Speaker 1: Welcome to the Bloomberg Markets Podcast. I'm Paul Sweeney, along
Speaker 1: with my co host of Bonnie Quinn. Every business day
Speaker 1: we bring you interviews from CEO, market pros, and Bloomberg experts,
Speaker 1: along with essential market moving news. Find the Bloomberg Markets
Speaker 1: Podcast on Apple Podcasts or wherever you listen to podcasts,
Speaker 1: and on Bloomberg dot com. Well, we are likely to
Speaker 1: have a new administration in very soon. The questions abound.
Speaker 1: One of them is how would this new administration deal
Speaker 1: with China, particularly the economic challenges with China. Nobody better
Speaker 1: to have that discussion than Carl Weinberg, founder and chief
Speaker 1: international economist at High Frequency Economics. Carl, thanks so much
Speaker 1: for joining us here. It's been a rough, bumpy four years,
Speaker 1: to say the very least between the US and China
Speaker 1: as it relates to trade. How do you think things
Speaker 1: will be different with a Biden administration? Well, that is
Speaker 1: the question of the day, and I personally am looking
Speaker 1: forward to see what's kind of a team UH President
Speaker 1: Elect Biden puts together at the U s Special Trade
Speaker 1: Representatives Office to give us some guidance as to how
Speaker 1: this is going to go. The tariffs have not worked
Speaker 1: they haven't reduced China's trade surplus with the United States
Speaker 1: in any measurable way. Since they've come on board. China's
Speaker 1: increased its exports to the United States by six and
Speaker 1: it's imports are up only eleven point eight percent um.
Speaker 1: That's not a winning strategy, and it's a tax on Americans.
Speaker 1: Tariffs are one of the few tax areas president elect
Speaker 1: a President Biden could reduce on US taxpayers without having
Speaker 1: to go through Congress. So there's a lot of potential there,
Speaker 1: But of course we don't want to be backing away
Speaker 1: from the critical issues of differences that we have with China.
Speaker 1: A sharp guy at the trade representatives, if you took
Speaker 1: President Trump out of the picture and the last four years,
Speaker 1: we could just, you know, erase that for the moment.
Speaker 1: What would a Biden plan towards China be. It feels
Speaker 1: like maybe he has to be a little bit more
Speaker 1: inviting to China given the last four years, but if
Speaker 1: that hadn't happened, he could be a lot tougher on China. Yeah,
Speaker 1: well absolutely, I mean he's certainly a lot tougher on
Speaker 1: China now than he was when he was vice president.
Speaker 1: And of course the playing field has changed a lot.
Speaker 1: It's more than just economic issues that separate us. We
Speaker 1: have human rights issues. We have Hong Kong on the table.
Speaker 1: Just within the last twenty four hours forty eight hours,
Speaker 1: we've seen China make moves to impose its rule on
Speaker 1: Hong Kong, which the US can't accept. We've got Taiwan issues,
Speaker 1: We've got India issues, We've got all kinds of human
Speaker 1: rights issues. So, um, it's not just a simple matter
Speaker 1: of commercial tariffs to achieve commercial goals. So the tricky
Speaker 1: part here is going to be to back down, I think,
Speaker 1: on the tariffs, but at the same time, to find
Speaker 1: ways to put pressure on China, perhaps through non economic
Speaker 1: ways or through economic ways, to try to achieve and
Speaker 1: to maintain our belief in some of these other goals.
Speaker 1: So says it sounds like from what we can see
Speaker 1: that China is getting back to work, that their economy, Um,
Speaker 1: they've seen the worst of it as it relates to COVID.
