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Speaker 3: Joining us down to get started.
Speaker 4: She Wolston Holiday Dress interat how many parties do you
Speaker 4: have tonight?
Speaker 1: Oh?
Speaker 5: My goodness, do you like only one?
Speaker 6: Only one?
Speaker 3: Just one party?
Speaker 4: Yes?
Speaker 3: Yes, Joining us.
Speaker 4: Rebecca Petis and iconic at JP Morgan of course, a
Speaker 4: tour of duty at Bridgewater as well.
Speaker 3: You came in and you whispered to Paul.
Speaker 4: You said, strong dollar.
Speaker 3: How strong a dollar?
Speaker 6: Well, a lot stronger than consensus has for next year.
Speaker 6: So most of the big investment banks are looking for
Speaker 6: weakness in the dollar, especially in the second half.
Speaker 3: Of the year.
Speaker 5: I don't see it.
Speaker 6: You've got a divergence in interest rates, even though that's
Speaker 6: somewhat priced in, but it's going to favor the dollar.
Speaker 6: You have much stronger growth in the US, which I
Speaker 6: think will continue to bring capital to the US, which
Speaker 6: will help the dollar. And in a case where President
Speaker 6: elect Trump decides to go hardcore on the tariffs. We've
Speaker 6: seen historically that that tends to be a positive for
Speaker 6: the dollar and weakness and currencies overseas. So the only
Speaker 6: case where I think the dollar weekends next year is
Speaker 6: if the US moderates while the rest of the world
Speaker 6: is gaining momentum, which moves capital overseas. Possible, but I
Speaker 6: just don't think the probability is as high as what
Speaker 6: consensus is suggesting.
Speaker 5: So I'm asking me for a friend here, could the
Speaker 5: euro get to parody?
Speaker 6: I think the euro is likely to break through parody.
Speaker 5: Now next year party, So there you go. I'm putting
Speaker 5: it out there, all right. I mean, for our friends
Speaker 5: that like to go to Rome in Paris, Lisa, that's
Speaker 5: a good thing. For those of us who stay in
Speaker 5: New Jersey, and that's so much of a thing, all right,
Speaker 5: talk to us about the equity markets. I've heard so
Speaker 5: much discussion over the past month or two of out
Speaker 5: international investors coming to the US market. Is is this
Speaker 5: activity unusual? Is it typical? What do you make of it?
Speaker 6: I mean, the risk that I think a lot of
Speaker 6: people are pointing out is that the US equity market,
Speaker 6: relative to the rest of the world, has gotten very
Speaker 6: expensive and heavily owned by foreign investors, international investors and
Speaker 6: domestic investors, and so there are. It feels like a
Speaker 6: drum beat now of calls that the US is in
Speaker 6: a bubble. The US could slow down next year. We'll
Speaker 6: get money going overseas because the valuations are much better.
Speaker 6: And the thing I always come back to is valuations matter,
Speaker 6: but aren't sufficient. You need a catalyst. And that's what
Speaker 6: I keep looking for. Is China pull out all the
Speaker 6: stops and held the consumer. Does Germany get rid of
Speaker 6: the debt break? And is that stimulus sufficient? I'm skeptical
Speaker 6: it is, which makes me think the US can stay
Speaker 6: the outperformer next year in terms of equities. But I'm
Speaker 6: watching those risks.
Speaker 3: Given where we are, let's fuld the correlated mess.
Speaker 4: I put out a tweet here we got d x
Speaker 4: Y through one oh seven. I got a ten year
Speaker 4: real yield out to two point zero three percent. To me,
Speaker 4: the single two sentences of the weekend was a guy
Speaker 4: named Sam Row, always suspect Sam Row channeling Liz Anne
Speaker 4: Saunders and Kevin Gordon and Charles Schwab on a beautiful
Speaker 4: scattered dot study that says it's not correlated. You can't
Speaker 4: take one year forward pe multiples like barons one on
Speaker 4: one and say market up or market down. What signals
Speaker 4: do you take from the equity market that bring you
Speaker 4: over to bonds, that bring you over to foreign exchange.
Speaker 5: That's a great question.
Speaker 6: So it's to me, there's a chicken and egg situation here.
Speaker 6: Does the equity market drive the currency? Does the currency
Speaker 6: drive the equity market and pull in bonds too? They
Speaker 6: all influence each other, and often it's which one is dominant.
Speaker 6: We'll be driving which one is having the bigger move,
Speaker 6: the greater momentum. So you can see a big move
Speaker 6: in bonds if we have a big rise in the
Speaker 6: ten year yield that not purely driven by growth, that
Speaker 6: can poll equity is lower. But we can also see
Speaker 6: if there's growth optimism about US exceptionalism, the tenure can
Speaker 6: go up and stocks go up with it, and the
Speaker 6: dollar goes up.
