WEBVTT - Surveillance: Fed Downshift with Emanuel 0:00:05.120 --> 0:00:09.200 Welcome to the Bloomberg Surveillance Podcast. I'm Tom Keane, along 0:00:09.200 --> 0:00:12.720 with Jonathan Ferrell and Lisa A. Brawmowitz jay Lee, we 0:00:12.840 --> 0:00:16.760 bring you insight from the best and economics, finance, investment, 0:00:17.079 --> 0:00:22.440 and international relations. To find Bloomberg Surveillance on Apple Podcast, Suncloud, 0:00:22.800 --> 0:00:26.280 Bloomberg dot com and of course on the Bloomberg terminal. 0:00:29.320 --> 0:00:31.400 Jinn and Emmanuel with a surround a table from a 0:00:31.600 --> 0:00:34.440 court Julian. Wonderful to have you with us. Proper introductions, sir, 0:00:34.600 --> 0:00:36.960 which you deserve. What a runny we've just seen in 0:00:37.000 --> 0:00:40.159 October spose over to November. This morning. We asked the 0:00:40.159 --> 0:00:42.720 guest a little bit earlier, Eric Freedom, what he thought 0:00:42.760 --> 0:00:44.519 of it, and he said he'd faith this. Do you 0:00:44.560 --> 0:00:49.760 agree with that? Now? Uh? From our point of view, Uh, Look, 0:00:49.880 --> 0:00:53.199 the next week or two could be very choppy. Obviously, 0:00:53.200 --> 0:00:57.360 we've got the FED tomorrow, you've got the elections next Tuesday, 0:00:57.960 --> 0:01:00.520 and there's likely going to be back in fourth as 0:01:00.560 --> 0:01:02.680 we've seen in the last couple of days. But from 0:01:02.680 --> 0:01:07.760 our point of view, look, we know the FED is 0:01:07.800 --> 0:01:10.320 about the downshift. I don't want to call it plause 0:01:10.600 --> 0:01:13.120 I don't want to get whatever. But we know the 0:01:13.280 --> 0:01:16.319 trajectory is going to change and the market is getting 0:01:16.319 --> 0:01:19.760 comfortable with that. At the same time, just like the 0:01:19.840 --> 0:01:23.800 July earning season, we know the numbers are coming down, okay, 0:01:23.840 --> 0:01:27.280 and it didn't matter stocks in in July, and it 0:01:27.319 --> 0:01:31.640 doesn't matter now because frankly, people have been for the 0:01:31.680 --> 0:01:36.280 most part underinvested. And the last thing, the stock bond correlation. 0:01:36.520 --> 0:01:40.080 You can't get away from that. The UK set the 0:01:40.160 --> 0:01:43.600 line in the sand when we resolve the political issues 0:01:43.959 --> 0:01:47.240 that at least stopped the parabolic move up and yields 0:01:47.280 --> 0:01:49.160 and that supportive for stock. We've got you for the 0:01:49.160 --> 0:01:51.280 whole half hour, which is a real pleasure. I want 0:01:51.280 --> 0:01:52.920 to go into some of the machinery of what you're 0:01:52.960 --> 0:01:55.080 doing day to day that everybody on wall streets treat. 0:01:55.120 --> 0:01:57.080 We'll do that later. Right now, you have a single 0:01:57.120 --> 0:02:00.640 statistic the morning it keeps coming up. Revenues keep taking 0:02:00.760 --> 0:02:04.880 up on your earnings edge nine point five. What's the 0:02:04.960 --> 0:02:08.400 glide path of revenues you see with your optimism and 0:02:08.440 --> 0:02:11.600 to say June of next year, well again, look, we 0:02:11.720 --> 0:02:14.840 know the story is the story that none of us 0:02:14.960 --> 0:02:18.200 as adults have a faced faced in our investing lifetime, 0:02:18.400 --> 0:02:21.080 and the revenues are being driven by the ability to 0:02:21.120 --> 0:02:26.720 pass on prices in an inflationary Absolutely, absolutely, Look, the 0:02:26.800 --> 0:02:30.440 glide path is going to moderate. The question is can 0:02:30.760 --> 0:02:34.320 margins be maintained. They've slipped, there's likely going to be 0:02:34.360 --> 0:02:37.680 some more slippage, but can we maintain And that's really 0:02:37.720 --> 0:02:42.000 the question uh confronting corporate America to politicians want to 0:02:42.040 --> 0:02:44.520 see those profit margins maintained as the federal reserve. In 0:02:44.560 --> 0:02:46.800 other words, the more that profit margins are maintained, the 0:02:46.840 --> 0:02:49.840 higher rates will go at a time when there is 0:02:49.880 --> 0:02:53.480 the lack of sensitivity right now between monetary policy and 0:02:53.520 --> 0:02:58.000 the market response. Look, this again is part of the narrative. 