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Trump Interview, Tesla Hiring, U.S Bank Earnings · Bloomberg Intelligence

0:02
Speaker 1: Bloomberg Audio Studios, podcasts, radio news.
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Speaker 2: This is Bloomberg Intelligence with Alex Steinhl and Paul Sweeny.
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Speaker 3: The real app performance has been in US corporate high yield.
0:17
Speaker 4: Are the companies lean enough? Have they trimmed all the fats?
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Speaker 3: The semiconductor business is a really cyclical.
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Speaker 2: Business, breaking market headlines and corporate news from across the globe.
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Speaker 4: Do investors like the M and A that we've seen?
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Speaker 3: These are two big time blue chip companies.
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Speaker 4: The window between the peak and cut changing super fast.
0:37
Speaker 2: Bloomberg Intelligence with Alex Steinhl and Paul'sweeny on Bloomberg Radio.
0:43
Speaker 3: On Today's Bloomberg Intelligence Show, we dig inside the big
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Speaker 3: business stories in pacting Wall Street and the global markets.
0:49
Speaker 3: Each and every week we provide in depth research and
0:51
Speaker 3: data on some of the two thousand companies and one
0:53
Speaker 3: hundred and thirty industries our analysts cover worldwide. Today, we'll
0:56
Speaker 3: look at why Tesla is looking to hire nearly eight
0:59
Speaker 3: hundred new employer after its largest round of layoffs. Plus
1:02
Speaker 3: we'll discuss why United Airlines gave disappointing guidance for the
1:06
Speaker 3: third quarter. But first we look at quarterly earnings from
1:08
Speaker 3: the world's largest money manager Blackrock. Blackrock called in fifty
1:12
Speaker 3: one billion dollars of client cash to its long term
1:16
Speaker 3: investment funds in the second quarter. As a result, the
1:18
Speaker 3: firm hit a record of ten point six trillion dollars
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Speaker 3: of assets. For more, we were joined by Neil Sipes,
1:22
Speaker 3: Bloomberg Intelligence financials analyst. We first asked Neil to comment
1:26
Speaker 3: on this week's news.
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Speaker 1: I think obviously over the past eighteen months, banks have
1:30
Speaker 1: been much more in the focus asset managers, maybe a
1:32
Speaker 1: little bit of a sleepier name, so to speak. But
1:35
Speaker 1: like you said, Blackrock eclipsing ten and a half trillion.
1:38
Speaker 1: Of course, a lot of that is due to markets.
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Speaker 1: We're up, you know, fifteen twenty percent year to date,
1:43
Speaker 1: but Blackrock sort of that perennial grower in the industry.
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Speaker 1: Organic growth, those flows from institutional retail clients have been
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Speaker 1: harder to come by. Blackrock, having that breadth and diversity
1:54
Speaker 1: of the platform, has really been able to deliver growth
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Speaker 1: through varying market cycles. We think that's one of their
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Speaker 1: strengths and why they're the leader in the space in
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Speaker 1: terms of size. In terms of the second quarter organic
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Speaker 1: growth a little bit lighter than expected. Part of that
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Speaker 1: due to the fact that we saw some larger institutional
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Speaker 1: clients sort of rebalancing portfolios. That's just sort of natural
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Speaker 1: in the business, especially when you're at all time highs. Nonetheless,
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Speaker 1: margin really improved again, that's on the heels of stronger markets.
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Speaker 1: Most of the revenue here is asset based fees, so
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Speaker 1: as markets move higher, the top line expands as well.
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Speaker 1: And so really, you know, you highlighted the last thing.
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Speaker 1: I guess ETF's another strong suit. That's really the bread
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Speaker 1: and butter of black Rock again, and obviously now with
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Speaker 1: some of that private's markets push that we've seen in
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Speaker 1: the past couple months, when do.
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Speaker 4: They hit the law of large numbers thing?
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Speaker 1: Yeah, I think that is becoming the more popular question
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Speaker 1: for me to ask.
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Speaker 4: This question forever, right, and it is still do it?
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Speaker 1: Yeah? They and they continue to target this five percent
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Speaker 1: organic based feed growth figure. They've been lagging that over
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Speaker 1: the past couple of quarters. Obvious markets, you know, since
3:01
Speaker 1: the beginning of twenty twenty two, we're less conducive. They've
3:05
Speaker 1: been more conducive for the past three quarters or so.
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Speaker 1: But the question still remains, how do you continue to
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Speaker 1: grow at that five percent clip when You're talking about
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Speaker 1: a ten trillion dollar asset base, and we think BlackRock's
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Speaker 1: diversity when assets are in motion, they can continue to
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Speaker 1: garner share from less diversified, less price competitors.
3:24
Speaker 3: Stock hasn't done anything this year, kind of up one
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Speaker 3: percent just on the year, lagging the market. What's the
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Speaker 3: investment called here on Blackrow? What are the investors saying?
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Speaker 1: Yeah? So I think, you know a lot of what's
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Speaker 1: been baked into this year is sort of market growth,
3:38
Speaker 1: which is going to be a benefit to all asset
3:40
Speaker 1: managers in the space. So I think the skepticism of
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Speaker 1: are these gains lasting? What happens obviously in November when
3:48
Speaker 1: we get this eventual FED pivot to cuts, How is
3:51
Speaker 1: that going to impact you know, client allocations, How is
3:54
Speaker 1: that going to impact the business model? But we do
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Speaker 1: think Blackrock is, you know, a is position to benefit
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Speaker 1: in pretty much all market cycles, and a lot of
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Speaker 1: that long term story is now shifting into that private
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Speaker 1: market's focus with Prequeent acquisition just announced a couple weeks
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Speaker 1: ago and Global Infrastructure Partners in January.
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Speaker 4: Ask a really dumb question at this point, who are
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Speaker 4: Blackrocks actual competitors, Like, who can actually compete with this company.
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Speaker 1: Yeah, so there are plenty of competitors. I mean, asset
4:22
Speaker 1: management can be somewhat commoditized in a lot of spaces.
4:26
Speaker 1: You know, there's competitors like a Vanguard. There's competitors like
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Speaker 1: a Schwab, in Vesco, Franklin, Tira. Price, There's plenty of
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Speaker 1: names out there. The question is who's able to compete
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Speaker 1: on price with Blackrock? And that's where scale really becomes
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Speaker 1: paramount here because they can continue to innovate with new products.
