1 00:00:05,120 --> 00:00:07,119 Speaker 1: This is the Bloomberg Surveillance Podcast. 2 00:00:07,160 --> 00:00:11,080 Speaker 2: I'm Tom Keene, along with Jonathan Ferrell and Lisa Abramowitz. 3 00:00:11,280 --> 00:00:15,760 Speaker 2: Join us each day for insight from the best an economics, geopolitics, 4 00:00:15,760 --> 00:00:20,720 Speaker 2: finance and investment. Subscribe to Bloomberg Surveillance on demand on Apple, 5 00:00:20,960 --> 00:00:25,400 Speaker 2: Spotify and anywhere you get your podcasts, and always on 6 00:00:25,520 --> 00:00:29,880 Speaker 2: Bloomberg dot Com, the Bloomberg Terminal, and the Bloomberg Business App. 7 00:00:30,640 --> 00:00:32,520 Speaker 3: With us around the table, you've got a sneak peak 8 00:00:32,520 --> 00:00:36,200 Speaker 3: of there. Sandrew Bors, Global Fixed Incomes CIO at PIMCO. Andrew, 9 00:00:36,200 --> 00:00:38,159 Speaker 3: good morning, good to be here, thanks for ten year. 10 00:00:38,240 --> 00:00:40,960 Speaker 3: Fantastic to be with you. Four thirty four on a 11 00:00:41,040 --> 00:00:43,920 Speaker 3: ten year yield this morning. To build on what Lisa said, 12 00:00:44,040 --> 00:00:46,440 Speaker 3: is this a moment in time, bye bye bye, lock 13 00:00:46,520 --> 00:00:47,640 Speaker 3: it in before it goes away? 14 00:00:47,760 --> 00:00:48,599 Speaker 4: Or can we live with this? 15 00:00:49,479 --> 00:00:51,720 Speaker 5: So I think it looks pretty attractive. We're in the 16 00:00:51,720 --> 00:00:54,040 Speaker 5: middle of our forum discussions which we had in London 17 00:00:54,080 --> 00:00:57,160 Speaker 5: as well, actually, so we're still talking about this with 18 00:00:57,200 --> 00:00:58,120 Speaker 5: the investor. 19 00:00:58,200 --> 00:01:00,520 Speaker 6: It's a head start, but it looks it looks. 20 00:01:00,160 --> 00:01:04,000 Speaker 5: Pretty attractive here if you have a high quality bond 21 00:01:04,000 --> 00:01:08,679 Speaker 5: fund five six percent yield in US dollars with more 22 00:01:08,720 --> 00:01:11,080 Speaker 5: credit kind of seven percent maybe seven and a half 23 00:01:11,120 --> 00:01:15,200 Speaker 5: percent yield, This looks very attractive. Equities have done very 24 00:01:15,240 --> 00:01:19,240 Speaker 5: well this year. Looking forward, you know, six and a 25 00:01:19,280 --> 00:01:21,240 Speaker 5: half five and a half percent type yield for a 26 00:01:21,240 --> 00:01:22,720 Speaker 5: bond fund looks very good to us. 27 00:01:22,840 --> 00:01:25,399 Speaker 7: There are two points here. One is does this look 28 00:01:25,440 --> 00:01:29,880 Speaker 7: attractive now? And the second is where is the next rate? 29 00:01:30,280 --> 00:01:32,440 Speaker 7: Where does the move come from? Is it higher or 30 00:01:32,480 --> 00:01:35,160 Speaker 7: is it lower? But two different discussions right how sticky 31 00:01:35,160 --> 00:01:35,840 Speaker 7: this is going to be? 32 00:01:36,720 --> 00:01:37,920 Speaker 8: How big is the. 33 00:01:38,000 --> 00:01:40,640 Speaker 7: Argument right now? In some of these meetings at PIMCO. 34 00:01:41,120 --> 00:01:43,360 Speaker 5: Well, I think you were talking about real yields and 35 00:01:43,440 --> 00:01:45,600 Speaker 5: I was nodding. When you look at real yields and 36 00:01:45,600 --> 00:01:49,680 Speaker 5: look at long term history, it's starting to look attractive. Here. 37 00:01:49,720 --> 00:01:52,680 Speaker 5: We had this period after two thousand and eight quantity 38 00:01:52,680 --> 00:01:55,800 Speaker 5: of easing and at all of that and depressed real yields. 39 00:01:55,800 --> 00:02:00,480 Speaker 5: But you're now seeing real yields its attractive levels and 40 00:02:00,560 --> 00:02:06,000 Speaker 5: nominal yields I was quoting before, look pretty good to us. 41 00:02:06,440 --> 00:02:08,639 Speaker 5: You have you know, in the outlook, you have inflation 42 00:02:08,800 --> 00:02:12,560 Speaker 5: still stubbornly high at the core level, improving much faster 43 00:02:12,639 --> 00:02:15,919 Speaker 5: in the US compared with Europe. I think the jury 44 00:02:16,040 --> 00:02:19,320 Speaker 5: is still out there, but then don't forget the recession risk. 45 00:02:20,080 --> 00:02:25,200 Speaker 5: We have had very significant global tightening across the world, 46 00:02:25,360 --> 00:02:29,520 Speaker 5: and yes the data has been better expected than expected, 47 00:02:29,520 --> 00:02:32,240 Speaker 5: particularly in the US this year, but as we all know, 48 00:02:32,400 --> 00:02:36,079 Speaker 5: these central bank tightening takes time to feed into the 49 00:02:36,760 --> 00:02:40,680 Speaker 5: real economy. So looking forward, the jury still out on inflation, 50 00:02:40,760 --> 00:02:44,120 Speaker 5: but that recession risk remains significant. 51 00:02:43,480 --> 00:02:46,560 Speaker 2: Critical question for PIMCO, and it's not only the heritage 52 00:02:46,560 --> 00:02:49,359 Speaker 2: of PIMPO from Bill and Muhammad forward. A great call 53 00:02:49,440 --> 00:02:52,520 Speaker 2: you people made a number of years ago. You've got 54 00:02:52,560 --> 00:02:55,519 Speaker 2: the advantage of the former Vince chairman, Richard Claired, I believe. 55 00:02:55,360 --> 00:02:56,160 Speaker 1: Darkens the door. 56 00:02:56,520 --> 00:02:59,120 Speaker 2: I can just see balls and clarity in a debate 57 00:02:59,720 --> 00:03:02,480 Speaker 2: over where we're going to reset on our start, and 58 00:03:02,520 --> 00:03:04,760 Speaker 2: almost on a global our start. 59 00:03:04,960 --> 00:03:06,480 Speaker 1: Do you sense within all the. 60 00:03:06,440 --> 00:03:09,320 Speaker 2: Great work you do, Andrew, that we're going to reset 61 00:03:09,480 --> 00:03:12,560 Speaker 2: in a new rate regime, something that. 62 00:03:12,520 --> 00:03:14,000 Speaker 1: We've never experienced before. 63 00:03:14,120 --> 00:03:16,520 Speaker 5: So I think it's an interesting debate. Rich and I 64 00:03:16,600 --> 00:03:20,760 Speaker 5: tend to agree, and on this point that as you 65 00:03:20,800 --> 00:03:26,000 Speaker 5: look forward beyond this inflation episode, the cyclical rise in 66 00:03:26,080 --> 00:03:29,600 Speaker 5: policy rates we've seen, there's good reasons to think that 67 00:03:30,880 --> 00:03:34,240 Speaker 5: our star neutral rates are at the low levels that 68 00:03:34,280 --> 00:03:37,080 Speaker 5: we've seen for the last several years. We'll see this 69 00:03:37,200 --> 00:03:40,800 Speaker 5: in the fed's projections this week, but that the chances 70 00:03:40,840 --> 00:03:42,600 Speaker 5: are the FED we'll also see two and a half 71 00:03:42,680 --> 00:03:45,840 Speaker 5: percent is their long dot. So compare the four and 72 00:03:45,880 --> 00:03:48,960 Speaker 5: a half percent for four point three percent four point 73 00:03:49,000 --> 00:03:51,440 Speaker 5: four percent for the ten year treasury, or look at 74 00:03:51,440 --> 00:03:55,480 Speaker 5: the forward rates and compare it with that that neutral anchor. 75 00:03:55,840 --> 00:04:00,720 Speaker 5: We believe that anchor remains the correct way to do analysis, 76 00:04:00,760 --> 00:04:03,760 Speaker 5: and then the long term outlook versus that then looks 77 00:04:03,840 --> 00:04:04,480 Speaker 5: very attractive. 78 00:04:04,520 --> 00:04:07,280 Speaker 2: I'd say, does the guard Heaven our start? Does you 79 00:04:07,360 --> 00:04:09,520 Speaker 2: wait to have an our star? Dare I say, does 80 00:04:09,560 --> 00:04:10,600 Speaker 2: Bailey have an our star? 81 00:04:10,920 --> 00:04:13,720 Speaker 6: They all have their They all have the variations on this. 82 00:04:13,800 --> 00:04:15,760 Speaker 5: I think, you know, the FED maybe is a bit 83 00:04:15,800 --> 00:04:20,240 Speaker 5: happier to talk about it sometimes. But again, looking at 84 00:04:20,240 --> 00:04:25,160 Speaker 5: bund yields now, even in Japan, you are getting too 85 00:04:25,240 --> 00:04:27,920 Speaker 5: levels in terms of you know, the ten year yield 86 00:04:28,000 --> 00:04:31,520 Speaker 5: where it's starting to look more interesting control for volatility 87 00:04:31,560 --> 00:04:34,960 Speaker 5: return per unit of volatility, and it becomes a little 88 00:04:34,960 --> 00:04:39,080 Speaker 5: bit once we get beyond the YCC, once we get 89 00:04:39,080 --> 00:04:42,040 Speaker 5: beyond the yield curve, control. So if you think that 90 00:04:42,080 --> 00:04:44,800 Speaker 5: you have that anchor, and we do, then look at 91 00:04:44,800 --> 00:04:48,360 Speaker 5: your five year, five year forward rates to isolate the 92 00:04:48,960 --> 00:04:52,760 Speaker 5: long term expectations beyond this central bank cycle, and you 93 00:04:52,800 --> 00:04:55,320 Speaker 5: know that's the environment. When it's it's much easier to 94 00:04:55,360 --> 00:04:58,120 Speaker 5: come in and be positive like I am today compared 95 00:04:58,120 --> 00:04:59,960 Speaker 5: with the lows of the COVID period. 