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Speaker 1: Bloomberg Audio Studios, podcasts, radio news. You're listening to the

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Speaker 1: Bloomberg Intelligence Podcast. Catch us live weekdays at ten am

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Speaker 1: Listen on demand wherever you get your podcasts, or watch

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Speaker 2: Can we bring you all the top news in business

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Speaker 2: and economics and finance. There are lens of our Bloomberg

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Speaker 2: Intelligence folks. They cover two thousand companies and one hundred

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Speaker 2: and thirty industries all around the world. They also cover commodities,

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Speaker 2: and for that we go to Mike and Glohan, Bloomberg

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Speaker 2: Intelligence senior commodity strategist. Mike. The news that Bloomberg broke

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Speaker 2: yesterday is that US tariffs on copper imports would be

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Speaker 2: coming within several weeks before a conclusion that was going

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Speaker 2: to take like two hundred and seventy days. Can we

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Speaker 2: just do like a primer here when we say copper imports,

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Speaker 2: were talking like the stuff that comes out of the ground.

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Speaker 2: Are we talking like refined things? Are we talking like

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Speaker 2: copper wires? Do we have an idea yet of what

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Speaker 2: that looks like?

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Speaker 3: Well, for me, it's a refined copper.

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Speaker 4: The US imports about fifty percent, one of the few

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Speaker 4: commodities that we have a deficit of. Obviously, it's spiking up,

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Speaker 4: but what you mentioned is still it hasn't happened yet.

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Speaker 4: Market's anticipating up to twenty five percent tariffs, and the

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Speaker 4: price the CME US traded copper has jumped about twenty

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Speaker 4: percent premium versus ALMA traded copper. So it's already priced

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Speaker 4: in and we still haven't had it. And I think

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Speaker 4: we're at the point where the market the Trump administrators

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Speaker 4: is going to be realized. Okay, Yeah, we need to

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Speaker 4: kind of reduce inflation, increase American productivity in American onshoing

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Speaker 4: production to US. If we spite the price of copper

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Speaker 4: too much, that's not going to help our goals. So

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Speaker 4: I'm kind of worried now that copper is at that

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Speaker 4: huge premium.

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Speaker 3: It's the highest price ever.

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Speaker 4: And so give you example, right us Coppyer right now

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Speaker 4: is a break down right now about five dollars and

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Speaker 4: thirty cents a pound.

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Speaker 3: It's the highest ever.

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Speaker 4: The equivalent in London is about four dollars and fifty cents.

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Speaker 5: So can we just all explain that for a second.

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Speaker 3: Yes, please? Is that.

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Speaker 6: It's been a light bulb.

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Speaker 2: For me today because I did all explain this to

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Speaker 2: polling commerce great, but in fairness, he asked, So the

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Speaker 2: Comax price, which is the US listed price, is by pound,

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Speaker 2: and that's versus tons, which is in the London exchange,

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Speaker 2: and there's two thousand pounds per ton, So that's how

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Speaker 2: you get the price to scrap and seeing kind of.

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Speaker 6: Where we're at, you wire, Mike, do you arbitrash at

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Speaker 6: do you it's moniest people start trush?

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Speaker 4: Oh yeah, well they're doing it now. Yeah, Alex is

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Speaker 4: all from a trader standpoint. That's why I look at it, Saratra.

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Speaker 4: So I just take that London price converted to pounds

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Speaker 4: and you can see over time it's been the same

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Speaker 4: spread forever since we have data since nineteen ninety seven

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Speaker 4: for that, and now it's twenty percent higher in the US.

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Speaker 3: That's just never happened. So I think what that is.

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Speaker 4: That's indicative of the how profound these tariffs are.

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Speaker 3: I mean, this is a shift in the global world order.

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Speaker 3: Post World War Two.

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Speaker 4: Well, the rest of the world was able to depend

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Speaker 4: on exporting stuff to the US.

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Speaker 3: That's changing now.

