1 00:00:06,360 --> 00:00:13,040 Speaker 1: Yeah, Welcome to the Bloomberg Surveillance Podcast. I'm Tom Keene 2 00:00:13,480 --> 00:00:17,560 Speaker 1: Jay Lee. We bring you insight from the best in economics, finance, investment, 3 00:00:18,000 --> 00:00:23,520 Speaker 1: and international relations. Find Bloomberg Surveillance on Apple Podcasts, SoundCloud, 4 00:00:23,600 --> 00:00:32,960 Speaker 1: Bloomberg dot Com, and of course, on the Bloomberg Let's 5 00:00:33,000 --> 00:00:35,800 Speaker 1: get the latest on the geopolitical news show and cross 6 00:00:35,840 --> 00:00:38,320 Speaker 1: over to Seul to catch up with Bloomberg Soul Bureau 7 00:00:38,400 --> 00:00:41,480 Speaker 1: chief Peter pay. Peter walked me through what we've learned 8 00:00:41,520 --> 00:00:44,320 Speaker 1: in the last thirty minutes or suck. Yes, it's pretty 9 00:00:44,360 --> 00:00:49,159 Speaker 1: amazing about it. About thirty minutes ago. South Korea's special 10 00:00:49,200 --> 00:00:52,760 Speaker 1: and envoys to North Korea returned actually a couple of 11 00:00:52,800 --> 00:00:56,200 Speaker 1: hours ago and gave their briefing, basically saying that they 12 00:00:56,200 --> 00:00:59,400 Speaker 1: were told by North Korea's leader, Kim Jong learn that 13 00:00:59,760 --> 00:01:02,920 Speaker 1: he was willing to sit down with the United States 14 00:01:02,920 --> 00:01:07,120 Speaker 1: and have a hard to hard talk, including the possibility 15 00:01:07,280 --> 00:01:11,640 Speaker 1: of the nuclearizing North Korea, which is a stunning shift 16 00:01:11,880 --> 00:01:15,480 Speaker 1: if that's true, considering that North Korea has always maintained 17 00:01:15,520 --> 00:01:19,120 Speaker 1: that their nuclear program was not negotiable. Yeah, pac it 18 00:01:19,120 --> 00:01:21,639 Speaker 1: does write the question what was the catalyst for the change? 19 00:01:21,680 --> 00:01:24,679 Speaker 1: The push that led to the shift. Well, that's a 20 00:01:24,680 --> 00:01:28,480 Speaker 1: good question. I mean, obviously the ditant had had significantly 21 00:01:28,520 --> 00:01:31,440 Speaker 1: increased over the last month or two, mainly because North 22 00:01:31,520 --> 00:01:35,479 Speaker 1: Korea decided to participate in the in the kun Channa Olympics. 23 00:01:36,760 --> 00:01:39,640 Speaker 1: I think that the Trump administration will take some credit 24 00:01:39,680 --> 00:01:41,800 Speaker 1: for it, maybe a large credit for it, saying that 25 00:01:41,880 --> 00:01:46,480 Speaker 1: they it was because of their hardlines and increasing the 26 00:01:46,480 --> 00:01:50,120 Speaker 1: the sanctions, their maximum pressure campaign that might have pushed 27 00:01:50,160 --> 00:01:53,840 Speaker 1: North Korea's Kim Jong leund to insteed and and uh 28 00:01:53,920 --> 00:01:58,880 Speaker 1: and come to the table again. It's uh, anybody's guests. 29 00:01:59,120 --> 00:02:01,960 Speaker 1: North Korea has all has been unpredictable, and this was 30 00:02:02,000 --> 00:02:05,480 Speaker 1: another case of this today for a long time. In fact, 31 00:02:05,480 --> 00:02:07,080 Speaker 1: for the last year, for much of the past year, 32 00:02:07,120 --> 00:02:08,679 Speaker 1: the President of the United States has said that he 33 00:02:08,720 --> 00:02:11,640 Speaker 1: would back off China on trade issues if they stepped 34 00:02:11,680 --> 00:02:14,960 Speaker 1: up the pressure on North Korea. From the experts you 35 00:02:15,000 --> 00:02:18,560 Speaker 1: speak to, Peter, is that what's worked here? Has that 36 00:02:18,639 --> 00:02:23,200 Speaker 1: helped the situation? Well, you know, uh, yeah, in some part, 37 00:02:23,560 --> 00:02:26,720 Speaker 1: maybe a large part, it may have, considering that China 38 00:02:26,919 --> 00:02:31,160 Speaker 1: was the largest trading partner for North Korea and provided 39 00:02:31,240 --> 00:02:34,440 Speaker 1: much of their you know, their lifeline really and that 40 00:02:34,560 --> 00:02:41,000 Speaker 1: had been cut back significantly. China did cooperate with the US, 41 00:02:41,200 --> 00:02:45,160 Speaker 1: particularly Donald Trump's request to tighten the section. Yeah, that 42 00:02:45,320 --> 00:02:47,640 Speaker 1: might have put a squeeze on North Korea. Um that 43 00:02:48,040 --> 00:02:50,720 Speaker 1: you know again, will we will see Bloom Maxel and 44 00:02:50,760 --> 00:02:53,840 Speaker 1: Bureau Chief Peter Page joining us from Seoul. In South Korea, 45 00:02:53,880 --> 00:02:57,320 Speaker 1: the message coming from South Korea from the Special Envoy 46 00:02:57,440 --> 00:03:00,760 Speaker 1: returning from pyong Yang saying that North Korea is open 47 00:03:00,880 --> 00:03:03,799 Speaker 1: to d nuclearize if the regime's safety is ashore. Do 48 00:03:03,840 --> 00:03:06,080 Speaker 1: you see the impact on the FX market thirty minutes 49 00:03:06,120 --> 00:03:08,560 Speaker 1: ago when this news drop donal witness across the board, 50 00:03:08,560 --> 00:03:11,000 Speaker 1: with the exception of the Japanese yen Dolly yen pushing 51 00:03:11,080 --> 00:03:13,240 Speaker 1: higher by just a tenth of one percent after being 52 00:03:13,320 --> 00:03:15,640 Speaker 1: lower earlier in the session by about a third, Dolly 53 00:03:15,680 --> 00:03:19,120 Speaker 1: Jenne getting up to one zero six spot thirty nine. So, 54 00:03:19,280 --> 00:03:21,840 Speaker 1: Tom King, we've got to talk about geopolitical risk fading 55 00:03:21,919 --> 00:03:25,200 Speaker 1: in North Korea and trade war risk rising here in 56 00:03:25,200 --> 00:03:28,840 Speaker 1: the United States potentially. Well, those are the I guess 57 00:03:28,880 --> 00:03:31,640 Speaker 1: for investment, those are the exaggerates, sharks and things that 58 00:03:31,680 --> 00:03:34,960 Speaker 1: are out there that can surprise is clearly was taken 59 00:03:35,000 --> 00:03:38,120 Speaker 1: as a surprise as we saw the tenure yield reverse 60 00:03:38,160 --> 00:03:42,680 Speaker 1: and move higher. Someone John Pharaoh that has to synthesize 61 00:03:43,600 --> 00:03:46,280 Speaker 1: these headlines I guess from outside, and of course to 62 00:03:46,320 --> 00:03:50,120 Speaker 1: our global Wall Street audience is Charles Cantor with new 63 00:03:50,160 --> 00:03:52,600 Speaker 1: Burger Berman, who has to he has an apt I 64 00:03:52,600 --> 00:03:56,840 Speaker 1: believe Johnny has an optimistic take. I'm where we're heading. Yeah, 65 00:03:57,040 --> 00:03:59,680 Speaker 1: and you get headlines like this and you know, futures 66 00:03:59,720 --> 00:04:02,840 Speaker 1: up a heaven. It's pretty good, particularly after what we 67 00:04:02,920 --> 00:04:05,680 Speaker 1: witnessed in Washington yesterday. You'd have to say, Charles that 68 00:04:05,720 --> 00:04:08,200 Speaker 1: the optimism at the moment it's being rewarded. That if 69 00:04:08,240 --> 00:04:11,240 Speaker 1: you faded the trade war risk through Thursday, you've been 70 00:04:11,240 --> 00:04:15,440 Speaker 1: handsomely rewarded through Friday and Monday. Pessimism doesn't get rewarded 71 00:04:15,480 --> 00:04:18,760 Speaker 1: these days, Charles, Does that change anytime soon? Well, it's 72 00:04:18,760 --> 00:04:22,840 Speaker 1: a function of the backdrop. Pessimism gets rewarded when when 73 00:04:22,920 --> 00:04:27,159 Speaker 1: you're starting points provide you with no margin of safety. 