96 00:05:00,000 --> 00:05:02,200 Speaker 4: We don't spend nearly enough time talking about this. 97 00:05:03,040 --> 00:05:05,839 Speaker 3: How different this regime is to the regime of the 98 00:05:05,880 --> 00:05:07,480 Speaker 3: last decade before the pandemic. 99 00:05:07,960 --> 00:05:09,559 Speaker 4: How different is it for you and the team? 100 00:05:09,760 --> 00:05:11,279 Speaker 3: What have you had to change just in terms of 101 00:05:11,279 --> 00:05:15,560 Speaker 3: approach away from zero rates and QY forever towards potentially 102 00:05:15,640 --> 00:05:17,880 Speaker 3: the Bank of Japan hike and interest rates the you 103 00:05:17,920 --> 00:05:20,160 Speaker 3: see be going too levels. I never thought they'd get 104 00:05:20,200 --> 00:05:22,240 Speaker 3: to I thought maybe they go back to zero, but 105 00:05:22,279 --> 00:05:23,360 Speaker 3: here we are at four percent. 106 00:05:23,560 --> 00:05:25,640 Speaker 5: How different is this view and the team? Well, I 107 00:05:25,640 --> 00:05:29,880 Speaker 5: think it's very different. And I think as a bond 108 00:05:29,920 --> 00:05:32,600 Speaker 5: manager you like to see these high yields at the 109 00:05:32,600 --> 00:05:35,680 Speaker 5: front end of the curve. It becomes really interesting the 110 00:05:35,720 --> 00:05:39,400 Speaker 5: relative value at the front end of the curve. You know, 111 00:05:39,680 --> 00:05:46,360 Speaker 5: zero yields, Remember those something that hopefully we've consigned to history. 112 00:05:46,680 --> 00:05:49,040 Speaker 5: I think one important thing looking forward different to the 113 00:05:49,120 --> 00:05:52,480 Speaker 5: last ten years is uncertainty year round inflation. So we 114 00:05:52,520 --> 00:05:56,440 Speaker 5: see inflation coming down towards central bank targets a little 115 00:05:56,440 --> 00:05:59,680 Speaker 5: bit above, but coming down over the course of next year. 116 00:06:00,240 --> 00:06:03,200 Speaker 5: But I think clearly there's much more uncertainty in the 117 00:06:03,240 --> 00:06:05,880 Speaker 5: inflation picture for the last for the next few years 118 00:06:05,920 --> 00:06:10,680 Speaker 5: compared with the last decade. And so back to the 119 00:06:10,720 --> 00:06:13,840 Speaker 5: discussion before you should be getting term premium. You should 120 00:06:13,839 --> 00:06:17,680 Speaker 5: be getting paid appropriate term premium for holding the ten 121 00:06:17,800 --> 00:06:21,920 Speaker 5: year part of the curve. But again comparing our forward 122 00:06:21,960 --> 00:06:24,760 Speaker 5: rates with our expectations for our start, it looks like 123 00:06:24,800 --> 00:06:28,680 Speaker 5: you're getting fair compensation after a period when with quantitative 124 00:06:28,680 --> 00:06:32,160 Speaker 5: easing and all these risk premiums, who are really compressed. 125 00:06:32,360 --> 00:06:34,359 Speaker 7: What about in credit though, I mean, given the fact 126 00:06:34,560 --> 00:06:38,400 Speaker 7: that you're looking at greater vulnerability to an oil price shock, 127 00:06:38,640 --> 00:06:42,279 Speaker 7: or a unionization shock, or a technological shock, some of 128 00:06:42,320 --> 00:06:44,200 Speaker 7: these things that become that much more important when you're 129 00:06:44,240 --> 00:06:46,240 Speaker 7: cushion is that much smaller. 130 00:06:47,000 --> 00:06:48,720 Speaker 5: So I think, I mean, I think the baseline for 131 00:06:48,800 --> 00:06:52,440 Speaker 5: credit looks fine. I think credits should do well in 132 00:06:52,480 --> 00:06:56,119 Speaker 5: an environment where you avoid the tails. Not just about 133 00:06:56,120 --> 00:06:59,920 Speaker 5: recession but you know, real recession, not just a technical recess. 134 00:07:00,200 --> 00:07:02,920 Speaker 5: And on the upside case, if inflation is coming back 135 00:07:02,960 --> 00:07:07,000 Speaker 5: inter line with that fairly benign middle path, then credit 136 00:07:07,040 --> 00:07:10,080 Speaker 5: should be fine. From our perspective, though we want to 137 00:07:10,120 --> 00:07:13,760 Speaker 5: guard against the tails. And if we do get deeper 138 00:07:13,800 --> 00:07:17,160 Speaker 5: than expected economic downturn, you know that's going to be 139 00:07:17,160 --> 00:07:20,280 Speaker 5: painful in credit. So I think up in quality ig 140 00:07:20,520 --> 00:07:26,040 Speaker 5: looks attractive versus high yield, avoid cuspier credits, avoid any 141 00:07:26,120 --> 00:07:31,000 Speaker 5: kind of exposure to real default risk in what remains 142 00:07:31,000 --> 00:07:34,160 Speaker 5: a really uncertain environment. It's not often you have these 143 00:07:34,160 --> 00:07:38,040 Speaker 5: sorts of tightening cycles globally to such an extent. And 144 00:07:38,080 --> 00:07:40,000 Speaker 5: then the final thing, there's lots of other stuff we 145 00:07:40,080 --> 00:07:43,160 Speaker 5: can do in the world. US agency mortgages very very 146 00:07:43,200 --> 00:07:48,080 Speaker 5: high quality instrument term, very attractive in terms of the valuation. 147 00:07:48,200 --> 00:07:49,760 Speaker 5: So again, if you can get to the kind of 148 00:07:49,760 --> 00:07:55,160 Speaker 5: five six percent type yields on core bonds, looks pretty. 149 00:07:54,840 --> 00:07:57,480 Speaker 6: Good to us in terms of the next few years. 150 00:07:57,640 --> 00:08:00,200 Speaker 3: Andrew always a privilege, thank you, sir, Andrew Ball, that 151 00:08:00,640 --> 00:08:01,320 Speaker 3: of Pincott. 152 00:08:12,160 --> 00:08:14,040 Speaker 1: What we're gonna do right now, this is really important. 153 00:08:14,040 --> 00:08:16,160 Speaker 2: We're trying to piece together with a trip to London 154 00:08:16,160 --> 00:08:19,320 Speaker 2: the credit conference will be doing on Thursday. We're really 155 00:08:19,360 --> 00:08:23,000 Speaker 2: trying to piece together twenty twenty four. They're the political 156 00:08:23,040 --> 00:08:24,600 Speaker 2: conventions in America and that. 157 00:08:25,320 --> 00:08:27,640 Speaker 1: But front center for Bramo, John. 158 00:08:27,440 --> 00:08:30,760 Speaker 2: And myself is we need tickets to the Paris Olympics. 159 00:08:31,200 --> 00:08:34,240 Speaker 2: The only reason he's with us now with AXA Investments Paris, 160 00:08:34,480 --> 00:08:37,920 Speaker 2: Gilmoek is with us here give us an update right now, 161 00:08:38,080 --> 00:08:41,719 Speaker 2: mister McCraw axe in the Paris boom you're going to 162 00:08:41,760 --> 00:08:44,840 Speaker 2: see can Paris get any more boomier than it is now? 163 00:08:45,120 --> 00:08:46,520 Speaker 2: Off the Olympics next summer? 164 00:08:46,720 --> 00:08:47,520 Speaker 1: Right, it's looking good. 165 00:08:48,120 --> 00:08:51,800 Speaker 9: I guess toysm is helping it lost So yeah, I 166 00:08:51,800 --> 00:08:55,160 Speaker 9: mean the city's having a good run. Gus is going 167 00:08:55,200 --> 00:08:58,640 Speaker 9: to continue to tell the Olympics. Now, the country around 168 00:08:58,679 --> 00:09:01,120 Speaker 9: Paris it can be a bit more complicated. We have 169 00:09:01,720 --> 00:09:04,679 Speaker 9: good first half of the year. Things are starting to 170 00:09:04,720 --> 00:09:07,440 Speaker 9: look a bit more complicated. So there's a lot of 171 00:09:07,520 --> 00:09:10,000 Speaker 9: positivity at the moment in France because if you compare 172 00:09:10,040 --> 00:09:13,480 Speaker 9: yourself to Germany, things are so much better. Even the 173 00:09:13,520 --> 00:09:17,120 Speaker 9: German stellar staff now, so it's quite unusual. But actually 174 00:09:17,120 --> 00:09:19,880 Speaker 9: if you look at the latest business confidence survey, it's 175 00:09:19,920 --> 00:09:22,280 Speaker 9: not as bad as in Germany, but it's also heading south. 176 00:09:22,360 --> 00:09:24,680 Speaker 2: This is really important because I think to our listeners 177 00:09:24,679 --> 00:09:27,959 Speaker 2: and viewers, particularly in America, when we say we went 178 00:09:28,000 --> 00:09:30,319 Speaker 2: to France, we went to three R and D small 179 00:09:30,520 --> 00:09:34,439 Speaker 2: wrapped around Notre Dame and the wonderful repair of that cathedral. 