Speaker 5: Everything earlier there's a bubble.
Speaker 3: I don't see a bubble bubble.
Speaker 6: I did not say there's a bubble. I said there's
Speaker 6: a rugby morning.
Speaker 3: I'm trying to wake people up there.
Speaker 6: I want to be clear what I'm saying. The US
Speaker 6: market is expensive. If you look at a twelve month
Speaker 6: forward price earnings ratio, if you look at EPs growth
Speaker 6: priced in for next year for US stocks, if you
Speaker 6: look at ownership. But we know from history, to your point, Tom,
Speaker 6: that what happened this year has zero correlation with what
Speaker 6: happens next year. So the market could continue to rise
Speaker 6: if we have decent growth in the US and there
Speaker 6: aren't a lot of alternatives for your money. And I
Speaker 6: think that scenario is probably the most likely one.
Speaker 5: How About we had the election last month here, big
Speaker 5: change is coming starting in January of twenty twenty five
Speaker 5: here in US policy. Your outlook at all or your
Speaker 5: allocation or where you want to find risk in the marketplace.
Speaker 6: Yeah, the one thing that I think investors should be
Speaker 6: really thinking about our scenarios because we simply don't know
Speaker 6: yet what President elect Trump and his administration are going
Speaker 6: to do in terms of sequencing and size. So when
Speaker 6: do tariffs happen and how big are they, what kind
Speaker 6: of deportation do we see? Those are big downside risks
Speaker 6: in my opinion for the equity market. I don't think
Speaker 6: they're being priced in right now, but we don't know,
Speaker 6: And so if you don't know what's going to happen,
Speaker 6: you have a wider cone of outcomes. You need to
Speaker 6: be having some hedges in your portfolio. So fine, have
Speaker 6: fun with financials that are going to benefit from deregulation
Speaker 6: and growth, have fun with your digital asset related assets,
Speaker 6: so to speak. But then make sure you have a
Speaker 6: few defensive positions as well in case some of these
Speaker 6: negatives become reality. So I would look overseas at the UK,
Speaker 6: I would look overseas, possibly at Switzerland. Within the United States,
Speaker 6: I think things like energy, healthcare utilities can play a role,
Speaker 6: not in large size, but some pieces of it. Just
Speaker 6: to give you those hedges for those less friendly scenarios.
Speaker 4: Our viewers or listeners have a collective memory of President
Speaker 4: Trump railings a strong dollar. Everything you said is against
Speaker 4: a genetic structure of Donald Trump. He wants a week
Speaker 4: dollar to keep US exports going.
Speaker 3: Are you suggesting that's done.
Speaker 6: Trump has gotten a little more balanced in his currency
Speaker 6: comments over the last few months, and certainly the Treasury
Speaker 6: Secretary nominee Scott Bessant is also more balanced in terms
Speaker 6: of his view on the dollar. So if the dollar
Speaker 6: is very strong and we're seeing that hurt exporters in
Speaker 6: the data. Of course we're going to get some tweets
Speaker 6: or posts or whatever.
Speaker 1: You know.
Speaker 6: The president elect is into that day, but what can
Speaker 6: he actually do about it. I don't think we have
Speaker 6: a new Plaza accord or a mar Lago accord. I
Speaker 6: don't think that's in the cards.
Speaker 3: Golf course in Scotland. He is turn Turny, a turnberrier.
Speaker 3: Everybody works killed. Yeah, I can see president elected killed.
Speaker 5: Sure, talk to us about avocados.
Speaker 6: Okay, so I have been Yes, we're talking about avocados.
Speaker 5: So amazing.
Speaker 3: Surveillance go.
Speaker 6: So you think about risks in the next year. And
Speaker 6: one risk that I think is on people's radar screens
Speaker 6: but maybe not enough, is a resurgence of inflation. And
Speaker 6: one area I think you want to watch is food inflation.
Speaker 6: US farmers are struggling right now. They can't get enough workers.
Speaker 6: Uh and seventy percent of workers in US farming are immigrants,
Speaker 6: about half of those are illegal immigrants. If you reduce
Speaker 6: the workers, you can't get the crops out of the ground.
