WEBVTT - FAA Outage Grounds US Flights 0:00:01.880 --> 0:00:04.440 This is Bloomberg Business Week. I'm Carol Masser and I'm 0:00:04.480 --> 0:00:06.840 Tim Stanevik. We're here every day bringing you the latest 0:00:06.840 --> 0:00:11.000 news from the world's of business and finance, clus technology, politics, economics, 0:00:11.039 --> 0:00:14.040 all harnessing the power of Business Week reporters and editors, 0:00:14.160 --> 0:00:17.000 not to mention our journalists and analyst in more than 0:00:17.040 --> 0:00:21.160 one twenty countries. You can download Bloomberg Business Week on iTunes, SoundCloud, 0:00:21.239 --> 0:00:23.320 or Bloomberg dot com. You can also listen to our 0:00:23.360 --> 0:00:26.160 radio show at two pm Eastern Time on Bloomberg Radio 0:00:26.280 --> 0:00:30.760 or stream US live on YouTube and Bloomberg dot com. 0:00:30.800 --> 0:00:32.080 It is one of our most word stories on the 0:00:32.080 --> 0:00:35.000 Bloomberg Today. It's about the nationwide halt and airline flights 0:00:35.000 --> 0:00:37.760 across the US this morning. This after the FA paused 0:00:37.800 --> 0:00:41.160 takeoffs due to a system outage of a key flight system. 0:00:41.200 --> 0:00:44.880 Airline shares is abigail mentioned are doing okay? But wait, 0:00:44.920 --> 0:00:46.559 do we need to be worried? I gotta say I'm 0:00:46.560 --> 0:00:48.800 a little worried when there's an f A a a system failure. 0:00:48.840 --> 0:00:53.000 I mean, this shouldn't ever probably happen. With some perspective, 0:00:53.080 --> 0:00:55.360 let's bring in Bloomberg's Creed Gupta. She's on the ground 0:00:55.480 --> 0:00:58.480 at LaGuardia Airport in New York City along with Allen 0:00:58.520 --> 0:01:00.840 leve and he's Aviation Safety and f A reporter at 0:01:00.840 --> 0:01:03.680 Bloomberg News on the phone from Washington, D C. Creedy. 0:01:03.720 --> 0:01:06.920 Let's kick it off with you. Looks pretty quiet, pretty 0:01:07.000 --> 0:01:11.160 come behind you. What's the latest regarding the disruption this 0:01:11.240 --> 0:01:16.760 morning and what actually caused the problem? Yeah, well it 0:01:16.880 --> 0:01:18.600 is pretty quiet, and I have to say though if 0:01:18.600 --> 0:01:20.280 you go to a different terminal you might see a 0:01:20.280 --> 0:01:23.520 little bit more chaos. And remember this all really started 0:01:23.560 --> 0:01:26.600 overnight when you did have, of course, the system wide 0:01:26.600 --> 0:01:28.759 outage coming up at the f A. The system called 0:01:28.760 --> 0:01:32.440 the No TAM system essentially the Notice to Air Mission system. 0:01:32.440 --> 0:01:35.160 It tells things to personnel and to pilots, things like 0:01:35.480 --> 0:01:40.080 runaway conditions, construction obstacles, bird hazards, even those are the 0:01:40.160 --> 0:01:41.840 kind of things that they need to know to make 0:01:41.880 --> 0:01:45.240 sure if a flight gets off the ground safely, as 0:01:45.280 --> 0:01:47.800 able to ground safely as well. So essentially the absence 0:01:47.840 --> 0:01:51.720 of that constant updating of information creates a pretty scary 0:01:51.880 --> 0:01:54.240 environment to operate. So of course we did see as 0:01:54.240 --> 0:01:58.240 a result six flight delays around the country. Of course, 0:01:58.360 --> 0:02:01.800 grounding of all air planes for about two hours this 0:02:01.840 --> 0:02:06.200 morning and about a thousand flight cancelations as well, something 0:02:06.240 --> 0:02:09.480 that the likes of United Delta Southwest are still kind 0:02:09.520 --> 0:02:11.480 of playing a little bit of catch up to. I 0:02:11.560 --> 0:02:13.320 love and come on in here because you cover the 0:02:13.440 --> 0:02:16.000 f A for us at Bloomberg News. Tell us everything 0:02:16.040 --> 0:02:18.000 that we need to understand about the no TAMP system, 0:02:18.040 --> 0:02:20.000 which I think to a lot of people probably hadn't 0:02:20.000 --> 0:02:27.280 heard about it until today. Yeah, it's basically an advisory system. 