1 00:00:00,080 --> 00:00:12,639 Speaker 1: Yeah, Welcome to the Bloomberg Surveillance Podcast and I'm term 2 00:00:12,720 --> 00:00:15,680 Speaker 1: Keene jay Leye. We bring you insight from the best 3 00:00:15,800 --> 00:00:21,240 Speaker 1: in economics, finance, investment, and international relations. Find Bloomberg Surveillance 4 00:00:21,280 --> 00:00:25,720 Speaker 1: on Apple Podcasts, SoundCloud, Bloomberg dot Com, and of course, 5 00:00:26,040 --> 00:00:35,280 Speaker 1: on the Bloomberg. One of our top stories, the president's 6 00:00:35,360 --> 00:00:38,320 Speaker 1: latest FED nominee, Stephen Moore, continues to call for a 7 00:00:38,440 --> 00:00:41,480 Speaker 1: central bank to reverse course. According to The New York Times, 8 00:00:41,600 --> 00:00:44,240 Speaker 1: Mr Moore defended his view that they Fed was wrong 9 00:00:44,320 --> 00:00:47,240 Speaker 1: to raise interest rates in September and December. He said 10 00:00:47,240 --> 00:00:50,520 Speaker 1: the FED should immediately reverse course and cut rates by 11 00:00:50,640 --> 00:00:54,120 Speaker 1: half a percentage point. To discuss on the phone. Joining 12 00:00:54,160 --> 00:00:57,960 Speaker 1: us now, Allen Zentner, Morgan Stanley's chief US economist, what 13 00:00:58,000 --> 00:01:00,240 Speaker 1: do you make of that, Allen, the latest call from 14 00:01:00,240 --> 00:01:04,920 Speaker 1: the least FED nominee. Well, I think it echoes sentiment. Um. 15 00:01:04,959 --> 00:01:07,360 Speaker 1: You know, almost widely held across the street that that 16 00:01:07,480 --> 00:01:10,800 Speaker 1: I don't know about September as well, but that the 17 00:01:10,800 --> 00:01:15,840 Speaker 1: FED might not have needed to hike uh in December uh. 18 00:01:15,880 --> 00:01:19,080 Speaker 1: And so I don't think it's unusual to you add 19 00:01:19,120 --> 00:01:21,640 Speaker 1: his voice to those saying that the FED may have 20 00:01:21,680 --> 00:01:24,759 Speaker 1: made a mistake. But expecting the FED to just take 21 00:01:24,800 --> 00:01:27,280 Speaker 1: a look back where they're sitting right now and say 22 00:01:27,920 --> 00:01:30,640 Speaker 1: we went fifty basis too far, let's cut. You know, 23 00:01:30,760 --> 00:01:34,120 Speaker 1: that's really um it is suggests that there's an exact 24 00:01:34,160 --> 00:01:36,720 Speaker 1: science to this. The FED feels pretty comfortable that we're 25 00:01:36,760 --> 00:01:39,400 Speaker 1: somewhere right around neutral. I don't think you'd find anyone 26 00:01:39,400 --> 00:01:41,840 Speaker 1: on the FED that agrees with with Stephen Moore's view 27 00:01:41,880 --> 00:01:45,200 Speaker 1: that they should cut right now without a catalyst. Uh, 28 00:01:45,319 --> 00:01:48,720 Speaker 1: by fifty basis points, what's your base elent for the 29 00:01:48,800 --> 00:01:51,440 Speaker 1: year for the Federal Reserve as it goes on, So 30 00:01:51,480 --> 00:01:53,360 Speaker 1: we don't count them out for the year. I mean 31 00:01:53,480 --> 00:01:55,680 Speaker 1: one thing that so we do have them hiking at 32 00:01:55,680 --> 00:01:57,360 Speaker 1: the tail end of the year in December, so on 33 00:01:57,480 --> 00:02:00,200 Speaker 1: hold for almost the entire year. One thing that I 34 00:02:00,240 --> 00:02:04,400 Speaker 1: was really perplexed about in this latest FED meeting is 35 00:02:04,440 --> 00:02:07,680 Speaker 1: that they're there. I've never seen such a convoluted mess 36 00:02:07,720 --> 00:02:10,880 Speaker 1: in in a summary of economic projections table. I mean, 37 00:02:10,919 --> 00:02:14,399 Speaker 1: you've got a FED that's extraordinarily patient, that has now 38 00:02:14,600 --> 00:02:17,680 Speaker 1: provided so much easing and financial conditions by moving to 39 00:02:17,720 --> 00:02:20,880 Speaker 1: the sidelines and communicating it's stopping the runoff of its 40 00:02:20,960 --> 00:02:25,080 Speaker 1: balance sheet that essentially we've we've done a rate cut. 41 00:02:25,680 --> 00:02:29,519 Speaker 1: If you put financial conditions easing into FED funds equivalent, 42 00:02:29,880 --> 00:02:33,360 Speaker 1: it's worth a rate cut. And for that, their summary 43 00:02:33,360 --> 00:02:37,760 Speaker 1: of economic projections showed that growth continues to deteriorate over 44 00:02:37,800 --> 00:02:40,480 Speaker 1: the next couple of years. Where is the benefit to 45 00:02:40,560 --> 00:02:43,800 Speaker 1: this patient policy. It should be showing up by lifting 46 00:02:43,800 --> 00:02:47,079 Speaker 1: their forecasts, not depressing their forecast now that they've moved 47 00:02:47,080 --> 00:02:48,880 Speaker 1: to the side. I think it ignores the fact that 48 00:02:48,919 --> 00:02:53,040 Speaker 1: they've provided a powerful amount of of easing, which should 49 00:02:53,040 --> 00:02:56,760 Speaker 1: help the economic backdrop. Ellen, good morning, wonderful to speaking 50 00:02:58,040 --> 00:03:02,440 Speaker 1: this morning. Uh I look Ellen, it within the Stephen 51 00:03:02,440 --> 00:03:05,919 Speaker 1: Moore th Kneeler went Tankerossly piece in the New York Times. 52 00:03:06,000 --> 00:03:09,000 Speaker 1: Mr Moore's and there's been ever changing theories for more, 53 00:03:09,040 --> 00:03:12,440 Speaker 1: but he's basically going back to early Marxism, which is 54 00:03:12,480 --> 00:03:17,560 Speaker 1: to found some form of financial system or monetary policy 55 00:03:18,080 --> 00:03:22,000 Speaker 1: off commodity pricing, which I find, you know, my my 56 00:03:22,120 --> 00:03:25,960 Speaker 1: quick take on it is almost early Marxist. Is there 57 00:03:26,000 --> 00:03:32,239 Speaker 1: any modern history of using commodity prices to judge what 58 00:03:32,320 --> 00:03:36,440 Speaker 1: we do with our economy and jobs and inflation? No, 59 00:03:36,640 --> 00:03:39,280 Speaker 1: I just think that it's it's been well proven for 60 00:03:39,360 --> 00:03:43,840 Speaker 1: many decades now that uh, that's too volatile of a measure. 61 00:03:43,920 --> 00:03:46,200 Speaker 1: I mean, if your you know, the your job as 62 00:03:46,240 --> 00:03:50,000 Speaker 1: a central banker is to keep the economy on steady keel. Uh, 63 00:03:50,080 --> 00:03:54,400 Speaker 1: low volatility helps the expansion last for longer. I mean 64 00:03:54,440 --> 00:03:57,920 Speaker 1: tying something to commodity prices. We've learned what's the wrong 65 00:03:57,960 --> 00:04:00,840 Speaker 1: way to go quite some time ago. Um, And so 66 00:04:00,920 --> 00:04:04,280 Speaker 1: it's quite an antiquated, antiquated view at point. And he's 67 00:04:04,280 --> 00:04:07,720 Speaker 1: certainly an outlier. Well, but it's a nostalgia that President 68 00:04:07,720 --> 00:04:11,440 Speaker 1: Trump seems extremely comfortable with to get back to something 69 00:04:11,440 --> 00:04:15,040 Speaker 1: that's not only pre nine twelve but borders on you know, 70 00:04:15,080 --> 00:04:17,480 Speaker 1: I don't even want to give it, you know, folks, 71 00:04:17,520 --> 00:04:20,240 Speaker 1: not to turn this into an academic lecture, but it's 72 00:04:20,320 --> 00:04:24,040 Speaker 1: pre leon valrus of general equilibrium theory. It's like back 73 00:04:24,080 --> 00:04:28,320 Speaker 1: to Thomas Soul's take on the early classicist economists. Is 74 00:04:28,360 --> 00:04:32,039 Speaker 1: that what the president and what Stephen Moore want, you know, 75 00:04:32,160 --> 00:04:35,480 Speaker 1: I don't really know. I mean, I don't know why 76 00:04:35,520 --> 00:04:38,880 Speaker 1: they would propose these policies and lessons because they're comfortable 77 00:04:38,920 --> 00:04:43,400 Speaker 1: with a mercantilistic thought, pre Valessian right, right, But Also, 78 00:04:43,760 --> 00:04:46,160 Speaker 1: you know, you're you're being advised by people that are 79 00:04:46,160 --> 00:04:48,880 Speaker 1: probably old enough to have practiced economics at that time. 80 00:04:49,520 --> 00:04:53,120 Speaker 1: I think I think that that's where some of these 81 00:04:53,120 --> 00:04:56,680 Speaker 1: antiquated views come. Ellen, you gotta see it. I wish 82 00:04:56,680 --> 00:04:59,880 Speaker 1: you were here and are wonderful interactive broker studios. John 83 00:05:00,000 --> 00:05:03,080 Speaker 1: Pharaohs shaking his head, going what are they talking about? 