WEBVTT - Bloomberg Surveillance TV: January 9th, 2026 0:00:00.080 --> 0:00:06.760 Bloomberg Audio Studios, Podcasts, radio news. 0:00:11.680 --> 0:00:15.480 This is the Bloomberg Surveillance Podcast. I'm Jonathan Ferrow, along 0:00:15.520 --> 0:00:18.720 with Lisa Bromwitz and Amrie Hordernt. Join us each day 0:00:18.760 --> 0:00:22.280 for insight from the best in markets, economics, and geopolitics 0:00:22.440 --> 0:00:24.920 from our global headquarters in New York City. We are 0:00:24.960 --> 0:00:27.720 live on Bloomberg Television weekday mornings from six to nine 0:00:27.720 --> 0:00:31.319 am Eastern. Subscribe to the podcast on Apple, Spotify or 0:00:31.320 --> 0:00:33.960 anywhere else you listen, and as always on the Bloomberg 0:00:34.040 --> 0:00:38.480 Terminal and the Bloomberg Business app. Nearly twenty energy executives 0:00:38.520 --> 0:00:41.680 meeting with President Donald Trump today to discuss rebuilding Venezuela's 0:00:41.720 --> 0:00:45.800 oil infrastructure. The lineup includes representatives from Chevron, Exon, and 0:00:45.880 --> 0:00:49.159 Conoco Phillips, among others. Also attending the meeting will be 0:00:49.200 --> 0:00:51.919 the US Interist Secretary tug Bergham, who joined us now. 0:00:51.960 --> 0:00:53.960 Mister Secretary. Welcome to the program sour and a happy 0:00:54.000 --> 0:00:58.520 new year. Just frame for us. The expectations for today's conversation. 0:01:00.000 --> 0:01:03.880 Expectation todays have a great conversation about the opportunity to 0:01:03.880 --> 0:01:07.200 continue President Trump's agenda, which is the agenda course has 0:01:07.240 --> 0:01:10.080 been always about the safety and security, national security of 0:01:10.080 --> 0:01:13.840 our country. That begins with you can't have national security 0:01:13.880 --> 0:01:17.440 without border security. You can't have national security without energy security. 0:01:17.760 --> 0:01:19.720 So that's going to be on the table, and of 0:01:19.720 --> 0:01:25.559 course the prosperity of America that's based on energy as well, 0:01:25.600 --> 0:01:30.080 because if without a plentiful, abundant, reliable, secure energy, you're 0:01:30.080 --> 0:01:31.760 going to have the inflation like we saw in the 0:01:31.760 --> 0:01:35.280 previous administration. President Trump is turning that around. So this 0:01:35.319 --> 0:01:38.080 is really at the core, it's a discussion about peace 0:01:38.080 --> 0:01:41.640 in the world and prosperity at home, and what an opportunity, 0:01:41.680 --> 0:01:47.000 economic opportunity to restore normal relations with Venezuela and for companies, 0:01:47.040 --> 0:01:50.840 including many of these that had operations in Venezuela for 0:01:51.040 --> 0:01:54.120 decades ago when Venezuela was a big economic partner in 0:01:54.120 --> 0:01:57.160 the United States before it's collapse, get a chance to 0:01:57.160 --> 0:01:59.840 return to that. So looking forward to it, it's exciting 0:02:00.240 --> 0:02:02.520 and lots of interest in coming to the meeting today. 0:02:02.520 --> 0:02:05.600 They're not enough seats in the room in terms of 0:02:05.680 --> 0:02:07.840 executives that wanted to join in the meeting today with 0:02:08.680 --> 0:02:09.400 President Trump. 0:02:09.760 --> 0:02:12.120 Secretary Bergham, I know that you and Secretary Writer have 0:02:12.240 --> 0:02:14.480 that outreach with the oil and industry right now. But 0:02:14.560 --> 0:02:16.600 what I'm hearing is that they are certainly lining up 0:02:16.639 --> 0:02:19.440 for meeting with the president, but not necessarily lining up 0:02:19.480 --> 0:02:22.120 to go back into Venezuela. What are they telling you. 0:02:23.000 --> 0:02:26.560 Well, I think the very strong interest. 