1 00:00:00,080 --> 00:00:06,760 Speaker 1: Boo, Bloomberg Audio Studios, Podcasts, radio news. 2 00:00:11,600 --> 00:00:15,440 Speaker 2: This is the Bloomberg Surveillance Podcast. I'm Jonathan Ferrow, along 3 00:00:15,440 --> 00:00:18,680 Speaker 2: with Lisa Bromwitz and Amrie Hordern. Join us each day 4 00:00:18,720 --> 00:00:22,239 Speaker 2: for insight from the best in markets, economics, and geopolitics 5 00:00:22,400 --> 00:00:24,880 Speaker 2: from our global headquarters in New York City. We are 6 00:00:24,920 --> 00:00:27,680 Speaker 2: live on Bloomberg Television weekday mornings from six to nine 7 00:00:27,680 --> 00:00:31,280 Speaker 2: am Eastern. Subscribe to the podcast on Apple, Spotify or 8 00:00:31,280 --> 00:00:33,919 Speaker 2: anywhere else you listen, and as always on the Bloomberg 9 00:00:34,000 --> 00:00:37,560 Speaker 2: Terminal and the Bloomberg Business app. Dan Greenhouse has solace 10 00:00:37,720 --> 00:00:40,920 Speaker 2: seeing plenty of opportunity next year. It's been a tremendous 11 00:00:40,960 --> 00:00:44,040 Speaker 2: year for both equity and credit, which understandably leaves many 12 00:00:44,040 --> 00:00:47,240 Speaker 2: investors fearful of sounding too optimistic. Entering twenty twenty five, 13 00:00:47,400 --> 00:00:50,479 Speaker 2: we feel differently. The economy is doing fine, inflation is 14 00:00:50,560 --> 00:00:54,279 Speaker 2: largely normalized, and the consumer remains strong. Dan joins us 15 00:00:54,280 --> 00:00:55,520 Speaker 2: now for more. Dan, It's good to see you. 16 00:00:55,560 --> 00:00:56,319 Speaker 3: Good to see you, sir. 17 00:00:56,360 --> 00:00:59,040 Speaker 2: Would you say the street is uncomfortably bullish then going 18 00:00:59,040 --> 00:01:01,720 Speaker 2: into next year, because overwhelmingly it feels like people aren't 19 00:01:01,720 --> 00:01:04,560 Speaker 2: bullish because they feel like what's the alternative, what else 20 00:01:04,560 --> 00:01:06,920 Speaker 2: can they be? It's there some career risk associated with 21 00:01:07,000 --> 00:01:09,040 Speaker 2: being slightly bearish at twenty twenty. 22 00:01:08,880 --> 00:01:10,560 Speaker 3: Five, I think uncomfortably bullish is the right way to 23 00:01:10,560 --> 00:01:13,199 Speaker 3: put it, at least my interpretation from talking to people 24 00:01:13,200 --> 00:01:15,679 Speaker 3: around the street and watching Bloomberg TV at seven AM, 25 00:01:15,720 --> 00:01:19,280 Speaker 3: as I do every morning. There after two years where 26 00:01:19,280 --> 00:01:21,880 Speaker 3: the S and P is up twenty percent, high yield 27 00:01:23,040 --> 00:01:25,200 Speaker 3: and loans and even the lower rated credits are up 28 00:01:25,240 --> 00:01:27,600 Speaker 3: ten percent or so this year, and there's a feeling, well, 29 00:01:27,600 --> 00:01:30,760 Speaker 3: this can't continue, and so there's a hesitancy to sort 30 00:01:30,760 --> 00:01:33,560 Speaker 3: of embrace this. But in reality, I think, and you 31 00:01:33,600 --> 00:01:36,280 Speaker 3: guys talk to people obviously for hours a day every day. 32 00:01:36,880 --> 00:01:39,240 Speaker 3: I think there's been a whether you're listening or not 33 00:01:39,400 --> 00:01:40,319 Speaker 3: list it's a separate story. 34 00:01:40,319 --> 00:01:43,920 Speaker 1: But thanks for really beginning on a great note. 35 00:01:43,920 --> 00:01:44,280 Speaker 4: Carry on. 36 00:01:44,440 --> 00:01:47,560 Speaker 3: There's been a hesitancy to embrace the bullish tone of 37 00:01:47,600 --> 00:01:51,080 Speaker 3: things for several quarters now, So in that sense, I 38 00:01:51,080 --> 00:01:52,080 Speaker 3: don't think it's anything new. 39 00:01:52,200 --> 00:01:54,160 Speaker 2: It's a difference between what people are saying and what 40 00:01:54,160 --> 00:01:56,480 Speaker 2: they're doing. The fundamentage. Your survey out from Bank of 41 00:01:56,480 --> 00:01:59,640 Speaker 2: America says things are tremendously bullish at the moment, cash 42 00:02:00,320 --> 00:02:03,280 Speaker 2: record low, us ancuenty allocation record high. Do you sense 43 00:02:03,320 --> 00:02:05,840 Speaker 2: things up that frothy sentiment? Is that high? 44 00:02:05,920 --> 00:02:07,360 Speaker 3: Yeah? I got to ask the other day whether I 45 00:02:07,360 --> 00:02:10,960 Speaker 3: thought this was euphoria, and no, I don't think it's euphoria. Clearly, 46 00:02:11,280 --> 00:02:13,440 Speaker 3: the Bank of America data that you just reference plays 47 00:02:13,480 --> 00:02:18,080 Speaker 3: into positioning data, which suggests that people are certainly invested, 48 00:02:18,520 --> 00:02:22,360 Speaker 3: and depending on how you measure positioning at the upper 49 00:02:22,480 --> 00:02:24,960 Speaker 3: end of the range that's prevailed let's say since the GFC, 50 00:02:25,440 --> 00:02:28,440 Speaker 3: so people are certainly in the market and expecting it 51 00:02:28,480 --> 00:02:32,239 Speaker 3: to continue. So I think it's euphoria, Listen, I don't. 52 00:02:33,320 --> 00:02:35,960 Speaker 3: I guess The subsequent question there after becomes, well, what 53 00:02:36,040 --> 00:02:40,080 Speaker 3: separates what we're experiencing now from euphoria? And I guess, 54 00:02:40,080 --> 00:02:42,960 Speaker 3: thinking out loud here, there's still an acknowledgment. You mentioned 55 00:02:42,960 --> 00:02:45,880 Speaker 3: the geopolitical risks on the way into this conversation. There's 56 00:02:45,880 --> 00:02:50,480 Speaker 3: still an acknowledgment that things are not great. Incoming President 57 00:02:50,480 --> 00:02:54,560 Speaker 3: elect Trump's policies could be inflationary, you could have a 58 00:02:54,600 --> 00:02:58,480 Speaker 3: widening of the wars, etc. Etc. So I think euphoria 59 00:02:58,639 --> 00:03:00,760 Speaker 3: is probably an environment in which all of that stuff 60 00:03:00,800 --> 00:03:04,080 Speaker 3: is not even acknowledged, and I just I don't think 61 00:03:04,120 --> 00:03:04,960 Speaker 3: that's where we are now. 62 00:03:05,040 --> 00:03:07,079 Speaker 1: Vulnerable is another way to put it that at a 63 00:03:07,120 --> 00:03:09,679 Speaker 1: certain point, it is a market that becomes increasingly vulnerable 64 00:03:09,680 --> 00:03:11,840 Speaker 1: to a potential shock when everyone is in one trade 65 00:03:11,840 --> 00:03:13,560 Speaker 1: and they feel like they've been pushed into that one 66 00:03:13,639 --> 00:03:16,720 Speaker 1: trade because there is no alternative. Do you feel that 67 00:03:16,840 --> 00:03:20,640 Speaker 1: vulnerability in some of these crowded trades where you know 68 00:03:20,720 --> 00:03:22,760 Speaker 1: one thing could go wrong, it's unforeseen, and it could 69 00:03:22,800 --> 00:03:26,880 Speaker 1: really torpedo a real mass mass trade that could pete 70 00:03:26,880 --> 00:03:27,519 Speaker 1: to an exodus. 