1 00:00:00,240 --> 00:00:03,480 Speaker 1: Runt you by Bank of America Mary Lynch with virtual 2 00:00:03,560 --> 00:00:09,360 Speaker 1: reality Virtually everything will change. Discover opportunities in a transforming 3 00:00:09,360 --> 00:00:14,440 Speaker 1: world VI of a mL dot Com slash vr Mery Lynch, 4 00:00:14,520 --> 00:00:29,240 Speaker 1: Pierced Fenner and Smith Incorporated. Welcome to the Bloomberg Surveillance Podcast. 5 00:00:29,280 --> 00:00:32,760 Speaker 1: I'm Tom Keene with David Gura. Daily we bring you 6 00:00:32,840 --> 00:00:37,640 Speaker 1: insight from the best of economics, finance, investment, and international relations. 7 00:00:38,120 --> 00:00:43,640 Speaker 1: Find Bloomberg Surveillance on Apple Podcasts, SoundCloud, Bloomberg dot Com, 8 00:00:43,640 --> 00:00:50,440 Speaker 1: and of course, on the Bloomberg. Alan Ruskin joins us 9 00:00:50,440 --> 00:00:53,400 Speaker 1: now ahead of ten f X strategy at Deutsche Bank. 10 00:00:53,400 --> 00:00:54,800 Speaker 1: Great to have you with us here in our Bloomberg 11 00:00:54,880 --> 00:00:57,959 Speaker 1: eleven three oh studios. Let's talk with with Let's talk 12 00:00:57,960 --> 00:01:00,280 Speaker 1: a little bit about oil. We saw the diminis in 13 00:01:00,280 --> 00:01:02,279 Speaker 1: price set yesterday. How does that play out in the 14 00:01:02,280 --> 00:01:04,679 Speaker 1: currency markets? What are you looking at for for indications 15 00:01:04,680 --> 00:01:08,240 Speaker 1: of how that's playing out here? The day after that began? Um, David, Well, 16 00:01:08,280 --> 00:01:10,000 Speaker 1: the first thing I think you look at is is 17 00:01:10,040 --> 00:01:12,760 Speaker 1: this indicative of a sort of a broader story of 18 00:01:12,920 --> 00:01:16,240 Speaker 1: risk off? You know, are we seeing risky assets selling off? 19 00:01:16,480 --> 00:01:21,279 Speaker 1: And the intriguing aspect of this particular decline in crude 20 00:01:21,280 --> 00:01:23,720 Speaker 1: oil is how equities have tended to for the most 21 00:01:23,760 --> 00:01:26,720 Speaker 1: part store rally. So this is not a broader risk 22 00:01:26,760 --> 00:01:29,280 Speaker 1: of story. This is a little bit unique to oil, 23 00:01:29,640 --> 00:01:33,720 Speaker 1: and therefore you're mostly seeing a response amongst the major 24 00:01:33,720 --> 00:01:38,000 Speaker 1: oil producers currencies like the Russian rouble for example, that 25 00:01:38,000 --> 00:01:40,800 Speaker 1: that has been responsive, But most of the other currencies 26 00:01:40,800 --> 00:01:43,720 Speaker 1: that might respond from a risk off standpoint are not responding. 27 00:01:43,880 --> 00:01:46,120 Speaker 1: And that's appropriate. What does it tell you about the 28 00:01:46,120 --> 00:01:48,920 Speaker 1: the oil market? Yes, but also about this this deal, 29 00:01:48,960 --> 00:01:50,920 Speaker 1: the integrity of this deal that we had between OPEC 30 00:01:50,920 --> 00:01:53,960 Speaker 1: producers and on OPEC producers. In other words, does this 31 00:01:54,040 --> 00:01:57,640 Speaker 1: does this portend more barishness going forward? Well, I think 32 00:01:57,920 --> 00:02:00,960 Speaker 1: what you're seeing is a sense that at OPEC has 33 00:02:01,040 --> 00:02:05,560 Speaker 1: lost its power and that the rise the ascendency of 34 00:02:05,560 --> 00:02:09,160 Speaker 1: the no non OPEC producers in the US in particular, 35 00:02:09,160 --> 00:02:12,920 Speaker 1: I think is is really I think driving the structural 36 00:02:13,000 --> 00:02:15,200 Speaker 1: shift that we're seeing in terms of crode oil. And 37 00:02:15,240 --> 00:02:18,840 Speaker 1: I think there's a sense that anytime oil pops its 38 00:02:18,880 --> 00:02:22,000 Speaker 1: head much above say fifty dollars a barrel, you're going 39 00:02:22,080 --> 00:02:26,600 Speaker 1: to incur increased supply, not just on the OPEC side, 40 00:02:26,600 --> 00:02:29,359 Speaker 1: but more importantly from the non opex side, let me 41 00:02:29,400 --> 00:02:30,960 Speaker 1: ask you about the news that I mentioned a few 42 00:02:30,960 --> 00:02:33,320 Speaker 1: moments ago out of Saudi Arabia. Of course we we 43 00:02:33,520 --> 00:02:36,360 Speaker 1: watch what's happening with that, with that economy there. How 44 00:02:36,360 --> 00:02:38,240 Speaker 1: big a part of the story is that what's going 45 00:02:38,320 --> 00:02:39,919 Speaker 1: on in Saudi arabi the role it plays and the 46 00:02:40,120 --> 00:02:42,920 Speaker 1: global oil market, well, the Saudi is always going to be, 47 00:02:43,040 --> 00:02:47,240 Speaker 1: you know, huge players in terms of global oil. There's 48 00:02:47,800 --> 00:02:51,400 Speaker 1: obviously a lot of other political aspects going on as well, 49 00:02:51,480 --> 00:02:54,880 Speaker 1: in terms of um what seems to be some approachman 50 00:02:54,960 --> 00:02:59,800 Speaker 1: maybe with Russia to some extent, and stronger linkages with Russia. 51 00:03:00,240 --> 00:03:04,120 Speaker 1: There's obviously the situation that's relates to the Qataris. But 52 00:03:04,520 --> 00:03:07,320 Speaker 1: for the most part, I don't think we're seeing you know, 53 00:03:07,480 --> 00:03:11,600 Speaker 1: huge shifts that are politically driven. In the end, it 54 00:03:11,760 --> 00:03:16,120 Speaker 1: still seems incumbent on the Saudis to play swing producer 55 00:03:16,480 --> 00:03:19,480 Speaker 1: if they're to drive prices higher. If they don't want 56 00:03:19,480 --> 00:03:21,920 Speaker 1: to play that role, then it's very easy to see 57 00:03:22,040 --> 00:03:25,200 Speaker 1: prices continuing to decline. You were you were sitting with 58 00:03:25,240 --> 00:03:27,920 Speaker 1: Tom whilst the Queen was beginning her speech in parliament. 59 00:03:27,919 --> 00:03:31,360 Speaker 1: What do we hear from her? Today about the UK economy, 60 00:03:31,400 --> 00:03:33,960 Speaker 1: about the path forward here for for Brexit, how important 61 00:03:34,240 --> 00:03:36,320 Speaker 1: aside from the ceremony of the speech itself and the 62 00:03:36,320 --> 00:03:39,520 Speaker 1: opening of Parliament, how substantive a speech was it today? 63 00:03:39,760 --> 00:03:44,240 Speaker 1: It all sounded so easy, um and I you know, 64 00:03:44,280 --> 00:03:47,160 Speaker 1: it's almost utopian. So look, I think you have to 65 00:03:47,160 --> 00:03:50,960 Speaker 1: take this in the context of um, a government that 66 00:03:51,280 --> 00:03:54,520 Speaker 1: doesn't really exist at this point in time, what seems 67 00:03:54,560 --> 00:04:00,600 Speaker 1: like a very weakened prime minister, and probably at least 68 00:04:00,640 --> 00:04:03,440 Speaker 1: as important. It's not so much what the UK wants, 69 00:04:03,440 --> 00:04:06,320 Speaker 1: but it's also what Europe wants, and so you've got 70 00:04:06,360 --> 00:04:09,240 Speaker 1: a lot of different elements there that make it very 71 00:04:09,280 --> 00:04:12,080 Speaker 1: difficult to second guess where this is all going. As 72 00:04:12,120 --> 00:04:16,080 Speaker 1: far as the hard Brexit soft Brexit debates concerns, I 73 00:04:16,120 --> 00:04:19,000 Speaker 1: think that's I think is stiming the market in terms 74 00:04:19,040 --> 00:04:22,799 Speaker 1: of its natural response. Um. I want to say Sterling stronger. 75 00:04:22,800 --> 00:04:25,599 Speaker 1: Alan Off of the Queen who looked, I thought lovely 76 00:04:26,320 --> 00:04:30,520 Speaker 1: an acquired dress without the regalia that usually is associated 77 00:04:30,520 --> 00:04:34,119 Speaker 1: with David Gurrea into the studio. Glad, No, it wasn't 78 00:04:34,120 --> 00:04:36,560 Speaker 1: the Queen. It was Mr Haldane of the Bank of England, 79 00:04:37,040 --> 00:04:39,960 Speaker 1: who says, quote risks of tightening too late, have risen 80 00:04:40,360 --> 00:04:44,080 Speaker 1: risks of tightening too early. You've shrunk partial withdrawal of 81 00:04:44,160 --> 00:04:47,919 Speaker 1: the extra stimulus prudent. It is a most hawkish speech, 82 00:04:48,520 --> 00:04:55,640 Speaker 1: spiking Sterling to a modest level. On three, I wonder 83 00:04:55,880 --> 00:04:59,280 Speaker 1: alan about that. I mean politics, I would suggest says 84 00:04:59,520 --> 00:05:04,120 Speaker 1: no raising rates, but is Mr Holden and or something? Well, 85 00:05:04,160 --> 00:05:06,159 Speaker 1: I think what you're seeing is some of the divisions 86 00:05:06,200 --> 00:05:09,120 Speaker 1: that you have within the Bank of England. The Bank 87 00:05:09,120 --> 00:05:11,680 Speaker 1: of England is notorious for not necessarily speaking with one 88 00:05:11,800 --> 00:05:14,320 Speaker 1: voice at the same time. You have to listen. I 89 00:05:14,360 --> 00:05:18,239 Speaker 1: guess to Mr Kenney more than anybody, and Mr Knney 90 00:05:18,279 --> 00:05:20,360 Speaker 1: has spoken and just spoken yesterday, so I think we've 91 00:05:20,360 --> 00:05:23,159 Speaker 1: got an update of his particular views. They don't seem 92 00:05:23,200 --> 00:05:27,360 Speaker 1: to reflect the Bank of England's chief economist views necessarily. 