WEBVTT - Iran Is The Thing That Keeps Me Up At Night: Former CIA Officer 0:00:06.000 --> 0:00:08.920 Welcome to the Bloomberg P and L Podcast. I'm pim Fox. 0:00:08.960 --> 0:00:11.640 Along with my co host Lisa A. Bramowitz. Each day 0:00:11.680 --> 0:00:15.200 we bring you the most important, noteworthy, and useful interviews 0:00:15.240 --> 0:00:17.720 for you and your money, whether you're at the grocery 0:00:17.760 --> 0:00:20.759 store or the trading floor. Find the Bloomberg P and 0:00:20.880 --> 0:00:32.360 L Podcast on Apple Podcasts, SoundCloud, and Bloomberg dot com, 0:00:32.479 --> 0:00:39.120 National security, trade tweets, Trump and Iran. Here to help 0:00:39.159 --> 0:00:41.839 us understand all of these different things is Jack Divine. 0:00:41.840 --> 0:00:46.520 He is the former acting director of the Central Intelligence Agency, 0:00:46.680 --> 0:00:49.239 and he is also the founding partner and the president 0:00:49.320 --> 0:00:52.559 of the security firm The Arkin Group. He joins us 0:00:52.560 --> 0:00:55.200 here in our eleven three oh studios. Jack, thank you 0:00:55.280 --> 0:00:58.160 very much for being here. Do you have a security clearance? 0:00:58.360 --> 0:01:03.560 I do. What is your reaction to the news reports 0:01:03.600 --> 0:01:09.200 about the potential for revoking the security clearances of several 0:01:09.240 --> 0:01:14.600 former administration security officials. I can understand why the presidents upset. 0:01:14.840 --> 0:01:20.680 I can unders stand um why it's painful to listen 0:01:20.720 --> 0:01:23.360 to them. But free speech is a big part of 0:01:23.360 --> 0:01:28.000 our critically important part of our system, and you can't. 0:01:28.520 --> 0:01:30.399 You have to be in the political rena. You have 0:01:30.480 --> 0:01:33.840 to live with it. UM. I do think there's questions 0:01:33.880 --> 0:01:36.880 about why we have so many people that have security clearance. 0:01:37.040 --> 0:01:39.720 Last time I looked at was the three millions why 0:01:39.959 --> 0:01:44.400 government officials carried into the private sector. I mean legitimate 0:01:44.440 --> 0:01:47.400 reasons is but to go after because you don't like 0:01:47.480 --> 0:01:50.120 what's being said, I think is wrong foot it well, 0:01:50.160 --> 0:01:51.720 and I don't think it has legs. If you'll use 0:01:51.840 --> 0:01:54.040 excuse the pun, I don't. I don't think there's gonna 0:01:54.080 --> 0:01:55.880 be a long lasting story. I don't think you're going 0:01:55.920 --> 0:01:59.559 to do it, but you know, it rattles everybody's cage. 0:02:00.000 --> 0:02:03.080 Another thing that's rattling everybody's cage right now is President 0:02:03.080 --> 0:02:07.040 Trump's rhetoric toward Iran UH, similar to the approach that 0:02:07.080 --> 0:02:11.799 he took with North Korea, basically threatening them and UH 0:02:12.040 --> 0:02:15.079 and and the idea of sanctions are definitely coming up. 0:02:15.800 --> 0:02:19.200 What's going on here? Well, I think there's the bigger 0:02:19.280 --> 0:02:22.480 picture of where we headed in Iran. But let's start 0:02:22.520 --> 0:02:27.959 with today's today's news, if you will, UH. I think 0:02:28.000 --> 0:02:32.519 the fact that Rohani, president in Iran, spoke out so 0:02:32.600 --> 0:02:35.480 forcedly and said if you do try and sanction, as 0:02:35.919 --> 0:02:37.799 you know, be the mother of all wars. I mean 0:02:37.960 --> 0:02:40.640 the predictable reaction. You don't have to be a rocket 0:02:40.720 --> 0:02:43.040 science to know that President Trump is going to come 0:02:43.040 --> 0:02:44.800 back and loves a good fight, and they're just going 0:02:44.880 --> 0:02:47.160 to come back as strong as you can, and says 0:02:47.200 --> 0:02:50.880 if you think that's the mother of all wars, what 0:02:50.960 --> 0:02:54.280 do you see what I have for you? So I 0:02:54.320 --> 0:02:58.440 was reading an article day where quoting someone saying, you 0:02:58.480 --> 0:03:01.280 know they're dealing with the for fish in this pond. 0:03:01.320 --> 0:03:04.320 Now you know what they might have gotten away with 0:03:04.480 --> 0:03:07.680 and passed with challenges. But if you know, if they 0:03:07.760 --> 0:03:11.280 really think they're going to use force the Iranians, then 0:03:11.800 --> 0:03:13.639 then I think they need to be prepared for a 0:03:13.639 --> 0:03:16.600 pretty harsh response. I mean, I don't think it's all bravado. 