WEBVTT - The Supply Chain, China, And JetBlue (Podcast) 0:00:00.000 --> 0:00:02.480 All right, we've got Welcome to the Bloomberg Markets podcast. 0:00:03.520 --> 0:00:08.640 Alongside every business day we bring you interviews from CEOs, 0:00:08.800 --> 0:00:13.960 market crows, and Bloomberg experts, along with essential marketing news 0:00:14.400 --> 0:00:17.400 the Bluebird Markets podcast on Apple podcast where wherever you 0:00:17.520 --> 0:00:21.160 listen to podcasts, and at Blueberg dot com Slash podcast. 0:00:21.640 --> 0:00:24.920 Those are numbers I don't think I've ever seen, so 0:00:24.960 --> 0:00:27.160 I need to talk to professional about this. R J Gallows, 0:00:27.200 --> 0:00:30.600 Senior portfolio manager Federated Hermes Joins US. R J talked 0:00:30.600 --> 0:00:33.280 to us about this year today performance we've seen in 0:00:33.320 --> 0:00:39.120 the US corporate bond market really really noteworthy declines. Well, 0:00:39.159 --> 0:00:43.240 good morning. Noteworthy might be an understatement. Yeah, I think 0:00:43.600 --> 0:00:47.159 you me, most of your listeners have not seen this 0:00:47.320 --> 0:00:50.479 kind of performance in fixed income. You know, nine four 0:00:50.600 --> 0:00:53.560 used to be an infamous year for bond returns. This 0:00:53.680 --> 0:00:58.080 dwarfs that, um it. It spans across really all the 0:00:58.080 --> 0:01:01.520 major sectors of fixed income. Uh, you were mentioning, I 0:01:01.600 --> 0:01:06.000 believe the Bloomberg Investment Grade Corporate Index down thirteen point four. 0:01:06.200 --> 0:01:08.240 You know, overall the agg of which that's a component, 0:01:08.520 --> 0:01:12.199 it's down nine seven. Treasuries are down just about nine. 0:01:13.120 --> 0:01:18.640 Munies are also down comparable amount. Ten percent means a 0:01:18.920 --> 0:01:22.440 terrible month of May. By the way, I think that 0:01:22.600 --> 0:01:26.960 the key concern now from an asset manager standpoint is 0:01:27.040 --> 0:01:29.600 trying to call when do we hit some stability on 0:01:29.800 --> 0:01:33.959 rates number one UH and number two dealing with what 0:01:34.040 --> 0:01:37.760 has been and outside redemptions as investors are sort of 0:01:37.760 --> 0:01:42.000 fleeing the losses they've already taken. And I highlight that 0:01:42.080 --> 0:01:44.800 just because they've already taken these losses, we are probably 0:01:44.800 --> 0:01:46.680 closer to the end of the sell off them. We 0:01:46.720 --> 0:01:48.800 are at the beginning for sure. When you consider that 0:01:48.840 --> 0:01:51.640 the treasury yields have risen, you know, all across the 0:01:51.680 --> 0:01:56.080 curve hundred fifty almost hundred eighty basis points UM. We 0:01:56.200 --> 0:01:58.080 still are short. We think there's another like to go 0:01:58.160 --> 0:02:01.440 up and yield, but the worst blosses that we've sustained 0:02:01.440 --> 0:02:04.880 are already probably behind us UM, and we're getting a 0:02:04.920 --> 0:02:07.200 little bit more optimistic as we start to look forward 0:02:07.880 --> 0:02:10.400 at this point. First of all, shout out to the 0:02:10.440 --> 0:02:13.959 i n GO function on the Bloomberg Journal. I end 0:02:14.000 --> 0:02:17.680 go is so helpful when talking fixed income. It just 0:02:17.720 --> 0:02:20.600 shows you all the indexes um that you can get. 0:02:20.760 --> 0:02:24.440 Thank you another well, R. J. Just rattled them all 0:02:24.480 --> 0:02:27.640 off as well. Um Uh. There was a great story 0:02:27.800 --> 0:02:31.880 r J by Liz Cappel McCormick and Alice Gledhill. Bonds 0:02:31.960 --> 0:02:35.399 suddenly looked like a smart hedge again. Um is the headline, 0:02:36.080 --> 0:02:39.480 and you're saying you expect another leg up in yields. 