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Markets, REITs, And Flying Private · Bloomberg Intelligence

0:00
Speaker 1: Welcome to the Bloomberg Markets Podcast. I'm Paul Sweeney alongside
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Speaker 1: my co host Matt Miller. Every business day we bring
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Speaker 1: you interviews from CEOs, market pros, and Bloomberg experts, along
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Speaker 1: with essential market moving news. Find the Bloomberg Markets podcast
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Speaker 1: called Apple Podcasts or wherever you listen to podcasts, and
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Speaker 1: at Bloomberg dot com slash podcast. All right, let's check
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Speaker 1: in with Adam Kunsi's a portfolio manager at Winthrop Capital Management.
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Speaker 1: Adam tough start to the week here, what do you
0:29
Speaker 1: just make it today's trading? They thanks for having me. Yeah,
0:32
Speaker 1: I mean, I think volatility is going to be the
0:35
Speaker 1: theme for the first quarter. This seems a little bit
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Speaker 1: like deja bou of the first quarter of last year,
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Speaker 1: where we saw interest rates start to pick up and
0:44
Speaker 1: you know, obviously meaningly meaningfully kicking up this year. At
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Speaker 1: the same time that's kind of pushing technology to roll over,
0:52
Speaker 1: and right now we're dealing with the fact that that
0:55
Speaker 1: the consumer is starting to weekend as well, just an
1:00
Speaker 1: and their behavior and the mentality on what they're doing,
1:02
Speaker 1: what they're spending money on. So altility is going to
1:05
Speaker 1: be here for the foreseeable future. So what kind of
1:09
Speaker 1: rate increases they're expecting, what kind of curve flattening you're expecting,
1:12
Speaker 1: and what what does that due to risk assets? Yeah,
1:16
Speaker 1: so I mean the curse flatten considerably h eighty basis
1:19
Speaker 1: points just over the last three months or so. So
1:22
Speaker 1: the bond market is absolutely telling you that that there's
1:26
Speaker 1: something going on here um and and to just blame
1:30
Speaker 1: it on COVID and COVID variants I think is incorrect
1:34
Speaker 1: way to look at. And if you looked at retail
1:36
Speaker 1: sales after the delta Barrea came out, actually jumped, but
1:41
Speaker 1: if you look at the reading here in December, saw
1:45
Speaker 1: the retail still has actually rolled over. And then you
1:47
Speaker 1: look at savings rates are now back to pre COVID levels,
1:52
Speaker 1: and then just most recently consumer sentiment was back at
1:55
Speaker 1: its lows. So all of those factors are going to
1:59
Speaker 1: lead to a slowing economy, which you're seeing in the
2:03
Speaker 1: flattening of the OL curve. And we think that's going
2:04
Speaker 1: to continue to get worse because the Feds likely not
2:08
Speaker 1: going to take their foot off of the accelerator of
2:11
Speaker 1: of tightening their policy. They seem pretty ole bent on
2:15
Speaker 1: on tightening and raising rates. So likely we see them
2:20
Speaker 1: invert the curve, and so just you know, from that standpoint,
2:24
Speaker 1: it's just a matter of time when we see some
2:26
Speaker 1: sort of recession at the market. All right, So given
2:28
Speaker 1: that backdrop, Adam, kind of where are you thinking about,
2:32
Speaker 1: you know, allocating capital? Uh? Yeah, So, I mean, if
2:37
Speaker 1: you think rates are gonna go up, you would think
2:40
Speaker 1: fixed incomes not the place to be. But we particularly
2:43
Speaker 1: like the long end of the curve. Credit spreads have
2:46
Speaker 1: widened a little bit of the last couple of weeks.
2:50
Speaker 1: So looking at your high quality thirty year bonds, I
2:53
Speaker 1: think is a good place to be. You get some
2:56
Speaker 1: yield pick up and there is potential for spread tightening.
