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What gives?
Let's ask that question to Michael Gabin, head of US Economics at Bank of America Securities. Michael, what is your reaction given the fact that markets seem to be a little put off by consistently disinflationary data.
I think the market's head well first of fall. Good morning Lisa and Katie, thanks for having me on. I think markets had priced this in already. With the CPI data in hand and the PPI data in the hand, we can make a pretty good projection of where PCE should come in. And we did expect the headline to be down in tenth in the core to only be up at ten. So this number really wasn't a surprise
to us. And if you do the implied CPI forecast from market prices, they're looking for pretty soft inflation over the next three to six months, so I think that the market had largely priced in this number, as we all know they're looking for about twice as many cuts this year as the FED has planned, So I think this was a status quo number for markets.
That might be status quo. The durable goods orders, as Katie pointed out, not so much. It came in significantly higher than expected, and I wonder if on the margins there's some anxiety that it seems sort of incompatible that we get ongoing better than expected growth while still seeing that disinflation that everyone's been hoping for.
Yeah, there's certainly a limit to that, right, So, so far, the narratives is that the economy can cool, growth can remain modest or moderate but away from recession, and we can experience both moderate growth and disinflation at the same time. That's our view. I think that's the FEDS view for sure, and why they've shifted to say a more balanced reaction function between bringing inflation down and wanting to support a soft landing. But you're right, there's a limit to that.
There is a risk to shifting to a doubvish stance now coming out of the December meeting and tilting the outlook towards rate cuts because markets have reacted quite quickly and financial conditions have ease. So the risk is that maybe you gin things up too much and you don't make as much progress as you want on the inflation front. So no free lunch in that regard. We think the
Fed's in a good spot. We do think rate cuts are coming, but you make a good point, too much easing too much using in financial conditions could ultimately mean inflation is stickier to come down, or maybe even rises a little bit and kind of puts off some of these rate cuts that the market is expecting.
Well, let's talk about just the magnitude of the rate cuts that the market is expecting. Of course, one hundred and fifty bases points price into next year, a big goalf between that and what we saw on the dot plot, just seventy five basis points of cuts penciled. And when you take in totality what we learned today, when it comes of course to PCE, to personal income, to spending and of course those durable goods orders, where does this
land in terms of what the market is expecting. Do those six rate cuts look justified at this juncture.
I think the inflation data certainly support the idea that the FED can start in March. So assuming the data flow trends in the way that it has, with a lot of evidence of disinflation and modest growth but a cooling economy, we do think rate cuts can start in March a little earlier than the FED things. We would say, you know, curb your enthusiasm a bit for one hundred and fifty or maybe more rate cuts over the course of the year, because we do think inflation will be
a little more slower to come down. So we agree on the start earlier than later. But our view is you get about one hundred basis points of cuts, so the market may need to reprice some of these as the data comes.
In, So okay, maybe that process back to target will be slower than expected. Compare that to what we heard from Jerome Pell last week. He said that he was reluctant to say that the last mile of this inflation fight will be more difficult. Is that your expectation or just slower than expected sort of imply there's some pain ahead.
No, I would agree that at least, you know, again, the composition of the data flow that we've been seeing, I think suggests we can enjoy modest growth and disinflation, and it does suggest that the last mile may not be overly difficult. Right, So that does come from supply side effects, both on goods and on services, where reemployment has really helped increase services outputs. That we're getting a supply side effect there. As everyone knows, core goods have
been falling for six months. So we'll see if things like shipping issues out of the red seat change that narrative. But otherwise, the last three to six months worth of data suggests maybe we can you know, it's more likely than not that we can get down to two percent consistent outcomes without needing to generate significant pain in labor markets, which would be a great outcome for the FED, the you know, the average US household and the average US business.
It would be a great outcome for the economy.
Well, I want to talk about that a little bit more because inflation has been an enemy number one from the Fed's perspective for really the last couple of years now. But now as we continue to get this march lower when it comes to some of these figures. Does the Fed's focus shift here, do they start paying more attention to economic growth, to the labor market, et cetera.