74 00:04:27,440 --> 00:04:31,000 Speaker 1: UM today's starting points, I would suggest, provides you with 75 00:04:31,080 --> 00:04:34,160 Speaker 1: a very reasonable margin of safety through the lens of 76 00:04:34,160 --> 00:04:37,680 Speaker 1: of valuation and discount rates. UM market today on a 77 00:04:37,800 --> 00:04:42,400 Speaker 1: ford Pe basis is possibly as cheap and as expensive 78 00:04:42,520 --> 00:04:45,080 Speaker 1: as last year, and we know what happened last year, 79 00:04:45,080 --> 00:04:48,080 Speaker 1: So there's been a surgeon corporate profits. Yes, the stock 80 00:04:48,120 --> 00:04:52,839 Speaker 1: markets up, but but business and um and consumer confidence 81 00:04:53,000 --> 00:04:57,720 Speaker 1: is very high. And and with confidence comes comes investment 82 00:04:57,920 --> 00:05:02,159 Speaker 1: and and planning on on on in ovation. So context matters, 83 00:05:02,800 --> 00:05:06,800 Speaker 1: um and starting points matter, and today's starting point is 84 00:05:06,839 --> 00:05:10,039 Speaker 1: as reasonable as last year, which I would suggest is 85 00:05:10,040 --> 00:05:12,640 Speaker 1: is still reasonable. When Charles Cancer picks up the front 86 00:05:12,640 --> 00:05:14,960 Speaker 1: pages of the newspapers here in the United States and 87 00:05:15,000 --> 00:05:18,039 Speaker 1: the trade wars plastered everywhere in the president United States 88 00:05:18,040 --> 00:05:21,200 Speaker 1: with some heightened rehetoric around it, the market's fading that 89 00:05:21,320 --> 00:05:23,640 Speaker 1: the view on Wall Street has changed radically compared to 90 00:05:23,640 --> 00:05:26,080 Speaker 1: what you see on the front page of the national papers. 91 00:05:26,120 --> 00:05:28,400 Speaker 1: But for you, Charles, to Tom's point, how do you 92 00:05:28,440 --> 00:05:31,919 Speaker 1: synthesize those points that come from the nation's capital and 93 00:05:31,920 --> 00:05:35,440 Speaker 1: the idea that we're drifting towards a trade war? Well 94 00:05:35,839 --> 00:05:39,240 Speaker 1: it for us, it comes from from a process and 95 00:05:39,720 --> 00:05:42,800 Speaker 1: how we define ourselves. And we are long term investors. 96 00:05:43,160 --> 00:05:46,000 Speaker 1: We try and block out the news and make sure 97 00:05:46,040 --> 00:05:49,080 Speaker 1: as we allocate capital, we get you know, we get 98 00:05:49,080 --> 00:05:51,640 Speaker 1: rewarded for the risk we take in and and and 99 00:05:51,680 --> 00:05:57,280 Speaker 1: the time that we've invested UM so yes on the margin. UM. 100 00:05:57,360 --> 00:06:01,960 Speaker 1: The headlines matter. Anything that had the potential to disrupt 101 00:06:02,360 --> 00:06:06,880 Speaker 1: supply and demand UM matters. Of course, we we dig 102 00:06:06,880 --> 00:06:10,000 Speaker 1: in on on on on those that are most likely 103 00:06:10,080 --> 00:06:14,120 Speaker 1: to be affected if the rules of of of the road, uh, 104 00:06:14,600 --> 00:06:17,279 Speaker 1: the rules of the game were implemented as suggested, which 105 00:06:17,279 --> 00:06:20,200 Speaker 1: they haven't been. And so you dig in on the industrials, 106 00:06:20,240 --> 00:06:23,080 Speaker 1: you dig in on the machinery side. You you, you, 107 00:06:23,080 --> 00:06:25,480 Speaker 1: you you, You call folks and and figure out how 108 00:06:25,520 --> 00:06:28,799 Speaker 1: much of the steel price increase will pass We passed 109 00:06:28,839 --> 00:06:31,600 Speaker 1: a long end, and and and and and how does 110 00:06:31,640 --> 00:06:34,880 Speaker 1: it affect um demand? Full goods and services? You know 111 00:06:34,920 --> 00:06:37,680 Speaker 1: we saw yesterday headline and full full disclosure, folks. I'm 112 00:06:37,680 --> 00:06:40,279 Speaker 1: not up to speed on a story where a CEO 113 00:06:40,360 --> 00:06:42,760 Speaker 1: of a railroad company were shown the door yesterday and 114 00:06:42,800 --> 00:06:46,279 Speaker 1: the board talked about they needed more energy, they needed 115 00:06:46,279 --> 00:06:49,839 Speaker 1: to energize, etcetera, etcetera. What this comes down to, Charles, 116 00:06:49,839 --> 00:06:55,240 Speaker 1: which I know is religion for you, is corporate capital allocation. 117 00:06:55,680 --> 00:07:00,400 Speaker 1: How do you identify large corporations that are poorly deploying capital? 118 00:07:00,640 --> 00:07:03,080 Speaker 1: Is it in the annual report? Is it something that 119 00:07:03,160 --> 00:07:05,719 Speaker 1: happens with smoking incense. How do you figure that out? 120 00:07:06,640 --> 00:07:08,839 Speaker 1: There are a bunch of ways to attempt to figure 121 00:07:08,839 --> 00:07:11,440 Speaker 1: that out. UM. One is to to look at the 122 00:07:11,480 --> 00:07:17,120 Speaker 1: CEOs record on return on invested capital. Has his investments 123 00:07:17,240 --> 00:07:20,440 Speaker 1: covered his cost of capital? Has it covered the cost 124 00:07:20,480 --> 00:07:23,680 Speaker 1: of capital? Has it covered the risk of implementation? Has 125 00:07:23,720 --> 00:07:27,520 Speaker 1: it covered the risk of the deal? Um? And and 126 00:07:27,520 --> 00:07:31,200 Speaker 1: and nothing speaks more loudly than that metric over time 127 00:07:31,800 --> 00:07:35,240 Speaker 1: and and businesses that can earn a reasonable return on 128 00:07:35,320 --> 00:07:38,200 Speaker 1: capital through a business cycle or through a very large 129 00:07:38,240 --> 00:07:42,040 Speaker 1: strategic deal um get placed um in a in a 130 00:07:42,160 --> 00:07:47,840 Speaker 1: very pecurious place. Um and and mean meaning job at risk, 131 00:07:48,080 --> 00:07:53,160 Speaker 1: board under fire. Do you assume that real rates inflation 132 00:07:53,400 --> 00:07:57,040 Speaker 1: adjusted interest rates rise here or is it just a 133 00:07:57,120 --> 00:08:02,440 Speaker 1: nominal interest rate exercise? I think for us it has 134 00:08:02,480 --> 00:08:05,080 Speaker 1: to be a bit of both. Um. At some point, 135 00:08:05,400 --> 00:08:09,080 Speaker 1: the the the the the yield itself, let's say, on 136 00:08:09,160 --> 00:08:13,000 Speaker 1: the on the tenure becomes a headwind UM And think, 137 00:08:13,040 --> 00:08:16,960 Speaker 1: while we've observed so far has been which I don't 138 00:08:17,000 --> 00:08:21,240 Speaker 1: think gets necessarily enough attention, is there's there's been an 139 00:08:21,280 --> 00:08:25,600 Speaker 1: equally large step up in real growth expectations as they 140 00:08:25,640 --> 00:08:31,520 Speaker 1: have been in inflation. UM. And that's a fantastically healthy environment. 