WEBVTT - Concerns Over Long Term Yields and Oil Prices 0:00:02.520 --> 0:00:13.760 Bloomberg Audio Studios, podcasts, radio news. This is the Bloomberg 0:00:13.840 --> 0:00:17.920 Surveillance Podcast. Catch us live weekdays at seven am Eastern 0:00:18.200 --> 0:00:22.000 on Apple CarPlay or Android Auto with the Bloomberg Business app. 0:00:22.360 --> 0:00:25.680 Listen on demand wherever you get your podcasts, or watch 0:00:25.760 --> 0:00:27.000 us live on YouTube. 0:00:27.040 --> 0:00:30.000 We're gonna pause here with Steven Anglan Dirt and we 0:00:30.000 --> 0:00:32.240 could do this with standard Charter Bank. 0:00:32.400 --> 0:00:35.959 And just look at the larger view, Paul. 0:00:35.760 --> 0:00:37.839 I'm going to go to seventy thousand feet on this. 0:00:38.760 --> 0:00:43.360 On the dollar, the single number on my screen which 0:00:43.560 --> 0:00:47.680 screams flight to quality is a DXY of ninety nine 0:00:48.200 --> 0:00:51.400 yen back to a one fifty nine handle. Just a 0:00:51.520 --> 0:00:55.160 remarkably resilient dollar. Steven England, There's been a student of 0:00:55.200 --> 0:00:59.520 this since time began. Are you shocked at the resiliency 0:00:59.600 --> 0:01:00.200 of the dollar. 0:01:01.440 --> 0:01:05.360 We're not shocked, because we've been dollar bulls in a 0:01:05.880 --> 0:01:10.200 market that's overwhelming the dollar negative, but you know, you're 0:01:10.240 --> 0:01:12.840 always a little bit surprised at the timing. What seems 0:01:12.880 --> 0:01:16.880 to have happened is a combination of US interest rates 0:01:16.920 --> 0:01:21.399 finally going up, reflecting some positives in the sense of 0:01:21.480 --> 0:01:25.920 US economic growth and earnings resiliency and you know, as 0:01:25.959 --> 0:01:28.039 well as some negatives, which is the inflation picture. 0:01:28.080 --> 0:01:29.319 But the market is responding. 0:01:29.400 --> 0:01:31.600 Explain us right now. I got to get the academics 0:01:31.640 --> 0:01:33.759 in what's great there? And I think if John Ryden 0:01:34.040 --> 0:01:37.280 iconic and Bear sterns with Breen as well is Paul 0:01:37.319 --> 0:01:41.800 In every dynamic there's an ambiguity. This word ambiguous. So 0:01:41.959 --> 0:01:45.480 if a dollar goes up, everybody's like gloom boom boom. 0:01:45.560 --> 0:01:48.640 But in a second order condition, it's about economic might, 0:01:49.320 --> 0:01:49.720 isn't it. 0:01:50.200 --> 0:01:54.520 Yeah, the causality is always important. And you know, if 0:01:54.640 --> 0:01:59.000 dollars going up for some arbitrary reason, yeah, it's not competitive. 0:01:59.560 --> 0:02:01.000 But if every quarter. 0:02:00.720 --> 0:02:04.280 You're always surprised at how resilient earnings are and how 0:02:04.280 --> 0:02:07.920 they surprise to the upside, and you're surprised at productivity 0:02:07.960 --> 0:02:11.000 growth and how strong it is, that tells you something 0:02:11.000 --> 0:02:14.320 about the return to capital. And that's why money keeps 0:02:14.320 --> 0:02:18.160 flowing into the US that you know, the risk adjusted 0:02:18.200 --> 0:02:21.919 return to capital estimates seem to be, you know, keep 0:02:21.960 --> 0:02:24.720 going up, and that attracts capital globally in a world 0:02:24.800 --> 0:02:25.520 that's slowing down. 0:02:26.880 --> 0:02:30.359 We have a new chairman of the US Federal Reserve. 