WEBVTT - Surveillance: Bitcoin With Roubini 0:00:05.120 --> 0:00:09.200 Welcome to the Bloomberg Surveillance Podcast. I'm Tom Keane. Along 0:00:09.240 --> 0:00:13.200 with Jonathan Ferroll and Lisa Brownowitz. Daily we bring you 0:00:13.320 --> 0:00:18.600 insight from the best and economics, finance, investment, and international relations. 0:00:18.960 --> 0:00:23.840 Find Bloomberg Surveillance on Apple podcast, SoundCloud, Bloomberg dot com 0:00:23.920 --> 0:00:30.720 and of course on the Bloomberg terminal. We welcome all 0:00:30.760 --> 0:00:34.040 of you again. For Nora Rubini, there any number of 0:00:34.080 --> 0:00:37.919 topics to spend a long conversation when professor at Rubini 0:00:38.240 --> 0:00:40.839 n hyu Stern School, and of course in Oriel Today 0:00:41.400 --> 0:00:44.479 dot com. But his comments the last time he appeared 0:00:44.520 --> 0:00:48.919 with us on bitcoin, those comments worldwide we get an update? 0:00:49.200 --> 0:00:52.920 What ten thousand dollars higher on bitcoin? Noil, Let's just 0:00:52.960 --> 0:00:56.800 start with the simple microeconomics to supply the demand. Why 0:00:56.920 --> 0:01:01.320 is bitcoins surging surge in because there is a massive 0:01:01.360 --> 0:01:05.280 amount of manipulation that are pumping damp schemes that is 0:01:05.280 --> 0:01:07.920 s fool thing. There's wash trading, there is front running, 0:01:08.319 --> 0:01:11.399 there's the issues by tether or a fiat currency not 0:01:11.560 --> 0:01:14.360 backed by much that's used to manipulate at the price 0:01:14.400 --> 0:01:18.640 of bitcoin. I think it's a bubble. Fundamentally, bitcoin is 0:01:18.680 --> 0:01:21.200 not a currency it's not a unit of account. It 0:01:21.280 --> 0:01:23.640 is not a scalable means of payment, is not a 0:01:23.680 --> 0:01:27.920 stable store of value. Not even bitcoin conferences accepted as 0:01:27.920 --> 0:01:30.759 a means of payment because the price flativity implies your 0:01:30.760 --> 0:01:33.280 profit margin can be wiped out. And it's not even 0:01:33.280 --> 0:01:36.040 a single numera you know, the flintstones at the better 0:01:36.120 --> 0:01:39.920 monetary system that bitcoin, because that the shells instead of 0:01:39.920 --> 0:01:43.640 having a different token for different purchase of goods and services. 0:01:43.680 --> 0:01:47.279 So these are not currencies. Calling them occurrencies them is nowhere, 0:01:47.520 --> 0:01:49.600 cannot even assets nor I want to get to the 0:01:49.640 --> 0:01:51.200 heart of it, and I'm gonna go to ruff Field 0:01:51.240 --> 0:01:54.800 hours path break breaking work with bead work correct the 0:01:54.880 --> 0:02:00.520 Bank of International Settlements. The transaction costs of big coin 0:02:00.800 --> 0:02:06.040 in retail transactions preclude its use. So do you look 0:02:06.080 --> 0:02:09.120 at Tesla is a one off and the bitcoin just 0:02:09.200 --> 0:02:13.079 simply will never be used in retail because the transaction 0:02:13.160 --> 0:02:17.640 costs are so much higher than normal currency. Well, the 0:02:17.720 --> 0:02:21.640 transaction costs are huge, but the technology proof of work 0:02:21.760 --> 0:02:25.160 doesn't allow more than fact transaction per second. The Visa 0:02:25.280 --> 0:02:28.760 network allows you twenty four thousand transaction per second. So 0:02:28.800 --> 0:02:31.840 it's not the scalable means of payment leaving aside the 0:02:31.840 --> 0:02:34.800 fact that transaction costs are so high, is never going 0:02:34.840 --> 0:02:37.600 to be used for goods and services, just used for 0:02:37.760 --> 0:02:42.080 speculation and buying other cryptocurrency. So it's a self serving system, 0:02:42.320 --> 0:02:44.000 but it's not something that's going to be used as 0:02:44.040 --> 0:02:47.400 scalable means of payment for goods and services. Ever. No, 0:02:47.680 --> 0:02:50.519 you mentioned the volume of transactions, What about just a 0:02:50.600 --> 0:02:54.400 small volume but in large size meaning what meaning if 0:02:54.400 --> 0:02:56.839 you could transact in large sums of money and move 0:02:56.960 --> 0:03:01.320 cash through bitcoin from one country to another in large numbers. 