1
00:00:03,360 --> 00:00:07,840
Speaker 1: This is Bloomberg Surveillance. I'm not sury the economy has slowed.

2
00:00:08,000 --> 00:00:10,200
Speaker 1: I think that in this recovery, all along, we've been

3
00:00:10,200 --> 00:00:12,719
Speaker 1: growing to two and a half percent in that range

4
00:00:12,760 --> 00:00:15,680
Speaker 1: when there's very little productivity growth Actually to an appocent

5
00:00:15,800 --> 00:00:18,119
Speaker 1: wage growth is beginning to emerge as something of a

6
00:00:18,160 --> 00:00:20,120
Speaker 1: threat to the fetes in flesh and target. The two

7
00:00:20,120 --> 00:00:24,280
Speaker 1: thousand sixteen seventeen economic outlook is somewhere between a model

8
00:00:24,400 --> 00:00:28,800
Speaker 1: long and garden variety recession. Bloomberg Surveillance your link to

9
00:00:28,840 --> 00:00:33,160
Speaker 1: the world of economics, finance, and investment on Bloomberg Radio.

10
00:00:33,360 --> 00:00:36,360
Speaker 1: Good morning everyone, Michael mckeein, Tom Keene, Good morning worldwide.

11
00:00:36,360 --> 00:00:39,920
Speaker 1: A Friday, Bloomberg Surveillance. Thrilled your with us churned to

12
00:00:40,000 --> 00:00:43,000
Speaker 1: the market. What a week in international relations? What a

13
00:00:43,040 --> 00:00:46,479
Speaker 1: week for retail shares. We will speak about retail here

14
00:00:46,479 --> 00:00:50,080
Speaker 1: at a moment with one D Wilson, Bloomberg Surveillance and

15
00:00:50,120 --> 00:00:53,280
Speaker 1: our four X brief led by the Brazilian Real brought

16
00:00:53,280 --> 00:00:56,160
Speaker 1: to you by Interactive Broker's winner of FX Week's two

17
00:00:56,160 --> 00:00:59,840
Speaker 1: thousand fifteen award for the Best in Retail for a

18
00:01:00,120 --> 00:01:04,000
Speaker 1: trading visit ib AT I B k R dot com

19
00:01:04,080 --> 00:01:08,319
Speaker 1: slash four x ib at I b k R dot

20
00:01:08,360 --> 00:01:12,679
Speaker 1: com slash four x Brazilian Rail three point four nine.

21
00:01:12,720 --> 00:01:15,200
Speaker 1: It was three point four five and with the changing

22
00:01:15,240 --> 00:01:18,600
Speaker 1: of the guard in Brazil the new announcements three point

23
00:01:18,680 --> 00:01:23,000
Speaker 1: four nine on Brazilian Rail. Still strong trading, excuse me,

24
00:01:23,040 --> 00:01:27,120
Speaker 1: still weaker trading this morning. Weaker yen, stronger dollar off

25
00:01:27,120 --> 00:01:30,759
Speaker 1: the retail story dollar ninety four point five five off

26
00:01:30,840 --> 00:01:34,920
Speaker 1: d X y yen one oh nine point zero nine

27
00:01:35,560 --> 00:01:38,160
Speaker 1: as well. Other than that, a churn the foreign exchange.

28
00:01:38,440 --> 00:01:43,319
Speaker 1: Oliver Chen moments ago publishing on js panay uh. He says,

29
00:01:43,360 --> 00:01:47,000
Speaker 1: trend is not your friend. You see some challenging moments

30
00:01:47,440 --> 00:01:51,360
Speaker 1: for j C. Penny makes clear the conference call will

31
00:01:51,440 --> 00:01:56,520
Speaker 1: uh sport. We await more details, especially on gross margins. Well,

32
00:01:56,600 --> 00:02:00,520
Speaker 1: j C. Penny, here's down and North which had bad

33
00:02:00,600 --> 00:02:05,520
Speaker 1: numbers last night. Let's forgive that coverage. David Wilson leading

34
00:02:05,520 --> 00:02:09,040
Speaker 1: with Nordstrom and j C Benny. What a week, David Wilson, Oh, absolutely,

35
00:02:09,120 --> 00:02:11,680
Speaker 1: And that's two out of three. And the third one

36
00:02:11,720 --> 00:02:15,000
Speaker 1: is smaller department store chain is Dillard's and that stocks

37
00:02:15,040 --> 00:02:18,800
Speaker 1: down five and a half percent. It's all about numbers,

38
00:02:18,840 --> 00:02:22,400
Speaker 1: not coming through for the first quarter or profit forecast

39
00:02:22,520 --> 00:02:25,320
Speaker 1: not measuring up. In Dillard's case, it's about the first

40
00:02:25,400 --> 00:02:28,920
Speaker 1: quarter results. With Penny, it's all about sales, and you

41
00:02:28,919 --> 00:02:31,959
Speaker 1: know they're cutting their Folier forecast for gross margin or

42
00:02:32,000 --> 00:02:36,040
Speaker 1: earnings after merchandise costs is a percentage of sales. And Nordstrom,

43
00:02:36,280 --> 00:02:38,960
Speaker 1: you know, cutting forecast for earnings and sales growth this

44
00:02:39,000 --> 00:02:42,040
Speaker 1: fiscal year. Now, North from talking about cutting cattle spending

45
00:02:42,040 --> 00:02:44,799
Speaker 1: and eliminating as many as four hundred jobs. Nonetheless, all

46
00:02:44,800 --> 00:02:47,880
Speaker 1: those stocks taking a beating in early trading, even Tiffany's

47
00:02:47,919 --> 00:02:50,760
Speaker 1: down two percents of an unrelated stories still the retailer,

48
00:02:50,800 --> 00:02:54,240
Speaker 1: though chief financial officer Ralph Nicoletti resigned after two years.

