1 00:00:05,800 --> 00:00:08,720 Speaker 1: Welcome to the Bloomberg p m L Podcast. I'm pim Fox. 2 00:00:08,760 --> 00:00:11,520 Speaker 1: Along with my co host Lisa Abramowitz. Each day we 3 00:00:11,640 --> 00:00:15,120 Speaker 1: bring you the most important, noteworthy, and useful interviews for 4 00:00:15,200 --> 00:00:17,840 Speaker 1: you and your money, whether you're at the grocery store 5 00:00:17,960 --> 00:00:20,720 Speaker 1: or the trading floor. Find the Bloomberg p m L 6 00:00:20,840 --> 00:00:32,280 Speaker 1: Podcast on Apple Podcasts, SoundCloud, and Bloomberg dot com. The 7 00:00:32,360 --> 00:00:36,320 Speaker 1: delinquency rate for subprime auto loans has risen to a 8 00:00:36,440 --> 00:00:40,240 Speaker 1: rate that is worse than during the financial crisis. Here 9 00:00:40,240 --> 00:00:43,880 Speaker 1: to help us understand consumer credit is Amy Cruz Cuts, 10 00:00:43,920 --> 00:00:48,600 Speaker 1: chief economist for Equifax, joining us from Washington, d C. Amy, 11 00:00:48,640 --> 00:00:51,159 Speaker 1: thank you very much for being with us. Tell us 12 00:00:51,280 --> 00:00:55,960 Speaker 1: your perspective on the health of consumer credit right now. Well, 13 00:00:56,040 --> 00:00:59,080 Speaker 1: it's uh, some of it is awesome and doing quite well. 14 00:00:59,120 --> 00:01:02,640 Speaker 1: I think many consumer or got the religion of debt 15 00:01:02,640 --> 00:01:05,880 Speaker 1: management after the Great Recession, and so from the majority 16 00:01:05,920 --> 00:01:08,880 Speaker 1: of them, I have no concerns at all, Um. And 17 00:01:08,920 --> 00:01:11,200 Speaker 1: then on the flip side, as you just mentioned, you know, 18 00:01:11,280 --> 00:01:14,480 Speaker 1: autolone performance has not gone as well as we might 19 00:01:14,520 --> 00:01:17,200 Speaker 1: have thought this. You know, we still have a great economy. 20 00:01:17,720 --> 00:01:19,680 Speaker 1: Jobs are being at it every month and normally would 21 00:01:19,680 --> 00:01:21,960 Speaker 1: expect delinquency used to be falling. So that's that is 22 00:01:22,000 --> 00:01:24,640 Speaker 1: a little bit of a troublesome spot. So I want 23 00:01:24,640 --> 00:01:27,440 Speaker 1: to pick up on that the fact that, uh, you know, 24 00:01:27,520 --> 00:01:30,280 Speaker 1: certainly mortgage debt is much lower than it used to be, 25 00:01:30,360 --> 00:01:32,920 Speaker 1: but we are seeing at least certainly on a relative 26 00:01:33,480 --> 00:01:35,880 Speaker 1: basis as well as an absolute one. But in other 27 00:01:35,959 --> 00:01:39,000 Speaker 1: areas the amount of debt really is noteworthy, and the 28 00:01:39,080 --> 00:01:42,319 Speaker 1: increases and delinquencies and defaults is also a little alarm 29 00:01:42,319 --> 00:01:44,679 Speaker 1: and giving given where we are in the credit cycle, 30 00:01:45,080 --> 00:01:47,920 Speaker 1: what are you expecting the consequence of that to be? 31 00:01:48,040 --> 00:01:52,120 Speaker 1: What's the implication here? Well, we dug deep into this 32 00:01:52,200 --> 00:01:54,920 Speaker 1: to try to figure out was it because they opened 33 00:01:54,960 --> 00:01:58,000 Speaker 1: the floodgates, as it might be, uh and let in 34 00:01:58,400 --> 00:02:01,440 Speaker 1: a bunch of you know, credit worthy borrowers, And what 35 00:02:01,480 --> 00:02:04,160 Speaker 1: we found was that the majority of lenders, particularly the 36 00:02:04,200 --> 00:02:07,840 Speaker 1: big guys so banks, credit unions, and the captive out 37 00:02:07,880 --> 00:02:10,480 Speaker 1: of finance, actually have gotten very tight with credits. So 38 00:02:10,639 --> 00:02:14,519 Speaker 1: in recent quarters they've gotten more reserved and their performances 39 00:02:14,520 --> 00:02:16,960 Speaker 1: showing it. What we're seeing though, on the flip side, 40 00:02:17,000 --> 00:02:19,840 Speaker 1: is that independent finance companies, so not associated with a 41 00:02:19,840 --> 00:02:24,560 Speaker 1: car manufacturer expanded their credit risk offerings and did so 42 00:02:24,639 --> 00:02:27,519 Speaker 1: in a way that that has greatly increased the indexes 43 00:02:27,560 --> 00:02:30,640 Speaker 1: that you just mentioned of delinquency. So it really has 44 00:02:30,680 --> 00:02:33,239 Speaker 1: to do with where the borrowers are getting the money 45 00:02:33,320 --> 00:02:35,360 Speaker 1: and perhaps the quality of the borrowers that are that 46 00:02:35,360 --> 00:02:38,760 Speaker 1: are being allowed in under those loans. So it's again 47 00:02:38,800 --> 00:02:41,800 Speaker 1: it's not as as easy as one spot versus another. 48 00:02:41,840 --> 00:02:44,160 Speaker 1: But what bothers me about that is that these are 49 00:02:44,200 --> 00:02:47,000 Speaker 1: likely borrowers who are at the at the very fringe 50 00:02:47,520 --> 00:02:50,600 Speaker 1: of the economy and so um whereas you know, a 51 00:02:50,639 --> 00:02:52,840 Speaker 1: prime credit borrower, if they make a mistake, isn't going 52 00:02:52,880 --> 00:02:55,400 Speaker 1: to be such a big deal. Uh, somebody really at 53 00:02:55,400 --> 00:02:59,119 Speaker 1: the edge, it could really throw their lives into financial catastrophe. 54 00:02:59,160 --> 00:03:02,480 Speaker 1: So that the part I worry about, go ahead, I 55 00:03:02,520 --> 00:03:05,320 Speaker 1: beg your pardon. How much strange do you think the 56 00:03:05,480 --> 00:03:08,240 Speaker 1: rise in short term rates will put on some of 57 00:03:08,240 --> 00:03:10,720 Speaker 1: these borrowers, particularly the credit card sector, because they end 58 00:03:10,800 --> 00:03:14,280 Speaker 1: up rolling things over. Yeah, So like auto loans are 59 00:03:14,320 --> 00:03:16,400 Speaker 1: fixed rate, most of the mortgages today are fixed rates. 