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Speaker 1: Bloomberg Audio Studios, podcasts, radio news.

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Speaker 2: This is the Bloomberg Surveillance Podcast. Catch us live weekdays

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Speaker 2: at seven am Eastern on Apple car Player, Android Auto

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Speaker 2: with the Bloomberg Business App. Listen on demand wherever you

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Speaker 2: get your podcasts, or watch us live on YouTube.

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Speaker 3: Joining us down to get started.

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Speaker 4: She Wolston Holiday Dress interat how many parties do you

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Speaker 4: have tonight?

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Speaker 1: Oh?

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Speaker 5: My goodness, do you like only one?

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Speaker 6: Only one?

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Speaker 3: Just one party?

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Speaker 4: Yes?

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Speaker 3: Yes, Joining us.

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Speaker 4: Rebecca Petis and iconic at JP Morgan of course, a

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Speaker 4: tour of duty at Bridgewater as well.

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Speaker 3: You came in and you whispered to Paul.

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Speaker 4: You said, strong dollar.

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Speaker 3: How strong a dollar?

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Speaker 6: Well, a lot stronger than consensus has for next year.

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Speaker 6: So most of the big investment banks are looking for

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Speaker 6: weakness in the dollar, especially in the second half.

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Speaker 3: Of the year.

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Speaker 5: I don't see it.

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Speaker 6: You've got a divergence in interest rates, even though that's

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Speaker 6: somewhat priced in, but it's going to favor the dollar.

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Speaker 6: You have much stronger growth in the US, which I

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Speaker 6: think will continue to bring capital to the US, which

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Speaker 6: will help the dollar. And in a case where President

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Speaker 6: elect Trump decides to go hardcore on the tariffs. We've

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Speaker 6: seen historically that that tends to be a positive for

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Speaker 6: the dollar and weakness and currencies overseas. So the only

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Speaker 6: case where I think the dollar weekends next year is

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Speaker 6: if the US moderates while the rest of the world

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Speaker 6: is gaining momentum, which moves capital overseas. Possible, but I

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Speaker 6: just don't think the probability is as high as what

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Speaker 6: consensus is suggesting.

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Speaker 5: So I'm asking me for a friend here, could the

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Speaker 5: euro get to parody?

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Speaker 6: I think the euro is likely to break through parody.

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Speaker 5: Now next year party, So there you go. I'm putting

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Speaker 5: it out there, all right. I mean, for our friends

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Speaker 5: that like to go to Rome in Paris, Lisa, that's

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Speaker 5: a good thing. For those of us who stay in

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Speaker 5: New Jersey, and that's so much of a thing, all right,

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Speaker 5: talk to us about the equity markets. I've heard so

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Speaker 5: much discussion over the past month or two of out

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Speaker 5: international investors coming to the US market. Is is this

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Speaker 5: activity unusual? Is it typical? What do you make of it?

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Speaker 6: I mean, the risk that I think a lot of

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Speaker 6: people are pointing out is that the US equity market,

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Speaker 6: relative to the rest of the world, has gotten very

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Speaker 6: expensive and heavily owned by foreign investors, international investors and

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Speaker 6: domestic investors, and so there are. It feels like a

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Speaker 6: drum beat now of calls that the US is in

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Speaker 6: a bubble. The US could slow down next year. We'll

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Speaker 6: get money going overseas because the valuations are much better.

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Speaker 6: And the thing I always come back to is valuations matter,

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Speaker 6: but aren't sufficient. You need a catalyst. And that's what

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Speaker 6: I keep looking for. Is China pull out all the

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Speaker 6: stops and held the consumer. Does Germany get rid of

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Speaker 6: the debt break? And is that stimulus sufficient? I'm skeptical

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Speaker 6: it is, which makes me think the US can stay

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Speaker 6: the outperformer next year in terms of equities. But I'm

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Speaker 6: watching those risks.

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Speaker 3: Given where we are, let's fuld the correlated mess.

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Speaker 4: I put out a tweet here we got d x

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Speaker 4: Y through one oh seven. I got a ten year

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Speaker 4: real yield out to two point zero three percent. To me,

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Speaker 4: the single two sentences of the weekend was a guy

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Speaker 4: named Sam Row, always suspect Sam Row channeling Liz Anne

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Speaker 4: Saunders and Kevin Gordon and Charles Schwab on a beautiful

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Speaker 4: scattered dot study that says it's not correlated. You can't

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Speaker 4: take one year forward pe multiples like barons one on

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Speaker 4: one and say market up or market down. What signals

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Speaker 4: do you take from the equity market that bring you

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Speaker 4: over to bonds, that bring you over to foreign exchange.

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Speaker 5: That's a great question.

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Speaker 6: So it's to me, there's a chicken and egg situation here.

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Speaker 6: Does the equity market drive the currency? Does the currency

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Speaker 6: drive the equity market and pull in bonds too? They

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Speaker 6: all influence each other, and often it's which one is dominant.

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Speaker 6: We'll be driving which one is having the bigger move,

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Speaker 6: the greater momentum. So you can see a big move

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Speaker 6: in bonds if we have a big rise in the

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Speaker 6: ten year yield that not purely driven by growth, that

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Speaker 6: can poll equity is lower. But we can also see

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Speaker 6: if there's growth optimism about US exceptionalism, the tenure can

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Speaker 6: go up and stocks go up with it, and the

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Speaker 6: dollar goes up.

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Speaker 5: Everything earlier there's a bubble.

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Speaker 3: I don't see a bubble bubble.

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Speaker 6: I did not say there's a bubble. I said there's

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Speaker 6: a rugby morning.

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Speaker 3: I'm trying to wake people up there.

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Speaker 6: I want to be clear what I'm saying. The US

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Speaker 6: market is expensive. If you look at a twelve month

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Speaker 6: forward price earnings ratio, if you look at EPs growth

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Speaker 6: priced in for next year for US stocks, if you

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Speaker 6: look at ownership. But we know from history, to your point, Tom,

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Speaker 6: that what happened this year has zero correlation with what

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Speaker 6: happens next year. So the market could continue to rise

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Speaker 6: if we have decent growth in the US and there

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Speaker 6: aren't a lot of alternatives for your money. And I

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Speaker 6: think that scenario is probably the most likely one.