84 00:05:03,560 --> 00:05:06,760 Speaker 1: Magnan decide? John just wrote a beautiful book, My Book 85 00:05:06,760 --> 00:05:11,440 Speaker 1: of the Summer two years ago, on the difficulties that 86 00:05:11,640 --> 00:05:17,760 Speaker 1: modern economists like Zentner have on equilibrium of finding very well, 87 00:05:17,800 --> 00:05:20,159 Speaker 1: I just didn't realize what's stop speaking Greek six minutes 88 00:05:20,160 --> 00:05:22,760 Speaker 1: into the shot. No, we were, but but but Ellen, 89 00:05:22,880 --> 00:05:25,600 Speaker 1: this is critical and that we have a president comfortable 90 00:05:26,240 --> 00:05:32,400 Speaker 1: with the neo or pseudo mercantilism that's pre the modern age, 91 00:05:32,520 --> 00:05:37,039 Speaker 1: right right, But you know, in terms of the FED policy, lucky, luckily, 92 00:05:37,160 --> 00:05:40,360 Speaker 1: they don't share that same sentiment. And you know, let's 93 00:05:40,480 --> 00:05:43,080 Speaker 1: let's I don't believe the odds are very high that 94 00:05:43,120 --> 00:05:45,800 Speaker 1: you confirmed Stephen Moore to the board. But let's say 95 00:05:45,800 --> 00:05:48,760 Speaker 1: he is confirmed to the board. Well, you could try to, 96 00:05:49,480 --> 00:05:51,560 Speaker 1: you know, put lipstick on a pig, so to speak, 97 00:05:51,600 --> 00:05:54,480 Speaker 1: and say, well, look, he's going to be another UM 98 00:05:54,560 --> 00:05:58,679 Speaker 1: source of diversity. Diversity of views is important UM, and 99 00:05:58,920 --> 00:06:01,039 Speaker 1: he can drive in a of his own to try 100 00:06:01,080 --> 00:06:05,840 Speaker 1: to talk through these UH measures and changes at the head. 101 00:06:05,880 --> 00:06:09,080 Speaker 1: And certainly jare Pal has shown that he is completely 102 00:06:09,160 --> 00:06:13,440 Speaker 1: open to discussing everything about how they implement monetary policy 103 00:06:13,560 --> 00:06:15,680 Speaker 1: and so leave it open for debate. But it's not 104 00:06:15,760 --> 00:06:18,200 Speaker 1: something that they're all going to come to consensus on. 105 00:06:18,680 --> 00:06:21,120 Speaker 1: And I don't I believe that the people have also 106 00:06:21,240 --> 00:06:24,800 Speaker 1: taken this too far to assume that because Stephen Moore 107 00:06:24,880 --> 00:06:27,200 Speaker 1: has said the FED should cut by fifty basis points 108 00:06:27,200 --> 00:06:30,800 Speaker 1: that if he gets onto the board UH, that he 109 00:06:30,839 --> 00:06:34,280 Speaker 1: would that they would immediately cut rates. Cutting rates is 110 00:06:34,320 --> 00:06:36,839 Speaker 1: not out of the realm of possibility. When you're at neutrals, 111 00:06:37,240 --> 00:06:39,280 Speaker 1: there should be an equal probability your next move is 112 00:06:39,320 --> 00:06:41,600 Speaker 1: up or down. But it won't be because Steven Moore 113 00:06:41,960 --> 00:06:43,840 Speaker 1: joined the board and said we should cut. It will 114 00:06:43,880 --> 00:06:47,279 Speaker 1: be because economic conditions warrant it. And next next I 115 00:06:47,279 --> 00:06:49,440 Speaker 1: think it's next week, we have book John Stewart Mill 116 00:06:49,520 --> 00:06:51,719 Speaker 1: will join us on the cornal. Is that right, Yes, 117 00:06:51,839 --> 00:06:56,800 Speaker 1: it's that right. We're gonna go way back. Thank you, 118 00:06:57,360 --> 00:07:00,240 Speaker 1: Chief US economist Homma meant to come back from that. 119 00:07:00,320 --> 00:07:02,960 Speaker 1: I'm trying not to insert my opinion of this, but 120 00:07:03,000 --> 00:07:06,560 Speaker 1: I think we're talking early Marxist. Is that you trying, 121 00:07:07,000 --> 00:07:13,080 Speaker 1: I'm trying. No one to Ellen's point, Stephen Moore may 122 00:07:13,160 --> 00:07:15,600 Speaker 1: or may not not get nominated to the Fed. If 123 00:07:15,640 --> 00:07:17,440 Speaker 1: he gets nominated the Fed, he's going to have a 124 00:07:17,560 --> 00:07:19,560 Speaker 1: very difficult time getting the rest of the committee to 125 00:07:19,600 --> 00:07:22,080 Speaker 1: come round to his view. Yeah. I think we understand that, 126 00:07:22,200 --> 00:07:25,000 Speaker 1: at least the way he explains his ultimate objective. I 127 00:07:25,000 --> 00:07:27,000 Speaker 1: actually think the committee may well come round to the 128 00:07:27,040 --> 00:07:29,440 Speaker 1: idea that they might need to cut rates pretty quickly. 129 00:07:29,880 --> 00:07:32,320 Speaker 1: The market's coming round to that idea, Tom. The bond 130 00:07:32,400 --> 00:07:35,240 Speaker 1: market has had a massive move over the last couple 131 00:07:35,280 --> 00:07:37,200 Speaker 1: of weeks, and it's stunning to see the front end 132 00:07:37,240 --> 00:07:40,160 Speaker 1: of the yield curve and yields grind lower once again 133 00:07:40,200 --> 00:07:55,480 Speaker 1: today just Wednesday. Wednesday's always a critical day for Johann Ferroll. 134 00:07:55,560 --> 00:07:58,040 Speaker 1: Is the real yield Where John is to decide, of 135 00:07:58,120 --> 00:08:00,920 Speaker 1: the hours of planning that have on the early week, 136 00:08:00,960 --> 00:08:03,800 Speaker 1: do they stay with it or does he blow up 137 00:08:03,840 --> 00:08:05,600 Speaker 1: the show? And John Tucker and I can see in 138 00:08:05,640 --> 00:08:10,760 Speaker 1: the Bloomberg Interactive Broker's studios. The tension here on the 139 00:08:11,400 --> 00:08:13,480 Speaker 1: blowing up the show and it's like the gey Go 140 00:08:13,640 --> 00:08:21,240 Speaker 1: commercial when you know the whole Wednesday thing, hump day, easy, easy, Okay. 141 00:08:21,280 --> 00:08:23,280 Speaker 1: There's so much to talk about, but we brought in 142 00:08:23,320 --> 00:08:26,880 Speaker 1: a guest who can help you drive for your decision making, 143 00:08:27,240 --> 00:08:30,960 Speaker 1: some structuring. Sometimes sometimes she graces us with her pressures 144 00:08:31,080 --> 00:08:33,680 Speaker 1: on Real Yo two and often on Bloomberg Surveillance pre 145 00:08:33,760 --> 00:08:36,959 Speaker 1: a miserat TV Security's head of global race strategy. Good 146 00:08:36,960 --> 00:08:40,240 Speaker 1: morning to your Prayer. Looking at your latest comments, the 147 00:08:40,320 --> 00:08:45,599 Speaker 1: rates market is too pessimistic. Thank you, thank you, thank you, 148 00:08:45,960 --> 00:08:50,079 Speaker 1: which which show really in shure. I mean, I think 149 00:08:50,120 --> 00:08:52,520 Speaker 1: we need more people who do talk about fixed incomes. 150 00:08:52,559 --> 00:08:55,960 Speaker 1: I'm glad you do that. Thanks Prayer. I appreciate that. 151 00:08:56,120 --> 00:08:58,520 Speaker 1: Good continue that. I'm going to continue. I just wanted 152 00:08:58,520 --> 00:09:00,640 Speaker 1: to look at your face for a little bit. The 153 00:09:00,720 --> 00:09:04,320 Speaker 1: rights market is too pessimistic about the outlook. That's your tape. 154 00:09:04,320 --> 00:09:08,240 Speaker 1: Prier Y. You know we're pricing in now more than 155 00:09:08,360 --> 00:09:11,600 Speaker 1: one uh TWI base points ease this year, so we're 156 00:09:11,640 --> 00:09:15,360 Speaker 1: pricing in a little over thirty based points of cuts. Um. 157 00:09:15,400 --> 00:09:18,400 Speaker 1: I think you know the FED was extremely do wished 158 00:09:18,559 --> 00:09:21,280 Speaker 1: last week. I actually think that's changing the narrative a 159 00:09:21,360 --> 00:09:25,079 Speaker 1: little bit. Here we're going away from We're moving away 160 00:09:25,120 --> 00:09:29,720 Speaker 1: from the market pricing in this you know, dovish Fed goldilocks, Uh, 161 00:09:29,720 --> 00:09:32,680 Speaker 1: you know carry trades equity should do well. So now 162 00:09:32,679 --> 00:09:34,240 Speaker 1: I think the fair is What does the FED know 163 00:09:34,480 --> 00:09:37,880 Speaker 1: that we don't know is the cycle? Has the cycle ended? 