0:02:27.360 --> 0:02:31.560 The you know, the aviation system generally have to have 0:02:31.639 --> 0:02:35.680 such a high reliability and high level of safety that 0:02:36.320 --> 0:02:40.480 they want pilots to know every little detail in advance 0:02:40.639 --> 0:02:42.839 before they fly to an airport. So if you're doing 0:02:43.440 --> 0:02:47.320 maintenance on the lights at a runway, or let's say 0:02:47.400 --> 0:02:54.960 the snow conditions are such that it's a slippery uh, 0:02:55.000 --> 0:02:59.600 they'll put that in a notem uh. It Also, you know, 0:02:59.639 --> 0:03:05.320 if they're launching a rocket into space in Florida, that 0:03:05.400 --> 0:03:07.720 requires a clear out a lot of airspace, and so 0:03:07.840 --> 0:03:11.680 they handled that as well in a notem Um. But 0:03:11.800 --> 0:03:16.480 I do want to make one thing clear that the 0:03:16.560 --> 0:03:20.520 system that guide airplanes, that keep them separated in the sky, 0:03:20.800 --> 0:03:25.000 that allow air traffic controllers, to talk to pilots, etcetera. 0:03:25.440 --> 0:03:30.560 None of those were affected. So this did not in 0:03:30.600 --> 0:03:34.240 and of itself cause any safety issues that were aware of. 0:03:35.400 --> 0:03:38.280 So so yeah, because I have to say, when I 0:03:38.320 --> 0:03:40.200 first heard, I'm like, whoa, what is it? What is 0:03:40.240 --> 0:03:44.440 this about? But even so, alan should we assume that 0:03:44.520 --> 0:03:51.760 this shouldn't happen? Um? I think it's fair to say 0:03:51.800 --> 0:03:54.800 that everyone from FA to the airlines would say that 0:03:54.880 --> 0:03:58.840 this shouldn't happen. Um. There are quite a number of 0:03:58.920 --> 0:04:01.400 questions that remained to be you know, you know, what 0:04:01.560 --> 0:04:06.000 level of backup they had? Did the backup go down? Um? 0:04:07.280 --> 0:04:11.040 They certainly have some backup, but was it an instantaneous 0:04:11.040 --> 0:04:12.920 backup or did it take him an hour or two 0:04:13.000 --> 0:04:16.120 to get the backup up and running? Um? You know, 0:04:16.160 --> 0:04:20.559 a lot of that is just not clear yet. Hey, Creedy, 0:04:20.600 --> 0:04:22.520 you've been there throughout the day, So give us an 0:04:22.520 --> 0:04:25.200 idea how how things have shifted and if it seems like, 0:04:25.560 --> 0:04:27.839 you know, travelers are still disrupted, because as we learned 0:04:27.960 --> 0:04:31.920 very recently with Southwest, if there's a you know, widespread delay, 0:04:32.320 --> 0:04:35.359 then things happen kind of like dominoes, and it takes 0:04:35.360 --> 0:04:37.360 a long time for things to go back to normal. 0:04:40.560 --> 0:04:42.800 Well's that domino effect that's really the worry here. The 0:04:42.839 --> 0:04:45.280 idea that a lot of the airlines are kind of 0:04:45.320 --> 0:04:47.680 assuring travelers that this is going to be something that 0:04:47.800 --> 0:04:49.760 was going to end by nine am Eastern, then it 0:04:49.800 --> 0:04:51.640 was going to end by noon. Then you actually had 0:04:51.680 --> 0:04:54.760 a lot of the major transport hubs around the country 0:04:54.960 --> 0:04:56.680 start to say, well, actually, we're going to need a 0:04:56.720 --> 0:04:58.560 couple of hours to kind of play that element of 0:04:58.600 --> 0:05:00.920 catch up. So now aly are still saying, well, look, 0:05:00.960 --> 0:05:03.640 expect those delays, expect those cancelations, but it should be 0:05:03.680 --> 0:05:06.280 done by the end of today. That is not necessarily 0:05:06.279 --> 0:05:08.040 the case. Now. The thing to worry about here is 0:05:08.080 --> 0:05:10.560 that does this kind of seep into tomorrow's flight schedule 0:05:10.880 --> 0:05:13.360 as well. You've heard of that sentiment or at least 0:05:13.360 --> 0:05:16.400 that worry coming from Delta, from Southwest and from United 0:05:16.480 --> 0:05:18.720 as well. But once again, that seems to be the 0:05:18.760 --> 0:05:20.479 big question, how do we even get here in the 0:05:20.520 --> 0:05:24.040 first place. Helene Becker, count senior research analyst, told Bloomer 0:05:24.080 --> 0:05:26.800 TV earlier that look, this is once again a function 