Stocks Wipe Out CPI-Fueled Gains as JPMorgan Sinks

Summary

Bloomberg Businessweek – "Stocks Wipe Out CPI-Fueled Gains as JPMorgan Sinks"

Date: January 13, 2026
Hosts: Carol Massar, Tim Stenovec
Episode Theme:
An exploration of the volatile market dynamics following new U.S. inflation data, escalating political pressure on the Federal Reserve, the DOJ’s Fed probe, policy impacts on banks and credit cards, and an in-depth look at the airline industry’s shifting fortunes and strategies.

---

Main Episode Theme

This episode dissects the interplay between Washington’s increasing intervention in economic policy—especially targeting the Federal Reserve and the banking sector—and the resulting financial market reactions. It further delves into how these macro-policy moves affect sectors like airlines and consumer affordability, managing to maintain a brisk and insightful pace with leading experts.

---

Key Discussion Points & Insights

1. Political Pressure on the Fed & Market Reaction

• Opening Segment (01:00–07:00):
  • Guests: Chris Whalen (Chairman, Whalen Global Advisors)
  • Donald Trump publicly ratchets up pressure for Fed rate cuts, linking market optimism to demands for lowered rates.
  • New DOJ probe into the Fed’s headquarters renovation further raises political stakes.
  • Whalen argues the President’s handling undermines both market and presidential credibility:

    "When you say things that are clearly not well thought through ... you just sit back for a minute and say, what are you trying to do?" – Chris Whalen (01:52)

  • Markets, however, remain largely unmoved, especially bonds, suggesting confidence in the Fed’s independence endures—thanks in part to Senate resistance.

    "The financial markets can get comfortable with just about anything. Would they be upset if rates fell? No." – Chris Whalen (03:48)

  • Populist proposals from the administration, such as capping credit card rates or instructing Fannie Mae and Freddie Mac to buy $200bn of their own debt, are deemed unlikely and not market moving.
  • Both the market and Whalen see the drama as mostly political theater, with policy substance lacking.

2. Congressional Dynamics & Fed Appointments

• Ongoing Analysis (07:00–09:00):
  • Senate Republicans, led by figures like Thom Tillis, promise to block Fed appointments until legal probes conclude, providing markets with assurance.
  • There's speculation over which candidates could succeed Powell, such as Kevin Warsh.

    "I think Kevin Hassett may be done. We may see Kevin Warsh instead..." – Chris Whalen (05:41)

3. Presidents versus the Fed: Then and Now

• Matthew Lizetti Segment (10:34–13:18):
  • DOJ’s legal scrutiny is called "an unprecedented challenge to Fed independence," differentiating it from past executive pressure (LBJ, Nixon).
  • Markets had a modest yield spike but steadied due to signs of Senate oversight.

    "Taking legal action here is the unprecedented aspect of what's happening." – Matthew Lizetti (10:53)

  • Administration's focus is intensely on affordability, hoping that rate cuts will ease housing costs—but Lizetti warns that attacking the Fed often raises, not lowers, longer-term rates and mortgage costs.

    "Every time we've seen an attack on the Fed ... long end rates typically rise, mortgage rates rise." – Matthew Lizetti (12:30)

4. Airline Industry Response to Economic Turbulence

• Delta & Airline Sector Focus (13:38–24:20):
  • Guest: Savi Syth (Managing Director, Airlines & Advanced Air Mobility, Raymond James)
  • Airlines (Delta as bellwether) see strong revenue momentum but are cautious due to policy volatility and macro uncertainty.

    "There's a lot of policy volatility and anything can happen. So maybe a very cautious start..." – Savi Syth (14:21)

  • Shift toward premium seating and steady demand from high spenders; economy/main-cabin remains weak.
  • Airline credit card programs, especially for Delta, are essential, contributing strongly to margins and cash flow, and any cap on credit card rates would have profound impacts—more so for price-sensitive, smaller airlines.

    "Credit cards is really important, has become important for the airlines as a whole and not just for Delta..." – Savi Syth (17:07)

  • Allegiant’s acquisition of Sun Country signals more industry consolidation as smaller airlines seek scale to survive.

    "The bigger you are, the more benefits there are to loyalty ... so it's trying to get bigger and trying to get scale so they can compete with the big four." – Savi Syth (19:50)

  • Even with cautious guidance, Delta's strong fundamentals are clear, but investors expect more bullish projections.

5. Tariffs, Inflation, and Cost of Living

• Economic Data Deep Dive (24:52–32:56):
  • Guests: Stuart Paul (US & Canada Economist, Bloomberg Economics), Eric Weiner (Senior Editor, Equities Americas, Bloomberg News)
  • Inflation came in below expectations; the effect of tariff pass-through appears to have peaked and is waning.

