1 00:00:02,400 --> 00:00:06,760 Speaker 1: Bloomberg Audio Studios, Podcasts, radio News. 2 00:00:11,680 --> 00:00:15,480 Speaker 2: This is the Bloomberg Surveillance Podcast. I'm Jonathan Ferrow, along 3 00:00:15,520 --> 00:00:18,720 Speaker 2: with Lisa Bromwitz and Amerie Hordern. Join us each day 4 00:00:18,760 --> 00:00:22,280 Speaker 2: for insight from the best in markets, economics, and geopolitics 5 00:00:22,440 --> 00:00:24,880 Speaker 2: from our global headquarters in New York City. We are 6 00:00:24,960 --> 00:00:27,680 Speaker 2: live on Bloomberg Television weekday mornings from six to nine 7 00:00:27,720 --> 00:00:31,319 Speaker 2: am Eastern. Subscribe to the podcast on Apple, Spotify or 8 00:00:31,320 --> 00:00:33,960 Speaker 2: anywhere else you listen, and as always on the Bloomberg 9 00:00:34,040 --> 00:00:35,880 Speaker 2: Terminal and the Bloomberg Business App. 10 00:00:36,440 --> 00:00:39,040 Speaker 3: Mike Worth, the CEO of Chevron, joins us now for 11 00:00:39,080 --> 00:00:41,560 Speaker 3: an exclusive interview. I am so glad that we're going 12 00:00:41,600 --> 00:00:42,279 Speaker 3: to speak with you, Mike. 13 00:00:42,320 --> 00:00:44,600 Speaker 1: Thank you so much for being here with us. You're welcome, WESA. 14 00:00:44,720 --> 00:00:47,160 Speaker 3: So let's start about that one ninety nine a gallon. 15 00:00:47,200 --> 00:00:49,479 Speaker 3: It might be great for a lot of people in 16 00:00:49,560 --> 00:00:50,800 Speaker 3: terms of filling. 17 00:00:50,600 --> 00:00:51,559 Speaker 1: Up their guest tanks. 18 00:00:51,640 --> 00:00:53,880 Speaker 3: A real question around drill, baby, drill, and how much 19 00:00:53,880 --> 00:00:58,000 Speaker 3: you're incentivized to increase production given the lower cost of oil. 20 00:00:58,920 --> 00:01:01,160 Speaker 4: Well, you know, we make our investment plans on a 21 00:01:01,200 --> 00:01:03,800 Speaker 4: long term basis. We look at supply and demand well 22 00:01:03,800 --> 00:01:07,160 Speaker 4: out into the future, and so the price of oil 23 00:01:07,280 --> 00:01:11,280 Speaker 4: today can affect short term financial performance of the company, 24 00:01:11,480 --> 00:01:13,600 Speaker 4: but it really doesn't play as much into some of 25 00:01:13,640 --> 00:01:17,840 Speaker 4: the longer term investment plans as we look down the road, 26 00:01:17,880 --> 00:01:20,679 Speaker 4: not really out the window as we decide what the 27 00:01:20,720 --> 00:01:21,920 Speaker 4: capital program looks like. 28 00:01:22,080 --> 00:01:23,840 Speaker 5: But how do you reconcile the too sure doing a 29 00:01:23,880 --> 00:01:27,640 Speaker 5: lot of exploration internationally, and to Lisa's point, prices are 30 00:01:27,760 --> 00:01:30,039 Speaker 5: low and potentially are going to even go lower. 31 00:01:30,880 --> 00:01:35,280 Speaker 4: Well, exploration is a long cycle business. We just brought 32 00:01:35,319 --> 00:01:39,000 Speaker 4: a project online in the Gulf of America last year 33 00:01:39,360 --> 00:01:42,320 Speaker 4: where the discovery was made twenty years prior, and so 34 00:01:42,600 --> 00:01:45,600 Speaker 4: the timeline between when you actually make a discovery, when 35 00:01:45,600 --> 00:01:48,000 Speaker 4: you appraise that and you ultimately develop and bring it 36 00:01:48,040 --> 00:01:50,720 Speaker 4: to market can be years or even decades, and so 37 00:01:50,760 --> 00:01:54,200 Speaker 4: we really have to take that long view on the business. 38 00:01:54,600 --> 00:01:57,640 Speaker 4: And in the short term we'll keep cost tight. We've 39 00:01:57,640 --> 00:02:00,680 Speaker 4: guided to industry leading free cash over the next few 40 00:02:00,720 --> 00:02:04,320 Speaker 4: years as we'ringing cost down, capital spending down, increase the 41 00:02:04,400 --> 00:02:07,480 Speaker 4: synergies on the hes transaction. So we're going to deliver 42 00:02:07,560 --> 00:02:09,919 Speaker 4: strong financial performance through the cycle. 43 00:02:10,240 --> 00:02:13,000 Speaker 5: Based on what the IA has said, recalibrated where they 44 00:02:13,040 --> 00:02:15,359 Speaker 5: see oil demand growing. It was twenty thirty, now it's 45 00:02:15,400 --> 00:02:18,440 Speaker 5: twenty fifty. Ope says they had a rendezvous with reality, 46 00:02:18,480 --> 00:02:20,880 Speaker 5: seeing that the world needs a lot more of this, 47 00:02:21,480 --> 00:02:24,760 Speaker 5: a lot more fossil fuels. If outlook is so strong, 48 00:02:25,320 --> 00:02:26,679 Speaker 5: should Chevron, should. 49 00:02:26,440 --> 00:02:27,800 Speaker 1: All of these big oil companies? 50 00:02:27,880 --> 00:02:30,400 Speaker 6: So do they increasing more of that investment. 51 00:02:30,840 --> 00:02:34,200 Speaker 4: Well, on the IEA, even a blow broken clock is 52 00:02:34,320 --> 00:02:37,560 Speaker 4: right twice a day. So they have finally acknowledged what 53 00:02:37,600 --> 00:02:40,239 Speaker 4: we've long known, which is that the world will continue 54 00:02:40,360 --> 00:02:43,799 Speaker 4: using oil and gas for many decades into the future. 55 00:02:44,600 --> 00:02:49,680 Speaker 4: We are in that long cycle business and the capital 56 00:02:49,680 --> 00:02:52,680 Speaker 4: spending amory has become more efficient in our industry. A 57 00:02:52,680 --> 00:02:55,800 Speaker 4: decade ago, we were spending money on big projects. There's 58 00:02:55,840 --> 00:02:57,960 Speaker 4: a lot of growth going on in shale at a 59 00:02:58,000 --> 00:03:00,720 Speaker 4: relatively high cost. Structure in the entire history has found 60 00:03:00,800 --> 00:03:05,359 Speaker 4: ways to standardize designs, simplify projects, and actually get more 61 00:03:05,400 --> 00:03:08,120 Speaker 4: for every capital dollar that we spend, so the size 62 00:03:08,160 --> 00:03:12,280 Speaker 4: of our capital spending doesn't necessarily correlate to the growth 63 00:03:12,320 --> 00:03:14,280 Speaker 4: the way that it would have in years gone by. 64 00:03:14,400 --> 00:03:15,520 Speaker 6: When it comes to expansion. 