1 00:00:00,080 --> 00:00:06,760 Speaker 1: Bloomberg Audio Studios, Podcasts, radio news. 2 00:00:11,960 --> 00:00:15,560 Speaker 2: This is the Bloomberg Surveillance Podcast. I'm Tom Keene along 3 00:00:15,600 --> 00:00:18,960 Speaker 2: with Paul Sweeney. Join us each day for insight from 4 00:00:18,960 --> 00:00:23,119 Speaker 2: the best in economics, finance, investment, and international relations. You 5 00:00:23,160 --> 00:00:25,800 Speaker 2: can also watch the show live on YouTube. 6 00:00:26,120 --> 00:00:27,640 Speaker 3: Visit the Bloomberg. 7 00:00:27,200 --> 00:00:31,760 Speaker 2: Podcast channel on YouTube to see the show weekday mornings 8 00:00:31,760 --> 00:00:35,000 Speaker 2: from seven to ten am Eastern from our global headquarters 9 00:00:35,159 --> 00:00:39,000 Speaker 2: in New York City. Subscribe to the podcast on Apple, Spotify, 10 00:00:39,360 --> 00:00:42,920 Speaker 2: or anywhere else you listen and always I'm Bloomberg Radio, 11 00:00:43,080 --> 00:00:46,280 Speaker 2: the Bloomberg Terminal, and the Bloomberg Business App. 12 00:00:46,560 --> 00:00:50,280 Speaker 3: I was at a university college, Dublin, coolest campus in Europe. 13 00:00:50,440 --> 00:00:54,600 Speaker 3: Derek Halpenny with us. He is iconic with MUFG and automy. 14 00:00:54,680 --> 00:00:58,520 Speaker 3: Clear they're a Japanese bank, it's inappropriate for mister Hallpenny 15 00:00:58,560 --> 00:01:03,360 Speaker 3: to discuss the executive intervention processes of the bank. But 16 00:01:03,400 --> 00:01:05,560 Speaker 3: we're thrilled you could join us. Head of Research Global 17 00:01:05,600 --> 00:01:09,880 Speaker 3: Markets EMA for mu FG. Derek, it's just been way, 18 00:01:09,959 --> 00:01:12,880 Speaker 3: way too long. Why is the dollar resilient? Is it 19 00:01:12,920 --> 00:01:15,559 Speaker 3: about the dollar or is it about everybody else? 20 00:01:17,880 --> 00:01:22,920 Speaker 4: I think primarily I would point more recently obviously to 21 00:01:23,160 --> 00:01:27,120 Speaker 4: the shifting expectations about the FED higher for longer, the 22 00:01:27,200 --> 00:01:30,319 Speaker 4: resilience of the data, which certainly by January febru time 23 00:01:30,360 --> 00:01:33,920 Speaker 4: the markets we're not expecting. So this kind of latest 24 00:01:34,000 --> 00:01:37,920 Speaker 4: leg stronger is more about the US dollar side, but 25 00:01:38,640 --> 00:01:41,960 Speaker 4: certainly from our perspective in terms of the forecast going forward, 26 00:01:42,360 --> 00:01:45,880 Speaker 4: I think it's important to remember the broader economic conditions 27 00:01:45,920 --> 00:01:47,800 Speaker 4: and if you're going to be in a position to 28 00:01:47,800 --> 00:01:50,560 Speaker 4: sell the US dollar, obviously you have to have currencies 29 00:01:50,600 --> 00:01:53,520 Speaker 4: to buy, and up until now the global backdrop hasn't 30 00:01:53,520 --> 00:01:57,480 Speaker 4: been particularly favorable. But we think that's changing, not dramatically, 31 00:01:58,000 --> 00:02:01,600 Speaker 4: but enough to limit dollar by And of course the 32 00:02:01,600 --> 00:02:05,040 Speaker 4: GDP data today in the UK is one small. 33 00:02:04,840 --> 00:02:08,320 Speaker 3: Example exactly what is the outcoming? And Governor Bailey mentioned 34 00:02:08,360 --> 00:02:11,720 Speaker 3: in that yesterday. Jack Halpenny, what does it mean for 35 00:02:11,760 --> 00:02:15,240 Speaker 3: our listeners and viewers on YouTube if we have a 36 00:02:15,320 --> 00:02:18,240 Speaker 3: stable dollar? I don't think there's enough talk about this, Paul. 37 00:02:18,240 --> 00:02:20,200 Speaker 3: What if we get a stable dollar forward? 38 00:02:22,600 --> 00:02:26,400 Speaker 4: Well, I think probably most center bankers for a start, 39 00:02:26,840 --> 00:02:31,760 Speaker 4: would certainly welcome that. And I think you know, stable 40 00:02:31,919 --> 00:02:39,440 Speaker 4: foreign exchange generally is indicative of relatively reasonable conditions more 41 00:02:39,480 --> 00:02:43,480 Speaker 4: broadly in the financial markets, and I think FX stability 42 00:02:43,520 --> 00:02:51,120 Speaker 4: going forward would obviously probably reflect a relatively coordinated monetary 43 00:02:51,120 --> 00:02:55,040 Speaker 4: policy approach going forward. And again I think for broader 44 00:02:55,040 --> 00:03:00,240 Speaker 4: financial market conditions, FX stability in that context would would 45 00:03:00,240 --> 00:03:00,720 Speaker 4: be welcomed. 46 00:03:01,360 --> 00:03:04,240 Speaker 5: So Derek, give us just kind of your broad overview 47 00:03:04,320 --> 00:03:07,120 Speaker 5: what you have seen with the Japanese yen over the 48 00:03:07,200 --> 00:03:09,680 Speaker 5: last several weeks. Again, we pushed up on that one 49 00:03:09,639 --> 00:03:12,600 Speaker 5: to sixty level a couple of weeks ago where he 50 00:03:12,680 --> 00:03:14,600 Speaker 5: caught people by surprise. Here, What do you think is 51 00:03:14,639 --> 00:03:15,320 Speaker 5: going on at there? 52 00:03:17,280 --> 00:03:19,160 Speaker 4: Yeah, I think I think this is really interesting. Like 53 00:03:19,200 --> 00:03:22,560 Speaker 4: obviously the price action last week, you know, I can 54 00:03:22,600 --> 00:03:26,120 Speaker 4: say that it certainly looks like there was there was intervention, 55 00:03:26,440 --> 00:03:29,720 Speaker 4: there's there's that's that's pretty obvious. And I think there's 56 00:03:29,800 --> 00:03:36,800 Speaker 4: definitely an elevated level of concern politically, at least in 57 00:03:36,880 --> 00:03:40,520 Speaker 4: relation to the depreciation of the Japanese yen. That has 58 00:03:40,560 --> 00:03:44,400 Speaker 4: an impact on household consumption, It has an impact on 59 00:03:44,520 --> 00:03:49,560 Speaker 4: household sentiment, and there is still a chance that the 60 00:03:49,680 --> 00:03:55,040 Speaker 4: Kashida administration will push for a general election before the 61 00:03:55,200 --> 00:04:02,040 Speaker 4: LDP leadership elections in September. Certainly from Kashida as standpoints, 62 00:04:02,120 --> 00:04:06,200 Speaker 4: having a general election victory, the measure of victory, of 63 00:04:06,200 --> 00:04:10,600 Speaker 4: course we can determine and debate that raises his prospects 64 00:04:10,680 --> 00:04:15,120 Speaker 4: of remaining leader after the leadership election in September, So 65 00:04:15,560 --> 00:04:19,440 Speaker 4: I wouldn't rule it out. And certainly politically there's definitely 66 00:04:19,440 --> 00:04:22,240 Speaker 4: an elevated level of concerns. And of course we've had 67 00:04:22,240 --> 00:04:25,760 Speaker 4: this meeting this week between Governor Ueda and Prime Minister Kashida. 