1 00:00:05,160 --> 00:00:08,480 Speaker 1: This is the Bloomberg Surveillance Podcast. I'm Tom Keane, along 2 00:00:08,520 --> 00:00:12,360 Speaker 1: with Jonathan Farrow and Lisa Abramowitz. Join us each day 3 00:00:12,400 --> 00:00:16,800 Speaker 1: for insight from the best and economics, geopolitics, finance and investment. 4 00:00:17,280 --> 00:00:22,079 Speaker 1: Subscribe to Bloomberg Surveillance on demand on Apple, Spotify and 5 00:00:22,320 --> 00:00:26,600 Speaker 1: anywhere you get your podcasts, and always on Bloomberg dot Com, 6 00:00:26,640 --> 00:00:30,440 Speaker 1: the Bloomberg Terminal, and the Bloomberg Business app. This is 7 00:00:30,440 --> 00:00:33,600 Speaker 1: a joy, and it's particularly a Matthew joy because Carl 8 00:00:33,640 --> 00:00:38,560 Speaker 1: Ricadatta of the Aerospace Engineering Persuasion knows the glide paths 9 00:00:38,680 --> 00:00:41,879 Speaker 1: that are out there. The glide pass and economics are 10 00:00:42,040 --> 00:00:47,360 Speaker 1: usually described through adverbs. In a paragraph in his recent report, 11 00:00:47,360 --> 00:00:50,360 Speaker 1: he really nails this. He's a BMP Perry Boner, chief 12 00:00:50,479 --> 00:00:57,000 Speaker 1: US Economists. You nail this strange word sufficiently. We are 13 00:00:57,120 --> 00:01:03,120 Speaker 1: sufficient We are getting there. Inflation is now sufficiently entrant. 14 00:01:03,480 --> 00:01:07,920 Speaker 1: Describe this sufficiently that your own power has to confront Wednesday. 15 00:01:08,240 --> 00:01:12,240 Speaker 2: Sure, well, there's a tension there, but on the sufficiently side, 16 00:01:12,640 --> 00:01:17,200 Speaker 2: we're seeing evidence of sufficiently restrictive monetary policy and that 17 00:01:17,240 --> 00:01:21,160 Speaker 2: we're not just seeing disinflation or deflation. Important distinction. You 18 00:01:21,280 --> 00:01:23,360 Speaker 2: drew earlier on the program, not just seeing it in 19 00:01:23,520 --> 00:01:27,319 Speaker 2: energy prices. We've seen that spread into goods prices, which 20 00:01:27,360 --> 00:01:30,160 Speaker 2: tells us a little bit about supply chain healing. But 21 00:01:30,280 --> 00:01:33,680 Speaker 2: now importantly we're seeing it where it really counts, and 22 00:01:33,720 --> 00:01:36,080 Speaker 2: that means we're seeing it on the service side of 23 00:01:36,120 --> 00:01:39,560 Speaker 2: the CPI, both in rents and finally, just in the 24 00:01:39,640 --> 00:01:42,040 Speaker 2: last couple of months, we're seeing this in what now 25 00:01:42,120 --> 00:01:46,399 Speaker 2: has been called super core inflation, which is core services X, 26 00:01:46,560 --> 00:01:48,280 Speaker 2: housing and shelter costs. 27 00:01:48,320 --> 00:01:51,120 Speaker 1: We yearn for an X and to get out front 28 00:01:51,520 --> 00:01:56,040 Speaker 1: Fed Belogney, there's no evidence of that since biblical history. 29 00:01:56,080 --> 00:01:59,440 Speaker 1: Their ex post how far behind are they going to 30 00:01:59,520 --> 00:02:03,560 Speaker 1: be when they get the sufficient courage up to accommodate. 31 00:02:03,920 --> 00:02:06,880 Speaker 2: Well, I don't think they have the courage just yet, 32 00:02:06,960 --> 00:02:09,760 Speaker 2: and because the factor in the back of their minds 33 00:02:09,760 --> 00:02:12,480 Speaker 2: that's haunting them is the mistakes made in the nineteen 34 00:02:12,560 --> 00:02:16,320 Speaker 2: seventies under Arthur Burns, and that was a FED that 35 00:02:16,440 --> 00:02:20,600 Speaker 2: knew what prescription was needed, but lacked the conviction to 36 00:02:20,720 --> 00:02:24,440 Speaker 2: keep the bitter medicine in place for long enough. And 37 00:02:24,480 --> 00:02:27,320 Speaker 2: as the Fed's determining whether policy has been restrictive for 38 00:02:27,440 --> 00:02:31,160 Speaker 2: long enough, I think they think that it's sufficiently restrictive. Now, 39 00:02:31,160 --> 00:02:33,600 Speaker 2: it's just a matter of keeping that policy in place 40 00:02:33,680 --> 00:02:37,880 Speaker 2: for a sufficiently long time. We'll use those adverbs you highlighted, Tom, 41 00:02:38,600 --> 00:02:40,840 Speaker 2: And the thing that's haunting them is the fact that 42 00:02:40,919 --> 00:02:45,000 Speaker 2: wage inflation is not back towards kind of what would 43 00:02:45,000 --> 00:02:48,800 Speaker 2: be a two percent consistent level for broader inflation. And 44 00:02:48,840 --> 00:02:51,680 Speaker 2: whether we look at the ECI or last Friday's average 45 00:02:51,680 --> 00:02:55,640 Speaker 2: hour of the earnings numbers, we're simply not moving in 46 00:02:55,720 --> 00:02:59,320 Speaker 2: the right direction swiftly enough to say, sure thing, let's 47 00:02:59,360 --> 00:03:01,800 Speaker 2: start accommodating policy sooner. 48 00:03:01,880 --> 00:03:03,639 Speaker 3: Why didn't j Powell push back more. 49 00:03:03,520 --> 00:03:07,399 Speaker 2: Than I think he has pushed back in recent comments. 50 00:03:07,560 --> 00:03:10,320 Speaker 2: He said it was premature to be thinking about the 51 00:03:10,320 --> 00:03:13,320 Speaker 2: timing of rate cuts with any amount of conviction. So 52 00:03:13,320 --> 00:03:15,640 Speaker 2: it was a bit of a diplomatic answer, But I 53 00:03:15,639 --> 00:03:19,440 Speaker 2: think we'll see those kind of hawkish undertones in both 54 00:03:19,440 --> 00:03:23,640 Speaker 2: the communicate and also the press conference later this week. 55 00:03:23,720 --> 00:03:25,440 Speaker 2: You have to think in the back of your mind, 56 00:03:25,800 --> 00:03:29,680 Speaker 2: Jerome Powell has been someone very focused on financial conditions. 57 00:03:29,960 --> 00:03:34,880 Speaker 2: Financial conditions have eased tremendously, and that restricts the amount 58 00:03:35,400 --> 00:03:38,680 Speaker 2: or the degree to which the Fed can pivot towards 59 00:03:38,720 --> 00:03:42,200 Speaker 2: a more moderate tone. They have to keep some vestige 60 00:03:42,200 --> 00:03:46,480 Speaker 2: of this tightening bias or hawkish concerns about inflation in place. 