WEBVTT - Markets, Oil, And Metals (Podcast) 0:00:00.800 --> 0:00:04.040 Welcome to the Bloomberg Markets Podcast. I'm Paul Sweeney, alongside 0:00:04.040 --> 0:00:06.920 my co host Matt Miller. Every business day, we bring 0:00:06.960 --> 0:00:11.520 you interviews from CEOs, market pros, and Bloomberg experts, along 0:00:11.520 --> 0:00:15.600 with essential market moving news. Find the Bloomberg Markets Podcast 0:00:15.600 --> 0:00:18.439 on Apple Podcasts or wherever you listen to podcasts, and 0:00:18.480 --> 0:00:21.800 at Bloomberg dot com slash podcast. All right, let's get 0:00:21.800 --> 0:00:23.920 to these markets here. I mean a lot of folks. 0:00:23.920 --> 0:00:25.440 Tell me, Matt, if you want to try to call 0:00:25.480 --> 0:00:28.960 the bottom, look for capitulation. That means when everybody just 0:00:29.000 --> 0:00:30.440 kind of throws it in town. I'm looking at it. 0:00:30.440 --> 0:00:33.800 You know, the volume today, the dal Jones above normal, 0:00:34.000 --> 0:00:38.240 SP above normal. I don't know. That's kind of feels 0:00:38.240 --> 0:00:39.560 like a lot of people are just kind of thrown 0:00:39.560 --> 0:00:41.879 into town. But let's talk to our professional here, Mike 0:00:41.960 --> 0:00:46.840 vogals On, Chief Investment Officer Managing director at cap Trust. Uh, Mike, 0:00:47.040 --> 0:00:51.160 are we at or near the bottom? If we are, 0:00:51.240 --> 0:00:53.080 what data points do you look at to give you 0:00:53.120 --> 0:00:55.560 some confidence about that call? Yeah, we've been wrestling with 0:00:55.600 --> 0:00:57.600 that question a lot, guys. I mean, it's it's a 0:00:58.520 --> 0:01:02.320 you know, clearly, what we're seeing is just continued obviously 0:01:02.400 --> 0:01:04.720 de risking in the in the I think particularly the 0:01:04.760 --> 0:01:07.920 hedge fund community. Um. You know that the hedge fund 0:01:07.959 --> 0:01:09.960 returns have been all over the place this year, and 0:01:10.120 --> 0:01:13.280 along short guys are are really struggling. A couple of 0:01:13.319 --> 0:01:16.000 a couple of winners, but most of them are really 0:01:16.160 --> 0:01:18.039 in trouble. And so I think I'm trying to de 0:01:18.160 --> 0:01:20.800 risk sort of at any price. And you see that 0:01:20.959 --> 0:01:24.200 in some of the activity today, Um, that that's certainly 0:01:24.200 --> 0:01:27.440 a phase that the market has to go through. Um. 0:01:27.720 --> 0:01:30.600 You know, I think one of the things that's interesting 0:01:30.920 --> 0:01:34.000 is this this uh sort of the sort of the 0:01:34.160 --> 0:01:38.679 orderliness with which we've seen this this meltdown. Now right, 0:01:38.680 --> 0:01:40.720 we're down fifteen percent or something like that from the 0:01:40.760 --> 0:01:44.119 peak on December or January three in the SMP. And 0:01:44.480 --> 0:01:46.960 you know, it's not been crazy. We haven't hit anywhere 0:01:46.959 --> 0:01:49.840 near forty on the VIX. We're even today we're a 0:01:49.960 --> 0:01:54.200 three four. Um, you know, it's it's it's we kind 0:01:54.200 --> 0:01:57.400 of looked for it's. You could look at it in 0:01:57.440 --> 0:02:00.280 the numbers. But there's also a visceral reaction of just 0:02:00.840 --> 0:02:05.360 like get me out at any price, right, And I 0:02:05.360 --> 0:02:06.960 think you're starting to see that at some of the 0:02:07.000 --> 0:02:11.600 most beaten down names, some of the really speculative innovation 0:02:12.240 --> 0:02:14.480 kind of names that that that have really you know, 0:02:14.480 --> 0:02:19.560 they're down already. UM, So there's probably pockets of it, 0:02:19.600 --> 0:02:22.320 but you know, I don't I don't think overall there's 0:02:22.320 --> 0:02:24.760 a there's a ton of fear here. I'm worried that 0:02:24.880 --> 0:02:28.119 as interest rates continue to climb, as you pointed out, 0:02:28.160 --> 0:02:30.360 you know, we're over three ten, we're up three fifteen. 