WEBVTT - Israel, Exxon, and House Speaker 0:00:00.840 --> 0:00:04.000 Welcome to the Bloomberg Markets Podcast. I'm Paul Sweeney, alongside 0:00:04.040 --> 0:00:05.240 my co host Matt Miller. 0:00:05.640 --> 0:00:09.600 Every business day, we bring you interviews from CEOs, market pros, 0:00:09.720 --> 0:00:13.600 and Bloomberg experts, along with essential market moven news. 0:00:14.160 --> 0:00:17.279 Find the Bloomberg Markets Podcast on Apple Podcasts or wherever 0:00:17.400 --> 0:00:20.520 you listen to podcasts, and at Bloomberg dot com slash podcast. 0:00:21.160 --> 0:00:23.480 Right now, we want to get back to the story, 0:00:23.520 --> 0:00:25.960 the front page story, which is obviously what's happening in 0:00:26.680 --> 0:00:30.240 Israel call it. Elgindy, Senior fellow at the Middle East Institute, 0:00:30.360 --> 0:00:33.000 joins us here. Colin, thanks so much for joining us here. 0:00:33.120 --> 0:00:35.360 We know you have so much expertise in this part 0:00:35.400 --> 0:00:37.879 of the world. I wonder if you could just for 0:00:37.920 --> 0:00:40.720 a lot of us, we're just not sure what's happened 0:00:40.720 --> 0:00:42.280 over the last several days. Can you give us a 0:00:42.320 --> 0:00:46.640 sense of why Hamas did what they did on Saturday? 0:00:46.680 --> 0:00:48.600 Why did they do it, what was their goal of 0:00:48.720 --> 0:00:51.080 any and then where do we go from here? 0:00:53.120 --> 0:00:53.440 Yeah? 0:00:53.560 --> 0:00:57.360 I mean I can't really speak to why Hamas would 0:00:57.440 --> 0:01:02.160 carry out such a horrific attack that has killed hundreds 0:01:02.160 --> 0:01:10.840 and hundreds over a thousand Israelis. I don't understand, you know, 0:01:10.880 --> 0:01:14.720 the logic behind it. I think it's totally unjustifiable. But 0:01:14.840 --> 0:01:17.920 what I can speak to is the context in which 0:01:18.000 --> 0:01:22.240 this is happening, and that is, you know, there's you know, 0:01:22.319 --> 0:01:27.320 Israel has occupied, has ruled over the Palestinians, five million 0:01:27.360 --> 0:01:32.760 Palestinians in a military occupation for more than half a century, 0:01:33.319 --> 0:01:36.360 had many many generations of Palestinians who have grown up 0:01:36.760 --> 0:01:41.560 without really knowing any sort of freedom. And in Gaza 0:01:41.600 --> 0:01:46.279 in particular, you have a very severe blockade that Israel 0:01:46.360 --> 0:01:52.640 has imposed that has impoverished the Gaza Strip, and most 0:01:53.520 --> 0:01:56.080 of the two million people who live in Gaza actually 0:01:56.120 --> 0:02:02.080 rely on international assistance for their basic needs. And so 0:02:02.160 --> 0:02:05.440 that's the context in which this is happening, as well 0:02:05.480 --> 0:02:09.800 as the sort of broader sense of despair among Palestinians 0:02:09.840 --> 0:02:14.040 that you know, there is no end in sight either 0:02:14.160 --> 0:02:20.760 to Israel's occupation, which is quite violent and repressive, or 0:02:20.840 --> 0:02:25.160 to the blockade in Gaza. And so Hamas is one 0:02:25.200 --> 0:02:30.480 of the various Palestinian factions that have embraced what they 0:02:30.520 --> 0:02:38.040 call armed struggle and are determined to pursue to push 0:02:38.120 --> 0:02:42.359 back on and resist Israeli occupation through violence of course, 0:02:42.440 --> 0:02:46.800 the violence that they've opted for in this case is 0:02:46.880 --> 0:02:51.320 wholly unjustified in that it's directed at civilians. 