60 00:03:16,440 --> 00:03:20,320 Speaker 1: So other the new entrance into the into the borrowing market, 61 00:03:20,680 --> 00:03:23,560 Speaker 1: there will be very little impact on the credit card side. 62 00:03:24,080 --> 00:03:26,160 Speaker 1: Um A large number of people are the gas and 63 00:03:26,200 --> 00:03:29,400 Speaker 1: grocery transactors, and so that they would have very little impact. 64 00:03:29,840 --> 00:03:32,880 Speaker 1: Where it will probably have the largest impact is again 65 00:03:32,919 --> 00:03:35,760 Speaker 1: in the subprime sector or the near prime sector, where 66 00:03:35,760 --> 00:03:37,840 Speaker 1: borrowers are more likely to be using the credit cards 67 00:03:37,880 --> 00:03:42,080 Speaker 1: as credit as opposed to a transaction means, and so 68 00:03:42,400 --> 00:03:45,280 Speaker 1: they're already paying very high rates on those loans. The 69 00:03:45,320 --> 00:03:48,120 Speaker 1: only saving grace there is that their credit limits are 70 00:03:48,200 --> 00:03:50,920 Speaker 1: usually very low, so they may be um, you know, 71 00:03:51,000 --> 00:03:53,160 Speaker 1: five hundred or thousand dollars in debt with with a 72 00:03:53,240 --> 00:03:55,280 Speaker 1: high interest rate as opposed to ten thousand dollars in 73 00:03:55,280 --> 00:03:58,320 Speaker 1: debt with a high rate. So um, it will have 74 00:03:58,400 --> 00:04:01,120 Speaker 1: an impact, and it will slow some of the purchases 75 00:04:01,160 --> 00:04:03,320 Speaker 1: that they might make. They may also move more to 76 00:04:03,440 --> 00:04:06,960 Speaker 1: things like um layaway plans to the extent that the 77 00:04:07,000 --> 00:04:10,480 Speaker 1: retailers are still offering those. So there are some other options. 78 00:04:10,520 --> 00:04:12,760 Speaker 1: On the car buying side, they can buy a smaller car. 79 00:04:12,920 --> 00:04:15,680 Speaker 1: On the home buying side, it's much harder, because there's 80 00:04:15,680 --> 00:04:18,560 Speaker 1: so much competition for the existing inventory that it may 81 00:04:18,560 --> 00:04:22,719 Speaker 1: actually just just delay or altogether wipe out homeownership opportunities. 82 00:04:23,920 --> 00:04:26,800 Speaker 1: Do consumers actually have the money to purchase these homes 83 00:04:26,880 --> 00:04:29,479 Speaker 1: or at least put the down payments forward, because it 84 00:04:29,480 --> 00:04:34,680 Speaker 1: seems as though consumer spending is rising at a slower pace. Yeah, 85 00:04:34,720 --> 00:04:37,159 Speaker 1: it depends so much on on where they are in 86 00:04:37,200 --> 00:04:40,280 Speaker 1: their um sort of earnings life cycle, and I think 87 00:04:40,279 --> 00:04:42,479 Speaker 1: it's one of the reasons why we're seeing the statistics 88 00:04:42,560 --> 00:04:47,400 Speaker 1: on young families. Um, you know, the millennial generation delaying 89 00:04:47,640 --> 00:04:51,000 Speaker 1: homeownership longer than than the prior generations did, and it's 90 00:04:51,040 --> 00:04:53,560 Speaker 1: been getting longer each generation. But I think one of 91 00:04:53,600 --> 00:04:56,000 Speaker 1: the reasons for that is them taking the time to 92 00:04:56,200 --> 00:04:58,320 Speaker 1: to get the money. And another part of that is 93 00:04:58,400 --> 00:05:01,120 Speaker 1: that in many cases they don't want buy a starter home. 94 00:05:01,160 --> 00:05:04,080 Speaker 1: They want to buy sort of there there, what we 95 00:05:04,120 --> 00:05:05,800 Speaker 1: normally would have thought it was a step up home. 96 00:05:06,400 --> 00:05:08,200 Speaker 1: And part of that is pressed by the inventory. Again, 97 00:05:08,240 --> 00:05:10,320 Speaker 1: we're not building smaller homes, so it's harder to get 98 00:05:10,320 --> 00:05:13,599 Speaker 1: those those little ones. You know. The reason why I 99 00:05:13,640 --> 00:05:16,080 Speaker 1: think that this is such an important area is because 100 00:05:16,240 --> 00:05:20,279 Speaker 1: consumer confidence and consumer consumer spending has really driven the 101 00:05:20,320 --> 00:05:24,839 Speaker 1: economic recovery. And as we see delinquencies and defalse increase, 102 00:05:25,080 --> 00:05:29,240 Speaker 1: albeit still historically low, you just have to wonder is 103 00:05:29,240 --> 00:05:31,600 Speaker 1: that consumer running out of steam? I mean, is there 104 00:05:31,600 --> 00:05:36,120 Speaker 1: sort of a bigger important message here that you're seeing. Well, 105 00:05:36,160 --> 00:05:38,359 Speaker 1: I'll tell you one of the more intriguing pieces of 106 00:05:38,360 --> 00:05:40,520 Speaker 1: this is, as you know, we're in a retail crisis 107 00:05:40,520 --> 00:05:43,800 Speaker 1: and many stores are are struggling, and for various reasons. 108 00:05:43,800 --> 00:05:46,640 Speaker 1: Some would say it's the online presence of some of 109 00:05:46,680 --> 00:05:48,520 Speaker 1: the big guys, but I would also say that a 110 00:05:48,520 --> 00:05:50,120 Speaker 1: lot of it has to do with their death structuring. 111 00:05:50,440 --> 00:05:54,120 Speaker 1: How they those companies borrowed money over the past ten 112 00:05:54,200 --> 00:05:56,880 Speaker 1: or fifteen years, it's now coming to that they can't resolve. 113 00:05:57,200 --> 00:05:59,760 Speaker 1: What's important about that for the consumer is that we 114 00:06:00,040 --> 00:06:05,039 Speaker 1: you see in UM locations as well as UM broadly based, 115 00:06:05,040 --> 00:06:08,279 Speaker 1: like in the asset back securities for securitized portfolios of 116 00:06:08,360 --> 00:06:11,760 Speaker 1: retail store credit when the store announces. When a company 117 00:06:11,800 --> 00:06:16,200 Speaker 1: announces either bankruptcy or a closing, consumers respond by going 118 00:06:16,240 --> 00:06:19,800 Speaker 1: delinquent on those cards. Now, what the consumers may not 119 00:06:19,880 --> 00:06:22,320 Speaker 1: realize is that they still owe that money. The creditors 120 00:06:22,360 --> 00:06:25,479 Speaker 1: to those organizations surely are going to go after that 121 00:06:25,480 --> 00:06:28,080 Speaker 1: that money. But um, you know, it's a very bad 122 