WEBVTT - Bloomberg Surveillance TV: April 30th, 2026 0:00:00.040 --> 0:00:06.720 Bloomberg Audio Studios, Podcasts, radio News. 0:00:11.640 --> 0:00:15.440 This is the Bloomberg Surveillance Podcast. I'm Jonathan Ferrow, along 0:00:15.480 --> 0:00:18.680 with Lisa Bromwitz and Amrie Hordern. Join us each day 0:00:18.720 --> 0:00:22.280 for insight from the best in markets, economics, and geopolitics 0:00:22.400 --> 0:00:24.840 from our global headquarters in New York City. We are 0:00:24.920 --> 0:00:27.680 live on Bloomberg Television weekday mornings from six to nine 0:00:27.720 --> 0:00:31.280 am Eastern. Subscribe to the podcast on Apple, Spotify or 0:00:31.320 --> 0:00:33.919 anywhere else you listen, and as always on the Bloomberg 0:00:34.000 --> 0:00:36.960 Terminal and the Bloomberg Business app. Here's the view on 0:00:37.000 --> 0:00:39.480 Wall Street this morning. Stops looking for some direction as 0:00:39.479 --> 0:00:42.560 big Tech plans another massive AI spend in the face 0:00:42.960 --> 0:00:46.440 of what could be Tainan's central banks worldwide. Joining US 0:00:46.479 --> 0:00:49.560 Shaman Massa var ROCKMANI the wealth management CIO and head 0:00:49.760 --> 0:00:52.599 of the Investment Strategy group at Goldman Sachs Charmin. It's 0:00:52.600 --> 0:00:54.760 good to see you, hello, Thank you for being here. 0:00:54.800 --> 0:00:57.240 Our central banks avants become a headwind to the Secretary 0:00:57.280 --> 0:00:57.880 market rally. 0:00:58.960 --> 0:01:01.080 We actually had a very exhibit on one of our 0:01:01.080 --> 0:01:05.199 client calls. If you look at the twenty one past 0:01:05.360 --> 0:01:07.919 strikes that the US has had on the middle Eastern 0:01:07.959 --> 0:01:12.399 North Africa. Up to eight months, eight weeks after the 0:01:12.440 --> 0:01:16.360 initial strike, the equity markets have been up on average 0:01:16.440 --> 0:01:20.319 four percent, and that's exactly where we are. So everybody saying, oh, 0:01:20.360 --> 0:01:22.679 the equity market is going ahead, how can they ignore 0:01:22.720 --> 0:01:25.760 the price of oil, whether it's wto or brent, what 0:01:25.920 --> 0:01:29.600 is exactly going on. Growth is still robust. Obviously we're 0:01:29.600 --> 0:01:31.560 going to get Q one numbers, but I think nobody's 0:01:31.640 --> 0:01:35.760 thinking that we're in recession is imminent. And if you 0:01:35.800 --> 0:01:40.200 look at the earnings we've gotten, they've been incredible, substantially 0:01:40.240 --> 0:01:47.280 greater than consensus, and this is a pretty significant in 0:01:47.319 --> 0:01:50.600 terms of exceeding expectations. It's a pretty significant number. It's 0:01:50.640 --> 0:01:53.760 not like, oh, we exceeded earnings by two percent, three percent, 0:01:53.840 --> 0:01:57.360 five percent. It's double digit. And if you look at 0:01:57.360 --> 0:02:00.320 the number of quarters where we've exceeded expectations and the 0:02:00.400 --> 0:02:03.880 number of consecutive quarts, it's just incredible. And so when 0:02:03.920 --> 0:02:07.680 people talk about the impact of the war, we have 0:02:07.800 --> 0:02:13.040 said the US economy is unbelievably resilient, and people continue 0:02:13.040 --> 0:02:15.519 to underestimate that. So as we look at this, I 0:02:15.560 --> 0:02:18.360 don't think anybody knows exactly how long this will last. 0:02:18.880 --> 0:02:21.400 If it lasts a lot longer and oil prices stay 0:02:21.400 --> 0:02:24.840 at these levels, then the economy will be weaker, and 0:02:24.880 --> 0:02:27.080 so the idea that people can raise rates in the 0:02:27.080 --> 0:02:29.720 face of weakening economy, especially in the US when you 0:02:29.720 --> 0:02:31.960 have a dual mandate, I think we need to factor 0:02:31.960 --> 0:02:33.160 in a lot of uncertainty. 