0:03:01.560 --> 0:03:04.400 So not the volume of individual transactions, but let's say 0:03:04.560 --> 0:03:07.000 you could move a billion from point A to point 0:03:07.040 --> 0:03:11.240 day with bitcoin. Well, you know, even Steve me Nuchin 0:03:11.320 --> 0:03:13.880 said that we cannot have a cryptim bitcoin becoming the 0:03:13.919 --> 0:03:18.400 next Swiss bank account being used by human traffickers, terrorists, 0:03:18.400 --> 0:03:21.239 tax invaders as a way of sheltering their worth and 0:03:21.320 --> 0:03:25.000 moving across borders right now, across borders that are slow 0:03:25.080 --> 0:03:28.359 movements of transactions because there is a ky C, there's 0:03:28.360 --> 0:03:30.839 a m a L, there's compliance. That's why it's hard 0:03:30.880 --> 0:03:33.120 to move money from one county. Now that that's why 0:03:33.160 --> 0:03:36.000 there are capital controls. So if you have a system 0:03:36.080 --> 0:03:39.120 is illegal that allows the transfer money instead dalleaging from 0:03:39.120 --> 0:03:42.280 accounting to another one without any control. Of course, that 0:03:42.440 --> 0:03:44.880 something is going to be used by crimin out or terrorists, 0:03:44.960 --> 0:03:48.240 or human traffickers or tax evaders, but no system, no 0:03:48.360 --> 0:03:51.240 count is gonna allow that. There's been a crackdown of 0:03:51.280 --> 0:03:54.600 the G twenty on those types of offshore financial centers 0:03:54.600 --> 0:03:58.200 will be similar crackdown against the total lack of m E, 0:03:58.360 --> 0:04:01.880 L and KYC in anything script of so, professor, what 0:04:02.000 --> 0:04:04.200 you make of the increased institutional find that we've seen 0:04:04.280 --> 0:04:07.320 more recently, Well, you know, I think that you have 0:04:07.360 --> 0:04:10.520 to ask yourself, is this as an asset? It's not occurrency, 0:04:10.520 --> 0:04:14.520 it's not even an asset. Usually stocks, bonds, loans, real 0:04:14.640 --> 0:04:19.120 estate give you some income, davidends, coupon interest or rent 0:04:19.839 --> 0:04:22.880 some other assets like residential real estate if you use 0:04:22.960 --> 0:04:26.320 housing services. Gold doesn't have any income, but there's a 0:04:26.480 --> 0:04:30.080 using industry as utility has jewelry and the past monitor 0:04:30.240 --> 0:04:33.039 use as a store of value. You look at bitcoin, 0:04:33.480 --> 0:04:35.880 it doesn't have any income, it doesn't have an use, 0:04:36.080 --> 0:04:39.360 it doesn't have any utility. So it's a pure speculative, 0:04:39.440 --> 0:04:43.520 self fulfilling bubble on a price appreciation is like tulip mania, 0:04:43.760 --> 0:04:46.040 but in case of tulip bank, at least tulips had 0:04:46.120 --> 0:04:49.559 some utility even today people love flowers. In this case, 0:04:49.720 --> 0:04:52.040 you have an asset that is not an asset because 0:04:52.040 --> 0:04:54.559 it doesn't have any feature of an asset. It doesn't 0:04:54.560 --> 0:04:56.800 any feature of the currency. So it's just a self 0:04:56.839 --> 0:04:59.440 fulfilling bubble. That's what it is. It's a in realistic 0:04:59.560 --> 0:05:02.840 values zero and actually, given it's hard so much energy 0:05:02.880 --> 0:05:05.479 for producing it, more than Argentina, if you had a 0:05:05.560 --> 0:05:09.960 pure carbon tax, the value will lead negative, not even zero. Well, 0:05:10.080 --> 0:05:13.240 some people would argue and neural that the idea of 0:05:13.320 --> 0:05:16.359 so much money flooding the financial system that there is 0:05:16.480 --> 0:05:19.200 value and being able to put it somewhere and not 0:05:19.440 --> 0:05:22.480 lose money. That basically not being charged to negative yield 0:05:22.960 --> 0:05:25.960 is value in and of itself in this nerve uh, 0:05:26.839 --> 0:05:30.320 this negative indestry policy world that we're living in. If 0:05:30.360 --> 0:05:34.040 this is a bubble, can it burst? Given where we 0:05:34.080 --> 0:05:37.479 are with the liquidity spickets, without many other parts of 0:05:37.560 --> 0:05:41.719 financial markets also suffering big blows. Well, you know, if 0:05:41.800 --> 0:05:45.600 it's a hedge against inflation, the basement of your