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Speaker 1: This is Bloomberg surveyanze lows have been seen in the

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Speaker 1: commodity markets generally, whether it's in the soft whether it's

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Speaker 1: in the grains, whether it's in crude oil. Has the

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Speaker 1: FED laid out a new rationale for running manager policy

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Speaker 1: other than looking at the labor market and looking at

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Speaker 1: inflation dumps. We think that people have leapfrogged what is

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Speaker 1: reasonable into excessive worry. Bloomberg Surveillance your link to the

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Speaker 1: world of economics, finance, and investment on Bloomberg Radio. Good

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Speaker 1: morning everyone, Bloomberg Surveillance. We'll talk equities in this hour

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Speaker 1: with David Wilson. We do that after two days extravagance

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Speaker 1: of international economics. We'll talk oil, Hydrocarbons. City Group joining

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Speaker 1: us on the mystery known as net gas. Our forex

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Speaker 1: brief this morning that has to do with Mr Drug.

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Speaker 1: He brought you by Interactive Broker's winner of FX Weeks

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Speaker 1: two thousand and fifteen award for the best retail forex

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Speaker 1: trading platform. Visit at ib AT, I b k R

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Speaker 1: dot Com slash four x. The Euro one eleven twenty

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Speaker 1: one weaker. I'm gasping over the volatility in the Euro

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Speaker 1: in the last forty eight hours. Euro one eleven twenty

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Speaker 1: one weeker this morning yen weaker one thirteen sixty Uh,

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Speaker 1: that's a move fair amount. One thirteen fifty nine had

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Speaker 1: a one fourteen handle with a drama yesterday. Is Michael

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Speaker 1: McKee mentioned earlier? Dollar churning certainly not stronger. Ninety six

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Speaker 1: point four seven is measured by d X y I

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Speaker 1: mentioned earlier. Ruble up fifteen percent one five fifteen big figures.

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Speaker 1: That's what Bob, since you would say fifteen big figures

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Speaker 1: from the bottom sixty nine point nine zero eighty to

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Speaker 1: sixty nine point nine zero on dollar ruble. And let's

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Speaker 1: look at Canada as well. One thirty two ninety six

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Speaker 1: on the Looney David Wilson is here because he watched

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Speaker 1: Charlie Rose, which will be on today Charlie Rosen. He

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Speaker 1: has a special guest from YO. That would be Morissameyer executive. Yeah,

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Speaker 1: who shares her up that one percent? Meyer sent on

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Speaker 1: the Charlie Rose Show that she hopes to maintain her

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Speaker 1: job even if the web portal change his hands. Yeah,

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Speaker 1: who is considering a sale and break up along with

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Speaker 1: other options. Williams Companies up three percent. The natural gas

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Speaker 1: pipeline owners affiliate Williams Partners agreed to work on a

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Speaker 1: deep water project off the Louisiana Coast. Williams Partners signed

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Speaker 1: an agreement with Rold Dutch Shell in the next sen

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Speaker 1: unit of China. Now Williams fell eleven and a half

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Speaker 1: percent yesterday after a dispute with would be buyer Energy

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Speaker 1: Transfer Equity Service over refinancing. Now Aulta Salon, Cosmetics and

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Speaker 1: Fragrance up thirteen percent. The beauty shop owners fiscal fourth

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Speaker 1: quarter owners and sales beat analyst average eesthmates in the

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Speaker 1: Bloomberg survey. Alta's first quarter forecasts or past projections as

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Speaker 1: well some analyst calls of outside man take up four

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Speaker 1: and a half percent. The security software maker was raised

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Speaker 1: the equivalent of buy from holding RBC Capital Markets Hurts

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Speaker 1: Global Holdings up ten percent. The car rental company was

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Speaker 1: raised the equivalent of buy from sell at Morgan Stanley DATABA.

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Speaker 1: Bloomberg shows Morgan Stanley was the only firm to recommend

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Speaker 1: selling the stock. Noble Corp, on the other hand, down

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Speaker 1: three percent. The oil driller was cut to sell or

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Speaker 1: an equivalent at Goldman, Sacks and Piper Jaffrey. In speaking

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Speaker 1: of Goldman UH, they raised ratings on a couple of

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Speaker 1: energy producers to buy from neutral. One of them Carrizo

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Speaker 1: Oil and Gas ticker on that one c r z

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Speaker 1: OH the stocks of five and a half percent, an

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Speaker 1: Oasis Petroleum UH taker o A S up four percent,

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Speaker 1: Finnisar ticker f n SR fourteen and a half percent.

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Speaker 1: The five optic equipment makers profit forecast with the fiscal

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Speaker 1: fourth quarter top Destmates revenue may also be higher than

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Speaker 1: analysts expected. And one more for your time, Jenesco taker

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Speaker 1: g c O down eight and a half percent. The

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Speaker 1: footwear makers fourth quarter earnings and revenue came up short

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Speaker 1: of analysts estimates, and Jennessco's profit forecast for this year

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Speaker 1: was also a disappointed David Wilson, thank you so much.

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Speaker 1: If you are lucky, you get to put together a

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Speaker 1: team including Christopher Main, Eric Lee, akashtos Adriana notas Willie Hugison,

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Speaker 1: our guest Anthony u n and they have the privilege

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Speaker 1: of working with one Edward Elmore's and Seth Climate. This

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Speaker 1: would be City Group Commodities, City Group Hydrocarbons and dr

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Speaker 1: Un out of Penn joins US right now, Anthony, good morning,

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Speaker 1: good morning, Thanks for having me. What is the number

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Speaker 1: one thing you will read about and think about this

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Speaker 1: weekend in oil and guests? What's the mystery for you

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Speaker 1: right now? The mystery right now is UH where storage

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Speaker 1: and production would be for oil side, because we are

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Speaker 1: looking at a situation where you cannot really observe production,

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Speaker 1: but you can observe through UH storage levels. And there's

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Speaker 1: been a lot of talk about you know, speculation, but

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Speaker 1: where production is what not? UH is all talk and

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Speaker 1: actual data won't see it for you know, a couple

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Speaker 1: of months at least, so storage is actually really you know,

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Speaker 1: thinking about where we are head of is your tendency

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Speaker 1: that we are overestimating our productive capacity? Um? In fact

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Speaker 1: right now I think it's kind of mixed right now.

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Speaker 1: Historically people kind of overestimate the productive capacity, but the

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Speaker 1: now almost people are trying to look for you know,

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Speaker 1: all sorts of the clients here and there and almost

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Speaker 1: trying to think about there might be more limitation to

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Speaker 1: where things quickly. What's UM, what's the difference we we

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Speaker 1: talked so much about oil, what's the difference between oil

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Speaker 1: and gas in terms of what we can know about it.

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Speaker 1: And when I'm thinking when you when you talk about

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Speaker 1: storage and we don't really know you know, all the details,

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Speaker 1: how do we think about natural gas? I think we

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Speaker 1: think about natural gas is kind of like give you

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Speaker 1: think about kind of quant trading of energy in that

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Speaker 1: UM there are a lot of data available UM and

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Speaker 1: so there's an arms race within the sector about how

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Speaker 1: to model UH production demand. And it's also storage and

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Speaker 1: what that means that we pay attention a lot of

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Speaker 1: attention to where storage would be because the ultimate storage

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Speaker 1: market within commodities is actually natural gas because there there's

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Speaker 1: only effectively one way to storage to store gas, which

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Speaker 1: is in a actual gas field, rather than for example,

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Speaker 1: oil or metals, which is much easier to find alternative

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Speaker 1: forms of storage locations. And that storage constraint on the

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Speaker 1: gas side really to tates where prices could be. And

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Speaker 1: there's where you know, not only people know a lot

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Speaker 1: of data about the fundamentals because it's halt fair high frequency.

