Speaker 1: This is the Bloomberg Surveillance Podcast.
Speaker 2: I'm Tom Keene, along with Jonathan Farrow and Lisa Abramowitz.
Speaker 2: Join us each day for insight from the best an economics, geopolitics,
Speaker 2: finance and investment. Subscribe to Bloomberg Surveillance on demand on Apple,
Speaker 2: Spotify and anywhere you get your podcasts, and always on
Speaker 2: Bloomberg dot Com, the Bloomberg Terminal and the Bloomberg Business app.
Speaker 2: Where are Boeing Aircraft made? I believe it's Renton, Washington
Speaker 2: where they were tuned into the college football game here
Speaker 2: a while back. The seven thirty seven comes out of Reton, Washington.
Speaker 2: An expert on that is Sheila Kiglu, senior equity research
Speaker 2: analyst at Jeffreys and joins us this morning. Have you
Speaker 2: been to Reton, Washington?
Speaker 1: I have.
Speaker 3: There's three production lines.
Speaker 4: The third one just opened up, so if you think
Speaker 4: about it, each one of those turns out fifteen to
Speaker 4: seventeen max's per month. The fourth one will open next
Speaker 4: year and ever at about an hour and a half
Speaker 4: away from Renton.
Speaker 2: So I want you to speak and I don't want
Speaker 2: you to talk about all your leverage finance work at
Speaker 2: JP Morgan and your wonderful work at Jefferys, your award
Speaker 2: winning work and institutional investor.
Speaker 1: Forget about it.
Speaker 2: Our listeners and viewers want to know where's the problem
Speaker 2: and is it easy to fix? Is it rent in
Speaker 2: Washington or is it the fuselage riveters in Kansas.
Speaker 4: I think the problem is the pandemic deteriorated their aerospace
Speaker 4: workforce not so much. And I mean the problem is
Speaker 4: in Renton, not only at the Boeing factory, but the
Speaker 4: small Tier three, Tier four suppliers around there. They're seeing
Speaker 4: strain on their workforce. The problem has been really focused
Speaker 4: over the last year in Spirit in Wichita, with three
Speaker 4: incidents either on the Max or the eight to seven
Speaker 4: involving quality issues.
Speaker 3: So there's been management changes there.
Speaker 4: To address those quality issues, and I think that's really
Speaker 4: the focus item. Given we've seen small improvements in the
Speaker 4: engine manufacturers and the Tier three.
Speaker 5: This sounds absolutely shocking when I start to hear about this,
Speaker 5: At least for ask this question earlier in the week.
Speaker 5: I'd love your response to it. Are we suggesting that
Speaker 5: things are safe but not as safe as they were
Speaker 5: before the pandemic?
Speaker 4: Now in this industry, I think the industry is having
Speaker 4: a tough time recruit you know, getting back up to
Speaker 4: post pandemic levels, and you know we're manufacturing.
Speaker 3: In September, we were only manufacturing.
Speaker 4: In the teens a month on these max is when
Speaker 4: we were supposed to be at thirty eight a month.
Speaker 4: So we essentially, you know, in December deliveries were forty four.
Speaker 4: Half of that was out of inventory, half of it.
Speaker 3: Was actual production.
Speaker 4: So we basically doubled output in three months, right, we
Speaker 4: were trying to double output. So there's a stream, given
Speaker 4: air traffic is back to one hundred percent of twenty
Speaker 4: nineteen levels, to get this aircraft production back, and it
Speaker 4: was very constrained over the last three years.
Speaker 5: You've now did demand at Boeing isn't the problem, it's deliveries.
Speaker 5: We had Ryan as Michael O'Leary sit in your seat
Speaker 5: actually at the end of last year, complaining about the
Speaker 5: delays to the seven thirty seven max getting delivered to
Speaker 5: Ryanair how Osawi to further delays and ultimately canceled orders
Speaker 5: because of what's tanking place.
Speaker 3: I'm sure he was more entertaining than me, and this seat,
Speaker 3: I will.
Speaker 5: Tell you that he's more entertaining than I Am, don't
Speaker 5: worry about it.
Speaker 4: You know, what we've seen is that we've seen a
Speaker 4: delivery slip. We delivered about one thousand aircraft in twenty two.