65 00:03:15,600 --> 00:03:18,120 Speaker 5: The US government is backing this plan of Rock has 66 00:03:18,240 --> 00:03:21,720 Speaker 5: to transfer Louke Oil stakes to an American company, So 67 00:03:22,080 --> 00:03:25,760 Speaker 5: it's really only your x on how are those negotiations going. 68 00:03:26,080 --> 00:03:30,000 Speaker 4: Well, I can't comment on commercial negotiations. What I will 69 00:03:30,040 --> 00:03:33,799 Speaker 4: say is we've got a well established reputation as a 70 00:03:33,880 --> 00:03:38,880 Speaker 4: good partner, as a world class operator in international locations. 71 00:03:39,360 --> 00:03:42,320 Speaker 4: We're sought out as a partner in countries around the world. 72 00:03:42,360 --> 00:03:44,920 Speaker 4: We got long history working in the Middle East, and 73 00:03:45,240 --> 00:03:48,600 Speaker 4: we put a real premium on partnership and that goes 74 00:03:48,640 --> 00:03:50,880 Speaker 4: to every country we work with and every company we 75 00:03:50,920 --> 00:03:51,240 Speaker 4: work with. 76 00:03:51,360 --> 00:03:53,360 Speaker 5: Can you talk about those assets though, do you think 77 00:03:53,400 --> 00:03:55,840 Speaker 5: those would be good assets the Chevron portfolio? 78 00:03:55,920 --> 00:03:58,840 Speaker 4: Well, we always look to strengthen our portfolio. Iraq is 79 00:03:58,880 --> 00:04:04,080 Speaker 4: a country that's blessed with very substantial petroleum resources and 80 00:04:04,160 --> 00:04:05,800 Speaker 4: some of the largest fields in the world, and so 81 00:04:05,800 --> 00:04:07,520 Speaker 4: those are the kinds of things that we always look at. 82 00:04:07,680 --> 00:04:10,160 Speaker 3: If you're talking about the capital profile and investments, and 83 00:04:10,200 --> 00:04:12,560 Speaker 3: how it's become a lot more efficient to make the 84 00:04:12,560 --> 00:04:17,479 Speaker 3: same kinds of investments and frankly the same kind of output. 85 00:04:17,760 --> 00:04:20,360 Speaker 3: Where is this sufficiency coming from. Is it coming from 86 00:04:20,520 --> 00:04:24,560 Speaker 3: artificial intelligence? Is is it coming from just better technology 87 00:04:24,560 --> 00:04:27,040 Speaker 3: and getting oil and gas out of the ground. 88 00:04:27,640 --> 00:04:30,960 Speaker 4: Yeah, So in shale, for instance, which is something the 89 00:04:31,040 --> 00:04:34,480 Speaker 4: US has been a world leader. In a decade ago, 90 00:04:34,720 --> 00:04:37,400 Speaker 4: break evens were seventy or eighty dollars a barrel. Today 91 00:04:37,560 --> 00:04:40,120 Speaker 4: they're not even half of that, as we found ways 92 00:04:40,160 --> 00:04:43,640 Speaker 4: to drill longer laterals, to optimize the spacing of wells, 93 00:04:43,680 --> 00:04:47,400 Speaker 4: to complete wells at lower cost with greater production coming 94 00:04:47,440 --> 00:04:49,360 Speaker 4: out of them. So it's a series of things. In 95 00:04:49,400 --> 00:04:53,479 Speaker 4: the deep water, we've simplified and standardized designs, and what 96 00:04:53,640 --> 00:04:57,000 Speaker 4: used to take thirty dollars a barrel or more in 97 00:04:57,080 --> 00:05:00,000 Speaker 4: terms of cost of capital to go into a project 98 00:05:00,279 --> 00:05:03,200 Speaker 4: now has been cut in half. And so it's not 99 00:05:03,400 --> 00:05:06,640 Speaker 4: driven by AI yet. I do think over time we're 100 00:05:06,680 --> 00:05:10,120 Speaker 4: going to see technologies like that continue this path that 101 00:05:10,200 --> 00:05:10,480 Speaker 4: we're on. 102 00:05:10,600 --> 00:05:12,440 Speaker 1: We're going to get to that in just a second. 103 00:05:12,640 --> 00:05:15,080 Speaker 3: If that's the case, if you can get more even 104 00:05:15,120 --> 00:05:16,960 Speaker 3: at a break even cost, it's a lot lower. 105 00:05:17,120 --> 00:05:19,440 Speaker 1: Why has the rig count gone down so much? 106 00:05:19,680 --> 00:05:22,840 Speaker 3: Why aren't there more rigs coming online given the capacity 107 00:05:22,839 --> 00:05:23,800 Speaker 3: here in the United States? 108 00:05:23,839 --> 00:05:27,040 Speaker 4: Because we can drill more feet per day with a 109 00:05:27,120 --> 00:05:29,360 Speaker 4: rig today than we could in the past, and so 110 00:05:30,360 --> 00:05:33,080 Speaker 4: rig count is not nearly as interesting a metric as 111 00:05:33,320 --> 00:05:35,280 Speaker 4: how many feet a day you can drill how many 112 00:05:35,279 --> 00:05:37,440 Speaker 4: wells you can complete in a period of time, and 113 00:05:37,480 --> 00:05:40,360 Speaker 4: so we're getting more work done out of fewer pieces 114 00:05:40,360 --> 00:05:40,880 Speaker 4: of equipment. 115 00:05:40,920 --> 00:05:44,880 Speaker 3: Today, you talk about how AI isn't delivering those efficiencies yet, 116 00:05:45,200 --> 00:05:48,120 Speaker 3: the indication being that maybe down the road it might 117 00:05:48,160 --> 00:05:48,800 Speaker 3: be the case. 118 00:05:49,279 --> 00:05:51,000 Speaker 1: Where specifically are you thinking. 119 00:05:50,960 --> 00:05:53,720 Speaker 3: And I'm saying at a time when Chevron's cutting staff 120 00:05:53,760 --> 00:05:56,000 Speaker 3: so or other people, is this a headcount issue? 121 00:05:56,120 --> 00:05:58,440 Speaker 1: Is this something else? How are you seeing it being deployed? 