WEBVTT - 2020 Outlook for Currencies, and Commodities (Podcast)

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<v Speaker 1>Welcome to the Bloomberg PENL Podcast. I'm Paul swing you

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<v Speaker 1>along with my co host Lisa Brahma wits. Each day

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<v Speaker 1>we bring you the most noteworthy and useful interviews for

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<v Speaker 1>you and your money. Whether at the grocery store or

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<v Speaker 1>the trading floor. Find a Bloomberg Penl podcast on Apple

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<v Speaker 1>podcast or wherever you listen to podcasts, as well as

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<v Speaker 1>at Bloomberg dot com. Paul, as we head into one

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<v Speaker 1>of the consensus calls is an emerging markets currencies and

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<v Speaker 1>assets generally will rally throughout next year. Right now, you're

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<v Speaker 1>seeing emerging market currencies at least the index at the

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<v Speaker 1>highest levels of the year. And we're so lucky to

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<v Speaker 1>have with us to talk about what people may be

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<v Speaker 1>getting right and what they might be getting wrong with

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<v Speaker 1>their forecasts on emerging markets and currencies next year. Is

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<v Speaker 1>Dr Winton, Global head of Currency Strategy for Brown Brothers.

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<v Speaker 1>Here are many joints is here in our eleven three

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<v Speaker 1>oh studios. I'd love to get your take on that.

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<v Speaker 1>I mean, you've heard also these forecasts. What are people

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<v Speaker 1>getting right? Well, I think what's right is that Morton

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<v Speaker 1>General have stepped back from bring you know, um you know,

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<v Speaker 1>seven months ago we're looking at a hard Brexit, sensifying

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<v Speaker 1>US China trade war. And over the last seven weeks

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<v Speaker 1>those those tailors have have eased. I can't say, but

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<v Speaker 1>then he's certainly that they've disappeared. Uh. For instance, um,

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<v Speaker 1>Mr Johnson, after his big election victory, he said, Oh,

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<v Speaker 1>we're gonna still gonna leave December thirty one, no matter what,

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<v Speaker 1>you know, So heart breakit. It's still floating around out there.

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<v Speaker 1>I don't know that's the base case, but out there

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<v Speaker 1>US China trade deal great. We just got news that

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<v Speaker 1>they're gonna sign something Phase one in in mid January likely. Um,

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<v Speaker 1>but that's the low hanging food. We had trouble getting

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<v Speaker 1>the easiest part done and we've got phase two plus

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<v Speaker 1>coming up. So it's it's gonna be some low level

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<v Speaker 1>sort of tensions I think persisting throughout. That's not to

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<v Speaker 1>say Marcus kent rally risk can do risk, acids can

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<v Speaker 1>do okay, but you just have to be you know,

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<v Speaker 1>you knows, be cautious. I guess that's my my watch word. Yeah,

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<v Speaker 1>because I'm Yeah, as Lisa and I have been talking

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<v Speaker 1>about the current seasons and so on, I'm just I

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<v Speaker 1>always kind of lead with. I have a very difficult

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<v Speaker 1>time coming up of the bear case for the U. S. Dollar.

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<v Speaker 1>I'm looking at the dollar index is off about a

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<v Speaker 1>third of one percent today, but you know, I'm just

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<v Speaker 1>not sure what rallies against it. But I guess you know,

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<v Speaker 1>do you think that the dollar could appreciably depreciate this year? Paul?

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<v Speaker 1>I mean you really have touched on really the big

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<v Speaker 1>debate because you know, look in long, going long dollar

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<v Speaker 1>was really the way to go, at least until Q

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<v Speaker 1>four UM. And I think I think you and I

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<v Speaker 1>are in the minority now. I think you know, most

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<v Speaker 1>most researchers and forecasters are looking for a weaker dollar

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<v Speaker 1>next year. And I have to agree with you. If

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<v Speaker 1>you don't like the dollar, where do you go? That's

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<v Speaker 1>my first question? Okay, we want to short the dollar?

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<v Speaker 1>Where you go along? Well? UK, you know again Brexit

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<v Speaker 1>issues are still there. Other economies is still going to

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<v Speaker 1>remain very weak under because it's continuing uncertainty. Your zone

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<v Speaker 1>is struggling. We may get another round of stimulus. That

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<v Speaker 1>remains me seen Japan struggling with the consumption tax hike impact.

