WEBVTT - Bloomberg Surveillance TV: December 10th, 2025 0:00:02.400 --> 0:00:06.760 Bloomberg Audio Studios, Podcasts, radio News. 0:00:11.680 --> 0:00:15.480 This is the Bloomberg Surveillance Podcast. I'm Jonathan Ferrow, along 0:00:15.520 --> 0:00:18.720 with Lisa Bromwitz and Amerie Hordern. Join us each day 0:00:18.760 --> 0:00:22.280 for insight from the best in markets, economics, and geopolitics 0:00:22.440 --> 0:00:24.880 from our global headquarters in New York City. We are 0:00:24.960 --> 0:00:27.680 live on Bloomberg Television weekday mornings from six to nine 0:00:27.720 --> 0:00:31.319 am Eastern. Subscribe to the podcast on Apple, Spotify or 0:00:31.320 --> 0:00:33.960 anywhere else you listen, and as always on the Bloomberg 0:00:34.040 --> 0:00:35.880 Terminal and the Bloomberg Business App. 0:00:36.440 --> 0:00:39.040 Mike Worth, the CEO of Chevron, joins us now for 0:00:39.080 --> 0:00:41.560 an exclusive interview. I am so glad that we're going 0:00:41.600 --> 0:00:42.279 to speak with you, Mike. 0:00:42.320 --> 0:00:44.600 Thank you so much for being here with us. You're welcome, WESA. 0:00:44.720 --> 0:00:47.160 So let's start about that one ninety nine a gallon. 0:00:47.200 --> 0:00:49.479 It might be great for a lot of people in 0:00:49.560 --> 0:00:50.800 terms of filling. 0:00:50.600 --> 0:00:51.559 Up their guest tanks. 0:00:51.640 --> 0:00:53.880 A real question around drill, baby, drill, and how much 0:00:53.880 --> 0:00:58.000 you're incentivized to increase production given the lower cost of oil. 0:00:58.920 --> 0:01:01.160 Well, you know, we make our investment plans on a 0:01:01.200 --> 0:01:03.800 long term basis. We look at supply and demand well 0:01:03.800 --> 0:01:07.160 out into the future, and so the price of oil 0:01:07.280 --> 0:01:11.280 today can affect short term financial performance of the company, 0:01:11.480 --> 0:01:13.600 but it really doesn't play as much into some of 0:01:13.640 --> 0:01:17.840 the longer term investment plans as we look down the road, 0:01:17.880 --> 0:01:20.679 not really out the window as we decide what the 0:01:20.720 --> 0:01:21.920 capital program looks like. 0:01:22.080 --> 0:01:23.840 But how do you reconcile the too sure doing a 0:01:23.880 --> 0:01:27.640 lot of exploration internationally, and to Lisa's point, prices are 0:01:27.760 --> 0:01:30.039 low and potentially are going to even go lower. 0:01:30.880 --> 0:01:35.280 Well, exploration is a long cycle business. We just brought 0:01:35.319 --> 0:01:39.000 a project online in the Gulf of America last year 0:01:39.360 --> 0:01:42.320 where the discovery was made twenty years prior, and so 0:01:42.600 --> 0:01:45.600 the timeline between when you actually make a discovery, when 0:01:45.600 --> 0:01:48.000 you appraise that and you ultimately develop and bring it 0:01:48.040 --> 0:01:50.720 to market can be years or even decades, and so 0:01:50.760 --> 0:01:54.200 we really have to take that long view on the business. 0:01:54.600 --> 0:01:57.640 And in the short term we'll keep cost tight. We've 0:01:57.640 --> 0:02:00.680 guided to industry leading free cash over the next few 0:02:00.720 --> 0:02:04.320 years as we'ringing cost down, capital spending down, increase the 0:02:04.400 --> 0:02:07.480 synergies on the hes transaction. So we're going to deliver 0:02:07.560 --> 0:02:09.919 strong financial performance through the cycle. 0:02:10.240 --> 0:02:13.000 Based on what the IA has said, recalibrated where they 0:02:13.040 --> 0:02:15.359 see oil demand growing. It was twenty thirty, now it's 0:02:15.400 --> 0:02:18.440 twenty fifty. Ope says they had a rendezvous with reality, 0:02:18.480 --> 0:02:20.880 seeing that the world needs a lot more of this, 0:02:21.480 --> 0:02:24.760 a lot more fossil fuels. If outlook is so strong, 0:02:25.320 --> 0:02:26.679 should Chevron, should. 0:02:26.440 --> 0:02:27.800 All of these big oil companies? 