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Speaker 1: Welcome to the Bloomberg P and L Podcast. I'm pim Fox.

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Speaker 1: Along with my co host Lisa Abramowitz. Each day we

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Speaker 1: bring you the most important, noteworthy, and useful interviews for

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Speaker 1: you and your money, whether at the grocery store or

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Speaker 1: the trading floor. Find the Bloomberg P L Podcast on iTunes,

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Speaker 1: SoundCloud and at Bloomberg dot com. Let's talk about oil

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Speaker 1: and gasoline. Joining me now, Stephen Shorky is the president

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Speaker 1: of the Short Group. Joining me from Villanova, Pennsylvania or

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Speaker 1: at Stephen Shorka was noting that gasoline prices are at

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Speaker 1: a two year high, at least on the national average

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Speaker 1: track by the Triple A. Yes, they are on the high,

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Speaker 1: and of course this has to do everything with the

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Speaker 1: price rise in crude. All that has been going on

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Speaker 1: for the better part of the year, and it really

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Speaker 1: got a kick start last month. With regard to the

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Speaker 1: decision out of OPEC, I want to point out that

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Speaker 1: though yes, even no, gasoline prices are high relative to

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Speaker 1: where we've been in the past, that is to say,

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Speaker 1: adjusted for inflation, gasoline prices, while they are dearer relative

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Speaker 1: to a year ago, there are still relatively cheap and

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Speaker 1: keep in mind, we're also at the time of the

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Speaker 1: year where demand is very strong, and demand this December

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Speaker 1: happened to be stronger than usual because we had the

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Speaker 1: coincidence of the Hanakah holiday overlapping with the Christmas holiday,

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Speaker 1: so you had that many more shoppers hitting the road

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Speaker 1: just about at the same time. So you have the

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Speaker 1: combination of higher oil prices, strong demand, which is transitory,

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Speaker 1: but once again just for inflation, were still in very

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Speaker 1: good shape. Well, Stephen, what's your outlook oil right now?

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Speaker 1: West Texas up one percent? That's fifty three fifty eight

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Speaker 1: for a barrel of West test West Texas seccrued. Also

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Speaker 1: give us your thoughts on natural gas higher by one

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Speaker 1: and a quarter percent, three dollars seventy one cents per

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Speaker 1: million BTU. Yeah, absolutely, so, first and foremost with oil prices,

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Speaker 1: I've been in the camp for the past two years

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Speaker 1: and I will remain in that camp for seventeen. That

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Speaker 1: oil in the mid fifties is you are testing the

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Speaker 1: highs of what the market can bear. There was an

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Speaker 1: interesting study put up at the Dallas Federal Reserve a

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Speaker 1: couple of months ago where they interviewed a hundred and

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Speaker 1: fifty executives in the oil and gas industry. The key

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Speaker 1: question was at what price would you need to see

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Speaker 1: to bring back a substantial amount of production here in

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Speaker 1: the US, and the overwhelming response was oil in between

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Speaker 1: fifty five and sixty dollars a barrel. So now we

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Speaker 1: look at and what has happened during this rally. Well,

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Speaker 1: first and foremost, we had a sharp decline in US

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Speaker 1: production through the first half of this year, but that

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Speaker 1: decline ebbed and plateaued at the end of the summer,

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Speaker 1: and actually since October U S crudal production has been

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Speaker 1: inching higher, and so US production was already rising in

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Speaker 1: spite of what OPEC was or was not going to

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Speaker 1: a last month in Vienna. And then when we look

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Speaker 1: at some other metrics in the market, the CFTC data.

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Speaker 1: This is data that gives you and tells you and

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Speaker 1: breaks out the positions being held by speculators, producers, merchants,

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Speaker 1: so forth in the market. And when we look at

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Speaker 1: that data, producers are now holding the shortest position. And

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Speaker 1: when I say shortest position PIM, I'm talking about dy've

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Speaker 1: sold oil forward in the futures market. That position now

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Speaker 1: is at a nine year high. So a producer is

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Speaker 1: not a speculator. A producer will only sell oil forward

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Speaker 1: if they intend to bring more production to the markets.