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Speaker 4: Copper is one of the things we do import. But

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Speaker 4: look at things like crueil. We have a surplus to

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Speaker 4: cr crudels down, we have a surplus of grains corn,

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Speaker 4: So I mean sweet, they're having pressure coppers at the

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Speaker 4: forefront right now. I just look at it in the

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Speaker 4: short term. This is a trader's trade. I look at

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Speaker 4: it as a trader. I'm like, yeah, I might be

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Speaker 4: structuring put strategies. I've been wrong so far, admitted, But

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Speaker 4: you know what the next in one tweet, it can

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Speaker 4: drop twenty percent and just go right back to parody

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Speaker 4: with what's trading in the rest of the world.

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Speaker 6: And is that how you think about valuation in this market,

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Speaker 6: the copper market. Is it Chicago versus lineners? And another

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Speaker 6: way to get a sense of val valuation?

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Speaker 3: Are we stretched? Well? I love using that word in

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Speaker 3: this case, Paul.

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Speaker 4: What usually happens if if you can identify spikes and

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Speaker 4: commodizy and be on board people are doing that in copper,

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Speaker 4: You're doing fine. The point is, almost every time you

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Speaker 4: get an aberration and a commodity spikes like this, it

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Speaker 4: always go down. What's the most recent example, Eggs? I

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Speaker 4: mean they spike up for a little while, we find

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Speaker 4: supply cut off the man and they go down.

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Speaker 3: So just a question how far it goes.

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Speaker 4: What's unique in this case is last year we could

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Speaker 4: really see in futures driving that price higher.

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Speaker 3: Manage money, hedge funds, future positions, we're driving it higher.

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Speaker 4: They got up to about thirty two percent of total

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Speaker 4: copp and open interests. Now they're nine to ten percent.

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Speaker 4: They don't really care because I think they know what's happening.

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Speaker 4: We're squeezing a few shorts. You just can't see how

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Speaker 4: obnoxious it is. And at some point, I just don't

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Speaker 4: know how it can stay up here, particularly if the

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Speaker 4: US stock market continues to trickle down, which is the

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Speaker 4: base case from people like Gina Martin Aadams.

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Speaker 2: So using these arms to trade like is nothing new,

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Speaker 2: and we see a lot of these dislocations a lot too,

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Speaker 2: especially if you factor in Shanghai copper as well, and

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Speaker 2: like how you then store it and then playing it. Typically,

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Speaker 2: when these distortions happen, how do they wind up resolving?

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Speaker 4: Well, usually it's some kind of fear futures. You have

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Speaker 4: to move copper towards the US. How you get there

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Speaker 4: into inventory is kind of complicated. Usually it's it's just

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Speaker 4: a matter of how why it goes before it goes

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Speaker 4: back to disparity, back to parody, and question is how

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Speaker 4: it does that, And that's key things I'm looking forward to.

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Speaker 4: What can make that happen. First of all, time, it's

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Speaker 4: not gonna last too long. It's just markets will markets

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Speaker 4: will move to where prices will benefit. And then the

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Speaker 4: key thing is you have to worry about if you're

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Speaker 4: long US copper, you have to worry about just the

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Speaker 4: next social media a tweet from a Trump administration fish

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Speaker 4: might say, yeah, we were going to do twenty five

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Speaker 4: percent terffs, Maybe we're going to do ten to fifteen

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Speaker 4: percent because the copper price is telling us we might

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Speaker 4: be a big extreme here.

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Speaker 3: So there's a lot of nuances.

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Speaker 4: But the thing is, the risk is you can turn

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Speaker 4: around one day and what's been up thirty percent this

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Speaker 4: year can drop thirty percent or twenty percent in a heartbeat.

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Speaker 6: All right, So we've talked about terraffs and copper, other

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Speaker 6: other commodities that you're paying attention to, Mike, as it

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Speaker 6: relates to.

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Speaker 3: Tariffs, that's the main one steal is in there.

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Speaker 4: But I'm steel's kind of a bit out of my

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Speaker 4: purview because it doesn't trade a lot in actively trade

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Speaker 4: of futures, but copper is the number one right now.

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Speaker 4: But I like to point out the key thing that's

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Speaker 4: really happening is because we're having this trade war, I

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Speaker 4: guess trade war you could call it. It's the surplus

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Speaker 4: commodities in the US that are major under pressure, and

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Speaker 4: that means crude oil, liquid fuels, natural gas potentially at

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Speaker 4: a peak around four and the grains. If we do

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Speaker 4: have truce in Ukraine Russia, grains are already in the

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Speaker 4: bear market, will pressure them lower.