0:02:58.000 --> 0:03:01.919 There are a number of ways the policy titans and 0:03:01.919 --> 0:03:05.080 and certainly and again this is part of the dialogue 0:03:05.120 --> 0:03:08.359 we've seen in the last twenty four hours in pointing 0:03:08.360 --> 0:03:11.960 out the energy industry and in particular that we do 0:03:12.040 --> 0:03:15.960 want to see margins come in. But again that this 0:03:16.040 --> 0:03:19.640 is why the challenge of the soft Ish landing is 0:03:19.720 --> 0:03:22.480 so intense, because there's a lot of things that have 0:03:22.600 --> 0:03:24.919 to go right. Triple overage, all cash fun I have 0:03:24.960 --> 0:03:28.680 no tax losses. Okay, other people have a lot of 0:03:28.760 --> 0:03:31.440 tax losses. How do you play the shell game of 0:03:31.480 --> 0:03:36.800 tax lost candidates into January three. So we are very 0:03:36.800 --> 0:03:40.400 strongly convicted in the idea that you don't want to 0:03:40.400 --> 0:03:44.760 take money out of the market here. Okay, look, could 0:03:44.760 --> 0:03:48.240 we go lower at some point next year, absolutely, but 0:03:48.360 --> 0:03:52.040 that is contingent on We've moved from contingent on a 0:03:52.080 --> 0:03:55.920 recession to contingent on a deep recession. Boom Radio. You 0:03:55.920 --> 0:03:57.920 don't see this, But to put a manual over here 0:03:57.960 --> 0:03:59.880 with me, because Lisa just didn't want to sit next 0:03:59.880 --> 0:04:03.440 to that much optimism to constructive to constructive, at least 0:04:03.480 --> 0:04:06.240 we'll said that the consensus view that has shifted so much, Judy, 0:04:06.320 --> 0:04:08.320 and we've gone from the fence not going to hike 0:04:08.360 --> 0:04:10.720 too much too. It's not gonna hike fifty, it's not 0:04:10.760 --> 0:04:13.320 gonna hike seventy five, or maybe it won't hike seventy 0:04:13.320 --> 0:04:15.440 five again, they're set to do a fourth seventy five 0:04:15.440 --> 0:04:17.839 basis point hike. When it came to the recession, it 0:04:17.880 --> 0:04:22.200 was no recession. That's recession but short and shallow. We're 0:04:22.200 --> 0:04:24.679 a long way from where we started the year, Julian, 0:04:24.839 --> 0:04:27.120 and we've been wrong, wrong, wrong, the whole way through. 0:04:29.360 --> 0:04:33.839 What gives you any confidence about three. Look, we do 0:04:33.960 --> 0:04:36.320 have to understand the fact that when you have a 0:04:36.400 --> 0:04:40.720 year like two, both the left tail and the right tail, 0:04:40.760 --> 0:04:42.840 and you know we talked about options planning at every 0:04:42.920 --> 0:04:46.960 car I s I are very large and frankly, when 0:04:46.960 --> 0:04:48.320 you look at it, and this is one of our 0:04:48.360 --> 0:04:52.320 favorite graphs, the bond stock return quadrant. It's been the 0:04:52.360 --> 0:04:57.760 lower left in an unprecedented nature over the last sixty years. Two. 0:04:58.000 --> 0:05:01.200 But actually the upside of that is the year after 0:05:01.360 --> 0:05:05.360 the only other time it was lower left, you had 0:05:05.400 --> 0:05:08.520 a massive return here for both bonds and stocks. And 0:05:08.560 --> 0:05:12.039 again we respect the concept of seasonality. It's not the 0:05:12.120 --> 0:05:14.240 be all and end all in the markets, but we 0:05:14.360 --> 0:05:17.839 all know the data that supports good years after mid time. 0:05:17.880 --> 0:05:19.600 Can we give him in a shout out? Just quickly? 0:05:19.839 --> 0:05:23.760 Did you say the latest institutional investor survey at him 0:05:23.839 --> 0:05:27.000 and top economist, a title he has earned forty two 0:05:27.040 --> 0:05:33.719 times in the history of the equity racess. I'm sorry, 0:05:33.960 --> 0:05:36.960 forty two fifty one. Well, this is what you're going. 