61 00:03:46,520 --> 00:03:48,800 Speaker 3: This week, let's get away from predicting what they may 62 00:03:48,880 --> 00:03:50,800 Speaker 3: or may not say or do and talk about the 63 00:03:50,840 --> 00:03:54,600 Speaker 3: actual economic backdrop. There is a question about whether they 64 00:03:54,600 --> 00:03:56,680 Speaker 3: are going to be late and whether this is going 65 00:03:56,720 --> 00:04:00,240 Speaker 3: to essentially cause a recession. Whether the bias now to 66 00:04:00,360 --> 00:04:03,680 Speaker 3: not go to the transitory debacle means that we're going 67 00:04:03,720 --> 00:04:06,000 Speaker 3: to get a recession just by virtue of them not 68 00:04:06,360 --> 00:04:10,400 Speaker 3: cutting rates in response to disinflation and to weakness. Is 69 00:04:10,440 --> 00:04:12,920 Speaker 3: that your base case at this point, just because we 70 00:04:13,040 --> 00:04:16,480 Speaker 3: are seeing a tightening and financial conditions, we are seeing 71 00:04:16,520 --> 00:04:19,200 Speaker 3: people start to push back a little bit, and the 72 00:04:19,200 --> 00:04:21,200 Speaker 3: theory is at this point you could actually start to 73 00:04:21,200 --> 00:04:24,039 Speaker 3: see higher rates bite in a warming and meaningful way. 74 00:04:24,200 --> 00:04:27,599 Speaker 2: We definitely are seeing higher interest rates bite in a 75 00:04:27,680 --> 00:04:29,560 Speaker 2: more meaningful way as you highlight, and I think we'll 76 00:04:29,600 --> 00:04:32,159 Speaker 2: see that in the retail sales numbers on Thursday. We're 77 00:04:32,200 --> 00:04:34,760 Speaker 2: looking for about a zero point five decline at the 78 00:04:34,760 --> 00:04:35,919 Speaker 2: headline in retail sales. 79 00:04:35,960 --> 00:04:36,080 Speaker 4: Now. 80 00:04:36,120 --> 00:04:38,760 Speaker 2: Part of that is lower energy prices and whatnot. But 81 00:04:38,760 --> 00:04:41,839 Speaker 2: if you pay attention to what's happening to consumers. The 82 00:04:41,880 --> 00:04:45,599 Speaker 2: excess saving story is largely washed out for lower and 83 00:04:45,680 --> 00:04:48,960 Speaker 2: middle income households. At the same time, higher rates. We 84 00:04:49,000 --> 00:04:51,000 Speaker 2: may have come off of the peaks on tenure yields 85 00:04:51,040 --> 00:04:53,960 Speaker 2: and whatnot, but if you look at what households are 86 00:04:54,080 --> 00:04:58,440 Speaker 2: diverting towards interest payments, so yes, most households locked in 87 00:04:58,480 --> 00:05:00,880 Speaker 2: those low mortgage rates during the pandem, But if you 88 00:05:00,880 --> 00:05:03,919 Speaker 2: look at everything else, whether it's car loans or helocks 89 00:05:04,080 --> 00:05:08,080 Speaker 2: or credit cards or whatnot, the interest coverage for those 90 00:05:08,200 --> 00:05:11,560 Speaker 2: is increasing pretty appreciably. That tells you that FED policy 91 00:05:11,680 --> 00:05:13,880 Speaker 2: is still kind of working its way through the system 92 00:05:13,880 --> 00:05:16,520 Speaker 2: and we haven't felt peak restriction now in terms of 93 00:05:16,520 --> 00:05:19,840 Speaker 2: getting the pivot right. Monetary policy acts with a long 94 00:05:19,880 --> 00:05:24,200 Speaker 2: and variable lag. That LAG's probably twelve months, and that 95 00:05:24,240 --> 00:05:25,760 Speaker 2: means it's going to be very hard to kind of 96 00:05:25,800 --> 00:05:26,560 Speaker 2: stick the landing. 97 00:05:26,680 --> 00:05:28,400 Speaker 4: So sounds like he's from Chicago. 98 00:05:28,560 --> 00:05:31,080 Speaker 2: Maybe not recession, maybe not recession next year, but I 99 00:05:31,120 --> 00:05:35,239 Speaker 2: think the landing could be bumpier than people are anticipating. 100 00:05:35,080 --> 00:05:37,720 Speaker 1: Bumpier from a GDP basis or bumpier from race because 101 00:05:37,720 --> 00:05:40,440 Speaker 1: what's in the zeitgeist's weekend is Yeah, they're gonna come 102 00:05:40,520 --> 00:05:44,280 Speaker 1: down disinflation. Oops, we reverse and we have a reflation. 103 00:05:45,400 --> 00:05:47,720 Speaker 2: Well, that's the scenario they want to avoid, and the 104 00:05:47,760 --> 00:05:50,360 Speaker 2: evidence pointing in that direction would be those sticky wage 105 00:05:50,400 --> 00:05:51,600 Speaker 2: pressures that haven't improved. 106 00:05:51,680 --> 00:05:51,800 Speaker 1: Jet. 107 00:05:51,880 --> 00:05:53,520 Speaker 4: I think it's just ali about the job mark. 108 00:05:53,720 --> 00:05:56,320 Speaker 2: It's about the job market, but also the inflation numbers, 109 00:05:56,360 --> 00:06:00,120 Speaker 2: and we've gotten used to this very immaculate disinflation the 110 00:06:00,200 --> 00:06:04,280 Speaker 2: course of Q three up Q four. I think that 111 00:06:04,440 --> 00:06:07,120 Speaker 2: the inflation is going to look a lot less immaculate 112 00:06:07,320 --> 00:06:09,240 Speaker 2: in Q one. In other words, Q one could look 113 00:06:09,240 --> 00:06:11,360 Speaker 2: a bit like the mirror image of Q three of 114 00:06:11,440 --> 00:06:14,520 Speaker 2: last year, and that we see slower growth and more 115 00:06:14,640 --> 00:06:17,800 Speaker 2: persistent inflation pressures. I'm not saying that the trend is reversing. 116 00:06:17,839 --> 00:06:21,040 Speaker 2: It's still moving broadly lower. But I think over the 117 00:06:21,160 --> 00:06:24,680 Speaker 2: last few months it looked more like two percent ish inflation, 118 00:06:24,839 --> 00:06:27,360 Speaker 2: and I think it'll look more three percent ish over 119 00:06:27,400 --> 00:06:28,080 Speaker 2: the next few months. 120 00:06:28,240 --> 00:06:30,840 Speaker 3: Slow down is sort of the perfect scenario that a 121 00:06:30,880 --> 00:06:32,680 Speaker 3: lot of people are looking for who are bullish on 122 00:06:32,839 --> 00:06:36,040 Speaker 3: risk assets. Is that basically what you're pointing to is 123 00:06:36,160 --> 00:06:39,000 Speaker 3: just a pause to allow things to cool and then 124 00:06:39,040 --> 00:06:41,440 Speaker 3: everybody can get going again, which is essentially the bull 125 00:06:41,520 --> 00:06:43,520 Speaker 3: case that we keep hearing from Eddie Ardenny and others. 