WEBVTT - Wall Street, Energy, And EVs (Podcast) 0:00:00.800 --> 0:00:04.040 Welcome to the Bloomberg Markets Podcast. I'm Paul Sweeney alongside 0:00:04.040 --> 0:00:06.920 my co host Matt Miller. Every business day we bring 0:00:06.960 --> 0:00:11.520 you interviews from CEOs, market pros, and Bloomberg experts, along 0:00:11.520 --> 0:00:15.520 with essential market moving news. Find the Bloomberg Markets podcast 0:00:15.560 --> 0:00:18.439 called Apple Podcasts or wherever you listen to podcasts, and 0:00:18.480 --> 0:00:22.040 at Bloomberg dot com slash podcast. We're going to bring 0:00:22.040 --> 0:00:25.480 in Shinali bassik Uh. She is our Wall Street reporter 0:00:25.520 --> 0:00:28.320 to talk to us about the reaction to j Palell 0:00:28.360 --> 0:00:29.840 and what to expect the rest of the week and 0:00:30.360 --> 0:00:33.159 of course after the long weekend. First off, though, I 0:00:33.200 --> 0:00:36.480 want to remind everyone listening that Bloomberg Markets is brought 0:00:36.520 --> 0:00:40.199 to you by Commonwealth, supporting more than two thousand independent 0:00:40.240 --> 0:00:43.120 financial advisors with the solutions they need to grow a 0:00:43.240 --> 0:00:47.880 thriving business. Commonwealth go where you grow. Visit Commonwealth dot 0:00:47.880 --> 0:00:50.599 com to learn more. That was so good, Thank you, well, 0:00:50.960 --> 0:00:53.479 thanks Actually forgot that I had to do that until 0:00:53.560 --> 0:00:56.400 after I introduced Shnale, So that's a little bit awkward. 0:00:56.600 --> 0:01:03.200 That's okay, shally Um. What's going on? We basically the market. 0:01:03.480 --> 0:01:05.920 I noticed Katie Greifeld in her newsletter wrote the markets 0:01:05.959 --> 0:01:09.200 puked on Friday. I don't know if I love that terminology, 0:01:10.000 --> 0:01:12.039 but I guess that's a popular thing to say. Well, 0:01:12.080 --> 0:01:14.240 it's funny to think about the market puking. You do 0:01:14.319 --> 0:01:17.000 have volatility rising a little bit once again, it's at 0:01:17.000 --> 0:01:18.800 twenty six now if you look at the VIX and 0:01:18.920 --> 0:01:23.720 obviously all summer, even with volatility muted, you've had von volatility, 0:01:23.760 --> 0:01:26.600 the move in deck still moving around a bit. So 0:01:26.920 --> 0:01:29.920 what was the reaction you read one of my major 0:01:29.959 --> 0:01:32.080 notes that I got. When you look at how the 0:01:32.120 --> 0:01:35.360 by side is perceiving what happened at Jackson Hole, there's 0:01:35.400 --> 0:01:37.400 a lot of questions about not just what's going to 0:01:37.480 --> 0:01:39.480 happen in the next two months, but what happens in 0:01:39.560 --> 0:01:44.000 the next six to twelve months. The frustration here is, yes, 0:01:44.040 --> 0:01:46.160 they're happy that forward guidance went away, but at the 0:01:46.200 --> 0:01:49.320 same time they don't trust the FED to be consistent 0:01:49.920 --> 0:01:53.200 over the next six to twelve months, and well, because 0:01:53.200 --> 0:01:56.240 it has over the last six to twelve exactly. Actually, 0:01:56.280 --> 0:01:58.200 there was a great story out on the terminal that 0:01:58.240 --> 0:02:00.280 we me and my sources have been kind of sharing 0:02:00.280 --> 0:02:04.320 around by Katerina Suriva, and it's about the history of 0:02:04.400 --> 0:02:07.080 Jackson Hole over the last two years under Powell and 0:02:07.120 --> 0:02:09.840 how much of his manifesto has really held up over 0:02:09.840 --> 0:02:13.440 the last two years. So credibility is really the question 0:02:13.480 --> 0:02:18.440 here um and the willingness to combat inflation. What else 0:02:18.440 --> 0:02:20.800 are you watching? What else am I watching? We'll see 0:02:20.919 --> 0:02:23.560 we're talking. We started this talking about the Vicks at six. 0:02:23.840 --> 0:02:26.920 Why does that matter from a Wall Street perspective, from 0:02:26.919 --> 0:02:31.040 a banking perspective, the post Labor Day rush, should things 0:02:31.080 --> 0:02:34.680 stay muted, there was a sense that underwriting could come back, 0:02:34.960 --> 0:02:36.600 that maybe we can see an I p O or 0:02:36.639 --> 0:02:40.280 two again, a bigger one. There are some big names 0:02:40.280 --> 0:02:43.480 out there that we've been talking about instat cart for example. 