0:02:51.720 --> 0:02:56.480 Yes, and seems to be specifically directed, according to the 0:02:56.520 --> 0:02:58.760 New York Times report on hostages this morning, at women 0:02:58.760 --> 0:03:04.120 and children as well, which doesn't make any sense. I 0:03:04.160 --> 0:03:08.560 think that we, those of us who've read pretty in 0:03:08.600 --> 0:03:09.480 depth about this. 0:03:09.800 --> 0:03:10.880 Not nearly as much as you have. 0:03:10.960 --> 0:03:15.960 You've studied air studies at Georgetown and Indiana University, You've 0:03:16.040 --> 0:03:18.880 you've taught that at Georgetown as well, and obviously you'ret 0:03:18.880 --> 0:03:21.600 the Middle East Institute. But I think we understand to 0:03:21.639 --> 0:03:26.240 some extent the context of the occupation. One thing that 0:03:26.280 --> 0:03:29.240 we don't One thing that we have troubled divining is 0:03:29.840 --> 0:03:35.360 how much support Hamas has in Gaza and from Palestinians. 0:03:35.360 --> 0:03:37.280 And I noticed in a lot of reports, for example, 0:03:37.280 --> 0:03:39.000 in the Times today, they have a ton of coverage 0:03:39.000 --> 0:03:44.720 on this conflict. They seem to conflate Palestinians and Hamas, 0:03:45.320 --> 0:03:48.560 and I wonder how fair that is. What kind of 0:03:48.600 --> 0:03:52.920 support do you think Hamas has in Gaza? 0:03:53.560 --> 0:03:57.000 Well, you're right, it's not fair to conflate millions of 0:03:57.000 --> 0:04:00.320 Palestinians with with one movement, even if that move movement 0:04:00.480 --> 0:04:04.960 is is governing at the moment inside the Gaza Strip. 0:04:06.800 --> 0:04:10.480 It's it's impossible to say exactly how much support Hamas 0:04:10.520 --> 0:04:13.800 has I think it has support. You know, the West 0:04:13.800 --> 0:04:18.640 Bank and Gaza are divided both politically and geographically under 0:04:18.760 --> 0:04:24.719 different kinds of Palestinian leaderships, both still under Israeli control. 0:04:27.360 --> 0:04:29.960 I would say, you know, people in the West Bank 0:04:30.200 --> 0:04:33.480 probably are more supportive of Hamas than people in Gaza 0:04:33.520 --> 0:04:41.120 who have lived under Hamas's governing And but but at 0:04:41.120 --> 0:04:43.200 the end of the day, when something like this happens, 0:04:43.240 --> 0:04:46.760 and and bear in mind that you know, Israel's now 0:04:46.839 --> 0:04:51.680 in the midst of a very severe bombing campaign inside Gaza, 0:04:52.080 --> 0:04:56.160 where as I said, two million human beings live and 0:04:56.760 --> 0:04:59.679 have nowhere to go in a in a very narrow 0:04:59.680 --> 0:05:03.520 strip of land, and entire neighborhoods have been leveled to 0:05:03.600 --> 0:05:07.359 the ground. So it's I think it's impossible to overstate 0:05:07.440 --> 0:05:11.640 the ferocity of the Israeli attack. And I think we 0:05:11.720 --> 0:05:16.440 have to be mindful that, you knows, as horrific as 0:05:16.480 --> 0:05:21.240 the attacks were inside Israel, we also have to remember 0:05:21.400 --> 0:05:25.719 that there are human beings also in the Gaza Strip 0:05:25.960 --> 0:05:28.680 who are suffering and who are dying by the hundreds 0:05:29.800 --> 0:05:32.520 and without much say in what's going on. 0:05:33.200 --> 0:05:36.880 In fact, I read a UNISEF report this morning that 0:05:36.960 --> 0:05:41.080 estimated there roughly a million children living in the Gaza strip, 0:05:41.200 --> 0:05:44.440 meaning almost half of the people there are you know, 0:05:44.560 --> 0:05:47.479 UNISEF says children are people who are under the age 0:05:47.480 --> 0:05:50.360 of fifteen, So almost half of the people there are 0:05:50.440 --> 0:05:53.720 under the age of fifteen, in which case, you know, 0:05:53.920 --> 0:05:56.520 they certainly can't support Hamas. They're not capable of making 0:05:56.600 --> 0:05:57.520 that kind of decision. 0:05:57.839 --> 0:05:59.520 So call it. That kind of raises a question here, 0:05:59.520 --> 0:06:02.280 do we have an idea or based upon your research 0:06:02.320 --> 0:06:05.800 giving the idea, what other than extracting some level of 0:06:05.839 --> 0:06:09.880 retribution or revenge does Israel? What do you think israel 0:06:09.880 --> 0:06:12.840 strategy is in terms of its response that we expect 0:06:13.200 --> 0:06:13.880 any day now. 0:06:15.839 --> 0:06:18.520 Tragically, I don't think they have a strategy. I mean, 0:06:18.560 --> 0:06:22.200 what they've stated is to remove Hamas or to end 0:06:22.240 --> 0:06:29.159 Hamas's military and governing capabilities. Nobody really knows what that means. 