WEBVTT - Presidents Day Special: Market and Oil Outlook Under Trump; Walmart Earnings Preview 0:00:02.520 --> 0:00:07.040 Bloomberg Audio Studios, Podcasts, Radio News. 0:00:10.800 --> 0:00:13.520 Thanks for joining us on this special holiday edition of 0:00:13.600 --> 0:00:17.800 Bloomberg Daybreak. US markets are closed for President's Day. I'm 0:00:17.840 --> 0:00:20.120 Nathan Hager, and coming up this hour, we will get 0:00:20.160 --> 0:00:22.759 a read on the energy market after a winter that 0:00:22.800 --> 0:00:25.840 has seen wild swings in the weather, and on trade. 0:00:26.079 --> 0:00:28.120 Plus we'll look ahead to one of the biggest earning 0:00:28.240 --> 0:00:31.080 stories of the week as Walmart gets set to report 0:00:31.240 --> 0:00:34.120 results from the holiday quarter. First, though, we want to 0:00:34.120 --> 0:00:37.040 take a look at the broader investment landscape how it 0:00:37.080 --> 0:00:40.199 may be changing with a new president in office. I 0:00:40.280 --> 0:00:41.920 think it's pretty safe to say it was a pretty 0:00:41.960 --> 0:00:45.400 tough environment as far as regulation goes when Gary Gensler 0:00:45.520 --> 0:00:48.120 was head of the Securities and Exchange Commission under then 0:00:48.200 --> 0:00:52.080 President Joe Biden. Now with a new SEC chief on 0:00:52.159 --> 0:00:55.960 the way under current President Donald Trump, are things starting 0:00:56.000 --> 0:00:59.440 to change for investors? Let's get some answers on this. 0:00:59.600 --> 0:01:03.560 Joining us on this holiday is Eric Balchunis, ETF, analyst 0:01:03.640 --> 0:01:06.800 for Bloomberg Intelligence. Thanks so much for being with us 0:01:06.920 --> 0:01:09.280 on the holiday. Eric, and I know we've got a 0:01:09.280 --> 0:01:13.800 lot of acting commissioners acting chiefs on the way as well, 0:01:13.959 --> 0:01:16.960 But are things starting to change now as far as 0:01:17.440 --> 0:01:19.480 where things sit in your world and ETFs. 0:01:19.760 --> 0:01:19.880 Uh. 0:01:20.000 --> 0:01:23.039 Yeah, There's been a couple of small things that we've seen, 0:01:23.080 --> 0:01:25.320 nothing major, But I think one of the big things 0:01:25.360 --> 0:01:27.680 is esther purse, which she was a commissioner. She is 0:01:27.680 --> 0:01:29.840 a commissioner, and she was in the minority during the 0:01:29.880 --> 0:01:32.880 Gensler era and she had a lot of opposing opinions 0:01:32.920 --> 0:01:35.679 that she would write about. And now she's working one 0:01:35.680 --> 0:01:37.880 of the two commissioners of the Act, is helping the 0:01:37.920 --> 0:01:42.280 acting commissioner. And some of the things we've seen, for example, 0:01:42.560 --> 0:01:46.240 they approved options on some precious metals ets that have 0:01:46.240 --> 0:01:49.040 been waiting ten years. It's a minor thing, but it 0:01:49.120 --> 0:01:51.560 just shows I think she just wants to get stuff 0:01:51.600 --> 0:01:53.640 out the door in the end. You know, she was 0:01:53.760 --> 0:01:58.320 very big on the SEC being a merit based regulator meeting. 0:01:58.880 --> 0:02:01.240 You just want to get the disclose out and then 0:02:01.320 --> 0:02:05.000 let the consumers pick. You don't want to play nanny 0:02:05.040 --> 0:02:06.680 too much in sort of saying. 0:02:06.640 --> 0:02:07.920 This is bad, this is good. 0:02:08.400 --> 0:02:10.040 So I think what you're going to see is just, 0:02:10.160 --> 0:02:12.120 you know, a little bit of Pandora's box opening up 0:02:12.120 --> 0:02:14.560 with products and I think some will be really good 0:02:14.600 --> 0:02:16.680 and successful. Some are going to be a little wild 0:02:16.680 --> 0:02:19.320 and we'll cause some head scratching maybe, but this is 0:02:19.360 --> 0:02:22.120 the ETF industry always pushes the envelope, and they're just 0:02:22.160 --> 0:02:23.880 gonna be able to push a little further. I think 0:02:24.360 --> 0:02:27.200 under this SEC chair, who hasn't been confirmed yet, but 0:02:27.240 --> 0:02:32.640 assuming he is Atkins, he'd be working obviously with Hester Purse. 