WEBVTT - Iraq Oil at Risk If Mediterranean Refiners Lose Access, Lee Says 0:00:05.800 --> 0:00:08.360 Welcome to the Bloomberg p m L Podcast. I'm Pim 0:00:08.400 --> 0:00:11.200 Fox along with my co host Lisa A. Bramowitz. Each 0:00:11.240 --> 0:00:14.440 day we bring you the most important, noteworthy, and useful 0:00:14.480 --> 0:00:17.079 interviews for you and your money, whether you're at the 0:00:17.120 --> 0:00:20.360 grocery store or the trading floor. Find the Bloomberg p 0:00:20.520 --> 0:00:32.080 m L Podcast on Apple Podcasts, SoundCloud, and Bloomberg dot com. 0:00:32.080 --> 0:00:35.080 And for details. Now and more details about what's going 0:00:35.120 --> 0:00:38.040 on in Iraq, we want to bring in Julian Lee, 0:00:38.120 --> 0:00:41.839 oil strategist for a Bloomberg first Word, and I encourage 0:00:41.880 --> 0:00:44.599 everyone to read his latest column having to do with 0:00:44.640 --> 0:00:48.839 the tensions with the Kurdish separatists. And I'm just wondering, 0:00:49.120 --> 0:00:51.840 you know, Julian, great to have you with us. It's 0:00:51.920 --> 0:00:55.600 kind of difficult to even put the nomenclature this correctly 0:00:55.640 --> 0:00:59.800 because Curtis Stan has a regional government and it just 0:01:00.120 --> 0:01:04.560 voted for full independence, and yet Iraq's government doesn't want 0:01:04.600 --> 0:01:06.840 to have anything to do with this and now has 0:01:06.920 --> 0:01:10.200 launched an assault on the city of kirk Kut. I 0:01:10.200 --> 0:01:12.760 wonder if you could explain why this is relevant and 0:01:13.160 --> 0:01:16.880 what do you believe is going on behind the scenes. Okay, well, 0:01:16.880 --> 0:01:18.600 thank you for for having me. I mean, it's it's 0:01:18.600 --> 0:01:21.280 great to be on the show. Um, I think we 0:01:21.400 --> 0:01:23.040 have to to sort of look at a little bit 0:01:23.040 --> 0:01:26.160 of history here. The city of Kirkuk has been disputed 0:01:27.160 --> 0:01:31.959 between the Kurdish government and the government in Baghdad really 0:01:32.040 --> 0:01:34.240 since the fall of Saddam Hussein, and has been a 0:01:35.520 --> 0:01:39.360 disputed city long before that. Um. It's not in the 0:01:39.440 --> 0:01:42.640 Kurdish region of Iraq, it's just outside it, so it 0:01:43.160 --> 0:01:48.360 wasn't under control of the Kurdish regional government. When Iraqi 0:01:48.400 --> 0:01:52.240 forces fled northern Iraq in fourteen in the face of 0:01:53.280 --> 0:01:56.760 the insurgency from the so called Islamic State, the Kurds 0:01:57.160 --> 0:02:01.440 moved in. Kurdish forces moved into protect Ka Cook, protects 0:02:01.480 --> 0:02:06.840 surrounding oil fields, and effectively established de facto control over 0:02:06.840 --> 0:02:11.120 the city of Kurdistan and over neighboring oil fields, a 0:02:11.120 --> 0:02:15.760 couple of which subsequently were taken over and managed by 0:02:16.440 --> 0:02:21.959 a Kurdish company. Now that Islamic State has been kicked 0:02:21.960 --> 0:02:27.520 out of northern Iraq, the federal government wants the city 0:02:27.520 --> 0:02:32.399 of Kerkook and wants those oil fields back. Um. The 0:02:32.400 --> 0:02:36.120 the Kurdish referendum really has has thrown fuel on the 0:02:36.160 --> 0:02:41.520 fire because the Baghdad government doesn't want to see Iraq 0:02:41.880 --> 0:02:47.200 split up, and indeed nor do international governments, particularly those 0:02:47.280 --> 0:02:52.040 of Iraq's neighbors. So how much of this Julian is 0:02:52.360 --> 0:02:56.919 a purely economic issue? Who gets control over these oil fields? 0:02:56.960 --> 0:03:01.799 And how important are these oil fields strategically? I think 0:03:01.800 --> 0:03:05.480 the issue is is it's certainly for for Iraqis and 0:03:05.480 --> 0:03:08.240 for Kords, is much bigger than just control of oil. 0:03:08.280 --> 0:03:11.960 It is about national destiny and the shape of Iraq 0:03:12.320 --> 0:03:16.640 going forwards. The oil is undoubtedly important, it's we're not 0:03:16.720 --> 0:03:22.000 talking huge volumes in terms of the total production of 0:03:22.000 --> 0:03:26.160 Iraq itself. Most of Iraq's oil production comes from the south, 0:03:26.280 --> 0:03:29.840 near the Persian Gulf. They're exporting something over three million 0:03:29.840 --> 0:03:34.240 barrels a day from the Persian Gulf. From northern Iraq, 0:03:34.400 --> 0:03:38.440 they're exporting about six hundred thousand barrels today, so you know, 0:03:38.600 --> 0:03:41.320 roughly a fifth of what they're exporting from the south. 