0:02:43.480 --> 0:02:45.600 I know Emily Chain was talking to Venture Capitalist last 0:02:45.600 --> 0:02:48.640 week on her program about something like that. Can deal 0:02:48.720 --> 0:02:51.280 making comeback in true reform? It hasn't been that bad, 0:02:51.360 --> 0:02:55.079 but underwriting is really what the expectation has been. If 0:02:55.080 --> 0:02:58.040 you see the vix keep rising. And then also remember 0:02:58.160 --> 0:03:01.720 quantitative tightening is taking off in large reform in September 0:03:01.840 --> 0:03:04.960 and to talk October. Should markets tighten up again, then 0:03:05.000 --> 0:03:06.760 all the hopes of doing all the things that make 0:03:06.800 --> 0:03:10.400 the banker's real money start to go away again. Underwriting. 0:03:11.320 --> 0:03:13.120 What does trading look like into the second half of 0:03:13.160 --> 0:03:15.200 the year. You know, we talk about this. Paul, if 0:03:15.200 --> 0:03:16.880 he was here, would already be asking about it. Is 0:03:16.919 --> 0:03:20.320 what does it mean for bonus season? Paul cares about 0:03:20.400 --> 0:03:22.680 is what bankers get paid, because Paul was a banker 0:03:22.720 --> 0:03:24.880 and then all he cared about was what he got paid. Yeah. 0:03:24.880 --> 0:03:27.280 Well yeah, And and to be honest, you know, this 0:03:27.320 --> 0:03:29.160 is where the rubber hits the road. When you come 0:03:29.160 --> 0:03:31.800 back from Labor Day, there's a lot of travel. I know, 0:03:31.840 --> 0:03:33.560 I'm already going to be in Miami and Paris through 0:03:33.560 --> 0:03:35.800 the end of the year. We have our own conferences. 0:03:35.880 --> 0:03:38.640 Why are you going to Paris? Um to interview, to 0:03:38.720 --> 0:03:42.080 see you of Morgan Stanley and kick care and so 0:03:42.240 --> 0:03:44.240 you take like a week off before or after so 0:03:44.280 --> 0:03:47.480 you can just enjoy this. Okay, care to say this? 0:03:47.520 --> 0:03:50.400 I was literally over the weekend going to actually ASHIONALI 0:03:50.720 --> 0:03:52.680 if we should take a girl's trip to Paris. But 0:03:52.800 --> 0:03:56.000 now we can't do that because apparently James Warman is 0:03:56.040 --> 0:04:01.400 more important than me. Um, let's talk to Almir's that 0:04:01.520 --> 0:04:03.720 maybe you'll give us some time on both ends of 0:04:03.720 --> 0:04:05.600 the trip so that you and I can come back 0:04:05.640 --> 0:04:09.680 here super happy as we deliver reports. But you know 0:04:10.480 --> 0:04:13.600 the reality is two weeks right after Labor Day or 0:04:13.640 --> 0:04:16.200 the full week after that, you have a lot of 0:04:16.200 --> 0:04:18.120 things in New York as well. You have super Return 0:04:18.120 --> 0:04:20.080 to New York, so all the big private equity executives 0:04:20.080 --> 0:04:22.159 from across the US and internationally are going to be 0:04:22.160 --> 0:04:25.039 in New York. You also have Salt, which is that 0:04:25.120 --> 0:04:29.720 Anthony Scaramuchie Skybridge conference. So I know, you know September 0:04:29.920 --> 0:04:34.120 is heated, it's booked, but again the markets are choppy. 0:04:34.279 --> 0:04:37.359 Well with conferences and with interviews, but not with I 0:04:37.560 --> 0:04:41.159 p o S or with launches. R'm talk. It's a 0:04:41.160 --> 0:04:43.520 lot of talking to investors, it's a lot of preparing 0:04:43.600 --> 0:04:48.200 for more stable times ahead. But again to your point, 0:04:48.839 --> 0:04:52.320 today's conversations lead to tomorrow's deals, right, But this year, 0:04:52.400 --> 0:04:54.440 I mean, what's deal activity look like, what's ipe O 0:04:54.520 --> 0:04:57.560 activity look like? What's it seems? Kind of it's it's 0:04:57.640 --> 0:04:59.719 really bad out there. I don't even know what else 0:04:59.760 --> 0:05:02.400 to say, because remember last year, the year before that, 0:05:02.440 --> 