WEBVTT - Surveillance: Return Of Travel With Ryanair CEO 0:00:05.120 --> 0:00:09.280 Welcome to the Bloombergs Surveillance Podcast Hometown Keene. Along with 0:00:09.320 --> 0:00:13.200 the Jonathan Feral and Lisa Brownwitz. Jaylie, we bring you 0:00:13.320 --> 0:00:17.799 insight from the best and economics, finance, investment, and international 0:00:20.280 --> 0:00:26.880 Johnson something else. And if you're talking to friends and family, 0:00:27.120 --> 0:00:29.760 they're thinking about other things through the summer too. Absolutely, 0:00:29.760 --> 0:00:31.560 everybody's trying to figure out exactly how they're going to 0:00:31.600 --> 0:00:35.280 get away for some sort of a vacation holiday throughout 0:00:35.280 --> 0:00:37.480 the summer, John, And it's interesting you listen to what 0:00:37.560 --> 0:00:40.040 the CDC is saying, and it's a similar thing over 0:00:40.080 --> 0:00:43.800 here in the UK as well. The scientists incredibly cautious 0:00:44.200 --> 0:00:47.360 about traveling. Certainly here in the UK, that is the narrative, 0:00:47.360 --> 0:00:49.840 but John, investors just don't see it that way. Bring 0:00:49.920 --> 0:00:53.320 up the chart of Ryanair from the beginning of we're 0:00:53.320 --> 0:00:57.400 back to the same levels that we came in to at. 0:00:57.520 --> 0:01:00.560 Basically the stock has completely rebound I did, as you 0:01:00.560 --> 0:01:03.960 can see during that period. Actually we're up by seven 0:01:04.000 --> 0:01:07.000 and a half percent, So investors certainly see a reopening. 0:01:07.080 --> 0:01:08.920 As you pointed out with Lisa just before the break, 0:01:08.959 --> 0:01:11.200 a lot of volatility though in the stock over the 0:01:11.240 --> 0:01:14.560 last few days as we've seen the equivocation from the 0:01:14.640 --> 0:01:17.959 UK and the case counts climbing within the EU, the 0:01:17.959 --> 0:01:21.440 health situation getting worse and worse. UM, let's bring in 0:01:21.480 --> 0:01:25.960 Michael O'Leary, he's the Ryanair CEO to talk about this. Michael, 0:01:26.120 --> 0:01:28.440 good morning. You were talking about the idea on a 0:01:28.480 --> 0:01:30.800 call a little earlier on that you're gonna be flying 0:01:30.920 --> 0:01:35.039 eight of the schedule that you would normally fly kind 0:01:35.040 --> 0:01:38.680 of July to September. What's your degree of confidence in 0:01:38.680 --> 0:01:41.640 that number? Yeah, good morning, Guide my John think there's 0:01:41.640 --> 0:01:44.319 a reasonably hydree of campers at this point in time 0:01:44.360 --> 0:01:48.320 that short order flying with significantly recover. I think through 0:01:48.360 --> 0:01:51.320 the peak summer months of July, August and September. That's 0:01:51.360 --> 0:01:53.480 drum amount the success of the vaccine program in the 0:01:53.560 --> 0:01:56.640 UK fifty percent of the UK population that has now 0:01:56.680 --> 0:01:58.840 been vaccinated by the end of May, that would be 0:01:58.880 --> 0:02:01.520 an easy percent. Europe will catch up. I can go 0:02:01.520 --> 0:02:03.880 over that period of time with think of the UK 0:02:03.960 --> 0:02:05.920 adult population with actually by the end of May they 0:02:05.960 --> 0:02:09.200 say seventy by the end of June, and then I 0:02:09.240 --> 0:02:12.440 think you will see a pretty rapid recovery of short 0:02:12.520 --> 0:02:16.120 haul holiday travel between the UK and the European Union 0:02:16.200 --> 0:02:19.600 through the summer. Already, the Portuguese, the Spanish, the Greek 0:02:19.600 --> 0:02:22.160 and the Cypriot governments have said they're going to welcome 0:02:22.280 --> 0:02:26.320 vaccinated UK travelers from the seventeenth of May onwards. So 0:02:26.919 --> 0:02:29.040 you know, it's still certain, but I think there's a 0:02:29.120 --> 0:02:34.079 reasonable grounds for optimism that once the school holidays arrived June, July, August, 0:02:34.120 --> 0:02:37.160 that we will see I think quite significant recovery of 0:02:37.240 --> 0:02:41.160 shorthold travel within Europe. You won't see longhold recover this summer, 0:02:41.440 --> 0:02:43.240 but again, a lot of people who would normally have 0:02:43.320 --> 0:02:45.560 