4:42
Speaker 1: If a new competitor comes out with, you know, a
4:45
Speaker 1: new flashy product, Blackrock tends to match that and can
4:48
Speaker 1: sometimes beat it on price. And we know that Blackrock
4:52
Speaker 1: is entrenched with pretty much every institutional client, every retail client,
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Speaker 1: so to speak, and that really gives them the strength
4:59
Speaker 1: of distribution to kind of leverage across its platform.
5:03
Speaker 3: Our Thanks to Neil SIPs Bloomberg Intelligence financials Analysts, we
5:06
Speaker 3: now look at this week's Bloomberg Business Week cover story
5:09
Speaker 3: about former President Donald Trump. It's titled Trump on Taxes Tariffs.
5:14
Speaker 3: Jerome pal and Moore for the story, BusinessWeek recently sat
5:17
Speaker 3: down with the ex president at mar A Lago for
5:19
Speaker 3: an exclusive interview. They discussed Trump's plans for the US
5:23
Speaker 3: economy and the world if he were to be re
5:25
Speaker 3: elected as president. For more and all this, we were
5:28
Speaker 3: joined by Bloomberg Business Week editor Brad Stone. We first
5:31
Speaker 3: asked Brad just how hard it was to gather details
5:33
Speaker 3: for this story.
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Speaker 5: Well, I mean, look, he wanted to talk. We'd actually
5:38
Speaker 5: put queries out to both campaigns. We heard first from
5:41
Speaker 5: former President Trump. You know, this is BusinessWeek, so our
5:45
Speaker 5: mandate is business obviously, economics the world order, and we
5:49
Speaker 5: went there to interrogate him about an economic plan that
5:52
Speaker 5: many economists think is a bit contradictory. I mean, President
5:56
Speaker 5: Trump talks about lowering inflation.
5:59
Speaker 2: The agenda is.
6:01
Speaker 5: Higher tariffs, less immigration, you know, which potentially raises wages.
6:08
Speaker 5: He talks a lot about lowering interest rates and then
6:10
Speaker 5: bringing members of the business community into his administration. So
6:14
Speaker 5: this is a topic he wanted to talk about. To
6:16
Speaker 5: put it in context, we talked to him two days
6:18
Speaker 5: before the first presidential debate and about two weeks before
6:21
Speaker 5: the assassination attempt. But even then, I think, you know,
6:24
Speaker 5: he is writing what he believes, at least in his campaign,
6:27
Speaker 5: believes is a heightened sense of momentum.
6:30
Speaker 3: So, Brad, there's a lot of areas here in the
6:32
Speaker 3: terms of economics to explore. Talk about taxes. How does
6:35
Speaker 3: he feel about taxes these days? He certainly had some
6:37
Speaker 3: big tax legislation in his first term, that's right.
6:40
Speaker 5: And one part of his plan is to extend the
6:43
Speaker 5: Trump tax cuts. Another part, which he told us, was
6:47
Speaker 5: to lower the corporate tax rate. He told the Business
6:49
Speaker 5: Roundtable that he wanted to bring it down to twenty
6:51
Speaker 5: percent from twenty one percent for no other reason that
6:54
Speaker 5: he likes big, large numbers. But then he said he
6:58
Speaker 5: would even get it down to fifteen percent if he could.
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Speaker 5: You know, the challenge here, of course, is they don't
7:03
Speaker 5: delineate any way to pay for this, to make the
7:06
Speaker 5: numbers parcel out and do anything other than raise the
7:08
Speaker 5: federal deficit. And there is really, I think a paucity
7:11
Speaker 5: of specifics here, which is one reason why proxies have
7:15
Speaker 5: kind of tried to fill the void with things like
7:18
Speaker 5: Project twenty twenty five, which then Trump really distanced himself from.
7:22
Speaker 5: But you know, I think, you know, with the broad
7:25
Speaker 5: brushstrokes we got is Trump wants to lower taxes and
7:28
Speaker 5: extend his tax cuts.
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Speaker 4: What I also felt was very interesting is the myriad
7:32
Speaker 4: of views in relation to the tech industry. So on
7:35
Speaker 4: the one hand of k lower taxes ya tech industry,
7:37
Speaker 4: he seems to embrace crypto clearly with JD. Vans, there's
7:41
Speaker 4: sort of an embrace of vcs, but big tech is
7:44
Speaker 4: very complicated. How did you parse through that?
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Speaker 5: There's some contradictions here, Alex. I mean, the first is
7:50
Speaker 5: he's obviously very pro American business, and yet he's he's
7:54
Speaker 5: turned on TikTok and believes that banning TikTok would only
7:58
Speaker 5: empower Mark Zuckerberg Facebook. The second thing is, you know,
8:02
Speaker 5: in the first term, he talked a lot about cryptocurrency
8:06
Speaker 5: and how it might engender fraud. He wasn't wrong about
8:09
Speaker 5: that obviously, but now he's flipped on that as well.
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Speaker 5: The bottom line here, and the way I interpreted, is
8:15
Speaker 5: that for Trump it's all about personal relationships, and he
8:19
Speaker 5: went and talked a lot about Tim Cook and how
8:21
Speaker 5: smart he thought Tim Cook was, in large part because
8:23
Speaker 5: Tim Cook went to the White House to ask for
8:26
Speaker 5: relief from the first set of tariffs. You know, he
8:28
Speaker 5: likes it when people come and you know, paid their respects,
8:32
Speaker 5: or at least visibly look to be on what he
8:35
Speaker 5: considers to be Team Trump, and so, you know in
8:38
Speaker 5: terms of crypto and a lot of people in that
8:40
Speaker 5: community are now pro Trump, and you know in terms
8:43
Speaker 5: of TikTok, where he's very popular on TikTok, and of
8:46
Speaker 5: course jeff yass one of the backers of Byte Dance
8:48
Speaker 5: as a Trump supporter. You can kind of see why
8:51
Speaker 5: these contradictions are sort of bundled into his views on technology.
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Speaker 3: Tariffs, certainly, it seems to be the topic we've had
8:58
Speaker 3: both sides of the aisle talking about tariffs and tough
9:01
Speaker 3: tariff talk. Mister Trump used tariffs.
9:03
Speaker 6: Quite liberally, liberally.
9:05
Speaker 3: How do you think about tariffs these days?
9:06
Speaker 5: It's interesting, Paul. You know, I have not spent much
9:09
Speaker 5: time thinking about President William McKinley, the twenty fifth president.