0:02:31.320 --> 0:02:32.040 What's he going to do. 0:02:32.160 --> 0:02:34.359 I mean, presumably he's got some pressure to cut race, 0:02:34.400 --> 0:02:36.640 but the data doesn't really support that at all. 0:02:36.840 --> 0:02:39.040 You know, we just put out a piece today and 0:02:39.360 --> 0:02:42.760 adjusting that question, and the title was he won't cut 0:02:42.880 --> 0:02:46.000 but hook cap of it that you know, and we 0:02:46.040 --> 0:02:48.160 say out theright that if it was say a yelling 0:02:48.280 --> 0:02:50.799 or a bernanky, you know, we'd probably have rate hikes 0:02:50.800 --> 0:02:53.720 in our foretest. As it is, we're flat because the 0:02:53.840 --> 0:02:57.400 chair does have a certain amount of power, and unless 0:02:57.400 --> 0:03:00.680 things really fall apart on the inflation side, he can 0:03:00.720 --> 0:03:03.400 certainly delay hikes for for a period of time. 0:03:04.280 --> 0:03:10.080 So how pronounced is your concern about inflation here? How 0:03:10.120 --> 0:03:10.919 do you think about that? 0:03:11.919 --> 0:03:14.480 You know, your kid has a ninety nine and a 0:03:14.560 --> 0:03:19.400 half degree you know temperature, yep, and you think it's 0:03:19.440 --> 0:03:21.280 going up a little bit, but you know you don't 0:03:21.320 --> 0:03:23.480 see any sign that's going to one o five. So 0:03:23.520 --> 0:03:25.240 you start to say, yeah, I got to watch this 0:03:25.280 --> 0:03:28.200 and make sure that you know it's it stays kind 0:03:28.200 --> 0:03:30.519 of at these levels. And you know, we're not a 0:03:30.639 --> 0:03:35.040 defcom one on inflation. It's higher than it we want 0:03:35.040 --> 0:03:38.320 it to be, and the best indications are that it's 0:03:38.360 --> 0:03:42.280 sort of going up very slowly. Plus he is right 0:03:42.320 --> 0:03:46.240 that the productivity story puts downward pressure on unit labor costs. 0:03:46.280 --> 0:03:50.160 So it's not like everything is falling apart. There's sort 0:03:50.160 --> 0:03:52.960 of there's concern, but not despair. 0:03:53.200 --> 0:03:53.960 Stephen Engelder. 0:03:54.040 --> 0:03:56.680 Where this is Standard Charter Bank, all of their heritage 0:03:56.720 --> 0:04:00.240 of the Pacific RIM and around India as well, it's 0:04:00.280 --> 0:04:02.040 off your remit, but I got. 0:04:01.800 --> 0:04:02.320 To go there. 0:04:02.360 --> 0:04:05.760 Given your team at Standard Charter Bank, is there a 0:04:05.920 --> 0:04:14.040 tradable currency opportunity given the the difficult energy template for 0:04:14.200 --> 0:04:17.880 the Pacific RIM and around India, is there an opportunity? 0:04:18.839 --> 0:04:22.440 Well, some of it's already priced in, and you know 0:04:22.720 --> 0:04:24.440 that's the part of the world that's been hit the 0:04:24.480 --> 0:04:29.600 worst that the you know, energy prices. Most of that 0:04:29.720 --> 0:04:32.440 region doesn't have energy. China is a bit aside because 0:04:32.480 --> 0:04:36.120 of the huge stocks of that it has on the 0:04:36.240 --> 0:04:39.839 energy side. But if you're looking at places like India, 0:04:40.040 --> 0:04:43.560 it's a real problem. And we've seen the currency adjust downward. 0:04:44.480 --> 0:04:46.599 Where's value out there in the currency markets today? 0:04:46.640 --> 0:04:50.560 Do you think you know, I think that there's always 0:04:50.560 --> 0:04:52.880 a problem and that I can say that I think 0:04:52.920 --> 0:04:55.200 the dollar is value and that you know it's going 0:04:55.240 --> 0:04:57.239 to go up, and that you know our our forecast 0:04:57.279 --> 0:05:00.400 for the euros one twelve a year out, but there's 0:05:00.440 --> 0:05:03.560 a lot of in betweens where you kind of say, 0:05:03.720 --> 0:05:07.960 is this the right timing to go long dollars short euros? 0:05:08.000 --> 0:05:11.599 Could something happen And that's always the art of trading 0:05:11.640 --> 0:05:12.640 to get the timing right. 0:05:13.120 --> 0:05:15.400 Thank you so much for coming in today and really 0:05:15.400 --> 0:05:20.000 really appreciate it. With the standard Charter Bank, Steven Englander 0:05:20.560 --> 0:05:24.159 with us is well, stay with us. More from Bloomberg 0:05:24.279 --> 0:05:26.320 Surveillance coming up after this. 0:05:33.560 --> 0:05:37.159 You're listening to the Bloomberg Surveillance podcast. Catch us Live 0:05:37.200 --> 0:05:40.359 weekday afternoons from seven to ten am Eastern Listen on 0:05:40.440 --> 0:05:44.120 Applecarplay and Android Otto with the Bloomberg Business app, or 0:05:44.279 --> 0:05:45.360 watch us Live on. 0:05:45.279 --> 0:05:48.359 YouTube to start a three hour conversation with Paul Sankie. 