0:03:41.400 --> 0:03:44.840 But the reason that it's important is that it's delivered 0:03:44.880 --> 0:03:50.880 by pipeline directly to an export terminal on Turkey's Mediterranean coast. 0:03:50.960 --> 0:03:55.400 That makes it a very close source of supply for 0:03:55.560 --> 0:03:59.680 Mediterranean refiners. And that is very attractive to them. So 0:03:59.720 --> 0:04:02.000 the loss of this oil, or even a part of it, 0:04:02.600 --> 0:04:08.320 would I think cause a dislocation for Mediterranean refiners as 0:04:08.360 --> 0:04:13.200 they look to replace this Kurdish and Northern Iraqi oil 0:04:13.280 --> 0:04:15.440 with supplies from elsewhere. And that's where I think the 0:04:15.480 --> 0:04:18.800 real importance lies. Add to that the fact that we 0:04:18.960 --> 0:04:22.279 seem to be in a situation again where Middle Eastern 0:04:22.279 --> 0:04:26.440 geopolitics and the threat of conflict or indeed the actuality 0:04:26.480 --> 0:04:29.080 of conflict in oil producing countries in the Middle East 0:04:29.120 --> 0:04:32.400 is starting to have an impact on prices. And what 0:04:32.520 --> 0:04:36.960 about the ability of Iraqi oil producers to get the 0:04:37.000 --> 0:04:40.920 product to market. Producers in the south of the country 0:04:40.920 --> 0:04:43.080 in the who, well, yeah, I know that the south 0:04:43.160 --> 0:04:45.440 is find producers in the north have a big problem. 0:04:45.920 --> 0:04:49.080 The only way at the moment to get oil out 0:04:49.120 --> 0:04:53.360 of northern Iraqi is through a Kurdish pipeline which runs 0:04:53.440 --> 0:04:55.719 from the northern end of the kirk cook Field, which 0:04:55.800 --> 0:04:59.760 Kurdistan has operated for a decade and a half U 0:05:00.040 --> 0:05:02.880 and that runs up to the Turkish border and then 0:05:02.920 --> 0:05:06.440 across Turkey to a terminal on on Turkey's Mediterranean coast. 0:05:06.480 --> 0:05:09.479 That is the only way of getting oil out of 0:05:09.520 --> 0:05:14.359 northern Iraq in any significant quantity, whether that's Kurdish produced 0:05:14.360 --> 0:05:17.400 and controlled oil or oil that is produced and controlled 0:05:17.400 --> 0:05:20.960 by the national government. So everybody needs the pipeline to 0:05:21.040 --> 0:05:24.560 keep running. Julian real quick, I'm trying to get an 0:05:24.640 --> 0:05:29.159 understanding of why we're seeing oil prices rise on this news. 0:05:29.240 --> 0:05:31.520 Is it because of the threat of a wider conflict 0:05:31.839 --> 0:05:35.800 or is it because this could potentially take oil offline. 0:05:36.760 --> 0:05:39.719 I think it's it's that it could potentially take oil offline. 0:05:40.040 --> 0:05:42.359 It could take as much as six hundred thousand barrels 0:05:42.360 --> 0:05:46.039 a day. There doesn't seem to be risk of the 0:05:46.040 --> 0:05:49.080 conflict spreading, although Turkey did threaten at the time of 0:05:49.120 --> 0:05:53.479 the referendum that if if Kurdistan went ahead with independence, 0:05:53.560 --> 0:05:56.320 it could and would close the pipeline. Julian Lee, thank 0:05:56.360 --> 0:05:58.280 you so much for joining us, and your story was 0:05:58.320 --> 0:06:01.839 really terrific. I recommend everyone read it. Bloomberg dot Com, 0:06:01.880 --> 0:06:05.720 slash goad Fly Julian Lee, oil strategist for Bloomberg, First 0:06:05.760 --> 0:06:21.960 Word and a Gadfly columnists. President Trump last week asked 0:06:21.960 --> 0:06:25.680 the US Congress to toughen the terms of a fifteen 0:06:25.800 --> 0:06:29.679 Iranian nuclear agreement saying it doesn't do enough to contain 0:06:29.839 --> 0:06:34.360 Iranian ambitions. Here to discuss this Ariel Cohen, Senior Fellow 0:06:34.480 --> 0:06:37.800 at the Atlantic Council, also Director of the Center for Energy, 0:06:37.920 --> 0:06:42.920 Natural Resources and Geopolitics at the Institute for Analysis of 0:06:42.960 --> 0:06:45.800 Global Security. Ariel, thank you so much for joining us. 0:06:46.120 --> 0:06:49.000 Can we just go over what the main issues are 0:06:49.120 --> 0:06:53.919 that President Trump is responding to and how widely his 0:06:54.279 --> 0:06:58.640 UH skepticism about this deal really is. It is shared, 0:07:00.000 --> 0:07:02.800 fest of all. Thank you for having me, fest of all. 0:07:03.240 --> 0:07:09.239 Because Trump is consistent. He criticized the deal with Iron 0:07:09.360 --> 0:07:13.760 called j C p o A the Obama era deal, 0:07:14.880 --> 0:07:19.120 because it is not a good deal for the United States. UH. 0:07:19.160 --> 0:07:25.239 The deal allows Iran to continue uranium enrichment, although this 0:07:25.480 --> 0:07:30.240 is low enriched uranium that is used in medical research 0:07:30.520 --> 0:07:36.240 and in civilian UM power stations, but the capacity can 0:07:36.320 --> 0:07:42.520 be easily upgraded UH to UM create the uranium for 0:07:42.640 --> 0:07:46.560 nuclear weapons. Secondly, the deal does not stop Iranian development 0:07:46.920 --> 0:07:52.240 of ballistic missiles, including we get indications the development of 0:07:52.440 --> 0:07:58.520 I C B M intercontinental ballistic myself in the longer term. UH. Thirdly, 0:07:59.000 --> 0:08:03.480 the deal does not fate to stop Iran from interfering 0:08:04.200 --> 0:08:07.840 throughout the Middle East. Iran is a major supporter of 0:08:07.920 --> 0:08:13.040 the brutal regime of Vashar Alasta in Syria. It interferes 0:08:13.120 --> 0:08:18.480 in Yemen. It effectively pursues policy of surrounding our allied 0:08:18.520 --> 0:08:24.080 Saudi Arabia both from the north. It supports Katar UH. 0:08:24.120 --> 0:08:30.800 It supports Shia minority inside Saudi, it supports Shia majority 0:08:31.240 --> 0:08:35.000 in Bahrain and the Ushia rebels and Yemen. So both 0:08:35.360 --> 0:08:38.440 in terms of geopolitics, in terms of facts on the 0:08:38.480 --> 0:08:41.520 ground in the Middle East, and in terms of nuclear capability, 0:08:41.960 --> 0:08:45.480 the deal did not achieve u S strategic goals, and 0:08:45.559 --> 0:08:49.240 this is why Trump is not UH scuttling it. But 0:08:49.559 --> 0:08:52.680 it is the company of Ministrusion is trying to push 0:08:53.120 --> 0:08:57.400 Iran to get to the negotiating table and to renegotiate 0:08:57.440 --> 0:09:01.959 the deal. Is there any evidence, Ariel, that the strategy 0:09:02.040 --> 0:09:06.880 that the Trump administration is employing has ever worked. UH. 0:09:06.960 --> 0:09:12.160 The strategy has not been fully announced. I believe that 0:09:12.760 --> 0:09:17.560 des certifying Iran is the first step, but the strategy 0:09:18.480 --> 0:09:22.199 has not been articulated, and if there is one, UH, 0:09:22.240 --> 0:09:25.880 they probably are not going to fully expose it for 0:09:25.960 --> 0:09:29.160 public consumption. UH. In a game with the Iranians that 0:09:29.200 --> 0:09:32.760 I cracked around for decades. In the game of the Iranians, 0:09:32.800 --> 0:09:34.880 you don't show your cards. You keep your cards closed 0:09:35.000 --> 0:09:37.960 to your chest. Iran is a place where the chess 0:09:38.120 --> 0:09:42.120 they was invented. Granted, the Russians played the chest well, 0:09:43.040 --> 0:09:47.559 but the Iranians other original auctors their tough nego shares. 0:09:48.040 --> 0:09:50.880 They've been in the area for over three thousand years, 0:09:51.480 --> 0:09:57.240 even before UH the introduction of Islam occupation by the 0:09:57.320 --> 0:10:01.600 Arabs in the seventh century a d uh. So these 0:10:01.600 --> 0:10:06.000 guys built a huge empire that you remember from history, 0:10:06.720 --> 0:10:10.000 clashed with ancient Greece and Rome, and fought with Greece 0:10:10.040 --> 0:10:13.720 and Rome for over a thousand years. So these are 0:10:13.920 --> 0:10:17.680 masters of political games. We should not tell them what 0:10:17.720 --> 0:10:19.960 we're planning to do. Well, Ariel, I want to talk 0:10:19.960 --> 0:10:23.120 a little bit about the broader reaction to President Trump's moves. 