93 00:05:27,400 --> 00:05:29,800 Speaker 1: But I think you know what you're saying is, look here, 94 00:05:29,839 --> 00:05:33,479 Speaker 1: there's some asymmetry in terms of this debate insomuch as 95 00:05:33,680 --> 00:05:36,440 Speaker 1: you know there's days of the Bank of England needing 96 00:05:36,480 --> 00:05:38,400 Speaker 1: to ease are gone really in a sense, and if 97 00:05:38,440 --> 00:05:41,960 Speaker 1: there's the next policy move, it's it's two hike interest rates. 98 00:05:41,960 --> 00:05:44,760 Speaker 1: And his highlighted the possibility in fact of hiking, you 99 00:05:44,800 --> 00:05:48,000 Speaker 1: know obviously this year, so this this year, actually that's 100 00:05:48,000 --> 00:05:50,000 Speaker 1: a that that's a big that's that's a big step 101 00:05:50,040 --> 00:05:52,280 Speaker 1: to because there's not many central banks out there who 102 00:05:52,279 --> 00:05:54,240 Speaker 1: are going to be tightening this year. In the time 103 00:05:54,360 --> 00:05:57,880 Speaker 1: after dinner discussions earlier this morning, you mentioned a given pair, 104 00:05:57,920 --> 00:06:01,680 Speaker 1: in this case sterling having much more influence off of 105 00:06:01,839 --> 00:06:05,120 Speaker 1: euro or off of dollar. Am I still write that 106 00:06:05,160 --> 00:06:08,440 Speaker 1: the Japanese yen is the go to safe haven currency? 107 00:06:08,680 --> 00:06:12,920 Speaker 1: Is that? Is that quaint of me to say that, Um? 108 00:06:12,920 --> 00:06:16,279 Speaker 1: It isn't? It isn't There are times when you know, 109 00:06:16,360 --> 00:06:18,680 Speaker 1: you have these sort of risk of moves and briefly 110 00:06:19,360 --> 00:06:23,880 Speaker 1: the yen does respond and favorably. That is. But I 111 00:06:23,920 --> 00:06:27,280 Speaker 1: think what you've seen is the primary driver as far 112 00:06:27,320 --> 00:06:31,320 Speaker 1: as Dolly yen in particular, is really U S treasuries 113 00:06:31,600 --> 00:06:33,960 Speaker 1: and the spread between U S treasuries and j g 114 00:06:34,040 --> 00:06:36,200 Speaker 1: B s now jgbs are being held steady by the 115 00:06:36,240 --> 00:06:38,800 Speaker 1: b O J So effectively, it's really U S treasuries 116 00:06:38,800 --> 00:06:42,680 Speaker 1: that are defining defining where Dolly yen goes? What maturity 117 00:06:42,720 --> 00:06:44,960 Speaker 1: do you so I can make a chart that's appropriate 118 00:06:45,000 --> 00:06:48,200 Speaker 1: for Bloomberg Radio, I need to steal this David, Yes, please, 119 00:06:48,680 --> 00:06:51,400 Speaker 1: So if I was, you know, if you're gonna steal anything, 120 00:06:51,440 --> 00:06:57,680 Speaker 1: I think the thirty US T bond minus the twenty 121 00:06:57,760 --> 00:07:01,120 Speaker 1: j g B I think that's that's fascinating, And explain 122 00:07:01,160 --> 00:07:05,000 Speaker 1: why you go out so I don't further because the 123 00:07:05,040 --> 00:07:07,640 Speaker 1: b o J is anchoring the tenure sector, so it's 124 00:07:07,640 --> 00:07:10,679 Speaker 1: not moving, and the twenty years sector is moving, and 125 00:07:10,840 --> 00:07:13,960 Speaker 1: there's certainly Japanese investors who believe there's still some hell 126 00:07:14,040 --> 00:07:16,200 Speaker 1: to be had in the twenty years sector, so it 127 00:07:16,240 --> 00:07:18,840 Speaker 1: moves around a little bit. So for that reason, I'm 128 00:07:18,840 --> 00:07:21,680 Speaker 1: really moving out the curve um The twenty year in 129 00:07:21,720 --> 00:07:23,440 Speaker 1: the U S obviously not quite as liquid is the 130 00:07:23,480 --> 00:07:25,600 Speaker 1: thirty years, so that you know, hence the thirty year 131 00:07:25,680 --> 00:07:28,560 Speaker 1: minus the twenty year in in Japan, David, I'm going 132 00:07:28,600 --> 00:07:32,120 Speaker 1: to dazzle them and dinner tonight when when we talk 133 00:07:32,200 --> 00:07:38,640 Speaker 1: about the table you have bring it out. Let me 134 00:07:38,640 --> 00:07:40,520 Speaker 1: ask you lastly about dollar Mexico. I look at the 135 00:07:40,560 --> 00:07:42,760 Speaker 1: chart here over the last six seven months, and we 136 00:07:42,800 --> 00:07:44,720 Speaker 1: see we see levels here that we haven't seen since 137 00:07:44,760 --> 00:07:47,400 Speaker 1: the election in November. What does that tell us about 138 00:07:47,400 --> 00:07:50,840 Speaker 1: the interregtum here? What's happened since the US presidential election. Indeed, 139 00:07:50,840 --> 00:07:53,800 Speaker 1: what's your your sense of where that paris heading. Yeah, well, 140 00:07:53,800 --> 00:07:57,360 Speaker 1: I think there was a perception of considerable fear down 141 00:07:57,440 --> 00:08:01,080 Speaker 1: in Mexico as it related to Donald Trump's views on 142 00:08:01,080 --> 00:08:06,640 Speaker 1: on NAFTA, and those have slowly dissipated, and the Mexican 143 00:08:06,640 --> 00:08:09,040 Speaker 1: pesso has responded, in part of course, because there was 144 00:08:09,080 --> 00:08:12,400 Speaker 1: a sense of overshoes that the pesso was genuinely cheap 145 00:08:12,440 --> 00:08:16,080 Speaker 1: and it was really amongst the very cheapest currencies out there, 146 00:08:16,400 --> 00:08:19,280 Speaker 1: very cheapest of the liquid currencies. That is so um, 147 00:08:19,320 --> 00:08:22,360 Speaker 1: there's a sense that, okay, we've kind of converged now 148 00:08:22,760 --> 00:08:25,760 Speaker 1: closer to fair value, but it's still, if anything, erring 149 00:08:25,800 --> 00:08:29,840 Speaker 1: on the cheaper side. Alan Ruskin, appreciate to appreciate you 150 00:08:29,840 --> 00:08:31,880 Speaker 1: being here as always, that's Allent Ruskin. Here's the global 151 00:08:31,920 --> 00:08:34,360 Speaker 1: head of get Ton FICX Strangy at Twicture Bank, joining 152 00:08:34,400 --> 00:08:36,680 Speaker 1: us here in our Bloomberg eleven three or studios in 153 00:08:36,720 --> 00:08:38,559 Speaker 1: New York. Again, great to have you with us on 154 00:08:38,600 --> 00:08:40,599 Speaker 1: the product today. And what did you think of the 155 00:08:40,600 --> 00:08:45,040 Speaker 1: speech time? I know that you you love the well, yeah, 156 00:08:45,440 --> 00:08:51,120 Speaker 1: actually I'm a big anglobehile you know, and that it 157 00:08:51,320 --> 00:08:54,120 Speaker 1: partly is time moving on to see Prince Charles sitting 158 00:08:54,120 --> 00:08:59,160 Speaker 1: next door. The Duke of Edinburgh is ill quite suddenly, 159 00:08:59,280 --> 00:09:02,600 Speaker 1: and so Prince Charles shows up at sixty eight years old. 160 00:09:02,960 --> 00:09:06,000 Speaker 1: Just it's that whole time as marching on. She was 161 00:09:06,080 --> 00:09:11,839 Speaker 1: dressed quietly today going back to well, I don't know 162 00:09:11,880 --> 00:09:16,040 Speaker 1: what the color is, but it wasn't the usual cleanly reguilty. 163 00:09:30,800 --> 00:09:33,440 Speaker 1: This is a joy. He is a gentleman of first 164 00:09:33,520 --> 00:09:37,000 Speaker 1: rate economic abilities. Jose vaniells not only with a tour 165 00:09:37,120 --> 00:09:40,719 Speaker 1: duty at Stanford teaching a few years ago, but his 166 00:09:40,840 --> 00:09:43,080 Speaker 1: work out of the London School of Economics at Harvard 167 00:09:43,559 --> 00:09:45,960 Speaker 1: as well, and he has taken on a job as 168 00:09:46,000 --> 00:09:50,320 Speaker 1: an economist in banking. He's chairman of the Standard Charter Bank, 169 00:09:50,760 --> 00:09:53,400 Speaker 1: and we are honored that he joins us now in 170 00:09:53,440 --> 00:09:57,080 Speaker 1: our New York studios. Uh, professor, I have to call you, professor, 171 00:09:57,160 --> 00:10:00,240 Speaker 1: Professor Vanielles. Uh. You you had a wonderful to our 172 00:10:00,320 --> 00:10:04,360 Speaker 1: duty at the International Monetary Fund, where you saw emerging markets. 173 00:10:04,600 --> 00:10:08,360 Speaker 1: Can you advise the Standard Charter system that emerging markets 174 00:10:08,400 --> 00:10:14,560 Speaker 1: are buoyant and can sustain economic growth? Well? Thank you. 175 00:10:14,679 --> 00:10:18,880 Speaker 1: Emerging markets UM have been a very critical part of 176 00:10:18,920 --> 00:10:22,600 Speaker 1: the global economy UM in the wake of the crisis, 177 00:10:22,679 --> 00:10:27,880 Speaker 1: and they have contributed around seventy seventy of total global growth. 178 00:10:28,320 --> 00:10:32,880 Speaker 1: And emerging markets continue to be strong. Of course, potential 179 00:10:32,920 --> 00:10:35,839 Speaker 1: growth is now lower than what it used to be 180 00:10:35,840 --> 00:10:38,960 Speaker 1: before the crisis, as it's happened in advanced economies, but 181 00:10:39,040 --> 00:10:43,800 Speaker 1: still I think that they offer very significant opportunities for 182 00:10:43,880 --> 00:10:48,640 Speaker 1: doing business UM and if the economic management in these 183 00:10:48,640 --> 00:10:53,640 Speaker 1: countries is is good, I think that there are many 184 00:10:53,679 --> 00:10:57,280 Speaker 1: good days ahead for emerging markets and the populations. The 185 00:10:57,360 --> 00:10:59,640 Speaker 1: challenges at the Standard Charter Bank have had, I think 186 00:10:59,640 --> 00:11:02,080 Speaker 1: are no to most of our global Wall Street listeners. 