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Speaker 1: But going forward, what's your view on let's say oil

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Speaker 1: and gas and what dictate web production and storage? And

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Speaker 1: put your net guests chart out with the trend uh

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Speaker 1: doctor you and from two thousand eight on downward, we're

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Speaker 1: one standard deviation through the trend heading towards two. Do

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Speaker 1: you just assume natural gas is in free flaw and

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Speaker 1: it's the buy of a lifetime twenty cents below here? Um,

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Speaker 1: I think that on natural gas a lot of things

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Speaker 1: that driven by fundamentals in the falling sense because of

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Speaker 1: the storage constrained and so therefore, even though you see

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Speaker 1: gas private phone phone following, but then we are um

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Speaker 1: at a point where it's just not profitable to drill

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Speaker 1: near wells, and it looks like we might be coming

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Speaker 1: up to a very shortage situation on the production zie,

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Speaker 1: especially two thousand and seventeen. And so therefore, right now,

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Speaker 1: if one is not a very short term trader, than

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Speaker 1: natural gas is something that one should be looking at

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Speaker 1: very closely. What what do you look at when you

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Speaker 1: look at the numbers I look at basically, if there

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Speaker 1: are two numbers that look at very simple, is there

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Speaker 1: two numbers to look at? One is the weekly storage number,

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Speaker 1: basically gauging whether it's the markets is in severe oversupply

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Speaker 1: or under supply. But the second number, which is very important,

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Speaker 1: is actually something callity end of October storage numbers. Because

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Speaker 1: if that number, if that projected number is too high,

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Speaker 1: then the market should sell gas because there's too much

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Speaker 1: gas available, and you to force the price down to

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Speaker 1: aid rational rationalized than supply, or bring up demand. But

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Speaker 1: then if the storage number at the end of October

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Speaker 1: is too low, then you want to raise your price

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Speaker 1: so that you motivate a little more supply, but also

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Speaker 1: killed after man. And these days the market has been

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Speaker 1: looking whether the end of October storage would be breaking

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Speaker 1: four thousand billing keeping feet in storage at it below

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Speaker 1: or above? Is that? Is that how much we need um,

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Speaker 1: that's how much we need in general over the last

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Speaker 1: few years. That's where the market targets. And one additional

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Speaker 1: thing what's happening in two seventeen is that we might

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Speaker 1: get to a so called comfortable level of storage by

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Speaker 1: the end of this October, but then next year because

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Speaker 1: of an expected production short for versus expectation, so therefore

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Speaker 1: we might see a very low storage number next year.

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Speaker 1: So that's precis next year. But in thirty seconds here

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Speaker 1: and we'll have you back, dr un Can you reaffirm

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Speaker 1: Edward Morris's caution about a Catharsis or clearing of oil

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Speaker 1: markets at a much lower price um, sure, so in

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Speaker 1: the short term because of the physical our constraints on

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Speaker 1: the storage probably whatnot and over supplied environment. So therefore

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Speaker 1: we're still um sort of more cautious in the very

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Speaker 1: short term within the disparting next quarter before a balancing

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Speaker 1: of the market that happened later this year. Are four

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Speaker 1: as well as you wouldn't wonderful. Let's have him Canston

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Speaker 1: and you win with us with City Group, working with

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Speaker 1: Everard Morris and Seth Climate as well. We'll come back

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Speaker 1: and talk about commodities and his good work. He's he

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Speaker 1: does minutia work on rig count. Folks, when you hear

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Speaker 1: people like me and the media and the rig count today,

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Speaker 1: you went down h it is it is sophomore compared

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Speaker 1: to how the pros parts what riggs are doing. Features

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Speaker 1: up nineteen to Features fifty three, the euro one eleven seventeen,

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Speaker 1: I'm Not a Chicken with Michael bar and get the

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Speaker 1: latest world in national headlines, Mike Tom, thank you very much.

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Speaker 1: Republican presidential candidate Donald Trump and Tea is getting the

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Speaker 1: endorsement from one time rival Ben Carson. Trump made the

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Speaker 1: announcement during last night's debate in Miami. Carson will make

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Speaker 1: it official this morning. Funeral services take place today for

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Speaker 1: former First Lady Nancy Reagan. The guest list will include

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Speaker 1: hundreds of friends from Hollywood and Washington. Four of the

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Speaker 1: five living First Ladies and relatives of every president dating

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Speaker 1: to John Kennedy will attend the services at the Reagan

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Speaker 1: Presidential Library in Smi Valley, California. Time is running out

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Speaker 1: for negotiations between New Jersey Transit and its rail workers unions.

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Speaker 1: Sunday morning strike deadline has been set by the union.

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Speaker 1: Global News twenty four hours a day, powered by our

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Speaker 1: twenty four hundred journalists more than a hundred fifty news

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Speaker 1: bureaus from around the world. Michael bar Tom and Michael

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Speaker 1: bar thanks so much. Oil forty fifty seven of barrel

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Speaker 1: of seventy two cents. It's within the vicinity of an

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Speaker 1: American price a forty dollars a barrel Brent forty point

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Speaker 1: six five. That's about a two dollar difference with Anton

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Speaker 1: U went a city group. This is Bloomberg Surveillance Market Drivers,

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Speaker 1: brought to you by Mercedes Benz. The this point you

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Speaker 1: Mercedes bens Tri State Dealers welcome Spring with the limit

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Speaker 1: time offers on selected models, global business news twenty four

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Speaker 1: mobile and on your radio is a Bloomberg Business Flash.

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Speaker 1: And I'm Karen Moscow. This updates brought to you by

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Speaker 1: Interactive Brokers and CME Group. If you're looking for global

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Speaker 1: futures contracts with low trading costs, look no further. Interactive

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Speaker 1: Brokers is the industry leader. Learn more at Interactive Brokers

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Speaker 1: dot com slash, c m E Group US dot Index

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Speaker 1: futures are higher this morning and indications stocks will trim

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Speaker 1: their first weekly dropping four and this is investors reassess

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Speaker 1: stimulus measures in Europe. We check the markets every fifteen

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Speaker 1: minutes throughout the trading day on bloom Burg SNP E

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Speaker 1: mini futures up about eighteen points and now E mini

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Speaker 1: futures have a hundred thirty nine NASA DOCU. Many futures

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Speaker 1: have forty six The decks in Germany's up three point

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Speaker 1: three percent. Ten your treasury that'll change yield one point

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Speaker 1: nine three percent yield on the two year point nine

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Speaker 1: four percent. Now I'm x S Crude oil have two

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Speaker 1: percent or seventy four cents to thirty eight fifty eight

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Speaker 1: of barrel comics goal, there's down four ten percent or

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Speaker 1: five dollars to twelve sixty the euro a dollar eleven

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Speaker 1: twenty two and again one thirteen point six one. That's

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Speaker 1: a bloomberg business flash, Tom and Mike Churn, thanks so much,

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Speaker 1: any number of ways to go with Anthony U and

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Speaker 1: a city group as we look at hydrocarbons energy that

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Speaker 1: guests in general, Anthony, your colleagues in crime note to

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Speaker 1: PERU kept their policy rate at four and a quarter percent.