Yeah, I still think inflation bringing inflation down as the number one goal, given where inflation's been where it is, and you know the Fed's internal consistency about, hey, we really control inflation. We set that long run inflation objective. We determine long run inflation outcomes. So that's it's kind of you know, it's in their blood, so to speak, and in their DNA. So I still think that's issue number one, But a very close issue number two, if not closer to balanced, is hey, I think we can
soft land this economy. We don't need to generate as much pain in labor markets as we thought we might have had to do six to nine months ago, so we should keep an eye out for that. So yes, it does make an argument that one of the reasons why the market has so many cuts priced in is both of those cases moving to a more balanced reaction function in an environment where the economy is cooling and inflation is flowing, that just increases the odds you're likely
to get rape cuts. So I think the market is listening to that message.
Michael, what's the gap between just weakening that is good and weakening that is bad? And I ask this because I'm trying to still understand the language at the cfo's office at Nike when they said that demand is cooling faster than they expected, revised downwards some of their expectations for sales, talked about cutting jobs. Is this something that is just an idiosyncratic business overlaid with a weakening economy in a good sense, or is this potentially something bad?
Yeah?
I think I would put that narrative probably inside the you know, the rotation story away from goods purchases back to services. The good side of the economy. The manufacturing sector has been kind of on the edge, if not in a mild recession for some time now, at least in terms of you know, production and inventory adjustment and so forth. So I think the good side of the
economy is reacting in part to that rotation story. What still looks pretty solid is activity and employment on the services side of the ledger, which is, you know, two thirds or more of outputs. So I think, you know, the to use your phrasing the quote goods slowing and cooling is about the rotation story, the end of the
COVID reopening impulse. Things should naturally slow down anyway. We need to provide an environment for the economy to do that while we bring inflation down without tamping on the brakes too hard. So you're right, there's a fine line between slowing that we think should happen as a result of a very unusual pandemic driven cycle and oops, we've got the monetary policy setting calibrated incorrectly. It's too tight. We have to back out of it more quickly.
Does anything about the services inflation concern you, given the fact that it still is running above which you would expect for two percent consistent inflation.
Yeah, certainly. Shelter and kind of the structural issues in the housing market without a lot of supply and inventory and available homes to contract for sale or purchase. So the shelter story, shelter is moderating. It is coming down, but it's coming down more slowly than our models would have suggested, So we think that there's stickiness there, and even non shelter services inflation has been more sticky. So this is where we would say, maybe you know, curb
your enthusiasm. We have inflation for PCE coming down to around two and a half year and near by the end of this year where market implied pricing is closer to so it's easy to see how a stickier inflation path could mean some of these rate cuts are not realized.
Michael Gape in a Bank of America security, joining us now as someone who's gotten it right all year at your Denny, president of your Denny Research called for the Roaring twenties, is leaning into that now talking about disinflation, we're seeing it now. What keeps you up at night, ed, considering that so far you've gotten a lot of things very right, Well, I've.
Been sleeping pretty well quite honestly, I guess I do worry about the Middle East, the geopolitical situation, the fog of war. You never know how things unfold once a war starts, and we have this fairly contained localized war in Gaza, and that the risk is that it becomes a regional war and it affects the price of oil. But so far, the price of oil has been telling me, telling me that there's not going to be a regional war going on here anytime soon.
So putting aside some of those tail risks, is the risk in your mind that people aren't bullish enough, considering that everyone's been upping their expectations for end of the year targets, but we're catching up to it really quick already it hasn't even been the end of the year.
Yeah, I think that's true. At the beginning of the year, I was talking about forty six hundred, that wasn't bullish enough. We're already above that for the end of this year, and then I'm looking for fifty four hundred next year, and now there's more people talking about over five thousand, and then for twenty twenty five, I'm talking about six thousand. So I think I'm bullish enough. I don't think things can get much better than that. So that's kind of at the top end of the scale on an optimism
I think. But I think in the near term here we've got everybody seems to be too happy, at least in terms of the sentiment indicators. So that's on a near term basis. I don't lose any sleep over it, but I do watch it.