0:03:17.360 --> 0:03:19.559 So you think that we could have a military altercation 0:03:19.639 --> 0:03:22.799 with Theyran I've been concerned about the prospects. It used 0:03:22.800 --> 0:03:25.600 to be my concern about Pakistan having nuclear weapons that 0:03:25.720 --> 0:03:28.240 kept me awake. The thing that has troubled me, and 0:03:28.240 --> 0:03:31.000 I've written about this in my quarterlies for the past year. 0:03:31.320 --> 0:03:34.880 The Place to Watch. I mean, I'm obviously fixated on 0:03:34.920 --> 0:03:38.280 the Russian Helsinki meeting, but I would say the longer 0:03:38.400 --> 0:03:41.560 term issue where there's a real risk, is Iran an 0:03:41.640 --> 0:03:45.320 arm relationship with them. Jack, You've had a thirty two 0:03:45.400 --> 0:03:49.440 year career with the CIA. You're also the author of 0:03:49.480 --> 0:03:54.360 a book called Good Hunting, a spy Master's story based 0:03:54.400 --> 0:03:57.920 on what you know. Do you believe that the meeting 0:03:58.040 --> 0:04:02.080 that took place between Vladimir Huon and President Donald Trump 0:04:02.880 --> 0:04:11.600 was recorded? That's a good A good question. UM. I 0:04:11.800 --> 0:04:15.200 would I wouldn't bet a lot of money, but I 0:04:15.360 --> 0:04:19.520 think it was limited to the stenography. All right, now, 0:04:19.560 --> 0:04:22.600 they'd have to have an agreement, and I would think 0:04:22.640 --> 0:04:25.000 if I were either the participants, I would not want 0:04:25.000 --> 0:04:27.159 to record it because you're not sure how that meeting 0:04:27.279 --> 0:04:30.160 is going to go. I think it's too risky to 0:04:30.240 --> 0:04:33.880 have it recorded. I think they were prudent. Actually, if 0:04:33.920 --> 0:04:37.000 you want to have UM, you know, once in a while, 0:04:37.040 --> 0:04:40.840 you really do have to do one on one and Uh. 0:04:42.080 --> 0:04:45.080 I seriously doubt that it was recorded, but I wouldn't 0:04:45.080 --> 0:04:47.120 bet a lot of money on it. Do you think 0:04:47.200 --> 0:04:53.920 that President Trump's lack of uh castigation of Prussia for 0:04:54.000 --> 0:04:58.920 their involvement in the election, which is agreed by bipartisan groups, 0:04:58.920 --> 0:05:02.480 that there was meddling the Russian government in the US elections. 0:05:02.480 --> 0:05:05.599 Do you think that the president's tepid kind of approach 0:05:05.680 --> 0:05:11.080 to that puts US into greater danger? I think the UH. 0:05:11.320 --> 0:05:14.000 I think President Trump was on a roll, depending on 0:05:14.040 --> 0:05:16.760 how you look at it, up until he landed in 0:05:16.920 --> 0:05:20.039 the UK, and I thought something wheel fell off of 0:05:20.080 --> 0:05:23.480 the car in terms of the preparation and strategy of 0:05:23.560 --> 0:05:26.240 the meeting. And then I honestly must say Helsinki, I 0:05:26.240 --> 0:05:29.040 thought it was a huge setback for the president in 0:05:29.160 --> 0:05:33.680 terms of the exerting what looked like a very strong president. 0:05:33.839 --> 0:05:36.200 I mean, you may not like the policies that may 0:05:36.200 --> 0:05:38.680 not be popular. Eventually popular already cuts up with it. 0:05:39.120 --> 0:05:41.000 But it was strong, whether you liked it or not. 0:05:41.160 --> 0:05:45.160 I think the biggest and most troubling thing about that 0:05:45.240 --> 0:05:49.640 meeting it was a sense of of weakness and not 0:05:49.800 --> 0:05:52.080 coming out ahead, which is a very bad place for 0:05:52.120 --> 0:05:55.640 a president to be. I remember I was a kid, 0:05:55.640 --> 0:05:59.760 but I remember Khruschef meeting Kennedy on the first seven meeting, 0:05:59.760 --> 0:06:01.880 and they didn't want Kennedy to make the meeting, and 0:06:01.920 --> 0:06:05.640 he did. He being Kennedy and Khrushchov belf. It was 0:06:05.680 --> 0:06:09.280 a disaster for Kennedy after that meeting, Putin went off 