WEBVTT - Surveillance: U.S.-China Talks With Bremmer 0:00:05.120 --> 0:00:09.200 Welcome to the Bloomberg Surveillance Podcast. I'm Tom Keane along 0:00:09.240 --> 0:00:13.200 with Jonathan Ferrell and Lisa Brownwitz Jailey. We bring you 0:00:13.320 --> 0:00:18.600 insight from the best and economics, finance, investment, and international relations. 0:00:18.840 --> 0:00:23.840 To find Bloomberg Surveillance on Apple Podcast, Suncloud, Bloomberg dot Com, 0:00:23.920 --> 0:00:30.680 and of course on the Bloomberg terminal. We will rip 0:00:30.760 --> 0:00:32.400 up the script here. We are honored to bring you 0:00:32.440 --> 0:00:35.680 Ian Bremer today with Eurisia Group. His top ten wrists 0:00:35.680 --> 0:00:39.080 did not include rudeness in Alaska, but nevertheless that's what 0:00:39.159 --> 0:00:41.440 we need to focus on, and we're hugely advantaged that 0:00:41.560 --> 0:00:45.000 Dr Bremer could join us this morning, Ian Bremer. At 0:00:45.000 --> 0:00:48.400 the Geneva Conference of nineteen fifty four, the Secretary of 0:00:48.440 --> 0:00:51.920 State of the United States refused to shake hands with 0:00:52.000 --> 0:00:55.520 a gentleman from China. We then moved on and oscillated 0:00:55.560 --> 0:00:59.200 to the wonder man of Ping Pong diplomacy of nineteen 0:00:59.360 --> 0:01:03.680 seventy one. What was the Pingong diplomacy? Across those two 0:01:03.720 --> 0:01:10.039 tables that we witnessed yesterday, most important bilateral relationship in 0:01:10.080 --> 0:01:14.839 the world, also the most challenging for the Americans to manage, 0:01:15.280 --> 0:01:20.600 certainly one of the more dysfunctional. And it shows that 0:01:21.400 --> 0:01:24.919 Biden and the Biden administration have been talking about China 0:01:25.000 --> 0:01:30.479 and operating largely in a vacuum over the first fifty days. Uh. 0:01:30.520 --> 0:01:33.840 And that's, as a consequence, been very easy to talk 0:01:33.920 --> 0:01:36.640 up how tough they're gonna be on China, and now 0:01:36.680 --> 0:01:39.640 they're actually engaged with China, and the Chinese government is 0:01:39.680 --> 0:01:42.959 having none of it, right. I mean, their their belief 0:01:43.560 --> 0:01:47.000 that they don't need to be talked down to by 0:01:47.480 --> 0:01:50.760 a group of American Exceptional is the Chinese belief that 0:01:50.840 --> 0:01:54.720 their system is every bit as valid as legitimate, and 0:01:54.880 --> 0:01:58.680 the Americans don't believe that, right, So that that's that's 0:01:58.720 --> 0:02:02.840 pretty core, It's pretty fundamental. What is the debris here 0:02:03.080 --> 0:02:06.840 of Trump Pompeo? Do you link the two or is 0:02:06.880 --> 0:02:11.200 this separate? In discreet to maybe the transfer from Obama 0:02:11.280 --> 0:02:17.720 to Biden. They're very similar in terms of orientation of 0:02:17.880 --> 0:02:23.200 actual policy issues, whether you're talking about Taiwan or Hong 0:02:23.280 --> 0:02:26.880 Kong or the South China see or intellectual property theft 0:02:27.360 --> 0:02:32.160 or cyber um or or trade. Uh. There's not an 0:02:32.200 --> 0:02:35.840 awful lot of daylight between what the Biden administration is 0:02:35.919 --> 0:02:39.240 concerned about and what the Trump administration is concerned about 0:02:39.240 --> 0:02:41.600 when we can cherry pick a few issues where you 0:02:41.639 --> 0:02:44.680 see some differences, even the leaguers where Trump never talked 0:02:44.680 --> 0:02:47.480 about human rights, but the actual policy under Trump Biden 0:02:47.600 --> 0:02:52.600 very similar. Where you see an enormous difference is that 0:02:52.880 --> 0:02:58.519 Number one, the Biden administration is trying to work very 0:02:58.560 --> 0:03:04.720 deliberately with allies in advance, trying to coordinate US China 0:03:04.840 --> 0:03:09.040 policy with the Quad, and that means the core allies 0:03:09.200 --> 0:03:12.160 in Asia, not including South Korea because Japan has a 0:03:12.160 --> 0:03:16.359 problem with the South Koreans, but Australia, Japan, and India, 0:03:16.639 --> 0:03:19.600 and also core allies in Europe, the EU three less 0:03:19.639 --> 0:03:22.920 successfully because the Europeans do not view China the way 0:03:22.960 --> 0:03:26.600 the Americans do, and that of course is the UK, France, 0:03:26.639 --> 0:03:31.120 and Germany. None of that coordination was happening under Trump. 