Speaker 1: Bloomberg Audio Studios, podcasts, radio news. This is the Bloomberg
Speaker 1: Surveillance Podcast. Catch us live weekdays at seven am Eastern
Speaker 1: on applecar Player, Android Auto with the Bloomberg Business App.
Speaker 1: Listen on demand wherever you get your podcasts, or watch
Speaker 1: us live on YouTube.
Speaker 2: Listen an important discussion and Bob Woodward yesterday and our
Speaker 2: piercing conversation. Thanks for the many comments there, particularly from
Speaker 2: Trump supporters that felt mister Woodward was supporting the other team.
Speaker 2: And to have Tina Fordham with us right now. Fordham
Speaker 2: Global Insights is important. Off what Bob Woodward said yesterday
Speaker 2: that the Secretary Defense of the Biden administration has an
Speaker 2: affinity for the Vice President of the United States, Tinas.
Speaker 2: I know you know in Foreign Affairs magazine the Secretary
Speaker 2: of Defense writing and of course is extreme concern about
Speaker 2: Ukraine and quote Putin's aggression unquote. The Secretary of Defense
Speaker 2: goes the frauds and falsehoods of the Kremlin apologists. What
Speaker 2: does the Department of Defense and our foreign policy projection
Speaker 2: look like, whether Trump or Harris Victory.
Speaker 3: Well, I think we should admit to start with it.
Speaker 3: As we've gotten closer to polling day. In the US,
Speaker 3: the sounding the alarm about the risks of Trump and
Speaker 3: the White House have increased, and the Defense Secretary is
Speaker 3: talking about the fact that Trump has said that he
Speaker 3: would end the war in Ukraine on day one. He
Speaker 3: hasn't said how he would do that. But what is
Speaker 3: likely the biggest foreign policy implication in the short term
Speaker 3: of Trump and the White House has got to be
Speaker 3: his promised end to military aid to Ukraine. Even though
Speaker 3: you're has done a lot and done it quickly in
Speaker 3: European Union terms, and the UK has been very involved
Speaker 3: in this, it won't be possible to replace that aid
Speaker 3: in time. And you know, Putin's been playing a waiting
Speaker 3: game when it comes to Ukraine, and he's been much
Speaker 3: more active when it comes to US elections.
Speaker 4: Tina, you're based in London. I'd love to get a
Speaker 4: sense of kind of what the folks in the UK
Speaker 4: are thinking about this election, how closely they're paying attention
Speaker 4: to it, how do they view potential outcomes.
Speaker 3: Well, I mean, I guess I have a bit of
Speaker 3: a you know, self selected crowd around me. My phone
Speaker 3: is lighting up constantly today and in the UK people
Speaker 3: feel very close to the United States and so there's
Speaker 3: you know, affinity and concern on that front, and of
Speaker 3: course in the markets, our investor clients and corporate clients
Speaker 3: are really on the edge of their seats about this.
Speaker 3: It's impossible to position for an election as close as this,
Speaker 3: as Tom was saying at the start, but there is
Speaker 3: enormous anxiety and it's pretty much across the board about
Speaker 3: what it would mean for the UK and Europe to
Speaker 3: have Trump back in the White House. And I think
Speaker 3: there's been less consideration really about what a Harris presidency
Speaker 3: would mean, apart from the expectation of continuity on NATO, Alcus,
Speaker 3: you know, the security umbrella in Asia.
Speaker 4: What have you heard, if anything, from some of the
Speaker 4: European leaders about a potential second Trump presidency in terms
Speaker 4: of just geopolitics in general. Again, as as you mentioned,
Speaker 4: there's so many hotspots around the world, from the Middle
Speaker 4: East to Ukraine. What would that mean.
Speaker 3: Potentially, Well, European elected officials will be at great pains
Speaker 3: not to say anything because you know, they don't want
Speaker 3: to be seen to be interfering in the elections. But
Speaker 3: there has been no secret about the fact that Brussels,
Speaker 3: for example, has been trying to trunk proof Europe, and
Speaker 3: that's the term that's been used, and that relates particularly
Speaker 3: to security and defense, as mentioned, But I think the
Speaker 3: other angle here, I mean, the obvious one is security
Speaker 3: and defense, and it matters enormously. But the other angle
Speaker 3: about why these US elections are being watched so closely
Speaker 3: and with so much anxiety is simply around the question
Speaker 3: about whether the US can have a peaceful transition. And
Speaker 3: I was very interested to see some polling data from
Speaker 3: the AP that talked about four and ten Americans are
Speaker 3: concerned about violent interference with elections. That's alarming. So I
Speaker 3: think the biggest litmus test is the functioning of our
Speaker 3: institutions and the acquiescence of whoever loses.