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Speaker 1: This is city group economics, UH saying it was a

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Speaker 1: bit of a surprise to the markets. Is this the

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Speaker 1: basic commodity turnaround play? Are things so interdependent that if

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Speaker 1: we finally find bottom and we have a commodity turnaround

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Speaker 1: as you alluded to minutes ago, that it's basically the

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Speaker 1: buy of a decade? Or is it towards a range

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Speaker 1: brown a range bound flatness when you look at all commodities,

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Speaker 1: I think I think that in terms of buying UH,

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Speaker 1: there certainly is is a very opportunity, but there are

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Speaker 1: still a lot of risks that's embedded in the market

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Speaker 1: because if we look at historically, UM, the same factors

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Speaker 1: that driving to come markets, which is shale production on

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Speaker 1: shell gas, shale oil right now, on driving the oil side, UM,

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Speaker 1: it is possible that this year you might be seeing

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Speaker 1: a potential disappointment because last year, remember exactly the same time,

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Speaker 1: there was a lot of optimism about prices rising on

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Speaker 1: you know, a potential balancing in the market. Right, so

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Speaker 1: then that did not come through last year. This year

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Speaker 1: at the prospect of a balancing at the end this

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Speaker 1: year is much better. But then one also has to

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Speaker 1: prepare for a potential risk on the downside. And so

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Speaker 1: then the reason is if you look at company guidance

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Speaker 1: on production, especially in the US, UM they're looking for

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Speaker 1: a you know, production declined about at least on the

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Speaker 1: d n P side, might be about you know, stract

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Speaker 1: to seven percent declient. But companies tend to over um

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Speaker 1: perform the guidance as world's particular in production historically, So

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Speaker 1: what if they do over um over performers the guidance

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Speaker 1: right So, um, yes, right now it is a very

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Speaker 1: good the end of the year balance looks very good.

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Speaker 1: It's just that one would have to be mindful of

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Speaker 1: the potential downside. What is the break even point in

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Speaker 1: natural gas? UM? How far? How far would we be

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Speaker 1: from that UM. In fact, it should be somewhere around

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Speaker 1: about two dollars and fifty cents to about three dollars

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Speaker 1: UH for mbtu. The reason is you're kind of looking

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Speaker 1: at where the cost of production would be including drilling,

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Speaker 1: racking UH in the US Northeast in the Pennsylvania, Ohio

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Speaker 1: and West Virginia region, as well as down the Gulf

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Speaker 1: coast such as Louisiana's Henzel shale, and how likely are

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Speaker 1: we to get back to that. We're seeing maybe the

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Speaker 1: magic of low prices work in the oil industry. What

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Speaker 1: about on the gas side. UM. On the gas side,

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Speaker 1: in fact, if you look at we think that in

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Speaker 1: seventeen UM because of the very low prices of oil

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Speaker 1: and gas right now in twenty sixteen, so companies are

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Speaker 1: not investing UH, way under investing for production and so

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Speaker 1: in ten we might not see enough production growth in

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Speaker 1: seventeen when you have, you know, expert to Mexico exports

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Speaker 1: via l en g F gas, that's going to boost

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Speaker 1: demand substantially, which requires much more production growth than what

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Speaker 1: we are expecting looking at whether it can with it

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Speaker 1: in the term that let's to you, what's your terminal

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Speaker 1: value on oil, what's your terminal value on that gas? UM.

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Speaker 1: I think that for on the oil side is we're

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Speaker 1: trying to find about where the cost client look right,

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Speaker 1: and so therefore it is possible for that uh so

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Speaker 1: called a long run price could be you know, in

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Speaker 1: the fifties or sixty dollar runs. And on the gas side, UM,

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Speaker 1: it could be you know, somewhere around the three dollar.

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Speaker 1: It could be three you know. Ye, so you're going

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Speaker 1: to double. You're talking to double on that gas. That's right,

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Speaker 1: because if we think about UM right now in terms

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Speaker 1: of prices, where we are looking at whether it's sufficient

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Speaker 1: to motivate production. Over the last few years, high oil

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Speaker 1: prices definitely helped production growth because of something called associated

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Speaker 1: gas production comes from oil wells, because when one drill

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Speaker 1: oil well, some gas would come out and some oil

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Speaker 1: wells and more gas and others. And this associated gas

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Speaker 1: production with belief was responsible for as much as off

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Speaker 1: the production growth between two thousand and eleven two thousands

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Speaker 1: fifteen on the gas side. So therefore, if you lose

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Speaker 1: that then you have to very much dependent on the

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Speaker 1: US northeast. The proposon dollars you like a ship. But

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Speaker 1: there are also companies over there that are not in

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Speaker 1: the best financial form. So even the places were to

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Speaker 1: rise through even two dollars or two in the low

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Speaker 1: two dollar range, now I'm talking about dollars per MMBT gap,

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Speaker 1: then some of these companies may not even want to

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Speaker 1: produce more because they do not have fining or appetitular

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Speaker 1: This has been wonderful answering when thank you so much.

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Speaker 1: Working with Edward Morris. It's City Group with a more

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Speaker 1: granular view on Mike. That was fascinating. There's some terminal

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Speaker 1: values that are up there. Yeah, we we're not quite

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Speaker 1: there yet. Mike and I have learned never to predict oil.

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Speaker 1: There's a million quots out there with all kinds of

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Speaker 1: formulas trying to figure. I'm not gonna guess. That's fascinating.

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Speaker 1: We protected don't call me up for his rig count research.

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Speaker 1: It's brilliant. And contact your city group associate, your branch

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Speaker 1: of City group. Maybe I'm playing around natural gas right

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Speaker 1: now one to five, a little bit of a lift

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Speaker 1: of the it's gone off the last few days, oddly

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Speaker 1: because it's gotten warmer. Well, there's you know, it's undeniable.

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Speaker 1: There's a come out of the lift. Excuse me, you

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Speaker 1: see that with West Texas Intermediate thirty eight fifty six

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Speaker 1: up seventy three sets a little bit higher earlier in

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Speaker 1: the city. Getting there oft of we need to get

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Speaker 1: the market open. It's Bloomberg Surveillance the Bloomberg Schime Report,

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00:20:07,320 --> 00:20:08,880
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Speaker 1: to the Country series except Channel one ninety and around

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Speaker 1: This is Bloomberg Surveillance. He good morning, I'm coming Moscow

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Speaker 1: along with Tom Keene and Michael McKee and the opening

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Speaker 1: Dale is brought to you by s C. I Imagine

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Speaker 1: a global operating platform designed to deliver a differentiated and

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00:20:54,040 --> 00:20:57,800
Speaker 1: technologically rich investor experience. Find out how see I can

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00:20:57,840 --> 00:21:01,440
Speaker 1: help you succeed at se I c calm slash imagine

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Speaker 1: songs are higher at the open. The SNP five hundred

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Speaker 1: six tenths percent or twelve points to two thousand two.

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Speaker 1: The Dow Jones Industrial average is up half a percent

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Speaker 1: or seven seventy nine points to seventeen thousand, seventy four.

