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Speaker 2: Intelligence folks. They cover two thousand companies and one hundred
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Speaker 2: and for that we go to Mike and Glohan, Bloomberg
Speaker 2: Intelligence senior commodity strategist. Mike. The news that Bloomberg broke
Speaker 2: yesterday is that US tariffs on copper imports would be
Speaker 2: coming within several weeks before a conclusion that was going
Speaker 2: to take like two hundred and seventy days. Can we
Speaker 2: just do like a primer here when we say copper imports,
Speaker 2: were talking like the stuff that comes out of the ground.
Speaker 2: Are we talking like refined things? Are we talking like
Speaker 2: copper wires? Do we have an idea yet of what
Speaker 2: that looks like?
Speaker 3: Well, for me, it's a refined copper.
Speaker 4: The US imports about fifty percent, one of the few
Speaker 4: commodities that we have a deficit of. Obviously, it's spiking up,
Speaker 4: but what you mentioned is still it hasn't happened yet.
Speaker 4: Market's anticipating up to twenty five percent tariffs, and the
Speaker 4: price the CME US traded copper has jumped about twenty
Speaker 4: percent premium versus ALMA traded copper. So it's already priced
Speaker 4: in and we still haven't had it. And I think
Speaker 4: we're at the point where the market the Trump administrators
Speaker 4: is going to be realized. Okay, Yeah, we need to
Speaker 4: kind of reduce inflation, increase American productivity in American onshoing
Speaker 4: production to US. If we spite the price of copper
Speaker 4: too much, that's not going to help our goals. So
Speaker 4: I'm kind of worried now that copper is at that
Speaker 4: huge premium.
Speaker 3: It's the highest price ever.
Speaker 4: And so give you example, right us Coppyer right now
Speaker 4: is a break down right now about five dollars and
Speaker 4: thirty cents a pound.
Speaker 3: It's the highest ever.
Speaker 4: The equivalent in London is about four dollars and fifty cents.
Speaker 5: So can we just all explain that for a second.
Speaker 3: Yes, please? Is that.
Speaker 6: It's been a light bulb.
Speaker 2: For me today because I did all explain this to
Speaker 2: polling commerce great, but in fairness, he asked, So the
Speaker 2: Comax price, which is the US listed price, is by pound,
Speaker 2: and that's versus tons, which is in the London exchange,
Speaker 2: and there's two thousand pounds per ton, So that's how
Speaker 2: you get the price to scrap and seeing kind of.
Speaker 6: Where we're at, you wire, Mike, do you arbitrash at
Speaker 6: do you it's moniest people start trush?
Speaker 4: Oh yeah, well they're doing it now. Yeah, Alex is
Speaker 4: all from a trader standpoint. That's why I look at it, Saratra.
Speaker 4: So I just take that London price converted to pounds
Speaker 4: and you can see over time it's been the same
Speaker 4: spread forever since we have data since nineteen ninety seven
Speaker 4: for that, and now it's twenty percent higher in the US.
Speaker 3: That's just never happened. So I think what that is.
Speaker 4: That's indicative of the how profound these tariffs are.
Speaker 3: I mean, this is a shift in the global world order.
Speaker 3: Post World War Two.
Speaker 4: Well, the rest of the world was able to depend
Speaker 4: on exporting stuff to the US.
Speaker 3: That's changing now.
Speaker 4: Copper is one of the things we do import. But
Speaker 4: look at things like crueil. We have a surplus to
Speaker 4: cr crudels down, we have a surplus of grains corn,
Speaker 4: So I mean sweet, they're having pressure coppers at the
Speaker 4: forefront right now. I just look at it in the
Speaker 4: short term. This is a trader's trade. I look at
Speaker 4: it as a trader. I'm like, yeah, I might be
Speaker 4: structuring put strategies. I've been wrong so far, admitted, But
Speaker 4: you know what the next in one tweet, it can
Speaker 4: drop twenty percent and just go right back to parody
Speaker 4: with what's trading in the rest of the world.
