WEBVTT - UBS Warns Worst May Not Be Over 0:00:05.800 --> 0:00:08.720 Welcome to the Bloomberg p m L Podcast. I'm Pim Fox. 0:00:08.760 --> 0:00:11.520 Along with my co host Lisa Bramowitz. Each day we 0:00:11.640 --> 0:00:15.120 bring you the most important, noteworthy, and useful interviews for 0:00:15.200 --> 0:00:17.840 you and your money, whether you're at the grocery store 0:00:17.960 --> 0:00:20.720 or the trading floor. Find the Bloomberg p m L 0:00:20.840 --> 0:00:32.720 Podcast on Apple Podcasts, SoundCloud, and Bloomberg dot com. Another 0:00:32.760 --> 0:00:35.919 share that is making a pretty big move today, UBS 0:00:36.360 --> 0:00:38.199 shares a plunging at one point at least the a 0:00:38.280 --> 0:00:40.720 d r s uh at one point, the most since 0:00:40.800 --> 0:00:44.600 twenty sixteen. A huge reversal, Paul, from just a few 0:00:44.600 --> 0:00:48.199 months ago when they reported pretty pretty sanguine earnings and 0:00:48.320 --> 0:00:51.239 are just an outlook that was seemed pretty good all 0:00:51.240 --> 0:00:53.400 of a sudden not so great. Yeah, And I think 0:00:53.400 --> 0:00:56.080 one of the surprising areas is the wealth management business. 0:00:56.080 --> 0:00:57.840 That's a business set for most of these big banks 0:00:57.880 --> 0:01:00.120 are supposed to be a steady eddie, predictable busins this 0:01:00.640 --> 0:01:02.520 long term positive trends, but they actually have some real 0:01:02.560 --> 0:01:05.800 weakness there. Let's dig into that. Patrick Winter's Lumberck News 0:01:05.800 --> 0:01:10.600 Swiss finance reporter joining us Now, Patrick, what happened here? Either? Yeah? 0:01:10.640 --> 0:01:13.440 What's interesting? Where? You guys are mentioning steady, Eddie. That's 0:01:13.520 --> 0:01:16.000 kind of the market perception of what this business is 0:01:16.000 --> 0:01:20.520 supposed to be. But it's also a very market dependent business. 0:01:20.760 --> 0:01:23.240 And you know, if if equities are down, if other 0:01:23.240 --> 0:01:26.640 types of assets are down, that actually translates into losses 0:01:26.680 --> 0:01:28.759 for the company because it means they have less assets. 0:01:28.880 --> 0:01:31.680 If they have less assets, then they get less revenues 0:01:31.720 --> 0:01:35.160 from managing those assets. And that's basically the story here today. Um. 0:01:35.240 --> 0:01:36.720 It is kind of why UBS has had a bit 0:01:36.720 --> 0:01:40.600 of a shocking quarter and alarmed some people. Um. You know, 0:01:40.680 --> 0:01:42.560 also given the read through for some of the other 0:01:42.600 --> 0:01:46.560 banks coming up reporting in the next week. So, Patrick, 0:01:46.600 --> 0:01:48.480 how do you in any sense of how UBS is 0:01:48.560 --> 0:01:51.320 performing relative to its peers and that wealth management business. 0:01:51.360 --> 0:01:54.200 We saw that Society General also had some some weak 0:01:54.240 --> 0:01:56.240 results as well. But is there any reason to believe 0:01:56.240 --> 0:01:59.720 that this is a UBS specific issue? Interesting you mentioned 0:01:59.720 --> 0:02:03.560 that to a chief executive officers, Sir Duo Mutti was 0:02:04.240 --> 0:02:07.000 saying that in the US at least UBS is doing 0:02:07.000 --> 0:02:10.120 better than its competitors. Um. You know, it's especially flow 0:02:10.120 --> 0:02:13.120 wise in terms of new money that it's winning from customers. Um. 0:02:13.320 --> 0:02:15.679 You know, they claim that the best. But it's also 0:02:15.760 --> 0:02:18.760 difficult to measure if that's true or not because the 0:02:18.800 --> 0:02:21.400 other US banks don't break out how much new money 0:02:21.040 --> 0:02:23.840 they get from customers um. And that's for the European banks. 0:02:23.840 --> 0:02:26.560 I guess we'll have to wait and see what they report. UM. 0:02:26.600 --> 0:02:28.600 You know, obviously it's a bit of an alarming sign 0:02:29.000 --> 0:02:31.880 if a bank like UBS comes out and says that 0:02:31.919 --> 0:02:33.880 it's had you know, that it's lost money. It's lost 0:02:33.919 --> 0:02:36.560 money in a in a quarter when it normally gains 0:02:36.639 --> 0:02:39.680 quite a lot. Well, so let's give some numbers to this, right. 