71 00:03:27,680 --> 00:03:29,440 Speaker 3: I listen, and I don't think this is a particular 72 00:03:29,680 --> 00:03:32,080 Speaker 3: secret or I'm certainly not breaking any headlines here, but 73 00:03:32,280 --> 00:03:34,600 Speaker 3: if something happens on the AI demand side of things, 74 00:03:35,080 --> 00:03:37,880 Speaker 3: my argument for a year has been when people talk 75 00:03:37,880 --> 00:03:41,120 Speaker 3: about this, everyone's in the trade or we're susceptible or 76 00:03:41,200 --> 00:03:44,160 Speaker 3: vulnerable to it. We have seen no evidence from virtually 77 00:03:44,160 --> 00:03:47,520 Speaker 3: any of the company is involved in this technology development 78 00:03:47,800 --> 00:03:50,880 Speaker 3: that demand is weakening at all. And when you look 79 00:03:50,920 --> 00:03:52,640 Speaker 3: back to the to the and we talked about this 80 00:03:52,640 --> 00:03:53,960 Speaker 3: the last few times I've been on. When you look 81 00:03:54,000 --> 00:03:58,400 Speaker 3: to the nineties, Floyd Norris and The New York Times 82 00:03:58,440 --> 00:04:00,280 Speaker 3: talked about the stock market being in a bubble in 83 00:04:00,360 --> 00:04:03,800 Speaker 3: nineteen ninety five, greenspans a rational exuberant speech was nineteen 84 00:04:03,840 --> 00:04:06,080 Speaker 3: ninety six, and obviously we still went on and had 85 00:04:06,160 --> 00:04:08,960 Speaker 3: ninety seven, ninety eight, and certainly ninety nine. It wasn't 86 00:04:09,040 --> 00:04:11,440 Speaker 3: until two thousand when you started to see those demand 87 00:04:11,440 --> 00:04:14,000 Speaker 3: trends weakening. Everybody. It's not like we didn't know along 88 00:04:14,040 --> 00:04:16,080 Speaker 3: the way that we were overbuilding. There was a story 89 00:04:16,120 --> 00:04:18,400 Speaker 3: about the telecom cables could wrap around the earth a 90 00:04:18,440 --> 00:04:21,480 Speaker 3: thousand times or whatever it was. We knew we were overbuilding, 91 00:04:21,839 --> 00:04:25,320 Speaker 3: but it still took until those demand trends weakened for 92 00:04:25,480 --> 00:04:29,120 Speaker 3: the broader environment to really to borrow the word. I 93 00:04:29,200 --> 00:04:31,480 Speaker 3: just use weekend, and I think now, whether it's AI 94 00:04:31,800 --> 00:04:34,359 Speaker 3: or Broadcom in the last two days, or any of 95 00:04:34,720 --> 00:04:38,200 Speaker 3: the derivative trades, I haven't heard. And again I've said 96 00:04:38,200 --> 00:04:39,799 Speaker 3: this one hundred times solo. This is not a particularly 97 00:04:39,880 --> 00:04:42,320 Speaker 3: large tech investor, and we don't own any of these names. 98 00:04:42,560 --> 00:04:44,920 Speaker 3: But I haven't seen any suggestion from anybody, either on 99 00:04:44,960 --> 00:04:47,320 Speaker 3: the sell side or from the companies themselves, that demand 100 00:04:47,360 --> 00:04:50,520 Speaker 3: trends are weakening. All I keep hearing is demand exceed 101 00:04:50,560 --> 00:04:52,640 Speaker 3: supply from just about anybody who has any comment. 102 00:04:52,839 --> 00:04:55,480 Speaker 1: One thing that SOLIS does have a pretty big footprint 103 00:04:55,480 --> 00:05:00,160 Speaker 1: in is looking at the potential combinations of companies, particularly media, 104 00:05:00,440 --> 00:05:02,600 Speaker 1: particularly in a couple of other industries. And this has 105 00:05:02,600 --> 00:05:04,040 Speaker 1: been an area that a lot of people think is 106 00:05:04,080 --> 00:05:06,800 Speaker 1: going to be really hot next year. How much you 107 00:05:06,880 --> 00:05:09,560 Speaker 1: seeing that in sort of the ground up analysis of 108 00:05:09,600 --> 00:05:12,960 Speaker 1: companies in different sectors and which sectors do you see 109 00:05:12,960 --> 00:05:14,479 Speaker 1: the most active discussions? 110 00:05:14,839 --> 00:05:16,680 Speaker 3: Well, it's when we had the lamb Western headlines the 111 00:05:16,720 --> 00:05:18,919 Speaker 3: other day. I think I'm certainly in the camp that 112 00:05:18,960 --> 00:05:20,560 Speaker 3: thinks next year is going to see a pickup in 113 00:05:20,720 --> 00:05:24,680 Speaker 3: M and A activity. You see this emb the issuance 114 00:05:24,720 --> 00:05:28,479 Speaker 3: trends are emblematic of this, and just CEO body language 115 00:05:28,520 --> 00:05:30,880 Speaker 3: is emblematic of this. So I'd expect to see that. 116 00:05:31,120 --> 00:05:33,800 Speaker 3: One area you mentioned SOLA is involvement in the media space. 117 00:05:34,080 --> 00:05:35,960 Speaker 3: I would point, for instance, to what's going on with 118 00:05:36,000 --> 00:05:40,159 Speaker 3: Comcast and Warner Brothers spinning out the linear let's oversimplify it, 119 00:05:40,200 --> 00:05:42,520 Speaker 3: spinning out the linear networks. The assumption is they're going 120 00:05:42,560 --> 00:05:46,320 Speaker 3: to combine, and there's a lot to do there. From 121 00:05:46,400 --> 00:05:49,160 Speaker 3: our standpoint, I think when people think about high yield 122 00:05:49,160 --> 00:05:51,719 Speaker 3: and credit and investing a lot of that conversation becomes 123 00:05:51,720 --> 00:05:54,880 Speaker 3: about dish or all tease. But those are the types 124 00:05:54,920 --> 00:05:56,280 Speaker 3: of things that we pay a lot of attention to. 125 00:05:56,360 --> 00:05:59,279 Speaker 3: Solace as a twenty year track record of investing in 126 00:05:59,279 --> 00:06:02,159 Speaker 3: the media space, and I think there's there's going to 127 00:06:02,160 --> 00:06:03,640 Speaker 3: be a lot there to to t to do in 128 00:06:03,680 --> 00:06:04,440 Speaker 3: that space, for sure. 129 00:06:04,720 --> 00:06:07,200 Speaker 4: Are you expecting then a light regulatory touch? 130 00:06:07,760 --> 00:06:11,200 Speaker 3: So I I think the the conversation is, well, Lena 131 00:06:11,279 --> 00:06:13,640 Speaker 3: Khan's gone, so it's game on, and I I don't 132 00:06:13,640 --> 00:06:15,039 Speaker 3: think that's the case. And I think you and I 133 00:06:15,040 --> 00:06:17,080 Speaker 3: have talked about this in the past. I think when 134 00:06:17,080 --> 00:06:18,680 Speaker 3: you really and I'm sure you're well aware of this, 135 00:06:18,720 --> 00:06:21,840 Speaker 3: when you really dig into jd Vance's philosophy and the 136 00:06:21,880 --> 00:06:25,440 Speaker 3: people around him, it's not a game on type philosophy. 137 00:06:25,480 --> 00:06:29,279 Speaker 3: It's there's still gonna be a scrutiny of the big 138 00:06:29,320 --> 00:06:32,200 Speaker 3: tech stocks in particular, of the T tech companies in particular. 