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Speaker 5: How About we had the election last month here, big

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Speaker 5: change is coming starting in January of twenty twenty five

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Speaker 5: here in US policy. Your outlook at all or your

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Speaker 5: allocation or where you want to find risk in the marketplace.

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Speaker 6: Yeah, the one thing that I think investors should be

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Speaker 6: really thinking about our scenarios because we simply don't know

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Speaker 6: yet what President elect Trump and his administration are going

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Speaker 6: to do in terms of sequencing and size. So when

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Speaker 6: do tariffs happen and how big are they, what kind

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Speaker 6: of deportation do we see? Those are big downside risks

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Speaker 6: in my opinion for the equity market. I don't think

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Speaker 6: they're being priced in right now, but we don't know,

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Speaker 6: And so if you don't know what's going to happen,

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Speaker 6: you have a wider cone of outcomes. You need to

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Speaker 6: be having some hedges in your portfolio. So fine, have

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Speaker 6: fun with financials that are going to benefit from deregulation

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Speaker 6: and growth, have fun with your digital asset related assets,

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Speaker 6: so to speak. But then make sure you have a

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Speaker 6: few defensive positions as well in case some of these

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Speaker 6: negatives become reality. So I would look overseas at the UK,

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Speaker 6: I would look overseas, possibly at Switzerland. Within the United States,

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Speaker 6: I think things like energy, healthcare utilities can play a role,

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Speaker 6: not in large size, but some pieces of it. Just

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Speaker 6: to give you those hedges for those less friendly scenarios.

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Speaker 4: Our viewers or listeners have a collective memory of President

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Speaker 4: Trump railings a strong dollar. Everything you said is against

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Speaker 4: a genetic structure of Donald Trump. He wants a week

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Speaker 4: dollar to keep US exports going.

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Speaker 3: Are you suggesting that's done.

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Speaker 6: Trump has gotten a little more balanced in his currency

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Speaker 6: comments over the last few months, and certainly the Treasury

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Speaker 6: Secretary nominee Scott Bessant is also more balanced in terms

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Speaker 6: of his view on the dollar. So if the dollar

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Speaker 6: is very strong and we're seeing that hurt exporters in

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Speaker 6: the data. Of course we're going to get some tweets

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Speaker 6: or posts or whatever.

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Speaker 1: You know.

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Speaker 6: The president elect is into that day, but what can

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Speaker 6: he actually do about it. I don't think we have

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Speaker 6: a new Plaza accord or a mar Lago accord. I

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Speaker 6: don't think that's in the cards.

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Speaker 3: Golf course in Scotland. He is turn Turny, a turnberrier.

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Speaker 3: Everybody works killed. Yeah, I can see president elected killed.

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Speaker 5: Sure, talk to us about avocados.

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Speaker 6: Okay, so I have been Yes, we're talking about avocados.

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Speaker 5: So amazing.

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Speaker 3: Surveillance go.

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Speaker 6: So you think about risks in the next year. And

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Speaker 6: one risk that I think is on people's radar screens

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Speaker 6: but maybe not enough, is a resurgence of inflation. And

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Speaker 6: one area I think you want to watch is food inflation.

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Speaker 6: US farmers are struggling right now. They can't get enough workers.

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Speaker 6: Uh and seventy percent of workers in US farming are immigrants,

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Speaker 6: about half of those are illegal immigrants. If you reduce

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Speaker 6: the workers, you can't get the crops out of the ground.

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Speaker 6: Prices go up, profits go down. In addition to that, though,

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Speaker 6: the tariffs are a big hit on US farmers. In

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Speaker 6: twenty eighteen nineteen, those that year period alone, they lost

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Speaker 6: twenty seven billion dollars in export revenue. Now, last time

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Speaker 6: Trump failed them out, they got over eighty billion dollars

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Speaker 6: in government subsidies. This time they don't have as much

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Speaker 6: free money flowing to hand out. So why do avocados

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Speaker 6: come in the mix. Because ninety percent of American avocados

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Speaker 6: come from Mexico. And if we don't have people to

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Speaker 6: get those avocados out of the ground here in California,

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Speaker 6: and the tariffs on Mexico are causing some retaliation, avocados

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Speaker 6: are going to become a luxury good I wrote about

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Speaker 6: it in the New York Times this past week.

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Speaker 3: I saw it, but Paul helped me.

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Speaker 4: Here. We didn't know what avocado was until what fifteen

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Speaker 4: years ago?

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Speaker 5: The guacam only the kids with the quaka, it was guak.

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Speaker 6: You know, if you want, that's a main three Americans.

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Speaker 6: I mean, double the price of guac for super you

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Speaker 6: will have angry voters.

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Speaker 4: See, I told you each avocado contains fifty eight milligrams

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Speaker 4: of magnesium.

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Speaker 3: Sure, is there anything bad about avocados?

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Speaker 5: Lisa, Come on, Lisa, get with it.

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Speaker 7: It's a healthy fat. It's very good for you.

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Speaker 3: Avocados. Do you buy him by the bushel at costco?

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Speaker 7: We sure do, do you really?

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Speaker 5: I do?

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Speaker 7: I buy the big bag. They come a little bit hard,

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Speaker 7: so you got to kind of put them in the

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Speaker 7: cabinet to ripe off. Yeah, but that's the.

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Speaker 5: Way to do it. The budget deficits has widened. This

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Speaker 5: is from your optioned from three point nine percent of

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Speaker 5: gross domestic product in twenty eighteen to six point four

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Speaker 5: percent today, suggesting that maybe the US government will not

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Speaker 5: have the same capability to support farmers in such a scenario.

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Speaker 6: I mean they're going to feel pressure to do that,

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Speaker 6: for sure. Farms are all across the country, our amber

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Speaker 6: waves of grain, right, so they're going to be pressure.

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Speaker 6: But are they going to find the money? It's going

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Speaker 6: to be harder to find the money this time. Is

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Speaker 6: Elon going to let them have the money?

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Speaker 1: Right?

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Speaker 3: Where's the best avocado restaurant in New York City? Oh?

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Speaker 3: Massive craving word?

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Speaker 6: Okay, Rosa Mexicano tabletop guacamole. They come and make it

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Speaker 6: in front of you and you can customize it. That's

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Speaker 6: still my go to.

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Speaker 5: Yep, very good.

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Speaker 6: See I'm now I'm now in holiday mode. You just

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Speaker 6: officially got me there.