0:02:27.120 --> 0:02:29.880 How can you not be interested in the world's largest 0:02:30.080 --> 0:02:34.400 oil reserves in the same hemisphere. So I think there's questions, 0:02:34.440 --> 0:02:38.840 of course, questions about security, questions about what the long 0:02:38.919 --> 0:02:41.160 term profile is going to be. But the interest level 0:02:41.240 --> 0:02:45.639 is through the roof across from the small wild catador 0:02:46.080 --> 0:02:52.280 to upstream, midstream, downstream, the majors. There's so much interest 0:02:52.320 --> 0:02:55.079 to this, and not just an energy people are reaching 0:02:55.080 --> 0:02:59.040 out because the mining industry collapsed in Venezuela. Their entire 0:02:59.160 --> 0:03:03.920 electrical generation industry has collapsed. The opportunity with sanctions being 0:03:03.960 --> 0:03:06.920 selectively listed for the US companies to sell into that 0:03:07.000 --> 0:03:10.160 market as it rebuilds is very interesting. And of course 0:03:10.200 --> 0:03:13.080 we've got a number of energy companies that have spent 0:03:13.160 --> 0:03:17.480 their careers going into some of the world's dangerous places 0:03:17.520 --> 0:03:20.600 to develop oil resources, and those folks, some of those 0:03:20.600 --> 0:03:21.919 will be in the room today as well. 0:03:22.080 --> 0:03:24.120 But it's going to take tens of billions of dollars 0:03:24.120 --> 0:03:27.519 them to allocate capital to go back into Venezuela. Does 0:03:27.520 --> 0:03:30.360 the math make sense when WTI is trading blow sixty 0:03:30.400 --> 0:03:31.120 dollars a arrow. 0:03:32.639 --> 0:03:34.359 Well, the market is going to decide. 0:03:34.360 --> 0:03:36.760 But I know that one thing that happened this week, 0:03:37.080 --> 0:03:40.000 people keep saying, oh, below sixty, there's going to. 0:03:39.920 --> 0:03:40.600 Be no interest. 0:03:41.080 --> 0:03:46.080 Through the Department of Interior, we're holding our as required 0:03:46.240 --> 0:03:49.800 legal lease sales, the one that we held in New 0:03:49.840 --> 0:03:54.120 Mexico earlier this week. On January sixth, three hundred and 0:03:54.120 --> 0:03:57.920 twenty seven million dollars of royalty payments enter record, the 0:03:58.000 --> 0:04:01.720 highest since these leases have begun under the new format 0:04:01.760 --> 0:04:04.440 over almost forty years. Thirty nine years ago in nineteen 0:04:04.480 --> 0:04:07.040 eighty seven was when the new rules came in place. 0:04:07.840 --> 0:04:11.600 It was two hundred nineteen thousand dollars per acre on 0:04:11.600 --> 0:04:13.520 one of the leases in Permian. So I would say 0:04:13.560 --> 0:04:18.000 the interest US and in Venezuela very strong in this 0:04:18.080 --> 0:04:20.760 industry because they see they look ahead and they see 0:04:20.800 --> 0:04:23.119 the demand for energy going up and of course driven 0:04:23.160 --> 0:04:26.840 by economic growth. Twenty twenty six could be a banner year, 0:04:26.839 --> 0:04:29.760 but also the energy required for US to win the 0:04:29.760 --> 0:04:32.880 AI arms race. So there's a strong, strong interest in 0:04:32.920 --> 0:04:35.720 this investing in this western hemisphere. 0:04:35.760 --> 0:04:38.800 Does the administration have a goal of getting oil to 0:04:38.839 --> 0:04:40.000 fifty dollars a barrel? 0:04:41.240 --> 0:04:43.320 Well, I think what President Trump wants is he wants 0:04:43.560 --> 0:04:45.760 to break the back of inflation. And he knows that 0:04:46.520 --> 0:04:48.720 there's a component of energy in the food you eat, 0:04:48.800 --> 0:04:51.680 the clothes you wear, the car you drive. If you 0:04:51.680 --> 0:04:53.920 can get energy prices down, that's the best way to 0:04:53.960 --> 0:04:58.080 lick inflation. And affordability is something that matters. President Trump 0:04:58.640 --> 0:05:01.320 has stopped the runaway in flame the prior administration. 0:05:01.400 --> 0:05:02.440 He wants to keep it going. 0:05:03.160 --> 0:05:05.800 When we talk about how do we get prices down, 0:05:05.880 --> 0:05:08.160 part of it is we've cut so much red tape 0:05:08.160 --> 0:05:08.839 in the last year. 0:05:08.880 --> 0:05:10.279 We've lowered the break even point. 