Speaker 1: Welcome to the Bloomberg Surveillance Podcast. I'm Tom Keane. Along
Speaker 1: with Jonathan Ferrell and Lisa Brownwitz Jay Leye. We bring
Speaker 1: you insight from the best and economics, finance, investment, and
Speaker 1: international relations. Find Bloomberg Surveillance on Apple, Podcast, SoundCloud, Bloomberg
Speaker 1: dot Com, and of course on the Bloomberg Terminal. We
Speaker 1: now have a Bloomberg exclusive with Venezuela's President Nicholas Maduro UH,
Speaker 1: speaking with Mr Shatsker in Caracas. The focus is on
Speaker 1: normalizing relations with the US, but this does fit into
Speaker 1: the broader theme that we've been talking about all week
Speaker 1: of the Great American reset of international relations as President
Speaker 1: Biden took a tour of Europe. The idea here is
Speaker 1: that Maduro would like to see relationships UH normalize with
Speaker 1: the United States, some of the harsh sanctions lifted, and
Speaker 1: take a listen to what Maduro had to say. We
Speaker 1: always have to remember, Eric, that we faced four years
Speaker 1: of the Trump administration, which were four years of direct
Speaker 1: aggression of cruel sanctions, very cruel and have damage to
Speaker 1: the Venezuelan economy and society. The politics that Donald Trump
Speaker 1: installed and left his legacy against Venezuela are extremist politics,
Speaker 1: irrational right that caused a complete rupture between the United
Speaker 1: States and Venezuela is the joy Biden. President Joe Biden
Speaker 1: has arrived making a proposal to the world. His first
Speaker 1: speech on January he said that we don't have to
Speaker 1: demonize anybody in politics. I would say to President Joe
Speaker 1: Biden to stop from the White House, from the Department
Speaker 1: of State, the demonization of Venezuela, the demonization of the
Speaker 1: Bolvarian Revolution, the demonization of President Nicolas Badu Row, and
Speaker 1: that hopefully we can find paths of reconciliation, of respect,
Speaker 1: paths of mutual benefit and pass that allow us to
Speaker 1: normalize relations between the United States and Venezuela. Have you
Speaker 1: seen any signals, wanna that suggests Joe Biden has a
Speaker 1: different posture, especially especially as it concerns the Venezuela question,
Speaker 1: do you want me to be sincere very? Sincere there
Speaker 1: hasn't been a single positive sign none. It's five months
Speaker 1: where Okay, they're settling into power. The only different thing,
Speaker 1: the only different thing that might be heard from some
Speaker 1: spokespeople of the White House and of the Department of State,
Speaker 1: is that they agree with a political dialogue between Venezuelans
Speaker 1: without intervention, to look for democratic political changes in the country.
Speaker 1: That's the only thing. They must abandoned the demonization that
Speaker 1: they make of Venezuela, of our revolution, democratic, constitutional, pacific,
Speaker 1: and of President Nicolas Maduro, to create real foundations, objective, credible, verifiable,
Speaker 1: of a process of negotiation, to regularize the relations between
Speaker 1: the two countries in terms of win win, which is
Speaker 1: what we aspire to since a long time ago. A
Speaker 1: win win is possible. In your opinion, absolutely, we've already
Speaker 1: shown that. Of course it's possible to win win. They
Speaker 1: know it. In the financial sector, the bondholders with whom
Speaker 1: we had an impeccable relationship, and they know it's possible
Speaker 1: to invest in Venezuela and win win as long as
Speaker 1: this whole persecution and the sanctions aren't there. The oil
Speaker 1: sector knows it. Who has invested in Venezuela uh and
Speaker 1: who still maintains investments in Venezuela that we can advance
Speaker 1: much more. The cultural sector knows it, the social sector,
Speaker 1: the political sectors know it. Bloombergs Eric Shatzker just returning
Speaker 1: from Caracas. He is here with us. I did not
Speaker 1: know that you could speak Spanish. Eric Uh, congratulations on
Speaker 1: the interview. I am curious before we get into the
Speaker 1: substance of what it was like in Caracas, given the
Speaker 1: COVID pandemic and how hard that region has been hit,
Speaker 1: and given the exodus of residents as a result of
Speaker 1: some of the financial crisis issues that this nation has
Speaker 1: been facing. Lisa, it shouldn't surprise anybody that Caracas and
Speaker 1: Venezuela as a country are a shadow of their former selves.
