1
00:00:04,760 --> 00:00:08,080
Speaker 1: Welcome to the Bloomberg P and L Podcast. I'm pim Fox.

2
00:00:08,119 --> 00:00:11,200
Speaker 1: Along with my co host Lisa Abramowitz. Each day we

3
00:00:11,280 --> 00:00:14,480
Speaker 1: bring you the most important, noteworthy, and useful interviews for

4
00:00:14,520 --> 00:00:16,880
Speaker 1: you and your money, whether at the grocery store or

5
00:00:16,920 --> 00:00:20,680
Speaker 1: the trading floor. Find the Bloomberg P L Podcast on iTunes,

6
00:00:20,840 --> 00:00:30,480
Speaker 1: SoundCloud and at Bloomberg dot com. What would twenty dollar

7
00:00:30,680 --> 00:00:33,760
Speaker 1: a barrel oil look like? What would it do to

8
00:00:34,000 --> 00:00:37,040
Speaker 1: companies around the world? Well? Bill smed is the chief

9
00:00:37,080 --> 00:00:40,919
Speaker 1: executive officer and the chief investment officer of Smede Capital Management,

10
00:00:40,960 --> 00:00:43,680
Speaker 1: helping to manage more than two point to billion dollars

11
00:00:43,680 --> 00:00:47,519
Speaker 1: in customer assets based in Seattle, and he's here to

12
00:00:47,520 --> 00:00:51,400
Speaker 1: tell us more. Bill, always a pleasure. So a barrel,

13
00:00:51,440 --> 00:00:53,640
Speaker 1: go ahead, give us how we get there? And then

14
00:00:53,760 --> 00:00:56,560
Speaker 1: what does the world look like if a barrel is

15
00:00:56,640 --> 00:01:00,400
Speaker 1: really real? Well, the first thing to understand that twenty

16
00:01:00,400 --> 00:01:05,320
Speaker 1: dollar barrel number is in two thousand and fourteen dollars. Uh,

17
00:01:05,400 --> 00:01:09,720
Speaker 1: So as the years go by, uh, we're using constant

18
00:01:09,760 --> 00:01:12,520
Speaker 1: dollars to look back at a hundred and sixty years

19
00:01:12,560 --> 00:01:17,080
Speaker 1: of participation in in in of oil in mainstream economies

20
00:01:17,640 --> 00:01:21,600
Speaker 1: and it's spent about seventy percent of the time during

21
00:01:21,640 --> 00:01:24,640
Speaker 1: the last hundred and sixty years around twenty dollars a

22
00:01:24,720 --> 00:01:28,120
Speaker 1: barrel adjusted for two thousand and fourteen prices. Now we

23
00:01:28,160 --> 00:01:30,360
Speaker 1: know that it's been as high as a hundred forty

24
00:01:30,400 --> 00:01:32,759
Speaker 1: five and two thousand and eight in terms of two

25
00:01:32,800 --> 00:01:34,800
Speaker 1: thousand and eight prices, and we know that it it

26
00:01:35,240 --> 00:01:36,960
Speaker 1: has been all over the place in those a hundred

27
00:01:37,000 --> 00:01:40,960
Speaker 1: sixty years, but using a constant dollar two thousand fourteen,

28
00:01:41,480 --> 00:01:44,440
Speaker 1: most of the time it's spent around twenty and when

29
00:01:44,440 --> 00:01:47,560
Speaker 1: it goes wild, uh, it gets around a hundred and

30
00:01:47,600 --> 00:01:50,120
Speaker 1: ten or a hundred and twenty adjusted for two thousand

31
00:01:50,160 --> 00:01:52,960
Speaker 1: fourteen prices, which ironically is where we were in two

32
00:01:53,000 --> 00:01:57,160
Speaker 1: thousand fourteen at about a hundred fifteen dollars a barrel bill.

33
00:01:57,320 --> 00:02:00,240
Speaker 1: This is a really compelling point to me, especially because

34
00:02:00,360 --> 00:02:03,480
Speaker 1: last year we were talking about deflation. This year we're

35
00:02:03,520 --> 00:02:06,800
Speaker 1: talking about reflation, and a lot of it boils down

36
00:02:06,880 --> 00:02:10,160
Speaker 1: to the price of oil. It's giving people the impression, uh,

37
00:02:10,200 --> 00:02:13,520
Speaker 1: and and the reality that prices are increasing. Do you

38
00:02:13,600 --> 00:02:16,320
Speaker 1: think that if oil prices were to fall back down

39
00:02:16,400 --> 00:02:18,880
Speaker 1: to twenty dollars a barrel, people would start talking about

40
00:02:18,880 --> 00:02:23,440
Speaker 1: deflation again, Well, sure of course they would. I think.

41
00:02:23,639 --> 00:02:26,160
Speaker 1: You know, we're looking at very long duration, you know,

42
00:02:26,240 --> 00:02:29,799
Speaker 1: ten year oriented things, and so a way to look

43
00:02:29,840 --> 00:02:33,320
Speaker 1: at this is in the next year. Something could cause

44
00:02:33,400 --> 00:02:36,000
Speaker 1: oil to go higher in the next year. But if

45
00:02:36,040 --> 00:02:38,360
Speaker 1: you look at the hundred and sixty year chart, every

46
00:02:38,400 --> 00:02:42,040
Speaker 1: one of those rallies in in in the oil bear markets, which,

47
00:02:42,080 --> 00:02:45,799
Speaker 1: by the way, oil has spent the time in bear

48
00:02:45,919 --> 00:02:49,320
Speaker 1: markets and only of the time in bowl markets if

49
00:02:49,360 --> 00:02:52,040
Speaker 1: you look back at a hundred sixty years. So the

50
00:02:52,120 --> 00:02:54,000
Speaker 1: thing I noticed in the easy way for me to

51
00:02:54,000 --> 00:02:57,359
Speaker 1: think about this is what is the investor sentiment. I've

52
00:02:57,400 --> 00:03:01,400
Speaker 1: never seen so many investors, both profess stional and individual

53
00:03:01,400 --> 00:03:07,000
Speaker 1: investors so anxious to see something work right everyone, Oh gosh,

54
00:03:07,440 --> 00:03:09,960
Speaker 1: the oil stocks are cheap from historical basis. Look at

55
00:03:10,000 --> 00:03:12,760
Speaker 1: all the oil they've gotten the ground, YadA, YadA, YadA. Well,

56
00:03:13,040 --> 00:03:16,160
Speaker 1: the people in Los Angeles are driving their their hybrid

57
00:03:16,160 --> 00:03:19,720
Speaker 1: and electric cars and and uh you know they faced

58
00:03:19,880 --> 00:03:24,480
Speaker 1: real stark you know, technology realities. It's funny the the

59
00:03:24,639 --> 00:03:27,800
Speaker 1: S and P loves technology and the only place they