141 00:08:31,560 --> 00:08:34,280 Speaker 1: The bond market is suggesting there's going to be more 142 00:08:34,360 --> 00:08:37,520 Speaker 1: real growth um which we have, which which has been 143 00:08:37,920 --> 00:08:41,800 Speaker 1: stubbornly low for a very long period of time. But yes, 144 00:08:41,960 --> 00:08:46,720 Speaker 1: at some point um the aggregate yield on on tenure treasuries, 145 00:08:47,280 --> 00:08:49,320 Speaker 1: you know, will become a headwind. I mean, I like 146 00:08:49,440 --> 00:08:54,200 Speaker 1: to describe today's environment as in simple terms, we have 147 00:08:54,320 --> 00:08:58,600 Speaker 1: lots of certainty on fundamentals and lots of uncertainty on rates. 148 00:08:58,760 --> 00:09:01,640 Speaker 1: And that's dramatically different than the mosaic we've played with 149 00:09:01,640 --> 00:09:03,800 Speaker 1: over the last five years. Charles Kinter with us a 150 00:09:03,880 --> 00:09:20,920 Speaker 1: new Vermint right now with this, Kim Wallace uh joins 151 00:09:20,920 --> 00:09:24,600 Speaker 1: from Erasia Group and Kim we in a spirited conversation 152 00:09:24,720 --> 00:09:29,880 Speaker 1: earlier this morning about the organizational chart of Washington. You've 153 00:09:29,920 --> 00:09:33,520 Speaker 1: experienced that at Treasury with President Obama, but you've also 154 00:09:33,559 --> 00:09:36,120 Speaker 1: experienced it a student of the game as well. Do 155 00:09:36,200 --> 00:09:38,720 Speaker 1: you know where the dotted lines and the solid lines 156 00:09:38,800 --> 00:09:43,720 Speaker 1: are within Republican Washington right now? No, nor do I 157 00:09:43,800 --> 00:09:46,719 Speaker 1: think they do. The dotted lines are more important. The 158 00:09:46,800 --> 00:09:50,320 Speaker 1: informal relationships have built up over the last six quarters. 159 00:09:50,440 --> 00:09:53,520 Speaker 1: Tom have served the leaders on the hill, and I 160 00:09:53,559 --> 00:09:55,600 Speaker 1: think the staff in the White House better than the 161 00:09:55,640 --> 00:09:59,480 Speaker 1: formal lines. My book this summer, and I haven't even announced, yeah, 162 00:09:59,520 --> 00:10:02,000 Speaker 1: but I'll do it right now is Threat Matrix, which 163 00:10:02,000 --> 00:10:04,640 Speaker 1: is a terrific book about Part of it is about 164 00:10:04,640 --> 00:10:07,960 Speaker 1: the Bush administration and the security apparatus after the horror 165 00:10:08,360 --> 00:10:12,319 Speaker 1: of nine eleven, and we all understand there the organizational 166 00:10:12,400 --> 00:10:16,120 Speaker 1: chart was really white house centric and everybody else had 167 00:10:16,160 --> 00:10:19,160 Speaker 1: better understand it was white house centric. Is that the 168 00:10:19,200 --> 00:10:22,000 Speaker 1: way this administration is? I mean you you were a 169 00:10:22,120 --> 00:10:26,720 Speaker 1: treasury within the Obama administration. Every administration is different. Is 170 00:10:26,760 --> 00:10:29,319 Speaker 1: it white House centric now or is it something else? 171 00:10:30,000 --> 00:10:32,800 Speaker 1: It's white house centric from the top line, but in 172 00:10:32,880 --> 00:10:35,720 Speaker 1: terms of the functions and the actual production of policy, 173 00:10:36,080 --> 00:10:39,240 Speaker 1: it's diffused from there. And that's actually a risk to 174 00:10:39,280 --> 00:10:43,160 Speaker 1: the president. One of the keys of confidence building in 175 00:10:43,200 --> 00:10:46,440 Speaker 1: the US as a president who understands the apparatus underneath 176 00:10:46,520 --> 00:10:51,000 Speaker 1: him and or her individually and UH will use that 177 00:10:51,559 --> 00:10:57,720 Speaker 1: utilize those authorities. Well, the president hasn't learned those yet. 178 00:10:57,760 --> 00:11:00,440 Speaker 1: He didn't come with those skills, and so you see 179 00:11:00,440 --> 00:11:03,640 Speaker 1: a bunch of his agency heads feeling the void, which 180 00:11:03,679 --> 00:11:05,960 Speaker 1: happens in Washington all the time. So Kim, help us 181 00:11:06,040 --> 00:11:09,160 Speaker 1: understand with that perspective, what is happening with the trade issue. 182 00:11:09,760 --> 00:11:14,479 Speaker 1: These policies set to become policy or they negotiations tactics 183 00:11:14,559 --> 00:11:17,680 Speaker 1: for a whole array of issues. It's pretty clear sitting 184 00:11:17,679 --> 00:11:20,360 Speaker 1: here on Tuesday morning that it's a negotiation tactic, and 185 00:11:20,559 --> 00:11:24,840 Speaker 1: the tying of stealing aluminum tariffs to negotiations down in 186 00:11:24,880 --> 00:11:28,760 Speaker 1: Mexico City is a big reach, but nonetheless it underscores 187 00:11:28,800 --> 00:11:31,560 Speaker 1: the way the president thinks about policy making. He thinks 188 00:11:31,559 --> 00:11:33,760 Speaker 1: about it the same way he did in the private sector, 189 00:11:34,160 --> 00:11:37,760 Speaker 1: and increasingly that's becoming more and more complicated for him. 190 00:11:37,800 --> 00:11:40,800 Speaker 1: It's transactional. Does that make it difficult to execute policy 191 00:11:40,800 --> 00:11:43,400 Speaker 1: in Washington, d c? And if so, how doesn't make 192 00:11:43,440 --> 00:11:45,280 Speaker 1: it difficult? It's just that you have to have all 193 00:11:45,320 --> 00:11:48,400 Speaker 1: of your trading partners or your negotiating partners understand that 194 00:11:48,400 --> 00:11:50,000 Speaker 1: that's how you deal, and you have to have a 195 00:11:50,040 --> 00:11:52,240 Speaker 1: staff that backs you up in that style. Right now, 196 00:11:52,240 --> 00:11:56,640 Speaker 1: we don't have that linear thought process nor delivery of product. 197 00:11:56,840 --> 00:11:58,960 Speaker 1: How rare is it to see what we're witnessing right 198 00:11:59,000 --> 00:12:01,480 Speaker 1: now for the leadership up of Paul Ryan to question 199 00:12:01,520 --> 00:12:04,280 Speaker 1: the president's objectives at the moment with the tarrists that 200 00:12:04,320 --> 00:12:06,440 Speaker 1: he's put on the table and for the potential within 201 00:12:06,480 --> 00:12:09,600 Speaker 1: the administrations, have a break from St. Gary Cone, one 202 00:12:09,600 --> 00:12:12,200 Speaker 1: of his lead economic advisors, to say, hold on a minute. 203 00:12:12,360 --> 00:12:15,040 Speaker 1: He said, to be conveying business leaders who consume metals 204 00:12:15,080 --> 00:12:17,400 Speaker 1: to try and convince the president not to do this. 205 00:12:17,480 --> 00:12:19,400 Speaker 1: How rare are these kind of things. To say that 206 00:12:19,440 --> 00:12:22,720 Speaker 1: the process now in Washington is unique is an understatement. 207 00:12:22,800 --> 00:12:25,640 Speaker 1: And so what you will have is you'll continue to 208 00:12:25,720 --> 00:12:29,319 Speaker 1: have fits and starts and policy, which I think erodes 209 00:12:29,800 --> 00:12:33,680 Speaker 1: the president's authority, not only in Washington but around the world. 