1 00:00:05,120 --> 00:00:09,200 Speaker 1: Welcome to the Bloomberg Surveillance Podcast. I'm Tom Keane along 2 00:00:09,240 --> 00:00:13,200 Speaker 1: with Jonathan Ferrell and Lisa Brownwitz Jailey. We bring you 3 00:00:13,320 --> 00:00:18,600 Speaker 1: insight from the best and economics, finance, investment, and international relations. 4 00:00:18,840 --> 00:00:23,840 Speaker 1: To find Bloomberg Surveillance on Apple Podcast, Suncloud, Bloomberg dot Com, 5 00:00:23,920 --> 00:00:30,680 Speaker 1: and of course on the Bloomberg terminal. We will rip 6 00:00:30,760 --> 00:00:32,400 Speaker 1: up the script here. We are honored to bring you 7 00:00:32,440 --> 00:00:35,680 Speaker 1: Ian Bremer today with Eurisia Group. His top ten wrists 8 00:00:35,680 --> 00:00:39,080 Speaker 1: did not include rudeness in Alaska, but nevertheless that's what 9 00:00:39,159 --> 00:00:41,440 Speaker 1: we need to focus on, and we're hugely advantaged that 10 00:00:41,560 --> 00:00:45,000 Speaker 1: Dr Bremer could join us this morning, Ian Bremer. At 11 00:00:45,000 --> 00:00:48,400 Speaker 1: the Geneva Conference of nineteen fifty four, the Secretary of 12 00:00:48,440 --> 00:00:51,920 Speaker 1: State of the United States refused to shake hands with 13 00:00:52,000 --> 00:00:55,520 Speaker 1: a gentleman from China. We then moved on and oscillated 14 00:00:55,560 --> 00:00:59,200 Speaker 1: to the wonder man of Ping Pong diplomacy of nineteen 15 00:00:59,360 --> 00:01:03,680 Speaker 1: seventy one. What was the Pingong diplomacy? Across those two 16 00:01:03,720 --> 00:01:10,039 Speaker 1: tables that we witnessed yesterday, most important bilateral relationship in 17 00:01:10,080 --> 00:01:14,839 Speaker 1: the world, also the most challenging for the Americans to manage, 18 00:01:15,280 --> 00:01:20,600 Speaker 1: certainly one of the more dysfunctional. And it shows that 19 00:01:21,400 --> 00:01:24,919 Speaker 1: Biden and the Biden administration have been talking about China 20 00:01:25,000 --> 00:01:30,479 Speaker 1: and operating largely in a vacuum over the first fifty days. Uh. 21 00:01:30,520 --> 00:01:33,840 Speaker 1: And that's, as a consequence, been very easy to talk 22 00:01:33,920 --> 00:01:36,640 Speaker 1: up how tough they're gonna be on China, and now 23 00:01:36,680 --> 00:01:39,640 Speaker 1: they're actually engaged with China, and the Chinese government is 24 00:01:39,680 --> 00:01:42,959 Speaker 1: having none of it, right. I mean, their their belief 25 00:01:43,560 --> 00:01:47,000 Speaker 1: that they don't need to be talked down to by 26 00:01:47,480 --> 00:01:50,760 Speaker 1: a group of American Exceptional is the Chinese belief that 27 00:01:50,840 --> 00:01:54,720 Speaker 1: their system is every bit as valid as legitimate, and 28 00:01:54,880 --> 00:01:58,680 Speaker 1: the Americans don't believe that, right, So that that's that's 29 00:01:58,720 --> 00:02:02,840 Speaker 1: pretty core, It's pretty fundamental. What is the debris here 30 00:02:03,080 --> 00:02:06,840 Speaker 1: of Trump Pompeo? Do you link the two or is 31 00:02:06,880 --> 00:02:11,200 Speaker 1: this separate? In discreet to maybe the transfer from Obama 32 00:02:11,280 --> 00:02:17,720 Speaker 1: to Biden. They're very similar in terms of orientation of 33 00:02:17,880 --> 00:02:23,200 Speaker 1: actual policy issues, whether you're talking about Taiwan or Hong 34 00:02:23,280 --> 00:02:26,880 Speaker 1: Kong or the South China see or intellectual property theft 35 00:02:27,360 --> 00:02:32,160 Speaker 1: or cyber um or or trade. Uh. There's not an 36 00:02:32,200 --> 00:02:35,840 Speaker 1: awful lot of daylight between what the Biden administration is 37 00:02:35,919 --> 00:02:39,240 Speaker 1: concerned about and what the Trump administration is concerned about 38 00:02:39,240 --> 00:02:41,600 Speaker 1: when we can cherry pick a few issues where you 39 00:02:41,639 --> 00:02:44,680 Speaker 1: see some differences, even the leaguers where Trump never talked 40 00:02:44,680 --> 00:02:47,480 Speaker 1: about human rights, but the actual policy under Trump Biden 41 00:02:47,600 --> 00:02:52,600 Speaker 1: very similar. Where you see an enormous difference is that 42 00:02:52,880 --> 00:02:58,519 Speaker 1: Number one, the Biden administration is trying to work very 43 00:02:58,560 --> 00:03:04,720 Speaker 1: deliberately with allies in advance, trying to coordinate US China 44 00:03:04,840 --> 00:03:09,040 Speaker 1: policy with the Quad, and that means the core allies 45 00:03:09,200 --> 00:03:12,160 Speaker 1: in Asia, not including South Korea because Japan has a 46 00:03:12,160 --> 00:03:16,359 Speaker 1: problem with the South Koreans, but Australia, Japan, and India, 47 00:03:16,639 --> 00:03:19,600 Speaker 1: and also core allies in Europe, the EU three less 48 00:03:19,639 --> 00:03:22,920 Speaker 1: successfully because the Europeans do not view China the way 49 00:03:22,960 --> 00:03:26,600 Speaker 1: the Americans do, and that of course is the UK, France, 50 00:03:26,639 --> 00:03:31,120 Speaker 1: and Germany. None of that coordination was happening under Trump. 