1 00:00:10,800 --> 00:00:14,440 Speaker 1: Hello, and welcome to another episode of the Odd Lots Podcast. 2 00:00:14,520 --> 00:00:19,159 Speaker 1: I'm Joe Wisnal and I'm Tracy all Away. Tracy, So, 3 00:00:19,239 --> 00:00:23,479 Speaker 1: obviously markets have been really fun and wild and crazy lately. 4 00:00:24,160 --> 00:00:27,680 Speaker 1: You know. I think that, um, when we started talking 5 00:00:27,800 --> 00:00:30,160 Speaker 1: about some of the stuff with game Stop and everything 6 00:00:30,320 --> 00:00:36,280 Speaker 1: and a liquid small small stocks being pushed on message boards, 7 00:00:36,520 --> 00:00:42,080 Speaker 1: we didn't expect it to move to a major commodity market, no, 8 00:00:42,520 --> 00:00:44,960 Speaker 1: And I have to say, I'm reminded of the post 9 00:00:45,040 --> 00:00:48,040 Speaker 1: you wrote a week or two ago about how it 10 00:00:48,080 --> 00:00:52,000 Speaker 1: can always get crazier, and I think what we're seeing 11 00:00:52,080 --> 00:00:55,480 Speaker 1: right now is proof that it can indeed always get crazier. 12 00:00:55,520 --> 00:00:59,640 Speaker 1: But what started with a relatively small single stock game 13 00:00:59,680 --> 00:01:02,520 Speaker 1: Stock migrated to a bunch of other stocks like AMC 14 00:01:02,800 --> 00:01:06,280 Speaker 1: and Nokia, and then it seemed to go to the 15 00:01:06,319 --> 00:01:09,680 Speaker 1: silver market. And I think silver future has jumped quite 16 00:01:09,680 --> 00:01:13,160 Speaker 1: a bit, although as we're recording this, uh, let's see, 17 00:01:13,319 --> 00:01:16,399 Speaker 1: it is February second, and they are starting to come 18 00:01:16,400 --> 00:01:19,759 Speaker 1: back down a bit. But the notion that retail money 19 00:01:19,840 --> 00:01:25,120 Speaker 1: would go after a market as large as silver is 20 00:01:25,160 --> 00:01:29,280 Speaker 1: pretty intense. Like that is a big market, certainly multiples 21 00:01:29,480 --> 00:01:33,000 Speaker 1: of game Stop. Now it should be noted that there 22 00:01:33,080 --> 00:01:37,160 Speaker 1: is some ambiguity about where this silver trade emanated from. 23 00:01:37,240 --> 00:01:40,320 Speaker 1: There are people on the subrettit Wall Street bets to say, hey, 24 00:01:40,360 --> 00:01:43,520 Speaker 1: this isn't us. We never said anything about silver. That's 25 00:01:43,560 --> 00:01:47,360 Speaker 1: not clear. What is clear is that something happened and 26 00:01:47,400 --> 00:01:50,080 Speaker 1: in a span of just a few days, starting at 27 00:01:50,080 --> 00:01:52,320 Speaker 1: the end of the last week, maybe Thursday, Friday through 28 00:01:52,360 --> 00:01:57,200 Speaker 1: the weekend, basically every retail silver coin site was just 29 00:01:58,120 --> 00:02:01,840 Speaker 1: instantly out of inventory, some of them saying, um that 30 00:02:01,880 --> 00:02:05,040 Speaker 1: they got as many sales in two days as they 31 00:02:05,040 --> 00:02:08,120 Speaker 1: would expect to get for an entire month. So something happened. 32 00:02:08,400 --> 00:02:11,840 Speaker 1: They just sent silver demand both through physical demand and 33 00:02:11,880 --> 00:02:14,160 Speaker 1: also plays on the e t F and then into 34 00:02:14,200 --> 00:02:18,519 Speaker 1: the future of market. Absolutely wild. Yeah, this is why 35 00:02:18,600 --> 00:02:21,200 Speaker 1: I find some of the reddit or Wall Street bets 36 00:02:21,240 --> 00:02:24,519 Speaker 1: pushed back on this really weird. Like they're all saying 37 00:02:24,600 --> 00:02:28,840 Speaker 1: that it's hedge funds buying silver and its bots trying 38 00:02:28,840 --> 00:02:31,120 Speaker 1: to push the price of silver up on the subreddit. 39 00:02:31,200 --> 00:02:34,120 Speaker 1: But the fact that all the coin stores are sold 40 00:02:34,160 --> 00:02:36,840 Speaker 1: out of American eagles kind of makes me think that 41 00:02:36,880 --> 00:02:39,800 Speaker 1: there is a retail component here. And I'm sure you know, 42 00:02:39,880 --> 00:02:42,400 Speaker 1: Ken Griffin isn't going down to his local coin store 43 00:02:42,520 --> 00:02:49,440 Speaker 1: to load up on Philharmonic coins or something like that. Now, Tracy, 44 00:02:49,520 --> 00:02:51,040 Speaker 1: we're gonna get to our guests in a second, But 45 00:02:51,200 --> 00:02:55,320 Speaker 1: have you um posted a video yet of you stacking silver? 46 00:02:55,919 --> 00:02:58,640 Speaker 1: You promise you were going to do that. I did, 47 00:02:58,680 --> 00:03:00,960 Speaker 1: but then I got really a side tracked and um 48 00:03:01,200 --> 00:03:04,880 Speaker 1: tired by the podcast recording schedule. I will do it. 49 00:03:05,320 --> 00:03:08,240 Speaker 1: I will try it this week. I promise again. Maybe 50 00:03:08,400 --> 00:03:10,440 Speaker 1: maybe you could, maybe you could time the release of 51 00:03:10,480 --> 00:03:15,880 Speaker 1: the video for this episode. So, unfortunately, we're not interviewing 52 00:03:15,960 --> 00:03:18,360 Speaker 1: your dad because we've been talking about that forever. We 53 00:03:18,440 --> 00:03:20,560 Speaker 1: know your dad is a big silver bug, but we're 54 00:03:20,560 --> 00:03:23,560 Speaker 1: not getting him. But I'm extremely excited about our guests. 55 00:03:23,560 --> 00:03:27,400 Speaker 1: In fact, we booked him before all the silver mania 56 00:03:27,440 --> 00:03:29,600 Speaker 1: happened because there is actually so much more to talk 57 00:03:29,639 --> 00:03:32,560 Speaker 1: about in the broader world of commodities, and it was 58 00:03:32,600 --> 00:03:35,040 Speaker 1: originally we're going to talk about all that. So there's 59 00:03:35,080 --> 00:03:39,600 Speaker 1: so much going in commodities, silver, oil, the broader macro picture, 60 00:03:39,640 --> 00:03:43,600 Speaker 1: industrial commodities, copper, etcetera. All wild stuff this year. So 61 00:03:43,600 --> 00:03:45,880 Speaker 1: we have the perfect guest for it. We're going to 62 00:03:45,920 --> 00:03:48,360 Speaker 1: be speaking with Jeff Curry. He has the Global Head 63 00:03:48,400 --> 00:03:52,200 Speaker 1: of Commodities Research at Goldman Sex or role he's occupied 64 00:03:52,280 --> 00:03:56,040 Speaker 1: the two thousand and six longtime veteran at Goldman Sex, 65 00:03:56,320 --> 00:03:58,680 Speaker 1: been there for twenty five years and really just sort 66 00:03:58,720 --> 00:04:01,080 Speaker 1: of knows more about the commodities world than almost anyone 67 00:04:01,160 --> 00:04:04,200 Speaker 1: you'll speak to. So the perfect guest today, So um, 68 00:04:04,280 --> 00:04:07,040 Speaker 1: Jeff Curry, thank you so much for joining us. Great 69 00:04:07,120 --> 00:04:10,440 Speaker 1: thanks for having me. Jeff. I don't want to get 70 00:04:10,440 --> 00:04:12,600 Speaker 1: you in trouble or have you say anything bad about 71 00:04:12,640 --> 00:04:16,000 Speaker 1: people who buy commodities, But honestly, what is the deal 72 00:04:16,160 --> 00:04:18,800 Speaker 1: with people who go who buy silver? Because I will 73 00:04:18,839 --> 00:04:23,119 Speaker 1: say that in my career following markets for the last 74 00:04:23,200 --> 00:04:26,400 Speaker 1: ten or so years, there's something about silver people. They're 75 00:04:26,440 --> 00:04:29,040 Speaker 1: just like wired a little bit different silver people, And 76 00:04:29,160 --> 00:04:32,120 Speaker 1: I'll just leave it at that, silver bug, silver people. 77 00:04:32,200 --> 00:04:34,800 Speaker 1: What is the deal with silver? And why does stuff 78 00:04:34,839 --> 00:04:38,200 Speaker 1: like this happen? Well, you know, you know the piece 79 00:04:38,240 --> 00:04:41,839 Speaker 1: we put out this this morning was silver is remains 80 00:04:41,960 --> 00:04:45,160 Speaker 1: the Populist medal, And you go back in history for 81 00:04:45,640 --> 00:04:50,280 Speaker 1: you know, hundreds of years. Silver has always been associated 82 00:04:50,320 --> 00:04:54,880 Speaker 1: with populist movements, and so the market today is focused 83 00:04:54,960 --> 00:04:59,440 Speaker 1: on the Hunt brothers cornering at the silver market as 84 00:04:59,480 --> 00:05:03,960 Speaker 1: the his oracle analog. We think the appropriate historical analog 85 00:05:04,480 --> 00:05:09,839 Speaker 1: is actually William Jennings Bryan's Cross of Gold speech, where 86 00:05:10,440 --> 00:05:15,680 Speaker 1: essentially he argues that the government in the banks, um, 87 00:05:16,080 --> 00:05:21,200 Speaker 1: we're suppressing inflation and economic potential, which is similar to 88 00:05:21,240 --> 00:05:24,960 Speaker 1: the rhetoric that the you know, the Wall Street veterate 89 00:05:25,279 --> 00:05:30,360 Speaker 1: hedit Um group was advocating. And the key here is that, 90 00:05:30,839 --> 00:05:34,520 Speaker 1: you know, take somebody like Brian. He was advocating silver 91 00:05:34,640 --> 00:05:37,200 Speaker 1: coinage as a way of getting around this, and so 92 00:05:37,560 --> 00:05:40,839 Speaker 1: it has that historical populist element to it, and I 93 00:05:40,880 --> 00:05:43,479 Speaker 1: think that's really what it's at play here, and the 94 00:05:43,520 --> 00:05:46,960 Speaker 1: way we view the Wall Street Vets group is this 95 00:05:47,040 --> 00:05:50,960 Speaker 1: is just a continuation of the rise of populism or 96 00:05:51,000 --> 00:05:55,000 Speaker 1: it's just you know crescendo occurring um, you know, week 97 00:05:55,080 --> 00:05:59,120 Speaker 1: after week. That's representing I think this need for governments 98 00:05:59,160 --> 00:06:02,800 Speaker 1: to address some these issues around income inequality and other 99 00:06:02,880 --> 00:06:07,160 Speaker 1: social needs. So we alluded to this in the intro. 