1 00:00:05,120 --> 00:00:07,119 Speaker 1: This is the Bloomberg Surveillance Podcast. 2 00:00:07,160 --> 00:00:11,080 Speaker 2: I'm Tom Keane, along with Jonathan Farrow and Lisa Abramowitz. 3 00:00:11,280 --> 00:00:15,760 Speaker 2: Join us each day for insight from the best an economics, geopolitics, 4 00:00:15,760 --> 00:00:20,720 Speaker 2: finance and investment. Subscribe to Bloomberg Surveillance on demand on Apple, 5 00:00:20,960 --> 00:00:25,400 Speaker 2: Spotify and anywhere you get your podcasts, and always on 6 00:00:25,520 --> 00:00:29,880 Speaker 2: Bloomberg dot Com, the Bloomberg Terminal, and the Bloomberg Business App. 7 00:00:31,240 --> 00:00:35,040 Speaker 2: In twenty eleven, I joined a guy named Mohammed el 8 00:00:35,280 --> 00:00:40,920 Speaker 2: Arian on the stage at the Fixed Income Analyst Society 9 00:00:41,120 --> 00:00:43,800 Speaker 2: as he was wandered into the Hall of Fame of 10 00:00:43,960 --> 00:00:45,600 Speaker 2: fixed income folks on Wall Street. 11 00:00:45,640 --> 00:00:47,680 Speaker 1: This is like a geninormous deal. 12 00:00:48,200 --> 00:00:51,599 Speaker 2: Names like Dan Fuss of Loomis Sales, Ed Altman, who 13 00:00:51,640 --> 00:00:54,720 Speaker 2: is one of my first the z Score, and all that, 14 00:00:55,120 --> 00:00:58,319 Speaker 2: a guy named Fabozi. It was inflicted upon us at 15 00:00:58,320 --> 00:01:02,760 Speaker 2: gunpoint to read this. Roger Ferguson, he did okay, and 16 00:01:02,800 --> 00:01:05,440 Speaker 2: every other name. It's a who's who here a fixed 17 00:01:05,440 --> 00:01:08,080 Speaker 2: income There's a new name joining us with a new 18 00:01:08,200 --> 00:01:16,119 Speaker 2: name is Bob Michael Cio, JP Moore. No, forget about 19 00:01:16,120 --> 00:01:17,760 Speaker 2: the title Hall of Fame member. 20 00:01:17,800 --> 00:01:19,280 Speaker 1: Congratulations, thank you. 21 00:01:19,360 --> 00:01:22,000 Speaker 3: It was a conpecional night last night. And by the way, 22 00:01:22,319 --> 00:01:25,800 Speaker 3: Barbara Novic from Blackrock was an honoree, and your own 23 00:01:26,000 --> 00:01:30,720 Speaker 3: Steve Berkeley, the godfather of the entire fixed income index business, 24 00:01:31,240 --> 00:01:33,280 Speaker 3: was also an iki last night. So it's a very 25 00:01:33,280 --> 00:01:33,920 Speaker 3: special night. 26 00:01:34,000 --> 00:01:35,839 Speaker 4: And I just speak to how modest Bob is Tom 27 00:01:36,040 --> 00:01:37,479 Speaker 4: that he came in this morning. And I knew where 28 00:01:37,480 --> 00:01:39,399 Speaker 4: Bob was last night for this event, and Bob came 29 00:01:39,400 --> 00:01:40,880 Speaker 4: in and said, it was a meal last night, and 30 00:01:40,880 --> 00:01:43,080 Speaker 4: he starts talking about a calculator. Yeah, I'm sitting there 31 00:01:43,120 --> 00:01:45,839 Speaker 4: thinking TK not just any meal, not just any meal. 32 00:01:46,040 --> 00:01:47,520 Speaker 5: And you pushed him and he didn't even say it. 33 00:01:48,240 --> 00:01:50,760 Speaker 2: There's so much and within the bond turmoil right now, 34 00:01:51,000 --> 00:01:53,120 Speaker 2: you know, we'll just take a few seconds here. You 35 00:01:53,160 --> 00:01:56,200 Speaker 2: and I were weaned on the same book Sydney Homer, 36 00:01:56,240 --> 00:01:59,560 Speaker 2: who's in the Hall of Fame, and Marty and the 37 00:01:59,800 --> 00:02:03,560 Speaker 2: the Yield Book. I mean, tell us about what that 38 00:02:03,680 --> 00:02:06,360 Speaker 2: book did to you and me, how it straightened out 39 00:02:06,360 --> 00:02:09,600 Speaker 2: our head about discounted cash flows. 40 00:02:09,760 --> 00:02:12,880 Speaker 3: So true story. I heard Marty might be there last night. 41 00:02:12,919 --> 00:02:17,000 Speaker 3: Marty Leebowitz, who co authored that book. I have my 42 00:02:17,120 --> 00:02:19,240 Speaker 3: original copy of the book. I kept it at home. 43 00:02:19,280 --> 00:02:21,720 Speaker 3: I looked at it for weeks, and I decided not 44 00:02:21,840 --> 00:02:24,880 Speaker 3: to bring it in and have a autographic because I 45 00:02:24,919 --> 00:02:27,600 Speaker 3: was afraid he might open it and see I underlined 46 00:02:27,639 --> 00:02:31,360 Speaker 3: the wrong things in it. But he was there. It 47 00:02:31,560 --> 00:02:35,160 Speaker 3: was star after star. So for me, very very specially cool. 48 00:02:35,200 --> 00:02:37,880 Speaker 5: It's a key moment right now in the bond market, 49 00:02:37,960 --> 00:02:40,440 Speaker 5: and I'm so glad that you're here because you've been 50 00:02:40,480 --> 00:02:42,560 Speaker 5: one of the buyers and saying that it is an 51 00:02:42,560 --> 00:02:46,120 Speaker 5: incredible value in the ten year pushing against the grain 52 00:02:46,240 --> 00:02:49,640 Speaker 5: right now. How much conviction do you still have despite 53 00:02:49,680 --> 00:02:50,720 Speaker 5: some of the moves we've seen. 54 00:02:51,280 --> 00:02:56,480 Speaker 3: I have increasing conviction, and I will admit for bond buyers, 55 00:02:56,760 --> 00:03:00,640 Speaker 3: we've been swimming upstream here for the last couple of months. 56 00:03:00,840 --> 00:03:04,160 Speaker 3: And I go back and I look post Silicon Valley 57 00:03:04,200 --> 00:03:07,040 Speaker 3: Bank and we all looked at the market and thought, 58 00:03:07,080 --> 00:03:09,440 Speaker 3: from March to June, we're going to have a pretty 59 00:03:09,440 --> 00:03:12,840 Speaker 3: significant retlacement. Let's sit out of that. I think what's 60 00:03:12,880 --> 00:03:17,320 Speaker 3: been this surprise is from June to this past week, 61 00:03:17,639 --> 00:03:20,840 Speaker 3: rates have continued to go up and the narrative has 62 00:03:20,919 --> 00:03:24,079 Speaker 3: become it's more of a soft landing. You look at 63 00:03:24,120 --> 00:03:26,760 Speaker 3: the fiscal impulse that are coming from all the acts, 64 00:03:26,760 --> 00:03:31,440 Speaker 3: the Inflation Reduction Act, the Chips and Sciences Act, and 65 00:03:31,720 --> 00:03:35,320 Speaker 3: a couple of the others, the Infrastructure Act, and they're 66 00:03:35,360 --> 00:03:38,920 Speaker 3: all rippling through the system. But what we're seeing is 67 00:03:39,080 --> 00:03:42,440 Speaker 3: the underlying data continues to get worse. We look at 68 00:03:42,480 --> 00:03:45,720 Speaker 3: the consumer that continues to get stretched, and we think 69 00:03:45,760 --> 00:03:48,960 Speaker 3: that buying duration in here, we're about to start swimming 70 00:03:49,040 --> 00:03:50,000 Speaker 3: downstream again. 71 00:03:50,280 --> 00:03:52,520 Speaker 5: How do you understand the market moves? How do you 72 00:03:52,600 --> 00:03:56,200 Speaker 5: understand where the bet so far has gone wrong? Given 73 00:03:56,200 --> 00:03:58,880 Speaker 5: the fact that yields have gone up much further than 74 00:03:58,920 --> 00:04:01,440 Speaker 5: anyone thought was passible in this cycle, after so many 75 00:04:01,440 --> 00:04:03,840 Speaker 5: people called this a peak yields. 76 00:04:04,080 --> 00:04:07,280 Speaker 3: Well, I'm not so sure about that. And I've gone 77 00:04:07,360 --> 00:04:12,520 Speaker 3: back and looked at the previous cycles, and actually we 78 00:04:12,560 --> 00:04:15,400 Speaker 3: should have been more surprised if we didn't get this 79 00:04:15,600 --> 00:04:19,760 Speaker 3: backup in yields. And it's happened every single time you 80 00:04:19,839 --> 00:04:23,839 Speaker 3: go back, and about the same magnitude fifty sixty plus 81 00:04:23,880 --> 00:04:26,800 Speaker 3: basis points. We went back and we looked at the 82 00:04:26,960 --> 00:04:29,919 Speaker 3: end of the FED hiking cycle in two thousand and six, 83 00:04:30,400 --> 00:04:34,800 Speaker 3: yields fell dramatically, and then they went back above the 84 00:04:34,839 --> 00:04:38,200 Speaker 3: five and a quarter percent high in June two thousand 85 00:04:38,240 --> 00:04:42,640 Speaker 3: and seven, right before these enhanced cash funds started shuddering. 86 00:04:43,040 --> 00:04:44,240 Speaker 1: So it takes time. 87 00:04:44,320 --> 00:04:47,839 Speaker 3: And then, by the way, they went back in June 88 00:04:48,000 --> 00:04:51,400 Speaker 3: two thousand and eight, they went up one hundred basis 89 00:04:51,440 --> 00:04:53,840 Speaker 3: points from their low in March two thousand and eight. 