164 00:09:37,920 --> 00:09:40,360 Speaker 1: Are we heading into a recession? I think over the 165 00:09:40,440 --> 00:09:43,080 Speaker 1: last week, if you look at price action and fixed income, 166 00:09:43,120 --> 00:09:46,160 Speaker 1: I would even look at drisk assets, and it doesn't 167 00:09:46,160 --> 00:09:48,600 Speaker 1: look like goldilocks is getting priced in again. I think 168 00:09:48,600 --> 00:09:51,280 Speaker 1: now we're talking about you know, it is a recession 169 00:09:51,280 --> 00:09:53,760 Speaker 1: around the corner, and I think the market the reason 170 00:09:53,800 --> 00:09:56,040 Speaker 1: I think the market is still too pessimistic is you 171 00:09:56,120 --> 00:09:58,199 Speaker 1: look at the fundamentals of you as growth. Now we 172 00:09:58,240 --> 00:10:00,000 Speaker 1: do have a lot of payroll later we're gonna get 173 00:10:00,040 --> 00:10:02,920 Speaker 1: the first look at March data in the next couple 174 00:10:02,920 --> 00:10:05,360 Speaker 1: of weeks. I don't think we're falling off a cliff here, 175 00:10:05,400 --> 00:10:08,359 Speaker 1: and so to price and eases, I think the threshold 176 00:10:08,400 --> 00:10:11,360 Speaker 1: is high. Growth needs to be closer to zero. We're 177 00:10:11,400 --> 00:10:15,320 Speaker 1: forecasting above two percent GDP for this year, slower than 178 00:10:15,400 --> 00:10:17,520 Speaker 1: last year, but you know, I think there's a stock 179 00:10:17,600 --> 00:10:20,600 Speaker 1: of recession and eases. I think it's the market reading 180 00:10:20,679 --> 00:10:23,800 Speaker 1: from the devilsh fed. I just don't think we've had 181 00:10:23,880 --> 00:10:27,280 Speaker 1: data that suggests that the US is slowing that materially. Prayer. 182 00:10:27,320 --> 00:10:30,080 Speaker 1: There are so many conflicting signals in the global bond 183 00:10:30,080 --> 00:10:32,840 Speaker 1: market right now, and I'm struggling to understand whether this 184 00:10:32,960 --> 00:10:36,319 Speaker 1: is just a massive monster reach for yield or whether 185 00:10:36,360 --> 00:10:39,160 Speaker 1: it is a market that shifted aggressively towards risk aversion. 186 00:10:39,200 --> 00:10:41,280 Speaker 1: Because if you look at what's handing the credit market, 187 00:10:41,679 --> 00:10:46,080 Speaker 1: with spread still tight and with treasuries rallying, buns rallying, 188 00:10:46,160 --> 00:10:49,160 Speaker 1: but bond markets outside of core government bond markets doing 189 00:10:49,200 --> 00:10:51,839 Speaker 1: pretty terrifically as well, kind of makes me think that 190 00:10:51,880 --> 00:10:54,160 Speaker 1: this is just a global reach for yield at the 191 00:10:54,200 --> 00:10:56,160 Speaker 1: same time as the rates market is pricing in a 192 00:10:56,280 --> 00:10:59,400 Speaker 1: rate cut um. It's difficult to reconcile some of these 193 00:10:59,400 --> 00:11:03,360 Speaker 1: things Prayer right now. I think you raise a good point. 194 00:11:03,360 --> 00:11:05,800 Speaker 1: I think the rates market has made that leap now 195 00:11:06,440 --> 00:11:09,400 Speaker 1: from just to reach field, and I do think that 196 00:11:09,480 --> 00:11:11,160 Speaker 1: was part of the move. I think we've had a 197 00:11:11,160 --> 00:11:14,440 Speaker 1: lot of convexity hedging flows. But again, the you know, 198 00:11:14,480 --> 00:11:17,800 Speaker 1: to your point, pricing in eases is not really an 199 00:11:17,800 --> 00:11:20,560 Speaker 1: extension of the cycle. So I would think that the 200 00:11:20,679 --> 00:11:23,600 Speaker 1: risk asset complexes is only now starting to price in 201 00:11:23,640 --> 00:11:26,560 Speaker 1: that if we are heading into recession extremely most low 202 00:11:26,640 --> 00:11:31,880 Speaker 1: in credit. Let's unpack the jargon convexity hedging. What is 203 00:11:31,920 --> 00:11:37,319 Speaker 1: that fair point? It is? You know this technical term 204 00:11:37,360 --> 00:11:39,960 Speaker 1: that we use in the bond market. So essentially, if 205 00:11:40,040 --> 00:11:43,600 Speaker 1: you are a mortgage investor and you hold a bunch 206 00:11:43,640 --> 00:11:46,480 Speaker 1: of mortgages, interest rates when they fall too much, your 207 00:11:46,480 --> 00:11:49,040 Speaker 1: mortgage duration shortens. Now, if you want to keep a 208 00:11:49,080 --> 00:11:51,920 Speaker 1: certain a certain duration of your portfolio, you have to 209 00:11:51,960 --> 00:11:54,280 Speaker 1: go and buy treasuries. And I think that has been 210 00:11:54,559 --> 00:11:57,120 Speaker 1: a part of the move. Okay, last, so we've had 211 00:11:57,120 --> 00:11:59,920 Speaker 1: to move, and we've had some of these pro dynamic, 212 00:12:00,000 --> 00:12:04,440 Speaker 1: excellent pro choices which are priced up yield lower. But 213 00:12:04,600 --> 00:12:08,200 Speaker 1: are you suggesting that than the bigger picture clicks in 214 00:12:08,800 --> 00:12:13,840 Speaker 1: and we have even more price up and yield lower. Right, 215 00:12:13,880 --> 00:12:16,480 Speaker 1: So I think convexity typically does not trigger a move. 216 00:12:16,559 --> 00:12:18,760 Speaker 1: So the move was triggered I would say by the 217 00:12:18,800 --> 00:12:22,040 Speaker 1: Dovish Fed, this wish fed, and the sphere of a recession. 218 00:12:22,040 --> 00:12:25,200 Speaker 1: I think that took creates two below their lows for 219 00:12:25,240 --> 00:12:28,319 Speaker 1: the year. Then that brings in convexity. The convexity so 220 00:12:28,440 --> 00:12:30,600 Speaker 1: I would say, it's it's a technical flow, it's it's 221 00:12:30,679 --> 00:12:33,079 Speaker 1: reach yield. In a short period of time, people hedge. 222 00:12:33,400 --> 00:12:35,520 Speaker 1: Then it goes back to fundamentals. I we have a 223 00:12:35,559 --> 00:12:38,400 Speaker 1: lot of feed speak. I don't hear any of them 224 00:12:38,440 --> 00:12:40,800 Speaker 1: saying that they're about to ease. So I think fundamentals 225 00:12:40,800 --> 00:12:44,640 Speaker 1: will ultimately matter once we get this convexity flow behind us. 226 00:12:44,679 --> 00:12:46,800 Speaker 1: So I would say there's two basic phases here, tom. 227 00:12:46,840 --> 00:12:49,000 Speaker 1: So we've had the first phase, which essentially as a 228 00:12:49,040 --> 00:12:52,000 Speaker 1: monster reach for yield. Treasury yields got lower, Bundy yields 229 00:12:52,040 --> 00:12:54,560 Speaker 1: got lower, credit spreads tighten up, even the likes of 230 00:12:54,640 --> 00:12:57,880 Speaker 1: BTPs rally Italian bond yields come in as well. And 231 00:12:57,880 --> 00:12:59,880 Speaker 1: then we face the prospect of the market looking at 232 00:12:59,880 --> 00:13:02,400 Speaker 1: the likelihood of a right cut. And this is where 233 00:13:02,440 --> 00:13:05,319 Speaker 1: two things become very hard to reconcile. If you believe 234 00:13:05,320 --> 00:13:07,320 Speaker 1: a rate cut is around the corner, that is not 235 00:13:07,360 --> 00:13:11,760 Speaker 1: an environment where the risk assets perform well. You can't 236 00:13:11,800 --> 00:13:14,200 Speaker 1: have an environment where the FED needs to cut where 237 00:13:14,200 --> 00:13:16,839 Speaker 1: also simultaneously the credit spreads are going to be tied. 238 00:13:17,000 --> 00:13:18,920 Speaker 1: So you need to reconcile those two things. Which one 239 00:13:18,960 --> 00:13:21,720 Speaker 1: breaks so you go into phase two. Phase two essentially, 240 00:13:21,760 --> 00:13:24,520 Speaker 1: as credit spread starts are wide and or you start 241 00:13:24,559 --> 00:13:26,440 Speaker 1: to price out the right cut one or the other, 242 00:13:26,559 --> 00:13:29,320 Speaker 1: something has to give. The question is which, which one 243 00:13:29,320 --> 00:13:32,240 Speaker 1: do you think gives. I'm more in the camp that 244 00:13:32,720 --> 00:13:36,079 Speaker 1: interest rates have become a little bit you know, do pessimistic. 245 00:13:36,160 --> 00:13:38,120 Speaker 1: So I think if if the data suggests that actually 246 00:13:38,120 --> 00:13:39,959 Speaker 1: the economy is growing at you know, one in three 247 00:13:40,000 --> 00:13:42,880 Speaker 1: quarters two, it takes all the reason for the FED 248 00:13:43,000 --> 00:13:45,520 Speaker 1: to hike, but it also does not provide a reason 249 00:13:45,559 --> 00:13:47,959 Speaker 1: for the FED to ease. So I do think the 250 00:13:48,000 --> 00:13:50,640 Speaker 1: interest rates have some room to rise. Now if the 251 00:13:50,760 --> 00:13:53,800 Speaker 1: data all falls apart, then you know, I would agree. 