49
00:02:54,240 --> 00:02:57,600
Speaker 1: He'll take the CFO job at consumer goods maker Newell

50
00:02:57,680 --> 00:03:01,840
Speaker 1: Brands starting next month. Look thing elsewhere. Biogens down one

51
00:03:01,840 --> 00:03:05,160
Speaker 1: and a half percent. The drug maker's hemophilia business won't

52
00:03:05,160 --> 00:03:08,440
Speaker 1: be a target for Novo Nordisk, even though the Danish

53
00:03:08,440 --> 00:03:12,720
Speaker 1: company is looking to make deals now. Novo's CEO laws

54
00:03:12,720 --> 00:03:15,720
Speaker 1: Revene Sorenson sent in an interview that his company isn't

55
00:03:15,760 --> 00:03:20,440
Speaker 1: the right buyer because its products are similar to biogens

56
00:03:20,560 --> 00:03:23,320
Speaker 1: UH do have in Videos shares up town a half percent.

57
00:03:23,480 --> 00:03:26,000
Speaker 1: The maker of graphics chips posted first quarterminings and sales

58
00:03:26,000 --> 00:03:29,079
Speaker 1: de beat projections. In Video's revenue forecast for the second

59
00:03:29,160 --> 00:03:32,840
Speaker 1: quarter also surpassed analyst average estimate in the Bloomberg survey.

60
00:03:33,080 --> 00:03:35,320
Speaker 1: Western Digital down two and a half percent. That this

61
00:03:35,440 --> 00:03:37,480
Speaker 1: drive maker was cut the equivalent of self from neutral

62
00:03:37,680 --> 00:03:40,520
Speaker 1: at Bank of America Merrill Lynch, Now this move was interesting.

63
00:03:40,600 --> 00:03:43,560
Speaker 1: Was made just a day after the company completed the

64
00:03:43,600 --> 00:03:46,760
Speaker 1: fourteen billion dollar purchase of memory chip maker Sandis, and

65
00:03:46,920 --> 00:03:50,400
Speaker 1: Merrill was an advisor to Western Digital on the deal.

66
00:03:50,760 --> 00:03:53,440
Speaker 1: A couple more for you Shake Shack up seven percent,

67
00:03:53,520 --> 00:03:56,320
Speaker 1: the restaurant change first quarter oinates at sales top testimates

68
00:03:56,440 --> 00:03:59,200
Speaker 1: and sat Jersey Industries up four percent, the utility raising

69
00:03:59,240 --> 00:04:01,360
Speaker 1: a hundred and eighty four million dollars in the stock

70
00:04:01,360 --> 00:04:04,000
Speaker 1: Sail and Tom. You know, I try to give you

71
00:04:03,880 --> 00:04:07,560
Speaker 1: your Shaner energy, but you failed right because you didn't

72
00:04:07,560 --> 00:04:10,240
Speaker 1: read my email. Anyway, here's the deal. Shanier was up

73
00:04:10,280 --> 00:04:13,840
Speaker 1: six point two percent yesterday. The show gas Exporter hired

74
00:04:13,960 --> 00:04:17,760
Speaker 1: Calpine chairman and former chief executive Jack Fusco as it's

75
00:04:20,040 --> 00:04:23,720
Speaker 1: and Carl Icon, who's the biggest shareholder, and Shannir put

76
00:04:23,720 --> 00:04:27,279
Speaker 1: out a tweet saying he liked the hiring David Wilson

77
00:04:27,320 --> 00:04:30,320
Speaker 1: with our gossip on equity. Whoever thought David Wilson be

78
00:04:30,360 --> 00:04:34,240
Speaker 1: looking at Twitter for equity work? This is great? Thank you, David. Savvy.

79
00:04:34,320 --> 00:04:37,520
Speaker 1: Syites is with Raymond James and she is in charge

80
00:04:37,880 --> 00:04:41,159
Speaker 1: of you sitting on the plane going When will the

81
00:04:41,320 --> 00:04:45,360
Speaker 1: stupid baggage things stop? She joins us down Savvy, When

82
00:04:45,400 --> 00:04:48,920
Speaker 1: are the airplanes gonna say enough about everybody bringing all

83
00:04:48,960 --> 00:04:55,320
Speaker 1: their baggage on board? Where does that stand? Well, baggage

84
00:04:55,400 --> 00:05:00,600
Speaker 1: on board is uh, They're they're charging for the baggage

85
00:05:00,600 --> 00:05:04,119
Speaker 1: because it it's costs money, and then it also makes

86
00:05:04,160 --> 00:05:07,440
Speaker 1: you not subsidize another passengers taking your bag, and then

87
00:05:07,440 --> 00:05:10,600
Speaker 1: they do limit you to a bag. So I mean,

88
00:05:10,600 --> 00:05:13,200
Speaker 1: I think that the system is working right now. They're

