WEBVTT - Bloomberg Surveillance TV: October 16th, 2025 0:00:02.400 --> 0:00:06.760 Bloomberg Audio Studios, Podcasts, radio News. 0:00:11.680 --> 0:00:15.480 This is the Bloomberg Surveillance Podcast. I'm Jonathan Ferrow, along 0:00:15.520 --> 0:00:18.720 with Lisa Bromwitz and Amrie Hordern. Join us each day 0:00:18.760 --> 0:00:22.280 for insight from the best in markets, economics, and geopolitics 0:00:22.440 --> 0:00:24.880 from our global headquarters in New York City. We are 0:00:24.960 --> 0:00:27.680 live on Bloomberg Television weekday mornings from six to nine 0:00:27.720 --> 0:00:31.319 am Eastern. Subscribe to the podcast on Apple, Spotify, or 0:00:31.320 --> 0:00:33.960 anywhere else you listen, and as always on the Bloomberg 0:00:34.040 --> 0:00:37.440 Terminal and the Bloomberg Business app. Turn into the Federal Reserve, 0:00:37.720 --> 0:00:40.760 the list of candidates to replace Chairman j Powell reportedly 0:00:40.800 --> 0:00:43.639 down to the final five, the list emerging following extensive 0:00:43.680 --> 0:00:46.680 interviews with the Treasury Secretary Scott Besson on that list, 0:00:46.800 --> 0:00:49.360 Fed Governor Chris Waller, who joins us now Governor Wanta. 0:00:49.400 --> 0:00:51.920 Good morning, Well, Goodmorian, Joan and goom Morrian, Henry. 0:00:51.800 --> 0:00:53.720 Welcome back, Sarah. It's good to see you. How's the 0:00:53.720 --> 0:00:55.360 process going. Let's start down and then we can get 0:00:55.360 --> 0:00:57.800 into all the other good stuff. How's the intertry process going. 0:00:58.440 --> 0:01:01.160 It's going well, that's fary psych tell that secretary has 0:01:01.200 --> 0:01:03.760 a very systematic way of going down on the list 0:01:03.800 --> 0:01:06.960 and doing the interviews. As I said the other week, 0:01:07.080 --> 0:01:10.800 I had a great interview with Secretary Vest. Talked a 0:01:10.840 --> 0:01:14.600 lot about economics, said policy, the FED balance sheet, just 0:01:14.800 --> 0:01:18.000 general stuff in the economy and financial markets. It went 0:01:18.120 --> 0:01:19.520 very quick. It was about an hour and forty five 0:01:19.520 --> 0:01:21.280 minutes and next I knew it was over. So it 0:01:21.440 --> 0:01:23.720 was a great conversation. Course. 0:01:23.720 --> 0:01:25.600 I loved those kind of conversations. I can do that 0:01:25.640 --> 0:01:26.240 all day long. 0:01:26.360 --> 0:01:28.360 The Church secretor I've spoken about in the past, he 0:01:28.440 --> 0:01:31.520 wants almost a visionary, someone who looks forward, like an 0:01:31.520 --> 0:01:34.839 Alan Greenspan type, open minded. Do you get a sense 0:01:34.840 --> 0:01:36.000 of what he means by that. 0:01:37.120 --> 0:01:39.399 I think it's the idea of if you're looking at 0:01:39.400 --> 0:01:41.839 the data and it's always looking back at the data, 0:01:41.880 --> 0:01:43.520 you're kind of the data is always kind of old, 0:01:43.600 --> 0:01:45.240 and you have to think forward, like where are you 0:01:45.400 --> 0:01:48.680 going with this stuff. I've managed to do that a 0:01:48.680 --> 0:01:51.720 couple of times with thinking about this beverage curve. Arge 0:01:51.960 --> 0:01:53.800 argument back in May of twenty two that we could 0:01:53.840 --> 0:01:56.800 have the soft landing earlier this summer with the weakness 0:01:56.800 --> 0:01:59.840 in the labor market, which turned out to be true. 0:02:00.160 --> 0:02:02.360 People doubted it at the time I set up. So 0:02:02.440 --> 0:02:05.240 I think it's I don't want to, you know, brag, 0:02:05.320 --> 0:02:07.400 but you know it's that kind of being able to 0:02:07.400 --> 0:02:09.600 look at the data and see forward where things are going, 0:02:09.639 --> 0:02:11.680 and I think that's a critical thing he's looking for. 0:02:11.800 --> 0:02:13.040 You were certainly vindicated. 0:02:13.200 --> 0:02:15.400 The President was obviously excited about the fact that the 0:02:15.440 --> 0:02:16.320 FED finally. 0:02:16.040 --> 0:02:17.040 Was cutting interest rates. 0:02:17.600 --> 0:02:19.079 Have you spoken to him at all? 0:02:19.280 --> 0:02:21.000 No, I have not. I have not. Is that on 0:02:21.040 --> 0:02:24.000 the schedule? I don't know. That's up the secretary vessent. 0:02:24.120 --> 0:02:26.280 We can find that saying highfully, what's to the moment 0:02:26.360 --> 0:02:29.280 of saff the Treasury Secretary hopefully lights on in a month. 0:02:29.360 --> 0:02:30.679 I want to talk about the bit to the tice 0:02:30.720 --> 0:02:32.280 place at the end of this month as well. You 0:02:32.320 --> 0:02:34.040 had a pretty clear governments to the loss. May tink 0:02:34.120 --> 0:02:35.960 you delivered a speech and not believe the title was 0:02:36.200 --> 0:02:38.359 let's get on with it. You amphacacy for the same 0:02:38.360 --> 0:02:39.200 thing of this may tink. 0:02:39.480 --> 0:02:42.120 Yeah, I think it's it's the right thing to do. 0:02:42.960 --> 0:02:45.680 Back then, there was a issue whether you go fifty 0:02:45.760 --> 0:02:47.720 or twenty five, and I thought, I argued, we could 0:02:47.760 --> 0:02:50.240 do twenty five and see how the data comes in. 0:02:50.600 --> 0:02:53.160 Of course, we're not getting much data, and then we 0:02:53.200 --> 0:02:55.080 can think about the next twenty five So in the 0:02:55.120 --> 0:02:57.200 last six weeks, I don't think a lot has changed. 0:02:57.200 --> 0:03:00.440 We're not getting the public data, but all the private 0:03:00.440 --> 0:03:03.200 sector data that we're getting Beige Book yesterday, everything we're 0:03:03.200 --> 0:03:05.040 getting is telling roughly the same story. 0:03:05.160 --> 0:03:06.600 The labor market's weak. 0:03:07.880 --> 0:03:10.200 Growth seems to be on the stronger side, which is 0:03:10.200 --> 0:03:13.120 a bit of a puzzle right now, because you can't 0:03:13.160 --> 0:03:15.480 have a really strong growing economy and. 0:03:15.480 --> 0:03:16.359 Negative job growth. 0:03:16.400 --> 0:03:19.519 There's zero job growth, and you know, people talk about productivity, 0:03:19.560 --> 0:03:22.440 but AI hasn't had that effect yet on the labor 0:03:22.440 --> 0:03:24.920 market or productivity. It will down the road, I think, 0:03:25.000 --> 0:03:27.160 but not right away. So I don't think that's the 0:03:27.160 --> 0:03:29.800 story that's driving it. So in that case, one of 0:03:29.840 --> 0:03:30.520 these things has. 0:03:30.480 --> 0:03:31.359 To move right. 0:03:31.440 --> 0:03:34.640 Either GDP numbers start coming back down or the labor 0:03:34.680 --> 0:03:39.240 market rebounds. You just can't have growing economy and you know, 0:03:39.640 --> 0:03:40.640 very weak labor market. 0:03:40.960 --> 0:03:41.960 They just don't go together. 0:03:42.120 --> 0:03:44.640 In the meantime, do you just continue to reduce interest 0:03:44.680 --> 0:03:47.000 rights in meeting by meeting as you wait to see 0:03:47.000 --> 0:03:47.680 what's going on? 0:03:47.720 --> 0:03:48.880 What's your old approach? 0:03:49.360 --> 0:03:50.119 You think about. 0:03:49.920 --> 0:03:52.400 That, that's exactly what I've been arguing is since we 0:03:52.400 --> 0:03:54.440 don't know which way this is going to break, If 0:03:54.440 --> 0:03:56.040 the labor market rebounds, there's. 0:03:55.960 --> 0:03:58.080 Less of pressure for kind of rates. 0:03:58.120 --> 0:04:00.280 If the growth comes back down, there's more pressure for 0:04:00.320 --> 0:04:01.000 cutting rates. 0:04:01.440 --> 0:04:02.240 You don't want to make a. 0:04:02.200 --> 0:04:04.240 Mistake, So the way to avoid that is to go, 0:04:04.800 --> 0:04:08.839 you know, cautiously or carefully and do twenty five wait, 0:04:08.920 --> 0:04:11.640 see what happens, and then you can get a better 0:04:11.680 --> 0:04:13.600 idea of what to do. But if you've already started 0:04:13.600 --> 0:04:17.040 the process, you're providing whatever's initial support for the labor 0:04:17.080 --> 0:04:19.040 market that you feel is necessary. 0:04:19.080 --> 0:04:21.119 So we've had this helviie step down in payrolls growth, 0:04:21.160 --> 0:04:24.200 it's pretty clear it feels like that alone, though, might 0:04:24.240 --> 0:04:26.280 be an outline compared to everything else that's going on 0:04:26.520 --> 0:04:29.240 in the economy. You yourself just acknowledge that, what do 0:04:29.240 --> 0:04:31.960 you think is behind that? And can that persist? 0:04:33.080 --> 0:04:33.279 You know? 0:04:33.320 --> 0:04:33.760 That's the thing. 0:04:33.800 --> 0:04:36.480 When I've talked to private sector CEOs about hiring, I mean, 0:04:36.480 --> 0:04:39.560 we typically get a couple of things. Maybe early part 0:04:39.560 --> 0:04:42.279 of the summer, there was a lot of uncertaint about tariffs. 