0:06:29.960 --> 0:06:33.440 I'm certain from having talked to many Israeli officials in 0:06:33.480 --> 0:06:36.800 the past, that they don't know what that means. I 0:06:36.800 --> 0:06:39.960 think right now they are in a very high state 0:06:40.080 --> 0:06:47.240 of emotion and trauma, and it is primarily a sort 0:06:47.240 --> 0:06:52.120 of the response is really one of retribution, as you said, 0:06:52.120 --> 0:06:55.120 and those are actually the words that Israeli military leaders 0:06:55.120 --> 0:06:59.680 are using. That we're not after precision, we're looking to 0:06:59.720 --> 0:07:03.039 cause damage, and we're seeing that on the ground. I 0:07:03.080 --> 0:07:08.599 think there is considerable evidence that civilians are being targeted. 0:07:09.680 --> 0:07:14.640 They're bombing neighborhoods, they're bombing infrastructure, they're bombing roads, preventing 0:07:14.720 --> 0:07:20.880 ambulances from reaching the wounded and so forth, and so 0:07:22.200 --> 0:07:26.320 it's right now emotions are running high, and so what 0:07:26.480 --> 0:07:29.560 needs to happen is there needs to be a responsible 0:07:29.680 --> 0:07:33.920 third party actor in the international community, presumably someone like 0:07:33.920 --> 0:07:37.640 the United States that has considerable leverage to intervene and 0:07:37.720 --> 0:07:42.960 really bring this to an end, because creating more death 0:07:43.000 --> 0:07:48.680 and destruction is not going to resolve any of the 0:07:48.800 --> 0:07:51.680 underlying issues, and in fact, is just going to make 0:07:51.720 --> 0:07:52.320 things worse. 0:07:53.120 --> 0:07:56.760 It's difficult not to be emotional about this when you 0:07:56.880 --> 0:08:00.600 read the reports of what Hamas has done. I suppose 0:08:01.520 --> 0:08:04.320 you could say the same thing in defense of the 0:08:04.360 --> 0:08:07.680 Palestinians when you read the history of what's happened, and 0:08:07.680 --> 0:08:10.760 you could say the same thing in support of the 0:08:10.840 --> 0:08:12.600 Jews when you read the history of what's happened, so 0:08:13.160 --> 0:08:15.080 you know there's this back and forth. One thing I 0:08:15.080 --> 0:08:21.880 can't understand is why Iran can fund and support Hamas 0:08:22.240 --> 0:08:28.240 and Hezbollah. Why they are allowed to do that, essentially, 0:08:28.680 --> 0:08:34.360 you know, promoting terrorism. Why nothing is done about it? 0:08:35.080 --> 0:08:38.920 Why is Iran allowed to Reportedly they fund up to 0:08:39.000 --> 0:08:45.040 ninety percent of Hamas's budget and they're pursuing enriched uranium 0:08:45.080 --> 0:08:49.920 to build a nuclear bomb. Why is that allowed even 0:08:49.960 --> 0:08:51.720 by other Arab states? 0:08:53.679 --> 0:08:56.199 Well, I mean setting aside the nuclear issue, which is 0:08:56.240 --> 0:09:00.520 a whole other topic. Okay, but Iran, Iran is not 0:09:00.559 --> 0:09:02.680 an air of state, but but it is a is 0:09:02.720 --> 0:09:05.199 a key player in the region and they support many 0:09:05.240 --> 0:09:09.080 different armed groups in different countries like Hisabela and Lebanon 0:09:09.400 --> 0:09:12.960 who he's in Yemen, UH and UH you know others 0:09:12.960 --> 0:09:16.000 in Iraq and in different places. Hamas is one of 0:09:16.040 --> 0:09:21.839 the groups that it supports. From Hamas's perspective, they are 0:09:21.920 --> 0:09:27.680 a non state actor. They need support from some patron, 0:09:27.800 --> 0:09:31.640 some sponsor. Iran is a willing sponsor. Iran has an 0:09:31.679 --> 0:09:38.599 interest in UH, in opposing Israel, in UH creating problems 0:09:38.640 --> 0:09:41.439 for for Israel and what better way to do that 0:09:41.480 --> 0:09:46.440 than to support groups whose mission it is to uh, 0:09:46.480 --> 0:09:48.400 to attack Israel. 