0:02:39.520 --> 0:02:43.280 But in a way, I find this so exciting because 0:02:44.400 --> 0:02:47.480 you know, for so long in my adult life, UM, 0:02:48.480 --> 0:02:51.840 I couldn't get that much yield from bonds, and now 0:02:52.120 --> 0:02:55.320 I'm starting to see levels that I would be comfortable with. 0:02:55.480 --> 0:03:00.560 You know, I'm perfectly happy buying UH bond with a 0:03:00.600 --> 0:03:04.040 five coupon. I mean, that sounds great to me right now. 0:03:05.440 --> 0:03:09.080 It's a great point. For much of the last ten years, 0:03:09.240 --> 0:03:11.440 which in a sense we're book ended by the global 0:03:11.440 --> 0:03:16.840 financial crisis and the pandemic, we had extraordinary economic shocks 0:03:16.840 --> 0:03:20.919 that were met with extraordinary monetary policy measures that drove 0:03:21.000 --> 0:03:26.120 yields down and caused price for short and intermedium periods 0:03:26.120 --> 0:03:30.440 of time to be your source of return. Uh. The 0:03:30.800 --> 0:03:36.040 direct implication of that is that yields got very low uh, 0:03:36.080 --> 0:03:40.040 and and they muted the perspective long term return and 0:03:40.080 --> 0:03:42.680 fixed income. As a result of the measures that were 0:03:42.680 --> 0:03:45.680 put in place by the central bank facing the economic 0:03:45.680 --> 0:03:49.200 crisis that I just mentioned. At this point, you know, 0:03:49.360 --> 0:03:54.080 fortunately the economy is growing. There are many challenges globally, 0:03:54.160 --> 0:03:57.840 and uh, the inflation story is a very very troubling 0:03:57.840 --> 0:04:00.640 one to fixed income returns. But now the bonds have 0:04:00.720 --> 0:04:03.600 repriced higher and yield to incorporate the very hawk ash 0:04:03.600 --> 0:04:07.040 central bank. Uh, we were getting closer to a period 0:04:07.040 --> 0:04:10.480 where there might be some symmetry and returns again. You 0:04:10.520 --> 0:04:14.320 get some income that historically has always boosted your fixed 0:04:14.360 --> 0:04:16.520 income total return income as a component of your return 0:04:16.720 --> 0:04:21.520 after all, um, and going forward, I think that the 0:04:21.560 --> 0:04:24.000 fact that we've seen bonds start to behave somewhat more 0:04:24.040 --> 0:04:29.120 normally where on a risk off day stocks are down, uh, 0:04:29.680 --> 0:04:32.240 bonds can actually be up again. For a while, They're 0:04:32.400 --> 0:04:35.880 everything was falling, which was a very adversarial investment climate 0:04:35.920 --> 0:04:39.400 for traditional diversification, you know, diversified bonds of the stocks. 0:04:39.400 --> 0:04:42.960 It wasn't working. You know, sixty portfolios weren't working. Um. 0:04:43.040 --> 0:04:45.440 So now that you've reset yields sharply higher, you're getting 0:04:45.440 --> 0:04:49.680 that income cushion, You're getting better perspective prospective returns. Excuse me, 0:04:49.960 --> 0:04:53.000 I would argue we still think that the tenure Treasury 0:04:53.080 --> 0:04:56.400 is going to end a good bit above three UH 0:04:56.480 --> 0:04:59.840 in this calendar year. UM. You know, right now you've 0:05:00.000 --> 0:05:01.920 had a bit of a retracement lower. By the way, 0:05:01.920 --> 0:05:04.160 what does that mean, r J, What does that mean 0:05:04.320 --> 0:05:11.040 for what's the spread usually like to UM investment grade corporate? Well, 0:05:11.080 --> 0:05:14.960 I g um. You know, we've actually recently gone more 0:05:15.360 --> 0:05:19.760 cautious on I g um investment grade even though the 0:05:19.760 --> 0:05:22.240 economy is pretty good. You know, the sad fact of 0:05:22.240 --> 0:05:25.000 the matter is, but the inflation being so hot and 0:05:25.040 --> 0:05:27.919 the FED having to be so hawkish, the prospects of 0:05:27.920 --> 0:05:33.279 recession UM in you know, next year or UH certainly 0:05:33.279 --> 0:05:36.640 have grown. UH. I think that what the volatility or 0:05:36.640 --> 0:05:38.440 the underperformance is probably a better way of saying it, 0:05:38.480 --> 0:05:42.239 that we've seen now in investment grade corporates are starting 0:05:42.279 --> 0:05:44.279 to price in that that sort of shift in the 0:05:44.320 --> 0:05:47.920 fundamental macro outlook. For a while there, we were recovering 0:05:47.960 --> 0:05:50.839 from the depths of the pandemic economic shock. The FED 0:05:51.040 --> 0:05:54.279 was pouring on its demand for bonds. You know, investment 0:05:54.279 --> 0:05:57.160 grade corporates had a really nice total rate of return UH, 0:05:57.200 --> 0:05:59.239 And now we're living to the flip side of that point. 