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Speaker 1: Welcome to the Bloomberg Surveillance Podcast. I'm Tom Keene. Daily

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Speaker 1: we bring you insight from the best in economics, finance, investment,

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Speaker 1: and international relations. Find Bloomberg Surveillance on Apple Podcasts, SoundCloud,

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Speaker 1: Bloomberg dot Com, and of course, on the Bloomberg Right

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Speaker 1: Now Lisa Brownlinson, Tom Keene and the equity markets with

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Speaker 1: Sam Stovall and Sam I've got a start where we

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Speaker 1: were with Matt O'Connor of Deutsche Bank. Thank you Doug

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Speaker 1: Cass for emailing in a very sharp note where Doug

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Speaker 1: cast almost trading. Sam would say, the banks have come

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Speaker 1: awfully far, awfully fast. Sam stove all that right now?

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Speaker 1: All love the banks? Do they? Sam? Is it too

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Speaker 1: far too fast for the banks? Well? I think that

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Speaker 1: we are seeing better numbers expected for this fourth core

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Speaker 1: are diversified banks were expected to be a uh down

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Speaker 1: in that fourth quarter earnings now off only seventeen point six,

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Speaker 1: so things are looking to get a little better. Regional

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Speaker 1: banks we're supposed to be down thirteen and a half

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Speaker 1: now less than twelve and a half, and things really

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Speaker 1: haven't even gotten started yet. So uh. Basically, where there

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Speaker 1: is a vacuum of valuations is where are most likely drawn. Yeah, well,

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Speaker 1: well said. The other idea of Sam still that I

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Speaker 1: think you've got so many decades of experience on, is

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Speaker 1: that corporations and ceo s they adjust to the cards

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Speaker 1: that have been dealt. Do you anticipate a lot of

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Speaker 1: adjustment by companies in this year they will surprise with

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Speaker 1: better margins down the income statement? Well, I think you're

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Speaker 1: right that the companies basically say, we don't like the uncertainty, uh,

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Speaker 1: and whatever cards are dealt us, we will work around them. Uh.

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Speaker 1: That's why. What interesting is that every Democratic president since

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Speaker 1: Woodrow Wilson has come into power backed by a solidly

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Speaker 1: Democratic Congress. Uh. Yet with that we've seen the market

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Speaker 1: do very well in the first year of those six presidents,

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Speaker 1: up more than eleven percent. And if you go back

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Speaker 1: to including the Russell two thousand, they've been up six

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Speaker 1: in the first year of a president's term in office,

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Speaker 1: rising in eight of eight times. Well, but this is

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Speaker 1: a very different year, and it comes on the heels

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Speaker 1: of an incredibly unique dynamic. There's a question how do

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Speaker 1: you parse out the froth from the reality when you

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Speaker 1: look at some of these earnings expectations that are baked

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Speaker 1: into valuations. Well, I think right now the earnings expectations

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Speaker 1: need to improve. Right now, we're looking at sube and

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Speaker 1: seventy dollar earnings for the SMP five hundred, which is

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Speaker 1: causing the SMP to be trading at a premium to

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Speaker 1: its twenty year ridge NTM or next twelve month PE ratio.

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Speaker 1: I think we're gonna need to see earnings that are

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Speaker 1: approaching two dollars a year in order to bring down

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Speaker 1: the PE from that twenty three plus to something closer

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Speaker 1: to eighteen or so. So the other issue, the other

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Speaker 1: aspect that's been influencing equities this week, this month, this

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Speaker 1: year has been the retail price setters, and I've really

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Speaker 1: been struck by statistics showing that, for example, on Monday,

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Speaker 1: retail traders accounted for a fifth of all equity trading.

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Speaker 1: If you just look at the top six most active stocks,

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Speaker 1: which were penny stocks. How does this affect your investment?

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Speaker 1: Pisis if at all? Does it? Does it sort of

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Speaker 1: create a flag for you that there's something amiss? Well,

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Speaker 1: yes it does. Actually, I also anecdotally got phone calls

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Speaker 1: from two nieces who have never invested before who now

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Speaker 1: want to invest. So you know, is that like Bernard Baruka,

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Speaker 1: Joe Kennedy. Uh, look, we need to get advice from

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Speaker 1: their their boot black So uh yeah, that's a concern.