2:59
Speaker 1: But really the theme is moving up in quality, whether
3:03
Speaker 1: you're in fixed income like I just mentioned, or even
3:05
Speaker 1: in stocks. And really when we talk about high quality stocks,
3:10
Speaker 1: it's it's a lot of the names that that we've
3:14
Speaker 1: been in and that have worked over the last couple
3:16
Speaker 1: of years. It's kind of question of, you know, do
3:18
Speaker 1: you leave with the way you came to the dance
3:20
Speaker 1: with and I think we do. Um And when you
3:23
Speaker 1: look at companies like Apple and Microsoft's obviously in the
3:26
Speaker 1: news today and Alphabet, they have business models that can
3:31
Speaker 1: be sustainable through uh economic swings like we saw through
3:36
Speaker 1: through COVID. We've seen it time and time again that
3:39
Speaker 1: as as those companies sell off because investors think either
3:43
Speaker 1: rates are going up and valuations are gonna come back down,
3:47
Speaker 1: they sell, but then they come right back into them
3:49
Speaker 1: because at the end of the day, they're cash flow
3:51
Speaker 1: machines that that effectively have turned themselves into the most
3:55
Speaker 1: defensive stocks in the SMP five. So we think that's
3:58
Speaker 1: going to continue to work, all right, Adam, thanks so
4:00
Speaker 1: much for joining us. Always appreciate getting your perspective. Adam
4:04
Speaker 1: Coon's portfolio manager for Winthrop Capital Management. I note here
4:08
Speaker 1: he is a graduate of Indiana University. A Hoosier. Rough
4:16
Speaker 1: start to the trading week here, inflation, rising interest rates,
4:21
Speaker 1: concerns about the FEDS aggressiveness, all factoring into some unsteady
4:27
Speaker 1: trading show. We say, let's bring in a professional does
4:29
Speaker 1: this stuff for living? Liz Young, head of investment strategy
4:32
Speaker 1: for so Far. So, Liz, when you see a day
4:34
Speaker 1: like today, I'm assuming it gets your attention. Anything more
4:38
Speaker 1: than that, well, of course it gets our attention, it
4:42
Speaker 1: gets everybody's attention, I'm sure, But when you see a
4:46
Speaker 1: day like today and even a month like we're having
4:48
Speaker 1: in January, I think it's to be expected given the
4:52
Speaker 1: environment that we're entering. And this is an environment that
4:55
Speaker 1: is new to a lot of us, and it's something
4:57
Speaker 1: that I think still has a lot of uncertainty around it,
5:00
Speaker 1: around the paths of rate hikes, the speed of quantitative tightening,
5:05
Speaker 1: and the market is trying to understand what can still
5:09
Speaker 1: win in this space. And the tina I hate to
5:12
Speaker 1: use that acronym. I think it's very overused, but that
5:15
Speaker 1: tina mentality still very much at play because stocks offer
5:19
Speaker 1: the best reward opportunity. It's still better than fomo, UM
5:24
Speaker 1: and yolo definitely better than you. That's true. That's true. UM.
5:28
Speaker 1: So I wonder when you're when you're looking at UM,
5:33
Speaker 1: a way to hedge against inflation? Is our stocks? The
5:36
Speaker 1: best way? Do you think? I mean depends obviously on
5:38
Speaker 1: what you buy, but UM, is there anything else that's better?
5:43
Speaker 1: I think stocks are the best bet right now because
5:46
Speaker 1: we're in a place where the set is trying to
5:48
Speaker 1: control inflation. Right so, if you're looking at let's say
5:52
Speaker 1: six months out, the set is trying to control inflation
5:55
Speaker 1: on input costs and food and energy, so commodities are
6:01
Speaker 1: going to see a volatile period. Uh as the said
6:04
Speaker 1: tries to put a lid on a lot of that
6:06
Speaker 1: price pressure that's moving upward. So when you look at stocks,
6:09
Speaker 1: you have to choose your spots. But stocks can still
6:12
Speaker 1: do pretty well in an inflationary environment. I think there's
6:15
Speaker 1: been this belief that the stock market has to fall
6:18
Speaker 1: if there's inflation, and that inflation is all bad, and
6:21
Speaker 1: that's not true. It's just that certain pockets of the
6:24
Speaker 1: stock market are not going to do as well as
6:26
Speaker 1: they did in a low inflationary environment. And that namely
6:30
Speaker 1: is tech or even just the NASDAC broadly given all
6:33
Speaker 1: of its tech exposure. And you look at things like
6:36
Speaker 1: the broader SMP or the TAO, or even small caps,
6:39
Speaker 1: even though I know that the growthy part of small
6:41
Speaker 1: caps are really getting hurt this year already. Uh, there
6:44
Speaker 1: are pockets of the stock market that can do really well.
