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Speaker 1: Bloomberg Audio Studios, podcasts, radio news. This is the Bloomberg

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Speaker 1: Surveillance Podcast. Catch us live weekdays at seven am Eastern

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Speaker 1: on Apple CarPlay or Android Auto with the Bloomberg Business app.

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Speaker 1: Listen on demand wherever you get your podcasts, or watch

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Speaker 1: us live on YouTube.

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Speaker 2: In the middle nineteen sixties, if you say I want

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Speaker 2: to fly, you fly. I don't know if he had.

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Speaker 3: A paper root of what.

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Speaker 2: Richard Levy is a legend folks, multi decades with American airlines,

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Speaker 2: and won't bore you with a resume other than to

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Speaker 2: say he soloed on his sixteenth birthday. What was that like,

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Speaker 2: Captain Levy? What was it like to be sixteen years

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Speaker 2: old and there's nobody helping you.

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Speaker 4: Well, let's say I was rady at fourteen, but fro

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Speaker 4: Devishu Reduation said wait till my sixteenth birthday.

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Speaker 5: So my instructor and I trained and trained and trained.

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Speaker 4: I was ready a lot earlier, but we waited to

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Speaker 4: the sixteenth birthday to comply with federal regulations.

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Speaker 5: And then the newspaper was there in Houston. They covered me.

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Speaker 5: It was very flattering, but it was fun to fly

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Speaker 5: by myself.

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Speaker 2: You encapsulate the romance of aviation in America. It is

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Speaker 2: shattered this morning. Not did you see this coming, but

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Speaker 2: all of the talk is was alluded to Captain Levy

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Speaker 2: and the press conference the near missus our interior confidence

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Speaker 2: in LAX or DFW or the others. Is it shattered

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Speaker 2: this morning our confidence in aviation?

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Speaker 5: No, I don't think so. Is this sad and regretful?

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Speaker 4: Of course it is for the families of the deceased

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Speaker 4: on both sides. The PSA regional airplane, by the way,

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Speaker 4: this was a PSA regional aircraft operator on behalf of

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Speaker 4: America Airlines, but the flight crew were not part of

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Speaker 4: the American Airlines. Pilots itself, zero training from American Airlines. Yes,

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Speaker 4: it had an American on its flight number. Every major

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Speaker 4: airline in the US, not every, but majority have regional

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Speaker 4: airlines feeding them in the smaller cities around the United

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Speaker 4: States networks very successfully. In any event, this mid air

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Speaker 4: collision here between THESA aircraft, the CRJA seven hundred and

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Speaker 4: the Army black Hawk helicopter is very regretful and we're

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Speaker 4: going to learn.

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Speaker 5: From it, and I have some information to talk to

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Speaker 5: you about that.

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Speaker 4: But it is, as you know, very very early, but

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Speaker 4: some evidence has already started to show up.

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Speaker 6: Right now, Captain Levy, how do you view the US

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Speaker 6: commercial airspace these days in terms of air traffic controllers,

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Speaker 6: technology deployed. Is this airspace overcrowded? Is it well or

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Speaker 6: is it well kind of managed?

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Speaker 5: You believe very well managed extreme olne.

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Speaker 4: I've flown the world, not every single airport, of course,

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Speaker 4: but the majority of the major ones in Europe, Russia, China,

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Speaker 4: of course, all over the United States and Asia. And

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Speaker 4: the airports in the United States, whether it's JFK, whether

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Speaker 4: it's DFW you mentioned Chicago, heroes based there thirty five years,

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Speaker 4: magnificently manage and run. But it's a two way process there.

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Speaker 4: You have the air traffic controllers on the radar as

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Speaker 4: you approach or depart the airport, and then what we

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Speaker 4: call the local controllers, the.

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Speaker 5: Control tower people.

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Speaker 4: And they're often working with good weather like it was

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Speaker 4: last night at four nine pm Eastern time. It's a

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Speaker 4: C and B CEN and so we can talk about that.

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Speaker 4: But the PSA was brought into the airport normally safely, correctly.

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Speaker 4: We're going to be focusing on this army helicopter, which

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Speaker 4: we can talk about.

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Speaker 2: One of the changes here is, for example, Reagan going

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Speaker 2: from fifteen million passengers to twenty five million passengers in London,

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Speaker 2: the talk of the congested one run way Gatwick. I

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Speaker 2: hear that Munich is terribly congested. I'm sure Captain Richard Leavy,

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Speaker 2: you know many other airports just as congested. Are we

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Speaker 2: pushing in terms of not in my backyard, not building airports?

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Speaker 2: Are we pushing the envelope on crowded in modern commercial aviation?

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Speaker 5: In my opinion, not a bit, by the way, speak

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Speaker 5: of Munich.

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Speaker 4: I made the first landing at the new Munich Airport

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Speaker 4: in the nineties from the United States, great airport over there,

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Speaker 4: great air traffic controllers and all over Germany. But back

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Speaker 4: to the US answer question, we're not pressing the envelope,

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Speaker 4: as we say in aviation whatsoever, because as we every

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Speaker 4: one of us know, if we're approaching an airport and

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Speaker 4: there's a big event, a football event, a baseball event,

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Speaker 4: a rock star is there, there's gonna be a lot

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Speaker 4: of extra traffic. So what they do is one or

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Speaker 4: two things. Either we go into a holding pattern, or

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Speaker 4: to be more energy efficient, they hold you. There's a

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Speaker 4: ground stop, you don't take off to go to the destination.

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Speaker 4: Say weather has gone through Chicago. I told you I

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Speaker 4: lived up there. A big snowstorm has covered the airport is.

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Speaker 5: Cleared out, the runways are clear. They're a goingst base.

