Speaker 1: Bloomberg Audio Studios, Podcasts, radio news. This is the Bloomberg
Speaker 1: Surveillance Podcast. Catch us live weekdays at seven am Eastern
Speaker 1: on Apple car Play or Android Auto with the Bloomberg
Speaker 1: Business App. Listen on demand wherever you get your podcasts,
Speaker 1: or watch us live on YouTube.
Speaker 2: Mike McLoone, Senior commodity strategist, Bloomberg Intelligence. Mike, this is
Speaker 2: such an unknown scenario here as to how the warn
Speaker 2: Iran will play out in.
Speaker 3: The coming days and weeks.
Speaker 2: We could wake up tomorrow and President Trump, for whatever reason,
Speaker 2: decides to claim victory and bring everybody home here. If
Speaker 2: that were to happen, how do you think energy prices
Speaker 2: would ebb here and pull back when they get back
Speaker 2: to pre war levels?
Speaker 3: Would it take? How quickly would it happen?
Speaker 2: Or are we at maybe a little bit higher levels
Speaker 2: here just given the damage that's been done and maybe
Speaker 2: the tension level that still remain.
Speaker 4: I think the crude oil peak so far this year
Speaker 4: near one hundred and twenty dollars a barrel in WTI
Speaker 4: Paul will go down in history similar to one forty
Speaker 4: seven in two thousand and eight and one thirty in
Speaker 4: twenty twenty two. Right now on the week WTI crude
Speaker 4: oil is down almost four percent, and part of that
Speaker 4: is it's switching contracts. It's gone from the April to
Speaker 4: the May. You go out to December, it's down the
Speaker 4: seventy eight dollars of barrow.
Speaker 5: Why is December is important. It's going to be front
Speaker 5: month right before the midterms. So the scenario you mentioned,
Speaker 5: I think is very unlikely.
Speaker 4: Right now, we're at the stage of trying to produce
Speaker 4: capitulation from Iran where they have no more ability to
Speaker 4: create offensive issues in the golf.
Speaker 5: It's happening.
Speaker 4: The key thing I think people are under estimating is
Speaker 4: there's some significant forces there, not only US President Trump.
Speaker 4: US military is really military, but also is really military intelligence.
Speaker 4: When people talk about boots on the ground, they're there.
Speaker 4: I just things I've read. So I'm pretty sure the
Speaker 4: crude oil market's already saying this weekend, if we wake
Speaker 4: up Monday morning, there's so any major incidents of you know,
Speaker 4: we see burning tankers, crudell is going to have a
Speaker 4: problem and continue to go lower.
Speaker 6: Hey, Mike, the US, other countries, they're taking steps to
Speaker 6: tame prices. Right we're talking about the release of strategic reserves.
Speaker 6: From your history following this and tracking this market is
Speaker 6: would this I mean, is this just a band aid?
Speaker 5: To put it that way, I think that's a good
Speaker 5: way to describe it.
Speaker 4: The first thing I thought of when I heard that
Speaker 4: is it's a sign that yes, oops, we made a
Speaker 4: mistake the hormones.
Speaker 5: The strait is closed now.
Speaker 4: That is enduring for now, but it just means they're
Speaker 4: going to pound harder and harder and harder on this
Speaker 4: offensive capability of Iran. I think that's what's happening now.
Speaker 4: They're bringing in more and more and more offensive capabilities
Speaker 4: that just stop it enough.
Speaker 5: They can't. That's a major failure.
Speaker 4: But right now we're seeing the markets starting saying, yeah,
Speaker 4: a lot of these attacks are slowing down. The worst
Speaker 4: is probably over, and a key indicator that is collapsing gold.
Speaker 5: I think it's looking forward to a safer world.
Speaker 2: What are the future markets telling us Mike today about
Speaker 2: the oil market.
Speaker 5: There's a major burden to go higher.
Speaker 4: Like I mentioned, if you go every future contract is
Speaker 4: in backgradation, which means is lower.
Speaker 5: So I'm focusing on the US.
Speaker 4: Why the US is the largest energy producer and a
Speaker 4: net exporterer it's the one that matters. That's what's shifted
Speaker 4: from the last ten twenty years, and US is a
Speaker 4: complete upper hand. But we're also seeing the price of
Speaker 4: gasoline went to four dollars a gallon. Remember what happened
Speaker 4: in two thousand and eight. When that happened, it accelerates recession.
