WEBVTT - Moniz Says "Mistake" to Underestimate N. Korea 0:00:00.080 --> 0:00:12.960 Yeah, Welcome to the Bloomberg Surveillance Podcast. I'm Tom Keene 0:00:13.480 --> 0:00:17.560 Jay Lee. We bring you insight from the best in economics, finance, investment, 0:00:18.000 --> 0:00:23.520 and international relations. Find Bloomberg Surveillance on Apple Podcasts, SoundCloud, 0:00:23.600 --> 0:00:28.160 Bloomberg dot Com, and of course on the Bloomberg Yeah. 0:00:33.920 --> 0:00:35.600 So let's get through the market, shall we a cross 0:00:35.640 --> 0:00:38.879 straight over to Cal Weinberg, high frequency Economics founder, as 0:00:38.920 --> 0:00:41.800 we break through that breaking news here at Bloomberg following 0:00:41.920 --> 0:00:46.520 what could be a significant shift in China's purchases of treasuries. Kylie, 0:00:46.520 --> 0:00:48.280 you've heard the news. Walk me through what you think 0:00:48.320 --> 0:00:52.200 is the significance the message that comes from these Chinese officials. Well, 0:00:52.560 --> 0:00:54.360 a good morning. I think that we need to know 0:00:54.440 --> 0:00:57.200 a lot more about what's actually going on. The notion 0:00:57.240 --> 0:01:00.160 that the Chinese would actually sell treasuries seems to me 0:01:00.320 --> 0:01:03.680 to be extremely implausible. Uh, you know, to sell treasuries 0:01:03.680 --> 0:01:06.240 that have to buy something else, and that would involve 0:01:06.560 --> 0:01:09.440 currency transaction. And I don't think they're prepared to be 0:01:09.480 --> 0:01:11.880 seen as intervening in the currency markets. If they're just 0:01:11.920 --> 0:01:13.760 going to be buying less of them, Well, they have 0:01:13.920 --> 0:01:16.040 been buying less of them, although there has been a 0:01:16.040 --> 0:01:18.640 bit of renaissance recently, but that would mean that they're 0:01:18.680 --> 0:01:22.120 not taking in more dollars on their foreign trade surpluses, 0:01:22.200 --> 0:01:25.039 that they're taking in more euros perhaps, and they're they're 0:01:25.040 --> 0:01:28.120 buying more an exchange counterpart to the cash and flows. 0:01:28.640 --> 0:01:32.160 But it doesn't necessarily mean a catastrophic sell of treasuries 0:01:32.240 --> 0:01:34.000 at all. I think that we just have to get 0:01:34.000 --> 0:01:36.240 some more information. But probably they're just going to buy 0:01:36.280 --> 0:01:39.880 a little bit less moving forward rather than liquidate their holdings. 0:01:39.920 --> 0:01:42.840 But it's not clear whether this recommendation is actually materialized 0:01:42.840 --> 0:01:45.520 into action either cows so we should probably think about 0:01:45.560 --> 0:01:46.960 that as well. But if you take a step back, 0:01:47.080 --> 0:01:50.880 last year they took the opportunity as their currency strengthened 0:01:50.920 --> 0:01:53.360 to build up their effects reserves. Is there a message 0:01:53.400 --> 0:01:55.400 that we can take away from this about how comfortable 0:01:55.440 --> 0:01:57.680 they might be with the current level of the Chinese 0:01:57.760 --> 0:02:00.120 You are well. I I think that there's been and 0:02:00.200 --> 0:02:03.800 overt changed since President Gee's speech in Davos last year, 0:02:04.000 --> 0:02:07.800 in which he pitched China as the new champion of globalization. 0:02:08.120 --> 0:02:10.880 To keep the the yuan strong and to make it 0:02:10.919 --> 0:02:13.600 even stronger so that people would have confidence in holding 0:02:13.600 --> 0:02:16.800 it is very clearly a competition developing between China and 0:02:16.800 --> 0:02:19.560 the United States to be the leader of globalization, the 0:02:19.639 --> 0:02:22.320 leader of free trade. And I think that a strong 0:02:22.360 --> 0:02:25.560 currency is part of china strategy. They're managing it. They 0:02:25.600 --> 0:02:27.640 can do it. Carl Weinberg with us out of our 0:02:27.680 --> 0:02:31.399 studios in London, which is a good and beautiful UH thing. 