1
00:00:05,120 --> 00:00:09,200
Speaker 1: Welcome to the Bloomberg Surveillance Podcast. I'm Tom Keane along

2
00:00:09,240 --> 00:00:13,200
Speaker 1: with Jonathan Ferrell and Lisa Brownwitz Jailey. We bring you

3
00:00:13,320 --> 00:00:18,600
Speaker 1: insight from the best and economics, finance, investment, and international relations.

4
00:00:18,960 --> 00:00:23,840
Speaker 1: Find Bloomberg Surveillance on Apple Podcast, Suncloud, Bloomberg dot Com,

5
00:00:23,920 --> 00:00:29,960
Speaker 1: and of course on the Bloomberg terminal. Right now, to

6
00:00:30,000 --> 00:00:32,680
Speaker 1: this American economy, and she doesn't mince words about it.

7
00:00:32,760 --> 00:00:36,400
Speaker 1: She calls it transitory and fragile. Francis Donald joins us

8
00:00:36,600 --> 00:00:40,080
Speaker 1: with manual Life, exceptionally good at working out why equals

9
00:00:40,080 --> 00:00:43,920
Speaker 1: see plus I plus G plus whatever the export dynamic is.

10
00:00:44,840 --> 00:00:47,760
Speaker 1: How tough is it right now to gain Q four

11
00:00:47,800 --> 00:00:52,120
Speaker 1: and Q one of next year? Francis probably tougher than

12
00:00:52,159 --> 00:00:54,560
Speaker 1: it's been in many, many years. And that's because when

13
00:00:54,600 --> 00:00:57,760
Speaker 1: we look at two, it does look as though growth

14
00:00:57,800 --> 00:01:01,200
Speaker 1: and inflation are going to decelerate quite materially. But we

15
00:01:01,280 --> 00:01:04,280
Speaker 1: have to get there first. And over the next three

16
00:01:04,280 --> 00:01:07,479
Speaker 1: to four months, we're facing a host of uncertainties. How

17
00:01:07,560 --> 00:01:11,920
Speaker 1: steeple China's decline will be. Will we see policy miscommunications,

18
00:01:11,959 --> 00:01:14,400
Speaker 1: too much tightening from the FED and wind all those

19
00:01:14,400 --> 00:01:17,959
Speaker 1: supply chains on wine, and yet underlying the surface, all

20
00:01:18,000 --> 00:01:20,560
Speaker 1: of these risks seem a lot better priced than they

21
00:01:20,560 --> 00:01:23,600
Speaker 1: were even six months ago, and that's why we're struggling

22
00:01:23,680 --> 00:01:26,560
Speaker 1: here with the levels looking not so great, but the

23
00:01:26,600 --> 00:01:28,920
Speaker 1: expectations that are aligned to them, and that's why I

24
00:01:28,920 --> 00:01:30,679
Speaker 1: think we could actually get a bit of a reprieve

25
00:01:30,720 --> 00:01:33,120
Speaker 1: in this market sentiment in the next three to four

26
00:01:33,160 --> 00:01:36,760
Speaker 1: months until we hit a more difficult How do you

27
00:01:36,800 --> 00:01:42,920
Speaker 1: respond to the pendulum of stagflation, Well, stagflation. Of course,

28
00:01:42,959 --> 00:01:46,039
Speaker 1: we're not exactly in stagflation. But what became very clear

29
00:01:46,040 --> 00:01:47,560
Speaker 1: over the course of the summer is that we were

30
00:01:47,560 --> 00:01:50,800
Speaker 1: going to see upside surprises to inflation and downside surprises

31
00:01:50,840 --> 00:01:53,720
Speaker 1: to growth. The challenges that we have yet to see,

32
00:01:53,800 --> 00:01:56,080
Speaker 1: or we we didn't really see the narrative focusing on

33
00:01:56,120 --> 00:01:59,040
Speaker 1: the idea that high prices were actually far less about

34
00:01:59,040 --> 00:02:01,480
Speaker 1: inflation thing they were about what they were going to

35
00:02:01,520 --> 00:02:05,240
Speaker 1: do to demand side of the economy. Stagflationary pressures are

36
00:02:05,240 --> 00:02:08,120
Speaker 1: about how they slow growth, even though you might have

37
00:02:08,200 --> 00:02:11,560
Speaker 1: good underlying fundamentals underneath them. Some of the examples of

38
00:02:11,560 --> 00:02:15,240
Speaker 1: that is US housing prices are skyrocketing, but US housing

39
00:02:15,320 --> 00:02:17,840
Speaker 1: dragged on growth in the second quarter. We could be

40
00:02:17,880 --> 00:02:21,960
Speaker 1: seeing much stronger manufacturing activity, but we don't have sufficient supply.

41
00:02:22,080 --> 00:02:24,600
Speaker 1: And I think we've been too dismissive that just because

42
00:02:24,639 --> 00:02:27,160
Speaker 1: this downside risks are coming from the supply side, they

43
00:02:27,200 --> 00:02:30,720
Speaker 1: don't matter. They absolutely do, and they will continue to restrain.

44
00:02:31,000 --> 00:02:34,400
Speaker 1: Just how fast this reopening can really be. Francis, how

45
00:02:34,400 --> 00:02:38,200
Speaker 1: do they matter to this spawn market? Well, this is

46
00:02:38,240 --> 00:02:40,000
Speaker 1: the issue is that there's been a lot of I

47
00:02:40,040 --> 00:02:42,760
Speaker 1: think misunderstanding that when we have really high inflation, the

48
00:02:42,760 --> 00:02:45,600
Speaker 1: FED will respond to it. The FED cannot, and in

49
00:02:45,639 --> 00:02:49,320
Speaker 1: my opinion, will not respond to supply side inflationary shocks.

50
00:02:49,520 --> 00:02:51,680
Speaker 1: The FED can hike all at once, it's compete for

51
00:02:51,760 --> 00:02:55,560
Speaker 1: super aggressively. It's not going to materialize the semiconductors out

52
00:02:55,600 --> 00:02:58,520
Speaker 1: of Taiwan. The FED cannot respond to this type of

53
00:02:58,560 --> 00:03:00,560
Speaker 1: inflation pressure. And that's why you want to get the

54
00:03:00,600 --> 00:03:02,800
Speaker 1: FED call right. What I'm trying to do is focus

55
00:03:02,880 --> 00:03:05,320
Speaker 1: on the types of inflation that the FED would respond to,

56
00:03:05,480 --> 00:03:09,399
Speaker 1: things like shelter prices for example, or broad based inflationary pressures.

57
00:03:09,560 --> 00:03:11,880
Speaker 1: That's going to be so much more important. That's why

58
00:03:11,919 --> 00:03:13,880
Speaker 1: we ended up with you know, five percent c p

59
00:03:14,040 --> 00:03:16,200
Speaker 1: I and at the exact same time, a tenure near

60
00:03:16,320 --> 00:03:18,519
Speaker 1: near one point three or even one point five seems

61
00:03:18,560 --> 00:03:21,680
Speaker 1: like it's disjointed. It's not. It's about the type of inflation,

62
00:03:21,919 --> 00:03:24,000
Speaker 1: not the total inflation. People want to get the market

63
00:03:24,040 --> 00:03:26,040
Speaker 1: killed right as wile Francis, so let's spend some time

64
00:03:26,080 --> 00:03:28,880
Speaker 1: on that. That's the economics debate folded into the markets

65
00:03:28,880 --> 00:03:31,320
Speaker 1: force treasuries. You've not been talking through much of summer.

66
00:03:31,600 --> 00:03:33,480
Speaker 1: You said repeatedly you think we've seen the highs on

67
00:03:33,480 --> 00:03:36,360
Speaker 1: a ten year yield. I imagine you haven't seen any

68
00:03:36,440 --> 00:03:38,440
Speaker 1: change as far as your concerned or changed your mind.

69
00:03:38,520 --> 00:03:40,720
Speaker 1: What's the framework for the bond market that makes you

70
00:03:40,760 --> 00:03:44,680
Speaker 1: think that? Why? Yeah, absolutely so. I still believe that

71
00:03:44,760 --> 00:03:47,280
Speaker 1: we've likely seen the peak in this cycle that we

72
00:03:47,320 --> 00:03:49,240
Speaker 1: may go back and tested, and a lot of that's

73
00:03:49,240 --> 00:03:51,240
Speaker 1: gonna have to do with what kind of communication we

74
00:03:51,320 --> 00:03:54,320
Speaker 1: get from the Fed. Pello was pretty darn hawkish last week.

75
00:03:54,400 --> 00:03:57,600
Speaker 1: He didn't reiterate that two seemed like it wasn't so

76
00:03:57,760 --> 00:04:00,760
Speaker 1: far off base from his perspective. But the challenge, from

77
00:04:00,800 --> 00:04:02,760
Speaker 1: my view is, how do we see a FED hiking

78
00:04:02,800 --> 00:04:06,040
Speaker 1: when we're gonna see PC inflation goes sub two percent

79
00:04:06,120 --> 00:04:07,920
Speaker 1: by the end of twenty two and we are going

80
00:04:07,960 --> 00:04:10,600
Speaker 1: to see growth accelerating and not the police of which

81
00:04:10,760 --> 00:04:13,240
Speaker 1: we have this giant fiscal hole at the end of

82
00:04:13,280 --> 00:04:17,520
Speaker 1: twenty two andree that's a really challenging environment. So right

83
00:04:17,560 --> 00:04:19,240
Speaker 1: now what we're doing is spending a lot of time

84
00:04:19,360 --> 00:04:22,000
Speaker 1: be composing what's moving the tenure yield. From our view,

85
00:04:22,000 --> 00:04:25,280
Speaker 1: it's the term premium as opposed to growth and inflation expectations.