Speaker 4: So we're seeing right now as a global energy crisis
Speaker 4: ticking over. The straight of har Moose might be somewhat
Speaker 4: safe within a few days. It's already getting safeer and
Speaker 4: Crudell's anticipating. And what I point out is now we're
Speaker 4: seeing collapsing in dustrial metals, which I think that's a
Speaker 4: sign that this is a global recessionary trajectory on the
Speaker 4: back of the spike and the shock of the straight
Speaker 4: being closed.
Speaker 6: Hey, Mike, we have about thirty seconds left. So you
Speaker 6: mentioned golds. I want you to kind of expand on
Speaker 6: that a little bit. I mean, it's seen of this
Speaker 6: haven heading for the biggest weekly loss in Sea. I mean,
Speaker 6: what does gold see kind of moving forward?
Speaker 4: Gold predicted this, It went up too much last year.
Speaker 5: It warned us something might be happened.
Speaker 4: So by the rumor sell effect, the significance is gold
Speaker 4: was a store value, but right now, at almost two
Speaker 4: point four times the volatility of the S and B
Speaker 4: five hundred, it's now a speculative risk asset in the
Speaker 4: late days of a bear mark.
Speaker 5: And I think it's more like a go down to
Speaker 5: four thousand dollars and announce.
Speaker 3: All right, Micha maclohan, thank you so much. We appreciate that.
Speaker 2: Mike mcloon, he is the senior commodity strategist for Bloomberg Intelligence.
Speaker 2: He's spaced down there in Miami Beach, Florida, and if
Speaker 2: you care about that part of the world, Sonny and eighty,
Speaker 2: as far as the I can see, Mike McLoone the
Speaker 2: smartest guy in the room, no doubt.
Speaker 3: Stay with us. More from Bloomberg Surveillance coming up after this.
Speaker 1: You're listening to the Bloomberg Surveillance podcast. Catch us live
Speaker 1: weekday afternoons from seven to ten. Listen on Apple Karplay
Speaker 1: and Android Otto with the Bloomberg Business app, or watch
Speaker 1: us live on YouTube.
Speaker 3: Welcome Cole Smeat into our studio.
Speaker 2: Cole Smith is the CEO and portfolio manager Smeat Capital
Speaker 2: Manager based out there in Phoenix. Your summer has already
Speaker 2: started in Phoenix, Right, I've seen some crazy temperatures it has.
Speaker 7: In fact, I need to invite both of you to
Speaker 7: come out breakfast with us like Tom Keane did a
Speaker 7: few weeks ago here yep, before he went off to
Speaker 7: his you know, San Francisco Giants spring training game LA
Speaker 7: that afternoon.
Speaker 8: So that's an open welcome, by the way, one hundred percent.
Speaker 7: We are we already We're gonna think we're gonna hit
Speaker 7: a hundred degree temperature this next week, earliest we've seen
Speaker 7: for a while.
Speaker 8: That being said, as I walk around to Cole New York, Yep,
Speaker 8: I'm not exactly sad about that. So it's back for
Speaker 8: ski season, but it is what it is.
Speaker 2: It is, and it's a dry heat. Col what's the
Speaker 2: conversation you're having with your clients these days? The last
Speaker 2: three weeks have kind of thrown that Black Swan event
Speaker 2: out there, and I'm sure it's got a lot of
Speaker 2: volatility into the marketplaces. Probably your phones might be bringing
Speaker 2: a little bit more than usual. What's the message you're
Speaker 2: bringing to your clients?
Speaker 8: Yeah, so here's what I would say.
Speaker 7: You know, you were just mentioning the timeline of what's
Speaker 7: going on in this conflict. Let's just go back to
Speaker 7: nineteen seventy three Yam Kapor War lasted thirty days, and
Speaker 7: yet the effects of it were seen throughout the rest
Speaker 7: of the decade.
Speaker 8: So I say that because I.
Speaker 7: Think that the idea was this is going to be
Speaker 7: like venny aka Venezuela.
Speaker 8: We're going to come in. It's gonna be strategic, super surgical.
Speaker 7: This has been everything but that, okay, And therefore what
Speaker 7: we're in is a longer term conflict. And what are
Speaker 7: we seeing. We are seeing longer term problems arise.