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Speaker 1: So when we look at that data at a nine

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Speaker 1: year high, when we also look at the data of

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Speaker 1: the forward curve, if we look at the pricing as

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Speaker 1: you go out along the future, as we go out

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Speaker 1: along the X axis month after month, we've seen a

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Speaker 1: sharp rise in the oil prices through the next six months.

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Speaker 1: But that sharp rise has actually declined and we're actually

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Speaker 1: seeing heavy selling pressure because we have not seen a

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Speaker 1: commensurate increase in price in oil for priced in the

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Speaker 1: latta half of this year and in so anecdotally PIM

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Speaker 1: what I'm taking away from that is when we look

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Speaker 1: at the CFTC data, when we look at the Dallas Fed,

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Speaker 1: when we look at the fact that we have not

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Speaker 1: seen a knock on impact the prices out into the

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Speaker 1: future of the belief that producers, US shell producers are

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Speaker 1: getting ready to have a very productive and a lot

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Speaker 1: of the oil that OPEC has promised to take off

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Speaker 1: of the market. US producers are willing to put a

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Speaker 1: lot of that oil back onto the market. Thanks very much,

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Speaker 1: Stephen Short, he is the president of the short group.

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Speaker 1: He says, oil in the mid fifties barrel, that is

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Speaker 1: testing the highs of oil prices. All right, to learn

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Speaker 1: more are about consumer confidence? We turned to Lynn Franco,

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Speaker 1: director of Economic Indicators for the Conference Board, and just

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Speaker 1: to note, the headline is US Consumer Confidence Index increased

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Speaker 1: to one hundred and thirteen point seven in December. It

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Speaker 1: is the highest level since August of two thousand one.

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Speaker 1: Lynn Franco, thanks for being with us, Good to be back.

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Speaker 1: Tell us the details current conditions. Let's start there. Okay,

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Speaker 1: we had a little bit of a mixed picture. We

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Speaker 1: had a little bit of a decline in current conditions

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Speaker 1: as consumers us a little bit of softening and overall

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Speaker 1: economic conditions and economic conditions, but overall the figures for

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Speaker 1: the fourth quarter remain very strong. Now, the quote that

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Speaker 1: you have that leads the report talks about the post

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Speaker 1: election surge in optimism for the economy. How much of

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Speaker 1: that is tied to the stock markets performance? A lot

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Speaker 1: is tied to the stock market, but also consumers expectations

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Speaker 1: for business conditions, employment, and income really urged in December.

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Speaker 1: In fact, expectations are at the thirteen year high and

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Speaker 1: expectations for the stock prices and the stock market overall

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Speaker 1: are all sort of thirteen year high. Now this includes

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Speaker 1: the short term report as well, the short term outlook

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Speaker 1: improving in December as well. Absolutely, and that's what drove

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Speaker 1: consumer confidence this month. We saw expectations surged across the board.

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Speaker 1: And now the question becomes is, you know, do these

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Speaker 1: expectations become realizations, because that's really going to be the

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Speaker 1: key for holding these high levels of optimism going into

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Speaker 1: Then you mentioned consumer incomes and I'm wondering if you

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Speaker 1: could give us more detail. Well, we saw here that

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Speaker 1: the percent of consumers expecting their incomes to increase one

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Speaker 1: to that's the highest reading we've seen since December of

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Speaker 1: oh seven, which is right before sort of the crisis

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Speaker 1: hit a max um. And in terms of their decrease

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Speaker 1: again we're going all the way back to two thousand

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Speaker 1: and seven. So consumers are really positive about their income expectations,

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Speaker 1: and tied into that is their expectations for stock markets

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Speaker 1: as well. What about consumer expectations for the labor market

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Speaker 1: very good as well. Here we saw that increase to

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Speaker 1: about saying they expect more jobs versus just a four

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Speaker 1: saying they expect a fewer jobs, and that is the

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Speaker 1: highest level we've seen since back in February of eleven.

