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Speaker 2: In the middle nineteen sixties, if you say I want
Speaker 2: to fly, you fly. I don't know if he had.
Speaker 3: A paper root of what.
Speaker 2: Richard Levy is a legend folks, multi decades with American airlines,
Speaker 2: and won't bore you with a resume other than to
Speaker 2: say he soloed on his sixteenth birthday. What was that like,
Speaker 2: Captain Levy? What was it like to be sixteen years
Speaker 2: old and there's nobody helping you.
Speaker 4: Well, let's say I was rady at fourteen, but fro
Speaker 4: Devishu Reduation said wait till my sixteenth birthday.
Speaker 5: So my instructor and I trained and trained and trained.
Speaker 4: I was ready a lot earlier, but we waited to
Speaker 4: the sixteenth birthday to comply with federal regulations.
Speaker 5: And then the newspaper was there in Houston. They covered me.
Speaker 5: It was very flattering, but it was fun to fly
Speaker 5: by myself.
Speaker 2: You encapsulate the romance of aviation in America. It is
Speaker 2: shattered this morning. Not did you see this coming, but
Speaker 2: all of the talk is was alluded to Captain Levy
Speaker 2: and the press conference the near missus our interior confidence
Speaker 2: in LAX or DFW or the others. Is it shattered
Speaker 2: this morning our confidence in aviation?
Speaker 5: No, I don't think so. Is this sad and regretful?
Speaker 4: Of course it is for the families of the deceased
Speaker 4: on both sides. The PSA regional airplane, by the way,
Speaker 4: this was a PSA regional aircraft operator on behalf of
Speaker 4: America Airlines, but the flight crew were not part of
Speaker 4: the American Airlines. Pilots itself, zero training from American Airlines. Yes,
Speaker 4: it had an American on its flight number. Every major
Speaker 4: airline in the US, not every, but majority have regional
Speaker 4: airlines feeding them in the smaller cities around the United
Speaker 4: States networks very successfully. In any event, this mid air
Speaker 4: collision here between THESA aircraft, the CRJA seven hundred and
Speaker 4: the Army black Hawk helicopter is very regretful and we're
Speaker 4: going to learn.
Speaker 5: From it, and I have some information to talk to
Speaker 5: you about that.
Speaker 4: But it is, as you know, very very early, but
Speaker 4: some evidence has already started to show up.
Speaker 6: Right now, Captain Levy, how do you view the US
Speaker 6: commercial airspace these days in terms of air traffic controllers,
Speaker 6: technology deployed. Is this airspace overcrowded? Is it well or
Speaker 6: is it well kind of managed?
Speaker 5: You believe very well managed extreme olne.
Speaker 4: I've flown the world, not every single airport, of course,
Speaker 4: but the majority of the major ones in Europe, Russia, China,
Speaker 4: of course, all over the United States and Asia. And
Speaker 4: the airports in the United States, whether it's JFK, whether
Speaker 4: it's DFW you mentioned Chicago, heroes based there thirty five years,
Speaker 4: magnificently manage and run. But it's a two way process there.
Speaker 4: You have the air traffic controllers on the radar as
Speaker 4: you approach or depart the airport, and then what we
Speaker 4: call the local controllers, the.
Speaker 5: Control tower people.
Speaker 4: And they're often working with good weather like it was
Speaker 4: last night at four nine pm Eastern time. It's a
Speaker 4: C and B CEN and so we can talk about that.
Speaker 4: But the PSA was brought into the airport normally safely, correctly.
Speaker 4: We're going to be focusing on this army helicopter, which
Speaker 4: we can talk about.
Speaker 2: One of the changes here is, for example, Reagan going
Speaker 2: from fifteen million passengers to twenty five million passengers in London,
Speaker 2: the talk of the congested one run way Gatwick. I
Speaker 2: hear that Munich is terribly congested. I'm sure Captain Richard Leavy,
Speaker 2: you know many other airports just as congested. Are we
Speaker 2: pushing in terms of not in my backyard, not building airports?
Speaker 2: Are we pushing the envelope on crowded in modern commercial aviation?
Speaker 5: In my opinion, not a bit, by the way, speak
Speaker 5: of Munich.
