A Real Leader Is Needed To Deliver Vital Changes: David McCourt

question of leadership. How should a leader go around getting people to come together and get past the difficulties they're they're currently dealing with. To answer that question, we have David McCourt, founder and Chief executive officer of Granahan McCourt Capital, also the chair of National Broadband Ireland, an entrepreneur for years in the technology, media and telecommunications space who has been a top many companies, many production outfits. Reading Rainbow

you want an Emmy for It? I loved that show when I was a little kid. You're also the author of Total Rethink Why Entrepreneurs should Act like Revolutionaries. When you're leading through a crisis, how do you even begin to think about first steps? When messaging your to your staff, to the people who you are leading. Thanks Thanks Lisa. Well, I think the first thing you want to do, Lisa is make your issue and the people you're leading issue the same. That's the very first thing you want to do.

And you want to have empathy, and you want to spend as much time listening as you do talking, and you want to be consistent. And I think those are the things you're seeing. Some people in the business will do very very well and some excuse me, and some

not to do well at all. And I think on the on the government side, we're seeing a real inconsistency around those types of leadership qualities, which is contributing to the chaos and the problems we're having right now, which are obviously not only affecting us as a society it has it's just not good business as well. So it's interesting, David. You know technology, we think about social media, the ways

leaders can communicate as so different today. It used to be, you know, you would hear from the White House via some formal press release with the White House stationary. Now it's it's it's a tweet. How has technology changed maybe how leaders get their message across to their followers. Well, it's it's changed everything, right, Uh, Paul, I mean it's it's it's changed overnight. We've all changed the way we

do business. But I think I think the big change is yet to come and there's a couple of things that have to happen. Number One, we have to make sure we get connectivity to everyone because right now it's a big urban world divide. Is roughly three million people a week that are moving from ral to urban because rural life in America and other parts of the world where I do business the UK and Ireland has just

been decimated. And we need to make connectivity human, right like Keanan water not so they get Netflix, so they have educational opportunities, health care opportunities, jobs, products and services to make their lives better. So that's the big change right now. It's zoom calls, and it's it's you know, being able to use social media to communicate. And when you think of social media, Paul, I think you want to really be thinking of that. That is Internet two

point oh. Right. Internet one point oh was was was just moving once and zero is more efficiently. Internet two point oh was was people communicating with machines uh at pace. But Internet three point oh when machines are communicating with machines at scale. That's going to be a total game change of all businesses, all your listeners that are gonna have to rethink the businesses when that happens. And of course, to make it fair, we have to make sure we

have connectivity to everyone. And I would argue that a lot of people are already making this shift mentally right now, based on what we've experienced with the pandemic, with more people working from home, trying to homeschool or not home schooling. But I'm just wondering, you know, especially as we get the jobs report tomorrow. As a leader, how do you offer reassurance to people that they're not going to become obsolete,

they're not going to be earning much much less. How do you give that kind of confidence and rally support at a time of such massive technological transformation. Well maybe maybe that that might be the wrong question, because I don't think we can if we don't make real changes, because there's some systemic problems that we're not dealing with. Our education, that training is relatively flat for last fifty years. If you saw a classroom fifty years ago, in years

start pitch of a classroom today, they look alike. The types of jobs we need in America are at a slope upward slope that's deeper than it's ever been. The traditional jobs are at a downward slope that sleep steeper than we've ever seen. So we can't give people a fake sense of confidence. We need to get people ready for the jobs of the future, and and we're not really doing that. So so you said that people have already made that the jump. People have made the jump

that have a job. So if you have a job, like like the three of us do, then you can make the change. You can adjust your life, you can do zoom calls, you can do an interview on Bloomberg Radio from in Los Angeles right now when you're in New York. But if you don't have a job after this is over, you're gonna be going into a market with the jobs aren't ever coming back, and the need for training for new jobs has never been so steep.

