WEBVTT - Globe Braces For Trump Tariffs; Oil Outlook For 2025 0:00:02.400 --> 0:00:06.720 Bloomberg Audio Studios, podcasts, radio news. 0:00:08.200 --> 0:00:12.080 You're listening to the Bloomberg Intelligence Podcast. Catch us live 0:00:12.160 --> 0:00:15.240 weekdays at ten am Eastern on Apple card playing Android 0:00:15.280 --> 0:00:18.400 Auto with the Bloomberg Business App. Listen on demand wherever 0:00:18.440 --> 0:00:22.280 you get your podcasts, or watch us live on YouTube. 0:00:23.120 --> 0:00:26.800 Katerina Simonetti, She's at Morgan Stanley Private Wealth Management. She's 0:00:26.840 --> 0:00:31.000 a private wealth advisor over there. Katerina, again, I'd love 0:00:31.040 --> 0:00:34.199 to hear kind of the conversations you're having with your 0:00:34.200 --> 0:00:36.520 clients as you can close out a pretty successful twenty 0:00:36.560 --> 0:00:39.160 twenty four and think about next year. What do you guys, 0:00:39.159 --> 0:00:41.000 how are you talking to your clients these days? 0:00:41.720 --> 0:00:44.199 Well, Paulin and Caroline, thank you for having me on 0:00:44.240 --> 0:00:48.520 the show. This is a really important conversation because it's 0:00:48.520 --> 0:00:52.200 not lost on clients that we've had double digit returns 0:00:52.200 --> 0:00:54.720 for two years in a row, and it is only 0:00:55.200 --> 0:01:00.440 reasonable to expect that the returns in twenty five are 0:01:00.480 --> 0:01:03.640 going to be somewhat subdued. So clients are concerned the 0:01:03.720 --> 0:01:06.920 questions that we're having about how to capture returns in 0:01:07.000 --> 0:01:10.800 the portfolios, how to maximize the income and the portfolios, 0:01:10.840 --> 0:01:14.600 and most importantly, risk management in the upcoming volatility, and 0:01:14.920 --> 0:01:18.600 to be fair, our expectations for the year are not dim. 0:01:18.760 --> 0:01:22.640 We think a lot of emphasis are on FED and 0:01:22.720 --> 0:01:25.319 inflation and how all the other factors are going to 0:01:25.360 --> 0:01:28.839 play out. But when it comes to the practical things 0:01:28.880 --> 0:01:32.319 that we do before the year end, rebalancing the portfolio 0:01:32.319 --> 0:01:36.400 and achieving maximum portfolio diversification in stocks, bonds, real assets, 0:01:36.440 --> 0:01:38.720 and private investments is the absolute key. 0:01:39.600 --> 0:01:43.000 So, Katerina, I mean again, a lot of folks are standpoint. 0:01:43.560 --> 0:01:45.560 You can you have a third year of performance in 0:01:45.560 --> 0:01:47.480 the equity markets and to the extent you're going to 0:01:47.480 --> 0:01:49.000 be a little bit more cautious. Well, you can look 0:01:49.000 --> 0:01:51.760 at the fixed income market. How do you think about 0:01:51.760 --> 0:01:53.320 the fixed income trade? Do I sit there in a 0:01:53.320 --> 0:01:56.720 two year treasury and get you four point three percent 0:01:56.800 --> 0:01:58.680 from the US government or door it take some credit risk. 0:02:00.480 --> 0:02:02.960 If we are expecting then FED is not going to 0:02:03.000 --> 0:02:06.400 have quite as many rate cuts as originally expected. It's 0:02:06.440 --> 0:02:08.960 not necessarily the absolutely worst thing in the world for 0:02:09.080 --> 0:02:12.200 fixed income investors. Number one, we're going to get higher 0:02:12.240 --> 0:02:14.800 yields of cash for a little bit longer than expected. 0:02:15.120 --> 0:02:17.880 And two, if we don't think about fixed income as 0:02:17.960 --> 0:02:20.560 per se a trade but as a whold and as 0:02:20.560 --> 0:02:24.440 an asset that delivers that consistent income and risk management 0:02:24.480 --> 0:02:27.359 because on the risk adjusted basis going into twenty. 0:02:27.040 --> 0:02:30.079 Five, we prefer bonds or stocks. 