0:04:42.320 --> 0:04:44.760 We're just holding off on doing anything. One of the 0:04:44.800 --> 0:04:46.240 things I heard is firms we're going to have to 0:04:46.240 --> 0:04:48.640 pay the tariffs. One easy way to do that is 0:04:48.680 --> 0:04:51.360 just not higher take all the labor savings to pay 0:04:51.360 --> 0:04:54.080 off whatever the tariffs were. So that was one thing. 0:04:55.720 --> 0:04:58.520 Then you had this AI story, which was people like, 0:04:58.600 --> 0:05:00.640 we don't know if we're going to need to hire, 0:05:00.760 --> 0:05:02.279 but we're going to wait and find out we're going 0:05:02.320 --> 0:05:03.440 to We're not going to go out and hire a 0:05:03.480 --> 0:05:04.560 lot of people right away. 0:05:05.160 --> 0:05:05.720 So I think the. 0:05:05.640 --> 0:05:08.839 Tariff uncertainty, paying for tariffs, trying to sort out what 0:05:08.880 --> 0:05:11.880 AI really is going to do kind of put firms 0:05:11.920 --> 0:05:15.080 on their back foot. Now that's what I mean. Either 0:05:15.080 --> 0:05:17.400 they decide the AI is not going to be in 0:05:17.440 --> 0:05:21.200 the near term the big job replacement that they thought, 0:05:21.240 --> 0:05:22.680 and they're going to have to start hiring, and it 0:05:22.720 --> 0:05:26.479 comes back, teriff uncertainty goes down. All of those things 0:05:26.480 --> 0:05:29.000 could lead to a rebound. On the other hand, you know, 0:05:29.040 --> 0:05:31.240 if GDP starts softening, it's not as strong as we 0:05:31.320 --> 0:05:32.919 think that somehow the data is a kind of a 0:05:32.960 --> 0:05:36.280 mirage right now. Then the labor market is telling you things. 0:05:36.279 --> 0:05:37.760 They're just not as good as you think. Now that 0:05:37.760 --> 0:05:40.400 the financial markets are the big puzzle, I mean, I'm 0:05:40.400 --> 0:05:43.039 not the only one how much of this is just 0:05:43.080 --> 0:05:47.279 a big boom and AI and everything else is marginal. 0:05:48.880 --> 0:05:51.080 I'd kind of been arguing there's a big difference between 0:05:51.080 --> 0:05:54.039 the financial conditions for corporate America and financial conditions for 0:05:54.080 --> 0:05:55.120 main street America. 0:05:55.680 --> 0:05:56.320 If you're main. 0:05:56.200 --> 0:05:58.960 Street America, you're looking at mortgages over six percent, very 0:05:58.960 --> 0:06:03.520 expensive housing, car loans over seven percent, credit card. 0:06:03.279 --> 0:06:04.600 Interest rates in the twenties. 0:06:05.000 --> 0:06:08.320 These are not lose financial conditions for American households. So 0:06:08.720 --> 0:06:10.480 when we look at the financial market, you're seeing a 0:06:10.480 --> 0:06:12.520 lot of When people talk about credit spreads and all that, 0:06:13.080 --> 0:06:15.279 I don't think most American households care what the credit 0:06:15.360 --> 0:06:18.400 spread between corporates and treasuries are. It doesn't really need 0:06:18.480 --> 0:06:21.279 unless it shows up in mortgages. So I think there's this. 0:06:21.800 --> 0:06:23.400 It's one of the things that I find kind of 0:06:23.640 --> 0:06:26.800 puzzling right now is there's just always these dichotomies between things. 0:06:27.680 --> 0:06:29.400 If you look at AI, if you take out anything 0:06:29.520 --> 0:06:32.920 data center AI related business fix invexcement is turning down, 0:06:33.960 --> 0:06:34.960 it's not widespread. 0:06:35.000 --> 0:06:37.160 All this investment is not widespread across there's a. 0:06:37.160 --> 0:06:40.520 Real reallocation from kind of everything else in the AI. 0:06:40.800 --> 0:06:44.520 So there's this bifurcation in so many ways that make 0:06:44.720 --> 0:06:46.520 kind of reading the economy tough right now. 0:06:46.480 --> 0:06:49.240 How much influence do you have on one versus the other? 0:06:49.560 --> 0:06:52.559 Financial conditions on Main straight versus woll straight, Moos streets, 0:06:52.560 --> 0:06:55.120 immediate Moostreate's gone it's self to the risis. Can you 0:06:55.120 --> 0:06:57.200 really influence financial conditions on Maine straight? 0:06:57.760 --> 0:06:59.080 Well, that's kind of what we hope. 0:06:59.120 --> 0:07:02.360 If you think about cutting rates, which we're doing and 0:07:02.400 --> 0:07:05.400 I think will continue doing, that does have a pass 0:07:05.440 --> 0:07:08.640 through to the tenure, and the tenures often the anchor 0:07:08.760 --> 0:07:12.840 for pricing mortgages. So the tenures down to like four percent, 0:07:12.960 --> 0:07:14.240 it's coming down from four and a half. 0:07:14.280 --> 0:07:15.560 That's about a half or percent off. 0:07:15.600 --> 0:07:18.240 If it were to continue drifting below four, you'll start 0:07:18.280 --> 0:07:23.200 seeing some downward pressure for certainly mortgages. Auto loans are 0:07:23.320 --> 0:07:25.040 kind of a different thing. You're trying to figure out 0:07:25.080 --> 0:07:27.720 how to deal with tariffs on the auto industry. One 0:07:27.720 --> 0:07:29.080 thing I've heard is that got rid of a lot 0:07:29.080 --> 0:07:31.880 of cheap enancing, that the use is subsidized for consumers. 0:07:32.440 --> 0:07:34.600 That's going to raise the cost of financing. All these 0:07:34.600 --> 0:07:37.040 things are more tightening for a mainstream RKT. So hopefully 0:07:37.080 --> 0:07:38.880 these things as we go on to the rest of 0:07:38.880 --> 0:07:40.000 the years, start loosening. 0:07:39.800 --> 0:07:41.920 Up some You've been watching the program, so you know 0:07:42.000 --> 0:07:43.800 some of the things that people say on the show. 0:07:44.200 --> 0:07:46.800 I'll just go out for it briefly. Ultimately, equities at 0:07:46.800 --> 0:07:49.320 all time highs go to rip sixty percent this year. 0:07:49.560 --> 0:07:50.760 You mentioned credit spreads. 0:07:51.320 --> 0:07:54.400 It credit spreads and multidecade tights high yeld spreads near 0:07:54.440 --> 0:07:56.720 the tie of the year. And there's a theory out 0:07:56.800 --> 0:07:59.480 that that the Federserve and some officials on the FET 0:07:59.560 --> 0:08:02.920 perhaps you included, have anchored that view of this economy 0:08:02.920 --> 0:08:05.080 around the step down in payrolls growth and it's going 0:08:05.080 --> 0:08:07.920 to be loaded into reducing interest rates when maybe they shouldn't, 0:08:08.240 --> 0:08:11.720 and all that's going to do is fuel financial market access. 0:08:12.120 --> 0:08:14.000 Just to give you the response, the chance to respond 0:08:14.000 --> 0:08:16.880 to that, how would you respond to that, this idea 0:08:16.920 --> 0:08:19.080 that you run the risk of being loaded into reducing 0:08:19.120 --> 0:08:20.840 rates when maybe you shouldn't. 0:08:21.320 --> 0:08:24.160 Well, the mandate I have from Congress's maximum employment stale 0:08:24.200 --> 0:08:24.679 with prices. 0:08:24.680 --> 0:08:26.160 It's not financial markets. 0:08:26.320 --> 0:08:29.080 So I look at that's when I'm looking at the 0:08:29.120 --> 0:08:29.600 labor market. 0:08:29.680 --> 0:08:30.680 The labor market is weak. 0:08:30.720 --> 0:08:33.160 If all these loose financial conditions are going to cause 0:08:33.200 --> 0:08:35.960 a boom and excess in the US. We should start 0:08:36.000 --> 0:08:38.880 seeing some of that in the labor market. We're not 0:08:38.920 --> 0:08:40.920 seeing it. So a lot of this is I think 0:08:41.000 --> 0:08:43.080 just this is where the AI thing is. There's so 0:08:43.200 --> 0:08:47.920 much speculation on AI that it's kind of again, it's dichotomy. 0:08:47.920 --> 0:08:52.400 It's kind of overshadowing everything else that's going on. And 0:08:52.640 --> 0:08:55.760 like I said, my job is unemployment in price stability, 0:08:55.880 --> 0:08:58.240 and I think inflation will be okay, it's on up, 0:08:58.240 --> 0:09:00.880 but that's some of the terrif effects we'll come back off. 0:09:01.480 --> 0:09:03.640 But my job is about the labor market and it's 0:09:03.640 --> 0:09:06.240 not good. So if you want me to go to 0:09:06.280 --> 0:09:08.240 Congress and say, hey, tell me to start worrying about 0:09:08.240 --> 0:09:11.000 financial conditions and that's how I should set policy, let 0:09:11.000 --> 0:09:11.240 me know. 0:09:11.320 --> 0:09:13.120 But until they do that, I'm going to keep focusing. 