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Speaker 3: They wouldn't have to depend on the US drought to

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Speaker 3: go up in my view.

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Speaker 5: And gold, what do you think still going to rock

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Speaker 5: and high here?

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Speaker 3: That can still blush away?

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Speaker 4: I see goal that it's reached a good threshold of

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Speaker 4: three thousand dollars and ounce, it's pretty much overbought.

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Speaker 7: It basically needs bull fuel, and that bull fuel the

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Speaker 7: top source of that be the US stock market going down,

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Speaker 7: which we know is basically deflation or good for gold,

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Speaker 7: would probably maybe tilt over and help you as longbos.

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Speaker 2: All right, Mike, really appreciate you, Thank you so much.

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Speaker 2: Mike mcglohm Boomerg Intelligence Senior Commodity strategistm.

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Speaker 1: You're listening to the Bloomberg Intelligence podcast. Catch us live

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Speaker 1: weekdays at ten am Eastern on Applecarcklay and Android Auto

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Speaker 6: Sally Bigwall joints us she's Bloomberg US Finance team leader

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Speaker 6: on a story. I like to read it, and just

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Speaker 6: by definition, it's going to be one of the most

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Speaker 6: read stories on the Bloomberg termninel Today. Wall Street bonus

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Speaker 6: pool surges to a record forty seven point five billion

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Speaker 6: for twenty twenty four, So, Sally, I mean a good

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Speaker 6: year on Wall Street. It seems like people are getting paid,

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Speaker 6: aren't they?

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Speaker 8: People are getting paid. I think it was largely driven

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Speaker 8: by a grete twenty twenty four, we started to see

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Speaker 8: deals bouncing back, but I think a big part of

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Speaker 8: this was also the volatility in trading created by the election.

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Speaker 8: I mean, we reported in December that executives a top

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Speaker 8: the biggest banks were locking in plans to award traders

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Speaker 8: and deal makers the biggest bonuses since the pandemic, with

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Speaker 8: some hikes as much as ten percent or more.

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Speaker 2: How much of this is actual results versus just the

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Speaker 2: competition for talent.

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Speaker 5: With a little bit of a result sprinkled in.

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Speaker 8: I think this is probably really more reflective of the results.

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Speaker 8: But obviously lifting bonuses faster can help ensure that employees

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Speaker 8: stay stay around for more business to come. And initially

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Speaker 8: the beginning of this year and toward the end of

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Speaker 8: last year, you know, we expected a big deal rebound,

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Speaker 8: so that seemed much more important than it does perhaps

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Speaker 8: now that things are a little more uns on Trump's

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Speaker 8: tariff policies, which are kind of clouding that rebound, which

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Speaker 8: in turn sort of makes the talent less of an

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Speaker 8: in demand thing. Potentially.

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Speaker 6: One of the more interesting parts of the story is

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Speaker 6: that Wall Street employment has hit record levels. Now, I

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Speaker 6: kind of thought this whole AI thing and automation and

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Speaker 6: would have maybe cause head counter maybe come down, but

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Speaker 6: there's still a lot of people working on global Wall Street.

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Speaker 8: That is correct. I think the trend has generally been

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Speaker 8: for employment to go up at Wall Street firms. Despite this,

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Speaker 8: I think because so many of them are trying to

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Speaker 8: modernize and improve their technology, that has caused them to

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Speaker 8: need to hire more people and perhaps you know, and

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Speaker 8: a lot of them also give this message that even

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Speaker 8: with the advent of AI and using AI, actually we

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Speaker 8: still need humans in order to choose.

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Speaker 3: Humans.

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Speaker 2: I mean, hey, as media people, let's take it. Let's

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Speaker 2: take the win where we can get it. I guess

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Speaker 2: the question is does this kind of pay out last? Because,

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Speaker 2: as you mentioned rightly, that em and a boom that

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Speaker 2: we've been waiting for hasn't happened. The IPO market being

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Speaker 2: wide open has barely happened. We have a couple that

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Speaker 2: are squeaking through and until the uncertainty settles down, like,

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Speaker 2: it's hard to see that actually panning out.

