This is the Bloomberg Surveillance Podcast. I'm Tom Keane, along with Jonathan Farrow and Lisa Abramowitz. Join us each day for insight from the best and economics, geopolitics, finance and investment. Subscribe to Bloomberg Surveillance on demand on Apple, Spotify and anywhere you get your podcasts, and always on Bloomberg dot Com, the Bloomberg Terminal, and the Bloomberg Business App. Subrider Chappa joins us right now. My head is spinning here on
equities and even more so on bonds as well. Sot of the fact is a lot of yields are moving up here. I'm looking at the ten year real yield in the US and is sobering. What are the ramifications to you in SoC gen If we see the ten year real yield breakout to new highs.
Well, I think that the impact is going to be felt not just in the bond market, but broadly speaking
in all risky assets. Right, we're starting to recalibrate to a much stronger economy, but a lot of the data that we're looking at, like the first quarter GDP, the second take or third take is backward looking, right, So we have to be looking at forward looking indicators, and if we are if the FED word raised rates by fifty basis points or more, then I think that you're going to see that feed through even more sharply into the broader economy.
So the forward looking data has the potential.
To be meaningfully weaker if the FED, you know, continues to hike rates. I mean, our call is that the FED would probably stay in and around you know, the.
Current levels for the remainder of the years.
It's not out of the question that they raise rates by maybe twenty five basis points or even fifty basis points by the end of the year. But you know, that's only going to really bring the recession you know forward, if you will, we have a recession pencident for the first half of twenty twenty four. That still seems like the timeline that we're looking at. But broadly speaking, I think a lot of the data that we're placing our optimism on is backward looking, not forward looking.
Well, it's so important here the dynamics Katie Greifeld mentioned earlier, the belly of the curve. Let's come in tight, not five to seven years, but in that interesting two year to five year space. What is your belief that we'll see there. Do the high yields of a two year one year space come out to high yields of a four year five year space, or do we get relief.
I think that a lot of the repricing in the FED funds market is going to be very much a front end phenomena. That's part of the reason why we don't really think that the tenure meaningfully rises about four percent. I think we get close to four percent. It's going to be a buying opportunity for bond investors that missed their first opportunity earlier on this year to go long bonds.
But again, you know, the rise in yields, at least in my view, is going to be much more of a front end phenomena and not a long end phenomena. And you're looking at the yield curve, you know, the two stents part of the eeld curve is back near
negative hundred basis points or below. Again, that might be our opportunity to think about reinitiating steepeners in the bond market, because eventually, the more the Fed hikes, the more the slowdown is going to be, and the Fed's going to have to perhaps adjust policy during twenty twenty four.
So Poer, I am so excited to talk to you about that two tens curve over one hundred basis points inverted, and you say that you expect the yield curve to gradually steep in, and that language masks a huge call because if you expect the ten year yield to sort of drop and then stay there, what does the front end look like? How much do two year yields have to plummet and how much does the FED have to cut to get there?
So that's really a tricky question.
I think it's it's fair to say that the FED could keep policy stable after getting to a certain level, but beyond that, I think that the FED is very committed to keeping policy higher for longer, and this time around with inflation not just a US phenomena but a global phenomena. I think that global center banks are going to keep policy restrictive well into the first half of
next year. So in that sort of context, it makes sense that the front end remains sticky and you don't really see that dramatic repricing lower in the two year part of the yel curve. That's why we're calling for a very gradual resteepening of the yelk curve. Typically when the FED pauses, you know, six months after that, you tend to see the two stents part of the curve steeping out meaningfully. This time around, that process is going to be somewhat gradual. Also for the tenure.
We only have.
The tens getting to say three and a quarter by the end of the of the year. That's not a meaningful decline from where you are at the lows of this year in tents. Again, the decline in yields is going to be much more gradual across the curve in this cycle as opposed to the past cycles.
So what gets us back to positive territory on the twos tense curve if you have the two year kind of anchored, I mean, what has to happen then at the back half.
So we will I think eventually get to positive territory, but it's going to be perhaps.
In twenty twenty four and not in twenty twenty three.
We have the two stands part of the curve you know, steepening out, but you know, getting to only anywhere between the negative fifteen negative twenty five basis points.
You know, by the end of the year. So the steepening is going to be, you know, much more gradual.