0:09:13.160 --> 0:09:14.640 Well, let's go to the Jill mandate and let's stay 0:09:14.679 --> 0:09:18.160 with AI and the potential that introduces some additional tension 0:09:18.160 --> 0:09:21.000 into the Dull mandate that it holds back employment but 0:09:21.080 --> 0:09:23.760 also boost prices. And Marie was talking about what it 0:09:23.800 --> 0:09:27.440 could do to energy, all the spending resource intensive. We've 0:09:27.440 --> 0:09:29.480 got a guest on the program talking about the same thing. 0:09:29.679 --> 0:09:31.840 Would you see that as a potential that it introduces 0:09:31.880 --> 0:09:33.920 some additional risk into the dual mandate? 0:09:34.520 --> 0:09:37.000 Well, in terms of inflation. 0:09:37.080 --> 0:09:39.080 I mean one of the things I was asked this 0:09:39.160 --> 0:09:41.760 question by some people in the AI sector. It's like, 0:09:41.920 --> 0:09:44.559 isn't this inflationary? All this spending we're doing. I said, yeah, 0:09:44.600 --> 0:09:48.320 but you're taking it away from other sectors, So those 0:09:48.360 --> 0:09:50.520 other sectors are seeing less demand. So this is a 0:09:50.880 --> 0:09:53.079 Now you a lot of this is a sexual reallocation. 0:09:53.920 --> 0:09:56.760 And if that's the case, then the increase in AI 0:09:56.880 --> 0:09:58.240 is going to be offset by other things. 0:09:58.280 --> 0:09:59.520 Now, true energy. 0:09:59.280 --> 0:10:01.760 May have a a bump up, but then you just 0:10:01.800 --> 0:10:03.640 look at core because you kind of knock out the 0:10:03.720 --> 0:10:05.839 energy part of it. And that's really what you want 0:10:05.880 --> 0:10:07.880 to do. That's why we kind of knock off energy. 0:10:08.240 --> 0:10:10.760 It's just so volatile. It gives you the wrong signals, 0:10:11.120 --> 0:10:13.200 and we look forward. Excuse me, well, we're just looking forward. 0:10:13.240 --> 0:10:14.600 What to hear from you is you can look through 0:10:14.640 --> 0:10:17.680 TARIF induced inflation, you can look at AI induced inflation. 0:10:18.200 --> 0:10:20.200 Is there any inflation out there right now that you 0:10:20.320 --> 0:10:22.840 see that you are concerned about, because we're potentially going 0:10:22.880 --> 0:10:24.680 to get a pretty hot CPI print at the end 0:10:24.720 --> 0:10:25.199 of this month. 0:10:25.679 --> 0:10:28.440 Well, we'll see when we take the data at the 0:10:28.520 --> 0:10:31.160 board and we kind of we have various ways. 0:10:30.880 --> 0:10:32.680 We try to tease out the tariff effects. 0:10:33.559 --> 0:10:36.440 Our estimate is inflation's running above two and a half percent, 0:10:36.920 --> 0:10:39.200 and we're not seeing anything that's going to explore. Like 0:10:39.200 --> 0:10:41.400 I said, all this attention on AI is and ignoring 0:10:41.440 --> 0:10:44.960 the fact that other stuff is softening. So demand is 0:10:45.000 --> 0:10:47.040 up in one sector, it's going down another. Those things 0:10:47.160 --> 0:10:50.960 often not completely but offset. So that's why I'm not 0:10:51.000 --> 0:10:53.040 really worried about the AI stuff. And if it really 0:10:53.040 --> 0:10:55.360 did cause some big problems and energy, like I said, 0:10:55.480 --> 0:10:58.360 just if you're thinking about future inflation, just look at core. 0:10:58.440 --> 0:11:00.439 Don't bother with headline end of the month. 0:11:00.440 --> 0:11:03.839 Though you might not get the labor market report. How 0:11:03.920 --> 0:11:08.560 difficult is it? And can you even provide outlook meeting 0:11:08.559 --> 0:11:10.080 by meeting in this environment? 0:11:10.800 --> 0:11:13.520 Well, I have this joke that for those who think 0:11:13.559 --> 0:11:15.319 we're too data dependent, you're going to find out what 0:11:15.400 --> 0:11:16.600 non data dependent policy. 0:11:16.760 --> 0:11:20.480 I'm excited, but that's the point. We do have lots 0:11:20.480 --> 0:11:20.840 of data. 0:11:20.880 --> 0:11:23.000 It's like I said, we've got lots of labor market 0:11:23.000 --> 0:11:25.400 indicators that tell us the same story. 0:11:25.480 --> 0:11:26.520 It's just it's not good. 0:11:26.720 --> 0:11:28.559 We don't get a lot of other things as own 0:11:28.760 --> 0:11:32.360 labor market's great. So I think that data from all 0:11:32.400 --> 0:11:35.760 the sources is telling you the same story the labor 0:11:35.840 --> 0:11:39.520 market's week. We're getting this data, conflicting data about GDP. 0:11:39.800 --> 0:11:41.480 Like I said, the basebook came out, it was not 0:11:41.840 --> 0:11:45.480 like everything's rosy and booming. There could be still in 0:11:45.559 --> 0:11:48.160 the GDP numbers. Is still a lot of inventory pull 0:11:48.240 --> 0:11:52.320 forward that because the China tarifs weren't finalized, so get them, 0:11:52.480 --> 0:11:55.120 you know, get stuff in now. So it may be 0:11:55.240 --> 0:11:58.480 that we see, you know, GDP start to pull off. 0:11:58.679 --> 0:11:59.520 At the end of the year. 0:12:00.640 --> 0:12:03.640 I think about the tax bill in that there was 0:12:03.679 --> 0:12:06.480 a lot of incentives for business six investment. That's great 0:12:06.520 --> 0:12:10.520 that that applies equally to AI and non AI. So 0:12:10.520 --> 0:12:12.400 at the end of the day, you're still deciding whether 0:12:12.440 --> 0:12:14.840 you want to go into AI investment or non AI investment. 0:12:14.960 --> 0:12:17.240 And the AI is winning. So I don't know how 0:12:17.320 --> 0:12:19.000 much of it, how big of a help it's going 0:12:19.080 --> 0:12:22.160 to be on the non AI kind of sectors. 0:12:21.760 --> 0:12:22.360 In the economy. 0:12:22.400 --> 0:12:24.560 You've coach you SAFA Techno optimists enjoyed the speech, by 0:12:24.600 --> 0:12:26.080 the way, well thanks that I thank you for that. 0:12:26.160 --> 0:12:27.880 I just wanted to finish on this before you run. 0:12:28.280 --> 0:12:30.800 This feels different to last year when you came out 0:12:30.880 --> 0:12:32.560 last year and you made a big step down on 0:12:32.600 --> 0:12:35.240 interest rates and comep one hundred basis points off the 0:12:35.280 --> 0:12:37.960 back of the employment scare through the summer. This feels 0:12:37.960 --> 0:12:40.120 slightly different in your approach. How would you describe the 0:12:40.160 --> 0:12:42.439 differences between now and the approach of you and what 0:12:42.480 --> 0:12:44.760 you're advocating for on the Federal Reserve to what the 0:12:44.760 --> 0:12:45.800 committee did last year? 0:12:46.360 --> 0:12:49.360 Well, last year we didn't have all the tariff uncertainty, 0:12:49.440 --> 0:12:52.600 we didn't have this AI thing. Unemployment was not even 0:12:52.720 --> 0:12:55.520 remotely talked about. So I'd say those are the two 0:12:55.520 --> 0:12:57.959 big differences. Like I said, I think the tariff stuff 0:12:57.960 --> 0:13:01.200 will settle out and MB okay, the AI thing is 0:13:01.320 --> 0:13:03.320 the concern I have with the AI if it does, 0:13:03.360 --> 0:13:07.320 and I think it will materialize. Monetary policy is designed 0:13:07.360 --> 0:13:09.559 to deal with cyclical movements in the labor market. It 0:13:09.600 --> 0:13:11.680 kind of ups and downs and come with a business cycle. 0:13:12.200 --> 0:13:14.840 But this feels like a structural change. All right, Labor 0:13:14.880 --> 0:13:18.240 demand just drops and doesn't come back. That's something I 0:13:18.280 --> 0:13:20.720 can do anything about. The FED can kind of adjust 0:13:20.800 --> 0:13:23.400 policy to deal with structural changes in the economy. So 0:13:24.240 --> 0:13:26.160 it's going to be a challenge to say as anything 0:13:26.200 --> 0:13:28.640 we're seeing the labor market from AI coming down the road, 0:13:28.920 --> 0:13:30.920 is that something the FED can do anything about or 0:13:30.960 --> 0:13:33.439 should do anything about. Or are we just seeing kind 0:13:33.440 --> 0:13:35.800 of a typical cyclical mover where there's a hot sector 0:13:35.800 --> 0:13:38.360 and then it cools off later and everything's not quite 0:13:38.400 --> 0:13:42.200 as futuristic as you think it is. So that's I 0:13:42.200 --> 0:13:44.480 think for me the biggest challenge looking forward is is 0:13:44.520 --> 0:13:47.400 this a structural change or is this just a cyclical change? 