0:02:29.800 --> 0:02:32.760 We think it's going to generate yield, but quality very 0:02:32.840 --> 0:02:35.720 much so within bonds as well as stocks is going 0:02:35.760 --> 0:02:37.079 to be the name of the game for. 0:02:37.120 --> 0:02:38.000 Twenty five. 0:02:39.480 --> 0:02:44.480 Volatility because there's so much well lack of clarity as 0:02:44.520 --> 0:02:47.320 it currently stands, Katerina, just take us through the thought 0:02:47.320 --> 0:02:50.120 process over at Morgan Stanley Private Wealth more broadly as 0:02:50.120 --> 0:02:52.560 to whether or not the FED will cut more than 0:02:52.600 --> 0:02:55.880 two times. What sort of realistic infrationary pressure will we 0:02:55.919 --> 0:02:58.240 get from the talked about tariffs that I yet to 0:02:58.240 --> 0:02:59.320 be imposed. 0:03:00.400 --> 0:03:01.760 Caroline, where do I start? 0:03:02.240 --> 0:03:07.240 Uncertainty about the Fed, uncertainty about inflation, uncertainty about the 0:03:07.320 --> 0:03:11.120 teriffs and immigration. As all these headlines are going to 0:03:11.160 --> 0:03:14.800 start coming out in early twenty five, all of this 0:03:15.200 --> 0:03:18.320 is going to play a role, and so our expectations 0:03:18.320 --> 0:03:21.440 for the early half of the year come with the 0:03:21.480 --> 0:03:24.640 expectation of the higher volatility, and last couple of weeks 0:03:24.639 --> 0:03:27.680 gave us a bit of a taste of what's to come. Now, 0:03:27.919 --> 0:03:31.240 tell investors not to chase rallies. And this is the 0:03:31.280 --> 0:03:34.040 other side of this coin where we have to prepare 0:03:34.280 --> 0:03:37.040 and stay calm and make sure that we have high 0:03:37.120 --> 0:03:41.600 quality portfolios, focus on sectors that generate yield, Focus on 0:03:41.680 --> 0:03:47.680 the areas like financials, industrials, materials, and make sure that 0:03:47.800 --> 0:03:50.800 we take some profits of the table and avoid higher 0:03:50.800 --> 0:03:55.119 concentrations in the portfolios. We've had some fantastic performance, this 0:03:55.160 --> 0:03:56.720 is the time to take some games. 0:03:58.080 --> 0:04:00.760 But the problem is you had fun state performance in 0:04:00.760 --> 0:04:03.920 twenty twenty three, and if you'd have that mindset around 0:04:03.920 --> 0:04:06.400 and in video or the Mac seven, then boy did 0:04:06.440 --> 0:04:08.800 you miss that rally of twenty twenty four videos up 0:04:08.840 --> 0:04:11.320 one hundred and eighty percent let's call it for the years. 0:04:11.400 --> 0:04:13.720 So how do you talk some of your clients out 0:04:13.720 --> 0:04:15.680 of that fomo feeling that a lot are going to 0:04:15.680 --> 0:04:17.479 be feeding all over again when it comes to countum 0:04:17.520 --> 0:04:18.360 an Ai. 0:04:19.400 --> 0:04:21.960 Carolin, It's only natural to feel this way, and I 0:04:22.000 --> 0:04:24.719 think that that what we have to ask is the 0:04:24.920 --> 0:04:28.960 are the valuations and profit expectations that are on the table, 0:04:29.200 --> 0:04:32.000 as well as the fact that FED has a lot 0:04:32.040 --> 0:04:34.120 of pressure on them. You know, when it comes to 0:04:34.160 --> 0:04:37.320 inflation in terms of cuts, are we going to get 0:04:37.360 --> 0:04:38.640 as many cuts as expected. 0:04:38.680 --> 0:04:40.680 That is the big question for us and for them. 0:04:40.920 --> 0:04:44.000 So when investors are looking at their holdings, of course 0:04:44.000 --> 0:04:46.200 it is natural not to be missing out on the 0:04:46.200 --> 0:04:50.320 continued growth. So we don't advise selling out of the 0:04:50.480 --> 0:04:54.760 entire position, but healthy profit taking and diversification into the 0:04:54.800 --> 0:04:57.559 other areas where a level the growth of that level 0:04:57.560 --> 0:05:00.640 didn't occur yet and where the possibility of future growth 0:05:00.800 --> 0:05:04.719 are significantly more substantial than they are in technology in 0:05:04.800 --> 0:05:08.840 some of these areas that achieved remarkable growth in both 0:05:08.880 --> 0:05:10.640 twenty four and twenty three. 0:05:11.000 --> 0:05:14.360 Ketterine, how do you talk to your clients about alternative investments? 