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Speaker 1: When you also see the Russell two thousand trading above,

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Speaker 1: it's two day moving average, the highest on record. Uh,

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Speaker 1: that too is a concern that the market is in

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Speaker 1: need of a digestion of games. What you are getting here,

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Speaker 1: folks on radio and television is the stove All Clinic.

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Speaker 1: What Sam stove All just said there about what we

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Speaker 1: do with Democratic President, House and Senate is textbook looking

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Speaker 1: at our history? Sam, what's our trap right now of

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Speaker 1: looking at too much history and at the present of

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Speaker 1: this modern market. Well, I always like to say that

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Speaker 1: history is a great guide, but it's never gospel. Uh

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Speaker 1: that even though, as Mark Twain one said, it might

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Speaker 1: frequently rhyme like the singer of the national anthem, sometimes

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Speaker 1: it forgets the words. So you really do have to

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Speaker 1: overlay historical um tendencies with economic project since fundamental forecast

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Speaker 1: and technical considerations, and right now that trend is your friend. Uh.

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Speaker 1: And while we are likely to do for some sort

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Speaker 1: of a pull back, one occurs every nine months. I

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Speaker 1: still think that we are headed higher for the full year. Okay,

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Speaker 1: we're heading to hire for the full year. Are you

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Speaker 1: gonna be like Ben Laylor and Tara Hudson and give

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Speaker 1: me a double digit number? I heard that with your

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Speaker 1: history back to Woodrow Wilson. I know your great grandfather

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Speaker 1: was covering the street back then. But Sam, are you

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Speaker 1: gonna go all double digit on me? Uh? No? High?

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Speaker 1: Single digit? I call myself a bull, but with a

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Speaker 1: lower case being um four or zero eight? Zero is

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Speaker 1: our year end target for the SMP five. We were

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Speaker 1: talking about how the hope for a better future is

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Speaker 1: paid with trillions of dollars of stimulus. How much is

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Speaker 1: your thesis? Is your prediction for year end predicated on

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Speaker 1: this idea of at least two trillion dollars of additional

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Speaker 1: fiscal support? Well, I think fiscal support is already baked

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Speaker 1: in largely to the market. Expectations are that we will come.

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Speaker 1: I mean I read Greg Valieri as well on a

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Speaker 1: daily basis, and I believe that I'm gonna be looking

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Speaker 1: for Biden going big when he announces tonight. Uh So,

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Speaker 1: I believe that that is factored in and we're starting

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Speaker 1: to see the interest rates and inflation every worry you

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Speaker 1: start to creep higher as a result of that. UM

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Speaker 1: and now we're looking at the dichotomy between our economists

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Speaker 1: and our technicians as to how high interest rates go.

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Speaker 1: So it should lead to some very interesting trading. But

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Speaker 1: I think the stimulus is important to ensure we have

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Speaker 1: a strong takeoff in the second half. And say, before

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Speaker 1: we let you go, I'd love to get your take

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Speaker 1: on the rotation trade. This idea that investors are going

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Speaker 1: further into the banks, into other cyclicals and away on

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Speaker 1: the margins from big tech. Do you think that that

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Speaker 1: has legs or do you think that that's been made

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Speaker 1: too much of um? No, absolutely it has legs. I

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Speaker 1: published my Bell portfolio, which looks at those sub industries

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Speaker 1: that were the ten best and the ten worst from

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Speaker 1: the prior calendar year UM and the outperformance typically has

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Speaker 1: been anywhere from two hundred to four hundred basis points,

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Speaker 1: whether you look at the best or the worst. Right now,

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Speaker 1: the bottom ten sub industry constituents or up eight percent,

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Speaker 1: whereas the market itself is up one point six And

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Speaker 1: chances are this ends up continuing through Sam Stove all

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Speaker 1: just wonderful, Thank you, Thank you so much. It's really

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Speaker 1: really appreciate it, Greg Value. Now with a g F Greg,

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Speaker 1: what will be the price to those ten Republicans? Can

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Speaker 1: you calculate the price to them in the primaries of

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Speaker 1: two thousand twenty two. Yeah, I think some of them

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Speaker 1: are going to lose in their primaries. I think Liz Shaney, though,

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Speaker 1: has some pretty decent support in the House town. I

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Speaker 1: wouldn't predict her her downfall, but some of her colleagues

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Speaker 1: might pay a price. You're out this morning, Sam Stoleball.