So I think we have to address the systemic issues rapidly um as opposed to pretending that everything is going to be okay. Because we have unemployment at the levels we have this pandemic that you know is as fearful as the one of nineteen eighteen. We have riots that

are that are far more expansive than the nine. So we've got a lot of things going on that we have to deal with, and the best way to deal with it, I think is not to give people confidence that it's gonna be okay, give people confidence that we're really going to address the systemic issues that we have. I think that's that's what the game changes, and I think that's what everybody wants to hear. And by the way, I know, this is the business show, so it's good

to business. The the it's good for business that we give people their dignity and we give people a sense that we're going to address these systemic employment issues. That's my view anyway. David McCourt, thank you so much for joining us. We really appreciate your thoughts and Commentsary David McCourt. He is the founder and CEO of Granahan McCourt Capital, also chairman of the National Broadbad Ireland and Lisa Also. He's also the author of Total Rethink Why Entrepreneurs Should

Act Like Revolutionaries. There's certainly need, Lisa, I think we can all agree as we look around what's going on over the last several months and really over the last we can have as a really to some of the civil unrest for leadership both at the national level, UH and at the local level as well. Yeah, this is

a scary time. It's a scary time for everyone, and it has brought about a lot of changes rapidly, people saying that it is accelerated, brought forward by years, some of the trends that we had seen, in addition to shattering a lot of people's notions of safety, of healthcare and and beyond. And and there's a question of how we get beyond this, Who will bring us there? How do we get the confidence and the support in order to build whatever comes next? And Paul, that's going to

be something that we continue to ask throughout the months ahead. Boy. Airline stocks are just ripping today, America Airlines up almost United, up about four Delta, up about eleven percent. And that's on news that American Airlines says it's gonna boosting in July by about seventy as demand goes back stronger than expected.

Mary Steinenstein, us airlines reporter for Bloomberg News, joins us. Mary, give us a sense of how what really American is saying here about the demand side of their business, well, they're saying that they've seen demand come back a little bit quicker than they had expected, particularly in domestic markets and particularly in states that have already lifted some of

the quarantine rules, like Florida and like Texas. They're seeing a lot of people who want to travel to UM to destinations like beaches, amusement parks that may be reopening things like that, and they're also seeing a little bit of improvement in domestic business demand. All right, so this is actually coming off a very difficult period. How much ahead of expectations is the surge and demand the American

Airlines is describing here. They didn't really put out a lot of numbers in terms of what they had expected versus what they're seeing, UM, but you know, they what they're doing is they're going to increase the number of flights on their busiest days next months to four thousand,

and that's up from twenty three hundred in June. So they've been planning clearly, you know, for around that twenty three d June level, and now that all of a sudden they're bumping up to four thousand UM And part of the reason for that is they're saying that their load factor, the percentage of seats filled for plane climbed to fifty five percent last week, down from in April,

or up from fIF in April. And what's important to note was before COVID, load factors on US airlines were like in the high eighty percent, So they've fallen a lot. They're still way below where they were a year ago, but they definitely are on the uptick. Are they gonna be selling middle seats? Is anybody can buy a middle seat anymore? You know? Um long term? All the airlines

have said they can't block middle seats long term. Right now, the only airlines that are guaranteeing the block middle seats are Delta and Jet Blue. The others are saying, you know, we'll space you out as best we can UM or will allow you to move when that's possible so that you're not sitting next to other people. But yet clearly that's going to have to go away because they can't make money by blocking off a third of the seats

on their planes. Well, Mary, I'm curious about the liability of airline carriers if someone does get sick on one of their flights. Could they be held liable if they don't provide masks and if they don't require a certain level of air filtration and sanitation. Right, A lot of the airlines, effect all the airlines have enacted very sophisticated, very up to date UM cleaning processes for their aircraft.

And they'll tell you that the filters on their planes are our hospital quality filters, and that the air is recirculated very often. It's not like once a flight that the air recirculates or that just recirculates air within the cabin. Um they're doing, you know, electrostatic cleaning. UM, they're taking all kinds of steps. Most of them are will give you a mask in a little packet of disinfectant when you get on the plane. UM. A number of them

are requiring masks to board the aircraft. And so I think, you know, as long as they are complying with CDC recommendations and doing everything that they can, I'm not sure how viable UM a lawsuit would be about them, although I'm not a legal expert. Mary, what's the you mentioned load factors in the high eighties. It seems like every flight I've been on in the last couple years has been a load factor. What's the load factor they need

to to kind of break even start making money. UM. That's a big question that everybody asked, is what what do you need to be break even? UM? You know, the airlines today are all still burning through millions of dollars a day. UM. The the government aid they got helped them with some payroll costs. But you know, although you have this bright outlook or brightened outlook on more flights, you know, all these airlines are still UM, plan need

to cut jobs. You know, United and American and both said we're going to cut our management and support staff. They have tens of thousands of employees who have already taken leaves or early retirement UM. And they are mostly offering a second round now of leave for employees to take.