Speaker 2: One of the great changes here at Tina from twenty
Speaker 2: sixteen to twenty twenty to twenty twenty four, way beneath
Speaker 2: the fold in America, nobody's paying attention is ninety six
Speaker 2: miles from the Russian border in Finland Lapland, the United
Speaker 2: States is leading NATO artillery exercises. That's something I would
Speaker 2: not have said four years ago or eight years ago.
Speaker 2: What is the significance of NATO artillery exercises? A Cuba
Speaker 2: away from Putin's border.
Speaker 3: Well, that speaks to the fact that we have two
Speaker 3: new NATO member states since Russia decided to invade Ukraine,
Speaker 3: and those are Finland and Sweden. It wasn't expected. I
Speaker 3: suppose even five years ago. I actually had a bet
Speaker 3: with a Swedish banker friend of mine about this, that
Speaker 3: they would both join. But you take an interesting place, Tom,
Speaker 3: which is that one of the sort of open debates
Speaker 3: that's underway is whether those Nordic states would kind of
Speaker 3: form their own and mini NATO if US withdraws its
Speaker 3: support in one form or another. They have strong militaries
Speaker 3: and have had the mandatory draft, and I think a
Speaker 3: lot of Americans don't appreciate how prepared those countries are.
Speaker 3: Finland was at war with Russia, remember, and has a
Speaker 3: memory of being at war to defend their territory. But
Speaker 3: they do rely on US participation.
Speaker 2: This came up last night at the dining room table,
Speaker 2: Tina Fordham. If President Trump wins a second term, where
Speaker 2: does he travel to first? Does he reducts his Pacific travels?
Speaker 2: Does he go to Europe? Will he try to redo
Speaker 2: twenty sixteen?
Speaker 3: So I actually have thought about that before. I love
Speaker 3: a thought experiment, Tom, but I don't think that Trump
Speaker 3: will feel compelled if he's reelected to do the traditional
Speaker 3: calling upon allies. Trump's also not really an ally guy,
Speaker 3: and if we look at his you know, campaign statements,
Speaker 3: they're really focused on the domestic. I mean, my sense
Speaker 3: is that Trump would likely subcontract his foreign policy, trade
Speaker 3: policy to experts who he trusts. Of course, the trouble
Speaker 3: for us is when we try to speculate what that
Speaker 3: looks like that most of the people who worked for
Speaker 3: him before have made it abundantly clear that they would
Speaker 3: never consider doing so again.
Speaker 2: Tina, we got to leave it there. Never enough time,
Speaker 2: Tina Fordham Fordham Global Inside.
Speaker 1: You're listening to the Bloomberg Surveillance Podcast. Catch us live
Speaker 1: weekday afternoons from seven to ten am Easter Listen on
Speaker 1: Apple car Play and Android Otto with a Bloomberg Business app,
Speaker 1: or watch us live on YouTube.
Speaker 2: There are moments in the blur of all this, folks.
Speaker 2: There's moments where any of our wonderful esting guests they
Speaker 2: say one single thing and like it doesn't go away.
Speaker 2: You remember, one hour, one day, one month later, got
Speaker 2: to mccunda said something a while back. I think it
Speaker 2: was I miscot him last time around because I was
Speaker 2: in Europe. But with Yale School of Management said something
Speaker 2: Paul that had carried for weeks and weeks and weeks,
Speaker 2: which is the undecided shrink. They shrink much more, and
Speaker 2: everybody caught up with Professor mccundy. He joins us down
Speaker 2: in studio on this election day. Where are the undecideds? Now?
Speaker 2: They got to decide.
Speaker 5: They have to decide at this point, pulling to everything
Speaker 5: here is guesses and stabs in the dark. But all
Speaker 5: the data I'm seeing suggests that in the last twenty
Speaker 5: four to forty eight hours, even even though I wanted
Speaker 5: to weeks, they've broken pretty strongly towards Harris the really
Speaker 5: decisive moment, and it's strikingly. It's striking So was the
Speaker 5: Madison Square Garden event. There's a lot of polling data
Speaker 5: coming out for Latinos, particularly Latinos in Pennsylvania that they
Speaker 5: all heard about it. It mattered to all of them,
Speaker 5: and it swung a substance. It swung some votes. Now
Speaker 5: I can't tell you that's enough to swing the election
Speaker 5: because there aren't many of those people like that. The
Speaker 5: undecided was last time I was here, it was three percent.