0:05:14.400 --> 0:05:17.960 Something in private equity, private credit, hedge funds, because when 0:05:17.960 --> 0:05:21.840 I speak to rias, I'm really surprised that the high 0:05:21.880 --> 0:05:24.240 percentages they allocate to alternatives. 0:05:24.240 --> 0:05:25.960 How do you guys more instantly think about it. 0:05:27.040 --> 0:05:29.920 Well, in the time where investors are so concerned about 0:05:29.960 --> 0:05:33.960 the risk and politility and protecting the values of their portfolio, 0:05:34.520 --> 0:05:38.000 having the asset us that could hedge risk in the 0:05:38.000 --> 0:05:41.400 equity side of the equation, it's extremely valuable. Now it 0:05:41.440 --> 0:05:44.360 comes with the cost, and that cost is liquidity. So 0:05:44.480 --> 0:05:47.400 investors that are comfortable with giving up some of the 0:05:47.440 --> 0:05:51.919 liquidity in their portfolios. Are perfectly fine using the alternative 0:05:51.920 --> 0:05:56.000 investments because it has huge value with making sure that 0:05:56.080 --> 0:05:59.719 we achieve consistent risk adjusted return. But with that, it's 0:05:59.800 --> 0:06:02.919 just the piece of the puzzle where fixed income delivers income, 0:06:03.120 --> 0:06:07.360 equities deliver growth, cash delivers liquidity, and alternative investments are 0:06:07.360 --> 0:06:09.040 extremely effective in risk management. 0:06:09.760 --> 0:06:11.600 We're going to have some changes to the tax policy. 0:06:11.640 --> 0:06:15.600 It seems like we'll see how that plays out. Then 0:06:15.600 --> 0:06:18.400 that kind of goes to the asset class of municipal bonds. 0:06:18.720 --> 0:06:21.400 I'm a big fan of municipal bonds. A triple tax 0:06:21.440 --> 0:06:24.240 free treatment is I think a good and wonderful thing. 0:06:24.839 --> 0:06:28.080 How do you guys position municipals in a typical portfolio. 0:06:29.960 --> 0:06:30.880 Well, taxes are. 0:06:30.800 --> 0:06:34.440 A major concern and inflation is a concern as well. 0:06:34.480 --> 0:06:38.240 But when investors are looking at their portfolios and analyzing 0:06:38.279 --> 0:06:41.880 the after tax income and after tax performance that they're receiving, 0:06:42.200 --> 0:06:45.119 tax efficiency is something that is a part of every 0:06:45.120 --> 0:06:48.200 single conversation that we're having with clients, and this is 0:06:48.200 --> 0:06:50.400 where municipal bonds come into play. 0:06:50.720 --> 0:06:52.479 Now, with municipal bonds. 0:06:52.240 --> 0:06:55.200 You have to make sure that the tax equivalent rate 0:06:55.240 --> 0:06:58.840 of return that we're getting on muni bonds is actually 0:06:59.120 --> 0:07:03.280 as good or better that return that we can achieve 0:07:03.440 --> 0:07:08.039 in corporate fixed income, because there are some amazing buying opportunities. 0:07:07.920 --> 0:07:08.839 On that side. 0:07:09.440 --> 0:07:13.400 But investors certainly like having that tax free cash flow 0:07:14.480 --> 0:07:16.680 in their portfolios, especially in retirement. 0:07:18.360 --> 0:07:22.520 Taxation clarity is something that perhaps the crypto world is 0:07:22.680 --> 0:07:27.000 potentially yearning for, girning for for twenty twenty five. How 0:07:27.000 --> 0:07:29.960 have you thought about crypto and that particular area of 0:07:30.440 --> 0:07:33.880 potential investment alternative investment for the twenty twenty four into 0:07:33.880 --> 0:07:35.560 twenty twenty five, Katrina. 