1 00:00:05,080 --> 00:00:07,200 Speaker 1: This is the Bloomberg Surveillance Podcast. 2 00:00:07,680 --> 00:00:08,280 Speaker 2: I'm Lisa A. 3 00:00:08,320 --> 00:00:11,640 Speaker 1: Bromoids, along with Tom Keen and Jonathan Ferrow. Join us 4 00:00:11,680 --> 00:00:15,280 Speaker 1: each day for insight from the best in economics, geopolitics, 5 00:00:15,320 --> 00:00:19,480 Speaker 1: finance and investment. Subscribe to Bloomberg Surveillance on demand on Apple, 6 00:00:19,600 --> 00:00:22,840 Speaker 1: Spotify and anywhere you get your podcasts, and always on 7 00:00:22,880 --> 00:00:26,440 Speaker 1: Bloomberg dot Com, the Bloomberg Terminal, and the Bloomberg Business App. 8 00:00:26,640 --> 00:00:27,200 Speaker 2: What gives? 9 00:00:27,400 --> 00:00:29,280 Speaker 1: Let's ask that question to Michael Gabin, head of US 10 00:00:29,360 --> 00:00:32,279 Speaker 1: Economics at Bank of America Securities. Michael, what is your 11 00:00:32,320 --> 00:00:35,560 Speaker 1: reaction given the fact that markets seem to be a 12 00:00:35,560 --> 00:00:38,840 Speaker 1: little put off by consistently disinflationary data. 13 00:00:40,159 --> 00:00:41,839 Speaker 3: I think the market's head well first of fall. Good 14 00:00:41,840 --> 00:00:44,600 Speaker 3: morning Lisa and Katie, thanks for having me on. I 15 00:00:44,600 --> 00:00:48,800 Speaker 3: think markets had priced this in already. With the CPI 16 00:00:49,040 --> 00:00:51,000 Speaker 3: data in hand and the PPI data in the hand, 17 00:00:51,000 --> 00:00:54,000 Speaker 3: we can make a pretty good projection of where PCE 18 00:00:54,400 --> 00:00:56,720 Speaker 3: should come in. And we did expect the headline to 19 00:00:56,720 --> 00:00:58,480 Speaker 3: be down in tenth in the core to only be 20 00:00:58,560 --> 00:01:01,760 Speaker 3: up at ten. So this number really wasn't a surprise 21 00:01:01,880 --> 00:01:05,319 Speaker 3: to us. And if you do the implied CPI forecast 22 00:01:05,360 --> 00:01:09,480 Speaker 3: from market prices, they're looking for pretty soft inflation over 23 00:01:09,520 --> 00:01:11,280 Speaker 3: the next three to six months, so I think that 24 00:01:11,319 --> 00:01:14,399 Speaker 3: the market had largely priced in this number, as we 25 00:01:14,480 --> 00:01:17,520 Speaker 3: all know they're looking for about twice as many cuts 26 00:01:17,520 --> 00:01:20,680 Speaker 3: this year as the FED has planned, So I think 27 00:01:20,680 --> 00:01:23,199 Speaker 3: this was a status quo number for markets. 28 00:01:22,959 --> 00:01:25,560 Speaker 1: That might be status quo. The durable goods orders, as 29 00:01:25,600 --> 00:01:28,480 Speaker 1: Katie pointed out, not so much. It came in significantly 30 00:01:28,520 --> 00:01:30,800 Speaker 1: higher than expected, and I wonder if on the margins 31 00:01:30,800 --> 00:01:34,880 Speaker 1: there's some anxiety that it seems sort of incompatible that 32 00:01:34,920 --> 00:01:39,280 Speaker 1: we get ongoing better than expected growth while still seeing 33 00:01:39,319 --> 00:01:41,760 Speaker 1: that disinflation that everyone's been hoping for. 34 00:01:42,840 --> 00:01:45,560 Speaker 3: Yeah, there's certainly a limit to that, right, So, so far, 35 00:01:45,640 --> 00:01:49,720 Speaker 3: the narratives is that the economy can cool, growth can 36 00:01:49,760 --> 00:01:54,480 Speaker 3: remain modest or moderate but away from recession, and we 37 00:01:54,560 --> 00:01:57,840 Speaker 3: can experience both moderate growth and disinflation at the same time. 38 00:01:57,920 --> 00:02:01,280 Speaker 3: That's our view. I think that's the FEDS view for sure, 39 00:02:02,320 --> 00:02:04,680 Speaker 3: and why they've shifted to say a more balanced reaction 40 00:02:04,760 --> 00:02:07,640 Speaker 3: function between bringing inflation down and wanting to support a 41 00:02:07,680 --> 00:02:10,000 Speaker 3: soft landing. But you're right, there's a limit to that. 42 00:02:10,040 --> 00:02:13,120 Speaker 3: There is a risk to shifting to a doubvish stance 43 00:02:13,880 --> 00:02:16,520 Speaker 3: now coming out of the December meeting and tilting the 44 00:02:16,520 --> 00:02:20,200 Speaker 3: outlook towards rate cuts because markets have reacted quite quickly 45 00:02:20,240 --> 00:02:23,560 Speaker 3: and financial conditions have ease. So the risk is that 46 00:02:23,639 --> 00:02:26,800 Speaker 3: maybe you gin things up too much and you don't 47 00:02:26,800 --> 00:02:29,400 Speaker 3: make as much progress as you want on the inflation front. 48 00:02:29,480 --> 00:02:32,360 Speaker 3: So no free lunch in that regard. We think the 49 00:02:32,400 --> 00:02:34,640 Speaker 3: Fed's in a good spot. We do think rate cuts 50 00:02:34,639 --> 00:02:38,040 Speaker 3: are coming, but you make a good point, too much 51 00:02:38,160 --> 00:02:41,480 Speaker 3: easing too much using in financial conditions could ultimately mean 52 00:02:41,960 --> 00:02:45,280 Speaker 3: inflation is stickier to come down, or maybe even rises 53 00:02:45,320 --> 00:02:47,240 Speaker 3: a little bit and kind of puts off some of 54 00:02:47,240 --> 00:02:49,200 Speaker 3: these rate cuts that the market is expecting. 55 00:02:49,400 --> 00:02:51,760 Speaker 4: Well, let's talk about just the magnitude of the rate 56 00:02:51,800 --> 00:02:54,200 Speaker 4: cuts that the market is expecting. Of course, one hundred 57 00:02:54,200 --> 00:02:57,840 Speaker 4: and fifty bases points price into next year, a big 58 00:02:57,880 --> 00:02:59,880 Speaker 4: goalf between that and what we saw on the dot plot, 59 00:03:00,160 --> 00:03:03,280 Speaker 4: just seventy five basis points of cuts penciled. And when 60 00:03:03,320 --> 00:03:05,840 Speaker 4: you take in totality what we learned today, when it 61 00:03:05,880 --> 00:03:09,200 Speaker 4: comes of course to PCE, to personal income, to spending 62 00:03:09,240 --> 00:03:12,560 Speaker 4: and of course those durable goods orders, where does this 63 00:03:12,720 --> 00:03:15,400 Speaker 4: land in terms of what the market is expecting. Do 64 00:03:15,520 --> 00:03:19,919 Speaker 4: those six rate cuts look justified at this juncture. 65 00:03:21,360 --> 00:03:24,680 Speaker 3: I think the inflation data certainly support the idea that 66 00:03:24,720 --> 00:03:28,040 Speaker 3: the FED can start in March. So assuming the data 67 00:03:28,040 --> 00:03:31,680 Speaker 3: flow trends in the way that it has, with a 68 00:03:31,680 --> 00:03:34,280 Speaker 3: lot of evidence of disinflation and modest growth but a 69 00:03:34,320 --> 00:03:37,680 Speaker 3: cooling economy, we do think rate cuts can start in 70 00:03:37,720 --> 00:03:40,360 Speaker 3: March a little earlier than the FED things. We would say, 71 00:03:41,040 --> 00:03:43,520 Speaker 3: you know, curb your enthusiasm a bit for one hundred 72 00:03:43,520 --> 00:03:45,920 Speaker 3: and fifty or maybe more rate cuts over the course 73 00:03:46,200 --> 00:03:49,080 Speaker 3: of the year, because we do think inflation will be 74 00:03:49,120 --> 00:03:52,640 Speaker 3: a little more slower to come down. So we agree 75 00:03:52,680 --> 00:03:56,280 Speaker 3: on the start earlier than later. But our view is 76 00:03:56,320 --> 00:03:58,320 Speaker 3: you get about one hundred basis points of cuts, so 77 00:03:58,640 --> 00:04:00,560 Speaker 3: the market may need to reprice some of these as 78 00:04:00,600 --> 00:04:01,480 Speaker 3: the data comes. 79 00:04:01,280 --> 00:04:04,440 Speaker 4: In, So okay, maybe that process back to target will 80 00:04:04,440 --> 00:04:07,560 Speaker 4: be slower than expected. Compare that to what we heard 81 00:04:07,560 --> 00:04:10,400 Speaker 4: from Jerome Pell last week. He said that he was 82 00:04:10,480 --> 00:04:13,600 Speaker 4: reluctant to say that the last mile of this inflation 83 00:04:13,720 --> 00:04:18,159 Speaker 4: fight will be more difficult. Is that your expectation or 84 00:04:18,279 --> 00:04:22,600 Speaker 4: just slower than expected sort of imply there's some pain ahead. 85 00:04:23,760 --> 00:04:26,599 Speaker 3: No, I would agree that at least, you know, again, 86 00:04:26,680 --> 00:04:29,200 Speaker 3: the composition of the data flow that we've been seeing, 87 00:04:29,839 --> 00:04:33,080 Speaker 3: I think suggests we can enjoy modest growth and disinflation, 88 00:04:33,600 --> 00:04:35,919 Speaker 3: and it does suggest that the last mile may not 89 00:04:36,080 --> 00:04:40,200 Speaker 3: be overly difficult. Right, So that does come from supply 90 00:04:40,279 --> 00:04:44,080 Speaker 3: side effects, both on goods and on services, where reemployment 91 00:04:44,480 --> 00:04:47,960 Speaker 3: has really helped increase services outputs. That we're getting a 92 00:04:48,000 --> 00:04:51,040 Speaker 3: supply side effect there. As everyone knows, core goods have 93 00:04:51,120 --> 00:04:53,839 Speaker 3: been falling for six months. So we'll see if things 94 00:04:53,880 --> 00:04:57,040 Speaker 3: like shipping issues out of the red seat change that narrative. 