1 00:00:00,800 --> 00:00:04,040 Speaker 1: Welcome to the Bloomberg Markets Podcast. I'm Paul Sweeney. Alongside 2 00:00:04,040 --> 00:00:06,920 Speaker 1: my co host Matt Miller. Every business day we bring 3 00:00:06,960 --> 00:00:11,520 Speaker 1: you interviews from CEOs, market pros, and Bloomberg experts, along 4 00:00:11,560 --> 00:00:15,600 Speaker 1: with essential market moving news. Find the Bloomberg Markets Podcast 5 00:00:15,640 --> 00:00:18,479 Speaker 1: on Apple Podcasts or wherever you listen to podcasts, and 6 00:00:18,480 --> 00:00:22,560 Speaker 1: at Bloomberg dot com slash podcast. Well, it's really a 7 00:00:22,680 --> 00:00:24,880 Speaker 1: joy to speak to our next guest, Michael sanin Felt. 8 00:00:24,920 --> 00:00:27,760 Speaker 1: He's the chairman and founder of Tiger twenty one. Tiger 9 00:00:27,800 --> 00:00:31,000 Speaker 1: twenty one is a peer membership organization for high net 10 00:00:31,000 --> 00:00:34,519 Speaker 1: worth wealth creators and preservers, helping them to navigate the 11 00:00:34,640 --> 00:00:38,720 Speaker 1: challenges and opportunity to that success creates. Tiger twenty one 12 00:00:38,720 --> 00:00:42,199 Speaker 1: has nine members with more than eighty eight billion dollars 13 00:00:42,240 --> 00:00:45,720 Speaker 1: in assets, so are really unique perspective and some from 14 00:00:46,600 --> 00:00:50,680 Speaker 1: the group of ultrawealthy UH individuals business owners that have 15 00:00:50,760 --> 00:00:53,800 Speaker 1: monetized their businesses. Uh. Michael, thanks so much for joining us. 16 00:00:53,920 --> 00:00:57,360 Speaker 1: I love to get your thoughts on what your members 17 00:00:57,400 --> 00:01:00,800 Speaker 1: are telling you now that at least in the US, 18 00:01:00,840 --> 00:01:03,200 Speaker 1: there are clear signs that we're coming out on the 19 00:01:03,200 --> 00:01:06,360 Speaker 1: other side of this pandemic. How are they viewing the 20 00:01:06,400 --> 00:01:10,840 Speaker 1: world and investment opportunities. Well, thanks for having me, Um. 21 00:01:10,880 --> 00:01:13,640 Speaker 1: You know, it's an interesting time. In one sense. If 22 00:01:13,680 --> 00:01:15,880 Speaker 1: you were ripped rand Winkle and you went to sleep 23 00:01:15,920 --> 00:01:18,200 Speaker 1: a year and a half ago and you woke up today, 24 00:01:18,760 --> 00:01:21,000 Speaker 1: you wouldn't be all that shock. You might not even 25 00:01:21,040 --> 00:01:24,600 Speaker 1: have known there was a pandemic looking at the financial numbers. 26 00:01:24,640 --> 00:01:27,920 Speaker 1: But at this particular moment, I think our members are 27 00:01:28,000 --> 00:01:32,520 Speaker 1: digesting some incredibly mixed signals. On the one hand, uh, 28 00:01:32,520 --> 00:01:35,679 Speaker 1: there's a lot of concern about inflation, uh, and mixed 29 00:01:35,720 --> 00:01:39,679 Speaker 1: messages about areas of the economy where there is inflation. 30 00:01:40,200 --> 00:01:42,679 Speaker 1: And on the other hand, as you've just talked about 31 00:01:42,760 --> 00:01:45,760 Speaker 1: the you know, there's some question about whether that we're 32 00:01:45,760 --> 00:01:47,600 Speaker 1: in a bubble and whether we're at the top of 33 00:01:47,640 --> 00:01:50,880 Speaker 1: a market and how do you protect yourself? Uh. And 34 00:01:50,960 --> 00:01:55,000 Speaker 1: yet there are these long term businesses that have incredible potential. 35 00:01:55,440 --> 00:01:57,520 Speaker 1: So it's a lot of mixed signals that feels a 36 00:01:57,600 --> 00:02:00,480 Speaker 1: little different than we've had in the past. It's pretty 37 00:02:00,520 --> 00:02:04,000 Speaker 1: much a spring back effect coming out of the pandemic. 38 00:02:04,080 --> 00:02:07,120 Speaker 1: I think, Michael, how are your clients preparing for the 39 00:02:07,200 --> 00:02:12,840 Speaker 1: changes that can emerge when it comes to taxes. Sure, 40 00:02:13,360 --> 00:02:16,720 Speaker 1: First of all, they're not clients their members UM because 41 00:02:17,120 --> 00:02:19,639 Speaker 1: these are all people who joined the organization and we're 42 00:02:19,680 --> 00:02:22,919 Speaker 1: not an advisor, but we do get a sense of 43 00:02:22,960 --> 00:02:26,600 Speaker 1: what they're doing. We had a UM we had a 44 00:02:26,600 --> 00:02:30,520 Speaker 1: poll which was really interesting that showed with members that 45 00:02:30,600 --> 00:02:36,800 Speaker 1: when taxes grow more than five percent, differential behavior starts changing. 46 00:02:37,120 --> 00:02:38,720 Speaker 1: And one of the things we talked about in our 47 00:02:38,760 --> 00:02:42,680 Speaker 1: groups we have seventy five groups across the globe UM 48 00:02:42,880 --> 00:02:46,640 Speaker 1: is you know what happens when taxes really rise quickly? 