0:02:33.600 --> 0:02:36.280 Do you think that there is a lack of logic 0:02:36.639 --> 0:02:39.519 when people say, well, oil prices are at this level 0:02:39.840 --> 0:02:42.720 and you see still that robust growth in the economy, 0:02:43.240 --> 0:02:46.240 So that means that the inflationary impacts can get passed 0:02:46.240 --> 0:02:49.920 through much more directly and easily because of the CAPEC spend, 0:02:50.000 --> 0:02:51.920 because of how all these companies are doing. Do you 0:02:51.919 --> 0:02:54.240 see that as a logical connection or do you think 0:02:54.280 --> 0:02:56.200 it just hasn't been long enough with oil prices at 0:02:56.240 --> 0:02:56.720 this level. 0:02:57.000 --> 0:02:59.480 They're actually two points. You're right, it hasn't been long enough. 0:03:00.120 --> 0:03:03.440 Number one, because if this war were to last and 0:03:03.520 --> 0:03:05.960 we see all prices here, eventually we will get to 0:03:06.000 --> 0:03:09.120 negative numbers in the equity market. But for now, the 0:03:09.240 --> 0:03:11.560 idea that we're up four to five percent is actually 0:03:11.560 --> 0:03:15.160 totally in line with history, and from our perspective, one 0:03:15.200 --> 0:03:17.880 of the pillars of our investment philosophy is history is 0:03:17.919 --> 0:03:20.360 a useful guide. So first we have that as the 0:03:20.400 --> 0:03:22.960 backdrop that we need to follow. The other thing that 0:03:23.000 --> 0:03:25.960 people need to think about is the energy intensity in 0:03:26.040 --> 0:03:29.720 terms of usage of oil is a lot different than 0:03:29.760 --> 0:03:32.160 the early eighties. So when we had the Arab oil embargo, 0:03:32.320 --> 0:03:34.680 then we had the Iran Iraq War, we had the 0:03:34.680 --> 0:03:39.800 Iranian Revolution, prices skyrocketed, but at that time the energy 0:03:39.800 --> 0:03:43.440 consumption in the US in terms of barrels per capita 0:03:43.600 --> 0:03:46.360 per year were substantially higher. In fact, it was around 0:03:46.360 --> 0:03:49.920 that's say, thirty barrels a year. That number is down 0:03:50.000 --> 0:03:53.080 around twenty three twenty four now. So there's also a 0:03:53.160 --> 0:03:56.640 view that energy crude oil will not impact as much. 0:03:56.680 --> 0:03:58.920 Obviously it will fertilizer. As we hear about all of 0:03:58.960 --> 0:04:01.360 these things to last a while. 0:04:01.240 --> 0:04:03.560 It does affect the cost of components, and we saw 0:04:03.600 --> 0:04:06.520 this with some of the hyper scalers reporting earnings last night. 0:04:06.840 --> 0:04:10.160 Meta for example, increase their expected capex in part because 0:04:10.160 --> 0:04:13.000 of higher component costs, maybe also because of some of 0:04:13.000 --> 0:04:16.200 the transportation issues that people are experiencing. At what point 0:04:16.240 --> 0:04:18.160 does that become a sticking point, Maybe not for the 0:04:18.160 --> 0:04:20.320 biggest tech companies, but for some of the tech companies 0:04:20.320 --> 0:04:23.040 out there that are facing an existential threat but are 0:04:23.040 --> 0:04:24.800 having to pay that much more to even play ball. 0:04:25.520 --> 0:04:29.279 I think there is a big question mark about the 0:04:29.320 --> 0:04:33.520 returns to the kapex for AI companies. The hyper scalers 0:04:33.520 --> 0:04:36.520 obviously have so much cash flow from other factors that 0:04:36.520 --> 0:04:38.520 they can do quite well. And if you look at 0:04:38.520 --> 0:04:41.760 their earnings, whether it was the latest reports or last years, 0:04:41.800 --> 0:04:44.279 they're just being phenomenal. But the rest of the economy 0:04:44.320 --> 0:04:48.160 is actually doing quite well, and people underestimate again the resilience. 0:04:48.200 --> 0:04:50.760 If you think about oil production in the US, US 0:04:50.800 --> 0:04:54.600 produces double the levels of Saudi Arabia, right, It's just incredible. 0:04:54.800 --> 0:04:57.440 You think about natural gas, US has become the largest 0:04:57.480 --> 0:05:03.599 exporter of natural gas in ten years, far exceeding Qatar. 