currencies 0:05:45.640 --> 0:05:48.160 are a collapse of the dollar, you would see a 0:05:48.279 --> 0:05:53.320 spy king tips in the price of gold in inflation expectation. Yeah, 0:05:53.360 --> 0:05:56.360 eventually the monetary policy may lead us to those kind 0:05:56.440 --> 0:05:59.040 of outcomes, but the price of other assets will be 0:05:59.080 --> 0:06:01.920 sharply increasing. Gold went up fifty percent in the last 0:06:01.960 --> 0:06:04.719 two years, has now corrected a little bit. Why would 0:06:04.720 --> 0:06:08.400 the bigcoin go from five thousand earlier last year to 0:06:08.560 --> 0:06:12.040 something like fifty thou ten times higher just because there's 0:06:12.040 --> 0:06:14.440 a hedge against some tail risk of that sort. Other 0:06:14.520 --> 0:06:17.080 ascids will be pricing in. So that's not the explanation 0:06:17.160 --> 0:06:20.560 of the rising bicom prices. This price manipulation of one 0:06:20.600 --> 0:06:23.159 sort of another and bacon, it's not even hedge against 0:06:23.200 --> 0:06:26.560 a risk. During the February March episode last year when 0:06:26.560 --> 0:06:28.599 you had a collapse in US and global equity of 0:06:28.640 --> 0:06:33.480 thirty becouse went done by fifty percent. Another keep occurrency 0:06:33.480 --> 0:06:35.480 when done by sixty percent. So when there is a 0:06:35.560 --> 0:06:38.159 risk of they're not even hedge against those tale risks. 0:06:38.160 --> 0:06:40.720 So they don't have any hedging purpose of that sort either. 0:06:41.080 --> 0:06:44.320 You see this price manipulation. Who's doing the manipulation manipulating? 0:06:44.320 --> 0:06:47.159 I will get my words out manipulating. Well, there've been 0:06:47.240 --> 0:06:51.080 tons of articles showing that these pumping dump schemes that 0:06:51.120 --> 0:06:54.400 are all over telegram groups that essential pumping and dumping 0:06:54.440 --> 0:06:57.040 the price of it. We know that tail the issuance 0:06:57.120 --> 0:07:01.159 is literally a billion dollar every other day out of nowhere. 0:07:01.200 --> 0:07:03.880 No one has been very fined account of tether and 0:07:03.920 --> 0:07:06.560 he's being used essentially to buy bitcoin, and he's not 0:07:06.560 --> 0:07:08.960 backed by anything. And there's a whole bunch of wash 0:07:09.080 --> 0:07:12.920 trading or spoofing exchange on the front, running their own clients. 0:07:13.080 --> 0:07:14.960 It's all over the map. I mean, stuff that he 0:07:15.120 --> 0:07:18.760 just should be investigated is being investigated. The whole bunch 0:07:18.800 --> 0:07:21.640 of investigation by the adjesc F. You see the New 0:07:21.680 --> 0:07:24.760 York Attorney General Office of TED and bats that are 0:07:24.800 --> 0:07:28.520 undergoing right now. Nora. What should governments do? I mean, 0:07:28.560 --> 0:07:30.880 there's got to be a point where in the United Kingdom, 0:07:30.960 --> 0:07:34.360 the City, the chancel of the Exchequer or some FSA 0:07:34.560 --> 0:07:37.680 body steps in. Same in the United States and same 0:07:37.720 --> 0:07:41.280 in other nations as well. With your government experience with 0:07:41.360 --> 0:07:46.600 the Clinton administration, how can governments be constructive with the 0:07:46.760 --> 0:07:51.040 surgeon bitcoin? Well, you have to enforce antimony laundering and 0:07:51.280 --> 0:07:54.760 know your customer KAC rules. That's the first thing there 0:07:54.840 --> 0:07:58.040 was a proposal by the Trump administration to make sure 0:07:58.080 --> 0:08:01.400 that an allset wallets have to reveal was behind them. 0:08:01.480 --> 0:08:03.840 That rule has not yet done into fact. That lots 0:08:03.880 --> 0:08:06.160 of things you can do that could be investigation of 0:08:06.200 --> 0:08:09.600 why that there is a price manipulation. The investigation right now, 0:08:09.680 --> 0:08:13.120 but that phoenex those things have to continue because this 0:08:13.240 --> 0:08:15.960 is a bubble and eventually it's reaching now a market 0:08:16.040 --> 0:08:19.400 value crepto of one point for three dom dollar and 0:08:19.400 --> 0:08:21.520 when there's gonna be a blood bat like in two 0:08:21.800 --> 0:08:24.760 eighteen the price of bitcoin when initially from a thousand 0:08:24.760 --> 0:08:27.600 to twenty and then collapse from twenty down to three 0:08:28.160 --> 0:08:30.360 that at time. At that time the market body was 0:08:30.480 --> 0:08:33.160 very small. A couple hundred billion dollars right now is 0:08:33.320 --> 0:08:36.439 a multiple of that. So the consequences and the losses 0:08:36.440 --> 0:08:38.920 of people are going to be so much severe for 0:08:39.040 --> 0:08:42.200 institutions and for retail sackers of one sort or another. 