Speaker 1: Don't forget Venezuela with South America's richest country. At one
Speaker 1: point in the nine nineties, it used to produce three
Speaker 1: and a half million barrels a day of oil. Last
Speaker 1: year that was down to four d and ten thousand,
Speaker 1: the lowest in about a century. And of course that's
Speaker 1: visible on the streets of karakas. The country doesn't have
Speaker 1: any money. First of all, you could argue persuasively that
Speaker 1: it was mismanaged by the socialist nationalist government of Hugo
Speaker 1: Chavs and subsequently Nicolas Maduro. But there's also these U
Speaker 1: S sanctions in force. They don't allow Venezuela to sell
Speaker 1: any oil. They don't allow Venezuela access to debt capital markets.
Speaker 1: The country has no money, it's in default, it's bankrupt,
Speaker 1: the infrastructure is crumbling. All of this is visible to
Speaker 1: the naked eye, but I will point out that there
Speaker 1: is call them green shoots. Venezuela has relaxed some of
Speaker 1: its economic restrictions and it is fascinating, candidly fascinating. I
Speaker 1: don't want to downplay the poverty, which is extreme, but
Speaker 1: to see these flickers of entrepreneurialism in a country that
Speaker 1: has been forced to loosen these strictures, uh to try
Speaker 1: and find some way out of its desperate economic situation.
Speaker 1: What eric is the path forward, what is the realistic
Speaker 1: in your conversations with him, a path forward to a
Speaker 1: loosening of sanctions, getting that oil back for the country.
Speaker 1: Let's not forget that the Trump administration was pursuing a
Speaker 1: policy of regime change. It was trying to drive Madudo
Speaker 1: out of office, and as far as the US government
Speaker 1: was concerned, there were good reasons to do that. Um
Speaker 1: drug trafficking, rigged elections, corruption, all kinds of accusations and
Speaker 1: allegations for which there's much evidence against the Madudo regime.
Speaker 1: The Biden administration has taken a different approach. Tony blankin
Speaker 1: the Secretary of State has talked about free and fair elections.
Speaker 1: That's the path forward. That's what the negotiations are moving toward.
Speaker 1: The United States. What remains to be seen clearly Madudo
Speaker 1: is extending something of an olive branch. He wants a deal,
Speaker 1: he wants talks. He wants the United States to sponsor,
Speaker 1: along with the Norwegians, UH, some kind of a dialogue
Speaker 1: with the opposition that moves the country forward such that
Speaker 1: these free and fair elections take place. People can, I guess,
Speaker 1: confidence can return to Venezuela, and ultimately the government feels
Speaker 1: as though the situation is stable enough and fair enough
Speaker 1: that it is willing to relieve at least some of
Speaker 1: these sanctions. And if that happens, I'm not in the
Speaker 1: business of making predictions that if Venezuela is allowed to
Speaker 1: start selling oil again on international markets, and if investors
Speaker 1: are allowed to bring money to the country and pump
Speaker 1: it into sectors like petrochemicals, it might be quite amazing
Speaker 1: the kind of growth we would see in the Venezuela economy,
Speaker 1: because it has over the past eight years shrunk by
Speaker 1: it's hard to believe. It's been shocking. Eric Schatska, thank
Speaker 1: you so much for going down there and doing this
Speaker 1: and joining us today. Are on the heels of your trip.
Speaker 1: The great reflation turns into the great unwind. Jay Bryson,
Speaker 1: Wells Fargo chief economist has been tracking the data. Unclear
Speaker 1: what the data actually says. Jay Bryson, based on the data,
Speaker 1: do we have any indication that, yes, this economic recovery
Speaker 1: is starting to stall out or give hints of having
Speaker 1: already reached its peak and poised for only disappointment going forward. Well,
Speaker 1: I don't know, Lisa, if I would say disappointment going forward,
Speaker 1: I mean, are we at peak growth right now? Yes? Probably.