89
00:05:13,240 --> 00:05:16,240
Speaker 1: investing in extra maybe larger bins so that everybody can

90
00:05:16,279 --> 00:05:19,800
Speaker 1: fit their bags. But I think it's working for now. Okay,

91
00:05:19,839 --> 00:05:22,040
Speaker 1: I'll go with that. I love what you say about

92
00:05:22,160 --> 00:05:25,039
Speaker 1: walk up fares, Mike. When was the last time you

93
00:05:25,040 --> 00:05:28,240
Speaker 1: did a walk up fair at an airport? It's like

94
00:05:28,279 --> 00:05:30,960
Speaker 1: in the movies. Do people still do that savvy do

95
00:05:31,080 --> 00:05:34,200
Speaker 1: they walk up and buy a plane ticket. You know,

96
00:05:34,279 --> 00:05:36,760
Speaker 1: walk up fairs is more of a term us. It's

97
00:05:36,800 --> 00:05:39,920
Speaker 1: it's basically for a fair ball within the seven seven

98
00:05:40,000 --> 00:05:42,640
Speaker 1: day window. And and fares do tend to move up

99
00:05:42,880 --> 00:05:45,440
Speaker 1: during that window because it tends to be business passengers

100
00:05:45,480 --> 00:05:47,960
Speaker 1: who are less price sensitive that buy it at that time.

101
00:05:48,320 --> 00:05:51,560
Speaker 1: So interestingly, with fares down, you are seeing more and

102
00:05:51,640 --> 00:05:55,080
Speaker 1: more leisure passengers, you know, pushing off their their purchasing

103
00:05:55,160 --> 00:05:58,360
Speaker 1: position un till till later on. And um, and so

104
00:05:58,440 --> 00:06:00,880
Speaker 1: it's an interesting dynamic. But only walk up fairs that

105
00:06:01,000 --> 00:06:04,600
Speaker 1: refer to kind of business business typefairs. Well, the uh,

106
00:06:05,080 --> 00:06:10,120
Speaker 1: the latest trend is this idea of the ultra cheap fair. Um.

107
00:06:11,000 --> 00:06:13,120
Speaker 1: I guess Delta started it. And now I see that

108
00:06:13,480 --> 00:06:16,960
Speaker 1: American and United Continent are going to join in this

109
00:06:17,040 --> 00:06:20,320
Speaker 1: idea that we'll give you the lowest fare possible, but

110
00:06:20,480 --> 00:06:23,160
Speaker 1: for that you get nothing. You don't even get an

111
00:06:23,200 --> 00:06:27,000
Speaker 1: assigned seat. It is a response to you know, the

112
00:06:27,400 --> 00:06:31,520
Speaker 1: popularity of these unbuddled affairs that airlines like Spirit or

113
00:06:31,560 --> 00:06:36,240
Speaker 1: Allegiance are offering. And and you know, to to certain travelers,

114
00:06:36,400 --> 00:06:38,520
Speaker 1: I think that is attractive because you get a base

115
00:06:38,560 --> 00:06:40,400
Speaker 1: fair and then you get to pick and choose exactly

116
00:06:40,480 --> 00:06:44,039
Speaker 1: what you value and pay for those. And so if

117
00:06:44,120 --> 00:06:46,039
Speaker 1: you can fit a bag under the seat in front

118
00:06:46,040 --> 00:06:47,680
Speaker 1: of you, you can get you know, get to where

119
00:06:47,680 --> 00:06:50,480
Speaker 1: you're going at a very low low fare. So I

120
00:06:50,480 --> 00:06:53,359
Speaker 1: think they're responding to to the popularity of that product.

121
00:06:53,360 --> 00:06:56,320
Speaker 1: Now it's not for everybody, um and so, and they

122
00:06:56,320 --> 00:06:58,560
Speaker 1: are responded to the fact that sometimes we think we

123
00:06:58,600 --> 00:07:00,480
Speaker 1: want that fair and then we ended up end up

124
00:07:00,480 --> 00:07:03,200
Speaker 1: buying a lot more um and so they want to

125
00:07:03,240 --> 00:07:06,400
Speaker 1: be able to address that type of that's part of

126
00:07:06,440 --> 00:07:08,840
Speaker 1: the market. Um. So, I think it's more choice for

127
00:07:08,880 --> 00:07:11,640
Speaker 1: the consumer, and it's it's a good thing. But why

128
00:07:11,640 --> 00:07:13,800
Speaker 1: are they doing it there? The planes are full and

129
00:07:14,240 --> 00:07:17,280
Speaker 1: business people aren't getting a break on on on prices,

130
00:07:17,360 --> 00:07:20,000
Speaker 1: so why do they feel the need to even put

131
00:07:20,000 --> 00:07:23,280
Speaker 1: it out there. Well, even they are seeing a lot

132
00:07:23,320 --> 00:07:26,120
Speaker 1: of some of their customers that they were losing some

133
00:07:26,240 --> 00:07:29,880
Speaker 1: customers to uh, the likes of these un modeled carriers,

134
00:07:29,920 --> 00:07:33,480
Speaker 1: and so, um, it's just a way to appeal to

135
00:07:33,480 --> 00:07:36,080
Speaker 1: too many different travelers and it's a very low fair

136
00:07:36,120 --> 00:07:37,840
Speaker 1: that doesn't cover their costs, they're just not going to

137
00:07:37,920 --> 00:07:39,480
Speaker 1: offer it. But if they is au fair that they

138
00:07:39,520 --> 00:07:42,600
Speaker 1: think they can uh, that that they can address with

139
00:07:43,000 --> 00:07:45,920
Speaker 1: a profitable level, then that they're gonna go after it, Sabby.