86
00:04:25,520 --> 00:04:27,480
Speaker 1: Really getting a sense of the drivers was going to

87
00:04:27,520 --> 00:04:29,440
Speaker 1: be tough, But of course I think we're probably in

88
00:04:29,520 --> 00:04:31,440
Speaker 1: this range on that tenure one point four to one

89
00:04:31,480 --> 00:04:33,840
Speaker 1: point six, and some days are going to be pretty uncomfortable,

90
00:04:34,000 --> 00:04:36,080
Speaker 1: just like today and Thursday last week. Can you bleed

91
00:04:36,120 --> 00:04:38,600
Speaker 1: that over into the equity call. In terms of the

92
00:04:38,760 --> 00:04:40,800
Speaker 1: risk on move, you did say that you do think

93
00:04:40,839 --> 00:04:43,560
Speaker 1: it's supply chain disruptions have been priced in. Is that

94
00:04:43,760 --> 00:04:47,560
Speaker 1: enough to reignite the reflation trade? I don't long the

95
00:04:47,640 --> 00:04:51,320
Speaker 1: term reflation. Reflation generally means growth and inflation are moving

96
00:04:51,480 --> 00:04:54,960
Speaker 1: moving positively. What we do expect is that high that

97
00:04:55,080 --> 00:04:58,400
Speaker 1: inflation data does start to come in below expectations and

98
00:04:58,520 --> 00:05:00,960
Speaker 1: growth can now start to supp eyes to the upside.

99
00:05:01,000 --> 00:05:04,680
Speaker 1: That typically looks goldilocks but is it full throttle, pedal

100
00:05:04,800 --> 00:05:07,080
Speaker 1: to the metal. Absolutely not. We still have a lot

101
00:05:07,160 --> 00:05:09,840
Speaker 1: of these underlying challenges. So sometimes I use the term

102
00:05:09,920 --> 00:05:13,400
Speaker 1: Goldilocks and the Three Bears, which essentially means you can

103
00:05:13,480 --> 00:05:15,760
Speaker 1: be over rat equities, but really be conscious of the

104
00:05:15,839 --> 00:05:18,080
Speaker 1: fact that you want to be defensively positioned. Maybe you

105
00:05:18,080 --> 00:05:20,840
Speaker 1: want to have barbelled portoreal with some value in there,

106
00:05:21,040 --> 00:05:23,040
Speaker 1: and just make sure you're ready for it in the

107
00:05:23,200 --> 00:05:27,400
Speaker 1: event of again not base case, but escalator up, elevator down.

108
00:05:27,480 --> 00:05:29,360
Speaker 1: I think we all need a plan for that, especially

109
00:05:29,400 --> 00:05:31,840
Speaker 1: if we get closer into two. How are you preparing

110
00:05:31,920 --> 00:05:35,440
Speaker 1: for that? Oh, there's a range of ways to doing that,

111
00:05:35,560 --> 00:05:38,159
Speaker 1: but just understanding your triggers where you're going to go through,

112
00:05:38,279 --> 00:05:41,680
Speaker 1: watching that FED speak really closely, watching supply chains, and

113
00:05:41,760 --> 00:05:44,039
Speaker 1: of course watching China. Those are the three main macro

114
00:05:44,200 --> 00:05:46,000
Speaker 1: factors that are going to really be the make or

115
00:05:46,040 --> 00:05:48,640
Speaker 1: break on whether we can continue more of that Goldilocks

116
00:05:48,760 --> 00:05:51,000
Speaker 1: narrative or whether we do have to prepare for something

117
00:05:51,080 --> 00:05:53,400
Speaker 1: that's a little bit more uncomfortable, more of a stagnation,

118
00:05:53,640 --> 00:05:55,720
Speaker 1: which is a really kind of slowing in growth and

119
00:05:55,760 --> 00:05:58,240
Speaker 1: slowing and inflation that's not expected. Do you have an

120
00:05:58,520 --> 00:06:03,920
Speaker 1: entrenched terminal vector to potential g d P. Do you

121
00:06:03,960 --> 00:06:07,960
Speaker 1: have an arrow sliding down over quarters and quarters and

122
00:06:08,200 --> 00:06:12,120
Speaker 1: years and years to the vicinity of two point zero percent.

123
00:06:13,680 --> 00:06:16,400
Speaker 1: It's actually tom really during close one point nine percent

124
00:06:16,640 --> 00:06:19,520
Speaker 1: is where we have growth coming out in six long

125
00:06:19,600 --> 00:06:21,760
Speaker 1: way to get there. A lot can change, But what's

126
00:06:21,800 --> 00:06:24,360
Speaker 1: been so disappointing is throat COVID. We really did expect,

127
00:06:24,480 --> 00:06:27,400
Speaker 1: or we were hoping for game changing fiscal that would

128
00:06:27,440 --> 00:06:31,120
Speaker 1: persist over an extended period of time. Average inflation targeting

129
00:06:31,240 --> 00:06:34,000
Speaker 1: really taking hold, and a lot of productivity growth and

130
00:06:34,120 --> 00:06:37,120
Speaker 1: all those things combined, we're supposed to lift that long

131
00:06:37,279 --> 00:06:39,480
Speaker 1: term GDP, but it just hasn't happened in the same

132
00:06:39,520 --> 00:06:41,880
Speaker 1: extent that it could have. So unfortunately, I don't even

133
00:06:41,920 --> 00:06:45,360
Speaker 1: get to two percent. One point nine is my peek

134
00:06:45,480 --> 00:06:47,720
Speaker 1: right now, Francis, just find a chairman Pound talking a

135
00:06:47,760 --> 00:06:50,080
Speaker 1: little bit light to this morning with sancretary Yellow the

136
00:06:50,160 --> 00:06:52,160
Speaker 1: chairman getting a lot of attention about what's happening with

137
00:06:52,240 --> 00:06:54,520
Speaker 1: Rose and Grant and what's happened with Camplan. I won't

138
00:06:54,520 --> 00:06:56,320
Speaker 1: ask you to weigh in on the politics at the moment.

139
00:06:56,400 --> 00:06:58,520
Speaker 1: I do want your understanding of things stand on what

140
00:06:58,640 --> 00:07:01,599
Speaker 1: you expect next. You the composition of this Federal Reserve,

141
00:07:01,880 --> 00:07:05,880
Speaker 1: Are you expecting big changes changes it? So? No, and

142
00:07:06,120 --> 00:07:08,599
Speaker 1: you know with the regional bank presidents, we're probably going

143
00:07:08,640 --> 00:07:11,000
Speaker 1: to see those dots mimic one to the next. I

144
00:07:11,120 --> 00:07:13,720
Speaker 1: think that even the hawks are gonna have to pivot

145
00:07:13,760 --> 00:07:18,280
Speaker 1: in as they start to realize that Hyke is gonna

146
00:07:18,320 --> 00:07:21,840
Speaker 1: be really problematic here. So regardless of the composition, whoever

147
00:07:22,000 --> 00:07:23,240
Speaker 1: is in the role, I think the data is going

148
00:07:23,280 --> 00:07:25,080
Speaker 1: to speak for itself, and you are going to see

149
00:07:25,080 --> 00:07:27,520
Speaker 1: a bit of a pivot around Q two of next year,

150
00:07:27,760 --> 00:07:30,480
Speaker 1: for instance. Just just to finish up here, I'm wondering

151
00:07:30,680 --> 00:07:32,880
Speaker 1: what you think the ramifications will be of some of

152
00:07:32,920 --> 00:07:35,240
Speaker 1: the turmoil that we've seen on the f O m C.

153
00:07:35,400 --> 00:07:38,240
Speaker 1: The idea that there are six seats UH of officials

154
00:07:38,320 --> 00:07:41,520
Speaker 1: that will be potentially appointed in the upcoming year. How

155
00:07:41,640 --> 00:07:45,680
Speaker 1: much does this shift the FED from doves becoming uber

156
00:07:45,760 --> 00:07:50,240
Speaker 1: dovish without even more hawkish members. It's really challenging, Lisa.

157
00:07:50,360 --> 00:07:51,960
Speaker 1: We don't even know who's going to be at the

158
00:07:52,040 --> 00:07:53,920
Speaker 1: helm of the fedting. Yeah, there is a little bit

159
00:07:53,960 --> 00:07:56,560
Speaker 1: of psychology that goes into guessing whose dot is you

160
00:07:56,960 --> 00:07:59,240
Speaker 1: and what is the general type of mood at the

161
00:07:59,680 --> 00:08:02,160
Speaker 1: MC So when you have that level of uncertainty, a

162
00:08:02,560 --> 00:08:05,080
Speaker 1: acknowledge it. That's a risk management tool that you should

163
00:08:05,120 --> 00:08:07,880
Speaker 1: be doing, but be recognized and really trying to pivot

164
00:08:08,000 --> 00:08:10,760
Speaker 1: or or pillar yourself to what the data will show you.

165
00:08:11,200 --> 00:08:13,840
Speaker 1: And our expectation is that the deceleration and growth and

166
00:08:13,960 --> 00:08:16,920
Speaker 1: inflation will mean that even the most heartened of hawks,

167
00:08:16,960 --> 00:08:18,680
Speaker 1: no matter who they are, is going to have to

168
00:08:18,760 --> 00:08:23,040
Speaker 1: recognize it's really challenging to start tightening aggressively. In Francis,

169
00:08:23,120 --> 00:08:25,280
Speaker 1: thank you. As always, Francis don't have the manual life

170
00:08:25,280 --> 00:08:35,199
Speaker 1: investment management global chief economists who look at the extractive

171
00:08:35,280 --> 00:08:39,719
Speaker 1: process and say what's the future look like? We do

172
00:08:39,920 --> 00:08:43,880
Speaker 1: that now with Columbia in Diego Poia joins us their

173
00:08:44,000 --> 00:08:46,439
Speaker 1: energy and minds Minister, and of course with this tour

174
00:08:46,520 --> 00:08:49,760
Speaker 1: of duty at the International Monetary Fund as well. We

175
00:08:49,920 --> 00:08:53,240
Speaker 1: don't do this enough. When you look at the media

176
00:08:53,960 --> 00:08:59,080
Speaker 1: talking about the extractive process of mining or even oil,

177
00:08:59,760 --> 00:09:02,959
Speaker 1: what do we get wrong about the challenges you face

178
00:09:03,600 --> 00:09:08,040
Speaker 1: in making supply happen. I think, uh, in the in

179
00:09:08,440 --> 00:09:11,600
Speaker 1: in the extractive industry sector, we need to make sure

180
00:09:11,679 --> 00:09:15,920
Speaker 1: that we have more stability obviously on on the price side. Uh,

181
00:09:16,040 --> 00:09:19,640
Speaker 1: And that's difficult because obviously it's determined by the market forces.

