Bloomberg Surveillance
Surveillance: Dollar Call with Verrone
Aug 29, 2023
Chris Verrone, Strategas Partner & Head of Technical & Macro Strategy, discusses the challenges of a short dollar call. Wells Fargo Chief Economist talks about the high bar for a September rate hike. UBS US Homebuilders & Building Products Equity Research Analyst highlights labor as the biggest headwind for US homebuilders. Morgan Stanley Investment Management Managing Director expects a strong fourth quarter. Jefferies Senior Equity Research Analyst discusses post-summer state of airline travel.
35:36
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Quick takeaways
- Airlines are facing deteriorating pricing power in the domestic market, while international flights show stronger pricing momentum, indicating uncertainties and shifts in travel demand post-pandemic.
- Airlines are grappling with multiple factors that could impact profitability, including weakening pricing power, rising fuel costs, increasing labor expenses, and potential cost pressures from pilot agreements, posing challenges to profit margins.
Deep dives
Airline pricing power and demand
The pricing power of airlines is experiencing a deterioration, particularly in the domestic market. Corporate travel remains stagnant, while international flights are seeing stronger pricing momentum. The unpredictability of travel demand post-pandemic and the shift towards virtual meetings are causing some uncertainty. However, network carriers like Delta and United, catering to a premium customer base, are better positioned than low-cost carriers.
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