0:05:27.080 --> 0:05:29.839 of old technology that's going to take billions and billions 0:05:29.839 --> 0:05:33.919 of dollars to renovate and we're just not there. Alan. 0:05:34.000 --> 0:05:37.080 Is that something that that you see uh in your 0:05:37.080 --> 0:05:38.760 reporting on the f A as well, that this is 0:05:38.800 --> 0:05:40.920 a this is an issue of old technology that will 0:05:40.960 --> 0:05:45.839 take significant investment. So the the f a A is 0:05:46.040 --> 0:05:52.200 in the years long uh effort of upgrading its entire 0:05:52.279 --> 0:05:57.279 air traffic system. And I have to say, generally, uh, 0:05:57.640 --> 0:06:02.159 there've been glitches along the way more than but the 0:06:02.240 --> 0:06:06.159 generally the system is far more modern than it was 0:06:06.279 --> 0:06:09.440 ten fifteen years ago when that was a bigger concern. 0:06:09.960 --> 0:06:13.919 And and it's generally been more reliable. And so you 0:06:13.960 --> 0:06:17.080 know now that we use satellite systems to track planes 0:06:17.120 --> 0:06:20.560 instead of radar, that was a huge switch that started 0:06:20.600 --> 0:06:25.680 in UM, the computer systems that the air traffic controllers 0:06:25.800 --> 0:06:32.919 used to follow aircraft are all relatively updated. UM. The 0:06:33.400 --> 0:06:36.159 UM it remains to be seen. We're hearing kind of 0:06:36.240 --> 0:06:40.880 contradictory information about this specific computer system that runs a 0:06:40.960 --> 0:06:46.920 NOTEM program, whether it's new or not. UM. You know, 0:06:46.920 --> 0:06:50.320 it clearly shouldn't happen, and we'll have to figure out 0:06:50.920 --> 0:06:56.280 why uh later on. But but and you know, and 0:06:56.360 --> 0:06:58.679 any time this happens, there's going to be huge calls 0:06:58.760 --> 0:07:02.039 for change gen all that, But but I'd say my 0:07:02.120 --> 0:07:04.680 big picture of you watching this over the past decade 0:07:04.760 --> 0:07:09.000 or two, the f A systems overall have been modernized, 0:07:11.640 --> 0:07:14.880 relatively speaking. Hey, just quickly got about a minute or 0:07:14.880 --> 0:07:17.120 so left to both of you and Creedy. Let me 0:07:17.120 --> 0:07:20.440 ask you first, Um, can we should we rule out 0:07:20.480 --> 0:07:25.680 that this was a cyber attack? Well, that is what's 0:07:25.680 --> 0:07:28.920 the Biden administration is saying. But then Peter Boud excuse me, 0:07:28.960 --> 0:07:31.680 the Secretary of Transportation, came in later and spoken to 0:07:31.840 --> 0:07:33.800 other outlets and said, well, look, we can't rule out 0:07:33.840 --> 0:07:37.440 anything yet. They are creating a white scale investigation. So 0:07:38.400 --> 0:07:40.640 no for now, but of course we have to stay tuned. 0:07:40.680 --> 0:07:45.240 Frought date, Alan, what are you hearing on that front? Um, 0:07:45.800 --> 0:07:49.640 the same thing, But I just point out that most 0:07:49.600 --> 0:07:52.680 of the f A computers are kind of firewalled from 0:07:52.720 --> 0:07:57.960 the normal types of ways that attackers might go after 0:07:58.560 --> 0:08:02.280 a system, so the odds are probably lower. But I, 0:08:02.720 --> 0:08:04.800 I mean, I would rule anything out at this point. 0:08:05.040 --> 0:08:07.200 All right, Well, that kind of fit makes me feel better, 0:08:07.440 --> 0:08:09.960 but I like everything to work, like he said, Carol, 0:08:10.080 --> 0:08:12.320 Like Alan said. Nothing in terms of the way that 0:08:12.360 --> 0:08:15.560 pilots communicate with each other or with air traffic and 0:08:15.640 --> 0:08:17.480 trains around the ground. Yeah, that was a good thing, 0:08:18.600 --> 0:08:21.200 all right. Allan Levin Aviation Safety and f A, a 0:08:21.280 --> 0:08:23.800 reporter at Bloomberg News joining us on the phone from Washington, 0:08:23.880 --> 0:08:25.600 d C. In a creaty group because she's been out 0:08:25.600 --> 0:08:29.320 there at LaGuardia Airport, New York City. She's anchored markets 0:08:29.320 --> 0:08:32.720 correspondent here at Bloomberg just following it. Airlines they're just 0:08:32.920 --> 