140
00:07:46,040 --> 00:07:48,920
Speaker 1: Let's start with the individual companies. Um. Jet Blue, I

141
00:07:49,000 --> 00:07:52,280
Speaker 1: noticed the other day, was way up high on you know,

142
00:07:52,400 --> 00:07:57,320
Speaker 1: frequent flyer miles favorability. You have a very constructive tone,

143
00:07:57,840 --> 00:08:00,920
Speaker 1: it seems on Jet Blue. What are doing that other

144
00:08:01,080 --> 00:08:06,120
Speaker 1: carriers aren't doing? What is the Jet Blue distinction? I

145
00:08:06,160 --> 00:08:09,720
Speaker 1: think that Blues long had a very good product. They

146
00:08:09,800 --> 00:08:12,320
Speaker 1: just haven't been able to monetize it very well in

147
00:08:12,360 --> 00:08:15,760
Speaker 1: the sense that passengers love the product that they offer,

148
00:08:15,880 --> 00:08:18,080
Speaker 1: but they haven't been willing to pay them much more

149
00:08:18,160 --> 00:08:20,640
Speaker 1: than they would pay another airline to to find maybe

150
00:08:21,000 --> 00:08:24,600
Speaker 1: a relatively inferior product. Um. And what jets is getting,

151
00:08:24,880 --> 00:08:26,960
Speaker 1: uh And what we like about what you was doing

152
00:08:27,000 --> 00:08:29,920
Speaker 1: is they're getting smarter about how they try to extract

153
00:08:29,960 --> 00:08:33,200
Speaker 1: that value. Um. You know, it is probably not something

154
00:08:33,440 --> 00:08:35,440
Speaker 1: the passagers want to hear, but they have a lot

155
00:08:35,480 --> 00:08:37,600
Speaker 1: more like groom than a lot of other airlines. Yes

156
00:08:37,679 --> 00:08:40,840
Speaker 1: they do, and I pay for it. So Mike, it's

157
00:08:40,920 --> 00:08:43,880
Speaker 1: like thirty bucks here, seventy bucks here, and you know,

158
00:08:43,960 --> 00:08:47,640
Speaker 1: pretty soon the wall it's gone. You are a little

159
00:08:48,080 --> 00:08:50,480
Speaker 1: taller than than most of us. But it kind of

160
00:08:50,520 --> 00:08:54,000
Speaker 1: raises the question of what it is consumers or let

161
00:08:54,000 --> 00:08:56,559
Speaker 1: me put this way, airline passengers are paying for. Uh.

162
00:08:56,640 --> 00:09:01,280
Speaker 1: Do we find loyalty to brands among consumers? I think

163
00:09:01,280 --> 00:09:03,520
Speaker 1: you still have it with business people who are a

164
00:09:03,520 --> 00:09:05,480
Speaker 1: little less price and sensitive and go with the guy

165
00:09:05,600 --> 00:09:08,120
Speaker 1: giving the frequent flyer miles. But the consumers care anymore?

166
00:09:09,240 --> 00:09:11,040
Speaker 1: They do. And then I think there again, there are

167
00:09:11,320 --> 00:09:13,800
Speaker 1: different segments of the market. There is a one segment

168
00:09:13,800 --> 00:09:16,120
Speaker 1: of the market that's very price sensitive and they're willing

169
00:09:16,160 --> 00:09:18,160
Speaker 1: to be a little bit uncomfortable for you know, a

170
00:09:18,160 --> 00:09:20,319
Speaker 1: couple hours flight if they have more money to spend

171
00:09:20,320 --> 00:09:22,920
Speaker 1: once they get where they're going. Uh. And then there

172
00:09:22,920 --> 00:09:25,680
Speaker 1: are another group of customers either because they're very tall

173
00:09:25,720 --> 00:09:28,360
Speaker 1: and like the extra leg room um or or just

174
00:09:28,400 --> 00:09:31,840
Speaker 1: want a better product. And I think the like brands

175
00:09:31,840 --> 00:09:35,440
Speaker 1: like Virgin America which blew appeal to those passengers, um

176
00:09:35,760 --> 00:09:37,800
Speaker 1: and and and you know, the interesting thing is that

177
00:09:38,120 --> 00:09:41,439
Speaker 1: even Delta, which you know is a legacy carrier, they

178
00:09:41,440 --> 00:09:44,080
Speaker 1: are doing something very different here. They've invested quite a

179
00:09:44,080 --> 00:09:45,920
Speaker 1: bit on their product and part of it on the

180
00:09:45,960 --> 00:09:49,600
Speaker 1: operations so the business passengers attracted Delta not just because

181
00:09:49,640 --> 00:09:52,160
Speaker 1: they get more frequent flyer but also because they get

182
00:09:52,200 --> 00:09:54,960
Speaker 1: you on time where you're going. We're gonna come back

183
00:09:54,960 --> 00:09:58,559
Speaker 1: on this, but I think it's so important. Do you

184
00:09:58,640 --> 00:10:02,679
Speaker 1: treat the free cash generation of these beasts in a

185
00:10:02,720 --> 00:10:05,920
Speaker 1: new way because they're disciplined or is it still the

186
00:10:06,000 --> 00:10:10,960
Speaker 1: same cyclical up and down that airlines have always been. Look,

187
00:10:11,120 --> 00:10:14,800
Speaker 1: it's still cyclical industry, right, but it is not the

188
00:10:15,120 --> 00:10:19,200
Speaker 1: you know, going from death bed to euphoria industry that

189
00:10:19,400 --> 00:10:21,200
Speaker 1: has been in the past. I think they're going to

190
00:10:21,520 --> 00:10:23,360
Speaker 1: They're going to have some rough years when you know,

191
00:10:23,440 --> 00:10:27,080
Speaker 1: recessions are never very helpful when business passengers stopped flying.