    "The relationship between the two, tariff rate and consumer prices, has basically broken down completely." – Stuart Paul (25:27)

  • Companies (banks in particular) are navigating policy threats—especially credit card rate proposals—which most experts see as unlikely to pass Congress.

    "It's not going to just happen by fiat like it's got to pass through Congress." – Eric Weiner (27:28)

  • Persistent consumer pain points remain, notably food prices, heavily influenced by weather and trade policy disruptions:

    "It's just really difficult to control the cost of food when it's subject to things like weather." – Stuart Paul (28:45)

  • Regional economics and political calculus at the state level are influencing (and sometimes offsetting) broad negative narratives about affordability.
  • Despite political turbulence, markets are not anticipating an imminent Fed cut and are largely pricing in a steady policy path.

    "Markets should be moving at the speed of policy, not at the speed of rhetoric." – Stuart Paul (32:13)

---

Notable Quotes & Memorable Moments

• On White House Rhetoric vs. Market Reality:

  "They're not really concerned with the medium and long term consequences ... you don't hear anybody talking about the budget deficit."
  – Chris Whalen (03:48)

• On Historical Precedents:

  "Taking legal action here is the unprecedented aspect..."
  – Matthew Lizetti (10:53)

• Market Mood:

  "The market is sort of moving on the way it was in Dec with the same level of assumptions."
  – Eric Weiner (31:03)

• On Inflation Pressure Points:

  "I went to buy eggs yesterday. They were $12."
  – Guest Commentator (28:26) "Welcome to Manhattan."
  – Christine (28:26)

• On Airline Credit Card Profitability:

  "When you do have demand volatility ... you're still making charges on your credit card. So for airlines, it's also a nice stream of steadier revenue..."
  – Savi Syth (17:07)

• On Political Risk Management:

  "Markets should be moving at the speed of policy, not at the speed of rhetoric."
  – Stuart Paul (32:13)

---

Timestamps for Key Segments

• 01:00–07:00: Chris Whalen critiques President Trump's Fed intervention & likely market outcomes.
• 10:34–13:18: Matthew Lizetti analyzes unprecedented legal challenge to Fed independence.
• 13:38–24:20: Savi Syth discusses airline industry fundamentals, credit cards, and recent merger news.
• 24:52–32:56: Stuart Paul & Eric Weiner on fading tariff effects, persistent inflation, and why markets are largely unbothered by political theatrics.

---

Episode Tone and Takeaways

• The discussion is brisk, candid, and peppered with real-time reactions to breaking news and policy.
• The prevailing mood is one of cautious pragmatism: politicians may shout, but markets (and their seasoned observers) are more swayed by tangible policy and Congressional gridlock than by executive rhetoric or populist proposals.
• Affordability remains at the heart of voter and consumer concern, especially for food and housing, but actual policy change—whether at the Fed, in Congress, or in regulatory edicts—moves far more slowly, as the experts repeatedly stress.
• In sectors like airlines, consolidation and adaptation continue as firms find creative ways to buttress finances amid macro uncertainty and political tumult.

---

For Those Who Haven’t Listened:
This episode offers a rich blend of macroeconomic, political, and industry-specific analysis, focusing on how headline-grabbing political maneuvers affect (or don’t) the real economy and financial markets—with a sober-eyed view of the limits of presidential power and the steadfastness of institutional market behavior. If you want insight into 2026’s dominant business and policy dynamics, this conversation is both current and prescient.

Transcript

[Marsh Representative]

At Marsh, we believe that perspective powers progress. That's why our individual businesses have come together as one company, a new marsh built to solve the world's most complex challenges and uncover new opportunities for our clients. We're better positioned than ever to help your business navigate obstacles and unlock potential across risk, reinsurance and capital, people and investments and management consulting. Learn [e-mail] podcast.

[Podcast Announcer]

Bloomberg Audio Studios Podcasts Radio News this is Bloomberg Business Week Daily reporting from the magazine that helps global leaders stay ahead with insight on the people, companies and trends shaping today's complex economy. Plus global business, finance and tech news as it happens. The Bloomberg Business Week Daily Podcast with Carol Massar and Tim Stenbeck on Bloomberg.

[Christine]

Radio I want to go now here to the Bloomberg businessweek studio and I want to bring in Chris Whalen is chairman of Whelan Global Advisors. He's co founder of the Institutional Risk Analytics. He's co author and author of many books including Inflated Money, Debt and the American Dream. And he also worked at the New York fed in the 1980s. And that's exactly where I want to start because we did just hear the president making comments in Michigan, ratcheting up his pressure on the Fed chief. He said, I want a Fed chief to put rates down on good news. When there's good news, the market should go up. When the market goes up, the Fed should lower rates. This comes after a weekend where I don't need to remind everybody about the pressure that the Fed chair is facing and what happened and what is happening with this Department of Justice probe. But as somebody who has experience in markets, who has experience at the Federal Reserve, what is the risk to markets here? What is the risk to the economy with the president job owning like this?