Speaker 1: You know, in the second quarter you're looking at a
Speaker 1: growth raith that's probably going to be annually that's clearly
Speaker 1: not sustainable. And if you slow down in the second
Speaker 1: half of the year to what we think will be
Speaker 1: six seven maybe eight percent less is a very very
Speaker 1: strong growth rate. So again, peak growth right now? You
Speaker 1: can't all right, Well, there's a question here about whether
Speaker 1: we can infer anything from the labor market data that
Speaker 1: we've been getting. The idea that we got a disappointment
Speaker 1: in the initial jobless claims. We've got disappointments on the
Speaker 1: monthly jobs reports that we've gotten out of the federal government.
Speaker 1: Are we gleaning anything from that or is it still
Speaker 1: too early to do anything with that information? You know,
Speaker 1: at least I think it still isn't very a little
Speaker 1: bit too early to really make hard decisions about what's
Speaker 1: coming out of the labor market right now. I mean,
Speaker 1: it's still being affected by concerns about COVID if you
Speaker 1: look at surveys when people say why aren't you working
Speaker 1: right now? Concerns about going back to the workplace or
Speaker 1: up there. You know, there's still these extended unemployment benefits
Speaker 1: at least in some states, um that may be keeping
Speaker 1: some people along the sidelines. So I think we really
Speaker 1: need to give it, unfortunately, you know, another few months
Speaker 1: to see when to smoke clears, to see how we're
Speaker 1: doing in the flaw if people are actually coming back
Speaker 1: to the labor market at that point. So at this point,
Speaker 1: there's still I think a lot of noise, a lot
Speaker 1: of things going on in the labor market that are
Speaker 1: that are keeping a little bit made depressed. Are you
Speaker 1: at all concerned about a price wage spiral? J I
Speaker 1: know it's something that economists fear normally, but as Lisa said,
Speaker 1: we've gone through a real paradigm shift. So Matt used
Speaker 1: the word spiral. Now I'm not really concerned about spiral,
Speaker 1: but it's like, so, you know what I think wages
Speaker 1: price spirals. I think what we saw back in the
Speaker 1: nineteenth seven and back then what you had was a
Speaker 1: fair amount of people had wages that were in dept
Speaker 1: to inflation. So you had the OPEC shocks that pushed
Speaker 1: up prices, then that fed into wages automatically fed back
Speaker 1: into prices again in spiraled up. You don't have that
Speaker 1: slight sort of thing today in terms of that, I mean,
Speaker 1: I think what's it would be interesting or what we're
Speaker 1: keeping a close eyele on is inflation expectations. If they
Speaker 1: really start to become a moored here, people really do
Speaker 1: start to expect firing and hired inflation going forward, then
Speaker 1: that does become a little bit of concern. And I
Speaker 1: think the data is mixed there. When you look at
Speaker 1: more good indicators of inflation expectations since the FED media,
Speaker 1: they've come down significantly. Um, you know, now the you know,
Speaker 1: the personal expectations like what you capture in the University
Speaker 1: of Michigan. We'll see how that all plays out. But
Speaker 1: for me, that's the big key is what happens to
Speaker 1: you know, j from UH in your career, from Johns
Speaker 1: Hopkins to Georgetown to the University of Alabama, You've been
Speaker 1: the entire time inside this kind of Reaganomics bubble. Right.
Speaker 1: We've had this supply side economics narrative for the last
Speaker 1: forty years, and that seems to have changed with this
Speaker 1: pandemic and with this um well, I guess the last
Speaker 1: administration was was a big spender as well, but all
Speaker 1: of a sudden, modern monetary theory seems to have won
Speaker 1: the day. How difficult does that make your job? Well,
Speaker 1: you know, you guys have been using the word paradigm chef,
Speaker 1: you know, and so it's it's clearly is that where
Speaker 1: are we right now in terms of what's what's the
Speaker 1: closest um of analog that you could look at, you know,
Speaker 1: I think it would be the ninth the guns and
Speaker 1: butter Um, And we did get some inflation out of that. Now,
Speaker 1: it was really the the opec shots um of the
Speaker 1: seventies that really got inflations and starting to higher so
Speaker 1: that's kind of where we are right now. And what
Speaker 1: I would say though, is it's a political decision going forward.
Speaker 1: You know, are we going to get all this infrastructure spending.
Speaker 1: Are we going to get this American Family's plan tasked
Speaker 1: or not? That still remains to be seen. We still
Speaker 1: have a very very split congress um, and even with
Speaker 1: among the fifty senators Democratic senators, there's not unity there either.
