Speaker 1: Boo, Bloomberg Audio Studios, Podcasts, radio news.
Speaker 2: This is the Bloomberg Surveillance Podcast. I'm Jonathan Ferrow, along
Speaker 2: with Lisa Bromwitz and Amrie Hordern. Join us each day
Speaker 2: for insight from the best in markets, economics, and geopolitics
Speaker 2: from our global headquarters in New York City. We are
Speaker 2: live on Bloomberg Television weekday mornings from six to nine
Speaker 2: am Eastern. Subscribe to the podcast on Apple, Spotify or
Speaker 2: anywhere else you listen, and as always on the Bloomberg
Speaker 2: Terminal and the Bloomberg Business app. Dan Greenhouse has solace
Speaker 2: seeing plenty of opportunity next year. It's been a tremendous
Speaker 2: year for both equity and credit, which understandably leaves many
Speaker 2: investors fearful of sounding too optimistic. Entering twenty twenty five,
Speaker 2: we feel differently. The economy is doing fine, inflation is
Speaker 2: largely normalized, and the consumer remains strong. Dan joins us
Speaker 2: now for more. Dan, It's good to see you.
Speaker 3: Good to see you, sir.
Speaker 2: Would you say the street is uncomfortably bullish then going
Speaker 2: into next year, because overwhelmingly it feels like people aren't
Speaker 2: bullish because they feel like what's the alternative, what else
Speaker 2: can they be? It's there some career risk associated with
Speaker 2: being slightly bearish at twenty twenty.
Speaker 3: Five, I think uncomfortably bullish is the right way to
Speaker 3: put it, at least my interpretation from talking to people
Speaker 3: around the street and watching Bloomberg TV at seven AM,
Speaker 3: as I do every morning. There after two years where
Speaker 3: the S and P is up twenty percent, high yield
Speaker 3: and loans and even the lower rated credits are up
Speaker 3: ten percent or so this year, and there's a feeling, well,
Speaker 3: this can't continue, and so there's a hesitancy to sort
Speaker 3: of embrace this. But in reality, I think, and you
Speaker 3: guys talk to people obviously for hours a day every day.
Speaker 3: I think there's been a whether you're listening or not
Speaker 3: list it's a separate story.
Speaker 1: But thanks for really beginning on a great note.
Speaker 4: Carry on.
Speaker 3: There's been a hesitancy to embrace the bullish tone of
Speaker 3: things for several quarters now, So in that sense, I
Speaker 3: don't think it's anything new.
Speaker 2: It's a difference between what people are saying and what
Speaker 2: they're doing. The fundamentage. Your survey out from Bank of
Speaker 2: America says things are tremendously bullish at the moment, cash
Speaker 2: record low, us ancuenty allocation record high. Do you sense
Speaker 2: things up that frothy sentiment? Is that high?
Speaker 3: Yeah? I got to ask the other day whether I
Speaker 3: thought this was euphoria, and no, I don't think it's euphoria. Clearly,
Speaker 3: the Bank of America data that you just reference plays
Speaker 3: into positioning data, which suggests that people are certainly invested,
Speaker 3: and depending on how you measure positioning at the upper
Speaker 3: end of the range that's prevailed let's say since the GFC,
Speaker 3: so people are certainly in the market and expecting it
Speaker 3: to continue. So I think it's euphoria, Listen, I don't.
Speaker 3: I guess The subsequent question there after becomes, well, what
Speaker 3: separates what we're experiencing now from euphoria? And I guess,
Speaker 3: thinking out loud here, there's still an acknowledgment. You mentioned
Speaker 3: the geopolitical risks on the way into this conversation. There's
Speaker 3: still an acknowledgment that things are not great. Incoming President
Speaker 3: elect Trump's policies could be inflationary, you could have a
Speaker 3: widening of the wars, etc. Etc. So I think euphoria
Speaker 3: is probably an environment in which all of that stuff
Speaker 3: is not even acknowledged, and I just I don't think
Speaker 3: that's where we are now.
Speaker 1: Vulnerable is another way to put it that at a
Speaker 1: certain point, it is a market that becomes increasingly vulnerable
Speaker 1: to a potential shock when everyone is in one trade
Speaker 1: and they feel like they've been pushed into that one
Speaker 1: trade because there is no alternative. Do you feel that
Speaker 1: vulnerability in some of these crowded trades where you know
Speaker 1: one thing could go wrong, it's unforeseen, and it could
Speaker 1: really torpedo a real mass mass trade that could pete
Speaker 1: to an exodus.