0:03:31.160 --> 0:03:34.760 The other big difference between Biden and Trump is that 0:03:34.880 --> 0:03:39.040 the Biden administration is actually having a policy review. What's 0:03:39.120 --> 0:03:43.960 that with principles across the cabinet that are actually trying 0:03:44.000 --> 0:03:48.160 to work out a strategic policy that then Biden will 0:03:48.240 --> 0:03:53.480 discuss with the principles and make a calculated, calibrated decision 0:03:53.800 --> 0:03:56.400 on how they're gonna roll that out. Uh, you know, 0:03:56.960 --> 0:04:00.080 this was a Trump was a game time quarterback. He 0:04:00.160 --> 0:04:03.320 sees an opportunity, he throws the ball. He's not waiting 0:04:03.360 --> 0:04:05.040 to see what kind of a review is going to 0:04:05.160 --> 0:04:08.400 happen from his you know, various members of cabinet who 0:04:08.480 --> 0:04:11.200 obviously aren't his right shouldn't be listened to the way 0:04:11.480 --> 0:04:15.440 his judgment carries. So it is quite different in terms 0:04:15.440 --> 0:04:20.680 of how you operationalize what those those relatively similar core policies. 0:04:20.960 --> 0:04:23.360 So an approach is going to be different, an emphasis 0:04:23.360 --> 0:04:25.640 will be different too. So let's talk about approach just briefly. 0:04:25.680 --> 0:04:27.360 And I think you mentioned the most important aspect of 0:04:27.400 --> 0:04:30.000 trying to get a multilateral approach together. That was just 0:04:30.080 --> 0:04:32.719 Europe West Germany on this. Where is Europe on this? 0:04:32.800 --> 0:04:34.920 And is there actually any space there to get Europe 0:04:34.920 --> 0:04:39.680 on board. The Europeans are of course more aligned with 0:04:39.720 --> 0:04:42.720 the United States than they are with China. But the 0:04:42.760 --> 0:04:46.880 Europeans are making very clear that if the United States 0:04:46.960 --> 0:04:50.840 is heading towards a policy of containment with China, they 0:04:50.920 --> 0:04:53.080 are not on for that. I want to be clear. 0:04:53.760 --> 0:04:58.600 In the United States, it is an absolute core national 0:04:58.680 --> 0:05:03.320 security agree men across the political spectrum that China is 0:05:03.680 --> 0:05:08.800 the most critical adversary of the United States. The Europeans 0:05:08.839 --> 0:05:12.440 don't buy that at all. China is not their core adversary. 0:05:12.720 --> 0:05:14.920 Uh And and that's our real problem, and that is 0:05:14.920 --> 0:05:19.440 going to get harder to bridge because of Brexit, because 0:05:19.640 --> 0:05:22.400 the United Kingdom is the European country that is most 0:05:22.440 --> 0:05:26.000 aligned with the United States and national security orientation. In 0:05:26.040 --> 0:05:29.120 diplomatic orientation, they are no longer, of course, a member 0:05:29.120 --> 0:05:31.680 of the European Union, and their relationship with the EU 0:05:31.800 --> 0:05:36.200 is increasingly fraught. And also Angela Merkel, who is sort 0:05:36.240 --> 0:05:40.039 of the voice of stability and reason and multilateralism in 0:05:40.120 --> 0:05:43.359 trying to keep the Americans and Europeans on side, is 0:05:43.480 --> 0:05:47.359 losing power, is leaving power, and the next coalition in 0:05:47.400 --> 0:05:50.720 Germany is likely to be a bit weaker mccrown. Emmanuel 0:05:50.800 --> 0:05:53.680 Macron is is going to be the most important strategic 0:05:53.760 --> 0:05:58.520 voice of foreign policy in the continent, and his orientation 0:05:58.760 --> 0:06:04.560 is all about strategic autonomy, European sovereignty, a third way. 0:06:04.760 --> 0:06:08.279 It is going to be very, very challenging, I'll tell you. Uh. 0:06:08.320 --> 0:06:10.640 You know, the markets have been talking about how there's 0:06:10.680 --> 0:06:14.160 a honeymoon between Biden and the Europeans and certainly, the 0:06:14.200 --> 0:06:18.680 Europeans are much happier to see Biden than Trump. But 0:06:18.920 --> 0:06:22.200 I would argue that even though the decoupling of