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Speaker 1: Then as to accept one percent or forty eight points

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Speaker 1: to forty seven ten ten, your treasury little change yield

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Speaker 1: one point nine three percent yield on the two year

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Speaker 1: point nine four percent. Niemex screwed oil up two point

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Speaker 1: three percent or eighty six cents to thirty eight seventy

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Speaker 1: of barrel comics gold is down four tenths percent or

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Speaker 1: five dollar seventy cents to twelve sixty six, the euro

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Speaker 1: at dollar eleven nineteen, and the yen one thirteen point

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Speaker 1: six four. Tom and Mike Caramesco thank you very much.

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Speaker 1: Well those of you who listen to this program regular

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Speaker 1: leak and you know who you are. Uh No, that

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Speaker 1: we have spent a lot of time talking about productivity

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Speaker 1: and why it is so low and what the consequences

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Speaker 1: for the economy and for standards of living are. One

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Speaker 1: of the questions that continually comes up, is are we

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Speaker 1: mismeasuring productivity because we're in an age of rapidly changing technology.

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Speaker 1: Chad Severson is a professor at the University of Chicago's

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Speaker 1: Booth School of Business, and he's done an unusual thing.

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Speaker 1: He's looked at the data and you find Chicago can

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Speaker 1: do that in a in a new in a new paper.

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Speaker 1: The data do not support the idea that we are

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Speaker 1: mismeasuring productivity. Yes, that seems to be the case in

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Speaker 1: several different directions. Well, tell us about what you found.

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Speaker 1: So I looked at a few things. Um first, is

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Speaker 1: what you see across several a couple dozen countries is

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Speaker 1: the pattern is the same. So there was a productivity

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Speaker 1: slow down that happened right around two thousand four. And uh,

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Speaker 1: there is no relationship between the size of the productivity

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Speaker 1: slow down in a country and how I T intensive.

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Speaker 1: That country's economy is weather measured on the production side,

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Speaker 1: which is, you know what fraction of the economy is

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Speaker 1: accounted for by production of I T related goods or

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Speaker 1: on the consumption side, so it's measured by for example,

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Speaker 1: broadband penetration. You you just don't see a relationship between

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Speaker 1: technology and the size of the productivity slowdown, which is

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Speaker 1: exactly what you would expect if if mismeasurement is causing

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Speaker 1: the the productivity slowed, the measured productivity slowdown in that case.

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Speaker 1: And then you can look at things a couple other

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Speaker 1: ways too. If you people have tried to go measure

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Speaker 1: UH in different settings, you know how much uh, the

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Speaker 1: how much people view the benefits from from information technologies,

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Speaker 1: things like basically trying to value what Facebook and Google

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Speaker 1: and all that are worth to people. And even if

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Speaker 1: you take the high end of those numbers, you can't

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Speaker 1: explain anywhere near the amount output that's been lost by

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Speaker 1: the productivity slow I mean, that's that's a useful thing

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Speaker 1: to remember here. What we're trying to explain is about

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Speaker 1: three trillion dollars a year of missing output. So if

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Speaker 1: you're gonna say, look, we're just productivity slow down only

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Speaker 1: because we're mismeasuring it, that's kind of the targeting you

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Speaker 1: should have in mind. You you your work is first

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Speaker 1: of all, we're thrilled to have you on and and

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Speaker 1: the the again looking at the data is to be

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Speaker 1: kind of helpful. What's so powerful about your work? Professor?

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Speaker 1: As you go back when Krasner was in Chicago seven,

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Speaker 1: when John Kendrick did his study on electrification, and the

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Speaker 1: bottom line is it's just history repeating itself, right, That's right.

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Speaker 1: So if you look at what happened during the electrification

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Speaker 1: the portable power, you see a strikingly similar pattern and

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Speaker 1: productivity growth. There was a slow period of about a

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Speaker 1: quarter century. People. Well, we're saying, well, we have these

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Speaker 1: great new technologies. Whereas the productivity then it's sped up,

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Speaker 1: and that slowed down again. Now we're waiting for that

404
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Speaker 1: next speed up that has not happened yet. We're in

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Speaker 1: that's we're in the bending slowdown since two thousand and four.

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Speaker 1: This is similar to what happened with the adoption of electricity.

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Speaker 1: But eventually we saw electricity really contribute to productivity. Games.

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Speaker 1: That's true. There was a second wave of productivity growth

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Speaker 1: with electrification. Uh, we're waiting for that with with I

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Speaker 1: T and the technologies we have the day. But as

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Speaker 1: hopeful as some folks are that it's happened and we're

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Speaker 1: just not measuring it. Again, like I said, it's just

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Speaker 1: when you take a closer look at the data, does

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Speaker 1: not seem to be there yet. We've had a lot

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Speaker 1: of discussions on this. Of course, it is the national

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Speaker 1: question and professor, if you're just joining us, folks, this

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Speaker 1: is an important discussion on productivity with all with Mario

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Speaker 1: drag yesterday, Chad siverson Chicago booth with important research um

419
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Speaker 1: capital dynamics, labor dynamics. Dominique Constant at Deutsche Bank is adamant.

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Speaker 1: The investment is actually pretty good. It's just there's a

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Speaker 1: wall labor coming in creating a lot of inefficiencies. Give

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Speaker 1: us the dynamic right now away from the I T

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Speaker 1: analysis of what capital and what labor are doing. Well,

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Speaker 1: it's certainly true that you know, if you invest more

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Speaker 1: and for a given sized labor force, you should expect

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Speaker 1: labor productivity to go up. And by a lot of metrics, uh,

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Speaker 1: capital investment seems to have been lagging for several years.

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Speaker 1: We seem to be behind on on housing investment for

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Speaker 1: perhaps obvious reasons. On public investment, there's just been maybe

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Speaker 1: a lack of putting capital into place. Now we've got

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Speaker 1: new workers coming into the economy or back into the

432
00:26:54,160 --> 00:26:57,080
Speaker 1: labor force. Sorry, all those things are going to tend

433
00:26:57,119 --> 00:26:59,960
Speaker 1: to lean against productivity in the short run at least.

434
00:27:01,080 --> 00:27:04,359
Speaker 1: But then again, you know, this slowdown started even before

435
00:27:04,840 --> 00:27:07,840
Speaker 1: the crisis, so we're talking about not just short run trends.

436
00:27:07,920 --> 00:27:10,280
Speaker 1: We're talking about longer run trends here that are operating

437
00:27:10,359 --> 00:27:16,760
Speaker 1: at the same time. I look at productivity then, and

438
00:27:16,880 --> 00:27:19,400
Speaker 1: you know, in every textbook, and this is true Chicago

439
00:27:19,480 --> 00:27:22,520
Speaker 1: or any other school, there's this thing called total total

440
00:27:22,600 --> 00:27:26,280
Speaker 1: factor productivity. It's basically, folks, the noise off the right

441
00:27:26,320 --> 00:27:29,320
Speaker 1: hand side of the equation. How how are we doing

442
00:27:29,440 --> 00:27:32,200
Speaker 1: with our technological progress? How do you fold that in

443
00:27:32,640 --> 00:27:37,040
Speaker 1: to this equal comparison of electrification and I t yeah,

444
00:27:37,119 --> 00:27:40,879
Speaker 1: that's a great question. So basically, labor productivity comes from

445
00:27:40,960 --> 00:27:43,600
Speaker 1: two things. One is capital investment, which we just talked

446
00:27:43,640 --> 00:27:47,000
Speaker 1: about in the second thing is total factor productivity. Both

447
00:27:47,080 --> 00:27:50,440
Speaker 1: of those have been slow during this labor productivity slowdown.