0:05:59.440 --> 0:06:02.400 If you look at the last five years the OS 0:06:02.480 --> 0:06:05.160 on the Bloomberg Corporate Index, and when we were talking 0:06:05.200 --> 0:06:08.160 about down thirteen percent year today, you know, the five 0:06:08.200 --> 0:06:12.680 year averages around one fifteen UH. Currently as a Friday's close, 0:06:12.720 --> 0:06:15.600 it's now at a one UH and the spread has 0:06:15.600 --> 0:06:19.559 been widening quite a bit really for much of the year. UM. 0:06:19.600 --> 0:06:21.479 We still think that that could get a little higher 0:06:22.320 --> 0:06:25.080 as we price in the risk of procession UH and 0:06:25.160 --> 0:06:29.400 as rates continue to drive somewhat higher and cause flows out. 0:06:29.520 --> 0:06:32.279 All right, r J, thank you so much. We appreciate r. J. Gallas, 0:06:32.320 --> 0:06:40.520 Senior portfolio Manager, Federated at Hermes. What we've all become 0:06:40.520 --> 0:06:43.400 a fairly smart at during this pandemic is this whole 0:06:43.400 --> 0:06:48.080 concept of the global supply chain and logistics and all 0:06:48.160 --> 0:06:51.680 that stuff, because boy, every company out there blames the 0:06:51.720 --> 0:06:55.000 supply chain one way or another during this pandemic for UH. 0:06:55.000 --> 0:06:57.520 You know, some challenges out there, and there's no better 0:06:57.560 --> 0:07:01.000 place to get the latest UH than with Gene Shiroka, 0:07:01.160 --> 0:07:03.560 Executive director of the Port of Los Angeles wife, because 0:07:03.560 --> 0:07:06.560 the Port of Los Angeles is the busiest container port 0:07:06.960 --> 0:07:10.280 in North America. Gene, thanks so much for joining us 0:07:10.280 --> 0:07:12.120 once again. We'd love to get an update, and let's 0:07:12.160 --> 0:07:14.800 just start with your port. Give us a sense of 0:07:14.880 --> 0:07:17.800 how many ships are waiting to get into your port 0:07:17.960 --> 0:07:21.520 now versus maybe six months ago. UM, maybe some other 0:07:21.560 --> 0:07:23.840 metrics that you look at in terms of getting stuff 0:07:23.960 --> 0:07:26.600 out of your port and into the economy. Gives us 0:07:26.720 --> 0:07:30.360 just an update. Good morning, man and pauled a couple 0:07:30.360 --> 0:07:35.080 of things. First number one, first quarter busiest on record 0:07:35.120 --> 0:07:37.640 at the Port of Los Angeles. Month of April, second 0:07:37.760 --> 0:07:41.400 busiest April in our hundred and fifteen year history. The 0:07:41.480 --> 0:07:46.320 number of ships is about thirty right now waiting outside 0:07:46.320 --> 0:07:49.080 the one and fifty mile marker on their way into 0:07:49.080 --> 0:07:51.480 the ports of Long Beach in Los Angeles. That's down 0:07:52.000 --> 0:07:55.160 from a hundred and nine vessels on the ninth of January. 0:07:55.240 --> 0:07:58.679 We continue to work that backlog and have record throughput 0:07:58.760 --> 0:08:01.800 at the port. The most interesting number to me is 0:08:01.880 --> 0:08:04.720 two hundred thousand, and that's the number of containers on 0:08:04.760 --> 0:08:07.280 a rolling thirty day average we're pushing out of the 0:08:07.320 --> 0:08:10.600 port to the interior of the country. That's at about 0:08:10.680 --> 0:08:13.640 recorded highs right now. We've got to keep pushing that 0:08:13.680 --> 0:08:17.360 efficiency and getting the cargo into the domestic economy. So 0:08:17.400 --> 0:08:21.160 you're doing more than ever and demand is still probably 0:08:21.240 --> 0:08:25.120 stronger than supply, and you know logistics terms, And I 0:08:25.160 --> 0:08:30.280 wonder about the morale of the industry, Gene, because you know, 0:08:30.320 --> 0:08:33.760 as Paul pointed out, we all now know more about 0:08:33.800 --> 0:08:38.080 the supply chain, more about logistics, and more about just 0:08:38.160 --> 0:08:41.360 how important it is for the American economy and for 0:08:41.400 --> 0:08:43.840 the global economy. Do you think that, you know, people 0:08:44.600 --> 0:08:48.719 working in this industry feel a lot more respect, you know, 0:08:48.760 --> 0:08:51.440 a lot more pride to what they're doing. Well. I 0:08:51.480 --> 0:08:54.880 think