182
00:09:20,040 --> 00:09:23,840
Speaker 1: So I think you know, it's understanding how the production

183
00:09:23,920 --> 00:09:27,199
Speaker 1: levels will change once we have those swings in prices,

184
00:09:27,240 --> 00:09:30,319
Speaker 1: either upside or or downward. I think that could be

185
00:09:30,400 --> 00:09:32,079
Speaker 1: one of the things that you know, it's difficult to

186
00:09:32,160 --> 00:09:36,040
Speaker 1: obviously forecast and understand the response from the real sector.

187
00:09:36,120 --> 00:09:39,360
Speaker 1: Do you bring prodigious academics to this, unlike many others

188
00:09:39,440 --> 00:09:43,679
Speaker 1: in extractive mining? Do you call a commodity supercycle? Now

189
00:09:43,800 --> 00:09:48,800
Speaker 1: after years of disinflation and outright price deflation, is the

190
00:09:48,920 --> 00:09:51,920
Speaker 1: time that we have turned and we're moving higher? Well,

191
00:09:52,000 --> 00:09:54,959
Speaker 1: it's looked like we're going in that direction. Uh, not

192
00:09:55,120 --> 00:09:57,360
Speaker 1: only with oil as we saw yes or it brent

193
00:09:57,960 --> 00:10:01,040
Speaker 1: for the first time, for which is Columbia reference as

194
00:10:01,120 --> 00:10:04,040
Speaker 1: crossed eighty dollar supervibl We've seen that with natural gas

195
00:10:04,120 --> 00:10:07,040
Speaker 1: obviously in Nation and European markets, and we're seeing that

196
00:10:07,120 --> 00:10:09,240
Speaker 1: with cole as well, which as we cover more than

197
00:10:09,280 --> 00:10:12,880
Speaker 1: seven in the last twelve months. Well, how do you

198
00:10:12,960 --> 00:10:15,000
Speaker 1: support your home industry which is called with one of

199
00:10:15,040 --> 00:10:18,120
Speaker 1: the biggest minds out there while also remaining on the

200
00:10:18,280 --> 00:10:20,959
Speaker 1: right side of the debate over global warming, on the

201
00:10:21,120 --> 00:10:23,880
Speaker 1: right side of all the development. In terms of what's

202
00:10:24,000 --> 00:10:27,959
Speaker 1: next for energy production going forward, well, Lissa, we we

203
00:10:28,080 --> 00:10:31,199
Speaker 1: know that we need to be more competitive because the

204
00:10:31,320 --> 00:10:34,040
Speaker 1: demand for coal, for thermal coal has been shifting towards

205
00:10:34,040 --> 00:10:36,280
Speaker 1: the East, and we need to make sure that we're

206
00:10:36,360 --> 00:10:39,160
Speaker 1: companies are competitive in that market. So we've been helping

207
00:10:39,240 --> 00:10:42,959
Speaker 1: those companies enter the Asian market. Uh. Some companies have

208
00:10:43,040 --> 00:10:45,920
Speaker 1: done it very well, like for example, Drummond and Sarah

209
00:10:46,040 --> 00:10:49,199
Speaker 1: Hon obviously. Uh. And now I think with Sarah Hon,

210
00:10:49,640 --> 00:10:54,319
Speaker 1: you obviously know that Glencore announced the buying the stakes

211
00:10:54,400 --> 00:10:57,120
Speaker 1: of Anglo American and BHP a couple of months ago,

212
00:10:57,240 --> 00:10:58,640
Speaker 1: So I think that's a very good sign that they

213
00:10:58,640 --> 00:11:01,640
Speaker 1: will continue uh to mind all of the assets in

214
00:11:01,679 --> 00:11:04,320
Speaker 1: Sarihn in the medium term. And and you know, Colombia

215
00:11:04,440 --> 00:11:06,880
Speaker 1: obviously would like to see the coal sector to continue

216
00:11:06,880 --> 00:11:10,200
Speaker 1: to thrive, as donne it overlast three decades. Well, how

217
00:11:10,200 --> 00:11:12,520
Speaker 1: do you get a foothold though in the new industries, right,

218
00:11:12,559 --> 00:11:15,480
Speaker 1: the new energies, and I'm thinking of natural gas in particular,

219
00:11:15,559 --> 00:11:18,920
Speaker 1: which is surging both in demand and in price. So

220
00:11:19,440 --> 00:11:23,679
Speaker 1: we've been doing efforts to award new EMP blocks. We

221
00:11:23,800 --> 00:11:26,199
Speaker 1: had a problem in Colombia because when we came into

222
00:11:26,240 --> 00:11:29,439
Speaker 1: power in the country had gone through a period of

223
00:11:29,520 --> 00:11:32,520
Speaker 1: five years without signing new on EMP contracts. So we

224
00:11:32,600 --> 00:11:34,800
Speaker 1: clear some bottlenecks on the contract call side, and in

225
00:11:34,880 --> 00:11:37,560
Speaker 1: these three years we've signed now more than thirty five

226
00:11:37,679 --> 00:11:39,880
Speaker 1: e MP contracts and we have a new round taking

227
00:11:39,920 --> 00:11:42,599
Speaker 1: place this year which will be awarding contracts by the

228
00:11:42,760 --> 00:11:46,040
Speaker 1: end of the of the year. So we're focusing also

229
00:11:46,120 --> 00:11:49,760
Speaker 1: obviously on gas prown basins off shore, but also in

230
00:11:49,840 --> 00:11:52,880
Speaker 1: the medium Valley u in on shore basins that material

231
00:11:52,960 --> 00:11:56,000
Speaker 1: Colombia and are well known for its gas prone. Is

232
00:11:56,080 --> 00:11:59,600
Speaker 1: the mind mechanized or does it employ so many people?

233
00:11:59,679 --> 00:12:04,600
Speaker 1: It's a domestic labor issue for Colombia. Uh, even though

234
00:12:04,760 --> 00:12:08,079
Speaker 1: it's not labor intensive, it is the main employer in

235
00:12:08,160 --> 00:12:12,400
Speaker 1: the two provinces. Well, we have about ten thou people.

236
00:12:12,800 --> 00:12:17,280
Speaker 1: You get ten thousand people straptical. You have, as Lisa mentioned,

237
00:12:17,360 --> 00:12:21,400
Speaker 1: a global mandate to reduce coal. How do you juxtapose that,

238
00:12:21,600 --> 00:12:25,040
Speaker 1: I mean, five years out figured about the limousines outside

239
00:12:25,040 --> 00:12:27,120
Speaker 1: the U N or I mean you and I've done

240
00:12:27,160 --> 00:12:30,240
Speaker 1: I m F World Bank forty seven times forget about

241
00:12:30,280 --> 00:12:33,560
Speaker 1: the suits and ties. How do you juxtapose that out

242
00:12:33,640 --> 00:12:37,480
Speaker 1: five or ten years is we're asking China to diminish coal.

243
00:12:37,800 --> 00:12:40,520
Speaker 1: So that's a very good question, and our main public

244
00:12:40,600 --> 00:12:43,640
Speaker 1: policy in the sector has been energy transition. Columbia has

245
00:12:43,679 --> 00:12:47,120
Speaker 1: world class resources, both wind and solar, and it happens

246
00:12:47,120 --> 00:12:50,079
Speaker 1: to be that the highest potential is exactly where the

247
00:12:50,120 --> 00:12:52,320
Speaker 1: coal mines are, which is a northern part of the country.

248
00:12:52,640 --> 00:12:55,199
Speaker 1: So we've done auctions, We've created a fiscal framework to

249
00:12:55,240 --> 00:13:00,520
Speaker 1: attract investment into uh this variable or unconventional renewable and resources,

250
00:13:00,800 --> 00:13:04,640
Speaker 1: and we're going from less than point two percent of

251
00:13:04,720 --> 00:13:08,000
Speaker 1: our power matrix made up of renewables to about twelve

252
00:13:08,640 --> 00:13:12,480
Speaker 1: in two and we see a significant opportunity for workers

253
00:13:12,679 --> 00:13:15,880
Speaker 1: in these regions to move and have not only a

254
00:13:16,000 --> 00:13:19,480
Speaker 1: just but a well managed transition over time to variable

255
00:13:19,520 --> 00:13:22,760
Speaker 1: renewable energy diego. We're talking about the potential for energy

256
00:13:22,880 --> 00:13:25,640
Speaker 1: crisis across the world. We see energy shortages, certainly in

257
00:13:25,640 --> 00:13:29,320
Speaker 1: the United Kingdom, there's a potential for one in China.

