WEBVTT - Surveillance: Negative September with Slimmon 0:00:05.120 --> 0:00:09.200 Welcome to the Bloomberg Surveillance Podcast. I'm Tom Keane. Along 0:00:09.200 --> 0:00:13.200 with Jonathan Ferrell and Lisa Abramowitz. Daily we bring you 0:00:13.280 --> 0:00:18.600 insight from the best and economics, finance, investment, and international relations. 0:00:18.960 --> 0:00:23.799 Find Bloomberg Surveillance on Apple podcast, SoundCloud, Bloomberg dot Com, 0:00:23.920 --> 0:00:29.960 and of course on the Bloomberg terminal. What we're gonna 0:00:30.000 --> 0:00:31.880 do this morning, folks, and this is, of course, the 0:00:32.680 --> 0:00:37.000 combination of equities, bonds, currencies, commodities is considered the bears 0:00:37.000 --> 0:00:40.760 who've been successful. Douglas cast nailing it at Sea Breeze 0:00:40.920 --> 0:00:44.040 on a short term basis, and as John mentions, Mr 0:00:44.080 --> 0:00:47.879 Wilson over at Morgan Stanley, absolutely nailing it on a 0:00:47.920 --> 0:00:52.120 more long term, measured let's call it institutional basis in 0:00:52.200 --> 0:00:55.520 this storm. As Andrew Slim and Mr Wilson's colleague, senior 0:00:55.560 --> 0:00:58.840 portfolio manager at Morgan Stanley Chicago, Andrew, thank you so 0:00:58.920 --> 0:01:02.760 much for joining us in this turmoil. You go, as 0:01:02.800 --> 0:01:06.640 a guy more optimistic where Mike Wilson goes, which is 0:01:06.720 --> 0:01:10.880 now we must study earnings, and you suggest that margins 0:01:11.080 --> 0:01:16.200 must be maintained. Can we be optimistic for maintained margins 0:01:16.200 --> 0:01:20.000 through the end of the year. Well, we we certainly 0:01:20.040 --> 0:01:23.959 haven't seen the you know, the earnings collapse that you know, 0:01:24.000 --> 0:01:27.840 many of the bears have predicted. We'll have to see. 0:01:28.240 --> 0:01:31.760 I would say from a stock picking standpoint, it's better 0:01:31.800 --> 0:01:35.640 to find the companies that actually already have had the 0:01:35.640 --> 0:01:38.679 the earnings clocks. I think he's talking at the at 0:01:38.720 --> 0:01:41.759 the S and P level. You know, we'll have to see. 0:01:41.840 --> 0:01:46.880 The counter argument is that we are still only two 0:01:46.959 --> 0:01:51.480 years from the previous recession, and therefore balance sheets can 0:01:51.560 --> 0:01:54.960 withstand the shocks that you're seeing to cost and so 0:01:55.040 --> 0:01:57.560 forth better than they would if we were, you know, 0:01:57.640 --> 0:02:00.920 coming off a long period of economic story with a 0:02:01.000 --> 0:02:05.360 two year back to an Autumn two thousand seven yield? 0:02:05.600 --> 0:02:11.519 Is cash attractive? Is a legit asset? Yeah? Yeah, yes. 0:02:11.800 --> 0:02:14.200 And the point of this is is I am in 0:02:14.320 --> 0:02:18.240 the camp of p compression. So I think that is 0:02:18.320 --> 0:02:22.080 the negative. The FED raising rates, yields going up pushes 0:02:22.120 --> 0:02:25.680 the pe down, and that's the negative that I see. 0:02:25.960 --> 0:02:28.959 I'm just haven't embraced as much the you know, the 0:02:28.960 --> 0:02:32.560 the earnings collapsing side, which is the positive that to 0:02:32.680 --> 0:02:36.840 me has been the story of the year. And we 0:02:36.960 --> 0:02:38.320 got a little but you know, we had a very 0:02:38.320 --> 0:02:41.160 big bance off the June low on the fact that 0:02:41.240 --> 0:02:44.959 the second quarter was not as bad as expepected. And 0:02:44.960 --> 0:02:47.200 you know, now we're pulling back. That's the push pull 0:02:47.880 --> 0:02:50.720 of you know, they're very much a lackluster year for 0:02:50.760 --> 0:02:52.720 requas and I'm still on that camp Andrews. You know, 0:02:52.800 --> 0:02:55.480 the bond market backdrop changed as well, since the middle 0:02:55.480 --> 0:02:57.120 of June is back to where we were. So here's 0:02:57.120 --> 0:02:59.040 the question about the June lows and the equity market. 