68 00:04:26,200 --> 00:04:28,960 Speaker 4: Luida has then come out and the BOJ certainly seems 69 00:04:29,000 --> 00:04:32,080 Speaker 4: a lot more hawkish now today than there were a 70 00:04:32,080 --> 00:04:35,080 Speaker 4: week ago, and that certainly raises the prospect of a 71 00:04:35,120 --> 00:04:39,320 Speaker 4: more active BOJ policy stance going forward from here. 72 00:04:39,960 --> 00:04:44,120 Speaker 5: So if the US dollar is maybe stabilized, maybe even 73 00:04:44,120 --> 00:04:46,359 Speaker 5: if there's a little bit of softness in the US dollar, 74 00:04:46,800 --> 00:04:49,440 Speaker 5: when you talk to your clients, do they have combetists 75 00:04:49,440 --> 00:04:51,000 Speaker 5: go ahead and buy anything else that used to be 76 00:04:51,040 --> 00:04:51,440 Speaker 5: the dollar? 77 00:04:55,839 --> 00:04:58,960 Speaker 4: Well, you know, look at Japan and today we've had 78 00:04:59,240 --> 00:05:04,279 Speaker 4: data on cross border flows, and you know, foreign investor 79 00:05:04,360 --> 00:05:10,839 Speaker 4: appetite for Japanese equities remains very, very strong. And again, 80 00:05:11,160 --> 00:05:15,159 Speaker 4: you know, I think if there's a fundamental, compelling story 81 00:05:15,640 --> 00:05:21,720 Speaker 4: to tell, investors are interested notwithstanding the high levels of rates, 82 00:05:21,760 --> 00:05:25,920 Speaker 4: notwithstanding the very high level of the US dollar, that 83 00:05:26,000 --> 00:05:29,880 Speaker 4: points to potential volatility ahead if there's a real fundamental 84 00:05:29,960 --> 00:05:32,720 Speaker 4: story that can trump all of that, and I think 85 00:05:32,720 --> 00:05:35,200 Speaker 4: that's what's going on in Japan at the moment, where 86 00:05:35,240 --> 00:05:41,039 Speaker 4: clearly corporate Japan is changing, dividend yields are picking up, 87 00:05:41,400 --> 00:05:45,080 Speaker 4: share buybacks are picking up, focus on return on equity, 88 00:05:45,839 --> 00:05:49,520 Speaker 4: and that is a compelling story in terms of Japanese 89 00:05:49,560 --> 00:05:50,360 Speaker 4: equities at the moment. 90 00:05:50,480 --> 00:05:52,520 Speaker 3: So what is your six months out play on yen? 91 00:05:52,640 --> 00:05:54,880 Speaker 3: Which pair do you take on yen here to make 92 00:05:54,960 --> 00:05:56,400 Speaker 3: a speculation? 93 00:05:58,400 --> 00:06:01,080 Speaker 4: Well, you know, I think in in terms of where 94 00:06:01,120 --> 00:06:05,760 Speaker 4: we've had probable intervention and given our view in terms 95 00:06:05,800 --> 00:06:08,960 Speaker 4: of where the rates pricing across G ten is at 96 00:06:08,960 --> 00:06:13,599 Speaker 4: the moment, and by that I mean there's more pushback 97 00:06:13,800 --> 00:06:17,120 Speaker 4: on yields to come back down based on our view 98 00:06:17,120 --> 00:06:19,640 Speaker 4: that the FED is going to cut three times this year, 99 00:06:21,000 --> 00:06:22,599 Speaker 4: and given the fact that we think the BOJ is 100 00:06:22,600 --> 00:06:26,000 Speaker 4: going to raise rates in July, possibly on the same 101 00:06:26,080 --> 00:06:28,800 Speaker 4: day that the FED is cutting, I do think there's 102 00:06:28,839 --> 00:06:34,080 Speaker 4: scope there for dolly en to move certainly back into 103 00:06:34,080 --> 00:06:36,880 Speaker 4: the one forties, for there to be a bigger move 104 00:06:36,920 --> 00:06:38,200 Speaker 4: than maybe what the markets are expecting. 105 00:06:38,320 --> 00:06:40,240 Speaker 3: We're going to get you. That's twenty big figures, are 106 00:06:40,279 --> 00:06:42,080 Speaker 3: fifteen big figures. We got to get you. Back on 107 00:06:42,200 --> 00:06:45,640 Speaker 3: Derek Halpennie, thank you so much from MUFG there on 108 00:06:46,440 --> 00:06:58,760 Speaker 3: foreign exchange. I'm going to break a rule here, folks. 109 00:06:58,839 --> 00:07:02,320 Speaker 3: Usually because they are always so product product touchy feely 110 00:07:02,400 --> 00:07:05,400 Speaker 3: with Apple, they go to Dan Ives and they go, 111 00:07:05,480 --> 00:07:07,200 Speaker 3: you know, should I get the brown one or the 112 00:07:07,240 --> 00:07:10,000 Speaker 3: red one? You know, I don't do that. I do 113 00:07:10,120 --> 00:07:12,440 Speaker 3: financials and like can you make money or lose money 114 00:07:12,480 --> 00:07:15,000 Speaker 3: in Apple? And all that? Right now, I'm gonna rip 115 00:07:15,080 --> 00:07:17,520 Speaker 3: up the script with Daniel Ives. He's with web Bush 116 00:07:17,880 --> 00:07:22,239 Speaker 3: on Apple, Dan Apple Insider, Mark German and the others. 117 00:07:22,880 --> 00:07:25,320 Speaker 3: They have a lot of paragraphs right now on what 118 00:07:25,440 --> 00:07:29,600 Speaker 3: AI is going to do for the iPhone? Is it 119 00:07:29,800 --> 00:07:34,120 Speaker 3: nothing more than a glorified search engine enhancement? 120 00:07:36,320 --> 00:07:40,360 Speaker 6: I disagree, And I think this is the start of 121 00:07:40,520 --> 00:07:45,280 Speaker 6: a game changing strategy at Apple with AI, and I 122 00:07:45,280 --> 00:07:48,080 Speaker 6: think it's gonna be on AI services as well as 123 00:07:48,080 --> 00:07:51,240 Speaker 6: on the iPhone. But Tom, they're not putting their new 124 00:07:51,440 --> 00:07:56,080 Speaker 6: chip to focus on AI. If this is just for 125 00:07:56,240 --> 00:07:57,160 Speaker 6: enhance search. 126 00:07:58,240 --> 00:08:00,320 Speaker 3: Okay, well, what's it for? I mean, right now on 127 00:08:00,360 --> 00:08:03,200 Speaker 3: a Friday in May, Paul you mentioned the June meeting, 128 00:08:03,360 --> 00:08:06,200 Speaker 3: is like, you know, Ive goes to that he ws 129 00:08:06,200 --> 00:08:09,920 Speaker 3: a tuxedo. You should see the color of that tuxedo. Dan, 130 00:08:10,400 --> 00:08:14,080 Speaker 3: I think there's a mystery here on what AI is 131 00:08:14,120 --> 00:08:16,680 Speaker 3: going to mean for the public on the toy they 132 00:08:16,680 --> 00:08:19,080 Speaker 3: all carry around. Do you agree at least that there's 133 00:08:19,120 --> 00:08:19,640 Speaker 3: a mystery. 