1 00:00:03,720 --> 00:00:07,760 Speaker 1: This is Bloomberg Surveillance and modestly bullish near term, but 2 00:00:07,880 --> 00:00:11,160 Speaker 1: embarrassing the media term. I expect the SMP to decline 3 00:00:11,240 --> 00:00:13,720 Speaker 1: to a low double digit percentage this year. I think 4 00:00:13,720 --> 00:00:16,200 Speaker 1: if we're going to take long dollar positions, I think 5 00:00:16,200 --> 00:00:18,160 Speaker 1: the euro is the way to go right now. Short 6 00:00:18,200 --> 00:00:21,000 Speaker 1: the euro along the dollar. I don't think inflation is 7 00:00:21,079 --> 00:00:25,480 Speaker 1: too low. The public doesn't care that core PC inflation 8 00:00:25,640 --> 00:00:28,800 Speaker 1: is one point four percent. They're oblivious to it. Bloomberg 9 00:00:28,880 --> 00:00:32,640 Speaker 1: Surveillance your link to the world of economics, finance, and 10 00:00:32,760 --> 00:00:36,360 Speaker 1: investment on Bloomberg Radio. Good Morning across this nation on 11 00:00:36,520 --> 00:00:39,640 Speaker 1: Serious and exam Bloomberg twelve, Boston, Bloomberg eleventh three in 12 00:00:39,760 --> 00:00:45,240 Speaker 1: New York Bay area of Bloomberg FM, Washington as well. 13 00:00:45,400 --> 00:00:47,960 Speaker 1: We're brought to you by Interactive Brokers Are for X 14 00:00:48,080 --> 00:00:51,159 Speaker 1: brief by Interactive Broker's winner of f X Weeks two 15 00:00:51,200 --> 00:00:54,720 Speaker 1: thousand fifteen award for the best Retail for X trading platform. 16 00:00:54,840 --> 00:00:57,240 Speaker 1: Visit I d AT I d k R dot com 17 00:00:57,360 --> 00:01:01,760 Speaker 1: slash for X quickly Sterling on oh one weeker Sterling 18 00:01:01,920 --> 00:01:04,840 Speaker 1: still and I'm gonna look at Japanese yen stronger one 19 00:01:04,959 --> 00:01:09,000 Speaker 1: twelve seven as well, Mike, on important housing data. We 20 00:01:09,160 --> 00:01:11,120 Speaker 1: got the case Shiller numbers out of four December, and 21 00:01:11,200 --> 00:01:14,600 Speaker 1: Vinetal Judas has those at the First World Desk. Michael, 22 00:01:14,640 --> 00:01:17,800 Speaker 1: the report track twenty major cities year over year December 23 00:01:18,000 --> 00:01:21,880 Speaker 1: five point seven four percent increase in home prices, same 24 00:01:22,040 --> 00:01:25,039 Speaker 1: as the prior month, with red fishions. December month over 25 00:01:25,120 --> 00:01:27,880 Speaker 1: month up point eight percent, a bit slower than the 26 00:01:27,959 --> 00:01:30,720 Speaker 1: prior month. At the Bloomberg First World Desk company deal Judas, 27 00:01:30,800 --> 00:01:33,240 Speaker 1: Let's go back to New York, NY, Vinny, Mike, what 28 00:01:33,360 --> 00:01:37,959 Speaker 1: do you see there? We see steady, steady growth across 29 00:01:38,040 --> 00:01:41,160 Speaker 1: the country. The national index up five point four over 30 00:01:41,160 --> 00:01:43,680 Speaker 1: the last twelve months. I guess you want to live 31 00:01:43,760 --> 00:01:47,640 Speaker 1: in Tampa, Florida, at least you did in December. Terms 32 00:01:47,680 --> 00:01:51,080 Speaker 1: of the biggest annual game nine tenths of eight percent. 33 00:01:52,400 --> 00:01:55,320 Speaker 1: We're still seeing gains in the sand city, San Diego, Phoenix, 34 00:01:55,640 --> 00:01:59,480 Speaker 1: Las Vegas. Um, there's a nice first derivative to all this, 35 00:01:59,640 --> 00:02:03,400 Speaker 1: Cleveland and mind. I'll give you New York down three tents. 36 00:02:04,240 --> 00:02:06,680 Speaker 1: Good thing you're not moving. The Boston is well done 37 00:02:06,800 --> 00:02:12,440 Speaker 1: for actually as well. San Francisco scrolling up goes decidedly. 38 00:02:12,960 --> 00:02:15,720 Speaker 1: The other way as well. Let's jump over our equity covers. 39 00:02:15,760 --> 00:02:19,680 Speaker 1: This morning, David Wilson looking at all sorts of stuff. 40 00:02:20,000 --> 00:02:23,880 Speaker 1: Home Depot was jaw dropping. There's no other way to 41 00:02:23,919 --> 00:02:27,840 Speaker 1: put it. Certainly has been well received, no question about that. 42 00:02:28,720 --> 00:02:31,200 Speaker 1: Home Depot shares a three and a half percent in 43 00:02:31,280 --> 00:02:34,919 Speaker 1: early trading. The largest home improvement retailer posted fiscal fourth 44 00:02:34,960 --> 00:02:37,160 Speaker 1: quarter ownings in South at the top to analysts average 45 00:02:37,240 --> 00:02:40,639 Speaker 1: estimates in bluebook s, the ressaults show Home Depot is 46 00:02:40,760 --> 00:02:44,200 Speaker 1: largely immune to the slumping demand faced by other retailers. 47 00:02:44,639 --> 00:02:46,919 Speaker 1: You've got shares arrival lows up about two and a 48 00:02:46,960 --> 00:02:50,720 Speaker 1: half percent, and that company will report fourth quarter results tomorrow. 49 00:02:51,480 --> 00:02:53,720 Speaker 1: Then you have Macy's up five and a half percent. 50 00:02:53,840 --> 00:02:57,360 Speaker 1: The biggest US department store owner, had a smaller decline 51 00:02:57,480 --> 00:03:00,840 Speaker 1: in fiscal fourth quarter sales, and analysts expected adjusted earnings 52 00:03:00,880 --> 00:03:03,480 Speaker 1: were two dollars nine cents of share, which beat the 53 00:03:03,520 --> 00:03:07,360 Speaker 1: average estimate by twenty one cents. On the deal front, 54 00:03:07,520 --> 00:03:11,880 Speaker 1: Western Digital down eight percent. The memory chipmaker lost a 55 00:03:12,000 --> 00:03:16,280 Speaker 1: three point eight billion dollar investment from China Singway unit Splendor, 56 00:03:16,560 --> 00:03:20,640 Speaker 1: which withdrew after learning US regulators would investigate the deal. 57 00:03:21,040 --> 00:03:24,320 Speaker 1: Even so, Western Digital is going ahead with a proposed 58 00:03:24,360 --> 00:03:28,000 Speaker 1: takeover Sandys. The purchase price was cut to fifteen point 59 00:03:28,040 --> 00:03:31,280 Speaker 1: eight billion dollars and Sandy shares are down two percent 60 00:03:31,680 --> 00:03:35,720 Speaker 1: almost three percent now in early trading. Valiant Pharmaceuticals up 61 00:03:35,720 --> 00:03:38,280 Speaker 1: two and a half percent. The drug developer cent will 62 00:03:38,360 --> 00:03:41,480 Speaker 1: restate earnings for last year and the year before. The 63 00:03:41,600 --> 00:03:46,120 Speaker 1: revisions follow a review by Valiance board of the company's 64 00:03:46,160 --> 00:03:50,720 Speaker 1: relationship with the mail order pharmacy Philidora b HP Billetin 65 00:03:51,080 --> 00:03:53,720 Speaker 1: down in early trading. The world's largest mining company reduced 66 00:03:53,760 --> 00:03:56,080 Speaker 1: a stif enough for the first time in fifteen years 67 00:03:56,360 --> 00:04:02,680 Speaker 1: after fiscal first half earnings plummeted. BHP Bulletin dually listed company. 68 00:04:02,960 --> 00:04:05,960 Speaker 1: It's Australian shares are down two and a half percent 69 00:04:06,040 --> 00:04:08,240 Speaker 1: here in the US, where they trade as American depositary 70 00:04:08,320 --> 00:04:11,960 Speaker 1: receipts a d rs worth. UK shares are down three 71 00:04:12,040 --> 00:04:15,119 Speaker 1: and a half percent. One more one more. Fit Bit, Yeah, 72 00:04:15,160 --> 00:04:16,680 Speaker 1: I saw that. I thought I knew you were going there. 73 00:04:16,680 --> 00:04:20,200 Speaker 1: You're looking at my stomach down my stomach let alone 74 00:04:20,279 --> 00:04:23,279 Speaker 1: yours uh, The maker of fitness tracking device, this forecast 75 00:04:23,320 --> 00:04:25,800 Speaker 1: first quarter revenue and ernies would come up short of estimates. 76 00:04:25,960 --> 00:04:29,240 Speaker 1: The outlet reflects the cost of rolling outfit. That's newest 77 00:04:29,320 --> 00:04:33,000 Speaker 1: trackers globally very good radio. Nobody has to look at 78 00:04:33,000 --> 00:04:36,320 Speaker 1: either one. Yeah, us an ugly site to behold as well. 79 00:04:36,760 --> 00:04:39,839 Speaker 1: Dan Deemo has made a career of looking at precious 80 00:04:39,880 --> 00:04:42,680 Speaker 1: medals and particularly looking at mining with US A a 81 00:04:43,360 --> 00:04:47,280 Speaker 1: out of TCU or he single handedly reinvented offensive football. 82 00:04:47,560 --> 00:04:49,840 Speaker 1: That was crazy what you did a couple of years ago. 83 00:04:51,720 --> 00:04:54,160 Speaker 1: We've had a great comeback. It's it's it's been good, 84 00:04:54,320 --> 00:04:56,160 Speaker 1: wonderful to have you here. We hear about you, we 85 00:04:56,279 --> 00:04:58,600 Speaker 1: never see you. Were thrilled to have you in New York. 86 00:04:58,760 --> 00:05:01,480 Speaker 1: DHP Builleton, I ain't a you their CFO today and 87 00:05:01,600 --> 00:05:04,159 Speaker 1: it was oddly I mean, they're talking about the word hope. 88 00:05:04,520 --> 00:05:08,360 Speaker 1: What is the hope for the global mining industry right now? Well, 89 00:05:08,520 --> 00:05:11,320 Speaker 1: you gotta separate the precious metals from the base metals. 