0:05:48.360 --> 0:05:53.360 He's founder Sankie Research, absolutely definitive in his independence within 0:05:53.440 --> 0:05:57.120 the petroleum analysis of the world. So I see Ed 0:05:57.200 --> 0:05:59.760 Morris out doing all sorts of stuff. He's like holding 0:06:00.480 --> 0:06:04.560 you sixty nine years old curries out doing microeconomics out 0:06:04.600 --> 0:06:08.080 of Chicago, price theory and a price oil away from 0:06:08.120 --> 0:06:11.120 the headlines in the zeitgeist that we're living every day. 0:06:11.160 --> 0:06:14.479 What is your curiosity right now? What is the odd 0:06:14.480 --> 0:06:15.560 thing you're studying? 0:06:16.200 --> 0:06:18.600 Well, we got into group three base oils. Do you 0:06:18.680 --> 0:06:19.440 know about that? 0:06:20.120 --> 0:06:21.919 Please help me? Or is that like? 0:06:22.760 --> 0:06:25.120 No, it's very striking. Last week this is quite a 0:06:25.160 --> 0:06:29.120 big deal. Actually, last week Walmart and Costco warned that 0:06:29.120 --> 0:06:31.760 they didn't have enough base oils to put on their shelves. 0:06:31.760 --> 0:06:34.360 You know, the stuff you put in your engine was 0:06:34.760 --> 0:06:37.120 running out. And the reason for that is basically, we're 0:06:37.120 --> 0:06:40.600 heavily dependent on bas oil from hor Moose. So it's 0:06:40.640 --> 0:06:43.039 a very interesting end of the chain story. And this 0:06:43.160 --> 0:06:45.520 is not you know, some deli down the road. This 0:06:45.600 --> 0:06:49.240 is Walmart, Costco, Toyota, Xon, then warm Day don't have 0:06:49.360 --> 0:06:52.320 enough motor oil. It's a physical shortage here in the 0:06:52.400 --> 0:06:54.760 US right now. And I thought that was pretty fascinating. 0:06:55.000 --> 0:06:57.880 The physical shortages in the Pacific room as well. Francisco 0:06:57.960 --> 0:07:01.719 Blanche was in saying by Foreign Way, the Pacific rim 0:07:01.839 --> 0:07:03.359 Indo Pacific is affected. 0:07:03.880 --> 0:07:06.480 Yes, absolutely, but I think compared to where we were 0:07:06.560 --> 0:07:09.400 when this started. We immediately looked at Australia and it's 0:07:09.400 --> 0:07:12.880 interesting that Australian inventories are actually higher now than they 0:07:12.880 --> 0:07:15.800 were when we started this crisis. So there is crisis 0:07:15.800 --> 0:07:18.960 management being successfully employed, and I think you can see 0:07:18.960 --> 0:07:21.120 that around the world. I've just been in Mexico. All 0:07:21.160 --> 0:07:23.560 the planes are flying, the place is basically booming and 0:07:23.600 --> 0:07:25.840 going into the World Cup. And the joke that I 0:07:25.840 --> 0:07:28.040 had in my research this weekend is that the moors 0:07:28.040 --> 0:07:30.480 are all buzzing, and these are high end moors. They're 0:07:30.480 --> 0:07:34.120 all buzzing with kids buying Mexican World Cup tops, you know, 0:07:34.120 --> 0:07:36.880 because the Mexicans always have the best strips. The other 0:07:36.960 --> 0:07:40.480 name for that is Asian Petrochemicals, so you know there 0:07:40.520 --> 0:07:43.640 is a petrochemical major issue that's about to emerge through 0:07:43.680 --> 0:07:45.920 the chain as well. You've shut down, you know, forty 0:07:45.960 --> 0:07:47.960 percent of Asian petrochemical capacity. 0:07:48.320 --> 0:07:51.200 So the straight upward moves, I mean, I'm speaking for 0:07:51.280 --> 0:07:53.920 most of our listeners and viewers here. We couldn't find 0:07:53.920 --> 0:07:56.600 that on a map before. Now we all know about it. 0:07:56.640 --> 0:07:58.880 Is it ever going to go back to where it 0:07:59.000 --> 0:08:00.560 was January? 