134 00:08:20,760 --> 00:08:23,920 Speaker 6: Yeah, but I think the mystery in the popcorn moment 135 00:08:24,280 --> 00:08:29,200 Speaker 6: that's gonna be revealed at WWDC next month by Cook. 136 00:08:29,280 --> 00:08:32,240 Speaker 6: I think it's going to start what I really view 137 00:08:32,280 --> 00:08:35,520 Speaker 6: is probably the most important event for Apple in a decade, 138 00:08:36,040 --> 00:08:39,559 Speaker 6: because it's unveiling AI on services, what I believe is 139 00:08:39,600 --> 00:08:42,520 Speaker 6: going to be in a new AI app store and 140 00:08:42,800 --> 00:08:45,080 Speaker 6: the start of it, and then what's going to be 141 00:08:45,080 --> 00:08:48,880 Speaker 6: built into iPhone sixteen. From an LM perspective. 142 00:08:49,320 --> 00:08:51,959 Speaker 5: Hey, Dan and Tom. I bumped into Dan at Newark 143 00:08:52,000 --> 00:08:54,480 Speaker 5: Airport yesterday. I was going up to Boston. He's getting 144 00:08:54,480 --> 00:08:55,800 Speaker 5: off the Red Eye from San Francisco. 145 00:08:56,000 --> 00:08:59,800 Speaker 3: No idea what's going on middle place? I have no 146 00:08:59,840 --> 00:09:02,400 Speaker 3: I I mean the web Bush golf stream usually doesn't 147 00:09:02,440 --> 00:09:02,719 Speaker 3: go down. 148 00:09:02,800 --> 00:09:05,720 Speaker 5: I know, I know that he's fine with the people. Hey, Dan, 149 00:09:06,040 --> 00:09:08,959 Speaker 5: when you talk to investors, what's the biggest challenge here 150 00:09:09,000 --> 00:09:11,000 Speaker 5: for this stock? I see it down four percent year 151 00:09:11,040 --> 00:09:15,280 Speaker 5: to date, which for Apple is really really underperformance. Is 152 00:09:15,320 --> 00:09:16,240 Speaker 5: it China? 153 00:09:16,440 --> 00:09:17,280 Speaker 3: Is it Ai? 154 00:09:17,600 --> 00:09:20,599 Speaker 5: How do you prioritize kind of what Apple needs to 155 00:09:20,640 --> 00:09:22,160 Speaker 5: get right over the next you know, one to two 156 00:09:22,200 --> 00:09:23,000 Speaker 5: to three years. 157 00:09:23,800 --> 00:09:26,600 Speaker 6: Yeah, it's a great question. I think it's really it's 158 00:09:26,760 --> 00:09:30,079 Speaker 6: China because that we're used to seeing that as growth 159 00:09:30,200 --> 00:09:33,800 Speaker 6: and it's actually been negative. But if you look out 160 00:09:33,840 --> 00:09:37,480 Speaker 6: over the next six twelve months, the headwind becomes a talent. 161 00:09:37,760 --> 00:09:41,440 Speaker 6: I mean, China, I think starts to grow next few quarters. 162 00:09:41,520 --> 00:09:44,760 Speaker 6: June will be its last negative quarter. And that's why 163 00:09:44,840 --> 00:09:47,320 Speaker 6: right now in New York City, cab drivers barish and Apple. 164 00:09:47,480 --> 00:09:51,400 Speaker 6: But you have this pent up upgrade cycle, two into 165 00:09:51,400 --> 00:09:54,720 Speaker 6: seventy million that have an upgrade, and four plus years 166 00:09:55,360 --> 00:09:58,360 Speaker 6: plus now AI coming to Cooper Tino with one hundred 167 00:09:58,360 --> 00:10:00,960 Speaker 6: and ten billion dollar buy back. I mean, that's like 168 00:10:01,040 --> 00:10:03,000 Speaker 6: going up against Brunt in the playoffs. 169 00:10:03,720 --> 00:10:06,439 Speaker 5: Good, good analogy, Mike. The concern in the back of 170 00:10:06,480 --> 00:10:08,520 Speaker 5: my mind, Dan, and I'm guessing I'm not the only one. 171 00:10:08,600 --> 00:10:13,840 Speaker 5: Is this growing? I guess cold war between China and 172 00:10:13,880 --> 00:10:19,560 Speaker 5: the West. That's spilling over into consumer behavior and maybe 173 00:10:19,640 --> 00:10:22,680 Speaker 5: people on the margin are not going to buy Apple 174 00:10:22,720 --> 00:10:24,720 Speaker 5: products to the same degree they did in the past 175 00:10:24,800 --> 00:10:27,560 Speaker 5: because of that. Is that did the numbers show that 176 00:10:27,600 --> 00:10:27,880 Speaker 5: at all? 177 00:10:29,120 --> 00:10:34,920 Speaker 6: I think the doomsday scenarios never really came true this quarter. 178 00:10:35,080 --> 00:10:37,760 Speaker 6: I mean that's and I think that was that was 179 00:10:37,840 --> 00:10:41,679 Speaker 6: evident because yeah, they have some geopolitical ahead winds the 180 00:10:41,760 --> 00:10:45,440 Speaker 6: Huawei issues, but you build the best products in the 181 00:10:45,480 --> 00:10:49,640 Speaker 6: world like they do. Consumers, whether they're in China, New 182 00:10:49,720 --> 00:10:53,360 Speaker 6: Jersey or wherever else, they're gonna want iPhones. 183 00:10:54,000 --> 00:10:56,880 Speaker 5: All right, So at this developer conference, how do you 184 00:10:56,920 --> 00:10:59,800 Speaker 5: think it's gonna play out? Because it feels like they're 185 00:10:59,800 --> 00:11:02,000 Speaker 5: all is important to Apple, They're always important to the stock, 186 00:11:02,040 --> 00:11:04,640 Speaker 5: but this one because there may be this AI component, 187 00:11:05,000 --> 00:11:07,319 Speaker 5: what do you what would you like to see happen 188 00:11:07,440 --> 00:11:09,680 Speaker 5: at this June uh get together? 189 00:11:10,400 --> 00:11:12,880 Speaker 6: Yeah, and this and German's talked about this, but this 190 00:11:12,960 --> 00:11:16,080 Speaker 6: is all focused on developers, yep. So the big thing 191 00:11:16,240 --> 00:11:22,400 Speaker 6: here is really them unveiling a foundational platform for developers 192 00:11:22,440 --> 00:11:26,560 Speaker 6: where they're gonna build AI apps within the app store. 193 00:11:27,360 --> 00:11:28,559 Speaker 6: And what that's really gonna do? 194 00:11:28,640 --> 00:11:30,360 Speaker 3: I mean, kings King's. 195 00:11:30,040 --> 00:11:33,360 Speaker 6: Talked about this a lot. But the A as AI 196 00:11:33,480 --> 00:11:38,160 Speaker 6: comes to the consumer, it has to come through Apple 197 00:11:38,760 --> 00:11:42,880 Speaker 6: till Apple dives into deep of the pool AI and 198 00:11:42,920 --> 00:11:44,040 Speaker 6: then it could all start. 199 00:11:45,160 --> 00:11:47,520 Speaker 3: I feel like I'm doing a lovelte conversation. This is 200 00:11:47,559 --> 00:11:50,520 Speaker 3: so non time keen Dan Ives and so we're are 201 00:11:50,559 --> 00:11:53,360 Speaker 3: Google and Apple frenemies right now? I mean, if they 202 00:11:53,400 --> 00:11:57,560 Speaker 3: need the Google platform to make AI happen, how does that? 203 00:11:57,720 --> 00:12:01,439 Speaker 3: How forget about the regulation in the litigation? This weekend, 204 00:12:01,480 --> 00:12:04,679 Speaker 3: they're gonna chit chat over an expensive latte out in 205 00:12:04,800 --> 00:12:06,559 Speaker 3: Cooper Tino. Are they fre enemies? 