0:02:32.919 --> 0:02:34.799 And the other thing they did was they moved a 0:02:34.840 --> 0:02:37.440 bunch of people who were on a crypto fraud. They 0:02:37.480 --> 0:02:40.480 moved some people out of that team, and that again 0:02:40.639 --> 0:02:43.200 was another sign that in terms of the crypto, which 0:02:43.240 --> 0:02:45.040 was I think Gensler is like you know, he was 0:02:45.120 --> 0:02:47.359 both known for being tough on that. It's going to 0:02:47.440 --> 0:02:50.960 be more lenient for sure. I would look for a 0:02:51.040 --> 0:02:55.680 ton of new coins and tokens to be etfised, and 0:02:55.720 --> 0:02:58.480 I would look for the industry also to push the 0:02:58.560 --> 0:03:02.360 envelope and some other things like share classes and maybe 0:03:02.360 --> 0:03:05.440 even some things like trying to put private equity and 0:03:05.520 --> 0:03:07.040 private credit into ETFs. 0:03:07.480 --> 0:03:10.200 Knowing they have a more liberal regulator. 0:03:10.240 --> 0:03:12.520 I mean, the regulator is more conservative, but I'd say 0:03:12.520 --> 0:03:14.359 they're more liberal in terms of what they'll approve. 0:03:14.800 --> 0:03:17.839 Well, let's dig into those broad strokes just a little bit. 0:03:18.040 --> 0:03:22.960 What kinds of products are you looking forward to that 0:03:23.120 --> 0:03:26.000 could find some success among investors. 0:03:26.360 --> 0:03:30.440 Yeah, so I think the first two are ets tracking 0:03:30.560 --> 0:03:35.800 Solana and XRP, which are two different networks. They're cryptocurrencies, 0:03:36.440 --> 0:03:40.360 and those two in particular have been the industry has 0:03:40.400 --> 0:03:43.480 been trying to get those approved for like five years. 0:03:43.720 --> 0:03:46.760 And even though Gary Gensler approved Bitcoin and ether, he 0:03:47.120 --> 0:03:50.440 basically said everything outside of that is a security and 0:03:50.480 --> 0:03:54.040 therefore it cannot be put into an ETF under the 0:03:54.120 --> 0:03:58.200 thirty three Act. And they even called XRP and Solana 0:03:58.280 --> 0:04:02.040 securities in lawsuits. And so the fact that the Salana 0:04:02.080 --> 0:04:04.760 ETF was acknowledged recently there was a new filing. They 0:04:04.760 --> 0:04:07.880 got acknowledged. They never acknowledged one of the pasts. Acknowledged 0:04:07.880 --> 0:04:09.840 just means the sec is like, Okay, we know you filed. 0:04:09.840 --> 0:04:11.520 We're going to let people comment on it. It's part 0:04:11.520 --> 0:04:13.560 of the normal process. In the past, when someone tried 0:04:13.560 --> 0:04:16.839 to follow Solana or XRP ETF, they would literally call 0:04:16.880 --> 0:04:19.359 the issuer and say get this out of here. It 0:04:19.360 --> 0:04:22.320 wouldn't even last three days. But this they've been filed 0:04:22.320 --> 0:04:26.200 now for two weeks. They've been acknowledged they're moving along 0:04:26.320 --> 0:04:28.840 the normal past. Doesn't mean to be approved, but it's 0:04:28.839 --> 0:04:31.799 a good sign. That probably indicates that they may actually 0:04:31.839 --> 0:04:35.200 rescind some of the lawsuits, because it would be weird 0:04:35.240 --> 0:04:37.840 for them to approve these while having a lawsuit and 0:04:37.880 --> 0:04:41.359 saying and writing that these are securities. So that's something 0:04:41.400 --> 0:04:43.680 to watch right there. And if Solana and XRP are 0:04:43.680 --> 0:04:46.080 put into ETF form, they have I think a decent 0:04:46.120 --> 0:04:48.880 chance to get some assets. Now, once you get out 0:04:48.880 --> 0:04:50.600 of there, you're going to get into some weird stuff 0:04:50.680 --> 0:04:55.279 like dose coin, Polka Dot bonk. They even filed for 0:04:55.320 --> 0:04:58.559 a trump Coin ETF, a Milania ETF, and a double 0:04:58.640 --> 0:05:03.520 leveraged Malania. So here's the thing though, even if all 0:05:03.560 --> 0:05:06.479 that gets out, most of it will just live in oblivion. 