Speaker 6: Prices go up, profits go down. In addition to that, though,
Speaker 6: the tariffs are a big hit on US farmers. In
Speaker 6: twenty eighteen nineteen, those that year period alone, they lost
Speaker 6: twenty seven billion dollars in export revenue. Now, last time
Speaker 6: Trump failed them out, they got over eighty billion dollars
Speaker 6: in government subsidies. This time they don't have as much
Speaker 6: free money flowing to hand out. So why do avocados
Speaker 6: come in the mix. Because ninety percent of American avocados
Speaker 6: come from Mexico. And if we don't have people to
Speaker 6: get those avocados out of the ground here in California,
Speaker 6: and the tariffs on Mexico are causing some retaliation, avocados
Speaker 6: are going to become a luxury good I wrote about
Speaker 6: it in the New York Times this past week.
Speaker 3: I saw it, but Paul helped me.
Speaker 4: Here. We didn't know what avocado was until what fifteen
Speaker 4: years ago?
Speaker 5: The guacam only the kids with the quaka, it was guak.
Speaker 6: You know, if you want, that's a main three Americans.
Speaker 6: I mean, double the price of guac for super you
Speaker 6: will have angry voters.
Speaker 4: See, I told you each avocado contains fifty eight milligrams
Speaker 4: of magnesium.
Speaker 3: Sure, is there anything bad about avocados?
Speaker 5: Lisa, Come on, Lisa, get with it.
Speaker 7: It's a healthy fat. It's very good for you.
Speaker 3: Avocados. Do you buy him by the bushel at costco?
Speaker 7: We sure do, do you really?
Speaker 5: I do?
Speaker 7: I buy the big bag. They come a little bit hard,
Speaker 7: so you got to kind of put them in the
Speaker 7: cabinet to ripe off. Yeah, but that's the.
Speaker 5: Way to do it. The budget deficits has widened. This
Speaker 5: is from your optioned from three point nine percent of
Speaker 5: gross domestic product in twenty eighteen to six point four
Speaker 5: percent today, suggesting that maybe the US government will not
Speaker 5: have the same capability to support farmers in such a scenario.
Speaker 6: I mean they're going to feel pressure to do that,
Speaker 6: for sure. Farms are all across the country, our amber
Speaker 6: waves of grain, right, so they're going to be pressure.
Speaker 6: But are they going to find the money? It's going
Speaker 6: to be harder to find the money this time. Is
Speaker 6: Elon going to let them have the money?
Speaker 1: Right?
Speaker 3: Where's the best avocado restaurant in New York City? Oh?
Speaker 3: Massive craving word?
Speaker 6: Okay, Rosa Mexicano tabletop guacamole. They come and make it
Speaker 6: in front of you and you can customize it. That's
Speaker 6: still my go to.
Speaker 5: Yep, very good.
Speaker 6: See I'm now I'm now in holiday mode. You just
Speaker 6: officially got me there.
Speaker 3: Becky Patterson, thank you so much for joining us.
Speaker 2: You're listening to the Bloomberg Surveillance Podcast. Catch us live
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.
Speaker 4: She's just been absolutely famous, Henriette, there is really only
Speaker 4: one question. Are there Are there Republican senators that are
Speaker 4: going to push against their president? There was confusion over
Speaker 4: the weekend.
Speaker 1: I think there's a lot of things to push back
Speaker 1: against incoming President Trump over you know, some of the
Speaker 1: nominees that he's picked, whether it's tanksas or RFK Junior.
Speaker 1: You're starting to see it in individual little baskets. We're
Speaker 1: dealing with the government funding bill that has not been
Speaker 1: released yet because it continues and increases federal spending and
Speaker 1: creates a problem with you know, eighty to one hundred
Speaker 1: and fifty House Republican members. So I think they're picking
Speaker 1: and choosing which areas they want to fight the president over.
Speaker 5: So let's go to that issue here. I'm always when
Speaker 5: you people talk about funding the government and shutdowns. It
Speaker 5: kind of gets my attention here. Just walk us through
Speaker 5: the timeline about what our Congress is going to be
Speaker 5: doing over the next several weeks as it relates to
Speaker 5: keeping this government open.
Speaker 8: Yeah, great question.
Speaker 1: Right now, they're going to vote on a National Defense
Speaker 1: Authorization Act, which increases federal spending for that sector by
Speaker 1: one percent to eight hundred and eighty four billion dollars.
Speaker 1: If I'm not mistaken, it includes you know, fourteen percent
Speaker 1: uptick for a junior enlisted serviceman.
Speaker 8: And that's the package that they'll pass this.
Speaker 1: Week while we wait to release the government funding bill,
Speaker 1: which will similarly increase federal spending by one hundred billion
Speaker 1: dollars roughly just to get us into March. So we're
Speaker 1: kind of trying to clear the decks, but they're not
Speaker 1: clearing it for any kind.
Speaker 8: Of long duration.
Speaker 1: It's just until about March fourteenth of twenty twenty five,
Speaker 1: which means almost as soon as we pass this hurdle
Speaker 1: to keep the government open, we're going to be facing
Speaker 1: another shutdown early next year, which very likely could.