0:05:10.320 --> 0:05:13.840 That plus the technological innovation from this industry. The oil 0:05:13.839 --> 0:05:17.800 and gas industry is not what it was fifty years ago. 0:05:17.920 --> 0:05:20.360 This is a super high tech industry. You take a 0:05:20.400 --> 0:05:22.240 look at my home state in North Dakota and you 0:05:22.240 --> 0:05:25.359 look at the capability and the productivity increases of the 0:05:25.360 --> 0:05:29.120 people developing there. It's just been amazing the gains that 0:05:29.160 --> 0:05:33.440 they continue to make. And again, the shale revolution tied 0:05:33.520 --> 0:05:36.320 with deregulation, cutting some of the red tape that was 0:05:36.360 --> 0:05:39.359 put in place. We know that their break even point 0:05:39.440 --> 0:05:41.760 is getting lower and lower, and that's why it makes 0:05:41.760 --> 0:05:43.560 it the great industry. And that's why we've got the 0:05:43.600 --> 0:05:46.960 greatest industry in the country in the world because in 0:05:47.000 --> 0:05:50.440 the US we've got competition. We don't have a nationalized 0:05:50.440 --> 0:05:54.040 oil industry that has become a monopoly and lethargic. We've 0:05:54.040 --> 0:05:56.400 got great companies that get out and compete. We're going 0:05:56.440 --> 0:05:59.080 to be with some of those great companies today and 0:05:59.400 --> 0:06:01.640 excited to hear their ideas about how to go in 0:06:01.680 --> 0:06:05.720 and break free the incredible opportunity that is for both 0:06:05.760 --> 0:06:09.040 the US and Venezuela in developing this resource. 0:06:09.160 --> 0:06:09.960 Mister Secretary, a. 0:06:09.960 --> 0:06:12.320 Lot to unpact there, including about the shale patch. I 0:06:12.360 --> 0:06:15.839 do want to stay on this question of US backing 0:06:16.040 --> 0:06:19.919 of some of these US companies going into Venezuela and 0:06:19.960 --> 0:06:22.520 building out the infrastructure there. President Trump has talked about 0:06:22.560 --> 0:06:25.040 potentially a one hundred billion dollar investment potentially over the 0:06:25.120 --> 0:06:28.240 next eighteen months. Where would the funds come from in 0:06:28.279 --> 0:06:31.680 the United States for some of these energy companies to 0:06:31.680 --> 0:06:33.560 help back those investments. 0:06:34.839 --> 0:06:38.120 Well, the discussions right now have been that the capital 0:06:38.160 --> 0:06:40.400 is going to come from the capital markets and come 0:06:40.400 --> 0:06:45.240 from the energy companies. I don't see that these companies 0:06:45.240 --> 0:06:47.880 are going to need a support from the US other 0:06:47.920 --> 0:06:50.440 than things around security. I mean, if we can provide 0:06:50.480 --> 0:06:54.320 a secure, stable environment. The resource here is so significant 0:06:54.360 --> 0:06:57.320 and so large that it's going to be attractive for 0:06:57.360 --> 0:07:00.320 people to go in and develop that, and particularly as 0:07:00.360 --> 0:07:02.080 the US maintains the embargo. 0:07:02.160 --> 0:07:02.720 This is key. 0:07:03.320 --> 0:07:05.960 You reported on it just now, President Trump serious, I 0:07:05.960 --> 0:07:09.120 mean sanctions under President Trump actually mean a sanction. The 0:07:09.160 --> 0:07:13.160 failed sanctions under the Biden administration just turned Venezuela and 0:07:13.240 --> 0:07:16.880 other places into the discount gas stations for China and 0:07:16.920 --> 0:07:19.920 other countries. And President Trump is We're going to make 0:07:19.960 --> 0:07:23.600 sure that this is secure and we're controlling the flow, 0:07:23.720 --> 0:07:28.400 both of energy going in and energy coming out. Venezuela's 0:07:28.400 --> 0:07:32.600 heavy crude requires diluting. It requires a light crude like 0:07:32.640 --> 0:07:35.200 we've got in the United States. To go down there, 0:07:35.640 --> 0:07:38.160 one barrel's got to go into Venezuela for every five 0:07:38.160 --> 0:07:41.600 barrel that comes out. Russia controlled that market. That market's 0:07:41.640 --> 0:07:45.200 coming back to the US. And the synergy between our 0:07:46.240 --> 0:07:49.040 refinery sector in the United States, which was built around 0:07:49.120 --> 0:07:52.360 Venezuelan oil. Getting back to that's great news for refiners, 0:07:52.400 --> 0:07:55.920 great news for gas prices for Americans, great news for 0:07:56.000 --> 0:08:00.720 the opportunity to sell modern equipment, to modernize this industry. 