0:02:59.400 --> 0:03:02.680 If the two yield is back through the June fourteenth highs, 0:03:03.320 --> 0:03:08.320 why do equities along anywhere near ten above the June 0:03:07.960 --> 0:03:13.919 six loaves? Probably not. They probably will head lower. I think, 0:03:13.960 --> 0:03:16.200 you know, September is not a great month, but I 0:03:16.240 --> 0:03:18.760 still think we could get a you know, gate late 0:03:18.960 --> 0:03:22.760 rally in the fourth quarter as the market starts to 0:03:22.880 --> 0:03:26.120 price off, you know, next four months, next four quarters 0:03:26.160 --> 0:03:30.000 of earning, which is three But you know, look, we've 0:03:30.000 --> 0:03:32.760 had a big bounce. You know, high risk came back 0:03:32.800 --> 0:03:35.920 in the market very quickly, and I think that's you 0:03:35.960 --> 0:03:38.440 know that that was a dangerous sign. So your own 0:03:38.480 --> 0:03:40.720 power getting up and saying what he said, and boom 0:03:41.120 --> 0:03:44.000 down goes all the speculation that had come quickly back 0:03:44.040 --> 0:03:46.040 to the market. So I think the Yeah, I think 0:03:46.080 --> 0:03:48.520 the near term is it's negative for the market. Will 0:03:48.560 --> 0:03:51.040 we hold the loads of June? I think it's possible, 0:03:51.120 --> 0:03:55.560 even with rates higher, But I think speculation is right 0:03:55.680 --> 0:03:58.560 for short term speculation right to be you know, washed out. 0:03:59.080 --> 0:04:02.280 So you sound really farish, Andrew, and you're talking about 0:04:02.440 --> 0:04:04.200 reducing risk. And then I look at some of the 0:04:04.200 --> 0:04:08.560 stocks that you like, including restoration hardware, Lulu Lemon, among 0:04:08.640 --> 0:04:13.600 other consumer discretionaries that usually do worse during downturns. What 0:04:13.720 --> 0:04:17.000 gives what's the rush now? Yeah? So, first of all, 0:04:17.600 --> 0:04:21.440 at the macro level, consumer sentiment hit a forty four 0:04:21.520 --> 0:04:26.799 year low in July, so a lot of very negative views. 0:04:27.160 --> 0:04:29.520 And when you think about that, it's all the stock 0:04:29.600 --> 0:04:34.960 market rewards the direction of change, and so inevitably direction change, 0:04:35.040 --> 0:04:37.120 it's got to go high. At some point. It has 0:04:37.120 --> 0:04:40.360 and it has improved. And then from a stock standpoint, 0:04:40.400 --> 0:04:46.200 those stacks are damned forty fifty, sixty, seventy piked the truck. 0:04:46.600 --> 0:04:50.280 There is just a turn of bad news priced into 0:04:50.360 --> 0:04:52.919 so so I guess going back to the original question 0:04:52.960 --> 0:04:56.400 of earnings, you know, these companies have already brought down 0:04:56.400 --> 0:05:00.280 their numbers. They you know, the market is priced sing 0:05:00.279 --> 0:05:03.520 in as if they're going to miss earnings. So I 0:05:03.560 --> 0:05:07.080 think that it's safer to buy companies that have already 0:05:07.279 --> 0:05:10.720 you know, the expectation is is bad. I I always 0:05:10.720 --> 0:05:14.320 am interested in buying companies with great long term track 0:05:14.400 --> 0:05:17.800 records that that the stocks are down a lot, with 0:05:17.920 --> 0:05:20.640 a lot of negative expectations. So I think that's safer 0:05:21.040 --> 0:05:23.919 than thinking you can pick and choose companies that aren't 0:05:23.920 --> 0:05:26.719 going to have earnings problems. Following that logic, Andrew, do 0:05:26.760 --> 0:05:28.679 you think that the opposite holds true, that you should 0:05:28.680 --> 0:05:31.240 sell the names that have held in better I'm thinking 0:05:31.240 --> 0:05:33.960 of big tech that have had incredible rallies over the 0:05:34.000 --> 0:05:39.280 past few months. I absolutely, I absolutely, I think it's 0:05:39.480 --> 0:05:44.040 very dangerous, be careful if the Mike Wilson scenario comes 0:05:44.080 --> 0:05:47.000 to bear. I don't want to stock this down from 0:05:47.000 --> 0:05:49.839 its you know five. I think there's a lot of 0:05:50.279 --> 0:05:54.279 risk into that area, and I'd rather buy the companies 0:05:54.279 --> 0:05:56.279 that already priced in a lot of bad news. How 0:05:56.279 --> 0:06:00.200 do our listeners and viewers do, Andrew? If everybody he's 0:06:00.240 --> 0:06:03.200 buying four or five stocks which were x per cent 0:06:03.320 --> 0:06:06.520 of the bullmarket rally out of June, and then you've 0:06:06.560 --> 0:06:10.479 got to look at everything else. Do you participate in 0:06:10.520 --> 0:06:14.400 those glory stocks and figure out what to buy or 0:06:14.400 --> 0:06:17.960 do you finally jettison the glory stocks and actually run 0:06:17.960 --> 0:06:23.080 a diversified portfolio. Well, yeah, I mean, for I I 0:06:23.640 --> 0:06:27.080 think there's plenty of companies out there that are down, 0:06:27.480 --> 0:06:29.840 uh you know a lot, as I said, and there's 0:06:30.120 --> 0:06:33.599 real opportunities. But those big, very big stocks, some of 0:06:33.600 --> 0:06:36.880 them are really not down that much. And you know, 0:06:36.920 --> 0:06:39.320 if you go back in long time at the history 0:06:39.360 --> 0:06:43.840 of the SMP, what brings down the largest companies that 0:06:43.920 --> 0:06:48.120 they never stay on top for ever? It's usually the government, 0:06:48.560 --> 0:06:51.080 the government, And I think, you know, you've you've got 0:06:51.080 --> 0:06:55.560 a very high waiting and a few names, and that 0:06:55.760 --> 0:06:58.160 is going to weigh on the S and P at 0:06:58.200 --> 0:07:00.839 the index level, I think for the a few years, 0:07:01.200 --> 0:07:04.159 which will be good for investors that go out and 0:07:04.200 --> 0:07:08.400 buy individual stocks because I think the opportunities that is 0:07:08.480 --> 0:07:12.200 probably better at the stock level than the index level, 0:07:12.320 --> 0:07:15.400 just given the waiting in those few names at the 0:07:15.440 --> 0:07:17.520 time when they're you know, the government is you know, 0:07:17.560 --> 0:07:20.640 like I said, starting that you know knows in some 0:07:20.760 --> 0:07:23.240 of these companies, Andrew got a squazes in energy when 0:07:23.280 --> 0:07:27.600 with the year on spid, Jeff carrying the team over 0:07:27.640 --> 0:07:31.480 a goldman. They're telling people to keep buying commodities, even 0:07:31.520 --> 0:07:34.520 going into what could be in recession. They say, the 0:07:34.560 --> 0:07:37.560 following commodities the best asset class to war into an 0:07:37.560 --> 0:07:40.800 a late cycle face where demand remains above supply. Andrew, 0:07:40.800 --> 0:07:42.760 where are you on the commodity equity side of things? 0:07:42.760 --> 0:07:45.920 The energy equities which have delivered some stellar returns this year. 0:07:46.800 --> 0:07:49.400 So we solicit some stocks that we like, we got 0:07:49.400 --> 0:07:52.920 to sell something to buy them because I'm a long 0:07:52.960 --> 0:07:56.480 equity marriage or what have I been reducing energy? And 0:07:56.520 --> 0:07:58.840 I've been reducing energy because just where you said, it's 0:07:58.840 --> 0:08:05.760 a significant to do at Uh, this industry is classically cyclical, 0:08:06.400 --> 0:08:11.480 and if in fact the economy does weaken, UH, to me, 0:08:12.000 --> 0:08:15.120 energy is vulnerable because it's done so well versus stocks 0:08:15.200 --> 0:08:17.440 that you know we're listed that are already done a lot. 0:08:17.520 --> 0:08:20.800 So I think energy is a source of funding. It's 0:08:20.840 --> 0:08:23.360 come roaring back here. I would continue to view it 0:08:23.360 --> 0:08:26.320 as a source of uh source of funny. So I'm 0:08:26.320 --> 0:08:29.320 you know that the halt pitch in energy was a 0:08:29.400 --> 0:08:31.320 year and a half two years ago, when you know 0:08:31.920 --> 0:08:36.360 the poor occurred with negative prices. I think the fat 0:08:36.400 --> 0:08:38.560 pitch right now is a sentiment is at a forty 0:08:38.640 --> 0:08:41.280 four year loved. I think that's the that's the opportunity, 0:08:41.320 --> 0:08:44.360 and you sell things that are done very well like energy. Andrew, 0:08:44.400 --> 0:08:53.080 thank you, Andrew Slim and management Numerus Surveillers has been 0:08:53.080 --> 0:08:56.000 committed to economics. We're really looking forward to giving the 0:08:56.120 --> 0:08:59.679 Jackson Whole treatment to CenTra when they come around again. 