Speaker 3: I listen, and I don't think this is a particular
Speaker 3: secret or I'm certainly not breaking any headlines here, but
Speaker 3: if something happens on the AI demand side of things,
Speaker 3: my argument for a year has been when people talk
Speaker 3: about this, everyone's in the trade or we're susceptible or
Speaker 3: vulnerable to it. We have seen no evidence from virtually
Speaker 3: any of the company is involved in this technology development
Speaker 3: that demand is weakening at all. And when you look
Speaker 3: back to the to the and we talked about this
Speaker 3: the last few times I've been on. When you look
Speaker 3: to the nineties, Floyd Norris and The New York Times
Speaker 3: talked about the stock market being in a bubble in
Speaker 3: nineteen ninety five, greenspans a rational exuberant speech was nineteen
Speaker 3: ninety six, and obviously we still went on and had
Speaker 3: ninety seven, ninety eight, and certainly ninety nine. It wasn't
Speaker 3: until two thousand when you started to see those demand
Speaker 3: trends weakening. Everybody. It's not like we didn't know along
Speaker 3: the way that we were overbuilding. There was a story
Speaker 3: about the telecom cables could wrap around the earth a
Speaker 3: thousand times or whatever it was. We knew we were overbuilding,
Speaker 3: but it still took until those demand trends weakened for
Speaker 3: the broader environment to really to borrow the word. I
Speaker 3: just use weekend, and I think now, whether it's AI
Speaker 3: or Broadcom in the last two days, or any of
Speaker 3: the derivative trades, I haven't heard. And again I've said
Speaker 3: this one hundred times solo. This is not a particularly
Speaker 3: large tech investor, and we don't own any of these names.
Speaker 3: But I haven't seen any suggestion from anybody, either on
Speaker 3: the sell side or from the companies themselves, that demand
Speaker 3: trends are weakening. All I keep hearing is demand exceed
Speaker 3: supply from just about anybody who has any comment.
Speaker 1: One thing that SOLIS does have a pretty big footprint
Speaker 1: in is looking at the potential combinations of companies, particularly media,
Speaker 1: particularly in a couple of other industries. And this has
Speaker 1: been an area that a lot of people think is
Speaker 1: going to be really hot next year. How much you
Speaker 1: seeing that in sort of the ground up analysis of
Speaker 1: companies in different sectors and which sectors do you see
Speaker 1: the most active discussions?
Speaker 3: Well, it's when we had the lamb Western headlines the
Speaker 3: other day. I think I'm certainly in the camp that
Speaker 3: thinks next year is going to see a pickup in
Speaker 3: M and A activity. You see this emb the issuance
Speaker 3: trends are emblematic of this, and just CEO body language
Speaker 3: is emblematic of this. So I'd expect to see that.
Speaker 3: One area you mentioned SOLA is involvement in the media space.
Speaker 3: I would point, for instance, to what's going on with
Speaker 3: Comcast and Warner Brothers spinning out the linear let's oversimplify it,
Speaker 3: spinning out the linear networks. The assumption is they're going
Speaker 3: to combine, and there's a lot to do there. From
Speaker 3: our standpoint, I think when people think about high yield
Speaker 3: and credit and investing a lot of that conversation becomes
Speaker 3: about dish or all tease. But those are the types
Speaker 3: of things that we pay a lot of attention to.
Speaker 3: Solace as a twenty year track record of investing in
Speaker 3: the media space, and I think there's there's going to
Speaker 3: be a lot there to to t to do in
Speaker 3: that space, for sure.
Speaker 4: Are you expecting then a light regulatory touch?
Speaker 3: So I I think the the conversation is, well, Lena
Speaker 3: Khan's gone, so it's game on, and I I don't
Speaker 3: think that's the case. And I think you and I
Speaker 3: have talked about this in the past. I think when
Speaker 3: you really and I'm sure you're well aware of this,
Speaker 3: when you really dig into jd Vance's philosophy and the
Speaker 3: people around him, it's not a game on type philosophy.
Speaker 3: It's there's still gonna be a scrutiny of the big
Speaker 3: tech stocks in particular, of the T tech companies in particular.