126 00:06:43,880 --> 00:06:48,240 Speaker 2: We need slower growth to continue to rein in those 127 00:06:48,320 --> 00:06:51,520 Speaker 2: imbalances in the economy and in turn the wage pressure story, 128 00:06:52,320 --> 00:06:55,080 Speaker 2: and for that to play out perfectly in the first 129 00:06:55,120 --> 00:06:57,880 Speaker 2: half of the year, I think is a possible scenario, 130 00:06:58,000 --> 00:07:00,760 Speaker 2: but not necessarily the most plausible, since so I think 131 00:07:00,760 --> 00:07:04,360 Speaker 2: there will be some tough sledding, some bumpiness there as 132 00:07:04,400 --> 00:07:07,920 Speaker 2: a FED makes it clear that we're not in the 133 00:07:08,279 --> 00:07:10,400 Speaker 2: you know, we're not free and clear yet to start 134 00:07:10,840 --> 00:07:14,800 Speaker 2: reducing interest rates as swiftly as maybe market participants think. 135 00:07:14,800 --> 00:07:18,280 Speaker 2: And I think we'll see some imbalances in the labor market, 136 00:07:18,400 --> 00:07:21,520 Speaker 2: some challenges on the growth front. And as you think 137 00:07:21,520 --> 00:07:24,720 Speaker 2: about the overall earnings trajectory, right, it's ultimately a function 138 00:07:24,880 --> 00:07:28,480 Speaker 2: of top line growth and pricing power. And if you're 139 00:07:28,480 --> 00:07:32,240 Speaker 2: talking about a moderating pace of economic activity and cooling 140 00:07:32,280 --> 00:07:35,760 Speaker 2: inflation pressures, that's still a challenging dynamic for earnings. 141 00:07:35,840 --> 00:07:38,520 Speaker 1: This is a sufficiently good interview, Carl Ricodona, Thank you 142 00:07:38,640 --> 00:07:38,960 Speaker 1: so much. 143 00:07:40,240 --> 00:07:40,520 Speaker 4: Perry. 144 00:07:40,560 --> 00:07:47,840 Speaker 1: Body in shock is Sarah Hunt, chief market strategist at 145 00:07:47,840 --> 00:07:50,280 Speaker 1: Alpine Sex's Woods, but you and I we follow that 146 00:07:50,400 --> 00:07:52,200 Speaker 1: your Jenny for years and this is what he does 147 00:07:52,560 --> 00:07:57,200 Speaker 1: with an economics and investment He extends out the X axis. 148 00:07:57,240 --> 00:08:00,760 Speaker 1: Do you have the visibility to go out pass forth. 149 00:08:00,600 --> 00:08:01,600 Speaker 4: Of July next year? 150 00:08:02,600 --> 00:08:04,280 Speaker 5: I think it's tough to have the visibility to go 151 00:08:04,360 --> 00:08:06,120 Speaker 5: out that far, to be honest, I think it really 152 00:08:06,320 --> 00:08:09,080 Speaker 5: is going to depend a lot on how we start 153 00:08:09,120 --> 00:08:11,360 Speaker 5: the beginning of next year. The equity markets got very 154 00:08:11,440 --> 00:08:14,240 Speaker 5: excited at the end of September in the beginning of October, thinking, 155 00:08:14,560 --> 00:08:16,120 Speaker 5: you know what the Fed has done. Rates are going 156 00:08:16,200 --> 00:08:17,560 Speaker 5: to come down, and that's going to solve a lot 157 00:08:17,600 --> 00:08:18,880 Speaker 5: of problems. I mean, you've got a story in the 158 00:08:18,880 --> 00:08:21,520 Speaker 5: Bloomberg this morning about how fast rates have to come 159 00:08:21,560 --> 00:08:23,040 Speaker 5: down because a lot of companies are going to be 160 00:08:23,080 --> 00:08:25,600 Speaker 5: starting to refinance in twenty four and twenty five. And 161 00:08:25,720 --> 00:08:27,960 Speaker 5: the question is, even if you started in June, you're 162 00:08:28,000 --> 00:08:29,840 Speaker 5: not going to start with two percent down. You're going 163 00:08:29,920 --> 00:08:32,040 Speaker 5: to start if you start a little bit. I'm not 164 00:08:32,120 --> 00:08:33,640 Speaker 5: sure we're going to start in June. I think that 165 00:08:33,720 --> 00:08:35,599 Speaker 5: that's I think that's a big question. And then you 166 00:08:35,640 --> 00:08:38,040 Speaker 5: get into the political calendar, so the question of timing 167 00:08:38,160 --> 00:08:40,800 Speaker 5: becomes an issue and you still have all these people 168 00:08:40,880 --> 00:08:43,680 Speaker 5: waiting for lower rates, and that's been very positive for equities. 169 00:08:44,280 --> 00:08:44,959 Speaker 4: Dovetail. 170 00:08:45,320 --> 00:08:47,760 Speaker 1: What we heard from Sarah House of Wells Fargo, which 171 00:08:47,840 --> 00:08:51,720 Speaker 1: is a cautious view on real GDP with the enthusiasm 172 00:08:51,840 --> 00:08:54,679 Speaker 1: of corporations are going to move forward, move on to 173 00:08:54,840 --> 00:08:57,280 Speaker 1: a greater bull market. Can you have a greater bull 174 00:08:57,360 --> 00:09:00,400 Speaker 1: market if you get subdued economical. 175 00:09:00,559 --> 00:09:02,160 Speaker 5: I don't think you can. And I think that's the 176 00:09:02,200 --> 00:09:04,760 Speaker 5: biggest question of twenty twenty four is where growth is 177 00:09:04,840 --> 00:09:07,439 Speaker 5: going to go? And can earnings really hold up or 178 00:09:07,600 --> 00:09:10,160 Speaker 5: grow eleven percent or twelve percent? In twenty twenty four 179 00:09:10,440 --> 00:09:13,240 Speaker 5: when we have that come down of inflation where some 180 00:09:13,360 --> 00:09:15,760 Speaker 5: of the earnings that were higher were because of higher 181 00:09:15,760 --> 00:09:17,960 Speaker 5: revenues because of inflation, you had this sort of rolling 182 00:09:18,160 --> 00:09:21,960 Speaker 5: and rolling global recession or rolling global slow down, rolling 183 00:09:22,000 --> 00:09:24,360 Speaker 5: slow down in sectors in the US. Now China's on 184 00:09:24,440 --> 00:09:26,880 Speaker 5: the slower and if they stimulate, is that going to help? 185 00:09:26,960 --> 00:09:29,959 Speaker 5: Is it enough to change the process of next year? 186 00:09:30,000 --> 00:09:31,600 Speaker 5: And can we keep margins where they are? I think 187 00:09:31,679 --> 00:09:33,560 Speaker 5: all these questions are unanswered, so I think. 