448
00:27:50,560 --> 00:27:53,879
Speaker 1: So we were just mentioning that capital investment spent on

449
00:27:54,000 --> 00:27:58,160
Speaker 1: the slow side. But it's not just that total factor productivity,

450
00:27:58,240 --> 00:28:00,919
Speaker 1: which is kind of you know, for people to imagine

451
00:28:00,960 --> 00:28:04,800
Speaker 1: what's going on. It's it's technological progress for lack of

452
00:28:04,880 --> 00:28:06,880
Speaker 1: a better term. You know, the more up what you're

453
00:28:06,880 --> 00:28:08,840
Speaker 1: going to get from the same amount of inputs that

454
00:28:09,080 --> 00:28:13,120
Speaker 1: is also slowed with similar timing to the labor productivity

455
00:28:13,160 --> 00:28:15,520
Speaker 1: slow down. So it seems that both of these things

456
00:28:16,200 --> 00:28:20,520
Speaker 1: seemed to be driving the slowdown. It was the expansion

457
00:28:20,880 --> 00:28:24,440
Speaker 1: of total factor productivity in the in the late nineties

458
00:28:24,480 --> 00:28:28,640
Speaker 1: that got us the last productivity boost from thousand and four.

459
00:28:29,200 --> 00:28:31,720
Speaker 1: The same thing happened with electrification. A lot of that

460
00:28:31,920 --> 00:28:35,760
Speaker 1: was total factor productivity as well. Chad Saverson is with

461
00:28:35,840 --> 00:28:40,120
Speaker 1: us from the Chicago boost. Look, continue our conversation productivity

462
00:28:40,160 --> 00:28:43,160
Speaker 1: and uh, whether or not our bosses are really measuring

463
00:28:43,200 --> 00:28:46,240
Speaker 1: what Tom and I effectively? Well, we know we're non productive.

464
00:28:46,320 --> 00:28:49,880
Speaker 1: I mean, Michael Barr is the only reason productivity advances

465
00:28:50,000 --> 00:28:52,840
Speaker 1: at Bloomberg's surveillance. I'm going to keep the illusion going.

466
00:28:52,960 --> 00:28:55,480
Speaker 1: Keep the illusions. They're very good. It's very British of you,

467
00:28:55,880 --> 00:28:59,320
Speaker 1: Michael Barr with the money illusion. Segue segui there into

468
00:28:59,400 --> 00:29:03,600
Speaker 1: product activity. Seriously, folks, productivity what they heat, whether we

469
00:29:03,720 --> 00:29:07,200
Speaker 1: heard it from Chairman Greenspan or Chad c Iberson, the

470
00:29:07,520 --> 00:29:12,640
Speaker 1: heat of mystery an analysis right now on this strange

471
00:29:12,800 --> 00:29:16,200
Speaker 1: economic soup is like I've never seen that the mystery

472
00:29:16,600 --> 00:29:20,000
Speaker 1: of where are we with the nation's efficiency is really

473
00:29:20,120 --> 00:29:22,760
Speaker 1: front and Center. The Dow likes to be efficient right now.

474
00:29:22,840 --> 00:29:25,720
Speaker 1: Up a hundred and sixty points seventeen thousand, one hundred

475
00:29:25,760 --> 00:29:27,720
Speaker 1: and fifty three on the Dow. The vix in a

476
00:29:27,800 --> 00:29:32,360
Speaker 1: full stick seventeen point zero nine. Good news risk on

477
00:29:32,720 --> 00:29:39,440
Speaker 1: for the markets. Now, let's check in with Michael Barr.

478
00:29:39,640 --> 00:29:42,200
Speaker 1: Got the latest world initial hid min Tom, thank you

479
00:29:42,320 --> 00:29:45,240
Speaker 1: very much. Ben Carson made it official. The former Republican

480
00:29:45,320 --> 00:29:49,000
Speaker 1: presidential candidate announced his support this morning for Donald Trump.

481
00:29:49,200 --> 00:29:52,320
Speaker 1: They're two different Donald Trumps. There's the one you see

482
00:29:52,440 --> 00:29:57,760
Speaker 1: on the stage and there's the one who's very cerebral.

483
00:29:58,600 --> 00:30:02,360
Speaker 1: Sits there and consider his things very carefully. Carson says

484
00:30:02,480 --> 00:30:05,600
Speaker 1: he has buried the hatchet with Trump. Funeral services will

485
00:30:05,600 --> 00:30:09,160
Speaker 1: begin later today for former First Lady Nancy Reagan. Four

486
00:30:09,240 --> 00:30:11,680
Speaker 1: of the five living First Ladies will attend the funeral

487
00:30:11,760 --> 00:30:14,920
Speaker 1: and at the Reagan Presidential Library and Seni Valley, California.

488
00:30:15,240 --> 00:30:19,520
Speaker 1: About a thousand guests seven invited, including former President George W. Bush.

489
00:30:20,160 --> 00:30:22,720
Speaker 1: It would be the first New Jersey transit strike in

490
00:30:22,800 --> 00:30:25,800
Speaker 1: three decades if they do not come to an agreement soon.

491
00:30:26,360 --> 00:30:29,360
Speaker 1: Union workers were one of the busiest commuter railroads have

492
00:30:29,520 --> 00:30:33,160
Speaker 1: set an early Sunday deadline a strike with Strand tens

493
00:30:33,200 --> 00:30:36,200
Speaker 1: of thousands of commuters in and out of Manhattan, New York,

494
00:30:36,760 --> 00:30:40,160
Speaker 1: and some traffic experts say a work stoppage could cause

495
00:30:40,360 --> 00:30:44,800
Speaker 1: twenty mile backups at the Lincoln and Holland Tunnels. Global

496
00:30:44,840 --> 00:30:47,280
Speaker 1: News twenty four hours a day, powered by hours twenty

497
00:30:47,280 --> 00:30:50,080
Speaker 1: four hundred journalists more than a hundred fifty news bureaus

498
00:30:50,120 --> 00:30:52,360
Speaker 1: from around the world. I'm like Michael By, that's so important.

499
00:30:52,400 --> 00:30:55,120
Speaker 1: We gotta sum that up. Likelihood Monday morning. Oh, it's

500
00:30:55,160 --> 00:30:57,920
Speaker 1: gonna be mad because the New Jersey Transit officials is

501
00:30:58,000 --> 00:31:00,400
Speaker 1: saying they can only get four out of ten transit

502
00:31:00,680 --> 00:31:04,200
Speaker 1: people who take the railways to get in and out

503
00:31:04,240 --> 00:31:06,880
Speaker 1: on the bus. I've cut to the chase. Starting Sunday,

504
00:31:07,040 --> 00:31:09,800
Speaker 1: Bloomberg Radio for all of you in Bloomberg leven THROEO,

505
00:31:09,880 --> 00:31:11,960
Speaker 1: New York, and for that matter, around the nation that

506
00:31:12,000 --> 00:31:15,160
Speaker 1: would like to follow us an important UH moment for

507
00:31:15,400 --> 00:31:21,480
Speaker 1: New Jersey. Look for that Monday morning. Bloomberg Surveillance Bloomberg

508
00:31:21,480 --> 00:31:23,920
Speaker 1: Surveillans brought to by Landover Adventure as yours for the taking.

