1
00:00:03,320 --> 00:00:06,640
Speaker 1: This is Bloomberg Surveillance. I don't think there's going to

2
00:00:06,720 --> 00:00:11,080
Speaker 1: be a major change in interest rates anytime. So the

3
00:00:11,160 --> 00:00:13,399
Speaker 1: people who think rates are going up, I think they'll

4
00:00:13,400 --> 00:00:15,680
Speaker 1: call up. A little stable oil at fifty dollars would

5
00:00:15,680 --> 00:00:18,160
Speaker 1: be a wonderful thing for everybody, and Summers would be happy,

6
00:00:18,320 --> 00:00:20,360
Speaker 1: Industry wouldn't be happy. That would be the best of

7
00:00:20,360 --> 00:00:22,759
Speaker 1: all worlds. The mentality of the FED has shifted. The

8
00:00:22,800 --> 00:00:26,160
Speaker 1: Fed does want to normalize rates, and as long as

9
00:00:26,200 --> 00:00:28,720
Speaker 1: there is not something in their way, they will continue

10
00:00:28,760 --> 00:00:31,920
Speaker 1: to do that. Bloomberg Surveillance your link to the world

11
00:00:31,920 --> 00:00:36,800
Speaker 1: of economics, finance, and investment on Bloomberg Radio. Good morning everyone,

12
00:00:36,840 --> 00:00:40,560
Speaker 1: Bloomberg Surveillas Michael McKee and Tom Keene extra data checks today.

13
00:00:40,600 --> 00:00:43,760
Speaker 1: Markets decidedly on the move. Not so much right now,

14
00:00:43,880 --> 00:00:48,479
Speaker 1: some stasis right now, but wow, overnight, huge moves and

15
00:00:48,520 --> 00:00:51,720
Speaker 1: interest rates, some of the foreign exchange pairs moving. Of course,

16
00:00:52,080 --> 00:00:55,160
Speaker 1: Korea with a shock rate cut. Thank you Frederick Woman

17
00:00:55,200 --> 00:00:59,120
Speaker 1: of HSBC for helping us out here with some smart

18
00:00:59,200 --> 00:01:02,600
Speaker 1: analysis out of Hong Kong. We all move things on here.

19
00:01:03,120 --> 00:01:06,880
Speaker 1: Got something to talk about that's absolutely fascinating. Um coming up,

20
00:01:06,959 --> 00:01:10,120
Speaker 1: First of all, the Bloomberg Surveillance this morning, bunch of

21
00:01:10,160 --> 00:01:14,720
Speaker 1: my kone RESIDEC Accounting Tax Advisory. Is your business ready

22
00:01:14,760 --> 00:01:18,000
Speaker 1: to break through? See how the professionals at kone resident

23
00:01:18,080 --> 00:01:21,240
Speaker 1: can help you guide your business forward. Find out more

24
00:01:21,280 --> 00:01:24,720
Speaker 1: at kone residek dot com. We spell at CEO H

25
00:01:24,880 --> 00:01:29,000
Speaker 1: n Our e Z and I c kkne residek dot

26
00:01:29,080 --> 00:01:33,319
Speaker 1: com and we thank them for their uh support. Mike,

27
00:01:33,400 --> 00:01:35,280
Speaker 1: before we get to our steam guests, I'll let you

28
00:01:35,319 --> 00:01:39,600
Speaker 1: bring them in. Um. Vladimir Miklaszewski at Donska Bank, which

29
00:01:39,600 --> 00:01:45,679
Speaker 1: is a wonderful interesting economics team. He notices the leptokurtodic

30
00:01:47,080 --> 00:01:52,560
Speaker 1: Russia rate call for tomorrow. He's going cross moments out

31
00:01:52,600 --> 00:01:56,280
Speaker 1: on Twitter. No mention of kurtosis. I was gonna make

32
00:01:56,320 --> 00:02:00,480
Speaker 1: fun of you for that, but but you're actually making sense. Uh.