Speaker 1: What do you know about the economy in China and
Speaker 1: how that may influence kind of their negotiating posture. Yeah,
Speaker 1: so China's economy is growing. They seem to have contained
Speaker 1: the coronavirus better than we have there. There's no sign
Speaker 1: of a second wave of outbreaks over there. Whatever outbreaks
Speaker 1: we've seen have been contained in clusters rather than becoming
Speaker 1: community spread, and the numbers are quite low. And as
Speaker 1: a result, their economy is growing. At the same time,
Speaker 1: they're increasing their exports for the rest of the world
Speaker 1: because they can, because they're at work and they're producing stuff,
Speaker 1: and they're being aggressive in terms of getting their merchandise
Speaker 1: out there. So we're seeing their export revenues go up,
Speaker 1: and we're also seeing them we deploy those export revenues
Speaker 1: into direct investment in other countries, building up their silk
Speaker 1: roots and making direct support and aid investments in other countries,
Speaker 1: sometimes against the wishes of the United States, like in Iran,
Speaker 1: and that's helping them promote their economic agenda and project
Speaker 1: their economic and diplomatic power around the world. They're taking
Speaker 1: good advantage of their advances and their their windfall on
Speaker 1: public health. Yeah, speaking of which, Carl, how is the
Speaker 1: U s economy these days? We we just got poor
Speaker 1: confidence data this morning, and and poor inflation data this
Speaker 1: week too. Yeah, well, Ronnie, you don't need me to
Speaker 1: tell you that we're in for a rough time here.
Speaker 1: You know. J Powell said it yesterday at the Virtual
Speaker 1: ECB Confidence and everybody who talks about the U. S
Speaker 1: economy tells the same story, and they're all right, the
Speaker 1: coronavirus outbreak that we're currently experiencing is debilitating. It not
Speaker 1: only causes us to lock down our enterprises, but it
Speaker 1: forces enterprises that are in lockdown to shut down as
Speaker 1: infection spread. This is going to be a loss of production.
Speaker 1: We're in for a really, really dark fourth quarter of
Speaker 1: this year. Carl, what do you make just broadly defined
Speaker 1: of a Biden administration, a Democratic House and I'm sorry
Speaker 1: at a Democratic House and a Republican controlled Senate. What
Speaker 1: does that mean do you think for economic policy over
Speaker 1: the next several years. Well, if that's the way it
Speaker 1: works out, and as you know, the Senator is still
Speaker 1: a programs. We still have to by elections in Georgia.
Speaker 1: But assuming that the Republicans keep the House, that's gonna
Speaker 1: sty me Biden's efforts to pump stimulus into the economy.
Speaker 1: The Republicans just don't seem to be going forward. And um,
Speaker 1: it's going to mean that a lot of the objectives
Speaker 1: on social level as well as an economic and political
Speaker 1: level that the Democrats wanted to do just simply aren't
Speaker 1: going to happen. It's also going to constrain choices of
Speaker 1: biden administration for cabinet jobs. I don't think Republicans will
Speaker 1: block all appointments, but some of the requests of the
Speaker 1: more rest a wing of the Democratic Party for more
Speaker 1: progressive cabinet members, they're going to be hard to bring
Speaker 1: about with the Senate having to approve all appointments. So
Speaker 1: it's going to be a tougher haul for Biden to
Speaker 1: be successful in his agenda that the Republicans keep the Senate,
Speaker 1: and that, of course, as you know, it is in
Speaker 1: the hands of the voters of Georgia right now. Yeah,
Speaker 1: that's for sure. I mean, won't the Republicans want the
Speaker 1: economy to do well as well though, in order to
Speaker 1: sort keep up their support. Well, you know, I'm not
Speaker 1: a Republican bunny, and I'm trying really hard to understand
Speaker 1: Republicans each program, and I wish that they would explain
Speaker 1: to me why they think it is in their interests,
Speaker 1: in the national interests to slow down, you know, support
Speaker 1: for the economy as it goes through this terrible contraction
Speaker 1: and to um, I understand some of the disagreements in principle, uh,
Speaker 1: and that's okay, but I don't understand why they would
Speaker 1: want to shut down the business of government trying to
Speaker 1: promote the general welfare right now. So you'll have to
Speaker 1: ask a republic in that question. But from my point
Speaker 1: of view, I admit that on yours, don't it's not
Speaker 1: often the Carl Weinberg. Yes, that's right, Carl. We could
Speaker 1: talk all day, but unfortunately we're coming to the end.