0:09:48.160 --> 0:09:52.600 And to exdicate Israel to murder Jews. I mean, well, 0:09:52.720 --> 0:09:55.040 one thing is support an state actor, but you can't 0:09:55.080 --> 0:09:58.760 support terrorists. And Hamas, given what we've seen over the weekend, 0:09:58.840 --> 0:10:01.119 is clearly a terrorist group, right. 0:10:02.280 --> 0:10:04.600 I mean Hamas certainly isn't a group that has carried 0:10:04.640 --> 0:10:08.040 out horrific acts of terrorism. There's no question about that. 0:10:09.040 --> 0:10:12.319 And and you know these are these are war crimes 0:10:12.360 --> 0:10:16.320 and they should be held accountable. Anyone involved in the 0:10:16.360 --> 0:10:20.000 planning or the sponsoring, or the financing or the execution 0:10:20.120 --> 0:10:24.920 of any of these attacks should be absolutely held accountable. 0:10:25.200 --> 0:10:27.240 But I think we have to I think we have 0:10:27.400 --> 0:10:31.960 to be careful in how we frame the issue. Uh, 0:10:32.960 --> 0:10:36.360 this is I mean Hamas is not I mean Hamas 0:10:36.440 --> 0:10:42.440 is a is a political movement. It's there's no serious 0:10:43.160 --> 0:10:45.640 actor who believes that Hamas can destroy Israel. 0:10:45.840 --> 0:10:45.960 Right. 0:10:46.120 --> 0:10:51.679 Whatever the rhetoric comes out of any political movement, rhetoric 0:10:51.760 --> 0:10:53.800 is rhetoric. I mean, if you if we take all 0:10:54.320 --> 0:10:57.120 political and military leaders at their rhetoric. 0:10:57.520 --> 0:11:00.439 Exactly, it would be unfortunate, you can call it. I 0:11:00.520 --> 0:11:02.480 have to just cut a short rare because of time, 0:11:02.520 --> 0:11:04.680 but we really appreciate you taking time sharing your thoughts 0:11:04.720 --> 0:11:05.040 with us. 0:11:06.160 --> 0:11:09.520 You're listening to the team Ken's Are Live program Bloomberg 0:11:09.640 --> 0:11:13.000 Markets weekdays at ten am Eastern on Bloomberg dot com, 0:11:13.080 --> 0:11:16.240 the iHeartRadio app and the Bloomberg Business App, or listen 0:11:16.280 --> 0:11:18.400 on demand wherever you get your podcasts. 0:11:19.880 --> 0:11:22.520 Big m and a trade here today exceon mobile buying 0:11:22.640 --> 0:11:27.080 Pioneer Natural Resource sixty large sixty billion dollars. This is 0:11:27.120 --> 0:11:30.160 a big time play on shale. Let's break it down 0:11:30.559 --> 0:11:32.920 with Frenetta Valley. He is a senior analyst at Bloomberg 0:11:32.960 --> 0:11:36.000 Intelligence is covering all the energy space. He joins his 0:11:36.120 --> 0:11:38.680 live here in our Bloomberg Interactive Broker Studio. So let's 0:11:38.679 --> 0:11:42.480 start first with the price, the valuation. Did they have 0:11:42.559 --> 0:11:44.480 to pay up to get this thing here? 0:11:44.720 --> 0:11:47.480 A little bit? But you know when you look at 0:11:47.520 --> 0:11:50.280 the breakdown on the free Castle per share, the ebitdah 0:11:50.400 --> 0:11:53.160 per share after the dilution, it's actually a creative right 0:11:53.200 --> 0:11:55.880 away to ex and mobile propriety. They can capture that 0:11:56.000 --> 0:11:58.439 one billion dollar synergies which is the low end of 0:11:58.440 --> 0:12:00.600 their target two billion being high end. 0:12:00.480 --> 0:12:03.200 And it's all stock deal, all stocked. Nice, that's good 0:12:03.240 --> 0:12:04.880 to you. Don't go out and borrow. 0:12:04.640 --> 0:12:07.160 It, you know. I had read an analyst saying, like, 0:12:07.400 --> 0:12:11.720 if they pay a moderate premium, then they can still 0:12:11.720 --> 0:12:14.280 make money on this. But does it have to be 0:12:14.320 --> 0:12:16.120 only a moderate premium or are they going to make 0:12:16.160 --> 0:12:17.160 money handover fist. 0:12:18.200 --> 0:12:22.559 I believe they'll make money handover fist regardless because of 0:12:22.640 --> 0:12:26.040 two factors. First, we've talked about the underinvestment in the 0:12:26.200 --> 0:12:30.199 industry over the past decade, and although we're burish in 0:12:30.240 --> 0:12:33.200 the short term demand side of the equation, longer term 0:12:33.320 --> 0:12:36.120 we think that will be the driver of oil prices. 