Speaker 1: Yeah, Welcome to the Bloomberg Surveillance Podcast. I'm Tom Keene
Speaker 1: Jay Lee. We bring you insight from the best in economics, finance, investment,
Speaker 1: and international relations. Find Bloomberg Surveillance on Apple Podcasts, SoundCloud,
Speaker 1: Bloomberg dot Com, and of course, on the Bloomberg Let's
Speaker 1: get the latest on the geopolitical news show and cross
Speaker 1: over to Seul to catch up with Bloomberg Soul Bureau
Speaker 1: chief Peter pay. Peter walked me through what we've learned
Speaker 1: in the last thirty minutes or suck. Yes, it's pretty
Speaker 1: amazing about it. About thirty minutes ago. South Korea's special
Speaker 1: and envoys to North Korea returned actually a couple of
Speaker 1: hours ago and gave their briefing, basically saying that they
Speaker 1: were told by North Korea's leader, Kim Jong learn that
Speaker 1: he was willing to sit down with the United States
Speaker 1: and have a hard to hard talk, including the possibility
Speaker 1: of the nuclearizing North Korea, which is a stunning shift
Speaker 1: if that's true, considering that North Korea has always maintained
Speaker 1: that their nuclear program was not negotiable. Yeah, pac it
Speaker 1: does write the question what was the catalyst for the change?
Speaker 1: The push that led to the shift. Well, that's a
Speaker 1: good question. I mean, obviously the ditant had had significantly
Speaker 1: increased over the last month or two, mainly because North
Speaker 1: Korea decided to participate in the in the kun Channa Olympics.
Speaker 1: I think that the Trump administration will take some credit
Speaker 1: for it, maybe a large credit for it, saying that
Speaker 1: they it was because of their hardlines and increasing the
Speaker 1: the sanctions, their maximum pressure campaign that might have pushed
Speaker 1: North Korea's Kim Jong leund to insteed and and uh
Speaker 1: and come to the table again. It's uh, anybody's guests.
Speaker 1: North Korea has all has been unpredictable, and this was
Speaker 1: another case of this today for a long time. In fact,
Speaker 1: for the last year, for much of the past year,
Speaker 1: the President of the United States has said that he
Speaker 1: would back off China on trade issues if they stepped
Speaker 1: up the pressure on North Korea. From the experts you
Speaker 1: speak to, Peter, is that what's worked here? Has that
Speaker 1: helped the situation? Well, you know, uh, yeah, in some part,
Speaker 1: maybe a large part, it may have, considering that China
Speaker 1: was the largest trading partner for North Korea and provided
Speaker 1: much of their you know, their lifeline really and that
Speaker 1: had been cut back significantly. China did cooperate with the US,
Speaker 1: particularly Donald Trump's request to tighten the section. Yeah, that
Speaker 1: might have put a squeeze on North Korea. Um that
Speaker 1: you know again, will we will see Bloom Maxel and
Speaker 1: Bureau Chief Peter Page joining us from Seoul. In South Korea,
Speaker 1: the message coming from South Korea from the Special Envoy
Speaker 1: returning from pyong Yang saying that North Korea is open
Speaker 1: to d nuclearize if the regime's safety is ashore. Do
Speaker 1: you see the impact on the FX market thirty minutes
Speaker 1: ago when this news drop donal witness across the board,
Speaker 1: with the exception of the Japanese yen Dolly yen pushing
Speaker 1: higher by just a tenth of one percent after being
Speaker 1: lower earlier in the session by about a third, Dolly
Speaker 1: Jenne getting up to one zero six spot thirty nine. So,
Speaker 1: Tom King, we've got to talk about geopolitical risk fading
Speaker 1: in North Korea and trade war risk rising here in
Speaker 1: the United States potentially. Well, those are the I guess
Speaker 1: for investment, those are the exaggerates, sharks and things that
Speaker 1: are out there that can surprise is clearly was taken
Speaker 1: as a surprise as we saw the tenure yield reverse
Speaker 1: and move higher. Someone John Pharaoh that has to synthesize
Speaker 1: these headlines I guess from outside, and of course to
Speaker 1: our global Wall Street audience is Charles Cantor with new
Speaker 1: Burger Berman, who has to he has an apt I
Speaker 1: believe Johnny has an optimistic take. I'm where we're heading. Yeah,
Speaker 1: and you get headlines like this and you know, futures
Speaker 1: up a heaven. It's pretty good, particularly after what we
Speaker 1: witnessed in Washington yesterday. You'd have to say, Charles that
Speaker 1: the optimism at the moment it's being rewarded. That if
Speaker 1: you faded the trade war risk through Thursday, you've been
Speaker 1: handsomely rewarded through Friday and Monday. Pessimism doesn't get rewarded
Speaker 1: these days, Charles, Does that change anytime soon? Well, it's
Speaker 1: a function of the backdrop. Pessimism gets rewarded when when
Speaker 1: you're starting points provide you with no margin of safety.