206 00:12:07,840 --> 00:12:10,840 Speaker 6: Oh? I mean I'd say they're just actually friends and 207 00:12:10,960 --> 00:12:13,559 Speaker 6: to some extent that that's getting closer and closer because 208 00:12:13,559 --> 00:12:17,160 Speaker 6: they need each other. You will, Google needs Apple just 209 00:12:17,200 --> 00:12:20,280 Speaker 6: like Apple needs Google. And that's something when it comes 210 00:12:20,280 --> 00:12:28,120 Speaker 6: to AI. What's what's made them more BFFs is actually Microsoft. 211 00:12:28,720 --> 00:12:33,960 Speaker 6: Because this Microsoft has aggressively really wed this. It's actually 212 00:12:34,120 --> 00:12:37,440 Speaker 6: forced Apple and Google to look in the mirror and 213 00:12:37,520 --> 00:12:41,160 Speaker 6: realize instead of enemies, they're actually friends. 214 00:12:41,160 --> 00:12:43,079 Speaker 5: The great thing about chat with Dan Ives Thomas, you 215 00:12:43,120 --> 00:12:45,440 Speaker 5: can just go all over the place. So I'm gonna 216 00:12:45,440 --> 00:12:46,079 Speaker 5: switch gear. 217 00:12:46,040 --> 00:12:48,360 Speaker 3: Just tearing them up on the live chat. Everybody wants 218 00:12:48,360 --> 00:12:50,400 Speaker 3: to know where he got his shirt up. I mean, 219 00:12:50,800 --> 00:12:52,839 Speaker 3: you know, they don't care about Apple. They just you know, 220 00:12:53,240 --> 00:12:55,040 Speaker 3: did you get that at Lord and Taylor? That's what 221 00:12:55,080 --> 00:12:55,719 Speaker 3: they want to know. 222 00:12:56,280 --> 00:12:58,959 Speaker 6: Now I got I got this one in this in Milan. 223 00:12:59,240 --> 00:13:01,360 Speaker 6: It's no, this is It's like it's like a pul 224 00:13:01,880 --> 00:13:03,160 Speaker 6: special right from Milan. 225 00:13:04,360 --> 00:13:11,000 Speaker 3: Can we have Dan luxury for me? Is like ll Beam. 226 00:13:12,880 --> 00:13:13,959 Speaker 5: At the thrift store? 227 00:13:14,000 --> 00:13:16,000 Speaker 3: Can you see Dana eyes and ll Beam? Now of 228 00:13:16,080 --> 00:13:17,320 Speaker 3: course they don't. 229 00:13:18,320 --> 00:13:21,079 Speaker 5: Hey Dan, I'm looking at our good friends Tesla and 230 00:13:21,200 --> 00:13:25,040 Speaker 5: stock down thirty percent here? How does that narrative need 231 00:13:25,160 --> 00:13:27,360 Speaker 5: to change for Elon, you know, over the next several 232 00:13:27,480 --> 00:13:29,839 Speaker 5: quarters here to get this stock moving. 233 00:13:30,840 --> 00:13:31,080 Speaker 3: Yeah. 234 00:13:31,240 --> 00:13:34,559 Speaker 6: Look, I mean obviously it's been a dark few quarters, 235 00:13:34,600 --> 00:13:37,200 Speaker 6: but I think it all started with this last conference 236 00:13:37,240 --> 00:13:40,439 Speaker 6: call in terms of turning it around. What I've used 237 00:13:40,440 --> 00:13:43,640 Speaker 6: this up thirty thousand dollars vehicle next year. They've had 238 00:13:43,640 --> 00:13:47,040 Speaker 6: to make some difficult cost cuts, but now I think 239 00:13:47,120 --> 00:13:50,640 Speaker 6: growth will start to return in China. That's the key. 240 00:13:51,360 --> 00:13:54,160 Speaker 6: And then you look at this time ahead it's really 241 00:13:54,240 --> 00:13:58,920 Speaker 6: full self driving autonomous. That vision now is starting to 242 00:13:58,960 --> 00:14:02,640 Speaker 6: become something close to reality. And that's the longer term 243 00:14:02,760 --> 00:14:05,880 Speaker 6: Tesla story here is that you know they've been through 244 00:14:05,960 --> 00:14:08,959 Speaker 6: this before. This is not the end of the Tesla 245 00:14:09,000 --> 00:14:11,079 Speaker 6: growth story. It's still second third in it. 246 00:14:11,559 --> 00:14:14,079 Speaker 3: Dan, I gotta get some news out here. I mean, 247 00:14:14,080 --> 00:14:16,080 Speaker 3: you're in the office, you go back to your house. 248 00:14:16,120 --> 00:14:18,920 Speaker 3: I understand you're published at any moment. You're out at 249 00:14:18,960 --> 00:14:21,440 Speaker 3: a two fifty on Apple? Can we make some news 250 00:14:21,440 --> 00:14:23,520 Speaker 3: here with a price lift? Can you go? Can you 251 00:14:23,560 --> 00:14:25,920 Speaker 3: give me two seventy here on Bloomberg Serioce? 252 00:14:25,920 --> 00:14:28,880 Speaker 6: Well, well, what I will tell you, Tom Will I 253 00:14:28,920 --> 00:14:33,320 Speaker 6: think the AI story is worth forty to fifty dollars 254 00:14:33,480 --> 00:14:37,640 Speaker 6: per share to the Apple store, and that is not 255 00:14:37,840 --> 00:14:42,360 Speaker 6: being factored in here. Sentiments negative and we I think 256 00:14:42,400 --> 00:14:45,760 Speaker 6: we sit here a year from now and and that's 257 00:14:45,800 --> 00:14:48,520 Speaker 6: that's gonna be what I've used a game changer. It's 258 00:14:48,520 --> 00:14:52,640 Speaker 6: the underestimation of Cook and Coopatina with am. 259 00:14:52,560 --> 00:14:54,800 Speaker 3: Can I put a headline out ives of Milan? 260 00:14:55,320 --> 00:14:55,520 Speaker 5: Yes? 261 00:14:55,720 --> 00:14:59,520 Speaker 3: Sure, Apple three hundred dollars a share? Did I hear that? Dan? 262 00:14:59,600 --> 00:15:04,240 Speaker 3: I've thank you with web Bush's the way the shirt. 263 00:15:04,480 --> 00:15:06,680 Speaker 3: You know, I don't know what to say that. I've 264 00:15:06,720 --> 00:15:09,120 Speaker 3: never done that folks. I've never done more touchy pheely 265 00:15:09,160 --> 00:15:11,680 Speaker 3: with Dan ives on Apple, but I think this AI 266 00:15:11,800 --> 00:15:18,920 Speaker 3: thing a real mystery and a real debate. David Miracle 267 00:15:19,000 --> 00:15:21,160 Speaker 3: is one of the toughest PhDs in the land that 268 00:15:21,360 --> 00:15:25,320 Speaker 3: under Greg Man Q at Harvard with Golden Sacks, David, 269 00:15:25,360 --> 00:15:26,680 Speaker 3: thank you so much for joining. I want to get 270 00:15:26,720 --> 00:15:30,120 Speaker 3: to immigration in a moment. How much algebra was there 271 00:15:30,160 --> 00:15:33,840 Speaker 3: with Man Q. I mean, I can't fathom the algebra 272 00:15:33,920 --> 00:15:36,080 Speaker 3: rigger you had to put up with under Greg Man Q. 273 00:15:37,960 --> 00:15:40,560 Speaker 7: Well, you do move from algebra to calculus when you 274 00:15:40,720 --> 00:15:41,680 Speaker 7: stick around millions. 