1 00:00:05,120 --> 00:00:09,200 Speaker 1: Welcome to the Bloomberg Surveillance Podcast. I'm Tom Keane. Along 2 00:00:09,240 --> 00:00:13,200 Speaker 1: with Jonathan Ferrell and Lisa Brownwitz. Daily we bring you 3 00:00:13,320 --> 00:00:18,600 Speaker 1: insight from the best and economics, finance, investment, and international relations. 4 00:00:18,960 --> 00:00:23,840 Speaker 1: Find Bloomberg Surveillance on Apple Podcast, Suncloud, Bloomberg dot com 5 00:00:23,920 --> 00:00:30,440 Speaker 1: and of course on the Bloomberg Terminal. This is an 6 00:00:30,480 --> 00:00:33,479 Speaker 1: immense joy. The book The Prize was a classic, The 7 00:00:33,560 --> 00:00:36,360 Speaker 1: Commanding Heights a classic, and there's been a set of 8 00:00:36,400 --> 00:00:39,479 Speaker 1: books along the way where late last year it was 9 00:00:39,600 --> 00:00:42,839 Speaker 1: instantly my book of the year. The New Map is 10 00:00:42,880 --> 00:00:46,040 Speaker 1: by Daniel Jurgen, I h S Vice Chairman, and we're 11 00:00:46,080 --> 00:00:48,680 Speaker 1: thrilled we could get an oil update from Dr Jorgen 12 00:00:49,400 --> 00:00:52,800 Speaker 1: right now on the Triumph. Really wonderful, wonderful book to 13 00:00:52,880 --> 00:00:56,680 Speaker 1: read on oil and the new Map of our geo politics. 14 00:00:57,080 --> 00:00:59,320 Speaker 1: Dr Jurgen, thank you so much for joining you talk 15 00:00:59,440 --> 00:01:03,000 Speaker 1: late in your work about the disrupted future. It's seventy 16 00:01:03,080 --> 00:01:06,360 Speaker 1: dollars a barrel, up from forty five dollars a barrel 17 00:01:06,400 --> 00:01:09,560 Speaker 1: when your book was released. What does the disrupted future 18 00:01:09,680 --> 00:01:13,320 Speaker 1: of oil look like? Thank you, Tom, and glad to 19 00:01:13,360 --> 00:01:15,000 Speaker 1: be with you. And I have to say thank you 20 00:01:15,040 --> 00:01:18,360 Speaker 1: for making the new map of the surveillance Bloomberg Surveillance 21 00:01:18,400 --> 00:01:20,600 Speaker 1: Book of the Year, and it did. The book does 22 00:01:20,640 --> 00:01:22,959 Speaker 1: talk about disruption of what we're seeing now. I think 23 00:01:23,000 --> 00:01:25,920 Speaker 1: we're moving. We're in the post pandemic economy right now, 24 00:01:26,400 --> 00:01:29,600 Speaker 1: and uh, after all of the obitras and everything we're 25 00:01:29,600 --> 00:01:32,480 Speaker 1: written for commodities, for oil, you're seeing a rebound and 26 00:01:32,520 --> 00:01:34,200 Speaker 1: it's telling you that we're in a very in a 27 00:01:34,240 --> 00:01:37,520 Speaker 1: strong world economy, we're probably in our number is going 28 00:01:37,560 --> 00:01:40,040 Speaker 1: to be looking at a six percent global economic growth 29 00:01:40,080 --> 00:01:42,720 Speaker 1: this year. That will bleed into demand. How do you 30 00:01:42,840 --> 00:01:46,080 Speaker 1: frame the price of oil? Are we here or you 31 00:01:46,120 --> 00:01:49,120 Speaker 1: go to eighty dollars of barrel as we've heard from technicians, 32 00:01:49,480 --> 00:01:52,560 Speaker 1: or can Daniel Jurgen speak of a hundred dollars of barrel? 33 00:01:53,560 --> 00:01:55,440 Speaker 1: I think a hundred dollars a barrel would have to 34 00:01:55,480 --> 00:01:58,880 Speaker 1: be some really big disruption. I think we've been thinking 35 00:01:58,880 --> 00:02:01,040 Speaker 1: that we were in a sixty seven many five dollar range. 36 00:02:01,040 --> 00:02:04,160 Speaker 1: It could touch eighty, but we're still using around seventies 37 00:02:04,240 --> 00:02:06,200 Speaker 1: the price for the year, which is where we happen 38 00:02:06,240 --> 00:02:09,880 Speaker 1: to be right now, and it's as the economies open 39 00:02:09,960 --> 00:02:12,680 Speaker 1: up around the world. Motorists on the road referring to 40 00:02:12,760 --> 00:02:16,840 Speaker 1: drive and places, and the OPEC countries and the OPEC 41 00:02:16,880 --> 00:02:19,919 Speaker 1: plus countries putting oil back in the market, and even 42 00:02:19,960 --> 00:02:22,720 Speaker 1: the prospect of a RAN coming back into the market 43 00:02:22,760 --> 00:02:25,720 Speaker 1: fairly soon if there is finally a new nuclear agreement 44 00:02:25,919 --> 00:02:28,320 Speaker 1: still hasn't riled the market. Well, there's this idea of 45 00:02:28,360 --> 00:02:32,200 Speaker 1: discipline that a lot of the oil producers having regained 46 00:02:32,240 --> 00:02:35,480 Speaker 1: discipline and are not going to overproduce for fear of 47 00:02:35,560 --> 00:02:38,560 Speaker 1: cannibalizing from their future profits. At what point does the 48 00:02:38,639 --> 00:02:42,400 Speaker 1: shale complex come back on see higher prices is something 49 00:02:42,639 --> 00:02:46,480 Speaker 1: they just can't miss and and perhaps enhance their production. 50 00:02:47,320 --> 00:02:49,640 Speaker 1: That's a question obviously not in the SHIL producers, but 51 00:02:49,680 --> 00:02:53,000 Speaker 1: that that OPEC Plus are looking at pretty carefully. We're 52 00:02:53,000 --> 00:02:56,320 Speaker 1: going to see at this point the shil producer returning 53 00:02:56,360 --> 00:02:59,920 Speaker 1: capital to investors. That's what their focus is on right now. 54 00:03:00,520 --> 00:03:03,040 Speaker 1: And uh, the increase in recount that we see is 55 00:03:03,080 --> 00:03:06,560 Speaker 1: among private operators, not the major companies. So I think 56 00:03:06,560 --> 00:03:08,720 Speaker 1: we will see obviously this second half of the year, 57 00:03:08,720 --> 00:03:11,600 Speaker 1: we'll see US oil production starting to go up again, 58 00:03:11,800 --> 00:03:13,800 Speaker 1: but I think at a modest rate, and I think 59 00:03:14,120 --> 00:03:17,320 Speaker 1: there is a new social contract between the shale producers 60 00:03:17,639 --> 00:03:20,440 Speaker 1: and their investors, and that does mean that maintaining a 61 00:03:20,480 --> 00:03:23,360 Speaker 1: certain discipline and not going for growth at any cost. 62 00:03:23,520 --> 00:03:25,360 Speaker 1: Hold on, It's like, can you elaborate what this social 63 00:03:25,400 --> 00:03:27,639 Speaker 1: contract is? Does it have to do with climate change 64 00:03:27,840 --> 00:03:29,440 Speaker 1: or does it have to do with the idea that 65 00:03:29,480 --> 00:03:32,280 Speaker 1: they're dead, that their equity has been whips ode by 66 00:03:32,280 --> 00:03:35,840 Speaker 1: the different price action in oil and that investors don't 67 00:03:35,840 --> 00:03:38,880 Speaker 1: want to see that again. It is your second option. 