Speaker 4: That number was fifteen hundred post pandemic on the narrow body.
Speaker 4: So we've seen that happen already. But we're not going
Speaker 4: to see cancelations. We're seeing the order brook stretch out
Speaker 4: twenty eight twenty nine. Everybody wants to get in line,
Speaker 4: and even Ryanair, who's been the most outspoken against Boeing,
Speaker 4: has talked about wanting that aircraft sooner and pricing being
Speaker 4: better for them, Pricing being better for Boeing on some
Speaker 4: of the Ryan Air aircraft because they want the aircraft sooner.
Speaker 2: What's the opportunity here for Airbus? I mean, I mean
Speaker 2: just as simple and tou luise I got to play
Speaker 2: this low. It could be them. I get the whole dance.
Speaker 2: But is this a huge strategic opportunity in the United
Speaker 2: States of America for unit sales for Airbus?
Speaker 3: Not so much.
Speaker 4: I think the opportunity was from twenty nineteen to twenty
Speaker 4: three twenty two, when the Max was essentially grounded, not
Speaker 4: delivering to China as well, where we're forgetting about that
Speaker 4: China element.
Speaker 3: But Airbus had their market share opportunity.
Speaker 4: So what we see in twenty five as Boeing produces
Speaker 4: fifty max is a month and Airbus does seventy five
Speaker 4: maybe in the twenty twenty six time frame is more
Speaker 4: likely to be honest. So they already have that market
Speaker 4: share game. And let's not for Yes, Airbus has its
Speaker 4: own issues. The Airbus aircraft is mad has two engine options,
Speaker 4: either the ge leap option and the Raithyon GTF option.
Speaker 4: We know the GTF has a contaminated powder in it,
Speaker 4: so they're basically grounding forty percent of the GTF engines
Speaker 4: in the first half of this year to do inspections
Speaker 4: on them. So Airbus is not short of its issues
Speaker 4: as well.
Speaker 1: Okay, some of this is.
Speaker 2: The complexity of the engineering across all of aviation. Are
Speaker 2: we at a point now and then, I mean, I
Speaker 2: get the COVID idea. I think that's brilliant, But are
Speaker 2: we at a point where these things are becoming too complex?
Speaker 4: Some areg you, it's not complex enough, not enough fuel efficiency,
Speaker 4: not enough energy efficiency, two pilots to by the plane.
Speaker 4: So I think that what we've seen in the aircraft
Speaker 4: industry is no new models really, this is the twenty
Speaker 4: twenties are just an upgrade of the existing models and efficiency.
Speaker 2: Are they still trying to do a one pilot plane.
Speaker 3: I think that's off the books for now.
Speaker 4: The focus has really been on the engine, the fuel efficiency,
Speaker 4: and what kind of engine we get in the twenty
Speaker 4: thirty five twenty forty time frame and how that aircraft
Speaker 4: takes us over the next two to three decades.
Speaker 2: The sitting of the jet back and forth on the
Speaker 2: wing was due to fuel efficiency, right, should we jettison?
Speaker 2: Fuel efficiency is an engineering mandate, that's what we're aiming for.
Speaker 4: But clearly the engine OEMs have had a lot of trouble,
Speaker 4: not only in production but the efficiency that they're getting.
Speaker 4: So not calling out GTF only with the raytheon issues.
Speaker 4: Not only do they have the contaminated powder, they've needed
Speaker 4: to do upgrades to get their engine.
Speaker 3: Up to par so is leaps. So that's what we're
Speaker 3: calling fence building.
Speaker 5: Let's finish on the regulator. This is a difficult one.
Speaker 5: How do you expect the regulator to respond to this?
Speaker 5: How do authority step in here? Given what could have
Speaker 5: taken place on Friday.
Speaker 4: So, John, you started off very stark contrast with Dave
Speaker 4: Calhoun yesterday, and I think the regulators took that same message.
Speaker 4: NTSP is solely focused on the accident. Well, no, in
Speaker 4: twelve to eighteen months, what really happened? The FAA said
Speaker 4: Grounding twelve hours in, so did Yassa. So I think
Speaker 4: that they're taking a stark stance. Boeing has this directive
Speaker 4: out on how to inspect the aircraft, and I think
Speaker 4: we could see the aircraft back in the air by
Speaker 4: the end.