95 00:04:57,600 --> 00:05:00,320 Speaker 3: But otherwise, the last three to six months worth of 96 00:05:00,400 --> 00:05:03,440 Speaker 3: data suggests maybe we can you know, it's more likely 97 00:05:03,480 --> 00:05:06,120 Speaker 3: than not that we can get down to two percent 98 00:05:06,240 --> 00:05:11,240 Speaker 3: consistent outcomes without needing to generate significant pain in labor markets, 99 00:05:11,400 --> 00:05:14,200 Speaker 3: which would be a great outcome for the FED, the 100 00:05:14,360 --> 00:05:17,120 Speaker 3: you know, the average US household and the average US business. 101 00:05:16,960 --> 00:05:19,200 Speaker 3: It would be a great outcome for the economy. 102 00:05:19,320 --> 00:05:20,720 Speaker 4: Well, I want to talk about that a little bit 103 00:05:20,720 --> 00:05:23,600 Speaker 4: more because inflation has been an enemy number one from 104 00:05:23,600 --> 00:05:26,839 Speaker 4: the Fed's perspective for really the last couple of years now. 105 00:05:26,880 --> 00:05:29,440 Speaker 4: But now as we continue to get this march lower 106 00:05:29,640 --> 00:05:32,400 Speaker 4: when it comes to some of these figures. Does the 107 00:05:32,400 --> 00:05:35,760 Speaker 4: Fed's focus shift here, do they start paying more attention 108 00:05:36,240 --> 00:05:40,040 Speaker 4: to economic growth, to the labor market, et cetera. 109 00:05:41,160 --> 00:05:44,040 Speaker 3: Yeah, I still think inflation bringing inflation down as the 110 00:05:44,120 --> 00:05:46,680 Speaker 3: number one goal, given where inflation's been where it is, 111 00:05:46,839 --> 00:05:51,320 Speaker 3: and you know the Fed's internal consistency about, hey, we 112 00:05:51,400 --> 00:05:55,320 Speaker 3: really control inflation. We set that long run inflation objective. 113 00:05:55,360 --> 00:05:59,039 Speaker 3: We determine long run inflation outcomes. So that's it's kind 114 00:05:59,040 --> 00:06:00,839 Speaker 3: of you know, it's in their blood, so to speak, 115 00:06:00,839 --> 00:06:03,279 Speaker 3: and in their DNA. So I still think that's issue 116 00:06:03,400 --> 00:06:06,720 Speaker 3: number one, But a very close issue number two, if 117 00:06:06,760 --> 00:06:09,400 Speaker 3: not closer to balanced, is hey, I think we can 118 00:06:09,480 --> 00:06:12,520 Speaker 3: soft land this economy. We don't need to generate as 119 00:06:12,600 --> 00:06:14,920 Speaker 3: much pain in labor markets as we thought we might 120 00:06:15,040 --> 00:06:16,880 Speaker 3: have had to do six to nine months ago, so 121 00:06:16,960 --> 00:06:19,880 Speaker 3: we should keep an eye out for that. So yes, 122 00:06:20,080 --> 00:06:22,960 Speaker 3: it does make an argument that one of the reasons 123 00:06:23,000 --> 00:06:25,120 Speaker 3: why the market has so many cuts priced in is 124 00:06:26,240 --> 00:06:28,920 Speaker 3: both of those cases moving to a more balanced reaction 125 00:06:29,040 --> 00:06:32,920 Speaker 3: function in an environment where the economy is cooling and 126 00:06:33,040 --> 00:06:35,960 Speaker 3: inflation is flowing, that just increases the odds you're likely 127 00:06:36,000 --> 00:06:37,800 Speaker 3: to get rape cuts. So I think the market is 128 00:06:37,880 --> 00:06:39,839 Speaker 3: listening to that message. 129 00:06:39,360 --> 00:06:43,120 Speaker 1: Michael, what's the gap between just weakening that is good 130 00:06:43,240 --> 00:06:46,000 Speaker 1: and weakening that is bad? And I ask this because 131 00:06:46,080 --> 00:06:50,040 Speaker 1: I'm trying to still understand the language at the cfo's 132 00:06:50,080 --> 00:06:52,960 Speaker 1: office at Nike when they said that demand is cooling 133 00:06:53,160 --> 00:06:56,560 Speaker 1: faster than they expected, revised downwards some of their expectations 134 00:06:56,600 --> 00:07:00,400 Speaker 1: for sales, talked about cutting jobs. Is this something that 135 00:07:00,520 --> 00:07:04,800 Speaker 1: is just an idiosyncratic business overlaid with a weakening economy 136 00:07:04,839 --> 00:07:07,919 Speaker 1: in a good sense, or is this potentially something bad? 137 00:07:09,279 --> 00:07:09,479 Speaker 2: Yeah? 138 00:07:09,720 --> 00:07:12,280 Speaker 3: I think I would put that narrative probably inside the 139 00:07:12,360 --> 00:07:16,160 Speaker 3: you know, the rotation story away from goods purchases back 140 00:07:16,160 --> 00:07:19,720 Speaker 3: to services. The good side of the economy. The manufacturing 141 00:07:19,760 --> 00:07:21,600 Speaker 3: sector has been kind of on the edge, if not 142 00:07:21,720 --> 00:07:25,680 Speaker 3: in a mild recession for some time now, at least 143 00:07:25,680 --> 00:07:29,160 Speaker 3: in terms of you know, production and inventory adjustment and 144 00:07:29,200 --> 00:07:31,240 Speaker 3: so forth. So I think the good side of the 145 00:07:31,240 --> 00:07:36,160 Speaker 3: economy is reacting in part to that rotation story. What 146 00:07:36,320 --> 00:07:39,400 Speaker 3: still looks pretty solid is activity and employment on the 147 00:07:39,440 --> 00:07:41,640 Speaker 3: services side of the ledger, which is, you know, two 148 00:07:41,720 --> 00:07:44,960 Speaker 3: thirds or more of outputs. So I think, you know, 149 00:07:45,080 --> 00:07:47,920 Speaker 3: the to use your phrasing the quote goods slowing and 150 00:07:47,960 --> 00:07:51,600 Speaker 3: cooling is about the rotation story, the end of the 151 00:07:51,600 --> 00:07:56,200 Speaker 3: COVID reopening impulse. Things should naturally slow down anyway. We 152 00:07:56,320 --> 00:07:58,560 Speaker 3: need to provide an environment for the economy to do 153 00:07:58,600 --> 00:08:01,680 Speaker 3: that while we bring inflation down without tamping on the 154 00:08:01,680 --> 00:08:04,040 Speaker 3: brakes too hard. So you're right, there's a fine line 155 00:08:04,080 --> 00:08:07,320 Speaker 3: between slowing that we think should happen as a result 156 00:08:07,360 --> 00:08:11,400 Speaker 3: of a very unusual pandemic driven cycle and oops, we've 157 00:08:11,400 --> 00:08:15,440 Speaker 3: got the monetary policy setting calibrated incorrectly. It's too tight. 158 00:08:15,520 --> 00:08:17,160 Speaker 3: We have to back out of it more quickly. 159 00:08:17,280 --> 00:08:20,280 Speaker 1: Does anything about the services inflation concern you, given the 160 00:08:20,320 --> 00:08:22,680 Speaker 1: fact that it still is running above which you would 161 00:08:22,680 --> 00:08:24,720 Speaker 1: expect for two percent consistent inflation. 162 00:08:25,800 --> 00:08:28,640 Speaker 3: Yeah, certainly. Shelter and kind of the structural issues in 163 00:08:28,680 --> 00:08:31,840 Speaker 3: the housing market without a lot of supply and inventory 164 00:08:31,880 --> 00:08:36,640 Speaker 3: and available homes to contract for sale or purchase. So 165 00:08:36,760 --> 00:08:39,840 Speaker 3: the shelter story, shelter is moderating. It is coming down, 166 00:08:39,880 --> 00:08:42,160 Speaker 3: but it's coming down more slowly than our models would 167 00:08:42,160 --> 00:08:45,120 Speaker 3: have suggested, So we think that there's stickiness there, and 168 00:08:45,200 --> 00:08:49,000 Speaker 3: even non shelter services inflation has been more sticky. So 169 00:08:49,040 --> 00:08:50,959 Speaker 3: this is where we would say, maybe you know, curb 170 00:08:50,960 --> 00:08:54,640 Speaker 3: your enthusiasm. We have inflation for PCE coming down to 171 00:08:54,679 --> 00:08:56,440 Speaker 3: around two and a half year and near by the 172 00:08:56,559 --> 00:08:59,760 Speaker 3: end of this year where market implied pricing is closer 173 00:08:59,760 --> 00:09:03,720 Speaker 3: to so it's easy to see how a stickier inflation 174 00:09:03,920 --> 00:09:06,400 Speaker 3: path could mean some of these rate cuts are not realized. 