49 00:02:46,720 --> 00:02:49,079 Speaker 1: Capital gains is the one we talk about a lot. 50 00:02:49,480 --> 00:02:52,880 Speaker 1: There's some evidence when you raise capital gains above thirty 51 00:02:53,960 --> 00:02:57,160 Speaker 1: you may not actually increase revenue to the government because 52 00:02:57,200 --> 00:03:00,720 Speaker 1: people's behavior change and they don't realize as many gains 53 00:03:00,720 --> 00:03:04,959 Speaker 1: and it becomes counterproductive. So depending on where the changes 54 00:03:05,080 --> 00:03:11,120 Speaker 1: occur will impact behavior. Obviously, you have tremendous migration out 55 00:03:11,120 --> 00:03:15,359 Speaker 1: of New York into Florida and out of Silicon Valley 56 00:03:15,400 --> 00:03:19,600 Speaker 1: into Austin, just to use as an example, because when 57 00:03:19,600 --> 00:03:23,280 Speaker 1: you had the elimination of the deductibility of state and 58 00:03:23,360 --> 00:03:28,239 Speaker 1: local taxes, it made the high tax states really expensive 59 00:03:28,280 --> 00:03:31,400 Speaker 1: and for some people they want to change their lifestyle 60 00:03:31,440 --> 00:03:34,559 Speaker 1: as a result of it, again that five percent differential 61 00:03:34,880 --> 00:03:38,240 Speaker 1: start showing behavioral changes. Michael, I'd love to get a 62 00:03:38,280 --> 00:03:41,880 Speaker 1: sense of kind of what your members think about cryptocurrencies. 63 00:03:41,920 --> 00:03:44,400 Speaker 1: A lot of investors just across the spectrum or are 64 00:03:44,480 --> 00:03:48,400 Speaker 1: a trying to understand what the whole world of crypto 65 00:03:48,520 --> 00:03:51,680 Speaker 1: and then be if I do have a working understanding 66 00:03:51,720 --> 00:03:53,800 Speaker 1: of it, how do I invest in it? So how 67 00:03:53,800 --> 00:03:56,920 Speaker 1: are your folks, again, the ultry wealthy folks thinking about 68 00:03:56,920 --> 00:04:01,160 Speaker 1: this space? Sure, so we tend to separate. First of all, 69 00:04:01,240 --> 00:04:04,360 Speaker 1: our members are not only interested in crypto, but some 70 00:04:04,520 --> 00:04:07,320 Speaker 1: of them are running some of the new crypto funds 71 00:04:07,320 --> 00:04:10,640 Speaker 1: and have really extraordinary expertise. That's one of the advantages 72 00:04:10,680 --> 00:04:14,480 Speaker 1: about being in our groups. But generally the first order 73 00:04:14,680 --> 00:04:18,279 Speaker 1: is sort of a substitute for gold. Some attributes of 74 00:04:18,360 --> 00:04:22,880 Speaker 1: particularly bitcoin superior to gold, the most being that you 75 00:04:23,000 --> 00:04:28,520 Speaker 1: have a capped amount of bitcoin, so that you have scarcity. Uh. 76 00:04:28,560 --> 00:04:31,960 Speaker 1: And historically gold was a one to three percent asset 77 00:04:32,080 --> 00:04:36,120 Speaker 1: across the average of our members, and today my guess 78 00:04:36,200 --> 00:04:40,120 Speaker 1: is that bitcoin is approaching perhaps a one percent number. 79 00:04:40,440 --> 00:04:43,760 Speaker 1: You know, with a scale of our organization that's still 80 00:04:43,800 --> 00:04:49,280 Speaker 1: approaching a billion dollars of bitcoin potentially UM, but the 81 00:04:49,720 --> 00:04:55,120 Speaker 1: bigger story is the blockchain story. The blockchain story many 82 00:04:55,120 --> 00:04:57,960 Speaker 1: members think could be as big as the Internet itself 83 00:04:58,000 --> 00:05:01,919 Speaker 1: because of the disruptive nature UH that it will have 84 00:05:02,080 --> 00:05:06,200 Speaker 1: on trade, commerce and finance. So in the bitcoin and 85 00:05:06,279 --> 00:05:09,760 Speaker 1: in the cryptocurrencies, in the public area, you have things 86 00:05:09,800 --> 00:05:13,160 Speaker 1: like UH, I think it's great scale bitcoin trust and 87 00:05:13,200 --> 00:05:16,360 Speaker 1: I think they have some other publicly traded trusts, so 88 00:05:16,400 --> 00:05:18,640 Speaker 1: you can buy it like a stock, and it reflects 89 00:05:19,120 --> 00:05:22,000 Speaker 1: the rise and fall of the price of bitcoin. But 90 00:05:22,080 --> 00:05:25,640 Speaker 1: if you're interested in the broader and of course coin 91 00:05:25,720 --> 00:05:31,560 Speaker 1: Base having gone public is the largest infrastructure play for 92 00:05:31,680 --> 00:05:37,120 Speaker 1: cryptocurrency and in the in the broader blockchain area, UM. 93 00:05:37,120 --> 00:05:41,719 Speaker 1: Probably the number one UH company involved in blockchain because 94 00:05:41,760 --> 00:05:44,760 Speaker 1: of commerce is Amazon. Of course, if you buy Amazon, 95 00:05:45,200 --> 00:05:48,200 Speaker 1: you're buying a lot of other themes as well. But 96 00:05:48,320 --> 00:05:50,599 Speaker 1: over the long term, they, they and some of the 97 00:05:50,640 --> 00:05:56,320 Speaker 1: other tech giants really are looking at how blockchain will 98 00:05:56,400 --> 00:05:58,920 Speaker 1: change the world. I'd love to switch gears just a 99 00:05:58,960 --> 00:06:02,039 Speaker 1: little bit to another hot button area, which is real estate. 100 00:06:02,120 --> 00:06:06,680 Speaker 1: With prices so high, are your members buying, are they 101 00:06:06,800 --> 00:06:10,440 Speaker 1: waiting or what are they doing in regard to their 102 00:06:10,440 --> 00:06:13,840 Speaker 1: real estate purchases right now. So so you know, our 103 00:06:13,880 --> 00:06:18,200 Speaker 1: members um joined Tiger when they have liquidity events and 104 00:06:19,000 --> 00:06:22,719 Speaker 1: have built a large, successful company. And the number one 105 00:06:22,839 --> 00:06:27,479 Speaker 1: asset among our members has been real estate for over 106 00:06:27,560 --> 00:06:31,359 Speaker 1: a decade, followed by private equity and then public equity 107 00:06:31,440 --> 00:06:34,679 Speaker 1: or today it's been reversed with public equity. Going forward, 108 00:06:34,760 --> 00:06:37,360 Speaker 1: real estate is king and the reason is that's where 109 00:06:37,360 --> 00:06:40,600 Speaker 1: our members have expertise. But um, you know when they 110 00:06:40,600 --> 00:06:44,200 Speaker 1: say like still water runs deep. Um, if you say 111 00:06:44,200 --> 00:06:46,840 