0:05:37.000 --> 0:05:39.200 And you know he's smart enough to hire Michael Chew 0:05:39.279 --> 0:05:41.920 and Julian Emmanuel. You work for Chew, right, That's how 0:05:41.960 --> 0:05:45.760 it works. We'll talk. But the basic idea here John 0:05:45.760 --> 0:05:48.160 has been doing it since C. J. Lawrence, And here's 0:05:48.160 --> 0:05:52.360 how he does it. Granularity. No one is as granular 0:05:52.920 --> 0:05:55.880 is Edward Hyman. He's got a black pencil. He's ruined 0:05:55.920 --> 0:05:58.000 three of his light Grace shoot suits. He's got the 0:05:58.040 --> 0:06:01.200 sharpie thing going. He ruins like a three shoots using 0:06:01.240 --> 0:06:05.120 the sharp uses a black sharpie, and he's got a 0:06:05.360 --> 0:06:09.599 he's looking at railroad crossings in Kansas City. Value. Add 0:06:10.040 --> 0:06:13.000 this is real value. You just take a sharpie and 0:06:13.000 --> 0:06:19.120 you talk about rabbit cross secrets. Yeah, exactly. I had 0:06:19.160 --> 0:06:21.119 a deal once and I had a paragraph on page 0:06:21.160 --> 0:06:23.880 forty two that said, up, I didn't get ed Hyman's literature, 0:06:23.920 --> 0:06:26.359 I wouldn't work there. I was literally give the proper 0:06:26.400 --> 0:06:29.200 shout out, and you just went on around about pencils 0:06:29.200 --> 0:06:43.919 and sharp Pia's Jude Emmanuel the Weekend. Head over to 0:06:43.960 --> 0:06:46.600 our good friend Manace Crowning morning Manus John, thank you 0:06:46.680 --> 0:06:50.719 very much. Yeah, Joimy nive is amatox seeing the Special 0:06:50.760 --> 0:06:54.200 Presidential Coordinator, and what's good to see you in the daby. 0:06:54.640 --> 0:06:56.360 We were just buying some of the presidents on there 0:06:56.360 --> 0:07:02.479 talking about uh, you know, continuing buybacks and dividends would 0:07:02.480 --> 0:07:05.480 perhaps bring the wrath of the wide House upon them 0:07:05.480 --> 0:07:09.200 in terms of taxes. But to speech last night, let's 0:07:09.200 --> 0:07:13.160 talk about last night. The President warned, I'm paraphrasing that 0:07:13.200 --> 0:07:15.000 there's a risk of a windfall tax if you don't 0:07:15.080 --> 0:07:18.280 be invest Is this just political kite find ahead of 0:07:18.320 --> 0:07:22.640 mid terms? Is there any built possibility of windfall taxes? Well, Master, 0:07:22.640 --> 0:07:23.920 first of all, it's great to be here with you 0:07:24.040 --> 0:07:26.920 in uh In Abugabi and I'm Bloomberg. It's it's always great, 0:07:27.640 --> 0:07:30.679 look the president is. This has been a consistent message 0:07:30.720 --> 0:07:36.360 from the President, from the administration asking companies to take 0:07:36.400 --> 0:07:40.120 their profits and invest them back in America, back in 0:07:40.240 --> 0:07:47.000 production and refining. We have been experiencing elevated prices as 0:07:47.000 --> 0:07:51.520 a result of geopolitical dynamics, not because of markets, but 0:07:51.600 --> 0:07:54.720 because we have a war, devastating war in Europe where 0:07:54.760 --> 0:07:57.320 the perpetrator of the war is one of the largest 0:07:57.320 --> 0:07:59.480 oil producers in the world, one of the largest gas 0:07:59.480 --> 0:08:02.160 exporters in the world, and it's using energy as a weapon. 0:08:02.440 --> 0:08:06.040 This has seen a massive increase in prices. Well, of course, 0:08:06.080 --> 0:08:10.280 we're still have a huge economic growth from post COVID 0:08:10.440 --> 0:08:13.720 that is also creating demands growth. So we're telling companies 0:08:14.000 --> 0:08:18.760 make a profit. Hey, your shareholders, but there's a level 0:08:18.800 --> 0:08:21.800 and a limit to how much profit you can tell 0:08:21.800 --> 0:08:24.800 you without investing. You weren't saying not to oil companies 0:08:24.800 --> 0:08:27.040 when oil was at twenty bucks in the United States 0:08:27.040 --> 0:08:29.520 of America. I think I think the point that at 0:08:30.240 --> 0:08:35.720 twenty dollars is when naturally companies don't invest. A hundred dollars, 0:08:35.800 --> 0:08:38.920 ninety dollars is naturally historically when companies do invest. The 0:08:38.960 --> 0:08:41.760 problem now is that they're not doing what they always 0:08:41.920 --> 0:08:45.320 used to do. I'm not here to represent big oil 0:08:45.520 --> 0:08:48.320 and US. I'm here maybe put the problemsation, which is 0:08:49.200 --> 0:08:51.520 people have said to me, you look at this administration's 0:08:51.600 --> 0:08:56.280 guidance to big oil. Day one keystone was bins. We 0:08:56.400 --> 0:09:00.800 have neither discussion about a new taxation format, and we 0:09:00.880 --> 0:09:03.200 have a host of sort of no drilling on on 0:09:03.280 --> 0:09:08.640 federal land. We have various messages which are respectfully schizophrenic. 