187 00:11:02,520 --> 00:11:04,720 Speaker 1: You and a new team have come into not so 188 00:11:04,840 --> 00:11:07,320 Speaker 1: much right the ship tell us about and this is 189 00:11:07,400 --> 00:11:10,200 Speaker 1: in the I m F work, the rule of law 190 00:11:10,400 --> 00:11:15,160 Speaker 1: within the different nations. Are we getting towards a more 191 00:11:15,200 --> 00:11:17,880 Speaker 1: not so much Anglo American system, but just a more 192 00:11:18,640 --> 00:11:23,520 Speaker 1: understanding of transparency within our banking system. Yes, I think 193 00:11:23,520 --> 00:11:29,000 Speaker 1: that this has been a mayor advance that has taken 194 00:11:29,040 --> 00:11:33,800 Speaker 1: place in emerging markets since the last great Emerging markets crisis, 195 00:11:33,800 --> 00:11:38,960 Speaker 1: which was the UH Global UH you know, Dasian crisis, 196 00:11:39,360 --> 00:11:43,400 Speaker 1: and which also had some some repercussions vision Asia. UM, 197 00:11:43,559 --> 00:11:46,440 Speaker 1: now you have much better economic governance in terms of 198 00:11:46,480 --> 00:11:52,080 Speaker 1: central bank independence, you have stronger institutions. UH. Principles of 199 00:11:52,120 --> 00:11:56,760 Speaker 1: economic rationality are approve widely in most economies. But of 200 00:11:56,800 --> 00:12:00,520 Speaker 1: course one cannot yet declared victory. There are countries whose 201 00:12:00,760 --> 00:12:05,959 Speaker 1: economic institutions are UH still in need of of much work. 202 00:12:06,040 --> 00:12:08,160 Speaker 1: I would say that for a number of countries in 203 00:12:08,480 --> 00:12:12,680 Speaker 1: Africa and we're a lot of progress still needs to 204 00:12:12,720 --> 00:12:17,240 Speaker 1: be made in fully granting central banks independence and having 205 00:12:17,360 --> 00:12:21,480 Speaker 1: a governments which are free from uh, you know, corruption 206 00:12:22,240 --> 00:12:26,120 Speaker 1: and other problems that may lessen the ability of these 207 00:12:26,120 --> 00:12:29,040 Speaker 1: countries to grow into the future. A few years ago, 208 00:12:29,679 --> 00:12:33,600 Speaker 1: we were talking about Africa rising. And although there's been 209 00:12:33,640 --> 00:12:37,280 Speaker 1: a few events since then like Ebola and and and 210 00:12:37,320 --> 00:12:40,920 Speaker 1: the sort of big following commodity prices which have hit 211 00:12:41,480 --> 00:12:44,760 Speaker 1: a number of these economies, I still think that Africa 212 00:12:44,920 --> 00:12:47,800 Speaker 1: is going to be one of these sex stories in 213 00:12:47,840 --> 00:12:51,160 Speaker 1: developing world in the next few years, and Asia continues 214 00:12:51,200 --> 00:12:54,520 Speaker 1: to be a sort of global powerhouse in terms of 215 00:12:54,559 --> 00:12:57,480 Speaker 1: economic growth. Let me ask you about the Chinese plan 216 00:12:57,559 --> 00:12:59,960 Speaker 1: for the New Silk Road, the form that took place 217 00:13:00,000 --> 00:13:02,760 Speaker 1: just a few months ago, with the opportunity to unveil 218 00:13:02,840 --> 00:13:04,880 Speaker 1: that to the world, and we focus a lot on 219 00:13:04,880 --> 00:13:08,920 Speaker 1: the geopolitics of that, the geopolitical ramifications of China doing this. 220 00:13:09,320 --> 00:13:11,160 Speaker 1: What does it stand to do to the economy in 221 00:13:11,200 --> 00:13:13,120 Speaker 1: the region to have an initiative like that of that 222 00:13:13,200 --> 00:13:16,480 Speaker 1: scale and ambition. Well, I think it's it's a it's 223 00:13:16,520 --> 00:13:21,560 Speaker 1: a very very important UH initiative on the part of China, 224 00:13:22,040 --> 00:13:24,320 Speaker 1: and we usund the charter that happened to be the 225 00:13:24,360 --> 00:13:28,600 Speaker 1: bank with the broadest presence in the one UH bill, 226 00:13:28,679 --> 00:13:31,440 Speaker 1: one road a footprints, so you get to put a 227 00:13:31,559 --> 00:13:36,320 Speaker 1: T M S and all along Marco Polo. Marco Polo 228 00:13:36,360 --> 00:13:39,880 Speaker 1: had this state right right, um, And and this is 229 00:13:39,880 --> 00:13:45,720 Speaker 1: an initiative which is huge. We're talking about you know, 230 00:13:45,840 --> 00:13:49,640 Speaker 1: double digits in terms of potential investment trillions of you know, 231 00:13:49,679 --> 00:13:52,400 Speaker 1: double digit in terms of trillions of dollars, and if 232 00:13:52,480 --> 00:13:55,360 Speaker 1: well executed, it's something that can play a very important 233 00:13:55,440 --> 00:14:01,280 Speaker 1: role in improving the connectivity between other economies in Asia 234 00:14:01,360 --> 00:14:03,959 Speaker 1: with China, but also in the Middle East, in Africa 235 00:14:04,000 --> 00:14:07,000 Speaker 1: and including Europe. So I think that it's a major, 236 00:14:07,240 --> 00:14:13,160 Speaker 1: major initiative to improve connectivity through infrastructures, through trade and 237 00:14:13,160 --> 00:14:15,520 Speaker 1: and and I think it's it's to be welcome. Now, 238 00:14:15,600 --> 00:14:18,320 Speaker 1: the important thing is that all of those projects are 239 00:14:18,440 --> 00:14:21,840 Speaker 1: well designed and well executed, because you don't want to 240 00:14:21,920 --> 00:14:25,480 Speaker 1: have roads that lead to nowhere or bridges which are 241 00:14:25,520 --> 00:14:28,680 Speaker 1: never crossed. So you need to have, you know, very 242 00:14:28,720 --> 00:14:33,160 Speaker 1: strong criteria of efficiency, economic, private, and social efficiency in 243 00:14:33,200 --> 00:14:36,880 Speaker 1: most of these projects, and also make sure that the 244 00:14:37,000 --> 00:14:40,120 Speaker 1: governance of these projects is appropriate so that you don't 245 00:14:40,120 --> 00:14:42,840 Speaker 1: get into all the difficulties. But I think that as 246 00:14:42,880 --> 00:14:45,920 Speaker 1: it was the case in other countries which received sort 247 00:14:45,920 --> 00:14:48,760 Speaker 1: of aid in the past or or landing in the past, 248 00:14:48,760 --> 00:14:51,400 Speaker 1: soft landing in the past to build infrastructures, I think 249 00:14:51,400 --> 00:14:55,680 Speaker 1: that this is a tremendous opportunity to improve globalization for 250 00:14:55,760 --> 00:14:59,160 Speaker 1: the emerging markets and developing economies. Mentioned your background with 251 00:14:59,200 --> 00:15:01,280 Speaker 1: the I m F, and I under how folks within 252 00:15:01,280 --> 00:15:04,920 Speaker 1: that institution today view what's happening in China with this initiative. 253 00:15:05,120 --> 00:15:06,720 Speaker 1: Do they see it as a complement to the work 254 00:15:06,760 --> 00:15:10,040 Speaker 1: they're doing, Should they be nervous about the leadership role 255 00:15:10,280 --> 00:15:14,280 Speaker 1: that China is taken here in development in Asia? How 256 00:15:14,280 --> 00:15:17,240 Speaker 1: should they view what's happening? Well, I cannot speak any 257 00:15:17,280 --> 00:15:19,840 Speaker 1: longer for I am. Let me just offer my personal 258 00:15:19,880 --> 00:15:23,880 Speaker 1: remarks on how I see things, and China clearly has 259 00:15:23,920 --> 00:15:26,920 Speaker 1: become an economic you know, one of the main economic 260 00:15:26,920 --> 00:15:29,360 Speaker 1: powers in the world. We are moving more towards a 261 00:15:29,440 --> 00:15:32,240 Speaker 1: multipolar world, and I think it is natural that in 262 00:15:32,360 --> 00:15:36,840 Speaker 1: economy like China is trying to project itself in the 263 00:15:36,960 --> 00:15:40,000 Speaker 1: in the global sine and this initiative of the World 264 00:15:40,040 --> 00:15:43,800 Speaker 1: Melbourn Road is something that certainly is going to enhance 265 00:15:43,840 --> 00:15:46,440 Speaker 1: the cloud of China, but it's also something which is 266 00:15:46,480 --> 00:15:49,640 Speaker 1: going to provide a lot of good financing for economies 267 00:15:49,680 --> 00:15:52,320 Speaker 1: that need to develop and improve their standards of living. 268 00:15:52,520 --> 00:15:54,640 Speaker 1: So I think it can be a win win situation 269 00:15:55,120 --> 00:16:00,000 Speaker 1: if it's well executed, but they could be also other outcomes. 270 00:16:00,040 --> 00:16:02,080 Speaker 1: But I hope that things happen in the way that 271 00:16:02,120 --> 00:16:04,280 Speaker 1: would be good for both China and the rest of 272 00:16:04,360 --> 00:16:06,360 Speaker 1: these countries. Would be rude if we didn't ask about 273 00:16:06,400 --> 00:16:09,160 Speaker 1: London this day of the Queen's speech standard charter goes 274 00:16:09,200 --> 00:16:12,240 Speaker 1: back to eighteen fifty three in London, Are you gonna 275 00:16:12,240 --> 00:16:14,320 Speaker 1: buy more square footage there? Can you? We need to 276 00:16:14,320 --> 00:16:17,600 Speaker 1: break some news, her chairman. Are you going to expand 277 00:16:17,600 --> 00:16:19,440 Speaker 1: out basic all? I mean, we're building a place there. 