188 00:09:33,440 --> 00:09:33,800 Speaker 2: That that's it. 189 00:09:34,080 --> 00:09:37,120 Speaker 5: It's tough to roll into an idea of where earnings 190 00:09:37,160 --> 00:09:38,400 Speaker 5: are going to be. When you don't know the answer 191 00:09:38,440 --> 00:09:39,320 Speaker 5: to questions with. 192 00:09:39,400 --> 00:09:41,080 Speaker 3: The outlook that you just put out there, it makes 193 00:09:41,120 --> 00:09:43,280 Speaker 3: me think maybe you're rotating out of stocks and going 194 00:09:43,360 --> 00:09:44,080 Speaker 3: more into bonds. 195 00:09:45,080 --> 00:09:46,760 Speaker 5: I think there's a real place for bonds, and I 196 00:09:46,840 --> 00:09:48,920 Speaker 5: think the question of how fast rates come down, I 197 00:09:49,040 --> 00:09:51,120 Speaker 5: mean a lot of investors are more interested in having 198 00:09:51,160 --> 00:09:52,640 Speaker 5: more of a balanced portfolio than they were. 199 00:09:52,720 --> 00:09:53,160 Speaker 2: You've got this. 200 00:09:53,559 --> 00:09:55,079 Speaker 5: This goes back to the tension of are we going 201 00:09:55,120 --> 00:09:57,400 Speaker 5: back to a pre financial crisis world where rates can 202 00:09:57,520 --> 00:10:00,640 Speaker 5: have some sort of meaningful aspect in your portfolio. 203 00:10:01,080 --> 00:10:02,840 Speaker 2: Where they settle is going to be the question. 204 00:10:03,000 --> 00:10:04,719 Speaker 5: But we're not going back to zero. And I think 205 00:10:04,760 --> 00:10:07,000 Speaker 5: the equity markets are getting excited that rates are coming down, 206 00:10:07,160 --> 00:10:08,960 Speaker 5: and maybe they're coming down a lot further than people 207 00:10:09,000 --> 00:10:10,920 Speaker 5: expect them to. I don't really know where that. 208 00:10:10,960 --> 00:10:11,559 Speaker 4: Answer is yet. 209 00:10:11,559 --> 00:10:12,480 Speaker 5: I don't think anybody does. 210 00:10:12,559 --> 00:10:14,280 Speaker 3: One of your highest convictions this year has been the 211 00:10:14,440 --> 00:10:17,040 Speaker 3: energy stop trade, and right now we're looking at a 212 00:10:17,080 --> 00:10:20,800 Speaker 3: sort of surprise decline and price, which is particularly surprising 213 00:10:20,880 --> 00:10:24,360 Speaker 3: given the disruption that we've seen and the Hamas Israel war. 214 00:10:24,800 --> 00:10:27,079 Speaker 3: How much do you still lean into that? Do you 215 00:10:27,160 --> 00:10:29,880 Speaker 3: still think that oil companies are goodbye here. 216 00:10:30,400 --> 00:10:32,440 Speaker 5: So I think the biggest issue for this year has 217 00:10:32,480 --> 00:10:35,319 Speaker 5: been much bigger supply than anybody was expecting. I think 218 00:10:35,320 --> 00:10:37,120 Speaker 5: Paul Sanki did a great job talking about that a 219 00:10:37,160 --> 00:10:40,199 Speaker 5: couple of days ago. The fact that everybody expected more 220 00:10:40,240 --> 00:10:42,160 Speaker 5: battles to come off the market, both from Russia and 221 00:10:42,200 --> 00:10:44,439 Speaker 5: Iran and the fact that they really didn't, and then 222 00:10:44,559 --> 00:10:48,040 Speaker 5: other people increased supply. Robust demand has been fairly robust. 223 00:10:48,120 --> 00:10:49,760 Speaker 5: If you get a really big slowdown, that's going to 224 00:10:49,840 --> 00:10:51,880 Speaker 5: hit the demand side. So it's tough. But I still 225 00:10:51,880 --> 00:10:54,679 Speaker 5: think longer term, you've got good dividend yields and you've 226 00:10:54,679 --> 00:10:56,920 Speaker 5: got a longer tail on hydrocarbons, and that is going 227 00:10:57,000 --> 00:10:57,560 Speaker 5: to be meaningful. 228 00:10:58,320 --> 00:11:00,640 Speaker 1: I look at the hydrocarbons, I'm okay, they had a 229 00:11:00,679 --> 00:11:02,679 Speaker 1: bad month, they had a bad week. I look at 230 00:11:02,679 --> 00:11:04,719 Speaker 1: the banks, and I guess we could talk forever about that. 231 00:11:05,320 --> 00:11:09,079 Speaker 1: All anybody's talking about are these super growers we have 232 00:11:09,240 --> 00:11:11,880 Speaker 1: with thirty, forty and fifty multiples on them. 233 00:11:11,920 --> 00:11:13,319 Speaker 4: That's not the textbooks? Is it? 234 00:11:13,760 --> 00:11:14,120 Speaker 1: Do they do? 235 00:11:14,320 --> 00:11:16,560 Speaker 4: Year two is the biggest surpriser. They just keep going. 236 00:11:17,200 --> 00:11:19,280 Speaker 5: I think it's well, it's those kind of multiples are 237 00:11:19,320 --> 00:11:21,079 Speaker 5: not in the textbook, No, but they really did have 238 00:11:21,240 --> 00:11:24,079 Speaker 5: fantastic earnings this year, and Cameron Dawson's been quick to 239 00:11:24,120 --> 00:11:26,319 Speaker 5: point that out right like how fast they were growing. 240 00:11:26,600 --> 00:11:28,920 Speaker 5: The question then becomes can they keep that up? And 241 00:11:29,000 --> 00:11:31,360 Speaker 5: if the delta is negative, if I'm growing, but I'm 242 00:11:31,360 --> 00:11:34,679 Speaker 5: growing more by delta's negative way to change, if the 243 00:11:34,760 --> 00:11:36,920 Speaker 5: rate of change is negative, so that I'm growing, but 244 00:11:36,960 --> 00:11:41,520 Speaker 5: I'm growing less fast. Somebody briefer, I'm growing less fast. 245 00:11:41,720 --> 00:11:45,040 Speaker 5: Do I deserve that thirty or fifty multiple? And I 246 00:11:45,080 --> 00:11:46,760 Speaker 5: don't know the answer to that question because it depends 247 00:11:46,760 --> 00:11:48,440 Speaker 5: on how fast we grow. I don't see it that fast. 248 00:11:48,720 --> 00:11:50,959 Speaker 3: I like that you're just honest about this, and we've 249 00:11:51,000 --> 00:11:53,040 Speaker 3: seen all these projections about you know, this is what 250 00:11:53,160 --> 00:11:55,199 Speaker 3: we expect to happen in twenty twenty four, this is 251 00:11:55,240 --> 00:11:56,839 Speaker 3: what we expect to happen in twenty twenty five. And 252 00:11:56,880 --> 00:11:58,360 Speaker 3: it's almost the curse of having to come out with 253 00:11:58,440 --> 00:12:01,520 Speaker 3: a full year's strategy. But if you had to, what 254 00:12:01,600 --> 00:12:04,079 Speaker 3: would you be looking at towards the end of next year. 255 00:12:05,960 --> 00:12:08,439 Speaker 5: I think one of the things that's been surprising is 256 00:12:08,480 --> 00:12:10,440 Speaker 5: that with the strength of the labor market, you haven't 257 00:12:10,480 --> 00:12:13,640 Speaker 5: seen wages increasing as fast as people predicted that they would. 