0:08:59.679 --> 0:09:03.320 In poor artegal and at those efforts there are academics. 0:09:03.720 --> 0:09:06.160 We avoid them like the plague. We do that for 0:09:06.200 --> 0:09:08.800 all sorts of reasons. But every once in a while 0:09:08.840 --> 0:09:12.480 we get lucky and lasso in one of them. If 0:09:12.679 --> 0:09:16.800 at Jackson Hall this year, Francesco Biancy of Johns Hopkins 0:09:16.920 --> 0:09:21.400 Ex Duke, EX Princeton stop traffic by speaking the word 0:09:21.480 --> 0:09:25.559 that no one wanted to speak, and that is fiscal economics. 0:09:25.920 --> 0:09:28.839 It's a twenty nine page paper loaded with math. I 0:09:28.880 --> 0:09:33.640 don't understand matrix algebra. We just can't do that on TV, 0:09:33.760 --> 0:09:36.760 but we can talk about the basics and the policy 0:09:36.840 --> 0:09:39.640 prescription out of this. You say there can be a 0:09:39.720 --> 0:09:46.160 monetary lead solution or a fiscal lead solution rhythm MMT. 0:09:46.679 --> 0:09:49.560 Does the FED do a fiscal lead solution or is 0:09:49.640 --> 0:09:54.080 that the part of Congress and the president so sor 0:09:54.120 --> 0:09:56.640 right now, I think the FED is committed to bringing 0:09:56.720 --> 0:09:58.840 fish on down. I guess the main point of our 0:09:59.120 --> 0:10:01.280 paper is to show that the FED also needs a 0:10:01.400 --> 0:10:04.720 cooperation from the physical authority. So we take an historical 0:10:04.800 --> 0:10:07.960 perspective and we look back at the sixties and seventies 0:10:08.320 --> 0:10:11.560 and provide an argument that that was a phisical phenomenon. 0:10:11.679 --> 0:10:16.760 Ultimately was dabbish monetary policy, but combined with overspending and 0:10:16.800 --> 0:10:20.000 not commitment to de stability. And so now the question 0:10:20.440 --> 0:10:23.960 the FED is acting is moving interest rates up. So 0:10:24.160 --> 0:10:26.880 our question in the paper is that if going forward 0:10:27.400 --> 0:10:30.600 we will see the necessary physical adjustments to bring thecation down, 0:10:30.679 --> 0:10:32.679 that would be the fiscal solution to the problem. What 0:10:32.800 --> 0:10:35.480 did you learn from Stephanie Kelton's mm T. This has 0:10:35.480 --> 0:10:37.480 been all the ways the media loves to pick on it. 0:10:37.559 --> 0:10:40.320 There's a political polarity to that. You come from the 0:10:40.360 --> 0:10:44.560 neutrality of Europe, of Italy, Caustanza over in Portugal and 0:10:44.600 --> 0:10:47.160 the rest of them. So you're the foreigner looking in 0:10:47.320 --> 0:10:50.280 at the debate of MMT. What have you learned about 0:10:50.400 --> 0:10:53.280 MMT in this crisis? Um So, I think what we 0:10:53.480 --> 0:10:55.800 learn the more, I think all of us. What we 0:10:55.960 --> 0:10:59.120 learn is that phisical policy can be extremely powerful. Phisical 0:10:59.200 --> 0:11:02.800 policy are probably put a stop to the low interest 0:11:02.920 --> 0:11:06.400 rate environment, and we were for ten years in at 0:11:06.400 --> 0:11:08.960 the zero over bound. In fact, we risk of deflation. 0:11:09.040 --> 0:11:10.760 I think we tend to forget where we were one 0:11:10.840 --> 0:11:14.920 year ago. The FED was generally concerned about deflation. Um 0:11:15.200 --> 0:11:20.040 we intervene very forcefully with fiscal policy, and that contributed 0:11:20.240 --> 0:11:23.080 to the solution. Um. Of course, it cause a big 0:11:23.160 --> 0:11:27.840 jump in inflation, arguably because it compounded with some exogenous 0:11:27.920 --> 0:11:33.800 forces like the pandemic of course, uh, the supply chain problems, 0:11:33.880 --> 0:11:39.200 the Russian conflict. But ultimately fiscal policy proved to be 0:11:39.240 --> 0:11:42.640 a very powerful mechanism. I think what we learned, on 0:11:42.640 --> 0:11:44.559 the other hand, is that this comes with a cost, 0:11:44.760 --> 0:11:48.360 and and the cost is inflation. Now, it's always easy 0:11:48.400 --> 0:11:51.840 to do policy with the benefit of hindsight, but with 0:11:51.880 --> 0:11:55.800 the benefit of insightro we went a little bit