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In the middle nineteen sixties, if you say I want to fly, you fly. I don't know if he had.
A paper root of what.
Richard Levy is a legend folks, multi decades with American airlines, and won't bore you with a resume other than to say he soloed on his sixteenth birthday. What was that like, Captain Levy? What was it like to be sixteen years old and there's nobody helping you.
Well, let's say I was rady at fourteen, but fro Devishu Reduation said wait till my sixteenth birthday.
So my instructor and I trained and trained and trained.
I was ready a lot earlier, but we waited to the sixteenth birthday to comply with federal regulations.
And then the newspaper was there in Houston. They covered me. It was very flattering, but it was fun to fly by myself.
You encapsulate the romance of aviation in America. It is shattered this morning. Not did you see this coming, but all of the talk is was alluded to Captain Levy and the press conference the near missus our interior confidence in LAX or DFW or the others. Is it shattered this morning our confidence in aviation?
No, I don't think so. Is this sad and regretful?
Of course it is for the families of the deceased on both sides. The PSA regional airplane, by the way, this was a PSA regional aircraft operator on behalf of America Airlines, but the flight crew were not part of the American Airlines. Pilots itself, zero training from American Airlines. Yes, it had an American on its flight number. Every major airline in the US, not every, but majority have regional airlines feeding them in the smaller cities around the United
States networks very successfully. In any event, this mid air collision here between THESA aircraft, the CRJA seven hundred and the Army black Hawk helicopter is very regretful and we're going to learn.
From it, and I have some information to talk to you about that.
But it is, as you know, very very early, but some evidence has already started to show up.
Right now, Captain Levy, how do you view the US commercial airspace these days in terms of air traffic controllers, technology deployed. Is this airspace overcrowded? Is it well or is it well kind of managed?
You believe very well managed extreme olne.
I've flown the world, not every single airport, of course, but the majority of the major ones in Europe, Russia, China, of course, all over the United States and Asia. And the airports in the United States, whether it's JFK, whether it's DFW you mentioned Chicago, heroes based there thirty five years, magnificently manage and run. But it's a two way process there.
You have the air traffic controllers on the radar as you approach or depart the airport, and then what we call the local controllers, the.
Control tower people.
And they're often working with good weather like it was last night at four nine pm Eastern time. It's a C and B CEN and so we can talk about that. But the PSA was brought into the airport normally safely, correctly. We're going to be focusing on this army helicopter, which we can talk about.
One of the changes here is, for example, Reagan going from fifteen million passengers to twenty five million passengers in London, the talk of the congested one run way Gatwick. I hear that Munich is terribly congested. I'm sure Captain Richard Leavy, you know many other airports just as congested. Are we pushing in terms of not in my backyard, not building airports? Are we pushing the envelope on crowded in modern commercial aviation?
In my opinion, not a bit, by the way, speak of Munich.
I made the first landing at the new Munich Airport in the nineties from the United States, great airport over there, great air traffic controllers and all over Germany. But back to the US answer question, we're not pressing the envelope, as we say in aviation whatsoever, because as we every one of us know, if we're approaching an airport and there's a big event, a football event, a baseball event, a rock star is there, there's gonna be a lot of extra traffic. So what they do is one or
two things. Either we go into a holding pattern, or to be more energy efficient, they hold you. There's a ground stop, you don't take off to go to the destination. Say weather has gone through Chicago. I told you I lived up there. A big snowstorm has covered the airport is.
Cleared out, the runways are clear. They're a goingst base.
The airplane airplanes ten to twenty miles apart. But back to last night, we have the PSAJ seven approach to run Away zero one, and then they were asked could they swing over? Could they alter their approach and make a visual approach.
To run Away three to three?
Nothing unsafe about that, has nothing to do traffic coggestion whatsoever.
Captain Levy.
When a military aircraft is in commercial space, it's the commercial air traffic controllers that have authority. Right, that's not a military I mean they're treated like any other aircraft in the space.
Correct, Correct, So there you go.
I mean, so there's gonna be some issues there atom.