0:02:27.880 --> 0:02:30.400 So do they increasing more of that investment. 0:02:30.840 --> 0:02:34.200 Well, on the IEA, even a blow broken clock is 0:02:34.320 --> 0:02:37.560 right twice a day. So they have finally acknowledged what 0:02:37.600 --> 0:02:40.239 we've long known, which is that the world will continue 0:02:40.360 --> 0:02:43.799 using oil and gas for many decades into the future. 0:02:44.600 --> 0:02:49.680 We are in that long cycle business and the capital 0:02:49.680 --> 0:02:52.680 spending amory has become more efficient in our industry. A 0:02:52.680 --> 0:02:55.800 decade ago, we were spending money on big projects. There's 0:02:55.840 --> 0:02:57.960 a lot of growth going on in shale at a 0:02:58.000 --> 0:03:00.720 relatively high cost. Structure in the entire history has found 0:03:00.800 --> 0:03:05.359 ways to standardize designs, simplify projects, and actually get more 0:03:05.400 --> 0:03:08.120 for every capital dollar that we spend, so the size 0:03:08.160 --> 0:03:12.280 of our capital spending doesn't necessarily correlate to the growth 0:03:12.320 --> 0:03:14.280 the way that it would have in years gone by. 0:03:14.400 --> 0:03:15.520 When it comes to expansion. 0:03:15.600 --> 0:03:18.120 The US government is backing this plan of Rock has 0:03:18.240 --> 0:03:21.720 to transfer Louke Oil stakes to an American company, So 0:03:22.080 --> 0:03:25.760 it's really only your x on how are those negotiations going. 0:03:26.080 --> 0:03:30.000 Well, I can't comment on commercial negotiations. What I will 0:03:30.040 --> 0:03:33.799 say is we've got a well established reputation as a 0:03:33.880 --> 0:03:38.880 good partner, as a world class operator in international locations. 0:03:39.360 --> 0:03:42.320 We're sought out as a partner in countries around the world. 0:03:42.360 --> 0:03:44.920 We got long history working in the Middle East, and 0:03:45.240 --> 0:03:48.600 we put a real premium on partnership and that goes 0:03:48.640 --> 0:03:50.880 to every country we work with and every company we 0:03:50.920 --> 0:03:51.240 work with. 0:03:51.360 --> 0:03:53.360 Can you talk about those assets though, do you think 0:03:53.400 --> 0:03:55.840 those would be good assets the Chevron portfolio? 0:03:55.920 --> 0:03:58.840 Well, we always look to strengthen our portfolio. Iraq is 0:03:58.880 --> 0:04:04.080 a country that's blessed with very substantial petroleum resources and 0:04:04.160 --> 0:04:05.800 some of the largest fields in the world, and so 0:04:05.800 --> 0:04:07.520 those are the kinds of things that we always look at. 0:04:07.680 --> 0:04:10.160 If you're talking about the capital profile and investments, and 0:04:10.200 --> 0:04:12.560 how it's become a lot more efficient to make the 0:04:12.560 --> 0:04:17.479 same kinds of investments and frankly the same kind of output. 0:04:17.760 --> 0:04:20.360 Where is this sufficiency coming from. Is it coming from 0:04:20.520 --> 0:04:24.560 artificial intelligence? Is is it coming from just better technology 0:04:24.560 --> 0:04:27.040 and getting oil and gas out of the ground. 0:04:27.640 --> 0:04:30.960 Yeah, So in shale, for instance, which is something the 0:04:31.040 --> 0:04:34.480 US has been a world leader. In a decade ago, 0:04:34.720 --> 0:04:37.400 break evens were seventy or eighty dollars a barrel. Today 0:04:37.560 --> 0:04:40.120 they're not even half of that, as we found ways 0:04:40.160 --> 0:04:43.640 to drill longer laterals, to optimize the spacing of wells, 0:04:43.680 --> 0:04:47.400 to complete wells at lower cost with greater production coming 0:04:47.440 --> 0:04:49.360 out of them. So it's a series of things. In 0:04:49.400 --> 0:04:53.479 the deep water, we've simplified and standardized designs, and what 0:04:53.640 --> 0:04:57.000 used to take thirty dollars a barrel or more in 0:04:57.080 --> 0:05:00.000 terms of cost of capital to go into a project 0:05:00.279 --> 0:05:03.200 now has been cut in half. And so it's not 0:05:03.400 --> 0:05:06.640 driven by AI yet. I do think over time we're 0:05:06.680 --> 0:05:10.120 going to see technologies like that continue this path that 0:05:10.200 --> 0:05:10.480 we're on. 0:05:10.600 --> 0:05:12.440 We're going to get to that in just a second. 