Speaker 8: Okay, you're Calleague in Dubai.
Speaker 7: If they go out to the spot market and oil
Speaker 7: right now, they're not going to see that price on Brent.
Speaker 7: They're looking at one seventy the highest price ever paid
Speaker 7: in the history of the world. Yep.
Speaker 8: Okay.
Speaker 7: And so I point that out because just think of what.
Speaker 7: Let's go back one year ago. We're sitting there staring
Speaker 7: at the tariff tantrum. We're watching economic cyclicality get bludgeoned.
Speaker 7: OPEC plus is increasing supply. It's going to be a
Speaker 7: nightmare for the oil business because we might have a
Speaker 7: recession YadA, YadA, YadA. And here we are less than
Speaker 7: twelve months later, and that seems to be a place
Speaker 7: to be. And guess where investors are not. They do
Speaker 7: not own the energy assets to quote the money python.
Speaker 7: The energy business started off as tis merely a flesh
Speaker 7: wound at three percent, and now investors are having to
Speaker 7: ask the question, what should I be doing? What am
Speaker 7: I doing differently? But here's what's weird. Markets are very
Speaker 7: slow to.
Speaker 8: Adapt to this. I mean, the first week the oil
Speaker 8: stocks didn't even go up.
Speaker 7: Okay, you wake up two. Week two there's a marginal bid.
Speaker 7: Week three, there's more of a bid. This looks like
Speaker 7: it's going to just continue on. But the former trade,
Speaker 7: the former great glorious mania in America, the AI Campex
Speaker 7: hyper scaling game that year is over.
Speaker 6: Well, all that said, I mean, where are their opportunities?
Speaker 6: Where's their value?
Speaker 7: Yeah, you know, if you want to beat Bobby Fisher,
Speaker 7: you got to play him in any game. But chess, Okay,
Speaker 7: chess in the American stock market is big cap tech.
Speaker 7: You can't play that game.
Speaker 8: Okay. Go look at all the quality.
Speaker 7: Growth manager that hid out in the SaaS businesses the
Speaker 7: last couple of years, thinking that that's the way they'll
Speaker 7: beat the game of chess and they found out they
Speaker 7: are actually playing chess. Been pretty nightmare in the last
Speaker 7: six months. So I say that because ultimately, you know,
Speaker 7: we have found to be more attractive in economic cyclical businesses.
Speaker 7: So like think of housing mall rates. We're in a
Speaker 7: world today. We're in nineteen seventy three, we did not
Speaker 7: have energy security. We are the largest oil producing nation
Speaker 7: in the world. We have this neighbor to the north
Speaker 7: that we have a lot of security with, who's a
Speaker 7: large oil producing nation as well. We look at the tars,
Speaker 7: the oil stands in Canada. Our largest holding across our
Speaker 7: book is Sonovas. Okay, Sonovas is a thirty plus year asset.
Speaker 7: You know, they bought out Meg last year. It's a
Speaker 7: great business to own. We think it's very attractive price.
Speaker 7: But what's going on right now is if you look
Speaker 7: at the returns on invested capital accruing per day at
Speaker 7: these prices, these oil companies are producing higher returns on
Speaker 7: capital than SaaS businesses, then software businesses, then all the
Speaker 7: asset light players in the world. So what's perverse is
Speaker 7: why are some of the most capital intensive businesses in
Speaker 7: the world producing the highest returns on capital, and yet
Speaker 7: investors are still treating the asset light businesses like they're
Speaker 7: producing great returns, even though, like I just said, we
Speaker 7: know that in this cap X game, the cash returns
Speaker 7: are declining rapidly in these hyperscalers.
Speaker 2: Aside from energy, which you guys have a couple of
Speaker 2: names including APA in this so novas you mentioned, yep,
Speaker 2: we're else what other sector may be screens wall for you.