Speaker 3: Of next week.
Speaker 5: The end of next week. That quickly.
Speaker 4: The directive said four to eight hours to inspect the aircraft.
Speaker 4: You think about just the pr element of it. An
Speaker 4: extra week.
Speaker 5: When you hear from the regulator. Of course, they have
Speaker 5: to start out really broad, actually have all options open,
Speaker 5: t K consider everything, Shila. Do you get the sense
Speaker 5: that they've narrowed this investigation down already? Then, given your expectation,
Speaker 5: we'll be back up in the air next week.
Speaker 4: So the NTSP, I think, will take a year to
Speaker 4: come to a conclusion on exactly what happened and what
Speaker 4: the cause was. But the FAA seems pretty confident that
Speaker 4: the directive came out so quickly.
Speaker 2: Thirty seconds normal conversation. What's your single best.
Speaker 1: Buy right now?
Speaker 4: Oh, this amazing company called Higo. When I started covering
Speaker 4: it's called Hiko.
Speaker 1: Hiko.
Speaker 4: Yes, twenty one billion market cap fifty one times PE.
Speaker 4: But when I first started covering this stock, and I
Speaker 4: won't tell you when that was, the market cap was
Speaker 4: two billion dollars. They are a generic aircraft parts manufacturer
Speaker 4: and they supply the aftermarket. The more we don't get
Speaker 4: new aircraft deliveries, the more Hiko benefits because the old
Speaker 4: planes get serviced.
Speaker 5: Interesting. I thought we could have rund out that conversation
Speaker 5: sort of long bowing, but we didn't. Shada, thank you,
Speaker 5: it's good to hear.
Speaker 1: Free me.
Speaker 5: Just fantastic, real depth to that conversation. Shada kyli that
Speaker 5: of Jeffreys. Let's catch out with say Mishap the chief
Speaker 5: club was strategistic principal asset man wish and seem pleased
Speaker 5: to say joined us right now. Seem a greater catch
Speaker 5: up two part story this year for you, first half,
Speaker 5: second half, first half, volatility, second half rally. I have
Speaker 5: to say it reminds me of some of the outlooks
Speaker 5: that I got last year for twenty twenty three, saying,
Speaker 5: what is it about twenty twenty four where you think
Speaker 5: that story could actually take place?
Speaker 6: So I think that Look, if you think about where
Speaker 6: we were at the end of last year, where you
Speaker 6: had I think a price per perfection, you know you
Speaker 6: couldn't get better news in the idea that the FED
Speaker 6: would start cutting it early in this year. You would
Speaker 6: have a soft landing, et cetera. Now, I'm not saying
Speaker 6: that that's not all going to come true, but at
Speaker 6: the beginning of this year, you're already seeing the market
Speaker 6: push back on some of those original expectations about early
Speaker 6: FED cuts. You're seeing ecod basilience that is creating a wobble,
Speaker 6: and I struggled to see what is going to be
Speaker 6: the catalyst to drive another leg up in the near term.
Speaker 6: Yourys need to see a bit of a pullback as
Speaker 6: the market starts to question their raid expectations. And then
Speaker 6: as you get towards the middle of the year and
Speaker 6: you get closer to that actual rate cut date, you
Speaker 6: see an economics slow down, but it doesn't turn out
Speaker 6: to be too damaging. That to me is that greed
Speaker 6: signal four and a more prolonged rally.
Speaker 2: Yes, seem a dovetail nominal GDP. Now that combination of
Speaker 2: real GDP plus the inflation with the IMS call of
Speaker 2: a beleaguered, slow global economy out four years to twenty
Speaker 2: twenty eight, where are we in that continuum as we
Speaker 2: go into twenty twenty four? Is there an animal spirit
Speaker 2: within our nominal GDP or is it going to drift away?