Speaker 4: I made the first landing at the new Munich Airport
Speaker 4: in the nineties from the United States, great airport over there,
Speaker 4: great air traffic controllers and all over Germany. But back
Speaker 4: to the US answer question, we're not pressing the envelope,
Speaker 4: as we say in aviation whatsoever, because as we every
Speaker 4: one of us know, if we're approaching an airport and
Speaker 4: there's a big event, a football event, a baseball event,
Speaker 4: a rock star is there, there's gonna be a lot
Speaker 4: of extra traffic. So what they do is one or
Speaker 4: two things. Either we go into a holding pattern, or
Speaker 4: to be more energy efficient, they hold you. There's a
Speaker 4: ground stop, you don't take off to go to the destination.
Speaker 4: Say weather has gone through Chicago. I told you I
Speaker 4: lived up there. A big snowstorm has covered the airport is.
Speaker 5: Cleared out, the runways are clear. They're a goingst base.
Speaker 4: The airplane airplanes ten to twenty miles apart. But back
Speaker 4: to last night, we have the PSAJ seven approach to
Speaker 4: run Away zero one, and then they were asked could
Speaker 4: they swing over? Could they alter their approach and make
Speaker 4: a visual approach.
Speaker 5: To run Away three to three?
Speaker 4: Nothing unsafe about that, has nothing to do traffic coggestion whatsoever.
Speaker 3: Captain Levy.
Speaker 6: When a military aircraft is in commercial space, it's the
Speaker 6: commercial air traffic controllers that have authority. Right, that's not
Speaker 6: a military I mean they're treated like any other aircraft
Speaker 6: in the space.
Speaker 3: Correct, Correct, So there you go.
Speaker 6: I mean, so there's gonna be some issues there atom.
Speaker 2: I think one final question, Captain Levy. And you know,
Speaker 2: I remember the day when Ronald Reagan, I'm going to
Speaker 2: say this is an amateur, sir, broke the Union of
Speaker 2: Air Traffic Controllers. A lot of the reporting, including Sydney
Speaker 2: Ember in the Times, they have a grid out of
Speaker 2: the new workload of air traffic controllers ten years ago.
Speaker 2: I mean you're a more ancient Levy was a Kiddihawk.
Speaker 7: Yes, Richard Levy, Richard Levy ten years ago or fifteen
Speaker 7: years ago, did you have more confidence that the air
Speaker 7: traffic controllers weren't fatigued?
Speaker 4: No, I had no Komba concerned about air traffic controllers.
Speaker 5: Yes, that was also my vintage.
Speaker 4: And one my neighbor in Chicago in the suburbs was
Speaker 4: an Air Force controller I remember, and he was brought
Speaker 4: from the Air Force to Chicago hair sharpest eye on
Speaker 4: the planet, and I had no qualm or concern they
Speaker 4: didn't have extra spacing for back.
Speaker 2: Then one final question, captain, can you bring back the seveneven.
Speaker 5: I'd love to bring it back?
Speaker 2: Man.
Speaker 4: When you all mentioned one comment and then I'll let
Speaker 4: you go. Please, technology that's going to be an issue
Speaker 4: in this accident. That again, the PSA was asked, could
Speaker 4: you turned right and quite what we call visual approach
Speaker 4: very safe to runway three to three? They said yes,
Speaker 4: for that size of the airplane, not a problem at all.
Speaker 4: Then you had the Army black Hawk heliculture, which is
Speaker 4: on a training mission going to the Potomac River training
Speaker 4: mission does not mean there amateurs whatsoever. There are pros
Speaker 4: or good as they come. You have an instructor pilot
Speaker 4: most likely I'm an air Force type guy. And then you
Speaker 4: have somebody who is upgrading to whatever they call it,
Speaker 4: an army aircraft commander perhaps in any event, so the
Speaker 4: people say it's descending, and there's we have equipment on
Speaker 4: the aircraft on all commercial aircraft operator Part one twenty
Speaker 4: one of the Federal Avish regulations called TCASS Traffic Collision
Speaker 4: of Audience System, and it's an audio that says traffic
Speaker 4: traffic and as you get closer, it says climb, climb
Speaker 4: or descend descend. Well, why wouldn't that be going off
Speaker 4: because you're so close to the grounds, So that is
Speaker 4: it's blanking out as you get close to the ground.
Speaker 2: We've talked to Robert Crandell over the years here at
Speaker 2: Bloomberg Surveillance, Sir, and what's great honor to speak to
Speaker 2: you today, Captain Richard at Levy forty years with American Airlines.
Speaker 1: You're listening to the Bloomberg Surveillance podcast. Catch us live
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Speaker 2: At two am, three am, we were piecing together the
Speaker 2: show and it was a group resounding call of team surveillance.