33
00:02:00,520 --> 00:02:02,560
Speaker 1: The average person just drove off the road when I

34
00:02:02,560 --> 00:02:05,840
Speaker 1: said that. I know, but apparently there is a big

35
00:02:05,880 --> 00:02:09,880
Speaker 1: trade into Russian paper right now because the Russian Central

36
00:02:09,880 --> 00:02:12,600
Speaker 1: Bank is meeting tomorrow to decide whether or not to

37
00:02:12,639 --> 00:02:18,399
Speaker 1: cut rates. Anytime, anytime anyone mentions leaptokurtosis or kurtosis itself,

38
00:02:18,680 --> 00:02:22,120
Speaker 1: any of the cross moments, we go apoplectic here at

39
00:02:22,160 --> 00:02:24,720
Speaker 1: Bloomberg Surveillance. So there it is. If you're looking for

40
00:02:24,760 --> 00:02:27,600
Speaker 1: a risk trade, there you go. You know, um, I

41
00:02:27,600 --> 00:02:29,919
Speaker 1: don't know what the odds are of a rate cut

42
00:02:29,919 --> 00:02:33,960
Speaker 1: in Russia, but no, obviously something to consider. We were

43
00:02:33,960 --> 00:02:37,080
Speaker 1: in the intro densk gardmen liking fifty dollars a barrel.

44
00:02:37,080 --> 00:02:40,760
Speaker 1: Why don't you bring in our esteem guest darkman like

45
00:02:41,000 --> 00:02:43,880
Speaker 1: stability here. I don't know whether Amada said likes fifty

46
00:02:43,880 --> 00:02:46,480
Speaker 1: dollar oil or not, but she's got to make a

47
00:02:46,520 --> 00:02:48,840
Speaker 1: decision on which way it's going to go from there.

48
00:02:49,720 --> 00:02:52,200
Speaker 1: The interesting thing is we saw a big run up

49
00:02:52,720 --> 00:02:56,399
Speaker 1: from the thirties to fifties and now yeah, I mean

50
00:02:56,440 --> 00:02:59,600
Speaker 1: it's it's beginning, um to be sort of a grind.

51
00:02:59,600 --> 00:03:03,160
Speaker 1: Everydy with energy aspects so sort of begin to be

52
00:03:03,200 --> 00:03:06,840
Speaker 1: a grind. And I'm wondering how much further? How much fast?

53
00:03:07,480 --> 00:03:11,120
Speaker 1: How fast? Good morning? And I'm glad to say you

54
00:03:11,160 --> 00:03:13,720
Speaker 1: said I don't have a preference for pricing. I don't.

55
00:03:13,720 --> 00:03:17,000
Speaker 1: I don't like or dislike any price less, that's that's

56
00:03:17,040 --> 00:03:20,000
Speaker 1: for sure. Uh No, but I think this is going

57
00:03:20,080 --> 00:03:22,840
Speaker 1: to be a slow grind higher because of once in

58
00:03:22,919 --> 00:03:24,920
Speaker 1: the region, we still have a lot of stocks to

59
00:03:25,040 --> 00:03:27,440
Speaker 1: run through. Don't get me wrong. We've been positive on

60
00:03:27,480 --> 00:03:29,520
Speaker 1: oil since the start of the year, even when it

61
00:03:29,600 --> 00:03:33,480
Speaker 1: was at twenty seven, simply because that wasn't based on fundamentals.

62
00:03:33,480 --> 00:03:36,520
Speaker 1: Fundamentals are turning the longer than Nigeria now to just

63
00:03:36,640 --> 00:03:40,560
Speaker 1: last the quicker reason to rebalance. But some people who

64
00:03:40,680 --> 00:03:45,880
Speaker 1: used to expect rebalancing in have now all started to

65
00:03:45,960 --> 00:03:48,280
Speaker 1: expect it in age to sixteen, which is correct, and

66
00:03:48,440 --> 00:03:51,040
Speaker 1: that's always been our view. But the point is it's

67
00:03:51,040 --> 00:03:53,920
Speaker 1: going to be a slow move higher because we have