Speaker 6: So, look, we are anticipating a bit of a global
Speaker 6: growth slowdown. You know, if you look across the US, Europe, China,
Speaker 6: it's not particularly exciting, but you do have a couple
Speaker 6: of bright spots around the globe. But we're not anticipating
Speaker 6: a very prolonged economic weakness. So I think this is
Speaker 6: a fairly decent nominal growth environment. But along with that
Speaker 6: comes the idea that we don't necessarily see inflation coming
Speaker 6: all the way back down to two below two percent
Speaker 6: like you saw in previous years. So from a real rate,
Speaker 6: which I know you've been focused on, it is a
Speaker 6: slightly more challenging environment than we've seen in previous years,
Speaker 6: and I think investors need to start taking that into
Speaker 6: consideration as they're starting to position their portfolios.
Speaker 2: What does the real rate do this year the ten
Speaker 2: year inflation adjusted rate in the United States.
Speaker 6: So we're expected to come down slightly, but not too much.
Speaker 6: If I give you an idea, you know, we're expecting
Speaker 6: the FED to color three times twenty five basis points
Speaker 6: each time, so it's not very significant. We are expecting
Speaker 6: inflation to come down to around the two point four
Speaker 6: percent level, so it's not too far from where we
Speaker 6: are today. That is a little bit still quite restrictive,
Speaker 6: so you're not in a fantastic environment for risk assets,
Speaker 6: but there is a lot of cyclical factors that we
Speaker 6: can take into consideration. It's just if you're thinking about
Speaker 6: your portfolio, you're looking at a higher cost of capital
Speaker 6: than you've had in the last decade or so, so
Speaker 6: you need to be kind of screening your stocks a
Speaker 6: little bit closer. You need to be start thinking a
Speaker 6: little bit more about bonds as well. You know, in
Speaker 6: terms of it's great in inflationary, it's or in a
Speaker 6: disinflationary scenario. But in an inflationary scenario where inflation doesn't
Speaker 6: come all the way back down to what maybe was
Speaker 6: accustomed to before, bonds don't necessarily perform as well as
Speaker 6: you would have expected.
Speaker 5: I wonder what your call is then on consumer discretionary.
Speaker 5: I'll share with you what we heard from Lori Cavasina
Speaker 5: of RBC overnight, greating discretionary to market way and saying this, Seema,
Speaker 5: We're wary of being underweight going forward, given the tendency
Speaker 5: of this sector to outperform when interest rates are falling.
Speaker 5: They're two sectors at the moment that are kind of
Speaker 5: leading the pact to close out last year. And whenever
Speaker 5: we rally, it's discretionary, it's tech. Where are you on
Speaker 5: the format and for that matter, where are you on
Speaker 5: the latter.
Speaker 6: So actually on the consumer discretioning, I'm not too negative.
Speaker 6: I do think there are challenges coming for consumers, but
Speaker 6: I don't think there is significant as maybe a lot
Speaker 6: of people, including myself, were worried about at the end
Speaker 6: of last year. There's just a lot going for consumers
Speaker 6: at the moment. I mean, as long as the labor
Speaker 6: market is holding up as strong as it is, and
Speaker 6: I think consuming discretion can do well. On the tech side,
Speaker 6: I still have good, I guess solid expectations for tech.
Speaker 6: I do worry though about whether the expectations from the
Speaker 6: market is going to be fulfilled. So whereas I wouldn't
Speaker 6: want to go negative or underweight technology, I think there
Speaker 6: are other parts of the market which are a little
Speaker 6: bit more interesting for twenty twenty four. If, as you said,
Speaker 6: you're going to see FED cuts and soft learning, I
Speaker 6: think there are other parts of the market can do well.
Speaker 5: We'll talk to me about the other parts. Then what's
Speaker 5: the big call for you? Banks? Where do they fit in?
Speaker 5: Give me we get earnings on Friday.
Speaker 6: I think banks can do pretty well. I think you know,
Speaker 6: as you're going to see in a lot of parts
Speaker 6: of the market, there are headwinds in the first half
Speaker 6: of the year, but as you get through to the
Speaker 6: second then I think banks can do well. The other
Speaker 6: part of the market, which I think should be gaining interest,
Speaker 6: there's going to be a bit of a warble in
Speaker 6: the first quarter at least bit small caps, I think
Speaker 6: the evaluations are very attractive. Typically, when you get a
Speaker 6: fed cutting cycle and it's accompanied by a kind of
Speaker 6: a return to or at least solid growth, that is
Speaker 6: typically a very good signal for small caps. And when
Speaker 6: you're looking at that valuation gap between the large and
Speaker 6: the small cup, it is very attractive so I think
Speaker 6: this is the time that investors start thinking about it
Speaker 6: and maybe edging into those positions.