Speaker 5: It's probably less than that now, and a lot of
Speaker 5: people had already voted by the time those events happened.
Speaker 5: But the Harris campaign is not a lot quietly anymore,
Speaker 5: feeling very confident because of what they've seen in the
Speaker 5: last few.
Speaker 3: Days we had.
Speaker 4: Yesterday, the piece of music came out as the Seltzer
Speaker 4: poll coming out of Iowa that surprisingly showed Vice President
Speaker 4: Kamala Harris three points ahead. What do you make of that?
Speaker 5: Earthquake does not understate the impact that they had. And
Speaker 5: Seltzer's record in Iowa was so good that I occasionally
Speaker 5: I occasionally make jokes that she doesn't She's lived in
Speaker 5: Iowa a whole life. She only does Iowa. She doesn't
Speaker 5: pull the state. She just knows every Iowa voter and
Speaker 5: asks them what they'll do. She I mean, it's not
Speaker 5: that she's never been wrong. She missed a gubernatorial e
Speaker 5: race a couple of years a few years ago, but
Speaker 5: in general, her record is as close to perfect as
Speaker 5: Upholster can get. For her to say not just that
Speaker 5: it's close, but that Trump is three points down stunning,
Speaker 5: I'll add to that. Okay, let's say she had a
Speaker 5: statistical fluke. It can happen to anyone, even Seltzer, I
Speaker 5: don't really think Harris is gonna win Iowa. The Trump
Speaker 5: campaign's response was to leak internals saying that they that
Speaker 5: they had numbers saying he was five points up. That's
Speaker 5: really bad for Trump. If he's five points up, and
Speaker 5: he should be ten to fifteen points up in Iowa.
Speaker 5: If he's five points up in Iowa, that's really bad
Speaker 5: news for him across the country. Now, the one thing
Speaker 5: I'd say is it might be Iowa specific. Iowa's abortion
Speaker 5: band went into what went active in July, and basically
Speaker 5: Iowa local elections have been nothing but sat gration bombing
Speaker 5: on abortion, and so that might mean that a swing
Speaker 5: by white women that's what Seltz picked up based on Dobbs,
Speaker 5: is more intense in Iowa than it is anywhere else
Speaker 5: in the country.
Speaker 4: Turnout, I'm told that it's particularly important this election, given
Speaker 4: how close the election appears to be. Does one camp
Speaker 4: one party have an advantage there in terms of turnout.
Speaker 5: So everyone agrees that the Harris turnout machine is much better,
Speaker 5: Like that's just that's not even that the Trump people
Speaker 5: will tell you that it's just much more effective, partly
Speaker 5: because they the Trump people outsource their entire turnout operation
Speaker 5: of Charlie Kirk and Elon Musk, and you can't build
Speaker 5: these things on the fly like you actually have to
Speaker 5: spend years doing it. That being said, Trump had essentially
Speaker 5: no turnout in operation at twenty sixteen, none, and he
Speaker 5: got people who never who you know, a democratic turnout
Speaker 5: machine would have just written off is not worth approaching.
Speaker 5: He got them to show up and vote for him.
Speaker 5: There's nothing that helps your turnout more than a clear,
Speaker 5: consistent message by a care ors met a candidate. You know,
Speaker 5: whether you like Donald Trump or not, that is a
Speaker 5: pretty good description of his campaign.
Speaker 4: What do you think I mean? Is Pennsylvania the state
Speaker 4: we should be focusing on or are there some other
Speaker 4: places we should be looking.
Speaker 5: I would start with Pennsylvania. So let's say it's harder
Speaker 5: to get early info from states than it is from
Speaker 5: particular areas, So it varies from election to election. But
Speaker 5: I'll tell you in twenty sixteen, I was looking at
Speaker 5: some areas in Virginia, and I was I was in China,
Speaker 5: of all things. I was doing an election commentary in Beijing.
Speaker 5: Among the strangest experiences of my life. And so about
Speaker 5: nine pm local time, which would have been nine and sorry,
Speaker 5: nine am local time, which had been nine pm time here,
Speaker 5: I got those results and turned to some people next
Speaker 5: to me and said, I think one's gonna lose this time.