the 0:06:22.320 --> 0:06:27.280 US and Europe has decelerated under Biden, it is continuing, 0:06:27.600 --> 0:06:32.200 and it's continuing for structural and strategic reasons, irrespective of 0:06:32.240 --> 0:06:35.840 the fact that Biden and his core team are fundamentally 0:06:35.920 --> 0:06:40.520 Transatlanticist at heart. Not just the issue of a China, 0:06:40.560 --> 0:06:42.800 also the issue of a Russia as well, with Germany 0:06:42.800 --> 0:06:44.920 looking lonely increasingly so over the last couple of days. 0:06:45.000 --> 0:06:46.920 And let's finish on this, why do you see a 0:06:47.040 --> 0:06:49.839 space for success? What can this administration achieve on the 0:06:49.839 --> 0:06:55.600 foreign policy upfront with regards specifically to China. Um, the 0:06:55.680 --> 0:07:02.039 United States and China are massively interdependent in terms of trade, 0:07:02.640 --> 0:07:05.480 in terms of their purchasing of our treasuries, in terms 0:07:05.520 --> 0:07:10.320 of the global economy, and responding to things like climate change, 0:07:10.760 --> 0:07:14.720 and and so the simple fact that that relationship persists 0:07:14.800 --> 0:07:17.760 in a relatively stable way. I mean, you might not 0:07:17.960 --> 0:07:22.000 consider that points on the board, but frankly it's important 0:07:22.320 --> 0:07:26.160 in terms of progress or very far from progress. But 0:07:26.320 --> 0:07:28.640 what you want to watch for, and you anticipated this 0:07:28.720 --> 0:07:32.440 in your last segment what's gonna happen around Earth Day? Um, 0:07:32.520 --> 0:07:36.560 what's gonna happen around John Kerry, who's in many ways 0:07:36.600 --> 0:07:41.000 the most important new appointment of the entire Biden cabinet 0:07:41.040 --> 0:07:45.160 Former Secretary of State John Kerry. Uh, you know, there 0:07:45.480 --> 0:07:47.760 there is no question that if you are going to 0:07:47.920 --> 0:07:52.320 resolve or even make significant progress in global climate, the 0:07:52.400 --> 0:07:56.280 two largest carbon emitters in the world need to have 0:07:56.400 --> 0:08:00.200 some willingness to work together. That is going to its taller, 0:08:00.560 --> 0:08:04.680 but it's also a critical concern of both countries. We 0:08:04.720 --> 0:08:06.920 will see where it goes and always great to catch 0:08:07.040 --> 0:08:09.320 up right to see it in Bremen that he writes 0:08:09.320 --> 0:08:18.320 a Greazra media president. Someone who has been very visible 0:08:18.360 --> 0:08:22.440 from the beginning of this terrible natural disaster, Peter Hotez, 0:08:22.720 --> 0:08:25.200 Baylor College of Medicine, joins us right now in Dan 0:08:25.240 --> 0:08:29.120 of the National School of Tropical Medicine. Dr Hotez, would 0:08:29.120 --> 0:08:32.960 you take the astro zenica vaccine right now? Yes? I would. 0:08:33.000 --> 0:08:36.240 In fact, I've offered to do that. And the reason 0:08:36.360 --> 0:08:39.000 is this, Uh, you know, the Europeans have been quite 0:08:39.040 --> 0:08:42.400 tone deaf to how sensitive vaccines are at the public 0:08:42.440 --> 0:08:45.360 perception is or is I often like to say it 0:08:45.440 --> 0:08:48.600 doesn't take much to vote even a good vaccine off 0:08:48.640 --> 0:08:51.240 the island if the public doesn't feel confident. And the 0:08:51.280 --> 0:08:54.640 way the individual European countries have handled this has has 0:08:54.640 --> 0:08:57.840 been abysmal. So the e M A statement of the 0:08:57.880 --> 0:09:00.599 European Medicine Agencies, which is the regular very body in 0:09:00.679 --> 0:09:04.200 Europe statement yesterday is important, but that's not going to 0:09:04.240 --> 0:09:06.920 be enough for all the for all the damage control 0:09:06.960 --> 0:09:10.160 that's going to be needed. That statement that the German 0:09:10.280 --> 0:09:13.800 Institute made the Paul Earlik Institute, which is their regulatory body, 0:09:13.880 --> 0:09:17.080 was just so damning. And and the fact that the 0:09:17.160 --> 0:09:20.599 French suspended its use with oblivious to the impact that 0:09:20.600 --> 0:09:24.800 would have on Francophone Africa, because the Francophone Africa very 0:09:24.840 --> 0:09:28.600 much gets its guidance from from France. Um, this is 0:09:28.760 --> 0:09:31.600 I'm really worried. I'm really worried about what's going to 0:09:31.640 --> 0:09:33.599 happen in the coming weeks. I have noticed in a 0:09:33.760 --> 0:09:36.920 James Moore Burns Murdock at the f to a major 0:09:37.040 --> 0:09:40.400 shout out Brazil and Latin America seems to be unraveling. 