139 00:06:32,680 --> 00:06:36,120 Speaker 3: But I also don't think, I mean, listen, Josh Hawley, 140 00:06:36,680 --> 00:06:40,120 Speaker 3: jd Vance, Tom Cotton are not gonna green light any 141 00:06:40,160 --> 00:06:42,800 Speaker 3: merger so to speak, either either in the public domain 142 00:06:42,920 --> 00:06:46,160 Speaker 3: or actually from the FTC standpoint. I think there's still 143 00:06:46,160 --> 00:06:47,839 Speaker 3: gonna be a lot of scrutiny here. But but will 144 00:06:47,880 --> 00:06:50,479 Speaker 3: it be lighter than what we've experienced the last couple 145 00:06:50,480 --> 00:06:52,039 Speaker 3: of years. I think that's unquestionably a Yes. 146 00:06:52,160 --> 00:06:53,960 Speaker 4: You were with us on election night. Do you think 147 00:06:54,520 --> 00:06:57,400 Speaker 4: this idea of the Trump trade is just overrun? Though? 148 00:06:58,880 --> 00:07:03,120 Speaker 3: No, no, l And I think, well, I guess maybe yes, 149 00:07:03,440 --> 00:07:08,400 Speaker 3: half no, half yes, yes, So there no is Listen, 150 00:07:08,520 --> 00:07:11,920 Speaker 3: we're going to have a friendlier business climate. The CEO confidence. 151 00:07:11,960 --> 00:07:14,200 Speaker 3: The Bloomberg is a story this morning about CEO confidence 152 00:07:14,200 --> 00:07:16,320 Speaker 3: spiking up. You saw it in a small business survey. 153 00:07:16,520 --> 00:07:19,600 Speaker 3: Small businessmen are apparently all Republicans because that numbers spiked 154 00:07:19,680 --> 00:07:22,760 Speaker 3: up to the highest level. Yeah, it's political bias in 155 00:07:22,760 --> 00:07:24,880 Speaker 3: some of these services, certainly political bias in some of 156 00:07:24,920 --> 00:07:26,680 Speaker 3: these surveys, and by some of these surveys, we mean 157 00:07:26,720 --> 00:07:29,760 Speaker 3: all of these surveys. But so in that sense, no, 158 00:07:29,960 --> 00:07:32,840 Speaker 3: this is going to be two years at least until 159 00:07:32,840 --> 00:07:36,160 Speaker 3: the mid terms, of probably four years of a more 160 00:07:36,280 --> 00:07:39,400 Speaker 3: right leaning business friendly climate. And so that's going to persist. 161 00:07:39,920 --> 00:07:42,440 Speaker 3: At the same time, I think there's and I'd be 162 00:07:42,480 --> 00:07:44,320 Speaker 3: curious of your thought on this, there's a lot of 163 00:07:44,480 --> 00:07:48,080 Speaker 3: enthusiasm and optimism about what this administration can accomplish. And 164 00:07:48,120 --> 00:07:50,840 Speaker 3: I'm a little more skeptical. I think, obviously the TCGA 165 00:07:50,920 --> 00:07:53,000 Speaker 3: is going to get extended, but can you also afford 166 00:07:53,560 --> 00:07:56,320 Speaker 3: no tax on tips? Can you also afford a further 167 00:07:56,360 --> 00:07:58,840 Speaker 3: lowering of the corporate tax rate. I'm a little skeptical 168 00:07:58,840 --> 00:07:59,920 Speaker 3: that this Congress is going to have. 169 00:08:00,240 --> 00:08:02,400 Speaker 4: So you're skeptical of the good stuff that would be 170 00:08:02,400 --> 00:08:04,760 Speaker 4: beneficial to the market and the business climate, but what 171 00:08:04,880 --> 00:08:08,240 Speaker 4: about tariffs and things that can actually have a negative impact. 172 00:08:08,560 --> 00:08:13,160 Speaker 3: Yeah, I enjoy this conversation a lot. I think that 173 00:08:13,360 --> 00:08:17,760 Speaker 3: the talk around tariffs is just so universally bearish and bad. 174 00:08:18,160 --> 00:08:20,600 Speaker 3: And listen, I don't want to give away my free 175 00:08:20,600 --> 00:08:24,160 Speaker 3: market bona feeds here, Like, certainly tariffs are not optimal, 176 00:08:24,640 --> 00:08:26,640 Speaker 3: but I also look back in the period in which 177 00:08:26,640 --> 00:08:31,080 Speaker 3: we had tariffs and I don't remember them being dystopian 178 00:08:31,120 --> 00:08:34,320 Speaker 3: in any meaningful way. I mean, obviously everyone likes to 179 00:08:34,320 --> 00:08:36,400 Speaker 3: point to the headline index there was no meaningful jump 180 00:08:36,400 --> 00:08:39,040 Speaker 3: in inflation, But when you dig into the core goods data, 181 00:08:39,200 --> 00:08:41,400 Speaker 3: there was a reversal of the downward the multi year 182 00:08:41,400 --> 00:08:44,920 Speaker 3: downward trend. So core goods prices certainly did respond. But 183 00:08:44,960 --> 00:08:48,640 Speaker 3: if we can simultaneously get the currency to move. If 184 00:08:48,679 --> 00:08:52,640 Speaker 3: we can simultaneously get oil prices lower, maybe present incoming 185 00:08:52,640 --> 00:08:55,040 Speaker 3: President Trump is a little friendlier with the Saudis and 186 00:08:55,080 --> 00:08:57,280 Speaker 3: we can maybe get a million barrels back on the 187 00:08:57,280 --> 00:08:59,200 Speaker 3: market and we can get oil down into the fifties 188 00:08:59,720 --> 00:09:01,000 Speaker 3: that that will help compensate. 189 00:09:01,080 --> 00:09:03,599 Speaker 4: And so just a little to that when US companies 190 00:09:03,640 --> 00:09:06,080 Speaker 4: are actually pulling back like Chevron at the Permian, there 191 00:09:06,280 --> 00:09:09,320 Speaker 4: needs to be a higher price to actually incentifize American 192 00:09:09,360 --> 00:09:11,280 Speaker 4: companies to want to continue driply listen, I. 193 00:09:11,280 --> 00:09:13,439 Speaker 3: Mean we're pumping thirteen and a half million barrels right now, 194 00:09:13,520 --> 00:09:16,680 Speaker 3: essentially a record high. So output in the United States 195 00:09:16,760 --> 00:09:19,040 Speaker 3: is not the issue. Obviously, you've got the voluntary c 196 00:09:19,200 --> 00:09:23,160 Speaker 3: talments across opek several million barrels spare capacities in the 197 00:09:23,880 --> 00:09:26,560 Speaker 3: million barrels. Obviously they keep trying to bring that back on, 198 00:09:26,679 --> 00:09:28,559 Speaker 3: but we're worried about Chinese demand and so there's a 199 00:09:28,600 --> 00:09:31,640 Speaker 3: lot of moving parts here. But I also think geopolitically, 200 00:09:31,640 --> 00:09:33,760 Speaker 3: if you're President Trump, your goal is going to be 201 00:09:33,800 --> 00:09:36,000 Speaker 3: the lower prices, and what is the easiest way to 202 00:09:36,040 --> 00:09:37,880 Speaker 3: do that. It's going to be much harder to spur 203 00:09:37,960 --> 00:09:40,360 Speaker 3: additional production of the Permian than it would be to 204 00:09:40,400 --> 00:09:43,280 Speaker 3: just somehow get the Saudis to agree to pump a 205 00:09:43,280 --> 00:09:45,720 Speaker 3: little bit more oil, which they might not. If you 206 00:09:45,720 --> 00:09:50,240 Speaker 3: can compensate that by lowering Iranian output, then for Russian 207 00:09:50,760 --> 00:09:53,400 Speaker 3: or Russian Iranians, probably easier, because the Iranians are back 208 00:09:53,440 --> 00:09:56,920 Speaker 3: up over three million barrels right now. That is up 209 00:09:56,960 --> 00:10:00,240 Speaker 3: a lot from the day President Trump left office. If 210 00:10:00,280 --> 00:10:03,480 Speaker 3: I'm President Trump, optimally you get a million Iranian barrels 211 00:10:03,480 --> 00:10:07,160 Speaker 3: off the market, you compensate that with a million Saudi barrels. 