51 00:03:31,160 --> 00:03:34,760 Speaker 1: The other big difference between Biden and Trump is that 52 00:03:34,880 --> 00:03:39,040 Speaker 1: the Biden administration is actually having a policy review. What's 53 00:03:39,120 --> 00:03:43,960 Speaker 1: that with principles across the cabinet that are actually trying 54 00:03:44,000 --> 00:03:48,160 Speaker 1: to work out a strategic policy that then Biden will 55 00:03:48,240 --> 00:03:53,480 Speaker 1: discuss with the principles and make a calculated, calibrated decision 56 00:03:53,800 --> 00:03:56,400 Speaker 1: on how they're gonna roll that out. Uh, you know, 57 00:03:56,960 --> 00:04:00,080 Speaker 1: this was a Trump was a game time quarterback. He 58 00:04:00,160 --> 00:04:03,320 Speaker 1: sees an opportunity, he throws the ball. He's not waiting 59 00:04:03,360 --> 00:04:05,040 Speaker 1: to see what kind of a review is going to 60 00:04:05,160 --> 00:04:08,400 Speaker 1: happen from his you know, various members of cabinet who 61 00:04:08,480 --> 00:04:11,200 Speaker 1: obviously aren't his right shouldn't be listened to the way 62 00:04:11,480 --> 00:04:15,440 Speaker 1: his judgment carries. So it is quite different in terms 63 00:04:15,440 --> 00:04:20,680 Speaker 1: of how you operationalize what those those relatively similar core policies. 64 00:04:20,960 --> 00:04:23,360 Speaker 1: So an approach is going to be different, an emphasis 65 00:04:23,360 --> 00:04:25,640 Speaker 1: will be different too. So let's talk about approach just briefly. 66 00:04:25,680 --> 00:04:27,360 Speaker 1: And I think you mentioned the most important aspect of 67 00:04:27,400 --> 00:04:30,000 Speaker 1: trying to get a multilateral approach together. That was just 68 00:04:30,080 --> 00:04:32,719 Speaker 1: Europe West Germany on this. Where is Europe on this? 69 00:04:32,800 --> 00:04:34,920 Speaker 1: And is there actually any space there to get Europe 70 00:04:34,920 --> 00:04:39,680 Speaker 1: on board. The Europeans are of course more aligned with 71 00:04:39,720 --> 00:04:42,720 Speaker 1: the United States than they are with China. But the 72 00:04:42,760 --> 00:04:46,880 Speaker 1: Europeans are making very clear that if the United States 73 00:04:46,960 --> 00:04:50,840 Speaker 1: is heading towards a policy of containment with China, they 74 00:04:50,920 --> 00:04:53,080 Speaker 1: are not on for that. I want to be clear. 75 00:04:53,760 --> 00:04:58,600 Speaker 1: In the United States, it is an absolute core national 76 00:04:58,680 --> 00:05:03,320 Speaker 1: security agree men across the political spectrum that China is 77 00:05:03,680 --> 00:05:08,800 Speaker 1: the most critical adversary of the United States. The Europeans 78 00:05:08,839 --> 00:05:12,440 Speaker 1: don't buy that at all. China is not their core adversary. 79 00:05:12,720 --> 00:05:14,920 Speaker 1: Uh And and that's our real problem, and that is 80 00:05:14,920 --> 00:05:19,440 Speaker 1: going to get harder to bridge because of Brexit, because 81 00:05:19,640 --> 00:05:22,400 Speaker 1: the United Kingdom is the European country that is most 82 00:05:22,440 --> 00:05:26,000 Speaker 1: aligned with the United States and national security orientation. In 83 00:05:26,040 --> 00:05:29,120 Speaker 1: diplomatic orientation, they are no longer, of course, a member 84 00:05:29,120 --> 00:05:31,680 Speaker 1: of the European Union, and their relationship with the EU 85 00:05:31,800 --> 00:05:36,200 Speaker 1: is increasingly fraught. And also Angela Merkel, who is sort 86 00:05:36,240 --> 00:05:40,039 Speaker 1: of the voice of stability and reason and multilateralism in 87 00:05:40,120 --> 00:05:43,359 Speaker 1: trying to keep the Americans and Europeans on side, is 88 00:05:43,480 --> 00:05:47,359 Speaker 1: losing power, is leaving power, and the next coalition in 89 00:05:47,400 --> 00:05:50,720 Speaker 1: Germany is likely to be a bit weaker mccrown. Emmanuel 90 00:05:50,800 --> 00:05:53,680 Speaker 1: Macron is is going to be the most important strategic 91 00:05:53,760 --> 00:05:58,520 Speaker 1: voice of foreign policy in the continent, and his orientation 92 00:05:58,760 --> 00:06:04,560 Speaker 1: is all about strategic autonomy, European sovereignty, a third way. 93 00:06:04,760 --> 00:06:08,279 Speaker 1: It is going to be very, very challenging, I'll tell you. Uh. 94 00:06:08,320 --> 00:06:10,640 Speaker 1: You know, the markets have been talking about how there's 95 00:06:10,680 --> 00:06:14,160 Speaker 1: a honeymoon between Biden and the Europeans and certainly, the 96 00:06:14,200 --> 00:06:18,680 Speaker 1: Europeans are much happier to see Biden than Trump. But 97 00:06:18,920 --> 00:06:22,200 Speaker 1: I would argue that even though the decoupling of the 98 00:06:22,320 --> 00:06:27,280 Speaker 1: US and Europe has decelerated under Biden, it is continuing, 99 00:06:27,600 --> 00:06:32,200 Speaker 1: and it's continuing for structural and strategic reasons, irrespective of 100 00:06:32,240 --> 00:06:35,840 Speaker 1: the fact that Biden and his core team are fundamentally 101 00:06:35,920 --> 00:06:40,520 Speaker 1: Transatlanticist at heart. Not just the issue of a China, 102 00:06:40,560 --> 00:06:42,800 Speaker 1: also the issue of a Russia as well, with Germany 103 00:06:42,800 --> 00:06:44,920 Speaker 1: looking lonely increasingly so over the last couple of days. 104 00:06:45,000 --> 00:06:46,920 Speaker 1: And let's finish on this, why do you see a 105 00:06:47,040 --> 00:06:49,839 Speaker 1: space for success? What can this administration achieve on the 106 00:06:49,839 --> 00:06:55,600 Speaker 1: foreign policy upfront with regards specifically to China. Um, the 107 00:06:55,680 --> 00:07:02,039 Speaker 1: United States and China are massively interdependent in terms of trade, 108 00:07:02,640 --> 00:07:05,480 Speaker 1: in terms of their purchasing of our