And with only what a week or so left until twenty twenty four, the fact that everyone is maybe too happy right now? Is that why you haven't boosted your year end target for this year? I believe that was at forty six hundred, and we're pretty firmly above that right now.
Ed.
Yeah, well, you know, I don't find you in my forecast that much because we are, as you said, we're only a week away, So what's the point of getting cute about it? Instead? I did talk. I am talking about fifty four hundred by the end of next year and six thousand after that, So that just puts me in the bullish camp pretty clearly. Yeah.
If I, of course had to put out these forecasts, I think I'd revise on like December thirtieth every year and just nail it every single time. But I do want to talk a little bit about twenty twenty five because six thousand is a staggering number and twenty twenty five feels very very far away. What is the work that gets you there and how do you project that with a certain degree of confidence.
Well, first, on a short term basis, looks like there's still some what I call die hard heard Landers who think that we're going to have a recession next year. I've been talking about a rolling recession for the past two years, and I think in the in the next two years we'll have rolling recoveries. Clearly, we're starting to see a rolling recovery in the housing market. I think we've bottomed in terms of retail merchandise. A lot of
inventories pile up now. I think consumers are going to go back next year and buy some goods in addition to services.
And I think.
Commercial real estate will be in a rolling recession in this coming year, but then beyond that, I think there will be a recovery. So I think that's the way I look at the business cycle is sort of spread out. Most importantly, I think we've got a labor shortage, significant chronic labor shortage, and I think companies will use technology to increase productivity dramatically. Right now, we're averaging about one
point eight percent over the past five years. I think by the end of the decade we'll be looking at three and a half to four and a half percent, which sounds far fetched, if not illusional, I admit, but that's the way productivity boom cycles have gone in the past. This one should do the same.
Does it worry you at all?
And I realized the anecdotes can't tell entire stories, and you can extrapolate out an entire research paper for one particular example. But let's take a look at Nike. They came out and they said that they're going to be cutting workers, They're going to be having cost cuts, and it is because, yes, they are working down their inventory, but because of weakness and weakness that they expect to
continue going forward. Does that kind of contradict some of your optimism about the recovery and the retail space.
Yeah, well, that's a good point, and that's why I think a lot of forecasters have missed the past couple of years and had this attitude that or view that the only way inflation could come down in the United States is if we have a recession. You mentioned the phrase immaculate disinflation, and I think that's what we've had. We've had inflation come down without a recession. And the reason for that is because the Chinese and the Europeans
have done us a great favor. They've had the recession so on a global basis, particularly China has been exporting deflation. Their PPI is down on a year over year basis, even their CPI is down a little bit on a year over year basis. So I think the United States is going to benefit from the recession the property depression in China for a long time in terms of having a low inflation and I think Year of starts to recover from its shallow recession next year, which will help us on the export side.
And let's bring this conversation to the bond market, because the reversal that we've seen there has been stunning, and of course you've done a lot of great work on deficits what that means for bonds and the demand for bonds, and it felt like for a while maybe the bond vigilantes were reappearing. Why did deficit concern seem to fall off the radar.
Yeah, I've had the point of view for many years that I'll care about the deficit when the bond market cares about the deficit, and the past supply really hasn't been much of a problem because you get the biggest supply in recessions. When interest the Fed was cutting interest rates, we had this brief period where the bond vigilani is saddled up and started to move on concerns of fiscal excesses,
and that period didn't last very long. Basically, from August to October we saw this monstrous increase in the tenure bond deal from basically four and a quarter percent to five percent, and here we are back below four percent. I think, you know, there's an expression, don't fight the Fed.
Maybe we should also say don't fight Janet Yale. And now that she's a treasury because she was very cleverly cut back on the supply of long term bonds and notes and issued a lot of bills and the bond Vigilani said, Oh, if that's the way you're going to play the game, we can live with that. Meanwhile, I think the big story has been how inflation has come down. I mean, it's been only the past couple of months that the consensus really has become that we can't have
immaculate this inflation. Even that Chair palin As press conference seemed to indicate that, you know what, we may actually get.