0:06:09.320 --> 0:06:12.000 and decided he was going to push, push hard and 0:06:12.040 --> 0:06:15.159 put missiles in the Cuba. But he didn't realize that. 0:06:15.240 --> 0:06:17.599 Jack Kennedy at the same time realized he did poorly, 0:06:17.680 --> 0:06:20.120 and and and strengthen it. And then you had a 0:06:20.160 --> 0:06:24.240 confrontation as close as we've gotten a nuclear war. And 0:06:25.160 --> 0:06:29.520 fortunately for Kennedy, we had in his pocket inside intelligence 0:06:29.560 --> 0:06:33.000 from the spy Pankovski and was able to push back 0:06:33.120 --> 0:06:36.080 on Krushev. So I think there's a dynamic here and 0:06:36.160 --> 0:06:39.920 what is Alice Trump going to regain his strength? And 0:06:40.000 --> 0:06:44.600 does that come from pushing back? And um, I think 0:06:44.640 --> 0:06:50.400 that would be my recommendation. I am a bit befuddled 0:06:50.440 --> 0:06:53.039 by the call for a second summit in that context, 0:06:53.080 --> 0:06:54.840 I thought I had a pretty good grasp of what 0:06:54.880 --> 0:06:59.600 was going to happen next to now ambivalent Jack. One 0:06:59.640 --> 0:07:03.400 of you are various UH duties. You headed the CIA's 0:07:03.480 --> 0:07:08.840 Counter Narcotics Center. You also worked on the response to 0:07:08.839 --> 0:07:13.240 the United States to Russian incursions in Afghanistan. Do you 0:07:13.320 --> 0:07:19.560 believe that there's a casual relationship between human behavior and logic? 0:07:23.600 --> 0:07:27.200 That's that's a really interesting question, but I'm not sure 0:07:27.200 --> 0:07:31.640 where you're coming from, and I would say, yes, qualified, 0:07:32.600 --> 0:07:36.960 quite qualified. Well, I think we all think we're very logic, 0:07:37.040 --> 0:07:39.720 all right, But I do think that we all come 0:07:39.760 --> 0:07:43.280 out of the same place with a DNA and makeup 0:07:43.360 --> 0:07:45.360 that was somehow related to some uncle who was a 0:07:45.400 --> 0:07:49.000 little flaky. So maybe we're not. We're trying to be logical, 0:07:49.800 --> 0:07:55.480 but we do have personalities that are developed. Um so yeah, 0:07:55.480 --> 0:08:01.360 I'd like to be optimistic that mankind woman kind as 0:08:01.400 --> 0:08:08.080 well h are logical. Well, let's hope that logic prevails. 0:08:08.520 --> 0:08:11.040 Jack Divine, thank you so much for being with us. 0:08:11.240 --> 0:08:14.800 We could spend another hour talking. Uh so many questions, 0:08:15.200 --> 0:08:32.360 so we'll leaf to have you back. Let's start our 0:08:32.400 --> 0:08:36.960 focus to emerging markets, in particular Turkey assets are falling 0:08:36.960 --> 0:08:40.880 out of bed there after the central Bank unexpectedly held 0:08:41.080 --> 0:08:43.520 interest rates where they were despite the fact that inflation 0:08:44.000 --> 0:08:46.199 was spiraling out of concern and that many people were 0:08:46.200 --> 0:08:49.200 saying that they needed to support the currency. Of course, uh, 0:08:49.240 --> 0:08:52.680 the president's son in law is now helming the central bank. 0:08:52.760 --> 0:08:55.079 So Damian Sassour joins us. Now fixed income started just 0:08:55.120 --> 0:08:59.679 for Bloomberg Intelligence. Damien, Wow, Turkey, are you surprised by 0:08:59.679 --> 0:09:02.320 this or is this just uh, you know, an ongoing 0:09:02.400 --> 0:09:04.720 mess that just gets worse. Well, I'm not surprised than 0:09:04.760 --> 0:09:06.839 it is an ongoing mess, and it's it's one of 0:09:06.880 --> 0:09:08.720 his own making. It's one of it's one of one's 0:09:08.760 --> 0:09:10.679 own making, right. I mean, we have a country that's 0:09:10.720 --> 0:09:14.120 operating with a six point one percent current account deficit UM. 0:09:14.120 --> 0:09:18.560 It's debt is funded in external currencies and it's all 0:09:18.559 --> 0:09:20.520 short term portfolio flows, right, So how are they going 0:09:20.559 --> 0:09:22.600 to fund their debt? How are they going to fund 0:09:22.640 --> 0:09:24.640 the country's operations? I mean, the only way to do 0:09:24.679 --> 0:09:27.640 that is to raise rates and appeal to offshore creditors 0:09:27.679 --> 0:09:31.080 to continue, you know, basically making its economy more investable. 