212 00:10:07,960 --> 00:10:10,440 Speaker 3: Maybe you depress oil prices a little bit in that environment, 213 00:10:10,520 --> 00:10:11,520 Speaker 3: win win run. 214 00:10:11,559 --> 00:10:13,320 Speaker 2: They clearly want to run this hot. Just a final 215 00:10:13,400 --> 00:10:14,040 Speaker 2: question to you. 216 00:10:14,480 --> 00:10:16,000 Speaker 3: They won't just started. How is it final? 217 00:10:16,040 --> 00:10:19,720 Speaker 2: Already here about five minutes into the segment, High christ, 218 00:10:20,000 --> 00:10:24,280 Speaker 2: low inflation, disciplined on Fisco. Out of those three, which 219 00:10:24,320 --> 00:10:25,760 Speaker 2: one do you think will be more difficult for the 220 00:10:25,800 --> 00:10:27,160 Speaker 2: incoming administration to achieve? 221 00:10:27,280 --> 00:10:27,880 Speaker 3: High growth? 222 00:10:28,160 --> 00:10:31,480 Speaker 2: Love inflation, disciplined on fiscal. 223 00:10:31,559 --> 00:10:33,520 Speaker 3: There's no one in Washington, and this is a parlor 224 00:10:33,559 --> 00:10:36,560 Speaker 3: game that we've played for decades now. There's no one's 225 00:10:36,600 --> 00:10:38,600 Speaker 3: cutting spending. Spending never gets cut. 226 00:10:39,440 --> 00:10:40,200 Speaker 2: Is Alan watching? 227 00:10:41,000 --> 00:10:43,520 Speaker 3: I hope he'll listen. I'm happy I mentioned last time. 228 00:10:43,679 --> 00:10:45,959 Speaker 3: I'll go work for Doze. Not full time, but I'll 229 00:10:46,000 --> 00:10:49,240 Speaker 3: go work for Doze. This is not brain surgery. The 230 00:10:49,320 --> 00:10:52,000 Speaker 3: CBO puts out a report all the time, all the 231 00:10:52,000 --> 00:10:55,120 Speaker 3: different ways you can fix the deficit. Former Senator Tom 232 00:10:55,200 --> 00:10:58,280 Speaker 3: Coburn now Ran Paul puts up the I Forget the watebook. 233 00:10:58,280 --> 00:11:00,800 Speaker 3: It's called all different ways that you can cut. This 234 00:11:00,840 --> 00:11:03,880 Speaker 3: is not brain surgery. There's the famous movie, not famous. 235 00:11:03,920 --> 00:11:06,440 Speaker 3: There was the movie Dave where the fake president comes 236 00:11:06,440 --> 00:11:09,320 Speaker 3: in and he brings in I forget who it was, 237 00:11:10,760 --> 00:11:13,000 Speaker 3: Charles Grodon, and Charles Groden's his friend. He's inn the 238 00:11:13,080 --> 00:11:14,520 Speaker 3: coountant and he sits down and he looks at the 239 00:11:14,520 --> 00:11:16,240 Speaker 3: Government of Books and he goes, this is the worst 240 00:11:16,280 --> 00:11:19,120 Speaker 3: looking thing I've ever seen. If you put five Republican 241 00:11:19,160 --> 00:11:23,640 Speaker 3: economists or or government fiscal people in a room with 242 00:11:23,760 --> 00:11:26,400 Speaker 3: five Democrats, they can solve the problem over lunch. The 243 00:11:26,480 --> 00:11:28,360 Speaker 3: problem is no one knows how to get elected once 244 00:11:28,400 --> 00:11:30,920 Speaker 3: they fix the problem. It's straight, which is why nothing's 245 00:11:30,920 --> 00:11:31,320 Speaker 3: getting done. 246 00:11:31,400 --> 00:11:32,839 Speaker 2: Good to say, it's why you know it's a still 247 00:11:33,200 --> 00:11:34,640 Speaker 2: not the four percent on a tenure. 248 00:11:34,760 --> 00:11:36,480 Speaker 3: Thank you for having me back on in the seven hour, 249 00:11:36,559 --> 00:11:37,320 Speaker 3: not at six thirty. 250 00:11:37,360 --> 00:11:39,760 Speaker 2: Okay, we're gonna keep that going down. Worry you want 251 00:11:39,800 --> 00:11:42,000 Speaker 2: the sevenite, the sevenite right. 252 00:11:42,760 --> 00:11:44,640 Speaker 3: Wherever you have me to come out and thank you. 253 00:11:44,679 --> 00:11:47,559 Speaker 2: Okay, Dank Greenhouse so solos Aultentive, Assi Masterms. Have a 254 00:11:47,640 --> 00:11:48,240 Speaker 2: very happy. 255 00:11:48,040 --> 00:11:48,880 Speaker 3: Christmas and you as well. 256 00:11:48,880 --> 00:12:01,920 Speaker 2: I'm merry Christmas. Thank you. Turning to consumer spending, Jet 257 00:12:01,920 --> 00:12:04,640 Speaker 2: Blue planning to expend its first class offerings in twenty 258 00:12:04,760 --> 00:12:08,480 Speaker 2: twenty six as passengers continue to pay up for premium options. 259 00:12:08,520 --> 00:12:12,440 Speaker 2: The carrier also cutting capacity to increase fares and focus 260 00:12:12,440 --> 00:12:15,720 Speaker 2: on East Coast leisure destinations. Joining us now to discuss 261 00:12:15,800 --> 00:12:18,720 Speaker 2: is the Jet Blue CEO Joanna Garretteeanna, good to see you. 262 00:12:18,760 --> 00:12:19,720 Speaker 5: Thanks thanks for having me. 263 00:12:19,760 --> 00:12:21,439 Speaker 2: The demand for premium is through the roof and a 264 00:12:21,480 --> 00:12:23,920 Speaker 2: lot of people are trying to provide the capacity for it. 265 00:12:24,040 --> 00:12:26,760 Speaker 2: What gives you the impression the confidence that that demand's 266 00:12:26,760 --> 00:12:27,480 Speaker 2: going to stick around? 267 00:12:27,640 --> 00:12:29,560 Speaker 5: I mean Jet Blue has been doing premium for ten years. 268 00:12:29,600 --> 00:12:32,080 Speaker 5: We introduced our Mint product ten years ago. This is 269 00:12:32,200 --> 00:12:34,679 Speaker 5: just continuing to round out the suite of products that 270 00:12:34,720 --> 00:12:36,800 Speaker 5: we have. We have a great coach experience, we have 271 00:12:36,800 --> 00:12:39,440 Speaker 5: even more space, Mint Life Flat and now more of 272 00:12:39,440 --> 00:12:42,920 Speaker 5: a domestic Mint and domestic business class seat that we're 273 00:12:42,920 --> 00:12:45,240 Speaker 5: going to be introducing in twenty twenty six. Very excited 274 00:12:45,240 --> 00:12:46,800 Speaker 5: to bring it to customers and leisure markets. 275 00:12:46,920 --> 00:12:49,719 Speaker 2: Food is best in class on your behalf. I've done 276 00:12:49,760 --> 00:12:53,160 Speaker 2: the flight and Mint to California and to London as well. 277 00:12:53,200 --> 00:12:55,080 Speaker 2: Where does that come from? How expensive is it to 278 00:12:55,080 --> 00:12:56,040 Speaker 2: provide that kind of product? 279 00:12:56,200 --> 00:12:58,439 Speaker 5: Yeah, I mean, we really look to provide a differentiated 280 00:12:58,480 --> 00:13:00,960 Speaker 5: experience and we lean in uncertain So food has been 281 00:13:00,960 --> 00:13:03,319 Speaker 5: an area that we focus on. Comfort is another area 282 00:13:03,360 --> 00:13:04,640 Speaker 5: that we spend a lot of time with. We have 283 00:13:04,720 --> 00:13:06,960 Speaker 5: a great a great partnership with Tought and Needle, and 284 00:13:07,000 --> 00:13:09,320 Speaker 5: as we think about our new domestic first class, comfort 285 00:13:09,360 --> 00:13:10,840 Speaker 5: is going to be the area that we lean in 286 00:13:10,920 --> 00:13:13,720 Speaker 5: on there as well, with some interesting features of our 287 00:13:13,760 --> 00:13:15,880 Speaker 5: seat product that provide a bit more comfort to customers. 