Speaker 8: Get in the way of the Republican agenda.
Speaker 1: Around this first smaller Reconciliation Bill on Immigration, Defense and
Speaker 1: the Order, and that's going to be the story of
Speaker 1: next to its starts.
Speaker 4: Well to the mystery of what Senator is going to
Speaker 4: do with the different controversial cabinet picks. Is the tea
Speaker 4: party ish type of the House going to go against
Speaker 4: their president on March fourteenth?
Speaker 1: You know? I think this is the real issue that
Speaker 1: we have, which is Speaker Johnson has a zero vote
Speaker 1: margin until April when he's going to have a whopping
Speaker 1: to vote margin.
Speaker 8: So House Republicans lost seats.
Speaker 1: Last election cycle, which is something that doesn't get I
Speaker 1: think reported enough, and that's going to be even more
Speaker 1: difficult for Speaker Johnson to keep the job and to
Speaker 1: keep the government open into next year. To answer your
Speaker 1: question directly, absolutely, I think that the Republicans in the
Speaker 1: next cr will probably lose one hundred and fifty House
Speaker 1: Republican members when they go to keep the government open
Speaker 1: under President Trump in twenty twenty five.
Speaker 5: All right, So I don't know how that wow, how
Speaker 5: that's going to play out, Henriette, I talked to us.
Speaker 5: I guess maybe a little bit more immediate in acounter
Speaker 5: is some of these nominations that still have to go
Speaker 5: through congressional approval.
Speaker 9: Where are we with.
Speaker 5: Some of the mister heg Seth, Tulca Gabbart, some of
Speaker 5: the more controversial ones. What do we know now?
Speaker 1: I mean, right now we're doing effectively a pretty serious
Speaker 1: media lobbying campaign.
Speaker 8: With hag Seth standing next to J. D.
Speaker 1: Dance and President Elect Trump at an Army Navy game,
Speaker 1: you know, obviously trying to project physically that they are
Speaker 1: all aligned and on board, and encouraging members of the
Speaker 1: Senate Republican Conference to get on board with passing those members.
Speaker 1: I think what's going to happen is we're going to
Speaker 1: see some of these folks get a full core press
Speaker 1: and President Trump put his weight behind it and say
Speaker 1: pass this, give me this nominee.
Speaker 8: But others A'llah.
Speaker 1: Telsea Gabbard, for example, are going to have a much
Speaker 1: more difficult time.
Speaker 8: I keep my eye on the prize.
Speaker 1: Obviously, I cover bacroeconomic policy, so I don't really care
Speaker 1: about some of those agencies.
Speaker 8: I really want to see Scott Bessett of the World,
Speaker 8: Damson Greer at USDR.
Speaker 1: Those are much more important to me, and I think
Speaker 1: those folks are very likely to get through those are
Speaker 1: the ones who will we put in tyreso on next year?
Speaker 8: I think that's the prize.
Speaker 4: And now, folks, the civics dumb question of the week,
Speaker 4: Let's get it out of the way early here on
Speaker 4: a Monday, Henrietta Trace with.
Speaker 3: A senator's vote.
Speaker 4: Are their votes visible or are they liked by a
Speaker 4: ballot box with their secret? Oh?
Speaker 8: No, absolutely visible. You can watch this all on c SPAN.
Speaker 8: It's a great family fun. Highly recommend this.
Speaker 5: Debt ceiling. She's such a nerve, I know, dead ceiling death.
Speaker 5: It's I mean, we've got the clock here in Manhattan.
Speaker 5: It shows us the deficits. And does anybody care in Washington, DC?
Speaker 9: Should they care?
Speaker 4: Oh?
Speaker 8: They talked about caring.
Speaker 1: For sure. Everybody's against deficits, that's for sure. But you're
Speaker 1: not against specific spending cuts. Excuse me, you're not for
Speaker 1: specific spending cuts. It's much easier to be against things
Speaker 1: than for them. So while we talk about, you know,
Speaker 1: being against federal spending, let's be mindful that we have
Speaker 1: to increase the debt ceiling next year. And Lindsey Grahm,
Speaker 1: they incoming Senate Budget Committee chairman, notified us last week
Speaker 1: that the debt ceiling, which could pass on party lines
Speaker 1: with just Republican support and a reconciliation bill will instead
Speaker 1: go through regular order. And that is acknowledgment that they
Speaker 1: will not be cutting federal spending next year. It is
Speaker 1: far too difficult a task, especially when you have a
Speaker 1: zero c margin in the House and only three seats
Speaker 1: in the Senate.