175 00:09:06,880 --> 00:09:13,200 Speaker 1: Michael Gape in a Bank of America security, joining us 176 00:09:13,200 --> 00:09:15,240 Speaker 1: now as someone who's gotten it right all year at 177 00:09:15,320 --> 00:09:17,839 Speaker 1: your Denny, president of your Denny Research called for the 178 00:09:17,920 --> 00:09:21,959 Speaker 1: Roaring twenties, is leaning into that now talking about disinflation, 179 00:09:22,120 --> 00:09:24,719 Speaker 1: we're seeing it now. What keeps you up at night, ed, 180 00:09:24,800 --> 00:09:26,880 Speaker 1: considering that so far you've gotten a lot of things 181 00:09:26,960 --> 00:09:28,840 Speaker 1: very right, Well, I've. 182 00:09:28,679 --> 00:09:31,600 Speaker 5: Been sleeping pretty well quite honestly, I guess I do 183 00:09:31,640 --> 00:09:36,000 Speaker 5: worry about the Middle East, the geopolitical situation, the fog 184 00:09:36,040 --> 00:09:39,480 Speaker 5: of war. You never know how things unfold once a 185 00:09:39,559 --> 00:09:43,760 Speaker 5: war starts, and we have this fairly contained localized war 186 00:09:44,679 --> 00:09:48,440 Speaker 5: in Gaza, and that the risk is that it becomes 187 00:09:48,480 --> 00:09:51,280 Speaker 5: a regional war and it affects the price of oil. 188 00:09:51,360 --> 00:09:54,280 Speaker 5: But so far, the price of oil has been telling me, 189 00:09:54,400 --> 00:09:57,200 Speaker 5: telling me that there's not going to be a regional 190 00:09:57,240 --> 00:09:59,840 Speaker 5: war going on here anytime soon. 191 00:10:00,080 --> 00:10:02,480 Speaker 1: So putting aside some of those tail risks, is the 192 00:10:02,559 --> 00:10:06,520 Speaker 1: risk in your mind that people aren't bullish enough, considering 193 00:10:06,559 --> 00:10:09,800 Speaker 1: that everyone's been upping their expectations for end of the 194 00:10:09,880 --> 00:10:12,840 Speaker 1: year targets, but we're catching up to it really quick 195 00:10:12,840 --> 00:10:14,760 Speaker 1: already it hasn't even been the end of the year. 196 00:10:15,559 --> 00:10:18,120 Speaker 5: Yeah, I think that's true. At the beginning of the year, 197 00:10:18,160 --> 00:10:21,360 Speaker 5: I was talking about forty six hundred, that wasn't bullish enough. 198 00:10:21,400 --> 00:10:24,120 Speaker 5: We're already above that for the end of this year, 199 00:10:24,200 --> 00:10:27,120 Speaker 5: and then I'm looking for fifty four hundred next year, 200 00:10:27,160 --> 00:10:30,520 Speaker 5: and now there's more people talking about over five thousand, 201 00:10:31,120 --> 00:10:34,200 Speaker 5: and then for twenty twenty five, I'm talking about six thousand. 202 00:10:34,320 --> 00:10:38,280 Speaker 5: So I think I'm bullish enough. I don't think things 203 00:10:38,280 --> 00:10:40,520 Speaker 5: can get much better than that. So that's kind of 204 00:10:40,559 --> 00:10:43,360 Speaker 5: at the top end of the scale on an optimism 205 00:10:43,440 --> 00:10:46,200 Speaker 5: I think. But I think in the near term here 206 00:10:46,440 --> 00:10:50,520 Speaker 5: we've got everybody seems to be too happy, at least 207 00:10:50,520 --> 00:10:53,040 Speaker 5: in terms of the sentiment indicators. So that's on a 208 00:10:53,080 --> 00:10:55,240 Speaker 5: near term basis. I don't lose any sleep over it, 209 00:10:55,280 --> 00:10:56,120 Speaker 5: but I do watch it. 210 00:10:56,640 --> 00:10:58,880 Speaker 4: And with only what a week or so left until 211 00:10:59,000 --> 00:11:01,680 Speaker 4: twenty twenty four, the fact that everyone is maybe too 212 00:11:01,720 --> 00:11:04,480 Speaker 4: happy right now? Is that why you haven't boosted your 213 00:11:04,559 --> 00:11:06,839 Speaker 4: year end target for this year? I believe that was 214 00:11:06,880 --> 00:11:09,680 Speaker 4: at forty six hundred, and we're pretty firmly above that 215 00:11:09,760 --> 00:11:10,079 Speaker 4: right now. 216 00:11:10,240 --> 00:11:10,320 Speaker 1: Ed. 217 00:11:10,600 --> 00:11:13,480 Speaker 5: Yeah, well, you know, I don't find you in my 218 00:11:14,080 --> 00:11:18,199 Speaker 5: forecast that much because we are, as you said, we're 219 00:11:18,240 --> 00:11:20,760 Speaker 5: only a week away, So what's the point of getting 220 00:11:20,760 --> 00:11:25,320 Speaker 5: cute about it? Instead? I did talk. I am talking 221 00:11:25,360 --> 00:11:27,960 Speaker 5: about fifty four hundred by the end of next year 222 00:11:28,000 --> 00:11:31,600 Speaker 5: and six thousand after that, So that just puts me 223 00:11:31,600 --> 00:11:34,520 Speaker 5: in the bullish camp pretty clearly. Yeah. 224 00:11:34,559 --> 00:11:36,600 Speaker 4: If I, of course had to put out these forecasts, 225 00:11:36,600 --> 00:11:39,160 Speaker 4: I think I'd revise on like December thirtieth every year 226 00:11:39,160 --> 00:11:41,440 Speaker 4: and just nail it every single time. But I do 227 00:11:41,520 --> 00:11:44,000 Speaker 4: want to talk a little bit about twenty twenty five 228 00:11:44,040 --> 00:11:47,480 Speaker 4: because six thousand is a staggering number and twenty twenty 229 00:11:47,480 --> 00:11:51,280 Speaker 4: five feels very very far away. What is the work 230 00:11:51,320 --> 00:11:53,080 Speaker 4: that gets you there and how do you project that 231 00:11:53,200 --> 00:11:55,319 Speaker 4: with a certain degree of confidence. 232 00:11:56,200 --> 00:12:00,920 Speaker 5: Well, first, on a short term basis, looks like there's 233 00:12:00,960 --> 00:12:04,440 Speaker 5: still some what I call die hard heard Landers who 234 00:12:04,520 --> 00:12:06,400 Speaker 5: think that we're going to have a recession next year. 235 00:12:06,960 --> 00:12:09,520 Speaker 5: I've been talking about a rolling recession for the past 236 00:12:09,600 --> 00:12:12,880 Speaker 5: two years, and I think in the in the next 237 00:12:12,880 --> 00:12:16,400 Speaker 5: two years we'll have rolling recoveries. Clearly, we're starting to 238 00:12:16,400 --> 00:12:19,360 Speaker 5: see a rolling recovery in the housing market. I think 239 00:12:19,400 --> 00:12:24,200 Speaker 5: we've bottomed in terms of retail merchandise. A lot of 240 00:12:24,440 --> 00:12:27,560 Speaker 5: inventories pile up now. I think consumers are going to 241 00:12:27,640 --> 00:12:30,160 Speaker 5: go back next year and buy some goods in addition 242 00:12:30,200 --> 00:12:30,880 Speaker 5: to services. 243 00:12:31,280 --> 00:12:31,800 Speaker 3: And I think. 244 00:12:31,679 --> 00:12:36,520 Speaker 5: Commercial real estate will be in a rolling recession in 245 00:12:36,559 --> 00:12:38,920 Speaker 5: this coming year, but then beyond that, I think there 246 00:12:38,920 --> 00:12:43,200 Speaker 5: will be a recovery. So I think that's the way 247 00:12:43,240 --> 00:12:45,600 Speaker 5: I look at the business cycle is sort of spread out. 248 00:12:46,240 --> 00:12:49,760 Speaker 5: Most importantly, I think we've got a labor shortage, significant 249 00:12:49,880 --> 00:12:54,200 Speaker 5: chronic labor shortage, and I think companies will use technology 250 00:12:54,240 --> 00:12:58,360 Speaker 5: to increase productivity dramatically. Right now, we're averaging about one 251 00:12:58,440 --> 00:13:01,520 Speaker 5: point eight percent over the past five years. I think 252 00:13:01,720 --> 00:13:03,280 Speaker 5: by the end of the decade we'll be looking at 253 00:13:03,280 --> 00:13:04,800 Speaker 5: three and a half to four and a half percent, 254 00:13:05,520 --> 00:13:09,520 Speaker 5: which sounds far fetched, if not illusional, I admit, but 255 00:13:10,080 --> 00:13:13,840 Speaker 5: that's the way productivity boom cycles have gone in the past. 256 00:13:14,320 --> 00:13:15,320 Speaker 5: This one should do the same. 257 00:13:15,720 --> 00:13:16,640 Speaker 2: Does it worry you at all? 258 00:13:16,679 --> 00:13:19,319 Speaker 1: And I realized the anecdotes can't tell entire stories, and 259 00:13:19,360 --> 00:13:21,959 Speaker 1: you can extrapolate out an entire research paper for one 260 00:13:22,080 --> 00:13:24,360 Speaker 1: particular example. But let's take a look at Nike. They 261 00:13:24,400 --> 00:13:25,680 Speaker 1: came out and they said that they're going to be 262 00:13:25,679 --> 00:13:28,120 Speaker 1: cutting workers, They're going to be having cost cuts, and 263 00:13:28,160 --> 00:13:30,920 Speaker 1: it is because, yes, they are working down their inventory, 264 00:13:30,960 --> 00:13:33,000 Speaker 1: but because of weakness and weakness that they expect to 265 00:13:33,000 --> 00:13:36,360 Speaker 1: continue going forward. Does that kind of contradict some of 266 00:13:36,400 --> 00:13:39,120 Speaker 1: your optimism about the recovery and the retail space. 