509
00:31:24,000 --> 00:31:26,120
Speaker 1: Visit Landover tri State dot Com for special LEAs and

510
00:31:26,240 --> 00:31:39,360
Speaker 1: financing offers landover, above and beyond. Gloomberg Business News twenty

511
00:31:39,400 --> 00:31:42,360
Speaker 1: four hours a day at Bloomberg dot com, the Radio

512
00:31:42,440 --> 00:31:45,240
Speaker 1: plus Mobile act and on your radio. This is a

513
00:31:45,320 --> 00:31:49,680
Speaker 1: Bloomberg Business Flash and I'm Karen Moscow and this updates

514
00:31:49,680 --> 00:31:52,200
Speaker 1: brought to you by c I T. From transportation to

515
00:31:52,280 --> 00:31:55,800
Speaker 1: healthcare to manufacturing. C I T offers commercial lending, leasing,

516
00:31:56,080 --> 00:31:59,760
Speaker 1: and treasury management services are small and middle market businesses.

517
00:32:00,200 --> 00:32:02,560
Speaker 1: Learn more at c I T dot com put knowledge

518
00:32:02,720 --> 00:32:07,040
Speaker 1: to work. US stocks are rising this morning, joining our

519
00:32:07,080 --> 00:32:10,640
Speaker 1: global rally boys to erase a weekly decline as investors

520
00:32:10,720 --> 00:32:14,000
Speaker 1: reassess stimulus measures in Europe. And we check the markets

521
00:32:14,040 --> 00:32:17,160
Speaker 1: every fifteen minutes throughout the trading day on Bloomberg SNP

522
00:32:17,320 --> 00:32:20,120
Speaker 1: five hundred up one percent of nineteen points to two

523
00:32:20,160 --> 00:32:23,320
Speaker 1: thousand nine down, Jones Industrial average of one percent or

524
00:32:23,400 --> 00:32:26,160
Speaker 1: one hundred seventy three points to seventeen thousand, one hundred

525
00:32:26,240 --> 00:32:28,280
Speaker 1: sixty eight and then as to acts at one point

526
00:32:28,320 --> 00:32:31,320
Speaker 1: one percent or fifty points to forty seven twelve ten

527
00:32:31,400 --> 00:32:33,840
Speaker 1: year treasury down three thirty seconds. The yield one point

528
00:32:33,920 --> 00:32:36,120
Speaker 1: nine four percent yield on the two year point nine

529
00:32:36,160 --> 00:32:39,240
Speaker 1: four percent NIMEX screwed oil up two point six percent

530
00:32:39,360 --> 00:32:42,280
Speaker 1: or ninety six cents to thirty eighty a barrel. Comex

531
00:32:42,400 --> 00:32:44,760
Speaker 1: gold is down three ten percent or three dollars eighty

532
00:32:44,840 --> 00:32:47,800
Speaker 1: cents to twelve sixty nine. Announced the Euro at dollar

533
00:32:47,880 --> 00:32:51,040
Speaker 1: eleven thirty six, the en one thirteen point five one.

534
00:32:51,480 --> 00:32:54,240
Speaker 1: That's a Bloomberg business flash, Tom and Mike Charon, thanks

535
00:32:54,280 --> 00:32:56,120
Speaker 1: so much, so much for that. Doom and bloom Ending

536
00:32:56,160 --> 00:32:58,960
Speaker 1: will get to the markets here in about four minutes.

537
00:32:59,040 --> 00:33:02,400
Speaker 1: Right now, we continue with Chad Steverson of Booths Chicago.

538
00:33:03,080 --> 00:33:06,000
Speaker 1: Thrilled to have him on. Professor Steverson, with your good

539
00:33:06,040 --> 00:33:09,320
Speaker 1: work on productivity. I go back fourteen years ago, a

540
00:33:09,400 --> 00:33:13,280
Speaker 1: lifetime ago, to Dale Jorgensen at Harvard and a compendium

541
00:33:13,360 --> 00:33:16,640
Speaker 1: on productivity that I remember as being just Bronian. Stephen

542
00:33:16,680 --> 00:33:19,200
Speaker 1: Older in it and rolled off in the usual victims

543
00:33:19,600 --> 00:33:24,400
Speaker 1: Martin Neal Bailey, The New Economy post Mortemer second wind.

544
00:33:24,960 --> 00:33:28,520
Speaker 1: Let's move forward fourteen years from two thousand two. Do

545
00:33:28,640 --> 00:33:31,240
Speaker 1: we have a new economy now? Or is that just

546
00:33:31,440 --> 00:33:34,360
Speaker 1: from another time and place? Well, you know that was

547
00:33:34,520 --> 00:33:37,880
Speaker 1: written sort of at the peak of the I T drift.

548
00:33:38,080 --> 00:33:44,120
Speaker 1: Thank you productivity, boom, and you know sure that turned

549
00:33:44,200 --> 00:33:47,360
Speaker 1: over the economy. It changed away. A lot of things

550
00:33:47,440 --> 00:33:51,440
Speaker 1: are done, had broad effects throughout the economy, and that's

551
00:33:51,440 --> 00:33:55,080
Speaker 1: why productivity growth it grew so much at that period,

552
00:33:55,160 --> 00:33:59,720
Speaker 1: just because those kind of technologies greatly affected so much

553
00:33:59,760 --> 00:34:03,520
Speaker 1: of of how things are done across many sectors. But

554
00:34:03,840 --> 00:34:07,000
Speaker 1: whatever was going on then seems to have slowed and

555
00:34:07,120 --> 00:34:10,160
Speaker 1: we haven't figured out how to get that second kick yet.

556
00:34:10,680 --> 00:34:14,360
Speaker 1: And that's sort of you know, this debate now is

557
00:34:14,560 --> 00:34:16,719
Speaker 1: some people are saying, oh, yes we have and it's

558
00:34:16,800 --> 00:34:20,000
Speaker 1: just not being measured. Um My, look at the data,

559
00:34:20,080 --> 00:34:22,759
Speaker 1: and some work that other people are doing is suggesting no,

560
00:34:23,120 --> 00:34:25,239
Speaker 1: you go drill a little deeper, and it does not

561
00:34:25,480 --> 00:34:28,480
Speaker 1: seem to be just mismeasurement it. It seems to be real.

562
00:34:28,600 --> 00:34:32,000
Speaker 1: We're still waiting for that second wind. Is this the

563
00:34:32,440 --> 00:34:37,000
Speaker 1: Robert Gordon conclusion that we have invented that which can

564
00:34:37,080 --> 00:34:42,680
Speaker 1: really be significant in terms of giving us additional productivity. Well,

565
00:34:42,719 --> 00:34:45,480
Speaker 1: it's it's tied to it, you know. I think Bob's

566
00:34:45,480 --> 00:34:49,560
Speaker 1: stuff would sort of say, there's one wind, we've had

567
00:34:49,640 --> 00:34:52,640
Speaker 1: it and we're done. I'm a little more on the

568
00:34:52,680 --> 00:34:56,520
Speaker 1: optimistic side, in part because of what we saw with electrification,

569
00:34:56,640 --> 00:34:59,759
Speaker 1: where we had two big waves with the gap between them.