258
00:13:29,600 --> 00:13:32,760
Speaker 1: How do you avoid something similar happening in a place

259
00:13:32,840 --> 00:13:35,720
Speaker 1: like Columbia. From your standpoint, so we need to make

260
00:13:35,720 --> 00:13:39,240
Speaker 1: sure that we exploit our natural resources very well. So

261
00:13:39,360 --> 00:13:44,040
Speaker 1: Columbia US hasn't a comparative advantage because right now our

262
00:13:44,120 --> 00:13:47,800
Speaker 1: power matrix depends largely on hydro power. We have significant

263
00:13:47,880 --> 00:13:50,439
Speaker 1: hydro resources. So what we're doing is we're complementing those

264
00:13:50,520 --> 00:13:53,800
Speaker 1: resources with wind and solar and obviously having you know

265
00:13:53,840 --> 00:13:59,119
Speaker 1: about or so of natural gas and coal power baseload

266
00:13:59,320 --> 00:14:02,480
Speaker 1: that we so we we can complement the intermittency on water,

267
00:14:02,720 --> 00:14:05,280
Speaker 1: wind and sun. So our matrix is looking quite good.

268
00:14:05,280 --> 00:14:07,880
Speaker 1: It's going to be better once we finished this, uh,

269
00:14:07,960 --> 00:14:10,640
Speaker 1: you know, rump up in energy transition process. Let's get

270
00:14:10,679 --> 00:14:13,959
Speaker 1: to the most important extract of commodity of Columbia. What

271
00:14:14,080 --> 00:14:15,439
Speaker 1: do you can do about the price of a cup

272
00:14:15,520 --> 00:14:19,960
Speaker 1: of coffee? Help us here? You know, And and that's

273
00:14:20,000 --> 00:14:22,640
Speaker 1: something that it's under the agriculture ministry. But I think

274
00:14:22,760 --> 00:14:26,840
Speaker 1: we're very happy. But you're here, so we're you. But

275
00:14:27,000 --> 00:14:29,080
Speaker 1: my answer there would be, you know, we're very happy

276
00:14:29,120 --> 00:14:35,720
Speaker 1: to see strong prices for coffee, and I think the

277
00:14:36,200 --> 00:14:38,600
Speaker 1: demand for coffee maybe is more in elastic than what

278
00:14:38,720 --> 00:14:44,160
Speaker 1: we think. Are we thank you killing analysis anything else

279
00:14:44,240 --> 00:14:48,000
Speaker 1: you'd like that, you know, I think I would like to,

280
00:14:48,360 --> 00:14:50,680
Speaker 1: you know, the energy transition process that we've been doing.

281
00:14:50,800 --> 00:14:54,000
Speaker 1: Columbia as a couple of very significant milestones that are

282
00:14:54,120 --> 00:14:56,800
Speaker 1: taking place right now. So on Thursday, we'll be launching

283
00:14:56,840 --> 00:15:00,240
Speaker 1: with President du Kid the Hydrogen Roadbop. Columbia has nafic

284
00:15:00,240 --> 00:15:03,640
Speaker 1: come potential to produce both green and blue hydrogen. And

285
00:15:03,880 --> 00:15:07,280
Speaker 1: we also awarded two months ago the first auction in

286
00:15:07,360 --> 00:15:10,520
Speaker 1: Latin America for large scale storage with bottery. See how

287
00:15:10,560 --> 00:15:13,120
Speaker 1: he did this, Lisa got right back on. He didn't,

288
00:15:13,120 --> 00:15:15,520
Speaker 1: he didn't even blame. My youngest daughter is popping eight

289
00:15:15,600 --> 00:15:17,920
Speaker 1: dollars a cup of something at Starbucks and I just

290
00:15:18,120 --> 00:15:31,360
Speaker 1: killed Thank you Colombia right now. Francisco Blanche, a Bank

291
00:15:31,440 --> 00:15:35,000
Speaker 1: of America Global Commodities and Derivatives research head. We had

292
00:15:35,000 --> 00:15:37,440
Speaker 1: Bloomberg want to bring you all we can and hydro

293
00:15:37,520 --> 00:15:41,000
Speaker 1: carbons France and Lacroix earlier this morning with Jeffrey Curry

294
00:15:41,280 --> 00:15:45,200
Speaker 1: and now at a hundred dollars of barrel. Francisco Blanche, Francisco,

295
00:15:45,320 --> 00:15:49,200
Speaker 1: I want to channel the research of Caldera Cavallo and

296
00:15:49,360 --> 00:15:51,880
Speaker 1: I had co v Ello at the FED and their

297
00:15:51,960 --> 00:15:56,600
Speaker 1: landmark piece five years ago on the elasticities of oil.

298
00:15:56,680 --> 00:16:00,640
Speaker 1: Adams Saminsky talked about this years ago at Deutsche how

299
00:16:00,880 --> 00:16:05,080
Speaker 1: tight is the oil market so that when demand shifts

300
00:16:05,440 --> 00:16:11,440
Speaker 1: the price explodes well. So so there's different ways to

301
00:16:11,480 --> 00:16:15,080
Speaker 1: look at this, but generally we uh for for every

302
00:16:15,320 --> 00:16:21,240
Speaker 1: every million barrel days swing in supplier demand unexpected, we

303
00:16:21,360 --> 00:16:24,280
Speaker 1: look at typically about a twenty dollar moving prices. And

304
00:16:24,680 --> 00:16:26,920
Speaker 1: again there's many ways you can run this calculation, but

305
00:16:27,720 --> 00:16:30,720
Speaker 1: think about it. One percent moving demand or supply unexpected

306
00:16:31,160 --> 00:16:33,440
Speaker 1: leads to a twenty loar price move. That that's that's

307
00:16:33,480 --> 00:16:36,480
Speaker 1: the issue here, um and and we are probably seen

308
00:16:36,520 --> 00:16:40,720
Speaker 1: more extreme moves in natural gas because of the reduction

309
00:16:40,800 --> 00:16:44,200
Speaker 1: of that price elasticity, that linkage between gas and coal

310
00:16:44,800 --> 00:16:48,640
Speaker 1: is now leading to even sharper moves on on that front.

311
00:16:48,720 --> 00:16:51,920
Speaker 1: So clearly hydrocarbons are are in a tight spot from

312
00:16:51,960 --> 00:16:56,000
Speaker 1: a from a supply and demand elasticity, from the response

313
00:16:56,120 --> 00:16:58,880
Speaker 1: of of of both supply men to rising prices. Yeh,

314
00:16:58,880 --> 00:17:01,160
Speaker 1: and you know the rule of thumbed I mentioned elasticity

315
00:17:01,280 --> 00:17:03,800
Speaker 1: on air. It confuses people, but that's the heart of

316
00:17:03,960 --> 00:17:07,880
Speaker 1: the matter right now. It's the ugly manth of elasticities.

317
00:17:07,960 --> 00:17:10,040
Speaker 1: And we're seeing a two hundred dollars to say, hey,

318
00:17:10,119 --> 00:17:12,119
Speaker 1: let's not bury the late let's get straight to that

319
00:17:12,240 --> 00:17:15,679
Speaker 1: forecast at Bank of America. It's a hundred dollar crued

320
00:17:15,960 --> 00:17:19,760
Speaker 1: triple digit crude Francisco by the middle of next year. Now,

321
00:17:19,920 --> 00:17:22,440
Speaker 1: help us understand the path to a hundred, and help

322
00:17:22,520 --> 00:17:26,359
Speaker 1: us understand why you think we might get there sooner. Well, so,

323
00:17:26,440 --> 00:17:29,280
Speaker 1: the path, the path to a hundred is basically being

324
00:17:29,359 --> 00:17:34,760
Speaker 1: driven by UM titan and supply demand conditions. UM. We

325
00:17:34,880 --> 00:17:38,640
Speaker 1: are seeing the man coming back. UM. It's coming back

326
00:17:38,680 --> 00:17:41,600
Speaker 1: from a mobility standpoint, but it's also coming back with

327
00:17:41,960 --> 00:17:45,760
Speaker 1: with natural gas prices rising so fast and creating substitution

328
00:17:45,880 --> 00:17:50,200
Speaker 1: back into oil and UM and and that's the that's

329
00:17:50,520 --> 00:17:51,760
Speaker 1: the heart of the matter. The heart of matter is

330
00:17:51,800 --> 00:17:56,080
Speaker 1: that we're going to be over UM the man levels

331
00:17:56,560 --> 00:17:59,159
Speaker 1: UH sometime next summer or maybe this winter if the

332
00:17:59,200 --> 00:18:02,640
Speaker 1: weather turns particularly called UM so we are we're concerned

333
00:18:02,640 --> 00:18:05,240
Speaker 1: about that because we have a lot less capacity. Remember,

334
00:18:05,440 --> 00:18:08,320
Speaker 1: shale oil production is way lower than it was back

335
00:18:08,600 --> 00:18:11,119
Speaker 1: in at the peak of the of the cycle in

336
00:18:11,480 --> 00:18:16,000
Speaker 1: shale in early and UH and and frankly, we've seen

337
00:18:16,720 --> 00:18:20,320
Speaker 1: severe under investment in the last eighteen months UM and

338
00:18:20,400 --> 00:18:23,000
Speaker 1: I'm not sure that under investment can be easily corrected

339
00:18:23,119 --> 00:18:26,400
Speaker 1: because now we're moving into a green economy. And uh,

340
00:18:26,680 --> 00:18:29,000
Speaker 1: guess Watts. I mean, if if if your time horizon

341
00:18:29,200 --> 00:18:31,480
Speaker 1: is three or four or five years, to recover your money,

342
00:18:32,119 --> 00:18:34,280
Speaker 1: you just need a higher price. And uh, and I

343
00:18:34,400 --> 00:18:36,040
Speaker 1: think a lot of companies are reluctant to make the

344
00:18:36,080 --> 00:18:38,560
Speaker 1: investment because of what they're hearing from governments and investors.