0:08:00.840 --> 0:08:02.840 No? No, But you know what's happening today is a 0:08:02.880 --> 0:08:05.680 couple of tankers have bussed, so you're going to see 0:08:05.800 --> 0:08:07.600 you know, the oil industry will work out a way 0:08:07.640 --> 0:08:09.760 to smuggle. You can be sure of that. And I 0:08:09.760 --> 0:08:13.160 think that the US announcement that they would kind of 0:08:13.360 --> 0:08:16.160 they would allow Russia and oil sales tells you that 0:08:16.200 --> 0:08:18.360 there's going to be you know, that kind of a 0:08:18.400 --> 0:08:21.600 move where they probably you U U turn and start 0:08:21.640 --> 0:08:23.960 turning a blind eye to the Iranians moving stuff. And 0:08:24.160 --> 0:08:26.040 that would come out of the China meetings. The other 0:08:26.120 --> 0:08:28.960 huge thing, by the way, which is huge, is after 0:08:29.120 --> 0:08:32.679 China Trump you obviously saw China putin. Yeah, you know 0:08:32.720 --> 0:08:34.440 that's a big deal in oil, believe me. 0:08:35.040 --> 0:08:38.080 So how if we're twenty percent of our oil and 0:08:38.120 --> 0:08:40.480 gas comes out of that part of the world. Did 0:08:40.520 --> 0:08:44.000 they just build more pipelines? But pipelines are also susceptible 0:08:44.080 --> 0:08:46.839 to stuff. I mean, what do we do in the 0:08:46.840 --> 0:08:48.520 straighter removes? Are you got to open that thing up, 0:08:48.520 --> 0:08:48.840 don't you? 0:08:48.960 --> 0:08:51.880 Well, I think we've characterized this is an incredible time 0:08:51.880 --> 0:08:54.440 where it's OVAX versus u at VAX. So it's the 0:08:54.800 --> 0:08:57.600 the US potential, you know, the US Treasury's global power 0:08:57.640 --> 0:09:02.120 against drones, and drones have totally change the shipping you know, 0:09:02.360 --> 0:09:05.400 entire future. It's just changed pipelines. You have two hundred 0:09:05.400 --> 0:09:08.280 and fifty thousand miles of pipelines in North America. You 0:09:08.360 --> 0:09:10.640 have forty thousand in the Middle East, so pipelines are 0:09:10.679 --> 0:09:13.600 totally a solution. And it's just that, you know, tank 0:09:13.640 --> 0:09:15.720 has never had a problem previously and so you didn't 0:09:15.720 --> 0:09:17.960 worry about it. And actually it's the Hooties that showed 0:09:18.360 --> 0:09:20.000 you know. That's what was so scary to me when 0:09:20.000 --> 0:09:21.880 the straight shutdown is, by the way, we haven't opened 0:09:21.880 --> 0:09:24.120 the suits canal properly and it's been three years, Is 0:09:24.200 --> 0:09:28.520 that right? Yeah? No, no, no, the suits canal throughput volumes 0:09:28.520 --> 0:09:31.080 are fifty percent of where they were before the Hootie 0:09:31.080 --> 0:09:31.440 shut up. 0:09:31.880 --> 0:09:33.560 I got a different question, but let me get to 0:09:33.600 --> 0:09:35.360 it then, right now, what's your gallon? 0:09:35.400 --> 0:09:36.880 A guess? Guess? 0:09:37.240 --> 0:09:37.480 Yeah? 0:09:37.520 --> 0:09:39.760 Out a year? I mean, are getting used to five 0:09:39.800 --> 0:09:40.600 dollars a gallon? 0:09:40.720 --> 0:09:42.920 You know Midwestralia always want me on when the gas 0:09:42.960 --> 0:09:45.160 price goes crazy. So I go on those shows and 0:09:45.200 --> 0:09:46.760 I told them the other day you're going to six. 0:09:46.800 --> 0:09:48.880 I don't think there's any doubt about six dollars a 0:09:48.920 --> 0:09:51.360 gallon here this summer because we're just going into some 0:09:51.480 --> 0:09:53.800 And now you'll get big data from the DOE today. 0:09:54.320 --> 0:09:56.760 Last night, the API data had one huge number in it, 0:09:56.800 --> 0:09:59.439 which was ten million drawer in the SPR. So you're 0:09:59.480 --> 0:10:01.800 running the sa PR and over obviously over a million 0:10:01.840 --> 0:10:04.760 in a week. Yeah, a day, you know what I mean. 0:10:05.360 --> 0:10:07.559 So you're going you're gonna run into a question. With 0:10:07.600 --> 0:10:10.199 three hundred and ninety million barrels in the SPR, You're 0:10:10.200 --> 0:10:11.800 going to run into a question. Now do you just 0:10:11.920 --> 0:10:14.760 keep allowing that to come into the market? And it's material, 0:10:14.960 --> 0:10:17.160 So there's a lot of inventory days coming. 