Bloomberg Surveillance: A Stellar Year for Equities | Bloomberg Podcasts

[Music] this is the Bloomberg surveillance podcast I'm Carol masser along with Manis cranny and Katie grield join us each day for insight from the best in economics geopolitics finance and investment subscribe to Bloomberg surveillance on demand at Apple Spotify and anywhere you get your podcasts and always on bloomberg.com the Bloomberg terminal and of course on the Bloomberg business app let's see how much sleep maybe Sam stovel got he's Chief investment strategist at CF joining us on this Friday uh there is so much to talk about Sam as we get ready to wrap up uh a wild year one for the textbooks I feel like in so many ways um as you sit here uh on this December as we get ready for the last trading day here in the United States how are you thinking about the year that was and the year that might be well good morning Carol and good morning everybody um I'm basically thinking that um looking forward to 2024 also being a good year um history tells us that great years traditionally are followed by good years uh that gains in excess of 20% in one calender year lead to double- digigit gains uh in the second year basically a 300 basis point improvement over the long-term average with a 10 percentage Point uh increase in the frequency of advance so basically you letting your winners ride from one year to the next so every day we've got to come up with a new way to ask you whether you want to Bel long the mag s relative to the breadth of the there are 493 other stocks so find another version of it if you think you're going to get a double digit return the question is then within mag 7 they are expected to see their earnings growth Rise by 22% next year that's twice the S&P 500 advance I mean there's an irrevocability of having to have mag 7 as a portion of your Equity exposure so is it still Overexposed to mag7 or do you go for breath I think you go for breath but what you do is you broaden out within those sectors that have done so well uh again going back to 1990 if you were to be holding on to the three best performing sectors from an up year into the new year you ended up beating the market 70% of the time and the focus being that now you drift down into the second maybe third tier level so semiconductors having 105% Improvement on a sub industry level within the S&P 1500 you would stick with that group but you might instead of looking at Nvidia you might be looking at broadcom you might be looking at Marvel technology Etc so you stick with the winning sectors but you might broaden out uh to the second and third tier companies can I ask you though Sam why not stay with Nvidia I feel like you know what Manis if we talk about AI chips that is still the company that everybody says has to beat I was listening to something from Ian King overnight you know we're waiting for their you know accelerator chips that are about to come I mean why not go with the leader oh we we still recommend Nvidia uh Angelo Zeno our Tech specialist uh is saying that this is a company that is likely to be a leader for quite some time uh I think that what I was saying is that we're also going to see others maybe we turn it into the Magnificent 14 or so uh but we basically broaden out those groups that are likely to benefit I mean it's interesting you say tier three tier three going from Nvidia 238% at performance to broom at 100% but I I get your point how much exceptional breadth would you take we caught up with uh Nat Alliance Alliance Bernstein yesterday and they talked about a sweet spot for junkka sweet spot for for many of these slightly riskier markets how much risk uh do you want to put into portfolios next year how much breath I mean they talk about junk being in a Sweet Spot what's the equivalent for you in the equity World well when you when you deal with risk I guess it depends on the individual I like to say I'm so conservative I wear a belt and suspenders uh but I think when you look to historical precedent and you see that we are in an election year for a first-term Administration the market has gained 100% of the time since World War II with an average total return of 15.5% we're in the second year of a bull market typically up 12 a half% rising 85% of the time and I has as I just mentioned whenever we're in a year following a 20 plus per Advance uh the market has done EX exceptionally well in that that second year so I would tend to say that uh if you have added to the risk in this fourth quarter um stick with that higher risk um and if you do believe that uh there was more risk potential for 2024 uh I think we're a bit overbought right now and once we get into the new calendar year when people can take their uh profits and then defer taxes for another year uh than I would say look to buy on those dips well let's talk about this from a sector perspective because you write in your notes that following up years it's best to let your winners ride I want to talk about the other side of that do you let your losers continue to lose you take a look at utilities energy Staples leading losses this year do you just stay away from them in 2024 well obviously we do have recommendations in all three of those sectors but from a waiting p uh perspective we would continue