00:06:28,080 --> 00:06:31,080 Speaker 1: consumer behavior. But I think the consumers in some minds 123 00:06:31,120 --> 00:06:33,960 Speaker 1: are thinking, Wow, you know this company just went bankrupt 124 00:06:33,960 --> 00:06:36,080 Speaker 1: declared bankruptcy, so I don't have to pay them back, 125 00:06:37,560 --> 00:06:39,960 Speaker 1: and we're seeing weird behaviors that way. So this is 126 00:06:40,040 --> 00:06:42,120 Speaker 1: one reason perhaps why the delinquencies are going up. In 127 00:06:42,120 --> 00:06:47,240 Speaker 1: other words, yes, yes, savings rates in the United States, 128 00:06:47,240 --> 00:06:52,000 Speaker 1: according to Bank rd about Americans save absolutely nothing. Another 129 00:06:52,160 --> 00:06:54,920 Speaker 1: fifth say that they save just five pc of their 130 00:06:54,960 --> 00:06:58,479 Speaker 1: income or less. Do they need to save more money 131 00:06:58,520 --> 00:07:04,880 Speaker 1: for things such as retirement or indeed any financial emergency? Um. Absolutely. 132 00:07:05,000 --> 00:07:08,080 Speaker 1: And the hard part of that is that, um, you know, 133 00:07:08,120 --> 00:07:09,920 Speaker 1: if we look on the flip side, that wages, real 134 00:07:09,920 --> 00:07:13,679 Speaker 1: wages really haven't risen that much. And we're celebrating rising 135 00:07:13,680 --> 00:07:16,640 Speaker 1: wages today because they're up around two percent. But I 136 00:07:16,720 --> 00:07:19,080 Speaker 1: think we've been below two percent on wage increases, but 137 00:07:19,160 --> 00:07:21,840 Speaker 1: for the past ten years we've run two percent on inflation. 138 00:07:22,440 --> 00:07:25,240 Speaker 1: The real value of the money people bring home is 139 00:07:25,680 --> 00:07:28,320 Speaker 1: less and less, and so savings out of that is 140 00:07:28,440 --> 00:07:31,360 Speaker 1: very hard. Now we can quibble about whether the savings 141 00:07:31,640 --> 00:07:35,640 Speaker 1: UM numbers are are accurate. One of the problems that 142 00:07:35,680 --> 00:07:37,200 Speaker 1: I haven't looking at this is that I might look 143 00:07:37,240 --> 00:07:39,760 Speaker 1: at a study, for example, by one of the largest 144 00:07:40,120 --> 00:07:43,800 Speaker 1: um UM mutual fund companies, and they'll say, oh, the 145 00:07:43,840 --> 00:07:46,960 Speaker 1: average balance of somebody is fifty dollars, but that's only 146 00:07:47,000 --> 00:07:50,520 Speaker 1: at their shop. So maybe there's more money out there 147 00:07:50,800 --> 00:07:53,120 Speaker 1: than we think um through these four oh one K 148 00:07:53,280 --> 00:07:56,520 Speaker 1: plans or or other savings instruments. But the bottom line 149 00:07:56,520 --> 00:07:59,360 Speaker 1: is that too many people end up at retirement with 150 00:07:59,440 --> 00:08:03,480 Speaker 1: a very small cushion and source of security is not enough. 151 00:08:03,680 --> 00:08:05,600 Speaker 1: It's great maybe you're only gonna live ten years, but 152 00:08:05,640 --> 00:08:07,360 Speaker 1: if you're gonna live thirty years, which is more of 153 00:08:07,400 --> 00:08:10,280 Speaker 1: the average expectancy now, it makes it very hard. Amy 154 00:08:10,280 --> 00:08:12,000 Speaker 1: cruise Cuts, thank you so much for being with us. 155 00:08:12,000 --> 00:08:15,400 Speaker 1: Amy cruiz Cuts, chief economist for Equifax. You know, the 156 00:08:15,440 --> 00:08:18,640 Speaker 1: aggregate household death balances are now nearly half a trillion 157 00:08:18,720 --> 00:08:21,320 Speaker 1: more than they were at the prior peak back in 158 00:08:21,360 --> 00:08:36,880 Speaker 1: two thousand and eight. There is a dilemma right now 159 00:08:37,120 --> 00:08:40,800 Speaker 1: in stock markets. Is it a good thing that US 160 00:08:40,840 --> 00:08:43,120 Speaker 1: companies are spending so much of the money that they're 161 00:08:43,160 --> 00:08:46,880 Speaker 1: saving from the tax cut on shared by backs and dividends. 162 00:08:47,080 --> 00:08:49,400 Speaker 1: Here to answer that, Barry James. He is president and 163 00:08:49,440 --> 00:08:53,040 Speaker 1: chief investment officer of James Investment Research, which oversees about 164 00:08:53,080 --> 00:08:55,720 Speaker 1: seven billion dollars and is based in Ohio, but joins 165 00:08:55,800 --> 00:08:58,319 Speaker 1: us here in our eleven three studios today. So Barry 166 00:08:58,440 --> 00:09:01,640 Speaker 1: I was looking at this Goldman's Acts research showing that 167 00:09:01,720 --> 00:09:05,760 Speaker 1: the highest proportion of companies cash is going towards share 168 00:09:05,800 --> 00:09:09,040 Speaker 1: by backs and dividends, while a much lower percentage is 169 00:09:09,120 --> 00:09:13,640 Speaker 1: going to plant improvements and salary increases, etcetera. Does this 170 00:09:13,760 --> 00:09:18,440 Speaker 1: concern you and one uh one form. It does can 171 00:09:18,480 --> 00:09:22,400 Speaker 1: concern us, Lisa, because you eventually need organic growth in 172 00:09:22,520 --> 00:09:26,559 Speaker 1: order to sustain not just the economy but the markets themselves. 