0:07:36.160 --> 0:07:39.080 Well, Caroline, when you think about the development of crypto world, 0:07:39.080 --> 0:07:41.520 where it turned from something that we don't mention or 0:07:41.560 --> 0:07:44.120 talk about into something that was, you know, the most 0:07:44.160 --> 0:07:47.040 exciting part of the portfolios than the most volatile part 0:07:47.040 --> 0:07:51.760 of the portfolios. And now we're seeing more over a 0:07:51.880 --> 0:07:57.440 legitimization or the use of crypto in the normal portfolios, 0:07:57.480 --> 0:08:01.120 you know, with the availability of ETFs, with people feeling more 0:08:01.160 --> 0:08:04.160 comfortable investing in this type of investments, but they can't 0:08:04.240 --> 0:08:07.840 lose track of the fact that the volatility still remains 0:08:07.960 --> 0:08:11.360 extremely high. So the positioning in the portfolio has to 0:08:11.400 --> 0:08:14.640 be extremely careful, and investors that are relying on the 0:08:14.680 --> 0:08:17.720 crypt for liquidity certainly has to have that in mind 0:08:17.800 --> 0:08:20.840 because the volatility in equity markets at high is high, 0:08:20.840 --> 0:08:25.760 but our expectations for volatility in the crypto world is 0:08:25.800 --> 0:08:26.960 significantly higher than that. 0:08:28.920 --> 0:08:31.080 Meanwhile, though, going back to the equity markets, where there 0:08:31.120 --> 0:08:35.439 still govies of volatility, I'm interested in your overweights industrials, utilities, 0:08:35.480 --> 0:08:39.040 and software, and actually that software shift from hardware to software, 0:08:39.080 --> 0:08:42.960 from chips into a paneteer or to a software application 0:08:43.000 --> 0:08:44.920 and generative AI has been a theme we've been hearing, 0:08:44.960 --> 0:08:47.360 but talk a little bit more about the industrials and utilities. 0:08:47.360 --> 0:08:49.120 What drives that For twenty twenty five. 0:08:50.640 --> 0:08:53.600 Kurln, we're looking for a defensive place. We're looking for 0:08:53.960 --> 0:09:02.520 companies that are not just delivering attractive earnings outlook, which 0:09:02.559 --> 0:09:04.640 is something that we see across the board and of 0:09:04.640 --> 0:09:07.160 course we'll be looking across the board for twenty five, 0:09:07.440 --> 0:09:11.160 but also that bring to the table attractive valuations. They 0:09:11.200 --> 0:09:15.080 didn't have that explosive growth that some of the sectors 0:09:15.120 --> 0:09:20.439 we're seeing. So that's where the industrials, that's where the materials, 0:09:20.480 --> 0:09:24.200 that's where consumer stables come in. We're looking for qualities 0:09:24.200 --> 0:09:27.480 and also for companies that are in position to make money, 0:09:27.520 --> 0:09:29.000 to be profitable in twenty five. 0:09:29.360 --> 0:09:31.560 All right, Katerina, thank you so much for joining us. 0:09:31.559 --> 0:09:34.160 Always appreciate getting some of your time and your thoughts 0:09:34.240 --> 0:09:38.680 on these markets. Category to Seminetti, you're listening to the 0:09:38.720 --> 0:09:40.680 Bloomberg Intelligence Podcast. 0:09:40.920 --> 0:09:44.160 Catch us live weekdays at ten am Eastern on applecar 0:09:44.320 --> 0:09:47.280 Play and Android Auto with the Bloomberg Business app. You 0:09:47.320 --> 0:09:50.560 can also listen live on Amazon Alexa from our flagship 0:09:50.640 --> 0:09:53.000 New York station, Just say Alexa Play. 0:09:53.160 --> 0:09:54.719 Bloomberg eleven thirty. 0:09:55.840 --> 0:09:58.280 Coming up early for us from la Is John Gilson, 0:09:58.320 --> 0:10:01.040 who is one of the authors behind in today's Big Take, 0:10:01.120 --> 0:10:04.640 how Trump tariff threats are already roiling global trade. You 0:10:04.720 --> 0:10:07.960 go into this deep diet of individual companies, how they're 0:10:07.960 --> 0:10:12.200 already having to have a surge of shipments from Germany, 0:10:12.240 --> 0:10:15.280 whether it's wriestling wine or whether it's the latest maker 0:10:15.559 --> 0:10:19.079 of wires and technology from the US in California. How 0:10:19.120 --> 0:10:21.400 are they trying to front runs some of the tariffs 0:10:21.440 --> 0:10:24.160 that we're expecting, John Well. 0:10:24.000 --> 0:10:28.439 Exactly, there's been a record number of containers running through 0:10:28.440 --> 0:10:30.760 the ports of la and Long Beach the biggest North 0:10:30.800 --> 0:10:35.079 American ports just in the last couple months. Because people 0:10:35.120 --> 0:10:37.160 are trying to get ahead of this, but at the 0:10:37.200 --> 0:10:41.199 