WEBVTT - Jeff Currie Talks Commodities

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<v Speaker 1>Bloomberg Audio Studios, podcasts, radio news.

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<v Speaker 2>Jeffrey Curry joins US, Professor of price theory at the

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<v Speaker 2>University of Chicago, acts a small firm downtown. Great interview

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<v Speaker 2>yesterday John Farrell with mister Solomon. It was like, you know,

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<v Speaker 2>it was like piercing its like wherever you know, I mean,

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<v Speaker 2>I mean, you know Curry Curry lit Versailles with his

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<v Speaker 2>Energy Now Jeff Curry joins US now energy Pathways like

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<v Speaker 2>the Carlisle Groupie roots for the Baltimore Orioles. Jeff Copper,

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<v Speaker 2>I got a rip up the script here. We're not

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<v Speaker 2>doing oil, We're doing copper. Twenty eleven, twenty twenty two,

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<v Speaker 2>and now another surge way out over three standard deviations.

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<v Speaker 2>What's different this time with a surging copper.

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<v Speaker 1>One the investors have finally bought into the view that

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<v Speaker 1>China is not the only game in town for copper.

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<v Speaker 1>That's the main thing is people have finally wrapped their

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<v Speaker 1>heads around, yes, the property in China can sync and

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<v Speaker 1>you can still be long copper, and positioning is full

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<v Speaker 1>force right now. And I think that if you look

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<v Speaker 1>at what's different now, it's the willingness of the investor

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<v Speaker 1>to embrace this market despite the fact that there's a

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<v Speaker 1>weak property market, and that's what happened in twenty twenty one,

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<v Speaker 1>in those other time periods that you were talking about,

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<v Speaker 1>as people started buying into it, then all of a sudden,

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<v Speaker 1>the property market weakened.

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<v Speaker 3>They got too scared and pulled out of the position.

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<v Speaker 1>I think there's a couple things that make this different.

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<v Speaker 1>It's one, they've now seen that copper demand can rise

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<v Speaker 1>in the face of a declining property market. It's up

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<v Speaker 1>six percent right now in a very weak property market.

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<v Speaker 1>But also they've seen that the government's willing to spend

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<v Speaker 1>infrastructure on green gampbacks. So there's a lot different.

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<v Speaker 2>Is there a utility overlay As we see utility surge

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<v Speaker 2>because of electricity buildout, does copper go up with the

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<v Speaker 2>AI enthusiasm One?

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<v Speaker 1>Yeah, And you know, I'd like to say, you know AIS,

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<v Speaker 1>you know chips and copper. You need the chips, but

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<v Speaker 1>then you need the electrical wiring to be able to

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<v Speaker 1>power those chips. In one of those chips, the video chips,

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<v Speaker 1>the GPUs consume as much power as the average American household,

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<v Speaker 1>So you're gonna need a lot of grid connection to

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<v Speaker 1>be able to accommodate that.

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<v Speaker 3>Type of growth. And you know what is the bottleneck

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<v Speaker 3>for that? It's copper.

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<v Speaker 1>So all roads lead to copper, whether if it's military,

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<v Speaker 1>spin AI, data centers, green Capex, they all.

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<v Speaker 3>Point to copper.

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<v Speaker 4>I mean, you couldn't have copper in a million years.

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<v Speaker 4>I would have guessed it. So what do I know?

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<v Speaker 5>But so there's the demand side of the equation. Jeff,

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<v Speaker 5>you just highlighted a number of sources in demand. Can

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<v Speaker 5>you explain to us kind of the supply side of copper.

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<v Speaker 5>I don't know anything about this. Where does copper come from?

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<v Speaker 5>And how's the supply?

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<v Speaker 1>It's one of the last of the good old fashioned commodities.

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<v Speaker 3>You got to dig out of the ground.

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<v Speaker 1>You know, think about oil, with shale manufacturing, aluminum manufacturing.

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<v Speaker 1>You know, you got to go out to very remotely located,

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<v Speaker 1>geographically restricted places like Chile, Peru, the DRC, Mongolia. It's

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<v Speaker 1>only located in a few places around the world, throwing

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<v Speaker 1>Zombia in that, and a lot of those places are

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<v Speaker 1>incredibly difficult to get into.

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<v Speaker 3>Then you got to dig and dig deep.