0:08:42.800 --> 0:08:45.640 Nourial comment please, and of course, and we thank all 0:08:45.679 --> 0:08:48.679 of you out on Twitter, in your emails, watching professor 0:08:48.960 --> 0:08:52.480 we're being here on television and radio is honorial. People 0:08:52.520 --> 0:08:56.839 are transfixed by this debate. Explain to it's not the 0:08:56.840 --> 0:09:04.760 thermodynamics but the proof of work of electricity and it's artificiality. 0:09:04.840 --> 0:09:08.640 How do you see the electrical consumption to make this 0:09:09.160 --> 0:09:13.800 machine go well? Bitcot alone, it uses the energy of 0:09:13.840 --> 0:09:17.760 a medial size country like Argentina. Because instead of having, 0:09:17.920 --> 0:09:22.720 like in any legacy financial system, a few trusted individuals 0:09:22.800 --> 0:09:26.079 or institutions are validating transaction to make sure there is 0:09:26.120 --> 0:09:28.680 no double spend a bunch of banks. Now you have 0:09:28.920 --> 0:09:31.680 literally hundreds of thousands of good miners. We have to 0:09:31.720 --> 0:09:34.840 do a stupid cryptographic exercise of that one of them 0:09:35.040 --> 0:09:37.880 wins the task of verifying those transactions and that are 0:09:37.880 --> 0:09:40.960 put on a ledger in hundreds of thousands of other computers. 0:09:41.080 --> 0:09:45.280 It's the most inefficient way of essentially verifying transaction. Doesn't 0:09:45.280 --> 0:09:46.960 make any sense. And by the way, it's not the 0:09:47.040 --> 0:09:51.680 centralized either because sev of all the mining of cripto 0:09:52.120 --> 0:09:55.280 or bitcoin is being done by five or six Oligo 0:09:55.280 --> 0:09:58.880 police firms that are based where in Russia, Belarus and 0:09:59.000 --> 0:10:01.760 China that are is that no rule of law and 0:10:01.760 --> 0:10:04.320 we have the national security problem right now if we're 0:10:04.320 --> 0:10:06.720 relying on a bunch of miners in counties that are 0:10:06.720 --> 0:10:09.640 our strategic rivals, which there is no rule of law 0:10:09.840 --> 0:10:12.480 to VERI find those transactions. So people talk about the 0:10:12.520 --> 0:10:16.920 centralization is not a the centralized system, your centralization of mining, 0:10:17.160 --> 0:10:22.840 the centralization of exchanges, where transaction occurring, the centralization of 0:10:22.880 --> 0:10:27.319 developers and centralization of wealth. The gene coefficient for bitcoin 0:10:27.760 --> 0:10:30.280 is worse than the one of North Korea, where Kimon 0:10:30.400 --> 0:10:33.360 Jude and his family and chronies on the entire country 0:10:33.600 --> 0:10:36.800 his point eighty six. Well, in Korea is point eighty four. 0:10:37.000 --> 0:10:39.880 It's just a total light. This is that the centralized 0:10:39.920 --> 0:10:43.320 system is centralized where a bunch of insiders and whales 0:10:43.480 --> 0:10:45.880 and others are controlling the entire system, and they are 0:10:45.880 --> 0:10:48.959 manipulating it in space in which there is no rule 0:10:49.000 --> 0:10:51.959 of law. It's just pathetic, Professor healthy, Next time we 0:10:52.000 --> 0:10:55.320 come back, you can tell us what you really think about, professor. 0:10:55.320 --> 0:10:57.720 It's good to see here they are Raban, a professor 0:10:57.760 --> 0:11:06.480 of economics m y U Sterns called past right now. 0:11:06.480 --> 0:11:09.520 An oil definitive is Paul Sanki long ago and far 0:11:09.520 --> 0:11:13.400 away at Deutsche Bank there was absolute definitive sell side 0:11:13.440 --> 0:11:17.240 research like a bible. You read is Saminsky and Sanky 0:11:17.520 --> 0:11:20.760 on the global supply, the global demand of oil. We're 0:11:20.760 --> 0:11:23.840 thrilled at Paul Sanky could join us from Sanky Research 0:11:24.240 --> 0:11:27.720 U this morning. Paul, with the gyrations that we see 0:11:27.920 --> 0:11:31.200 in the midwest of the United States, in Texas, Permian basin, 0:11:31.240 --> 0:11:34.280 et cetera, can we get out of the assumption of 0:11:34.520 --> 0:11:39.280 range bound oil? Well, these are these are not gyrations. 