Speaker 7: Guys these days, Yeah, the banking world looks attractive because
Speaker 7: people are overplaying fears. Okay, I don't doubt for one
Speaker 7: second that institutions and a bunch of ultra high net
Speaker 7: worth people bought some assets they shouldn't have in places
Speaker 7: like private credit and other alternatives. That is a totally
Speaker 7: plausible theory. The idea that that is the average American
Speaker 7: and the average American household if you go look, if
Speaker 7: you go look at the Federal reserves reports on household
Speaker 7: net worth equity is a percentage of household assets. Is
Speaker 7: the highest I ever been right now, fifty four percent. Okay. Now,
Speaker 7: what's more normal is real estate is bigger in that
Speaker 7: because your home is typically your largest asset, and that's
Speaker 7: very typical for most Americans to retire. We're at a
Speaker 7: point where stocks have become bigger than real estate, and ultimately,
Speaker 7: what it means is we're probably in an era where
Speaker 7: your home out punches your stocks and the problems of
Speaker 7: these products that we're sold to institutions and high network folks,
Speaker 7: you know, the private credit type stuff that is going
Speaker 7: to be contained in wealthy and institutional arenas. But the
Speaker 7: average American doesn't take risk in that. And so the
Speaker 7: idea that there's some massive spill over the economy and
Speaker 7: therefore banking is can be really terrible.
Speaker 8: We just don't see proof to that theory.
Speaker 6: How are you talking to your clients and this kind
Speaker 6: of climate that we're living, mean, well, what kind of
Speaker 6: questions do they have for you?
Speaker 7: Disbelief that the folks that own energy might win the game?
Speaker 7: I mean disbelief where it's like, gosh, you know. The
Speaker 7: main thing we've been talking about with investors is like, listen,
Speaker 7: this is a very concentrated, narrow world, and if the
Speaker 7: future is unknown, which it always is unknown, are we
Speaker 7: all playing the wrong game?
Speaker 8: Okay?
Speaker 7: And ultimately, what's happened the last twelve months is people
Speaker 7: went from being like I know, I should probably get
Speaker 7: away from some of this stuff and diversify a way.
Speaker 7: And if you look at our portfolio, we're a diversifier.
Speaker 7: Whether you're talking us or not. Us and our portfolio,
Speaker 7: we just we tend on things that people don't. And
Speaker 7: now people are actually asking that question for the first time,
Speaker 7: why should I look at this? Because if this is
Speaker 7: a longer term problem, maybe I haven't been doing what
Speaker 7: I should. But again there we're nowhere near money moving
Speaker 7: based on that.
Speaker 5: Col, thanks so much for coming in here. We appreciate it.
Speaker 2: Col Sweeden, he's the CEO of portfolio manager of SMED
Speaker 2: Capital Management.
Speaker 5: Stay with us.
Speaker 3: More from Bloomberg Surveillance coming up after this.
Speaker 1: You're listening to the Bloomberg Surveillance podcast. Catch us live
Speaker 1: weekday afternoons from seven to ten am Eastern Listen on
Speaker 1: Applecarplay and Android Otto with the Bloomberg Business app, or
Speaker 1: watch us live on YouTube.
Speaker 2: Karon Mannet vice president and Fixed Income Investment Directors. IT
Speaker 2: federated her as she is a proud Nitly Lion from
Speaker 2: Penn State University. That's the highlight for me, I think, Karen,
Speaker 2: let's step back here. How are you kind of rethinking
Speaker 2: your fixed income strategy here and what does it become
Speaker 2: a more turbulent world over the last three to four weeks.
Speaker 9: Well, good morning and thank you. Definitely more volatility in
Speaker 9: fixed income markets and to you know, reset that range
Speaker 9: or put it into context. We entered the conflict at
Speaker 9: the end of February with yields really at the lower
Speaker 9: end of that range. As you said, we had pushed
Speaker 9: down below four percent on that guiding star for US
Speaker 9: long term fixed income managers, the ten year rate, and
Speaker 9: I think we entered the conflict a little bit low.
Speaker 9: You know, that was a rate that priced in significant
Speaker 9: movement from the Federal Reserve, likely on the heels of
Speaker 9: Kevin Warsh being nominated as the new head, and then
Speaker 9: we got into a more reasonable trading range. But what
Speaker 9: we saw, particularly yesterday and through this week is a
Speaker 9: significant reprising of expectations of what the Federal Reserve can
Speaker 9: do or what they will do at the front end
Speaker 9: of the curve. So tens pushing a little bit higher,
Speaker 9: but really that two year rate going even higher than
Speaker 9: that and flattening yield curves. So here we see the
Speaker 9: bond market fighting off its eternal foe inflation. And it's
Speaker 9: a good time for investors to look more to coupon
Speaker 9: clipping or income rather than the price appreciation or diversification
Speaker 9: of the bond market.