278 00:16:19,440 --> 00:16:21,520 Speaker 1: Come on, you guys, can build a new place. Will 279 00:16:21,560 --> 00:16:25,440 Speaker 1: you invest in London in the coming years. Well, we 280 00:16:25,440 --> 00:16:30,840 Speaker 1: we are certainly we are headquartered in London, although we 281 00:16:30,920 --> 00:16:34,960 Speaker 1: happen to be present in about sixty nine countries over 282 00:16:35,000 --> 00:16:38,160 Speaker 1: the world, but we are headquartered in London and that 283 00:16:38,320 --> 00:16:41,240 Speaker 1: we will remain so. So we do a lot of 284 00:16:41,640 --> 00:16:45,920 Speaker 1: corporate and institutional banking out of London. Uh, It's it's 285 00:16:45,920 --> 00:16:50,600 Speaker 1: fundamental for us. We're regulated by the British authorities. We're 286 00:16:50,680 --> 00:16:54,160 Speaker 1: very happy with with with the relationship we have with them, 287 00:16:54,440 --> 00:16:56,480 Speaker 1: and we think that the city of London is a 288 00:16:56,520 --> 00:17:00,760 Speaker 1: great place and for us, Brexit is going to affect 289 00:17:00,840 --> 00:17:03,600 Speaker 1: us very marginally because since we have the bulk of 290 00:17:03,600 --> 00:17:07,120 Speaker 1: our operations in the margin market developing economies, we're going 291 00:17:07,160 --> 00:17:10,160 Speaker 1: to be very very likely affected. And it's very easy 292 00:17:10,240 --> 00:17:12,480 Speaker 1: for us with it. David and I don't care. We 293 00:17:12,560 --> 00:17:14,639 Speaker 1: just want to use your helicopter pad to get the 294 00:17:14,640 --> 00:17:17,959 Speaker 1: heat throw from your headquarters. One final question, sir, if 295 00:17:18,000 --> 00:17:20,919 Speaker 1: we could. You are affiliated with the Central Bank of 296 00:17:20,960 --> 00:17:24,080 Speaker 1: your Spain. For years and years, we've been hearing really 297 00:17:24,119 --> 00:17:26,560 Speaker 1: good things about Spain. If you compare economic growth in 298 00:17:26,600 --> 00:17:30,480 Speaker 1: Spain to economic growth in France, it is remarkable what's 299 00:17:30,480 --> 00:17:33,080 Speaker 1: the next five year plan for Spain. Well, I think 300 00:17:33,119 --> 00:17:35,720 Speaker 1: that that what Spain needs is first of all, to 301 00:17:35,840 --> 00:17:38,679 Speaker 1: consolidate all the progress that has been made. And it 302 00:17:38,800 --> 00:17:41,000 Speaker 1: is true that is now one of the fastest growing 303 00:17:41,359 --> 00:17:43,840 Speaker 1: sort of large economies in the in the in the 304 00:17:43,880 --> 00:17:48,119 Speaker 1: European Union um. And that is a testimony to a 305 00:17:48,200 --> 00:17:50,400 Speaker 1: number of things that were done in Spain the last 306 00:17:50,400 --> 00:17:53,960 Speaker 1: few years. The banking reform has been very deep. Spin 307 00:17:54,119 --> 00:17:58,160 Speaker 1: took the bull by the horns, like Irelands exactly, so 308 00:17:58,320 --> 00:18:00,600 Speaker 1: they did the right thing at the right time and 309 00:18:00,720 --> 00:18:03,359 Speaker 1: that has led to a banking system which is a 310 00:18:03,440 --> 00:18:06,040 Speaker 1: source of support to the economy by the provision of credit. 311 00:18:06,520 --> 00:18:09,560 Speaker 1: Spain did also labor market reforms which have been very 312 00:18:09,600 --> 00:18:13,520 Speaker 1: powerful in enhancing view of creation. And the Spain has 313 00:18:13,560 --> 00:18:16,960 Speaker 1: maintained fiscal prudence, which I think is very important. That 314 00:18:17,440 --> 00:18:21,520 Speaker 1: coupled with the hearing dynamism of civil society in Spain, 315 00:18:21,880 --> 00:18:24,320 Speaker 1: I think is played very well and this texts story. 316 00:18:24,440 --> 00:18:26,520 Speaker 1: So more needs to be done in terms of reforms. 317 00:18:27,119 --> 00:18:31,359 Speaker 1: The fiscal prudence need to be continued or intensified. And 318 00:18:32,080 --> 00:18:34,000 Speaker 1: that's that's that's the plan we have to leave at 319 00:18:34,000 --> 00:18:36,560 Speaker 1: the Jose he is the Chairman of the Standard Charter 320 00:18:36,600 --> 00:18:39,800 Speaker 1: Bank of London and the world as well. Thank you 321 00:18:39,840 --> 00:18:49,280 Speaker 1: so much. Brunch you by Bank of America Mary Lynch. 322 00:18:49,560 --> 00:18:55,040 Speaker 1: With virtual reality, virtually everything will change. Discover opportunities in 323 00:18:55,080 --> 00:18:59,680 Speaker 1: a transforming world VI of a mL dot Com slash VR, 324 00:19:00,560 --> 00:19:08,880 Speaker 1: Mary Lynch, Pierce, Fenner and Smith Incorporated. So why don't 325 00:19:08,880 --> 00:19:11,879 Speaker 1: you bring in the esteemed Minister of portrait. Yes, the 326 00:19:11,880 --> 00:19:14,720 Speaker 1: Economy Ministry from Portugal, Manuell Calledera Cabral, who joins us 327 00:19:14,720 --> 00:19:17,520 Speaker 1: here in three studios. Great to have you with us, 328 00:19:17,520 --> 00:19:21,040 Speaker 1: and let's just start with your sense of growth in Portugal, 329 00:19:22,240 --> 00:19:23,959 Speaker 1: what your what's your sense of it is? What your 330 00:19:23,960 --> 00:19:25,440 Speaker 1: forecast is for the year, and if you intend to 331 00:19:25,480 --> 00:19:27,600 Speaker 1: revise that, I think it might be revised going forward. Here, 332 00:19:28,960 --> 00:19:33,040 Speaker 1: I think all all the international agencies have been revised 333 00:19:33,119 --> 00:19:38,320 Speaker 1: upwards the Portuguese growth prospects, and uh, I think we 334 00:19:38,320 --> 00:19:42,520 Speaker 1: we will eat a target close to three growth, which 335 00:19:42,600 --> 00:19:46,560 Speaker 1: is a very interesting acceleration. And it also put us 336 00:19:48,160 --> 00:19:52,119 Speaker 1: above the European Union average, which means that our recovery 337 00:19:52,760 --> 00:19:57,000 Speaker 1: is strong and gaining momentum. Help us understand them. What 338 00:19:57,200 --> 00:20:00,840 Speaker 1: drives the economy in Portugal. It's a place I'm regret 339 00:20:00,960 --> 00:20:02,640 Speaker 1: to say I haven't visited yet. I've had many friends 340 00:20:02,720 --> 00:20:05,399 Speaker 1: go there on vacation. Tourism is is hugely important. But 341 00:20:05,480 --> 00:20:09,000 Speaker 1: in terms of other sectors, what's driving the Portuguese economy today, 342 00:20:09,760 --> 00:20:13,080 Speaker 1: that's a very interesting question in the sense that we 343 00:20:13,160 --> 00:20:17,880 Speaker 1: are having a very interesting increase in exports. Of course, 344 00:20:17,920 --> 00:20:21,359 Speaker 1: tourism is part of that increase, but we are having 345 00:20:21,400 --> 00:20:25,639 Speaker 1: an increasing exports in the diversified set of sectors that 346 00:20:25,720 --> 00:20:30,600 Speaker 1: include like metallic products, machinery, but also agricultural products are 347 00:20:30,640 --> 00:20:36,200 Speaker 1: expanding quite well. It includes sophisticated services like software, where 348 00:20:36,240 --> 00:20:39,080 Speaker 1: there was a boom in the startups some years ago, 349 00:20:39,119 --> 00:20:41,439 Speaker 1: and all the startups have grown up and some of 350 00:20:41,440 --> 00:20:46,680 Speaker 1: them are exporting quite heavily. So it's a complex set 351 00:20:46,720 --> 00:20:50,439 Speaker 1: of factors that had to do with the more coming 352 00:20:50,480 --> 00:20:54,000 Speaker 1: of foreign indirect investment, like all the automobile factories that 353 00:20:54,080 --> 00:20:59,800 Speaker 1: we already have there are expanding. Several investments from bushes, 354 00:21:00,080 --> 00:21:04,760 Speaker 1: men's alties and other European firms are againing momentum and expanding, 355 00:21:05,000 --> 00:21:08,040 Speaker 1: and of course tourism. Tourism, especially from the US is 356 00:21:08,119 --> 00:21:12,280 Speaker 1: growing quite well. We had the fort increase into from 357 00:21:12,320 --> 00:21:15,240 Speaker 1: the US. It has to do with why why did 358 00:21:15,240 --> 00:21:21,439 Speaker 1: you have increase from what was? Was this a flight, No, 359 00:21:21,640 --> 00:21:26,920 Speaker 1: it's it's it was an improve uh An increasing flights. 