9:13
Speaker 5: He was from my former state of Ohio, and Trump
9:16
Speaker 5: brought him up repeatedly because here's this nineteenth century president who,
9:21
Speaker 5: before the age of a federal income tax, was raising
9:24
Speaker 5: tariffs and bringing in money. And he said that McKinley
9:27
Speaker 5: is overlooked. Who knows what book club he's part of,
9:31
Speaker 5: but clearly they've been reading histories and he wants to
9:34
Speaker 5: raise tariffs. He thinks tariffs are underrated. He's talking about
9:37
Speaker 5: a ten percent across the board tariff. He's talking about
9:41
Speaker 5: raising the tariff on Chinese goods to sixty percent or
9:44
Speaker 5: even one hundred percent. And you know, he says they're
9:47
Speaker 5: a great negotiating ployee. He tried that in the first term.
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Speaker 5: And obviously then you know a lot of US companies,
9:54
Speaker 5: particularly tech companies, complained, and they did. They were quite
9:57
Speaker 5: generous in their carve outs. But this is a a
10:00
Speaker 5: big part of Trumpanomics, and most economists think that companies
10:04
Speaker 5: don't pay those tariffs, they turn around and pass them
10:06
Speaker 5: to customers in the form of higher prices. So there
10:09
Speaker 5: we pressed them on it, and I think there are
10:11
Speaker 5: some unresolved contradictions and tensions there.
10:14
Speaker 4: What's also interesting, I was reading a JP Morgan note
10:16
Speaker 4: about commodities and what the Trump administration would do to commodities.
10:21
Speaker 4: Obviously that's my beat, but what they made the point
10:24
Speaker 4: is it really depends on the sequencing. So if you
10:27
Speaker 4: go to corporate taxes first, tariffs come later. Like the
10:30
Speaker 4: sequencing of how all of this works will really depend
10:33
Speaker 4: then on what the market reaction is. Did you get
10:36
Speaker 4: any sense of that in terms.
10:38
Speaker 5: Of how we would do it, I didn't. But I mean,
10:41
Speaker 5: one thing that impressed us, or is impressed upon us,
10:45
Speaker 5: is that in twenty sixteen he was unprepared to win,
10:50
Speaker 5: and he surrounded himself with people, maybe a bit impulsively,
10:53
Speaker 5: and he says that he would do it differently this time,
10:55
Speaker 5: that he knows who's loyal and who's not, and he's experienced,
10:59
Speaker 5: and he knows everybody time. And it just seemed to us,
11:02
Speaker 5: you know, that he is prepared to move quickly in
11:04
Speaker 5: what order I don't know, but particularly if he controls
11:07
Speaker 5: both houses in Congress, that they have an agenda that
11:11
Speaker 5: they're pretty much willing to implement. A blitz Creed.
11:14
Speaker 3: Speed Jamie Diamond as Secretary of Treasury thirty seconds spread.
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Speaker 5: Yeah, yeah, what did he call him an overrated globalist once? Look,
11:24
Speaker 5: he's courting the business community. I you know, who knows
11:27
Speaker 5: if Diamond would do that, particularly considering how former members
11:32
Speaker 5: of Trump's administration often ended up being treated somewhat badly
11:36
Speaker 5: or breaking with him. But yeah, I mean, I think
11:39
Speaker 5: Trump wants to go and it's very important to him
11:42
Speaker 5: that business leaders like him. I mean that comes through
11:44
Speaker 5: in the interview and so he's doing this but to
11:46
Speaker 5: court them as well.
11:47
Speaker 3: Thanks to Bloomerg Business Week editor Brad Stone. Coming up,
11:50
Speaker 3: we'll take a deep dive into how various industries would
11:53
Speaker 3: be impacted by a Donald Trump or Joe Biden presidency.
11:56
Speaker 3: In November, you're listening to Bloomberg Intelligence on Bloomberg Radio,
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Speaker 3: so providing in depth research and data on two thousand
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Speaker 3: companies in one hundred and thirty industries. You can access
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Speaker 3: Bloomberg Intelligence via Bigo on the terminal. I'm Paul Sweeney.
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Speaker 3: This is Bloomberg.
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12:29
Speaker 3: We move next to politics. The direction of government policy
12:31
Speaker 3: and the world's largest economy is at stake when the
12:33
Speaker 3: US Alexa president. In November, Bloomberg Intelligence took a deep
12:37
Speaker 3: dive into how various industries would be impacted with either
12:40
Speaker 3: Joe Biden or Donald Trump in office. For more on
12:43
Speaker 3: this research, we were joined by Nathan Dean, Bloomberg Intelligence
12:46
Speaker 3: Senior Policy analyst. We first asked Nathan to break down
12:50
Speaker 3: his findings.
12:51
Speaker 7: What we did is we started with the report by
12:52
Speaker 7: looking at what are the key sectors to watch, and
12:54
Speaker 7: we really had five of them. The first one was
12:57
Speaker 7: investment banks. If President Biden wins, you know, you could
13:00
Speaker 7: see somewhere between seven to ten eight percent increase in
13:03
Speaker 7: capital requirements. If President Trump wins, that could be off
13:06
Speaker 7: the table. We looked at electric vehicles. You know, the
13:08
Speaker 7: tax credits for the electric vehicles could be at risk
13:11
Speaker 7: during a tax reform debate next year. Like you mentioned,
13:14
Speaker 7: in terms of tax global manufacturers, President Trump has called
13:18
Speaker 7: for a fifteen percent corporate tax rate. Representative Steve Scalise
13:21
Speaker 7: said he's going to make the tax cuts for individuals permanent,
13:24
Speaker 7: so tax reform and the impact of manufacturing. And the
13:27
Speaker 7: other two were Healthcarecter that twenty five billion dollar subsidies
13:30
Speaker 7: that's really for seventeen and United Health. And then finally
13:33
Speaker 7: it was big tech. Because whether you get President Biden
13:35
Speaker 7: or President Trump, more likely than not you're going to
13:38
Speaker 7: get a very skeptical Washington towards big tech, certainly both
13:42
Speaker 7: in Congress and also on the enforcement side.
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Speaker 4: Nate, then the question then becomes what can he and
13:46
Speaker 4: this has been the question throughout his four years. Also
13:48
Speaker 4: what can he do on his own? And what would
13:50
Speaker 4: he need a Republican Congress for?
13:52
Speaker 7: Yeah, So you know, I think one of the biggest
13:54
Speaker 7: questions we get from clients is what does the executive
13:57
Speaker 7: order landscape look like if President Trump wins? And I'd
14:01
Speaker 7: say about ninety percent of the time, an executive order
14:04
Speaker 7: is a fancy way of the president picking up the
14:05
Speaker 7: phone and saying to his staff, I expect you to
14:08
Speaker 7: do X, Y and Z. But there's a difference there.