to recommend underweighting these groups mainly because there's an off a lot of overhead resistance and uh if there is the emphasis toward growth toward risk Etc investors are going to continue to focus on those growth leaders so I would tend to say that while you could see a drifting higher of some of these groups from a relative strength perspective they're likely to be underperformers yet and I want to uh get specific here and run through some names because I'm taking a look at the stocks that you've uh specified in financials Charles Schwab Schwab Bob is a really interesting name to me because obviously it was one of the babies perhaps thrown out with the bath water in what we saw with March and it really hasn't recovered you take a look at shares down about 16% for 2023 what's the thinking around Charles Schwab at this juncture well uh I like to say that fundamentals tell you what but uh technicals tell you when and how far so I like to combine uh cfra Equity analyst recommendations along with our Lowry research techn uh assistance area so you know seeing where the momentum relative strength happens to be so Charles Schwab basically it's an extreme undervaluation situation uh it's almost trading at about half of what it normally trades also we're looking at an environment uh in in which uh the concern I think is just totally overblown so with the prospect of another good year in the marketplace benefiting the investment Banks and Brokers uh one that is oversold uh and really has not reached its potential is Schwab hey Sam our most red story on the Bloomberg it's a story put together by a bunch of our reporters and it says wall Street's best and brightest flopped once again in 2023 basically saying that at the end of 2022 everyone it seen was game planning for the recession they were convinced was coming there's a lot of things that came out seemingly from nowhere Regional banking uh the concerns there Russia Ukraine that war continuing then of course the Middle East conflict as you look ahead uh and you obviously have laid out your scenario you know what are the things though that we must keep on our radar that maybe could just kind of come out of nowhere well as Manis was saying early on in the program is when will the FED start to cut and by how much our belief is that they're going to cut three times in 2024 starting in the second quarter uh mainly because the FED doesn't want to make the mistakes that they did in the late 70s they want to ensure that inflation like a campfire is fully doused uh before before they start to uh cut interest rates uh so our belief is that only if we end up with a hard Landing rather than a soft Landing will the FED be more aggressive from an a rate cutting perspective also adding geopolitical issues uh should we find that there's an a broadening of the Middle East tensions and conflict uh and the total shutdown of the Red Sea we still are having some shipping firms that are willing to uh Venture in there but a total shut down a jump in oil prices those could obviously upend uh the year ahead forecast yeah already a full plate it feels like for the new year hey Sam thank you so much Happy New Year uh always appreciate all the time you give us here at Bloomberg Sam stoval over at cfra uh a lot to talk about I mean Apple's had a very good year the stock is up I think just shy a 50% here in 2023 so uh and a lot of stories and a lot of concerns this week in terms terms of litigations stopping sales of uh the Apple wash but coming back on board so no offense guys I'd love to talk to you but I really want to talk to Mark kman about it he's Bloomberg Chief correspondent Apple expert has written a bunch about Apple always but also this week Mark good to have you here we know it's early I think you're on the west coast uh so it is kind of early um talk to us about the watch specifically in terms of the back and forth pulling it off the market putting it back on the market patent litigation I feel like when it comes to techn ology companies you're it's a kind of a given but how should we be thinking about it at least for the investment side and the investor audience sure thank you so much for having me so I'll start off by saying that the Apple watch one of Apple's most Premier Products being pulled from sale in the US uh that's unprecedented that just doesn't happen when the ITC said in October that Apple would have to pull the watch from store shelves uh after a 60-day review period that's how we ended up uh with this happening during the week between Christmas and New Year's I think a lot of people believe that there would be there would be no way Apple would get to this point either Apple would figure out some sort of settlement either they would issue a softer update they would convince the Biden Administration to veto the order from the Trade Commission I think it was very surprising including to myself when these things actually got pulled from store shelves now the ban for all intens of purposes really only lasted a few days because Apple just a couple days ago got an emergency order an appeals court in DC that got them to put the watch back on the market now this is temporary right Apple still has to put a software fix in place uh or another type of fix and that fix is being