Speaker 3: But I also don't think, I mean, listen, Josh Hawley,
Speaker 3: jd Vance, Tom Cotton are not gonna green light any
Speaker 3: merger so to speak, either either in the public domain
Speaker 3: or actually from the FTC standpoint. I think there's still
Speaker 3: gonna be a lot of scrutiny here. But but will
Speaker 3: it be lighter than what we've experienced the last couple
Speaker 3: of years. I think that's unquestionably a Yes.
Speaker 4: You were with us on election night. Do you think
Speaker 4: this idea of the Trump trade is just overrun? Though?
Speaker 3: No, no, l And I think, well, I guess maybe yes,
Speaker 3: half no, half yes, yes, So there no is Listen,
Speaker 3: we're going to have a friendlier business climate. The CEO confidence.
Speaker 3: The Bloomberg is a story this morning about CEO confidence
Speaker 3: spiking up. You saw it in a small business survey.
Speaker 3: Small businessmen are apparently all Republicans because that numbers spiked
Speaker 3: up to the highest level. Yeah, it's political bias in
Speaker 3: some of these services, certainly political bias in some of
Speaker 3: these surveys, and by some of these surveys, we mean
Speaker 3: all of these surveys. But so in that sense, no,
Speaker 3: this is going to be two years at least until
Speaker 3: the mid terms, of probably four years of a more
Speaker 3: right leaning business friendly climate. And so that's going to persist.
Speaker 3: At the same time, I think there's and I'd be
Speaker 3: curious of your thought on this, there's a lot of
Speaker 3: enthusiasm and optimism about what this administration can accomplish. And
Speaker 3: I'm a little more skeptical. I think, obviously the TCGA
Speaker 3: is going to get extended, but can you also afford
Speaker 3: no tax on tips? Can you also afford a further
Speaker 3: lowering of the corporate tax rate. I'm a little skeptical
Speaker 3: that this Congress is going to have.
Speaker 4: So you're skeptical of the good stuff that would be
Speaker 4: beneficial to the market and the business climate, but what
Speaker 4: about tariffs and things that can actually have a negative impact.
Speaker 3: Yeah, I enjoy this conversation a lot. I think that
Speaker 3: the talk around tariffs is just so universally bearish and bad.
Speaker 3: And listen, I don't want to give away my free
Speaker 3: market bona feeds here, Like, certainly tariffs are not optimal,
Speaker 3: but I also look back in the period in which
Speaker 3: we had tariffs and I don't remember them being dystopian
Speaker 3: in any meaningful way. I mean, obviously everyone likes to
Speaker 3: point to the headline index there was no meaningful jump
Speaker 3: in inflation, But when you dig into the core goods data,
Speaker 3: there was a reversal of the downward the multi year
Speaker 3: downward trend. So core goods prices certainly did respond. But
Speaker 3: if we can simultaneously get the currency to move. If
Speaker 3: we can simultaneously get oil prices lower, maybe present incoming
Speaker 3: President Trump is a little friendlier with the Saudis and
Speaker 3: we can maybe get a million barrels back on the
Speaker 3: market and we can get oil down into the fifties
Speaker 3: that that will help compensate.
Speaker 4: And so just a little to that when US companies
Speaker 4: are actually pulling back like Chevron at the Permian, there
Speaker 4: needs to be a higher price to actually incentifize American
Speaker 4: companies to want to continue driply listen, I.
Speaker 3: Mean we're pumping thirteen and a half million barrels right now,
Speaker 3: essentially a record high. So output in the United States
Speaker 3: is not the issue. Obviously, you've got the voluntary c
Speaker 3: talments across opek several million barrels spare capacities in the
Speaker 3: million barrels. Obviously they keep trying to bring that back on,
Speaker 3: but we're worried about Chinese demand and so there's a
Speaker 3: lot of moving parts here. But I also think geopolitically,
Speaker 3: if you're President Trump, your goal is going to be
Speaker 3: the lower prices, and what is the easiest way to
Speaker 3: do that. It's going to be much harder to spur
Speaker 3: additional production of the Permian than it would be to
Speaker 3: just somehow get the Saudis to agree to pump a
Speaker 3: little bit more oil, which they might not. If you
Speaker 3: can compensate that by lowering Iranian output, then for Russian
Speaker 3: or Russian Iranians, probably easier, because the Iranians are back
Speaker 3: up over three million barrels right now. That is up
Speaker 3: a lot from the day President Trump left office. If
Speaker 3: I'm President Trump, optimally you get a million Iranian barrels
Speaker 3: off the market, you compensate that with a million Saudi barrels.