But broadly speaking, you look at the broader economy, you are going to start seeing the market respond to higher interest rates. We did see some improvement in the housing market in the in the last couple of months. If you start seeing two start, you know ten, you're starting to get towards four percent again, and mortgage it's start to rise. You're going to see that impacting the housing market and the broader interstate censor sectors of the economy.
Are going to respond to higher interstrates.
Sobrata, thank you for the brief. Really look forward to talking to you in the twenty twenty three here on the dynamics of fixed income. Sobrada Rajappa with a sack gen. We decided to go to the only man in America from sea to shining Sea that has not lost the family arapods. Tom Forty joins us right now of Da Davison. And what's important with this conversation, folks, is Forty's expert on the chips, the wiring and all that. But he's not a fanboy your neutral on Apple discuss all right.
I'm neutral.
I think that a lot of the good news is already priced.
Into the stock.
So when you think about the Marshall three trillion, it's mainly been in the back of the iPhone. The iPhone continues to perform very well. But when you think of the next trillion, and you think of vision pro and augmented reality and virtual reality.
There are a lot of structural challenges.
Even for Apple started with price thirty four to ninety nine, is not going to result in a mass produced, mass marketed, mass adopted I am and Tom, I wish I could tell you that I haven't washed many AirPods in my washer dryer, well, many AirPods in the fourteen household.
Yeah, Cook and Lucas are working on that right now. Tom. Everybody owns it. But I continue to read from pros like you that Apple is institutionally under owned. On June thirty is long only buyside out there going oh damn it, I gotta buy it.
All right, So to that point, I think that's a fair yes, And outside of Warren Buffett, where it's his number one position, yes, it's probably under owned. From an inters social standpoint, if you look at the basis points holdings versus the index. They're likely a lot of equal weights or some underweights out there and that's going to negative affect their performance for the June quarter.
And Tom, I want to talk about the next trillion dollars. I mean, you have a neutral rating on the stock. It seems like you would say take a breather here. But what's going to propel the next trillion is that the Vision Pro.
Yes, and I would have told you that it was the Vision Pro and at some point the Apple car, But now I have concerns that if they make a car, they're going to price it at two hundred thousand. So I think that you know, the good news is that the iPhone keeps on chugging on and that's still the most important product right now, generates the largest percentage of sales and profits, and it's still well positioned.
But I think to go.
From three to four, three to five, three to six, we're going to have to see some sort of contribution from the Vision Pro, potentially a car, new products, and I think that's going to be challenging.
Can we talk about the price tag on the Vision Pro because when they announced that there was a clip that made its way through social media of people gasping at that price town tag three four hundred ninety nine dollars for that augmented reality headset.
Is that price going to have to come down?
So the answer is yes.
The question is did Apple tip off their strategy by naming it the Vision pro So are they going to have a lower price point ARVR headsite called Division not, unlike they do with their laptops?
And I think that's a possibility. But I do think even.
For Apple to generate mass adoption, they're going to have to have a lower priced offering. The good news is for Meta Platforms they're three thousand dollars less.
So I do think to the.
Extent that Apple gets people excited about ARVR, that could lean people to purchase the products from Meta Platforms, which has one at four ninety nine.
And Tom, I know, oh you're neutral, but I want to bring you the ball case. Of course, again that city call getting a lot of attention, initiating coverage with the buyer and talking about this underestimation of Apple's ability to really protect and grow its margins. How are you thinking about Apple's abilities when it comes to its margins.
So the story for.
Apple under tim Cook has been the rollout of higher margin services, which has resulted.
In a higher multiple for the stock. Now, what the.
Analyst isn't pointing out is that on a short term basis, we've seen pressure in the services revenue.
We've seen pressure in the advertising revenue.
So yes, I found sales have held up amazingly well in a global, challenging macroeconomic environment, but the higher margin, higher multiple causing services revenue has been under pressure. So I think that's a little optimistic over the next twelve months.
O good time. I want to fold this into the share buyback and the beliefs that they're going to show up every day and buy four hundred and twenty two shares. In an odd log from Fidelity dot com, Tom fourteen, i got free cash flow out at one hundred and eleven billion, basically a double pre COVID. I've got the margin discussion that uber bulls like Ives and Mailekovert City Group are talking about, and critically, Tom, I've got Apple
with four point one percent of capital is debt. Can't these guys just keep going out and doing bond deals and buying back share after share after share.
They certainly are cash register and generate tremendous free cash flow. And yes, his Warren Buffets not buying the stock, Apples certainly buying the stock.
And we'll see about.
Those institutional investors, Tom to see if they want to ramp their portfolio to at least equal weight.