258 00:12:13,920 --> 00:12:16,040 Speaker 5: So when people say the labor market is still is 259 00:12:16,080 --> 00:12:19,199 Speaker 5: still very strong, yes, but wages aren't increasing that much. 260 00:12:19,280 --> 00:12:21,480 Speaker 5: If we can keep a labor market with an unemployment 261 00:12:21,520 --> 00:12:23,240 Speaker 5: rate that's fairly low and I don't want what that 262 00:12:23,440 --> 00:12:26,040 Speaker 5: number is, and you don't see as much wage acceleration, 263 00:12:26,400 --> 00:12:28,200 Speaker 5: then that's going to help on the margin side. It's 264 00:12:28,280 --> 00:12:30,040 Speaker 5: not going to help on the consumer side, right, because 265 00:12:30,040 --> 00:12:32,040 Speaker 5: there's attention to that because people aren't getting paid as 266 00:12:32,120 --> 00:12:34,600 Speaker 5: much and you go look at food. You know, inflation 267 00:12:34,720 --> 00:12:36,120 Speaker 5: may be coming down, but going to the super market 268 00:12:36,120 --> 00:12:38,360 Speaker 5: doesn't feel any better for anybody. And so I think 269 00:12:38,400 --> 00:12:40,000 Speaker 5: that those are the kinds of things that make it 270 00:12:40,080 --> 00:12:42,680 Speaker 5: difficult to say spending is going to be completely robust 271 00:12:42,720 --> 00:12:43,760 Speaker 5: on the consumer side next year. 272 00:12:43,800 --> 00:12:47,199 Speaker 3: Can I just say thank you because she knows. Sarah 273 00:12:47,280 --> 00:12:50,040 Speaker 3: knows that I like the smell of pine trees when 274 00:12:50,080 --> 00:12:52,360 Speaker 3: I walk by, So she got me pine tree. 275 00:12:52,720 --> 00:12:54,480 Speaker 4: You didn't get those in pine Tree, Vermont. 276 00:12:54,520 --> 00:12:57,920 Speaker 3: This weekend I'm going to share with you and you know, 277 00:12:58,160 --> 00:13:01,440 Speaker 3: light our candles the general and think about what the head. 278 00:13:01,360 --> 00:13:02,720 Speaker 4: Until place they did White Christmas. 279 00:13:02,760 --> 00:13:06,480 Speaker 1: This weekend, I heard saw Rosemary Clooney. 280 00:13:07,600 --> 00:13:08,760 Speaker 4: So there are you going to. 281 00:13:08,800 --> 00:13:11,199 Speaker 3: Unwrap them so we can smell the pine, so the 282 00:13:11,240 --> 00:13:12,800 Speaker 3: audience can sell the pine. Yes, we'll do that. 283 00:13:12,880 --> 00:13:14,440 Speaker 2: Yes that in the next episode. 284 00:13:14,480 --> 00:13:17,400 Speaker 4: We can smell it on TV dot Radio. Sarah Hunt, 285 00:13:17,440 --> 00:13:19,920 Speaker 4: Thank you so much. Elpine, saxon what's here. 286 00:13:30,120 --> 00:13:33,479 Speaker 1: In December and onto a new January of Iowa caucuses 287 00:13:33,559 --> 00:13:36,880 Speaker 1: and New Hampshire primaries. Greg Villier briefs this morning she 288 00:13:37,040 --> 00:13:40,959 Speaker 1: fires policy strategist at AGF Greg, Lisa wants to talk 289 00:13:41,000 --> 00:13:44,240 Speaker 1: about the various and sundry wars we're in. I need 290 00:13:44,320 --> 00:13:46,040 Speaker 1: to talk to you about the war that's coming in 291 00:13:46,120 --> 00:13:50,719 Speaker 1: the presidential election. Is it that Trump's ahead or is 292 00:13:50,760 --> 00:13:52,040 Speaker 1: it that Biden's behind. 293 00:13:54,000 --> 00:13:57,199 Speaker 6: I think it's more the latter than anything else. Just 294 00:13:57,360 --> 00:13:59,920 Speaker 6: listening to the sound bites over the weekend, Tom would 295 00:14:00,360 --> 00:14:04,640 Speaker 6: cringe inducing really from both Biden and Trump. If we're 296 00:14:04,679 --> 00:14:09,200 Speaker 6: in for another eleven months of this, this is cruel 297 00:14:09,240 --> 00:14:12,640 Speaker 6: and unusual punishment for the American voter who still thinks 298 00:14:12,920 --> 00:14:14,360 Speaker 6: there's a chance for somebody else. 299 00:14:14,679 --> 00:14:17,000 Speaker 1: There's somebody else out there, but it's not going to 300 00:14:17,040 --> 00:14:20,280 Speaker 1: be decided, I would believe at the Iowa caucus the 301 00:14:20,720 --> 00:14:24,200 Speaker 1: New Hampshire primary as well. Where are we in February 302 00:14:24,360 --> 00:14:26,640 Speaker 1: after those January political events. 303 00:14:27,720 --> 00:14:30,920 Speaker 6: Well, Trump will win, obviously in Iowa, but maybe not 304 00:14:31,160 --> 00:14:35,200 Speaker 6: by quite as much as people had expected. I think 305 00:14:35,280 --> 00:14:38,320 Speaker 6: that he will be the presumptive nominee by the middle 306 00:14:38,360 --> 00:14:41,080 Speaker 6: of the spring. That's not a real courageous call on 307 00:14:41,240 --> 00:14:44,920 Speaker 6: my part. But with the Democrats, I still think there 308 00:14:44,960 --> 00:14:48,680 Speaker 6: could be a surprise. Maybe this guy from Minnesota, this 309 00:14:48,800 --> 00:14:51,920 Speaker 6: House member, he's way behind, but he's different, he's new. 310 00:14:52,760 --> 00:14:56,880 Speaker 6: Even Robert Kennedy, who's pretty exotic in his views, has 311 00:14:57,080 --> 00:15:02,480 Speaker 6: attracted some attention. I sense a lot of Democrats, not 312 00:15:02,680 --> 00:15:06,080 Speaker 6: just David Axelrod, who are desperately looking for someone else. 313 00:15:06,440 --> 00:15:08,600 Speaker 3: Greg your language is really colorful, the supporting cruel and 314 00:15:08,680 --> 00:15:11,280 Speaker 3: unusual punishment for the American people at this has to continue, 315 00:15:11,640 --> 00:15:14,840 Speaker 3: and the exotic views of a representative Kennedy. I am 316 00:15:14,920 --> 00:15:19,360 Speaker 3: wondering how much you think the likelihood of President Biden 317 00:15:19,680 --> 00:15:22,600 Speaker 3: stepping aside for another candidate is tied into some of 318 00:15:22,680 --> 00:15:25,360 Speaker 3: the military conflicts that the US is currently supporting or 319 00:15:25,400 --> 00:15:25,840 Speaker 3: involved with. 320 00:15:26,800 --> 00:15:29,360 Speaker 6: Well, there's two big stories so that you allude to. 321 00:15:29,520 --> 00:15:32,960 Speaker 6: Number one is the trouble that Trump will have with 322 00:15:33,160 --> 00:15:33,600 Speaker 6: his son. 323 00:15:34,080 --> 00:15:35,520 Speaker 4: This is going to go on and on, and. 324 00:15:35,560 --> 00:15:39,360 Speaker 6: It's an embarrassment. It's a distraction. It's a plus for Trump. 