0:09:31.120 --> 0:09:33.800 And it did not do that today. And so now 0:09:33.840 --> 0:09:36.600 we've seen the lira the worst performer pretty much um 0:09:36.880 --> 0:09:41.360 outside of Argentina on the year down local currency, Turkish 0:09:41.400 --> 0:09:44.920 debt down twenty nine percent year to date in dollar terms. 0:09:45.400 --> 0:09:47.840 Uh yeah. Now you've got yields in the high teams 0:09:47.880 --> 0:09:50.720 now seventeen point eight percent five year yields and local currency. 0:09:51.360 --> 0:09:53.880 It's just it's getting bad, it's getting ugly. You've got 0:09:53.920 --> 0:09:57.400 inflation there of around fifteen percent I believe percent inflation 0:09:57.440 --> 0:09:59.360 that's right. I mean that was that was in June. 0:09:59.400 --> 0:10:01.240 It's average a eight and a half percent over the 0:10:01.320 --> 0:10:03.040 last five years. Just to give you a sense of 0:10:03.120 --> 0:10:05.560 just how far things have gone, I mean, think about 0:10:05.559 --> 0:10:07.360 p M I. P m I felt to its lowest 0:10:07.440 --> 0:10:11.840 level on record in May. That signals slower GDP growth. 0:10:11.840 --> 0:10:14.600 I mean, the only way that could possibly think they're gonna, 0:10:14.760 --> 0:10:16.240 you know, move their way out of this is to 0:10:16.360 --> 0:10:18.440 accelerate growth, right, is to grow their way out of it. 0:10:18.480 --> 0:10:21.000 But clearly that's not happening either. And so where does 0:10:21.120 --> 0:10:24.120 attention now shift. It shifts to the financial sector. And hey, 0:10:24.120 --> 0:10:25.800 we're an earning season, right, So you've got all the 0:10:25.800 --> 0:10:29.640 big Turkish banks reporting starting tomorrow and through next week, 0:10:30.120 --> 0:10:33.360 and they're also huge, huge issuers of US dollar debt 0:10:33.520 --> 0:10:35.480 and they're gonna have trouble rolling it over. When I 0:10:35.520 --> 0:10:39.200 talked to emerging markets investors, particularly the debt world, they say, 0:10:39.480 --> 0:10:42.079 you know, in general, we still find some things to 0:10:42.200 --> 0:10:45.200 like in emerging markets. Credit that's sold off a lot, 0:10:45.840 --> 0:10:48.240 but we're not touching Argentina or Turkey. Some people are 0:10:48.240 --> 0:10:51.560 actually tiptoeing back to Argentina Turkey off limits. I'm just 0:10:51.559 --> 0:10:54.960 wondering I mean, it's Turkey just a completely idiosyncratic story 0:10:55.080 --> 0:10:57.760 unto itself, with a government that just is getting itself 0:10:57.760 --> 0:11:01.960 deeper into mess. Or do you see signs of something 0:11:02.080 --> 0:11:05.160 more pervasive happening across the board and development more? I mean, 0:11:05.160 --> 0:11:06.880 and you know, I mean I I every time I 0:11:06.880 --> 0:11:09.280 think I've got emerging markets figured out, Lesta, they always 0:11:09.280 --> 0:11:12.040 another Turkey pops up. And you know, it's just unbelievable, 0:11:12.080 --> 0:11:14.600 the stubbornness. And look, it's it's not unprecedented. Right, We've 0:11:14.600 --> 0:11:17.160 seen in South in Brazil, we said Dilma, you know, 0:11:17.320 --> 0:11:19.440 you know, contesting the credibility of the of the Brazilian 0:11:19.440 --> 0:11:21.400 Central Bank a few years back. We've seen recently in 0:11:21.440 --> 0:11:23.520 South Africa something somewhere. We're seeing here in the US 0:11:23.559 --> 0:11:26.160 Trump saying he does think rates should continue to go up, right, 0:11:26.200 --> 0:11:28.559 So this is nothing new. But for a president to 0:11:28.640 --> 0:11:32.040 basically just shrug off the markets, um to install his 0:11:32.080 --> 0:11:34.720 son in law as the dual head of the Central 0:11:34.720 --> 0:11:38.000 Bank and the Finance Ministry and give him the control, 0:11:38.120 --> 0:11:40.559 it's basically he's I mean, now the markets believe he's 0:11:40.559 --> 0:11:42.760 a puppet, right, And so you know, Idawin's on the 0:11:42.800 --> 0:11:44.920 record is having said he does not think high rates 0:11:44.960 --> 0:11:47.520 are good for the economy. He wants rates lower, and 0:11:47.720 --> 0:11:49.800 we're seeing evidence of that here today. And it's just 0:11:50.080 --> 0:11:53.080 h yeah, No, I a a central bank that's um, 0:11:53.120 --> 0:11:56.760 that's sort of um, not independent, that's not targeting inflation, 0:11:56.800 --> 0:11:59.559 that's not targeting full employment. You know, the markets have 0:11:59.600 --> 0:12:03.079 a funny way of of showing them where the clearing rate, 0:12:03.080 --> 0:12:05.600 where the clearing prices and um. And I think that's 0:12:05.600 --> 0:12:07.480 what Turkey's undergoing right now, and we don't know where 0:12:07.480 --> 0:12:10.400 the bottom is. They mean, if you're an emerging markets 0:12:10.440 --> 0:12:14.920 investor for debt and you're looking for corporates, what sector 0:12:15.600 --> 0:12:21.680 I'm thinking commodities, maybe extractive industries, mining companies, oil companies. 0:12:22.200 --> 0:12:24.400 How are they doing? Yeah? No, I mean you're now 0:12:24.480 --> 0:12:25.960 now we're going to shift out of Turkey and we're 0:12:25.960 --> 0:12:27.439 getting to get into the fun stuff. So the fun 0:12:27.520 --> 0:12:30.640 stuff is this I happen to think that. I'm sorry, 0:12:30.679 --> 0:12:34.200 we don't think the data tells us that commodities are 0:12:34.400 --> 0:12:37.480 over sold. Right We're starting to see for the first time, 0:12:37.520 --> 0:12:41.640 we've seen copper short up, COMICX copper, we've seen a 0:12:41.720 --> 0:12:45.680 net short, a speculative interest moved, you know, it's moved short. 0:12:45.720 --> 0:12:47.679 It was, it was, it was long for as long 0:12:47.720 --> 0:12:49.560 as we can remember. It's now gone short. We're seeing 0:12:49.559 --> 0:12:51.360 the same thing in oil and other commodities, and what 0:12:51.440 --> 0:12:53.920 that tells us is that these markets are vulnerable to 0:12:53.920 --> 0:12:56.120 a short squeeze to a near term rebound which could 0:12:56.120 --> 0:12:58.480 be accentuated to the upside. So that's good for all 0:12:58.520 --> 0:13:03.360 of the commodity producers. Latin American specific, Peru, Colombia, and 0:13:03.440 --> 0:13:05.720 Chile are three that come to mind there um. But 0:13:05.760 --> 0:13:07.640 then you know, you've got You've got you've got Russia, 0:13:07.640 --> 0:13:09.320 who's a pretty big oil export over they have their 0:13:09.320 --> 0:13:11.000 own problems, and you've got a handful of other there's 0:13:11.000 --> 0:13:13.120 the Middle East and so forth. So so so yeah, I 0:13:13.160 --> 0:13:14.839 happen to agree with you. I think you know you're 0:13:14.840 --> 0:13:16.599 going to see a pivot on the corporate side and 0:13:16.640 --> 0:13:20.520 emerging markets toward commodity exporters. And we're seeing a little 0:13:20.520 --> 0:13:22.959 bit of evidence of that now, although you know, we'll 0:13:22.960 --> 0:13:25.320 see what happens. But I like your thoughts about copper 0:13:25.480 --> 0:13:30.319 very interesting because copper has dropped more than seventeen percent 0:13:30.480 --> 0:13:35.360 in price, not this year, just since the beginning of June. 0:13:35.400 --> 0:13:38.640 Absolutely now it's oversold. I mean, the red metal is oversold. 0:13:38.640 --> 0:13:41.240 If you would ask my colleague Mike mcglonany's actually on 0:13:41.280 --> 0:13:43.520 vacation now, we should get him up here. But yeah, no, 0:13:43.600 --> 0:13:47.719 he would agree with you completely. Vacation. I'm sorry, he's 0:13:47.720 --> 0:13:50.880 not a vacation. He's actually working from home. But yeah, right, 0:13:51.240 --> 0:13:53.199 But you know, broad commodity sell off, I mean, that's 0:13:53.200 --> 0:13:54.840 where we are, and we need to see that kind 0:13:54.840 --> 0:13:57.280 of rebound in order for emerging markets to catch a bid, 0:13:57.320 --> 0:13:59.200 I think and uh, and we might very well be 0:13:59.240 --> 0:14:02.240 on on the verge of that. Thanks very much, Damian Sassaur. 0:14:02.360 --> 0:14:06.199 We love having you on Fixed Income Strategist for Bloomberg Intelligence, 0:14:06.480 --> 0:14:10.800 telling us all about Turkey and commodity related emerging market debt. 0:14:27.840 --> 0:14:31.240 One of the biggest question marks right now is around oil, 0:14:31.880 --> 0:14:35.880 particularly are we heading much higher than seventy dollars a barrel? 