68 00:03:39,000 --> 00:03:44,240 Speaker 1: It's about money and that many shale producers were spending 69 00:03:44,360 --> 00:03:47,520 Speaker 1: beyond their cash flow. Now they've turned around. Some have 70 00:03:47,680 --> 00:03:51,280 Speaker 1: dividends or sort of variable dividends there, paying down debt. 71 00:03:51,800 --> 00:03:54,480 Speaker 1: That's been their focus. That they have to show two 72 00:03:54,520 --> 00:03:57,720 Speaker 1: investors that they will be prudent managers, and that comes 73 00:03:57,720 --> 00:04:01,400 Speaker 1: with consolidation. We used to follow uh at S market 74 00:04:01,480 --> 00:04:05,040 Speaker 1: six T SHL companies as consolidation proceeds. As some companies 75 00:04:05,040 --> 00:04:08,840 Speaker 1: disappeared with down really getting closer to DAN. It would 76 00:04:08,840 --> 00:04:11,040 Speaker 1: be rude if we did not ask. And let us 77 00:04:11,040 --> 00:04:14,520 Speaker 1: go back from Mobile to XN to s O. You 78 00:04:14,600 --> 00:04:17,040 Speaker 1: and I remember s O and the roll ups there 79 00:04:17,040 --> 00:04:22,040 Speaker 1: of different hydrocarbon gasoline companies across this nation. S SO 80 00:04:22,240 --> 00:04:25,760 Speaker 1: and climate change, what does it mean that the climate 81 00:04:25,839 --> 00:04:29,440 Speaker 1: change activists have assaulted the board of directors of X 82 00:04:29,640 --> 00:04:32,640 Speaker 1: and what does it symbolize? Well, I think I think 83 00:04:32,800 --> 00:04:35,560 Speaker 1: if you read the documents, it was not only climate change. 84 00:04:35,560 --> 00:04:37,760 Speaker 1: It was an argument about how the company has been 85 00:04:37,800 --> 00:04:41,000 Speaker 1: spending money, about investment, and I think that's been kind 86 00:04:41,000 --> 00:04:44,200 Speaker 1: of lost Tom to some degree in the focus about 87 00:04:44,200 --> 00:04:47,000 Speaker 1: the climate. I think all companies are getting on board 88 00:04:47,200 --> 00:04:52,479 Speaker 1: about kind of net zero carbon by which has become 89 00:04:53,440 --> 00:04:59,000 Speaker 1: almost the rule book, and that's what US and other 90 00:04:59,040 --> 00:05:02,400 Speaker 1: countries are going to seek to put into place in 91 00:05:02,400 --> 00:05:04,440 Speaker 1: a much stronger way when they have their next UN 92 00:05:04,520 --> 00:05:07,800 Speaker 1: meeting in Glasgow in November. But I think that what 93 00:05:07,839 --> 00:05:10,160 Speaker 1: we've seen about the board of directors at Excellent and 94 00:05:10,200 --> 00:05:13,440 Speaker 1: Mobile is also it's a question about strategy, about where 95 00:05:13,440 --> 00:05:16,280 Speaker 1: you invest, and obviously climate change has been part of it, 96 00:05:16,400 --> 00:05:19,200 Speaker 1: but that's not the only thing. Daniel. When do we 97 00:05:19,240 --> 00:05:24,440 Speaker 1: get peak oil? Ah? Sometimes I think we'll someday we'll 98 00:05:24,440 --> 00:05:27,520 Speaker 1: have peak conversation about peak oil. I think uh in 99 00:05:27,880 --> 00:05:30,080 Speaker 1: the new map, you know, I take the view that 100 00:05:30,120 --> 00:05:33,039 Speaker 1: it's probably around twenty we're going to see strong demand. 101 00:05:33,600 --> 00:05:36,800 Speaker 1: Right now, that's what we're seeing demand increasing seven million 102 00:05:36,880 --> 00:05:39,479 Speaker 1: barrels a day from the first quarter to the third quarter. 103 00:05:39,720 --> 00:05:41,320 Speaker 1: So I think, and I spent a lot of time 104 00:05:41,400 --> 00:05:43,000 Speaker 1: think about this in terms of the new map, and 105 00:05:43,560 --> 00:05:47,560 Speaker 1: but I think around is when demand really starts to peak. 106 00:05:47,920 --> 00:05:50,400 Speaker 1: I mean, this year we're selling about three of the 107 00:05:50,440 --> 00:05:53,600 Speaker 1: new cars in the US are electric cars. Fuel efficiency 108 00:05:53,640 --> 00:05:56,320 Speaker 1: has a big impact. But recovery in the world, if 109 00:05:56,360 --> 00:05:59,960 Speaker 1: we have a strong recovery, that's going to propel demand. 110 00:06:00,120 --> 00:06:06,960 Speaker 1: So I was still used around as the expectation. Thank you, sir, 111 00:06:07,240 --> 00:06:16,920 Speaker 1: Always appreciate your perspective. Chess mal Kid, Vice chairman. Right 112 00:06:16,960 --> 00:06:19,120 Speaker 1: now there is no one like Douglas Cass joining us 113 00:06:19,120 --> 00:06:22,600 Speaker 1: some sea breeze and Doug, I love, love, love your 114 00:06:22,600 --> 00:06:27,600 Speaker 1: note yesterday afternoon, which is where is the uproar that 115 00:06:27,680 --> 00:06:31,440 Speaker 1: we've all become hourly traders? I mean, how do we 116 00:06:31,560 --> 00:06:35,840 Speaker 1: extricate ourselves from this? A wise one. First, let me 117 00:06:35,920 --> 00:06:38,720 Speaker 1: say that I love following Jack Ablom. In the morning, 118 00:06:39,440 --> 00:06:42,480 Speaker 1: he texted me that he's watching and all I would 119 00:06:42,480 --> 00:06:45,000 Speaker 1: say is that Jack Ablin has one of the best 120 00:06:45,040 --> 00:06:48,080 Speaker 1: long games in the investment business, but his short game 121 00:06:48,080 --> 00:06:50,760 Speaker 1: and golf is a totally different. It's a disaster. It's 122 00:06:50,800 --> 00:06:52,720 Speaker 1: like embarrassing in and I know the reason that you 123 00:06:52,839 --> 00:06:57,320 Speaker 1: play golf. He's that bad, but seriously done on the market. 