Speaker 2: If youels come down, is the is the flow of
Speaker 2: money out of money market funds it's assumed. Is it
Speaker 2: linear or does it all come in one great surge.
Speaker 6: I think that's it's really difficult to say in terms
Speaker 6: of how the investors sentiment is going to go. What
Speaker 6: I do think though, is one is that those money
Speaker 6: market funds, they do have the potential to create a
Speaker 6: pretty strong rally once some of the questions that investors
Speaker 6: have hanging over them are answered. So those questions would
Speaker 6: include when is the going to start reducing interest rates?
Speaker 6: And the second thing is is there could be an
Speaker 6: economic slow down? And if there is an economic slow down,
Speaker 6: how devastating is it going to be. I think all
Speaker 6: three of those questions are going to be answered fairly
Speaker 6: from in a positive tilt in that there's a slowdown,
Speaker 6: but it's not too devastating at all. And I think
Speaker 6: once you have some of these questions answered, then money
Speaker 6: market funds that trickle is going to move towards those
Speaker 6: risk acids, which is one of the reason do you
Speaker 6: think investors should be positioning for a stronger second half
Speaker 6: of the year.
Speaker 5: Russ Coastrick at Black Crog said something similar in Raka
Speaker 5: Semath thank you. Going to hear from your Sam a
Speaker 5: Chant of Principal Asset Management.
Speaker 1: Right now to.
Speaker 2: Further discussion and the American economy. Kathleen bus Johnson joins
Speaker 2: his chief economists Nationwide Mutual Insurance. Kathy, what's the state
Speaker 2: of the consumer?
Speaker 7: Good morning, Tom and John Happy to be with you. Well,
Speaker 7: the consumer has been really resilient and not really reflective
Speaker 7: of the labor market continue to be quite strong. We've
Speaker 7: got employment growth that continues to kind of outpace the
Speaker 7: monthly estimates, and wage growth continues to be buoyant. So
Speaker 7: you know, put that together, you still have you know,
Speaker 7: income wherewithal of the consumer to keep spending. Now, it's
Speaker 7: not going to be the buoyant spending that we had
Speaker 7: in the past. You know, most much of the of
Speaker 7: not all of the pandemic related savings has been run down.
Speaker 7: But you know, until we see a slow down a
Speaker 7: labor market, the consumer can continue to run Here.
Speaker 2: The character of our wage growth is compared to a
Speaker 2: declining inflation is something the optimist speak of.
Speaker 1: Is it normal?
Speaker 2: Is it a normal dynamic now or do you put
Speaker 2: an asterisk around what that means?
Speaker 7: It's getting more normalized. I mean wage growth. If you
Speaker 7: look at the average earlier earnings numbers running four to one,
Speaker 7: you know you would probably in a more normal time
Speaker 7: see that around three and a half. So you're seeing
Speaker 7: wage growth is still a bit you know, buoyant there,
Speaker 7: but inflation is not back to two percent yet either.
Speaker 7: So I think in the mix, what you're seeing is
Speaker 7: real wage growth that is steady. You know, it's not stellar,
Speaker 7: but it's not negative either, So you know that that
Speaker 7: helps to you know, kind of keep the consumer buoyant.
Speaker 7: But we do think there's some slowing underneath the headline
Speaker 7: and employment numbers, and I do think we are going
Speaker 7: to see The question is do we see you know,
Speaker 7: just a soft patch in growth in the middle part
Speaker 7: of the year, or do we get a mild recession.
Speaker 7: We're still thinking that mild recession is possible, but you know,
Speaker 7: certainly recognize that the data have come in stronger than
Speaker 7: expected and that could continue.
Speaker 5: Kathy, how would you expect John Williams, the New York
Speaker 5: Fed President, to address some of those issues this afternoon?
