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Speaker 1: Welcome to the Bloomberg Surveillance Podcast. I'm Tom Keene, Jaylie.

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Speaker 1: We bring you insight from the best in economics, finance,

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Speaker 1: investment and international relations. Find Bloomberg Surveillance on Apple Podcasts, SoundCloud,

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Speaker 1: Bloomberg dot com, and of course I'm the Bloomberg. Peter

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Speaker 1: Oppenheimer joined us right now Goldman Sachs, Chief Global equity Strategist. Peter,

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Speaker 1: I usually have to deal with this by myself. I've

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Speaker 1: got you with you to Dan, I appreciate that. Glad.

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Speaker 1: Can you explain to Tom Keane? Can you explain to

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Speaker 1: Tom Keene please who Gareth Bale is and why you

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Speaker 1: might be happy very very soon. Thank you, Thank you. John.

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Speaker 1: Hello everyone. Firstly, I think I think, just to correct,

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Speaker 1: I think you're talking about Everton. But nonetheless, yes, you

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Speaker 1: you've found the one Tottenham over here, very very concerned

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Speaker 1: about the prospects of al but um, yeah, it's gonna

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Speaker 1: be a tricky, a tricky thing for them to face.

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Speaker 1: You know what's so important here, Peter Appenheimer seriously is

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Speaker 1: maybe Gareth Bell can come in and save the day

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Speaker 1: for the Tots. But far more importantly a huge part

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Speaker 1: of this market needs to be saved if they're not

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Speaker 1: Amazon and they're not Apple, and I love, love, love

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Speaker 1: the phrase you've coined, the hope phase. What is the

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Speaker 1: hope phase right now for investors and the huge body

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Speaker 1: of people that don't own the high flying text. Well, firstly,

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Speaker 1: what is the hope phase? You know, if you look

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Speaker 1: at history of their markets and ball markets, virtually every

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Speaker 1: ball market does start during a recession, after a period

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Speaker 1: of falling prices, when investors for some reason start to

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Speaker 1: get more optimistic about the prospects for recovery, and that

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Speaker 1: initial hope phase. The hope of recovery tends to be

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Speaker 1: reflected in quite explosive cases, and stock price is mainly

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Speaker 1: driven by valuation expansion, and that's exactly what we've seen

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Speaker 1: really since March, and I think it is consistent with

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Speaker 1: this being the start of a new phase. What you say, though,

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Speaker 1: is interesting is that this new phase, this new cycle,

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Speaker 1: is seeing the same leadership as we were seeing before

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Speaker 1: with the technologies companies and growth companies continue to outperform

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Speaker 1: significantly the old economy and the deep value parts of

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Speaker 1: the market. But it's consistent with this ongoing shift to

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Speaker 1: more negative real interest rates U and actually the disruption

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Speaker 1: that we're seeing as a result of the technology companies

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Speaker 1: changing the nature of many of these traditional businesses as

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Speaker 1: a digital revolution continues. So I think strategically we're in

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Speaker 1: a new ball market phase. That's a good thing, but

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Speaker 1: the secular trend is probably likely to be quite similar

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Speaker 1: in terms of leadership. Pet have made the argument though,

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Speaker 1: that Europe doesn't have to be left for dead here,

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Speaker 1: that this is not just the United States big text,

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Speaker 1: or that Europe has a role in all of this.

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Speaker 1: Can you walk us through that that argument that you've

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Speaker 1: been making over the last several months. Yeah, look again,

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Speaker 1: let's just look back at for a moment. If we

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Speaker 1: take the last cycle, the last decade or so period

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Speaker 1: after the financial crisis, it was marked by very good

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Speaker 1: returns and financial assets as rates came down. But the

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Speaker 1: US was a massive outperformer of all eperty markets. And

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Speaker 1: the main reason for that not the only one. The

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Speaker 1: main reason was its exposure to the things that we're

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Speaker 1: doing very well technology, whereas Europe, of course had a

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Speaker 1: massive exposure to the areas of the market that were

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Speaker 1: really at the epicenter of the crisis. You know, it

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Speaker 1: had about a quarter of its index in banks and

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Speaker 1: another ten or fifteen cent in the oil sector for example. Now,

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Speaker 1: if you roll things onto where we are today, banks

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Speaker 1: have fallen to about six percent of the index in Europe.

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Speaker 1: Now you have technology being about twice the size of

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Speaker 1: the oil sector. So why you don't have the same

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Speaker 1: significant concentration of leaders and technology in Europe as you

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Speaker 1: do have in the US. The market is becoming more

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Speaker 1: grossy and it's becoming less value orientated, and what you

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Speaker 1: have is a similar sort of style of of concentration.

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Speaker 1: You don't have the bang stocks, of course, but you

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Speaker 1: have what we've described as the Granola's, the top ten

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Speaker 1: or eleven companies in Europe standing for the starting letter

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Speaker 1: of each of their names. These are big companies which

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Speaker 1: are cash generative, strong balance sheets in a combination of technology, healthcare,

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Speaker 1: and staples. And that's really a game what the market

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Speaker 1: is paying for in an environment of otherwise weak growth

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Speaker 1: and very very low rates. And I think that probably

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Speaker 1: will continue grown overs is did I get that right there?

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Speaker 1: I want to say, how much do you expect European

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Speaker 1: equities to outperform US equities? Say over the next one

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Speaker 1: too years, we don't see significant outperformance we've just seen

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Speaker 1: much more similar performance. But I think that's an increasing

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Speaker 1: case in itself for just more geographical diversification. You know,

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Speaker 1: the last ten years you saw huge dominance of the

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Speaker 1: US UM and now I think you'll get much more

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Speaker 1: similar turns across the regions, particularly dollar terms, because we

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Speaker 1: think that the dollars weakness that we've seen in the

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Speaker 1: recent past will continue. So for dollar investors there will

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Speaker 1: be some benefit to diversification from from a currency perspective,

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Speaker 1: and also because the differences across these regions may narrow.

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Speaker 1: And I would say again that we should be looking

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Speaker 1: more at our fora opportunities now where really our companies

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Speaker 1: and drivers irrespective of the region. I'll give you an

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Speaker 1: example of just briefly, our renewables basket companies in Europe

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Speaker 1: at the epicenter of the renewables revolution have actually outperformed

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Speaker 1: then as DAC over the last couple of years. So

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Speaker 1: there are pockets of growth and I think investors should

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Speaker 1: be focused on outside of the US. Peter Appenheimer, you

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Speaker 1: went right where I wanted to go. You're reading my

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Speaker 1: mind here on the alpha generation necessary right now, and

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Speaker 1: what I want to talk about is Ray Dalio's interview

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Speaker 1: yesterday with Eric Shatzker, and he just talked about literally

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Speaker 1: blind diversification. I don't buy that for a single second.