360 00:21:27,400 --> 00:21:32,560 Speaker 1: Our national UH flight company as the it's the biggest 361 00:21:32,560 --> 00:21:35,919 Speaker 1: one in the flights between Portugal and Brazil, and it 362 00:21:36,000 --> 00:21:39,160 Speaker 1: had increased changed some flights from Brazil to the US. 363 00:21:39,480 --> 00:21:42,399 Speaker 1: We've expanded a lot of flights to the US. But 364 00:21:42,560 --> 00:21:44,719 Speaker 1: at the same time it did that because we already 365 00:21:44,720 --> 00:21:48,320 Speaker 1: had signs of increasing in the tourism in Portugal before 366 00:21:48,400 --> 00:21:51,800 Speaker 1: the flights, and we we we were thinking that the 367 00:21:52,359 --> 00:21:56,280 Speaker 1: non existence of more direct flights was dragging. And I know, 368 00:21:56,359 --> 00:21:58,440 Speaker 1: I know David that a lot of people are flying 369 00:21:58,440 --> 00:22:01,120 Speaker 1: Touism because the taxes it goes from Lisbon, the fees 370 00:22:01,160 --> 00:22:04,119 Speaker 1: are so much less than Heathrow. That and you stop 371 00:22:04,160 --> 00:22:06,879 Speaker 1: over and you stay for three weeks, like John Tucker 372 00:22:06,920 --> 00:22:11,200 Speaker 1: did on his last vacation. Minister Mr Cabral of Portugal, 373 00:22:11,280 --> 00:22:16,080 Speaker 1: you need a different euro price then the minister from 374 00:22:16,119 --> 00:22:19,280 Speaker 1: Germany needs. What is your best euro price? Do you 375 00:22:19,320 --> 00:22:23,119 Speaker 1: have in your head evaluation of euro that makes sense 376 00:22:23,160 --> 00:22:27,879 Speaker 1: for Portugal. I think that we had that problem some 377 00:22:28,040 --> 00:22:31,639 Speaker 1: years ago. We had an important adjustment in the economy 378 00:22:31,960 --> 00:22:35,440 Speaker 1: and I think the exports are growing at fifteen when 379 00:22:35,480 --> 00:22:38,840 Speaker 1: compared with last year. The exports have grown quite well 380 00:22:39,080 --> 00:22:42,760 Speaker 1: and above the Germany average in the last twelve years. 381 00:22:43,119 --> 00:22:46,560 Speaker 1: So I think we had justted our competitiveness to a 382 00:22:46,640 --> 00:22:49,360 Speaker 1: wrong price that we had in the Euro. But now 383 00:22:49,440 --> 00:22:52,080 Speaker 1: with the adjustment that we had in our competitiveness, were 384 00:22:52,119 --> 00:22:54,840 Speaker 1: managed to export and to grow our exports faster than 385 00:22:54,880 --> 00:22:58,320 Speaker 1: for instance, Germany without any adjustment in the in the 386 00:22:58,320 --> 00:23:01,000 Speaker 1: price of the euro. And I think that is the 387 00:23:01,560 --> 00:23:04,280 Speaker 1: good news. And the other good news is that that 388 00:23:04,440 --> 00:23:07,480 Speaker 1: is not happening just in one sector, because it's going well. 389 00:23:07,760 --> 00:23:12,080 Speaker 1: It's happening in the set of sectors, quite diversified, and 390 00:23:12,320 --> 00:23:16,439 Speaker 1: it's happening for ten years now, but it's increasing a 391 00:23:16,480 --> 00:23:19,320 Speaker 1: lot in the last in the last year, which which 392 00:23:19,359 --> 00:23:22,679 Speaker 1: means that the competitiveness of the Portuguese economy is in 393 00:23:22,720 --> 00:23:25,840 Speaker 1: a good moment. The leg up and GDP that you've 394 00:23:25,920 --> 00:23:28,879 Speaker 1: had recently, and as you mentioned, it's superb compared to 395 00:23:28,920 --> 00:23:32,000 Speaker 1: the challenges Portugal has had for decades. Do you ascribe 396 00:23:32,040 --> 00:23:35,280 Speaker 1: that all to the currency? I mean, is currency? What 397 00:23:35,359 --> 00:23:38,720 Speaker 1: gets it done for Portugal? I think that the problem 398 00:23:38,920 --> 00:23:41,600 Speaker 1: we had had to do with currency for a while, 399 00:23:41,920 --> 00:23:45,800 Speaker 1: but it had to do also with authority policies in Europe, 400 00:23:46,240 --> 00:23:50,560 Speaker 1: and when we dropped the authority policies in Portugal, and 401 00:23:50,600 --> 00:23:54,560 Speaker 1: we find ourselves in the policy that is a moderate policy, 402 00:23:54,880 --> 00:23:57,359 Speaker 1: where we are having budget consolidation and we had the 403 00:23:57,400 --> 00:24:01,040 Speaker 1: lowest budget in forty budget VI said, I mean in 404 00:24:01,160 --> 00:24:06,399 Speaker 1: forty years, and we managed to increase growth while balancing 405 00:24:06,440 --> 00:24:10,560 Speaker 1: the public accounts and while balancing as well the external accounts. 406 00:24:10,560 --> 00:24:15,520 Speaker 1: Our external super avid increased in the last year, which 407 00:24:15,600 --> 00:24:18,200 Speaker 1: is which means that we are growing more in the 408 00:24:18,359 --> 00:24:21,239 Speaker 1: balanced way. So what this means is in April or May, 409 00:24:21,280 --> 00:24:23,159 Speaker 1: when we want to do the show from the algorithm, 410 00:24:23,359 --> 00:24:26,560 Speaker 1: you can somehow make it happen for us. Right, yes, 411 00:24:26,880 --> 00:24:29,679 Speaker 1: you should come to but you should come also to 412 00:24:29,800 --> 00:24:33,320 Speaker 1: Lisbon and two places that a lot of people are discovering, 413 00:24:33,359 --> 00:24:36,040 Speaker 1: nown like the Assorts and the ass of Portugal. We 414 00:24:36,160 --> 00:24:40,040 Speaker 1: had a fantastic and pristine nature and are attracting new 415 00:24:40,320 --> 00:24:43,119 Speaker 1: kind of of tourists as well. We are promoting, for instance, 416 00:24:43,160 --> 00:24:49,399 Speaker 1: the Duro Valley closer to New York, not for yours. 417 00:24:49,440 --> 00:25:05,320 Speaker 1: The Minister of Portugal thank you so much. This is 418 00:25:05,320 --> 00:25:07,959 Speaker 1: a great joy. He has a Shingle out in public 419 00:25:08,000 --> 00:25:11,080 Speaker 1: service for the State of Rhode Island, where he is 420 00:25:11,119 --> 00:25:14,080 Speaker 1: their general treasurer. Lots of topics to talk about. What's 421 00:25:14,119 --> 00:25:16,760 Speaker 1: interesting about Seth magazine or is not only out of 422 00:25:16,800 --> 00:25:19,600 Speaker 1: Milton Academy, but out of Brown University, where he led 423 00:25:19,600 --> 00:25:23,200 Speaker 1: the charge for Democrats. Seth a timely question. Were there 424 00:25:23,200 --> 00:25:28,240 Speaker 1: any Republicans at Brown University? There there were, although I'll 425 00:25:28,240 --> 00:25:32,359 Speaker 1: say I think as the president of the College Democrats 426 00:25:32,359 --> 00:25:35,000 Speaker 1: at Brown, I spent as much time butting heads with 427 00:25:35,040 --> 00:25:36,720 Speaker 1: folks on the left of me that as I did 428 00:25:36,720 --> 00:25:39,520 Speaker 1: on the right. But um, but no, no, it was 429 00:25:40,040 --> 00:25:42,639 Speaker 1: you know, we had we had some healthy debates. You know, 430 00:25:42,720 --> 00:25:45,320 Speaker 1: we kid about it, folks. But that's a good crucible 431 00:25:45,400 --> 00:25:48,680 Speaker 1: to get into politics on and particularly the contact sport, 432 00:25:48,760 --> 00:25:51,880 Speaker 1: not as Rhode Island politics, Seth. Before I give you 433 00:25:51,960 --> 00:25:54,440 Speaker 1: over to the pro David Gura, what do you need 434 00:25:54,520 --> 00:25:57,240 Speaker 1: from President Trump right now? What does Rhode Island need 435 00:25:57,600 --> 00:26:01,200 Speaker 1: from Washington? Oh? Where to begin? I mean, I would say, 436 00:26:01,520 --> 00:26:03,840 Speaker 1: you know, from a budgetary point of view, the thing 437 00:26:03,840 --> 00:26:06,639 Speaker 1: that we're most worried about in Rhode Island is whatever 438 00:26:06,720 --> 00:26:08,720 Speaker 1: is going to come out of the Senate with this 439 00:26:09,080 --> 00:26:12,360 Speaker 1: secret healthcare bill that they're working on. Um, if it's 440 00:26:12,359 --> 00:26:15,239 Speaker 1: anything like the House version, then Rhode Island is going 441 00:26:15,240 --> 00:26:19,600 Speaker 1: to vase the very tough choice of either letting seventy 442 00:26:19,680 --> 00:26:22,840 Speaker 1: thousand of our people lose health insurance or trying to 443 00:26:22,880 --> 00:26:24,879 Speaker 1: come up with hundreds of millions of dollars to make 444 00:26:24,960 --> 00:26:27,160 Speaker 1: up the difference, which in a small state like Rhode 445 00:26:27,160 --> 00:26:30,600 Speaker 1: Island could really break the bank. So, you know, there's 446 00:26:30,600 --> 00:26:33,439 Speaker 1: a lot of things about this administration that makes us 447 00:26:33,480 --> 00:26:36,679 Speaker 1: nervous in Rhode Island, But when it comes to you know, 448 00:26:36,720 --> 00:26:40,800 Speaker 1: the state budget and and the state's finances, healthcare is 449 00:26:40,800 --> 00:26:43,600 Speaker 1: probably number one. Said's how big an issue is is 450 00:26:43,640 --> 00:26:45,800 Speaker 1: financial form to focus in in Rhode Island. I know 451 00:26:45,840 --> 00:26:48,760 Speaker 1: you've spoken out quite vaciferously against the Financial Choice Act 452 00:26:48,760 --> 00:26:51,600 Speaker 1: that Jeff Hensterling champion was voted on by the House 453 00:26:51,640 --> 00:26:55,000 Speaker 1: of Representatives. What do you hear from community bankers in 454 00:26:55,000 --> 00:26:57,680 Speaker 1: the state of Rhode Island about financial regulation and sort 455 00:26:57,680 --> 00:27:00,600 Speaker 1: of what needs to change? Well, you know it's interesting 456 00:27:00,680 --> 00:27:02,680 Speaker 1: is when I talk to community bankers. When I talked 457 00:27:02,720 --> 00:27:05,719 Speaker 1: to our community banks are credit unions. Sure, there are 458 00:27:05,760 --> 00:27:08,240 Speaker 1: regulations that they feel are too onerous, but a lot 459 00:27:08,280 --> 00:27:11,399 Speaker 1: of them were not part of Dodd Frank. When I 460 00:27:11,440 --> 00:27:14,679 Speaker 1: talked to our community banks. You know, the more common 461 00:27:14,720 --> 00:27:18,000 Speaker 1: gripes are things like some of the you know, the 462 00:27:18,000 --> 00:27:22,080 Speaker 1: Patriot Act, anti money laundering regulations, that sort of thing. So, 463 00:27:22,600 --> 00:27:24,600 Speaker 1: you know, if you really want to help smaller banks 464 00:27:24,600 --> 00:27:27,600 Speaker 1: and credit unions, uh, Dodd Frank may not be the 465 00:27:27,640 --> 00:27:31,520 Speaker 1: place to start, because you know, Dodd Frank was, as 466 00:27:31,600 --> 00:27:35,680 Speaker 1: you know, crafted more at the you know, the cities, 467 00:27:35,720 --> 00:27:38,120 Speaker 1: the too big to fails as they're more commonly known 468 00:27:38,640 --> 00:27:41,639 Speaker 1: among the public, was more about you know, the financial 469 00:27:42,040 --> 00:27:46,280 Speaker 1: systemic stability of those issues. So you know, I think 470 00:27:46,320 --> 00:27:48,600 Speaker 1: if you want to do something to help community banks 471 00:27:48,600 --> 00:27:51,320 Speaker 1: credit unions, uh, Dodd Frank is not where I would 472 00:27:51,320 --> 00:27:54,520 Speaker 1: start as far as the financial choice that goes. Uh. 473 00:27:54,560 --> 00:27:56,239 Speaker 1: There are a lot of things that concern us. I mean, 474 00:27:56,240 --> 00:28:02,400 Speaker 1: in Rhode Island, we had one of the largest housing 475 00:28:02,400 --> 00:28:07,080 Speaker 1: and construction booms and busts in the Northeast, even in 476 00:28:07,160 --> 00:28:09,600 Speaker 1: that time of you know, oh six or seven oh eight, 477 00:28:10,040 --> 00:28:13,560 Speaker 1: when so many states were going through that, And you know, 478 00:28:13,680 --> 00:28:18,359 Speaker 1: I think that there's a sense that Dodd Frank was 479 00:28:18,560 --> 00:28:21,080 Speaker 1: put into place to try to prevent another crisis like 480 00:28:21,160 --> 00:28:23,560 Speaker 1: that from happening. Why don't we even you know, let's 481 00:28:23,560 --> 00:28:26,040 Speaker 1: play it out. Let's let's let's let ourselves go through 482 00:28:26,080 --> 00:28:28,679 Speaker 1: a full cycle, see what works and what doesn't before 483 00:28:28,680 --> 00:28:30,760 Speaker 1: we go and we start rewriting the things seth How 484 00:28:30,760 --> 00:28:33,240 Speaker 1: did the financial crisis shape you? I know, you were 485 00:28:33,280 --> 00:28:36,720 Speaker 1: teaching elementary school north of Lafayette in Louisiana. You leave 486 00:28:36,760 --> 00:28:39,320 Speaker 1: Louisiana around two thousand and eight, has all of this 487 00:28:39,360 --> 00:28:43,360 Speaker 1: is unfolding, You joint Trillium and in greater Boston. How 488 00:28:43,400 --> 00:28:45,160 Speaker 1: How did how did that? How did watching all of 489 00:28:45,160 --> 00:28:48,480 Speaker 1: that unfold shape your perspective on the markets, in the economy. 490 00:28:48,920 --> 00:28:51,160 Speaker 1: It had a very profound effect on me. I was 491 00:28:51,480 --> 00:28:54,760 Speaker 1: living in working as a as you mentioned, an elementary 492 00:28:54,800 --> 00:28:58,120 Speaker 1: school teacher in rural Louisiana. At the time, I had 493 00:28:58,160 --> 00:29:00,240 Speaker 1: grown up in Rhode Island. I was born and raised here. 494 00:29:00,280 --> 00:29:02,120 Speaker 1: I went to college here. So by the time I was, 495 00:29:02,360 --> 00:29:04,200 Speaker 1: you know, twenty two years old and out of college, 496 00:29:04,200 --> 00:29:05,880 Speaker 1: I wanted to be as far away from Rhode Island 497 00:29:05,920 --> 00:29:09,479 Speaker 1: as possible, and I moved down to Louisiana, and I 498 00:29:09,520 --> 00:29:12,040 Speaker 1: was teaching in a lower income community. And you know, 499 00:29:12,120 --> 00:29:16,560 Speaker 1: we could see even before we knew officially that we 500 00:29:16,560 --> 00:29:18,960 Speaker 1: were intercession. We could see it beginning to take hold. 501 00:29:19,120 --> 00:29:21,760 Speaker 1: You know, there were main street businesses starting to shut down, 502 00:29:21,880 --> 00:29:25,800 Speaker 1: and I noticed it in you know, the my students 503 00:29:25,840 --> 00:29:28,920 Speaker 1: and uh, you know, the layoffs that their parents were 504 00:29:28,960 --> 00:29:31,160 Speaker 1: starting to go through. So, you know, we could tell 505 00:29:31,160 --> 00:29:35,200 Speaker 1: that something wasn't right, and that did inspire me to 506 00:29:35,280 --> 00:29:38,840 Speaker 1: go and get my m b a. And get work 507 00:29:38,920 --> 00:29:41,520 Speaker 1: in the financial sector, just so that I could understand 508 00:29:42,400 --> 00:29:46,000 Speaker 1: better what was going on and understand the levers in 509 00:29:46,040 --> 00:29:48,880 Speaker 1: the broader economy that impacted communities like the one that 510 00:29:48,920 --> 00:29:52,720 Speaker 1: I was working on working in Louisiana. We are fortunate 511 00:29:52,840 --> 00:29:54,880 Speaker 1: here at Bloomberg Surveillance to have one of our board 512 00:29:54,880 --> 00:29:57,320 Speaker 1: members at Bloomberg lpon often. Then that would be Mr 513 00:29:57,400 --> 00:30:00,320 Speaker 1: Levitt of the Securities and Exchange Commission. I know it 514 00:30:00,360 --> 00:30:03,200 Speaker 1: only talks to you, Seth because he needs fishing advice 515 00:30:03,240 --> 00:30:07,560 Speaker 1: off Newport. But but you people have done original work 516 00:30:07,680 --> 00:30:11,720 Speaker 1: on transparency of pensions, and the backdrop here, folks, are 517 00:30:11,760 --> 00:30:15,840 Speaker 1: the challenges of Texas and the huge challenges of Illinois. 518 00:30:15,920 --> 00:30:20,440 Speaker 1: What's your advice to the Illinois political disaster as they 519 00:30:20,480 --> 00:30:23,840 Speaker 1: try to write their pension system based off the good 520 00:30:23,840 --> 00:30:27,080 Speaker 1: work you've done in Rhode Island. Yeah, so, as you know, 521 00:30:27,280 --> 00:30:31,160 Speaker 1: Rhode Island at one point had pension issues that were 522 00:30:31,960 --> 00:30:35,160 Speaker 1: almost as serious. We call that Illinois. Like yeah, Illinois 523 00:30:35,240 --> 00:30:38,400 Speaker 1: and New Jersey and some of the other uh, really 524 00:30:38,440 --> 00:30:41,400 Speaker 1: troubled state pension systems around the country. Uh, and we 525 00:30:41,440 --> 00:30:45,400 Speaker 1: had to undergo a very painful reform as a result, 526 00:30:45,440 --> 00:30:48,160 Speaker 1: where uh, you know, a lot of retirees had their 527 00:30:48,160 --> 00:30:51,600 Speaker 1: cost of living adjustments frozen. Uh, public employees had their 528 00:30:51,600 --> 00:30:55,960 Speaker 1: retirement ages increased, and so on. And you know, there's 529 00:30:55,960 --> 00:30:57,880 Speaker 1: a few things I would say. The first is the 530 00:30:58,000 --> 00:31:01,040 Speaker 1: longer you wait, the more painful it's going to be. 531 00:31:01,560 --> 00:31:03,800 Speaker 1: So if you're a state and you're worried about the 532 00:31:03,800 --> 00:31:07,440 Speaker 1: sustainability of your pension system, you know, act sooner rather 533 00:31:07,520 --> 00:31:09,440 Speaker 1: than later, or else you know, the problem is only 534 00:31:09,440 --> 00:31:12,840 Speaker 1: going to snowball and get worse. I'd also say it's 535 00:31:12,840 --> 00:31:18,280 Speaker 1: incredibly important to have realistic assumptions that you used to 536 00:31:18,320 --> 00:31:20,880 Speaker 1: govern your pension system. The reason that a lot of 537 00:31:21,320 --> 00:31:24,520 Speaker 1: pension systems, including Rhode Island, got into trouble is that 538 00:31:24,560 --> 00:31:27,400 Speaker 1: they were assuming that they were going to make you know, 539 00:31:28,440 --> 00:31:33,120 Speaker 1: eight nine percent investment returns over time, and that basically 540 00:31:33,160 --> 00:31:36,000 Speaker 1: became an excuse for underfunding those systems, and when you 541 00:31:36,080 --> 00:31:38,440 Speaker 1: underfund them again, you're only going to end up having 542 00:31:38,440 --> 00:31:40,400 Speaker 1: to pay more later if if you don't, you know, 543 00:31:40,640 --> 00:31:43,960 Speaker 1: prefund early. So, you know, we and Rhode Island have 544 00:31:44,240 --> 00:31:47,120 Speaker 1: in addition to the reforms, we've made some moves to 545 00:31:47,240 --> 00:31:49,640 Speaker 1: lower our assumed rate of return for the pension. It's 546 00:31:49,720 --> 00:31:51,479 Speaker 1: not one of the lowest of any state in the country, 547 00:31:51,480 --> 00:31:53,600 Speaker 1: and that that has helped us. I will say in 548 00:31:54,680 --> 00:31:57,680 Speaker 1: you know, in um sympathy to the folks in Illinois, 549 00:31:58,440 --> 00:32:01,040 Speaker 1: one of the challenges that I know they have is 550 00:32:01,080 --> 00:32:04,840 Speaker 1: that