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<v Speaker 1>So it's really hard for me to get excited about

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<v Speaker 1>a lot of other places, and I think we goes

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<v Speaker 1>back to so there were the least bad place out there.

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<v Speaker 1>Although you could say people are going to put more

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<v Speaker 1>money in to emerging market currency. Is what you've seen.

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<v Speaker 1>Uh do you buy that? Yes? I do. So we

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<v Speaker 1>just brought out a quarterly Uh, I guess two weeks ago,

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<v Speaker 1>and we do have the sort of bifurcated dollar. I

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<v Speaker 1>look that against the majors that should do better, but

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<v Speaker 1>against emerging markets, uh, it will do a little bit worse.

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<v Speaker 1>So it's doesn't always happen a lot of times, you know,

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<v Speaker 1>really trades and lockstep, but this is one of those

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<v Speaker 1>times where we think we can get divergence between major

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<v Speaker 1>currencies and emerging market currency, which nations which crosses are

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<v Speaker 1>going to kind of drive that in emerging markets emerging markets. Well,

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<v Speaker 1>that's the thing we've been telling our clientses. And you know,

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<v Speaker 1>you can't just go widely long m there's a lot

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<v Speaker 1>of idiosynecratic risk out there. You know. For instance, we're

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<v Speaker 1>very negative and remain very negative in South African Turkey

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<v Speaker 1>various reasons, but much more positible in say Brazil and

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<v Speaker 1>Mexico and sort of agnostic on a lot of things

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<v Speaker 1>in between. But it's really it's really just a matter

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<v Speaker 1>of really doing a homework. And I say this all

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<v Speaker 1>the time. You know, whether we're in a bear market

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<v Speaker 1>or a bull market, you know, you really got to

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<v Speaker 1>do your homework. You look under the hood, which countries

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<v Speaker 1>are doing the right things, which countries are doing the

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<v Speaker 1>wrong things? Um, And really, really, I think, m when

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<v Speaker 1>when all of dust settles, the performance story speaks for itself.

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<v Speaker 1>All right, you mentioned Brazil. That's kind of where I

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<v Speaker 1>wanted to go. What's your thesis on Brazil? Because I

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<v Speaker 1>know that obviously when people think about emerging markets, that's

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<v Speaker 1>one of the first places they think about getting disposure.

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<v Speaker 1>So Brazil got hammered last during this esay last year.

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<v Speaker 1>I feel like I was already twenty but it got

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<v Speaker 1>hammered in um in much of nine. And I think

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<v Speaker 1>for good reason. But a lot of the UM good

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<v Speaker 1>things are happening now. Growth is finally starting to pick up. UM.

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<v Speaker 1>Mr Bolson I was able to push through a majority

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<v Speaker 1>of his fiscal reforms. But you know, I was actually

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<v Speaker 1>pretty skeptical that he would be able to do so.

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<v Speaker 1>But he got the majority of it past um. Central

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<v Speaker 1>MICUs cut rates aggressively. That's the sort of the I

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<v Speaker 1>think the warning sign. You know, I think a lot

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<v Speaker 1>of investors are used to ten percent twelve percent rates

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<v Speaker 1>in Brazil. You know, just put money in government bonds

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<v Speaker 1>what have you, and you get a really solid yield.

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<v Speaker 1>But you know, we're record low four and a half

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<v Speaker 1>percent for the celic rate. I think that's the bottom.

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<v Speaker 1>But my only point is that we used to get

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<v Speaker 1>a lot of cushion, you know, used to get a

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<v Speaker 1>lot of sort of risk premium for what's going on

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<v Speaker 1>in Brazil real longer there, so we're sort of price

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<v Speaker 1>for perfection. Uh. Maybe market getting a little too optimistic.

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<v Speaker 1>But just again, it's good things. The economy is starting

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<v Speaker 1>to finally respond to stimulus. Um another round of structural

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<v Speaker 1>forms I think is in the pipeline for so you know, overall,

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<v Speaker 1>good story. We just have a few hours left of

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<v Speaker 1>the last day of the treading of treading of nineteen,

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<v Speaker 1>so it's time to get philosophical. It falls like I'm

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<v Speaker 1>going to go back to practicing my golf stroke. Um.