Speaker 6: Karen, you mentioned the FED, I mean the composition of
Speaker 6: it continues, of course to be interesting. Is your house
Speaker 6: view still for one ease this year? Has that changed?
Speaker 9: It hasn't changed, well moderated since the beginning of the year.
Speaker 9: We went into the beginning of the year looking for
Speaker 9: maybe two cuts, expected maybe one in June than one
Speaker 9: in September through decem With the behavior of the markets,
Speaker 9: and some of that is health Lisa, it is a
Speaker 9: relatively resilient and stable economy. I describe it as equilibrium.
Speaker 9: Equilibrium is not necessarily comfortable. But now with inflation coming
Speaker 9: back in, with the spike in oil prices, extreme sensitivity
Speaker 9: around the length of this conflict, we are now expecting
Speaker 9: one and perhaps that would be later in the year.
Speaker 9: So you hear you hear that hedging in my voice,
Speaker 9: and in that position, it's a little bit wait and see.
Speaker 3: High yield market.
Speaker 5: What's your view there?
Speaker 2: You have credit concerns there in a high yield market
Speaker 2: or do you feel like the risk reward.
Speaker 9: Is worth it here, I would say the latter, Paul,
Speaker 9: it's not so much a'll recharacterize it. We're more sensitive
Speaker 9: to valuation with high yield. Still, we have seen a
Speaker 9: nice orderly widening of spreads there, but we are not
Speaker 9: at our target to lift out of the underweight position
Speaker 9: where we've been. We would like to see spreads closer
Speaker 9: to four hundred basis points on a pretty stabilized basis point, sorry,
Speaker 9: stabilized point, not just a flash in the pan. We
Speaker 9: are above three hundred, but still waiting to see more
Speaker 9: value there. The companies are largely doing fine. They would
Speaker 9: not have the ability to move out of non investment
Speaker 9: grade to investment grade. The pricing power isn't there, the
Speaker 9: ability to grow volumes. You know, they can't correct what
Speaker 9: made them non investment grade. Our analysts there think results
Speaker 9: are largely fine to inline. Nothing to make them overly worried,
Speaker 9: but nothing to make them overly excited that they can,
Speaker 9: you know, eclipse that non investment grade rating.
Speaker 6: Karen, I'm looking through your notes here. You talk about
Speaker 6: private credit being in the headlines, of course, does it
Speaker 6: have the characteristics to build toward this systemic crisis that
Speaker 6: we've been hearing, we don't think so.
Speaker 9: And we took a look at what has caused systemic
Speaker 9: crisis in the past, and oftentimes, yes, you do see
Speaker 9: an increase in defaults, and we look at defaults by
Speaker 9: number and also by dollar amount. But you really need
Speaker 9: leverage in the system in order to become a systemic
Speaker 9: event like long term capital management the late eighties or
Speaker 9: the Great Financial Crisis. But we all know that there's
Speaker 9: a lot of market value and road between systemic crisis
Speaker 9: and optimal markets. And I think what we're really seeing,
Speaker 9: and as many of your speakers have said over the morning,
Speaker 9: is a recalibration of liquidity and pricing around liquidity. These
Speaker 9: are loans to middle market companies that are very necessary,
Speaker 9: and we're getting a lot of our information from Bloomberg
Speaker 9: on these private markets and from media. Roger Ferguson wrote
Speaker 9: a great piece in the Financial Times where you characterize
Speaker 9: these loans and how private credit came about. But what happened,
Speaker 9: as with the success of private credit with the attractive yields,
Speaker 9: it began to be sold down into retail channels. The
Speaker 9: retail vehicles provide for greater liquidity or faster liquidity than
Speaker 9: the tenor of the underlying loans, those are mostly three
Speaker 9: to five years. So when you have a liquidity mismatch
Speaker 9: and then you have something in the headlines that was
Speaker 9: sold for being attractive and something that you needed to
Speaker 9: have in the portfolio, and then you're seeing in the
Speaker 9: headlines that you need to get out, you're just having
Speaker 9: a mismatch in the vehicle versus the purchaser.
Speaker 5: Karen Mike, my.