0:05:04.040 --> 0:05:06.760 So as we think about these factors, people need to 0:05:06.800 --> 0:05:10.280 think that the shock is not as great. And at 0:05:10.279 --> 0:05:12.600 the end of the day, both sides want to end 0:05:12.600 --> 0:05:15.560 this war. The question is what is a respectable off 0:05:15.640 --> 0:05:18.000 ramp for both sides, And I think the market is 0:05:18.000 --> 0:05:20.359 saying we will get there. Well, there'll be fits and 0:05:20.400 --> 0:05:23.599 start the escalation, the escalation, and we're going to have 0:05:23.600 --> 0:05:25.400 to go through that and That's why we recommend our 0:05:25.400 --> 0:05:28.600 clients stay invested, don't try to time this market. Nobody 0:05:28.600 --> 0:05:30.400 can do that consistently very well. 0:05:30.480 --> 0:05:33.479 But in the beginning, conventional thinking was four to six weeks. 0:05:33.520 --> 0:05:35.800 We're now eight to nine weeks into this war. How 0:05:35.880 --> 0:05:39.200 much longer with these kind of elevated prices do you 0:05:39.279 --> 0:05:42.680 think the economy could withstand? Julian Emmanuel says July and 0:05:42.720 --> 0:05:44.600 then things might start to break down. Do you have 0:05:44.800 --> 0:05:46.760 a date where you're looking at Not. 0:05:46.839 --> 0:05:49.200 Really, because nobody really knows, right if you look at 0:05:49.200 --> 0:05:51.680 the probabilities, it's not as if it's so obvious how 0:05:51.720 --> 0:05:54.880 long this will last. I think we know both sides 0:05:54.920 --> 0:05:57.400 don't want it to last. July and oil not the conflict. 0:05:57.440 --> 0:06:00.760 How long the economy could withstand tripled crude? 0:06:02.560 --> 0:06:04.520 Well, in the US, we're just sort of just around 0:06:04.520 --> 0:06:07.840 triple digit, right, and we've been here before, and prices 0:06:07.920 --> 0:06:09.800 last under these levels for a while. I don't think 0:06:09.839 --> 0:06:12.920 the economy is going to break. We had initially expected 0:06:13.120 --> 0:06:15.680 GDP to be around two point three when we started, 0:06:16.040 --> 0:06:19.560 then momentum two point four percent. Now because of the 0:06:19.600 --> 0:06:22.559 war and oil prices, we've lowered it to two point 0:06:22.600 --> 0:06:25.599 one percent, But we have a very low probability of 0:06:25.640 --> 0:06:28.560 recession even at these levels if prices were to stay here, 0:06:28.760 --> 0:06:31.400 I think to say, exactly, is it July? Again? If 0:06:31.440 --> 0:06:34.520 you believe the resilience of the economy and adjustments, and 0:06:34.560 --> 0:06:37.880 we're talking about the US that is ample crude and 0:06:38.000 --> 0:06:40.760 natural gas, right, it's really the rest of the world. 0:06:40.960 --> 0:06:44.479 And if the US is a big importer and less 0:06:44.520 --> 0:06:48.599 of an exporter, then not in terms of hydrocarbons and 0:06:48.600 --> 0:06:50.800 things like that, but in aggregate, the damage to the 0:06:50.800 --> 0:06:52.560 economy is going to be much less than it is, 0:06:52.600 --> 0:06:55.360 for example, to Europe or to China. 0:06:56.240 --> 0:06:58.680 Do you think we're moving into a phase where the 0:06:58.720 --> 0:07:02.960 offset to equity were is increasingly gold and commodities and 0:07:03.000 --> 0:07:07.080 not develop market bonds, which increasingly are subject to potentially 0:07:07.440 --> 0:07:10.880 spending issues, deficit issues as well as just the national 0:07:10.880 --> 0:07:11.880 inflation in the system. 0:07:12.480 --> 0:07:14.640 That's a very good question, because all our clients are 0:07:14.680 --> 0:07:17.240 asking us how can they hedge against the risk of war, 0:07:17.840 --> 0:07:20.440 And we tell clients that at the end of the day, 0:07:20.560 --> 0:07:25.800 the best hedge against inflation has been historically US equities 0:07:25.800 --> 0:07:28.640 in aggregate. So in fact, that's why again we say 0:07:28.680 --> 0:07:32.600 stay invested. Gold is not a good inflation hedge and 0:07:32.720 --> 0:07:35.800 not a good inflation hedge. So the idea that gold 0:07:35.960 --> 0:07:37.920 is something you need to have in your portfolio is 0:07:37.960 --> 0:07:40.720 something we totally disagree with. We don't think you're truly 0:07:40.720 --> 0:07:45.080 be part of a client's strategic acid allocation, and tactically 0:07:45.120 --> 0:07:48.000 we've actually said that when you see these kinds of 0:07:48.080 --> 0:07:53.080 price increases driven by central banks, especially initially by China 0:07:53.360 --> 0:07:57.239 and then countries like Turkey, Poland, clients shouldn't be caught 0:07:57.320 --> 0:08:00.280 up in the euphoria and the momentum of gold. And 0:08:00.320 --> 0:08:03.280 obviously we've seen a pretty significant decline from peak levels. 