WEBVTT - Market Unpredictability and Congestion Pricing 0:00:02.520 --> 0:00:13.760 Bloomberg Audio Studios, podcasts, radio news. This is the Bloomberg 0:00:13.840 --> 0:00:17.920 Surveillance Podcast. Catch us live weekdays at seven am Eastern 0:00:18.200 --> 0:00:22.000 on Apple CarPlay or Android Auto with the Bloomberg Business App. 0:00:22.360 --> 0:00:25.680 Listen on demand wherever you get your podcasts, or watch 0:00:25.760 --> 0:00:27.040 us live on YouTube. 0:00:27.440 --> 0:00:30.840 Kathy Jones joins is to give a first look it yield. 0:00:31.000 --> 0:00:34.920 I look at total return on bond funds since the 0:00:34.960 --> 0:00:38.640 bond market broke three years ago whatever now two and 0:00:38.640 --> 0:00:41.599 a half years ago, and it ain't working. What's the 0:00:41.720 --> 0:00:46.280 value proposition in bonds versus buy in two year of 0:00:46.440 --> 0:00:48.560 Paul Sweeney two year yield forever? 0:00:48.920 --> 0:00:52.199 Yeah, well, we didn't have positive returns last. 0:00:52.000 --> 0:00:55.120 Year, and by look, you gotta do better than that. 0:00:55.280 --> 0:00:57.160 Yeah, I know, but we did. 0:00:57.200 --> 0:00:59.840 The agg was up in most categories except for very 0:00:59.840 --> 0:01:02.920 long long term bonds or international bonds had positive returns. 0:01:03.400 --> 0:01:07.280 And you know, the reason you buy bonds are for income, 0:01:07.560 --> 0:01:11.160 and right now they have income. You buy them for 0:01:11.200 --> 0:01:13.680 a capital preservation, just because. 0:01:13.440 --> 0:01:15.000 Borrowing you want to get your money back. 0:01:15.080 --> 0:01:17.679 You can get your money back, and for that sort 0:01:17.720 --> 0:01:21.560 of certainty, right and for diversification. So at some point 0:01:21.800 --> 0:01:25.560 in the sometime in the future, the stock market might 0:01:25.600 --> 0:01:31.440 go down, and generally bonds do pretty well in that environment, Kathy. 0:01:31.480 --> 0:01:33.800 For a long time we had an inverted yield curve 0:01:33.840 --> 0:01:36.440 in some folks like Cam Harvey at Duke University would 0:01:36.480 --> 0:01:39.119 tell you that means the recessions coming. We didn't get it. 0:01:39.480 --> 0:01:41.520 Now we've got the yeld curve steeping. I got the 0:01:41.560 --> 0:01:43.600 four I got the ten year at four to sixty, 0:01:43.640 --> 0:01:45.880 the two year four and a quarter. What is that 0:01:45.920 --> 0:01:47.360 steepening yield curve telling us? 0:01:47.720 --> 0:01:50.240 Yeah, this was one for the record books. We didn't 0:01:50.240 --> 0:01:53.400 get the recession after the inverted yield curve. I think 0:01:53.440 --> 0:01:55.960 it's telling us two things. It's telling us, yes, the 0:01:56.000 --> 0:01:58.320 market still looks for the Fed to cut a couple 0:01:58.320 --> 0:02:00.720 of times at the short end, but the long end 0:02:00.800 --> 0:02:02.880 is reflecting all of the risks that we have for 0:02:03.040 --> 0:02:08.079 inflation and for policy that may prove to be inflationary 0:02:08.160 --> 0:02:11.000 down the road. So we're going back to a more normal, 0:02:11.560 --> 0:02:13.680 steeper yield curve, and I think that continues. 0:02:14.800 --> 0:02:18.160 So what am I doing in terms of credit? Here? 0:02:18.280 --> 0:02:20.960 Do I take credit risk? Here? Do I just be 0:02:21.600 --> 0:02:23.600 comfortable in my treasury market? 0:02:24.120 --> 0:02:26.720 Yeah? I think you can take some credit risk. We 0:02:26.760 --> 0:02:30.000 are cautious on overdoing it on credit going too far 0:02:30.120 --> 0:02:32.720 down the spectrum, because we are starting to see defaults 0:02:32.800 --> 0:02:35.560 rise in the high yield market, in the lower credit 0:02:35.639 --> 0:02:39.280 quality part of the market. But investment grade companies, you know, 0:02:39.320 --> 0:02:43.440 they have cash flow that have strong earnings. It's really 0:02:43.480 --> 0:02:46.480 hard to fight that. So we'd continue at the investment rate. 0:02:46.520 --> 0:02:51.079 And you know, in the intermediate duration category. 