0:10:23.160 --> 0:10:27.920 The European Union is opposed to bringing Iran back to 0:10:27.960 --> 0:10:30.680 the table and trying to renegotiate this. They're hoping that 0:10:30.960 --> 0:10:36.199 US Congress keeps this nuclear agreement intact. I'm just wondering, 0:10:36.440 --> 0:10:39.760 you know, there has been talk that perhaps UH taking 0:10:39.760 --> 0:10:43.720 a hard line could actually be advantageous for Russia, what's 0:10:43.720 --> 0:10:46.680 your take on how much political will there is to 0:10:47.160 --> 0:10:54.680 really renegotiate this. Uh. The European position, the Russian position, 0:10:54.679 --> 0:10:58.319 and the Chinese position are all going to be crucial 0:10:58.880 --> 0:11:01.400 UH in the strategy of the U S is pursuing. 0:11:01.440 --> 0:11:05.280 And of course, UH, just as in case of North Korea, 0:11:05.360 --> 0:11:10.400 we would much rather achieve our strateistic goals through negotiations 0:11:10.520 --> 0:11:13.480 and not for war. UH, not through the use of force. 0:11:13.840 --> 0:11:18.320 Having said that, we still have a lot of means 0:11:18.360 --> 0:11:21.959 short of the use of force, short of war, including 0:11:22.520 --> 0:11:27.920 banking and economic sections against terrorist organization UH and the 0:11:27.960 --> 0:11:34.480 Iranian Revolutionary Guard core mega terrorist organization that has an 0:11:34.520 --> 0:11:38.319 air force UH, controls ballistic missiles that we were on, 0:11:39.000 --> 0:11:43.040 is developing the nuclear program and has presence all over 0:11:43.080 --> 0:11:46.000 the world. So it's much bigger than Al Qaina ever was. 0:11:46.400 --> 0:11:51.400 The IRG SEE finally finally was declared a terrorist organization, 0:11:51.480 --> 0:11:55.440 which it is UH, and now the consequences to their 0:11:55.520 --> 0:12:00.520 businesses are coming. The chickens are coming home to roost. Aria. 0:12:00.640 --> 0:12:02.559 Let me let Aria, let me just break in here, 0:12:02.600 --> 0:12:05.080 because all of what let's let's just put all of 0:12:05.080 --> 0:12:07.319 what you said just aside for just just a second. 0:12:07.920 --> 0:12:10.520 And if you can just focus on the idea that 0:12:10.720 --> 0:12:15.040 Iran is the second largest exporter of oil from OPEC, 0:12:15.480 --> 0:12:21.280 it's the world's fourth largest oil producer. What are the 0:12:21.400 --> 0:12:25.120 goals that you believe can be exchanged. I don't mean 0:12:25.120 --> 0:12:28.000 in terms of passing legislation in the United States or 0:12:28.080 --> 0:12:33.480 getting European allies to agree with the Trump administration's uh 0:12:33.760 --> 0:12:39.880 yet to be revealed strategy, but what goals can be 0:12:39.960 --> 0:12:44.280 achieved in dealing with what you describe as a hostile 0:12:44.400 --> 0:12:48.000 or confrontational force that just happens to have ten percent 0:12:48.080 --> 0:12:51.520 of the world's proven oil reserves and of its gas. 0:12:53.640 --> 0:12:59.320 Uh you're putting your finger on a very important uh 0:12:59.600 --> 0:13:03.480 here economic if you want issue, and that is a 0:13:03.480 --> 0:13:08.200 competition between Saudi Arabia and Iran for the regional dominance 0:13:08.240 --> 0:13:10.640 of the Middle East. The Saudis as soon as Irainians 0:13:10.679 --> 0:13:14.960 a Shia, we can and we should work with the 0:13:14.960 --> 0:13:18.440 Saudias um to keep the oil pricess down. But the 0:13:18.440 --> 0:13:21.160 Saudis the suffering, and the Saudis and the Russians they're 0:13:21.200 --> 0:13:25.000 talking about cutting production. If production is cut, oil prices 0:13:25.000 --> 0:13:29.160 are going up, and our shell producers are going to 0:13:29.240 --> 0:13:32.720 step in. UH so the oil prices. Uh if we 0:13:33.160 --> 0:13:39.160 are looking at the you know, fifty five sixty uh marks, 0:13:39.280 --> 0:13:42.320 they may go up and that will benefit Iran. So 0:13:42.480 --> 0:13:46.199 what can we do? We can, and we should talk 0:13:46.320 --> 0:13:51.439 to main consumers to prefer oil from the United States 0:13:51.520 --> 0:13:56.200 and from our allies, from Canada, from Saudi not from Iran, 