overboard. Well, Francesco, 0:11:56.120 --> 0:11:59.560 there's a really profound application here. It's not just what 0:11:59.679 --> 0:12:02.439 the rest PUNTS was, it's the expectation of the consumer's 0:12:02.520 --> 0:12:05.640 mind that there will be more fiscal stimulus if there 0:12:05.800 --> 0:12:08.240 is another downturn, and that that is what it's going 0:12:08.280 --> 0:12:12.959 to lead to inflation expectations becoming unmoored. How much does 0:12:13.000 --> 0:12:17.280 that really crimp the ability of policymakers to either add 0:12:17.320 --> 0:12:20.680 phiscal stimulus in the face of a recession, mitigating some 0:12:20.760 --> 0:12:23.880 of the downturn, or be going for the fiscal stimulus 0:12:23.960 --> 0:12:26.559 of the past few years and leading to inflation that's 0:12:26.600 --> 0:12:29.040 much higher than it has been in the past. That's 0:12:29.080 --> 0:12:32.120 an excellent point, and in fact, what we emphasize is 0:12:32.160 --> 0:12:36.000 what really matters is a long run phiscal sustainability. So 0:12:36.080 --> 0:12:37.719 what we want is to be able to use this 0:12:37.800 --> 0:12:41.040 powerful mechanist during recessions. But in order to do that, 0:12:41.240 --> 0:12:44.040 we need to guarantee that overall in the long run, 0:12:44.120 --> 0:12:46.040 or at least in the medium run, we are on 0:12:46.080 --> 0:12:49.440 a stable path. So what that implies is essentially that 0:12:49.559 --> 0:12:51.760 when things are good, when we don't need that to 0:12:52.280 --> 0:12:55.560 uh provide fiscal steamulus, we should refrain from doing that 0:12:55.720 --> 0:12:58.000 exactly to keep this ammunition to when we need it. 0:12:58.040 --> 0:13:00.839 I got one quick question. I saw Richard the Jackson Hole, 0:13:00.880 --> 0:13:02.040 and I want to go back to the core of 0:13:02.080 --> 0:13:04.920 your paper, which is DSG. Richard Claire has worked with 0:13:04.960 --> 0:13:08.079 Girdler and the rest. Right, how can we trust this math, 0:13:08.400 --> 0:13:11.400 all the math in smart guys like you are doing. 0:13:11.640 --> 0:13:14.720 Has it been proven wrong given these shocks that we've 0:13:14.720 --> 0:13:18.440 seen that So I don't think so. I think like 0:13:18.840 --> 0:13:21.200 the math is just a way to formalize some ideas. 0:13:21.200 --> 0:13:23.680 So what we are discussing here, I think is something 0:13:23.760 --> 0:13:27.280 that everybody can relate to. People have had first ideas 0:13:27.320 --> 0:13:29.680 and then came the math. So the math is only 0:13:29.720 --> 0:13:32.520 a way to put order there. And I don't think 0:13:32.559 --> 0:13:36.800 that um DSG models of money general macro models in 0:13:36.840 --> 0:13:40.200 themselves have failed. If anything, there are some risks that 0:13:40.320 --> 0:13:45.320 we forgot about. Okay and John, it's important, Lisa, good news. 0:13:45.360 --> 0:13:47.679 I just got the car to take you to the 0:13:47.840 --> 0:13:51.360 brandma with house to explain matrix algebra to Lisa's kids. 0:13:51.360 --> 0:13:56.360 It's waiting, Marcesco. Thank you, Francesco Biankee. That on fiscal 0:13:56.440 --> 0:14:09.520 policy and what it makes for inflation expectations, some legitimate 0:14:09.559 --> 0:14:14.360 tension with record dollar strength off the good Bloomberg Dollar Index. 0:14:14.640 --> 0:14:16.720 Part of that, of course is commodities. We're looking at 0:14:16.760 --> 0:14:19.680 all the asset classes this morning, in this turmoil, this 0:14:19.840 --> 0:14:22.760 reset into the end of the year, Ellen Wall provides 0:14:22.800 --> 0:14:27.240 advice senior fellow in Atlantic Atlantic Council. I should say 0:14:27.520 --> 0:14:32.200 in a definitive effort, Saudi, I can't say enough about 0:14:32.520 --> 0:14:35.400 the terseness of her book. Saudi inc. Just a really 0:14:35.440 --> 0:14:38.080 wonderful walk through of the originality of what we see 0:14:38.520 --> 0:14:42.440 in riod Ellen. I want to talk what John mentioned earlier, 0:14:43.080 --> 0:14:45.880 which is the idea of the US as a global 0:14:46.040 --> 0:14:51.960 manufacturer of hydrocarbons. In a select few