0:02:31.800 --> 0:02:35.239 Bloomberg Surmanance this morning brought you by U s c 0:02:35.520 --> 0:02:39.560 F invest In. What's real Visit us c F Investments 0:02:40.000 --> 0:02:45.080 dot com. That's U s c F Investments dot com. 0:02:45.280 --> 0:02:49.639 We thank them for their UH support. Carl. There has 0:02:49.720 --> 0:02:53.720 been a grand shift. It occurred yesterday with a shock 0:02:54.320 --> 0:02:57.040 of a president to Davos. My phrase for the year 0:02:57.680 --> 0:03:00.720 is make Davos Davos again. Is a president could have 0:03:00.720 --> 0:03:03.400 succeeded that if he's going to go there without Mike 0:03:03.480 --> 0:03:06.640 Allen over to Xios calls a carrot and stick approach 0:03:06.720 --> 0:03:09.239 from one of his sources. Is the carrot and the 0:03:09.360 --> 0:03:13.640 stick going to be felt up Happy Valley? Well, you know, Tom, 0:03:13.680 --> 0:03:16.680 I'd like to think that the president's handlers are sending 0:03:16.760 --> 0:03:19.600 him over there to try to repair US relations and 0:03:19.639 --> 0:03:22.079 to try to reverse some of the damage that has 0:03:22.120 --> 0:03:24.920 been done in those relations over the last year. For me, 0:03:25.200 --> 0:03:28.680 the highlight of last year's Davos was President Gee's speech, 0:03:28.720 --> 0:03:31.080 the one I just referred to, in which he proposed 0:03:31.080 --> 0:03:34.160 that China would promote globalization if the U. S wouldn't think. 0:03:34.200 --> 0:03:36.200 This is a chance for the President to explain to 0:03:36.240 --> 0:03:39.520 everybody what US policy is, and I'm hoping that his 0:03:39.520 --> 0:03:42.520 his statement will be that the U. S. Believes in trade, 0:03:42.720 --> 0:03:45.080 it just wants to level the trading field. And that's 0:03:45.120 --> 0:03:50.680 a much more digestible proposition. That is not a multilateral tone. 0:03:50.760 --> 0:03:53.280 He isn't I mean if he if he Waltz is 0:03:53.320 --> 0:03:56.760 over there with Peter Navarro and Wilbur Ross. It's not 0:03:56.960 --> 0:03:59.880 a Davos friendly tone, is it. Well, it's not a 0:04:00.120 --> 0:04:03.520 Vos friendly crowd. But remember the President will be scripted 0:04:03.560 --> 0:04:06.440 and that Navarro will only be one of the voices 0:04:06.560 --> 0:04:10.200 that will will draft that script. There are other voices 0:04:10.240 --> 0:04:13.400 out there, particularly over at the state side, that is 0:04:13.440 --> 0:04:17.359 concerned about Europe, for example, pivoting its primary relations away 0:04:17.400 --> 0:04:20.039 from the Atlantic Alliance to the stronger tie with China. 0:04:20.400 --> 0:04:23.080 And I think that there are concerns in other parts 0:04:23.120 --> 0:04:26.479 of his advice pool about the damage that could be 0:04:26.520 --> 0:04:29.080 done long term to the US by being more isolated. 0:04:29.240 --> 0:04:31.320 Tom Kane, this is not the morning to talk about 0:04:31.320 --> 0:04:33.880 the World Economic Forum, not with the moves we've had 0:04:33.880 --> 0:04:37.000 in the bond market of the last Maybe the link 0:04:37.040 --> 0:04:39.479 you think Trump going to Davos is the news of 0:04:39.520 --> 0:04:44.159 the morning. I think it's a huge, huge deal for washing. 0:04:44.200 --> 0:04:46.680 I think the fragility of the bond market is absolutely 0:04:46.720 --> 0:04:50.000 front and center, and that's the significant story this morning. 0:04:50.080 --> 0:04:52.440 Carl walked me up about walk me through about how 0:04:52.480 --> 0:04:56.360 francile you think the situation and treasuries might be. Well, 0:04:56.400 --> 0:04:58.880 I mean there are there are very explosive headlines and 0:04:58.960 --> 0:05:02.279 doom and gloom for by various people about the bottom market. 