570
00:35:00,680 --> 00:35:04,960
Speaker 1: I'm you know, so we know historically technology doesn't just

571
00:35:05,120 --> 00:35:07,120
Speaker 1: have to come once, give what it has and we're

572
00:35:07,160 --> 00:35:09,839
Speaker 1: done with it. It can come in waves. We've had

573
00:35:09,880 --> 00:35:12,560
Speaker 1: one wave with I t we're waiting on that second.

574
00:35:12,800 --> 00:35:14,960
Speaker 1: Doesn't mean it has to happen though, just because it

575
00:35:15,080 --> 00:35:21,000
Speaker 1: did with electrification. But I think we know it can happen. Well,

576
00:35:21,080 --> 00:35:25,920
Speaker 1: what is the most likely outcome in your view? I,

577
00:35:27,280 --> 00:35:29,920
Speaker 1: deep down I'm still an optimist. I mean, you look

578
00:35:30,000 --> 00:35:34,279
Speaker 1: at the potential of some of these technologies, not just

579
00:35:34,680 --> 00:35:38,640
Speaker 1: in tech but biotech and other things that folks are

580
00:35:38,680 --> 00:35:40,840
Speaker 1: working on, and you can imagine a world that is

581
00:35:41,680 --> 00:35:45,200
Speaker 1: that it's very different, with a lot of economic progress,

582
00:35:45,320 --> 00:35:50,080
Speaker 1: a lot of new income. Um, you know, I think

583
00:35:50,520 --> 00:35:53,440
Speaker 1: so I can imagine that, and hey, I would love

584
00:35:53,560 --> 00:35:56,000
Speaker 1: to see it in the data, and I would be

585
00:35:56,080 --> 00:35:59,560
Speaker 1: happy to be told convincingly this is just mismeasurement now

586
00:35:59,680 --> 00:36:02,960
Speaker 1: and we're really already there. But the simple fact is,

587
00:36:03,080 --> 00:36:05,400
Speaker 1: I just don't think that lines up with the evidence. Now,

588
00:36:05,520 --> 00:36:09,560
Speaker 1: we're still waiting at that a year away, five years away,

589
00:36:09,640 --> 00:36:12,880
Speaker 1: ten years away. I couldn't tell you. It's just the facts.

590
00:36:13,080 --> 00:36:18,000
Speaker 1: What's the what's the Stiverson prescription. Forget about getting back

591
00:36:18,040 --> 00:36:20,600
Speaker 1: to the boom productivity. What do we just do to

592
00:36:20,719 --> 00:36:24,760
Speaker 1: not embarrass ourselves as a nation. Yeah, that's a good question.

593
00:36:24,760 --> 00:36:27,439
Speaker 1: I mean, one thing we can do, and there's there's

594
00:36:27,440 --> 00:36:31,239
Speaker 1: some evidence actually that this has gotten worse lately, is

595
00:36:31,320 --> 00:36:36,600
Speaker 1: that you diffuse best practices and best technologies through the

596
00:36:36,719 --> 00:36:40,560
Speaker 1: economy more quickly. So you know, you can imagine productivity

597
00:36:40,600 --> 00:36:43,360
Speaker 1: goes comes from two sources. One is that we just

598
00:36:43,560 --> 00:36:45,880
Speaker 1: figure out new and better ways to do things. But

599
00:36:46,040 --> 00:36:49,560
Speaker 1: the other is that the speed at which people adopt

600
00:36:49,640 --> 00:36:53,440
Speaker 1: these states grows. And it looks there's some away. C

601
00:36:53,600 --> 00:36:55,560
Speaker 1: D has a really nice paper about a year ago

602
00:36:56,320 --> 00:37:00,040
Speaker 1: suggesting that maybe the bleeding edge hasn't slowed down, but

603
00:37:00,160 --> 00:37:03,640
Speaker 1: what has slowed down the diffusion. This is, folks, This

604
00:37:03,760 --> 00:37:08,040
Speaker 1: is a huge theme of Jean Plautrichet. I've spoke to

605
00:37:08,120 --> 00:37:11,600
Speaker 1: him at length twice about the diffusing in America is

606
00:37:11,640 --> 00:37:16,720
Speaker 1: superior to the diffusing through economy within a more fractious Europe.

607
00:37:16,920 --> 00:37:22,920
Speaker 1: Are we becoming professor more like Europe? Uh, that's possible.

608
00:37:23,000 --> 00:37:25,520
Speaker 1: I mean they always see the sort of his broad base,

609
00:37:25,600 --> 00:37:27,719
Speaker 1: we seem to be slowing down, like like I said,

610
00:37:27,880 --> 00:37:30,480
Speaker 1: the slowdown is happening here, is happening in Europe. It

611
00:37:30,560 --> 00:37:34,799
Speaker 1: could be a very broad pattern. And the thing about

612
00:37:34,840 --> 00:37:37,640
Speaker 1: this diffusion stuff is in some sense it's free. It's

613
00:37:37,719 --> 00:37:40,680
Speaker 1: just the the technology is there. In that case, we

614
00:37:40,840 --> 00:37:43,759
Speaker 1: just have to figure out how to get companies to

615
00:37:43,920 --> 00:37:47,960
Speaker 1: adopt that stuff, to adopt those better technologies, those better practices,

616
00:37:48,480 --> 00:37:52,439
Speaker 1: and encourage you know, markets to sort of move those

617
00:37:52,520 --> 00:37:57,000
Speaker 1: technologies through the economy. So you don't need to wait

618
00:37:57,080 --> 00:38:01,920
Speaker 1: for that stunning uh invention. It's there. You just got

619
00:38:02,040 --> 00:38:05,320
Speaker 1: to get people to start using it. And so you know,

620
00:38:05,480 --> 00:38:08,520
Speaker 1: that's in some sense it's a little depressing that that's

621
00:38:08,520 --> 00:38:10,799
Speaker 1: slowed down. But on the other hand, if that at

622
00:38:10,840 --> 00:38:12,880
Speaker 1: least we have some hope of turning the dial on

623
00:38:13,040 --> 00:38:15,719
Speaker 1: maybe a little more easily than trying to invent new

624
00:38:15,840 --> 00:38:18,880
Speaker 1: in better ways. Well, Chad, thank you so much, greatly

625
00:38:18,920 --> 00:38:24,200
Speaker 1: appreciated the congratulations on some terrific historical and present research.

626
00:38:24,880 --> 00:38:29,280
Speaker 1: Is well. Chat Zeeverson is Professor of Economics, Posh School, Chicago.