It, and everybody let out a collective cheer. And you still hear that cheer today at your of your Dunny Research. Kim Wallace, head of Washington Policy Research at twenty twenty twenty two v Research, joining us here in studio for the holiday party for the holiday spirit fordy York City. Thank you so much for being with us.
We really appreciate it.
Morning, happy to be here.
Good morning. I know that you put out an outlook for what to expect in twenty twenty four, and I want to start an industrial policy hinging off the latest news of US steel and some of the administration pushback to a Japanese conglomerate purchasing the largest steelmaker in the country.
Well, you know, there's a lot of now's that will go into the ultimate reaction from the administration. Obviously, the Committee on Foreign Investment in the US will investigate the proposed merger. But when you break it down, the promise is made by Nipon probably upset a few people in the political side, but don't in my view at least imply disruption to the production of steel in the US. The deal proposes to combine globally number four and number
twenty seven. So the first question for the competition policy reviewers is is it a global market you're defining when you review the deal of the national market. My sense is it'll be a global market. And if that's the case, we look at Japan as a strategic partner. It's difficult to imagine that if Japan can't close the deal like this, that anyone can close the deal like this.
Do you think the Biden administration has been consistent with industrial policy? On one hand, talking about America first in some ways and talking about unionization, but not necessarily celebrating the fact that the United States is pumping a record amount of oil, which is really offset a lot of the prices, and kept gasoline low.
I think they've been as consistent as you can be as a policymaker in this environment. A couple of points there. First, we have started from a very low point in industrial production and manufacturing. We gave away that base in the nineties in the first part of this century. Reclaiming it is going to take a long time. The report that the National Economic Council and the National Security Council put out in June of twenty twenty one quantified how far
back the US is. The President then sought to make up a gap there. Congress joined them. This has been a bipartisan effort, particularly in infrastructure. So we are way behind the ball when it comes to in the US when it comes to infrastructure, when it comes to chips, semit conductors. We have a long way to go. Deals like this have to be reviewed from all of those perspectives we talked about, but ultimately what's best for the US in terms of short term supplies and then longer
term building out of the industrial base. That's part of the President's proposal in the Emergency selplemental almost sixty billion dollars for a defense industrial base, three billion of that to build more submarines.
And you bring up chips, and that's where I want to go because you think about the US China relationship. Obviously still a lot of tensions. There are a lot of that playing out in the semiconductor arena. But when you look over the totality of twenty twenty three, how has the US China relationship evolved.
It has stabilized and the optics are better against the backdrop of severe competition, competition across a lot of platforms, and that's not going to change. We see that almost daily. We saw it this week in critical minerals. And so when China decides that it's not going to allow the export of processing technology for critical minerals, that's a shot
across the bow. It again points to a deficiency in the US industrial base and something that it's hard to make this political if you look at it from an economic standpoint. Of course people will make it political, but making up for the deficiency will require decades, not just years.
Well, in the context of critical minerals and of course the news that we saw this week, both on that front and also that US steal nip On deal. You talked about Japan as a strategic ally here and when you think about the arena of critical mirror not miracles, minerals and of course the competition going on there, how important does that make Japan potentially other partners.
It's that last part, Katie, potentially other partners. Japan is critically important. There is no Indo Pacific strategy which is important to this administration without Japan, and that goes back to my saying if Japan can't close deals, then no one can. But it's the other players. What we saw at the beginning of the APEC week that didn't get a lot of attention was a national security partnership signed between Indonesia and the US Defense Technology Defense Know how
Indonesia your promises to send critical min ruals. Eventually it's part of a very sophisticated program. Sophistication is necessary given how far back the US is in my.
View taking a step back, you've gotten plenty of accolades for your research and for your view forward, particularly when it comes to politics, which recently has been a black box of absolutely impenetrable predictions. But I'm wondering next year what you see is some of the bigger market related risks stemming from Washington, d C. At a time where there's a lot on the table, not just industrial policy.