0:13:47.559 --> 0:13:49.320 Is the prudent thing to do as a risk manager 0:13:50.240 --> 0:13:52.800 just to assume it might be cyclical and just in case. 0:13:52.920 --> 0:13:55.960 Yeah, I mean, if you cut and it ends up 0:13:55.960 --> 0:13:58.200 being structural, you cut. 0:13:57.880 --> 0:14:00.440 It's not going to undo whatever you did. 0:14:00.480 --> 0:14:02.880 But if it is cyclical, then you can help rebound 0:14:02.920 --> 0:14:05.319 and get the comedy back on the steve or labor 0:14:05.360 --> 0:14:06.000 market back on. 0:14:05.960 --> 0:14:10.560 A se stay with us Mulblindex. Savana's coming up off to. 0:14:10.640 --> 0:14:21.920 This memory was talking about China in the US, and 0:14:21.920 --> 0:14:24.120 there's no one better to talk to than Michael Roberts, 0:14:24.160 --> 0:14:28.080 CEO of HSBC Bank and CEO of the Corporate and 0:14:28.120 --> 0:14:31.880 institutional bank at the region. I'm just curious, given the 0:14:31.880 --> 0:14:35.080 fact that HSBC and WELCOME is such a central bank 0:14:35.240 --> 0:14:38.160 in both trade as well as in both China and 0:14:38.320 --> 0:14:41.560 in the West, how significant do you see this latest 0:14:41.680 --> 0:14:43.800 eruption of trade tensions between the US and China. 0:14:43.800 --> 0:14:44.640 Does this feel different? 0:14:44.800 --> 0:14:46.800 Yeah? No, First of all, thank you for having me today. 0:14:47.200 --> 0:14:50.880 Look, I think the world has gotten used to a 0:14:50.880 --> 0:14:54.280 lot of these tariff changes, although certainly this newest round 0:14:54.360 --> 0:14:58.720 is yet another bit of unpredictability. I think companies have 0:14:58.800 --> 0:15:02.400 been now looking for different ways to manage their supply chains. 0:15:02.720 --> 0:15:05.800 We have a survey that we've did right after Liberation 0:15:05.880 --> 0:15:09.240 Day which I think still hold trues today. We surveyed 0:15:09.280 --> 0:15:14.160 five thousand clients, so big survey, and they all said one, 0:15:14.280 --> 0:15:15.680 all of these tariffs are going to cause a lot 0:15:15.680 --> 0:15:18.560 of issues. Prices will go up to Most of now 0:15:18.600 --> 0:15:20.400 are looking at their supply chains. In the word, I 0:15:20.400 --> 0:15:22.480 think supply chain has now come to be one of 0:15:22.480 --> 0:15:25.960 the probably the most discussed terms in e C suite today. 0:15:26.600 --> 0:15:28.520 And thirdly, they're going to change and they may even 0:15:28.560 --> 0:15:31.960 change business models. So this next round, this current round, 0:15:32.200 --> 0:15:34.440 I think just tells you that they're going to have 0:15:34.520 --> 0:15:37.840 to significantly change what that is because one hundred percent tariffs, 0:15:38.480 --> 0:15:41.520 you can't absorb one hundred percent tariffs, So that means 0:15:41.560 --> 0:15:43.600 there'll be a greater acceleration to where. 0:15:43.440 --> 0:15:44.880 Those new supply chains will be. 0:15:45.320 --> 0:15:47.440 However, it is a bit of a whack a mole 0:15:47.520 --> 0:15:50.000 because you have to constantly look at where the next 0:15:50.080 --> 0:15:52.280 tariffs will come from, and that's been a challenge to 0:15:52.320 --> 0:15:55.360 many companies. They really have to figure out what is 0:15:55.480 --> 0:15:58.520 the least vulnerable place they can be or the most 0:15:58.560 --> 0:16:01.160 tariff proof place they can be, and how do they 0:16:01.200 --> 0:16:05.640 then export into the US or frankly anywhere to make 0:16:05.680 --> 0:16:08.000 sure that they can do so as effectively as possible. 0:16:08.040 --> 0:16:10.320 How much of the extra costs from tariff's been realized, 0:16:10.480 --> 0:16:13.000 not just teriffs but also the rejiggering of supply chains. 0:16:13.080 --> 0:16:16.960 Yeah, so rule of thumb, when I've talked to most people, 0:16:18.720 --> 0:16:23.560 probably seventy eighty percent is born by the producer versus 0:16:23.600 --> 0:16:27.160 the importer. The last twenty percent analysis starting to seep 0:16:27.200 --> 0:16:30.720 into en buyer the customer. I think most are saying, 0:16:30.800 --> 0:16:35.000 we can't continue to absorb that much additional costs as 0:16:35.040 --> 0:16:38.200 the importer or the distributor. Therefore it will start shifting 0:16:38.280 --> 0:16:41.200 more and more to the end buyer, the client or 0:16:41.200 --> 0:16:44.320 the customer. So that there's been a I think as 0:16:44.360 --> 0:16:47.560 strong effort, however, to try to absorb as much as possible. 0:16:47.840 --> 0:16:50.240 So I talked to a retailer, high fashion retailer saying, 0:16:50.640 --> 0:16:54.800 me and distributor or the producer out of Asia, and 0:16:54.840 --> 0:16:57.400 me as the distributor, are absorbing as much as we 0:16:57.440 --> 0:17:00.120 possibly can. We understand we could do that, but it 0:17:00.160 --> 0:17:00.840 will come to an ends. 0:17:01.200 --> 0:17:03.720 John and Amory, we're talking to Fed Governor Chris Waller 0:17:03.760 --> 0:17:07.520 and about the balance between inflation and the labor market, 0:17:07.640 --> 0:17:09.639 and there's this feeling that any kind of inflation is 0:17:09.680 --> 0:17:12.600 going to be short lived and the effect on the 0:17:12.680 --> 0:17:15.159 labor market could potentially be pernicious. Are you seeing that 0:17:15.240 --> 0:17:18.800 companies is that of raising prices, laying off workers, or 0:17:18.840 --> 0:17:21.800 trying to revert to artificial intelligence to bridge the gaps. 0:17:22.600 --> 0:17:23.280 Not yet. 0:17:23.600 --> 0:17:26.000 However, there is a lot of cost pressures. I think 0:17:26.000 --> 0:17:28.280 there's a delay a lot of investments. I mean that's 0:17:28.840 --> 0:17:30.680 the flip side of that, because I do think people 0:17:30.760 --> 0:17:34.399 want predictability. The companies need to understand where they're going 0:17:34.400 --> 0:17:36.119 to put down a lot of capital, that that capital 0:17:36.200 --> 0:17:38.480 is going to produce good returns because of more predictability. 0:17:39.280 --> 0:17:43.399 I've seen slowing of hiring, but not real firing today, 0:17:43.560 --> 0:17:45.439 and so that's kind of again the flip side of 0:17:45.440 --> 0:17:48.600 that coin. But really it's the capital and the investments 0:17:48.600 --> 0:17:50.200 that you're starting to see slow down quite a lot. 0:17:50.440 --> 0:17:54.199 Meanwhile, we've heard a lot here at the meetings in Washington, 0:17:54.240 --> 0:17:56.399 d C. At a number of themes AI, which we'll 0:17:56.400 --> 0:17:59.320 get to any second, but also this question around credit 0:17:59.320 --> 0:18:02.359 froth an AI related bubble. How much are you getting 0:18:02.400 --> 0:18:05.159 concerned akin to what JP Morgan's been talking about of 0:18:05.560 --> 0:18:07.840 a real turn in the credit cycle or some sort 0:18:07.840 --> 0:18:10.159 of later innings that give you pause and make you 0:18:10.200 --> 0:18:10.800 more cautious. 0:18:10.880 --> 0:18:12.960 Yeah, look, I do think this is not the first 0:18:12.960 --> 0:18:16.360 instance of what is inventory financing fraud, which is essentially 0:18:16.400 --> 0:18:18.920 selling you know, or using the same bit of inventory 0:18:18.920 --> 0:18:21.520 to finance multiple times. We've seen that in Europe a 0:18:21.520 --> 0:18:24.040 couple of times as well in the last say nine months. 0:18:24.240 --> 0:18:24.919 So I am more. 0:18:24.800 --> 0:18:28.360 Concerned and something that we're very focused on. So in fact, 0:18:28.400 --> 0:18:31.600 we're using technology we developed in our trade business and 0:18:31.760 --> 0:18:34.560 using it throughout all of our lending platforms now to 0:18:34.600 --> 0:18:37.560 try to go through and be very specific that everything 0:18:37.600 --> 0:18:41.160 we finance is good collateral, it doesn't have multiple leans 0:18:41.200 --> 0:18:42.680 on top of it, which is really what happened to 0:18:42.720 --> 0:18:45.760 First Brands. It's tough to do, and I think, you know, 0:18:45.880 --> 0:18:48.239 the fraudstats are getting better at it, so we're going 0:18:48.320 --> 0:18:52.040 to have to respond to being much better on due diligence. 0:18:52.480 --> 0:18:55.760 You know, we were not involved obviously directly in First Brands, 0:18:55.760 --> 0:18:58.359 so don't know how much due diligence was done. But 0:18:58.440 --> 0:19:01.000 I think these type of finance seeing arrangements are going 0:19:01.040 --> 0:19:05.160 to require much more due diligence, much greater technology, much 0:19:05.200 --> 0:19:07.800 more specific understanding exactly what you're financing. 0:19:07.920 --> 0:19:10.040 The other aspect has been just sort of how much 0:19:10.160 --> 0:19:14.720 AI has actually boosted productivity, boosted profitability versus been a 0:19:14.760 --> 0:19:17.119 real call center for the most part. Ken Griffin came 0:19:17.160 --> 0:19:19.919 out of Citadel saying that he's not seeing evidence that 0:19:20.040 --> 0:19:23.800 AI programs can really make an edge in financial markets. 0:19:23.840 --> 0:19:26.080 I know that HSBC has been big in quantum computing 0:19:26.119 --> 0:19:26.880 and has this test. 0:19:27.440 --> 0:19:28.560 Are you seeing real gains? 