I think one final question, Captain Levy. And you know, I remember the day when Ronald Reagan, I'm going to say this is an amateur, sir, broke the Union of Air Traffic Controllers. A lot of the reporting, including Sydney Ember in the Times, they have a grid out of the new workload of air traffic controllers ten years ago. I mean you're a more ancient Levy was a Kiddihawk.
Yes, Richard Levy, Richard Levy ten years ago or fifteen years ago, did you have more confidence that the air traffic controllers weren't fatigued?
No, I had no Komba concerned about air traffic controllers.
Yes, that was also my vintage.
And one my neighbor in Chicago in the suburbs was an Air Force controller I remember, and he was brought from the Air Force to Chicago hair sharpest eye on the planet, and I had no qualm or concern they didn't have extra spacing for back.
Then one final question, captain, can you bring back the seveneven.
I'd love to bring it back?
Man.
When you all mentioned one comment and then I'll let you go. Please, technology that's going to be an issue in this accident. That again, the PSA was asked, could you turned right and quite what we call visual approach very safe to runway three to three? They said yes, for that size of the airplane, not a problem at all. Then you had the Army black Hawk heliculture, which is on a training mission going to the Potomac River training mission does not mean there amateurs whatsoever. There are pros
or good as they come. You have an instructor pilot
most likely I'm an air Force type guy. And then you have somebody who is upgrading to whatever they call it, an army aircraft commander perhaps in any event, so the people say it's descending, and there's we have equipment on the aircraft on all commercial aircraft operator Part one twenty one of the Federal Avish regulations called TCASS Traffic Collision of Audience System, and it's an audio that says traffic traffic and as you get closer, it says climb, climb
or descend descend. Well, why wouldn't that be going off because you're so close to the grounds, So that is it's blanking out as you get close to the ground.
We've talked to Robert Crandell over the years here at Bloomberg Surveillance, Sir, and what's great honor to speak to you today, Captain Richard at Levy forty years with American Airlines.
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At two am, three am, we were piecing together the show and it was a group resounding call of team surveillance. Can we get George Ferguson on. It's not just his knowledge of aviation, and we had Captain Richard Levion who's a pilot and incredibly experience. George Ferguson is the one that pieces the industry together for us. George, where is the aviation industry in America in a year? In two years after this tragedy, I.
Think the aviation industry has been you know, has been much safer than it had been in the past, right and so I think that safety record continues. I mean, you know, we're all sad in the see the event that just happened, the crash. Unfortunately, you know, from time to time they happen, but it's much safer than it
was decades ago. Right now, I think we're going through a phase and aviation as we're going through in other industries where there's a generational turnover in the labor in the business, and so there has to be a bunch of training and I think you know that's that training is critical to maintain safety. I'm worried that there may be you know, maybe the black Hawk pilot was in the midst of a training flight around a very busy airport and didn't you know, pay attention to all the
ques from ATC. But again, I think, you know, the future of aviation is all about training, strong training, and building in that safety culture. And you know, I think we've got to pay you know, very high attention to it right now, given this generational change. But I think it continues to get better from here.
Chres Paul and I were talking about this. I mean, there's a lot of reporting of near misses, you know, beautiful graphics and fancy, fancy analysis because we've got all the technology. Are there more near misses now or any old days? Did we just miss the near misses?
You know, I've seen more reporting of near misses and other kinds of operations where you know, airlines, airplanes are landing on taxiways and things like that. And again I'm going to attribute it to there's a new generation coming in as we retire a bunch of baby boomers, people with less experience. There's been a lot of turnover pilot
ranks ATC. We know they've been recruiting heavily because their ranks have been depleted, and so it's just critical here that we get these this next generation in trained up and you know, focused on the right safety procedures. So but I think there is more. I think there is more.
Right now, Hey, George, just give us a sense. You know, from your conversations with the airlines that you cover, where are where's this country? Where's our air system in terms of air traffic controllers? Where are we in terms of where.
We need to be?
Do we have enough ATC folks out there or where are we now?