124 00:06:57,480 --> 00:07:03,320 Speaker 1: I quoted Wrestling Icon on Rowdy Roddy Piper. I have 125 00:07:03,440 --> 00:07:05,960 Speaker 1: come here to chew bubblegum and kick ass, and I'm 126 00:07:06,040 --> 00:07:12,040 Speaker 1: out of bubblegum. I'm reasonably convinced that the markets upside 127 00:07:12,120 --> 00:07:14,800 Speaker 1: reward is dwarfed by the downside risk. It doesn't mean 128 00:07:14,840 --> 00:07:16,920 Speaker 1: that the market is going to fade immediately, but all 129 00:07:16,960 --> 00:07:23,400 Speaker 1: the signs are there. UM valuations, investor expectations are really inflated. 130 00:07:23,520 --> 00:07:26,200 Speaker 1: Speculation is run a buck as you just described with 131 00:07:26,360 --> 00:07:30,760 Speaker 1: the discussion of AMC. But are they compartmentalized, Mr Cass 132 00:07:30,880 --> 00:07:34,880 Speaker 1: or do you lump it altogether? Ablin said that, you know, 133 00:07:34,960 --> 00:07:38,240 Speaker 1: it's a little ambivalent right now where we where we are, 134 00:07:38,320 --> 00:07:43,240 Speaker 1: But do you lump it all together? Or is yeah, 135 00:07:43,320 --> 00:07:46,960 Speaker 1: I lumped it all together. I see it as endemic 136 00:07:47,840 --> 00:07:52,480 Speaker 1: um to what's going on in the market. Um the artificiality, 137 00:07:52,680 --> 00:07:57,520 Speaker 1: the absence of natural price discovery created by obviously zero 138 00:07:57,560 --> 00:08:01,840 Speaker 1: interest rate policy. It's become Paul and Tom so conspicuous 139 00:08:01,880 --> 00:08:06,640 Speaker 1: that it can't be ignored by any investor that requires 140 00:08:06,640 --> 00:08:09,960 Speaker 1: a margin of safety when they invest. All right, Doug, 141 00:08:10,040 --> 00:08:13,040 Speaker 1: I appreciate a rowdy roddy piper reference as much as 142 00:08:13,040 --> 00:08:15,360 Speaker 1: the next person. But I also note in your most 143 00:08:15,400 --> 00:08:18,600 Speaker 1: recent note that you are not yet net short. What 144 00:08:18,640 --> 00:08:22,600 Speaker 1: would get you to become net short? Yeah? I'm respectful 145 00:08:22,640 --> 00:08:26,440 Speaker 1: of the market's momentum, which we all know is fueled, 146 00:08:27,080 --> 00:08:29,600 Speaker 1: as I said, in large measure because of liquidity from 147 00:08:29,600 --> 00:08:34,880 Speaker 1: physical monetary policy. I think it's important that we recognize 148 00:08:35,000 --> 00:08:38,280 Speaker 1: that tops of processes. I think we're making an important 149 00:08:38,320 --> 00:08:43,559 Speaker 1: top bottoms. By contrast, or more typically, events and the 150 00:08:43,679 --> 00:08:46,920 Speaker 1: bull markets are typically born out of bad news. If 151 00:08:46,960 --> 00:08:51,000 Speaker 1: you consider March two thousand nine, the generational low inequities 152 00:08:51,000 --> 00:08:55,319 Speaker 1: which I described, or March um at both junches I 153 00:08:55,400 --> 00:08:59,120 Speaker 1: got really bullish. It doesn't pay to be dogmatic, neither 154 00:08:59,200 --> 00:09:03,760 Speaker 1: a per a bowl or permanent bear v I um 155 00:09:03,840 --> 00:09:08,080 Speaker 1: and um uh. You know. In fact, if you remember 156 00:09:08,080 --> 00:09:12,400 Speaker 1: our conversations on surveillance throughout, I called for rip your 157 00:09:12,400 --> 00:09:15,400 Speaker 1: face rally and mother of all short squeezes, which we've had. 158 00:09:15,559 --> 00:09:18,080 Speaker 1: But bear markets are born out of good news. If 159 00:09:18,120 --> 00:09:21,000 Speaker 1: you consider early two thousand, fall of two thousand and seven, 160 00:09:21,280 --> 00:09:26,079 Speaker 1: and maybe even June. It happens when demand for stocks 161 00:09:26,120 --> 00:09:29,880 Speaker 1: is sated. It happens when you have a promotional CEO 162 00:09:30,000 --> 00:09:34,959 Speaker 1: of a company like AMC, where there's tremendous misallocate allocation 163 00:09:35,000 --> 00:09:39,920 Speaker 1: of capital UM and there's play money on steroids UM, 164 00:09:40,000 --> 00:09:43,680 Speaker 1: and you have someone by contrast, Madrick but Modrick Capital 165 00:09:44,000 --> 00:09:46,920 Speaker 1: who becomes the smartest man in the room and and 166 00:09:47,120 --> 00:09:51,840 Speaker 1: plays Reddit and Wall Street bets and David fortnit um 167 00:09:51,880 --> 00:09:55,800 Speaker 1: to a fairly well and makes thirty million as UM, 168 00:09:55,880 --> 00:09:58,400 Speaker 1: an hourly trader, not a day trader. To reference your 169 00:09:58,480 --> 00:10:02,160 Speaker 1: question about the you know whether we're all day traders now? Um. 170 00:10:02,280 --> 00:10:04,320 Speaker 1: So when stocks are cheap, I buy them when they're 171 00:10:04,320 --> 00:10:07,600 Speaker 1: expensively short. I'm starting up a hedge fund this week, 172 00:10:08,280 --> 00:10:11,600 Speaker 1: Seabreez Capital Partners LP, to take advantage of what I 173 00:10:11,640 --> 00:10:17,480 Speaker 1: think are uh in certain cases ludicrously valued prices classic 174 00:10:17,840 --> 00:10:25,200 Speaker 1: short shore short. Most long short guys are long biased. 175 00:10:25,480 --> 00:10:27,640 Speaker 1: I run a long short book with a short bias. 176 00:10:28,480 --> 00:10:31,320 Speaker 1: What I do during my days is analyzed companies. I'm 177 00:10:31,320 --> 00:10:34,840 Speaker 1: not looking at the forums and Reddit Wall Street bets. 178 00:10:35,480 --> 00:10:38,720 Speaker 1: Hopefully I'm producing an intelligent judgment of value. You'll apply 179 00:10:38,880 --> 00:10:43,400 Speaker 1: leverage I don't apply. I never use leverage. I tried 180 00:10:43,440 --> 00:10:48,040 Speaker 1: to create excess returns alpha by superior stock selection. The 181 00:10:48,080 --> 00:10:51,079 Speaker 1: bottom line is that I feel a lot of people 182 00:10:51,120 --> 00:10:53,840 Speaker 1: today are ignoring the fact that the SMP has doubled 183 00:10:54,120 --> 00:10:56,800 Speaker 1: since the March Lows. I think looking at the rear 184 00:10:56,840 --> 00:11:00,680 Speaker 1: view mirror is not the fountain for delivering superior returns 185 00:11:01,040 --> 00:11:04,440 Speaker 1: to meet. Buying here is like drinking contaminated water. So 186 00:11:04,520 --> 00:11:07,280 Speaker 1: I'm not yet shut Paul. I've one step out the door, 187 00:11:08,120 --> 00:11:10,480 