122 00:05:58,760 --> 00:06:00,640 Speaker 4: Well, we're in I think we're still the very early 123 00:06:00,800 --> 00:06:05,920 Speaker 4: days of applying AI at scale in our industry. One 124 00:06:05,920 --> 00:06:08,880 Speaker 4: of the things that's undeniable about AI is it needs 125 00:06:08,960 --> 00:06:11,560 Speaker 4: lots of data. A company like ours has as much 126 00:06:11,640 --> 00:06:13,839 Speaker 4: data as just about any company in the world, and 127 00:06:13,880 --> 00:06:17,200 Speaker 4: so we've got decades and decades of geologic data, seismic data, 128 00:06:17,279 --> 00:06:20,240 Speaker 4: operating data, all of which can be used to feed 129 00:06:20,279 --> 00:06:25,200 Speaker 4: these models, to optimize operations, to improve our exploration success, 130 00:06:25,920 --> 00:06:29,720 Speaker 4: to squeeze more production out of existing assets. And so 131 00:06:30,279 --> 00:06:35,520 Speaker 4: we see huge opportunities to run our business with smarter technology, 132 00:06:35,760 --> 00:06:39,760 Speaker 4: get better decisions made faster, and so there's certainly a 133 00:06:39,800 --> 00:06:43,039 Speaker 4: cost dimension to this, but I think the real opportunity 134 00:06:43,080 --> 00:06:45,159 Speaker 4: is going to be about the productivity of our assets 135 00:06:45,160 --> 00:06:45,760 Speaker 4: and our business. 136 00:06:46,000 --> 00:06:48,359 Speaker 5: You announced this project, the first of it's kind, to 137 00:06:48,520 --> 00:06:50,880 Speaker 5: provide natural gas fired power. 138 00:06:50,600 --> 00:06:51,719 Speaker 6: For data centers. 139 00:06:51,800 --> 00:06:53,359 Speaker 5: Do you expect to do more of these projects and 140 00:06:53,360 --> 00:06:55,440 Speaker 5: what's the update on this one in West Texas well. 141 00:06:55,480 --> 00:06:59,560 Speaker 4: Certainly, the demand for power has been talked about now 142 00:06:59,640 --> 00:07:03,440 Speaker 4: for the last year or so, as the constraint in 143 00:07:03,680 --> 00:07:07,440 Speaker 4: the growth of AI data centers and the ambition for 144 00:07:07,560 --> 00:07:10,960 Speaker 4: data centers at a scale we've never seen before has 145 00:07:11,000 --> 00:07:15,920 Speaker 4: become a commonplace. The reality is we need large scale power. 146 00:07:16,360 --> 00:07:19,640 Speaker 4: What we're working on is off the grid power because 147 00:07:19,680 --> 00:07:22,000 Speaker 4: it's also becoming an issue with electricity prices, and we're 148 00:07:22,000 --> 00:07:26,440 Speaker 4: seeing this show up in consumer sentiment and elections. Our 149 00:07:26,480 --> 00:07:32,520 Speaker 4: approach is to develop gigawatt scale power generation, not through 150 00:07:32,560 --> 00:07:35,920 Speaker 4: the grid, but dedicated to data centers. We've got a 151 00:07:35,960 --> 00:07:38,000 Speaker 4: project in a couple of sites actually we're working on 152 00:07:38,120 --> 00:07:40,880 Speaker 4: in West Texas where we've got a lot of natural gas. 153 00:07:41,320 --> 00:07:44,720 Speaker 4: We've got large gas turbines, the largest in the world 154 00:07:44,800 --> 00:07:49,120 Speaker 4: being delivered starting next year, and we're deep into discussions 155 00:07:49,120 --> 00:07:52,800 Speaker 4: with multiple customers that would like to cite data centers 156 00:07:53,480 --> 00:07:54,440 Speaker 4: to use this power. 157 00:07:54,760 --> 00:07:57,080 Speaker 5: You're at the center of a lot of politically very 158 00:07:57,120 --> 00:08:00,400 Speaker 5: important conversations, not just when it comes to AI Sluke 159 00:08:00,440 --> 00:08:03,960 Speaker 5: oil assets, also Venezuela the only American company left. 160 00:08:04,000 --> 00:08:05,400 Speaker 6: Can you give us an update. 161 00:08:05,080 --> 00:08:08,120 Speaker 5: On either conversation with the administration your team on the ground. 162 00:08:08,960 --> 00:08:11,240 Speaker 6: What is the future of Chevron in this country? 163 00:08:11,280 --> 00:08:13,960 Speaker 5: Is the president's sense maybe he's going to send troops there? 164 00:08:14,640 --> 00:08:18,640 Speaker 4: Yeah, I don't know what the presence intentions are. We've 165 00:08:18,640 --> 00:08:21,920 Speaker 4: been in Venezuela for the last one hundred years. Our 166 00:08:21,960 --> 00:08:25,120 Speaker 4: presence there, we believe is important for the local economy, 167 00:08:25,160 --> 00:08:28,840 Speaker 4: the regional economy, the people of Venezuela. The Venezuelan oil 168 00:08:28,920 --> 00:08:32,560 Speaker 4: is sought after by US refiners, and we operate there 169 00:08:32,559 --> 00:08:35,520 Speaker 4: in full compliance with all US law and sanctions. We're 170 00:08:35,520 --> 00:08:38,480 Speaker 4: in discussions with the administration to ensure that we stay 171 00:08:38,520 --> 00:08:42,360 Speaker 4: in compliance, that they understand the value that our presence 172 00:08:42,600 --> 00:08:43,719 Speaker 4: brings to America. 173 00:08:44,120 --> 00:08:47,760 Speaker 6: And so you know that's and you plan on being 174 00:08:47,800 --> 00:08:49,520 Speaker 6: there for the long term. 175 00:08:50,200 --> 00:08:53,400 Speaker 4: Venezuela actually has more oil and gas resource than Saudi Arabia. 176 00:08:53,760 --> 00:08:57,040 Speaker 4: It's right here in our hemisphere, very close to the 177 00:08:57,040 --> 00:09:01,840 Speaker 4: Gulf Coast refining complex. We been there through ups and downs, 178 00:09:01,960 --> 00:09:04,719 Speaker 4: and like many places in the world, we have to 179 00:09:04,760 --> 00:09:07,720 Speaker 4: take a long view on our presence in countries like this. 180 00:09:08,000 --> 00:09:11,560 Speaker 5: You talked about succession yesterday at this conference. How are 181 00:09:11,559 --> 00:09:13,800 Speaker 5: you thinking about that as you talk to the board? 182 00:09:13,880 --> 00:09:15,960 Speaker 5: Is there something you want to get done before you 183 00:09:16,040 --> 00:09:17,000 Speaker 5: hand over the reins? 