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Speaker 4: The airplane airplanes ten to twenty miles apart. But back

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Speaker 4: to last night, we have the PSAJ seven approach to

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Speaker 4: run Away zero one, and then they were asked could

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Speaker 4: they swing over? Could they alter their approach and make

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Speaker 4: a visual approach.

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Speaker 5: To run Away three to three?

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Speaker 4: Nothing unsafe about that, has nothing to do traffic coggestion whatsoever.

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Speaker 3: Captain Levy.

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Speaker 6: When a military aircraft is in commercial space, it's the

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Speaker 6: commercial air traffic controllers that have authority. Right, that's not

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Speaker 6: a military I mean they're treated like any other aircraft

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Speaker 6: in the space.

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Speaker 3: Correct, Correct, So there you go.

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Speaker 6: I mean, so there's gonna be some issues there atom.

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Speaker 2: I think one final question, Captain Levy. And you know,

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Speaker 2: I remember the day when Ronald Reagan, I'm going to

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Speaker 2: say this is an amateur, sir, broke the Union of

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Speaker 2: Air Traffic Controllers. A lot of the reporting, including Sydney

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Speaker 2: Ember in the Times, they have a grid out of

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Speaker 2: the new workload of air traffic controllers ten years ago.

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Speaker 2: I mean you're a more ancient Levy was a Kiddihawk.

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Speaker 7: Yes, Richard Levy, Richard Levy ten years ago or fifteen

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Speaker 7: years ago, did you have more confidence that the air

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Speaker 7: traffic controllers weren't fatigued?

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Speaker 4: No, I had no Komba concerned about air traffic controllers.

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Speaker 5: Yes, that was also my vintage.

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Speaker 4: And one my neighbor in Chicago in the suburbs was

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Speaker 4: an Air Force controller I remember, and he was brought

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Speaker 4: from the Air Force to Chicago hair sharpest eye on

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Speaker 4: the planet, and I had no qualm or concern they

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Speaker 4: didn't have extra spacing for back.

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Speaker 2: Then one final question, captain, can you bring back the seveneven.

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Speaker 5: I'd love to bring it back?

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Speaker 2: Man.

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Speaker 4: When you all mentioned one comment and then I'll let

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Speaker 4: you go. Please, technology that's going to be an issue

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Speaker 4: in this accident. That again, the PSA was asked, could

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Speaker 4: you turned right and quite what we call visual approach

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Speaker 4: very safe to runway three to three? They said yes,

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Speaker 4: for that size of the airplane, not a problem at all.

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Speaker 4: Then you had the Army black Hawk heliculture, which is

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Speaker 4: on a training mission going to the Potomac River training

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Speaker 4: mission does not mean there amateurs whatsoever. There are pros

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Speaker 4: or good as they come. You have an instructor pilot

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Speaker 4: most likely I'm an air Force type guy. And then you

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Speaker 4: have somebody who is upgrading to whatever they call it,

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Speaker 4: an army aircraft commander perhaps in any event, so the

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Speaker 4: people say it's descending, and there's we have equipment on

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Speaker 4: the aircraft on all commercial aircraft operator Part one twenty

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Speaker 4: one of the Federal Avish regulations called TCASS Traffic Collision

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Speaker 4: of Audience System, and it's an audio that says traffic

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Speaker 4: traffic and as you get closer, it says climb, climb

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Speaker 4: or descend descend. Well, why wouldn't that be going off

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Speaker 4: because you're so close to the grounds, So that is

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Speaker 4: it's blanking out as you get close to the ground.

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Speaker 2: We've talked to Robert Crandell over the years here at

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Speaker 2: Bloomberg Surveillance, Sir, and what's great honor to speak to

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Speaker 2: you today, Captain Richard at Levy forty years with American Airlines.

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Speaker 1: You're listening to the Bloomberg Surveillance podcast. Catch us live

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Speaker 1: weekday afternoons from seven to ten am. Eastern Listen on

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Speaker 1: Applecarplay and Android Otto with the Bloomberg Business app, or

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Speaker 1: watch us live on YouTube.

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Speaker 2: At two am, three am, we were piecing together the

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Speaker 2: show and it was a group resounding call of team surveillance.

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Speaker 2: Can we get George Ferguson on. It's not just his

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Speaker 2: knowledge of aviation, and we had Captain Richard Levion who's

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Speaker 2: a pilot and incredibly experience. George Ferguson is the one

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Speaker 2: that pieces the industry together for us. George, where is

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Speaker 2: the aviation industry in America in a year? In two

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Speaker 2: years after this tragedy, I.

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Speaker 8: Think the aviation industry has been you know, has been

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Speaker 8: much safer than it had been in the past, right

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Speaker 8: and so I think that safety record continues. I mean,

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Speaker 8: you know, we're all sad in the see the event

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Speaker 8: that just happened, the crash. Unfortunately, you know, from time

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Speaker 8: to time they happen, but it's much safer than it

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Speaker 8: was decades ago. Right now, I think we're going through

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Speaker 8: a phase and aviation as we're going through in other

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Speaker 8: industries where there's a generational turnover in the labor in

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Speaker 8: the business, and so there has to be a bunch

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Speaker 8: of training and I think you know that's that training

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Speaker 8: is critical to maintain safety. I'm worried that there may

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Speaker 8: be you know, maybe the black Hawk pilot was in

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Speaker 8: the midst of a training flight around a very busy

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Speaker 8: airport and didn't you know, pay attention to all the

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Speaker 8: ques from ATC. But again, I think, you know, the

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Speaker 8: future of aviation is all about training, strong training, and

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Speaker 8: building in that safety culture. And you know, I think

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Speaker 8: we've got to pay you know, very high attention to

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Speaker 8: it right now, given this generational change. But I think

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Speaker 8: it continues to get better from here.