0:10:17.040 --> 0:10:19.240 Up, Alexa, Should I ask about the wah Wah or 0:10:19.280 --> 0:10:20.840 the caspianc which one? 0:10:20.920 --> 0:10:22.240 Oh I go ibolt wah Wah? 0:10:22.280 --> 0:10:24.040 Whoa, Okay, lit'sten to geal? 0:10:24.120 --> 0:10:26.160 I guess you're telling me John Tucker at the wah 0:10:26.160 --> 0:10:27.760 Wah is going to be six bucks a gallon? 0:10:29.320 --> 0:10:31.680 Well, because that's nationwide average, so that would be like 0:10:31.760 --> 0:10:35.640 eight nine in California. Yeah, so I'm talking nationwide average soon. 0:10:35.720 --> 0:10:37.240 I looked at Berlin the other day. They're going to 0:10:37.320 --> 0:10:38.600 go to eleven or twelve bucks ago. 0:10:38.800 --> 0:10:40.280 Yeah they will. Oh yeah, No, I don't have any 0:10:40.320 --> 0:10:42.160 doubt about that. And what's happening is that because the 0:10:42.280 --> 0:10:44.720 refiners are really pushing hard to make jet feel so 0:10:44.840 --> 0:10:48.040 fascinating thing here is our jet field inventries are record high. 0:10:48.080 --> 0:10:51.400 Absolutely fascinating because they're training to do that. They're going 0:10:51.440 --> 0:10:54.160 to make less gasoline into driving season. And the other 0:10:54.200 --> 0:10:55.640 thing you got to watch I was talking about base 0:10:55.720 --> 0:10:59.160 all is Alki, which gives you octane is short in California. 0:10:59.200 --> 0:11:02.160 So they can't make great They can't make the fancy stuff. No, 0:11:02.720 --> 0:11:03.440 they can't get the stuck. 0:11:03.480 --> 0:11:05.520 Okay, you know Paul and I say risk, folks, Well 0:11:05.520 --> 0:11:07.440 we're done with the show. Paul comes off at twelve 0:11:07.559 --> 0:11:09.760 noon and we're usually playing a board game of risk. 0:11:10.040 --> 0:11:12.240 I would guess one hundred and five of one hundred 0:11:12.280 --> 0:11:16.080 Americans don't know where the Caspian Sea is. I would say, 0:11:16.160 --> 0:11:21.240 right now, it's fascinating that transport, that dynamic you're encyclopedic 0:11:22.040 --> 0:11:26.720 on something like Baku to this pipeline or that. Tell 0:11:26.800 --> 0:11:31.040 us give me a forty second, one minute critique here 0:11:31.520 --> 0:11:33.680 of how we should look at the Caspian Sea. 0:11:33.920 --> 0:11:35.520 Well, I think the difference between playing a board game 0:11:35.559 --> 0:11:37.720 and going to the Caspian I've been to Tangies, where 0:11:37.720 --> 0:11:40.160 the huge Chevron project is a million barrel to day 0:11:40.720 --> 0:11:44.640 giant reef that was discovered from space by the cosmic Soviets. 0:11:44.679 --> 0:11:48.880 It's so huge the tide there is eight miles bailey. 0:11:49.200 --> 0:11:51.520 That's how flat, and you know how far the water 0:11:51.679 --> 0:11:54.200 moves and how difficult it is to develop oil there. 0:11:54.720 --> 0:11:58.400 But the generally speaking, yeah, the Casipian has a unique 0:11:58.400 --> 0:12:01.559 position as well because Kazakhstan is sat right between Russia, 0:12:01.920 --> 0:12:05.800 China and the US with Chevron and now Ukraine and 0:12:05.800 --> 0:12:09.800 the drones. So it's a fascinating and huge potential. Yeah. 0:12:09.840 --> 0:12:11.719 I mean there's a lot of non opec oil that's 0:12:11.720 --> 0:12:13.599 going to be developed here, no doubt, because. 0:12:14.080 --> 0:12:16.720 Excuse me, I'm so lined up. I forgot my micage. 0:12:16.720 --> 0:12:18.839 I'm thinking about John Ducker. 0:12:18.600 --> 0:12:19.760 In six bucks again. 