[Chris Whalen]

I think the risk is obviously confidence. It also, I think even more importantly risks calling the office of the Presidency into ridicule. Because you know, when you say things that are clearly not well thought through and when it's obvious that they're not getting the outcome that they say that they want, then you just sit back for a minute and say, you know, what are you trying to do? I worked for Paul Volcker at the Fed of New York and then Jerry Corrigan. These were both very serious people who never said anything in public unless they had to. I think that Donald Trump has mishandled the Fed. The way to dealt with this was to simply say, you know, he hasn't done a good job. We're looking forward to getting a new chairman, that's it. And then let the man, exit and retire. They could have also used the several aspects of policy, quantitative easing, the purchase of all those securities during COVID obviously the refurbishment of the Fed's headquarters, which is rather grotesque. But you didn't have to do it this way. And by attacking Powell personally continuously, I think they're not going to get what they want. I expect Powell to stay on the board until his term as governor is over in 2028.

[Christine]

Yeah. You're not the only person to, to share that with us. In recent days, I think that's seen as a wide view. We'll see what happens. I hear you. And then I say, and yet, and yet we're not seeing the equity market react and we're not seeing, more importantly the bond market react. It seems like the bond market is saying the independence is not threatened. Maybe it's Senator Thom Tillis, maybe it's Republicans coming out and saying, we're not going to let your Fed pit go through until this legal matter is resolved. Is that what, what's happening here? Because it doesn't seem like the markets are taking the independence risk.

[Chris Whalen]

The financial markets can get comfortable with just about anything. Would they be upset if rates fell? No. Would they be upset if you had other policy changes at the Fed that were more pro growth, to the President's point just now? No, they would be very happy with that. They're not really concerned with the medium and long term consequences, which is what I think you're really alluding to with your question, which is will people take the United States seriously when it comes to economic policy? You don't hear anybody talking about the budget deficit. You don't hear anybody talking about any number of things. And the proposals that come out, you know, capping credit cards at 10%, that doesn't work.

[Guest Commentator]

He needs an act of Congress.

[Chris Whalen]

The better customers in any portfolio like that subsidize the inferior customers, whether you're talking about housing or credit cards. So when you start going into these populist policy descriptions, which the President, you know, seems to be more and more interested in, it just is a disconnect because none of these things, I think are really going to happen. The Congress is not going to pass a national cap on credit card rates. I don't think Fannie Mae and Freddie Mac are going to buy $200 billion worth of their own debt. They don't have the cash. Are they going to go out and borrow the cash? You know, people Forget that the GSEs have to hedge their books. So the net effect on rates is going to be just about zero. The Fed doesn't hedge. That's why they got such an immediate impact in March of 2020. So, you know, when you look at the details, and obviously no one at the White House is looking at the details, these proposals don't have a lot of substance. And I think that's why the markets haven't reacted. We kind of shrug it off and say more.

[Guest Commentator]

They just don't think it's going to happen. Is this like willful suspension of disbelief from the different markets?

[Chris Whalen]

I think so, because, you know, if Jamie Dimon and the rest of the banking industry decided to fight CR credit card caps, I think they'd win. I also think that Trump is in perilous waters right now when it comes to his Fed appointment because he may not be able to get a majority of the Senate to support him. Yeah. How would that look? You know, I think Kevin Hassett may be done. We may see Kevin Warsh instead, which I didn't expect. I'm a friend, a big supporter of Warsh, but I, you know, I didn't think he was in the running until about a month ago. So, you know, this whole situation is a surreal quality to it. And I think the markets haven't reacted in part because they can't believe it. They haven't had time to process it. And they also, I think, discount it because it's not really well thought through. I think there were ways that they could have managed Powell, for example, that would have gotten the president what he wants. But instead you're going to have a sole chairman appointed. You're going to have a more hawkish FOMC as we have now. And then you're going to have Chairman Powell sitting near as a governor for the next two years till the end of Trump's term. That's not what they wanted.

[Christine]

Yeah, I mean, a lot of folks out there saying right now that this attack, specific attack over the last 48 hours has backfired. Really appreciate you joining us today and sticking around was cut a little short due to President Trump. So that's Chris Whalen. He's chairman of Wayland Global Advisors, author of Inflated Money, Debt and the American Dream, among other books, and editor of the Institutional Risk newsletter here in the Bloomberg businessweek studio. Stay with us. More from Bloomberg businessweek Daily. Coming up after this.