14:11
Speaker 7: The difference is for trade, tariffs and foreign relations. The
14:14
Speaker 7: power of the presidency is a lot more powerful when
14:17
Speaker 7: it comes to that. So when President Trump uses words
14:19
Speaker 7: like nasty calling the European Union, you know, that's something
14:23
Speaker 7: that investors have to pay attention to.
14:25
Speaker 8: Now.
14:25
Speaker 7: When it comes to tariffs, the President can certainly go
14:27
Speaker 7: out there and say I want to do this, but
14:29
Speaker 7: then it's going to be up for Congress and the
14:32
Speaker 7: business community and so forth. But todentially try and influence
14:35
Speaker 7: the White House to either get to the appropriate amount
14:38
Speaker 7: or try in some cases stop it from even happening.
14:40
Speaker 3: So are there certain industries that you know, I think
14:44
Speaker 3: about the healthcare industry. I'm trying to think about regulated industries,
14:48
Speaker 3: and healthcare is certainly one of them. And you mentioned
14:51
Speaker 3: the subsidies. But the Republicans and the Democrats think differently
14:54
Speaker 3: about the economics of health care.
14:56
Speaker 7: Yeah, it does. And this is rarely where the process
14:59
Speaker 7: comes in the play, because that's subsidies. That twenty five
15:02
Speaker 7: billion dollars subsidies is Obamacare subsidies, and that requires an
15:06
Speaker 7: Act of Congress. And I think you don't need to
15:08
Speaker 7: be a Washington expert to know that gridlock is going
15:11
Speaker 7: to continue no matter who wins the presidency. So look
15:14
Speaker 7: for subdued actions from Congress when it comes to healthcare. Now,
15:19
Speaker 7: the difference is on the regulatory side. On the regulatory side,
15:22
Speaker 7: and this is where you look at the FDA and
15:24
Speaker 7: a lot of the actions they've been doing. You can
15:26
Speaker 7: bypass democratic opposition and just implement your own policies, but
15:31
Speaker 7: it takes time, and so I would say just general
15:34
Speaker 7: rule of thumb for a lot of the healthcare issues
15:37
Speaker 7: that are going out at the agencies after President Trump
15:40
Speaker 7: if he wins, where the input is new regulatory leadership,
15:44
Speaker 7: at that point, you probably have another eighteen months and
15:47
Speaker 7: twenty four month window for any regulatory change, So for
15:50
Speaker 7: the healthcare industry, there's a lot of time to prepare
15:53
Speaker 7: for any changes. You'll know exactly what's going to happen
15:56
Speaker 7: well before it does.
15:57
Speaker 4: Going back to the ev point, it feels like solar evs,
16:02
Speaker 4: stuff like hydrogen from the IRA, like those are the
16:04
Speaker 4: stuff maybe potentially on the chopping block potentially where the
16:08
Speaker 4: President Trump win. But then the Musk thing is weird
16:10
Speaker 4: because Elon Musk has definitely become a big supporter of
16:14
Speaker 4: President Trump donating to super packs, and I'm wondering if
16:17
Speaker 4: that relationship will change the calculus to how President Trump
16:21
Speaker 4: sees electric vehicles.
16:23
Speaker 7: Absolutely, you hit it right on the head and we
16:24
Speaker 7: even say this in the report. There's a difference between
16:27
Speaker 7: headline risk and reality. So if you look at the
16:29
Speaker 7: electric vehicles, you can look at statements that President Trump
16:32
Speaker 7: and other Republicans have said saying they do not like
16:34
Speaker 7: these electric vehicle tax credits out there and so forth.
16:37
Speaker 7: But then you balance it with the Elon Musk and
16:39
Speaker 7: even taking it to grander scale on the Inflation Reduction Act.
16:43
Speaker 7: A lot of the benefits of the IRA are going
16:45
Speaker 7: to gop led states. So what you have to do
16:48
Speaker 7: here is a take the statement. Okay, if President Trump
16:51
Speaker 7: says I want to do away with the electric vehicle
16:54
Speaker 7: tax credit, how am I going to do that? Most likely,
16:56
Speaker 7: I'll do that as part of tax reform and via
16:58
Speaker 7: the reconciliation, which means I probably won't have any Democrats
17:02
Speaker 7: going on board with me, so I need all Republicans
17:04
Speaker 7: on board at that point. If Elon Musk starts whispering saying, hey,
17:08
Speaker 7: we like these tax credits for the EB world, then
17:11
Speaker 7: that change may not even be a high priority anymore.
17:13
Speaker 7: So I would just say that for a lot of
17:15
Speaker 7: the statements, you have to remember short term risk versus
17:17
Speaker 7: long term risk. And as we see with every single election,
17:21
Speaker 7: politicians of both parties love to go out there and
17:23
Speaker 7: say I'm going to do X, Y and Z, but
17:25
Speaker 7: then when they get into power, it's XYZ minus a
17:28
Speaker 7: whole bunch of other stuff because I'm going to be
17:30
Speaker 7: a little bit more moderate now.
17:31
Speaker 3: And Nathan, how about for our good friends on Wall
17:33
Speaker 3: Street M and A bankers and lawyers. Under this administration,
17:36
Speaker 3: the regulator has been pretty tough, and it's been pretty
17:39
Speaker 3: tough to get big M and A deals approved, presumably
17:42
Speaker 3: that would be more Wall Street friendly M and A
17:45
Speaker 3: friendly with a Republican administration, it.
17:48
Speaker 7: Really depends on the leadership that President Trump, again, if
17:51
Speaker 7: he were to win, would put in place at the
17:53
Speaker 7: FTC and the DOJ. Because you have one side, you
17:55
Speaker 7: have the Republican business friendly view, the stereotypical Republican business
17:59
Speaker 7: friendly view. If you get somebody like Jamie Diamond, and
18:01
Speaker 7: I'm just picking on the banking execs. If you get
18:04
Speaker 7: somebody from Wall Street, like a Gary Cohne individual that
18:06
Speaker 7: was in his last administration, then you could just reasonably
18:10
Speaker 7: say that M and A activity will get a little
18:11
Speaker 7: bit easier. But if you get somebody that comes from
18:14
Speaker 7: the economic populist side of the party. For example, Senator Vance,
18:17
Speaker 7: the vice presidential candidate, spoke in favor of the FDAC
18:21
Speaker 7: chair will Lim and Kahn and said that she was
18:23
Speaker 7: one of Biden's best picks. And so if President Trump
18:27
Speaker 7: comes out and picks an economic populist for the heads
18:30
Speaker 7: of the FTC and the DOJ, M and A made
18:33
Speaker 7: very difficult for the next few years. It really just
18:35
Speaker 7: depends who's going to get that nod, and that would
18:37
Speaker 7: come right after inauguration to President Trump wins our.