90 00:05:11,360 --> 00:05:15,120 Speaker 1: For sure. Um iron were still in an awful glut. Uh. 91 00:05:15,320 --> 00:05:19,360 Speaker 1: The guy's keep producing minds, keep building minds. Uh. Real 92 00:05:19,440 --> 00:05:22,160 Speaker 1: and BHP both continue to build because they can produce 93 00:05:22,240 --> 00:05:24,440 Speaker 1: a lower costs of anybody else. They're gonna try to 94 00:05:24,520 --> 00:05:26,760 Speaker 1: drive everybody out of the businesses, are they That's a 95 00:05:26,839 --> 00:05:28,960 Speaker 1: key question, is it, Mike? This goes back. I mentioned 96 00:05:28,960 --> 00:05:32,000 Speaker 1: it's Andrew mellon economics of the thirties. That's the only hope, 97 00:05:32,120 --> 00:05:34,559 Speaker 1: isn't it? It is, But it's always a false hope 98 00:05:35,360 --> 00:05:38,200 Speaker 1: because minds never closed because nobody wants to operate them. 99 00:05:38,480 --> 00:05:40,000 Speaker 1: The banks don't want to take them over. So these 100 00:05:40,040 --> 00:05:42,640 Speaker 1: mines just keep going. You're not gonna see China's shut 101 00:05:42,720 --> 00:05:45,720 Speaker 1: in supply either. China needs those jobs. So is your 102 00:05:45,760 --> 00:05:48,160 Speaker 1: base away from your expertise of precious metals? Is your 103 00:05:48,200 --> 00:05:52,400 Speaker 1: base for lower prices or stability at these low prices? Yes? 104 00:05:53,600 --> 00:05:56,640 Speaker 1: How well, what can you tell the guests that single 105 00:05:56,720 --> 00:06:00,800 Speaker 1: answers on radio don't sorry about I think that what's 106 00:06:00,920 --> 00:06:05,200 Speaker 1: uh a more detailed explanation, but basically, what's the cycle 107 00:06:05,680 --> 00:06:08,720 Speaker 1: length here? I mean the cycle is still You're gonna 108 00:06:08,720 --> 00:06:10,640 Speaker 1: have to see steel production shutting because we have too 109 00:06:10,680 --> 00:06:14,080 Speaker 1: much steel production. It was all built for a much 110 00:06:14,160 --> 00:06:16,720 Speaker 1: faster China. It's built for a China growing at seven 111 00:06:16,760 --> 00:06:19,640 Speaker 1: a half eight percent, even up to ten percent. China 112 00:06:19,720 --> 00:06:22,520 Speaker 1: is not growing that fast. It doesn't need that much steel. Plus, 113 00:06:22,560 --> 00:06:25,840 Speaker 1: it's converting to from an intra infrastructure economy to a 114 00:06:25,880 --> 00:06:29,400 Speaker 1: consumer economy. Consumers don't use much steel. They buy clothes, 115 00:06:29,480 --> 00:06:32,800 Speaker 1: they don't buy iron beams, and so therefore even you're 116 00:06:32,800 --> 00:06:35,600 Speaker 1: having to readjust the supply, the whole world is having 117 00:06:35,680 --> 00:06:39,600 Speaker 1: to to adjust. It's China adjusting. I mean, there's a 118 00:06:39,640 --> 00:06:41,919 Speaker 1: lot of talk about how they're keeping all these factories open, 119 00:06:42,040 --> 00:06:44,880 Speaker 1: these minds open, because they need to keep people employed. 120 00:06:45,000 --> 00:06:48,680 Speaker 1: Are they actually going to shut in this production. We've 121 00:06:48,720 --> 00:06:51,640 Speaker 1: actually seen the first signs recently where they actually where 122 00:06:51,680 --> 00:06:55,880 Speaker 1: they talked about shutting on production, actually going in and 123 00:06:56,000 --> 00:06:59,880 Speaker 1: paying to layoff people. But they can't afford to. It's 124 00:07:00,000 --> 00:07:02,760 Speaker 1: one point of their population is in the steel meals. 125 00:07:03,200 --> 00:07:04,880 Speaker 1: You can't lay those people off. They're gonna have a 126 00:07:04,920 --> 00:07:08,000 Speaker 1: protesting social social issues. So let's go over to your 127 00:07:08,000 --> 00:07:12,040 Speaker 1: expertise and pressures mining. James Steele at HSBC on fundamentals, 128 00:07:12,080 --> 00:07:16,600 Speaker 1: gol gold. Christopherona Strtigues on charts says, go along gold, 129 00:07:16,680 --> 00:07:19,160 Speaker 1: not with a lot of confidence, but he's there. Are 130 00:07:19,240 --> 00:07:23,960 Speaker 1: you can you link gold price still into gold mining shares? 131 00:07:24,040 --> 00:07:27,000 Speaker 1: What's that correlation? That correlation is very high and it's 132 00:07:27,000 --> 00:07:28,640 Speaker 1: actually come back that there. One of the things that 133 00:07:28,720 --> 00:07:31,520 Speaker 1: makes us very happy is the gold mining companies have 134 00:07:31,560 --> 00:07:33,760 Speaker 1: actually cut the fat. They've actually done a good job 135 00:07:34,560 --> 00:07:37,680 Speaker 1: reducing operating costs. So they've returned back to the days 136 00:07:37,720 --> 00:07:40,600 Speaker 1: of having operating leverage. Four years ago. They had no 137 00:07:40,680 --> 00:07:43,480 Speaker 1: operating leverage because they got fat, dumb and happy. Every 138 00:07:43,560 --> 00:07:45,880 Speaker 1: year gold price to go up a hunter Bucks, so 139 00:07:45,960 --> 00:07:48,480 Speaker 1: they never had to control costs because gold price saved him. 140 00:07:48,680 --> 00:07:50,800 Speaker 1: When gold price started following a hunter Bucks every year, 141 00:07:50,920 --> 00:07:52,440 Speaker 1: you have to start cutting costs there now to the 142 00:07:52,600 --> 00:07:55,960 Speaker 1: level they can actually make money at these prices, could 143 00:07:56,080 --> 00:07:58,040 Speaker 1: make money years. I don't want to get you in 144 00:07:58,120 --> 00:08:00,680 Speaker 1: trouble with the USA a compliance pull least. But is 145 00:08:00,720 --> 00:08:05,360 Speaker 1: there an industry performer who has best practices? Not by 146 00:08:05,440 --> 00:08:08,960 Speaker 1: old seal, but is there's somebody that has best practices 147 00:08:09,360 --> 00:08:12,120 Speaker 1: in precious metal mining? Yeah? By far the CEO has 148 00:08:12,160 --> 00:08:15,600 Speaker 1: done the best job as Mark Bristow Ringold. He runs 149 00:08:15,680 --> 00:08:19,240 Speaker 1: every operation, he prices everything at a thousand dollar gold. 150 00:08:19,280 --> 00:08:22,440 Speaker 1: He's been doing that for years. Probably the second best 151 00:08:22,560 --> 00:08:26,120 Speaker 1: that the one who reformed everything is Gary Goldberg at Newmont. 152 00:08:26,200 --> 00:08:28,320 Speaker 1: He was the first to come in of the big 153 00:08:28,400 --> 00:08:32,040 Speaker 1: guys and actually start cutting costs. Uh. He started putting 154 00:08:32,040 --> 00:08:34,400 Speaker 1: out these big in dollar targets for cutting costs, and 155 00:08:34,760 --> 00:08:36,840 Speaker 1: people would ask me, what do you think about that thing? Well, 156 00:08:36,880 --> 00:08:39,400 Speaker 1: it actually ticks me off. If he can find these 157 00:08:39,480 --> 00:08:42,679 Speaker 1: costs savings so easily, What were they doing before? Why 158 00:08:42,760 --> 00:08:45,480 Speaker 1: weren't they managing their business before? They have now come 159 00:08:45,520 --> 00:08:47,559 Speaker 1: around to managing their business. And that's why Newmont is 160 00:08:47,600 --> 00:08:51,080 Speaker 1: doing pretty good. I mean b RS, the symbol b RS. 161 00:08:51,800 --> 00:08:54,199 Speaker 1: The plunge is something. How do you know when to 162 00:08:54,360 --> 00:08:58,400 Speaker 1: buy a wise one? When to buy? You always buy. 163 00:08:58,720 --> 00:09:00,240 Speaker 1: You always have to own a little bit in the 164 00:09:00,360 --> 00:09:03,199 Speaker 1: space because you want it for the defensive characteristics. We 165 00:09:03,280 --> 00:09:07,559 Speaker 1: always tell everybody at USA, if I'm doing well, the 166 00:09:07,640 --> 00:09:09,559 Speaker 1: rest of your portfolio is probably not doing well. So 167 00:09:09,640 --> 00:09:13,240 Speaker 1: you want to root against us. Where the insurance where 168 00:09:13,280 --> 00:09:15,240 Speaker 1: the house insurance? And when you're in the woods, when 169 00:09:15,280 --> 00:09:17,719 Speaker 1: the force getting little dry, if things are looking a 170 00:09:17,800 --> 00:09:20,080 Speaker 1: little more, a little worse, you take on a little 171 00:09:20,080 --> 00:09:22,840 Speaker 1: bit more insurance. When things are looking good, you don't 172 00:09:22,840 --> 00:09:23,880 Speaker 1: want to be in gold. Do you want to have 173 00:09:23,920 --> 00:09:26,880 Speaker 1: a heavy position in gold? Because US stocks will do fine, 174 00:09:27,840 --> 00:09:30,720 Speaker 1: European stocks will do fine. It's when things aren't going well, 175 00:09:30,760 --> 00:09:32,680 Speaker 1: when you're worried about things not going well, the gold 176 00:09:32,760 --> 00:09:35,200 Speaker 1: is not gonna do well. Look at the moving ram gold. Wow, 177 00:09:35,320 --> 00:09:38,280 Speaker 1: what a spike up it's been recently, Well, the whole 178 00:09:38,320 --> 00:09:40,959 Speaker 1: space it's been. Why were you here like six weeks ago? 179 00:09:41,800 --> 00:09:44,800 Speaker 1: Nobody wanted to talk to us six weeks ago. See 180 00:09:44,800 --> 00:09:48,040 Speaker 1: your shirt sales. But that's right, Yeah, it's it's funny. Yeah, 181 00:09:48,080 --> 00:09:50,959 Speaker 1: we were nobody cared about gold to all of a sudden, 182 00:09:50,960 --> 00:09:52,760 Speaker 1: we had a few issues and a few concerns, and 183 00:09:52,840 --> 00:09:55,559 Speaker 1: gold came back in August. People are calling gold the 184 00:09:55,640 --> 00:10:02,320 Speaker 1: barbaric relic. Now now people want to talk to us again. 