180 00:09:34,920 --> 00:09:37,960 Speaker 2: We don't have a real picture here of the greater 181 00:09:38,120 --> 00:09:42,520 Speaker 2: European economy. We just see the boom of European tourism. 182 00:09:43,040 --> 00:09:46,840 Speaker 2: Separate the European tourism from your caution and the rest 183 00:09:46,840 --> 00:09:48,160 Speaker 2: of the European economy. 184 00:09:48,840 --> 00:09:51,720 Speaker 9: Yeah, I mean the definitely the weakness in the euro 185 00:09:51,960 --> 00:09:54,400 Speaker 9: is helping from the point of view, so tharism is 186 00:09:54,480 --> 00:09:57,719 Speaker 9: actually a function of of that weakness, the rebound in 187 00:09:58,280 --> 00:10:02,160 Speaker 9: the US, I think the appetite for traveling to Europe 188 00:10:02,200 --> 00:10:06,480 Speaker 9: at the moment, but even in the most tourism sensitive 189 00:10:06,520 --> 00:10:09,280 Speaker 9: countries in the year Zone, it's what fifteen to twenty 190 00:10:09,280 --> 00:10:11,600 Speaker 9: percent of GDP at most, and the rest is, you know, 191 00:10:11,720 --> 00:10:15,800 Speaker 9: the usual stuff that is dependent on either world demand 192 00:10:15,960 --> 00:10:20,160 Speaker 9: in the generic sense of the meaning, or on constant spending. 193 00:10:20,679 --> 00:10:23,800 Speaker 9: And constant spending in France, for instance, has been contracting 194 00:10:23,880 --> 00:10:26,960 Speaker 9: for two quarters in a row. So we have to 195 00:10:27,000 --> 00:10:31,120 Speaker 9: be yes a bit broader in our assessment situation. 196 00:10:30,880 --> 00:10:31,880 Speaker 4: It takes us to the ECB. 197 00:10:32,080 --> 00:10:34,920 Speaker 3: So let's be slightly provocative in this question three shate 198 00:10:34,960 --> 00:10:37,959 Speaker 3: two thousand and eight three twenty eleven. Should we add 199 00:10:38,440 --> 00:10:42,439 Speaker 3: leguard September twenty twenty three to those. 200 00:10:42,640 --> 00:10:45,640 Speaker 9: Well, they're trying hard not to fall in that trap, 201 00:10:45,720 --> 00:10:48,800 Speaker 9: because actually, if you compare this with either weight and 202 00:10:48,800 --> 00:10:51,840 Speaker 9: with twenty eleven, there was not a great sense of 203 00:10:51,960 --> 00:10:54,240 Speaker 9: quotient at the time when they actually hike, and there 204 00:10:54,240 --> 00:10:56,600 Speaker 9: was a sort of self righteousness. So we are definitely 205 00:10:56,640 --> 00:10:59,120 Speaker 9: delivering what we need to. I'm probably going to continue, 206 00:10:59,400 --> 00:11:03,080 Speaker 9: whereas this time it feels very much like it's the 207 00:11:03,240 --> 00:11:07,600 Speaker 9: last hike that we probably need, maybe for technical reasons 208 00:11:07,600 --> 00:11:10,600 Speaker 9: internally to get the hawks on board, also because I 209 00:11:10,760 --> 00:11:13,440 Speaker 9: think it's true there is a resilience of inflation which 210 00:11:13,480 --> 00:11:15,920 Speaker 9: is more tangible in Europe than it is in the US. 211 00:11:16,440 --> 00:11:17,959 Speaker 4: But the entire. 212 00:11:17,679 --> 00:11:21,720 Speaker 9: Bloody language from from Crinstila Gal last week was about, yes, 213 00:11:21,760 --> 00:11:26,200 Speaker 9: they're now selling the long for the high for long sorry, 214 00:11:27,120 --> 00:11:30,120 Speaker 9: but in terms of further hikes, we've probably done. And 215 00:11:30,160 --> 00:11:31,960 Speaker 9: I think yes, what happened in a way to what 216 00:11:32,000 --> 00:11:35,040 Speaker 9: happened in twenty eleven must be on their minds, and 217 00:11:35,120 --> 00:11:37,800 Speaker 9: even the Hawks are getting a bit less vocal. 218 00:11:37,840 --> 00:11:39,240 Speaker 4: I would say I've noticed the same thing. 219 00:11:39,679 --> 00:11:41,360 Speaker 3: It begs the question about what we can learn from 220 00:11:41,400 --> 00:11:43,720 Speaker 3: the European experience on the other side of the Atlantic. 221 00:11:43,760 --> 00:11:46,400 Speaker 3: Do you think the rounding lessons you see Germany essentially 222 00:11:46,440 --> 00:11:49,400 Speaker 3: go into recession and inflation is still a problem. Growth 223 00:11:49,400 --> 00:11:53,000 Speaker 3: in Europe essentially stagnate and inflation is still a problem. 224 00:11:53,080 --> 00:11:55,679 Speaker 3: It's softer growth the cure for what we're experiencing at 225 00:11:55,679 --> 00:11:56,080 Speaker 3: the moment. 226 00:11:56,800 --> 00:12:00,439 Speaker 9: Well, I know that lots of economists, clearly myself have 227 00:12:00,520 --> 00:12:03,440 Speaker 9: been wrong on that for the last year. But history 228 00:12:03,480 --> 00:12:05,840 Speaker 9: would tell you that it's very, very very hard to 229 00:12:05,920 --> 00:12:09,640 Speaker 9: get this inflation without proper pain in the reread economy, 230 00:12:09,720 --> 00:12:13,840 Speaker 9: especially when inflation is no longer about exhausgenous forces and 231 00:12:13,840 --> 00:12:18,120 Speaker 9: so about your domestic forces. So as long as proved otherwise, 232 00:12:18,160 --> 00:12:19,840 Speaker 9: I would say that what's happening in the Europe is 233 00:12:19,840 --> 00:12:22,280 Speaker 9: probably a lesson for what might happen in the US, 234 00:12:22,400 --> 00:12:26,160 Speaker 9: even if, yes, the US resilience is amazing at the moment, 235 00:12:26,280 --> 00:12:29,240 Speaker 9: I guess a big difference between between the two is 236 00:12:29,320 --> 00:12:33,559 Speaker 9: thus there's I think in Germany a more structural issue, 237 00:12:33,600 --> 00:12:36,040 Speaker 9: which is coming back to buy them at the moment, 238 00:12:36,120 --> 00:12:40,319 Speaker 9: which is to some extent disconnected from military policy. There 239 00:12:40,360 --> 00:12:44,479 Speaker 9: would be probably in a softer patch anyway that is dragging. 240 00:12:44,120 --> 00:12:45,200 Speaker 4: The years and average down. 241 00:12:46,000 --> 00:12:49,000 Speaker 9: But you want to heal inflation, especially when it started 242 00:12:49,040 --> 00:12:53,000 Speaker 9: to get entrenched in wage negotiations, you probably need to 243 00:12:53,000 --> 00:12:56,240 Speaker 9: engineer some sort of softening of demand. There is not 244 00:12:56,360 --> 00:12:58,400 Speaker 9: a lot in the textbook that would tell you otherwise. 245 00:12:59,320 --> 00:13:02,600 Speaker 7: Ispletely different than the US when it comes to how 246 00:13:02,640 --> 00:13:06,400 Speaker 7: well it can withstand the oil shock, or just perhaps 247 00:13:06,480 --> 00:13:09,200 Speaker 7: the oil price is going back to something more normal 248 00:13:09,200 --> 00:13:10,880 Speaker 7: on an inflation adjusted basis. 249 00:13:11,800 --> 00:13:13,800 Speaker 9: Well, our big problem for the last two years has 250 00:13:13,840 --> 00:13:16,959 Speaker 9: been gas rather than rather than than oil. But on 251 00:13:17,720 --> 00:13:20,959 Speaker 9: average we tend to be more sensitive to old shocks 252 00:13:21,240 --> 00:13:24,840 Speaker 9: than the US for complicated reasons, due to the fact 253 00:13:24,880 --> 00:13:29,960 Speaker 9: that even if we are less oil intensive than the US, 254 00:13:30,080 --> 00:13:34,640 Speaker 9: the actual price of a gallon of gas in Europe 255 00:13:34,760 --> 00:13:36,760 Speaker 9: is much higher than in the US, and people are 256 00:13:36,760 --> 00:13:42,760 Speaker 9: probably more sensitive to that particular item. But it were 257 00:13:43,200 --> 00:13:45,720 Speaker 9: if it was just about oil prices, I don't think 258 00:13:45,760 --> 00:13:50,319 Speaker 9: we would be really concerned. I think most observers at 259 00:13:50,360 --> 00:13:52,760 Speaker 9: the moment are more focused on what's going on with 260 00:13:52,840 --> 00:13:56,960 Speaker 9: food prices. Hopefully it will continue to slow down at 261 00:13:57,000 --> 00:13:58,920 Speaker 9: least this is what all sale markets would tell you 262 00:13:58,960 --> 00:13:59,480 Speaker 9: for most. 263 00:13:59,280 --> 00:14:00,880 Speaker 4: Of that and gas. 264 00:14:00,960 --> 00:14:04,719 Speaker 9: And we went through last winter much more positively than 265 00:14:04,720 --> 00:14:07,680 Speaker 9: what was expected. We need to do it again this winter, 266 00:14:07,960 --> 00:14:09,880 Speaker 9: and to some extents being our control. 