gone long hold for their holidays to the States or 0:02:45.600 --> 0:02:47.880 to Asia will holiday at home in Europe. But we 0:02:47.960 --> 0:02:50.600 think Ryan there will be the beneficiary of that. You 0:02:50.680 --> 0:02:53.120 sound confidence, you think it's going to happen later on 0:02:53.200 --> 0:02:55.639 in the year, but but the date keeps getting pushed 0:02:55.639 --> 0:02:58.040 to the rights and certain the noises out of the 0:02:58.080 --> 0:03:02.480 UK over the last few days have been less than optimistic. Michael, 0:03:02.520 --> 0:03:05.760 you said this morning that that you could survive if 0:03:05.760 --> 0:03:08.480 we don't have a summer season. My question to you 0:03:08.720 --> 0:03:11.520 is how. But we're very strong balance sheet. You know, 0:03:11.560 --> 0:03:13.240 we're sitting on more than three and a half billion 0:03:13.280 --> 0:03:15.359 of cash At the moment, we have a very small 0:03:15.440 --> 0:03:19.400 cash outflow. Most of our aircraft are grounded at the moment, 0:03:19.440 --> 0:03:22.960 most of our plastic cameracrew are on furlough, paced schemes, etcetera. 0:03:23.040 --> 0:03:26.200 So we can survive. We don't want to survive. We 0:03:26.280 --> 0:03:28.360 do want to see people return to travel. And I 0:03:28.360 --> 0:03:31.240 would put the question back to those UK governments if, 0:03:31.400 --> 0:03:35.200 as the UK government has you vaccinatedent of the adult 0:03:35.200 --> 0:03:37.960 population by the end of May, why are you restricting 0:03:38.000 --> 0:03:40.840 their movement? You know they are there are very little risk. 0:03:40.880 --> 0:03:42.720 I mean, the one thing we know from the vaccines, 0:03:42.760 --> 0:03:45.640 the experience in Israel and in other countries essay, as 0:03:45.680 --> 0:03:49.000 you begin to vaccinate large proportions of the population, the 0:03:49.120 --> 0:03:51.800 risk of serious illness, the risk of hospitalizations, and the 0:03:51.880 --> 0:03:56.040 risk of death fatalities almost collapses, certainly falls to very 0:03:56.040 --> 0:03:58.520 low levels. Now we're only locking up at the moment 0:03:58.600 --> 0:04:01.200 not to limit the spread of cod it, but actually 0:04:01.240 --> 0:04:04.240 to eliminate the risk that COVID cases will overwhelm the 0:04:04.280 --> 0:04:09.160 hospital service and health systems which beliminate that risk with vaccinations. Frankly, 0:04:09.160 --> 0:04:11.080 I think people are going to rebel. They're not good 0:04:11.080 --> 0:04:13.960 to be willing to be locked up. Those kids are 0:04:14.000 --> 0:04:16.560 not going to stay home from school. Life will return 0:04:16.640 --> 0:04:19.800 to normal, and I think COVID will be comm I mean, 0:04:19.800 --> 0:04:21.320 it will still be with us, but it would be 0:04:21.440 --> 0:04:24.560 much more. I think similar to the annual flu, the 0:04:24.640 --> 0:04:28.920 annual cold. Because of the success and vaccinations. Well, Michael, 0:04:28.920 --> 0:04:30.560 as you know, they might rebel, but right now it's 0:04:30.560 --> 0:04:32.760 illegal to go on holiday. So and still that's lifted. 0:04:32.800 --> 0:04:34.680 We've got a problem. So my question to you would 0:04:34.720 --> 0:04:36.920 be how hard are you lobbying on a vaccine passport 0:04:36.960 --> 0:04:40.240 issue and how close our way to a breakthrough? Well, 0:04:40.240 --> 0:04:42.200 I mean, as you know, Johnason league to drive over 0:04:42.240 --> 0:04:44.080 the speed limit, but lots of people do it too. 0:04:44.160 --> 0:04:48.840 You know, again you're telling me that your summer is 0:04:48.880 --> 0:04:51.480 reliant upon people rebelling and getting on the plane and 0:04:51.520 --> 0:04:54.000 breaking the law. No, I mean I was going to 0:04:54.040 --> 0:04:56.080 move on to say, you know, sure, be long hole 0:04:56.200 --> 0:04:59.120 travel will be much more restricted, but you have free 0:04:59.120 --> 0:05:02.119 movement of Pepe within the European Union and in large 0:05:02.120 --> 0:05:05.200 amation between the UK and Europe as well. Now I 0:05:05.200 --> 0:05:07.000 think there's finding a time to get to the end 0:05:07.000 --> 0:05:08.640 of mayor in the June. You have all of the 0:05:08.720 --> 0:05:12.520 high risk categories, the elderly, the obese, the infirm have 0:05:12.640 --> 0:05:16.120 been vaccinated. Eighty percent of the annual population have been vaccinated. 