So although it, you know, it looks a little bit brighter, the industry is still hurting a lot and it's going to be a long lasting impact that the carriers are saying, you know, we know when demand improves and we come out of this, we're just gonna be a lot smaller than we were before it happened. I want to talk about the roots that the airlines are willing to fly. How much is this really just focused on domestic flights and how limited our flights to areas that have been

harder hit by COVID? And then of course there's a question of international travel. How are the airline carriers dealing with that? Right? The airlines have not added a lot of international travel. Um. You know, right after um, the COVID pandemic really started spreading, Um, they basically stopped all the international flying, I mean playing. Airlines like American was making a handful of flights internationally each week, so it

was a very very small amount. They are adding back, um, some international routes now, um, but they're also delaying some international routes. For example, American has added back a few for June, but they've delayed by another month until July or beyond, a whole lot more of the international routes that they had had planned to start. Part of the reason for that is there's confusion about well, you know

what country is listed the restrictions. What countries are gonna cause me to quarantine for fourteen days when I get there? You know what? Tourist attractions in Europe are open. So there's a lot of confusion, and so people are more hesitant to book internationally, UM, domestically. UM. You know. The only place that is got a quarantine requirement when you fly there in places Hawaii, and that's really dampening down travel to Hawaii. Southwest for example, has not restarted uh,

their primary Hawaii service yet because of that. Mary Schlagenstein, thank you so much. She covers all things airlines for us at Bloomberg News. Well's another difficult jobless claims number today. We're looking about forty million people since the beginning of the pandemic have fouled jobs claims. Real question is how are the gig economy employees being counted here and how are they faring during this economy? For that, we're welcome, Uh, We're pleased to have John Chuangu, CEO and co founder

of Aquinutu discusses the gig economy. So, John, thanks so much for joining us here. Give us a sense of how gig economy employees are faring here in this economic environment. Yeah, gig economy employees are not uh, not doing well. They are a very large part of the record numbers of unemployed people uh that we're having. Um, and more importantly, because they are not really part of the social safety net.

Um they do not get, they have a lot more difficulty getting an employment and by large they do not have sick pay and they do not have health insurance from their employer, so they are they are definitely hurting

more um than the average employee. Well, so I'm wondering going forward whether we're going to see a sea change in some of the lack of protections that gig workers have based on the fact that the government has had to step in in big in a big way to back up these workers and may push employee employers to do more. I certainly hope. So right now, there's a great deal of inequality in corporate America, even in some

of the biggest, most richest American companies. You have really two classes of employees, one regular w two employees who get who might get great benefits and retirement plan ends and lots of perks. But then you have the contingent contractors who are who are combined you know, gig gig economy employees as well as temporary contractors, and they do not get benefits, and that that really needs to change, and it's it's changing by companies on their own taking

some initiatives. They've been some companies taking steps a few a few ones recently, UM, but it might take government involvement to really change it. You have initiatives like a B five in California, UM where some UM where the where the California government has basically passed laws making it a lot more difficult to hire people as ten ninety nine or contractors, which will kind of force UM at least basic employment protections on a lot of UM businesses.

And and and I think we shall support that because it's only fair for the workers. So John, I guess you know we saw over the last several year as I think about Uber and Lift and other gig economy companies, you know, a real sense that, gee, this is a real cool way to think about work. It's flexible. I can work when I want, where I want, kind of set my own hours, be my own boss. There's a big,

big move towards the gig economy. And I always joke that anytime you walk into a Starbucks anywherewhere around the country, it seems like the entire Starbucks is people with you know, computers open doing a certain gig economy jobs. That's going to change at all. On the other side of this pandemic. Look, there's a really big opportunity here to make the gig

economy great. That's sort of flexibility that you're talking about, and the easy access the jobs is wonderful and we should really be proud of of economy that has created this and the entrepreneurship that has UH has built UH

such flexibility and work. Now there is a downside though, because um as they built these systems, they did very quickly, and they wanted to have the as much HOSS advantage as possible, so they decided to pay people as contractors, which means you don't pay employment taxes, and you don't do minimum wage, and you don't overtime laws. As an effect you and and you cut out all the social services. Well, this has a really big impact, and it's been magnified

by the pandemic. So my hope is what these companies will do, maybe with some prodding from the government, is keep the gig economy and keep all the great benefits, but add the social protections such as minimum wage, unemployment insurance, you know, overtime laws that all companies have really provided their workers for the last hundred years if something. If if companies like McDonald's and Starbucks and Walmart to pride these protections UM for their employees, I'm sure gig economy