Speaker 1: UM today's starting points, I would suggest, provides you with
Speaker 1: a very reasonable margin of safety through the lens of
Speaker 1: of valuation and discount rates. UM market today on a
Speaker 1: ford Pe basis is possibly as cheap and as expensive
Speaker 1: as last year, and we know what happened last year,
Speaker 1: So there's been a surgeon corporate profits. Yes, the stock
Speaker 1: markets up, but but business and um and consumer confidence
Speaker 1: is very high. And and with confidence comes comes investment
Speaker 1: and and planning on on on in ovation. So context matters,
Speaker 1: um and starting points matter, and today's starting point is
Speaker 1: as reasonable as last year, which I would suggest is
Speaker 1: is still reasonable. When Charles Cancer picks up the front
Speaker 1: pages of the newspapers here in the United States and
Speaker 1: the trade wars plastered everywhere in the president United States
Speaker 1: with some heightened rehetoric around it, the market's fading that
Speaker 1: the view on Wall Street has changed radically compared to
Speaker 1: what you see on the front page of the national papers.
Speaker 1: But for you, Charles, to Tom's point, how do you
Speaker 1: synthesize those points that come from the nation's capital and
Speaker 1: the idea that we're drifting towards a trade war? Well
Speaker 1: it for us, it comes from from a process and
Speaker 1: how we define ourselves. And we are long term investors.
Speaker 1: We try and block out the news and make sure
Speaker 1: as we allocate capital, we get you know, we get
Speaker 1: rewarded for the risk we take in and and and
Speaker 1: the time that we've invested UM so yes on the margin. UM.
Speaker 1: The headlines matter. Anything that had the potential to disrupt
Speaker 1: supply and demand UM matters. Of course, we we dig
Speaker 1: in on on on on those that are most likely
Speaker 1: to be affected if the rules of of of the road, uh,
Speaker 1: the rules of the game were implemented as suggested, which
Speaker 1: they haven't been. And so you dig in on the industrials,
Speaker 1: you dig in on the machinery side. You you, you,
Speaker 1: you you, You call folks and and figure out how
Speaker 1: much of the steel price increase will pass We passed
Speaker 1: a long end, and and and and and how does
Speaker 1: it affect um demand? Full goods and services? You know
Speaker 1: we saw yesterday headline and full full disclosure, folks. I'm
Speaker 1: not up to speed on a story where a CEO
Speaker 1: of a railroad company were shown the door yesterday and
Speaker 1: the board talked about they needed more energy, they needed
Speaker 1: to energize, etcetera, etcetera. What this comes down to, Charles,
Speaker 1: which I know is religion for you, is corporate capital allocation.
Speaker 1: How do you identify large corporations that are poorly deploying capital?
Speaker 1: Is it in the annual report? Is it something that
Speaker 1: happens with smoking incense. How do you figure that out?
Speaker 1: There are a bunch of ways to attempt to figure
Speaker 1: that out. UM. One is to to look at the
Speaker 1: CEOs record on return on invested capital. Has his investments
Speaker 1: covered his cost of capital? Has it covered the cost
Speaker 1: of capital? Has it covered the risk of implementation? Has
Speaker 1: it covered the risk of the deal? Um? And and
Speaker 1: and nothing speaks more loudly than that metric over time
Speaker 1: and and businesses that can earn a reasonable return on
Speaker 1: capital through a business cycle or through a very large
Speaker 1: strategic deal um get placed um in a in a
Speaker 1: very pecurious place. Um and and mean meaning job at risk,
Speaker 1: board under fire. Do you assume that real rates inflation
Speaker 1: adjusted interest rates rise here or is it just a
Speaker 1: nominal interest rate exercise? I think for us it has
Speaker 1: to be a bit of both. Um. At some point,
Speaker 1: the the the the the yield itself, let's say, on
Speaker 1: the on the tenure becomes a headwind UM And think,
Speaker 1: while we've observed so far has been which I don't
Speaker 1: think gets necessarily enough attention, is there's there's been an
Speaker 1: equally large step up in real growth expectations as they
Speaker 1: have been in inflation. UM. And that's a fantastically healthy environment.