0:05:04.479 people were excited about not just I P O S, 0:05:04.720 --> 0:05:08.880 people were also excited about direct listings, they were excited 0:05:08.880 --> 0:05:11.680 about spacks and now kind of the venue to go 0:05:11.760 --> 0:05:14.119 back just licking their wounds from all of those things 0:05:14.120 --> 0:05:17.960 that they unfortunately got involved in last year. Regrettably. Right, 0:05:18.120 --> 0:05:21.160 the hangover is real, and it'll probably be real into 0:05:21.240 --> 0:05:24.440 next year. Maybe one or two will squeeze through, but again, 0:05:24.480 --> 0:05:27.320 a lot of the things that really fueled the banking 0:05:27.360 --> 0:05:30.679 system this year does not seem to be continuing into 0:05:30.680 --> 0:05:33.159 next year. And again, VIX at today, we're in the 0:05:33.240 --> 0:05:36.080 last week of August. What does that look like into 0:05:36.160 --> 0:05:38.920 next year? The Future's curve is telling you that it's 0:05:38.960 --> 0:05:40.560 going to get choppier into the end of the year. 0:05:40.600 --> 0:05:42.479 It's pretty crazy. Although I have to say the VIX 0:05:42.520 --> 0:05:45.320 has been a pretty poor indicator of action. I mean, 0:05:45.360 --> 0:05:49.200 there were times last month when it felt incredibly heated 0:05:49.240 --> 0:05:51.640 and the VIX was doing a whole lot of nothing. Now, 0:05:51.680 --> 0:05:54.520 I know Friday was a big down day and that's 0:05:54.560 --> 0:05:57.360 when the VIX climbed up to basically twenty six, but 0:05:57.720 --> 0:06:02.080 it's it's not moving around that much today, and I 0:06:02.080 --> 0:06:04.040 I just don't know about the VIX as an indicator. 0:06:04.160 --> 0:06:06.640 We haven't jumped above thirty six, so I don't think 0:06:06.640 --> 0:06:09.000 the VIX needs to get all that high to stifle activity. 0:06:09.440 --> 0:06:12.400 Twenty five is the one year average. Now that that one, 0:06:12.440 --> 0:06:15.159 we haven't jumped above twenty six. You mean thirty six 0:06:15.240 --> 0:06:20.280 is where we were in March of right, Okay, so 0:06:20.480 --> 0:06:23.320 we haven't jumped above thirty six, and today we're at 0:06:23.320 --> 0:06:26.400 twenty six. But you can get to and things already 0:06:26.440 --> 0:06:29.520 still feel pretty choppy out there, all right, Join Allie Bassik, 0:06:29.760 --> 0:06:36.000 Wall Street Reporter, Thanks so much for joining us. Let's 0:06:36.000 --> 0:06:39.320 get over to Pete Anderson right now, joining us from 0:06:39.360 --> 0:06:42.200 Anderson Capital Management. Pete, I want to get first year 0:06:42.240 --> 0:06:47.000 take on um Powell's eight minute speech on Friday. It 0:06:47.080 --> 0:06:49.760 really the whole Jackson, whole event, Um that seemed to 0:06:49.839 --> 0:06:54.400 drag markets down pretty substantially last week. Well, good morning, 0:06:54.440 --> 0:06:58.919 and yes it did in eight minutes of really devastating testimony, 0:06:59.160 --> 0:07:04.040 in my opinion, very very frank uh uh narrative in 0:07:04.200 --> 0:07:06.760 terms of the way he had been speaking. So I 0:07:06.800 --> 0:07:09.400 think that's a pretty strong message. But you know, the 0:07:09.480 --> 0:07:11.880 other thing we have to keep in context is that's 0:07:12.200 --> 0:07:15.559 one speech of many, and he is trying to figure 0:07:15.600 --> 0:07:18.080 out where the heck we are in this market cycle, 0:07:18.520 --> 0:07:20.880 just like the rest of us. You know, they have data. 0:07:21.320 --> 0:07:24.640 We all have the same data. And it is very 0:07:24.720 --> 0:07:28.640 challenging right now to formulate, you know, a pretty rational 0:07:28.720 --> 0:07:32.480 picture about where we are and how we should handle 0:07:32.520 --> 0:07:35.400 where we are and where we're going. So he's trying, 0:07:35.440 --> 0:07:37.720 like the rest of us. Hats off to him, But 0:07:38.080 --> 0:07:41.760 there are many many possibilities in this scenario. Isn't there 0:07:42.320 --> 0:07:46.200 certainly longer term? Um, it's a big question mark about 0:07:46.240 --> 0:07:48.280 what the FED does. Of course, in