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<v Speaker 1>Your or grades have come down. It can be anywhere

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<v Speaker 1>from twelve you know, you take. You know, ivan Ho's

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<v Speaker 1>big mine in the DRC.

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<v Speaker 3>It took twenty six years to bring online.

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<v Speaker 1>So you know, there is a big commitment to be

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<v Speaker 1>able to get the supply online. And you have strong demand.

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<v Speaker 1>And everybody's been sleep walking into this, even though they've

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<v Speaker 1>been told about it. You know, we started calling copper

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<v Speaker 1>the new oil back in twenty twenty one, and it

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<v Speaker 1>rang on deaf ears.

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<v Speaker 3>You know, now it's finally people are perking up to

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<v Speaker 3>the story. But it's going to take years to bring this.

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<v Speaker 2>Paul, ask one more question, and then I got to

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<v Speaker 2>do microeconomics with Professor Kurr.

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<v Speaker 5>All right, so while we have you, Jeff here, it

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<v Speaker 5>talked to us about oil here.

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<v Speaker 4>I mean, I'm looking at I like to quote WTI

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<v Speaker 4>crew to oil. I'm an American.

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<v Speaker 5>I love the guys down in Texas and Oklahoma and

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<v Speaker 5>all those crazy people seventy nine dollars a barrel here.

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<v Speaker 4>What's driving oil these days? Is it supply? Is it demand?

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<v Speaker 4>What are you focusing on?

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<v Speaker 1>You know, all the commodities are being driven by the

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<v Speaker 1>same demand.

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<v Speaker 3>For us, it's late cycle.

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<v Speaker 1>Business cycle in the sense that you can think of

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<v Speaker 1>twenty twenty two and twenty twenty three as being your

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<v Speaker 1>classic mid cycle pause where your raise rates, higher energy prices,

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<v Speaker 1>the system slowed down, a regathered scheme consolidated around the

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<v Speaker 1>higher rates, and now we're chugging back off into the

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<v Speaker 1>second half of the business cycle.

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<v Speaker 3>That's when you want to own oil and commodities.

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<v Speaker 1>And it's about the level of demand stressing the inability

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<v Speaker 1>to supply. That's why all of these markets are going up.

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<v Speaker 1>You know, the vast majority of are in backwardation. You know,

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<v Speaker 1>it's all your typical, you know, indocycle type of bullish

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<v Speaker 1>structure that's playing out here. And I don't see this

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<v Speaker 1>oil being any different than copper or some of the

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<v Speaker 1>base models.

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<v Speaker 2>And now folks Drivetime America early in the morning, your

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<v Speaker 2>microeconomics segment, Jeff Curry. We just were honored to have

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<v Speaker 2>Richard portis a giant of English economics in London business

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<v Speaker 2>school in our and you know, he was kind enough

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<v Speaker 2>to give us a story about studying under John Hicks

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<v Speaker 2>a few years ago. I want to talk about going

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<v Speaker 2>back to copper into China and all the emotion. Jeff Curry,

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<v Speaker 2>is this a shift in demand along the curve or

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<v Speaker 2>an outright shift of the curve that has a permanence.

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<v Speaker 3>The outright shift in the curve is permanence.

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<v Speaker 1>And think about how much of that's occurred since twenty

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<v Speaker 1>twenty one military the military spent, you know, whether if

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<v Speaker 1>it is munitions in the US to the two to

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<v Speaker 1>ninety five billion dollars one hundred billion dollars in places

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<v Speaker 1>like Germany, and then you throw in the AI data

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<v Speaker 1>centers on top of that. That's on all an outward

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<v Speaker 1>shift in the demand curve. So you know that's going

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<v Speaker 1>to lead to structurally higher prices. And I think the

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<v Speaker 1>question is why will it lead to structurally higher prices?

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<v Speaker 1>Because somebody's going to have to be crowded out here.

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<v Speaker 1>There's not enough supply to go around to everyone, and

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<v Speaker 1>so we're going to find out where demand destruction actually occurs.

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<v Speaker 2>Jeff Curry, thank you so much. That segment of microeconomics

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<v Speaker 2>with Bloomberg Surveillance brought to you by the George Stiegler Foundation, Chicago.

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<v Speaker 2>Jeff Curry, thank you so much. With Carlisle there