same time they're balancing, like, we don't want to overorder 0:10:41.600 --> 0:10:44.880 in the case of there's a company that has EarPods 0:10:44.920 --> 0:10:49.040 that they supply, not Apple ones. But their concern is 0:10:49.240 --> 0:10:52.240 technology changes very fast. If we order too much ahead 0:10:52.240 --> 0:10:54.640 of time, we'll be stuck with all this inventory that 0:10:54.960 --> 0:10:57.560 people won't want to buy. So they're trying to balance 0:10:57.600 --> 0:11:00.559 all these things. Get it in while prices are cheap, 0:11:00.720 --> 0:11:04.280 beat the tariffs. At the same time, don't overorder. There 0:11:04.280 --> 0:11:07.640 are also higher costs if you rush to get stuff 0:11:07.679 --> 0:11:10.160 in because free costs have gone up a lot. 0:11:11.120 --> 0:11:14.520 So John, it's interesting, we don't even know what's going 0:11:14.559 --> 0:11:17.400 to get be subject to tariffs, how much any of that, 0:11:17.480 --> 0:11:20.960 But it appears that companies just aren't waiting, are they. 0:11:21.000 --> 0:11:23.840 They're trying to just get ahead of this anyway they can. 0:11:24.480 --> 0:11:25.920 I mean, it's just extraordinary. 0:11:26.600 --> 0:11:28.240 Well, yeah, they're trying to figure out what to do. 0:11:28.280 --> 0:11:31.280 Because the other concern is people thought, well, let's have 0:11:31.360 --> 0:11:35.960 stuff imported via Mexico assembled in Mexico, and that way 0:11:36.000 --> 0:11:39.160 we could get around the sort of Chinese content. 0:11:39.280 --> 0:11:40.440 Rules on tariffs. 0:11:40.640 --> 0:11:43.959 But now recently Trump said, well, we want to impose 0:11:44.040 --> 0:11:47.720 tariffs on Mexico and Canada because we're concerned that they're letting, 0:11:47.760 --> 0:11:50.240 you know, bad guys and fentanyl into the US. 0:11:52.440 --> 0:11:55.160 Look, well, we're looking at a market that is carneadis 0:11:55.200 --> 0:11:57.440 some significant setting pressure today or off by more than 0:11:57.440 --> 0:11:59.439 two percent, and then ask that one hundred. Is there 0:11:59.440 --> 0:12:02.199 a flavor of which industries are bracing themselves the most, 0:12:02.240 --> 0:12:04.520 Like I'm remporting all year on the chip sector and 0:12:04.559 --> 0:12:07.280 how they've had to be navigating the China US relationship. 0:12:07.280 --> 0:12:12.440 But you've already mentioned wine technology. This is so broad 0:12:12.440 --> 0:12:16.040 in its remit auto's whoever are we seeing the most 0:12:16.080 --> 0:12:17.239 anxiety build. 0:12:18.040 --> 0:12:19.520 Well, I would say across the board. 0:12:19.559 --> 0:12:23.000 I mean clothing is another one you mentioned or didn't mention, 0:12:23.160 --> 0:12:27.800 But yeah, electronics, clothing, just about anything that's made overseas, 0:12:28.040 --> 0:12:30.120 which is most of the consumer goods that we have 0:12:30.160 --> 0:12:33.000 in the US. Lawn furniture, I mean, it's not something 0:12:33.000 --> 0:12:34.880 that I go, oh my god, I won't be able 0:12:34.880 --> 0:12:37.839 to live without lawn furniture. But at the same time, 0:12:38.400 --> 0:12:42.120 there are a lot of knock on effects. As Secretary 0:12:42.160 --> 0:12:46.480 Yellen was talking about it'll cost more ultimately to consumers, 0:12:46.559 --> 0:12:48.760 and we're not sure whether that's good for the economy 0:12:48.840 --> 0:12:49.200 or bad. 0:12:49.720 --> 0:12:52.760 You've got a great graphics here, like it may take stories, folks, 0:12:52.760 --> 0:12:57.120 they're deeply sourced, deeply reported, and they've got great graphics, 0:12:57.520 --> 0:12:58.240 which makes it. 0:12:58.240 --> 0:13:01.719 Just come alive. Tariff talk abounds companies. 0:13:02.000 --> 0:13:05.120 You guys tracked how much companies talk about tariffs on 0:13:05.160 --> 0:13:08.440 our conference calls, and holy cow, itch spiked in November 0:13:08.480 --> 0:13:10.640 and December this year. So this is this is on 0:13:10.720 --> 0:13:13.040 the top of minds of corporate executives, isn't it. 0:13:14.080 --> 0:13:15.040 That's right exactly. 