reviewed by the US Customs agency there was actually a hearing yesterday on Thursday uh we don't know how the hearing went at this point because it's all closed door stuff but by mid January we should have some sort of answer from the Customs agency whether or not the fix via software that Apple has proposed for the watch is sufficient enough to no longer in their view violate the patents from a company called mosimo a medical device company that say apple infringed and got the ITC to pull the watch from Apple stores in the US hey Mark are we naive to just assume that Apple's going to figure this one out and they'll be able to keep their watches uh on shelves in the future uh I think we were naive to believe that this wouldn't happen I think we're less naive to believe that Apple's on the verge of figuring this out there's going to be a resolution here sometime in January I believe uh if the US Customs agency accepts Apple's software fix uh it's game over right this watch is back on sale moso will go after Apple again uh the two companies have been in court they have a round two of their trial related to patents and trade secret theft uh that's kicking off in late October of 2024 for those unfamiliar mosimo sued Apple in 2020 over patent infringement there was actually a trial this year it ended in a mistrial due to a hung jury uh for this type of trial you needed uh all the jurors to be an agreement one way or another but it was actually six to one in Apple's favor so both apple and mosim lost so they've got history and and they've got form they've got form on that let can we just sort of uh because those legal wrangles are going to continue if you look at the webl part of the business I know there's a number of that Katie is keeping an eye on the wearables is 10% of their revenue we had Dan IES with us a little bit earlier in the week and he evangelized had a $4 trillion valuation on Apple a how quickly do you think it could make that valuation but more importantly how important is China to that because again there's regulatory sniping from the Chinese on the ownership of iPhones and iPhones are 77% of the of the revenue lineup for Apple yeah I'll tell you this you could be quite Successful by constantly betting that Apple's going to be okay long term and their market cap is going to keep growing uh so you know I see every scenario in the book that Apple gets the 4 trillion uh I'm not sure it'll be in 20124 but it will happen eventually and it's typically a Bad Bet to go against apple right uh in terms of China there have been these reports from us and others uh about the the government Banning the iPhone and other non-chinese made devices in certain offices and certain organizations within the country uh I think it's really going to take until Apple reveals its first quarter results at the tail end of January or early February to see what revenue is like in China to get a full scope of that impact the last Revenue results that we got for Apple that was the fourth quarter they did okay in China they they really didn't decline much it was pretty solid overall that the issue for us in terms of trying to determine what that means is that it only Incorporated very few days of iPhone 15 sales in the overall Q4 earnings so it's really difficult to know until Apple actually puts those numbers out because otherwise we're just guessing so a lot of the time the detractors of Apple would say the the scale and the speed of radical Innovation radical product product development has perhaps slowed down where do they what does Apple need as it where to get to 4 trillion does it need multiple refreshes which we get or or does it need something perhaps more Damen esque that's undoubtedly true the pace of device redesigns uh has slowed down to an incredible degree if you look at the iPhone 15 Pro sure it has pretty great new materials it has a very Advanced processor the first 3 nanometer chip uh to ship in volume in a smartphone but if you put that thing in a case or even if you don't put it in a case it's going to for the most part look and feel uh almost the same as an iPhone you bought three or four years ago but that doesn't necessarily matter it's the ecosystem it's the lockin it's the services it's the attached products like the airpods the Apple watch the Apple TV and others which has really created this Mo for the company that's going to help it uh continue to grow and I think for 2024 you have some pretty cool products on the road map the Apple Vision Pro their first mixed reality headset that's going to go on sale in about one month from now that's not going to drive a lot of revenue for Apple but it's probably going to add for the next two two years probably between two and 5 billion in annual revenue uh and on a quarterly basis that could be the difference between you know a couple percent growth or a couple percent decline uh so that could be important in the short term but critical in the long term you're going to see larger iPhones uh in the fall they're moving from a 6.1 inch to a 6.3 inch on the smaller phone uh and from 6.7 Ines to 6.9 in on the bigger phone now to your questions about China that's very important because in China lots of consumers are shifting to one device instead of having an iPad an iPhone a Mac