Are they deminimus? I mean, are they going to come back and buy back so much shares? Is Tom? Is Tim Cook going to privatize AAPL?
Maybe not privatize, but it does remind me of another Warren Buffet investment being there where there was an extended period of time where Dairy Queen had no new unit growth but essentially bought back having to stop. So I do think there's a potential that, given the free cash flow Apple generates and that it is a cash right, sure they're going to retire a lot more shares privatize.
I don't think so, and their folks. In the history of Bloomberg Surveillance is the first time we've taken the mother of all blue chip stocks and compared it to Dairy Queen. Tom forty, thank you so much. With da Davidson, hugely, hugely valuable. He's one of the greatest thinkers on Wall Street. I mean this seriously. He's chief economist ubs Global Wealth Management, far More, a student of the Pacific experiment of China and America. Farmer as student of Brexit. Farmer's student of
continental Europe as well. We welcome Paul Donovan. It's been way way to a love Paul. I love, love, love your comments on CenTra. Everybody's out there pounding the inflation bendwagon. You're with Ed Hyman, You're with David Rosenberg. Disinflation is in place. Discuss well, we're seeing this inflation.
The three waves of inflation that we've had, the demand shock after the pandemic, the supply shock of the war, and then the profit led inflation. Wave one and Wave two have gone. We've had six months of outright deflation in endurable goods prices in the United States. Transitory inflation was transitory energy prices fading completely from the picture. And now what we're starting to see is this squeeze on
margins coming through. Now every country's got weird technical stuff going on with its inflation numbers, which creates a little bit of noise, a little bit of distortion. But just draw up any inflation chart around the world and you are seeing the numbers come out down. That's I think the disinflation narrative is going to start to become a bit more established.
I want to talk about profit lead inflation and how that differs or is the same as what we're seeing when it comes to margins. What's going to be the biggest impulse in that disinflation that you're talking about. Is it the margins decreasing or how does that actually translate through?
So profit led inflation, it's a bit of a weird terms. It's really a relative price shift. To be very clear, profit led inflation does not take place across the entire economy. It takes place at the end of the supply chain. It's with retailers with very strong corporate brands, so food brands, clothing brands, people who are very very close to the consumer. And what happens is you have stabilist demand and companies find a good excuse to pass on a margin increase.
So if we look in the United States tail profit margins as a share of retail GDP pre pandemic, those are averaging about fourteen percent one four percent of GDP now twenty one percent. So you've seen that margin expansion coming through margin small companies. It's not just big business. Small business does this as well. But what's now happening is customers are saying, you know what, I don't believe that story. I don't think that profit increase is necessarily
something I should be paying. I don't believe why prices are going up. You're seeing more discernment amongst consumers. You're seeing politicians start to get involved, and with that, with the threat of brand damage, companies are starting to perhaps be a bit more cautious on their margin expansion, and with that that final stage of inflation is starting to turn into this inflation refource.
Zima, what is your I mean, you're doing more of a broader economic chit chat. I get there. But let's play asset allocation. Now, what are you and UBS Global Wealth Management say, after the bang upon market we've seen, how do you recalibrate on an allocation basis in equities into the second half of this year.
Well so, for the time being, equities for Arthur a moderate underweight, because there is still this optimism about earnings which perhaps needs to be looked at a little bit around the world. There are some challenges. Remember, of course, the equity market is more skewed towards the good sector than the service sector. The economy is very very service sector space focused. The equity market's a little bit more good spacing, and there we're seeing more of the moderation
of demands, more of the disinflation pressure coming through. So the macroeconomics are not creating a sort of a vibrant equity market. I'm not saying it's a disaster. I'm just saying it's something where I think equities are more likely to underperform. And as central banks are confronted by an inflation rate that continues to come down, then the expectations about rates are going to assist as well. They can't
keep hiking inexorably. Even Powell has got to learn to stop tiking policy at some point, and with that the bond market gets a little bit more support.
Can we withstand higher yields? I mean, I get the idea of your case and others very respectful ed heyman, evercore Isi. I mean the basic idea here, Paul is if we delay a disinflation, if we get some form of higher rate regime, there's a belief out there we all fall apart, says who.