Speaker 7: Yeah, very much. Looking forward to his comments, you know,
Speaker 7: and to put into perspective like they kind of we're
Speaker 7: talking about ray cuts. Well not really, but you know,
Speaker 7: and the Minute's helped us out a little bit there.
Speaker 7: But I do think they're at an interesting time now.
Speaker 7: I mean, in a way it's better than they thought, right,
Speaker 7: but it's still complicated. It's better because inflation has come
Speaker 7: down much quicker than they thought, the labor market has
Speaker 7: been more resilient. But now that the idea is well,
Speaker 7: it's not just about lowering inflation, but can we stabilize
Speaker 7: the economy to avoid, you know, a harder landing. So
Speaker 7: I'm very interested to see how he kind of threads out.
Speaker 7: I think one message you'll probably deliver is the bond
Speaker 7: market is still a little too optimistic in the start
Speaker 7: of the timing of rate cuts. But to be honest,
Speaker 7: we're looking for May May June market sort of pricing
Speaker 7: and high odds and marks not all that different. The
Speaker 7: fact is the Fed's is going to be cutting rates
Speaker 7: this year unless something on inflation starts to turn around
Speaker 7: in a very ugly way.
Speaker 5: Well, Kathy, not all rate cuts are created equally, and
Speaker 5: I think that on the surface, it's almost contradictory to
Speaker 5: talk about maintaining a restrictive stance and entertain the surgical
Speaker 5: rate cuts at the same time with a focus on
Speaker 5: real yields. Do you think they can entertain both iteas
Speaker 5: simultaneously and communicate effectively and clearly.
Speaker 7: Well, communication has not been there, you know, the top
Speaker 7: bright spot here really to be honest, you know they
Speaker 7: need to communicate clearly. But I you also think your
Speaker 7: point is well taken. Are you just removing some of
Speaker 7: that restrictiveness but still want to hang on to it
Speaker 7: because you're not quite one hundred percent confident infleetion's getting
Speaker 7: back to two percent? Or do you say, you know
Speaker 7: what inflation? We do have a high degree of confidence.
Speaker 7: You're getting to the point with you know Mike's interview
Speaker 7: with Lorettemester. You know how confident they are we're going
Speaker 7: back to two percent? And how does that real rate,
Speaker 7: you know, play in to the mix of things, because
Speaker 7: right now the real rate is higher.
Speaker 2: Right the fact that it can't in Columbus, Ohio nationwide
Speaker 2: is on your side, and all that the unemployment rate
Speaker 2: is two point eight zero percent. Help me with Senator
Speaker 2: Warren from the Commonwealth of Massachusetts. Shouldn't we be up
Speaker 2: on the tables pop and champagne and celebrating an unemployment
Speaker 2: rate of two point eight zero percent.
Speaker 7: Yes, I mean we should be celebrating that this economy
Speaker 7: is is quite good, and you know, inflation is coming down.
Speaker 7: You know, maybe that is why consumers overall and maybe
Speaker 7: there's not as much exuberance out there, but inflation's coming
Speaker 7: down eventually. If it's going to be cutting interest rates
Speaker 7: at some point this year, you know, that's that's a
Speaker 7: very positive mix. And to your point, and employment rate
Speaker 7: certain parts of the country, like Columbus, very very low
Speaker 7: and very positive. So I think we need to applaud
Speaker 7: a lot of that, and that sort of gets overshadowed
Speaker 7: by all of our concerns.
Speaker 5: Kathy, just quickly, where do you have unemployment your end?
Speaker 7: Yes, so we see the unemployment rate drifting a bit higher,
Speaker 7: but because we have a mild recession, it doesn't even
Speaker 7: get above five percent. So you're looking at something around
Speaker 7: four point seven percent or so at the high so
Speaker 7: let some of the air out of the economy, but
Speaker 7: certainly does not crush the labor market.
Speaker 5: Interesting, Kathy, Thank you appreciate the insight. Kathy Chance it
Speaker 5: that of nationwide.
Speaker 2: Matthew Bartland knows each and every ward in Nashua, New Hampshire.