Speaker 1: So it does make our job the politics right now,
Speaker 1: I think it is complicates what we're trying to figure
Speaker 1: out going forward. How are you thinking within this big
Speaker 1: paradigm shift that we talk about, the models that we
Speaker 1: traditionally look at a Phillips curve, let's say it, the
Speaker 1: way that we're measuring inflation, the basket of which we're measuring,
Speaker 1: are those tools still intact well in terms of the
Speaker 1: you know, the Phillips curve, I think that has been
Speaker 1: was put to rest pretty much during the last expansion.
Speaker 1: You know, we got down to an unemployment rate that
Speaker 1: was at three and a half percent. Productional Phillips curves
Speaker 1: would have told you you would have had a lot
Speaker 1: more wage inflation than we did it. So that's kind
Speaker 1: of about the out the window right now. So, yes,
Speaker 1: we are in kind of uncharted territory right now, not
Speaker 1: only with what's going on with the pandemic, but as
Speaker 1: well as as way the the economy is responding to them.
Speaker 1: So when we think about the future, when we're looking
Speaker 1: at our forecast, when there's always a confidence interval around that,
Speaker 1: Unfortunately that confidence interval right now is wider than what
Speaker 1: voice historically has been. What about the level of divergence
Speaker 1: and thinking on a global basis, A lot of the
Speaker 1: guests yesterday we're hinting that the FED has now diverged
Speaker 1: from other global central banks and thinking about where we are,
Speaker 1: how further ahead we are are you see the divergence
Speaker 1: of the US versus other central banks. It's clearly up
Speaker 1: until say Wednesday, there wasn't a doubled. It seemed like
Speaker 1: other major central banks were leaning a little bit more
Speaker 1: towards starting to remove some policy accommodation, you know, defend
Speaker 1: wasn't there yet. Now. I think what they hinted with
Speaker 1: the dot plot on Wednesday was maybe we're getting a
Speaker 1: little bit closer to that than than what we thought.
Speaker 1: So I would say the FED at this point is
Speaker 1: still lagging a little bit behind some of its international counterparts. Um.
Speaker 1: But clearly there's been a reaction function ship that seems
Speaker 1: like they have, uh, what they've elevated is a maximum
Speaker 1: employment at the expense of inflation. But now that it
Speaker 1: may be starting to change a little bit as well,
Speaker 1: So the FED is starting to catch up to some
Speaker 1: of those major central banks. We're speaking with Jay Bryson
Speaker 1: and Wells Fargo chief economists and Jay every day on
Speaker 1: Thursday at four thirty pm, I take a look at
Speaker 1: the FED balance sheet. It's when they release the latest outstandings.
Speaker 1: And yesterday the balance sheet increased by the most going
Speaker 1: back three months, and it rose to the highest level
Speaker 1: ever of more than eight trillion dollars, crossing that line
Speaker 1: for the first time. They are talking about tapering perhaps,
Speaker 1: and people are talking about tapering, but they're doing anything.
Speaker 1: But I mean, honestly, how much support is this giving
Speaker 1: to the economy at this point and how much support
Speaker 1: is this given to bond yields where people getting increasingly
Speaker 1: sanguine that they will stay as low as they are
Speaker 1: so right, I mean, the FED is taking down roughly
Speaker 1: half of the treasury supply UM right now. I don't
Speaker 1: have a point estimate for how much that's worth on
Speaker 1: the ten year yield. But you know it's clearly bringing
Speaker 1: that that yield down. If the Fed tomorrow says we're
Speaker 1: going to start the paper, what do you think happens
Speaker 1: to the tenure yield? Is home a snap fire, and
Speaker 1: I think they are very concerned about that. They look
Speaker 1: back at the paper tantrum back in two thousand thirteen
Speaker 1: when the yield on the tenure stepped up fifty basis
Speaker 1: points over you know a number of leads, and I
Speaker 1: don't think they want to go back to that. Yeah,
Speaker 1: and so we do expect that, you know, later this summer,
Speaker 1: maybe early fall, the Fed will start to hit about