0:08:03.800 --> 0:08:07.280 Stay with us. More Bloomberg surveillance coming up after this. 0:08:16.400 --> 0:08:19.760 Let's talk about this economy. US economic growth accelerating at 0:08:19.800 --> 0:08:22.280 the start of the year, fueled by solid business and 0:08:22.360 --> 0:08:26.840 consumer demand, insulating this economy from heightened geopolitical risk as 0:08:26.880 --> 0:08:29.480 the FED remains very much on the sidelines. Joining us 0:08:29.520 --> 0:08:33.880 now to discuss as the National Economic Council Director Kevin said, Kevin, 0:08:33.960 --> 0:08:36.640 welcome back to the programs. Always good to catch up. 0:08:36.760 --> 0:08:38.400 We'll talk about this economy in just a moment. I 0:08:38.440 --> 0:08:40.079 think we need to follow on from the Federal Reserve 0:08:40.120 --> 0:08:43.200 and the news conference with Chairman Poll just yesterday stepping 0:08:43.240 --> 0:08:46.319 aside as the FED chair but staying gone as a governor, Kevin. 0:08:46.400 --> 0:08:48.840 Was anyone in the administration giving a heads up ahead 0:08:48.840 --> 0:08:50.720 of time before you heard that announcement? 0:08:52.200 --> 0:08:58.120 You know, communications with the Federal Reserve and the administration 0:08:58.240 --> 0:09:01.560 are still open when they're policy concerns. But I can't 0:09:01.600 --> 0:09:06.040 really discuss that. I could say that I'm disappointed in 0:09:06.160 --> 0:09:08.400 what Jay said, but I'm going to sort of stay 0:09:08.400 --> 0:09:10.360 out of it as we await just a couple of 0:09:10.400 --> 0:09:13.800 weeks Kevin Worsh's confirmation. I think when Kevin gets in there, 0:09:14.440 --> 0:09:16.000 it's going to really be a sea change at the 0:09:16.000 --> 0:09:17.840 FED that we're all looking forward to Kevin. 0:09:17.880 --> 0:09:21.440 In the meantime, the President has articulated his disappointment like 0:09:21.480 --> 0:09:24.760 you just have previously. The President suggested that if the 0:09:24.840 --> 0:09:27.760 Chairman stayed down beyond his time, not sure what he 0:09:27.800 --> 0:09:30.640 meant specifically beyond his time, that he would fire him. 0:09:30.960 --> 0:09:37.760 Is the President intervening certain options to intervene. 0:09:35.720 --> 0:09:38.439 You know, I think that in the end, our hope 0:09:38.480 --> 0:09:42.640 is that Chairman Powell understands that the Justice Department has 0:09:42.720 --> 0:09:46.240 stood down. They've just asked the Inspector General at the 0:09:46.280 --> 0:09:48.400 FED to look into this, which is something the Inspector 0:09:48.440 --> 0:09:51.560 General is probably doing anyway, and so that I think 0:09:51.600 --> 0:09:54.520 that it's time to de escalate and move on. 0:09:55.080 --> 0:09:57.600 Kevin, do you think the President has sufficiently de escalated 0:09:57.640 --> 0:09:59.080 to allow him to move on? 0:10:00.760 --> 0:10:03.480 Well, you know, he doesn't think so, and I think 0:10:03.520 --> 0:10:06.640 that in the end he'll study the matter and we 0:10:06.679 --> 0:10:07.480 hope he comes around. 0:10:07.640 --> 0:10:10.120 The Treasury Secretary says it's an insult to the other 0:10:10.160 --> 0:10:13.320 Republican nominees on the board, the likes of Governor Waller, 0:10:13.480 --> 0:10:16.120 Mickey Bowman, people that you and I know fairly. Wow, 0:10:16.160 --> 0:10:17.920 do you believe it's also an insult and does it 0:10:17.960 --> 0:10:21.360 complicate the way this particular institution will operate in the 0:10:21.360 --> 0:10:22.840 months of meetings to count. 