across the board there's been a spotlight shined on 0:08:54.960 --> 0:08:58.160 this industry and it can never be too bright for us. 0:08:58.760 --> 0:09:01.920 You've got dock workers who have been averaging six days 0:09:01.960 --> 0:09:06.520 a week on the job since the pandemic began, chassis providers, 0:09:06.720 --> 0:09:11.200 liner shipping companies, marine terminal operators working around the clock 0:09:11.280 --> 0:09:14.640 as well, with this deluge of cargo coming in and 0:09:14.679 --> 0:09:18.800 no shortage of areas that need to be fixed, improved 0:09:19.080 --> 0:09:23.120 or smoothed out to help this portion of the supply chain. Remember, 0:09:23.160 --> 0:09:27.000 the American economy is seventy you and me buying goods, 0:09:27.280 --> 0:09:30.840 and we haven't shown any reason to stop just yet. 0:09:31.600 --> 0:09:34.160 Jane talked to us about what you're seeing in China. 0:09:34.280 --> 0:09:38.959 You know, there's reports of various levels of shutting down, reopening, 0:09:39.120 --> 0:09:41.600 and how does that manifest itself into kind of what 0:09:41.760 --> 0:09:44.560 you're seeing in terms of exports. Well, a lot has 0:09:44.600 --> 0:09:47.640 been written on this, but so far we've seen the 0:09:47.720 --> 0:09:51.720 number of ships leaving Asia and Central China at about 0:09:51.800 --> 0:09:55.120 the levels that we had anticipated. No real slow down 0:09:55.200 --> 0:09:57.319 because of the lockdowns in Shanghai. And I'll give you 0:09:57.320 --> 0:10:00.680 a couple of reasons. One, I had work there in 0:10:00.720 --> 0:10:03.040 the early part of the two thousands for a number 0:10:03.080 --> 0:10:05.600 of years. Keep up my contacts on the ground and 0:10:05.600 --> 0:10:08.840 those relationships. I'm talking to these folks every night. We're 0:10:08.880 --> 0:10:12.079 seeing very good productivity out of the Young Shaan Deep 0:10:12.200 --> 0:10:16.600 Seaport in Shanghai. And for those manufacturers who are based 0:10:16.640 --> 0:10:20.920 west of town, the Hong Chow area, Hung Joe, Su Joe, 0:10:21.040 --> 0:10:24.920 even into Junk sup province locations like Nanjing. They're almost 0:10:24.960 --> 0:10:28.720 equidistant between the port of Shanghai and the port of Ningbo. 0:10:28.920 --> 0:10:31.680 Ningbo over these last eight weeks, that's how long the 0:10:31.720 --> 0:10:35.480 lockdown has been in effect. Is up about picking up 0:10:35.559 --> 0:10:41.120 the slack where transport companies can't navigate in their normal lanes. 0:10:41.520 --> 0:10:44.200 So we're seeing about the amount of cargo that we 0:10:44.280 --> 0:10:48.040 did before the lockdowns went into effect. No precipitates, no 0:10:48.160 --> 0:10:51.560 precipitous drop off at some had a pint early on. 0:10:53.040 --> 0:10:56.199 What about the US restraints that UM we've been seeing 0:10:56.200 --> 0:10:59.320 over the past year, for example, labor constraints, how how 0:10:59.360 --> 0:11:03.000 have those UH faired UM going into the second quarter. 0:11:03.760 --> 0:11:07.080 Three segments of labor, as we've talked about guys. One, 0:11:07.160 --> 0:11:09.560 the dock workers, they're out there six days a week, 0:11:09.720 --> 0:11:12.560 full employment of the fifteen thousand women and men that 0:11:12.640 --> 0:11:15.960 have been on the job for the past two years, 0:11:15.960 --> 0:11:19.480 with this heightened volume coming through. Second, of the truck drivers. 0:11:19.840 --> 0:11:22.080 And as we've said, I don't know that we've got 0:11:22.120 --> 0:11:25.280 a shortage of drivers because the state of California has 0:11:25.320 --> 0:11:29.480 issued more than six and forty thousand commercial drivers licenses, 0:11:29.720 --> 0:11:33.360 and of the nine thousand port dra age drivers that 0:11:33.440 --> 0:11:36.080 called the port at least once a week, we could 0:11:36.080 --> 0:11:39.000 probably use a few more, but they've gone into other sectors, 0:11:39.360 --> 0:11:42.760 whether it's parcel delivery, working in other segments of the 0:11:42.800 --> 0:11:47.080 transportation network. What we have right now, though, guys, and 0:11:47.120 --> 0:11:50.200 the thing that I look at, most fifty