184 00:09:17,200 --> 00:09:20,600 Speaker 4: Well, succession discussions begin on day one. I think for 185 00:09:20,679 --> 00:09:24,200 Speaker 4: most CEOs it's part of a board's responsibility to be 186 00:09:24,240 --> 00:09:27,679 Speaker 4: thinking about the next generational leadership. I have a long 187 00:09:27,720 --> 00:09:30,320 Speaker 4: list of things, some of which have been accomplished. I 188 00:09:30,320 --> 00:09:32,400 Speaker 4: mentioned the Hest transaction, which was a big one for 189 00:09:32,520 --> 00:09:35,800 Speaker 4: US earlier this year. We have laid out a plan 190 00:09:35,960 --> 00:09:38,280 Speaker 4: for the next several years to investors last month that 191 00:09:38,360 --> 00:09:41,839 Speaker 4: grows free cash flow, that drives a significant return to 192 00:09:41,920 --> 00:09:44,160 Speaker 4: cash to shareholders. All of those are things that I 193 00:09:44,200 --> 00:09:46,559 Speaker 4: want to make progress on. But when the time is 194 00:09:46,640 --> 00:09:48,800 Speaker 4: right for someone to follow me in this job, the 195 00:09:48,800 --> 00:09:54,240 Speaker 4: board will make that determination and I will happily hand over. 196 00:09:54,440 --> 00:09:55,920 Speaker 6: Will you go right for landman? 197 00:09:57,240 --> 00:09:58,280 Speaker 1: Just three seconds left? 198 00:09:58,480 --> 00:10:01,280 Speaker 3: Do you think that in ten years gas or oil 199 00:10:01,520 --> 00:10:02,840 Speaker 3: is going to be more valuable? 200 00:10:04,040 --> 00:10:08,400 Speaker 4: Well, on an energy content basis, you know, oil's got 201 00:10:08,400 --> 00:10:11,280 Speaker 4: about six times more energy content per unit of volume 202 00:10:11,280 --> 00:10:13,960 Speaker 4: than gas does, and so you know they trade in 203 00:10:14,559 --> 00:10:18,400 Speaker 4: sympathy with one another because energy is somewhat fungible. I 204 00:10:18,400 --> 00:10:20,760 Speaker 4: think both of those commodities are going to be essential 205 00:10:20,760 --> 00:10:22,880 Speaker 4: to the global economy. I think demand for both of 206 00:10:22,880 --> 00:10:24,880 Speaker 4: those will be much higher than it is today. And 207 00:10:24,880 --> 00:10:26,400 Speaker 4: I think you're going to see good companies in our 208 00:10:26,400 --> 00:10:29,120 Speaker 4: industry still producing more of that and doing it in 209 00:10:29,120 --> 00:10:31,280 Speaker 4: a way that keeps costs very affordable for the economy. 210 00:10:31,360 --> 00:10:34,560 Speaker 2: Stay with us, multiple impex divanance coming up off to. 211 00:10:34,640 --> 00:10:47,400 Speaker 3: This, Julian Emmanuel of Evercore staying bullets into twenty twenty six, 212 00:10:47,440 --> 00:10:51,120 Speaker 3: writing earning strength, fiscal and monetary stimulus and a capital 213 00:10:51,160 --> 00:10:54,720 Speaker 3: market cycle moving into higher gear are laying the groundwork 214 00:10:54,920 --> 00:10:58,360 Speaker 3: for seven seven fifty at year end twenty twenty six. 215 00:10:58,480 --> 00:11:01,160 Speaker 1: Julian, I am so glad to say is here. Julian, 216 00:11:01,200 --> 00:11:02,000 Speaker 1: thank you for being here. 217 00:11:02,080 --> 00:11:02,720 Speaker 7: Good morning. 218 00:11:02,840 --> 00:11:04,880 Speaker 1: So what do you make of the yields rising this morning? 219 00:11:06,280 --> 00:11:08,600 Speaker 7: Look, the first thing is we have to step back 220 00:11:08,679 --> 00:11:12,720 Speaker 7: and understand something that bond market cycles are very long 221 00:11:13,440 --> 00:11:17,520 Speaker 7: legged things. And the forty year bond bull market ended 222 00:11:17,840 --> 00:11:20,720 Speaker 7: at the pandemic lows in twenty twenty and when you 223 00:11:20,720 --> 00:11:24,120 Speaker 7: think of an Anne Marie. You just detailed all of 224 00:11:24,160 --> 00:11:27,160 Speaker 7: the reasons that yields are going higher, and the answer 225 00:11:27,200 --> 00:11:29,480 Speaker 7: is yes to every single one of them. You put 226 00:11:29,480 --> 00:11:32,079 Speaker 7: it together in our mind. If you think about it, 227 00:11:32,080 --> 00:11:36,720 Speaker 7: it's almost remarkable that the confluence of the US being 228 00:11:36,800 --> 00:11:42,120 Speaker 7: the debt premier destination for capital has actually caused spreads 229 00:11:42,200 --> 00:11:46,760 Speaker 7: against global bond markets to compress. You know, if you 230 00:11:46,840 --> 00:11:49,560 Speaker 7: had said to me Japanese ten year yields were going 231 00:11:49,600 --> 00:11:51,800 Speaker 7: to be close to two percent, I would have told 232 00:11:51,840 --> 00:11:54,000 Speaker 7: you at the beginning of the year, the US ten 233 00:11:54,040 --> 00:11:56,640 Speaker 7: year yields would be close to five percent. And we're 234 00:11:56,640 --> 00:12:01,280 Speaker 7: not there. But all of these pressures are building in 235 00:12:01,360 --> 00:12:03,160 Speaker 7: our mind towards hire yields. 236 00:12:03,320 --> 00:12:06,200 Speaker 3: If we do get a hawkish FED today, is that 237 00:12:06,320 --> 00:12:08,600 Speaker 3: going to diminish some of the optimism that you have 238 00:12:08,679 --> 00:12:11,560 Speaker 3: heading into twenty twenty six or support it given the 239 00:12:11,559 --> 00:12:14,920 Speaker 3: fact that the FED is looking at a rosier economic backdrop. 240 00:12:15,120 --> 00:12:19,320 Speaker 7: So that is the question that is really fascinating in 241 00:12:19,400 --> 00:12:22,520 Speaker 7: our mind, and we're a little bit uncomfortable by this 242 00:12:23,200 --> 00:12:28,600 Speaker 7: incredibly staunch consensus that we are going to get precisely 243 00:12:29,040 --> 00:12:32,080 Speaker 7: a hawkish cut that is going to be bullet for 244 00:12:32,120 --> 00:12:35,360 Speaker 7: stocks in the near term. We actually think long term 245 00:12:35,640 --> 00:12:40,000 Speaker 7: it is bullet for stocks because simply it shows that 246 00:12:40,040 --> 00:12:44,400 Speaker 7: the FED is cognizant of the inflation problem as well. 247 00:12:44,840 --> 00:12:49,000 Speaker 7: But the other issue there, Lisa, is the labor market 248 00:12:49,160 --> 00:12:52,760 Speaker 7: is about as clear as mud. I think whatever, It's 249 00:12:52,800 --> 00:12:56,360 Speaker 7: not even mud, it's just it's unknowable right now. And 250 00:12:57,080 --> 00:13:00,880 Speaker 7: that's really the aspect of the flying blind that is 251 00:13:00,920 --> 00:13:02,160 Speaker 7: probably going to weigh on markets. 