173 00:09:26,920 --> 00:09:29,240 Speaker 1: The other side of it, though, is as a shareholder, 174 00:09:29,280 --> 00:09:31,800 Speaker 1: we don't mind share share by backs in any way, 175 00:09:31,800 --> 00:09:34,400 Speaker 1: shape or form. And we've done studies that show the 176 00:09:34,440 --> 00:09:37,320 Speaker 1: companies that have the higher levels of share by backs 177 00:09:37,320 --> 00:09:40,320 Speaker 1: their their stocks actually outperform so over the next six 178 00:09:40,360 --> 00:09:43,280 Speaker 1: to twelve months, so that's a positive thing. And also 179 00:09:43,280 --> 00:09:46,280 Speaker 1: getting more money back in terms of dividends is positive 180 00:09:46,320 --> 00:09:49,400 Speaker 1: as well from the shareholder standpoint. But again it's not 181 00:09:49,600 --> 00:09:52,880 Speaker 1: a sustainable model. All right, Let's talk about the fund 182 00:09:53,040 --> 00:09:56,280 Speaker 1: that you run. This is the Golden Rainbow Fund, the 183 00:09:56,320 --> 00:10:00,280 Speaker 1: symbol g l r b x I. Note that is 184 00:10:00,360 --> 00:10:03,200 Speaker 1: balanced funds, so that you can have stocks as well 185 00:10:03,240 --> 00:10:06,559 Speaker 1: as bonds, and you have a boatload of treasuries in 186 00:10:06,920 --> 00:10:10,000 Speaker 1: the fund right now, tell us why do you have that? 187 00:10:10,080 --> 00:10:13,760 Speaker 1: And then we can talk about some individual company names. Sure, 188 00:10:13,840 --> 00:10:15,800 Speaker 1: the objectives of the fund are growth and income, but 189 00:10:15,880 --> 00:10:19,079 Speaker 1: preservation of capital in declining markets. And you did mention 190 00:10:19,120 --> 00:10:21,000 Speaker 1: we do our own research. Every weekend, we do an 191 00:10:21,000 --> 00:10:23,360 Speaker 1: analysis of the markets and try to measure risk. And 192 00:10:23,400 --> 00:10:25,240 Speaker 1: I've been doing it for forty five years. This isn't 193 00:10:25,280 --> 00:10:27,960 Speaker 1: something new for us, and so we adjust the allocation 194 00:10:28,040 --> 00:10:30,199 Speaker 1: between stocks and bonds based on where we see the 195 00:10:30,280 --> 00:10:33,560 Speaker 1: risk levels both in stocks and bonds. Um we see 196 00:10:33,679 --> 00:10:37,079 Speaker 1: from the stock side right now that maybe the foundation 197 00:10:37,240 --> 00:10:41,160 Speaker 1: is a little weak at the moment. Prices are fairly high. 198 00:10:41,200 --> 00:10:43,520 Speaker 1: You've got the tax cuts which we talked about, tend 199 00:10:43,520 --> 00:10:45,960 Speaker 1: not to be very promising. The year after the tax 200 00:10:46,000 --> 00:10:49,080 Speaker 1: cut is actually implemented, which is right now, they only 201 00:10:49,080 --> 00:10:51,320 Speaker 1: tend to see about an average of two percent return. 202 00:10:51,800 --> 00:10:54,360 Speaker 1: And of course we've got too much optimism, so we've 203 00:10:54,400 --> 00:10:56,520 Speaker 1: kind of got into this. Uh, I don't know trading 204 00:10:56,559 --> 00:10:59,360 Speaker 1: pattern at the moment. And one thing, when you're in 205 00:10:59,559 --> 00:11:02,560 Speaker 1: a period maybe of correction, having some bonds is very 206 00:11:02,679 --> 00:11:06,679 Speaker 1: very helpful in terms of stabilizing the portfolio. Obviously you're 207 00:11:06,679 --> 00:11:09,240 Speaker 1: not going to make a lot in terms of interest payments. 208 00:11:09,280 --> 00:11:12,960 Speaker 1: But again, the key is preserving capital in declining markets, 209 00:11:13,000 --> 00:11:14,920 Speaker 1: and that's one of the things we try to set 210 00:11:14,920 --> 00:11:18,040 Speaker 1: ourselves aside on. So when did you most recently shift 211 00:11:18,080 --> 00:11:21,880 Speaker 1: to a greater allocation to safety two bonds? Well, that 212 00:11:21,960 --> 00:11:25,240 Speaker 1: was the latter part of last year. Um, we had 213 00:11:26,280 --> 00:11:28,280 Speaker 1: lowered the amount of equities we have. And I don't 214 00:11:28,280 --> 00:11:30,839 Speaker 1: want to give the impression where market timers, because we 215 00:11:31,200 --> 00:11:33,520 Speaker 1: know that that doesn't work for us. But we do 216 00:11:33,640 --> 00:11:36,880 Speaker 1: try to shift based upon risk levels. And so we've 217 00:11:36,920 --> 00:11:40,000 Speaker 1: gotten down about now we're you know, with a market 218 00:11:40,000 --> 00:11:41,400 Speaker 1: down a little bit, we've been doing a little bit 219 00:11:41,400 --> 00:11:44,000 Speaker 1: of buying. So but you had been down bonds and 220 00:11:44,000 --> 00:11:48,760 Speaker 1: now you've been buying stocks, and so now you're buying stocks. 221 00:11:48,800 --> 00:11:50,240 Speaker 1: That's what I was going to ask. Where are you now? 222 00:11:50,240 --> 00:11:51,840 Speaker 1: I mean, are you basically more risk on? Do you 223 00:11:51,840 --> 00:11:54,520 Speaker 1: think that the values have declined enough to be uh 224 00:11:54,720 --> 00:11:57,800 Speaker 1: to to prove attractive at this point? Yes, Um, that's 225 00:11:57,840 --> 00:12:00,880 Speaker 1: the very interesting time we're in. Think we're in a 226 00:12:00,960 --> 00:12:04,040 Speaker 1: great shift, if you will, a paradigm shift. It's been 227 00:12:04,080 --> 00:12:07,160 Speaker 1: all large cap and growth uh for you know, probably 228 00:12:07,160 --> 00:12:09,840 Speaker 1: about ten years and what we've seen even this year, 229 00:12:09,880 --> 00:12:12,080 Speaker 1: the market went down in the first quarter, in small 230 00:12:12,120 --> 00:12:14,360 Speaker 1: caps didn't go down as much, and so I think 231 00:12:14,400 --> 00:12:16,559 Speaker 1: that shift is coming into smaller caps. That's one of 232 00:12:16,600 --> 00:12:20,360 Speaker 1: the areas we've been moving into. Also, we call them bargains. 233 00:12:20,400 --> 00:12:23,560 Speaker 1: People talk about value whatever you want to call it, um, 234 00:12:23,600 --> 00:12:26,520 Speaker 1: but those have been ignored for quite some time. And 235 00:12:26,960 --> 00:12:30,040 Speaker 1: um they tend to work very very well, uh most 236 00:12:30,080 --> 00:12:32,200 Speaker 1: of the time, and they hadn't. So I think both 237 00:12:32,200 --> 00:12:35,079 Speaker 1: of those are coming into into view. It's almost like 238 00:12:36,559 --> 00:12:39,280 Speaker 1: the year and two thousand, the NASTAC fell thirty eight 239 00:12:39,280 --> 00:12:41,840 Speaker 1: percent and a small cap value went up twenty two 240 00:12:42,600 --> 00:12:46,040 Speaker 1: Not saying that this is two thousand, but this is 241 00:12:46,080 --> 00:12:48,600 Speaker 1: the type of circumstances I think could be unfolding. And 242 00:12:48,880 --> 00:12:50,880 Speaker 1: so when the market pulls back to a little buying, 243 00:12:50,920 --> 00:12:52,960 Speaker 1: when the market jumps up, maybe do a little trimming. 