0:13:56.640 --> 0:14:00.040 and keep Iranian oil off the markets and try to 0:14:00.240 --> 0:14:03.439 decrease their revenues. All right, We're gonna leave it there, 0:14:03.480 --> 0:14:05.400 but I want to thank you very much for joining 0:14:05.480 --> 0:14:07.680 us and giving us your thoughts. Ariel Cohen as a 0:14:07.760 --> 0:14:10.680 Senior Fellow at the Atlantic Council and director of the 0:14:10.760 --> 0:14:30.760 Center for Energy, Natural Resources, and Geopolitics at the I A. G. S. Well, 0:14:30.880 --> 0:14:36.320 where were you on October nine, eighty seven? Well, some 0:14:36.400 --> 0:14:39.520 people may not have been born by seven, so they're 0:14:39.560 --> 0:14:42.600 in lies the quandary when it comes time to at 0:14:42.640 --> 0:14:46.680 least remember Black Monday in seven. So here to help 0:14:46.800 --> 0:14:49.120 us do so is Matt Mayleie. He is managing director 0:14:49.120 --> 0:14:51.840 and equity strategist at Miller tay Back. He is on 0:14:52.040 --> 0:14:55.800 site at the Boston Convention and Exhibition Center of course, Boston, 0:14:55.880 --> 0:14:58.600 home to Bloomberg one oh six one Boston, Newbray Fort 0:14:58.640 --> 0:15:03.880 and Metro and the South Shore. Matt Malee, did you 0:15:03.920 --> 0:15:08.200 know that in nineteen eighties seven, the federal the interest rate, 0:15:08.280 --> 0:15:10.800 the prevailing interest rate was like eight and three quarters 0:15:10.800 --> 0:15:13.320 of a percent, and a gallon of gasoline was eighty 0:15:13.400 --> 0:15:17.280 nine cents eighty nine cents, heavin forbid, and then the 0:15:17.240 --> 0:15:20.040 the rates were ever that high. I mean's I'm on 0:15:20.200 --> 0:15:22.920 enough to remember them when they were in the team. Indeed, indeed, 0:15:22.920 --> 0:15:27.080 thank you. Don't don't encourage me, um, when you were 0:15:27.160 --> 0:15:30.280 driving your Ford Escort down to uh, you know, the 0:15:30.360 --> 0:15:32.960 Solomon Brothers trading room. Tell us a little bit about 0:15:33.040 --> 0:15:35.480 what it was like that day and and what are 0:15:35.520 --> 0:15:37.560 some of the things that you were put together to 0:15:37.680 --> 0:15:43.040 explain what happened on October the nineteenth seven. Well, it 0:15:43.120 --> 0:15:45.960 was kind of a perfect storm. And we had, you know, 0:15:46.040 --> 0:15:48.240 the stock market have been going up for a long time, 0:15:48.320 --> 0:15:51.520 and uh and and remember the investors and managers alike 0:15:51.680 --> 0:15:54.280 had all remembered the back of the end, had remember 0:15:54.480 --> 0:15:57.120 the horrible bear market of the nineteen seventies. And then 0:15:57.120 --> 0:15:58.880 of course they at all at least had some sort 0:15:58.880 --> 0:16:01.720 of a memory or very much from their parents of 0:16:01.760 --> 0:16:04.320 the Great Depression. So jeez, they're starting to get nervous 0:16:04.600 --> 0:16:07.480 about this uh uh, this this market having a big run, 0:16:07.720 --> 0:16:12.640 and people in the institutional side we're buying portfolio insurance 0:16:12.640 --> 0:16:15.560 that we've all heard about. But individual investors again, they 0:16:15.600 --> 0:16:17.280 also were worried because they had a lot of money 0:16:17.280 --> 0:16:19.360 and mutual funds. Then there was a third like that 0:16:19.400 --> 0:16:20.920 a lot of people don't talk about, and that was 0:16:21.200 --> 0:16:23.560 in the takeover areas. I mean, I even boasting these 0:16:23.560 --> 0:16:25.400 guys with the big stars back down on Wall Street, 0:16:25.440 --> 0:16:28.960 and the takeover stocks were highly, highly leveraged. And what happened, 0:16:29.040 --> 0:16:30.560 and a lot of people don't know is that the 0:16:30.600 --> 0:16:33.120 real catalyst really came out of Washington, d C. When 0:16:33.880 --> 0:16:36.120 the Ways and Means Committee came out and decided they well, 0:16:36.120 --> 0:16:38.800 at least they floated a trial balloon about changing the 0:16:38.880 --> 0:16:41.680 tax the way these takeovers or the debt on these 0:16:41.680 --> 0:16:45.760 takesovers would be taxed. And these leveraged risk arbitrage guys 0:16:46.160 --> 0:16:49.000 all started getting some margin calls, started selling an aggressive way, 0:16:49.280 --> 0:16:51.800 and that kind of started the the the whole thing rolling. 