Speaker 1: the tapering. And when they start to really do that,
Speaker 1: we will see yield start to move up. I wouldn't
Speaker 1: expect them to start to really dial back their case
Speaker 1: of purchases and late this year and probably more likely
Speaker 1: early next year. Jay Brayson, it Wells Fargo chief Economist,
Speaker 1: Thank you so much. A lot of folks really have
Speaker 1: to assess what happened on Wednesday and what could happen
Speaker 1: going forward. Of Course, all the big head honchos over
Speaker 1: at black Rock when they want to get a sense
Speaker 1: of what's happening in the market. Of course, they turned
Speaker 1: to Way Lee, chief Global Chief Investment Strategists over at
Speaker 1: the black Rock Investment Institute, and I'm pleased to say
Speaker 1: Way joins us right now to talk a little bit
Speaker 1: more here. Way about this shift in tone that we
Speaker 1: got out of the fit and I'm wondering if this
Speaker 1: requires a meaningful shift in tone out of the markets. Well,
Speaker 1: we actolutely see what the FED announced this week in
Speaker 1: line with its new policy framework service bring forward the
Speaker 1: lead too, as well as adjusting inflation expectations higher, especially
Speaker 1: for this year. We also see this adding to the
Speaker 1: credibility of of its framework because everything that's happened so far,
Speaker 1: what they have put out is still in line with
Speaker 1: what we call the new nominal theme, which is that
Speaker 1: the rate path will be a lot slower in this
Speaker 1: cycle in comparison with previous cycles. So if you think
Speaker 1: about back in twenty fifteen, or we're looking at FED
Speaker 1: right high co PC was just above one and now
Speaker 1: we're talking about a lot higher levels and at the
Speaker 1: same time leadoff not in not until twenty twenty three
Speaker 1: by Feds on estimate. So we still see their new
Speaker 1: policy framework very much intact, and that under cleans our
Speaker 1: pro risk view. So just to underscore what you may
Speaker 1: be saying here, is it just that you have not
Speaker 1: changed anything about your investment thesis post the FED meeting
Speaker 1: that a lot of people thought was a pivotal shift. Well,
Speaker 1: I would say that there are specific kind of views around,
Speaker 1: for example, where the dollar could go from here on,
Speaker 1: at least in the near term, and that has beat
Speaker 1: across the immersion market sentiment, which we are reviewing very
Speaker 1: very closely and more broadly that the view around curve
Speaker 1: steepening after this this week's annasmal have seen reversal of that.
Speaker 1: So so so there are under the surface and nuances
Speaker 1: that we're working through, but the overall stay invested in
Speaker 1: market pro risk that is intact because we still see
Speaker 1: even though it came as a bit of a hawkish surprise,
Speaker 1: the the the changes and the announcement in line with
Speaker 1: the new policy framework of that effect in battle. How
Speaker 1: are you thinking though about the rotation sort of back
Speaker 1: into growth out of value. How much of that was
Speaker 1: maybe just some recent under performance that we have seen,
Speaker 1: how much of that is more fundamental that long term
Speaker 1: growth expectations might be lower than some of our early
Speaker 1: lofty projections. I would say yes, very interesting indeed, that
Speaker 1: we're seeing a bit of our rotation back into the
Speaker 1: growth fee names that came a bit more under pressure
Speaker 1: earlier on in the year in our review, for example,
Speaker 1: the typical growth fee names tech. There is always a
Speaker 1: place for technology in portfolio, especially when you look at
Speaker 1: it from a longer term perspective. If you think about
Speaker 1: some of the structural challenges that we've got to tackle,
Speaker 1: aging demographics, the global grain transition, technology will play a
Speaker 1: big growth there. Earnings a goose and they have continued
Speaker 1: to deliver, and we actually have been talking about kind
Speaker 1: of earlier year on the performance as interesting entry point
Speaker 1: to view that position to the longer term case for growth.