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Speaker 1: Thank you for mentioning that. Folks, we protect the copyright

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Speaker 1: of our note. Lisa and I are not going to

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Speaker 1: send it out to you. Go to a g F

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Speaker 1: two c Velier's note, Greg, you link pardons in the

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Speaker 1: dynamics for this president towards the Senate votes beginning the

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Speaker 1: nineteenth linked those two. Sure, if there was a vote today,

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Speaker 1: the Senate would vote to acquit. I don't see the

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Speaker 1: seventeen votes necessary. However, we've got a week to go.

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Speaker 1: So what do we get in the next week? Are

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Speaker 1: there more disclosures about who was behind the riots, who

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Speaker 1: is complicit? Are there more pardons? I think that events

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Speaker 1: in the next week or so will be really crucial.

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Speaker 1: And it's happening in tandem with efforts to draft a

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Speaker 1: new fiscal stimulus bill. Joe Biden planning to unveil that

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Speaker 1: today at seven pm Eastern Time. The price tag two trillion,

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Speaker 1: two point two trillion, the expectation that Republicans will sign

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Speaker 1: off on it. How realistic, Greg, is this bipartisanship that

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Speaker 1: people are expecting. I think it is for this bill, Lisa,

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Speaker 1: that then I would get concerned about whether they can

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Speaker 1: get a lot more. I mean, the plan right now

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Speaker 1: is to go for go big. I would say two

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Speaker 1: trillion or something close to it tonight is big. And

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Speaker 1: then the plan is to wait and come up with

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Speaker 1: another bill on infrastructure, green jobs, all that stuff later

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Speaker 1: in the spring. That second bill could be difficult. On

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Speaker 1: this one, I think that Biden will prevail, and I

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Speaker 1: think it's the story of the bond market has to

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Speaker 1: worry about. One story that people have been saying is

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Speaker 1: that the impeachment turmoil in Washington, d C. Has unified Congress,

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Speaker 1: has unified Republicans and Democrats to some degree to get

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Speaker 1: some sort of bipartisanship. Do you think that's really an

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Speaker 1: accurate representation, not necessarily. I think both parties are still

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Speaker 1: in great disagreement. It's a weird, surreal climate right now

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Speaker 1: in Washington. I went for a long run yesterday and

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Speaker 1: it's an armed camp in downtown Washington and it's going

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Speaker 1: to stay that way for a while. Yeah, Gregg, I

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Speaker 1: went for a long run yesterday too, to get a

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Speaker 1: new iPhone actually with a marginal cocktail. Greg. When we

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Speaker 1: look at this drama and we move forward, there is

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Speaker 1: a changing from McConnell to Schumer. Color that change? What?

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Speaker 1: What's the backstory there? Well, they're both very partisan, they

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Speaker 1: both know how to deal. I think obviously they have

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Speaker 1: different priorities, and I think a major one is that

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Speaker 1: Schumer really feels strongly about infrastructure. I mean, he's had

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Speaker 1: to drive on the b QUI and the l I E,

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Speaker 1: and he knows you need more money spent on infrastructure.

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Speaker 1: I think that will be a priority. A lot of

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Speaker 1: other things Schumer will place a big priority on, like

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Speaker 1: a big increase in minimum wage. I think that comes

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Speaker 1: fairly soon. So they're different, but I think they'll they'll

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Speaker 1: at least superficially get a lot. The big relationship Tom

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Speaker 1: is the relationship between McConnell and Biden. Okay, I'll go

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Speaker 1: with that. But if your two point two trillion, as

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Speaker 1: you published today as a top end on the Biden

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Speaker 1: stimulus tonight, do you have a figure on following infrastructure?

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Speaker 1: Do we get out to the kind of support that

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Speaker 1: the liberal conomist Claudius Sam mentions, Oh that comes in

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Speaker 1: this second bill in the spring, they could talk about

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Speaker 1: a half a trillion or more on infrastructure. You know,

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Speaker 1: you've got Republicans who have now found religion on the deficit,

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Speaker 1: you can be sure of that. But you've got the

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Speaker 1: bond market that send yields quite a bit higher. I

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Speaker 1: think we just can't spend an unlimited amount of money

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Speaker 1: where the markets may rebel. This is kind of a

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Speaker 1: sensitive question, Greg, but based on your conversations with your clients,

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Speaker 1: typically big business has skewed, Republican has huged more to

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Speaker 1: the policies of Republicans. Who's the party of the c

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Speaker 1: suite right now? That's a really really intriguing question. I think.