0:16:51.840 --> 0:16:54.640 When you know, the dominoes started falling after that, Matt, 0:16:54.960 --> 0:16:58.200 your note is really tremendous. You also talk about that 0:16:58.520 --> 0:17:02.000 people were worried about longer term interest rates rising, and 0:17:02.040 --> 0:17:05.960 they weren't as worried about the effect of rising yields 0:17:06.000 --> 0:17:08.560 and lower prices in their bond portfolios as much as 0:17:08.600 --> 0:17:12.400 they were about potential takeover deals that would collapse due 0:17:12.480 --> 0:17:16.240 to tighter credit conditions. So, really putting things into perspective 0:17:16.560 --> 0:17:20.520 before we delve too far into history, Lane, can you 0:17:20.640 --> 0:17:24.600 draw any parallels from that period to today? Are we 0:17:24.840 --> 0:17:28.080 sort of setting ourselves up for a similar type of 0:17:28.320 --> 0:17:30.760 crash or do you think that that was really a 0:17:30.760 --> 0:17:35.399 confluence of idiosyncratic events that will not be repeated today. Well, 0:17:36.080 --> 0:17:39.200 I yes and no or both, like is the way 0:17:39.200 --> 0:17:40.639 to put it? I guess on the one yes, I 0:17:40.720 --> 0:17:44.000 do not think that we could have a one day 0:17:44.520 --> 0:17:47.520 disaster like that. We have all the circuit breakers and 0:17:47.520 --> 0:17:51.879 and the FED is uh. I think all central banks 0:17:51.880 --> 0:17:54.360 are We're ready and willing to provide liquidity when when 0:17:54.400 --> 0:17:57.680 it is needed. Uh So, I think I'm very, very, 0:17:57.760 --> 0:18:00.000 very surprising we have to be some sort of uh 0:18:00.280 --> 0:18:03.359 huge black swan uh to cause a twenty percent or 0:18:03.400 --> 0:18:05.560 thirty percent move in, you know, just in a day 0:18:05.600 --> 0:18:07.639 or two, because a lot of people forget that it 0:18:07.640 --> 0:18:09.960 was actually about a thirty five percent drop over several 0:18:10.040 --> 0:18:13.760 days if you all in. But but at the same time, 0:18:14.080 --> 0:18:15.600 we have a lot of you know, whether it be 0:18:15.680 --> 0:18:17.560 you know, we heard a lot about these algos and 0:18:17.560 --> 0:18:20.479 these high frequency tradeers and of course UH in the 0:18:20.480 --> 0:18:24.719 e t F. These are all rules based UH investors 0:18:25.119 --> 0:18:27.120 and when the market goes to a certain things, they're 0:18:27.119 --> 0:18:29.720 going to automatically buy. Well, that's we've we've seen that 0:18:29.760 --> 0:18:31.800 in a nice way in the last couple of years. 0:18:31.840 --> 0:18:34.360 But the flips that can happen as well, So at 0:18:34.400 --> 0:18:36.440 some point we're gonna have another bearer market. Of bearer 0:18:36.480 --> 0:18:39.119 markets have not been outlawed, I'm do afraid. I am 0:18:39.160 --> 0:18:42.160 afraid that it could be again, not a crash over 0:18:42.200 --> 0:18:44.159 a couple of periods, a couple of days, but we 0:18:44.200 --> 0:18:47.280 could see a twenty orcent move over just a few weeks, 0:18:47.440 --> 0:18:49.680 which is not something that people will like very much. 0:18:49.920 --> 0:18:53.120 That there are not circuit breakers in certain bond markets. 0:18:53.119 --> 0:18:57.000 Do you think that they're more susceptible to a crash, Well, 0:18:57.160 --> 0:18:59.679 that that's certainly thing. I mean, it was only just 0:18:59.840 --> 0:19:01.360 a year ago or a year and a half ago, 0:19:01.400 --> 0:19:03.080 I should say. One of the things that you know, 0:19:03.119 --> 0:19:05.600 the real problem with with the decline in oil prices 0:19:05.640 --> 0:19:07.359 that took place in the latter half of two thousand 0:19:07.440 --> 0:19:10.880 fifteen and very early two thou sixteen was the almost 0:19:10.920 --> 0:19:15.720 crash in the high yield market. And like you said, no, 0:19:15.720 --> 0:19:19.160 no circuit breakers. Liquidity can be very small there. Uh 0:19:19.200 --> 0:19:21.720 So when you get that kind of uh, forced selling. 