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Speaker 1: Conditions for businesses that's set to improve over the next

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Speaker 1: six months as well. Absolutely, there we saw twenty three

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Speaker 1: point six of consumers are telling us that they expect

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Speaker 1: conditions to improve. That's the highest level we've seen since

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Speaker 1: February of two thousand and eleven. So it's really these

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Speaker 1: expectations for business conditions, employment, and obviously that will then

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Speaker 1: lend itself to an increase in income that are driving

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Speaker 1: the surge that we've seen confidence this month. Now, Lynn,

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Speaker 1: this is not the only indicator that you look at,

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Speaker 1: For example, the measure of CEO confidence as well as

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Speaker 1: things such as help Wanted Online. Tell us about how

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Speaker 1: this all fits together in a picture? What would you

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Speaker 1: describe it as. I think what we're seeing right here

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Speaker 1: is just sort of some post election optimism from what

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Speaker 1: we're seeing with our under you know, other indicators, whether

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Speaker 1: it's UH employment indicators or Leading Economic Index all look

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Speaker 1: for a pickup in sort of economic activity in the

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Speaker 1: first quarter of I think with consumer confidence now, the

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Speaker 1: key is, you know, are we going to be able

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Speaker 1: to maintain these levels? And that then really becomes a

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Speaker 1: question of will the economy pick up further, will UH

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Speaker 1: employment gains pick up further, and will wage growth continue.

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Speaker 1: So we're expecting that whether or not we get a

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Speaker 1: little bit of a retreat in the next couple of months,

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Speaker 1: that could be possible, but we still see a very

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Speaker 1: confident consumer. And then just quickly, based on your experience,

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Speaker 1: is the is the economy going to lead this indicator

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Speaker 1: or is it going to lag the indicator. I think

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Speaker 1: it's going to sort of lead the indicator. And I

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Speaker 1: think key here is what really happens in terms of

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Speaker 1: job growth and wage growth. UH And if these both

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Speaker 1: of these don't sort of pick up in the next

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Speaker 1: couple of months, we could see a little bit of

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Speaker 1: a retreat and consumer confidence. But if we just take

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Speaker 1: a step back, I mean, we've been at very high

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Speaker 1: levels since the summer. We've been at over a hundred,

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Speaker 1: so I think overall we should maintain levels that reflect

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Speaker 1: a very confident consumer. Thank you very much, Lynn Franco,

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Speaker 1: Director of Economic Indicators for the Conference Board. Part one

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Speaker 1: stock that is falling and has well has fallen this year,

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Speaker 1: Rather is uh Banca mont Sienna down more than eighty seven.

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Speaker 1: Here I'll tell us more about the future of the bank.

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Speaker 1: Is Kiara Albanesi are room based markets reporter for Bloomberg.

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Speaker 1: Kara tell us the latest details on the rescue or

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Speaker 1: attempted rescue of Banka Monte di Paski. Good morning everyone. Yes,

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Speaker 1: indeed the stock, as you mentioned, has fallen, but trading

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Speaker 1: has been altered for a few days given that the bank,

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Speaker 1: which is that the world oldest bank, is actually in

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Speaker 1: the eye of the storm because of its inability to

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Speaker 1: have a sustainable plan to to plug in a capital

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Speaker 1: short fall. The latest on this front has been a

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Speaker 1: bank UM a letter from the European Central Bank to

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Speaker 1: the to the bank, which was acknowledged yesterday evening, saying

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Speaker 1: that the capital short fall is actually almost doubled that

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Speaker 1: what initially was expected. Uh. This means that a twenty

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Speaker 1: billion funds that was set up by the state UM

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Speaker 1: earlier earlier this month to help the bank could be

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Speaker 1: almost entirely taken up or for its most part taken

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Speaker 1: up by Montepasti only. Well, what has the government's response

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Speaker 1: been to the e c b S letter saying that

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Speaker 1: the bank needs more money and as you just described

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Speaker 1: that twenty billion euro effort was designed not just for

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Speaker 1: Monte di Paski, but for other Italian banks as well.