Speaker 6: And is that how you think about valuation in this market,
Speaker 6: the copper market. Is it Chicago versus lineners? And another
Speaker 6: way to get a sense of val valuation?
Speaker 3: Are we stretched? Well? I love using that word in
Speaker 3: this case, Paul.
Speaker 4: What usually happens if if you can identify spikes and
Speaker 4: commodizy and be on board people are doing that in copper,
Speaker 4: You're doing fine. The point is, almost every time you
Speaker 4: get an aberration and a commodity spikes like this, it
Speaker 4: always go down. What's the most recent example, Eggs? I
Speaker 4: mean they spike up for a little while, we find
Speaker 4: supply cut off the man and they go down.
Speaker 3: So just a question how far it goes.
Speaker 4: What's unique in this case is last year we could
Speaker 4: really see in futures driving that price higher.
Speaker 3: Manage money, hedge funds, future positions, we're driving it higher.
Speaker 4: They got up to about thirty two percent of total
Speaker 4: copp and open interests. Now they're nine to ten percent.
Speaker 4: They don't really care because I think they know what's happening.
Speaker 4: We're squeezing a few shorts. You just can't see how
Speaker 4: obnoxious it is. And at some point, I just don't
Speaker 4: know how it can stay up here, particularly if the
Speaker 4: US stock market continues to trickle down, which is the
Speaker 4: base case from people like Gina Martin Aadams.
Speaker 2: So using these arms to trade like is nothing new,
Speaker 2: and we see a lot of these dislocations a lot too,
Speaker 2: especially if you factor in Shanghai copper as well, and
Speaker 2: like how you then store it and then playing it. Typically,
Speaker 2: when these distortions happen, how do they wind up resolving?
Speaker 4: Well, usually it's some kind of fear futures. You have
Speaker 4: to move copper towards the US. How you get there
Speaker 4: into inventory is kind of complicated. Usually it's it's just
Speaker 4: a matter of how why it goes before it goes
Speaker 4: back to disparity, back to parody, and question is how
Speaker 4: it does that, And that's key things I'm looking forward to.
Speaker 4: What can make that happen. First of all, time, it's
Speaker 4: not gonna last too long. It's just markets will markets
Speaker 4: will move to where prices will benefit. And then the
Speaker 4: key thing is you have to worry about if you're
Speaker 4: long US copper, you have to worry about just the
Speaker 4: next social media a tweet from a Trump administration fish
Speaker 4: might say, yeah, we were going to do twenty five
Speaker 4: percent terffs, Maybe we're going to do ten to fifteen
Speaker 4: percent because the copper price is telling us we might
Speaker 4: be a big extreme here.
Speaker 3: So there's a lot of nuances.
Speaker 4: But the thing is, the risk is you can turn
Speaker 4: around one day and what's been up thirty percent this
Speaker 4: year can drop thirty percent or twenty percent in a heartbeat.
Speaker 6: All right, So we've talked about terraffs and copper, other
Speaker 6: other commodities that you're paying attention to, Mike, as it
Speaker 6: relates to.
Speaker 3: Tariffs, that's the main one steal is in there.
Speaker 4: But I'm steel's kind of a bit out of my
Speaker 4: purview because it doesn't trade a lot in actively trade
Speaker 4: of futures, but copper is the number one right now.
Speaker 4: But I like to point out the key thing that's
Speaker 4: really happening is because we're having this trade war, I
Speaker 4: guess trade war you could call it. It's the surplus
Speaker 4: commodities in the US that are major under pressure, and
Speaker 4: that means crude oil, liquid fuels, natural gas potentially at
Speaker 4: a peak around four and the grains. If we do
Speaker 4: have truce in Ukraine Russia, grains are already in the
Speaker 4: bear market, will pressure them lower.