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<v Speaker 1>I want to talk a little bit about the concept

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<v Speaker 1>of de dollarization, because we've seen an incredible amount of

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<v Speaker 1>net buying of gold by central banks around the world

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<v Speaker 1>as they try to diversify away from the dollar. Do

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<v Speaker 1>you buy that that could potentially gain steam and create

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<v Speaker 1>a bit of weakness for the dollar. Well, I've been

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<v Speaker 1>in the markets for years in the space is basically

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<v Speaker 1>screaming note And I have to say I'm not exact

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<v Speaker 1>when I've heard the story multiple multiple times, and you

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<v Speaker 1>know at first it was gonna happen. I think the

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<v Speaker 1>big time was when the Euro was introduced. Well, of

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<v Speaker 1>course the Euro, we got this big economic powerhouse and

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<v Speaker 1>it's gonna replace a dollar. Um. It's interestally asked that

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<v Speaker 1>because I'm have just released it's quarterly co for data

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<v Speaker 1>competition of for in exchange reserves, and the dollar shares

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<v Speaker 1>actually checked up a little bits around. It's always been

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<v Speaker 1>so around sixty. And if you look at the at

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<v Speaker 1>the euro share, it's always sort of been the sum

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<v Speaker 1>of the parts. You know, if you took nine, nine,

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<v Speaker 1>you took you know, French, Frank Italian leader, blah blah blah,

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<v Speaker 1>you add them all up, that's pretty much what the

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<v Speaker 1>Euro is right now. So it's it's there's still no

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<v Speaker 1>one out there that to really challenge a dollar. What

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<v Speaker 1>about the whole concept the other philosophical question facing currencies

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<v Speaker 1>of a crypto un rite, the idea of some sort

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<v Speaker 1>of crypto currency that could supersede the dollar. No, that's

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<v Speaker 1>I mean, I think that's Governor Karney of the BO.

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<v Speaker 1>You just sort of threw that out there. It was

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<v Speaker 1>like you know, dropping, uh, throwing hand grenading in the

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<v Speaker 1>crowd that up. Yeah, it was really fascinating. Um, you know,

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<v Speaker 1>like the one philosophy I noticed that the person's uh,

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<v Speaker 1>an observer's interest in cryptocurrencies is in inversity related I'm sorry,

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<v Speaker 1>is positively related to their inversity related to the age.

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<v Speaker 1>So the older you get, I think, the more skeptical

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<v Speaker 1>you are cryptoscurrencies, and the younger you are like, okay,

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<v Speaker 1>this is the greatest things in slice bread. So you know,

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<v Speaker 1>I'm the oldest guy in the room, I think. So

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<v Speaker 1>I'm gonna be the skeptic and say, look, you know

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<v Speaker 1>there's a lot of you know, the whole blockchain technology

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<v Speaker 1>is there, right, and it has all sorts of um,

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<v Speaker 1>you know, secrecy provision things like that. But you know,

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<v Speaker 1>in terms of an actual you know, reserve conrecnier, it

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<v Speaker 1>just doesn't meet those those qualities. You know, that's sort

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<v Speaker 1>of the conditions were being a currency right in the

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<v Speaker 1>store value you need to measure, you know. It's just

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<v Speaker 1>you know, when when you tell me if a currency

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<v Speaker 1>you know can rally you know a day or drop

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<v Speaker 1>or you know, drop a thousand percent or whatever, it's

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<v Speaker 1>just you know, it doesn't that's not right. Know the

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<v Speaker 1>central banks, if you know, I've met a lot of

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<v Speaker 1>CenTra branks in general, they're very conservative. They you know,

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<v Speaker 1>they want something solid, and that's why the dollar is

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<v Speaker 1>still there. You can trust a dollar. You might not

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<v Speaker 1>agree with everyone doing, but it's got a great track record.

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<v Speaker 1>Dr Winton, thank you so much for joining us. Dr

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<v Speaker 1>Winton is global head of Currency Strategy, Brown Brothers Harriman.