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Speaker 8: Yeah, I mean the banks have a lot of the

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Speaker 8: bank executives are now outwardly saying that certain things are

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Speaker 8: on pause, certain things are frozen because big sort of deals,

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Speaker 8: big companies with deals, they absolutely don't want to come

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Speaker 8: out and hit the market in this sort of uncertain environment.

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Speaker 8: We have seen a few but the general message that

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Speaker 8: Wall Street is very open about is that things are

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Speaker 8: on a bit of a holding pattern at the moment.

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Speaker 2: He stally, can I ask a quick question, I like

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Speaker 2: the ones about money because anyway, well, now from.

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Speaker 9: The peanut gallery over here how much of the local economy,

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Speaker 9: and I'm talking in New York State, New York City, Connecticut,

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Speaker 9: New Jersey depend on Wall Street for tax revenue and

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Speaker 9: et cetera, and so forth.

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Speaker 8: Well, Wall Street is responsible for seventeen point seven percent

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Speaker 8: of all economic activity in the city.

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Speaker 3: Really, see were important.

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Speaker 8: And Wall Street also accounted for about nineteen percent of

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Speaker 8: New York State's tax revenue between twenty three and twenty four,

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Speaker 8: twenty twenty three and twenty twenty four. And the estimates

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Speaker 8: we got today are that for twenty twenty four bonuses

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Speaker 8: they'll generate about six hundred million more in state income tax.

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Speaker 8: And obviously this is very important, particularly as New York

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Speaker 8: City is sort of struggling somewhat with potential budget gaps

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Speaker 8: created by cuts to federal funding. And New York City,

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Speaker 8: you know that relies heavily on federal funding for various

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Speaker 8: programs like Medicaid and the Essential Plan, so it does

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Speaker 8: have an importance.

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Speaker 6: Here here's another great data point in the story. New

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Speaker 6: York Cities sheriff securities industry jobs naturally has declined to

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Speaker 6: eighteen percent from about thirty three percent and nineteen ninety

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Speaker 6: as financial firms move jobs to other regions.

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Speaker 5: To drive down costs Slarida.

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Speaker 6: Yeah, and it's like Goldman Sacks has got to get

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Speaker 6: a big place in Salt Lake. Yeah, salt Lake. I

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Speaker 6: mean they're all over there, just lower Clow.

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Speaker 9: You don't have to be here necessarily when you can

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Speaker 9: go to a place with good weather.

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Speaker 6: Right, Deutsche Bank has a big, big place down in

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Speaker 6: Jacksonville for example. You know, so you don't have to

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Speaker 6: send these jobs off to India. You can just put

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Speaker 6: them to the Midwest or the South or somewhere else,

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Speaker 6: right me on that, Yeah, so interesting.

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Speaker 2: Sally, Thanks love, We really appreciate it's a mustery guys.

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Speaker 2: It's always really fun to dissect those stories. Sally Bank

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Speaker 2: Well joining us on that Bloomberg US Finance team leader.

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Speaker 1: You're listening to the Bloomberg Intelligence Podcast. Catch us live

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Speaker 1: weekdays at ten am Eastern on Applecarplay and Android Auto

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Speaker 1: with the Bloomberg Business App. Listen on demand wherever you

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Speaker 1: get your podcasts, or watch us live on YouTube.

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Speaker 6: Andrew sibnow joints us here. He's the CEO of International Paper.

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Speaker 6: IP is the ticker. Put it into your Bloomberg terminally

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Speaker 6: joints us here in our Bloomberg Interactives studios. Fact that

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Speaker 6: you're in our studio makes me believe that you had

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Speaker 6: an investor day we did yesterday.

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Speaker 10: Yeah, we had an investor d yesterday.

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Speaker 6: Green What was the theme of the investor day today

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Speaker 6: that you had yesterday?

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Speaker 11: Transformation? Okay, it's really about the transformation. I heard in

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Speaker 11: the opening talking about international paper. Of course it's in

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Speaker 11: our name, and so people think global paper. And the

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Speaker 11: reality is is we're a packaging company now, so almost

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Speaker 11: one hundred percent sustainable packaging.

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Speaker 10: With the acquisition of.