0:19:21.720 --> 0:19:24.200 I mean that's the whole thing, is that crashes only 0:19:24.240 --> 0:19:26.600 take place because of forced selling, not because of actual 0:19:26.640 --> 0:19:30.720 fundamental issues. And when you get highly leveraged uh sixth 0:19:30.800 --> 0:19:34.160 income markets and they start to you know, the bids disappear, Uh, 0:19:34.200 --> 0:19:36.920 it could have gone serious problem. There's no question, Matt. 0:19:37.320 --> 0:19:41.720 Is there something about Friday trading and Monday trading that 0:19:41.760 --> 0:19:45.760 you can draw from history? Well, the one thing is, 0:19:45.840 --> 0:19:48.480 I mean it's funny. It's it's it's said, you know, 0:19:48.560 --> 0:19:51.320 people on Friday's are worried about Jesus, I won't be 0:19:51.359 --> 0:19:52.760 able to get to my money or not get to 0:19:52.800 --> 0:19:54.479 my money, or get do a trade over, you know, 0:19:54.560 --> 0:19:57.040 for another couple of days. So sometimes they you know, 0:19:57.080 --> 0:19:59.119 they panic a little bit on Friday's And it's the 0:19:59.160 --> 0:20:02.760 same thing, uh on Mondays. Is because over the weekend 0:20:03.080 --> 0:20:05.280 they start talking to each other. I mean I literally, 0:20:05.320 --> 0:20:08.960 I mean that's kind of what happened. People started talking 0:20:09.000 --> 0:20:10.320 to each other and said, oh my gosh, the stock 0:20:10.320 --> 0:20:12.399 prank was down a hundred points. Back then, that was 0:20:12.480 --> 0:20:15.280 like unheard of. And people started panicking and they started 0:20:15.400 --> 0:20:18.520 calling one eight hundred mutual funds and redeeming their mutual funds. 0:20:18.560 --> 0:20:20.840 And so that's how the whole thing kind of started 0:20:20.880 --> 0:20:23.479 clicking in, and the thing is is today. I mean, 0:20:23.520 --> 0:20:26.160 there is a reason that the stock market is open 0:20:26.240 --> 0:20:30.560 the Friday after of of Thanksgiving because they don't want 0:20:30.600 --> 0:20:32.800 the market closed four days in a row because if 0:20:32.840 --> 0:20:36.200 that happens, if something big happens, panic, real panic could 0:20:36.200 --> 0:20:38.320 sit in over four days. That's really the reason why 0:20:38.320 --> 0:20:41.040 they don't close the day after Thanksgiving, no other reason. Matt, mainly, 0:20:41.160 --> 0:20:44.120 thank you so much for joining us. Truly a fascinating 0:20:44.160 --> 0:20:46.480 note and direct mand people read it. Matt Malie is 0:20:46.480 --> 0:21:00.120 a managing director and equity strategist at Miller TVAC and Company. 0:21:01.720 --> 0:21:05.200 The holy grail in the food industry to create something 0:21:05.359 --> 0:21:09.320 that tastes decadent but allows you to stay slim. Here 0:21:09.400 --> 0:21:13.320 to talk about one development in the sugar industry is 0:21:13.400 --> 0:21:17.359 Iran Banniel, Chief executive officer and president of do mat Talk, 0:21:17.600 --> 0:21:20.119 which is based in Potactica in Israel. Here is in 0:21:20.240 --> 0:21:24.440 our eleven three oh studios today and Iran. Your company 0:21:25.040 --> 0:21:29.880 makes a sugar product that basically just enhances how we 0:21:29.960 --> 0:21:34.879 taste sugar correct, rather and reducing the amount of sugar included, 0:21:35.200 --> 0:21:37.639 rather than having an artificial substitute. Correct, Can you tell 0:21:37.680 --> 0:21:41.200 us a little that absolutely correct? What we do is 0:21:41.280 --> 0:21:47.120 we load the sugar onto a carrier, a mineral very 0:21:47.200 --> 0:21:51.679 common in food. A tiny little bit of mineral is 0:21:51.840 --> 0:21:55.880 enough to carry a whole lot of sugar. And when 0:21:55.920 --> 0:22:00.600 those clusters of sweetness arrive at the receptors, they download 0:22:00.680 --> 0:22:05.359 the sugar at the receptors and cheating and if you 0:22:05.440 --> 0:22:09.360 wish the receptors to report something which is mild sweeter 0:22:09.800 --> 0:22:14.680 than the amount of sugar that you've put there. About reduction, 0:22:14.720 --> 0:22:17.719 I believe at least that is that for sugar consumption. 