I think there are a big four. The first quarter will be consumed by fiscal policy. What does Washington do around funding for FY twenty four and what does it do about the supplemental requests around WARS. I think that morphs into first second quarter. What's the result of the Fed's business over the last two years, How does that play out in the economy. Normalization at this part of the cycle means tightening. Normalization soon will mean the other side.
That leads into, in my view, at least, concerns about liquidity, both official liquidity, private liquidity. It is the It's the topic very few people want to address in public, but something that pops up on a regular basis as a concern among traders all the time, both official and private liquidity.
That morphs into the back end of the year and the elections and what's happening in terms of the outcome of the elections, what that implies for the country going forward, and for policy in twenty twenty.
Five, and just in terms of the market risk there, meaning as liquidity titens, people be more focused on that and the potential deficit and the potential inability of the US to spend in all of those issues.
Well, that and the issues around the federal Home loan banks. The administration is constrained the advances that they can make the member institutions. There's discussion about paying less for reserves at the FAD and forcing that money out into the economy somewhere else. There are As QT goes on, we have a lot of tightening of liquidity in the system to follow.
Kim Wallas, thank you so much for being with us. Wonderful to see you in person. Kim Wallis, I'm twenty two V Research.
Thank you.
Joining us now. Deborah Cunningham, Global Liquidity Market CIO A federated her means not on that at all. Debraah, thank you so much for being with us. I want to start with this idea that people have been talking a lot about cash on the sidelines, and we've talked about this before, and how cash on the sidelines are going to start flooding into risk assets. Have you seen any evidence of that over the past couple of weeks.
Not really, Lisa, It's not something generally speaking. People at the end of the year are trying to, you know, kind of allocate and close out their books in a normal fashion, and there may be some surprises, either cash in flows or cash outflows. Things closed, things don't close that we're supposed to, but ultimately it's not a great time in a normal situation for.
You know, what i'd call reallocation.
That happens more at the beginning of the year, So we have not been experiencing or seeing that type of market shift at this point and cash flow out.
Well, I do want to get to what happens at the start of next year and in twenty twenty four. But I know I just said that AI and Ozempic have been really the stock market stories of this year. But I want to add a third thing, which has been the rush into money market funds. Of course, one of the big stories in markets this year about six trillion dollars sitting in money market funds right now. Where
is that coming from. Is that investors saying, look at these high yields, I'm going to go there, Or is that people moving away taking money out of their bank deposits for example, and shifting into money market funds.
I think the bulk of it is coming from the deposit market. It's coming as a retail trade, so it's
a pretty steady trade. And if you look at what shifted out of retail deposits during the year, it's been about one point three t brillion, and about a trillion has gone into money market fund So it's hard to follow dollar for dollar exactly where cash goes, but you know, from all we can tell, I'd say at least eighty percent of that is coming from the retail deposit market, where rates from a banking perspective just didn't follow, you know, short term rates in the market upwards with the FED.
Now there has been in the last quarter, just really since we've flipped into the fourth quarter October and November, a little bit more of a cash flow from an institutional type of customer, and I think that has to do with, you know, the flattening to you know, to some degree inverted yield curve where the shorter end of the curve is no longer as attractive necessarily as what a product that has some weighted average maturity like a money market fund does. So we're starting to see some
of that trade. I would see more of I would expect to see more of that trade though, in twenty twenty four.
So just amitt on that point a little bit longer that potentially eighty percent of what we've seen come into money market funds has been coming from deposits. How sticky is that money? Because it feels like one of the assumptions is that what we're seeing in money market funds that belongs to the equity market, that belongs to risk assets, and it's going to return there. But if that's coming from bank deposits, that logic doesn't quite make sense.
That's exactly right, and certainly there is there are some risk assets that are in there as a hiding place, you know, a short term home, until they feel like, you know, their entry point back into their risk asset class is more palatable for them.
But that's certainly not the bulk of what we've been seeing.