0:09:08.679 --> 0:09:11.360 How can you plan for five years, ten years, copex 0:09:11.440 --> 0:09:15.160 aim us with schizophrenic policy changes like this? This is 0:09:15.160 --> 0:09:17.319 how it's been described to me. What's your response to that. 0:09:17.640 --> 0:09:19.600 I don't think it's been schizophrenic. I think we've been 0:09:19.679 --> 0:09:23.280 very clear to craft. Look, we're in a we have 0:09:23.360 --> 0:09:26.160 to deal with the short term, medium term, and laun terms. 0:09:26.280 --> 0:09:29.600 We're in a a time when we have to increase 0:09:29.679 --> 0:09:33.400 production because we need to make sure to ensure global 0:09:33.480 --> 0:09:38.440 economic growth. Yes, we have to have reasonably brice affordable 0:09:38.559 --> 0:09:43.480 energy resources oil and gas to meet our goals of 0:09:43.520 --> 0:09:48.280 where we want the world to go. We have to 0:09:48.320 --> 0:09:52.120 accelerate our investments in renewable energy. Those are consistent with 0:09:52.200 --> 0:09:55.880 each other, they're not competing with each other. So investing 0:09:55.960 --> 0:09:58.560 right now, we here's a certainty we're giving oil companies. 0:09:59.400 --> 0:10:01.920 We've said we are going now that we have released 0:10:01.960 --> 0:10:04.760 a hundred and eighty million barrels. Yeah, I've oil onto 0:10:04.800 --> 0:10:07.520 the market from the spr for our national security, and 0:10:07.600 --> 0:10:09.760 just we need to buy it back. We need to 0:10:09.760 --> 0:10:11.840 buy another two hundred million barrels back over the next 0:10:11.880 --> 0:10:15.679 several years, we have said. The President himself has told companies, 0:10:16.400 --> 0:10:18.360 I will get I will tell you what price. I 0:10:18.360 --> 0:10:21.360 will buy it back at seventy dollars or so I 0:10:21.400 --> 0:10:25.080 will start buying back at large amounts. So I will 0:10:25.160 --> 0:10:29.280 provide you with certainty of price to some degree, so 0:10:29.400 --> 0:10:32.160 to enable to answer the questions you've asked, Well, there's 0:10:32.160 --> 0:10:34.040 one way to push a market against you, and that's 0:10:34.080 --> 0:10:36.040 to tell them about what price you want to replenished 0:10:36.040 --> 0:10:38.520 the spr But I know it's a lengthy document and 0:10:38.559 --> 0:10:40.720 I know it has detailed We can we move on, 0:10:40.920 --> 0:10:43.160 which is about the price cap from the United States 0:10:43.200 --> 0:10:46.160 of America. I think the language is an effective and 0:10:46.200 --> 0:10:48.200 a strong level of forty to sixty dollars is what 0:10:48.240 --> 0:10:51.560 I understand. The numbers that's in the Blomberg stories. Do 0:10:51.640 --> 0:10:54.280 you really believe sixty bucks is going to keep Russian 0:10:54.280 --> 0:10:57.480 oil flowing onto the market, because the conversation I've had 0:10:57.480 --> 0:11:00.280 with everybody here, everybody's worried about the sanctions coming to 0:11:00.360 --> 0:11:03.080 bear here in our at home in Europe. To sixty 0:11:03.080 --> 0:11:06.920 bucks keep Russia oil flowing in your mind? So, outside 0:11:06.920 --> 0:11:08.560 of a Bloomberg article, which I would never want to 0:11:08.600 --> 0:11:13.560 argue with Bloomberg, I don't think so. I we are 0:11:13.640 --> 0:11:15.280 going to set the price. When we do that, and 0:11:15.280 --> 0:11:18.160 we'll announce it. I think all these numbers out there 0:11:18.200 --> 0:11:20.719 that are just rumors and leaks that I can tell 0:11:20.720 --> 0:11:23.920 you are not substantiated by reality. Uh, and people should 0:11:23.960 --> 0:11:26.400 just