[Marsh Representative]

Business challenges and opportunities are never one dimensional. At Marsh, we believe that to thrive, you need perspective. That's why our individual businesses have come together as one company, a newmarsh where each layer of our organization works even more closely together to provide you with a stronger, more panoramic perspective. We're now one firm solving the world's most complex challenges and unlocking opportunities for you across risk, reinsurance and capital, people and investments and management consulting. As business continues to evolve, the Marsh will always be here to help you overcome new challenges, answer new questions and take advantage of new opportunities. We're better positioned than ever to provide the perspective you need to fuel progress forward. See [e-mail] podcast you're listening to the.

[Podcast Announcer]

Bloomberg Business Week Daily Podcast. Catch us live weekday afternoons from 2 to 5 Eastern. Listen on Apple CarPlay and Android Auto with the Bloomberg Business app or watch us live on YouTub.

[Christine]

The president still making comments. He says now that if I had to help the Fed, housing costs would be easier. The president also praised that huge impact of $200 billion mortgage bond buy, which Chris Whelan just referred to. The president also saying, Christina, that credit card interest rates are too high, way too high.

[Guest Commentator]

The interesting thing? Well, there's a few interesting things about this president. Obviously one of the things I find interesting is he is very hard to dissuade from these issues. You know, we saw with the tariffs, this is something his policy advisors and folks around him were able to get him to back down on in the first term. And he carried that all the way through that four year hiatus. And then when he came back, he was there again. It will be interesting to see the only person who was able to bend him a little bit was Jamie Dimon. When he went on the airwaves and said this is a bad idea, all.

[Christine]

Of a sudden he went on Fox Business that morning.

[Guest Commentator]

We had that 90 day pause and we saw movement from the White House. So I am wondering after Dimon's comments today about how Fed, you know, the impartiality of the Fed not being there could impact the the viability of the US Financial system. I'm wondering if Trump heard that, if someone will play it for him and if we will see any kind of impact on the White House.

[Christine]

The perfect segue for our next conversation, the president criticizing Fed Chair Jay Powell after a Justice Department probe into the Fed's headquarters renovation sparked backlash across Washington. The president telling reporters outside the White House this morning, here's what he had to say. He's billions of dollars over budget. So he either is incompetent or he's crooked. I don't know what he is, but he does. It certainly doesn't do a very good job. That's President Trump outside the White House earlier this morning. Meantime, underlying US Inflation rising in December by less than expected. We've got a lot to get to with Matthew Lizetti. He's chief U.S. economist and head of U.S. economic research at Deutsche Bank. Thanks too for sticking by. I mean, of course we were starting to talk to you a few minutes ago and the President started on time today.

[Matthew Lizetti]

More important things cropped up more.

[Christine]

Okay, well, we're not going to judge what's more important.

[Guest Commentator]

It's also planned for the President to be late. We honestly had not planned for the President to be on time. So thank you for hanging out. We appreciate it.

[Christine]

So you call this DOJ probe of the Fed a quote, unprecedented challenge to Fed independence. How in your view is this different from pressure that other presidents have applied? Lbj, for example, or President Nixon?

[Matthew Lizetti]

Yeah, look, I think there really is a long history here where presidents have applied pressure to the Fed through various measures. I think in that note I had, you know, talked about the historical experience where LBJ and William and Chesney Martin had this kind of dust up around in the 1960s to try to bring rates lower. Obviously, President Trump has, has pushed for the Fed to cut rates aggressively in recent times. But taking legal action here is the unprecedented aspect of what's happening. I was listening to the conversation, you know, that we were all just having. I think initially you did see the bond market respond yesterday.

[Christine]

Yeah.

[Matthew Lizetti]

You saw 10 year yields rising. 5 to 6 basis points at longer end of the curve was moving as well. I just think it was a important development that Senator Thom Tillis, other Republican senators came out and basically said, look, we are going to block any Fed appointees until this gets resolved. And so I think that opened up potential counterproductive actions here, whether it's the chair palate staying on or that you won't get more dovish members on the Fed.

[Guest Commentator]

And that margin is so thin. I mean it's, the caucus has been together enough that they've been able to uphold the administration's policies. But you know, when you start getting calls from those donors, from your own portfolio managers saying this is going to have an impact, I think that does move people. Obviously Tillis is retiring, so he has a little bit. He's in a swing district, but he's able to go out on this ledge because he doesn't have to run again. But I'm wondering why you think this president is so obsessed with this, especially given recent precedents. I just every time think of Turkey and what happened there. They fired the guy who did the numbers because Erdogan didn't like the numbers, they raised interest rates and then the Turkish lira collapsed. Has no one in this administration. Are they not concerned about that?