the next few months, 0:07:48.280 --> 0:07:51.720 it seems they are determined to continue raising at a 0:07:52.680 --> 0:07:55.520 if not seventy five then fifty basis point clip. What 0:07:55.520 --> 0:08:00.880 do you expect, Well, I expect that in lation is 0:08:00.920 --> 0:08:05.280 probably going to take care of itself, uh not completely, 0:08:05.680 --> 0:08:10.120 but you know, we have already seen really pretty remarkable 0:08:10.200 --> 0:08:16.000 changes in gas prices, housing inventories, and even lumber applywood prices, 0:08:16.080 --> 0:08:19.720 all those types of things, and we didn't require FED 0:08:19.920 --> 0:08:22.800 intervention for that. That was just supply and demand taking 0:08:22.840 --> 0:08:26.760 over classic dynamics like that. So what I worry about 0:08:27.320 --> 0:08:30.640 is that the FED might be acting too aggressively, and 0:08:30.680 --> 0:08:34.600 as you know, there's a delay and the impacts of 0:08:34.679 --> 0:08:38.240 his decisions, so we might be heading to a period 0:08:38.280 --> 0:08:43.640 where he might overtighten. As we see naturally, inflation just 0:08:43.720 --> 0:08:46.000 kind of receding. So that's what I worry about. But 0:08:46.080 --> 0:08:48.760 I do think that he probably will do fifty five 0:08:49.320 --> 0:08:52.000 uh coming this next month, and I do worry a 0:08:52.080 --> 0:08:54.200 little bit about that because I think by then we 0:08:54.240 --> 0:08:57.600 will see even more signs of inflation, you know, our deflation. Sorry, 0:08:57.840 --> 0:09:03.000 where we're not really focusing on the natural dynamics that's applied. 0:09:03.040 --> 0:09:07.560 Demand has And remember where there is no playbook for 0:09:07.640 --> 0:09:11.120 this recovery because it is truly unique. So as we 0:09:11.160 --> 0:09:13.920 struggle to look back at history and say these are 0:09:13.960 --> 0:09:16.560 the rules of thumb, I don't really think we have 0:09:16.760 --> 0:09:20.760 many rules of thumb given this unique circumstance that we're in. Well, Peter, 0:09:20.840 --> 0:09:23.480 you say there's no playbook, But let's go back to 0:09:23.720 --> 0:09:27.280 just a couple of years ago, where you had a 0:09:27.360 --> 0:09:30.800 series of rate hikes, you had quantitative tightening, you had 0:09:30.840 --> 0:09:33.440 an equity market that even by then at that point 0:09:33.600 --> 0:09:37.240 was also considered extremely hot and extremely overvalued. Isn't that 0:09:37.320 --> 0:09:39.400 the playbook to go by, the idea that the stock 0:09:39.440 --> 0:09:43.319 market can actually handle this QT and can handle these 0:09:43.360 --> 0:09:46.960 rate hikes because it has before well very good points. 0:09:46.960 --> 0:09:49.040 And you know, I struggle with that myself, to be 0:09:49.120 --> 0:09:51.920 honest with you. But I do think when we look 0:09:51.960 --> 0:09:56.920 at the root cause, where we find ourselves presently very 0:09:57.040 --> 0:10:00.240 very different from anything in the past. I mean even 0:10:00.280 --> 0:10:03.320 two thousand eight for instance, which I think is the 0:10:03.360 --> 0:10:05.840 most comparable in terms of the state of confusion that 0:10:05.840 --> 0:10:08.800 we're in right now. So I look at what caused 0:10:08.880 --> 0:10:12.319 us to get here, and I find that the cause 0:10:12.640 --> 0:10:16.160 is unique. And because the cause is unique, I also 0:10:16.240 --> 0:10:19.480 think the solution might be unique. And you know, we 0:10:19.559 --> 0:10:23.440 are desperately hanging on to every single data point that 0:10:23.480 --> 0:10:26.319 comes out, and many of these data points are approximations, 0:10:26.559 --> 0:10:28.840 So I think you have to blend all that together. 0:10:29.200 --> 0:10:31.959 I know what you're saying in terms of, oh, say, 0:10:32.679 --> 0:10:35.840 yield curve dynamics and rules of thumb about you know, 0:10:35.880 --> 0:10:38.839 if the yield curve is inverted. But even that, this 0:10:38.920 --> 0:10:44.000 time I think might be different in terms of, uh, 0:10:44.160 --> 0:10:46.679 you know, what the FED can do. You said you're 0:10:46.679 --> 0:10:50.640 concerned about overtightening. What what does that look like? Overtightening? 