90 00:04:54,120 --> 00:04:57,600 Speaker 3: So until these long and variable lags hit, you're in 91 00:04:57,640 --> 00:05:01,560 Speaker 3: this never never land of something that feels like a 92 00:05:01,600 --> 00:05:04,320 Speaker 3: soft landing. You're not getting more rate hikes, you're not 93 00:05:04,480 --> 00:05:08,440 Speaker 3: in recession, and the markets will oscillate back and forth, 94 00:05:08,440 --> 00:05:11,200 Speaker 3: and you'll have this battle between the Fed's done it. 95 00:05:11,240 --> 00:05:15,040 Speaker 3: They've engineered a soft landing. They'll congratulate themselves on that 96 00:05:15,279 --> 00:05:18,640 Speaker 3: they did it this time through their summary of economic projections, 97 00:05:18,880 --> 00:05:21,600 Speaker 3: and people like me, you say, look at the underlying data. 98 00:05:21,720 --> 00:05:24,119 Speaker 3: Everything's cracking and then bad things happen. 99 00:05:24,560 --> 00:05:28,159 Speaker 4: You can't throw around six seven eight without really giving 100 00:05:28,200 --> 00:05:30,160 Speaker 4: us an idea of the kind of things you're concerned about. 101 00:05:30,520 --> 00:05:32,840 Speaker 4: Do you see things going badly wrong or just the 102 00:05:32,880 --> 00:05:34,880 Speaker 4: ultimate run of the mill recession that we're not used to. 103 00:05:35,160 --> 00:05:37,760 Speaker 3: Well, you touched on them earlier. It's not true that 104 00:05:37,800 --> 00:05:41,359 Speaker 3: these rate hikes don't have consequences. We almost took out 105 00:05:41,600 --> 00:05:45,480 Speaker 3: the UK pension fund system and the US banking system. 106 00:05:45,800 --> 00:05:48,359 Speaker 3: When you look at the bank term funding program, it 107 00:05:48,400 --> 00:05:52,880 Speaker 3: didn't backstop regional banks, it backstop the entire banking system. 108 00:05:52,920 --> 00:05:55,960 Speaker 3: We're looking at a couple of things. We're looking at 109 00:05:56,120 --> 00:06:02,560 Speaker 3: the consumer facing depleted savings, the excess savings from the 110 00:06:02,600 --> 00:06:06,880 Speaker 3: COVID fiscal transfers. Those are gone, and now they're seeing 111 00:06:06,920 --> 00:06:11,080 Speaker 3: the higher cost of everything. They're facing higher energy prices 112 00:06:11,080 --> 00:06:15,520 Speaker 3: which are going to dip into consumption elsewhere. We look 113 00:06:15,600 --> 00:06:19,799 Speaker 3: at temporary help services jobs. They've turned down, they've never 114 00:06:19,960 --> 00:06:24,479 Speaker 3: turned down before, except in advance of recession. And we 115 00:06:25,040 --> 00:06:29,719 Speaker 3: looked at home price affordability, housing affordability. Kelsey Bearro and 116 00:06:29,720 --> 00:06:34,160 Speaker 3: I we're talking about this morning. It's the worst on record. Now, 117 00:06:34,200 --> 00:06:36,520 Speaker 3: the date only goes back to nineteen eighty six, so 118 00:06:36,560 --> 00:06:39,440 Speaker 3: I don't know before that. But the combination of very 119 00:06:39,520 --> 00:06:43,400 Speaker 3: high home prices and the cost to finance them, we've 120 00:06:43,480 --> 00:06:46,200 Speaker 3: never seen it. So when you hear about the current 121 00:06:46,320 --> 00:06:50,039 Speaker 3: generation talking about how hard it is to buy a 122 00:06:50,040 --> 00:06:52,920 Speaker 3: home and how an expensive, they're one hundred percent right. 123 00:06:52,960 --> 00:06:54,240 Speaker 3: We've never seen this before. 124 00:06:54,360 --> 00:06:57,680 Speaker 2: Here's Bob Michael's in my calculator. This is my personal 125 00:06:57,880 --> 00:07:02,279 Speaker 2: HP twelve C was cfa sticker here, and Bob you 126 00:07:02,400 --> 00:07:04,120 Speaker 2: used to have this, or Bill Gross. 127 00:07:03,839 --> 00:07:06,560 Speaker 1: Had a monro trader at his desk and all that. 128 00:07:06,880 --> 00:07:08,000 Speaker 1: All that's out the window. 129 00:07:08,040 --> 00:07:11,280 Speaker 2: Now here's what our audience knows and what you're dealing with. 130 00:07:11,280 --> 00:07:12,200 Speaker 1: A JP Morgan. 131 00:07:12,680 --> 00:07:17,840 Speaker 2: Every day, the Vanguard Total bond fund is down something 132 00:07:17,960 --> 00:07:21,560 Speaker 2: like twenty one percent from the Great Moderation peak. It's 133 00:07:21,600 --> 00:07:26,640 Speaker 2: down seven point five percent annualized. That's what our audience 134 00:07:26,720 --> 00:07:30,600 Speaker 2: is feeling. How do they turn that around? Leave bonds? 135 00:07:32,040 --> 00:07:35,640 Speaker 3: I'm all for that. We're at an inflection point in 136 00:07:35,680 --> 00:07:39,240 Speaker 3: the economy and the bond market that the last fifteen 137 00:07:39,320 --> 00:07:43,840 Speaker 3: years were not normal, That we got to a structural low, 138 00:07:44,400 --> 00:07:46,800 Speaker 3: that was it, and now we're going to revert to 139 00:07:46,880 --> 00:07:50,640 Speaker 3: something that's more normal, where maybe that first long term 140 00:07:50,640 --> 00:07:53,520 Speaker 3: Fed DOT at four and a quarter percent will be 141 00:07:53,720 --> 00:07:56,200 Speaker 3: the neutral Fed funds rate. I just don't think you 142 00:07:56,320 --> 00:07:59,040 Speaker 3: get there all at once. I think it takes time. 143 00:07:59,120 --> 00:08:01,400 Speaker 3: It took twenty seven years for the Fed to get 144 00:08:01,400 --> 00:08:04,600 Speaker 3: from twenty percent to zero. Maybe this time we go 145 00:08:04,680 --> 00:08:07,320 Speaker 3: from zero to five and a quarter, things slow down. 146 00:08:07,360 --> 00:08:08,920 Speaker 3: They have to come back to two and a half 147 00:08:08,960 --> 00:08:11,720 Speaker 3: to three. Next time they go to six percent, and 148 00:08:11,760 --> 00:08:14,520 Speaker 3: then we figure out what that range is. We've gone 149 00:08:14,560 --> 00:08:15,440 Speaker 3: too far already. 150 00:08:15,520 --> 00:08:17,520 Speaker 2: You're in an officer with a guy named James Diamond, 151 00:08:17,600 --> 00:08:20,400 Speaker 2: and these are huge questions with a lot of zeros. 152 00:08:20,440 --> 00:08:21,120 Speaker 1: To the left of. 153 00:08:21,040 --> 00:08:25,360 Speaker 2: The decimal point. Is the Great Moderation over? Bring up 154 00:08:25,400 --> 00:08:28,440 Speaker 2: the banner again, BMD. This is the Vanguard Index, and 155 00:08:28,520 --> 00:08:31,200 Speaker 2: this is what our audience is feeling. They've been hammered 156 00:08:31,240 --> 00:08:34,040 Speaker 2: twenty one percent from the peak, seven and a half 157 00:08:34,040 --> 00:08:36,840 Speaker 2: percent analyzed off the Bloomberg What do you say to 158 00:08:36,920 --> 00:08:40,040 Speaker 2: Jamie Diamond about this hope and prayer of getting back 159 00:08:40,320 --> 00:08:41,360 Speaker 2: to the Great moderation. 160 00:08:43,120 --> 00:08:46,640 Speaker 3: We all hope that we moderate at a reasonable level 161 00:08:46,640 --> 00:08:51,080 Speaker 3: of interest rates, and I would hope that not tomorrow, 162 00:08:51,160 --> 00:08:54,280 Speaker 3: but say five to seven years from now, a five 163 00:08:54,320 --> 00:08:58,679 Speaker 3: percent ten year treasury is normal, not one and a 164 00:08:58,760 --> 00:09:01,600 Speaker 3: half to two percent where we were. It's just going 165 00:09:01,679 --> 00:09:03,199 Speaker 3: to take time to get there. 166 00:09:03,240 --> 00:09:06,160 Speaker 2: And this is so importantly so five to seven years 167 00:09:06,240 --> 00:09:10,520 Speaker 2: is not in the vocabulary of financial media and Global 168 00:09:10,559 --> 00:09:11,840 Speaker 2: Wall Street to a great extent. 169 00:09:11,920 --> 00:09:14,560 Speaker 3: Although I did hear I should start paying attention to 170 00:09:14,640 --> 00:09:16,520 Speaker 3: the possibility of seven percent. 171 00:09:16,679 --> 00:09:17,719 Speaker 4: Yes, I was just going to go that. 172 00:09:17,880 --> 00:09:18,920 Speaker 6: What did you think about that? 173 00:09:20,000 --> 00:09:21,480 Speaker 5: Did you go over to Jamien and says. 174 00:09:21,320 --> 00:09:22,800 Speaker 6: What are you thinking, volunteer? 175 00:09:23,440 --> 00:09:23,920 Speaker 1: Exactly? 176 00:09:24,440 --> 00:09:26,400 Speaker 5: I was going to go there, but you actually too easier. 177 00:09:26,520 --> 00:09:29,880 Speaker 3: It is a reminder to me that I sit here 178 00:09:30,240 --> 00:09:33,280 Speaker 3: and I think about could the FED go to five 179 00:09:33,320 --> 00:09:36,400 Speaker 3: and a half five and three quarters? They may just 180 00:09:36,559 --> 00:09:39,960 Speaker 3: do one for decoration. Could they go to five and 181 00:09:40,000 --> 00:09:43,800 Speaker 3: three quarter six percent? No, by the time you get 182 00:09:43,800 --> 00:09:47,160 Speaker 3: to that meeting, and I'm glad to know that the 183 00:09:47,200 --> 00:09:50,080 Speaker 3: guy sitting on the top of the house is thinking. 