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Speaker 1: How does Peter Appenheimer with David Costen, how do you

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Speaker 1: define an appropriate diversification away from owning three hundred stacks?

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Speaker 1: What is that approach? Well, it's it's a great question,

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Speaker 1: and I think it goes beyond just where you go

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Speaker 1: for equities. Bear in mind that multi asset funds have

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Speaker 1: grown hugely in the last decade and been very successful

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Speaker 1: at bond mix has generated one of the longest and

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Speaker 1: strongest ball markets in history, and a good chunk of that,

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Speaker 1: given that we're now at the zero bound, is likely

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Speaker 1: to generate a very low return, if not a zero returns.

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Speaker 1: So moving up the risk curve is partly what these

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Speaker 1: policies are doing. Within the context of equities. I think

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Speaker 1: you need to sort of diversify out of the pure

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Speaker 1: technology growth part of the market, or looking at how

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Speaker 1: technology is evolving and and and entering into medical technology,

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Speaker 1: UH and educational technology and environmental technology, and actually the

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Speaker 1: environmental drivers of growth we think are going to be

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Speaker 1: a really significant theme over the next ten years or so.

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Speaker 1: It's already really becoming a big focus here in Europe

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Speaker 1: with the Green Deal, which has putting some money behind

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Speaker 1: this idea. But it's likely to broaden out and provide

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Speaker 1: lots of growth opportunities. So I think that m despite

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Speaker 1: the challenges economically, it is fair to say there are

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Speaker 1: some real growth engines and opportunities that are still available

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Speaker 1: for investors as they look to diversify away from the

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Speaker 1: concentration of a very small number of technology names. Peter,

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Speaker 1: great catch up, look forward to seeing you soon, Peter

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Speaker 1: up in him of that of Saxon, do assistance with

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Speaker 1: as someone already just wonderful on the American economy, Stephen

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Speaker 1: Stanley of Amer's pierrepunt Stephen Stanley, how do you frame

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Speaker 1: these retail numbers plus the revisions? Does it make you

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Speaker 1: adjust your guest a bent of G D P. So

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Speaker 1: I'm going to take a tack that that none of

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Speaker 1: you have taken yet. And that's exactly opposite of what

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Speaker 1: Neil was saying a few minutes ago, which is, I

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Speaker 1: think you have to pay attention to the levels and

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Speaker 1: the thing about retail sales, and this is an amazing development,

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Speaker 1: but the retail sales in July were already higher than

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Speaker 1: the pre pandemic levels, so we had already more than

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Speaker 1: recovered what we lost in the lockdown, so it was

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Speaker 1: gonna be tougher to get big gains in August. So yes,

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Speaker 1: it's the disappointment at the margin, but the fact is

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Speaker 1: that retail sales have recovered amazingly since the lockdown. Do

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Speaker 1: you agree with Meal Datas even that the U. S

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Speaker 1: economy looks strong enough and has enough momentum to not

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Speaker 1: need an additional round of fiscal support. Well, I think

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Speaker 1: it's interesting. I yeah, largely, I would agree with what

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Speaker 1: Neil said. I think that um it's interesting because everybody

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Speaker 1: was saying that the economy was going to fall off

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Speaker 1: the table if those benefits expired, and of course it didn't.

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Speaker 1: UM and the markets also were supposedly dependent on seeing

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Speaker 1: that continued UH fiscal or jefs and we didn't get it,

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Speaker 1: and the markets have kind of moved on at this point.

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Speaker 1: So I think if we do need some level of support,

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Speaker 1: I think it would be nice to get some level

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Speaker 1: of bonus benefits. You know, it would be nice for

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Speaker 1: companies to be able to go back and do a

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Speaker 1: second round of p pp loans. Um, you know, maybe

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Speaker 1: something for state and local governments. But I don't think

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Speaker 1: that the economy, the economic recovery, absolutely depends on it

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Speaker 1: the way that a lot of folks were thinking a

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Speaker 1: few months ago. So Stephen, you agree with the administration

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Speaker 1: that this is a self sustaining recovery that doesn't require

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Speaker 1: and that's acessarily require another fiscal life package. I guess

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Speaker 1: in the aggregate, yes, although I think they're you know,

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Speaker 1: the way that the Democrats are looking at it is

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Speaker 1: not wrong either, which is to say that even if

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Speaker 1: the broader economy is doing okay, there's still people that

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Speaker 1: need help. Um. And I wouldn't disagree with that. I think,

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Speaker 1: you know, getting help to people who are unemployed, um,

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Speaker 1: you know, getting help to businesses who are still having trouble,

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Speaker 1: small businesses that are still having trouble does make sense

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Speaker 1: at this point. Um. But but I don't think that

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Speaker 1: the broad macro economy needs a two or three trillion dollar,

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Speaker 1: you know, fiscal booster shot right now just to continue growing. Steven,

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Speaker 1: the whole idea here of half full, half empty. Chairman

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Speaker 1: Paul is gonna have to juggle this today. How do

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Speaker 1: you expect he will express the uncertainty that attends this meeting.

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Speaker 1: I think the FET has taken the FETE is somewhere

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Speaker 1: beyond half empty. Um. You know, the FET looks at

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Speaker 1: every situation and tries to find the black lining and

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Speaker 1: the silver cloud at this point, UM and And I

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Speaker 1: guess you could argue that that's probably the right thing

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Speaker 1: to do, because if things turn out better than expected,

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Speaker 1: then it's great, and the FED obviously can handle that. UM.