0:08:00.800 --> 0:08:03.640 So lots of news for beyond even. 0:08:03.400 --> 0:08:07.000 The oil majors, Lots of great news economically as we 0:08:07.080 --> 0:08:10.720 open up this trading and normalized trading relationship with Venezuela. 0:08:10.800 --> 0:08:13.440 Yeah, certainly Valero as a refiner has seen the benefits 0:08:13.480 --> 0:08:16.520 of this. Mister Secretary, you talk about security guarantees, and 0:08:16.720 --> 0:08:19.360 if the safety is there, the oil majors will go 0:08:19.480 --> 0:08:22.960 in with frankly, capital markets behind them. What kind of 0:08:23.000 --> 0:08:24.680 security guarantees are they asking for. 0:08:25.880 --> 0:08:27.880 Well, we'll find out some of that more today. But 0:08:27.960 --> 0:08:30.320 I think what they really want to understand is, you know, 0:08:30.480 --> 0:08:35.040 how serious is the US in maintaining the embargo, How 0:08:35.120 --> 0:08:40.120 serious is the US in maintaining stability in Venezuela. And 0:08:40.200 --> 0:08:43.040 I think the actions that they're seeing this week speak 0:08:43.080 --> 0:08:46.480 loudly to that, the actions of President Trump enforcing the 0:08:46.520 --> 0:08:50.000 embargo and already the cooperation. I mean earlier this morning, 0:08:50.240 --> 0:08:53.439 President Trump just in the last half hour tweeted out 0:08:53.480 --> 0:08:58.880 that the Venezuelan interim government is releasing political prisoners. They're 0:08:58.960 --> 0:09:03.160 taking actions to demonstrate that they want to have a 0:09:03.200 --> 0:09:07.240 successful economic relationship with the United States of America. The 0:09:08.240 --> 0:09:11.080 interim governments committed that they're going to be buying equipment 0:09:11.200 --> 0:09:14.000 material from the US companies. I mean, these are all 0:09:14.000 --> 0:09:16.280 the signals that we're looking for that to keep us 0:09:16.320 --> 0:09:18.960 moving towards normalized relationships. 0:09:18.440 --> 0:09:22.320 Mister secretary, as you know, to establish stability in this region, 0:09:22.360 --> 0:09:26.240 it might require massive expense from the US government, which 0:09:26.320 --> 0:09:29.400 might require a lot of money from taxpayers. If these 0:09:29.440 --> 0:09:31.160 oil may just go in with the support of the 0:09:31.280 --> 0:09:33.880 US government, mister secretary, will the president want a slice 0:09:33.880 --> 0:09:35.679 of that revenue for the US government? 0:09:37.120 --> 0:09:40.120 Well, I think President Trump is always looking for good 0:09:40.160 --> 0:09:42.200 deals for the American people, but he also is a 0:09:42.200 --> 0:09:44.280 business person. He understands that we have to have the 0:09:44.360 --> 0:09:48.760 right economic conditions for companies to go in and deploy 0:09:48.840 --> 0:09:51.160 their own capital and solve these problems. So I think 0:09:51.200 --> 0:09:53.839 in the end, what we're going to see is we've 0:09:53.880 --> 0:09:57.360 got to We're so fortunate to have a president who 0:09:57.520 --> 0:10:01.120 has got the willingness and the courage and the understanding 0:10:01.160 --> 0:10:04.800 of how to use force, just like past presidents. I mean, 0:10:04.840 --> 0:10:07.480 we wouldn't have the Panama Canal without bold action by 0:10:07.520 --> 0:10:10.360 Theodore Roosevelt one hundred and twenty five years ago, and 0:10:10.480 --> 0:10:16.240 now under President Trump again taking a corollary of the 0:10:16.240 --> 0:10:18.600 Monroe doctrine, which is saying, Hey, if we've got criminal 0:10:18.679 --> 0:10:22.760 enterprises running countries and destroying countries in our hemisphere, that's 0:10:22.800 --> 0:10:23.840 bad for the neighborhood. 