0:10:23.520 --> 0:10:26.640 Again, I don't want to start getting too much into 0:10:26.640 --> 0:10:28.959 having the White House argue with the Fed right now 0:10:28.960 --> 0:10:32.719 while we're waiting Kevin Worsh's confirmation, which looks like it's 0:10:32.760 --> 0:10:35.720 a lock to me. The bottom line is that Kevin 0:10:35.720 --> 0:10:37.040 Worsh is going to go in there. He's going to 0:10:37.040 --> 0:10:39.360 be new leadership. He's going to be fresh leadership, and 0:10:39.440 --> 0:10:42.840 we fully expect that that's going to help everybody see 0:10:43.080 --> 0:10:45.800 how important the independence of the FED is now as 0:10:45.840 --> 0:10:48.120 a logical matter, if you just sort of say, hey, 0:10:48.120 --> 0:10:49.920 we like the IG to look into something. The IG 0:10:50.400 --> 0:10:53.680 is the Federal Reserves Inspector General, and so it's completely 0:10:53.800 --> 0:10:56.320 respectful of the independence of the FED. We do respect 0:10:56.320 --> 0:10:58.280 the independence of the FED, and I think that the 0:10:58.320 --> 0:11:00.360 best way to show that it's not a artists and 0:11:00.480 --> 0:11:02.160 organization is to move on. 0:11:02.520 --> 0:11:05.200 There has been a pretty aggressive push to reduce interest rates. 0:11:05.280 --> 0:11:07.880 At the same time, this Federal Reserve is shifting towards 0:11:07.960 --> 0:11:11.760 articulating a more symmetrical reaction function. Not there yet, but 0:11:11.800 --> 0:11:14.800 getting closer to it. Kevin supporting that is the economic 0:11:14.880 --> 0:11:17.439 data from earlier on this morning. Do you think there 0:11:17.520 --> 0:11:20.040 is space just to wait to see to work out 0:11:20.040 --> 0:11:22.840 how things turn out before thinking about reducing interest rates? 0:11:24.080 --> 0:11:26.440 Right, well, well, first of all, let's talk about the 0:11:26.440 --> 0:11:29.199 economic data for a second, because it was just kind 0:11:29.200 --> 0:11:31.520 of a whole bunch of blockbuster numbers. A two percent 0:11:31.600 --> 0:11:34.920 number actually, you know, for me being capital spending guy, 0:11:35.000 --> 0:11:36.560 used to be the capital spending guy at the FED 0:11:36.600 --> 0:11:38.880 when I was a young economist. That the thing that 0:11:38.960 --> 0:11:41.560 was amazing, as you know, and you highlighted the capital 0:11:41.600 --> 0:11:44.120 spending boom and one of the things that sort of 0:11:44.160 --> 0:11:47.560 drag it down from a really high number was the 0:11:47.679 --> 0:11:50.840 quality of the imports has skyrocketed, and so almost half 0:11:51.160 --> 0:11:53.520 of the imports were capital goods, which were coming in 0:11:53.559 --> 0:11:56.160 to build factories in the US. Typically in the past, 0:11:56.200 --> 0:11:58.560 you know, our imports are things like consumer goods that 0:11:58.600 --> 0:12:02.280 are perishable. So the bottom line is that it's really 0:12:02.320 --> 0:12:04.440 strong data. We got initial claims the lowest they've been 0:12:04.520 --> 0:12:07.360 since the nineteen sixties. We've got government employment the lowest 0:12:07.360 --> 0:12:09.760 has been since the Second World War. We've got all 0:12:09.800 --> 0:12:13.560 these positive movements in terms of fiscal responsibility and economic 0:12:13.600 --> 0:12:16.360 growth moving forward, and so then, but we do have 0:12:16.440 --> 0:12:20.040 this temporary disruption with energy markets, which is very serious. 0:12:20.280 --> 0:12:23.480 As you mentioned, the energy prices are high, gasoline prices 0:12:23.520 --> 0:12:26.320 are high. But you know, my read of the academic 0:12:26.360 --> 0:12:28.080 literature on what you do when you have an oil 0:12:28.080 --> 0:12:31.000 shock like this is not that you raise rates into it, 0:12:31.120 --> 0:12:34.600 especially given how I think we're highly confident that this 0:12:34.679 --> 0:12:37.000 is going to be a temporary disruption. Futures markets agree 0:12:37.040 --> 0:12:38.600 with that as well, and so I think it would 0:12:38.600 --> 0:12:42.840 be a policy error for this EASB or the FED 0:12:43.320 --> 0:12:47.480 to hike rates into a temporary spike in energy prices, 0:12:47.760 --> 0:12:52.439 and their own economic studies