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Speaker 2: Chres Paul and I were talking about this. I mean,

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Speaker 2: there's a lot of reporting of near misses, you know,

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Speaker 2: beautiful graphics and fancy, fancy analysis because we've got all

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Speaker 2: the technology. Are there more near misses now or any

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Speaker 2: old days? Did we just miss the near misses?

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Speaker 8: You know, I've seen more reporting of near misses and

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Speaker 8: other kinds of operations where you know, airlines, airplanes are

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Speaker 8: landing on taxiways and things like that. And again I'm

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Speaker 8: going to attribute it to there's a new generation coming

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Speaker 8: in as we retire a bunch of baby boomers, people

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Speaker 8: with less experience. There's been a lot of turnover pilot

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Speaker 8: ranks ATC. We know they've been recruiting heavily because their

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Speaker 8: ranks have been depleted, and so it's just critical here

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Speaker 8: that we get these this next generation in trained up

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Speaker 8: and you know, focused on the right safety procedures. So

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Speaker 8: but I think there is more. I think there is more.

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Speaker 6: Right now, Hey, George, just give us a sense. You know,

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Speaker 6: from your conversations with the airlines that you cover, where

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Speaker 6: are where's this country? Where's our air system in terms

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Speaker 6: of air traffic controllers? Where are we in terms of where.

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Speaker 3: We need to be?

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Speaker 6: Do we have enough ATC folks out there or where

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Speaker 6: are we now?

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Speaker 8: I mean, no, we know we have shortages, right, we

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Speaker 8: know there's been challenges recruiting people into that business. You know,

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Speaker 8: I still hear the airlines talk about ATC issues limiting

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Speaker 8: their operations as you know, So we know we don't

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Speaker 8: have enough, and you know, we know we need continue

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Speaker 8: to need to recruit people into the industry. I think

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Speaker 8: one of the challenges the industry has too, it's I mean,

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Speaker 8: maybe it's lost some of its appeal over the years. People,

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Speaker 8: you know, young kids like tech a little bit more.

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Speaker 8: So we got to go out and find more folks

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Speaker 8: that love aviation and pull them into the industry. Maybe

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Speaker 8: work a little harder to get folks to recruit people

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Speaker 8: into the industry because maybe it isn't as exciting as

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Speaker 8: it used to be. But that's a challenge.

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Speaker 6: And how do the commercial airliners, how do they typically

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Speaker 6: feel about operating in areas where there's military aircraft. I would, again,

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Speaker 6: as we just saw today, I'm guessing that it just increases,

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Speaker 6: you know, just some of the tensions of operating.

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Speaker 2: It does.

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Speaker 8: Right, So, you know Reagan right downtown there in DC.

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Speaker 8: The convenience of that airport, it's huge, as anybody knows, it's.

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Speaker 2: Falling into that.

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Speaker 8: But you know, it's the nation's capital, so you're always

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Speaker 8: going to have a fair amount of military activity around there,

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Speaker 8: you know, just trying to protect the nation's capital. And

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Speaker 8: so I mean to have to have blackhawks flying around

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Speaker 8: the approach end of an airport, though, is extremely risky.

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Speaker 8: I wonder if people don't revisit that. And to have

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Speaker 8: a training flight around the approach end of Reagan at

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Speaker 8: a busy time, busy evening is really difficult, right, So

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Speaker 8: what we need to think about.

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Speaker 2: George, the critics here, and you know I'm not one

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Speaker 2: of me. I don't think Paul is. I don't think we're

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Speaker 2: qualified to be critics. Well, sometimes take our air traffic

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Speaker 2: controller fatigue and daffing back to nineteen eighty one when

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Speaker 2: President Reagan went after I'm going to generally say the union.

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Speaker 2: It was thirteen thousand people at the time. Do you

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Speaker 2: buy it.

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Speaker 3: Now?

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Speaker 8: It's been a lot of years since then, so I

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Speaker 8: think we've probably fully recovered since Reagan let go all

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Speaker 8: the controllers.

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Speaker 6: What do we typically get controllers? Where do they recruit

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Speaker 6: them from it? And why is it so difficult?

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Speaker 2: Starting?

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Speaker 6: Yeah, why is it so difficult? It seems like I

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Speaker 6: don't know the pay is there, it's kind of exciting.

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Speaker 6: I know it's stressful, But where do they typically get recruits?

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Speaker 8: I mean, I guess people who love aviation, don't want

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Speaker 8: to be a pilot, maybe want to sleep in their

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Speaker 8: own own bed every night, become a controller. But you

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Speaker 8: can imagine it's a really difficult job, right, You've got

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Speaker 8: a lot of lives on your hands. You're again, if

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Speaker 8: you're controlling at an air airport like Reagan, Newark, LaGuardia,

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Speaker 8: there's a lot of things going on, So you better

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Speaker 8: be better be top of your game. And look, during

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Speaker 8: the pandemic, you know, remember we were all sort of

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Speaker 8: you know, those of us in business in the sorry

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Speaker 8: of the office world. You know we were we weren't

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Speaker 8: even going to the offices anymore, right, we were waking

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Speaker 8: up at six point thirty, turn around computer on at seven.

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Speaker 8: You don't get that. In the air traffic control business.

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Speaker 8: You get a chance to do some late night shifts

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Speaker 8: and you're tired, and you're trying to bring airplanes in

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Speaker 8: for landing and keep everybody separated. I think it's a

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Speaker 8: challenging job, right, and that's one of the reasons why

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Speaker 8: it may not appeal to everybody.

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Speaker 2: George, you're expert. I guess DFW is the size of Luxembourg.

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Speaker 2: And you mentioned Paul earlier Denver. We went from Stapleton

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Speaker 2: out to the beautiful airport in Denver, Salt Lake City

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Speaker 2: building a palace, Kansas City building a palace. Do we

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Speaker 2: need more airports? Do we need more gates?