275 00:15:43,200 --> 00:15:46,200 Speaker 3: Okay, Well, David, thank you for being with us. Your 276 00:15:46,320 --> 00:15:48,680 Speaker 3: essay on immigration is the debate of the moment for 277 00:15:48,720 --> 00:15:52,080 Speaker 3: this nation. With your research at Goldben Sachs, can you 278 00:15:52,120 --> 00:15:57,120 Speaker 3: say that immigration has moved the needle on our labor economy? 279 00:15:57,880 --> 00:15:59,920 Speaker 7: I think it's you know, it's clearly had a mechanic 280 00:16:00,040 --> 00:16:03,440 Speaker 7: whole impact on things like job growth and GDP growth. 281 00:16:03,760 --> 00:16:07,040 Speaker 7: That part's pretty easy. More people, more entrance to the workforce, 282 00:16:07,120 --> 00:16:09,600 Speaker 7: you can put more people to work. GDP can grow 283 00:16:09,640 --> 00:16:13,040 Speaker 7: a little bit faster. Maybe the more contentious part is 284 00:16:13,080 --> 00:16:15,960 Speaker 7: what impact all of this had on wage growth and inflation, 285 00:16:16,600 --> 00:16:18,720 Speaker 7: where you know, we saw a big increase at a 286 00:16:18,760 --> 00:16:22,800 Speaker 7: time when immigration was extremely low because the borders were 287 00:16:22,840 --> 00:16:25,000 Speaker 7: closed and fewer people were coming. Then we saw a 288 00:16:25,040 --> 00:16:28,960 Speaker 7: big decline in wage growth and inflation when immigration surged, 289 00:16:29,000 --> 00:16:32,000 Speaker 7: and it naturally raises the question is there's some link there. 290 00:16:32,600 --> 00:16:36,120 Speaker 7: My take is it probably did play a modest and 291 00:16:36,200 --> 00:16:40,440 Speaker 7: secondary role as one of several factors. But you know, 292 00:16:40,480 --> 00:16:43,800 Speaker 7: I don't think it was the main story. Normally. You know, 293 00:16:43,880 --> 00:16:46,480 Speaker 7: a lot of people I think quickly think of immigrants 294 00:16:46,480 --> 00:16:48,360 Speaker 7: as well. You have more workers that should help to 295 00:16:48,400 --> 00:16:51,600 Speaker 7: rebalance the labor market. Economists is of course going to 296 00:16:51,640 --> 00:16:53,760 Speaker 7: point out, well, you know, now that they've come to 297 00:16:53,760 --> 00:16:55,840 Speaker 7: the US, they're consuming in the US as well, not 298 00:16:55,960 --> 00:16:58,360 Speaker 7: just producing in the US, so you've boosted both supply 299 00:16:58,520 --> 00:17:02,080 Speaker 7: and demand, and under normal conditions, I'd probably say is 300 00:17:02,080 --> 00:17:04,280 Speaker 7: I think most people would say that it would be 301 00:17:04,280 --> 00:17:07,119 Speaker 7: a wash, that it doesn't matter too much that you know, 302 00:17:07,160 --> 00:17:10,440 Speaker 7: when we economists and markets think about forecasting wage growth 303 00:17:10,480 --> 00:17:13,400 Speaker 7: and inflation, this is just not something at the top 304 00:17:13,440 --> 00:17:16,640 Speaker 7: of our list that we're considering. I do think this 305 00:17:16,800 --> 00:17:20,240 Speaker 7: recent episode, though, was a little bit different, because if 306 00:17:20,240 --> 00:17:22,920 Speaker 7: you remember back to the beginning, of the immigration surge, 307 00:17:23,160 --> 00:17:26,399 Speaker 7: we had probably the tightest peacetime labor market in the 308 00:17:26,480 --> 00:17:29,280 Speaker 7: history of the United States. So I think under those 309 00:17:29,400 --> 00:17:33,560 Speaker 7: unique circumstances where you had a huge supply demand imbalance 310 00:17:33,600 --> 00:17:37,119 Speaker 7: in the labor market, and in particular, the low wage 311 00:17:37,160 --> 00:17:39,960 Speaker 7: part of the labor market was just red hot, generating 312 00:17:40,040 --> 00:17:43,640 Speaker 7: really hot wage growth. Under those unique circumstances, I think 313 00:17:43,680 --> 00:17:46,800 Speaker 7: it's fair to say that an influx of another million, 314 00:17:47,000 --> 00:17:49,720 Speaker 7: mostly low wage workers probably helped cool. 315 00:17:50,119 --> 00:17:53,560 Speaker 5: So, David, given that backdrop here, how would you characterize 316 00:17:53,560 --> 00:17:55,840 Speaker 5: the US labor market. We've got, I guess, a headline 317 00:17:55,880 --> 00:17:58,959 Speaker 5: of three point nine percent unemployment, three point eight percent unemployment. 318 00:17:59,560 --> 00:18:01,359 Speaker 5: How do you characterized the labor market? How do you 319 00:18:01,359 --> 00:18:03,560 Speaker 5: think the FED views the US labor market? 320 00:18:04,880 --> 00:18:09,360 Speaker 7: Yeah, I think basically we've restored the pre pandemic balance, 321 00:18:09,560 --> 00:18:12,000 Speaker 7: but things are a little bit more complicated. So if 322 00:18:12,000 --> 00:18:13,800 Speaker 7: you look at a lot of different measures of how 323 00:18:13,840 --> 00:18:16,800 Speaker 7: tight the labor market is, the unemployment rate, our jobs 324 00:18:16,840 --> 00:18:21,320 Speaker 7: workers gap, survey based measures, many other data points, and 325 00:18:21,359 --> 00:18:23,840 Speaker 7: you just average all of them, the average is basically 326 00:18:23,880 --> 00:18:26,680 Speaker 7: where it was in twenty nineteen, down a long way 327 00:18:26,680 --> 00:18:29,000 Speaker 7: from twenty twenty two. I think the FED would say 328 00:18:29,440 --> 00:18:32,159 Speaker 7: that's ideal. In twenty nineteen, we kind of had the 329 00:18:32,240 --> 00:18:35,400 Speaker 7: you know, in retrospect, the best of all possible worlds, 330 00:18:35,440 --> 00:18:38,719 Speaker 7: abundant job opportunities, low unemployment, but we didn't have an 331 00:18:38,760 --> 00:18:42,439 Speaker 7: inflation problem. By twenty twenty two, we'd probably overshot. You know, 332 00:18:42,480 --> 00:18:45,919 Speaker 7: twenty nineteen was one of the tightest labor markets in history. 333 00:18:45,960 --> 00:18:49,359 Speaker 7: Twenty twenty two was kind of drastically tighter, and I 334 00:18:49,359 --> 00:18:52,600 Speaker 7: think most FED officials concluded that's not the right place 335 00:18:52,640 --> 00:18:55,920 Speaker 7: to be, especially when you have a big inflation problem. 