0:02:30.360 --> 0:02:33.079 This war hand and tame year, My goodness, I don't 0:02:33.120 --> 0:02:35.000 I don't know where it stops. The Feds have the 0:02:35.040 --> 0:02:38.120 fence has really even haven't even started yet. Yeah, but 0:02:38.160 --> 0:02:40.080 I wonder when that's going to get priced in though 0:02:40.600 --> 0:02:44.800 they haven't even started yet, but we already expect you know, 0:02:44.919 --> 0:02:47.919 half back to back, half basis point cuts. Some people 0:02:47.919 --> 0:02:51.760 were saying seventy five and seventy five as well. Um, 0:02:52.240 --> 0:02:54.400 is there a point when that gets priced in and 0:02:55.000 --> 0:02:57.560 you know, all of the concerns you had about inflation 0:02:57.639 --> 0:03:02.160 and fighting inflation, um, and the economy slowing down are 0:03:02.200 --> 0:03:05.760 all priced in and we can get out. I think 0:03:06.040 --> 0:03:07.880 I think you've got to look for a direction, right, 0:03:07.919 --> 0:03:10.080 You've got to look for the directional change and and 0:03:10.160 --> 0:03:14.200 right now inflation has only been getting worse. Um And 0:03:14.200 --> 0:03:16.720 and at some stage we need to see a consistent 0:03:16.760 --> 0:03:20.920 pattern of you know, lower employment cost index or we 0:03:21.000 --> 0:03:25.280 are slower slower growth, same thing with inflation. We need 0:03:25.320 --> 0:03:30.000 to see uh COVID lockdowns in China beginning to ease, 0:03:30.040 --> 0:03:32.080 so we have some sense that the that the that 0:03:32.160 --> 0:03:35.760 the you know, the logistics supply problems are are beginning 0:03:35.760 --> 0:03:38.360 to free up. You know this. Right now, it seems 0:03:38.360 --> 0:03:41.520 like everything is continuing to go in the wrong direction. 0:03:41.560 --> 0:03:44.560 And until we get some fundamental change at the margins, 0:03:44.760 --> 0:03:46.760 it's just hard to see why anybody would want to 0:03:46.760 --> 0:03:48.600 step in front of it because there's no there's no 0:03:48.640 --> 0:03:53.320 way to to know um. You know. Look, and every 0:03:53.320 --> 0:03:55.400 time we talk about something like this, it really comes 0:03:55.400 --> 0:03:57.560 down to your time frame. And if if your time 0:03:57.560 --> 0:04:01.320 frame is relatively short, um, I think you're going to 0:04:01.400 --> 0:04:03.440 stay out of the way of this thing. I think 0:04:03.480 --> 0:04:05.480 if you're a long term investor and you have some 0:04:05.640 --> 0:04:08.360 dry powder, I think you have to begin to think 0:04:08.400 --> 0:04:11.960 about nibbling at the at the margins here. Just because 0:04:12.000 --> 0:04:15.240 there are some things that are pretty inexpensive. It's pretty easy, 0:04:15.280 --> 0:04:18.960 for example, to buy a large cap value portfolio with 0:04:19.279 --> 0:04:22.360 the price to earnings ratio pretty close to single digits now, 0:04:22.400 --> 0:04:25.840 maybe ten or eleven twelve times earnings UM with a 0:04:25.880 --> 0:04:29.880 pretty healthy dividend. Okay, that's pretty interesting right over the 0:04:29.920 --> 0:04:33.520 next five or ten years. UM. So, you know, I 0:04:33.520 --> 0:04:36.000 think the pockets of a sort of long term allocation 0:04:36.080 --> 0:04:38.160 that can happen if you're if you're in the right 0:04:38.200 --> 0:04:41.360 spot and you're sort of smart enough to know that 0:04:42.200 --> 0:04:45.080 it's sort enought to see some of this coming, um 0:04:45.160 --> 0:04:47.279 and so, but you know, I just don't think we're 0:04:47.320 --> 0:04:49.480 there yet on a on a momentum kind of basis. 0:04:49.520 --> 0:04:52.520 There's no way yet. Hey, Mike, thanks so much for 0:04:52.600 --> 0:04:55.360 joining us here. Always appreciate getting your thoughts from here 0:04:55.440 --> 0:04:57.960 on in these markets. Mike phobos On. He's a chief 0:04:58.000 --> 0:05:04.840 investment officer and managing director at Cap Trust. All Right, Matt, 0:05:04.839 --> 0:05:09.239 I filled up the beamer this weekend four one per gallon. 0:05:09.680 --> 0:05:11.800 I wanted to blame somebody, so I just obviously just 0:05:11.800 --> 0:05:13.640 looked at OPEC because I'm looking at the oil here, 0:05:13.960 --> 0:05:17.200 Brent crude on eight dollars a barrel. But I forgot 0:05:17.200 --> 0:05:20.760 about the whole refining process and taking that crude oil 0:05:20.800 --> 0:05:23.479 into gas or dies or whatever else we need to consume. 