184 00:09:50,200 --> 00:09:51,880 Speaker 1: You idiots. Okay, goodness, what. 185 00:09:53,640 --> 00:09:57,040 Speaker 3: If all this liquidity hasn't been wrung out of the system, 186 00:09:57,480 --> 00:10:01,320 Speaker 3: it reignites and we do get up to something like 187 00:10:01,480 --> 00:10:05,600 Speaker 3: seven percent. It happened in the eighties. So he's running 188 00:10:05,640 --> 00:10:10,120 Speaker 3: the whole show, and I'm grateful that he's thinking about 189 00:10:10,160 --> 00:10:12,040 Speaker 3: those things. And I get to go back to my 190 00:10:12,240 --> 00:10:15,959 Speaker 3: little world of is it five and three quarters or 191 00:10:15,960 --> 00:10:16,960 Speaker 3: are we stuck here? 192 00:10:17,120 --> 00:10:19,719 Speaker 5: So basically the lead is here. You respectfully disagree with 193 00:10:19,800 --> 00:10:22,360 Speaker 5: Jamie Dimond. You'll let him worry about seven percent interest rates, 194 00:10:22,440 --> 00:10:25,319 Speaker 5: but it's not your range in any way, shape or form. 195 00:10:25,440 --> 00:10:28,720 Speaker 3: Well, I think he's pretty clear that's a stress test. 196 00:10:28,880 --> 00:10:31,440 Speaker 3: I don't think that's his base case scenario. 197 00:10:31,320 --> 00:10:34,079 Speaker 5: As we game out how to understand long and variable lags. 198 00:10:34,160 --> 00:10:35,840 Speaker 5: You did talk about that, and I think that that 199 00:10:35,960 --> 00:10:38,000 Speaker 5: is one of the questions that we keep hearing about, 200 00:10:38,000 --> 00:10:40,400 Speaker 5: with the likes of Jim Bullard, the former Saint Louis 201 00:10:40,400 --> 00:10:43,040 Speaker 5: FED president, saying that we've already seen them, and that 202 00:10:43,040 --> 00:10:45,080 Speaker 5: there might be shorter and they might have worked their 203 00:10:45,080 --> 00:10:47,360 Speaker 5: way through the system much more quickly. How do you 204 00:10:47,440 --> 00:10:50,120 Speaker 5: push back against that, especially at a time where you 205 00:10:50,200 --> 00:10:53,680 Speaker 5: do have highly financialized markets that do respond to a 206 00:10:53,720 --> 00:10:56,800 Speaker 5: Federal Reserve forecast what it's going to look like and 207 00:10:56,840 --> 00:10:59,120 Speaker 5: have already been adapting to this reality for a year 208 00:10:59,200 --> 00:10:59,800 Speaker 5: more than a year. 209 00:11:00,840 --> 00:11:04,720 Speaker 3: I would have waited until two years past from the 210 00:11:04,800 --> 00:11:08,600 Speaker 3: period of FED hikes to see whether those long and 211 00:11:08,720 --> 00:11:12,360 Speaker 3: variable lags hit, because the FED zone studies show it's 212 00:11:12,440 --> 00:11:16,280 Speaker 3: eighteen to twenty four months, and here we are about 213 00:11:16,320 --> 00:11:19,080 Speaker 3: twelve to eighteen months into it, so we should just 214 00:11:19,480 --> 00:11:23,560 Speaker 3: be starting to see that. I disagree. I don't think 215 00:11:23,559 --> 00:11:26,840 Speaker 3: they fully hit. I think we've only seen the front edge. 216 00:11:27,040 --> 00:11:30,920 Speaker 3: You talk to anyone in corporate America. The big companies 217 00:11:30,960 --> 00:11:33,360 Speaker 3: have already turned out their debt. They have to go 218 00:11:33,440 --> 00:11:36,720 Speaker 3: back and refinance that you talk to anyone who's looking 219 00:11:36,760 --> 00:11:40,360 Speaker 3: at a home, they can't get a mortgage at three percent. 220 00:11:40,720 --> 00:11:43,560 Speaker 3: They're in that close to eight percent category. And those 221 00:11:43,600 --> 00:11:46,360 Speaker 3: people who own homes, if they need to move, they're 222 00:11:46,400 --> 00:11:49,040 Speaker 3: going to have to step up their mortgage. The cost 223 00:11:49,080 --> 00:11:52,160 Speaker 3: of financing autos has gone up, and we've seen through 224 00:11:52,200 --> 00:11:56,000 Speaker 3: the Chase credit card data that revolving credit usage has 225 00:11:56,080 --> 00:12:00,800 Speaker 3: gone vertical, and that's at a much higher cost of before. 226 00:12:01,040 --> 00:12:04,360 Speaker 3: So that is telling you the crew consumers already stretched here. 227 00:12:04,520 --> 00:12:07,400 Speaker 3: They're trying to maintain their level of spending and it's 228 00:12:07,440 --> 00:12:09,440 Speaker 3: going to cost them more when they put it on credit. 229 00:12:09,520 --> 00:12:12,160 Speaker 5: We've been seeing this, and we've been hearing the acknowledgment 230 00:12:12,200 --> 00:12:14,400 Speaker 5: of this for people who still are not buying treasuries 231 00:12:14,440 --> 00:12:16,920 Speaker 5: right now because they're saying that prices are still going up. Yes, 232 00:12:16,920 --> 00:12:20,040 Speaker 5: the housing market is broken, but house prices are surprising 233 00:12:20,080 --> 00:12:22,360 Speaker 5: to the upside. At what point do you say that 234 00:12:22,400 --> 00:12:26,160 Speaker 5: inflation can stay here, the benchmark rates can stay here, 235 00:12:26,600 --> 00:12:30,520 Speaker 5: even with a downdraft that's being felt and recognized by 236 00:12:30,520 --> 00:12:31,040 Speaker 5: the market. 237 00:12:32,320 --> 00:12:34,600 Speaker 3: Well, I think the end of this week will be 238 00:12:34,679 --> 00:12:39,280 Speaker 3: interesting because on Thursday we get benchmark revisions to GDP. 239 00:12:39,880 --> 00:12:43,400 Speaker 3: We expect those to be lower, so that will raise 240 00:12:43,440 --> 00:12:46,720 Speaker 3: into question how strong the economy is. Then we get 241 00:12:46,760 --> 00:12:51,199 Speaker 3: personal consumption expenditures on Friday. We think that while the 242 00:12:51,320 --> 00:12:54,520 Speaker 3: year over year may come down below four percent, you 243 00:12:54,559 --> 00:12:57,160 Speaker 3: could have another point too. Now you start to print 244 00:12:57,200 --> 00:13:01,200 Speaker 3: a string of point twos, which is bringing inflation pretty 245 00:13:01,200 --> 00:13:04,360 Speaker 3: close to the Fed's two percent target. As long as 246 00:13:04,400 --> 00:13:11,320 Speaker 3: those growth and inflationary pressures, the trajectory is down. At 247 00:13:11,360 --> 00:13:14,800 Speaker 3: some point, the Fed's policies will look outdated. 248 00:13:15,120 --> 00:13:17,679 Speaker 4: Question from my Bloomberg subscriber, Bob, let's finish with that 249 00:13:18,040 --> 00:13:21,160 Speaker 4: unless the FED steps back into the market, Vique, who's 250 00:13:21,200 --> 00:13:24,840 Speaker 4: going to take down the duration supply next year? What's 251 00:13:24,880 --> 00:13:25,360 Speaker 4: the answer to that? 252 00:13:25,400 --> 00:13:31,200 Speaker 3: At the moment, we get inquiry every day from retail 253 00:13:31,280 --> 00:13:35,760 Speaker 3: platforms and from institutions wanting to know is this the 254 00:13:35,840 --> 00:13:38,360 Speaker 3: time to go into bonds? And there's been a lot 255 00:13:38,400 --> 00:13:40,400 Speaker 3: of flow at the start of the year, but I 256 00:13:40,440 --> 00:13:42,720 Speaker 3: think it's only been at the tip of the iceberg. 257 00:13:42,800 --> 00:13:44,920 Speaker 3: I think there are a lot of pension funds and 258 00:13:45,000 --> 00:13:47,880 Speaker 3: insurance companies that are looking at one of the best 259 00:13:47,960 --> 00:13:51,440 Speaker 3: opportunities to de risk in twenty years. They put some 260 00:13:51,559 --> 00:13:53,440 Speaker 3: money to work, they've got a lot more to do. 261 00:13:53,840 --> 00:13:56,200 Speaker 3: There will be plenty of buyers out there out of 262 00:13:56,840 --> 00:13:57,400 Speaker 3: out of interest. 263 00:13:57,400 --> 00:13:58,319 Speaker 6: What's holding them back? 264 00:13:58,960 --> 00:14:00,800 Speaker 4: If I told them they could have these yields a 265 00:14:00,840 --> 00:14:03,079 Speaker 4: couple of years ago, they've been like ready, Like can 266 00:14:03,120 --> 00:14:04,880 Speaker 4: I take that now? What's holding them back? 267 00:14:04,920 --> 00:14:07,400 Speaker 6: Now here it is for sixty. 268 00:14:07,280 --> 00:14:11,560 Speaker 3: I think everyone's concerned about catching a falling knife. And 269 00:14:11,600 --> 00:14:13,640 Speaker 3: I think at the start of the year when they 270 00:14:13,640 --> 00:14:17,000 Speaker 3: put money in, yields rallied very rapidly, and they pulled 271 00:14:17,040 --> 00:14:19,320 Speaker 3: back to see if you would get a pullback. They 272 00:14:19,360 --> 00:14:21,560 Speaker 3: pulled back a bit, and over the summer they put 273 00:14:21,560 --> 00:14:23,720 Speaker 3: them in, and as yields have continued to go up, 274 00:14:24,040 --> 00:14:24,880 Speaker 3: they've just paused. 