192
00:10:27,400 --> 00:10:29,800
Speaker 1: But I think unlike the past, where we might have

193
00:10:29,920 --> 00:10:33,080
Speaker 1: to consider, you know, who might be filing bankruptcy, you know,

194
00:10:33,440 --> 00:10:36,640
Speaker 1: we might even get airlines making a small profit during

195
00:10:36,960 --> 00:10:41,240
Speaker 1: uh during the work time. Precastle might still be a question,

196
00:10:41,280 --> 00:10:44,080
Speaker 1: but you know, it's a cyclical industry and they will

197
00:10:44,080 --> 00:10:46,360
Speaker 1: recover that, it will be healthy and will come back.

198
00:10:46,440 --> 00:10:53,400
Speaker 1: Savvy sits with us this morning. All right, let's check

199
00:10:53,440 --> 00:10:55,520
Speaker 1: in with Michael Barr and get the latest world in

200
00:10:55,640 --> 00:10:58,400
Speaker 1: national headlines. My toime, Thank you very much. The Obama

201
00:10:58,440 --> 00:11:01,240
Speaker 1: administration is selling the nation public schools that they must

202
00:11:01,280 --> 00:11:04,680
Speaker 1: allow students to use bathrooms and locker rooms consistent with

203
00:11:04,720 --> 00:11:09,000
Speaker 1: their chosen gender identity. The Departments of Education and Justice

204
00:11:09,040 --> 00:11:13,120
Speaker 1: are releasing a directive today reminding public schools that there

205
00:11:13,240 --> 00:11:16,240
Speaker 1: is no room in our schools for discrimination of any kind.

206
00:11:16,880 --> 00:11:20,480
Speaker 1: Some Democratic Party leaders are concerned that Bernie Sanders insisting

207
00:11:20,480 --> 00:11:23,320
Speaker 1: that he will stay in the presidential race will hurt

208
00:11:23,400 --> 00:11:27,200
Speaker 1: front runner Hillary Clinton. Clinton, her aids and supporters had

209
00:11:27,280 --> 00:11:30,560
Speaker 1: largely resisted calling on Sanders to drop out, but now

210
00:11:30,600 --> 00:11:33,320
Speaker 1: that Donald Trump has locked up the nomination, they fear

211
00:11:33,360 --> 00:11:36,880
Speaker 1: he will capitalize on sanders decision to remain in the race.

212
00:11:37,440 --> 00:11:40,760
Speaker 1: Hezbollah says it's top commander was killed in an explosion

213
00:11:40,880 --> 00:11:44,320
Speaker 1: in Syria. Global News twenty four hours a day, powered

214
00:11:44,360 --> 00:11:47,360
Speaker 1: by our twenty four hundred journalists more than a hundred

215
00:11:47,360 --> 00:11:49,959
Speaker 1: fifty news bureaus from around the world. On Michael bar

216
00:11:50,280 --> 00:11:53,280
Speaker 1: Top and Michael Thanks so Much. Yields in ten yere

217
00:11:53,440 --> 00:11:59,360
Speaker 1: yield one point seven two two year yield higher ten

218
00:11:59,440 --> 00:12:07,880
Speaker 1: year old odd Bloomberg Surveillance Coming up. We will continue

219
00:12:07,920 --> 00:12:12,000
Speaker 1: taking a look at the airline industry and then We'll

220
00:12:12,040 --> 00:12:15,560
Speaker 1: turn our thoughts to Brazil. What's the best way to

221
00:12:15,600 --> 00:12:23,920
Speaker 1: play it? Santos joined us later. Global Business News twenty

222
00:12:23,920 --> 00:12:26,920
Speaker 1: four hours a day. If Bloomberg dot com, the radio

223
00:12:26,960 --> 00:12:30,480
Speaker 1: plus mobile app and on your radio is a Bloomberg

224
00:12:30,520 --> 00:12:34,200
Speaker 1: Business Flash. And I'm Karen Moscow. The Bloomberg Futures Report

225
00:12:34,240 --> 00:12:37,120
Speaker 1: brought to you by Interactive Brokers and CME Group. If

226
00:12:37,120 --> 00:12:40,200
Speaker 1: you're looking for global futures contracts with low trading costs,

227
00:12:40,440 --> 00:12:44,240
Speaker 1: look no further. Interactive Brokers as the industry leader. Learn

228
00:12:44,280 --> 00:12:48,040
Speaker 1: more at Interactive Brokers dot com slash, CME Group US

229
00:12:48,120 --> 00:12:51,840
Speaker 1: dot Index futures are now little change to lower. They