0:05:23.680 --> 0:05:26.400 There's a whole refinery process out there, and don't you 0:05:26.440 --> 0:05:29.240 know haveavier Blast Calumnus for Bloomberg Opinion comes out with 0:05:29.240 --> 0:05:32.440 a fantastic column today looking at that part of the 0:05:32.600 --> 0:05:36.960 energy stream. The mark of the refinery business. How your 0:05:37.400 --> 0:05:39.000 those guys are making a lot of money right now? 0:05:39.040 --> 0:05:43.600 Aren't they making quarter lot of money right now? Record 0:05:43.640 --> 0:05:49.279 margins for American refiners currently about fifty dollars per barrel 0:05:49.400 --> 0:05:52.280 of refining margin. This is a bit of a back 0:05:52.320 --> 0:05:56.320 of the envelope calculation. Each refinery is different, so you 0:05:56.360 --> 0:05:59.360 cannot really have like a benchmark for the whole industry, 0:05:59.400 --> 0:06:01.839 but we have a of the envelope calculation that in 0:06:01.880 --> 0:06:05.000 the industry we called the three to one refinery margin, 0:06:05.120 --> 0:06:08.760 and that is the record high up. In simple terms, 0:06:09.240 --> 0:06:12.520 a refinery usually makes something between ten and twenty dollars, 0:06:12.520 --> 0:06:15.280 but barrely, they're making about fifty five right now, so 0:06:15.360 --> 0:06:18.080 it's as good as it gets for them. And uh, 0:06:18.120 --> 0:06:21.440 you know, people pay attention to normal gas every you know, 0:06:21.520 --> 0:06:26.240 consumer focused cable TV news channel. Uh, we're looking at 0:06:26.520 --> 0:06:28.360 Paul and I have a huge bank of screens here. 0:06:28.760 --> 0:06:31.320 They're all focused on the price at the pump and 0:06:31.400 --> 0:06:36.120 talking about regular unleaded, but diesel is almost seven dollars 0:06:36.120 --> 0:06:40.839 a barrel where I live. What is going on with that? Well, 0:06:40.920 --> 0:06:43.920 that is the market that is the tightest of all 0:06:43.960 --> 0:06:46.840 of them. There is very little diesel going around. And 0:06:46.880 --> 0:06:49.360 this is a this is something that really mattered. You're right, 0:06:49.880 --> 0:06:52.720 most of consumers, myself included, we we we really look 0:06:52.800 --> 0:06:55.640 at cattle in prices because that's what we we we 0:06:55.640 --> 0:06:58.360 we need for our car. But the global economy, the 0:06:58.360 --> 0:07:02.479 American economy, really run on diesel. That is the fuel 0:07:02.520 --> 0:07:05.800 for tracks, that is the fuel for heavy machinery things 0:07:05.839 --> 0:07:09.600 about all of those machines and diggers on construction sites, 0:07:09.800 --> 0:07:14.160 and it's also the fuel for for farming. And supplies 0:07:14.200 --> 0:07:18.520 are well above pre pandemic levels because in far all 0:07:18.560 --> 0:07:22.480 of us, myself included, are buying all these stuff online 0:07:22.840 --> 0:07:25.080 and that all needs to be transported in tracks and 0:07:25.120 --> 0:07:28.440 bands and their fuel on on diesel. The supply has 0:07:28.440 --> 0:07:31.360 not really come back, and lots of refineries with trouble 0:07:31.720 --> 0:07:36.080 coming back from from pandemic and the combination of both 0:07:36.120 --> 0:07:39.680 has sent inventories to very low levels, and particularly the 0:07:39.760 --> 0:07:43.240 East Coast, the Eastern seaboard of the United States, lowest 0:07:43.320 --> 0:07:47.520 inventories in thirty two years for diesel, and that's why 0:07:47.760 --> 0:07:51.760 you see retail prices going to record levels. And UH 0:07:52.160 --> 0:07:55.960 diesel prices have never been so high compared to gasolin 0:07:56.040 --> 0:08:00.000 prices in the United States. And and just ongoing comfort 0:08:00.040 --> 0:08:04.680 and scoll from one of the independent American refinance hs 0:08:04.720 --> 0:08:08.800 Sinclair where the CFO used to me gave the quote 0:08:08.880 --> 0:08:11.440 of the day or the month of what's going on 0:08:11.440 --> 0:08:14.280 on the on the diesel market, and morgenally all the 0:08:14.400 --> 0:08:18.040 kind of retail fuel market in the US. He said, 0:08:18.320 --> 0:08:23.400 pre pandemic demand and post pandemic supply. That's that's the problem. 