275 00:14:24,960 --> 00:14:27,960 Speaker 2: In Lincoln Publishing moments ago, Bank of Montreal goes to 276 00:14:28,000 --> 00:14:31,240 Speaker 2: the same illusion Christopherona had this earlier, the sarcastic idea 277 00:14:31,240 --> 00:14:35,280 Speaker 2: of catching a falling knife. What is the signal out there? 278 00:14:35,400 --> 00:14:37,840 Speaker 2: Is it fed rhetoric or is your own power policy? 279 00:14:38,200 --> 00:14:40,000 Speaker 2: Where all of a sudden you go from the fear 280 00:14:40,040 --> 00:14:42,160 Speaker 2: of catching the knife to something else. 281 00:14:42,960 --> 00:14:46,640 Speaker 3: I think you've got to see something which evidences a 282 00:14:46,720 --> 00:14:50,880 Speaker 3: material slow down in the economy. I think everyone's comfortable 283 00:14:50,920 --> 00:14:54,920 Speaker 3: with the disinflation narrative, but concerned that there's a lot 284 00:14:54,960 --> 00:14:57,680 Speaker 3: of data in the labor market that looks strong. When 285 00:14:57,720 --> 00:15:00,480 Speaker 3: we start to see the labor market come under pressure, 286 00:15:00,880 --> 00:15:03,000 Speaker 3: that will turn the tide for sure above. 287 00:15:03,000 --> 00:15:05,240 Speaker 4: I nine you a long time. Always enjoy catching up 288 00:15:05,240 --> 00:15:06,400 Speaker 4: with your congratulations. 289 00:15:06,520 --> 00:15:07,240 Speaker 3: Thank you very much. 290 00:15:07,280 --> 00:15:10,320 Speaker 4: Inducted into the Fixed Income Hall of Fame. But Michael 291 00:15:10,320 --> 00:15:12,720 Speaker 4: at JP Market Asset Management. 292 00:15:23,280 --> 00:15:25,680 Speaker 2: And your equity markets on your new two oh one 293 00:15:25,760 --> 00:15:28,600 Speaker 2: k with a vis at eighteen point twenty six. Now 294 00:15:28,600 --> 00:15:32,520 Speaker 2: to your level, senior US equity strategist ubs Nadi, thank 295 00:15:32,560 --> 00:15:35,320 Speaker 2: you so much for joining give me the siren call 296 00:15:35,640 --> 00:15:38,520 Speaker 2: of whatever the new level of cash is going to 297 00:15:38,560 --> 00:15:41,800 Speaker 2: be five point two five, five point fivey five. Someday 298 00:15:41,800 --> 00:15:44,359 Speaker 2: it's going to be a level like six percent cash. 299 00:15:44,440 --> 00:15:47,320 Speaker 2: Do I need to be in cash? 300 00:15:47,440 --> 00:15:47,600 Speaker 5: No? 301 00:15:47,680 --> 00:15:49,440 Speaker 7: I don't think that you need to be in cash. 302 00:15:49,520 --> 00:15:53,120 Speaker 7: I think that there are opportunities in the market equities 303 00:15:53,160 --> 00:15:56,360 Speaker 7: as well as the bond market. We think that there 304 00:15:56,480 --> 00:16:00,320 Speaker 7: is some upsides to this market. I mean, this wellcome 305 00:16:00,360 --> 00:16:02,760 Speaker 7: pulled back I think is very healthy, and I think 306 00:16:02,800 --> 00:16:05,120 Speaker 7: that it's time to really start to leg into the 307 00:16:05,120 --> 00:16:07,960 Speaker 7: equity markets and in the fixed income market. Even though 308 00:16:08,040 --> 00:16:10,800 Speaker 7: yields have backed up a bit. We do think that 309 00:16:10,880 --> 00:16:14,200 Speaker 7: yields will trend lower in the coming months. We do 310 00:16:14,280 --> 00:16:16,400 Speaker 7: think that the economy will start to slow and the 311 00:16:16,400 --> 00:16:18,720 Speaker 7: FED is done hiking, and that should give some relief 312 00:16:18,760 --> 00:16:21,360 Speaker 7: to bond yields, and so we will look into add 313 00:16:21,400 --> 00:16:22,680 Speaker 7: to bond bonds. 314 00:16:22,400 --> 00:16:25,360 Speaker 5: As well, starting to leg into stocks witch stocks, Matty, 315 00:16:25,400 --> 00:16:27,640 Speaker 5: are you looking at consumer discretionary and saying let's go. 316 00:16:29,240 --> 00:16:32,920 Speaker 7: No, We actually in terms of we're mutual consumer discretionary, 317 00:16:33,040 --> 00:16:38,280 Speaker 7: we maintain a preference for industrial consumer stables and the 318 00:16:38,520 --> 00:16:41,840 Speaker 7: energy sector. We know that energy has done quite well 319 00:16:41,880 --> 00:16:45,200 Speaker 7: over the last few months since we upgraded it three 320 00:16:45,240 --> 00:16:48,160 Speaker 7: months ago, but it has lacked the commodity and we 321 00:16:48,240 --> 00:16:51,400 Speaker 7: continue to believe that oil prices are sustainable in this 322 00:16:51,560 --> 00:16:53,960 Speaker 7: ninety to one hundred dollars range. We're looking for ninety 323 00:16:54,000 --> 00:16:57,040 Speaker 7: five into twenty twenty four, and so we do think 324 00:16:57,040 --> 00:16:59,040 Speaker 7: that there's a little bit more to go in the 325 00:16:59,080 --> 00:17:01,960 Speaker 7: long energy trade. I mean, we particularly like the EMP 326 00:17:02,160 --> 00:17:05,199 Speaker 7: companies and the all service six companies within energy. 327 00:17:05,560 --> 00:17:08,280 Speaker 5: When you talk about yields eventually going down, there's a 328 00:17:08,359 --> 00:17:10,280 Speaker 5: question of what's going to trigger that at a time 329 00:17:10,320 --> 00:17:14,000 Speaker 5: where people are seeing strength that was unexpected in the economy, 330 00:17:14,359 --> 00:17:17,359 Speaker 5: and they're saying that it will cause inflation to stay 331 00:17:17,480 --> 00:17:20,120 Speaker 5: higher for longer, the FED to stay on hold for longer. 332 00:17:20,560 --> 00:17:23,400 Speaker 5: What gives you confidence that both equities can keep doing 333 00:17:23,440 --> 00:17:26,359 Speaker 5: well and we are going to get yields going lower 334 00:17:26,560 --> 00:17:30,600 Speaker 5: typically some sort of symbol of weakness being expressed to 335 00:17:30,600 --> 00:17:31,480 Speaker 5: the market. 336 00:17:32,520 --> 00:17:36,320 Speaker 7: Yeah, we are looking for more sub try and economic growth, 337 00:17:36,359 --> 00:17:38,439 Speaker 7: but we are calling for a recession, and so we 338 00:17:38,520 --> 00:17:40,040 Speaker 7: think that you are going to be in this sweet 339 00:17:40,040 --> 00:17:43,560 Speaker 7: spot where the GDP growth is probably around one percent 340 00:17:43,640 --> 00:17:46,000 Speaker 7: the FED is done hiking. We know about historically when 341 00:17:46,000 --> 00:17:48,160 Speaker 7: the Fed is done hike and BONDI you'll start to fall. 342 00:17:48,480 --> 00:17:51,800 Speaker 7: I mean, we think that inflation is going to continue 343 00:17:51,800 --> 00:17:53,879 Speaker 7: to remain on this downward trend. I mean, for a 344 00:17:53,920 --> 00:17:57,080 Speaker 7: core PCE on Friday, we're looking for about fourteen basis 345 00:17:57,119 --> 00:17:59,600 Speaker 7: points and when you annualize like the last three months, 346 00:18:00,440 --> 00:18:02,680 Speaker 7: you're at two point three percent. And so we think 347 00:18:02,720 --> 00:18:05,760 Speaker 7: that that inflation is going to cause effect to stop 348 00:18:05,840 --> 00:18:08,800 Speaker 7: hiking and look to ease rates in twenty twenty four, 349 00:18:08,840 --> 00:18:12,000 Speaker 7: and so that should be supportive to the equity markets 350 00:18:12,040 --> 00:18:13,240 Speaker 7: as well as the bond market. 351 00:18:13,400 --> 00:18:16,480 Speaker 2: Nadie I'm going to editorialize and suggest that maybe the 352 00:18:16,520 --> 00:18:20,240 Speaker 2: bond market on price is in a bond bear market, 353 00:18:20,320 --> 00:18:23,360 Speaker 2: priced down and staying down and looking for new lows. 354 00:18:24,000 --> 00:18:27,919 Speaker 2: In the equity space, I'm confused. Are we in a 355 00:18:27,960 --> 00:18:32,280 Speaker 2: bull market off the October lows or are we reaffirming 356 00:18:33,040 --> 00:18:35,400 Speaker 2: the bear market reality and stocks? 357 00:18:37,200 --> 00:18:39,480 Speaker 7: Yeah, I think I don't think that you're going to 358 00:18:39,560 --> 00:18:42,680 Speaker 7: re enter our bear market in equities. I mean, reality 359 00:18:42,920 --> 00:18:45,720 Speaker 7: is the earnest recession in our view, is behind us, 360 00:18:45,760 --> 00:18:47,639 Speaker 7: and so we think the upcome and earnesty so of 361 00:18:47,720 --> 00:18:49,840 Speaker 7: course will be important, but we also think that you 362 00:18:49,880 --> 00:18:53,200 Speaker 7: should be certain to see an inflection point in earnings 363 00:18:53,280 --> 00:18:56,080 Speaker 7: after three quarters of negative earness growth. I mean, when 364 00:18:56,080 --> 00:18:58,120 Speaker 7: we look into twenty twenty four, we see high single 365 00:18:58,160 --> 00:19:01,560 Speaker 7: digitus earnings growth really support still a growing economy. 