a watch Etc a lot of people are just buying phones and they want the biggest ones they can get their hands on and so that 6.9 inch iPhone 16 Pro Max that's going to be pretty important for that market I really don't understand the uh the desire for a larger phone but I want to talk about the Vision Pro a little bit I'm sure you remember the video of when they unveiled the frison pro and they read out the price of it and the audience gasped uh it was a viral moment it was pretty funny who's going to buy these is this just people who love apple apple enthusiasts and are we going to see the price tag come down from several thousands of dollars yeah you're going to see software developers who want to develop for the platform you're going to see uh mixed reality enthusiasts you're going to see not the early adopters I think the early adopters are the people who buy the new iPhones the first day or week they come out but I think you're going to see the early early early ad doctors right that is an even more Niche audience I'm not expecting lines outside of of Apple Stores you know they believe over the course of a year they're only going to sell a couple of these at most a day in each of its retail stores right so this is a niche product probably uh in the same Spectrum as people who would buy a Mac Pro or high-end Mac Studio those are the company's most expensive Mac right you're talking $3,500 plus $500 in tax in the US yeah not not for the lightharted or the the small pocket books um Mark always appreciate it Mark is always my go-to is it time for me to upgrade a watch a phone that's who I talk to Mark Gman thank you so much Happy New Year Bloomberg's own Mark Gman when it comes to Apple a must read here at [Music] Bloomberg let's take these discussions to our next guest Terry Haynes is the founder of Pangia policy Terry good morning to you you I mean you lay it out very Punchy so well done to you this is what you say about Washington uh let's just start with the the geopolitical situation there because they haven't funded uh Ukraine and they're reluctant to fund Israel they got two heart Wars but you say this Washington's lazy bur minimum approach on everything whether it's border security foreign aid or building fiscal crisis of great concern to markets won't cut it in 2024 not for markets not for the US national and international interests we've ignored markets have essentially ignored these faas these Grand faas we've ignored them is it our Folly to ignore these and which is the biggest tail risk well I think what you've got Manis here is a situation where you haven't seen in 50 years where you've got combination of of probably the highest geopolitical risk and probably the highest domestical risk as well those things combine I think what markets ignore is that going into 2024 with that combination very simply is you know they tend to see political issues by and large as uh spices one way or the other uh you know things that uh the things aren't fundamental to the markets but uh you know provide some some minor up or down action when what they should consider is that lower geopolitical risk and lower domestic political risk in the United States are both foundational to the markets and uh and you know we haven't really had a mjor conflict uh in the United States That Shook markets since the second world war but when it did uh you know the markets went down by 20% uh in the first six months after Pearl Harbor and you know we're I'm talking about a conflict that happened almost 80 years ago in a conflict in which you know not today more than half of the United States citizens are invested in the markets so the foundational risks here I think generally are and the volatility Terry Terry let's get more specific though play it out uh if markets are ignoring geopolitical risk what might you what might likely happen in 2024 when it comes to the geopolitical risks and we've kind of laid them out um all throughout the week obviously we continue to watch what's going on in the Middle East and concerns about escalation you still have Russia and Ukraine we're looking at China and Taiwan and then you know you've got a a election coming up I think there's some concerns nervousness year so play it out specifically what you think likely could happen that investors have to be wary of uh I think fundamentally the there will be a temptation to think that the uh the three major conflict areas geopolitically that you just pointed out uh Ukraine Israel Taiwan uh are are going to be somehow handled uh when in fact they're going to continue on for months I mean there's no easy end to the Ukraine War uh the Israelis say that the Hamas war will go on for months uh and I don't see anything there to stop it and there's a lot of volatility around Taiwan which I think frankly is under under appreciated uh uh by markets who think that uh Biden and Chi Jinping have some sort of a uh an agreement after their recent Summit uh when in fact what China is doing is is pushing on kind of undeterred and uh and probably has more rather than less uh incentives to act thanks to their more powerless political sit or excuse me economic situation uh so there's all that and then you and then you're going to have a lot of points in the uh in in domestic politics