0:02:50.960 --> 0:02:53.400 The real yield, what does that indicate to you? The 0:02:53.480 --> 0:02:56.160 nominally yield, folks, I think it's Paul, it's the beginning 0:02:56.160 --> 0:02:58.200 of the year. Like every jargon we use. We got 0:02:58.240 --> 0:03:00.720 to redefine it, right, even if it's slows a show 0:03:00.760 --> 0:03:04.040 down to Alisa Monteo crawl. We don't want to do that. 0:03:04.120 --> 0:03:07.839 But the real yield is the inflation adjusted yield. There's 0:03:07.840 --> 0:03:10.080 different ways to measure, but the answer is it's. 0:03:09.960 --> 0:03:12.560 Up up and a way. Does that impinge on Lizzie 0:03:12.600 --> 0:03:13.720 and Saunders economy? 0:03:14.440 --> 0:03:17.360 Well, I think at some stage of the game, other 0:03:17.440 --> 0:03:20.400 asset classes may look at the positive real yield of 0:03:20.480 --> 0:03:22.720 say two and a half percent, maybe moving up to 0:03:22.760 --> 0:03:23.400 three percent? 0:03:23.840 --> 0:03:26.680 Really are you well, we've gotta make some news here finely, 0:03:27.360 --> 0:03:28.760 can I put that on on YouTube? 0:03:29.240 --> 0:03:32.000 Kathy Jones models three percent ten year real yield. 0:03:32.560 --> 0:03:34.680 I don't think that it's out of the question at all. 0:03:35.320 --> 0:03:37.560 If you get a five percent ten year which is 0:03:37.560 --> 0:03:40.400 not out, which is within the range of potential outcomes 0:03:40.400 --> 0:03:43.480 that we have, and inflation continues to drift lower, you're 0:03:43.480 --> 0:03:46.120 going to get very close to that three percent real yield. 0:03:46.640 --> 0:03:49.000 And I would think at some point other asset classes 0:03:49.040 --> 0:03:52.320 would pay attention to that and say it's competition. But 0:03:52.400 --> 0:03:58.360 in terms of the economy, I notice Kathy both chantick 0:03:58.400 --> 0:03:59.600 I always have trouble with their name. 0:03:59.640 --> 0:04:00.920 But Centory. 0:04:01.520 --> 0:04:04.080 We got to take a pall here right now, Lisa Matteo, 0:04:04.160 --> 0:04:06.480 do you have trouble with Kathys Johnson's name? 0:04:06.880 --> 0:04:13.600 Best Paul, do you have trouble with you? And say, hey, friend, welcome. 0:04:13.480 --> 0:04:14.760 To a terrific e. 0:04:15.240 --> 0:04:16.279 She's a killer. 0:04:17.400 --> 0:04:20.240 I'm sitting there butchering. Mark Crumpton keeps a list of 0:04:20.320 --> 0:04:24.040 all the names that God I can pronounce Jones. But 0:04:24.480 --> 0:04:27.839 Mark Crumpton keeps a list of all the things I butchered. 0:04:27.520 --> 0:04:30.120 And at the top of the list is Kathley has 0:04:30.120 --> 0:04:31.080 studyed Good. 0:04:30.839 --> 0:04:34.880 Morning Kathy, a nationwide tell us about Kathy's announce well. 0:04:34.760 --> 0:04:37.719 She talked about productivity. So we can have high real 0:04:37.800 --> 0:04:41.640 yield if we have strong productivity, And that's the question mark. 0:04:41.680 --> 0:04:42.800 Does that continue or not? 0:04:43.560 --> 0:04:45.680 What does our Federal Reserve do over the next couple 0:04:45.760 --> 0:04:48.080 of meetings here? Because now, I mean we kind of 0:04:48.120 --> 0:04:51.080 started thinking six nine months ago it could be multiple 0:04:51.160 --> 0:04:53.840 breat cuts. Now the market's down to maybe one or two. 0:04:53.920 --> 0:04:55.760 What do you think? Yeah, I think. 0:04:55.640 --> 0:04:57.279 They're very cautious from here. 0:04:57.320 --> 0:04:57.880 They have to be. 0:04:57.920 --> 0:05:00.520 We'll get the minutes later this week of the meeting, 0:05:00.520 --> 0:05:03.719 which should be very interesting, but they have to be 0:05:03.880 --> 0:05:08.120 very cautious because there's so much policy uncertainty on the 0:05:08.120 --> 0:05:11.240 horizon and the economy continues to do better than they thought. 