0:10:50.679 --> 0:10:54.080 What happens to an economy of this economy? Because it 0:10:54.200 --> 0:10:59.360 is pretty unique. M Yeah, I think, um, if they 0:10:59.400 --> 0:11:03.480 acknowledge edge that lets let's assume they do overtighten. Okay, 0:11:03.520 --> 0:11:06.480 and that's the biggessumption. But let's just play that scenario 0:11:06.559 --> 0:11:09.960 out then. I do think, um, if they acknowledge that 0:11:10.040 --> 0:11:14.040 they have overtightened, that could be a market rally. However, 0:11:14.520 --> 0:11:19.000 if they are denying or ignoring that and the market 0:11:19.120 --> 0:11:21.839 starts to signal that to them, that could be more 0:11:21.960 --> 0:11:24.920 dangerous because then we don't know what the next steps 0:11:25.000 --> 0:11:27.160 the FED will take well, and the and the effect 0:11:27.200 --> 0:11:30.479 on business, the effect on investment, the effect on consumers. 0:11:30.559 --> 0:11:33.240 How how bad does it get for the economy. I 0:11:33.280 --> 0:11:36.400 think it could be very serious in that, Um, you know, 0:11:36.520 --> 0:11:41.800 higher rates could just stifle a natural recovery. And that's 0:11:41.840 --> 0:11:44.120 the problem. You know, if you play out just as 0:11:44.160 --> 0:11:47.440 I mentioned, say lumber prices or housing inventory, you know, 0:11:47.559 --> 0:11:50.720 just imagine how that could get crushed if we actually 0:11:51.040 --> 0:11:54.360 put the brake on too strong. So, you know, nobody 0:11:54.400 --> 0:11:58.040 had envies the Fed's position, but I am hopeful that 0:11:58.200 --> 0:12:00.800 they are intuitive enough. And I hate to use the 0:12:00.840 --> 0:12:03.160 word intuition when we're talking about these kinds of things, 0:12:03.200 --> 0:12:05.640 but I do think it does come to the forefront 0:12:05.920 --> 0:12:08.920 where you have to try to blend all the scenario 0:12:09.559 --> 0:12:12.480 and signals that you're getting and try to incorporate the 0:12:12.480 --> 0:12:17.320 fact that we got here from coronavirus and it has 0:12:17.360 --> 0:12:20.440 impacted the nation in the world. Those are the things 0:12:20.520 --> 0:12:22.120 you have to factor in that are very different this 0:12:22.160 --> 0:12:25.720 time coronavirus. And then you know, like trillions upon trillions 0:12:25.800 --> 0:12:29.840 upon trillions of fiscal spending. Pete, we never have enough 0:12:29.840 --> 0:12:31.360 time with you. I'm so glad we could spend we 0:12:31.360 --> 0:12:32.920 could get you on the show though, So thanks so 0:12:33.000 --> 0:12:35.400 much for joining us. Peter Anderson is the founder of 0:12:35.440 --> 0:12:42.040 Anderson Capital Management. Let's bring in a true expert here, 0:12:42.040 --> 0:12:45.840 I mean a Baker chief OPEC correspondent and Dubai deputy 0:12:45.840 --> 0:12:49.360 beau chief of Energy Intelligence. Uh, let me put that 0:12:49.440 --> 0:12:51.640 question to you. Thank you for joining us as always 0:12:51.720 --> 0:12:55.400 back or excuse me, I am standing corrected. Let me 0:12:55.440 --> 0:12:57.720 ask you why do we see that spread in oil 0:12:57.760 --> 0:13:03.800 at the moment? Hi, good morning and thanks for having me. Um. Yeah, 0:13:03.840 --> 0:13:06.520 there is a huge spread between the two, as you noted, 0:13:06.640 --> 0:13:09.440 and uh, perhaps I mean we're we're going to see 0:13:09.440 --> 0:13:14.320 a further spread. And I mean this wasn't the case 0:13:15.480 --> 0:13:18.839 a few weeks ago. You saw that Brent fell to 0:13:19.120 --> 0:13:23.679 ninety dollars. Now it's back to a hundred and three. Um, 0:13:23.720 --> 0:13:28.880 and this mainly happened really because after comments UH from 0:13:28.920 --> 0:13:34.160 the Saudi Energy Minister hinting that Okay Plus had previously 0:13:35.000 --> 0:13:39.480 cut production, and that comment was enough for the market 0:13:39.600 --> 0:13:43.680 to realize that cutting production might be on the table again. 