244 00:12:53,440 --> 00:12:58,359 Speaker 1: Let's talk about one stock in the portfolio, Advanced Energy Industries. 245 00:12:58,400 --> 00:13:01,679 Speaker 1: They're based in the Fort colin Colorado. What do you 246 00:13:01,679 --> 00:13:03,760 Speaker 1: like about this company? How did you find it? First 247 00:13:03,800 --> 00:13:07,280 Speaker 1: of all, that's always a great, great question. We have 248 00:13:07,320 --> 00:13:09,280 Speaker 1: clients and Fort Collins, but no, that's not how I 249 00:13:09,320 --> 00:13:13,360 Speaker 1: found it um we um. With our research, we try 250 00:13:13,360 --> 00:13:16,319 Speaker 1: to rate UH securities how closely they meet our criteria 251 00:13:16,720 --> 00:13:20,480 Speaker 1: of good value, of good historical earnings, not the projected earnings. 252 00:13:20,480 --> 00:13:22,480 Speaker 1: We we haven't found a lot of use for that. 253 00:13:22,840 --> 00:13:25,240 Speaker 1: And then the price appreciation. We like to see it 254 00:13:25,240 --> 00:13:27,800 Speaker 1: out perform in the market. So this meets all of those, 255 00:13:28,080 --> 00:13:30,600 Speaker 1: all of those criteria. You know. This is one that 256 00:13:30,679 --> 00:13:36,319 Speaker 1: works in engineered power conversion type area. Almost a little 257 00:13:36,320 --> 00:13:39,199 Speaker 1: techy if you will, but a low pe of only fourteen. 258 00:13:39,800 --> 00:13:44,679 Speaker 1: The earnings year over year about thirty increase, uh so, 259 00:13:45,280 --> 00:13:49,040 Speaker 1: cash flows increasing rapidly. Cash flow from operations is strong. 260 00:13:49,559 --> 00:13:52,280 Speaker 1: Uh No real debt, so it's got lots of those. 261 00:13:52,320 --> 00:13:54,040 Speaker 1: And the other thing is is number one in its 262 00:13:54,080 --> 00:13:58,240 Speaker 1: market um so it has about of that marketplace. So 263 00:13:58,760 --> 00:14:01,040 Speaker 1: um and we talked about buying back chairs. Guess what 264 00:14:01,040 --> 00:14:03,800 Speaker 1: they're doing. They're buying back chairs. I want to thank 265 00:14:03,840 --> 00:14:06,640 Speaker 1: you very much for being with us, insightful. We wish 266 00:14:06,679 --> 00:14:08,280 Speaker 1: I had more time. He could talk about more the 267 00:14:08,320 --> 00:14:10,880 Speaker 1: details of the of the fund. It's called the Golden 268 00:14:11,080 --> 00:14:14,920 Speaker 1: Rainbow Fund. The symbol there is g l r b X. 269 00:14:15,400 --> 00:14:18,400 Speaker 1: Barry James is the president and the chief investment Research 270 00:14:18,800 --> 00:14:22,640 Speaker 1: Officer of Barry James Investment Research, helping to manage more 271 00:14:22,760 --> 00:14:41,560 Speaker 1: than seven billion dollars of customer assets much appreciated. Russian 272 00:14:41,640 --> 00:14:45,880 Speaker 1: President of Vladimir Putin speaks with Israeli Prime Minister Benjamin 273 00:14:45,960 --> 00:14:50,000 Speaker 1: Netan Yahoo the topic Syria are a topic also Syria. 274 00:14:50,280 --> 00:14:52,520 Speaker 1: Here to help us understand it is Larry Liebert. He 275 00:14:52,640 --> 00:14:56,440 Speaker 1: is our national security editor for Bloomberg. Larry laid down 276 00:14:56,520 --> 00:14:59,920 Speaker 1: exactly or what we believe we exactly know right now 277 00:15:00,200 --> 00:15:03,120 Speaker 1: about what's going on in the region and what what 278 00:15:03,440 --> 00:15:06,840 Speaker 1: are some of the likely scenarios. Well, we do know 279 00:15:07,640 --> 00:15:11,360 Speaker 1: that the President toned down his rhetoric a little of 280 00:15:11,440 --> 00:15:14,000 Speaker 1: this morning, at least in terms of the timing of attack. 281 00:15:14,120 --> 00:15:17,920 Speaker 1: He didn't anything. I didn't say exactly when and exactly whether. UH. 282 00:15:17,960 --> 00:15:20,760 Speaker 1: And there are high level talks going on. UH. In 283 00:15:20,840 --> 00:15:23,240 Speaker 1: particular in this case, we're seeing the US worked with 284 00:15:23,320 --> 00:15:28,200 Speaker 1: allies France and the UK. France especially ready and willing 285 00:15:28,640 --> 00:15:31,760 Speaker 1: UH to join in, if not take the lead, in 286 00:15:31,840 --> 00:15:36,440 Speaker 1: some sort of response to this presumed chemical attack. UH. 287 00:15:36,480 --> 00:15:39,800 Speaker 1: But there are others offering some notes of caution and 288 00:15:39,960 --> 00:15:43,720 Speaker 1: UH just this morning, just a short while ago, in 289 00:15:43,880 --> 00:15:47,800 Speaker 1: his testimony, Defense Sextuary, Jim Mattis, appearing before the House 290 00:15:47,880 --> 00:15:52,040 Speaker 1: Armed Services Committee, UH said that the risk of this 291 00:15:52,160 --> 00:15:55,000 Speaker 1: kind of thing is getting out of control. Now. He 292 00:15:55,120 --> 00:15:57,680 Speaker 1: was just he didn't say, don't do it, but he 293 00:15:57,760 --> 00:16:00,600 Speaker 1: was pointing out there was all of them eelstrom of 294 00:16:01,000 --> 00:16:05,360 Speaker 1: activity there with with Russia there, with Iran there, with 295 00:16:05,640 --> 00:16:09,320 Speaker 1: US forces, with Turkey there, that things could go around 296 00:16:09,360 --> 00:16:12,240 Speaker 1: in any kind of strike. Uh. So that's a note 297 00:16:12,200 --> 00:16:17,000 Speaker 1: of caution. Uh. He also said that some things, like 298 00:16:17,240 --> 00:16:22,000 Speaker 1: a chemical text, something's clearly require a response. You know, Larry, 299 00:16:22,080 --> 00:16:25,160 Speaker 1: you talk about all the different voices, whether it's General 300 00:16:25,200 --> 00:16:29,200 Speaker 1: Maddus or President Trump's tweets weighing in on this issue. 301 00:16:29,240 --> 00:16:32,720 Speaker 1: Of course, we also have John Bolton, who just recently 302 00:16:32,760 --> 00:16:36,800 Speaker 1: took the home as the National Security Advisor to President Trump. 