Speaker 3: Maybe you depress oil prices a little bit in that environment,
Speaker 3: win win run.
Speaker 2: They clearly want to run this hot. Just a final
Speaker 2: question to you.
Speaker 3: They won't just started. How is it final?
Speaker 2: Already here about five minutes into the segment, High christ,
Speaker 2: low inflation, disciplined on Fisco. Out of those three, which
Speaker 2: one do you think will be more difficult for the
Speaker 2: incoming administration to achieve?
Speaker 3: High growth?
Speaker 2: Love inflation, disciplined on fiscal.
Speaker 3: There's no one in Washington, and this is a parlor
Speaker 3: game that we've played for decades now. There's no one's
Speaker 3: cutting spending. Spending never gets cut.
Speaker 2: Is Alan watching?
Speaker 3: I hope he'll listen. I'm happy I mentioned last time.
Speaker 3: I'll go work for Doze. Not full time, but I'll
Speaker 3: go work for Doze. This is not brain surgery. The
Speaker 3: CBO puts out a report all the time, all the
Speaker 3: different ways you can fix the deficit. Former Senator Tom
Speaker 3: Coburn now Ran Paul puts up the I Forget the watebook.
Speaker 3: It's called all different ways that you can cut. This
Speaker 3: is not brain surgery. There's the famous movie, not famous.
Speaker 3: There was the movie Dave where the fake president comes
Speaker 3: in and he brings in I forget who it was,
Speaker 3: Charles Grodon, and Charles Groden's his friend. He's inn the
Speaker 3: coountant and he sits down and he looks at the
Speaker 3: Government of Books and he goes, this is the worst
Speaker 3: looking thing I've ever seen. If you put five Republican
Speaker 3: economists or or government fiscal people in a room with
Speaker 3: five Democrats, they can solve the problem over lunch. The
Speaker 3: problem is no one knows how to get elected once
Speaker 3: they fix the problem. It's straight, which is why nothing's
Speaker 3: getting done.
Speaker 2: Good to say, it's why you know it's a still
Speaker 2: not the four percent on a tenure.
Speaker 3: Thank you for having me back on in the seven hour,
Speaker 3: not at six thirty.
Speaker 2: Okay, we're gonna keep that going down. Worry you want
Speaker 2: the sevenite, the sevenite right.
Speaker 3: Wherever you have me to come out and thank you.
Speaker 2: Okay, Dank Greenhouse so solos Aultentive, Assi Masterms. Have a
Speaker 2: very happy.
Speaker 3: Christmas and you as well.
Speaker 2: I'm merry Christmas. Thank you. Turning to consumer spending, Jet
Speaker 2: Blue planning to expend its first class offerings in twenty
Speaker 2: twenty six as passengers continue to pay up for premium options.
Speaker 2: The carrier also cutting capacity to increase fares and focus
Speaker 2: on East Coast leisure destinations. Joining us now to discuss
Speaker 2: is the Jet Blue CEO Joanna Garretteeanna, good to see you.
Speaker 5: Thanks thanks for having me.
Speaker 2: The demand for premium is through the roof and a
Speaker 2: lot of people are trying to provide the capacity for it.
Speaker 2: What gives you the impression the confidence that that demand's
Speaker 2: going to stick around?
Speaker 5: I mean Jet Blue has been doing premium for ten years.
Speaker 5: We introduced our Mint product ten years ago. This is
Speaker 5: just continuing to round out the suite of products that
Speaker 5: we have. We have a great coach experience, we have
Speaker 5: even more space, Mint Life Flat and now more of
Speaker 5: a domestic Mint and domestic business class seat that we're
Speaker 5: going to be introducing in twenty twenty six. Very excited
Speaker 5: to bring it to customers and leisure markets.
Speaker 2: Food is best in class on your behalf. I've done
Speaker 2: the flight and Mint to California and to London as well.
Speaker 2: Where does that come from? How expensive is it to
Speaker 2: provide that kind of product?