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Speaker 1: Now you've got a lot of businesses that were a

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Speaker 1: gas at what happened last week. They were a gas

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Speaker 1: at Republicans refusing to accept the results of the election.

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Speaker 1: So I think for now at least a lot of

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Speaker 1: businesses are going to view Republicans as being in the

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Speaker 1: dog house. All right, So Republicans in the dog house,

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Speaker 1: and we've seen that in terms of campaign contributetions. What

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Speaker 1: does that mean in terms of policy and where they

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Speaker 1: will work with Republicans and where they will work with Democrats.

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Speaker 1: I think eventually we do get deals. I think that

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Speaker 1: it will come, but we're still in the kumbaya phase

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Speaker 1: where everybody is going to talk during the inauguration about,

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Speaker 1: you know, working together. It never ever winds up that way,

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Speaker 1: and I think there will be huge differences over spending.

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Speaker 1: And then the issue we haven't talked about is taxes.

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Speaker 1: I think by mid spring, the Ways and Means Committee

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Speaker 1: is going to be putting together a tax bill and

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Speaker 1: it's going to be a build the markets don't like Greg.

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Speaker 1: Thank you so much. I greatly abridge. You know what's

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Speaker 1: great about this, folks, is Lisa and I are still

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Speaker 1: in the Kumbaya phase. Oh yeah, from our for each

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Speaker 1: other or for well we'll see Greg morning. A really

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Speaker 1: really smart note. Frances Donald band you Life Investment Management,

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Speaker 1: Global chief economist in Global head of macro strategy joining

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Speaker 1: us now France. Is your first take on this really

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Speaker 1: disappointing Josh Report. Yeah. You know, for the last couple

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Speaker 1: of months when we've had bad data, we've struggled to

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Speaker 1: make the point that it mattered for markets because bad

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Speaker 1: data just meant more fiscal stimulus. And who cares because

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Speaker 1: on the second half of the economy is going to

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Speaker 1: re accelerate. But this number, to me, speaks to a

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Speaker 1: tipping point in that narrative. You know, we're not seeing

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Speaker 1: rate surge following this terrible, terrible number, implying we're going

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Speaker 1: to get a greater fiscal spend. What we're looking at

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Speaker 1: here is a deepening in the crisis, a second economic

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Speaker 1: wave that's coming through. And let's remember there's a lot

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Speaker 1: to say about fiscal But what is Power thinking as

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Speaker 1: he looks at this number he is speaking later today,

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Speaker 1: what is he seeing global economies heading back into lockdown?

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Speaker 1: In Europe, in Asia? I'm up here in Canada have

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Speaker 1: a curfew for the first time since I was fourteen

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Speaker 1: years old. He's looking at some members of the FED

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Speaker 1: talk about tapering, and he has ten million Americans are

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Speaker 1: unemployed relative to FED ory and a surgeon jobless claims.

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Speaker 1: It's not bad news is good news anymore. It's a

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Speaker 1: bad news reflecting really painful a couple of months ahead

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Speaker 1: for the economy. And could you elaborate a little bit

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Speaker 1: on this tipping point, Francis, as you called it. Is

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Speaker 1: it a tipping point for markets where bad news is

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Speaker 1: bad news or is it a tipping point for the

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Speaker 1: economy where each of these weekly initial jobless claims suddenly

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Speaker 1: has import beyond what it did, say a month ago. Well,

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Speaker 1: first and foremost for the economy, in my view, the

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Speaker 1: first half of one is going to look very rough.

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Speaker 1: It's not going to be a formal recession just because

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Speaker 1: the year over. Your pomps don't get us there. But

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Speaker 1: in December the US lost a hundred and forty thousand jobs.

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Speaker 1: That's recessionary territory. We are going to see a lot

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Speaker 1: of weakness in the economy in the first few months.

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Speaker 1: Those city economic surprise indexes are gonna fall. And I've

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Speaker 1: struggled to see how the Federal Reserve allows rates to climb,

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Speaker 1: even if it's gradual, in this type of environment, this

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Speaker 1: is not the time to be risking gradually raising rates.

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Speaker 1: They have to things relatively supplanted. And if they don't,

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Speaker 1: I really do worry about some form of taper tantra.