18:40
Speaker 3: Thanks to Nathan Dean Bloomberg Intelligence senior policy analysts. We
18:43
Speaker 3: move next to the EV space and Tesla this way,
18:46
Speaker 3: if you heard, the ev maker is looking to hire
18:48
Speaker 3: nearly eight hundred new employees. This comes nearly three months
18:51
Speaker 3: after CEO Elon Musk ordered the largest round of layoffs
18:54
Speaker 3: in the company's history. From her on this and the
18:56
Speaker 3: state of the EV industry, we were joined by Craig
18:59
Speaker 3: Trudell bloom For a Global Autos editor first ask for
19:02
Speaker 3: more context on this week's news.
19:04
Speaker 8: This is very Elon Muskian of Tesla in that it
19:08
Speaker 8: sort of you know, depends on the day of what's
19:11
Speaker 8: going on at this company. So, yes, a few months
19:14
Speaker 8: back on the heels of Tesla selling about twenty percent
19:19
Speaker 8: fewer cars than it did in the fourth quarter, Elon
19:22
Speaker 8: Musk wasn't particularly happy with that quarterly showing he wanted
19:27
Speaker 8: the company to cut headcount by a commensurate amount, so
19:31
Speaker 8: roughly twenty percent, So you know, for context, you know,
19:35
Speaker 8: this is a company that you know, had quite a
19:38
Speaker 8: few employees at that time. They started the year with
19:41
Speaker 8: a round one hundred and forty thousand, so that would
19:43
Speaker 8: mean twenty eight thousand people being let go. It's unclear
19:47
Speaker 8: whether they got to that, but it is absolutely clear that,
19:50
Speaker 8: you know, certain parts of the company were decimated, I
19:53
Speaker 8: think most notably the super Charging team that really turned
19:56
Speaker 8: a lot of heads because it was a you know,
19:58
Speaker 8: aspect of this company that has been looked at as
20:01
Speaker 8: you know, such a sort of feather in their cap
20:04
Speaker 8: that they really invested where others didn't and built a
20:08
Speaker 8: charging that worked, whereas others have have not worked very well,
20:11
Speaker 8: particularly in the US, and so it is kind of
20:14
Speaker 8: shocking to see, you know, such a significant pulling of
20:19
Speaker 8: people followed by a you know, hiring spree of sorts.
20:23
Speaker 3: So do we know kind of what type of roles
20:26
Speaker 3: they're hiring for. Are they hiring people to bend metal
20:29
Speaker 3: or are they looking to like some software guys for
20:32
Speaker 3: AI and all that, the.
20:33
Speaker 4: Robotax An or the Superpower people superhero Yeah.
20:37
Speaker 8: I think we did report even weeks back that some
20:40
Speaker 8: of the Supercharger people who are you know, a part
20:44
Speaker 8: of the team that was really you know cut to
20:46
Speaker 8: a very significant degree, were brought back relatively quickly. Notably,
20:50
Speaker 8: the woman who was running that group, uh you know,
20:54
Speaker 8: has not been brought back, and there were some reports
20:57
Speaker 8: that maybe she you know, kind of tried to protect
20:59
Speaker 8: her team team and was dismissed as a result of that.
21:03
Speaker 8: So in terms of what parts of the company are hiring,
21:07
Speaker 8: it's it's it's pretty broad, but I would say, you know,
21:10
Speaker 8: the data that our very own care Carlson has crunched.
21:13
Speaker 8: Service is a big aspect, which is maybe no surprise,
21:17
Speaker 8: and that you know, the summer season is a busy
21:20
Speaker 8: one for Tesla. People are out, you know, driving for vacations.
21:24
Speaker 8: It's warm outs, they're running their air conditioners, you know,
21:27
Speaker 8: to the extent that you do need the service an
21:29
Speaker 8: electric vehicle, that's one of the things that is common. So,
21:32
Speaker 8: you know, one of the interesting aspects of this story
21:34
Speaker 8: is that we did speak with people who were a
21:38
Speaker 8: part of this job cutting, who you know, said that
21:41
Speaker 8: they were surprised that some of the service and salespeople,
21:45
Speaker 8: you know, that that the company you know, clearly needs
21:47
Speaker 8: at a time of you know, busy service work and
21:52
Speaker 8: you know, a company that's struggling to to sell more cars. Uh,
21:56
Speaker 8: you know, we're seeing you know, some people being brought
21:59
Speaker 8: back there, but it is very widespread. I think notably
22:02
Speaker 8: as well. You know, AI and robotics is definitely you know,
22:06
Speaker 8: an area where everybody's you know, looking at very closely
22:09
Speaker 8: because of you know what this sort of new priority
22:13
Speaker 8: is or emphasis is on the.
22:15
Speaker 3: Part of Musk, you know, Craig. GM's Mary Barris says
22:19
Speaker 3: the automaker won't sell a million evs next year, So
22:22
Speaker 3: just another story, another data point about kind of maybe
22:25
Speaker 3: where the ultimate demand or lack of demand may be
22:28
Speaker 3: for EV's. What's the latest feeling within the industry about
22:31
Speaker 3: how this thing's going to evolve at what pace.
22:34
Speaker 8: We've seen a really dramatic pullback on the part of
22:37
Speaker 8: GM and Ford in particular. I feel like, you know, Stillantis,
22:40
Speaker 8: you know, formerly Fiat Chrysler. They were sort of slow
22:45
Speaker 8: in the first place, you know, making this transition and
22:49
Speaker 8: have not necessarily had much to pull back from. But
22:52
Speaker 8: I would not be surprised if they sort of you know,
22:54
Speaker 8: joined the quote unquote party in terms of maybe dialing
22:58
Speaker 8: back sort of the ramp at which they tried to
23:01
Speaker 8: produce more electric vehicles and sell them. But it is
23:05
Speaker 8: very interesting to see you know, GM and Ford you know,
23:09
Speaker 8: really be sort of welcomed with open arms by the
23:11
Speaker 8: White House. You know, Mary Bara being lauded by Bidens
23:15
Speaker 8: as leading the EV transition. That really ticked off Elon
23:19
Speaker 8: Musk and helps explain why, you know, in the last
23:21
Speaker 8: few days we've learned that he's been planning to spend
23:24
Speaker 8: quite a bit of money on you know, contributing to
23:27
Speaker 8: packs to get to Donald Trump reelected.