Now, maybe that you know, will pick up again in twenty twenty four, but it's not been what we've seen mostly in twenty twenty three. It's come through the deposit market, through the retail trade, with the likelihood of that being very sticky. And I think the other thing that makes that a stickier trade than it has been even over the course of the last fifteen years is we as
well as the market. And I don't think anybody out there expects the Fed to normalize at zero, where they have been you know, twelve out of the last fifteen years. The expectation is the normalization is back to you know, three, three and a half, maybe four percent, depending upon where inflation plays out. And so that again keeps that retail trade generally in the market.
Rather than back rather than back in deposits.
So do you just sort of reject Deborah this idea of cash on the sidelines flooding into markets once the federal reserve is cut rates one, two, three or even more times next year.
Now, I don't reject it at all. I just don't think it's all coming out of money market funds. I
think there. I think cash continues to come out of deposit products, and I think some some goes into the direct markets through that, you know, from that from that mode, and I do believe there will be some that comes out of money market funds, but I certainly don't think it's you know, it's it's the vast majority of what will you know, let's say, fuel the markets, the risk asset markets in twenty twenty four.
Just real quick here, Debrah. Are you seeing money go out a short term and go into longer term? Is that a theme?
It started?
We run micro short and ultra short funds that are really just you know, a modest step out the yield curve in the one to two two and a half year sector, and we're starting to see positive cash flow in those products. But it's trickling, it's a it's certainly not any kind of a flood.
Devra Coningham, thank you so much for being with us. I really want to get a sense of where we are heading into this, what kinds of disruptions we can expect. How people are paying for their travel, whether they are traveling. Brian Kelly, founder of The Points Guy, who did advise that I get rid of my points and spend them. Thank you for that, trying to work them down. What do you expect in terms of this particular holiday season. Are we going to see another Southwest episode? Are things
looking like they're pretty orderly? Are people going to have a not really deep, deeply uncomfortable experience.
Well, I'm an internal optimist and things are looking really good. Right So the Thanksgiving holiday in November we saw the most amount of air travelers ever two point nine million go through the TSA, and things work pretty smooth. And the biggest factor that I see would be weather, and right now there's no major weather patterns that I see that could upend our air travel system, so I am
forecasting hopefully smooth sailing for the next ten days. We had two point five million people through the TSA yesterday, relatively low delays and cancelations, so fingers crossed. But I think this is going to be a good holiday travel season, and certainly much better than last year.
Yes, especially given some of those delays. International, though, does face some potential headwinds. In particular, some of this strikes that we've been hearing about in the United Kingdom elsewhere in Europe is that on your radar at all or is that basically just sort of hand ringing as people have to find something to worry about if they're not eternal optimists like yourself.
Yeah. No, you know, anytime you travel to Europe you have to worry about you know, strikes. It can happen any day. It's much different here than the US. But you know in Spain there will be strikes with Iberia's ground staff around the New Year holiday. Yesterday we saw the Eurostar have a surprise strike that displaced a lot of people. They're actually not even selling trains today between
Paris and London. So but overall, there might be some German train strikers here there, but hopefully no widespread strikes that we're aware of.
And so how should travelers think about that, say that they do have a holiday European vacation booked, I mean, should they be thinking about insurance here or how to best handle that?
Yeah, So what most people don't realize is when you use your premium travel credit card, as I'm assuming many people watching this program, whether that's AMX, Platinum, Chase, Sapphire, Capital one Venture, those cars cards come with built in perks, and this is what people don't realize. I was traveling to Puerto Rico in May and my flight was delayed
ten hours by United for a mechanical reason. United gave me one hundred dollars E gift card and told me to go away, but American Express refunded five hundred dollars for me to get a hotel, to get ubers to go out to dinner in old San Juan. So always go to your credit card company for compensation. And when traveling to Europe, there's a rule called EU two sixty
one compensation. And if you're traveling to or from Europe and there's a flight delay for pretty much any reason, they are mandated by the government to give you compensation. So yes, go to the airline. But generally the airlines are pretty cheap when it comes to compensation. Your credit
card is where it's at. The only time I really recommend travel insurance is if you're going on that mega trip on a big expensive cruise line, sofari you're bringing people who could get sick abroad where you might need that evacuation coverage. So but in general, your credit cards protect you a lot more than you realize.