210 00:12:33,800 --> 00:12:37,559 Speaker 1: Have you seen a good number and where our fiscal 211 00:12:37,640 --> 00:12:41,720 Speaker 1: deficits going? I I've been working just under one point 212 00:12:41,960 --> 00:12:45,720 Speaker 1: for trillion. Have you seen a better study yet or 213 00:12:45,760 --> 00:12:47,920 Speaker 1: do we just we just simply don't know do it? 214 00:12:48,000 --> 00:12:50,000 Speaker 1: We don't know for sure? But the simple math in 215 00:12:50,040 --> 00:12:52,400 Speaker 1: front of us is about one point five trillion added 216 00:12:52,440 --> 00:12:55,880 Speaker 1: to the tenure baseline from the spending program in February 217 00:12:55,920 --> 00:12:58,240 Speaker 1: and about the same one point for one point five 218 00:12:58,240 --> 00:13:03,120 Speaker 1: trillion added from the tax program in December. Ten years, 219 00:13:03,280 --> 00:13:08,600 Speaker 1: the trillion three trillion out over ten years, John, You're 220 00:13:08,640 --> 00:13:11,720 Speaker 1: gonna be dazzled by this that's three billion a year. 221 00:13:12,760 --> 00:13:17,920 Speaker 1: I think we will pay some of that interest cost 222 00:13:17,960 --> 00:13:21,040 Speaker 1: of that because all of that is debt financed, and 223 00:13:21,080 --> 00:13:24,800 Speaker 1: so the fiscal story is much more complicated than it's 224 00:13:24,840 --> 00:13:28,600 Speaker 1: being given attention, and will become dangerous with that attention 225 00:13:28,600 --> 00:13:30,600 Speaker 1: in the next year or two. We should point out 226 00:13:30,640 --> 00:13:33,120 Speaker 1: this is one of your great acclaims, Kim Wallace. If 227 00:13:33,160 --> 00:13:36,680 Speaker 1: that is the fact, when does the mystery go away? 228 00:13:36,760 --> 00:13:40,920 Speaker 1: When do we actually begin to understand what we have wrought? 229 00:13:41,960 --> 00:13:45,080 Speaker 1: Usually in policy making or politics, you only understand what 230 00:13:45,200 --> 00:13:47,320 Speaker 1: you've wrought when somebody has pointed it out to you. 231 00:13:47,400 --> 00:13:49,280 Speaker 1: In this case, we rely on the CBO and the 232 00:13:49,400 --> 00:13:52,120 Speaker 1: l m B to do that. The Congressional Budget Office 233 00:13:52,120 --> 00:13:54,160 Speaker 1: will come out with a re estimate of the baseline 234 00:13:54,160 --> 00:13:56,640 Speaker 1: in April. That will get attention. It will generally we're 235 00:13:56,640 --> 00:14:01,520 Speaker 1: waiting for CBO's changed. Nothing's changed until April. And frankly, 236 00:14:01,760 --> 00:14:05,479 Speaker 1: when you have the US economy pumping on many cylinders 237 00:14:05,480 --> 00:14:08,239 Speaker 1: as it is now, maybe not all cylinders, but many cylinders, 238 00:14:08,600 --> 00:14:11,600 Speaker 1: it distracts from the downside story. So my guess, as 239 00:14:11,640 --> 00:14:14,120 Speaker 1: you'll be into next year or sometime after the election 240 00:14:14,160 --> 00:14:17,520 Speaker 1: before you start thinking seriously about fiscal policy. Drag Kim Wallace. 241 00:14:17,559 --> 00:14:19,880 Speaker 1: Before we let you go, We've done trade policy, fiscal policy. 242 00:14:19,920 --> 00:14:23,200 Speaker 1: Let's talk about foreign policy just briefly. Some important headlines 243 00:14:23,240 --> 00:14:25,480 Speaker 1: coming out of North Korea and South Korea this morning 244 00:14:25,520 --> 00:14:28,720 Speaker 1: that the North may be willing to denuclearize if the 245 00:14:28,840 --> 00:14:32,920 Speaker 1: regime is protected. How does one protect a regime when 246 00:14:33,000 --> 00:14:35,880 Speaker 1: history says that once the country is denuclearized, something very 247 00:14:35,920 --> 00:14:38,760 Speaker 1: different happens. It's a great question. I think it points 248 00:14:38,760 --> 00:14:41,280 Speaker 1: to the difficulty in reaching the kind of a deal 249 00:14:41,360 --> 00:14:44,480 Speaker 1: that the headlines are suggesting. It is not to say 250 00:14:44,560 --> 00:14:47,040 Speaker 1: that the South Koreans don't have an abiding interest in 251 00:14:47,080 --> 00:14:49,280 Speaker 1: a deal. Obviously they do more than anyone else in 252 00:14:49,280 --> 00:14:52,240 Speaker 1: the world, maybe Japan. But it does point to the 253 00:14:52,280 --> 00:14:55,600 Speaker 1: fact that getting the regime that has spent the last 254 00:14:55,640 --> 00:14:59,440 Speaker 1: thirty years building its national defenses to back away from 255 00:14:59,640 --> 00:15:02,600 Speaker 1: what you say the sweetest part of those national defenses 256 00:15:02,880 --> 00:15:06,359 Speaker 1: will be very difficult. And if that requires a superpower 257 00:15:06,440 --> 00:15:10,120 Speaker 1: like the US to give concessions publicly and privately in 258 00:15:10,280 --> 00:15:12,360 Speaker 1: order to get that deal, you have to believe that 259 00:15:12,400 --> 00:15:14,640 Speaker 1: deal is long and coming. Would it be fat to 260 00:15:14,720 --> 00:15:17,200 Speaker 1: say that this unique approach from this administration might be 261 00:15:17,240 --> 00:15:20,600 Speaker 1: generating some results on the foreign policy side of things, Kim, 262 00:15:20,720 --> 00:15:24,360 Speaker 1: obfuscation and foreign policy is a plus usually so long 263 00:15:24,400 --> 00:15:27,720 Speaker 1: as you have a strategy. Kim Wells, thank you so much. 264 00:15:27,760 --> 00:15:30,640 Speaker 1: This is brilliant. Thank you, But have you look forward 265 00:15:30,640 --> 00:15:35,040 Speaker 1: to speaking to you FM Washington Studios as well. He 266 00:15:35,160 --> 00:15:50,320 Speaker 1: is with your AISI group with them. Stephen Short with 267 00:15:50,400 --> 00:15:52,760 Speaker 1: us now he's with us recently on oil Steve. When 268 00:15:52,800 --> 00:15:54,680 Speaker 1: I want to go back to short one oh one, 269 00:15:55,320 --> 00:15:59,520 Speaker 1: which is a basic question, are we energy independent that's 270 00:15:59,520 --> 00:16:02,760 Speaker 1: been around own for a lifetime. Are we there yet? 271 00:16:03,760 --> 00:16:05,920 Speaker 1: We are not there yet, But if you do believe 272 00:16:05,960 --> 00:16:09,000 Speaker 1: the i e. A. Which is a body that studies 273 00:16:09,040 --> 00:16:13,160 Speaker 1: this based on Paris, certainly within the next five years, Uh, 274 00:16:13,200 --> 00:16:17,400 Speaker 1: they're projecting that not necessarily independent, but the United States 275 00:16:17,400 --> 00:16:21,000 Speaker 1: will certainly be the largest krudal producer, surpassing We've already 276 00:16:21,000 --> 00:16:25,320 Speaker 1: surpassed Staudi Arabia and will certainly surpass of Russia probably 277 00:16:25,360 --> 00:16:28,440 Speaker 1: by the end of next year as far as rudal 278 00:16:28,480 --> 00:16:32,040 Speaker 1: production goes. So at that point, guys, what I really 279 00:16:32,040 --> 00:16:36,080 Speaker 1: want to emphasize is that the demand structure has completely changed. 