Speaker 1: The bond market is suggesting there's going to be more
Speaker 1: real growth um which we have, which which has been
Speaker 1: stubbornly low for a very long period of time. But yes,
Speaker 1: at some point um the aggregate yield on on tenure treasuries,
Speaker 1: you know, will become a headwind. I mean, I like
Speaker 1: to describe today's environment as in simple terms, we have
Speaker 1: lots of certainty on fundamentals and lots of uncertainty on rates.
Speaker 1: And that's dramatically different than the mosaic we've played with
Speaker 1: over the last five years. Charles Kinter with us a
Speaker 1: new Vermint right now with this, Kim Wallace uh joins
Speaker 1: from Erasia Group and Kim we in a spirited conversation
Speaker 1: earlier this morning about the organizational chart of Washington. You've
Speaker 1: experienced that at Treasury with President Obama, but you've also
Speaker 1: experienced it a student of the game as well. Do
Speaker 1: you know where the dotted lines and the solid lines
Speaker 1: are within Republican Washington right now? No, nor do I
Speaker 1: think they do. The dotted lines are more important. The
Speaker 1: informal relationships have built up over the last six quarters.
Speaker 1: Tom have served the leaders on the hill, and I
Speaker 1: think the staff in the White House better than the
Speaker 1: formal lines. My book this summer, and I haven't even announced, yeah,
Speaker 1: but I'll do it right now is Threat Matrix, which
Speaker 1: is a terrific book about Part of it is about
Speaker 1: the Bush administration and the security apparatus after the horror
Speaker 1: of nine eleven, and we all understand there the organizational
Speaker 1: chart was really white house centric and everybody else had
Speaker 1: better understand it was white house centric. Is that the
Speaker 1: way this administration is? I mean you you were a
Speaker 1: treasury within the Obama administration. Every administration is different. Is
Speaker 1: it white House centric now or is it something else?
Speaker 1: It's white house centric from the top line, but in
Speaker 1: terms of the functions and the actual production of policy,
Speaker 1: it's diffused from there. And that's actually a risk to
Speaker 1: the president. One of the keys of confidence building in
Speaker 1: the US as a president who understands the apparatus underneath
Speaker 1: him and or her individually and UH will use that
Speaker 1: utilize those authorities. Well, the president hasn't learned those yet.
Speaker 1: He didn't come with those skills, and so you see
Speaker 1: a bunch of his agency heads feeling the void, which
Speaker 1: happens in Washington all the time. So Kim, help us
Speaker 1: understand with that perspective, what is happening with the trade issue.
Speaker 1: These policies set to become policy or they negotiations tactics
Speaker 1: for a whole array of issues. It's pretty clear sitting
Speaker 1: here on Tuesday morning that it's a negotiation tactic, and
Speaker 1: the tying of stealing aluminum tariffs to negotiations down in
Speaker 1: Mexico City is a big reach, but nonetheless it underscores
Speaker 1: the way the president thinks about policy making. He thinks
Speaker 1: about it the same way he did in the private sector,
Speaker 1: and increasingly that's becoming more and more complicated for him.
Speaker 1: It's transactional. Does that make it difficult to execute policy
Speaker 1: in Washington, d c? And if so, how doesn't make
Speaker 1: it difficult? It's just that you have to have all
Speaker 1: of your trading partners or your negotiating partners understand that
Speaker 1: that's how you deal, and you have to have a
Speaker 1: staff that backs you up in that style. Right now,
Speaker 1: we don't have that linear thought process nor delivery of product.
Speaker 1: How rare is it to see what we're witnessing right
Speaker 1: now for the leadership up of Paul Ryan to question
Speaker 1: the president's objectives at the moment with the tarrists that
Speaker 1: he's put on the table and for the potential within
Speaker 1: the administrations, have a break from St. Gary Cone, one
Speaker 1: of his lead economic advisors, to say, hold on a minute.
Speaker 1: He said, to be conveying business leaders who consume metals
Speaker 1: to try and convince the president not to do this.
Speaker 1: How rare are these kind of things. To say that
Speaker 1: the process now in Washington is unique is an understatement.
Speaker 1: And so what you will have is you'll continue to
Speaker 1: have fits and starts and policy, which I think erodes
Speaker 1: the president's authority, not only in Washington but around the world.
