WEBVTT - Bloomberg's McGlone on Gold Correction and Oil Glut (Audio)

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<v Speaker 1>Global business news twenty four hours a day. If Bloomberg

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<v Speaker 1>Hunting Charlie pelt, the Dow and NAZDAK are lower smps hire.

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<v Speaker 1>Let's head right over the first word breaking news desk

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<v Speaker 1>for today's afternoon call. Here he is Bill Maloney. Good afternoon, Charlie.

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<v Speaker 1>Stocks have rebounded from the lows, with the Dow currently

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<v Speaker 1>down twelve points. SUPs are hired by a point in

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<v Speaker 1>NAZAC is lower by seven at one point. The Dow

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<v Speaker 1>is down a hundred and eighteen points, the small cap

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<v Speaker 1>six hundred is little changed, and the US ten yield

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<v Speaker 1>at one point seven four percent. Seven out of eleven

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<v Speaker 1>sub sectors are higher let Big Games and Materials, real

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<v Speaker 1>estate and technology, while healthcare, industrials and telecom fell down.

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<v Speaker 1>Transports are a little change, NASA by Tech's fall seventy

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<v Speaker 1>and the vix is down by point three percent. Leaders

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<v Speaker 1>to the downside and the down included American Express, Walmart,

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<v Speaker 1>and Fiser, while dupot Apple and Mike McDonald's. Lad in

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<v Speaker 1>jel News Quacom said to make progress and talks with

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<v Speaker 1>n XP and Mars to buy out Berkshire Hathwayte equity

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<v Speaker 1>stake in wrig Lely. In other news of Walster, John

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<v Speaker 1>reported that Snapchat parents said he'll be working on an

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<v Speaker 1>I p O valuing the firm at five billion or more.

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<v Speaker 1>Whole food spiked intured A gained as much as six

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<v Speaker 1>point seven percent tweets residing takeover speculation, while al Nylum

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<v Speaker 1>Pharma fell as much as forty nine percent after ending

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<v Speaker 1>development of a key medicine. Live from the first back

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<v Speaker 1>of news desk, gom Bill Maloney charge, all right, thank

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<v Speaker 1>you very much, billing here live breaking news over your

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<v Speaker 1>bloomberd Times squawk gasqu a w K on your terminal.

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<v Speaker 1>I'm Charlie Pellett. That's sub Bloombred Business Flash June listening

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<v Speaker 1>to taking stock with pim Box and Kathleen Hayes on

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<v Speaker 1>Bloomberg Radio. Gold the price of gold declining. Today. You

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<v Speaker 1>can buy an ounce of gold for twelve hundred and

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<v Speaker 1>fifty one dollars an ounce. That is fifteen dollars less

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<v Speaker 1>than it costs yesterday. Here to tell us more about

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<v Speaker 1>gold and other commodities is Mike mccloan. He is commodity

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<v Speaker 1>strategist for Bloomberg Intelligence and he joins us here in

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<v Speaker 1>the studio. Mike, thank you very much for being here.

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<v Speaker 1>Great to see you. Give us the story on goal.

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<v Speaker 1>What's going on? Why the sell off? What are all

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<v Speaker 1>the connections. I think gold is just doing a little

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<v Speaker 1>bit of a catch up to the record high stock

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<v Speaker 1>market prices. The dollar really hasn't been much of a

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<v Speaker 1>factor this year, and gold really got its lift after Brexit.

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<v Speaker 1>That's when it moved above thirteen hundred dollars announced. Both

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<v Speaker 1>remember our gold started the year, It started the year

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<v Speaker 1>below eleven hundred dollars announced. Right now it's around twelve fifty,

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<v Speaker 1>so it's still up eighteen percent on the year. And

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<v Speaker 1>part of the reasons it's up, it's because there's this

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<v Speaker 1>proliferation of negative interest rates in the world that's still

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<v Speaker 1>a pretty good solid support for the world's really quintessential

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<v Speaker 1>you know, alternative asset um. So it's worth a little

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<v Speaker 1>bit about FED tightening. But you know we did that

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<v Speaker 1>last year too, and actually within the tightening, gold within

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<v Speaker 1>a day or two put in its low. So so

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<v Speaker 1>is this then okay? So is this then maybe just

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<v Speaker 1>a bit of a correction. Are you just people like,

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<v Speaker 1>you know, kind of lightning up to run it back up?

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<v Speaker 1>Because I think partly what also is happening, there was

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<v Speaker 1>this speculation that the ECB might be ready to start

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<v Speaker 1>tapering off on its bond purchases, put thoroughly to bed

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<v Speaker 1>today by the ECB minutes also by a couple of

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<v Speaker 1>e CP Council members, at least one of them speaking

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<v Speaker 1>of New York. Um. So if the if the FED

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<v Speaker 1>raises once, I think that's I'm a gold bull, That's

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<v Speaker 1>what I'm saying. So what, especially if the west of

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<v Speaker 1>the central banks in the world aren't gonna stop buying bonds.