230
00:12:51,960 --> 00:12:56,280
Speaker 1: briefly erased declines as retail sales east, concerns that consumers

231
00:12:56,280 --> 00:12:58,760
Speaker 1: were hesitant to boost their spending, while also adding to

232
00:12:58,760 --> 00:13:01,320
Speaker 1: the case for higher trist rates. We checked the markets

233
00:13:01,320 --> 00:13:04,640
Speaker 1: every fifteen minutes throughout the trading day on Bloomberg SNP

234
00:13:04,760 --> 00:13:06,959
Speaker 1: E mini futures are lower down two points down we

235
00:13:07,000 --> 00:13:09,520
Speaker 1: many futures down thirty five Now is DOCU many futures

236
00:13:09,520 --> 00:13:12,560
Speaker 1: that will change. Dex in Germany's up half percent. Ten

237
00:13:12,640 --> 00:13:15,040
Speaker 1: year treasury up five thirty seconds, the yield one point

238
00:13:15,080 --> 00:13:18,360
Speaker 1: seven three percent. Nimex screwed oil down one per cent

239
00:13:18,440 --> 00:13:20,920
Speaker 1: or fifty six cents to forty six thirteen a barrel,

240
00:13:21,120 --> 00:13:22,959
Speaker 1: Comex s gold down a tenth of upper cent or

241
00:13:22,960 --> 00:13:25,840
Speaker 1: a dollar twenty to twelve seventy announced the Euro at

242
00:13:25,840 --> 00:13:28,360
Speaker 1: dollar thirteen twenty four the end one oh nine point

243
00:13:28,360 --> 00:13:31,160
Speaker 1: oh seven. That's a Bloomberg business flash, Tom and Mike,

244
00:13:31,920 --> 00:13:35,080
Speaker 1: Carol Maska, thank you very much. Savvy sythe covers the

245
00:13:35,120 --> 00:13:39,120
Speaker 1: airline industry for Raymond James. She's with us now. Uh,

246
00:13:39,160 --> 00:13:42,120
Speaker 1: and Karen was just talking about the economic data we got.

247
00:13:42,559 --> 00:13:47,120
Speaker 1: Raises a question for me about prices. Where are ticket

248
00:13:47,160 --> 00:13:51,520
Speaker 1: prices going for the airlines now that petroleum is going

249
00:13:51,640 --> 00:13:55,520
Speaker 1: back up, are they going to be immediately passing along

250
00:13:55,920 --> 00:13:59,480
Speaker 1: higher costs to everybody? Um Again, at the end of

251
00:13:59,480 --> 00:14:02,080
Speaker 1: the day of seeing a set by demand and right now,

252
00:14:02,120 --> 00:14:04,040
Speaker 1: what we're seeing is, you know, in the peak days

253
00:14:04,040 --> 00:14:07,040
Speaker 1: the strong demands, I think pricing into the summer July

254
00:14:07,200 --> 00:14:10,720
Speaker 1: August months will be strong. Uh. But uh, you know,

255
00:14:10,800 --> 00:14:13,080
Speaker 1: beyond that they seems to be you know, capacity has

256
00:14:13,120 --> 00:14:15,480
Speaker 1: come into the market to adjust for lower fuel. So

257
00:14:15,600 --> 00:14:18,120
Speaker 1: I don't see kind of an immediate move up in pricing.

258
00:14:18,120 --> 00:14:20,280
Speaker 1: But eventually, and as you get to the fall, if

259
00:14:20,320 --> 00:14:22,040
Speaker 1: I fuel is much higher, I think you're going to

260
00:14:22,120 --> 00:14:26,480
Speaker 1: see a little bit more pricing path through fuel rises. Well,

261
00:14:26,480 --> 00:14:31,000
Speaker 1: we demand what it is, um even ex fuel are

262
00:14:31,040 --> 00:14:35,680
Speaker 1: we seeing sort of an inexorable rise because the demand

263
00:14:35,720 --> 00:14:39,480
Speaker 1: is strong enough that the airlines see an opportunity to

264
00:14:39,560 --> 00:14:42,960
Speaker 1: keep pushing fares up. UM. You know, there's there's been

265
00:14:43,040 --> 00:14:45,720
Speaker 1: some softness. You saw it in the first quarter, and

266
00:14:45,720 --> 00:14:47,760
Speaker 1: you saw it in the US GDP and and and

267
00:14:47,920 --> 00:14:49,960
Speaker 1: so there's going back to the close and fair that

268
00:14:50,000 --> 00:14:53,040
Speaker 1: we discussed earlier, there's been some softness there. And again

269
00:14:53,080 --> 00:14:55,640
Speaker 1: the airlines had added a lot more capacity because they

270
00:14:55,680 --> 00:14:59,600
Speaker 1: can now fly lower affairs and still be profitable. So

271
00:14:59,800 --> 00:15:01,440
Speaker 1: kind the nation of that, I don't think you've really

272
00:15:01,480 --> 00:15:04,320
Speaker 1: seen fairs move up, not just yet. And and so

273
00:15:04,400 --> 00:15:06,800
Speaker 1: I think maybe in the fall is when you'll probably

274
00:15:06,840 --> 00:15:09,160
Speaker 1: get the first chance to see higher fairers. The number

275
00:15:09,240 --> 00:15:12,400
Speaker 1: one thing Savva that I hear from people is I