Speaker 2: Can we get George Ferguson on. It's not just his
Speaker 2: knowledge of aviation, and we had Captain Richard Levion who's
Speaker 2: a pilot and incredibly experience. George Ferguson is the one
Speaker 2: that pieces the industry together for us. George, where is
Speaker 2: the aviation industry in America in a year? In two
Speaker 2: years after this tragedy, I.
Speaker 8: Think the aviation industry has been you know, has been
Speaker 8: much safer than it had been in the past, right
Speaker 8: and so I think that safety record continues. I mean,
Speaker 8: you know, we're all sad in the see the event
Speaker 8: that just happened, the crash. Unfortunately, you know, from time
Speaker 8: to time they happen, but it's much safer than it
Speaker 8: was decades ago. Right now, I think we're going through
Speaker 8: a phase and aviation as we're going through in other
Speaker 8: industries where there's a generational turnover in the labor in
Speaker 8: the business, and so there has to be a bunch
Speaker 8: of training and I think you know that's that training
Speaker 8: is critical to maintain safety. I'm worried that there may
Speaker 8: be you know, maybe the black Hawk pilot was in
Speaker 8: the midst of a training flight around a very busy
Speaker 8: airport and didn't you know, pay attention to all the
Speaker 8: ques from ATC. But again, I think, you know, the
Speaker 8: future of aviation is all about training, strong training, and
Speaker 8: building in that safety culture. And you know, I think
Speaker 8: we've got to pay you know, very high attention to
Speaker 8: it right now, given this generational change. But I think
Speaker 8: it continues to get better from here.
Speaker 2: Chres Paul and I were talking about this. I mean,
Speaker 2: there's a lot of reporting of near misses, you know,
Speaker 2: beautiful graphics and fancy, fancy analysis because we've got all
Speaker 2: the technology. Are there more near misses now or any
Speaker 2: old days? Did we just miss the near misses?
Speaker 8: You know, I've seen more reporting of near misses and
Speaker 8: other kinds of operations where you know, airlines, airplanes are
Speaker 8: landing on taxiways and things like that. And again I'm
Speaker 8: going to attribute it to there's a new generation coming
Speaker 8: in as we retire a bunch of baby boomers, people
Speaker 8: with less experience. There's been a lot of turnover pilot
Speaker 8: ranks ATC. We know they've been recruiting heavily because their
Speaker 8: ranks have been depleted, and so it's just critical here
Speaker 8: that we get these this next generation in trained up
Speaker 8: and you know, focused on the right safety procedures. So
Speaker 8: but I think there is more. I think there is more.
Speaker 6: Right now, Hey, George, just give us a sense. You know,
Speaker 6: from your conversations with the airlines that you cover, where
Speaker 6: are where's this country? Where's our air system in terms
Speaker 6: of air traffic controllers? Where are we in terms of where.
Speaker 3: We need to be?
Speaker 6: Do we have enough ATC folks out there or where
Speaker 6: are we now?
Speaker 8: I mean, no, we know we have shortages, right, we
Speaker 8: know there's been challenges recruiting people into that business. You know,
Speaker 8: I still hear the airlines talk about ATC issues limiting
Speaker 8: their operations as you know, So we know we don't
Speaker 8: have enough, and you know, we know we need continue
Speaker 8: to need to recruit people into the industry. I think
Speaker 8: one of the challenges the industry has too, it's I mean,
Speaker 8: maybe it's lost some of its appeal over the years. People,
Speaker 8: you know, young kids like tech a little bit more.
Speaker 8: So we got to go out and find more folks
Speaker 8: that love aviation and pull them into the industry. Maybe
Speaker 8: work a little harder to get folks to recruit people
Speaker 8: into the industry because maybe it isn't as exciting as
Speaker 8: it used to be. But that's a challenge.
Speaker 6: And how do the commercial airliners, how do they typically
Speaker 6: feel about operating in areas where there's military aircraft. I would, again,
Speaker 6: as we just saw today, I'm guessing that it just increases,
Speaker 6: you know, just some of the tensions of operating.
Speaker 2: It does.
Speaker 8: Right, So, you know Reagan right downtown there in DC.
Speaker 8: The convenience of that airport, it's huge, as anybody knows, it's.
Speaker 2: Falling into that.