[Matthew Lizetti]

Yes, I think I would think of this through the lens of affordability. It is the number one question for, for U.S. households. I think it's what's driving elections and kind of political decisions. And I think everything that you see coming out of this administration is focused on that question. At this point in time, I think key to affordability in the housing market is viewed interest rates. Now, I think the disconnect is that if the Fed cuts rates aggressively, it does not necessarily mean that the long end of the curve is going to come down as well. It doesn't mean that mortgage rates are going to come down as well. In fact, every time that we've seen an attack on the Fed, including yesterday, the long end rates typically rise, mortgage rates rise. And I think that's where it becomes kind of counterproductive for the administration.

[Christine]

Matt, you got to run. We appreciate you taking the time and joining us on Bloomberg businessweek today. Stay with us. More from Bloomberg businessweek Daily coming up after this.

[Podcast Announcer]

You're listening to the Bloomberg Businessweek Daily podcast. Catch us live weekday afternoons from 2 to 5 Eastern. Listen on Apple Car Play and Android Auto with the Bloomberg Business app or watch us live on YouTube.

[Christine]

Delta fell as much as 4% earlier in the session. The company providing a profit forecast, it fell short of Wall street estimates. Delta is taking a more cautious view for this year after the aviation industry emerged from a volatile year. I want to bring in Savvy Scythe, managing director for airlines and advanced air mobility with Raymond James. Savi joins us from St. Petersburg, Florida. Welcome. Delta is the first major airline to report. Investors often look to it as a bellwether for how the industry is doing. The report contrasts quite a bit with what we heard from Ed Bastian, the CEO of Delta last year at this time. And certainly a lot has happened when it comes to trade policy, when it comes to immigration in the U.S. how would you characterize Delta's outlook for this year?

[Savvy Scythe]

Hi, Tim, thanks for having me. Now, you know, I think if you look at the momentum in terms of demand, corporate strength, that's sounding a lot like what we had last year at this time. In fact, you're seeing strong year over year growth on top of a very strong setup last year to come into the year. What's different is I think a little bit more of a recognition that there's a lot of policy volatility and anything can happen. So maybe a very cautious start in trying to forecast a full 12 months based on just what we're seeing so far in the year. So, so I would say overall revenue trends very strong, but maybe lessons learned and being a little bit more cautious on a full year outlook.

[Guest Commentator]

I also want to ask you, you know, the Delta CEO said that demand from high spending consumers continues to be strong and that's something we've seen in a lot of the hospitality industry. He added, effectively none of our growth in seats will be in the main cabin. They virtually all will be in the premium sector. Are airlines still losing money from economy passengers, people like me who are cheap and in the back of the plane and at some point are going to run out of folks who can pay a premium for a better seat. What's the model here and what's going to work?

[Savvy Scythe]

Christina? It's, you know, it's really there's a lot of kind of revenue management here and premium passengers are flying but the very price sensitive passengers are still not, you know, there's probably too much supply in that market and the fares are weak. And the interesting thing for the group is you are seeing capacity in that part of the market getting rationalized slowly. And so there's an opportunity here for another leg up as we get that market stabilize. But you are correct that the strength still is on the premium side with the main cabin fare environment not as strong as premium.

[Christine]

Xavier I want to go to some comments that Delta CEO Ed Bastian made on this morning's conference call. This is about the credit cards and the news that we got late last week from the president calling for a cap on credit card rates. Check out what he had to say. One of the big issues and challenges with with the potential order is the fact that it would actually restrict the lower end consumer from having access to any credit, not just what the interest rate they're paying, which would upend the whole credit card industry. That was Delta CEO Ed Bastian on this morning's conference call with analysts. So a couple different things I want to talk to you about. Here is one. Delta, when you think of credit cards and airlines, Delta is the airline with the credit card. Help us understand the contribution that Delta's credit card has to top line to bottom line. What do we need to know?

[Savvy Scythe]

Yeah, I mean credit cards is really important, has become important for the airlines as a whole and not just for Delta. It's most powerful for the big four. So the airlines with the kind of the Biggest networks here. But even some of the, you know, the smaller airlines like allegiant, you know, JetBlue, decisions are being made based on, you know, how much credit card contribution and what routes might appeal to credit cards. It's really important. You know, in the past we've said at least three points of margin are coming from the credit card, probably more. And it's also important in terms of cash flow. It's a steady stream of cash flow. So when you do have demand volatility, where suddenly some, you know, some shock happens and people may not want to fly, you're still making charges on your credit card. So for airlines, it's also a nice stream of steadier revenue that comes through in volatile kind of passenger travel demand environment. So it is an important component for airlines and something we're watching closely.