288 00:13:15,880 --> 00:13:18,040 Speaker 1: How difficult is it to thread a needle with the 289 00:13:18,160 --> 00:13:21,120 Speaker 1: likes of business class given the fact that Jet Blue 290 00:13:21,120 --> 00:13:25,440 Speaker 1: traditionally has been an airline that caters to pleasure travel, 291 00:13:25,480 --> 00:13:28,040 Speaker 1: sure to the idea of traveling with the family to 292 00:13:28,160 --> 00:13:31,600 Speaker 1: warm places in the winter time, how much does that 293 00:13:31,679 --> 00:13:33,520 Speaker 1: kind of create a conflict for you? 294 00:13:33,280 --> 00:13:35,360 Speaker 5: You know, we don't think it creates a conflict because 295 00:13:35,440 --> 00:13:38,240 Speaker 5: everybody's a leisure customer and when you think about what 296 00:13:38,280 --> 00:13:40,120 Speaker 5: you like to do on a vacation, sometimes you want 297 00:13:40,160 --> 00:13:42,920 Speaker 5: an elevated travel experience as well. So we want to 298 00:13:42,960 --> 00:13:44,960 Speaker 5: make sure that we have an offering for every type 299 00:13:45,000 --> 00:13:47,440 Speaker 5: of leisure customer. One of the things we have done 300 00:13:47,440 --> 00:13:50,520 Speaker 5: recently is kind of retrenched in the Northeast, really focusing 301 00:13:50,559 --> 00:13:53,720 Speaker 5: on serving the best leisure markets out of the Northeast Europe, 302 00:13:54,160 --> 00:13:56,240 Speaker 5: the West Coast down in the Caribbean, and there's a 303 00:13:56,280 --> 00:13:58,000 Speaker 5: real market for that premium seat. 304 00:13:58,120 --> 00:13:59,959 Speaker 1: I guess another way to say this is businesses are 305 00:14:00,000 --> 00:14:02,240 Speaker 1: willing to pay more on their expense accounts than individuals, 306 00:14:02,320 --> 00:14:04,640 Speaker 1: especially when they're going on vacation. How difficult is it 307 00:14:05,000 --> 00:14:08,319 Speaker 1: to charge the rates that make it worthwhile Given the 308 00:14:08,360 --> 00:14:10,320 Speaker 1: fact that as people going on vacation and they typically 309 00:14:10,360 --> 00:14:11,440 Speaker 1: have bledget's. 310 00:14:11,040 --> 00:14:13,240 Speaker 5: We're not focused on charging rates at are akin to 311 00:14:13,280 --> 00:14:15,440 Speaker 5: what a business customer and a business would charge. We 312 00:14:15,480 --> 00:14:18,880 Speaker 5: really want to make the premium experience affordable to leisure customers. 313 00:14:18,920 --> 00:14:21,560 Speaker 5: When we introduced Mint ten years ago, we did just that. 314 00:14:21,600 --> 00:14:23,960 Speaker 5: We reduced fares to the West Coast, we introduced a 315 00:14:23,960 --> 00:14:26,320 Speaker 5: better product, a better service, and that's what we're looking 316 00:14:26,320 --> 00:14:28,720 Speaker 5: to do here. It's really important for jet Blue to 317 00:14:28,720 --> 00:14:31,200 Speaker 5: make sure that we have affordable fares and that all 318 00:14:31,200 --> 00:14:33,520 Speaker 5: of our products are accessible to the leisure customers. So 319 00:14:33,560 --> 00:14:35,760 Speaker 5: that's the customer that we're targeting, somebody willing to pay 320 00:14:35,760 --> 00:14:38,200 Speaker 5: a bit more, but not at the size that you 321 00:14:38,200 --> 00:14:39,000 Speaker 5: would for a business. 322 00:14:39,080 --> 00:14:41,440 Speaker 1: You've been tasked with turning around the balance sheet of 323 00:14:41,480 --> 00:14:44,040 Speaker 1: jet Blue, and you've made progress in that front. You 324 00:14:44,120 --> 00:14:46,880 Speaker 1: just reported earnings that were positive and really pointed toward 325 00:14:46,880 --> 00:14:50,760 Speaker 1: progress in that How much are you able to raise 326 00:14:50,840 --> 00:14:54,480 Speaker 1: prices at a time where you see increasing consumer pushback, 327 00:14:55,200 --> 00:14:56,760 Speaker 1: But at the same time, there seems to still be 328 00:14:56,800 --> 00:14:58,080 Speaker 1: that ongoing demand for travel. 329 00:14:58,120 --> 00:15:00,280 Speaker 5: There's very healthy demand in the peak and that's where 330 00:15:00,440 --> 00:15:03,000 Speaker 5: leisure travel is great. So as we think about you know, 331 00:15:03,040 --> 00:15:05,520 Speaker 5: the holidays, we think about the summertime frame. You know, 332 00:15:05,560 --> 00:15:07,800 Speaker 5: that's where I think jet Blue does its best because 333 00:15:07,800 --> 00:15:09,680 Speaker 5: we fly to some of these great destinations. Troughs are 334 00:15:09,680 --> 00:15:12,800 Speaker 5: definitely more challenging. We've seen some pricing pressure in the troughs. 335 00:15:12,960 --> 00:15:14,480 Speaker 5: We've reduced a lot of flying in the troughs. So 336 00:15:14,520 --> 00:15:16,640 Speaker 5: it's really about balancing out that year and making sure 337 00:15:16,680 --> 00:15:19,320 Speaker 5: that you know, when demand is high, you're focused on 338 00:15:19,400 --> 00:15:21,680 Speaker 5: trying to capture your share of that demand, and then 339 00:15:21,680 --> 00:15:23,520 Speaker 5: the troughs really reducing the losses. 340 00:15:23,840 --> 00:15:26,760 Speaker 1: So do you expect to increase fares this year? 341 00:15:26,880 --> 00:15:29,640 Speaker 5: We're hopeful that we can keep fares affordable that reflect 342 00:15:29,640 --> 00:15:32,440 Speaker 5: the cost of service. It's more expensive to travel now 343 00:15:32,440 --> 00:15:35,440 Speaker 5: because there are costs. Airport costs have gone up, labor 344 00:15:35,480 --> 00:15:38,280 Speaker 5: costs have gone up, so there's meaningful inflationary pressure for 345 00:15:38,320 --> 00:15:40,440 Speaker 5: the airlines as well. Our great food comes at a cost. 346 00:15:40,520 --> 00:15:42,920 Speaker 5: When you start seeing the grocery costs go up, that 347 00:15:42,960 --> 00:15:44,480 Speaker 5: means the food and an aircraft is going to go 348 00:15:44,560 --> 00:15:46,560 Speaker 5: up too. So we're really trying to balance it and 349 00:15:46,600 --> 00:15:49,400 Speaker 5: make sure that relative to the other travel out there, 350 00:15:49,440 --> 00:15:52,560 Speaker 5: that Jet Blue is an affordable fare for customers, inaccessible 351 00:15:52,560 --> 00:15:53,280 Speaker 5: for a leisure customer. 352 00:15:53,280 --> 00:15:55,360 Speaker 4: Well, there's also been other constraints on the airline industry 353 00:15:55,360 --> 00:15:57,400 Speaker 4: when it comes to getting the parts they need, comes 354 00:15:57,440 --> 00:16:00,640 Speaker 4: to actually getting the planes they need to fly. And 355 00:16:00,680 --> 00:16:02,480 Speaker 4: then next year a lot of people are talking about, well, 356 00:16:02,520 --> 00:16:05,080 Speaker 4: we might get tariffs and potentially that might impact the 357 00:16:05,120 --> 00:16:05,720 Speaker 4: supply chain. 