Speaker 1: The title names and especially Technology Review stays intact. But
Speaker 1: in the Newton we still see there being more to
Speaker 1: go in this restart narrative. If you think about kind
Speaker 1: of the restarted that started earlier this year in the US,
Speaker 1: now broadening out to Europe and then also broadening out
Speaker 1: of Japan, I do see that there being more to
Speaker 1: go for the sickly control to go a bit longer. Well,
Speaker 1: let's talk a little bit more about some of the
Speaker 1: growth prospects in Europe. Right now, we are getting headlines
Speaker 1: from the Italian Prime Minister Mario dragging Uh saying the
Speaker 1: economic forecast there will be revised up significantly. He's also
Speaker 1: talking up the need and his desire here for additional
Speaker 1: economic stimulus here kind of on the same note that
Speaker 1: we've heard from drag for quite some time. But we've
Speaker 1: seen better data starting to come out of Italy and
Speaker 1: some of the other European nations here that I think
Speaker 1: would be encouraging. Way indeed, for we have seen so
Speaker 1: far is that the momentum of restarts, the botton is
Speaker 1: getting passed on from the US to the laggers, previous
Speaker 1: laggas including Europe and in our review Japan. And that's
Speaker 1: very much under king our preference to potentially broaden out
Speaker 1: our previously very kind of strong conviction in US apputies
Speaker 1: and consider some of the laggers, including Japan and including
Speaker 1: Europe that that you just you just spoke to. One
Speaker 1: thing I would say, though, is that the restart is
Speaker 1: very different from a typical recovery. So as we see
Speaker 1: these very strong incoming growth numbers, we have to take
Speaker 1: it with a pinch of salt as well. In this
Speaker 1: we cannot extrapolate this momentum indefinitely, so we're cautioned against
Speaker 1: extrapolating the very strong momentum that we're seen right now.
Speaker 1: But we do see that we start brosening out, benefiting
Speaker 1: secico assets such as Europe and Japan. For the matter,
Speaker 1: wait before we let you go just twenty seconds here,
Speaker 1: do you think that the dollar will continue to strengthen
Speaker 1: after five straight days the greatest strengthening streak going back
Speaker 1: to well, we actually see dollar kind of range found.
Speaker 1: The recent kind of strengthening trend came off the back
Speaker 1: of a period of weakening, right, so this is earlier
Speaker 1: at the beginning of the year because of the US exceptionalism.
Speaker 1: We see dollar strengthening, and then we see that coming back,
Speaker 1: and now it's rebounding that a little bit. We see
Speaker 1: it range found, not breaking out of the current range
Speaker 1: and not particularly hurting really sentiment, but in a near
Speaker 1: top giving post strong. It's rebounded, but we definitely keep
Speaker 1: a close eye on res market because of that. Really
Speaker 1: of black rock, thank you so much for that. Right now,
Speaker 1: we are so lucky to have Congressman Shawn cast In,
Speaker 1: a Democrat from Illinois joining us on the drum beat
Speaker 1: to infrastructure, the drum bread to cleaner energy. Congressman, I'd
Speaker 1: love to start with this idea that there seems to
Speaker 1: be more of a consensus forming and some sort of
Speaker 1: bipartisan infrastructure bill. What's your sense of the shift that's
Speaker 1: allowed a greater consensus and perhaps more optimism around something
Speaker 1: getting done. Um, you know, I hope you're right. We
Speaker 1: desperately need to upgrade our infrastructure. The I don't think
Speaker 1: it's surprising every member of Congress would like to see
Speaker 1: infrastructure projects to their district. I think the challenge that
Speaker 1: we have in this moment is to make sure that
Speaker 1: we do not forget about the critical importance of climate
Speaker 1: infrastructure in this piece, because as long as the red state,
Speaker 1: blue state, red district blue district divide tracks so closely
Speaker 1: to where people live and where land is, that means
Speaker 1: that this huge win win of clean energy, that is
Speaker 1: a wealth transfer from energy producers energy consumers, has a
Speaker 1: partisan tinge, and we just have to make sure not
Speaker 1: to let that quest for by partisanship get in the
Speaker 1: way of doing what we have to do both for
Speaker 1: the environment and for our wallets. Yeah. Well, the partisan tinge,
Speaker 1: of course, has been a huge roadblock of for a
Speaker 1: lot of efforts out there to address some of these issues. Congressman,
Speaker 1: you have three proposals out there, at least three, uh
Speaker 1: that I'm aware of here to address some of those
Speaker 1: climate change issues. I'm weathering whether you can talk a
Speaker 1: little bit specifically about the one that's supposed to address
Speaker 1: some of the financial risk that you see out there.