Speaker 1: and I hope that my hedge fund launch is timely 188 00:11:10,520 --> 00:11:13,840 Speaker 1: from the standpoint of setting up shorts. But as I 189 00:11:13,880 --> 00:11:15,760 Speaker 1: look at the major and I'd be happy to go 190 00:11:15,840 --> 00:11:18,440 Speaker 1: through most of them very quickly. As I look at 191 00:11:19,400 --> 00:11:23,800 Speaker 1: most asset classes, most market sectors, and individual stocks, I'm 192 00:11:23,800 --> 00:11:28,839 Speaker 1: pretty er sign is Doug is the catalyst for a 193 00:11:28,960 --> 00:11:32,680 Speaker 1: market contraction in your mind, the FED stepping in here 194 00:11:32,720 --> 00:11:36,480 Speaker 1: and tapering. If not start talking about raising rates, I'm 195 00:11:36,520 --> 00:11:39,920 Speaker 1: different than everyone else. I listened to Laura earlier on 196 00:11:39,960 --> 00:11:43,680 Speaker 1: Bloomberg TV, UM, I listened to your other guests were 197 00:11:43,679 --> 00:11:47,360 Speaker 1: all smart. Um, I just think it happens. Let's look 198 00:11:47,360 --> 00:11:50,839 Speaker 1: for example, of the disgorging and SPACs. There were three 199 00:11:50,880 --> 00:11:54,200 Speaker 1: hundred SPACs. They raised a hundred and twenty billion dollars 200 00:11:54,640 --> 00:11:59,120 Speaker 1: late two thousand twenty in early How fast was that 201 00:11:59,200 --> 00:12:02,640 Speaker 1: graze over? It was over as fast as frasier as 202 00:12:03,000 --> 00:12:07,880 Speaker 1: a Frasier hitting a walk off home run last night 203 00:12:07,920 --> 00:12:10,960 Speaker 1: at the bottom of the eleven, or as or as 204 00:12:11,240 --> 00:12:16,360 Speaker 1: John Sterling said, Tom, oh did we need that? Yeah? Okay, 205 00:12:16,360 --> 00:12:18,959 Speaker 1: well just because broad so I see a broad of 206 00:12:19,040 --> 00:12:21,760 Speaker 1: discorge from in the head, not only not only for 207 00:12:21,960 --> 00:12:24,120 Speaker 1: a Tampa Bay, but for the market. Doug cass, I 208 00:12:24,120 --> 00:12:26,480 Speaker 1: gotta switch gears here on the raging debate that we're 209 00:12:26,480 --> 00:12:29,720 Speaker 1: having and everybody else's on the new baseball. I'm a 210 00:12:29,800 --> 00:12:32,480 Speaker 1: huge fan, frankly of the new game. And I go 211 00:12:32,600 --> 00:12:35,199 Speaker 1: back to a pitcher who was in the Baseball Hall 212 00:12:35,240 --> 00:12:37,120 Speaker 1: of Fame by the time he was thirty six years 213 00:12:37,160 --> 00:12:41,559 Speaker 1: old and pitched from a higher mount. Would Sandy Kofax 214 00:12:41,679 --> 00:12:44,080 Speaker 1: complain about lower in the mound right now to make 215 00:12:44,120 --> 00:12:50,000 Speaker 1: things work? Um, Sandy's giddy about his investment portfolio, and 216 00:12:50,080 --> 00:12:53,400 Speaker 1: I don't think he would be concerned about the difference 217 00:12:53,400 --> 00:12:56,240 Speaker 1: in the mound. Yeah, I mean I don't. I don't, 218 00:12:56,280 --> 00:12:58,200 Speaker 1: I don't feel so. I mean you and I remember 219 00:12:58,280 --> 00:13:01,160 Speaker 1: these guys were fearsome, They were up way, Hi, Bob Gibson, one, 220 00:13:01,200 --> 00:13:03,480 Speaker 1: Marichelle and the rest of him, and they brought it 221 00:13:03,520 --> 00:13:05,960 Speaker 1: in all the games. You know. That's why Sandy's games 222 00:13:05,960 --> 00:13:08,840 Speaker 1: were two to one. Um. You know. The Yankees, by 223 00:13:08,840 --> 00:13:12,240 Speaker 1: the way, getting back to baseball, uncharacteristically have s forward 224 00:13:12,640 --> 00:13:15,320 Speaker 1: two or less runs and nine of the least thirteen games. 225 00:13:15,640 --> 00:13:18,960 Speaker 1: The last time that happened was seventy one. Aaron Boone, 226 00:13:19,120 --> 00:13:22,400 Speaker 1: the manager wasn't and I think Brian was four years old. 227 00:13:22,640 --> 00:13:25,040 Speaker 1: I got time for one last question. It's a really 228 00:13:25,080 --> 00:13:27,840 Speaker 1: really important question because you're living at Doug Cast. The 229 00:13:27,880 --> 00:13:29,559 Speaker 1: rest of us are up here in the snow. You're 230 00:13:29,559 --> 00:13:32,880 Speaker 1: living at large in Florida, our Tampa Bay, the San 231 00:13:32,920 --> 00:13:36,880 Speaker 1: Diego Padres, l A Dodgers, and the San Francisco Giants 232 00:13:36,920 --> 00:13:39,440 Speaker 1: doing so well because the players want to play in 233 00:13:39,480 --> 00:13:47,640 Speaker 1: that perfect weather. No, no, it's it's you're a Red 234 00:13:47,720 --> 00:13:50,560 Speaker 1: Sox fan. For God's sake. You know it's early in 235 00:13:50,600 --> 00:13:53,840 Speaker 1: the season. Talk to me in August. Got that right, 236 00:13:54,480 --> 00:13:56,880 Speaker 1: We'll leave it there, Go away, Doug Cast. Good luck 237 00:13:56,920 --> 00:14:01,200 Speaker 1: with your new long short escapade here. That will be interesting. 238 00:14:01,920 --> 00:14:03,960 Speaker 1: No leverage. That's really important for those of you that 239 00:14:03,960 --> 00:14:08,000 Speaker 1: aren't sophisticates on this. That's a really important uh statement 240 00:14:08,000 --> 00:14:10,520 Speaker 1: by Mr Cass. Yeah, I think he's just as strict 241 00:14:10,600 --> 00:14:12,960 Speaker 1: long short. It sounds like a bottom's up, Doug Cass. 242 00:14:13,400 --> 00:14:15,480 Speaker 1: I'm a stock selector, and that that's going to generate 243 00:14:15,600 --> 00:14:18,920 Speaker 1: my alpha. I I can't remember the paper, but really 244 00:14:19,080 --> 00:14:23,160 Speaker 1: Matthew really sophisticated twenty five years ago said if you 245 00:14:23,200 --> 00:14:26,960 Speaker 1: go over two point three eight times leverage, bad things happened. 