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Speaker 1: I mean, even if it's many. What is the most

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Speaker 1: efficient use of stimulus? What is the lessons you've learned

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Speaker 1: Francis Donald from support in Canada or support in Europe.

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Speaker 1: So first and foremost, you do have to plug the hole. Now,

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Speaker 1: the best type of support are those that make sure

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Speaker 1: people don't actually leave their jobs. So we're talking about

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Speaker 1: wage supplements for example. This was really really successful in Germany.

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Speaker 1: You also, of course have to think longer term. We've

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Speaker 1: been thinking a lot more longer term about infrastructure spending,

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Speaker 1: how do we raise inflation and how do we get

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Speaker 1: potential GDP higher? But I suspect we need to add

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Speaker 1: back into an area. We're talking about providing immediate and

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Speaker 1: urgent support Google food lines. You're going to see people

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Speaker 1: around the block over and over. This is still a

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Speaker 1: very ring situation just because of time. I don't need

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Speaker 1: to interrupt, But this is really really really important with

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Speaker 1: the politics and the new calculus in wanting to and

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Speaker 1: is there a change in Lackey in individualism in America

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Speaker 1: where we're gonna become more like Canada, your Canada. We're

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Speaker 1: gonna become more like Europe and provide the income, substitution

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Speaker 1: and replacement that Jonathan Pharaoh speaks of. Well, we're heading

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Speaker 1: towards redistributive policies. You are likely going to see more

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Speaker 1: demand for that. And I've heard Lisa earlier say something

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Speaker 1: really critical. Watch stimulus, not for the headline number, but

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Speaker 1: what it's being spent on. What it's being spent on

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Speaker 1: is what will drive your growth and inflation over the

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Speaker 1: longer term. And redistributive policies have a lot of merits

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Speaker 1: to them, but they're not necessarily as inflationaries other types

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Speaker 1: of spending. So let's just be cautious when we're analyzing fistal,

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Speaker 1: not just the headline, but what's under the surface as well.

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Speaker 1: Francis Donald of Menual Life Asset Management, thank you so

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Speaker 1: much for being with us on this day. Right now

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Speaker 1: and anticipating is Jeffrey Curry of Golden Sex on the

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Speaker 1: surge in oil, Jeff, many people are modeling up. This

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Speaker 1: is the top end of the range. Can you model

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Speaker 1: a breakout of oil through sixty Well, I, I I you

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Speaker 1: have all of the telltale signs of a structural bull

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Speaker 1: market at play here. You know, not only do you

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Speaker 1: have oil, you know, charging towards sixty dollars a barrel.

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Speaker 1: You have metals prices back to supercycle era levels. You

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Speaker 1: have grains exploding, UM, you have global liquidity increasing tremendously

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Speaker 1: at the exact same time you look at the dollar,

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Speaker 1: it's broking multi year trend lines going back to two

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Speaker 1: thousand eleven. So you know, when we think about the

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Speaker 1: potential for a macro raate pricing across the commodity complex,

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Speaker 1: this is the highest it's been well over a decade.

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Speaker 1: So we think there's a lot of upside risk not

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Speaker 1: only to oil but the entire commodity complex. You know,

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Speaker 1: I want to talk about Jurgen's wonderful new book, The

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Speaker 1: New Map for pro Like you, Jeff Curry, it's all

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Speaker 1: old news. You probably helped Urgan write it. But for

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Speaker 1: the rest of us, it's overwhelming the dynamics of US

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Speaker 1: production of oil. Are we at risk in the New

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Speaker 1: Map that Joe Biden is writing. No, When when we

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Speaker 1: think about uh, the current environment, and particularly given the

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Speaker 1: E s G overlay, UM, there's only really two sources

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Speaker 1: of oil that can be brought on quickly to meet

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Speaker 1: the potential deficits that we expect over the course of

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Speaker 1: the next twelve to twenty four months. And that's the

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Speaker 1: Middle East in the United States. So it's going to

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Speaker 1: be a very important part of that supply mixture. Now

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Speaker 1: when we think about, um, you know, the potential for

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Speaker 1: Iran coming back with the Biden administration. One, Iran has

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Speaker 1: probably fallen down the policy agenda somewhat, but more importantly,

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Speaker 1: we expect there to be room for that supply as well.