267 00:14:09,640 --> 00:14:12,920 Speaker 7: Which feeds into the whole discussion of wage virals, especially 268 00:14:12,920 --> 00:14:15,160 Speaker 7: in light of some of the labor movement that we've 269 00:14:15,200 --> 00:14:17,320 Speaker 7: seen in the US but also around the world. Maybe 270 00:14:17,400 --> 00:14:19,960 Speaker 7: taking a page from Europe, if anything, how much do 271 00:14:20,000 --> 00:14:23,160 Speaker 7: you think that that's more noise than signal or vice 272 00:14:23,280 --> 00:14:27,800 Speaker 7: versa in terms of wages staying sticky and labor power 273 00:14:28,120 --> 00:14:29,920 Speaker 7: continuing to be stronger than it has been. 274 00:14:30,640 --> 00:14:36,200 Speaker 9: I think there's something profound happening there is there has 275 00:14:36,240 --> 00:14:39,320 Speaker 9: been an outside change in the balance of power between 276 00:14:39,320 --> 00:14:40,479 Speaker 9: employees and employers. 277 00:14:40,480 --> 00:14:41,720 Speaker 6: And it's very trivial to say that. 278 00:14:41,920 --> 00:14:46,080 Speaker 9: But in Europe, where we have in most countries a 279 00:14:46,160 --> 00:14:50,440 Speaker 9: collective wedge bargaining system, what we tend to have is 280 00:14:50,520 --> 00:14:54,680 Speaker 9: more inertia in the way wages react. In the US, 281 00:14:54,720 --> 00:14:59,200 Speaker 9: you could make the case that wage accelerate when people 282 00:14:59,240 --> 00:15:03,280 Speaker 9: actually can leverage the job opportunities and go back to 283 00:15:03,320 --> 00:15:05,920 Speaker 9: their employer and ask for a pair raise. It's not 284 00:15:05,960 --> 00:15:07,720 Speaker 9: really the way it works in Europe, and some of 285 00:15:07,760 --> 00:15:10,800 Speaker 9: it obviously happens, but most of the pay increases here 286 00:15:11,240 --> 00:15:14,360 Speaker 9: happen as a result of collective bargaining. And it always 287 00:15:14,400 --> 00:15:17,280 Speaker 9: takes a while for, for instance, the unions to realize 288 00:15:17,280 --> 00:15:21,280 Speaker 9: that maybe the economy has become softer, job opportunities are falling, 289 00:15:21,360 --> 00:15:24,240 Speaker 9: maybe it would be time to move back towards wage moderation. 290 00:15:25,160 --> 00:15:28,480 Speaker 9: But you need actually a proper proof that the labor 291 00:15:28,560 --> 00:15:32,080 Speaker 9: market is softening. And even in Europe, and that's actually 292 00:15:32,080 --> 00:15:34,280 Speaker 9: one of the big positives of our current situation is 293 00:15:34,680 --> 00:15:37,680 Speaker 9: even in countries which have been used to mass unemployment 294 00:15:37,680 --> 00:15:40,640 Speaker 9: for decades, the current situation of the lby market is 295 00:15:40,680 --> 00:15:42,680 Speaker 9: more than okay, I mean, you take France, my country, 296 00:15:43,240 --> 00:15:45,560 Speaker 9: un employment rate at seven percent. If you had told 297 00:15:45,560 --> 00:15:49,520 Speaker 9: me that France would be able to deliver that ten 298 00:15:49,600 --> 00:15:50,840 Speaker 9: years ago, I wouldn't have believed you. 299 00:15:50,880 --> 00:15:52,280 Speaker 1: Okay, eight ways to go here. 300 00:15:52,520 --> 00:15:55,920 Speaker 2: But just because the time then, can you stay Europe 301 00:15:55,920 --> 00:15:58,280 Speaker 2: has vaulted beyond eurosclerosis? 302 00:15:59,120 --> 00:15:59,920 Speaker 1: I think clear. 303 00:16:01,480 --> 00:16:04,160 Speaker 9: I think in many cases what we have is sort 304 00:16:04,200 --> 00:16:07,120 Speaker 9: of magnified version of what happens in the US in 305 00:16:07,160 --> 00:16:09,840 Speaker 9: terms of demographic changes, for instance, we are a sort 306 00:16:09,880 --> 00:16:11,400 Speaker 9: of more acute version of what. 307 00:16:11,360 --> 00:16:13,240 Speaker 6: Is going to happen in the US anyway. 308 00:16:13,560 --> 00:16:15,760 Speaker 9: But one point on which I think Europe at the 309 00:16:15,800 --> 00:16:16,920 Speaker 9: moment is doing better than. 310 00:16:16,880 --> 00:16:19,120 Speaker 6: The US, it's on participation. 311 00:16:19,680 --> 00:16:21,320 Speaker 4: The big positive. 312 00:16:20,960 --> 00:16:23,760 Speaker 9: Right now in Europe is that our participation rate is 313 00:16:23,840 --> 00:16:26,600 Speaker 9: rising and has been rising through the pandemic, is today 314 00:16:26,680 --> 00:16:30,160 Speaker 9: much higher than it was before COVID. It's exactly the 315 00:16:30,160 --> 00:16:32,480 Speaker 9: opposite of what's been happening in the US. Even if 316 00:16:32,520 --> 00:16:35,080 Speaker 9: there has been a catch up. Recently, we've put more 317 00:16:35,120 --> 00:16:40,080 Speaker 9: young people, more older people back to work. And basically 318 00:16:40,160 --> 00:16:42,960 Speaker 9: I think we are benefiting from structural reforms which have 319 00:16:43,000 --> 00:16:45,440 Speaker 9: been pushed through in Europe for the last twenty thirty years. 320 00:16:45,440 --> 00:16:49,280 Speaker 9: Not spectacular ones, but gradually I think we have a 321 00:16:49,360 --> 00:16:52,080 Speaker 9: much better functioning labor market than what we had twenty 322 00:16:52,160 --> 00:16:54,720 Speaker 9: thirty years ago, and it's definitely positive. 323 00:16:54,880 --> 00:16:57,680 Speaker 3: Jill, that is a bright spot. Thanks for famous, Jill 324 00:16:57,720 --> 00:17:05,959 Speaker 3: Maak of ACA Investment Managers the Jeff you joined US 325 00:17:05,960 --> 00:17:08,439 Speaker 3: now Senior market strategistic bim Y Mallan, Good. 326 00:17:08,280 --> 00:17:08,800 Speaker 4: Morning, Jeff. 327 00:17:08,800 --> 00:17:11,359 Speaker 3: I appreciate it's going to see it yields at five 328 00:17:11,359 --> 00:17:13,439 Speaker 3: percent at the front end, pushing cycle highs on a 329 00:17:13,480 --> 00:17:16,280 Speaker 3: ten year Dare I say it is this the new normal? 330 00:17:16,320 --> 00:17:17,479 Speaker 4: Are we getting comfortable with this? 331 00:17:17,520 --> 00:17:20,240 Speaker 10: Well, let's go back to Tom's point about real yields. Okay, 332 00:17:20,359 --> 00:17:23,080 Speaker 10: you can deflate via CPI headline CPI. What if we 333 00:17:23,160 --> 00:17:27,760 Speaker 10: deflate nominal yields by wage gains or potential wage gains. 334 00:17:27,880 --> 00:17:30,720 Speaker 10: So then if you take the twenty percent or between 335 00:17:30,720 --> 00:17:34,560 Speaker 10: twenty and forty percent real wages, sorry, nominal wage gains 336 00:17:34,600 --> 00:17:39,520 Speaker 10: if realized, then real yields actually are very very negative still, 337 00:17:39,600 --> 00:17:42,280 Speaker 10: and then central bankers have to catch up. So there's 338 00:17:42,280 --> 00:17:44,119 Speaker 10: a risk here going back to your point about a 339 00:17:44,160 --> 00:17:46,520 Speaker 10: wage price firal that isn't going away anytime soon. 340 00:17:46,560 --> 00:17:48,280 Speaker 1: What is the XA accessign real yield? 341 00:17:48,359 --> 00:17:50,080 Speaker 2: So here we are two percent, and I've done some 342 00:17:50,160 --> 00:17:52,240 Speaker 2: fancy man I get to two point two zero. 343 00:17:52,359 --> 00:17:53,679 Speaker 1: Maybe I'm still here at two. 344 00:17:53,600 --> 00:17:57,760 Speaker 2: Percent, whatever it is, there's a length of this new 345 00:17:57,840 --> 00:18:00,119 Speaker 2: real yield where's attention point out in the next. 346 00:18:00,400 --> 00:18:03,760 Speaker 10: So basically you have to identify where potential GDP growth 347 00:18:03,880 --> 00:18:06,200 Speaker 10: is medium to longer term growth in the US. If 348 00:18:06,240 --> 00:18:09,439 Speaker 10: that's a headline number, nonmal number, you know, three to 349 00:18:09,480 --> 00:18:12,280 Speaker 10: four percent, then find your inflation target. Then if it's 350 00:18:12,280 --> 00:18:14,399 Speaker 10: still two percent, right, then real yields you still need 351 00:18:14,440 --> 00:18:15,240 Speaker 10: to get to two to three. 352 00:18:15,760 --> 00:18:17,840 Speaker 2: To go on Nerdy on a Monday, our mind is 353 00:18:17,920 --> 00:18:21,280 Speaker 2: gr we at a risk here where the interest rate 354 00:18:21,480 --> 00:18:25,560 Speaker 2: becomes less than the small g is bland charted and stiglets, 355 00:18:25,600 --> 00:18:26,760 Speaker 2: among others, worry about. 356 00:18:26,880 --> 00:18:28,920 Speaker 10: I'm glad you brought up Blanche because I want to 357 00:18:28,920 --> 00:18:31,399 Speaker 10: bring up another paper between him and chairburn nankey. So 358 00:18:31,480 --> 00:18:33,640 Speaker 10: when when does this become uprom. 359 00:18:33,560 --> 00:18:36,240 Speaker 1: Nerd fast over on the port side of the desk. 360 00:18:36,560 --> 00:18:37,440 Speaker 6: Favorite part of the morning. 