246 00:14:27,000 --> 00:14:29,320 Speaker 1: That was where the math laid out in cast goes 247 00:14:29,400 --> 00:14:32,520 Speaker 1: the other way with no leverage. Doesn't of baseball talk 248 00:14:38,960 --> 00:14:42,640 Speaker 1: right now on inflation, which he does link into Washington 249 00:14:42,720 --> 00:14:46,160 Speaker 1: Gregory Gregory Valier joins us with a g F Investments 250 00:14:46,200 --> 00:14:48,880 Speaker 1: this morning note is a mustardyad and all of Washington 251 00:14:48,880 --> 00:14:52,320 Speaker 1: it really can't say enough about it. I want to 252 00:14:52,320 --> 00:14:55,960 Speaker 1: go back to whip inflation now, Greg Valier, and I 253 00:14:56,000 --> 00:14:58,000 Speaker 1: don't know if we're gonna have a redo of that 254 00:14:58,120 --> 00:15:01,320 Speaker 1: here with about him inflay Shan, But I was just 255 00:15:01,680 --> 00:15:06,000 Speaker 1: inflation is treated differently by the GOP or by the Democrats. 256 00:15:06,120 --> 00:15:10,440 Speaker 1: Discussed that well. First of all, I'm old enough time 257 00:15:10,520 --> 00:15:13,800 Speaker 1: to remember the seventies when inflation did tremendous damage to 258 00:15:13,880 --> 00:15:17,640 Speaker 1: Jimmy Carter's presidency, and I do think it's a real 259 00:15:17,760 --> 00:15:20,960 Speaker 1: vulnerability for Joe Biden. You know, we all talk about 260 00:15:21,000 --> 00:15:23,080 Speaker 1: the impact that the fed or the markets, but there's 261 00:15:23,080 --> 00:15:27,040 Speaker 1: a big political impact. You see an extreme shortage of meat, 262 00:15:27,520 --> 00:15:31,240 Speaker 1: you see gasoline prices higher, you see a really acute 263 00:15:31,240 --> 00:15:34,480 Speaker 1: shortage of labor, and you see housing prices on fire. 264 00:15:34,560 --> 00:15:36,760 Speaker 1: And I think a lot of consumers will look at 265 00:15:36,840 --> 00:15:40,280 Speaker 1: this stuff intend to blame the incumbent president seventy one. 266 00:15:40,720 --> 00:15:45,880 Speaker 1: Baron brand explain, you're the politics of a gallon of gas. Well, 267 00:15:45,920 --> 00:15:49,120 Speaker 1: it's visceral. People see it, uh So clearly when they 268 00:15:49,160 --> 00:15:52,040 Speaker 1: fill their tank, they see the price of meat. There's 269 00:15:52,040 --> 00:15:54,080 Speaker 1: a story in the Washington Post this morning about a 270 00:15:54,080 --> 00:15:57,360 Speaker 1: house in the DC suburbs that went for one million 271 00:15:57,440 --> 00:16:01,560 Speaker 1: dollars above the asking price. So everywhere you look, you 272 00:16:01,560 --> 00:16:04,520 Speaker 1: you see signs of it. And the Republicans, who have 273 00:16:04,600 --> 00:16:07,520 Speaker 1: been desperate for issues that will give them traction may 274 00:16:07,600 --> 00:16:12,120 Speaker 1: have an issue. Greg, what are the politics of higher wages? Well, 275 00:16:12,120 --> 00:16:14,360 Speaker 1: that that is well, I think that when you see 276 00:16:14,400 --> 00:16:17,720 Speaker 1: stories Lisa, like the Bank of America paying twenty five 277 00:16:18,120 --> 00:16:21,600 Speaker 1: an hour, when you see stories about bidding wars by 278 00:16:21,680 --> 00:16:24,400 Speaker 1: companies that people are saying, I've got to pay all 279 00:16:24,400 --> 00:16:27,880 Speaker 1: these higher prices. I need higher wages, and I think 280 00:16:27,960 --> 00:16:30,800 Speaker 1: that's the big issue for the FED. It's not corn 281 00:16:30,920 --> 00:16:34,040 Speaker 1: or copper, it's wages. All right, Well, this really raises 282 00:16:34,040 --> 00:16:36,800 Speaker 1: a question because inflation has been highly political, and the 283 00:16:36,840 --> 00:16:39,760 Speaker 1: way that we normally talk about it is that Republicans 284 00:16:39,800 --> 00:16:42,720 Speaker 1: have been raising the issue of inflation to push back 285 00:16:42,760 --> 00:16:45,640 Speaker 1: on some of Biden's plans. But you're saying that the 286 00:16:45,720 --> 00:16:48,360 Speaker 1: here and now of inflation that we're seeing commodity prices 287 00:16:48,440 --> 00:16:51,400 Speaker 1: is already eroding confidence in some of the spending. Is 288 00:16:51,440 --> 00:16:55,200 Speaker 1: that what you're saying or what you're hearing from the polls. Yes, 289 00:16:55,320 --> 00:16:58,560 Speaker 1: I'm hearing Lisa that the Republicans who need issues. I mean, 290 00:16:58,600 --> 00:17:01,000 Speaker 1: they can talk about urban cry I'm an immigration, but 291 00:17:01,040 --> 00:17:03,400 Speaker 1: they need more issues. And I think if they can 292 00:17:03,480 --> 00:17:06,480 Speaker 1: say the reason why we've got high prices everywhere you 293 00:17:06,520 --> 00:17:09,480 Speaker 1: look is because of the Biden spending Binge, I'm not 294 00:17:09,520 --> 00:17:11,560 Speaker 1: sure I believe that. By the way, I don't think 295 00:17:11,640 --> 00:17:14,199 Speaker 1: Joe Biden is to blame for computer chips being in 296 00:17:14,280 --> 00:17:17,800 Speaker 1: short supply, but the Republicans may try to link the 297 00:17:17,840 --> 00:17:22,879 Speaker 1: two issues to Biden's detriment. Greg Ville. West Virginia is 298 00:17:22,880 --> 00:17:26,600 Speaker 1: such an original and interesting state. Here we have two 299 00:17:26,680 --> 00:17:32,000 Speaker 1: senators with uncommon power. Explain the power of the senator's 300 00:17:32,280 --> 00:17:36,040 Speaker 1: was Virginia even as one meets with Biden today. Well, 301 00:17:36,160 --> 00:17:37,960 Speaker 1: first of all, time, you start with the fact that 302 00:17:38,000 --> 00:17:41,159 Speaker 1: it's among the most conservative states in the country. So 303 00:17:41,280 --> 00:17:45,359 Speaker 1: Joe Manson, a modern Democrat, can't stray very far. Shelley 304 00:17:45,359 --> 00:17:47,800 Speaker 1: more Caputo, who will be at the White House negotiating 305 00:17:47,840 --> 00:17:51,399 Speaker 1: with the President, can't stray very much either. So I 306 00:17:51,880 --> 00:17:55,919 Speaker 1: think ironically their state needs a lot of money for infrastructure, 307 00:17:56,119 --> 00:17:59,040 Speaker 1: but I think they'd be reluctant to sign on to 308 00:17:59,160 --> 00:18:03,600 Speaker 1: a plan that the Democrats support. That said, they're getting closer. 309 00:18:04,119 --> 00:18:07,160 Speaker 1: Late last week the Republicans came close to one trillion. 