Well, I'm a little bit skeptical about the idea that we all fall apart. I have to say, I think economies generally have become less interest rate sensitive, over time monetary policy and to a lesser extent quantitative policy. They become blunter tools in the range of options that a central bank has got. So absolutely I think that there
is less likely to be a complete collapse. And what we're going to remember is that when we look at economies, it's the middle income consumer that's really the engine of any advanced economy, and middle income consumers are actually doing okay, they're more resilient. Now I'm not saying they're not slowing down.
They are slowing down, but with low unemployment, with rising female participation in the workforce, very important point that, with the fact that middle income consumers have a lower inflation rate than headline consumer price inflation suggests on both sides of the Atlantic, all of that combined is giving the middle income consumer that little bit more firepower when it
comes to spending. Not enough to reverse a slowdown at this stage, but enough to make sure that the slowdown is not, in my view, going to be too severe.
Well, Paul, maybe the economy has become less interest rate sensitive, as you say, And if that's the case, does that mean the FED ultimately has to go higher on the terminal than cycles previous? I mean, if the upper bound right now is at five and a quarter percent, do we need to go above six to really pull down the final areas of the economy that are still pretty hot at this point.
I think that's a very very difficult question because I think you need to sort of pause and reflect on what is changing and what isn't changing in the economy. I mean, this is why the sort of relentless chance of hike hike hikes that comes out of the fanatics that the said is really quite troubling. You know, stop and think for a moment, guys, because I think what you've got to assess is, Okay, well, look the transport sector, LEO travel and so on. That's not necessarily changing. There
is this fanatical desire to go on vacation all the time. Well, actually, then perhaps you've got a totally different world emerging post pandemic in that sector. But then look at the deflation that's coming through endurable goods, So we've got something different going on there. So I think you've got to balance this out and consider what relative prices are doing as well as the aggregate. How much of this is the fiction of owner's equivalent rent, which we know is going
to be coming down in the future. Again an important factor. I think that the central banks also need to broaden their thought. I mean, they've got conversative policy as an additional weapon. They've also got regulatory policy, and of course that's going to become a topic in the United States if you start to Tyson bank regulation in the wake of the implosion of Silicon Valley Bank, that is going to be something which is going to have a cooling aspect on the economy as well.
Paul Donovan, thank you so much. With UBS Global Wealth Management. Part of the collective memory that John and I have about bulls and bears is people that are out switch their mind and get it right. One of those is Max Kuttner, chie's anti asset strategist at HFCC. We joined him in London ages ago and he said, you know what, up, we get a brief today from the gentleman who got this really right. Max, give us a redo here. How
have you recalibrated for Q three of twenty twenty three. Yeah, good morning, Tom.
Not an awful lot really, because from a fundamental perspective, I don't think an awful lot really has changed yet. When we look actually at the US economy, I think, particularly against initial expectations, the US economy is just doing fine. The consumers doing fine, the services sector is fine. Look at all the concerns we had around the housing sector,
around commercial real estate. The reality is I think you guys at Bloomberg are running one of those surprise and disease about the US housing and in real estate activity, and that's on a twenty year high, right, So the US economy is really doing fine. So quite frankly, I don't think those recession calls that we're still having for Q three and Q four and in particular for you, for the US economy, that these recession calls are really
really going to come to fruition. I really do think that those recession calls will continue to be misplaced, and if anything, the risk is that things are continuing to be much much better than expected and that we will have another sort of short end rate repricing.
Mex Curtner fold in here the linkage of economics to the markets, which I'm going to take through nominal GDP. If we have a persistent inflation or dare I say, even a breakout higher in rates on a broad global basis, and if we get some form of real GDP like the surprise of America, does that provide persistency to corporate revenues forward? Yeah? I think it does.
When we look at earnings, actually at earnings growth over the last thirty forty years, you overlay that with things like headline inflation, you know, that usually does provide some tailwent because as you said, right, this is the discussion that we should be focused on much much more rather than looking at you know, credit crunches and commercial real estate and death seiling and you know, in effect really some sort of when's the recession finally going to hit?
Instead of that, we should be talking much more about, well, do we really care right now about real GDP growth? Or as an investor, like you were saying, right, the connection to markets is real versus nominal and in effect, really we should be caring much much more about nominal growth nominal earnings and they're growing just fine. And think about Q two, the Q two reporting season that's going
to start in a couple of weeks. Consensus expectations again are only for flat growth Q two over Q on they are you know, they've been massively downgraded for cyclical sectors, the sectors like consumer, discretionary, energy, and materials. Even tech, right, even the tech earnings expectations have been downgraded by more
than ten percent in the last five months. So I do struggle to see a big, big decline or a big big downside surprise in earnings, particularly now in the in the Q two reporting season.