0:02:39.720 --> 0:02:43.640 They said that clients pulled thirteen billion dollars in assets 0:02:43.880 --> 0:02:49.640 during the really ugly three months that ended eighteen. Do 0:02:49.720 --> 0:02:52.400 we have a sense of whether that's stabilized. Do we 0:02:52.440 --> 0:02:56.160 have a sense of of which clients were really withdrawing money? 0:02:56.520 --> 0:02:58.520 In terms of which clients, definitely you can say it 0:02:58.720 --> 0:03:02.080 was the ultra client, that's the big, big billionaires, And 0:03:02.120 --> 0:03:04.240 that's a warding sign because normally you think that the 0:03:04.240 --> 0:03:07.720 billionaire is the best place in this type of market environment. 0:03:07.720 --> 0:03:11.640 They had some surprising outfits in Switzerland, uh and and 0:03:11.720 --> 0:03:14.560 also in the US UM. So that's kind of geographically 0:03:14.960 --> 0:03:18.200 where it's all coming from UM and I think you know, 0:03:18.680 --> 0:03:21.560 in terms of how they're doing versus competitors. Yeah, it's 0:03:21.560 --> 0:03:24.160 it's it's a it's difficult really to talk about that 0:03:24.200 --> 0:03:26.000 at this point. What one thing that I'm struggling to 0:03:26.080 --> 0:03:28.680 understand is this a re allocation to another firm? Is 0:03:28.680 --> 0:03:33.079 this a re allocation to alternative strategies by ultra wealthy individuals, 0:03:33.480 --> 0:03:36.000 or is this a wholesale take your money and stuff 0:03:36.000 --> 0:03:38.280 and in a maddress. I think it's I think it's 0:03:38.280 --> 0:03:40.840 probably the latter. It's takes Really you don't you don't 0:03:40.880 --> 0:03:43.600 trust equities if I mean, if you're believing what what 0:03:43.720 --> 0:03:47.160 UBS is saying today, it's they're not moving it to competitors. 0:03:47.200 --> 0:03:49.360 They're taking the money, they're stuffing in a mattress because 0:03:49.400 --> 0:03:52.680 they don't believe they're investing in some type of other 0:03:53.280 --> 0:03:55.720 asset in the financial marketplace is going to be safe 0:03:55.720 --> 0:03:58.400 for them at this point in time. So, Patrick, one 0:03:58.440 --> 0:03:59.640 of the things we heard from the U S and 0:03:59.680 --> 0:04:02.160 vest A banks last week was kind of a similar story, 0:04:02.200 --> 0:04:05.400 and that the very rough fourth quarter, particularly that December, 0:04:05.920 --> 0:04:08.840 but generally a fairly optimistic outlook. Did you be as 0:04:08.840 --> 0:04:13.800 share that optimistic outook for Uh, the outlook was kind 0:04:13.800 --> 0:04:18.760 of nuanced. What they said was if things continue like 0:04:18.800 --> 0:04:20.919 they did in the fourth quarter, you know, then we 0:04:20.920 --> 0:04:23.960 could be in some trouble. But they did not specify 0:04:24.080 --> 0:04:25.840 if that would be the case or not, so they 0:04:25.920 --> 0:04:29.559 kind of left it open to interpretation. So going forward, 0:04:29.720 --> 0:04:33.640 is this any sense of what's to come for asset managers, because, 0:04:33.839 --> 0:04:36.800 as Paul was mentioning wisely, this has been sort of 0:04:36.839 --> 0:04:39.520 the the calm harbor, the safe harbor for a lot 0:04:39.520 --> 0:04:41.880 of banks is the wealth management division. Is this sort 0:04:41.880 --> 0:04:46.960 of sounding an alarm saying, rethink that? I think so? 0:04:47.520 --> 0:04:49.400 I think it is. You just really have to watch 0:04:49.440 --> 0:04:51.960 the markets. You know, if if equity markets keep going down, 0:04:52.279 --> 0:04:54.240 then you're going to see more of the same. If 0:04:54.240 --> 0:04:56.320 they rally and go up, then people in the next 0:04:56.360 --> 0:04:59.720 quarter might be saying, how Ubs this the role model 0:04:59.760 --> 0:05:02.560 wants the again, You'll just have to wait and see. Patrick, 0:05:02.640 --> 0:05:05.640 just real quickly. Uh, they start a banker for UBS, 0:05:05.760 --> 0:05:08.960 Andrea or Cell recently left. How damaging is that to 0:05:09.040 --> 0:05:13.039 that franchise If you have a big name like