0:05:06.800 --> 0:05:09.839 I think you've got think about the precious metals. Gold 0:05:09.920 --> 0:05:13.400 is the stud, Silver's got a good living, platinum, pladium, 0:05:14.080 --> 0:05:18.160 And then once you get to commodities like coffee, nickel, aluminum, 0:05:18.320 --> 0:05:20.760 some ETFs are tried and failed. I think you'll see 0:05:20.760 --> 0:05:23.320 the same thing here. I think Bitcoin will get like 0:05:23.480 --> 0:05:26.960 seventy five percent of the assets, Ether ten percent, and 0:05:27.000 --> 0:05:30.080 then XRP Solana will you know, fight over the other 0:05:30.240 --> 0:05:33.200 eight or nine percent, and then we'll see one wacky 0:05:33.240 --> 0:05:35.080 one get lucky for a minute, and then you know, 0:05:35.200 --> 0:05:37.720 rise and fall. So I think even though we will 0:05:37.720 --> 0:05:40.799 see a ton of stuff approved, most of the assets 0:05:40.839 --> 0:05:43.440 from the big money in America are they're not going 0:05:43.480 --> 0:05:46.599 to go crazy. They're gonna stick to bitcoin as they're 0:05:47.040 --> 0:05:49.159 that's crazy to most people, to be honest. So they're 0:05:49.200 --> 0:05:51.440 gonna stick to bitcoin, and that's where most of. 0:05:51.400 --> 0:05:52.039 The assets will go. 0:05:52.120 --> 0:05:55.280 But look for some really interesting things. And the thing 0:05:55.279 --> 0:05:57.880 about a Trump and Malania coin etf is I was 0:05:57.920 --> 0:06:00.640 that this was going to be interesting, is that these 0:06:00.680 --> 0:06:01.480 are pretty fringe. 0:06:01.520 --> 0:06:02.560 I mean, they just launched. 0:06:02.760 --> 0:06:05.440 It made clear to everybody that the Trump coin was 0:06:05.760 --> 0:06:07.960 you know a lot of even if the crypto people 0:06:07.960 --> 0:06:09.560 didn't like it. It kind of they call it a 0:06:09.640 --> 0:06:11.599 rug pull. You know, you put a meme coin out 0:06:11.640 --> 0:06:13.320 and then all of a sudden, the people who started 0:06:13.720 --> 0:06:16.279 leave and then the people who came in late. 0:06:16.080 --> 0:06:17.839 Hold the bag. It's like, you know, kind of a 0:06:17.880 --> 0:06:19.320 short term Ponzi effect. 0:06:19.920 --> 0:06:23.120 Now that's Trump is the boss of the sec chair, 0:06:23.279 --> 0:06:26.320 so it'd be weird if you didn't approve a coin 0:06:26.520 --> 0:06:29.640 based on his coin, given that he's the boss that. 0:06:29.560 --> 0:06:30.000 Isn't the work. 0:06:30.040 --> 0:06:32.239 It all gets a little It's going to be interesting 0:06:32.279 --> 0:06:35.280 to see how they deal with this, because we do 0:06:35.360 --> 0:06:37.240 think some of the main coins will be approved. But 0:06:37.320 --> 0:06:40.800 once you get to this really outskirtsy meme coin world, 0:06:41.240 --> 0:06:41.760 will the. 0:06:41.640 --> 0:06:43.200 SEC just sort of let it out? 0:06:43.880 --> 0:06:46.719 That's a question we don't quite know, but if I 0:06:46.760 --> 0:06:48.880 had to guess now, I'd lean towards they've probably let 0:06:48.880 --> 0:06:52.159 most stuff out. But for people worried about how this 0:06:52.240 --> 0:06:55.000 will be bad, most of this stuff will be ignored 0:06:55.000 --> 0:06:55.680 by investors. 0:06:56.120 --> 0:07:00.200 Speaking with Eric Balchuna's ETF analysts for Bloomberg Intelligence, Eric, 0:07:00.240 --> 0:07:02.520 if we're expecting these kind of approvals, what are you 0:07:02.600 --> 0:07:06.880 expecting when it when it comes to enforcement of some 0:07:06.960 --> 0:07:10.480 of the potential risks around some of these new products. 0:07:11.240 --> 0:07:13.480 This is where the big debate on what should the 0:07:13.520 --> 0:07:17.600 SEC behold Should it really police the products, invest them 0:07:17.600 --> 0:07:20.880 and say is this really safe for retail? 