60
00:03:27,800 --> 00:03:32,480
Speaker 1: don't trust technology is in the oil market. Expand on that,

61
00:03:32,560 --> 00:03:36,480
Speaker 1: because you've talked about this in the past, and it

62
00:03:36,560 --> 00:03:40,840
Speaker 1: has been verified that we are now pumping the same

63
00:03:40,920 --> 00:03:43,240
Speaker 1: amount of oil out of the ground in the United

64
00:03:43,280 --> 00:03:47,760
Speaker 1: States through the operation of fracking and other techniques, but

65
00:03:47,920 --> 00:03:52,600
Speaker 1: with many fewer rigs. Well, yes, and that's because the

66
00:03:53,960 --> 00:03:57,280
Speaker 1: remember the rig counting. That kind of stuff has to

67
00:03:57,320 --> 00:04:00,200
Speaker 1: do with getting it up and going uh. You know,

68
00:04:00,200 --> 00:04:02,720
Speaker 1: it's like a spaceship. You blast off and then once

69
00:04:02,760 --> 00:04:05,119
Speaker 1: you get into outer space, you're on momentum. The same

70
00:04:05,120 --> 00:04:09,360
Speaker 1: thing with with drilling wells. Once the wells drilled, right,

71
00:04:09,440 --> 00:04:11,480
Speaker 1: then then all you do is have that thing pumping

72
00:04:11,520 --> 00:04:14,400
Speaker 1: it out at the top. So don't confuse those those

73
00:04:14,400 --> 00:04:18,400
Speaker 1: two things, right. That is the eagerness on the part

74
00:04:18,480 --> 00:04:22,000
Speaker 1: of people to uh poke new holes in the ground.

75
00:04:22,160 --> 00:04:24,320
Speaker 1: And we just went through a five to ten year

76
00:04:24,440 --> 00:04:27,120
Speaker 1: era where every Tom, Dick and Harry around the world

77
00:04:27,240 --> 00:04:29,320
Speaker 1: was poking holes in the ground. I remember being in

78
00:04:29,320 --> 00:04:31,880
Speaker 1: London five years ago or four years ago, and the

79
00:04:32,440 --> 00:04:36,640
Speaker 1: fun you know, the London newspaper was talking about fracking

80
00:04:36,680 --> 00:04:39,920
Speaker 1: in northern England. It's like, if they're fracking in northern England,

81
00:04:40,040 --> 00:04:42,200
Speaker 1: they might as well be fracking in California because there

82
00:04:42,200 --> 00:04:44,559
Speaker 1: aren't any places left to poke holes in the ground.

83
00:04:44,600 --> 00:04:48,480
Speaker 1: All right, well, I like I like that expression. Uh,

84
00:04:48,560 --> 00:04:51,000
Speaker 1: but what does this mean going forward for your investments?

85
00:04:51,040 --> 00:04:53,600
Speaker 1: Because if you have twenty dollars a barrel of oil

86
00:04:54,240 --> 00:04:56,920
Speaker 1: at some point in the future, it doesn't really necessarily

87
00:04:56,960 --> 00:05:00,080
Speaker 1: guide you right now. What should people be doing you

88
00:05:00,160 --> 00:05:04,440
Speaker 1: prepare for the potential for this price swoon? Well that's

89
00:05:04,440 --> 00:05:07,560
Speaker 1: a great question, because, uh, you know, we're we're bottom

90
00:05:07,640 --> 00:05:11,000
Speaker 1: up stock pickers. And the thing that we notice as

91
00:05:11,160 --> 00:05:14,960
Speaker 1: an overlay, the most important overlay, is just the sheer

92
00:05:15,040 --> 00:05:17,520
Speaker 1: demographic movement that occur in the United States. Over the

93
00:05:17,560 --> 00:05:20,600
Speaker 1: next fifteen years. We're going to become a society dominated

94
00:05:20,600 --> 00:05:22,880
Speaker 1: by thirty five to forty four year old people that

95
00:05:23,040 --> 00:05:26,200
Speaker 1: have two kids on average. So what it means is

96
00:05:26,279 --> 00:05:29,280
Speaker 1: it would be extremely favorable over a ten year period

97
00:05:29,560 --> 00:05:33,240
Speaker 1: if you're forming a lot of households, and these households

98
00:05:33,279 --> 00:05:35,960
Speaker 1: get formed in a place they can afford to raise

99
00:05:35,960 --> 00:05:40,200
Speaker 1: a family, that that that gasoline prices would be moderate. Right.

100
00:05:40,360 --> 00:05:43,360
Speaker 1: In other words, if gas prices just stayed around two

101
00:05:43,400 --> 00:05:46,400
Speaker 1: or two fifty a gallon around the country during the

102
00:05:46,440 --> 00:05:50,000
Speaker 1: next ten years, that would be very favorable on this

103
00:05:50,520 --> 00:05:53,320
Speaker 1: booming number of thirty five to forty four year olds,

104
00:05:53,360 --> 00:05:58,719
Speaker 1: So household formation is very bullish if if commodity prices

105
00:05:58,800 --> 00:06:02,320
Speaker 1: don't go wild, it's very favorable for that. Secondly, in

106
00:06:02,360 --> 00:06:06,320
Speaker 1: the S and P five, the market is completely infatuated

107
00:06:06,360 --> 00:06:10,880
Speaker 1: with technology stocks, and technology stocks make up We count

108
00:06:10,880 --> 00:06:15,200
Speaker 1: Amazon and Netflix and technology so about twenty of the index.

109
00:06:15,440 --> 00:06:18,039
Speaker 1: The only time that's ever been bigger was in ninety

110
00:06:18,080 --> 00:06:21,480
Speaker 1: eight ninety nine, and that was a disaster. For example,

111
00:06:21,640 --> 00:06:26,400
Speaker 1: in ninety nine, UH, the technology sector was seven percent

112
00:06:26,480 --> 00:06:28,839
Speaker 1: of the S and P. And by the way, Microsoft

113
00:06:28,920 --> 00:06:32,839
Speaker 1: was a big time glamour stock already by by so,

114
00:06:32,839 --> 00:06:38,280
Speaker 1: so the the markets here are in this weird conundrum

115
00:06:38,360 --> 00:06:42,679
Speaker 1: where professionals are super bullish, including bullish. The value guys

116
00:06:42,680 --> 00:06:45,040
Speaker 1: are just bullish as all get out on oil, and

117
00:06:45,080 --> 00:06:47,200
Speaker 1: then the growth guys are just as bullish as all

118
00:06:47,200 --> 00:06:51,479
Speaker 1: get out on technology. And John Maynard Keane's UH says

119
00:06:51,520 --> 00:06:54,680
Speaker 1: that victory, security, and success go to the minority and

120
00:06:54,680 --> 00:06:57,880
Speaker 1: never to the majority. So UH, you got to kind

121
00:06:57,880 --> 00:06:59,640
Speaker 1: of pick your way, So go ahead and pick your

122
00:06:59,640 --> 00:07:02,840
Speaker 1: way through this. Give us the detail, give us some names. Well, well,

123
00:07:02,880 --> 00:07:04,560
Speaker 1: first of all, we like the home builders, so we

124
00:07:04,600 --> 00:07:09,279
Speaker 1: own NVR, and UH we own Lenar and Uh, the

125
00:07:09,400 --> 00:07:13,200
Speaker 1: SMP has point one three percent of the index and

126
00:07:13,280 --> 00:07:17,560
Speaker 1: home builders. Uh, just as an example, they've got two

127
00:07:18,160 --> 00:07:20,880
Speaker 1: in in tech and they've got point one three percent.