185 00:10:02,400 --> 00:10:05,760 Speaker 1: It is an interesting turn. But what he is driving 186 00:10:05,800 --> 00:10:07,880 Speaker 1: in You got worries about US recession. We don't think 187 00:10:07,880 --> 00:10:10,680 Speaker 1: you can go to recession, but that probability has increased 188 00:10:10,679 --> 00:10:13,439 Speaker 1: a little bit. The tenure Treasury showing you that we 189 00:10:13,520 --> 00:10:15,880 Speaker 1: have geo political stability and that's never going away. But 190 00:10:15,960 --> 00:10:19,720 Speaker 1: it's ticked up again. Worries about the global economy that's 191 00:10:19,760 --> 00:10:23,120 Speaker 1: ticked up, and central banks continuity value the currency and 192 00:10:23,240 --> 00:10:25,800 Speaker 1: that drives gold price is higher. Denbo, he's with us 193 00:10:25,840 --> 00:10:31,600 Speaker 1: a a really decades of expertise on the precious world 194 00:10:31,840 --> 00:10:34,959 Speaker 1: of precious metals. Don't be a stranger, come back again. 195 00:10:35,400 --> 00:10:40,720 Speaker 1: Visiting from San Antonio. UM future is negative two green. 196 00:10:40,800 --> 00:10:43,839 Speaker 1: The other way, SP goes up ten points, sort of 197 00:10:43,880 --> 00:10:46,880 Speaker 1: the churn to the market that we see with Tenure 198 00:10:46,960 --> 00:10:53,160 Speaker 1: up a good six basis points. Now, let's check in 199 00:10:53,320 --> 00:10:56,120 Speaker 1: with John Tucker and get the latest world in national headlines. John, 200 00:10:56,240 --> 00:10:58,640 Speaker 1: all right, thanks to Michels Microsoft out of Bill Gates 201 00:10:58,679 --> 00:11:01,240 Speaker 1: and weighing in on the dispute of Apple's refusal to 202 00:11:01,360 --> 00:11:04,640 Speaker 1: have the FBI break into a terrorists iPhone. I do 203 00:11:04,840 --> 00:11:08,840 Speaker 1: believe that that with the right safeguards, there are cases 204 00:11:08,920 --> 00:11:14,400 Speaker 1: where the government on our behalf like stopping terrorists which 205 00:11:14,480 --> 00:11:18,199 Speaker 1: could get worse in the future, that that that is valuable. 206 00:11:19,040 --> 00:11:22,400 Speaker 1: Gates is stopping By Bloomberg Television and Radio This Morning 207 00:11:22,720 --> 00:11:25,439 Speaker 1: Paul Show, Donald Trump points to win his third consecutive 208 00:11:25,480 --> 00:11:30,319 Speaker 1: Republican presidential nominating contest tonight when Nevada holds its caucuses, 209 00:11:31,040 --> 00:11:33,880 Speaker 1: and Secretary State John Kerry bringing the tales of a 210 00:11:33,880 --> 00:11:37,680 Speaker 1: news Syrians ceasefire to skeptical senators appearing before the Republican 211 00:11:37,760 --> 00:11:41,280 Speaker 1: led Senate for Relations Committee and members of Congress trying 212 00:11:41,280 --> 00:11:43,719 Speaker 1: to head off a new Jersey transit strike authorized for 213 00:11:43,840 --> 00:11:47,280 Speaker 1: March thirteen. Last time the Jersey Railroad employees walked off. 214 00:11:47,320 --> 00:11:51,120 Speaker 1: The job was thirty three years ago. Global News twenty 215 00:11:51,160 --> 00:11:53,440 Speaker 1: four hours a day, powered by a twenty journalists more 216 00:11:53,440 --> 00:11:56,240 Speaker 1: than one fifty news ureaus around the world. I'm John Tucker, 217 00:11:57,000 --> 00:12:00,880 Speaker 1: John Tucker, thanks so much from New York Mborg. Surveillance 218 00:12:06,080 --> 00:12:08,640 Speaker 1: Market Drivers brought you by your Mercedes Benz Tri State Dealer. 219 00:12:08,679 --> 00:12:10,520 Speaker 1: When it comes to winter elements, put your best four 220 00:12:10,559 --> 00:12:13,360 Speaker 1: wheels forward with Mercedes Benz Formatic all wheel Drive. Visit 221 00:12:13,400 --> 00:12:16,120 Speaker 1: your Mercedes Benz Tri State dealer for a test drive today. 222 00:12:22,360 --> 00:12:25,720 Speaker 1: Global Business News twenty four hours a day at Bloomberg 223 00:12:25,800 --> 00:12:28,839 Speaker 1: dot com, the Radio Plus mobile app, and on your radio. 224 00:12:29,160 --> 00:12:33,600 Speaker 1: This is a Bloomberg Business Flash and I'm carrying Moscow. 225 00:12:33,720 --> 00:12:36,920 Speaker 1: This updates brought to you by Interactive Brokers and CIME Group. 226 00:12:36,960 --> 00:12:39,720 Speaker 1: If you're looking for global futures contracts with low trading costs, 227 00:12:39,760 --> 00:12:42,800 Speaker 1: look no further. Interactive Brokers is the industry leader. Learn 228 00:12:42,840 --> 00:12:45,800 Speaker 1: more at Interactive Brokers dot com, Slash, c M Group 229 00:12:46,280 --> 00:12:48,920 Speaker 1: us dock Indix future Is. They're little change as investors 230 00:12:48,960 --> 00:12:52,640 Speaker 1: assess global growth prospects and earnings amid renewed concern over 231 00:12:52,679 --> 00:12:56,040 Speaker 1: the Chinese economy, while oil prices far between gains and 232 00:12:56,120 --> 00:12:58,800 Speaker 1: losses there right now lower. We check the markets every 233 00:12:58,840 --> 00:13:01,640 Speaker 1: fifteen minutes throughout the trading day on Bloomberg with SMP 234 00:13:01,800 --> 00:13:04,520 Speaker 1: eveny future is down about three points down, eveny futures 235 00:13:04,520 --> 00:13:07,480 Speaker 1: down three as well, and as VAC eveny futures down twelve. 236 00:13:07,559 --> 00:13:10,200 Speaker 1: The acts in Germany's down six tenths percent. Pen your 237 00:13:10,240 --> 00:13:12,840 Speaker 1: treasury down fourteen thirty seconds. The yield one point eight 238 00:13:12,960 --> 00:13:16,360 Speaker 1: zero percent yield on the two year point seven seven percent. 239 00:13:16,720 --> 00:13:19,360 Speaker 1: Nimax screwed oil down one point seven percent, now down 240 00:13:19,440 --> 00:13:21,880 Speaker 1: fifty five cents. The thirty two dollars four cents of 241 00:13:21,960 --> 00:13:25,280 Speaker 1: barrel Comax gold up one percent or twelve dollars to twelve. 242 00:13:25,320 --> 00:13:28,080 Speaker 1: Twenty two twenty announced the euros at a dollar ten 243 00:13:28,160 --> 00:13:30,760 Speaker 1: o six, the British pound at a dollar forty seventy 244 00:13:30,840 --> 00:13:33,720 Speaker 1: eight agin one twelve point to six. That's a Bloomberg 245 00:13:33,760 --> 00:13:36,840 Speaker 1: business flash, Tom and Mike can thank you very much. 246 00:13:37,280 --> 00:13:41,240 Speaker 1: British pound trading for one forty seventy eight, down half 247 00:13:41,280 --> 00:13:45,920 Speaker 1: a percent again today, extending the biggest decline we've seen 248 00:13:46,000 --> 00:13:49,040 Speaker 1: since two thousand ten. Mark Kearney went to Parliament and 249 00:13:49,120 --> 00:13:52,720 Speaker 1: said uncertainty over Britain's future membership of the European Union 250 00:13:52,920 --> 00:13:56,680 Speaker 1: is weighing on the currency, and he noted that options 251 00:13:56,720 --> 00:14:01,800 Speaker 1: are suggesting further declines ahead. How joanous is global ahead 252 00:14:01,840 --> 00:14:05,079 Speaker 1: of foreign exchange for credit SUITEE and I guess The 253 00:14:05,160 --> 00:14:08,679 Speaker 1: question then becomes, Shahab, how low can it go? How 254 00:14:08,760 --> 00:14:12,559 Speaker 1: far down does the pound go? And how much of 255 00:14:12,640 --> 00:14:16,120 Speaker 1: an impact does how much of an impact does the 256 00:14:16,200 --> 00:14:18,559 Speaker 1: vote have on this? In other words, we're going to 257 00:14:18,600 --> 00:14:20,840 Speaker 1: see a lot of volatility as the polls come out 258 00:14:21,120 --> 00:14:25,680 Speaker 1: between now in June, Hi, good morning. Well, we think 259 00:14:26,520 --> 00:14:31,000 Speaker 1: if Brexit becomes a real possibility, at least you're suggested 260 00:14:31,040 --> 00:14:34,000 Speaker 1: by Poles, the pound is a lot further to go 261 00:14:34,120 --> 00:14:36,080 Speaker 1: on the downside. If you look at the pound against 262 00:14:36,120 --> 00:14:40,040 Speaker 1: the euro um, it's still six stronger than it's average 263 00:14:40,440 --> 00:14:43,960 Speaker 1: rates since two thousands and nine. Um Our fair value 264 00:14:44,000 --> 00:14:46,800 Speaker 1: indicators suggest that the pound is not cheap at this point. 