68
00:03:54,040 --> 00:03:56,000
Speaker 1: to run down these infantries. I think we've kind of

69
00:03:56,040 --> 00:03:59,040
Speaker 1: for the market. We've oscillated from being super sumper bearish

70
00:03:59,080 --> 00:04:01,800
Speaker 1: to suddenly everybody turned bullish. But it needs to be

71
00:04:01,920 --> 00:04:06,040
Speaker 1: slightly more measured. And this is uh you know, a

72
00:04:06,160 --> 00:04:09,120
Speaker 1: market that is a little unlike equities or something like

73
00:04:09,160 --> 00:04:12,680
Speaker 1: that in a sense that you don't have uh an

74
00:04:12,800 --> 00:04:17,920
Speaker 1: unlimited ceiling for where you can go. How high does

75
00:04:17,960 --> 00:04:23,520
Speaker 1: this particular rally take us? Where's the cap? I think

76
00:04:23,560 --> 00:04:25,880
Speaker 1: in the very near term, of course, you're going to

77
00:04:25,960 --> 00:04:29,520
Speaker 1: get so many corrections on the way, but around fifty

78
00:04:29,560 --> 00:04:31,880
Speaker 1: five I mean, for me forty five to fifty five

79
00:04:32,040 --> 00:04:34,200
Speaker 1: is the new trading rich, the new ten dollar range.

80
00:04:34,800 --> 00:04:38,680
Speaker 1: At the moment, our price forecast for Q three is

81
00:04:38,760 --> 00:04:41,440
Speaker 1: fifty five, Q four sixty five, and this is for Brent.

82
00:04:42,200 --> 00:04:44,320
Speaker 1: So again it's going to be a slow grind higher.

83
00:04:44,640 --> 00:04:48,080
Speaker 1: But if you think slightly broader kind of the secular trend,

84
00:04:48,480 --> 00:04:50,160
Speaker 1: I do think we are setting up, and I think

85
00:04:50,160 --> 00:04:52,480
Speaker 1: we've discussed this before on this show as well, for

86
00:04:52,720 --> 00:04:55,960
Speaker 1: a spike higher, but it's probably not teen or maybe

87
00:04:56,040 --> 00:04:59,240
Speaker 1: late seventeen, because we are losing immense amounts of supplies

88
00:04:59,240 --> 00:05:01,640
Speaker 1: which are just not going to come back very quickly,

89
00:05:02,120 --> 00:05:04,680
Speaker 1: almost irrespective of the price, because there's a time lag

90
00:05:04,760 --> 00:05:08,360
Speaker 1: associated between when prices right or for and the decision

91
00:05:08,360 --> 00:05:15,239
Speaker 1: is taken on the supplies swing though roughly how voul

92
00:05:15,360 --> 00:05:19,520
Speaker 1: can you is this going to be? And of course

93
00:05:19,560 --> 00:05:22,599
Speaker 1: it is. I mean, we don't think it's going to

94
00:05:22,640 --> 00:05:24,520
Speaker 1: be much more likely seeing today you know, you're you're

95
00:05:24,640 --> 00:05:28,240
Speaker 1: off about fifty cents or so from yesterday. It is

96
00:05:28,240 --> 00:05:30,720
Speaker 1: going to trade in that kind of you know, two

97
00:05:30,760 --> 00:05:33,800
Speaker 1: dollar ranges. About the reason I gave you the ten

98
00:05:33,839 --> 00:05:37,159
Speaker 1: dollar ranges. There are a few important meetings or events

99
00:05:37,160 --> 00:05:40,280
Speaker 1: coming up. There's breakfit there's the FED decisions. So there

100
00:05:40,320 --> 00:05:43,880
Speaker 1: are some of those macro factors that can lead to

101
00:05:44,000 --> 00:05:47,800
Speaker 1: a fairly significant amount of volatively, outside of that, it

102
00:05:47,839 --> 00:05:49,680
Speaker 1: will probably be a couple of dollars. And now for

103
00:05:49,720 --> 00:05:52,680
Speaker 1: the dumb question of the morning, I'm qualified to ask that,