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<v Speaker 1>Looking at the consumer, it's really been the driver for

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<v Speaker 1>this economy, the consumer confidence. Uh, whether you look at

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<v Speaker 1>the jobs or housing prices, the consumer has really been, uh,

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<v Speaker 1>the component of this economy that has really been supporting

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<v Speaker 1>the US economy as business investment, as manufacturing continue to

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<v Speaker 1>be under a modest amount of pressure. Let's get the

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<v Speaker 1>latest indicator of the Consumer Confidence Index. We welcome Lynn Franco,

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<v Speaker 1>Director of Economic indicators for the conference board. Joining us

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<v Speaker 1>on the phone from New York City. So, Lynn, give

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<v Speaker 1>us some color on what your data announced today means

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<v Speaker 1>for the consumer. I think the consumer is going to

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<v Speaker 1>continue to prop up the US economy. In early I mean,

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<v Speaker 1>we had a very slight marginal dip in consumer confidence,

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<v Speaker 1>mostly in people's expectations, uh, you know, regarding jobs and

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<v Speaker 1>their income prospects, which may suggest no real pickup in

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<v Speaker 1>in consumer spending. But we still expect consumers to spend

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<v Speaker 1>enough at least for us to have a positive growth

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<v Speaker 1>in Q one. When do we start to care the

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<v Speaker 1>fact that we did see a slight decline into summer

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<v Speaker 1>four or five. In the previous months we saw a

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<v Speaker 1>dip like this, We've really just been moving sideways. I think.

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<v Speaker 1>Really that's the story for nineteen and probably in early

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<v Speaker 1>twenty as well. So no cause for alarm. This is

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<v Speaker 1>sort of typical behavior. It's behavior to that suggests, you know,

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<v Speaker 1>we're sort of at at a plateau. So, um, you know,

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<v Speaker 1>our expectations are as the economy is going to continue

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<v Speaker 1>to expand. It around two percent in the first quarter,

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<v Speaker 1>second quarter, uh, consumer spending should come in and around

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<v Speaker 1>two and a half percent in Q one UM, so

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<v Speaker 1>really no red flags as of yet. One of the

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<v Speaker 1>key issues supporting the consumer has been the job market again,

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<v Speaker 1>uneployment down around three and a half percent, the best

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<v Speaker 1>it's been in you know, fifty or sixty years. UM.

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<v Speaker 1>What is your survey saying about the labor market. I

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<v Speaker 1>think what we're seeing here is that consumers expect a

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<v Speaker 1>little bit of softening in the labor market in UM.

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<v Speaker 1>Not that that translates into you know, suddenly, you know,

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<v Speaker 1>layoffs and any other sort of negative behavior, but maybe

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<v Speaker 1>that it won't grow just as fast as it has

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<v Speaker 1>in UH nineteen. I was looking at this data today

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<v Speaker 1>that shows half of the US population spends more than

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<v Speaker 1>they take in every every month, and I find it

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<v Speaker 1>compelling because it kind of speaks this two tier economy

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<v Speaker 1>that we're in. And I'm wondering from a consumer confidence level,

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<v Speaker 1>do you break it out or do you have a

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<v Speaker 1>sense of how confidence is different depending on the income level. Absolutely.

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<v Speaker 1>I mean if you take a look at sort of

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<v Speaker 1>you know, consumers earning under fifty thousand a year, UH,

0:11:12.880 --> 0:11:16.240
<v Speaker 1>their confidence level is at one oh seven, not unaveraged,

0:11:16.320 --> 0:11:20.640
<v Speaker 1>let's say, which is confident but not as confident as

0:11:20.640 --> 0:11:24.640
<v Speaker 1>their counterparts who are earning fifty and over and are

0:11:24.679 --> 0:11:27.800
<v Speaker 1>averaging at one, you know, at around one thirty eight.

0:11:27.920 --> 0:11:31.240
<v Speaker 1>So it continues to be sort of a a split

0:11:31.679 --> 0:11:35.640
<v Speaker 1>economy here in terms of consumers. And while both the

0:11:35.960 --> 0:11:38.840
<v Speaker 1>upper end and the lower end remain confident, um, those

0:11:38.840 --> 0:11:42.079
<v Speaker 1>in the upper end are much more confident. How about housing,

0:11:42.160 --> 0:11:44.080
<v Speaker 1>that's been a big part of that is a big

0:11:44.120 --> 0:11:47.200
<v Speaker 1>part of a consumer's net worth in the housing markets

0:11:47.200 --> 0:11:49.400
<v Speaker 1>generally been pretty strong with low interest rates, which your

0:11:49.400 --> 0:11:52.680
<v Speaker 1>survey saying about the housing market in US, yes, I

0:11:52.720 --> 0:11:54.920
<v Speaker 1>mean that remains sort of a bright spot. And we

0:11:54.960 --> 0:11:57.720
<v Speaker 1>did see a pick up in the percentage of consumers

0:11:57.720 --> 0:12:00.680
<v Speaker 1>who had the intention to purchase a home over the

0:12:00.720 --> 0:12:03.640
<v Speaker 1>next six months, and I think we can attribute that

0:12:03.720 --> 0:12:06.760
<v Speaker 1>to the several cuts that we've seen in you know,

0:12:06.880 --> 0:12:09.800
<v Speaker 1>in interest rates, so that should bode well for housing.