0:08:23.720 --> 0:08:26.280 Demand is back to what it was before the pandemic, 0:08:26.560 --> 0:08:28.720 but the supply has not come back. One of the 0:08:28.720 --> 0:08:32.439 other things that we've noticed, Javier, just on an anecdotal level, 0:08:32.679 --> 0:08:35.480 is it's harder and harder to get cheap tickets on 0:08:35.520 --> 0:08:39.080 an airline. Okay, in Europe, um, it's a different story, 0:08:39.120 --> 0:08:41.400 but here a lot of people are getting priced out 0:08:41.400 --> 0:08:45.000 of the market to fly, even in luggage class. Jet 0:08:45.040 --> 0:08:49.520 Fuel is another one of those markets that's super tight, right, Yeah, 0:08:49.600 --> 0:08:52.520 jet fuel is also very tight. I think that generally 0:08:53.160 --> 0:08:56.360 what has happened was that the industry has been a 0:08:56.360 --> 0:09:01.360 bit surprised by the return of trouble by by air, 0:09:01.880 --> 0:09:04.600 not only in the US but also in Europe. Refinance, 0:09:04.640 --> 0:09:07.480 we're not making enough jet fuel now. The prices are there, 0:09:07.800 --> 0:09:10.400 so get fuel is selling in New York hardword that 0:09:10.520 --> 0:09:14.199 the benchmark for the US East coat at the equivalent 0:09:14.240 --> 0:09:17.320 to about two and fifty dollars per barrel, so very 0:09:17.400 --> 0:09:22.320 very high prices that the highest ever. And refiners are 0:09:22.440 --> 0:09:24.480 something that we are trying to make more get fuel. 0:09:24.720 --> 0:09:27.040 But if they make more get fuel at the expense 0:09:27.080 --> 0:09:29.800 of making maybe a bit less decent or maybe a 0:09:29.880 --> 0:09:33.600 less a bit of less catoline, we really are getting 0:09:33.720 --> 0:09:35.720 quite a lot of strong demand for all of them. 0:09:36.080 --> 0:09:38.840 And and and you are right, consumers are starting to 0:09:38.840 --> 0:09:43.199 get price out on airth travel just because it's getting expensive. 0:09:43.480 --> 0:09:47.360 But I was in America only ten days ago UM 0:09:47.400 --> 0:09:51.679 flying into New York. Both my flying and my flyout 0:09:51.760 --> 0:09:57.040 were completely booked UM every class, first class, business, Premium, Economy, 0:09:57.360 --> 0:10:00.840 and Economy. All of the seats were occupied. And that 0:10:01.000 --> 0:10:03.600 is kind of a sense of how Weston the demand is. 0:10:03.640 --> 0:10:07.400 After two years of not traveling around, people are still 0:10:07.440 --> 0:10:10.120 putting with high prices because they want to They want 0:10:10.160 --> 0:10:12.640 to see relatives, they want to see colleagues, they want 0:10:12.679 --> 0:10:16.160 to see business contacts. Have your How hard or difficult 0:10:16.360 --> 0:10:21.760 is it for refineries to increase capacity? They have to restart, 0:10:21.880 --> 0:10:24.559 refineries have to build new ones. How does that look 0:10:24.600 --> 0:10:27.599 on the spade. It's very difficult because once you you 0:10:27.679 --> 0:10:29.880 shut down a refinery, that's not going to come back. 0:10:30.400 --> 0:10:33.480 And the trend in Europe and the United States over 0:10:33.520 --> 0:10:36.800 the last few years have been of reducing refining capacity 0:10:36.880 --> 0:10:41.520 because of um well, we thought that peak demand was coming, 0:10:42.080 --> 0:10:45.280 the energy transitions, some of the refineries were actually now 0:10:45.320 --> 0:10:49.840 surrounded by big cities or operating with new environmental regulations 0:10:49.960 --> 0:10:52.880 was getting more difficult. And then pandemic hit and that 0:10:53.120 --> 0:10:56.000 two more charge the trend. So what we saw is, 0:10:56.080 --> 0:10:59.960 excluding the Middle East, on China, we saw the biggest 0:11:00.360 --> 0:11:04.000 amount of refining capacity laws in thirty years over the 0:11:04.080 --> 0:11:07.199 last year and a half two years. Because of the pandemic. 