0:05:12.640 --> 0:05:15.080 If that's the case, if you can get more even 0:05:15.120 --> 0:05:16.960 at a break even cost, it's a lot lower. 0:05:17.120 --> 0:05:19.440 Why has the rig count gone down so much? 0:05:19.680 --> 0:05:22.840 Why aren't there more rigs coming online given the capacity 0:05:22.839 --> 0:05:23.800 here in the United States? 0:05:23.839 --> 0:05:27.040 Because we can drill more feet per day with a 0:05:27.120 --> 0:05:29.360 rig today than we could in the past, and so 0:05:30.360 --> 0:05:33.080 rig count is not nearly as interesting a metric as 0:05:33.320 --> 0:05:35.280 how many feet a day you can drill how many 0:05:35.279 --> 0:05:37.440 wells you can complete in a period of time, and 0:05:37.480 --> 0:05:40.360 so we're getting more work done out of fewer pieces 0:05:40.360 --> 0:05:40.880 of equipment. 0:05:40.920 --> 0:05:44.880 Today, you talk about how AI isn't delivering those efficiencies yet, 0:05:45.200 --> 0:05:48.120 the indication being that maybe down the road it might 0:05:48.160 --> 0:05:48.800 be the case. 0:05:49.279 --> 0:05:51.000 Where specifically are you thinking. 0:05:50.960 --> 0:05:53.720 And I'm saying at a time when Chevron's cutting staff 0:05:53.760 --> 0:05:56.000 so or other people, is this a headcount issue? 0:05:56.120 --> 0:05:58.440 Is this something else? How are you seeing it being deployed? 0:05:58.760 --> 0:06:00.640 Well, we're in I think we're still the very early 0:06:00.800 --> 0:06:05.920 days of applying AI at scale in our industry. One 0:06:05.920 --> 0:06:08.880 of the things that's undeniable about AI is it needs 0:06:08.960 --> 0:06:11.560 lots of data. A company like ours has as much 0:06:11.640 --> 0:06:13.839 data as just about any company in the world, and 0:06:13.880 --> 0:06:17.200 so we've got decades and decades of geologic data, seismic data, 0:06:17.279 --> 0:06:20.240 operating data, all of which can be used to feed 0:06:20.279 --> 0:06:25.200 these models, to optimize operations, to improve our exploration success, 0:06:25.920 --> 0:06:29.720 to squeeze more production out of existing assets. And so 0:06:30.279 --> 0:06:35.520 we see huge opportunities to run our business with smarter technology, 0:06:35.760 --> 0:06:39.760 get better decisions made faster, and so there's certainly a 0:06:39.800 --> 0:06:43.039 cost dimension to this, but I think the real opportunity 0:06:43.080 --> 0:06:45.159 is going to be about the productivity of our assets 0:06:45.160 --> 0:06:45.760 and our business. 0:06:46.000 --> 0:06:48.359 You announced this project, the first of it's kind, to 0:06:48.520 --> 0:06:50.880 provide natural gas fired power. 0:06:50.600 --> 0:06:51.719 For data centers. 0:06:51.800 --> 0:06:53.359 Do you expect to do more of these projects and 0:06:53.360 --> 0:06:55.440 what's the update on this one in West Texas well. 0:06:55.480 --> 0:06:59.560 Certainly, the demand for power has been talked about now 0:06:59.640 --> 0:07:03.440 for the last year or so, as the constraint in 0:07:03.680 --> 0:07:07.440 the growth of AI data centers and the ambition for 0:07:07.560 --> 0:07:10.960 data centers at a scale we've never seen before has 0:07:11.000 --> 0:07:15.920 become a commonplace. The reality is we need large scale power. 