366 00:19:01,600 --> 00:19:02,480 Speaker 6: It's still a consumer. 367 00:19:02,560 --> 00:19:04,639 Speaker 7: Yes, the consumer is pulling back, but the consumer is 368 00:19:04,640 --> 00:19:08,160 Speaker 7: still there. So I mean, when we look into twenty four, 369 00:19:08,359 --> 00:19:10,840 Speaker 7: we're looking for forty seven one hundred and on the 370 00:19:10,920 --> 00:19:13,200 Speaker 7: S and P five hundred. So no, not an indication 371 00:19:13,320 --> 00:19:14,879 Speaker 7: of our retest of the bear market. 372 00:19:15,000 --> 00:19:17,560 Speaker 2: What do you do with tech and other high flyers. 373 00:19:17,600 --> 00:19:21,119 Speaker 2: I'm thinking luxury, which has been beleaguered. I guess, but 374 00:19:21,200 --> 00:19:24,400 Speaker 2: what do you do with those leading sectors from before? 375 00:19:26,440 --> 00:19:29,639 Speaker 7: You were seeing a pullback in tech. We are mutual 376 00:19:29,840 --> 00:19:32,399 Speaker 7: tech up, but we think that this pullback could provide 377 00:19:32,440 --> 00:19:36,280 Speaker 7: some opportunities. We're really going to be important for tech. Again, 378 00:19:36,320 --> 00:19:38,600 Speaker 7: it's the earnest season. This is really real. The rubbery's 379 00:19:38,640 --> 00:19:40,800 Speaker 7: going to hit the road no longer, it's just the 380 00:19:40,800 --> 00:19:43,040 Speaker 7: outer of the term. AI is going to move U stop. 381 00:19:43,080 --> 00:19:45,320 Speaker 7: You really need to start to see revenues come through 382 00:19:45,600 --> 00:19:48,719 Speaker 7: on that or concrete plans around AI. And we do 383 00:19:48,800 --> 00:19:50,480 Speaker 7: think that you are going to start to see some 384 00:19:50,720 --> 00:19:53,080 Speaker 7: growth in some of those areas of tech that had 385 00:19:53,119 --> 00:19:56,400 Speaker 7: been weak or signs of bottom and a stabilization, whether 386 00:19:56,440 --> 00:20:01,560 Speaker 7: that be PC, smartphone or cloud computing. So for globally, 387 00:20:01,680 --> 00:20:03,600 Speaker 7: we continue to like the areas of tech that are 388 00:20:03,680 --> 00:20:07,080 Speaker 7: profitable Number one and two areas of tech where there 389 00:20:07,080 --> 00:20:10,919 Speaker 7: are higher percentage of Hargn revenues and have some secular 390 00:20:11,000 --> 00:20:15,879 Speaker 7: exposure to cecular trends like AI and cybersecurity. We have 391 00:20:15,960 --> 00:20:18,320 Speaker 7: these do think that there's a role for tech in 392 00:20:18,320 --> 00:20:18,920 Speaker 7: the portfolio. 393 00:20:19,040 --> 00:20:21,600 Speaker 5: Nadia. We talk about these macro trends and then we 394 00:20:21,600 --> 00:20:24,880 Speaker 5: get these micro stories like what the FTC did yesterday 395 00:20:24,920 --> 00:20:27,919 Speaker 5: with Amazon, how much and how do you sort of 396 00:20:28,440 --> 00:20:33,719 Speaker 5: view those headlines and translate them into overall theses. How 397 00:20:33,800 --> 00:20:36,280 Speaker 5: much do you care about those type of developments. 398 00:20:37,560 --> 00:20:40,800 Speaker 7: It's important to keep an eye on these things because obviously, 399 00:20:40,880 --> 00:20:43,840 Speaker 7: you know, any of these sort of cases could eventually 400 00:20:43,960 --> 00:20:46,800 Speaker 7: to a breakup of company, which in some view even 401 00:20:46,880 --> 00:20:51,640 Speaker 7: some of the breakup of these larger companies can unlock value. 402 00:20:52,280 --> 00:20:55,400 Speaker 7: So it is something baire watching over the longer charm. 403 00:20:55,440 --> 00:20:57,119 Speaker 7: But I think in the narrow tron what's going to 404 00:20:57,160 --> 00:21:00,400 Speaker 7: matter more is really the earnest growth, what the fat doing, 405 00:21:00,440 --> 00:21:02,680 Speaker 7: and what the economy doing. Not so much on terms 406 00:21:02,680 --> 00:21:05,680 Speaker 7: of a regulatory standpoint, because these regulations take a long 407 00:21:05,720 --> 00:21:07,719 Speaker 7: time to play out and most of the time they 408 00:21:07,800 --> 00:21:08,679 Speaker 7: end up being nothing. 409 00:21:08,840 --> 00:21:11,840 Speaker 4: It's Grant HOWKDA once again for Amazon, Natia, thank you, 410 00:21:11,920 --> 00:21:13,919 Speaker 4: Nati Leveo. Have you Bes Club of Wealth Management? 411 00:21:18,119 --> 00:21:20,240 Speaker 1: Thrilled to have on set this morning. Ed Mills. 412 00:21:20,320 --> 00:21:23,360 Speaker 2: He's Washington policy analyst at Raymond James, has a lot 413 00:21:23,359 --> 00:21:27,960 Speaker 2: of work with Carol Malonium on others out of Boston 414 00:21:27,960 --> 00:21:30,919 Speaker 2: College where you learn politics quickly and Mils, have you 415 00:21:31,000 --> 00:21:32,359 Speaker 2: seen this before? To me? 416 00:21:32,800 --> 00:21:34,440 Speaker 1: A president on a picket line. 417 00:21:34,520 --> 00:21:38,040 Speaker 2: It's original, But is this an original talk about shutdown? 418 00:21:38,520 --> 00:21:41,720 Speaker 8: It's not an original talkout on shutdown. At Raymond James, 419 00:21:41,760 --> 00:21:44,480 Speaker 8: we have enough data to go back to nineteen ninety 420 00:21:44,480 --> 00:21:47,600 Speaker 8: five and say, like what happens in each of these shutdowns, 421 00:21:47,600 --> 00:21:51,440 Speaker 8: And what we found was actually somewhat counterintuitive that on average, 422 00:21:51,520 --> 00:21:54,880 Speaker 8: the market is up about three point two percent during 423 00:21:54,920 --> 00:21:59,159 Speaker 8: government shutdowns. So that tells me that the shutdown in 424 00:21:59,240 --> 00:22:03,520 Speaker 8: and of itself should not be a driver for this market. 425 00:22:04,240 --> 00:22:06,600 Speaker 8: We have a lot of other kind of headwinds that 426 00:22:06,640 --> 00:22:10,399 Speaker 8: we have to focus on, kind of the debt service 427 00:22:10,400 --> 00:22:15,240 Speaker 8: burden for this country, longer term fiscal trends, But government shutdown. 428 00:22:15,600 --> 00:22:18,600 Speaker 8: I don't have a huge concern about market implications for you. 429 00:22:18,680 --> 00:22:20,800 Speaker 2: And I know the photo when you're at Boston College 430 00:22:20,840 --> 00:22:24,720 Speaker 2: of Tip O'Neil sitting with Howard Baker and somehow they 431 00:22:24,880 --> 00:22:29,040 Speaker 2: got things done. That's not happening right now. How do 432 00:22:29,080 --> 00:22:31,800 Speaker 2: you get to compromise and a fractured Washington. 433 00:22:32,400 --> 00:22:33,240 Speaker 6: Very different world. 434 00:22:33,480 --> 00:22:36,840 Speaker 8: I have been focused more on the Senate than on 435 00:22:36,920 --> 00:22:39,280 Speaker 8: the House, and I think almost all of the headlines 436 00:22:39,280 --> 00:22:42,000 Speaker 8: have been about the House of Representatives, when in reality 437 00:22:42,680 --> 00:22:46,080 Speaker 8: the Senate, either sometime in the next day or two, 438 00:22:46,560 --> 00:22:50,600 Speaker 8: maybe past October first, is going to pass a continuing resolution, 439 00:22:50,760 --> 00:22:53,560 Speaker 8: and it's going to have well north of seventy five votes. 440 00:22:54,000 --> 00:22:57,520 Speaker 8: Once that's done, the pressure is going to build on 441 00:22:57,560 --> 00:22:59,320 Speaker 8: the House to at least have a vote on that. 442 00:22:59,760 --> 00:23:02,320 Speaker 8: If they have a vote on what passes the Senate, 443 00:23:02,760 --> 00:23:05,359 Speaker 8: I think there's probably more than three hundred votes on 444 00:23:05,480 --> 00:23:08,080 Speaker 8: that bill. Why that's important is that if you can 445 00:23:08,119 --> 00:23:10,320 Speaker 8: get three hundred votes, you don't have to go through 446 00:23:10,320 --> 00:23:12,840 Speaker 8: the rules committee. Kevin McCarthy does not have to have 447 00:23:12,880 --> 00:23:14,840 Speaker 8: a fight on the floor where he has to have 448 00:23:14,920 --> 00:23:17,880 Speaker 8: Democrats supporting even having a conversation of the bill. 449 00:23:17,960 --> 00:23:20,080 Speaker 6: It's put on the suspension calendar and get that done. 450 00:23:20,160 --> 00:23:21,280 Speaker 5: So just to put a bow on that, are you 451 00:23:21,320 --> 00:23:23,399 Speaker 5: basically saying that there's a good chance that we're going 452 00:23:23,440 --> 00:23:25,800 Speaker 5: to avoid a shutdown more than the market certainly pricing. 