0:08:36.560 up shy of one percent here, so they're doing okay, 0:08:36.760 --> 0:08:38.240 doing better than even the markets. On a day we 0:08:38.360 --> 0:08:39.920 we're seeing a rally the S and P five hundred 0:08:39.920 --> 0:08:41.800 at eight tenths of one percent. The nastack up one 0:08:41.840 --> 0:08:44.360 point too. All right. You are listening in watching Bloomberg 0:08:44.400 --> 0:08:47.760 Business Week on this Wednesday, Carol Master Tim Stanovic. This 0:08:47.920 --> 0:08:54.319 is Bloomberg Radio. These sees Bloomberg Business Week with Carol 0:08:54.360 --> 0:08:59.520 Messer and Tim Stanovic on Bloomberg Radio Newsia. Bloomberg Business 0:08:59.520 --> 0:09:02.199 Week at newsstands tomorrow, some of the stories already on 0:09:02.240 --> 0:09:05.080 the Bloomberg and online at Bloomberg dot com. Slash business Week. 0:09:05.120 --> 0:09:08.560 It is the year ahead issue covering the major trends, disruptions, 0:09:08.600 --> 0:09:12.439 breakthrough products, so much that are coming this year in 0:09:13.360 --> 0:09:16.120 and it compliments next year's Bloomberg Live event and Davos 0:09:16.160 --> 0:09:19.240 happening as the World Economic Forum hosts its annual meeting. There. 0:09:19.480 --> 0:09:21.600 One section in the Year Ahead issue was all about 0:09:21.640 --> 0:09:25.200 the consumer, everything from starbucks unhappy New Year to Hollywood's 0:09:25.240 --> 0:09:27.880 comeback here and more with a round up. Here is 0:09:27.880 --> 0:09:31.360 a Bloomberg Business Week Assistant Managing Editor Jim Ellis. He's 0:09:31.400 --> 0:09:35.200 right here in our Bloomberg Interactive Broker's studio. Jim, good 0:09:35.200 --> 0:09:38.760 to see you. Um, the Year Ahead here we are here. 0:09:38.800 --> 0:09:40.959 We didn't think it would happen. He made it here. 0:09:41.160 --> 0:09:43.640 Inflation is still here. And there's some stuff that we 0:09:43.760 --> 0:09:45.240 you know, some themes that we covered a little bit 0:09:45.280 --> 0:09:48.000 last year. Uh that kind of gave us a preview 0:09:48.080 --> 0:09:50.000 of what to think about this year. I think to 0:09:50.600 --> 0:09:54.600 the stories about unionization and Starbucks. So before we get 0:09:54.640 --> 0:09:58.280 to that, though, UM, talk about like how you chose 0:09:59.000 --> 0:10:04.480 the stories. Well, actually, one of the things that I 0:10:04.520 --> 0:10:07.040 wanted to do this year was to uh sort of 0:10:07.640 --> 0:10:10.560 you know, sort of capture how things are different from 0:10:10.559 --> 0:10:13.160 the previous year. And the biggest is that, you know, 0:10:13.280 --> 0:10:16.520 while the pandemic sort of defined last year, you know, 0:10:16.559 --> 0:10:19.200 how our sort of come back from the pandemic. This year, 0:10:19.600 --> 0:10:22.840 um you know, is going to be defined more about 0:10:22.960 --> 0:10:26.000 how consumers sort of you know, what's the new normal 0:10:26.360 --> 0:10:29.520 for consumers in other words, you know, lots of things changed. 0:10:29.640 --> 0:10:32.360 You obviously returned to work, you know, it's been an issue, 0:10:32.679 --> 0:10:35.240 but also how people want to shop, how people want 0:10:35.280 --> 0:10:38.360 to consume, you know, what people are willing to spend on, 0:10:38.559 --> 0:10:41.200 and the way the consumer behaves is a lot different 0:10:41.200 --> 0:10:44.040 than than and so we want to capture that. And 0:10:44.080 --> 0:10:45.960 so we tried to sort of take a look at 0:10:46.000 --> 0:10:48.480 a number of areas. You know, one I was obviously entertained. 0:10:48.480 --> 0:10:50.199 It was travel because it's something I love, but it's 0:10:50.200 --> 0:10:53.800 also something that was really really knocked during the pandemic. 