this 0:05:13.080 --> 0:05:15.680 guy leaving it for sure is not going to help 0:05:15.839 --> 0:05:18.200 the investment bank. And they've got They've got two guys 0:05:18.320 --> 0:05:21.920 who have replaced him. They basically split his job between 0:05:21.920 --> 0:05:24.200 two co heads. But I don't think I think it's 0:05:24.200 --> 0:05:26.240 fair to say this either of them really have the 0:05:26.279 --> 0:05:30.400 same name recognition as he does. It's difficult to measure 0:05:30.480 --> 0:05:33.159 the impact of one guy. But definitely, looking at this 0:05:33.200 --> 0:05:35.880 from the outside, it's a lot for them. Yeah, maybe 0:05:35.960 --> 0:05:38.520 they don't have the name recognition. They also don't have 0:05:38.560 --> 0:05:42.280 the paycheck that it comes with. Just how much UBS 0:05:42.279 --> 0:05:47.159 would have to compensate him for leaving his former employer, actually, 0:05:47.200 --> 0:05:50.640 how much he would have to be competated to leave UBS? 0:05:50.920 --> 0:06:08.240 Thank you so much, Patrick Winters of Bloomberg News. Well, 0:06:08.240 --> 0:06:10.400 at least so. The on again, off again trade talks 0:06:10.440 --> 0:06:12.520 between the U S and China appear to be back 0:06:12.600 --> 0:06:14.640 on again. To bring us up to date on what's 0:06:14.680 --> 0:06:17.960 actually going on between the two countries is Michael Herston. 0:06:18.000 --> 0:06:20.880 Michael is a director covering Asia for the Eurasian Group. 0:06:20.960 --> 0:06:23.760 He's on the phone with us from New York City. Michael, 0:06:23.760 --> 0:06:26.120 thank you for joining us. I guess let's start right 0:06:26.120 --> 0:06:29.520 off the bat um. How likely is it that we 0:06:29.560 --> 0:06:32.120 will in fact get a trade agreement this year? And 0:06:32.160 --> 0:06:34.880 how limited or abroad. Do you think that agreement could 0:06:34.880 --> 0:06:40.839 be well, I think that there is a reasonable chance 0:06:40.839 --> 0:06:45.400 of getting some kind of trade agreement within h within 0:06:45.760 --> 0:06:48.799 I would put it at better than at this point. 0:06:49.240 --> 0:06:51.120 But I think the last question you raised is a 0:06:51.160 --> 0:06:53.640 really important one, which is what kind of deal is it? 0:06:54.279 --> 0:06:56.559 And in my view, it's going to be a quite 0:06:56.640 --> 0:06:59.520 limited deal. What I mean there is that many of 0:06:59.640 --> 0:07:03.680 the lead tough issues between the two sides are not 0:07:03.760 --> 0:07:07.000 close to being resolved. And I don't think that President 0:07:07.080 --> 0:07:12.320 Trump can really very easily declare victory by saying these 0:07:12.360 --> 0:07:16.920 issues are settled, because he'll face blowback from Congress, from Democrats, 0:07:16.960 --> 0:07:20.360 including those running for president, and from trade hawks within 0:07:20.480 --> 0:07:23.160 his administration and close to his face. So I think 0:07:23.160 --> 0:07:26.000 what happens is we get a limited deal. Many of 0:07:26.040 --> 0:07:29.720 the tough issues continue to be negotiated, and that means 0:07:29.760 --> 0:07:32.680 that there will there will be a lot of unresolved 0:07:32.680 --> 0:07:35.800 issues hanging over the relationship, which means the US will 0:07:35.800 --> 0:07:39.440 be very slow to remove tariffs, and any agreement is 0:07:39.480 --> 0:07:42.320 at risk of breaking down if the two sides can't 0:07:42.360 --> 0:07:45.560 get past an impass on some of these very tough issues. 0:07:45.720 --> 0:07:47.120 So you think that it's very likely that We're going 0:07:47.160 --> 0:07:48.560 to get a deal done, but the deal will be 0:07:48.600 --> 0:07:52.640 mostly useless, very limited, and possibly revoked pretty quickly. Is 0:07:52.640 --> 0:07:59.600 that right, That's right, it will be well, it will 0:07:59.640 --> 0:08:02.960 be the The use will be that it will lower 0:08:03.040 --> 0:08:06.560 the probability of the worst case outcome in terms of 0:08:06.560 --> 0:08:09.040 what the markets and trading community is looking at, which 0:08:09.080 --> 0:08:13.320 is further escalation of the of the