453 00:23:26,040 --> 00:23:28,760 Speaker 8: So could we have a shutdown for a day or two. 454 00:23:29,160 --> 00:23:31,560 Speaker 8: It's certainly possible because we're looking at the timing of 455 00:23:31,560 --> 00:23:33,840 Speaker 8: how the Senate is working on this. But if there 456 00:23:34,080 --> 00:23:37,320 Speaker 8: is a shutdown, I don't think it's long lasting because 457 00:23:37,560 --> 00:23:40,119 Speaker 8: the pressure's going to build so much on the House 458 00:23:40,320 --> 00:23:42,399 Speaker 8: to have a vote on what the Senate passes. So 459 00:23:42,520 --> 00:23:45,119 Speaker 8: look at what the Senate does and if it's seventy 460 00:23:45,119 --> 00:23:48,520 Speaker 8: five eighty votes on that continuing resolution, I think that's 461 00:23:48,560 --> 00:23:51,320 Speaker 8: a really positive sign. And another positive sign could be 462 00:23:51,400 --> 00:23:53,560 Speaker 8: if the House is not able to do their own 463 00:23:53,640 --> 00:23:56,480 Speaker 8: cr that adds to the complication if they can do 464 00:23:56,560 --> 00:23:57,280 Speaker 8: that later. 465 00:23:57,080 --> 00:23:59,920 Speaker 5: Today, moving away from the crystal ball of Washington politics, 466 00:24:00,160 --> 00:24:02,840 Speaker 5: question around the actualities of the moment, we were talking 467 00:24:02,840 --> 00:24:05,880 Speaker 5: about the dollar. The dollar being stronger, and this comes 468 00:24:05,920 --> 00:24:08,280 Speaker 5: at a time after years where a lot of nations 469 00:24:08,280 --> 00:24:10,320 Speaker 5: were looking to depreciate their currency. 470 00:24:10,760 --> 00:24:12,159 Speaker 6: Is the stronger value. 471 00:24:12,240 --> 00:24:15,080 Speaker 5: Is a stronger dollar actually a benefit right now to 472 00:24:15,080 --> 00:24:16,720 Speaker 5: the Biden administration. 473 00:24:16,400 --> 00:24:17,760 Speaker 6: Lisa, I could argue yes. 474 00:24:17,960 --> 00:24:20,320 Speaker 8: And when I have been on trips to Europe and 475 00:24:20,320 --> 00:24:25,480 Speaker 8: European investors, they think that the Federal Reserve and Treasury 476 00:24:25,520 --> 00:24:29,560 Speaker 8: are in cahoots here, that all of the push for 477 00:24:29,760 --> 00:24:32,119 Speaker 8: kind of rebuilding the industrial base of the United States 478 00:24:32,160 --> 00:24:35,080 Speaker 8: through the Inflation Reduction Act, Chips and Science Act, Bipartisan 479 00:24:35,160 --> 00:24:39,399 Speaker 8: Infrastructure Bill. If you have a strong dollar, it is 480 00:24:39,600 --> 00:24:43,199 Speaker 8: cheaper to manufacture things here in the United States. And 481 00:24:43,240 --> 00:24:46,800 Speaker 8: to the extent that that's supporting that fiscal policy in 482 00:24:46,840 --> 00:24:51,359 Speaker 8: the background. I do think that's an underappreciated aspect of 483 00:24:51,359 --> 00:24:53,080 Speaker 8: what the Fed has been doing. 484 00:24:53,480 --> 00:24:55,480 Speaker 5: Do you think that that's a valid in any way, 485 00:24:55,480 --> 00:24:57,640 Speaker 5: shape or form or just conspiracy theory from people who 486 00:24:57,720 --> 00:24:59,280 Speaker 5: kind of have sower greapes about the fact that they 487 00:24:59,280 --> 00:25:00,000 Speaker 5: feel like they're on the line. 488 00:25:00,680 --> 00:25:03,439 Speaker 8: Well, I think there's two things, Lisa. One, this is 489 00:25:03,480 --> 00:25:06,520 Speaker 8: the first time and generations where we have challenged the 490 00:25:06,560 --> 00:25:10,199 Speaker 8: industrial base of Europe right rebuilding it here in the 491 00:25:10,280 --> 00:25:13,480 Speaker 8: United States. Two, the Treasury Secretary used to be the 492 00:25:13,520 --> 00:25:16,600 Speaker 8: FED cheer and so I do think there might be 493 00:25:16,680 --> 00:25:19,399 Speaker 8: a few kind of conversations and a little bit of 494 00:25:19,440 --> 00:25:21,040 Speaker 8: work together between the two. 495 00:25:21,359 --> 00:25:24,480 Speaker 2: Tell me about the debt and the deficit. Mia McGuinness 496 00:25:24,600 --> 00:25:26,800 Speaker 2: was on yesterday and it was just brilliant about the 497 00:25:26,880 --> 00:25:30,040 Speaker 2: new of the debt and the deficit. You are a 498 00:25:30,160 --> 00:25:34,320 Speaker 2: grizzled pro at this. Are you concerned about our debt 499 00:25:34,520 --> 00:25:35,440 Speaker 2: and our deficit? 500 00:25:36,400 --> 00:25:37,760 Speaker 6: I have a growing concern. 501 00:25:37,800 --> 00:25:39,159 Speaker 8: I mean one of the things that we look at 502 00:25:39,240 --> 00:25:42,560 Speaker 8: if you check the national debt and the debt service burden, 503 00:25:42,640 --> 00:25:45,000 Speaker 8: the debt service burden is going to eclipse what we 504 00:25:45,080 --> 00:25:49,919 Speaker 8: spend on discretionary spending all of defense in non defense 505 00:25:50,000 --> 00:25:53,359 Speaker 8: discretionary spending pretty quickly here. So for years when I 506 00:25:53,359 --> 00:25:56,000 Speaker 8: first came to Capitol Hill being concerned about the debt 507 00:25:56,040 --> 00:25:59,159 Speaker 8: and the deficit, we're front and center last five ten 508 00:25:59,280 --> 00:26:02,600 Speaker 8: years that really went away. That's returning, and that's going 509 00:26:02,640 --> 00:26:06,359 Speaker 8: to have a huge impact on our politics and you know, 510 00:26:06,480 --> 00:26:08,800 Speaker 8: ultimately on kind of what we're able to spend. When 511 00:26:08,840 --> 00:26:11,639 Speaker 8: I look at the twenty twenty four election, probably one 512 00:26:11,680 --> 00:26:13,640 Speaker 8: of the biggest decisions that's going to be made based 513 00:26:13,720 --> 00:26:16,600 Speaker 8: upon who wins is the tax cuts that expire in 514 00:26:16,600 --> 00:26:19,439 Speaker 8: twenty twenty five. That's another four trillion dollars if you 515 00:26:19,480 --> 00:26:22,400 Speaker 8: want to extend those out. And so if you are 516 00:26:22,480 --> 00:26:24,800 Speaker 8: kind of having a conversation about the debt and the deficit, 517 00:26:25,200 --> 00:26:27,080 Speaker 8: what are you going to do with those tax cuts? 518 00:26:27,359 --> 00:26:30,320 Speaker 8: What is the implication for the economy, especially on the 519 00:26:30,560 --> 00:26:33,040 Speaker 8: individual side, because those are the parts that expire. 520 00:26:33,119 --> 00:26:34,640 Speaker 4: It's such a good point, but you know how this works. 521 00:26:34,720 --> 00:26:36,560 Speaker 4: You get into power and order of a sudden, you 522 00:26:36,600 --> 00:26:38,440 Speaker 4: don't care about the deficit like you used to do. 523 00:26:38,560 --> 00:26:39,640 Speaker 6: Yeah, I's going to change. 524 00:26:40,280 --> 00:26:43,000 Speaker 8: No, I've always said that the you know kind of 525 00:26:43,080 --> 00:26:45,280 Speaker 8: members of Congress really care about. 526 00:26:45,040 --> 00:26:47,120 Speaker 6: The debt and the deficit when they're in the minority. 527 00:26:47,359 --> 00:26:50,600 Speaker 8: Yeah, And one of the big concerns is that the 528 00:26:50,600 --> 00:26:54,280 Speaker 8: way in which you think you should solve it is different. 529 00:26:54,320 --> 00:26:58,040 Speaker 8: So Republicans like to kind of grow kind of revenues 530 00:26:58,080 --> 00:27:00,800 Speaker 8: through kind of tax cuts, and Democrats try to feel 531 00:27:00,840 --> 00:27:03,600 Speaker 8: they want to grow revenue through tax increases. 532 00:27:03,480 --> 00:27:07,080 Speaker 4: Unless, of course, the market forces that discipline onto Congress 533 00:27:07,080 --> 00:27:08,800 Speaker 4: and Washington and away Tom that it hasn't for a 534 00:27:08,840 --> 00:27:10,879 Speaker 4: long time, that would be the change one just. 535 00:27:11,000 --> 00:27:13,040 Speaker 1: Quick, I'm so sorry for this. It should be a 536 00:27:13,040 --> 00:27:13,760 Speaker 1: longer question. 537 00:27:13,840 --> 00:27:16,800 Speaker 2: Do either of these parties feel like they're in the minority. 538 00:27:17,440 --> 00:27:19,600 Speaker 1: They're both acting like they're in the majority. 539 00:27:20,119 --> 00:27:22,760 Speaker 8: I think that when you are in the White House, 540 00:27:23,080 --> 00:27:25,760 Speaker 8: you know, that's kind of what sets it. So, yes, 541 00:27:25,880 --> 00:27:29,360 Speaker 8: Republicans have a majority in the House, but in reality, 542 00:27:29,359 --> 00:27:33,960 Speaker 8: with the Senate a Democratic majority Donald Joe Biden as president, 543 00:27:34,680 --> 00:27:38,120 Speaker 8: they kind of can push on the president and make 544 00:27:38,160 --> 00:27:40,200 Speaker 8: him have kind of tough conversations. 