0:11:07.679 --> 0:11:10.640 Those refineries are not going to come back. And China 0:11:11.040 --> 0:11:14.440 has a specifying capacity, but they really control a lot 0:11:14.480 --> 0:11:17.160 of what they are exporting, so you cannot count on them. 0:11:17.440 --> 0:11:21.360 So we unfortunately seem that we have hit the refinery wall, 0:11:21.960 --> 0:11:24.199 and we're gonna we're gonna have to deal with that 0:11:24.240 --> 0:11:26.959 for for for a time, and the only solution is 0:11:27.000 --> 0:11:32.280 to reduce our slow down the demand for fuel, and 0:11:32.840 --> 0:11:35.319 that only comes be are two things that they are 0:11:35.360 --> 0:11:39.200 closely related. Demanded strokes will be a very high prices. 0:11:39.240 --> 0:11:42.920 So just some American Son people just decide that they 0:11:42.960 --> 0:11:48.400 cannot drive because it's very expensive for outright recession and unfortunately, 0:11:48.440 --> 0:11:50.520 probably we're gonna hit both of them by the end 0:11:50.520 --> 0:11:52.920 of the year. By the way, I heard Tom talking 0:11:52.920 --> 0:11:56.360 to Will Kennedy the other day on Bloomberg Radio and 0:11:56.440 --> 0:11:58.839 asked him, you know where would Brent be right now 0:11:58.880 --> 0:12:01.679 in price terms if it weren't for the lockdowns in China, 0:12:01.720 --> 0:12:04.480 if it weren't for COVID zero, And he said, maybe 0:12:04.480 --> 0:12:08.520 more like or even closer to the high. What do 0:12:08.559 --> 0:12:11.280 you think. I think that we will be higher. I 0:12:11.280 --> 0:12:13.160 think that we will be a hundred and fifty. It 0:12:13.280 --> 0:12:16.040 was not because of China shut down. I mean, China 0:12:16.240 --> 0:12:19.160 is all what is stopping this market to really rallying 0:12:19.559 --> 0:12:24.400 on a moneyful way. Um, if China will not shut down, 0:12:25.280 --> 0:12:30.120 we will be higher than that. Uh. Really in some ways, 0:12:30.240 --> 0:12:34.480 as Son speaking in private son government officials both in 0:12:34.520 --> 0:12:38.079 the US and Europe say, and also oil traders, the 0:12:38.240 --> 0:12:40.480 refusal of China to really go with the fives and 0:12:40.520 --> 0:12:43.400 the moderna vaccine. It's all what is preventing this market 0:12:43.400 --> 0:12:45.720 to a hundred and all? Right? Have you ever last 0:12:45.760 --> 0:12:48.280 calumnist for Bloomberg Opinion got a great, great calm today 0:12:48.480 --> 0:12:51.600 talking at the refining aspect of the supply chain within 0:12:52.040 --> 0:12:58.920 global energy. You know, for a lot of folks, medals 0:12:59.280 --> 0:13:01.600 are a say haven or seen as a safe haven 0:13:01.960 --> 0:13:04.280 for investors in uncertain times. I wonder if that's still 0:13:04.280 --> 0:13:06.480 the case given all the uncertainty we have out there, 0:13:06.720 --> 0:13:12.200 whether it's economic, federal reserve, UH, interest rate moves, geopolitical issues. 0:13:12.440 --> 0:13:17.120 It's checking with one Matthew Miller, one of many medals 0:13:17.120 --> 0:13:20.400 and mining analyst at cfr A Research. Matt, can people 0:13:21.240 --> 0:13:25.720 kind of hide out a little bit in metals here? Yeah? 0:13:25.720 --> 0:13:28.000 I mean it is a great question because we've seen 0:13:28.520 --> 0:13:31.600 we've seen precious medals have a safe haven bid earlier 0:13:31.600 --> 0:13:34.560 in the year, but they have they have since sold off, 0:13:34.559 --> 0:13:38.240 and I think that you know, people are preferring the dollar, 0:13:38.480 --> 0:13:40.640 the US dollar as a safe haven of choice right 0:13:40.679 --> 0:13:43.720 now and you know, I think with the strength of dollar, 0:13:43.800 --> 0:13:47.520 we have seen both precious metals and industrial metals sell off, 0:13:47.600 --> 0:13:50.040 and you know, I think that risk off trade is 0:13:50.080 --> 0:13:53.520 really um, you know, a combination of three major factors. 