104
00:05:53,160 --> 00:05:57,400
Speaker 1: and Rita, I'm fascinated if people like you can ever

105
00:05:57,600 --> 00:06:03,360
Speaker 1: discover equilibrium in supply and demand in all your years

106
00:06:03,400 --> 00:06:09,159
Speaker 1: of studying hydrocarbons, can you actually note when supply lines

107
00:06:09,240 --> 00:06:13,640
Speaker 1: up with demand? Or is that just a fiction? I

108
00:06:13,680 --> 00:06:15,560
Speaker 1: think it's a fiction. I don't think you ever have

109
00:06:15,720 --> 00:06:18,040
Speaker 1: that work, or there might be, you know, a point

110
00:06:18,120 --> 00:06:20,600
Speaker 1: in time when you get that, but you always also

111
00:06:20,680 --> 00:06:23,800
Speaker 1: date from the huge oversupp language we had. Now we're

112
00:06:23,839 --> 00:06:26,720
Speaker 1: kind of running through that. And because the market is

113
00:06:26,760 --> 00:06:30,040
Speaker 1: a market and we kind of swing right, we've co forcott.

114
00:06:30,120 --> 00:06:35,160
Speaker 1: Now we've got too much supplies that then how do

115
00:06:35,200 --> 00:06:39,360
Speaker 1: you how do you respond to Gary Shillings informed call

116
00:06:40,120 --> 00:06:46,320
Speaker 1: of sharply lower oil prices because supply won't clear, you know,

117
00:06:46,680 --> 00:06:51,919
Speaker 1: the microeconomics will still allow for a sustained supply of

118
00:06:52,000 --> 00:06:54,680
Speaker 1: the product. Do you just doubt that that will happen?

119
00:07:00,160 --> 00:07:03,320
Speaker 1: Thank you? Not just because of the wildfires, but actual

120
00:07:03,440 --> 00:07:06,839
Speaker 1: underline US production today is down about eight hundred thousand

121
00:07:06,839 --> 00:07:09,600
Speaker 1: barrels per day year on year. More importantly, it splaces

122
00:07:09,640 --> 00:07:13,080
Speaker 1: like Brazil, China. That's where productions falling, I mean across

123
00:07:13,080 --> 00:07:17,760
Speaker 1: the world, nonofect supplies that What about what about the

124
00:07:17,800 --> 00:07:21,280
Speaker 1: oil tankers off whichever harbor you want to talk about.

125
00:07:24,320 --> 00:07:26,760
Speaker 1: The biggest one at the moment is actually in Asia.

126
00:07:26,840 --> 00:07:29,920
Speaker 1: It's a it's of Singapore and Malaysia. And that's an

127
00:07:29,960 --> 00:07:32,080
Speaker 1: interesting one because if you look at the shape of

128
00:07:32,120 --> 00:07:36,760
Speaker 1: the curve, the klintangle has not entirely disappeared, but we've

129
00:07:36,760 --> 00:07:39,800
Speaker 1: basically flattened out all the curves. Again, it's a sign

130
00:07:39,800 --> 00:07:42,680
Speaker 1: of a tightening market. Brent flat, Dubai is actually in

131
00:07:42,760 --> 00:07:45,280
Speaker 1: backuidation and w t I is quite flat as well.

132
00:07:46,000 --> 00:07:48,000
Speaker 1: To the tanker, they are actually not being held as

133
00:07:48,000 --> 00:07:51,600
Speaker 1: a storage play. It's basically China because there are these

134
00:07:51,640 --> 00:07:55,120
Speaker 1: new independent teapot refinery small refineries that have been given

135
00:07:55,160 --> 00:07:58,120
Speaker 1: crude licenses. They are starting to import cruder, but they

136
00:07:58,160 --> 00:08:00,600
Speaker 1: don't have the infrastructure of the space to do so.

