1 00:00:00,600 --> 00:00:07,760 Speaker 1: Broadcasting live to New York Cloomberg eleventh, to Washington d 2 00:00:07,800 --> 00:00:11,719 Speaker 1: C Bloomberg nine one to Boston Bloomberg dwell liners to 3 00:00:11,880 --> 00:00:16,320 Speaker 1: San Francisco Bloomberg ninety to the Country Series XM Channel 4 00:00:16,400 --> 00:00:19,840 Speaker 1: one nineteen and around the globe the Bloomberg Radio Plus 5 00:00:19,840 --> 00:00:24,640 Speaker 1: Appen Bloomberg dot com. This is Broomberg Surveilance. Good morning. 6 00:00:24,640 --> 00:00:28,200 Speaker 1: I'm Karen Moscow along with Tom Keene and Michael meet McKee. 7 00:00:28,200 --> 00:00:29,840 Speaker 1: And that is the sound of the opening bell. It's 8 00:00:29,880 --> 00:00:33,600 Speaker 1: brought to you by SEI Imaginement Asset management servicing is 9 00:00:33,640 --> 00:00:37,760 Speaker 1: unconstrained by infrastructure. See how SC has global operating platform 10 00:00:37,800 --> 00:00:40,640 Speaker 1: can be your catalyst for a business expansion at se 11 00:00:40,680 --> 00:00:44,200 Speaker 1: i C dot com. Slash imagine stocks higher at the open. 12 00:00:44,240 --> 00:00:46,199 Speaker 1: The S and P five hundred up three tens per 13 00:00:46,200 --> 00:00:49,480 Speaker 1: cent or six points to night five down. Jones Industrial 14 00:00:49,479 --> 00:00:51,560 Speaker 1: average up three tens per cent or forty eight points 15 00:00:51,640 --> 00:00:54,640 Speaker 1: to seventeen thousand, eighteen, the NASTAC of four tens per 16 00:00:54,640 --> 00:00:57,560 Speaker 1: cent or eighteen points to forty six sixty seven ten. 17 00:00:57,600 --> 00:01:00,240 Speaker 1: Your treasury down thirteen thirty seconds. The yield one point 18 00:01:00,240 --> 00:01:02,600 Speaker 1: eight seven percent. Yield done a two year point eight 19 00:01:02,640 --> 00:01:05,920 Speaker 1: nine percent nimex s crude oil is up two percent 20 00:01:06,000 --> 00:01:09,320 Speaker 1: or seventy three cents to thirty two of arrel Gomex 21 00:01:09,440 --> 00:01:12,120 Speaker 1: goal down one point three percent or sixteen dollars ten 22 00:01:12,200 --> 00:01:16,280 Speaker 1: cents to the euro a dollar oh nine four eight 23 00:01:16,360 --> 00:01:19,639 Speaker 1: the n one twelve point eight three. Tom and Mike, Karen, 24 00:01:19,920 --> 00:01:24,679 Speaker 1: thanks so much. Karen, Like myself, we usually don't quote 25 00:01:25,200 --> 00:01:30,520 Speaker 1: nat gas, which is important because it is cratered with 26 00:01:30,600 --> 00:01:34,520 Speaker 1: a four day rebound here recently. But I rarely use 27 00:01:34,560 --> 00:01:38,800 Speaker 1: the word cratered, and yet it works for net gas. 28 00:01:38,840 --> 00:01:42,360 Speaker 1: I've begged our cracked team, Mike, what's our staff up to? 29 00:01:42,480 --> 00:01:48,640 Speaker 1: Like eight people? Three? It depends some of them. Some 30 00:01:48,680 --> 00:01:52,360 Speaker 1: of them are some of the voting. Yes, they're they're 31 00:01:52,400 --> 00:01:55,160 Speaker 1: they're old enough to vote. Um. Anyways, our cracked team 32 00:01:55,280 --> 00:01:58,760 Speaker 1: finally tracked him down. Stephen Shark joins us from the 33 00:01:58,800 --> 00:02:01,320 Speaker 1: Shark Report. Right. That's Steven, wonderful to have you on. 34 00:02:01,800 --> 00:02:06,080 Speaker 1: Why is oil up in that gas cell? Uh? That 35 00:02:06,280 --> 00:02:10,799 Speaker 1: gas is uh down? Because actually it's up. We're essentially 36 00:02:10,880 --> 00:02:13,639 Speaker 1: at a technical turning point. Guys. It is so cheap 37 00:02:13,880 --> 00:02:16,560 Speaker 1: at this point. I got down to about a dollar sixty, 38 00:02:17,000 --> 00:02:20,480 Speaker 1: which is what about ten dollars barrel oil equivalent. UH. 39 00:02:20,560 --> 00:02:23,920 Speaker 1: The reason for the bearish uh bearishness and gas, aside 40 00:02:23,960 --> 00:02:26,440 Speaker 1: from the little pop that we're getting now, is the 41 00:02:26,560 --> 00:02:29,519 Speaker 1: fact that the U. S. Industrial economy has been, continues 42 00:02:29,600 --> 00:02:32,840 Speaker 1: to be will be for the foreseeable future in a 43 00:02:32,919 --> 00:02:35,800 Speaker 1: steep recession. Keep in mind, I'm saying the industrial sector 44 00:02:35,840 --> 00:02:38,359 Speaker 1: of the economy. Hence why we've gotten the pull back. 45 00:02:38,840 --> 00:02:41,480 Speaker 1: So with natural gas, you're only other driver outside of 46 00:02:41,520 --> 00:02:45,040 Speaker 1: commercial industrial demand, which is at a post grade recession low, 47 00:02:45,080 --> 00:02:47,520 Speaker 1: by the way, is the weather. And of course now 48 00:02:47,600 --> 00:02:50,280 Speaker 1: we're in the shoulder months, we don't have gas furnace demand, 49 00:02:50,360 --> 00:02:52,200 Speaker 1: we don't have air conditioning demand, so we don't have 50 00:02:52,320 --> 00:02:55,720 Speaker 1: power demand on the residential side, so hence why we've 51 00:02:55,760 --> 00:02:58,600 Speaker 1: had such a precipitous drop. But the funny thing about 52 00:02:58,680 --> 00:03:02,880 Speaker 1: natural gas is it's the ultimate or the consummate contrarian play. 53 00:03:03,360 --> 00:03:05,840 Speaker 1: So we were weak throughout the winter, even if this 54 00:03:06,000 --> 00:03:08,799 Speaker 1: is a cold winter. On average, we see weakness in 55 00:03:08,880 --> 00:03:11,040 Speaker 1: gas prices during the winter, and then you tend to 56 00:03:11,080 --> 00:03:15,080 Speaker 1: see a countercyclical rebound in natural gas once we get 57 00:03:15,120 --> 00:03:17,160 Speaker 1: into the show of the months. So perhaps that's what 58 00:03:17,240 --> 00:03:20,400 Speaker 1: we're seeing right now at technical bounds, which could also 59 00:03:20,639 --> 00:03:23,160 Speaker 1: come into being a contrarian trade over the next month 60 00:03:23,240 --> 00:03:26,320 Speaker 1: two months. Now, with regard to oil, this is the 61 00:03:26,360 --> 00:03:29,760 Speaker 1: market that's not trading on fundamentals. We've had a significant 62 00:03:29,800 --> 00:03:32,400 Speaker 1: pop in oil prices over the last two weeks. But 63 00:03:32,639 --> 00:03:35,320 Speaker 1: I'm going to underscore this. This is nothing but a 64 00:03:35,920 --> 00:03:40,040 Speaker 1: major short squeeze rally. I'll give you for instance, as 65 00:03:40,120 --> 00:03:43,840 Speaker 1: of a week ago, according to the CFTC, both bullish 66 00:03:43,960 --> 00:03:49,080 Speaker 1: speculators and bearers speculators liquidated some of their positions going 67 00:03:49,160 --> 00:03:52,600 Speaker 1: into two Fridays ago. The difference is when the bulls 68 00:03:52,680 --> 00:03:56,680 Speaker 1: liquidated the position, they sold one contract. When the bears 69 00:03:56,760 --> 00:04:00,720 Speaker 1: liquidated the position they bought back eight two tracks. So 70 00:04:00,800 --> 00:04:03,960 Speaker 1: when you sell one contract and you buy ad two contracts, 71 00:04:04,120 --> 00:04:06,680 Speaker 1: guess what happens to price? And hence we are now 72 00:04:06,880 --> 00:04:11,120 Speaker 1: into this significant short squeeze. How long does it last? 73 00:04:12,280 --> 00:04:15,680 Speaker 1: It's a great question, Mike uh it could. Now what's 74 00:04:15,720 --> 00:04:19,680 Speaker 1: happened here is this rally is driven solely by a 75 00:04:19,760 --> 00:04:23,720 Speaker 1: liquidation by the bears. Now, what we've seen now over 76 00:04:23,760 --> 00:04:27,520 Speaker 1: the past week is open interest beginning to rise. So 77 00:04:28,160 --> 00:04:30,680 Speaker 1: if the rally to this point was driven by a 78 00:04:30,800 --> 00:04:35,360 Speaker 1: bear speculation, if open interest is indeed rising. That could 79 00:04:35,360 --> 00:04:38,760 Speaker 1: be a significant sign that money, bullish money is coming 80 00:04:38,880 --> 00:04:43,400 Speaker 1: into the markets. So this could prolong the rebound. So 81 00:04:44,279 --> 00:04:46,360 Speaker 1: how long. No one's going to be able to tell 82 00:04:46,400 --> 00:04:49,680 Speaker 1: you that. But certainly we're going through the We're going 83 00:04:49,760 --> 00:04:53,560 Speaker 1: through the turnaround season, the maintenance season, so we're buying 84 00:04:53,600 --> 00:04:57,080 Speaker 1: a lot fewer battles physical buyers because the refineries are 85 00:04:57,080 --> 00:04:59,160 Speaker 1: shutting down units for maintenance and to get ready for 86 00:04:59,240 --> 00:05:02,040 Speaker 1: the summer. So this is more or less a spec 87 00:05:02,279 --> 00:05:06,000 Speaker 1: driven rally. So this could happen until when until the 88 00:05:06,160 --> 00:05:08,520 Speaker 1: end of the turnaround season, when we bring the physical 89 00:05:08,600 --> 00:05:12,400 Speaker 1: buyers back into the market and some fundamentals are again 90 00:05:12,560 --> 00:05:17,440 Speaker 1: injected into this market. So roll of dice. This could 91 00:05:17,520 --> 00:05:20,160 Speaker 1: last a couple of more months, could last just another day. 92 00:05:20,279 --> 00:05:23,480 Speaker 1: It could be with yesterday's sella it could I've already 93 00:05:23,560 --> 00:05:26,360 Speaker 1: run its course. No one, unfortunately tell you that, right 94 00:05:26,400 --> 00:05:29,360 Speaker 1: And to be clear, you're not long oil because this 95 00:05:29,440 --> 00:05:33,480 Speaker 1: has been a raging debate. Uh Danzazuki with Francisco Blanche 96 00:05:33,520 --> 00:05:38,200 Speaker 1: at Maryland suggest prices to fifty and they've got fundamental enthusiasm. 97 00:05:38,839 --> 00:05:44,280 Speaker 1: Jeff de Graf, working technically, was ruthless today looking for 98 00:05:44,520 --> 00:05:48,279 Speaker 1: a retest of loads and even into the teens. Yeah, 99 00:05:48,520 --> 00:05:51,120 Speaker 1: I cannot make, guys, I cannot make the fundamental case. 100 00:05:51,200 --> 00:05:56,520 Speaker 1: I understand. Uh, there is the the inclination we're looking at. Um. Certainly, 101 00:05:56,600 --> 00:06:00,320 Speaker 1: prices are so cheap, but just because prices or cheap 102 00:06:00,360 --> 00:06:02,200 Speaker 1: doesn't mean that's not a reason to buy. They're they're 103 00:06:02,279 --> 00:06:04,560 Speaker 1: cheap for a really good reason. And that really good 104 00:06:04,600 --> 00:06:07,160 Speaker 1: reason is we are still producing a lot of oil, 105 00:06:07,320 --> 00:06:10,880 Speaker 1: not only here in North America. But what seems to 106 00:06:10,960 --> 00:06:13,760 Speaker 1: be have driven some of the speculative rally is that 107 00:06:13,839 --> 00:06:18,880 Speaker 1: this idiotic notion that somehow OPEC is going to come 108 00:06:18,920 --> 00:06:22,240 Speaker 1: to some sort of agreement on the production freeze. I'll 109 00:06:22,320 --> 00:06:25,720 Speaker 1: just point it to yesterday's ballistic missile test by Iran. 110 00:06:26,160 --> 00:06:28,720 Speaker 1: There is no way the Soony side of OPEC and 111 00:06:28,760 --> 00:06:30,200 Speaker 1: the s Is side of OPEC are going to come 112 00:06:30,240 --> 00:06:33,800 Speaker 1: to an agreement on production anytime in the foreseeable future. 