100 00:06:07,480 --> 00:06:10,960 Speaker 1: But trying to force a squeeze in a commodity market 101 00:06:11,360 --> 00:06:14,159 Speaker 1: is very very different to trying to force a squeeze 102 00:06:14,240 --> 00:06:19,120 Speaker 1: in a single stock with high short interest. How how 103 00:06:19,160 --> 00:06:23,280 Speaker 1: effective do you think retail could be. And again we 104 00:06:23,320 --> 00:06:26,440 Speaker 1: should just repeat the Wall Street butts is refuting the 105 00:06:26,480 --> 00:06:29,320 Speaker 1: idea that they're behind all of this. But how effective 106 00:06:29,360 --> 00:06:32,320 Speaker 1: do you think retail could be in moving the price 107 00:06:32,320 --> 00:06:35,520 Speaker 1: of silver? At this point, again going back to the 108 00:06:35,600 --> 00:06:41,760 Speaker 1: Hunt Brothers, there was significant regulatory changes in these markets, 109 00:06:41,800 --> 00:06:46,240 Speaker 1: in particular position limits that makes it almost nearly impossible 110 00:06:46,320 --> 00:06:48,760 Speaker 1: to be able to squeeze these markets on the same 111 00:06:48,800 --> 00:06:51,599 Speaker 1: scale that we saw forty one years ago. Um, you know, 112 00:06:51,800 --> 00:06:55,479 Speaker 1: and also in terms of thinking about the magnitude the 113 00:06:55,560 --> 00:06:59,919 Speaker 1: size of these macro markets versus let's say game stock. 114 00:07:00,120 --> 00:07:02,680 Speaker 1: You know, the size of the silver market in terms 115 00:07:02,720 --> 00:07:05,120 Speaker 1: of what's being produced and all out there is you know, 116 00:07:05,160 --> 00:07:08,680 Speaker 1: somewhere around three hundred billion US dollars. You know, it's 117 00:07:08,720 --> 00:07:11,480 Speaker 1: three hundred times the size of the original market cap 118 00:07:11,520 --> 00:07:14,880 Speaker 1: of games. And so when we and by the way, 119 00:07:15,080 --> 00:07:17,480 Speaker 1: that's a in our world, silver is one of the 120 00:07:17,560 --> 00:07:20,680 Speaker 1: smallest markets we deal with. You put something like gold, 121 00:07:21,080 --> 00:07:23,680 Speaker 1: you know, in term you include everything in the central banks, 122 00:07:23,720 --> 00:07:26,360 Speaker 1: it's just like a seven trillion dollar market. But I 123 00:07:26,400 --> 00:07:28,920 Speaker 1: think you know, the key point here is that if 124 00:07:28,960 --> 00:07:33,760 Speaker 1: you take the what five million Wall Street Bets subscribers, 125 00:07:33,800 --> 00:07:35,960 Speaker 1: they would imply that each one of them would have 126 00:07:36,040 --> 00:07:39,400 Speaker 1: to own somewhere around forty two hundred ounces of silver 127 00:07:39,680 --> 00:07:42,560 Speaker 1: to be able to replicate what the Hunt brothers did. 128 00:07:42,920 --> 00:07:46,400 Speaker 1: Then the ability for them to do it, given position limits, 129 00:07:46,440 --> 00:07:48,720 Speaker 1: means that you would have to split the position fifty 130 00:07:48,800 --> 00:07:52,880 Speaker 1: three ways, with each position representing two hundred and seventeen 131 00:07:52,920 --> 00:07:56,720 Speaker 1: million dollars um, and they would all need to be coordinated. So, 132 00:07:56,760 --> 00:07:59,200 Speaker 1: in other words, it's nearly impossible to do in the 133 00:07:59,240 --> 00:08:03,360 Speaker 1: current environment, and that's one of the smaller commodities. I 134 00:08:03,400 --> 00:08:08,360 Speaker 1: think Wall Street Cuts is now seven or eight million subscribers, 135 00:08:08,400 --> 00:08:11,760 Speaker 1: so the number keeps going up. But point taken about 136 00:08:11,880 --> 00:08:14,960 Speaker 1: the amount of firepower that would be needed, yeah, it 137 00:08:15,040 --> 00:08:17,680 Speaker 1: still seems very unlikely that they're going to do what 138 00:08:17,800 --> 00:08:21,560 Speaker 1: would be needed to really corner this market. Jeff, you know, 139 00:08:21,640 --> 00:08:25,520 Speaker 1: there's this persistent myth or this thing that people say, 140 00:08:25,560 --> 00:08:27,160 Speaker 1: and I don't really understand it, but I guess it 141 00:08:27,200 --> 00:08:29,720 Speaker 1: gets back, you know, to some of the William Jennings 142 00:08:29,720 --> 00:08:34,280 Speaker 1: Bryan populism. There's this persistent myth out there that the 143 00:08:34,320 --> 00:08:38,280 Speaker 1: Wall Street banks and in particular JP Morgan for some reason, 144 00:08:38,360 --> 00:08:40,920 Speaker 1: and I never understood why, what the what the story 145 00:08:41,080 --> 00:08:43,520 Speaker 1: is they're like, oh, they're sitting on this huge naked 146 00:08:43,559 --> 00:08:46,440 Speaker 1: short position, and if we just jack up the price 147 00:08:46,480 --> 00:08:48,480 Speaker 1: of silver enough, they're gonna have to cover and then 148 00:08:48,520 --> 00:08:50,280 Speaker 1: that's the way we're going to take down the bankers 149 00:08:50,280 --> 00:08:52,320 Speaker 1: and get them back and all that stuff. Do you know, 150 00:08:52,400 --> 00:08:54,280 Speaker 1: like what do what? Can you walk us through the 151 00:08:54,320 --> 00:08:57,959 Speaker 1: origin of this notion that for some reason banks Like 152 00:08:58,240 --> 00:09:00,640 Speaker 1: where did they get this idea that banks are sitting 153 00:09:00,679 --> 00:09:05,520 Speaker 1: on these huge unhedged short silver positions. If you look 154 00:09:05,559 --> 00:09:11,400 Speaker 1: at the c TC positioning reports, what you see is 155 00:09:11,600 --> 00:09:16,400 Speaker 1: that the U, the swap dealers, the banks are have 156 00:09:16,800 --> 00:09:22,200 Speaker 1: very large short positions in um precious metals. Now, the 157 00:09:22,240 --> 00:09:26,440 Speaker 1: thing that's forgotten is that these are typically hedges to 158 00:09:26,559 --> 00:09:29,320 Speaker 1: the physical positions and like the E T s And 159 00:09:29,320 --> 00:09:32,400 Speaker 1: that's the one thing that makes commodity markets very different 160 00:09:32,559 --> 00:09:35,760 Speaker 1: from financial markets or the long only markets is that 161 00:09:35,840 --> 00:09:39,040 Speaker 1: there's zero sum, meaning that for every long is a short, 162 00:09:39,320 --> 00:09:41,920 Speaker 1: and I think people forget that. And also, you know, 163 00:09:42,000 --> 00:09:45,040 Speaker 1: it goes to a broader point about the ability for 164 00:09:45,679 --> 00:09:49,760 Speaker 1: um speculators to impact these markets. Uh, when you have 165 00:09:49,800 --> 00:09:53,280 Speaker 1: a speculator coming and buy the share of a company, 166 00:09:54,040 --> 00:09:56,440 Speaker 1: the only way you create more supply of those shares 167 00:09:56,520 --> 00:09:59,839 Speaker 1: is through the SEC approval and then you issue new shares, 168 00:10:00,240 --> 00:10:02,840 Speaker 1: so if the speculator buys those shares, they can drive 169 00:10:02,920 --> 00:10:05,559 Speaker 1: up the price. Now, when you think about a commodity 170 00:10:05,600 --> 00:10:09,079 Speaker 1: market like let's say, you know oil or something like that, 171 00:10:09,120 --> 00:10:12,280 Speaker 1: where you have the the you know every long there 172 00:10:12,400 --> 00:10:15,040 Speaker 1: is a short, you're adding more loans means you're adding 173 00:10:15,040 --> 00:10:18,560 Speaker 1: the short. Now, what separates silver and gold from all 174 00:10:18,600 --> 00:10:21,079 Speaker 1: the other commodity markets is that E t F is 175 00:10:21,120 --> 00:10:23,960 Speaker 1: physically backed. And so to answer your question, what they're 176 00:10:24,000 --> 00:10:27,840 Speaker 1: observed is the fact that the lights of the entities 177 00:10:27,880 --> 00:10:30,680 Speaker 1: that are supporting those e t F s are using 178 00:10:30,760 --> 00:10:34,520 Speaker 1: the comac silver market as a hedge mechanism. And hint, 179 00:10:34,720 --> 00:10:37,120 Speaker 1: that's why you see the shorts in that market. But 180 00:10:37,320 --> 00:10:39,440 Speaker 1: I actually always want to quickly go to a point 181 00:10:39,440 --> 00:10:43,240 Speaker 1: about the physical aspect of those e t F gold 182 00:10:43,280 --> 00:10:47,080 Speaker 1: and silver is if you take the the the current 183 00:10:47,200 --> 00:10:52,040 Speaker 1: size of the of the gold et F, you know 184 00:10:52,559 --> 00:10:57,280 Speaker 1: it's somewhere around a hundred and fifty billion dollars of gold. 185 00:10:57,760 --> 00:11:01,280 Speaker 1: You could put the hundred and fifty billion dollars into 186 00:11:01,360 --> 00:11:04,280 Speaker 1: your office. It may break the floor, it's so heavy 187 00:11:04,360 --> 00:11:07,120 Speaker 1: it falls through. But the key point is that you 188 00:11:07,160 --> 00:11:09,720 Speaker 1: don't need a lot of space to store it. Now, 189 00:11:09,720 --> 00:11:13,280 Speaker 1: in contrast, if you take the oil et F, which 190 00:11:13,320 --> 00:11:16,560 Speaker 1: is all paper, not physical, and you look at the 191 00:11:16,559 --> 00:11:19,240 Speaker 1: total amount in there, it's something like a hundred and 192 00:11:19,280 --> 00:11:21,360 Speaker 1: eighty million barrels. By the way, don't quote me on 193 00:11:21,400 --> 00:11:24,400 Speaker 1: these numbers I made. They changing quickly. But the point 194 00:11:24,400 --> 00:11:26,800 Speaker 1: I want to illustrate here is that if you take 195 00:11:26,840 --> 00:11:30,880 Speaker 1: a hundred and eighty million barrels, one BLCC carries two 196 00:11:30,960 --> 00:11:33,640 Speaker 1: million barrels. So think about this, A hundred and eighty 197 00:11:33,640 --> 00:11:37,920 Speaker 1: million barrels is ninety blccs. Now, why don't you even 198 00:11:38,000 --> 00:11:41,160 Speaker 1: envision in your head parking ninety b LCCs in the 199 00:11:41,200 --> 00:11:43,600 Speaker 1: East River, New York or the Thames here in London. 