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Speaker 11: DA Smith North America and Europe, we're number one in

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Speaker 11: both places, and we're all focused on the customer and

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Speaker 11: their packaging needs. You mentioned Chewy before, great customer for

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Speaker 11: us and a wonderful opportunity to build their branding to

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Speaker 11: help them be successful. That's what we're all about, is

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Speaker 11: transforming into a packaging company.

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Speaker 2: So something that definitely came up is value over volume.

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Speaker 2: You want to get the most out of what you're

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Speaker 2: doing rather than just the numbers. Ups is doing something

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Speaker 2: very similar and the short term, there's a lot of

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Speaker 2: angst and pain kind of around that before you get

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Speaker 2: to that volume.

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Speaker 5: After that value growth talk me through the cycle.

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Speaker 11: Yeah, So if you think about we were our own

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Speaker 11: worst enemy. So for years and years and years, we

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Speaker 11: would chase volume at the most inopportunity time. And so

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Speaker 11: what we've effectively had to do is go back to

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Speaker 11: the marketplace and say we need to be paid for

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Speaker 11: the value.

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Speaker 10: That we're bringing. And that's what we do. We come

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Speaker 10: into the marketplace.

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Speaker 11: We're trying to help you get your goods to the

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Speaker 11: place do you want them to be, whether it's fast

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Speaker 11: moving consumer goods or it's industrial goods, that's what we're.

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Speaker 10: Trying to help.

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Speaker 11: But we've got to make sure that we're taking care

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Speaker 11: of all of our constituents, and frankly, we weren't, and

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Speaker 11: so we've got to get that value proposition right. I

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Speaker 11: think we've made that switch over the last couple of years.

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Speaker 11: We're seeing that start to play out appropriately and we're

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Speaker 11: getting paid for the value that we bring.

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Speaker 6: You're building a state of the art box plant in Waterloo, Iowa,

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Speaker 6: So talk about onshoing. That's big time. Two hundred and

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Speaker 6: sixty million dollars. Talk to us about that investment. What

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Speaker 6: are you trying to do there?

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Speaker 11: So what a lot of people don't understand about the

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Speaker 11: packaging business. Certainly the paper based packaging business is all

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Speaker 11: of the business has done within two hundred miles a

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Speaker 11: two hundred mile radius of a plant. And because you

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Speaker 11: can't air as expensive as ship, and so you've got

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Speaker 11: to be close.

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Speaker 10: So we want to be close to our best customers.

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Speaker 11: That's protein Alley, So that area there's protein out, Protein Alley.

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Speaker 10: Really think of the beef and the chicken before and

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Speaker 10: so if you.

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Speaker 11: Think about kind of kind of where protein happens in

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Speaker 11: the United States from if you think of the South

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Speaker 11: all the way through the Midwest through there. We want

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Speaker 11: to be close to our customers. We have a great

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Speaker 11: customer relationships. We need a modern facility. We're going to

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Speaker 11: have the I think it's going to be the largest

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Speaker 11: facility in the US that does paper based packaging. And

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Speaker 11: we want to make sure because we're shipping in from

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Speaker 11: other parts of the country now service those customers very ineffective,

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Speaker 11: very inefficient.

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Speaker 10: We want to be local, we want to be close.

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Speaker 10: We want to drive customer service and innovation as close

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Speaker 10: to the customer.

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Speaker 3: As we can.

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Speaker 2: International is in your name, So what how are you

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Speaker 2: affected by potential tariffs? And everyone sort of every country

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Speaker 2: shift to nationalism and whenever that way that is energy nationalism,

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Speaker 2: goods nationalism, supply to nationalism.

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Speaker 5: Where do you play and that has affect you?

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Speaker 10: Yeah, so we are.

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Speaker 11: We're definitely international company, principally North America and Europe.

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Speaker 10: We're about two thirds North America and a third Europe.

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Speaker 11: We don't ship actually a lot cross borders, believe it

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Speaker 11: or not, so that doesn't happen. So we're not being

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Speaker 11: impacted directly by tariffs with crossboarder trade, but we're impacted

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Speaker 11: by the economy, and so as tariffs impact the economy,

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Speaker 11: that will have an impact of us. So we're watching

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Speaker 11: what's going on and we see it in our numbers.