Speaker 1: Just briefly, your you know, GDP forecast GDP forecast fourth
Speaker 1: quarter is probably going to be down. Let's broaden it
Speaker 1: to the world, okay, because what we're seeing in Europe
Speaker 1: it's a lot more severe in terms of the outbreak
Speaker 1: and a lot more severe in terms of the shutdowns
Speaker 1: that we're seeing. And of course in the emerging world,
Speaker 1: where they produce a lot of the world materials that
Speaker 1: feed our industrial machine. They're going to be problems in
Speaker 1: debt service, they're gonna be problems with bond holders, are
Speaker 1: going to be a lot of restructuring coming up. It's
Speaker 1: going to be a really grim fourth quarter and it's
Speaker 1: going to carry over into next year, and certainly johny
Speaker 1: yelling news to talk about the feedback loop all the
Speaker 1: time from international economies to the US and vice versa.
Speaker 1: Carl Weinberg, thank you for joining us today. That's Dr
Speaker 1: Carl Weinberg, Founder and chief International economist for High Frequency Economics.
Speaker 1: It is time now to take a look at Disney.
Speaker 1: Shares began the session higher. They're still up for they
Speaker 1: have been raising some gains off about one point one now.
Speaker 1: Severe changes throughout the pandemic to the business model. Let's
Speaker 1: bring in Tara la Chapelle Bloomberg Opinion, who knows everything
Speaker 1: there is to know about Disney. She is Media and
Speaker 1: Deal's columnist. So Tara, your takeaway thoughts after last night's earnings. Yeah,
Speaker 1: I mean the takeaway is that streaming is front and
Speaker 1: center right now, and that's not such a bad thing
Speaker 1: because these other businesses are still being bluddended by the pandemic.
Speaker 1: The cruises aren't going to be back in operation until
Speaker 1: at least after this year. Not all the theme parks
Speaker 1: are open, and the ones that are open are operating
Speaker 1: at reduced capacity. Of course. Uh, the film business obviously
Speaker 1: really had nothing significant this year because movie theaters were closed,
Speaker 1: and the TV networks, I mean, they're they're doing okay
Speaker 1: because they they're costs. They're down because they couldn't really
Speaker 1: you know, produce much content for the year. But the
Speaker 1: the outlook isn't you know, great obviously with streaming taking
Speaker 1: over and more people cutting the cords. So I think,
Speaker 1: you know, investors just want to hear them talk about streaming, streaming, streaming.
Speaker 1: It's all about Disney Plus. And I think that's why
Speaker 1: the stock is up despite you know, the company not
Speaker 1: reporting great results expectively because of covid Terry. You've got
Speaker 1: a great, great column out on this Disney earnings and
Speaker 1: in your column you say, Disney recently was you know,
Speaker 1: a theme park company, a media network company, a film
Speaker 1: studio plus some streaming. Now you think of it now
Speaker 1: is a streaming giant plus some other stuff. That's a
Speaker 1: big change. Yeah, It's like everything's kind of moved to
Speaker 1: the other side of the plus sign, you know, Disney Plus.
Speaker 1: It's it's obviously not making money. I maybe can't you
Speaker 1: know that that is still true, Like Disney Plus doesn't
Speaker 1: make money. It's going to be a little while before
Speaker 1: it does. But just in terms of the growth in
Speaker 1: the direction of where this industry is going. There are
Speaker 1: positive signs that Disney is doing a pretty decent job
Speaker 1: with it. They've got seventy three million subscribers to Disney
Speaker 1: Plus um and it's all about, you know, trying to
Speaker 1: catch up to Netflix and just keeping those subscribers loyal.
Speaker 1: And Bob Chapek, the CEO, talks on the call last
Speaker 1: night about how they do that, which is really ramping
Speaker 1: up the number of shows and movies that are available
Speaker 1: to Disney Plus subscribers, either in the form of what
Speaker 1: they did with Mulan, where you're Disney Plus subscriber paying
Speaker 1: seven dollars a month and then you pay thirty dollars
Speaker 1: one time charge on top of that to watch Mulan,
Speaker 1: or like what they're doing with Pixar Soul, which is
Speaker 1: just going to be available for no extra charge to
Speaker 1: Disney Plus users. And so they're kind of experimenting with
Speaker 1: that and with this big reorganization that Shapeck announced the
Speaker 1: other day where they're going to, you know, put all
Speaker 1: the content creation side of the media and entertainment business
Speaker 1: into one unit and they're just going to focus on
Speaker 1: making content and then they're going to have this other
Speaker 1: group that just focuses on figuring out where to put
Speaker 1: that content, whether it's on the traditional cable networks, whether
Speaker 1: it's in a movie theater, whether it's on Disney Plus
Speaker 1: or for you know, going back and forth between those. Uh.