Speaker 8: But you know, it's the nation's capital, so you're always
Speaker 8: going to have a fair amount of military activity around there,
Speaker 8: you know, just trying to protect the nation's capital. And
Speaker 8: so I mean to have to have blackhawks flying around
Speaker 8: the approach end of an airport, though, is extremely risky.
Speaker 8: I wonder if people don't revisit that. And to have
Speaker 8: a training flight around the approach end of Reagan at
Speaker 8: a busy time, busy evening is really difficult, right, So
Speaker 8: what we need to think about.
Speaker 2: George, the critics here, and you know I'm not one
Speaker 2: of me. I don't think Paul is. I don't think we're
Speaker 2: qualified to be critics. Well, sometimes take our air traffic
Speaker 2: controller fatigue and daffing back to nineteen eighty one when
Speaker 2: President Reagan went after I'm going to generally say the union.
Speaker 2: It was thirteen thousand people at the time. Do you
Speaker 2: buy it.
Speaker 3: Now?
Speaker 8: It's been a lot of years since then, so I
Speaker 8: think we've probably fully recovered since Reagan let go all
Speaker 8: the controllers.
Speaker 6: What do we typically get controllers? Where do they recruit
Speaker 6: them from it? And why is it so difficult?
Speaker 2: Starting?
Speaker 6: Yeah, why is it so difficult? It seems like I
Speaker 6: don't know the pay is there, it's kind of exciting.
Speaker 6: I know it's stressful, But where do they typically get recruits?
Speaker 8: I mean, I guess people who love aviation, don't want
Speaker 8: to be a pilot, maybe want to sleep in their
Speaker 8: own own bed every night, become a controller. But you
Speaker 8: can imagine it's a really difficult job, right, You've got
Speaker 8: a lot of lives on your hands. You're again, if
Speaker 8: you're controlling at an air airport like Reagan, Newark, LaGuardia,
Speaker 8: there's a lot of things going on, So you better
Speaker 8: be better be top of your game. And look, during
Speaker 8: the pandemic, you know, remember we were all sort of
Speaker 8: you know, those of us in business in the sorry
Speaker 8: of the office world. You know we were we weren't
Speaker 8: even going to the offices anymore, right, we were waking
Speaker 8: up at six point thirty, turn around computer on at seven.
Speaker 8: You don't get that. In the air traffic control business.
Speaker 8: You get a chance to do some late night shifts
Speaker 8: and you're tired, and you're trying to bring airplanes in
Speaker 8: for landing and keep everybody separated. I think it's a
Speaker 8: challenging job, right, and that's one of the reasons why
Speaker 8: it may not appeal to everybody.
Speaker 2: George, you're expert. I guess DFW is the size of Luxembourg.
Speaker 2: And you mentioned Paul earlier Denver. We went from Stapleton
Speaker 2: out to the beautiful airport in Denver, Salt Lake City
Speaker 2: building a palace, Kansas City building a palace. Do we
Speaker 2: need more airports? Do we need more gates?
Speaker 8: George Ferguson, Well, look, I'm going to say that the
Speaker 8: challenge is that you know, some of those key key
Speaker 8: airports in the country you can't replace well, right, Laguardiah
Speaker 8: Reagan because of their downtown proximity. Even if you have
Speaker 8: more airports, there's capacity at Dullest to put airplanes into,
Speaker 8: you know, but nobody wants to. Nobody wants to take
Speaker 8: the trip in from Dulles to d C. So I
Speaker 8: don't think this is a we don't have enough airport,
Speaker 8: you know issue. Again, I think this is the it's
Speaker 8: a black Hawk training flight around an extremely busy airport. ATC,
Speaker 8: it sounds like they moved the they.
Speaker 2: Moved the runway to thirty three, the shorter runway up
Speaker 2: to them the White House.
Speaker 8: And so if you're that Blackhawk pilot and you weren't
Speaker 8: paying attention and ATC said hey Blackhawk, you got this CRJ.
Speaker 8: You miss on that, and you weren't expecting that airplane
Speaker 8: to come into that other runway, bad things happen. So
Speaker 8: I don't think this is an airport issue. I think
Speaker 8: this is training paying attention. The Blackhawk apparently just didn't
Speaker 8: and see what was going on.
Speaker 2: George, thank you. We look for your publication of Bloomberg
Speaker 2: Intelligence as well. Just great conversations today in this tragedy
Speaker 2: there with a guy with decades of experience in aviation.
