00:00American Express is topping expectations as its premium customers keep spending despite higher energy prices. The CEO Steve Squary spoke
00:08with Bloomberg The Close host Romain Bostic about the resilient consumer saying quote it's hard to square my concern with
00:16record travel bookings and record billings. We're not seeing any lending indicators from a credit perspective or from a bookings
00:24or spending perspective. Danny joining us now is the man behind that interview. It's Romain Bostic co-host
00:29of the close. Romain it seems like a robust quarter even though shares are down. So what was behind that?
00:36Well there's a couple of issues. I mean spending is phenomenal. You're talking about 11 percent on the retail side
00:40for luxury spending. It's like 18 percent. Premium travels up like 12 percent. But their costs have been going up
00:45as well. Remember they have launched a couple new cards which of course comes with huge advertising and marketing expenses.
00:51That's what kind of dinged them in the previous quarter for the Q4 reporting season. Now I did speak with
00:56the CEO and he said he's not too concerned about these marketing expenses.
00:59And that they will sort of smooth out over time. But there are some a lot of concerns here about
01:03the state of the economy. And I pepper him with a lot of questions about that. I basically asked him
01:07to point out. I was like when do you become concerned? Yeah it may not have impacted you any kind
01:11of quip. Well I'll become concerned when people stop spending. And that really was kind of the tale of the
01:15last three months. The big question is what are the next three months going to look like?
01:19I always think about the platinum card because it's been like a hot story. They raised the price of it.
01:25But they also raised the amount of perks that you can get back if you work very hard. And I've
01:32never worked harder in my entire life to get money back from credit card perks than I have.
01:37$75 Lululemon. Exactly. I'm going to Lululemon every quarter for the $75 credit.
01:41Well they've really been masterful in the way that they've used these perks in order to sort of keep people
01:46to out and out and get new signups for the cards. But to keep people tethered to them.
01:49One thing that Steve Square talks a lot about is the retention rate. Which I think is running at like
01:5399% for like new customers. Basically the idea is that once you get these cards you don't give them
01:57up.
01:58And yeah they've gotten more expensive. I think you're paying basically $8.95 a year. Which is pretty high. I
02:04mean you're rich Matt. So I mean I know that doesn't hurt you.
02:07But it gets to the idea of the type of customer they're really going for. They want a more affluent
02:11customer. They want a younger customer as well. The Gen Z. Sorry Matt.
02:14But it gets to this idea of where they really think they can sort of maintain not only their revenue
02:18growth but their profitability.
02:19I want to be a younger customer.
02:20I was going to say I like that you didn't apologize to me because you think maybe I could be
02:24Gen Z. I really appreciate that Romain.
02:26On air travel it does seem like a bit of a contradiction.
02:29And this is you know Matt was pointing out your quote from the CEO.
02:33This idea that air travel has been slowing.
02:35But we've been hearing from the airlines they're raising prices.
02:38They're keeping them there. People are still spending.
02:41So what accounts for the difference?
02:42Well I just got off the conference call and it's interesting because the CFO was asked about this by an
02:46analyst.
02:47And the CFO I thought said something interesting.
02:48He said that they had actually seen a certain degree of refunds with regards to air travel over the last
02:55few weeks.
02:55Which seems to suggest this didn't necessarily show up in the three months ended in March.
03:00But definitely something to keep an eye on looking forward.
03:02Though he did also say that he doesn't think it's going to have a material impact.
03:05But when I was speaking with Square earlier before the call you know I asked I said look are you
03:09worried about any potential slowdown in travel?
03:11He said look he's like yeah we're seeing slowdown in travel in the Middle East.
03:14Nobody's going to Doha but they are going to other places as well so he thinks it'll balance out.
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