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Speaker 3: Becky Patterson, thank you so much for joining us.

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Speaker 2: You're listening to the Bloomberg Surveillance Podcast. Catch us live

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Speaker 2: weekday afternoons from seven to ten am Eastern. Listen on

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Speaker 3: Henrietta Trace joins us right now with Veda Partners.

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Speaker 4: She's just been absolutely famous, Henriette, there is really only

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Speaker 4: one question. Are there Are there Republican senators that are

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Speaker 4: going to push against their president? There was confusion over

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Speaker 4: the weekend.

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Speaker 1: I think there's a lot of things to push back

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Speaker 1: against incoming President Trump over you know, some of the

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Speaker 1: nominees that he's picked, whether it's tanksas or RFK Junior.

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Speaker 1: You're starting to see it in individual little baskets. We're

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Speaker 1: dealing with the government funding bill that has not been

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Speaker 1: released yet because it continues and increases federal spending and

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Speaker 1: creates a problem with you know, eighty to one hundred

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Speaker 1: and fifty House Republican members. So I think they're picking

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Speaker 1: and choosing which areas they want to fight the president over.

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Speaker 5: So let's go to that issue here. I'm always when

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Speaker 5: you people talk about funding the government and shutdowns. It

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Speaker 5: kind of gets my attention here. Just walk us through

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Speaker 5: the timeline about what our Congress is going to be

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Speaker 5: doing over the next several weeks as it relates to

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Speaker 5: keeping this government open.

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Speaker 8: Yeah, great question.

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Speaker 1: Right now, they're going to vote on a National Defense

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Speaker 1: Authorization Act, which increases federal spending for that sector by

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Speaker 1: one percent to eight hundred and eighty four billion dollars.

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Speaker 1: If I'm not mistaken, it includes you know, fourteen percent

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Speaker 1: uptick for a junior enlisted serviceman.

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Speaker 8: And that's the package that they'll pass this.

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Speaker 1: Week while we wait to release the government funding bill,

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Speaker 1: which will similarly increase federal spending by one hundred billion

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Speaker 1: dollars roughly just to get us into March. So we're

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Speaker 1: kind of trying to clear the decks, but they're not

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Speaker 1: clearing it for any kind.

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Speaker 8: Of long duration.

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Speaker 1: It's just until about March fourteenth of twenty twenty five,

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Speaker 1: which means almost as soon as we pass this hurdle

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Speaker 1: to keep the government open, we're going to be facing

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Speaker 1: another shutdown early next year, which very likely could.

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Speaker 8: Get in the way of the Republican agenda.

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Speaker 1: Around this first smaller Reconciliation Bill on Immigration, Defense and

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Speaker 1: the Order, and that's going to be the story of

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Speaker 1: next to its starts.

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Speaker 4: Well to the mystery of what Senator is going to

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Speaker 4: do with the different controversial cabinet picks. Is the tea

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Speaker 4: party ish type of the House going to go against

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Speaker 4: their president on March fourteenth?

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Speaker 1: You know? I think this is the real issue that

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Speaker 1: we have, which is Speaker Johnson has a zero vote

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Speaker 1: margin until April when he's going to have a whopping

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Speaker 1: to vote margin.

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Speaker 8: So House Republicans lost seats.

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Speaker 1: Last election cycle, which is something that doesn't get I

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Speaker 1: think reported enough, and that's going to be even more

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Speaker 1: difficult for Speaker Johnson to keep the job and to

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Speaker 1: keep the government open into next year. To answer your

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Speaker 1: question directly, absolutely, I think that the Republicans in the

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Speaker 1: next cr will probably lose one hundred and fifty House

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Speaker 1: Republican members when they go to keep the government open

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Speaker 1: under President Trump in twenty twenty five.

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Speaker 5: All right, So I don't know how that wow, how

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Speaker 5: that's going to play out, Henriette, I talked to us.

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Speaker 5: I guess maybe a little bit more immediate in acounter

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Speaker 5: is some of these nominations that still have to go

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Speaker 5: through congressional approval.

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Speaker 9: Where are we with.

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Speaker 5: Some of the mister heg Seth, Tulca Gabbart, some of

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Speaker 5: the more controversial ones. What do we know now?

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Speaker 1: I mean, right now we're doing effectively a pretty serious

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Speaker 1: media lobbying campaign.

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Speaker 8: With hag Seth standing next to J. D.

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Speaker 1: Dance and President Elect Trump at an Army Navy game,

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Speaker 1: you know, obviously trying to project physically that they are

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Speaker 1: all aligned and on board, and encouraging members of the

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Speaker 1: Senate Republican Conference to get on board with passing those members.

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Speaker 1: I think what's going to happen is we're going to

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Speaker 1: see some of these folks get a full core press

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Speaker 1: and President Trump put his weight behind it and say

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Speaker 1: pass this, give me this nominee.

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Speaker 8: But others A'llah.

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Speaker 1: Telsea Gabbard, for example, are going to have a much

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Speaker 1: more difficult time.

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Speaker 8: I keep my eye on the prize.

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Speaker 1: Obviously, I cover bacroeconomic policy, so I don't really care

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Speaker 1: about some of those agencies.

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Speaker 8: I really want to see Scott Bessett of the World,

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Speaker 8: Damson Greer at USDR.

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Speaker 1: Those are much more important to me, and I think

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Speaker 1: those folks are very likely to get through those are

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Speaker 1: the ones who will we put in tyreso on next year?

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Speaker 8: I think that's the prize.

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Speaker 4: And now, folks, the civics dumb question of the week,

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Speaker 4: Let's get it out of the way early here on

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Speaker 4: a Monday, Henrietta Trace with.

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Speaker 3: A senator's vote.

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Speaker 4: Are their votes visible or are they liked by a

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Speaker 4: ballot box with their secret? Oh?

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Speaker 8: No, absolutely visible. You can watch this all on c SPAN.

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Speaker 8: It's a great family fun. Highly recommend this.

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Speaker 5: Debt ceiling. She's such a nerve, I know, dead ceiling death.

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Speaker 5: It's I mean, we've got the clock here in Manhattan.

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Speaker 5: It shows us the deficits. And does anybody care in Washington, DC?

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Speaker 9: Should they care?

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Speaker 4: Oh?

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Speaker 8: They talked about caring.