252 00:13:54,000 --> 00:13:55,880 Speaker 1: I think then the rate market may be pricing this 253 00:13:56,000 --> 00:13:59,319 Speaker 1: in fine, but then risk as look a lot more vulnerable. 254 00:14:00,080 --> 00:14:05,400 Speaker 1: On January of this year was a one two year yield. Roughly, 255 00:14:06,040 --> 00:14:07,760 Speaker 1: you know, just a quick look at the chart. When 256 00:14:07,760 --> 00:14:11,080 Speaker 1: we're getting back there rapidly, we're taking out some of 257 00:14:11,080 --> 00:14:14,440 Speaker 1: the right hikes from the fat has been away from 258 00:14:14,480 --> 00:14:17,160 Speaker 1: full faith in credit. How does the full faith in 259 00:14:17,240 --> 00:14:21,200 Speaker 1: credit German tenure the US two year How does it 260 00:14:21,280 --> 00:14:27,080 Speaker 1: readound over the corporate bond space. I think you know, 261 00:14:27,200 --> 00:14:30,440 Speaker 1: particularly when you look at US front end yiels, they're 262 00:14:30,440 --> 00:14:33,760 Speaker 1: actually pretty attractive on a real rate basis in terms 263 00:14:33,760 --> 00:14:37,160 Speaker 1: of how much return you get for the riscue taking. 264 00:14:37,520 --> 00:14:40,600 Speaker 1: So I actually think when full faith and credit risk 265 00:14:40,720 --> 00:14:43,480 Speaker 1: free rates rise, and they have in the US and 266 00:14:43,520 --> 00:14:46,720 Speaker 1: the front end, that actually provides a pretty viable hiding 267 00:14:46,760 --> 00:14:49,640 Speaker 1: place for credit investors. So if I'm a credit investent, 268 00:14:49,720 --> 00:14:52,480 Speaker 1: I'm worried about a recession, maybe I should not be 269 00:14:52,520 --> 00:14:54,960 Speaker 1: in a five year credit piece of paper. I should 270 00:14:54,960 --> 00:14:57,120 Speaker 1: be in three month treasury bills, which is actually giving 271 00:14:57,160 --> 00:14:59,720 Speaker 1: me higher yield than the tenure treasury. So I think 272 00:14:59,720 --> 00:15:03,440 Speaker 1: you do you see these interesting fund flows um fiction 273 00:15:03,440 --> 00:15:05,760 Speaker 1: come investors when they start looking at risk reward doesn't 274 00:15:05,800 --> 00:15:07,960 Speaker 1: look that attractive to take that much risk. So what 275 00:15:08,040 --> 00:15:12,120 Speaker 1: economic data changes that difference in yield the curve of 276 00:15:12,200 --> 00:15:16,560 Speaker 1: the treasury bill to the treasury no three months of 277 00:15:16,560 --> 00:15:22,280 Speaker 1: the tenure. What kind of economic data changes your world? Right? 278 00:15:22,360 --> 00:15:25,240 Speaker 1: I think it's forward looking indicators of of you as growth, 279 00:15:25,440 --> 00:15:29,920 Speaker 1: So I non manufacturing, I think that will matter if 280 00:15:29,920 --> 00:15:32,160 Speaker 1: it's if you're not heading into a recession, I sm 281 00:15:32,240 --> 00:15:36,320 Speaker 1: is still at let's say, then you know you should 282 00:15:36,320 --> 00:15:39,000 Speaker 1: start pricing out some of these cuts and so the 283 00:15:39,040 --> 00:15:41,320 Speaker 1: front and can still stay very anchored, but the long 284 00:15:41,400 --> 00:15:43,320 Speaker 1: instart selling off, so you get a little bit of 285 00:15:43,320 --> 00:15:46,960 Speaker 1: curve steepening. Priam, thank you so much, TV Securities greatly, 286 00:15:47,080 --> 00:15:49,520 Speaker 1: thanks to I understood about it. Thank you for the 287 00:15:49,560 --> 00:15:56,400 Speaker 1: support primus. You know you want to bring into our 288 00:15:56,520 --> 00:16:00,280 Speaker 1: esteem guests absolutely, um, you know, obviously we are are 289 00:16:00,320 --> 00:16:03,560 Speaker 1: here at the Bloomberg Equality Summer Broadcasting Life from the 290 00:16:03,720 --> 00:16:07,120 Speaker 1: link at our world headquarters here in Lectionton Avenue, fifty 291 00:16:07,200 --> 00:16:10,080 Speaker 1: ninth Street, and we think about Hollywood. It's been said 292 00:16:10,120 --> 00:16:13,520 Speaker 1: that Hollywood is one of the least welcoming industries for women. 293 00:16:13,800 --> 00:16:16,080 Speaker 1: And I love this point that I think our guests made. 294 00:16:16,320 --> 00:16:20,120 Speaker 1: Even the coal industry does a better job deally being 295 00:16:20,160 --> 00:16:22,640 Speaker 1: accepting in supportive of women than this Hollywood. So it 296 00:16:22,720 --> 00:16:25,240 Speaker 1: helps us kind of dig through this issue. We welcome 297 00:16:25,320 --> 00:16:28,480 Speaker 1: our our guest, Maria Geiss. She has a writer and director. 298 00:16:28,560 --> 00:16:30,880 Speaker 1: Maria's thanks so much for joining us here at Bloomberg. 299 00:16:31,360 --> 00:16:35,640 Speaker 1: How did it ever get so bad for women in Hollywood? 300 00:16:35,680 --> 00:16:39,320 Speaker 1: What's the history there? Well, let's see, let's start with 301 00:16:39,760 --> 00:16:43,360 Speaker 1: what Hollywood does today. I mean, Hollywood pays out seven 302 00:16:43,480 --> 00:16:47,520 Speaker 1: billion dollars in wages every year, It creates eight percent 303 00:16:47,680 --> 00:16:51,320 Speaker 1: of the media content that's distributed globally, and it helps 304 00:16:51,440 --> 00:16:54,840 Speaker 1: form our cultural narrative through the stories that are told there. 305 00:16:54,960 --> 00:16:58,640 Speaker 1: This is an incredibly powerful industry and it's run by 306 00:16:58,680 --> 00:17:03,680 Speaker 1: a very small group of mostly white liberal men. UM 307 00:17:03,840 --> 00:17:08,000 Speaker 1: the history of of Hollywood, as told so beautifully in 308 00:17:08,040 --> 00:17:11,439 Speaker 1: the film by Tom Donahue called This Changes Everything Screen 309 00:17:11,520 --> 00:17:15,440 Speaker 1: here Last Night, UM shows that in the pioneer days 310 00:17:15,720 --> 00:17:19,119 Speaker 1: of of Hollywood, which began in eighteen ninety six with 311 00:17:19,200 --> 00:17:24,440 Speaker 1: the invention of the movie camera, the cinematograph um invited 312 00:17:24,480 --> 00:17:28,000 Speaker 1: women in and there were lots and lots of women directors, writers, 313 00:17:28,080 --> 00:17:32,040 Speaker 1: and producers up until the big money came in. And 314 00:17:32,119 --> 00:17:34,280 Speaker 1: as soon as the big Wall Street money came in, 315 00:17:34,960 --> 00:17:38,480 Speaker 1: women got pushed out. So we really saw almost no 316 00:17:38,760 --> 00:17:43,280 Speaker 1: women in the industry as storytellers from about nineteen thirty 317 00:17:43,720 --> 00:17:47,720 Speaker 1: until nineteen seventy nine. After the civil rights movement of 318 00:17:47,800 --> 00:17:50,639 Speaker 1: the nineteen sixties and the women's lib movement of the 319 00:17:50,720 --> 00:17:53,879 Speaker 1: nineteen seventies, and then we began to see some shift. 320 00:17:54,080 --> 00:17:56,879 Speaker 1: So really one can look at this as an economic issue, 321 00:17:57,520 --> 00:18:01,879 Speaker 1: a battle for resources. It's a patriarch have has the 322 00:18:02,320 --> 00:18:04,399 Speaker 1: so to what extent has the meat too? This is 323 00:18:04,480 --> 00:18:07,200 Speaker 1: just recent history. To what extent has the meat too movement? 324 00:18:07,520 --> 00:18:10,480 Speaker 1: Do you think going going to impact Hollywood going forward? 325 00:18:11,080 --> 00:18:14,880 Speaker 1: Because it seems to be of the Me too movement? 