303 00:16:37,000 --> 00:16:40,840 Speaker 1: His deputy just quit or was pushed out, and there 304 00:16:40,840 --> 00:16:44,080 Speaker 1: has been quite a few exits from the department. How 305 00:16:44,120 --> 00:16:47,640 Speaker 1: does that affect the USS response to some of these threats. Well, 306 00:16:47,680 --> 00:16:50,680 Speaker 1: I think you're going to clearly have the the Central 307 00:16:50,960 --> 00:16:56,400 Speaker 1: National Security Team, which now which still includes Pompeo, the 308 00:16:56,400 --> 00:17:02,560 Speaker 1: newcomer a nominee for State who's CIA te Secretary Maddis 309 00:17:03,160 --> 00:17:07,560 Speaker 1: uh and uh. And and now Mr Bolton at the table, 310 00:17:07,800 --> 00:17:10,879 Speaker 1: and they're backed up, I think in particular by the U. S. Military, 311 00:17:11,119 --> 00:17:15,000 Speaker 1: and it's it's expertise. So uh, you know, it is 312 00:17:15,040 --> 00:17:18,520 Speaker 1: a time of tumult. There is a lot of speculation, 313 00:17:18,640 --> 00:17:22,200 Speaker 1: which Pompeo hit back at today and his confirmation hearing 314 00:17:22,680 --> 00:17:26,760 Speaker 1: that these are hard liners, he said he rejected that description, 315 00:17:26,800 --> 00:17:29,560 Speaker 1: which are so many would put on him. But uh, 316 00:17:30,600 --> 00:17:32,560 Speaker 1: there's there is a sense of change, there is a 317 00:17:32,600 --> 00:17:34,840 Speaker 1: sense of a harder line coming, but there's also sort 318 00:17:34,880 --> 00:17:41,040 Speaker 1: of a continuum of expertise at the Pentagon and elsewhere. Larry, 319 00:17:41,400 --> 00:17:43,320 Speaker 1: I don't want to diminish anything having to do with 320 00:17:43,320 --> 00:17:46,480 Speaker 1: the humanitarian aspect of the situation, but what is really 321 00:17:46,520 --> 00:17:49,880 Speaker 1: the strategic interest of the United States in this Well, 322 00:17:50,000 --> 00:17:53,480 Speaker 1: that's uh, that's to some extent what Secretary Maddis was saying. 323 00:17:53,560 --> 00:17:57,119 Speaker 1: He was saying that there is a humanitarian goal sometimes 324 00:17:57,160 --> 00:18:02,639 Speaker 1: to uh to take some action. Uh. And obviously there's 325 00:18:02,680 --> 00:18:06,800 Speaker 1: also the strategic sense that to the extent that a 326 00:18:06,880 --> 00:18:10,399 Speaker 1: President rop who was clearly torn on this issue of Syria, 327 00:18:10,640 --> 00:18:12,960 Speaker 1: to the extent he liked the US to pull out. 328 00:18:13,720 --> 00:18:17,760 Speaker 1: This is a message to Russia in particular as well 329 00:18:17,800 --> 00:18:23,200 Speaker 1: as the Syrian regime. Uh, that the world community can't 330 00:18:23,240 --> 00:18:26,800 Speaker 1: abide uh sort of a permanent free reign of terror 331 00:18:26,920 --> 00:18:29,680 Speaker 1: in Syria. So UH, there is an argument that at 332 00:18:29,720 --> 00:18:33,960 Speaker 1: some point you have to signal uh a demand for 333 00:18:34,000 --> 00:18:37,560 Speaker 1: some restraint. Uh. That and I and that's as far 334 00:18:37,600 --> 00:18:40,040 Speaker 1: as it goes. But if you took a purely strategic views, 335 00:18:40,160 --> 00:18:43,159 Speaker 1: as Matters suggested, UH, if it wasn't a matter of 336 00:18:43,160 --> 00:18:48,679 Speaker 1: such great outrage over crossing this particular humanitarian line, the 337 00:18:48,800 --> 00:18:53,679 Speaker 1: US probably wouldn't get involved. So since you mentioned Mike Pompeo, 338 00:18:53,760 --> 00:18:57,280 Speaker 1: who is currently testifying in front of Congress, we should 339 00:18:57,280 --> 00:18:59,600 Speaker 1: know some of the headlines that are coming out. People 340 00:18:59,640 --> 00:19:03,240 Speaker 1: say Pompeo did say that he spoke with Robert Mueller, 341 00:19:03,359 --> 00:19:08,280 Speaker 1: he declined to provide details. Is this significant because he 342 00:19:08,320 --> 00:19:12,240 Speaker 1: declined to provide details? Are sure? But it does show you, 343 00:19:12,400 --> 00:19:14,080 Speaker 1: I mean he he would have talked to him and 344 00:19:14,240 --> 00:19:19,080 Speaker 1: is in his role as a CIA director. Uh. The 345 00:19:19,200 --> 00:19:24,640 Speaker 1: question is, UH, what exactly was Mueller looking for from him? 346 00:19:25,000 --> 00:19:29,760 Speaker 1: And clearly uh, if nothing else, it is yet another 347 00:19:29,880 --> 00:19:35,240 Speaker 1: minder of the extraordinary breadth uh and uh reach of 348 00:19:35,359 --> 00:19:43,240 Speaker 1: Mueller's investigation, which increasingly is alarming and angering the president. Larry, 349 00:19:43,320 --> 00:19:46,879 Speaker 1: any chance that Mr Pompeo is not confirmed the Secretary 350 00:19:46,880 --> 00:19:49,840 Speaker 1: of State, there's a chance. You know, he was handily 351 00:19:49,840 --> 00:19:52,000 Speaker 1: confirmed for a c I A. You know he does. 352 00:19:52,080 --> 00:19:55,000 Speaker 1: He is a farmer, a member of Congress. Uh. Yet 353 00:19:55,040 --> 00:19:59,560 Speaker 1: there are concerns about the State Department at its leadership, 354 00:19:59,760 --> 00:20:02,240 Speaker 1: and about again his hawk ish views, even though he 355 00:20:02,280 --> 00:20:05,359 Speaker 1: fought against that. In his testimony today he tried to 356 00:20:05,400 --> 00:20:07,960 Speaker 1: address a number of those things. First of all, he 357 00:20:07,960 --> 00:20:10,240 Speaker 1: said that the US would be very tough on Russia. 358 00:20:10,320 --> 00:20:12,720 Speaker 1: The time for softness is over, which seems a message 359 00:20:12,760 --> 00:20:16,040 Speaker 1: to the president too. And uh. And and he he 360 00:20:16,200 --> 00:20:21,080 Speaker 1: vouched for the State Department bureaucracy, the diplomat to have 361 00:20:21,160 --> 00:20:24,760 Speaker 1: felt so abused and direct Gerson. So that will please 362 00:20:24,800 --> 00:20:27,240 Speaker 1: some members, but whether it's enough to win him the 363 00:20:27,400 --> 00:20:30,199 Speaker 1: confirmation isn't yet clear. Larry Liebert, thank you so much 364 00:20:30,240 --> 00:20:33,919 Speaker 1: for being with us. Larry Liebert, national Security editor for Bloomberg. 