6:46
Speaker 1: And I would point out look at the spread between
6:49
Speaker 1: small cap growth and small cap value. Small cap value
6:53
Speaker 1: coming into today was actually positive year to date, small
6:56
Speaker 1: capt growth down almost eight percent. So it matters is
7:00
Speaker 1: the style that you're in. It matters the sector allocations
7:03
Speaker 1: that you have in an inflationary environment. Liz, we've seen
7:06
Speaker 1: a big move up in oil prices and the in
7:09
Speaker 1: the energy space here again, oil w t A crewed
7:12
Speaker 1: up another one point three percent today, that just under
7:14
Speaker 1: eighty five dollars a barrel, continuing its climb. How do
7:17
Speaker 1: you think about energy stocks here? Is there more room
7:20
Speaker 1: to grow? Yeah? I do think there's more room to
7:24
Speaker 1: go in energy, not only in oil prices but in
7:27
Speaker 1: energy stocks. Uh. And I don't think it's necessarily a
7:29
Speaker 1: long term play, but I think in the short term
7:31
Speaker 1: here a tactical opportunity and energy, especially as in the
7:35
Speaker 1: next few months we exit the winter months, and as
7:38
Speaker 1: you see, every time we have a new variant, we
7:41
Speaker 1: don't lock down nearly as hard right across the globe,
7:44
Speaker 1: so travel has really continued through oh Macron, and I
7:48
Speaker 1: think any new bouts of a new variant that we
7:51
Speaker 1: may have, travel will continue through that as well. And
7:54
Speaker 1: that's just going to drive more demand for energy. And
7:57
Speaker 1: if we get to a point where we are finally
7:59
Speaker 1: real opening and out of this stop start cycle, there's
8:03
Speaker 1: going to be still quite a bit of demand for energy.
8:05
Speaker 1: And then just think about the second derivative aspects of it.
8:08
Speaker 1: How many people have bought cars over the last year,
8:11
Speaker 1: how many people are dying to drive those cars to
8:15
Speaker 1: further destinations and and dying to get on airplanes and
8:18
Speaker 1: go to further places. So I think there's room for
8:20
Speaker 1: energy here. I would only caution investors that you don't
8:24
Speaker 1: want to see a ton of run up and energy
8:27
Speaker 1: to a point where it gets frosty or hits a spike,
8:30
Speaker 1: because when you get a spike in energy prices, very
8:33
Speaker 1: frequently a huge spike and energy is something that comes
8:37
Speaker 1: before a down draft in the economy. So we want
8:40
Speaker 1: to keep energy prices in control UM and I like
8:43
Speaker 1: to say things like I want them to take the stairs,
8:45
Speaker 1: not the elevator up by the way, another acronym that
8:48
Speaker 1: I hate as USP. But what is the unique selling
8:51
Speaker 1: point or what makes so Far different UM from other
8:56
Speaker 1: investment businesses. Well, so Far is an all in one
9:01
Speaker 1: app so it's not just an investment business. We have
9:04
Speaker 1: ways that people can save, we have ways that people
9:06
Speaker 1: can spend. We have a credit card, and then we
9:08
Speaker 1: have the invest platform that really offers our members a
9:12
Speaker 1: great way to invest and get started if they're new investors.