Speaker 5: There's actually Pennsylvania guests also Delaware. They're oddly I mean,
Speaker 5: obviously they're gonna win Delaware, but if it's closer than
Speaker 5: you expect, that would be a pretty bad sign for Harris.
Speaker 2: Picking presidents, I mean, mister Trump is unique, even as
Speaker 2: supporters will agree, it's a unique process. What have we
Speaker 2: learned your wonderful book picking presidents? What have we learned
Speaker 2: about picking presidents? It prepares us for twenty twenty eight?
Speaker 5: I think counterintuitively, the thing maybe we should learn is
Speaker 5: that campaigns. Campaigns are just too long. I think Harris
Speaker 5: got a real benefit from being I mean, maybe this
Speaker 5: was too short for her, but the two year long
Speaker 5: election cycle that we've been doing for presidential campaigns, it
Speaker 5: drives everyone in saying it forces people to take positions
Speaker 5: that end up being completely in defensive.
Speaker 2: So to be clear, here, for Vice President Harris, she
Speaker 2: had an advantage because of the delay.
Speaker 5: I won't say I think she would rather have had
Speaker 5: a normal cycle, And I have to give her credit
Speaker 5: for being able to perform this balancing act in the
Speaker 5: shortest kind of time. But if I were a normal candidate,
Speaker 5: I would rather do six months than two years.
Speaker 2: Charlie Cook led his before election essay with we grew
Speaker 2: up with landslides. I was explaining at home what they
Speaker 2: did to mcgovernor in seventy two. That's beyond the realm
Speaker 2: of how we think. Now. Do you desire, professor, that
Speaker 2: we get back to landslides, back to where we vote
Speaker 2: for somebody with an image, or we just wedded to
Speaker 2: this polarity forever.
Speaker 5: So I don't think we are. We saw landslide in two
Speaker 5: thousand and eight and twenty twelve was not that close.
Speaker 5: This polarity is deeply operational, and I'll says, speaking as
Speaker 5: a political scientist for a second, we don't really understand
Speaker 5: why we don't have good theories as to what is
Speaker 5: going on, as to why the elections. The elections are
Speaker 5: so perfectly balanced right now. I think the American political
Speaker 5: system basically does not work when it is in deadlock.
Speaker 5: Other political systems do.
Speaker 2: But to the laureate to mit. Is it, you know,
Speaker 2: in the Power and Progress? Is it just a separation
Speaker 2: of the nation year between the haves and they have nots?
Speaker 2: Is that really all this comes down to.
Speaker 5: I don't think so. I think that is a driving issue.
Speaker 5: But although the Trump campaign sort of said images, it's
Speaker 5: image of itself that it portrays is of the working
Speaker 5: sort of the working class tribunal. Trump voters are significantly
Speaker 5: wealthier than Harris voters. They were significantly wealthier than Biden
Speaker 5: voters in twenty twenty. They will be significantly well Maharris
Speaker 5: was twenty twenty four. And so you have a real
Speaker 5: conflict between the image of the campaigns and their voter base.
Speaker 5: And that is going to be resolved eventually, but it
Speaker 5: might take a while.
Speaker 2: Love can't wait to talk to you after this election.
Speaker 2: Got a Macunda with this, of course, of Yale his
Speaker 2: book Picking Presidents, How to Make the Most consequential Decision
Speaker 2: in the World.
Speaker 1: This is the Bloomberg Surveillance Podcast. Listen live each weekday
Speaker 1: starting at seven am Eastern on applecar Play and Android
Speaker 1: Auto with the Bloomberg Business app. You can also listen
Speaker 1: live on Amazon Alexa from our flagship New York station.
Speaker 1: Just say Alexa play Bloomberg eleven thirty.
Speaker 2: Dan Tobin joins the City Group and courses London watch
Speaker 2: for them, and he's of course with FX there a
Speaker 2: G ten effects strategy. It's City Group. So if you
Speaker 2: bracket Euro Trump Harris Euro right now is I'm looking
Speaker 2: at damn. My eyes are failing me here one oh nine?
Speaker 2: With Trump? Where's Euro? With a Harris? Where's Euro? Yeah?
Speaker 6: Well, I mean very simply, if Trump wins Euro, dollar
Speaker 6: goes down potentially all the way towards around one oh five.