0:13:53.559 --> 0:13:56.840 But you know it fears about inflation and dead number 0:13:56.840 --> 0:14:00.600 one in Russia's war against Ukraine and how that impacting 0:14:00.600 --> 0:14:04.760 the supply side of the equation for industrial medals in particular, 0:14:05.280 --> 0:14:08.000 And then you have China's COVID lockdown, and I think 0:14:08.040 --> 0:14:12.240 that you know, with inflation remaining elevated, we here at 0:14:12.240 --> 0:14:15.480 c fr A do think the industrial medals in particular, 0:14:15.520 --> 0:14:18.480 it is a good place to you know, hedge inflation, 0:14:18.600 --> 0:14:20.960 even though we have seen that weakness recently, we do 0:14:21.040 --> 0:14:24.360 think it's a great place to be currently in terms 0:14:24.440 --> 0:14:27.600 of treasuries. Uh, this morning we're looking at three eighteen. 0:14:27.640 --> 0:14:30.560 I think, let me check to get the exact here 0:14:30.600 --> 0:14:34.200 three spot Well we've come down substantially three spot zero 0:14:34.280 --> 0:14:37.800 one eight and nonetheless it's a much better return than gold. 0:14:38.040 --> 0:14:43.760 Is that a competitor? Yeah, I I absolutely think it is. 0:14:43.880 --> 0:14:46.560 I mean, I think gold tends to do well when 0:14:46.560 --> 0:14:50.200 real rates are declining, and we we threw in the 0:14:50.200 --> 0:14:52.720 talent gold we were bullish for a number of years 0:14:52.840 --> 0:14:55.400 leading up to the end of one, and you know, 0:14:55.480 --> 0:14:58.360 we were too early on that knowing what's happened this year. 0:14:58.440 --> 0:15:01.560 But um, we do think old is gonna struggle to 0:15:01.640 --> 0:15:04.200 reach new highs in this cycle because you you do 0:15:04.280 --> 0:15:07.720 see um, you know, you do see real rates starting 0:15:07.720 --> 0:15:10.920 to creep back up. And so we think that as 0:15:10.960 --> 0:15:14.120 the FED is tightening and real rates start to you know, 0:15:14.160 --> 0:15:16.880 they're now above UM, they're now positive again, and we 0:15:16.920 --> 0:15:19.920 think that gold's gold and precious metals are gonna really 0:15:20.000 --> 0:15:23.080 struggle in this environment. And we do think that that 0:15:23.240 --> 0:15:26.400 is maybe the number one thing over the short intermediate 0:15:26.520 --> 0:15:31.120 term that drives gold prices, that negative correlation with real yields. 0:15:31.120 --> 0:15:34.360 So we do think that that's a major headwind for gold. Hey, Matt, 0:15:34.400 --> 0:15:37.920 I'm looking at the nickel a thirty five percent year 0:15:38.040 --> 0:15:41.240 to date. What was slash is the nickel call that 0:15:41.280 --> 0:15:45.400 I so obviously missed well, I mean, nicol is an 0:15:45.440 --> 0:15:48.920 interesting one because um, the spike and nickel really was 0:15:49.000 --> 0:15:53.600 driven by a major um, a major short squeeze, and 0:15:53.720 --> 0:15:56.560 so um, when you look at nickel, it is one 0:15:56.600 --> 0:16:00.000 of the medals that is at risk on the supply side. 0:16:00.280 --> 0:16:05.200 From Russia's invasion of Ukraine. Russia produces around seven percent 0:16:05.320 --> 0:16:08.240 of the of the global UH supply of nickel, and 0:16:08.240 --> 0:16:11.560 it was already pretty um you know, the the inventory 0:16:11.680 --> 0:16:14.240 levels were already pretty tight. So it was already a 0:16:14.280 --> 0:16:18.040 structurally tight market. And what we saw with um uh 0:16:18.080 --> 0:16:20.960 you know, Russia invading invading Ukraine, you did see a 0:16:21.000 --> 0:16:25.880 major um, a major short seller in China that was 0:16:25.880 --> 0:16:28.760 was literally the big short that that kind of drove 0:16:28.880 --> 0:16:33.120 what's happened with nickel and causing the CME to actually um, 0:16:33.200 --> 0:16:36.520 you know, causing the LMY excuse me to actually um 0:16:36.640 --> 0:16:39.560 halt the exchange a number of times in the last 0:16:39.600 --> 0:16:42.360 couple of months. And so we think that you know, 0:16:42.440 --> 0:16:45.640 there that market is going to be structurally tight, along 0:16:45.680 --> 0:16:49.960 with aluminum and palladium. Um, there's a number of markets 0:16:50.000 --> 0:16:54.400 that rely pretty heavily on that region for for global supply. 