345
00:18:38,600 --> 00:18:41,640
Speaker 1: And this is so so important. Typically, Francisco, we would

346
00:18:41,640 --> 00:18:45,680
Speaker 1: say the cure for higher prices is higher prices. Jeff

347
00:18:45,720 --> 00:18:48,879
Speaker 1: Carry of Goldman a pair of yours this morning, speaking

348
00:18:48,920 --> 00:18:51,000
Speaker 1: to Francis Laque, was saying, this is the revenge of

349
00:18:51,080 --> 00:18:54,240
Speaker 1: the old economy. It's the under investment that you describe

350
00:18:54,240 --> 00:18:56,160
Speaker 1: of the last several years, that is standing to buy.

351
00:18:56,400 --> 00:18:59,240
Speaker 1: And I think what you're getting at here is really important, Francisco.

352
00:18:59,320 --> 00:19:01,400
Speaker 1: How long we might have to live with this? Could

353
00:19:01,440 --> 00:19:05,119
Speaker 1: this be year? Is? If this um it could potentially

354
00:19:05,240 --> 00:19:07,280
Speaker 1: and and and we're moving into I mean the thing

355
00:19:07,359 --> 00:19:10,200
Speaker 1: is we remember, we're moving into a straight jacket here

356
00:19:10,640 --> 00:19:13,640
Speaker 1: for energy. We don't want to use coal. We want

357
00:19:13,680 --> 00:19:16,920
Speaker 1: to use less and less gas. Um, we want to

358
00:19:16,960 --> 00:19:21,920
Speaker 1: move away from oil. So so this policy ultimately is

359
00:19:22,160 --> 00:19:25,639
Speaker 1: going to create deeper and deeper and the investment and

360
00:19:25,960 --> 00:19:28,200
Speaker 1: UH and and the issue is we can't sort out

361
00:19:28,280 --> 00:19:30,560
Speaker 1: all these things at once, and if if the weather

362
00:19:30,640 --> 00:19:32,959
Speaker 1: turns against us, and they have so far this year,

363
00:19:33,000 --> 00:19:35,120
Speaker 1: we've had low hydr in China, we've had low wind

364
00:19:35,160 --> 00:19:39,400
Speaker 1: in Europe. UM. Now now if we have a cold

365
00:19:39,440 --> 00:19:41,720
Speaker 1: winter on top of it, things are gonna get complicated

366
00:19:41,960 --> 00:19:44,840
Speaker 1: because we're depending more and more on renewal sources UM

367
00:19:44,880 --> 00:19:47,560
Speaker 1: and we don't have the industrial scale batteries required to

368
00:19:48,480 --> 00:19:52,399
Speaker 1: UM to store that energy throughout the year. So so

369
00:19:52,440 --> 00:19:55,480
Speaker 1: I think that's where the challenges UM in my view.

370
00:19:55,600 --> 00:19:57,359
Speaker 1: So so yes, it could be a multi year period

371
00:19:57,480 --> 00:20:00,680
Speaker 1: until we finally transition to a green economy where where

372
00:20:00,880 --> 00:20:05,119
Speaker 1: things are are calmer. Francisco, this backdrop is bullish for

373
00:20:05,200 --> 00:20:07,600
Speaker 1: oil prices, and we've already blown through some of your

374
00:20:07,640 --> 00:20:10,800
Speaker 1: forecasts for September. When it comes to brand I mean,

375
00:20:10,880 --> 00:20:13,679
Speaker 1: how much are you bringing forward the idea of triple

376
00:20:14,080 --> 00:20:18,080
Speaker 1: digit oil prices? Right? So, so we've been saying it

377
00:20:18,200 --> 00:20:21,720
Speaker 1: was going to be a summer when global air traffic recovered.

378
00:20:21,760 --> 00:20:23,879
Speaker 1: And remember, at the end of the day, the biggest

379
00:20:23,920 --> 00:20:27,560
Speaker 1: gap in global demand has come from from the airline industry.

380
00:20:27,920 --> 00:20:30,800
Speaker 1: We've shut down most of airline travel. But now the

381
00:20:30,960 --> 00:20:33,879
Speaker 1: US is restarting travel in November. Right, You're gonna be

382
00:20:33,920 --> 00:20:35,800
Speaker 1: able to travel into the US from all around the

383
00:20:35,800 --> 00:20:38,000
Speaker 1: world if you're vaccinated. At least that's what the guidance

384
00:20:38,040 --> 00:20:40,639
Speaker 1: seems to be. So, um, we're gonna see a resumption

385
00:20:40,680 --> 00:20:43,320
Speaker 1: in international travel. Demand for jet fuel is going to

386
00:20:43,400 --> 00:20:45,600
Speaker 1: pick up. At the same time, we're going into winter,

387
00:20:45,800 --> 00:20:48,680
Speaker 1: and we don't have enough gas to keep the world warm,

388
00:20:48,720 --> 00:20:51,000
Speaker 1: and and and and that's going to lead to a

389
00:20:51,040 --> 00:20:53,720
Speaker 1: search in demand. So it could potentially happen sooner. The

390
00:20:53,800 --> 00:20:56,119
Speaker 1: hundred oil and I think I think as where the

391
00:20:56,119 --> 00:20:58,720
Speaker 1: winter premium plays a big role here. So how high

392
00:20:58,760 --> 00:21:00,960
Speaker 1: could oil prices go? I mean, we're talking about hundred

393
00:21:01,000 --> 00:21:04,080
Speaker 1: dollar barrels by September and next year at the latest,

394
00:21:04,320 --> 00:21:07,239
Speaker 1: based on the current dynamics, could we get two hundred ten?

395
00:21:07,320 --> 00:21:10,040
Speaker 1: Could we get two hundred and fifty? Well, I mean

396
00:21:10,040 --> 00:21:13,560
Speaker 1: I don't want to create necessarily headlines without writing them

397
00:21:14,080 --> 00:21:16,560
Speaker 1: before because otherwise I get into trouble with with our

398
00:21:16,640 --> 00:21:20,440
Speaker 1: our compliance officers. But um, you know I have to

399
00:21:20,560 --> 00:21:23,480
Speaker 1: tell you. I mean, this seems to be increasingly a

400
00:21:23,640 --> 00:21:28,040
Speaker 1: multi year problem because companies are reluctant to invest until

401
00:21:28,119 --> 00:21:32,080
Speaker 1: higher prices um come about. And and even if prices

402
00:21:32,160 --> 00:21:34,840
Speaker 1: come about, they still don't know what COPY is gonna

403
00:21:34,880 --> 00:21:38,840
Speaker 1: look like. My senses, once we get through copy will

404
00:21:38,880 --> 00:21:40,760
Speaker 1: have a clear picture of what it's going to take

405
00:21:40,800 --> 00:21:43,960
Speaker 1: to resolve the problem. Um. But the Climate Summit will

406
00:21:44,000 --> 00:21:46,840
Speaker 1: provide a lot of guidance to investors and governments and

407
00:21:46,920 --> 00:21:49,159
Speaker 1: companies alike as to what they need to do here

408
00:21:49,160 --> 00:21:51,359
Speaker 1: in Francisco very quickly or we're out of time. Do

409
00:21:51,400 --> 00:21:53,960
Speaker 1: you anticipate hundred dollars like we saw a hundred and

410
00:21:54,080 --> 00:21:58,720
Speaker 1: ten average for four years? UM? I don't at the moment.

411
00:21:59,080 --> 00:22:02,920
Speaker 1: I think it's to squeeze. We've been factoring in more

412
00:22:02,960 --> 00:22:08,960
Speaker 1: electric vehicles, transition away from from hydrocarbons. Um. But but again,

413
00:22:09,040 --> 00:22:11,520
Speaker 1: we have an under investment problem that we can't solve easily.

414
00:22:11,920 --> 00:22:14,920
Speaker 1: And at the same time, we have surging demand because

415
00:22:14,920 --> 00:22:17,520
Speaker 1: we keep printing all this money, and and my concern

416
00:22:17,720 --> 00:22:21,320
Speaker 1: is prices for oil and other commodities spike, and what

417
00:22:21,440 --> 00:22:23,280
Speaker 1: are we gonna do. We're gonna say this is transitionary

418
00:22:23,320 --> 00:22:27,120
Speaker 1: and we're gonna keep feeding more money and and increasing

419
00:22:27,160 --> 00:22:30,760
Speaker 1: our debts, our government debts to to cure the problem.

420
00:22:31,040 --> 00:22:35,520
Speaker 1: That's definitely not going to help our our transctory inflation story.

421
00:22:35,640 --> 00:22:37,760
Speaker 1: I think it could make it more entrenched, but I'll

422
00:22:37,800 --> 00:22:39,840
Speaker 1: leave it there. But I mean, you know, I think

423
00:22:39,880 --> 00:22:42,040
Speaker 1: at the moment looks transitory, but but I think it

424
00:22:42,119 --> 00:22:45,640
Speaker 1: becomes more permanent if um, if we use the same

425
00:22:45,680 --> 00:22:48,920
Speaker 1: tools we have physical and monetary to address was essentially

426
00:22:49,240 --> 00:22:52,359
Speaker 1: an undersupply problem right now. Interesting Francisco, we could go

427
00:22:52,440 --> 00:22:55,080
Speaker 1: to day Oh mon, I guess great Francisco Blanch the

428
00:22:55,240 --> 00:22:57,880
Speaker 1: Bank of America two with the best on Wall Straight

429
00:22:57,960 --> 00:23:01,040
Speaker 1: this morning, Jeff Carry and Francisco Blanch comments sing on

430
00:23:01,160 --> 00:23:09,400
Speaker 1: this crude market. Sarah Mayo joins USNOO being global equity. See,

431
00:23:09,440 --> 00:23:13,120
Speaker 1: I know far too optimistic to be on this show.

432
00:23:13,359 --> 00:23:17,440
Speaker 1: State the bull case where this swoon, as you call it,

433
00:23:17,840 --> 00:23:22,359
Speaker 1: is an opportunity. Both cases around earnings growth for next year,

434
00:23:22,400 --> 00:23:24,600
Speaker 1: which we think can be in the high single digits.