252 00:13:02,280 --> 00:13:05,280 Speaker 5: Jillan want to nerves you about the hawkish cut consensus. 253 00:13:05,360 --> 00:13:06,960 Speaker 5: Is it the hawkish part or is the fact that 254 00:13:06,960 --> 00:13:09,120 Speaker 5: people think that is going to be bullish for stocks. 255 00:13:09,320 --> 00:13:12,760 Speaker 7: No, it's actually the deep consensus. So what we've seen 256 00:13:13,040 --> 00:13:17,679 Speaker 7: this year, and our survey team has really been front 257 00:13:17,679 --> 00:13:21,520 Speaker 7: foot on this, particularly during the government data blackout, is 258 00:13:21,559 --> 00:13:25,480 Speaker 7: that anytime we've had really really deep consensus, whether it 259 00:13:25,559 --> 00:13:28,280 Speaker 7: was going back to that week in April where our 260 00:13:28,320 --> 00:13:31,240 Speaker 7: clients eighty one percent of them thought we were either 261 00:13:31,280 --> 00:13:33,360 Speaker 7: in a recession or was going to start in the 262 00:13:33,400 --> 00:13:36,640 Speaker 7: second half, or going back to the end of October 263 00:13:36,880 --> 00:13:40,400 Speaker 7: when a record seventy five percent of our clients responded 264 00:13:40,400 --> 00:13:42,880 Speaker 7: in our polling that the next ten percent in the 265 00:13:42,960 --> 00:13:45,000 Speaker 7: S and P five hundred was up and then you 266 00:13:45,080 --> 00:13:49,079 Speaker 7: immediately had that five percent pullback. That's what bothers us 267 00:13:49,120 --> 00:13:53,600 Speaker 7: and just the consensus around the fact that this is 268 00:13:53,760 --> 00:13:57,280 Speaker 7: likely to be bullish, And frankly, if this was any 269 00:13:57,320 --> 00:14:00,960 Speaker 7: other month than December, it probably would not be as 270 00:14:01,040 --> 00:14:03,880 Speaker 7: sharp a consensus. But December tends to be a good 271 00:14:03,920 --> 00:14:07,280 Speaker 7: month for stocks. We think there is a potential for 272 00:14:07,400 --> 00:14:08,360 Speaker 7: surprise here. 273 00:14:08,360 --> 00:14:09,640 Speaker 6: Like what what's the surprise? 274 00:14:10,120 --> 00:14:12,640 Speaker 7: Well, look, if you look at last year, you had 275 00:14:12,640 --> 00:14:16,160 Speaker 7: a hawkish cut at the December FOMC last year and 276 00:14:16,200 --> 00:14:21,080 Speaker 7: the market pulled back. It didn't derailable market in any way, 277 00:14:21,120 --> 00:14:25,000 Speaker 7: shape or form, but it made December an unexpectedly volid 278 00:14:25,000 --> 00:14:27,520 Speaker 7: a month. And you add in the fact that you're 279 00:14:27,560 --> 00:14:31,280 Speaker 7: going to get data, employment data on the sixteenth. Who 280 00:14:31,320 --> 00:14:34,360 Speaker 7: the heck ever heard of the FED talking and then 281 00:14:34,440 --> 00:14:35,320 Speaker 7: getting the data. 282 00:14:35,440 --> 00:14:38,400 Speaker 1: It's just it's ridiculous. You're speaking Emory's language. 283 00:14:38,400 --> 00:14:40,840 Speaker 3: She's saying, come on, move the meeting so we can 284 00:14:40,920 --> 00:14:43,360 Speaker 3: actually get that data. It's not just the employment data, 285 00:14:43,400 --> 00:14:45,840 Speaker 3: it's also a question around the big tax space and 286 00:14:45,960 --> 00:14:48,800 Speaker 3: exactly what they are doing. I think about John Stoltzfiz. 287 00:14:48,840 --> 00:14:50,840 Speaker 3: He comes in every day singing, is how you do 288 00:14:50,880 --> 00:14:52,480 Speaker 3: the things you do? And it's sort of this question 289 00:14:52,560 --> 00:14:55,760 Speaker 3: around Oracle, which reports earnings after the bill, how much 290 00:14:55,800 --> 00:14:56,840 Speaker 3: are they, yes pluting for. 291 00:14:56,800 --> 00:14:59,160 Speaker 1: Expansion, going to beat expectations, but. 292 00:14:59,160 --> 00:15:02,440 Speaker 3: Continue building their debt pile in a way that seems 293 00:15:02,920 --> 00:15:06,720 Speaker 3: not unsustainable but potentially a little more precarious when it 294 00:15:06,760 --> 00:15:07,920 Speaker 3: comes to capital markets. 295 00:15:08,080 --> 00:15:12,400 Speaker 7: Yeah. No, And actually, from our point of view, the 296 00:15:12,560 --> 00:15:17,120 Speaker 7: concern around the debt loads of these companies, this one 297 00:15:17,160 --> 00:15:21,120 Speaker 7: in particular, is quite rational if you think back to 298 00:15:21,360 --> 00:15:24,520 Speaker 7: this whole talk about an AI bubble, which we don't 299 00:15:24,520 --> 00:15:29,040 Speaker 7: believe we're anywhere near the endgame yet at all in AI, 300 00:15:29,120 --> 00:15:31,520 Speaker 7: But if you think back to the late nineteen nineties, 301 00:15:31,840 --> 00:15:35,800 Speaker 7: the concern was just just a random throwing money at 302 00:15:35,840 --> 00:15:41,480 Speaker 7: everything everywhere without revenues. And in that respect, having a 303 00:15:41,480 --> 00:15:45,560 Speaker 7: little bit of capital markets discipline to around a company 304 00:15:45,640 --> 00:15:50,480 Speaker 7: that is assuming a bigger debt load is very, very measured, 305 00:15:51,120 --> 00:15:53,520 Speaker 7: and it shows that people are not losing their heads. 306 00:15:53,640 --> 00:15:56,640 Speaker 7: But our question is is that when those earnings are 307 00:15:56,640 --> 00:16:00,560 Speaker 7: announced this afternoon, is it more the sense that the 308 00:16:00,640 --> 00:16:03,360 Speaker 7: AI bubble is going to pop? We think it might 309 00:16:03,400 --> 00:16:06,240 Speaker 7: actually be more of the sense that the fear bubble, 310 00:16:06,320 --> 00:16:10,640 Speaker 7: as reflected by the credit the fault swap market may pop. 311 00:16:10,960 --> 00:16:12,920 Speaker 3: In other words, the idea that people are pricing in 312 00:16:13,000 --> 00:16:15,000 Speaker 3: the highest chance of some sort of default or demanding 313 00:16:15,000 --> 00:16:18,680 Speaker 3: the highest amount of compensation for default from the likes 314 00:16:18,720 --> 00:16:21,240 Speaker 3: of Oracle going back to two thousand and nine, that 315 00:16:21,320 --> 00:16:22,440 Speaker 3: might have to diminish. 