trade dispute. And 0:08:13.640 --> 0:08:15.440 you know, really that would come in the form of 0:08:15.480 --> 0:08:18.520 the US moving ahead with the threat to lift the 0:08:18.520 --> 0:08:22.400 tariff rate on most of the goods that the US 0:08:22.520 --> 0:08:26.760 is imported from China that are under tariff from That 0:08:26.800 --> 0:08:28.840 would be a big move. I think at this point 0:08:29.520 --> 0:08:33.840 it's becoming less and less likely that that happens, certainly 0:08:34.000 --> 0:08:36.920 in the near term. So this removes that worst case probability, 0:08:36.960 --> 0:08:39.400 or at least it lowers it. But what it doesn't 0:08:39.440 --> 0:08:43.440 do is resolve the underlying issues, and it probably doesn't 0:08:43.520 --> 0:08:46.920 lead to a path where the US removes existing tariffs 0:08:47.480 --> 0:08:49.760 in a very quick manner, if at all. So, Michael, 0:08:49.760 --> 0:08:51.520 you mentioned that you know this is likely to be 0:08:51.559 --> 0:08:53.920 a limited deal. Um, you know, some of the thorniest 0:08:54.040 --> 0:08:57.079 issues between China and the US have historically been around 0:08:57.120 --> 0:09:01.679 technology around intellectual property UM. Is there any scenario where 0:09:01.679 --> 0:09:05.200 you think those issues get addressed with these negotiations or 0:09:05.240 --> 0:09:08.079 is it just too difficult at this point, I think 0:09:08.080 --> 0:09:11.200 it's really hard for me to see a breakthrough happening 0:09:11.280 --> 0:09:14.360 in those areas. And it's because this this set of 0:09:14.400 --> 0:09:19.319 issues related to technology, it spans trade and national security 0:09:19.440 --> 0:09:23.880 for both governments. When you look at um issues like 0:09:24.559 --> 0:09:27.920 the rollout of five G, next generation wireless, or AI 0:09:28.160 --> 0:09:31.440 or quantum computing, all of these are seen by both 0:09:31.480 --> 0:09:35.480 governments as being important not only for economic competitiveness, but 0:09:35.600 --> 0:09:40.120 also for military and national security advantages as well. And 0:09:40.200 --> 0:09:44.200 the US China geopolitical rivalry is heating up, so it's 0:09:44.280 --> 0:09:48.600 it's very hard for me to see Beijing making concessions 0:09:49.080 --> 0:09:52.440 in the areas of tech and innovation policy that meet 0:09:52.520 --> 0:09:54.959 the high bar of the US. Indeed, and actually the 0:09:54.960 --> 0:09:59.120 Wall Street Journal today was reporting that several US agencies 0:09:59.200 --> 0:10:03.360 have owned that China has absolutely doubled down on their 0:10:03.400 --> 0:10:06.240 wishes and efforts to try to exert a tech dominance 0:10:06.400 --> 0:10:10.199 over the world. That said, Jijn Ping, President of China, 0:10:10.320 --> 0:10:13.160 really sounded a different note at the Party Congress in 0:10:13.200 --> 0:10:17.240 his address when he talked about quote serious dangers to 0:10:17.320 --> 0:10:20.240 the party. What was your take on that, having spent 0:10:20.320 --> 0:10:23.240 a lot of time in Beijing as a representative for 0:10:23.600 --> 0:10:26.960 the U. S. Treasury Department. Well, it was a very 0:10:27.000 --> 0:10:30.079 interesting speech. It happened over the weekend where Jen Pain 0:10:30.200 --> 0:10:33.360 called together senior party leaders in the central government and 0:10:33.440 --> 0:10:37.760 the provinces for what's known as a seminar. And as 0:10:37.800 --> 0:10:41.200 you said, the theme was avoiding major risks for China. 