326 00:18:15,240 --> 00:18:18,639 Speaker 1: UM came in based on the work of the A 327 00:18:18,800 --> 00:18:21,320 Speaker 1: C l U and the e O c SO. On 328 00:18:21,400 --> 00:18:25,840 Speaker 1: October six, the e O C the Equal Rights um 329 00:18:26,720 --> 00:18:30,320 Speaker 1: Commission of the United States Department of Justice started an 330 00:18:30,359 --> 00:18:37,080 Speaker 1: investigation for women directors in Hollywood and UH. Two years later, 331 00:18:37,240 --> 00:18:42,080 Speaker 1: almost the day, on October five, the New York Times 332 00:18:42,200 --> 00:18:46,000 Speaker 1: finally had the Kahan s to publish the expose s 333 00:18:46,080 --> 00:18:49,040 Speaker 1: on Harvey Weinstein. Incidentally that they had been holding onto 334 00:18:49,280 --> 00:18:52,800 Speaker 1: since two thousand and four for thirteen years. So when 335 00:18:52,960 --> 00:18:56,320 Speaker 1: Hillary Clinton was in the Clintons were no longer in power, 336 00:18:56,400 --> 00:19:01,159 Speaker 1: and Trump was now in power. UH, the major media 337 00:19:01,680 --> 00:19:05,640 Speaker 1: was emboldened to publish these stories. It was a watershed moment, 338 00:19:05,680 --> 00:19:08,560 Speaker 1: there's no question about it. But I believe, you know, 339 00:19:08,720 --> 00:19:12,960 Speaker 1: also a diversion because Hollywood has been able to use 340 00:19:13,800 --> 00:19:17,560 Speaker 1: me too and the stories of sexual harassment and abuse 341 00:19:17,600 --> 00:19:22,200 Speaker 1: in the workplace and actresses to um control the narrative. 342 00:19:22,960 --> 00:19:26,000 Speaker 1: And that's what they're doing because when you talk about 343 00:19:26,040 --> 00:19:29,879 Speaker 1: equal employment Opportunity law and the enforcement of Title Federal 344 00:19:30,040 --> 00:19:34,399 Speaker 1: enforcement Title seven in Hollywood, you're talking about fundamentally a 345 00:19:34,520 --> 00:19:37,920 Speaker 1: redistribution of jobs from men to women. And that is 346 00:19:38,000 --> 00:19:41,000 Speaker 1: something that Hollywood doesn't want you very quickly here just 347 00:19:41,000 --> 00:19:43,200 Speaker 1: because of time. You came out of U c l A. 348 00:19:43,320 --> 00:19:46,960 Speaker 1: There's other combines of screenwriting and directing around the world. 349 00:19:47,119 --> 00:19:49,840 Speaker 1: Out of Tish came out and Bowden and Ryan Fleck 350 00:19:49,880 --> 00:19:53,240 Speaker 1: and they're doing Captain Marvel in that do women have 351 00:19:53,440 --> 00:19:58,560 Speaker 1: to advance and succeed going from small movies and working 352 00:19:58,680 --> 00:20:02,479 Speaker 1: up the food time like you did, Frankly, or can 353 00:20:02,560 --> 00:20:06,840 Speaker 1: they jump in now at a higher level. Uh? Basically, 354 00:20:06,960 --> 00:20:10,560 Speaker 1: the way it stands right now, women directed, women were 355 00:20:10,600 --> 00:20:15,240 Speaker 1: directing of episodic TV shows four percent of studio features 356 00:20:16,800 --> 00:20:20,520 Speaker 1: and through Amazon and Netflix. Know that fundamentally, what is 357 00:20:20,560 --> 00:20:23,040 Speaker 1: happening here is that women can work if they work 358 00:20:23,119 --> 00:20:27,080 Speaker 1: for free. Women are doing the lower end of it's 359 00:20:27,200 --> 00:20:30,600 Speaker 1: it's the exception. Lawrence said four years ago, she's sick 360 00:20:30,640 --> 00:20:35,840 Speaker 1: of being adorable. I mean that's simple. Yeah, that women 361 00:20:36,040 --> 00:20:39,080 Speaker 1: need to demand their rights under our laws. You see 362 00:20:39,160 --> 00:20:41,920 Speaker 1: that changing over the grill at the Beverly Hills Hilton 363 00:20:42,040 --> 00:20:46,800 Speaker 1: or at the Sunset Tourro Hotel. Is the dynamic changing? Um? 364 00:20:47,400 --> 00:20:50,040 Speaker 1: I think that there is a great deal of pressure 365 00:20:50,200 --> 00:20:53,040 Speaker 1: right now on the industry. I think the federal investigation 366 00:20:53,119 --> 00:20:54,680 Speaker 1: and the work of the a C L you rock 367 00:20:54,760 --> 00:20:57,520 Speaker 1: to the industry to its core, and they're worried about 368 00:20:57,640 --> 00:21:01,000 Speaker 1: lawsuits and so um they're going to move those numbers 369 00:21:01,080 --> 00:21:06,280 Speaker 1: up through inside efforts, but those will have not historically 370 00:21:06,400 --> 00:21:09,920 Speaker 1: proven to be enduring. Is Disney Fox good for women? 371 00:21:10,080 --> 00:21:11,719 Speaker 1: Is James Wurdock and the rest of them out there 372 00:21:11,800 --> 00:21:15,400 Speaker 1: with Mr Igoran Disney Fox in the new combination? Nobody 373 00:21:15,520 --> 00:21:18,840 Speaker 1: is good for women. Nobody is good for women. All 374 00:21:19,080 --> 00:21:22,960 Speaker 1: all of these the organizations that make up Hollywood, including 375 00:21:23,080 --> 00:21:27,080 Speaker 1: the unions, the talent agencies at studios, and the network 376 00:21:27,200 --> 00:21:31,200 Speaker 1: streaming giants, they all need to be challenged by by 377 00:21:31,520 --> 00:21:34,960 Speaker 1: by a legal action. Is that coming? Is that forthcoming? 378 00:21:34,960 --> 00:21:38,359 Speaker 1: Do you think? I? My belief is because the a 379 00:21:38,560 --> 00:21:41,720 Speaker 1: E O C has been um conducting this investigation and 380 00:21:41,800 --> 00:21:44,240 Speaker 1: perhaps has been in settlement talks for three years and 381 00:21:44,440 --> 00:21:47,720 Speaker 1: four months six months almost and we UM, don't know 382 00:21:47,920 --> 00:21:51,040 Speaker 1: what is going on with that, because uh, they function 383 00:21:51,119 --> 00:21:54,720 Speaker 1: in total confidentiality. However, we have been a small group 384 00:21:54,760 --> 00:21:57,000 Speaker 1: of us have been working very very hard to move 385 00:21:57,119 --> 00:21:59,920 Speaker 1: this into the court system, and I do believe that 386 00:22:00,080 --> 00:22:01,960 Speaker 1: that is the necessary thing. This needs to end up 387 00:22:02,000 --> 00:22:04,359 Speaker 1: in the Supreme Court. Right. It sounds like it sounds 388 00:22:04,400 --> 00:22:06,879 Speaker 1: like pressure is building. It sounds like the me too 389 00:22:06,920 --> 00:22:09,920 Speaker 1: movement might might accelerate that. So very interesting, married guys, 390 00:22:09,960 --> 00:22:11,760 Speaker 1: thank you so much for joining us. Thank you Maria 391 00:22:11,760 --> 00:22:13,560 Speaker 1: as a writer and directors who joins us here talking 392 00:22:13,560 --> 00:22:17,199 Speaker 1: about this equality issue in Hollywood, which again very very 393 00:22:17,240 --> 00:22:21,040 Speaker 1: difficult place historically for women to do well, even harder 394 00:22:21,240 --> 00:22:23,879 Speaker 1: than the coal industry. Believe it or not, but hopefully 395 00:22:24,000 --> 00:22:38,159 Speaker 1: change is coming to Hollywood. What an interesting time. I 396 00:22:38,200 --> 00:22:40,919 Speaker 1: should point out we haven't mentioned it much of West Texas. 397 00:22:41,000 --> 00:22:44,920 Speaker 1: Back to sixty dollars six zero dollars a barrel with 398 00:22:45,000 --> 00:22:47,600 Speaker 1: Brent crude on the edge of seventy. This gets my attention. 399 00:22:47,680 --> 00:22:50,680 Speaker 1: Sixty dollars a barrel and Brent crude with a style. 400 00:22:50,760 --> 00:22:54,639 Speaker 1: Paul Sankey of Missouri and ons incredibly important, your folks, 401 00:22:54,760 --> 00:22:58,840 Speaker 1: is to realize that a decade or more ago the 402 00:22:59,000 --> 00:23:02,960 Speaker 1: world stop when Sankey and company at Deutsche Bank would 403 00:23:03,000 --> 00:23:06,600 Speaker 1: put out a spreadsheet of supply and demand dynamics, and 404 00:23:06,680 --> 00:23:10,440 Speaker 1: they were so influential you'd go over every number of it. 405 00:23:10,600 --> 00:23:15,560 Speaker 1: Mr Sanky is causing great advantage to Missouri America's where 406 00:23:15,600 --> 00:23:17,879 Speaker 1: he is there oil and guest analyst and a legend 407 00:23:18,240 --> 00:23:20,960 Speaker 1: in his own time. Paul, wonderful to have you with us. 408 00:23:21,760 --> 00:23:25,359 Speaker 1: X on mobile is returned five percent a year for 409 00:23:25,440 --> 00:23:28,360 Speaker 1: the last ten years. Why should I own a big 410 00:23:28,440 --> 00:23:32,600 Speaker 1: oil blue chip? Thanks for the intro, Tom, you always 411 00:23:32,640 --> 00:23:36,120 Speaker 1: made me smile. Um, yes, So why should you own 412 00:23:36,240 --> 00:23:38,359 Speaker 1: a big blue ship? Well? Why why you shouldn't as 413 00:23:38,400 --> 00:23:41,800 Speaker 1: the market's worried about technology? Uh, In fact, market wants 414 00:23:41,840 --> 00:23:46,240 Speaker 1: to own technology rightly for the future, and technology, of course, 415 00:23:46,320 --> 00:23:49,840 Speaker 1: in theory, will lower oil demand and raise the oil supply. 