three percent 0:11:50.240 --> 0:11:53.679 of our truck gates go unused every day. We've got 0:11:53.760 --> 0:11:57.160 latent capacity to haul more containers out. We've got to 0:11:57.200 --> 0:12:00.000 take advantage of that. The third segment is the warehouse 0:12:00.040 --> 0:12:02.880 US workers. With two billion square feet of warehousing under 0:12:02.960 --> 0:12:05.720 roof from the Pacific Ocean to the desert region of 0:12:05.760 --> 0:12:09.400 southern California, there's still about ten thousand job openings for 0:12:09.440 --> 0:12:13.400 the folks that handle all this product, and with less 0:12:13.400 --> 0:12:19.800 than one percent vacancy rate, that warehousing complex needs considered attention. Hey, Jean, 0:12:19.920 --> 0:12:22.840 A lot of folks, just you know, economists in general 0:12:22.840 --> 0:12:25.600 have been saying, what this supply chain issue that we've 0:12:25.600 --> 0:12:27.320 all been experiencing over the past couple year is, what 0:12:27.320 --> 0:12:30.080 it may suggest is we need to maybe rethink this 0:12:30.280 --> 0:12:34.680 global just in time inventory strategy. Any customers that you 0:12:34.760 --> 0:12:39.040 talked to, uh, say that they're reevaluating that or maybe 0:12:39.080 --> 0:12:41.960 trying to tweak it going forward. Yes, and a number 0:12:42.000 --> 0:12:45.160 of conversations taking place. A lot of folks what we've 0:12:45.200 --> 0:12:47.840 witnessed over the past couple of years have been ordering 0:12:47.960 --> 0:12:50.400 just in case, not just in time. They didn't want 0:12:50.440 --> 0:12:54.440 to be known as the paper goods company of two. 0:12:54.840 --> 0:12:57.760 So we see a lot of product flowing through quarter two, 0:12:57.800 --> 0:13:01.400 as I've shared with your audience before, or was designated 0:13:01.440 --> 0:13:05.760 to be the inventory replenishment time period. This is normally 0:13:05.800 --> 0:13:08.240 our slack season, so folks wanted to build up those 0:13:08.280 --> 0:13:12.840 safety stocks. The inventory sales ratio nationwide had been as 0:13:13.000 --> 0:13:16.839 low as two thousand eleven. A lot of focus on that, 0:13:17.320 --> 0:13:21.200 and then thirdly, trying to segment these products from the 0:13:21.240 --> 0:13:24.360 parts and components which make up twenty percent of our 0:13:24.440 --> 0:13:27.520 imports that need to get the factory floors, goods that 0:13:27.600 --> 0:13:29.679 need to get out in the market versus those that 0:13:29.760 --> 0:13:33.560 can continue this inventory replenishment are the segments that we've 0:13:33.600 --> 0:13:36.800 got to monitor very closely now and push them into 0:13:36.800 --> 0:13:40.480 the market place on the time basis that are needed. Gene, 0:13:40.480 --> 0:13:43.080 always great to get your insight. Thanks so much for 0:13:43.200 --> 0:13:46.840 joining us today. Jean Siroka there is the executive director 0:13:47.080 --> 0:13:55.080 at the Port of Los Angeles, North America's busiest container report. Boy, 0:13:55.280 --> 0:13:58.880 we know from past experience that lockdowns are not good 0:13:58.920 --> 0:14:00.760 for economic activity, and just take a look at some 0:14:00.800 --> 0:14:03.959 of the recent data out of China. Industrial output unexpectedly 0:14:03.960 --> 0:14:06.480 felt two point nine percent in April from a year ago, 0:14:06.800 --> 0:14:10.240 while retail sales contracted eleven point one percent. In the period. 0:14:10.679 --> 0:14:13.400 That's weaker than it projected six point six percent and drop. 0:14:13.840 --> 0:14:15.640 Let's get to the bottom of this and see what 0:14:15.880 --> 0:14:18.640 is really going on underneath the numbers in China. Chia 0:14:18.880 --> 0:14:23.480 Kazi joins US managing director China Basebook International ches tough 0:14:23.600 --> 0:14:27.640 numbers coming out of China. UM, give us your lay 0:14:27.680 --> 0:14:31.280 of the land about the Chinese economy. Yeah, thanks for 0:14:31.320 --> 0:14:34.560 having me on look over night. Numbers were incredibly disappointing, 0:14:34.960 --> 0:14:37.640 But if you're watching China closely the way we are, 0:14:37.760 --> 0:14:40.360 this should have