128
00:07:21,000 --> 00:07:23,280
Speaker 1: So if homebuilders do well the next ten years is

129
00:07:23,360 --> 00:07:26,480
Speaker 1: these people age. Uh, SMP is gonna make no money

130
00:07:26,520 --> 00:07:28,960
Speaker 1: from it, or hardly any money from it. We we

131
00:07:28,960 --> 00:07:32,400
Speaker 1: we like the things that the market just hates. Uh.

132
00:07:32,640 --> 00:07:37,480
Speaker 1: We're gently tiptoeing around beginning to buy in the anti

133
00:07:37,600 --> 00:07:40,680
Speaker 1: Amazon world. Right In other words, you know which of

134
00:07:40,720 --> 00:07:45,040
Speaker 1: the retailers are going to survive? Uh? So Uh, you know,

135
00:07:45,080 --> 00:07:47,440
Speaker 1: we own Nordstrom, and we think they have a future

136
00:07:47,480 --> 00:07:50,520
Speaker 1: once people settle in on whatever pattern there is and

137
00:07:50,520 --> 00:07:54,440
Speaker 1: they get over this fascination with buying something online and

138
00:07:54,480 --> 00:07:57,320
Speaker 1: having it delivered. You know, once that gets to be five, six,

139
00:07:57,320 --> 00:07:59,160
Speaker 1: seven years old, it's not going to be quite as

140
00:07:59,160 --> 00:08:02,200
Speaker 1: exciting as it is uh right now. And then lastly,

141
00:08:03,280 --> 00:08:07,520
Speaker 1: there's this innate fear that the wonderful economics in healthcare

142
00:08:07,600 --> 00:08:11,000
Speaker 1: are just going to implode. And so you know, we

143
00:08:11,120 --> 00:08:14,160
Speaker 1: still like we we you know, we like the pharmaceuticals,

144
00:08:14,160 --> 00:08:17,880
Speaker 1: we like the am gens, and and very dangerously have

145
00:08:18,000 --> 00:08:21,040
Speaker 1: been waiting our way into express scripts, because that seems

146
00:08:21,080 --> 00:08:24,840
Speaker 1: to be, you know, the most hated stock in America lately.

147
00:08:25,240 --> 00:08:27,560
Speaker 1: Thank you so much. Bill Smeaede, Chief executive Officer and

148
00:08:27,600 --> 00:08:30,920
Speaker 1: chief investment officer. It's SMAD Capital Management, which oversees two

149
00:08:31,000 --> 00:08:46,280
Speaker 1: point two billion dollars. It's based in Seattle. Well, you

150
00:08:46,280 --> 00:08:48,680
Speaker 1: know all these brahmins. We've been talking about a US

151
00:08:48,920 --> 00:08:52,439
Speaker 1: border tax, and of course one of the industries that

152
00:08:52,520 --> 00:08:55,600
Speaker 1: has been highlighted by President Trump in regards to a

153
00:08:55,640 --> 00:08:58,800
Speaker 1: border tax is the automobile industry. And we've got a

154
00:08:58,840 --> 00:09:02,920
Speaker 1: Chris Writer, here's our European Transports editor joining us from

155
00:09:03,080 --> 00:09:05,440
Speaker 1: Bery Lynn to tell us a little bit more. And

156
00:09:05,520 --> 00:09:09,280
Speaker 1: he's got some additional info because of a new study

157
00:09:09,400 --> 00:09:14,440
Speaker 1: that was just completed and it has some rather useful facts,

158
00:09:14,679 --> 00:09:17,960
Speaker 1: or at least the proposed facts about the cost of

159
00:09:18,000 --> 00:09:20,680
Speaker 1: this tax. Chris, great to have you with us, as always,

160
00:09:20,920 --> 00:09:24,000
Speaker 1: just detail exactly who put the study together and what

161
00:09:24,200 --> 00:09:28,199
Speaker 1: are some of their most important findings. Yeah. Well, the

162
00:09:28,880 --> 00:09:31,719
Speaker 1: study was put together by a consulting firm based out

163
00:09:31,720 --> 00:09:34,400
Speaker 1: of Munich, um pretty well connected and respected within the

164
00:09:34,440 --> 00:09:38,480
Speaker 1: auto industry. It's called Roland Berger Um. And so they're

165
00:09:38,559 --> 00:09:41,920
Speaker 1: they're findings basically say that the backlash for the border

166
00:09:42,000 --> 00:09:44,959
Speaker 1: tax would do more harm than good essentially. I mean,

167
00:09:45,080 --> 00:09:48,560
Speaker 1: the headline figure is that that across the board that

168
00:09:48,920 --> 00:09:51,840
Speaker 1: UM US consumers can kind of expect costs of vehicles

169
00:09:51,880 --> 00:09:55,520
Speaker 1: to rise by about three thousand, three hundred dollars per

170
00:09:55,640 --> 00:09:58,240
Speaker 1: vehicle UM and that you know, that's the cost of

171
00:09:58,280 --> 00:10:00,920
Speaker 1: the vehicles, you know, for the for the industry itself,

172
00:10:00,960 --> 00:10:03,880
Speaker 1: and so you know, the impact of the industry trying

173
00:10:03,880 --> 00:10:06,120
Speaker 1: to trying to absorb those costs and pass on some

174
00:10:06,280 --> 00:10:09,280
Speaker 1: of the consumers UM, you know, could push the whole

175
00:10:09,360 --> 00:10:13,480
Speaker 1: the entire industry into UM into losses. So, Chris, this

176
00:10:13,559 --> 00:10:17,320
Speaker 1: is a pretty dire warning basically saying that every auto

177
00:10:17,360 --> 00:10:20,800
Speaker 1: company in the world will suffer if these proposals are

178
00:10:20,800 --> 00:10:23,800
Speaker 1: put into effect. Can we take a look at the

179
00:10:23,880 --> 00:10:27,160
Speaker 1: actual agency providing the study data, I mean, are they

180
00:10:27,200 --> 00:10:30,400
Speaker 1: normally do they normally come from a certain place when

181
00:10:30,559 --> 00:10:32,280
Speaker 1: they put this out, and what was sort of their

182
00:10:32,320 --> 00:10:36,120
Speaker 1: motivation behind doing this study? Now? Yeah, well, I mean

183
00:10:36,360 --> 00:10:38,480
Speaker 1: I think that's a fair question because I mean, ruland

184
00:10:38,480 --> 00:10:41,719
Speaker 1: Berger UM they're well connected in Germany, they're like very

185
00:10:41,720 --> 00:10:44,319
Speaker 1: well respected. But they also because in Germany they're also

186
00:10:44,440 --> 00:10:47,440
Speaker 1: pretty close to the German automakers, um to be sure.