0:09:40.760 --> 0:09:44.440 To me, India's a statistical mystery as well. Are we 0:09:44.480 --> 0:09:46.760 winning in this battle with a pandemic or are we 0:09:46.840 --> 0:09:50.120 deluding ourselves. Well, what you really have to do is 0:09:50.160 --> 0:09:52.000 go a country to country. I think you know in 0:09:52.040 --> 0:09:55.160 the US we're slowly getting our arms around this. We're 0:09:55.160 --> 0:09:57.959 in a race with the B one one seven variant 0:09:58.000 --> 0:10:01.920 from the UK with faccine. The American people, UM, the 0:10:01.960 --> 0:10:04.920 next few weeks are absolutely going to be critical. UM. 0:10:04.960 --> 0:10:09.480 Africa is UH doesn't have vaccine. That's that's going to 0:10:09.520 --> 0:10:12.200 be That's a that's a disaster in the making. Latin 0:10:12.240 --> 0:10:16.319 America doesn't have vaccine. That's a disaster in the making. UH. 0:10:16.360 --> 0:10:19.360 Indias is doing what it can to step up to 0:10:19.520 --> 0:10:22.319 prepe to be the vaccine supplier for the world's low 0:10:22.360 --> 0:10:26.240 and middle income countries. UH that that's a positive. Russia 0:10:26.240 --> 0:10:31.280 and China have largely bypassed international regulatory authorities like WHR 0:10:31.320 --> 0:10:34.880 prequalification and making these one off deals with countries. That's 0:10:34.880 --> 0:10:38.520 a disaster. So it's a very very complicated and mixed 0:10:38.520 --> 0:10:40.920 picture right now. So I have to follow up on 0:10:40.960 --> 0:10:42.679 something you've brought up, and I'm embarrassed to say I 0:10:42.720 --> 0:10:45.839 haven't even thought about it. How the issues in France 0:10:46.120 --> 0:10:49.280 around this vaccine would spill over culturally to the issues 0:10:49.600 --> 0:10:51.600 in Africa as well. When you say we could see 0:10:51.600 --> 0:10:56.120 a disaster, can you describe what that disaster would look like? Well, 0:10:56.160 --> 0:10:59.600 the disaster is it looks like the South African variant 0:10:59.679 --> 0:11:04.280 to be one three one is accelerating now up into Malawi, Mozambique, 0:11:04.280 --> 0:11:07.800 and even though Africa overall has done better than many 0:11:07.880 --> 0:11:12.720 expected during that grace period, could end as this virus 0:11:12.720 --> 0:11:15.960 starts to accelerate and they're not. And the world has 0:11:15.960 --> 0:11:20.839 been very focused on very high tech innovations uh m 0:11:20.960 --> 0:11:23.679 RNA vaccines that will never filter or I don't think 0:11:23.679 --> 0:11:26.520 we'll filter to the low and middle income countries. Yes, 0:11:26.559 --> 0:11:28.960 fiser By in Tech sent sent two hundred and thirty 0:11:28.960 --> 0:11:33.040 five thousand doses to Rwanda. That was great, but look 0:11:33.040 --> 0:11:35.360 at the need. There are one point one billion people 0:11:35.400 --> 0:11:38.800 living in Sub Saharan Africa. If we need two doses 0:11:38.840 --> 0:11:41.960 of most of those vaccines has two billion doses. So 0:11:41.960 --> 0:11:43.720 so far it's a drop in the bucket and there's 0:11:43.760 --> 0:11:45.920 no real plan for what we do. We're trying to 0:11:45.960 --> 0:11:49.600 accelerate a low cost recommin and protein vaccine with another 0:11:49.960 --> 0:11:53.480 Indian producer biologically and that's going really well, so hopefully 0:11:53.559 --> 0:11:56.920 we can fill that gap, but that that's a potentially 0:11:57.000 --> 0:12:00.840 humanitarian crisis right there. For receiving sufficient funding to do 0:12:00.920 --> 0:12:04.320 that delta, uh no, I mean we had to raise 0:12:04.360 --> 0:12:08.040 a lot of that money privately from from various sources 0:12:08.040 --> 0:12:10.760 and here in Texas enough to do the technology transfer 0:12:10.880 --> 0:12:15.280 to uh India. And now we're in discussions with South 0:12:15.320 --> 0:12:19.200 Africa and Indonesia, so hopefully that will come through. But 0:12:19.640 --> 0:12:23.119 you know, everybody was went very heavy on the innovation 0:12:23.440 --> 0:12:26.480 um and and and innovation is important. We need to 0:12:26.520 --> 0:12:30.040 innovate in vaccines, but you know, at a certain stage 0:12:30.080 --> 0:12:34.959 you need some traditional, low caust durable vaccines for low 0:12:35.000 --> 0:12:37.439 and middle income countries. And and there was not enough 0:12:37.480 --> 0:12:40.280 attention paid to that. Peter Hotels, thank you so much. 0:12:40.320 --> 0:12:43.240 I noticed your bookshelf behind you. No doubt Walter Isaacson's 0:12:43.280 --> 0:12:46.920 new book on genetics will take a place there as well. 0:12:53.040 --> 0:12:54.760 The heritage that John and I have is to talk 0:12:54.760 --> 0:12:56.760 to experts. And if you know the name cow and 0:12:56.840 --> 0:13:00.640 you know they own aviation with a legendary Von Rumor 0:13:00.720 --> 0:13:03.760 and the ever so younger Lane Becker, they have been 0:13:03.800 --> 0:13:06.760 at the top of the heap on airline analysis. And 0:13:06.800 --> 0:13:10.720 we're thrilled on Lane Becker could join us this morning. Helene. 0:13:10.800 --> 0:13:13.719 Within your note is the rollout you are guessing at, 0:13:13.800 --> 0:13:16.280 which is can Koon at some point, and then we're 0:13:16.280 --> 0:13:18.800 gonna John off to Paris as they go into lockdown 0:13:18.840 --> 0:13:23.240 this weekend, and somewhere way out in two thousand twenty two, 0:13:23.800 --> 0:13:26.120 we're gonna be able to go to Asia. Can the 0:13:26.200 --> 0:13:29.960 airlines wait that long? Are the airlines in control of 0:13:30.000 --> 0:13:33.040 their destiny? I think they are and and and it's 0:13:33.040 --> 0:13:35.280 good to see you again, Tom and John iced to 0:13:35.320 --> 0:13:37.920 talk to you guys. Um. I think they are in 0:13:38.000 --> 0:13:40.480 control of their own destiny at this point. Over the 0:13:40.520 --> 0:13:44.199 past week, we've regularly seen more than a million people 0:13:44.240 --> 0:13:46.520 a day passed through t s A, and we thought 0:13:47.320 --> 0:13:50.200 that that would be the case till about mid May, 0:13:50.520 --> 0:13:53.400 and then around Memorial Day weekend, we we think there 0:13:53.400 --> 0:13:56.320 will be a jail break and we'll see regularly between 0:13:56.360 --> 0:13:59.199 one point one and one point five million people a day, 0:13:59.559 --> 0:14:03.559 And frankly, we think that's pretty close to pre pandemic 0:14:03.679 --> 0:14:08.839 levels in domestic traffic. People don't want to go, people 0:14:08.840 --> 0:14:11.720 don't want to quarantine, especially, you know, if you only 0:14:11.760 --> 0:14:15.440 have a week or two a vacation, you really don't 0:14:15.440 --> 0:14:19.080 want to stay in a hotel room somewhere or come back. 0:14:19.080 --> 0:14:21.760 And so we need to see those quarantines lifted. And 0:14:22.200 --> 0:14:25.440 our view has been as more vaccine gets into people's arms, 0:14:25.440 --> 0:14:28.320 we think that will happen. I think New York is 0:14:28.480 --> 0:14:32.360 lift in quarantine rules this weekend, and I think I 0:14:32.400 --> 0:14:34.680 think things will start to get better. And I do 0:14:34.760 --> 0:14:38.160 think the airlines will benefit from domestic traffic. Do they 0:14:38.200 --> 0:14:40.800 have the empty planes to bring on capacity? Is it 0:14:40.880 --> 0:14:44.400 an easy exercise for sake Delta to bring on new 0:14:44.440 --> 0:14:46.600 planes or do they just packed the planes as they 0:14:46.600 --> 0:14:52.240 did pre pandemic. Yes, yes to both. So in Delta's 0:14:52.280 --> 0:14:56.000 case specifically because you asked about them, they are not 0:14:56.040 --> 0:14:59.560 selling middle seats until after April. So when you think 0:14:59.560 --> 0:15:04.360 about at as demand improves, they'll bring back those middle 0:15:04.400 --> 0:15:08.080 seats and that's about at increase in capacity without adding 0:15:08.440 --> 0:15:11.920 a single aircraft. And then for the other airlines that 0:15:11.960 --> 0:15:15.840 we're seeing, um that that that parked