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Speaker 1: The government has been um silent at the moment, but

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Speaker 1: local media has been saying that the intervention could uh

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Speaker 1: could be almost UH six point five billion from the States,

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Speaker 1: so basically the government would step in covering most of

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Speaker 1: the capital shortfall. What about the bond holders? Will the

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Speaker 1: bond holders end up with any value if the bank

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Speaker 1: receives this injection of capital from the Italian government. The

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Speaker 1: bond holders could say could save parts of their investments,

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Speaker 1: but they will most definitely their loss in this case. UM.

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Speaker 1: Both the state and the ECB, especially in an interview

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Speaker 1: with the CB supervisory board member Angeline earlier today, saying

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Speaker 1: that yes, the bond holders also have to to chip

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Speaker 1: in into into the shortfallen and and basically combine their

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Speaker 1: efforts with the state. What is the state of the

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Speaker 1: bank's liquidity right now at the moment, The ECB said

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Speaker 1: that the bank is still solvent, which is definitely good

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Speaker 1: news for for the market, for investors and for those

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Speaker 1: following the story closely. UM, But the liquidity has been

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Speaker 1: deteriorating very quickly and the ECB mentioned in particular what

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Speaker 1: happened in terms of liquidity degrees during the month of

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Speaker 1: December and the days before. So it has been a

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Speaker 1: liquidity deterioration, quite sudden, quite fast, in the run up

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Speaker 1: to to to the latest news that we just we

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Speaker 1: just discussed KIA. It's worth noting that not all Italian

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Speaker 1: banks are facing the kind of pressure that Monte Dipaski

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Speaker 1: is facing. Correct. Correct, Not only Italian banks are in

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Speaker 1: the same condition, and Montepasky is definitely the bank which

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Speaker 1: is in the weakest position, but most or several other

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Speaker 1: banks are also feeling the pressure of non performing loans,

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Speaker 1: a burden that overall is about three hundred and sixty

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Speaker 1: billion for the country, and other banks are expected to

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Speaker 1: also seek the aid of the funds that was approved

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Speaker 1: by the government. Has there been any reaction to a

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Speaker 1: plan to put all of the bad loans into a

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Speaker 1: bad loan bank and be able to ring fence the

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Speaker 1: problems here Again, the issue is the European Central Bank,

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Speaker 1: which is monitoring closely what is going on with with

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Speaker 1: Monteparsky and UM. The plan that was advised by by

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Speaker 1: GPE market until a few weeks ago, a few days

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Speaker 1: actually go Um also looked into this possibility, but that

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Speaker 1: was set aside for the moment. What happens over the

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Speaker 1: next week or so. Are there meetings between the Italian

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Speaker 1: government and European Central Bank officials or they everyone just

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Speaker 1: taking a break. The contexts are are still ongoing, and

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Speaker 1: the fact that UM that the ECB responded to the

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Speaker 1: letter and Montepasky send out a statement on on a

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Speaker 1: day that is actually a holiday in Italy is a

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Speaker 1: signal that everyone is still very much UM at the table,

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Speaker 1: even if, of course UM that there is a festive break.

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Speaker 1: At the same time, it is likely that things are

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Speaker 1: going to slow down until the new year and and

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Speaker 1: more clarity is found between those the record discussion. Thank

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Speaker 1: you very much. Giara alban Asi, markets reporter for Bloomberg News,

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Speaker 1: reporting from Rome going up against Verizon and a T

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Speaker 1: and T. Some would think it is suicidal, but not

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Speaker 1: David Glickman. He is the chief executive of Ultra Mobile

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Speaker 1: and he's here to tell us more about the company

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Speaker 1: and its battle in the mobile phone business. David Glickman,

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Speaker 1: thank you very much for being with us. Thank you

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Speaker 1: all right, So you are serial entrepreneur, as I understand

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Speaker 1: it you you previously found it TelePacific that was back

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Speaker 1: in and that was to compete with landline phone exchanges.