276
00:15:12,600 --> 00:15:16,680
Speaker 1: have points or miles and I can't use them. Is

277
00:15:16,760 --> 00:15:19,640
Speaker 1: the points guy who I'm going to arguably say change

278
00:15:19,720 --> 00:15:23,760
Speaker 1: the industry. The whole gaming of these charge cards wrapped

279
00:15:23,800 --> 00:15:28,000
Speaker 1: into miles. His lead story today is fifty thousand rapid

280
00:15:28,080 --> 00:15:32,600
Speaker 1: rewards points from Southwest air How much do the airlines

281
00:15:32,720 --> 00:15:38,160
Speaker 1: hate the points guy? You know, it's it is a

282
00:15:38,280 --> 00:15:42,200
Speaker 1: balance and uh, you know, a balance in their hatred

283
00:15:43,360 --> 00:15:45,760
Speaker 1: exactly in the sense that they you know, they want

284
00:15:45,840 --> 00:15:49,000
Speaker 1: customers to have fine value in the in the points

285
00:15:49,360 --> 00:15:52,760
Speaker 1: that they do collect um. And at the same time

286
00:15:52,920 --> 00:15:54,560
Speaker 1: you know that they are having a hard time with

287
00:15:54,720 --> 00:15:58,040
Speaker 1: high load factors, you know, finding the defeats for the

288
00:15:58,120 --> 00:16:00,560
Speaker 1: reward miles. But it's it's a it's a fine balance,

289
00:16:00,600 --> 00:16:02,400
Speaker 1: and I think competition is is going to go work

290
00:16:02,440 --> 00:16:05,960
Speaker 1: in the favor of consumers. Well, so it is one

291
00:16:06,000 --> 00:16:10,600
Speaker 1: way to I guess, um charge you for extras in

292
00:16:10,680 --> 00:16:13,440
Speaker 1: the sense that if you stay loyal to an airline,

293
00:16:13,560 --> 00:16:16,400
Speaker 1: you're you're buying the right to get on the plane

294
00:16:16,480 --> 00:16:19,320
Speaker 1: first and get more carry on luggage space or something

295
00:16:19,400 --> 00:16:22,360
Speaker 1: like that. And you know, and another thing too is

296
00:16:22,440 --> 00:16:25,880
Speaker 1: that that you'll see airlines do is just expand the

297
00:16:25,960 --> 00:16:29,200
Speaker 1: opportunity to use those points as well, so maybe to

298
00:16:29,280 --> 00:16:31,400
Speaker 1: be able to use those points to buy on board

299
00:16:31,760 --> 00:16:34,200
Speaker 1: items or to use it in their club lounges. So

300
00:16:34,280 --> 00:16:37,760
Speaker 1: I think they are aware of the frustration that consumers

301
00:16:37,800 --> 00:16:40,240
Speaker 1: have about not being able to stull utilize it and

302
00:16:40,320 --> 00:16:44,840
Speaker 1: so just expand the opportunity and not just kind of

303
00:16:44,880 --> 00:16:48,000
Speaker 1: free fight. Based on my anecdotal, they're dreaming all people

304
00:16:48,080 --> 00:16:52,800
Speaker 1: want is miles. It's it's amazing some of the stuff

305
00:16:52,840 --> 00:16:56,680
Speaker 1: I hear about it, international and domestic. Finally, Alaska errors

306
00:16:56,720 --> 00:17:00,600
Speaker 1: the poster child for the industry. They buy that airline

307
00:17:00,640 --> 00:17:03,080
Speaker 1: with a little purple lights when you come on board

308
00:17:03,160 --> 00:17:06,600
Speaker 1: in the white seats and it's oh so cool. Is

309
00:17:06,640 --> 00:17:09,600
Speaker 1: that going to work out? Alaska air mating with Mr

310
00:17:09,720 --> 00:17:11,560
Speaker 1: cush and Virgin America? Is that going to be a

311
00:17:11,640 --> 00:17:14,520
Speaker 1: good thing? I think it is. You know, Alaska has

312
00:17:14,560 --> 00:17:17,440
Speaker 1: a pretty dominant position in the Pacific Northwest, and and

313
00:17:17,680 --> 00:17:21,359
Speaker 1: and virgins com clearly appealed to two travelers in in

314
00:17:21,800 --> 00:17:24,440
Speaker 1: San Francisco in l a um and and you know,

315
00:17:24,520 --> 00:17:26,280
Speaker 1: this is Alaska management team has a kind of a

316
00:17:26,400 --> 00:17:29,119
Speaker 1: long history of that kind of creating sharehold value and

317
00:17:29,240 --> 00:17:32,320
Speaker 1: creating a product that customers really like. So I wouldn't

318
00:17:32,359 --> 00:17:34,520
Speaker 1: bet against them, And I think I think this is

319
00:17:34,560 --> 00:17:36,360
Speaker 1: gonna work, which is not gonna be easy, but it's

320
00:17:36,359 --> 00:17:39,959
Speaker 1: gonna work. Right, what's your single best buck right now?

321
00:17:40,040 --> 00:17:42,840
Speaker 1: You know? I do like Alaska, it's for the longer term. Uh,

322
00:17:43,280 --> 00:17:47,600
Speaker 1: And the proposed acquisition clearly's uh you know, creates risks

323
00:17:47,640 --> 00:17:49,639
Speaker 1: in the near term, but I think they're they're creating

324
00:17:49,680 --> 00:17:52,880
Speaker 1: a platform for future growth. So we definitely like Alaska.