435
00:23:24,640 --> 00:23:27,680
Speaker 1: But the concern today is whether yields are moving too

436
00:23:27,800 --> 00:23:31,880
Speaker 1: far too fast, And the issue is that as monetary

437
00:23:31,960 --> 00:23:35,280
Speaker 1: policy becomes contractionary seat of expansionary, how do we get

438
00:23:35,320 --> 00:23:37,560
Speaker 1: to this growth rate? But we're looking at is a

439
00:23:37,640 --> 00:23:42,240
Speaker 1: strong consumer, strong manufacturing data, all of that should continue.

440
00:23:42,400 --> 00:23:44,399
Speaker 1: And really what we're seeing here is growth is just

441
00:23:44,480 --> 00:23:47,840
Speaker 1: being postponed. It's not evaporating. In the third year of

442
00:23:47,880 --> 00:23:50,720
Speaker 1: a bull market posts the deep procession, we can see

443
00:23:50,760 --> 00:23:52,800
Speaker 1: the strong earnings growth, It's going to come from the

444
00:23:52,920 --> 00:23:56,000
Speaker 1: top line and pricing power because margins are at about

445
00:23:56,080 --> 00:23:59,240
Speaker 1: decade high. So companies with pricing power who can overcome

446
00:23:59,240 --> 00:24:03,880
Speaker 1: inflation great show that earnings growth, so revenues will outstrip

447
00:24:04,080 --> 00:24:09,240
Speaker 1: any margin erosion. That's our view, and we're looking for

448
00:24:09,320 --> 00:24:11,520
Speaker 1: those companies with the pricing power. So let's talk about

449
00:24:11,640 --> 00:24:14,000
Speaker 1: Nike here where it really was a supply issue on

450
00:24:14,080 --> 00:24:16,359
Speaker 1: the guide down. They have a lot of brand heat.

451
00:24:16,440 --> 00:24:18,919
Speaker 1: Demand has never been healthier for Nike that you can

452
00:24:18,960 --> 00:24:21,320
Speaker 1: wear Nikes anywhere. I'm actually wearing a pair right now

453
00:24:21,880 --> 00:24:26,920
Speaker 1: as we as we do this video. Also Gary on

454
00:24:27,040 --> 00:24:31,040
Speaker 1: Sarah also for Nike, you know they're shifting their margins

455
00:24:31,080 --> 00:24:34,639
Speaker 1: should increases. They move from wholesale to retail more direct

456
00:24:34,680 --> 00:24:38,360
Speaker 1: to consumer business and the Vietnam factories you're opening right now,

457
00:24:38,680 --> 00:24:41,040
Speaker 1: and they have scale, so when those ports do become

458
00:24:41,119 --> 00:24:43,480
Speaker 1: less congested, Nike is going to have more power in

459
00:24:43,560 --> 00:24:46,040
Speaker 1: that area. So we think going forward, actually they can

460
00:24:46,080 --> 00:24:48,560
Speaker 1: be earnings next year. Is that a template Sarah for

461
00:24:48,640 --> 00:24:51,359
Speaker 1: you through this earning season? Does that story open up

462
00:24:51,400 --> 00:24:54,240
Speaker 1: some opportunities if we say more Nikes through earning season

463
00:24:54,280 --> 00:24:57,320
Speaker 1: and they buys for you? I think likely we will

464
00:24:57,359 --> 00:24:59,920
Speaker 1: see a lot of companies talking about supply chain issues,

465
00:25:00,119 --> 00:25:02,640
Speaker 1: perhaps missing earnings because of it. Because of it, well,

466
00:25:02,680 --> 00:25:05,440
Speaker 1: we're looking at are those companies which have the power

467
00:25:05,480 --> 00:25:08,600
Speaker 1: of the reopening behind them and can overcome those supply issues.

468
00:25:08,880 --> 00:25:11,600
Speaker 1: Another name we like is Simon Property Group. This is

469
00:25:11,640 --> 00:25:14,359
Speaker 1: an a mall company here, malls are not dying. If

470
00:25:14,400 --> 00:25:17,040
Speaker 1: you look at Simon Property Um A lot of retailers

471
00:25:17,119 --> 00:25:20,119
Speaker 1: want an omni channel business, a combination of brick and

472
00:25:20,200 --> 00:25:23,119
Speaker 1: mortar and online. Brick and mortar is becoming much more

473
00:25:23,200 --> 00:25:26,360
Speaker 1: cost effective, and to get that online traffic, you want

474
00:25:26,400 --> 00:25:28,720
Speaker 1: to have foot traffic through your brick and mortar. You

475
00:25:28,800 --> 00:25:31,159
Speaker 1: look at something with Simon Property, it's trading at a

476
00:25:31,240 --> 00:25:33,600
Speaker 1: discount in the reach sector because it's a mall. So

477
00:25:33,680 --> 00:25:36,280
Speaker 1: we think that's another strong play going forward. Banks abouncing

478
00:25:36,320 --> 00:25:37,920
Speaker 1: back as well with a step of yield curve and

479
00:25:37,960 --> 00:25:40,440
Speaker 1: high yields through the whole of this curve. Sarah, where

480
00:25:40,480 --> 00:25:43,880
Speaker 1: do you like the financials right now within the banks themselves.

481
00:25:43,920 --> 00:25:46,480
Speaker 1: We've talked about this before. Goldman very different to Bank

482
00:25:46,520 --> 00:25:49,000
Speaker 1: of America. Take your pick and financials at the moment.

483
00:25:49,160 --> 00:25:50,879
Speaker 1: What do you like, what kind of business model do

484
00:25:50,880 --> 00:25:54,240
Speaker 1: you want to exposure to. What we like about banks

485
00:25:54,359 --> 00:25:56,320
Speaker 1: are the yields. But we don't love about banks are

486
00:25:56,359 --> 00:25:59,119
Speaker 1: the valuations. We don't think they look particularly cheap. So

487
00:25:59,200 --> 00:26:01,600
Speaker 1: if you want to play yield on banks are exactly right.

488
00:26:01,760 --> 00:26:04,120
Speaker 1: Look at a Bank of America that's pretty levered to yield.

489
00:26:04,480 --> 00:26:07,040
Speaker 1: We like companies more like Morgan Stanley, which has more

490
00:26:07,040 --> 00:26:10,080
Speaker 1: of a consistent, stable business in wealth management. And then

491
00:26:10,119 --> 00:26:12,399
Speaker 1: we like our mid cap bank Fifth Third, which has

492
00:26:12,440 --> 00:26:16,399
Speaker 1: more of a strong Southeast uh original footprint. Also, they

493
00:26:16,440 --> 00:26:19,200
Speaker 1: have a strong business model. They're rolling out new products,

494
00:26:19,240 --> 00:26:20,919
Speaker 1: a lot of cash on the balance sheet, so they

495
00:26:20,960 --> 00:26:23,960
Speaker 1: can really leverage the yields that are going up going forward.

496
00:26:23,960 --> 00:26:26,360
Speaker 1: Because you lean into a reflation type trade, how much

497
00:26:26,560 --> 00:26:29,240
Speaker 1: does oil at eighty dollars of barrel going up potentially

498
00:26:29,280 --> 00:26:32,000
Speaker 1: a hundred dollars of barrel challenge the view of say

499
00:26:32,160 --> 00:26:35,000
Speaker 1: airlines of certain cyclical stocks that might not be able

500
00:26:35,040 --> 00:26:38,320
Speaker 1: to pass along the cost so easily. But we don't

501
00:26:38,440 --> 00:26:41,480
Speaker 1: love the cyclicals that don't have pricing powers, so exactly

502
00:26:41,560 --> 00:26:44,159
Speaker 1: that we're not looking at maybe what are lower quality

503
00:26:44,280 --> 00:26:46,959
Speaker 1: or highly cyclical companies. At this point, energy is going

504
00:26:47,000 --> 00:26:49,040
Speaker 1: to be an issue. You have to have that pricing

505
00:26:49,080 --> 00:26:52,120
Speaker 1: power and demand in place, So airlines are not necessarily

506
00:26:52,160 --> 00:26:55,240
Speaker 1: a favorite for us. We would play companies related to airlines,

507
00:26:55,320 --> 00:26:58,119
Speaker 1: like Boeing, which has a leverage because they're supplying to

508
00:26:58,240 --> 00:27:01,199
Speaker 1: airline companies, but less it's all and less circlical than

509
00:27:01,240 --> 00:27:04,399
Speaker 1: a pure airline. So today we're gonna hear from Jerome Powell.

510
00:27:04,440 --> 00:27:07,520
Speaker 1: We already heard from Christine Leguard of the ECB talking

511
00:27:07,600 --> 00:27:12,240
Speaker 1: about the transitory supply chain disruptions, the transitory inflation inputs.