416 00:23:50,080 --> 00:23:53,760 Speaker 1: So face value. The answer is you shouldn't. But in reality, 417 00:23:54,359 --> 00:23:56,720 Speaker 1: as I was saying to you earlier on television with Bloomberg, 418 00:23:57,320 --> 00:24:00,400 Speaker 1: the fact is that oil demand is exceeding expect aans 419 00:24:00,480 --> 00:24:03,560 Speaker 1: and efficiency is not learning demand in the way anticipated. 420 00:24:04,000 --> 00:24:05,879 Speaker 1: So if the oil companies can get their act together 421 00:24:06,000 --> 00:24:09,280 Speaker 1: and return cash to shareholders and pay the pay out 422 00:24:09,400 --> 00:24:11,479 Speaker 1: at the end of the oil age, which I think 423 00:24:11,520 --> 00:24:14,359 Speaker 1: they will. I'm not sure about Exxon. We're neutral on 424 00:24:14,400 --> 00:24:16,600 Speaker 1: the store, but certainly in the case of Chevron, we 425 00:24:16,760 --> 00:24:20,720 Speaker 1: can see a ten percent plus cash return to shareholders 426 00:24:20,920 --> 00:24:25,920 Speaker 1: on a sustained basis as achievable by Chevron these kind 427 00:24:25,960 --> 00:24:28,440 Speaker 1: of prices. So if we're in the seventy range, assuming 428 00:24:28,520 --> 00:24:32,560 Speaker 1: that the industry has learned a new year of capital discipline, 429 00:24:33,000 --> 00:24:35,960 Speaker 1: I think returns will be very good and that becomes 430 00:24:36,040 --> 00:24:39,520 Speaker 1: the reason for owning these names. So, Paul, you know, 431 00:24:39,560 --> 00:24:41,520 Speaker 1: one of the things you know, Tom mentioned you know 432 00:24:41,600 --> 00:24:44,040 Speaker 1: your legendary supply and demand models, and I know that 433 00:24:44,160 --> 00:24:46,359 Speaker 1: you and uh, you know, all energy analysts. You can 434 00:24:46,400 --> 00:24:48,359 Speaker 1: rely heavily on those types of models to give you 435 00:24:48,359 --> 00:24:50,560 Speaker 1: a sense of where pricing is going. But one of 436 00:24:50,560 --> 00:24:52,840 Speaker 1: the things that's always, you know, challenged me is just 437 00:24:52,960 --> 00:24:56,719 Speaker 1: kind of where does OPEC want oil to be? Uh, 438 00:24:56,960 --> 00:24:58,959 Speaker 1: that's the question, and kind of where do you think 439 00:24:59,000 --> 00:25:02,000 Speaker 1: they are right now? Well, there's an interesting dynamic here. Firstly, 440 00:25:02,080 --> 00:25:04,280 Speaker 1: Saudi for the first time is actually talking about a 441 00:25:04,359 --> 00:25:07,639 Speaker 1: price range which is seventy to eighty dollar brent. And 442 00:25:07,760 --> 00:25:09,800 Speaker 1: as you say, we're knocking on the door of seventy 443 00:25:09,840 --> 00:25:13,719 Speaker 1: today heading into driving seasons, so I think they'll achieve 444 00:25:13,800 --> 00:25:15,960 Speaker 1: that number. The risk for US is that they actually 445 00:25:16,040 --> 00:25:18,639 Speaker 1: lose control of the market on the upside, particularly if 446 00:25:18,680 --> 00:25:22,840 Speaker 1: we get Iranian sanctions in late April. But one interesting 447 00:25:22,920 --> 00:25:26,080 Speaker 1: dynamic is, firstly, Saudi is what matters the most, but 448 00:25:26,160 --> 00:25:28,760 Speaker 1: we don't have this new member of OPEC called Russia, 449 00:25:29,119 --> 00:25:32,080 Speaker 1: and they actually the companies that don't want such higher prices. 450 00:25:32,280 --> 00:25:35,880 Speaker 1: The tax regime there dist incentivizes them from wanting super 451 00:25:35,920 --> 00:25:39,200 Speaker 1: high prices because it tends to appreciate the ruble and 452 00:25:39,359 --> 00:25:43,400 Speaker 1: increase their costs, while they don't benefit from the higher 453 00:25:43,440 --> 00:25:46,000 Speaker 1: price because of a tax system. But what really matters 454 00:25:46,080 --> 00:25:48,520 Speaker 1: ultimately is Saudi, and Saudi is staying seventy two eighty. 455 00:25:49,560 --> 00:25:52,480 Speaker 1: So what when I think about the U s shell, 456 00:25:52,520 --> 00:25:54,600 Speaker 1: I mean the whole market just over the last few 457 00:25:54,680 --> 00:25:57,399 Speaker 1: years to this, you know, lay person myself kind of 458 00:25:57,440 --> 00:26:00,600 Speaker 1: looking at the energy space, it's really just totally changed 459 00:26:00,680 --> 00:26:04,080 Speaker 1: with the advent of US shale production. So there's a 460 00:26:04,160 --> 00:26:06,720 Speaker 1: sense that this growing commitment in the US to the 461 00:26:07,160 --> 00:26:10,320 Speaker 1: development of the US shale oil output. Does that suggest 462 00:26:10,400 --> 00:26:14,240 Speaker 1: oils lower for longer? It suggests that there's far far 463 00:26:14,359 --> 00:26:18,240 Speaker 1: more supply than would have been argued in the two thousand's. 464 00:26:18,320 --> 00:26:20,879 Speaker 1: We were never peak oil advocates in any way. We 465 00:26:20,960 --> 00:26:23,600 Speaker 1: always said, look, you can crush coal at a hundred 466 00:26:23,640 --> 00:26:27,359 Speaker 1: and fifty dollars a barrel. You know, it's ultimately everything 467 00:26:27,480 --> 00:26:32,680 Speaker 1: is oil. But this new unlocking of technology is absolutely staggering. 468 00:26:33,040 --> 00:26:34,920 Speaker 1: And you've got to keep in mind that the recovery 469 00:26:35,040 --> 00:26:37,879 Speaker 1: rates in the Permian at the moment around twelve percent 470 00:26:38,000 --> 00:26:41,040 Speaker 1: of the oil in place. So the supply side looks 471 00:26:41,960 --> 00:26:45,560 Speaker 1: abundant to say the least. And our argument, obul argument 472 00:26:45,680 --> 00:26:48,719 Speaker 1: is based on the fact that we think demand continues 473 00:26:48,880 --> 00:26:53,560 Speaker 1: to outstrip more negative view of efficiency gains, and you 474 00:26:53,600 --> 00:26:56,040 Speaker 1: know what we call the Tesla effect, and that the 475 00:26:56,320 --> 00:27:00,520 Speaker 1: simple arithmetic of that is widely overstated of the market. 476 00:27:01,520 --> 00:27:03,159 Speaker 1: That's well, that's where I wanted to go. Where is 477 00:27:03,280 --> 00:27:07,359 Speaker 1: the dynamic right now? The dynamic right now for demand 478 00:27:07,560 --> 00:27:10,200 Speaker 1: is it? Is it airplanes flying around in the sky? 479 00:27:10,400 --> 00:27:12,800 Speaker 1: Is it just trucks and cars? I mean, where's that 480 00:27:13,280 --> 00:27:16,960 Speaker 1: at the margin? Where is that demand dynamic? Well, it's 481 00:27:17,040 --> 00:27:20,760 Speaker 1: distillate and so that that it's plans. Jet fuels is 482 00:27:20,840 --> 00:27:24,880 Speaker 1: diesel and jet fuel essentially Hunter million people a year. 483 00:27:25,040 --> 00:27:28,320 Speaker 1: According to Boeing take a plane for the first time 484 00:27:28,840 --> 00:27:32,840 Speaker 1: every year, so that continues to grow. Well, um, just 485 00:27:32,920 --> 00:27:35,400 Speaker 1: at the time we got left Wall, Well, I'm sure 486 00:27:35,480 --> 00:27:37,639 Speaker 1: all of our listeners want to know this from Paul Sanki. 