0:05:11.640 --> 0:05:14.080 Thank you so much for coming in today. Thanks liz 0:05:14.080 --> 0:05:17.120 Ane would have done this. I mean she's cold. She's like, no. 0:05:17.080 --> 0:05:18.320 Way, she's down in Florida. 0:05:18.400 --> 0:05:22.240 She said, exactly, Yeah what liz An smart? The rest 0:05:22.240 --> 0:05:24.560 of us moll that's O there is, Kathy Jones. Thank 0:05:24.600 --> 0:05:25.800 you so much for getting to start. 0:05:26.040 --> 0:05:29.600 You're listening to the Bloomberg Surveillance Podcast. Catch us live 0:05:29.680 --> 0:05:32.839 weekday afternoons from seven to ten am Eastern. Listen on 0:05:32.920 --> 0:05:36.599 Applecarplay and Android Otto with the Bloomberg Business app, or 0:05:36.720 --> 0:05:38.240 watch us live on YouTube. 0:05:38.400 --> 0:05:43.320 Glor Calvisina of RBC Capital Markets, Laurie, up twenty percent, 0:05:43.400 --> 0:05:46.320 up twenty percent. How do you model up up again? 0:05:48.200 --> 0:05:50.440 Well, thanks for having me, Tom, and happy new year. 0:05:51.000 --> 0:05:51.240 Look. 0:05:51.240 --> 0:05:53.800 I think you can't really do it from a valuation perspective. 0:05:54.240 --> 0:05:56.920 My valuation model is the most conservative one in our 0:05:56.920 --> 0:05:59.719 targeting process. But I do think on the sentiment side, 0:05:59.760 --> 0:06:02.080 we have an important development in December, which was that 0:06:02.120 --> 0:06:05.600 everybody got worried, and so we saw aaii net bulls 0:06:05.960 --> 0:06:07.760 fall from a range you know that had been one 0:06:07.800 --> 0:06:10.920 standard deviation above the long term average back in October. 0:06:11.279 --> 0:06:14.600 It stayed elevated as we got into early December, and 0:06:14.640 --> 0:06:16.920 it's pulled back now to the long term average. If 0:06:16.920 --> 0:06:18.400 you look at the four week average, and if you 0:06:18.400 --> 0:06:20.560 look at the weekly data point that came out last week, 0:06:20.600 --> 0:06:22.440 I think the bulls and the bears were basically at 0:06:22.480 --> 0:06:25.599 parody with one another, and that actually improves the setup 0:06:25.640 --> 0:06:28.640 for stocks going forward. So I think we can get there. 0:06:28.680 --> 0:06:30.720 I think you can. You can also have earnings help 0:06:30.800 --> 0:06:32.600 drive the market higher. I just don't think you get 0:06:32.600 --> 0:06:35.560 it from a valuation expansion perspective. I think we've really 0:06:35.600 --> 0:06:37.599 done the valuation expansion that we're going to do in 0:06:37.640 --> 0:06:38.200 this cycle. 0:06:39.480 --> 0:06:41.400 Hey, Lorie, how about earnings? How important are they going 0:06:41.440 --> 0:06:41.560 to be? 0:06:41.640 --> 0:06:41.800 Here? 0:06:41.880 --> 0:06:43.880 It seems like the Fed's not going to be doing 0:06:44.000 --> 0:06:47.240 too much heavy lifting forming in twenty twenty five. It 0:06:47.279 --> 0:06:50.640 feels like, and I can't imagine getting multiple expansion from here. 0:06:50.680 --> 0:06:52.840 So it feels like if any performance we're going to 0:06:52.880 --> 0:06:54.640 get in twenty five, it is going to be earnings driven. 0:06:54.839 --> 0:06:55.880 Is that a fair assessment? 0:06:56.720 --> 0:06:58.160 I think that's I think you hit the nail on 0:06:58.200 --> 0:07:00.760 the head, Paul. And look, I do think earnings have 0:07:00.880 --> 0:07:04.400 some challenges as we go into this next recording season. Namely, 0:07:04.440 --> 0:07:07.040 margin expectations have been coming down if you look at 0:07:07.040 --> 0:07:09.800 the bottom up sell side consensus estimates, that's been under 0:07:09.800 --> 0:07:11.640 their way since the middle of last year, actually, but 0:07:11.680 --> 0:07:14.480 it's continued as we look at these past few weeks. 