Speaker 2: Good friends on the debt capital markets desks across Wall
Speaker 2: Street are having a heck of a year here. The
Speaker 2: supply has been really really heavy. How's the market been
Speaker 2: receiving this supply.
Speaker 9: It's been received extraordinarily well. We went into the year
Speaker 9: knowing that we would see significant new supply from merger
Speaker 9: and activity funding, and then that we would also see
Speaker 9: the hyperscalers coming to the market. They have already done
Speaker 9: more than half of their expected supply. But the supply
Speaker 9: is coming in, and because the yield and the income
Speaker 9: it's that known variable are attractive, it seems that investors
Speaker 9: are flocking to investment grade corporate bonds for that known income,
Speaker 9: that little bit of spread over the US Treasury and
Speaker 9: enjoying that rather than taking excessive duration risk. So we've
Speaker 9: seen again a little bit of widening. We've gone out
Speaker 9: from the high seventies for the investment grade oas until
Speaker 9: now we're into.
Speaker 3: The mid nineties or so.
Speaker 9: But we see that as a restoration of value and
Speaker 9: a time where selection security, selection can begin to matter.
Speaker 9: So one of our big themes in houses. While we
Speaker 9: have a top down framework, we are bottom up fundamental
Speaker 9: reviewers of credit day in, day out. We speak to
Speaker 9: discernment and discipline around valuation. Of course we're cognizant of themes,
Speaker 9: but as we say in health, it wasn't likely that
Speaker 9: all software companies were great going into the beginning of
Speaker 9: this year, and it's similarly just as likely that they
Speaker 9: are not all going to fail just because the tide
Speaker 9: is turned.
Speaker 2: Thanks so much appreciating Arent Man, vice president and fixing them.
Speaker 2: Investment director for Federator, Hermie Stay with us.
Speaker 3: More from Bloomberg Surveillance coming up after this.
Speaker 1: You're listening to the Bloomberg Surveillance podcast. Catch us live
Speaker 1: weekday afternoons from seven to ten am Eastern Listen on
Speaker 1: Applecarplay and Android Otto with the Bloomberg Business app, or
Speaker 1: watch us live on YouTube.
Speaker 2: Rebecca Walser joins us here Presidency of Walser Wealth Management.
Speaker 3: Rebecca, thanks so much for joining us here in the studio.
Speaker 7: Home.
Speaker 2: Crazy times out there, crazy lots of volatility. What are
Speaker 2: the conversation I'm sure your phone's bringing off the hook
Speaker 2: from your clients. What's the conversation you're having here?
Speaker 10: I mean, we've been big commodity bugs for the lascence
Speaker 10: twenty twenty pandemic, so I think a lot of people
Speaker 10: are really concerned about the routing down again of precious metal,
Speaker 10: specifically gold and silver, and so that's definitely something that
Speaker 10: we have to explain to them. This is a three
Speaker 10: part attack on gold. First of all, there's profit taking
Speaker 10: because it's you know, obviously done extremely well. Second of all,
Speaker 10: I think it's a panic selling because you see high
Speaker 10: volume on GLD ETF and people are really getting up fast.
Speaker 10: And then also you have a rotation out because now
Speaker 10: that we don't expect interest rates to potentially be cut
Speaker 10: or cut as much or as soon, people are looking
Speaker 10: for higher yield than maybe a non yielding asset. So
Speaker 10: it's really a three part attack and we have to
Speaker 10: just stay the course because nothing fundamentally, actually everything has
Speaker 10: actually increased the likelihood of price increases in actual precious metals.
Speaker 10: It's just that they're not going to happen in the
Speaker 10: short term right now. There's a lot of consternation of
Speaker 10: moving capital around, but when you look at the private.
Speaker 11: Credit situation, the liquidity course isn't that other thing.
Speaker 10: I think private credit and liquidity raises are also having
Speaker 10: an impact on selling off.
Speaker 11: And getting out of gold and silver.
Speaker 10: So we just have to stay the course and remember
Speaker 10: that we are not in it for these short term
Speaker 10: price actions. We're really in it because fundamentally, we believe
Speaker 10: that we are at the beginning stages of a transition
Speaker 10: of currency from fiat to stable coin, to the blockchain,
Speaker 10: and ultimately there's going to be a tether to some
Speaker 10: kind of hard assets, and we believe metals will be
Speaker 10: that well.