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Speaker 1: For sure. Everybody's against deficits, that's for sure. But you're

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Speaker 1: not against specific spending cuts. Excuse me, you're not for

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Speaker 1: specific spending cuts. It's much easier to be against things

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Speaker 1: than for them. So while we talk about, you know,

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Speaker 1: being against federal spending, let's be mindful that we have

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Speaker 1: to increase the debt ceiling next year. And Lindsey Grahm,

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Speaker 1: they incoming Senate Budget Committee chairman, notified us last week

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Speaker 1: that the debt ceiling, which could pass on party lines

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Speaker 1: with just Republican support and a reconciliation bill will instead

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Speaker 1: go through regular order. And that is acknowledgment that they

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Speaker 1: will not be cutting federal spending next year. It is

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Speaker 1: far too difficult a task, especially when you have a

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Speaker 1: zero c margin in the House and only three seats

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Speaker 1: in the Senate.

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Speaker 5: How about on the tax front here, how do we

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Speaker 5: think this is going to play out on the tax front?

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Speaker 1: I think it's clear from incoming Leader Foons agenda that

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Speaker 1: we will not get a tax bill until December of.

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Speaker 8: Twenty twenty five. We are only to have the massive.

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Speaker 1: Light over you know, the salt deduction, over repealing the

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Speaker 1: IRA tax credits for burgeoning industries and clean energy solar,

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Speaker 1: wind batteries, et cetera. It's popular to say that we're

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Speaker 1: going to repeal the electric vehicles tax credit, for example,

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Speaker 1: but that's about one hundred and twenty billion dollars in

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Speaker 1: the broader IRA, which has balloomed, as you know, from

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Speaker 1: a bill that they expected to be about two hundred

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Speaker 1: billion dollars in private sector uptake to seven hundred and

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Speaker 1: eighty billion dollars. Who has grown these industries some up

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Speaker 1: in Boston, Texas, Ohio, North Dakota, South Dakota was buried

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Speaker 1: by percident. Unfortunately, in red states, about seventy percent of

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Speaker 1: that funny Red states.

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Speaker 4: You know what's interesting here, Henrietta, and I've got to

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Speaker 4: squeeze this in the salt tax it's called, is a

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Speaker 4: stereotype that is just about democratic states? Or can mister

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Speaker 4: Trump get pressure on the assault tax from Republican states?

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Speaker 8: You know, that's a great question. As you know, I

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Speaker 8: live down here in Louisiana.

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Speaker 1: There are beautiful, nice streets down here where people are

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Speaker 1: paying exorbitant property taxes and mortgages.

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Speaker 8: That's in Texas, that's in every state in our great nation.

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Speaker 8: There's big homes that people want this deduction for.

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Speaker 1: So I think a lot of it weighs on the

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Speaker 1: New York, New Jersey, Connecticut, California Republican contingent. And the

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Speaker 1: reason that's easy is because those are sheets that president

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Speaker 1: like Trump and the Republican Party have picked up in

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Speaker 1: the last ten years, and so they really highlight those members,

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Speaker 1: and frankly, those members are on the hook for fixing

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Speaker 1: this for their constituents.

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Speaker 4: That's that they got a lot to Henrietta Trace, thank

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Speaker 4: you so much for your perspective. Can't say now from

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Speaker 4: Louisiana today, which is wonderful. She is with Veda Partners.

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Speaker 4: Every time she's on. I learned stuff I know every

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Speaker 4: single time.

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Speaker 3: It's just great.

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Speaker 2: This is the Bloomberg Surveillance Podcast. Listen live each weekday

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Speaker 2: starting at seven am Eastern on Apple Our Play in

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00:18:00,640 --> 00:18:03,600
Speaker 2: Android Auto with a Bloomberg Business app. You can also

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Speaker 2: listen live on Amazon Alexa from our flagship New York station,

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Speaker 2: Just say Alexa Play Bloomberg eleven thirty.

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Speaker 4: This is a joy and for me and Paul and

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Speaker 4: Lisa and Charlie Pellett, this could literally be a three

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Speaker 4: hour conversation. We all fly, our loved ones fly. Stephen

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Speaker 4: Trent is definitive. It's City group on this. You know,

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Speaker 4: it's not American Airlines research. It's all of American research.

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Speaker 4: Thrilled to have you in the studio. Way too short

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Speaker 4: of visit which let's just get the single best buy.

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Speaker 4: Is it a foreign carrier or a domestic carrier?

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Speaker 10: Well, thank you so much for having me on and

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Speaker 10: good morning to you. So in terms of the carriers

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Speaker 10: we like the most in the United States, it's going

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Speaker 10: to be Delta Airlines is our top pick. We do

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Speaker 10: have American Airlines with a by rating and our focus

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Speaker 10: group on a long term basis. However, within the America's

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Speaker 10: Panama's COPA Airlines, we think is dynamite.

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Speaker 5: Copa Airlines out of Panama. What's what's the place. I

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Speaker 5: know you have a lot of experience covering the transports

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Speaker 5: down in Latin America. Give us just kind of the

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Speaker 5: macro call, because we don't talk about it a lot.

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Speaker 5: How do you how do we think about it from

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Speaker 5: a thirty thousand foot level Latin America transportation?

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Speaker 10: Yeah, absolutely, So when we look at, for example, the

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Speaker 10: market there versus the market here, I think there are

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Speaker 10: a couple of things I would keep in mind. One

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Speaker 10: of the most important things is the lack of capacity

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Speaker 10: on a per capita basis, so you have relative to

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Speaker 10: the United States, lower employments per capita. The other thing

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Speaker 10: I would layer on top of that, Latin America Airlines,

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Speaker 10: for the most part, of course, generate revenue in local

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Speaker 10: currency and faced US dollar indexed seat mile cost, so

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Speaker 10: they are not long dollar companies. They actually suffer under

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Speaker 10: the circumstances. The third thing I would highlight would be

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Speaker 10: the lack of affordability to fly in Latin America. If

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Speaker 10: you compare the average fare to average weekly per capita

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Speaker 10: income versus US, so people that are flying it's less less.

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Speaker 4: Are they like US and that they have mileage programs

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Speaker 4: and all the other accouturements of US airlines or are

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Speaker 4: they like something back twenty or thirty years or they're

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Speaker 4: just trying to get to the end of the quarter.