sort of suggest this is true, 0:12:52.720 --> 0:12:54.920 because if you look at it, what they want to 0:12:54.960 --> 0:12:57.360 do is make sure that future inflation goes back towards 0:12:57.400 --> 0:12:59.920 the target. The best forecast of future inflation is not 0:13:00.080 --> 0:13:03.199 top line inflation, but core inflation at core inflation, and 0:13:03.280 --> 0:13:06.120 the last CPI number was fine. The PC's kind of 0:13:06.200 --> 0:13:08.560 crept up a little bit, but it doesn't tell the 0:13:08.559 --> 0:13:10.440 story of the top light, and the top light is 0:13:10.440 --> 0:13:13.120 the kind of thing that I think someone could overreact to. 0:13:13.280 --> 0:13:15.560 It might not be appropriate, Kevin, to have a rate 0:13:15.720 --> 0:13:17.840 hike at this point, but do you agree with your 0:13:17.880 --> 0:13:20.440 colleague treasure Secretary Scott Beston, who came out and said 0:13:20.480 --> 0:13:22.880 it might be appropriate to stay on hold for a 0:13:22.960 --> 0:13:28.199 while as this does progress and works itself out again. 0:13:28.679 --> 0:13:33.000 I am highly confident that the productivity boom is going 0:13:33.080 --> 0:13:38.040 to keep core prices under control. And my old friend 0:13:38.080 --> 0:13:42.120 Alan's green Span and the ninety saw that because of 0:13:42.160 --> 0:13:44.600 the computer revolution that we could have high growth and 0:13:44.640 --> 0:13:46.280 that wasn't a flips curve kind of thing that you 0:13:46.360 --> 0:13:48.559 needed to respond to, as he let us have four 0:13:48.640 --> 0:13:51.200 or five of the best economic gears that we've seen 0:13:51.240 --> 0:13:53.480 in my lifetime. And I think that we have that 0:13:53.600 --> 0:13:55.760 opportunity again and it would be a shame if we 0:13:55.800 --> 0:13:56.440 squandered it. 0:13:56.559 --> 0:13:59.120 So you think that it is appropriate to currently cut 0:13:59.200 --> 0:14:02.000 rates de fite the increasing concern by some of the 0:14:02.000 --> 0:14:05.600 FED members that we are entering a potentially inflationary moment. 0:14:05.640 --> 0:14:07.360 Do you think it's inappropriate to go to something more 0:14:07.400 --> 0:14:09.320 of a symmetric type of approach. 0:14:10.000 --> 0:14:13.160 Well, they've been sort of saying we're leaning towards cutting, 0:14:13.240 --> 0:14:14.960 and then there was some dispute about what's going to 0:14:14.960 --> 0:14:18.200 happen at the next meeting. But I think that getting 0:14:18.320 --> 0:14:22.280 interest rates down could really supercharge the economy from where 0:14:22.280 --> 0:14:25.720 we are, but not be super inflationary. So you saw 0:14:26.080 --> 0:14:29.000 that the weak spot the weak spot in the GDP 0:14:29.120 --> 0:14:33.200 report was residential investment, which was down eight percent. Residential 0:14:33.240 --> 0:14:36.200 investment is kind of the most intrasensitive thing there is, 0:14:36.640 --> 0:14:39.040 and I think that FED policy has a chance of 0:14:39.120 --> 0:14:40.920 moving the yield curve in a way that could really 0:14:40.960 --> 0:14:43.760 help home buyers. And one of the things that I 0:14:43.840 --> 0:14:46.120 remember from the nineties is that when we want to 0:14:46.160 --> 0:14:49.320 have sort of low inflation, high growth, then one of 0:14:49.320 --> 0:14:52.000 the things that happens is you get a lot of 0:14:52.040 --> 0:14:55.480 construction residential construction. And when you have residential construction, it 0:14:55.480 --> 0:14:57.760 has a big positive effect on GDP because you have 0:14:57.840 --> 0:14:59.760 like an empty house that has to get filled with 0:14:59.760 --> 0:15:02.840 a w dryer and a TV and carpet and furniture 0:15:02.880 --> 0:15:05.160 and everything else. And that's much different than if you 0:15:05.160 --> 0:15:06.680 have like an old house where you're moving from what 0:15:06.760 --> 0:15:09.360 old house to another. And so new construction is really 0:15:09.440 --> 0:15:11.040 the thing that could lift this to four or five 0:15:11.040 --> 0:15:13.320 percent growth, and it's being held back by hydrostrates. 