358 00:16:05,760 --> 00:16:06,840 Speaker 2: How are you preparing for all of that? 359 00:16:06,960 --> 00:16:08,800 Speaker 5: Yeah, I mean Jet Blue has a unique situation with 360 00:16:08,800 --> 00:16:10,480 Speaker 5: Pratt and Whitney. Right now, we have a number of 361 00:16:10,480 --> 00:16:12,480 Speaker 5: aircraft sitting on the ground that we're paying for, but 362 00:16:12,520 --> 00:16:14,320 Speaker 5: we're not able to fly because they're due for an 363 00:16:14,360 --> 00:16:17,640 Speaker 5: engine inspection and there's not enough capacity to do those inspections. 364 00:16:17,680 --> 00:16:20,200 Speaker 5: So that's definitely a headwind for Jet Blue. As you 365 00:16:20,200 --> 00:16:22,920 Speaker 5: think about tariffs, it's a bit too soon to tell. 366 00:16:22,960 --> 00:16:24,400 Speaker 5: I think the good news for Jeblo's. We take a 367 00:16:24,400 --> 00:16:26,920 Speaker 5: lot of our aircraft from Alabama, but you know, depending 368 00:16:26,920 --> 00:16:28,920 Speaker 5: on how tariffs get put in. We do have exposure 369 00:16:29,000 --> 00:16:30,800 Speaker 5: in Europe and in Canada because some of our aircraft 370 00:16:30,880 --> 00:16:31,360 Speaker 5: come from there. 371 00:16:32,000 --> 00:16:35,920 Speaker 4: Of course, the Jet Blue Spirit Airlines potential merger was blocked. 372 00:16:36,080 --> 00:16:39,440 Speaker 4: Are you potentially thinking about going at it again in 373 00:16:39,480 --> 00:16:41,920 Speaker 4: the next four years in this space more mergers and 374 00:16:41,960 --> 00:16:46,200 Speaker 4: acquisitions because there might be a lighter regulatory touch in Washington, 375 00:16:46,240 --> 00:16:46,440 Speaker 4: d C. 376 00:16:46,640 --> 00:16:49,240 Speaker 5: We're really focused on delivering our new plan, Jet Forward. 377 00:16:49,600 --> 00:16:51,880 Speaker 5: We want to see Jet Blue thrive as a successful 378 00:16:51,880 --> 00:16:55,120 Speaker 5: standalone company. We have a brand that customers love, We've 379 00:16:55,160 --> 00:16:57,840 Speaker 5: got a great product, a great service. We're focus on 380 00:16:57,920 --> 00:16:59,760 Speaker 5: flying in the places that people know us. So we're 381 00:16:59,760 --> 00:17:02,000 Speaker 5: really focus on our standalone plan jet Forward right now. 382 00:17:02,040 --> 00:17:04,000 Speaker 4: Okay, so you might not dip your toes back into 383 00:17:04,040 --> 00:17:06,400 Speaker 4: that space, But do you think that this is going 384 00:17:06,440 --> 00:17:10,800 Speaker 4: to be a more welcoming administration when it comes to 385 00:17:10,840 --> 00:17:12,480 Speaker 4: things like mergers and acquisitions. 386 00:17:12,520 --> 00:17:15,320 Speaker 5: It's hard to speculate because we don't know exactly what 387 00:17:15,440 --> 00:17:17,240 Speaker 5: the com plan's going to be, but it's hard to 388 00:17:17,240 --> 00:17:19,720 Speaker 5: see an administration that's going to be worse than the 389 00:17:19,720 --> 00:17:21,760 Speaker 5: administration we had around antitrust. 390 00:17:22,200 --> 00:17:24,560 Speaker 1: In the meantime, you have announced a number of changes 391 00:17:24,600 --> 00:17:27,560 Speaker 1: in terms of the Jet Forward, including closing down certain 392 00:17:27,640 --> 00:17:30,840 Speaker 1: operations in a number of cities. I believe that they 393 00:17:31,240 --> 00:17:34,359 Speaker 1: are going to cut You're going to cut some fifty routes. Correct, 394 00:17:34,520 --> 00:17:36,080 Speaker 1: Is it done? Are there more to come? 395 00:17:36,440 --> 00:17:39,120 Speaker 5: The network is always something that's evolving, So the majority 396 00:17:39,119 --> 00:17:41,080 Speaker 5: of the changes are done. But you know, we're not 397 00:17:41,080 --> 00:17:43,240 Speaker 5: going to rest on our laurels. If a particular market 398 00:17:43,280 --> 00:17:45,280 Speaker 5: is not producing results, then we're going to take a 399 00:17:45,280 --> 00:17:47,280 Speaker 5: good hard look at it see if we can improve it, 400 00:17:47,320 --> 00:17:49,280 Speaker 5: and if not, then we're going to point those planes 401 00:17:49,320 --> 00:17:51,000 Speaker 5: to a place where we can make money. We've got 402 00:17:51,000 --> 00:17:53,560 Speaker 5: to become profitable, and part of that has made may 403 00:17:53,760 --> 00:17:55,240 Speaker 5: maybe need to make some tough decisions. 404 00:17:55,320 --> 00:17:57,760 Speaker 2: I've got to follow up. Have you spokens the incoming administration. 405 00:17:58,200 --> 00:18:00,359 Speaker 5: We have not spoken to then incoming administration. 406 00:18:00,280 --> 00:18:03,040 Speaker 2: To go down to Mari Lanka anytime soon, Mike the pilgrimage. 407 00:18:03,119 --> 00:18:05,280 Speaker 5: Right now, I'm focused on holiday travel. We have one 408 00:18:05,320 --> 00:18:07,679 Speaker 5: hundred and fifty thousand customers a day. Flying is a 409 00:18:07,680 --> 00:18:10,040 Speaker 5: great place over the holiday, the sun for the holiday. 410 00:18:10,440 --> 00:18:12,000 Speaker 2: You can combine the two. What do we call that? 411 00:18:12,440 --> 00:18:12,640 Speaker 5: Work? 412 00:18:12,720 --> 00:18:18,040 Speaker 2: Patience, leisure, pleasure, leisure bleisia, yeah, leisure, Okay, Lezia, you 413 00:18:18,040 --> 00:18:20,440 Speaker 2: sing a lot of pleasure. We see a lot of leisure. 414 00:18:20,480 --> 00:18:22,359 Speaker 5: We see a lot of leisure over the holidays too. Though. 415 00:18:22,440 --> 00:18:24,760 Speaker 5: We're just really happy to be a part of connecting 416 00:18:24,760 --> 00:18:26,360 Speaker 5: people with their families over over the whole. 417 00:18:26,400 --> 00:18:28,280 Speaker 2: What does it only look like that one hundred. 418 00:18:28,080 --> 00:18:31,040 Speaker 5: And fifty thousand people a day over the Christmas holiday, 419 00:18:31,359 --> 00:18:33,760 Speaker 5: We've got about a thousand flights a day, and you know, 420 00:18:33,800 --> 00:18:36,520 Speaker 5: it's amazing when you think what airlines do and the 421 00:18:36,560 --> 00:18:39,000 Speaker 5: magic that we can deliver to customers, reuniting their families 422 00:18:39,000 --> 00:18:41,800 Speaker 5: and making that great experience. It'll be busy, it'll be tough, 423 00:18:42,480 --> 00:18:44,240 Speaker 5: and my hope is that everybody can be patient and 424 00:18:44,320 --> 00:18:44,920 Speaker 5: a little kinder. 