0:10:54.080 --> 0:10:56.160 So I knew that was something we wanted to get into. 0:10:56.480 --> 0:10:58.600 And also there were a lot of management shifts that 0:10:58.720 --> 0:11:02.400 happened over the uh pandemic period, and a lot of 0:11:02.400 --> 0:11:06.040 it was because of the way the consumers were changing 0:11:06.080 --> 0:11:10.280 what they wanted to do a good A good example 0:11:10.360 --> 0:11:13.160 that was Starbucks simply because China was a big piece 0:11:13.200 --> 0:11:15.480 of its business. China was going to do, um, you know, 0:11:15.720 --> 0:11:18.760 not behave this year the way it did before. And 0:11:18.800 --> 0:11:22.520 also they were involved in a unionization drive that really 0:11:22.559 --> 0:11:25.160 picked up steam, you know, over the course of the pandemic, 0:11:25.200 --> 0:11:26.840 so that I knew it wanted that in there. So 0:11:26.880 --> 0:11:29.320 I went sort of just trying to choose things that 0:11:29.400 --> 0:11:31.800 I thought if I was a consumer, what would I 0:11:31.840 --> 0:11:34.199 care about? Now? I love that you guys say when 0:11:34.240 --> 0:11:37.720 it comes to starbuck in the section Starbucks, excuse me, 0:11:37.800 --> 0:11:40.360 could really use some caffeine this year, And well they're 0:11:40.400 --> 0:11:43.120 getting it in the likes of bringing back Howard Schultz, 0:11:43.120 --> 0:11:45.559 so connected obviously with this company. It's like the old 0:11:45.679 --> 0:11:50.360 leaders are all coming back Disney Tiger, but tell us, um, 0:11:50.679 --> 0:11:53.400 they've also got what another They've got a new CEO 0:11:53.520 --> 0:11:57.360 who's coming in, Um, who will work with Howard Schultz. 0:11:57.440 --> 0:12:02.280 We'll see how that works out. But I think, oh yeah, so, um, 0:12:02.360 --> 0:12:04.400 you know when he's coming. He was the former CEO 0:12:04.440 --> 0:12:07.160 of rek It. And the thing is that, you know, 0:12:07.200 --> 0:12:10.520 he was very he was successful there. The problem is 0:12:10.559 --> 0:12:12.960 that it's a very different type of business. This is 0:12:13.000 --> 0:12:15.839 a this is a true consumer business that sells and 0:12:15.960 --> 0:12:18.480 you know, sort of sells food and drink in restaurants, 0:12:18.720 --> 0:12:24.319 regor sells you know, condoms and and other things. But um, 0:12:24.360 --> 0:12:28.319 it's a sanitizing, sanitizing, and yeah, but I mean it's 0:12:28.960 --> 0:12:31.000 consumer products, but they're not the same thing as selling 0:12:31.080 --> 0:12:34.040 at retail, and so that's the real challenge. He's gonna 0:12:34.080 --> 0:12:36.200 have to learn that job at the same time that 0:12:36.280 --> 0:12:41.880 it has a big, big challenge in unionization of its stores. 0:12:42.280 --> 0:12:45.880 And also China, which is its second most important market, 0:12:46.200 --> 0:12:49.080 is still not back to normal. That's also supposedly the 0:12:49.120 --> 0:12:53.320 big growth market of Starbucks, and they hope that, you know, 0:12:53.360 --> 0:12:55.319 they're gonna have nine thousand stores there or something in 0:12:55.360 --> 0:12:57.800 a few years. You know, that's gonna be a real lift, 0:12:57.960 --> 0:13:02.119 given that China is still not fully back from the pandemic, 0:13:02.559 --> 0:13:06.400 and this guy has to figure out how to pull 0:13:06.440 --> 0:13:09.120 all this off at the same time that his predecessor, 0:13:09.160 --> 0:13:13.000 Howard Schultz, is still remaining on the board. And often founders, 0:13:13.040 --> 0:13:15.720 you know, sort of they tend to be sort of 0:13:15.760 --> 0:13:18.840 hands on, and especially a founder like Schultz, who has already, 0:13:19.080 --> 0:13:22.040 you know, had the CEO's job three times. He's already 0:13:22.080 --> 0:13:24.640 gotten rid of two people before. It's a good point. Hey, 0:13:24.720 --> 0:13:26.760 I gotta talk planes because I know Tim's really into it, 0:13:26.800 --> 0:13:28.640 but I'm just thinking, you know, you mentioned the importance 0:13:28.640 --> 0:13:31.360 of China China. Obviously in planes that's important, I mean 0:13:31.520 --> 0:13:33.679 jumbo jets important kind of, I feel like, to all 0:13:33.679 --> 0:13:36.720 the carriers. Well, but we previously thought they were no 0:13:36.800 --> 0:13:41.000 longer important. He said, Oh my god, jumbo jets they 0:13:41.120 --> 0:13:43.400 got four engines. They you know, they gobble up all 0:13:43.480 --> 0:13:45.959 