Speaker 3: They wouldn't have to depend on the US drought to
Speaker 3: go up in my view.
Speaker 5: And gold, what do you think still going to rock
Speaker 5: and high here?
Speaker 3: That can still blush away?
Speaker 4: I see goal that it's reached a good threshold of
Speaker 4: three thousand dollars and ounce, it's pretty much overbought.
Speaker 7: It basically needs bull fuel, and that bull fuel the
Speaker 7: top source of that be the US stock market going down,
Speaker 7: which we know is basically deflation or good for gold,
Speaker 7: would probably maybe tilt over and help you as longbos.
Speaker 2: All right, Mike, really appreciate you, Thank you so much.
Speaker 2: Mike mcglohm Boomerg Intelligence Senior Commodity strategistm.
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Speaker 6: Sally Bigwall joints us she's Bloomberg US Finance team leader
Speaker 6: on a story. I like to read it, and just
Speaker 6: by definition, it's going to be one of the most
Speaker 6: read stories on the Bloomberg termninel Today. Wall Street bonus
Speaker 6: pool surges to a record forty seven point five billion
Speaker 6: for twenty twenty four, So, Sally, I mean a good
Speaker 6: year on Wall Street. It seems like people are getting paid,
Speaker 6: aren't they?
Speaker 8: People are getting paid. I think it was largely driven
Speaker 8: by a grete twenty twenty four, we started to see
Speaker 8: deals bouncing back, but I think a big part of
Speaker 8: this was also the volatility in trading created by the election.
Speaker 8: I mean, we reported in December that executives a top
Speaker 8: the biggest banks were locking in plans to award traders
Speaker 8: and deal makers the biggest bonuses since the pandemic, with
Speaker 8: some hikes as much as ten percent or more.
Speaker 2: How much of this is actual results versus just the
Speaker 2: competition for talent.
Speaker 5: With a little bit of a result sprinkled in.
Speaker 8: I think this is probably really more reflective of the results.
Speaker 8: But obviously lifting bonuses faster can help ensure that employees
Speaker 8: stay stay around for more business to come. And initially
Speaker 8: the beginning of this year and toward the end of
Speaker 8: last year, you know, we expected a big deal rebound,
Speaker 8: so that seemed much more important than it does perhaps
Speaker 8: now that things are a little more uns on Trump's
Speaker 8: tariff policies, which are kind of clouding that rebound, which
Speaker 8: in turn sort of makes the talent less of an
Speaker 8: in demand thing. Potentially.
Speaker 6: One of the more interesting parts of the story is
Speaker 6: that Wall Street employment has hit record levels. Now, I
Speaker 6: kind of thought this whole AI thing and automation and
Speaker 6: would have maybe cause head counter maybe come down, but
Speaker 6: there's still a lot of people working on global Wall Street.
Speaker 8: That is correct. I think the trend has generally been
Speaker 8: for employment to go up at Wall Street firms. Despite this,
Speaker 8: I think because so many of them are trying to
Speaker 8: modernize and improve their technology, that has caused them to
Speaker 8: need to hire more people and perhaps you know, and
Speaker 8: a lot of them also give this message that even
Speaker 8: with the advent of AI and using AI, actually we
Speaker 8: still need humans in order to choose.
Speaker 3: Humans.
Speaker 2: I mean, hey, as media people, let's take it. Let's
Speaker 2: take the win where we can get it. I guess
Speaker 2: the question is does this kind of pay out last? Because,
Speaker 2: as you mentioned rightly, that em and a boom that
Speaker 2: we've been waiting for hasn't happened. The IPO market being
Speaker 2: wide open has barely happened. We have a couple that
Speaker 2: are squeaking through and until the uncertainty settles down, like,
Speaker 2: it's hard to see that actually panning out.