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Speaker 8: George Ferguson, Well, look, I'm going to say that the

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Speaker 8: challenge is that you know, some of those key key

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Speaker 8: airports in the country you can't replace well, right, Laguardiah

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Speaker 8: Reagan because of their downtown proximity. Even if you have

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Speaker 8: more airports, there's capacity at Dullest to put airplanes into,

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Speaker 8: you know, but nobody wants to. Nobody wants to take

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Speaker 8: the trip in from Dulles to d C. So I

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Speaker 8: don't think this is a we don't have enough airport,

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Speaker 8: you know issue. Again, I think this is the it's

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Speaker 8: a black Hawk training flight around an extremely busy airport. ATC,

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Speaker 8: it sounds like they moved the they.

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Speaker 2: Moved the runway to thirty three, the shorter runway up

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Speaker 2: to them the White House.

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Speaker 8: And so if you're that Blackhawk pilot and you weren't

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Speaker 8: paying attention and ATC said hey Blackhawk, you got this CRJ.

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Speaker 8: You miss on that, and you weren't expecting that airplane

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Speaker 8: to come into that other runway, bad things happen. So

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Speaker 8: I don't think this is an airport issue. I think

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Speaker 8: this is training paying attention. The Blackhawk apparently just didn't

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Speaker 8: and see what was going on.

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Speaker 2: George, thank you. We look for your publication of Bloomberg

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Speaker 2: Intelligence as well. Just great conversations today in this tragedy

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Speaker 2: there with a guy with decades of experience in aviation.

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Speaker 1: This is the Bloomberg Surveillance Podcast. Listen live each weekday

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Speaker 1: starting at seven am Eastern on Apple Corplay and Android

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Speaker 1: Auto with the Bloomberg Business App. You can also listen

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Speaker 1: live on Amazon Alexa from our flagship New York station.

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Speaker 1: Just say Alexa, play Bloomberg eleven thirty.

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Speaker 2: The right person at the right time. Francis Donald, RBC

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Speaker 2: Capital Markets joins our chief economist. Francis I saw a

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Speaker 2: buoyant consumption, which tells me there's something that gave way.

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Speaker 2: What was the week statistic in the GDP algebra?

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Speaker 9: Oh well, excuse me. We've got a little decline in

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Speaker 9: business investment. We got a little bit of a stagnation

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Speaker 9: in trade activity. But nothing is a narrative change for

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Speaker 9: the United States. And that's looking for when I look

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Speaker 9: at data that comes through, is there's anything that's giving

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Speaker 9: us a yellow flag? And right now no real yellow flags.

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Speaker 9: The consumer on aggregate emphasis on aggregate is very strong,

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Speaker 9: and I was told very early in my career twenty

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Speaker 9: years ago, never bet against the US consumer. That advice

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Speaker 9: is still true.

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Speaker 2: Okay, I get it yesterday the FED level. But Canada

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Speaker 2: cut rates ECB cuts rates of some flavor as well.

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Speaker 2: Is the gap widening between America's prosperity and other nations struggling.

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Speaker 9: It's a very wide gap. One of the best ways

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Speaker 9: that you can think about that is all these central

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Speaker 9: bankers are talking about their neutral rate, what is the

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Speaker 9: rate that is neither tightening nor eating on the economy,

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Speaker 9: And nobody else except for the US Federal Reserve is

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Speaker 9: claiming that their neutral rate is much higher than it

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Speaker 9: was before COVID, Canada, ECB all effectively saying their neutral

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Speaker 9: rate is probably around two and a half percent. And

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Speaker 9: now we have a FED that says we think that

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Speaker 9: rates are above the neutral rate before percent seems okay

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Speaker 9: to us. That is a huge, huge change in the

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Speaker 9: way that global monetary policy operated, and I think it's

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Speaker 9: being driven by massive amounts of US fiscal spending that's

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Speaker 9: put a complete floor undergrowth and is creating this offset

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Speaker 9: between fiscal and monetary. So as much as there was

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Speaker 9: focus on the FED yesterday and we always have to

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Speaker 9: write our FED write ups, I spent more time thinking

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Speaker 9: about government funding freezes and what the path of fiscal

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Speaker 9: is going to look like ahead, because my sense is

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Speaker 9: it's the fiscal path ahead that's going to be more

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Speaker 9: important for the FED than maybe even the unemployment rate

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Speaker 9: or the CPI.

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Speaker 6: Francis, as the chief economist for the Royal Bank of Canada,

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Speaker 6: I am sure you and your colleagues have thought long

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Speaker 6: and hard about tariffs and what they may mean for

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Speaker 6: the economy in North America, particularly Canada, US and Mexico.

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Speaker 6: Are you thinking about those because guess what February first

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Speaker 6: is two days away?

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Speaker 9: It is, And one of the challenges is that just

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Speaker 9: about everybody wants us to give a nice round number

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Speaker 9: what does this tariff policy mean for GDP or growth?

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Speaker 9: But it's an extraordinarily difficult economic exercise. We still engage

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Speaker 9: in it, but it's really hard, and we've actually developed

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Speaker 9: infographics to try to explain just how convoluted this is.

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Speaker 9: Even before a tariff lands on an economy, you tend

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Speaker 9: to see things like uncertainty shocks way on business investment

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Speaker 9: inventory forarding. So we were even noticing in the GDP

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Speaker 9: data this morning that consumers had this big spend increase

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Speaker 9: on durable goods in the United States, and we were

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Speaker 9: talking amongst ourselves, is that consumers that are maybe thinking

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Speaker 9: about autos and washing machines starting to become more expensive.