9:16
Speaker 1: It offers them a lot of different opportunities. You can
9:19
Speaker 1: buy I P O s on our platform, you can
9:20
Speaker 1: buy fractional shares on our platform, so there's a lot
9:23
Speaker 1: of great options. Crypto. You can buy a lot of
9:26
Speaker 1: crypto on our platform. But what what what's different about
9:29
Speaker 1: so far from say a robin Hood or a T
9:33
Speaker 1: dum merit trade or any of these other platforms that
9:37
Speaker 1: I guess younger investors are using to invest. Yeah, what's
9:41
Speaker 1: different about it is that we offer all of the
9:43
Speaker 1: solutions in one place. So a lot of the ones
9:46
Speaker 1: that are out there offering just an investing platform and
9:48
Speaker 1: you still have to do your banking somewhere else, in
9:50
Speaker 1: your credit card somewhere else, and you're lending somewhere else,
9:53
Speaker 1: and you can do every single one of them on ours, alright.
9:56
Speaker 1: I mean, we hear so much about it, and yes,
9:58
Speaker 1: it's gotten so popular that I just wanted to that's interesting.
10:01
Speaker 1: So you can do everything you don't need still a
10:04
Speaker 1: traditional bank account, you don't need to apply for a
10:06
Speaker 1: credit card elsewhere, and you can I guess use those
10:10
Speaker 1: uh services with each other, which probably it's got a
10:14
Speaker 1: market cap about ten billion dollars. Although the stock is
10:16
Speaker 1: off about prior twelve months after going public. I guess
10:21
Speaker 1: in October. All right, Liz, great to get a chance
10:23
Speaker 1: to talk to you. Let's talk about the office real
10:30
Speaker 1: estate space. Are people are gonna be coming back to
10:33
Speaker 1: the office. Do we need the companies and corporations need
10:36
Speaker 1: the space the footprint they had before the pandemic. I'm
10:39
Speaker 1: looking around here and I'm thinking the answer is noble
10:42
Speaker 1: or do they need more? Uh? Yeah, made for We're
10:46
Speaker 1: all sitting at these cubicles like little rat race rodents.
10:52
Speaker 1: You know, he's got four square feet like I would
10:56
Speaker 1: like some room to stretch out. My dad, by the way,
10:58
Speaker 1: had an office. I had at the door on it
11:01
Speaker 1: and you would go in there and he was the
11:03
Speaker 1: only person in there. You could close the door and
11:05
Speaker 1: have complete privacy. I had a table, a sofa like
11:08
Speaker 1: a little managing director at Credit Swiss First Boston. Those
11:13
Speaker 1: were the days, no Moss. Jeffrey Langbaum, Senior reat c
11:17
Speaker 1: R E equity analysts for Bloomberg Intelligence, joins us. Jeff.
11:20
Speaker 1: I keep seeing in the news companies in New York
11:23
Speaker 1: City and other urban areas continue the least space. Who's
11:26
Speaker 1: going to fill the space? I think the answer is
11:30
Speaker 1: somewhere in between what both of you are saying. Um,
11:33
Speaker 1: but people may not be back five days a week
11:37
Speaker 1: like we were before. UM, but companies are setting themselves
11:41
Speaker 1: up for a situation where people will be back some
11:45
Speaker 1: amount of time and they need space for that UM.
11:48
Speaker 1: And for each individual person, they might actually need more
11:52
Speaker 1: space than they needed previously. UM. What that means for
11:56
Speaker 1: the overall size of the footprint still remains to be seen.
11:59
Speaker 1: But the leases that we've that we're seeing getting done
12:02
Speaker 1: in many cases are actually for more space than what
12:05
Speaker 1: they had previously. So in terms of the return to work,
12:09
Speaker 1: we've had a couple of false starts here right especially
12:11
Speaker 1: on Wall Street, and everything seems to have gotten pushed back.
12:16
Speaker 1: You know, if you're a cool Stilicon Valley company, then forever. Um.
12:22
Speaker 1: If you're a conservative Wall Street bank, then like February
12:26
Speaker 1: fully boosted. Please, when are we going to see things
12:29
Speaker 1: get back to normal? Well, we'll see about that forever.