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Speaker 1: When we look out in the where do the saudiast

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Speaker 1: and where do the Russians, speaking of the wonderful Jurgan book,

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Speaker 1: where do they? Where's their optimal oil price? I mean,

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Speaker 1: I know Mr Putin is gonna say high or higher

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Speaker 1: or higher, but where's their best price? Well, I just

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Speaker 1: want to remind everyone that remember in the two thousands

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Speaker 1: there in that structural bull market, they go to the

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Speaker 1: best prices to twenty eight dollars five best prices thirty five.

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Speaker 1: I don't think they know and I don't think we know. Um.

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Speaker 1: I just want to remind people that structural repricing, that

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Speaker 1: curtain of five oh six, everything repriced, and we saw

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Speaker 1: a structural repricing in two thousand and fifteen to the downside. Um,

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Speaker 1: we're in the cust but one of those happening We

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Speaker 1: maybe in it. It feels like it in terms of

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Speaker 1: look at what's going on in the other markets. It

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Speaker 1: starts to become very difficult to endpoint where that cost

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Speaker 1: structure is. Let's go Chicago with Jeffrey Curry teaching for

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Speaker 1: years at the University of Chicago legendary and their microeconomics,

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Speaker 1: which is the oxygen of Chicago. Jeff, you and I

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Speaker 1: know there's a general equilibrium theorium etherium, Martilly and cross

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Speaker 1: of oil supply and demand. There's a misunderstanding by the

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Speaker 1: public of how sensitive how tight those elasticities those sponsiveness

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Speaker 1: is are. Are we in a new equilibrium or is

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Speaker 1: it the same old, same alta. It's the same old,

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Speaker 1: same old, But the underlying cost that's associated with that

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Speaker 1: same old, same old is the one that's really uncertain.

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Speaker 1: Let me give you an example this UM, it's two

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Speaker 1: thousand and twelve. I was talking to one of our

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Speaker 1: private equity clients. They valued a Canadian asset at a

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Speaker 1: hundred and twenty dollars in barrel. It had a internal

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Speaker 1: rate to return. Then fourteen and fifteen happened. What oil

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Speaker 1: collapse from one twenty down to forty five? The dollar

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Speaker 1: ripped from one point four on the euro to one

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Speaker 1: point oh five, iron ore crushed, copper crush, Canadian dollar smashed. Um,

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Speaker 1: we're sitting at forty five dollars in barrel. You went

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Speaker 1: back to that same asset and revalued it. What would

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Speaker 1: the I R R everything repriced during that environment? And

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Speaker 1: that's why it's really difficult when we say, all right,

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Speaker 1: is there something different about this this equaliberying? Yeah, it's

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Speaker 1: really what are the prices attached to it? For those

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Speaker 1: of you taking notes on radio, in at home on TV,

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Speaker 1: I must say what you just heard from Dr Curry

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Speaker 1: there was brilliant. But do we have that same formula,

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Speaker 1: that same reaction function now or we cut prices so

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Speaker 1: much to a new efficiency. You're gonna alludes to this

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Speaker 1: in the new map that the technology technological leap isn't

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Speaker 1: there anymore to cut costs if we see price pressure. Well,

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Speaker 1: I gave you the example to the downside. Now this

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Speaker 1: one is moving to the upside. Like in oh five,

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Speaker 1: I don't have you a good private equity example for

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Speaker 1: oh five when it re priced to the upside because

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Speaker 1: they weren't active in this space back then. But but

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Speaker 1: I think when in terms of what's going on right

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Speaker 1: now is costs are rising, I like to point out

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Speaker 1: we have Wall Street sanctioned cost inflation going on with companies,

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Speaker 1: particularly ones that don't follow stringent E s G types strategy. So, um,

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Speaker 1: we're in an environment in which coster in flame. And

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Speaker 1: let me just give me an idea why a weaker

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Speaker 1: dollar creates up or cost structure. Let's take like copper

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Speaker 1: of coppers. Production costs are local in Chile, and when

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Speaker 1: we have the dollar a week and in the Chilean

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Speaker 1: pace so began to strengthen. What happens to the cost

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Speaker 1: of producing copper? It goes up almost immediately the minute

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Speaker 1: the dollar begins to weaken. Even places like Columbia or

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Speaker 1: Canada where we produce oil at cost, structure starts to

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Speaker 1: creep up very quickly with the weakening dollar, and then

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Speaker 1: you get what we call the reflationary feedback loop. So

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Speaker 1: what you have a week dollar puts upper pressure on commodities.