325 00:15:40,160 --> 00:15:43,640 Speaker 6: But the other big story is who lost Ukraine. I 326 00:15:43,720 --> 00:15:48,080 Speaker 6: think that could be a devastating story for the Washington 327 00:15:48,160 --> 00:15:50,800 Speaker 6: in general if we can't get money for Ukraine, and 328 00:15:50,920 --> 00:15:54,120 Speaker 6: it looks unlikely this week. Maybe they'll get a pittance, 329 00:15:54,760 --> 00:15:57,400 Speaker 6: maybe they'll get a haircut, but I don't see a 330 00:15:57,600 --> 00:16:01,720 Speaker 6: huge chunk of money coming for you, and Vladimir Putin 331 00:16:01,800 --> 00:16:03,400 Speaker 6: has to be very happy. 332 00:16:03,680 --> 00:16:06,840 Speaker 3: Vladimir Zelenski is coming to Washington, DC this week, I believe, 333 00:16:06,880 --> 00:16:09,800 Speaker 3: on Wednesday, to talk directly with Congress members, including how 334 00:16:09,880 --> 00:16:12,240 Speaker 3: Speaker Johnson, to try to plead his case. 335 00:16:12,520 --> 00:16:13,520 Speaker 4: Over the weekend, there. 336 00:16:13,480 --> 00:16:15,760 Speaker 3: Was a lot of discussion about how essentially this comes 337 00:16:15,800 --> 00:16:18,800 Speaker 3: down to funding and if Ukraine doesn't get funded, they're 338 00:16:18,880 --> 00:16:20,560 Speaker 3: going to lose, and that was what a lot of 339 00:16:20,600 --> 00:16:23,440 Speaker 3: people were talking about, especially because Russia is putting about 340 00:16:23,480 --> 00:16:25,520 Speaker 3: forty percent of its budget into the military. Do you 341 00:16:25,600 --> 00:16:27,160 Speaker 3: agree with that assessment that this is sort of the 342 00:16:27,200 --> 00:16:30,640 Speaker 3: turning point where if Ukraine doesn't get aid, it kind 343 00:16:30,680 --> 00:16:31,080 Speaker 3: of ends. 344 00:16:32,520 --> 00:16:34,520 Speaker 6: I guess I say it all depends on the definition 345 00:16:34,640 --> 00:16:37,040 Speaker 6: of lose. I don't think Ukraine is going to lose 346 00:16:37,520 --> 00:16:40,920 Speaker 6: the war anytime soon, but they're clearly on the defensive. 347 00:16:41,040 --> 00:16:45,840 Speaker 6: They're backpedaling, They've not had a good winter, they lack supplies. 348 00:16:46,360 --> 00:16:49,320 Speaker 6: So I would say that the momentum right now is 349 00:16:49,480 --> 00:16:53,120 Speaker 6: with Russia. And if that's true, what does Vladimir Putin 350 00:16:53,200 --> 00:16:57,400 Speaker 6: think about Estonia, Lithuania, Latvia? Does he think about other 351 00:16:57,520 --> 00:17:01,360 Speaker 6: Central European countries that might be next greg The news. 352 00:17:01,240 --> 00:17:05,480 Speaker 1: Over the weekend on Gaza was just absolutely grim. 353 00:17:06,080 --> 00:17:07,720 Speaker 4: There's no other way to put it. 354 00:17:07,760 --> 00:17:10,359 Speaker 1: It's a point where it's almost subsued within the media 355 00:17:10,480 --> 00:17:13,760 Speaker 1: because of just the weight of the grimness as well. 356 00:17:14,320 --> 00:17:17,360 Speaker 1: What is the action the administration can do this week? 357 00:17:19,240 --> 00:17:21,879 Speaker 6: I don't see a lot. I don't see much that 358 00:17:22,000 --> 00:17:25,320 Speaker 6: we can do. We could send more aid, but I 359 00:17:25,359 --> 00:17:28,359 Speaker 6: think if it's tied to Ukraine, that's not going to 360 00:17:28,400 --> 00:17:30,840 Speaker 6: happen until after the new year begins. 361 00:17:31,200 --> 00:17:31,240 Speaker 4: No. 362 00:17:32,400 --> 00:17:34,520 Speaker 6: I do think though, that in terms of the Arab 363 00:17:34,600 --> 00:17:37,480 Speaker 6: street and the world in general, the Israelis maybe only 364 00:17:37,560 --> 00:17:42,040 Speaker 6: have a few weeks left before they totally lose support. 365 00:17:42,400 --> 00:17:45,000 Speaker 6: I think the window is starting to close on the Israelis. 366 00:17:45,000 --> 00:17:46,960 Speaker 6: They've got to wrap this up pretty. 367 00:17:46,760 --> 00:17:49,240 Speaker 4: Quickly at least to jump in here. Please. 368 00:17:49,359 --> 00:17:51,800 Speaker 3: Well, I'm just curious there was so much discussion over 369 00:17:51,840 --> 00:17:54,560 Speaker 3: the weekend about the university of presidents, the potential resignation 370 00:17:55,200 --> 00:17:59,000 Speaker 3: of Harvard's president after what we saw from UPenn. I'm 371 00:17:59,080 --> 00:18:02,080 Speaker 3: just curious. We're hearing that a lot of conservatives are 372 00:18:02,119 --> 00:18:05,080 Speaker 3: saying we told you so, and that universities have been 373 00:18:05,160 --> 00:18:07,879 Speaker 3: constraining freedom of speech for a long time, and that 374 00:18:07,960 --> 00:18:10,800 Speaker 3: this is just one example. How much do you actually 375 00:18:10,840 --> 00:18:14,080 Speaker 3: see Democrats joining with that versus sort of voyeuristic arguments 376 00:18:14,119 --> 00:18:16,399 Speaker 3: being made around this, and. 377 00:18:16,560 --> 00:18:21,240 Speaker 6: Good work voyeuristic. I don't see anything that's going to 378 00:18:21,359 --> 00:18:25,440 Speaker 6: change the political landscape quickly, but it is an embarrassment 379 00:18:25,560 --> 00:18:27,959 Speaker 6: for the Ivy League, and I think that will persist 380 00:18:28,240 --> 00:18:30,960 Speaker 6: for a while. One other thing, really quickly, the abortion 381 00:18:31,160 --> 00:18:34,879 Speaker 6: fight in Texas has long term implications. I think that 382 00:18:35,359 --> 00:18:38,160 Speaker 6: more and more people will be looking at this saying 383 00:18:38,600 --> 00:18:39,320 Speaker 6: this is not right. 