0:05:16.360 --> 0:05:19.599 The children had a lower rate of catching code, but 0:05:19.600 --> 0:05:22.520 don't suffer serious illness anyway. What would be the base 0:05:22.640 --> 0:05:26.720 on with UK governments would be finding people moving around Europe, 0:05:26.720 --> 0:05:29.479 where by we're intacted to the free movement of people, 0:05:29.560 --> 0:05:33.560 so again, be careful. I think short Hauld domestically within 0:05:33.600 --> 0:05:36.000 the US will be there will be the very few 0:05:36.040 --> 0:05:39.200 restrictions this summer, and short Hall, I would say within 0:05:39.240 --> 0:05:41.760 the European unions there would be very few restrictions. Michael, 0:05:41.760 --> 0:05:45.320 long Hole will continue to be restrictions. Yes, guys, Sorry Michael. 0:05:45.360 --> 0:05:47.400 You're clearly focused on the summer season, which is going 0:05:47.440 --> 0:05:50.880 to be the holiday for the kids. But nevertheless, short 0:05:50.920 --> 0:05:53.560 Hole is driven by younger demographics and they are going 0:05:53.600 --> 0:05:55.960 to be the last to get the vaccines. Is that 0:05:56.040 --> 0:05:58.479 going to be a problem. No, I mean again, a 0:05:58.520 --> 0:06:00.960 summer holidays tend to be driven by families. You know, 0:06:01.000 --> 0:06:05.520 it's the school holidays across eurotypically start through June, July August. 0:06:05.560 --> 0:06:08.320 That's when the schools are off, That's when families are moving. 0:06:08.720 --> 0:06:12.360 The young people are generally working at that point in time, generally, 0:06:12.400 --> 0:06:16.080 hopefully in the hospitality of jurism industry. I think that's 0:06:16.080 --> 0:06:20.240 what we'll drive the recovery. And then, you know, everybody 0:06:20.440 --> 0:06:22.799 predicts that Europe will be a washed with drag scenes 0:06:22.880 --> 0:06:25.039 through May June July, and we're not about sure what 0:06:25.120 --> 0:06:27.200 the date will actually be. And I do accept that 0:06:27.200 --> 0:06:29.719 the date has moved backwards, but we still see that 0:06:29.760 --> 0:06:33.640 there's sufficient time and sufficient vaccination room left run. You know, 0:06:33.680 --> 0:06:36.040 we still have April, May and June to go to 0:06:36.240 --> 0:06:40.080 allow us to recover the holiday season in Europe through 0:06:40.200 --> 0:06:43.159 July Augus and the general Michael, let's make some producers nervous. 0:06:43.160 --> 0:06:45.120 We've got forty five seconds left play with me, just 0:06:45.160 --> 0:06:47.640 for a moment. Chancellor Miracle says she's made a mistake, 0:06:47.720 --> 0:06:50.160 just backing down from that East of lockdown. Your response 0:06:50.200 --> 0:06:52.640 to that this morning, I mean, I try not to 0:06:52.680 --> 0:06:56.359 respond to the instantaneous comments of politicians. We're planning. We 0:06:56.360 --> 0:06:58.920 announced new rooms this morning from the UK for the 0:06:58.960 --> 0:07:02.040 European Peak. We extract to run most of the changes 0:07:02.080 --> 0:07:04.640 through July over September, where reason to be content with 0:07:04.680 --> 0:07:07.400 that kind of overlook. Michael, comeback soon, stay close it's 0:07:07.400 --> 0:07:10.560 always greater catch Larry. Good to see you, sir, Ryan 0:07:10.680 --> 0:07:18.840 s CEO greased to say we can head down to 0:07:18.880 --> 0:07:22.440 Washington now to catch up with Congressman Don Buyer, Democrat 0:07:22.480 --> 0:07:25.720 from Virginia and chair of the Joint Economic Committee. Congressman, 0:07:25.800 --> 0:07:27.200 great to catch up with you, sir. I want to 0:07:27.200 --> 0:07:29.960 stablish as the last twenty four hours of we can, 0:07:30.400 --> 0:07:32.760 there was supposed to be a hearing just to go 0:07:32.840 --> 0:07:36.560 through some of the priorities for a bipartisan infrastructure proposal, 0:07:36.600 --> 0:07:38.560 which Republicans didn't want to take part in. And I 0:07:38.640 --> 0:07:40.760 want to read a quote from