0:12:36.280 --> 0:12:41.480 But second, Pioneer has the largest undeveloped resource base in 0:12:41.520 --> 0:12:47.040 the Midland Basin, which gives Excellent a huge jud region 0:12:47.120 --> 0:12:48.720 to develop over the next ten years. 0:12:49.080 --> 0:12:52.080 So Matt and I were just noticing that this is 0:12:52.200 --> 0:12:55.600 just a good old fashion buy up some you know, 0:12:55.880 --> 0:12:59.920 old fashioned fuel oil shale whatever it is. There's no carbon, 0:13:00.040 --> 0:13:01.920 there's no solar here, there's no wind here, there's no 0:13:02.080 --> 0:13:04.480 eco friendly thing here, there's no green here. This is 0:13:04.520 --> 0:13:07.920 good old fashioned big oil company buying another big Texas 0:13:07.960 --> 0:13:10.920 oil company. Right, this is old time. But they said 0:13:10.920 --> 0:13:12.280 it was good for the environment. They said it was 0:13:12.280 --> 0:13:13.880 good for the environment. I'm not sure where they get 0:13:13.880 --> 0:13:14.320 that from. 0:13:14.400 --> 0:13:18.040 Well, you know, there's two factors. Yes, it is exactly that. 0:13:18.559 --> 0:13:22.120 And Darren Woods in his interview with Alex Steele said 0:13:22.760 --> 0:13:25.800 they don't believe peak oils upon us and that we'll 0:13:25.840 --> 0:13:28.079 still use oil in gas for a really long time. 0:13:28.360 --> 0:13:32.160 And then their their point on reducing emissions is that 0:13:32.520 --> 0:13:36.640 because they're developing this carbon capture center in the Gulf Coast, 0:13:36.880 --> 0:13:39.880 they'll actually be able to take all the Pioneer's production 0:13:40.400 --> 0:13:43.440 and take it there and capture that carbon and use 0:13:43.679 --> 0:13:46.760 and reduce their emissions. So on a net basis, this 0:13:46.920 --> 0:13:48.959 becomes a lower emissions. 0:13:49.559 --> 0:13:51.400 So they bury that stuff, right. 0:13:51.679 --> 0:13:54.040 They bury. Eventually the goal is to use it for 0:13:54.160 --> 0:13:56.320 power generation, but we're still a little bit away from that. 0:13:57.440 --> 0:13:58.959 Okay, I'll buy it. 0:13:59.000 --> 0:14:00.160 Sounds interesting. 0:14:01.040 --> 0:14:02.960 Some geologists somewhere came up with that idea. 0:14:03.280 --> 0:14:05.959 So Alex Eel was on here earlier and told us 0:14:06.120 --> 0:14:10.800 we pump thirteen million barrels a day more than Saudi 0:14:10.840 --> 0:14:14.360 Arabia in this country. Talk to us just for a 0:14:14.400 --> 0:14:17.520 brief moment about energy independence. What does that mean? I mean, 0:14:17.559 --> 0:14:23.080 if for example, we no longer could import any oil 0:14:23.760 --> 0:14:26.960 or petroleum products to the US. Would we still be 0:14:28.000 --> 0:14:30.640 okay with prices hovering around where they are now? 0:14:32.040 --> 0:14:35.840 Likely not unless you're counting inports from Canada and Mexico 0:14:35.880 --> 0:14:38.440 as well and looking at that as one integrated system. 0:14:38.680 --> 0:14:41.200 The issues that the shale oil that we produce is 0:14:41.280 --> 0:14:43.680 very light, and it's one of the reasons we export 0:14:43.720 --> 0:14:47.359 a fair amount of our shale crew and still import. 0:14:47.560 --> 0:14:50.200 Then pulse fase, what what are light crudes used for 0:14:50.320 --> 0:14:51.479 as opposed to heavy. 0:14:51.600 --> 0:14:54.840 So light crudes tend to produce more gasoline and NAFTA, 0:14:55.640 --> 0:14:58.640 and then medium crudes produce diesel and jet fuel. So 0:14:58.680 --> 0:15:01.720 we need to balance that in our crude diet. And 0:15:01.760 --> 0:15:05.520 then Paul's favorite act, the Jones Act, prevents us to 0:15:05.880 --> 0:15:07.960 moving some of that crude into the East Coast that 0:15:08.000 --> 0:15:10.200 could process some of that crude, So we'd have to 0:15:10.240 --> 0:15:14.360 revoke that act. We would have to also refining capacity. 