545 00:27:40,320 --> 00:27:43,399 Speaker 4: And thank you smart as always as most of Raymond James, 546 00:27:53,520 --> 00:27:56,720 Speaker 4: I'm ready cent advantagy aspects, calling for one hundred dollars 547 00:27:56,720 --> 00:27:59,960 Speaker 4: oil by Halloween. The last time she was on Bloomberg surveillance. 548 00:28:00,040 --> 00:28:02,119 Speaker 4: In her latest note, she says this will do you not 549 00:28:02,160 --> 00:28:05,240 Speaker 4: see prices lending up in the net term. Crude fundamentals 550 00:28:05,240 --> 00:28:07,879 Speaker 4: have become strong enough that the macro story is no 551 00:28:08,000 --> 00:28:09,960 Speaker 4: longer sufficient to drive price action. 552 00:28:10,359 --> 00:28:10,639 Speaker 6: Tom. 553 00:28:10,680 --> 00:28:14,080 Speaker 4: Instead, crude is starting to drive the macro view. 554 00:28:14,480 --> 00:28:17,080 Speaker 2: Joining us now in New York as usual in London. 555 00:28:17,119 --> 00:28:21,600 Speaker 2: Emory Dessen, co founder, head of Research Energy Aspects, How 556 00:28:21,600 --> 00:28:26,480 Speaker 2: does Saudi Arabia react to the band turmoil and critically 557 00:28:27,160 --> 00:28:33,679 Speaker 2: strong dollar currency turmoil worldwide INOPEC plus and outside OPEK plus. 558 00:28:34,160 --> 00:28:36,760 Speaker 9: I think Tom, that's one of the biggest reasons why 559 00:28:37,200 --> 00:28:40,200 Speaker 9: Prince Abvilaziz has insisted on keeping these cuts. He is 560 00:28:40,280 --> 00:28:43,400 Speaker 9: extremely worried about what he's seeing in the macro market. 561 00:28:43,440 --> 00:28:46,600 Speaker 9: Right Bond markets are reflecting this uncertainty. What does it 562 00:28:46,680 --> 00:28:51,680 Speaker 9: mean for growth? And why preempt that by bringing barrels on, 563 00:28:51,880 --> 00:28:54,840 Speaker 9: for instance, and you get a big slowdown in growth 564 00:28:55,680 --> 00:28:57,440 Speaker 9: only for them to have to cut it back. 565 00:28:58,120 --> 00:29:00,000 Speaker 5: What was the mood like in Oklahoma City, That's where 566 00:29:00,000 --> 00:29:03,400 Speaker 5: you just came from with this conference, David Tullman, interestingly, 567 00:29:03,520 --> 00:29:05,840 Speaker 5: was there of goldmentz Act saying we support you, Which 568 00:29:05,880 --> 00:29:08,400 Speaker 5: is a real change in the tone of some of 569 00:29:08,440 --> 00:29:11,760 Speaker 5: the biggest financial institutions in the US. Was the tone 570 00:29:11,840 --> 00:29:14,720 Speaker 5: optimistic that you could start investing again in a way 571 00:29:14,880 --> 00:29:17,360 Speaker 5: that was more meaningful with the idea of higher oil prices. 572 00:29:17,600 --> 00:29:19,360 Speaker 9: No, I think it's a great question, and I think 573 00:29:19,360 --> 00:29:22,000 Speaker 9: the mood was optimistic because oil prices are at ninety 574 00:29:22,880 --> 00:29:25,720 Speaker 9: But I do think there was a sense of pessimism 575 00:29:25,720 --> 00:29:30,680 Speaker 9: as well because the markets aren't really allowing CEOs and 576 00:29:30,720 --> 00:29:34,040 Speaker 9: companies to invest, shareholder pressure and governments as well around 577 00:29:34,080 --> 00:29:36,360 Speaker 9: the world. I think you're starting to see some European 578 00:29:36,400 --> 00:29:39,320 Speaker 9: government's backtrack over the last couple of days with some 579 00:29:39,360 --> 00:29:42,880 Speaker 9: of their big targets. But in general, i'd say, you know, 580 00:29:42,920 --> 00:29:46,320 Speaker 9: the support from the Western governments has or for oil 581 00:29:46,320 --> 00:29:49,840 Speaker 9: and gas companies remains very limited, with the focus still 582 00:29:49,960 --> 00:29:52,240 Speaker 9: mostly on ESG and renewables. 583 00:29:52,320 --> 00:29:54,880 Speaker 5: Well, there's a larger question here than how high prices 584 00:29:54,880 --> 00:29:56,920 Speaker 5: could go. And the Continental CEO said the oil got 585 00:29:56,960 --> 00:30:00,640 Speaker 5: to get one hundred and fifty dollars without government backing. 586 00:30:01,520 --> 00:30:02,080 Speaker 6: Do you agree? 587 00:30:02,120 --> 00:30:03,720 Speaker 5: I mean, honestly, when I saw that, I was like, 588 00:30:04,040 --> 00:30:07,840 Speaker 5: of course, but that's just my natural internal skeptic skepticism, 589 00:30:07,920 --> 00:30:08,640 Speaker 5: and what's your take. 590 00:30:08,800 --> 00:30:11,000 Speaker 9: I mean, look, those numbers, they're just a number, right, 591 00:30:11,000 --> 00:30:13,720 Speaker 9: Like you can't kindly what's the difference between I don't know, 592 00:30:13,760 --> 00:30:16,840 Speaker 9: one thirty one fifty two hundred. I wouldn't sit here 593 00:30:16,880 --> 00:30:20,080 Speaker 9: and call for those numbers. But I think the point 594 00:30:20,120 --> 00:30:22,160 Speaker 9: I would make is and we've you know, we've been 595 00:30:22,200 --> 00:30:25,400 Speaker 9: calling for high prices for the end of the year consistently. 596 00:30:25,480 --> 00:30:29,280 Speaker 9: End we were very out of consensus. But my kind 597 00:30:29,320 --> 00:30:31,959 Speaker 9: of fear in this market is we have d stocked 598 00:30:32,000 --> 00:30:35,000 Speaker 9: so much inventory right now. What's going on in the US. 599 00:30:35,160 --> 00:30:38,520 Speaker 9: Cushing is dry, and even when cushing has fallen to 600 00:30:38,640 --> 00:30:41,640 Speaker 9: record low levels, it can't keep barrels because the rest 601 00:30:41,680 --> 00:30:44,120 Speaker 9: of the US is so low that it's start continuing 602 00:30:44,200 --> 00:30:46,719 Speaker 9: to pull barrels from Cushing. Dubai, I don't know if 603 00:30:46,720 --> 00:30:49,440 Speaker 9: you saw this morning, Dubai spreads have gone to over 604 00:30:49,520 --> 00:30:52,680 Speaker 9: three dollars backwardation. It's telling you this market is very, 605 00:30:52,800 --> 00:30:56,600 Speaker 9: very tight, and we are not seeing signs of investment 606 00:30:56,640 --> 00:30:59,560 Speaker 9: from companies, not because the CEO doesn't want to. It's 607 00:30:59,560 --> 00:31:03,760 Speaker 9: because we in the world society, governments, they're not allowing 608 00:31:03,800 --> 00:31:06,800 Speaker 9: them to. We do continue to see a huge supply 609 00:31:06,880 --> 00:31:09,720 Speaker 9: gap in the medium term, probably around twenty seven or 610 00:31:09,760 --> 00:31:12,640 Speaker 9: twenty six to twenty nine. We don't have enough projects 611 00:31:12,640 --> 00:31:15,320 Speaker 9: in the pipeline, and that's where OPEK in Saudi Arabia 612 00:31:15,360 --> 00:31:17,320 Speaker 9: and you have to step up, and that's where the 613 00:31:17,360 --> 00:31:18,360 Speaker 9: projects are coming through. 614 00:31:18,560 --> 00:31:20,720 Speaker 4: This is ultimately the point that you're making that perhaps 615 00:31:20,760 --> 00:31:23,440 Speaker 4: some people are getting this back to front. You're saying 616 00:31:23,480 --> 00:31:25,440 Speaker 4: that the macro isn't driving crude crew is going to 617 00:31:25,480 --> 00:31:27,280 Speaker 4: drive the macro. Can you explain that just a little 618 00:31:27,280 --> 00:31:27,640 Speaker 4: bit more. 619 00:31:27,800 --> 00:31:29,680 Speaker 9: You know, the first half of the year, we had 620 00:31:30,080 --> 00:31:33,680 Speaker 9: every FED decision mattered more to crude oil than OPEC decision, 621 00:31:33,760 --> 00:31:37,480 Speaker 9: right Whereas now you've seen even when in the bond 622 00:31:37,520 --> 00:31:39,720 Speaker 9: market the turmoil we've seen, we've seen equities come off, 623 00:31:39,720 --> 00:31:44,160 Speaker 9: but crud's really held up and that's purely driven by fundamentals. 624 00:31:44,200 --> 00:31:47,400 Speaker 9: And the worry now is if crude markets are this tight, 625 00:31:47,680 --> 00:31:50,160 Speaker 9: you start getting all prices going up, and then does 626 00:31:50,360 --> 00:31:52,720 Speaker 9: that influence FED decision again through inflation? 627 00:31:52,840 --> 00:31:56,560 Speaker 4: In your experience, how inelastic is demand for certain crude products? 628 00:31:56,920 --> 00:31:59,160 Speaker 4: How much demand destruction could we see off the back 629 00:31:59,160 --> 00:31:59,880 Speaker 4: of these prices. 