saying it's un 0:14:52.040 --> 0:14:56.520 American export the stuff discussed. That is the adult in 0:14:56.560 --> 0:15:00.440 the room. Yeah, I can I can understand where these 0:15:00.440 --> 0:15:04.560 people are coming from, especially because for so long we 0:15:04.640 --> 0:15:08.440 did have a crude oil export band, uh and that. 0:15:08.600 --> 0:15:11.120 But you have to remember that that really is only 0:15:11.200 --> 0:15:14.120 a very recent phenomenon. We only had a crude oil 0:15:14.160 --> 0:15:18.560 export band starting in the seventies during the um when 0:15:18.640 --> 0:15:21.200 when we had the oil shocks, and the idea was 0:15:21.240 --> 0:15:23.840 to try to keep as much oil as we had 0:15:23.880 --> 0:15:27.760 at home. Before that, America was a major supplier of 0:15:28.000 --> 0:15:32.160 energy to the world. Basically during World War Two, American 0:15:32.840 --> 0:15:36.360 crude oil, American energy, American gasoline and diesel, and jet 0:15:36.400 --> 0:15:40.360 fuel was essentially you could argue responsible for winning World 0:15:40.400 --> 0:15:43.080 War Two for the Allies. UH. So, I think to 0:15:43.120 --> 0:15:47.200 say that it's un American to export our energy products 0:15:47.360 --> 0:15:51.480 UH is a very shortsighted view of of America. So Ellen, 0:15:51.560 --> 0:15:54.600 the deparotmat of Energy, led by Secondary ground Home, appears 0:15:54.600 --> 0:15:56.480 to be very concerned about the low stock pass of 0:15:56.600 --> 0:16:00.200 diesel and gasoline, particularly in the Northeast. This is what 0:16:00.280 --> 0:16:01.880 she said in a letter to some of the energy 0:16:01.920 --> 0:16:04.800 players here it is our hope that companies will proactively 0:16:04.840 --> 0:16:08.680 address this need or quote the administration will need to 0:16:08.720 --> 0:16:13.040 consider additional federal requirements or other emergency measures. And on 0:16:13.160 --> 0:16:16.720 how credible it's that threat. I mean, if that's not 0:16:16.840 --> 0:16:19.240 a threat, then I'm not sure what is a threat. 0:16:19.240 --> 0:16:21.800 I mean that was She pretty much laid it out, saying, 0:16:22.080 --> 0:16:24.800 if you don't get American stockpiles out of you don't 0:16:25.160 --> 0:16:30.520 stop exporting products that are you know, commercially viable uh 0:16:30.600 --> 0:16:33.720 to to export, then we're going to you know, ban 0:16:33.840 --> 0:16:37.360 the export of certain products. And that's I think very 0:16:37.440 --> 0:16:40.560 damaging to the global energy market because the United States 0:16:40.680 --> 0:16:44.760 is an important participant in this global energy market and 0:16:45.040 --> 0:16:48.960 we we import tons of products as well as as 0:16:48.960 --> 0:16:51.600 we export them, and that's what helps things run smoothly. 0:16:52.080 --> 0:16:55.960 Right now, the prices in Europe for diesel, for liquefied 0:16:56.040 --> 0:16:58.720 natural gas, for all sorts of products are much higher 0:16:58.760 --> 0:17:00.920 than you can get in being United States, and so 0:17:01.000 --> 0:17:03.560 that's why we're seeing a lot of products go to Europe, 0:17:03.680 --> 0:17:08.240 especially because Russian products are no longer available for these 0:17:08.240 --> 0:17:11.600 places to import. If you know, we wanted to correct this, 0:17:11.760 --> 0:17:15.720 we could stop, you know, sanctioning Russian exports, or Europe 0:17:15.720 --> 0:17:17.680 could take a hard look at it. You know, it's 0:17:18.000 --> 0:17:21.720 the answer to this problem is not to say don't 0:17:21.880 --> 0:17:25.159 export or we're gonna ban exports. The answer is to 0:17:25.280 --> 0:17:29.000 look at the larger flow of of products and figure out, 0:17:29.280 --> 0:17:32.639 you know, where things could be improved. For example, they 0:17:32.640 --> 0:17:35.240 could get rid of the Jones Act or suspend the 0:17:35.280 --> 0:17:38.159 Jones Act, which would make it much easier to transport 0:17:38.240 --> 0:17:41.199 diesel from certain places in the United States to the 0:17:41.200 --> 0:17:44.640 Eastern Seaboard where diesel supplies are very low. Well, there's 0:17:44.640 --> 0:17:47.119 a question about whether Jennifer Granham has credibility within the 0:17:47.200 --> 0:17:49.280 energy industry at this point. We could get into that. 0:17:49.920 --> 0:17:52.760 Perhaps a little more instructive is what companies are actually 0:17:52.760 --> 0:17:55.720 doing whether they're going to actually invest in producing more 0:17:55.840 --> 0:17:59.960 natural gas, producing more crude products in the United States. 