0:13:15.080 --> 0:13:20.120 I mean, we have ways of searching texts of calls 0:13:20.120 --> 0:13:22.040 all over the place and we use that as a tool. 0:13:22.080 --> 0:13:25.920 It's like, yes, CEOs say that's a big issue for 0:13:25.960 --> 0:13:28.120 them going into twenty twenty five. 0:13:29.320 --> 0:13:30.320 And it's uncertain too. 0:13:30.400 --> 0:13:32.200 I mean, that's part of the deal, is we don't 0:13:32.320 --> 0:13:35.640 know what's actually going to happen because Trump has talked 0:13:35.640 --> 0:13:37.240 a lot, but he's not president yet. 0:13:38.400 --> 0:13:41.480 And that must be the frustration that ultimately a lot 0:13:41.480 --> 0:13:44.280 of these business leaders know that they're having to drive 0:13:44.360 --> 0:13:47.719 up costs, perhaps unnecessarily, but they've just got to make 0:13:47.720 --> 0:13:49.760 a call. They've got to decide whether they're going to 0:13:49.760 --> 0:13:52.520 front run something that's hypothetical in nature. Do we know 0:13:52.559 --> 0:13:54.120 how much is driving up costs? 0:13:54.760 --> 0:13:57.240 Well, we don't know yet, I mean there and we 0:13:57.280 --> 0:13:59.520 don't know how much they're going to pass on. There 0:14:00.080 --> 0:14:03.400 are higher costs for shipping right now, and a lot 0:14:03.400 --> 0:14:07.240 of people are using air freight instead of using ships 0:14:07.280 --> 0:14:11.880 because they want to get it here earlier. There's stuff 0:14:11.920 --> 0:14:14.160 that if you order it early, you have to put 0:14:14.160 --> 0:14:17.120 it in a warehouse before you put it in stores, 0:14:17.200 --> 0:14:20.440 so that could be an extra cost too. And then 0:14:20.520 --> 0:14:22.360 we don't know what other kind of tariffs will be 0:14:22.400 --> 0:14:25.560 added on, so it's very hard to know how much 0:14:26.480 --> 0:14:30.040 each unit is going to cost. How much the people 0:14:30.040 --> 0:14:32.920 who are processing or passing on those units are going 0:14:32.960 --> 0:14:36.360 to pass on to consumers too, because you don't want 0:14:36.360 --> 0:14:36.880 to raise your. 0:14:36.760 --> 0:14:37.760 Prices too fast. 0:14:38.080 --> 0:14:41.000 And then there are in the case of the German 0:14:41.040 --> 0:14:43.800 wine maker, maybe they're just going to export to Scandinavia 0:14:43.840 --> 0:14:46.600 instead of the US because I think I can make 0:14:46.640 --> 0:14:50.960 money in Scandinavia. They're not a major exporter of wine. 0:14:51.720 --> 0:14:54.240 Some of their competitors, though, they can't do without the US. 0:14:54.560 --> 0:14:56.240 I mean, this is no joke here. 0:14:56.280 --> 0:15:00.240 I mean, you have some research from Oxford Economics where 0:15:00.280 --> 0:15:01.840 I think they pulled executives. 0:15:01.920 --> 0:15:03.760 What are the biggest worries you have over the next 0:15:03.760 --> 0:15:04.120 two years. 0:15:04.200 --> 0:15:08.120 We're talking Eurozone crisis, China, Taiwan, I mean, big, big issues, 0:15:08.160 --> 0:15:08.760 the Middle East. 0:15:09.240 --> 0:15:10.640 By far, the. 0:15:10.600 --> 0:15:14.000 Biggest one is the global trade war. So this is 0:15:14.040 --> 0:15:18.320 on top of mind just about everybody out there, that's right. 0:15:18.440 --> 0:15:22.320 Yeah, And as Secretary Yellen said in the previous segment, 0:15:22.600 --> 0:15:24.840 we don't know what kind of retaliation is going to happen. 0:15:25.480 --> 0:15:30.680 They're talking about using a very blunt instrument across the board, tariffs, 0:15:31.520 --> 0:15:36.480 and so people will retaliate, and yeah, people will stop paying. 