Speaker 5: Yeah, I mean, we really look to provide a differentiated
Speaker 5: experience and we lean in uncertain So food has been
Speaker 5: an area that we focus on. Comfort is another area
Speaker 5: that we spend a lot of time with. We have
Speaker 5: a great a great partnership with Tought and Needle, and
Speaker 5: as we think about our new domestic first class, comfort
Speaker 5: is going to be the area that we lean in
Speaker 5: on there as well, with some interesting features of our
Speaker 5: seat product that provide a bit more comfort to customers.
Speaker 1: How difficult is it to thread a needle with the
Speaker 1: likes of business class given the fact that Jet Blue
Speaker 1: traditionally has been an airline that caters to pleasure travel,
Speaker 1: sure to the idea of traveling with the family to
Speaker 1: warm places in the winter time, how much does that
Speaker 1: kind of create a conflict for you?
Speaker 5: You know, we don't think it creates a conflict because
Speaker 5: everybody's a leisure customer and when you think about what
Speaker 5: you like to do on a vacation, sometimes you want
Speaker 5: an elevated travel experience as well. So we want to
Speaker 5: make sure that we have an offering for every type
Speaker 5: of leisure customer. One of the things we have done
Speaker 5: recently is kind of retrenched in the Northeast, really focusing
Speaker 5: on serving the best leisure markets out of the Northeast Europe,
Speaker 5: the West Coast down in the Caribbean, and there's a
Speaker 5: real market for that premium seat.
Speaker 1: I guess another way to say this is businesses are
Speaker 1: willing to pay more on their expense accounts than individuals,
Speaker 1: especially when they're going on vacation. How difficult is it
Speaker 1: to charge the rates that make it worthwhile Given the
Speaker 1: fact that as people going on vacation and they typically
Speaker 1: have bledget's.
Speaker 5: We're not focused on charging rates at are akin to
Speaker 5: what a business customer and a business would charge. We
Speaker 5: really want to make the premium experience affordable to leisure customers.
Speaker 5: When we introduced Mint ten years ago, we did just that.
Speaker 5: We reduced fares to the West Coast, we introduced a
Speaker 5: better product, a better service, and that's what we're looking
Speaker 5: to do here. It's really important for jet Blue to
Speaker 5: make sure that we have affordable fares and that all
Speaker 5: of our products are accessible to the leisure customers. So
Speaker 5: that's the customer that we're targeting, somebody willing to pay
Speaker 5: a bit more, but not at the size that you
Speaker 5: would for a business.
Speaker 1: You've been tasked with turning around the balance sheet of
Speaker 1: jet Blue, and you've made progress in that front. You
Speaker 1: just reported earnings that were positive and really pointed toward
Speaker 1: progress in that How much are you able to raise
Speaker 1: prices at a time where you see increasing consumer pushback,
Speaker 1: But at the same time, there seems to still be
Speaker 1: that ongoing demand for travel.
Speaker 5: There's very healthy demand in the peak and that's where
Speaker 5: leisure travel is great. So as we think about you know,
Speaker 5: the holidays, we think about the summertime frame. You know,
Speaker 5: that's where I think jet Blue does its best because
Speaker 5: we fly to some of these great destinations. Troughs are
Speaker 5: definitely more challenging. We've seen some pricing pressure in the troughs.
Speaker 5: We've reduced a lot of flying in the troughs. So
Speaker 5: it's really about balancing out that year and making sure
Speaker 5: that you know, when demand is high, you're focused on
Speaker 5: trying to capture your share of that demand, and then
Speaker 5: the troughs really reducing the losses.
Speaker 1: So do you expect to increase fares this year?
Speaker 5: We're hopeful that we can keep fares affordable that reflect
Speaker 5: the cost of service. It's more expensive to travel now
Speaker 5: because there are costs. Airport costs have gone up, labor
Speaker 5: costs have gone up, so there's meaningful inflationary pressure for
Speaker 5: the airlines as well. Our great food comes at a cost.
Speaker 5: When you start seeing the grocery costs go up, that
Speaker 5: means the food and an aircraft is going to go
Speaker 5: up too. So we're really trying to balance it and
Speaker 5: make sure that relative to the other travel out there,
Speaker 5: that Jet Blue is an affordable fare for customers, inaccessible
Speaker 5: for a leisure customer.