0:13:43.960 --> 0:13:49.319 So we saw Brent rise based on on that news. UM, 0:13:49.440 --> 0:13:52.280 whether or not we're gonna see the Open Plus group 0:13:52.880 --> 0:13:57.280 go ahead with that hint of a cut remains to 0:13:57.320 --> 0:13:59.480 be seen. The group is supposed to meet on the 0:13:59.520 --> 0:14:03.400 fifth of September and they say all options are open, 0:14:03.559 --> 0:14:08.160 but I think I mean, just looking at Brent prices here, UM. 0:14:08.600 --> 0:14:11.920 The main reason I believe the Saudi Energy Minister hinted 0:14:12.080 --> 0:14:16.800 that at these cuts UM wasn't really to to raise prices. 0:14:16.880 --> 0:14:21.400 It was more about gaining UH control over the market. 0:14:21.680 --> 0:14:25.400 He was worried that overbarish or over bullish uses moving 0:14:25.680 --> 0:14:29.520 this market. Speculation is moving this market. Use um daily 0:14:29.600 --> 0:14:31.840 news that we're seeing that perhaps the US is going 0:14:31.880 --> 0:14:35.360 to reach a deal with Iran and Iran would supply 0:14:35.560 --> 0:14:39.040 more barrels into the market. I mean, there's the influx 0:14:39.200 --> 0:14:43.280 of news and that's influencing the market. So I would 0:14:43.320 --> 0:14:48.080 say the market in general oil is not reacting on fundamentals, 0:14:48.560 --> 0:14:52.360 it's more of a kind of psychological disturbance or to 0:14:52.600 --> 0:14:55.560 borrow a phrase the Saudi Energy minister used, he says, 0:14:55.920 --> 0:15:00.320 it's a it's in a stage of like instab pity 0:15:00.600 --> 0:15:07.680 uh and she's afraidia. Um. So that's that's the situation. Uh. 0:15:07.920 --> 0:15:11.960 What's the real likelihood from from your vantage point of 0:15:12.320 --> 0:15:18.080 Iranian barrels coming on to um, you know, the Western 0:15:18.120 --> 0:15:24.240 market from here from America, it looks incredibly unlikely that 0:15:24.720 --> 0:15:27.120 that something's really going to happen that would lead to, 0:15:27.440 --> 0:15:31.840 you know, those sanctions coming off. Sure, UM, I would 0:15:31.840 --> 0:15:34.640 agree with that. I mean, I know that from from 0:15:34.840 --> 0:15:38.800 the Iranian press or Iranian media, even from Iranian officials, 0:15:38.800 --> 0:15:41.720 they seem to be a lot more optimistic and they 0:15:41.800 --> 0:15:45.000 want to keep reminding the market that in order to 0:15:45.400 --> 0:15:49.120 uh to to to to move prices down, Iran needs 0:15:49.160 --> 0:15:51.840 to come back. Iran needs to fill that gap there 0:15:51.920 --> 0:15:54.360 isn't enough spirit capacity and they're able to do that. 0:15:54.400 --> 0:15:59.080 But just um, thinking about it in terms of signing 0:15:59.080 --> 0:16:02.000 a deal with the US, I I completely agree with 0:16:02.080 --> 0:16:07.000 what you're saying here that it's really complicated. Negotiation is ongoing, 0:16:07.040 --> 0:16:09.960 and I don't see the steal getting signed anytime soon. 0:16:10.200 --> 0:16:12.760 But that doesn't stop the market from reacting. Every time 0:16:12.840 --> 0:16:16.080 we see a proposal or talk of the proposals, we're 0:16:16.240 --> 0:16:19.160 seeing prices move on that. So that's that's a fair 0:16:19.200 --> 0:16:23.360 point in terms of spare capacity, I mean, talking about 0:16:23.560 --> 0:16:26.440 cutting production makes sense to be that the market would 0:16:26.480 --> 0:16:29.160 react to that. Talking about raising production, I mean, how 0:16:29.240 --> 0:16:34.680 much can they really raise production? Um, Well, let's look 0:16:34.720 --> 0:16:37.240 at the group as open plus. I would say that 0:16:37.280 --> 0:16:39.800 there are only two members out of that twenty three 0:16:39.840 --> 0:16:44.479 member group that have spare capacity left or have capacity 0:16:44.480 --> 0:16:49.040 that they could bring to the market and Saudi you 0:16:49.160 --> 0:16:52.040 Ai and Saudi. So between the two, I would say 0:16:52.080 --> 0:16:56.040 they're sitting at UM two point five two point three 0:16:56.160 --> 0:16:59.680 million barrels. Uh. So that's that's the amount that could 0:16:59.720 --> 0:17:01.960 be off