12:33
Speaker 1: I'm still skeptical about that. I think that most people
12:35
Speaker 1: are going to need to be in an office UM
12:38
Speaker 1: a portion of the time, whatever that may be, And
12:41
Speaker 1: I think the reason is that the companies want them
12:43
Speaker 1: there the people making these leasing decisions want their employees
12:49
Speaker 1: in person at least part of the time. UM and
12:51
Speaker 1: that's why leases are getting signed as far as when
12:54
Speaker 1: I mean, obviously, you know, every time there's going to
12:56
Speaker 1: be another spike of the virus is something that remains
12:59
Speaker 1: some amount of the normality going forward. You know, there's
13:03
Speaker 1: gonna be pauses and fits and starts. But I think
13:05
Speaker 1: at some point employers are going to want their employees back,
13:09
Speaker 1: and they're setting themselves up for when that's going to
13:11
Speaker 1: be um and and you know, we'll see how long
13:15
Speaker 1: it takes for it to get uh, you know, fully immersed. Jeff,
13:19
Speaker 1: how do you think about just across the country. You know,
13:21
Speaker 1: we we had this migration of people from urban centers
13:25
Speaker 1: fleeing to whether it's Florida or Texas or wherever Idaho falls.
13:30
Speaker 1: I mean, is that a long lasting thing? Are you
13:33
Speaker 1: seeing that in the vacancies and the rents or or
13:36
Speaker 1: do you still see a future for the urban centers.
13:39
Speaker 1: I still see the future for the urban center. I
13:41
Speaker 1: think that's where the the majority of the companies want
13:44
Speaker 1: to at least have their core, you know, central locations.
13:49
Speaker 1: You know, that's where the talent is that's where the
13:51
Speaker 1: young people want to be. I think for the most part,
13:54
Speaker 1: you're obviously seeing some corporate relocations. You're seeing some satellite
13:57
Speaker 1: offices opened, you know, throughout the South and you know,
14:00
Speaker 1: the South Florida the new hotbed. But but you're not
14:03
Speaker 1: seeing too many companies relocate in full force down there.
14:07
Speaker 1: And I don't think that that happens. Um. I think
14:09
Speaker 1: that you continue to have demand for places like New
14:13
Speaker 1: York and San Francisco, even if on the margin there
14:15
Speaker 1: are people migrating away from those cities. It's a bummer, dude.
14:20
Speaker 1: I was hoping you were going to say, look, obviously
14:22
Speaker 1: we're gonna keep New York, Chicago, Los Angeles, but let's
14:27
Speaker 1: spread out a little bit, like we are in the office,
14:29
Speaker 1: you know, Let's some of us go to Austin. Let's
14:32
Speaker 1: some of us go to like Taos. You know that. Uh,
14:35
Speaker 1: you know, I think I think some people are right,
14:38
Speaker 1: But it's not companies wholesale leaving for those locations. Yeah. No,
14:42
Speaker 1: that's what I thought. It would be cool. I mean,
14:45
Speaker 1: it would be cool if big companies, huge corporations would
14:49
Speaker 1: say we're leaving San Francisco, you know, and we're going
14:52
Speaker 1: to Myrtle Beach or whatever. Like. You know, we can
14:55
Speaker 1: communicate with everybody in the world easily and electronically. We
14:59
Speaker 1: don't need to be down the street. So but that's
15:02
Speaker 1: just one of my pipe dreams. I want population centers
15:06
Speaker 1: just to spread out. I think we're too dense really.