Republican Kevin Brady who 0:07:40.760 --> 0:07:43.320 said the following. In our view, today's hearing is nothing 0:07:43.360 --> 0:07:46.440 more than another partisan exercise so the Democrat House leadership 0:07:46.480 --> 0:07:49.400 can set up yet another multi trillion dollar, one sided 0:07:49.760 --> 0:07:52.280 spending bill. Congressman, can you tell us why it's more 0:07:52.280 --> 0:07:56.920 sincere than that. I was really disappointed in Ranking Member 0:07:56.960 --> 0:07:59.720 Brady's comments because it didn't seem to have any connection 0:07:59.760 --> 0:08:03.000 to reality. We invited all the Democrats and all the 0:08:03.040 --> 0:08:06.440 Republicans to come tell us what their priorities should be 0:08:06.440 --> 0:08:09.680 in this next infrastructure bill, and I think Kevin Brady 0:08:09.720 --> 0:08:12.120 knows that there are many Democrats, including me, that hope 0:08:12.120 --> 0:08:16.200 that this bill is mostly are largely paid for. So 0:08:16.280 --> 0:08:18.080 this is you know, this is a once in a 0:08:18.160 --> 0:08:21.720 generation infrastructure bill that we love to have everybody's input for. 0:08:22.080 --> 0:08:24.400 By the way, it's gonna affect all those Republican districts 0:08:24.400 --> 0:08:26.679 to it early major ways. Let's talk about what's happened 0:08:26.680 --> 0:08:28.400 previously in the last couple of months. Do you think 0:08:28.440 --> 0:08:30.280 they have been conditioned by the approach to the one 0:08:30.320 --> 0:08:33.400 point nine trillion dollar bill where many Republicans found totally 0:08:33.400 --> 0:08:37.400 frozen out of the process. Yeah, although I kind I 0:08:37.400 --> 0:08:39.480 don't think they were frozen out of the process. There 0:08:39.480 --> 0:08:43.440 were extensive markups on this. You know that the most 0:08:43.440 --> 0:08:46.520 controversial part for them was the four dollars which came 0:08:46.559 --> 0:08:50.079 from their president, Donald Trump. And by the way, is 0:08:50.400 --> 0:08:53.760 affecting all their folks. We have the there's a big piece. 0:08:53.800 --> 0:08:56.880 They were against the state and local government funding. The 0:08:56.920 --> 0:09:00.280 best of my knowledge, no Republican governor, Republican or has 0:09:00.320 --> 0:09:04.640 refused to accept these funds to strengthen their communities. It 0:09:04.720 --> 0:09:07.680 was again, it was a wildly popular bill, is a 0:09:07.679 --> 0:09:12.600 wildly popular bill among all Americans, including Republican Americans. Just 0:09:12.720 --> 0:09:16.960 not their elected officials in Washington, Congressman, you said that 0:09:17.080 --> 0:09:19.680 they were presented with a bill that was mostly or 0:09:19.800 --> 0:09:22.760 largely paid for, But isn't that the issue? The way 0:09:22.760 --> 0:09:26.200 that it's being paid for through tax hikes on wealthier 0:09:26.200 --> 0:09:29.360 individuals and on corporations is something that Republicans have said 0:09:29.679 --> 0:09:31.480 is a no go for them, that they don't want 0:09:31.520 --> 0:09:37.200 to do. How are you going to reconcile that issue? Well, yeah, 0:09:37.440 --> 0:09:40.240 I don't know how we're going to reconcile, and I 0:09:40.280 --> 0:09:42.199 think we just have to come after with the facts. 0:09:42.600 --> 0:09:45.400 At least we did a hearing before the pandemic on 0:09:45.480 --> 0:09:49.240 infrastructure in ways of means, we're virtually every Democrat and 0:09:49.320 --> 0:09:51.640 Republicans said we need to have a way to pay 0:09:51.679 --> 0:09:55.040 for this and needs to be sustainable. Well, we know 0:09:55.120 --> 0:09:57.360 that the gas tax is a is a no starter 0:09:57.480 --> 0:10:00.559 for many different reasons. But we also saw yesterday that 0:10:01.480 --> 0:10:05.000 US corporate affective tax rate last year was seven point 0:10:05.080 --> 0:10:08.439 eight percent after the j c T A that had 0:10:08.480 --> 0:10:11.240 the top one percent had their networth increased by four 0:10:11.360 --> 0:10:16.439 trillion dollars or or just the New York Times editorial 0:10:16.640 --> 0:10:21.080 on Sunday about how you know personal income is almost 0:10:21.080 --> 0:10:24.720 all