Speaker 1: Have you seen a good number and where our fiscal
Speaker 1: deficits going? I I've been working just under one point
Speaker 1: for trillion. Have you seen a better study yet or
Speaker 1: do we just we just simply don't know do it?
Speaker 1: We don't know for sure? But the simple math in
Speaker 1: front of us is about one point five trillion added
Speaker 1: to the tenure baseline from the spending program in February
Speaker 1: and about the same one point for one point five
Speaker 1: trillion added from the tax program in December. Ten years,
Speaker 1: the trillion three trillion out over ten years, John, You're
Speaker 1: gonna be dazzled by this that's three billion a year.
Speaker 1: I think we will pay some of that interest cost
Speaker 1: of that because all of that is debt financed, and
Speaker 1: so the fiscal story is much more complicated than it's
Speaker 1: being given attention, and will become dangerous with that attention
Speaker 1: in the next year or two. We should point out
Speaker 1: this is one of your great acclaims, Kim Wallace. If
Speaker 1: that is the fact, when does the mystery go away?
Speaker 1: When do we actually begin to understand what we have wrought?
Speaker 1: Usually in policy making or politics, you only understand what
Speaker 1: you've wrought when somebody has pointed it out to you.
Speaker 1: In this case, we rely on the CBO and the
Speaker 1: l m B to do that. The Congressional Budget Office
Speaker 1: will come out with a re estimate of the baseline
Speaker 1: in April. That will get attention. It will generally we're
Speaker 1: waiting for CBO's changed. Nothing's changed until April. And frankly,
Speaker 1: when you have the US economy pumping on many cylinders
Speaker 1: as it is now, maybe not all cylinders, but many cylinders,
Speaker 1: it distracts from the downside story. So my guess, as
Speaker 1: you'll be into next year or sometime after the election
Speaker 1: before you start thinking seriously about fiscal policy. Drag Kim Wallace.
Speaker 1: Before we let you go, We've done trade policy, fiscal policy.
Speaker 1: Let's talk about foreign policy just briefly. Some important headlines
Speaker 1: coming out of North Korea and South Korea this morning
Speaker 1: that the North may be willing to denuclearize if the
Speaker 1: regime is protected. How does one protect a regime when
Speaker 1: history says that once the country is denuclearized, something very
Speaker 1: different happens. It's a great question. I think it points
Speaker 1: to the difficulty in reaching the kind of a deal
Speaker 1: that the headlines are suggesting. It is not to say
Speaker 1: that the South Koreans don't have an abiding interest in
Speaker 1: a deal. Obviously they do more than anyone else in
Speaker 1: the world, maybe Japan. But it does point to the
Speaker 1: fact that getting the regime that has spent the last
Speaker 1: thirty years building its national defenses to back away from
Speaker 1: what you say the sweetest part of those national defenses
Speaker 1: will be very difficult. And if that requires a superpower
Speaker 1: like the US to give concessions publicly and privately in
Speaker 1: order to get that deal, you have to believe that
Speaker 1: deal is long and coming. Would it be fat to
Speaker 1: say that this unique approach from this administration might be
Speaker 1: generating some results on the foreign policy side of things, Kim,
Speaker 1: obfuscation and foreign policy is a plus usually so long
Speaker 1: as you have a strategy. Kim Wells, thank you so much.
Speaker 1: This is brilliant. Thank you, But have you look forward
Speaker 1: to speaking to you FM Washington Studios as well. He
Speaker 1: is with your AISI group with them. Stephen Short with
Speaker 1: us now he's with us recently on oil Steve. When
Speaker 1: I want to go back to short one oh one,
Speaker 1: which is a basic question, are we energy independent that's
Speaker 1: been around own for a lifetime. Are we there yet?
Speaker 1: We are not there yet, But if you do believe
Speaker 1: the i e. A. Which is a body that studies
Speaker 1: this based on Paris, certainly within the next five years, Uh,
Speaker 1: they're projecting that not necessarily independent, but the United States
Speaker 1: will certainly be the largest krudal producer, surpassing We've already
Speaker 1: surpassed Staudi Arabia and will certainly surpass of Russia probably
Speaker 1: by the end of next year as far as rudal
Speaker 1: production goes. So at that point, guys, what I really
Speaker 1: want to emphasize is that the demand structure has completely changed.