uh with uh with the primaries coming up over the next several months who are going to be the N ninees will there continue to be rising third party challenges as I've I've thought and continue to think there will be uh you know exactly what is the direction of the United States uh both domestically and in terms of its own foreign policy those will play out in you know in in specific points uh you know at least once or twice a month through the year and uh and I think have the opportunity to to put additional volatility into the markets as unsure about the future direction of the United States Terry I don't want to be inflammatory I just want to be smart here for our audience when we talk about a third world war when I look at our Bloomberg intelligence team and when they're putting out um research when it comes to what we need to watch on the global economy and top of the line or top of the headline is about war so how do we need to think about the possibility of a third world war uh you know in some ways and I'm not trying to be inflammatory either I'll give you a different way of thinking about it though in a lot of ways we already are uh you know there there are at least three regional conflicts uh there's uh there's cyber War there's a concern about H how the uh the the contending parties uh move into space there is there are concerns about uh how they they're moving around in even in the Arctic for example uh so you know you've got kind of a slow-moving conflict right now and I'm not trying to be inflammatory or push it uh push it too far either uh but what I will say is that anybody that's looking at uh the current three spots as solely Regional conflicts and not representative of a larger conflict uh isn't thinking about this enough and The Economic Consequences alone as you all just noted on Supply chains and uh in the Red Sea and many other things uh could be very substantial so you know we are in a very uh we're in a very volatile situation already even though markets don't fully understand it realize it or appreciate it so there's a lot to worry about on the global front let's go back domestic though because uh you write in a recent note you talk about Washington's outof control fiscal spending increasing debt service costs maybe we saw some of those concerns play out in the treasury market in the summer but uh looking at the state of play right now it seems like that was a blip but what's the trajectory there when you think about the fiscal side of the equation Washington Washington always thinks that they understand the markets and the markets always think they understand Washington and that Washington is responsive to markets uh I've never thought that was true and we've probably got the biggest Gap uh between Washington and the markets in some time increasingly markets are asking uh you know when and whether the uh United States government is going to be able to get its fiscal spending under control and there there's no movement at all towards doing that you you have a situation in Washington right now where you know the the most uh the people are banging their their fists on the table the most to control spending are people that are you know ironically to some extent uh conservative Republicans but really what they're doing is talking about as much as 1% out of 30% the discretionary part of the overall federal budget and that's a blip and that's by no means what anybody expects so the the discrepancy between What markets want in terms of uh more sustainable fiscal policy and what Washington is it can deliver there's a huge gap and there's no in there's no indication that Washington even understands what markets uh want or expect there Terry we'll have to see how these uh negotiations go down to uh the wire this month in regards to the potential risks uh and as you say there is a great disconnect between markets and Washington uh let them rule we rule our our own way at say the bond equity and commodity Traders Terry hens Pangia policy Angela stent is here with us she's non-resident senior fellow at the Brookings institution she's author of Putin's world she understands uh Vladimir Putin so well she has worked uh done National Intelligence uh for Russia and Eurasia at the National Intelligence Council so really understands uh a lot when it comes to geopolitics Angela good to have you here as we get ready to wrap up 2020 three this latest barrage by Russia shows that what to you that this war is long from over oh yes this war is going to continue um well into 2024 despite stories that occasionally appear in our media about Putin being willing to negotiate uh he's defined this as an exential existential issue for him uh the survival of his regime um and as we saw today this was I think the deadliest attack again hitting civilian targets um mercilessly and uh uh you know anger that the ukrainians were able to destroy this amphibious Russian warship in Crimea uh this week this was a major gain for the ukrainians but still uh they are they are fighting very hard to uh maintain their position Angela I do wonder that geopolitically there's a lot going on around the world to say the least it's an understatement with what's going on in the Middle East and I do wonder how Global allies are preoccupied with so