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Speaker 1: But the FED is definitely been braced and expecting the

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Speaker 1: worst since the pandemic broke, and I don't really see

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Speaker 1: any reason to change that. I think the FED feels

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Speaker 1: that they need to support the commune every way they can,

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Speaker 1: and one of the most important ways they can do

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Speaker 1: that is by assuring the markets that they're there and

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Speaker 1: that they're going to provide support. And the markets have

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Speaker 1: certainly gotten that message with an exclamation point, and you've

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Speaker 1: seen that obviously in stocks and another risk asset. I

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Speaker 1: like how you put that with an exclamation point, which

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Speaker 1: brings me to acid bubbles. Do you get the sense

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Speaker 1: the Fed's worried at all about those elevated prices? I don't,

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Speaker 1: I don't, and I don't think the FED has come

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Speaker 1: to grips with the role that they've played in creating

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Speaker 1: um inflated asset prices over the last several cycles. UM

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Speaker 1: and until they um, you know, rethink that we're probably

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Speaker 1: just going to see you know, kind of rolling asset

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Speaker 1: bubbles every cycle. UM. You know. The fet IS is

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Speaker 1: still of the view that they should be easy until

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Speaker 1: consumer price inflation takes off, and it certainly hasn't over

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Speaker 1: the last twenty years or so, and so I think

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Speaker 1: that they're fully on board with the idea that they

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Speaker 1: can be as easy as they uh, as they please,

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Speaker 1: for as long as they want, and if we get

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Speaker 1: high asset prices, that's fine. Stephen I asked this earlier

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Speaker 1: on this morning. Chairman Pal is aware of this. He's

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Speaker 1: even talked about it. He did at the Economic Club

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Speaker 1: in New York several years ago when he first became

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Speaker 1: the chairman of the Federal Reserve. Something's changed. What changed

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Speaker 1: He first had that market test, you remember, I think

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Speaker 1: it was the back end of banging backed away. Why

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Speaker 1: did that change for him? Yeah, it's interesting. He's he's

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Speaker 1: gone a very he's gone through a very rapid UH

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Speaker 1: evolution and over his terms as chairman. UM. I think

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Speaker 1: that he's I think that the FED listens Um tour

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Speaker 1: really had an impact on the way that FED thinks

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Speaker 1: about things. I think they sat down and they listened

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Speaker 1: to people who normally aren't listened to with regard to

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Speaker 1: monetary policy, people in low income communities, UM, you know, uh,

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Speaker 1: community activists and people like that, and they have taken

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Speaker 1: that on board, and it's a it's a very different feed.

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Speaker 1: It's almost like a social justice bed rather than kind

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Speaker 1: of the traditional thought of a green ice shade, you know, um,

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Speaker 1: someone that just just looking at numbers and not thinking

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Speaker 1: about uh some of the more social aspects of things.

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Speaker 1: Whether that's a good or a bad thing, I think

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Speaker 1: remains to be seen. But um, it's the feed is

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Speaker 1: very different I think in the way that they approached

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Speaker 1: things today that they were even a few years ago.

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Speaker 1: Steven scribes a cash up really really great. Steven Stanney,

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Speaker 1: there avant to pay upon securities right now. This has

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Speaker 1: been such a joy for us over the last number

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Speaker 1: of months the Lieutenant Governor of the Empire State. We've

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Speaker 1: had huge response worldwide to Kathy Hokel and her straight talk.

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Speaker 1: Of course, serving with Governor Cuomo as well, Kathy. As

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Speaker 1: you know, the Empire state is rather large, and we're

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Speaker 1: gonna give bragging rights to your buffollow Buffalo doing better

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Speaker 1: than good as the bills clearly trouting the Jets and

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Speaker 1: the Giants, except they're doing it too empty stadiums, and

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Speaker 1: that's a metaphor for the entire state recovery. How urgent

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Speaker 1: is it to fill the restaurants and to fill the

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Speaker 1: bills stadiums as they defeat Miami next week? Well, I'm

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Speaker 1: concerned about people from New York Buffalo traveling to Miami,

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Speaker 1: which is the continue to be a hotspot. So uh,

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Speaker 1: no one loves the Buffalo bills more than I do.

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Speaker 1: In the fans of Western York are fanatical about it,

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Speaker 1: but I don't recommend anyone to travel there, and right

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Speaker 1: for place during a pandemic is still to watch it

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Speaker 1: at home. But in terms of restaurants and other openings,

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Speaker 1: we are making some slow progress toward that. Indoor dining

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Speaker 1: will be allowed in New York City starting on September,

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Speaker 1: and every business will have to make their own calculation

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Speaker 1: as to whether or not at a capacity that did

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Speaker 1: it makes sense for them to start to that or

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Speaker 1: just waste this out. So those are still challenges, but

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Speaker 1: I the fact that they're playing at all time, I

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Speaker 1: think that's progress. I mean, there was a few months

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Speaker 1: ago I was talking to the owners of the bills

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Speaker 1: that like, we weren't sure we're gonna have any games.

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Speaker 1: So let's just take these incremental success stories as they come,

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Speaker 1: knowing that the pandemic is still very much with us.

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Speaker 1: What is the urgency of your and Governor Cuomo's need

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Speaker 1: to get salvation from Washington. It's it's it's rapidly sped up,

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Speaker 1: hasn't it. Oh, we spoke a couple of weeks ago,

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Speaker 1: it was intense. Now it's intense on steroids. I mean,

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Speaker 1: we have to get that money. We are in a

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Speaker 1: desperate situation where we have to get money out to

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Speaker 1: schools that are spent in ordinate amount of money to

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Speaker 1: make the school setting safer kids. We have to get

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Speaker 1: it out to healthcare workers, childcare workers, who's watching the kids.

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Speaker 1: We need to give support for that first responders. Mean,

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Speaker 1: there is so much money that needs to come to

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Speaker 1: the States. We can get out to the localities, get

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Speaker 1: it out to the schools, and if Washington does not

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Speaker 1: do that, that will be one of the greatest derelictions

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Speaker 1: of duty in the history of this country. We are

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Speaker 1: still waiting. This is our equivalent of storms, hurricanes, tornadoes,

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Speaker 1: black bloods, and fires all at once hits the state

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Speaker 1: of New York, and the the rest of the nation

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Speaker 1: needs itself as well. The time is now. What are

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Speaker 1: you waiting for, Kathy. In the meantime, you've got employers

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Speaker 1: trying to bring workers back to the office. JP Morgan

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Speaker 1: in particular has been pretty vocal about this, and yet

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Speaker 1: yesterday Bloomberg reporting that one of JP Morgan's workers did

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Speaker 1: get diagnosed with COVID. They had to send some workers home,

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Speaker 1: and this really speaks to the concern about a second

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Speaker 1: wave of COVID as workers start getting back to the office.

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Speaker 1: What are you expecting and what's the threshold for another

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Speaker 1: shutdown or additional closures dialing back of the reopening with

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Speaker 1: respect to how much the virus cases will be allowed

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Speaker 1: to climb, We are not planning to dial back the

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Speaker 1: reopening unless the situation becomes very extremely What I'm talking

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Speaker 1: about it We have been managing a one percent or

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Speaker 1: less in infectionaries the entire state of New York, and

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Speaker 1: that includes New York City for the last thirty eight days,

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Speaker 1: that's extraordinary. If we continue to engage in the same

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Speaker 1: behavior we're doing, people wearing masks, people staying apart, and

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Speaker 1: this is a message for our n YU friends and

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Speaker 1: watch its where stop gathering. You're just only making you're

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Speaker 1: you're creating a situation where you're going to be sent home.