325
00:17:52,960 --> 00:17:56,320
Speaker 1: Here best airline in the best airport, rather in the country.

326
00:17:56,480 --> 00:17:58,760
Speaker 1: Best airport, not the worst. It's easy to say the worst.

327
00:17:58,800 --> 00:18:02,720
Speaker 1: Everybody focuses which is the airport we shall aspire to.

328
00:18:04,119 --> 00:18:07,639
Speaker 1: I'm gonna go with my hometown airport, Tampa air Tampa Airport.

329
00:18:08,000 --> 00:18:10,520
Speaker 1: It's actually gotten a lot of accolades and they do

330
00:18:10,600 --> 00:18:14,560
Speaker 1: a good job. The Tampa International Airport. What do they

331
00:18:14,600 --> 00:18:17,800
Speaker 1: do right? Um, you know, they've been first with kind

332
00:18:17,800 --> 00:18:20,400
Speaker 1: of free WiFi. If it's easy to get to your gate,

333
00:18:20,520 --> 00:18:23,520
Speaker 1: it's kind of short times. And so when the Pittsburgh

334
00:18:23,640 --> 00:18:27,280
Speaker 1: Penguins come in this week up one game to zero

335
00:18:27,880 --> 00:18:31,080
Speaker 1: against the Tampa Bay Lightning, when they come in, they'll

336
00:18:31,119 --> 00:18:33,720
Speaker 1: have a good access into Tampa. They'll have a good

337
00:18:33,720 --> 00:18:35,679
Speaker 1: access into Tampa. That might be the only good thing

338
00:18:35,760 --> 00:18:44,000
Speaker 1: that they have. Yeah, oh, Tom, last time she's on obviously,

339
00:18:44,280 --> 00:18:46,680
Speaker 1: take you so much to the Raymond James is the

340
00:18:46,800 --> 00:18:49,879
Speaker 1: Tampa Bay Lightning. For those of you worldwide. The Tampa

341
00:18:49,960 --> 00:18:53,159
Speaker 1: The Tampa Bay's good morning, Mr Vinnick. If you're listening,

342
00:18:53,240 --> 00:18:57,320
Speaker 1: the Tampa Bay's always surprised in a hockey they are.

343
00:18:57,520 --> 00:19:00,200
Speaker 1: They are the team no one knows. Did is a

344
00:19:00,359 --> 00:19:03,639
Speaker 1: joy to watch. They are just they have ice and

345
00:19:03,800 --> 00:19:08,840
Speaker 1: they have a really loyal fan base, and they're always

346
00:19:08,960 --> 00:19:10,960
Speaker 1: You watch them and you go, why am I watching?

347
00:19:11,240 --> 00:19:14,879
Speaker 1: And it's always a great always a great game, and

348
00:19:14,960 --> 00:19:17,680
Speaker 1: then you won't go to the beach after the game. Yeah,

349
00:19:18,440 --> 00:19:20,520
Speaker 1: well there it is. Sabviously, this was great. We get

350
00:19:20,520 --> 00:19:22,800
Speaker 1: a huge response from our airline coverage, and we thank

351
00:19:22,840 --> 00:19:25,479
Speaker 1: our team for getting us in front of Savvy as

352
00:19:25,520 --> 00:19:27,720
Speaker 1: she ran through the various things. The only thing we

353
00:19:27,760 --> 00:19:30,760
Speaker 1: didn't get from her as Miles. You know, I I

354
00:19:31,040 --> 00:19:34,320
Speaker 1: find in in the day to day chat all people want,

355
00:19:34,400 --> 00:19:36,600
Speaker 1: Mike is get me a ticket, Get me a ticket,

356
00:19:36,680 --> 00:19:39,480
Speaker 1: Get me a ticket. Well, business people like the perk

357
00:19:39,560 --> 00:19:42,040
Speaker 1: of being able to either get upgraded or or at

358
00:19:42,119 --> 00:19:44,760
Speaker 1: least get on a plane earlier, so you get a

359
00:19:44,920 --> 00:19:48,440
Speaker 1: place for your carry on luggage. We will see there.

360
00:19:48,480 --> 00:19:50,400
Speaker 1: It is Savvy's sides. With three minutes, we are having

361
00:19:50,440 --> 00:19:54,080
Speaker 1: a wonderful Friday major shot out. We're gonna continue, get

362
00:19:54,160 --> 00:19:56,720
Speaker 1: the markets open for you, and continue and finish strong.

363
00:19:56,800 --> 00:20:01,320
Speaker 1: Here on a Friday worldwide, coast to coast Bloomberger eleventh THREEO,

364
00:20:01,359 --> 00:20:07,400
Speaker 1: New York, Bloomberg's Surveillance counting down to the opening Bell,

365
00:20:07,440 --> 00:20:09,120
Speaker 1: brought to you by the Jeep Grand Cherokee, the most

366
00:20:09,160 --> 00:20:12,080
Speaker 1: awarded suv ever. The Grand Cherokee continues to raise the

367
00:20:12,119 --> 00:20:15,919
Speaker 1: bar with its luxurious interior and legendary four by four capability.

368
00:20:16,040 --> 00:20:17,800
Speaker 1: Drive one at your local Jeep dealer today