0:07:16.360 --> 0:07:19.640 What we're working on is off the grid power because 0:07:19.680 --> 0:07:22.000 it's also becoming an issue with electricity prices, and we're 0:07:22.000 --> 0:07:26.440 seeing this show up in consumer sentiment and elections. Our 0:07:26.480 --> 0:07:32.520 approach is to develop gigawatt scale power generation, not through 0:07:32.560 --> 0:07:35.920 the grid, but dedicated to data centers. We've got a 0:07:35.960 --> 0:07:38.000 project in a couple of sites actually we're working on 0:07:38.120 --> 0:07:40.880 in West Texas where we've got a lot of natural gas. 0:07:41.320 --> 0:07:44.720 We've got large gas turbines, the largest in the world 0:07:44.800 --> 0:07:49.120 being delivered starting next year, and we're deep into discussions 0:07:49.120 --> 0:07:52.800 with multiple customers that would like to cite data centers 0:07:53.480 --> 0:07:54.440 to use this power. 0:07:54.760 --> 0:07:57.080 You're at the center of a lot of politically very 0:07:57.120 --> 0:08:00.400 important conversations, not just when it comes to AI Sluke 0:08:00.440 --> 0:08:03.960 oil assets, also Venezuela the only American company left. 0:08:04.000 --> 0:08:05.400 Can you give us an update. 0:08:05.080 --> 0:08:08.120 On either conversation with the administration your team on the ground. 0:08:08.960 --> 0:08:11.240 What is the future of Chevron in this country? 0:08:11.280 --> 0:08:13.960 Is the president's sense maybe he's going to send troops there? 0:08:14.640 --> 0:08:18.640 Yeah, I don't know what the presence intentions are. We've 0:08:18.640 --> 0:08:21.920 been in Venezuela for the last one hundred years. Our 0:08:21.960 --> 0:08:25.120 presence there, we believe is important for the local economy, 0:08:25.160 --> 0:08:28.840 the regional economy, the people of Venezuela. The Venezuelan oil 0:08:28.920 --> 0:08:32.560 is sought after by US refiners, and we operate there 0:08:32.559 --> 0:08:35.520 in full compliance with all US law and sanctions. We're 0:08:35.520 --> 0:08:38.480 in discussions with the administration to ensure that we stay 0:08:38.520 --> 0:08:42.360 in compliance, that they understand the value that our presence 0:08:42.600 --> 0:08:43.719 brings to America. 0:08:44.120 --> 0:08:47.760 And so you know that's and you plan on being 0:08:47.800 --> 0:08:49.520 there for the long term. 0:08:50.200 --> 0:08:53.400 Venezuela actually has more oil and gas resource than Saudi Arabia. 0:08:53.760 --> 0:08:57.040 It's right here in our hemisphere, very close to the 0:08:57.040 --> 0:09:01.840 Gulf Coast refining complex. We been there through ups and downs, 0:09:01.960 --> 0:09:04.719 and like many places in the world, we have to 0:09:04.760 --> 0:09:07.720 take a long view on our presence in countries like this. 0:09:08.000 --> 0:09:11.560 You talked about succession yesterday at this conference. How are 0:09:11.559 --> 0:09:13.800 you thinking about that as you talk to the board? 0:09:13.880 --> 0:09:15.960 Is there something you want to get done before you 0:09:16.040 --> 0:09:17.000 hand over the reins? 0:09:17.200 --> 0:09:20.600 Well, succession discussions begin on day one. I think for 0:09:20.679 --> 0:09:24.200 most CEOs it's part of a board's responsibility to be 0:09:24.240 --> 0:09:27.679 thinking about the next generational leadership. I have a long 0:09:27.720 --> 0:09:30.320 list of things, some of which have been accomplished. I 0:09:30.320 --> 0:09:32.400 mentioned the Hest transaction, which was a big one for 0:09:32.520 --> 0:09:35.800 US earlier this year. We have laid out a plan 0:09:35.960 --> 0:09:38.280 for the next several years to investors last month that 0:09:38.360 --> 0:09:41.839 grows free cash flow, that drives a significant return to 0:09:41.920 --> 0:09:44.160 cash to shareholders. All of those are things that I 0:09:44.200 --> 0:09:46.559 want to make progress on. But when the time is 0:09:46.640 --> 0:09:48.800 right for someone to follow me in this job, the 0:09:48.800 --> 0:09:54.240 board will make that determination and I will happily hand over. 0:09:54.440 --> 0:09:55.920 Will you go right for landman? 0:09:57.240 --> 0:09:58.280 Just three seconds left? 0:09:58.480 --> 0:10:01.280 Do you think that in ten years gas or oil 0:10:01.520 --> 0:10:02.840 is going to be more valuable? 