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Speaker 1: Now you're going after mobile operators. Tell us about how

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Speaker 1: Ultramobile works. UM. Ultramobile is a nationwide mobile carrier, and

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Speaker 1: we uh, we have stores and offices all around the country. Uh.

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Speaker 1: And we assume that everybody has their own mobile phone handset,

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Speaker 1: and we offer sim cards uh to put in your

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Speaker 1: existing phones, very much like they do in Europe and

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Speaker 1: in Asia, just hasn't come to America just yet, um,

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Speaker 1: in full force, and we are making that happen. Well, David,

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Speaker 1: how is it possible that you are able to compete

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Speaker 1: against the likes of Verizon, A T and T T

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Speaker 1: Mobile uh in offering what looks like to be a

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Speaker 1: per month all you can eat mobile fare um. Well,

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Speaker 1: a little something that I like to call coopetition. UM.

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Speaker 1: We we actually purchase network from T Mobile so that

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Speaker 1: we have the same nationwide footprint. UM. And then since

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Speaker 1: we don't spend hundreds of millions of dollars on advertising, um,

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Speaker 1: and we just pass on all the savings to our

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Speaker 1: end users. So uh yeah, So for for nineteen dollars,

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Speaker 1: you can have unlimited talk, unlimited texts, unlimited UH data,

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Speaker 1: unlimited international calling and unlimited international texting. UM. All you

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Speaker 1: need to do is get one of our SIM cards

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Speaker 1: and put it into your phone. Now, in addition to

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Speaker 1: it being as you describe, unlimited, you can also customize

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Speaker 1: the service. Can you explain how that works? Sure? UM?

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Speaker 1: So UM at them at the lower price levels, for example,

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Speaker 1: nineteen dollars, UM, you get unlimited data. You don't get

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Speaker 1: unlimited high speed data. So we have very high speed

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Speaker 1: four g LTE and we give you a chunk of

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Speaker 1: that UM and if you want more, UM, you just

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Speaker 1: pay for exactly what you use UH, and you don't.

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Speaker 1: You don't end up having to pay sixty seventy eight

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Speaker 1: dollars like you do with some of the other carriers. UM.

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Speaker 1: And have you know, ten gigabytes of high speed data

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Speaker 1: if you only use one or two? So this way, UM,

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Speaker 1: you're you're unlimited. But after a certain amount you end

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Speaker 1: up going back to more of a three g UH

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Speaker 1: data and you can upgrade to whatever you want. How

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Speaker 1: did you decide to focus on what you describe as

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Speaker 1: an underserved demographic of the U S consumer market, the

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Speaker 1: foreign born US residents well, uh we uh. I. Basically

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Speaker 1: I've lived overseas. I started my first songing company when

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Speaker 1: I was living in South America and offered discounts to

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Speaker 1: businesses there. And uh, at the same time when when

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Speaker 1: I when living in America, it's so hard to make

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Speaker 1: international phone calls because usually the big mobile carriers want

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Speaker 1: to charge you a dollar a minute tall overseas, or

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Speaker 1: if you want to use the more inexpensive calling cards,

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Speaker 1: it's the pain. You have to dial and access number,

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Speaker 1: punch in your pin number, then punch in the destination number.

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Speaker 1: If you're on a smartphone, if somebody calls you, you

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Speaker 1: can't just hit reply and call back. Um. And so

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Speaker 1: we decided that we wanted to come up with a

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Speaker 1: system that employed either free international calls or inexpensive you know,

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Speaker 1: calling card rates on. Uh, it's not it's not free

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Speaker 1: in the sense that you do have to actually buy

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Speaker 1: the card. Correct. Well, I mean you've got the you've

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Speaker 1: got a twenty, you've got a plan thirty four dollar

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Speaker 1: and thirty nine dollar and so on. I mean you

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Speaker 1: have to actually buy the buy the card. Right. So,

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Speaker 1: so what a saying is international is free on a

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Speaker 1: discounted mobile phone so instead of paying six yr seventy

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Speaker 1: dollars for unlimited talking text and UH in the US