Speaker 4: Well, there's also been other constraints on the airline industry
Speaker 4: when it comes to getting the parts they need, comes
Speaker 4: to actually getting the planes they need to fly. And
Speaker 4: then next year a lot of people are talking about, well,
Speaker 4: we might get tariffs and potentially that might impact the
Speaker 4: supply chain.
Speaker 2: How are you preparing for all of that?
Speaker 5: Yeah, I mean Jet Blue has a unique situation with
Speaker 5: Pratt and Whitney. Right now, we have a number of
Speaker 5: aircraft sitting on the ground that we're paying for, but
Speaker 5: we're not able to fly because they're due for an
Speaker 5: engine inspection and there's not enough capacity to do those inspections.
Speaker 5: So that's definitely a headwind for Jet Blue. As you
Speaker 5: think about tariffs, it's a bit too soon to tell.
Speaker 5: I think the good news for Jeblo's. We take a
Speaker 5: lot of our aircraft from Alabama, but you know, depending
Speaker 5: on how tariffs get put in. We do have exposure
Speaker 5: in Europe and in Canada because some of our aircraft
Speaker 5: come from there.
Speaker 4: Of course, the Jet Blue Spirit Airlines potential merger was blocked.
Speaker 4: Are you potentially thinking about going at it again in
Speaker 4: the next four years in this space more mergers and
Speaker 4: acquisitions because there might be a lighter regulatory touch in Washington,
Speaker 4: d C.
Speaker 5: We're really focused on delivering our new plan, Jet Forward.
Speaker 5: We want to see Jet Blue thrive as a successful
Speaker 5: standalone company. We have a brand that customers love, We've
Speaker 5: got a great product, a great service. We're focus on
Speaker 5: flying in the places that people know us. So we're
Speaker 5: really focus on our standalone plan jet Forward right now.
Speaker 4: Okay, so you might not dip your toes back into
Speaker 4: that space, But do you think that this is going
Speaker 4: to be a more welcoming administration when it comes to
Speaker 4: things like mergers and acquisitions.
Speaker 5: It's hard to speculate because we don't know exactly what
Speaker 5: the com plan's going to be, but it's hard to
Speaker 5: see an administration that's going to be worse than the
Speaker 5: administration we had around antitrust.
Speaker 1: In the meantime, you have announced a number of changes
Speaker 1: in terms of the Jet Forward, including closing down certain
Speaker 1: operations in a number of cities. I believe that they
Speaker 1: are going to cut You're going to cut some fifty routes. Correct,
Speaker 1: Is it done? Are there more to come?
Speaker 5: The network is always something that's evolving, So the majority
Speaker 5: of the changes are done. But you know, we're not
Speaker 5: going to rest on our laurels. If a particular market
Speaker 5: is not producing results, then we're going to take a
Speaker 5: good hard look at it see if we can improve it,
Speaker 5: and if not, then we're going to point those planes
Speaker 5: to a place where we can make money. We've got
Speaker 5: to become profitable, and part of that has made may
Speaker 5: maybe need to make some tough decisions.
Speaker 2: I've got to follow up. Have you spokens the incoming administration.
Speaker 5: We have not spoken to then incoming administration.
Speaker 2: To go down to Mari Lanka anytime soon, Mike the pilgrimage.
Speaker 5: Right now, I'm focused on holiday travel. We have one
Speaker 5: hundred and fifty thousand customers a day. Flying is a
Speaker 5: great place over the holiday, the sun for the holiday.
Speaker 2: You can combine the two. What do we call that?
Speaker 5: Work?
Speaker 2: Patience, leisure, pleasure, leisure bleisia, yeah, leisure, Okay, Lezia, you
Speaker 2: sing a lot of pleasure. We see a lot of leisure.
Speaker 5: We see a lot of leisure over the holidays too. Though.
Speaker 5: We're just really happy to be a part of connecting
Speaker 5: people with their families over over the whole.
Speaker 2: What does it only look like that one hundred.
Speaker 5: And fifty thousand people a day over the Christmas holiday,
Speaker 5: We've got about a thousand flights a day, and you know,
Speaker 5: it's amazing when you think what airlines do and the
Speaker 5: magic that we can deliver to customers, reuniting their families
Speaker 5: and making that great experience. It'll be busy, it'll be tough,
Speaker 5: and my hope is that everybody can be patient and
Speaker 5: a little kinder.