310 00:18:07,480 --> 00:18:10,080 Speaker 1: Biden's come down from two point to five trillion to 311 00:18:10,160 --> 00:18:13,560 Speaker 1: one point seven. They're getting closer. I wouldn't be shocked 312 00:18:13,760 --> 00:18:17,080 Speaker 1: to see a deal start to come into focusing. You and, yeah, 313 00:18:17,320 --> 00:18:21,760 Speaker 1: you think they will defeat gridlock with this legislation. Yeah, 314 00:18:21,840 --> 00:18:24,159 Speaker 1: it's not going to satisfy the progressive left. They're going 315 00:18:24,200 --> 00:18:26,960 Speaker 1: to be very upset. And but what Biden has to 316 00:18:27,000 --> 00:18:29,640 Speaker 1: do or say, look, I'll take this now, we'll come 317 00:18:29,680 --> 00:18:32,439 Speaker 1: back for more. Maybe the next bill will use budget 318 00:18:32,480 --> 00:18:35,760 Speaker 1: reconciliation and shove it through Congress. But I think Biden 319 00:18:35,840 --> 00:18:38,840 Speaker 1: needs a win. I think it gives him momentum. I 320 00:18:38,880 --> 00:18:41,520 Speaker 1: think a deal is doable, all right, He needs a win. 321 00:18:42,040 --> 00:18:44,679 Speaker 1: Is he losing popularity among his own Democratic Party or 322 00:18:44,720 --> 00:18:47,440 Speaker 1: is he actually gaining some cloud as he actually moves 323 00:18:47,480 --> 00:18:51,479 Speaker 1: toward accomplishing something two points quickly number one his His 324 00:18:51,600 --> 00:18:55,400 Speaker 1: overall numbers are pretty good, even with ras Mussin poll 325 00:18:55,440 --> 00:18:58,919 Speaker 1: takers that are conservative. Biden's well into the fifties. Trump 326 00:18:58,960 --> 00:19:02,320 Speaker 1: never got there. But among his own progressives there's a 327 00:19:02,400 --> 00:19:06,120 Speaker 1: growing suspicion that he may opt out of a very 328 00:19:06,160 --> 00:19:09,360 Speaker 1: aggressive deal and go for something a little more modest 329 00:19:09,640 --> 00:19:12,639 Speaker 1: that worries the left. Greg I just want to wrap up, 330 00:19:12,920 --> 00:19:14,640 Speaker 1: kind of taking a left turn here. We've been talking 331 00:19:14,640 --> 00:19:17,520 Speaker 1: about the hacks coming out of Russia that have affected 332 00:19:17,680 --> 00:19:21,080 Speaker 1: both meat processing and previously the colonial pipeline, and we've 333 00:19:21,119 --> 00:19:23,240 Speaker 1: seen some pretty big kinks that have thrown into a 334 00:19:23,280 --> 00:19:26,400 Speaker 1: supply chain. It's already strained as a result of these 335 00:19:26,440 --> 00:19:29,919 Speaker 1: hacks and these uh, these malware events. I'm wondering what 336 00:19:30,040 --> 00:19:33,680 Speaker 1: the US response you expect to be, whether it's against China, 337 00:19:33,920 --> 00:19:37,080 Speaker 1: against Russia, or whether it's against just creating a better 338 00:19:37,119 --> 00:19:40,399 Speaker 1: barrier on a national level. Well, i'd say lee. So, 339 00:19:40,480 --> 00:19:42,840 Speaker 1: first of all, the meeting between Putin and Biden on 340 00:19:42,920 --> 00:19:45,960 Speaker 1: June six is going to be pretty chilly. I don't 341 00:19:46,000 --> 00:19:51,400 Speaker 1: expect any big breakthrough. I think Biden will threaten to retaliate. 342 00:19:51,880 --> 00:19:54,560 Speaker 1: I think relations between the US and Russia could get 343 00:19:54,560 --> 00:19:57,679 Speaker 1: worse before they get better. Greg gotta leave it there, 344 00:19:58,520 --> 00:20:07,720 Speaker 1: I t F. Laura Raym joins US now with FF's investment. 345 00:20:07,800 --> 00:20:11,240 Speaker 1: She is definitive on foreign exchanges and taking it over 346 00:20:11,280 --> 00:20:15,600 Speaker 1: as chief US economist at FS Investor's. Laura, I love, love, 347 00:20:15,760 --> 00:20:19,840 Speaker 1: love your research note where you say here's one of 348 00:20:19,880 --> 00:20:22,720 Speaker 1: the fears. I want you to talk right now about 349 00:20:22,760 --> 00:20:27,760 Speaker 1: the fear everybody has a quote unquote policy mistake. What 350 00:20:27,920 --> 00:20:32,600 Speaker 1: can your own Powell get wrong? So unfortunately, I think 351 00:20:32,600 --> 00:20:35,160 Speaker 1: that there's a lot that can go wrong at this stage. 352 00:20:35,320 --> 00:20:38,679 Speaker 1: And you know, I feel like everybody always labels me 353 00:20:38,720 --> 00:20:41,280 Speaker 1: as the pessimist, But what's the point in another person 354 00:20:41,359 --> 00:20:43,280 Speaker 1: telling us the economy strong? Right? We got to look 355 00:20:43,280 --> 00:20:46,560 Speaker 1: at what could possibly go wrong here and what has 356 00:20:46,640 --> 00:20:50,480 Speaker 1: caused the end of every expansion that we've had. It's 357 00:20:50,520 --> 00:20:54,600 Speaker 1: been either rates going up too fast or inter inter 358 00:20:55,000 --> 00:21:00,960 Speaker 1: business cycle, we've had miscommunication that is sparked significant latility. 359 00:21:01,040 --> 00:21:03,320 Speaker 1: So I think that's an area where the FED is 360 00:21:03,680 --> 00:21:07,080 Speaker 1: trying to be much more regimented. But let's face it, 361 00:21:07,119 --> 00:21:10,600 Speaker 1: they haven't really started the tough discussion, which is, how 362 00:21:10,600 --> 00:21:13,600 Speaker 1: are they going to remove this policy accommodation and what 363 00:21:13,720 --> 00:21:15,840 Speaker 1: it's going to mean at a time when the economy 364 00:21:15,920 --> 00:21:19,760 Speaker 1: is already facing other constraints. If they have to move, Laura, 365 00:21:19,840 --> 00:21:23,399 Speaker 1: do they move with a green Spaniard measured approach quarter 366 00:21:23,440 --> 00:21:26,119 Speaker 1: point quarter point quarter point or do they got to 367 00:21:26,160 --> 00:21:28,879 Speaker 1: go back to burns and make some real jumps or 368 00:21:28,880 --> 00:21:32,320 Speaker 1: at least one jump condition to get back to something 369 00:21:32,359 --> 00:21:35,640 Speaker 1: that's in the textbooks. You know, they're I think they're 370 00:21:35,640 --> 00:21:38,640 Speaker 1: going to be extremely cautious. This is of course what 371 00:21:38,680 --> 00:21:43,199 Speaker 1: they've said. And yet markets are forward looking, so you know, 372 00:21:43,280 --> 00:21:47,200 Speaker 1: we've seen markets before get