336 00:18:57,000 --> 00:18:58,560 Speaker 7: At this point, though, I think, you know, we can 337 00:18:58,640 --> 00:19:00,760 Speaker 7: kind of say now and fact, we could say by 338 00:19:00,840 --> 00:19:04,479 Speaker 7: last fall that we have restored that pre pandemic balance. 339 00:19:04,560 --> 00:19:07,520 Speaker 7: The reason I say it's more complicated is that there's 340 00:19:07,600 --> 00:19:11,520 Speaker 7: more dispersion among these indicators. They tell a less consistent story, 341 00:19:12,359 --> 00:19:14,080 Speaker 7: and you know, that means you can be a little 342 00:19:14,080 --> 00:19:17,000 Speaker 7: bit less confident about where we are than if they 343 00:19:17,040 --> 00:19:18,600 Speaker 7: all told exactly the same story. 344 00:19:19,240 --> 00:19:22,560 Speaker 5: Hey, David, I'm looking at your team's note from early April. 345 00:19:22,600 --> 00:19:25,119 Speaker 5: You talk about GDP forecast a little bit higher than 346 00:19:25,160 --> 00:19:30,040 Speaker 5: consensus PCE inflation falling pretty significantly, leading maybe the FED 347 00:19:30,040 --> 00:19:32,080 Speaker 5: to cut maybe as many as three times this year. 348 00:19:32,119 --> 00:19:35,200 Speaker 5: Is that's still the Goldman Sex call? 349 00:19:35,240 --> 00:19:38,040 Speaker 7: We think twice at this point, once in July, once 350 00:19:38,080 --> 00:19:40,119 Speaker 7: in November. And you know, I'd be the first to 351 00:19:40,200 --> 00:19:43,720 Speaker 7: acknowledge that that decision is going to be very, very 352 00:19:43,760 --> 00:19:47,280 Speaker 7: sensitive to very small surprises on the inflation data. With 353 00:19:47,680 --> 00:19:49,679 Speaker 7: you know, I don't think anyone can be certain about. 354 00:19:50,119 --> 00:19:52,320 Speaker 3: Well when you look at the you know, with you 355 00:19:52,400 --> 00:19:55,120 Speaker 3: and your Hatzia is having to put together a call 356 00:19:55,200 --> 00:19:58,639 Speaker 3: Peter Oppenheimer over in London, you put together call do 357 00:19:58,680 --> 00:20:03,280 Speaker 3: you have not certitude? But do you have a confidence 358 00:20:03,320 --> 00:20:05,520 Speaker 3: in the summer and into the end of the year. 359 00:20:06,200 --> 00:20:08,800 Speaker 3: Are you basically flying blind till you do your next 360 00:20:08,840 --> 00:20:13,240 Speaker 3: conference call to figure out what the view is? Well? 361 00:20:13,280 --> 00:20:16,159 Speaker 7: There, you know, there's always some interplay between the economic 362 00:20:16,240 --> 00:20:19,919 Speaker 7: side and the market side. We try to incorporate that 363 00:20:20,240 --> 00:20:23,359 Speaker 7: through our Financial Conditions index framework, and so it's very 364 00:20:23,359 --> 00:20:25,439 Speaker 7: helpful to be able to work with our strategists to 365 00:20:25,480 --> 00:20:29,800 Speaker 7: get some sense of how that impulse from changing financial 366 00:20:29,840 --> 00:20:32,600 Speaker 7: conditions broadly might matter for our economic forecast. 367 00:20:32,680 --> 00:20:35,000 Speaker 3: So where's your nominal GDP call? Now, that's been one 368 00:20:35,000 --> 00:20:37,520 Speaker 3: of our themes this morning, is a lot of people 369 00:20:37,560 --> 00:20:40,639 Speaker 3: looking at resilient rates figure in a resilient inflation in 370 00:20:40,680 --> 00:20:44,080 Speaker 3: that you know, we may not get nominal GDP under 371 00:20:44,160 --> 00:20:47,080 Speaker 3: four percent or can you can you be more cautious? 372 00:20:48,119 --> 00:20:50,840 Speaker 7: Yeah, so we would have it this year at a 373 00:20:50,880 --> 00:20:53,639 Speaker 7: little bit over five percent, but by the end of 374 00:20:53,680 --> 00:20:56,720 Speaker 7: twenty twenty five approaching that four percent number you mentioned. 375 00:20:57,320 --> 00:20:58,920 Speaker 3: Wow, Wow, interesting. 376 00:20:59,160 --> 00:21:02,680 Speaker 5: So David, us about the consumer here? The US consumer? 377 00:21:03,320 --> 00:21:04,120 Speaker 3: What's your call here? 378 00:21:04,160 --> 00:21:05,440 Speaker 5: I know we're going to hear from Walmart and a 379 00:21:05,480 --> 00:21:07,840 Speaker 5: bunch of other retailers in the coming week or so 380 00:21:07,880 --> 00:21:09,359 Speaker 5: when we'll get a better handle on it, But how 381 00:21:09,359 --> 00:21:11,360 Speaker 5: do you guys think about the US consumer? 382 00:21:11,600 --> 00:21:11,840 Speaker 3: Sure? 383 00:21:11,880 --> 00:21:13,960 Speaker 7: Look, I think there's been a bit of a disconnect 384 00:21:13,960 --> 00:21:16,720 Speaker 7: between how we and other people looking at macro data 385 00:21:16,760 --> 00:21:18,760 Speaker 7: would think about this and how people who have been 386 00:21:19,080 --> 00:21:21,879 Speaker 7: focused on some of these company reports might think about it. 387 00:21:21,960 --> 00:21:24,360 Speaker 7: Our take is a little bit more optimistic. I think 388 00:21:24,359 --> 00:21:28,359 Speaker 7: of this as a pretty simple, straightforward story, basically the 389 00:21:28,400 --> 00:21:31,760 Speaker 7: twenty twenty three story, just in water down form. What 390 00:21:31,840 --> 00:21:33,280 Speaker 7: I mean by that is, you know, there was a 391 00:21:33,280 --> 00:21:36,159 Speaker 7: lot of gloominess in twenty twenty three too, but we 392 00:21:36,200 --> 00:21:38,439 Speaker 7: looked at the data and we thought, real income is 393 00:21:38,480 --> 00:21:41,040 Speaker 7: going to grow at a pretty robust pace. People's spending 394 00:21:41,080 --> 00:21:45,840 Speaker 7: power is growing robustly because wages are growing faster than inflation. 395 00:21:45,920 --> 00:21:48,280 Speaker 7: We're putting a lot of people to work, and there 396 00:21:48,280 --> 00:21:51,560 Speaker 7: are a couple other sources of income like interest income 397 00:21:51,600 --> 00:21:54,600 Speaker 7: and some government transfers that we kind of knew were coming. 398 00:21:54,960 --> 00:21:57,879 Speaker 7: And if your income's rising quickly and household balance sheets 399 00:21:57,920 --> 00:22:01,400 Speaker 7: are basically the strongest in history than the natural assumption 400 00:22:01,520 --> 00:22:04,320 Speaker 7: I think is that consumption keeps growing at a healthy pace. 401 00:22:04,720 --> 00:22:06,960 Speaker 7: Now this year, we're not going to put two hundred 402 00:22:07,000 --> 00:22:08,960 Speaker 7: and fifty thousand people to work per month. We just 403 00:22:08,960 --> 00:22:12,439 Speaker 7: don't have that many workers. So economy's income growth is 404 00:22:12,440 --> 00:22:15,040 Speaker 7: going to slow. Everything's going to slow, including consumption. But 405 00:22:15,440 --> 00:22:17,879 Speaker 7: we're at about two and a half percent, a little 406 00:22:17,880 --> 00:22:20,400 Speaker 7: bit stronger than I think is sustainable in the long run, 407 00:22:20,440 --> 00:22:21,800 Speaker 7: but not a blowout number. 