much and how that might impact their support of something like uh the Russian war in Ukraine right so for Putin you know the Israel Hamas War has been a godsend uh attention has been diverted uh to what's happening in the Middle East away from Russia Ukraine and then of course you have uh this debates within the United States our Congress couldn't agree on a major um $60 billion Aid package for Ukraine they went away uh they may be able to agree on on it in January but it's of course tied to all these issues of border security the European Council was unable to vote on a 50 billion Euro tranch of financial support for Ukraine because Victor Orban the Hungarian prime minister vetoed it they're also trying to get round this but the ukrainians are now saying that they cannot pay pensions going forward if they don't get this money from the European Union so uh allies are distracted they're dealing with their own domestic issues um and so the outlook for Ukraine uh for the next year is really very sober Angela good morning when you talk about the lack of robust support from the US and from Europe it is Victor Orban of course who is the the spoiler in that narrative does this embolden Putin uh to to deliver a killing blow as he has today I mean it is one of the missile record missile barrage killing 18 people this is breaking news this morning he's attack keev Liv Odessa are under attack do you think that this prevarication by the United States and by the part in part Europe emboldens Putin oh it certainly does if you watch the nightly Russian TV shows they are gloating uh both about the debates within Congress and the Republicans who don't want to give any more money to Ukraine and they're gloating about a disunited European Union uh of course it emboldens them because Putin's calculation is that if he waits this out Western support will further erode uh he is waiting for Donald Trump to be reelected uh next November and hoping that then us support for Ukraine will can I ask you if Trump I I I mean this is this is projection this this is projection but I want you to reflect on certain moments in the previous administration when Trump was in power he went to meet Kim Jung he he got on planes he he sort of B you know Grand standed and did a great deal of theater is that our risk here that if there's a shift in politics in the United States of America is this campaign is this Russia war going to play in the polls for Trump towards the campaign later this year well I think it will I mean Trump has said that he could end this war in 24 hours I would be interested to understand how he's going to do that but it's clearly going to cl play in the election campaign in the United States uh the whole question of why we're supporting ing Ukraine and how important it is as he said before during his presidency to have a good relationship with Russia and before we get of course to the 2024 US presidential election we have to get through the winter and you write in your notes that the winter will be very challenging for the ukrainians walk us through that the reality on the ground is of course the calendar year flips here right so the Ukrainian counter offensive that began in June did not achieve what the ukrainians and I think what we and the Europeans hoped it would they were unable to take back a significant amount of territory they they need to mobilize more soldiers um their generals have said that now they need more Us weapons and if they don't get the weapons from the US which is quite possible given the debates in Congress it will be much more difficult for them to push back if they don't get the financial assistance both from the US and from the European Union again uh their domistic situation their economic situation will deteriorate and Russia still has millions of people that it could mobilize uh so far Putin who's running for re-election in March has said that there won't be another mobilization and maybe there won't be at least until after the election and the Russians you know they've survived the sanctions the sanctions have not had the impact that the West hoped that they would so Russia appears to be in a stronger position now uh and Ukraine really is very challenged the keep pushing back against the Russian forces well on the aid conversation of course on the US side we've been talking about it on the program this week about a compromise needed when it comes uh to the southern border and uh the expectation seems to be there that that will be achieved in January but when it comes to the EU you mentioned of course Victor orban's opposition is there a path for the EU around hungary's veto I think there is and the and the EU the European Council they're discussing this and they've said that they hope in January that they can somehow um avoid having to have uh you know Orban vote on this and find another way of getting the money to Ukraine uh but it still has been I think much more challenging for them I think the other thing we should realize is that right now the G7 countries are seriously thinking about how they can deploy the Frozen Frozen Russian assets $300 billion dollars of them maybe not the principle but the interest to help Ukraine and this is a conversation that has now gained momentum so that might be a way