Speaker 8: Yeah, I mean the banks have a lot of the
Speaker 8: bank executives are now outwardly saying that certain things are
Speaker 8: on pause, certain things are frozen because big sort of deals,
Speaker 8: big companies with deals, they absolutely don't want to come
Speaker 8: out and hit the market in this sort of uncertain environment.
Speaker 8: We have seen a few but the general message that
Speaker 8: Wall Street is very open about is that things are
Speaker 8: on a bit of a holding pattern at the moment.
Speaker 2: He stally, can I ask a quick question, I like
Speaker 2: the ones about money because anyway, well, now from.
Speaker 9: The peanut gallery over here how much of the local economy,
Speaker 9: and I'm talking in New York State, New York City, Connecticut,
Speaker 9: New Jersey depend on Wall Street for tax revenue and
Speaker 9: et cetera, and so forth.
Speaker 8: Well, Wall Street is responsible for seventeen point seven percent
Speaker 8: of all economic activity in the city.
Speaker 3: Really, see were important.
Speaker 8: And Wall Street also accounted for about nineteen percent of
Speaker 8: New York State's tax revenue between twenty three and twenty four,
Speaker 8: twenty twenty three and twenty twenty four. And the estimates
Speaker 8: we got today are that for twenty twenty four bonuses
Speaker 8: they'll generate about six hundred million more in state income tax.
Speaker 8: And obviously this is very important, particularly as New York
Speaker 8: City is sort of struggling somewhat with potential budget gaps
Speaker 8: created by cuts to federal funding. And New York City,
Speaker 8: you know that relies heavily on federal funding for various
Speaker 8: programs like Medicaid and the Essential Plan, so it does
Speaker 8: have an importance.
Speaker 6: Here here's another great data point in the story. New
Speaker 6: York Cities sheriff securities industry jobs naturally has declined to
Speaker 6: eighteen percent from about thirty three percent and nineteen ninety
Speaker 6: as financial firms move jobs to other regions.
Speaker 5: To drive down costs Slarida.
Speaker 6: Yeah, and it's like Goldman Sacks has got to get
Speaker 6: a big place in Salt Lake. Yeah, salt Lake. I
Speaker 6: mean they're all over there, just lower Clow.
Speaker 9: You don't have to be here necessarily when you can
Speaker 9: go to a place with good weather.
Speaker 6: Right, Deutsche Bank has a big, big place down in
Speaker 6: Jacksonville for example. You know, so you don't have to
Speaker 6: send these jobs off to India. You can just put
Speaker 6: them to the Midwest or the South or somewhere else,
Speaker 6: right me on that, Yeah, so interesting.
Speaker 2: Sally, Thanks love, We really appreciate it's a mustery guys.
Speaker 2: It's always really fun to dissect those stories. Sally Bank
Speaker 2: Well joining us on that Bloomberg US Finance team leader.
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Speaker 6: Andrew sibnow joints us here. He's the CEO of International Paper.
Speaker 6: IP is the ticker. Put it into your Bloomberg terminally
Speaker 6: joints us here in our Bloomberg Interactives studios. Fact that
Speaker 6: you're in our studio makes me believe that you had
Speaker 6: an investor day we did yesterday.
Speaker 10: Yeah, we had an investor d yesterday.
Speaker 6: Green What was the theme of the investor day today
Speaker 6: that you had yesterday?
Speaker 11: Transformation? Okay, it's really about the transformation. I heard in
Speaker 11: the opening talking about international paper. Of course it's in
Speaker 11: our name, and so people think global paper. And the
Speaker 11: reality is is we're a packaging company now, so almost
Speaker 11: one hundred percent sustainable packaging.
Speaker 10: With the acquisition of.
Speaker 11: DA Smith North America and Europe, we're number one in
Speaker 11: both places, and we're all focused on the customer and
Speaker 11: their packaging needs. You mentioned Chewy before, great customer for
Speaker 11: us and a wonderful opportunity to build their branding to
Speaker 11: help them be successful. That's what we're all about, is
Speaker 11: transforming into a packaging company.