treasuries, in terms 109 00:07:05,520 --> 00:07:10,320 Speaker 1: of the global economy, and responding to things like climate change, 110 00:07:10,760 --> 00:07:14,720 Speaker 1: and and so the simple fact that that relationship persists 111 00:07:14,800 --> 00:07:17,760 Speaker 1: in a relatively stable way. I mean, you might not 112 00:07:17,960 --> 00:07:22,000 Speaker 1: consider that points on the board, but frankly it's important 113 00:07:22,320 --> 00:07:26,160 Speaker 1: in terms of progress or very far from progress. But 114 00:07:26,320 --> 00:07:28,640 Speaker 1: what you want to watch for, and you anticipated this 115 00:07:28,720 --> 00:07:32,440 Speaker 1: in your last segment what's gonna happen around Earth Day? Um, 116 00:07:32,520 --> 00:07:36,560 Speaker 1: what's gonna happen around John Kerry, who's in many ways 117 00:07:36,600 --> 00:07:41,000 Speaker 1: the most important new appointment of the entire Biden cabinet 118 00:07:41,040 --> 00:07:45,160 Speaker 1: Former Secretary of State John Kerry. Uh, you know, there 119 00:07:45,480 --> 00:07:47,760 Speaker 1: there is no question that if you are going to 120 00:07:47,920 --> 00:07:52,320 Speaker 1: resolve or even make significant progress in global climate, the 121 00:07:52,400 --> 00:07:56,280 Speaker 1: two largest carbon emitters in the world need to have 122 00:07:56,400 --> 00:08:00,200 Speaker 1: some willingness to work together. That is going to its taller, 123 00:08:00,560 --> 00:08:04,680 Speaker 1: but it's also a critical concern of both countries. We 124 00:08:04,720 --> 00:08:06,920 Speaker 1: will see where it goes and always great to catch 125 00:08:07,040 --> 00:08:09,320 Speaker 1: up right to see it in Bremen that he writes 126 00:08:09,320 --> 00:08:18,320 Speaker 1: a Greazra media president. Someone who has been very visible 127 00:08:18,360 --> 00:08:22,440 Speaker 1: from the beginning of this terrible natural disaster, Peter Hotez, 128 00:08:22,720 --> 00:08:25,200 Speaker 1: Baylor College of Medicine, joins us right now in Dan 129 00:08:25,240 --> 00:08:29,120 Speaker 1: of the National School of Tropical Medicine. Dr Hotez, would 130 00:08:29,120 --> 00:08:32,960 Speaker 1: you take the astro zenica vaccine right now? Yes? I would. 131 00:08:33,000 --> 00:08:36,240 Speaker 1: In fact, I've offered to do that. And the reason 132 00:08:36,360 --> 00:08:39,000 Speaker 1: is this, Uh, you know, the Europeans have been quite 133 00:08:39,040 --> 00:08:42,400 Speaker 1: tone deaf to how sensitive vaccines are at the public 134 00:08:42,440 --> 00:08:45,360 Speaker 1: perception is or is I often like to say it 135 00:08:45,440 --> 00:08:48,600 Speaker 1: doesn't take much to vote even a good vaccine off 136 00:08:48,640 --> 00:08:51,240 Speaker 1: the island if the public doesn't feel confident. And the 137 00:08:51,280 --> 00:08:54,640 Speaker 1: way the individual European countries have handled this has has 138 00:08:54,640 --> 00:08:57,840 Speaker 1: been abysmal. So the e M A statement of the 139 00:08:57,880 --> 00:09:00,599 Speaker 1: European Medicine Agencies, which is the regular very body in 140 00:09:00,679 --> 00:09:04,200 Speaker 1: Europe statement yesterday is important, but that's not going to 141 00:09:04,240 --> 00:09:06,920 Speaker 1: be enough for all the for all the damage control 142 00:09:06,960 --> 00:09:10,160 Speaker 1: that's going to be needed. That statement that the German 143 00:09:10,280 --> 00:09:13,800 Speaker 1: Institute made the Paul Earlik Institute, which is their regulatory body, 144 00:09:13,880 --> 00:09:17,080 Speaker 1: was just so damning. And and the fact that the 145 00:09:17,160 --> 00:09:20,599 Speaker 1: French suspended its use with oblivious to the impact that 146 00:09:20,600 --> 00:09:24,800 Speaker 1: would have on Francophone Africa, because the Francophone Africa very 147 00:09:24,840 --> 00:09:28,600 Speaker 1: much gets its guidance from from France. Um, this is 148 00:09:28,760 --> 00:09:31,600 Speaker 1: I'm really worried. I'm really worried about what's going to 149 00:09:31,640 --> 00:09:33,599 Speaker 1: happen in the coming weeks. I have noticed in a 150 00:09:33,760 --> 00:09:36,920 Speaker 1: James Moore Burns Murdock at the f to a major 151 00:09:37,040 --> 00:09:40,400 Speaker 1: shout out Brazil and Latin America seems to be unraveling. 152 00:09:40,760 --> 00:09:44,440 Speaker 1: To me, India's a statistical mystery as well. Are we 153 00:09:44,480 --> 00:09:46,760 Speaker 1: winning in this battle with a pandemic or are we 154 00:09:46,840 --> 00:09:50,120 Speaker 1: deluding ourselves. Well, what you really have to do is 155 00:09:50,160 --> 00:09:52,000 Speaker 1: go a country to country. I think you know in 156 00:09:52,040 --> 00:09:55,160 Speaker 1: the US we're slowly getting our arms around this. We're 157 00:09:55,160 --> 00:09:57,959 Speaker 1: in a race with the B one one seven variant 158 00:09:58,000 --> 00:10:01,920 Speaker 1: from the UK with faccine. The American people, UM, the 159 00:10:01,960 --> 00:10:04,920 Speaker 1: next few weeks are absolutely going to be critical. UM. 160 00:10:04,960 --> 00:10:09,480 Speaker 1: Africa is UH doesn't have vaccine. That's that's going to 161 00:10:09,520 --> 00:10:12,200 Speaker 1: be That's a that's a disaster in the making. Latin 162 00:10:12,240 --> 00:10:16,319 Speaker 1: America doesn't have vaccine. That's a disaster in the making. UH. 163 00:10:16,360 --> 00:10:19,360 Speaker 1: Indias is doing what it can to step up