627
00:38:29,400 --> 00:38:32,399
Speaker 1: That was brilliant to get to finish the week. Um,

628
00:38:32,840 --> 00:38:35,640
Speaker 1: it just it pays to look at charts. Um. We

629
00:38:35,760 --> 00:38:38,040
Speaker 1: will now attempt to do that Rush Fish is with

630
00:38:38,360 --> 00:38:41,080
Speaker 1: Bank of Montreal VIMO Capital Markets and he joins us

631
00:38:41,640 --> 00:38:45,000
Speaker 1: right now. Russ, you are a believer in momentum. The

632
00:38:45,120 --> 00:38:49,040
Speaker 1: doom and Gloom crew had the momentum in January. What happened,

633
00:38:50,760 --> 00:38:54,840
Speaker 1: We've actually seen a fairly significant turnaround in momentum, and

634
00:38:54,920 --> 00:38:58,000
Speaker 1: not just short term noise or either. We're talking about

635
00:38:58,800 --> 00:39:00,960
Speaker 1: weekly and monthly chart which gives you a sense of

636
00:39:01,040 --> 00:39:03,759
Speaker 1: what the next six to twelve months or longer look

637
00:39:03,840 --> 00:39:08,400
Speaker 1: like for the whole commodity space, not just the materials themselves,

638
00:39:08,480 --> 00:39:14,640
Speaker 1: but also the stocks job Uh. Well, we actually saw

639
00:39:14,800 --> 00:39:19,440
Speaker 1: some major shift in leadership occur UH in mid January

640
00:39:19,520 --> 00:39:22,600
Speaker 1: when equity markets sold off, specifically when the SMP five

641
00:39:23,000 --> 00:39:26,640
Speaker 1: sold off to retest it's January low. At the time,

642
00:39:27,000 --> 00:39:30,480
Speaker 1: we saw specific sectors such as consumer discretionary, healthcare, and

643
00:39:30,600 --> 00:39:36,120
Speaker 1: financials actually break down below their January lows, while at

644
00:39:36,160 --> 00:39:39,880
Speaker 1: the same time, commodity stocks, which have been huge laggards

645
00:39:39,920 --> 00:39:43,480
Speaker 1: for roughly four years now, actually held above it, which

646
00:39:43,680 --> 00:39:48,480
Speaker 1: was the first indication that there was a change in leadership.

647
00:39:48,600 --> 00:39:52,080
Speaker 1: Meaning while everyone seemed to be running around like their

648
00:39:52,120 --> 00:39:54,560
Speaker 1: hair was on fire in mid February, they still didn't

649
00:39:54,560 --> 00:39:58,000
Speaker 1: want to sell their energy and material stocks. Uh, And

650
00:39:58,160 --> 00:40:01,800
Speaker 1: subsequently they have continued to provide leadership as the markets

651
00:40:01,800 --> 00:40:04,480
Speaker 1: have rallied over the last few Which sectors have leadership?

652
00:40:04,560 --> 00:40:09,440
Speaker 1: I mean, is hydrocarbon screen bottom? Uh, it's frankly, it's

653
00:40:09,440 --> 00:40:13,080
Speaker 1: it's right across the whole spectrum. You've seen energy. I mean,

654
00:40:13,120 --> 00:40:16,560
Speaker 1: I would say that natural gas is certainly lagging somewhat.

655
00:40:16,719 --> 00:40:21,360
Speaker 1: But we're talking energy, We're talking base metals, su precious metals,

656
00:40:21,880 --> 00:40:27,719
Speaker 1: as well as the agricultural stocks. What next? Uh, if

657
00:40:27,760 --> 00:40:29,600
Speaker 1: you put in the bottom to the charts, tell us

658
00:40:29,960 --> 00:40:34,520
Speaker 1: whether it's going to last? Yeah, great question. So, Uh,

659
00:40:34,960 --> 00:40:36,920
Speaker 1: if you look back over the last hundred years or so,

660
00:40:37,040 --> 00:40:41,560
Speaker 1: there's a very clear inverse relationship between commodities and equities,

661
00:40:42,080 --> 00:40:45,480
Speaker 1: really big picture stuff. When you were in a secular,

662
00:40:45,719 --> 00:40:49,839
Speaker 1: multi year, multi decade bull market for stocks, you tend

663
00:40:49,920 --> 00:40:53,919
Speaker 1: to be in a multi year, multi decade secular bear

664
00:40:54,040 --> 00:40:58,960
Speaker 1: market for commodities, which is certainly the case right now.

665
00:40:59,160 --> 00:41:01,120
Speaker 1: So what I did as I went and looked back

666
00:41:01,320 --> 00:41:05,799
Speaker 1: at the last secular bear market for commoditc eighties and nineties, UH,

667
00:41:06,000 --> 00:41:08,160
Speaker 1: to get a sense of what a cyclical bull market

668
00:41:08,280 --> 00:41:11,080
Speaker 1: looks like for them. Uh, and at a top level

669
00:41:11,640 --> 00:41:16,560
Speaker 1: using the CRB index, UH cyclical bull markets within bigger

670
00:41:16,719 --> 00:41:20,000
Speaker 1: secular bears tended to last about two years on average,

671
00:41:20,440 --> 00:41:23,480
Speaker 1: with thirty thirty two percent gains in the CRB In

672
00:41:23,600 --> 00:41:26,840
Speaker 1: next UH with actually more impressive gains thunder need to

673
00:41:27,239 --> 00:41:30,960
Speaker 1: underneed to surf it in UH different segments. For example,

674
00:41:31,640 --> 00:41:35,759
Speaker 1: UH energy stocks within those cyclical bull markets rallied UH

675
00:41:36,239 --> 00:41:39,800
Speaker 1: more than a hundred percent during those cyclical bowls. Precious

676
00:41:39,880 --> 00:41:44,120
Speaker 1: metals were up sixty UH in industrial metal metals like

677
00:41:44,239 --> 00:41:47,399
Speaker 1: Copers Russ. Thank you so much, trust Fish with Demo

678
00:41:47,480 --> 00:41:50,680
Speaker 1: Capital Markets greatly appreciated. UH this morning, Mike, what a

679
00:41:50,760 --> 00:41:54,439
Speaker 1: week it spend. I mean, I mean yesterday was really something. Yeah,

680
00:41:55,440 --> 00:41:58,759
Speaker 1: we're gonna be living with the change in that for

681
00:41:58,800 --> 00:42:02,040
Speaker 1: a while. Absolutely, we need to say thank you to

682
00:42:02,120 --> 00:42:05,880
Speaker 1: all of our guests, particularly on international economics. From everything

683
00:42:05,920 --> 00:42:09,520
Speaker 1: we've seen across all of surveillance, UH, Olivier Blanchard and

684
00:42:09,640 --> 00:42:13,080
Speaker 1: Catherine Mann and UM I thought jacolm Fells, yacolm Fells.

685
00:42:13,160 --> 00:42:16,920
Speaker 1: Yesterday Mike was just absolutely superbed with PIMCO. Dennis Gartman,

686
00:42:17,239 --> 00:42:19,839
Speaker 1: thank you so much for his appearance, and of course

687
00:42:19,880 --> 00:42:23,319
Speaker 1: our good guests today um as well. All you need

688
00:42:23,440 --> 00:42:28,440
Speaker 1: to know is shock and awe on the announcement. As

689
00:42:28,480 --> 00:42:31,919
Speaker 1: I said yesterday on Twitter, like four pm. To be kind,

690
00:42:32,040 --> 00:42:34,480
Speaker 1: it was an odd day in the markets. It's not

691
00:42:34,640 --> 00:42:38,440
Speaker 1: odd today. They're just simply a lift. There's a persistency higher.

692
00:42:38,680 --> 00:42:41,200
Speaker 1: I want you on the watch for forty dollar barrel

693
00:42:41,320 --> 00:42:44,720
Speaker 1: American oil. Maybe we'll see that on Monday. We're produced

694
00:42:44,760 --> 00:42:47,320
Speaker 1: by y U N. Ken Fellow. You our global technical

695
00:42:47,400 --> 00:42:49,200
Speaker 1: director Bloomberg Surveillance