Speaker 2: So something that definitely came up is value over volume.
Speaker 2: You want to get the most out of what you're
Speaker 2: doing rather than just the numbers. Ups is doing something
Speaker 2: very similar and the short term, there's a lot of
Speaker 2: angst and pain kind of around that before you get
Speaker 2: to that volume.
Speaker 5: After that value growth talk me through the cycle.
Speaker 11: Yeah, So if you think about we were our own
Speaker 11: worst enemy. So for years and years and years, we
Speaker 11: would chase volume at the most inopportunity time. And so
Speaker 11: what we've effectively had to do is go back to
Speaker 11: the marketplace and say we need to be paid for
Speaker 11: the value.
Speaker 10: That we're bringing. And that's what we do. We come
Speaker 10: into the marketplace.
Speaker 11: We're trying to help you get your goods to the
Speaker 11: place do you want them to be, whether it's fast
Speaker 11: moving consumer goods or it's industrial goods, that's what we're.
Speaker 10: Trying to help.
Speaker 11: But we've got to make sure that we're taking care
Speaker 11: of all of our constituents, and frankly, we weren't, and
Speaker 11: so we've got to get that value proposition right. I
Speaker 11: think we've made that switch over the last couple of years.
Speaker 11: We're seeing that start to play out appropriately and we're
Speaker 11: getting paid for the value that we bring.
Speaker 6: You're building a state of the art box plant in Waterloo, Iowa,
Speaker 6: So talk about onshoing. That's big time. Two hundred and
Speaker 6: sixty million dollars. Talk to us about that investment. What
Speaker 6: are you trying to do there?
Speaker 11: So what a lot of people don't understand about the
Speaker 11: packaging business. Certainly the paper based packaging business is all
Speaker 11: of the business has done within two hundred miles a
Speaker 11: two hundred mile radius of a plant. And because you
Speaker 11: can't air as expensive as ship, and so you've got
Speaker 11: to be close.
Speaker 10: So we want to be close to our best customers.
Speaker 11: That's protein Alley, So that area there's protein out, Protein Alley.
Speaker 10: Really think of the beef and the chicken before and
Speaker 10: so if you.
Speaker 11: Think about kind of kind of where protein happens in
Speaker 11: the United States from if you think of the South
Speaker 11: all the way through the Midwest through there. We want
Speaker 11: to be close to our customers. We have a great
Speaker 11: customer relationships. We need a modern facility. We're going to
Speaker 11: have the I think it's going to be the largest
Speaker 11: facility in the US that does paper based packaging. And
Speaker 11: we want to make sure because we're shipping in from
Speaker 11: other parts of the country now service those customers very ineffective,
Speaker 11: very inefficient.
Speaker 10: We want to be local, we want to be close.
Speaker 10: We want to drive customer service and innovation as close
Speaker 10: to the customer.
Speaker 3: As we can.
Speaker 2: International is in your name, So what how are you
Speaker 2: affected by potential tariffs? And everyone sort of every country
Speaker 2: shift to nationalism and whenever that way that is energy nationalism,
Speaker 2: goods nationalism, supply to nationalism.
Speaker 5: Where do you play and that has affect you?
Speaker 10: Yeah, so we are.
Speaker 11: We're definitely international company, principally North America and Europe.
Speaker 10: We're about two thirds North America and a third Europe.
Speaker 11: We don't ship actually a lot cross borders, believe it
Speaker 11: or not, so that doesn't happen. So we're not being
Speaker 11: impacted directly by tariffs with crossboarder trade, but we're impacted
Speaker 11: by the economy, and so as tariffs impact the economy,
Speaker 11: that will have an impact of us. So we're watching
Speaker 11: what's going on and we see it in our numbers.
Speaker 11: We've seen the volatility in the last month or so,
Speaker 11: so we're keeping a close eye on that.