425 00:18:45,080 --> 00:18:47,199 Speaker 2: If you're asking for patients, does that mean they're going 426 00:18:47,240 --> 00:18:49,560 Speaker 2: to be delays? How does this snack cut? 427 00:18:49,560 --> 00:18:52,000 Speaker 5: Oh, you've teed that one up perfectly delays. I wish 428 00:18:52,040 --> 00:18:54,919 Speaker 5: this administration would focus more on air traffic control. That 429 00:18:55,040 --> 00:18:57,679 Speaker 5: has definitely been a meaningful pressure to Jet Blue, to 430 00:18:57,720 --> 00:19:00,760 Speaker 5: all airlines. When we think about this next administration, that 431 00:19:00,840 --> 00:19:02,480 Speaker 5: is a real focus area for jeblue. 432 00:19:02,480 --> 00:19:03,560 Speaker 2: What would you like to see change? 433 00:19:03,640 --> 00:19:05,879 Speaker 5: What would they do to see more hiring. I'd love 434 00:19:05,920 --> 00:19:09,040 Speaker 5: to see better technology and ultimately improving the amount of 435 00:19:09,040 --> 00:19:11,320 Speaker 5: delays that come out of the air traffic control system 436 00:19:11,320 --> 00:19:13,120 Speaker 5: in New York in particular, which is the hardest hit. 437 00:19:13,240 --> 00:19:15,080 Speaker 2: We don't like to say the same thing now one 438 00:19:15,080 --> 00:19:16,320 Speaker 2: what's delays? Did they bred up? 439 00:19:17,000 --> 00:19:20,360 Speaker 1: You're talking to the choir I've had at well, Okay, Honestly, 440 00:19:20,400 --> 00:19:22,359 Speaker 1: going to Florida is the hardest though, I have to 441 00:19:22,359 --> 00:19:24,919 Speaker 1: be honest, because there's always weather, there are wins that 442 00:19:24,960 --> 00:19:28,280 Speaker 1: come up. There's a random storm that comes up, and 443 00:19:28,320 --> 00:19:30,440 Speaker 1: some people get delayed for a long period of time 444 00:19:30,480 --> 00:19:32,600 Speaker 1: and they sit there and then their complane gets canceled 445 00:19:32,640 --> 00:19:34,080 Speaker 1: and they take go on vacation with. 446 00:19:34,000 --> 00:19:36,600 Speaker 4: The family CEOs can't control the weather though. But what 447 00:19:36,720 --> 00:19:39,680 Speaker 4: is interesting is we have here an airline CEO saying 448 00:19:39,680 --> 00:19:42,440 Speaker 4: they want the FAA to hire more. The incoming administration 449 00:19:42,480 --> 00:19:44,000 Speaker 4: is talking about dogifying the government. 450 00:19:44,040 --> 00:19:46,720 Speaker 5: It's true, well, hopefully do not talking about air traffic control. 451 00:19:46,960 --> 00:19:49,800 Speaker 5: We are grossly understaffed and at the end of the day, 452 00:19:49,800 --> 00:19:52,240 Speaker 5: those delays, even with weather, we should be able to 453 00:19:52,240 --> 00:19:55,760 Speaker 5: have a more resilient aviation air traffic control system with weather. 454 00:19:56,000 --> 00:19:57,639 Speaker 5: That is just something that we have to deal with. 455 00:19:57,840 --> 00:19:59,679 Speaker 1: Just pause for a second. Are you saying that all 456 00:19:59,720 --> 00:20:01,680 Speaker 1: those it's not because of weather. 457 00:20:01,840 --> 00:20:04,320 Speaker 5: It's just some of the delays are definitely because of weather, 458 00:20:04,680 --> 00:20:08,760 Speaker 5: but they are exacerbated because we are significantly understaffed among 459 00:20:08,760 --> 00:20:09,400 Speaker 5: air traffic. 460 00:20:09,400 --> 00:20:12,040 Speaker 2: I never trust the excuse. You've got a problem with 461 00:20:12,080 --> 00:20:14,879 Speaker 2: trust as well. I never trust it. I never trust. 462 00:20:15,000 --> 00:20:16,280 Speaker 6: I know it's actually going on. 463 00:20:16,560 --> 00:20:18,879 Speaker 1: And actually, to Joanna's point, there is a problem with 464 00:20:18,960 --> 00:20:19,439 Speaker 1: air traffic. 465 00:20:19,480 --> 00:20:20,320 Speaker 2: The stuff's missing. 466 00:20:20,880 --> 00:20:23,119 Speaker 4: You can actually see how bad the weather is and 467 00:20:23,160 --> 00:20:24,960 Speaker 4: you're thinking, and it's the weather. 468 00:20:25,160 --> 00:20:27,359 Speaker 2: For sometimes you look outside, the sky is blue, the 469 00:20:27,400 --> 00:20:29,960 Speaker 2: sun is shining, and they're like air traffic control below. Yeah, 470 00:20:30,000 --> 00:20:33,040 Speaker 2: that's a problem. The pilots missing went out the night before. 471 00:20:33,080 --> 00:20:36,560 Speaker 1: Who knows that's Japan, but that does not happen, doesn't 472 00:20:36,560 --> 00:20:37,080 Speaker 1: have to. 473 00:20:37,880 --> 00:20:40,879 Speaker 2: Just to be very clear, JO going to see you 474 00:20:40,920 --> 00:20:53,399 Speaker 2: appreciate time. Mart McCormick of TD Securities joined us right 475 00:20:53,440 --> 00:20:55,800 Speaker 2: now for more Mark you're there, you're following it closer 476 00:20:55,800 --> 00:20:57,200 Speaker 2: than we are. What's next. 477 00:20:58,920 --> 00:21:00,439 Speaker 6: Well, I think it's very clear that this is a 478 00:21:00,440 --> 00:21:03,160 Speaker 6: common theme. This isn't just Canada. This is happening in France, 479 00:21:03,280 --> 00:21:05,640 Speaker 6: is happening Germany's happening all over the world. What you're 480 00:21:05,680 --> 00:21:08,359 Speaker 6: seeing is that the election of Trump is a disruption 481 00:21:08,840 --> 00:21:10,840 Speaker 6: to the existing order. And I think a piece of 482 00:21:10,840 --> 00:21:14,080 Speaker 6: this is work together in the markets and work together economy. 483 00:21:14,480 --> 00:21:16,640 Speaker 6: We're seeing a central banks are trying to cut rates 484 00:21:16,640 --> 00:21:19,919 Speaker 6: to stimulate the economy, Fiscal policy is being used to 485 00:21:20,000 --> 00:21:24,200 Speaker 6: stimulate the economy. Voters are unsatisfied with incumbents and compans 486 00:21:24,200 --> 00:21:27,359 Speaker 6: are trying to find ways to maintain power. And that's 487 00:21:27,400 --> 00:21:29,800 Speaker 6: just when you think about where this is going, where 488 00:21:29,800 --> 00:21:32,720 Speaker 6: you think the existing order is going. It's just very 489 00:21:32,760 --> 00:21:36,760 Speaker 6: clear that you know, using like short term incentives just 490 00:21:36,800 --> 00:21:38,960 Speaker 6: to spend money to kind of help people ahead of 491 00:21:38,960 --> 00:21:41,600 Speaker 6: an election is really not a long term strategy for 492 00:21:41,640 --> 00:21:45,320 Speaker 6: economic policy, especially when you think about innovation and investment. 493 00:21:45,400 --> 00:21:47,000 Speaker 6: And again, this is a common theme that you saw 494 00:21:47,040 --> 00:21:49,280 Speaker 6: on the UK budget. So I think this is not 495 00:21:49,440 --> 00:21:51,600 Speaker 6: a piece of like what's going on in Canada. This 496 00:21:51,640 --> 00:21:55,000 Speaker 6: is clearly not idiosyncratic. But what's very clear is that 497 00:21:55,040 --> 00:21:58,919 Speaker 6: the political economy, what we're calling geomacro, is a force 498 00:21:58,960 --> 00:22:02,600 Speaker 6: that's creating disruption. It's creating more volatility, more uncertainty, and 499 00:22:02,640 --> 00:22:04,919 Speaker 6: it's coming through the currencies first market. 