around some of this in the next year hey Angela just got about 30 seconds left here there is a way though to peace but maybe it's after the presidential elections I mean there's always a way to peace but the question is um are the Russians interested in negotiating and how much would the ukrainians have to agree to give up if there were to be peace negotiations and I think we have to be quite clear eyed here uh that as long as Putin is in power even if there were peace negotiations they would probably only be temporary because he has not given up his goal of trying to conquer all of Ukraine all right gonna leave it on that note Angela thank you so much uh really appreciate your Insight Angela stent of the Brookings [Music] institution shares of Carnival Corporation they are the seventh best performer in the the S&P 500 up 132% year to date and we are delighted to have with us on this Friday Carnival's Josh Weinstein he's president CEO and chief climate officer joining us here on set in New York in town welcome welcome welcome almost Happy New Year Happy New Year to everybody thanks for having me how are you thinking about the year I mean you guys have had a great one in terms of a stock run you're working on a lot of things in terms of pairing down debt talk to us you just reported earnings last week um some pricing power talk to us about about the kind of the business environment yeah so the 2023 you know we wrapped in in November on November 30th and you know the one word that we like to use as a as a summary is record we had record demand record yields record pricing record bookings forward bookings record onboard spending level so really across the board um our business has really thrived in 2023 and we expect much more in 2024 it could continue because you're such a great gauge of how customers are feeling you know you have several Brands but you really kind of speak to um you know the everyday us consumer if you will and I and I you just have a great read on it are they continuing to spend are they continue to do Advanced bookings and then once they're on their ships Josh continuing to spend as well yeah that that is exactly what we see you know as a matter of fact our our Q4 um was from a pricing standpoint the highest all year so it's accelerating it's not decelerating and when we look uh when we look forward we're actually 2third booked for all of 2024 already it's nice visibility it's not too bad uh we uh were about 10 points higher than we were last year and on top of the the ticket bookings we've actually started pulling forward onboard spend so we have about a more or less about a third of our onboard spend being prepaid in advance so we have a really good amount of visibility and those booking Trends they just haven't slowed down you know every quarter this year you know people expected it's got to it's got to slow down it's got to we're going to we're going to see something thing the consumer is going to get impacted and the fact is with our business we haven't seen it it's record after record as a matter of fact we just ended uh the two weeks of you know Cyber Monday and Black Friday at more records and it's not just coming from uh one brand it's not coming from the United States it's Global it's with our Global portfolio of Brands which is really really encouraging do you think we're moving good morning good to meet you do you think we're moving from many CEOs similar to yourself that that I've sat with that run Global Airlines and and Global businesses have said we've lived through a period of Revenge tourism we were all locked up for a period of time this is something we had this parabolic reopening and you had a parabolic rebooking are we evolving into some kind of new cycle you say there's no end inside in this demand so have if if We've Ended Revenge tourism how do you describe the next Evolution yeah that's a great question so we don't think this is Revenge anymore this is not pent up demand it's two years on from when we really got back in full as a as a as a corporation this is people who have decided what's meaningful for them how do I want to spend my life and experiences are what they're looking for you know Unforgettable memories and Creation with friends and family and that's exactly what cruising has to offer and that's what I sat down with the actore CEO and he said look I haven't got enough hotel rooms and I haven't got enough high-end staff to help me run this business which then takes me to the the cruise is the highend hotel but to what extent are those packages off ship and onshore those additional spans are they critically important to the expansion and the turnaround from the loss that you've had do they add incrementally or significantly so I mean when we think about our business um we're a little bit different from from when you're looking at hotel companies you know I'm staying in a hotel in New York and I won't tell you which one it is but I'll tell you the service is not very good um and we've learned how to live with that as a society it's almost a tcid acceptance no we should not and cruise cruise industry our Our Brands did not deviate from service level our guests have high expectations and we aim to exceed them we do not close off floors we do not shut areas down we do