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Speaker 1: Don't do that if if people do it smartly, and

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Speaker 1: from the lessons we learned before, we did not know

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Speaker 1: that a mask to make such a heap difference or

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Speaker 1: social distinct could make such a big difference. So that's

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Speaker 1: why if there is a second wave or whether there's

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Speaker 1: their individual cases popping up, we're ready for it. We

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Speaker 1: can handle it. We know what to do now and

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Speaker 1: more treatments for people, so I don't first see that

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Speaker 1: will ever be in such a dire situation. We want

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Speaker 1: to reopen this economy. We want to get it going

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Speaker 1: in a safe, smart way, but people have to get

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Speaker 1: back to work. That's why we're continuing to make sure

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Speaker 1: the m P a estate so people can take public transportation.

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Speaker 1: We're encouraging people to do it, but follow the protocols

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Speaker 1: we've had in place to march, which is the only

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Speaker 1: reason why we have at the lowest infection rate in

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Speaker 1: the nation. How much, Kathy, are you thinking about the

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Speaker 1: other side of this and how you're going to entice

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Speaker 1: businesses to stay in New York, especially if you do

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Speaker 1: have to raise taxes in order to pay for some

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Speaker 1: of the deficits we're experiencing now. Well, we have not

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Speaker 1: said we're raising taxes in the state of New York.

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Speaker 1: That is very clear. We think that if the federal

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Speaker 1: government is saying that they don't have enough to support us,

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Speaker 1: they can raise taxes. But we don't want to have

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Speaker 1: New York. Uh. We work very hard to get rid

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Speaker 1: of a high tax state reputation. That was one of

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Speaker 1: our administration's first parties because we know that we don't

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Speaker 1: want to rise to the employers away because people need

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Speaker 1: to have good jobs in our city and in our state.

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Speaker 1: It's that simple. So we're not looking to raise taxes,

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Speaker 1: but we are looking to get that assistance from Washington's

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Speaker 1: one one time infusion of mine that can help us

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Speaker 1: get back on our feet because there is no recoveries.

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Speaker 1: I've set a new show before without a national there's

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Speaker 1: no national recovery without the recovery of New York State.

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Speaker 1: It's just a statement effect listening government before we let

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Speaker 1: you go. If you don't get that age, you've gotta

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Speaker 1: make some tough decisions. And if it's not tax talks,

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Speaker 1: what is it, Well, we're gonna have to figure that out.

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Speaker 1: I mean, we are still focused on Washington right now

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Speaker 1: and our legislature in the government, we're having conversations about

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Speaker 1: what Plan B is. But I also do believe that

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Speaker 1: they start recharging the economy, the revenues will start coming back.

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Speaker 1: You've had a hit of fourteen billion dollars loss revenues.

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Speaker 1: We have to start finding ways to bring back businesses

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Speaker 1: to generate that that income, not just for the employees,

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Speaker 1: but also for the state. And I was on a

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Speaker 1: call yesterday with the leadership of and Why seeing companies

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Speaker 1: talking about our tourism ministry and how hard they've been hit.

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Speaker 1: But we're just reminding everyone there is only one New

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Speaker 1: York City. People will still continue to come back. In

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Speaker 1: the meantime, we're asking New Yorkers to come down and

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Speaker 1: explore New York City. The lines are that long. Talk

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Speaker 1: about a staycation. We have nineteen million New Yorkers. Let's

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Speaker 1: start letting you know, this is the lowest infection orry

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Speaker 1: to come to New York City. Have a fabulous vacation,

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Speaker 1: open up your wallets, go see some of the sites,

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Speaker 1: and we'll figure this out. You know, we're New Yorkers.

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Speaker 1: We always figure these things out. We've been down before

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Speaker 1: and we are coming back. Lieutenant Governor, appreciate a sentiment

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Speaker 1: and you saw him this morning. Thanks for giving it

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Speaker 1: to us, Kathy. How cool that New York Lieutenant governor.

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Speaker 1: We have been waiting. We bust us chops at Davos

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Speaker 1: is Francine and our note to do? When will there

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Speaker 1: be a new book? What's interesting about Daniel Jurgen is

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Speaker 1: there are books that are done not quickly, but in

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Speaker 1: a more light tone. Is wonderful request, and they're the

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Speaker 1: books that you have to carry around campus just to

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Speaker 1: look cool. That would be the price definitive on oil.

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Speaker 1: And of course Commanding Heights. How about a new prize?

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Speaker 1: How about a new Commanding Heights? The new map? Where

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Speaker 1: Dan you'regan? Good morning? Where did the title come from?

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Speaker 1: Good morning? Well? Thank you Tom and Francine. First, I've

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Speaker 1: been waiting for a long time to be able to

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Speaker 1: come on with you about the New Map, my new book.

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Speaker 1: So it's a real pleasure to be with you today. Um,

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Speaker 1: I thought, it's you know, the landscape has changed in

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Speaker 1: so many different ways. It's changed in terms of energy,

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Speaker 1: is changed in terms of geopolitics. And that's what I

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Speaker 1: meant by the New Map. And it really started when

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Speaker 1: I was just looking at how trade flows and energy

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Speaker 1: had changed, and then it became clear that this was

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Speaker 1: a metaphor for these big changes we're living through in

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Speaker 1: the world today. To the comparing contrast of the Commanding Heights,

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Speaker 1: which folks, everyone knows, I just say, shut up and

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Speaker 1: read it. H to compare to commanding Heights. You talk

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Speaker 1: about the fragmentation of our globalization. Can that change with

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Speaker 1: a new president of the United States, whether it's in

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Speaker 1: forty eight days or four years from now, Uh, it

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Speaker 1: can change. I think it will be kind of partly

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Speaker 1: putting the pieces back together in relationships with alliances, alliance partners,

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Speaker 1: allies and also international institutions. But I think that the

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Speaker 1: kind of sense that one world just flowing very easily

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Speaker 1: to gather trade flowing, I think that's past us and

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Speaker 1: we're still going to see even with a new administration.