reported in tax but a huge part of business 0:10:24.800 --> 0:10:28.559 income is not to the tune of six fifty billion 0:10:28.600 --> 0:10:31.520 dollars or one point six trillion dollars a year I 0:10:31.559 --> 0:10:34.160 think was the New York Times number. There's a lot 0:10:34.200 --> 0:10:36.360 of low hanging for it out there that wouldn't affect 0:10:36.360 --> 0:10:40.559 the economy. Congressmen, and these are points that are widely 0:10:40.600 --> 0:10:44.679 accepted among Democrats. However, there are Republicans that come back 0:10:44.720 --> 0:10:46.760 and they say, look, you're going to prevent a certain 0:10:46.800 --> 0:10:50.320 amount of dynamism investment in things like infrastructure just by 0:10:50.360 --> 0:10:53.640 the corporations themselves if they have to pay higher taxes. 0:10:53.679 --> 0:10:55.920 And we can debate that till the cows come home. 0:10:55.960 --> 0:10:58.960 But the question really here is is there any wiggle 0:10:59.040 --> 0:11:02.480 room to negotiate and higher taxes with Republicans or is 0:11:02.480 --> 0:11:04.560 it going to have to be done without any of 0:11:04.559 --> 0:11:09.200 their support. Well, I wish there were wiggle room. I 0:11:09.320 --> 0:11:13.959 think one place Lisa that might be fruitful is looking 0:11:13.960 --> 0:11:17.840 at carbon pricing. And now that the American Patroleum Institute, 0:11:17.840 --> 0:11:20.560 along with Exxon Mobile and others, and the Business round 0:11:20.600 --> 0:11:23.080 Table and the Use Chamber, we've all said that carbon 0:11:23.160 --> 0:11:25.920 pricing should be on the table, maybe we can get 0:11:25.920 --> 0:11:28.480 Republicans to do that and at a minimum pay for 0:11:29.200 --> 0:11:31.959 you know, the roads and bridges and asphalt and stuff 0:11:31.960 --> 0:11:33.760 that they really like. In conversement, what do you think 0:11:33.760 --> 0:11:36.120 the ultimate approach now is then? Do you think it 0:11:36.200 --> 0:11:41.080 is a series of smaller bills or still one launch bill? Jonathan? 0:11:41.120 --> 0:11:44.800 I prefer one large bill, But I'm a I'm agnostic 0:11:44.840 --> 0:11:47.000 whatever it takes to get the job done. I know 0:11:47.800 --> 0:11:50.000 drifting around is the idea that you take things you 0:11:50.000 --> 0:11:54.080 could get Republicans on board with, like highways and roads, bridges, 0:11:54.600 --> 0:11:57.840 and do that with their votes, and then the other 0:11:57.920 --> 0:12:01.600 more controversial things. Although why odd band and electrical grid 0:12:01.640 --> 0:12:04.760 modernization should be controversial? Uh, you may have to do 0:12:04.800 --> 0:12:08.040 that through through reconciliation. You are one other bite at 0:12:08.080 --> 0:12:12.200 the reconciliation apple this year Congress. Before we let you go, 0:12:12.320 --> 0:12:14.360 I want to ask you about bitcoin. We've got Tesla 0:12:14.440 --> 0:12:17.280 now accepting bitcoin is a form of payment. What's the 0:12:17.280 --> 0:12:21.880 regulatory front when it comes to that crypto asset, Lisa, 0:12:22.160 --> 0:12:25.080 We're about to dive into that deeply. I think there 0:12:25.120 --> 0:12:28.520 needs to be when you get a completely unregulated currency. 0:12:29.280 --> 0:12:34.920 While it's exciting and interesting, um, the possibilities for yeah, 0:12:35.040 --> 0:12:39.280 everybody from terrorists to to uh international mafia type things 0:12:39.360 --> 0:12:42.800 using it or people just avoiding taxes on a large 0:12:42.800 --> 0:12:46.200 scale are very real. So I can't tell you what 0:12:46.200 --> 0:12:49.360 the regulation is going to be, but it's worth very 0:12:49.400 --> 0:12:51.719 deep dives this year by congress A. Comressman. If I 0:12:51.760 --> 0:12:54.720 shout walks, do we create some trouble there in your house? 0:12:55.760 --> 0:12:59.160 The duck out? He really does want to go outside? 0:12:59.240 --> 0:13:01.320 You I can tell. Let you go, sir, Congressman. It's 0:13:01.360 --> 0:13:03.520 good to see you. Stay close. It's going to catch up. 0:13:03.720 --> 0:13:11.760 Congressman's on via there, Virginia. Thank you. Let's turn to 0:13:11.760 --> 0:13:15.199 Mind Mahajan, now the Nsclobe and Investors US investment strategist. 