WEBVTT - Prestige's Schenker on OPEC Decision: Bearish for Price (Audio)

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<v Speaker 1>Broadcasting live to New York Toomberg eleventh, to Washington, d C.

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<v Speaker 1>Bloomberg to Boston, Bloomberg twelve, under to San Francisco, Bloomberg

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<v Speaker 1>nine to the country, US Exam General one nine team,

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<v Speaker 1>and around the globe the Bloomberg Radio plus Aid Boomberg

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<v Speaker 1>dot Com. This is taking Stock. Hi, I'm Kathleen. He's

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<v Speaker 1>my co host, Pim Fox. Out of the office today.

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<v Speaker 1>In this half hour, we are going to be taking

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<v Speaker 1>a big picture kind of political look at some very

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<v Speaker 1>important events. Today. We've got Hillary Clinton, the presumptive Democratic nominee,

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<v Speaker 1>giving him an important foreign policy speech starting momentarily where

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<v Speaker 1>she's expected to attack Donald Trump on his lack of

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<v Speaker 1>a foreign policy vision. And we're gonna be looking at

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<v Speaker 1>the Opeque meeting today, no quota met downward pressure on

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<v Speaker 1>oil prices. If supply weren't lower in the United States,

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<v Speaker 1>oil prices might be falling more than they are. We're

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<v Speaker 1>going to take a look at these and maybe even

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<v Speaker 1>tie them together in a few important respects. Now, let's

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<v Speaker 1>tie it all together. We're gonna go to Charlie Pelton

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<v Speaker 1>Issiam with a bloombig business flash, and I thank you

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<v Speaker 1>very much. Kathleen Hayes plenty going on. We've got the

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<v Speaker 1>jobs report tomorrow, but as you mentioned, we've got that

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<v Speaker 1>OPEC meeting today. Crude oil now up eight cents forty

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<v Speaker 1>nine O nine a barrel on West Texas Intermediate two

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<v Speaker 1>tenths of one percent. And also the ECB decision. ECB

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<v Speaker 1>President Mario Draggy unveiling largely unchanged inflation forecast for the

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<v Speaker 1>Eurozone even as its latest stimulus measures start to take effect.

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<v Speaker 1>He also called on governments to play a bigger role

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<v Speaker 1>in cementing the region's pick up. The latest data point

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<v Speaker 1>to ongoing growth in the second quarter, though possibly at

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<v Speaker 1>a lower rate than in the first quarter. Looking ahead,

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<v Speaker 1>we expect the economic recovery to proceed at a moderate

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<v Speaker 1>but steady pace. The ten year of eight thirty seconds

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<v Speaker 1>zeal there one point eight oh percent. Filings for US

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<v Speaker 1>unemployment benefits to climb for a third consecutive weeks. Signalings

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<v Speaker 1>sustained firming in the labor market, jovels claims down by

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<v Speaker 1>one thousand. Tomorrow morning, eight thirty A on Wall Street Time,

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<v Speaker 1>we get the all important May jobs report. Payrolls seen

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<v Speaker 1>climbing by one hundred sixty thousand, the unemployment rates scene

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<v Speaker 1>falling to four point nine percent, SMP five hundred index

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<v Speaker 1>up two point. Stocks are rebounding. The SMP now at

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<v Speaker 1>one up by point one percent down, Industrials up twenty points,

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<v Speaker 1>a gain of point one percent, nastack of eight a

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<v Speaker 1>gain of two tenths of one percent, and at two

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<v Speaker 1>thirty two on Wall Street. Now, let's take a look

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<v Speaker 1>at other news from around the world. On Bloomberg Radio.

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<v Speaker 1>Thank you Charlie from the Bloomberg News Room, my Ramie Innocentio.

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<v Speaker 1>Hillary Clinton has said to unleash a major foreign policy

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<v Speaker 1>attack on Donald Trump at this hour, using a speech

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<v Speaker 1>in San Diego today to cast the likely Republican presidential

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<v Speaker 1>nominee as unqualified and dangerous. The former Secretary of State

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<v Speaker 1>plans to contrast her foreign policy experience with his. Meanwhile,

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<v Speaker 1>Hillary Clinton and Bernie Sanders are locked in a tight

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<v Speaker 1>battle in California. Clinton has a slight lead over Sanders

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<v Speaker 1>forty to forty in a new Field Pole a New

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<v Speaker 1>Wall Street Journal NBC News Maris Pole found similar results,

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<v Speaker 1>with Clinton leading Sanders for the state's primary is Tuesday.