187
00:10:47,520 --> 00:10:49,480
Speaker 1: And so I mean you're getting like a view of

188
00:10:49,520 --> 00:10:53,000
Speaker 1: the world like based on sort of the European auto

189
00:10:53,040 --> 00:10:55,679
Speaker 1: ins the German automakers, which are you know, even according

190
00:10:55,720 --> 00:10:58,280
Speaker 1: to their own this study, is that um that they

191
00:10:58,320 --> 00:11:00,320
Speaker 1: will be hit the most. That the cause to the

192
00:11:00,360 --> 00:11:03,959
Speaker 1: European automakers, Um, it's going to be six thousand, four

193
00:11:04,040 --> 00:11:08,000
Speaker 1: hundred dollars per vehicle, whereas the Detroit automakers obviously hit

194
00:11:08,040 --> 00:11:10,760
Speaker 1: a lot less, like the Big three in Detroit, um,

195
00:11:10,800 --> 00:11:13,640
Speaker 1: just by fift dollars. So you see that like sort

196
00:11:13,640 --> 00:11:16,640
Speaker 1: of a European skew here a bit on the study

197
00:11:16,840 --> 00:11:20,000
Speaker 1: that you know, they're trying to like head off, you know, um,

198
00:11:20,000 --> 00:11:24,200
Speaker 1: this sort of impact on their automakers there, right, So Chris,

199
00:11:24,200 --> 00:11:26,920
Speaker 1: somebody could argue, well, you know, if they're pretty closely

200
00:11:26,960 --> 00:11:29,600
Speaker 1: tied to the German automakers, they're going to try to

201
00:11:30,240 --> 00:11:33,720
Speaker 1: paint this proposal as catastrophic for the entire industry around

202
00:11:33,760 --> 00:11:36,440
Speaker 1: the world, including the United States. Have there been other

203
00:11:36,520 --> 00:11:40,120
Speaker 1: studies done that edify some of their claims that are

204
00:11:40,360 --> 00:11:44,560
Speaker 1: done away from this potential I don't want to say bias,

205
00:11:44,640 --> 00:11:48,160
Speaker 1: but this potential leaning. UM, well, I think like that.

206
00:11:48,240 --> 00:11:50,560
Speaker 1: Everybody's got an opinion about something like this, you know,

207
00:11:50,640 --> 00:11:52,760
Speaker 1: so it depends on what kind of you know, what

208
00:11:52,840 --> 00:11:54,319
Speaker 1: side of they camp here on. I mean, the other

209
00:11:54,320 --> 00:11:57,920
Speaker 1: side will say that, um, that the tax incentives um,

210
00:11:58,120 --> 00:12:01,439
Speaker 1: lower tax rates, you know, more consumer power will eventually

211
00:12:01,760 --> 00:12:05,080
Speaker 1: you know, give consumers like more ability to spend money.

212
00:12:05,120 --> 00:12:07,640
Speaker 1: You know. That's the other side coin and that UM,

213
00:12:07,679 --> 00:12:11,360
Speaker 1: you know that it's supposed to create manufacturing jobs, encourage

214
00:12:11,400 --> 00:12:14,640
Speaker 1: more manufacturing within the US to avoid these kinds of taxes,

215
00:12:14,679 --> 00:12:18,280
Speaker 1: to lower the costs. Um. So that's that's the argument.

216
00:12:18,320 --> 00:12:20,800
Speaker 1: You know, that's the other side of the argument. So, um,

217
00:12:20,840 --> 00:12:22,440
Speaker 1: you know, kind of depends on which side of the

218
00:12:22,480 --> 00:12:26,200
Speaker 1: camp you want. You want to um you prefer, you know,

219
00:12:26,240 --> 00:12:28,440
Speaker 1: and and and to what kind of credence you're going

220
00:12:28,480 --> 00:12:30,320
Speaker 1: to give a study like this, Chris, I was trying

221
00:12:30,360 --> 00:12:34,000
Speaker 1: to find out the number of automobiles produced in the

222
00:12:34,080 --> 00:12:40,000
Speaker 1: United States by foreign owned or headquartered automobile companies. It

223
00:12:40,200 --> 00:12:44,360
Speaker 1: is significant if you have a seventeen million annual run rate.

224
00:12:44,480 --> 00:12:47,319
Speaker 1: Let's say that's just the number of automobiles sold I

225
00:12:47,400 --> 00:12:52,240
Speaker 1: guess in the United States. Uh, if we stay on

226
00:12:52,360 --> 00:12:56,280
Speaker 1: that trajectory, Is there any insight into what might happen

227
00:12:56,320 --> 00:12:59,920
Speaker 1: to those operations in the US, because whether it's high

228
00:13:00,520 --> 00:13:03,560
Speaker 1: or Mercedes or BMW, I mean, the list goes on

229
00:13:03,600 --> 00:13:06,000
Speaker 1: and on. I think Hanta in fact, actually produces more

230
00:13:06,040 --> 00:13:08,320
Speaker 1: automobiles in the United States and it does in Japan.

231
00:13:09,679 --> 00:13:12,679
Speaker 1: But yeah, I mean, I think that the problem is

232
00:13:12,800 --> 00:13:15,280
Speaker 1: essentially like about whether there's going to be like a

233
00:13:15,400 --> 00:13:18,520
Speaker 1: boon and uu um auto manufacturing as a result of this,

234
00:13:18,559 --> 00:13:22,040
Speaker 1: as a result of the um um a border tax

235
00:13:22,080 --> 00:13:24,160
Speaker 1: and any kind of restrictions, is that there's really no

236
00:13:24,160 --> 00:13:26,559
Speaker 1: no growth in the US market anymore. I mean, it's

237
00:13:26,600 --> 00:13:28,840
Speaker 1: like where we're at now. It's seventeen million is basically

238
00:13:28,880 --> 00:13:31,480
Speaker 1: the cap. You know, it's basically peaked, and so you

239
00:13:31,520 --> 00:13:33,760
Speaker 1: can't you know, I mean, as you know, the industry

240
00:13:33,840 --> 00:13:36,440
Speaker 1: is doing well already. It doesn't need a lot of

241
00:13:36,480 --> 00:13:41,160
Speaker 1: extra help from for border tax well, right, you know,

242
00:13:41,200 --> 00:13:43,719
Speaker 1: And there's certain there's certain rationales in that, like just

243
00:13:44,040 --> 00:13:46,560
Speaker 1: like the low cost vehicles like just can't be made

244
00:13:46,679 --> 00:13:49,640
Speaker 1: like you know, at like US labor rates, you know,

245
00:13:49,679 --> 00:13:51,839
Speaker 1: they're made someplace else. And also the interconnection of the

246
00:13:52,000 --> 00:13:54,720
Speaker 1: entire auto industry where these parts come from all around

247
00:13:54,720 --> 00:13:56,800
Speaker 1: the globe and then maybe get assembled in the US,

248
00:13:56,880 --> 00:13:59,200
Speaker 1: or maybe US parts get assembled in Mexico or wherever.