0:19:28.560 --> 0:19:34.000 Are you actually deploying quantitative strategies from quantitative computing on 0:19:34.119 --> 0:19:35.439 you on your trading floors? 0:19:35.520 --> 0:19:37.239 Yeah? So just for those who don't know. 0:19:37.400 --> 0:19:40.440 We had a partnership still do with IBM. We develop 0:19:40.560 --> 0:19:44.160 quantum computing really for financial markets, focusing on the bond market, 0:19:44.600 --> 0:19:48.520 and we use both quantum computing and more traditional computing. 0:19:48.560 --> 0:19:51.400 Brought them together, changed the way we look at data. 0:19:51.560 --> 0:19:55.000 There's a scene called representation data that we actually flipped 0:19:55.000 --> 0:19:58.520 into a more of a quantum computing type of mode. 0:19:58.920 --> 0:20:01.760 That led to a third twenty four percent improvement in 0:20:01.800 --> 0:20:04.359 our ability to predict a trade. So if you were 0:20:04.359 --> 0:20:06.639 going to make a trade, we get to understand that 0:20:06.680 --> 0:20:09.480 trade thirty four percent better. To see the matching between 0:20:09.520 --> 0:20:11.439 buyer and seller is really what it comes down to. 0:20:11.520 --> 0:20:15.359 So that was very effective. It's an initial study. We 0:20:15.440 --> 0:20:19.560 did how we we're tested on multiple contmcuting machines. We 0:20:19.600 --> 0:20:22.080 did all the statistical analysis, so we really do think 0:20:22.119 --> 0:20:26.520 there's something there. It can be used for any traded asset, 0:20:26.800 --> 0:20:30.320 so any asset class. I think the power that that 0:20:30.400 --> 0:20:32.440 brings is going to give an edge. I don't know 0:20:32.480 --> 0:20:34.760 how it wouldn't give an edge, but I think it'll 0:20:34.800 --> 0:20:36.760 be Once we roll it out and others roll it out, 0:20:36.760 --> 0:20:39.639 they'll be quick adoption by I think the industry. I 0:20:39.640 --> 0:20:42.200 mean it's the same industry that tries to reduce latency 0:20:42.240 --> 0:20:46.960 to its smallest possible amount. So I do think technology 0:20:47.000 --> 0:20:48.120 does bring a substantial edge. 0:20:48.160 --> 0:20:50.359 Do you think it's going to replace traders that? 0:20:50.440 --> 0:20:50.800 I don't know. 0:20:50.840 --> 0:20:52.560 I mean, I think they always be humans involved, But 0:20:52.600 --> 0:20:54.479 I think it will help traders quite a lot. And 0:20:54.520 --> 0:20:57.040 I think it'll change really the way traders think about 0:20:57.040 --> 0:20:59.320 it because when you have that much compute. 0:20:58.880 --> 0:21:01.160 Power and you could really use I think. 0:21:01.000 --> 0:21:03.920 Today, you know, we use a lot ai as you said, 0:21:04.200 --> 0:21:07.960 through alg rhythmic trading. This will just be one more 0:21:08.000 --> 0:21:11.280 substantial boost to the power of al rhythmic trading that 0:21:11.320 --> 0:21:11.960 we see today. 0:21:12.359 --> 0:21:13.800 So will it be less traders? 0:21:13.840 --> 0:21:14.159 Don't know? 0:21:14.200 --> 0:21:16.439 But are they going to have powerful machines? Definitely. 0:21:16.520 --> 0:21:17.640 So the other. 0:21:17.480 --> 0:21:19.439 Theme here, and this is something that comes up in 0:21:19.440 --> 0:21:22.040 pretty much every conversation, is the debasement of the dollar 0:21:22.400 --> 0:21:25.360 and this question of how much the dollar is losing 0:21:25.400 --> 0:21:29.040 its heft as a reserve currency internationally. Do you see 0:21:29.080 --> 0:21:32.280 any signs that people truly are moving away from the 0:21:32.280 --> 0:21:32.680 green back? 0:21:32.760 --> 0:21:34.679 Yeah, that's a great question. So I have to be 0:21:34.720 --> 0:21:37.560 traveling to Asia right after Liberation Day, and I would 0:21:37.800 --> 0:21:40.879 say that was probably the number one conversation that I 0:21:40.920 --> 0:21:45.240 was having by very big, very sophisticated large holders of dollars, 0:21:45.800 --> 0:21:48.919 and they were quite focused on this idea of dedollarization 0:21:49.040 --> 0:21:52.199 or debasement of the dollars of reserve currency. And the 0:21:52.240 --> 0:21:54.160 mere fact that they're talking about it and the terms 0:21:54.160 --> 0:21:55.639 they were tells you something is different. 0:21:56.240 --> 0:21:56.480 Now. 0:21:56.680 --> 0:21:59.200 If you look at where the dollar is today, trade 0:21:59.200 --> 0:22:04.800 flows reserve the primary currency of invoicing for most commercial flows, 0:22:05.880 --> 0:22:08.919 the markets flows, it's all well, nor than fifty percent, 0:22:08.960 --> 0:22:11.040 it's you know, sixty seventy eighty percent in all those 0:22:11.080 --> 0:22:14.440 various metrics. It will take a long time to find 0:22:14.480 --> 0:22:17.879 another reserve currency. And the other biggest question is if 0:22:17.880 --> 0:22:19.440 you're going to go away from. 0:22:19.280 --> 0:22:20.840 Dollars, what are you going to do? 0:22:20.880 --> 0:22:23.439 And you know what will be that reserve currency that 0:22:23.520 --> 0:22:26.919 replaces it. There is no other alternative today. And so 0:22:27.040 --> 0:22:30.440 that's the twin issues that you have. The conundrum, maybe 0:22:30.480 --> 0:22:32.240 go away from dollars, but what are we going to 0:22:32.280 --> 0:22:33.359 go to instead. 0:22:33.640 --> 0:22:35.600 To wrap it all up, there is this feeling that 0:22:35.640 --> 0:22:39.000 the center of finance has shifted, and it's not so 0:22:39.119 --> 0:22:41.479 clearly in the United States, and something that you've been 0:22:41.520 --> 0:22:44.000 focusing a lot, how do you see the sort of 0:22:44.000 --> 0:22:46.840 tentacles of finance in terms of where they are flowing 0:22:46.880 --> 0:22:49.520 from transforming really over the past couple of years. 0:22:49.560 --> 0:22:52.199 Yeah, No, I think there's significant transformation going on. And 0:22:52.240 --> 0:22:55.159 if you think there was a unipolar world with the 0:22:55.280 --> 0:22:57.080 US right in the middle of it, still is and 0:22:57.200 --> 0:22:59.280 you know, the US capital market is the most liquid 0:22:59.280 --> 0:23:02.440 of the world, still the dominant place to trade. However, 0:23:02.720 --> 0:23:04.680 you need to look at where trade and commercial flows 0:23:04.680 --> 0:23:07.800 are going, where financial flows are going. I would look 0:23:07.880 --> 0:23:11.000 between the Middle East and Asia as an example. Substantial 0:23:11.080 --> 0:23:14.160 increase of flows between those two regions, and they're not 0:23:14.440 --> 0:23:17.000 flows that are necessarily coming from the West just being 0:23:17.000 --> 0:23:21.199 transhipped through those reasons. They're actually wealth and that is 0:23:21.240 --> 0:23:23.399 being rechanneled in that region. 0:23:23.440 --> 0:23:23.760 Issel. 0:23:24.119 --> 0:23:25.640 I think you'll see that more and more. I think 0:23:25.640 --> 0:23:28.520 you'll see Asia Middle East coming together more and more, 0:23:28.800 --> 0:23:31.200 and I think you'll have a much more balanced equation. 0:23:31.320 --> 0:23:34.280 I don't think there'll be as a dominant source of 0:23:34.400 --> 0:23:37.200 financial flows that you've seen before. And you know, great 0:23:37.200 --> 0:23:38.919 for US because we have to be very strong in 0:23:38.920 --> 0:23:41.439 those two regions. But I do think people need to 0:23:41.480 --> 0:23:44.640 understand that there's a significant change going on and those 0:23:44.640 --> 0:23:46.760 flows will not just go through New York as they 0:23:46.880 --> 0:23:48.000 used to in past. 0:23:49.400 --> 0:23:52.840 Stay with us. More Bloomberg Surveillance coming up after this. 0:24:02.280 --> 0:24:04.760 Yeah, I would love to welcome in Scott Kirby, the 0:24:04.800 --> 0:24:08.760 CEO of United Airlines, And Scott, it's really tremendous to 0:24:08.800 --> 0:24:11.760 see not only what you did, but also the fact 0:24:11.760 --> 0:24:14.399 that you see significant upside to the fourth quarter. And 0:24:14.440 --> 0:24:16.480 I want to just start there. Where do you see 0:24:16.480 --> 0:24:18.080 the acceleration in demand? 0:24:18.960 --> 0:24:21.360 You know, Actually you look across the full year. 0:24:21.400 --> 0:24:23.520 The first three quarters were really good for United in 0:24:23.600 --> 0:24:27.520 a lot of macro volatility that happened for the aviation industry. 