384 00:18:39,560 --> 00:18:40,439 Speaker 4: Greg. Thank you so much. 385 00:18:40,480 --> 00:18:43,120 Speaker 1: Greg Valier with a Monday Eclectic Brief. There are many 386 00:18:43,200 --> 00:18:48,080 Speaker 1: many different topics here, including what we see in Ukraine 387 00:18:52,640 --> 00:18:55,359 Speaker 1: joining us now with the biggest shoes to fill on 388 00:18:55,440 --> 00:18:58,760 Speaker 1: Wall Street. Max Layton with Jeff Curry at Gold and 389 00:18:58,840 --> 00:19:01,760 Speaker 1: Sachs and now we've had more. It's City Group, global 390 00:19:01,840 --> 00:19:04,840 Speaker 1: head of Commodity Research, Max. I'm going to cut to 391 00:19:04,920 --> 00:19:08,359 Speaker 1: the chase. You and mister Morris. Doctor Morris had the 392 00:19:08,440 --> 00:19:12,560 Speaker 1: call of the year. Everybody was looking for oil resiliency, 393 00:19:13,200 --> 00:19:14,159 Speaker 1: oil higher. 394 00:19:14,800 --> 00:19:19,040 Speaker 4: You guys went south? How far south from Brent seventy five? 395 00:19:19,560 --> 00:19:22,800 Speaker 4: Can we now head? Sure? 396 00:19:23,400 --> 00:19:25,800 Speaker 7: We think overall a lot of the move is done. 397 00:19:26,880 --> 00:19:30,720 Speaker 7: And you know OPEC plus is doing some work to 398 00:19:30,920 --> 00:19:33,320 Speaker 7: rebalance the market in the first quarter, and you know 399 00:19:33,400 --> 00:19:36,800 Speaker 7: our base cases they'll be successful in doing that. The 400 00:19:36,920 --> 00:19:40,600 Speaker 7: pressure increases for them to roll these cuts forward through 401 00:19:40,720 --> 00:19:43,600 Speaker 7: the remainder of the year. Actually, we forcussed around a 402 00:19:43,640 --> 00:19:46,920 Speaker 7: million barrel a day surplus for the second quarter and 403 00:19:47,080 --> 00:19:50,399 Speaker 7: around an overall surplus of abouzero point six million barrels 404 00:19:50,400 --> 00:19:52,639 Speaker 7: a day through the whole of twenty twenty four. So 405 00:19:54,000 --> 00:19:56,560 Speaker 7: you know, these cuts do need to be maintained to 406 00:19:56,640 --> 00:19:59,240 Speaker 7: balance the market through the course of next year. In 407 00:19:59,480 --> 00:20:01,640 Speaker 7: our kind of face case global growth environment. 408 00:20:01,960 --> 00:20:04,840 Speaker 1: In the base case, what is the relationship of Saudi 409 00:20:04,920 --> 00:20:08,240 Speaker 1: Arabia to oil producing Russia in Iran? 410 00:20:10,400 --> 00:20:15,680 Speaker 7: Sure, Well, obviously there's a lot of complex factors going 411 00:20:15,720 --> 00:20:20,680 Speaker 7: on with the political relationships between these countries. Overall, Saudi's 412 00:20:20,680 --> 00:20:25,919 Speaker 7: taken the brunt of the cuts so far, and Russia 413 00:20:26,040 --> 00:20:29,200 Speaker 7: is contributing, and we expect them to continue. 414 00:20:28,840 --> 00:20:29,200 Speaker 4: To do so. 415 00:20:30,280 --> 00:20:34,480 Speaker 7: They've been pretty forthright in what they want to do 416 00:20:34,800 --> 00:20:39,960 Speaker 7: and in their expectations of countries meeting their quotas through 417 00:20:40,000 --> 00:20:43,600 Speaker 7: the first quarter, and overall, I think that these you know, 418 00:20:43,920 --> 00:20:46,800 Speaker 7: when you look at the trade off of the OPEK 419 00:20:46,880 --> 00:20:53,040 Speaker 7: plus countries, they essentially maintain the existing cuts, have some 420 00:20:53,400 --> 00:20:56,520 Speaker 7: incremental compliance, and they can balance this market and keep 421 00:20:56,560 --> 00:20:59,480 Speaker 7: this price at seventy to eighty dollars if they work together. 422 00:21:00,200 --> 00:21:05,119 Speaker 7: The alternative is obviously substantial. Spare capacity gets ramped up 423 00:21:05,160 --> 00:21:09,159 Speaker 7: into and prices could be down thirty, forty, you know, 424 00:21:09,320 --> 00:21:12,880 Speaker 7: even fifty percent if all of that spare capacity comes 425 00:21:12,920 --> 00:21:15,200 Speaker 7: back online. So I think the alternative is just so 426 00:21:15,400 --> 00:21:19,399 Speaker 7: painful that it's most likely you get this kind of 427 00:21:19,440 --> 00:21:22,040 Speaker 7: half a million barrel a day cut through the through 428 00:21:22,080 --> 00:21:24,520 Speaker 7: the course of next year at the right price. So well, 429 00:21:24,800 --> 00:21:27,040 Speaker 7: seventy eighty dollars is the right kind of price levels. 430 00:21:27,320 --> 00:21:29,120 Speaker 3: I want to develop that a little bit, max, because 431 00:21:29,119 --> 00:21:31,560 Speaker 3: you're talking about a potential fifty percent price cut that 432 00:21:31,600 --> 00:21:34,600 Speaker 3: could be a forty dollars hand doll and Brent crude 433 00:21:34,600 --> 00:21:37,359 Speaker 3: even thirty five dollars on WTI. And this comes as 434 00:21:37,400 --> 00:21:39,760 Speaker 3: we heard from Paul Sank last week, there is this 435 00:21:40,040 --> 00:21:42,719 Speaker 3: risk that as the US ramps up production in as 436 00:21:42,720 --> 00:21:46,200 Speaker 3: Saudi Arabia loses share market share to the US, the 437 00:21:46,280 --> 00:21:48,199 Speaker 3: flood the market. They'll just say, look, you guys are 438 00:21:48,240 --> 00:21:50,440 Speaker 3: going to do this. Let's go and put all the 439 00:21:50,480 --> 00:21:53,359 Speaker 3: barrels out there and get prices low enough that people 440 00:21:53,440 --> 00:21:56,359 Speaker 3: start cutting production. What holds them back from doing that? 441 00:21:58,760 --> 00:22:01,960 Speaker 7: Well, I think obviously you know that kind of price 442 00:22:02,000 --> 00:22:06,440 Speaker 7: decline will hurt everybody's profits and revenues. I