Speaker 1: the word real estate, it sounds like it's a single market, 112 00:06:46,960 --> 00:06:50,080 Speaker 1: but there's no market more in transition. If you look 113 00:06:50,120 --> 00:06:54,960 Speaker 1: at the retail space, there's just uh, endless negativity going 114 00:06:55,080 --> 00:06:59,560 Speaker 1: forward because those Internet sales have changed the way people 115 00:06:59,600 --> 00:07:04,000 Speaker 1: buy forever. And if that's hurt the retail space, the 116 00:07:04,080 --> 00:07:08,279 Speaker 1: industrial space that serves those internet sales, the last mile 117 00:07:08,720 --> 00:07:13,040 Speaker 1: delivery and some of the telecommunications industrial real estate has 118 00:07:13,040 --> 00:07:16,480 Speaker 1: been on fire. That's been amazing. And in the middle, 119 00:07:16,960 --> 00:07:19,880 Speaker 1: you know, you have the big question about residential, which 120 00:07:19,960 --> 00:07:23,800 Speaker 1: is just the perennial favorite. It's income producing an office. 121 00:07:23,920 --> 00:07:27,120 Speaker 1: Everybody's gonna wonder what's happening with office. That's that's the 122 00:07:27,160 --> 00:07:30,200 Speaker 1: big question. Hey, Michael, Thanks so much for joining us again. 123 00:07:30,280 --> 00:07:33,320 Speaker 1: We always love getting your perspective. It is a unique perspective. 124 00:07:33,400 --> 00:07:36,640 Speaker 1: Michael Son and Felt, chairman and founder of a tiger 125 00:07:37,160 --> 00:07:45,840 Speaker 1: one billion dollars assets. This is Bloomberg. Well, we did 126 00:07:45,840 --> 00:07:49,320 Speaker 1: get the I s M Services Index data this morning. 127 00:07:49,320 --> 00:07:50,760 Speaker 1: I guess for the month of June it fell to 128 00:07:50,880 --> 00:07:55,080 Speaker 1: sixty point one versus the record sixty four May. So 129 00:07:55,160 --> 00:07:58,000 Speaker 1: that's not so good. The expectation was for sixty three 130 00:07:58,080 --> 00:08:00,720 Speaker 1: point five, so came in a little bit below expectations. 131 00:08:00,880 --> 00:08:03,880 Speaker 1: That's not so good. But heck, are reading a sixty 132 00:08:03,880 --> 00:08:06,240 Speaker 1: point one in and of itself is very good. So 133 00:08:06,280 --> 00:08:08,880 Speaker 1: how to really pass through this? We welcome Steve you 134 00:08:08,920 --> 00:08:12,400 Speaker 1: should oh he's a chief economist for Miszoo ho Security. Steve, 135 00:08:12,440 --> 00:08:15,280 Speaker 1: what was your takeaway this i SM data this morning? Well, 136 00:08:15,280 --> 00:08:16,720 Speaker 1: I mean you kind of hit the nail on the 137 00:08:16,760 --> 00:08:18,760 Speaker 1: head a moment ago PUB when you talked about the 138 00:08:18,800 --> 00:08:21,400 Speaker 1: fact that you know it's down relative to expectations, but 139 00:08:21,520 --> 00:08:24,920 Speaker 1: the headline number is still in that expansion every phase. 140 00:08:24,960 --> 00:08:28,000 Speaker 1: Now this is for the service component of the economy. 141 00:08:28,040 --> 00:08:31,880 Speaker 1: The manufacturing number are disappointed as well relative to expectations, 142 00:08:32,160 --> 00:08:34,839 Speaker 1: but again still at a healthy level. But what's most 143 00:08:34,920 --> 00:08:38,280 Speaker 1: important about the data in here is the details of 144 00:08:38,360 --> 00:08:40,959 Speaker 1: the report, you know, the details of the report getting 145 00:08:40,960 --> 00:08:43,600 Speaker 1: at what was actually happening in terms of orders and 146 00:08:43,679 --> 00:08:46,760 Speaker 1: employment and things of that nature. Whereas where we saw 147 00:08:46,840 --> 00:08:49,960 Speaker 1: the weakness and the biggest negative surprise was in that 148 00:08:50,080 --> 00:08:52,880 Speaker 1: employment component, which came in at minus four. It came 149 00:08:52,880 --> 00:08:56,240 Speaker 1: in at forty nine point three versus fifty five point three, 150 00:08:56,280 --> 00:08:58,920 Speaker 1: and that's really a fairly large drop. That's a six 151 00:08:59,280 --> 00:09:03,120 Speaker 1: index point drop in the employment component. And considering that 152 00:09:03,200 --> 00:09:06,120 Speaker 1: this is what's really being the factors that people are 153 00:09:06,160 --> 00:09:10,800 Speaker 1: looking at in driving monetary policy, especially after that solid 154 00:09:10,800 --> 00:09:14,120 Speaker 1: payroll employment number yesterday, I'll ask Friday in terms of 155 00:09:14,120 --> 00:09:17,120 Speaker 1: the headline number coming into eight hundred and fifty, this 156 00:09:17,200 --> 00:09:21,360 Speaker 1: disappointment tells you that perhaps the fifty numbers more an 157 00:09:21,360 --> 00:09:25,400 Speaker 1: anomaly than it is going to be the new norm. Well, 158 00:09:25,440 --> 00:09:29,400 Speaker 1: what are some of the more complicated aspects of this, right? 159 00:09:29,440 --> 00:09:34,720 Speaker 1: You know? I S M had said material shortages, inflation, logistics, 160 00:09:34,720 --> 00:09:38,760 Speaker 1: and employment resources continue to be a problem. Right, And 161 00:09:38,800 --> 00:09:41,199 Speaker 1: so it looks like you hit a snag and one 162 00:09:41,200 --> 00:09:43,640 Speaker 1: part of the economy and then it impacts another part 163 00:09:43,640 --> 00:09:46,560 Speaker 1: of the economy, and it looks like, um, there's a 164 00:09:46,559 --> 00:09:50,760 Speaker 1: bit of a tangled web of issues here. So how 165 00:09:51,040 --> 00:09:54,080 Speaker 1: do how does this number kind of stand when you 166 00:09:54,120 --> 00:09:58,960 Speaker 1: think about broader economic recoveries here? Well, I mean, look, 167 00:09:59,320 --> 00:10:01,720 Speaker 1: the reality as the economy is going to put in 168 00:10:01,760 --> 00:10:03,920 Speaker 1: a very very good growth rate number this year. Okay, 169 00:10:04,480 --> 00:10:07,240 Speaker 1: second quarter g DP our number seven and a half percent. 