200 00:11:43,920 --> 00:11:47,920 Speaker 1: It becomes incredibly difficult. Now, in contrast, you take that 201 00:11:48,000 --> 00:11:51,160 Speaker 1: hundred eighty million barrels at fifty dollars a barrel, that's 202 00:11:51,240 --> 00:11:54,480 Speaker 1: nine billion dollars parked out on the Thames River. And 203 00:11:54,520 --> 00:11:57,640 Speaker 1: if you can think about the gold et F, I've 204 00:11:57,679 --> 00:12:00,600 Speaker 1: just stored a hundred and fifty billion dollar dollars in 205 00:12:00,720 --> 00:12:03,480 Speaker 1: my office. I'm gonna get you need to concrete floor 206 00:12:03,600 --> 00:12:05,520 Speaker 1: to be able to store. But the key message here 207 00:12:05,840 --> 00:12:07,920 Speaker 1: is you can do it, you can't do it in oil. 208 00:12:08,200 --> 00:12:11,200 Speaker 1: Hence why you have physical e t s in both 209 00:12:11,240 --> 00:12:15,800 Speaker 1: gold and silver. Yeah, don't take physical delivery of oil, 210 00:12:16,360 --> 00:12:21,280 Speaker 1: something I learned from first hand experience. So so what's 211 00:12:21,280 --> 00:12:23,840 Speaker 1: your what's your take on why the price of silver 212 00:12:24,160 --> 00:12:27,120 Speaker 1: actually moved this week? If if we're saying that retail 213 00:12:27,280 --> 00:12:30,240 Speaker 1: probably doesn't have enough firepower to do it by themselves, 214 00:12:30,520 --> 00:12:33,839 Speaker 1: what's going on here? Well, I mean in terms of 215 00:12:33,840 --> 00:12:37,440 Speaker 1: looking at you know, near term volatility. Absolutely, they can 216 00:12:37,480 --> 00:12:41,960 Speaker 1: create volatility by moving uh, you know, in and out 217 00:12:41,960 --> 00:12:45,360 Speaker 1: of the market and creating velocity and changes in open interest, 218 00:12:45,440 --> 00:12:47,680 Speaker 1: which they are doing because you know, we're down again 219 00:12:47,720 --> 00:12:50,680 Speaker 1: today similar to this we were up. But in terms 220 00:12:50,679 --> 00:12:54,000 Speaker 1: of thinking about a long term structural shift, you need 221 00:12:54,040 --> 00:12:58,240 Speaker 1: to have physical demand for those coins and real physical silver. 222 00:12:59,120 --> 00:13:02,480 Speaker 1: It's increased. What but is they going to create a 223 00:13:02,559 --> 00:13:05,200 Speaker 1: squeeze or anything of that, Megan to The answer is no. 224 00:13:05,720 --> 00:13:07,920 Speaker 1: And I so I don't want to dismiss the inability 225 00:13:07,960 --> 00:13:10,720 Speaker 1: to move markets, because clearly they did. Yesterday's silver was 226 00:13:10,920 --> 00:13:14,520 Speaker 1: up eight percent. But the question is are they going 227 00:13:14,559 --> 00:13:18,280 Speaker 1: to stay in this market and maintain those positions. That 228 00:13:18,400 --> 00:13:21,200 Speaker 1: becomes a much more difficult task because the one thing 229 00:13:21,240 --> 00:13:24,880 Speaker 1: about commodities that separates them from again from financial markets 230 00:13:25,440 --> 00:13:28,680 Speaker 1: is not only are they long short, but also there's 231 00:13:28,679 --> 00:13:32,160 Speaker 1: an expiration that they mean the financial market expires into 232 00:13:32,200 --> 00:13:34,440 Speaker 1: the physical, which means at some point they have to 233 00:13:34,520 --> 00:13:37,880 Speaker 1: roll these positions back out onto the financial market to 234 00:13:37,920 --> 00:13:41,439 Speaker 1: avoid taking delivery like our example with oil, and because 235 00:13:41,480 --> 00:13:44,800 Speaker 1: of that need to roll, they prefer, you know, these 236 00:13:44,840 --> 00:13:47,600 Speaker 1: financial instruments like the E t F, which is where 237 00:13:47,640 --> 00:14:10,040 Speaker 1: most of the retailer activity remains. So regardless of where 238 00:14:10,080 --> 00:14:14,040 Speaker 1: the uh the idea to go crazy to buy silver originated, 239 00:14:14,120 --> 00:14:16,280 Speaker 1: it did happen. Obviously we saw the buying and the 240 00:14:16,640 --> 00:14:19,800 Speaker 1: s l V E t F. I mentioned that the 241 00:14:19,800 --> 00:14:22,960 Speaker 1: the coin dealers all had to put out put up 242 00:14:22,960 --> 00:14:24,960 Speaker 1: signs saying we can't sell coins right now because we're 243 00:14:24,960 --> 00:14:28,440 Speaker 1: out of inventory. As an analyst, now now that you've 244 00:14:28,480 --> 00:14:32,400 Speaker 1: seen this happen in the silver market, how do you 245 00:14:32,480 --> 00:14:34,520 Speaker 1: think about it going forward? Because maybe okay, this is 246 00:14:34,520 --> 00:14:37,160 Speaker 1: gonna die down and maybe silver in a week or 247 00:14:37,200 --> 00:14:39,280 Speaker 1: two weeks we'll be back to where it was. But 248 00:14:39,360 --> 00:14:42,080 Speaker 1: now that this can happen and we're aware that they 249 00:14:42,160 --> 00:14:45,160 Speaker 1: sort of like flash mob buying can happen in a 250 00:14:45,240 --> 00:14:48,520 Speaker 1: physical commodity. How does that make you think about sort 251 00:14:48,520 --> 00:14:51,360 Speaker 1: of like volatility in the space going forward, the risk 252 00:14:51,400 --> 00:14:54,440 Speaker 1: of it happening um again and sort of changing the 253 00:14:54,480 --> 00:14:57,040 Speaker 1: ability for the market to get at least short term 254 00:14:57,080 --> 00:15:01,240 Speaker 1: disrupted so quickly, so fast us all these markets, the 255 00:15:01,320 --> 00:15:05,360 Speaker 1: volatility has started to rise substantially, and this represents a 256 00:15:05,440 --> 00:15:08,440 Speaker 1: significant departure from you know, let's say two to three 257 00:15:08,520 --> 00:15:11,040 Speaker 1: years ago. UM. And I think it, you know, has 258 00:15:11,080 --> 00:15:14,280 Speaker 1: to do with the fact that you have these markets 259 00:15:14,560 --> 00:15:19,000 Speaker 1: running at much lower inventory levels, which goes into this 260 00:15:19,080 --> 00:15:21,560 Speaker 1: more structural story, you know, because you know, I think, 261 00:15:21,600 --> 00:15:25,400 Speaker 1: as you you're aware, we're advocating we're entering a new supercycle. 262 00:15:25,720 --> 00:15:28,960 Speaker 1: And the evidence that we're you know, in you know, 263 00:15:29,040 --> 00:15:32,200 Speaker 1: this transition between a tactical bowl market and structural bowl 264 00:15:32,240 --> 00:15:34,760 Speaker 1: market is that every single one of these markets, with 265 00:15:34,840 --> 00:15:38,160 Speaker 1: the exception of zinc and coco, is in a deficit 266 00:15:38,280 --> 00:15:42,440 Speaker 1: right now. That's a very rare dinam, which means that, um, 267 00:15:42,520 --> 00:15:46,560 Speaker 1: when you have volatility of positions going in and out 268 00:15:46,560 --> 00:15:50,160 Speaker 1: of a market that has tight physical fundamentals is going 269 00:15:50,200 --> 00:15:53,760 Speaker 1: to manifest itself in greater volatility. You know, we like 270 00:15:53,840 --> 00:15:57,280 Speaker 1: to say that the biggest shortage facing silver today is 271 00:15:57,640 --> 00:16:01,560 Speaker 1: the ability to give the physical to the exchanges, whether 272 00:16:01,600 --> 00:16:04,240 Speaker 1: if it's the Leemy or the COMAX. And that's the 273 00:16:04,280 --> 00:16:07,080 Speaker 1: type of volatility that's being generated. Because if you have 274 00:16:07,160 --> 00:16:10,120 Speaker 1: more than adequate inventory everywhere, getting into an exchange is 275 00:16:10,160 --> 00:16:13,480 Speaker 1: pretty easy. When you're short, it becomes much more difficult 276 00:16:13,520 --> 00:16:17,960 Speaker 1: and creates, you know, much more volatility. On that note, 277 00:16:18,000 --> 00:16:21,000 Speaker 1: walk us through your structural both thesis, because I think 278 00:16:21,040 --> 00:16:24,640 Speaker 1: for a lot of people, many people are going to 279 00:16:24,720 --> 00:16:27,160 Speaker 1: still be thinking about and we have this big hit 280 00:16:27,240 --> 00:16:32,000 Speaker 1: to economic growth. We saw oil prices collapse, and a 281 00:16:32,080 --> 00:16:34,400 Speaker 1: lot of people are thinking also that we're getting the 282 00:16:34,480 --> 00:16:38,480 Speaker 1: screen energy revolution, which might be bad for oil. So 283 00:16:38,720 --> 00:16:42,800 Speaker 1: the notion that we're entering a long term up cycle 284 00:16:42,920 --> 00:16:47,440 Speaker 1: in commodities might be counterintuitive to some what's your line 285 00:16:47,440 --> 00:16:52,840 Speaker 1: of thinking here, Well, we think about oil itself, it 286 00:16:53,000 --> 00:16:58,680 Speaker 1: actually benefits from the green stimulus in the very near term, 287 00:16:58,840 --> 00:17:03,200 Speaker 1: long before the energy transition begins to hurt its demand. 