23:29
Speaker 4: That was my thing. Is that the Musk Trump love
23:32
Speaker 4: affair I find to be quite interesting because if we
23:36
Speaker 4: can just game out that the love affair is also
23:39
Speaker 4: so President Trump would be more nice to EV's. Is
23:44
Speaker 4: the huge change that we're expecting with alternative energy and
23:48
Speaker 4: the IRA and a Trump administration maybe not going to happen.
23:51
Speaker 8: Yeah, it is surprising. I mean, maybe if you're trading Tesla,
23:55
Speaker 8: you sort of reckon that the CEO very publicly endearing
23:58
Speaker 8: himself to the candidate will sort of, you know, come
24:01
Speaker 8: back to benefit him down the line, and maybe some
24:04
Speaker 8: of these threats to do away with electric vehicle tax
24:07
Speaker 8: credits and so forth will fall by the wayside. Elon
24:11
Speaker 8: even went so far, you know, to sort of claim that,
24:14
Speaker 8: you know, doing away with subsidies would only help Tesla.
24:17
Speaker 8: I don't know how exactly he squares that circle. But
24:21
Speaker 8: perhaps it's a matter of Tesla is you know, the
24:24
Speaker 8: strongest of the companies that's trying to make this work
24:28
Speaker 8: and is for this along, and so taking subsidies away
24:31
Speaker 8: would hurt you know, competitors even more so than it
24:34
Speaker 8: would Tesla. But it certainly wouldn't be good for Tesla
24:37
Speaker 8: to lose access to seventy five hundred dollars for a
24:41
Speaker 8: lot of its customers in the US or would be customers.
24:45
Speaker 8: And so I do think it's very interesting, and we've
24:48
Speaker 8: we've heard very similar sort of intiev rhetoric on the
24:52
Speaker 8: on the part of jd Vance, his running mate, and
24:55
Speaker 8: so I think it's it's not only Trump who's you know,
24:58
Speaker 8: sort of campaigned against e but his running made.
25:01
Speaker 3: Our Thanks to Craig Trudell, Bloomberg Global Autos Editor. Coming
25:04
Speaker 3: up on the program, we'll break down a slew of
25:07
Speaker 3: bank earnings in the US. You're listening to Bloomberg Intelligence
25:10
Speaker 3: on Bloomberg Radio, providing in depth research and data on
25:13
Speaker 3: two thousand companies and one hundred and thirty industries. You
25:16
Speaker 3: can access Bloomberg Intelligence via Bigo on the terminal. I'm
25:19
Speaker 3: Paul Sweeney. This is Bloomberg.
25:26
Speaker 2: You're listening to the Bloomberg Intelligence Podcast. Catch us live
25:30
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25:33
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25:36
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25:40
Speaker 2: Just say Alexa Play Bloomberg eleven thirty.
25:44
Speaker 3: We move now to US bank earnings. This week, we
25:46
Speaker 3: got quarterly results from Morgan Stanley, Bank of America, and
25:49
Speaker 3: Goldman Sachs, and all three firms posted double digit increases
25:52
Speaker 3: in investment banking revenue. From where we were joined by
25:55
Speaker 3: Alison Williams, Bloomberg Intelligence senior analysts Global banks and asset Managers.
26:00
Speaker 3: We first asked Allison what the street liked about Morgan
26:02
Speaker 3: Stanley's quarterly results.
26:04
Speaker 9: Really strong institutional numbers, I mean, it was a great
26:07
Speaker 9: quarter for trading and investment banking, so equities trading really,
26:12
Speaker 9: I think a source of strength. Morgan Stanley doing better
26:15
Speaker 9: than expected across the board, So equities trading I think
26:18
Speaker 9: was the standout. Fixed income you know, was sort of mixed,
26:22
Speaker 9: but really compared to a year ago, I think that's strong.
26:27
Speaker 9: Those revenues are turning out to be resilient and on
26:29
Speaker 9: the investment banking side, investors are excited that there could
26:33
Speaker 9: be momentum coming into the next quarter. You know, M
26:35
Speaker 9: and A still just historically low, so improving from a
26:39
Speaker 9: low base. Same thing with equities, but I think reasons
26:42
Speaker 9: for optimism, especially with the stocks in general doing so well.
26:47
Speaker 3: Now for Bank of America, when I think a Bank
26:49
Speaker 3: of America, I think it a corporate bank, you know,
26:51
Speaker 3: making big loans to big corporate customers around the world.
26:55
Speaker 3: What did you see there, so you know.
26:57
Speaker 9: I think the demand is for loans is still so
27:00
Speaker 9: something that we're looking more for the second half.
27:02
Speaker 6: If we do get the FED rate cuts, that is
27:05
Speaker 6: definitely going to be a help.
27:06
Speaker 9: And I think for Bank of America, what people are
27:08
Speaker 9: excited about is that it could be the trough. So
27:10
Speaker 9: Bank of America saying that it's going to be the trough,
27:13
Speaker 9: This will be the weakest quarter, but keep in mind
27:16
Speaker 9: that they are baking in the FED rate cut expectations
27:20
Speaker 9: and some loan growth in the second half, so we'll
27:22
Speaker 9: see if they can deliver that. But definitely telling investors
27:26
Speaker 9: what they want to hear in terms of the fourth quarter,
27:29
Speaker 9: a little bit higher entry rate, firming that up and
27:32
Speaker 9: again that the you know, the most of the weakness
27:34
Speaker 9: could be behind us.
27:35
Speaker 4: So does that mean that if we don't get FED
27:37
Speaker 4: cuts that Bank of America's going to have some problems here?
27:40
Speaker 9: I think where the disappointment will come will be loan growth.
27:44
Speaker 6: Spurred by FED cuts.
27:45
Speaker 9: Right, So I think that some of the loan growth
27:48
Speaker 9: that they're factoring in is based on that we heard
27:50
Speaker 9: from Wells Fargo where they're you know, still a lot
27:53
Speaker 9: more cautious on the loan growth side. And commercial and
27:57
Speaker 9: industrial has been.
27:58
Speaker 6: A weak spot. Credit card is it has been a
28:01
Speaker 6: strong spot.
28:02
Speaker 1: You know.
28:03
Speaker 3: When I was in banking, one of our most lucrative
28:05
Speaker 3: businesses that the Chasement had bank was this leverage lending,
28:08
Speaker 3: you know, lending to companies that don't have assets or
28:11
Speaker 3: inventory and any kind of just lending into cash flow.
28:13
Speaker 3: It's a little bit more risky. It's tough to show
28:15
Speaker 3: your credit officer where the collateral is for this loan.