aircraft in the 0:15:15.920 --> 0:15:19.960 desert last year, those aircraft will start to come back 0:15:20.040 --> 0:15:23.240 as demand warrants. I think the airlines are trying not 0:15:23.320 --> 0:15:26.600 to get too far over their skis. I don't see 0:15:26.640 --> 0:15:30.280 them bringing back wide body aircraft this summer in in 0:15:30.680 --> 0:15:35.880 huge measure because Europe is still for most most of 0:15:35.880 --> 0:15:39.960 Europe is still closed. Um. But we when when Boris 0:15:40.040 --> 0:15:44.880 Johnson announced his plan for reopening the UK and mid May, 0:15:44.920 --> 0:15:50.240 easy Jet saw three and thirty seven percent three percent 0:15:50.320 --> 0:15:54.520 increase in bookings that night. I know, and because people 0:15:54.560 --> 0:15:56.960 are sick of being home and cooped up and they 0:15:56.960 --> 0:16:00.440 want to get out and about, and we're we're worried 0:16:00.440 --> 0:16:04.640 about Europe. Um, then we are about US air alliance 0:16:04.680 --> 0:16:07.720 because of that, because Europe has been so locked down. 0:16:08.560 --> 0:16:11.960 And I think also people people don't want to wear 0:16:12.000 --> 0:16:15.840 a mask for eight or ten hour flights. As you know, 0:16:15.880 --> 0:16:18.120 that's totally done with this. So what's amazing. Before we 0:16:18.160 --> 0:16:20.120 move on and just speed onto the boom in the 0:16:20.160 --> 0:16:22.120 United States, we've got to look back on where we were. 0:16:22.440 --> 0:16:24.720 I remember talking to them in the depths of this crisis. 0:16:24.720 --> 0:16:28.320 It felt depressing. It was depressing the likes of Warren Buffett, 0:16:28.440 --> 0:16:31.600 a legendary investor, dumped his airline stocks in April last year, 0:16:31.840 --> 0:16:35.080 and Berkshire Hathaway said the world has changed, and Helene, 0:16:35.120 --> 0:16:37.240 so many people got this wrong because so much is 0:16:37.240 --> 0:16:40.040 coming back so quickly. Why is it so difficult to 0:16:40.040 --> 0:16:44.240 get a read on this industry. It always has been 0:16:44.680 --> 0:16:48.000 for for the whatever. For almost four decades that I've 0:16:48.040 --> 0:16:51.400 covered this industry, it's been very up and down, two 0:16:51.480 --> 0:16:54.880 or three good years, maybe one great year and then 0:16:55.160 --> 0:16:58.280 four or five so so or bad years. It's so 0:16:58.400 --> 0:17:04.320 cyclical and so dependent on consumer discretionary spending. And then 0:17:04.359 --> 0:17:08.520 of course business traffic, which you're kind of alluding to here. Um, 0:17:08.560 --> 0:17:11.600 in the million people a day we're seeing, we're really 0:17:11.640 --> 0:17:14.520 not seeing much business traffic. Maybe small and medium sized 0:17:14.560 --> 0:17:17.159 companies who need to get out on the road to 0:17:17.240 --> 0:17:21.240 generate revenue, but we're really not seeing corporate business traffic 0:17:21.280 --> 0:17:23.680 come back yet. They're still worried about getting their people 0:17:23.720 --> 0:17:26.240 back to work. But we think that's a fourth quarter 0:17:26.280 --> 0:17:28.480 of twenty one event where people will start to get 0:17:28.480 --> 0:17:31.800 back on the road. Um, we think maybe of the 0:17:31.840 --> 0:17:35.600 way back by your end twenty two, and then maybe 0:17:35.640 --> 0:17:39.280 the other comes back over three to twenty six or seven. 0:17:39.359 --> 0:17:42.000 So let's talk about opportunities then, because right now everyone's 0:17:42.000 --> 0:17:44.560 on board with the domestic story here in America. Everyone's 0:17:44.600 --> 0:17:47.080 on board with return of travel, everyone's on board with 0:17:47.119 --> 0:17:49.760 the likes of Alaska nicely leverage to that story. Hellong, 0:17:49.840 --> 0:17:51.800 when we start to talk about the New York London 0:17:51.800 --> 0:17:55.840 corridor reopening, the European story reopening, is there an opportunity 0:17:55.880 --> 0:17:59.120 there now or have we already missed that too? Oh No, 0:17:59.200 --> 0:18:01.760 I don't think we've staid at all. I think UM 0:18:02.040 --> 0:18:06.320 United is the most leverage to international traffic of their 0:18:06.359 --> 0:18:11.320 capacity as an international bigger than both American and Delta. 