316 00:16:22,520 --> 00:16:23,440 Speaker 1: I do want of the Fed's role. 317 00:16:23,440 --> 00:16:25,960 Speaker 3: Putting these two stories together, what is the Fed's role 318 00:16:26,240 --> 00:16:28,960 Speaker 3: in lifting the AI bubble? This idea that if the 319 00:16:29,000 --> 00:16:32,320 Speaker 3: FED is overly easy and I say overly based on 320 00:16:32,560 --> 00:16:37,200 Speaker 3: the economic conditions what they might warrant, does that lead 321 00:16:37,560 --> 00:16:40,800 Speaker 3: to an inflation of some of these valuations and frankly 322 00:16:40,840 --> 00:16:43,440 Speaker 3: the debt profiles of some of these companies that raises 323 00:16:43,480 --> 00:16:44,000 Speaker 3: your concern. 324 00:16:44,400 --> 00:16:47,600 Speaker 7: It certainly could, and we have said for the last 325 00:16:47,640 --> 00:16:52,000 Speaker 7: several months that given this sort of extraordinary time that 326 00:16:52,080 --> 00:16:54,960 Speaker 7: we're in, where earnings are going to be good, the 327 00:16:55,000 --> 00:16:59,840 Speaker 7: economies humming along, even with the questions around labor. But 328 00:17:00,160 --> 00:17:04,560 Speaker 7: the point is both the monetary and fiscal stimulus really 329 00:17:04,680 --> 00:17:07,919 Speaker 7: do have the potential. We've said there's a thirty percent 330 00:17:08,040 --> 00:17:10,680 Speaker 7: chance that you get a full on bubble next year, 331 00:17:11,000 --> 00:17:13,399 Speaker 7: which we defined as nine thousand in the S and P. 332 00:17:13,520 --> 00:17:18,040 Speaker 7: Five hundred, which I think is also why on balance, 333 00:17:18,440 --> 00:17:22,680 Speaker 7: the FED is trying to remind everyone of the dual 334 00:17:22,760 --> 00:17:27,199 Speaker 7: mandate in general. But again, the questions around the labor 335 00:17:27,240 --> 00:17:29,440 Speaker 7: market are very very intense. 336 00:17:29,160 --> 00:17:32,080 Speaker 3: Especially given Joel Statia came out yesterday and just added 337 00:17:32,119 --> 00:17:34,440 Speaker 3: to this confusion, given the fact that the headliness number 338 00:17:34,480 --> 00:17:36,520 Speaker 3: came in pretty well, and then you saw the quits 339 00:17:36,560 --> 00:17:38,960 Speaker 3: number coming at the lowest pace going back to May 340 00:17:39,000 --> 00:17:41,560 Speaker 3: of twenty twenty, So choose your own adventure. Is gold 341 00:17:41,640 --> 00:17:43,680 Speaker 3: telling us something? Because I was looking at the move 342 00:17:43,760 --> 00:17:46,240 Speaker 3: since the last FED meeting and what stands out to 343 00:17:46,280 --> 00:17:49,199 Speaker 3: me ten year yields, thirty year yields and gold up 344 00:17:49,320 --> 00:17:50,360 Speaker 3: seven percent in that. 345 00:17:50,359 --> 00:17:51,199 Speaker 1: Period of time. 346 00:17:51,520 --> 00:17:53,960 Speaker 3: Are we getting a signal there about the path of 347 00:17:54,040 --> 00:17:56,800 Speaker 3: travel right now in terms of the US's role in 348 00:17:56,920 --> 00:18:00,000 Speaker 3: terms of fiscal doleance, when it comes to the US dollar, 349 00:18:00,480 --> 00:18:02,639 Speaker 3: and when it comes to just going forward. 350 00:18:02,680 --> 00:18:03,920 Speaker 1: What people think about this policy? 351 00:18:03,960 --> 00:18:06,479 Speaker 7: Well, gold has really the last couple of years been 352 00:18:06,680 --> 00:18:11,280 Speaker 7: a portfolio diversifier. And then from our perspective, you know, 353 00:18:11,640 --> 00:18:15,720 Speaker 7: you saw what we believe is a reasonably significant dollar 354 00:18:15,840 --> 00:18:18,879 Speaker 7: top in the first quarter of twenty twenty five, So 355 00:18:19,040 --> 00:18:22,119 Speaker 7: gold it tends to trade better on that I would 356 00:18:22,119 --> 00:18:27,119 Speaker 7: say Frankly, you know, gold has actually lagged the last 357 00:18:27,160 --> 00:18:30,120 Speaker 7: month or two as silver has has shot the moon. 358 00:18:30,640 --> 00:18:33,720 Speaker 7: That to us says that there's probably a pause in 359 00:18:34,280 --> 00:18:38,440 Speaker 7: the precious metals frenzy coming, you know into twenty twenty six. 360 00:18:38,640 --> 00:18:41,840 Speaker 2: Stay with us. Multiple impex of viands coming up. Off 361 00:18:41,840 --> 00:18:52,360 Speaker 2: to this, turning. 362 00:18:52,080 --> 00:18:54,800 Speaker 3: Back to the federers or President Trump reportedly planning to 363 00:18:54,840 --> 00:18:57,640 Speaker 3: start his final round of interviews for the FED shair 364 00:18:58,040 --> 00:19:00,639 Speaker 3: in the coming days. The front runner believed to be 365 00:19:00,720 --> 00:19:04,080 Speaker 3: National Economic Council Director Kevin Hassett, who said there's quote 366 00:19:04,119 --> 00:19:06,560 Speaker 3: plenty of room to cut. Joining us now as someone 367 00:19:06,600 --> 00:19:09,840 Speaker 3: who disagrees with that statement, Lindsay Pie of Stifhel lindsay, 368 00:19:09,840 --> 00:19:11,359 Speaker 3: you've been really vocal on the fact that you do 369 00:19:11,440 --> 00:19:13,919 Speaker 3: think that inflation is very much a preeminent concern and 370 00:19:14,040 --> 00:19:18,119 Speaker 3: is being underplayed by this particular FED. How much do 371 00:19:18,160 --> 00:19:20,960 Speaker 3: you expect that to come to bite the FED when 372 00:19:20,960 --> 00:19:23,359 Speaker 3: it comes to BILLI yields, which is what we're seeing 373 00:19:23,400 --> 00:19:23,840 Speaker 3: this morning. 