137
00:08:00,600 --> 00:08:04,560
Speaker 1: So there's massive congestion which has then spilled over to Singapore,

138
00:08:04,560 --> 00:08:09,520
Speaker 1: and that's why you're seeing those anchors. Uh, the the

139
00:08:09,560 --> 00:08:13,800
Speaker 1: spread between West Texas and Bread has really really narrowed

140
00:08:13,800 --> 00:08:16,280
Speaker 1: in recent months, and at some point brief points we've

141
00:08:16,320 --> 00:08:19,840
Speaker 1: had West Texas trading add or above Bread. What about

142
00:08:19,840 --> 00:08:21,320
Speaker 1: the rest of the world, I mean, there are dozens

143
00:08:21,360 --> 00:08:24,960
Speaker 1: of grades of oil, but how is the rest of

144
00:08:24,960 --> 00:08:27,560
Speaker 1: the world converging as well? Is just becoming a different

145
00:08:27,640 --> 00:08:32,520
Speaker 1: kind of trade? Yes, I mean Brent is it's stronger

146
00:08:32,559 --> 00:08:35,000
Speaker 1: than a lot of the Asian grades, particularly Dubide, mainly

147
00:08:35,040 --> 00:08:38,120
Speaker 1: because the Uranian production is rising and that pressurizing some

148
00:08:38,280 --> 00:08:42,000
Speaker 1: of that grade. But generally there's been a very significant

149
00:08:42,000 --> 00:08:45,640
Speaker 1: convergence across all the grade. The biggest are normally used

150
00:08:45,679 --> 00:08:48,640
Speaker 1: to be West Texas and because of the convergence there,

151
00:08:48,679 --> 00:08:51,640
Speaker 1: pretty much everything else is trading broadly in line with

152
00:08:51,760 --> 00:08:57,200
Speaker 1: the Brent and w T I. Obviously Nigeria's a separate case.

153
00:08:57,240 --> 00:09:01,960
Speaker 1: But what about Canada. Uh, we have you mentioned the wildfires.

154
00:09:02,640 --> 00:09:07,000
Speaker 1: We have sort of written the Canadians off. But as

155
00:09:07,000 --> 00:09:09,800
Speaker 1: a Canadian dollar gets a little bit stronger, are they

156
00:09:09,960 --> 00:09:12,240
Speaker 1: coming back a little bit weaker? I mean they're coming back.

157
00:09:14,360 --> 00:09:17,480
Speaker 1: We are starting to come back. But unfortunately, I'm sure

158
00:09:18,040 --> 00:09:22,240
Speaker 1: you've seen there's been another wildfire just like yesterday and

159
00:09:22,600 --> 00:09:24,760
Speaker 1: early this morning as well. That that's led to the

160
00:09:24,800 --> 00:09:28,800
Speaker 1: evacuation of two new sites. And the wildfires this time

161
00:09:29,240 --> 00:09:31,800
Speaker 1: are close to quite a few sag deep projects of

162
00:09:31,880 --> 00:09:34,800
Speaker 1: some of the other oil science projects. So I don't

163
00:09:34,840 --> 00:09:38,839
Speaker 1: think this is over yet, very very Unfortunately um I

164
00:09:38,960 --> 00:09:40,959
Speaker 1: may not be of the same scale, but yes, it's

165
00:09:41,080 --> 00:09:45,720
Speaker 1: it has already led to UM two sites being evacually evacuated,

166
00:09:45,720 --> 00:09:47,320
Speaker 1: so yes, well some of them are coming back, I

167
00:09:47,320 --> 00:09:50,040
Speaker 1: think O those are having to shut down again West Canada.