267 00:13:39,320 --> 00:13:41,320 Speaker 5: Yeah, well, that's a good point, and that's why I 268 00:13:41,320 --> 00:13:44,760 Speaker 5: think a lot of forecasters have missed the past couple 269 00:13:44,800 --> 00:13:48,000 Speaker 5: of years and had this attitude that or view that 270 00:13:48,160 --> 00:13:50,960 Speaker 5: the only way inflation could come down in the United 271 00:13:50,960 --> 00:13:54,679 Speaker 5: States is if we have a recession. You mentioned the 272 00:13:54,960 --> 00:13:59,679 Speaker 5: phrase immaculate disinflation, and I think that's what we've had. 273 00:13:59,800 --> 00:14:02,600 Speaker 5: We've had inflation come down without a recession. And the 274 00:14:02,679 --> 00:14:05,440 Speaker 5: reason for that is because the Chinese and the Europeans 275 00:14:05,440 --> 00:14:08,080 Speaker 5: have done us a great favor. They've had the recession 276 00:14:08,559 --> 00:14:12,840 Speaker 5: so on a global basis, particularly China has been exporting deflation. 277 00:14:13,440 --> 00:14:15,640 Speaker 5: Their PPI is down on a year over year basis, 278 00:14:15,640 --> 00:14:18,120 Speaker 5: even their CPI is down a little bit on a 279 00:14:18,200 --> 00:14:20,600 Speaker 5: year over year basis. So I think the United States 280 00:14:21,160 --> 00:14:27,040 Speaker 5: is going to benefit from the recession the property depression 281 00:14:27,480 --> 00:14:29,760 Speaker 5: in China for a long time in terms of having 282 00:14:29,800 --> 00:14:32,240 Speaker 5: a low inflation and I think Year of starts to 283 00:14:32,400 --> 00:14:35,520 Speaker 5: recover from its shallow recession next year, which will help 284 00:14:35,600 --> 00:14:36,880 Speaker 5: us on the export side. 285 00:14:37,520 --> 00:14:40,320 Speaker 4: And let's bring this conversation to the bond market, because 286 00:14:40,840 --> 00:14:43,640 Speaker 4: the reversal that we've seen there has been stunning, and 287 00:14:43,680 --> 00:14:45,440 Speaker 4: of course you've done a lot of great work on 288 00:14:45,520 --> 00:14:49,120 Speaker 4: deficits what that means for bonds and the demand for bonds, 289 00:14:49,200 --> 00:14:51,720 Speaker 4: and it felt like for a while maybe the bond 290 00:14:51,760 --> 00:14:56,400 Speaker 4: vigilantes were reappearing. Why did deficit concern seem to fall 291 00:14:56,440 --> 00:14:57,120 Speaker 4: off the radar. 292 00:14:57,880 --> 00:15:01,800 Speaker 5: Yeah, I've had the point of view for many years 293 00:15:01,840 --> 00:15:04,720 Speaker 5: that I'll care about the deficit when the bond market 294 00:15:04,720 --> 00:15:07,520 Speaker 5: cares about the deficit, and the past supply really hasn't 295 00:15:07,520 --> 00:15:10,040 Speaker 5: been much of a problem because you get the biggest 296 00:15:10,040 --> 00:15:13,520 Speaker 5: supply in recessions. When interest the Fed was cutting interest rates, 297 00:15:13,960 --> 00:15:16,200 Speaker 5: we had this brief period where the bond vigilani is 298 00:15:16,280 --> 00:15:21,320 Speaker 5: saddled up and started to move on concerns of fiscal excesses, 299 00:15:21,800 --> 00:15:25,680 Speaker 5: and that period didn't last very long. Basically, from August 300 00:15:25,680 --> 00:15:30,560 Speaker 5: to October we saw this monstrous increase in the tenure 301 00:15:30,640 --> 00:15:32,880 Speaker 5: bond deal from basically four and a quarter percent to 302 00:15:32,960 --> 00:15:35,880 Speaker 5: five percent, and here we are back below four percent. 303 00:15:36,440 --> 00:15:39,280 Speaker 5: I think, you know, there's an expression, don't fight the Fed. 304 00:15:39,920 --> 00:15:42,080 Speaker 5: Maybe we should also say don't fight Janet Yale. And 305 00:15:42,200 --> 00:15:45,440 Speaker 5: now that she's a treasury because she was very cleverly 306 00:15:45,480 --> 00:15:49,600 Speaker 5: cut back on the supply of long term bonds and 307 00:15:49,680 --> 00:15:52,760 Speaker 5: notes and issued a lot of bills and the bond 308 00:15:52,800 --> 00:15:54,480 Speaker 5: Vigilani said, Oh, if that's the way you're going to 309 00:15:54,520 --> 00:15:56,600 Speaker 5: play the game, we can live with that. Meanwhile, I 310 00:15:56,600 --> 00:15:59,120 Speaker 5: think the big story has been how inflation has come down. 311 00:15:59,160 --> 00:16:01,600 Speaker 5: I mean, it's been only the past couple of months 312 00:16:01,600 --> 00:16:04,000 Speaker 5: that the consensus really has become that we can't have 313 00:16:04,800 --> 00:16:09,320 Speaker 5: immaculate this inflation. Even that Chair palin As press conference 314 00:16:09,680 --> 00:16:12,720 Speaker 5: seemed to indicate that, you know what, we may actually get. 315 00:16:12,520 --> 00:16:15,640 Speaker 1: It, and everybody let out a collective cheer. And you 316 00:16:15,720 --> 00:16:18,560 Speaker 1: still hear that cheer today at your of your Dunny Research. 317 00:16:28,760 --> 00:16:31,600 Speaker 1: Kim Wallace, head of Washington Policy Research at twenty twenty 318 00:16:31,600 --> 00:16:35,560 Speaker 1: twenty two v Research, joining us here in studio for 319 00:16:35,640 --> 00:16:38,760 Speaker 1: the holiday party for the holiday spirit fordy York City. 320 00:16:38,800 --> 00:16:39,880 Speaker 1: Thank you so much for being with us. 321 00:16:39,920 --> 00:16:40,640 Speaker 2: We really appreciate it. 322 00:16:40,760 --> 00:16:41,720 Speaker 6: Morning, happy to be here. 323 00:16:41,800 --> 00:16:44,680 Speaker 1: Good morning. I know that you put out an outlook 324 00:16:44,760 --> 00:16:46,880 Speaker 1: for what to expect in twenty twenty four, and I 325 00:16:46,880 --> 00:16:50,000 Speaker 1: want to start an industrial policy hinging off the latest 326 00:16:50,040 --> 00:16:52,840 Speaker 1: news of US steel and some of the administration pushback 327 00:16:53,080 --> 00:16:57,920 Speaker 1: to a Japanese conglomerate purchasing the largest steelmaker in the country. 328 00:16:58,560 --> 00:17:00,480 Speaker 6: Well, you know, there's a lot of now's that will 329 00:17:00,480 --> 00:17:04,320 Speaker 6: go into the ultimate reaction from the administration. Obviously, the 330 00:17:04,359 --> 00:17:07,040 Speaker 6: Committee on Foreign Investment in the US will investigate the 331 00:17:07,080 --> 00:17:09,919 Speaker 6: proposed merger. But when you break it down, the promise 332 00:17:10,000 --> 00:17:13,040 Speaker 6: is made by Nipon probably upset a few people in 333 00:17:13,080 --> 00:17:15,879 Speaker 6: the political side, but don't in my view at least 334 00:17:16,080 --> 00:17:19,439 Speaker 6: imply disruption to the production of steel in the US. 335 00:17:19,800 --> 00:17:23,800 Speaker 6: The deal proposes to combine globally number four and number 336 00:17:23,880 --> 00:17:27,240 Speaker 6: twenty seven. So the first question for the competition policy 337 00:17:27,280 --> 00:17:30,400 Speaker 6: reviewers is is it a global market you're defining when 338 00:17:30,440 --> 00:17:33,320 Speaker 6: you review the deal of the national market. My sense 339 00:17:33,400 --> 00:17:35,440 Speaker 6: is it'll be a global market. And if that's the case, 340 00:17:35,720 --> 00:17:38,680 Speaker 6: we look at Japan as a strategic partner. It's difficult 341 00:17:38,680 --> 00:17:41,240 Speaker 6: to imagine that if Japan can't close the deal like this, 342 00:17:41,600 --> 00:17:43,359 Speaker 6: that anyone can close the deal like this. 343 00:17:43,600 --> 00:17:46,119 Speaker 1: Do you think the Biden administration has been consistent with 344 00:17:46,240 --> 00:17:50,000 Speaker 1: industrial policy? On one hand, talking about America first in 345 00:17:50,040 --> 00:17:54,480 Speaker 1: some ways and talking about unionization, but not necessarily celebrating 346 00:17:54,520 --> 00:17:57,080 Speaker 1: the fact that the United States is pumping a record 347 00:17:57,119 --> 00:17:59,200 Speaker 1: amount of oil, which is really offset a lot of 348 00:17:59,200 --> 00:18:01,240 Speaker 1: the prices, and kept gasoline low. 349 00:18:01,560 --> 00:18:03,679 Speaker 6: I think they've been as consistent as you can be 350 00:18:03,760 --> 00:18:07,320 Speaker 6: as a policymaker in this environment. A couple of points there. First, 351 00:18:07,359 --> 00:18:10,440 Speaker 6: we have started from a very low point in industrial 352 00:18:10,480 --> 00:18:13,520 Speaker 6: production and manufacturing. We gave away that base in the 353 00:18:13,600 --> 00:18:16,639 Speaker 6: nineties in the first part of this century. Reclaiming it 354 00:18:16,680 --> 00:18:19,480 Speaker 6: is going to take a long time. The report that 355 00:18:19,520 --> 00:18:22,480 Speaker 6: the National