0:10:04.040 --> 0:10:08.400 Well, on an energy content basis, you know, oil's got 0:10:08.400 --> 0:10:11.280 about six times more energy content per unit of volume 0:10:11.280 --> 0:10:13.960 than gas does, and so you know they trade in 0:10:14.559 --> 0:10:18.400 sympathy with one another because energy is somewhat fungible. I 0:10:18.400 --> 0:10:20.760 think both of those commodities are going to be essential 0:10:20.760 --> 0:10:22.880 to the global economy. I think demand for both of 0:10:22.880 --> 0:10:24.880 those will be much higher than it is today. And 0:10:24.880 --> 0:10:26.400 I think you're going to see good companies in our 0:10:26.400 --> 0:10:29.120 industry still producing more of that and doing it in 0:10:29.120 --> 0:10:31.280 a way that keeps costs very affordable for the economy. 0:10:31.360 --> 0:10:34.560 Stay with us, multiple impex divanance coming up off to. 0:10:34.640 --> 0:10:47.400 This, Julian Emmanuel of Evercore staying bullets into twenty twenty six, 0:10:47.440 --> 0:10:51.120 writing earning strength, fiscal and monetary stimulus and a capital 0:10:51.160 --> 0:10:54.720 market cycle moving into higher gear are laying the groundwork 0:10:54.920 --> 0:10:58.360 for seven seven fifty at year end twenty twenty six. 0:10:58.480 --> 0:11:01.160 Julian, I am so glad to say is here. Julian, 0:11:01.200 --> 0:11:02.000 thank you for being here. 0:11:02.080 --> 0:11:02.720 Good morning. 0:11:02.840 --> 0:11:04.880 So what do you make of the yields rising this morning? 0:11:06.280 --> 0:11:08.600 Look, the first thing is we have to step back 0:11:08.679 --> 0:11:12.720 and understand something that bond market cycles are very long 0:11:13.440 --> 0:11:17.520 legged things. And the forty year bond bull market ended 0:11:17.840 --> 0:11:20.720 at the pandemic lows in twenty twenty and when you 0:11:20.720 --> 0:11:24.120 think of an Anne Marie. You just detailed all of 0:11:24.160 --> 0:11:27.160 the reasons that yields are going higher, and the answer 0:11:27.200 --> 0:11:29.480 is yes to every single one of them. You put 0:11:29.480 --> 0:11:32.079 it together in our mind. If you think about it, 0:11:32.080 --> 0:11:36.720 it's almost remarkable that the confluence of the US being 0:11:36.800 --> 0:11:42.120 the debt premier destination for capital has actually caused spreads 0:11:42.200 --> 0:11:46.760 against global bond markets to compress. You know, if you 0:11:46.840 --> 0:11:49.560 had said to me Japanese ten year yields were going 0:11:49.600 --> 0:11:51.800 to be close to two percent, I would have told 0:11:51.840 --> 0:11:54.000 you at the beginning of the year, the US ten 0:11:54.040 --> 0:11:56.640 year yields would be close to five percent. And we're 0:11:56.640 --> 0:12:01.280 not there. But all of these pressures are building in 0:12:01.360 --> 0:12:03.160 our mind towards hire yields. 0:12:03.320 --> 0:12:06.200 If we do get a hawkish FED today, is that 0:12:06.320 --> 0:12:08.600 going to diminish some of the optimism that you have 0:12:08.679 --> 0:12:11.560 heading into twenty twenty six or support it given the 0:12:11.559 --> 0:12:14.920 fact that the FED is looking at a rosier economic backdrop. 0:12:15.120 --> 0:12:19.320 So that is the question that is really fascinating in 0:12:19.400 --> 0:12:22.520 our mind, and we're a little bit uncomfortable by this 0:12:23.200 --> 0:12:28.600 incredibly staunch consensus that we are going to get precisely 0:12:29.040 --> 0:12:32.080 a hawkish cut that is going to be bullet for 0:12:32.120 --> 0:12:35.360 stocks in the near term. We actually think long term 0:12:35.640 --> 0:12:40.000 it is bullet for stocks because simply it shows that 0:12:40.040 --> 0:12:44.400 the FED is cognizant of the inflation problem as well. 0:12:44.840 --> 0:12:49.000 But the other issue there, Lisa, is the labor market 0:12:49.160 --> 0:12:52.760 is about as clear as mud. I think whatever, It's 0:12:52.800 --> 0:12:56.360 not even mud, it's just it's unknowable right now. And 0:12:57.080 --> 0:13:00.880 that's really the aspect of the flying blind that is 0:13:00.920 --> 0:13:02.160 probably going to weigh on markets. 