Speaker 1: This is the Bloomberg Surveillance Podcast. Listen live each weekday
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Speaker 2: The right person at the right time. Francis Donald, RBC
Speaker 2: Capital Markets joins our chief economist. Francis I saw a
Speaker 2: buoyant consumption, which tells me there's something that gave way.
Speaker 2: What was the week statistic in the GDP algebra?
Speaker 9: Oh well, excuse me. We've got a little decline in
Speaker 9: business investment. We got a little bit of a stagnation
Speaker 9: in trade activity. But nothing is a narrative change for
Speaker 9: the United States. And that's looking for when I look
Speaker 9: at data that comes through, is there's anything that's giving
Speaker 9: us a yellow flag? And right now no real yellow flags.
Speaker 9: The consumer on aggregate emphasis on aggregate is very strong,
Speaker 9: and I was told very early in my career twenty
Speaker 9: years ago, never bet against the US consumer. That advice
Speaker 9: is still true.
Speaker 2: Okay, I get it yesterday the FED level. But Canada
Speaker 2: cut rates ECB cuts rates of some flavor as well.
Speaker 2: Is the gap widening between America's prosperity and other nations struggling.
Speaker 9: It's a very wide gap. One of the best ways
Speaker 9: that you can think about that is all these central
Speaker 9: bankers are talking about their neutral rate, what is the
Speaker 9: rate that is neither tightening nor eating on the economy,
Speaker 9: And nobody else except for the US Federal Reserve is
Speaker 9: claiming that their neutral rate is much higher than it
Speaker 9: was before COVID, Canada, ECB all effectively saying their neutral
Speaker 9: rate is probably around two and a half percent. And
Speaker 9: now we have a FED that says we think that
Speaker 9: rates are above the neutral rate before percent seems okay
Speaker 9: to us. That is a huge, huge change in the
Speaker 9: way that global monetary policy operated, and I think it's
Speaker 9: being driven by massive amounts of US fiscal spending that's
Speaker 9: put a complete floor undergrowth and is creating this offset
Speaker 9: between fiscal and monetary. So as much as there was
Speaker 9: focus on the FED yesterday and we always have to
Speaker 9: write our FED write ups, I spent more time thinking
Speaker 9: about government funding freezes and what the path of fiscal
Speaker 9: is going to look like ahead, because my sense is
Speaker 9: it's the fiscal path ahead that's going to be more
Speaker 9: important for the FED than maybe even the unemployment rate
Speaker 9: or the CPI.
Speaker 6: Francis, as the chief economist for the Royal Bank of Canada,
Speaker 6: I am sure you and your colleagues have thought long
Speaker 6: and hard about tariffs and what they may mean for
Speaker 6: the economy in North America, particularly Canada, US and Mexico.
Speaker 6: Are you thinking about those because guess what February first
Speaker 6: is two days away?
Speaker 9: It is, And one of the challenges is that just
Speaker 9: about everybody wants us to give a nice round number
Speaker 9: what does this tariff policy mean for GDP or growth?
Speaker 9: But it's an extraordinarily difficult economic exercise. We still engage
Speaker 9: in it, but it's really hard, and we've actually developed
Speaker 9: infographics to try to explain just how convoluted this is.
Speaker 9: Even before a tariff lands on an economy, you tend
Speaker 9: to see things like uncertainty shocks way on business investment
Speaker 9: inventory forarding. So we were even noticing in the GDP
Speaker 9: data this morning that consumers had this big spend increase
Speaker 9: on durable goods in the United States, and we were
Speaker 9: talking amongst ourselves, is that consumers that are maybe thinking
Speaker 9: about autos and washing machines starting to become more expensive.
Speaker 9: So even before the tariff lands, you tend to see
Speaker 9: inventory hoarding. That changes your data. You got to talk
Speaker 9: about whether there's going to be retaliation, You got to
Speaker 9: talk about what secondary industries are being impacted. And then
Speaker 9: maybe some of the biggest assumptions you have to make,
Speaker 9: And this is what keeps me up at night, how
Speaker 9: are central bankers going to respond? Because while we have
Speaker 9: a good playbook, Tom, we've been talking for years. We
Speaker 9: know if inflation goes up, central banks hype, right, But
Speaker 9: what if inflation going up is a function of tariff's
Speaker 9: rising and interest rates are not going to impact that
Speaker 9: type of inflation. That's the biggest question that we have.