0:15:13.360 --> 0:15:15.680 What's the pathway to get there? Given the fact that 0:15:15.840 --> 0:15:19.320 longer and the longer term yield curve is seeing some 0:15:19.360 --> 0:15:21.640 of the highest rates that has this cycle, five percent 0:15:21.680 --> 0:15:23.480 in the thirty year yesterday for the first time in 0:15:23.520 --> 0:15:26.280 a while. And frankly, a lot of people in the 0:15:26.360 --> 0:15:28.720 market think that if the interest rate were cut at 0:15:28.720 --> 0:15:31.760 the front end, that would only exacerbate the creep higher 0:15:31.960 --> 0:15:34.360 in yields at the long end. How do you see that? 0:15:35.520 --> 0:15:38.160 Yeah, I mean there are times when that's true, but 0:15:38.240 --> 0:15:39.920 not a time when we're in the middle of a 0:15:40.000 --> 0:15:42.920 huge positive supply shock. And so I think a little 0:15:42.920 --> 0:15:46.880 bit of movement and Kevin Wirsh, hopefully soon to be 0:15:46.960 --> 0:15:50.800 chairman Worsh has described how one can do that and 0:15:50.840 --> 0:15:53.000 maybe play with the balance sheet a little bit at 0:15:53.000 --> 0:15:55.840 the same time and move things in a direction that 0:15:56.480 --> 0:16:01.640 helps America's homeowners. I think that if we could get 0:16:01.640 --> 0:16:05.400 that last little bit of the economy going on all cylinders, 0:16:05.520 --> 0:16:08.400 that we'd really really be back very close to talking 0:16:08.400 --> 0:16:09.360 about the golden days. 0:16:09.760 --> 0:16:13.560 Kevin. We have triple to crued this morning, WTI much higher, 0:16:13.600 --> 0:16:15.960 and actually what you're seeing across America, especially in a 0:16:16.000 --> 0:16:20.000 place like California, they've actually breached six dollars a gallon 0:16:20.000 --> 0:16:22.200 when it comes to gasoline. I know the White House 0:16:22.440 --> 0:16:25.240 has some measures, they've extended the Jones Act waiver, but 0:16:25.280 --> 0:16:26.640 what else are you thinking about. 0:16:27.360 --> 0:16:30.040 Well, we've already done a whole bunch of things, including 0:16:30.480 --> 0:16:35.040 you know, basically opening up the drilling that was offshore 0:16:35.120 --> 0:16:37.400 drilling in California that was shut down by the state 0:16:37.520 --> 0:16:41.120 and that's actually you know, alive and pumping out barrels. 0:16:41.800 --> 0:16:45.480 The bottom line is that we're very convinced that this 0:16:45.560 --> 0:16:49.160 is you know, a suicidal Irradian regime that was set 0:16:49.280 --> 0:16:52.520 on really big disruptive things in the region that would 0:16:52.560 --> 0:16:58.280 be perhaps permanently harmful. And when we had them signal 0:16:58.320 --> 0:17:01.040 in their negotiations, they were just about ready to have 0:17:01.080 --> 0:17:03.920 eleven nuclear bombs. Then the President decided to take action 0:17:04.280 --> 0:17:07.959 to defend the entire earth for good's sake. And so 0:17:08.200 --> 0:17:10.640 right now, the thing that I look at in terms 0:17:10.680 --> 0:17:13.200 of the economic effects of the war is how difficult 0:17:13.240 --> 0:17:17.199 it is for Iranians right now, as if the government 0:17:17.200 --> 0:17:20.120 doesn't care about them at all, and so they're having 0:17:20.119 --> 0:17:23.800 a hyperinflation, they're running out of food, they don't have 0:17:23.840 --> 0:17:26.080 any distilled products to driver out of their cars. They're 0:17:26.080 --> 0:17:31.160 shutting down businesses. Even the Persian rug dealers are shutting down. 0:17:32.280 --> 0:17:35.000 It's time for that government to just see that they 0:17:35.040 --> 0:17:37.440 shouldn't aspire to have a nuclear weapon, and if they 0:17:37.560 --> 0:17:40.359 just give that up, then we can go back to 0:17:40.400 --> 0:17:41.560 having normal relations. 0:17:41.560 --> 0:17:43.919 What could hope, right, but what could this government do 0:17:44.080 --> 0:17:47.800 to shield Americans from higher gasoline prices? Are things like 0:17:47.840 --> 0:17:49.359 an export ban on the table. 