0:07:15.080 --> 0:07:17.239 And if you think about, you know, sort of the dollar. 0:07:17.320 --> 0:07:20.120 A stronger dollar typically causes downward revisions, and I know 0:07:20.160 --> 0:07:22.000 the dollar has been all over the place, you know, 0:07:22.040 --> 0:07:24.560 and showing some weakness at least last I checked this morning. 0:07:25.280 --> 0:07:27.920 But the four Q strengthening that we had, that cake 0:07:28.000 --> 0:07:29.680 is already baked. So we've got to sort of see 0:07:29.680 --> 0:07:31.760 what companies say about that. And look, Paul, I've been 0:07:31.800 --> 0:07:33.960 doing this a long time. It always amazes me that 0:07:34.000 --> 0:07:36.120 when we go through these periods of dollar strength, I 0:07:36.160 --> 0:07:39.239 go in and you know, read earnings call transcripts, and companies, 0:07:39.360 --> 0:07:42.200 especially in healthcare and tech, like to blame weakness on 0:07:42.240 --> 0:07:44.560 the dollar. You know that everybody saw in real time, 0:07:44.600 --> 0:07:47.000 but nobody marks their models until we actually, you know, 0:07:47.080 --> 0:07:49.880 get to the end of the quarter. But I think 0:07:49.920 --> 0:07:51.920 you've got some little issues like that, and I do 0:07:51.960 --> 0:07:54.920 frankly expect companies to keep the bar somewhat low, just 0:07:54.960 --> 0:07:57.440 that we do still have some uncertainty in terms of 0:07:57.520 --> 0:08:00.680 things like taxes and tariffs. So I think earnings are 0:08:00.680 --> 0:08:02.560 going to be good and solid, but maybe not a 0:08:02.600 --> 0:08:04.600 ton of excitement here in the very short term. 0:08:04.680 --> 0:08:07.240 I want to talk about religion, Laurie, and that what 0:08:07.360 --> 0:08:09.560 I saw in all the wrap ups of last year 0:08:09.600 --> 0:08:11.560 in this great bul market. Take it back to Ben 0:08:11.640 --> 0:08:16.040 Laidler and Christmas Eveo. I believe twenty eighteen is the 0:08:16.040 --> 0:08:20.440 worship of free cash flow. They have nots the people 0:08:20.440 --> 0:08:23.800 that aren't trading it in Vidia multiples. Do they have 0:08:23.840 --> 0:08:29.280 a new religion to emphasize free cash flow growth or 0:08:29.320 --> 0:08:32.800 do we awake that. Why aren't more companies saying we 0:08:32.880 --> 0:08:34.400 got to boost free cash flow? 0:08:36.120 --> 0:08:38.320 It's an interesting question, ton. I'll tell you it's not 0:08:38.400 --> 0:08:40.439 a big part of my process, and that may be 0:08:40.440 --> 0:08:43.000 because I'm sort of overly influenced by my small cap 0:08:43.080 --> 0:08:45.400 days and I am a data nerd at heart. We've 0:08:45.400 --> 0:08:47.560 talked about that on this show before. But I will 0:08:47.600 --> 0:08:49.560 tell you that when I look at different databases and 0:08:49.600 --> 0:08:51.840 try to bring in free cash flow data, especially free 0:08:51.840 --> 0:08:55.040 cash flow estimates, it's really kind of garbage like when 0:08:55.040 --> 0:08:57.160 you try to aggregate it off to the market level. 0:08:57.280 --> 0:09:00.360 So I'm, not, to be honest, a big you know, 0:09:00.400 --> 0:09:01.839 sort of part of that philosophy. 0:09:02.760 --> 0:09:05.920 So, Laurie, as we think about twenty twenty five, it 0:09:06.000 --> 0:09:08.000 seems like, again two years in a row, we've had 0:09:08.040 --> 0:09:10.800 twenty percent plus returns in the SP five hundred, in 0:09:10.880 --> 0:09:13.560 large part tech driven. Quite frankly, it seems like this 0:09:13.600 --> 0:09:16.600 has been a tech driven market for fifteen years. Is 0:09:16.720 --> 0:09:19.080 tech going to be a leader in twenty twenty five? 0:09:19.160 --> 0:09:21.720 Does it need to be a leader in twenty twenty five. 0:09:22.960 --> 0:09:25.400 It's a great question, Paul. And if you actually go 0:09:25.480 --> 0:09:27.920 back and I think it was after Trump's first victory. 