265 00:14:46,880 --> 00:14:50,680 Speaker 1: It's only roughly at fair values. So on that basis, 266 00:14:51,520 --> 00:14:54,520 Speaker 1: there's a lot more room for downside as this issue 267 00:14:55,400 --> 00:14:59,040 Speaker 1: reaches its focal points around June. From our perspectives, and 268 00:14:59,120 --> 00:15:02,520 Speaker 1: in the events of a Erexit vote, clearly there's a 269 00:15:02,600 --> 00:15:05,360 Speaker 1: lot of uncertainty in terms of what type of economic 270 00:15:05,440 --> 00:15:09,440 Speaker 1: arrangement would replace the current arrangements UM, and in that 271 00:15:09,600 --> 00:15:11,920 Speaker 1: type of environment, we could even see the pounds fall 272 00:15:12,080 --> 00:15:17,200 Speaker 1: towards one twenty against the dollar one twenty over what 273 00:15:17,400 --> 00:15:20,320 Speaker 1: time period, over the next year or so. We think 274 00:15:20,360 --> 00:15:23,760 Speaker 1: that's that's feasible in the events of a Brexit decision. Remember, 275 00:15:23,920 --> 00:15:27,480 Speaker 1: the UK is like a very large leverage business. It's 276 00:15:27,520 --> 00:15:31,080 Speaker 1: basically like a bank. Um, there's assets and liabilities of 277 00:15:31,120 --> 00:15:34,680 Speaker 1: six of GDP. UH, there's a current account deficit of 278 00:15:34,720 --> 00:15:38,240 Speaker 1: around five percent of GDP. In two thousands fifteen, the 279 00:15:38,360 --> 00:15:43,440 Speaker 1: UK received net portfolio on SDI flows around twenty percent 280 00:15:43,520 --> 00:15:47,120 Speaker 1: of GDP. So these are large sums of money. And 281 00:15:47,600 --> 00:15:51,720 Speaker 1: the type of uncertainty that a Brexit vote would create 282 00:15:52,760 --> 00:15:56,080 Speaker 1: is significant and sufficient to take us, I think, to 283 00:15:56,240 --> 00:15:59,440 Speaker 1: to that one twenty level against the dollar. After all, 284 00:15:59,520 --> 00:16:03,120 Speaker 1: this is a that happens very infrequently. The last major 285 00:16:03,240 --> 00:16:06,440 Speaker 1: votes on the EU was in the mid seventies UH, 286 00:16:06,600 --> 00:16:08,800 Speaker 1: and in that time we've had the pound trade almost 287 00:16:08,840 --> 00:16:11,240 Speaker 1: to one against the dollar for for various reasons. So 288 00:16:11,960 --> 00:16:14,040 Speaker 1: going to one twenty wouldn't even take us to the 289 00:16:14,360 --> 00:16:17,040 Speaker 1: lowest So this type of event is big enough in 290 00:16:17,120 --> 00:16:20,280 Speaker 1: our view too, to deliver that Outcolm, we're getting these 291 00:16:20,320 --> 00:16:25,840 Speaker 1: outlier calls. I'd like you to discuss the ramifications of 292 00:16:25,960 --> 00:16:28,960 Speaker 1: getting anywhere near a one and through that to your 293 00:16:29,480 --> 00:16:32,920 Speaker 1: um not call, but extrapolation, I'll call it to a 294 00:16:33,040 --> 00:16:37,680 Speaker 1: one twenty week sterling. Do you just assume that means 295 00:16:38,480 --> 00:16:42,840 Speaker 1: end of Reuben dollar like two thousand two dollars strength? Well, 296 00:16:42,920 --> 00:16:46,320 Speaker 1: I think the question really comes why would anybody be 297 00:16:46,680 --> 00:16:49,960 Speaker 1: upset in the UK if the pound goes to one 298 00:16:50,360 --> 00:16:53,160 Speaker 1: against the dollar? Who would actually try to stop that happening? 299 00:16:53,560 --> 00:16:57,440 Speaker 1: I think that's incredibly that's incredibly important. Why is that? Well, 300 00:16:57,560 --> 00:16:59,840 Speaker 1: so here, here's the thing. We have low inflation and 301 00:17:00,000 --> 00:17:02,240 Speaker 1: you care at the moment, So the central bank probably 302 00:17:02,400 --> 00:17:05,639 Speaker 1: doesn't mind a currency that goes lower as long as 303 00:17:05,680 --> 00:17:10,000 Speaker 1: it doesn't become incredibly volatile as it does. So now 304 00:17:10,119 --> 00:17:12,880 Speaker 1: that that is a risk, um. But but in any case, 305 00:17:12,960 --> 00:17:15,119 Speaker 1: you know, let's assume that you go down there in 306 00:17:15,200 --> 00:17:18,240 Speaker 1: a relatively contained where As I said, we're still six 307 00:17:18,320 --> 00:17:21,119 Speaker 1: percent stronger against the euro than we were with the 308 00:17:21,200 --> 00:17:25,800 Speaker 1: pounds as an average level in the period since two 309 00:17:25,840 --> 00:17:28,760 Speaker 1: thousand and nine. So the starting point is not a 310 00:17:28,840 --> 00:17:32,280 Speaker 1: pound that's very uh weak at this point in time. 311 00:17:32,320 --> 00:17:33,840 Speaker 1: And this is the key issue here is that the 312 00:17:33,920 --> 00:17:37,680 Speaker 1: euro has fallen a long way against the dollar, and 313 00:17:37,760 --> 00:17:40,920 Speaker 1: the pound resisted falling with the euro despite the U 314 00:17:41,040 --> 00:17:44,760 Speaker 1: area being the pounds or the UK's biggest economic trading partners. 315 00:17:44,840 --> 00:17:47,680 Speaker 1: So to some extent, the pounds got to pass, you know, 316 00:17:47,880 --> 00:17:50,520 Speaker 1: from from the euro's form by being seen as a 317 00:17:50,560 --> 00:17:53,280 Speaker 1: bit more dollarlike. Now, what we're really doing is re 318 00:17:53,920 --> 00:17:56,920 Speaker 1: revaluing the pounds to reflect the existing realities. And in 319 00:17:57,000 --> 00:18:00,320 Speaker 1: that context are said going to one twenty is not 320 00:18:00,840 --> 00:18:02,560 Speaker 1: is not really that far away from where we are 321 00:18:02,680 --> 00:18:05,399 Speaker 1: right now. And critically, I don't see why the central 322 00:18:05,440 --> 00:18:08,000 Speaker 1: bank would be too upset with the move to that 323 00:18:08,119 --> 00:18:10,560 Speaker 1: kind of level given where inflation levels are, and even 324 00:18:10,600 --> 00:18:14,880 Speaker 1: the politicians have generally been criticized for not reboundanting economy. 325 00:18:15,480 --> 00:18:18,439 Speaker 1: This is critical. What does it mean given a dollar 326 00:18:18,600 --> 00:18:23,480 Speaker 1: strength that diminishes US export industries means that part of 327 00:18:24,080 --> 00:18:27,840 Speaker 1: the following effect, Well, I think this is a you know, 328 00:18:28,040 --> 00:18:29,920 Speaker 1: at the end of the day, in the UK is 329 00:18:30,000 --> 00:18:33,680 Speaker 1: not a significant enough economic partner for the US, whereby 330 00:18:34,160 --> 00:18:37,320 Speaker 1: the pounds fall into one twenty against the dollar, would 331 00:18:37,359 --> 00:18:40,840 Speaker 1: materially change the overall export outlook for the US. In 332 00:18:40,920 --> 00:18:45,520 Speaker 1: my view, I think things occurrencies like China, Euro these 333 00:18:45,800 --> 00:18:48,280 Speaker 1: matter a lot more to the to the US, but 334 00:18:48,400 --> 00:18:50,560 Speaker 1: you're raided the wider points. And that's the fact that 335 00:18:50,640 --> 00:18:53,320 Speaker 1: the dollar itself has now got to a point where 336 00:18:53,880 --> 00:18:57,240 Speaker 1: many believe there is a negative effect on GDP in 337 00:18:57,280 --> 00:19:00,040 Speaker 1: the US via the exports channel. Uh and also so 338 00:19:00,240 --> 00:19:04,879 Speaker 1: even a potential hindrance to inflation expectations as well. So 339 00:19:05,520 --> 00:19:08,840 Speaker 1: that's resulting in some changes in some of our other forecasts. 340 00:19:08,840 --> 00:19:11,879 Speaker 1: For example, we lowered our dollar yan forecast to one 341 00:19:11,960 --> 00:19:15,120 Speaker 1: oh five in twelve months time to reflect the fact 342 00:19:15,160 --> 00:19:17,439 Speaker 1: that the dollar is now being held back but by 343 00:19:17,520 --> 00:19:20,960 Speaker 1: this change in perception. But I think from the UK's perspective, 344 00:19:21,600 --> 00:19:24,639 Speaker 1: um at the pound going to one twenty is more 345 00:19:24,640 --> 00:19:26,920 Speaker 1: of a local UK story and I don't think in 346 00:19:27,600 --> 00:19:29,960 Speaker 1: a way it would influence what the US does it 347 00:19:30,000 --> 00:19:33,000 Speaker 1: a dollar those thank you so much chub Jonas with 348 00:19:33,119 --> 00:19:37,320 Speaker 1: a um not outlier call, but a new trend towards significant, 349 00:19:37,400 --> 00:19:40,320 Speaker 1: big figure moves, something definitely to keep an eye on. 350 00:19:40,400 --> 00:19:43,040 Speaker 1: I mean, it's it raises a whole new risk category 351 00:19:43,640 --> 00:19:46,240 Speaker 1: and a reaffirmation of dollar strength. There seems to be 352 00:19:46,320 --> 00:19:49,080 Speaker 1: a heated debate about where that goes. But what we 353 00:19:49,119 --> 00:19:50,800 Speaker 1: want to do is get you out in front of 354 00:19:50,880 --> 00:19:54,119 Speaker 1: the conversation, and we try to do that. Uh, Michael 355 00:19:54,160 --> 00:19:56,960 Speaker 1: McKee and Tom Keane. When you get the markets open 356 00:19:57,080 --> 00:20:00,720 Speaker 1: futures A slight tilt negative negative four stay with a 357 00:20:00,800 --> 00:20:07,000 Speaker 1: Sploomberg Surveillance Good morning. We are kind of down to 358 00:20:07,119 --> 00:20:09,000 Speaker 1: the opening bell brought you by the refined Jeep Grand 359 00:20:09,080 --> 00:20:11,159 Speaker 1: Cherokee Overland. It continues to raise the bar with its 360 00:20:11,240 --> 00:20:14,320 Speaker 1: luxurious interior and legendary four by four capability. Drive on 361 00:20:14,359 --> 00:20:16,840 Speaker 1: ato local jeep dealer today Gee, the official vehicle of 362 00:20:16,920 --> 00:20:27,600 Speaker 1: Killington Resort, broadcasting live to New York, Kiolberg eleventh to Washington, 363 00:20:27,720 --> 00:20:31,760 Speaker 1: d C, Huomberg one to Boston, Bloomberg twelve line to 364 00:20:31,920 --> 00:20:35,800 Speaker 1: San Francisco, Bloomberg nine to the Country Suit the Sex 365 00:20:35,920 --> 00:20:39,160 Speaker 1: and General one nineteen and around the glow the Bloomberg 366 00:20:39,280 --> 00:20:44,159 Speaker 1: Radio cross Aben Boomberg dot Com. This is Bloomberg Surveillance. Hey, 367 00:20:44,160 --> 00:20:46,600 Speaker 1: good morning, I'm Karen Moscow along with Tom Keene and 368 00:20:46,680 --> 00:20:49,040 Speaker 1: Michael McKee, and the opening nowal brought to you by 369 00:20:49,320 --> 00:20:52,680 Speaker 1: se I Imagine, a global operating platform designed to deliver 370 00:20:52,800 --> 00:20:57,199 Speaker 1: a differentiated and technologically rich investor experience. Find out how 371 00:20:57,280 --> 00:21:00,280 Speaker 1: SEI can help you succeed at se i C dot com. 372 00:21:00,359 --> 00:21:03,280 Speaker 1: Slash Imagine stocks are lower at the open. The S 373 00:21:03,320 --> 00:21:05,440 Speaker 1: and P five hundred down three ten percent or six 374 00:21:05,520 --> 00:21:08,680 Speaker 1: points in nineteen thirty nine. Down Jones Industrial Average down 375 00:21:08,720 --> 00:21:11,320 Speaker 1: two tens percent or forty four points to sixteen thousand, 376 00:21:11,359 --> 00:21:14,240 Speaker 1: five hundred seventy five. Then as Dacs down half percent 377 00:21:14,400 --> 00:21:18,080 Speaker 1: or twenty one points to fort nine. Ten year Treasury 378 00:21:18,160 --> 00:21:20,959 Speaker 1: down fourteen thirty seconds, the yield one point eight zero percent, 379 00:21:21,080 --> 00:21:23,479 Speaker 1: and the yield in the two year point seven seven percent. 