361 00:18:37,880 --> 00:18:41,119 Speaker 10: In terms of wages versus price spiral, and with the 362 00:18:41,119 --> 00:18:43,360 Speaker 10: ore prices going where they are right now, you get 363 00:18:43,400 --> 00:18:46,840 Speaker 10: a price spiral according to that paper when labor markets 364 00:18:46,880 --> 00:18:51,320 Speaker 10: are tight, so here are the unions making the gamble 365 00:18:51,480 --> 00:18:54,800 Speaker 10: or the determination in manufacturing, labor markets are still very 366 00:18:54,840 --> 00:18:56,400 Speaker 10: tightline and the US which raises. 367 00:18:56,200 --> 00:18:58,880 Speaker 7: A question is this signal or noise? Because this is yes, 368 00:18:59,040 --> 00:19:02,200 Speaker 7: it is down tight. Though on the margins you're seeing 369 00:19:02,280 --> 00:19:05,000 Speaker 7: signs that you are getting some sort of labor market softening. 370 00:19:05,520 --> 00:19:08,159 Speaker 7: Is this the last gas because John was asking of 371 00:19:08,240 --> 00:19:11,160 Speaker 7: labor market power or is this something else? It does 372 00:19:11,200 --> 00:19:12,240 Speaker 7: have a stickier nature. 373 00:19:12,720 --> 00:19:14,760 Speaker 10: On a broader basis, this does feel like a last 374 00:19:14,800 --> 00:19:16,960 Speaker 10: as if I do if I look at things globally. 375 00:19:17,000 --> 00:19:18,800 Speaker 10: But on the other hand, you know, I'm FX guy. 376 00:19:18,800 --> 00:19:20,560 Speaker 10: At the end of the day, relatives, it's all about 377 00:19:20,600 --> 00:19:23,040 Speaker 10: the relative differentials. I think US labor market's all tight 378 00:19:23,119 --> 00:19:23,960 Speaker 10: up compared to what we have. 379 00:19:23,920 --> 00:19:24,840 Speaker 6: In Europe right now. 380 00:19:24,960 --> 00:19:27,160 Speaker 10: So on that note alone, probably labor has more bargaining 381 00:19:27,200 --> 00:19:28,320 Speaker 10: power in the US compared. 382 00:19:28,080 --> 00:19:28,440 Speaker 6: To in Europe. 383 00:19:28,480 --> 00:19:29,720 Speaker 7: Does that mean dollar weakness? 384 00:19:30,040 --> 00:19:31,600 Speaker 10: I would say, you know, a short term your dollar 385 00:19:31,640 --> 00:19:33,840 Speaker 10: strength here, that's still going to be in play because 386 00:19:34,040 --> 00:19:36,760 Speaker 10: that puts the FED on more vigilant footing, you know, 387 00:19:36,840 --> 00:19:38,000 Speaker 10: to borrow an ECB phrase. 388 00:19:38,560 --> 00:19:39,919 Speaker 6: But you know, Net, I. 389 00:19:39,920 --> 00:19:41,560 Speaker 10: Think they're pretty much sure that is in the price 390 00:19:41,640 --> 00:19:43,199 Speaker 10: right now. So let's see where we're going to. 391 00:19:43,160 --> 00:19:45,760 Speaker 3: Be very creche of you, Jeff, Let's talk about POW 392 00:19:45,880 --> 00:19:48,679 Speaker 3: on Wednesday. On Wednesday, we get a set of projections. 393 00:19:48,920 --> 00:19:51,879 Speaker 3: Most people assume that for twenty twenty three, when we 394 00:19:51,880 --> 00:19:54,199 Speaker 3: look at revised growth figures, they're going up. When we 395 00:19:54,200 --> 00:19:56,800 Speaker 3: look at revised inflation figures, they're going down. What does 396 00:19:56,840 --> 00:19:58,880 Speaker 3: twenty twenty four look like for you and the team? 397 00:19:59,000 --> 00:20:00,919 Speaker 10: I saw twenty twenty four. It's less about are they 398 00:20:01,000 --> 00:20:03,399 Speaker 10: going to hike further? It's more about how long do 399 00:20:03,560 --> 00:20:06,639 Speaker 10: US rates and state where they are? And that is 400 00:20:06,680 --> 00:20:08,639 Speaker 10: you know what the boj will be looking at and 401 00:20:08,680 --> 00:20:11,400 Speaker 10: what Dara, so you didn't mention central Bank of Brazil, 402 00:20:11,480 --> 00:20:13,680 Speaker 10: central Bank of Turkey, and the Central Bank of South Africa, 403 00:20:13,760 --> 00:20:16,320 Speaker 10: the Swiss, they're all deciding and when they look at 404 00:20:16,359 --> 00:20:19,119 Speaker 10: their nominal effective exchange rates, they'll all be looking at 405 00:20:19,119 --> 00:20:21,440 Speaker 10: the FED. How long can the Fed projection keep the 406 00:20:21,480 --> 00:20:23,800 Speaker 10: dollar strong? And then they'll have to calibrate their own forecasts. 407 00:20:23,840 --> 00:20:24,400 Speaker 4: Called is that. 408 00:20:24,400 --> 00:20:27,000 Speaker 3: Dollar problem bigger in Europe right now? 409 00:20:27,040 --> 00:20:27,760 Speaker 4: For you than am? 410 00:20:28,320 --> 00:20:30,240 Speaker 10: I think that dollar problem is bigger here because em 411 00:20:30,280 --> 00:20:32,240 Speaker 10: a crossboard. If you look at a Brazil, for example, 412 00:20:32,359 --> 00:20:34,560 Speaker 10: much higher at real rates, so they've got the buffer. 413 00:20:34,640 --> 00:20:37,520 Speaker 2: Europe does not, Argie even surprised US with a low 414 00:20:37,720 --> 00:20:42,399 Speaker 2: five year growth view. Suddenly oil ninety four for Jeff, 415 00:20:42,440 --> 00:20:45,080 Speaker 2: you where is the price of brand? That's a tip 416 00:20:45,160 --> 00:20:48,040 Speaker 2: point that really accentuates that global slowdown. 417 00:20:48,520 --> 00:20:49,879 Speaker 6: Let's look at the individual markets. 418 00:20:49,960 --> 00:20:52,080 Speaker 10: For example, China's at a slow down already, no matter 419 00:20:52,160 --> 00:20:55,280 Speaker 10: what China, unless you're looking at a real reacceleration in China, 420 00:20:55,320 --> 00:20:57,320 Speaker 10: which is nor the base case to five or six percent. 421 00:20:57,800 --> 00:20:59,879 Speaker 6: Then you get into a demand. 422 00:20:59,440 --> 00:21:03,080 Speaker 10: Issue top of a supply issue that becomes a problem globally, 423 00:21:03,200 --> 00:21:04,840 Speaker 10: and then that could be a certain point. But right now, 424 00:21:04,840 --> 00:21:06,560 Speaker 10: if it's just the US alone and given the US 425 00:21:06,640 --> 00:21:08,640 Speaker 10: energy to independence, I think it's much more manageable. 426 00:21:08,680 --> 00:21:11,040 Speaker 7: I'm glad you mentioned China. The Wall Street Journal had 427 00:21:11,080 --> 00:21:13,800 Speaker 7: this big expose China might be weaker than you think, 428 00:21:13,840 --> 00:21:17,280 Speaker 7: and to focus talked about focusing on the housing market. 429 00:21:17,520 --> 00:21:19,920 Speaker 7: Other people have said, including Lelynn Miller of the China 430 00:21:19,920 --> 00:21:22,600 Speaker 7: Beige Book, that from a US perspective, this is what 431 00:21:22,640 --> 00:21:25,360 Speaker 7: people want to see, but it's not actually what's happening 432 00:21:25,400 --> 00:21:27,719 Speaker 7: on the ground that there's actually a great deal of strength. 433 00:21:28,000 --> 00:21:30,560 Speaker 7: Having been in China a couple of times recently, what's 434 00:21:30,600 --> 00:21:31,160 Speaker 7: your view. 435 00:21:31,480 --> 00:21:34,760 Speaker 10: So domestically, I thought consumption was firm selves there about 436 00:21:34,760 --> 00:21:37,359 Speaker 10: three weeks ago. People were spending you know, some of 437 00:21:37,359 --> 00:21:40,280 Speaker 10: the key torus sites in like in Ciano Terra Cotta Warriors, 438 00:21:40,440 --> 00:21:42,320 Speaker 10: it was basically in a several rows behind before you 439 00:21:42,359 --> 00:21:45,800 Speaker 10: could actually obvious soldiers there. But then on the way 440 00:21:45,800 --> 00:21:47,480 Speaker 10: out look at Beijing Airport, you know, just in a 441 00:21:47,480 --> 00:21:50,040 Speaker 10: barely any international flights coming out, so that high tiker 442 00:21:50,080 --> 00:21:50,959 Speaker 10: consumption items. 443 00:21:51,000 --> 00:21:52,320 Speaker 6: I think now that's a bit more of a problem 444 00:21:52,359 --> 00:21:52,800 Speaker 6: at this point. 445 00:21:52,920 --> 00:21:55,320 Speaker 10: Going back to the real estate market and the close linkages, 446 00:21:55,359 --> 00:21:57,719 Speaker 10: and it's the financial system in China. Stabilizing the real 447 00:21:57,800 --> 00:22:00,960 Speaker 10: estate market means stabilizing the financial system actually the trust 448 00:22:01,000 --> 00:22:04,560 Speaker 10: and framework shadow banking for example, So you know, that's 449 00:22:04,600 --> 00:22:07,440 Speaker 10: where I think they are doing the right thing. But ultimately, 450 00:22:07,480 --> 00:22:09,480 Speaker 10: how much more downsie can you price in relative pricing? 451 00:22:09,560 --> 00:22:10,399 Speaker 10: I think it's very limited. 