15:10
Speaker 1: All right, well, Jeff's first, how about in New York City,
15:13
Speaker 1: what's just give us delay of the land in commercial
15:15
Speaker 1: real estate in New York City, Well, office leasing in
15:19
Speaker 1: the fourth quarter was the highest that has been since
15:22
Speaker 1: the fourth quarter of two thousand nineteen. Has been a
15:25
Speaker 1: steady uptick. Now we're still below pre pandemic levels, right,
15:29
Speaker 1: the amount of LEAs is being signed is still below
15:31
Speaker 1: pre pandemic levels, and vacancy is elevated. Um rents are
15:35
Speaker 1: falling because the vacancy is elevated. But what is really happening,
15:40
Speaker 1: I think, is the a migration of tenants to higher
15:44
Speaker 1: quality buildings. There's going to be a bifurcation the newer
15:49
Speaker 1: and more recently renovated buildings with the highest amenities in
15:52
Speaker 1: the best locations. Those are going to be the ones
15:54
Speaker 1: that attract pennants and keep occupancy high and rent high,
15:57
Speaker 1: and those that are on the opposite end of the spectrum,
15:59
Speaker 1: are really going to suffer and potentially you know, become
16:03
Speaker 1: obsolete as office buildings and need to find some other
16:05
Speaker 1: other use. And so I think that that will naturally,
16:08
Speaker 1: over time reduce the amount of space um uh, you know,
16:12
Speaker 1: overall available space, and get us back more towards a
16:15
Speaker 1: period uh a position of equilibrium. All right, Jeff, thanks
16:19
Speaker 1: so much for joining us. Always appreciating your thoughts on
16:22
Speaker 1: the real estate space. Jeff Langbaum, He's a senior read
16:25
Speaker 1: analyst for Bloomberg Intelligence. He's been doing this for decades,
16:29
Speaker 1: but he used to do it from the office. Yeah,
16:31
Speaker 1: and I working from home today. And we'll see how
16:34
Speaker 1: long that lasts here at Bloomberg LP. I get a
16:37
Speaker 1: sense that we'll be coming back to the office at
16:39
Speaker 1: some point and not too distant future. We'll see how
16:41
Speaker 1: that plays out. Every corporation seems to be uh kind
16:44
Speaker 1: of dealing with that as well. So many industries have
16:51
Speaker 1: been disrupted by this pandemic, by the economic disruption. One
16:55
Speaker 1: of them is just broadly defined transportation, but particularly aviation,
16:59
Speaker 1: and who wants to hop in an aircraft with two
17:02
Speaker 1: yr you know, potentially infected people that's been a real
17:05
Speaker 1: issue for the industry, and one of the results is
17:08
Speaker 1: private aircraft travel has actually picked up during the pandemic.
17:12
Speaker 1: We want to get some more color on that. Tal Kanan,
17:16
Speaker 1: CEO of sky Harbor Group, joins us Talent, thanks so
17:18
Speaker 1: much for taking that time here. Just briefly, let's start
17:21
Speaker 1: off at just saying what is sky Harbor. What do
17:24
Speaker 1: you guys do within the aviation space? Well, thanks for
17:27
Speaker 1: having me conceptual Our business very simple. We we secure
17:31
Speaker 1: land at airports across the United States. These are mainly
17:34
Speaker 1: airports and supports business aviation. We developed campuses of hangars
17:38
Speaker 1: for business aviation and then least them out long term
17:41
Speaker 1: to corporate or individual tenants and manage them. That's good business.
17:47
Speaker 1: And how did you I mean, you come from impressive
17:52
Speaker 1: education and you are a fighter pilot yourself. Um, what's
17:56
Speaker 1: your idea for this business that differentiates it from other
18:00
Speaker 1: businesses in the space. Yeah, so a couple of things. First,
18:04
Speaker 1: I think it's it's a non controversial statement. There is
18:06
Speaker 1: massive unmet demand for hangar space in business aviation across
18:10
Speaker 1: the United States. And you know, just to kind of
18:13
Speaker 1: give you a sense, put some numbers on it. Uh,
18:16
Speaker 1: the square footage of the US business aviation fleet grew
18:20
Speaker 1: by twenty seven and a half million square feet between
18:23
Speaker 1: two thousand and two thousand and twenty. Now what's happened
18:26
Speaker 1: in the last two years is just a very very
18:29
Speaker 1: dramatic acceleration of that trend. You know, what we have
18:32
Speaker 1: now is a situation where the vast majority you probably close,
18:37
Speaker 1: of those who can afford private air travel in the
18:39
Speaker 1: United States. I'm talking about both corporations and individuals UH
18:44
Speaker 1: close to have not availed themselves of private aviation. And
18:47
Speaker 1: what we're seeing right now, and I think your introduction
18:49
Speaker 1: was very appropriate, appropriate on that we're seeing right now
18:52
Speaker 1: is just a you know, the whole scale migration from
18:56
Speaker 1: commercial aviation into private among those. By the way, why
18:59
Speaker 1: haven't day I mean, is it just not prudent to
19:01
Speaker 1: spend your money that way? Tal It seems like the
19:05
Speaker 1: jump from business class to your own jet is quite
19:09
Speaker 1: a bit. Yeah, I mean, for it is expensive. I
19:13
Speaker 1: think culturally a lot of things, a lot of people,
19:15
Speaker 1: a lot of corporations haven't like that look for a
19:18
Speaker 1: long time, but increasingly that is a responsible thing to do,
19:22
Speaker 1: especially for a business. You know, that involves a lot
19:24
Speaker 1: of travel and sending people on kind of extended road
19:28
Speaker 1: trips today using commercial travel is disruptive. And you know,
19:32
Speaker 1: one of the things you'll see it's it's not just
19:34
Speaker 1: it's not just the risk of contracting COVID nineteen on
19:38
Speaker 1: a commercial flight, it's the airline's reaction to COVID, which
19:43
Speaker 1: has largely been to cancel and diminish a lot of routes.