512
00:27:12,280 --> 00:27:15,919
Speaker 1: How transitory based on the ground level view of corporate

513
00:27:16,000 --> 00:27:18,960
Speaker 1: balance sheets, do you expect the supply chain disruptions to

514
00:27:19,040 --> 00:27:22,000
Speaker 1: be you know, we don't think we're at the peak

515
00:27:22,119 --> 00:27:25,200
Speaker 1: of inflation at this point. It will be mostly transitory,

516
00:27:25,280 --> 00:27:27,920
Speaker 1: but there's going to be some permanence going forward, especially

517
00:27:28,160 --> 00:27:31,440
Speaker 1: in larger pieces of inflation like wage inflation. So you know,

518
00:27:31,520 --> 00:27:33,560
Speaker 1: going forward, maybe inflation is more in the two to

519
00:27:33,680 --> 00:27:36,240
Speaker 1: three percent range. The question is how hot is that

520
00:27:36,359 --> 00:27:39,360
Speaker 1: for the Fed. Powell does tend to leandubish, so we're

521
00:27:39,359 --> 00:27:41,560
Speaker 1: on the side that the Fed does not make an

522
00:27:41,680 --> 00:27:44,320
Speaker 1: error here. Our view is even that interest rates may

523
00:27:44,359 --> 00:27:47,040
Speaker 1: not increase as quickly as the market is thinking with

524
00:27:47,160 --> 00:27:49,320
Speaker 1: the moderate growth that we expect next year. Sir hamon

525
00:27:49,440 --> 00:27:51,919
Speaker 1: going back and forth with Doug Castle all morning. I mean,

526
00:27:51,960 --> 00:27:54,159
Speaker 1: we're not in speaking terms because the Yankees are crushing

527
00:27:54,200 --> 00:27:57,240
Speaker 1: in red sox, but cast is all better shape about

528
00:27:57,880 --> 00:28:01,200
Speaker 1: or buy backs and in all that, what's use of

529
00:28:01,280 --> 00:28:05,399
Speaker 1: cash gonna do? Given this? Maelstrom, I mean, it's interesting

530
00:28:05,440 --> 00:28:07,679
Speaker 1: because you've seen really high levels of buybacks this year,

531
00:28:07,720 --> 00:28:09,520
Speaker 1: and this kind of tells you that companies are not

532
00:28:09,800 --> 00:28:13,280
Speaker 1: confident enough right now to spend on capex. By backs

533
00:28:13,320 --> 00:28:15,880
Speaker 1: tend to be more flexible. However, we think that will

534
00:28:15,960 --> 00:28:19,560
Speaker 1: likely keep going forward. We're seeing low inventory levels. Our

535
00:28:19,640 --> 00:28:23,560
Speaker 1: view is that companies could shift more capital expenditure going

536
00:28:23,720 --> 00:28:27,040
Speaker 1: forward and pulled back on five backs. So maybe five

537
00:28:27,080 --> 00:28:29,040
Speaker 1: backs continue and kick around the end of this year,

538
00:28:29,040 --> 00:28:30,880
Speaker 1: and then we switched to more of a capex based

539
00:28:30,920 --> 00:28:34,280
Speaker 1: model as companies become more confident as the delta variant

540
00:28:34,320 --> 00:28:36,680
Speaker 1: moves behind us. Sarah, I missed you last time. It's

541
00:28:36,680 --> 00:28:38,280
Speaker 1: been too long. It's going to see you and great

542
00:28:38,280 --> 00:28:41,360
Speaker 1: to catch up. Thank you. This is new ving global equity.

543
00:28:41,440 --> 00:28:50,520
Speaker 1: See Dan Clifton always writes with a real sense of

544
00:28:50,600 --> 00:28:54,680
Speaker 1: American political history. His latest note is simply a jewel.

545
00:28:54,760 --> 00:28:58,840
Speaker 1: He's a frateiguous research head to policy Research. Dan, I love, love,

546
00:28:58,920 --> 00:29:01,760
Speaker 1: love what you do about the ascent of the Tea

547
00:29:01,920 --> 00:29:06,920
Speaker 1: Party twelve thirteen years ago and in November a decade ago,

548
00:29:07,280 --> 00:29:10,560
Speaker 1: basically the Tea Party collapsed. How do you bring that

549
00:29:10,800 --> 00:29:15,680
Speaker 1: forward to the Democrats of two thousand twenty one? Absolutely, First,

550
00:29:15,720 --> 00:29:17,960
Speaker 1: thank you for having me. This is a very big

551
00:29:18,000 --> 00:29:20,840
Speaker 1: week in Washington. We're calling it Field of Dreams Week,

552
00:29:21,200 --> 00:29:24,600
Speaker 1: as Speaker Pelosi tries to build legislation and hopefully the

553
00:29:24,680 --> 00:29:28,160
Speaker 1: votes will come. As you know, the progressive Democrats have

554
00:29:28,280 --> 00:29:31,640
Speaker 1: been pushing for a ironclad commitment on a three point

555
00:29:31,720 --> 00:29:35,200
Speaker 1: five trillion dollars spending package, and if they get that,

556
00:29:35,320 --> 00:29:38,280
Speaker 1: they would agree to an infrastructure package that was negotiated

557
00:29:38,360 --> 00:29:41,600
Speaker 1: on a bipartisan basis. We are nowhere near at three

558
00:29:41,640 --> 00:29:44,920
Speaker 1: point five trillion dollar deal. And so Speaker Pelosi made

559
00:29:44,920 --> 00:29:47,719
Speaker 1: a very big shift last night and said I am

560
00:29:47,840 --> 00:29:50,640
Speaker 1: going to d link the infrastructure bill from the three

561
00:29:50,680 --> 00:29:53,840
Speaker 1: point five trillion dollars spending package. Let's take the win

562
00:29:53,960 --> 00:29:56,960
Speaker 1: on infrastructure, and now we're going to have a test

563
00:29:57,320 --> 00:30:00,720
Speaker 1: of whether the Progressive Democrats or the equivalent of the

564
00:30:00,800 --> 00:30:03,560
Speaker 1: Tea Party in two thousand eleven and two thousand twelve,

565
00:30:03,920 --> 00:30:06,960
Speaker 1: tom as you remember, in the week before the fiscal

566
00:30:07,040 --> 00:30:10,320
Speaker 1: cliff of two thousand twelve, the Tea Party took down

567
00:30:10,840 --> 00:30:15,200
Speaker 1: a bipartisan negotiated agreement on the fiscal cliff in direct

568
00:30:15,360 --> 00:30:18,680
Speaker 1: opposition to what Speaker May wanted to get, and as

569
00:30:18,760 --> 00:30:21,200
Speaker 1: a result, they ended up with a much worse deal

570
00:30:21,640 --> 00:30:24,000
Speaker 1: and eventually the collapse. So this is a very big

571
00:30:24,080 --> 00:30:27,640
Speaker 1: test for the Progressives here. Pelosi is changing them, and

572
00:30:27,760 --> 00:30:30,760
Speaker 1: ultimately I believe an infrastructure bill will pass this week. Dan,

573
00:30:30,840 --> 00:30:34,120
Speaker 1: Are they whippable? Are they so intransigent that I can't

574
00:30:34,120 --> 00:30:36,320
Speaker 1: even pronounce it correctly? I don't have a fancy degree

575
00:30:36,400 --> 00:30:40,360
Speaker 1: like Clifton. But are they whippable? It's a great word,

576
00:30:40,560 --> 00:30:43,280
Speaker 1: and I do think they are whippable. They are whippable.

577
00:30:43,440 --> 00:30:47,200
Speaker 1: If the President of the United States picks up the phone,

578
00:30:47,640 --> 00:30:50,600
Speaker 1: even goes to their lunch this week and says I

579
00:30:50,760 --> 00:30:53,840
Speaker 1: need your vote. The President is in quicksand here. He's

580
00:30:53,880 --> 00:30:57,200
Speaker 1: got higher inflation, he's got COVID issues where he's under

581
00:30:57,240 --> 00:31:00,720
Speaker 1: water with the voters. He has the Afghanistan on armed policy.

582
00:31:00,960 --> 00:31:03,800
Speaker 1: He needs a domestic policy win. He needs to put

583
00:31:03,880 --> 00:31:06,800
Speaker 1: it out there. There's two points of pressure. Number One,

584
00:31:07,080 --> 00:31:09,720
Speaker 1: I need you for this win. The momentum will get

585
00:31:09,800 --> 00:31:13,000
Speaker 1: us to a larger spending package down the road. And second,

586
00:31:13,360 --> 00:31:16,520
Speaker 1: the Highway Trust Fund will completely expire on October one.

587
00:31:17,080 --> 00:31:19,400
Speaker 1: We don't want those jobs to go away, so I

588
00:31:19,520 --> 00:31:22,280
Speaker 1: need your vote. But it's not a one way street. Tom.

589
00:31:22,640 --> 00:31:25,280
Speaker 1: He's gonna have to go to Senator Mansion and Senator

590
00:31:25,360 --> 00:31:28,080
Speaker 1: Cinema and say I need something bigger on the three

591
00:31:28,160 --> 00:31:30,720
Speaker 1: point five trillion dollar spending package so I can go

592
00:31:30,800 --> 00:31:34,200
Speaker 1: back to the Progressives with something. Ultimately, I believe that

593
00:31:34,320 --> 00:31:37,000
Speaker 1: that's going to work. But this is as high stakes

594
00:31:37,040 --> 00:31:39,160
Speaker 1: as I've seen it. When you can only lose three

595
00:31:39,240 --> 00:31:41,360
Speaker 1: votes in the House of Representatives. Daniel said that you

596
00:31:41,400 --> 00:31:44,200
Speaker 1: do believe that an infrastructure plan will pass. I assume

597
00:31:44,280 --> 00:31:47,640
Speaker 1: this is the bipartisan infrastructure bill that will pass this week.