28:18
Speaker 3: But we made a lot of money doing it. How's
28:20
Speaker 3: a private credit market been poaching on that business?
28:23
Speaker 9: So actually you would have been making this would have
28:25
Speaker 9: been a good quarter for you. I know, you'd be happy.
28:28
Speaker 9: The first quarter was good. Second quarter was good, and
28:31
Speaker 9: I think that if you look at some of the
28:33
Speaker 9: most recent statistics that we've seen, is that banks.
28:37
Speaker 6: Are still doing a lot of that refinancing.
28:39
Speaker 9: Right, So a lot of the business that's been happening
28:42
Speaker 9: in the debt markets, debt fees, a source of strength
28:44
Speaker 9: across the bank's disquorter has been refinancing, and that leverage
28:49
Speaker 9: lending business has been doing well at the bank. So
28:53
Speaker 9: even though private credit is certainly raising a lot of
28:56
Speaker 9: funds and a product and demand, banks are still getting
29:00
Speaker 9: their share of refinancing in their leverage one volumes.
29:03
Speaker 6: And that's you know.
29:04
Speaker 9: Sort of you saw like the huge growth at City
29:06
Speaker 9: Group and the numbers at Gold and Sachs where they
29:10
Speaker 9: have relative strength in those businesses.
29:12
Speaker 6: High yields another area that's doing really well.
29:15
Speaker 4: Back to the consumer so we'll have Paul Donmus and
29:18
Speaker 4: banking stuff, all the consumer stuff. What about chargeobs on
29:20
Speaker 4: their credit card losses for Bank of America? Was that
29:24
Speaker 4: higher lower?
29:24
Speaker 6: Where did that come out in general?
29:26
Speaker 9: I would say there, so their provisions overall came in
29:29
Speaker 9: in line. We did see, you know, charge offs in
29:32
Speaker 9: the car business, charge offs and commercial real estate, So
29:34
Speaker 9: those are areas that we're watching, but you know, controlled
29:38
Speaker 9: and in line with expectations. I think the area of
29:41
Speaker 9: weakness that we saw in CARD this quarter was at
29:44
Speaker 9: City Group. They have a private label business that tends
29:46
Speaker 9: to skew on the lower income side of things. You're
29:49
Speaker 9: seeing losses come in above their targeted range. There is
29:53
Speaker 9: seasonal pattern to that, and so there are expectations that
29:57
Speaker 9: that could come in, but I would say the second
30:00
Speaker 9: quarter did not give us confidence in those expectations. So
30:04
Speaker 9: I think that is continues to be an area for watching.
30:07
Speaker 9: It's not necessarily a big area for the big banks
30:10
Speaker 9: that we're talking about and the ones that I cover,
30:12
Speaker 9: but I think it's important to watch, you know, for
30:14
Speaker 9: the overall economy and to some of the other CARD
30:18
Speaker 9: names such as Synchrony.
30:20
Speaker 3: CEO at Morgan Stanle we have a new CEO, Ted Pick.
30:23
Speaker 3: I guess with a little bit of hindsight here does
30:25
Speaker 3: it seem like it's kind of working and everybody's kind
30:28
Speaker 3: of found their place.
30:29
Speaker 9: And so it seems like, you know, he's talking with conviction.
30:33
Speaker 9: I think the boldest statement he made was with regard
30:36
Speaker 9: to the margins and the wealth business. So the wealth business,
30:39
Speaker 9: as you know, under the former CEO and a lot
30:42
Speaker 9: of acquisitions. Wealth and asset management is the predominant revenue
30:46
Speaker 9: and profit engine.
30:47
Speaker 6: It's what investors are watching. The wealth margin was.
30:51
Speaker 9: Something where Pick early in the year took off some
30:54
Speaker 9: of the upside under the prior targets, and that thirty
30:59
Speaker 9: percent wealth target I think is a question among investors
31:01
Speaker 9: if they can get there, and Ted really trying to
31:04
Speaker 9: instill confidence that he is a believer the wealth flows
31:08
Speaker 9: at Morgan Stanley, I would say, you know, that is
31:11
Speaker 9: the probably the number one thing I think that that
31:14
Speaker 9: we watch for them, and that did come in week
31:16
Speaker 9: this quarter. The fee based part of those flows were
31:20
Speaker 9: relatively resilient, so some puts in takes there, but I
31:23
Speaker 9: think the wealth flows do bear watching and that that
31:26
Speaker 9: really has been the engine of optimism investors, like you know,
31:30
Speaker 9: the tilt towards the recurring fee based business, and so
31:33
Speaker 9: I think that they'll have to continue to deliver and
31:37
Speaker 9: deliver on that thirty percent margin that Pick is confident.
31:42
Speaker 4: And then I'll go to sort of what the macro
31:44
Speaker 4: read is for Morgan Stanley, because also on the call,
31:46
Speaker 4: Ted Pick said that you're going to see normal m
31:48
Speaker 4: and a return unless there's a full blown recession, and
31:50
Speaker 4: he thinks we're in the early stages of multi year
31:52
Speaker 4: investment banking leed cycle.
31:54
Speaker 9: Oh yeah, oh yeah, But we've been hearing that for
31:56
Speaker 9: so many quarters now and you're starting to definitely, you know,
32:00
Speaker 9: feel more of the doubt coming from analysts. Right, So
32:03
Speaker 9: the twenty twenty one, amazing twenty twenty two disaster, the
32:08
Speaker 9: lift that we got last year did not materialize.
32:11
Speaker 6: I would say that so far this.
32:13
Speaker 9: Year EM and A has been disappointing again, and you
32:17
Speaker 9: know you can see in terms of the reported fees
32:19
Speaker 9: and the announcements, right, so both of those have been disappointing.
32:24
Speaker 9: It does tend to pick up late in the year,
32:27
Speaker 9: It does tend to pick up after elections, So I
32:30
Speaker 9: think it'll be hard to get for that particular business line,
32:34
Speaker 9: you know, sort of the momentum people are looking for,
32:36
Speaker 9: perhaps until after the election. But on the underwriting side,
32:41
Speaker 9: I think is where you're seeing, you know, perhaps more
32:44
Speaker 9: the momentum and strength. Golden Sachs, though who is tends
32:47
Speaker 9: to be the biggest and reported revenue, did say significant
32:51
Speaker 9: uptick in their pipeline debt. Underwriting and advisory were the
32:55
Speaker 9: areas of strength all.