249
00:13:59,480 --> 00:14:02,040
Speaker 1: That it's so interconnected that like just putting a border

250
00:14:02,080 --> 00:14:04,360
Speaker 1: up in one place doesn't really solve the problem because

251
00:14:04,400 --> 00:14:07,560
Speaker 1: it just it just redistributes the cost. Chris Writer, I

252
00:14:07,600 --> 00:14:11,080
Speaker 1: really appreciate your joining us right now to talk about this,

253
00:14:11,200 --> 00:14:15,280
Speaker 1: because it is clearly a huge concern for automakers around

254
00:14:15,320 --> 00:14:18,320
Speaker 1: the world. To the fact that people are actually creating

255
00:14:18,320 --> 00:14:20,480
Speaker 1: these studies and coming up with estimates is telling in

256
00:14:20,480 --> 00:14:24,920
Speaker 1: and of itself. Chris Writer, European transports editor for Bloomberg News,

257
00:14:25,000 --> 00:14:41,800
Speaker 1: speaking with US from Berlin. We have heard a lot

258
00:14:41,920 --> 00:14:44,840
Speaker 1: about the wall that the US is ostensibly going to

259
00:14:44,920 --> 00:14:48,960
Speaker 1: build on the border with Mexico, but we are just

260
00:14:49,120 --> 00:14:52,480
Speaker 1: now getting some details about what it may look like.

261
00:14:52,520 --> 00:14:56,880
Speaker 1: On February, there was a pre solicitation notice posted on

262
00:14:57,080 --> 00:15:01,440
Speaker 1: the Federal Business Opportunities website, and responses poured in from many,

263
00:15:01,560 --> 00:15:05,640
Speaker 1: including Bill Sandbrook, CEO of US Concrete, who joins US

264
00:15:05,880 --> 00:15:09,640
Speaker 1: now from Ulis, Texas. Bill uh first of all, can

265
00:15:09,680 --> 00:15:12,560
Speaker 1: you just give us a sense of where this project

266
00:15:12,840 --> 00:15:16,480
Speaker 1: is in terms of the planning stages and the details

267
00:15:16,480 --> 00:15:19,960
Speaker 1: that are coming out. Surely it's a good morning. The

268
00:15:20,400 --> 00:15:26,000
Speaker 1: as you said, initial solicitation was posted on February and

269
00:15:26,040 --> 00:15:28,080
Speaker 1: subsequently in the last couple of days there's been some

270
00:15:28,160 --> 00:15:34,960
Speaker 1: modifications to it requesting concept conceptual designs for thirty feet

271
00:15:35,040 --> 00:15:40,280
Speaker 1: high concrete wall segments UH and those designs have to

272
00:15:40,360 --> 00:15:44,840
Speaker 1: be submitted by March twenty. Out of those designs, there

273
00:15:44,840 --> 00:15:49,400
Speaker 1: will be prototype selected and then final bidding with pricing

274
00:15:49,560 --> 00:15:53,440
Speaker 1: needs to be received by May three. What would be

275
00:15:53,640 --> 00:15:57,400
Speaker 1: the estimated time to complete such a barrier, Well, the

276
00:15:57,560 --> 00:15:59,640
Speaker 1: entire the entire barriers. You have to be seen how

277
00:15:59,720 --> 00:16:02,920
Speaker 1: much of that very long border is going to be concrete,

278
00:16:02,960 --> 00:16:06,360
Speaker 1: because the solicitation was very explicit that there would be

279
00:16:06,400 --> 00:16:11,000
Speaker 1: other materials also UM providing some of that border protection,

280
00:16:11,040 --> 00:16:16,040
Speaker 1: including fencing, some redundancy of electronic monitoring, and obviously there's

281
00:16:16,600 --> 00:16:21,040
Speaker 1: large bodies of water and rivers and mountains, so it's

282
00:16:21,160 --> 00:16:24,480
Speaker 1: very difficult to say, you know how long an entire

283
00:16:24,640 --> 00:16:28,560
Speaker 1: wall structure where wall barrier would take to build. Bill,

284
00:16:28,600 --> 00:16:30,480
Speaker 1: do you have a sense of what the process is

285
00:16:30,520 --> 00:16:33,920
Speaker 1: from here? I mean, yes, the government is actively soliciting

286
00:16:34,320 --> 00:16:38,880
Speaker 1: proposals from businesses and prices that a potential project would cost.

287
00:16:39,400 --> 00:16:40,880
Speaker 1: But do you have a sense of what would be

288
00:16:40,880 --> 00:16:44,360
Speaker 1: required on the government's side to get something like this

289
00:16:44,480 --> 00:16:48,000
Speaker 1: done from a budget perspective as well as even the

290
00:16:48,000 --> 00:16:52,800
Speaker 1: planned perspective. Well, the budget perspective, I think the administration

291
00:16:53,000 --> 00:16:56,560
Speaker 1: and member members of the Congress of Senate have to

292
00:16:56,600 --> 00:16:59,840
Speaker 1: work on the funding mechanism. But all along they said

293
00:16:59,840 --> 00:17:01,640
Speaker 1: that it's not going to be an obstacle, so I'm

294
00:17:01,680 --> 00:17:05,600
Speaker 1: confident that money will be procured from some source or

295
00:17:05,720 --> 00:17:10,240
Speaker 1: or reshuffled around within the current existing budget. Um As

296
00:17:10,280 --> 00:17:13,560
Speaker 1: far as the government process, they're going to have to

297
00:17:13,600 --> 00:17:18,000
Speaker 1: be analysis of these prototypes by by government procurement people,

298
00:17:18,119 --> 00:17:22,000
Speaker 1: selection of the prototypes, republished, what the actual bid documents

299
00:17:22,000 --> 00:17:24,320
Speaker 1: are gonna look like, so people know exactly what they're bidding,

300
00:17:24,560 --> 00:17:26,240
Speaker 1: and then it's going to have to be an analysis

301
00:17:26,280 --> 00:17:29,200
Speaker 1: of those bids that come in. As far as business,

302
00:17:29,240 --> 00:17:31,280
Speaker 1: as you said, there's been a lot of interests in