0:07:22.280 --> 0:07:24.240 It's sort of I guess like the FDA, at. 0:07:24.080 --> 0:07:27.400 Some point, you know, there's a line between what is 0:07:27.440 --> 0:07:30.480 safe versus Hey, let's just disclose all risks and let 0:07:30.520 --> 0:07:32.560 people have a choice and they if they want to, 0:07:32.920 --> 0:07:35.960 you know, you know, if someone wants beat McDonald's every day. 0:07:36.840 --> 0:07:39.680 It's really their choice, even though that's not healthy, and 0:07:40.040 --> 0:07:43.800 you could argue the government should ban McDonald's. But this 0:07:43.920 --> 0:07:46.040 is the same deal. And I think this sec with 0:07:46.240 --> 0:07:48.840 this chair is going to be a little more like, look, 0:07:49.040 --> 0:07:51.840 just let this stuff out, let people choose, but just 0:07:52.040 --> 0:07:53.480 we're going to put a lot of the risks in 0:07:53.520 --> 0:07:56.840 the perspectives. Now nobody reads the perspectives, that's the problem. 0:07:57.440 --> 0:07:59.760 But I think most people if they see a two 0:07:59.880 --> 0:08:03.720 X Smulania ETF, they're probably going to know it's wacky, 0:08:03.880 --> 0:08:06.840 like they're going to know there's some that it's not vanguard. Okay, 0:08:08.120 --> 0:08:10.880 But this whole thing is why we and BI have 0:08:10.960 --> 0:08:14.120 something called the traffic light. It's based on movie ratings. 0:08:14.120 --> 0:08:17.120 I always thought ETSD movie ratings that way, you know, 0:08:17.760 --> 0:08:20.920 if the name sounds innocent, maybe you know, you know, 0:08:20.960 --> 0:08:23.080 if the if the ETF has some stuff you need 0:08:23.120 --> 0:08:25.120 to know about, you know, just sort of like a 0:08:25.240 --> 0:08:29.640 nasty surprise indicator system. And so we would give most 0:08:29.680 --> 0:08:32.880 of these yellow lights. The two X millennia would be 0:08:32.880 --> 0:08:36.240 read because it's leverage. One ex millenni would be yellow 0:08:36.280 --> 0:08:38.160 because its kind of extra volatility, and there's really no 0:08:38.200 --> 0:08:40.800 cash flows backing any of this. It's like just it's 0:08:40.840 --> 0:08:43.840 like a commodity. So I just think that would be 0:08:43.880 --> 0:08:46.800 helpful for investors to have. Like imagine if you went 0:08:46.840 --> 0:08:50.120 on your Schwab account, you pulled up any ticker and 0:08:50.160 --> 0:08:53.600 it said you know, rated g PG, PG thirteen or R. 0:08:54.160 --> 0:08:56.079 You get a very good idea of like, okay, if 0:08:56.080 --> 0:08:58.600 this is our y and here's the three reasons they 0:08:58.600 --> 0:09:01.400 got rated R tag. To me, that would be awesome. 0:09:01.480 --> 0:09:03.319 We try to create this. We did create the system. 0:09:03.360 --> 0:09:05.840 It's on the terminal. But that's I think how you 0:09:05.840 --> 0:09:08.720 should think as an investor if you're looking at this stuff. 0:09:09.360 --> 0:09:12.040 If it sounds wacky, you know, read the fine print. 0:09:12.960 --> 0:09:15.000 If it sounds innocent, like the Vanguard is some P 0:09:15.080 --> 0:09:17.720 five hundred, that probably is. But every now and then 0:09:17.720 --> 0:09:20.000 there are some with innocent names that are a little 0:09:20.080 --> 0:09:22.720 more involved, like the oil ETF. But I think most 0:09:22.720 --> 0:09:23.280 of these are. 0:09:23.160 --> 0:09:26.400 Going to sound wacky, and they are wacky, so but 0:09:26.880 --> 0:09:29.920 always I would read the perspectives if you can. And 0:09:29.960 --> 0:09:31.440 that's what the SEC is going to say. 0:09:31.520 --> 0:09:34.080 Just put all this stuff, all the risks in the documents, 0:09:34.400 --> 0:09:37.360 and that's that's the kind of you know, because they 0:09:37.920 --> 0:09:41.360 want innovation, and they want things to be out there 0:09:41.400 --> 0:09:44.240 for consumers. But there is a point where you can 0:09:44.280 --> 0:09:47.080 put something out that, you know, is somebody could lose 0:09:47.120 --> 0:09:49.280 money on. But I you know, this is again the 0:09:49.320 --> 0:09:50.800 debate on what a regulator should be. 0:09:51.679 --> 0:09:51.880 Eric. 0:09:51.920 --> 0:09:54.480 Now that we do have a new administration in office, 0:09:54.520 --> 0:09:59.800 have you seen some interesting shifts in ETF flows now 0:09:59.840 --> 0:10:02.400 the there's new leadership in the White House. 