0:24:27.760 --> 0:24:30.879 That demonstrates the resilient of our revenue diverse, brand loyal 0:24:30.920 --> 0:24:32.879 business model. But you look to the fourth quarter, it's 0:24:32.920 --> 0:24:35.840 even more exciting because as the economy started to get 0:24:35.880 --> 0:24:39.119 back to a solid footing, at least for aviation, demonstrates 0:24:39.119 --> 0:24:40.600 a lot of upside. We think we're going to be 0:24:40.640 --> 0:24:42.520 able to grow earnings for the full year even in 0:24:42.560 --> 0:24:43.280 this environment. 0:24:43.520 --> 0:24:45.280 So it really is creating. 0:24:45.040 --> 0:24:47.000 Value for all of our customers all the way from 0:24:47.000 --> 0:24:49.520 basic economy to winning much higher market share in the 0:24:49.520 --> 0:24:53.560 brand loyal customers really is a great resilient strategy when 0:24:53.600 --> 0:24:56.399 times are difficult, but a lot of upside as the 0:24:56.440 --> 0:24:57.320 economy recovers. 0:24:57.320 --> 0:24:59.480 Here in four Q, I. 0:24:59.440 --> 0:25:03.000 Guess I want to drill into the economy because Scott, 0:25:03.119 --> 0:25:06.240 earlier in the year it had been the economy section that. 0:25:06.240 --> 0:25:07.120 Had struggled the most. 0:25:07.200 --> 0:25:10.040 I'm just wondering how much it's picking up, whether you've 0:25:10.080 --> 0:25:12.959 had to discount tickets to bring people in to compete, 0:25:13.040 --> 0:25:16.399 or whether consumers are willing to absorb higher prices and 0:25:17.560 --> 0:25:18.520 take their trips. 0:25:18.960 --> 0:25:19.240 Yeah. 0:25:19.320 --> 0:25:22.120 Well, as we've talked about before, least so the airline 0:25:22.119 --> 0:25:24.720 industries are a pretty good real time indicator of the economy. 0:25:24.720 --> 0:25:27.160 And you know, we saw for much of the first 0:25:27.160 --> 0:25:30.640 half of the year economic stress and ticket prices were 0:25:30.680 --> 0:25:33.000 lower as a result of that. But as we got 0:25:33.040 --> 0:25:36.320 into the third quarter, bookings, at least for future travel, 0:25:36.720 --> 0:25:37.879 the economy started to pick up. 0:25:37.920 --> 0:25:39.400 Bookings started to pick up, and. 0:25:39.280 --> 0:25:42.000 As we finished the quarter, you know, we've set records 0:25:42.119 --> 0:25:44.800 each of the last several weeks on most corporate revenue 0:25:44.800 --> 0:25:46.639 that we've ever booked in a single week, and a 0:25:46.720 --> 0:25:49.680 number of records, particularly in business travel, really kind of 0:25:49.720 --> 0:25:53.040 strong across the board, though internationals come back stronger. 0:25:53.200 --> 0:25:56.200 The period has extended premium. 0:25:55.800 --> 0:26:00.679 Is obviously stronger than main cabin but really we've seen improvement, 0:26:00.760 --> 0:26:02.960 you know, as we've moved through the third quarter, kind 0:26:02.960 --> 0:26:05.679 of across the board on revenue streams, with the biggest 0:26:05.680 --> 0:26:07.199 strength in the corporate segment. 0:26:08.480 --> 0:26:10.240 And that's actually something that we see across the board, 0:26:10.240 --> 0:26:11.879 particularly because they're all these deals, so people have to 0:26:11.880 --> 0:26:13.760 actually get on a plane and go see some of 0:26:13.800 --> 0:26:18.840 their clients. I am wondering, are you seeing international travelers 0:26:18.840 --> 0:26:20.440 tourists come back to the United States. 0:26:20.480 --> 0:26:21.119 I thought that was kind of. 0:26:21.080 --> 0:26:22.919 A soft spot and a sort of a tell in 0:26:23.040 --> 0:26:26.080 terms of the international reputation of the country. 0:26:26.640 --> 0:26:30.000 Well, our business is about eighty percent US point of sale. 0:26:30.119 --> 0:26:32.720 But we have and we saw a drop at international 0:26:32.760 --> 0:26:36.240 traffic earlier in the year. It's not quite back to 0:26:36.480 --> 0:26:39.280 last year's levels, but it has recovered and it's close 0:26:39.359 --> 0:26:41.040 to last year's level. So we did see a dip, 0:26:41.520 --> 0:26:43.920 but even that has come back and we think that's 0:26:43.960 --> 0:26:46.920 on the trend to getting back to normal pretty soon. 0:26:48.160 --> 0:26:50.600 Are you planning to keep capacity pretty much the same? 0:26:50.680 --> 0:26:53.119 Are you expanding to Are you planning to expand or 0:26:53.160 --> 0:26:55.480 cut back? I know that it was constrained earlier this 0:26:55.560 --> 0:26:58.400 year just because of demand. But as demand picks up, 0:26:58.720 --> 0:27:00.680 are you going to bring more planes on deck? 0:27:01.560 --> 0:27:04.439 Well, we've been growing, you know, in absolute growth, actually 0:27:04.440 --> 0:27:06.080 faster I think than in the airline in the world 0:27:06.119 --> 0:27:07.840 has ever grown for several years in a row. 0:27:07.880 --> 0:27:09.040 And that's worked really. 0:27:08.880 --> 0:27:11.000 Well for you, NINED and that's been successful. So we 0:27:11.119 --> 0:27:13.840 really haven't much changed our capacity. We tweak it here 0:27:13.880 --> 0:27:15.879 and there. The biggest change we're going to make for 0:27:15.920 --> 0:27:19.280 next year, I think is actually to reshape the seasonality 0:27:19.320 --> 0:27:19.600 of the year. 0:27:19.640 --> 0:27:21.600 You know. One of the things that's happened that's good. 0:27:21.400 --> 0:27:24.720 For our business is this third quarter peak has extended 0:27:24.800 --> 0:27:26.919 into the fourth quarter, and it's made the fourth quarter 0:27:27.160 --> 0:27:29.480 actually a better quarter from a margin perspective than. 0:27:29.440 --> 0:27:30.080 The third quarter. 0:27:30.080 --> 0:27:33.439 And what we think is as that particularly international demand 0:27:33.480 --> 0:27:36.119 has extended into the fourth quarter, there's an opportunity for 0:27:36.200 --> 0:27:38.960 us to actually fly less in the peak in the 0:27:39.000 --> 0:27:41.000 third quarter, which would be good for our RASM. But 0:27:41.040 --> 0:27:42.359 it turns out it's going to actually be good for 0:27:42.400 --> 0:27:44.720 our cost structure too, because we we have to build 0:27:44.880 --> 0:27:48.360 staffing and infrastructure everything up to that peak for six 0:27:48.400 --> 0:27:50.760 weeks of the peak summer. And so next year we're 0:27:50.760 --> 0:27:53.760 going to actually try to reshape our schedule some to 0:27:53.800 --> 0:27:56.800 lower the peak and let the demand spread across more 0:27:56.840 --> 0:27:57.200 of the year. 0:27:58.400 --> 0:28:00.080 I know earlier this year when we were talking and 0:28:00.200 --> 0:28:02.600 you said that you do expect to raise prices by 0:28:03.520 --> 0:28:07.320 single digits just to compensate for higher costs. You see 0:28:07.359 --> 0:28:09.760 that on track the same type of price increases and 0:28:09.760 --> 0:28:12.280 our consumers okay with it? Are they absorbing it? 0:28:13.160 --> 0:28:13.359 You know? 0:28:13.840 --> 0:28:16.359 This year prices have come down, as we talked about, 0:28:16.760 --> 0:28:19.600 just you know, as there was echo macro volatility, at 0:28:19.640 --> 0:28:23.720 least for aviation. I do expect them to normalize next year, 0:28:24.240 --> 0:28:27.080 and I think just over time that you should expect 0:28:27.080 --> 0:28:30.840 to see airfares grow consistent with inflation is likely what's 0:28:30.880 --> 0:28:32.720 going to happen over time. 0:28:33.800 --> 0:28:36.560 How much do you see staff wage increases? 0:28:36.640 --> 0:28:38.480 Also playing into this the idea. 0:28:38.320 --> 0:28:40.680 That a lot of the people who work for United 0:28:40.680 --> 0:28:43.719 are also saying, Okay, well things are going up, we 0:28:43.760 --> 0:28:44.640 want to pay increase. 0:28:45.320 --> 0:28:45.600 Yeah. 0:28:45.720 --> 0:28:47.040 A lot of people are the best in the world, 0:28:47.120 --> 0:28:49.440 and they deserve industry leading contract. Every time we sign 0:28:49.480 --> 0:28:52.080 a new contract with one of our union groups, they 0:28:52.720 --> 0:28:56.360 expect and deserve and will be paid at the top 0:28:56.400 --> 0:28:58.960 of the industry. So that's built into our forecast that's 0:28:58.960 --> 0:29:01.000 built into everything that we're doing. One of the great 0:29:01.000 --> 0:29:03.160 things that we're doing though at United is I think 0:29:03.160 --> 0:29:05.560 we're the best in the world at managing our real 0:29:05.640 --> 0:29:08.800 core costs and being more efficient at the airline. We've 0:29:08.800 --> 0:29:12.760 invested heavily in technology. It helps us run the airline better. 0:29:13.080 --> 0:29:15.000 But you look at the third quarter. You know the 0:29:15.120 --> 0:29:17.560 number of airlines that have talked about missing their cost 0:29:17.600 --> 0:29:20.360 guidance because of storms, and there were storms in the quarter. 