0:14:35.960 --> 0:14:39.080 We're much lower? Uh, And a lot of this hinges 0:14:39.320 --> 0:14:42.520 on Iran. Joining us now Will Ryan, founder and chief 0:14:42.520 --> 0:14:45.480 executive officer of Granite Shares in New York. Well, I 0:14:45.520 --> 0:14:47.880 want to start with Iran because we've gotten this battle 0:14:47.920 --> 0:14:51.320 of words between President Trump uh and the Iranian leaders 0:14:51.320 --> 0:14:54.080 and I'm wondering do you think that the market is 0:14:54.120 --> 0:14:58.000 pricing in some kind of escalation here and the likelihood 0:14:58.400 --> 0:15:02.400 that Iranian oil fields would truly be taken out of 0:15:02.440 --> 0:15:04.840 service for the rest of the world. In short, no, 0:15:04.960 --> 0:15:07.800 I don't think so. Um. Iran is a huge producer, 0:15:08.280 --> 0:15:11.480 one of the largest opaque producing countries, and so if 0:15:11.520 --> 0:15:14.760 there was a disruption or an escalation that resulted in disruption, 0:15:15.000 --> 0:15:16.920 that would have a big effect on supply. And right 0:15:16.960 --> 0:15:19.360 now what you have is a situation where we have 0:15:20.000 --> 0:15:22.960 strong demand for oil and almost certainly you see the 0:15:23.000 --> 0:15:27.440 price being pushed higher. How much higher? Uh is impossible 0:15:27.480 --> 0:15:29.320 to say, but I mean give us a range. I mean, 0:15:29.440 --> 0:15:31.480 are we talking, you know, five dollars? Are we talking 0:15:31.520 --> 0:15:36.880 twenty dollars? I think you could see ten to twenty. Yeah, alright, Well, 0:15:37.800 --> 0:15:40.720 before we get into some details about commodity related funds, 0:15:40.720 --> 0:15:44.520 I want to talk just a second about granite shares because, UM, 0:15:44.880 --> 0:15:48.280 when I was young before I think almost just around 0:15:48.280 --> 0:15:51.560 the time they invented the telephone, UM, one of the 0:15:51.560 --> 0:15:53.320 ways to be interested in the world was to read 0:15:53.360 --> 0:15:56.200 annual reports, and it was quite exciting because you got 0:15:56.200 --> 0:15:59.960 to see how things operated, how companies created products are 0:16:00.120 --> 0:16:02.240 versus all over the world was one of the few 0:16:02.240 --> 0:16:05.160 ways to really access the excitement of what was happening 0:16:05.160 --> 0:16:08.240 in the world. Tell our listeners a little bit about 0:16:08.320 --> 0:16:10.400 granite shares and how you're trying to bring some of 0:16:10.440 --> 0:16:14.920 that excitement back. Thank you, um So, grantite Shares is really, 0:16:15.600 --> 0:16:20.160 you know, it's my expression of what a modern day 0:16:20.160 --> 0:16:22.880 E t F company should be about, or an asset 0:16:22.880 --> 0:16:25.000 manager should be about. So we specialize in E t 0:16:25.160 --> 0:16:27.520 F E t F so the new technology, if you will, 0:16:27.840 --> 0:16:31.280 in the asset management space. And really the reason why 0:16:31.320 --> 0:16:34.480 they're driving so much popularity and investor flows is because 0:16:34.840 --> 0:16:38.800 on the whole, lower cost, more transparent and liquid. And 0:16:39.160 --> 0:16:42.880 in terms of specifically why I started the business, I 0:16:43.040 --> 0:16:45.800 felt that there was an opportunity, or actually a rare 0:16:45.800 --> 0:16:49.640 opportunity to really do two things. One was to reinvent 0:16:49.680 --> 0:16:53.920 the way people access commodity markets in investment form. And too, 0:16:54.360 --> 0:16:56.880 I felt like the timing was right for a new 0:16:56.960 --> 0:16:59.880 sort of ball market in commodities. And when I took 0:16:59.880 --> 0:17:05.080 about reinvesting the commodity market, before investors had accessed or 0:17:05.160 --> 0:17:08.440 had access to commodities in two ways, either to buy 0:17:08.480 --> 0:17:11.760 partnerships that issued k ones, which can be pretty clunky 0:17:11.760 --> 0:17:14.639 for investors around tax time. Or they could buy notes 0:17:14.680 --> 0:17:17.960 from banks, and notes from