Speaker 1: Sure well as the light had we just passed on
Speaker 1: the floor this week my my Climate Change Financial Risk
Speaker 1: Disclosure Act, which essentially just says that the sec UM
Speaker 1: is obligated to require all companies, on a mandatory and
Speaker 1: consistent basis to report both their contributions to global warming
Speaker 1: in their exposure US as I'm sure you know in
Speaker 1: the SEC developed voluntary disclosure and last year that the
Speaker 1: Trump led CFTC said that those disclosures were insufficient. We're
Speaker 1: not providing investors what they need, and so the idea
Speaker 1: is to get this out here to level of playing
Speaker 1: field again. That one we just passed on the floor
Speaker 1: this week and we will send off to the Senate.
Speaker 1: The the other proposals that we have are essentially follow
Speaker 1: from that, saying we need to understand the systemic risk
Speaker 1: that climate change poses to our financial system. Swiss Rey
Speaker 1: has said that on the course we're on, we're looking
Speaker 1: at an eighteen percent reduction in global GDP from climate change.
Speaker 1: That's the business as usual case. Even if we meet
Speaker 1: the Paris goals, it's a four percent reduction in global GDP.
Speaker 1: CFTC has more or less matched those predictions for the
Speaker 1: United States, and some of that is negative loss, you know,
Speaker 1: what happens to low lying coastal areas and properties that
Speaker 1: are associate that are there from hurricanes, from wildfires, etcetera.
Speaker 1: But a big part of it is transitional because everything
Speaker 1: every clean energy technology we build lowers the cost of energy,
Speaker 1: solar panels, electric vehicles, geothermal efficiency. It leaves more money
Speaker 1: in people's pockets. But that's really disruptive to certain regions
Speaker 1: of the country. And you know, as I tell my colleagues,
Speaker 1: rising tides sometimes lift all boats. Tsunami is that away
Speaker 1: of swamping some out. And so we're creating a tremendous
Speaker 1: amount of wealth, but where is it going to be
Speaker 1: isolated in our economy from it? So these other bills
Speaker 1: are designed to say, let's have the let's have our
Speaker 1: pudential regulators understand where those systemic risks sit and then
Speaker 1: put appropriate guard rails to protect investors when those movements
Speaker 1: inevitably start to come is indeed they already are. Congressman
Speaker 1: Shawn Casting of Illinois, thank you so much for being
Speaker 1: with us, too short. We'll get you on more next time.
Speaker 1: There is no better person to discuss travel than Brian Kelly.
Speaker 1: Of course we know him as the points guy. I'm
Speaker 1: a huge fan on Instagram following you, and of course
Speaker 1: some of the big headlines this morning that the EU
Speaker 1: sort of fully trying to reopen to US visitors. But
Speaker 1: I guess the big questions can I still afford a
Speaker 1: flight or my flights now priced out of my price
Speaker 1: range to Europe? You know what, Taylor, The best deals
Speaker 1: this summer are to Europe. We're seeing thousand dollar one
Speaker 1: way business class fairs to Europe. And it's also a
Speaker 1: great time to use those frequent Flyer miles. So many
Speaker 1: of us have them. We're hoarding them because we haven't
Speaker 1: traveled that so they use them now, especially because you
Speaker 1: can cancel your freaking flyer midel tickets and get them
Speaker 1: all back and all your taxes and fees back, which
Speaker 1: is much better than getting a voucher if you pay
Speaker 1: for a ticket. Interesting, I mean you mentioned business class.
Speaker 1: There where are we in terms of the return of
Speaker 1: the business customer. We have heard that those are the
Speaker 1: big ticket items, but that is nowhere coming back from
Speaker 1: the corporate side. Is this all leisure still? At this moment,
Speaker 1: it's mostly leisure travel, although every major CEO of an
Speaker 1: airline that I've talked to you says that business travels
Speaker 1: coming back much quicker than they anticipated. As we know,
Speaker 1: the big banks are going to be calling people back
Speaker 1: to the office usually after labor day um, and business
Speaker 1: travel is going to come back in a different form.
Speaker 1: I know at my company, we're not going to be
Speaker 1: doing senseless meetings that we could do a resume, but
Speaker 1: we're gonna have longer, more impactful team building meetings at resorts.