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Speaker 1: If it's a Biden administration, it's a bipartisan UH critique

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Speaker 1: now of China. So I think that notion of what

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Speaker 1: I call in the New Map the w t O

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Speaker 1: Consensus of Integration in the World Economy is it would

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Speaker 1: be under pressure. Who's ever president? Um Don, Good morning

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Speaker 1: and congratulations on the book. You explore two themes that

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Speaker 1: are really crucial to everything that we also try to

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Speaker 1: do here on Bloomberg surveillance, which is trying to understand

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Speaker 1: how the position of the US as one of the

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Speaker 1: major global oil producers because of shale has really transformed

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Speaker 1: this market. And on the one hand, this kind of

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Speaker 1: new Cold War, as you say, between um, you know,

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Speaker 1: some of our western countries and Russia and China. What

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Speaker 1: has been the most significant development in the last fifty

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Speaker 1: years for oil, Well, I think the biggest development is,

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Speaker 1: of course the shale revolution, which took the United States

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Speaker 1: from being a has been a finished we're done with

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Speaker 1: the oil producer to being the world's largest oil producer,

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Speaker 1: and it still is even today. And that's changed the dynamic.

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Speaker 1: It used to be OPAQ versus non OPEC is that

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Speaker 1: kind of framework for for decades, but now it's really

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Speaker 1: the big three, the US, Saudi Arabia, and Russia, and

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Speaker 1: how those three interact really does much to shape the

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Speaker 1: future of the oil market and and the economications about Yeah,

430
00:23:54,960 --> 00:23:57,520
Speaker 1: and we talk a lot about, you know, renewables and

431
00:23:57,840 --> 00:24:02,480
Speaker 1: climate change and a greener tomorrow. So what's at risk

432
00:24:02,560 --> 00:24:06,000
Speaker 1: most for for the shale revolution. Is it COVID and

433
00:24:06,119 --> 00:24:09,560
Speaker 1: demand or is it actually these new renewables. Well, I

434
00:24:09,560 --> 00:24:13,800
Speaker 1: think COVID and demand. I think shale was already running

435
00:24:13,840 --> 00:24:17,880
Speaker 1: into a need for a second revolution, as I call it,

436
00:24:17,920 --> 00:24:20,679
Speaker 1: in terms of its relationship with investors, and COVID has

437
00:24:20,680 --> 00:24:23,240
Speaker 1: been a real crisis for it. And you see it

438
00:24:23,280 --> 00:24:25,920
Speaker 1: in the terms of the degree to which budgets have

439
00:24:26,000 --> 00:24:30,400
Speaker 1: been cut the shale producers fifty from what they were doing.

440
00:24:30,480 --> 00:24:32,920
Speaker 1: So I think it is a kind of survival mode

441
00:24:33,000 --> 00:24:34,880
Speaker 1: right now and will be in that mode. It will

442
00:24:34,880 --> 00:24:38,480
Speaker 1: be in that mode too next year. Wind and solar,

443
00:24:39,200 --> 00:24:42,080
Speaker 1: you know, actually don't compete directly with oil. They compete

444
00:24:42,080 --> 00:24:45,320
Speaker 1: with natural gas and those that's where the decisions will

445
00:24:45,359 --> 00:24:48,400
Speaker 1: be made on oil. It. You know, if you look

446
00:24:48,440 --> 00:24:51,040
Speaker 1: at China, China's oil demand is back to where it

447
00:24:51,200 --> 00:24:54,680
Speaker 1: was last year. It's air traffic actually in China is

448
00:24:54,760 --> 00:24:56,800
Speaker 1: higher this August than it was in the August of

449
00:24:56,840 --> 00:25:00,920
Speaker 1: last year. So I think it's too soon to look

450
00:25:00,960 --> 00:25:05,720
Speaker 1: at this current terrible COVID situation and generalize about what

451
00:25:05,760 --> 00:25:08,920
Speaker 1: the what the future will be. But I think clearly

452
00:25:08,960 --> 00:25:12,200
Speaker 1: renewables are going to become a much bigger part of

453
00:25:12,240 --> 00:25:15,040
Speaker 1: the picture, and we're going to see more investment going

454
00:25:15,040 --> 00:25:17,720
Speaker 1: into them. Daniel, you're in part of what we have

455
00:25:17,960 --> 00:25:21,399
Speaker 1: is the great American cliche and in our diplomacy, and

456
00:25:21,440 --> 00:25:25,320
Speaker 1: your most delicate chapter that is our many lines in

457
00:25:25,400 --> 00:25:29,639
Speaker 1: the sand? How did America get to the comedy of

458
00:25:29,760 --> 00:25:33,480
Speaker 1: drawing lines in the sand? Well, really, the lines of

459
00:25:33,520 --> 00:25:36,560
Speaker 1: the stands started, of course after World War One, when

460
00:25:36,560 --> 00:25:39,840
Speaker 1: the Ottoman Empire collapsed into British and the French started

461
00:25:39,880 --> 00:25:42,040
Speaker 1: doing That's on page I got to interrupt. That's on

462
00:25:42,080 --> 00:25:46,040
Speaker 1: page for eighty two of the prize. Continue. Okay, it's

463
00:25:46,200 --> 00:25:50,359
Speaker 1: much much earlier in the new map, much earlier. Uh,

464
00:25:50,440 --> 00:25:53,000
Speaker 1: you're almost at the last page numbers of the new map.

465
00:25:53,040 --> 00:25:56,359
Speaker 1: It's a shorter book. Um, But I think what you know,

466
00:25:56,480 --> 00:25:59,439
Speaker 1: we had this really historic development yesterday which was in

467
00:25:59,480 --> 00:26:02,600
Speaker 1: some ways understated in news coverage because of everything else

468
00:26:02,600 --> 00:26:06,000
Speaker 1: that's happening, which is the new relationship between the UAE

469
00:26:06,680 --> 00:26:10,119
Speaker 1: and Israel, and that reflects a kind of a change

470
00:26:10,119 --> 00:26:12,000
Speaker 1: in the map of drawing a line. And there are

471
00:26:12,000 --> 00:26:14,840
Speaker 1: many reasons for it. And one reason is the Gulf

472
00:26:14,880 --> 00:26:17,960
Speaker 1: countries are concerned that the US or they see the

473
00:26:18,040 --> 00:26:22,080
Speaker 1: US kind of backing away from the region, particularly because

474
00:26:22,800 --> 00:26:25,040
Speaker 1: we're much more secure in our energy than we were

475
00:26:25,600 --> 00:26:30,480
Speaker 1: before because of domestic development, which is just transformed the