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<v Speaker 1>I think that's a good assessment. I mean, gold head,

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<v Speaker 1>it got way overdone. Open interest reach a record high

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<v Speaker 1>in futures in July and it's come off since. And

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<v Speaker 1>this is very similar to what it did in two

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<v Speaker 1>thousand ten before it ran up to that high, or

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<v Speaker 1>that took a major collapse in the dollar. Hopefully that

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<v Speaker 1>won't happen. We don't think that won't happen. But gold

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<v Speaker 1>still as its value. It's just pulling back. There's definitely

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<v Speaker 1>been some profit taking. Open interests come off and the

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<v Speaker 1>question is whereas it continue. I think for gold to

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<v Speaker 1>really move and sustain above will probably needs something negative

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<v Speaker 1>in terms of the stock market or the dollar like

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<v Speaker 1>it did in two thousand ten. I guess we don't

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<v Speaker 1>really want that to happen. Well, that's where gold comes

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<v Speaker 1>in play. It's a diversifier and it's really done a

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<v Speaker 1>good job doing that this year. Tell us about what's

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<v Speaker 1>going on in oil. I've got a print right now.

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<v Speaker 1>Oil a front month at fifty and forty nine cents

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<v Speaker 1>a barrel. It's up sixty six cents today. Well, I

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<v Speaker 1>think there's two things to remember in oil. It's not

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<v Speaker 1>so much that OPEC is gonna reduce production. Is they're

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<v Speaker 1>going to stop the drill at will trend at least

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<v Speaker 1>they say they will. The market thinks it's gonna happen,

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<v Speaker 1>It doesn't always know that will happen. And we have

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<v Speaker 1>this hurricane brewing. That's really pretty good positive things for oil,

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<v Speaker 1>but we all know they overwhelming. The most significant way

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<v Speaker 1>to describe oil now is glut. One word glutt. We

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<v Speaker 1>all know that. And if oil sustains much higher, we're

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<v Speaker 1>gonna be more supply come on board. Yes, it doesn't

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<v Speaker 1>happen really quick. But oil and the fifty handle has

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<v Speaker 1>been pretty good resistance since the beginning of the year.

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<v Speaker 1>Last year. The key level is sixty, and I think

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<v Speaker 1>most traders, most investors know that this is a level

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<v Speaker 1>if they've been long and they should be lightning up

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<v Speaker 1>and being a little carefully. It's just been good resistance

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<v Speaker 1>for quite a while. It's been a good trade all year, right,

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<v Speaker 1>I mean you take a look at crude oil, I

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<v Speaker 1>mean it's up what more than thirty six percent in price?

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<v Speaker 1>This key thing to remember, it's been a good range trade.

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<v Speaker 1>But gold different than than gold. You can't really invest

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<v Speaker 1>in crude really has futures. So if you look at

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<v Speaker 1>the number one traded um oil ETF this year us SO,

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<v Speaker 1>it's up like five um. So. Actually, when it comes

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<v Speaker 1>to investing standpoints, sometimes it's better. It has been better

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<v Speaker 1>to sell oil on rallies rather than buy it on support.

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<v Speaker 1>But it's been stuck between forty and fifty for a while.

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<v Speaker 1>But yeah, that's where I like to really differentiate and

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<v Speaker 1>make the difference. If you look like you can buy

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<v Speaker 1>gold in et F and get that gold return, but

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<v Speaker 1>in oil it's a much different story. It has to

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<v Speaker 1>use futures. It rolls, and there's a little it's a

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<v Speaker 1>little more complicated, but for traders it's it can be fun.

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<v Speaker 1>So what's the uh what would you say the odds

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<v Speaker 1>are of oil going downhill? Again? I know we have

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<v Speaker 1>the latest to his inventories and they showed more demand.

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<v Speaker 1>But as you said, as people called call this glut,

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<v Speaker 1>this global glut a wall, right. And there's also I

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<v Speaker 1>think a lot of people are going to really believe

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<v Speaker 1>that Saudi Arabic can engineer this this kind of production

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<v Speaker 1>until you actually see it on paper, right, So uh,

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<v Speaker 1>and and and being carried out as well. Would you say,

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<v Speaker 1>one intent chance, how much the risk the oil actually

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<v Speaker 1>takes another turn towards the lows. We have to be

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<v Speaker 1>careful of the actual probabilities. But I think the thing

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<v Speaker 1>that remembers trends, your friend. And guess what, there's no trend.

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<v Speaker 1>It's been stuck in a range we all know supplies overwhelming.

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<v Speaker 1>It's getting up near the upper end of the range,

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<v Speaker 1>at least in the shorter term. It might extend a

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<v Speaker 1>little higher. And I think that we should remember trends,

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<v Speaker 1>your friend. It's near the upper end of the range,

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<v Speaker 1>and what's just expected to stick in the stick within

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<v Speaker 1>a trend and in the short term might be a

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<v Speaker 1>new one, but who knows how long it's gonna last.

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<v Speaker 1>Just quickly you want to do anything on corn or

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<v Speaker 1>or grains con there. Corn corn has reached recently reached

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<v Speaker 1>a ten year low. Supply is just is you know,

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<v Speaker 1>it's going to be the record year harvest in for

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<v Speaker 1>corn and soybeans, but the prices are reached so much

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<v Speaker 1>such a low level that the man is picking up exponentially.

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<v Speaker 1>We're just one weather event away from a pretty substantial railly.

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<v Speaker 1>I'm not predicting weather, but these things happen in cycles,

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<v Speaker 1>and expect that happened at some point. All right, he

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<v Speaker 1>knows how to watch that. Stop watch very very well.

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<v Speaker 1>Mike mclenn, Thank you so very much. Commodity strategist for

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<v Speaker 1>Bloomberg Intelligence on Kathleen Hayes along with pim Fox and

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<v Speaker 1>this is Bloomberg coming up on taking stock Walmart. Walmart

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<v Speaker 1>says it's got more plans to focus heavily on its

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<v Speaker 1>e commerce operations and also warned investors that it's going

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<v Speaker 1>to cost more. We've got details coming up