I mean, no, we know we have shortages, right, we know there's been challenges recruiting people into that business. You know, I still hear the airlines talk about ATC issues limiting their operations as you know, So we know we don't have enough, and you know, we know we need continue to need to recruit people into the industry. I think one of the challenges the industry has too, it's I mean,
maybe it's lost some of its appeal over the years. People, you know, young kids like tech a little bit more. So we got to go out and find more folks that love aviation and pull them into the industry. Maybe work a little harder to get folks to recruit people into the industry because maybe it isn't as exciting as it used to be. But that's a challenge.
And how do the commercial airliners, how do they typically feel about operating in areas where there's military aircraft. I would, again, as we just saw today, I'm guessing that it just increases, you know, just some of the tensions of operating.
It does.
Right, So, you know Reagan right downtown there in DC. The convenience of that airport, it's huge, as anybody knows, it's.
Falling into that.
But you know, it's the nation's capital, so you're always going to have a fair amount of military activity around there, you know, just trying to protect the nation's capital. And so I mean to have to have blackhawks flying around the approach end of an airport, though, is extremely risky. I wonder if people don't revisit that. And to have a training flight around the approach end of Reagan at a busy time, busy evening is really difficult, right, So what we need to think about.
George, the critics here, and you know I'm not one of me. I don't think Paul is. I don't think we're qualified to be critics. Well, sometimes take our air traffic controller fatigue and daffing back to nineteen eighty one when President Reagan went after I'm going to generally say the union. It was thirteen thousand people at the time. Do you buy it.
Now?
It's been a lot of years since then, so I think we've probably fully recovered since Reagan let go all the controllers.
What do we typically get controllers? Where do they recruit them from it? And why is it so difficult?
Starting?
Yeah, why is it so difficult? It seems like I don't know the pay is there, it's kind of exciting. I know it's stressful, But where do they typically get recruits?
I mean, I guess people who love aviation, don't want to be a pilot, maybe want to sleep in their own own bed every night, become a controller. But you can imagine it's a really difficult job, right, You've got a lot of lives on your hands. You're again, if you're controlling at an air airport like Reagan, Newark, LaGuardia, there's a lot of things going on, So you better
be better be top of your game. And look, during the pandemic, you know, remember we were all sort of you know, those of us in business in the sorry of the office world. You know we were we weren't even going to the offices anymore, right, we were waking up at six point thirty, turn around computer on at seven. You don't get that. In the air traffic control business. You get a chance to do some late night shifts and you're tired, and you're trying to bring airplanes in
for landing and keep everybody separated. I think it's a challenging job, right, and that's one of the reasons why it may not appeal to everybody.
George, you're expert. I guess DFW is the size of Luxembourg. And you mentioned Paul earlier Denver. We went from Stapleton out to the beautiful airport in Denver, Salt Lake City building a palace, Kansas City building a palace. Do we need more airports? Do we need more gates?
George Ferguson, Well, look, I'm going to say that the challenge is that you know, some of those key key airports in the country you can't replace well, right, Laguardiah Reagan because of their downtown proximity. Even if you have more airports, there's capacity at Dullest to put airplanes into, you know, but nobody wants to. Nobody wants to take the trip in from Dulles to d C. So I don't think this is a we don't have enough airport, you know issue. Again, I think this is the it's
a black Hawk training flight around an extremely busy airport. ATC, it sounds like they moved the they.
Moved the runway to thirty three, the shorter runway up to them the White House.
And so if you're that Blackhawk pilot and you weren't paying attention and ATC said hey Blackhawk, you got this CRJ. You miss on that, and you weren't expecting that airplane to come into that other runway, bad things happen. So I don't think this is an airport issue. I think this is training paying attention. The Blackhawk apparently just didn't and see what was going on.
George, thank you. We look for your publication of Bloomberg Intelligence as well. Just great conversations today in this tragedy there with a guy with decades of experience in aviation.
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The right person at the right time. Francis Donald, RBC Capital Markets joins our chief economist. Francis I saw a buoyant consumption, which tells me there's something that gave way. What was the week statistic in the GDP algebra?