0:10:02.920 --> 0:10:03.840 Yeah, it's interesting. 0:10:04.280 --> 0:10:07.080 You know, I think ETF investors over the years, you know, 0:10:07.160 --> 0:10:08.920 we wrote a piece saying the S and P five 0:10:09.000 --> 0:10:10.560 hundred doesn't care who. 0:10:10.440 --> 0:10:11.160 The president is. 0:10:12.760 --> 0:10:15.520 It's almost like the US stock market. We call it 0:10:15.520 --> 0:10:18.000 the eighth Wonder of the World because it's just so relentless. 0:10:18.880 --> 0:10:22.640 It's almost like immune to any of this. And I 0:10:22.679 --> 0:10:26.160 think over the years, even if there has been drama 0:10:26.280 --> 0:10:29.320 and maybe a pullback, it goes right back up. And 0:10:29.400 --> 0:10:31.920 so we have seen no change in the flows from 0:10:31.960 --> 0:10:36.000 like last summer into fall, into the winter into this 0:10:36.200 --> 0:10:38.880 twenty twenty five. It's it's basically been a lot of 0:10:38.920 --> 0:10:41.640 people continue to buy what we call beta, the S 0:10:41.679 --> 0:10:44.839 and P five hundred, the bond ETFs, you know, the 0:10:44.880 --> 0:10:47.760 sixty forty people are just continuing to buy now on 0:10:47.800 --> 0:10:50.960 the fringes. There is some stuff that we see moving, like, 0:10:51.000 --> 0:10:54.680 for example, in the bond space, we do see people 0:10:54.920 --> 0:10:57.760 moving towards the shorter end of the curve, more towards 0:10:57.840 --> 0:11:00.880 like a money market type deal, and I think that's 0:11:00.880 --> 0:11:05.120 a little protection. We've seen obviously money go into the 0:11:05.120 --> 0:11:08.839 bitcoin ets and some into gold. There's some thought that 0:11:08.840 --> 0:11:13.080 that is, you know, an inflation hedge. And then the 0:11:13.120 --> 0:11:16.840 stock market. Sometimes we'll see some flow like try to 0:11:16.880 --> 0:11:19.439 bet on small caps having a rebound or. 0:11:19.440 --> 0:11:21.960 Europe, but those are usually short lived. 0:11:22.000 --> 0:11:24.800 So you do sometimes see people trying to bet on 0:11:24.840 --> 0:11:27.400 some kind of a rotation or regime change. 0:11:27.920 --> 0:11:29.439 So again they're on the outskirts. 0:11:29.440 --> 0:11:31.960 We see bets being made, but for the most part, 0:11:32.000 --> 0:11:36.120 the sort of mainstream flow of money continues to buy 0:11:36.840 --> 0:11:41.120 us stocks, you know, at a breakneck pace, and it's 0:11:41.160 --> 0:11:43.160 going to take more than just like a you know, 0:11:43.600 --> 0:11:48.040 a scary tariff headline to get these ETF investors to 0:11:48.040 --> 0:11:53.240 to change direction. And you know, and why would they. 0:11:53.240 --> 0:11:56.240 They've they've almost been conditioned like Pavolovian dogs to just 0:11:56.480 --> 0:11:58.360 keep buying because it's worked out. 0:11:58.920 --> 0:11:59.880 If you've ever read a. 0:12:00.000 --> 0:12:02.760 Scary headline pulled your money out put in cash. 0:12:02.800 --> 0:12:05.760 You're basically filled with a ton of regret. 0:12:06.440 --> 0:12:09.520 And so this is where we're at. Why I think 0:12:09.559 --> 0:12:12.200 that it will take like a black Swan event in 0:12:12.240 --> 0:12:15.600 my opinion, to really see anything shift, something like the 0:12:15.640 --> 0:12:19.280 COVID something we're not not tariffs, you know, not a 0:12:19.400 --> 0:12:22.520 crazy tweet Like it has to be something like really 0:12:22.600 --> 0:12:25.760 major that nobody's even looking at in my opinion, for 0:12:26.360 --> 0:12:30.080 the general blob of money to like stop investing or 0:12:30.080 --> 0:12:31.000 to move out of stocks. 0:12:31.240 --> 0:12:33.880 Really appreciate this. Eric, thanks again for coming on with us. 0:12:34.200 --> 0:12:35.120 You got it anytime. 