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Speaker 1: for nineteen dollars, you have UM. You're you're getting a

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Speaker 1: discount on limited domestic talk in text. But at the

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Speaker 1: same time, we give you sixty countries to call about

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Speaker 1: two thirds of the world for free, so you can

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Speaker 1: call Mexico unlimited, you can call China unlimited, Canada unlimited,

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Speaker 1: Europe unlimited. UM. It's sys some countries that are more expensive,

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Speaker 1: for example, some of the African countries calling Philippines, etcetera, etcetera,

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Speaker 1: where we will charge you, you know, two or three

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Speaker 1: four cents a minute instead of UM. What the what

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Speaker 1: the large carriers will charge a dollar a minute. What's

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Speaker 1: the incentive for the stores to sell your cards, your

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Speaker 1: simcards versus the SIM cards of more established players like

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Speaker 1: Verizon or A T and T. Well, you know, we

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Speaker 1: focus very heavily on the stores as our distribution points,

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Speaker 1: so we make it very easy for them to sell UM.

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Speaker 1: We offer a great product to the consumers, so they know.

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Speaker 1: The consumers are gonna be very happy when they get

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Speaker 1: an ultramobile SIM cards and we offer one of the

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Speaker 1: highest commissions. You know, Our theory when we launched the

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Speaker 1: company was the customer is going to have the best

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Speaker 1: deal and the store is going to make more money

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Speaker 1: and have happier customers by selling ultramobile. And we've stuck

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Speaker 1: with that in the four years that we've been in business. Now,

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Speaker 1: this idea of offering uh, data saving data your way,

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Speaker 1: this is what they call voluntarily throttling the speeds and

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Speaker 1: the access to various websites or services. How is that

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Speaker 1: working out? Actually it's been succeeded our expectation. Customers absolutely

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Speaker 1: love it. So what happens is, um, you know, if

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Speaker 1: you're on a plan that says says gives you five

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Speaker 1: gigabytes of high speed data, and UH, you go on

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Speaker 1: YouTube and you start looking at a video, and you

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Speaker 1: know as you as you as the video starts to load,

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Speaker 1: and as you start watching it, it's loading much more

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Speaker 1: than you're than you're watching. So if you're you're the

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Speaker 1: seconds into the video, the YouTube is already downloaded UM

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Speaker 1: onto your phone, maybe one minute of that video, UM.

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Speaker 1: And then if you don't choose to watch the rest

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Speaker 1: of that video, it wasn't the one you wanted. You

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Speaker 1: want to go to the next one. Or the next

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Speaker 1: one you ended up paying. You ended up using a

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Speaker 1: lot of your data for video that you never watched.

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Speaker 1: The same thing happens with Netflix. The same thing happens

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Speaker 1: with Facebook, especially because Facebook will automatically uh download and

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Speaker 1: play a lot of videos that you have you haven't

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Speaker 1: even watched yet, or you haven't even you clicked on UM.

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Speaker 1: And so with data mind way, you picked the speed

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Speaker 1: that you want. Essentially you decide how much of that

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Speaker 1: pretty loading you you want. And we've discovered as a

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Speaker 1: lot of our customers that don't like paying for uh,

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Speaker 1: you know, downloading pipe speed data UM for movies and

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Speaker 1: videos that they're not watching. They they get onto the

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Speaker 1: the the data my way, and they picked how much

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Speaker 1: throttling they want and how much how much downloading. Indeed,

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Speaker 1: thanks very much, David Glickman. He is the founder and

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Speaker 1: the chief executive of Ultramobile. Thanks for listening to the

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Speaker 1: Bloomberg P and L podcast. You can subscribe and listen

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Speaker 1: to interviews at iTunes, SoundCloud, or whatever podcast platform you prefer.

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Speaker 1: I'm pim Fox. I'm out there on Twitter at pim Fox.

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Speaker 1: I'm out there on Twitter at Lisa Abramo. It's one

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Speaker 1: before the podcast. You can always catch us worldwide on

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Speaker 1: Bloomberg Radio