452 00:22:10,440 --> 00:22:15,120 Speaker 2: Do you partition China and the domestic balance sheet challenges 453 00:22:15,600 --> 00:22:18,800 Speaker 2: even after Changdu or do you drag that into the 454 00:22:18,840 --> 00:22:21,760 Speaker 2: more international analysis of Ritmanby and the rest. 455 00:22:22,040 --> 00:22:23,040 Speaker 1: Do you partition or not? 456 00:22:23,440 --> 00:22:26,280 Speaker 6: So I think at this point China's pretty much SOLF financed. 457 00:22:26,320 --> 00:22:27,399 Speaker 6: We look at and flow data. 458 00:22:27,560 --> 00:22:30,600 Speaker 10: International financing for China's growth is very very limited right now. 459 00:22:30,680 --> 00:22:34,160 Speaker 10: So it's about domestic financial stability, and then the transmission 460 00:22:34,200 --> 00:22:36,600 Speaker 10: is if things go all right, can that drag down 461 00:22:36,600 --> 00:22:37,480 Speaker 10: international growth further? 462 00:22:37,600 --> 00:22:40,040 Speaker 4: We've got to squeeze this in Jeff, we're in Europe. 463 00:22:40,520 --> 00:22:44,000 Speaker 3: There is an ev battle taking place, and to a 464 00:22:44,040 --> 00:22:46,840 Speaker 3: greater extent, I think the transition to EVS is at 465 00:22:46,840 --> 00:22:49,800 Speaker 3: the epicenter the heart of this conversation with u AW 466 00:22:49,800 --> 00:22:52,440 Speaker 3: and the Detroit three. At the moment, are we heading 467 00:22:52,480 --> 00:22:57,080 Speaker 3: towards just massive tariffs for auto imports in places like Europe? 468 00:22:57,119 --> 00:22:58,440 Speaker 10: If you ask me two weeks ago, I would have 469 00:22:58,480 --> 00:23:00,960 Speaker 10: said no, But I think something changed the immuna quart ocean. 470 00:23:01,000 --> 00:23:01,800 Speaker 4: What do you think changed? 471 00:23:01,920 --> 00:23:03,800 Speaker 10: I think for the first time in three or four years, 472 00:23:03,880 --> 00:23:07,040 Speaker 10: Chinese came back and European manufacturers looked at how farther 473 00:23:07,040 --> 00:23:09,399 Speaker 10: over behind, not just in terms of cars battery technology, 474 00:23:09,600 --> 00:23:12,320 Speaker 10: and realize this is much more pressing than we thought. 475 00:23:12,359 --> 00:23:13,240 Speaker 10: And you saw the reaction. 476 00:23:13,359 --> 00:23:15,920 Speaker 3: German manufacturers are scared of what's coming out of China. 477 00:23:16,600 --> 00:23:18,879 Speaker 10: Absolutely, and China saw this in advance. That's why they 478 00:23:18,880 --> 00:23:21,159 Speaker 10: want to build in Hungary near battery factories, and they 479 00:23:21,200 --> 00:23:24,240 Speaker 10: want to build assembly plants in France as well. But 480 00:23:24,359 --> 00:23:26,880 Speaker 10: even then, with that kind of cooperative approach, you're seeing 481 00:23:26,880 --> 00:23:28,920 Speaker 10: the backlash already, and then you're seeing the backlash of 482 00:23:28,920 --> 00:23:30,920 Speaker 10: the backlash from Beijing. So this is going to get 483 00:23:30,920 --> 00:23:31,239 Speaker 10: in now. 484 00:23:31,240 --> 00:23:33,040 Speaker 3: This is only one industry, yeah, but do you think 485 00:23:33,040 --> 00:23:35,760 Speaker 3: there's broader things at play here that ultimately influence things 486 00:23:35,800 --> 00:23:38,680 Speaker 3: like flows that contribute to calls in foreign exchange. 487 00:23:38,880 --> 00:23:40,440 Speaker 10: I think medium to longer term, let's look at the 488 00:23:40,480 --> 00:23:43,600 Speaker 10: chip industry as well, that's going to feature heavily in 489 00:23:43,680 --> 00:23:47,720 Speaker 10: terms of flows into Asia, into Europe. But the importance 490 00:23:47,720 --> 00:23:50,600 Speaker 10: to employment, especially in Germany and also that Eastern Europe 491 00:23:50,600 --> 00:23:52,840 Speaker 10: that feeds into the German supply chain. I think this 492 00:23:52,960 --> 00:23:55,320 Speaker 10: is and politically speaking that this is absolutely going to 493 00:23:55,359 --> 00:23:56,280 Speaker 10: be central to Europe. 494 00:23:56,359 --> 00:23:57,360 Speaker 4: Jeff, this was fantastic. 495 00:23:57,480 --> 00:23:59,520 Speaker 3: Right to kick off the weight with you here in London, Jeff, 496 00:23:59,520 --> 00:24:01,359 Speaker 3: you there fbny men at. 497 00:24:11,760 --> 00:24:13,800 Speaker 1: Right now, we're going to survive American politics. 498 00:24:13,800 --> 00:24:18,280 Speaker 2: Gregory Villier briefs this morning, Chief US Policy Strategistic AGF 499 00:24:18,440 --> 00:24:21,879 Speaker 2: greg and I Wanhington posts they talk about five ideological 500 00:24:21,960 --> 00:24:24,399 Speaker 2: factions of the Republican Party. 501 00:24:24,920 --> 00:24:28,000 Speaker 1: I didn't know that. Do you actually buy the idea. 502 00:24:28,119 --> 00:24:32,600 Speaker 2: Given labor unrest in America, given a possible government shutdown, 503 00:24:33,040 --> 00:24:37,359 Speaker 2: that mister McCarthy's dealing with five ideological factions? 504 00:24:38,560 --> 00:24:41,720 Speaker 11: Oh at least, yeah, it's it's it's quite a spectacle. 505 00:24:41,760 --> 00:24:43,400 Speaker 11: Right now, he's on really thin ice. 506 00:24:43,480 --> 00:24:43,840 Speaker 1: Tom. 507 00:24:44,280 --> 00:24:46,119 Speaker 11: I don't think he can get a deal before the 508 00:24:46,160 --> 00:24:50,000 Speaker 11: October one deadline. So we do have a shutdown. I 509 00:24:50,080 --> 00:24:52,560 Speaker 11: call it shutdown light because it's not going to be 510 00:24:52,560 --> 00:24:52,960 Speaker 11: the end. 511 00:24:52,840 --> 00:24:53,240 Speaker 1: Of the world. 512 00:24:53,280 --> 00:24:56,080 Speaker 11: We're not going to kill social Security and Medicare benefits. 513 00:24:56,240 --> 00:24:58,119 Speaker 11: But if you want to go to a national park, 514 00:24:58,440 --> 00:25:00,800 Speaker 11: you're out of luck. And I I think the shutdown 515 00:25:00,880 --> 00:25:02,320 Speaker 11: is going to last for quite a while. 516 00:25:03,880 --> 00:25:06,680 Speaker 2: Is there a shutdown in Detroit? What I find stark 517 00:25:06,880 --> 00:25:09,359 Speaker 2: is the imagery and the great coverage by Bloomberg on this. 518 00:25:10,080 --> 00:25:12,159 Speaker 2: You know, I see them picketing and there's like seven 519 00:25:12,280 --> 00:25:14,680 Speaker 2: people out front. It looks like a lineup of Denny's 520 00:25:14,720 --> 00:25:16,919 Speaker 2: waiting to get in. I mean, is this like a 521 00:25:16,960 --> 00:25:20,080 Speaker 2: real strike of labor like you and I remember, or 522 00:25:20,160 --> 00:25:21,800 Speaker 2: is it sort of kind of like pretend? 523 00:25:22,680 --> 00:25:25,360 Speaker 11: Yeah, it's not like what we remember that everybody went 524 00:25:25,400 --> 00:25:31,240 Speaker 11: out and he didn't selectively target factories. But I think 525 00:25:31,280 --> 00:25:35,240 Speaker 11: there have been some sign of progress. I think Ford 526 00:25:35,280 --> 00:25:38,080 Speaker 11: has been the most conciliatory, and I think that the 527 00:25:38,119 --> 00:25:40,560 Speaker 11: elephant in the room obviously is Joe Biden. I think 528 00:25:40,600 --> 00:25:44,919 Speaker 11: Biden knows that Michigan has sixteen electoral votes, and I 529 00:25:44,920 --> 00:25:48,200 Speaker 11: think Biden will be influential in the final agreement. 530 00:25:49,720 --> 00:25:50,800 Speaker 4: What will that entail? 531 00:25:51,000 --> 00:25:52,360 Speaker 7: Do we have a sense of what it will take 532 00:25:52,400 --> 00:25:54,359 Speaker 7: to get it done, and what that means for the 533 00:25:54,440 --> 00:25:58,199 Speaker 7: viability of auto manufacturers that have traditionally added to the 534 00:25:58,240 --> 00:26:01,040 Speaker 7: GDP and really fostered a lot of strength in the Midwest. 535 00:26:02,400 --> 00:26:05,000 Speaker 11: Yeah, I think it will have to be close to 536 00:26:05,040 --> 00:26:08,719 Speaker 11: thirty percent in wages forty percents out of the question, 537 00:26:09,000 --> 00:26:11,360 Speaker 11: but I think the number will creep up. They may 538 00:26:11,400 --> 00:26:15,440 Speaker 11: go back to more defined pensions, They may have less 539 00:26:15,440 --> 00:26:18,520 Speaker 11: than a forty hour work week. It will be generous, 540 00:26:18,560 --> 00:26:22,160 Speaker 11: and it will add to the perception that wages are 541 00:26:22,240 --> 00:26:26,120 Speaker 11: sticky for the federal Reserve. I think sticky wages are 542 00:26:26,119 --> 00:26:27,720 Speaker 11: going to be around for quite a while. 543 00:26:29,320 --> 00:26:31,880 Speaker 7: Does this pressure just sort of uniting the two ideas? 