ahead of themselves as far 373 00:21:47,359 --> 00:21:50,960 Speaker 1: as um. You know, concerns about speak, concerns about reaction 374 00:21:51,160 --> 00:21:55,720 Speaker 1: to the inflation. The mini cycle of inflation that we're 375 00:21:55,800 --> 00:21:59,080 Speaker 1: going to start seeing really evolved after we get this 376 00:21:59,160 --> 00:22:02,480 Speaker 1: technical glitch out of the way of you know, year 377 00:22:02,520 --> 00:22:05,720 Speaker 1: on year higher inflation. So what we really need to 378 00:22:05,720 --> 00:22:08,840 Speaker 1: think about is um the fact that the FED has 379 00:22:08,920 --> 00:22:13,480 Speaker 1: boxed themselves in with getting markets so addicted to this 380 00:22:13,880 --> 00:22:18,359 Speaker 1: strong liquidity, and two is going to be a year 381 00:22:18,440 --> 00:22:21,480 Speaker 1: of deceleration. Economy is gonna be strong, but it's gonna 382 00:22:21,480 --> 00:22:24,640 Speaker 1: be growing slower. Earnings may well be solid that they're 383 00:22:24,680 --> 00:22:28,560 Speaker 1: going to be growing slower. How's the FED gonna start 384 00:22:28,720 --> 00:22:33,280 Speaker 1: removing quantitative easing in a place that's already uncomfortable for markets? Well, 385 00:22:33,320 --> 00:22:35,639 Speaker 1: before we get into the reaction function, there's also a 386 00:22:35,720 --> 00:22:38,200 Speaker 1: question law of where we are right now in the cycle, 387 00:22:38,280 --> 00:22:40,959 Speaker 1: both the economic and the labor cycle. And people are 388 00:22:40,960 --> 00:22:43,240 Speaker 1: talking about mid cycle, some people are saying late cycle, 389 00:22:43,280 --> 00:22:46,000 Speaker 1: even Jim Bullard saying that perhaps the labor market is 390 00:22:46,040 --> 00:22:48,679 Speaker 1: tighter than it seems. Where do you fall in this debate. 391 00:22:49,920 --> 00:22:53,439 Speaker 1: I'm firmly in the mid cycle camp, and I would 392 00:22:53,800 --> 00:22:56,480 Speaker 1: I would argue that what we're seeing in the labor 393 00:22:56,520 --> 00:23:01,880 Speaker 1: market shows constraints that are deeply under are appreciated. Um 394 00:23:01,920 --> 00:23:05,159 Speaker 1: when he says that they're tight, I recognize that, you know, 395 00:23:05,240 --> 00:23:08,760 Speaker 1: we're dealing with this labor supply mismatch. People still can't. 396 00:23:09,320 --> 00:23:12,640 Speaker 1: They're tight because people are having to pay more for workers. 397 00:23:12,680 --> 00:23:16,639 Speaker 1: But the labor market is the most inefficient market that 398 00:23:16,680 --> 00:23:20,160 Speaker 1: we have, maybe except for real estate. And the fact 399 00:23:20,200 --> 00:23:23,800 Speaker 1: that we've had significant labor migration, the fact that we've 400 00:23:23,800 --> 00:23:27,840 Speaker 1: had some industries requiring much less labor whereas others are 401 00:23:27,880 --> 00:23:31,760 Speaker 1: requiring significantly more, the pivot that our economy has made 402 00:23:31,840 --> 00:23:35,119 Speaker 1: towards goods production of manufacturing. A lot of these things 403 00:23:35,640 --> 00:23:38,280 Speaker 1: are you can't just press a button and wake all 404 00:23:38,320 --> 00:23:41,480 Speaker 1: these workers back up again, especially the you know, labor 405 00:23:41,480 --> 00:23:44,520 Speaker 1: force participation having fallen. I think it's gonna be harder 406 00:23:44,520 --> 00:23:46,600 Speaker 1: to resolve a lot of this than other people think. 407 00:23:46,760 --> 00:23:49,280 Speaker 1: So what's your view that basically the Fed is doing 408 00:23:49,280 --> 00:23:50,959 Speaker 1: the right thing and staying on hold, and that they 409 00:23:50,960 --> 00:23:52,800 Speaker 1: ought to, and that inflation is not going to surprise 410 00:23:52,840 --> 00:23:55,240 Speaker 1: to the upside the way that some people think. I 411 00:23:55,240 --> 00:23:57,239 Speaker 1: think they're going to have a lot of trouble with 412 00:23:57,320 --> 00:23:59,760 Speaker 1: the fact that I think the labor market gets much 413 00:24:00,200 --> 00:24:04,000 Speaker 1: You're much harder to improve from here, and inflation is 414 00:24:04,040 --> 00:24:07,400 Speaker 1: going to be uncomfortably high, and no matter what they say, 415 00:24:07,480 --> 00:24:09,680 Speaker 1: it's going to continue to be a hot button issue 416 00:24:09,680 --> 00:24:12,360 Speaker 1: for markets. It's going to continue to cause these sort 417 00:24:12,359 --> 00:24:15,280 Speaker 1: of bouts of volatility, and the fet is going to 418 00:24:15,480 --> 00:24:18,119 Speaker 1: really have trouble talking out of both sides of their 419 00:24:18,160 --> 00:24:21,439 Speaker 1: mouth on this one. Lauren want to dovetail your economic 420 00:24:21,520 --> 00:24:24,960 Speaker 1: work in ff IS investments with the lore of Laura 421 00:24:25,040 --> 00:24:28,480 Speaker 1: ram in the foreign exchange market? How do you interpret 422 00:24:28,640 --> 00:24:32,840 Speaker 1: dollar dynamics now around the next six months of the 423 00:24:32,880 --> 00:24:38,960 Speaker 1: American economy? So so much strength has been priced in 424 00:24:39,520 --> 00:24:43,040 Speaker 1: for growth. I actually think that this could be a 425 00:24:43,080 --> 00:24:46,600 Speaker 1: place for the dollar weekends. Further from here, what are 426 00:24:46,600 --> 00:24:49,679 Speaker 1: we going to do? You know, we see the fact 427 00:24:50,040 --> 00:24:54,560 Speaker 1: that um our economy is going to modestly decelerate from 428 00:24:54,640 --> 00:24:58,760 Speaker 1: such a strong level. So with so much good news 429 00:24:58,840 --> 00:25:02,520 Speaker 1: already priced in, I think we're seeing real rates continue 430 00:25:02,520 --> 00:25:04,800 Speaker 1: to slide. I think there's a strong argument to be 431 00:25:04,880 --> 00:25:08,720 Speaker 1: made that the tenure actually falls a little bit from here. 432 00:25:09,760 --> 00:25:14,200 Speaker 1: All of that against the backdrop of still positive news, 433 00:25:14,240 --> 00:25:17,639 Speaker 1: possible upside surprises possible and the rest of the world. 