there is some fairly restrictive language written into their 551 00:32:04,840 --> 00:32:07,920 Speaker 1: state constitution about the types of changes they can make 552 00:32:07,920 --> 00:32:09,760 Speaker 1: with their pension, and I think that's made it harder 553 00:32:09,800 --> 00:32:12,120 Speaker 1: for them than what a lot of other states have 554 00:32:12,200 --> 00:32:14,800 Speaker 1: had to face. Now, when you mentioned transparency, though, that's 555 00:32:14,800 --> 00:32:17,480 Speaker 1: a slightly different issue and one where we really have 556 00:32:17,560 --> 00:32:20,840 Speaker 1: been a leader in Rhode Island. So uh, you see 557 00:32:20,840 --> 00:32:25,160 Speaker 1: a growing awareness around the country that particularly public pensions, 558 00:32:25,160 --> 00:32:29,600 Speaker 1: but also in general, transparency around the performance and the 559 00:32:29,640 --> 00:32:34,120 Speaker 1: fees of alternative investment managers is a huge issue. And 560 00:32:35,120 --> 00:32:36,960 Speaker 1: what you find is that a lot of funds, A 561 00:32:37,000 --> 00:32:39,280 Speaker 1: lot of pension funds. They don't even really know what 562 00:32:39,320 --> 00:32:43,920 Speaker 1: they're being charged um between management fees, carry their interest 563 00:32:44,200 --> 00:32:45,880 Speaker 1: and all the funds. Seth, we gotta leave it their 564 00:32:45,960 --> 00:32:49,320 Speaker 1: unfortunately Seth Magazine with a state of Rhode Island. Thank 565 00:32:49,360 --> 00:33:05,640 Speaker 1: you so much. This is Bloomberg right now. Uh, we 566 00:33:05,680 --> 00:33:10,360 Speaker 1: need to talk oil, and oil is about the domestic 567 00:33:10,440 --> 00:33:13,520 Speaker 1: view and that would be pipelines and valves and joining 568 00:33:13,600 --> 00:33:16,040 Speaker 1: us the one you want to hear from, because he 569 00:33:16,200 --> 00:33:20,280 Speaker 1: was right on oil moving lower, Mr Shark, Stephen Shark 570 00:33:20,320 --> 00:33:24,080 Speaker 1: the Shark Reports, Stephen, congratulations again. I'm getting the vector 571 00:33:24,200 --> 00:33:27,000 Speaker 1: right of lower oil prices. Can we get out of 572 00:33:27,000 --> 00:33:32,920 Speaker 1: the range and move to new recent lows? Absolutely? Tom, 573 00:33:33,240 --> 00:33:35,160 Speaker 1: We're at a point now when we were making a 574 00:33:35,160 --> 00:33:38,440 Speaker 1: call for lower prices. Our concern at the time was 575 00:33:38,680 --> 00:33:42,200 Speaker 1: that demand for crude oil had never been and still 576 00:33:42,360 --> 00:33:46,239 Speaker 1: is stronger than ever. But the problem was is we 577 00:33:46,240 --> 00:33:48,840 Speaker 1: were not seeing any sort of balancing in the market 578 00:33:48,960 --> 00:33:52,960 Speaker 1: regardless of this record demand. So the concern now if 579 00:33:53,000 --> 00:33:55,920 Speaker 1: you are long or if you are bullish oil, is 580 00:33:55,960 --> 00:33:58,680 Speaker 1: the fact that we are over the next couple of 581 00:33:58,680 --> 00:34:01,360 Speaker 1: weeks going to transit in out of the peak demand 582 00:34:01,440 --> 00:34:04,800 Speaker 1: season and demand will now start to seasoningly stade as 583 00:34:04,800 --> 00:34:08,280 Speaker 1: we get through into July, August and certainly into September. 584 00:34:09,000 --> 00:34:12,680 Speaker 1: So recently we broke a key technical area of support 585 00:34:12,719 --> 00:34:17,080 Speaker 1: and spot crude oil between forty two and forty two 586 00:34:17,520 --> 00:34:21,080 Speaker 1: the next obvious target now, of course, it's the psychological 587 00:34:21,120 --> 00:34:25,160 Speaker 1: barrier at forty. Now, if you're a technical technical guy 588 00:34:25,239 --> 00:34:31,680 Speaker 1: like myself and you like the Fibonacci, I love the Sibinaci. Okay, 589 00:34:31,360 --> 00:34:37,320 Speaker 1: by each his own. So the next downside target range 590 00:34:37,520 --> 00:34:41,839 Speaker 1: is forty sixty five to thirty seven twenty over the 591 00:34:41,880 --> 00:34:44,520 Speaker 1: next two months. So right now the trend is your friend, 592 00:34:44,560 --> 00:34:47,240 Speaker 1: if your baron, what is the due list for OPEC? 593 00:34:47,360 --> 00:34:49,799 Speaker 1: Not only are they distracted by the changing of the 594 00:34:49,840 --> 00:34:53,319 Speaker 1: guard in to Saudi Arabia, but they've been disappointed by 595 00:34:53,360 --> 00:34:57,919 Speaker 1: their recent actions. Do they respond to this newly low 596 00:34:58,040 --> 00:35:02,799 Speaker 1: range of oil? Does OPEQ become cognizant in Sibonacci analysis? 597 00:35:03,080 --> 00:35:07,399 Speaker 1: What do they do well? OPEC has certainly overplayed its hand, 598 00:35:07,480 --> 00:35:10,040 Speaker 1: and what's really hurt OPEC over the past few months 599 00:35:10,320 --> 00:35:13,320 Speaker 1: is not the compliance issue, because OPEC compliance to the 600 00:35:13,400 --> 00:35:16,160 Speaker 1: production quota has been very strong. In fact, it's been 601 00:35:16,239 --> 00:35:18,319 Speaker 1: much stronger than I thought it was going to be 602 00:35:18,360 --> 00:35:21,799 Speaker 1: even up until this point. Their issue is the two 603 00:35:21,840 --> 00:35:25,399 Speaker 1: countries that are outside of the agreement, that is to say, 604 00:35:25,560 --> 00:35:29,719 Speaker 1: Libya and Nigeria, because of the civil start in those countries, 605 00:35:30,120 --> 00:35:32,680 Speaker 1: they would not behold into any sort of production quota. 606 00:35:33,000 --> 00:35:36,680 Speaker 1: And that's really what is really breaking OPEC's desire right 607 00:35:36,719 --> 00:35:40,280 Speaker 1: now is the additional output being put on by Libya 608 00:35:40,400 --> 00:35:43,560 Speaker 1: and uh and Nigeria. As I said, so OPEC is 609 00:35:43,600 --> 00:35:45,759 Speaker 1: really struck in between a rock and a hard place. 610 00:35:45,880 --> 00:35:48,480 Speaker 1: There's not much they can do. They've played their hand 611 00:35:48,680 --> 00:35:51,840 Speaker 1: and the market has called their bluff. So that bluff 612 00:35:51,960 --> 00:35:56,799 Speaker 1: now being the fact that production inside of OPEC, as 613 00:35:56,840 --> 00:35:59,799 Speaker 1: we've just said, is strongly been expected, but it's the 614 00:36:00,080 --> 00:36:03,040 Speaker 1: US shell producer. This is something Tom I've been screaming 615 00:36:03,080 --> 00:36:06,840 Speaker 1: about since November when Wall Street went all in on 616 00:36:06,960 --> 00:36:09,879 Speaker 1: higher oil prices that OPEC was going to save the day. 617 00:36:10,400 --> 00:36:12,840 Speaker 1: No one wanted to seem to give the credit to 618 00:36:12,920 --> 00:36:16,480 Speaker 1: the US oil producer, and US oil producer has responded 619 00:36:16,719 --> 00:36:20,600 Speaker 1: amazingly well, it's going to continue to respond through the 620 00:36:20,719 --> 00:36:23,279 Speaker 1: end of the year. So now you're OPEC, you've got 621 00:36:23,320 --> 00:36:25,879 Speaker 1: a big problem because the first six months of your 622 00:36:25,880 --> 00:36:29,239 Speaker 1: production quota kudo. Demand has never been stronger, and you 623 00:36:29,360 --> 00:36:31,680 Speaker 1: failed to balance the market. Now we're going to go 624 00:36:31,719 --> 00:36:33,799 Speaker 1: into the latter half of the year, demand is going 625 00:36:33,840 --> 00:36:37,440 Speaker 1: to fall and US production is going to remain stout. 626 00:36:37,920 --> 00:36:41,080 Speaker 1: So really OPEC is just stuck now and they just 627 00:36:41,080 --> 00:36:43,120 Speaker 1: have to try and ride this out until the next 628 00:36:43,160 --> 00:36:46,240 Speaker 1: peak demand season, and that's at least six months away 629 00:36:46,239 --> 00:36:48,280 Speaker 1: from them. Steve, when I was out of town yesterday, 630 00:36:48,280 --> 00:36:50,480 Speaker 1: I was in d C, so I just was following 631 00:36:50,480 --> 00:36:53,880 Speaker 1: all of this from from Afar? What what changed yesterday? 632 00:36:53,880 --> 00:36:57,840 Speaker 1: What led to the drop in oil prices yesterday? You know, 633 00:36:58,040 --> 00:37:01,720 Speaker 1: essentially it is now a really station that Wall Street 634 00:37:01,760 --> 00:37:06,200 Speaker 1: now is jumping onto the bandwagon that we've gotten through. 635 00:37:06,320 --> 00:37:09,320 Speaker 1: We've got in froto the season. And as I said before, 636 00:37:09,640 --> 00:37:13,279 Speaker 1: when we look at the demand drivers in this market, yes, 637 00:37:13,360 --> 00:37:16,000 Speaker 1: crudal demand is very strong. So what does that mean. 638 00:37:16,280 --> 00:37:19,000 Speaker 1: That means the refiners are buying a lot of crudel? 639 00:37:19,440 --> 00:37:21,719 Speaker 1: What's what's the other side of that? That means the 640 00:37:21,719 --> 00:37:25,439 Speaker 1: refiners are making a lot of gasoline and diesel fuel. 641 00:37:25,800 --> 00:37:28,600 Speaker 1: So in fact, when we look at it, demand has 642 00:37:28,640 --> 00:37:32,480 Speaker 1: never been stronger, but production of products have never been stronger. 