0:16:54.800 --> 0:16:57.960 By the way, I'm sure the CMME is very happy 0:16:58.040 --> 0:17:01.360 that that was the l M E and and on them. 0:17:01.480 --> 0:17:05.120 Do you think that's done more than just reputational damage 0:17:05.240 --> 0:17:07.240 to the LEMY, I mean other people who are saying, 0:17:07.240 --> 0:17:10.920 you know what, I'm not trading there anymore. Yeah, Well, 0:17:11.000 --> 0:17:14.520 I do think that they will regain sort of that trust. 0:17:14.600 --> 0:17:17.520 But yeah, it does hurt in the short term because 0:17:17.760 --> 0:17:19.400 you know, there are a number of trades that were 0:17:19.440 --> 0:17:23.240 canceled that the days that these were um you know, 0:17:23.600 --> 0:17:26.160 the days that the halt happened, and and you never 0:17:26.200 --> 0:17:28.640 really want that to happen, and you don't you never 0:17:28.680 --> 0:17:31.880 want to see that type of volatility. But the reality 0:17:31.960 --> 0:17:34.760 is there there are a number of metals markets that 0:17:34.840 --> 0:17:38.040 aren't very liquid that are you know, they will see 0:17:38.160 --> 0:17:42.080 this sort of volatility, and so you know, the exchanges, 0:17:42.480 --> 0:17:44.199 you know, they do want to, you know, kind of 0:17:44.240 --> 0:17:47.119 do do their part to kind of correct the market 0:17:47.119 --> 0:17:50.360 when you do have a major, um, a major trader 0:17:50.400 --> 0:17:53.720 out there where this was this was a lot of speculation, 0:17:53.920 --> 0:17:55.600 but it was also somebody that was going to be 0:17:55.680 --> 0:17:59.119 needing to close those short positions. So um yeah, I 0:17:59.160 --> 0:18:01.679 mean it's there's no easy solutions for them, But I 0:18:01.720 --> 0:18:04.520 do think that um, you know, they're gonna regain trust. 0:18:04.880 --> 0:18:06.920 I don't think it's a long term issue in my opinion. 0:18:07.200 --> 0:18:09.080 All Right, Matthew Miller, thank you so much for joining us. 0:18:09.080 --> 0:18:12.960 Matthew Miller Metals and Mining Analysis c f R, a 0:18:13.040 --> 0:18:22.400 research well in person investor conferences are back. In fact, 0:18:22.400 --> 0:18:26.000 Bloomberg Intelligence is hosting its first annual Thematic Investing Conference 0:18:26.400 --> 0:18:30.520 UH May ten and eleven at Bloomberg's Global HQ in 0:18:30.600 --> 0:18:33.200 New York City. The inaugural in person event will focus 0:18:33.240 --> 0:18:38.160 on these key themes plant based foods, digital healthcare, digital commerce, 0:18:38.200 --> 0:18:41.520 digital payments, and cryptocurrency. So all the big topics that 0:18:41.560 --> 0:18:42.879 are front and center. Let's get a little bit of 0:18:42.880 --> 0:18:45.840 a preview. Eric Baltunist, Uh, he covers E t F 0:18:46.000 --> 0:18:48.960 for Bloomberg Intelligence, and Eric, I know you're deeply involved 0:18:48.960 --> 0:18:51.639 in this conference, so you know, what are Bloomberg clients 0:18:51.680 --> 0:18:54.040 that are attending here? What are they going to see? Um, 0:18:54.040 --> 0:18:58.200 they're gonna see basically a different themes emerging themes. Why 0:18:58.320 --> 0:19:00.399 themes matter? You have throw stand, A lot of the 0:19:00.400 --> 0:19:03.680 investing universe used to be divided or is divided into sectors, 0:19:03.720 --> 0:19:06.840 the gift sectors. But the the world is changing so 0:19:06.960 --> 0:19:09.840 quickly theme ets I think capture that changed a little 0:19:09.960 --> 0:19:12.760 quicker than the sectors. Do you know some of these 0:19:12.760 --> 0:19:15.840 stocks are in multiple sectors at least in their business lines, 0:19:15.880 --> 0:19:18.280 So more and more of the money is going towards 0:19:18.359 --> 0:19:21.280 thematic ETFs and that's why I'm involved because e t 0:19:21.440 --> 0:19:22.879 f s are tend to be sort of at the 0:19:22.920 --> 0:19:25.439 forefront of finding new themes because if you find a 0:19:25.440 --> 0:19:26.920 new theme and it starts to go up a lot, 0:19:27.080 --> 0:19:28.919 you can get some cash. So if you look at 0:19:28.960 --> 0:19:32.600 the sectors, uh if thematic ETFs have the second most 0:19:32.640 --> 0:19:35.760 assets