0:13:15.240 --> 0:13:17.280 She joins, US might a great to catch up. As 0:13:17.320 --> 0:13:19.160 you've said, we started to see some fatigue in the 0:13:19.200 --> 0:13:22.120 big winners through the last year, going back to late 0:13:22.200 --> 0:13:25.040 October as well. I'm trying to understand how you approach 0:13:25.040 --> 0:13:27.800 your market like this one right now, huge rip since 0:13:27.840 --> 0:13:30.560 the end of October, you start to see fatigue. How 0:13:30.559 --> 0:13:33.640 do you approach what you see on the screen. Yeah. Absolutely, Look, 0:13:33.679 --> 0:13:35.920 I think it's been a phenomenal market since really last 0:13:35.960 --> 0:13:39.960 March of UM this year one has really been a 0:13:40.000 --> 0:13:43.680 story of the reopening trade, that value trade, the rotation 0:13:43.800 --> 0:13:47.160 into value into the reopening stories, and out of really 0:13:47.200 --> 0:13:50.240 that growth in some of those large cap COVID winners 0:13:50.559 --> 0:13:53.040 from last year. Of course, over the last few days 0:13:53.040 --> 0:13:55.199 you've seen a bit of reversal of that because rates 0:13:55.240 --> 0:13:57.640 have started to come down a little. Maybe there's some 0:13:57.720 --> 0:14:01.200 questions around the reopening, given new of variants, given news 0:14:01.240 --> 0:14:04.680 of some states seeing rising cases, clearly given what's happening 0:14:04.679 --> 0:14:06.560 in Europe, so we're starting to see a little bit 0:14:06.600 --> 0:14:10.520 of pause around that reopening value cyclical trade. Um what 0:14:10.640 --> 0:14:13.240 we're thinking about, of course is as we're heading to 0:14:13.280 --> 0:14:16.400 this summer of really that real unleashing of pent up 0:14:16.400 --> 0:14:19.880 demand by the consumer and perhaps the real unleashing of 0:14:19.920 --> 0:14:24.000 the stimulus really flowing through the system, we may see 0:14:24.080 --> 0:14:27.440 this value cyclical rally have one more leg or maybe 0:14:27.480 --> 0:14:30.160 some legs through the summer. But what we're really thinking 0:14:30.160 --> 0:14:32.920 about then towards the second half of this year are 0:14:32.960 --> 0:14:35.840 some of the risks on the horizon, and those include one, 0:14:36.320 --> 0:14:38.320 you know, peak reopening. At some point you're going to 0:14:38.400 --> 0:14:40.400 get a peak growth rate. Maybe it's two q maybe 0:14:40.400 --> 0:14:42.600 it's three q UM, but that at that point the 0:14:42.600 --> 0:14:45.560 second relative starts to to slow again in terms of 0:14:45.640 --> 0:14:48.720 GDP growth. The second, of course is we do think 0:14:48.760 --> 0:14:52.760 that yields have you know, can continue to grind higher. UM. 0:14:52.760 --> 0:14:55.280 We do think that the two handle on the tenure 0:14:55.480 --> 0:14:58.280 is feasible this year, and so that will cause some 0:14:58.320 --> 0:15:01.960 additional volatility and pressure. And then finally and thirdly of course, 0:15:02.080 --> 0:15:05.040 is a FED who has been quite accommodated thus far. 0:15:05.680 --> 0:15:07.480 We think that continues for most of this year, but 0:15:07.640 --> 0:15:09.960 at some point they're going to have to come off 0:15:09.960 --> 0:15:12.880 this crisis level accommodation that they've been writing. So this 0:15:12.960 --> 0:15:16.760 was really rates at the zero bound unlimited queue to 0:15:16.840 --> 0:15:19.600 some extent to really help at the heart of the pandemic. 0:15:20.080 --> 0:15:22.560 We're now clearly trying to re emerge from that. So, 0:15:22.920 --> 0:15:25.200 you know, some things you're thinking about. A lot of 0:15:25.760 --> 0:15:28.040 the good news, a lot of the reopening story, a 0:15:28.040 --> 0:15:30.560 lot of this value trade is starting to get priced 0:15:30.600 --> 0:15:33.160 in UM. So keep in mind, if you haven't yet, 0:15:33.640 --> 0:15:36.800 you do have an opportunity to to you know, tactically 0:15:36.880 --> 0:15:39.680 layer in sencyclicality, but just be mindful. Then as you're 0:15:39.680 --> 0:15:41.480 heading towards the second half of the here money you've 0:15:41.440 --> 0:15:43.040 gone through a lot of issues there. Everyone's got their 0:15:43.080 --> 0:15:45.520 own approach, their own process to work through. A lot 0:15:45.520 --> 0:15:47.440 of people talk about where we are in the cycle. 