170 00:10:07,400 --> 00:10:10,440 Speaker 1: That's a really solid number. But it doesn't compare to 171 00:10:10,440 --> 00:10:14,000 Speaker 1: the nine percent numbers people have been talking about. And 172 00:10:14,120 --> 00:10:17,000 Speaker 1: this data again doesn't fit with the numbers that have 173 00:10:17,200 --> 00:10:20,760 Speaker 1: people and being discussed in some areas. It consistent with 174 00:10:20,800 --> 00:10:24,440 Speaker 1: you know, a million workers being added every month between 175 00:10:24,480 --> 00:10:26,840 Speaker 1: now and the end of the year. In terms of 176 00:10:26,880 --> 00:10:29,560 Speaker 1: the employment numbers, these numbers are telling you that a 177 00:10:29,640 --> 00:10:32,800 Speaker 1: lot of the incentive to the economy that was provided 178 00:10:33,240 --> 00:10:36,520 Speaker 1: by the by the two point eight trillion in stimulus 179 00:10:36,600 --> 00:10:39,480 Speaker 1: that we were given UM earlier this year, between the 180 00:10:39,520 --> 00:10:42,760 Speaker 1: Trump program and the Biden program, the nine hundred billion 181 00:10:42,800 --> 00:10:45,480 Speaker 1: and the and the one point nine trillion program, that 182 00:10:45,679 --> 00:10:48,520 Speaker 1: is largely run its course, and you're starting to see 183 00:10:48,520 --> 00:10:52,400 Speaker 1: the economy come back slowly to a more realistic growth level. 184 00:10:52,640 --> 00:10:54,959 Speaker 1: It's still going to be robust and solid relative to 185 00:10:55,000 --> 00:10:57,719 Speaker 1: our historical norms for the next couple of quarters. But 186 00:10:57,800 --> 00:10:59,880 Speaker 1: the upside momentum is kind of over and done with. 187 00:11:00,280 --> 00:11:02,240 Speaker 1: We've seen the peak in the economy and now we're 188 00:11:02,320 --> 00:11:05,319 Speaker 1: rolling down the other side of that. Do you think, so, 189 00:11:05,400 --> 00:11:07,200 Speaker 1: how do you think the FED kind of looks at 190 00:11:07,400 --> 00:11:10,480 Speaker 1: at that Steve that Does the FED feel like I can, 191 00:11:10,600 --> 00:11:13,880 Speaker 1: in fact stay on the sidelines or do we think 192 00:11:13,920 --> 00:11:15,760 Speaker 1: back to the last FED meeting where the dot plots 193 00:11:15,800 --> 00:11:19,240 Speaker 1: got some people's attention about potentially tightening you know, again, 194 00:11:19,320 --> 00:11:22,400 Speaker 1: when the Fed changes its dots in three which, to 195 00:11:22,440 --> 00:11:24,880 Speaker 1: be honest, it's a year and a half out um, 196 00:11:25,520 --> 00:11:27,839 Speaker 1: you know, and people pay attention to that. That I 197 00:11:27,960 --> 00:11:30,880 Speaker 1: think is the mistake, you know, talking about going from 198 00:11:31,000 --> 00:11:33,679 Speaker 1: one dot to two dots in terms of one hike 199 00:11:33,760 --> 00:11:36,840 Speaker 1: to two hikes in twenty the end of twenty three, 200 00:11:37,360 --> 00:11:41,320 Speaker 1: in an environment where the unemployment rate actually moved up 201 00:11:41,800 --> 00:11:45,280 Speaker 1: to five point nine percent from five point eight percent 202 00:11:45,360 --> 00:11:47,760 Speaker 1: when everyone's expecting it to drop. The five point six 203 00:11:48,840 --> 00:11:51,840 Speaker 1: is going to be a problem for those more hawkish 204 00:11:51,920 --> 00:11:54,880 Speaker 1: members of the committee because even though the employment number 205 00:11:54,960 --> 00:11:58,480 Speaker 1: was good at fifty thousand, the more political aspect of 206 00:11:58,559 --> 00:12:02,400 Speaker 1: this is the jobless rate and the household employment numbers 207 00:12:02,440 --> 00:12:04,920 Speaker 1: weren't particularly robust. So I think when you look at 208 00:12:04,960 --> 00:12:08,000 Speaker 1: all this, it's a really good economy. It's just not 209 00:12:08,120 --> 00:12:11,000 Speaker 1: as strong as people want to see to fit with 210 00:12:11,240 --> 00:12:14,000 Speaker 1: what we have seen in terms of the Hawks discussions 211 00:12:14,320 --> 00:12:17,520 Speaker 1: and the optimistic scenarios as to where this economy is 212 00:12:17,559 --> 00:12:20,199 Speaker 1: going to go. Essentially, members of the Committee and I 213 00:12:20,280 --> 00:12:22,599 Speaker 1: think a lot of people in the financial community have 214 00:12:22,760 --> 00:12:26,760 Speaker 1: written checked this economy can't cash into great economy, but 215 00:12:26,960 --> 00:12:29,800 Speaker 1: it's not as strong as they would like. I like 216 00:12:29,960 --> 00:12:33,040 Speaker 1: a little top Gun reference there, Stevens Judeo, chief economist 217 00:12:33,080 --> 00:12:36,559 Speaker 1: for Missoo Securities USA. I'm sure he's getting ready for 218 00:12:36,640 --> 00:12:39,719 Speaker 1: top Gun two, which I think is coming in the 219 00:12:39,880 --> 00:12:43,120 Speaker 1: fall from power Amount Stevens Judo. Good to have him 220 00:12:43,200 --> 00:12:45,480 Speaker 1: on here talking about this. I S M data still 221 00:12:45,679 --> 00:12:48,760 Speaker 1: pretty strong. Don't freak out. The bond market definitely paying 222 00:12:48,800 --> 00:12:53,640 Speaker 1: attention here with the ten uere you know, below two um, 223 00:12:53,880 --> 00:12:59,079 Speaker 1: but still a good number overall. Looking at w t 224 00:12:59,160 --> 00:13:02,160 Speaker 1: I crude oil here seventy four hours thirty three cents 225 00:13:02,160 --> 00:13:04,960 Speaker 1: announced off about eighties cents, but it had been as 226 00:13:05,080 --> 00:13:08,719 Speaker 1: high as seventies six dollars and cents earlier Today so 227 00:13:08,840 --> 00:13:12,200 Speaker 1: this is uh, just moving higher. We've seen oil really 228 00:13:12,200 --> 00:13:14,720 Speaker 1: over the last several weeks, and all I know about 229 00:13:14,800 --> 00:13:17,880 Speaker 1: that is it's a commodity, so it's supply, it's demand. 