Speaker 5: How about on the tax front here, how do we
Speaker 5: think this is going to play out on the tax front?
Speaker 1: I think it's clear from incoming Leader Foons agenda that
Speaker 1: we will not get a tax bill until December of.
Speaker 8: Twenty twenty five. We are only to have the massive.
Speaker 1: Light over you know, the salt deduction, over repealing the
Speaker 1: IRA tax credits for burgeoning industries and clean energy solar,
Speaker 1: wind batteries, et cetera. It's popular to say that we're
Speaker 1: going to repeal the electric vehicles tax credit, for example,
Speaker 1: but that's about one hundred and twenty billion dollars in
Speaker 1: the broader IRA, which has balloomed, as you know, from
Speaker 1: a bill that they expected to be about two hundred
Speaker 1: billion dollars in private sector uptake to seven hundred and
Speaker 1: eighty billion dollars. Who has grown these industries some up
Speaker 1: in Boston, Texas, Ohio, North Dakota, South Dakota was buried
Speaker 1: by percident. Unfortunately, in red states, about seventy percent of
Speaker 1: that funny Red states.
Speaker 4: You know what's interesting here, Henrietta, and I've got to
Speaker 4: squeeze this in the salt tax it's called, is a
Speaker 4: stereotype that is just about democratic states? Or can mister
Speaker 4: Trump get pressure on the assault tax from Republican states?
Speaker 8: You know, that's a great question. As you know, I
Speaker 8: live down here in Louisiana.
Speaker 1: There are beautiful, nice streets down here where people are
Speaker 1: paying exorbitant property taxes and mortgages.
Speaker 8: That's in Texas, that's in every state in our great nation.
Speaker 8: There's big homes that people want this deduction for.
Speaker 1: So I think a lot of it weighs on the
Speaker 1: New York, New Jersey, Connecticut, California Republican contingent. And the
Speaker 1: reason that's easy is because those are sheets that president
Speaker 1: like Trump and the Republican Party have picked up in
Speaker 1: the last ten years, and so they really highlight those members,
Speaker 1: and frankly, those members are on the hook for fixing
Speaker 1: this for their constituents.
Speaker 4: That's that they got a lot to Henrietta Trace, thank
Speaker 4: you so much for your perspective. Can't say now from
Speaker 4: Louisiana today, which is wonderful. She is with Veda Partners.
Speaker 4: Every time she's on. I learned stuff I know every
Speaker 4: single time.
Speaker 3: It's just great.
Speaker 2: This is the Bloomberg Surveillance Podcast. Listen live each weekday
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Speaker 2: Just say Alexa Play Bloomberg eleven thirty.
Speaker 4: This is a joy and for me and Paul and
Speaker 4: Lisa and Charlie Pellett, this could literally be a three
Speaker 4: hour conversation. We all fly, our loved ones fly. Stephen
Speaker 4: Trent is definitive. It's City group on this. You know,
Speaker 4: it's not American Airlines research. It's all of American research.
Speaker 4: Thrilled to have you in the studio. Way too short
Speaker 4: of visit which let's just get the single best buy.
Speaker 4: Is it a foreign carrier or a domestic carrier?
Speaker 10: Well, thank you so much for having me on and
Speaker 10: good morning to you. So in terms of the carriers
Speaker 10: we like the most in the United States, it's going
Speaker 10: to be Delta Airlines is our top pick. We do
Speaker 10: have American Airlines with a by rating and our focus
Speaker 10: group on a long term basis. However, within the America's
Speaker 10: Panama's COPA Airlines, we think is dynamite.
Speaker 5: Copa Airlines out of Panama. What's what's the place. I
Speaker 5: know you have a lot of experience covering the transports
Speaker 5: down in Latin America. Give us just kind of the
Speaker 5: macro call, because we don't talk about it a lot.
Speaker 5: How do you how do we think about it from
Speaker 5: a thirty thousand foot level Latin America transportation?
Speaker 10: Yeah, absolutely, So when we look at, for example, the
Speaker 10: market there versus the market here, I think there are
Speaker 10: a couple of things I would keep in mind. One
Speaker 10: of the most important things is the lack of capacity
Speaker 10: on a per capita basis, so you have relative to
Speaker 10: the United States, lower employments per capita. The other thing
Speaker 10: I would layer on top of that, Latin America Airlines,
Speaker 10: for the most part, of course, generate revenue in local
Speaker 10: currency and faced US dollar indexed seat mile cost, so
Speaker 10: they are not long dollar companies. They actually suffer under
Speaker 10: the circumstances. The third thing I would highlight would be
Speaker 10: the lack of affordability to fly in Latin America. If
Speaker 10: you compare the average fare to average weekly per capita
Speaker 10: income versus US, so people that are flying it's less less.