544 00:26:31,880 --> 00:26:34,920 Speaker 7: Does this pressure lawmakers to try to get a budget 545 00:26:34,960 --> 00:26:38,600 Speaker 7: deal done just to avoid the extra hit on that front, 546 00:26:38,680 --> 00:26:40,439 Speaker 7: especially at a time where there might be some agreement 547 00:26:40,480 --> 00:26:43,119 Speaker 7: on things like border control between the Republicans and Democrats. 548 00:26:43,960 --> 00:26:46,159 Speaker 11: I tell you, Lisa, these people are on a different 549 00:26:46,280 --> 00:26:50,920 Speaker 11: planet from you and me. They are fighting these parochial 550 00:26:51,000 --> 00:26:53,680 Speaker 11: fights knowing they're going to lose. I mean, it's quite 551 00:26:53,680 --> 00:26:56,640 Speaker 11: clear that this compromise over the weekend would never make 552 00:26:56,680 --> 00:26:59,200 Speaker 11: it through the Senate. I'm not even sure it would 553 00:26:59,240 --> 00:27:01,199 Speaker 11: make it through the House. So we're going to go 554 00:27:01,240 --> 00:27:04,439 Speaker 11: through this exercise, and sadly, I think this drags on 555 00:27:04,640 --> 00:27:08,119 Speaker 11: right into the holiday season, maybe after the holiday season, 556 00:27:08,160 --> 00:27:09,200 Speaker 11: before we get a deal. 557 00:27:11,280 --> 00:27:13,520 Speaker 2: Greg, you're going to turn the script once again over 558 00:27:13,520 --> 00:27:16,520 Speaker 2: the weekend, lots of discussion about the president's age. I 559 00:27:16,560 --> 00:27:18,480 Speaker 2: think all of our listeners and viewers are sort of 560 00:27:18,560 --> 00:27:21,359 Speaker 2: exhausted by the debate. But I want to know the 561 00:27:21,440 --> 00:27:26,240 Speaker 2: valier timeline to where I get an LBJ announcement. Like 562 00:27:26,359 --> 00:27:29,000 Speaker 2: March of nineteen sixty eight, you and I were sitting 563 00:27:29,000 --> 00:27:32,560 Speaker 2: on the couch watching the Bruins lose when that happened. 564 00:27:33,200 --> 00:27:36,320 Speaker 2: How do we get Joe Biden out to where LBJ 565 00:27:36,680 --> 00:27:38,040 Speaker 2: was in March of sixty eight. 566 00:27:39,000 --> 00:27:42,000 Speaker 11: I don't think he realizes there's a problem. More and 567 00:27:42,040 --> 00:27:44,960 Speaker 11: more Democrats I talked to almost all of them, as 568 00:27:45,000 --> 00:27:47,040 Speaker 11: a matter of fact, say they would like to see 569 00:27:47,040 --> 00:27:51,840 Speaker 11: Biden step down. Two problems. Number One, he is delusional 570 00:27:51,920 --> 00:27:54,360 Speaker 11: and he doesn't think there is a problem. Number Two, 571 00:27:54,400 --> 00:27:59,840 Speaker 11: there is no logical successor. That's the problem for the party. 572 00:28:00,280 --> 00:28:05,160 Speaker 3: To the polls screen, Greg, that is a problem absolutely. 573 00:28:05,440 --> 00:28:09,640 Speaker 11: I mean about seventy percent of Democrats say they would 574 00:28:09,640 --> 00:28:12,359 Speaker 11: prefer a different nominee. I mean that I've never seen 575 00:28:12,400 --> 00:28:15,359 Speaker 11: a gap like that, so you could have more pressure, 576 00:28:15,480 --> 00:28:17,240 Speaker 11: you know. The other thing guys I should mention is 577 00:28:17,280 --> 00:28:22,680 Speaker 11: that filing deadlines are fast approaching. By late October early November, 578 00:28:22,720 --> 00:28:25,520 Speaker 11: it's too late to file, So any talk about some 579 00:28:25,880 --> 00:28:29,440 Speaker 11: last minute rescue for the party I think is unwarranted. 580 00:28:30,800 --> 00:28:33,120 Speaker 3: Greg, before you run, before you go. If you heard 581 00:28:33,119 --> 00:28:35,520 Speaker 3: about that missing F thirty five, have you read the 582 00:28:35,520 --> 00:28:36,160 Speaker 3: story on that. 583 00:28:37,600 --> 00:28:38,120 Speaker 11: Missing What. 584 00:28:39,840 --> 00:28:42,440 Speaker 4: F thirty five fighter jet gone missing? 585 00:28:42,600 --> 00:28:45,040 Speaker 1: I'm the Carolinus. Yeah, yeah, Greg, what on. 586 00:28:45,000 --> 00:28:47,000 Speaker 3: Earth is going on? How does the military lose in 587 00:28:47,160 --> 00:28:48,000 Speaker 3: F thirty five? 588 00:28:48,880 --> 00:28:52,120 Speaker 11: I know it's quite a story, and yeah, I think 589 00:28:52,160 --> 00:28:53,520 Speaker 11: it's going to get bigger. 590 00:28:53,280 --> 00:28:55,320 Speaker 4: Great valueah of AJF. Thank you sir. 591 00:29:00,720 --> 00:29:03,320 Speaker 2: Let us move on and Rita enjoys us to save 592 00:29:03,400 --> 00:29:06,200 Speaker 2: us here from the ballpark, co founder, head of research 593 00:29:06,240 --> 00:29:10,200 Speaker 2: and Energy aspects and critically joins us this morning from Canada, 594 00:29:10,520 --> 00:29:14,240 Speaker 2: which is an oil producer, and Rita within your racket, 595 00:29:14,400 --> 00:29:18,160 Speaker 2: within your industry, are they looking at this as a 596 00:29:18,200 --> 00:29:22,560 Speaker 2: surge that can ebb or is there a feeling, you know, 597 00:29:22,640 --> 00:29:25,560 Speaker 2: within the macro petroleum. 598 00:29:24,960 --> 00:29:27,760 Speaker 1: Business that this is a new pricing to stay. 599 00:29:28,200 --> 00:29:31,280 Speaker 8: Well, it's still early, it's not even five am here, 600 00:29:31,440 --> 00:29:33,200 Speaker 8: so I don't know how they're feeling. But if I 601 00:29:33,200 --> 00:29:35,640 Speaker 8: had to guess Tom, I would say they are all 602 00:29:35,680 --> 00:29:37,360 Speaker 8: going to be very happy. I mean, of course, there's 603 00:29:37,360 --> 00:29:40,960 Speaker 8: well Petroleum Congress over here, Ministers from all around the 604 00:29:41,000 --> 00:29:45,760 Speaker 8: world are gathering, including Prince Apleses himself. There's lots and 605 00:29:45,800 --> 00:29:49,520 Speaker 8: lots of kind of you know, talks with both consumers 606 00:29:49,560 --> 00:29:52,120 Speaker 8: and producer governments really over the next couple of days 607 00:29:52,120 --> 00:29:55,400 Speaker 8: over here, and I think the reality is that demand 608 00:29:55,400 --> 00:29:58,240 Speaker 8: has surprise to the upside, regardless of all the recessionary 609 00:29:58,280 --> 00:30:01,680 Speaker 8: fears that we've seen. Think that's why what is interesting 610 00:30:01,760 --> 00:30:04,280 Speaker 8: for me is, yes, crude is getting all the headlines 611 00:30:04,320 --> 00:30:07,160 Speaker 8: now we're talking about it, but if you look at 612 00:30:07,320 --> 00:30:11,200 Speaker 8: products and crack spreads that have already been high for 613 00:30:11,240 --> 00:30:14,680 Speaker 8: the last few months, gasoline, diesel, they've been trading one 614 00:30:14,760 --> 00:30:17,920 Speaker 8: hundred and twenty plus dollars per barrel. Crude was eighty. 615 00:30:18,040 --> 00:30:22,160 Speaker 8: Now crud's catching up, but those prices haven't necessarily gone 616 00:30:22,240 --> 00:30:25,200 Speaker 8: up further. So this is more of a redistribution between 617 00:30:25,240 --> 00:30:29,360 Speaker 8: refiners and producers than really end users feeling the impact. 618 00:30:29,400 --> 00:30:32,000 Speaker 8: So I know why the media is focusing on the crude, 619 00:30:32,080 --> 00:30:34,680 Speaker 8: but I don't think the end user is necessarily seeing 620 00:30:35,080 --> 00:30:37,280 Speaker 8: that big an impact versus a few months ago. 621 00:30:38,120 --> 00:30:43,480 Speaker 2: Right, what is a representation or tone of China? Is 622 00:30:43,520 --> 00:30:46,960 Speaker 2: the marginal demand elephant in the room at the Congress? 