Speaker 6: That'd probably be a bit of a stretch, but it
Speaker 6: could get down that far. If Harris wins, Euro higher
Speaker 6: at least back to one ten, but there might be
Speaker 6: some difficulty getting higher than that, simply because data in
Speaker 6: the US has been outperforming the Euro.
Speaker 2: So with Harris, the euro strength is it's asymmetric. Is
Speaker 2: it about euro stronger? Is it sell the dollar with Harris?
Speaker 6: No, this is absolutely about the dollar. And actually there's
Speaker 6: dollar yen would be a trade we'd be looking.
Speaker 2: At more because wrack at that.
Speaker 6: Please, it's a proxy one, it's a proxy for rates,
Speaker 6: and so rates should go down, You'll should go down
Speaker 6: if we see a Harris win, and so dollar yen
Speaker 6: should go down as well.
Speaker 4: Since the beginning of time, when I think about trading currencies,
Speaker 4: I think about City, Bank and City. Now you guys
Speaker 4: are New York, London, Asia, you trade everything. How are
Speaker 4: you guys staffing up for the next twelve to twenty
Speaker 4: four hours globally currency desk at City.
Speaker 6: Oh, it's it's gonna be busy, and it's gonna be
Speaker 6: all hands on deck at least tonight until we have
Speaker 6: you know, probably until midnight. We have to see how
Speaker 6: the results are coming out, but certainly twenty four to
Speaker 6: seven we will have staff and we will be there.
Speaker 2: For what currency pair, What indicator of FX is what
Speaker 2: Dan Tobin's gonna watch off the Bloomberg at City.
Speaker 6: I'm gonna be watching dollar Yen and dollar max. Those
Speaker 6: will be the two key ones to keep an eye on.
Speaker 4: Talk to us about dollar Mexican hit pay, So what's
Speaker 4: the relationship there, what's driving that trade?
Speaker 2: These days?
Speaker 6: Dollar max has a lot of domestic stories, but it's
Speaker 6: also sensitive to the US dynamic if Trump wins, both
Speaker 6: because the USMCA will come under review and so there's
Speaker 6: some potential uncertainty around there, and also because there's been
Speaker 6: a lot of border disputes, so Mexus comes into focus
Speaker 6: and remains.
Speaker 2: So Max's twenty point one three. If Trump is going
Speaker 2: to win or appear to win, it weakens to twenty
Speaker 2: one twenty two in that area.
Speaker 6: It's hard to say overnight, but certainly potentially.
Speaker 2: Yeah, I don't, you know, it's completely unfair, but the directions.
Speaker 6: Absolutely that story.
Speaker 4: When you talk to your clients, do you feel like
Speaker 4: they're hedged today? Are they making bets today? Are they
Speaker 4: just saying I'm on the sidelines today because there will
Speaker 4: be movements in your market?
Speaker 2: Yeah?
Speaker 6: Absolutely. For the most part, the big accounts have really
Speaker 6: reduced positioning and are trying to go in as lightly
Speaker 6: positioned as possible. The more active clients they're long dollar,
Speaker 6: they've reduced some of that. They were a lot more
Speaker 6: long dollar last week when Trump odds were a bit higher.
Speaker 6: Still leaning towards long dollar though.
Speaker 4: So all right, let's go seventy two hours, three, four
Speaker 4: or five days from now?
Speaker 2: What long term?
Speaker 4: Long term? Let's get back to more fundamentals. What's your
Speaker 4: view here at the currency markets? Where do you see
Speaker 4: value here?
Speaker 3: Yeah?
Speaker 6: Probably outside of the dollar we'd be looking at things
Speaker 6: like the Australian dollar. Actually there's a lot of value
Speaker 6: there just because the domestic story is strong, and there's
Speaker 6: potential for some hedge changes next year. At the end
Speaker 6: of the day, though, the data in the US is
Speaker 6: still holding up, and so it's hard to see a
Speaker 6: real big sell off coming for the dollar. Even if
Speaker 6: Harris wins and the dollar selves off, it probably will
Speaker 6: be momentary and the dollar probably rally.
Speaker 2: Do you have a I mean, G ten, it's not
Speaker 2: but China, How do you affect a China trade given
Speaker 2: the Congress coming out, presume fiscal support, more help, et cetera.
Speaker 2: How does city group affect a China belief?