0:09:27.960 --> 0:09:30.400 We went back and looked at sector performance in the 0:09:30.520 --> 0:09:34.360 twelve month period after that first Trump victory that November election, 0:09:34.400 --> 0:09:37.320 and we found both financials and tech outperformed. So it 0:09:37.360 --> 0:09:39.280 doesn't shed a ton of light on the growth versus 0:09:39.400 --> 0:09:41.360 JALU trade at the sector level, but we did see 0:09:41.360 --> 0:09:44.480 growth stocks generally outperform in that period, and we've seen 0:09:44.520 --> 0:09:48.320 growth stocks, you know, big megacap tech type names, continue 0:09:48.320 --> 0:09:50.640 to hang on to their leadership here in the aftermath 0:09:50.679 --> 0:09:53.280 of this election as well. And look, I think a 0:09:53.280 --> 0:09:55.480 lot of people want this market to broaden out. You 0:09:55.520 --> 0:09:57.440 can count myself in that camp. 0:09:57.520 --> 0:09:57.840 Yeah. 0:09:57.920 --> 0:10:00.200 That being said, I think we have to understand and 0:10:00.400 --> 0:10:02.720 why we have had so many head fakes so far, 0:10:02.760 --> 0:10:05.160 and it is simply because the value part of the market, 0:10:05.280 --> 0:10:06.960 the rest of the S and P whatever you want 0:10:06.960 --> 0:10:09.600 to call it, has just not put up superior earnings 0:10:09.640 --> 0:10:12.199 growth and the mag seven you know that it has 0:10:12.240 --> 0:10:14.280 been fighting back, and we see it in terms of 0:10:14.320 --> 0:10:17.959 near term consensus expectations. They're still dominant even though a 0:10:18.120 --> 0:10:21.679 ramp down is anticipated, and long term earning growth expectations 0:10:22.160 --> 0:10:24.640 are still sitting at big highs relative to the rest 0:10:24.640 --> 0:10:27.080 of the market, and that is sustaining the premium valuation 0:10:27.160 --> 0:10:30.360 multiples until you break that. And I think a hotter 0:10:30.440 --> 0:10:32.800 economy than what we've been expecting, like more like a 0:10:32.840 --> 0:10:35.199 three percent economy than a two percent economy, I think 0:10:35.240 --> 0:10:37.800 can help that value part of the market. See earnings growth, 0:10:38.120 --> 0:10:40.440 you don't move up, but we're just not seeing it yet. 0:10:40.520 --> 0:10:42.760 And so I think, to be honest, if I look 0:10:42.800 --> 0:10:46.160 back at my December meetings, this whole go with value broadening, 0:10:46.480 --> 0:10:49.280 it just seems so consensus right now, especially in the 0:10:49.280 --> 0:10:51.319 fact that the earnings growth dynamics aren't shifting. 0:10:51.800 --> 0:10:54.400 Lloyd Kelvicina, I look at where we are, and what 0:10:54.520 --> 0:10:57.800 I'd suggest is sort of the zeitgeist now as everybody's 0:10:57.840 --> 0:11:00.920 pulling away the last five six days, I think like 0:11:00.960 --> 0:11:02.880 three hundred and sixty five days ago, we had the 0:11:02.920 --> 0:11:06.160 same thing going on. How do you interpret the pulling 0:11:06.200 --> 0:11:09.920 away we're seeing right now? People selling Meg seven, people 0:11:10.000 --> 0:11:10.680 lightening up. 0:11:12.080 --> 0:11:14.840 Yeah. Look, I think there is a natural inclination to 0:11:14.880 --> 0:11:18.000 take some profits when you've had this frothy sentiment in place, 0:11:18.160 --> 0:11:20.240 and I don't think people realize how much the sentiment 0:11:20.280 --> 0:11:23.200 started to unravel. But there's been a big concern about valuations, 0:11:23.200 --> 0:11:25.480 and we've got a lot of uncertainty on the policy front, 0:11:25.760 --> 0:11:27.480 so I do think it makes sense to sort of 0:11:27.520 --> 0:11:30.480 retrace here a little bit, take some profits and see 0:11:30.480 --> 0:11:32.079 where we need to redeploy in a bit. 0:11:32.559 --> 0:11:36.120 Laurie, thank you so much, Lori Kelvisina, RBC Capital Mark. 0:11:36.160 --> 0:11:38.120 It's just a huge value. 