to 164 00:10:19,520 --> 00:10:22,319 Speaker 1: prepe to be the vaccine supplier for the world's low 165 00:10:22,360 --> 00:10:26,240 Speaker 1: and middle income countries. UH that that's a positive. Russia 166 00:10:26,240 --> 00:10:31,280 Speaker 1: and China have largely bypassed international regulatory authorities like WHR 167 00:10:31,320 --> 00:10:34,880 Speaker 1: prequalification and making these one off deals with countries. That's 168 00:10:34,880 --> 00:10:38,520 Speaker 1: a disaster. So it's a very very complicated and mixed 169 00:10:38,520 --> 00:10:40,920 Speaker 1: picture right now. So I have to follow up on 170 00:10:40,960 --> 00:10:42,679 Speaker 1: something you've brought up, and I'm embarrassed to say I 171 00:10:42,720 --> 00:10:45,839 Speaker 1: haven't even thought about it. How the issues in France 172 00:10:46,120 --> 00:10:49,280 Speaker 1: around this vaccine would spill over culturally to the issues 173 00:10:49,600 --> 00:10:51,600 Speaker 1: in Africa as well. When you say we could see 174 00:10:51,600 --> 00:10:56,120 Speaker 1: a disaster, can you describe what that disaster would look like? Well, 175 00:10:56,160 --> 00:10:59,600 Speaker 1: the disaster is it looks like the South African variant 176 00:10:59,679 --> 00:11:04,280 Speaker 1: to be one three one is accelerating now up into Malawi, Mozambique, 177 00:11:04,280 --> 00:11:07,800 Speaker 1: and even though Africa overall has done better than many 178 00:11:07,880 --> 00:11:12,720 Speaker 1: expected during that grace period, could end as this virus 179 00:11:12,720 --> 00:11:15,960 Speaker 1: starts to accelerate and they're not. And the world has 180 00:11:15,960 --> 00:11:20,839 Speaker 1: been very focused on very high tech innovations uh m 181 00:11:20,960 --> 00:11:23,679 Speaker 1: RNA vaccines that will never filter or I don't think 182 00:11:23,679 --> 00:11:26,520 Speaker 1: we'll filter to the low and middle income countries. Yes, 183 00:11:26,559 --> 00:11:28,960 Speaker 1: fiser By in Tech sent sent two hundred and thirty 184 00:11:28,960 --> 00:11:33,040 Speaker 1: five thousand doses to Rwanda. That was great, but look 185 00:11:33,040 --> 00:11:35,360 Speaker 1: at the need. There are one point one billion people 186 00:11:35,400 --> 00:11:38,800 Speaker 1: living in Sub Saharan Africa. If we need two doses 187 00:11:38,840 --> 00:11:41,960 Speaker 1: of most of those vaccines has two billion doses. So 188 00:11:41,960 --> 00:11:43,720 Speaker 1: so far it's a drop in the bucket and there's 189 00:11:43,760 --> 00:11:45,920 Speaker 1: no real plan for what we do. We're trying to 190 00:11:45,960 --> 00:11:49,600 Speaker 1: accelerate a low cost recommin and protein vaccine with another 191 00:11:49,960 --> 00:11:53,480 Speaker 1: Indian producer biologically and that's going really well, so hopefully 192 00:11:53,559 --> 00:11:56,920 Speaker 1: we can fill that gap, but that that's a potentially 193 00:11:57,000 --> 00:12:00,840 Speaker 1: humanitarian crisis right there. For receiving sufficient funding to do 194 00:12:00,920 --> 00:12:04,320 Speaker 1: that delta, uh no, I mean we had to raise 195 00:12:04,360 --> 00:12:08,040 Speaker 1: a lot of that money privately from from various sources 196 00:12:08,040 --> 00:12:10,760 Speaker 1: and here in Texas enough to do the technology transfer 197 00:12:10,880 --> 00:12:15,280 Speaker 1: to uh India. And now we're in discussions with South 198 00:12:15,320 --> 00:12:19,200 Speaker 1: Africa and Indonesia, so hopefully that will come through. But 199 00:12:19,640 --> 00:12:23,119 Speaker 1: you know, everybody was went very heavy on the innovation 200 00:12:23,440 --> 00:12:26,480 Speaker 1: um and and and innovation is important. We need to 201 00:12:26,520 --> 00:12:30,040 Speaker 1: innovate in vaccines, but you know, at a certain stage 202 00:12:30,080 --> 00:12:34,959 Speaker 1: you need some traditional, low caust durable vaccines for low 203 00:12:35,000 --> 00:12:37,439 Speaker 1: and middle income countries. And and there was not enough 204 00:12:37,480 --> 00:12:40,280 Speaker 1: attention paid to that. Peter Hotels, thank you so much. 205 00:12:40,320 --> 00:12:43,240 Speaker 1: I noticed your bookshelf behind you. No doubt Walter Isaacson's 206 00:12:43,280 --> 00:12:46,920 Speaker 1: new book on genetics will take a place there as well. 207 00:12:53,040 --> 00:12:54,760 Speaker 1: The heritage that John and I have is to talk 208 00:12:54,760 --> 00:12:56,760 Speaker 1: to experts. And if you know the name cow and 209 00:12:56,840 --> 00:13:00,640 Speaker 1: you know they own aviation with a legendary Von Rumor 210 00:13:00,720 --> 00:13:03,760 Speaker 1: and the ever so younger Lane Becker, they have been 211 00:13:03,800 --> 00:13:06,760 Speaker 1: at the top of the heap on airline analysis. And 212 00:13:06,800 --> 00:13:10,720 Speaker 1: we're thrilled on Lane Becker could join us this morning. Helene. 