303
00:17:31,280 --> 00:17:35,360
Speaker 1: the solicitation, both from contractors who would actually build the structure,

304
00:17:35,720 --> 00:17:38,800
Speaker 1: to material suppliers like myself who would be working with

305
00:17:38,840 --> 00:17:43,440
Speaker 1: subcontractors or the general contractors giving pricing for various prototypes

306
00:17:43,440 --> 00:17:46,600
Speaker 1: and various amounts of our material in various remote parts

307
00:17:46,640 --> 00:17:51,160
Speaker 1: of the country so that a qualified bid could be submitted. Bill,

308
00:17:51,200 --> 00:17:54,040
Speaker 1: I gotta say, you know, I appreciate your work because

309
00:17:54,040 --> 00:17:56,119
Speaker 1: I saw some of your guys at work yesterday at

310
00:17:56,160 --> 00:17:58,760
Speaker 1: LaGuardia Airport. I know that that's just one of the

311
00:17:58,760 --> 00:18:02,560
Speaker 1: many contracts you have. Maybe you could give people a

312
00:18:02,600 --> 00:18:06,560
Speaker 1: little bit of detail about the importance of the New

313
00:18:06,640 --> 00:18:09,840
Speaker 1: York metropolitan region as a market, because you've also made

314
00:18:09,840 --> 00:18:13,520
Speaker 1: some acquisitions here in high profile projects residential and so on,

315
00:18:13,800 --> 00:18:16,000
Speaker 1: and then also take us out to what you're doing

316
00:18:16,040 --> 00:18:19,320
Speaker 1: with Google uh and your operations on the West Coast

317
00:18:19,400 --> 00:18:24,040
Speaker 1: in California. Sure, thank you. Both of those areas are

318
00:18:24,160 --> 00:18:27,760
Speaker 1: very very important to us concrete. They both have very

319
00:18:27,840 --> 00:18:33,560
Speaker 1: vibrant underlying economies and very very vibrant construction dynamics existing

320
00:18:33,600 --> 00:18:36,479
Speaker 1: in in both those metro areas. As you said, we

321
00:18:36,520 --> 00:18:39,320
Speaker 1: are doing the LaGuardia Airport right now. We made a

322
00:18:39,359 --> 00:18:41,879
Speaker 1: series of acquisitions over the last two years, and with

323
00:18:41,960 --> 00:18:45,280
Speaker 1: the largest manufacturer of concrete in the Five Boroughs, we

324
00:18:45,320 --> 00:18:48,720
Speaker 1: have seventeen concrete plants and over four hundred mixer trucks

325
00:18:48,840 --> 00:18:51,080
Speaker 1: in the Five Boroughs in any given day and We're

326
00:18:51,160 --> 00:18:54,080
Speaker 1: very bullish about New York because the Port Authority of

327
00:18:54,119 --> 00:18:57,360
Speaker 1: New York and New Jersey's ten year Planning UH document

328
00:18:57,440 --> 00:19:02,200
Speaker 1: came out recently with significant signific vacant infrastructure spent within

329
00:19:02,320 --> 00:19:06,120
Speaker 1: that document. In California, we do very large work. We've

330
00:19:06,160 --> 00:19:09,720
Speaker 1: done the forty Niners Stadium in Santa Clara, We've done

331
00:19:09,720 --> 00:19:12,800
Speaker 1: the Oakland Bay Bridge, and we have been successful in

332
00:19:12,840 --> 00:19:15,840
Speaker 1: getting the procurement for the the Google complex, which is

333
00:19:16,160 --> 00:19:19,160
Speaker 1: over a hundred thousand yards of concrete and UH. It's

334
00:19:19,160 --> 00:19:22,400
Speaker 1: a testament to our to our teams, especially in California,

335
00:19:23,080 --> 00:19:26,600
Speaker 1: with the complexity of the designs for specifications that a

336
00:19:27,320 --> 00:19:29,880
Speaker 1: forward thinking company like Google would have for their campus,

337
00:19:30,200 --> 00:19:34,640
Speaker 1: and we're able to supply that that very specialized concrete. Bill,

338
00:19:34,680 --> 00:19:38,120
Speaker 1: I want to talk about the supply of workers. If

339
00:19:38,160 --> 00:19:41,439
Speaker 1: there is this development of a wall on the border

340
00:19:41,480 --> 00:19:44,600
Speaker 1: with Mexico, will you be able to find sufficient workers

341
00:19:44,640 --> 00:19:46,679
Speaker 1: and are you able to find sufficient workers as is

342
00:19:46,880 --> 00:19:50,840
Speaker 1: right now for your current projects. It's a very interesting

343
00:19:50,920 --> 00:19:53,920
Speaker 1: question and we work on this all the time, depending

344
00:19:53,960 --> 00:19:57,200
Speaker 1: on how busy the underlying economy is. Our our major

345
00:19:57,960 --> 00:20:03,080
Speaker 1: un employment umbers exists within our ready mixed truck drivers

346
00:20:03,400 --> 00:20:05,520
Speaker 1: they have to be skilled, they have to have some

347
00:20:05,560 --> 00:20:08,919
Speaker 1: credentials with a commercial driver's license, and it is a

348
00:20:08,960 --> 00:20:13,399
Speaker 1: tight market in in Texas right now, specifically in the

349
00:20:13,520 --> 00:20:16,320
Speaker 1: Dallas metroplex. The oil fields are a little bit slower

350
00:20:16,359 --> 00:20:20,000
Speaker 1: the Eagle Ford which is in South Texas, and the demand,

351
00:20:20,119 --> 00:20:22,840
Speaker 1: the labor demand isn't as significant as it in Dallas.

352
00:20:23,080 --> 00:20:24,639
Speaker 1: We have to work on it every day and we

353
00:20:24,640 --> 00:20:26,840
Speaker 1: would have to be very creative in how we procure

354
00:20:26,880 --> 00:20:30,520
Speaker 1: truck drivers and make sure that they have the ability

355
00:20:30,560 --> 00:20:33,439
Speaker 1: to live and work in some remote areas of the

356
00:20:33,480 --> 00:20:36,040
Speaker 1: country going forward. I want to thank you very much

357
00:20:36,080 --> 00:20:39,200
Speaker 1: for spending time with us. Bill Sandbrook is the chief

358
00:20:39,240 --> 00:20:55,920
Speaker 1: executive of us A. Concrete treasuries in the US are

359
00:20:56,000 --> 00:20:59,160
Speaker 1: down for a twelve straight day. That is the longest

360
00:20:59,160 --> 00:21:02,640
Speaker 1: stretch it's two thousand and twelve or more. Perspective on this,

361
00:21:03,280 --> 00:21:04,960
Speaker 1: I want to bring in Tom Tucci ahead of US

362
00:21:05,000 --> 00:21:08,920
Speaker 1: Treasure treating at CIBC World Markets Corporate. First, I want

363
00:21:08,920 --> 00:21:13,000
Speaker 1: to start with just the magnitude of the move. It

364
00:21:13,160 --> 00:21:15,920
Speaker 1: is not that huge. It's not like the losses are

365
00:21:16,000 --> 00:21:20,160
Speaker 1: so significant, and yet it's really the momentum that we're

366
00:21:20,160 --> 00:21:24,240
Speaker 1: seeing with yields going higher and bond values going lower.