0:18:11.760 --> 0:18:15.640 So I think that that international corridor starts to come back, 0:18:15.960 --> 0:18:20.480 probably September October. I'm kind of hoping the summer because 0:18:20.640 --> 0:18:23.960 all of US canceled many trips to Europe last year, 0:18:24.560 --> 0:18:26.879 and I think we want to go back. And I 0:18:26.920 --> 0:18:29.720 think that by the end of the summer enough vaccine 0:18:29.720 --> 0:18:33.040 will be in people's arms worldwide that we'll be able 0:18:33.119 --> 0:18:36.400 to see that start to reopen. But just start, hell 0:18:36.440 --> 0:18:37.719 And you know, I love catching up with you. It's 0:18:37.720 --> 0:18:41.320 great to get you on the program. The City Research Analyst, 0:18:41.320 --> 0:18:49.840 thank you for being with us. Brian Leavitt ordered by 0:18:49.920 --> 0:18:52.520 his general counsel not to talk about bitcoin and joins 0:18:52.600 --> 0:18:58.920 US market strategist as well well. Avoid it. Brian, there 0:18:59.040 --> 0:19:03.160 was a theory two or three levels ago about international 0:19:03.200 --> 0:19:08.199 investment and a recovering Pacific RIM, dove chilling e m. 0:19:08.320 --> 0:19:11.560 Disappointments of the last couple of days and weeks with 0:19:11.680 --> 0:19:15.560 what we observe the tension and anchorage yesterday. How is 0:19:15.600 --> 0:19:19.440 the Pacific RIM doing? Yes, so I child actually has 0:19:19.480 --> 0:19:22.320 emerged from this, as most people know, in quite good shape. 0:19:22.520 --> 0:19:26.080 You're right, the economy is is quite stable, their valuations 0:19:26.080 --> 0:19:29.399 look attractive, and that place is still a hotbed of innovation, 0:19:29.520 --> 0:19:32.720 although you know some concerns about the regulatory environment. I 0:19:32.760 --> 0:19:35.480 think the the story right now has just all been 0:19:35.640 --> 0:19:38.199 has been all about the United States, the rates market, 0:19:38.560 --> 0:19:41.400 expectations of whether the Fed's going to have to raise 0:19:41.520 --> 0:19:43.760 rates sooner rather than later. So it put a floora 0:19:43.800 --> 0:19:47.600 in the dollar. Color moves a bit. You get some 0:19:47.640 --> 0:19:50.320 capital flight out of the emerging markets, concerned that this 0:19:50.359 --> 0:19:52.960 is all over again and we have the tantrum. I 0:19:52.960 --> 0:19:55.920 think those concerns are are overstated. This is a this 0:19:55.960 --> 0:19:58.000 is a reversion to the mean in the United States. 0:19:58.160 --> 0:20:01.320 We want to connect the dots cross the He's Alaska Aerolines, 0:20:01.400 --> 0:20:04.159 John and NonStop. This is some anchors to Minneapolis and 0:20:04.240 --> 0:20:06.880 John Again, it's just that feeling of the opening up 0:20:06.880 --> 0:20:08.600 of the economy. One of the top picks over a 0:20:08.640 --> 0:20:11.040 Goldman because it's so leverage to the domestic play, to 0:20:11.560 --> 0:20:14.000 the leisure story as well. Brian, I think you've picked 0:20:14.080 --> 0:20:16.560 up on the irony at the moment perfectly. In year one, 0:20:16.600 --> 0:20:19.080 investors question how markets can go up with the economy 0:20:19.160 --> 0:20:21.960 is so challenged, your line, your words. In year two, 0:20:22.280 --> 0:20:24.399 the question if the market can go up if the 0:20:24.440 --> 0:20:27.399 economy is so good, And Brian, I've heard people ask it. 0:20:27.680 --> 0:20:30.440 I've asked it, boom year it's coming. Can we really 0:20:30.440 --> 0:20:32.400 have a boom year in the market that doesn't perform well? 0:20:34.640 --> 0:20:36.560 I think the markets will perform well. I mean it's 0:20:36.560 --> 0:20:38.800 gonna be a more volatile year. You find year two 0:20:38.800 --> 0:20:41.119 of a market cycle tends to be more challenging. We 0:20:41.160 --> 0:20:44.880 saw that in three, We saw that in it's those 0:20:44.880 --> 0:20:47.440 second years to to what you know you have just said, 0:20:47.480 --> 0:20:50.159 we questioned whether it's too good. The reality is, we 0:20:50.200 --> 0:20:51.720 know there's a lot of pent up to man, we 0:20:51.800 --> 0:20:54.159 know there's a lot of fiscal support, and we know 0:20:54.200 --> 0:20:56.439 we're going to have a good economic backdrop. The problem 0:20:56.480 --> 0:20:59.200 isn't raises concerns about policy. And when you have concerns 0:20:59.240 --> 0:21:02.680 about policy, that's when you get volatility in the markets. 