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Speaker 9: Yeah, they're actually somewhat like the US.

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Speaker 10: Ones, and they are more unbundled than what we have

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Speaker 10: here in the United States. So a full blown Delta Airlines,

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Speaker 10: for example, is sort of would be sort of an

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Speaker 10: anomaly in many Latin markets.

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Speaker 4: Ours Delta and United and the others competing with government

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Speaker 4: funded international air carriers like Air France, Cutter, Eddiot and

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Speaker 4: the others buying Formula one billboards.

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Speaker 10: Yeah, that's kind of a tough place, and that has

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Speaker 10: been sort of controversial at points in the past. So

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Speaker 10: you would be concerned about those issues on the Transatlantic

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Speaker 10: for example.

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Speaker 9: But here in the.

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Speaker 10: United States, the model is very good. The airlines here

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Speaker 10: have de risked their earning stream through co branded card

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Speaker 10: loyalty programs and the US consumer itself. The demand we

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Speaker 10: see for premium cabin is very good. So I've seen

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Speaker 10: big improvements in earnings quality.

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Speaker 5: How about some of the budget airlines here, that's a

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Speaker 5: tough business in this country. I'm thinking Spirit and Frontier

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Speaker 5: and all these things. What's going on in that? How

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Speaker 5: do you run a budget airline these days?

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Speaker 9: You know it's tough. I think it's very difficult. And

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Speaker 9: what do you see with the budget airlines today?

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Speaker 10: They're all trying to add premium and so when we

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Speaker 10: look at this movement to just the front of the cabin,

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Speaker 10: are they going to imp prove unit revenues on that?

445
00:22:01,920 --> 00:22:03,480
Speaker 9: Yes, they probably will.

446
00:22:03,960 --> 00:22:08,280
Speaker 10: But if you're a network airline, you're already a unit

447
00:22:08,320 --> 00:22:11,119
Speaker 10: revenue champion with a strong demand curve. If you're a

448
00:22:11,160 --> 00:22:14,840
Speaker 10: budget airline, historically, I've never been good at unit revenue.

449
00:22:14,880 --> 00:22:16,400
Speaker 10: You want to delate the heck out of your seat

450
00:22:16,440 --> 00:22:18,439
Speaker 10: maul cost and you can't do that.

451
00:22:18,480 --> 00:22:19,760
Speaker 3: So Stephen Trent helped me here.

452
00:22:19,800 --> 00:22:22,080
Speaker 4: Like Robert Crandall was a huge supporter of what I

453
00:22:22,119 --> 00:22:24,600
Speaker 4: was doing, and it was such a joy to have

454
00:22:24,680 --> 00:22:27,720
Speaker 4: him and missus Crandall from Florida.

455
00:22:27,760 --> 00:22:31,440
Speaker 3: He changed what we do. But is it still cyclical.

456
00:22:31,480 --> 00:22:34,280
Speaker 4: I'm looking at the ten year track record of Delta Airlines,

457
00:22:34,720 --> 00:22:38,200
Speaker 4: maybe had some challenges like a pandemic, and I'm sorry

458
00:22:38,320 --> 00:22:41,440
Speaker 4: it's not good enough total return. Is there a new

459
00:22:41,560 --> 00:22:45,040
Speaker 4: persistency to cash flow where they're acting like a blue

460
00:22:45,119 --> 00:22:50,240
Speaker 4: chip stock or is in another up and down airline cardiac.

461
00:22:49,840 --> 00:22:51,680
Speaker 3: Arrest with these air with these stocks?

462
00:22:52,800 --> 00:22:55,560
Speaker 10: Yeah, Look so I think relative to two thousand and

463
00:22:55,680 --> 00:22:59,479
Speaker 10: nine to now, for example, there's a lot that's changed.

464
00:22:59,680 --> 00:23:03,800
Speaker 10: The U stairlines, for example, do very little synthetic fuel hatching,

465
00:23:04,040 --> 00:23:07,640
Speaker 10: which I would argue is part of the problem. More importantly, however,

466
00:23:08,119 --> 00:23:12,520
Speaker 10: the co branded card piece of the pie is really important.

467
00:23:12,640 --> 00:23:16,360
Speaker 10: So they're getting cash flow streams from consumers using their

468
00:23:16,359 --> 00:23:17,159
Speaker 10: credit cards.

469
00:23:17,520 --> 00:23:19,920
Speaker 3: Is that more important than Paul sitting on the runway

470
00:23:19,920 --> 00:23:20,479
Speaker 3: at Newark?

471
00:23:22,680 --> 00:23:25,840
Speaker 10: Okay, well that's that's the challenge to Newark has had.

472
00:23:25,760 --> 00:23:26,280
Speaker 9: His is use.

473
00:23:26,640 --> 00:23:29,159
Speaker 5: Yeah, but trumal A is good though. Boy they did

474
00:23:29,160 --> 00:23:29,880
Speaker 5: a good job there.

475
00:23:29,960 --> 00:23:31,280
Speaker 9: It's short, it's sure, is so?

476
00:23:31,280 --> 00:23:31,840
Speaker 3: What all right?

477
00:23:31,920 --> 00:23:33,920
Speaker 9: So is the business flyer?

478
00:23:34,000 --> 00:23:37,480
Speaker 5: I know that the leisure flyers back and above pre

479
00:23:37,520 --> 00:23:40,520
Speaker 5: pandemic levels. Some about the business flyer, what's the new normal?

480
00:23:40,560 --> 00:23:42,080
Speaker 5: What are the Airlines telling me is a new normal

481
00:23:42,119 --> 00:23:42,960
Speaker 5: for business travel.

482
00:23:43,680 --> 00:23:46,800
Speaker 9: Yeah, so I think we're like going back to where.

483
00:23:46,640 --> 00:23:52,320
Speaker 10: We were in terms of these those distribution channels kind

484
00:23:52,320 --> 00:23:56,879
Speaker 10: of getting filled out again. Uh but pre pandemic business travel,

485
00:23:56,920 --> 00:23:58,120
Speaker 10: are we going all the way back?

486
00:23:58,160 --> 00:23:59,560
Speaker 9: I would say no.

487
00:23:59,840 --> 00:24:03,760
Speaker 10: And that's because in a lot of industries you no

488
00:24:03,840 --> 00:24:07,600
Speaker 10: longer have the consumer in the office five days a week.