476
00:26:30,520 --> 00:26:33,239
Speaker 1: global oil market. Dan, you're goin with us, and we

477
00:26:33,240 --> 00:26:35,800
Speaker 1: were thrilled he could join us here in celebration of

478
00:26:35,840 --> 00:26:38,520
Speaker 1: the new map. It is readable, he said, that's not

479
00:26:38,600 --> 00:26:41,240
Speaker 1: the thickness of the prize. My risk hurt for six

480
00:26:41,280 --> 00:26:44,600
Speaker 1: weeks carrying the prize around campus. How about the new

481
00:26:44,680 --> 00:26:48,800
Speaker 1: map here from Dan Jurgen. This has been hugely anticipated

482
00:26:49,080 --> 00:26:51,840
Speaker 1: and again the reach in the scope and skill leaves

483
00:26:51,840 --> 00:26:55,000
Speaker 1: you speechless. Daniel. In the book, you basically say that

484
00:26:55,160 --> 00:26:58,680
Speaker 1: we're not euro of strategic competition with great power rivalry

485
00:26:58,800 --> 00:27:01,360
Speaker 1: that could look a lot like a new Cold War.

486
00:27:01,760 --> 00:27:03,679
Speaker 1: What does it you know, what are the hot spots

487
00:27:03,680 --> 00:27:06,080
Speaker 1: that you're looking for and what does it mean? For example,

488
00:27:06,200 --> 00:27:09,320
Speaker 1: nord Stream too, Well, I think it's you know you

489
00:27:09,320 --> 00:27:11,680
Speaker 1: can look at it. It's basically in terms of relationships

490
00:27:11,720 --> 00:27:15,639
Speaker 1: with China and Russia and the notion of that wt

491
00:27:15,960 --> 00:27:19,280
Speaker 1: O consensus that China's integration with the world economy being

492
00:27:19,320 --> 00:27:21,679
Speaker 1: good for everybody is over. And you see it in

493
00:27:21,720 --> 00:27:25,600
Speaker 1: the language of both the Chinese military documents, the US

494
00:27:25,720 --> 00:27:30,920
Speaker 1: military documents, strategic competition, great power rivalry, and defense budgets

495
00:27:30,920 --> 00:27:34,479
Speaker 1: are being oriented towards that where the hot spots. Clearly,

496
00:27:34,520 --> 00:27:38,040
Speaker 1: one area of risk is the South China Sea, which

497
00:27:38,119 --> 00:27:41,199
Speaker 1: China claims is its own territorial waters and the United

498
00:27:41,240 --> 00:27:44,719
Speaker 1: States and other navies say no freedom of seas, and

499
00:27:44,760 --> 00:27:47,320
Speaker 1: they're in in the new map. I describe several near

500
00:27:47,400 --> 00:27:50,800
Speaker 1: collisions of naval ships that have happened, and so if

501
00:27:50,840 --> 00:27:54,000
Speaker 1: you're saying where could an accident happen, that's one place

502
00:27:54,040 --> 00:27:58,160
Speaker 1: and prudence is required there. You mentioned nords Dream too,

503
00:27:59,000 --> 00:28:03,600
Speaker 1: That certainly is a very dramatic case study of the

504
00:28:03,720 --> 00:28:07,240
Speaker 1: new situation where the U. S government is seeking has

505
00:28:07,280 --> 00:28:10,159
Speaker 1: already put sanctions to try and stop NORD stream to

506
00:28:10,280 --> 00:28:13,560
Speaker 1: the eleven billion dollar pipeline that's almost weeks away from

507
00:28:13,560 --> 00:28:18,760
Speaker 1: being finished, and more sanctions to come. Germany rebellion against

508
00:28:18,760 --> 00:28:21,680
Speaker 1: sanctions being put on the project. But the situation changed

509
00:28:21,960 --> 00:28:26,280
Speaker 1: somewhat by the Navalny poisoning, a kind of reconsideration going on.

510
00:28:26,760 --> 00:28:30,960
Speaker 1: But I think, really since a kind of emerging Cold

511
00:28:30,960 --> 00:28:33,760
Speaker 1: war with Russia. And also, and this really hit me

512
00:28:33,800 --> 00:28:36,600
Speaker 1: while I was writing the New Map, a kind of

513
00:28:36,640 --> 00:28:39,640
Speaker 1: cold war with China, a different kind because the Soviet

514
00:28:39,720 --> 00:28:42,800
Speaker 1: Union was not a major factor in the world economy. China,

515
00:28:42,840 --> 00:28:45,720
Speaker 1: of course, is a very major factor. And one thing

516
00:28:45,760 --> 00:28:48,000
Speaker 1: you start to see some country saying, we don't want

517
00:28:48,040 --> 00:28:49,920
Speaker 1: to have to choose between the U S and China.

518
00:28:50,360 --> 00:28:53,719
Speaker 1: So I think that's the big geopolitical issue for the

519
00:28:53,760 --> 00:28:58,160
Speaker 1: next decade or two. Daniel, do you think that the

520
00:28:58,280 --> 00:29:02,760
Speaker 1: Navalny poisoning will actually force Germany to reassess their position

521
00:29:02,840 --> 00:29:05,760
Speaker 1: on North Stream too? Well? I think it's still up

522
00:29:05,760 --> 00:29:07,920
Speaker 1: in the air as to whether that will happen. You've

523
00:29:07,920 --> 00:29:12,680
Speaker 1: certainly had some prominent German spokesman saying it shouldn't go ahead. Uh,

524
00:29:12,920 --> 00:29:16,120
Speaker 1: consequences if it doesn't go ahead. What happened? I think

525
00:29:16,120 --> 00:29:18,520
Speaker 1: one thing to keep in mind, people will say, well,

526
00:29:18,680 --> 00:29:21,080
Speaker 1: this is going to stop Russian gas from coming into Europe.

527
00:29:21,480 --> 00:29:25,479
Speaker 1: About of Europe's gas comes from Russia ten percent total

528
00:29:25,600 --> 00:29:28,120
Speaker 1: energy that is, and if it doesn't come through nord

529
00:29:28,160 --> 00:29:31,440
Speaker 1: stream too, it's going to come through other pipes into

530
00:29:31,600 --> 00:29:35,440
Speaker 1: Europe anyway, because it's competitive. Although you l en G

531
00:29:35,680 --> 00:29:39,640
Speaker 1: is also competitive and it's what gives the Europeans flexibility.