0:05:02.360 --> 0:05:04.400 But you know, the bottom line is that most of 0:05:04.400 --> 0:05:07.159 the time when the Fed hikes rates, and it's hiking 0:05:07.240 --> 0:05:10.520 rates because it fears inflation, bondy yields go up. Because 0:05:10.600 --> 0:05:14.080 the base the primary base for for bondy yields, the 0:05:14.080 --> 0:05:16.599 Fed rates are going up, and because inflation expectations are 0:05:16.640 --> 0:05:18.720 going up. So this is not really news. This is 0:05:18.760 --> 0:05:21.479 maybe a startling movement on a single day, but you 0:05:21.520 --> 0:05:24.080 really have to expect that if history is not going 0:05:24.160 --> 0:05:27.000 to reverse itself. Five out of six times we've seen 0:05:27.040 --> 0:05:29.240 the bottom market rise with the FED tightening, and this 0:05:29.320 --> 0:05:31.559 is I think shaping up to be one of those times. 0:05:31.800 --> 0:05:33.800 Just another day in paradise, John, I just took a 0:05:33.839 --> 0:05:35.840 quick look at one of my technical studies and I 0:05:35.880 --> 0:05:38.960 don't even get sweaty until two sixty. We had a 0:05:39.000 --> 0:05:42.640 guest on this morning, Jonathan Krinsky in MK. I'm looking 0:05:42.640 --> 0:05:46.919 for two sixty three. Two sixty four is key technical 0:05:47.120 --> 0:05:49.520 resistance on a higher yield. As you look at the 0:05:49.520 --> 0:05:52.840 bond market, Carl, the situation for many people has been 0:05:53.160 --> 0:05:55.600 term premium has been incredibly low and faint. It's being negative. 0:05:55.960 --> 0:05:58.599 What's going to be the catalyst to get term premium up, 0:05:58.680 --> 0:06:02.280 which would mean to sustain move higher in treasury year 0:06:02.320 --> 0:06:05.080 it's going forward? Yeah, So I think that, you know, 0:06:05.600 --> 0:06:07.839 risk and supply are one element in there. You know, 0:06:07.880 --> 0:06:10.520 we just had a tax bill passed with a trillion 0:06:10.560 --> 0:06:12.920 and a half dollars of new borrowing for the next decade, 0:06:13.120 --> 0:06:16.159 possibly more, possibly less, but something on that order of magnitude. 0:06:16.160 --> 0:06:19.240 We have infrastructure spending coming, so we have I think 0:06:19.279 --> 0:06:22.880 some uncertainty about some nervousness perhaps about having to deal 0:06:22.920 --> 0:06:26.200 with that. We do have expectations for higher inflation coming 0:06:26.240 --> 0:06:29.360 out there, and while it's a slow burn inflation indicators, 0:06:29.360 --> 0:06:32.200 wages in particular, are starting to accelerate a little bit visibly. 0:06:32.520 --> 0:06:34.800 So the elements are in place for that term premium 0:06:34.839 --> 0:06:38.480 to normalize and maybe even overshoot to the higher side. 0:06:38.520 --> 0:06:40.560 You can't be sure of that, but certainly this is 0:06:40.560 --> 0:06:42.760 not a time to be looking for lower term premium 0:06:42.800 --> 0:06:45.240 for lower bodylds. I certainly agree with that statement. Just 0:06:45.279 --> 0:06:47.120 the question whether it's going to be a panic or not, 0:06:47.360 --> 0:06:48.880 and I have no reason to think it will well 0:06:48.960 --> 0:06:50.480 call at this stage when you put all the moving 0:06:50.520 --> 0:06:52.520 parts together, the prospect of a bigger deficit in the 0:06:52.600 --> 0:06:55.560 United States for America, the prospect of China stepping back, 0:06:55.839 --> 0:06:58.480 the reality of an unline of the federal reserves balance sheet, 0:06:58.520 --> 0:07:01.560 and rights going higher as well, that's fertile grind for 0:07:02.080 --> 0:07:05.280 repricing of treasuries, isn't it. Well, yes, but you know, 0:07:05.400 --> 0:07:07.479 almost all of those things you mentioned, except for the 0:07:07.560 --> 