companies can do the same. John, I'm sure you've heard this argument. UH. And just to give some perspective, you co founded this company in while you are an under graduated at Harvard. UH. It's fascinating to see how much the world has transformed in that time with the focus on the gig economy. What do you say to people who counter your argument about protections and say that this market would but not be nearly as dynamic if companies had to pay the kind of overhead required of companies

that do have full time, non gig workers. No, I I I disagree with that UM UH Fully Basically, America wants companies that could provide value to consumers and pay their workers a fair wage. UH. They do not want UM to UM participate in businesses that mistreat their workers UM. And that's why many American companies that are the most successful have managed to do both. UM. What gig economy companies are saying is that, hey, we can't UM provide

great value to customers unless we underpay our workers. And if that is the case, which is not the case, but if that was the case, Uh, then there should be no gig economy because you cannot essentially provide great services while miss treating your workers. Americans don't want that. John Joying, thank you so much for being with those, co founder, chairman and chief executive officer of aquand here in New York talking about that gig economy, which has

very much been in focus. And Paul, when we parse the jobs data tomorrow, one big question mark is a number of people receiving the pandemic unemployment insurance, a separate bucket that covers the gig workers. Well. After the significant sell off we saw in March, in most financial markets, it's been extraordinary rebound for a lot of the riskiest assets out that. Do you think about the equity markets up nearly off the lows. Uh. It's also applied to

certain extents to the emerging markets. And let's get the latest for all things emerging markets. We turned to Damien Sassaur. He's the chief Emerging Markets credit streat just for Bloomberg Intelligence. So Damian, give us a sense of kind of how your markets, the riskier assets classes out there emerging markets have performed over the last week or so. Yeah, you know, I mean they're definitely snapping back. But you know, look, I mean, Paul, we've worked together for four year now,

four years now, you know. So in my prior lifetime, you know, you're aware I ran a large asset manager with a focus on em but more importantly to focus on the frontier markets. Right. So when it comes to pitching numerous projects, you know the folks down at Connecticut and seven nineteen Street, I'm talking about the World Bank and the i m F now for funding for development

of power deals or agriculture. I mean, I can tell you without fail, multilaterals, including all their x in banks and the financial institutions that support them, they must manage their own balance sheet risk and this means managing exposure across countries and sectors. Paul. So you know, when we talk about debt relief from the G seven, and we talk about all the IMF lending facilities that are going on for the me the debate isn't about relief, It's

about how the relief is delivered. And I've got two words for you here, transparency and control and I fear when the dust those we're going to have little of either to lean on when times gets off. All right, well, let's talk about the current situation and who needs the

debt relief the most. As an investor, if you channel where you were back from two thousand sixteen, where would you be looking for, you know, the best place to basically put your equity in and and say you deserve some sort of relief And I want to be part of your upside. I mean, is there is there a country that you say is deserving? Is that of that? I mean plenty of them. The problem is the problem is how to institutions price that risk? Okay, so let me give you an example here. The I m F

is preparing a new credit line with Ecuador. But Lennon Moreno, the president is not going to seek re election, and if he doesn't, there's a reasonable chance that the new government won't be as pro reform. So how does the IMF? How does the World Bank price that risk that the next administration might very well reject any you know, loans they agree to today? Right, so this is a country that's going to have as much as eight billion in

an eight billion dollar budget gap. I mean they once went a hundred and eighty years without repaying a bund. They're obviously not a good creditor, you know, So you know, I mean that's that's the risk when you deal with you know, frontier and emerging markets and all that's going on here in the world. And for me again, it comes down to, you know what we're seeing from the G seven This is more forbearance than debt reduction, right,

it's not real debt relief. I mean, does the G seven expect to realistically get paid back on these loans? Does the I m F? And more importantly, you know how does the World Bank and political risk instore is out their guard against all of these risks. I mean, it's very difficult to price your Lisa. So what is the market for some of these frontier countries, Damien? I mean,

is it is? It is the I m F, the backstop, is that the last lender of last resort or can some of these folks go to say China and go to their check book. Well, you know what it comes down to the two words I mentioned previously, transparency and control. So on the China front, it's all about transparency. You know, we need to know what the debt stock looks like for a potential borrow before lending to them, that's just has to upen and you know right now we don't

have much of that right. And then it comes down to control. Even if the moons and the moneys do reach who you know, you know that country sures you know who's going to control it? You know who's going to disperse it? Is it going to go to the places that the I m F and the World Bank and and and the slenders wanted to go? You know, are we going to trust that the municipalities, the governments that are in power are going to do that for them as an extension of them. You know, the verdict