0:15:14.400 --> 0:15:17.000 All right. Talk to so I bring up the oil 0:15:17.040 --> 0:15:19.520 from the shale in Texas, how do I get it 0:15:19.520 --> 0:15:21.640 to where it needs to go? How does that happen? 0:15:22.000 --> 0:15:25.960 Pipelines primarily pipelines, and that's one of. 0:15:25.320 --> 0:15:27.400 The midstream what you guys called midstream. 0:15:27.520 --> 0:15:31.320 Yeah, midstream is the whole processing side. So we separate 0:15:31.800 --> 0:15:35.240 oil from gas, from water, from the natural gas liquids, 0:15:35.320 --> 0:15:40.680 and then we move it out to the production center's refineries, fractionators, 0:15:40.680 --> 0:15:43.440 et cetera. And one of the wrinkles in this deal 0:15:43.520 --> 0:15:45.200 is that it will make it harder for the mid 0:15:45.280 --> 0:15:48.160 streams and service players because Excellon is now going to 0:15:48.160 --> 0:15:51.360 be you know, nearly ten over ten percent of premium production. 0:15:51.600 --> 0:15:54.880 They'll have a lot of say on how the pricing 0:15:54.920 --> 0:15:57.280 goes that in that market. And it will also make 0:15:57.320 --> 0:15:59.960 it harder for smaller independent players to get those service 0:16:00.160 --> 0:16:03.080 is because you need to be exposed to Xceon and 0:16:03.120 --> 0:16:05.080 they will have a driver's seat in that area. 0:16:05.120 --> 0:16:07.200 Oh so, do we need to talk to Jennifer Ree 0:16:07.200 --> 0:16:09.720 Bloomberg intellig She is anti trust person. Is this still 0:16:09.720 --> 0:16:10.800 going to get approved? You think? 0:16:11.440 --> 0:16:11.560 So? 0:16:11.640 --> 0:16:15.480 I was speaking to Jennifer earlier and she thinks, because 0:16:15.520 --> 0:16:17.960 it's less than fifteen percent of permium production, there's a 0:16:18.000 --> 0:16:20.760 good chance that he will get approved. But the timeline 0:16:21.120 --> 0:16:24.760 maybe beyond the first half of twenty twenty four, and 0:16:25.320 --> 0:16:28.320 it will be a challenge. Typically, the way they argue 0:16:28.360 --> 0:16:30.840 is that oil is a global market and we export 0:16:30.880 --> 0:16:34.240 CREWD So we're actually competing with the Saudia, Ramcos and 0:16:34.280 --> 0:16:36.440 the gas drums of the world and not just with 0:16:36.520 --> 0:16:40.840 the pioneers and EOGs. 0:16:41.720 --> 0:16:43.520 So are we going to I mean, if I'm an 0:16:43.520 --> 0:16:46.360 investment energy investment banker in Houston, am I just ripping 0:16:46.400 --> 0:16:48.920 up the phone here calling everybody I can? My rolldeck's 0:16:48.920 --> 0:16:49.800 trying to get some deals done. 0:16:49.920 --> 0:16:53.360 Well, you're calling four companies, primarily you're calling Conical Phillips, 0:16:53.400 --> 0:16:56.720 You're calling Chefron, you're calling Occidental, and maybe you're calling 0:16:56.800 --> 0:16:59.600 EOG Resources and you're saying, who do you want? 0:16:59.760 --> 0:17:00.000 Right? 0:17:00.160 --> 0:17:03.200 And then perhaps they're calling all the private equity players 0:17:03.200 --> 0:17:05.239 and be like, hey, we need to get together and 0:17:05.280 --> 0:17:08.960 create a better larger player or else we're going to 0:17:09.000 --> 0:17:12.120 be taken up by larger players. 0:17:12.400 --> 0:17:16.159 What about BP and SHELL Where are they in the 0:17:16.160 --> 0:17:16.959 Permian basin? 0:17:17.400 --> 0:17:21.080 So shell sowed their acreage to Chronicle Phillips, so they're 0:17:21.080 --> 0:17:24.280 no longer in the Permian basin and they really have 0:17:24.400 --> 0:17:29.959 moved away from shale. BP had bought BHP Billetin's shale portfolio. 0:17:30.480 --> 0:17:34.040 They haven't been very aggressive in the Permian and it's 0:17:34.160 --> 0:17:36.679 kind of a question mark because they changed their CEO 0:17:36.760 --> 0:17:39.760 after burn Looney was forced to resign a couple months ago. 0:17:40.119 --> 0:17:42.960 All Right, we got WTI crude oil eighty four dollars 0:17:43.040 --> 0:17:45.200 a barrel here it did you know spike up Monday? 