Speaker 10: But that's really how it impacts us.
Speaker 6: What are your customers saying about their outlook for the economy.
Speaker 6: I would think that you would have a finger on
Speaker 6: the pulse of that.
Speaker 11: Yeah, I think we do have a pretty good pulse.
Speaker 11: I think there's uncertainty, if we're fair about that. The
Speaker 11: last month or two or so, there's been some real uncertainty,
Speaker 11: and I think, well, nothing's really happened. Yet it's caused
Speaker 11: people to retrench a little bit and ask, hey, do
Speaker 11: I want to make that investment right now?
Speaker 10: Can I hold off on spending money right now? And
Speaker 10: let's see.
Speaker 11: Look, my belief is these things wash out over time,
Speaker 11: and we make investments for decades. We don't make investments
Speaker 11: for quarters or even years. And so we're thinking about
Speaker 11: investments for the long.
Speaker 2: Term in terms of say, hiring labor, how you're managing
Speaker 2: the business. Is it a retrenchman time, is it expansion?
Speaker 2: How would you define it.
Speaker 5: For you guys?
Speaker 10: Actually, interestingly, it's a little bit of both.
Speaker 3: Right.
Speaker 10: What I mean by that you have yeah, you can. Actually,
Speaker 10: so when you think about.
Speaker 11: That, you have certain parts of your business that aren't
Speaker 11: as strong or aren't as healthy, and you have other
Speaker 11: parts that are very healthy. So, as an example, protein
Speaker 11: alley very healthy for us. Let's make investments in water,
Speaker 11: rely on it. Let's move the the let's move people
Speaker 11: in this investment. There things that are weaker, things that
Speaker 11: are struggling or markets you're not as strong in, you
Speaker 11: have to retrench.
Speaker 10: So you have to do blame as those.
Speaker 11: Well you've got you've got softness in parts of the
Speaker 11: economy kind of broad base. You've got to be concerned
Speaker 11: about things that are going to shrink over time and things,
Speaker 11: you know, things like e commerce that are strong, things
Speaker 11: like protein and fresh vegetables, those are strong.
Speaker 10: You want to move towards those things.
Speaker 11: And uh and so you know, we want to move
Speaker 11: our investment towards the parts of the economy that we
Speaker 11: think are going to expand over time, location and industry
Speaker 11: and and really you know, grow on those strengths.
Speaker 6: So to the extent, if I think about your company,
Speaker 6: I think about a GDP top line growth story, is
Speaker 6: there anything different than that?
Speaker 10: I mean, that's it?
Speaker 3: And is it just so?
Speaker 6: Is your business really about managing the cost of managing margin?
Speaker 10: No, it's not.
Speaker 11: Ok Yes, you always have to manage your cost, right,
Speaker 11: But the key thing is you want to align yourself
Speaker 11: with where growth is. Okay, I think that's the biggest thing.
Speaker 11: Bottom line though, is we're going to generally follow the economy.
Speaker 11: So yesterday in our in our investor day, we talked
Speaker 11: about a volume growth. It's kind of one to two
Speaker 11: percent that follows, you know, underlying volume growth and pricing
Speaker 11: power over time. It's also about one to two percent
Speaker 11: so we think we're three to four percent grower over
Speaker 11: time the core market. And then that question is can
Speaker 11: you align with better growing industries and can you win markets?
Speaker 10: Here, Andrew, thank you.
Speaker 6: So much for joining us. Really appreciate you taking a
Speaker 6: few minutes of your time here today. Andrew Cilnaire, he's
Speaker 6: the CEO of International Paper. No surprise, the ticker symbols
Speaker 6: ip logging it to your Bloomberg terminal. He joins us
Speaker 6: here in a Bloomberg INTERACTI appropriate studio. They the Investor
Speaker 6: Day yesterday. The stocks up forty five percent over the
Speaker 6: trailing twelve months, so it's had some pretty solid performance.
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