We let's talk about the next half of the year that we're sailing into. I want to talk a little bit about the expectations for the relative asset classes. Of course, there was a lot of doom and gloom about the corporate earnings picture, and this was really supposed to be the year of the bond, the year of fixed income. It looks like it just turned into another year for equity,
specifically another year for big tech. Is that the dynamic heading into the second half is that how we're going to end twenty twenty three.
I think, well, I'm going to give you the classic strategist answer yes and no, and it depends I think what it's going to be is I think at the beginning of Q three, I think, Katie, you're correct, it's going to be more of the same, right, more sort of growthy, you know, the kind of goldilocks environment where we're in right now, because growth is fine, inflation, headline inflation is still going down, so that's sort of really really goldilocks y. The problem I think will come in
late summer towards Q four when we realize, look, inflation could and particularly headline inflation in the US could start to pick up again because some of those energy based effects will fade, right, they will converge to zero. So we're going to have a bit of a mechanical posh
higher for headline inflation again. And that and of course the economy doing much much better, and that in my mind, really will then favor value of a growth So that will then really make a switch from those big tech names into the more value and short duration names towards the end of the summer and into the poll.
How do valuations factor into that call for this rally to broaden out outside of just you know, megacap tech, which has absolutely been dominating.
The short answer is not at all, nothing, Right, Valuations don't matter, right, They really really don't matter to me at all. In the short term.
If we're talking about.
The next seven to ten years, they are the thing that should matter the most. If we're talking about the next three to six months, they are quite frankly a random number. If you look at you know, the explanatory power of both outright and absolute valuations of equities and also relative valuations things like equity risk premium, and the explanatory power with sort of six to twelve month performance, it is somewhat between two to three percent, So they
don't really matter, right. So to me, the valuation side of things, they don't really matter.
It's more the.
Inflation and the rates trajectory, right, and particularly inflation, the sticky inflation part that matters for the next six months.
The left tail outlier right now, and we covered this yesterday Max Kutner with an important essay by William Dudley, the former president of the New York fedoh modeled out of four and a half percent US tenure. But the thing that no one's predicting is a higher interest rate regime that goes against Steve Major, that goes against David Blom and a lot of the HSBC research heritage. Are you guys prepared for the possibility of higher interest rates?
Not quite yet, because I think we're still in this goldilocks environment right where you know, yields are sort of peeped from last year. I think it is really a risk for the second half. It's not a base case. It is a risk, though not on the long end, more on the front end, because let's remember that, you know, futures are still pricing around one hundred and fifty basis points of rate cuts between the end of this year and the end of next year, so it is really
one of those risks. I think that if the majority of those rate cuts will be sort of pushed into twenty twenty five, not saying that there won't be any rate cuts at all next year, but if the market temporarily shifts its expectations, you know, from twenty twenty four into twenty twenty five, that has massive, massive implications from an asset of location perspective, because what we just talked about in that environment, if that risk does, if that
tail risk, that left hand side risk really does pan out, you really absolutely don't want to be in growth names. You want to be shifting into the value names, perhaps even into the cyclical value names, rather than re having the long duration and tech assets.
Max Cutner, thank you so much for the June thirty brief. Mister Cuttner is with HSBC. But what's far more important is there some serious ramifications to this airline mess up. We address this now. The Points Guy, let's just be blunt. He changed the way all of his travel absolutely revolutionary, so much so that Clint Anderson was an iconic guy and all sorts of TV metrics doing the charade that we do every day. Clint Anderson said, no, I want to get frequent fires on Alaska Era. I'm going to
join with Brian. How did you get to the Points Guy? How did they drag someone as the famous as you and MSNBC over to a real job with the Points Guy.
Well, you know, the Points Guy is obsessed with points and miles. That's always been ours sort of DNA, but over the years we've expanded into a full media brand, and so they wanted somebody who had a little bit of media experience to come in. So that's sort of where I came in. And it was right before COVID, and so it was the perfect timing because I was able to help drive this news.
Was this expected? I'm going to suggest that the thebaccle of fourth of July weekend in America is new and original. Do I have that right?