Yeah, so maybe you actually should read the fine print there, But what are you actually seeing in terms of where people are going when it comes to this holiday season. Are they going abroad or as much of the travel that you're seeing booked and happening right now within the country.
Yeah, I mean most of the travel growth we're seeing is international. Is funny. I was looking up where are the deals for I was just searching from New York, and the best travel deals were in Miami Orlando. And a year or two years ago, we all knew Miami flights were like two thousand dollars each, crazy rates. So we've seen some of that demand from domestic travel. Now we're seeing huge increases. United Airlines just started flying NonStop
from San Francisco to christ Church, New Zealand. They're betting big on the Pacific region, new flights to Tahiti, and so I think there are a lot of travelers who now feel cometerle traveling internationally, doing that big trip Japan. I'm going there in February. We're seeing huge increases in that type of travel. And also when it comes to lodging,
we're seeing a huge increase. Hotels dot Com saw one hundred and twenty five percent increase in authentic lodging, So whether that's a reopen in Japan or staying at a riad in Morocco. I think travelers are sick of paying for overpriced cookie cutter hotels and are willing to shell out for those luxury experiences.
Are they looking for discounts or is this still very much the experience world that's just continuing, and is this basically a sea change that has legs where experiences will keep seeing people pay up for some of these unique experiences even if they don't buy a shirt and an outfit that's fancied to accompany it.
Yeah, people, you know, funny enough, discounts are happening domestically. Jeff Blues just ran a fifty dollars a fair sales Southwest. So the domestic airfare market and those carriers are ruggling. Where the premium cruise lines that are just launching, There's tons of new really exclusive ships. I just did. Expedition cruising is huge. I'm seeing more and more my friends go to Antarctica. I just went on swan Hellenic to Greenland and that was an incredible experience. So yeah, people
are shelling out for unique bespoke experiences. That sector in the market cannot grow fast enough. And even I mean domestically theme park travels, Big Disney still continues to see growth. And it's not just Disney. Dollywood just increased prices and opened up new parts of their park, Mattel. So people really want to take their families not just to a beach vacation, but they want to go and experience the new Mattel theme park that just opened up in Arizona.
They really want these unique experiences and that's a trend I can foresee happening more and more.
And Brian, you are the points guys. So let's talk about some news that broke this week. It was first reported by Rorders basically about the Department of t Transportation in the early stages of looking into airline frequent flyer programs, really checking whether airlines have engaged in unfair or deceptive practices when it comes to some of those programs.
What do you make of that?
Yeah, I mean I think it's much needed. A lot of times there are changes that happen overnight, and you know it. Kennedy said that the airlines are banks nowadays. The airlines are making more money selling their currencies of
frequent flyer programs to banks. So I do think there needs to be a little bit more consumer heads up, right, if you're going to have this multi billion dollar loyalty program that essentially is a bank where you know you're creating your own currency, you should give consumers notice when making negative changes. We saw this year Delta and American Express rolled out some pretty punitive changes to their credit cards,
increasing fees, et cetera. And there was huge consumer backlash to mostly Delta on that one, and we saw them roll back some of their changes. Now, do I think the government needs to come in and regulate every aspect of loyalty programs? Probably not, but having some more consumer protections when those negative changes happens, I think are a good thing for everyone involved, because people are getting sick of just constantly changing and moving up the.
Goldpost and waiting in line at the the lounge. I mean that might be part of the issue, yeah, I mean. Brian Kelly, thank you so much for being with us. Brian Kelly of The Points Guy. Thank you as always. Subscribe to the Bloomberg Surveillance podcast on Apple, Spotify and anywhere else you get your podcasts. Listen live every weekday, starting at seven am Eastern, on Bloomberg dot com, the
iHeartRadio app tune In, and the Bloomberg Business app. You can watch us live on Bloomberg Television and always on the Bloomberg Terminal. Thanks for listening. I'm Lisa Abramowitz, and this is Bloomberg