0:17:45.520 --> 0:17:47.160 You know, four or five percent on the news coming 0:17:47.200 --> 0:17:49.440 out of Israel. What's the feeling now when you talk 0:17:49.440 --> 0:17:53.600 to the energy folks about just kind of the geopolitics 0:17:53.640 --> 0:17:55.840 of that part of the world and what it really 0:17:55.880 --> 0:17:57.919 means for global supply. 0:17:58.040 --> 0:18:00.760 I guess, well, the fear is there on what happens 0:18:00.760 --> 0:18:04.040 with Iran. Is this war going to escalate to that 0:18:04.080 --> 0:18:06.160 part of the world, and if he does, how will 0:18:06.160 --> 0:18:09.200 it impact the oil flows and also the exports of crude? 0:18:09.200 --> 0:18:11.919 How much does Iran I guess producer exporter. 0:18:12.160 --> 0:18:14.200 They produce around three million barrels a day and the 0:18:14.320 --> 0:18:16.960 export just north at one point two million barrels a day. 0:18:17.119 --> 0:18:21.359 So it's about one percent of the world consumption in exports. 0:18:21.920 --> 0:18:26.440 It's not that significant, except that supply is relatively tight. Again, 0:18:26.520 --> 0:18:28.880 as we said, our fear is on the demand side, 0:18:29.600 --> 0:18:33.080 and that we think could be the bigger driver. But 0:18:33.280 --> 0:18:36.520 if Iran does go into war, wars consume a lot 0:18:36.560 --> 0:18:38.920 of fuel consume a lot of oil, so that could 0:18:39.000 --> 0:18:41.040 shift the narrative entirely. 0:18:41.119 --> 0:18:43.800 But it's fungible, so we could be okay as long 0:18:43.840 --> 0:18:48.600 as we hold Canada and Mexico as allies. 0:18:48.800 --> 0:18:54.040 Exactly exactly, and we could also we have other allies, 0:18:54.040 --> 0:18:57.280 including in the UK and Norway that produce a fair 0:18:57.280 --> 0:19:00.280 amount of crud, in Brazil and others that can help 0:19:01.320 --> 0:19:02.119 fill our needs. 0:19:02.160 --> 0:19:04.760 By the way, I saw a pipeline had been damaged 0:19:04.800 --> 0:19:07.919 between Finland and Estonia. Today you see that, yes, and 0:19:07.960 --> 0:19:11.080 apparently at one point this is a young pipeline, it's 0:19:11.119 --> 0:19:16.080 only three years old. Nonetheless, Finland gets almost all of 0:19:16.119 --> 0:19:18.840 their gas through this pipeline. 0:19:18.960 --> 0:19:22.320 I mean, Europe is in a very comfortable place with 0:19:22.640 --> 0:19:26.080 natural gas inventories. The issue is if there are disruptions 0:19:26.119 --> 0:19:29.960 and movements, because their diesel inventories are very low, and 0:19:30.000 --> 0:19:32.840 that's the backup to the natural gas. And obviously they 0:19:32.840 --> 0:19:35.000 closed a lot of nuclear plants over the past year 0:19:35.080 --> 0:19:38.639 in Belgium and Germany. If there is a disruption, especially 0:19:38.640 --> 0:19:41.520 in the straight or horror moves between Katara and Iran 0:19:42.080 --> 0:19:44.280 where we get a lot of the natural gas shipments 0:19:44.280 --> 0:19:47.920 to Western Europe, that leads them the very precarious position. 0:19:48.560 --> 0:19:50.440 If we have a normal to cold winter. 0:19:51.040 --> 0:19:52.920 Got to put LNG terminals in over there. 0:19:53.040 --> 0:19:54.919 Yeah, and can you put like, yeah, what is the 0:19:55.040 --> 0:19:57.399 LNG situation over in New York? Can't we just? I 0:19:57.400 --> 0:19:58.640 thought you can build them pretty quickly. 0:19:58.720 --> 0:20:00.480 Well they did. They didn't want to build them back 0:20:00.520 --> 0:20:01.920 when Dan Boyette was over there. 0:20:01.960 --> 0:20:05.520 But that's to regassify we need the gas first. In 0:20:05.640 --> 0:20:09.280 Qatar and Iran shared the largest gas field in the world, 0:20:09.280 --> 0:20:12.200 the North Field, and they are the Qatar is the 0:20:12.280 --> 0:20:14.080 largest producer of ellen g in the world. 