banks have credit exposure to 0:17:18.119 --> 0:17:21.520 that particular issuing bank. So I thought, here's a way 0:17:21.560 --> 0:17:25.440 to actually change the way that investors get access improve 0:17:25.520 --> 0:17:28.040 the solution, so by offering it in a fund of 0:17:28.119 --> 0:17:31.479 forty act fund without k ones, but without the credit 0:17:31.600 --> 0:17:35.280 risk of the the issuing banks of notes, and provide 0:17:35.320 --> 0:17:39.199 that exposure to the broad commodity markets. Okay, thank you, 0:17:39.320 --> 0:17:41.520 that's a great definition. And now I want to turn 0:17:41.600 --> 0:17:46.320 to the actual way in which investors can speculate or invest, 0:17:46.400 --> 0:17:50.800 let's say in crude in oil markets. Is that a 0:17:50.880 --> 0:17:56.119 specific market and there are there specific challenges to doing that? Yes, So, 0:17:56.119 --> 0:17:59.040 so investors have a broad array of options when it 0:17:59.040 --> 0:18:03.680 comes to investing in either individual commodities or broad based commodities. 0:18:04.280 --> 0:18:07.639 Um and you can invest in gold, for example, something 0:18:07.760 --> 0:18:10.359 very specific. You can invest in other metals, you can 0:18:10.400 --> 0:18:13.600 invest in crude, or you can invest in in broad 0:18:14.040 --> 0:18:15.920 Now I would say just to just to be clear 0:18:16.000 --> 0:18:20.080 that when we're talking about precious metals, we're talking about 0:18:20.520 --> 0:18:23.280 owning exposure of fun. For example, we have the Granite 0:18:23.280 --> 0:18:26.439 Shares Gold Trust, the ticket code is bar and what 0:18:26.600 --> 0:18:29.680 that actually holds as physical bars of gold. So every 0:18:29.680 --> 0:18:32.639 share is backed by a tenth of announce of gold. 0:18:33.119 --> 0:18:36.639 Now that's fine for precious metals because the natural state 0:18:36.840 --> 0:18:38.720 is stored in a vault and we can do that, 0:18:39.000 --> 0:18:41.760 but when we go outside into other commodities that either 0:18:41.800 --> 0:18:44.760 decay or die over time, you have to obtain that 0:18:44.800 --> 0:18:47.879 exposure of your futures contracts. So when we're talking about oil, 0:18:47.880 --> 0:18:50.440 we're not talking about physical barrels of oil. We're talking 0:18:50.480 --> 0:18:54.399 about futures contracts are linked to the price of oil. 0:18:55.200 --> 0:18:57.919 So since we started with oil, I'm wondering, what have 0:18:57.960 --> 0:19:00.760 you seen recently with respect to the investors that have 0:19:00.840 --> 0:19:04.000 been using your e t f s in that space 0:19:04.240 --> 0:19:05.720 and do you find that they tend to be more 0:19:05.760 --> 0:19:11.919 speculators or more true investors. Well, we um We offer 0:19:12.560 --> 0:19:17.359 really two broad diversified commodity funds, so take us C O, 0:19:17.480 --> 0:19:20.760 m B, and CMG, and that's really for the investor 0:19:20.840 --> 0:19:23.840 that wants to take broad market exposure. So those people 0:19:24.000 --> 0:19:27.480 are really more longer term investors that are looking to 0:19:27.480 --> 0:19:30.760 to gain longer term exposure. So we don't offer some 0:19:30.920 --> 0:19:34.280 of the more racy individual commodities for example, Um, that 0:19:34.359 --> 0:19:36.439 may be something we do over time, but at the 0:19:36.480 --> 0:19:39.919 moment we have just the two broad based commodities, and 0:19:39.920 --> 0:19:43.160 then we have gold and platinum, and so really that's 0:19:43.200 --> 0:19:45.399 somebody that is looking to put five percent of the 0:19:45.440 --> 0:19:50.120 portfolio typically into commodities, and the decision making process that 0:19:50.240 --> 0:19:52.200 they're going to go through is really to evaluate how 0:19:52.280 --> 0:19:56.240 much energy exposure do I want within that particular fund, 0:19:56.680 --> 0:19:58.720 and that leads you to to the decision of whether 0:19:58.760 --> 0:20:01.919 you buy one or the other. Okay, the reason I 0:20:02.000 --> 0:20:05.600 was focusing on oil and futurist contracts is there is 0:20:05.600 --> 0:20:09.800 a natural seasonality not only to oil and other commodities, 0:20:09.920 --> 0:20:13.119 but there is a rollover effect because you have the 0:20:13.160 --> 0:20:17.320 expiration of those contracts. How do you avoid that natural 0:20:17.480 --> 0:20:22.679 decay of value when you're dealing with futurist contracts, great question. 