Economic Council and the National Security Council put 356 00:18:22,520 --> 00:18:26,280 Speaker 6: out in June of twenty twenty one quantified how far 357 00:18:26,359 --> 00:18:29,760 Speaker 6: back the US is. The President then sought to make 358 00:18:29,840 --> 00:18:32,119 Speaker 6: up a gap there. Congress joined them. This has been 359 00:18:32,160 --> 00:18:37,440 Speaker 6: a bipartisan effort, particularly in infrastructure. So we are way 360 00:18:37,440 --> 00:18:39,840 Speaker 6: behind the ball when it comes to in the US 361 00:18:39,960 --> 00:18:44,199 Speaker 6: when it comes to infrastructure, when it comes to chips, 362 00:18:44,240 --> 00:18:47,400 Speaker 6: semit conductors. We have a long way to go. Deals 363 00:18:47,480 --> 00:18:50,480 Speaker 6: like this have to be reviewed from all of those 364 00:18:50,520 --> 00:18:54,199 Speaker 6: perspectives we talked about, but ultimately what's best for the 365 00:18:54,320 --> 00:18:57,679 Speaker 6: US in terms of short term supplies and then longer 366 00:18:57,760 --> 00:19:00,800 Speaker 6: term building out of the industrial base. That's part of 367 00:19:00,800 --> 00:19:05,399 Speaker 6: the President's proposal in the Emergency selplemental almost sixty billion 368 00:19:05,440 --> 00:19:08,080 Speaker 6: dollars for a defense industrial base, three billion of that 369 00:19:08,760 --> 00:19:10,560 Speaker 6: to build more submarines. 370 00:19:11,040 --> 00:19:13,000 Speaker 4: And you bring up chips, and that's where I want 371 00:19:13,040 --> 00:19:15,600 Speaker 4: to go because you think about the US China relationship. 372 00:19:15,640 --> 00:19:17,639 Speaker 4: Obviously still a lot of tensions. There are a lot 373 00:19:17,680 --> 00:19:20,400 Speaker 4: of that playing out in the semiconductor arena. But when 374 00:19:20,440 --> 00:19:23,880 Speaker 4: you look over the totality of twenty twenty three, how 375 00:19:23,880 --> 00:19:26,440 Speaker 4: has the US China relationship evolved. 376 00:19:27,040 --> 00:19:31,399 Speaker 6: It has stabilized and the optics are better against the 377 00:19:31,440 --> 00:19:35,959 Speaker 6: backdrop of severe competition, competition across a lot of platforms, 378 00:19:35,960 --> 00:19:38,639 Speaker 6: and that's not going to change. We see that almost daily. 379 00:19:38,680 --> 00:19:41,800 Speaker 6: We saw it this week in critical minerals. And so 380 00:19:42,240 --> 00:19:44,560 Speaker 6: when China decides that it's not going to allow the 381 00:19:44,640 --> 00:19:49,320 Speaker 6: export of processing technology for critical minerals, that's a shot 382 00:19:49,359 --> 00:19:52,560 Speaker 6: across the bow. It again points to a deficiency in 383 00:19:52,600 --> 00:19:57,359 Speaker 6: the US industrial base and something that it's hard to 384 00:19:57,400 --> 00:19:59,119 Speaker 6: make this political if you look at it from an 385 00:19:59,119 --> 00:20:01,960 Speaker 6: economic standpoint. Of course people will make it political, but 386 00:20:03,280 --> 00:20:07,600 Speaker 6: making up for the deficiency will require decades, not just years. 387 00:20:08,080 --> 00:20:10,840 Speaker 4: Well, in the context of critical minerals and of course 388 00:20:11,080 --> 00:20:12,800 Speaker 4: the news that we saw this week, both on that 389 00:20:12,800 --> 00:20:16,600 Speaker 4: front and also that US steal nip On deal. You 390 00:20:16,680 --> 00:20:20,880 Speaker 4: talked about Japan as a strategic ally here and when 391 00:20:20,920 --> 00:20:24,560 Speaker 4: you think about the arena of critical mirror not miracles, 392 00:20:24,600 --> 00:20:28,160 Speaker 4: minerals and of course the competition going on there, how 393 00:20:28,200 --> 00:20:31,600 Speaker 4: important does that make Japan potentially other partners. 394 00:20:32,320 --> 00:20:35,520 Speaker 6: It's that last part, Katie, potentially other partners. Japan is 395 00:20:35,560 --> 00:20:38,720 Speaker 6: critically important. There is no Indo Pacific strategy which is 396 00:20:38,760 --> 00:20:42,240 Speaker 6: important to this administration without Japan, and that goes back 397 00:20:42,240 --> 00:20:45,119 Speaker 6: to my saying if Japan can't close deals, then no 398 00:20:45,160 --> 00:20:48,240 Speaker 6: one can. But it's the other players. What we saw 399 00:20:48,280 --> 00:20:50,239 Speaker 6: at the beginning of the APEC week that didn't get 400 00:20:50,280 --> 00:20:53,520 Speaker 6: a lot of attention was a national security partnership signed 401 00:20:53,520 --> 00:20:58,880 Speaker 6: between Indonesia and the US Defense Technology Defense Know how 402 00:20:59,520 --> 00:21:04,040 Speaker 6: Indonesia your promises to send critical min ruals. Eventually it's 403 00:21:04,119 --> 00:21:08,920 Speaker 6: part of a very sophisticated program. Sophistication is necessary given 404 00:21:08,960 --> 00:21:10,480 Speaker 6: how far back the US is in my. 405 00:21:10,520 --> 00:21:14,199 Speaker 1: View taking a step back, you've gotten plenty of accolades 406 00:21:14,359 --> 00:21:18,280 Speaker 1: for your research and for your view forward, particularly when 407 00:21:18,280 --> 00:21:20,640 Speaker 1: it comes to politics, which recently has been a black 408 00:21:20,680 --> 00:21:24,960 Speaker 1: box of absolutely impenetrable predictions. But I'm wondering next year 409 00:21:25,280 --> 00:21:28,000 Speaker 1: what you see is some of the bigger market related 410 00:21:28,320 --> 00:21:31,400 Speaker 1: risks stemming from Washington, d C. At a time where 411 00:21:31,400 --> 00:21:33,760 Speaker 1: there's a lot on the table, not just industrial policy. 412 00:21:33,880 --> 00:21:36,120 Speaker 6: I think there are a big four. The first quarter 413 00:21:36,160 --> 00:21:38,760 Speaker 6: will be consumed by fiscal policy. What does Washington do 414 00:21:38,840 --> 00:21:40,879 Speaker 6: around funding for FY twenty four and what does it 415 00:21:40,920 --> 00:21:43,919 Speaker 6: do about the supplemental requests around WARS. I think that 416 00:21:44,000 --> 00:21:48,280 Speaker 6: morphs into first second quarter. What's the result of the 417 00:21:48,320 --> 00:21:51,320 Speaker 6: Fed's business over the last two years, How does that 418 00:21:51,359 --> 00:21:54,840 Speaker 6: play out in the economy. Normalization at this part of 419 00:21:54,840 --> 00:21:59,359 Speaker 6: the cycle means tightening. Normalization soon will mean the other side. 420 00:22:00,119 --> 00:22:03,679 Speaker 6: That leads into, in my view, at least, concerns about liquidity, 421 00:22:03,960 --> 00:22:08,639 Speaker 6: both official liquidity, private liquidity. It is the It's the 422 00:22:08,680 --> 00:22:11,320 Speaker 6: topic very few people want to address in public, but 423 00:22:11,440 --> 00:22:13,760 Speaker 6: something that pops up on a regular basis as a 424 00:22:13,800 --> 00:22:18,760 Speaker 6: concern among traders all the time, both official and private liquidity. 425 00:22:19,160 --> 00:22:21,199 Speaker 6: That morphs into the back end of the year and 426 00:22:21,240 --> 00:22:24,200 Speaker 6: the elections and what's happening in terms of the outcome 427 00:22:24,280 --> 00:22:27,919 Speaker 6: of the elections, what that implies for the country going forward, 428 00:22:28,000 --> 00:22:29,840 Speaker 6: and for policy in twenty twenty. 429 00:22:29,600 --> 00:22:33,119 Speaker 1: Five, and just in terms of the market risk there, 430 00:22:33,400 --> 00:22:36,239 Speaker 1: meaning as liquidity titens, people be more focused on that 431 00:22:36,440 --> 00:22:39,199 Speaker 1: and the potential deficit and the potential inability of the 432 00:22:39,280 --> 00:22:40,760 Speaker 1: US to spend in all of those issues. 433 00:22:40,800 --> 00:22:43,720 Speaker 6: Well, that and the issues around the federal Home loan banks. 434 00:22:43,760 --> 00:22:47,840 Speaker 6: The administration is constrained the advances that they can make 435 00:22:47,880 --> 00:22:52,359 Speaker 6: the member institutions. There's discussion about paying less for reserves 436 00:22:52,400 --> 00:22:54,359 Speaker 6: at the FAD and forcing that money out into the 437 00:22:54,359 --> 00:22:59,520 Speaker 6: economy somewhere else. There are As QT goes on, we 438 00:22:59,600 --> 00:23:02,399 Speaker 6: have a lot of tightening of liquidity in the system 439 00:23:02,640 --> 00:23:03,159 Speaker 6: to follow. 440 00:23:03,640 --> 00:23:05,320 Speaker 1: Kim Wallas, thank you so much for being with us. 441 00:23:05,359 --> 00:23:07,680 Speaker 1: Wonderful to see you in person. Kim Wallis, I'm twenty 442 00:23:07,760 --> 00:23:08,720 Speaker 1: two V Research. 