0:12:20.000 --> 0:12:23.800 So to Paul's question about the Hormuz, is what's really 0:12:23.800 --> 0:12:24.520 going to happen here? 0:12:24.640 --> 0:12:26.559 Is all this nan opek is going to come on? 0:12:27.000 --> 0:12:29.240 Oh? No question, Yeah, over time. I mean, you know 0:12:29.360 --> 0:12:32.640 one country I'm very interested right now is Argentina going 0:12:32.720 --> 0:12:37.000 to grow massively. Brazil has huge incremental sales to China 0:12:37.080 --> 0:12:40.360 of oil, and of course Venezuela hopefully will boom. You know, 0:12:40.679 --> 0:12:42.280 Venezuela can easily suppli. 0:12:43.040 --> 0:12:45.640 Dormose doesn't matter. Yeah, I'm not there yet. 0:12:45.720 --> 0:12:49.480 I mean, Paul, your energy guys supply demand you get that. 0:12:50.000 --> 0:12:52.680 If I'm a politician, I can't allow six dollars. I 0:12:52.760 --> 0:12:54.440 guess that can't happen. 0:12:54.760 --> 0:12:56.600 No, that's right, and that's going to be very interesting. 0:12:56.640 --> 0:12:58.920 And so my notes on Sunday was called watching the 0:12:59.000 --> 0:13:02.600 frog boil with that blinking, and that I think is 0:13:02.640 --> 0:13:05.400 the outlet. I think that's what will trigger a crisis. 0:13:05.440 --> 0:13:07.840 Response is actually going to be the US gasoline price. 0:13:07.880 --> 0:13:09.920 When it comes down to it, You've got the nasdak 0:13:09.960 --> 0:13:12.480 at a record high. Everything seems fine, The Knicks are 0:13:12.480 --> 0:13:14.400 on a great you know, Nicks have got a great crumback. 0:13:14.600 --> 0:13:16.719 The world is not just simply not ending in the 0:13:16.800 --> 0:13:20.160 United States, and I think that's affecting the president's sense 0:13:20.200 --> 0:13:23.120 of the crisis. But you know, as oil analyst, we've 0:13:23.160 --> 0:13:26.360 almost gone quiet because we were screaming so much six 0:13:26.360 --> 0:13:30.200 weeks ago. It's continued to progress on the exactly the 0:13:30.240 --> 0:13:33.480 screaming bath and you'll see it in the DOE data today, 0:13:33.760 --> 0:13:36.360 you know, big draws. Eventually, you'll get to a point 0:13:36.360 --> 0:13:39.959 where the US has to compete with international exports sales. 0:13:39.960 --> 0:13:42.120 So the export sales are going to start fighting our 0:13:42.160 --> 0:13:45.079 domestic on price, and that's going to make US domestic 0:13:45.120 --> 0:13:49.080 prices go vertical, especially as we don't really know where 0:13:49.080 --> 0:13:52.160 operational limits are. So there's a point in inventory where 0:13:52.160 --> 0:13:54.360 you can't run the system, and we're going to hit 0:13:54.400 --> 0:13:56.880 that and that's when prices go nuts, and we haven't 0:13:56.920 --> 0:13:57.400 hit it yet. 0:13:57.480 --> 0:14:00.320 Interesting, you lead a romantic life. It's like out of 0:14:00.360 --> 0:14:02.760 the Price by Daniel Jurgen. Where are you going next? 0:14:02.800 --> 0:14:04.240 Give me some romantic. 0:14:03.840 --> 0:14:06.880 Look, did you know? Sure? Shakdemption one of the great 0:14:06.880 --> 0:14:09.520 Wall Street films, and they dream of going to Ziwata 0:14:09.640 --> 0:14:13.320 Nejo in the Pacific is where they want to escape to, 0:14:13.400 --> 0:14:15.520 and in fact do escape to. And that's where I'm 0:14:15.520 --> 0:14:18.120 going next June the eleventh to watch the World Cup. 0:14:20.240 --> 0:14:23.160 I got my Mexican shirts ready to go, and yeah, 0:14:23.200 --> 0:14:25.160 I'm really looking forward to that, really looking forward to 0:14:25.200 --> 0:14:26.120 the World Cup. I mean, I'm. 0:14:25.960 --> 0:14:28.160 America can pull off the World Cup. 0:14:28.400 --> 0:14:30.640 You know, you always back the hosts, So I love here, 0:14:30.720 --> 0:14:35.520 you know, and traditionally do awfully. Obviously Mexico, US Canada. 