Speaker 1: For instance, A T and T is is going to
Speaker 1: release Wonder Woman ninetem four, uh supposed to be Christmas Day,
Speaker 1: and then a couple of weeks later they might put
Speaker 1: it right on HBO Max. So we're really starting to
Speaker 1: see these companies change their strategy when it comes to
Speaker 1: where content, big content, expensive productions are going to wind up. Wow,
Speaker 1: that is fascinating. What about the theme parks? Do they
Speaker 1: emerge much smaller, much less staffed. It's it's really hard
Speaker 1: to know right now. I mean, it seems like Tapic
Speaker 1: and also Brian Roberts that Comcast, which owns Universal Studios,
Speaker 1: are really optimistic about the theme parks business that that
Speaker 1: will come back. They don't seem to be talking is
Speaker 1: optimistically about movie theaters, but theme parks. They really seem
Speaker 1: to like that business a lot. For Disney, the Parks
Speaker 1: and Cruises division, how to over one billion dollar loss
Speaker 1: for the fourth quarter and the total impact on profit
Speaker 1: from COVID so far just for that business has been
Speaker 1: almost seven billion dollars, So they're really hurting. But I
Speaker 1: think that these companies are optimistic that it will come back.
Speaker 1: It's just going to take a while. A combination of
Speaker 1: you know, in California with Disneyland, trying to work with
Speaker 1: the state government there, which is really opposed to reopening,
Speaker 1: and then also you know, trying to get people comfortable
Speaker 1: again with travel and and visiting these you know, big
Speaker 1: crowded spaces tera. What do we know about the role
Speaker 1: of Bob Iger. You know, he stepped down a CEO
Speaker 1: too much fanfare, uh, going to be a chairman for
Speaker 1: a while, then as COVID came on, um potentially coming
Speaker 1: back and taking it's a little bit more of a
Speaker 1: bigger role. Do we know what his role is right now? Yeah?
Speaker 1: I mean, I think that the speculation when he did
Speaker 1: step back and then COVID hit was that Bob Iger
Speaker 1: is going to come back and kind of be pulling
Speaker 1: the strings behind the scenes, even though he's no longer CEO,
Speaker 1: you know, he's still executive chairman. But I'm not sure
Speaker 1: that it's actually working out that way to Disney's credit,
Speaker 1: Bob Sack is really calling the shots, and that's at
Speaker 1: least what it looks like to people on the outside.
Speaker 1: I mean, this is his reorganization, and as someone who
Speaker 1: came up through the park side of the company, I mean,
Speaker 1: he's really doing a lot to put the focus on
Speaker 1: streaming and so I think he's making the right moves
Speaker 1: and and you know, people are pretty pleased with what
Speaker 1: he's doing and making the best of a tough situation
Speaker 1: this year. And we haven't really heard anything from Bob Eiger.
Speaker 1: He didn't speak on the call last night, I don't think,
Speaker 1: and it's just been really quiet on that front. And
Speaker 1: I think that's what they needed to do in order
Speaker 1: for it to be seen as an actual, you know
Speaker 1: succession where Bob Chapek is the CEO of Disney. Now,
Speaker 1: what about sports viewing. Disney was insisting that it's not
Speaker 1: a problem that the live sports going away for the
Speaker 1: most part, is not hurting. Yeah. I mean, the you
Speaker 1: know sports came back in the fourth quarters, so that
Speaker 1: hurts them in some ways because it meant that their
Speaker 1: costs went up a lot because sports programming is very expensive.
Speaker 1: But I think overall they're happy to see sports back.
Speaker 1: It's just without the vaccine, we don't know what this
Speaker 1: is going to look like. And by the time you know,
Speaker 1: we're able to go back to quote normal in some way. Uh,
Speaker 1: you know, people have been cutting the court in our
Speaker 1: they hanging on to these expensive, you know, sports subscriptions.
Speaker 1: I don't know. I mean, it's really hard to know.