374 00:19:23,920 --> 00:19:25,600 Speaker 8: Well, I think the FED is well aware of the 375 00:19:25,600 --> 00:19:28,560 Speaker 8: fact that inflation remains a very sizable problem. As we 376 00:19:28,600 --> 00:19:31,439 Speaker 8: see the majority of FED officials have come out and 377 00:19:31,480 --> 00:19:34,359 Speaker 8: spoken against or at least question the need for further 378 00:19:34,520 --> 00:19:37,600 Speaker 8: rate cuts. So there's a very clear divide among Fed 379 00:19:37,640 --> 00:19:41,400 Speaker 8: officials right now, some focused on the employment component, but still, 380 00:19:41,400 --> 00:19:44,919 Speaker 8: as I mentioned, a majority concern that we did not 381 00:19:45,080 --> 00:19:47,800 Speaker 8: do enough the first time around to reinstate price stability. 382 00:19:48,119 --> 00:19:51,000 Speaker 8: And now it becomes even more of a challenge for 383 00:19:51,040 --> 00:19:53,240 Speaker 8: the Fed to get us back to two percent, having 384 00:19:53,359 --> 00:19:55,560 Speaker 8: left price as well above that target level for so 385 00:19:55,640 --> 00:19:56,160 Speaker 8: many years. 386 00:19:56,160 --> 00:19:59,120 Speaker 3: Now, where's the inflationary pressure coming from? Given the fact 387 00:19:59,119 --> 00:20:01,679 Speaker 3: that people have seen prices actually come down not just 388 00:20:01,720 --> 00:20:03,520 Speaker 3: disinflation but outright deflation. 389 00:20:03,680 --> 00:20:05,000 Speaker 1: A couple of rent metrics, and. 390 00:20:04,960 --> 00:20:08,320 Speaker 3: We are seeing pretty contained price increases, certainly during the 391 00:20:08,320 --> 00:20:10,000 Speaker 3: holiday season, even on consumer goods. 392 00:20:10,040 --> 00:20:12,440 Speaker 1: So what's going to drive this? So there still is 393 00:20:12,520 --> 00:20:13,240 Speaker 1: some improvement. 394 00:20:13,280 --> 00:20:15,600 Speaker 8: We have seen some improvement as you mentioned, in these pockets, 395 00:20:15,640 --> 00:20:17,600 Speaker 8: but when we look at the cost of services, this 396 00:20:17,680 --> 00:20:20,760 Speaker 8: is still going up consistently over three tenths on an 397 00:20:20,760 --> 00:20:24,520 Speaker 8: average monthly basis, So that's continuing to fuel these overall 398 00:20:24,680 --> 00:20:28,080 Speaker 8: annual inflation numbers up near three percent. Remember, it was 399 00:20:28,119 --> 00:20:30,399 Speaker 8: never about getting us down from eight to six to 400 00:20:30,480 --> 00:20:34,000 Speaker 8: four close to two percent, but back to two percent 401 00:20:34,119 --> 00:20:37,200 Speaker 8: on a sustained level, and the Fed failed, as I mentioned, 402 00:20:37,200 --> 00:20:41,399 Speaker 8: to really bring us to that sufficiently restrictive level the 403 00:20:41,440 --> 00:20:43,840 Speaker 8: first time around, stopping short at five and a half, 404 00:20:44,119 --> 00:20:46,840 Speaker 8: and so now the FED continues to contend with above 405 00:20:46,880 --> 00:20:48,040 Speaker 8: trend price pressures. 406 00:20:48,160 --> 00:20:50,200 Speaker 5: Does this get worse when the President gets his pick 407 00:20:50,280 --> 00:20:50,960 Speaker 5: for the FED chair? 408 00:20:52,000 --> 00:20:54,639 Speaker 8: I think the FED is going to have more of 409 00:20:54,680 --> 00:20:57,280 Speaker 8: a lean to the dubbish side. There may be more 410 00:20:57,280 --> 00:20:59,600 Speaker 8: of an inclination to air on the side of additional 411 00:20:59,680 --> 00:21:03,280 Speaker 8: rate huts as opposed to holding steady, moving to the 412 00:21:03,320 --> 00:21:06,520 Speaker 8: sideline waiting for the data, depending on who takes the 413 00:21:06,640 --> 00:21:09,640 Speaker 8: lead at the FED. But remember all of these members 414 00:21:09,680 --> 00:21:13,280 Speaker 8: are pro growth, pro market economists that they're looking to 415 00:21:13,680 --> 00:21:16,880 Speaker 8: support the economy. They're looking to meet the Fed's dual mandate, 416 00:21:17,160 --> 00:21:21,160 Speaker 8: and they will base policy appropriately to achieve that legally 417 00:21:21,200 --> 00:21:22,640 Speaker 8: mandated a great goal. 418 00:21:22,680 --> 00:21:26,359 Speaker 5: When you look at potentially inflation next year, where is 419 00:21:26,400 --> 00:21:28,600 Speaker 5: that coming from? Is that coming from like almost a 420 00:21:28,600 --> 00:21:31,240 Speaker 5: self induced crisis in Washington because the one big beautiful 421 00:21:31,240 --> 00:21:34,040 Speaker 5: bill and maybe these two thousand dollars dividend check. 422 00:21:34,080 --> 00:21:36,080 Speaker 8: Well, so this is one of the biggest concerns right now. 423 00:21:36,119 --> 00:21:38,159 Speaker 8: We're looking at inflation and we're saying, okay, there's not 424 00:21:38,200 --> 00:21:41,720 Speaker 8: necessarily a tremendous amount of upside momentum that we're concerned about. 425 00:21:41,880 --> 00:21:43,920 Speaker 8: But as we turn the calendar page, if we see 426 00:21:43,920 --> 00:21:47,119 Speaker 8: a stronger growth profile than expected. Right now, according to 427 00:21:47,160 --> 00:21:49,840 Speaker 8: the Atlanta Fed, we could see Q three GDP up 428 00:21:49,880 --> 00:21:52,520 Speaker 8: over three and a half percent, much stronger than what 429 00:21:52,560 --> 00:21:55,600 Speaker 8: the FED had anticipated. We're still seeing a very spendy, 430 00:21:55,760 --> 00:21:58,679 Speaker 8: solid consumer as we go into this holiday shopping season. 431 00:21:59,040 --> 00:22:03,520 Speaker 8: And my biggest concern is businesses drawing down inventories, eating 432 00:22:03,520 --> 00:22:06,680 Speaker 8: into profit margins. If they begin to pass through more 433 00:22:06,720 --> 00:22:09,840 Speaker 8: of these teriff related or other policy related costs onto 434 00:22:09,880 --> 00:22:12,920 Speaker 8: the end consumer, any one or a combination of those 435 00:22:12,960 --> 00:22:16,400 Speaker 8: factors is going to drive inflation higher. So we can't 436 00:22:16,400 --> 00:22:19,680 Speaker 8: get ourselves in a position where the FED eases dramatically 437 00:22:19,920 --> 00:22:22,320 Speaker 8: and then quickly we have to reverse course because inflation 438 00:22:22,480 --> 00:22:24,840 Speaker 8: is taking off up near four percent or beyond. 