0:11:38.320 --> 0:11:38.400 Ed. 0:11:44.200 --> 0:11:48.120 This is the Bloomberg Surveillance Podcast. Listen live each weekday 0:11:48.160 --> 0:11:51.160 starting at seven am Eastern on Apple Cocklay and Android 0:11:51.200 --> 0:11:54.240 Auto with the Bloomberg Business up. You can also listen 0:11:54.320 --> 0:11:57.560 live on Amazon Alexa from our flagship New York station. 0:11:58.120 --> 0:12:00.400 Just say Alexa, play Bloomberg. 0:12:00.960 --> 0:12:04.640 Procest Nation on your commute this morning, the one everyone 0:12:04.720 --> 0:12:07.520 on transportation is watching. No, Paul, it's not the build 0:12:07.520 --> 0:12:10.920 out in ink or what they're doing with JFK terminal wone. 0:12:11.480 --> 0:12:12.800 Jenna Lieber joins us. 0:12:12.720 --> 0:12:16.599 Today running the MTA off of this congestion tax in 0:12:16.640 --> 0:12:19.720 New York, and we're thrilled the Bloomberg Surveillance will bring 0:12:19.760 --> 0:12:22.360 them to you for the entire risk of this hour. 0:12:22.400 --> 0:12:27.120 An incredibly busy day, important Monday for you. I've got 0:12:27.160 --> 0:12:29.800 one question which Krity grouped in London actually brought up 0:12:29.800 --> 0:12:32.600 because I know Paul's fired up here with a bunch 0:12:32.600 --> 0:12:37.920 of questions as well. Part of the bargain in Stockholm 0:12:38.080 --> 0:12:41.360 is they have a world class taxi service. Part of 0:12:41.400 --> 0:12:44.600 the bargain in London is they have a world class 0:12:44.640 --> 0:12:49.320 taxi service. I'm in taxis constantly here that are third world. 0:12:49.559 --> 0:12:53.120 How does this congestion tax get us is crity goop 0:12:53.200 --> 0:12:57.440 dimension to a better taxi experience? 0:12:57.840 --> 0:13:00.800 I think, Tom, thanks thanks for having me. I think 0:13:00.800 --> 0:13:03.720 that the taxis in New York are dominated, as we 0:13:03.880 --> 0:13:07.120 all know, by Uber and Lyft, and they actually are 0:13:07.160 --> 0:13:09.119 looking forward to having. 0:13:09.679 --> 0:13:12.079 You interrupt here. You're telling the poor people of New 0:13:12.120 --> 0:13:13.440 York City to take an Uber. 0:13:13.720 --> 0:13:16.360 Yeah, you know what, the right now that the cost 0:13:16.400 --> 0:13:19.080 difference between Uber and taxis is not all that great. 0:13:19.120 --> 0:13:20.839 I'm not in the taxi business, so I'm trying to 0:13:20.880 --> 0:13:24.400 answer your question. But the point is with more with 0:13:24.840 --> 0:13:27.880 less congestion on the roads, you're going to have the 0:13:27.960 --> 0:13:31.200 taxi industry, I think is going to do better. I mean, 0:13:31.240 --> 0:13:33.240 people will be able to move more quickly, pick up 0:13:33.280 --> 0:13:36.800 more rides, and for what is actually seventy five cents 0:13:36.840 --> 0:13:40.320 per ride when the average ride of a taxi taxi 0:13:40.360 --> 0:13:42.560 ride now in New York is like twenty five bucks, 0:13:42.760 --> 0:13:44.439 so seventy five cents a ride, and they're going to 0:13:44.520 --> 0:13:46.559 be able to move much more quickly, take more rides. 0:13:46.600 --> 0:13:48.160 I think it's going to be good for the industry. 0:13:48.679 --> 0:13:51.400 Part of the outcome that you guys are hoping for, 0:13:51.520 --> 0:13:54.640 that we're all hoping for as a city is reduced traffic, 0:13:54.720 --> 0:13:57.200 reduced congestion within the city. When don't we know if 0:13:57.240 --> 0:13:58.439 that's actually happening. 0:13:58.440 --> 0:13:59.040 It's a good question. 0:13:59.040 --> 0:14:01.559 It's going to take a while to obviously, to take effect. 