come as no surprise whatsoever. When we 0:14:40.400 --> 0:14:43.080 put out our note in April based on our brand 0:14:43.120 --> 0:14:46.640 new numbers, the sentence up top red these are the 0:14:46.760 --> 0:14:50.280 worst economic data out of China that we've seen since 0:14:50.320 --> 0:14:54.040 the initial COVID downturn. At that point, every major sector 0:14:54.120 --> 0:14:58.240 was hurting, Every major economic indicator was turning down UM, 0:14:58.280 --> 0:15:00.520 and it was becoming very clear that the pain that 0:15:00.640 --> 0:15:03.480 began in March at the beginning of the lockdowns had 0:15:03.520 --> 0:15:06.280 made its way into April. Has lockdowns got more severe. 0:15:06.720 --> 0:15:09.960 Businesses were starting to pause activity, and consumers were being 0:15:10.000 --> 0:15:17.360 forced to stay home. Why is she UM sticking to this? Um? 0:15:17.400 --> 0:15:22.360 You know, even amidst pushbacks I mean, it's clear what 0:15:22.400 --> 0:15:25.040 this does to the economy, and I'm not sure how 0:15:25.080 --> 0:15:29.360 it works out for the health of the nation after Yeah, 0:15:29.440 --> 0:15:31.480 that's right. Look, I mean, right now, the problem that 0:15:31.560 --> 0:15:33.800 the that that she and others are facing is that 0:15:33.920 --> 0:15:37.360 they don't have access to vaccines that with high efficacy rates. 0:15:37.360 --> 0:15:40.239 They have a real problem getting their adult senior citizens, 0:15:40.360 --> 0:15:45.800 serious citizens vaccinated. Their health infrastructure cannot simply handle if 0:15:45.800 --> 0:15:48.240 they were to see the type of outbreaks and and 0:15:48.240 --> 0:15:50.040 and and cases the way that we saw them here 0:15:50.080 --> 0:15:52.120 in the United States, specifically how we suffered here in 0:15:52.120 --> 0:15:54.960 New York a couple of years ago. So, uh, if 0:15:54.960 --> 0:15:56.600 that were to happen, I think you would see just 0:15:56.680 --> 0:15:58.560 a breakdown of the health care system there, and he 0:15:58.600 --> 0:16:01.600 would also see the white uh you know, divide between 0:16:01.640 --> 0:16:04.240 the half and the have not take place. It would 0:16:04.240 --> 0:16:07.400 be pretty brutal. I think avoiding that as priority number one, 0:16:07.760 --> 0:16:10.200 if it means taking a hit to the economy right now, 0:16:10.600 --> 0:16:12.880 then that's clearly a cost of the party is willing 0:16:12.920 --> 0:16:15.120 to suffer, despite the fact that they keeps saying that 0:16:15.200 --> 0:16:18.600 maintaining solid economic momentum is a priority of theirs this year, 0:16:19.160 --> 0:16:21.120 She's give us a just an update on kind of 0:16:21.560 --> 0:16:24.880 where the discussions are or are not between maybe some 0:16:24.920 --> 0:16:28.480 of the Western pharmaceutical companies and the Chinese government about 0:16:28.560 --> 0:16:32.680 maybe getting some higher, uh some better vaccines into the country. 0:16:33.880 --> 0:16:35.960 But we've heard some stuff about you know, Fizer Pills, 0:16:35.960 --> 0:16:39.280 et cetera getting approval. There's a domestic MR and a 0:16:39.360 --> 0:16:41.920 vaccine that has now gotten approval. But even if this 0:16:41.960 --> 0:16:45.240 stuff were to happen today, uh, this the rollout would 0:16:45.280 --> 0:16:48.800 not take place uh for for months and months to come. 0:16:49.320 --> 0:16:51.720 You know, we can safely say that as far as 0:16:51.800 --> 0:16:54.200 zero COVID is concerned, which by the way, it's a 0:16:54.240 --> 0:16:56.600 lot more flexible today than it used to be back 0:16:56.600 --> 0:16:59.520 a couple of years ago. But even in its current form, 0:16:59.640 --> 0:17:02.960 it's going anywhere before the Party Congress. It is an 0:17:03.000 --> 0:17:05.560 all important time. That is where all eyes are when 0:17:05.600 --> 0:17:08.159 when President she gets his third term, um and so. 0:17:08.280 --> 0:17:10.960 And just continue to assume as if you're an investor 0:17:11.280 --> 0:17:14.280 that these types of lockdowns uh and and especially the 0:17:14.320 --> 0:17:17.719 reversion back to lockdown, even if there is some opening up, 0:17:18.280 --> 