0:15:47.560 --> 0:15:50.960 The early trade is the early cycle playbook still with us? 0:15:51.160 --> 0:15:53.280 Is that going to last another few months, maybe another 0:15:53.320 --> 0:15:56.040 quarter or another few quarters? Morgan Stanley think we've already 0:15:56.040 --> 0:15:58.360 seen the early cycle move. Do you use the same 0:15:58.400 --> 0:16:01.240 approach Mona? Do you have that early cycle playbook? And 0:16:01.320 --> 0:16:04.680 when the cycle do you think were on this market? Yeah? Absolutely, 0:16:04.720 --> 0:16:07.440 I think we are re emerging from a recessionary environment. 0:16:07.440 --> 0:16:09.640 And of course this recession is is different from some 0:16:09.680 --> 0:16:11.720 of the others, which are more you know, rates driven 0:16:11.840 --> 0:16:14.200 or more consumer driven. This was a pandemic and a 0:16:14.240 --> 0:16:17.200 health crisis, but we're clearly re emerging from it, and 0:16:17.280 --> 0:16:20.400 that that playbook actually came to fruition in a very 0:16:20.400 --> 0:16:24.640 real way this year. So certainly areas like energy, financials, industrial, 0:16:24.640 --> 0:16:28.920 specilical stocks, the reopening place, uh, those all took a 0:16:29.040 --> 0:16:31.240 nice light higher and so a lot of you know, 0:16:32.000 --> 0:16:35.320 what they call the easy money perhaps has been made. 0:16:35.400 --> 0:16:37.600 But that being said, you know, we do think that 0:16:37.960 --> 0:16:41.560 um the earnings growth environment, there's still upside to some 0:16:41.640 --> 0:16:44.600 of the numbers that we're seeing at there especially on UM. 0:16:44.640 --> 0:16:47.800 Some of these sectors like financials, like energy, like industrials, 0:16:48.320 --> 0:16:51.080 some of the areas that do well as rates continue 0:16:51.120 --> 0:16:53.600 to grind higher. Of course, financials, especially with a steeper 0:16:53.640 --> 0:16:57.320 year field curve. UM. We think areas like industrials may 0:16:57.320 --> 0:16:59.800 have some legs given the infrastructure package that we think 0:17:00.000 --> 0:17:02.600 will start to come to the forefront in the weeks ahead. 0:17:03.120 --> 0:17:05.680 Even areas like clean energy, which has been a real 0:17:05.720 --> 0:17:08.720 focus of the Biden administration and has now sold off 0:17:08.760 --> 0:17:10.840 as the NAZAC has sold off. As a lot of 0:17:10.880 --> 0:17:13.800 the growth stories have sold off, UM could have another lead. 0:17:13.840 --> 0:17:16.719 We think that's a secular growth theme that that if 0:17:16.760 --> 0:17:18.840 you haven't yet had explored, which was it's an interesting 0:17:18.880 --> 0:17:21.560 one here. So UM certainly we're looking at it more 0:17:21.600 --> 0:17:24.919 from now, a more active approach, taking a sector you know, 0:17:25.000 --> 0:17:28.560 by sector positioning approach rather than a broad market approach. 0:17:28.600 --> 0:17:30.080 And so I think, you know, at this point in 0:17:30.080 --> 0:17:33.439 the cycle, after we've had this reopening rally, we have 0:17:33.480 --> 0:17:36.880 to really be more selective going forward. Just to be clear, Mona, 0:17:37.119 --> 0:17:39.760 is the reopening rally done. If we reached a plateau 0:17:40.119 --> 0:17:41.840 and we're just going to fluctuate from here, is that 0:17:41.880 --> 0:17:43.920 what you're saying, you know, I think that that there 0:17:44.000 --> 0:17:45.960 is one like higher and you know, if you think 0:17:45.960 --> 0:17:49.359 about seasonality, sometimes it's sell in May and go away, 0:17:49.400 --> 0:17:52.239 but generally this year, I think, um, you know, when 0:17:52.280 --> 0:17:54.959 you look anecdotally, those summer months are really when we're 0:17:54.960 --> 0:17:57.280 going to see um, that pent up demand on leach. 