489
00:24:08,000 --> 00:24:11,320
Speaker 10: So I'm not saying that the flyout Sunday night, fly

490
00:24:11,400 --> 00:24:14,320
Speaker 10: home Thursday night is gone, but I think it's at

491
00:24:14,440 --> 00:24:17,560
Speaker 10: least somewhat diminished. And you've seen some of that flow

492
00:24:17,800 --> 00:24:23,440
Speaker 10: going towards blended travel. People traveling, and you know these

493
00:24:23,680 --> 00:24:25,359
Speaker 10: pre pandemic shoulder.

494
00:24:25,000 --> 00:24:27,480
Speaker 3: Periods single best buys delta right.

495
00:24:28,640 --> 00:24:30,440
Speaker 9: Yes, for the US quickly, How are.

496
00:24:30,400 --> 00:24:33,119
Speaker 3: Their lounges doing because I can't get into it.

497
00:24:34,400 --> 00:24:37,240
Speaker 10: Well, I think those full lounges are a darn good

498
00:24:37,359 --> 00:24:38,080
Speaker 10: sign of demand.

499
00:24:39,359 --> 00:24:43,080
Speaker 9: So that's going very well. And the other.

500
00:24:44,880 --> 00:24:49,400
Speaker 10: Equipment and infrastructure they have set up for premium it's great.

501
00:24:49,480 --> 00:24:51,040
Speaker 9: I think American Airlines is.

502
00:24:51,080 --> 00:24:54,960
Speaker 10: Just getting started with co branded cart so those are

503
00:24:55,080 --> 00:24:56,000
Speaker 10: the network carriers.

504
00:24:56,040 --> 00:24:59,919
Speaker 3: I think I get thirty seconds. What's Kirby doing at United?

505
00:25:01,280 --> 00:25:04,320
Speaker 10: I'm a fan of United as well. I think they're

506
00:25:04,359 --> 00:25:06,679
Speaker 10: doing great. We had them on our focus list. That

507
00:25:06,960 --> 00:25:09,959
Speaker 10: was some very good performance on the backped So we

508
00:25:10,080 --> 00:25:14,560
Speaker 10: continue to think free cash flow for these network airlines

509
00:25:14,640 --> 00:25:17,280
Speaker 10: is still spooling up, and the diversity of the free

510
00:25:17,280 --> 00:25:21,040
Speaker 10: cash flow is no longer coming from just passengers buying tickets.

511
00:25:21,080 --> 00:25:22,680
Speaker 9: It's coming from co branded cart.

512
00:25:22,800 --> 00:25:25,399
Speaker 3: Up one hundred and thirty percent this year. Steve was

513
00:25:25,480 --> 00:25:26,160
Speaker 3: pre in a year.

514
00:25:26,400 --> 00:25:29,800
Speaker 4: Yeah you know, did you always said spooling cares You

515
00:25:29,840 --> 00:25:31,199
Speaker 4: have to go to talk to say that.

516
00:25:31,640 --> 00:25:33,440
Speaker 3: You can only do that if you go to talk

517
00:25:33,520 --> 00:25:36,720
Speaker 3: up at dark Stephen Trent, don't be a stranger. Thank

518
00:25:36,760 --> 00:25:37,359
Speaker 3: you so much.

519
00:25:43,240 --> 00:25:47,520
Speaker 2: This is the Bloomberg Surveillance Podcast. Listen live each weekday

520
00:25:47,600 --> 00:25:50,800
Speaker 2: starting at seven am Eastern on applecar Play and Android

521
00:25:50,840 --> 00:25:53,760
Speaker 2: Auto with the Bloomberg Business app. You can also watch

522
00:25:53,840 --> 00:25:57,080
Speaker 2: us live every weekday on YouTube and always on the

523
00:25:57,080 --> 00:25:58,320
Speaker 2: Bloomberg terminal.

524
00:25:58,400 --> 00:26:03,920
Speaker 4: Bloomberg Surveillance end Our front page is a Lisa Matteo hours.

525
00:26:04,040 --> 00:26:04,879
Speaker 4: What do you got, Lisa?

526
00:26:05,400 --> 00:26:07,480
Speaker 7: Some new Apple tech that's going to be coming out.

527
00:26:07,520 --> 00:26:09,840
Speaker 7: This is from the Wall Street Journal in Bloomberg Both

528
00:26:09,840 --> 00:26:12,080
Speaker 7: I'm reporting starting next year, they're gonna introduce an iPhone

529
00:26:12,119 --> 00:26:13,919
Speaker 7: that's thinner, so in case you have the one, you

530
00:26:13,920 --> 00:26:16,560
Speaker 7: have it, it'll be a little bit thinner. It's intended

531
00:26:16,640 --> 00:26:19,080
Speaker 7: to be cheaper than the pro models, So that's a

532
00:26:19,080 --> 00:26:22,000
Speaker 7: bonus because it's going to have this simplified camera system

533
00:26:22,240 --> 00:26:25,600
Speaker 7: and that's reducing their costs. On top of that, foldable

534
00:26:25,640 --> 00:26:27,920
Speaker 7: devices that's like the hot new thing. So now they

535
00:26:27,960 --> 00:26:30,840
Speaker 7: want to plan two one for a bigger device, one

536
00:26:30,840 --> 00:26:33,000
Speaker 7: for a smaller device. Bloomberg reporting, it's like kind of

537
00:26:33,000 --> 00:26:36,280
Speaker 7: like an iPad foldable. The problem is that they have

538
00:26:36,320 --> 00:26:39,000
Speaker 7: to improve the hinge that actually allows it to fold.

539
00:26:39,040 --> 00:26:42,800
Speaker 7: That's been having some issues. But it's also rethinking the mouse.

540
00:26:42,920 --> 00:26:44,920
Speaker 7: The next air tag, you know those ones that sometimes

541
00:26:44,960 --> 00:26:46,879
Speaker 7: you put on your luggage. It's going to have a

542
00:26:47,040 --> 00:26:50,439
Speaker 7: wider range so we can find things a little bit

543
00:26:50,440 --> 00:26:52,199
Speaker 7: further away. And then it's going to shift to an

544
00:26:52,240 --> 00:26:55,080
Speaker 7: in house Wi Fi chair. All this stuff kind of

545
00:26:55,320 --> 00:26:59,040
Speaker 7: coming out next year. I don't, but I know a

546
00:26:59,040 --> 00:27:00,920
Speaker 7: couple of people who do. And it's kind of scary

547
00:27:00,960 --> 00:27:05,520
Speaker 7: because they're tracking but without their knowledge, without the kind

548
00:27:05,520 --> 00:27:06,919
Speaker 7: of slip it in someone's.