to the market. But bear in mind that 0:17:02.040 --> 0:17:06.120 both countries they don't want to max out their capacity 0:17:06.160 --> 0:17:09.320 because we're at a time here where sitting on spare 0:17:09.359 --> 0:17:14.400 capacity is incredibly valuable. It's become more valuable than than 0:17:14.560 --> 0:17:17.840 actual production and provides these countries a lot of leverage 0:17:17.840 --> 0:17:20.560 and political leverage, and I think that part of why 0:17:20.600 --> 0:17:24.959 the Biden administration. Biden visited the Jedda recently was because 0:17:25.000 --> 0:17:27.959 Saudi Arabia still sits on that capacity, so they're not 0:17:28.080 --> 0:17:31.959 gonna max out to twelve anytime soon. And you know, 0:17:32.440 --> 0:17:35.000 UM not have that in their hands. So I mean, 0:17:35.119 --> 0:17:36.920 thus the supply side, speak to us a little b 0:17:36.920 --> 0:17:38.720 about the demand side. I mean, how do you go 0:17:38.800 --> 0:17:41.560 about calculating this kind of stuff? I really studying the 0:17:41.560 --> 0:17:44.000 demand picture When you do have the likes of China 0:17:44.080 --> 0:17:47.479 and India buying discounted crude from Russia, still, how does 0:17:47.520 --> 0:17:53.160 that affect the demand pressures on the commodity market? Um, well, 0:17:53.440 --> 0:17:56.960 we we saw. I mean OPEC predicts in three that 0:17:57.000 --> 0:18:00.280 there is gonna be an increment in demand. It's it's 0:18:00.680 --> 0:18:02.920 not going to be at the same level of two, 0:18:03.000 --> 0:18:06.560 but there's gonna be increased demand. The there's a risk 0:18:06.600 --> 0:18:10.200 of the recession still hitting and again that's uh that's 0:18:10.320 --> 0:18:16.520 impacting uh markets. But uh, I mean that small demand 0:18:16.640 --> 0:18:20.560 increase that really needs to be fulfilled by the remaining 0:18:20.600 --> 0:18:25.840 spare capacity, which isn't much. UM. OPIC members remain optimistic 0:18:25.960 --> 0:18:30.720 about the demand side, but also very cautious. UM as 0:18:30.760 --> 0:18:33.800 you noted that, yeah, Russia is diverting a lot of 0:18:33.840 --> 0:18:36.640 its crew that is normally sold into Europe. Now it's 0:18:36.640 --> 0:18:40.240 being sold at discounts to India and China, who we 0:18:40.359 --> 0:18:45.760 understand our our storing a lot of it and straight 0:18:45.760 --> 0:18:48.600 back to those Europeans at or straight back exactly doing 0:18:48.640 --> 0:18:52.680 that cycle, which which is happening. Uh so they're they're 0:18:52.680 --> 0:18:54.960 taking advantage of the situation. But at the same time, 0:18:54.960 --> 0:18:58.199 I mean we've we've gotten a lot of calls from 0:18:58.240 --> 0:19:01.600 from from people in India in China asking us if 0:19:01.640 --> 0:19:05.760 the Gulf is going to be reducing their their allocations 0:19:05.800 --> 0:19:08.520 there and looking to sell their oil at at higher 0:19:08.560 --> 0:19:12.200 prices to to europe um, which isn't the case. I mean, 0:19:12.280 --> 0:19:15.520 the Gulf states haven't cut their allocations well, and I 0:19:15.560 --> 0:19:18.320 mean a lot of a lot of European countries are 0:19:18.359 --> 0:19:23.960 also still buying Russian crude, right, I mean these uh Italy, Yeah, 0:19:24.320 --> 0:19:27.320 we we we can't pretend that everyone is UM following 0:19:27.359 --> 0:19:29.199 along and it doesn't even kick in. I don't think 0:19:29.280 --> 0:19:32.600 until February the real UM sanctions there. I mean a 0:19:32.680 --> 0:19:34.359 great having on. I hope we can get you back 0:19:34.440 --> 0:19:37.800 soon because your insight and your intelligence very key to 0:19:38.480 --> 0:19:40.800 helping us to understand these markets. I mean, a baker 0:19:41.040 --> 0:19:46.720 is chief OPEC correspondent at Energy Intelligence. We're watching uh 0:19:47.080 --> 0:19:53.560 brent crude At one oh three forty two. I got 0:19:53.560 --> 0:19:57.240 a great message from Dan Curtis earlier, who is he's 0:19:57.240 --> 0:19:59.399 one of one of our producers in London. I believe 0:19:59.440 --> 0:20:04.680 he's