439 00:22:24,960 --> 00:22:27,600 Speaker 3: I just feel this, but but coming in all these 440 00:22:27,600 --> 00:22:29,560 Speaker 3: people who are listening to this saying, but that GDP 441 00:22:29,680 --> 00:22:32,760 Speaker 3: number was really driven by data center investment, and what 442 00:22:32,800 --> 00:22:36,480 Speaker 3: we're seeing right now potentially next year is greater efficiency, 443 00:22:36,600 --> 00:22:40,720 Speaker 3: greater productivity that could fuel both growth but also a disinflation. 444 00:22:41,119 --> 00:22:45,080 Speaker 8: There is this inflation on the AI side, absolutely increasing productivity, 445 00:22:45,080 --> 00:22:48,440 Speaker 8: increasing efficiencies as you mentioned, but there's also an inflationary 446 00:22:48,440 --> 00:22:52,040 Speaker 8: component too, driving demand higher for these AI services, as 447 00:22:52,040 --> 00:22:55,960 Speaker 8: well as this sizeable energy component driving higher demand for 448 00:22:56,480 --> 00:23:00,359 Speaker 8: data centers. So it's not necessarily a clear cut argument 449 00:23:00,400 --> 00:23:02,840 Speaker 8: that AI is going to or other technologies are going 450 00:23:02,880 --> 00:23:05,960 Speaker 8: to drive inflation down. There still are a lot of 451 00:23:06,040 --> 00:23:08,679 Speaker 8: question marks, and if we factor in tariffs, if you 452 00:23:08,760 --> 00:23:12,520 Speaker 8: factor in consumer and growth prospects, I think the risk 453 00:23:12,560 --> 00:23:13,720 Speaker 8: still remains of the upside. 454 00:23:13,720 --> 00:23:15,960 Speaker 3: Where's the political risk here in the case that you 455 00:23:16,080 --> 00:23:18,440 Speaker 3: just made you talk about how it can be inflationary 456 00:23:18,480 --> 00:23:20,239 Speaker 3: and then you think, okay, energy costs and we are 457 00:23:20,280 --> 00:23:22,200 Speaker 3: going to be speaking with the Chevron CEO Mike Worth 458 00:23:22,280 --> 00:23:25,280 Speaker 3: later on. It should be a great moment for energy costs, 459 00:23:25,320 --> 00:23:27,520 Speaker 3: at least from the producer side, because you should see 460 00:23:27,520 --> 00:23:29,240 Speaker 3: them going up because of how much energy is into 461 00:23:29,240 --> 00:23:29,600 Speaker 3: make well. 462 00:23:29,680 --> 00:23:31,600 Speaker 8: We have seen energy go up over forty percent in 463 00:23:31,880 --> 00:23:34,280 Speaker 8: just the last five years, but we haven't seen. 464 00:23:34,440 --> 00:23:35,320 Speaker 1: Oil prices go up. 465 00:23:35,359 --> 00:23:36,680 Speaker 3: And this is sort of the question of at what 466 00:23:36,800 --> 00:23:40,479 Speaker 3: point can you factor in government interference in trying to 467 00:23:40,640 --> 00:23:42,919 Speaker 3: skew prices to the downside because of some of the 468 00:23:42,920 --> 00:23:47,000 Speaker 3: political concerns, leaving a sort of subdued inflation, even if 469 00:23:47,040 --> 00:23:50,600 Speaker 3: the supply demand dynamic might otherwise signify something else. 470 00:23:50,680 --> 00:23:52,800 Speaker 8: So there will be pressure on the administration to step in. 471 00:23:52,840 --> 00:23:55,000 Speaker 8: As we know, the fastest way to derail the American 472 00:23:55,040 --> 00:23:58,440 Speaker 8: consumer is sustained heightened energy prices, and that will show 473 00:23:58,520 --> 00:24:01,280 Speaker 8: up in the polls via the mid or other and 474 00:24:01,320 --> 00:24:02,919 Speaker 8: so there will be a lot of pressure on the 475 00:24:02,920 --> 00:24:06,399 Speaker 8: administration to step in, not necessarily with a long term solution, 476 00:24:06,520 --> 00:24:08,879 Speaker 8: but certainly with some short term reprief Well. 477 00:24:08,720 --> 00:24:09,800 Speaker 6: That's with electricity. 478 00:24:09,920 --> 00:24:11,440 Speaker 5: Is it balanced out with the fact that the President 479 00:24:11,480 --> 00:24:13,640 Speaker 5: last night was talking about gasoleen and dollar ninety nine. 480 00:24:13,680 --> 00:24:15,440 Speaker 5: So then I looked and actually, there is a gas 481 00:24:15,480 --> 00:24:18,560 Speaker 5: station in Oklahoma that has a gallon for dollar ninety nine. 482 00:24:18,560 --> 00:24:20,720 Speaker 6: In Colorado for dollars sixty nine. 483 00:24:20,720 --> 00:24:22,879 Speaker 1: The gas buddy has everyone mapped. 484 00:24:22,640 --> 00:24:24,560 Speaker 5: Out, and I said, wow, they really are that low, 485 00:24:24,640 --> 00:24:26,639 Speaker 5: below two dollars a gallon. 486 00:24:26,880 --> 00:24:29,360 Speaker 6: But the issue people have at home is electricity price, right, 487 00:24:29,520 --> 00:24:30,800 Speaker 6: and so they negate each other. 488 00:24:31,080 --> 00:24:33,479 Speaker 8: For the household balance sheet, the average consumer will look 489 00:24:33,480 --> 00:24:35,600 Speaker 8: at where they're allocating those funds, be that to the 490 00:24:35,640 --> 00:24:38,320 Speaker 8: gasoline tank or be that to the household energy bill, 491 00:24:38,600 --> 00:24:41,160 Speaker 8: and so if one is improving and the other isn't, 492 00:24:41,320 --> 00:24:44,880 Speaker 8: we're still going to feel that pressure as normal consumers, 493 00:24:44,920 --> 00:24:45,600 Speaker 8: normal spendors. 494 00:24:46,400 --> 00:24:49,920 Speaker 2: This is the Bloomberg Sevendents podcast, bringing you the best 495 00:24:49,960 --> 00:24:53,280 Speaker 2: in markets, economics, anngient politics. You can watch the show 496 00:24:53,320 --> 00:24:56,280 Speaker 2: live on Bloomberg TV weekday mornings from six am to 497 00:24:56,400 --> 00:25:00,359 Speaker 2: nine am Eastern. Subscribe to the podcast on Apple or 498 00:25:00,440 --> 00:25:03,040 Speaker 2: anywhere else you listen, and as always on the Bloomberg 499 00:25:03,119 --> 00:25:09,520 Speaker 2: Terminal and the Bloomberg Business out mm hmm