288 00:17:03,240 --> 00:17:08,240 Speaker 1: And let's say, and so when we put oil into 289 00:17:08,280 --> 00:17:11,399 Speaker 1: the mix we're talking about over the next let's say, 290 00:17:11,480 --> 00:17:13,960 Speaker 1: you know, three to five years, we would see that 291 00:17:13,960 --> 00:17:18,440 Speaker 1: that tipping point is somewhere around four. But let's talk 292 00:17:18,480 --> 00:17:22,160 Speaker 1: about what we think is creating that the structural bull market. 293 00:17:22,560 --> 00:17:26,800 Speaker 1: And we like to emphasize that while the vaccine represents 294 00:17:26,880 --> 00:17:33,920 Speaker 1: tactical upside, the pandemic itself creates the structural catalyst for 295 00:17:34,040 --> 00:17:37,840 Speaker 1: a supercycle type of bull market. And we would use 296 00:17:37,960 --> 00:17:41,439 Speaker 1: analogy more like the seventies in the two thousand's, but 297 00:17:41,600 --> 00:17:44,680 Speaker 1: it is back to see a bull market along those 298 00:17:44,720 --> 00:17:47,680 Speaker 1: lines of either like the nineteen seventies or two thousand's. 299 00:17:47,720 --> 00:17:51,119 Speaker 1: And there's three themes that we're focused on. One is 300 00:17:51,320 --> 00:17:55,720 Speaker 1: structural under investment in supply, and historically we've termed that 301 00:17:55,880 --> 00:17:59,160 Speaker 1: the revenge of the old economy, meaning that the new 302 00:17:59,160 --> 00:18:02,399 Speaker 1: economy has capital away from the old economy because they 303 00:18:02,440 --> 00:18:05,639 Speaker 1: have much better returns starved the old economy of the 304 00:18:05,720 --> 00:18:08,960 Speaker 1: building the ability to grow out the production capacity. That 305 00:18:09,040 --> 00:18:11,679 Speaker 1: then creates a problem once we see a recovery and 306 00:18:11,720 --> 00:18:15,440 Speaker 1: demand as we're witnessing today and why nearly every single 307 00:18:15,440 --> 00:18:17,800 Speaker 1: one of these markets is in a deficit, and then 308 00:18:17,840 --> 00:18:20,440 Speaker 1: we overlay E s G concerns on top of that, 309 00:18:20,760 --> 00:18:24,240 Speaker 1: you know, you see a very tight supply picture going forward, 310 00:18:24,480 --> 00:18:27,920 Speaker 1: particularly in oil second big theme that we're focused on 311 00:18:28,400 --> 00:18:31,760 Speaker 1: is policy driven demand and we like to call that 312 00:18:32,200 --> 00:18:37,200 Speaker 1: revving commodity demand r E D. And what is the 313 00:18:37,640 --> 00:18:43,360 Speaker 1: r E V and for redistributional policies environmental policies as 314 00:18:43,400 --> 00:18:46,400 Speaker 1: well as versatility and supply chains. And you can think 315 00:18:46,400 --> 00:18:51,320 Speaker 1: about comparing this to seventies. Redigital redistributional policies are like 316 00:18:51,800 --> 00:18:56,480 Speaker 1: the War on poverty in the night late sixties. In seventies, 317 00:18:56,680 --> 00:18:59,600 Speaker 1: the environmental policies again like the seventies, are like the 318 00:18:59,600 --> 00:19:02,679 Speaker 1: war are on acid rain where he took all the 319 00:19:02,720 --> 00:19:05,480 Speaker 1: sulfur out of out of the fuels. And then the 320 00:19:05,720 --> 00:19:09,200 Speaker 1: versatility and supply chains would be like the Cold War 321 00:19:09,280 --> 00:19:11,440 Speaker 1: with the Soviets. This time we have a Cold War 322 00:19:11,840 --> 00:19:14,200 Speaker 1: with the Chinese. And by the way, that Cold War 323 00:19:14,280 --> 00:19:19,200 Speaker 1: type dynamic immediate play today. The Chinese are buying grains 324 00:19:19,600 --> 00:19:22,000 Speaker 1: at a very torrid pace right now. One of the 325 00:19:22,080 --> 00:19:25,280 Speaker 1: key reasons they want to create security and supply, just 326 00:19:25,359 --> 00:19:28,480 Speaker 1: like the Americans and Europeans did back in the late 327 00:19:28,520 --> 00:19:32,520 Speaker 1: sixties and seventies against the Cold War with the Soviets, 328 00:19:32,560 --> 00:19:36,040 Speaker 1: build up these strategic stockpiles at these critical commodities. So 329 00:19:36,240 --> 00:19:38,040 Speaker 1: again that's why we kind of like in the current 330 00:19:38,119 --> 00:19:42,240 Speaker 1: environment more being more like the seventies is fascinating. I mean, 331 00:19:42,359 --> 00:19:45,879 Speaker 1: talks us a little bit more about the under investment 332 00:19:45,920 --> 00:19:48,359 Speaker 1: we've seen in commodities. I mean in the post grade 333 00:19:48,359 --> 00:19:52,120 Speaker 1: financial crisis era. I think like in the immediate way 334 00:19:52,400 --> 00:19:55,879 Speaker 1: twenty nine we saw this pretty big oil spike and 335 00:19:55,960 --> 00:19:59,680 Speaker 1: jump in other commodities, but basically it was just all 336 00:19:59,760 --> 00:20:03,639 Speaker 1: down downhill in a lot of industrial commodities, in particular 337 00:20:03,720 --> 00:20:07,840 Speaker 1: for the last decade. Talk to us about what that did, 338 00:20:07,960 --> 00:20:12,080 Speaker 1: that long decade long bear market in commodities did to 339 00:20:12,560 --> 00:20:16,600 Speaker 1: um investment, how much under investment created and really what 340 00:20:16,640 --> 00:20:20,240 Speaker 1: we're talking about when we talk about various industrial commodities 341 00:20:20,560 --> 00:20:24,880 Speaker 1: being indeficit. Yeah, I think the bottom line is that 342 00:20:25,440 --> 00:20:30,840 Speaker 1: the companies in these industries had very poor returns, and 343 00:20:31,240 --> 00:20:35,359 Speaker 1: those poor returns um you know, basically we're you know, 344 00:20:35,440 --> 00:20:40,280 Speaker 1: reached a peak or you know, they capitulated when we 345 00:20:40,320 --> 00:20:44,320 Speaker 1: reached negative oil prices in April of last year. And 346 00:20:44,400 --> 00:20:47,679 Speaker 1: so when we look at the willingness of investors to 347 00:20:47,760 --> 00:20:50,960 Speaker 1: come into this space, you know it's gonna take a 348 00:20:51,080 --> 00:20:54,800 Speaker 1: significant track record before they show any interests. And you 349 00:20:54,840 --> 00:20:57,119 Speaker 1: know the reason why we termed it the revenge of 350 00:20:57,160 --> 00:21:01,439 Speaker 1: the Old economy. Goes back to the dot com boom 351 00:21:01,640 --> 00:21:04,680 Speaker 1: in the late nineties and early two thousand's a period 352 00:21:04,800 --> 00:21:08,360 Speaker 1: in which you know, the tech sector was attracting all 353 00:21:08,359 --> 00:21:11,720 Speaker 1: the capital because of you know, the much better prospects 354 00:21:11,720 --> 00:21:15,119 Speaker 1: and outlook. And essentially what occurred over that time period 355 00:21:15,240 --> 00:21:18,679 Speaker 1: is investors abandoned the space. That's when you created the 356 00:21:18,720 --> 00:21:22,280 Speaker 1: Exxon mobils, the vps, the shells because they had to 357 00:21:22,400 --> 00:21:25,840 Speaker 1: reduce costs to survive in an environment with very poor returns. 358 00:21:26,200 --> 00:21:28,119 Speaker 1: I don't know if they come back this time because 359 00:21:28,160 --> 00:21:30,200 Speaker 1: you have the e S G overlay, Because you got 360 00:21:30,200 --> 00:21:31,960 Speaker 1: to ask yourself, even if we went to a hundred 361 00:21:31,960 --> 00:21:35,360 Speaker 1: dollar barrel hall, are you interested investing in oil when 362 00:21:35,359 --> 00:21:38,320 Speaker 1: you know it's only a to three year, maybe five 363 00:21:38,400 --> 00:21:42,680 Speaker 1: year proposition at best. I want to go back to that, 364 00:21:43,040 --> 00:21:46,240 Speaker 1: the notion that there's a sort of arms race in 365 00:21:46,600 --> 00:21:52,200 Speaker 1: commodities and in securing things like food and oil. One 366 00:21:52,200 --> 00:21:55,119 Speaker 1: thing I've never quite understood is I understand why you 367 00:21:55,119 --> 00:21:58,000 Speaker 1: would want to build a stock pile of something like 368 00:21:58,080 --> 00:22:01,000 Speaker 1: grains in the short term, but I'm trying to think 369 00:22:01,000 --> 00:22:02,800 Speaker 1: how to phrase this. This is kind of a stupid question, 370 00:22:02,840 --> 00:22:06,320 Speaker 1: But how long would that stockpile actually last? Like if 371 00:22:06,359 --> 00:22:09,680 Speaker 1: you're buying a boatload of grains because you're worried about 372 00:22:10,400 --> 00:22:14,240 Speaker 1: food security way out in the future, Like, how useful 373 00:22:14,400 --> 00:22:17,200 Speaker 1: is that to you? What exactly is the strategy here? 374 00:22:17,280 --> 00:22:22,639 Speaker 1: Is it about actually accumulating physical commodities in case you 375 00:22:22,720 --> 00:22:26,080 Speaker 1: run out? Or is it about building relationships and securing 376 00:22:26,240 --> 00:22:32,000 Speaker 1: supply lines with suppliers and countries and partners for the future. 