Speaker 6: So that's it has goal become more volatile than equities.
Speaker 10: I mean, I wouldn't say more volatile than equities, but
Speaker 10: certainly this year in twenty twenty six, we've seen the
Speaker 10: most volatility. We know, it's the worst trading week for
Speaker 10: it and the six years, So from that perspective, it's
Speaker 10: we're seeing a lot more volatile than we're seeing to
Speaker 10: act like a risk on asset, which we're not used to.
Speaker 10: So that's why the consternation, that's why we have to
Speaker 10: explain and just take a breath and remember that, you know,
Speaker 10: it's really, you know, the wrong move to act emotionally
Speaker 10: and to remember the fundamentals and the technicals and why
Speaker 10: we're here in something.
Speaker 2: So where are you asking or where you're telling your
Speaker 2: clients that they should be focusing here?
Speaker 3: Is it US equities? Non US equities? Should we be
Speaker 3: looking at fixed income?
Speaker 8: Where's it?
Speaker 3: Because there is a lot of cross.
Speaker 2: Currents out there.
Speaker 3: Yes, absolutely, So where's the area focused for you? Guys?
Speaker 10: Well, I think right now the global world has got
Speaker 10: some major issues, not geopolitical war aside with a RAN.
Speaker 10: If you look at kretar energy, if you look at
Speaker 10: the actual damage that has happened until liquefied natural gas production,
Speaker 10: the straight being closed, you're looking at for the first time,
Speaker 10: really a three part bifurcation of energy price Asia being
Speaker 10: really the worst, you know, then Europe being the second worst,
Speaker 10: and US, of course, being energy independent, we.
Speaker 11: Are a little bit insulated.
Speaker 10: But so the bottom line is people are trying to
Speaker 10: figure out what is this going to be it's going
Speaker 10: to take some time. I will note that this administration
Speaker 10: is trying to reduce bank capital requirements and reserve requirements
Speaker 10: to make things a little bit easier credit That will
Speaker 10: obviously be good for the rest of two thousand companies.
Speaker 11: And so if you look at.
Speaker 10: That in the framework of the rest of the world
Speaker 10: that's not already talking Europe already talking about rate hikes,
Speaker 10: you know, and all of this inflationary pressure from energy costs.
Speaker 10: I mean, Europe has got a massive energy crisis that's
Speaker 10: approaching very quickly. So I'm going to say no on
Speaker 10: on out going outside of the United States for now,
Speaker 10: and then we'll see if there's pockets of opportunity that
Speaker 10: we can maybe pick up on and dissect. But right now,
Speaker 10: things are extremely fast moving, very fluid, and we just
Speaker 10: have to remain calm and remember.
Speaker 11: Especially in a time of war.
Speaker 10: So we've got the kind of the confluence of all
Speaker 10: the convergence of all things, Paul, We've got literally, you know,
Speaker 10: energy crisis, war, blockchain.
Speaker 11: Fiat bank reserves. I mean, it's just I mean, could
Speaker 11: we add anything else?
Speaker 10: And I don't even say that, because as soon.
Speaker 11: As I say it, something else is going to come
Speaker 11: into the mix.
Speaker 10: But yeah, I mean this is a literally crazy time
Speaker 10: and so therefore calm, cooler heads will prevail.
Speaker 6: And we even talk terrors trade I mean two exactly,
Speaker 6: that's one thing missing from that. So all this uncertainty
Speaker 6: that you're talking about, I mean, does it usually scream
Speaker 6: recession or stagflation? I mean, what's your take with it?
Speaker 10: I mean, I definitely do think that there is going
Speaker 10: to be with the energy crisis alone, with with just
Speaker 10: going back to catar energy saying three to five years
Speaker 10: state and fix the one plant that produces seventeen percent
Speaker 10: of the world's global LNG. I mean, these kinds of
Speaker 10: things definitely have an impact and will be recessionary and
Speaker 10: nature job creation and as a positive, right, energy prices
Speaker 10: going up have some other influationary aspects that help with
Speaker 10: some kinds of investments. Right, But overall, this is a
Speaker 10: time I think we'll look back. You know, you look
Speaker 10: at the S and P five hundred chart. You can
Speaker 10: see dot com, you can see GFC. Will twenty twenty
Speaker 10: six be the beginning of something new that we can
Speaker 10: really see a breakout towards a new a new way
Speaker 10: forward and I do think with you add in there,
Speaker 10: you know, blockchain and stable coin, which is really under
Speaker 10: Congress with right with the Clarity Act that we got
Speaker 10: the Genius Act last year, You've got a lot of
Speaker 10: changing parts and so this is going to be the
Speaker 10: beginning of something that is new, I believe.