Speaker 2: If you're asking for patients, does that mean they're going
Speaker 2: to be delays? How does this snack cut?
Speaker 5: Oh, you've teed that one up perfectly delays. I wish
Speaker 5: this administration would focus more on air traffic control. That
Speaker 5: has definitely been a meaningful pressure to Jet Blue, to
Speaker 5: all airlines. When we think about this next administration, that
Speaker 5: is a real focus area for jeblue.
Speaker 2: What would you like to see change?
Speaker 5: What would they do to see more hiring. I'd love
Speaker 5: to see better technology and ultimately improving the amount of
Speaker 5: delays that come out of the air traffic control system
Speaker 5: in New York in particular, which is the hardest hit.
Speaker 2: We don't like to say the same thing now one
Speaker 2: what's delays? Did they bred up?
Speaker 1: You're talking to the choir I've had at well, Okay, Honestly,
Speaker 1: going to Florida is the hardest though, I have to
Speaker 1: be honest, because there's always weather, there are wins that
Speaker 1: come up. There's a random storm that comes up, and
Speaker 1: some people get delayed for a long period of time
Speaker 1: and they sit there and then their complane gets canceled
Speaker 1: and they take go on vacation with.
Speaker 4: The family CEOs can't control the weather though. But what
Speaker 4: is interesting is we have here an airline CEO saying
Speaker 4: they want the FAA to hire more. The incoming administration
Speaker 4: is talking about dogifying the government.
Speaker 5: It's true, well, hopefully do not talking about air traffic control.
Speaker 5: We are grossly understaffed and at the end of the day,
Speaker 5: those delays, even with weather, we should be able to
Speaker 5: have a more resilient aviation air traffic control system with weather.
Speaker 5: That is just something that we have to deal with.
Speaker 1: Just pause for a second. Are you saying that all
Speaker 1: those it's not because of weather.
Speaker 5: It's just some of the delays are definitely because of weather,
Speaker 5: but they are exacerbated because we are significantly understaffed among
Speaker 5: air traffic.
Speaker 2: I never trust the excuse. You've got a problem with
Speaker 2: trust as well. I never trust it. I never trust.
Speaker 6: I know it's actually going on.
Speaker 1: And actually, to Joanna's point, there is a problem with
Speaker 1: air traffic.
Speaker 2: The stuff's missing.
Speaker 4: You can actually see how bad the weather is and
Speaker 4: you're thinking, and it's the weather.
Speaker 2: For sometimes you look outside, the sky is blue, the
Speaker 2: sun is shining, and they're like air traffic control below. Yeah,
Speaker 2: that's a problem. The pilots missing went out the night before.
Speaker 1: Who knows that's Japan, but that does not happen, doesn't
Speaker 1: have to.
Speaker 2: Just to be very clear, JO going to see you
Speaker 2: appreciate time. Mart McCormick of TD Securities joined us right
Speaker 2: now for more Mark you're there, you're following it closer
Speaker 2: than we are. What's next.
Speaker 6: Well, I think it's very clear that this is a
Speaker 6: common theme. This isn't just Canada. This is happening in France,
Speaker 6: is happening Germany's happening all over the world. What you're
Speaker 6: seeing is that the election of Trump is a disruption
Speaker 6: to the existing order. And I think a piece of
Speaker 6: this is work together in the markets and work together economy.
Speaker 6: We're seeing a central banks are trying to cut rates
Speaker 6: to stimulate the economy, Fiscal policy is being used to
Speaker 6: stimulate the economy. Voters are unsatisfied with incumbents and compans
Speaker 6: are trying to find ways to maintain power. And that's
Speaker 6: just when you think about where this is going, where
Speaker 6: you think the existing order is going. It's just very
Speaker 6: clear that you know, using like short term incentives just
Speaker 6: to spend money to kind of help people ahead of
Speaker 6: an election is really not a long term strategy for
Speaker 6: economic policy, especially when you think about innovation and investment.
Speaker 6: And again, this is a common theme that you saw
Speaker 6: on the UK budget. So I think this is not
Speaker 6: a piece of like what's going on in Canada. This
Speaker 6: is clearly not idiosyncratic. But what's very clear is that
Speaker 6: the political economy, what we're calling geomacro, is a force
Speaker 6: that's creating disruption. It's creating more volatility, more uncertainty, and
Speaker 6: it's coming through the currencies first market.