0:13:02.280 --> 0:13:05.280 Jillan want to nerves you about the hawkish cut consensus. 0:13:05.360 --> 0:13:06.960 Is it the hawkish part or is the fact that 0:13:06.960 --> 0:13:09.120 people think that is going to be bullish for stocks. 0:13:09.320 --> 0:13:12.760 No, it's actually the deep consensus. So what we've seen 0:13:13.040 --> 0:13:17.679 this year, and our survey team has really been front 0:13:17.679 --> 0:13:21.520 foot on this, particularly during the government data blackout, is 0:13:21.559 --> 0:13:25.480 that anytime we've had really really deep consensus, whether it 0:13:25.559 --> 0:13:28.280 was going back to that week in April where our 0:13:28.320 --> 0:13:31.240 clients eighty one percent of them thought we were either 0:13:31.280 --> 0:13:33.360 in a recession or was going to start in the 0:13:33.400 --> 0:13:36.640 second half, or going back to the end of October 0:13:36.880 --> 0:13:40.400 when a record seventy five percent of our clients responded 0:13:40.400 --> 0:13:42.880 in our polling that the next ten percent in the 0:13:42.960 --> 0:13:45.000 S and P five hundred was up and then you 0:13:45.080 --> 0:13:49.079 immediately had that five percent pullback. That's what bothers us 0:13:49.120 --> 0:13:53.600 and just the consensus around the fact that this is 0:13:53.760 --> 0:13:57.280 likely to be bullish, And frankly, if this was any 0:13:57.320 --> 0:14:00.960 other month than December, it probably would not be as 0:14:01.040 --> 0:14:03.880 sharp a consensus. But December tends to be a good 0:14:03.920 --> 0:14:07.280 month for stocks. We think there is a potential for 0:14:07.400 --> 0:14:08.360 surprise here. 0:14:08.360 --> 0:14:09.640 Like what what's the surprise? 0:14:10.120 --> 0:14:12.640 Well, look, if you look at last year, you had 0:14:12.640 --> 0:14:16.160 a hawkish cut at the December FOMC last year and 0:14:16.200 --> 0:14:21.080 the market pulled back. It didn't derailable market in any way, 0:14:21.120 --> 0:14:25.000 shape or form, but it made December an unexpectedly volid 0:14:25.000 --> 0:14:27.520 a month. And you add in the fact that you're 0:14:27.560 --> 0:14:31.280 going to get data, employment data on the sixteenth. Who 0:14:31.320 --> 0:14:34.360 the heck ever heard of the FED talking and then 0:14:34.440 --> 0:14:35.320 getting the data. 0:14:35.440 --> 0:14:38.400 It's just it's ridiculous. You're speaking Emory's language. 0:14:38.400 --> 0:14:40.840 She's saying, come on, move the meeting so we can 0:14:40.920 --> 0:14:43.360 actually get that data. It's not just the employment data, 0:14:43.400 --> 0:14:45.840 it's also a question around the big tax space and 0:14:45.960 --> 0:14:48.800 exactly what they are doing. I think about John Stoltzfiz. 0:14:48.840 --> 0:14:50.840 He comes in every day singing, is how you do 0:14:50.880 --> 0:14:52.480 the things you do? And it's sort of this question 0:14:52.560 --> 0:14:55.760 around Oracle, which reports earnings after the bill, how much 0:14:55.800 --> 0:14:56.840 are they, yes pluting for. 0:14:56.800 --> 0:14:59.160 Expansion, going to beat expectations, but. 0:14:59.160 --> 0:15:02.440 Continue building their debt pile in a way that seems 0:15:02.920 --> 0:15:06.720 not unsustainable but potentially a little more precarious when it 0:15:06.760 --> 0:15:07.920 comes to capital markets. 0:15:08.080 --> 0:15:12.400 Yeah. No, And actually, from our point of view, the 0:15:12.560 --> 0:15:17.120 concern around the debt loads of these companies, this one 0:15:17.160 --> 0:15:21.120 in particular, is quite rational if you think back to 0:15:21.360 --> 0:15:24.520 this whole talk about an AI bubble, which we don't 0:15:24.520 --> 0:15:29.040 believe we're anywhere near the endgame yet at all in AI, 0:15:29.120 --> 0:15:31.520 But if you think back to the late nineteen nineties, 0:15:31.840 --> 0:15:35.800 the concern was just just a random throwing money at 0:15:35.840 --> 0:15:41.480 everything everywhere without revenues. And in that respect, having a 0:15:41.480 --> 0:15:45.560 little bit of capital markets discipline to around a company 0:15:45.640 --> 0:15:50.480 that is assuming a bigger debt load is very, very measured, 0:15:51.120 --> 0:15:53.520 and it shows that people are not losing their heads. 