0:29:20.680 --> 0:29:24.120 But we've invested so heavily in our recovery tools that 0:29:24.320 --> 0:29:27.920 we had best in the industry cost performance, and we're 0:29:28.000 --> 0:29:31.160 driving our costs lower, not by taking things away from 0:29:31.160 --> 0:29:34.280 the customer, but by actually investing in technology that lets 0:29:34.320 --> 0:29:37.120 us run a better operation for customers and is lower 0:29:37.120 --> 0:29:39.480 costs at the same time, and that also helps fund 0:29:39.760 --> 0:29:42.120 investments for the customer. We're spending over a billion dollars 0:29:42.160 --> 0:29:44.640 a year and incremental investments for the customer, but also 0:29:44.720 --> 0:29:48.560 importantly investments in our people and having them have the 0:29:48.600 --> 0:29:50.320 best pay and the best contracts in the world. 0:29:51.440 --> 0:29:53.920 Scott, I love saying that you're my favorite economists to 0:29:53.960 --> 0:29:55.400 speak to you because you do have this real time 0:29:55.520 --> 0:29:58.040 view of the economy and right now what you're saying 0:29:58.160 --> 0:30:00.880 is kind of flying in the face the weakness and 0:30:00.920 --> 0:30:02.920 some of the worries that we're hearing, whether it's from 0:30:02.960 --> 0:30:05.520 the government shutdown is going to cause disruptions, or whether 0:30:05.560 --> 0:30:09.280 it's the unemployment picture that people are increasingly worried about. 0:30:09.600 --> 0:30:12.240 How do you square those two things, This reacceleration that 0:30:12.280 --> 0:30:16.080 you're talking about with the weakness that policymakers seem to 0:30:16.080 --> 0:30:16.920 be so worried about. 0:30:17.760 --> 0:30:21.960 Well, uncertainty really is I think what drives the economy 0:30:22.160 --> 0:30:23.920 in one direction or another, And there was a lot 0:30:23.920 --> 0:30:25.160 of uncertainty to start the year. 0:30:25.200 --> 0:30:26.800 As we kind of got into the third. 0:30:26.600 --> 0:30:31.360 Quarter and some of the macro issues, the reconciliation bill 0:30:31.520 --> 0:30:38.160 passed and geopolitical situation improved, Tariffs settled into having some 0:30:38.240 --> 0:30:39.360 confidence what they were going to be. 0:30:39.680 --> 0:30:40.760 We saw that improved. 0:30:40.920 --> 0:30:44.120 Now we do now have new issues that things pop 0:30:44.200 --> 0:30:48.040 up all the time. What's happening with the shutdown could 0:30:48.120 --> 0:30:48.920 become an issue. 0:30:49.080 --> 0:30:50.160 So far it hasn't been. 0:30:50.240 --> 0:30:52.480 You know, first, the FA is doing I think a 0:30:52.480 --> 0:30:54.280 great job of running the system. 0:30:54.520 --> 0:30:57.960 We have our lowest cancelation rate in the last. 0:30:57.800 --> 0:31:01.080 Decade, our second best on time performance controllers are professionals 0:31:01.080 --> 0:31:04.000 because it's not news about it. But the controllers are professionals, 0:31:04.120 --> 0:31:06.120 view their job as safety view their job is taking 0:31:06.120 --> 0:31:08.720 care of the public. And kudos to them. They're almost 0:31:08.800 --> 0:31:10.680 all of them are showing up to work and doing 0:31:10.720 --> 0:31:12.920 their job. And has it the first couple of weeks 0:31:12.920 --> 0:31:16.000 of October. Has it really affected bookings? I think if 0:31:16.040 --> 0:31:19.160 this goes on for too long, certainly the risks escalate 0:31:19.920 --> 0:31:22.000 in the economies that goes on. I think the economy 0:31:22.200 --> 0:31:25.520 is better than most people think, but it's still tenuous. 0:31:25.880 --> 0:31:29.440 It's still a little balanced on a knife edge, and 0:31:29.480 --> 0:31:31.320 we shouldn't have, you know, unforre share. 0:31:31.480 --> 0:31:33.760 So let's get the shutdown settled. 0:31:34.440 --> 0:31:37.880 Stay with us more Bloomberg Surveillance coming up after this 0:31:46.760 --> 0:31:50.040 today and asking a one point six billion dollar loone 0:31:50.280 --> 0:31:53.320 to a subsidiary of American Electric Power. The goal is 0:31:53.360 --> 0:31:55.880 to strength and grid reliability and of course lower energy 0:31:55.880 --> 0:31:59.120 costs across the Midwest. The US Energy Secretary Chris Right 0:31:59.320 --> 0:32:01.720 joined us now from miss the Right. Miss the Secretary, 0:32:01.800 --> 0:32:04.120 welcome back to the program, sir. Let's just start with 0:32:04.400 --> 0:32:06.560 giving you some time to explain what brought us to 0:32:06.560 --> 0:32:09.160 this moment and what the broader strategy. 0:32:08.760 --> 0:32:15.160 Is, Yeah, the broader strategy is to use funds to 0:32:15.360 --> 0:32:21.040 better the American experience, lower cost rate payers, lower taxpayer expenditures. 0:32:21.480 --> 0:32:23.920 I mean, in short, President Trump got elected to get 0:32:24.000 --> 0:32:27.000 rid of the nonsense. We're not about climate politics now, 0:32:27.200 --> 0:32:30.240 we're about energy for the American people. How can we 0:32:30.360 --> 0:32:33.200 lower their cost of energy? How can we enable AI 0:32:33.400 --> 0:32:36.800 and manufacturing to reshore in our country? And this program, 0:32:36.960 --> 0:32:40.040 this loan is a perfect example of that. This is 0:32:40.120 --> 0:32:45.560 to reconductor five thousand miles of transmission lines, existing right aways, 0:32:45.600 --> 0:32:49.400 existing towers, just put better conductors up so you can 0:32:49.400 --> 0:32:52.320 get more juice through the same corridors you already had. 0:32:52.840 --> 0:32:55.560 This is the kind of things that helps American people 0:32:55.560 --> 0:32:56.680 and American businesses. 0:32:56.920 --> 0:32:59.800 Secretary, right, your department is saying that and projecting that 0:33:00.040 --> 0:33:02.600 data centers, commercial customers are for the first time ever 0:33:02.880 --> 0:33:06.840 going to use more electricity next year than household Is 0:33:06.880 --> 0:33:09.239 the federal government going to have to step in and 0:33:09.320 --> 0:33:15.280 help con American people consumers foot the bill with. 0:33:15.280 --> 0:33:18.720 The American government's doing everything we can to enable the 0:33:18.760 --> 0:33:22.120 growth of electricity production in this country. You know, the 0:33:22.200 --> 0:33:25.840 last administration was about energy subtraction, trying to get away things, 0:33:26.040 --> 0:33:29.480 get rid of things they didn't like and subsidize things 0:33:29.480 --> 0:33:32.640 that are unreliable, that use a lot of land and 0:33:32.720 --> 0:33:35.959 drive up electricity prices. So, yeah, we're trying to reverse 0:33:36.000 --> 0:33:38.880 a tidal wave. That's a challenge, but we're going to 0:33:38.920 --> 0:33:42.360 do it, and ultimately AI is not going to make 0:33:42.440 --> 0:33:45.520 electricity more scarce and more expensive in the country. 0:33:45.680 --> 0:33:47.720 It's going to make electricity. 0:33:47.040 --> 0:33:51.160 More abundant, more reliable, and ultimately more affordable, so we 0:33:51.200 --> 0:33:53.880 can walk and chew gum at the same time. It's 0:33:53.920 --> 0:33:55.840 a challenge, but we're going to get it done well. 0:33:55.880 --> 0:33:59.400 The administration, though, has purge some clean energy projects. Do 0:33:59.440 --> 0:34:03.040 you want to hoole of energy approach or just specific types. 0:34:05.160 --> 0:34:06.000 We care about? 0:34:06.080 --> 0:34:10.680 Affordable, reliable and secure energy. I get asked all the time, 0:34:10.719 --> 0:34:13.439 aren't you all of the above? No, I'm not all 0:34:13.520 --> 0:34:16.560 of the above, and I've never claimed to be. If 0:34:16.600 --> 0:34:20.080 you put it's not just more electrons on the grid 0:34:20.120 --> 0:34:22.520 to collect more wind power in the middle of the 0:34:22.600 --> 0:34:26.800 night in Iowa. That doesn't increase the capacity of our grid. 0:34:27.040 --> 0:34:30.560 That doesn't drive down anyone's prices. It doesn't allow us 0:34:30.560 --> 0:34:34.280 to reshore manufacturing our data centers here. The electricity grid's 0:34:34.400 --> 0:34:37.600 very different than your gas tank. What matters is having 0:34:37.719 --> 0:34:41.880 reliable power to meet peak demand times. If you're not 0:34:42.080 --> 0:34:44.960 there at peak demand time, you don't add any value 0:34:45.000 --> 0:34:46.760 to the grid, You just add expense. 0:34:47.280 --> 0:34:49.960 Well, when it comes to reliability. Right now, the US 0:34:50.040 --> 0:34:53.360 government is shut down. Are you speaking directly with senators 0:34:53.640 --> 0:34:56.440 about when the US government could reopen? How is it 0:34:56.440 --> 0:34:58.480 affecting your department specifically? 