Speaker 6: Yeah, I mean, the key question is going to be
Speaker 6: what kind of tariffs do we get if we do,
Speaker 6: in fact get a Trump presidency, and to offset that,
Speaker 6: what kind of stimulus where we get from the Chinese side?
Speaker 6: And we do have the Standing Committee meeting on November eight,
Speaker 6: so there it will potentially be a lot of volatility
Speaker 6: around the currency. But very simply, if Trump wins, we
Speaker 6: expect dollars CNH to move higher. Harris wins, we can
Speaker 6: actually see dollars CNH more stable.
Speaker 4: The pound sterling, what's the call there? How do you
Speaker 4: how do you feel about sterling right here?
Speaker 2: Structurally we like it.
Speaker 6: We think there's opportunity for investors which have been very
Speaker 6: underweight the UK since Breadxit, to start moving assets back
Speaker 6: into the UK. Guilt yields look somewhat attractive here. So
Speaker 6: we see potential for a stronger sterling, especially against the Euro,
Speaker 6: into next year. But in the short term it's not
Speaker 6: trading to its domestic fundamentals. It's trading too concerns around
Speaker 6: the budget, around and across the US.
Speaker 2: I'm trying of question you do technicals, which we do
Speaker 2: a lot here instrumants, technicals and radio really work. And
Speaker 2: the answer here is when someone says the vector and
Speaker 2: the dollar is strong dollar, is there an established trend
Speaker 2: I call it soup? Or is it technically just soup?
Speaker 2: Where the dollar is right now?
Speaker 6: If we pull out far enough, there is a very
Speaker 6: clear trend since the Great Financial Crisis for a stronger dollar,
Speaker 6: and in fact, the US has been the outperforming economy
Speaker 6: in the global development.
Speaker 2: So does it gets you on YenS through one sixty?
Speaker 2: I mean Gartman's frame in it for gold, But that's
Speaker 2: Gartman making gold chat. Can you, as a major bank
Speaker 2: frame out a fan distribution it gets a yen back
Speaker 2: out over one sixty.
Speaker 6: That would require a much higher US tenure yield. And
Speaker 6: given that the FED is already in a cutting cycle,
Speaker 6: and then in general we're seeing a bit of a
Speaker 6: slowan on in the US, it's hard to see that
Speaker 6: absence some kind of fiscal shock. Now that's not impossible,
Speaker 6: given you know, we have a potential red wave coming,
Speaker 6: but it's hard for us to see that we actually
Speaker 6: think the yen can strengthen into next year.
Speaker 2: Paul said, you're everywhere? Where are you based for City Group?
Speaker 2: Are you in like Dubai or.
Speaker 6: I'm in New York, but I've I've worked all over
Speaker 6: for City They're everywhere.
Speaker 4: I'm actually if you want to go trade some obscure
Speaker 4: currency already.
Speaker 2: Dan Tobin's Razumi and it's like it's like the romance
Speaker 2: of you know, FX in Big Bank. I mean, you know,
Speaker 2: he came out of Villanova and he's sipping tea in Mayfair.
Speaker 2: What's that about?
Speaker 6: I know City is the FX bank and London is
Speaker 6: a place.
Speaker 2: What was your first day like in City Group? It
Speaker 2: was it like the TV show industry.
Speaker 6: Oh no, no, no, it was.
Speaker 2: Actually great.
Speaker 6: I've loved working there. I've been there for over a decade.
Speaker 6: I did leave and I came back because I loved
Speaker 6: it so much.
Speaker 2: Great, Dan Tobe, don't be a stranger. Thank you so much.
Speaker 2: Thanks very much, City Group, you said g ten FX
Speaker 2: at City Group.
Speaker 1: This is the Bloomberg Surveillance Podcast. Listen live each weekday
Speaker 1: starting at seven am Eastern on applecar Play and Android
Speaker 1: Auto with the Bloomberg Business app. You can also watch
Speaker 1: us live every weekday on YouTube and always on the
Speaker 1: Bloomberg terminal.
Speaker 2: Joining us right now. The last time he's on, he
Speaker 2: was a hugely knowledgeable pause blown away. Beneticae Cammel joins us,
Speaker 2: why don't you bring him in? You nailed it. I
Speaker 2: mean you told me the strike's not going to get
Speaker 2: settled last time, and this time was different.
Speaker 4: Yeah, it's they Finally we got the rank and file
Speaker 4: Tom over at Boeing, the machinist of in a Pacific
Speaker 4: Northwest agreeing to a contract with Boeing.