280 00:16:36,200 --> 00:16:38,800 Speaker 1: And Tom, I know this is right up your alley. Uh, 281 00:16:38,840 --> 00:16:45,480 Speaker 1: the elasticities of demand are changing quite substantially, because now 282 00:16:45,480 --> 00:16:47,640 Speaker 1: we have the sector factor. The second fact that that 283 00:16:47,720 --> 00:16:50,960 Speaker 1: impacts consumer behavior, and that is substitutes. And of course 284 00:16:50,960 --> 00:16:54,240 Speaker 1: I'm talking about electric vehicles and driverless technology, but they're 285 00:16:54,240 --> 00:16:56,240 Speaker 1: not there yet. They're not there yet, So how do 286 00:16:56,280 --> 00:17:00,680 Speaker 1: you just that to the present to the president? Right now? 287 00:17:01,160 --> 00:17:04,760 Speaker 1: We've made a significant impact already just in the past 288 00:17:04,800 --> 00:17:08,879 Speaker 1: five years, and hence we're don't we're not seeing a 289 00:17:08,960 --> 00:17:13,040 Speaker 1: commensurate increase in demand a relative to what you would 290 00:17:13,119 --> 00:17:16,680 Speaker 1: normally expect, giving the improvement in the economy, the improvement 291 00:17:16,760 --> 00:17:19,800 Speaker 1: in incomes right now, so this is essentially telling me 292 00:17:19,920 --> 00:17:22,919 Speaker 1: that we're already starting to see the impact. Uh and 293 00:17:23,040 --> 00:17:25,440 Speaker 1: right now that the riding is on the wall. All 294 00:17:25,480 --> 00:17:28,879 Speaker 1: of the major oil companies guys have rebranded themselves over 295 00:17:28,920 --> 00:17:31,560 Speaker 1: the last couple of years. They no longer considered themselves 296 00:17:31,600 --> 00:17:34,639 Speaker 1: oil companies. They now consider themselves natural gas and believe 297 00:17:34,640 --> 00:17:38,040 Speaker 1: it or not, power companies. So certainly we are now 298 00:17:38,160 --> 00:17:41,680 Speaker 1: in a significant paradigm shift. All right, Stephen shut come 299 00:17:41,720 --> 00:17:45,199 Speaker 1: in on the idea that natural gas right now is 300 00:17:45,920 --> 00:17:49,639 Speaker 1: going international. Liquefied natural gas was reading I guess it 301 00:17:49,680 --> 00:17:51,720 Speaker 1: was last week that there was a shipment of natural 302 00:17:51,760 --> 00:17:55,800 Speaker 1: gas that came from Russia. It was offloaded in Boston. 303 00:17:55,920 --> 00:17:59,959 Speaker 1: Because of the kind of crazy dynamics of this market, 304 00:18:00,200 --> 00:18:03,040 Speaker 1: can you explain what's going on to people? Sure? In 305 00:18:03,200 --> 00:18:06,679 Speaker 1: Boston you have essentially the Nimby crowd, where there is 306 00:18:06,760 --> 00:18:12,119 Speaker 1: considerable backlash about expanding of access to UH gas from 307 00:18:12,160 --> 00:18:15,560 Speaker 1: my home state here in Pennsylvania. So the New England 308 00:18:15,600 --> 00:18:20,040 Speaker 1: market has chosen to keep itself isolated from the bonanza 309 00:18:20,240 --> 00:18:24,639 Speaker 1: of supply. So their supply essentially comes from liquefied natural 310 00:18:24,640 --> 00:18:28,760 Speaker 1: gas the ruction that's certainly significant, but there's also offshore 311 00:18:28,800 --> 00:18:33,040 Speaker 1: production UH in um UH in the Northern Atlantic there 312 00:18:33,320 --> 00:18:35,119 Speaker 1: and Boston has to compete on the l en G 313 00:18:35,320 --> 00:18:38,200 Speaker 1: market globally, and they also have to compete with Canadian 314 00:18:38,840 --> 00:18:44,440 Speaker 1: demand in eastern Ontario in Quebec. So Boston is kind 315 00:18:44,440 --> 00:18:47,600 Speaker 1: of an island on itself. But the bottom line here 316 00:18:47,880 --> 00:18:51,560 Speaker 1: is demand for natural gas has been created. We're now 317 00:18:51,640 --> 00:18:55,120 Speaker 1: building the infrastructure to get it out. We're deglutting the markets. 318 00:18:55,560 --> 00:18:58,680 Speaker 1: Mexico is going to be a huge customer of US 319 00:18:58,800 --> 00:19:02,560 Speaker 1: natural gas pipeline gas. They already are. They're their largest 320 00:19:02,560 --> 00:19:05,359 Speaker 1: buyer of US LERG at this point. But we have 321 00:19:05,480 --> 00:19:09,119 Speaker 1: significant amount of pipeline infrastructures that are being connected. So 322 00:19:09,200 --> 00:19:13,640 Speaker 1: the demand structure is really changing here, and it's really bullish. 323 00:19:13,840 --> 00:19:16,560 Speaker 1: And hence why I'm telling all of my clients on 324 00:19:16,600 --> 00:19:20,119 Speaker 1: the n side who have to buy natural gas feedstocks 325 00:19:20,160 --> 00:19:23,240 Speaker 1: for the manufacturing processes, if they are not locking in 326 00:19:23,359 --> 00:19:26,639 Speaker 1: natural gas prices at sub three dollars now, they're doing 327 00:19:26,680 --> 00:19:31,080 Speaker 1: their investors a considerable disfavor right now, because the future 328 00:19:31,200 --> 00:19:34,159 Speaker 1: is extremely bright for natural gas demand and hence natural 329 00:19:34,200 --> 00:19:37,240 Speaker 1: gas prices well, natural gas prices right now two dollars 330 00:19:37,280 --> 00:19:39,560 Speaker 1: seventy three cents per million B tou up one and 331 00:19:39,600 --> 00:19:42,640 Speaker 1: a quarter percent. Stephen Then is there a certain irony 332 00:19:42,680 --> 00:19:45,840 Speaker 1: that you have President Donald Trump who supports the construction 333 00:19:45,920 --> 00:19:48,680 Speaker 1: of the various pipelines, let's say, coming from Canada to 334 00:19:48,720 --> 00:19:52,840 Speaker 1: the United States to bring Canadian oil into the US 335 00:19:52,920 --> 00:19:55,199 Speaker 1: to be refined and then shipped out. Is there an 336 00:19:55,240 --> 00:19:58,800 Speaker 1: irony that there's support there and yet there is this 337 00:19:58,960 --> 00:20:02,880 Speaker 1: trade h confrontation between the United States, Canada, and now 338 00:20:02,960 --> 00:20:08,680 Speaker 1: Mexico even though they import a lot of our natural gas. Yeah. Absolutely, 339 00:20:09,720 --> 00:20:12,800 Speaker 1: I cannot figure out this administration and every time I do. 340 00:20:12,840 --> 00:20:15,800 Speaker 1: It really makes my head hurt at this point because 341 00:20:15,840 --> 00:20:17,879 Speaker 1: I don't know how much of it is smoking, mirrors 342 00:20:17,960 --> 00:20:21,240 Speaker 1: and and so forth, trying to trying to manage expectations. 343 00:20:21,400 --> 00:20:24,479 Speaker 1: But the bottom line here is Canada Mexico. I mean, 344 00:20:24,560 --> 00:20:30,840 Speaker 1: our two greatest trading partners friends as it wore, I'm 345 00:20:30,880 --> 00:20:32,800 Speaker 1: not putting a lot of faith into it. I think 346 00:20:32,800 --> 00:20:35,879 Speaker 1: a lot of it is bluster at this point of 347 00:20:35,880 --> 00:20:38,119 Speaker 1: a PIM, I want to go back to the issue 348 00:20:38,200 --> 00:20:42,720 Speaker 1: of the pipeline infrastructure. Canada UH is just producing way 349 00:20:42,720 --> 00:20:45,600 Speaker 1: too much oil. They're producing way too much natural gas. 350 00:20:45,760 --> 00:20:48,880 Speaker 1: They simply don't have the off take to take away capacity, 351 00:20:48,920 --> 00:20:52,640 Speaker 1: even with the construction of a start. Thanks very much, 352 00:20:52,640 --> 00:20:55,480 Speaker 1: as Stephen Shorty is the editor of The Short Report. 