ignore those. I really would hope people would ignore 0:11:26.440 --> 0:11:30.280 those numbers. We are We've always said that our goal 0:11:30.520 --> 0:11:33.400 was to keep the Russian barrels on the market while 0:11:34.720 --> 0:11:38.360 we restrict the revenues to Russia at a point when 0:11:38.400 --> 0:11:41.640 they're using those revenues to finance the war. There's a 0:11:41.640 --> 0:11:44.000 balance here and we have to figure that out. There's 0:11:44.040 --> 0:11:46.280 a difference in the balance between when we were at 0:11:46.280 --> 0:11:48.840 a hundred twenty dollars of arrow versus when we were 0:11:48.840 --> 0:11:51.679 at seventy six dollars of arrow. So we are going 0:11:51.720 --> 0:11:54.640 to have to figure out we're doing that now of 0:11:54.679 --> 0:11:57.040 what the right price is going to be in order 0:11:57.080 --> 0:12:00.040 to make sure that Russia's still incentiviz is so on 0:12:00.080 --> 0:12:04.959 the market while we make sure that they're not overprofiting 0:12:05.760 --> 0:12:08.080 beyond that level. Will it be materially higher than sixty 0:12:08.880 --> 0:12:10.400 I can't tell you what the price is because if 0:12:10.400 --> 0:12:13.080 I say anything now, you're gonna they're gonna have rumors 0:12:13.120 --> 0:12:16.040 again on that. But we look, we get it, We 0:12:16.160 --> 0:12:18.679 understand how the market works, and we want to make 0:12:18.679 --> 0:12:22.520 sure that our goals are achieved to terrify ideal in fact, 0:12:22.920 --> 0:12:25.199 not rumor. And with that in mind, I want to 0:12:25.240 --> 0:12:27.199 understand the potency of the price cap when it comes. 0:12:27.240 --> 0:12:29.760 Because I call up the Indian Oil Ministry yesterday, it's 0:12:29.840 --> 0:12:32.679 very unlikely. The speculation is it's very unlikely Indian China 0:12:32.720 --> 0:12:37.600 to If the biggest customers either for Russian oil will 0:12:37.679 --> 0:12:43.480 sign up, we don't know, but given the price cap, 0:12:43.800 --> 0:12:47.360 it's a fairy impotent proposition if two of the biggest 0:12:47.360 --> 0:12:54.439 customers of Russia won't sign up. I disagree because, um 0:12:54.640 --> 0:12:56.480 the country. What we're telling people, you don't have to 0:12:56.520 --> 0:12:59.800 sign up. It's not you know, a membership. Uh. You 0:13:00.160 --> 0:13:03.120 as long as you are purchasing Russian oil at a 0:13:03.160 --> 0:13:06.720 lower price, that's what we want to achieve. You have 0:13:06.720 --> 0:13:09.920 a market price of brant. Everybody negotiates. You know that 0:13:09.960 --> 0:13:13.960 nobody buys strictly brant. There's all kinds of negotiations. Do 0:13:14.040 --> 0:13:17.040 you really believe that India and China are not going 0:13:17.080 --> 0:13:19.280 to be negotiating and are not already? We know that 0:13:19.320 --> 0:13:21.360 Russian oil is not selling a brant right now. No, 0:13:21.440 --> 0:13:25.160 it's at a discount, So it's just amount. How much 0:13:25.160 --> 0:13:27.559 of a discount? Okay, Well, let's see what you produced 0:13:27.640 --> 0:13:32.360 at your hair in Adipec. How would you describe Starry 0:13:32.520 --> 0:13:35.840 US relations at the moment are they broken, Are they fractured? 0:13:35.880 --> 0:13:38.720 What is the word that describes it at the moment? Well, 0:13:38.760 --> 0:13:41.320 I think people attach too much to the drama of 0:13:41.360 --> 0:13:45.280 things and the soap opera of things. Satura Abrabian the 0:13:45.360 --> 0:13:47.880 United States have had an eight year relationship. We've had 0:13:47.880 --> 0:13:50.080 some ups, we've had some downs. We usually come back 0:13:50.120 --> 0:13:52.720 from the up. We have a broad range of interest 0:13:53.120 --> 0:13:58.360 from security to economic. We had a significant disagreement that 0:13:58.400 --> 0:14:00.120 we're you know, I don't try away from that. We 0:14:00.160 --> 0:14:02.400 had a disagreement about the OPEC decision. We think it 0:14:02.480 --> 0:14:05.560 was a mistake to announce a cut of two million barrels, 0:14:06.640 --> 0:14:09.280 But we all we continue to talk to them, and 