365 00:20:47,560 --> 00:20:49,959 Speaker 1: All right, right now, taking a look at West Texas 366 00:20:49,960 --> 00:20:51,960 Speaker 1: and to media, cruited is down about eight tenths of 367 00:20:52,000 --> 00:20:54,160 Speaker 1: a percent, a drop of fifty eight cents of barrel 368 00:20:54,280 --> 00:20:57,320 Speaker 1: to sixty six dollars and cents And here do I 369 00:20:57,359 --> 00:20:59,600 Speaker 1: tell us why this is all happening is our own 370 00:20:59,680 --> 00:21:02,640 Speaker 1: Mike mcgloane, he's an expert when it comes to everything commodities. 371 00:21:02,840 --> 00:21:06,560 Speaker 1: These our commodity strategist for Bloomberg Intelligence. Mike, always a pleasure, 372 00:21:06,560 --> 00:21:10,080 Speaker 1: Thanks for coming into the studio uh OPAC today saying 373 00:21:10,119 --> 00:21:13,440 Speaker 1: that those production cuts, yes, they are working, they are 374 00:21:13,480 --> 00:21:17,399 Speaker 1: in place. But US shale producers they're saying, just go 375 00:21:17,440 --> 00:21:19,760 Speaker 1: ahead and pump the oil. YEA. Well that's the that's 376 00:21:19,800 --> 00:21:21,639 Speaker 1: the battle. It's going to continue, and I have a 377 00:21:21,720 --> 00:21:26,440 Speaker 1: suspicion that Ope is probably gonna lose. They need continued situations. 378 00:21:26,440 --> 00:21:28,600 Speaker 1: What we're happy happy right now. Missiles flying in the 379 00:21:28,600 --> 00:21:32,600 Speaker 1: Middle East. Trade attentions gield political attentions. You need that 380 00:21:32,640 --> 00:21:35,080 Speaker 1: to keep oil higher because that supply from the US 381 00:21:35,200 --> 00:21:37,480 Speaker 1: is going exponential. And don't have to take my word 382 00:21:37,520 --> 00:21:39,560 Speaker 1: for it, taking the word for the market. The amount 383 00:21:39,600 --> 00:21:43,240 Speaker 1: of commercial um commercial shorts in the market is parabolic, 384 00:21:43,320 --> 00:21:45,760 Speaker 1: which means people are bringing on more production U S 385 00:21:45,760 --> 00:21:48,560 Speaker 1: it's being somewhat heads. Also, you look at crude oil, 386 00:21:48,600 --> 00:21:50,680 Speaker 1: it's it finally got above that six six six level. 387 00:21:50,680 --> 00:21:52,480 Speaker 1: Thank god, we don't have to look at that level anymore. 388 00:21:52,760 --> 00:21:54,320 Speaker 1: But I think it's very It's one of the most 389 00:21:54,440 --> 00:21:56,760 Speaker 1: risky commodities. I'm bullish on commodities with crude oil is 390 00:21:56,760 --> 00:21:58,960 Speaker 1: the one that's most likely to mean revert. I e. 391 00:21:59,080 --> 00:22:02,439 Speaker 1: It's very expensive, it has supply coming on and you 392 00:22:02,480 --> 00:22:05,040 Speaker 1: look at this week, aluminiums up twice as much as 393 00:22:05,080 --> 00:22:08,000 Speaker 1: crude oil on the week on these geopolitical tensions, which 394 00:22:08,000 --> 00:22:11,480 Speaker 1: it should be. But crude oil, it's a bullmarket. It's 395 00:22:11,480 --> 00:22:14,640 Speaker 1: just it has to deal with supply, too much supply. So, Mike, 396 00:22:14,880 --> 00:22:17,840 Speaker 1: we just came off the three the biggest three day 397 00:22:17,920 --> 00:22:22,080 Speaker 1: jump in crude value since December. A lot of this 398 00:22:22,160 --> 00:22:25,320 Speaker 1: did have to do with geopolitical risk. I'm wondering, let's 399 00:22:25,320 --> 00:22:28,639 Speaker 1: say there was some kind of disruption of production in 400 00:22:28,680 --> 00:22:31,680 Speaker 1: the Middle East akin to what people were pricing in. 401 00:22:32,240 --> 00:22:36,480 Speaker 1: Would that be enough to justify how much prices increased. 402 00:22:37,160 --> 00:22:40,240 Speaker 1: It's absolutely, it's how do you quantify that. It's necessary, 403 00:22:40,320 --> 00:22:43,560 Speaker 1: you kind of need it because the situation remains the same. 404 00:22:43,640 --> 00:22:46,480 Speaker 1: The US is now importing. Our net imports are not 405 00:22:46,560 --> 00:22:49,119 Speaker 1: only about six million barrels a day, that's the least 406 00:22:49,160 --> 00:22:52,040 Speaker 1: in was it five or six decades, And it's trending lower. 407 00:22:52,080 --> 00:22:54,600 Speaker 1: It's the lowest. It's continuing to go that way, and 408 00:22:54,720 --> 00:22:57,600 Speaker 1: they have to OPEC in Russia has to offset that 409 00:22:57,680 --> 00:23:00,840 Speaker 1: with more cuts. So it's that battle which which has 410 00:23:00,880 --> 00:23:03,680 Speaker 1: been favorable. It's been good and got crudroil certain levels. 411 00:23:03,680 --> 00:23:06,240 Speaker 1: It's getting a little expensive here and now we're starting 412 00:23:06,280 --> 00:23:08,680 Speaker 1: to here worries about a little demand destruction. But that's 413 00:23:08,680 --> 00:23:10,680 Speaker 1: also the big picture in this. In this country, there's 414 00:23:10,720 --> 00:23:12,600 Speaker 1: just no demand. I mean, the man is not. There is, 415 00:23:12,640 --> 00:23:14,639 Speaker 1: but it's not in picking up like it did in 416 00:23:14,720 --> 00:23:16,600 Speaker 1: the in the old days, you know, and when we 417 00:23:16,680 --> 00:23:19,960 Speaker 1: had you know, all the gas um the the gas causers. 