353 00:21:10,760 --> 00:21:13,639 Speaker 1: Now the most important interview of the day with a 354 00:21:13,720 --> 00:21:18,919 Speaker 1: gentleman who invented a business and changed everyone's lives. Brian Kelly, 355 00:21:19,240 --> 00:21:21,880 Speaker 1: were you in college? Were like, because this is romantic enough, 356 00:21:21,920 --> 00:21:25,040 Speaker 1: you're in a dorm room somewhere. Well, yeah, I discovered miles. 357 00:21:25,040 --> 00:21:27,200 Speaker 1: I was a student body president at the University of Pittsburgh. 358 00:21:27,240 --> 00:21:29,080 Speaker 1: I was traveling all around and all of a sudden, 359 00:21:29,119 --> 00:21:31,520 Speaker 1: I had elite status and I was making no money, 360 00:21:31,720 --> 00:21:34,960 Speaker 1: like eighteen years old, and you were getting up. It's like, 361 00:21:35,000 --> 00:21:37,479 Speaker 1: this is a really cool Why isn't everyone taken advantage 362 00:21:37,480 --> 00:21:39,960 Speaker 1: of this? Brian Kelly the points guy with a website. 363 00:21:39,960 --> 00:21:42,280 Speaker 1: It links the charge cards into miles and all that. 364 00:21:42,440 --> 00:21:44,480 Speaker 1: Are you here to see Jamie Diamond? When you're done 365 00:21:44,480 --> 00:21:48,160 Speaker 1: with us? So you go to JP Morgan, shake everybody's hand, 366 00:21:48,480 --> 00:21:51,400 Speaker 1: and walk out with my suitcases. Do they speak to you? Yeah? 367 00:21:51,440 --> 00:21:53,440 Speaker 1: We worked directly with Chase. You know all the credit 368 00:21:53,480 --> 00:21:55,439 Speaker 1: card issues we work with because we know their products 369 00:21:55,440 --> 00:21:57,320 Speaker 1: better than they do, so we know how to translate 370 00:21:57,640 --> 00:22:00,800 Speaker 1: why credit cards make sense to business travels to millennials. 371 00:22:01,600 --> 00:22:04,840 Speaker 1: What's the biggest mistake we make in our credit card? Idiotcy? 372 00:22:04,960 --> 00:22:07,080 Speaker 1: Besides we don't pay our bill off? And then you know, 373 00:22:07,160 --> 00:22:09,040 Speaker 1: well that yeah, that, I mean, if you're paying interest 374 00:22:09,080 --> 00:22:11,480 Speaker 1: and fees, even if you're earning points, you're negating the 375 00:22:11,560 --> 00:22:13,080 Speaker 1: value of any of them. But I think a lot 376 00:22:13,119 --> 00:22:15,119 Speaker 1: of people get stuck with one card forever and then 377 00:22:15,400 --> 00:22:17,720 Speaker 1: I don't want to change my you know, the card 378 00:22:17,760 --> 00:22:20,000 Speaker 1: on file, and you're kind of cranky, and then you realize, well, 379 00:22:20,040 --> 00:22:22,640 Speaker 1: why aren't I earning so many points? There's so many 380 00:22:22,680 --> 00:22:26,120 Speaker 1: different bonuses, not just to get the card, but category bonuses, 381 00:22:26,160 --> 00:22:28,000 Speaker 1: so you really takes a little bit of effort, but 382 00:22:28,040 --> 00:22:30,920 Speaker 1: you should be putting certain spend for groceries on one card, 383 00:22:31,240 --> 00:22:33,840 Speaker 1: uber on another. You make those little tweaks and all 384 00:22:33,840 --> 00:22:38,159 Speaker 1: of a sudden you're earning, you know, to more points. Brian, 385 00:22:38,760 --> 00:22:41,840 Speaker 1: Why do they make it so complicated? People already have 386 00:22:41,960 --> 00:22:44,240 Speaker 1: jobs and lives they need to spend time dealing with 387 00:22:44,320 --> 00:22:45,840 Speaker 1: I mean, you know, if you're going to go through 388 00:22:45,840 --> 00:22:48,240 Speaker 1: and say, all right, I get bonus value of a 389 00:22:48,280 --> 00:22:51,760 Speaker 1: thousand dollars for the Chase Sapphire Preferred Card and fifty 390 00:22:51,840 --> 00:22:54,800 Speaker 1: thousand points on offer, good luck trying to get the flight, 391 00:22:54,880 --> 00:22:57,800 Speaker 1: the seat and the timetable that you want. Well, you know, 392 00:22:57,840 --> 00:22:59,679 Speaker 1: it's actually I would disagree with that because most of 393 00:22:59,680 --> 00:23:01,760 Speaker 1: the credit card programs, even Chase now allows you to 394 00:23:01,800 --> 00:23:03,760 Speaker 1: buy any flight at you know, if you have the 395 00:23:03,760 --> 00:23:05,440 Speaker 1: Reserve card, it's one and a half cents of point, 396 00:23:05,440 --> 00:23:07,360 Speaker 1: which is really rich, so you don't have to jump 397 00:23:07,400 --> 00:23:09,640 Speaker 1: through those hoops. But if you do want to transfer 398 00:23:09,640 --> 00:23:12,840 Speaker 1: to a frequent flyer program, you can still get insane value. 399 00:23:12,840 --> 00:23:15,920 Speaker 1: I just booked my parents Hong Kong, JFK, Cathay business 400 00:23:15,920 --> 00:23:19,760 Speaker 1: class one way, fifty thousand Alaska miles and twenty bucks 401 00:23:20,000 --> 00:23:23,240 Speaker 1: for an eight thousands. Come on, this is un America. 402 00:23:23,840 --> 00:23:26,520 Speaker 1: Say that. Stop the show. So it's all about partners 403 00:23:26,560 --> 00:23:30,439 Speaker 1: You put two people business class one way, but it 404 00:23:30,480 --> 00:23:32,960 Speaker 1: was one way, so it's you can get Alaska. Everything's 405 00:23:32,960 --> 00:23:35,280 Speaker 1: about partnerships. So Alaska Airlines miles, even if you live 406 00:23:35,280 --> 00:23:38,040 Speaker 1: in New York, Alaska Airlines miles are the most valuable 407 00:23:38,400 --> 00:23:40,959 Speaker 1: US carrier currency because they have all these crazy partners 408 00:23:40,960 --> 00:23:45,159 Speaker 1: like Japan Airlines, Cathay, Pacific Emirates. So in Alaska miles, 409 00:23:45,200 --> 00:23:46,920 Speaker 1: even if you don't fly them, you can buy them 410 00:23:46,920 --> 00:23:49,200 Speaker 1: at two cents a pop. So think about that Kathay 411 00:23:49,280 --> 00:23:51,360 Speaker 1: ticket I got from my parents that was fifty thousand 412 00:23:51,480 --> 00:23:54,000 Speaker 1: miles one way for an eight thousand dollar ticket. I 413 00:23:54,119 --> 00:23:56,320 Speaker 1: paid a thousand to just buy those miles. So there's 414 00:23:56,359 --> 00:23:58,960 Speaker 1: an arbitrage game there too with buying miles. And then 415 00:23:59,400 --> 00:24:03,280 Speaker 1: you know you're taking notes on this. I just want 416 00:24:03,320 --> 00:24:05,760 Speaker 1: to know, you know, how do I get to Pittsburgh? 