598
00:31:47,880 --> 00:31:50,160
Speaker 1: Where does that leave the debt ceiling debate? The potential

599
00:31:50,200 --> 00:31:52,840
Speaker 1: government shutdown if it all. Does it help move the

600
00:31:52,920 --> 00:31:57,280
Speaker 1: needle in that direction? Great question, completely separate, but everything

601
00:31:57,400 --> 00:32:00,240
Speaker 1: is connected. In Washington, last night we had a vote

602
00:32:00,240 --> 00:32:03,800
Speaker 1: in the United States Senate to continue that government funding

603
00:32:04,120 --> 00:32:06,560
Speaker 1: and to lift at that ceiling. Did you know? That

604
00:32:06,720 --> 00:32:10,440
Speaker 1: vote failed? And so we're beginning the step process of

605
00:32:10,760 --> 00:32:12,800
Speaker 1: where we're going on this. My guess is that the

606
00:32:12,880 --> 00:32:16,240
Speaker 1: Democrats in the Senate are going to remove the debt ceiling,

607
00:32:16,840 --> 00:32:20,480
Speaker 1: pass the continuing Budget resolution, and that will ultimately pass

608
00:32:20,520 --> 00:32:23,040
Speaker 1: the House of Representatives. Then we're gonna have to figure

609
00:32:23,080 --> 00:32:25,160
Speaker 1: out what we're gonna do with the debt ceiling. And

610
00:32:25,240 --> 00:32:27,280
Speaker 1: I do think the Democrats are starting to come to

611
00:32:27,360 --> 00:32:29,960
Speaker 1: the realization that they're gonna have to do it alone

612
00:32:30,360 --> 00:32:34,040
Speaker 1: through the budget reconciliation process, and it's gonna take about

613
00:32:34,080 --> 00:32:36,320
Speaker 1: two weeks for them to get there. So this is

614
00:32:36,400 --> 00:32:39,520
Speaker 1: a for me, I'm much more worried about the debt

615
00:32:39,560 --> 00:32:43,160
Speaker 1: ceiling resolution. You're already seeing short term interest rates in

616
00:32:43,200 --> 00:32:45,680
Speaker 1: the one month market really starting the bid up here

617
00:32:45,720 --> 00:32:48,480
Speaker 1: as investors are worried about getting paid for. That's gonna

618
00:32:48,520 --> 00:32:51,080
Speaker 1: have a far bigger impact on financial mortgage than the

619
00:32:51,160 --> 00:32:53,680
Speaker 1: infrastructure at least. The thing about the question you just

620
00:32:53,840 --> 00:32:56,400
Speaker 1: have to think about all the bandwidth. Each one of

621
00:32:56,440 --> 00:32:58,960
Speaker 1: these are very difficult, and we're trying to do four

622
00:32:59,080 --> 00:33:01,960
Speaker 1: of them at one time in a very short time

623
00:33:02,000 --> 00:33:05,040
Speaker 1: frame with limited majorities in both the Senate and the House.

624
00:33:05,360 --> 00:33:07,160
Speaker 1: This is as high stakes as I've ever seen it.

625
00:33:07,320 --> 00:33:10,520
Speaker 1: What's the historical analog to the potential for the United

626
00:33:10,560 --> 00:33:12,440
Speaker 1: States to default here? I mean, is it two thousand

627
00:33:12,520 --> 00:33:15,560
Speaker 1: and eleven or is this unprecedented in the potential here

628
00:33:15,680 --> 00:33:18,640
Speaker 1: for an error? Yeah, So we've been calling this a

629
00:33:18,680 --> 00:33:20,840
Speaker 1: September to remember because it reminds us a lot of

630
00:33:20,880 --> 00:33:24,040
Speaker 1: September two thousand thirteen. Do you remember in September two

631
00:33:24,080 --> 00:33:27,000
Speaker 1: thousand thirteen, the FED was trying to taper. Bernaki's replacement

632
00:33:27,120 --> 00:33:29,440
Speaker 1: was on the table. You had a government shutdown, we

633
00:33:29,520 --> 00:33:31,040
Speaker 1: had to raise the debt ceiling in the A C

634
00:33:31,240 --> 00:33:34,200
Speaker 1: exchanges were coming online. That's very similar to what we

635
00:33:34,280 --> 00:33:36,720
Speaker 1: are today and ultimately LI So we had a government

636
00:33:36,760 --> 00:33:40,080
Speaker 1: shutdown that made it easier to raise the debt ceiling

637
00:33:40,440 --> 00:33:42,520
Speaker 1: because once we got into a shutdown, we had to

638
00:33:42,600 --> 00:33:45,560
Speaker 1: reopen the government and then we attached the debt ceiling

639
00:33:45,640 --> 00:33:48,320
Speaker 1: to it. So there is an analogy there. In two

640
00:33:48,400 --> 00:33:51,240
Speaker 1: thousand eleven, which I think is another good analogy that

641
00:33:51,440 --> 00:33:55,320
Speaker 1: was the Republican Tea Party challenging on the debt ceiling.

642
00:33:55,640 --> 00:33:57,840
Speaker 1: Today it's a little bit different because you have one

643
00:33:57,920 --> 00:34:01,160
Speaker 1: party government, and usually when you have one party government,

644
00:34:01,440 --> 00:34:04,120
Speaker 1: that party raises the debt ceiling by themselves, and there's

645
00:34:04,160 --> 00:34:06,480
Speaker 1: ways to do it. It's just we're gonna need the

646
00:34:06,760 --> 00:34:09,759
Speaker 1: pressure to get policy makers to act. And that's why

647
00:34:09,760 --> 00:34:11,520
Speaker 1: I think you're going to see some strain and some

648
00:34:11,680 --> 00:34:14,399
Speaker 1: volatility in the short term credit markets until we get

649
00:34:14,440 --> 00:34:19,239
Speaker 1: that resolution government about three different parties down. That's the issue.

650
00:34:19,320 --> 00:34:22,920
Speaker 1: Isn't it to party government in name only? Really to

651
00:34:23,080 --> 00:34:25,360
Speaker 1: party d C. There's about five different ones down that

652
00:34:25,480 --> 00:34:26,920
Speaker 1: is trying to agree on something. It isn't that a

653
00:34:27,000 --> 00:34:28,960
Speaker 1: myth hit down in Washington. It's always been true to

654
00:34:29,080 --> 00:34:32,439
Speaker 1: some degree that there roady two parties in Washington. That's

655
00:34:32,480 --> 00:34:35,400
Speaker 1: exactly right. And you know, our presentation into the presidential

656
00:34:35,400 --> 00:34:38,319
Speaker 1: election was there's really four political parties. You have your

657
00:34:38,400 --> 00:34:42,279
Speaker 1: establishment Republicans, Establishment Democrats, and then your Progressives and your

658
00:34:42,320 --> 00:34:46,120
Speaker 1: Trump Republicans. And for the Republicans, they've just been much

659
00:34:46,160 --> 00:34:49,000
Speaker 1: more advanced over the last couple of years. Now you're

660
00:34:49,000 --> 00:34:52,080
Speaker 1: seeing that fourth party really developed on the Democratic side,

661
00:34:52,360 --> 00:34:54,960
Speaker 1: And I think the key question is Speaker Pelosi is

662
00:34:55,040 --> 00:34:57,719
Speaker 1: the best whip that I've ever seen in my lifetime.

663
00:34:57,960 --> 00:35:00,280
Speaker 1: She knows where to get the vote, she knows actually

664
00:35:00,280 --> 00:35:03,080
Speaker 1: how to apply the pressure. But Jonathan, she's a lane

665
00:35:03,239 --> 00:35:06,400
Speaker 1: duck speaker, and do the Progressive sees that as an

666
00:35:06,440 --> 00:35:09,759
Speaker 1: opportunity try and burn the House down until they get

667
00:35:09,840 --> 00:35:12,120
Speaker 1: what they want. My guess is that they're going to

668
00:35:12,600 --> 00:35:15,000
Speaker 1: not let perfect be the enemy of the good. They're

669
00:35:15,000 --> 00:35:17,319
Speaker 1: gonna wind up moving the ball forward, but it's gonna

670
00:35:17,400 --> 00:35:19,480
Speaker 1: take a lot of work from Pelosi in Biden to

671
00:35:19,600 --> 00:35:21,880
Speaker 1: get there. And then ultimately, I think there's a lot

672
00:35:21,960 --> 00:35:24,160
Speaker 1: of work getting done behind the scenes to get some

673
00:35:24,280 --> 00:35:27,160
Speaker 1: sort of reconciliation package through somewhere in the range of

674
00:35:27,239 --> 00:35:30,440
Speaker 1: two trillion dollars that's going to have a meaningful increase

675
00:35:30,480 --> 00:35:33,640
Speaker 1: in healthcare renewable energy spending. So not everything you want,

676
00:35:33,920 --> 00:35:37,360
Speaker 1: but that's Washington, and you're gonna have to accept that compromise,

677
00:35:37,640 --> 00:35:40,320
Speaker 1: just like the Democrats did with Obamacare in two thousand tens.

678
00:35:40,400 --> 00:35:43,480
Speaker 1: So we're really seeing those divisions play out. It's not

679
00:35:43,719 --> 00:35:46,400
Speaker 1: easy to watch the legislation be made. But I do

680
00:35:46,600 --> 00:35:49,239
Speaker 1: think that we're starting to see how this how this

681
00:35:49,360 --> 00:35:52,479
Speaker 1: program is going to develop, and the Democrats are starting

682
00:35:52,520 --> 00:35:54,760
Speaker 1: to get their game plan and place. Don't be a stranger.

683
00:35:54,880 --> 00:35:57,319
Speaker 1: It's gonna catch you up than Clifton that to take us.

684
00:35:58,200 --> 00:36:01,360
Speaker 1: This is the Bloomberg Surveillance Pod asked thanks for listening.

685
00:36:01,760 --> 00:36:05,040
Speaker 1: Join us live weekdays from seven to ten am Eastern

686
00:36:05,320 --> 00:36:09,319
Speaker 1: on Bloomberg Radio and on Bloomberg Television each day from

687
00:36:09,440 --> 00:36:14,680
Speaker 1: six to nine am for insight from the best in economics, finance, investment,

688
00:36:14,840 --> 00:36:19,840
Speaker 1: and international relations. And subscribe to the Surveillance podcast on

689
00:36:19,960 --> 00:36:23,759
Speaker 1: Apple podcast, SoundCloud, Bloomberg dot com, and of course on

690
00:36:23,880 --> 00:36:28,000
Speaker 1: the terminal. I'm Tom Keene, and this is Bloomberg