0:07:10.040 China announcement, have been in the market for a while, 0:07:10.360 --> 0:07:12.280 so you think about what's new and what's going to 0:07:12.360 --> 0:07:15.320 change the expectations, and I don't believe the China statement 0:07:15.520 --> 0:07:19.360 is enough to uh, to to really create a panicky 0:07:19.440 --> 0:07:21.760 market situation in and of itself. We've known about the 0:07:21.760 --> 0:07:23.880 FED for a while. We've known about the FED unwinding 0:07:23.880 --> 0:07:26.320 its balance sheet. We've known about inflation, We've known about 0:07:26.320 --> 0:07:28.800 growth and wages in the unemployment rate and all that. 0:07:28.960 --> 0:07:31.720 So I think that in terms of news this morning, 0:07:32.000 --> 0:07:35.000 China and the margin could make a difference. But again 0:07:35.040 --> 0:07:37.160 we don't even have enough details to fully assess what 0:07:37.280 --> 0:07:39.200 that means. At this moment, we don't care. But what 0:07:39.400 --> 0:07:41.240 is clear is that we're seeing a repricing of the 0:07:41.280 --> 0:07:43.400 last couple of weeks. You're seeing a lot more people 0:07:43.560 --> 0:07:47.440 reach to hedge their exposure potentially to a higher inflation 0:07:47.560 --> 0:07:51.280 rate through this year. Does that make sense to you? Well, yes, 0:07:51.400 --> 0:07:54.120 and you know, my due diligence and saying you know, 0:07:54.440 --> 0:07:57.240 uh and saying everything is that yes, we should expect 0:07:57.360 --> 0:07:59.960 higher bond yields. No, I have no basis to exp 0:08:00.040 --> 0:08:03.040 back the panic in bond in bonds to occur in 0:08:03.080 --> 0:08:06.000 the short term. Technicians may have a reason for the 0:08:06.040 --> 0:08:09.000 market to sell off, and that's independent of what the 0:08:09.040 --> 0:08:11.800 economics says. When the technicals and the economics call for 0:08:11.840 --> 0:08:14.080 the same thing, you do tend to get more powerful moves. 0:08:14.280 --> 0:08:17.120 But the economics of the matter are actually pretty tranquil. 0:08:18.320 --> 0:08:21.560 High frequency economics founder the reality check on on some 0:08:21.680 --> 0:08:25.360 franchile some fragility, just some fragility coming through in the 0:08:25.400 --> 0:08:38.880 bond market. It is a joy to speak with Jeffrey 0:08:38.880 --> 0:08:42.120 Curry of Golden Sex ahead of their commodities research. He 0:08:42.200 --> 0:08:47.520 writes acutely detailed notes on the dynamics of supplying demand. 0:08:47.840 --> 0:08:52.960 Jeff Curry, you are trumpeting the return of backward backwardation. 0:08:53.440 --> 0:08:56.920 That is a mouthful. What is backwardation and why should 0:08:56.960 --> 0:09:00.760 we care? It's a condition and a come oddity market 0:09:01.000 --> 0:09:04.880 where the spot price sits above the forward price, and 0:09:05.120 --> 0:09:08.800 it's a condition that's usually representative of market that is 0:09:08.880 --> 0:09:10.760 very short. I like to think of an example. Let's 0:09:10.760 --> 0:09:13.640 take oxygen. You have to have it today because if 0:09:13.640 --> 0:09:15.320 you don't have it today, you're dead. You don't care 0:09:15.360 --> 0:09:19.120 about tomorrow. So oxygen would be a perfectly backrodated market. 0:09:19.480 --> 0:09:21.920 And so we think about a contango markets where spot 0:09:21.920 --> 0:09:25.160 prices sit below forward prices. That's what these markets look 0:09:25.240 --> 0:09:28.360 like throughout most of the period over the last ten 0:09:28.440 --> 0:09:30.960 years since that since the crisis. So the fact that 0:09:31.000 --> 0:09:34.400 we have oil now shifting into a solid backgrodation zinc 0:09:34.480 --> 0:09:38.440 invtive backgrodation. It's an indication that supply chains around the 0:09:38.440 --> 0:09:42.040 world for both metals and oil are