0:21:02.720 --> 0:21:05.679 But let's remember this is what we all hoped for 0:21:05.760 --> 0:21:09.800 a year ago, and we're seeing earnings improved, the economy improved. 0:21:09.840 --> 0:21:13.119 I think inflation pressures will will rear their head, but 0:21:13.160 --> 0:21:17.040 I think they ultimately fade as we move out beyond Well, 0:21:17.119 --> 0:21:19.920 let's move out beyond twenty one. This cycle moves quickly, Brian. 0:21:20.040 --> 0:21:22.960 We've been pricing in all of twenty one throughout the 0:21:23.040 --> 0:21:25.400 last couple of months. In fact, since the beginning of November, 0:21:25.560 --> 0:21:27.720 we've been pricing the boom that is twenty one. When 0:21:27.760 --> 0:21:31.080 you start thinking about deceleration in twenty two, well, I 0:21:31.080 --> 0:21:34.080 think that investors need to keep their mind on deceleration 0:21:34.119 --> 0:21:37.040 in in twenty two. Now. I think this recovery reflation 0:21:37.080 --> 0:21:39.560 trade plays out for a bit. You know, your your 0:21:39.640 --> 0:21:42.000 value oriented parts of the market get their day in 0:21:42.040 --> 0:21:45.320 the sun. But ultimately, you know this idea that we 0:21:45.359 --> 0:21:48.600 can't own anything long duration, that interest rates are going 0:21:48.640 --> 0:21:51.919 to keep going up forever. I caution against that. What 0:21:52.080 --> 0:21:55.000 you see as you move out into two is, look, 0:21:55.040 --> 0:21:57.800 we all have pent up demand. How long does that persist? 0:21:57.920 --> 0:22:00.359 We know that this income replacement that you getting a 0:22:00.359 --> 0:22:03.920 fiscal deal starts to fade as you move out into two, 0:22:03.960 --> 0:22:07.520 and let's not forget the long term structural forces against inflation, 0:22:07.600 --> 0:22:11.960 like an aging population globally, automation of the workforce, new technology. 0:22:12.080 --> 0:22:14.639 So I'm not ready to sell anything long duration. I 0:22:14.640 --> 0:22:16.800 think growth stocks will be back in vogue as we 0:22:16.840 --> 0:22:19.680 move out into two. Brian, I'd really underline, you know, 0:22:19.760 --> 0:22:22.159 the new technology, which is of course a great mystery. 0:22:22.200 --> 0:22:25.920 Paul Romer with Bloomberg earlier this week, the laureate Brian Lovett, 0:22:25.920 --> 0:22:28.080 how much cash is really out there? I get all 0:22:28.080 --> 0:22:32.080 these trillion numbers, but when Investo sits down and calculates 0:22:32.160 --> 0:22:35.520 out the investable cash that's out there waiting to find 0:22:35.520 --> 0:22:38.399 a warm spot, how much is it a lot? And 0:22:38.480 --> 0:22:40.600 I'm not only looking for a number answer, I'm looking 0:22:40.640 --> 0:22:44.480 for something Friday scientific. Is it ginormous or is it 0:22:44.520 --> 0:22:47.959 a lot? A lot? I mean it's it's ginormous. I mean, 0:22:47.960 --> 0:22:50.280 you have a trillion dollars go into money market strategies 0:22:50.359 --> 0:22:52.959 last year. You've got you know, I mean, even if 0:22:52.960 --> 0:22:55.159 you think about the amount of money that's just sitting 0:22:55.240 --> 0:22:58.320 in government related bonds, you're looking at a few trillion, 0:22:58.400 --> 0:22:59.920 and you know, you add it all up, there's a 0:23:00.000 --> 0:23:02.479 substantial amount of money sitting on the sidelines. Even if 0:23:02.520 --> 0:23:05.080 you think since oh wait, you've had far more money, 0:23:05.280 --> 0:23:08.680 a ginormous amount of money go into fixed income strategies 0:23:09.040 --> 0:23:12.240 versus equity strategies, and yields have come up a bit, 0:23:12.280 --> 0:23:14.600 but nonetheless, the Feds still telling you they want to 0:23:14.600 --> 0:23:17.800 inflate away a good percentage of it. You're getting zero 0:23:17.880 --> 0:23:20.919 in money markets. The FED wants greater than two percent inflation. 0:23:21.240 --> 0:23:24.080