532
00:29:39,760 --> 00:29:42,840
Speaker 1: The other thing that people haven't paid attention to is

533
00:29:42,840 --> 00:29:44,800
Speaker 1: that Russia is going to be a big l G

534
00:29:45,360 --> 00:29:48,480
Speaker 1: power along with the US, along with gutter in Australia,

535
00:29:48,920 --> 00:29:50,880
Speaker 1: and so we might see a day where Russian llen

536
00:29:50,960 --> 00:29:54,960
Speaker 1: G is competing with Russian pipeline gas in Europe, which

537
00:29:55,200 --> 00:29:58,120
Speaker 1: is nobody's playbook right now, Then you're gonna we're gonna

538
00:29:58,120 --> 00:30:00,560
Speaker 1: have you back in our next half hour after we

539
00:30:00,640 --> 00:30:03,120
Speaker 1: speak with Mr Gurya. Then you're going to just quickly

540
00:30:03,160 --> 00:30:05,680
Speaker 1: here on what you were just talking about. Are we

541
00:30:05,760 --> 00:30:11,760
Speaker 1: in an age of over supply of hydrocarbons? Um where

542
00:30:11,800 --> 00:30:15,400
Speaker 1: in a year of over supply of hydrocarbons when you

543
00:30:15,480 --> 00:30:18,280
Speaker 1: look at the amount of the budget cuts by the

544
00:30:18,400 --> 00:30:21,120
Speaker 1: companies and then you start to say, well, if there's

545
00:30:21,160 --> 00:30:24,400
Speaker 1: decent economic recovery, are we gonna could we have tight

546
00:30:24,480 --> 00:30:26,520
Speaker 1: markets in two or three years? Is not out of

547
00:30:26,520 --> 00:30:29,239
Speaker 1: the question. Although it seems a million miles away. Right

548
00:30:29,320 --> 00:30:33,120
Speaker 1: now we are in celebration of Van Jurgen's the new map,

549
00:30:33,160 --> 00:30:36,200
Speaker 1: and I can only say red with the commanding heights,

550
00:30:36,240 --> 00:30:45,920
Speaker 1: it is absolutely extraordinary. Joining us now is on Hilgaria

551
00:30:46,000 --> 00:30:49,560
Speaker 1: the City Secretary General Mr Gura as always, thank you

552
00:30:49,560 --> 00:30:51,080
Speaker 1: so much for giving us a bit of your time.

553
00:30:51,400 --> 00:30:53,880
Speaker 1: Are you a bit more optimistic about the economy? And

554
00:30:54,080 --> 00:30:56,720
Speaker 1: still some you know, pretty painful fault. But are you

555
00:30:56,720 --> 00:31:00,400
Speaker 1: more optimistic about the economy because lockdown was easy sooner

556
00:31:00,440 --> 00:31:07,400
Speaker 1: than not? As specimistic? Not specimistic, it's not about being optimistic.

557
00:31:07,560 --> 00:31:09,920
Speaker 1: It's gonna be a sea of red all over the place.

558
00:31:10,400 --> 00:31:13,880
Speaker 1: We're still gonna have the contraction that is the greatest

559
00:31:13,960 --> 00:31:17,160
Speaker 1: since the O E c D was created sixty years ago,

560
00:31:17,520 --> 00:31:21,840
Speaker 1: but not as bad as we thought, mostly because of

561
00:31:21,960 --> 00:31:28,080
Speaker 1: the rather timely and very big injection of resources. Okay,

562
00:31:28,080 --> 00:31:32,040
Speaker 1: but do you also see actually productivity and things restarting,

563
00:31:32,760 --> 00:31:35,480
Speaker 1: you know, quicker? Does it mean that we'll have less scarring?

564
00:31:38,840 --> 00:31:43,360
Speaker 1: The problem here is that this V shaped reaction or

565
00:31:43,480 --> 00:31:46,760
Speaker 1: V shaped recovery is not going to happen. What we

566
00:31:47,440 --> 00:31:50,520
Speaker 1: had is it dropped like a lead balloon, then it

567
00:31:50,640 --> 00:31:55,959
Speaker 1: rebounded somewhat and after June we were a little bit enthusiastic,

568
00:31:56,200 --> 00:32:01,560
Speaker 1: maybe too much, and July August it tapered off. Naturally,

569
00:32:01,760 --> 00:32:04,920
Speaker 1: it was going to happen. Now we're gonna see the reality.

570
00:32:05,000 --> 00:32:07,760
Speaker 1: Now we're gonna see the hard numbers. We're gonna be

571
00:32:07,840 --> 00:32:13,560
Speaker 1: counting literally all the casualties. Uh and that includes, of course, uh,

572
00:32:13,760 --> 00:32:17,000
Speaker 1: not only jobs, but also same s. We're gonna see

573
00:32:17,120 --> 00:32:20,680
Speaker 1: if the tourism can recover, and we're gonna see whether

574
00:32:20,800 --> 00:32:25,760
Speaker 1: investment can recover. We are having investment still below what

575
00:32:26,000 --> 00:32:29,480
Speaker 1: we started, you know, at the end of and it

576
00:32:29,560 --> 00:32:35,200
Speaker 1: was already under pressure. Remember trade and investment. We're already

577
00:32:35,320 --> 00:32:39,960
Speaker 1: under pressure. We're already negative to flat, but slightly negative

578
00:32:39,960 --> 00:32:43,520
Speaker 1: to flat because of the trade tensions, because of all

579
00:32:43,600 --> 00:32:47,800
Speaker 1: the pressure that countries were putting among themselves, you know,

580
00:32:47,920 --> 00:32:51,240
Speaker 1: China and the United States and Europe, etcetera. Well, now

581
00:32:51,680 --> 00:32:54,600
Speaker 1: we are in a situation where then then COVID struck,

582
00:32:54,840 --> 00:32:58,320
Speaker 1: and of course that makes it worse. So m as

583
00:32:58,360 --> 00:33:01,920
Speaker 1: I said, we're gonna see a overary in one, but

584
00:33:02,160 --> 00:33:06,320
Speaker 1: it's still gonna be below the level of twenty nineteen.

585
00:33:06,480 --> 00:33:09,120
Speaker 1: It's that bad, okay, Yeah, and you said it it's

586
00:33:09,200 --> 00:33:12,360
Speaker 1: less pessimistic, but still pessimistic. There are a number of

587
00:33:12,400 --> 00:33:16,600
Speaker 1: emerging markets that you've actually had to downgrade further. I'm

588
00:33:16,600 --> 00:33:20,880
Speaker 1: looking at South Africa, I'm looking at India, Argentina and Mexico.