19:46
Speaker 1: So getting from secondary city to secondary city in the
19:49
Speaker 1: United States today is much more difficult than it was
19:52
Speaker 1: two years ago, and I think that's probably going to
19:54
Speaker 1: be the case for a while. Talent, how do you
19:57
Speaker 1: think business travel is going to return? And we've seen
20:00
Speaker 1: generally leisure travel come back depending upon where we are
20:04
Speaker 1: with with the various variants, but business travels something different.
20:08
Speaker 1: How do you think about it? Well, so a couple
20:11
Speaker 1: of things. First, in much of the country it already
20:14
Speaker 1: has returned. And then some you know, if we look
20:16
Speaker 1: at kind of our facility in Miami, we look at
20:18
Speaker 1: the fuel volumes that fuel consumption by business aviation. We're
20:22
Speaker 1: hitting record years. If you see delivery of new aircraft
20:27
Speaker 1: was a record year. Delivery of new business aircraft two
20:31
Speaker 1: is going to beat it. About twelve, so the market
20:35
Speaker 1: is already speaking on this. You know, the the this,
20:38
Speaker 1: this business aviation fleet in the United States will continue
20:41
Speaker 1: to expand by literally millions of square feet per year,
20:45
Speaker 1: I think for the foreseeable future. And I think one
20:47
Speaker 1: of the things that's worth looking at. Historically, the move
20:51
Speaker 1: from commercial to business aviation has tended to be secular.
20:56
Speaker 1: You know. On once a company decides it's going to
20:58
Speaker 1: start flying privately, it tends to go back to commercial aviation.
21:02
Speaker 1: So we we think you can't go back. I will
21:07
Speaker 1: tell you I a good friend of mine as a CEO,
21:10
Speaker 1: was a CEO of Major Carmaker, and after he retired,
21:13
Speaker 1: his family made him take one trip on a commercial
21:15
Speaker 1: flight and he said, man, I never want to do
21:17
Speaker 1: that again. Awful, awful explorence um and it is bad.
21:21
Speaker 1: You know. They sit you right on top of each other.
21:23
Speaker 1: They don't care about the risk of COVID. They will
21:26
Speaker 1: they they will put you less than a safe social
21:30
Speaker 1: distance apartment in the plane and on the bus. And
21:33
Speaker 1: tell I want to ask about Miami as a choice.
21:35
Speaker 1: I believe you're from Miami, but I know you studied
21:38
Speaker 1: at Georgetown and then in the Northeast You've advised government
21:44
Speaker 1: task forces in Israel where you served in the military,
21:49
Speaker 1: so you've been around. Why go back to your roots.