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Speaker 9: So even before the tariff lands, you tend to see

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Speaker 9: inventory hoarding. That changes your data. You got to talk

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Speaker 9: about whether there's going to be retaliation, You got to

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Speaker 9: talk about what secondary industries are being impacted. And then

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Speaker 9: maybe some of the biggest assumptions you have to make,

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Speaker 9: And this is what keeps me up at night, how

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Speaker 9: are central bankers going to respond? Because while we have

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Speaker 9: a good playbook, Tom, we've been talking for years. We

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Speaker 9: know if inflation goes up, central banks hype, right, But

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Speaker 9: what if inflation going up is a function of tariff's

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Speaker 9: rising and interest rates are not going to impact that

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Speaker 9: type of inflation. That's the biggest question that we have.

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Speaker 2: Okay, this is really important, and Karl Weinberg and Mary

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Speaker 2: Chin is publishing High Frequency Economics with the idea that

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Speaker 2: it was, you know, within the mix and the soup

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Speaker 2: of it a disappointing report. Was there a teriff reaction

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Speaker 2: in that second look at GDP or does that await

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Speaker 2: let me do the math April thirtieth, or you know,

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Speaker 2: may first report.

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Speaker 9: My senses will see more of that. But what I'm

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Speaker 9: really looking for is the inventorious component Now, this is

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Speaker 9: not something that seems very dramatic most of the time,

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Speaker 9: but if we do see a lot of Americans who

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Speaker 9: start thinking about, hey, prices could go up, you could

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Speaker 9: actually see growth accelerate on the surface because you're going

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Speaker 9: to see an acceleration in trade moving forward. So we

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Speaker 9: did see that we know a little bit more about

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Speaker 9: tariffs now than we did in twenty eighteen. And inventory

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Speaker 9: hoarding is a real economic development that could occur within

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Speaker 9: a terraff landscape. And let me just say this, it

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Speaker 9: doesn't even matter if the tariff itself is implemented. We

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Speaker 9: see this behavior ahead of the tariff coming through. So

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Speaker 9: even all this talk, all the tweets, etc. Of tariffs

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Speaker 9: is having will have an economic impact. We know that

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Speaker 9: to be the case.

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Speaker 6: Francis, I think we here in America we import some

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Speaker 6: stuff from Canada from Mexico. What's the feeling up there

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Speaker 6: in Canada today about what kind of I don't know

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Speaker 6: response Canadians the Canadian government may have.

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Speaker 3: If the teriffs are in fact placed.

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Speaker 9: Well, I'll share with you that in Canada, our Canadian

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Speaker 9: clients view tariffs as a high probability, high impact event

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Speaker 9: and they are very likely if they're applied in extreme

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Speaker 9: to create a recession in Canada, and different variations, of

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Speaker 9: course would not produce it. We're still waiting on those details.

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Speaker 9: In the US, my clients are a little less concerned

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Speaker 9: about either the probability or the impact that comes through.

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Speaker 9: But just a reminder, Americans import a ton of stuff

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Speaker 9: from Canada. You know, significant amounts of electricity, a quarter

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Speaker 9: of all the oil consumed comes from Canada, everything from

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Speaker 9: nickel of the nickel in the US economy. There's a

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Speaker 9: significant amount of imports that come through from Canada that

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Speaker 9: will raise prices for Americans and how the currency response

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Speaker 9: is going to be a big impact from that. But

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Speaker 9: most government officials in Canada this is just public knowledge.

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Speaker 9: It's not me opining have talked about retaliation. So we

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Speaker 9: know the balance of risks. We might not know the

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Speaker 9: magnitude for Americans, but we know the balance of risks

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Speaker 9: is going to be higher prices and lower growth, and

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Speaker 9: just the details of that is going to matter extraordinarily.

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Speaker 9: And it's not me trying to say we haven't done

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Speaker 9: the work. We have, but there are so many steps

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Speaker 9: to modeling a tariff impact that it can't be summarized

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Speaker 9: in when Pacific word, which is why the Federal Reserve

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Speaker 9: is not implementing it, and it's why places like the

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Speaker 9: Bank of Canada are speaking to the risks but not

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Speaker 9: putting a dollar figure on a justcaw for instance.

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Speaker 2: Or David Gera just spoke the Christian Friedland. As you know,

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Speaker 2: there's a derby up in Canada for the next leader

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Speaker 2: after mister Trudeaux. I know it's inappropriate for you to

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Speaker 2: pick sides on this, but help our American audience. What's

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Speaker 2: the timeline to the election right now into the spring?

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Speaker 9: Oh, we don't know. We know there'll be a new

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Speaker 9: leader of the liberal policy. And I am an economist,

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Speaker 9: not a political scientist, but from what I read in

437
00:24:35,920 --> 00:24:38,119
Speaker 9: the papers, that means that the new leader of that

438
00:24:38,160 --> 00:24:40,720
Speaker 9: policy will become Prime minister and then likely an election

439
00:24:40,840 --> 00:24:43,879
Speaker 9: will be called. So if you think about uncertainty for

440
00:24:44,000 --> 00:24:47,159
Speaker 9: the Canadian economy, or even uncertainty for American businesses that

441
00:24:47,200 --> 00:24:49,880
Speaker 9: are trying to figure out will there be retaliatory measures,

442
00:24:50,400 --> 00:24:53,960
Speaker 9: it's been really challenging to hear one particular cohesive voice

443
00:24:54,000 --> 00:24:57,280
Speaker 9: because at this time we're really relying on provincial leaders,

444
00:24:57,320 --> 00:25:00,720
Speaker 9: for example, to give us a sense of what's ahead. Now, Tom,

445
00:25:00,760 --> 00:25:03,440
Speaker 9: You've got me totally outside the scope of my credentials here.

446
00:25:03,480 --> 00:25:05,840
Speaker 9: What I can tell you is people are talking a

447
00:25:05,880 --> 00:25:08,840
Speaker 9: lot about the uncertainty of tariffs, but uncertainty shocks are

448
00:25:09,119 --> 00:25:13,199
Speaker 9: powerful economic taxes, and whether you're in Canada or the

449
00:25:13,280 --> 00:25:17,760
Speaker 9: US right now, you're experiencing different variations of uncertainty taxes.