367
00:21:24,400 --> 00:21:26,399
Speaker 1: What do you make of that? Well, I think the

368
00:21:26,880 --> 00:21:29,680
Speaker 1: pace of the sell off has been slow because it's

369
00:21:29,720 --> 00:21:32,000
Speaker 1: been very well advertised that the FAT is going to

370
00:21:32,080 --> 00:21:35,960
Speaker 1: be raising rates most likely in March. That's priced in

371
00:21:36,560 --> 00:21:39,479
Speaker 1: um and positioning is very well set up for that,

372
00:21:39,560 --> 00:21:42,200
Speaker 1: so you it's not like the markets being caught off guard.

373
00:21:42,240 --> 00:21:44,040
Speaker 1: And I think that's the reason why you haven't seen

374
00:21:44,080 --> 00:21:46,960
Speaker 1: an acceleration or repricing of the market so much higher

375
00:21:47,000 --> 00:21:49,720
Speaker 1: yields as time goes on and we unfold some more

376
00:21:49,760 --> 00:21:52,919
Speaker 1: information than the market has the ability to price in

377
00:21:53,000 --> 00:21:56,760
Speaker 1: more tightenings fiscal policy and the like, and that could

378
00:21:56,800 --> 00:21:59,119
Speaker 1: move rates higher. Well, Tom, you know, I was speaking

379
00:21:59,119 --> 00:22:01,600
Speaker 1: with somebody this more Ng who said that a lot

380
00:22:01,720 --> 00:22:06,400
Speaker 1: of this is simply a symptom of the increasing influence

381
00:22:06,400 --> 00:22:09,800
Speaker 1: of algorithmic traders in treasuries, that there is this momentum

382
00:22:09,840 --> 00:22:13,520
Speaker 1: trade now that's more prevalent in this U S Government

383
00:22:13,520 --> 00:22:15,160
Speaker 1: bond market than it used to be. Do you agree

384
00:22:15,200 --> 00:22:17,880
Speaker 1: with that? Well, I think the algorithm trading is has

385
00:22:17,920 --> 00:22:21,280
Speaker 1: a heavy influence on a day to day market making business. UM.

386
00:22:21,320 --> 00:22:24,040
Speaker 1: As far as the bigger moves concerned, I'm not so sure,

387
00:22:24,119 --> 00:22:25,960
Speaker 1: that's the same factor, but I think on a day

388
00:22:26,000 --> 00:22:28,000
Speaker 1: to day, minute to minute that I think they have

389
00:22:28,080 --> 00:22:31,040
Speaker 1: a huge influence on the treasury market. Well, maybe that

390
00:22:31,040 --> 00:22:33,000
Speaker 1: gets into my next question, and Tom, maybe I just

391
00:22:33,040 --> 00:22:35,399
Speaker 1: need a little education. I'm curious, is there any idea,

392
00:22:35,640 --> 00:22:37,639
Speaker 1: Is there any way to know how much money or

393
00:22:37,680 --> 00:22:40,800
Speaker 1: how many orders does it take to actually cause a

394
00:22:40,880 --> 00:22:43,800
Speaker 1: decent shift in price? Now, I think you know, your

395
00:22:43,840 --> 00:22:48,080
Speaker 1: biggest example would have been the day after the election. UM.

396
00:22:48,119 --> 00:22:53,400
Speaker 1: That's when algorithm trading suffers because there's there's business that's

397
00:22:53,400 --> 00:22:57,360
Speaker 1: happening UM on a large scale UM, and it dwarfs

398
00:22:57,400 --> 00:23:00,520
Speaker 1: what's happening on the market making side of things. And UH,

399
00:23:00,640 --> 00:23:03,920
Speaker 1: markets tend to reprice in those environments. So I think

400
00:23:03,920 --> 00:23:06,959
Speaker 1: it has to do with what the fundamentals are and

401
00:23:07,000 --> 00:23:10,960
Speaker 1: what the actual size of the transactions are in the marketplace.

402
00:23:10,960 --> 00:23:14,240
Speaker 1: When when the markets relatively quiet and orderly, algorithm trading

403
00:23:14,440 --> 00:23:17,320
Speaker 1: is very successful. UM, when you start to get some

404
00:23:17,359 --> 00:23:20,639
Speaker 1: information that's new to the market and positions are off sides,

405
00:23:21,040 --> 00:23:22,520
Speaker 1: then it's a little bit of a different story, and

406
00:23:22,560 --> 00:23:26,520
Speaker 1: those same machines back away from being aggressive market makers overall,

407
00:23:26,560 --> 00:23:28,919
Speaker 1: and that that leads to the bigger moves. So, Tom,

408
00:23:29,320 --> 00:23:31,720
Speaker 1: what do you hear from clients? Is your since the

409
00:23:31,760 --> 00:23:34,560
Speaker 1: moves that we've been seeing over the past two weeks

410
00:23:34,880 --> 00:23:37,960
Speaker 1: are being driven by fund managers who are changing their

411
00:23:38,000 --> 00:23:42,400
Speaker 1: allocation or is it changing or are the moves resulting

412
00:23:42,440 --> 00:23:45,600
Speaker 1: really from this sort of market making activity now? I

413
00:23:45,640 --> 00:23:49,280
Speaker 1: think specifically it's it's portfolio managers of trying to re

414
00:23:49,560 --> 00:23:53,840
Speaker 1: end treasuries, trying to rebalance themselves for a higher rate structure.

415
00:23:54,240 --> 00:23:56,840
Speaker 1: As I said, we have basically a hundred percent priced

416
00:23:56,880 --> 00:23:58,960
Speaker 1: in for a March rate hike, and after today we

417
00:23:59,119 --> 00:24:02,320
Speaker 1: basically have to full rate hikes priced in by September

418
00:24:02,359 --> 00:24:05,000
Speaker 1: of this year. So what ends up happening from here

419
00:24:05,080 --> 00:24:09,000
Speaker 1: is just like everybody else, myself, you, We're all looking

420
00:24:09,000 --> 00:24:10,840
Speaker 1: to see what's going to come out of the administration

421
00:24:10,960 --> 00:24:13,560
Speaker 1: as far as fiscal stimulus is concerned. And I would

422
00:24:13,680 --> 00:24:16,119
Speaker 1: argue that the next move in the market will be

423
00:24:16,200 --> 00:24:21,960
Speaker 1: dependent on whether that that fiscal stimulus comes sooner or later. Um,

424
00:24:21,960 --> 00:24:23,919
Speaker 1: what happens when the market has this big of a

425
00:24:23,920 --> 00:24:27,600
Speaker 1: short base waiting for lower prices higher yields, If they

426
00:24:27,640 --> 00:24:31,000
Speaker 1: don't get a strong slew of information, then they tend

427
00:24:31,000 --> 00:24:32,399
Speaker 1: to cover and that's when we start to get a

428
00:24:32,440 --> 00:24:34,600
Speaker 1: little bit of rebound and a bounce in the marketplace.