0:10:24.280 --> 0:10:26.760 Let's go in and clean it up and do that. 0:10:26.800 --> 0:10:29.080 But when it comes to rebuilding, I think again, what 0:10:29.080 --> 0:10:31.880 we've seen is that if we can create the right 0:10:31.960 --> 0:10:35.280 market conditions, we're not going to need taxpayer dollars to 0:10:35.280 --> 0:10:37.400 go do this. And who's going to benefit the taxpayers 0:10:37.400 --> 0:10:39.360 because you're going to see lower prices at the pump 0:10:39.920 --> 0:10:40.720 here in America. 0:10:40.960 --> 0:10:43.000 The reason I bring up this question says, because, as 0:10:43.080 --> 0:10:45.280 you know, there was some conversation about chips being sold 0:10:45.280 --> 0:10:48.080 into China and the government getting a share of the 0:10:48.080 --> 0:10:50.480 revenue associated with those chips, and I wonder if the 0:10:50.480 --> 0:10:52.160 same kind of thing applies here, because I think the 0:10:52.160 --> 0:10:54.760 executive's going to g into this meeting later trying to 0:10:54.760 --> 0:10:57.240 figure out what kind of meeting then coming into is 0:10:57.280 --> 0:11:01.720 it an opportunity to explore Venezuela themselves or alongside the 0:11:01.800 --> 0:11:04.200 US government, and what kind of agreement could be established 0:11:04.200 --> 0:11:05.040 further down the road. 0:11:06.240 --> 0:11:08.880 Well, I think initially it's going to be alongside the 0:11:08.960 --> 0:11:11.840 US government, because that has been stated publicly this week. 0:11:12.520 --> 0:11:15.920 The US intends to control the disposition of the oil 0:11:16.600 --> 0:11:20.400 coming out of Venezuela, and as I said earlier, it's 0:11:20.440 --> 0:11:25.320 going to control whatever material and supplies and in this case, 0:11:26.240 --> 0:11:29.360 the millions of barrels of deliument that need to go 0:11:29.440 --> 0:11:32.280 in to distract this heavy VENs and crude that is 0:11:32.320 --> 0:11:35.240 going to be controlled by the US during this period 0:11:35.559 --> 0:11:39.840 in cooperation with the interim government in Venezuela. So I 0:11:39.840 --> 0:11:42.600 think that they can hear more about that firsthand today, 0:11:42.600 --> 0:11:45.640 but it's going to match what they've heard publicly this week. 0:11:45.880 --> 0:11:47.679 And I know from talking to a number of these 0:11:47.720 --> 0:11:50.520 executives this week. Chris Wright has talked to a number 0:11:50.520 --> 0:11:52.840 of these executives week. There is a lot of interest 0:11:53.440 --> 0:11:57.520 in getting back into the world's largest proven reserves right 0:11:57.559 --> 0:12:02.080 here in our hemisphere. And again that's a great benefit 0:12:02.679 --> 0:12:05.720 to the entire Western hemisphere, but absolutely it's a benefit 0:12:05.760 --> 0:12:06.880 to the American citizens. 0:12:07.080 --> 0:12:10.559 Stay with us. More Bloomberg surveillance coming up after this 0:12:19.840 --> 0:12:23.840 Stephen major of tradition, writing economic data relative to expectations 0:12:23.840 --> 0:12:27.040 has softened, there is fundamental support to keep luring the 0:12:27.040 --> 0:12:29.960 Fed funds rate to a level below weather forwards are 0:12:29.960 --> 0:12:32.839 currently implying. Steven joins us now for more. Stephen, welcome 0:12:32.880 --> 0:12:34.240 to the program. So it's always good to see you 0:12:34.240 --> 0:12:36.959 when congratulations on the new seat. Let's talk about the 0:12:37.040 --> 0:12:39.360 data this morning. How relevant is the jobs report at 0:12:39.400 --> 0:12:41.559 eight thirty with your opinion in mind? 0:12:43.160 --> 0:12:45.720 Well, I think your setup said it all. John. 0:12:46.559 --> 0:12:50.080 There's other stuff going on, isn't there. So there's the 0:12:50.120 --> 0:12:54.040 fiscal news perhaps coming through later, and everything else that's 0:12:54.080 --> 0:12:57.760 happening globally. So it's just one it's just one data point, 0:12:57.800 --> 0:13:01.160 and I think you've covered it pretty well regarding this one. 0:13:01.559 --> 0:13:05.560 What really matters is the evidence about what all this 0:13:05.640 --> 0:13:08.920 does for wages, because I think there's been a clear 0:13:09.000 --> 0:13:13.079 trend