0:10:41.280 --> 0:10:44.720 And I think really it's a reflection of JN Paying 0:10:45.120 --> 0:10:49.480 realizing that China faces risks on a number of fronts 0:10:49.600 --> 0:10:54.080 domestic economy, the external environment, the trade war, um, growing 0:10:54.120 --> 0:10:58.280 geopolitical frictions with the U S UM. Really it's it's 0:10:58.320 --> 0:11:00.720 a very difficult time for the leader ship right now. 0:11:00.840 --> 0:11:03.600 But I think really important point here is that what 0:11:03.800 --> 0:11:07.720 she was saying was that it's not that the the 0:11:07.920 --> 0:11:11.120 direction of Chinese policy is a mistake. Many of these 0:11:11.240 --> 0:11:15.840 risks are the inevitable result of the course that China's plotting, 0:11:15.840 --> 0:11:18.840 which is looking to become a great power and facing 0:11:18.840 --> 0:11:22.800 blowback from the US, or on the domestic economy, restructuring 0:11:22.800 --> 0:11:26.200 the economy, which is going to be painful. So it 0:11:26.280 --> 0:11:30.360 was a message to the leadership that China needs to 0:11:30.400 --> 0:11:34.120 say vigilant in the risks that it's facing, but not 0:11:34.320 --> 0:11:37.320 that she is preparing to change course, and I certainly 0:11:37.360 --> 0:11:41.400 don't think he is. That's interesting. Thank you very much, Michael. 0:11:41.400 --> 0:11:45.079 It's a very complicated issue. Um. That was Michael Herson, 0:11:45.240 --> 0:11:48.160 director covering Asia for the Eurasia Group, on the film 0:11:48.200 --> 0:11:50.600 with us from New York City. I think Michael's take 0:11:50.720 --> 0:11:54.800 is likely to get some type of trade agreement in tween, 0:11:55.320 --> 0:11:57.680 but it's likely to be a limited agreement, so some 0:11:57.720 --> 0:12:01.880 of the authorities issues unlikely to be addressed. At least 0:12:02.320 --> 0:12:22.360 this year, the volatility and the energy markets reared its 0:12:22.360 --> 0:12:25.360 head once again. Today. We've got West Texas Intermediate crew 0:12:25.480 --> 0:12:28.040 down about a dollar fifty seven to fifty two dollars 0:12:28.080 --> 0:12:30.520 and twenty three cents per barrel. That's down almost three. 0:12:31.440 --> 0:12:32.880 To bring us up to date on what's going on 0:12:32.920 --> 0:12:35.400 in the energy markets and maybe one impact China maybe 0:12:35.480 --> 0:12:38.440 having on global energy markets, we bring in Stewart Clickman. 0:12:38.480 --> 0:12:40.959 Stewart is the head of Energy research at c f 0:12:41.280 --> 0:12:44.400 r A. He's on the phone with us from New Jersey. Stewart, 0:12:44.520 --> 0:12:47.000 welcome to the show. I wondered if you could give 0:12:47.040 --> 0:12:48.800 us a sense just right off the top of kind 0:12:48.800 --> 0:12:51.000 of what is your call on kind of the global 0:12:51.080 --> 0:12:54.320 supply and demand situation out there for oil and what 0:12:54.400 --> 0:12:57.839 impact China maybe having on that. Yeah, good morning, Paul. 0:12:57.880 --> 0:13:02.200 So I think I think the first UM piece of UM, 0:13:02.240 --> 0:13:05.120 I guess supply demand fundamentals. That's that's the most important, 0:13:05.120 --> 0:13:08.840 is the demand situation, and you lose China. China represents 0:13:09.320 --> 0:13:13.000 about a third of expected incremental global demand growth in 0:13:13.920 --> 0:13:16.640 so if people start getting worried that that the demand 0:13:16.640 --> 0:13:18.840 picture is going to fall apart in China, that has 0:13:18.880 --> 0:13:21.880 a huge impact on demand overall. And I think what's 0:13:21.880 --> 0:13:25.320 happening is that the producers, you know, the OPEC plus 0:13:25.320 --> 0:13:29.640 consortium is trying to UM, trying to trying to keep 0:13:29.679 --> 0:13:32.120 pace with falling demand by trying to cut their production 0:13:32.160 --> 0:13:35.480 as well. UM and and so that's that's that's the 0:13:35.480 --> 0:13:37.679 give and take between supply demand. Right now, it seems 0:13:37.720 --> 0:13:41.800 to be UM. You know, WIL prices are up a 0:13:41.800 --> 0:13:43.640 little bit relatively the beginning of the year, but they're 0:13:43.679 --> 0:13:45.880 not up a whole lot. So I'm looking right now 0:13:46.360 --> 0:13:49.120 it it crewed traded on the night Max. It's currently 0:13:49.320 --> 0:13:53.800 down a bit and thirteen cents barrel. Where do you 0:13:53.840 --> 0:13:55.920 see us sending the year here? Given all of these 0:13:55.960 --> 0:13:58.559 cross winds, I mean, how can you even make that 0:13:58.640 --> 0:14:02.600 kind of prediction? It's really tough, um Lesa. I would 0:14:02.640 --> 0:14:05.760 say that, you know, we're looking for w T I 0:14:05.800 --> 0:14:08.400 to be somewhere in the high stiftees on average for 0:14:09.800 --> 0:14:11.520 so on the one hand, that's up from where we 0:14:11.559 --> 0:14:13.480 are today, so that sounds like a win. On the 0:14:13.520 --> 0:14:17.040 other hand, last year a crude average sixty five a barrel. 