168
00:09:50,120 --> 00:09:55,480
Speaker 1: So this morning, Wow, that's interesting. M I'm Manada said

169
00:09:55,559 --> 00:09:58,080
Speaker 1: thank you so much with the energy aspects, Mike, I

170
00:09:58,120 --> 00:10:01,960
Speaker 1: asked earlier about Canary in a coal Mine. John Nigerian

171
00:10:02,840 --> 00:10:09,000
Speaker 1: is a an acclaimed surgeon out of Minneapolis. He had

172
00:10:09,040 --> 00:10:12,959
Speaker 1: two sons, thugs that became football players. One of them

173
00:10:13,040 --> 00:10:16,679
Speaker 1: is also named John Nigerian. He put out a dissertation

174
00:10:16,760 --> 00:10:21,120
Speaker 1: on Twitter Mike of Canary in a coal mine. It

175
00:10:21,160 --> 00:10:25,200
Speaker 1: has to do with methane and carbon monoxide, which is

176
00:10:25,240 --> 00:10:29,400
Speaker 1: mostly what Nigerian breeze all day as he hyperventilates about

177
00:10:29,400 --> 00:10:32,480
Speaker 1: the equity and options. Marcus, we say thank you to

178
00:10:32,720 --> 00:10:37,560
Speaker 1: Dr Jerryon's son for his perspective on Canary in a

179
00:10:37,559 --> 00:10:40,120
Speaker 1: coal Mine. It's got to be like, you know, John,

180
00:10:40,480 --> 00:10:43,560
Speaker 1: Michael Twaite. Michael Twaitte would know McKee. I say, get

181
00:10:43,600 --> 00:10:46,360
Speaker 1: Michael Twaite on the phone on Canary in a coal

182
00:10:46,400 --> 00:10:53,800
Speaker 1: Mine Futures negative eight. I've had to check into if

183
00:10:54,120 --> 00:10:56,199
Speaker 1: John Tucker and get the latest world in national headlines

184
00:10:56,400 --> 00:10:59,000
Speaker 1: and President Obama has an Oval Office meeting with Bernie

185
00:10:59,000 --> 00:11:01,640
Speaker 1: Sanders this morning. Sanders has been under pressure to opt

186
00:11:01,679 --> 00:11:03,680
Speaker 1: out of the race and clear the way for presumptive

187
00:11:03,679 --> 00:11:08,000
Speaker 1: Democratic nominee Hillary Clinton, and Clinton's campaign some of its

188
00:11:08,080 --> 00:11:11,440
Speaker 1: major fundraisers on a conference call yesterday to quickly mobilize

189
00:11:11,440 --> 00:11:14,920
Speaker 1: their networks for general election cash. They're asking them to

190
00:11:14,960 --> 00:11:18,040
Speaker 1: match what they raised for the primaries by the end

191
00:11:18,240 --> 00:11:21,520
Speaker 1: of this month, as much as one point one billion dollars.

192
00:11:21,800 --> 00:11:25,280
Speaker 1: And Speaker Paul Ryant unveiling today the national Security portion

193
00:11:25,600 --> 00:11:29,480
Speaker 1: of abroad election year agenda for House Republicans, even as

194
00:11:29,520 --> 00:11:32,480
Speaker 1: Donald Trump is pledging to shake up US diplomacy and

195
00:11:32,679 --> 00:11:36,200
Speaker 1: reassert American power. Global News twenty four hours a day

196
00:11:36,440 --> 00:11:39,040
Speaker 1: from our news bureaus around the world. I'm John Tucker,

197
00:11:39,240 --> 00:11:43,199
Speaker 1: Michael John, thank you so much. John Buddle, Michael Key.

198
00:11:43,320 --> 00:11:47,960
Speaker 1: John Buddle invented the air pump to clean out the

199
00:11:48,040 --> 00:11:53,120
Speaker 1: methode in the Yorkshire coal months. Michael Thwaite's grandfather, John

200
00:11:53,160 --> 00:11:57,000
Speaker 1: Mcallethwaite's grandfather was there as they did the Canarian A

201
00:11:57,080 --> 00:12:07,880
Speaker 1: Coleman Northern England appeal. Yeah we do, alright. Coming up

202
00:12:07,960 --> 00:12:10,920
Speaker 1: on Bloomberg surveillance, we're gonna take a look at the

203
00:12:10,960 --> 00:12:13,880
Speaker 1: political race and the implications for the economy. David mal

204
00:12:13,960 --> 00:12:15,400
Speaker 1: pass Of and SEMA Global