Speaker 1: ESPN is cutting like three jobs right now, so it's
Speaker 1: it's not looking great. It makes me wonder. You know,
Speaker 1: for a long time people have speculated whether Disney whatever
Speaker 1: kind of spin off ESPN or separate from it, And
Speaker 1: now in hindsight, it's like, you know, maybe they should
Speaker 1: have done that. You know, that's the business that it
Speaker 1: really there's a lot of unknowns because of COVID and
Speaker 1: because of streaming, so they're getting hit from both sides. Terry,
Speaker 1: how's some people reacting to that organization you've referenced There
Speaker 1: was a pretty big reorganization of the management team to
Speaker 1: try to focus more on streaming. Some people was kind
Speaker 1: of scratching their heads. What's kind of the feedback you're hearing. Yeah,
Speaker 1: I mean, I think it's going to be really tough
Speaker 1: if you work in those businesses. Right now. If you're
Speaker 1: a manager, you know, you've kind of had some of
Speaker 1: your responsibilities taken away, perhaps because if you're just if
Speaker 1: you know, if you work for the cable network and
Speaker 1: you're just focusing on content now, you don't really have
Speaker 1: a stay over where that content goes. And streaming has
Speaker 1: kind of become the big thing that they're focusing on,
Speaker 1: and so if you're in these other businesses, you might
Speaker 1: feel a little bit slighted. Um. But I think what
Speaker 1: Bob try to say on the call last night is
Speaker 1: that they're doing this in a very organized way, and
Speaker 1: they're making it clear what people's responsibilities are. That if
Speaker 1: you're a creative you're in a creative role, focus on that.
Speaker 1: And if you're in a role to market and and
Speaker 1: distribute content, focus on that. And that will make it
Speaker 1: a more organized, um, you know, process, and maybe make
Speaker 1: it easier for Disney to do this in a way
Speaker 1: that doesn't disrupt the empire so much. But of course,
Speaker 1: right now, I mean, I imagine it's gonna be really
Speaker 1: hard to be there. It's just like everything just changed overnight. Absolutely. Hey, Tara,
Speaker 1: thanks so much for joining us. Always appreciate your thoughts
Speaker 1: and insight Tara La Chappelle. She's a Bloomberg opinion column
Speaker 1: she covers entertainment, telecommunications, UH and deal. She joins us
Speaker 1: on the phone from New York City and again better
Speaker 1: than expected results out of Disney. I think the expectations
Speaker 1: were quite low given the pandemic and we know the
Speaker 1: impact it's having on its business. But again, this is
Speaker 1: a company that's pivoted toward streaming business and they put
Speaker 1: us some really good streaming numbers last night. When you
Speaker 1: think about the U. S. Agricultural sector, rural America, that
Speaker 1: lots of challenges, climate related disasters, weak ethanol and bio
Speaker 1: fueld demand, US China trade tensions and that that's not enough,
Speaker 1: COVID nineteen pandemic, many many challenges for the U. S.
Speaker 1: Agricultural industry and rural America. To get a sense of
Speaker 1: what rural America, US Big agg look like potentially under
Speaker 1: a Biden administration, we welcome our next guest, Run sunder Room,
Speaker 1: Equity Research analysts for c f R A research based
Speaker 1: in Washington, d c uh Aaron, thanks so much for
Speaker 1: joining us here. Again, tough times for the U. S.
Speaker 1: Agricultural sector, rural America, what's the feeling under a Biden
Speaker 1: administration about potential changes, Paul, Yeah, thanks for having me. Yeah,
Speaker 1: you mentioned you under the Trump administration. You know, although
Speaker 1: the Trump administration is trying to pay itself as an
Speaker 1: ally to farmers, the unfortunate truth is, you know, the
Speaker 1: past few years have been nothing short of difficult for
Speaker 1: the agriculture sector. You know, we've had the US trying
Speaker 1: to trade war, various climber related disasters, weak demand for
Speaker 1: ethnom biofuels, and then obviously the COVID nineteen pandemic has
Speaker 1: wrecked havoc on the sector. But we believe under a
Speaker 1: Biden administration, you know, there'll be a lot more positive
Speaker 1: implications for the sector um rather than negative ones. You know,
Speaker 1: Joe Biden's policies are much more moderate than most of
Speaker 1: the other Democrats that are running in the Democratic primary.