0:14:17.200 --> 0:14:20.320 So really, when you put it in context, we're not 0:14:20.360 --> 0:14:24.880 looking for any any great improvement in price for producers. 0:14:24.880 --> 0:14:26.200 And I think when it comes to the E N 0:14:26.240 --> 0:14:28.640 P S, I think you have to pivot towards the 0:14:28.720 --> 0:14:30.800 more defensive names, the names that are doing a better 0:14:30.880 --> 0:14:34.720 job generating cash flow in that kind of environment. So 0:14:34.880 --> 0:14:37.680 as we think about supply here, Russia has always been 0:14:37.720 --> 0:14:40.800 the wild card, very difficult to predict. They talk about 0:14:40.800 --> 0:14:44.400 cutting production, yet they don't. Um So, what's your sense 0:14:44.440 --> 0:14:49.520 about the supply side of the equation specifically VSAV Russia. Yeah, 0:14:49.640 --> 0:14:52.800 Russia is you know, I think it was Winston Churchill 0:14:53.600 --> 0:14:56.240 said there are a riddle trapped inside an enigma, or 0:14:56.280 --> 0:14:59.760 maybe my FIRSTA, UM, they you know they are, They're 0:14:59.760 --> 0:15:01.480 gonna do what they want to do. UM. They have 0:15:01.520 --> 0:15:05.640 agreed to cuts of UM around four hundred thousand barrels 0:15:05.640 --> 0:15:07.680 a day UM they plus the others in the non 0:15:07.680 --> 0:15:11.840 OPEC piece of OPEC plus. But the December numbers, according 0:15:11.840 --> 0:15:15.320 to the i A, show that Russia actually increased production. UM. 0:15:15.480 --> 0:15:18.080 So you know, they have six months to kind of 0:15:18.120 --> 0:15:19.880 get their act together and get on the same page 0:15:19.880 --> 0:15:23.000 with OPEC. But the early indications are that there are 0:15:23.040 --> 0:15:26.160 some call it artistic differences between what Saudi wants and 0:15:26.200 --> 0:15:29.160 what Russia wants. Well, how much influence does OPEC have 0:15:29.320 --> 0:15:32.760 on Russia. It doesn't seem like it has much. I 0:15:33.000 --> 0:15:35.720 don't think they really do. UM. I think, you know, 0:15:35.960 --> 0:15:39.120 in UM, when oil prices fell through the floor and 0:15:39.200 --> 0:15:42.120 landed around twenty six dollars a barrel, everyone was on 0:15:42.160 --> 0:15:45.320 the same page because twenty six dollars about worked from nobody. UM. 0:15:45.360 --> 0:15:48.800 I think that Russia's cost structure is perhaps UM a 0:15:48.840 --> 0:15:52.480 little better UM than than Saudi's is. Keep in mind 0:15:52.480 --> 0:15:55.760 that Saudi has all sorts of social programs that I 0:15:55.880 --> 0:15:58.640 need to pay for, and I think that Saudi's desired 0:15:58.720 --> 0:16:01.040 number is probably higher than USh is at this point. 0:16:01.520 --> 0:16:04.520 So I've been seeing data at point after data point 0:16:04.560 --> 0:16:08.000 showing that US production has risen to new records and 0:16:08.080 --> 0:16:10.880 makes new highs every month, and I'm just wondering, how 0:16:11.000 --> 0:16:13.280 much further do we have to go? How much more 0:16:13.400 --> 0:16:16.800 can the US ramp up its production here. It's been 0:16:16.840 --> 0:16:19.560 a real surprise to the market. I would have said 0:16:19.600 --> 0:16:21.400 three months ago that I thought we were close to 0:16:21.400 --> 0:16:24.160 topping out, and yet they continued surprise. To the upside, 0:16:24.480 --> 0:16:27.600 there are some indications that, um, there's not a lot 0:16:27.680 --> 0:16:31.080 of room left for further efficiency improvements. Um. You know, 0:16:31.120 --> 0:16:33.200 some of the producers I started talking about what they 0:16:33.200 --> 0:16:37.160 call parent parent child interference, where wells that you've already 0:16:37.200 --> 0:16:39.240 drilled are are getting in the way of wells he 0:16:39.280 --> 0:16:43.040 would like to drill. So, you know, the technology side 0:16:43.360 --> 0:16:47.480 of the battle between