Oh well, excuse me. We've got a little decline in business investment. We got a little bit of a stagnation in trade activity. But nothing is a narrative change for the United States. And that's looking for when I look at data that comes through, is there's anything that's giving us a yellow flag? And right now no real yellow flags. The consumer on aggregate emphasis on aggregate is very strong, and I was told very early in my career twenty
years ago, never bet against the US consumer. That advice is still true.
Okay, I get it yesterday the FED level. But Canada cut rates ECB cuts rates of some flavor as well. Is the gap widening between America's prosperity and other nations struggling.
It's a very wide gap. One of the best ways that you can think about that is all these central bankers are talking about their neutral rate, what is the rate that is neither tightening nor eating on the economy, And nobody else except for the US Federal Reserve is claiming that their neutral rate is much higher than it was before COVID, Canada, ECB all effectively saying their neutral
rate is probably around two and a half percent. And now we have a FED that says we think that rates are above the neutral rate before percent seems okay to us. That is a huge, huge change in the way that global monetary policy operated, and I think it's being driven by massive amounts of US fiscal spending that's put a complete floor undergrowth and is creating this offset
between fiscal and monetary. So as much as there was focus on the FED yesterday and we always have to write our FED write ups, I spent more time thinking about government funding freezes and what the path of fiscal is going to look like ahead, because my sense is it's the fiscal path ahead that's going to be more important for the FED than maybe even the unemployment rate or the CPI.
Francis, as the chief economist for the Royal Bank of Canada, I am sure you and your colleagues have thought long and hard about tariffs and what they may mean for the economy in North America, particularly Canada, US and Mexico. Are you thinking about those because guess what February first is two days away?
It is, And one of the challenges is that just about everybody wants us to give a nice round number what does this tariff policy mean for GDP or growth? But it's an extraordinarily difficult economic exercise. We still engage in it, but it's really hard, and we've actually developed infographics to try to explain just how convoluted this is. Even before a tariff lands on an economy, you tend to see things like uncertainty shocks way on business investment
inventory forarding. So we were even noticing in the GDP data this morning that consumers had this big spend increase on durable goods in the United States, and we were talking amongst ourselves, is that consumers that are maybe thinking about autos and washing machines starting to become more expensive. So even before the tariff lands, you tend to see inventory hoarding. That changes your data. You got to talk about whether there's going to be retaliation, You got to
talk about what secondary industries are being impacted. And then maybe some of the biggest assumptions you have to make, And this is what keeps me up at night, how are central bankers going to respond? Because while we have a good playbook, Tom, we've been talking for years. We know if inflation goes up, central banks hype, right, But what if inflation going up is a function of tariff's rising and interest rates are not going to impact that
type of inflation. That's the biggest question that we have.
Okay, this is really important, and Karl Weinberg and Mary Chin is publishing High Frequency Economics with the idea that it was, you know, within the mix and the soup of it a disappointing report. Was there a teriff reaction in that second look at GDP or does that await let me do the math April thirtieth, or you know, may first report.
My senses will see more of that. But what I'm really looking for is the inventorious component Now, this is not something that seems very dramatic most of the time, but if we do see a lot of Americans who start thinking about, hey, prices could go up, you could actually see growth accelerate on the surface because you're going to see an acceleration in trade moving forward. So we did see that we know a little bit more about
tariffs now than we did in twenty eighteen. And inventory hoarding is a real economic development that could occur within a terraff landscape. And let me just say this, it doesn't even matter if the tariff itself is implemented. We see this behavior ahead of the tariff coming through. So even all this talk, all the tweets, etc. Of tariffs is having will have an economic impact. We know that to be the case.
Francis, I think we here in America we import some stuff from Canada from Mexico. What's the feeling up there in Canada today about what kind of I don't know response Canadians the Canadian government may have.
If the teriffs are in fact placed.