Speaker 1: You know, Bidden's biggest goal is to achieve that zero
Speaker 1: emissions by two as the fifties, So I think he'll
Speaker 1: want to work with the agriculture industry to practice more
Speaker 1: you know, sustainable farming methods, and I think he'll incentivize
Speaker 1: them to do so. So, really, anything that's related to green,
Speaker 1: clean energy should support farmers, particularly corn farmers, I think
Speaker 1: in the United States because they have been increasingly reliant
Speaker 1: on the ethanol industry. But unfortunately the ethnicol industry over
Speaker 1: the past few years have been that the industry has
Speaker 1: been significantly pressured. Um you know, I think last year's
Speaker 1: of nineteen dethnel industry productions for the first time in
Speaker 1: nearly a decade. So, um, when when Joe Biden comes in,
Speaker 1: I think anything that it's way to clean green energy
Speaker 1: should support UH farmers, agrie businesses and be a big
Speaker 1: relief for the industry. And what about the relationship with
Speaker 1: China and how farmers fit into that. China, you know,
Speaker 1: sending cops and so on to the United States and
Speaker 1: vice versa. Exports. Yeah, yeah, that's right. So the good
Speaker 1: news right now at least is over the past few months,
Speaker 1: China has significantly accelerated uh it's imports of US agricultural products. Um.
Speaker 1: But unfortunately they are still you know, well short of
Speaker 1: its UH commitment requirements as part of the Phase one
Speaker 1: US China trade deal that was signed earlier this year. Um.
Speaker 1: You know. Unfortunately, that trade deal was signed I think
Speaker 1: less than ten days before China went into lockdown. So
Speaker 1: obviously China has been slow to to uh purchase US
Speaker 1: agricultural products. But the good news is, at least right
Speaker 1: now it looks like they are accelerating their their imports.
Speaker 1: But I think when when Joe Biden comes in, UM,
Speaker 1: I don't think he'll completely scrapped existing Phase one agreement
Speaker 1: or immediately removed tariffs because you know, it will be
Speaker 1: prudent to get something in return, you know. I think
Speaker 1: instead Joe Biden will work with other allies to set
Speaker 1: some ground rules for China which includes topics like you know,
Speaker 1: human rights, climate change, um, and and then go go
Speaker 1: go from there. But um, but like I said, the
Speaker 1: good news is China is accelerating their their U s
Speaker 1: agricultural imports then and hopefully that continues. What are some
Speaker 1: of the areas that have been particularly hard hit when
Speaker 1: you look at the US egg industry. What are some
Speaker 1: of the big areas. Yeah, the biggest areas are you know,
Speaker 1: Harry farmers, Uh, you know, soybean farmers, corn farmers. You know,
Speaker 1: they've they've all been you know, like I said, going
Speaker 1: through uh, the past few years have been just incredibly
Speaker 1: difficult on all of them. Um, but you know, I
Speaker 1: think when when when Biden comes into um into uh
Speaker 1: the seat, I think when when he goes to choose
Speaker 1: his agriculture secretary, I think, here she will need to
Speaker 1: focus on, you know, the long term and it makes
Speaker 1: a more impactful change then you know, some of the
Speaker 1: short term I call short term band aids that are
Speaker 1: being handed out right now to farmers. Right now, there's
Speaker 1: a lot of you know, subsidies and grants being handed
Speaker 1: out to farmers. But but farmers want to make their
Speaker 1: own income. So I think going forward, you know, we'll
Speaker 1: need to you know, expand trade opportunities and um really
Speaker 1: open up the market for for our farm economy. How
Speaker 1: are they doing out there? I mean I've been asking
Speaker 1: questions over the last several days about supply chains and
Speaker 1: so on, and you know, how has the farming community
Speaker 1: dealt now with eight months of you know lockdown in
Speaker 1: many parts of the country. Yeah, so the past the
Speaker 1: past eight months have been very difficult. You know. In
Speaker 1: the beginning, um, you know, farmers had to know, had
Speaker 1: to leave their their crop and the plants they are
Speaker 1: unable to harvest them. And then also um, the knee
Speaker 1: processing industry has has has gone through some challenges as well.
Speaker 1: You know, uh, many farmers had to had to call
Speaker 1: their livestock because there was just there was just no
Speaker 1: end demand for for their products because of the essential
Speaker 1: shutdown to the food service industry. Um. But but but
Speaker 1: the good news now is, you know, the economy is recovering.