0:17:19.639 is going to be part for the course of the 0:17:19.680 --> 0:17:22.000 rest of this year, probably getting into early next year. 0:17:22.359 --> 0:17:24.640 What do you think we should the market should be 0:17:25.160 --> 0:17:28.360 thinking about when this Party Congress convenes later in the year, 0:17:28.400 --> 0:17:29.720 what what do you expect to come out of this 0:17:31.560 --> 0:17:34.600 the look I mean politically speaking, I don't buy some 0:17:34.640 --> 0:17:38.000 of the noise sets out there about opposition to the 0:17:38.040 --> 0:17:40.119 too too she and and so forth. I think that 0:17:40.240 --> 0:17:42.199 it seems quite likely that that their term is very 0:17:42.240 --> 0:17:45.439 much guaranteed. The real question is what happens in the 0:17:45.440 --> 0:17:48.399 applemath of that, what moves are done around the Party 0:17:48.400 --> 0:17:51.680 Congress is stabilized. Big stimulus is not happening in China. 0:17:52.000 --> 0:17:55.040 We know this. It's clear and Shana age data, it's 0:17:55.080 --> 0:17:58.159 clear and official numbers. What amounts of fiscal stimulus perhaps 0:17:58.160 --> 0:18:00.199 takes place in the second half of the year to 0:18:00.240 --> 0:18:02.680 help energize the economy. Does the you know, do they 0:18:02.720 --> 0:18:04.439 move a little to do the ease up on the 0:18:04.480 --> 0:18:06.960 property market? Is a property market? Get it some additional 0:18:07.000 --> 0:18:10.320 breathing room, Um, that's possible. What's the nature of the 0:18:10.320 --> 0:18:13.320 tech wrapdowns? Are they done for good? Highly doubted? What 0:18:13.560 --> 0:18:16.240 form do they take next? So I think continuity of 0:18:16.280 --> 0:18:18.600 policy is going to be there. We just have to 0:18:18.600 --> 0:18:21.600 watch it very very closely on the ground. How is 0:18:21.600 --> 0:18:24.840 it being implemented rather than just coming up with theories, 0:18:24.840 --> 0:18:27.840 as sometimes China watchers often do. Alright, great great stuff 0:18:27.920 --> 0:18:30.040 was really taught me to get you on the phone. 0:18:30.119 --> 0:18:33.639 Cha Kazi, managing director, trying to bage book Internet for 0:18:33.680 --> 0:18:37.440 getting the latest from continuing challenging economic ayor coming out 0:18:37.440 --> 0:18:44.920 of trying to amid the lockdown. Fascinating news going on. 0:18:44.920 --> 0:18:49.560 One of the coolest stories is the Jet Blue hostile 0:18:49.640 --> 0:18:53.879 takeover for Spirit. And it's not just uh, the US 0:18:53.960 --> 0:18:56.160 airlines that I find interesting because we had an interview 0:18:56.200 --> 0:18:59.520 with Michael O'Leary Ryan their earlier UM and he was 0:18:59.800 --> 0:19:02.720 also saying, like, you know what, there's going to be 0:19:02.760 --> 0:19:05.040 a recession. People are going to go towards the lowest 0:19:05.080 --> 0:19:07.840 costs and that's us. UM. That's that's at least his 0:19:07.880 --> 0:19:09.760 bet there. And I'm not sure exactly what's going on 0:19:09.760 --> 0:19:13.840 with yet Blue and Spirit, but Bloomberg News reporter Mary 0:19:13.840 --> 0:19:17.240 Schlangenstein is going to tell us exactly what's going on. 0:19:17.680 --> 0:19:22.760 Mary joined Bloomberg News in right and and she and Mary, 0:19:22.920 --> 0:19:25.440 since you're in Dallas, I'm gonna guess your name isn't 0:19:25.480 --> 0:19:29.040 pronounced Schlangenstein. But since I just came back from Berlin 0:19:29.160 --> 0:19:32.160 for me, that's what it is right right, Yeah, that's 0:19:32.400 --> 0:19:34.040 that's not how we pronounced it here in the US, 0:19:34.119 --> 0:19:36.800 but you're right on the German pronouncing. How So how 0:19:37.040 --> 0:19:39.280 what do we say? What do you say when you're 0:19:39.320 --> 0:19:46.399 introducing yourself? I wasn't that far off. Um. In any case, 0:19:46.680 --> 0:19:48.680 that's not what we brought you on to talk about. Mary. 0:19:48.720 --> 0:19:51.199 What's the deal with this Jet Blue offer? I mean, 0:19:51.320 --> 0:19:54.320 is this kind of um, you know, we better get 0:19:54.400 --> 0:19:57.880 this asset before somebody else does kind of deal. Well, 0:19:57.920 --> 