230 00:13:18,360 --> 00:13:21,840 Speaker 1: So I'm guessing demand ising, you know, more than supply 231 00:13:22,000 --> 00:13:24,920 Speaker 1: right here. So that's basically my analysis. Fortunately, we have 232 00:13:25,040 --> 00:13:28,280 Speaker 1: somebody much much smarter on this to explain it to us, 233 00:13:28,440 --> 00:13:32,480 Speaker 1: Fernando Valier. He's an oil and gas analyst for Bloomberg Intelligence. Fernando, 234 00:13:32,559 --> 00:13:36,079 Speaker 1: let's start with OPEC here. Um, they didn't get it 235 00:13:36,120 --> 00:13:38,400 Speaker 1: done this weekend, So tell us what's going on with OPEK, 236 00:13:38,800 --> 00:13:40,559 Speaker 1: what happened over the weekend, and kind of how you 237 00:13:40,600 --> 00:13:44,160 Speaker 1: think it might play out. Sure, both, First, thanks for 238 00:13:44,240 --> 00:13:48,040 Speaker 1: being for let me participate today. Um, there's a major 239 00:13:48,160 --> 00:13:52,199 Speaker 1: disagreement between OPEC plus in putting Russia UH and the 240 00:13:52,480 --> 00:13:56,120 Speaker 1: u A, the United Arab Emirates, And the big dispute 241 00:13:56,240 --> 00:13:58,439 Speaker 1: is really about when you set the baseline for the 242 00:13:58,520 --> 00:14:03,079 Speaker 1: OPEC plus cards their stock of extending the cuts beyond 243 00:14:03,280 --> 00:14:07,360 Speaker 1: A two. The EE doesn't want to extend this early ahead, 244 00:14:07,440 --> 00:14:10,800 Speaker 1: but they are okay to complain with the cuts, but 245 00:14:11,000 --> 00:14:15,160 Speaker 1: their baseline for production is set in October, and they 246 00:14:15,320 --> 00:14:20,160 Speaker 1: added to tacity UH just after that. So currently the 247 00:14:20,240 --> 00:14:22,760 Speaker 1: EE has about a third of its capacity that's been 248 00:14:22,840 --> 00:14:28,160 Speaker 1: idled since the cuts in UM and so they want 249 00:14:28,240 --> 00:14:30,840 Speaker 1: to bring back. They want to reset the baseline to 250 00:14:30,920 --> 00:14:34,320 Speaker 1: be their production production production capacity as it stands as 251 00:14:34,360 --> 00:14:39,560 Speaker 1: opposed to October and as opposed to the Saudi Arabian economy, 252 00:14:39,640 --> 00:14:41,880 Speaker 1: the EE is a lot more depending on oil revenue. 253 00:14:41,920 --> 00:14:44,560 Speaker 1: So even though they're benefiting from the rise in oil prices, 254 00:14:45,040 --> 00:14:47,400 Speaker 1: they're still struggling a little bit with the fiscal balance 255 00:14:47,880 --> 00:14:52,160 Speaker 1: without that additional production. Can you draw out what's at 256 00:14:52,320 --> 00:14:56,000 Speaker 1: stake here, because really it looks like it's the stability 257 00:14:56,520 --> 00:14:59,440 Speaker 1: of the global economic recovery. Oil is already at a 258 00:14:59,480 --> 00:15:04,360 Speaker 1: six year I what are the ramifications of a lot 259 00:15:04,400 --> 00:15:08,920 Speaker 1: of these delays and the volatility that's arising from them. Well, 260 00:15:09,040 --> 00:15:12,640 Speaker 1: currently the biggest issue is just higher oil prices for 261 00:15:12,720 --> 00:15:14,920 Speaker 1: the short term, although right now they're trading down a 262 00:15:15,000 --> 00:15:19,600 Speaker 1: little bit. But without resetting that baseline UH and getting 263 00:15:19,600 --> 00:15:23,840 Speaker 1: additional volume, we would be and in the current status 264 00:15:23,880 --> 00:15:26,040 Speaker 1: grow of the mint recovery in O E C D, 265 00:15:26,680 --> 00:15:30,120 Speaker 1: we would expect this UH in balance to continue and 266 00:15:30,440 --> 00:15:33,280 Speaker 1: drive oil prices higher. And there's actually pressure from the 267 00:15:33,320 --> 00:15:36,520 Speaker 1: Biden administrations for OPEX to increase some of that production 268 00:15:36,600 --> 00:15:39,960 Speaker 1: back so we don't see a disparate impact on inflation 269 00:15:40,080 --> 00:15:43,080 Speaker 1: as we're seeing with other commodities. So that's really what's 270 00:15:43,160 --> 00:15:47,040 Speaker 1: in the balance now. And ultimately UH energy is really 271 00:15:47,560 --> 00:15:51,200 Speaker 1: um hinges on GDP growth in in gasoline and jet 272 00:15:51,360 --> 00:15:55,240 Speaker 1: on disposal income growth. So higher oil prices are actually 273 00:15:56,280 --> 00:16:00,280 Speaker 1: a long term issue for oil demand. So there is 274 00:16:00,600 --> 00:16:04,120 Speaker 1: an interest for OPEC to not get back to the 275 00:16:04,240 --> 00:16:08,000 Speaker 1: hundred hunder dollar oil prices that we saw in two 276 00:16:08,080 --> 00:16:11,280 Speaker 1: thousand and ten to two thousand fourteen, because really that's 277 00:16:11,320 --> 00:16:13,840 Speaker 1: what gave Ryan's to shale, that's what gave rise to 278 00:16:13,880 --> 00:16:17,320 Speaker 1: a lot of the UH improvements in my legion that 279 00:16:17,600 --> 00:16:22,040 Speaker 1: that really have curtailed oil and man. So Fernando generally speaking, 280 00:16:22,280 --> 00:16:27,320 Speaker 1: where would OPEC like oil to trade in an ideal world. 