429
00:24:34,960 --> 00:24:37,959
Speaker 1: So I think the next trade from here, we can

430
00:24:38,000 --> 00:24:41,119
Speaker 1: expect to see a strong non farm payroll number correlated

431
00:24:41,119 --> 00:24:44,280
Speaker 1: with today's ADP number that we saw, so we should

432
00:24:44,280 --> 00:24:47,359
Speaker 1: look for Friday's number to be relatively firm. Obviously, the

433
00:24:47,480 --> 00:24:50,400
Speaker 1: hour the average hourly earnings number will be a key

434
00:24:50,400 --> 00:24:52,919
Speaker 1: component as far as what the Fed has been watching.

435
00:24:52,920 --> 00:24:55,520
Speaker 1: They were they're looking for wage growth. Wage growth will

436
00:24:55,520 --> 00:24:58,360
Speaker 1: continue to pave the way for them to remove accommodation.

437
00:24:58,760 --> 00:25:01,119
Speaker 1: But I still think that over roll, it's really about

438
00:25:01,119 --> 00:25:03,760
Speaker 1: what's going to come out of the administration. Whether it's infrastructure,

439
00:25:03,840 --> 00:25:06,800
Speaker 1: whether it's tax policy. Those are the things that will

440
00:25:06,880 --> 00:25:09,119
Speaker 1: drive the next move, the next leg in the market.

441
00:25:09,840 --> 00:25:11,760
Speaker 1: What kind of time frame are we talking about? And

442
00:25:11,760 --> 00:25:13,600
Speaker 1: I wondering if you could tell us if your strategy,

443
00:25:13,840 --> 00:25:16,160
Speaker 1: you know, what would it be if you thought they're

444
00:25:16,160 --> 00:25:17,879
Speaker 1: not going to be able to get much done before

445
00:25:17,880 --> 00:25:20,240
Speaker 1: the August recess or they might get one thing done

446
00:25:20,280 --> 00:25:23,800
Speaker 1: before August. Yeah, it seems to me that with the

447
00:25:23,880 --> 00:25:27,520
Speaker 1: delay that's happened in this Obamacare repeal and replace, it's

448
00:25:27,560 --> 00:25:29,480
Speaker 1: kind of put everything on the back burner. Now, if

449
00:25:29,520 --> 00:25:33,080
Speaker 1: you listen to the Treasury secretary, he talked about August

450
00:25:33,240 --> 00:25:35,159
Speaker 1: was a time frame in which they're becoming with some

451
00:25:35,240 --> 00:25:38,080
Speaker 1: kind of tax reform. So I would imagine it's going

452
00:25:38,119 --> 00:25:40,879
Speaker 1: to move into the latter half of the year, but

453
00:25:41,000 --> 00:25:44,240
Speaker 1: specifically into the fall time frame before we see anything

454
00:25:44,240 --> 00:25:48,240
Speaker 1: of any consequence as it relates to this, Tom, what's

455
00:25:48,240 --> 00:25:50,000
Speaker 1: your what's your best guest? Do you think that we're

456
00:25:50,040 --> 00:25:52,760
Speaker 1: going to see a rally at some point in bonds

457
00:25:53,280 --> 00:25:56,040
Speaker 1: as people sort of reassess the possibility for fiscal stimulus.

458
00:25:56,359 --> 00:25:58,800
Speaker 1: I think that's a potential just from the standpoint that

459
00:25:58,960 --> 00:26:01,160
Speaker 1: you know, there's still is a demand end for yield overall.

460
00:26:01,200 --> 00:26:04,159
Speaker 1: But I think that rally is more it's not based

461
00:26:04,200 --> 00:26:07,320
Speaker 1: on real genuine demand for the long term. I think

462
00:26:07,359 --> 00:26:10,000
Speaker 1: people are starting to get defensive realizing that the fete

463
00:26:10,080 --> 00:26:13,680
Speaker 1: is in motion and will be so um and that

464
00:26:13,880 --> 00:26:15,719
Speaker 1: some other things are happening around the world as well.

465
00:26:15,760 --> 00:26:17,480
Speaker 1: I mean, you look at what's happening in the bond market.

466
00:26:17,520 --> 00:26:20,119
Speaker 1: You know, we we've been on this show multiple times

467
00:26:20,119 --> 00:26:22,440
Speaker 1: in the last ten years talking about how the bude

468
00:26:22,480 --> 00:26:25,439
Speaker 1: market has carried a bid into treasuries that been in

469
00:26:25,440 --> 00:26:27,359
Speaker 1: the bone market is starting to fade as well, so

470
00:26:27,440 --> 00:26:31,119
Speaker 1: that anchor that's been helping out the treasury market um

471
00:26:31,240 --> 00:26:33,520
Speaker 1: is starting to loosen as well. So I think there's

472
00:26:33,560 --> 00:26:36,879
Speaker 1: some things in here that would generate, you know, expectations

473
00:26:36,920 --> 00:26:39,400
Speaker 1: for higher rates to be met. Yes, of course, there

474
00:26:39,400 --> 00:26:41,800
Speaker 1: could be a rally in any one of these days

475
00:26:41,840 --> 00:26:43,959
Speaker 1: where we could get some shortcovering, but I think overall

476
00:26:44,000 --> 00:26:46,240
Speaker 1: we're looking at a general trend of upward interest rates.

477
00:26:46,440 --> 00:26:48,520
Speaker 1: All right, Thanks very much. Tom Tucci's the head of

478
00:26:48,600 --> 00:26:58,399
Speaker 1: US Treasury trading at CIBC World Markets. Thanks for listening

479
00:26:58,480 --> 00:27:01,440
Speaker 1: to the Bloomberg P and L podcast. You can subscribe

480
00:27:01,480 --> 00:27:06,080
Speaker 1: and listen to interviews at iTunes, SoundCloud, or whatever podcast

481
00:27:06,119 --> 00:27:09,159
Speaker 1: platform you prefer. I'm pim Fox. I'm out there on

482
00:27:09,160 --> 00:27:12,400
Speaker 1: Twitter at pim Fox. I'm out there on Twitter at

483
00:27:12,520 --> 00:27:15,520
Speaker 1: Lisa Abramo. It's one before the podcast. You can always

484
00:27:15,600 --> 00:27:17,680
Speaker 1: catch us worldwide on Bloomberg Radio.