0:12:35.400 --> 0:12:40.040 That's Eric Baluchunis ETF, analyst for Bloomberg Intelligence, and coming 0:12:40.120 --> 0:12:43.000 up next on the special holiday edition of Bloomberg Daybreak, 0:12:43.000 --> 0:12:44.800 we're going to take a look at the oil market 0:12:44.880 --> 0:12:48.280 how that may be shifting under the new administration. We'll 0:12:48.320 --> 0:12:51.600 be speaking with Stephen Schork, president of the Short Group. 0:12:51.960 --> 0:12:54.839 It's twenty minutes past the hour. I'm Nathan Hager, and 0:12:54.920 --> 0:13:03.840 this is Bloomberg. Welcome back to this special holiday edition 0:13:03.920 --> 0:13:07.920 of Bloomberg Daybreak. US markets are closed for President's Day. 0:13:08.160 --> 0:13:10.120 I'm Nathan Hager, and we want to take a look 0:13:10.160 --> 0:13:14.000 now at the oil market, commodities across the board have 0:13:14.120 --> 0:13:17.760 been rocked with President Trump threatening and in some cases 0:13:17.880 --> 0:13:22.480 imposing tariffs on friend and foe alike. Here to give 0:13:22.520 --> 0:13:24.880 us a sense of the energy outlook as we make 0:13:24.960 --> 0:13:28.520 sense of this new tougher trade policy is Stephen Shork, 0:13:28.760 --> 0:13:32.480 president of the energy analysis firm the Short Group. Thanks 0:13:32.520 --> 0:13:35.320 again for being with us, Steven, And we have seen 0:13:35.360 --> 0:13:38.480 oil prices really take a hit on the tariffs that 0:13:38.520 --> 0:13:41.160 President Trump is already imposed and the threat of more 0:13:41.200 --> 0:13:45.000 to come. How do tougher trade policies affect your outlook 0:13:45.040 --> 0:13:45.800 for the months to come? 0:13:46.040 --> 0:13:48.600 Yeah, absolutely, Nathan. So what I like to do, of course, 0:13:48.720 --> 0:13:51.080 is always look at the market's term structure or its 0:13:51.200 --> 0:13:55.120 forward curve. And with all of the rhetoric and some 0:13:55.200 --> 0:13:58.319 of it has made good on with regard to the tariffs, 0:13:58.440 --> 0:14:00.240 when it comes to oil, we have to think about 0:14:00.240 --> 0:14:03.920 this logically. A lot of this is bluster. The United States, 0:14:03.960 --> 0:14:07.800 and specifically our refineries in the Upper Midwestern the Chicago 0:14:07.840 --> 0:14:12.720 market area, are wholly dependent on importing crude oil from Canada. 0:14:13.000 --> 0:14:17.800 These refiners are geared specifically to refine Canadian heavy crude oil. 0:14:18.320 --> 0:14:21.320 So with regards to the terrifs, when it comes to oil. 0:14:22.120 --> 0:14:25.480 I think it's a bit of brinksmanship so far. I 0:14:25.480 --> 0:14:28.960 think the administration has blinked on that matter, because the 0:14:29.040 --> 0:14:31.600 last thing the administration wants to do, of course, is 0:14:32.040 --> 0:14:35.200 drive up oil prices, which consumers will begin to feel 0:14:35.240 --> 0:14:38.760 immediately at the pump. So that said, when we look 0:14:38.800 --> 0:14:41.440 at the term structure, the market has been fairly stable 0:14:42.000 --> 0:14:45.080 non ex WTI has been ranged bound in between about 0:14:45.120 --> 0:14:49.080 seventy dollars and seventy five dollars a barrel for this quarter, 0:14:49.480 --> 0:14:52.680 which is in perfect agreement with our modeling that we 0:14:52.800 --> 0:14:55.520 came out. We entered this year with oil at about 0:14:55.520 --> 0:14:59.240 sixty nine dollars fifty cents. The midpoint for this quarter 0:14:59.320 --> 0:15:01.560 based on our model is about seventy one dollars and 0:15:01.600 --> 0:15:04.240 sixty cents. And as they said, the market has pretty 0:15:04.280 --> 0:15:06.800 much been ranged bound in between seventy and seventy five. 0:15:07.280 --> 0:15:11.320 Most importantly, a recent survey put out by the Dallas 0:15:11.360 --> 0:15:15.520 Federal Reserve to oil executives in the oil patch down 0:15:15.560 --> 0:15:19.160 in Texas, Oklahoma, Kansas, and