0:12:09.800 --> 0:12:12.439
<v Speaker 1>I think we've got some positive news this morning, so

0:12:12.480 --> 0:12:15.080
<v Speaker 1>that could be a very you know, bright spot in

0:12:16.280 --> 0:12:18.920
<v Speaker 1>and obviously of concumers are purchasing homes, you're going to

0:12:19.040 --> 0:12:21.320
<v Speaker 1>need you know, durables to go in there, so that

0:12:21.440 --> 0:12:24.559
<v Speaker 1>may be a boost spending as well. Lin Franco, thank

0:12:24.600 --> 0:12:26.280
<v Speaker 1>you so much. For being with us and happy to

0:12:26.360 --> 0:12:29.720
<v Speaker 1>year two. Lin franco Is, Senior Director of Economic Indicators

0:12:29.720 --> 0:12:49.079
<v Speaker 1>and Surveys at the conference. Board has been what Lisa

0:12:49.120 --> 0:12:53.000
<v Speaker 1>abrom Woods has I think correctly coined the everything rally

0:12:53.360 --> 0:12:56.800
<v Speaker 1>year Everything seems that I like it though, but I'm

0:12:56.840 --> 0:13:00.640
<v Speaker 1>not taken credit for it. That includes a gold so

0:13:01.320 --> 0:13:03.079
<v Speaker 1>which is kind of you know, given we're seeing risky

0:13:03.080 --> 0:13:06.000
<v Speaker 1>assets go to see gold move up off. It's June

0:13:06.000 --> 0:13:07.719
<v Speaker 1>low also very interesting to get a sense of what's

0:13:07.720 --> 0:13:09.920
<v Speaker 1>going on in gold, in the metals market and other

0:13:09.920 --> 0:13:13.360
<v Speaker 1>things financial. We welcome Frank Holmes, CEO and Chief Investment

0:13:13.360 --> 0:13:17.439
<v Speaker 1>Officer of US Global Investors based in San Antonio, Texas.

0:13:17.640 --> 0:13:19.800
<v Speaker 1>So Frank, again, I'm just looking at my gold chart

0:13:19.920 --> 0:13:23.400
<v Speaker 1>here and since early June gold now is rallied about

0:13:24.120 --> 0:13:29.679
<v Speaker 1>what's behind that a negative real interest rates? Bloomberg has

0:13:29.679 --> 0:13:32.240
<v Speaker 1>a beautiful function and'll let you take a look at

0:13:32.559 --> 0:13:35.440
<v Speaker 1>all the government bonds around the world, and you saw

0:13:35.480 --> 0:13:38.200
<v Speaker 1>the peak took place in August when it was a

0:13:38.240 --> 0:13:41.760
<v Speaker 1>record number of government bonds were offering negative real interest

0:13:41.840 --> 0:13:45.360
<v Speaker 1>rates to try to stimulate economic activity. And that's the

0:13:45.400 --> 0:13:48.199
<v Speaker 1>great in balance that we have, the balancing of economies,

0:13:48.240 --> 0:13:52.920
<v Speaker 1>fiscal and monetary policies. The fiscal policies are toxic regulation, monetaries,

0:13:52.960 --> 0:13:57.600
<v Speaker 1>money supply, and real interest rates. And the unprecedented number

0:13:57.720 --> 0:14:00.319
<v Speaker 1>of bonds that are offering negative real interest rates and

0:14:00.360 --> 0:14:04.040
<v Speaker 1>try to stimulate economic activity is a catalyst for gold

0:14:04.040 --> 0:14:08.080
<v Speaker 1>to trade higher. So this is an important point that

0:14:08.200 --> 0:14:11.080
<v Speaker 1>we've had negative yields for years now, but this year

0:14:11.120 --> 0:14:16.160
<v Speaker 1>we actually saw inflation tick up beyond where the yields were.