Speaker 1: And Tom, I know this is right up your alley. Uh,
Speaker 1: the elasticities of demand are changing quite substantially, because now
Speaker 1: we have the sector factor. The second fact that that
Speaker 1: impacts consumer behavior, and that is substitutes. And of course
Speaker 1: I'm talking about electric vehicles and driverless technology, but they're
Speaker 1: not there yet. They're not there yet, So how do
Speaker 1: you just that to the present to the president? Right now?
Speaker 1: We've made a significant impact already just in the past
Speaker 1: five years, and hence we're don't we're not seeing a
Speaker 1: commensurate increase in demand a relative to what you would
Speaker 1: normally expect, giving the improvement in the economy, the improvement
Speaker 1: in incomes right now, so this is essentially telling me
Speaker 1: that we're already starting to see the impact. Uh and
Speaker 1: right now that the riding is on the wall. All
Speaker 1: of the major oil companies guys have rebranded themselves over
Speaker 1: the last couple of years. They no longer considered themselves
Speaker 1: oil companies. They now consider themselves natural gas and believe
Speaker 1: it or not, power companies. So certainly we are now
Speaker 1: in a significant paradigm shift. All right, Stephen shut come
Speaker 1: in on the idea that natural gas right now is
Speaker 1: going international. Liquefied natural gas was reading I guess it
Speaker 1: was last week that there was a shipment of natural
Speaker 1: gas that came from Russia. It was offloaded in Boston.
Speaker 1: Because of the kind of crazy dynamics of this market,
Speaker 1: can you explain what's going on to people? Sure? In
Speaker 1: Boston you have essentially the Nimby crowd, where there is
Speaker 1: considerable backlash about expanding of access to UH gas from
Speaker 1: my home state here in Pennsylvania. So the New England
Speaker 1: market has chosen to keep itself isolated from the bonanza
Speaker 1: of supply. So their supply essentially comes from liquefied natural
Speaker 1: gas the ruction that's certainly significant, but there's also offshore
Speaker 1: production UH in um UH in the Northern Atlantic there
Speaker 1: and Boston has to compete on the l en G
Speaker 1: market globally, and they also have to compete with Canadian
Speaker 1: demand in eastern Ontario in Quebec. So Boston is kind
Speaker 1: of an island on itself. But the bottom line here
Speaker 1: is demand for natural gas has been created. We're now
Speaker 1: building the infrastructure to get it out. We're deglutting the markets.
Speaker 1: Mexico is going to be a huge customer of US
Speaker 1: natural gas pipeline gas. They already are. They're their largest
Speaker 1: buyer of US LERG at this point. But we have
Speaker 1: significant amount of pipeline infrastructures that are being connected. So
Speaker 1: the demand structure is really changing here, and it's really bullish.
Speaker 1: And hence why I'm telling all of my clients on
Speaker 1: the n side who have to buy natural gas feedstocks
Speaker 1: for the manufacturing processes, if they are not locking in
Speaker 1: natural gas prices at sub three dollars now, they're doing
Speaker 1: their investors a considerable disfavor right now, because the future
Speaker 1: is extremely bright for natural gas demand and hence natural
Speaker 1: gas prices well, natural gas prices right now two dollars
Speaker 1: seventy three cents per million B tou up one and
Speaker 1: a quarter percent. Stephen Then is there a certain irony
Speaker 1: that you have President Donald Trump who supports the construction
Speaker 1: of the various pipelines, let's say, coming from Canada to
Speaker 1: the United States to bring Canadian oil into the US
Speaker 1: to be refined and then shipped out. Is there an
Speaker 1: irony that there's support there and yet there is this
Speaker 1: trade h confrontation between the United States, Canada, and now
Speaker 1: Mexico even though they import a lot of our natural gas. Yeah. Absolutely,
Speaker 1: I cannot figure out this administration and every time I do.
Speaker 1: It really makes my head hurt at this point because
Speaker 1: I don't know how much of it is smoking, mirrors
Speaker 1: and and so forth, trying to trying to manage expectations.
Speaker 1: But the bottom line here is Canada Mexico. I mean,
Speaker 1: our two greatest trading partners friends as it wore, I'm
Speaker 1: not putting a lot of faith into it. I think
Speaker 1: a lot of it is bluster at this point of
Speaker 1: a PIM, I want to go back to the issue
Speaker 1: of the pipeline infrastructure. Canada UH is just producing way
Speaker 1: too much oil. They're producing way too much natural gas.
Speaker 1: They simply don't have the off take to take away capacity,
Speaker 1: even with the construction of a start. Thanks very much,
Speaker 1: as Stephen Shorty is the editor of The Short Report.