Speaker 2: He is hardcore in New Hampshire. Enjoins us this morning
Speaker 2: Darby Field Advisors, a Republican strategist with service in the
Speaker 2: Trump administration until a certain January date. I got to
Speaker 2: go there first, Matthew, as you joined surveillance for the
Speaker 2: first time. What was it like on January sixth when
Speaker 2: you said, Sea.
Speaker 1: Yeah, you know, thanks Tom. Listen.
Speaker 8: It was a very very hard day here in this
Speaker 8: town in Washington, and I remember walking home it was
Speaker 8: during COVID and crossing the Capitol and just seeing the
Speaker 8: utter mayhem and feeling utter discussed and made what was
Speaker 8: just the easiest decision I've ever made my career, which was,
Speaker 8: dear mister Secretary, I hereby resigne immediately from the State Department.
Speaker 2: Decisions will be made in this excuse me, decisions will
Speaker 2: be made in Hampshire, Mass Bartlet what's the tone you
Speaker 2: see right now among Republicans?
Speaker 8: Well, exactly, it's January, and you know the business community
Speaker 8: that the country is looking at a lot of those
Speaker 8: those snow covered roads right now. It's not Davos might
Speaker 8: be Davenport, Iowa, might be dover New Hampshire. And you know,
Speaker 8: we are looking at what is either the beginning or
Speaker 8: maybe the end. President Trump has a significant lead. There
Speaker 8: are really two battlegrounds right now. It's Iowa, which he
Speaker 8: may have locked up, and it's a question of expectations.
Speaker 8: And then it's over in New Hampshire, the Granite State,
Speaker 8: my home state, where Nikki Haley may be putting together
Speaker 8: some puzzle pieces with her granite heels on climbing the
Speaker 8: mountain and may shock the Trump campaign, may shock the world.
Speaker 1: And if so, then we have a race.
Speaker 8: But if President Trump really blows it out in both states,
Speaker 8: I think this nomination might be wrapped up and wrapped
Speaker 8: up ptty quickly.
Speaker 5: Well, Matthia, talk about that. You've been on the ground
Speaker 5: with every candidate I believe in the field, Matthew, do
Speaker 5: you see anything on the ground. It's difficult to reconcile
Speaker 5: with what we all see in the polls.
Speaker 1: Oh sure, right now. Polls. You'll see a lot of
Speaker 1: national polls.
Speaker 8: Those poll polls are certainly, you know, lagging indicators. It
Speaker 8: is the state polls that are the leading indicators. The
Speaker 8: nomination process is not a you know, as we know,
Speaker 8: a national election, it's a state by state event, and
Speaker 8: right now in Iowa and in New.
Speaker 1: Hampshire, the race is not nationalized. Rather it's personalized.
Speaker 8: People get to go and meet the candidates upfront, hear
Speaker 8: from them directly, unfiltered from you know, free from from media,
Speaker 8: free from ads, get to ask questions, and that's really
Speaker 8: where where people can can can make their stake. And
Speaker 8: I think that's what we see Nikki Heley do to
Speaker 8: to a very high degree.
Speaker 5: What's the number one issue that you think is attracting
Speaker 5: voters to the likes of Nicki Hailey?
Speaker 8: You know, I think it's probably a mix of policies
Speaker 8: of you know, maybe the Biden administration, whether it's foreign policy,
Speaker 8: domestic spending, inflation that have kind of pushed people away
Speaker 8: from you know, their vote maybe twenty twenty or away
Speaker 8: from the Democratic Party, but more importantly looking back towards
Speaker 8: what people see, as you know, a firmer Republican party
Speaker 8: that maybe is absent some of them, mayhem, some of
Speaker 8: the personality deficits that former President Trump has displayed for
Speaker 8: the better part of a decade.
Speaker 7: Now.
Speaker 1: Matthew Barlow.
Speaker 2: Terry Hayes visits often from Pangaea, and he made a
Speaker 2: common a number of months ago where he said, there's
Speaker 2: a complete misjudgment about the number of GOP who really
Speaker 2: aren't in love with the former president. In political Jonathan
Speaker 2: Martin the headline where are all the anti Trump Republicans?
Speaker 1: Where are they? Matthew?
Speaker 2: And are there any conquered New Hampshire?