0:14:09.320 --> 0:14:11.720 we're going to continue to have a relationship that serves 0:14:11.720 --> 0:14:14.160 our interests. We're just gonna have to evaluate how that is, 0:14:14.280 --> 0:14:17.640 how that best works. In all ways, the last time 0:14:17.720 --> 0:14:21.600 you were in the region, you left here? Did you 0:14:21.680 --> 0:14:26.560 leave here? Did you leave Saudi Arabia with a conviction 0:14:26.840 --> 0:14:28.680 and a solid belief that you were going to get 0:14:28.680 --> 0:14:31.040 more oil on the market. From the side, he's were 0:14:31.040 --> 0:14:34.480 you miss guy? You did? Did you walk away with 0:14:34.520 --> 0:14:37.960 that belief? Clarify for us today. So one of the 0:14:37.960 --> 0:14:39.360 things that I never do was talking about what we 0:14:39.440 --> 0:14:42.520 talked about. What I my conversations with government officially understand 0:14:42.520 --> 0:14:45.760 the scenes. So I will say that we were very 0:14:46.000 --> 0:14:49.200 The good thing about my conversation and folks, I'm always 0:14:49.240 --> 0:14:51.360 very straightforward and I appreciate that they can be with me. 0:14:52.200 --> 0:14:55.040 They knew that we believe that a cut right now 0:14:55.400 --> 0:14:59.240 in this environment, under these conditions was not good for 0:14:59.280 --> 0:15:01.880 the global eco. What I mean, it was not good 0:15:01.960 --> 0:15:05.800 for their consumers. It's not good for our economy consumers. 0:15:06.320 --> 0:15:08.480 We thought it was a mistake. I also, I think 0:15:08.520 --> 0:15:12.600 that we from trip to Saudi Arabia was about oil 0:15:13.400 --> 0:15:16.160 all along. No, it was never about oil. Think about 0:15:16.160 --> 0:15:18.280 the things that we've done. We look, we are the 0:15:18.320 --> 0:15:23.520 United States, Our interests are are varied and deep. And 0:15:24.280 --> 0:15:26.200 look at what we achieved on that trip that I 0:15:26.200 --> 0:15:29.120 think was really important. They were over flights from Israel, 0:15:29.200 --> 0:15:33.560 security arrangements, security integration, security, economic integration of Iraq, visa 0:15:33.600 --> 0:15:38.200 vi Iran, extending the ceasefire with Yemen. I mean, these 0:15:38.200 --> 0:15:40.640 are really important things. We announced all kinds of other 0:15:40.840 --> 0:15:43.640 achievements at the in the wall on that trip that 0:15:43.680 --> 0:15:45.840 I'm nothing to do with oil. At the same time, 0:15:47.040 --> 0:15:50.440 when we announced the trip. We also so after the trip, 0:15:50.560 --> 0:15:53.920 a increase in production in July, an increase in production 0:15:54.000 --> 0:15:58.320 in August, an increase in production in September. Uh the 0:15:58.440 --> 0:16:02.720 com sauity in August had its highest production levels continuity 0:16:02.800 --> 0:16:05.520 of them shock and it provoked immediate press releases. In 0:16:05.560 --> 0:16:08.480 the news conference I was in in Vienna that night, 0:16:08.680 --> 0:16:10.880 the question the market wants to know is how serious 0:16:10.920 --> 0:16:15.440 is the white hot abide a retaliation? You know, is 0:16:15.480 --> 0:16:17.840 retaliation the right word? What are you gonna do? Is it? 0:16:17.880 --> 0:16:20.440 Is it gonna be on sales? Is it gonna be 0:16:20.520 --> 0:16:23.840 no peck? Is it gonna be let's say more additional 0:16:23.960 --> 0:16:26.680 spr releases? What is this retaliation that's been so much 0:16:26.720 --> 0:16:29.200 made off in the media. So again I have to 0:16:29.200 --> 0:16:31.080 deal with the relationship less with what it's made of 0:16:31.080 --> 0:16:34.200 in the media. And we are looking at what the 0:16:34.240 --> 0:16:36.600 interests in the United States are, how we see for 0:16:36.680 --> 0:16:39.480 our own interests and for our interests here in the region. 