Speaker 1: Bloomberg Audio Studios, podcasts, radio news.
Speaker 2: Jeffrey Curry joins US, Professor of price theory at the
Speaker 2: University of Chicago, acts a small firm downtown. Great interview
Speaker 2: yesterday John Farrell with mister Solomon. It was like, you know,
Speaker 2: it was like piercing its like wherever you know, I mean,
Speaker 2: I mean, you know Curry Curry lit Versailles with his
Speaker 2: Energy Now Jeff Curry joins US now energy Pathways like
Speaker 2: the Carlisle Groupie roots for the Baltimore Orioles. Jeff Copper,
Speaker 2: I got a rip up the script here. We're not
Speaker 2: doing oil, We're doing copper. Twenty eleven, twenty twenty two,
Speaker 2: and now another surge way out over three standard deviations.
Speaker 2: What's different this time with a surging copper.
Speaker 1: One the investors have finally bought into the view that
Speaker 1: China is not the only game in town for copper.
Speaker 1: That's the main thing is people have finally wrapped their
Speaker 1: heads around, yes, the property in China can sync and
Speaker 1: you can still be long copper, and positioning is full
Speaker 1: force right now. And I think that if you look
Speaker 1: at what's different now, it's the willingness of the investor
Speaker 1: to embrace this market despite the fact that there's a
Speaker 1: weak property market, and that's what happened in twenty twenty one,
Speaker 1: in those other time periods that you were talking about,
Speaker 1: as people started buying into it, then all of a sudden,
Speaker 1: the property market weakened.
Speaker 3: They got too scared and pulled out of the position.
Speaker 1: I think there's a couple things that make this different.
Speaker 1: It's one, they've now seen that copper demand can rise
Speaker 1: in the face of a declining property market. It's up
Speaker 1: six percent right now in a very weak property market.
Speaker 1: But also they've seen that the government's willing to spend
Speaker 1: infrastructure on green gampbacks. So there's a lot different.
Speaker 2: Is there a utility overlay As we see utility surge
Speaker 2: because of electricity buildout, does copper go up with the
Speaker 2: AI enthusiasm One?
Speaker 1: Yeah, And you know, I'd like to say, you know AIS,
Speaker 1: you know chips and copper. You need the chips, but
Speaker 1: then you need the electrical wiring to be able to
Speaker 1: power those chips. In one of those chips, the video chips,
Speaker 1: the GPUs consume as much power as the average American household,
Speaker 1: So you're gonna need a lot of grid connection to
Speaker 1: be able to accommodate that.
Speaker 3: Type of growth. And you know what is the bottleneck
Speaker 3: for that? It's copper.
Speaker 1: So all roads lead to copper, whether if it's military,
Speaker 1: spin AI, data centers, green Capex, they all.
Speaker 3: Point to copper.
Speaker 4: I mean, you couldn't have copper in a million years.
Speaker 4: I would have guessed it. So what do I know?
Speaker 5: But so there's the demand side of the equation. Jeff,
Speaker 5: you just highlighted a number of sources in demand. Can
Speaker 5: you explain to us kind of the supply side of copper.
Speaker 5: I don't know anything about this. Where does copper come from?
Speaker 5: And how's the supply?
Speaker 1: It's one of the last of the good old fashioned commodities.
Speaker 3: You got to dig out of the ground.
Speaker 1: You know, think about oil, with shale manufacturing, aluminum manufacturing.
Speaker 1: You know, you got to go out to very remotely located,
Speaker 1: geographically restricted places like Chile, Peru, the DRC, Mongolia. It's
Speaker 1: only located in a few places around the world, throwing
Speaker 1: Zombia in that, and a lot of those places are
Speaker 1: incredibly difficult to get into.
Speaker 3: Then you got to dig and dig deep.
Speaker 1: Your or grades have come down. It can be anywhere
Speaker 1: from twelve you know, you take. You know, ivan Ho's
Speaker 1: big mine in the DRC.
Speaker 3: It took twenty six years to bring online.
Speaker 1: So you know, there is a big commitment to be
Speaker 1: able to get the supply online. And you have strong demand.
Speaker 1: And everybody's been sleep walking into this, even though they've
Speaker 1: been told about it. You know, we started calling copper
Speaker 1: the new oil back in twenty twenty one, and it
Speaker 1: rang on deaf ears.
Speaker 3: You know, now it's finally people are perking up to
Speaker 3: the story. But it's going to take years to bring this.
Speaker 2: Paul, ask one more question, and then I got to
Speaker 2: do microeconomics with Professor Kurr.
Speaker 5: All right, so while we have you, Jeff here, it
Speaker 5: talked to us about oil here.
Speaker 4: I mean, I'm looking at I like to quote WTI
Speaker 4: crew to oil. I'm an American.
Speaker 5: I love the guys down in Texas and Oklahoma and
Speaker 5: all those crazy people seventy nine dollars a barrel here.
Speaker 4: What's driving oil these days? Is it supply? Is it demand?
Speaker 4: What are you focusing on?
Speaker 1: You know, all the commodities are being driven by the
Speaker 1: same demand.
Speaker 3: For us, it's late cycle.
Speaker 1: Business cycle in the sense that you can think of
Speaker 1: twenty twenty two and twenty twenty three as being your
Speaker 1: classic mid cycle pause where your raise rates, higher energy prices,
Speaker 1: the system slowed down, a regathered scheme consolidated around the
Speaker 1: higher rates, and now we're chugging back off into the
Speaker 1: second half of the business cycle.
Speaker 3: That's when you want to own oil and commodities.
Speaker 1: And it's about the level of demand stressing the inability
Speaker 1: to supply. That's why all of these markets are going up.
Speaker 1: You know, the vast majority of are in backwardation. You know,
Speaker 1: it's all your typical, you know, indocycle type of bullish
Speaker 1: structure that's playing out here. And I don't see this
Speaker 1: oil being any different than copper or some of the
Speaker 1: base models.
Speaker 2: And now folks Drivetime America early in the morning, your
Speaker 2: microeconomics segment, Jeff Curry. We just were honored to have
Speaker 2: Richard portis a giant of English economics in London business
Speaker 2: school in our and you know, he was kind enough
Speaker 2: to give us a story about studying under John Hicks
Speaker 2: a few years ago. I want to talk about going
Speaker 2: back to copper into China and all the emotion. Jeff Curry,
Speaker 2: is this a shift in demand along the curve or
Speaker 2: an outright shift of the curve that has a permanence.
Speaker 3: The outright shift in the curve is permanence.
Speaker 1: And think about how much of that's occurred since twenty
Speaker 1: twenty one military the military spent, you know, whether if
Speaker 1: it is munitions in the US to the two to
Speaker 1: ninety five billion dollars one hundred billion dollars in places
Speaker 1: like Germany, and then you throw in the AI data
Speaker 1: centers on top of that. That's on all an outward
Speaker 1: shift in the demand curve. So you know that's going
Speaker 1: to lead to structurally higher prices. And I think the
Speaker 1: question is why will it lead to structurally higher prices?
Speaker 1: Because somebody's going to have to be crowded out here.
Speaker 1: There's not enough supply to go around to everyone, and
Speaker 1: so we're going to find out where demand destruction actually occurs.
Speaker 2: Jeff Curry, thank you so much. That segment of microeconomics
Speaker 2: with Bloomberg Surveillance brought to you by the George Stiegler Foundation, Chicago.
Speaker 2: Jeff Curry, thank you so much. With Carlisle there