Speaker 1: So I think it's gonna be it's gonna come back
Speaker 1: a lot quicker than we thought, but it's gonna look
Speaker 1: different that Monday to Thursday grind might change a little bit. Yeah,
Speaker 1: you know, it's interesting you bring that up. I was actually,
Speaker 1: you know, with the CEO of Marriott International yesterday as well,
Speaker 1: as the CEO of trip dot Com, and they talked
Speaker 1: about this idea of sort of I guess hybrid type
Speaker 1: travel where you're gonna see much more of a blend
Speaker 1: between that leisure and business customer here. How does that
Speaker 1: sort of change at all? I guess the way that
Speaker 1: some of the airlines and the hotels sort to price
Speaker 1: their offerings and I guess, uh sort of adjust their
Speaker 1: offerings to deal with those types of customers. Yeah, you know,
Speaker 1: their first claims are full these days, there's still you know,
Speaker 1: upgrading people in the first class. You know, the business
Speaker 1: class total fares are down. I think we're gonna see
Speaker 1: a return to profitability are not stemming the losses this
Speaker 1: quarter for most of the airlines, but they're not those
Speaker 1: big ticket bears, the ten thousand dollar business class fairs
Speaker 1: to Shanghai, right, So definitely the airlines are looking for
Speaker 1: more ways to raise revenue. A key way they did
Speaker 1: that during the pandemic was selling billions of dollars worth
Speaker 1: of frequent fire miles to the credit card companies. And
Speaker 1: what we're seeing is huge offers for consumers in the
Speaker 1: credit card market. You know, we're looking hundred thousand mile
Speaker 1: offers to get a single credit card. I think there's
Speaker 1: seven different cards offering that. So I think we're seeing
Speaker 1: a shift in the way they're accounting for the revenue,
Speaker 1: but making it up through Cobram partnerships is a key
Speaker 1: way to do that. Do you think we'll get back
Speaker 1: to a stage anytime soon where we will see some
Speaker 1: of those offers dangled a little bit more out there?
Speaker 1: I mean, I hear a lot about past issues with
Speaker 1: a lot of these companies. They're obviously having to pay
Speaker 1: a little bit more for workers here. Uh, and there's
Speaker 1: this idea here that in order to protect their margins,
Speaker 1: that means they can't offer the same type of discounts
Speaker 1: that they did in the past. Absolutely, we're going to
Speaker 1: see more ancillary fees. Even though the airlines did you know,
Speaker 1: get rid of change fees over the pandemic, We've already
Speaker 1: seen them start to roll that back, right And nay,
Speaker 1: most airlines now won't give you that free change if
Speaker 1: you book basic economy, which is what most leisure travelers
Speaker 1: are booking that cheapest fair. We've also seen some bogus
Speaker 1: fees from hotels for service fees, cleaning fees. Uh. Certainly
Speaker 1: in the car rental space. We're seeing exorbitant rates and fees,
Speaker 1: so travel prices are for eping up. You know, this
Speaker 1: summer is not the summer of forty dollar affairs across
Speaker 1: the country like we saw a year ago. So uh yeah,
Speaker 1: I think the airlines are very smart at coming up
Speaker 1: with ways to to bring in that ancillary revenue quickly. Here, Brian,
Speaker 1: where's the hot spot to go this summer? I mean
Speaker 1: we're still looking domestic. Key West Miami y is through
Speaker 1: the roof. You know, so many people just want to travel,
Speaker 1: and even though Europe is opening, I'm excited to go
Speaker 1: next month. It's been really confusing to figure out what
Speaker 1: the rules are EU rules versus individual country rules. Certain
Speaker 1: countries will release information on Facebook and it's you know,
Speaker 1: luckily at the Points Guy, we break this all down
Speaker 1: for our readers, but the average consumer it's still way
Speaker 1: too confusing to go abroad. So uh and we're seeing
Speaker 1: huge amounts of capacity added to the Caribbean for Q three,
Speaker 1: actually more than Q three, so people are headed to
Speaker 1: the beach. We'll need a break. You and me vote
Speaker 1: the Points Guy, Brian Kelly, thank you so much for
Speaker 1: joining us. This is the Bloomberg Surveillance Podcast. Thanks for listening.
Speaker 1: Join us live weekdays from seven to ten am Eastern
Speaker 1: on Bloomberg Radio and on Bloomberg Television each day from
Speaker 1: six to nine am for insight from the best in economics, finance, investment,
Speaker 1: and international relations. And subscribe to the Surveillance podcast on
Speaker 1: Apple podcast, SoundCloud, Bloomberg dot com, and of course on
Speaker 1: the terminal. I'm Tom Keene, and this is Bloomberg