Speaker 8: Oh, certainly, you know, if you look at New Hampshire,
Speaker 8: it is the only purple state, maybe the only swing state.
Speaker 1: In addition to being an early state.
Speaker 8: Republicans can only vote in the Republican primary, Democrats can
Speaker 8: only vote in the Democratic primary. But independence, of which
Speaker 8: there are more than Republicans or Democrats, can vote either one.
Speaker 8: So right now, the independence of New Hampshire, those that
Speaker 8: actually decide the general election are going to have a
Speaker 8: significant role in choosing the Republican nominee, or at least
Speaker 8: impacting that. Right now, it looks as if they are
Speaker 8: going to Nicky Haley. There is a Trump fatigue factor.
Speaker 8: In fact, when you go to her town halls, one
Speaker 8: of the biggest applause lines you hear. She's quite candid,
Speaker 8: she says, listen polling says Donald Trump might be up
Speaker 8: one to four points on Joe Biden, but I'm up
Speaker 8: seventeen points. So I think a lot of strong conservatives
Speaker 8: look at that as a resounding, you know, rationale for
Speaker 8: her candidacy, and a lot of independent voters, you know,
Speaker 8: find her to be the Goldilocks King.
Speaker 2: What does President Biden need to do to garner those
Speaker 2: GOP diss affected votes. Does he need to communicate with
Speaker 2: him like his communicating with a Pentagon.
Speaker 8: Yeah, I think communications a good start, you know, putting
Speaker 8: priority that you see, you hear, you listen to those
Speaker 8: that it is a warm place. Maybe some of his
Speaker 8: policies have been rather progressive. He's been for the past
Speaker 8: four years really attuned to the left wing of his party. Now,
Speaker 8: as we turn a corner into a potential you know,
Speaker 8: general election, he really needs to make sure that that
Speaker 8: coalition that he built in twenty twenty stays with him,
Speaker 8: that they do not feel deflated. And that's from the
Speaker 8: left on certain issues which may be a little more sensitive.
Speaker 8: Maybe it's foreign policy issues as we're seeing in playout
Speaker 8: in Michigan. But again, those disaffected voters who thought Trump,
Speaker 8: you know, maybe they liked his policy, but they just
Speaker 8: thought his personality was just too much. Now it's going
Speaker 8: to be yet again a choosing time potentially between Trump
Speaker 8: and Biden and who can swing those voters right back.
Speaker 5: Let's get to TV programming later on the seven and
Speaker 5: just to wrap things up math nine pm Eastern time.
Speaker 5: I believe you've got Run versus Nicky on CNN and
Speaker 5: then you've got the former president kind of programming on
Speaker 5: Fox News. What's the approach from Nicky im Ron going
Speaker 5: to be they going after each other or going after
Speaker 5: the former president.
Speaker 8: I mean, listen, it's gonna be both, you know, more
Speaker 8: than anything right now, the Republican Party wants somebody with
Speaker 8: attitude and swagger, and that is certainly why Donald Trump
Speaker 8: has had a command over the party, not just over
Speaker 8: the past few months, but over the past few years.
Speaker 8: So it is a performance. It is how you take
Speaker 8: a punch, how you land a punch, how you come
Speaker 8: back from a punch. Nicki Haley has really made her
Speaker 8: bones in this race by lighting up vivek Ramaswany like
Speaker 8: a pinball machine at debates, and it seems their voters
Speaker 8: appreciate that.
Speaker 1: Look for more of that tonight.
Speaker 5: Let's continue the conversation for this month. Matthew Greta catch
Speaker 5: out Matthew Bountle at the f Danby Field Advisors.
Speaker 2: Subscribe to the Bloomberg Surveillance Podcast on Apple, Spotify, and
Speaker 2: anywhere else you get your podcasts. Listen live every week
Speaker 2: starting at seven am Eastern. I'm Bloomberg dot com, the
Speaker 2: iHeartRadio app, tune In.
Speaker 1: And the Bloomberg Business app.
Speaker 2: You can watch us live on Bloomberg Television and always
Speaker 2: I'm the Bloomberg Terminal.
Speaker 1: Thanks for listening.
Speaker 2: I'm Tom Keen, and this is Bloomberg