your ball um every something. That very cool, he said. 0:20:04.680 --> 0:20:08.840 The Tesla model s uh sixty, so that's the cheaper one. 0:20:08.840 --> 0:20:11.240 It has a sixty two kilowatt hour battery with a 0:20:11.240 --> 0:20:15.000 two mile range, meaning it's about zero point three kilowatt 0:20:15.040 --> 0:20:19.200 hours per mile um. So he has worked out through 0:20:19.280 --> 0:20:23.159 that at a thousand euros per megawatt hour, which is 0:20:23.200 --> 0:20:25.080 one europe Er kilowatt hour, that works out to like 0:20:25.160 --> 0:20:27.639 thirty euro cents per mile and as I said, red parody, 0:20:27.680 --> 0:20:31.240 so that's it about the same as thirty cents cents um. 0:20:31.480 --> 0:20:35.840 Fuel economy in Europe, the average is six leaders per 0:20:35.960 --> 0:20:38.760 hundred kilometers that's how they measure it, instead of miles 0:20:38.800 --> 0:20:43.520 per gallon or about zero uh point one leaders per 0:20:43.560 --> 0:20:47.960 mile um. Premium gas in Germany is one seventy nine 0:20:47.960 --> 0:20:50.119 and euros, which as we know is one dollar and 0:20:50.119 --> 0:20:55.800 seventy nine cents per leader um or seventeen cents per mile. 0:20:56.240 --> 0:20:59.080 So in order to have parody between a Tesla and 0:20:59.119 --> 0:21:02.520 an internal combush an engine car, one that burns gasoline. Um, 0:21:02.520 --> 0:21:05.920 with gas at these prices, electricity needs to drop to 0:21:06.040 --> 0:21:09.080 five and eighty six euros or dollars a kill one hour. 0:21:09.280 --> 0:21:13.160 Right now we're approaching a thousand, So right now it's 0:21:13.200 --> 0:21:16.400 more economical to drive a gas car in Europe, which 0:21:16.400 --> 0:21:18.600 I thought was that's is interesting. Actually, now that you've like, 0:21:19.720 --> 0:21:22.399 let's bring in Kevin Tynan from Bloomberg Intelligence. He's a 0:21:22.440 --> 0:21:25.919 senior automotive analyst and Kevin, you know, there are a 0:21:25.920 --> 0:21:28.560 couple of news events that prompted me to say, let's 0:21:28.600 --> 0:21:32.840 get Kevin on. First was the news out of California 0:21:32.920 --> 0:21:38.560 that they want to um ban uh the selling of 0:21:38.880 --> 0:21:44.240 internal combustion engines by so no more gas engines by then. Okay, 0:21:44.240 --> 0:21:48.520 it's a long way off, but is that possible? Uh, 0:21:48.560 --> 0:21:50.719 well saying it as possible. And and by the way, 0:21:50.760 --> 0:21:54.639 I'm with you on the James Taylor thing. Um but Kevin, 0:21:54.800 --> 0:21:57.000 that was a big trail. Yeah. Well I'm a big 0:21:57.040 --> 0:22:00.960 Carlie Simon fans, so anyway, but um but you know, 0:22:01.080 --> 0:22:03.439 I I laugh because I don't think any of these 0:22:03.480 --> 0:22:07.560 people are going to be making decisions in if we're 0:22:07.640 --> 0:22:11.000 put on that path now anyway. Um, And I still 0:22:11.080 --> 0:22:12.760 feel like, and you know this matter, right, we talked 0:22:12.760 --> 0:22:15.920 about this all the time, like there's so many unintended 0:22:15.960 --> 0:22:22.040 consequences of this technological singularity of going to e V 0:22:22.520 --> 0:22:25.679 right that that I feel like we're just looking at 0:22:25.840 --> 0:22:29.320 one very very short part of the process, I mean, 0:22:29.440 --> 0:22:35.200 from mining of materials to disposal of batteries that says 0:22:35.240 --> 0:22:37.159 this is better, this is the way we should go. 0:22:37.280 --> 0:22:40.000 And I'm just not sure. And I think we're starting 0:22:40.040 --> 0:22:42.240 to hear a little bit more about like, hey, maybe 0:22:42.240 --> 0:22:46.320 we need some diversity in how we're powering these things 0:22:46.320 --> 0:22:50.720 and what choices we have as consumers. Yeah, yeah, I 0:22:50.720 --> 0:22:53.440 mean I I just I just feel like we're so 0:22:53.600 --> 0:22:58.160 focused on this one on the tail pipe or lack thereof, 0:22:58.680 --> 0:23:01.520 and saying this is bad, and I'm just not I'm 0:23:01.560 --> 0:23:03.719 just not convincing. I'm not anti e V, I'm not 0:23:04.119 --> 0:23:07.400