380 00:21:24,040 --> 00:21:26,320 Speaker 1: NIMEX scrude oil is down one point eight percent or 381 00:21:26,359 --> 00:21:29,000 Speaker 1: sixty one cents to thirty two seventy seven. A barrel 382 00:21:29,240 --> 00:21:31,919 Speaker 1: comes gold up nine tenths percent or ten dollars fifty 383 00:21:32,000 --> 00:21:34,720 Speaker 1: cents to twelve twenty sixty and ounce the euros at 384 00:21:34,760 --> 00:21:37,160 Speaker 1: a dollar ten o four the N one twelve point 385 00:21:37,320 --> 00:21:41,760 Speaker 1: three six. Tom and Mike Cavaska, thank you very much. 386 00:21:42,359 --> 00:21:45,080 Speaker 1: It feels like a serial. When we last left the 387 00:21:45,200 --> 00:21:48,720 Speaker 1: people of Argentina, they were in a dispute with Paul 388 00:21:48,800 --> 00:21:52,440 Speaker 1: Singer and other hedge fund managers over bonds that had 389 00:21:52,520 --> 00:21:57,840 Speaker 1: not been paid. Now we are moving towards a settlement 390 00:21:58,480 --> 00:22:00,680 Speaker 1: and for some people it may be a good deal 391 00:22:00,760 --> 00:22:02,680 Speaker 1: and for some people that may not. And that's why 392 00:22:02,720 --> 00:22:06,160 Speaker 1: we're bringing our referee cat to p Zenkovsky to explain 393 00:22:06,400 --> 00:22:08,480 Speaker 1: where we are. I want to get an update on 394 00:22:08,600 --> 00:22:11,359 Speaker 1: where we are in terms of the settlement with the 395 00:22:11,440 --> 00:22:14,840 Speaker 1: holdouts and the Argentine bond deal, and then who's the 396 00:22:14,880 --> 00:22:17,479 Speaker 1: winner and who's the loser. Absolutely so where we are 397 00:22:17,680 --> 00:22:20,280 Speaker 1: is probably closer to a settlement and putting this all 398 00:22:20,320 --> 00:22:22,560 Speaker 1: behind us than we've ever been before, so we can 399 00:22:22,640 --> 00:22:26,000 Speaker 1: all move on with our lives. It's been fifteen years. UM. 400 00:22:26,720 --> 00:22:31,720 Speaker 1: Anything anything to do, I'll retire. UM. The Argentina made 401 00:22:31,720 --> 00:22:35,600 Speaker 1: a proposal, a formal proposal on February five. UH. It 402 00:22:35,760 --> 00:22:39,120 Speaker 1: extended to various types of bond holders and and exactly 403 00:22:39,240 --> 00:22:42,560 Speaker 1: what they've done so far in their legal steps. UH. 404 00:22:42,800 --> 00:22:44,800 Speaker 1: They had Depending on what you've done in the court, 405 00:22:44,920 --> 00:22:49,040 Speaker 1: you have different options that pertain to you. The holdouts 406 00:22:49,080 --> 00:22:54,240 Speaker 1: like Elliott Um and run by Paul Singer Aurelius Management 407 00:22:54,320 --> 00:22:57,520 Speaker 1: aren't very happy with the deal because the because of 408 00:22:57,600 --> 00:22:59,320 Speaker 1: what the steps that they've taken and the kind of 409 00:22:59,359 --> 00:23:02,359 Speaker 1: bonds that they hold. They feel that this deal offers 410 00:23:02,560 --> 00:23:06,439 Speaker 1: a better resolution to to others, like for example, Kenneth 411 00:23:06,520 --> 00:23:11,360 Speaker 1: dart Um, the foam cut magnet. UH. He got basically 412 00:23:11,359 --> 00:23:13,800 Speaker 1: a hundred percent of his claim off of this steal, 413 00:23:14,520 --> 00:23:17,040 Speaker 1: and Elliott would be getting seventy two point five percent 414 00:23:17,080 --> 00:23:20,199 Speaker 1: of their claims. So they're not happy, but things are 415 00:23:20,240 --> 00:23:22,639 Speaker 1: going in the direction in the favor of the Argentines 416 00:23:22,640 --> 00:23:27,040 Speaker 1: because they've shown this goodwill under President Maki that former 417 00:23:27,080 --> 00:23:30,680 Speaker 1: President Kirshner simply did not do. Just basically Macari coming 418 00:23:31,400 --> 00:23:33,760 Speaker 1: back and saying, look, let's get this over with and 419 00:23:33,840 --> 00:23:35,760 Speaker 1: what do we need to do to settle it exactly? 420 00:23:35,840 --> 00:23:39,320 Speaker 1: And that attitude has been monumental and changing the opinion 421 00:23:39,400 --> 00:23:41,959 Speaker 1: in the mind of the judge that's been presiding over 422 00:23:42,040 --> 00:23:45,000 Speaker 1: this case for for many, many years. He says, this 423 00:23:45,119 --> 00:23:48,080 Speaker 1: attitude change is the game changer that I needed to see. 424 00:23:48,680 --> 00:23:50,840 Speaker 1: And as a result, so far he's been kind of 425 00:23:50,920 --> 00:23:55,240 Speaker 1: making these decisions that have really gone against Elliott and 426 00:23:55,320 --> 00:23:58,600 Speaker 1: turned the tables on them, uh and and in a 427 00:23:58,680 --> 00:24:00,439 Speaker 1: way removed a lot of the level rige that they 428 00:24:00,480 --> 00:24:03,320 Speaker 1: had in this whole UH, in this whole saga. So 429 00:24:03,480 --> 00:24:06,200 Speaker 1: we could be seeing a pressure on them to settle 430 00:24:06,359 --> 00:24:08,400 Speaker 1: sooner rather than later in a way that we hadn't 431 00:24:08,440 --> 00:24:12,560 Speaker 1: seen before. Do we have a time frame for signing 432 00:24:12,680 --> 00:24:15,680 Speaker 1: the documents? I would love a trumpan that I knew 433 00:24:15,720 --> 00:24:19,000 Speaker 1: could be true. They the Argentines have basically presented a 434 00:24:19,080 --> 00:24:21,440 Speaker 1: settlement that they would like everybody to get involved in 435 00:24:21,480 --> 00:24:26,800 Speaker 1: by February twenty nine. Um. Yes, so it's soon, but 436 00:24:27,000 --> 00:24:30,040 Speaker 1: that doesn't necessarily mean that Elliott will will get involved 437 00:24:30,080 --> 00:24:34,199 Speaker 1: by February. Can they make this go on longer? They 438 00:24:34,240 --> 00:24:37,680 Speaker 1: can try. This is the thing with this case is 439 00:24:37,720 --> 00:24:40,920 Speaker 1: that everybody has a very striking incentive to end it 440 00:24:41,080 --> 00:24:43,600 Speaker 1: as soon as possible. Everyone wants to get this over 441 00:24:43,680 --> 00:24:47,080 Speaker 1: with as soon as possible. The thing with Elliott and 442 00:24:47,440 --> 00:24:51,200 Speaker 1: and what's happening now in the courts is the if 443 00:24:51,240 --> 00:24:55,520 Speaker 1: you remember, there's this injunction um, which made everything far 444 00:24:55,600 --> 00:24:59,080 Speaker 1: more complicated. There's an injunction that basically prevents Argentina from 445 00:24:59,080 --> 00:25:02,200 Speaker 1: paying its restructu your debt until it pays Elliott. That 446 00:25:02,720 --> 00:25:06,280 Speaker 1: the judge that that design that injunction said, because of 447 00:25:06,359 --> 00:25:08,800 Speaker 1: all this good faith that I've seen from Argentina in 448 00:25:08,840 --> 00:25:11,000 Speaker 1: the last couple of weeks, I'm going to remove that 449 00:25:11,080 --> 00:25:15,080 Speaker 1: injunction even if Elliott isn't paid yet. That has been 450 00:25:15,160 --> 00:25:17,640 Speaker 1: this this huge turning of the table events that we've 451 00:25:17,720 --> 00:25:22,040 Speaker 1: seen and um as a result, uh that that may 452 00:25:22,119 --> 00:25:24,960 Speaker 1: put pressure on Elliott to settle sooner rather than later 453 00:25:25,760 --> 00:25:28,120 Speaker 1: because their leverage is now gone. Well that's good news 454 00:25:28,160 --> 00:25:30,640 Speaker 1: because it means Catchy will come back in a week 455 00:25:30,720 --> 00:25:33,960 Speaker 1: or so, maybe next Monday, and explain how we've gotten 456 00:25:33,960 --> 00:25:36,600 Speaker 1: through all this catch up, Zakonski, thank for updating us 457 00:25:36,640 --> 00:25:39,600 Speaker 1: on the This was a big deal some months ago. 458 00:25:39,880 --> 00:25:41,639 Speaker 1: The world was going to come to an end because 459 00:25:41,680 --> 00:25:44,920 Speaker 1: of the Argentina situation. And see if they've made nice 460 00:25:45,000 --> 00:25:53,360 Speaker 1: Tom Tricy alloway with us uh so quickly forgotten. It's 461 00:25:53,359 --> 00:25:57,120 Speaker 1: amazing in the back and forth of surveillance today, we've 462 00:25:57,119 --> 00:26:00,920 Speaker 1: been whipside by all sorts of interesting interviews. Is the 463 00:26:01,080 --> 00:26:04,239 Speaker 1: idea of top of Market. I am thunderstruck by your 464 00:26:04,280 --> 00:26:07,560 Speaker 1: note on Morgan Stanley and commercial real estate. Well, they 465 00:26:07,640 --> 00:26:11,359 Speaker 1: have just flat out adjusted. So I wish this is 466 00:26:11,440 --> 00:26:13,920 Speaker 1: one of those times when I wish maybe we weren't 467 00:26:13,960 --> 00:26:16,040 Speaker 1: doing radio and I could actually show you the chart, 468 00:26:16,080 --> 00:26:18,320 Speaker 1: because if you look at a chart of commercial real 469 00:26:18,440 --> 00:26:23,119 Speaker 1: estate prices they have blown past their two thousand seven peak. 470 00:26:23,520 --> 00:26:27,760 Speaker 1: And obviously residential housing has recovered as well, but by 471 00:26:27,920 --> 00:26:31,040 Speaker 1: no means has it grown to the extent that commercial 472 00:26:31,119 --> 00:26:34,040 Speaker 1: real estate has. And so we have this big debate 473 00:26:34,200 --> 00:26:37,639 Speaker 1: about froth in the market. And now we have Morgan 474 00:26:37,720 --> 00:26:40,280 Speaker 1: Stanley analysts who are led by Richard Hill, who's a 475 00:26:40,480 --> 00:26:43,560 Speaker 1: veteran of the commercial real estate industry, saying they see 476 00:26:43,760 --> 00:26:46,880 Speaker 1: flat growth for the year. And what's more is they're 477 00:26:46,880 --> 00:26:51,920 Speaker 1: talking about potentially very barished dynamic where investors, because they're 478 00:26:51,960 --> 00:26:54,399 Speaker 1: not getting the sort of leveraged returns that they're used to, 479 00:26:55,080 --> 00:27:00,359 Speaker 1: start demanding more income from commercial properties that potentially companies 480 00:27:00,480 --> 00:27:02,920 Speaker 1: just won't be able to come up with. Remember we're 481 00:27:03,000 --> 00:27:06,160 Speaker 1: talking about an earnings recession in the US. It seems 482 00:27:06,240 --> 00:27:08,560 Speaker 1: unlikely you're suddenly going to get a big uptick in 483 00:27:08,680 --> 00:27:11,879 Speaker 1: income from commercial properties. At the same time, the idea 484 00:27:11,920 --> 00:27:15,920 Speaker 1: of commercial property speaks to the FED is a linkage 485 00:27:16,000 --> 00:27:20,520 Speaker 1: that the FED has provided a unique monetary milieu which 486 00:27:20,600 --> 00:27:27,240 Speaker 1: is allowed for to occur. Um. Well, it's hard to 487 00:27:27,520 --> 00:27:32,440 Speaker 1: argue otherwise when you see that commercial real estate, i 488 00:27:32,480 --> 00:27:36,119 Speaker 1: mean something like eight percent above its two thousand seven peak. 489 00:27:36,800 --> 00:27:39,399 Speaker 1: That's pretty amazing, and it's not like anyone in two 490 00:27:39,440 --> 00:27:42,440 Speaker 1: thousand seven was saying that commercial real estate was undervalued 491 00:27:42,960 --> 00:27:45,400 Speaker 1: and we're now eight percent above it. And of course 492 00:27:45,480 --> 00:27:48,040 Speaker 1: we have seen a lot of yield hungry investors to 493 00:27:48,200 --> 00:27:51,880 Speaker 1: use the old cliche pile into the asset class. They've 494 00:27:51,880 --> 00:27:55,679 Speaker 1: been buying commercial mortgage backed bonds quite a lot, sales 495 00:27:55,760 --> 00:28:00,560 Speaker 1: of which are perhaps unsurprisingly now slowing UH following the 496 00:28:00,760 --> 00:28:02,800 Speaker 1: interest rate rise from the Fed and also some new 497 00:28:02,920 --> 00:28:05,840 Speaker 1: rules coming in, so headwinds to that sector. For sure. 498 00:28:06,520 --> 00:28:10,680 Speaker 1: You have been touring the world. We have barely struggled 499 00:28:10,680 --> 00:28:13,560 Speaker 1: by without you. What did you learn your global jot 500 00:28:13,760 --> 00:28:16,760 Speaker 1: my global tour. That's yeah. I was in Hong Kong 501 00:28:16,880 --> 00:28:20,200 Speaker 1: for a week and then Abu Dhabi and Dubai, the 502 00:28:20,640 --> 00:28:23,920 Speaker 1: oil soaked Middle East now even more oil soaked. I 503 00:28:24,040 --> 00:28:26,800 Speaker 1: think what did I learn? UM? I had some interesting 504 00:28:26,840 --> 00:28:31,160 Speaker 1: discussions with high end retail sales people in Hong Kong. 505 00:28:31,280 --> 00:28:34,200 Speaker 1: They've seen a significant slowdown. Where once you used to 506 00:28:34,240 --> 00:28:37,159 Speaker 1: have a Tiffany's on every corner of every block, you 507 00:28:37,280 --> 00:28:41,520 Speaker 1: now have one on every other corner of every other block. UH. 508 00:28:41,760 --> 00:28:45,760 Speaker 1: In Abu Dhabi, I am reliably told there is a 509 00:28:45,800 --> 00:28:48,680 Speaker 1: lot of consternation about lower oil prices. A lot of 510 00:28:48,800 --> 00:28:52,880 Speaker 1: consultants and lawyers have been hired to talk about what 511 00:28:53,360 --> 00:28:57,280 Speaker 1: um the Emirate can do. Unfortunately, so far it seems 512 00:28:57,320 --> 00:28:59,480 Speaker 1: they're just telling the Emiratis what they want to hear. 513 00:29:00,240 --> 00:29:02,680 Speaker 1: So we'll have to see you how that plays out. 514 00:29:02,800 --> 00:29:07,160 Speaker 1: Are you here tomorrow? You're going for another twelve weeks? Uh? Sadly, 515 00:29:07,360 --> 00:29:09,520 Speaker 1: Tom I I will be here now. I'm thrilled to 516 00:29:09,560 --> 00:29:12,480 Speaker 1: be back. Good Tracy always Mars. We'll see a lot 517 00:29:12,520 --> 00:29:15,440 Speaker 1: of her in the coming days. Does a fabulous job 518 00:29:15,520 --> 00:29:19,320 Speaker 1: of gleaning street research and coming up with important insight 519 00:29:19,560 --> 00:29:24,040 Speaker 1: you need on economics, finance, investment, and occasionally alloway on 520 00:29:24,400 --> 00:29:28,800 Speaker 1: international relations as well. I read on the screen the 521 00:29:28,920 --> 00:29:33,800 Speaker 1: VIX nineteen point eight zero vis up point three four points. 522 00:29:37,840 --> 00:29:40,400 Speaker 1: Let's take anyway, John Tucker, I'll get the latest world 523 00:29:40,400 --> 00:29:43,360 Speaker 1: in national headlines, John Michael and tom Ley Pentagon plan 524 00:29:43,480 --> 00:29:46,640 Speaker 1: for closing Guantanamo's detention center I have Moving detainees to 525 00:29:46,720 --> 00:29:49,440 Speaker 1: the US is an expanded to get a warm welcome. 526 00:29:49,480 --> 00:29:53,160 Speaker 1: But it's presented to Congress today. The administration's last ditch 527 00:29:53,280 --> 00:29:56,000 Speaker 1: effort to make good on President Obama's campaign about a 528 00:29:56,080 --> 00:30:01,760 Speaker 1: closed guantanamo may only further antagonized lawmakers Republican presidential camp, 529 00:30:01,800 --> 00:30:04,960 Speaker 1: and it's took last minute appeals for support across Nevada 530 00:30:05,280 --> 00:30:08,480 Speaker 1: at ahead of today's caucuses. At one rally, Texas Senator 531 00:30:08,520 --> 00:30:10,920 Speaker 1: Ted Cruz said he'd liked the thought of Hillary Clinton 532 00:30:11,040 --> 00:30:14,680 Speaker 1: behind bars. The sees fire proposal for Syria getting support 533 00:30:14,720 --> 00:30:17,920 Speaker 1: with strings today. Turkey's deputy Prime Minister says this country 534 00:30:18,000 --> 00:30:21,840 Speaker 1: supports the plan, but suggest its military could continue firing 535 00:30:21,920 --> 00:30:26,280 Speaker 1: on Syrian Kurdish groups in Syria in response to attacks. 536 00:30:26,920 --> 00:30:30,240 Speaker 1: A migrant crisis in France reaching a peak today, charity 537 00:30:30,280 --> 00:30:33,560 Speaker 1: groups making a last station aftertitude delay implementation of an 538 00:30:33,640 --> 00:30:36,760 Speaker 1: order by French authorities that refugees must move out of 539 00:30:36,800 --> 00:30:40,040 Speaker 1: their camp in Calais by tonight. The camp of the 540 00:30:40,080 --> 00:30:43,000 Speaker 1: port city has become a flashpoint. Authorities say the slum 541 00:30:43,120 --> 00:30:47,480 Speaker 1: like present slum like site presents sanitary and other risks. 542 00:30:47,520 --> 00:30:50,760 Speaker 1: Anywhere from eight hundred to three thousand people lived there. 543 00:30:51,440 --> 00:30:53,440 Speaker 1: Global News twenty four hours a day, powered by a 544 00:30:53,520 --> 00:30:55,760 Speaker 1: twenty four hundred journalists. He had more than one hundred 545 00:30:55,800 --> 00:30:59,760 Speaker 1: fifty news bureaus around the world. I'm John Tucker. Michael, 546 00:31:00,000 --> 00:31:02,960 Speaker 1: I'm Tom John Tucker. Thank you so much. Negative sixty 547 00:31:03,560 --> 00:31:08,440 Speaker 1: SMP down nine points six on the SMP N one, 548 00:31:09,240 --> 00:31:13,520 Speaker 1: still strong, but not like earlier this morning. Michael McKee 549 00:31:13,560 --> 00:31:21,640 Speaker 1: and Tom Keane. Next on the economy. Bloomberg Surveillance is 550 00:31:21,720 --> 00:31:25,080 Speaker 1: our of surveillance, brought to you by Westchester Subaru. Visit 551 00:31:25,160 --> 00:31:39,280 Speaker 1: Westchester Subaru dot com. Global business news twenty four hours 552 00:31:39,320 --> 00:31:42,480 Speaker 1: a day at Bloomberg dot com, the radio plus mobil 553 00:31:42,760 --> 00:31:46,200 Speaker 1: and on your radio. This is a Bloomberg Business Flash 554 00:31:46,720 --> 00:31:49,120 Speaker 1: and I'm Karen Moscow. This updates brought to you by 555 00:31:49,200 --> 00:31:51,680 Speaker 1: Sector Spidery t F s by by a single stock. 