0:14:16.200 --> 0:14:18.760
<v Speaker 1>In other words, there was a sense that you are

0:14:18.840 --> 0:14:21.960
<v Speaker 1>losing money by parking it in bonds. Is that the

0:14:22.000 --> 0:14:24.240
<v Speaker 1>idea here? And that was sort of the shift in

0:14:25.560 --> 0:14:30.480
<v Speaker 1>versus the other years where they're also were negative interest rates. Well, no,

0:14:30.760 --> 0:14:32.600
<v Speaker 1>it's it's it is part of it as a good

0:14:32.640 --> 0:14:35.360
<v Speaker 1>comment you make, but I think it really is. If

0:14:35.400 --> 0:14:38.160
<v Speaker 1>you take a look at the aggregate number, it hit

0:14:38.240 --> 0:14:41.720
<v Speaker 1>an all time high in August, and that's when gold

0:14:41.760 --> 0:14:44.760
<v Speaker 1>hit an all time high. So we're seeing our strong

0:14:44.800 --> 0:14:47.600
<v Speaker 1>core relationship by I guess quant macro funds that are

0:14:47.800 --> 0:14:50.680
<v Speaker 1>going a long gold every time that trend starts. Momentum

0:14:50.920 --> 0:14:54.120
<v Speaker 1>of more and more government sovereign bonds going to negative yields.

0:14:54.160 --> 0:14:57.560
<v Speaker 1>But the inflation area in the US is real, especially

0:14:57.560 --> 0:15:01.000
<v Speaker 1>if you look at prices at Target and Walmart. And

0:15:01.040 --> 0:15:04.560
<v Speaker 1>Target Walmart are critical for covering the upper middle class

0:15:04.600 --> 0:15:07.280
<v Speaker 1>down to the lower class and all classes of that range.

0:15:07.760 --> 0:15:09.880
<v Speaker 1>And we're seeing in place and running five to six

0:15:09.920 --> 0:15:13.920
<v Speaker 1>percent with the tetraphor so you are seeing. It doesn't

0:15:13.920 --> 0:15:17.320
<v Speaker 1>show up in the CPI numbers, but the real zoomer

0:15:17.400 --> 0:15:23.080
<v Speaker 1>going out and buying products is experiencing inflation pushing six percent. So, Frank,

0:15:23.320 --> 0:15:24.800
<v Speaker 1>where do you think gold? I'm looking at gold here

0:15:26.360 --> 0:15:30.120
<v Speaker 1>announced fifty one dollars. Where's your expectation for gold maybe

0:15:30.160 --> 0:15:33.920
<v Speaker 1>a year from now. Well, it's easy for gold to

0:15:34.000 --> 0:15:36.960
<v Speaker 1>go up or down in any rolling twelve month period

0:15:37.040 --> 0:15:40.080
<v Speaker 1>of the past fifteen years. Uh. It's his DNA of

0:15:40.120 --> 0:15:43.040
<v Speaker 1>all of TILLTI seventy percent of time. So I think

0:15:43.040 --> 0:15:46.400
<v Speaker 1>you can see gold track up the eighteen hundred maybe

0:15:46.400 --> 0:15:49.480
<v Speaker 1>take out the nineteen hundred high that took place in

0:15:49.960 --> 0:15:53.000
<v Speaker 1>two thousand and eleven. Uh. And the reason why I

0:15:53.080 --> 0:15:56.440
<v Speaker 1>say that is because this in balance between monetary and

0:15:56.440 --> 0:16:00.200
<v Speaker 1>fiscal policy position makers is still not resolved. It's off.

0:16:00.200 --> 0:16:03.360
<v Speaker 1>There's only countries that have really lowered corporate taxes or

0:16:03.440 --> 0:16:08.640
<v Speaker 1>creating tax free zones for incentives are America and China. Now,

0:16:08.760 --> 0:16:13.680
<v Speaker 1>fortunately there of global trade and that's an important macro factor.

0:16:14.080 --> 0:16:16.000
<v Speaker 1>But I think that the rest of the country is,

0:16:16.160 --> 0:16:20.720
<v Speaker 1>especially Europe and Japan. Uh, there's no conviction to actually

0:16:20.840 --> 0:16:25.680
<v Speaker 1>streamline the regulations which have been growing at ager for

0:16:25.760 --> 0:16:28.480
<v Speaker 1>the past decade. All Right, so we covered gold, let's

0:16:28.480 --> 0:16:32.080
<v Speaker 1>move on to oil. We're seeing oil prices surging this year.