213 00:13:10,800 --> 00:13:13,719 Speaker 1: Within your note is the rollout you are guessing at, 214 00:13:13,800 --> 00:13:16,280 Speaker 1: which is can Koon at some point, and then we're 215 00:13:16,280 --> 00:13:18,800 Speaker 1: gonna John off to Paris as they go into lockdown 216 00:13:18,840 --> 00:13:23,240 Speaker 1: this weekend, and somewhere way out in two thousand twenty two, 217 00:13:23,800 --> 00:13:26,120 Speaker 1: we're gonna be able to go to Asia. Can the 218 00:13:26,200 --> 00:13:29,960 Speaker 1: airlines wait that long? Are the airlines in control of 219 00:13:30,000 --> 00:13:33,040 Speaker 1: their destiny? I think they are and and and it's 220 00:13:33,040 --> 00:13:35,280 Speaker 1: good to see you again, Tom and John iced to 221 00:13:35,320 --> 00:13:37,920 Speaker 1: talk to you guys. Um. I think they are in 222 00:13:38,000 --> 00:13:40,480 Speaker 1: control of their own destiny at this point. Over the 223 00:13:40,520 --> 00:13:44,199 Speaker 1: past week, we've regularly seen more than a million people 224 00:13:44,240 --> 00:13:46,520 Speaker 1: a day passed through t s A, and we thought 225 00:13:47,320 --> 00:13:50,200 Speaker 1: that that would be the case till about mid May, 226 00:13:50,520 --> 00:13:53,400 Speaker 1: and then around Memorial Day weekend, we we think there 227 00:13:53,400 --> 00:13:56,320 Speaker 1: will be a jail break and we'll see regularly between 228 00:13:56,360 --> 00:13:59,199 Speaker 1: one point one and one point five million people a day, 229 00:13:59,559 --> 00:14:03,559 Speaker 1: And frankly, we think that's pretty close to pre pandemic 230 00:14:03,679 --> 00:14:08,839 Speaker 1: levels in domestic traffic. People don't want to go, people 231 00:14:08,840 --> 00:14:11,720 Speaker 1: don't want to quarantine, especially, you know, if you only 232 00:14:11,760 --> 00:14:15,440 Speaker 1: have a week or two a vacation, you really don't 233 00:14:15,440 --> 00:14:19,080 Speaker 1: want to stay in a hotel room somewhere or come back. 234 00:14:19,080 --> 00:14:21,760 Speaker 1: And so we need to see those quarantines lifted. And 235 00:14:22,200 --> 00:14:25,440 Speaker 1: our view has been as more vaccine gets into people's arms, 236 00:14:25,440 --> 00:14:28,320 Speaker 1: we think that will happen. I think New York is 237 00:14:28,480 --> 00:14:32,360 Speaker 1: lift in quarantine rules this weekend, and I think I 238 00:14:32,400 --> 00:14:34,680 Speaker 1: think things will start to get better. And I do 239 00:14:34,760 --> 00:14:38,160 Speaker 1: think the airlines will benefit from domestic traffic. Do they 240 00:14:38,200 --> 00:14:40,800 Speaker 1: have the empty planes to bring on capacity? Is it 241 00:14:40,880 --> 00:14:44,400 Speaker 1: an easy exercise for sake Delta to bring on new 242 00:14:44,440 --> 00:14:46,600 Speaker 1: planes or do they just packed the planes as they 243 00:14:46,600 --> 00:14:52,240 Speaker 1: did pre pandemic. Yes, yes to both. So in Delta's 244 00:14:52,280 --> 00:14:56,000 Speaker 1: case specifically because you asked about them, they are not 245 00:14:56,040 --> 00:14:59,560 Speaker 1: selling middle seats until after April. So when you think 246 00:14:59,560 --> 00:15:04,360 Speaker 1: about at as demand improves, they'll bring back those middle 247 00:15:04,400 --> 00:15:08,080 Speaker 1: seats and that's about at increase in capacity without adding 248 00:15:08,440 --> 00:15:11,920 Speaker 1: a single aircraft. And then for the other airlines that 249 00:15:11,960 --> 00:15:15,840 Speaker 1: we're seeing, um that that that parked aircraft in the 250 00:15:15,920 --> 00:15:19,960 Speaker 1: desert last year, those aircraft will start to come back 251 00:15:20,040 --> 00:15:23,240 Speaker 1: as demand warrants. I think the airlines are trying not 252 00:15:23,320 --> 00:15:26,600 Speaker 1: to get too far over their skis. I don't see 253 00:15:26,640 --> 00:15:30,280 Speaker 1: them bringing back wide body aircraft this summer in in 254 00:15:30,680 --> 00:15:35,880 Speaker 1: huge measure because Europe is still for most most of 255 00:15:35,880 --> 00:15:39,960 Speaker 1: Europe is still closed. Um. But we when when Boris 256 00:15:40,040 --> 00:15:44,880 Speaker 1: Johnson announced his plan for reopening the UK and mid May, 257 00:15:44,920 --> 00:15:50,240 Speaker 1: easy Jet saw three and thirty seven percent three percent 258 00:15:50,320 --> 00:15:54,520 Speaker 1: increase in bookings that night. I know, and because people 259 00:15:54,560 --> 00:15:56,960 Speaker 1: are sick of being home and cooped up and they 260 00:15:56,960 --> 00:16:00,440 Speaker 1: want to get out and about, and we're we're worried 261 00:16:00,440 --> 00:16:04,640 Speaker 1: about Europe. Um, then we are about US air alliance 262 00:16:04,680 --> 00:16:07,720 Speaker 1: because of that, because Europe has been so locked down. 263 00:16:08,560 --> 00:16:11,960 Speaker 1: And I think also people people don't want to wear 264 00:16:12,000 --> 00:16:15,840 Speaker 1: a mask for eight or ten hour flights. As you know, 265 00:16:15,880 --> 00:16:18,120 Speaker 1: that's totally done with this. So what's amazing. Before we 266 00:16:18,160 --> 00:16:20,120 Speaker 1: move on and just speed onto the boom in the 267 00:16:20,160 --> 00:16:22,120 Speaker 1: United States, we've got to look back on where we were. 268 00:16:22,440 --> 00:16:24,720 Speaker 1: I remember talking to them in the depths of this crisis. 