377 00:22:33,920 --> 00:22:36,360 Speaker 1: To answer that question, you just go back to biblical 378 00:22:36,480 --> 00:22:38,800 Speaker 1: times and you ask where does that seven year number 379 00:22:38,840 --> 00:22:41,120 Speaker 1: come from? That you hear over and over. But when 380 00:22:41,119 --> 00:22:43,920 Speaker 1: we think about the strategic reserves in oil and the 381 00:22:44,119 --> 00:22:46,880 Speaker 1: US has you know, six hundred seven hundred million barrels 382 00:22:46,880 --> 00:22:51,400 Speaker 1: of oil that was built up during those nineteen seventies. Um, 383 00:22:51,400 --> 00:22:53,879 Speaker 1: the oil lasts a lot longer, and they they recycle 384 00:22:53,920 --> 00:22:55,760 Speaker 1: it in and out and they make sure that it 385 00:22:55,880 --> 00:22:58,280 Speaker 1: is you know, up to par in terms of being 386 00:22:58,280 --> 00:23:00,960 Speaker 1: able to create products. Um. But I think you know, 387 00:23:01,040 --> 00:23:04,520 Speaker 1: going to to your your broader question here is that 388 00:23:04,600 --> 00:23:06,880 Speaker 1: you know, when you look at China, there's a lot 389 00:23:06,880 --> 00:23:10,080 Speaker 1: of different motivations here, and we talk about versatility and 390 00:23:10,119 --> 00:23:13,320 Speaker 1: supply chains. You know, we're talking about duplicate five G 391 00:23:13,520 --> 00:23:17,440 Speaker 1: networks responding to the trade war with you know, manufacturing 392 00:23:17,960 --> 00:23:20,920 Speaker 1: UM supply lines. You've heard Biden talk about made in America. 393 00:23:21,040 --> 00:23:23,800 Speaker 1: That's part of this dynamic that we're talking about. It means, 394 00:23:24,080 --> 00:23:26,520 Speaker 1: you know, if if Biden wants to go out and 395 00:23:26,560 --> 00:23:31,960 Speaker 1: promote evs that are made in America and using unionized labor, 396 00:23:32,000 --> 00:23:34,480 Speaker 1: it means you need to build different supply chains in 397 00:23:34,520 --> 00:23:37,560 Speaker 1: America and that's going to take time and require more commodities. 398 00:23:37,600 --> 00:23:41,879 Speaker 1: So that's what we mean by this versatility and supply chains, 399 00:23:42,000 --> 00:23:46,240 Speaker 1: is this need to create your own secure domestic supply 400 00:23:46,400 --> 00:23:49,040 Speaker 1: chains to deal with you know, host of different issues, 401 00:23:49,080 --> 00:23:51,840 Speaker 1: whether if it were concerns around COVID, you know, people 402 00:23:51,880 --> 00:23:55,760 Speaker 1: realize supply chains were vulnerable, concerns around climate change, you know, 403 00:23:55,840 --> 00:23:59,200 Speaker 1: do you have enough firefighting capabilities in places like California? 404 00:23:59,520 --> 00:24:01,240 Speaker 1: UM And so I think you get the point here 405 00:24:01,440 --> 00:24:04,200 Speaker 1: is it's a more of a broader type of comment 406 00:24:04,320 --> 00:24:07,119 Speaker 1: here than it is specific like it was like it 407 00:24:07,200 --> 00:24:09,119 Speaker 1: was in the nineteen seventies. But it's kind of that 408 00:24:09,200 --> 00:24:12,440 Speaker 1: same dynamic. And when you look at capex, you look 409 00:24:12,440 --> 00:24:16,880 Speaker 1: at global capex cycles since the nineteen fifties. We've seen 410 00:24:16,960 --> 00:24:20,120 Speaker 1: two big capex cycles, one that started in the late 411 00:24:20,200 --> 00:24:24,960 Speaker 1: sixties and ended somewhere around sight and then another one 412 00:24:25,000 --> 00:24:27,600 Speaker 1: that started around two thousand and one and ended around 413 00:24:27,600 --> 00:24:31,280 Speaker 1: two thousand eleven. And both of those corresponded to big 414 00:24:31,359 --> 00:24:36,520 Speaker 1: bullmarkets and commodities, because commodities ultimary reflection of a capex cycle. 415 00:24:38,080 --> 00:24:41,399 Speaker 1: So I love this idea that you know, the Biden 416 00:24:41,400 --> 00:24:44,720 Speaker 1: administration could be great for oil because obviously it's kind 417 00:24:44,720 --> 00:24:48,120 Speaker 1: of intuitive, but the way you describe it is fairly Uh, 418 00:24:48,200 --> 00:24:50,400 Speaker 1: it does make a lot of sense, and it's interesting. 419 00:24:50,440 --> 00:24:52,560 Speaker 1: I mean, you have to sort of figure the Trump 420 00:24:52,600 --> 00:24:57,480 Speaker 1: administration was pretty oil friendly with its policies, but that 421 00:24:57,600 --> 00:25:03,159 Speaker 1: was a brutal for years for oil stocks, Uh, the companies, 422 00:25:03,320 --> 00:25:06,920 Speaker 1: the whole industry. How much of an effect um does 423 00:25:07,000 --> 00:25:09,280 Speaker 1: this have? Like you know, say, okay, like the Biden 424 00:25:09,280 --> 00:25:11,840 Speaker 1: administration is going to have a less generous approach to 425 00:25:12,320 --> 00:25:16,080 Speaker 1: new permitting, drilling and so forth. What does that mean 426 00:25:16,320 --> 00:25:20,280 Speaker 1: for sort of domestic the domestic industry and then therefore 427 00:25:20,359 --> 00:25:24,560 Speaker 1: the upward pressure that that puts on prices. Well, you know, 428 00:25:24,720 --> 00:25:27,720 Speaker 1: first of all, the one thing about the policy here 429 00:25:28,200 --> 00:25:31,200 Speaker 1: is that it wants to use a carrot more than 430 00:25:31,240 --> 00:25:33,919 Speaker 1: a stick. Um. You know, you look at Europe and 431 00:25:33,920 --> 00:25:37,200 Speaker 1: now the blueprint and China, it looks more to using 432 00:25:37,200 --> 00:25:41,159 Speaker 1: a stick get rid of the dirty technologies and replace 433 00:25:41,240 --> 00:25:45,160 Speaker 1: them with the um the following defined technologies. At least 434 00:25:45,160 --> 00:25:47,560 Speaker 1: a ministration here is using more of a carrot and 435 00:25:47,640 --> 00:25:51,360 Speaker 1: incentive approach. Now, when we think about, you know, raising 436 00:25:51,359 --> 00:25:53,919 Speaker 1: the cost of oil, um, the way I like to 437 00:25:53,920 --> 00:25:57,119 Speaker 1: think about it is on the Federal lands, which represents 438 00:25:57,119 --> 00:25:59,639 Speaker 1: you know, nearly three million barrels per day a production, 439 00:26:00,119 --> 00:26:04,919 Speaker 1: they can actually create an implied well head carbon tax 440 00:26:05,000 --> 00:26:08,280 Speaker 1: there that raised the marginal cost of producing the barrel 441 00:26:08,280 --> 00:26:11,400 Speaker 1: of oil. And because that shale barrel and these barrels 442 00:26:11,400 --> 00:26:13,800 Speaker 1: in the US are the marginal barrel that sets the 443 00:26:13,840 --> 00:26:16,879 Speaker 1: price to the rest of the world, it effectively creates 444 00:26:16,960 --> 00:26:20,320 Speaker 1: a carbon tax that is imposed on the rest of 445 00:26:20,359 --> 00:26:22,880 Speaker 1: the world. UM. So you can, if you think about 446 00:26:22,880 --> 00:26:25,480 Speaker 1: it in that context, and that he has a unilateral 447 00:26:25,560 --> 00:26:29,160 Speaker 1: capability to do it, takeaway drilling credits, tax credits, raise 448 00:26:29,280 --> 00:26:31,919 Speaker 1: royalty rates and so forth of that nature. So it 449 00:26:32,080 --> 00:26:34,800 Speaker 1: is a way to get at this which then in 450 00:26:34,880 --> 00:26:39,040 Speaker 1: turn and sentivises investment in other types of clean energy. 451 00:26:39,119 --> 00:26:41,920 Speaker 1: Let's say, like you know, he's proposing you know, doubling 452 00:26:42,400 --> 00:26:46,720 Speaker 1: capacity offshore. He can do that through you know, unilateral 453 00:26:47,080 --> 00:26:49,719 Speaker 1: credits on the tax side, as well as you know, 454 00:26:49,800 --> 00:26:53,639 Speaker 1: improving learning standards for for that type of investment. So 455 00:26:53,640 --> 00:26:55,560 Speaker 1: so I do think that the one thing that's different 456 00:26:55,600 --> 00:26:59,440 Speaker 1: about this approach is it's focusing on the carrot as 457 00:26:59,440 --> 00:27:02,480 Speaker 1: opposed to the stick. Because one of the problems historically 458 00:27:02,560 --> 00:27:05,080 Speaker 1: with the US is if you use the stick, you're 459 00:27:05,080 --> 00:27:08,000 Speaker 1: going don't make these investments in these technologies. It gets 460 00:27:08,040 --> 00:27:09,600 Speaker 1: tied up in the courts. And if it's tied up 461 00:27:09,600 --> 00:27:12,240 Speaker 1: in the courts, um, you know, you can see Obama's 462 00:27:12,280 --> 00:27:15,800 Speaker 1: clean air policy is still tied up in the courts today. 