Speaker 4: Are they like US and that they have mileage programs
Speaker 4: and all the other accouturements of US airlines or are
Speaker 4: they like something back twenty or thirty years or they're
Speaker 4: just trying to get to the end of the quarter.
Speaker 9: Yeah, they're actually somewhat like the US.
Speaker 10: Ones, and they are more unbundled than what we have
Speaker 10: here in the United States. So a full blown Delta Airlines,
Speaker 10: for example, is sort of would be sort of an
Speaker 10: anomaly in many Latin markets.
Speaker 4: Ours Delta and United and the others competing with government
Speaker 4: funded international air carriers like Air France, Cutter, Eddiot and
Speaker 4: the others buying Formula one billboards.
Speaker 10: Yeah, that's kind of a tough place, and that has
Speaker 10: been sort of controversial at points in the past. So
Speaker 10: you would be concerned about those issues on the Transatlantic
Speaker 10: for example.
Speaker 9: But here in the.
Speaker 10: United States, the model is very good. The airlines here
Speaker 10: have de risked their earning stream through co branded card
Speaker 10: loyalty programs and the US consumer itself. The demand we
Speaker 10: see for premium cabin is very good. So I've seen
Speaker 10: big improvements in earnings quality.
Speaker 5: How about some of the budget airlines here, that's a
Speaker 5: tough business in this country. I'm thinking Spirit and Frontier
Speaker 5: and all these things. What's going on in that? How
Speaker 5: do you run a budget airline these days?
Speaker 9: You know it's tough. I think it's very difficult. And
Speaker 9: what do you see with the budget airlines today?
Speaker 10: They're all trying to add premium and so when we
Speaker 10: look at this movement to just the front of the cabin,
Speaker 10: are they going to imp prove unit revenues on that?
Speaker 9: Yes, they probably will.
Speaker 10: But if you're a network airline, you're already a unit
Speaker 10: revenue champion with a strong demand curve. If you're a
Speaker 10: budget airline, historically, I've never been good at unit revenue.
Speaker 10: You want to delate the heck out of your seat
Speaker 10: maul cost and you can't do that.
Speaker 3: So Stephen Trent helped me here.
Speaker 4: Like Robert Crandall was a huge supporter of what I
Speaker 4: was doing, and it was such a joy to have
Speaker 4: him and missus Crandall from Florida.
Speaker 3: He changed what we do. But is it still cyclical.
Speaker 4: I'm looking at the ten year track record of Delta Airlines,
Speaker 4: maybe had some challenges like a pandemic, and I'm sorry
Speaker 4: it's not good enough total return. Is there a new
Speaker 4: persistency to cash flow where they're acting like a blue
Speaker 4: chip stock or is in another up and down airline cardiac.
Speaker 3: Arrest with these air with these stocks?
Speaker 10: Yeah, Look so I think relative to two thousand and
Speaker 10: nine to now, for example, there's a lot that's changed.
Speaker 10: The U stairlines, for example, do very little synthetic fuel hatching,
Speaker 10: which I would argue is part of the problem. More importantly, however,
Speaker 10: the co branded card piece of the pie is really important.
Speaker 10: So they're getting cash flow streams from consumers using their
Speaker 10: credit cards.
Speaker 3: Is that more important than Paul sitting on the runway
Speaker 3: at Newark?
Speaker 10: Okay, well that's that's the challenge to Newark has had.
Speaker 9: His is use.
Speaker 5: Yeah, but trumal A is good though. Boy they did
Speaker 5: a good job there.
Speaker 9: It's short, it's sure, is so?
Speaker 3: What all right?
Speaker 9: So is the business flyer?
Speaker 5: I know that the leisure flyers back and above pre
Speaker 5: pandemic levels. Some about the business flyer, what's the new normal?
Speaker 5: What are the Airlines telling me is a new normal
Speaker 5: for business travel.
Speaker 9: Yeah, so I think we're like going back to where.
Speaker 10: We were in terms of these those distribution channels kind
Speaker 10: of getting filled out again. Uh but pre pandemic business travel,
Speaker 10: are we going all the way back?
Speaker 9: I would say no.
Speaker 10: And that's because in a lot of industries you no
Speaker 10: longer have the consumer in the office five days a week.
Speaker 10: So I'm not saying that the flyout Sunday night, fly
Speaker 10: home Thursday night is gone, but I think it's at
Speaker 10: least somewhat diminished. And you've seen some of that flow
Speaker 10: going towards blended travel. People traveling, and you know these
Speaker 10: pre pandemic shoulder.
Speaker 3: Periods single best buys delta right.
Speaker 9: Yes, for the US quickly, How are.