0:20:14.760 --> 0:20:16.200 Interesting, man, it all comes back. 0:20:16.480 --> 0:20:18.560 It's a big gas field in Netherlands, but they decided 0:20:18.600 --> 0:20:19.240 to shut it down. 0:20:19.359 --> 0:20:22.600 Yeah I heard that, because all right, Fernando, thanks so 0:20:22.640 --> 0:20:25.720 much for joining us. Fernando Valley, he's our senior global 0:20:26.240 --> 0:20:28.600 energy guy for Bloomberg Intelligence. 0:20:28.760 --> 0:20:31.879 You're listening to the tape catch are live program Bloomberg 0:20:31.920 --> 0:20:35.520 Markets weekdays at ten am Eastern on Bloomberg Radio, the 0:20:35.560 --> 0:20:38.800 tune in app, Bloomberg dot Com, and the Bloomberg Business app. 0:20:38.840 --> 0:20:41.639 You can also listen live on Amazon Alexa from our 0:20:41.680 --> 0:20:46.400 flagship New York station, Just say Alexa play Bloomberg eleven thirty. 0:20:47.600 --> 0:20:52.640 Economic outlook, inflation, interest rates, geopolitics is front center once again, 0:20:52.680 --> 0:20:55.639 first in Ukraine and now in Israel. Let's see how 0:20:55.680 --> 0:20:58.120 some of these professionals kind of put that into their calculus. 0:20:58.160 --> 0:21:02.120 Karra Murphy joins us. She's a CIO Kestra Investment Management. Karen, 0:21:02.160 --> 0:21:04.600 thanks so much for joining us via zoom here. Talk 0:21:04.600 --> 0:21:06.520 to us about kind of you know, like the rest 0:21:06.520 --> 0:21:08.800 of us, we woke up over the weekend and saw 0:21:08.840 --> 0:21:13.159 the terrible news coming out of Israel. As a professional investor, 0:21:13.720 --> 0:21:16.640 how does that factor into your calculus if at all? 0:21:18.640 --> 0:21:20.959 It's interesting, you know, I've been a chief investment officer 0:21:20.960 --> 0:21:22.399 for a long time and I've given a lot of 0:21:22.440 --> 0:21:25.560 presentations on our you know, global market outlook, and there's 0:21:25.600 --> 0:21:27.560 usually always a slide at the end of the deck 0:21:27.600 --> 0:21:30.040 that says risks, and there's always a line item there 0:21:30.040 --> 0:21:33.480 that says geopolitical risks. And exactly which risks are sort 0:21:33.480 --> 0:21:36.399 of simmering under the surface might change over time, but 0:21:36.440 --> 0:21:39.320 there's always a possibility of some sort of conflagration around 0:21:39.760 --> 0:21:43.240 around the world. And typically, like often when we see 0:21:43.760 --> 0:21:48.000 a geopolitical event outside the US, the main transmission mechanism 0:21:48.000 --> 0:21:51.199 by which it starts to affect global markets is through oil, right, 0:21:51.240 --> 0:21:54.200 So we saw this particularly in Ukraine when Russia invaded. 0:21:54.600 --> 0:21:56.880 Now conflict in the Middle East, and so I think 0:21:56.880 --> 0:21:59.520 that's the biggest immediate concern in terms of the impact 0:21:59.600 --> 0:22:02.240 on the US economy, and so far markets have really 0:22:02.280 --> 0:22:05.960 been largely shrugging it off. Now, if this continues to 0:22:06.000 --> 0:22:08.600 be you know, a big focus and continues on for 0:22:08.640 --> 0:22:11.520 a long time, really starts to affect the supply of oil. 0:22:11.640 --> 0:22:14.120 That then will drive the price of oil up, which 0:22:14.160 --> 0:22:16.879 then will complicate matters for the FED here at home. 0:22:17.640 --> 0:22:19.879 The other piece of it, of course is military funding, 0:22:19.920 --> 0:22:22.920 where now we have the US government helping a fund 0:22:22.960 --> 0:22:25.840 war in Ukraine and now war in Israel, and that 0:22:25.880 --> 0:22:28.760 does cost money. It is, you know, a commitment that 0:22:28.800 --> 0:22:31.639 the US has made, but we'll start to hurt the 0:22:31.760 --> 0:22:34.200 US budget in some way at the same time when 0:22:34.200 --> 0:22:37.119 the budget is already under pressure and we have discord 0:22:37.200 --> 0:22:37.880 in Washington. 0:22:38.160 --> 0:22:38.800 So it's sort of. 0:22:38.720 --> 0:22:41.360