this fuel. So therefore we moved beyond that. And so 0:13:46.000 --> 0:13:47.800 we saw all these new sort of what they call 0:13:47.880 --> 0:13:52.000 new generation planes, the UH seven seven have an X, 0:13:52.160 --> 0:13:55.640 the A three fifty I mean planes, and the Dreamliner 0:13:55.800 --> 0:13:59.079 planes that were supposedly able to do with two engines 0:13:59.160 --> 0:14:02.199 everything that the old jumbos like the seven forties seven 0:14:02.360 --> 0:14:04.920 and the double decker A three eighty could do. And 0:14:05.160 --> 0:14:07.840 the problem is that, um, you know, we've sort of 0:14:07.840 --> 0:14:12.599 retired a lot of those planes, and now demand is 0:14:13.120 --> 0:14:15.200 jumped back and they say like, oh my god, we 0:14:15.240 --> 0:14:17.439 need we need big planes, and we need big planes 0:14:17.480 --> 0:14:20.680 with big first classes. And he say, like, why does 0:14:20.720 --> 0:14:23.360 that matter that much? Well, it matters because the first 0:14:23.360 --> 0:14:26.320 class seat can sell for seven thousand dollars, and that's 0:14:26.440 --> 0:14:30.000 one way that's not around trip, and you make a 0:14:30.040 --> 0:14:31.680 lot of money in the front of the plane. People 0:14:31.680 --> 0:14:33.920 always talk about business class, but you started forget that 0:14:34.000 --> 0:14:36.040 for a lot of long haul careers. That's still the 0:14:36.120 --> 0:14:39.000 first class business, and they've been surprised at how fast 0:14:39.360 --> 0:14:41.600 that business has come back, so they want to get 0:14:41.640 --> 0:14:43.680 all these planes that have a lot of first class 0:14:43.680 --> 0:14:46.240 seats back up in the air. What's really surprising to 0:14:46.280 --> 0:14:49.040 me is that it's not necessarily a short term thing. 0:14:49.120 --> 0:14:51.600 I mean, you guys write the Thai Airways, which in 0:14:52.480 --> 0:14:54.840 that it planned to phase out those double decker Airbus 0:14:54.880 --> 0:14:58.360 A three eighties. They're pulling a return of the A 0:14:58.480 --> 0:15:01.640 three eighty, but not until only four Well, part of 0:15:01.640 --> 0:15:05.400 it is that a lot of people parked their large airplanes. 0:15:05.400 --> 0:15:06.920 They thought they were going to retire them, so they 0:15:06.920 --> 0:15:10.840 parked about in the desert someplace. They've know a lot 0:15:10.920 --> 0:15:13.160 of them just have not kept up with the planes, 0:15:13.200 --> 0:15:15.520 and so it takes months for these things to come back, 0:15:15.640 --> 0:15:17.480 and if you really haven't taken care of it, it 0:15:17.520 --> 0:15:19.160 could take you a year because often have to be 0:15:19.200 --> 0:15:22.560 refurbished and they're putting in new interiors. A lot of 0:15:22.560 --> 0:15:25.400 these planes have not been well kept from the pandemic. Alright, 0:15:25.440 --> 0:15:29.320 plane skipping trains, automobiles, the used car market man that 0:15:29.400 --> 0:15:32.280 was on fire during the pandemic and right after and 0:15:32.320 --> 0:15:34.920 now it feels like not so much. Yeah, I mean, 0:15:35.040 --> 0:15:39.480 used cars were a real sort of boom time during 0:15:39.520 --> 0:15:42.600 the pandemic. What happened was that because the new car 0:15:42.720 --> 0:15:46.960 business UM was really constrained because of chips, because of 0:15:47.000 --> 0:15:50.760 the shutdowns and auto plants and different parts of the world, 0:15:51.160 --> 0:15:54.080 UM prices went up on new cars because there was 0:15:54.160 --> 0:15:57.160 no you know, there was no supply. And what that 0:15:57.160 --> 0:15:59.520 meant was a lot of people couldn't afford new cars 0:15:59.520 --> 0:16:01.360 and so they said, okay, I'll buy something on the 0:16:01.440 --> 0:16:05.240 US line, and that sent used core prices soaring. The 0:16:05.440 --> 0:16:08.280 problem for the used car business now is that in 0:16:08.360 --> 0:16:12.400 the last you know, six months, you know, new cars 0:16:12.400 --> 0:16:14.640 have come back. You can get them on the lots again. 