32:56
Speaker 3: Right, Thanks to Alison Williams, Bloomberg Intelligence Senior analysts, Global
32:59
Speaker 3: Banks and as a managers, we move next to the
33:01
Speaker 3: airline space. This weekend, Edited Airlines reported second quarter profit
33:05
Speaker 3: that grew thanks to strong travel demand, but the airline
33:08
Speaker 3: also said third quarter profit will fall short of Wall
33:10
Speaker 3: Streets expectations. United warned that price cuts by low cost
33:14
Speaker 3: carriers are weighing on the entire airline industry. For more
33:17
Speaker 3: guess sos, Matt Miller, and I were joined by George Ferguson,
33:20
Speaker 3: Bloomberg Intelligence senior Aerospace, Defense and airlines analysts. We first
33:23
Speaker 3: asked George for his take on this week's results.
33:26
Speaker 10: The industry is just suffering from overcapacity.
33:28
Speaker 2: Right.
33:28
Speaker 10: United confirmed that Delta told us the same thing earlier.
33:32
Speaker 10: We saw Alaska results come out, their load factors down,
33:35
Speaker 10: yields flat load factors down, telling me they can't fill
33:38
Speaker 10: airplanes at the right price point. We need capacity to
33:42
Speaker 10: come out. Everybody's pointing to an inflection point in three Q.
33:48
Speaker 10: United said that you know, they'd get down and maybe
33:52
Speaker 10: after mid August, maybe two to three percent growth in capacity.
33:56
Speaker 10: I think this is still a too high level of
33:58
Speaker 10: capacity growth, right, this isn't an economy that probably a
34:02
Speaker 10: year over year grew about a percent. I think that
34:04
Speaker 10: number ought to be tied much closer to GDP growth.
34:07
Speaker 10: You talked about unemployment rising, right, so the US economy
34:11
Speaker 10: appears to be slowing a bit. So I think those
34:13
Speaker 10: things are working against the airlines right now. A bunch
34:15
Speaker 10: of capacity has to come out, I think, to get
34:17
Speaker 10: back to pricing power, and that's what's needed to get
34:20
Speaker 10: profitability going.
34:21
Speaker 11: So how does that happen? I mean, do the airlines
34:23
Speaker 11: themselves pull capacity out? Don't they have competition in this market?
34:27
Speaker 11: Don't we have regulators to ensure that.
34:30
Speaker 10: Yeah, so how does it happen? We're starting to see
34:34
Speaker 10: some of it happen. Alaska announced that they were going
34:38
Speaker 10: to add more premium seeding to them.
34:40
Speaker 11: Can I just pause here for a fun fact, George,
34:43
Speaker 11: For a long time, Paul Sweeney thought that the Eskimo
34:48
Speaker 11: on the Alaska Airlines tail was actually a picture of
34:51
Speaker 11: Jerry Garcia.
34:52
Speaker 8: I did.
34:52
Speaker 10: Yeah, Actually he's told me that. I'm not sure what
34:57
Speaker 10: that says about Paul Sween.
35:00
Speaker 11: I mean, what an airline Jerry Garcia on the tail?
35:03
Speaker 3: They're so cool?
35:04
Speaker 6: All right? So sorry, sorry, go ahead.
35:06
Speaker 10: So we're starting to see capacity come out with these
35:08
Speaker 10: announcements like Alaska where they said, you know, we're gonna
35:11
Speaker 10: add more premium seating, which usually means a bit less
35:14
Speaker 10: capacity in the marketplace. Frontier is gonna block your middle seat,
35:17
Speaker 10: so you can get a premium seat out of Frontier.
35:20
Speaker 10: That obviously brings the capacity out. You know, what you
35:22
Speaker 10: really need is you need airlines to start parking airplanes.
35:25
Speaker 10: And I think that's hard too, right, So United Delta
35:29
Speaker 10: all jazzed up about this inflection point. But look, I
35:32
Speaker 10: would note that there's a lot of very fast growing,
35:35
Speaker 10: low cost airlines in the US, Frontier, Spirit, even Jet Blue, right,
35:40
Speaker 10: they lease a lot of airplanes. You fly airplanes you
35:43
Speaker 10: lease because you gotta pay that least payment no matter what. Right.
35:46
Speaker 10: So I think it gets difficult here and it takes
35:49
Speaker 10: a little while to get capacity out. Maybe next summer,
35:53
Speaker 10: you know, I don't know.
35:54
Speaker 11: I was talking with the CEO of JSX. They fly
35:58
Speaker 11: fascinating roots. For example, Well, they'll fly from the west
36:01
Speaker 11: Chester Airport to the Naples Airport, right or some airport
36:07
Speaker 11: outside of la into you know, Palm Beach. So are
36:11
Speaker 11: we gonna see more of these upstarts, George.
36:14
Speaker 10: Well, so we always do in the industry, right. So
36:17
Speaker 10: the beautiful thing about this industry is when people sell airplanes,
36:21
Speaker 10: someone buys them cheap and starts flying routes like that,
36:25
Speaker 10: and there's always someone of the wants that come to
36:27
Speaker 10: this industry, right It's it's got just a heavy allure.
36:30
Speaker 10: Everybody wants to own an airline. That becomes one of
36:32
Speaker 10: the challenges too, I think, and sort of making money
36:35
Speaker 10: in this industry. But the big folks, they'd love to
36:38
Speaker 10: have more, you know, more maybe the ultra low cost
36:41
Speaker 10: point at those smaller airports, but you just don't get
36:44
Speaker 10: the demand out of those smaller airports, you know, to
36:47
Speaker 10: really fill big airplanes, and so that becomes part of
36:51
Speaker 10: the challenge I think right now. One of the bigger
36:53
Speaker 10: parts of the challenge is definitely business is kinda We
36:57
Speaker 10: heard United say one hundred percent of what it was
37:00
Speaker 10: in twenty nineteen. Obviously that gives you sort of no
37:02
Speaker 10: growth since the pandemic. They're saying, the share of revenue
37:05
Speaker 10: in the cabin is lower. That's always at a really
37:08
Speaker 10: nice price point, and business likes to go different places
37:11
Speaker 10: than leisure does, so it diversifies your routes to a
37:14
Speaker 10: certain degree, but you need enough of it to go
37:17
Speaker 10: to those other destinations. So business just isn't back enough.
37:21
Speaker 10: I think to let the big full service carriers move
37:24
Speaker 10: into maybe some smaller sized airplanes, more diversified destinations, and
37:30
Speaker 10: get competition off those sort of heavy volume routes, and
37:34
Speaker 10: I think that's part of the problem too.
37:35
Speaker 3: Our thanks to George Ferguson, Bloomberg Intelligence, senior airspace, defense
37:39
Speaker 3: and airlines analysts.
37:40
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