0:11:39.360 --> 0:11:42.440 I mean this situation to me is is very reminiscent 0:11:42.520 --> 0:11:46.160 of Park in Katrina, where if you recall, on the 0:11:46.200 --> 0:11:49.800 Monday after Katrina, there was sort of an attitude that, uh, 0:11:49.840 --> 0:11:51.880 this hasn't been that big a deal, and then over 0:11:51.880 --> 0:11:55.120 the course of the following week, it's suddenly you emerged 0:11:55.200 --> 0:11:58.840 as a as a horrendous disaster. So gyrations in this 0:11:58.920 --> 0:12:01.960 I've observed this morning, Tom, people don't realize how about 0:12:02.000 --> 0:12:04.600 this situation is. I mean, you've got, like, as you mentioned, 0:12:04.600 --> 0:12:07.600 your previous guests mentioned, you've got basically full scale blackouts 0:12:07.600 --> 0:12:11.600 in Mexico, but you've also lost here the biggest outage 0:12:11.600 --> 0:12:13.800 in the history of US oil and gas. I mean, 0:12:13.840 --> 0:12:16.720 this thing is we have never seen a loss of 0:12:16.760 --> 0:12:20.280 this scale at a time when you know you're in midwinter. 0:12:20.400 --> 0:12:23.440 So basically we think you've lost about three million barrels 0:12:23.480 --> 0:12:26.400 a day of oil. We think you've lost about ten 0:12:26.520 --> 0:12:30.079 BCP of gas at least, and we're down at least 0:12:30.080 --> 0:12:32.559 three million barrels a day. And the finding you know, 0:12:32.640 --> 0:12:34.640 all of these for example, in the finding of the 0:12:34.679 --> 0:12:37.480 base of about sixteen million barrels a day with inventory 0:12:37.559 --> 0:12:40.360 is not that high. So this is an energy crisis. 0:12:40.679 --> 0:12:43.720 And you know, yeah, gyerations, you know you're seeing Brent 0:12:44.400 --> 0:12:48.600 at sixty four here the obvious price reaction would be. Firstly, obviously, 0:12:48.640 --> 0:12:52.720 if you lose US Texas oil, you're expecting Brent to 0:12:52.760 --> 0:12:55.080 go up, and it is and yeah, what is your 0:12:55.120 --> 0:12:58.000 price target? I mean, you give us visibility and price 0:12:58.120 --> 0:13:00.600 right now. Well, we've been talking a lot about the dollar, 0:13:00.800 --> 0:13:02.720 so we think you can get to eight this year 0:13:03.360 --> 0:13:05.520 based on the dollar. Now that obviously if the dollar 0:13:05.640 --> 0:13:08.960 strengthens a lot, that that calls it dad. But essentially 0:13:09.080 --> 0:13:11.880 oil should be around sixty five seventy just on the 0:13:11.920 --> 0:13:14.800 dollar at ninety on the d X Y. You know, 0:13:14.840 --> 0:13:18.160 if we break down to eight in below, then you 0:13:18.160 --> 0:13:20.840 can you could easy see oil at eight um. And 0:13:20.920 --> 0:13:23.240 you know, therefore there's quite a bit of upside at 0:13:23.240 --> 0:13:26.360 this point, which has been that was prior to the outage, 0:13:27.000 --> 0:13:28.800 So you know, we'll see how this thing plays out, 0:13:28.800 --> 0:13:30.000 but I think it's going to take a long time 0:13:30.040 --> 0:13:31.960 to sort this problem out. Well, Paul, can you talk 0:13:32.000 --> 0:13:34.560 about the way forward? In other words, how much federal 0:13:34.640 --> 0:13:37.480 interference has to be waged here given the fact that 0:13:37.600 --> 0:13:41.400 to upgrade texas Is infrastructure to be more weather proof 0:13:41.600 --> 0:13:44.320 would cost trillions of dollars and we're looking at a 0:13:44.360 --> 0:13:48.160 state that doesn't ensure against potential outages the way that 0:13:48.200 --> 0:13:50.439 places in the Northeast do. How do you see the 0:13:50.480 --> 0:13:54.520 federal government getting involved? Well, so far, the only comments 0:13:54.559 --> 0:13:57.360 been from AOC. You know, we haven't really seen much 