0:20:00.360 I think that's part of it, because you know, for many, 0:20:00.400 --> 0:20:02.880 many years, Jet Blue has tried to grow and they've 0:20:02.920 --> 0:20:06.119 always said they want to grow organically, but they lost 0:20:06.160 --> 0:20:08.879 out several years back when they tried to buy Virgin 0:20:08.880 --> 0:20:12.359 America that ended up being acquired by Alaska. So now 0:20:12.480 --> 0:20:14.880 when Frontier came out and made an offer for Spirit, 0:20:15.359 --> 0:20:17.320 jet Blue looks at that and says, you know, this 0:20:17.400 --> 0:20:20.359 may be one of our last chances to really have 0:20:20.480 --> 0:20:23.199 a turbo charge to our growth, so we're gonna go 0:20:23.320 --> 0:20:26.520 for it. Um. They were spurned by the Spirit Airlines 0:20:26.560 --> 0:20:29.520 board and so now they're making this hostile bid, uh 0:20:29.640 --> 0:20:31.920 to get Spirit to take a closer look at all 0:20:31.920 --> 0:20:35.320 the details of their offer. So do we have any sense, Mary, 0:20:35.359 --> 0:20:39.000 is there any regulatory challenges to either of these acquires, 0:20:39.040 --> 0:20:41.680 jet Blue or Frontier. Does anybody have an upper hand 0:20:41.760 --> 0:20:46.440 supper regulatory perspective? Well, right now, the Jet Blue, I 0:20:46.440 --> 0:20:50.640 mean the Spirit Frontier merger proposals getting some review from 0:20:50.680 --> 0:20:54.240 regulators because they've already asked for more information. Um, so 0:20:54.280 --> 0:20:57.440 they are. That's already happening. But Jet Blue would have 0:20:57.560 --> 0:21:00.399 to go under the same scrutiny. If it reaches an 0:21:00.440 --> 0:21:03.879 agreement to merge with Spirit or to take over Spirit, 0:21:04.040 --> 0:21:07.080 then that would go have to go through a regulatory review, 0:21:07.359 --> 0:21:09.280 and there has come some concern that's one of the 0:21:09.280 --> 0:21:12.880 big issues that Spirit raised and rejecting rejecting jet Blue 0:21:12.920 --> 0:21:15.840 would say, look, we don't think that this deal has 0:21:15.880 --> 0:21:18.280 a good chance of being consummated, and because we don't 0:21:18.280 --> 0:21:20.480 think that, we're not even going to look at your offer, 0:21:21.000 --> 0:21:23.440 you know, we're not going to evaluate the financial side 0:21:23.440 --> 0:21:24.960 of it or anything like that because we don't think 0:21:24.960 --> 0:21:26.919 it can be done. And of course Jet Blue is 0:21:27.000 --> 0:21:31.320 arguing against that. Mary, I have indeed just moved back 0:21:31.400 --> 0:21:33.919 from six years living in Germany, and one of the 0:21:33.920 --> 0:21:38.360 coolest things about living in Europe is you can travel everywhere, 0:21:38.640 --> 0:21:41.160 and you do because it's just so cheap. I mean, 0:21:41.880 --> 0:21:43.760 you go from one end to the continent to the 0:21:43.760 --> 0:21:45.600 other and you can do it for less than a 0:21:45.640 --> 0:21:49.520 hundred bucks round trip um pretty much guaranteed all the time, 0:21:49.720 --> 0:21:51.840 not just like once in a while when there's a sale. 0:21:52.240 --> 0:21:54.760 Is there any chance of that kind of super low 0:21:54.880 --> 0:21:58.240 cost model coming to the US? What? What's what's the 0:21:58.280 --> 0:22:03.320 differentiator of you? If you did see Frontier and Spirit combined, 0:22:03.480 --> 0:22:07.080 they are the two largest ultra discounters already. Those are 0:22:07.119 --> 0:22:09.719 the people that charge you a very low fair price, 0:22:10.040 --> 0:22:12.280 but then they charge you for everything else, Like if 0:22:12.320 --> 0:22:14.040 you want to print your boarding path, if you want 0:22:14.080 --> 0:22:16.480 to get a bottle of water on board, they charge 0:22:16.520 --> 0:22:19.840 you for every We call that nickel and diming. Yeah, 0:22:19.880 --> 0:22:22.600 that's a lot of people do call it Nicolin diming um. 0:22:22.760 --> 0:22:26.359 And so this would make them a very large airline, um, 0:22:26.520 --> 0:22:29.320 you know. And and there's the expectation that there would 0:22:29.320 --> 0:22:32.639 be lots of growth beyond that, simply because the resurgence 0:22:32.680 --> 0:22:36.920