0:16:32.240 --> 0:16:36.440
<v Speaker 1>Are I guess searches the wrong word. They've risen significantly. Uh,

0:16:36.480 --> 0:16:39.440
<v Speaker 1>and of late they have been rising. How much more

0:16:40.160 --> 0:16:44.600
<v Speaker 1>space is there in this rally? In your opinion, I

0:16:44.640 --> 0:16:48.160
<v Speaker 1>think that oil will run into difficult eighty dollars. The

0:16:48.240 --> 0:16:52.480
<v Speaker 1>factors are just an incredible game changer. And you saw

0:16:52.520 --> 0:16:55.880
<v Speaker 1>this morning at a Russia that in fact they're lowering

0:16:56.000 --> 0:17:01.160
<v Speaker 1>some of the five year gas contracts UH to Europe. Now,

0:17:01.160 --> 0:17:04.560
<v Speaker 1>this is great for global economic activity, but it's not

0:17:04.880 --> 0:17:08.919
<v Speaker 1>so great for the energy stocks. So it's interesting. You know,

0:17:08.960 --> 0:17:10.680
<v Speaker 1>when I think about gold, it's just you know, it's

0:17:10.680 --> 0:17:14.920
<v Speaker 1>a commodity obviously supplying demand. It seems like demand has

0:17:14.960 --> 0:17:18.440
<v Speaker 1>been really the determinant of where oil is going to trade.

0:17:18.480 --> 0:17:20.920
<v Speaker 1>If there's a trade deal out there, easing trade tensions.

0:17:20.920 --> 0:17:23.879
<v Speaker 1>Oil can rally. If we have a bad tweet about

0:17:24.119 --> 0:17:26.800
<v Speaker 1>trade between US and China, oils tends to pull back.

0:17:27.160 --> 0:17:30.159
<v Speaker 1>How are you thinking about oil? Is it really demand

0:17:30.280 --> 0:17:35.440
<v Speaker 1>driven or supply driven? I think you right now is

0:17:35.480 --> 0:17:40.200
<v Speaker 1>still supply driven. And I think the the the technological

0:17:40.240 --> 0:17:45.359
<v Speaker 1>breakthroughs UH in America have, in addition to the ubers

0:17:45.400 --> 0:17:49.879
<v Speaker 1>of the world, I would change the transportation, would changed

0:17:49.920 --> 0:17:53.720
<v Speaker 1>the energy dynamics. So I think that it's going to

0:17:53.840 --> 0:17:55.920
<v Speaker 1>be definitely. Supply is going to be strong coming over

0:17:55.920 --> 0:17:58.760
<v Speaker 1>the US. They keep lowering the price of them, costing

0:17:58.840 --> 0:18:02.639
<v Speaker 1>of the costs and finding energy. It's they have a

0:18:02.680 --> 0:18:05.960
<v Speaker 1>surplus of energy. In fact, earlier this year electricity places

0:18:05.960 --> 0:18:09.680
<v Speaker 1>in Houston went to zero from the surfplus of electricity

0:18:09.960 --> 0:18:13.359
<v Speaker 1>and not only from gas but from windmills, et cetera.

0:18:13.600 --> 0:18:16.560
<v Speaker 1>So I think it's a game changer. Frank Holmes, thank

0:18:16.600 --> 0:18:18.399
<v Speaker 1>you so much for being with us, and happy New

0:18:18.480 --> 0:18:21.200
<v Speaker 1>Year to you. Frank Holmes is chief executive officer and

0:18:21.280 --> 0:18:25.600
<v Speaker 1>chief investment officer for US Global Investors. Thanks for listening

0:18:25.640 --> 0:18:28.040
<v Speaker 1>to the Bloomberg P and L podcast. You can subscribe

0:18:28.040 --> 0:18:30.800
<v Speaker 1>and listen to interviews at Apple Podcasts or whatever podcast

0:18:30.880 --> 0:18:34.400
<v Speaker 1>platform you prefer. Paul Sweeney, I'm on Twitter at pt Sweeney.

0:18:34.480 --> 0:18:36.680
<v Speaker 1>I'm Lisa bram Woyit's I'm on Twitter at Lisa A.

0:18:36.760 --> 0:18:39.360
<v Speaker 1>Bram Wits one before the podcast, you can always catch

0:18:39.440 --> 0:18:41.240
<v Speaker 1>us worldwide. I'm Bloomberg Radio