500 00:22:04,920 --> 00:22:07,520 Speaker 1: How much does this really push people back toward the 501 00:22:07,560 --> 00:22:10,840 Speaker 1: dollar because there isn't There isn't another alternative that necessarily 502 00:22:11,359 --> 00:22:14,520 Speaker 1: is more put together, whether it comes to the government 503 00:22:14,600 --> 00:22:17,400 Speaker 1: or whether it comes to the economy. 504 00:22:17,520 --> 00:22:18,120 Speaker 2: Yeah, it just. 505 00:22:18,040 --> 00:22:21,520 Speaker 6: Reinforces dollar exceptionalism, US exceptionalism. These are things we've been 506 00:22:21,520 --> 00:22:23,640 Speaker 6: talking about for months. I think one of the things 507 00:22:23,680 --> 00:22:26,719 Speaker 6: that's very clear is we run a quantitative macro framework. 508 00:22:26,800 --> 00:22:29,480 Speaker 6: We looked at different styles and drivers of markets. The 509 00:22:29,560 --> 00:22:32,840 Speaker 6: dollar has behind it as a tailwind the equity market. 510 00:22:33,040 --> 00:22:36,480 Speaker 6: It's got carry, it's got momentum, it's got essentially the 511 00:22:36,560 --> 00:22:38,920 Speaker 6: terms of trade. It also has growth. So you can't 512 00:22:38,920 --> 00:22:41,000 Speaker 6: think of a better mix. The one thing that's a 513 00:22:41,040 --> 00:22:43,520 Speaker 6: little bit challenging right now is markets have been really 514 00:22:43,520 --> 00:22:47,200 Speaker 6: focused on mean reversion, so positioning, short term valuation models, 515 00:22:47,200 --> 00:22:49,960 Speaker 6: those things have worked for the currencies all year. But 516 00:22:50,040 --> 00:22:53,320 Speaker 6: what we're starting to see is momentum is a factor 517 00:22:53,359 --> 00:22:56,119 Speaker 6: that's becoming increasingly more important as we push into the 518 00:22:56,119 --> 00:22:58,399 Speaker 6: new year. So I'm a little bit wary here of 519 00:22:58,440 --> 00:23:00,320 Speaker 6: like people coming in and buying the dollar with a 520 00:23:00,359 --> 00:23:02,560 Speaker 6: couple of weeks left in the year. But it's very 521 00:23:02,600 --> 00:23:04,560 Speaker 6: clear where we're going in the front half of next year, 522 00:23:04,640 --> 00:23:06,600 Speaker 6: and it's going to be a strong dollar across spoort. 523 00:23:06,760 --> 00:23:08,399 Speaker 4: But what about the end of twenty time, going to 524 00:23:08,440 --> 00:23:10,320 Speaker 4: twenty twenty six, A lot of analysts are talking about 525 00:23:10,320 --> 00:23:12,720 Speaker 4: the fact that actually we could see some weakness or 526 00:23:12,920 --> 00:23:14,760 Speaker 4: minimum a plateau of the US dollar. 527 00:23:16,560 --> 00:23:19,280 Speaker 6: Yeah, this is uh, this is an important theme, I 528 00:23:19,800 --> 00:23:22,000 Speaker 6: think because what we're seeing is a disruption to the 529 00:23:22,000 --> 00:23:24,919 Speaker 6: global trade order. Again, you can look at we have 530 00:23:24,960 --> 00:23:27,240 Speaker 6: indicators that we've looked at for globalization. So if you 531 00:23:27,280 --> 00:23:31,199 Speaker 6: look at globalization as a theme, hyper globalization economic and 532 00:23:31,240 --> 00:23:34,159 Speaker 6: trade peaked ten years ago. It's been moving sideways. But 533 00:23:34,280 --> 00:23:36,359 Speaker 6: along with the correlation, the thing that you see is 534 00:23:36,359 --> 00:23:39,399 Speaker 6: that as globalization was rising, hyperglobalzation was rising, the US 535 00:23:39,480 --> 00:23:41,920 Speaker 6: trade depsit was rising, and the US dollar is getting 536 00:23:41,960 --> 00:23:44,360 Speaker 6: very expensive. So if you think about what is the 537 00:23:44,680 --> 00:23:47,680 Speaker 6: north star of the Trump administration, one thing that he's 538 00:23:47,720 --> 00:23:49,280 Speaker 6: talked about and one thing that I think is very 539 00:23:49,320 --> 00:23:52,560 Speaker 6: important to their economic policy is eliminating the trade deficit. 540 00:23:53,040 --> 00:23:56,600 Speaker 6: You cannot reindustrialize the rust belt. You cannot reindustrialize the 541 00:23:56,640 --> 00:23:59,800 Speaker 6: states that want it for this for Trump, this you 542 00:23:59,840 --> 00:24:06,320 Speaker 6: know in this last election, Michigan, Ohio, Pennsylvania, Wisconsin, those states. 543 00:24:06,440 --> 00:24:09,399 Speaker 6: What matters, I think is the reindustrialization and also the 544 00:24:09,400 --> 00:24:12,119 Speaker 6: reduction of the trade depth to which means you need 545 00:24:12,160 --> 00:24:14,000 Speaker 6: to find a way to weaken the dollar. So I 546 00:24:14,040 --> 00:24:15,960 Speaker 6: think what's going to be very important is the world's 547 00:24:16,040 --> 00:24:18,800 Speaker 6: breaking apart. And as the global order is being ripped 548 00:24:18,840 --> 00:24:22,959 Speaker 6: apart again, most countries are choosing national sovereignty over globalization. 549 00:24:23,040 --> 00:24:24,640 Speaker 6: This is not a US story. This has been going 550 00:24:24,640 --> 00:24:27,520 Speaker 6: on for over a decade. And essentially, as that order 551 00:24:27,560 --> 00:24:30,560 Speaker 6: gets picked apart, the dollar rallies. It's the only game 552 00:24:30,600 --> 00:24:32,960 Speaker 6: of town, and it's fomo, It's all these kind of themes. 553 00:24:33,359 --> 00:24:37,679 Speaker 6: But that creates the conditions for the Trump administration to 554 00:24:38,000 --> 00:24:41,520 Speaker 6: address the major concern for industrialization, which is the trade 555 00:24:41,560 --> 00:24:44,360 Speaker 6: deficit and the strength of the dollar, which again if 556 00:24:44,359 --> 00:24:46,720 Speaker 6: we look at our longer term valuation models, the cheapest 557 00:24:46,720 --> 00:24:48,840 Speaker 6: currencies in the world are the en the remedy to 558 00:24:48,840 --> 00:24:52,119 Speaker 6: be the one Taiwanese dollar, all the Asian currencies that 559 00:24:52,160 --> 00:24:54,520 Speaker 6: were low yielding funding currencies. 560 00:24:54,080 --> 00:24:56,600 Speaker 2: At LIASA said it already this morning. What's the alternative? 561 00:24:56,680 --> 00:25:01,520 Speaker 2: Ma mcbakatdi math. Thank you. This is the Bloomberg Surveillance podcast, 562 00:25:01,680 --> 00:25:05,520 Speaker 2: bringing you the best in markets, economics, antient politics. You 563 00:25:05,600 --> 00:25:08,359 Speaker 2: can watch the show live on Bloomberg TV weekday mornings 564 00:25:08,400 --> 00:25:11,320 Speaker 2: from six am to nine am Eastern. Subscribe to the 565 00:25:11,359 --> 00:25:14,840 Speaker 2: podcast on Apple, Spotify, or anywhere else you listen, and 566 00:25:14,920 --> 00:25:18,000 Speaker 2: as always, on the Bloomberg Terminal and the Bloomberg Business app.