starting to get very, 0:09:42.120 --> 0:09:45.640 very tight. So backwardation is an indication a premium for 0:09:45.640 --> 0:09:50.280 prompt deliberty spot prices above forward prices. How much is 0:09:50.320 --> 0:09:53.440 it Jeff about shale coming online as this crewed price 0:09:53.520 --> 0:09:57.360 guys U Uh. That's a very important component of this 0:09:57.640 --> 0:10:01.800 is that when we think about the forward outlook for energy, 0:10:02.080 --> 0:10:04.040 I don't think anybody out there is going to argue 0:10:04.040 --> 0:10:06.280 we're running out of oil on a longer term basis 0:10:06.320 --> 0:10:08.880 because there's so much supply. And what we saw with 0:10:08.960 --> 0:10:12.640 the rally this week in prices is that producers came 0:10:12.720 --> 0:10:15.559 in and sold the back into that forward curve, which 0:10:15.600 --> 0:10:19.240 then reinforces this whole concept of agrodation. And the thing 0:10:19.280 --> 0:10:22.480 about is what the backwardation is that, particularly even if 0:10:22.520 --> 0:10:25.319 OPEC tries to ramp up production or you have the shale, 0:10:25.400 --> 0:10:27.839 it's just gonna put more selling pressure on the back end, 0:10:28.160 --> 0:10:31.200 while the strong global economic backdrop that we have right 0:10:31.200 --> 0:10:33.040 now is going to put upward pressure on the front 0:10:33.080 --> 0:10:35.920 end of the curve. Reinforcing the bagardation. I'm gonna go 0:10:35.960 --> 0:10:39.160 back to Tom's question of why is this important is 0:10:39.200 --> 0:10:42.560 because an investor can buy oil at a discount on 0:10:42.559 --> 0:10:45.160 the forward curve and then hold it up and it 0:10:45.240 --> 0:10:47.520 rolls up to expiration, and sell it at a premium. 0:10:47.760 --> 0:10:50.040 So the oil price does not need to move. All 0:10:50.080 --> 0:10:51.880 you do is you roll the front end of the curve. 0:10:51.920 --> 0:10:55.760 And I want to emphasize commodities are yielding assets, and 0:10:55.880 --> 0:10:58.440 that's that shape of the forward curve that gives the yield. 0:10:58.720 --> 0:11:00.800 And for the first time and quite sometime, we're now 0:11:00.840 --> 0:11:03.760 in a positive yield, which allows the investor to hold 0:11:03.880 --> 0:11:06.400 oil without having to pay the cost of carrey. So 0:11:06.400 --> 0:11:08.920 this is a very important development for investors. Jeff, this 0:11:08.960 --> 0:11:11.640 is the market dynamic. Let's talk about the economic bankdrop 0:11:11.720 --> 0:11:16.080 fundamentally and the commodity complex in its entirety. China. A 0:11:16.120 --> 0:11:18.960 lot of news coming through from China today. A conversation 0:11:19.040 --> 0:11:22.560 this morning here on Bloomberg about Chinese officials wary of 0:11:22.960 --> 0:11:25.360 purchasing more treasuries. From here. As you look at the 0:11:25.360 --> 0:11:28.000 effects dynamics in China, what does it mean ultimately for 0:11:28.000 --> 0:11:31.560 how you view the commodity trade. Well, I think the big, 0:11:31.600 --> 0:11:34.959 biggest and most important component of what's going on in 0:11:35.280 --> 0:11:39.880 China really is the supply side policy that they've implemented 0:11:39.880 --> 0:11:42.360 more recently, in the sense that they're trying to deal 0:11:42.400 --> 0:11:45.320 with two problems in China. One is the pollution problem, 0:11:45.400 --> 0:11:48.000 so the anti pollution, but the other is that they have, 0:11:48.440 --> 0:11:50.880 you know, a debt problem and some of the key industries, 0:11:50.920 --> 0:11:52.800 and those key industries in which they have the debt 0:11:52.840 --> 0:11:59.000 problem happened to be in your core commodity sectors like steel, iron, ore, aluminum, 0:11:59.000 --> 0:12:01.959 and as a result, like hutting back capacity, not only 0:12:02.000 --> 