Speaker 2: Yeah, so how are you What is your strategy your
Speaker 2: advice to your clients as it relates to crypto broadly defined.
Speaker 10: Yeah, Well, we do believe crypto is a risk on asset.
Speaker 10: We haven't had enough of a use case to prove
Speaker 10: that even through a recession it will do well, like
Speaker 10: talking specifically bot coin, So definitely see it as risk one.
Speaker 10: But we do see that stable coin is the future
Speaker 10: transaction system and so we want to be on the
Speaker 10: frontier of that. We want to be on the forefront
Speaker 10: of that and not be afraid of it. I would
Speaker 10: say that overall, we're going to look for pockets of
Speaker 10: picking up a price action on obviously the energy front
Speaker 10: for sure, we've really kind of moved our portfolio from
Speaker 10: commodities and specifically precious metals.
Speaker 11: More to oil.
Speaker 10: Starting October of last year, we pair down and moved
Speaker 10: over to energy. So we've enjoyed really some nice price
Speaker 10: action to the upside. But we still truly believe that
Speaker 10: the system, the global world system, as we move away
Speaker 10: from FIAT, will be anchored in tether too hard precious assets,
Speaker 10: precious metals specifically, So we're going to continue to have
Speaker 10: a gold and silver perspective in our portfolios.
Speaker 6: I'm curious what areas will you be looking to when
Speaker 6: when things sort of calm down.
Speaker 10: The calm down is we're going to be I mean,
Speaker 10: obviously AI everything right, AI disruption. Software as a service
Speaker 10: obviously has been a really big problem for Shear. Private
Speaker 10: credit being invested in software, and you know, private credit
Speaker 10: is really interesting is it's tied into our banking system
Speaker 10: in the sense of all of the credit lines. You know,
Speaker 10: I did an analysis of the top our top you know,
Speaker 10: six banks and how much credit lines they have outstanding
Speaker 10: to private credit, which might be drawing down because there's
Speaker 10: so many redemptions blue alcol pausing redemptions Blackstones b cred
Speaker 10: basically and the last quarter had an eight percent redemptions,
Speaker 10: their largest quarterly redemption on record. So we're we're expecting
Speaker 10: this volatility. But to that point, on the other end
Speaker 10: of it, what are the new AI technologies that are
Speaker 10: going to be kind of pushing aside the old software route.
Speaker 10: I mean, I don't believe that it's going to happen tomorrow,
Speaker 10: but it is going to happen eventually.
Speaker 11: So the route was over sold.
Speaker 10: We didn't need to see that much consternation in the
Speaker 10: software market. But it is a reality in the future.
Speaker 6: So is it.
Speaker 10: Sixty months, is it thirty six months? Is it next year?
Speaker 10: Not sure, it's not tomorrow, It's not probably this year,
Speaker 10: especially with all of this. This is obviously the world
Speaker 10: is going to be focused on energy and pricing that
Speaker 10: and AI will continue to go on. But you know,
Speaker 10: I do think that anthropic maybe won't be a little
Speaker 10: to disrupt as much as we as it has been
Speaker 10: able to do this year.
Speaker 3: Very good, Rebecca, thank you so much.
Speaker 1: Thanking you.
Speaker 2: She's the president, and so you have Walser, welcome management
Speaker 2: joining us live here in our Bloomberg Interactive Brooke Studio.
Speaker 5: So we appreciate that.
Speaker 1: This is the Bloomberg Surveillance podcast, available on Apple, Spotify
Speaker 1: and anywhere else you get your podcasts. Listen live each
Speaker 1: weekday seven to ten am Eastern on Bloomberg Dot com
Speaker 1: the iHeartRadio app tune In, and the Bloomberg Business app.
Speaker 1: You can also watch us live every weekday on YouTube
Speaker 1: and always on the Bloomberg terminal