549
00:27:06,520 --> 00:27:08,600
Speaker 5: Back that's not that's not very nice.

550
00:27:08,920 --> 00:27:11,000
Speaker 7: But no parents use it to on their kids, like

551
00:27:11,040 --> 00:27:14,120
Speaker 7: on their backpacks and stuff. So it's being used a lot.

552
00:27:14,280 --> 00:27:20,159
Speaker 3: Okay, have foldable phone to be.

553
00:27:23,119 --> 00:27:24,840
Speaker 7: No, well, not a lot of adults are using it,

554
00:27:24,880 --> 00:27:27,400
Speaker 7: but it's it's the new like that's the new hot thing.

555
00:27:27,480 --> 00:27:29,320
Speaker 7: So now they have to adjust to the times, and

556
00:27:29,720 --> 00:27:31,960
Speaker 7: you know, they have to find a tech gadget that's

557
00:27:31,960 --> 00:27:36,720
Speaker 7: similar to it, Apple New Tech. So you've heard about

558
00:27:36,720 --> 00:27:40,000
Speaker 7: the problems with school districts cutting back on bus service, right,

559
00:27:40,280 --> 00:27:43,359
Speaker 7: So now parents are turning to ride share apps to

560
00:27:43,400 --> 00:27:46,280
Speaker 7: get their kids to school. This was in the Associated Press.

561
00:27:46,320 --> 00:27:48,640
Speaker 7: It's interesting. It's not Uber and Lyft that we're talking about.

562
00:27:48,680 --> 00:27:52,840
Speaker 7: It's new startups ones called piggyback network. So parents book

563
00:27:52,880 --> 00:27:55,760
Speaker 7: the ride for the kids online with another parent traveling

564
00:27:55,880 --> 00:27:57,880
Speaker 7: in the same direction. So that's the idea of one

565
00:27:57,920 --> 00:28:00,960
Speaker 7: of them. Another is hop skipped. So these are all

566
00:28:01,000 --> 00:28:04,520
Speaker 7: these startups that are beginning because parents are having trouble

567
00:28:04,600 --> 00:28:06,200
Speaker 7: finding ways to get their kids to school.

568
00:28:06,280 --> 00:28:06,600
Speaker 3: Somehow.

569
00:28:07,160 --> 00:28:09,240
Speaker 7: Buses we do not.

570
00:28:09,400 --> 00:28:11,480
Speaker 5: No, no, no, no, we do not in my town.

571
00:28:11,760 --> 00:28:15,600
Speaker 5: But presumably for the elementary schools you lived close by,

572
00:28:15,200 --> 00:28:17,320
Speaker 5: they all over tency look close by, you could walk,

573
00:28:17,520 --> 00:28:19,960
Speaker 5: that's fine. Then the middle school and the high school

574
00:28:20,240 --> 00:28:22,280
Speaker 5: not so much. So you drive by the high school

575
00:28:22,280 --> 00:28:25,400
Speaker 5: at pickup time, it's a disaster. As all these parents

576
00:28:25,440 --> 00:28:27,000
Speaker 5: are they are lined up. I'm like, where are the buses?

577
00:28:27,440 --> 00:28:29,560
Speaker 7: Yeah right, yeah no, but that's a problem. So now

578
00:28:29,600 --> 00:28:31,600
Speaker 7: they're going to these apps. I mean, the question is

579
00:28:31,600 --> 00:28:35,639
Speaker 7: is it safe so they can claim to like screen

580
00:28:35,680 --> 00:28:38,000
Speaker 7: the drivers, check their fingerprints, things like that.

581
00:28:38,600 --> 00:28:42,120
Speaker 3: I'll be here in the suburbs, you know, folks. Suburbs

582
00:28:42,120 --> 00:28:46,160
Speaker 3: for me are thirty fourth Street. In the suburbs, you

583
00:28:46,200 --> 00:28:48,160
Speaker 3: don't have a lot of ubers. I mean, if you have.

584
00:28:48,120 --> 00:28:51,280
Speaker 4: A given a high school getting out, they're just flat

585
00:28:51,280 --> 00:28:52,280
Speaker 4: out not enough cars.

586
00:28:52,440 --> 00:28:55,400
Speaker 7: And that's why they're they're starting these new startups, these

587
00:28:55,440 --> 00:28:58,120
Speaker 7: startup apps. Some of them. My kids just walked, They

588
00:28:58,200 --> 00:29:00,920
Speaker 7: just just fucked walked a long way.

589
00:29:01,120 --> 00:29:03,120
Speaker 5: Maybe bad weather, we go pick them up.

590
00:29:03,160 --> 00:29:09,920
Speaker 4: Yeah, I remember going through two feet of snow. You know, no,

591
00:29:10,000 --> 00:29:12,960
Speaker 4: but you know it was it was like normal that

592
00:29:13,000 --> 00:29:16,200
Speaker 4: everybody did that. Now they got to be you know what,

593
00:29:16,360 --> 00:29:18,640
Speaker 4: you got me a black car and not an suv.

594
00:29:20,080 --> 00:29:20,320
Speaker 1: God.

595
00:29:21,680 --> 00:29:24,120
Speaker 7: Okay, So if you're not the life of the party,

596
00:29:24,320 --> 00:29:29,760
Speaker 7: you know, if maybe you're a dull person, definitely not, Sweetey.

597
00:29:31,120 --> 00:29:33,680
Speaker 7: There was a social club just for those type of people.

598
00:29:33,760 --> 00:29:37,320
Speaker 7: It is called the Dull Men's Club. The Washington Post

599
00:29:37,680 --> 00:29:39,720
Speaker 7: has a great article kind of looking into it that

600
00:29:39,760 --> 00:29:41,960
Speaker 7: it started back in nineteen eighty eight, but how it's

601
00:29:41,960 --> 00:29:44,520
Speaker 7: grown like it's it's now includes women. It has like

602
00:29:44,640 --> 00:29:47,440
Speaker 7: one and a half million members about posting about their

603
00:29:47,480 --> 00:29:50,680
Speaker 7: adventures on their Facebook page. So what's an adventure for

604
00:29:50,760 --> 00:29:51,440
Speaker 7: a dull person?