Speaker 2: Okay, this is really important, and Karl Weinberg and Mary
Speaker 2: Chin is publishing High Frequency Economics with the idea that
Speaker 2: it was, you know, within the mix and the soup
Speaker 2: of it a disappointing report. Was there a teriff reaction
Speaker 2: in that second look at GDP or does that await
Speaker 2: let me do the math April thirtieth, or you know,
Speaker 2: may first report.
Speaker 9: My senses will see more of that. But what I'm
Speaker 9: really looking for is the inventorious component Now, this is
Speaker 9: not something that seems very dramatic most of the time,
Speaker 9: but if we do see a lot of Americans who
Speaker 9: start thinking about, hey, prices could go up, you could
Speaker 9: actually see growth accelerate on the surface because you're going
Speaker 9: to see an acceleration in trade moving forward. So we
Speaker 9: did see that we know a little bit more about
Speaker 9: tariffs now than we did in twenty eighteen. And inventory
Speaker 9: hoarding is a real economic development that could occur within
Speaker 9: a terraff landscape. And let me just say this, it
Speaker 9: doesn't even matter if the tariff itself is implemented. We
Speaker 9: see this behavior ahead of the tariff coming through. So
Speaker 9: even all this talk, all the tweets, etc. Of tariffs
Speaker 9: is having will have an economic impact. We know that
Speaker 9: to be the case.
Speaker 6: Francis, I think we here in America we import some
Speaker 6: stuff from Canada from Mexico. What's the feeling up there
Speaker 6: in Canada today about what kind of I don't know
Speaker 6: response Canadians the Canadian government may have.
Speaker 3: If the teriffs are in fact placed.
Speaker 9: Well, I'll share with you that in Canada, our Canadian
Speaker 9: clients view tariffs as a high probability, high impact event
Speaker 9: and they are very likely if they're applied in extreme
Speaker 9: to create a recession in Canada, and different variations, of
Speaker 9: course would not produce it. We're still waiting on those details.
Speaker 9: In the US, my clients are a little less concerned
Speaker 9: about either the probability or the impact that comes through.
Speaker 9: But just a reminder, Americans import a ton of stuff
Speaker 9: from Canada. You know, significant amounts of electricity, a quarter
Speaker 9: of all the oil consumed comes from Canada, everything from
Speaker 9: nickel of the nickel in the US economy. There's a
Speaker 9: significant amount of imports that come through from Canada that
Speaker 9: will raise prices for Americans and how the currency response
Speaker 9: is going to be a big impact from that. But
Speaker 9: most government officials in Canada this is just public knowledge.
Speaker 9: It's not me opining have talked about retaliation. So we
Speaker 9: know the balance of risks. We might not know the
Speaker 9: magnitude for Americans, but we know the balance of risks
Speaker 9: is going to be higher prices and lower growth, and
Speaker 9: just the details of that is going to matter extraordinarily.
Speaker 9: And it's not me trying to say we haven't done
Speaker 9: the work. We have, but there are so many steps
Speaker 9: to modeling a tariff impact that it can't be summarized
Speaker 9: in when Pacific word, which is why the Federal Reserve
Speaker 9: is not implementing it, and it's why places like the
Speaker 9: Bank of Canada are speaking to the risks but not
Speaker 9: putting a dollar figure on a justcaw for instance.
Speaker 2: Or David Gera just spoke the Christian Friedland. As you know,
Speaker 2: there's a derby up in Canada for the next leader
Speaker 2: after mister Trudeaux. I know it's inappropriate for you to
Speaker 2: pick sides on this, but help our American audience. What's
Speaker 2: the timeline to the election right now into the spring?
Speaker 9: Oh, we don't know. We know there'll be a new
Speaker 9: leader of the liberal policy. And I am an economist,
Speaker 9: not a political scientist, but from what I read in
Speaker 9: the papers, that means that the new leader of that
Speaker 9: policy will become Prime minister and then likely an election
Speaker 9: will be called. So if you think about uncertainty for
Speaker 9: the Canadian economy, or even uncertainty for American businesses that
Speaker 9: are trying to figure out will there be retaliatory measures,
Speaker 9: it's been really challenging to hear one particular cohesive voice
Speaker 9: because at this time we're really relying on provincial leaders,
Speaker 9: for example, to give us a sense of what's ahead. Now, Tom,
Speaker 9: You've got me totally outside the scope of my credentials here.