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Speaker 1: Higher commodity prices lead to greater global liquidity. Let me

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Speaker 1: emphasize Saudi's excess reserves went up in the month of

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Speaker 1: November by ten billion. So what happens that access liquidity

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Speaker 1: gets lent out, creates more demand for commodities, and the

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Speaker 1: whole cycle goes up and you get there. But does

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Speaker 1: the circuitous function here that leads to this optimism of

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Speaker 1: price and just the the micro cosm of it helping

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Speaker 1: push prices up. Does it lead to a commodity bull

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Speaker 1: market or is it a lift off the Great commodity recession?

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Speaker 1: Um I would argue, this is a this is a

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Speaker 1: structural bowl market. And you know you played Dwight Anderson,

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Speaker 1: you know, talking about you know the type of tail

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Speaker 1: wins you have going on. You have structural under investment

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Speaker 1: in supply similar to what we had twenty years ago,

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Speaker 1: but turbo charts because of COVID prices going negative and

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Speaker 1: the fact that you have the E. S G overlay

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Speaker 1: on it. Second, you have policy driven demand, redistributional policies,

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Speaker 1: green capecs. All of that fueling is struggle upward shift

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Speaker 1: in demand. And then the third one is you have

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Speaker 1: that tail win of a week dollar to really create

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Speaker 1: relation feedback. Is American big Oil ready for your scenario? Um?

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Speaker 1: Part of the reason why we're bullets from a supply

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Speaker 1: perspective is they're not they're you know, looking at you know,

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Speaker 1: the permian um. They act ativity is of the big

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Speaker 1: super majors around the world have come off tremendously. You know,

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Speaker 1: there's an E S G component there, but there's also

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Speaker 1: just hey, returns weren't that great. So the bottom line, yes,

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Speaker 1: there is definitely um you know, the makings here for

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Speaker 1: you know, a very strong bowl market and the interest

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Speaker 1: in some of these companies. They may be, but they're

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Speaker 1: moving forward in a very different direction. So this is

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Speaker 1: really important. I don't want you to take over David

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Speaker 1: Coustan Shingle here, but bringing over the commodity perspective of

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Speaker 1: Curry over to the equity market application of Constant. Can

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Speaker 1: you advise David Constant to be overweight energy even after

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Speaker 1: the liftoff the bottom um, we want to be overweight commodities.

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Speaker 1: And the one thing that separates commodities from you know,

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Speaker 1: financial assets is financial assets they anticipate the future. Um.

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Speaker 1: Commodities are spot assets, and they pick up as a

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Speaker 1: hedge against potential inflation, the unanticipated physical moves in the

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Speaker 1: real economy. So as we think you're gonna physically take

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Speaker 1: off with the vaccination. Um, you know, improvement in economic

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Speaker 1: activity in the quarter, you're gonna want to be long

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Speaker 1: spot assets, real assets. So we must prefer, you know,

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Speaker 1: the commodity as opposed to the commodity related equity. Well,

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Speaker 1: I just need to revisit the start to Curry one

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Speaker 1: final question. If you look at the breaking commodities off

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Speaker 1: of OH eight and this is the glide path that

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Speaker 1: we've seen through a decade. To be clear, here you're

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Speaker 1: calling for a reaffirmation of a commodity bull market without question.

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Speaker 1: I mean, I get. I'm gonna emphasize you know, this

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Speaker 1: ship is sailed. If you look at all the classic

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Speaker 1: you know, telltale signs of a structural bull market. You

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Speaker 1: have the weak dollar, grain prices. We can talk about

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Speaker 1: grain prices. You know how a client called corn bitcorn recently. Um.

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Speaker 1: And then you have what's going on in the metals

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Speaker 1: markets overlay that. And the kicker is the global liquidity

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Speaker 1: is beginning to rise, because that's the to the Michigan

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Speaker 1: that really starts that reflationary fact. Jeff Curry, hugely informative.

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Speaker 1: Thank you so much. With Goldman Sachs. Thanks for listening

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Speaker 1: to the Bloomberg Surveillance podcast. Subscribe and listen to interviews

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Speaker 1: on Apple Podcasts, SoundCloud, or whichever podcast platform you prefer.

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Speaker 1: can always catch us worldwide. I'm Bloomberg Radio