605
00:29:51,480 --> 00:29:51,800
Speaker 9: Okay?

606
00:29:51,880 --> 00:29:55,720
Speaker 7: So they collect milk bottles, so they write about that,

607
00:29:56,120 --> 00:29:59,200
Speaker 7: They take out their trash, what kind of potholes they've seen,

608
00:29:59,360 --> 00:30:02,280
Speaker 7: what food they've ate. You know, it's the happening place.

609
00:30:02,560 --> 00:30:05,200
Speaker 7: They even have a calendar that they put out with

610
00:30:05,280 --> 00:30:08,280
Speaker 7: pictures of their members. Next two things that they have

611
00:30:08,400 --> 00:30:11,440
Speaker 7: fun doing. It's a hot seller. It's a hot item.

612
00:30:12,640 --> 00:30:18,200
Speaker 4: Einstein here saying a calm and modest life instead of

613
00:30:18,400 --> 00:30:22,479
Speaker 4: constant restlessness, like going to see the eagles at the sphere.

614
00:30:25,640 --> 00:30:34,480
Speaker 4: She did, I'm a charter member, right you we live vicariously.

615
00:30:34,520 --> 00:30:38,760
Speaker 7: Three sweetie, okay, last one. Stick with Hollywood. They're starting

616
00:30:38,760 --> 00:30:40,880
Speaker 7: to embrace Saudi Arabia. This was in screen time. I'm

617
00:30:40,880 --> 00:30:43,520
Speaker 7: still kind of going through it. But Lucashaw basically Earlier

618
00:30:43,520 --> 00:30:45,720
Speaker 7: this month, he went to Jetta for the Red Sea

619
00:30:45,840 --> 00:30:49,480
Speaker 7: Film Festival. Of course, yes he did. Vin Diesel, Emily

620
00:30:49,520 --> 00:30:52,680
Speaker 7: Blunt received awards Spike Lee. Many drivers serve on the jury.

621
00:30:52,920 --> 00:30:56,280
Speaker 7: So Shaw says that Hollywood is starting to embrace Saudi

622
00:30:56,320 --> 00:31:00,000
Speaker 7: Arabia because you have that pullback and spending across media entertainment,

623
00:31:00,000 --> 00:31:02,600
Speaker 7: and it's prompting people in search for money in places

624
00:31:02,640 --> 00:31:07,360
Speaker 7: they never thought of, like Saudi a radio, Why well,

625
00:31:07,400 --> 00:31:09,920
Speaker 7: there was one thing here. The country is offering incentives

626
00:31:09,920 --> 00:31:13,280
Speaker 7: a rebate of about forty percent to film in Saudi Arabia,

627
00:31:13,320 --> 00:31:15,520
Speaker 7: so that's one of the draws there. But they've really

628
00:31:15,560 --> 00:31:17,360
Speaker 7: been dumping a lot of money. You've had the money

629
00:31:17,400 --> 00:31:20,480
Speaker 7: going into golf, video game places, building. We wanted to

630
00:31:20,480 --> 00:31:24,520
Speaker 7: have trillion dollar ye futuristic city. So it's starting to grow.

631
00:31:24,560 --> 00:31:26,800
Speaker 7: So they're saying this might be the new place to

632
00:31:26,840 --> 00:31:27,560
Speaker 7: start filming.

633
00:31:27,760 --> 00:31:31,440
Speaker 4: There's of course, read Lucas the moment it comes out

634
00:31:32,040 --> 00:31:34,160
Speaker 4: and there's some Hollywood pushback.

635
00:31:33,800 --> 00:31:36,080
Speaker 3: Of course, like do we really want to do this?

636
00:31:36,840 --> 00:31:37,160
Speaker 9: Correct?

637
00:31:37,160 --> 00:31:39,880
Speaker 5: At the end of the day, money that's what it

638
00:31:39,920 --> 00:31:43,520
Speaker 5: comes down, exactly, think and it's Hollywood. So I mean

639
00:31:43,760 --> 00:31:44,360
Speaker 5: it's Hollywood.

640
00:31:44,440 --> 00:31:47,320
Speaker 7: Had Johnny Depp, guy Ritchie like they've you know, shot

641
00:31:47,400 --> 00:31:49,480
Speaker 7: projects there and they say they're going to go.

642
00:31:49,640 --> 00:31:51,880
Speaker 5: So Johnny Depp is back, right, you see, backed up

643
00:31:51,920 --> 00:31:53,360
Speaker 5: making movies and stuff like Johnny Depp.

644
00:31:54,760 --> 00:31:57,560
Speaker 4: Okay. Brought to you by Aaron Taylor Johnson, Thank you

645
00:31:57,640 --> 00:32:00,760
Speaker 4: so much. Craving the Hunter seat in the theaters this week,

646
00:32:00,840 --> 00:32:02,240
Speaker 4: only only you, Lisa.

647
00:32:02,560 --> 00:32:07,680
Speaker 7: Yeah, did you see pictures of this gentleman?

648
00:32:08,120 --> 00:32:11,360
Speaker 5: No, let me, what's gonna go? Go to his name?

649
00:32:11,520 --> 00:32:14,400
Speaker 7: Aaron Taylor Johnson, Aaron are go ahead.

650
00:32:14,120 --> 00:32:19,480
Speaker 4: Right, craving Lisa Matteo on the newspapers. Thank you so much.

651
00:32:19,720 --> 00:32:24,160
Speaker 2: This is the Bloomberg Surveillance podcast, available on Apple, Spotify,

652
00:32:24,320 --> 00:32:28,440
Speaker 2: and anywhere else you get your podcasts. Listen live each weekday,

653
00:32:28,520 --> 00:32:31,600
Speaker 2: seven to ten am Eastern on Bloomberg dot Com, the

654
00:32:31,720 --> 00:32:35,520
Speaker 2: iHeartRadio app, tune In, and the Bloomberg Business app. You

655
00:32:35,520 --> 00:32:38,840
Speaker 2: can also watch us live every weekday on YouTube and

656
00:32:38,960 --> 00:32:40,560
Speaker 2: always on the Bloomberg terminal