0:35:00.800 --> 0:35:02.839 Oh, that is a great question, and yes I am 0:35:02.880 --> 0:35:05.960 speaking to US senators on both sides of the aisle. 0:35:06.400 --> 0:35:10.120 The shutdown is definitely destructive. Everything we're trying to do 0:35:10.200 --> 0:35:14.120 is lower American energy costs and enable American businesses to 0:35:14.239 --> 0:35:20.399 build more manufacturing facilities in our country. Losing workers, having uncertainty, 0:35:20.880 --> 0:35:24.560 having funds frozen or uncertain that's not helpful. Let me 0:35:24.560 --> 0:35:27.719 get if I can give one example. We are modernizing 0:35:27.800 --> 0:35:31.280 our nuclear weapons stockpile at the Department of Energy. That's 0:35:31.400 --> 0:35:36.080 done by about one hundred thousand contractors. They're not government employees, 0:35:36.480 --> 0:35:39.840 they're contractors, so they're not going to get back pay. 0:35:40.160 --> 0:35:43.520 We've been paying them till date to date, but starting 0:35:43.560 --> 0:35:46.360 tomorrow Monday at the latest, we're not going to be 0:35:46.400 --> 0:35:49.919 able to pay those workers. If that continues, on for long. 0:35:50.040 --> 0:35:52.920 They may get other jobs. They're going to stop their 0:35:53.000 --> 0:35:57.080 efforts to modernize our nuclear weapons to guarantee the sovereignty 0:35:57.120 --> 0:35:59.879 of our country. That's not something we should mess around. 0:36:00.280 --> 0:36:03.000 Are you saying you are furlowing employees at the National 0:36:03.120 --> 0:36:07.800 Nuclear Security Administration, which keeps our nuclear stockpile in check. 0:36:10.000 --> 0:36:12.759 We have not furloughed anyone yet, but we will be 0:36:12.960 --> 0:36:16.880 out of funds by the tomorrow or early next week, 0:36:17.040 --> 0:36:19.200 so we will be forced to do that if this 0:36:19.280 --> 0:36:22.560 shutdown continues. I desperately do not want to do that, 0:36:22.880 --> 0:36:24.080 but I have to follow the law. 0:36:24.560 --> 0:36:28.719 Well, what does this mean for our national security posture? 0:36:31.640 --> 0:36:32.480 Of course, we. 0:36:32.400 --> 0:36:37.520 Keep people for emergency services or existing nuclear stockpile will 0:36:37.560 --> 0:36:41.760 be secure and will be ready. But the modernization program 0:36:41.800 --> 0:36:45.239 to replace our older weapons with new modern weapons, that's 0:36:45.280 --> 0:36:48.279 a key part of my job. We're just ramping those 0:36:48.320 --> 0:36:52.160 efforts up. We're just getting momentum there. To have everybody 0:36:52.800 --> 0:36:56.080 unpaid and not come into work, that will not be helpful. 0:36:56.640 --> 0:36:59.560 I'm adamantly in favor of ending this shutdown as soon 0:36:59.600 --> 0:37:03.759 as we can. Unfortunately, Chuck Schumer's worried more about AOC 0:37:04.280 --> 0:37:08.680 than America's nuclear safety that's just deeply un American. I'm 0:37:08.760 --> 0:37:11.800 very disappointed with the Democrats. We have a clean r 0:37:12.000 --> 0:37:15.840 to just continue the Biden level spending we had before. 0:37:16.040 --> 0:37:19.040 It's got bipartisan votes in the House and the Senate 0:37:19.480 --> 0:37:23.400 multiple times. It's just a small number of Democrats that 0:37:23.480 --> 0:37:26.239 are standing out thinking they're going to win new subsidies 0:37:26.520 --> 0:37:30.239 by holding our modernization of our nuclear stockpile hostage. 0:37:30.440 --> 0:37:32.640 This is deeply irresponsible. 0:37:33.160 --> 0:37:35.879 We also have at this moment a current trade war 0:37:35.920 --> 0:37:37.840 between the United States and China with a lot of 0:37:38.280 --> 0:37:41.200 hot rhetoric the past few weeks. What is the Department 0:37:41.280 --> 0:37:44.600 doing in terms of sourcing rare earth minerals that come 0:37:44.600 --> 0:37:47.120 from China and China right now is trying to really 0:37:47.160 --> 0:37:48.440 put a choke hold on them. 0:37:50.400 --> 0:37:53.440 Yes, that is another critical effort at our department and 0:37:53.520 --> 0:37:57.520 across the Trump administration. We have made ourselves far too 0:37:57.560 --> 0:38:00.839 dependent on, as you say, critical minerals products that come 0:38:00.880 --> 0:38:04.120 from them, that come from China. We have it across 0:38:04.200 --> 0:38:08.720 our department and across the administration effort to reshore the mining, 0:38:09.080 --> 0:38:13.480 the processing, the manufacturing for these critical projects in our 0:38:13.520 --> 0:38:18.000 country or in our friends neighboring countries or close allies 0:38:18.000 --> 0:38:20.800 of ours. This is an absolute critical effort of the 0:38:20.840 --> 0:38:21.839 Trump administration. 0:38:22.160 --> 0:38:24.520 But it's going to take time. It's years that Doug 0:38:24.640 --> 0:38:25.360 us in this hole. 0:38:25.640 --> 0:38:27.960 It's going to take us many months, hopefully not many 0:38:28.080 --> 0:38:30.000 years to get out of it. We will achieve it 0:38:30.120 --> 0:38:33.560 during the Trump administration. But you're right, we're vulnerable today 0:38:33.800 --> 0:38:37.000 and that's at a loss to Americans. Four years of 0:38:37.200 --> 0:38:42.399 unserious government focused on climate change and energy subtraction, outsourcing, 0:38:42.480 --> 0:38:44.440 anything that consumed the energy. 0:38:44.160 --> 0:38:46.960 Out of our country. That was deeply destructive. 0:38:47.080 --> 0:38:50.280 It angered Americans, and it elected President Trump. 0:38:50.520 --> 0:38:51.319 We need to fix it. 0:38:51.680 --> 0:38:55.600 You come from the private sector. Are you comfortable with 0:38:55.920 --> 0:39:00.000 the president taking stakes, equity stakes in some of these 0:39:00.040 --> 0:39:04.279 companies that he deems critical for the US national security? 0:39:06.120 --> 0:39:07.880 I am, And let me tell you why. 0:39:08.320 --> 0:39:12.520 China has used market forces to push us out of 0:39:12.560 --> 0:39:15.600 all these critical industries. As soon as we invest money, 0:39:15.640 --> 0:39:19.279 or American businesses invest money, you know, demind samarium or 0:39:19.320 --> 0:39:21.960 process that in the United States, they flood the market, 0:39:22.080 --> 0:39:25.240 drive the prices down, and people can't raise equity capital, 0:39:25.400 --> 0:39:26.040 they can't. 0:39:25.840 --> 0:39:27.080 Develop those resources. 0:39:27.480 --> 0:39:31.279 China has used manipulation of markets to keep US and 0:39:31.320 --> 0:39:31.920 the rest. 0:39:31.719 --> 0:39:33.719 Of the world out of these critical materials. 0:39:34.120 --> 0:39:36.880 We need to do things differently to make it so 0:39:36.960 --> 0:39:40.320 it does work for American businesses to do these things. 0:39:40.160 --> 0:39:40.880 In our country. 0:39:41.160 --> 0:39:44.800 That means the government providing loans, the government's providing equity capital, 0:39:45.080 --> 0:39:49.160 the government's providing other out of normal market mechanisms to 0:39:49.239 --> 0:39:51.279 make it happens. 0:39:52.640 --> 0:39:56.120 Distorting the market. Though you're a capitalist, is this not distortion? 0:39:56.560 --> 0:39:58.879 It feels like the US government is doing what China does, 0:39:58.880 --> 0:40:00.000 which is picking winners and loup. 0:40:02.400 --> 0:40:04.840 Yeah, we don't want to do this broadly in our economy, 0:40:04.920 --> 0:40:09.000 but China has effectively distorted the market to push everyone 0:40:09.080 --> 0:40:12.120 out of these critical industries. The only way for us 0:40:12.160 --> 0:40:15.200 to get back into those industries is to respond to 0:40:15.320 --> 0:40:18.759 China's market distortion. And it does require things out of 0:40:18.760 --> 0:40:21.880 the normal market mechanism, but that's in a narrow area 0:40:22.000 --> 0:40:24.880 of these critical minerals and materials. But they matter for 0:40:24.960 --> 0:40:28.000 our national security and they matter for our economic security. 0:40:28.800 --> 0:40:32.359 This is the Bloomberg Survandics podcast, bringing you the best 0:40:32.400 --> 0:40:35.719 in markets, economics, antient politics. You can watch the show 0:40:35.760 --> 0:40:38.719 live on Bloomberg TV weekday mornings from six am to 0:40:38.840 --> 0:40:42.600 nine am Eastern. Subscribe to the podcast on Apple, Spotify, 0:40:42.760 --> 0:40:44.960 or anywhere else you listen, and as always, on the 0:40:45.000 --> 0:40:47.399 Bloomberg terminal and the Bloomberg Business app.