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<v Speaker 1>The fallout continues from North Korea's recent missile tests. Bloomberg's

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<v Speaker 1>Michael Barr has more. The U. N. Security Council is

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<v Speaker 1>calling North Korea's failed missile launches flagrant violations. The Council

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<v Speaker 1>has strongly condemned the three latest launches. The council calls

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<v Speaker 1>them a grave violation of a ban on all ballistic

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<v Speaker 1>missile activity that's contributed to the country's nuclear weapons program.

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<v Speaker 1>Michael Barr Bloomberg Radio more. What weather is on the

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<v Speaker 1>way for Texas emergency official state the Brazos River is

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<v Speaker 1>already four feet higher than its record and still rising.

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<v Speaker 1>Donna Cheshire, who lives in Lubbick, says she's never seen

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<v Speaker 1>the flooding so bad. I've seen it bad when you know,

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<v Speaker 1>in the cars would come and it would wash up

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<v Speaker 1>in the yard, but never where it would get into

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<v Speaker 1>the house. But it actually came in my house. And

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<v Speaker 1>the New York City lawyer says the city's police force

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<v Speaker 1>has thwarted numerous terrorist attacks, despite claims by some critics

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<v Speaker 1>that its methods do not work. Global News twenty four

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<v Speaker 1>hours a day, powered by our journalists in more than

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<v Speaker 1>one fifty news bureaus around the world. From the Bloomberg Newsroom,

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<v Speaker 1>I'm Rainy in essentio Charlie and we thank you and

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<v Speaker 1>again recapping stocks higher across the board. SMP five hundred

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<v Speaker 1>index up two points to one again of point one.

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<v Speaker 1>I'm Charlie Vllett and that's a Bloomberg Business flash. This

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<v Speaker 1>is taking stock with Kathleen Hayes and Grim Box on

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<v Speaker 1>Bloomberg Radio. OPEC is going to stick to its policy

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<v Speaker 1>of unfettered production after members failed again to agree on

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<v Speaker 1>a new output ceiling. However, ministers are united in their

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<v Speaker 1>optimism that global oil markets markets are improving, and the

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<v Speaker 1>group was also able to appoint a news Secretary General,

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<v Speaker 1>Nigeria's Mohammed Barkindo, something that couldn't agree on last year.

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<v Speaker 1>Mr Barkindo gave some remarks today saying that the group

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<v Speaker 1>is going to work to regain the unity it had

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<v Speaker 1>had in the past and the confidence of the international

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<v Speaker 1>community UH, saying that OPEC is making a comeback as

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<v Speaker 1>it overcomes temporary difficulties. Now he's in Vienna today, not

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<v Speaker 1>only Mr Barkindo, but our next guest, Jason Shanker, president

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<v Speaker 1>of Prestige Economics. He's based in Austin, Texas, but he's

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<v Speaker 1>joining us from Austria today where Opek met. So, Jason,

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<v Speaker 1>what is your sense of the mood coming out of

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<v Speaker 1>this putting the best face on the fact that they

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<v Speaker 1>couldn't agree on a quota or is it is it

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<v Speaker 1>true that the meetings were not rankers, they were a

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<v Speaker 1>little friendlier and they're heading towards more of an agreement

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<v Speaker 1>in the future. So I think it's both. So I

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<v Speaker 1>think the eating was less rancorous. It was described as

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<v Speaker 1>you know, amenable and friendly and the sorts of things,

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<v Speaker 1>and you know, it wasn't as it has been at

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<v Speaker 1>past meetings where you have people kind of storm out

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<v Speaker 1>of the meeting and that's not as good. But that

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<v Speaker 1>being said, even though it was a more positive meeting,

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<v Speaker 1>no production quota was adopted, No target was adopted. Uh

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<v Speaker 1>and UH. I know that the Saudis had worked very

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<v Speaker 1>hard to put together what turned out to be quite

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<v Speaker 1>a complicated proposal that they thought would make the interests

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<v Speaker 1>of both Iran and Saudi and all the rest of

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<v Speaker 1>the members, and yet it wasn't accepted and there's no

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<v Speaker 1>production number. Again, So where will the price of oil go? Today?