Speaker 1: Now the most important interview of the day with a
Speaker 1: gentleman who invented a business and changed everyone's lives. Brian Kelly,
Speaker 1: were you in college? Were like, because this is romantic enough,
Speaker 1: you're in a dorm room somewhere. Well, yeah, I discovered miles.
Speaker 1: I was a student body president at the University of Pittsburgh.
Speaker 1: I was traveling all around and all of a sudden,
Speaker 1: I had elite status and I was making no money,
Speaker 1: like eighteen years old, and you were getting up. It's like,
Speaker 1: this is a really cool Why isn't everyone taken advantage
Speaker 1: of this? Brian Kelly the points guy with a website.
Speaker 1: It links the charge cards into miles and all that.
Speaker 1: Are you here to see Jamie Diamond? When you're done
Speaker 1: with us? So you go to JP Morgan, shake everybody's hand,
Speaker 1: and walk out with my suitcases. Do they speak to you? Yeah?
Speaker 1: We worked directly with Chase. You know all the credit
Speaker 1: card issues we work with because we know their products
Speaker 1: better than they do, so we know how to translate
Speaker 1: why credit cards make sense to business travels to millennials.
Speaker 1: What's the biggest mistake we make in our credit card? Idiotcy?
Speaker 1: Besides we don't pay our bill off? And then you know,
Speaker 1: well that yeah, that, I mean, if you're paying interest
Speaker 1: and fees, even if you're earning points, you're negating the
Speaker 1: value of any of them. But I think a lot
Speaker 1: of people get stuck with one card forever and then
Speaker 1: I don't want to change my you know, the card
Speaker 1: on file, and you're kind of cranky, and then you realize, well,
Speaker 1: why aren't I earning so many points? There's so many
Speaker 1: different bonuses, not just to get the card, but category bonuses,
Speaker 1: so you really takes a little bit of effort, but
Speaker 1: you should be putting certain spend for groceries on one card,
Speaker 1: uber on another. You make those little tweaks and all
Speaker 1: of a sudden you're earning, you know, to more points. Brian,
Speaker 1: Why do they make it so complicated? People already have
Speaker 1: jobs and lives they need to spend time dealing with
Speaker 1: I mean, you know, if you're going to go through
Speaker 1: and say, all right, I get bonus value of a
Speaker 1: thousand dollars for the Chase Sapphire Preferred Card and fifty
Speaker 1: thousand points on offer, good luck trying to get the flight,
Speaker 1: the seat and the timetable that you want. Well, you know,
Speaker 1: it's actually I would disagree with that because most of
Speaker 1: the credit card programs, even Chase now allows you to
Speaker 1: buy any flight at you know, if you have the
Speaker 1: Reserve card, it's one and a half cents of point,
Speaker 1: which is really rich, so you don't have to jump
Speaker 1: through those hoops. But if you do want to transfer
Speaker 1: to a frequent flyer program, you can still get insane value.
Speaker 1: I just booked my parents Hong Kong, JFK, Cathay business
Speaker 1: class one way, fifty thousand Alaska miles and twenty bucks
Speaker 1: for an eight thousands. Come on, this is un America.
Speaker 1: Say that. Stop the show. So it's all about partners
Speaker 1: You put two people business class one way, but it
Speaker 1: was one way, so it's you can get Alaska. Everything's
Speaker 1: about partnerships. So Alaska Airlines miles, even if you live
Speaker 1: in New York, Alaska Airlines miles are the most valuable
Speaker 1: US carrier currency because they have all these crazy partners
Speaker 1: like Japan Airlines, Cathay, Pacific Emirates. So in Alaska miles,
Speaker 1: even if you don't fly them, you can buy them
Speaker 1: at two cents a pop. So think about that Kathay
Speaker 1: ticket I got from my parents that was fifty thousand
Speaker 1: miles one way for an eight thousand dollar ticket. I
Speaker 1: paid a thousand to just buy those miles. So there's
Speaker 1: an arbitrage game there too with buying miles. And then
Speaker 1: you know you're taking notes on this. I just want
Speaker 1: to know, you know, how do I get to Pittsburgh?