269 00:16:24,720 --> 00:16:28,320 Speaker 1: It felt depressing. It was depressing the likes of Warren Buffett, 270 00:16:28,440 --> 00:16:31,600 Speaker 1: a legendary investor, dumped his airline stocks in April last year, 271 00:16:31,840 --> 00:16:35,080 Speaker 1: and Berkshire Hathaway said the world has changed, and Helene, 272 00:16:35,120 --> 00:16:37,240 Speaker 1: so many people got this wrong because so much is 273 00:16:37,240 --> 00:16:40,040 Speaker 1: coming back so quickly. Why is it so difficult to 274 00:16:40,040 --> 00:16:44,240 Speaker 1: get a read on this industry. It always has been 275 00:16:44,680 --> 00:16:48,000 Speaker 1: for for the whatever. For almost four decades that I've 276 00:16:48,040 --> 00:16:51,400 Speaker 1: covered this industry, it's been very up and down, two 277 00:16:51,480 --> 00:16:54,880 Speaker 1: or three good years, maybe one great year and then 278 00:16:55,160 --> 00:16:58,280 Speaker 1: four or five so so or bad years. It's so 279 00:16:58,400 --> 00:17:04,320 Speaker 1: cyclical and so dependent on consumer discretionary spending. And then 280 00:17:04,359 --> 00:17:08,520 Speaker 1: of course business traffic, which you're kind of alluding to here. Um, 281 00:17:08,560 --> 00:17:11,600 Speaker 1: in the million people a day we're seeing, we're really 282 00:17:11,640 --> 00:17:14,520 Speaker 1: not seeing much business traffic. Maybe small and medium sized 283 00:17:14,560 --> 00:17:17,159 Speaker 1: companies who need to get out on the road to 284 00:17:17,240 --> 00:17:21,240 Speaker 1: generate revenue, but we're really not seeing corporate business traffic 285 00:17:21,280 --> 00:17:23,680 Speaker 1: come back yet. They're still worried about getting their people 286 00:17:23,720 --> 00:17:26,240 Speaker 1: back to work. But we think that's a fourth quarter 287 00:17:26,280 --> 00:17:28,480 Speaker 1: of twenty one event where people will start to get 288 00:17:28,480 --> 00:17:31,800 Speaker 1: back on the road. Um, we think maybe of the 289 00:17:31,840 --> 00:17:35,600 Speaker 1: way back by your end twenty two, and then maybe 290 00:17:35,640 --> 00:17:39,280 Speaker 1: the other comes back over three to twenty six or seven. 291 00:17:39,359 --> 00:17:42,000 Speaker 1: So let's talk about opportunities then, because right now everyone's 292 00:17:42,000 --> 00:17:44,560 Speaker 1: on board with the domestic story here in America. Everyone's 293 00:17:44,600 --> 00:17:47,080 Speaker 1: on board with return of travel, everyone's on board with 294 00:17:47,119 --> 00:17:49,760 Speaker 1: the likes of Alaska nicely leverage to that story. Hellong, 295 00:17:49,840 --> 00:17:51,800 Speaker 1: when we start to talk about the New York London 296 00:17:51,800 --> 00:17:55,840 Speaker 1: corridor reopening, the European story reopening, is there an opportunity 297 00:17:55,880 --> 00:17:59,120 Speaker 1: there now or have we already missed that too? Oh No, 298 00:17:59,200 --> 00:18:01,760 Speaker 1: I don't think we've staid at all. I think UM 299 00:18:02,040 --> 00:18:06,320 Speaker 1: United is the most leverage to international traffic of their 300 00:18:06,359 --> 00:18:11,320 Speaker 1: capacity as an international bigger than both American and Delta. 301 00:18:11,760 --> 00:18:15,640 Speaker 1: So I think that that international corridor starts to come back, 302 00:18:15,960 --> 00:18:20,480 Speaker 1: probably September October. I'm kind of hoping the summer because 303 00:18:20,640 --> 00:18:23,960 Speaker 1: all of US canceled many trips to Europe last year, 304 00:18:24,560 --> 00:18:26,879 Speaker 1: and I think we want to go back. And I 305 00:18:26,920 --> 00:18:29,720 Speaker 1: think that by the end of the summer enough vaccine 306 00:18:29,720 --> 00:18:33,040 Speaker 1: will be in people's arms worldwide that we'll be able 307 00:18:33,119 --> 00:18:36,400 Speaker 1: to see that start to reopen. But just start, hell 308 00:18:36,440 --> 00:18:37,719 Speaker 1: And you know, I love catching up with you. It's 309 00:18:37,720 --> 00:18:41,320 Speaker 1: great to get you on the program. The City Research Analyst, 310 00:18:41,320 --> 00:18:49,840 Speaker 1: thank you for being with us. Brian Leavitt ordered by 311 00:18:49,920 --> 00:18:52,520 Speaker 1: his general counsel not to talk about bitcoin and joins 312 00:18:52,600 --> 00:18:58,920 Speaker 1: US market strategist as well well. Avoid it. Brian, there 313 00:18:59,040 --> 00:19:03,160 Speaker 1: was a theory two or three levels ago about international 314 00:19:03,200 --> 00:19:08,199 Speaker 1: investment and a recovering Pacific RIM, dove chilling e m. 315 00:19:08,320 --> 00:19:11,560 Speaker 1: Disappointments of the last couple of days and weeks with 316 00:19:11,680 --> 00:19:15,560 Speaker 1: what we observe the tension and anchorage yesterday. How is 317 00:19:15,600 --> 00:19:19,440 Speaker 1: the Pacific RIM doing? Yes, so I child actually has 318 00:19:19,480 --> 00:19:22,320 Speaker 1: emerged from this, as most people know, in quite good shape. 319 00:19:22,520 --> 00:19:26,080 Speaker 1: You're right, the economy is is quite stable, their valuations 320 00:19:26,080 --> 00:19:29,399 Speaker 1: look attractive, and that place is still a hotbed of innovation, 321 00:19:29,520 --> 00:19:32,720 Speaker 1: although you know some concerns about the regulatory environment. I 322 00:19:32,760 --> 00:19:35,480 Speaker 1: think the the story right now has just all been 323 00:19:35,640 --> 00:19:38,199 Speaker 1: has been all about the United States, the rates market, 324 00:19:38,560 --> 00:19:41,400 Speaker 1: expectations of whether the Fed's going to have to raise 325 00:19:41,520 --> 00:19:43,760 Speaker 1: rates sooner rather than later. So it put a floora 326 00:19:43,800 --> 00:19:47,600 Speaker 1: in the dollar. Color moves a bit. You get some 327 00:19:47,640 --> 00:19:50,320 Speaker 1: capital flight out of the emerging markets, concerned that this 328 00:19:50,359 --> 00:19:52,960 Speaker 1: is all over again and we have the tantrum. I 329 00:19:52,960 --> 00:19:55,920 Speaker 1: think those concerns are are overstated. This is a this 330 00:19:55,960 --> 00:19:58,000 Speaker 1: is a reversion to the mean in the United States. 