after tech, So we all know tech rules the sectors, 0:19:35.760 --> 0:19:38.560 but themes are number two now above healthcare. So that's 0:19:38.560 --> 0:19:40.760 how this is. These used to be kind of a 0:19:40.840 --> 0:19:42.879 laughing stock like a video game. Et F would come 0:19:42.880 --> 0:19:44.920 out everyday the trash and laugh at it. Now it's 0:19:44.960 --> 0:19:47.399 big business. This stuff is the future of active in 0:19:47.400 --> 0:19:49.000 my opinion, and it's smart of b I to get 0:19:49.040 --> 0:19:50.800 on board. So a lot, a lot a lot of 0:19:50.800 --> 0:19:52.560 times Matt and I away ask a guess, you know, 0:19:52.680 --> 0:19:56.440 what sectors are you looking at? But maybe a better question, 0:19:56.480 --> 0:19:58.359 or certainly a different question be what themes are you 0:19:58.359 --> 0:20:00.800 guys focusing on? Yes, so well they're going to focus 0:20:00.800 --> 0:20:04.520 on everything. You know you talked about blockchain, cryptocurrency, plant 0:20:04.560 --> 0:20:08.280 based themes, the digit digitization of everything is a big one. 0:20:08.720 --> 0:20:10.679 Some that we're looking at this year that are interesting 0:20:10.680 --> 0:20:14.040 are natural resources, right themes time Sometimes people think theme 0:20:14.040 --> 0:20:17.600 are themes are just growth stocks sort of you know, repackaged, 0:20:17.960 --> 0:20:21.159 but there's natural resources which hold oil mining stocks. You've 0:20:21.200 --> 0:20:24.600 also got infrastructure is a theme, and with the infrastructure 0:20:24.640 --> 0:20:27.800 spending that could be big the metaverse, even though that's 0:20:27.800 --> 0:20:30.480 been hit hard, that is a theme people are looking at. 0:20:30.560 --> 0:20:32.359 So those are some of the ones that we're looking 0:20:32.359 --> 0:20:34.840 at on my panel. We also have ARC. We don't 0:20:34.840 --> 0:20:37.040 have Kathy, We have Brett Witten and ARC. To me, 0:20:37.400 --> 0:20:39.760 I think put themes on the map all of Kathy's 0:20:39.800 --> 0:20:44.040 funds or theme ETFs. But the main fund isn't a theme, right, 0:20:44.359 --> 0:20:48.160 It kind of is disruptive innovation. We consider innovation a theme, 0:20:48.520 --> 0:20:50.640 and Kathy kind of kicked off a whole category because 0:20:51.160 --> 0:20:56.320 Kathy goes across sectors to just find innovative and disruptive companies. 0:20:56.680 --> 0:20:58.560 So in a way, that's how we define themes. And 0:20:58.640 --> 0:21:01.320 so it's interesting because I was I was thinking first 0:21:01.320 --> 0:21:04.639 about factors, right, because that became huge, especially in the 0:21:04.640 --> 0:21:08.320 hedge fund world five six, seven years ago. Right, And 0:21:08.520 --> 0:21:11.880 Paul mentioned sectors. Now those are two different things, right. 0:21:11.960 --> 0:21:15.280 A factor and a sector are different ways of categorizing 0:21:15.400 --> 0:21:19.760 investment opportunities. I guess companies or what have you? Um, 0:21:19.920 --> 0:21:24.040 themes can be kind of either one. Yeah, no, you're 0:21:24.080 --> 0:21:26.800 what you're hitting on is so important and interesting and 0:21:26.840 --> 0:21:30.399 what everybody in asset management should understand. Themes are going 0:21:30.440 --> 0:21:33.560 to steal your thunder. They steal from the sectors, which 0:21:33.600 --> 0:21:36.639 are sort of born in this legacy. There's only eleven 0:21:36.680 --> 0:21:39.320 of them, and they're sort of stale, and they steal 0:21:39.359 --> 0:21:42.639 from factors because growth momentum value. Some of these to 0:21:42.840 --> 0:21:45.960 a normal person or an advisor with younger clients, they 0:21:46.000 --> 0:21:49.399 just don't resonate. Whereas some of these themes have a 0:21:49.520 --> 0:21:52.360 narrative attached to them. You can identify them. They get 0:21:52.359 --> 0:21:54.879 your imagination going. And a lot of them also will 0:21:54.920 --> 0:21:57.400 hold stocks that aren't in the broad indexes, so they 0:21:57.440 --> 0:22:00.360 compliment nicely. So I agree with you, Matt, you're kind 0:22:00.359 --> 0:22:03.080