281 00:16:27,400 --> 00:16:29,720 Speaker 1: I know different countries, I guess have different break evens, 282 00:16:29,800 --> 00:16:33,160 Speaker 1: and just give us a sense of how that works. Yeah, exactly. 283 00:16:33,200 --> 00:16:35,080 Speaker 1: So the break even is opposed to a company is 284 00:16:35,120 --> 00:16:37,200 Speaker 1: not what it takes for you to cover your operating 285 00:16:37,240 --> 00:16:41,120 Speaker 1: expenses and everything else. It's because these these countries are 286 00:16:41,280 --> 00:16:45,880 Speaker 1: essentially almost at dependent on oil is how much what 287 00:16:46,040 --> 00:16:49,680 Speaker 1: oil prices they require in order to cover their fiscal costs, 288 00:16:50,280 --> 00:16:53,080 Speaker 1: and that will vary from Pennezuela, which is into two 289 00:16:53,160 --> 00:16:56,880 Speaker 1: hundreds UH, society which is probably closer to fifty five 290 00:16:56,960 --> 00:17:02,880 Speaker 1: to sixty depending on their production levels and UM. So 291 00:17:03,560 --> 00:17:06,480 Speaker 1: the Saudi and Russia can can make do in the 292 00:17:06,560 --> 00:17:10,200 Speaker 1: six to seventy dollar range UM, but they probably prefer 293 00:17:10,359 --> 00:17:13,120 Speaker 1: anywhere between seventy to eighty dollars. I think that tends 294 00:17:13,160 --> 00:17:16,040 Speaker 1: to be a price where you can start to see 295 00:17:16,720 --> 00:17:20,080 Speaker 1: an impact on global demand. We have a heuristic that 296 00:17:20,440 --> 00:17:23,280 Speaker 1: when at total energy costs are over seven percent of 297 00:17:23,440 --> 00:17:27,960 Speaker 1: global UH the domestic product, it starts to be detrimental 298 00:17:28,080 --> 00:17:31,679 Speaker 1: to overall growth. So I think that gets you anywhere 299 00:17:31,720 --> 00:17:34,920 Speaker 1: between six to seventy five. I think that's probably their 300 00:17:34,960 --> 00:17:38,440 Speaker 1: Goldilock scenario where they're making a lot of money UM, 301 00:17:38,600 --> 00:17:40,880 Speaker 1: but at the same time they're not damaging a long 302 00:17:41,000 --> 00:17:44,080 Speaker 1: term reman. Can you give us a roadmap here of 303 00:17:44,160 --> 00:17:46,359 Speaker 1: what the next couple of days should look like and 304 00:17:46,920 --> 00:17:51,040 Speaker 1: what the conflicts might be in the interim, Well, I 305 00:17:51,119 --> 00:17:55,800 Speaker 1: think that's that's everybody's cats. Now. THEE has said the 306 00:17:55,920 --> 00:17:58,760 Speaker 1: meeting has been postponed, while SARDI and Russia said the 307 00:17:58,840 --> 00:18:03,399 Speaker 1: meeting was canceled. UM. So I think for now, at 308 00:18:03,440 --> 00:18:05,480 Speaker 1: least in the short term, we're going to continue having 309 00:18:05,560 --> 00:18:09,320 Speaker 1: these dually narratives. I think talks of the U E 310 00:18:09,520 --> 00:18:15,200 Speaker 1: leaving OPEC are probably not unfounded, but I think we'll 311 00:18:15,280 --> 00:18:18,560 Speaker 1: we'll get more pressure to at least get a temporary, 312 00:18:19,760 --> 00:18:22,080 Speaker 1: at least a small increasing in production over the next 313 00:18:22,520 --> 00:18:25,520 Speaker 1: couple of days UH, and that could be coupled with 314 00:18:26,040 --> 00:18:30,480 Speaker 1: extending the deal beyond the current expiry. Hey, Fernando, you 315 00:18:30,560 --> 00:18:33,119 Speaker 1: mentioned earlier the U S shale producers. They have not 316 00:18:33,200 --> 00:18:36,800 Speaker 1: been the most disciplined lot historically. Do we expect them 317 00:18:37,720 --> 00:18:41,760 Speaker 1: to just start drilling again? Well, so far we haven't 318 00:18:41,800 --> 00:18:45,240 Speaker 1: seen that, except for the private operators. The public operators 319 00:18:45,320 --> 00:18:48,399 Speaker 1: have stuck to their capital discipline, and part of that 320 00:18:48,560 --> 00:18:50,919 Speaker 1: is because they have to, because they took on too 321 00:18:51,000 --> 00:18:53,639 Speaker 1: much debt during the pandemic and the focus now is 322 00:18:53,680 --> 00:18:56,800 Speaker 1: to reduce that debt rather than continue to grow. Um. 323 00:18:57,160 --> 00:19:00,359 Speaker 1: You've seen anywhere one from chronical Phillips, who has always 324 00:19:00,400 --> 00:19:04,119 Speaker 1: been disciplined increasing share by backs UH to OXY that 325 00:19:04,520 --> 00:19:07,520 Speaker 1: UH hasn't always been the most discipline but focusing instead 326 00:19:07,560 --> 00:19:10,400 Speaker 1: of on debt reduction. So right now, when you look 327 00:19:10,440 --> 00:19:14,040 Speaker 1: at the track spread count UM, which is how many 328 00:19:14,080 --> 00:19:18,240 Speaker 1: walls are completed, UH, only the permian is up significantly 329 00:19:18,320 --> 00:19:22,800 Speaker 1: from the loads of April, but even that there we 330 00:19:22,880 --> 00:19:25,920 Speaker 1: haven't seen a return to twenty nineteen levels. So we're 331 00:19:25,920 --> 00:19:29,200 Speaker 1: seeing that discipline. Most of the growth has been from 332 00:19:29,240 --> 