434 00:25:18,000 --> 00:25:21,320 Speaker 1: It's been amazing that ages had so much struggle to 435 00:25:21,440 --> 00:25:24,840 Speaker 1: really reopen and get themselves fully back online. I think 436 00:25:24,840 --> 00:25:28,520 Speaker 1: there's a lot of room for that to go better. Finally, 437 00:25:28,520 --> 00:25:31,719 Speaker 1: we really need that um and further, you want to 438 00:25:31,760 --> 00:25:34,600 Speaker 1: continue to appreciate as well. So I think all of 439 00:25:34,640 --> 00:25:37,320 Speaker 1: those things speak to a dollar negative out of here. 440 00:25:37,600 --> 00:25:40,320 Speaker 1: But again this goes back to classic demand pull cost 441 00:25:40,400 --> 00:25:42,600 Speaker 1: push debate about inflation. I don't want to go all 442 00:25:42,720 --> 00:25:45,840 Speaker 1: nineteen sixties on you, but if we have a pacific 443 00:25:46,040 --> 00:25:53,359 Speaker 1: rim resurgence, that has to have help aggregate demand worldwide, 444 00:25:53,400 --> 00:25:58,359 Speaker 1: and that's where the gloom fades away, right, Yes, of course, 445 00:25:58,440 --> 00:26:01,119 Speaker 1: to some degree. But I think what we've seen in 446 00:26:01,119 --> 00:26:04,160 Speaker 1: the US is that we can't sustain these strong growth 447 00:26:04,280 --> 00:26:07,280 Speaker 1: rates for long. I mean, all this time, our trade 448 00:26:07,320 --> 00:26:11,480 Speaker 1: of is it's incredibly wide. We've been sucking in goods 449 00:26:11,560 --> 00:26:14,119 Speaker 1: from the rest of the world this whole time. I 450 00:26:14,160 --> 00:26:18,480 Speaker 1: think what growth they've had has really been already significantly 451 00:26:18,560 --> 00:26:21,240 Speaker 1: helped by the U. S consumer, which once again is 452 00:26:21,320 --> 00:26:25,080 Speaker 1: kind of the the engine driving not just US growth, 453 00:26:25,080 --> 00:26:27,879 Speaker 1: but global growth as well. So I think what we 454 00:26:28,040 --> 00:26:30,359 Speaker 1: really I think the story of the NEST six months 455 00:26:30,440 --> 00:26:33,359 Speaker 1: is a story of business investment. Of course, you know, 456 00:26:33,359 --> 00:26:36,879 Speaker 1: I've heard your infrastructure conversation with the last guests, so interesting. 457 00:26:37,320 --> 00:26:39,639 Speaker 1: I think how that plays out is going to be important. 458 00:26:40,080 --> 00:26:44,040 Speaker 1: But I think as far as consumer goods go, We're 459 00:26:44,040 --> 00:26:47,320 Speaker 1: gonna now pivot to a lot of business investment stories 460 00:26:47,400 --> 00:26:50,600 Speaker 1: and for that, um, you know, I think it's more 461 00:26:50,640 --> 00:26:56,520 Speaker 1: closing the gap of demands, of unfulfilled demands, than it 462 00:26:56,640 --> 00:27:00,639 Speaker 1: is a fresh leg up. We're speaking with Laura ray 463 00:27:00,720 --> 00:27:03,400 Speaker 1: M of FS Investments on this moment of a lack 464 00:27:03,440 --> 00:27:06,720 Speaker 1: of conviction when it comes to the outlook, an idiosyncratic moment, 465 00:27:06,840 --> 00:27:10,280 Speaker 1: unprecedented in economic history. And John was just talking about 466 00:27:10,320 --> 00:27:13,080 Speaker 1: the word out of Caterpillar, the idea that they are 467 00:27:13,160 --> 00:27:16,840 Speaker 1: seeing some easing in the supply of goods that they 468 00:27:16,960 --> 00:27:20,200 Speaker 1: use to manufacture their objects. Meanwhile, you've got Elon Musk 469 00:27:20,240 --> 00:27:22,520 Speaker 1: on the other side of things, tweeting this morning. Our 470 00:27:22,520 --> 00:27:26,240 Speaker 1: biggest challenges supply chain, especially micro controller chips. Never seen 471 00:27:26,320 --> 00:27:30,680 Speaker 1: anything like it. He indicated that this was obviously temporary. 472 00:27:30,840 --> 00:27:33,400 Speaker 1: Do you agree or do you think that supply chain 473 00:27:33,480 --> 00:27:37,320 Speaker 1: kinks will become a feature of the post pandemic economy. 474 00:27:37,880 --> 00:27:42,040 Speaker 1: I think they'll resolve eventually. But the real I think 475 00:27:42,119 --> 00:27:45,720 Speaker 1: question is if it will change behavior going forward. Will 476 00:27:45,760 --> 00:27:48,840 Speaker 1: we start bringing some of this manufacturing back to the US. 477 00:27:49,160 --> 00:27:52,200 Speaker 1: We've been running soaked in on inventories for decades we've 478 00:27:52,240 --> 00:27:57,160 Speaker 1: been eroting those inventories. Will companies start stockpiling more? Obviously 479 00:27:57,280 --> 00:27:59,680 Speaker 1: you know that would give us some near term boost 480 00:27:59,760 --> 00:28:02,760 Speaker 1: in d KEY, but um, you know that would just 481 00:28:02,760 --> 00:28:07,000 Speaker 1: sort of frontload that consumption, that business investment. So you 482 00:28:07,040 --> 00:28:09,240 Speaker 1: know that's me is the real issue. Do we sort 483 00:28:09,280 --> 00:28:12,600 Speaker 1: of change? Does it change long run behavior of how 484 00:28:12,640 --> 00:28:16,600 Speaker 1: companies had their supply chains to be less vulnerable to 485 00:28:16,720 --> 00:28:20,160 Speaker 1: this kind of disruption? I know I sure would. All 486 00:28:20,240 --> 00:28:23,720 Speaker 1: Rank gotta run FS Investments Chief the US economist on 487 00:28:23,760 --> 00:28:27,440 Speaker 1: the latest situation and the mismatch between DEMANDUS supply. This 488 00:28:27,480 --> 00:28:31,280 Speaker 1: is the Bloomberg Surveillance Podcast. Thanks for listening. Join us 489 00:28:31,359 --> 00:28:34,480 Speaker 1: live weekdays from seven to ten a m. Eastern on 490 00:28:34,600 --> 00:28:38,840 Speaker 1: Bloomberg Radio and on Bloomberg Television each day from six 491 00:28:38,920 --> 00:28:43,800 Speaker 1: to nine am for insight from the best in economics, finance, investment, 492 00:28:43,960 --> 00:28:48,960 Speaker 1: and international relations. And subscribe to the Surveillance podcast on 493 00:28:49,040 --> 00:28:52,880 Speaker 1: Apple podcast, SoundCloud, Bloomberg dot com, and of course on 494 00:28:52,960 --> 00:28:57,120 Speaker 1: the terminal. I'm Tom Keene and this is Bloomberg