0:14:01.760 --> 0:14:05.160 New York is adjust and they are resilient, but it's 0:14:05.200 --> 0:14:07.000 gonna take a little while. So we're gonna be watching 0:14:07.080 --> 0:14:09.800 it very closely, day by day, week by week. I 0:14:09.800 --> 0:14:13.079 don't expect to see some dramatic change on the first 0:14:13.160 --> 0:14:13.960 or the second day. 0:14:14.000 --> 0:14:14.520 Over time. 0:14:14.559 --> 0:14:17.800 We're expecting a ten to twenty percent reduction in traffic. 0:14:17.840 --> 0:14:20.840 That's what we're shooting for. But Paul, the big issue 0:14:20.880 --> 0:14:24.080 here is New York is leading New York Is and 0:14:24.120 --> 0:14:28.000 I think I know you're an international outfit. New York 0:14:28.120 --> 0:14:31.000 is becoming a twenty first century city. We just did 0:14:31.160 --> 0:14:33.520 you know two train terminals in the last couple of years, 0:14:33.680 --> 0:14:36.840 La Guardi Airport a total rebuild. It's number one in 0:14:36.880 --> 0:14:39.560 the country. JFK is getting rebuilt. I know your Newark 0:14:39.600 --> 0:14:42.520 Airport is getting investment. This is about being a twenty 0:14:42.560 --> 0:14:44.960 first century city where we don't spend all our time 0:14:45.000 --> 0:14:48.840 stuck in traffic. The business community that has always supported 0:14:48.880 --> 0:14:52.960 congestion pricing under Mike Bloomberg's lead in part because it, 0:14:53.120 --> 0:14:56.240 you know, congestion and time spending traffic is a tax 0:14:56.360 --> 0:14:57.120 on our economy. 0:14:57.840 --> 0:15:00.880 A lot of folks view this congestion price as simply 0:15:00.920 --> 0:15:06.520 a tax on consumers. Your budget is nineteen billion dollars. 0:15:06.560 --> 0:15:08.480 I believe that the MTA is for twenty twenty four. 0:15:08.960 --> 0:15:10.920 You need more money. That's what a lot of folks 0:15:10.920 --> 0:15:11.280 are saying. 0:15:11.440 --> 0:15:12.800 Listen, this is as you said. 0:15:12.840 --> 0:15:15.200 This is ninety percent of the people who come to 0:15:15.200 --> 0:15:18.200 the central business this or take transit. We're carrying six 0:15:18.240 --> 0:15:21.520 to seven million people a day on mass transit. So yeah, 0:15:21.800 --> 0:15:23.640 we have we have to pay a lot of people, 0:15:23.640 --> 0:15:26.600 and eighty percent of our cost is wages and pensions 0:15:26.640 --> 0:15:28.800 and benefits. No question, we'd have to pay a lot 0:15:28.800 --> 0:15:32.480 of people to deliver that service. But the bottom line 0:15:32.520 --> 0:15:36.360 is congestion pricing is about the benefits. It's about not 0:15:36.440 --> 0:15:40.720 just money for the MTA, but about lower traffic, cleaner air, 0:15:41.080 --> 0:15:44.560 safer streets, and a more functioning economy. That's the goal. 0:15:44.640 --> 0:15:47.600 That's why London did it, and that's why we're following. 0:15:48.000 --> 0:15:48.520 I was in. 0:15:48.440 --> 0:15:50.920 Paris last week and all I could say is what 0:15:51.040 --> 0:15:54.800 a difference in congestion. It was just beyond pleasant. When 0:15:54.840 --> 0:15:59.320 are we going to see results? Are we talking tuesday 0:15:59.400 --> 0:16:01.320 and we talk in twenty twenty seven? 0:16:01.760 --> 0:16:03.840 Listen, I want to sit here and tell you I 0:16:03.880 --> 0:16:07.080 have a crystal ball. The bottom line is adjustments are 0:16:07.080 --> 0:16:09.680 going to be made. It's gonna definitely take place over time. 0:16:10.040 --> 0:16:13.480 Let's watch it together. There's gonna be total transparency on 0:16:13.520 --> 0:16:15.840 the MTA side. We're gonna have a you know, a 0:16:15.920 --> 0:16:18.360 dashboard app for everybody to look at how many cars 0:16:18.400 --> 0:16:22.200 came in as compared to before the system went in, 0:16:22.600 --> 0:16:25.040 and how many of them are chargeable, and we're gonna 0:16:25.040 --> 0:16:25.880 be monitoring it close. 