Speaker 1: I don't. I don't think anyone is expecting to economy
Speaker 1: to recover as fast it is right now, and and
Speaker 1: therefore supply and demand levels are beginning to balance, which
Speaker 1: is a good sign. But obviously right now the number
Speaker 1: of COVID cases are rising, and then there's a chance
Speaker 1: that you know, we could have lockdowns again in the future, um,
Speaker 1: which could have put you know, an imbalance to the
Speaker 1: supply and demand levels. But um, the good news is
Speaker 1: we've we've gone through lockdowns once, and I think the
Speaker 1: industry is a lot more prepared to go through one again. Aarons,
Speaker 1: thank you. We will ask you to come back soon
Speaker 1: and give us a further update. Our own syndrome is
Speaker 1: Anquity analyst at c f r A Research talking there
Speaker 1: about commodities, farmers, US China relationship, and lots lots more
Speaker 1: difficult time for everybody, but rural America has also had
Speaker 1: an extremely tough There is a few mikes, but only
Speaker 1: one in studio right now. Mike mcglogan's with US Commodity
Speaker 1: strategist for Bloomberg Intelligence and Mike a loot to get to.
Speaker 1: But give us an update on cryptocurrencies because we had
Speaker 1: that huge rally for bitcoin, remember, and I guess I
Speaker 1: haven't really looked since then what happened in that sector
Speaker 1: after that big, big rally. Bitcoin is a bullmarket that's
Speaker 1: had a significant correction, impairing to disdain, and it's just
Speaker 1: resuming that bullmarket. The key thing is that's really happened.
Speaker 1: This year's fundamentals have really increased and improved. We have
Speaker 1: more demand, more adaption. It's going mainstream. You see that
Speaker 1: from from place companies like micro Strategy and Square. They're
Speaker 1: digging in. Even people like Standing Drucklander saying how he
Speaker 1: holds bitcoins. What I think is happening is bitcoin is
Speaker 1: it's the virus that isn't going away, and it's becoming
Speaker 1: more mainstream. And this year this supplied basically was cut
Speaker 1: in half. So next year, if history is a guide,
Speaker 1: is can potentially be a very big up year for
Speaker 1: the price of bitcoin. All right. Well, here's my anecdotal
Speaker 1: evidence about the the you know, bubble nature of bitcoin.
Speaker 1: They're actually talking about it for long periods of time
Speaker 1: on sports radio in the morning. You've got the Post
Speaker 1: not talking Mets and not talking Yankees. They're trying to
Speaker 1: explain to each other, Mike, what is bitcoin? And no
Speaker 1: one knows, by the way, and why it's going higher?
Speaker 1: No one knows, by the way, but they're all buying it.
Speaker 1: So that you know that has to be you need
Speaker 1: to call in sometimes. I know I'm gonna I'm gonna
Speaker 1: have Mike call in because they're just dying for some information. Mike. Um,
Speaker 1: let's talk crude oil here. Um, You've got this, no doubt.
Speaker 1: And for those listening, Mike has by far, no question
Speaker 1: the best charts at Bloomberg Intelligences. Charts are so much detail,
Speaker 1: you can spend hours just looking at them. You've got
Speaker 1: a great chart where you're talking about more of a
Speaker 1: permanent bear market for crude. What's what's what's your basis there? Well,
Speaker 1: thank you for that, boy. I missed working with you
Speaker 1: and b I, but I do enjoy conversing with you
Speaker 1: on the radio, UM and on TV and the key
Speaker 1: point about crude oils. It's a bear market that's come
Speaker 1: back to good resistance and fundamentals remain parish. So that
Speaker 1: to me is the key thing that makes me look
Speaker 1: very fearful. That w t I around forty is more
Speaker 1: likely to go to thirty than the fifties. The key
Speaker 1: thing is just got back to this fifty two weeks
Speaker 1: moving average, which is heading lower for the first time
Speaker 1: since January. We see what's having in covid Opec has
Speaker 1: a meeting coming up and they have to sustain cuts,
Speaker 1: yet they need money. It's getting really bad. So it's
Speaker 1: almost a perfect storm for the bear market to simply
Speaker 1: continue and resume. And the key thing, it's highly correlated
Speaker 1: with bond yields. So a lot of people am looking
Speaker 1: for steeping in curve higher bond yields. And I like
Speaker 1: to say, is good luck with that one. If crude
Speaker 1: oil takes the next leg lower and it's you know,
Speaker 1: it's enduring bear market, right, We that the effort, let's say,
Speaker 1: at a solid a few dollars of a game, but
Speaker 1: or back down ninety cents today was still about forty
Speaker 1: barrolable flirting with that level. So is there a catalyst
Speaker 1: that sends it much lower or matire more the same.