these last few months where the path of wage 0:13:13.080 --> 0:13:16.800 growth is consistent with something nearer to the two percent 0:13:16.840 --> 0:13:19.760 inflation target. So what you want today is something that 0:13:19.840 --> 0:13:23.440 doesn't disrupt that. Really. Of course, it's complicated because you've 0:13:23.440 --> 0:13:28.040 got the labor pool being affected by migration factors, and 0:13:28.679 --> 0:13:31.320 you've got some softening of demand for labor that's been 0:13:31.320 --> 0:13:35.760 evident in previous months. Overall, it's all very well looking 0:13:35.800 --> 0:13:39.559 at the unemployment rate and the payrolls number, but it's 0:13:39.600 --> 0:13:42.319 the bigger picture how this fits into the bigger picture 0:13:42.320 --> 0:13:43.080 that matters. 0:13:42.800 --> 0:13:43.160 Well, Steve. 0:13:43.160 --> 0:13:44.920 The bigger picture, I think for many is that we've 0:13:44.920 --> 0:13:48.160 seen a notable increase in slack, captured by several data points. 0:13:48.160 --> 0:13:49.960 Your point of wages, you can point to the unemployment 0:13:50.000 --> 0:13:52.200 rate rising more recently as well. There is a take 0:13:52.240 --> 0:13:53.920 on Wall Street at the moment, Steve, and I wonder 0:13:53.920 --> 0:13:57.000 if you push back. If things stabilized, particularly with things 0:13:57.040 --> 0:13:59.360 like the unemployment rate, it closes the door on interest 0:13:59.400 --> 0:14:01.480 rate cuts see things differently for the year ahead. 0:14:03.480 --> 0:14:08.080 I don't know about that, John, because so first of all, 0:14:08.160 --> 0:14:11.240 given all the things that have been happening, and you 0:14:11.360 --> 0:14:16.000 listed the surprises the shocks that we've been experiencing these 0:14:16.040 --> 0:14:18.400 last few weeks, Given all of that, would you have 0:14:18.559 --> 0:14:20.960 believed that the ten year treasury would have been in 0:14:21.000 --> 0:14:24.000 a range of six basis points. I'm told by my 0:14:24.080 --> 0:14:28.240 colleagues downstairs six basis points this year, six six whole 0:14:28.320 --> 0:14:31.960 basis points. In fact, it's been in a tight range 0:14:31.960 --> 0:14:35.760 for quite some time now, even before the start of 0:14:35.760 --> 0:14:39.440 this year. So you know, I think that the bomb 0:14:39.480 --> 0:14:45.320 markets holding in pretty well. The If you've got at 0:14:45.720 --> 0:14:49.280 a strong data release today, something that indicated the economy 0:14:49.360 --> 0:14:52.479 was much stronger than we expected, I think the cynics 0:14:52.680 --> 0:14:57.400 out there might question whether the data was correct in 0:14:57.440 --> 0:14:59.280 the same way that you could say if it was 0:14:59.320 --> 0:15:03.840 exceedingly I think it's the broader trend that matters. You've 0:15:03.840 --> 0:15:06.680 got to smooth these numbers out over a period of time. 0:15:06.760 --> 0:15:09.120 I think the trend in the path is quite clear 0:15:09.160 --> 0:15:13.360 towards lower rates, and therefore there's an asymmetric bias in place. 0:15:13.440 --> 0:15:16.280 If you get a shock that says that the rates 0:15:16.320 --> 0:15:18.480 aren't going down, I don't think it's going to bother 0:15:18.560 --> 0:15:23.080 the market that much. But we're skewed towards opening the 0:15:23.560 --> 0:15:26.800 floor for rates and seeing how far they can go down. 0:15:27.440 --> 0:15:30.400 I don't see that many people talking about rate hikes anymore. 