417 00:24:05,920 --> 00:24:08,639 Speaker 1: You know, but that's a serious question. Your world is 418 00:24:08,680 --> 00:24:10,920 Speaker 1: all this romance? Are going to Bali for a hundred 419 00:24:10,960 --> 00:24:13,719 Speaker 1: and forty two dollars. What can you do for somebody 420 00:24:13,800 --> 00:24:17,400 Speaker 1: listening on serious x M Chad on one nineteen in Cincinnati, 421 00:24:17,680 --> 00:24:20,400 Speaker 1: who needs to get to Boston one o six one FM. Well, 422 00:24:20,400 --> 00:24:22,720 Speaker 1: you mentioned it earlier. I mean, so domestic flights. Actually, 423 00:24:22,880 --> 00:24:26,000 Speaker 1: airline pricing hasn't gone up that much, so I would say, 424 00:24:26,160 --> 00:24:28,880 Speaker 1: use you know, use Google flights. So Google dot com 425 00:24:28,880 --> 00:24:31,560 Speaker 1: slash flights to free site that allow you to look 426 00:24:31,680 --> 00:24:34,199 Speaker 1: at airline pricing by day. You can if you know, 427 00:24:34,240 --> 00:24:35,720 Speaker 1: you know, if you're flexible with dates, you can save 428 00:24:35,760 --> 00:24:38,600 Speaker 1: a ton. So save the points for expensive trips or 429 00:24:38,800 --> 00:24:41,120 Speaker 1: as an insurance policy. Right, so if someone in your 430 00:24:41,119 --> 00:24:43,520 Speaker 1: family gets uh sick, you can use the points for 431 00:24:43,520 --> 00:24:46,080 Speaker 1: those last minute, super expensive tickets. But hunt out the 432 00:24:46,160 --> 00:24:49,760 Speaker 1: cheap deals because we've seen insane deals to even to Europe, 433 00:24:49,800 --> 00:24:52,120 Speaker 1: and you know there's all these low cost carriers. Now 434 00:24:52,160 --> 00:24:54,000 Speaker 1: there's a new one. It's like a hundred dollars each 435 00:24:54,040 --> 00:24:59,120 Speaker 1: way up a little bit pim Well if I stand corrected, 436 00:24:59,160 --> 00:25:00,800 Speaker 1: but I mean I gotta say, and all of my 437 00:25:00,920 --> 00:25:03,119 Speaker 1: time is trying to make this happen. Uh, you know 438 00:25:03,160 --> 00:25:05,960 Speaker 1: the flight you want is either not available, you can't 439 00:25:05,960 --> 00:25:09,040 Speaker 1: get the seats that you want. But um, I want 440 00:25:09,080 --> 00:25:10,840 Speaker 1: to talk about the seats because let's say you do 441 00:25:10,920 --> 00:25:13,119 Speaker 1: get a seat on the on the plane, isn't the 442 00:25:13,160 --> 00:25:15,280 Speaker 1: f A A gonna come in and say something about 443 00:25:15,280 --> 00:25:17,440 Speaker 1: the size of the seat. Yeah, I think we're getting 444 00:25:17,480 --> 00:25:20,080 Speaker 1: to a point where they're jamming and it is uncomfortable. 445 00:25:20,160 --> 00:25:22,320 Speaker 1: Like I mean, some airlines have ten across seating now 446 00:25:22,640 --> 00:25:24,600 Speaker 1: on planes that used to have should point out that 447 00:25:24,680 --> 00:25:27,080 Speaker 1: Mr Kelly and I are clocking in at six five. 448 00:25:27,720 --> 00:25:30,720 Speaker 1: It's a joke. I mean, American seating is becoming like what. 449 00:25:32,080 --> 00:25:34,680 Speaker 1: But but what I will say is that airlines used 450 00:25:34,680 --> 00:25:36,800 Speaker 1: to block all the best seats for elite travelers, so 451 00:25:37,119 --> 00:25:39,000 Speaker 1: it kind of sucks for elite travelers because now you 452 00:25:39,040 --> 00:25:41,080 Speaker 1: can buy the best seat. So what I would say is, yes, 453 00:25:41,119 --> 00:25:43,080 Speaker 1: you're not going to get the cheapest price and the 454 00:25:43,119 --> 00:25:45,119 Speaker 1: best seat. You know, it's economics one on one, so 455 00:25:45,160 --> 00:25:46,800 Speaker 1: you can at least even if you don't have elite status. 456 00:25:46,840 --> 00:25:49,760 Speaker 1: Now you can shell out thirty bucks and get the 457 00:25:50,160 --> 00:25:52,479 Speaker 1: better seat. Where this Brian Kelly, the Points guy on 458 00:25:52,560 --> 00:25:56,320 Speaker 1: your website today, Emily McNutt writing about the weather is coming, 459 00:25:56,400 --> 00:25:58,800 Speaker 1: Rob Carroll and will be with this tomorrow folks with 460 00:25:58,880 --> 00:26:03,919 Speaker 1: updated weather UH forecasts. In the question I get particularly 461 00:26:03,960 --> 00:26:07,880 Speaker 1: from parents with kids, when do we get away from 462 00:26:07,920 --> 00:26:11,480 Speaker 1: waiting four hours on the runway. Yeah, you know, the 463 00:26:11,520 --> 00:26:14,119 Speaker 1: airlines have gotten better with that, with the new rules 464 00:26:14,160 --> 00:26:16,160 Speaker 1: that that got into place. But what I would recommend 465 00:26:16,160 --> 00:26:18,040 Speaker 1: with these big storms, when you know it's coming, so 466 00:26:18,080 --> 00:26:20,080 Speaker 1: all the airlines issue weather waivers, and that's what we 467 00:26:20,119 --> 00:26:23,040 Speaker 1: try to warn people. Guess what there will be seven 468 00:26:23,040 --> 00:26:25,600 Speaker 1: hour weights on on the airline, you know tomorrow, So 469 00:26:25,680 --> 00:26:30,280 Speaker 1: if you wait until Wednesday, peak of storms, don't cancel 470 00:26:30,359 --> 00:26:33,120 Speaker 1: your plans, right like, unless you really have to be somewhere. 471 00:26:33,160 --> 00:26:35,720 Speaker 1: The airlines wave all the fees, so take advantage. So 472 00:26:35,800 --> 00:26:38,600 Speaker 1: you cancel tomorrow and you don't you can read book 473 00:26:38,640 --> 00:26:40,160 Speaker 1: or just going to your money back. The airlines will 474 00:26:40,160 --> 00:26:42,560 Speaker 1: just give you all your money back. Save yourself the stress. 475 00:26:42,800 --> 00:26:44,840 Speaker 1: You know. You know some people that will be mad. 476 00:26:44,880 --> 00:26:46,159 Speaker 1: Oh the airline didn't tell me it was going to 477 00:26:46,200 --> 00:26:47,720 Speaker 1: be delayed until I got to the airport. We'll guess 478 00:26:47,760 --> 00:26:49,639 Speaker 1: what I can tell you tomorrow in a northeast storm, 479 00:26:50,000 --> 00:26:54,960 Speaker 1: just make alternate plans in advance. Alternate plans in advance. 480 00:26:55,040 --> 00:26:58,840 Speaker 1: That's when you got the weather report. Yeah, what about 481 00:26:58,880 --> 00:27:03,080 Speaker 1: traveling other than using an airplane? Yeah, I mean it's 482 00:27:03,080 --> 00:27:06,560 Speaker 1: funny there's all these new bus uh bus startups coming out. 483 00:27:06,680 --> 00:27:08,360 Speaker 1: You know, who knows what hyper loop if that will 484 00:27:08,400 --> 00:27:12,439 Speaker 1: actually disrupt the the airline industry. I mean train travel 485 00:27:12,440 --> 00:27:15,680 Speaker 1: is still you know, kind of a disaster. It's expensive, 486 00:27:16,200 --> 00:27:18,760 Speaker 1: it's not really that fast, but you know, certainly the 487 00:27:18,880 --> 00:27:21,040 Speaker 1: East coast it can still make sense. But that's where 488 00:27:21,040 --> 00:27:23,720 Speaker 1: I was going with train travel. Why is it impossible 489 00:27:23,760 --> 00:27:26,760 Speaker 1: for the railroad industry to figure out a way to 490 00:27:26,880 --> 00:27:31,080 Speaker 1: use points and some kind of uh customer relation. I 491 00:27:31,080 --> 00:27:33,560 Speaker 1: think it's just the economics aren't there. Right. AMTRAKX is 492 00:27:33,560 --> 00:27:36,000 Speaker 1: subsidized by the government and still kind of loses money. 