0:13:57.440 --> 0:14:01.440 from the President for example, I mean Ergans following a 0:14:01.520 --> 0:14:05.679 post Trump you know, no Twitter kind of approach. But yeah, 0:14:05.760 --> 0:14:07.800 it's a major problem for the Texans and they're going 0:14:07.840 --> 0:14:10.199 to have to completely rethink this is this is really 0:14:10.600 --> 0:14:13.199 existential in terms of how much wind and how much 0:14:13.200 --> 0:14:16.160 solar you can have in a system. Given that you know, 0:14:16.200 --> 0:14:18.400 you were caught really badly shut what happens if you 0:14:18.480 --> 0:14:20.600 lose natural gas? And you know, to be honest, people 0:14:20.600 --> 0:14:22.960 haven't really thought what happens if there's a major matt 0:14:22.960 --> 0:14:25.280 gas outage at the time when there's no wind and solar? 0:14:25.760 --> 0:14:29.000 And the answer probably is, well, where are your nukes? Well, 0:14:29.040 --> 0:14:31.760 where's your cod file? Old one, get Paul. But this 0:14:31.840 --> 0:14:34.280 is really important because yesterday we had a Texas regulator 0:14:34.320 --> 0:14:37.920 come on and say that the default really was prioritizing 0:14:37.960 --> 0:14:40.520 green energy, that the wind turbines and some of the 0:14:40.560 --> 0:14:44.240 other natural resources that went offline were part of the 0:14:44.240 --> 0:14:47.320 big culprits behind this outage. If we look at data 0:14:47.320 --> 0:14:49.960 as reported by Bloomberg, it's not really the case that 0:14:50.040 --> 0:14:53.240 actually it's very much across the board, and that accounts 0:14:53.280 --> 0:14:56.360 for a much smaller proportion of the total energy output. 0:14:56.640 --> 0:14:59.280 So can you give us some perspective on how much 0:14:59.520 --> 0:15:02.200 this sort of shift to green energy really is behind 0:15:02.280 --> 0:15:06.520 this versus something much broader and more existential. As you say, yeah, 0:15:06.520 --> 0:15:08.840 I mean, look it's broader. That's exactly my point. Thank 0:15:08.840 --> 0:15:10.680 you for making that. No, I mean, you've you've had 0:15:10.680 --> 0:15:12.600 a failure of the natural gas system, You've had a 0:15:12.680 --> 0:15:17.760 nuclear power very large one two hundred bank or nuclear 0:15:17.800 --> 0:15:21.160 power plant has gone down. And obviously this is somewhat 0:15:21.240 --> 0:15:24.120 unprecedented weather. I think it's a sixties sixty year event 0:15:24.280 --> 0:15:26.920 since we've seen something like this in Texas. So all 0:15:26.960 --> 0:15:29.320 of the all of the above absolutely, and for one side, 0:15:29.360 --> 0:15:31.800 you know, exactly as you highlight for one side to 0:15:31.840 --> 0:15:34.320 say it's wind spot, for the other side to sort 0:15:34.360 --> 0:15:36.240 of say, you know, this shows you that even invest 0:15:36.240 --> 0:15:38.720 in nothing the grid is the kind of idiocy that 0:15:38.760 --> 0:15:42.440 we see around, you know, the whole energy transition debate. 0:15:42.720 --> 0:15:45.040 The thing that bugs me the most is people who 0:15:45.080 --> 0:15:47.080 are trying to get us of natural gas. You know, 0:15:47.120 --> 0:15:50.000 the idea that natural gas and the enemy because it's 0:15:50.040 --> 0:15:53.320 a fossil fuel. It's really flawed. And you know, ultimately 0:15:53.360 --> 0:15:55.480 all of us agree that basically we should be building 0:15:55.560 --> 0:15:58.800 nuclear if we really want to be emissions creed, because 0:15:58.800 --> 0:16:00.960 that's by far the best emission this pretty option pull. 0:16:00.960 --> 0:16:02.920 A couple of different conversations happen here, and I'm trying 0:16:02.920 --> 0:16:05.160 to reconcile them. You've got this eighty dollar price target, 0:16:05.160 --> 0:16:07.280 at least an eighty dollar call that you're looking for 0:16:07.360 --> 0:16:10.280 oil prices to gravitate towards. Then we're talking about a 0:16:10.280 --> 0:16:13.040 problem right now that could be fixed in a couple 0:16:13.040 --> 0:16:15.480 of weeks as we get into springs. So Paul, can 0:16:15.520 --> 0:16:18.560 you reconcile the two things for me? Yeah, I mean, 0:16:18.560 --> 0:16:21.080 the demand growth that we