21:52
Speaker 1: Why choose Miami as a place to headquarter your company? Well,
21:56
Speaker 1: so it's it's it's only one of our facilities right now. Yeah,
22:00
Speaker 1: we've been six facilities today. The company is actually headquartered
22:02
Speaker 1: in New York. I will say it is one of
22:05
Speaker 1: my favorites. And then you know, the just business growth
22:07
Speaker 1: of business aviation growth in South Florida has really been
22:10
Speaker 1: off the charts, even compared to what we're seeing around
22:12
Speaker 1: the country. Yeah, I wanted to ask you know what
22:16
Speaker 1: you thought of the city. We've been talking a lot
22:17
Speaker 1: about divertification away from New York, but I guess you,
22:21
Speaker 1: I guess what your experience proves is you still have
22:24
Speaker 1: to be in New York. It's still an incredibly important hub. Yeah,
22:29
Speaker 1: you know, I think, certainly from a business aviation perspective,
22:32
Speaker 1: you could cut New York in half and it would
22:34
Speaker 1: still be you know, it still become a top five
22:36
Speaker 1: market in the country for US. And I don't think
22:38
Speaker 1: it's good to tell. You know, Matt's out there in
22:41
Speaker 1: the car market trying to buy a car and his
22:43
Speaker 1: supply chains at killing them. You can't find anything wait list.
22:46
Speaker 1: If I want to go out there and get an aircraft,
22:49
Speaker 1: a private jet, can I get one? Am I going
22:51
Speaker 1: to pay through the nose? Can I get in discounts?
22:53
Speaker 1: What's the market like? Yeah, the short answer is you cannot.
22:56
Speaker 1: You're absolutely right. It's a very relevant question. Uh. If
23:01
Speaker 1: you look at the various websites you know where aircraft
23:03
Speaker 1: are traded, you know, they went from a year ago
23:06
Speaker 1: advertising aircraft and now kind of aircraft wanted to see
23:09
Speaker 1: a you know, like wanted um. So yes, There's been
23:14
Speaker 1: also a lot of move movement in the secondary market
23:18
Speaker 1: for used business aircraft, which is pro us right. Europe
23:22
Speaker 1: as a net seller of used business jets to the
23:24
Speaker 1: United States the net fire of business jets right now,
23:27
Speaker 1: and prices have gone up considerably in the secondary market
23:30
Speaker 1: as well. By the way that those supply chain issues
23:33
Speaker 1: are also you know, I think the aircraft oms feel
23:36
Speaker 1: that as well. But because the numbers are much smaller,
23:39
Speaker 1: you know, seven aircraft delivered in is a record years,
23:43
Speaker 1: nothing like the automotive industry, I think the impact of
23:46
Speaker 1: the supply chain issues is a little bit lighter, all right,
23:49
Speaker 1: So it sounds like I should hold onto my United miles.
23:52
Speaker 1: Then uh, Greg Jarrett proposes trade of plane. It's a
23:57
Speaker 1: website that I peruse quite often. But you're not finding
24:00
Speaker 1: a G six fifty there. This is more like um
24:03
Speaker 1: per cup exactly, more like a place for a piper cup.
24:06
Speaker 1: Towns great to have, sorry, even though you'll see the
24:10
Speaker 1: christ that. Yeah, you know the prices are soaring. Um
24:16
Speaker 1: to you to use a bad punch, twel, I'd love
24:18
Speaker 1: to have you back on the program. I think really
24:20
Speaker 1: interesting stuff and um, it's a business. I think we
24:24
Speaker 1: all would like to see grow a little bit. I
24:25
Speaker 1: think we all want a little piece of that little
24:27
Speaker 1: piece of private I would to play and travel. Talking
24:30
Speaker 1: there with Talcane. He's the CEO of Sky Harbor Group.
24:36
Speaker 1: Thanks for listening to the Bloomberg Markets podcast. You can
24:39
Speaker 1: subscribe and listen to interviews with Apple Podcasts or whatever
24:43
Speaker 1: podcast platform you prefer. I'm Matt Miller. I'm on Twitter
24:47
Speaker 1: at Matt Miller V three. Put on false Sweeney I'm
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Speaker 1: on Twitter at pt Sweeney. Before the podcast, you can
24:53
Speaker 1: always catch us worldwide at Bloomberg Radio