0:22:17.840 --> 0:22:21.560 If this were introduced, yes you have here. I brought 0:22:21.640 --> 0:22:27.399 you two examples. The jelly bellies are fifty sugar reduction 0:22:28.119 --> 0:22:32.560 and the chocolate is thirty just to show you, but 0:22:32.720 --> 0:22:37.080 we got complained that the chocolate was still too sweet 0:22:36.320 --> 0:22:41.199 a reduction, so we are continuing to reduce. You know, 0:22:41.359 --> 0:22:45.480 one big question about the science behind reducing sugar is 0:22:45.520 --> 0:22:50.679 that if your body is expecting and experiencing a certain sweetness, 0:22:50.720 --> 0:22:54.440 it prepares for the calories that accompany it. In other words, 0:22:54.480 --> 0:22:59.080 if people eat something that is calorie reduced, they may 0:22:59.119 --> 0:23:01.680 eat more after the words, to compensate for the lack 0:23:01.760 --> 0:23:03.720 of calories that they received for the amount of sugar. 0:23:03.880 --> 0:23:06.560 This is one sort of complaint with the artificial sweeteners. 0:23:06.960 --> 0:23:10.200 What have you found with respect to that. It's interesting 0:23:10.280 --> 0:23:13.320 that you say that it's a wonderful question, because what 0:23:13.440 --> 0:23:20.200 happens without sugar is that sweetness is a teeny bit belated, 0:23:21.320 --> 0:23:26.080 but then lingers on. So you did you really won't 0:23:26.160 --> 0:23:30.879 reach out for the next bite so fast because you 0:23:31.080 --> 0:23:39.600 really get a full sugary impression, taste, and satisfaction. So 0:23:40.119 --> 0:23:44.560 it's actually a way to reduce even further the temptation 0:23:45.000 --> 0:23:49.600 to take too much. So it's a lingering story too. 0:23:50.359 --> 0:23:52.640 Give us an update on how far along you are 0:23:52.800 --> 0:23:55.600 in the commercialization of this. I know you're raised what 0:23:55.680 --> 0:23:57.960 about eight a little bit more than eight million dollars 0:23:58.000 --> 0:24:02.560 recently you're announcing that where are you in the commercialization? 0:24:02.640 --> 0:24:06.159 And does this then go into the food service industry, 0:24:06.520 --> 0:24:09.600 perhaps in addition to just in a direct retail way. 0:24:10.800 --> 0:24:17.520 We were very fortunate. We did very little pr It 0:24:17.640 --> 0:24:21.080 was usually to say, hey, we got some money invested 0:24:21.119 --> 0:24:24.680 in us or something, and what followed was an avalanche 0:24:25.080 --> 0:24:30.280 of emails to the website, etcetera. The whole world is 0:24:30.359 --> 0:24:36.560 looking for a sugar reduction solution which tastes great, which 0:24:36.640 --> 0:24:41.440 doesn't have all those aftertastes, etcetera. So what happened is 0:24:41.880 --> 0:24:47.479 wherever we had early success, like with chocolate, without naming 0:24:47.560 --> 0:24:52.600 names because obviously I can't, but I wouldn't exaggerate. I 0:24:52.640 --> 0:24:57.639 think if I say, this startup from israelis talking to 0:24:57.880 --> 0:25:04.399 over sixt of the sugar of the chocolate industry in 0:25:04.440 --> 0:25:09.040 the world, and I'm meaning all the big You have 0:25:09.080 --> 0:25:11.560 a big you have an ex nest ly an espresso 0:25:12.240 --> 0:25:15.480 executive as part of your executive team. I believe that 0:25:15.840 --> 0:25:19.439 is true. So how much more expensive is it to 0:25:19.560 --> 0:25:23.240 produce these chemicals that have sugar on them, that are 0:25:23.640 --> 0:25:27.840 that are expressed as sweeter. I don't terribly go for 0:25:27.920 --> 0:25:32.159 the expression chemicals because it sounds like, oh, you know, 0:25:33.040 --> 0:25:35.439 we are using a mineral, and the mineral is the 0:25:35.480 --> 0:25:38.840 most common mineral on Earth. I love I love this. 0:25:38.960 --> 0:25:41.600 By the way, you know, everything that we have is chemicals, right, 0:25:41.640 --> 0:25:43.480 I mean their chemical coursing for our bodies. But it 0:25:43.520 --> 0:25:45.840 has taken on a sort of negative connotation. So we'll 0:25:45.880 --> 0:25:49.040 call it a mineral. Okay, So mineral with sweetener on it. Yeah, 0:25:50.040 --> 0:25:57.520 And um, what happens is that we don't have one 0:25:58.200 --> 0:26:01.440 let's say, suck rose, the normal table sugar, not one. 0:26:02.000 --> 0:26:06.720