463 00:27:16,080 --> 00:27:18,639 Speaker 1: I would feel very remiss if we talked about oil 464 00:27:18,680 --> 00:27:22,720 Speaker 1: and didn't mention OPEX. So when we talk about oil 465 00:27:22,760 --> 00:27:26,400 Speaker 1: getting structurally more incentive through um, what's the word I'm 466 00:27:26,440 --> 00:27:31,240 Speaker 1: thinking of a inadvertent carbon tax? I guess, um, Sorry, 467 00:27:31,280 --> 00:27:33,720 Speaker 1: it's late and my vocabulary isn't as good as it 468 00:27:33,760 --> 00:27:37,520 Speaker 1: really is. But how how would we expect OPEC to 469 00:27:37,680 --> 00:27:42,679 Speaker 1: respond to that? Why wouldn't they like it? Because ultimately 470 00:27:42,760 --> 00:27:45,840 Speaker 1: you're raising the price of oil? Um, And they're the 471 00:27:46,000 --> 00:27:48,400 Speaker 1: you know, so you're basically they're the two bookends. In fact, 472 00:27:48,480 --> 00:27:52,600 Speaker 1: when you look at the ability to grow supply, is 473 00:27:52,640 --> 00:27:56,080 Speaker 1: that the only short cycle production that can be brought 474 00:27:56,119 --> 00:27:58,359 Speaker 1: on in the world if we see a big spike 475 00:27:58,400 --> 00:28:00,960 Speaker 1: and price sometime in the next of months, it's the 476 00:28:01,000 --> 00:28:03,440 Speaker 1: Middle East in the United States, and there are the 477 00:28:03,480 --> 00:28:06,520 Speaker 1: two bookends on. Middle East is the lowest cost, in 478 00:28:06,600 --> 00:28:09,680 Speaker 1: the US is the highest cost. Everything else in between 479 00:28:10,080 --> 00:28:13,000 Speaker 1: is unlikely to be invested in. In fact, actually, when 480 00:28:13,000 --> 00:28:15,320 Speaker 1: you look at part of the reason why Saudi is 481 00:28:15,359 --> 00:28:19,800 Speaker 1: willing to do a unilateral cut is that Nigeria Angola 482 00:28:19,880 --> 00:28:23,240 Speaker 1: can't even produce at their quota right now because production 483 00:28:23,440 --> 00:28:26,000 Speaker 1: is dropping due to a lack of investment. In decline 484 00:28:26,040 --> 00:28:29,960 Speaker 1: rate sitting in Mexico another example of declining production. So 485 00:28:30,240 --> 00:28:33,480 Speaker 1: when we look at non opact production there, even some 486 00:28:33,640 --> 00:28:38,320 Speaker 1: of the non golf OPAC producers, they're struggling to be 487 00:28:38,400 --> 00:28:41,200 Speaker 1: able to maintain production where it is in the face 488 00:28:41,240 --> 00:28:43,240 Speaker 1: of a lack of investment. Goes back to that theme 489 00:28:43,280 --> 00:29:01,640 Speaker 1: of under investment. You know. Another thing that you said 490 00:29:01,680 --> 00:29:05,080 Speaker 1: in terms of like identifying the big pillars of the 491 00:29:05,120 --> 00:29:10,520 Speaker 1: structural bull market in commodities, redistributionist policies, and it seems 492 00:29:10,600 --> 00:29:15,480 Speaker 1: like the new administration is definitely going to you know, 493 00:29:15,560 --> 00:29:17,560 Speaker 1: something in the air. More people are into it, the 494 00:29:17,600 --> 00:29:22,880 Speaker 1: idea of actually, uh redistributing wealth downward, giving more households 495 00:29:22,960 --> 00:29:25,640 Speaker 1: buying power, and you liken that to the seventies. Talk 496 00:29:25,680 --> 00:29:28,560 Speaker 1: to us a little bit more about how that plays 497 00:29:28,600 --> 00:29:34,440 Speaker 1: into your broader thesis. Absolutely critical and it's it's and 498 00:29:34,720 --> 00:29:39,560 Speaker 1: it's hard to distinguish between the redistributional policies and the 499 00:29:39,680 --> 00:29:42,520 Speaker 1: environmental policies because you know, to use a term from 500 00:29:42,560 --> 00:29:46,280 Speaker 1: the UK green leveling, using green capex to level income 501 00:29:46,800 --> 00:29:49,320 Speaker 1: is you know, a policy initiative. So the two begin 502 00:29:49,440 --> 00:29:53,560 Speaker 1: to blend in with with one another. Now in terms 503 00:29:53,560 --> 00:29:58,120 Speaker 1: of thinking about how this differs from the previous ten 504 00:29:58,160 --> 00:30:03,200 Speaker 1: to fifteen years is following the financial crisis. Policy was 505 00:30:03,280 --> 00:30:07,480 Speaker 1: focused on financial stability and as a result, it went 506 00:30:07,520 --> 00:30:11,600 Speaker 1: into banks that systematically created a decline in interest rates, 507 00:30:11,600 --> 00:30:15,560 Speaker 1: which mechanically raised equity valuations and created a wealth effect. 508 00:30:15,880 --> 00:30:20,040 Speaker 1: So stimulus work through the wealth channel. Who owns financial assets? 509 00:30:20,360 --> 00:30:25,240 Speaker 1: The higher income households, now they have a very low 510 00:30:25,440 --> 00:30:28,040 Speaker 1: marginal propency to consume, you give them a dollar, they're 511 00:30:28,040 --> 00:30:30,120 Speaker 1: going to save it. They only spend three cents on 512 00:30:30,200 --> 00:30:34,520 Speaker 1: each dollar. In contrast, today we look at most of 513 00:30:34,560 --> 00:30:37,320 Speaker 1: the stimulus goes directly into the hands of the lower 514 00:30:37,360 --> 00:30:41,120 Speaker 1: income households who have a marginal propensity to consume of 515 00:30:42,280 --> 00:30:45,480 Speaker 1: meaning you give them a dollar, they'll consume one pennies 516 00:30:45,520 --> 00:30:49,080 Speaker 1: of it versus the higher income household that will consume three. 517 00:30:49,520 --> 00:30:52,600 Speaker 1: That is significant because what that tells you is that 518 00:30:52,680 --> 00:30:55,719 Speaker 1: going forward, and you already see it in the postcode 519 00:30:55,800 --> 00:30:59,040 Speaker 1: level data in the US, is that you're seeing a 520 00:30:59,080 --> 00:31:03,720 Speaker 1: mechanical words shifting consumption. So that's point one. Point two 521 00:31:03,960 --> 00:31:08,360 Speaker 1: is that the consumption is more commodity intensive. High income guy, 522 00:31:08,520 --> 00:31:12,520 Speaker 1: he can he drives a tesla, his house is well insulated, 523 00:31:12,560 --> 00:31:16,240 Speaker 1: and he eats fish. The lower income guy drives a 524 00:31:16,240 --> 00:31:20,080 Speaker 1: a SUV with poor gas mileage, a poorly insulated house, 525 00:31:20,120 --> 00:31:23,080 Speaker 1: and he most likely eats beef. The beef consumes four 526 00:31:23,120 --> 00:31:25,960 Speaker 1: times or excuse me, eight times more grains in the fish. 527 00:31:26,360 --> 00:31:29,720 Speaker 1: And then there's more consumption going into the SUVs and 528 00:31:29,800 --> 00:31:31,840 Speaker 1: into the houses. And you put this together and then 529 00:31:31,880 --> 00:31:34,920 Speaker 1: you know, you look at the at the margin, the 530 00:31:35,000 --> 00:31:37,920 Speaker 1: lower income households, you give them a dollar, fifty cents 531 00:31:37,920 --> 00:31:42,280 Speaker 1: of it goes to commodities. In contrast, the lower income households, 532 00:31:42,280 --> 00:31:44,600 Speaker 1: you give them a dollar, thirty five cents of it 533 00:31:44,640 --> 00:31:46,920 Speaker 1: goes to commodities. So not only do you get the 534 00:31:46,960 --> 00:31:51,920 Speaker 1: upwards shift in commodity or in overall consumption, it's more 535 00:31:51,920 --> 00:31:54,920 Speaker 1: commodity intensitive. And then one last point, you look at 536 00:31:54,960 --> 00:32:01,040 Speaker 1: the colation between UM these transfer payments in commodity prices 537 00:32:01,080 --> 00:32:04,640 Speaker 1: going back to the sixties, they're very highly correlated. You know. 538 00:32:04,680 --> 00:32:07,360 Speaker 1: I go back to the point about Milton Freeman made 539 00:32:07,360 --> 00:32:11,719 Speaker 1: the point that, you know, inflation is a monetary phenomena. 540 00:32:11,800 --> 00:32:13,760 Speaker 1: I think he needed a close to it. Now we've 541 00:32:13,800 --> 00:32:17,320 Speaker 1: learned after oh eight oh nine, provided that the money 542 00:32:17,360 --> 00:32:19,959 Speaker 1: gets into the hands of the people who will spend it. 543 00:32:20,760 --> 00:32:25,560 Speaker 1: I love the idea of measuring direct payments in terms 544 00:32:25,560 --> 00:32:30,720 Speaker 1: of impact on commodities. UM. So you mentioned inflation at 545 00:32:30,720 --> 00:32:32,520 Speaker 1: the very end of that, and I wanted to get 546 00:32:32,560 --> 00:32:38,600 Speaker 1: into this because the dollar also factors into your structural 547 00:32:38,640 --> 00:32:41,920 Speaker 1: boal case. Can you walk us through how you're seeing 548 00:32:41,960 --> 00:32:44,920 Speaker 1: the dollar and what it means for commodities and also 549 00:32:45,120 --> 00:32:49,920 Speaker 1: how that would feed into inflation. Let's start with the 550 00:32:49,920 --> 00:32:54,120 Speaker 1: reflation feedback loop. How does it work? It is the 551 00:32:54,320 --> 00:32:57,400 Speaker 1: call it petro dollar recycling story, or whatever you want 552 00:32:57,400 --> 00:33:02,320 Speaker 1: to call it is. Let's take you know, US spends 553 00:33:02,400 --> 00:33:06,000 Speaker 1: money that weekends the dollar um similar to what we 554 00:33:06,080 --> 00:33:08,320 Speaker 1: saw on the second half of last year. A week 555 00:33:08,400 --> 00:33:12,400 Speaker 1: er dollar mechanically raises the cost of produce oil and commodities. 556 00:33:12,680 --> 00:33:17,040 Speaker 1: Take copper and chili. The cost of producing copper is 557 00:33:17,160 --> 00:33:21,440 Speaker 1: denominated in local currency like wages for the truck drivers UM. 558 00:33:21,480 --> 00:33:24,440 Speaker 1: So a decline in the dollar and increase in the 559 00:33:24,520 --> 00:33:27,000 Speaker 1: Chilean pay so it just pushes up the dollar price 560 00:33:27,120 --> 00:33:30,320 Speaker 1: of copper. So then we get to higher commodity prices. 