Well, I'll share with you that in Canada, our Canadian clients view tariffs as a high probability, high impact event and they are very likely if they're applied in extreme to create a recession in Canada, and different variations, of course would not produce it. We're still waiting on those details. In the US, my clients are a little less concerned about either the probability or the impact that comes through. But just a reminder, Americans import a ton of stuff
from Canada. You know, significant amounts of electricity, a quarter of all the oil consumed comes from Canada, everything from nickel of the nickel in the US economy. There's a significant amount of imports that come through from Canada that will raise prices for Americans and how the currency response is going to be a big impact from that. But most government officials in Canada this is just public knowledge. It's not me opining have talked about retaliation. So we
know the balance of risks. We might not know the magnitude for Americans, but we know the balance of risks is going to be higher prices and lower growth, and just the details of that is going to matter extraordinarily. And it's not me trying to say we haven't done
the work. We have, but there are so many steps to modeling a tariff impact that it can't be summarized in when Pacific word, which is why the Federal Reserve is not implementing it, and it's why places like the Bank of Canada are speaking to the risks but not putting a dollar figure on a justcaw for instance.
Or David Gera just spoke the Christian Friedland. As you know, there's a derby up in Canada for the next leader after mister Trudeaux. I know it's inappropriate for you to pick sides on this, but help our American audience. What's the timeline to the election right now into the spring?
Oh, we don't know. We know there'll be a new leader of the liberal policy. And I am an economist, not a political scientist, but from what I read in the papers, that means that the new leader of that policy will become Prime minister and then likely an election
will be called. So if you think about uncertainty for the Canadian economy, or even uncertainty for American businesses that are trying to figure out will there be retaliatory measures, it's been really challenging to hear one particular cohesive voice because at this time we're really relying on provincial leaders, for example, to give us a sense of what's ahead. Now, Tom, You've got me totally outside the scope of my credentials here.
What I can tell you is people are talking a lot about the uncertainty of tariffs, but uncertainty shocks are powerful economic taxes, and whether you're in Canada or the US right now, you're experiencing different variations of uncertainty taxes. So some of our data, which is backward looking, is not going to show it, but you should expect this to show up in places like business surveys, manufacturing activity,
consumer sentiment. To a certain perspective, I really would not downplay how important an uncertainty tax or uncertainty shock can be on an economy and all the places and the tentacles for which that'll flow through all of North America.
This has been wonderful. Thank you for the brief. Francis Donald, the Royal Bank of Canada RBC.
This is the Bloomberg Surveillance Podcast. Listen live each weekday starting at seven am Eastern on Applecarplay and Android Auto with the Bloomberg Business app. You can also watch us live every weekday on YouTube and always on the Bloomberg terminal.
Joining us now is John Stolfus of OPKO of Oppenheimer. We're thrilled that he could attend with a very optimistic call out America. John Ferrer put out a tweet yesterday that showed x percent of stacks flat to even lower, while a few stacks go up up in a way like Facebook meta yesterday as well. Do you see any broadening out in the great Stolfus bull market?
You know, Tom, First of all, our hearts are with those in the accident today in DCA. And then but related to the markets, we see a broadening of the rally that had started up until we got this deep seek question, and then the we saw a pullback. I mean, right now, I think the S and P is still not about one percent from its.
January twenty third peak.
The Nasdaq's not about two percent, But you look at it, the trend is upward in the sense that we've got the FEDS doing the right thing. We believe we're one of the fut strategies that think that business and the consumers and job growth resilient.
In the FED meeting yesterday, I thought the most interesting debate was simply on real and top line economic growth. Jan Hatzius and Goldman Sachs yesterday came out and shaved, I believe Q four under two percent. That's a bold call. What is I don't want to talk to John Stolf for stock guy. I want to talk to John Stolf as economist. Do you believe in a solid, resilient American economy forward?
I think the way I'd put it, it's a remarkably resilient and I think that's been the case that has caused skeptics and bears a lot of adjida over the course of since the rally began in the fall of twenty two. I think it was in October of twenty twenty two, after a really rough year the rally began and it persisted through twenty three and twenty four.
We think it carries through here.
You know, we've got that seventy one hundred target that I was looking for about seventeen percent upside from the point where we put it in in December. It's reached closer to around an eighteen twenty percent kind of upside.
But we think it's very possible.