0:17:57.359 --> 0:18:00.000 So you know, the consumers will hopefully have the next 0:18:00.040 --> 0:18:03.080 round of stimulus checks in their pockets. Uh, the vaccination 0:18:03.160 --> 0:18:05.800 program here in the US will be more fully rolled out, 0:18:06.119 --> 0:18:08.680 and so you'll really see them that demand for areas 0:18:08.760 --> 0:18:12.159 like travel like um, you know, going back indoors, perhaps 0:18:12.200 --> 0:18:15.399 even two restaurants, going to sporting events. And so I 0:18:15.400 --> 0:18:19.480 think that when when the economy really is going through 0:18:19.520 --> 0:18:23.719 that hyper demand phase, we'll see the market actually react 0:18:23.760 --> 0:18:25.960 to that. But that's when you have to start thinking about, well, 0:18:26.000 --> 0:18:28.880 after that, what happens are we at peak reopening? And 0:18:29.200 --> 0:18:31.680 so I think, you know, you probably have a little 0:18:31.680 --> 0:18:34.720 bit of steam left in this rally, um, but it's 0:18:34.840 --> 0:18:37.200 it's probably time to start thinking about being a little 0:18:37.200 --> 0:18:39.520 bit more neutral or cautious as we had passed the 0:18:39.520 --> 0:18:42.679 summer months. You used one line in this conversation that 0:18:42.720 --> 0:18:44.920 always pops out jumps out to me when people say 0:18:44.920 --> 0:18:47.760 the easy money monitor, and you know I always pick 0:18:47.880 --> 0:18:50.080 up on it, so forgive me for doing so. Did 0:18:50.080 --> 0:18:53.240 it ever feel easy? You know? Ever since March of 0:18:53.359 --> 0:18:56.040 last year, it's felt a little bit tough, and so 0:18:56.200 --> 0:18:58.399 I think, you know that the whole dichotomy between Main 0:18:58.440 --> 0:19:00.280 Street and Wall Street has always been a tough point 0:19:00.320 --> 0:19:03.040 to to follow. But I certainly think in this case, 0:19:03.480 --> 0:19:06.439 the markets have been very forward looking, and perhaps they 0:19:06.480 --> 0:19:09.520 were really since last year looking towards the second half 0:19:09.560 --> 0:19:12.520 of one, and so they were very astute in realizing 0:19:12.560 --> 0:19:14.840 that at some point we will have a program in 0:19:14.840 --> 0:19:17.080 place that will help us get through the pandemic to 0:19:17.200 --> 0:19:21.080 reopen fully um And and interestingly, the retail investor last 0:19:21.119 --> 0:19:23.119 year played a very large role in that. So you know, 0:19:23.119 --> 0:19:25.879 the util investor in some way was the winner in 0:19:27.200 --> 0:19:30.560 really kind of kept you know, kept that optimistic outlook 0:19:31.200 --> 0:19:33.880 throughout the year, and so they really benefited from that. So, yes, 0:19:33.960 --> 0:19:37.639 we've had an optimistic reopening trade, you could argue since 0:19:37.680 --> 0:19:41.320 perhaps March April of last year. So hopefully, you know, 0:19:41.359 --> 0:19:44.840 most investors participated in some way, and that the good 0:19:44.880 --> 0:19:47.320 news was last year, if you had the growth stocks 0:19:47.480 --> 0:19:51.159 um this year you could actually have some opportunities in 0:19:51.200 --> 0:19:54.320 the value stocks, and so that's why we think there 0:19:54.440 --> 0:19:56.399 is still a little bit more catch up and perhaps 0:19:56.400 --> 0:19:59.280 a little bit more rebound to to go in that sector. 0:19:59.320 --> 0:20:02.080 If you think about a lot of these value names 0:20:02.119 --> 0:20:06.639 like financials, energy industrials, they are still slightly up to 0:20:06.720 --> 0:20:09.280 March of last year, and so they have some catch 0:20:09.320 --> 0:20:12.640 up to do to the NAZAC, which is up from 0:20:12.680 --> 0:20:18.720 its February highs. So UM interesting markets still one where 0:20:18.760 --> 0:20:21.159 you know, again you know, just be selective, be active, 0:20:21.200 --> 0:20:23.920 but you still have some opportunities to go. It's never 0:20:23.920 --> 0:20:28.600 easy catch up, you know, it's never exactly. Aliance Global 0:20:28.640 --> 0:20:37.639 Investors US investment strategist, let's bring in Toasten Slock, Apollo 0:20:37.640 --> 0:20:41.600 Global Management chief economist, Torsten. You've seen your old colleagues, 0:20:41.640 --> 0:20:44.200 your old peers put out their forecast for growth for 0:20:44.320 --> 0:20:49.680 GDP for one six handles, seven handles, big numbers. Can 0:20:49.720 --> 0:20:52.679