Speaker 3: Their lounges doing because I can't get into it.
Speaker 10: Well, I think those full lounges are a darn good
Speaker 10: sign of demand.
Speaker 9: So that's going very well. And the other.
Speaker 10: Equipment and infrastructure they have set up for premium it's great.
Speaker 9: I think American Airlines is.
Speaker 10: Just getting started with co branded cart so those are
Speaker 10: the network carriers.
Speaker 3: I think I get thirty seconds. What's Kirby doing at United?
Speaker 10: I'm a fan of United as well. I think they're
Speaker 10: doing great. We had them on our focus list. That
Speaker 10: was some very good performance on the backped So we
Speaker 10: continue to think free cash flow for these network airlines
Speaker 10: is still spooling up, and the diversity of the free
Speaker 10: cash flow is no longer coming from just passengers buying tickets.
Speaker 9: It's coming from co branded cart.
Speaker 3: Up one hundred and thirty percent this year. Steve was
Speaker 3: pre in a year.
Speaker 4: Yeah you know, did you always said spooling cares You
Speaker 4: have to go to talk to say that.
Speaker 3: You can only do that if you go to talk
Speaker 3: up at dark Stephen Trent, don't be a stranger. Thank
Speaker 3: you so much.
Speaker 2: This is the Bloomberg Surveillance Podcast. Listen live each weekday
Speaker 2: starting at seven am Eastern on applecar Play and Android
Speaker 2: Auto with the Bloomberg Business app. You can also watch
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Speaker 4: Bloomberg Surveillance end Our front page is a Lisa Matteo hours.
Speaker 4: What do you got, Lisa?
Speaker 7: Some new Apple tech that's going to be coming out.
Speaker 7: This is from the Wall Street Journal in Bloomberg Both
Speaker 7: I'm reporting starting next year, they're gonna introduce an iPhone
Speaker 7: that's thinner, so in case you have the one, you
Speaker 7: have it, it'll be a little bit thinner. It's intended
Speaker 7: to be cheaper than the pro models, So that's a
Speaker 7: bonus because it's going to have this simplified camera system
Speaker 7: and that's reducing their costs. On top of that, foldable
Speaker 7: devices that's like the hot new thing. So now they
Speaker 7: want to plan two one for a bigger device, one
Speaker 7: for a smaller device. Bloomberg reporting, it's like kind of
Speaker 7: like an iPad foldable. The problem is that they have
Speaker 7: to improve the hinge that actually allows it to fold.
Speaker 7: That's been having some issues. But it's also rethinking the mouse.
Speaker 7: The next air tag, you know those ones that sometimes
Speaker 7: you put on your luggage. It's going to have a
Speaker 7: wider range so we can find things a little bit
Speaker 7: further away. And then it's going to shift to an
Speaker 7: in house Wi Fi chair. All this stuff kind of
Speaker 7: coming out next year. I don't, but I know a
Speaker 7: couple of people who do. And it's kind of scary
Speaker 7: because they're tracking but without their knowledge, without the kind
Speaker 7: of slip it in someone's.
Speaker 5: Back that's not that's not very nice.
Speaker 7: But no parents use it to on their kids, like
Speaker 7: on their backpacks and stuff. So it's being used a lot.
Speaker 3: Okay, have foldable phone to be.
Speaker 7: No, well, not a lot of adults are using it,
Speaker 7: but it's it's the new like that's the new hot thing.
Speaker 7: So now they have to adjust to the times, and
Speaker 7: you know, they have to find a tech gadget that's
Speaker 7: similar to it, Apple New Tech. So you've heard about
Speaker 7: the problems with school districts cutting back on bus service, right,
Speaker 7: So now parents are turning to ride share apps to
Speaker 7: get their kids to school. This was in the Associated Press.
Speaker 7: It's interesting. It's not Uber and Lyft that we're talking about.
Speaker 7: It's new startups ones called piggyback network. So parents book
Speaker 7: the ride for the kids online with another parent traveling
Speaker 7: in the same direction. So that's the idea of one
Speaker 7: of them. Another is hop skipped. So these are all
Speaker 7: these startups that are beginning because parents are having trouble
Speaker 7: finding ways to get their kids to school.
Speaker 3: Somehow.
Speaker 7: Buses we do not.
Speaker 5: No, no, no, no, we do not in my town.
Speaker 5: But presumably for the elementary schools you lived close by,
Speaker 5: they all over tency look close by, you could walk,
Speaker 5: that's fine. Then the middle school and the high school
Speaker 5: not so much. So you drive by the high school
Speaker 5: at pickup time, it's a disaster. As all these parents
Speaker 5: are they are lined up. I'm like, where are the buses?