so forth, or asked what 0:15:19.200 --> 0:15:22.640 they were planning oil prices based on their capital spending 0:15:22.840 --> 0:15:24.680 and as long as the oil prices hold in that 0:15:24.800 --> 0:15:30.320 seventy seventy five dollars range. Not coincidentally, the industry will 0:15:30.360 --> 0:15:33.960 continue to invest. So from this standpoint, the teriffs the 0:15:34.120 --> 0:15:37.120 talk their rhetoric, Yes, it makes a lot of noise, 0:15:37.400 --> 0:15:41.320 but when you look at the relatively lack of volatility, 0:15:41.440 --> 0:15:43.200 So we're looking at a market when we look at 0:15:43.200 --> 0:15:45.840 whether it's range bound, there's a lack of volatility. The 0:15:45.880 --> 0:15:48.400 market has been relatively stable as far as looking at 0:15:48.440 --> 0:15:51.600 the spreads, the spreads are indicating. That is to say, 0:15:51.800 --> 0:15:54.200 as we look at prices along the forward curve, the 0:15:54.320 --> 0:15:58.840 market is well balanced. No one is clamoring for product. 0:15:59.040 --> 0:16:02.440 So do you see any factor breaking the oil market 0:16:02.560 --> 0:16:04.760 out of this range, and if so, is it going 0:16:04.800 --> 0:16:06.320 to go up or is it going to go down? 0:16:07.120 --> 0:16:10.880 I think the risk is certainly to the downside. Of course, 0:16:11.120 --> 0:16:15.520 the big two geopolitical headlines out there are sanctions and 0:16:15.840 --> 0:16:20.200 a harder stamps on Russian and Iranian oil, and of 0:16:20.200 --> 0:16:24.360 course that is a potential uptick that would propel oil 0:16:24.400 --> 0:16:27.640 prices higher. But again, looking at the forward curve, in 0:16:27.680 --> 0:16:30.800 the turn structure in oil markets all around the world, 0:16:31.440 --> 0:16:35.160 traders are placing a maximum of minimum concern on these 0:16:35.200 --> 0:16:38.680 geopolitical events. So just as we've seen over the past 0:16:38.720 --> 0:16:41.760 two years when more in the Middle East broke out, 0:16:42.040 --> 0:16:46.080 it's less about supply more about demand. So the supply 0:16:46.200 --> 0:16:49.000 issues will always okay, supplies out of the Middle East 0:16:49.040 --> 0:16:54.040 transiting through the Red Sea with all the attacks and shipping, 0:16:54.440 --> 0:16:57.480 that's a supply issue, but it had not impact prices. 0:16:57.720 --> 0:17:00.720 So the concern now is more of global economic growth. 0:17:00.960 --> 0:17:02.800 And when we say that when it comes to oil, 0:17:02.880 --> 0:17:05.800 of course we're talking about China. But we've been waiting 0:17:05.800 --> 0:17:08.000 for bide when it comes to China for the past 0:17:08.040 --> 0:17:10.640 three years with this demand to hit, it has not hit. 0:17:10.920 --> 0:17:12.760 I don't think it's going to hit in this year. 0:17:13.080 --> 0:17:15.520 So certainly, if there is a risk of breaks out 0:17:15.560 --> 0:17:18.399 of that range, Nathan, it is certainly oil prices below 0:17:18.480 --> 0:17:21.480 seventy dollars a barrel rather than oil prices above eighty 0:17:21.520 --> 0:17:24.160 dollars a barrel through the first at least six months 0:17:24.160 --> 0:17:24.640 of this year. 0:17:24.920 --> 0:17:28.600 To your point about waiting for that demand shift to 0:17:28.720 --> 0:17:32.000 change coming out of China, it gets us into the 0:17:32.040 --> 0:17:35.639 next OPEC Plus meeting and the decision on whether to 0:17:35.680 --> 0:17:40.200 continue with the delayed production increases from the oil cartel. 0:17:40.240 --> 0:17:42.159 What's your expectation there. 0:17:42.880 --> 0:17:46.360 Yeah, exactly, so there's speculation, of course, if we're tougher 0:17:46.359 --> 0:17:50.600 on Russia, we're tougher in Iran the other OPEC members, 0:17:50.720 --> 0:17:53.919 primarily the Arab oil producers who don't have a lot 0:17:53.960 --> 0:17:56.520 of love loss with between the Arabs and the Iranians, 0:17:56.680 --> 0:18:00.679 that Saudi Arabia and so forth will increase production. But 0:18:01.000 --> 0:18:03.600 that is just trying to play geopolitics. 