493 00:27:36,440 --> 00:27:39,679 Speaker 1: And that's on you know that the whole infrastructure, right, 494 00:27:39,720 --> 00:27:42,520 Speaker 1: the whole system. No one company, no one startups going 495 00:27:42,560 --> 00:27:45,200 Speaker 1: to come in and be like, let me retract the US. Right, 496 00:27:45,480 --> 00:27:47,639 Speaker 1: it's a massive undertaking that I think as a country 497 00:27:47,680 --> 00:27:49,560 Speaker 1: we need to get behind if it's gonna I think 498 00:27:49,600 --> 00:27:52,000 Speaker 1: the biggest surprise in your new annual report the Best 499 00:27:52,000 --> 00:27:55,680 Speaker 1: and Worst US Airlines in two thousand and eighteen, without question, 500 00:27:55,720 --> 00:27:58,320 Speaker 1: the headline is Jet Blue, which falls off a cliff 501 00:27:58,720 --> 00:28:01,160 Speaker 1: and yet at the bottom are very kind of Jet 502 00:28:01,160 --> 00:28:05,439 Speaker 1: Blue as I've experienced, and that it's actually comfortable. Yeah, 503 00:28:05,480 --> 00:28:07,720 Speaker 1: so we did this service. So look, I get so 504 00:28:07,760 --> 00:28:11,119 Speaker 1: annoyed there's all these airline industry promoted surveys of the 505 00:28:11,160 --> 00:28:13,119 Speaker 1: best airlines. I mean, I want you walk on American 506 00:28:13,160 --> 00:28:15,840 Speaker 1: airlines and like best airline. I'm like, under what criteria? 507 00:28:15,960 --> 00:28:17,719 Speaker 1: You know? So at the Points guy, we don't take 508 00:28:17,760 --> 00:28:20,520 Speaker 1: any free flights or hotels. Everything is independent. So we 509 00:28:20,520 --> 00:28:22,680 Speaker 1: we put together a servey that said what matters most 510 00:28:22,720 --> 00:28:25,359 Speaker 1: of consumers and to be honest, most people want price, 511 00:28:25,400 --> 00:28:28,560 Speaker 1: So of our ranking was based on the average price 512 00:28:29,119 --> 00:28:31,320 Speaker 1: um of tickets on that airline. We also looked at 513 00:28:31,320 --> 00:28:34,720 Speaker 1: customer service, lost bags, on time performance was huge and 514 00:28:34,800 --> 00:28:38,000 Speaker 1: unfortunately I love Jet Blue, but it's not about what 515 00:28:38,200 --> 00:28:41,880 Speaker 1: any one person's experiences. We looked at data and unfortunately 516 00:28:41,920 --> 00:28:44,360 Speaker 1: Jet Blue was last in terms of on time performance. 517 00:28:44,600 --> 00:28:46,280 Speaker 1: Jet Blue, you know, they lost out on the Virgin 518 00:28:46,320 --> 00:28:48,640 Speaker 1: America bid. Their route network just isn't as big as 519 00:28:48,680 --> 00:28:51,240 Speaker 1: the other so you know, they're They're not a terrible 520 00:28:51,280 --> 00:28:53,600 Speaker 1: airline by any means. I love them, but you know, 521 00:28:53,800 --> 00:28:56,840 Speaker 1: and they're not really excelling in anyone category where I 522 00:28:56,880 --> 00:28:59,240 Speaker 1: wanted to go. As Alaska Airlines taken the cool out 523 00:28:59,240 --> 00:29:02,800 Speaker 1: of Virgin America, you know, they certainly are by dissolving 524 00:29:02,800 --> 00:29:05,000 Speaker 1: a cool brand. I wouldn't have necessarily agreed with that. 525 00:29:05,120 --> 00:29:08,760 Speaker 1: I do think they need to um, you know, I think, 526 00:29:08,800 --> 00:29:12,040 Speaker 1: you know, it's two good companies coming together, and Alaska 527 00:29:12,080 --> 00:29:15,240 Speaker 1: certainly has a really solid brand as well. So I 528 00:29:15,240 --> 00:29:17,640 Speaker 1: don't think it's it was, you know, the worst idea, 529 00:29:17,720 --> 00:29:21,080 Speaker 1: but and now is there's a tradition of Bloomberg surveillance. 530 00:29:21,320 --> 00:29:26,080 Speaker 1: We speak with Brian Kelly about his next Pacific ocean 531 00:29:26,120 --> 00:29:30,720 Speaker 1: travel someplace forty nine dollars. Where are you going next? 532 00:29:30,840 --> 00:29:33,640 Speaker 1: A wise one? Well, you know, it's funny. I actually 533 00:29:33,640 --> 00:29:36,959 Speaker 1: just not funny. It makes us sick. But continued Fiji, 534 00:29:37,240 --> 00:29:42,640 Speaker 1: Uh past the Fiji water John, Fiji. I'm still working 535 00:29:42,640 --> 00:29:44,320 Speaker 1: on my flight. It's actually a lot of the flights 536 00:29:44,320 --> 00:29:47,320 Speaker 1: are sold out, so I'm actually it's it's booking last 537 00:29:47,320 --> 00:29:49,680 Speaker 1: minute can be amazing on certain flights, but the destinations 538 00:29:49,680 --> 00:29:51,479 Speaker 1: like Fiji, where there's like one or two flights a day, 539 00:29:51,920 --> 00:29:54,080 Speaker 1: I haven't quite booked it yet. But once again, Alaska 540 00:29:54,080 --> 00:29:58,320 Speaker 1: Airlines miles are amazing uh Fiji air or American Airlines 541 00:29:58,360 --> 00:30:01,440 Speaker 1: with Air Tahiti Nui. So I gotta uh and and 542 00:30:01,600 --> 00:30:04,800 Speaker 1: you know, getting flexible with routing and stopping in different islands. 543 00:30:04,800 --> 00:30:07,080 Speaker 1: So I'm still in the middle of that. I look 544 00:30:07,080 --> 00:30:10,000 Speaker 1: at booking award trips as crossword puzzles, you know, using 545 00:30:10,000 --> 00:30:11,760 Speaker 1: all the different tools that I have to what's the 546 00:30:11,800 --> 00:30:14,440 Speaker 1: biggest mistake people make in the crossroad posts. The biggest 547 00:30:14,440 --> 00:30:17,240 Speaker 1: mistake is listening to airline website. So airline websites won't 548 00:30:17,240 --> 00:30:19,080 Speaker 1: show you all partners, you know, so if you want 549 00:30:19,080 --> 00:30:20,880 Speaker 1: to use your A A miles, you know, flycat the 550 00:30:20,960 --> 00:30:23,040 Speaker 1: Pacific is one of the best ways, but a dot 551 00:30:23,080 --> 00:30:25,560 Speaker 1: com will never show you. And how do you book Pacific? 552 00:30:25,600 --> 00:30:27,720 Speaker 1: You got a call or you could use British Airways 553 00:30:27,760 --> 00:30:30,000 Speaker 1: website to sniff out the Cathey flights because catt they 554 00:30:30,000 --> 00:30:31,840 Speaker 1: will show on British Airways. And once you see the 555 00:30:31,880 --> 00:30:33,560 Speaker 1: cat they flight on British you call up there right 556 00:30:33,600 --> 00:30:36,360 Speaker 1: more stories about this. We didn't get the hotels. Brian Kelly, 557 00:30:36,360 --> 00:30:41,240 Speaker 1: Congratulations sevested where US Airlines in two thousand eighteen, Alaska 558 00:30:41,320 --> 00:30:52,560 Speaker 1: air takes the trophy. Thanks for listening to the Bloomberg 559 00:30:52,600 --> 00:30:58,560 Speaker 1: surveillance podcast. Subscribe and listen to interviews on Apple Podcasts, SoundCloud, 560 00:30:58,920 --> 00:31:03,120 Speaker 1: or whichever podcast platform you prefer. I'm on Twitter at 561 00:31:03,160 --> 00:31:07,440 Speaker 1: Tom Keane before the podcast. You can always catch us worldwide. 562 00:31:07,880 --> 00:31:08,960 Speaker 1: I'm Bloomberg Radio