not skimp on the services that we used to offer it is full steam ahead and that's what people expect and that's what they're willing to pay for and that's what we're seeing and let's talk a little bit about the fact that you are a global brand of course a global company uh that goes many places in the world I don't need to tell you that uh the geopolitical landscape very fraught right now two hot Wars and of course conflict in the Red Sea has that impacted at all where you can go and are you seeing any inflationary pressures from some of the things that we're talking about here so the second question uh is no uh we we haven't seen anything of note obviously we pay attention to crude prices which is a good barometer of a lot of things uh with respect to the impact on our business uh we had about less than 1% of our of our business touching Israel in one way or another not necessarily home porting but it might be one Transit stop on a world Cruise or or something of that nature um we made changes uh some time ago we actually don't have any ships transiting the Red Sea area for several months uh and so obviously Safety First and we will we have mitigation plans should we need to adjust where those ships would be transiting uh but as of now uh we're in a we're in a watch and and and learn mode Let's also talk about uh your bond book uh because was interesting seeing just last week actually S&P coming out and upgrading Carnival not quite back to investment grade territory but you're getting closer two notches higher two notches higher uh on earnings day actually you think back and uh the Chief Financial Officer of Carnival said that there's a real possibility that Carnival will come back to the debt markets in 2024 where is your current thinking on that and what would actually bring you back to the debt Market well really the only thing that would bring us back to the debt Market as far as we can see is if there's opportunity to refinance on more favorable terms so lower rates yeah lower rates we're not or managing our maturities but we're not looking to lever up as a matter of fact as as you said in the intro we've managed to cut down our debt load by about5 billion so far um and we expect much more of that uh as we go forward you know that's priority one two and three when it comes to our capital structure Dever uh so hey you know one of the things and I it kind of ties together geopolitical but also kind of you know where you're thinking about growth saw a story uh I think it was today or in the last 24 hours that the first domestically built ship in China getting ready to uh hit the high seas but it's a joint venture it's you guys are involved in this and I think about how important China is for you guys but also geopolitically concerns about China its Ambitions with Taiwan and whether or not there's going to be some problems there down the road sure uh well we're very happy for uh for the folks at uh at the China JV we actually Unwound the JV earlier this year you did we did so we've been providing ship building expertise support uh for them and we were very happy to do that we're very story still says you guys are involved but go ahead well that that could be how we're involved uh at this point but from our perspective we got a portfolio of worldclass Brands um all over the world and that's where our focus is um you know it's great for the cruise industry that China has opened up and it will be opening up for International Cruise companies we're not going to be one of them that's going back in uh we've got our assets where we want them we've we've changed our asset strategy we've moved ships to different brands to accommodate the change in China and they're doing very very well so we'll uh we'll take a wait and see approach on that as well but not a market you need to be in right now just no it's definitely not all right going to leave it there listen so appreciate it we know you're spending some time with family but great to get you while you're in time my pleasure thanks and Happy New Year yeah hope the New York Hotel tuned in listen you should be getting you should be getting an upgrade I had the same experience in some hotels I don't think they I don't think they have the workers they do not you have all the workers that you need we do have all the workers that we need and and I'd encourage everybody come come book a cruise before we run out of inventory for 2024 because it's going pretty fast Josh Weinstein the president and CEO of Carnival thank you so much so appreciate it subscribe to the Bloomberg surveillance podcast on Apple Spotify and anywhere else you get your podcasts listen live every weekday starting at 7:00 a.m. eastern on bloomberg.com the iHeart Radio App tune in and the Bloomberg business app you can watch us live on Bloomberg television and always on the Bloomberg terminal thanks so much for listening I'm Carol M and this is [Music] Bloomberg

Channel: Bloomberg Podcasts

Views: 361

Keywords: Business, Business News, Daily News, Investing, Jon Ferro, Lisa Abramowicz, News, Paul Sweeney, Tom Keene, bloomberg, bloomberg podcast, bloomberg radio, bloomberg surveillance, finance, markets, news, podcast, surveillance

Id: 1UD5wANb9dQ

Length: 42min 36sec (2556 seconds)

Published: Fri Dec 29 2023