0:16:14.680 --> 0:16:16.720 You don't have these long waiting periods, and so the 0:16:16.760 --> 0:16:20.360 prices of youth have dropped. And what that means is 0:16:20.400 --> 0:16:23.880 for people like CarMax and for car Vanna, people's business 0:16:24.000 --> 0:16:26.960 is heavily skewed toward that. You know, they suddenly are 0:16:27.000 --> 0:16:29.520 you know, they don't have the demand, but also the 0:16:29.600 --> 0:16:32.120 values of the cars that they have have in stock 0:16:32.280 --> 0:16:35.840 are dropping. It's such a one eight. It's a great story. 0:16:35.920 --> 0:16:38.520 There's more in the magazine and also online. There's also 0:16:38.560 --> 0:16:40.840 another story about Hollywood hoping for a return to the 0:16:40.880 --> 0:16:43.720 old normal, so we highly recommend you check it out 0:16:43.760 --> 0:16:46.000 in the new Year Ahead issue. Jim Ellis, thank you 0:16:46.120 --> 0:16:49.080 so much, Assistant Managing editor of Bloomberg Business Week. Here 0:16:49.080 --> 0:16:52.840 in our interactive broker studio, you're listening and watching Bloomberg 0:16:52.840 --> 0:16:55.440 Business Week. That new issue out on newsstands, online at 0:16:55.440 --> 0:16:58.920 Bloomberg dot com and always on the Bloomberg terminal. This 0:16:59.000 --> 0:17:06.119 is Bloomberg Radio. You're listening to Bloomberg Business Week with 0:17:06.240 --> 0:17:10.120 Carol mess Here and Tim Stenovic on Bloomberg Radio. Well, 0:17:10.160 --> 0:17:11.720 we keep hearing from many of our guests about how 0:17:11.760 --> 0:17:13.760 investors need to keep an eye on the bond market 0:17:13.800 --> 0:17:18.000 for where the economy, US economy and Fed policy are going. 0:17:18.359 --> 0:17:20.600 Bond market trading often like the Fed is getting ready 0:17:20.640 --> 0:17:23.439 to stop raising rates and possibly even dear we say pivot, 0:17:23.480 --> 0:17:27.679 meaning cut rates. But monitoring and writing about it all NonStop. 0:17:27.960 --> 0:17:29.880 Is our next guest. She's a member of the family. Yeah, 0:17:29.960 --> 0:17:33.520 Bloomberg News Chief correspondent for Global macro Markets, Liz McCormick 0:17:33.640 --> 0:17:36.000 is back with us. She's Her story today is among 0:17:36.040 --> 0:17:38.240 the most rot on the Bloomberg terminal, it taps into 0:17:38.280 --> 0:17:41.760 the dreaded FED dot plot and why it's confusing markets. 0:17:41.880 --> 0:17:45.200 Liz joins us via zoom from New York City. Liz 0:17:45.400 --> 0:17:48.240 always good to chat with you, especially when it comes 0:17:48.280 --> 0:17:51.679 to everything you know related to dot plots and what 0:17:51.720 --> 0:17:53.960 the Fed is going to do with rates. But what's 0:17:53.960 --> 0:17:55.960 the mixed message here or is there not even a 0:17:56.000 --> 0:17:59.040 mixed message? And traders are just kind of like grappling 0:17:59.040 --> 0:18:03.000 onto whatever positive news they can. Well, I guess it's 0:18:03.040 --> 0:18:06.240 like they're grappling onto some of the bad news right 0:18:06.280 --> 0:18:08.560 that the economy is slowing down. The good news, I 0:18:08.560 --> 0:18:11.560 guess as they think inflation is peaked. But but yeah, 0:18:11.640 --> 0:18:14.480 it's like the FED keeps saying, you know, Craig and 0:18:14.520 --> 0:18:16.879 I wrote that story. We're saying, it's like a total 0:18:16.920 --> 0:18:19.280 full court Fed press, like we are not going to 0:18:19.440 --> 0:18:22.560 cut rates. We have more work to do. Look at 0:18:22.600 --> 0:18:25.560 our dot plot, which is they're kind of projections for 0:18:25.720 --> 0:18:29.320 rates that show no cuts this year, and the market 0:18:29.400 --> 0:18:32.240 just saying, okay, whatever, we're we're doing what we think. 0:18:32.359 --> 0:18:35.080 And you know, I mean literally last week in the 0:18:35.119 --> 0:18:41.200 minutes they said we're not going to cut rates totally. 