443 00:23:08,840 --> 00:23:09,439 Speaker 2: Thank you. 444 00:23:13,520 --> 00:23:16,639 Speaker 1: Joining us now. Deborah Cunningham, Global Liquidity Market CIO A 445 00:23:16,720 --> 00:23:19,600 Speaker 1: federated her means not on that at all. Debraah, thank 446 00:23:19,600 --> 00:23:21,000 Speaker 1: you so much for being with us. I want to 447 00:23:21,040 --> 00:23:23,320 Speaker 1: start with this idea that people have been talking a 448 00:23:23,359 --> 00:23:27,160 Speaker 1: lot about cash on the sidelines, and we've talked about 449 00:23:27,200 --> 00:23:30,119 Speaker 1: this before, and how cash on the sidelines are going 450 00:23:30,160 --> 00:23:33,840 Speaker 1: to start flooding into risk assets. Have you seen any 451 00:23:34,000 --> 00:23:37,760 Speaker 1: evidence of that over the past couple of weeks. 452 00:23:37,800 --> 00:23:41,480 Speaker 7: Not really, Lisa, It's not something generally speaking. People at 453 00:23:41,480 --> 00:23:43,480 Speaker 7: the end of the year are trying to, you know, 454 00:23:43,640 --> 00:23:46,280 Speaker 7: kind of allocate and close out their books in a 455 00:23:46,320 --> 00:23:49,920 Speaker 7: normal fashion, and there may be some surprises, either cash 456 00:23:49,960 --> 00:23:53,200 Speaker 7: in flows or cash outflows. Things closed, things don't close 457 00:23:53,240 --> 00:23:57,280 Speaker 7: that we're supposed to, but ultimately it's not a great 458 00:23:57,400 --> 00:24:00,840 Speaker 7: time in a normal situation for. 459 00:24:00,960 --> 00:24:02,480 Speaker 2: You know, what i'd call reallocation. 460 00:24:02,600 --> 00:24:04,399 Speaker 7: That happens more at the beginning of the year, So 461 00:24:05,400 --> 00:24:08,879 Speaker 7: we have not been experiencing or seeing that type of 462 00:24:09,640 --> 00:24:12,560 Speaker 7: market shift at this point and cash flow out. 463 00:24:12,920 --> 00:24:14,719 Speaker 4: Well, I do want to get to what happens at 464 00:24:14,760 --> 00:24:16,960 Speaker 4: the start of next year and in twenty twenty four. 465 00:24:17,040 --> 00:24:19,720 Speaker 4: But I know I just said that AI and Ozempic 466 00:24:19,760 --> 00:24:22,120 Speaker 4: have been really the stock market stories of this year. 467 00:24:22,160 --> 00:24:23,800 Speaker 4: But I want to add a third thing, which has 468 00:24:23,840 --> 00:24:26,199 Speaker 4: been the rush into money market funds. Of course, one 469 00:24:26,240 --> 00:24:29,359 Speaker 4: of the big stories in markets this year about six 470 00:24:29,480 --> 00:24:33,720 Speaker 4: trillion dollars sitting in money market funds right now. Where 471 00:24:33,880 --> 00:24:36,920 Speaker 4: is that coming from. Is that investors saying, look at 472 00:24:36,920 --> 00:24:39,199 Speaker 4: these high yields, I'm going to go there, Or is 473 00:24:39,240 --> 00:24:42,200 Speaker 4: that people moving away taking money out of their bank 474 00:24:42,280 --> 00:24:45,439 Speaker 4: deposits for example, and shifting into money market funds. 475 00:24:46,000 --> 00:24:47,840 Speaker 7: I think the bulk of it is coming from the 476 00:24:47,880 --> 00:24:51,600 Speaker 7: deposit market. It's coming as a retail trade, so it's 477 00:24:51,640 --> 00:24:54,760 Speaker 7: a pretty steady trade. And if you look at what 478 00:24:54,960 --> 00:24:58,959 Speaker 7: shifted out of retail deposits during the year, it's been 479 00:24:58,960 --> 00:25:01,440 Speaker 7: about one point three t brillion, and about a trillion 480 00:25:01,440 --> 00:25:04,359 Speaker 7: has gone into money market fund So it's hard to 481 00:25:04,440 --> 00:25:09,239 Speaker 7: follow dollar for dollar exactly where cash goes, but you know, 482 00:25:09,280 --> 00:25:11,639 Speaker 7: from all we can tell, I'd say at least eighty 483 00:25:11,640 --> 00:25:16,800 Speaker 7: percent of that is coming from the retail deposit market, 484 00:25:16,800 --> 00:25:20,359 Speaker 7: where rates from a banking perspective just didn't follow, you know, 485 00:25:20,400 --> 00:25:24,120 Speaker 7: short term rates in the market upwards with the FED. 486 00:25:24,600 --> 00:25:28,159 Speaker 7: Now there has been in the last quarter, just really 487 00:25:28,200 --> 00:25:31,320 Speaker 7: since we've flipped into the fourth quarter October and November, 488 00:25:31,880 --> 00:25:33,639 Speaker 7: a little bit more of a cash flow from an 489 00:25:33,680 --> 00:25:36,280 Speaker 7: institutional type of customer, and I think that has to 490 00:25:36,320 --> 00:25:40,280 Speaker 7: do with, you know, the flattening to you know, to 491 00:25:40,359 --> 00:25:45,000 Speaker 7: some degree inverted yield curve where the shorter end of 492 00:25:45,040 --> 00:25:48,760 Speaker 7: the curve is no longer as attractive necessarily as what 493 00:25:49,000 --> 00:25:51,399 Speaker 7: a product that has some weighted average maturity like a 494 00:25:51,440 --> 00:25:53,840 Speaker 7: money market fund does. So we're starting to see some 495 00:25:53,920 --> 00:25:55,720 Speaker 7: of that trade. I would see more of I would 496 00:25:55,760 --> 00:25:57,960 Speaker 7: expect to see more of that trade though, in twenty 497 00:25:58,080 --> 00:25:58,560 Speaker 7: twenty four. 498 00:25:59,000 --> 00:26:01,280 Speaker 4: So just amitt on that point a little bit longer 499 00:26:01,320 --> 00:26:03,960 Speaker 4: that potentially eighty percent of what we've seen come into 500 00:26:03,960 --> 00:26:08,320 Speaker 4: money market funds has been coming from deposits. How sticky 501 00:26:08,800 --> 00:26:10,879 Speaker 4: is that money? Because it feels like one of the 502 00:26:10,920 --> 00:26:13,760 Speaker 4: assumptions is that what we're seeing in money market funds 503 00:26:13,760 --> 00:26:17,359 Speaker 4: that belongs to the equity market, that belongs to risk assets, 504 00:26:17,400 --> 00:26:19,600 Speaker 4: and it's going to return there. But if that's coming 505 00:26:19,600 --> 00:26:22,399 Speaker 4: from bank deposits, that logic doesn't quite make sense. 506 00:26:23,160 --> 00:26:25,960 Speaker 7: That's exactly right, and certainly there is there are some 507 00:26:26,080 --> 00:26:28,320 Speaker 7: risk assets that are in there as a hiding place, 508 00:26:28,560 --> 00:26:31,199 Speaker 7: you know, a short term home, until they feel like, 509 00:26:31,400 --> 00:26:34,520 Speaker 7: you know, their entry point back into their risk asset 510 00:26:34,560 --> 00:26:37,280 Speaker 7: class is more palatable for them. 511 00:26:37,560 --> 00:26:40,000 Speaker 2: But that's certainly not the bulk of what we've been seeing. 512 00:26:40,040 --> 00:26:44,600 Speaker 7: Now, maybe that you know, will pick up again in 513 00:26:44,640 --> 00:26:46,760 Speaker 7: twenty twenty four, but it's not been what we've seen 514 00:26:46,760 --> 00:26:50,719 Speaker 7: mostly in twenty twenty three. It's come through the deposit market, 515 00:26:50,960 --> 00:26:54,200 Speaker 7: through the retail trade, with the likelihood of that being 516 00:26:54,320 --> 00:26:56,360 Speaker 7: very sticky. And I think the other thing that makes 517 00:26:56,400 --> 00:26:59,800 Speaker 7: that a stickier trade than it has been even over 518 00:26:59,840 --> 00:27:03,280 Speaker 7: the course of the last fifteen years is we as 519 00:27:03,320 --> 00:27:05,480 Speaker 7: well as the market. And I don't think anybody out 520 00:27:05,480 --> 00:27:08,880 Speaker 7: there expects the Fed to normalize at zero, where they 521 00:27:08,920 --> 00:27:11,480 Speaker 7: have been you know, twelve out of the last fifteen years. 522 00:27:12,400 --> 00:27:16,400 Speaker 7: The expectation is the normalization is back to you know, three, 523 00:27:16,520 --> 00:27:18,840 Speaker 7: three and a half, maybe four percent, depending upon where 524 00:27:19,600 --> 00:27:23,920 Speaker 7: inflation plays out. And so that again keeps that retail 525 00:27:24,000 --> 00:27:26,640 Speaker 7: trade generally in the market. 526 00:27:26,480 --> 00:27:28,520 Speaker 2: Rather than back rather than back in deposits. 