0:15:30.880 --> 0:15:32.880 It's only a few months ago that that was being 0:15:33.360 --> 0:15:34.880 mentioned on shows like this. 0:15:35.280 --> 0:15:37.200 Well, it seems like Stephen, this is no longer a 0:15:37.280 --> 0:15:39.600 data dependent market, as you just laid out, at least 0:15:39.640 --> 0:15:41.800 on a data point dependent market, just because people have 0:15:41.840 --> 0:15:45.000 so many questions around the data. This is potentially a 0:15:45.120 --> 0:15:48.400 market though that could be roiled by events, and you 0:15:48.520 --> 0:15:51.280 mentioned some of them, including the IEPA ruling that could 0:15:51.320 --> 0:15:54.120 come as soon as today. What kind of effect would 0:15:54.160 --> 0:15:57.920 it have on the bond market if the tariffs passed 0:15:58.040 --> 0:16:01.960 under the AEPA rule the United States were to be repealed, 0:16:02.160 --> 0:16:03.880 pushed back in any kind of way. 0:16:05.600 --> 0:16:07.960 Okay, that kind of scenario is going to blow us 0:16:07.960 --> 0:16:12.040 out of that six basis point range. And the question 0:16:12.120 --> 0:16:15.360 is whether we would close still outside of the range, 0:16:15.440 --> 0:16:18.640 or whether we'd still be outside of the range next week. Ultimately, 0:16:18.680 --> 0:16:22.440 we're looking at whether there is a path I'm using 0:16:22.440 --> 0:16:29.040 that word path again towards a fiscal number that is manageable. 0:16:29.280 --> 0:16:33.240 I mean, is it possible that the deficit is within 0:16:33.840 --> 0:16:36.520 a reasonable level. Now, of course, there could be some 0:16:36.680 --> 0:16:41.480 disruption to the to the president's plans, and it's clear 0:16:41.520 --> 0:16:45.200 there's a risk here. But you know, ultimately the bomb 0:16:45.200 --> 0:16:49.320 market's going to clear. The auctions are going to get done. 0:16:50.160 --> 0:16:53.080 That there's a question about at what price and at 0:16:53.120 --> 0:16:55.640 what cost? Because the bomb market is going to get done, 0:16:55.680 --> 0:16:57.560 I can assure you of that. The question is whether 0:16:57.600 --> 0:16:59.600 it's going to come at the expense of some other 0:16:59.680 --> 0:17:00.680 asset class. 0:17:00.760 --> 0:17:03.480 Yeah, but that's really the issue, right, See. 0:17:03.280 --> 0:17:05.760 When you keep talking about the six bass point gap, 0:17:05.760 --> 0:17:06.960 and you're right. I mean, even when you look at 0:17:07.000 --> 0:17:11.040 the move the forward imply volatility index in tenure treasury yields, 0:17:11.080 --> 0:17:16.119 it's incredibly low. You aren't necessarily seeing much expectation for disruption. 0:17:16.960 --> 0:17:20.120 How do you know that this is resiliency and our complacency? 0:17:22.080 --> 0:17:26.240 Yeah, look, that's a fair fair point too. Maybe we're 0:17:26.280 --> 0:17:32.400 all just so beaten up and already exhausted with the shock. 0:17:32.560 --> 0:17:35.359 I'll I'll give you an anecdote on this. You're putting 0:17:35.359 --> 0:17:38.240 together my most recent piece. Like many analysts, you tend 0:17:38.320 --> 0:17:40.000 to go through it at the weekend. So I'm sitting 0:17:40.000 --> 0:17:42.720 there on a Sunday looking at the text and thinking, 0:17:42.760 --> 0:17:45.960 oh no. With the newsflow last weekend over Venezuela, I 0:17:46.000 --> 0:17:48.919 was thinking everything I've written here is irrelevant. But I 0:17:49.000 --> 0:17:51.120 came in on Monday morning and I was still able. 0:17:50.960 --> 0:17:51.560 To publish it. 0:17:52.920 --> 0:17:53.920 How is that possible? 0:17:54.440 --> 0:17:54.920 It just. 0:17:56.400 --> 0:17:58.760 How could I have been so wrong with my judgment 0:17:58.760 --> 0:18:01.440 on the Sunday compared to the Monday. And I think 0:18:01.480 --> 0:18:04.840 that most of us are experiencing the same thing. Anyone 0:18:04.840 --> 0:18:08.879 who's involved in this market at the moment. So it 0:18:08.920 --> 0:18:11.560 could be that we're complacent, but it could also be 0:18:11.960 --> 0:18:16.119 with the fact that we're resigning ourselves to the reality 0:18:16.160 --> 0:18:18.359 that rates aren't going up and they're probably going to 0:18:18.400 --> 0:18:20.720 go down. So, as I said, I think the data 0:18:20.800 --> 0:18:24.720 is consistent with dates going down towards where the forwards imply, 0:18:24.920 --> 0:18:29.240 and maybe less, and with some of the changes coming 0:18:29.240 --> 0:18:32.040 at the FED, I would suggest that the balance is 0:18:32.080 --> 0:18:34.240 tipping to rates going even lower. 0:18:34.720 --> 0:18:35.920 A lot has already happened too. 0:18:36.200 --> 0:18:37.280 A lot has already happened. 