561 00:33:30,760 --> 00:33:34,320 Speaker 1: Higher commodity prices then in term increase the terms of 562 00:33:34,440 --> 00:33:38,280 Speaker 1: trade for those different countries and they now start building 563 00:33:38,560 --> 00:33:42,360 Speaker 1: global liquidity. Hence they're even Saudi Arabian. The month of 564 00:33:42,400 --> 00:33:46,680 Speaker 1: November December saw a rise in their liquidity because prices 565 00:33:46,760 --> 00:33:49,959 Speaker 1: we got into that fifty five dollar range, and so 566 00:33:50,000 --> 00:33:54,480 Speaker 1: the global liquidity then in turns gets lent out creates 567 00:33:54,880 --> 00:34:00,040 Speaker 1: more dollars, which does two things. Weekends the dollar of 568 00:34:00,160 --> 00:34:03,840 Speaker 1: further increases the demand for commodities, and then you cycle 569 00:34:03,880 --> 00:34:06,080 Speaker 1: back over again. So that's how you get that reflation 570 00:34:06,200 --> 00:34:09,000 Speaker 1: feedback loop. But I want to go into tying this 571 00:34:09,320 --> 00:34:12,239 Speaker 1: into kind of the bigger theme here and got back 572 00:34:12,280 --> 00:34:17,279 Speaker 1: to the redistributional policies. If we look at you know, 573 00:34:17,320 --> 00:34:20,280 Speaker 1: the current issues, you know, the populism and so forth, 574 00:34:20,800 --> 00:34:23,439 Speaker 1: I would argue they're mostly tied to this whole idea 575 00:34:23,480 --> 00:34:26,120 Speaker 1: of income inequality. And I challenge you to take a 576 00:34:26,160 --> 00:34:29,120 Speaker 1: picture and look at income inequality over the last hundred years, 577 00:34:29,520 --> 00:34:31,920 Speaker 1: and when we look at when it's at its lowest 578 00:34:31,960 --> 00:34:35,359 Speaker 1: point or when the world was the most equal in 579 00:34:35,440 --> 00:34:38,520 Speaker 1: terms of wealth and income, it was in nineteen seventy 580 00:34:38,600 --> 00:34:43,040 Speaker 1: nine nineteen eighty, a period in which we had the 581 00:34:43,120 --> 00:34:48,279 Speaker 1: highest real commodity prices and you know, substantial inflation. And 582 00:34:48,600 --> 00:34:50,440 Speaker 1: the reason why I bring this in with the discussion 583 00:34:50,440 --> 00:34:53,600 Speaker 1: of the dollar is that you take you know, July four, 584 00:34:54,000 --> 00:34:57,719 Speaker 1: two thousand and eight, we reached peak oil prices of 585 00:34:57,760 --> 00:35:00,360 Speaker 1: a hundred and forty seven dollars. It was also the 586 00:35:00,400 --> 00:35:04,400 Speaker 1: weakest dollar ever observed, one point six one against the euro, 587 00:35:04,520 --> 00:35:07,600 Speaker 1: the exact same hour that that oil spiked to those 588 00:35:07,680 --> 00:35:10,759 Speaker 1: higher or higher prices. So when you see that dynamic 589 00:35:10,920 --> 00:35:14,760 Speaker 1: between commodity prices in the dollar, it really does feed 590 00:35:14,760 --> 00:35:16,640 Speaker 1: on itself. But we now I go back to that 591 00:35:16,640 --> 00:35:21,160 Speaker 1: whole point about redistribution. If the policy aim here is 592 00:35:21,200 --> 00:35:24,600 Speaker 1: to try to solve income inequality over a longer period 593 00:35:24,800 --> 00:35:27,400 Speaker 1: of time, um, you're probably going to end up with 594 00:35:27,520 --> 00:35:31,560 Speaker 1: higher commodity prices as being a call it a collateral 595 00:35:31,640 --> 00:35:34,759 Speaker 1: damage of it because ultimately get more consumption. You know, 596 00:35:34,840 --> 00:35:37,400 Speaker 1: I really didn't expect this conversation to go there, but 597 00:35:37,440 --> 00:35:40,600 Speaker 1: it's interesting because it's such a recurring theme on this 598 00:35:40,640 --> 00:35:45,040 Speaker 1: podcast of the conversations that Tracy and I have, which is, 599 00:35:45,719 --> 00:35:50,319 Speaker 1: are we essentially at the end of the vulgar era? 600 00:35:50,360 --> 00:35:52,520 Speaker 1: And so if you think about the early eighties and 601 00:35:52,600 --> 00:35:55,399 Speaker 1: when the war on inflation really started to take off, 602 00:35:55,440 --> 00:35:58,360 Speaker 1: of this monetary policy dominance and the sort of forty 603 00:35:58,440 --> 00:36:01,480 Speaker 1: year cycle, and we always sort of come back to 604 00:36:01,600 --> 00:36:05,360 Speaker 1: this in different ways of is this the turn or 605 00:36:05,360 --> 00:36:07,960 Speaker 1: are we coming to the end of this idea? It's 606 00:36:07,960 --> 00:36:12,080 Speaker 1: sort of really interesting to hear you put that in 607 00:36:12,120 --> 00:36:15,120 Speaker 1: the commodity context, but when you say that, uh, you know, 608 00:36:15,200 --> 00:36:18,560 Speaker 1: makes it makes a ton of sense. Yeah, I just 609 00:36:18,640 --> 00:36:22,040 Speaker 1: like to emphasize that when you think about these dynamics there, 610 00:36:22,080 --> 00:36:24,560 Speaker 1: they're really these longer terms that you're talking about, they're 611 00:36:24,600 --> 00:36:30,560 Speaker 1: really political choices. And the political choice back in the 612 00:36:30,560 --> 00:36:33,200 Speaker 1: the late nineteen sixties is very similar to the one 613 00:36:33,280 --> 00:36:37,040 Speaker 1: we have today now. Social unrest was high, racial tensions 614 00:36:37,080 --> 00:36:41,040 Speaker 1: were running high, and you had the War on poverty. 615 00:36:41,440 --> 00:36:44,040 Speaker 1: You had, you know, at that point, you had you know, 616 00:36:44,120 --> 00:36:48,040 Speaker 1: the environmental situation was terrible. You had smog, and so 617 00:36:48,160 --> 00:36:50,359 Speaker 1: you had to have that War on acid rain. By 618 00:36:50,360 --> 00:36:52,919 Speaker 1: the way, on that War on acid rain, taking the 619 00:36:52,960 --> 00:36:55,359 Speaker 1: sulfur out of the out of the fuels, and out 620 00:36:55,360 --> 00:36:57,880 Speaker 1: of the sky to get rid of the smog actually 621 00:36:57,920 --> 00:37:01,200 Speaker 1: accelerated the carbon problem. And he did the atmosphere because 622 00:37:01,520 --> 00:37:06,319 Speaker 1: sulfur is a coolant. Suit is heats the atmosphere. Um. 623 00:37:06,400 --> 00:37:08,160 Speaker 1: But I think the key point is we had all 624 00:37:08,160 --> 00:37:11,680 Speaker 1: those similar type of social dynamics at play in the 625 00:37:11,680 --> 00:37:14,640 Speaker 1: sixties and we had to solve them. And as we 626 00:37:14,760 --> 00:37:17,759 Speaker 1: chose to solve them, one of the implications of that 627 00:37:17,840 --> 00:37:21,440 Speaker 1: were higher commodity prices. Joe, I'm waiting for you to 628 00:37:21,480 --> 00:37:23,760 Speaker 1: bring up M M T and ask what it means. No. 629 00:37:24,920 --> 00:37:27,440 Speaker 1: Tracy always always told me with that, but I didn't. 630 00:37:27,440 --> 00:37:30,279 Speaker 1: I wasn't gonna I wasn't gonna go there. I have 631 00:37:30,400 --> 00:37:33,440 Speaker 1: to sort of lightning round question type, and then I'll 632 00:37:33,480 --> 00:37:36,520 Speaker 1: let you go first. I'm just curious, what were you 633 00:37:36,640 --> 00:37:40,239 Speaker 1: doing when the price of oil hit negative forty list 634 00:37:40,840 --> 00:37:42,560 Speaker 1: I'll tell you you guys don't want to know. I 635 00:37:42,600 --> 00:37:49,040 Speaker 1: was on CNBC UM talking about oil price. Okay, yeah, 636 00:37:49,040 --> 00:37:51,239 Speaker 1: we know that's fine, all right, No, actually I do 637 00:37:51,280 --> 00:37:52,880 Speaker 1: have a lot. But this is and this relates to 638 00:37:53,080 --> 00:37:55,960 Speaker 1: the silver question, the precious metals angle, and this is 639 00:37:56,080 --> 00:37:58,520 Speaker 1: something I'm curious about. We don't need to go too 640 00:37:58,600 --> 00:38:02,120 Speaker 1: into it, but there is this meme out there that 641 00:38:02,440 --> 00:38:05,919 Speaker 1: somehow the rise of crypto is um eating into some 642 00:38:06,040 --> 00:38:08,839 Speaker 1: demand from the very rich who might otherwise have been 643 00:38:08,840 --> 00:38:12,720 Speaker 1: putting their money into gold and silver as a store 644 00:38:12,719 --> 00:38:16,200 Speaker 1: of wealth. Is that something that you observe at all 645 00:38:16,239 --> 00:38:21,200 Speaker 1: from your perch? Very small at the margin. And the 646 00:38:21,520 --> 00:38:25,000 Speaker 1: reason why I say that is right now, you look 647 00:38:25,000 --> 00:38:27,520 Speaker 1: at let's say the cryptome or bitcoin. You know, the 648 00:38:27,600 --> 00:38:31,080 Speaker 1: overall crypto market is roughly a trillion dollar market, bitcoin 649 00:38:31,480 --> 00:38:37,480 Speaker 1: around six hundred billion. The institutional involvement in there is 650 00:38:37,520 --> 00:38:41,239 Speaker 1: somewhere around seven to ten billion dollars. It's still relatively 651 00:38:41,320 --> 00:38:45,879 Speaker 1: small magnitude of about one percent. So what's left over 652 00:38:46,280 --> 00:38:51,440 Speaker 1: are the specult retail investors, and they behave um in 653 00:38:51,520 --> 00:38:55,440 Speaker 1: a very risk on fashion. They're not treating bitcoin and 654 00:38:55,440 --> 00:38:59,759 Speaker 1: cryptocurrency as a defensive asset like gold. Instead knit like 655 00:38:59,840 --> 00:39:04,080 Speaker 1: a turbo charged risk on asset that trades very much 656 00:39:04,120 --> 00:39:08,040 Speaker 1: like copper or iron ore, which trades off of positive 657 00:39:08,080 --> 00:39:11,399 Speaker 1: growth news. And so if the current environment means do 658 00:39:11,480 --> 00:39:14,920 Speaker 1: I want to own crypto as a defensive asset, the 659 00:39:14,960 --> 00:39:18,760 Speaker 1: answer is not really no. And then there's also the 660 00:39:18,880 --> 00:39:23,759 Speaker 1: inherent transparency issues. Do big institutional players in you know, 661 00:39:23,960 --> 00:39:28,280 Speaker 1: high net worth individuals want to own crypto? Given those issues, 662 00:39:28,560 --> 00:39:31,840 Speaker 1: the answer is probably unlikely. They're still gonna have to 663 00:39:32,000 --> 00:39:35,359 Speaker 1: use a custodial bank to purchase this stuff. And then 664 00:39:35,360 --> 00:39:38,840 Speaker 1: the custodio bank actually owns the crypto. So why do 665 00:39:38,920 --> 00:39:40,800 Speaker 1: we have crypto? And I like to go to the point, 666 00:39:40,840 --> 00:39:44,120 Speaker 1: what are the physical properties of bitcoin that make it 667 00:39:44,239 --> 00:39:47,560 Speaker 1: a commodity? It's the very first time in the history 668 00:39:47,560 --> 00:39:50,040 Speaker 1: of digital money. You can take it off the grid. 669 00:39:50,280 --> 00:39:52,680 Speaker 1: You can put fort Knox onto the key fob, put 670 00:39:52,719 --> 00:39:55,120 Speaker 1: it in your pocket and walk away. Why do you 671 00:39:55,160 --> 00:39:58,480 Speaker 1: want to take it off the grid? Maybe they should 672 00:39:58,480 --> 00:40:01,280 Speaker 1: find James stop Stock is a store of value instead 673 00:40:03,080 --> 00:40:05,759 Speaker 1: it's true. Oh, thank you. Thank you for clarifying that 674 00:40:05,800 --> 00:40:10,399 Speaker 1: as a joke. Jeff. This was so great. Jeff, this 675 00:40:10,480 --> 00:40:13,320 Speaker 1: was so great, Uh to chat with you. Um, I 676 00:40:13,440 --> 00:40:18,000 Speaker 1: really appreciate you coming on. Super fascinating, love the big 677 00:40:18,080 --> 00:40:21,600 Speaker 1: big picture thoughts as well as the specific mechanics. Thanks 678 00:40:21,600 --> 00:40:24,160 Speaker 1: for coming on the show. Great. Thanks for having me 679 00:40:24,320 --> 00:40:45,080 Speaker 1: about that was really great, Jeff. Thank you, Tracy. I 680 00:40:45,480 --> 00:40:48,759 Speaker 1: really did not expect this conversation, as I mentioned, to 681 00:40:48,800 --> 00:40:50,960 Speaker 1: sort of like fit in so well with some of 682 00:40:50,960 --> 00:40:55,160 Speaker 1: our like other broader macro conversations. But just the way 683 00:40:55,200 --> 00:40:58,120 Speaker 1: like Jeff rounded that out that was so good. I 684 00:40:58,120 --> 00:41:00,319 Speaker 1: could He's another one. I could listen to him for 685 00:41:00,560 --> 00:41:03,319 Speaker 1: very long time. Yeah, for sure. And I gotta say 686 00:41:03,360 --> 00:41:08,959 Speaker 1: his point about the redistributive effects of direct payments being 687 00:41:09,000 --> 00:41:12,359 Speaker 1: different to quantitative easing like we saw after the two 688 00:41:12,360 --> 00:41:15,160 Speaker 1: thousand eight financial crisis. I thought that was really interesting 689 00:41:15,200 --> 00:41:18,600 Speaker 1: and something that I hadn't considered before. The idea of 690 00:41:18,640 --> 00:41:22,120 Speaker 1: you're putting money directly into people's pockets, they're probably going 691 00:41:22,200 --> 00:41:25,799 Speaker 1: to go out and spend it on things that use 692 00:41:25,920 --> 00:41:31,479 Speaker 1: a lot of commodities to come into being. That was interesting. Yeah, 693 00:41:31,560 --> 00:41:34,120 Speaker 1: and just this whole idea of like the sort of 694 00:41:34,160 --> 00:41:39,280 Speaker 1: backloaded or front loaded effects on commodities from green spending. 695 00:41:39,360 --> 00:41:43,000 Speaker 1: So at some point the internal combustion engine may come 696 00:41:43,000 --> 00:41:47,040 Speaker 1: to an end and we really might have structurally lower 697 00:41:47,120 --> 00:41:50,840 Speaker 1: oil prices forever. But in the meantime that is a 698 00:41:50,880 --> 00:41:54,279 Speaker 1: lot of capex spending right now and all kinds of 699 00:41:54,320 --> 00:41:58,520 Speaker 1: things and more money in people's hands that then increases 700 00:41:58,600 --> 00:42:01,480 Speaker 1: the demand. And then if you at on top of that, 701 00:42:01,560 --> 00:42:04,440 Speaker 1: it's like, okay, well, like who is going to invest 702 00:42:04,600 --> 00:42:09,960 Speaker 1: in expanding oil supply when in the long term oil 703 00:42:10,040 --> 00:42:13,240 Speaker 1: demand really will collapse due to everyone having an electric vehicle. 704 00:42:13,880 --> 00:42:16,000 Speaker 1: You could see how you could have the real makings 705 00:42:16,160 --> 00:42:19,200 Speaker 1: of a sustained spike. It may not last forever, but 706 00:42:19,280 --> 00:42:21,120 Speaker 1: you could see how you could have several years of 707 00:42:21,160 --> 00:42:25,360 Speaker 1: extremely elevated prices. It makes a lot of sense. I 708 00:42:25,360 --> 00:42:27,400 Speaker 1: think the thing that comes through really clear here is 709 00:42:27,440 --> 00:42:30,399 Speaker 1: the idea that we're in a transition phase from some 710 00:42:30,440 --> 00:42:34,440 Speaker 1: sort of old economy to some sort of new economy. 711 00:42:34,600 --> 00:42:37,200 Speaker 1: So you know, call it whatever you want, Like the 712 00:42:37,239 --> 00:42:40,640 Speaker 1: baby boomer economy that was focused on returns and financial 713 00:42:40,680 --> 00:42:44,080 Speaker 1: assets and didn't really care about things like the environment 714 00:42:44,560 --> 00:42:49,000 Speaker 1: or fairness, or equitable distribution of wealth, and then maybe 715 00:42:49,000 --> 00:42:51,760 Speaker 1: the new economy starts to look a little bit different, 716 00:42:52,120 --> 00:42:57,040 Speaker 1: tech heavy, very E s G focused, looking at fuzzy 717 00:42:57,080 --> 00:43:01,480 Speaker 1: concepts like fairness and things like that. And the transition 718 00:43:01,520 --> 00:43:06,040 Speaker 1: period is going to be volatile to Jeff's point, but 719 00:43:06,120 --> 00:43:09,520 Speaker 1: you can see how it might throw up weird oddities 720 00:43:09,560 --> 00:43:13,800 Speaker 1: like commodities prices, the oil price getting higher in the interim, 721 00:43:13,880 --> 00:43:16,640 Speaker 1: even though the place we're eventually going to is a 722 00:43:16,680 --> 00:43:20,959 Speaker 1: place where oil is used much much less. No, it's weird, 723 00:43:21,040 --> 00:43:22,600 Speaker 1: but it makes sense. And again, you know, I go 724 00:43:22,680 --> 00:43:25,440 Speaker 1: back to the last four years. It's like literally the 725 00:43:25,480 --> 00:43:29,200 Speaker 1: opposite of the Trump administration, which was super oil friendly 726 00:43:29,280 --> 00:43:32,560 Speaker 1: but in the end terrible for oil given look if 727 00:43:32,560 --> 00:43:35,080 Speaker 1: you just look at oil prices, in the price of 728 00:43:35,280 --> 00:43:38,040 Speaker 1: oil company stocks, and so you can see how this 729 00:43:38,200 --> 00:43:40,560 Speaker 1: sort of like a very big irony, the ultimate irony 730 00:43:40,600 --> 00:43:43,120 Speaker 1: of how like E. S G and redistribution of wealth 731 00:43:43,200 --> 00:43:47,200 Speaker 1: and all this stuff could lead to. Also, that was 732 00:43:47,239 --> 00:43:50,719 Speaker 1: super interesting. I did not realize and he described it again, 733 00:43:50,840 --> 00:43:54,080 Speaker 1: so well, what Biden can do unilaterally by placing that 734 00:43:54,840 --> 00:43:59,080 Speaker 1: essentially the de facto carbon tax. Super interesting, clients, So 735 00:44:00,480 --> 00:44:04,120 Speaker 1: thank you. That was the word I was looking for. Um, yeah, no, 736 00:44:04,280 --> 00:44:06,919 Speaker 1: that was really interesting. The idea that Biden could sort 737 00:44:06,920 --> 00:44:12,160 Speaker 1: of lead a global defacto virtue of the US being 738 00:44:12,239 --> 00:44:15,640 Speaker 1: the sort of pricing benchmark for oil. That's a big change, 739 00:44:15,880 --> 00:44:18,360 Speaker 1: so much that I learned a ton in just in 740 00:44:18,440 --> 00:44:21,120 Speaker 1: that period of conversation with Jeff. That was great. Yeah, 741 00:44:21,400 --> 00:44:24,040 Speaker 1: Jeff's good. All right, Um, should we leave it there? 742 00:44:24,600 --> 00:44:27,560 Speaker 1: Let's see it there. This has been another episode of 743 00:44:27,600 --> 00:44:30,480 Speaker 1: the All Thoughts podcast. I'm Tracy Alloway. You can follow 744 00:44:30,520 --> 00:44:34,360 Speaker 1: me on Twitter at Tracy Alloway and I'm Joe Wisntal. 745 00:44:34,440 --> 00:44:37,360 Speaker 1: You can follow me on Twitter at the Stalwart. Follow 746 00:44:37,400 --> 00:44:41,839 Speaker 1: our producer Laura Carlson. She's at Laura M. Carlson. Follow 747 00:44:41,920 --> 00:44:45,520 Speaker 1: the Bloomberg head of podcast, Francesco Levi at Francesca Today, 748 00:44:45,680 --> 00:44:48,399 Speaker 1: and check out all of our podcast at Bloomberg under 749 00:44:48,440 --> 00:45:07,840 Speaker 1: the handle add Podcasts. Thanks for listening to