556 00:31:51,720 --> 00:31:54,480 Speaker 1: When you can invest in the entire sector. Visit Sector 557 00:31:54,720 --> 00:31:58,520 Speaker 1: spd r s dot Com are called sector et F. 558 00:31:59,200 --> 00:32:02,600 Speaker 1: Stocks are falling from six week highs as investors assess 559 00:32:02,680 --> 00:32:06,360 Speaker 1: global growth prospects and earnings, while oil prices retreat, and 560 00:32:06,440 --> 00:32:09,240 Speaker 1: we check the markets every fifteen minutes throughout the trading day. 561 00:32:09,320 --> 00:32:12,800 Speaker 1: On Bloomberg, the S and P fived is down three 562 00:32:12,840 --> 00:32:15,880 Speaker 1: tens percent, down six points. The nineteen thirty eight down 563 00:32:15,960 --> 00:32:18,920 Speaker 1: Jones Industrial average down three tens percent or forty seven points, 564 00:32:19,000 --> 00:32:22,160 Speaker 1: to sixteen thousand five hundred seventy four nasdacked down four 565 00:32:22,240 --> 00:32:25,840 Speaker 1: tens percent or seventeen points to forty five fifty two ten. 566 00:32:25,920 --> 00:32:29,360 Speaker 1: Your treasury is down thirteen thirty seconds. The yield one 567 00:32:29,400 --> 00:32:32,200 Speaker 1: point seven nine percent yield on the two year point 568 00:32:32,280 --> 00:32:34,880 Speaker 1: seven six percent. Niemex screwed oil down two and a 569 00:32:34,920 --> 00:32:37,240 Speaker 1: half percent or eighty two cents to thirty two fifties 570 00:32:37,240 --> 00:32:40,000 Speaker 1: seven of barrel comes gold up one percent or eleven 571 00:32:40,040 --> 00:32:42,960 Speaker 1: dollars ninety cents to twelve twenty two announced. The euro 572 00:32:43,080 --> 00:32:45,480 Speaker 1: a dollar oh nine nine seven, the en one twelve 573 00:32:45,680 --> 00:32:48,960 Speaker 1: point to eight. The London Stock Exchange Group is in 574 00:32:49,040 --> 00:32:51,440 Speaker 1: murder talks with Deutsche Boors, the tie up that would 575 00:32:51,440 --> 00:32:53,760 Speaker 1: create one of the biggest exchange companies in the world. 576 00:32:54,120 --> 00:32:57,800 Speaker 1: Western Digital to buy Sandis for fifteen point eight billion dollars, 577 00:32:57,840 --> 00:33:00,440 Speaker 1: sticking with plans to combine the makers of memory chips 578 00:33:00,720 --> 00:33:03,480 Speaker 1: after a potential Chinese investor backed out of another deal 579 00:33:03,560 --> 00:33:07,160 Speaker 1: amid a national security probe. And that's a Bloomberg business flash. 580 00:33:07,240 --> 00:33:10,120 Speaker 1: Tom and Mike Karen, thanks so much. Every once in 581 00:33:10,160 --> 00:33:12,840 Speaker 1: a while, there's a research piece that jumps out and 582 00:33:13,000 --> 00:33:16,080 Speaker 1: hit you over the head. After I picked myself up 583 00:33:16,120 --> 00:33:19,240 Speaker 1: all the off the ground. I said to Rachel worst 584 00:33:19,760 --> 00:33:23,800 Speaker 1: Span and our team, would you please find Josh Silverstein. 585 00:33:23,880 --> 00:33:28,640 Speaker 1: He's with Deutsche Bank out of Lehigh and he covers Parsley, Permium, 586 00:33:28,760 --> 00:33:34,280 Speaker 1: Newfield and conna Q and p resources in oil. Josh, 587 00:33:34,480 --> 00:33:38,360 Speaker 1: good morning. You call it the opportunity curve. Is the 588 00:33:38,480 --> 00:33:43,520 Speaker 1: opportunity upon us high good boy and Tom. Uh. There 589 00:33:43,640 --> 00:33:46,800 Speaker 1: is some certain certainly some opportunities to the outside in 590 00:33:46,840 --> 00:33:49,280 Speaker 1: the energy sector right now, but we do find it 591 00:33:49,400 --> 00:33:53,320 Speaker 1: to be a challenging investing environment. And until we find 592 00:33:53,400 --> 00:33:55,600 Speaker 1: at least a little bit more clarity in terms of 593 00:33:56,320 --> 00:33:59,240 Speaker 1: oil price direction, we want to stay more nimble. We 594 00:33:59,280 --> 00:34:02,680 Speaker 1: want to focus on our deepest, high highest quality inventory 595 00:34:02,760 --> 00:34:05,560 Speaker 1: assets UH and really have a balance sheet focus as 596 00:34:05,600 --> 00:34:13,120 Speaker 1: well well. Um, these are all, you know, investments that 597 00:34:13,480 --> 00:34:17,160 Speaker 1: have been affected by the price of oil. Do you 598 00:34:17,200 --> 00:34:24,399 Speaker 1: have an underlying call that then makes them worth looking at? Sure? 599 00:34:24,600 --> 00:34:27,200 Speaker 1: You know we're a roughly thirty dollars of barrel right now, 600 00:34:27,360 --> 00:34:29,880 Speaker 1: and you know we don't see this as a sustainable 601 00:34:29,960 --> 00:34:33,920 Speaker 1: price in our longer term forecast rise to roughly sixty 602 00:34:34,440 --> 00:34:38,040 Speaker 1: per barrel in UH, and that's really what we see 603 00:34:38,160 --> 00:34:41,279 Speaker 1: some of our investments predicated on. However, we do like 604 00:34:41,480 --> 00:34:44,920 Speaker 1: some of the downside protection that these that these companies 605 00:34:45,080 --> 00:34:49,040 Speaker 1: offer in terms of lower leverage than average and really 606 00:34:49,520 --> 00:34:53,440 Speaker 1: a deep, high quality inventory that can sustain lower prices 607 00:34:53,480 --> 00:34:55,640 Speaker 1: for for a period of time. And that's why we 608 00:34:55,719 --> 00:34:58,520 Speaker 1: feel more comfortable in owning companies that are exposed to 609 00:34:59,000 --> 00:35:01,600 Speaker 1: the priming base in the inn a dark obasin. Well, 610 00:35:01,680 --> 00:35:06,080 Speaker 1: certainly lower leverage is key. We have the big bank 611 00:35:06,200 --> 00:35:08,239 Speaker 1: reset coming up in a month or show, and a 612 00:35:08,280 --> 00:35:12,920 Speaker 1: lot of companies may not be here anymore. You're five, 613 00:35:13,600 --> 00:35:16,359 Speaker 1: you suggest are in pretty good shape. We shouldn't worry 614 00:35:16,360 --> 00:35:20,520 Speaker 1: about any of them. Yeah, most of these companies are 615 00:35:20,560 --> 00:35:23,360 Speaker 1: in fairly good shape. We're definitely seeing another round of 616 00:35:23,960 --> 00:35:27,200 Speaker 1: capital raises from the sector right now, very similar to 617 00:35:27,320 --> 00:35:30,080 Speaker 1: what we saw at this point last year. Uh. It 618 00:35:30,200 --> 00:35:33,160 Speaker 1: seems like most of these companies are finding opportunities to 619 00:35:33,200 --> 00:35:35,600 Speaker 1: issue equity and so they're going to enhance their their 620 00:35:35,640 --> 00:35:38,440 Speaker 1: balance sheets. From that standpoint, Uh, you know, we are 621 00:35:38,520 --> 00:35:40,640 Speaker 1: really you know, we want to go after these companies 622 00:35:40,680 --> 00:35:42,960 Speaker 1: that have the better balance sheets. If you were just 623 00:35:43,120 --> 00:35:45,799 Speaker 1: to take a spread of the kind of the top 624 00:35:45,880 --> 00:35:49,800 Speaker 1: ten balance sheets in our coverage universe versus the the 625 00:35:49,960 --> 00:35:54,279 Speaker 1: bottom ten since December one. That's roughly gap between the 626 00:35:54,360 --> 00:35:56,440 Speaker 1: two of those. So it really goes to show you 627 00:35:56,560 --> 00:35:59,440 Speaker 1: that balance sheets are the best drivers of equity performance. 628 00:35:59,520 --> 00:36:02,200 Speaker 1: Right now, Why is there balance sheets like they are 629 00:36:02,440 --> 00:36:04,600 Speaker 1: if so much of the industry is on the edge 630 00:36:04,640 --> 00:36:08,560 Speaker 1: of grim how do they pull that off? Yeah, it's 631 00:36:08,560 --> 00:36:11,600 Speaker 1: a combination of of how they wanted to set up 632 00:36:11,640 --> 00:36:15,560 Speaker 1: their assets over the last few years. Certainly when oil 633 00:36:15,680 --> 00:36:18,800 Speaker 1: was at a much higher prices at eight two, capital 634 00:36:19,040 --> 00:36:21,799 Speaker 1: was a lot easier to come by, and some more 635 00:36:21,880 --> 00:36:25,480 Speaker 1: companies were taking on debt versus acquiring with equity or 636 00:36:25,560 --> 00:36:30,239 Speaker 1: growing with equity. Uh, these companies have either grown with 637 00:36:30,400 --> 00:36:32,400 Speaker 1: the balance sheet in good position and have had the 638 00:36:32,560 --> 00:36:35,840 Speaker 1: assets that would allow them to do that, or, in 639 00:36:35,960 --> 00:36:38,160 Speaker 1: the case of some of the other companies that have 640 00:36:38,320 --> 00:36:41,839 Speaker 1: transitioned from more of a natural gas focus to an 641 00:36:41,840 --> 00:36:44,839 Speaker 1: oil focus over the past few years, they've sold off 642 00:36:45,000 --> 00:36:48,600 Speaker 1: assets and really focused their their capital deployment in their 643 00:36:48,640 --> 00:36:53,560 Speaker 1: best basins. I look at this and it's remarkable. What's 644 00:36:53,600 --> 00:36:58,600 Speaker 1: the backstory you see in the action of executive officers 645 00:36:59,320 --> 00:37:01,799 Speaker 1: within the oil old business? Now? Is it I got 646 00:37:01,920 --> 00:37:04,439 Speaker 1: to get the Memorial Day and clear my balance sheet? 