think the 443 00:22:07,080 --> 00:22:11,639 Speaker 7: stick or the stick that Saudi has is quite effective 444 00:22:11,760 --> 00:22:15,160 Speaker 7: in the sense that they have the ability to raise 445 00:22:15,200 --> 00:22:19,280 Speaker 7: production by twenty percent themselves, so they could offset, for example, 446 00:22:19,960 --> 00:22:23,399 Speaker 7: on paper, a twenty percent decline in price with a 447 00:22:23,440 --> 00:22:26,840 Speaker 7: big increase in their own production. Not many other frankly, 448 00:22:27,160 --> 00:22:29,560 Speaker 7: very few other Ope plus countries have the ability to 449 00:22:29,640 --> 00:22:33,360 Speaker 7: do that. So in the worst case scenario, it's potentially 450 00:22:33,560 --> 00:22:37,120 Speaker 7: least painful for Saudi Arabia and more painful for everybody else. 451 00:22:37,200 --> 00:22:41,840 Speaker 7: So I do think that that dynamic makes the stick 452 00:22:41,960 --> 00:22:46,520 Speaker 7: quite effective. Obviously, if there was a hard landing on 453 00:22:46,600 --> 00:22:50,080 Speaker 7: the demand side, if non OPEC supply continued to grow 454 00:22:50,160 --> 00:22:52,480 Speaker 7: extremely strongly. And on that note, we do have a 455 00:22:52,600 --> 00:22:56,600 Speaker 7: material slowdown sequentially in US growth in our forecast for 456 00:22:56,720 --> 00:22:59,280 Speaker 7: the next twelve months. Most of the growth that we 457 00:22:59,400 --> 00:23:03,320 Speaker 7: have is actually OPEC plus bringing back some barrels and 458 00:23:03,640 --> 00:23:06,639 Speaker 7: or ramping up over the next twelve months. So if 459 00:23:06,640 --> 00:23:08,760 Speaker 7: you take that out of the market, if these cuts 460 00:23:08,760 --> 00:23:11,600 Speaker 7: were extended, you're actually running a deficit in the first 461 00:23:11,680 --> 00:23:15,680 Speaker 7: quarter if the quotas are met as well, and overall, 462 00:23:15,720 --> 00:23:18,640 Speaker 7: if broadly the quotas are met, because we are assuming 463 00:23:18,720 --> 00:23:21,439 Speaker 7: some slippage to get our balanced small you know, one 464 00:23:21,520 --> 00:23:23,680 Speaker 7: hundred thousand barrel a day surplus in the first quarter, 465 00:23:23,840 --> 00:23:26,760 Speaker 7: So it does appear that it's within OPECK plus's grasp 466 00:23:27,640 --> 00:23:30,760 Speaker 7: to hold the market together in the baseline. But yeah, look, 467 00:23:30,800 --> 00:23:33,200 Speaker 7: a hard landing on the demand slide, big surprises on 468 00:23:33,240 --> 00:23:39,440 Speaker 7: the upside on supply less disruptions and normal perhaps OPECK 469 00:23:39,560 --> 00:23:43,480 Speaker 7: might break. But look, I just I think you have 470 00:23:43,640 --> 00:23:47,080 Speaker 7: to get into a pretty dark global growth environment to 471 00:23:47,560 --> 00:23:48,439 Speaker 7: even think about that. 472 00:23:49,080 --> 00:23:51,320 Speaker 3: Which raises this question, are we in a narrow range. 473 00:23:51,520 --> 00:23:53,840 Speaker 3: You said, you know, there could potentially be some sort 474 00:23:53,880 --> 00:23:57,399 Speaker 3: of significant downside should production and come back online, but 475 00:23:57,480 --> 00:23:59,280 Speaker 3: you see that as improbable. So are we in a 476 00:23:59,320 --> 00:24:02,840 Speaker 3: pretty narrow range after a lot of really massive swings 477 00:24:02,840 --> 00:24:03,920 Speaker 3: over the past couple of years. 478 00:24:05,640 --> 00:24:08,639 Speaker 7: Yeah, I mean certainly, we think so. And positioning is 479 00:24:08,720 --> 00:24:13,240 Speaker 7: extremely low now the spreads have collapsed, and yet the 480 00:24:13,320 --> 00:24:16,320 Speaker 7: price is being supported here. It's found some you know 481 00:24:16,480 --> 00:24:19,760 Speaker 7: base here. We think around seventy five dollars if anything, 482 00:24:19,920 --> 00:24:23,120 Speaker 7: base cases we bounce back over the next month or two, 483 00:24:23,840 --> 00:24:25,239 Speaker 7: prices stabilize a little bit. 484 00:24:25,320 --> 00:24:25,480 Speaker 4: Here. 485 00:24:26,520 --> 00:24:28,720 Speaker 7: We think, you know, China's going to roll out a 486 00:24:28,800 --> 00:24:33,760 Speaker 7: significant easing package, significant as in to stabilize the ship. 487 00:24:34,280 --> 00:24:37,240 Speaker 7: Not significant as in a ten percent easing as a 488 00:24:37,280 --> 00:24:41,040 Speaker 7: share of GDP, but significant enough that the market thinks 489 00:24:41,080 --> 00:24:43,119 Speaker 7: that China will be fine next year, be able to 490 00:24:43,160 --> 00:24:46,760 Speaker 7: achieve four and a half five percent GDP growth. And 491 00:24:46,880 --> 00:24:49,159 Speaker 7: you know, there's been some big builds lately that we 492 00:24:49,320 --> 00:24:53,040 Speaker 7: expect to stop. Essentially, we expect a reduction in the 493 00:24:53,080 --> 00:24:56,040 Speaker 7: builds in inventory that we've seen over the last three 494 00:24:56,119 --> 00:24:58,720 Speaker 7: weeks over the next couple of months. So we are 495 00:24:58,800 --> 00:25:02,000 Speaker 7: expecting to stabilization prices from here. 496 00:25:02,200 --> 00:25:06,119 Speaker 1: Sure, Max, thank you so much and congratulations. Max Leyton 497 00:25:06,240 --> 00:25:09,879 Speaker 1: is globalhead of Commodities for City Group. Subscribe to the 498 00:25:09,920 --> 00:25:14,159 Speaker 1: Bloomberg Surveillance podcast on Apple, Spotify, and anywhere else you 499 00:25:14,280 --> 00:25:18,480 Speaker 1: get your podcasts. Listen live every weekday starting at seven 500 00:25:18,520 --> 00:25:23,440 Speaker 1: am Easter. I'm Bloomberg dot Com, the iHeartRadio app, tune. 501 00:25:23,240 --> 00:25:25,080 Speaker 4: In, and the Bloomberg Business app. 502 00:25:25,600 --> 00:25:29,240 Speaker 1: You can watch us live on Bloomberg Television and always 503 00:25:29,680 --> 00:25:30,840 Speaker 1: I'm the Bloomberg Terminal. 504 00:25:31,280 --> 00:25:35,440 Speaker 4: Thanks for listening. I'm Tom Keen, and this is Bloomberg