0:18:00.080 --> 0:18:01.679 What do you see on the investment side at a 0:18:01.760 --> 0:18:04.840 time when prices, while they have come down, are still 0:18:04.920 --> 0:18:08.840 much more elevated than they have been in years. You know, 0:18:08.920 --> 0:18:11.800 you you would think that ordinarily, when prices are high, 0:18:12.040 --> 0:18:16.440 that there's a much higher level of certainty for producers 0:18:16.480 --> 0:18:18.800 to say, Okay, we're going to invest, We're going to 0:18:18.960 --> 0:18:22.359 produce more. But right now, at least according to the 0:18:22.440 --> 0:18:25.480 survey that the Dallas Set and other fans have done 0:18:25.640 --> 0:18:29.600 of energy producers in their regions, show that actually there's 0:18:29.640 --> 0:18:32.520 a very high level of uncertainty, and a big part 0:18:32.520 --> 0:18:36.159 of that has to do with inflation and supply chain issues. 0:18:36.480 --> 0:18:39.440 A lot of producers are finding that while they thought 0:18:39.480 --> 0:18:42.679 that their costs would go up maybe ten, they're finding 0:18:42.720 --> 0:18:47.240 that costs are up or higher and that's really hurting 0:18:47.280 --> 0:18:49.840 their ability. Even those that want to produce more, that 0:18:49.920 --> 0:18:52.879 want to drill more, they want to open more wells, Uh, 0:18:52.920 --> 0:18:55.199 they're finding that this is very difficult. They don't know 0:18:55.200 --> 0:18:57.400 where they can get this steel, they don't know where 0:18:57.400 --> 0:19:00.679 they can find labor and sand and other inputs. That 0:19:00.760 --> 0:19:03.520 they need in order to get get these wells going. 0:19:03.760 --> 0:19:07.000 So wells are taking these seven to eight months to complete, 0:19:07.040 --> 0:19:10.199 whereas before that timeline was much much shorter. Can we 0:19:10.240 --> 0:19:12.840 just probe the tail risk it? Just to wrap up, Allen, 0:19:13.040 --> 0:19:15.800 what do you think would happen if the administration cut 0:19:15.880 --> 0:19:19.399 out the export of a fuel of energy product to 0:19:19.600 --> 0:19:22.400 say Europe. What would happen? What would the main characteristics 0:19:22.400 --> 0:19:25.879 of the energy market look like in that world? I 0:19:25.920 --> 0:19:28.480 think that the first thing we would see is a major, 0:19:28.720 --> 0:19:32.439 major spike in the price of um fuel products and 0:19:32.480 --> 0:19:35.560 oil all over. I mean, speculators would just you know, 0:19:35.720 --> 0:19:38.280 ramp things up, and it would be such a high, 0:19:38.480 --> 0:19:41.320 you know, increase that maybe the likes of which we 0:19:41.440 --> 0:19:43.760 we've almost never seen, or at least even if this 0:19:43.840 --> 0:19:47.239 was just foreshadowed, we'd see a jump in prices. And 0:19:47.280 --> 0:19:50.800 then we probably also see some issues in terms of 0:19:51.480 --> 0:19:54.200 w t I that would see a much bigger differential 0:19:54.280 --> 0:19:57.200 between Brent and w t I developing. And then thank 0:19:57.240 --> 0:20:04.760 you and I'm wild the Atlanta Council. We celebrate now 0:20:04.920 --> 0:20:08.560 and we do this of Washington, and whether conservative or liberal, 0:20:08.640 --> 0:20:13.600 we celebrate someone who in this geriatric Senate that we 0:20:13.680 --> 0:20:16.880 have is doing the right thing. Lady of Vermont will 0:20:16.960 --> 0:20:20.680 retire and he's retiring with his full abilities at eighty 0:20:20.680 --> 0:20:24.160 two years old, and he retires with a wonderful memoir 0:20:24.359 --> 0:20:28.359 for all the Road taken a memoir. Senator Patrick Lahy, 0:20:28.400 --> 0:20:32.560 we welcome the former DJ at