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Speaker 11: We've seen the volatility in the last month or so,

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Speaker 11: so we're keeping a close eye on that.

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Speaker 10: But that's really how it impacts us.

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Speaker 6: What are your customers saying about their outlook for the economy.

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Speaker 6: I would think that you would have a finger on

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Speaker 6: the pulse of that.

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Speaker 11: Yeah, I think we do have a pretty good pulse.

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Speaker 11: I think there's uncertainty, if we're fair about that. The

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Speaker 11: last month or two or so, there's been some real uncertainty,

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Speaker 11: and I think, well, nothing's really happened. Yet it's caused

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Speaker 11: people to retrench a little bit and ask, hey, do

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Speaker 11: I want to make that investment right now?

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Speaker 10: Can I hold off on spending money right now? And

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Speaker 10: let's see.

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Speaker 11: Look, my belief is these things wash out over time,

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Speaker 11: and we make investments for decades. We don't make investments

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Speaker 11: for quarters or even years. And so we're thinking about

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Speaker 11: investments for the long.

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Speaker 2: Term in terms of say, hiring labor, how you're managing

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Speaker 2: the business. Is it a retrenchman time, is it expansion?

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Speaker 2: How would you define it.

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Speaker 5: For you guys?

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Speaker 10: Actually, interestingly, it's a little bit of both.

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Speaker 3: Right.

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Speaker 10: What I mean by that you have yeah, you can. Actually,

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Speaker 10: so when you think about.

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Speaker 11: That, you have certain parts of your business that aren't

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Speaker 11: as strong or aren't as healthy, and you have other

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Speaker 11: parts that are very healthy. So, as an example, protein

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Speaker 11: alley very healthy for us. Let's make investments in water,

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Speaker 11: rely on it. Let's move the the let's move people

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Speaker 11: in this investment. There things that are weaker, things that

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Speaker 11: are struggling or markets you're not as strong in, you

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Speaker 11: have to retrench.

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Speaker 10: So you have to do blame as those.

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Speaker 11: Well you've got you've got softness in parts of the

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Speaker 11: economy kind of broad base. You've got to be concerned

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Speaker 11: about things that are going to shrink over time and things,

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Speaker 11: you know, things like e commerce that are strong, things

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Speaker 11: like protein and fresh vegetables, those are strong.

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Speaker 10: You want to move towards those things.

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Speaker 11: And uh and so you know, we want to move

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Speaker 11: our investment towards the parts of the economy that we

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Speaker 11: think are going to expand over time, location and industry

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Speaker 11: and and really you know, grow on those strengths.

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Speaker 6: So to the extent, if I think about your company,

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Speaker 6: I think about a GDP top line growth story, is

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Speaker 6: there anything different than that?

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Speaker 10: I mean, that's it?

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Speaker 3: And is it just so?

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Speaker 6: Is your business really about managing the cost of managing margin?

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Speaker 10: No, it's not.

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Speaker 11: Ok Yes, you always have to manage your cost, right,

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Speaker 11: But the key thing is you want to align yourself

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Speaker 11: with where growth is. Okay, I think that's the biggest thing.

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Speaker 11: Bottom line though, is we're going to generally follow the economy.

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Speaker 11: So yesterday in our in our investor day, we talked

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Speaker 11: about a volume growth. It's kind of one to two

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Speaker 11: percent that follows, you know, underlying volume growth and pricing

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Speaker 11: power over time. It's also about one to two percent

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Speaker 11: so we think we're three to four percent grower over

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Speaker 11: time the core market. And then that question is can

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Speaker 11: you align with better growing industries and can you win markets?

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Speaker 10: Here, Andrew, thank you.

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Speaker 6: So much for joining us. Really appreciate you taking a

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Speaker 6: few minutes of your time here today. Andrew Cilnaire, he's

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Speaker 6: the CEO of International Paper. No surprise, the ticker symbols

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Speaker 6: ip logging it to your Bloomberg terminal. He joins us

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Speaker 6: here in a Bloomberg INTERACTI appropriate studio. They the Investor

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Speaker 6: Day yesterday. The stocks up forty five percent over the

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Speaker 6: trailing twelve months, so it's had some pretty solid performance.

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