Speaker 1: That's the problem. It needs more cuts. It needs to
Speaker 1: reduce supply, which is indicative of the biggest problem in
Speaker 1: crude oil, rapid lead vancing technology, demographic ships, and now
Speaker 1: we have COVID. Supply is just supply is very much
Speaker 1: just waiting to come on and elastic, and demand is
Speaker 1: just no more, no longer elastic like it was in
Speaker 1: our you ten twenty years ago. Hey, Mike, we just
Speaker 1: had a guest on an analyst talking about some of
Speaker 1: the agricultural companies talking about some of the consumer products
Speaker 1: companies under a Biden administration. If I'm a farmer, you
Speaker 1: know what am I thinking? You're saying, yeah, thank you.
Speaker 1: The end is over for Trump, for the Trump bottom. Now,
Speaker 1: the good news is President Trump wrote checks to farmers.
Speaker 1: They enjoyed that, But that just increased production. That's the
Speaker 1: world's worst way to end the market. So I think
Speaker 1: we're gonna look back and at the Trump administration is
Speaker 1: the enduring low in grain prices as we used to
Speaker 1: look back at two thousand twelves in during high because
Speaker 1: what we have going forward is a potential week dollar.
Speaker 1: The trade war of China over exports picking up, and
Speaker 1: they they used to say in commanities, the cure for
Speaker 1: low prices is low prices. That's really kicking in. So
Speaker 1: the key thing I'm watching is corn looks like it's
Speaker 1: finally staying above four. It looks like it's heading closer
Speaker 1: to five or six, and four dours should now be
Speaker 1: which was resistance for five years and during the Trump administration,
Speaker 1: should probably become support. Mike, a quick word on things
Speaker 1: like soy wheat, all those commodities that sort of trade
Speaker 1: outside the country as well as inside. Yes, a key
Speaker 1: derivative and demand indicator for prices is US exports because
Speaker 1: soybeans and corn and wheat, the primary most liquid futures
Speaker 1: in the world are based on US products that are
Speaker 1: exported and then delivered and traded in the U S. So,
Speaker 1: US exports of kick and picking up, for instance, soybeans,
Speaker 1: and we just went past the fifty threshold of production
Speaker 1: and that should contin in you, particularly if we have
Speaker 1: a weaker dollar. Mike mclogan, thank you so much for
Speaker 1: joining us. Always learned so much about the commodity space.
Speaker 1: Mike mcloge covers all commodities. He's a strategist there for
Speaker 1: Bloomberg Intelligence, and he's probably the only one in the
Speaker 1: Bloomberg building that understands bitcoin, and he's explained it to
Speaker 1: us a million times. But I am not. I am not.
Speaker 1: But when I hear sports, uh, you know, guys on
Speaker 1: radio talking about bitcoin, it it just kind of gets
Speaker 1: me a little bit nervous. But maybe they know something, uh,
Speaker 1: that we don't know. Mike's been on top of that
Speaker 1: bitcoin story from day one, so it's really fascinating. And
Speaker 1: you take a look at that chart and it is
Speaker 1: a good looking chart for bitcoin, but uh, I think
Speaker 1: I'll stick to stocks and bonds and some of those
Speaker 1: them were boring instruments. Thanks for listening to Bloomberg Markets podcast.
Speaker 1: You can subscribe and listen to interviews at Apple Podcasts
Speaker 1: or whatever a podcast platform you prefer. I'm Bonnie Quinn.
Speaker 1: I'm on Twitter at Bonny Quinn, and I'm Paul Sweeney.
Speaker 1: I'm on Twitter at pt Sweeney. Before the podcast, you
Speaker 1: can always catch us worldwide at Brig Radio. H m hmmm.