527 00:27:28,760 --> 00:27:31,679 Speaker 1: So do you just sort of reject Deborah this idea 528 00:27:31,880 --> 00:27:35,000 Speaker 1: of cash on the sidelines flooding into markets once the 529 00:27:35,040 --> 00:27:38,160 Speaker 1: federal reserve is cut rates one, two, three or even 530 00:27:38,160 --> 00:27:39,200 Speaker 1: more times next year. 531 00:27:39,880 --> 00:27:42,240 Speaker 7: Now, I don't reject it at all. I just don't 532 00:27:42,280 --> 00:27:44,560 Speaker 7: think it's all coming out of money market funds. I 533 00:27:44,600 --> 00:27:47,080 Speaker 7: think there. I think cash continues to come out of 534 00:27:47,119 --> 00:27:49,800 Speaker 7: deposit products, and I think some some goes into the 535 00:27:49,960 --> 00:27:53,160 Speaker 7: direct markets through that, you know, from that from that mode, 536 00:27:53,440 --> 00:27:55,440 Speaker 7: and I do believe there will be some that comes 537 00:27:55,480 --> 00:27:57,680 Speaker 7: out of money market funds, but I certainly don't think 538 00:27:57,720 --> 00:28:02,640 Speaker 7: it's you know, it's it's the vast majority of what 539 00:28:02,720 --> 00:28:06,520 Speaker 7: will you know, let's say, fuel the markets, the risk 540 00:28:06,600 --> 00:28:09,040 Speaker 7: asset markets in twenty twenty four. 541 00:28:09,040 --> 00:28:11,000 Speaker 1: Just real quick here, Debrah. Are you seeing money go 542 00:28:11,000 --> 00:28:12,760 Speaker 1: out a short term and go into longer term? Is 543 00:28:12,760 --> 00:28:13,320 Speaker 1: that a theme? 544 00:28:14,440 --> 00:28:15,280 Speaker 2: It started? 545 00:28:15,440 --> 00:28:18,040 Speaker 7: We run micro short and ultra short funds that are 546 00:28:18,359 --> 00:28:21,639 Speaker 7: really just you know, a modest step out the yield 547 00:28:21,680 --> 00:28:24,440 Speaker 7: curve in the one to two two and a half 548 00:28:24,520 --> 00:28:27,760 Speaker 7: year sector, and we're starting to see positive cash flow 549 00:28:28,000 --> 00:28:32,720 Speaker 7: in those products. But it's trickling, it's a it's certainly 550 00:28:32,720 --> 00:28:34,159 Speaker 7: not any kind of a flood. 551 00:28:34,760 --> 00:28:37,400 Speaker 1: Devra Coningham, thank you so much for being with us. 552 00:28:47,440 --> 00:28:49,200 Speaker 1: I really want to get a sense of where we 553 00:28:49,240 --> 00:28:52,160 Speaker 1: are heading into this, what kinds of disruptions we can expect. 554 00:28:52,440 --> 00:28:55,680 Speaker 1: How people are paying for their travel, whether they are traveling. 555 00:28:55,720 --> 00:28:58,720 Speaker 1: Brian Kelly, founder of The Points Guy, who did advise 556 00:28:58,960 --> 00:29:01,320 Speaker 1: that I get rid of my points and spend them. 557 00:29:01,560 --> 00:29:04,240 Speaker 1: Thank you for that, trying to work them down. What 558 00:29:04,280 --> 00:29:07,520 Speaker 1: do you expect in terms of this particular holiday season. 559 00:29:07,560 --> 00:29:10,160 Speaker 1: Are we going to see another Southwest episode? Are things 560 00:29:10,200 --> 00:29:12,800 Speaker 1: looking like they're pretty orderly? Are people going to have 561 00:29:13,240 --> 00:29:15,880 Speaker 1: a not really deep, deeply uncomfortable experience. 562 00:29:16,920 --> 00:29:19,840 Speaker 8: Well, I'm an internal optimist and things are looking really good. 563 00:29:20,000 --> 00:29:23,560 Speaker 8: Right So the Thanksgiving holiday in November we saw the 564 00:29:23,560 --> 00:29:26,520 Speaker 8: most amount of air travelers ever two point nine million 565 00:29:26,560 --> 00:29:29,920 Speaker 8: go through the TSA, and things work pretty smooth. And 566 00:29:29,960 --> 00:29:32,480 Speaker 8: the biggest factor that I see would be weather, and 567 00:29:32,640 --> 00:29:35,560 Speaker 8: right now there's no major weather patterns that I see 568 00:29:35,560 --> 00:29:38,600 Speaker 8: that could upend our air travel system, so I am 569 00:29:38,640 --> 00:29:42,840 Speaker 8: forecasting hopefully smooth sailing for the next ten days. We 570 00:29:42,880 --> 00:29:45,520 Speaker 8: had two point five million people through the TSA yesterday, 571 00:29:45,880 --> 00:29:49,360 Speaker 8: relatively low delays and cancelations, so fingers crossed. But I 572 00:29:49,400 --> 00:29:51,920 Speaker 8: think this is going to be a good holiday travel season, 573 00:29:51,960 --> 00:29:53,520 Speaker 8: and certainly much better than last year. 574 00:29:53,640 --> 00:29:57,000 Speaker 1: Yes, especially given some of those delays. International, though, does 575 00:29:57,080 --> 00:30:00,320 Speaker 1: face some potential headwinds. In particular, some of this strikes 576 00:30:00,320 --> 00:30:03,320 Speaker 1: that we've been hearing about in the United Kingdom elsewhere 577 00:30:03,360 --> 00:30:05,280 Speaker 1: in Europe is that on your radar at all or 578 00:30:05,320 --> 00:30:08,440 Speaker 1: is that basically just sort of hand ringing as people 579 00:30:08,640 --> 00:30:10,240 Speaker 1: have to find something to worry about if they're not 580 00:30:10,280 --> 00:30:11,840 Speaker 1: eternal optimists like yourself. 581 00:30:12,120 --> 00:30:15,040 Speaker 8: Yeah. No, you know, anytime you travel to Europe you 582 00:30:15,080 --> 00:30:17,240 Speaker 8: have to worry about you know, strikes. It can happen 583 00:30:17,360 --> 00:30:19,880 Speaker 8: any day. It's much different here than the US. But 584 00:30:20,160 --> 00:30:23,200 Speaker 8: you know in Spain there will be strikes with Iberia's 585 00:30:23,240 --> 00:30:26,840 Speaker 8: ground staff around the New Year holiday. Yesterday we saw 586 00:30:26,880 --> 00:30:29,840 Speaker 8: the Eurostar have a surprise strike that displaced a lot 587 00:30:29,840 --> 00:30:32,760 Speaker 8: of people. They're actually not even selling trains today between 588 00:30:33,440 --> 00:30:35,880 Speaker 8: Paris and London. So but overall, there might be some 589 00:30:36,000 --> 00:30:41,000 Speaker 8: German train strikers here there, but hopefully no widespread strikes 590 00:30:41,000 --> 00:30:41,880 Speaker 8: that we're aware of. 591 00:30:42,520 --> 00:30:45,040 Speaker 4: And so how should travelers think about that, say that 592 00:30:45,120 --> 00:30:48,280 Speaker 4: they do have a holiday European vacation booked, I mean, 593 00:30:48,280 --> 00:30:51,080 Speaker 4: should they be thinking about insurance here or how to 594 00:30:51,200 --> 00:30:52,000 Speaker 4: best handle that? 595 00:30:52,960 --> 00:30:54,960 Speaker 8: Yeah, So what most people don't realize is when you 596 00:30:55,080 --> 00:30:58,520 Speaker 8: use your premium travel credit card, as I'm assuming many 597 00:30:58,560 --> 00:31:02,120 Speaker 8: people watching this program, whether that's AMX, Platinum, Chase, Sapphire, 598 00:31:02,200 --> 00:31:06,560 Speaker 8: Capital one Venture, those cars cards come with built in perks, 599 00:31:06,600 --> 00:31:10,280 Speaker 8: and this is what people don't realize. I was traveling 600 00:31:10,280 --> 00:31:12,680 Speaker 8: to Puerto Rico in May and my flight was delayed 601 00:31:13,720 --> 00:31:17,600 Speaker 8: ten hours by United for a mechanical reason. United gave 602 00:31:17,640 --> 00:31:19,400 Speaker 8: me one hundred dollars E gift card and told me 603 00:31:19,440 --> 00:31:23,440 Speaker 8: to go away, but American Express refunded five hundred dollars 604 00:31:23,480 --> 00:31:26,080 Speaker 8: for me to get a hotel, to get ubers to 605 00:31:26,120 --> 00:31:28,280 Speaker 8: go out to dinner in old San Juan. So always 606 00:31:28,280 --> 00:31:31,320 Speaker 8: go to your credit card company for compensation. And when 607 00:31:31,360 --> 00:31:35,240 Speaker 8: traveling to Europe, there's a rule called EU two sixty 608 00:31:35,280 --> 00:31:38,680 Speaker 8: one compensation. And if you're traveling to or from Europe 609 00:31:39,680 --> 00:31:41,880 Speaker 8: and there's a flight delay for pretty much any reason, 610 00:31:41,960 --> 00:31:44,960 Speaker 8: they are mandated by the government to give you compensation. 611 00:31:46,000 --> 00:31:48,920 Speaker 8: So yes, go to the airline. But generally the airlines 612 00:31:48,960 --> 00:31:51,200 Speaker 8: are pretty cheap when it comes to compensation. Your credit 613 00:31:51,240 --> 00:31:53,040 Speaker 8: card is where it's at. The only time I really 614 00:31:53,080 --> 00:31:55,880 Speaker 8: recommend travel insurance is if you're going on that mega 615 00:31:56,280 --> 00:32:00,240 Speaker 8: trip on a big expensive cruise line, sofari you're bringing 616 00:32:01,640 --> 00:32:04,840 Speaker 8: people who could get sick abroad where you might need 617 00:32:04,840 --> 00:32:08,360 Speaker 8: that evacuation coverage. So but in general, your credit cards 618 00:32:08,400 --> 00:32:10,080 Speaker 8: protect you a lot more than you realize. 