418 00:23:19,960 --> 00:23:21,520 Speaker 1: I mean, I drive a volt and a lot of 419 00:23:21,520 --> 00:23:23,200 Speaker 1: people do that. Now we just don't have to worry 420 00:23:23,200 --> 00:23:26,320 Speaker 1: about that incremental demand and more in this country. Really 421 00:23:26,359 --> 00:23:30,520 Speaker 1: you try, I didn't know that. What made you do that? Well, 422 00:23:30,560 --> 00:23:33,040 Speaker 1: you get on or twenty miles for gallon. The government 423 00:23:33,080 --> 00:23:35,200 Speaker 1: subsidized it, and a lot of people are going that way. 424 00:23:35,240 --> 00:23:37,639 Speaker 1: It's where that trends going. Everybody knows that. It's certainly 425 00:23:37,720 --> 00:23:41,040 Speaker 1: in the industrial countries like ours. The demands really coming 426 00:23:41,080 --> 00:23:44,400 Speaker 1: from the developed countries. We know that like China and 427 00:23:44,400 --> 00:23:48,639 Speaker 1: India and things but that major shift from the world's 428 00:23:48,720 --> 00:23:52,560 Speaker 1: largest demand factor in crudel is getting is becoming more 429 00:23:52,600 --> 00:23:54,840 Speaker 1: of a factor. And I'm I've been bullish on crude oil, 430 00:23:55,040 --> 00:23:57,399 Speaker 1: but at these levels it's just very expensive. If you 431 00:23:57,440 --> 00:23:59,080 Speaker 1: look at the trend just the last two years, the 432 00:23:59,119 --> 00:24:02,920 Speaker 1: bull market, it's had pretty significant ten dollar corrections. We're 433 00:24:02,920 --> 00:24:05,560 Speaker 1: a bit overdup from that. And unless we get more 434 00:24:05,640 --> 00:24:09,280 Speaker 1: bad you know, geopolitical data out of the Middle East, 435 00:24:09,320 --> 00:24:11,600 Speaker 1: it's gonna make crude to a more susceptible. Okay, but 436 00:24:11,640 --> 00:24:13,240 Speaker 1: you know the reason I ask you about being in 437 00:24:13,280 --> 00:24:17,240 Speaker 1: your vault is, uh, why you're driving in your vault. 438 00:24:17,320 --> 00:24:19,760 Speaker 1: You're not going to be subject to the increasing gasoline 439 00:24:19,760 --> 00:24:21,919 Speaker 1: prices which we're seeing in the United States. Tell me, 440 00:24:22,000 --> 00:24:25,200 Speaker 1: why is the price of gasoline? You look around, it's 441 00:24:25,240 --> 00:24:27,399 Speaker 1: over three bucks, even though the average they're saying to 442 00:24:27,600 --> 00:24:30,080 Speaker 1: seventy five. I mean, come on, you, you find it's 443 00:24:30,080 --> 00:24:32,920 Speaker 1: difficult to find gas for under three dollars a gallon. 444 00:24:33,160 --> 00:24:35,919 Speaker 1: We're also walking into the summer blend season, and summer 445 00:24:35,960 --> 00:24:38,160 Speaker 1: prices always higher because you have to use a summer blend, 446 00:24:38,200 --> 00:24:40,240 Speaker 1: So that'll kick it up a little bit. But my 447 00:24:40,359 --> 00:24:43,240 Speaker 1: indications from here, unless you get more tensions out on 448 00:24:43,520 --> 00:24:46,560 Speaker 1: the Middle East. Like Lisa mentions, you basically need that 449 00:24:46,960 --> 00:24:49,600 Speaker 1: to keep these prices higher. So after the summer's over, 450 00:24:50,040 --> 00:24:53,000 Speaker 1: after we get past that blend season, unless we can 451 00:24:53,040 --> 00:24:57,080 Speaker 1: get really good reasons for cutting from these producers who 452 00:24:57,080 --> 00:24:59,200 Speaker 1: actually need the money we can, they only gonna go 453 00:24:59,280 --> 00:25:01,920 Speaker 1: so long crude oil prices should have a tendency to 454 00:25:01,960 --> 00:25:05,080 Speaker 1: probably pick up. The difference is for investors in Crudel, 455 00:25:05,080 --> 00:25:07,960 Speaker 1: they have backradationl backgradation means if you're a buyer and 456 00:25:08,040 --> 00:25:12,159 Speaker 1: holder of Crudel, you get that you get positive return, 457 00:25:12,200 --> 00:25:13,480 Speaker 1: which you did in the past. You used to have 458 00:25:13,520 --> 00:25:16,200 Speaker 1: to pay for that role. Now it's positive. So Mike, 459 00:25:16,280 --> 00:25:18,879 Speaker 1: just real quick, which country in the Middle East is 460 00:25:19,000 --> 00:25:22,520 Speaker 1: most key to watch with respect to oil prices right now? 461 00:25:22,960 --> 00:25:25,320 Speaker 1: We well, it's right now. It's the when you see 462 00:25:25,320 --> 00:25:29,200 Speaker 1: headlines of Saudi Arabia and missiles right away, that means 463 00:25:29,240 --> 00:25:32,200 Speaker 1: Crudel gets bit and missiles signed over rehad So that's 464 00:25:33,440 --> 00:25:35,639 Speaker 1: you know, the other other countries are more perfect, but 465 00:25:35,680 --> 00:25:38,239 Speaker 1: Saudi a radios Arabia is the biggest producer. And when 466 00:25:38,240 --> 00:25:40,959 Speaker 1: I see Mrs see that, I would expect Crudel will 467 00:25:40,960 --> 00:25:43,000 Speaker 1: be up ten percent and it's only up six percent. 468 00:25:43,119 --> 00:25:45,120 Speaker 1: Part of the reason this week is it's already very 469 00:25:45,119 --> 00:25:48,159 Speaker 1: stretched and aluminum. Look at aluminium, it was at his 470 00:25:48,240 --> 00:25:50,200 Speaker 1: fifty two week average so and in a bull market, 471 00:25:50,280 --> 00:25:51,719 Speaker 1: so we had a lot more room to go up. 472 00:25:51,920 --> 00:25:53,439 Speaker 1: And that's kind of I look at it technically and 473 00:25:53,440 --> 00:25:56,280 Speaker 1: then open the fundamentals. Mike mclogan, we always love having you. 474 00:25:56,320 --> 00:25:58,040 Speaker 1: Thank you so much for being with us. Mike mcloonan 475 00:25:58,320 --> 00:26:01,640 Speaker 1: is a commodity strategistic for Bloomberg Intelligence, and of course, 476 00:26:01,640 --> 00:26:04,879 Speaker 1: aluminum jumping in part due to the news out of 477 00:26:05,000 --> 00:26:10,119 Speaker 1: Russia and Russol being sanctioned by the US possibly cutting 478 00:26:10,119 --> 00:26:16,080 Speaker 1: off its supplies. Thanks for listening to the Bloomberg P 479 00:26:16,200 --> 00:26:19,160 Speaker 1: and L podcast. You can subscribe and listen to interviews 480 00:26:19,200 --> 00:26:23,240 Speaker 1: at Apple Podcasts, SoundCloud, or whatever podcast platform you prefer. 481 00:26:23,640 --> 00:26:27,240 Speaker 1: I'm Pim Fox. I'm on Twitter at pim Fox. I'm 482 00:26:27,240 --> 00:26:30,560 Speaker 1: on Twitter at Lisa Abramo. It's one before the podcast. 483 00:26:30,600 --> 00:26:33,200 Speaker 1: You can always catch us worldwide on Bloomberg Radio.