Speaker 7: Yeah right, yeah no, but that's a problem. So now
Speaker 7: they're going to these apps. I mean, the question is
Speaker 7: is it safe so they can claim to like screen
Speaker 7: the drivers, check their fingerprints, things like that.
Speaker 3: I'll be here in the suburbs, you know, folks. Suburbs
Speaker 3: for me are thirty fourth Street. In the suburbs, you
Speaker 3: don't have a lot of ubers. I mean, if you have.
Speaker 4: A given a high school getting out, they're just flat
Speaker 4: out not enough cars.
Speaker 7: And that's why they're they're starting these new startups, these
Speaker 7: startup apps. Some of them. My kids just walked, They
Speaker 7: just just fucked walked a long way.
Speaker 5: Maybe bad weather, we go pick them up.
Speaker 4: Yeah, I remember going through two feet of snow. You know, no,
Speaker 4: but you know it was it was like normal that
Speaker 4: everybody did that. Now they got to be you know what,
Speaker 4: you got me a black car and not an suv.
Speaker 1: God.
Speaker 7: Okay, So if you're not the life of the party,
Speaker 7: you know, if maybe you're a dull person, definitely not, Sweetey.
Speaker 7: There was a social club just for those type of people.
Speaker 7: It is called the Dull Men's Club. The Washington Post
Speaker 7: has a great article kind of looking into it that
Speaker 7: it started back in nineteen eighty eight, but how it's
Speaker 7: grown like it's it's now includes women. It has like
Speaker 7: one and a half million members about posting about their
Speaker 7: adventures on their Facebook page. So what's an adventure for
Speaker 7: a dull person?
Speaker 9: Okay?
Speaker 7: So they collect milk bottles, so they write about that,
Speaker 7: They take out their trash, what kind of potholes they've seen,
Speaker 7: what food they've ate. You know, it's the happening place.
Speaker 7: They even have a calendar that they put out with
Speaker 7: pictures of their members. Next two things that they have
Speaker 7: fun doing. It's a hot seller. It's a hot item.
Speaker 4: Einstein here saying a calm and modest life instead of
Speaker 4: constant restlessness, like going to see the eagles at the sphere.
Speaker 4: She did, I'm a charter member, right you we live vicariously.
Speaker 7: Three sweetie, okay, last one. Stick with Hollywood. They're starting
Speaker 7: to embrace Saudi Arabia. This was in screen time. I'm
Speaker 7: still kind of going through it. But Lucashaw basically Earlier
Speaker 7: this month, he went to Jetta for the Red Sea
Speaker 7: Film Festival. Of course, yes he did. Vin Diesel, Emily
Speaker 7: Blunt received awards Spike Lee. Many drivers serve on the jury.
Speaker 7: So Shaw says that Hollywood is starting to embrace Saudi
Speaker 7: Arabia because you have that pullback and spending across media entertainment,
Speaker 7: and it's prompting people in search for money in places
Speaker 7: they never thought of, like Saudi a radio, Why well,
Speaker 7: there was one thing here. The country is offering incentives
Speaker 7: a rebate of about forty percent to film in Saudi Arabia,
Speaker 7: so that's one of the draws there. But they've really
Speaker 7: been dumping a lot of money. You've had the money
Speaker 7: going into golf, video game places, building. We wanted to
Speaker 7: have trillion dollar ye futuristic city. So it's starting to grow.
Speaker 7: So they're saying this might be the new place to
Speaker 7: start filming.
Speaker 4: There's of course, read Lucas the moment it comes out
Speaker 4: and there's some Hollywood pushback.
Speaker 3: Of course, like do we really want to do this?
Speaker 9: Correct?
Speaker 5: At the end of the day, money that's what it
Speaker 5: comes down, exactly, think and it's Hollywood. So I mean
Speaker 5: it's Hollywood.
Speaker 7: Had Johnny Depp, guy Ritchie like they've you know, shot
Speaker 7: projects there and they say they're going to go.
Speaker 5: So Johnny Depp is back, right, you see, backed up
Speaker 5: making movies and stuff like Johnny Depp.
Speaker 4: Okay. Brought to you by Aaron Taylor Johnson, Thank you
Speaker 4: so much. Craving the Hunter seat in the theaters this week,
Speaker 4: only only you, Lisa.
Speaker 7: Yeah, did you see pictures of this gentleman?
Speaker 5: No, let me, what's gonna go? Go to his name?
Speaker 7: Aaron Taylor Johnson, Aaron are go ahead.
Speaker 4: Right, craving Lisa Matteo on the newspapers. Thank you so much.
Speaker 2: This is the Bloomberg Surveillance podcast, available on Apple, Spotify,
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