0:16:39.840 --> 0:16:42.520 We have very strong interests here in the Gulf, across 0:16:42.560 --> 0:16:45.960 the board with you A, with Saudi, with the rest 0:16:45.960 --> 0:16:48.360 of the region. And we are going to continue to 0:16:48.400 --> 0:16:50.560 look at what other actions that we need to take 0:16:51.720 --> 0:16:55.360 that best serve the American interests and what we think 0:16:55.400 --> 0:16:58.200 are the best security interests for this region and the 0:16:58.200 --> 0:17:01.960 economic interests around the world. That's what will guide every 0:17:02.000 --> 0:17:04.040 decision that we make. And I thank you very much 0:17:04.040 --> 0:17:05.280 to taking the time. I know you've got a busy 0:17:05.280 --> 0:17:08.240 schedule and it's been good to catch up and on 0:17:08.440 --> 0:17:10.840 I'll make sure i'll go down fact check my forty 0:17:10.880 --> 0:17:13.520 to sixty dollar oiler price in terms of where the 0:17:13.520 --> 0:17:18.680 cop comes and team Special Presidential Coordinator in OUTA two. 0:17:18.720 --> 0:17:21.760 My final guest, it's a wrapper from the hallowed halls 0:17:22.640 --> 0:17:33.600 where oil dealers are dumb. Jonathan Jane Folly will No, 0:17:33.760 --> 0:17:35.760 I would actually like it. Let's be about the company. 0:17:35.760 --> 0:17:37.800 It's just fun to say the name Billy, Billy say it. 0:17:37.800 --> 0:17:44.200 It's fun. Alright, let's be please, let's move on. Royal 0:17:44.280 --> 0:17:47.440 Dutch show is maybe just as fun to say, Jane Folly. 0:17:48.680 --> 0:17:51.320 Strategy Jane, I did a fancy log study on the 0:17:51.359 --> 0:17:55.200 Bloomberg on Chinese you won USDC N Y and if 0:17:55.240 --> 0:17:58.600 you extrapolated out on this moon shot of weakness, you 0:17:58.680 --> 0:18:01.880 get to eight you want in the summer of next year. 0:18:02.440 --> 0:18:05.840 Can you go through that exercise? Can you extrapolate out 0:18:06.280 --> 0:18:11.320 some of these beleaguered EM currencies and particularly China. Well 0:18:11.359 --> 0:18:13.240 you know again that the news that you were just 0:18:13.280 --> 0:18:16.000 referring to, will they pull out of COVID zero or not, 0:18:16.080 --> 0:18:18.280 Well that's going to have a big, big leaning really 0:18:18.320 --> 0:18:21.800 on the markets expectations for growth in China and therefore 0:18:21.880 --> 0:18:24.399 on the the value of the the remember, because we 0:18:24.440 --> 0:18:27.040 all know that Chinese growth this year is it's really 0:18:27.080 --> 0:18:29.200 disappointing now. And we all know that of course that 0:18:29.280 --> 0:18:31.439 we can economy means that we can exchange rate. So 0:18:32.160 --> 0:18:34.879 those two things that are really really aligned. But you know, 0:18:34.960 --> 0:18:38.960 for many of the e M currencies or the economies, 0:18:38.960 --> 0:18:40.720 I think it really depends whether or not we're talking 0:18:40.760 --> 0:18:44.439 about commodities exporters, commodities importers and certainly the ones that 0:18:44.480 --> 0:18:47.160 have been really struck by the energy yet at crisis 0:18:47.720 --> 0:18:49.920 really in some dire straits or that or the food 0:18:49.920 --> 0:18:52.679 price crisis for many em and you know, there is 0:18:52.760 --> 0:18:55.000 some degree of a doom look for for for many 0:18:55.040 --> 0:18:57.320 of these now and that's going to be really tough 0:18:57.400 --> 0:18:59.720 to break. And of course I think we've talked about 0:18:59.720 --> 0:19:01.440 before if you can look at the doom loop for 0:19:01.440 --> 0:19:04.600 for emerging markets as their fundamentals keep on driving them lower, 0:19:05.119 --> 0:19:07.240 and then of course refers to to do that feedback 0:19:07.280 --> 0:19:09.720 loop with respect to the dollar, to people keep on 0:19:10.119 --> 0:19:13.280 holding the dollar and instead let's go to the first principles. 