487 00:27:37,640 --> 00:27:40,679 Speaker 1: At the time we've got left, somebody's also precious if 488 00:27:40,720 --> 00:27:43,520 Speaker 1: they got money, they're driving at Tesla Pulse Reny. What 489 00:27:43,600 --> 00:27:48,520 Speaker 1: are they driving if they don't have money? Uh, maybeuver whatever, 490 00:27:49,000 --> 00:27:51,040 Speaker 1: But then they're taking their plane to London or they're 491 00:27:51,080 --> 00:27:54,000 Speaker 1: plane to Washington and their plane to all hair what 492 00:27:54,359 --> 00:27:56,399 Speaker 1: what How does a pro like you respond to a 493 00:27:56,480 --> 00:27:59,880 Speaker 1: guy saving being green in an electric car when they're 494 00:28:00,040 --> 00:28:03,119 Speaker 1: jutting around the world. Well, it's simple, simple arithmetic. I mean, 495 00:28:03,119 --> 00:28:05,680 Speaker 1: the fact of the matter is, with a sixteen year 496 00:28:05,760 --> 00:28:08,560 Speaker 1: life cycle of an American car and the current makeup 497 00:28:08,640 --> 00:28:12,639 Speaker 1: of cars and trucks being sold, there's almost no effect 498 00:28:12,680 --> 00:28:15,400 Speaker 1: from electric vehicles for the next fifteen years. It's it's 499 00:28:15,480 --> 00:28:17,800 Speaker 1: really marginal. As you say, Tesla is very much a 500 00:28:17,880 --> 00:28:23,000 Speaker 1: luxury vehicle. Everyone else is basically built buying gasoline fired 501 00:28:23,640 --> 00:28:27,240 Speaker 1: somewhat more efficient cars and less efficient trucks, but trucks 502 00:28:27,280 --> 00:28:29,080 Speaker 1: for the far more. But every time I get on 503 00:28:29,160 --> 00:28:32,080 Speaker 1: the shuttle to Washington, is it a gas guzzler? Am 504 00:28:32,119 --> 00:28:34,840 Speaker 1: I burning up tons of oil? Well in a car 505 00:28:35,000 --> 00:28:38,680 Speaker 1: or plan, of course. I mean there's no real potential 506 00:28:38,760 --> 00:28:41,080 Speaker 1: for an electric plane at the moment they are testing them, 507 00:28:41,120 --> 00:28:44,400 Speaker 1: but it's pretty early day. And you know, the main 508 00:28:44,480 --> 00:28:47,800 Speaker 1: thing is is trucks and an economic activity are all 509 00:28:48,040 --> 00:28:51,080 Speaker 1: distillate diesel fired. And as long as that keeps coming. 510 00:28:51,160 --> 00:28:53,680 Speaker 1: The other thing is Tom sheer weight of global population 511 00:28:53,840 --> 00:29:00,320 Speaker 1: is still estimated Chinese. Well, we gotta lead it there. 512 00:29:00,360 --> 00:29:02,920 Speaker 1: Paul Sanka Bazoo on Cyclopedic Love to have a model. 513 00:29:02,960 --> 00:29:14,640 Speaker 1: We'll do this again soon. Paul Sanky on oil Now 514 00:29:14,720 --> 00:29:18,320 Speaker 1: a four hour interview with IDEALU of City Private Bank 515 00:29:18,440 --> 00:29:22,440 Speaker 1: as well. We could start with Asia fashion and Vivia 516 00:29:22,520 --> 00:29:25,360 Speaker 1: tam and I was taken over the world. We could 517 00:29:25,400 --> 00:29:29,200 Speaker 1: go to your work in mergers in acquisitions years ago, 518 00:29:29,280 --> 00:29:32,760 Speaker 1: and I remember the Warner Lambert transaction, among many others. 519 00:29:33,200 --> 00:29:35,160 Speaker 1: We could move from this to what you're doing with 520 00:29:35,360 --> 00:29:39,080 Speaker 1: City Group in the demands of high net worth, or 521 00:29:39,200 --> 00:29:42,040 Speaker 1: we could actually talk about Bloomers Equality Summit and anyway, 522 00:29:42,040 --> 00:29:44,280 Speaker 1: that's why we're here to Okay, so take it down 523 00:29:44,320 --> 00:29:47,520 Speaker 1: to four minutes and then we'll go from there. So 524 00:29:47,600 --> 00:29:49,040 Speaker 1: i'd just talk about you know, one of the things 525 00:29:49,080 --> 00:29:54,360 Speaker 1: about the this Equality Summit has been, UM, gender lens investing. 526 00:29:54,840 --> 00:29:58,480 Speaker 1: Give us a sense of what that is for investors 527 00:29:58,520 --> 00:30:01,600 Speaker 1: in your clients, absolutely, Paul. So what we've seen is 528 00:30:01,880 --> 00:30:07,280 Speaker 1: a increased focus on feeling good investments, investments that are 529 00:30:07,320 --> 00:30:09,800 Speaker 1: going to make a strong social impact, and one of 530 00:30:09,880 --> 00:30:13,480 Speaker 1: those aspects is gender lens investing. Today, it's estimated that 531 00:30:13,600 --> 00:30:16,640 Speaker 1: gender lens investing is roughly four and a half billion 532 00:30:17,040 --> 00:30:21,160 Speaker 1: in private and public investment, and that has doubled in 533 00:30:21,240 --> 00:30:23,760 Speaker 1: the last year, so we're on an upward trajectory, but 534 00:30:23,840 --> 00:30:27,640 Speaker 1: it's still a very very small amount. However, there is 535 00:30:27,720 --> 00:30:31,000 Speaker 1: a huge interest in it. Um. You see that you 536 00:30:31,120 --> 00:30:34,000 Speaker 1: can do great investments without giving up any of these 537 00:30:34,080 --> 00:30:36,640 Speaker 1: That's where I wanted to go. I mean Wellesley College. 538 00:30:36,640 --> 00:30:38,880 Speaker 1: I'm sure you're studying with a great Carl Case and 539 00:30:39,840 --> 00:30:42,280 Speaker 1: you would have the facts. Chip Case would have said, 540 00:30:42,560 --> 00:30:45,320 Speaker 1: it's all a great touchy feely wonder wonder. But I 541 00:30:45,440 --> 00:30:48,400 Speaker 1: know you have done the sensitivity chart. I don't mean 542 00:30:48,440 --> 00:30:52,840 Speaker 1: equality sensitivity, I mean a sensitivity analysis of wonder. This 543 00:30:53,320 --> 00:30:58,440 Speaker 1: lens of investing doesn't sacrifice profit, does it. It absolutely 544 00:30:58,520 --> 00:31:01,479 Speaker 1: does not. In fact, it generate more alpha. It has 545 00:31:01,520 --> 00:31:06,040 Speaker 1: been proven time and well. You can pick up which 546 00:31:06,240 --> 00:31:11,640 Speaker 1: it shows that in public companies, women CEOs generate more 547 00:31:12,000 --> 00:31:15,280 Speaker 1: r o I than not. You see companies that have 548 00:31:15,880 --> 00:31:19,800 Speaker 1: women on the boards generating much greater returns over time. 549 00:31:20,160 --> 00:31:23,320 Speaker 1: You see women in the technology sectors that get much 550 00:31:23,400 --> 00:31:26,400 Speaker 1: less funding. Three percent of venture capital funding goes to women, 551 00:31:26,640 --> 00:31:29,920 Speaker 1: and yet they outperform and returns of their male counterparts. 552 00:31:29,960 --> 00:31:33,000 Speaker 1: By These are just some of the facts, but no 553 00:31:33,200 --> 00:31:36,160 Speaker 1: matter what, it goes to show that the diversity of 554 00:31:36,320 --> 00:31:40,520 Speaker 1: the gender lens, diversity, having diverse teams definitely outperforms. So 555 00:31:40,640 --> 00:31:43,520 Speaker 1: it's an alpha and a feel good investment. So how 556 00:31:43,560 --> 00:31:45,400 Speaker 1: about when you sit down with your high net worth 557 00:31:45,960 --> 00:31:48,880 Speaker 1: clients at City, are they open to this type of 558 00:31:48,920 --> 00:31:50,800 Speaker 1: investment or do you really have to prove it to 559 00:31:50,920 --> 00:31:53,560 Speaker 1: them with numbers. So, Paul, it's interesting because a lot 560 00:31:53,640 --> 00:31:56,920 Speaker 1: of our investors are coming to us and asking about 561 00:31:57,360 --> 00:32:02,400 Speaker 1: e s G investments, impact investment, environmental sustainable sustainability governance UM. 562 00:32:02,520 --> 00:32:04,560 Speaker 1: And in addition to that, a lot of our clients, 563 00:32:04,680 --> 00:32:08,400 Speaker 1: particularly are female clients, are very interested in gender lens investing, 564 00:32:08,760 --> 00:32:11,120 Speaker 1: So we do that in a very customized format for 565 00:32:11,200 --> 00:32:13,400 Speaker 1: our female clients. We look at the public and the 566 00:32:13,440 --> 00:32:15,760 Speaker 1: private side. On the public side, we look at companies 567 00:32:15,840 --> 00:32:19,440 Speaker 1: that have great representation of women on boards and management teams, 568 00:32:19,680 --> 00:32:23,160 Speaker 1: diversity initiatives within the company. On the private side, we 569 00:32:23,240 --> 00:32:27,600 Speaker 1: look at investing into female startups, into micro finance loans 570 00:32:27,640 --> 00:32:32,040 Speaker 1: for small businesses, et cetera. It's okay, so there's a 571 00:32:32,360 --> 00:32:34,480 Speaker 1: I don't know if the chip case tell you there's 572 00:32:34,480 --> 00:32:37,719 Speaker 1: an index that has five hundred stocks in it, how 573 00:32:37,800 --> 00:32:40,600 Speaker 1: many of five of the stocks of the standard impos 574 00:32:40,720 --> 00:32:45,560 Speaker 1: kindex are are are IDEALU approved? I mean, I mean seriously, 575 00:32:45,640 --> 00:32:48,120 Speaker 1: out of five stocks, how many pass the e s 576 00:32:48,160 --> 00:32:51,480 Speaker 1: G test? You know at the moment it's less than no, no, no, 577 00:32:51,600 --> 00:32:54,400 Speaker 1: it's about a third that passed the e s G test. 578 00:32:54,680 --> 00:32:58,080 Speaker 1: And by the way, there are plenty of other portfolio 579 00:32:58,160 --> 00:33:02,520 Speaker 1: management companies indexes that have been launched since that. Yeah, 580 00:33:02,680 --> 00:33:07,600 Speaker 1: many of them that focused particularly on now, particularly an 581 00:33:07,640 --> 00:33:10,720 Speaker 1: institutional basic city group. What are the two thirds that 582 00:33:10,800 --> 00:33:13,640 Speaker 1: are not e s G approved? Are they in a 583 00:33:13,760 --> 00:33:17,720 Speaker 1: panic to become e s G approved? Tom, I would 584 00:33:17,760 --> 00:33:20,720 Speaker 1: think that everyone is focused on being E s G 585 00:33:21,400 --> 00:33:25,400 Speaker 1: focused because, as I mentioned earlier, it drives returns. It's good, 586 00:33:25,600 --> 00:33:28,640 Speaker 1: it's a good thing to do. It drives returns, and uh, 587 00:33:29,200 --> 00:33:31,440 Speaker 1: I don't see why they wouldn't be more focused on 588 00:33:31,560 --> 00:33:33,760 Speaker 1: doing that well. And it's interesting. On the Bloomberg terminal, 589 00:33:33,880 --> 00:33:36,400 Speaker 1: one of the most highly hit function is F a 590 00:33:36,520 --> 00:33:39,560 Speaker 1: financial analysis where it does income statement balance sheet analysis 591 00:33:39,600 --> 00:33:41,520 Speaker 1: and one of the tabs is the E s G 592 00:33:41,680 --> 00:33:44,560 Speaker 1: tab for every company and that just we have a 593 00:33:44,600 --> 00:33:47,880 Speaker 1: lot of statistics there that just helps investors. Were got 594 00:33:47,960 --> 00:33:49,920 Speaker 1: a company from an E s G perspective because it 595 00:33:50,200 --> 00:33:53,800 Speaker 1: is becoming a bigger part. You mentioned Silicon Valley UM 596 00:33:54,040 --> 00:33:57,560 Speaker 1: and that three percent numbers just staggering. And I mean, 597 00:33:57,760 --> 00:33:59,400 Speaker 1: and I've heard that before. I've heard that, you know, 598 00:33:59,480 --> 00:34:02,880 Speaker 1: as tough as Wall Street maybe for women, Silicon Valley 599 00:34:03,080 --> 00:34:07,080 Speaker 1: is even tougher. Are there any any efforts underway to 600 00:34:07,120 --> 00:34:09,960 Speaker 1: try to change that at all? You know, I don't 601 00:34:09,960 --> 00:34:12,799 Speaker 1: know about efforts per se. But we've had the huge 602 00:34:12,880 --> 00:34:16,280 Speaker 1: ME two movement. We've seen all of the efforts around 603 00:34:16,400 --> 00:34:18,879 Speaker 1: a lot of companies like City who are putting out 604 00:34:19,000 --> 00:34:21,759 Speaker 1: gender equality based information. We were very proud to be 605 00:34:21,840 --> 00:34:24,600 Speaker 1: part of the Bloomberg Gender Equality Index for the fourth 606 00:34:24,680 --> 00:34:27,120 Speaker 1: year in a row. We we have a many things 607 00:34:27,160 --> 00:34:30,120 Speaker 1: that we're working on in terms of disclosure representation of 608 00:34:30,239 --> 00:34:32,840 Speaker 1: fifty of our basis women, So we are doing the 609 00:34:32,960 --> 00:34:35,560 Speaker 1: right things as a public company in the financial services sector. 610 00:34:35,680 --> 00:34:38,080 Speaker 1: I've seen that happen a lot in the financial services sector. 611 00:34:38,440 --> 00:34:42,440 Speaker 1: On the VC private equity side, they're they're coming along, right. 612 00:34:42,440 --> 00:34:44,400 Speaker 1: I think they're coming along a little slower than we 613 00:34:44,719 --> 00:34:47,880 Speaker 1: than we would like. But my world stops when Mary 614 00:34:47,960 --> 00:34:50,400 Speaker 1: Meeker puts out her eighty six page power point in 615 00:34:50,440 --> 00:34:53,799 Speaker 1: every year, whatever it is, I go over. Folks are 616 00:34:53,880 --> 00:34:56,440 Speaker 1: stupid about this. I go over every page of it 617 00:34:56,560 --> 00:34:59,240 Speaker 1: with a pencil as well. What is a Mary Meeker 618 00:34:59,320 --> 00:35:02,840 Speaker 1: with all of reclaim in Silicon Valley? Think about the 619 00:35:02,920 --> 00:35:06,600 Speaker 1: impatience to move this forward. I'm sure that Mary and 620 00:35:06,640 --> 00:35:08,479 Speaker 1: I can't speak for Mary, but I'm sure that Mary 621 00:35:08,719 --> 00:35:12,120 Speaker 1: can be frustrated about about the movement. But that's why 622 00:35:12,280 --> 00:35:15,560 Speaker 1: we have people like Mary and other women launching their 623 00:35:15,600 --> 00:35:19,200 Speaker 1: own initiative looking at ways to invest in to help 624 00:35:19,640 --> 00:35:22,279 Speaker 1: move forward the gender based um. Folks, you see them 625 00:35:22,320 --> 00:35:25,440 Speaker 1: define benefit and define contribution, pension plans or real desire 626 00:35:25,520 --> 00:35:27,960 Speaker 1: for this and where does the marginal move on your 627 00:35:27,960 --> 00:35:31,080 Speaker 1: four trillion dollars. Where does that marginal move go in 628 00:35:31,160 --> 00:35:34,759 Speaker 1: the next five years. I certainly hope it goes very quickly, Tom, 629 00:35:34,880 --> 00:35:38,279 Speaker 1: because that for four four and a half billion that 630 00:35:38,360 --> 00:35:41,400 Speaker 1: we have today, and you know, hopefully we want it 631 00:35:41,440 --> 00:35:44,719 Speaker 1: to to increase exponentially, and the only way that we're 632 00:35:44,719 --> 00:35:47,719 Speaker 1: going to do that is by further engagement. Well not 633 00:35:47,840 --> 00:35:50,680 Speaker 1: only engagement, but the alpha pickup is tangible. I mean, 634 00:35:50,719 --> 00:35:53,960 Speaker 1: that's what it is. More and more is I'd mentioned that, 635 00:35:54,040 --> 00:35:56,319 Speaker 1: you know, the more and more the research that comes 636 00:35:56,320 --> 00:35:59,120 Speaker 1: out from academia to other places about the diversity, about E. 637 00:35:59,280 --> 00:36:03,120 Speaker 1: S G. About that it does have significant return implications 638 00:36:03,160 --> 00:36:05,080 Speaker 1: for investors. It can't be ignored anymore. I guess it's 639 00:36:05,120 --> 00:36:07,160 Speaker 1: the point. And Paul, you know, if if we did 640 00:36:07,239 --> 00:36:10,360 Speaker 1: have gender quality today, that would add twenty eight trillion 641 00:36:10,640 --> 00:36:13,760 Speaker 1: to global GDP over the next five years. Twenty eight trillion, 642 00:36:13,960 --> 00:36:20,040 Speaker 1: it's global gender. Can we get quality? Sure? Craft highs 643 00:36:20,320 --> 00:36:24,160 Speaker 1: on your list to be To be honest with you, 644 00:36:24,200 --> 00:36:27,759 Speaker 1: I I didn't look at Craft times and all those 645 00:36:27,840 --> 00:36:31,439 Speaker 1: guys and the up and they're building up the good. 646 00:36:31,600 --> 00:36:35,080 Speaker 1: She's like, how can I get away from no, No, no, no, 647 00:36:35,200 --> 00:36:37,680 Speaker 1: no no, but there's a whole macho guy. But you 648 00:36:37,719 --> 00:36:40,120 Speaker 1: know what, Tom, Also, that's a very different approach than 649 00:36:40,200 --> 00:36:41,960 Speaker 1: what we do for our clients. So we aren't single 650 00:36:42,000 --> 00:36:44,080 Speaker 1: stock pickers at all for our clients. Okay, so we 651 00:36:44,520 --> 00:36:48,240 Speaker 1: are strategic asset allocators, were active managers of our clients assets, 652 00:36:48,280 --> 00:36:51,000 Speaker 1: and we never pick single stocks. In other words, we 653 00:36:51,040 --> 00:36:54,279 Speaker 1: will put together a group that makes sense. We get 654 00:36:54,280 --> 00:36:57,880 Speaker 1: a little punch when they let us out of the studio. 655 00:36:58,520 --> 00:37:00,880 Speaker 1: Thank you so much for City Private Bank here at 656 00:37:00,880 --> 00:37:08,719 Speaker 1: the Bloomberg Equality Summit. Thanks for listening to the Bloomberg 657 00:37:08,800 --> 00:37:14,719 Speaker 1: Surveillance podcast. Subscribe and listen to interviews on Apple Podcasts, SoundCloud, 658 00:37:15,120 --> 00:37:19,279 Speaker 1: or whichever podcast platform you prefer. I'm on Twitter at 659 00:37:19,400 --> 00:37:23,600 Speaker 1: Tom Keene before the podcast. You can always catch us worldwide. 660 00:37:24,080 --> 00:37:25,160 Speaker 1: I'm Bloomberg Radio.