The years leading up to the tech bubble were about four or five years, as I recall, with remarkable performance from the S and P five hundred as technology became a more important part of everyday life for both business and the consumer, and that's where we are.
But it's about sharper virtual.
Picks and shovels for both business and the consumer to deal with each other and deal with the data that is produced on a daily basis, which has grown exponentially in the last decade.
John, we heard from the FED yesterday. I think the market's discounting maybe one or two rate cuts, so there's not a lot the Fed's going.
To do for us in twenty two.
It feels like earnings are going to have to be the driver for this market. How confident are you in the earnings for Corporate America?
Well, so far, you know, this fourth quarter earning season looks pretty good. Last I looked on the EA page on my Bloomberg it was it was eight sectors positive earnings growth. Four of those were double digit earnings growth, half were tech related, the others were as I recall, it was financials, and for the life of me at this moment, the last one I don't recall what it was. But the thing is, it's a mix of cyclicals and growth that are driving this. And we think it's you know,
it has it. It's not the trees grow to the sky. It's just that a market can climb a remarkable wall of worry in terms of dealing with all kinds of things.
I found fascinating yesterday. And sorry, my small brain can't remember who I was talking to at Lisa. Has it been a blur the last forty eight hours. It's been a blur the last forty hours took me. With this horrific crash. Somebody mentioned to me incremental four oh one
K purchases, Mike Green, simplex, simplified asset management. This goes back to my essay of the year three years ago, Lawrence McDonald, who walked through the wall of money that's just out there relentlessly putting a systematic bid to the market. Do you buy that story?
You know we do, and we think it's not an exuberance, but rather has to do with a fundamental thinking that I think has occurred in the private client group, which is that Social Security will simply not provide the same percentage of retirement income that it provided for Boomer's parents, and.
So we're savings America.
This is under discussed and it's won that frequently when whenever you get a boost in the tenure yield, the bond crowd says, oh, bonds are competitive with stocks, but on an media to longer term basis, history.
Tells us past performance no guarantee your future results that stocks indeed right where to be.
Good morning everyone, It is Bloomberg surveillance from New York City this morning. Good morning to ninety two nine FM in Boston, Bloomberg eleven to three to zero in New York and is sleepless ninety nine to one in Washington. A horrific plane crash at Reagan National Airport overnight. I'm sure many of you are up to speed on this. We'll continue with more information on it. In scheduled twelve minutes.
The Mayor of Washington will provide a press conference with various officials, responders if you will, and we will of course bring you that coverage at worldwide. Our goal here, folks, is to brief you on the crash, provide background of the aviation industry. We're working on guests on that, former pilots, engineers, former federal officials to speak to us about it. But we were thrilled to bring any people like John Stolfus, Paul.
John, you know, what are some of the sectors here that you're looking for in twenty twenty five? Again, we had, as you mentioned, two really strong years in the S and P five hundred performance in twenty three and twenty four. As you looked at twenty five, are you looking for certain sectors of leaders market or how do you think it about it?
Well, we're looking at from a perspective of first of all of sectors, and we think it continues to be information technology and communications services and communications service.
As the old phone companies, but it's also got the streamers, the search engines, and it's got social media and it's a big stuff for the AI story. But we're also looking at the industrial sector, which is heavily embedded with technology and financials and consumer discretionary. You like the banks, well, we like still like the big banks, and we think his interest rates are normalized.
It's good for them.
It's not a day to say this, but John, you're killing it. You're calling a bull market has just been absolutely super very flattered. Joe, still do I need a new grudge guitar?
I tell you a penguin.
Thank you, missus King. Good morning, mister Stulpers, I need to drudge Penguin. You're dismissed, John Stolfus, thank you so much for DAWs seven s and p I should say seven thousand as well.
This is the Bloomberg Surveillance Podcast, available on Apple, Spotify, and anywhere else you get your podcasts. Listen live each weekday, seven to ten am Eastern on Bloomberg dot com, the iHeartRadio app, tune In, and the Bloomberg Business app. You can also watch us live every weekday on YouTube and always on the Bloomberg terminal