589
00:33:21,040 --> 00:33:27,920
Speaker 1: What happened, Well, they have been UH hardness hit. You

590
00:33:28,080 --> 00:33:33,920
Speaker 1: have cases like Argentina which already had the financial problems before,

591
00:33:34,480 --> 00:33:35,880
Speaker 1: they were dealing with the I m F and they

592
00:33:35,880 --> 00:33:39,800
Speaker 1: were dealing with their creditors before. So uh it's kind

593
00:33:39,840 --> 00:33:42,320
Speaker 1: of a continuation. But in the case of South Africa

594
00:33:42,400 --> 00:33:44,720
Speaker 1: or the case of Mexico, the give in Brazil, et cetera,

595
00:33:45,120 --> 00:33:50,080
Speaker 1: what you are having is very hard hit by the pandemic,

596
00:33:50,440 --> 00:33:55,560
Speaker 1: among other things, because the structures, the health structures, UH

597
00:33:55,640 --> 00:34:00,080
Speaker 1: were not as strong as they were in many the

598
00:34:00,120 --> 00:34:02,880
Speaker 1: countries in the West. Dr Gurry, you know we've squeezed you,

599
00:34:03,120 --> 00:34:06,040
Speaker 1: grease squeezed you in rather around. Daniel Jurgen in his

600
00:34:06,160 --> 00:34:09,200
Speaker 1: wonderful book The New Map, I want you to talk

601
00:34:09,239 --> 00:34:12,520
Speaker 1: to me about the scenario chart on the cover of

602
00:34:12,520 --> 00:34:17,440
Speaker 1: the O c D website about the New Map of joblessness.

603
00:34:17,440 --> 00:34:21,920
Speaker 1: How do you and Lawrence Boon perceive the idea of

604
00:34:22,080 --> 00:34:27,840
Speaker 1: furlough too permanent unemployed? The rationalization of a lesser labor

605
00:34:27,880 --> 00:34:36,880
Speaker 1: share worldwide. What we're saying is number one, don't take

606
00:34:36,960 --> 00:34:41,960
Speaker 1: away the support. Don't take away the relief too fast.

607
00:34:42,560 --> 00:34:46,640
Speaker 1: Maintain that relief because you're talking about tens of millions

608
00:34:46,640 --> 00:34:50,600
Speaker 1: of people who today are not officially registered as unemployed,

609
00:34:51,120 --> 00:34:56,000
Speaker 1: but because they are benefiting from either shoumash Basel in

610
00:34:56,080 --> 00:34:59,480
Speaker 1: France or courts a bit in Germany, or the corresponding

611
00:34:59,680 --> 00:35:02,400
Speaker 1: meca is um in the UK, the United States, et cetera.

612
00:35:02,920 --> 00:35:08,000
Speaker 1: But the question is let's continue. Of course, you know,

613
00:35:08,080 --> 00:35:11,240
Speaker 1: the Germany just announced that they will continue this support throughout.

614
00:35:12,560 --> 00:35:14,600
Speaker 1: Not every country is going to be in a position

615
00:35:14,640 --> 00:35:18,200
Speaker 1: to do that, but we have to continue this because

616
00:35:18,840 --> 00:35:21,239
Speaker 1: we are now going to be in a tapering off

617
00:35:21,320 --> 00:35:24,680
Speaker 1: of the situation, and we're gonna see that unemployment is

618
00:35:24,680 --> 00:35:27,959
Speaker 1: going to taper off, unfortunately at a very very high level.

619
00:35:28,120 --> 00:35:30,920
Speaker 1: With your North American expertise, Samuel Gurry, I'm gonna ask

620
00:35:30,920 --> 00:35:32,799
Speaker 1: you this question. We're gonna rip up the script here

621
00:35:32,880 --> 00:35:36,480
Speaker 1: right now, Daniel, You're gonna defined in commanding heights the

622
00:35:36,600 --> 00:35:40,600
Speaker 1: previous capitalism. He's talking about the new map now of

623
00:35:40,640 --> 00:35:45,399
Speaker 1: a disrupted future. Why can't the United States be more

624
00:35:45,480 --> 00:35:49,719
Speaker 1: like those societies you're talking about who are comfortable in

625
00:35:49,840 --> 00:35:58,360
Speaker 1: providing support in a global natural disaster. The United States

626
00:35:58,560 --> 00:36:01,720
Speaker 1: is a very dynamic society, and at the same time

627
00:36:02,040 --> 00:36:05,759
Speaker 1: it is fifty societies at the same time. You know,

628
00:36:06,080 --> 00:36:09,760
Speaker 1: every country is every every state is a different country

629
00:36:09,800 --> 00:36:12,240
Speaker 1: in the world. The size of many of the countries

630
00:36:12,760 --> 00:36:17,160
Speaker 1: in Europe, and then even within those states, you have

631
00:36:17,920 --> 00:36:21,120
Speaker 1: very large cities which have their own way of doing

632
00:36:21,160 --> 00:36:25,200
Speaker 1: things and their own uh their own bias towards doing things.

633
00:36:25,200 --> 00:36:28,400
Speaker 1: So it's very difficult to put it all together. But

634
00:36:28,440 --> 00:36:31,480
Speaker 1: I think one of the less it's of the pandemic

635
00:36:31,880 --> 00:36:35,680
Speaker 1: is precisely that we can pick up a lot of

636
00:36:36,120 --> 00:36:38,719
Speaker 1: the things that work well and many of the other

637
00:36:38,760 --> 00:36:43,080
Speaker 1: countries and apply them to our own countries because they

638
00:36:43,120 --> 00:36:47,280
Speaker 1: make sense. Because things like masks, things like distancing, things

639
00:36:47,360 --> 00:36:51,560
Speaker 1: like avoiding crowds. There are these things, washing your hands constantly.

640
00:36:51,840 --> 00:36:55,960
Speaker 1: These things work, and actually those countries that did it better.

641
00:36:56,160 --> 00:37:00,759
Speaker 1: Plus technology. Now about about the try king and the

642
00:37:00,880 --> 00:37:06,160
Speaker 1: tracing and massive testing, testing, testing, testing that's going to

643
00:37:06,200 --> 00:37:11,080
Speaker 1: hold us until we develop a vaccine or medicine or both.

644
00:37:12,600 --> 00:37:14,200
Speaker 1: Thank you so much, and Hungarya, they're the O E.

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Speaker 1: C D sectuar in general. Thanks for listening to the

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Speaker 1: Tom Keane before the podcast. You can always catch us worldwide.

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