Speaker 1: A piece of good news.
Speaker 4: For them and for the company and for the stock.
Speaker 4: Stocks up about one point three percent pre market trading.
Speaker 4: Benedic Cammel Joins is Global Aviation editorial leader for Bloomberg News.
Speaker 4: He's based in Berlin, Germany, Benedict. What's different for this
Speaker 4: contract versus the last contract? Is it simply dollars and cents.
Speaker 7: There's a bit of that. I think your numbers are
Speaker 7: slightly better. You know, we had now a thirty eight
Speaker 7: percent wage increase last timers thirty five, so up a smidge.
Speaker 7: But I think the bigger difference is that there was
Speaker 7: a general weariness, and you could see it in the
Speaker 7: faces of the workers of the union leadership. I think
Speaker 7: everyone was ready to get this done with and they
Speaker 7: probably felt this is as good as it's going to get.
Speaker 7: Any any more holdouts and any more negative votes, we
Speaker 7: might actually start hurting ourselves more than we start benefiting
Speaker 7: from this. So there was this sense this is a
Speaker 7: pretty good deal. It's a thirty eight percent wage increase
Speaker 7: over a couple of years. There's a big bonuses, a
Speaker 7: couple of other sweetness thrown in, and and you know,
Speaker 7: we're moving towards Thanksgiving. People's savings are depleted. People, you know,
Speaker 7: started to get cold over there. The Joys are standing
Speaker 7: by the roadside with a sign in your hand probably
Speaker 7: rapidly diminishing. So there was that sense, let's get it
Speaker 7: done with. This is good, and that's where we got
Speaker 7: fifty nine percent approval. Okay, you know, mathematically all they needed,
Speaker 7: but not great if you want to repair relations.
Speaker 4: So what's the company saying about their ability to kind
Speaker 4: of restart the assembly line and get those planes coming
Speaker 4: out of the assembly line, getting them to customers and
Speaker 4: bring them cash flow into the company. What's the company
Speaker 4: saying about timing.
Speaker 7: Well, there's no absolute perfect sense of timing here, but
Speaker 7: they have said, is it going to take a while?
Speaker 7: Kelly or Bog the CEO, said a couple of weeks ago.
Speaker 7: It's much easier to turn things off than it is
Speaker 7: to turn them back on again. You know, as we
Speaker 7: all know, fixing something's harder than breaking it. So it
Speaker 7: will take months. You know, it'll take into next year
Speaker 7: to give you a sense. They have said this year
Speaker 7: will be a cash negative year, they'll have cash outflow,
Speaker 7: and the next year, the first half will also be
Speaker 7: cash negative. And that was to many people are surprise.
Speaker 7: People thought that come early next year things would be
Speaker 7: back in repair mode and sort of the company would
Speaker 7: be would be on a road to recovery. But clearly
Speaker 7: we're looking into this the latter part of next year
Speaker 7: when that'll happen. So this year they will have burnt
Speaker 7: about fourteen billion dollars of cash. You know, that gives
Speaker 7: you a sense of just how high the stakes were.
Speaker 7: And even the company the size of Boeing can't do
Speaker 7: this forever, so the stakes are really high for both
Speaker 7: sides to get this deal over.
Speaker 2: The line man in the guard advantage with you is
Speaker 2: you're in Berlin's so you get the to loose France
Speaker 2: Airbus axes his. Airbus had any advantage from the strike.
Speaker 7: Only in so much that people aren't looking at their
Speaker 7: problems as much as they are at Boeing's. And you know,
Speaker 7: Airbus is not without its own faults. Their production is
Speaker 7: not where it should be. You know, it's not as
Speaker 7: bad as Boeing's. They are actually producing planes, whereas Boeing
Speaker 7: right now as close to zero. But they have huge
Speaker 7: supply chain issues. They have had to cut back their
Speaker 7: output targets for the year. But people are obviously far
Speaker 7: more fixated on what's going on at Boeing than they
Speaker 7: are at Airbus. But it's also it's a complicated market
Speaker 7: where you can't simply switch from one supply to the other.