408 00:22:21,880 --> 00:22:24,160 Speaker 3: David got to run, David miracle, Thank you so much 409 00:22:24,200 --> 00:22:26,360 Speaker 3: for that briefund Gold and Sacks and to me the headline, 410 00:22:26,359 --> 00:22:30,040 Speaker 3: there is a sprightly nominal GDP even out in to 411 00:22:30,160 --> 00:22:42,639 Speaker 3: next year. Long ago and far away. You had to 412 00:22:42,640 --> 00:22:46,080 Speaker 3: read Robert Lacy. I believe it was three or four 413 00:22:46,080 --> 00:22:51,480 Speaker 3: books in Saudi Arabia. You had to read various others 414 00:22:51,520 --> 00:22:53,800 Speaker 3: out of England, and then there was a more modern 415 00:22:53,800 --> 00:22:57,600 Speaker 3: book by ellen Wald Saudi Inc. And all I know 416 00:22:57,880 --> 00:23:01,359 Speaker 3: is right now my head is spinning simply because time 417 00:23:01,400 --> 00:23:03,960 Speaker 3: has moved on, and I'm not sure the Royal Family 418 00:23:04,000 --> 00:23:07,520 Speaker 3: of Saudi Arabia is the same as the royal family 419 00:23:08,000 --> 00:23:10,560 Speaker 3: that I think I knew of Saudi Arabia, or at 420 00:23:10,600 --> 00:23:13,120 Speaker 3: least what David Lean gave us and Lawrence of Arabia. 421 00:23:13,160 --> 00:23:15,760 Speaker 3: Ellen Wall joins us the book is the one volume 422 00:23:15,840 --> 00:23:20,080 Speaker 3: Saudi Yank. She's with the Atlantic Council on Energy. Ellen. 423 00:23:20,200 --> 00:23:22,240 Speaker 3: Just as simple as I can put it, Who is 424 00:23:22,280 --> 00:23:26,320 Speaker 3: the new Royal family of Saudi Arabia? And are they 425 00:23:26,400 --> 00:23:27,080 Speaker 3: our ally? 426 00:23:28,359 --> 00:23:31,240 Speaker 1: That's a really good question. I would say, in some 427 00:23:31,280 --> 00:23:33,720 Speaker 1: ways they're very different, but in other ways they're very 428 00:23:33,800 --> 00:23:36,480 Speaker 1: much the same. Are they our ally? I think the 429 00:23:36,520 --> 00:23:39,960 Speaker 1: answer to that is no. I would say they're probably 430 00:23:39,960 --> 00:23:43,440 Speaker 1: more of a strategic partner. But I think that Saudi 431 00:23:43,440 --> 00:23:48,159 Speaker 1: Arabia sees America as their ally, and that can complicate 432 00:23:48,240 --> 00:23:49,480 Speaker 1: things a lot. 433 00:23:49,800 --> 00:23:52,520 Speaker 5: So I know there was or there's a deal in 434 00:23:52,560 --> 00:23:55,560 Speaker 5: the works between the US and Saudi, you know, encompassing 435 00:23:55,640 --> 00:23:58,119 Speaker 5: a lot of technological issues, a lot of economic issues. 436 00:23:58,160 --> 00:24:00,600 Speaker 5: Can you summarize kind of what the discussion are between 437 00:24:00,680 --> 00:24:02,680 Speaker 5: the US and the Saudis right now? 438 00:24:03,440 --> 00:24:06,640 Speaker 1: Yeah, this was the really kind of big story earlier 439 00:24:06,680 --> 00:24:12,280 Speaker 1: in the week that this US Saudi weapons diplomatic economic 440 00:24:12,400 --> 00:24:16,040 Speaker 1: deal is nearing the finish line. And essentially it seems 441 00:24:16,080 --> 00:24:19,760 Speaker 1: like the US's goal is really to limit Chinese influence 442 00:24:19,960 --> 00:24:24,359 Speaker 1: in terms of Saudi technology. So they don't want Saudi 443 00:24:24,400 --> 00:24:29,119 Speaker 1: Arabia using Chinese technology and their sensitive networks and things 444 00:24:29,160 --> 00:24:32,080 Speaker 1: like that. So the US is going to provide as 445 00:24:32,359 --> 00:24:38,040 Speaker 1: they call investments in ai Wantum computing. And yeah, also. 446 00:24:38,240 --> 00:24:39,879 Speaker 3: And I don't mean to interrupt, but this is the 447 00:24:39,920 --> 00:24:43,360 Speaker 3: first thing I dealt with this morning. So basically, we 448 00:24:43,400 --> 00:24:47,000 Speaker 3: want to tell Saudi Arabia what to do with Chinese technology. 449 00:24:47,560 --> 00:24:49,760 Speaker 3: Do we want to tell them they can't drive Chinese 450 00:24:49,920 --> 00:24:50,920 Speaker 3: electric vehicles? 451 00:24:52,080 --> 00:24:54,320 Speaker 1: That's a really good question. I think that they probably 452 00:24:54,440 --> 00:24:59,080 Speaker 1: rather that Saudi's drive Rivian or not sorry, not Rivian 453 00:24:59,119 --> 00:25:02,680 Speaker 1: out Lucid did vehicles, which the PIF has a big 454 00:25:02,720 --> 00:25:06,720 Speaker 1: stake in that company. It's really unlikely that people in 455 00:25:06,720 --> 00:25:10,200 Speaker 1: Saudi Arabia are going to be driving evs, considering the 456 00:25:10,400 --> 00:25:12,760 Speaker 1: same they drive really long distances. 457 00:25:13,240 --> 00:25:15,040 Speaker 5: I even got that right on the A Little World 458 00:25:15,040 --> 00:25:18,399 Speaker 5: test exactly, all right, So so Ellen's let's talk about it. 459 00:25:18,440 --> 00:25:20,960 Speaker 5: Brought out to kind of the global energy markets here, 460 00:25:20,960 --> 00:25:24,520 Speaker 5: we've had both WTI and Brent Crew pull back a 461 00:25:24,560 --> 00:25:27,760 Speaker 5: little bit from recent highs here. What's your kind of 462 00:25:27,800 --> 00:25:30,280 Speaker 5: sense of where oil may be heading here and in 463 00:25:30,320 --> 00:25:30,840 Speaker 5: your future? 464 00:25:31,520 --> 00:25:33,399 Speaker 1: Yeah, this is a really good question, and does in 465 00:25:33,520 --> 00:25:37,040 Speaker 1: some respects depend on on Saudi Arabia. It does seem 466 00:25:37,119 --> 00:25:41,480 Speaker 1: like there's some economic weaknesses, some indications of economic weaknesses. 467 00:25:41,480 --> 00:25:44,199 Speaker 1: We're looking at a lot of kind of some weaknesses 468 00:25:44,200 --> 00:25:48,000 Speaker 1: in diesel and middle dissolates, which can be a troubling 469 00:25:48,080 --> 00:25:52,720 Speaker 1: economic sign. In the past that has definitely signaled oncoming 470 00:25:53,000 --> 00:25:54,240 Speaker 1: economic weakness. 