[Christine]

Yeah, so. So it's interesting because he was talking about two different things there. One he's talking about which we've heard from a lot of, a lot of the banks of late, which is access to credit and why it's important to have these products to extend credit to a large portion of the American population. If this were to go into effect and a lot of, there are a lot of skeptics out there, a lot of people saying this would never happen. But what would be more at risk for Delta? Would it be the actual passengers who would not be able to afford to travel and have this discretionary spend as a result of these caps or would it be that Delta wouldn't be able to make as much money with their credit product.

[Savvy Scythe]

Given Delta is more premium and kind of higher end focus? I think for Delta it might be a little bit more on just fewer people have, you know, having this card because when you do get a card, you're more likely to spend with that airline. You're less likely to shop around because you do get benefits. So that's the aspect of it. And I would say this is probably going to be a lot more to Bastion's point. It's going to be a lot more impactful probably for the smaller airlines and for airlines that rely on a lot more price sensitive passengers that, that need that credit to, to make those trips.

[Guest Commentator]

Well, and speaking of those smaller airlines, we also wanted to ask you about in other aviation news this week. On Sunday, Allegiant announced that it's buying sound Country Airlines for $1.5 billion. They are kind of the other end of this market we were just talking about. They focus on lower income, middle income folks. They have a Lot of small and medium markets, although this merger will allow them to reach more places. What are your thoughts on that merger and is that what we're seeing in a lot of other industries, the hollowing out kind of of the middle where you're getting higher end and budget, making a profit but everything else in the middle is really struggling.

[Savvy Scythe]

Yeah, Allegiance really interesting, Christine, in the sense that this is an airline that focuses on serving small markets to direct leisure. So allegiance definitely a lot more leisure and doesn't carry the corporate passenger that you might get on one of the big four airlines, but they still cater to a higher income net worth individual because they do fly folks to their second homes and things like that. So they span the spectrum. And what I would say is I think what's happening here is airlines, it's like any network, the bigger you are, there are scale benefits and I think that's what the smaller airlines are figuring out is they need to get bigger. The bigger you are, the more benefits there are to loyalty to corporate credit cards and things like that. And so it's trying to get bigger and trying to get scale so they can compete with the big four. I think that's what you're seeing and we think we'll see a lot more of that.

[Christine]

Yeah, talk a little bit about that. That was my next question is what other M and A do you think we're going to be seeing this year when it comes from especially the smaller airlines? I mean, no question. I would imagine JetBlue, Spirit, Frontier are going to be trying to do some shopping.

[Savvy Scythe]

Yeah, there's definitely, I mean there's probably something more imminent with Spirit. We know that given their kind of cash flow perspective and, and needing creditors to put more money in. So will get an answer there. You know, if it's, if it's a matter of that they have to do a Chapter 7 scenario or they merge with like a Frontier. But you do see that kind of lower end or the smaller end of the market really needing to kind of consolidate and get bigger so that they're stronger to kind of compete with JetBlue. They have a lot of cash, but they also have a lot of debt. So we'll see what happens with them. They have a, you know, a standalone plan that they're executing and it will all depend on, you know, if we, if we get a stable demand environment and if we can see some earnings and balance sheets improve here in 2026.

[Guest Commentator]

The thing, I mean this might be a stupid question, but the thing that struck me about this is it wasn't necessarily a bad Q4 report. It just wasn't as good as it could have been. I'm wondering if at the moment, giving all the constraints on the industry, given how expensive it is to operate these planes to fly these days, is status quo. Is maintaining altitude kind of as good as it's getting right now for a lot of these big airlines?

[Savvy Scythe]

I think if you look at the fourth quarter, I mean, there was a lot of noise. It clearly got impacted by the, you know, the government shutdown and more so from the, you know, the DOT directed flight cuts and then you did have, you know, weather towards the end of the year as well, that that hurt things. But fourth quarter, actually Delta came in above expectations. It was a good hit. And then what I would say is if you look at the revenue, as I mentioned earlier, the demand momentum, the revenue momentum is really strong. We thought we had really tough comps because of the kind of the post election euphoria that we saw in the prior year. But they're showing revenue growth on top of that. They're showing fair growth on top of that. So it is a really strong setup. I think what disappointed is investors were anticipating a strong setup and they were expecting a really strong guide. And I think Delta is being cautious here and saying, look, there's a lot of the year to go. We're still two weeks in, so let's be a little bit more cautious in setting expectations so that we don't have to cut guidance like we did last year.

[Christine]

Let's, we're going to do one more. I got one more question for you and then, then we have to wrap. Savvy? Savvy. I want to ask about moving forward to like United Airlines, American Airlines and what Delta can tell us about what to expect from those other companies set to report soon.