450
00:25:18,040 --> 00:25:20,080
Speaker 9: So some of our data, which is backward looking, is

451
00:25:20,119 --> 00:25:21,960
Speaker 9: not going to show it, but you should expect this

452
00:25:22,080 --> 00:25:26,400
Speaker 9: to show up in places like business surveys, manufacturing activity,

453
00:25:26,720 --> 00:25:30,080
Speaker 9: consumer sentiment. To a certain perspective, I really would not

454
00:25:30,320 --> 00:25:33,880
Speaker 9: downplay how important an uncertainty tax or uncertainty shock can

455
00:25:33,920 --> 00:25:36,359
Speaker 9: be on an economy and all the places and the

456
00:25:36,400 --> 00:25:39,320
Speaker 9: tentacles for which that'll flow through all of North America.

457
00:25:39,440 --> 00:25:42,119
Speaker 2: This has been wonderful. Thank you for the brief. Francis Donald,

458
00:25:42,359 --> 00:25:44,200
Speaker 2: the Royal Bank of Canada RBC.

459
00:25:50,320 --> 00:25:54,199
Speaker 1: This is the Bloomberg Surveillance Podcast. Listen live each weekday

460
00:25:54,280 --> 00:25:57,560
Speaker 1: starting at seven am Eastern on Applecarplay and Android Auto

461
00:25:57,680 --> 00:26:00,520
Speaker 1: with the Bloomberg Business app. You can also watch us

462
00:26:00,600 --> 00:26:04,480
Speaker 1: live every weekday on YouTube and always on the Bloomberg terminal.

463
00:26:04,800 --> 00:26:09,200
Speaker 2: Joining us now is John Stolfus of OPKO of Oppenheimer.

464
00:26:09,240 --> 00:26:12,600
Speaker 2: We're thrilled that he could attend with a very optimistic

465
00:26:12,640 --> 00:26:16,200
Speaker 2: call out America. John Ferrer put out a tweet yesterday

466
00:26:16,880 --> 00:26:20,680
Speaker 2: that showed x percent of stacks flat to even lower,

467
00:26:21,400 --> 00:26:24,320
Speaker 2: while a few stacks go up up in a way

468
00:26:24,400 --> 00:26:28,160
Speaker 2: like Facebook meta yesterday as well. Do you see any

469
00:26:28,280 --> 00:26:31,720
Speaker 2: broadening out in the great Stolfus bull market?

470
00:26:32,000 --> 00:26:34,439
Speaker 10: You know, Tom, First of all, our hearts are with

471
00:26:34,560 --> 00:26:38,600
Speaker 10: those in the accident today in DCA. And then but

472
00:26:38,720 --> 00:26:42,600
Speaker 10: related to the markets, we see a broadening of the

473
00:26:42,720 --> 00:26:45,800
Speaker 10: rally that had started up until we got this deep

474
00:26:45,960 --> 00:26:49,960
Speaker 10: seek question, and then the we saw a pullback. I mean,

475
00:26:50,000 --> 00:26:51,440
Speaker 10: right now, I think the S and P is still

476
00:26:51,480 --> 00:26:53,639
Speaker 10: not about one percent from its.

477
00:26:53,720 --> 00:26:55,320
Speaker 3: January twenty third peak.

478
00:26:55,480 --> 00:27:00,840
Speaker 10: The Nasdaq's not about two percent, But you look at it,

479
00:27:01,480 --> 00:27:04,960
Speaker 10: the trend is upward in the sense that we've got

480
00:27:05,400 --> 00:27:07,679
Speaker 10: the FEDS doing the right thing. We believe we're one

481
00:27:07,680 --> 00:27:10,320
Speaker 10: of the fut strategies that think that business and the

482
00:27:10,359 --> 00:27:12,440
Speaker 10: consumers and job growth resilient.

483
00:27:12,600 --> 00:27:15,720
Speaker 2: In the FED meeting yesterday, I thought the most interesting

484
00:27:15,760 --> 00:27:20,640
Speaker 2: debate was simply on real and top line economic growth.

485
00:27:20,960 --> 00:27:24,719
Speaker 2: Jan Hatzius and Goldman Sachs yesterday came out and shaved,

486
00:27:24,760 --> 00:27:28,560
Speaker 2: I believe Q four under two percent. That's a bold call.

487
00:27:28,720 --> 00:27:30,960
Speaker 2: What is I don't want to talk to John Stolf

488
00:27:30,960 --> 00:27:33,479
Speaker 2: for stock guy. I want to talk to John Stolf

489
00:27:33,480 --> 00:27:37,800
Speaker 2: as economist. Do you believe in a solid, resilient American

490
00:27:37,840 --> 00:27:38,880
Speaker 2: economy forward?

491
00:27:39,119 --> 00:27:41,320
Speaker 10: I think the way I'd put it, it's a remarkably

492
00:27:41,440 --> 00:27:45,280
Speaker 10: resilient and I think that's been the case that has

493
00:27:45,359 --> 00:27:49,199
Speaker 10: caused skeptics and bears a lot of adjida over the

494
00:27:49,280 --> 00:27:52,560
Speaker 10: course of since the rally began in the fall of

495
00:27:52,600 --> 00:27:55,040
Speaker 10: twenty two. I think it was in October of twenty

496
00:27:55,080 --> 00:27:57,920
Speaker 10: twenty two, after a really rough year the rally began

497
00:27:58,440 --> 00:28:00,960
Speaker 10: and it persisted through twenty three and twenty four.

498
00:28:01,680 --> 00:28:03,639
Speaker 3: We think it carries through here.