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<v Speaker 1>We've got West Texas Intermediate trading around forty nine dollars

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<v Speaker 1>and change just slightly higher. So it has certainly hasn't

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<v Speaker 1>um taken a beating on this news today? Is the

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<v Speaker 1>bottom in for oil now? Well, I think, you know,

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<v Speaker 1>if we look back to where we were in January,

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<v Speaker 1>I think that, yeah, I mean, we've come a long

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<v Speaker 1>way since those loads in January, but that doesn't mean

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<v Speaker 1>that there aren't downside risks. And I'd say, if you

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<v Speaker 1>wanted to assess where those risks are, I would probably

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<v Speaker 1>be looking at industrial medals prices like copper or aluminum,

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<v Speaker 1>or fair scrap prices, which, although we're stronger a couple

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<v Speaker 1>of months ago, have taken a beating in the last

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<v Speaker 1>six weeks um following a couple of very weak Chinese

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<v Speaker 1>p m I numbers. The schene Um just out on

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<v Speaker 1>the first of the month out yesterday showed that Chinese

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<v Speaker 1>manufacturing has been contracting for seventeen in the past eighteen

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<v Speaker 1>consecutive months. That's a year and a half of a

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<v Speaker 1>manufacturing recession in China's been going on, and that's thirty

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<v Speaker 1>of their economy. So that's hurting medals and there's a

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<v Speaker 1>risk as in the last two years, when the summer

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<v Speaker 1>driving season ends uh, that oil prices could follow medals

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<v Speaker 1>lower regardless of a supply demand balance. Well, you know

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<v Speaker 1>our Bloomberg story about keeping the status quo after feeling

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<v Speaker 1>to cree on output cap said, the fact that oil

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<v Speaker 1>has rallied about from the twelve year old January suggests

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<v Speaker 1>the Saudi led decision a couple of years ago to

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<v Speaker 1>maintain output amid a global glut, in fact maybe make

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<v Speaker 1>it worse. It's finally paying off with higher cost producers

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<v Speaker 1>cutting back. So I think, uh, that is partially true.

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<v Speaker 1>So that the um, you know, the the vet tolet prices,

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<v Speaker 1>to to let go of the rudder and let the

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<v Speaker 1>market kind of find its own way has paid off.

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<v Speaker 1>Higher cost producers have been forced out of the market.

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<v Speaker 1>More producers will be forced out of the market because

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<v Speaker 1>fifty dollars isn't very profitable for some producers, and campex

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<v Speaker 1>has been cut significantly in the United States. Now that

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<v Speaker 1>being said, while that has been good for OPEC market share,

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<v Speaker 1>the prices are still low enough that this is problematic

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<v Speaker 1>for a number of opaque economies even at fifty dollars.

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<v Speaker 1>And if you look at some of the I m

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<v Speaker 1>F growth forecast or some uh, pretty dis more growth

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<v Speaker 1>forecast for some OPEC members in the year ahead. And

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<v Speaker 1>of course not all OPEC members operate on the same

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<v Speaker 1>cost curve, so this is something that is uh yeah,

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<v Speaker 1>it could could prove beneficial for OPEC providing oil into

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<v Speaker 1>the market, but also hurts the profitability of some of

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<v Speaker 1>those members. You know. A very smart fellow named Jason Shanker,

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<v Speaker 1>Oh that's you, president of Stige Economics, also quoted this story.

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<v Speaker 1>The lack of oil production targets bears for prices because

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<v Speaker 1>the hopes of ideal to increased in the past couple

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<v Speaker 1>of days. Jason Shanker says, say goodbye to OPEX efficacy

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<v Speaker 1>as united groups. So you don't think Mohammed Markendo is

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<v Speaker 1>the guy to to pull this group strongly together again.

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<v Speaker 1>I mean, is OPEC really over as the powerhouse of

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<v Speaker 1>the oil setting market oil price setting market. No, you know,

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<v Speaker 1>I don't think it's over, and I don't think that

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<v Speaker 1>the Secretary General is the one who should be uh,

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<v Speaker 1>you know, really put to task with pulling the group together.

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<v Speaker 1>It's uh, you know, I think it's unfortunate for the

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<v Speaker 1>group that that there were attempts to try to have

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<v Speaker 1>cohesion and it didn't come together. But after a couple

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<v Speaker 1>of meetings where there's no production target, something that had

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<v Speaker 1>been in place for thirty five years. Uh, you know,

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<v Speaker 1>I think markets look at this and they begin to wonder, Uh,

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<v Speaker 1>you know, does OPEC still have a leadership role. There's

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<v Speaker 1>not really a uniform set of decisions. What does this mean?

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<v Speaker 1>Are they going to remain effective moving forward? Will things

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<v Speaker 1>improve when Iranian production gets back to sort of pre

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<v Speaker 1>embargo levels. Is that when there's going to be more

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<v Speaker 1>of a negotiation. Those are the questions out there right now.

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<v Speaker 1>Jason Shaker, thanks so much for joining us. I hope

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<v Speaker 1>you have a nice time in Vienna where Jason's been

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<v Speaker 1>attending the OPEC meeting today. No output target met, he says,

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<v Speaker 1>that is still bearish for oil prices. I'm Kathleen Hayes.

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<v Speaker 1>This is taking Stock on Bloomberg Radio. Bloomber Taking Stock

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