[Savvy Scythe]

Yeah, I think we'll get quite a few. You know, I think that generally what the read through here is the revenue environment and outlook is going to be positive. I think United has historically talked about putting a few acts of God into their outlook. So I think you'll get some conservatism in the outlook from the onset there. But generally I think you're going to hear something similar from a revenue perspective that there's kind of good momentum to begin the year with. And, and kind of especially what we're seeing from the industry is good capacity discipline. And that's what we watch from United and American as well is what are their capacity growth plans because Delta's 3% is very encouraging and so what those airlines say about capacity growth will be also important to at least understand that supply is not going to be the issue this year.

[Christine]

Savvy say. Thanks so much for joining us, Managing Director for Airlines and Advanced Air Mobility at Raymond James joining us from St. Petersburg, Florida. Stay with us. More from Bloomberg businessweek Daily Coming up after this.

[Podcast Announcer]

You're listening to the Bloomberg Businessweek Daily Podcast. Catch us live weekday afternoons from 2 to 5 Eastern. Listen on Apple CarPlay and Android Auto with the Bloomberg Business app or watch us live on YouTube.

[Christine]

Hey I to bring in Stuart Paul, US Canada economist for Bloomberg Economics and also Eric Weiner. He's senior editor, Equities America's for Bloomberg News. Both of us, both of them join us here in the Bloomberg Interactive Brokers studio. I want to start on the economic data that we got today, Stuart. We saw a downside surprise when it came to inflation data. You and the team, or I should say Anna Wong and the team, out with a note that said that the tariff pass through from inflation or tariff pass through to inflation has peaked already. There's nothing more to come.

[Stuart Paul]

Yeah, it looks that way. When we look at some of the most tariff affected goods and we map the increase in tariffs to what we've seen in consumer prices, the relationship between the two tariff rate and consumer prices has basically essentially broken down. It's basically broken down completely. When we look at some of the most tariff affected goods, things like appliances, things like other household completely, completely gone. We saw appliance prices actually plummet and really drag down core goods. Even when you would expect to see some of the knock on consequences of tariffs and things like used autos. Right. If you have tariffs on auto parts, you should see higher demand for used autos and used auto prices rising. We're not seeing that anymore. So it really looks like the tariff consequences are starting to fade. When we look at consumer prices, I think that we're on the other side of peak tariff Pastor so we heard.

[Christine]

From JP Morgan Chase a little earlier today, Eric, and you're going to be listening to all these earnings calls very closely. Can you give us your take here? Are we going to not hear about tariffs from these company CEOs because that pass through happened, they already paid for them. We're not going to see the inflationary effects from that?

[Eric Weiner]

Well, I think when you're talking about the Trump administration, it's kind of hard to say that things are over because you don't necessarily know what he's going to slap on and it's kind of Unpredictable. The when you're looking at banks, they're really looking at, you know, trading revenues and underwriting revenues. And that's what there are a couple of things going on right now in the financial sector. One is the threat of the 10%, you know, credit card ceiling.

[Christine]

Is that a real threat?

[Eric Weiner]

I don't think so, but.

[Christine]

Stewart laughed a little bit.

[Stuart Paul]

Yeah, look, I mean use free laws that are administered at the state level. And when you look for support within Republicans on the Hill, basically nobody supports because they're fearing drying up of consumer revolver. So we know that it's what the president wants, but whether it happens is more difficult.

[Eric Weiner]

Yes. And it's not going to just happen by fiat like it's got to pass through Congress. This isn't something that's just going to happen overnight. But when you see, so when you see JP Morgan down and you see other banks falling along those lines, you see some concern about what their bottom lines are looking like and what their fee income is looking like and all that. When you see Visa and MasterCard in there, that means that there's something strange going on with credit card companies. And I mean I don't want to make a, I don't, I don't make investment recommendations. But if they're getting hit right now, that's probably a false flag. Like that's the kind of thing that probably is in, you know, in the, in the atmosphere. But it isn't probably going to overhang them very long. So they'll come back.

[Guest Commentator]

Before we move on from the cpi, what is going on with grocery prices? We've talked about all these other things that are, that are dipping that you're seeing movement in. I went to buy eggs Yesterday. They were $12.

[Christine]

Welcome to Manhattan.

[Guest Commentator]

Yeah, I don't want to talk about.

[Christine]

She moved here from D.C. so this week.

[Guest Commentator]

I moved this week. But seriously, that is untenable for the majority of Americans even at half that price. Why are you not seeing those prices budge where you're seeing them other places? And that's one of the places that most Americans are going to notice and they're going to notice when they go to the polls.