0:14:35.600 --> 0:14:38.280 I really think you typically you do, and it's a 0:14:38.320 --> 0:14:40.320 traditional way of looking at You always get a run, 0:14:41.200 --> 0:14:43.600 you know, of the host nations. And so we'll see 0:14:43.800 --> 0:14:45.800 Mexico's got a tough group, and they don't have that 0:14:45.920 --> 0:14:48.400 much talent. I don't understand why the US is one 0:14:48.440 --> 0:14:49.080 of the greatest of. 0:14:50.680 --> 0:14:55.000 Oh yeah, thank you, thank you so much, legendary. I 0:14:55.160 --> 0:14:57.840 know he SANKI at Research. We'll have them back soon. 0:14:58.400 --> 0:15:02.600 Stay with us. More from Bloomberg Surveillance coming up after this. 0:15:09.840 --> 0:15:13.440 You're listening to the Bloomberg Surveillance podcast. Catch us Live 0:15:13.480 --> 0:15:16.640 weekday afternoons from seven to ten am Eastern Listen on 0:15:16.720 --> 0:15:20.400 Applecarplay and Android Otto with the Bloomberg Business app, or 0:15:20.560 --> 0:15:22.000 watch US live on YouTube. 0:15:22.120 --> 0:15:23.240 We start strong here. 0:15:23.280 --> 0:15:26.480 He's a wonderful perspective out of me and Andrea Suderman 0:15:26.560 --> 0:15:30.480 has always given his great perspective with Vauntable, chairman of 0:15:30.560 --> 0:15:34.440 their board of directors, and of course venerated across finance 0:15:34.600 --> 0:15:39.320 in Europe as well. Just what's the mood into the 0:15:39.520 --> 0:15:42.600 summer in Europe? I mean, I know everyone takes a 0:15:42.640 --> 0:15:46.040 month of August off onlike the ugly Americans, but just 0:15:46.120 --> 0:15:49.440 what is the continental zeitgeist right now? 0:15:50.800 --> 0:15:52.560 Well, listen, thanks for having me on. By the way, 0:15:52.600 --> 0:15:56.080 Tom Paul's great to be on the side, guys, is 0:15:56.120 --> 0:16:01.600 really one of questioning, you know, well, what's going to 0:16:01.600 --> 0:16:03.920 happen politically in Europe. There are a lot of elections 0:16:03.920 --> 0:16:06.720 coming up that look a bit dicey, and we saw 0:16:06.800 --> 0:16:09.000 hungry swing in the pro European camp. But there's a 0:16:09.080 --> 0:16:11.800 lot of concern about France, about Germany going forward. 0:16:11.880 --> 0:16:12.600 The UK. 0:16:13.840 --> 0:16:16.960 People are concerned about competitiveness with the United States, they're 0:16:16.960 --> 0:16:21.080 concerned about the trade war, They're concerned about their auto industry. 0:16:21.120 --> 0:16:23.280 So there is a lot of questioning, well, let's. 0:16:23.080 --> 0:16:25.760 Go there, because you've got some visceral knowledge, and is 0:16:25.760 --> 0:16:29.960 the auto is manufacturing done in Germany? Is it so 0:16:30.080 --> 0:16:33.680 messed up, particularly with the China manufacturing at any price, 0:16:33.920 --> 0:16:38.400 that the Germany under threat of losing that iconic image. 0:16:39.320 --> 0:16:41.640 Now I understand the question. I think it's it's a 0:16:41.680 --> 0:16:43.960 relevant question, but I don't think I think it's way 0:16:43.960 --> 0:16:46.920 too early to say Germany is done. We've seen waves 0:16:46.920 --> 0:16:50.520 of competitiveness in the past. If you recall, you know, 0:16:50.560 --> 0:16:53.720 the Japanese auto manufacturers getting into Europe in the seventies. 0:16:54.960 --> 0:16:59.960 Initial response by the Europeans was again import restrictions, tariff. 0:17:00.160 --> 0:17:03.760 As a matter of fact, people don't remember that, but 0:17:03.840 --> 0:17:08.119 they sort of adapted and survived. There is a renaissance 0:17:08.119 --> 0:17:11.360 of the defense industry. As everybody knows, some of these 0:17:11.480 --> 0:17:15.720 car plants, idle car plants are being repurposed to grow 0:17:16.119 --> 0:17:18.320 the defense industry in Europe. So yeah, I think it's 0:17:18.320 --> 0:17:21.240 too early to say, but certainly a lot of work 0:17:21.240 --> 0:17:23.800 ahead for the Europeans, in particular the Germans. 