0:15:37.240 --> 0:15:40.520 We all know consumers are very unhappy about inflation. Now, 0:15:40.560 --> 0:15:42.760 we don't know what effect hires tariffs are going to 0:15:42.800 --> 0:15:45.640 have on inflation, but generally it raises the cost of 0:15:45.720 --> 0:15:48.320 imported goods if you put tariffs on them. 0:15:48.360 --> 0:15:52.360 All right, John Great Reporting John Gittilson, Bloomberg LA Bureau chief, 0:15:52.360 --> 0:15:55.520 one of the contributors to the Big Take story. Check 0:15:55.560 --> 0:15:58.200 out the Big Take stories on the terminal. They are 0:15:58.240 --> 0:16:01.920 fantastic reporting every single You can go to Bloomberg dot 0:16:01.920 --> 0:16:05.520 com slash Big Take find them online as well. 0:16:06.880 --> 0:16:10.800 You're listening to the Bloomberg Intelligence Podcast. Catch us live 0:16:10.880 --> 0:16:13.920 weekdays at ten am Eastern on Apple, Cardplay and Android 0:16:13.960 --> 0:16:17.080 Otto with the Bloomberg Business app listener on demand wherever 0:16:17.120 --> 0:16:20.320 you get your podcasts, or watch us live on YouTube. 0:16:21.800 --> 0:16:24.400 Let's just dig into the geopolitical persuasion a little bit 0:16:24.400 --> 0:16:26.560 more and indeed what the outlook for some of these 0:16:26.640 --> 0:16:29.320 energy markets is going into twenty twenty five. Perfect personally 0:16:29.400 --> 0:16:31.680 that Ellen Wold is with US, senior fellow at the 0:16:31.720 --> 0:16:33.239 Atlantic Council and author. 0:16:33.000 --> 0:16:34.080 Of Saudi Inc. 0:16:34.480 --> 0:16:37.160 The Arabian Kingdoms Pursuit of Profit and Power. I am 0:16:37.280 --> 0:16:39.760 so interested in your take of what the next administration 0:16:39.920 --> 0:16:43.600 means for the relationship with Saudi, with Israel and going forward. 0:16:43.600 --> 0:16:46.960 But just taking on where Natalia was bringing us the 0:16:47.000 --> 0:16:51.240 supply demand dynamics around oil and just how important is 0:16:51.280 --> 0:16:52.400 OPEK at this moment. 0:16:53.240 --> 0:16:55.960 So I think OPEK is actually playing a fairly critical 0:16:56.080 --> 0:16:59.520 role right now because they're keeping a fair amount of 0:16:59.520 --> 0:17:04.280 oil off the market and they're really enabling the US 0:17:04.359 --> 0:17:07.639 to have a role for its oil space, for its 0:17:07.680 --> 0:17:11.480 oil market to grow. If, for example, OPEK were to decide, hey, 0:17:12.000 --> 0:17:14.520 all bets are off, we're going to just open the taps. 0:17:14.560 --> 0:17:16.760 Forget about all these cuts. We're just going to put 0:17:16.800 --> 0:17:19.720 all of our production capacity back on the market. They 0:17:19.720 --> 0:17:22.720 have the ability to tank prices. I think they don't 0:17:22.720 --> 0:17:26.639 want to do that right now. But a lot in 0:17:26.680 --> 0:17:29.600 terms of the oil market hinges on whether OPEK is 0:17:29.640 --> 0:17:32.359 going to move forward with its very gradual plans to 0:17:32.560 --> 0:17:34.240 put more of that oil back on the market, or 0:17:34.280 --> 0:17:37.000 whether they're going to continue to push it off. So 0:17:37.440 --> 0:17:40.720 I think that they're still very very relevant, just not 0:17:40.840 --> 0:17:42.560 in quite the same way as they were, say in 0:17:42.640 --> 0:17:43.720 the nineteen seventies. 0:17:44.040 --> 0:17:46.000 All right, Ellen, I have to fully disclose here. I 0:17:46.040 --> 0:17:48.920 am a big fan of the TV show Landman, so 0:17:48.960 --> 0:17:51.160 I now consider myself an expert. 0:17:50.800 --> 0:17:53.440 On oil and gas and all that kind of stuff. 0:17:53.480 --> 0:17:57.520 But talk to us about the US supply because that's 0:17:57.600 --> 0:18:01.880 really changed that dynamic in global oil and gas over 0:18:01.880 --> 0:18:04.879 the last ten years or so. Are those guys going 0:18:04.960 --> 0:18:07.480 to be drilling, baby drilling coming forward? 