technology and geology, technology is still winning, 0:16:47.760 --> 0:16:51.080 but but there is a limit. And at the moment, 0:16:51.600 --> 0:16:54.720 the expectations are that non opect growth led by the 0:16:54.840 --> 0:16:58.480 US is going to deliver more production in twent nine. 0:16:59.120 --> 0:17:00.920 I think it's going to be I think that delta 0:17:01.000 --> 0:17:03.360 is going to be less than it was though, So 0:17:03.440 --> 0:17:05.639 just real cookie Stewart and what's the preview of the 0:17:05.680 --> 0:17:07.400 earnings coming at fourth quarter earnings for some of these 0:17:07.440 --> 0:17:09.440 energy companies are is there particular areas that you're gonna 0:17:09.440 --> 0:17:13.640 stay away from? Um, you know, I think the services 0:17:13.680 --> 0:17:16.760 space looks a little beleaguered at this point. Um. You know, 0:17:16.800 --> 0:17:20.440 they've they've they've suffered for the last couple of years. Um, 0:17:20.520 --> 0:17:23.680 in a in a weird way, it's it's they've kind 0:17:23.680 --> 0:17:25.760 of sowed the seeds of their own demise. They've gotten 0:17:25.800 --> 0:17:28.080 so good at helping producers get more oil out of 0:17:28.080 --> 0:17:32.040 the ground that um, that it doesn't take quite as 0:17:32.040 --> 0:17:34.159 many assets to deliver a lot of production growth for 0:17:34.160 --> 0:17:37.280 the customers. So the customers are winning that battle, Haliburton 0:17:37.359 --> 0:17:40.960 reported today, and my colleague Page Marcus published a note 0:17:41.000 --> 0:17:44.280 on them, you know, maintaining a whole recommendation with them. Um, 0:17:44.320 --> 0:17:47.679 you know, in part because you know, the services you know, 0:17:48.280 --> 0:17:52.160 services pricing business doesn't look all that all that rosy 0:17:52.320 --> 0:17:54.200 right now. Unfortunately, we're going to have to leave there. 0:17:54.200 --> 0:17:56.359 Thank you so much though, for being with us. Stuart Glickman, 0:17:56.480 --> 0:18:15.240 head of Energy Research at CFR A research from New Jersey. Well, 0:18:15.280 --> 0:18:18.280 we did get from the International Monetary Fund a bleak 0:18:18.280 --> 0:18:22.840 assessment of global growth. They forecast the weakest growth around 0:18:22.920 --> 0:18:25.960 the world in three years, and they are not blaming 0:18:26.080 --> 0:18:29.520 China frankly for their downgraded assessment of the world, but 0:18:29.680 --> 0:18:33.639 rather Europe in particular Germany. Let's talk about how that 0:18:33.840 --> 0:18:36.840 is shaping up some of the views of investors. Jack 0:18:36.880 --> 0:18:39.359 Ablin joining us now founding partner in chief investment officer 0:18:39.400 --> 0:18:42.639 at Crescent Wealth Advisers. Jack, thank you so much for 0:18:42.720 --> 0:18:45.879 joining us from Palm Beach, Florida. I'm just wondering, do 0:18:45.920 --> 0:18:48.320 you care what the i m F says about global growth? 0:18:48.520 --> 0:18:52.399 Are they accurate and sort of relevant to you? You know, 0:18:52.480 --> 0:18:56.080 I do care about changes in their growth forecasts, and 0:18:56.160 --> 0:18:58.920 they do highlight things that are a concern of there. 0:18:59.080 --> 0:19:01.600 I remember, i am FF is really there for the 0:19:01.640 --> 0:19:06.240 emerging markets, and so I did to pay more attention 0:19:06.680 --> 0:19:09.159 to what they say in that regard rather than the 0:19:09.200 --> 0:19:11.840 developed world. So you're not that concerned about Europe right now? 0:19:12.440 --> 0:19:16.200 Not that concerned? No, I mean, I'm and concerned about Europe, 0:19:16.200 --> 0:19:18.639 but I'm not more concerned about Europe now that the 0:19:18.720 --> 0:19:21.040 I m F has put it on their radar screen. 