Speaker 1: You know, but that's a serious question. Your world is
Speaker 1: all this romance? Are going to Bali for a hundred
Speaker 1: and forty two dollars. What can you do for somebody
Speaker 1: listening on serious x M Chad on one nineteen in Cincinnati,
Speaker 1: who needs to get to Boston one o six one FM. Well,
Speaker 1: you mentioned it earlier. I mean, so domestic flights. Actually,
Speaker 1: airline pricing hasn't gone up that much, so I would say,
Speaker 1: use you know, use Google flights. So Google dot com
Speaker 1: slash flights to free site that allow you to look
Speaker 1: at airline pricing by day. You can if you know,
Speaker 1: you know, if you're flexible with dates, you can save
Speaker 1: a ton. So save the points for expensive trips or
Speaker 1: as an insurance policy. Right, so if someone in your
Speaker 1: family gets uh sick, you can use the points for
Speaker 1: those last minute, super expensive tickets. But hunt out the
Speaker 1: cheap deals because we've seen insane deals to even to Europe,
Speaker 1: and you know there's all these low cost carriers. Now
Speaker 1: there's a new one. It's like a hundred dollars each
Speaker 1: way up a little bit pim Well if I stand corrected,
Speaker 1: but I mean I gotta say, and all of my
Speaker 1: time is trying to make this happen. Uh, you know
Speaker 1: the flight you want is either not available, you can't
Speaker 1: get the seats that you want. But um, I want
Speaker 1: to talk about the seats because let's say you do
Speaker 1: get a seat on the on the plane, isn't the
Speaker 1: f A A gonna come in and say something about
Speaker 1: the size of the seat. Yeah, I think we're getting
Speaker 1: to a point where they're jamming and it is uncomfortable.
Speaker 1: Like I mean, some airlines have ten across seating now
Speaker 1: on planes that used to have should point out that
Speaker 1: Mr Kelly and I are clocking in at six five.
Speaker 1: It's a joke. I mean, American seating is becoming like what.
Speaker 1: But but what I will say is that airlines used
Speaker 1: to block all the best seats for elite travelers, so
Speaker 1: it kind of sucks for elite travelers because now you
Speaker 1: can buy the best seat. So what I would say is, yes,
Speaker 1: you're not going to get the cheapest price and the
Speaker 1: best seat. You know, it's economics one on one, so
Speaker 1: you can at least even if you don't have elite status.
Speaker 1: Now you can shell out thirty bucks and get the
Speaker 1: better seat. Where this Brian Kelly, the Points guy on
Speaker 1: your website today, Emily McNutt writing about the weather is coming,
Speaker 1: Rob Carroll and will be with this tomorrow folks with
Speaker 1: updated weather UH forecasts. In the question I get particularly
Speaker 1: from parents with kids, when do we get away from
Speaker 1: waiting four hours on the runway. Yeah, you know, the
Speaker 1: airlines have gotten better with that, with the new rules
Speaker 1: that that got into place. But what I would recommend
Speaker 1: with these big storms, when you know it's coming, so
Speaker 1: all the airlines issue weather waivers, and that's what we
Speaker 1: try to warn people. Guess what there will be seven
Speaker 1: hour weights on on the airline, you know tomorrow, So
Speaker 1: if you wait until Wednesday, peak of storms, don't cancel
Speaker 1: your plans, right like, unless you really have to be somewhere.
Speaker 1: The airlines wave all the fees, so take advantage. So
Speaker 1: you cancel tomorrow and you don't you can read book
Speaker 1: or just going to your money back. The airlines will
Speaker 1: just give you all your money back. Save yourself the stress.
Speaker 1: You know. You know some people that will be mad.
Speaker 1: Oh the airline didn't tell me it was going to
Speaker 1: be delayed until I got to the airport. We'll guess
Speaker 1: what I can tell you tomorrow in a northeast storm,
Speaker 1: just make alternate plans in advance. Alternate plans in advance.
Speaker 1: That's when you got the weather report. Yeah, what about
Speaker 1: traveling other than using an airplane? Yeah, I mean it's
Speaker 1: funny there's all these new bus uh bus startups coming out.
Speaker 1: You know, who knows what hyper loop if that will
Speaker 1: actually disrupt the the airline industry. I mean train travel
Speaker 1: is still you know, kind of a disaster. It's expensive,
Speaker 1: it's not really that fast, but you know, certainly the
Speaker 1: East coast it can still make sense. But that's where
Speaker 1: I was going with train travel. Why is it impossible
Speaker 1: for the railroad industry to figure out a way to
Speaker 1: use points and some kind of uh customer relation. I
Speaker 1: think it's just the economics aren't there. Right. AMTRAKX is
Speaker 1: subsidized by the government and still kind of loses money.