471 00:25:53,840 --> 00:25:55,399 Speaker 7: But on the other hand, it may not. 472 00:25:55,800 --> 00:25:58,639 Speaker 1: We're looking at strong summer demand, though I think that 473 00:25:58,760 --> 00:26:02,359 Speaker 1: once summer demand and you know, kind of rolls through, 474 00:26:03,119 --> 00:26:05,439 Speaker 1: it's really quite questionable what we're going to be seeing 475 00:26:05,560 --> 00:26:09,920 Speaker 1: in the fall. Globally, obviously, China matters a lot, and 476 00:26:10,520 --> 00:26:13,240 Speaker 1: it's kind of unclear. There are sides of weaknesses, but 477 00:26:13,280 --> 00:26:15,320 Speaker 1: then again, you never know what the Chinese government is 478 00:26:15,359 --> 00:26:18,840 Speaker 1: going to do, and there's still importing a lot of oil. 479 00:26:19,440 --> 00:26:22,840 Speaker 1: When it comes to kind of oil prices going up 480 00:26:22,880 --> 00:26:24,959 Speaker 1: and down, I think we're seeing a pullback from a 481 00:26:24,960 --> 00:26:28,320 Speaker 1: lot of the risk premium that had come on back 482 00:26:28,320 --> 00:26:31,359 Speaker 1: when it looked like Iran and Israel might kind of 483 00:26:31,520 --> 00:26:34,600 Speaker 1: destroy each other. I think that traders really thought there 484 00:26:34,640 --> 00:26:36,840 Speaker 1: was a real possibility of war. But when you look 485 00:26:36,880 --> 00:26:39,639 Speaker 1: at kind of the facts on the ground, neither of 486 00:26:39,640 --> 00:26:42,040 Speaker 1: those countries is equipped to fight a war against each 487 00:26:42,080 --> 00:26:45,080 Speaker 1: other at all. So I think it was much more 488 00:26:45,200 --> 00:26:47,239 Speaker 1: likely that we were going to see kind of a 489 00:26:47,240 --> 00:26:51,080 Speaker 1: cooling of tensions as opposed to continuing escalation. 490 00:26:51,800 --> 00:26:55,520 Speaker 5: So Ellen, I guess OPEK next meeting around June. 491 00:26:55,560 --> 00:26:55,879 Speaker 3: First. 492 00:26:56,200 --> 00:26:58,000 Speaker 5: I'm just not sure how much we should all pay 493 00:26:58,000 --> 00:27:01,040 Speaker 5: attention to OPEK these days. Are you going to approach it? 494 00:27:01,800 --> 00:27:04,800 Speaker 1: That's a good point, especially because when I think when 495 00:27:04,800 --> 00:27:07,560 Speaker 1: OPEK is doing its job well, we don't really need 496 00:27:07,600 --> 00:27:10,520 Speaker 1: to pay attention to it because their job is really 497 00:27:10,560 --> 00:27:14,119 Speaker 1: to keep prices stable, and actually prices have been fairly stable. 498 00:27:14,160 --> 00:27:17,600 Speaker 1: They've really kept a lid on production. They've managed to, 499 00:27:17,800 --> 00:27:19,720 Speaker 1: you know, to kind of keep everyone in line. But 500 00:27:19,800 --> 00:27:22,480 Speaker 1: I do think that this US Saudi deal could have 501 00:27:22,560 --> 00:27:25,159 Speaker 1: some impact because there is a sense that if it 502 00:27:25,240 --> 00:27:28,119 Speaker 1: goes through, the Biden administration is going to be expecting 503 00:27:28,200 --> 00:27:31,640 Speaker 1: the Saudis to increase production so that oil prices come 504 00:27:31,720 --> 00:27:34,679 Speaker 1: down by the time November rolls around, and I'm not 505 00:27:34,680 --> 00:27:38,159 Speaker 1: sure that the Saudis are really prepared or interested in 506 00:27:38,200 --> 00:27:41,880 Speaker 1: doing that unless they get this full deal. So's it's 507 00:27:41,880 --> 00:27:45,679 Speaker 1: going to be quite interesting. I think they might increase 508 00:27:45,760 --> 00:27:49,639 Speaker 1: production in age two, or at least for one quarter 509 00:27:49,800 --> 00:27:51,960 Speaker 1: if things are really tight for the summer. 510 00:27:52,200 --> 00:27:55,240 Speaker 3: I mean, you don't do you don't do a market call. 511 00:27:55,760 --> 00:27:57,800 Speaker 3: I get it. We're not doing market economics. You know, 512 00:27:57,840 --> 00:27:59,879 Speaker 3: we're not trying to game out a barrel of oil. 513 00:28:00,520 --> 00:28:03,600 Speaker 3: But we've gone ninety to eighty. As you say, do 514 00:28:03,760 --> 00:28:07,239 Speaker 3: you have in your head a geopolitics a dynamic of 515 00:28:07,280 --> 00:28:11,200 Speaker 3: supply and demand that gets you to seventy dollars rent? 516 00:28:11,320 --> 00:28:15,520 Speaker 3: Or dare I say six zero sixty dollars rent? 517 00:28:17,280 --> 00:28:21,600 Speaker 1: I think that's really tough in the current inflationary area 518 00:28:21,640 --> 00:28:24,439 Speaker 1: where we are because a lot we always think of 519 00:28:24,520 --> 00:28:28,199 Speaker 1: oil prices as causing inflation, but inflation also acts on 520 00:28:28,240 --> 00:28:31,840 Speaker 1: oil prices. So we're talking about rise and costs in 521 00:28:31,920 --> 00:28:36,320 Speaker 1: all aspects of oil production. Plus we've now got a 522 00:28:36,560 --> 00:28:41,400 Speaker 1: very much consolidated US shale industry which is not going 523 00:28:41,480 --> 00:28:45,760 Speaker 1: to re enter this kind of produce that all costs time. 524 00:28:45,840 --> 00:28:48,720 Speaker 1: So I really don't think that unless we see some 525 00:28:48,840 --> 00:28:53,160 Speaker 1: kind of economic collapse or recession, I don't think that 526 00:28:53,280 --> 00:28:56,560 Speaker 1: there are the conditions in terms of supply to put 527 00:28:56,640 --> 00:28:59,920 Speaker 1: us back into that sixty barrel rate. 528 00:29:00,240 --> 00:29:02,600 Speaker 3: Just for a moment there, Ellen Walt sounded like Emerita 529 00:29:02,680 --> 00:29:05,680 Speaker 3: send you know I mean, I mean, it's just great 530 00:29:05,680 --> 00:29:09,480 Speaker 3: market oil nomics with Ellen. Ellen, thank you so much. 531 00:29:09,520 --> 00:29:11,800 Speaker 3: We look forward to the next volume of Saudi Ink. 532 00:29:11,920 --> 00:29:14,520 Speaker 3: It's dude, to say the least with all the changes. 533 00:29:14,560 --> 00:29:19,040 Speaker 3: Ellen Wald with the Atlantic Council a wonderful book, really 534 00:29:19,040 --> 00:29:23,600 Speaker 3: can't say enough and also Transversial Consulting founder. This is 535 00:29:23,640 --> 00:29:28,720 Speaker 3: a Bloomberg Surveillance podcast, bringing you the best in economics, finance, investment, 536 00:29:28,920 --> 00:29:32,520 Speaker 3: and international relations. You can also watch the show live 537 00:29:32,760 --> 00:29:35,320 Speaker 3: on YouTube. 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