0:18:03.600 --> 0:18:04.160 One oh one. 0:18:04.640 --> 0:18:06.840 What we have to look at again is the spread, 0:18:06.880 --> 0:18:09.760 the spread between Brent Dubai, the Dubai spreads, the Middle 0:18:09.800 --> 0:18:13.879 East spreads, and what we're indicating here is once again 0:18:14.000 --> 0:18:19.000 a market that is relatively stable on a global standpoint. 0:18:19.359 --> 0:18:22.359 So once again OPEK is going to look rather than 0:18:22.480 --> 0:18:25.159 look at the potential, they're going to look at what 0:18:25.200 --> 0:18:28.680 the market's telling them. Their analysts are excellent at looking 0:18:28.720 --> 0:18:31.639 at this. So I would suspect there's a fifty to 0:18:31.640 --> 0:18:34.840 fifty chance that they'll they'll maintain the status quo i e. 0:18:35.160 --> 0:18:40.600 They'll kick the production, you know, the quota adherents, they'll 0:18:40.880 --> 0:18:43.159 kick that can down the road until their next meeting 0:18:43.400 --> 0:18:46.840 unless they see something that happens in the spreads. And 0:18:47.000 --> 0:18:49.639 right now that the spreads are telling OPEK, they're telling 0:18:49.720 --> 0:18:53.000 traders that the market is in balance at this point, 0:18:53.080 --> 0:18:56.960 regardless of all these known unknowns of geopolitical events, be 0:18:57.080 --> 0:19:03.160 it Iran Russia, the war between in Gaza between Iran 0:19:03.240 --> 0:19:07.399 and Israel basically, and certainly the situation in Ukraine. So 0:19:07.480 --> 0:19:11.119 until we see something hard tangible to trade on the 0:19:11.200 --> 0:19:14.080 spreads is telling us no OPA will maintain the status quo. 0:19:14.480 --> 0:19:17.480 We're speaking with Stephen Schork, president of the Short Group, 0:19:17.640 --> 0:19:22.440 energy analyst with us on this special edition of Bloomberg Daybreak. 0:19:22.600 --> 0:19:24.359 I know you said we should look past the noise 0:19:24.359 --> 0:19:26.520 when it comes to the oil market, Stephen, but if 0:19:26.520 --> 0:19:29.720 you'll indulge me for a minute, we have heard noise, 0:19:29.760 --> 0:19:32.040 if you want to call it that, from President Trump 0:19:32.040 --> 0:19:35.440 on the campaign trail, now in office saying drill, baby, drill. 0:19:35.520 --> 0:19:40.119 He wants to boost energy production in this country. Is 0:19:40.119 --> 0:19:42.199 that something you're thinking about when it comes to the 0:19:42.200 --> 0:19:43.080 outlook for crud? 0:19:44.200 --> 0:19:48.320 Of course, and that really hammers home the point of 0:19:48.359 --> 0:19:51.440 the rhetoric. So yes, the president, we'll want to talk 0:19:51.480 --> 0:19:56.720 about drill, about baby drill, But guess what we are drilling, baby, 0:19:56.800 --> 0:20:01.160 and we are drilling a lot of oil at this point. 0:20:01.480 --> 0:20:04.439 So again i'll reference that the response is to a 0:20:04.520 --> 0:20:06.879 survey to E and T executives put forth by the 0:20:06.960 --> 0:20:12.000 Dallas said, and the response that is, the industry response 0:20:12.160 --> 0:20:15.400 is relatively lukewarm to the idea of drill baby drill. 0:20:15.680 --> 0:20:19.000 Why because we're already drilling more oil than we ever had, 0:20:19.280 --> 0:20:21.920 and we are by far drilling the most oil than 0:20:21.960 --> 0:20:24.320 any country in the world. So there really is a 0:20:24.520 --> 0:20:26.639 lot of neat left on that bone for us to 0:20:26.720 --> 0:20:30.320 drill even more so, according to those responses, you only 0:20:30.359 --> 0:20:34.440 have fourteen percent of the responses come from these executives 0:20:34.560 --> 0:20:39.000 that said they planned to increase capital spending significantly. The 0:20:39.040 --> 0:20:43.080 majority of the executives at these current prices are comfortable 0:20:43.119 --> 0:20:46.120 with drilling at current rates, i e. There is no 0:20:46.200 --> 0:20:48.760