Speaker 1: And that's on you know that the whole infrastructure, right,
Speaker 1: the whole system. No one company, no one startups going
Speaker 1: to come in and be like, let me retract the US. Right,
Speaker 1: it's a massive undertaking that I think as a country
Speaker 1: we need to get behind if it's gonna I think
Speaker 1: the biggest surprise in your new annual report the Best
Speaker 1: and Worst US Airlines in two thousand and eighteen, without question,
Speaker 1: the headline is Jet Blue, which falls off a cliff
Speaker 1: and yet at the bottom are very kind of Jet
Speaker 1: Blue as I've experienced, and that it's actually comfortable. Yeah,
Speaker 1: so we did this service. So look, I get so
Speaker 1: annoyed there's all these airline industry promoted surveys of the
Speaker 1: best airlines. I mean, I want you walk on American
Speaker 1: airlines and like best airline. I'm like, under what criteria?
Speaker 1: You know? So at the Points guy, we don't take
Speaker 1: any free flights or hotels. Everything is independent. So we
Speaker 1: we put together a servey that said what matters most
Speaker 1: of consumers and to be honest, most people want price,
Speaker 1: So of our ranking was based on the average price
Speaker 1: um of tickets on that airline. We also looked at
Speaker 1: customer service, lost bags, on time performance was huge and
Speaker 1: unfortunately I love Jet Blue, but it's not about what
Speaker 1: any one person's experiences. We looked at data and unfortunately
Speaker 1: Jet Blue was last in terms of on time performance.
Speaker 1: Jet Blue, you know, they lost out on the Virgin
Speaker 1: America bid. Their route network just isn't as big as
Speaker 1: the other so you know, they're They're not a terrible
Speaker 1: airline by any means. I love them, but you know,
Speaker 1: and they're not really excelling in anyone category where I
Speaker 1: wanted to go. As Alaska Airlines taken the cool out
Speaker 1: of Virgin America, you know, they certainly are by dissolving
Speaker 1: a cool brand. I wouldn't have necessarily agreed with that.
Speaker 1: I do think they need to um, you know, I think,
Speaker 1: you know, it's two good companies coming together, and Alaska
Speaker 1: certainly has a really solid brand as well. So I
Speaker 1: don't think it's it was, you know, the worst idea,
Speaker 1: but and now is there's a tradition of Bloomberg surveillance.
Speaker 1: We speak with Brian Kelly about his next Pacific ocean
Speaker 1: travel someplace forty nine dollars. Where are you going next?
Speaker 1: A wise one? Well, you know, it's funny. I actually
Speaker 1: just not funny. It makes us sick. But continued Fiji,
Speaker 1: Uh past the Fiji water John, Fiji. I'm still working
Speaker 1: on my flight. It's actually a lot of the flights
Speaker 1: are sold out, so I'm actually it's it's booking last
Speaker 1: minute can be amazing on certain flights, but the destinations
Speaker 1: like Fiji, where there's like one or two flights a day,
Speaker 1: I haven't quite booked it yet. But once again, Alaska
Speaker 1: Airlines miles are amazing uh Fiji air or American Airlines
Speaker 1: with Air Tahiti Nui. So I gotta uh and and
Speaker 1: you know, getting flexible with routing and stopping in different islands.
Speaker 1: So I'm still in the middle of that. I look
Speaker 1: at booking award trips as crossword puzzles, you know, using
Speaker 1: all the different tools that I have to what's the
Speaker 1: biggest mistake people make in the crossroad posts. The biggest
Speaker 1: mistake is listening to airline website. So airline websites won't
Speaker 1: show you all partners, you know, so if you want
Speaker 1: to use your A A miles, you know, flycat the
Speaker 1: Pacific is one of the best ways, but a dot
Speaker 1: com will never show you. And how do you book Pacific?
Speaker 1: You got a call or you could use British Airways
Speaker 1: website to sniff out the Cathey flights because catt they
Speaker 1: will show on British Airways. And once you see the
Speaker 1: cat they flight on British you call up there right
Speaker 1: more stories about this. We didn't get the hotels. Brian Kelly,
Speaker 1: Congratulations sevested where US Airlines in two thousand eighteen, Alaska
Speaker 1: air takes the trophy. Thanks for listening to the Bloomberg
Speaker 1: surveillance podcast. Subscribe and listen to interviews on Apple Podcasts, SoundCloud,
Speaker 1: or whichever podcast platform you prefer. I'm on Twitter at
Speaker 1: Tom Keane before the podcast. You can always catch us worldwide.
Speaker 1: I'm Bloomberg Radio