0:16:26.080 --> 0:16:28.520 Number one question I get is what happens, folks, For 0:16:28.560 --> 0:16:31.360 those of you across the nation and worldwide. The outer 0:16:31.480 --> 0:16:34.880 rege of Manhattan North South is the FDR in the 0:16:34.920 --> 0:16:39.520 West Side Highway. What happens to those two important thoroughfares 0:16:39.760 --> 0:16:41.760 where I believe there's no congestion text. 0:16:41.880 --> 0:16:44.800 Yeah, well, the idea is that these are so called 0:16:44.840 --> 0:16:47.320 excluded roadways that are on the edge of Manhattan, that 0:16:47.360 --> 0:16:49.920 people should be able to use them to get around 0:16:49.960 --> 0:16:54.080 the congestion zone. Listen, we have to We always talk 0:16:54.120 --> 0:16:58.040 about drivers like the dominant reality. I know you guys 0:16:58.080 --> 0:17:00.440 take trans At ninety percent of people who come to 0:17:00.480 --> 0:17:03.200 the Central Business State history take transit. There are only 0:17:03.240 --> 0:17:06.680 one hundred and thirty thousand people coming to the CBD 0:17:07.280 --> 0:17:10.919 who drive their personal cars as opposed to a million 0:17:10.920 --> 0:17:13.080 and a half jobs. So I don't think that we're 0:17:13.080 --> 0:17:17.000 gonna have some catastrophic traffic impact because a portion of 0:17:17.040 --> 0:17:20.440 those people do elect to take transit, or that people 0:17:20.440 --> 0:17:22.679 are avoiding the charge. I think we're gonna see it 0:17:22.680 --> 0:17:25.280 all get baked in over time, but we're gonna watch 0:17:25.320 --> 0:17:26.840 it closely, and we're gonna talk to you about it. 0:17:27.280 --> 0:17:28.960 We have a new president coming in in a couple 0:17:29.000 --> 0:17:32.639 of weeks. I'll hear your tunnel exactly. 0:17:32.760 --> 0:17:35.200 Now, just what do you what do you think president 0:17:35.440 --> 0:17:38.920 in president like Trump will do if anything about this plan. 0:17:39.119 --> 0:17:39.560 I don't know. 0:17:39.640 --> 0:17:42.960 You know, we got sued by in every every court front. 0:17:43.000 --> 0:17:45.080 You know east of the Mississippi's. 0:17:44.320 --> 0:17:46.560 Gonna say, is there anyone who hasn't sued you? Yeah? 0:17:46.560 --> 0:17:47.720 But Lisa Tay, are. 0:17:47.640 --> 0:17:48.840 You filing this party? 0:17:48.960 --> 0:17:49.120 Yeah? 0:17:49.160 --> 0:17:51.240 But you know what, we went every lawsuit because we 0:17:51.280 --> 0:17:54.040 did a four thousand page study. The FEDS approved it. 0:17:54.520 --> 0:17:56.320 You know, it took five years to do the study. 0:17:56.320 --> 0:17:58.120 It takes about five minutes to figure out New York 0:17:58.160 --> 0:18:01.119 as a congestion problem if you stand in midtown. But 0:18:01.640 --> 0:18:05.280 the what President Trump is going to do, I'm not certain. 0:18:05.280 --> 0:18:08.480 There's a lot of Republican politicians who are against mass 0:18:08.480 --> 0:18:09.520 transit and who. 0:18:09.600 --> 0:18:10.360 Rail about this. 0:18:10.760 --> 0:18:13.600 President Trump is also in New Yorker ruins office buildings, 0:18:13.600 --> 0:18:15.800 and ninety percent of the people who work in his 0:18:15.880 --> 0:18:19.520 office buildings come on mass transit, So I'm optimistic that 0:18:19.600 --> 0:18:20.280 he will get it. 0:18:20.520 --> 0:18:24.159 We are on a General Libo's Lever's CEO of the 0:18:24.320 --> 0:18:27.679 MTA with us today for this extended block. Here we 0:18:27.680 --> 0:18:30.200 welcome all of you on Bloomberg Surveillance nationwide and you 0:18:30.280 --> 0:18:35.399 commute and on YouTube subscribe to Bloomberg Podcast. To say 0:18:35.720 --> 0:18:38.240 the least, I have talked to Mayor Adams not once, 0:18:38.280 --> 0:18:41.280 but twice about a New Orleans experiment. I believe over 0:18:41.280 --> 0:18:44.679 in Europe a free bus service for the poor. The 0:18:44.760 --> 0:18:48.520 congestion text is about fancy people like Paul Sweeney in 0:18:48.560 --> 0:18:51.960 his ginormous car or me being driven by the Bentley 0:18:52.000 --> 0:18:53.000