499
00:28:04,480 --> 00:28:07,600
Speaker 10: You know, we've got that seventy one hundred target that

500
00:28:07,600 --> 00:28:10,600
Speaker 10: I was looking for about seventeen percent upside from the

501
00:28:10,600 --> 00:28:14,160
Speaker 10: point where we put it in in December. It's reached

502
00:28:14,200 --> 00:28:18,080
Speaker 10: closer to around an eighteen twenty percent kind of upside.

503
00:28:18,119 --> 00:28:19,760
Speaker 3: But we think it's very possible.

504
00:28:20,440 --> 00:28:24,119
Speaker 10: The years leading up to the tech bubble were about

505
00:28:24,160 --> 00:28:28,679
Speaker 10: four or five years, as I recall, with remarkable performance

506
00:28:28,720 --> 00:28:32,720
Speaker 10: from the S and P five hundred as technology became

507
00:28:32,760 --> 00:28:35,760
Speaker 10: a more important part of everyday life for both business

508
00:28:35,760 --> 00:28:37,840
Speaker 10: and the consumer, and that's where we are.

509
00:28:37,960 --> 00:28:41,200
Speaker 3: But it's about sharper virtual.

510
00:28:40,720 --> 00:28:45,000
Speaker 10: Picks and shovels for both business and the consumer to

511
00:28:45,040 --> 00:28:47,720
Speaker 10: deal with each other and deal with the data that

512
00:28:47,840 --> 00:28:51,200
Speaker 10: is produced on a daily basis, which has grown exponentially

513
00:28:51,600 --> 00:28:52,760
Speaker 10: in the last decade.

514
00:28:53,000 --> 00:28:55,240
Speaker 6: John, we heard from the FED yesterday. I think the

515
00:28:55,280 --> 00:28:57,680
Speaker 6: market's discounting maybe one or two rate cuts, so there's

516
00:28:57,800 --> 00:28:58,920
Speaker 6: not a lot the Fed's going.

517
00:28:58,880 --> 00:28:59,920
Speaker 3: To do for us in twenty two.

518
00:29:00,680 --> 00:29:03,320
Speaker 6: It feels like earnings are going to have to be

519
00:29:03,400 --> 00:29:05,760
Speaker 6: the driver for this market. How confident are you in

520
00:29:05,800 --> 00:29:07,000
Speaker 6: the earnings for Corporate America?

521
00:29:07,080 --> 00:29:09,880
Speaker 10: Well, so far, you know, this fourth quarter earning season

522
00:29:09,920 --> 00:29:12,680
Speaker 10: looks pretty good. Last I looked on the EA page

523
00:29:12,720 --> 00:29:16,160
Speaker 10: on my Bloomberg it was it was eight sectors positive

524
00:29:16,200 --> 00:29:19,560
Speaker 10: earnings growth. Four of those were double digit earnings growth,

525
00:29:19,920 --> 00:29:22,960
Speaker 10: half were tech related, the others were as I recall,

526
00:29:23,040 --> 00:29:25,520
Speaker 10: it was financials, and for the life of me at

527
00:29:25,560 --> 00:29:28,480
Speaker 10: this moment, the last one I don't recall what it was.

528
00:29:28,560 --> 00:29:32,920
Speaker 10: But the thing is, it's a mix of cyclicals and

529
00:29:33,040 --> 00:29:37,400
Speaker 10: growth that are driving this. And we think it's you know,

530
00:29:37,480 --> 00:29:41,000
Speaker 10: it has it. It's not the trees grow to the sky.

531
00:29:41,320 --> 00:29:44,600
Speaker 10: It's just that a market can climb a remarkable wall

532
00:29:44,640 --> 00:29:47,560
Speaker 10: of worry in terms of dealing with all kinds of things.

533
00:29:47,440 --> 00:29:50,800
Speaker 2: I found fascinating yesterday. And sorry, my small brain can't

534
00:29:50,840 --> 00:29:52,680
Speaker 2: remember who I was talking to at Lisa. Has it

535
00:29:52,680 --> 00:29:55,160
Speaker 2: been a blur the last forty eight hours. It's been

536
00:29:55,200 --> 00:29:57,480
Speaker 2: a blur the last forty hours took me. With this

537
00:29:57,560 --> 00:30:03,360
Speaker 2: horrific crash. Somebody mentioned to me incremental four oh one

538
00:30:03,440 --> 00:30:09,000
Speaker 2: K purchases, Mike Green, simplex, simplified asset management. This goes

539
00:30:09,040 --> 00:30:11,160
Speaker 2: back to my essay of the year three years ago,

540
00:30:11,640 --> 00:30:17,640
Speaker 2: Lawrence McDonald, who walked through the wall of money that's

541
00:30:17,760 --> 00:30:23,240
Speaker 2: just out there relentlessly putting a systematic bid to the market.

542
00:30:23,480 --> 00:30:24,800
Speaker 2: Do you buy that story?

543
00:30:25,320 --> 00:30:30,640
Speaker 10: You know we do, and we think it's not an exuberance,

544
00:30:30,760 --> 00:30:33,239
Speaker 10: but rather has to do with a fundamental thinking that

545
00:30:33,280 --> 00:30:36,240
Speaker 10: I think has occurred in the private client group, which

546
00:30:36,280 --> 00:30:39,680
Speaker 10: is that Social Security will simply not provide the same

547
00:30:39,760 --> 00:30:44,840
Speaker 10: percentage of retirement income that it provided for Boomer's parents, and.

548
00:30:44,760 --> 00:30:47,120
Speaker 2: So we're savings America.

549
00:30:47,360 --> 00:30:51,560
Speaker 10: This is under discussed and it's won that frequently when

550
00:30:51,840 --> 00:30:54,840
Speaker 10: whenever you get a boost in the tenure yield, the

551
00:30:54,880 --> 00:30:58,840
Speaker 10: bond crowd says, oh, bonds are competitive with stocks, but

552
00:30:58,960 --> 00:31:02,880
Speaker 10: on an media to longer term basis, history.