So Unfortunately, since COVID, we've seen this holiday after holiday. We got through Memorial Day, but remember Christmas time was a mess. We had a real mess last summer. At the time, we were blaming airline staffing, so there wasn't enough pilots and flight attendants. Now it seems like they've been able to higher up. But now it's the air traffic controller issue that's really helping to drive this. You know, thunderstorms are a normal part of summer. We should be
planning for that. Unfortunately, the airlines are scheduled really tight right now, as if there's no such thing as thunderstorm. So there's blame to go around. But the air traffic controller shortage is a real issue.
A real issue. And talk about the demand picture too. Obviously a lot of people want to fly right now, which is maybe why that shortage with the air traffic controllers is really being felt.
Yeah, you know what's really interesting. Business travel has not fully recovered yet, But it's been more than made up for by leisure travel. So the demand is insane. And remember during COVID, the airline's cut back on the number of flights, in the number of seats that are for sale, and people decided during COVID, I'm going to travel. I don't care what happens. And that's what we're seeing. We're seeing that pent up demand and people who decided that's going to be a way of life for themselves.
Well your life.
It's interesting though that business travel hasn't really caught up, and I do want to talk about the summer travel season, but with business travel, I mean, is that coming back or when can we officially declare we're not going back to twenty nineteen.
So it really depends on who you ask. We're sort of eighty percent level of business travel. I don't think it returns fully ever. I think people have learned how to do zoom meetings. Companies have realized it's really expensive to send employees around and they don't necessarily need to in all cases.
So I think that's what you're seeing on a planning basis. And the points guy is a concept. I mean, you guys reinvented how we travel the whole keep track at your miles racket and the charge cards and all that. But what if I'm fascinating here. It's the same old, same mold. We have limited airports, limited gates. We have a major argument between gates at JFK and Newark. Just is one discussion point. I'll even pull a LaGuardia on it.
And then we got air traffic controllers. Now I look out on the web and they're making one hundred and thirty one hundred and fifty thousand dollars a year. So I'm up in the air and there's a guy with seven lights on a radar screen, and I look at the pilots that were complaining, and they make sixty grand a year, which is like a bar worse than a bartender. I don't get the salary structure we're complaining about. Shouldn't
we just pay the air traffic controllers more? Shouldn't we just pay the pilots more to solve this labor conundrum.
I think that would help solve it.
But that's going to cut into the airline's bottom line, and they don't necessarily want to do that. Air traffic controllers. That's a good middle class, solid job that you could end up doing very well. I'm not sure why it's not an attractive option for young people. I think they're trying to do some recruiting at colleges and places like that, but it's tough to get people in.
Okay, but I don't buy this. If Kirby was here or Bastian was here, yeah, i'd say, look, you guys are fancy. I get it, you want to make your profits and all that. The fact is on this Friday or I think at Bramo, she's probably down in Atlanta right now at Heartsfeld's sleeping on a floor somewhere. Why are we acting like a third world country where we've got families with kids sleeping on the floor in the new terminal A at Nork. That's a good policy for these airlines.
Totally unacceptable, and that's why, as consumer advocates are the points guy. My own personal opinion is that we should have some kind of passenger bill of rights. Now, there is a passenger Bill of Rights being proposed by Senators Markey and Blumenthal. Even though even if that was passed, though which is unlikely, the problem is it doesn't cover for weather, so the airlines always have wiggle room when
it comes to weather. They can say, oh, well, that chain reaction started because of a storm on Tuesday, so we don't have to compensate passengers. I think maybe something stronger needs to be in place.
Is there any blueprint for that? Though? Maybe it doesn't exist in the US.
But when you look overseas, I mean, how is that handled there?
I would love to see something pass in the US like EU two sixty one compensation.
What those So?
Basically, if a flight is delayed extreme amounts from three to six hours, or it's canceled, the airlines have to compensate passengers in almost all cases. I personally benefited from this with an American Airlines flight from Europe. But here's the issue. There is an exception for whether in those cases as well.
Even still, I mean, a lot of people would make a lot of money when you think about just the cancelations that we've seen. Let's talk about this summer though, because even with the conditions that we're talking about, I mean, the demand is off the charts, especially internationally. I mean you've heard several airlines talk up what they expect to see in terms of overseas travel. Is that actually going to materialize?
Absolutely.
You see two thousand dollars flights from New York to Rome, you know something's up. And I think part of the issue is they've reduced the number and frequency of flights, and so what's happening is those seats are very much in demand in prices are spiking. But there is deals out there. I promise you every day we publish a deal at the Point Skuy and there are deals to bed click.
Come on, you're a grizzle media proble. What's Katie doing here? Showing it? 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 Tom Keane, and this is Bloomberg