0:18:37.320 --> 0:18:40.840 From Sunday, Stephen the President this week has really taken 0:18:40.840 --> 0:18:45.439 a focus on the housing market. Even if continues to 0:18:45.480 --> 0:18:47.760 cut interest rates, Is that going to help the US 0:18:47.840 --> 0:18:48.440 housing market? 0:18:48.440 --> 0:18:49.760 Will that help mortgage rates? 0:18:51.320 --> 0:18:55.000 Look so, so, what proportion is that money of the 0:18:55.040 --> 0:18:56.320 total stock of mortgages? 0:18:56.720 --> 0:18:57.800 It's not that high, is it. 0:18:58.720 --> 0:19:00.800 I haven't run all of the all the numbers yet, 0:19:00.840 --> 0:19:03.560 but we're talking about a few hundred billion in a 0:19:03.680 --> 0:19:07.720 multi trillion market, So I don't know whether how much 0:19:07.720 --> 0:19:12.640 of a game changer is Ultimately getting the ten year 0:19:12.800 --> 0:19:17.640 rate down towards three rather than four would be one 0:19:17.640 --> 0:19:19.520 of the best things that could be done. For the 0:19:19.560 --> 0:19:24.240 housing market right now. So I guess the intervention that's 0:19:24.359 --> 0:19:27.480 just happened is going to help, but I haven't run 0:19:27.520 --> 0:19:29.960 the numbers yet. I don't know whether it's going to 0:19:29.640 --> 0:19:31.040 have a major impact. 0:19:31.600 --> 0:19:34.119 I actually mean, if the FED cuts interest rates, is 0:19:34.160 --> 0:19:36.920 that really going to meaningfully help the mortgage market? 0:19:37.119 --> 0:19:39.720 Ah, thank you, thank you. I thought you were talking 0:19:39.840 --> 0:19:45.160 referring to the intervention for Freddie and Fanny. Now, if 0:19:45.200 --> 0:19:47.639 the short rate goes down another one hundred basis points, 0:19:47.680 --> 0:19:49.679 the whole term structure is going to come down. The 0:19:49.720 --> 0:19:53.800 ten year on current form isn't falling as much, but 0:19:53.840 --> 0:19:55.680 it doesn't mean to say it won't still go down. 0:19:56.040 --> 0:19:58.800 So depends what the delta is between the rate cuts 0:19:59.040 --> 0:20:01.400 and the ten year I would I would suggest if 0:20:01.760 --> 0:20:05.520 policy rates go towards two percent or even less than 0:20:05.600 --> 0:20:07.600 you could imagine that tens are going to have a 0:20:07.640 --> 0:20:10.000 three handle and probably low threes. 0:20:10.920 --> 0:20:13.720 Fun of question, Steve, what's more likely year end the 0:20:13.720 --> 0:20:16.120 the tenure yield? Is it three percent? Or west Ham 0:20:16.160 --> 0:20:17.320 is playing Premier League football? 0:20:21.040 --> 0:20:26.760 That's a possible one to answer. Look, John, the based 0:20:26.800 --> 0:20:29.040 on the fact that west Ham was seven points adrift, 0:20:30.320 --> 0:20:34.119 is pretty obvious. Where the probabilities lie there, but you 0:20:34.240 --> 0:20:37.360 think things can change. It looks like a close call 0:20:37.440 --> 0:20:40.560 between the two and I'm I'm not going to give 0:20:40.560 --> 0:20:42.119 you an answer if you don't mind. 0:20:42.080 --> 0:20:45.560 Stay with us. More Bloomberg surveillance coming up after this 0:20:54.600 --> 0:20:57.280 premiss of JP Morgan looking for a cleaner read writing 0:20:57.320 --> 0:21:01.160 the Bloomberg consensus of seventy thousand clid and unemployment should 0:21:01.160 --> 0:21:04.080 be the goldilocks market pricing of low hiring, low firing 0:21:04.440 --> 0:21:06.440 can continue. Pray it joins us now for more prayer, 0:21:06.440 --> 0:21:07.359 Good monic morning. 0:21:07.400 --> 0:21:08.879 Can the right cuts continue? 0:21:09.280 --> 0:21:09.520 Yes? 0:21:09.600 --> 0:21:12.440 I mean if we get the Bloomber consensus, does the 0:21:12.480 --> 0:21:17.359 FED cut in January? Probably not unless we get some big, 0:21:18.040 --> 0:21:21.240 much lower inflation. But look at the market pricing. Markets 0:21:21.280 --> 0:21:23.800 not pricing for the FED to likely cut in in Jam. 0:21:23.920 --> 0:21:26.240 The market has the two cuts priced and for the 0:21:26.280 --> 0:21:28.560