113 00:06:34,160 --> 00:06:37,159 Speaker 1: So if you are buying oil on the assumption OPEC 114 00:06:37,279 --> 00:06:40,279 Speaker 1: is going to freeze production, good luck with that, because 115 00:06:40,400 --> 00:06:48,080 Speaker 1: that is not happening. But so far, we put a 116 00:06:48,120 --> 00:06:50,920 Speaker 1: floor under oil because people are thinking it it might 117 00:06:51,080 --> 00:06:54,560 Speaker 1: What what changes? What what do what happens to get 118 00:06:54,600 --> 00:06:58,440 Speaker 1: people to believe that you're correct. Um, well, at this point, 119 00:06:58,520 --> 00:07:01,000 Speaker 1: we've already got five and seven seen million barrels of 120 00:07:01,040 --> 00:07:04,120 Speaker 1: oil commercial stocks sitting there. That is at the highest 121 00:07:04,200 --> 00:07:06,760 Speaker 1: level since Babe Ruth was sitting home runs up there 122 00:07:06,800 --> 00:07:10,120 Speaker 1: in the Bronx. At this point, it's just going to 123 00:07:10,240 --> 00:07:13,280 Speaker 1: be a wait and see game. We have to let 124 00:07:13,360 --> 00:07:16,720 Speaker 1: this run its course. Uh, certainly once we get into 125 00:07:17,000 --> 00:07:20,680 Speaker 1: the demand season, Mike. So perhaps we're going to have 126 00:07:20,880 --> 00:07:23,200 Speaker 1: to wait until either the beginning of the summer or 127 00:07:23,320 --> 00:07:25,760 Speaker 1: the end of the summer, after we get through the 128 00:07:25,960 --> 00:07:29,440 Speaker 1: peak oil demand season gasoline season that is in July 129 00:07:29,560 --> 00:07:34,320 Speaker 1: and August. Then perhaps because if if you juxtapose today's 130 00:07:34,360 --> 00:07:37,520 Speaker 1: price bath in oil with last year's price bath in oil, 131 00:07:37,920 --> 00:07:41,680 Speaker 1: they're they're they're going in lockstep fashion. So in January 132 00:07:41,800 --> 00:07:47,200 Speaker 1: last oil bottomed out about forty rallied to sixty in May, 133 00:07:48,040 --> 00:07:50,320 Speaker 1: we went into the summer demand season, and by the 134 00:07:50,400 --> 00:07:52,440 Speaker 1: end of the summer demand season oil was at forty 135 00:07:52,480 --> 00:07:54,200 Speaker 1: dollars a barrel, and then of course at the beginning 136 00:07:54,200 --> 00:07:57,040 Speaker 1: of this year it dropped out to basically twenty a barrel. 137 00:07:57,400 --> 00:08:00,920 Speaker 1: So I could see that happening again, so Riley certainly 138 00:08:01,040 --> 00:08:04,840 Speaker 1: could continue into the summer, but certainly I'm not expecting 139 00:08:04,960 --> 00:08:09,040 Speaker 1: a significant pullback in production enough enough to compensate for 140 00:08:09,240 --> 00:08:12,680 Speaker 1: soft demand, and hence why I wouldn't be surprised if 141 00:08:12,760 --> 00:08:17,040 Speaker 1: this current lockstep again follows last year's very very quickly. 142 00:08:17,200 --> 00:08:20,120 Speaker 1: Here when we say we're up to our eyeballs and oil, 143 00:08:20,400 --> 00:08:24,400 Speaker 1: are we up to our eyeballs and natural gas? Absolutely? 144 00:08:24,640 --> 00:08:27,800 Speaker 1: And that's the bigger issue here because production is showing 145 00:08:27,960 --> 00:08:31,760 Speaker 1: no signs of any sort of significant cutback. So again, 146 00:08:31,840 --> 00:08:34,320 Speaker 1: as I said, you're only two drivers for natural gas 147 00:08:34,480 --> 00:08:37,079 Speaker 1: essentially are commercial and indust gril demand, which is a 148 00:08:37,160 --> 00:08:40,160 Speaker 1: new session, and then the weather. Now the difference is 149 00:08:40,280 --> 00:08:43,000 Speaker 1: here that natural gas. All it is going to take 150 00:08:43,280 --> 00:08:45,440 Speaker 1: to get natural gas back to three dollars a deck 151 00:08:45,480 --> 00:08:47,559 Speaker 1: of therm from where it is today at about a 152 00:08:47,640 --> 00:08:50,440 Speaker 1: dollar seventy a dec of therm. All it's going to take, guys, 153 00:08:50,600 --> 00:08:53,520 Speaker 1: is a really really hot summer. So if you get 154 00:08:53,640 --> 00:08:56,439 Speaker 1: a sweltering summer in Boston, it's got to be in 155 00:08:56,440 --> 00:08:58,880 Speaker 1: the northern latitudes also because it's always hot in the south, 156 00:08:59,200 --> 00:09:03,320 Speaker 1: So Boston, New York to swelter. If that happens, you'll 157 00:09:03,320 --> 00:09:07,520 Speaker 1: see a significant bounce in natural gas. Stephen Shark, we 158 00:09:07,600 --> 00:09:10,520 Speaker 1: will return Stephen Shark on oil, one of the great 159 00:09:10,600 --> 00:09:14,120 Speaker 1: debates at this moment, the market up forty five points. 160 00:09:17,600 --> 00:09:19,559 Speaker 1: Time down to bring in Michael bar for the latest 161 00:09:19,640 --> 00:09:22,360 Speaker 1: news headlines. Michael, by time, Thank you very much. Vice 162 00:09:22,400 --> 00:09:26,200 Speaker 1: President Joe Biden says we will act if Iran breaks 163 00:09:26,280 --> 00:09:29,720 Speaker 1: the nuclear deal. Biden is in Jerusalem today for meetings 164 00:09:29,760 --> 00:09:32,400 Speaker 1: with this really prim Minister Benjamin That to Yahoo. It 165 00:09:32,600 --> 00:09:36,040 Speaker 1: comes after Iran's news agency says the country fired two 166 00:09:36,080 --> 00:09:39,800 Speaker 1: ballistic missiles, but the phrase Israel must be wiped out 167 00:09:39,960 --> 00:09:44,359 Speaker 1: written in Hebrew on them. Biden says, US Israel relations 168 00:09:44,640 --> 00:09:48,719 Speaker 1: remain strong. It doesn't mean we don't disagree, but you 169 00:09:49,840 --> 00:09:53,240 Speaker 1: you never need to doubt that the United States America 170 00:09:53,360 --> 00:09:56,760 Speaker 1: has Israel's back, and we know Israel has our back 171 00:09:56,840 --> 00:09:59,280 Speaker 1: as well. It might add, it's not a one whish street. 172 00:09:59,559 --> 00:10:02,880 Speaker 1: Biden meet later today with Palestinian President Mark Muda bas 173 00:10:03,400 --> 00:10:07,080 Speaker 1: Democrats Hillary Clinton and Bernie Sanders will debate again tonight. 174 00:10:07,559 --> 00:10:11,000 Speaker 1: Clinton won the Mississippi primary yesterday, while Sanders near really 175 00:10:11,040 --> 00:10:14,559 Speaker 1: scored an upset win in Michigan. Donald Trump won Republican 176 00:10:14,640 --> 00:10:18,720 Speaker 1: contests in Michigan, Mississippi, and Hawaii, Ted Cruz One, Idaho. 177 00:10:19,360 --> 00:10:23,160 Speaker 1: He was the Beatles Other George Beatles manager George Martin, 178 00:10:23,200 --> 00:10:26,720 Speaker 1: has died. Martin produced some of the most influential Beatles albums, 179 00:10:31,800 --> 00:10:35,199 Speaker 1: including Sergeant Pepper's Lonely Hearts Club Band. George Martin was 180 00:10:35,320 --> 00:10:37,560 Speaker 1: ninety Global News twenty four hours a day, powered by 181 00:10:37,640 --> 00:10:41,040 Speaker 1: our journalists more than a hundred fifty news bureaus from 182 00:10:41,080 --> 00:10:45,360 Speaker 1: around the world. I'm Michael bar Tom. Extraordinary individual he was. 183 00:10:45,600 --> 00:10:49,080 Speaker 1: It is. It is just album after album of original 184 00:10:49,360 --> 00:10:51,199 Speaker 1: I don't think you've ever seen that again, Yeah, I 185 00:10:51,400 --> 00:10:56,240 Speaker 1: don't think so. Absolutely extraordinary, Sir George Martin. This is 186 00:10:56,280 --> 00:11:02,400 Speaker 1: Bloomberg Surveillance. Where was Steve Shark? Tom noted the weather. 187 00:11:02,880 --> 00:11:05,400 Speaker 1: It's going to be in the sixties all through next 188 00:11:05,480 --> 00:11:09,240 Speaker 1: week in New York. Stephen Shark next on what the 189 00:11:09,360 --> 00:11:12,000 Speaker 1: temperatures mean for the price of energy.