Speaker 1: How much does this really push people back toward the
Speaker 1: dollar because there isn't There isn't another alternative that necessarily
Speaker 1: is more put together, whether it comes to the government
Speaker 1: or whether it comes to the economy.
Speaker 2: Yeah, it just.
Speaker 6: Reinforces dollar exceptionalism, US exceptionalism. These are things we've been
Speaker 6: talking about for months. I think one of the things
Speaker 6: that's very clear is we run a quantitative macro framework.
Speaker 6: We looked at different styles and drivers of markets. The
Speaker 6: dollar has behind it as a tailwind the equity market.
Speaker 6: It's got carry, it's got momentum, it's got essentially the
Speaker 6: terms of trade. It also has growth. So you can't
Speaker 6: think of a better mix. The one thing that's a
Speaker 6: little bit challenging right now is markets have been really
Speaker 6: focused on mean reversion, so positioning, short term valuation models,
Speaker 6: those things have worked for the currencies all year. But
Speaker 6: what we're starting to see is momentum is a factor
Speaker 6: that's becoming increasingly more important as we push into the
Speaker 6: new year. So I'm a little bit wary here of
Speaker 6: like people coming in and buying the dollar with a
Speaker 6: couple of weeks left in the year. But it's very
Speaker 6: clear where we're going in the front half of next year,
Speaker 6: and it's going to be a strong dollar across spoort.
Speaker 4: But what about the end of twenty time, going to
Speaker 4: twenty twenty six, A lot of analysts are talking about
Speaker 4: the fact that actually we could see some weakness or
Speaker 4: minimum a plateau of the US dollar.
Speaker 6: Yeah, this is uh, this is an important theme, I
Speaker 6: think because what we're seeing is a disruption to the
Speaker 6: global trade order. Again, you can look at we have
Speaker 6: indicators that we've looked at for globalization. So if you
Speaker 6: look at globalization as a theme, hyper globalization economic and
Speaker 6: trade peaked ten years ago. It's been moving sideways. But
Speaker 6: along with the correlation, the thing that you see is
Speaker 6: that as globalization was rising, hyperglobalzation was rising, the US
Speaker 6: trade depsit was rising, and the US dollar is getting
Speaker 6: very expensive. So if you think about what is the
Speaker 6: north star of the Trump administration, one thing that he's
Speaker 6: talked about and one thing that I think is very
Speaker 6: important to their economic policy is eliminating the trade deficit.
Speaker 6: You cannot reindustrialize the rust belt. You cannot reindustrialize the
Speaker 6: states that want it for this for Trump, this you
Speaker 6: know in this last election, Michigan, Ohio, Pennsylvania, Wisconsin, those states.
Speaker 6: What matters, I think is the reindustrialization and also the
Speaker 6: reduction of the trade depth to which means you need
Speaker 6: to find a way to weaken the dollar. So I
Speaker 6: think what's going to be very important is the world's
Speaker 6: breaking apart. And as the global order is being ripped
Speaker 6: apart again, most countries are choosing national sovereignty over globalization.
Speaker 6: This is not a US story. This has been going
Speaker 6: on for over a decade. And essentially, as that order
Speaker 6: gets picked apart, the dollar rallies. It's the only game
Speaker 6: of town, and it's fomo, It's all these kind of themes.
Speaker 6: But that creates the conditions for the Trump administration to
Speaker 6: address the major concern for industrialization, which is the trade
Speaker 6: deficit and the strength of the dollar, which again if
Speaker 6: we look at our longer term valuation models, the cheapest
Speaker 6: currencies in the world are the en the remedy to
Speaker 6: be the one Taiwanese dollar, all the Asian currencies that
Speaker 6: were low yielding funding currencies.
Speaker 2: At LIASA said it already this morning. What's the alternative?
Speaker 2: Ma mcbakatdi math. Thank you. This is the Bloomberg Surveillance podcast,
Speaker 2: bringing you the best in markets, economics, antient politics. You
Speaker 2: can watch the show live on Bloomberg TV weekday mornings
Speaker 2: from six am to nine am Eastern. Subscribe to the
Speaker 2: podcast on Apple, Spotify, or anywhere else you listen, and
Speaker 2: as always, on the Bloomberg Terminal and the Bloomberg Business app.