619 00:32:10,200 --> 00:32:13,440 Speaker 4: Yeah, so maybe you actually should read the fine print there, 620 00:32:13,480 --> 00:32:15,400 Speaker 4: But what are you actually seeing in terms of where 621 00:32:15,400 --> 00:32:17,800 Speaker 4: people are going when it comes to this holiday season. 622 00:32:17,840 --> 00:32:20,959 Speaker 4: Are they going abroad or as much of the travel 623 00:32:21,000 --> 00:32:24,400 Speaker 4: that you're seeing booked and happening right now within the country. 624 00:32:24,920 --> 00:32:27,360 Speaker 8: Yeah, I mean most of the travel growth we're seeing 625 00:32:27,440 --> 00:32:29,680 Speaker 8: is international. Is funny. I was looking up where are 626 00:32:29,720 --> 00:32:32,880 Speaker 8: the deals for I was just searching from New York, 627 00:32:32,920 --> 00:32:36,520 Speaker 8: and the best travel deals were in Miami Orlando. And 628 00:32:36,800 --> 00:32:39,040 Speaker 8: a year or two years ago, we all knew Miami 629 00:32:39,080 --> 00:32:42,040 Speaker 8: flights were like two thousand dollars each, crazy rates. So 630 00:32:42,080 --> 00:32:44,840 Speaker 8: we've seen some of that demand from domestic travel. Now 631 00:32:45,280 --> 00:32:48,560 Speaker 8: we're seeing huge increases. United Airlines just started flying NonStop 632 00:32:48,600 --> 00:32:52,560 Speaker 8: from San Francisco to christ Church, New Zealand. They're betting 633 00:32:52,600 --> 00:32:57,640 Speaker 8: big on the Pacific region, new flights to Tahiti, and 634 00:32:57,720 --> 00:32:59,240 Speaker 8: so I think there are a lot of travelers who 635 00:32:59,320 --> 00:33:03,600 Speaker 8: now feel cometerle traveling internationally, doing that big trip Japan. 636 00:33:04,080 --> 00:33:07,880 Speaker 8: I'm going there in February. We're seeing huge increases in 637 00:33:08,440 --> 00:33:11,280 Speaker 8: that type of travel. And also when it comes to lodging, 638 00:33:12,040 --> 00:33:15,120 Speaker 8: we're seeing a huge increase. Hotels dot Com saw one 639 00:33:15,160 --> 00:33:18,440 Speaker 8: hundred and twenty five percent increase in authentic lodging, So 640 00:33:18,440 --> 00:33:21,680 Speaker 8: whether that's a reopen in Japan or staying at a 641 00:33:21,760 --> 00:33:25,280 Speaker 8: riad in Morocco. I think travelers are sick of paying 642 00:33:25,280 --> 00:33:28,960 Speaker 8: for overpriced cookie cutter hotels and are willing to shell 643 00:33:29,000 --> 00:33:30,680 Speaker 8: out for those luxury experiences. 644 00:33:30,880 --> 00:33:33,600 Speaker 1: Are they looking for discounts or is this still very 645 00:33:33,640 --> 00:33:36,440 Speaker 1: much the experience world that's just continuing, and is this 646 00:33:36,800 --> 00:33:40,520 Speaker 1: basically a sea change that has legs where experiences will 647 00:33:40,560 --> 00:33:43,960 Speaker 1: keep seeing people pay up for some of these unique 648 00:33:44,040 --> 00:33:47,360 Speaker 1: experiences even if they don't buy a shirt and an 649 00:33:47,360 --> 00:33:49,479 Speaker 1: outfit that's fancied to accompany it. 650 00:33:50,280 --> 00:33:53,240 Speaker 8: Yeah, people, you know, funny enough, discounts are happening domestically. 651 00:33:53,360 --> 00:33:56,240 Speaker 8: Jeff Blues just ran a fifty dollars a fair sales Southwest. 652 00:33:56,280 --> 00:34:00,440 Speaker 8: So the domestic airfare market and those carriers are ruggling. 653 00:34:00,480 --> 00:34:03,880 Speaker 8: Where the premium cruise lines that are just launching, There's 654 00:34:03,920 --> 00:34:07,200 Speaker 8: tons of new really exclusive ships. I just did. Expedition 655 00:34:07,280 --> 00:34:09,239 Speaker 8: cruising is huge. I'm seeing more and more my friends 656 00:34:09,280 --> 00:34:12,360 Speaker 8: go to Antarctica. I just went on swan Hellenic to 657 00:34:12,560 --> 00:34:17,520 Speaker 8: Greenland and that was an incredible experience. So yeah, people 658 00:34:17,560 --> 00:34:21,040 Speaker 8: are shelling out for unique bespoke experiences. That sector in 659 00:34:21,120 --> 00:34:25,440 Speaker 8: the market cannot grow fast enough. And even I mean 660 00:34:25,480 --> 00:34:30,000 Speaker 8: domestically theme park travels, Big Disney still continues to see growth. 661 00:34:30,280 --> 00:34:33,759 Speaker 8: And it's not just Disney. Dollywood just increased prices and 662 00:34:33,920 --> 00:34:36,920 Speaker 8: opened up new parts of their park, Mattel. So people 663 00:34:36,960 --> 00:34:38,840 Speaker 8: really want to take their families not just to a 664 00:34:39,400 --> 00:34:42,160 Speaker 8: beach vacation, but they want to go and experience the 665 00:34:42,200 --> 00:34:45,440 Speaker 8: new Mattel theme park that just opened up in Arizona. 666 00:34:45,880 --> 00:34:49,319 Speaker 8: They really want these unique experiences and that's a trend 667 00:34:49,400 --> 00:34:52,560 Speaker 8: I can foresee happening more and more. 668 00:34:53,080 --> 00:34:54,960 Speaker 4: And Brian, you are the points guys. So let's talk 669 00:34:54,960 --> 00:34:57,280 Speaker 4: about some news that broke this week. It was first 670 00:34:57,320 --> 00:35:00,840 Speaker 4: reported by Rorders basically about the Department of t Transportation 671 00:35:01,280 --> 00:35:04,880 Speaker 4: in the early stages of looking into airline frequent flyer programs, 672 00:35:05,080 --> 00:35:09,160 Speaker 4: really checking whether airlines have engaged in unfair or deceptive 673 00:35:09,480 --> 00:35:11,960 Speaker 4: practices when it comes to some of those programs. 674 00:35:12,000 --> 00:35:13,040 Speaker 2: What do you make of that? 675 00:35:14,360 --> 00:35:16,400 Speaker 8: Yeah, I mean I think it's much needed. A lot 676 00:35:16,440 --> 00:35:19,239 Speaker 8: of times there are changes that happen overnight, and you 677 00:35:19,280 --> 00:35:22,759 Speaker 8: know it. Kennedy said that the airlines are banks nowadays. 678 00:35:22,760 --> 00:35:26,440 Speaker 8: The airlines are making more money selling their currencies of 679 00:35:26,520 --> 00:35:30,640 Speaker 8: frequent flyer programs to banks. So I do think there 680 00:35:30,680 --> 00:35:33,759 Speaker 8: needs to be a little bit more consumer heads up, right, 681 00:35:33,800 --> 00:35:36,120 Speaker 8: if you're going to have this multi billion dollar loyalty 682 00:35:36,120 --> 00:35:39,560 Speaker 8: program that essentially is a bank where you know you're 683 00:35:39,600 --> 00:35:44,319 Speaker 8: creating your own currency, you should give consumers notice when 684 00:35:44,360 --> 00:35:47,280 Speaker 8: making negative changes. We saw this year Delta and American 685 00:35:47,360 --> 00:35:52,880 Speaker 8: Express rolled out some pretty punitive changes to their credit cards, 686 00:35:53,000 --> 00:35:57,479 Speaker 8: increasing fees, et cetera. And there was huge consumer backlash 687 00:35:57,560 --> 00:36:00,000 Speaker 8: to mostly Delta on that one, and we saw them 688 00:36:00,120 --> 00:36:02,440 Speaker 8: roll back some of their changes. Now, do I think 689 00:36:02,480 --> 00:36:05,000 Speaker 8: the government needs to come in and regulate every aspect 690 00:36:05,000 --> 00:36:09,120 Speaker 8: of loyalty programs? Probably not, but having some more consumer 691 00:36:09,160 --> 00:36:11,840 Speaker 8: protections when those negative changes happens, I think are a 692 00:36:11,880 --> 00:36:14,279 Speaker 8: good thing for everyone involved, because people are getting sick 693 00:36:14,440 --> 00:36:16,560 Speaker 8: of just constantly changing and moving up the. 694 00:36:16,480 --> 00:36:20,480 Speaker 1: Goldpost and waiting in line at the the lounge. I 695 00:36:20,480 --> 00:36:22,200 Speaker 1: mean that might be part of the issue, yeah, I mean. 696 00:36:22,280 --> 00:36:23,960 Speaker 1: Brian Kelly, thank you so much for being with us. 697 00:36:23,960 --> 00:36:27,080 Speaker 1: Brian Kelly of The Points Guy. Thank you as always. 698 00:36:27,200 --> 00:36:30,600 Speaker 1: Subscribe to the Bloomberg Surveillance podcast on Apple, Spotify and 699 00:36:30,680 --> 00:36:34,120 Speaker 1: anywhere else you get your podcasts. Listen live every weekday, 700 00:36:34,120 --> 00:36:36,719 Speaker 1: starting at seven am Eastern, on Bloomberg dot com, the 701 00:36:36,760 --> 00:36:40,520 Speaker 1: iHeartRadio app tune In, and the Bloomberg Business app. You 702 00:36:40,560 --> 00:36:43,920 Speaker 1: can watch us live on Bloomberg Television and always on 703 00:36:43,920 --> 00:36:47,360 Speaker 1: the Bloomberg Terminal. Thanks for listening. I'm Lisa Abramowitz, and 704 00:36:47,440 --> 00:36:48,320 Speaker 1: this is Bloomberg