Speaker 9: What I can tell you is people are talking a
Speaker 9: lot about the uncertainty of tariffs, but uncertainty shocks are
Speaker 9: powerful economic taxes, and whether you're in Canada or the
Speaker 9: US right now, you're experiencing different variations of uncertainty taxes.
Speaker 9: So some of our data, which is backward looking, is
Speaker 9: not going to show it, but you should expect this
Speaker 9: to show up in places like business surveys, manufacturing activity,
Speaker 9: consumer sentiment. To a certain perspective, I really would not
Speaker 9: downplay how important an uncertainty tax or uncertainty shock can
Speaker 9: be on an economy and all the places and the
Speaker 9: tentacles for which that'll flow through all of North America.
Speaker 2: This has been wonderful. Thank you for the brief. Francis Donald,
Speaker 2: the Royal Bank of Canada RBC.
Speaker 1: This is the Bloomberg Surveillance Podcast. Listen live each weekday
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Speaker 2: Joining us now is John Stolfus of OPKO of Oppenheimer.
Speaker 2: We're thrilled that he could attend with a very optimistic
Speaker 2: call out America. John Ferrer put out a tweet yesterday
Speaker 2: that showed x percent of stacks flat to even lower,
Speaker 2: while a few stacks go up up in a way
Speaker 2: like Facebook meta yesterday as well. Do you see any
Speaker 2: broadening out in the great Stolfus bull market?
Speaker 10: You know, Tom, First of all, our hearts are with
Speaker 10: those in the accident today in DCA. And then but
Speaker 10: related to the markets, we see a broadening of the
Speaker 10: rally that had started up until we got this deep
Speaker 10: seek question, and then the we saw a pullback. I mean,
Speaker 10: right now, I think the S and P is still
Speaker 10: not about one percent from its.
Speaker 3: January twenty third peak.
Speaker 10: The Nasdaq's not about two percent, But you look at it,
Speaker 10: the trend is upward in the sense that we've got
Speaker 10: the FEDS doing the right thing. We believe we're one
Speaker 10: of the fut strategies that think that business and the
Speaker 10: consumers and job growth resilient.
Speaker 2: In the FED meeting yesterday, I thought the most interesting
Speaker 2: debate was simply on real and top line economic growth.
Speaker 2: Jan Hatzius and Goldman Sachs yesterday came out and shaved,
Speaker 2: I believe Q four under two percent. That's a bold call.
Speaker 2: What is I don't want to talk to John Stolf
Speaker 2: for stock guy. I want to talk to John Stolf
Speaker 2: as economist. Do you believe in a solid, resilient American
Speaker 2: economy forward?
Speaker 10: I think the way I'd put it, it's a remarkably
Speaker 10: resilient and I think that's been the case that has
Speaker 10: caused skeptics and bears a lot of adjida over the
Speaker 10: course of since the rally began in the fall of
Speaker 10: twenty two. I think it was in October of twenty
Speaker 10: twenty two, after a really rough year the rally began
Speaker 10: and it persisted through twenty three and twenty four.
Speaker 3: We think it carries through here.
Speaker 10: You know, we've got that seventy one hundred target that
Speaker 10: I was looking for about seventeen percent upside from the
Speaker 10: point where we put it in in December. It's reached
Speaker 10: closer to around an eighteen twenty percent kind of upside.
Speaker 3: But we think it's very possible.
Speaker 10: The years leading up to the tech bubble were about
Speaker 10: four or five years, as I recall, with remarkable performance
Speaker 10: from the S and P five hundred as technology became
Speaker 10: a more important part of everyday life for both business
Speaker 10: and the consumer, and that's where we are.
Speaker 3: But it's about sharper virtual.
Speaker 10: Picks and shovels for both business and the consumer to
Speaker 10: deal with each other and deal with the data that
Speaker 10: is produced on a daily basis, which has grown exponentially
Speaker 10: in the last decade.
Speaker 6: John, we heard from the FED yesterday. I think the
Speaker 6: market's discounting maybe one or two rate cuts, so there's
Speaker 6: not a lot the Fed's going.
Speaker 3: To do for us in twenty two.
Speaker 6: It feels like earnings are going to have to be
Speaker 6: the driver for this market. How confident are you in
Speaker 6: the earnings for Corporate America?