0:18:08.280 --> 0:18:11.959 Yeah, that is a great question, and you're definitely pushing 0:18:11.960 --> 0:18:15.480 me to start watching this show in my free time, 0:18:15.640 --> 0:18:20.080 so thank you for that. So I think that this 0:18:20.160 --> 0:18:23.320 is not the same oil market is in twenty sixteen 0:18:23.359 --> 0:18:26.399 and twenty eighteen this is a different shale patch. Back then, 0:18:26.440 --> 0:18:29.840 it really was a drill, baby, drill situation because we 0:18:29.960 --> 0:18:32.080 had lots of companies out there. It was kind of 0:18:32.080 --> 0:18:34.359 like the wild West in a little bit of a sense, 0:18:34.640 --> 0:18:37.119 and they just had to keep on drilling and drilling, 0:18:37.560 --> 0:18:41.560 even if they weren't, you know, breaking, even just because 0:18:41.560 --> 0:18:44.000 they needed to make payroll, they needed to get all 0:18:44.040 --> 0:18:46.199 that oil out there. They were being funded with the 0:18:46.240 --> 0:18:47.040 intent to just. 0:18:47.160 --> 0:18:49.920 Drill, drill, drill. That time is over. 0:18:50.160 --> 0:18:53.240 We're in a different, different oil market now, different different 0:18:53.240 --> 0:18:56.359 shale patch where we've got a lot of consolidation. We've 0:18:56.359 --> 0:18:59.600 got bigger, much bigger companies at the helm now, and 0:18:59.680 --> 0:19:03.400 they they're a lot better capitalized. They're much more focused 0:19:03.480 --> 0:19:09.400 on not necessarily just growth, but on returning value to shareholders. Coincidentally, 0:19:09.400 --> 0:19:12.200 we happen to be producing at the highest levels ever 0:19:12.320 --> 0:19:15.840 right now, but companies are also using a lot better techniques, 0:19:15.920 --> 0:19:19.120 a lot more sophisticated techniques to find oil, to get 0:19:19.119 --> 0:19:23.200 more oil out of each well. And so I think, yes, 0:19:23.480 --> 0:19:25.640 we still do have a lot of oil to get 0:19:25.680 --> 0:19:27.520 out of there. We're still going to be producing at 0:19:27.600 --> 0:19:31.400 fairly high levels. But that same mentality and the ability 0:19:31.440 --> 0:19:34.480 to kind of predict where we're going is not there now. 0:19:34.720 --> 0:19:37.240 It's really a different look now when it comes to 0:19:37.680 --> 0:19:40.280 the Trump administration and drill baby drill. I think that 0:19:40.480 --> 0:19:44.200 we're going to see that much more in the offshore 0:19:44.240 --> 0:19:47.320 oil space because that's really an area that has suffered 0:19:47.640 --> 0:19:52.439 greatly under the Biden administration's regulatory restrictions, and so I 0:19:52.440 --> 0:19:54.600 think we're going to see a lot more optimism there 0:19:54.640 --> 0:19:57.080 because that's an area where things take a lot more 0:19:57.119 --> 0:19:59.760 capital to get going. You need a lot more time, 0:20:00.240 --> 0:20:00.800 you've got to. 0:20:00.760 --> 0:20:01.840 Invest a lot more. 0:20:01.960 --> 0:20:04.159 But at the same time, those wealth can last a 0:20:04.160 --> 0:20:07.639 lot longer than what we're seeing in say the Permian 0:20:08.320 --> 0:20:11.040 and those areas. So I think they're really looking forward 0:20:11.080 --> 0:20:13.639 to a Trump administration to help them get the leases 0:20:13.680 --> 0:20:16.439 they need, get the permits they need to start drilling. 0:20:16.640 --> 0:20:18.960 And I do think that is an area where we 0:20:19.000 --> 0:20:21.520 are going to see a more kind of drill baby 0:20:21.640 --> 0:20:23.080 drill outlook. 0:20:23.760 --> 0:20:27.560 And the outlook under the next administration. Of relationships with 0:20:27.640 --> 0:20:31.840 Saudi Arabia, of relationships with Israel, and normalization with the 0:20:31.880 --> 0:20:34.159 our world more broadly, how are you looking at that 0:20:34.280 --> 0:20:38.160 and what it means for your markets that you are well. 0:20:37.960 --> 0:20:41.280 I think that that's a really complicated area because I 0:20:41.280 --> 0:20:45.080 do think that the Trump administration is much more unabashed 0:20:45.119 --> 0:20:48.760 and its support for Israel, particularly in a military sense 0:20:49.119 --> 0:20:51.840 and in a diplomatic sense. So I think you're going 0:20:51.920 --> 0:20:55.359 to see a lot more very overt and very strong 0:20:55.440 --> 0:20:58.680 support for Israel. Does that necessarily mean that's going to 0:20:58.720 --> 0:21:00.760