0:20:22.880 --> 0:20:26.159 So you can't avoid it. That's a market structure issue. 0:20:26.320 --> 0:20:30.320 So by definition, when you're investing in futures contracts, the 0:20:30.400 --> 0:20:34.639 contract you own, depending on what expiry date it is, 0:20:34.800 --> 0:20:36.919 is going to expire at that expiry date. That is 0:20:36.920 --> 0:20:39.919 the whole point. And so by definition, to maintain that 0:20:40.000 --> 0:20:42.720 exposure we call it rolling, you have to sell that 0:20:42.800 --> 0:20:47.920 contract before it expires and buy the next contract, And 0:20:48.040 --> 0:20:50.919 that has a friction associated with it because you're selling 0:20:50.960 --> 0:20:54.560 one contract and buying another, and depending on whether that 0:20:55.480 --> 0:20:58.800 contract that you're buying is trading more expensive or cheaper 0:20:59.080 --> 0:21:01.119 in the money, you're out of the money. Exactly. That's 0:21:01.200 --> 0:21:05.119 either a positive or negative effect. I've been looking at 0:21:05.200 --> 0:21:09.240 comb as. You're one example, right, and this is it 0:21:09.320 --> 0:21:13.359 was trading right about twenty seven back in May, now 0:21:13.400 --> 0:21:16.000 trading at around twenty five s, a drop of about 0:21:16.040 --> 0:21:18.360 eight and a half percent. Do you believe that that's 0:21:18.359 --> 0:21:22.280 an accurate reflection of the overall commodity market? Yes, So 0:21:22.359 --> 0:21:24.160 what's happened actually, and this is this is a great 0:21:24.160 --> 0:21:26.760 point because I think you know, it's important for investors. 0:21:26.760 --> 0:21:29.280 You know, there are three components that make up what 0:21:29.400 --> 0:21:32.560 we call the total return of these kind of funds. 0:21:32.600 --> 0:21:34.320 So the first one is the spot price of the 0:21:34.400 --> 0:21:37.600 underlying futures naturally. The second one is what we're just 0:21:37.640 --> 0:21:40.560 talking about, which is the we call the roll yield, 0:21:40.840 --> 0:21:43.680 which is either positive or negative. The third one is 0:21:43.720 --> 0:21:46.760 the return on the collateral. Because when we invest in 0:21:46.800 --> 0:21:49.480 future as, we hold treasury bills as collateral and they 0:21:49.520 --> 0:21:52.119 generate an interest rate orbit not not a huge amount, 0:21:52.160 --> 0:21:54.920 but still generates an interest rate, and so those three 0:21:55.040 --> 0:21:57.600 make up the total return. What's actually happened is the 0:21:57.640 --> 0:22:02.280 market structure for the majority of commodities is shifted into backwardation, 0:22:02.680 --> 0:22:06.160 so people are being paid to be long that exposure 0:22:06.160 --> 0:22:09.320 and oil for example, Well done, Thanks very much, Will 0:22:09.400 --> 0:22:12.280 ryand he is the founder and the chief executive of 0:22:12.640 --> 0:22:17.919 Granted Shares. Talking about investing in commodities through E T 0:22:18.160 --> 0:22:35.080 F S Well, Verizon decided that it is going to 0:22:35.440 --> 0:22:38.560 seek to partner with either Google or Apple to provide 0:22:38.840 --> 0:22:42.440 television when it launches the first super fast five G 0:22:42.720 --> 0:22:46.200 service to homes in l A and Sacramento later this year. 0:22:46.720 --> 0:22:50.280 A big question, why didn't they go with Hollywood? Why 0:22:50.320 --> 0:22:54.880 didn't they go with the traditional television networks? And here 0:22:54.920 --> 0:22:57.280 to talk about that, John Butler, Senior Telecom Service as 0:22:57.320 --> 0:23:03.000 an equipment analyst with Bloomberg intell Agents, John, what happened here? So, 0:23:03.840 --> 0:23:07.719 first of all, Verizon just held its earnings call and 0:23:07.760 --> 0:23:11.400 the question didn't even come up about content really, so 0:23:12.600 --> 0:23:15.280 I think the and that reflects the fact that the 0:23:15.320 --> 0:23:20.960