[Stuart Paul]

Yeah, food prices jumped materially during the month, 0.7% month on month, both for food at home and food services, including things like dining out. And look, it's just really difficult to control the cost of food when it's subject to things like weather.

[Christine]

Right.

[Stuart Paul]

We are talking about egg prices, chicken feed, you need corn. It's subject, it's subject to things like whether you layer in then a little bit of tariff pass through because again, it does come from places like Brazil where the administration has been especially onerous. And so while we're on peak tariff pass through for things like core goods, a lot of the manufactured items, when you layer in tariffs end things like weather end things like redirecting of crops and other produced agricultural goods, say to China. We saw the consequences of soy export controls and so on. All of those are going to be weighing on food prices more broadly. To your point, though, the affordability issue is going to matter a lot at the polls. One thing that is most relevant in the economic world when we get to the intersection of politics and economics, is that I think about the economy from a macroeconomic perspective, but all politics is local. When you look at the consequences of trade policy and industrial policy at the state level, you actually see more manufacturing employment in states like Georgia and Ohio and Michigan, where there are hotly contested Senate races. You see more exports in those same states where they're hotly contested Senate races. So even though we're facing this affordability crisis and we're struggling a little bit with understanding the economic consequences from a macroeconomic perspective of the administration's new policies, it actually looks reasonably favorable when it comes to the midterms.

[Christine]

Were you buying quail eggs or were they regular eggs?

[Guest Commentator]

Tim?

[Christine]

Regular eggs.

[Guest Commentator]

I didn't buy them.

[Savvy Scythe]

I put them back.

[Christine]

Okay, that's pretty interesting.

[Marsh Representative]

That's a smart question.

[Guest Commentator]

Now leave me alone.

[Christine]

Eric, I want to bring you back in here and just get your view on the equity market reaction, or lack thereof, to the pressure that's been put on Fed Chair Jay Powell. It doesn't seem like. And look, we've talked a lot about the bond market today and yesterday, a little bit of reaction in the early part of yesterday, but it seems like as soon as those Republican senators came out and said, we're not going to budge on nominations unless this matter is fully resolved. Thom Tillis. Senator Thom Tillis saying that there was a kind of a sigh of relief. Absolutely.

[Eric Weiner]

And that's actually what we're hearing, which is the idea that the idea that the President is attacking the Fed Chairman is nothing new. So it's not like that hasn't been priced in. It's not like traders haven't seen that before. What the question was was, you know, how far will they go? And obviously the furthest they're going to go is actually a criminal investigation. But when you start seeing Republicans, Republicans coming out and saying, you know, no, we're not going to stand by for this. And you start seeing pushback coming from a lot of different places where there wasn't before. Suddenly people feel a little bit more comfortable with, you know, the president putting pressure on Powell, standing up to him and, you know, things moving apace. When you look at the rate impact, nobody's betting on a rate cut coming. You know, like all of this is sort of priced in. So the market is sort of moving on the way it was in Dec with the same level of assumptions.

[Christine]

Do you bet on a rate cut? I mean, it seems like I'm not.

[Stuart Paul]

Betting on a rate cut in the foreseeable future, at least through the first half of this year.

[Christine]

Okay.

[Stuart Paul]

This is what I think is sort of the thematic synthesis of everything that we're getting from Washington. Whether it's pressure on the Fed or whether it's threatened cap on credit card rates that are charged to consumers. Markets should be moving at the speed of policy, not at the speed of rhetoric. So when we hear Eric commenting on, you know, Visa and MasterCard getting dented because of this threat, it's really difficult to actually see that policy being implemented. When we see threats from President Trump or when we see subpoenas issued from the Department of Justice to the Federal Reserve, that's not actually a policy change. The policy change would be a new Fed chair. And that Fed chair is going to face longer odds when you have somebody like Thom Tillist standing in the way. So we have to move at the pace of policy, not at the pace of rhetoric.

[Christine]

Guys, thanks for joining us today. Check out Stuart's research in the entire Bloomberg Economics team. You can do that on the Bloomberg Terminal. Stuart Paul, US And Canada economist for Bloomberg Economics. Also check out Eric's reporting and editing his entire team. He's senior editor for Equities Americas at Bloomberg News. Both joining us here in the Bloomberg Interactive Broker studio. You can see Eric in Stewart's work on the Bloomberg terminal [e-mail] this is.

[Podcast Announcer]

The Bloomberg Business Week daily podcast available on Apple, Spotify and anywhere else you get. Your podcasts listen live weekday afternoons from 2 to 5pm Eastern on Bloomberg.com, the iHeartRadio app, TuneIn and the Bloomberg Business App. You can also watch us live Every weekday on YouTube and always on the Bloomberg Terminal.