00:19:32,359 Speaker 1: private operators that don't have the same pressures as the 333 00:19:32,440 --> 00:19:35,560 Speaker 1: public ones, and the public ones have outlined more plans 334 00:19:35,640 --> 00:19:38,000 Speaker 1: to return capital as opposed to continue English to grow. 335 00:19:39,000 --> 00:19:41,600 Speaker 1: What can we see coming out of Washington, UM, real 336 00:19:41,680 --> 00:19:44,439 Speaker 1: quick here, really in thirty seconds or so. What can 337 00:19:44,520 --> 00:19:49,480 Speaker 1: we expect from Joe Biden in terms of guidance? I 338 00:19:49,600 --> 00:19:55,200 Speaker 1: think mostly diplomacy as opposed to outward comments. The administrations 339 00:19:55,240 --> 00:19:57,560 Speaker 1: in a tough spot where they have to promote higher 340 00:19:57,600 --> 00:20:03,040 Speaker 1: oil production, which is really against their overall UH stated goals, 341 00:20:03,800 --> 00:20:07,000 Speaker 1: but in order to prevent higher inflation that could be 342 00:20:07,160 --> 00:20:09,320 Speaker 1: damaging to the to the U S and global economy, 343 00:20:09,800 --> 00:20:12,520 Speaker 1: they have to pressure OPEC plus to raise production a 344 00:20:12,600 --> 00:20:14,560 Speaker 1: little bit, but they can't be seen out the lead 345 00:20:14,640 --> 00:20:18,960 Speaker 1: to be doing that. So so so Setst. Fernando, thank 346 00:20:18,960 --> 00:20:20,960 Speaker 1: you so much for joining us. We appreciate it as 347 00:20:21,040 --> 00:20:24,520 Speaker 1: always your go to person for global oil. Fernando val 348 00:20:25,040 --> 00:20:28,080 Speaker 1: oil and gas analysts for Bloomberg in intelligence, looking at 349 00:20:28,200 --> 00:20:30,239 Speaker 1: w t I crude here, it's been a really volatile day. 350 00:20:30,240 --> 00:20:33,159 Speaker 1: Trader as high as seventy seven dollars for barrel, now 351 00:20:33,320 --> 00:20:37,240 Speaker 1: down trading down to seventy four dollars. So volatility continues 352 00:20:37,320 --> 00:20:40,000 Speaker 1: in the global energy markets. Will pay attention to OPEC. 353 00:20:40,320 --> 00:20:47,440 Speaker 1: This is Bloomberg. All right. Let's talk plastic waste. It's 354 00:20:47,440 --> 00:20:49,880 Speaker 1: a big, big issue for a lot of consumer products 355 00:20:49,960 --> 00:20:53,280 Speaker 1: companies as they try to combat this issue. There's different 356 00:20:53,320 --> 00:20:56,800 Speaker 1: technologies out there for doing that, and we as consumers 357 00:20:56,880 --> 00:20:59,600 Speaker 1: try to do our part by recycling. Let's check in 358 00:20:59,680 --> 00:21:02,240 Speaker 1: with marking staff and he's a deputy CEO of Carbios. 359 00:21:02,320 --> 00:21:05,080 Speaker 1: Carbios is a company that trades on the UNEXT under 360 00:21:05,119 --> 00:21:08,800 Speaker 1: the ticker symbol a l c RB, based in France. Martin, 361 00:21:08,880 --> 00:21:11,199 Speaker 1: thanks so much for joining us here. Talk to us, 362 00:21:11,280 --> 00:21:14,520 Speaker 1: just frame out for us the global problem that is 363 00:21:14,600 --> 00:21:20,800 Speaker 1: plastics waste. Yes, thank you for inviting me. Uh. You know, 364 00:21:21,600 --> 00:21:25,560 Speaker 1: three and fifty million metric tons of plastics are produced 365 00:21:25,640 --> 00:21:29,760 Speaker 1: every year, of which ten million metric tones end up 366 00:21:29,800 --> 00:21:32,959 Speaker 1: in the environment every year, So it's a big issue 367 00:21:33,160 --> 00:21:36,200 Speaker 1: and the issue is not plastics. The issue is plastic 368 00:21:36,320 --> 00:21:40,639 Speaker 1: waste because we have been producing plastics for more than 369 00:21:40,800 --> 00:21:44,840 Speaker 1: fifty years and we have not taken enough care of 370 00:21:45,080 --> 00:21:48,639 Speaker 1: the end of life of plastics and carbios. We are 371 00:21:48,760 --> 00:21:52,680 Speaker 1: the first and only company to develop biological technologies for 372 00:21:52,840 --> 00:21:56,200 Speaker 1: the end of life of plastics and fibers. Martin, maybe 373 00:21:56,200 --> 00:21:59,960 Speaker 1: you could speak a little to how large global corporations 374 00:22:00,280 --> 00:22:04,440 Speaker 1: like Laureale or Pepsi are able to be a part 375 00:22:04,480 --> 00:22:09,080 Speaker 1: of the solution better than the problem. They are part 376 00:22:09,119 --> 00:22:12,440 Speaker 1: of the solution, Yes, and they really feel responsible for that. 377 00:22:12,560 --> 00:22:15,919 Speaker 1: It's a co responsibility, you know, to tackle this plastic 378 00:22:16,040 --> 00:22:19,719 Speaker 1: pollution issue. Nobody will be able to put an end 379 00:22:19,760 --> 00:22:23,840 Speaker 1: to plastic pollution by itself, so it's really a global play. 380 00:22:24,480 --> 00:22:29,960 Speaker 1: And our partners, you know, laur Real Nicely, PepsiCo Century, 381 00:22:30,760 --> 00:22:35,399 Speaker 1: they are very aware that it's by collaborating with a 382 00:22:35,520 --> 00:22:40,840 Speaker 1: startup like us, with governance, with NGOs that we will 383 00:22:41,040 --> 00:22:45,480 Speaker 1: develop solutions to really tackle this plastic solution issue, which 384 00:22:45,600 --> 00:22:49,200 Speaker 1: is not acceptable. Talk to us, Martin about kind of 385 00:22:49,359 --> 00:22:52,960 Speaker 1: what your technology is, what it does and in kind 386 00:22:53,000 --> 00:22:56,600 Speaker 1: of how it's being used. Yes, so we use a 387 00:22:56,680 --> 00:23:00,600 Speaker 1: biological tool, which