553
00:31:02,520 --> 00:31:05,520
Speaker 3: Tells us past performance no guarantee your future results that

554
00:31:05,640 --> 00:31:08,320
Speaker 3: stocks indeed right where to be.

555
00:31:09,000 --> 00:31:12,440
Speaker 2: Good morning everyone, It is Bloomberg surveillance from New York

556
00:31:12,520 --> 00:31:14,880
Speaker 2: City this morning. Good morning to ninety two nine FM

557
00:31:14,920 --> 00:31:17,479
Speaker 2: in Boston, Bloomberg eleven to three to zero in New

558
00:31:17,560 --> 00:31:20,600
Speaker 2: York and is sleepless ninety nine to one in Washington.

559
00:31:20,720 --> 00:31:26,360
Speaker 2: A horrific plane crash at Reagan National Airport overnight. I'm

560
00:31:26,360 --> 00:31:28,360
Speaker 2: sure many of you are up to speed on this.

561
00:31:28,400 --> 00:31:32,800
Speaker 2: We'll continue with more information on it. In scheduled twelve minutes.

562
00:31:32,880 --> 00:31:36,600
Speaker 2: The Mayor of Washington will provide a press conference with

563
00:31:36,760 --> 00:31:40,880
Speaker 2: various officials, responders if you will, and we will of

564
00:31:40,880 --> 00:31:46,360
Speaker 2: course bring you that coverage at worldwide. Our goal here, folks,

565
00:31:46,400 --> 00:31:49,000
Speaker 2: is to brief you on the crash, provide background of

566
00:31:49,040 --> 00:31:54,959
Speaker 2: the aviation industry. We're working on guests on that, former pilots, engineers,

567
00:31:55,040 --> 00:31:58,080
Speaker 2: former federal officials to speak to us about it. But

568
00:31:58,120 --> 00:32:03,080
Speaker 2: we were thrilled to bring any people like John Stolfus, Paul.

569
00:32:03,200 --> 00:32:05,600
Speaker 6: John, you know, what are some of the sectors here

570
00:32:05,640 --> 00:32:08,320
Speaker 6: that you're looking for in twenty twenty five? Again, we had,

571
00:32:08,320 --> 00:32:10,760
Speaker 6: as you mentioned, two really strong years in the S

572
00:32:10,800 --> 00:32:13,440
Speaker 6: and P five hundred performance in twenty three and twenty four.

573
00:32:14,000 --> 00:32:15,840
Speaker 6: As you looked at twenty five, are you looking for

574
00:32:15,880 --> 00:32:18,480
Speaker 6: certain sectors of leaders market or how do you think

575
00:32:18,480 --> 00:32:18,800
Speaker 6: it about it?

576
00:32:18,880 --> 00:32:21,920
Speaker 11: Well, we're looking at from a perspective of first of

577
00:32:21,920 --> 00:32:24,200
Speaker 11: all of sectors, and we think it continues to be

578
00:32:24,920 --> 00:32:29,320
Speaker 11: information technology and communications services and communications service.

579
00:32:29,040 --> 00:32:32,040
Speaker 10: As the old phone companies, but it's also got the streamers,

580
00:32:32,320 --> 00:32:35,040
Speaker 10: the search engines, and it's got social media and it's

581
00:32:35,040 --> 00:32:38,080
Speaker 10: a big stuff for the AI story. But we're also

582
00:32:38,120 --> 00:32:41,360
Speaker 10: looking at the industrial sector, which is heavily embedded with

583
00:32:41,400 --> 00:32:45,960
Speaker 10: technology and financials and consumer discretionary. You like the banks, well,

584
00:32:45,960 --> 00:32:48,120
Speaker 10: we like still like the big banks, and we think

585
00:32:48,120 --> 00:32:49,800
Speaker 10: his interest rates are normalized.

586
00:32:50,120 --> 00:32:51,000
Speaker 3: It's good for them.

587
00:32:51,360 --> 00:32:53,320
Speaker 2: It's not a day to say this, but John, you're

588
00:32:53,440 --> 00:32:55,880
Speaker 2: killing it. You're calling a bull market has just been

589
00:32:56,200 --> 00:32:59,280
Speaker 2: absolutely super very flattered. Joe, still do I need a

590
00:32:59,320 --> 00:32:59,960
Speaker 2: new grudge guitar?

591
00:33:00,800 --> 00:33:06,720
Speaker 3: I tell you a penguin.

592
00:33:06,800 --> 00:33:09,440
Speaker 2: Thank you, missus King. Good morning, mister Stulpers, I need

593
00:33:09,480 --> 00:33:12,480
Speaker 2: to drudge Penguin. You're dismissed, John Stolfus, thank you so

594
00:33:12,600 --> 00:33:15,480
Speaker 2: much for DAWs seven s and p I should say

595
00:33:15,480 --> 00:33:17,200
Speaker 2: seven thousand as well.

596
00:33:17,560 --> 00:33:22,400
Speaker 1: This is the Bloomberg Surveillance Podcast, available on Apple, Spotify,

597
00:33:22,520 --> 00:33:26,800
Speaker 1: and anywhere else you get your podcasts. Listen live each weekday,

598
00:33:26,920 --> 00:33:30,440
Speaker 1: seven to ten am Eastern on Bloomberg dot com, the

599
00:33:30,480 --> 00:33:34,520
Speaker 1: iHeartRadio app, tune In, and the Bloomberg Business app. You

600
00:33:34,560 --> 00:33:37,920
Speaker 1: can also watch us live every weekday on YouTube and

601
00:33:38,120 --> 00:33:39,840
Speaker 1: always on the Bloomberg terminal