331 00:19:58,160 --> 00:20:01,320 Speaker 1: We want to connect the dots cross the He's Alaska Aerolines, 332 00:20:01,400 --> 00:20:04,159 Speaker 1: John and NonStop. This is some anchors to Minneapolis and 333 00:20:04,240 --> 00:20:06,880 Speaker 1: John Again, it's just that feeling of the opening up 334 00:20:06,880 --> 00:20:08,600 Speaker 1: of the economy. One of the top picks over a 335 00:20:08,640 --> 00:20:11,040 Speaker 1: Goldman because it's so leverage to the domestic play, to 336 00:20:11,560 --> 00:20:14,000 Speaker 1: the leisure story as well. Brian, I think you've picked 337 00:20:14,080 --> 00:20:16,560 Speaker 1: up on the irony at the moment perfectly. In year one, 338 00:20:16,600 --> 00:20:19,080 Speaker 1: investors question how markets can go up with the economy 339 00:20:19,160 --> 00:20:21,960 Speaker 1: is so challenged, your line, your words. In year two, 340 00:20:22,280 --> 00:20:24,399 Speaker 1: the question if the market can go up if the 341 00:20:24,440 --> 00:20:27,399 Speaker 1: economy is so good, And Brian, I've heard people ask it. 342 00:20:27,680 --> 00:20:30,440 Speaker 1: I've asked it, boom year it's coming. Can we really 343 00:20:30,440 --> 00:20:32,400 Speaker 1: have a boom year in the market that doesn't perform well? 344 00:20:34,640 --> 00:20:36,560 Speaker 1: I think the markets will perform well. I mean it's 345 00:20:36,560 --> 00:20:38,800 Speaker 1: gonna be a more volatile year. You find year two 346 00:20:38,800 --> 00:20:41,119 Speaker 1: of a market cycle tends to be more challenging. We 347 00:20:41,160 --> 00:20:44,880 Speaker 1: saw that in three, We saw that in it's those 348 00:20:44,880 --> 00:20:47,440 Speaker 1: second years to to what you know you have just said, 349 00:20:47,480 --> 00:20:50,159 Speaker 1: we questioned whether it's too good. The reality is, we 350 00:20:50,200 --> 00:20:51,720 Speaker 1: know there's a lot of pent up to man, we 351 00:20:51,800 --> 00:20:54,159 Speaker 1: know there's a lot of fiscal support, and we know 352 00:20:54,200 --> 00:20:56,439 Speaker 1: we're going to have a good economic backdrop. The problem 353 00:20:56,480 --> 00:20:59,200 Speaker 1: isn't raises concerns about policy. And when you have concerns 354 00:20:59,240 --> 00:21:02,680 Speaker 1: about policy, that's when you get volatility in the markets. 355 00:21:02,720 --> 00:21:05,679 Speaker 1: But let's remember this is what we all hoped for 356 00:21:05,760 --> 00:21:09,800 Speaker 1: a year ago, and we're seeing earnings improved, the economy improved. 357 00:21:09,840 --> 00:21:13,119 Speaker 1: I think inflation pressures will will rear their head, but 358 00:21:13,160 --> 00:21:17,040 Speaker 1: I think they ultimately fade as we move out beyond Well, 359 00:21:17,119 --> 00:21:19,920 Speaker 1: let's move out beyond twenty one. This cycle moves quickly, Brian. 360 00:21:20,040 --> 00:21:22,960 Speaker 1: We've been pricing in all of twenty one throughout the 361 00:21:23,040 --> 00:21:25,400 Speaker 1: last couple of months. In fact, since the beginning of November, 362 00:21:25,560 --> 00:21:27,720 Speaker 1: we've been pricing the boom that is twenty one. When 363 00:21:27,760 --> 00:21:31,080 Speaker 1: you start thinking about deceleration in twenty two, well, I 364 00:21:31,080 --> 00:21:34,080 Speaker 1: think that investors need to keep their mind on deceleration 365 00:21:34,119 --> 00:21:37,040 Speaker 1: in in twenty two. Now. I think this recovery reflation 366 00:21:37,080 --> 00:21:39,560 Speaker 1: trade plays out for a bit. You know, your your 367 00:21:39,640 --> 00:21:42,000 Speaker 1: value oriented parts of the market get their day in 368 00:21:42,040 --> 00:21:45,320 Speaker 1: the sun. But ultimately, you know this idea that we 369 00:21:45,359 --> 00:21:48,600 Speaker 1: can't own anything long duration, that interest rates are going 370 00:21:48,640 --> 00:21:51,919 Speaker 1: to keep going up forever. I caution against that. What 371 00:21:52,080 --> 00:21:55,000 Speaker 1: you see as you move out into two is, look, 372 00:21:55,040 --> 00:21:57,800 Speaker 1: we all have pent up demand. How long does that persist? 373 00:21:57,920 --> 00:22:00,359 Speaker 1: We know that this income replacement that you getting a 374 00:22:00,359 --> 00:22:03,920 Speaker 1: fiscal deal starts to fade as you move out into two, 375 00:22:03,960 --> 00:22:07,520 Speaker 1: and let's not forget the long term structural forces against inflation, 376 00:22:07,600 --> 00:22:11,960 Speaker 1: like an aging population globally, automation of the workforce, new technology. 377 00:22:12,080 --> 00:22:14,639 Speaker 1: So I'm not ready to sell anything long duration. I 378 00:22:14,640 --> 00:22:16,800 Speaker 1: think growth stocks will be back in vogue as we 379 00:22:16,840 --> 00:22:19,680 Speaker 1: move out into two. Brian, I'd really underline, you know, 380 00:22:19,760 --> 00:22:22,159 Speaker 1: the new technology, which is of course a great mystery. 