0:19:13.320 --> 0:19:15.680 Off a FED meeting tomorrow and folks will have our 0:19:15.680 --> 0:19:19.640 college very coverage, very dollar centric. Jane Fawley, Can central 0:19:19.720 --> 0:19:24.120 banks manage a dollar turnaround? Well, you know, I think 0:19:24.119 --> 0:19:26.879 central banks would like a dollar turnaround. I mean, you know, 0:19:26.920 --> 0:19:28.680 there has been keeping up with the jones Is to 0:19:29.000 --> 0:19:31.720 some extent, and that's not just an e M. And 0:19:31.760 --> 0:19:34.440 we saw the emerging market central banks at start hiking 0:19:34.480 --> 0:19:38.400 interest rates really before detenant in many cases. And of course, 0:19:38.600 --> 0:19:40.399 you know you look at the Bank of England, you 0:19:40.400 --> 0:19:43.080 look at the u c B. You know they next 0:19:43.080 --> 0:19:45.520 time they go, I mean the Bank of England obviously 0:19:45.520 --> 0:19:47.760 this week, but next time they go, they could be 0:19:47.840 --> 0:19:50.640 hiking into an interest rate hike into a recession. That's 0:19:50.680 --> 0:19:52.840 not something they want and they don't really want to 0:19:52.840 --> 0:19:55.639 be doing seventy five basis points even fifty basis points 0:19:55.680 --> 0:19:57.600 into a recession. But of course, as long as the 0:19:57.680 --> 0:20:01.439 FED does large increments, then because of the the impact 0:20:01.520 --> 0:20:03.959 or the potential impact on their currencies, you know that 0:20:04.040 --> 0:20:06.520 really keeps alive the possibility that they may have to 0:20:06.560 --> 0:20:10.200 go by large incumments to which crushes demand. This isn't 0:20:10.240 --> 0:20:13.560 just about a doom look for em it's happening here too. 0:20:13.640 --> 0:20:17.199 It crushes demand even more, which is clearly not what 0:20:17.280 --> 0:20:21.119 you want when you've got energy prices crushing demand as well. So, um, 0:20:21.160 --> 0:20:23.399 if the FED were to ease up, I think it 0:20:23.400 --> 0:20:25.800 would be a relief to huge amount of economies around 0:20:25.800 --> 0:20:27.800 the world. Okay, so if there is a step down, 0:20:27.960 --> 0:20:31.399 does that mean that we've seen peak dollar? Well, you know, 0:20:31.680 --> 0:20:34.440 not necessarily. And and this is the interesting thing. Because 0:20:34.440 --> 0:20:36.760 the dollar is a safe haven, the dollar also reacts 0:20:36.760 --> 0:20:39.119 to to slower world growth. And so you know, I 0:20:39.440 --> 0:20:43.119 still come back to the question until you can really answer, 0:20:43.200 --> 0:20:44.560 you know, what else are you going to buy if 0:20:44.560 --> 0:20:46.880 it's not the dollar and you can really say, yeah, 0:20:46.880 --> 0:20:48.919 you know, I really want to go and buy risky assets, 0:20:48.960 --> 0:20:50.720 I want to go back into em or you know, 0:20:50.760 --> 0:20:53.919 I'm confident in the Euro. Until you can answer those questions, 0:20:53.960 --> 0:20:56.520 I think the dollar retains a fair amount of strength. 0:20:56.520 --> 0:20:59.080 And you know, with respect to the Euro, yes, you know, 0:20:59.160 --> 0:21:02.080 the energy prices have come lower in October and that's 0:21:02.160 --> 0:21:05.359 great news, but you know it won't stop. It hasn't stopped. 0:21:05.359 --> 0:21:09.800 You know, big chemical companies, aluminium smelters help manufacturers moving 0:21:09.800 --> 0:21:11.840 out of Europe because they know that it's not just 0:21:11.920 --> 0:21:14.280 about the cost of energy this winter. It's next winter 0:21:14.320 --> 0:21:16.159 and the one after that. Where is that energy going 0:21:16.160 --> 0:21:18.280 to come from? And I don't think that's something that 0:21:18.320 --> 0:21:20.600 the euro is is really priced for yet. So how 0:21:20.640 --> 0:21:22.840 much can we see the dollar continued to rally based 0:21:22.920 --> 0:21:25.719 on that backdrop, which is really a poign to think 0:21:25.760 --> 0:21:29.439 about industries moving out wholesale of Europe because they know 0:21:29.560 --> 0:21:32.600 this is not a one winter problem. Well, you know, 0:21:33.160 --> 0:21:35.280 I think, you know, we could still have euro dollar 0:21:35.440 --> 0:21:37.880 going lower, maybe not right in the in the near term, 0:21:37.920 --> 0:21:40.879 because the market is is getting excited about that the 0:21:40.920 --> 0:21:43.760 story that we've got this this warm period and energy 0:21:43.760 --> 0:21:46.000 prices aren't as expensive as they could have been. But 0:21:46.280 --> 0:21:48.680 I think if we move into the proper winter over 0:21:49.000 --> 0:21:51.240