expect to see is going 0:16:21.120 --> 0:16:23.640 to be about three million barrels a day. In the summer, 0:16:24.480 --> 0:16:27.200 you're about five million barrels a day versus last year 0:16:27.240 --> 0:16:30.840 in OPEC with another million coming off from Saudi, So 0:16:30.920 --> 0:16:33.880 that's that leaves you about three million. At the same time. 0:16:33.920 --> 0:16:36.600 We've been drawing inventories before this crisis, that about two 0:16:36.600 --> 0:16:40.880 million a day globally. So basically the market is pretty 0:16:40.960 --> 0:16:43.960 much tight by summer. And that gets you. And that's 0:16:44.000 --> 0:16:46.000 by the way, I mean, I'm sure you guys, you know, 0:16:46.320 --> 0:16:48.680 are pretty jazzed up about the potential for a major 0:16:48.720 --> 0:16:51.800 pent up demand situations to emerge here. I think all 0:16:51.840 --> 0:16:55.040 of us, you know, desperate apply in a plane and 0:16:55.360 --> 0:16:57.920 whatever Tom does in the summer vacations. But I'm sure 0:16:57.960 --> 0:17:01.640 it involves travel and um, you know. So the point 0:17:01.680 --> 0:17:04.600 to count me out pull The point is that you're 0:17:04.600 --> 0:17:08.200 going to see a significant up searching demand. It's almost guaranteed. 0:17:08.240 --> 0:17:10.879 This is always you know, energy wise, this is a 0:17:10.960 --> 0:17:14.120 very strong point. Obviously the windsor fuels, obviously natural gas, 0:17:14.800 --> 0:17:17.600 heating oil. Propane by the way, is pretty much approaching 0:17:17.640 --> 0:17:20.399 crisis levels as well. The line that we've had before 0:17:20.440 --> 0:17:23.560 this crisis was there's no propane less than the Mississippi. 0:17:23.920 --> 0:17:25.880 So my point is that you're in an energy crisis, 0:17:25.960 --> 0:17:27.920 and I don't even see it as the top headline, 0:17:28.840 --> 0:17:31.480 you know, in the various media outlets like followed, including 0:17:31.480 --> 0:17:33.240 blue Bug. Blue Bug always does a great job, by 0:17:33.240 --> 0:17:37.800 the way, on thanks basically just to jump in forward 0:17:37.880 --> 0:17:40.680 just quickly. The more one of the more populist outlets 0:17:41.040 --> 0:17:43.240 don't seem to realize that you've got an energy crisis. 0:17:43.240 --> 0:17:48.520 Some laquetrina. Final question from me, sir, there's a difference 0:17:48.520 --> 0:17:50.600 between a rebound and crude crisis and the start of 0:17:50.640 --> 0:17:52.720 a commodity super psychole. I think that's been the big 0:17:52.720 --> 0:17:55.800 conversation amongst many people in this industry in the last 0:17:55.800 --> 0:17:58.440 couple of weeks. This was Andy Hall, of course, fain 0:17:58.600 --> 0:18:02.000 oil trader of the previous cycle, the last supercycle, he 0:18:02.080 --> 0:18:04.480 said the following in the ft, the oil and gas 0:18:04.480 --> 0:18:07.439 industry is in terminal decline. Perhaps this dead cat can 0:18:07.480 --> 0:18:09.840 bant a few more times, but would that be a 0:18:09.920 --> 0:18:14.120 super cycle. What's your take on that? Pot? Well, yeah, 0:18:14.119 --> 0:18:15.720 I used to I used to meet and the in 0:18:16.160 --> 0:18:19.600 a bar up on the upper rest side player and 0:18:20.040 --> 0:18:22.840 he's obviously a brilliant mad or is bullish actually I'm 0:18:22.920 --> 0:18:25.959 very interested to hear him not so bullish. Yeah, my concern. 0:18:26.000 --> 0:18:28.280 It's obviously it's a it's a consensus call. There's going 0:18:28.320 --> 0:18:29.840 to be a super cycle, you know, the world. And 0:18:29.840 --> 0:18:32.199 his wife is saying, yeah, you know everything, hands up, 0:18:32.320 --> 0:18:35.359 it's a super cycle. Having said that, we are bullish 0:18:35.440 --> 0:18:37.560 on our demand over the next five years, you know, 0:18:37.800 --> 0:18:40.359 the whole impact of the VS, which is so heavily 0:18:40.400 --> 0:18:43.520 discanted by the market, overvalued by the market, is going 0:18:43.560 --> 0:18:45.560 to take a lot longer to really have an impact. 