is an enzyme. You know, we have 388 00:23:00,760 --> 00:23:04,119 Speaker 1: a lot of enzymes in our body. An enzyme is 389 00:23:04,480 --> 00:23:08,560 Speaker 1: a catalyst which triggers a reaction. Normally, it triggers a 390 00:23:08,640 --> 00:23:13,800 Speaker 1: biological reaction, but our scientists had the idea to use 391 00:23:13,960 --> 00:23:18,639 Speaker 1: this biological tool to trigger not a biological reaction, but 392 00:23:18,760 --> 00:23:23,040 Speaker 1: a chemical reaction. And this chemical reaction is to break 393 00:23:23,119 --> 00:23:30,240 Speaker 1: down plastics into its monomaiers, which are the common building 394 00:23:30,280 --> 00:23:34,640 Speaker 1: blocks of plastics. So instead of putting together the same 395 00:23:34,720 --> 00:23:38,199 Speaker 1: molecule sudden of times to make a plastic or a fiber, 396 00:23:39,080 --> 00:23:43,760 Speaker 1: our enzyme breaks down this long chain of molecule into 397 00:23:44,320 --> 00:23:49,520 Speaker 1: single molecules which are called monomers. Then we isolate the monomaers, 398 00:23:49,720 --> 00:23:53,640 Speaker 1: we purify them, and we recombine them again to make 399 00:23:53,800 --> 00:23:57,600 Speaker 1: new plastic with the same quality as plastics which are 400 00:23:57,680 --> 00:24:01,080 Speaker 1: made from petrochemicals. So it's a real a solution for 401 00:24:01,200 --> 00:24:03,720 Speaker 1: the end of life. It is not a reused solution. 402 00:24:03,800 --> 00:24:08,040 Speaker 1: It's a pure recycling. It's a virtuous loop which we 403 00:24:08,200 --> 00:24:12,600 Speaker 1: have made possible. Are there certain types of plastics that 404 00:24:12,840 --> 00:24:16,760 Speaker 1: don't work to go through these technologies? You know, I 405 00:24:16,840 --> 00:24:19,640 Speaker 1: think even as an ordinary recycler people have to think 406 00:24:19,680 --> 00:24:24,480 Speaker 1: twice before they they do throw out or or recycled 407 00:24:24,520 --> 00:24:27,520 Speaker 1: certain types of plastics. And it's interesting to see what's 408 00:24:27,560 --> 00:24:31,840 Speaker 1: happening across different cities when it comes to you know, 409 00:24:32,080 --> 00:24:34,680 Speaker 1: really the city is cracking down on certain companies using 410 00:24:35,040 --> 00:24:39,640 Speaker 1: and distributing certain types of plastics to the consumers. Yes, 411 00:24:39,680 --> 00:24:44,639 Speaker 1: so today our technology works for polyesters, which is mostly ety, 412 00:24:45,280 --> 00:24:48,960 Speaker 1: which is the plastics for bottles, but also a food 413 00:24:49,000 --> 00:24:52,680 Speaker 1: trace for example, or textile. When you see poliest on 414 00:24:52,760 --> 00:24:56,440 Speaker 1: the garment, it is exactly the same material than the 415 00:24:56,520 --> 00:25:00,119 Speaker 1: material which is used to make transparent bottles. So our 416 00:25:00,200 --> 00:25:05,040 Speaker 1: technology work for any kind of peg transparent bottle, but 417 00:25:05,280 --> 00:25:10,000 Speaker 1: also colored bottle or opeque or foot trace or polyester 418 00:25:10,200 --> 00:25:14,720 Speaker 1: T shirts. We can be polymerize or deconstruct all kinds 419 00:25:14,840 --> 00:25:18,600 Speaker 1: of petty waste to make any kind of petty product. 420 00:25:19,080 --> 00:25:21,320 Speaker 1: So we can make a bottle from the bottle, but 421 00:25:21,480 --> 00:25:23,879 Speaker 1: we can also make a T shirt from a bottle, 422 00:25:24,359 --> 00:25:27,240 Speaker 1: or a bottle from a T shirt. It is exactly 423 00:25:27,320 --> 00:25:30,920 Speaker 1: the same for us. In the future, we have the 424 00:25:31,000 --> 00:25:35,440 Speaker 1: intention and the goal to develop this technology for other polymaires. 425 00:25:35,600 --> 00:25:38,720 Speaker 1: So our technology must be seen really as a platform 426 00:25:39,400 --> 00:25:43,879 Speaker 1: two to recycle any kind of plastics in the future. 427 00:25:44,280 --> 00:25:49,040 Speaker 1: That's a fascinating technology, fascinating story for a huge global problem. 428 00:25:49,119 --> 00:25:51,040 Speaker 1: Just think about all the plastic bottles we see on 429 00:25:51,080 --> 00:25:53,679 Speaker 1: the side of the road or worse yet, in the waterways. 430 00:25:54,000 --> 00:25:58,840 Speaker 1: Martin Stefan, Deputy CEO of Carbios coming to us from France, 431 00:25:58,920 --> 00:26:02,080 Speaker 1: we appreciate and again, you know that really is a 432 00:26:02,200 --> 00:26:06,159 Speaker 1: global issue, uh Sonali, and it's just begging out for 433 00:26:06,400 --> 00:26:10,640 Speaker 1: technological solutions in addition to more recycling, because only four 434 00:26:11,760 --> 00:26:14,919 Speaker 1: of plastics actually are recycled. Paul, I know people who 435 00:26:15,000 --> 00:26:17,600 Speaker 1: have given up shopping with plastics for days in a row, 436 00:26:17,720 --> 00:26:20,640 Speaker 1: and it's possible. It's hard to do. Thanks for listening 437 00:26:20,680 --> 00:26:24,160 Speaker 1: to the Bloomberg Markets podcast. You can subscribe and listen 438 00:26:24,200 --> 00:26:28,480 Speaker 1: to interviews with Apple Podcasts or whatever podcast platform you prefer. 439 00:26:28,880 --> 00:26:33,439 Speaker 1: I'm Matt Miller. I'm on Twitter at Matt Miller. Put 440 00:26:33,480 --> 00:26:36,080 Speaker 1: on false Sweeney I'm on Twitter at pt Sweeney. Before 441 00:26:36,119 --> 00:26:39,240 Speaker 1: the podcast, you can always catch us worldwide at Bloomberg Radio.