0:17:50.480 --> 0:17:53.560 Now, what we've done is, as you know, we've done 0:17:53.600 --> 0:17:58.040 the Jones Act. We've opened up drilling in California. We've 0:17:59.359 --> 0:18:04.119 pursued like different changing the ethanol standards so the cored 0:18:04.119 --> 0:18:07.520 ethanol can be used more in the summer. We've taken 0:18:07.720 --> 0:18:12.359 every single step that we could, and we understand that, 0:18:13.640 --> 0:18:14.879 you know, it would have been a lot worse if 0:18:14.880 --> 0:18:17.000 we hadn't done that. But the fact is that our 0:18:17.040 --> 0:18:20.280 expectation is that things are going to get better very 0:18:20.359 --> 0:18:23.080 very quickly, if we could just get the irradiance to 0:18:23.880 --> 0:18:27.280 like finish the negotiations and realize that it's in the 0:18:27.280 --> 0:18:30.200 interest of their own people to stop things that could 0:18:30.200 --> 0:18:33.080 turn into you know, serious hunger events and so on. 0:18:33.240 --> 0:18:36.640 Kevin, Unfortunately, and you and I probably an agreement here. Unfortunately, 0:18:36.640 --> 0:18:38.000 they've got a track record of doing a lot of 0:18:38.000 --> 0:18:40.199 things that aren't in the interest of their own people. 0:18:40.480 --> 0:18:42.159 In the meantime, there seems to be a preference to 0:18:42.200 --> 0:18:45.360 maintain the blockade and put the squeeze on them. How 0:18:45.400 --> 0:18:48.879 close are we to them breaching storage capacity, so to speak? 0:18:48.920 --> 0:18:50.800 What's our understanding of that. Do we have a decent 0:18:50.840 --> 0:18:53.040 gauge of where things are at inside the country? 0:18:54.480 --> 0:18:58.119 You know, like it's a well to well thing. But 0:18:58.160 --> 0:19:00.480 the basic idea is that if you shut down a well, 0:19:00.840 --> 0:19:03.560 then the pressure can build and then the you know, 0:19:03.600 --> 0:19:06.280 oil can kind of squirt everywhere, and then when you 0:19:06.320 --> 0:19:08.240 open the well up again, you get a lot less 0:19:08.280 --> 0:19:10.320 oil out of the well. That's the sort of theory 0:19:10.560 --> 0:19:13.360 of what could happen, and it's certainly possible because they're 0:19:13.359 --> 0:19:14.800 writting out of storage that they're going to have to 0:19:14.840 --> 0:19:17.280 shut in wells. The one thing I can say is 0:19:17.320 --> 0:19:19.600 that their production went from five million barrels a day 0:19:19.640 --> 0:19:23.240 to one million barrels a day because of President Trump's 0:19:23.320 --> 0:19:26.160 you know, policies in the previous term, when he really 0:19:26.160 --> 0:19:28.080 put in tough sanctions on Iran to try to stop 0:19:28.119 --> 0:19:31.679 the nuclear program. And after Joe Biden came in, he 0:19:31.800 --> 0:19:35.320 just stopped the sanctions and the energy production went back 0:19:35.400 --> 0:19:37.440 up to five billion barrels a day over a couple 0:19:37.440 --> 0:19:41.280 of years. And so the Iranians, you know, they had 0:19:41.359 --> 0:19:43.280 they took them a couple of years to get things fixed, 0:19:43.280 --> 0:19:45.280 probably with new wells and so on, because it can 0:19:45.359 --> 0:19:48.200 harm wells. But we have an experience of them being 0:19:48.200 --> 0:19:50.960 shut almost down to nothing and then getting back up. 0:19:51.760 --> 0:19:53.840 Kevin a partner's stepping up to how we're just hearing 0:19:53.840 --> 0:19:56.280 from the president here out on social media. So I 0:19:56.280 --> 0:19:58.239 assure this is the first time you're hearing Golf here. 0:19:58.240 --> 0:20:00.680 I'll read it for you. The Chancellor of Germany should 0:20:00.680 --> 0:20:03.199 spend more time on ending the war with Russia and 0:20:03.359 --> 0:20:07.240 Ukraine and fixing his broken country, especially immigration and energy, 0:20:07.440 --> 0:20:09.520 and less time on interfering with those that are getting 0:20:09.560 --> 0:20:12.200 rid of the Iranian nuclear threat, there by making the world, 0:20:12.200 --> 0:20:15.600 including Germany, a safer place. I believe the German chancellor 0:20:15.600 --> 0:20:18.880