0:18:45.640 --> 0:18:48.760 And it really comes down to still being at ninety 0:18:48.840 --> 0:18:51.080 five nineties six million bars in the wild demand with 0:18:51.240 --> 0:18:54.760 effectively no jet fuel demand in the US, you know, 0:18:54.840 --> 0:18:58.639 the discretionary basis, so you can easily get three to 0:18:58.720 --> 0:19:00.919 four million barrels today of extra jet field demand here, 0:19:00.960 --> 0:19:02.840 which takes you way back up to the hundred million 0:19:02.840 --> 0:19:05.520 barrel a day market, And then you're really questioning can 0:19:05.600 --> 0:19:08.520 the supplice I meet that? As you know, the key questions, 0:19:08.600 --> 0:19:10.399 one of them is going to be is the USC 0:19:10.440 --> 0:19:13.240 and P industry going to actually show capital discipline and 0:19:13.280 --> 0:19:16.840 generate returns this time? That's what's relating to me. I 0:19:16.880 --> 0:19:19.159 think they will. And yesterday we had Devon announced a 0:19:19.280 --> 0:19:22.880 variable dividend very early in its announcement of that policy. 0:19:22.920 --> 0:19:26.640 So essentially now Devon Energy is paying a standard dividend 0:19:26.640 --> 0:19:29.040 and then a variable dividend depending on the old price. 0:19:29.160 --> 0:19:31.600 And they came in with the nineteen cent boost that 0:19:31.600 --> 0:19:34.399 their dividend just based on fortify or and que Corps. 0:19:34.800 --> 0:19:37.800 That's that's a very good leadership role from from Devon 0:19:37.880 --> 0:19:40.639 to what this industry should be doing, which is paying 0:19:40.640 --> 0:19:43.879 out heavily cash to shareholders to pay them to the 0:19:43.920 --> 0:19:46.720 E s G. Pain of earning oil. I'm far more 0:19:46.760 --> 0:19:48.640 interested in how drinks went with Andy on the Upper 0:19:48.680 --> 0:19:52.119 West Side was the two thousand and seven just as 0:19:52.240 --> 0:19:55.159 like Steve Jobs right, So it's a mysterious figure. I 0:19:55.200 --> 0:19:57.359 don't know if you've ever seen the naked painting of 0:19:57.440 --> 0:20:02.200 him and his wife, but I've seen him make really 0:20:02.240 --> 0:20:09.600 interesting catch up folder at a time. Folking to see 0:20:09.640 --> 0:20:19.320 him a folk, thank you, thank you, thank you. Michael 0:20:19.359 --> 0:20:22.800 Gabon joined some Barclays right now. Michael, does this kind 0:20:22.800 --> 0:20:28.359 of data solidify a Barclay's call for buoyant economic growth? 0:20:29.160 --> 0:20:32.359 It certainly does help. At least we're looking for growth 0:20:32.359 --> 0:20:34.760 to be very solid this year and I think what 0:20:34.880 --> 0:20:37.960 this tells you is when fiscal stimulus or fiscal aid 0:20:38.080 --> 0:20:41.520 I think it's the better word arrives to household balance 0:20:41.520 --> 0:20:44.639 sheets is it does get turned around fairly quickly and 0:20:45.080 --> 0:20:49.600 materializes in economic activities. So this is largely, we think 0:20:49.720 --> 0:20:53.159 attributable to the nine plus billion aid package that was 0:20:53.200 --> 0:20:56.359 passed at the end of last year. We suspect we 0:20:56.400 --> 0:20:58.680 will be getting around to one point four one point 0:20:58.720 --> 0:21:01.840 five trillion dollar aid package by the middle to the 0:21:01.960 --> 0:21:04.840 end of March. So I think this means we should 0:21:04.840 --> 0:21:09.719 see a pretty rapid acceleration in demand and household spending 0:21:09.720 --> 0:21:12.359 as we move into the into the second quarter, which 0:21:12.480 --> 0:21:17.160 could be continued if vaccinations continue apace and mobility gradually 0:21:17.200 --> 0:21:19.600 recovers over time. So yes, Tom, it does I think 0:21:19.680 --> 0:21:24.000 confirm our expectations about growth for this year, at least initially. 0:21:24.040 --> 0:21:26.520 Obviously there's eleven more months to go. Well, Michael, can 0:21:26.560 --> 0:21:29.680 you connect retail sales and sort of a one month 0:21:29.760 --> 0:21:33.879 pop after passing this stimulus plan to longer term growth? 0:21:33.920 --> 0:21:38.080 How neat is that line? I wouldn't say it's it's 0:21:38.359 --> 0:21:43.800 entirely neat, but so there are certainly a list of 0:21:43.880 --> 0:21:48.159 things that have to happen, including vaccinations and getting on 0:21:48.200 --> 0:21:51.160