W S. S. E. St. 0:20:32.600 --> 0:20:37.080 Michael's College, Patrick Lady. This morning, Senator, I want to 0:20:37.080 --> 0:20:41.040 cut to the chase. The liberals of your youth, Scoop 0:20:41.119 --> 0:20:44.800 Jackson of Washington, H. H. H. Of Minnesota and a 0:20:44.920 --> 0:20:49.440 young lady have been substituted for the new progressives. What 0:20:49.520 --> 0:20:52.840 do the new progressives need to learn from the liberal 0:20:53.040 --> 0:20:57.760 three theology you lived well? I think they have to 0:20:57.880 --> 0:21:01.720 learn that you can talk about doing things or you 0:21:01.800 --> 0:21:07.240 can do it. Yep, they accomplishing the accomplishing legislation is 0:21:07.280 --> 0:21:13.080 more difficult, but it requires you to uh stop talking 0:21:13.560 --> 0:21:18.240 except with each other work out. Both Republicans and Democrats 0:21:18.240 --> 0:21:21.800 try to get coalitions and past six I mean, you 0:21:21.880 --> 0:21:24.760 go way back at the time of Lennon Johnson getting 0:21:24.800 --> 0:21:29.520 civil rights bill has passed and he had a number 0:21:29.520 --> 0:21:35.000 of senators who supported segregation. All he brought people together, 0:21:35.760 --> 0:21:40.679 but it required hard work. Humphrey and Jackson did the 0:21:40.760 --> 0:21:46.879 same thing. They would bring in Republicans, uh and work 0:21:47.000 --> 0:21:50.359 with him and get it done. I worry that, and 0:21:51.200 --> 0:21:54.560 I appreciate a number of things that you so called 0:21:54.680 --> 0:22:01.480 progressive stand for on climate control, it and education all. 0:22:02.160 --> 0:22:04.800 But it's one thing to talk about it. It's another 0:22:04.880 --> 0:22:07.840 thing to accomplish it. And you had a lot of 0:22:07.840 --> 0:22:11.679 these things. You have to settle for eighty five percent 0:22:12.800 --> 0:22:16.720 this year in legislation, get another fift pcent next year. 0:22:17.000 --> 0:22:20.600 It's never an all or nothing game. Senator, did you 0:22:20.640 --> 0:22:23.359 think that President Biden is the right person to take 0:22:23.400 --> 0:22:29.040 that country and lead that a particular effort post, Well, 0:22:29.040 --> 0:22:34.960 he's done a lot of great legislation past. He's uh 0:22:35.240 --> 0:22:42.520 uh lord the deficit in many ways he's and most importantly, 0:22:43.040 --> 0:22:47.120 he brought us back into the world of nations. Look 0:22:47.160 --> 0:22:52.280 at the animosity Mr Trump has shown towards NATO and 0:22:52.400 --> 0:22:56.600 other countries and his favoritism of Russia, and said, Joe 0:22:56.600 --> 0:23:00.159 Biden came remember the clear view of what Russians like, 0:23:00.320 --> 0:23:05.480 what Putiners like with Ukraine. He brought the natural countries, 0:23:05.480 --> 0:23:09.000 our European allies together in the way we haven't seen 0:23:09.200 --> 0:23:15.359 in decades. And uh, I know that totally surprised a 0:23:15.400 --> 0:23:18.159 lot of our putent, but it also showed that the 0:23:18.240 --> 0:23:22.240 United States was back in the leadership role. Senator. There 0:23:22.280 --> 0:23:24.920 are a lot of people speculating that perhaps he shouldn't 0:23:24.920 --> 0:23:29.399 be the person to run again, specifically because of the 0:23:29.440 --> 0:23:32.000 fact that he is older and that he isn't necessarily 0:23:32.000 --> 0:23:34.520 generating the same enthusiasm, and we're certainly seeing that in 0:23:34.520 --> 0:23:36.919 the polling. Do you agree, do you think that it 0:23:37.040 --> 0:23:40.480 is time for new leadership? Well, I think if Joe 0:23:40.520 --> 0:23:43.800 Biden wants to run again, I'll support him. That's a 0:23:43.880 --> 0:23:47.320 decision only he could make. It's the same way I 0:23:47.400 --> 0:23:50.399 had a lot of people urged me to run again 0:23:50.440 --> 0:23:55.040 in Vermont, but it's a six year term and I 0:23:55.160 --> 0:23:58.320 have things I want to do and still do, and 0:23:58.400 --> 0:24:03.119 so I retired probably at the top of my influence 0:24:03.160 --> 0:24:07.400 of the Senate is protrac But but Joe's gonna Joe 0:24:07.440 --> 0:24:10.480