0:15:53.640 --> 0:15:56.640 But our question is is that when those earnings are 0:15:56.640 --> 0:16:00.560 announced this afternoon, is it more the sense that the 0:16:00.640 --> 0:16:03.360 AI bubble is going to pop? We think it might 0:16:03.400 --> 0:16:06.240 actually be more of the sense that the fear bubble, 0:16:06.320 --> 0:16:10.640 as reflected by the credit the fault swap market may pop. 0:16:10.960 --> 0:16:12.920 In other words, the idea that people are pricing in 0:16:13.000 --> 0:16:15.000 the highest chance of some sort of default or demanding 0:16:15.000 --> 0:16:18.680 the highest amount of compensation for default from the likes 0:16:18.720 --> 0:16:21.240 of Oracle going back to two thousand and nine, that 0:16:21.320 --> 0:16:22.440 might have to diminish. 0:16:22.520 --> 0:16:23.440 I do want of the Fed's role. 0:16:23.440 --> 0:16:25.960 Putting these two stories together, what is the Fed's role 0:16:26.240 --> 0:16:28.960 in lifting the AI bubble? This idea that if the 0:16:29.000 --> 0:16:32.320 FED is overly easy and I say overly based on 0:16:32.560 --> 0:16:37.200 the economic conditions what they might warrant, does that lead 0:16:37.560 --> 0:16:40.800 to an inflation of some of these valuations and frankly 0:16:40.840 --> 0:16:43.440 the debt profiles of some of these companies that raises 0:16:43.480 --> 0:16:44.000 your concern. 0:16:44.400 --> 0:16:47.600 It certainly could, and we have said for the last 0:16:47.640 --> 0:16:52.000 several months that given this sort of extraordinary time that 0:16:52.080 --> 0:16:54.960 we're in, where earnings are going to be good, the 0:16:55.000 --> 0:16:59.840 economies humming along, even with the questions around labor. But 0:17:00.160 --> 0:17:04.560 the point is both the monetary and fiscal stimulus really 0:17:04.680 --> 0:17:07.919 do have the potential. We've said there's a thirty percent 0:17:08.040 --> 0:17:10.680 chance that you get a full on bubble next year, 0:17:11.000 --> 0:17:13.399 which we defined as nine thousand in the S and P. 0:17:13.520 --> 0:17:18.040 Five hundred, which I think is also why on balance, 0:17:18.440 --> 0:17:22.680 the FED is trying to remind everyone of the dual 0:17:22.760 --> 0:17:27.199 mandate in general. But again, the questions around the labor 0:17:27.240 --> 0:17:29.440 market are very very intense. 0:17:29.160 --> 0:17:32.080 Especially given Joel Statia came out yesterday and just added 0:17:32.119 --> 0:17:34.440 to this confusion, given the fact that the headliness number 0:17:34.480 --> 0:17:36.520 came in pretty well, and then you saw the quits 0:17:36.560 --> 0:17:38.960 number coming at the lowest pace going back to May 0:17:39.000 --> 0:17:41.560 of twenty twenty, So choose your own adventure. Is gold 0:17:41.640 --> 0:17:43.680 telling us something? Because I was looking at the move 0:17:43.760 --> 0:17:46.240 since the last FED meeting and what stands out to 0:17:46.280 --> 0:17:49.199 me ten year yields, thirty year yields and gold up 0:17:49.320 --> 0:17:50.360 seven percent in that. 0:17:50.359 --> 0:17:51.199 Period of time. 0:17:51.520 --> 0:17:53.960 Are we getting a signal there about the path of 0:17:54.040 --> 0:17:56.800 travel right now in terms of the US's role in 0:17:56.920 --> 0:18:00.000 terms of fiscal doleance, when it comes to the US dollar, 0:18:00.480 --> 0:18:02.639 and when it comes to just going forward. 0:18:02.680 --> 0:18:03.920 What people think about this policy? 