643 00:37:32,800 --> 00:37:35,480 Speaker 1: So two weeks ago the d o E issue to 644 00:37:35,560 --> 00:37:39,600 Speaker 1: report one of the largest build ever recorded in forty 645 00:37:39,680 --> 00:37:42,400 Speaker 1: years of documented history, one of the largest build of 646 00:37:42,520 --> 00:37:46,719 Speaker 1: total oil oil. So it's crude and the products. So 647 00:37:46,840 --> 00:37:49,399 Speaker 1: right now, what we've seen is Wall Street went all 648 00:37:49,440 --> 00:37:53,040 Speaker 1: in on higher oil prices in December January. They were wrong. 649 00:37:53,400 --> 00:37:56,480 Speaker 1: They've gotten flat now. But the issue is they're not 650 00:37:56,640 --> 00:37:59,160 Speaker 1: jumping back in. And what we're really starting to see 651 00:37:59,280 --> 00:38:02,440 Speaker 1: on Wall Street risk tolerance on the bears. So the 652 00:38:02,520 --> 00:38:05,560 Speaker 1: bears are really stepping up into the plate. And as 653 00:38:05,560 --> 00:38:08,920 Speaker 1: I wrote the clienty today's Daily Short Report, what's really 654 00:38:09,000 --> 00:38:13,359 Speaker 1: interesting is the kudole producer is hedging a lot. So 655 00:38:13,400 --> 00:38:15,880 Speaker 1: when we saw oil in the mid fifties, high fifties, 656 00:38:16,000 --> 00:38:18,200 Speaker 1: the guys pulling the oil out of the ground, we're 657 00:38:18,239 --> 00:38:20,680 Speaker 1: doing a lot of hedging. But the opposite end of 658 00:38:20,680 --> 00:38:23,640 Speaker 1: that the guys on the other end, the refineries, who 659 00:38:23,680 --> 00:38:28,839 Speaker 1: are not hedging. So what's this telling you. It's telling 660 00:38:28,920 --> 00:38:32,400 Speaker 1: the producers things prices are high in the high fifties 661 00:38:32,480 --> 00:38:34,880 Speaker 1: and hence they'd hedged, and the guys who have passed 662 00:38:34,920 --> 00:38:37,800 Speaker 1: to buy the oil, the refiners Brilliance still need to hedge. 663 00:38:38,080 --> 00:38:41,279 Speaker 1: It's a very long term. Yes, well, that's brilliant. That's 664 00:38:41,320 --> 00:38:45,160 Speaker 1: brilliant analysis there about the producers versus refiners in protection, 665 00:38:45,200 --> 00:38:48,040 Speaker 1: the hedging that goes on among the producer. Steve Shark, 666 00:38:48,400 --> 00:38:52,719 Speaker 1: within your your incredibly detailed short report, where's your fair 667 00:38:52,800 --> 00:38:57,080 Speaker 1: value on West Texas? Where does West Texas clear? Right now? 668 00:38:59,000 --> 00:39:00,880 Speaker 1: Right now? We are right now, I'm looking at my 669 00:39:00,920 --> 00:39:05,919 Speaker 1: Bloomberg it's sixty cents in the prompt market. We are 670 00:39:06,320 --> 00:39:09,360 Speaker 1: well below. We are well below where you would expect 671 00:39:09,440 --> 00:39:12,759 Speaker 1: to start to see at w t I clearing right now. 672 00:39:13,120 --> 00:39:15,359 Speaker 1: So we are probably a good five dollars of our 673 00:39:15,560 --> 00:39:19,919 Speaker 1: below the clickiller and mechanism at this point. So this 674 00:39:20,000 --> 00:39:24,280 Speaker 1: is clearly a run now where the speculators are starting 675 00:39:24,280 --> 00:39:28,640 Speaker 1: to sell. You're looking at a situation where they've driving prices. 676 00:39:28,680 --> 00:39:30,840 Speaker 1: From this point on, TOM is not necessarily going to 677 00:39:30,880 --> 00:39:34,279 Speaker 1: be fundamentally driven. It's going to be speculatively driven. So 678 00:39:34,400 --> 00:39:37,040 Speaker 1: low prices are going to become the answer for even 679 00:39:37,080 --> 00:39:40,440 Speaker 1: lower price. This is really important observation, folks. This is 680 00:39:40,480 --> 00:39:43,520 Speaker 1: not my opinion, Mr Shark's opinion that we've moved away 681 00:39:43,560 --> 00:39:46,640 Speaker 1: from supply demand, etcetera. And much more over the flow 682 00:39:46,719 --> 00:39:49,399 Speaker 1: dynamics within the trading market, which is what the short 683 00:39:49,480 --> 00:39:53,400 Speaker 1: reports about. How does our listener catch a knife falling 684 00:39:53,400 --> 00:39:55,880 Speaker 1: in the dark, Steve Shark, you know where to get 685 00:39:55,920 --> 00:40:01,040 Speaker 1: in once speculators step away. Is that a atharctic event 686 00:40:01,120 --> 00:40:05,160 Speaker 1: that you're waiting for? Uh? Yeah, I'm actually waiting for 687 00:40:05,280 --> 00:40:07,719 Speaker 1: At this point, Tom, I'm waiting for even more bloodlining. 688 00:40:07,840 --> 00:40:10,680 Speaker 1: I thought that we were We've been in this range 689 00:40:11,000 --> 00:40:15,360 Speaker 1: as a reference betwort for five seemed to be the bottom, 690 00:40:15,840 --> 00:40:18,640 Speaker 1: but we're now beyond that. So step away, stay away 691 00:40:18,680 --> 00:40:22,040 Speaker 1: from this is the proverbial trying to catch a fallen dagger. 692 00:40:22,440 --> 00:40:25,160 Speaker 1: I do not try to pick bottoms at this point. 693 00:40:25,400 --> 00:40:28,239 Speaker 1: We'll let this run run its course and then look 694 00:40:28,320 --> 00:40:31,960 Speaker 1: for the look for the seasonal dynamics. So I wouldn't 695 00:40:32,080 --> 00:40:36,680 Speaker 1: venture into this market until we get beyond the turnaround season. 696 00:40:36,719 --> 00:40:40,120 Speaker 1: So I'm now I'm talking September and October, so that's 697 00:40:40,160 --> 00:40:44,440 Speaker 1: probably going to be your next opportunity when the carson 698 00:40:44,680 --> 00:40:47,120 Speaker 1: has likely run its course, to catch that night and 699 00:40:47,160 --> 00:40:49,839 Speaker 1: look for the turnaround as seasonal demand towards the end 700 00:40:49,840 --> 00:40:52,160 Speaker 1: of the year picks back up. One final question, do 701 00:40:52,200 --> 00:40:56,720 Speaker 1: we see behavioral change among shale in the United States. 702 00:40:56,920 --> 00:40:59,880 Speaker 1: Do those people stop doing what they do because of 703 00:41:00,040 --> 00:41:04,600 Speaker 1: this new pricing. Well, the cost curve, especially in Moss, Texas, 704 00:41:04,640 --> 00:41:08,360 Speaker 1: has come considerably over the past two years. So whereas 705 00:41:08,600 --> 00:41:11,319 Speaker 1: two years ago, forty five oil would would have had 706 00:41:11,360 --> 00:41:15,440 Speaker 1: these guys running for the exits. Uh, they're still profitable 707 00:41:15,520 --> 00:41:17,840 Speaker 1: now and a number of these fields are still productive 708 00:41:18,040 --> 00:41:20,759 Speaker 1: in that thirty five to forty five dollar range. So 709 00:41:20,840 --> 00:41:23,600 Speaker 1: when we look at the lower margins, greater productivity and 710 00:41:23,800 --> 00:41:28,719 Speaker 1: increased hedging. Uh, so their oils already sold. It's going 711 00:41:28,760 --> 00:41:31,040 Speaker 1: to take a wild clo see some sort of delitary 712 00:41:31,280 --> 00:41:34,399 Speaker 1: impact these prices on oil productions. Steve, we just had 713 00:41:34,400 --> 00:41:36,920 Speaker 1: an email coming. This is John from New Jersey. He 714 00:41:36,960 --> 00:41:38,399 Speaker 1: wants to know are we going to see a dollar 715 00:41:38,520 --> 00:41:42,759 Speaker 1: ninety nine gallon a New Jersey a dolin hanging on? Well, 716 00:41:42,800 --> 00:41:45,160 Speaker 1: you guys just great to taxes in Jersey. Uh. And 717 00:41:45,200 --> 00:41:47,239 Speaker 1: I live in Philadelphia, and I always love coming to 718 00:41:47,320 --> 00:41:49,200 Speaker 1: New Jersey for for a number of reasons, especially for 719 00:41:49,239 --> 00:41:53,839 Speaker 1: the cheap gas. To that point, and exactly, and so 720 00:41:53,960 --> 00:41:57,520 Speaker 1: John's a job from New Jersey. The correlation is for 721 00:41:57,600 --> 00:42:00,960 Speaker 1: every one dollar drop include all prices you compically get 722 00:42:01,000 --> 00:42:12,520 Speaker 1: about a chief sends knock on to guest prices keep okay, 723 00:42:12,920 --> 00:42:16,440 Speaker 1: Steve Shark, thank you so much for briefing John Tucker 724 00:42:16,520 --> 00:42:29,200 Speaker 1: of the Hummer H two. This is Bloomberg. Thanks for 725 00:42:29,280 --> 00:42:33,360 Speaker 1: listening to the Bloomberg Surveillas podcast. Subscribe and listen to 726 00:42:33,480 --> 00:42:39,520 Speaker 1: interviews on Apple Podcasts, SoundCloud, or whichever podcast platform you prefer. 727 00:42:40,080 --> 00:42:43,120 Speaker 1: I'm on Twitter at Tom Keene. David Gura is at 728 00:42:43,280 --> 00:42:48,120 Speaker 1: David Gura. Before the podcast, you can always catch us worldwide. 729 00:42:48,320 --> 00:43:02,640 Speaker 1: I'm Bloomberg Radio, brought you by Bank of America Merrill Lynch. 730 00:43:02,880 --> 00:43:08,400 Speaker 1: With virtual reality, virtually everything will change. Discover opportunities in 731 00:43:08,440 --> 00:43:11,800 Speaker 1: a transforming world. Be of a m L dot Com 732 00:43:12,000 --> 00:43:16,880 Speaker 1: slash v R, Merrill Lynch, Pierced Fenner and Smith Incorporated