381 00:22:22,200 --> 00:22:25,920 Speaker 1: Paul Romer with Bloomberg earlier this week, the laureate Brian Lovett, 382 00:22:25,920 --> 00:22:28,080 Speaker 1: how much cash is really out there? I get all 383 00:22:28,080 --> 00:22:32,080 Speaker 1: these trillion numbers, but when Investo sits down and calculates 384 00:22:32,160 --> 00:22:35,520 Speaker 1: out the investable cash that's out there waiting to find 385 00:22:35,520 --> 00:22:38,399 Speaker 1: a warm spot, how much is it a lot? And 386 00:22:38,480 --> 00:22:40,600 Speaker 1: I'm not only looking for a number answer, I'm looking 387 00:22:40,640 --> 00:22:44,480 Speaker 1: for something Friday scientific. Is it ginormous or is it 388 00:22:44,520 --> 00:22:47,959 Speaker 1: a lot? A lot? I mean it's it's ginormous. I mean, 389 00:22:47,960 --> 00:22:50,280 Speaker 1: you have a trillion dollars go into money market strategies 390 00:22:50,359 --> 00:22:52,959 Speaker 1: last year. You've got you know, I mean, even if 391 00:22:52,960 --> 00:22:55,159 Speaker 1: you think about the amount of money that's just sitting 392 00:22:55,240 --> 00:22:58,320 Speaker 1: in government related bonds, you're looking at a few trillion, 393 00:22:58,400 --> 00:22:59,920 Speaker 1: and you know, you add it all up, there's a 394 00:23:00,000 --> 00:23:02,479 Speaker 1: substantial amount of money sitting on the sidelines. Even if 395 00:23:02,520 --> 00:23:05,080 Speaker 1: you think since oh wait, you've had far more money, 396 00:23:05,280 --> 00:23:08,680 Speaker 1: a ginormous amount of money go into fixed income strategies 397 00:23:09,040 --> 00:23:12,240 Speaker 1: versus equity strategies, and yields have come up a bit, 398 00:23:12,280 --> 00:23:14,600 Speaker 1: but nonetheless, the Feds still telling you they want to 399 00:23:14,600 --> 00:23:17,800 Speaker 1: inflate away a good percentage of it. You're getting zero 400 00:23:17,880 --> 00:23:20,919 Speaker 1: in money markets. The FED wants greater than two percent inflation. 401 00:23:21,240 --> 00:23:24,080 Speaker 1: That's not a great deal. Ultimately, I think that money 402 00:23:24,119 --> 00:23:27,000 Speaker 1: continues to find its way into equities and credit. And 403 00:23:27,080 --> 00:23:30,120 Speaker 1: let's remember, a lot of this support on the fiscal 404 00:23:30,200 --> 00:23:32,680 Speaker 1: side is going to end up in markets. It's it's 405 00:23:32,720 --> 00:23:35,080 Speaker 1: some of it is finding its way into middle income 406 00:23:35,240 --> 00:23:38,320 Speaker 1: household pockets, and that's gonna find its way into markets too. 407 00:23:38,400 --> 00:23:41,560 Speaker 1: So I would say asset price inflation um is a 408 00:23:41,560 --> 00:23:43,840 Speaker 1: good part of this story. And let's stop talking about 409 00:23:43,880 --> 00:23:46,280 Speaker 1: managing other people's money and talk about managing your money. 410 00:23:46,280 --> 00:23:49,400 Speaker 1: I understand its young Carlie's birthday today and the Levitt household. 411 00:23:49,520 --> 00:23:54,160 Speaker 1: So hap to the young Levitt for you. Carlie needs 412 00:23:54,160 --> 00:23:56,080 Speaker 1: some money when she comes to New York City in 413 00:23:56,080 --> 00:23:57,840 Speaker 1: about ten years time. If you had to buy and 414 00:23:57,920 --> 00:24:01,520 Speaker 1: hold for a decade for your young thirteen year old. 415 00:24:01,640 --> 00:24:04,399 Speaker 1: Where would that money go today? Brian, And let me 416 00:24:04,400 --> 00:24:07,480 Speaker 1: first say, I hope it's a decade before before she's 417 00:24:07,480 --> 00:24:09,200 Speaker 1: going to New York City to hang out with her friends. 418 00:24:09,200 --> 00:24:10,800 Speaker 1: I say, it's gonna be a little it's gonna be 419 00:24:10,800 --> 00:24:12,720 Speaker 1: a little bit sooner than that. But you know, I 420 00:24:13,119 --> 00:24:15,159 Speaker 1: think that you have a trade here on value stocks. 421 00:24:15,160 --> 00:24:17,520 Speaker 1: But if you're looking out long term ten years, you 422 00:24:17,560 --> 00:24:21,480 Speaker 1: want to look for structural growth businesses globally. I would 423 00:24:21,480 --> 00:24:22,919 Speaker 1: think that a lot of those are going to be 424 00:24:22,960 --> 00:24:24,399 Speaker 1: in the United States. Some of those are going to 425 00:24:24,440 --> 00:24:27,359 Speaker 1: be in the emerging markets as well. Brian, is she 426 00:24:27,560 --> 00:24:31,399 Speaker 1: training game stop off the couch? Not yet? Maybe I 427 00:24:31,400 --> 00:24:34,040 Speaker 1: should teach her too, Not yet. I just feel bad that, 428 00:24:34,119 --> 00:24:36,240 Speaker 1: you know, last year the friends we were haunting the 429 00:24:36,240 --> 00:24:38,640 Speaker 1: horn on the street to celebrate the birthday. This year 430 00:24:38,680 --> 00:24:41,080 Speaker 1: a little bit better. We're celebrating in the garage. Maybe 431 00:24:42,000 --> 00:24:46,720 Speaker 1: two we can go inside, have fun. Brian, happy the celebrations. 432 00:24:46,760 --> 00:24:49,359 Speaker 1: Thank you, sir, Brian left that of investing the global 433 00:24:49,480 --> 00:24:54,280 Speaker 1: market strategies. This is the Bloomberg Surveillance Podcast. Thanks for listening. 434 00:24:54,640 --> 00:24:58,000 Speaker 1: Join us live weekdays from seven to ten a m. Eastern. 435 00:24:58,240 --> 00:25:02,280 Speaker 1: I'm Bloomberg Radio and I'm Bomberg Television each day from 436 00:25:02,320 --> 00:25:07,600 Speaker 1: six to nine am for insight from the best in economics, finance, investment, 437 00:25:07,720 --> 00:25:12,760 Speaker 1: and international relations. And subscribe to the Surveillance podcast on 438 00:25:12,840 --> 00:25:16,639 Speaker 1: Apple podcast, SoundCloud, Bloomberg dot com, and of course, on 439 00:25:16,760 --> 00:25:20,919 Speaker 1: the terminal, I'm Tom Keene and this is Bloomberg.