0:18:03.960 --> 0:18:06.479 Well, gold has really the last couple of years been 0:18:06.680 --> 0:18:11.280 a portfolio diversifier. And then from our perspective, you know, 0:18:11.640 --> 0:18:15.720 you saw what we believe is a reasonably significant dollar 0:18:15.840 --> 0:18:18.879 top in the first quarter of twenty twenty five, So 0:18:19.040 --> 0:18:22.119 gold it tends to trade better on that I would 0:18:22.119 --> 0:18:27.119 say Frankly, you know, gold has actually lagged the last 0:18:27.160 --> 0:18:30.120 month or two as silver has has shot the moon. 0:18:30.640 --> 0:18:33.720 That to us says that there's probably a pause in 0:18:34.280 --> 0:18:38.440 the precious metals frenzy coming, you know into twenty twenty six. 0:18:38.640 --> 0:18:41.840 Stay with us. Multiple impex of viands coming up. Off 0:18:41.840 --> 0:18:52.360 to this, turning. 0:18:52.080 --> 0:18:54.800 Back to the federers or President Trump reportedly planning to 0:18:54.840 --> 0:18:57.640 start his final round of interviews for the FED shair 0:18:58.040 --> 0:19:00.639 in the coming days. The front runner believed to be 0:19:00.720 --> 0:19:04.080 National Economic Council Director Kevin Hassett, who said there's quote 0:19:04.119 --> 0:19:06.560 plenty of room to cut. Joining us now as someone 0:19:06.600 --> 0:19:09.840 who disagrees with that statement, Lindsay Pie of Stifhel lindsay, 0:19:09.840 --> 0:19:11.359 you've been really vocal on the fact that you do 0:19:11.440 --> 0:19:13.919 think that inflation is very much a preeminent concern and 0:19:14.040 --> 0:19:18.119 is being underplayed by this particular FED. How much do 0:19:18.160 --> 0:19:20.960 you expect that to come to bite the FED when 0:19:20.960 --> 0:19:23.359 it comes to BILLI yields, which is what we're seeing 0:19:23.400 --> 0:19:23.840 this morning. 0:19:23.920 --> 0:19:25.600 Well, I think the FED is well aware of the 0:19:25.600 --> 0:19:28.560 fact that inflation remains a very sizable problem. As we 0:19:28.600 --> 0:19:31.439 see the majority of FED officials have come out and 0:19:31.480 --> 0:19:34.359 spoken against or at least question the need for further 0:19:34.520 --> 0:19:37.600 rate cuts. So there's a very clear divide among Fed 0:19:37.640 --> 0:19:41.400 officials right now, some focused on the employment component, but still, 0:19:41.400 --> 0:19:44.919 as I mentioned, a majority concern that we did not 0:19:45.080 --> 0:19:47.800 do enough the first time around to reinstate price stability. 0:19:48.119 --> 0:19:51.000 And now it becomes even more of a challenge for 0:19:51.040 --> 0:19:53.240 the Fed to get us back to two percent, having 0:19:53.359 --> 0:19:55.560 left price as well above that target level for so 0:19:55.640 --> 0:19:56.160 many years. 0:19:56.160 --> 0:19:59.120 Now, where's the inflationary pressure coming from? Given the fact 0:19:59.119 --> 0:20:01.679 that people have seen prices actually come down not just 0:20:01.720 --> 0:20:03.520 disinflation but outright deflation. 0:20:03.680 --> 0:20:05.000 A couple of rent metrics, and. 0:20:04.960 --> 0:20:08.320 We are seeing pretty contained price increases, certainly during the 0:20:08.320 --> 0:20:10.000 holiday season, even on consumer goods. 0:20:10.040 --> 0:20:12.440 So what's going to drive this? So there still is 0:20:12.520 --> 0:20:13.240 some improvement. 0:20:13.280 --> 0:20:15.600 We have seen some improvement as you mentioned, in these pockets, 0:20:15.640 --> 0:20:17.600 but when we look at the cost of services, this 0:20:17.680 --> 0:20:20.760 is still going up consistently over three tenths on an 0:20:20.760 --> 0:20:24.520 average monthly basis, So that's continuing to fuel these overall 0:20:24.680 --> 0:20:28.080 annual inflation numbers up near three percent. Remember, it was 0:20:28.119 --> 0:20:30.399 never about getting us down from eight to six to 0:20:30.480 --> 0:20:34.000 four close to two percent, but back to two percent 0:20:34.119 --> 0:20:37.200