630 00:32:00,160 --> 00:32:02,960 Speaker 9: That Tom's going to love this because I, okay, I'm 631 00:32:02,960 --> 00:32:06,080 Speaker 9: going to say this because I have started to see 632 00:32:06,080 --> 00:32:09,080 Speaker 9: this not just in China but even other parts of 633 00:32:09,120 --> 00:32:11,320 Speaker 9: the world. It's very early days, so Tom, don't ask 634 00:32:11,320 --> 00:32:13,959 Speaker 9: me to put a number to this elasticity figure out 635 00:32:14,200 --> 00:32:17,560 Speaker 9: thing I'm going to mention, but I'm sensing that oil 636 00:32:17,720 --> 00:32:22,280 Speaker 9: is becoming more inelastic with Like, if you look at this, 637 00:32:22,320 --> 00:32:24,200 Speaker 9: the global economy this year is going to be less 638 00:32:24,200 --> 00:32:27,200 Speaker 9: than three percent GDP growth, right, but oil demand growth 639 00:32:27,280 --> 00:32:29,400 Speaker 9: is going to be more than two million barrels Now 640 00:32:29,640 --> 00:32:33,440 Speaker 9: China we know still post COVID recovery, but there's something around. 641 00:32:33,600 --> 00:32:35,680 Speaker 9: You know, Initially we all thought working from home will 642 00:32:35,720 --> 00:32:38,280 Speaker 9: lead to lower oil demand. It seems to be going 643 00:32:38,280 --> 00:32:40,520 Speaker 9: the other way because now people are having to come 644 00:32:40,560 --> 00:32:44,200 Speaker 9: into work. There's more driving from further away because people 645 00:32:44,200 --> 00:32:48,520 Speaker 9: have still moved out during the pandemic. We just aren't 646 00:32:48,560 --> 00:32:52,320 Speaker 9: seeing the same impact from higher prices on demand. Again 647 00:32:52,560 --> 00:32:55,200 Speaker 9: early days, maybe people have access savings. Let's see what 648 00:32:55,240 --> 00:32:57,120 Speaker 9: happens next year. But I'm keeping an eye out on that. 649 00:32:57,160 --> 00:32:57,880 Speaker 1: You want to put number. 650 00:33:00,000 --> 00:33:02,479 Speaker 9: I'm telling my group of economists to continue to do that. 651 00:33:03,040 --> 00:33:07,640 Speaker 2: The microeconomist Jeff Curry at glob and Sachs exiting may 652 00:33:07,800 --> 00:33:11,440 Speaker 2: very clear to us that the tangible, real yields globally. 653 00:33:11,640 --> 00:33:14,600 Speaker 2: The end of the free money that we've seen changes 654 00:33:14,760 --> 00:33:18,360 Speaker 2: your world changes oil investment. Are you beginning to see 655 00:33:18,360 --> 00:33:22,400 Speaker 2: indications that a ten year two point two two percent 656 00:33:22,560 --> 00:33:25,760 Speaker 2: real yield changes how oil animals think? 657 00:33:26,080 --> 00:33:26,640 Speaker 6: Absolutely? 658 00:33:26,720 --> 00:33:29,720 Speaker 9: And I think we've been talking about this since April, really, Tom, 659 00:33:29,720 --> 00:33:33,320 Speaker 9: and that is my worry. Nobody wants to hold inventory 660 00:33:34,520 --> 00:33:37,360 Speaker 9: just for basic kind of you know, we always used 661 00:33:37,360 --> 00:33:39,520 Speaker 9: to say we need X number of days of forward cover, 662 00:33:39,600 --> 00:33:42,760 Speaker 9: fifteen twenty, whatever that number is. You need that buffer. 663 00:33:42,800 --> 00:33:44,680 Speaker 9: What if a cargo gets delayed, What if there's a 664 00:33:44,720 --> 00:33:48,720 Speaker 9: Libya happening today? Because of the rising rates, it's too 665 00:33:48,800 --> 00:33:52,400 Speaker 9: expensive and that's what creates the risk of volatility and 666 00:33:52,480 --> 00:33:53,960 Speaker 9: upside for prices going forward. 667 00:33:54,480 --> 00:33:56,800 Speaker 1: So let's reaffering a price. John started with that. 668 00:33:56,880 --> 00:33:59,080 Speaker 2: I mean, you made some real headlines and vision of 669 00:33:59,120 --> 00:34:01,640 Speaker 2: one hundred dollars a earl at ninety five fifty seven 670 00:34:01,680 --> 00:34:04,760 Speaker 2: Brent Corde were really buttressed right up against a ninety 671 00:34:04,800 --> 00:34:09,319 Speaker 2: six level before get us out beyond that to the 672 00:34:09,360 --> 00:34:11,440 Speaker 2: fear of one hundred and twenty a barrel. 673 00:34:11,880 --> 00:34:13,120 Speaker 1: How do we get there? 674 00:34:13,640 --> 00:34:16,160 Speaker 9: I think those kinds of number, yeah, I mean those 675 00:34:16,239 --> 00:34:18,040 Speaker 9: kind of numbers you probably need an event, right, a 676 00:34:18,040 --> 00:34:21,160 Speaker 9: supply shock. But in the day to day trading, if 677 00:34:21,200 --> 00:34:23,120 Speaker 9: we break these technical levels, of course we can make 678 00:34:23,160 --> 00:34:24,919 Speaker 9: a rund up to one hundred dollars. Like I said 679 00:34:24,920 --> 00:34:26,879 Speaker 9: to you last time, calling one hundred and ninety five 680 00:34:26,920 --> 00:34:30,640 Speaker 9: is not a big call, right, regime, No, the new regime, 681 00:34:30,920 --> 00:34:33,719 Speaker 9: I do think, yes. And one of the things to 682 00:34:33,719 --> 00:34:36,480 Speaker 9: bear in mind, there's crude and cracks. Diesel cracks, yes, 683 00:34:36,480 --> 00:34:39,640 Speaker 9: they're coming off, but gasoline and diesel cracks are on 684 00:34:39,760 --> 00:34:43,200 Speaker 9: top of that. So that's where I do think in 685 00:34:43,239 --> 00:34:45,120 Speaker 9: some ways you have to put a risk premium to 686 00:34:45,160 --> 00:34:48,320 Speaker 9: prices because you don't have enough infantries. Once you break 687 00:34:48,360 --> 00:34:50,640 Speaker 9: through this next level, we can then go into that 688 00:34:50,680 --> 00:34:54,080 Speaker 9: paradigm where we just hang around one hundred dollars unless 689 00:34:54,120 --> 00:34:56,480 Speaker 9: there is a clear sign that demand is slowing down. 690 00:34:56,520 --> 00:34:57,480 Speaker 9: We haven't seen that yet. 691 00:34:57,680 --> 00:34:59,920 Speaker 4: Just to finish has sustainable? Do you think the Saudi 692 00:35:00,440 --> 00:35:01,439 Speaker 4: current position. 693 00:35:01,200 --> 00:35:04,239 Speaker 9: Is, Oh, it's very sustainable. They're very very clear that 694 00:35:04,320 --> 00:35:07,640 Speaker 9: we want to make sure inventories are not building, and 695 00:35:07,719 --> 00:35:10,800 Speaker 9: I think there's clearly signs of that. And once and 696 00:35:11,320 --> 00:35:13,680 Speaker 9: also the macro concerns, right, and that's where it becomes 697 00:35:13,719 --> 00:35:16,120 Speaker 9: a bit of a chicken and egg because we've started 698 00:35:16,160 --> 00:35:18,400 Speaker 9: to get worse data from the US that's going to 699 00:35:18,440 --> 00:35:21,560 Speaker 9: concern them even more, and that almost makes them more 700 00:35:21,600 --> 00:35:23,080 Speaker 9: cautious in adding barrels back. 701 00:35:23,160 --> 00:35:24,960 Speaker 4: The reason I asked because there is a monthly review. 702 00:35:25,400 --> 00:35:27,960 Speaker 4: I'm just wondering whether I should ignore the monthly review 703 00:35:28,000 --> 00:35:28,480 Speaker 4: between now. 704 00:35:28,440 --> 00:35:29,080 Speaker 1: And the end of the year. 705 00:35:29,160 --> 00:35:32,680 Speaker 9: I mean, we have seen Prince Abdilzies and even Alexander 706 00:35:32,719 --> 00:35:34,960 Speaker 9: Novac come and extend the cuts to your end. Of course, 707 00:35:35,200 --> 00:35:36,799 Speaker 9: they always keep an eye out on the market. We've 708 00:35:36,800 --> 00:35:40,799 Speaker 9: got the November OPEC meeting as well in Vienna, so 709 00:35:40,840 --> 00:35:43,239 Speaker 9: there are a few things to kind of consider before 710 00:35:43,320 --> 00:35:45,600 Speaker 9: your end. But you know that deal is still I 711 00:35:45,600 --> 00:35:47,720 Speaker 9: mean he's extended it for a reason. He is concerned 712 00:35:47,719 --> 00:35:50,520 Speaker 9: about the global economy. I'm not going to change that overnight. 713 00:35:50,560 --> 00:35:52,960 Speaker 4: We'll say, if they let us attend that OPEQ plus 714 00:35:52,960 --> 00:35:54,400 Speaker 4: mating in Vienna, you don't have to weigh in on that. 715 00:35:54,440 --> 00:35:56,960 Speaker 4: Don't worry about that and redissent a anergy aspects. I'm 716 00:35:56,960 --> 00:35:57,600 Speaker 4: ready to thank you. 717 00:35:57,800 --> 00:36:01,480 Speaker 2: Subscribe to the Bloomberg Surveillance podcast US on Apple, Spotify, 718 00:36:01,560 --> 00:36:05,960 Speaker 2: and anywhere else you get your podcasts. Listen live every weekday, 719 00:36:06,239 --> 00:36:09,759 Speaker 2: starting at seven am Eastern. I'm Bloomberg dot Com, the 720 00:36:09,880 --> 00:36:12,560 Speaker 2: iHeartRadio app tune In, and. 721 00:36:12,520 --> 00:36:13,840 Speaker 1: The Bloomberg Business app. 722 00:36:14,280 --> 00:36:17,960 Speaker 2: You can watch us live on Bloomberg Television and always 723 00:36:18,320 --> 00:36:22,200 Speaker 2: I'm the Bloomberg Terminal. Thanks for listening. I'm Tom Keen, 724 00:36:22,400 --> 00:36:24,160 Speaker 2: and this is Bloomberg