623 00:30:47,080 --> 00:30:48,760 Speaker 1: Is China there in a big way? 624 00:30:50,440 --> 00:30:53,240 Speaker 8: I think there is going to be presence for sure, 625 00:30:54,040 --> 00:30:57,680 Speaker 8: and I think again the dichotomy between Chinese macro and 626 00:30:57,760 --> 00:31:00,680 Speaker 8: Chinese all demand is definitely going to come up, something 627 00:31:00,720 --> 00:31:03,640 Speaker 8: we've been highlighting for some time now because in the 628 00:31:03,680 --> 00:31:06,400 Speaker 8: West and Western analysts keep looking at the Chinese micro 629 00:31:06,560 --> 00:31:09,400 Speaker 8: data and saying, well, ail demand hasn't been performing yet 630 00:31:09,440 --> 00:31:13,160 Speaker 8: aldemand has actually been hitting record highs because it's become 631 00:31:13,200 --> 00:31:17,160 Speaker 8: more consumer oriented. Plus, China's got some strategic petroleum reserve 632 00:31:17,200 --> 00:31:20,040 Speaker 8: filling going on as well. In some ways, the US 633 00:31:20,080 --> 00:31:22,440 Speaker 8: has been drawing it down last year and China now 634 00:31:22,520 --> 00:31:26,200 Speaker 8: is actually refilling it, having locked in some favorable prices 635 00:31:26,240 --> 00:31:27,000 Speaker 8: earlier in the year. 636 00:31:27,320 --> 00:31:30,280 Speaker 7: What's the pressure on Prince Abdulaziz today, who's going to 637 00:31:30,280 --> 00:31:33,120 Speaker 7: be speaking, I believe around ten am Eastern time at 638 00:31:33,160 --> 00:31:37,520 Speaker 7: the Calgary conference, to really increase production, especially if this 639 00:31:37,760 --> 00:31:40,080 Speaker 7: is being driven in part by demand, not just their 640 00:31:40,080 --> 00:31:40,760 Speaker 7: supply cuds. 641 00:31:41,320 --> 00:31:43,520 Speaker 8: Well, I think he's been very clear that, look, there 642 00:31:43,600 --> 00:31:47,200 Speaker 8: still is a lot of uncertainty, be it from the 643 00:31:47,240 --> 00:31:50,240 Speaker 8: FED itself or even China, all the kind of noise 644 00:31:50,320 --> 00:31:53,720 Speaker 8: that's coming around, and he has to be one thousand 645 00:31:53,800 --> 00:31:56,160 Speaker 8: percent confident, I would say, not even one hundred percent 646 00:31:56,480 --> 00:31:59,360 Speaker 8: that there are not going to be any of these 647 00:31:59,520 --> 00:32:02,239 Speaker 8: you know, prices with the FED for instance, and it's 648 00:32:02,240 --> 00:32:03,640 Speaker 8: a bit of a chicken and egg, right if all 649 00:32:03,680 --> 00:32:05,360 Speaker 8: prices go up, what does the FED do? As you 650 00:32:05,360 --> 00:32:07,480 Speaker 8: guys have been talking about as well. But I think 651 00:32:07,480 --> 00:32:09,400 Speaker 8: they are going to be cautious. They want to ensure 652 00:32:09,400 --> 00:32:12,960 Speaker 8: that balances or at least inventries do not build because 653 00:32:13,000 --> 00:32:16,040 Speaker 8: of those macro concerns. And looks Audi Arabia has extended 654 00:32:16,280 --> 00:32:19,520 Speaker 8: the cuts still your end, so has Russia. It kind 655 00:32:19,520 --> 00:32:21,760 Speaker 8: of gives for them. The main thing they want to 656 00:32:21,760 --> 00:32:24,800 Speaker 8: provide is stability, and I think that's what he's trying 657 00:32:24,840 --> 00:32:26,120 Speaker 8: to do, and I think that's what he's going to 658 00:32:26,120 --> 00:32:26,920 Speaker 8: focus on today. 659 00:32:27,280 --> 00:32:29,880 Speaker 7: It's a really interesting confluence of events at the United Nations. 660 00:32:29,880 --> 00:32:32,080 Speaker 7: They're holding a conference right now or a lot of 661 00:32:32,120 --> 00:32:35,280 Speaker 7: the focus is going to be unsustainable energy and moving 662 00:32:35,320 --> 00:32:38,520 Speaker 7: away from fossil fuels. You have electric vehicles taking over. 663 00:32:38,680 --> 00:32:41,120 Speaker 7: That is underpinning some of the discussions with the UAW. 664 00:32:41,440 --> 00:32:44,560 Speaker 7: How much is that underpinning Saudi Arabia's decision to cut 665 00:32:44,600 --> 00:32:48,240 Speaker 7: production to get more profits now before some of these 666 00:32:48,240 --> 00:32:51,560 Speaker 7: groups phase out fossil fuels before they've become less of 667 00:32:51,600 --> 00:32:52,760 Speaker 7: a focus later on. 668 00:32:54,000 --> 00:32:56,640 Speaker 8: Or you could argue that goes both ways. Lisa right. 669 00:32:56,640 --> 00:32:59,040 Speaker 8: I've also heard the argument that that's why other countries 670 00:32:59,080 --> 00:33:01,280 Speaker 8: want to flood them market and make sure they don't 671 00:33:01,280 --> 00:33:05,360 Speaker 8: have stranded assets afterwards. I don't think OPEC plus policy 672 00:33:05,400 --> 00:33:08,040 Speaker 8: works like that. We've written about this as well, that 673 00:33:08,200 --> 00:33:12,000 Speaker 8: ultimately South the Arabian most OPEC countries are revenue optimizers. 674 00:33:12,080 --> 00:33:15,400 Speaker 8: Right What they are trying to do for themselves is saying, Okay, 675 00:33:15,600 --> 00:33:18,040 Speaker 8: if this is the price and we cut production or 676 00:33:18,120 --> 00:33:20,680 Speaker 8: race production, what is our total revenue going to be? 677 00:33:20,840 --> 00:33:23,160 Speaker 8: That is what they are focusing on right now. Of 678 00:33:23,200 --> 00:33:26,280 Speaker 8: course they are concerned about long term energy transition, but 679 00:33:26,320 --> 00:33:28,160 Speaker 8: I wouldn't even use the word concerned. I think they 680 00:33:28,240 --> 00:33:31,440 Speaker 8: embrace it. They are doing a lot around it, and 681 00:33:31,560 --> 00:33:34,200 Speaker 8: they very much are aware that oil has to fade 682 00:33:34,280 --> 00:33:37,120 Speaker 8: over time, they just disagree with the timelines, Like the 683 00:33:37,160 --> 00:33:39,040 Speaker 8: IA has put out, what's the. 684 00:33:39,080 --> 00:33:42,200 Speaker 2: A'mer going to send timeline of an oil vector? I 685 00:33:42,240 --> 00:33:45,680 Speaker 2: guess in June or July of seventy something up to 686 00:33:45,800 --> 00:33:48,160 Speaker 2: ninety four fifty one right now? Is that just a 687 00:33:48,200 --> 00:33:51,480 Speaker 2: continued vector up? Do you see ninety five, ninety six, 688 00:33:51,720 --> 00:33:54,520 Speaker 2: ninety seven, et cetera, et cetera, et cetera. 689 00:33:55,080 --> 00:33:57,360 Speaker 8: Yeah, if you remember, tom our price forecast for Q 690 00:33:57,480 --> 00:34:00,240 Speaker 8: four was an average of ninety two dollars for Rent. 691 00:34:00,280 --> 00:34:02,840 Speaker 8: So I think we've we've kind of hit it now. 692 00:34:02,880 --> 00:34:04,960 Speaker 8: So the question is, but look, an average of ninety 693 00:34:05,000 --> 00:34:07,080 Speaker 8: two does allow oil prices to go to a hundred? 694 00:34:07,560 --> 00:34:09,520 Speaker 8: We're going to We're putting out a piece later today 695 00:34:09,560 --> 00:34:13,239 Speaker 8: which is calling for one hundred dollars by Halloween for Brent. 696 00:34:14,000 --> 00:34:16,200 Speaker 8: And again, you know this is this is just a trajectory, 697 00:34:16,480 --> 00:34:18,880 Speaker 8: and at this point of course, it's a short term thing, right, 698 00:34:18,880 --> 00:34:20,920 Speaker 8: I'm not saying it's going to average above hundred, But 699 00:34:21,000 --> 00:34:23,560 Speaker 8: could it go two hundred dollars for a bit? Absolutely? 700 00:34:23,640 --> 00:34:23,839 Speaker 1: Yes. 701 00:34:24,200 --> 00:34:27,320 Speaker 3: The triple digit by Halloween is amurates? Is that just 702 00:34:27,360 --> 00:34:32,400 Speaker 3: a marketing mechanism? Just you know, triple digit something about it. 703 00:34:32,400 --> 00:34:34,640 Speaker 8: It just rhymes right, hundred by Halloween. That's why I 704 00:34:34,680 --> 00:34:37,880 Speaker 8: know I'm joking, but it's no. 705 00:34:38,000 --> 00:34:38,239 Speaker 1: I think. 706 00:34:38,280 --> 00:34:41,880 Speaker 8: Look, fundamentals are very very strong right now, but also positioning, 707 00:34:41,920 --> 00:34:44,319 Speaker 8: and that's one thing we shouldn't miss. A lot of 708 00:34:44,320 --> 00:34:46,960 Speaker 8: hedge funds are very under positioned and crude because of 709 00:34:46,960 --> 00:34:50,160 Speaker 8: the macro concerns. Now we are seeing quite a bit 710 00:34:50,200 --> 00:34:52,359 Speaker 8: of passive money come back as well, so I think 711 00:34:52,400 --> 00:34:55,520 Speaker 8: the combination of that could actually lead to a temporary 712 00:34:55,840 --> 00:34:58,160 Speaker 8: kind of upswing in crude. And that's why I'm not 713 00:34:58,200 --> 00:35:00,920 Speaker 8: saying we're still we're not expecting it to average above hundred, 714 00:35:00,960 --> 00:35:03,040 Speaker 8: but it could go about hundred and in the next 715 00:35:03,080 --> 00:35:03,520 Speaker 8: couple of. 716 00:35:03,400 --> 00:35:06,000 Speaker 3: Weeks, only five dollars away. Right now, I'm ready to 717 00:35:06,000 --> 00:35:08,280 Speaker 3: thank you. I'm ready to send Avanergy as space. 718 00:35:09,680 --> 00:35:13,520 Speaker 2: Subscribe to the Bloomberg Surveillance podcast on Apple, Spotify and 719 00:35:13,680 --> 00:35:17,880 Speaker 2: anywhere else you get your podcasts. Listen live every weekday 720 00:35:18,120 --> 00:35:21,640 Speaker 2: starting at seven am Easter. I'm Bloomberg dot Com, the 721 00:35:21,760 --> 00:35:24,120 Speaker 2: iHeartRadio app, tune In. 722 00:35:24,280 --> 00:35:25,720 Speaker 1: And the Bloomberg Business app. 723 00:35:26,160 --> 00:35:29,880 Speaker 2: You can watch us live on Bloomberg Television and always 724 00:35:30,200 --> 00:35:32,760 Speaker 2: I'm the Bloomberg Terminal thanks for listening. 725 00:35:33,239 --> 00:35:36,000 Speaker 1: I'm Tom Keen, and this is Bloomberg