0:17:24.119 --> 0:17:28.440 Talk to us just about how Europe thinks about their 0:17:28.600 --> 0:17:31.720 energy dependence or their energy policy, energy strategy, because first 0:17:31.760 --> 0:17:35.119 you had the Ukraine War and the challenges with Russia 0:17:35.119 --> 0:17:37.399 and that supply, now you've got the Mid East. How 0:17:37.480 --> 0:17:39.200 was Europe thinking about its energy policy. 0:17:39.840 --> 0:17:41.760 Well, it's certainly thinking it needs to be more independent, 0:17:43.400 --> 0:17:46.520 though I think the market's making too much of the dependency. 0:17:47.160 --> 0:17:48.840 If you recall, I think we even talked about this 0:17:48.920 --> 0:17:51.160 last time I was on the show in March in 0:17:51.520 --> 0:17:55.560 four years ago. When the Ukraine War broke, everybody's saying that, 0:17:55.640 --> 0:17:57.480 you know, the Germans wouldn't be able to heat their 0:17:58.119 --> 0:18:01.439 houses in the following winter, and nothing like that happens. 0:18:01.440 --> 0:18:04.000 So I think the Europeans are quite adaptable. I think 0:18:04.040 --> 0:18:08.400 it's going to push them more towards renewables, but certainly 0:18:08.400 --> 0:18:11.840 also and that's an increasing discussion, certainly more towards going 0:18:11.880 --> 0:18:14.760 back to some form of nuclear as well to ensure 0:18:14.760 --> 0:18:16.119 the baseload of the grid. 0:18:16.960 --> 0:18:19.920 What's your view or what's the view of Vontanamo about 0:18:20.000 --> 0:18:22.359 global markets here today? Where do you want to be 0:18:22.400 --> 0:18:26.200 given some of the geopolitical risk? Are you thinking geographically? 0:18:27.200 --> 0:18:27.600 US? 0:18:28.000 --> 0:18:29.280 Non US, Europe? 0:18:30.000 --> 0:18:30.320 Asia? 0:18:30.359 --> 0:18:32.399 How do you think about just the geographics about I. 0:18:32.400 --> 0:18:35.639 Think overall emerging markets look attractive. I think fixed income 0:18:35.680 --> 0:18:41.120 looks attractive. The risk to to to to the capital 0:18:41.240 --> 0:18:43.640 that you invest in fixed income with yields being much 0:18:43.680 --> 0:18:46.200 higher than there were four or five years ago, even 0:18:46.200 --> 0:18:48.480 if rates continued to back up, it's fairly low. So 0:18:48.560 --> 0:18:51.199 the rolldown will make that good very quickly. So I 0:18:51.200 --> 0:18:55.040 think fixed income security is certainly attractive. I also think, 0:18:55.040 --> 0:19:00.359 funnily enough, that equity markets are quite reasonably prior for 0:19:00.520 --> 0:19:02.800 the majority of them. I mean this, You've said this 0:19:02.880 --> 0:19:05.800 on this program, that the rally has been very very narrow, 0:19:06.480 --> 0:19:08.359 and a lot of stocks, a lot of sectors that 0:19:08.440 --> 0:19:13.280 consumer durables, you know, are actually modesty valued. 0:19:13.400 --> 0:19:16.560 Right, you areas qualified as anybody I know to take 0:19:16.600 --> 0:19:19.480 this train of thought. I hope, I hope you're Can 0:19:19.520 --> 0:19:22.280 you see Andreas Uderman having to deal with compliance? 0:19:22.440 --> 0:19:22.560 Oh? 0:19:22.640 --> 0:19:26.720 Yeah, James Diamond wants to come into Europe with a 0:19:26.800 --> 0:19:31.480 digital banking model. Is it a threat to the European 0:19:31.600 --> 0:19:34.879 complex of the financial system? How do they adapt to 0:19:34.920 --> 0:19:38.200 the idea that JP Morgan wants to come over to Europe. 0:19:39.119 --> 0:19:43.000 I don't think that's that's a concern for anybody. By 0:19:43.040 --> 0:19:45.280 the way, I do deal with compliance a lot increasingly, 0:19:45.320 --> 0:19:51.680 I meant a huge concern also, particularly for front Tobl. 0:19:51.720 --> 0:19:54.840 I mean front Tobos has a very large US person's 0:19:54.840 --> 0:19:58.840 client base, and as you know, that's a pretty tricky 0:19:59.119 --> 0:20:01.560 thing to deal with. No, but I think I think 0:20:01.600 --> 0:20:04.280 the real threat or the real risk to the European 0:20:04.280 --> 0:20:07.760 banking see the competitive threat comes from the revolutes. Then 0:20:07.840 --> 0:20:13.960