is still owed. And you know, these are the real challenges that go hand in hand with trying to provide relief to all of these markets that so desperately needed. Paul, this all sounds pretty bad, and it seems like you wouldn't want to invest in developing markets. And yet if you take a look at developing market currencies, they've been on a tear recently. I mean they've been gating quite a bit. And this has to do with the dollar,

which is weekend pretty steadily. How much can you just go into a basket VM currencies here based on a week or dollar call going forward and nothing else. I mean, I wouldn't do that. I mean, I'd be taking with the market different I'm sure. I mean, I you know me, I'm a risk averse guy. Look, there's no question about it, you know, and you invested in the market marrow and

may and go away, and I was wrong. I'm the first one to say that mean and say, you know, but I'm I'm a prudent man having worked in these markets and knowing what the real risks are. And you know, what you're seeing an emerging market, specifically on the equity side, is very much what we're seeing here in US equity US equities, where it's it's it's all at the top, you know, it's it's it's the Ali Baba's, it's the ten cents, it's the Taiwan semiconductors that are getting fatter.

It's not the smaller commodity producers we might find in many of these countries that make them tick. And so it's not everyone participating. And I think you know that we're seeing that here in the US obviously as well. So I see Brent crude here pushing close to forty dollars a big rebound. What does that mean is that significant enough movers that oil still low not to be much of a help for some of these exporting emerging market companies. Well, Paul, I mean you have to look

at the average price over a period of time. So when things got really bad for a period there, you know a lot of people weren't as overly concerned. I mean I wasn't as overly concerned. People still need to power their you know, know, their cars and their plants and everything us that goes hand in hand. So so you know what I think, you know, we're taking a step back and now realizing, you know, what are Saudi Arabia and Russia? What did the OPEC plus going to

do here? You know, are they going to be successful in pushing these production cuts forward? We know Nigeria and Iraq have you know, they're on the out because they've been producing far too much based on what they've agreed to. And so you know, I do think that you know, Saudi and Russia have regained a little bit of a toe hold here in the market. I think that should but provide some stability and support and hopefully that's the next leg we see where the commodity producers begin to

participate in the recovery. How much does the emerging markets dead investment industry rely on the FED and the ECB continuing to just absolutely blow away the market with as much cash as they possibly can and absorb any excess government debt. In other words, how much does it rely

on a suppression of yields in the developed markets. I mean, that's the great question, right And I think the market pricing of the financial assets that investable are very much a function of what we're seeing here with the FED. But the real economies are just not feeling it yet, because there's still a hunger for dollars. There's a dollars you know, onshore in many of these economies that you know, they you know, they they've they've gotten hit so very

badly by the pandemic. I mean, food prices, energy prices, I mean, and now you know, you know, the governments are coming after local corporates and households, taxing them more because they can't meet their budget depth. You know, so it's really becoming very painful. You know, it's not about helicopter money in these markets. It's about directing the capital to those that need it most in an effica you know,

just in the right way. And you know that's where things are getting a bit muddled, and that's where the challenges line. And so yeah, I'm sorry to be the dead horse here, but you know that's my focus and it's and it's you know, I'm laser focused on it. To to coach on Sarah, I gotta say, I've I've I've got to be fascinating. Unfortunately, I would love to speak with you all afternoon, and actually particularly about the movement that we're seeing in the bond market today, because

I think it's fascinating. It is very unusual. It does not go here with a broader narrative. You see the long bond sell off even though you don't see inflation expectations picking up twenty seconds. Any thoughts on that are you interesting? Premium? I mean, we need some of it, right, I mean, obviously I don't know if this is more inflation expectations or growth expectations yet because it's early going.

But this is the steepener that and steepening move that a lot of you know, a lot of Wall Street House has been calling for and I expected to continue at least for a little bit longer. But we're hitting some technical levels if you ask my man our Jersey so but people look out. We're hitting technical levels, folks, same as as our chief Emerging Markets credit Strategies for Bloomberg Intelligence. Thank you so much. I find this so interesting, Paul.

I mean, I'm just looking at this, and I'm thinking, you know, is it inflation? But you're not saying at the break evens, you're not seeing it stocks, you're not seeing it in high credit risk priced in by the derivatives. Interesting. I wonder who's selling. Thanks for listening to the Bloomberg P and L podcast. You can subscribe and listen to interviews at Apple Podcasts or whatever podcast platform you prefer. Paul Sweeney, I'm on Twitter at pt Sweeney. I'm Lisa

abram Woids. I'm on Twitter at Lisa bramwoit's one before the podcast. You can always catch us worldwide on Bloomberg Radio m