Speaker 7: So even if you were a Ryanair, which is a
Speaker 7: Boeing custom, and we had the Ryan CEO in the
Speaker 7: studio yesterday and he was saying, look, I'm getting I'm
Speaker 7: not getting the planes I need. I need them for
Speaker 7: the peak summer period and they're not coming in. You
Speaker 7: can't just pick up the phone to ge and free
Speaker 7: the CEO of Rabbus and say hey, can you sell
Speaker 7: me a couple of planes. So everyone is kind of
Speaker 7: locked in, you know, the situation they're in, and everyone
Speaker 7: is really hoping for this to resolve itself. And this strike,
Speaker 7: the end of the strike, is one big step towards that.
Speaker 2: Benedict, are you back any countless elections back to sixty
Speaker 2: eight and seventy two in the Vietnam War? Is the
Speaker 2: defense component of aviation, whether it's Lackey Martin or McDonald, Douglas,
Speaker 2: et cetera, et cetera. And the answer, Benedict is it's
Speaker 2: a big distraction. Is Boeing distracted or hindered because of
Speaker 2: their defense institutional place in America?
Speaker 7: Well, I mean defense is still a big component of
Speaker 7: Boeing and it's all also part of the reason why
Speaker 7: you know, a lot of people have said, is this
Speaker 7: a company too big to fail? And yes it is
Speaker 7: because they have that big foot in the door on
Speaker 7: all things defense. And it's if you again, if you
Speaker 7: compare it to Abbus, it's a much more sizable part
Speaker 7: of their operation and a more important part. So whatever
Speaker 7: Boeing looks like in three, five, ten years, the defense
Speaker 7: component will still be there and it will be an
Speaker 7: important part of what they do. It's a different question
Speaker 7: when you start thinking about space, for instance. You know, yes,
Speaker 7: they have this long history of you know, helping put
Speaker 7: a man on the moon and all that, but the
Speaker 7: space business is really where they're bleeding and where they're hurting.
Speaker 7: So if you look at what they have to do,
Speaker 7: and Kelly Orkberg, the CEO, has been quite open about this.
Speaker 7: He says, we can't be everything to everyone. We have
Speaker 7: to really think hard about what we're good at, what
Speaker 7: where we make our money, and where we might have
Speaker 7: to make some painful cuts. And if I had to guess,
Speaker 7: it's probably going to be in the in the space
Speaker 7: area more than in the defense market.
Speaker 4: Bened what are the Boeing's customers saying are they still
Speaker 4: standing by the company. Again, it's it's just a diopoly
Speaker 4: out there. I guess they don't have much of a
Speaker 4: choice there for your Southwest airlines and some other airlines
Speaker 4: that depend upon Boeing. But what are the customers been saying?
Speaker 7: They are and they're standing with them, and they're saying,
Speaker 7: we want Bowing to succeed. And oddly, you'd think Abbus
Speaker 7: is actually saying the same thing. They're saying, we take
Speaker 7: no joy. I mean maybe secretly they might take a
Speaker 7: little bit, but openly they will say we take no
Speaker 7: joy in Boeing's misfortunes. Here is because we are sort
Speaker 7: of tied at the hip with these with these guys
Speaker 7: and them to succeed, we need a healthy market out there.
Speaker 7: And as I said, if you're United, if you're an American,
Speaker 7: if you're a Southwest, you can't just sort of switch
Speaker 7: back and forth. You have these longtime contracts. You have
Speaker 7: your crew training, you have your maintenance. All those things
Speaker 7: are tied into these decades long contracts that you have
Speaker 7: with these suppliers, and therefore they need bonies to succeed.
Speaker 7: And as you say, there isn't really much of a
Speaker 7: choice out there. The Chinese there are making some noises.
Speaker 7: There was a Comac nine to one nine, but that
Speaker 7: plane is not certified in the Western hemisphere, so it'll
Speaker 7: be years. You know, who knows whether we on this
Speaker 7: call we'll ever see that plane flying in our time zone,
Speaker 7: but it'll come at some point, but that's far out.
Speaker 2: Be absolutely spectacular. Thank you so much, Ben, Ben came
Speaker 2: a worldwide driving our airline coverage.
Speaker 1: This is the Bloomberg Surveillance podcast, available on Apple, Spotify,
Speaker 1: and anywhere else you get your podcasts. Listen live each
Speaker 1: weekday seven to ten am Eastern on Bloomberg dot com,
Speaker 1: the iHeartRadio app, tune In, and the Bloomberg Business app.
Speaker 1: You can also watch us live every weekday on YouTube
Speaker 1: and always on the Bloomberg terminal