Speaker 10: Well, so far, you know, this fourth quarter earning season
Speaker 10: looks pretty good. Last I looked on the EA page
Speaker 10: on my Bloomberg it was it was eight sectors positive
Speaker 10: earnings growth. Four of those were double digit earnings growth,
Speaker 10: half were tech related, the others were as I recall,
Speaker 10: it was financials, and for the life of me at
Speaker 10: this moment, the last one I don't recall what it was.
Speaker 10: But the thing is, it's a mix of cyclicals and
Speaker 10: growth that are driving this. And we think it's you know,
Speaker 10: it has it. It's not the trees grow to the sky.
Speaker 10: It's just that a market can climb a remarkable wall
Speaker 10: of worry in terms of dealing with all kinds of things.
Speaker 2: I found fascinating yesterday. And sorry, my small brain can't
Speaker 2: remember who I was talking to at Lisa. Has it
Speaker 2: been a blur the last forty eight hours. It's been
Speaker 2: a blur the last forty hours took me. With this
Speaker 2: horrific crash. Somebody mentioned to me incremental four oh one
Speaker 2: K purchases, Mike Green, simplex, simplified asset management. This goes
Speaker 2: back to my essay of the year three years ago,
Speaker 2: Lawrence McDonald, who walked through the wall of money that's
Speaker 2: just out there relentlessly putting a systematic bid to the market.
Speaker 2: Do you buy that story?
Speaker 10: You know we do, and we think it's not an exuberance,
Speaker 10: but rather has to do with a fundamental thinking that
Speaker 10: I think has occurred in the private client group, which
Speaker 10: is that Social Security will simply not provide the same
Speaker 10: percentage of retirement income that it provided for Boomer's parents, and.
Speaker 2: So we're savings America.
Speaker 10: This is under discussed and it's won that frequently when
Speaker 10: whenever you get a boost in the tenure yield, the
Speaker 10: bond crowd says, oh, bonds are competitive with stocks, but
Speaker 10: on an media to longer term basis, history.
Speaker 3: Tells us past performance no guarantee your future results that
Speaker 3: stocks indeed right where to be.
Speaker 2: Good morning everyone, It is Bloomberg surveillance from New York
Speaker 2: City this morning. Good morning to ninety two nine FM
Speaker 2: in Boston, Bloomberg eleven to three to zero in New
Speaker 2: York and is sleepless ninety nine to one in Washington.
Speaker 2: A horrific plane crash at Reagan National Airport overnight. I'm
Speaker 2: sure many of you are up to speed on this.
Speaker 2: We'll continue with more information on it. In scheduled twelve minutes.
Speaker 2: The Mayor of Washington will provide a press conference with
Speaker 2: various officials, responders if you will, and we will of
Speaker 2: course bring you that coverage at worldwide. Our goal here, folks,
Speaker 2: is to brief you on the crash, provide background of
Speaker 2: the aviation industry. We're working on guests on that, former pilots, engineers,
Speaker 2: former federal officials to speak to us about it. But
Speaker 2: we were thrilled to bring any people like John Stolfus, Paul.
Speaker 6: John, you know, what are some of the sectors here
Speaker 6: that you're looking for in twenty twenty five? Again, we had,
Speaker 6: as you mentioned, two really strong years in the S
Speaker 6: and P five hundred performance in twenty three and twenty four.
Speaker 6: As you looked at twenty five, are you looking for
Speaker 6: certain sectors of leaders market or how do you think
Speaker 6: it about it?
Speaker 11: Well, we're looking at from a perspective of first of
Speaker 11: all of sectors, and we think it continues to be
Speaker 11: information technology and communications services and communications service.
Speaker 10: As the old phone companies, but it's also got the streamers,
Speaker 10: the search engines, and it's got social media and it's
Speaker 10: a big stuff for the AI story. But we're also
Speaker 10: looking at the industrial sector, which is heavily embedded with
Speaker 10: technology and financials and consumer discretionary. You like the banks, well,
Speaker 10: we like still like the big banks, and we think
Speaker 10: his interest rates are normalized.
Speaker 3: It's good for them.
Speaker 2: It's not a day to say this, but John, you're
Speaker 2: killing it. You're calling a bull market has just been
Speaker 2: absolutely super very flattered. Joe, still do I need a
Speaker 2: new grudge guitar?
Speaker 3: I tell you a penguin.
Speaker 2: Thank you, missus King. Good morning, mister Stulpers, I need
Speaker 2: to drudge Penguin. You're dismissed, John Stolfus, thank you so
Speaker 2: much for DAWs seven s and p I should say
Speaker 2: seven thousand as well.
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