0:18:41.480 --> 0:18:43.440 That's what I'm saying it is like a clear full 0:18:43.480 --> 0:18:45.639 court press. But I think you know, that's why I 0:18:45.680 --> 0:18:47.880 mean all joking aside. Craig and I've been around maybe 0:18:47.880 --> 0:18:50.600 too long, but we thought, you know, we remember I said. 0:18:50.640 --> 0:18:53.640 Part of the problem is that the FED officials themselves 0:18:53.680 --> 0:18:56.639 in the past have said, I kind of don't focus 0:18:56.680 --> 0:18:59.840 too much on the dots. It's just our forecast. It's 0:18:59.880 --> 0:19:03.560 not a projection for sure policy. And now they keep 0:19:03.640 --> 0:19:06.040 you know, of course they're saying things too, but they're 0:19:06.040 --> 0:19:08.639 they're also pointing to like our dot plot is a 0:19:08.680 --> 0:19:12.040 good projection of where we're going. Um, So I think 0:19:12.080 --> 0:19:14.680 markets are kind of jaded, like number one, we've heard 0:19:14.680 --> 0:19:18.040 you downplay these before, and number two like all economists. 0:19:18.080 --> 0:19:20.640 But the FED has kind of been really wrong footed 0:19:20.680 --> 0:19:22.879 in some of these, not just the projections on the 0:19:22.920 --> 0:19:25.960 dot plants, some of their economic forecast where they saw inflation, 0:19:26.000 --> 0:19:29.160 of course didn't pan out. So I think these investors, 0:19:29.200 --> 0:19:31.960 these traders are a little bit like you know, I've 0:19:32.000 --> 0:19:34.399 heard this before. I'm seeing signs that we have a 0:19:34.440 --> 0:19:38.280 slowdown coming, I think, and maybe they're wrong to think 0:19:38.280 --> 0:19:40.520 that the FED ultimately is going to have to cater 0:19:40.640 --> 0:19:43.600 to the economy, which is like history. But as you 0:19:43.640 --> 0:19:46.919 guys have talked before, if inflation stays too sticky, the 0:19:46.960 --> 0:19:49.160 FED has no choice. They will have to stay high. 0:19:49.160 --> 0:19:51.320 So it's gonna be interesting to see, like we talk 0:19:51.400 --> 0:19:54.960 in a six months time, what what's really panned out? Right? 0:19:55.119 --> 0:19:58.040 I feel like Lizzie, like you hit it. There's such 0:19:58.119 --> 0:20:00.760 diversion between what we're hearing from the ED saying they're 0:20:00.800 --> 0:20:03.440 going to do, no doubt about the message, and then 0:20:03.440 --> 0:20:06.240 what you see plays ob certainly in the bond market 0:20:06.280 --> 0:20:08.600 they think, you know, the FED is gonna you know, 0:20:08.640 --> 0:20:10.720 and I don't know what how much of it is? 0:20:10.760 --> 0:20:13.359 Like you said, hey, Fed, you've gotten a lot wrong. 0:20:15.000 --> 0:20:17.720 We're the bond market. We're figuring this out and it 0:20:17.760 --> 0:20:20.720 will be interesting. How much do you think tomorrow's CPI 0:20:20.840 --> 0:20:24.639 report could help the bond you know, could could change 0:20:24.680 --> 0:20:27.480 that or be reflected in the bond market about whether 0:20:27.560 --> 0:20:29.199 or not there there's more of a buy into the 0:20:29.200 --> 0:20:32.879 FED and what it's saying and the dot plot. Well, 0:20:33.359 --> 0:20:34.760 at first, I want to make a joke. I heard 0:20:34.800 --> 0:20:37.320 Doug saying it's the day before cp I. I I was 0:20:37.320 --> 0:20:41.119 waiting for like the day day before Christmas exactly. That 0:20:41.119 --> 0:20:44.200 would be more fun. But no, I think I think Carol, 0:20:44.280 --> 0:20:47.560 you're right, cp I, you know, could change this kind 0:20:47.560 --> 0:20:49.560 of I call it the schism between the two. If 0:20:49.600 --> 0:20:51.760 cp I, first of all, if it's it proves a 0:20:51.800 --> 0:20:55.440 surprising strong number, I think the market is going to think, 0:20:55.440 --> 0:20:57.520 oh yeah, maybe the Fed is going to have to 0:20:57.560 --> 0:21:00.280 do what they're saying. So you might see yields pick up. 0:21:00.320 --> 0:21:03.520 Maybe we'll see some of that pricing and the derivative market, 0:21:03.840 --> 0:21:06.399 you know, be reduced saying they'll price out the cuts, 0:21:06.440 --> 0:21:09.239 but may they may trim down how much um And 0:21:09.320 --> 0:21:12.720 if it's an uber soft number, then maybe the bond 0:21:12.720 --> 0:21:15.359 market just doubles down. You know. The Fed officials seem 0:21:15.440 --> 0:21:18.040