647 00:37:04,560 --> 00:37:07,680 Speaker 1: Is it they're putting together their two thousand eighteen business plan. 648 00:37:07,800 --> 00:37:11,919 Speaker 1: What's the mood out there? Yeah, I think for them, 649 00:37:12,320 --> 00:37:15,400 Speaker 1: it's trying to figure out how how best we want 650 00:37:15,440 --> 00:37:19,280 Speaker 1: to attack six team but also preserve the option value 651 00:37:19,320 --> 00:37:24,399 Speaker 1: for teen when when prices come about. I think that's 652 00:37:24,440 --> 00:37:26,400 Speaker 1: why a lot of these companies are are seeing the 653 00:37:26,440 --> 00:37:30,480 Speaker 1: opportunity to go and an issue capital right now, because 654 00:37:30,560 --> 00:37:34,480 Speaker 1: it helps them get through some of these these bridge periods. Uh. 655 00:37:34,600 --> 00:37:38,239 Speaker 1: The other option would be also divesting assets. And while 656 00:37:38,280 --> 00:37:42,080 Speaker 1: you may not want to divest at today's prices because 657 00:37:42,120 --> 00:37:45,279 Speaker 1: evaluations are certainly lower now than where they were a 658 00:37:45,400 --> 00:37:48,279 Speaker 1: year or two ago, Uh, it's it's necessary to go 659 00:37:48,360 --> 00:37:50,400 Speaker 1: and do that and you can come out stronger on 660 00:37:50,440 --> 00:37:52,239 Speaker 1: the other side. So that really seems to be the 661 00:37:52,280 --> 00:37:59,200 Speaker 1: mood right now. Which of these companies is best position 662 00:37:59,320 --> 00:38:01,799 Speaker 1: to pay off earlier? And people are going to want 663 00:38:01,880 --> 00:38:05,640 Speaker 1: to see progress before they you know, they want to 664 00:38:05,640 --> 00:38:07,800 Speaker 1: see somebody making money I think before they want to 665 00:38:07,840 --> 00:38:12,680 Speaker 1: go all in on any kind of energy play. Yeah, 666 00:38:12,760 --> 00:38:15,400 Speaker 1: that's right. You know, it's certainly more of a trading 667 00:38:15,520 --> 00:38:19,080 Speaker 1: environment than in investing an environment right now. You know, 668 00:38:19,480 --> 00:38:23,799 Speaker 1: amongst these companies, you know, one of our favorites right 669 00:38:23,840 --> 00:38:27,680 Speaker 1: now is Newfield Energy ticker NFX. Uh. They're one of 670 00:38:27,719 --> 00:38:31,560 Speaker 1: the biggest companies that it's levered to the Anadarko basin. Uh. 671 00:38:31,719 --> 00:38:34,239 Speaker 1: It's more of a of an early stage play, kind 672 00:38:34,239 --> 00:38:36,200 Speaker 1: of in its second or third year of development, with 673 00:38:36,719 --> 00:38:39,920 Speaker 1: plenty of resource upside there. Um. So that would be 674 00:38:39,960 --> 00:38:41,920 Speaker 1: the one that I would point to for that basin. 675 00:38:42,239 --> 00:38:46,359 Speaker 1: And we like most of the smaller cab priming focus companies. Uh. 676 00:38:46,560 --> 00:38:48,680 Speaker 1: You know, they are certainly some of the more expensive 677 00:38:48,719 --> 00:38:51,919 Speaker 1: companies on a relative basis, they're the ones that hold 678 00:38:51,960 --> 00:38:55,200 Speaker 1: up better. Just one final question today, Josh, do you 679 00:38:56,000 --> 00:39:01,000 Speaker 1: do you anticipate a feeding frenzy if oil breaks down 680 00:39:01,080 --> 00:39:04,080 Speaker 1: to whatever new level. There's a raging debate about what 681 00:39:04,160 --> 00:39:07,279 Speaker 1: oil does here that you know, the resistance level Brent 682 00:39:07,440 --> 00:39:10,440 Speaker 1: thirty four nim x three is you know, hop give 683 00:39:10,520 --> 00:39:13,319 Speaker 1: or take a couple of dollars if we break down 684 00:39:13,400 --> 00:39:18,719 Speaker 1: to new lows, what happens. Yeah, there's certainly going to 685 00:39:18,800 --> 00:39:21,840 Speaker 1: be a lot more distress in the system if that happens, 686 00:39:21,920 --> 00:39:24,560 Speaker 1: and it may actually be a good thing too to 687 00:39:24,719 --> 00:39:28,680 Speaker 1: flush more capital out of the system. Um. But I 688 00:39:28,760 --> 00:39:31,480 Speaker 1: also think that that provides some good opportunities if we 689 00:39:31,560 --> 00:39:34,560 Speaker 1: really get down towards towards those levels, because we're we're 690 00:39:34,640 --> 00:39:38,000 Speaker 1: well below break even economics at that point. And it 691 00:39:38,200 --> 00:39:41,359 Speaker 1: while the pain make may come on the way down, 692 00:39:41,480 --> 00:39:45,080 Speaker 1: it certainly provides some of the greater opportunity on the 693 00:39:45,200 --> 00:39:47,840 Speaker 1: upside because at least then you would have some some 694 00:39:48,000 --> 00:39:51,200 Speaker 1: better clarity over direction of grid. Just so overseeing, thank 695 00:39:51,239 --> 00:39:54,240 Speaker 1: you so much with Deutsche Bank this morning on oil. 696 00:39:54,400 --> 00:39:56,840 Speaker 1: Really interesting folks away from the exxons of the world, 697 00:39:57,280 --> 00:40:01,480 Speaker 1: what some of small oil is doing, uh versus others 698 00:40:01,600 --> 00:40:04,880 Speaker 1: out there. Michael, I'm I'm doing a chart for tomorrow 699 00:40:05,680 --> 00:40:09,920 Speaker 1: which is a hyper fancy pounds sterling chart with the 700 00:40:10,040 --> 00:40:13,600 Speaker 1: linear extrapolation out to what you and I have heard today, 701 00:40:14,320 --> 00:40:19,919 Speaker 1: which is one the end of is a really sophisticated chart. 702 00:40:20,520 --> 00:40:24,719 Speaker 1: The end of seventeen and even into early spring two 703 00:40:24,800 --> 00:40:28,960 Speaker 1: thousand nineteen is a lot of My summary of that 704 00:40:29,600 --> 00:40:33,399 Speaker 1: is a lot gotta happen to get the news flow 705 00:40:34,000 --> 00:40:37,040 Speaker 1: to get the kind of weak sterling that we're looking at. 706 00:40:38,239 --> 00:40:40,640 Speaker 1: But the interesting thing is a lot could happen. I mean, 707 00:40:42,480 --> 00:40:46,439 Speaker 1: who knows, But it's supposed you have a Brexit vote, 708 00:40:46,520 --> 00:40:51,879 Speaker 1: then you have a Scottish exit from the UK vote. Um, 709 00:40:52,080 --> 00:40:57,440 Speaker 1: there would be ongoing in continuous pressure. Yeah, on sterling 710 00:40:57,560 --> 00:41:00,960 Speaker 1: now then the knock on effects to the Bank of England, 711 00:41:01,040 --> 00:41:05,640 Speaker 1: to inflation um, to policy there, the whole thing could 712 00:41:05,680 --> 00:41:10,640 Speaker 1: be absolutely fascinating. I don't agree there's a simplistic extrapolation 713 00:41:10,760 --> 00:41:14,359 Speaker 1: to some level based on a new trend. It's a lot. 714 00:41:14,560 --> 00:41:16,560 Speaker 1: This is trend going back to the autumn of two 715 00:41:16,640 --> 00:41:19,319 Speaker 1: thousand and fourteen, which I think is there's a lot 716 00:41:19,360 --> 00:41:22,040 Speaker 1: of data points and it granted, you know, we've really 717 00:41:22,120 --> 00:41:24,719 Speaker 1: broken down. We're almost down to two standard deviations going 718 00:41:24,760 --> 00:41:27,799 Speaker 1: back thirty years, which is like Thatcher like, I mean, 719 00:41:27,880 --> 00:41:29,879 Speaker 1: that's where you know we are. We're not there yet, 720 00:41:29,960 --> 00:41:33,160 Speaker 1: but we're getting there. But the idea of going from 721 00:41:33,280 --> 00:41:36,080 Speaker 1: one forty one where are we now? And sterling I'm 722 00:41:36,080 --> 00:41:41,440 Speaker 1: looking at the call it one to go down eleven 723 00:41:41,520 --> 00:41:45,800 Speaker 1: big figures or I can't even do the math, twenty 724 00:41:45,880 --> 00:41:50,960 Speaker 1: one big figures, twenty it's extraordinary, extraordinary what we've heard 725 00:41:51,000 --> 00:41:55,000 Speaker 1: on this show today, very very different, folks. It's just fascinating. 726 00:41:55,880 --> 00:41:59,839 Speaker 1: And don't forget all of our media besides us live 727 00:42:00,000 --> 00:42:02,080 Speaker 1: on Bloomberg Radio Plus and of course on our Good 728 00:42:02,160 --> 00:42:06,879 Speaker 1: Signals UM nationwide and worldwide UM, all sorts of other 729 00:42:06,960 --> 00:42:10,160 Speaker 1: ways to listen to what we're doing, including Mike McKee 730 00:42:10,160 --> 00:42:13,680 Speaker 1: and myself on Twitter with our good team advancing some 731 00:42:13,800 --> 00:42:17,680 Speaker 1: of these interviews to you as well at B Surveillance. 732 00:42:18,080 --> 00:42:23,200 Speaker 1: At B Surveillance is yep, right now, it looks like 733 00:42:23,760 --> 00:42:25,960 Speaker 1: we have opened the day down. It was a lot 734 00:42:26,000 --> 00:42:27,880 Speaker 1: of questions if what was gonna happen because oil was 735 00:42:27,920 --> 00:42:29,560 Speaker 1: going up right now, all you need to know now 736 00:42:29,760 --> 00:42:33,080 Speaker 1: is oil is lower. And then yeah, one thing different 737 00:42:33,120 --> 00:42:35,520 Speaker 1: from yesterday, a little bit of curve steepening versus a 738 00:42:35,560 --> 00:42:38,640 Speaker 1: shock and all of kurr flattening yesterday. The end one 739 00:42:38,680 --> 00:42:42,800 Speaker 1: twelve seven Global Litmus paper also looking at as Mike mentions, 740 00:42:42,880 --> 00:42:46,920 Speaker 1: the doubt negative forty one. This is Bloomberg surveillance