0:19:21.320 --> 0:19:23.080 So Jack, how concerned are you or how do you 0:19:23.160 --> 0:19:26.119 view emerging markets. You know, in that volatility we experienced 0:19:26.160 --> 0:19:28.360 in the fourth quarter of ther emerging markets got hit 0:19:28.880 --> 0:19:31.199 extremely hard. Bouncing back a little bit here in the 0:19:31.240 --> 0:19:34.040 new year. How are you positioned in emerging markets and 0:19:34.320 --> 0:19:38.320 what is your recommendation to your clients? Sure, um, well, 0:19:38.520 --> 0:19:41.960 we are underweight emerging markets, even though I would argue 0:19:42.280 --> 0:19:45.240 from on a historical basis they're pretty cheap. In fact, 0:19:45.240 --> 0:19:50.159 they're probably the cheapest major asset class in the world 0:19:50.240 --> 0:19:52.960 right now. Um. But there are a lot of things 0:19:53.000 --> 0:19:56.040 that need to be sorted out, not the least of which, 0:19:56.080 --> 0:20:00.800 of course, is just near term economic trajectory, but more broadly, 0:20:01.040 --> 0:20:05.120 you know, I want to really better understand this uh 0:20:05.280 --> 0:20:09.480 tipfort trade issue with China. You know, I think investors 0:20:09.520 --> 0:20:12.840 originally thought this was a tactic. Uh it is now 0:20:12.960 --> 0:20:17.840 since morphed into a strategy. Um. And the question really 0:20:17.960 --> 0:20:22.760 is is this ultimately a policy, a policy that reverses 0:20:23.359 --> 0:20:29.320 thirty five years of outsourcing globalization and and and and 0:20:29.400 --> 0:20:33.320 finding the best um, you know, producers for the best goods, 0:20:33.920 --> 0:20:38.080 and you know, a shift to more inward focused where 0:20:38.119 --> 0:20:42.680 perhaps this wall kind of personifies that that worldview. Well, Jack, 0:20:42.720 --> 0:20:45.080 you mentioned China, we had a guest on earlier who 0:20:45.080 --> 0:20:48.280 suggested that a deal trade deal between the US and 0:20:48.359 --> 0:20:52.000 China is possible is likely maybe odds, but that it 0:20:52.040 --> 0:20:54.480 will be a very limited deal, not have a lot 0:20:54.520 --> 0:20:58.359 of teeth into it. Assuming that's the backdrop, How important 0:20:58.800 --> 0:21:01.399 is getting a deal, any deal with China to the 0:21:01.440 --> 0:21:06.639 overall equity markets. I think that it's important that, um, 0:21:06.680 --> 0:21:09.480 there is a dialogue, that there is some back and 0:21:09.560 --> 0:21:13.480 forth here, that this isn't just uh, you know, uh 0:21:13.680 --> 0:21:17.280 digging heels into the sand, so to speak. Um. And 0:21:17.359 --> 0:21:19.720 so I would like to make sure that there is 0:21:20.040 --> 0:21:23.960 some trade decent going on with China. UM. But you're right, 0:21:24.000 --> 0:21:29.840 I mean there's still larger issues looming relative to more 0:21:29.880 --> 0:21:33.800 than just necessarily these these tariffs. In fact, um, there 0:21:33.840 --> 0:21:38.280 are many analysts now believe that these tariffs will will 0:21:38.320 --> 0:21:41.119 be here to stay permanently um or at least on 0:21:41.160 --> 0:21:44.280 many items. And I think businesses are going to have 0:21:44.320 --> 0:21:46.840 to adjust to that. And and that's where I have 0:21:47.359 --> 0:21:49.600 some concern. I want to talk a little bit about 0:21:49.680 --> 0:21:52.479 UBS and what they're reported with respect of thirteen billion 0:21:52.520 --> 0:21:55.879 dollars of client withdrawals, and we were just talking about 0:21:55.880 --> 0:21:58.280 how this really came from the high net worth the 0:21:58.400 --> 0:22:01.840 ultra high net worth individuals who basically we're trying to 0:22:01.880 --> 0:22:04.399 stuff cash into a mattress. Do you adhere to the 0:22:04.400 --> 0:22:09.080 same strategy of stuff in cash into yeah. Do you 0:22:09.119 --> 0:22:10.879 think that that's a that's a prudent thing to do 0:22:10.960 --> 0:22:12.919 to take money out of equities, cash out in the 0:22:13.000 --> 0:22:14.840 in the good days and and sort of just put 0:22:14.840 --> 0:22:19.120 money aside. Yeah. I mean, I will say, we normally 0:22:19.160 --> 0:22:21.840 don't carry much of a cash balance, and we do 0:22:22.000 --> 0:22:26.199 have a cash balance now. Um. You know, I'm not 0:22:27.080 --> 0:22:29.800 why I think that there are still, like I said, 0:22:29.840 --> 0:22:32.080 there are still things that need to be sorted out. Well, 0:22:32.680 --> 0:22:36.840 valuations among US large caps. You know, you you can 0:22:36.880 --> 0:22:39.520