0:12:04.520 they take pollution out of the system, but they also 0:12:04.679 --> 0:12:07.800 increase the prices of these commodities, which reduces the number 0:12:07.800 --> 0:12:10.160 of non performing loans on the bank's bouncy. So that's 0:12:10.160 --> 0:12:12.760 a really important component. And if you go back to 0:12:12.840 --> 0:12:16.680 the currency question, because these are the commodities that they export, 0:12:16.760 --> 0:12:19.400 not import um. When we think about you know, a 0:12:19.400 --> 0:12:23.720 weakening currency in terms of UM, any type of you know, 0:12:24.520 --> 0:12:28.240 retaliation type of dynamic here that you end up with 0:12:28.520 --> 0:12:32.200 a more competitive environment to push these commodities out. So there, 0:12:32.240 --> 0:12:34.480 you know, there's a lot of connections here between these, 0:12:34.480 --> 0:12:36.520 but I think the primary one really is a supply 0:12:36.559 --> 0:12:39.320 side policy, Jeff, at the moment of the last few years, 0:12:39.320 --> 0:12:41.760 for that matter, you've always joined a distinction between what 0:12:41.800 --> 0:12:45.360 you see in China's campex commodities and ompex commodities. How 0:12:45.400 --> 0:12:47.880 much that story developed of the last few quarters for 0:12:47.920 --> 0:12:52.640 you when when we look at the the broader demand 0:12:52.800 --> 0:12:56.120 for commodities right now is that there's something I've never 0:12:56.160 --> 0:12:59.560 seen before. We use the term global synchronous growth from 0:12:59.559 --> 0:13:02.160 a g graphic perspective, and we're seeing that right now. 0:13:02.400 --> 0:13:04.800 But what makes this even more different than two thousand 0:13:04.840 --> 0:13:07.120 and four was last time we saw a real strong 0:13:07.120 --> 0:13:12.520 global synchronous growth, is that it's synchronous across the commodity complex, 0:13:12.559 --> 0:13:15.760 across medals, across the barrel of oil. I've never seen this. 0:13:16.000 --> 0:13:20.080 It's the the comprehensive nature of this demand growth is Okay, well, 0:13:20.080 --> 0:13:21.880 I'm looking at the copper chart. I'll get it out 0:13:21.960 --> 0:13:24.880 on Twitter for Bloomberg Radio. You've gotta first look at it. 0:13:25.120 --> 0:13:28.440 But I mean, as copper, something that we're Jeff Curry 0:13:28.480 --> 0:13:31.520 can call bottom to the commodity bear marketing. Coppers had 0:13:31.520 --> 0:13:34.960 a great movement by no means is broken out through 0:13:35.120 --> 0:13:40.080 you know two thousand five, two thousand six highs Well, 0:13:40.160 --> 0:13:42.520 I think when you think about you know, the old saying, 0:13:42.600 --> 0:13:45.520 you know, the copper has a PhD in economics, I'm 0:13:45.559 --> 0:13:48.120 a firm believer the only differences instead of being Harvard 0:13:48.120 --> 0:13:51.960 now it's some Shanghai University UM. And in terms of 0:13:52.160 --> 0:13:54.920 looking at the health of the global economy, you know, 0:13:55.120 --> 0:13:58.360 the one thing is, you know, shorting base metals in 0:13:58.400 --> 0:14:02.319 the midst of an economic engine is a very dangerous proposition. 0:14:02.400 --> 0:14:04.280 And so I think, you know, even though our target 0:14:04.320 --> 0:14:07.240 is seventy seven thousand fifty right now in the markets 0:14:07.280 --> 0:14:10.200 trading around, I think all the risk or to the 0:14:10.240 --> 0:14:13.480 upside right now and I could easily see UM copper 0:14:13.520 --> 0:14:16.080 pushing up and testing new highs. Maybe ten thousand we 0:14:16.120 --> 0:14:18.439 saw in two thousand eleven may be difficult, but the 0:14:18.520 --> 0:14:20.520 highs of oh six and oh eight I think are 0:14:20.600 --> 0:14:22.880 very very much of risk to the upside quickly. Or 0:14:22.920 --> 0:14:26.800 Jeff Crey, do I get Brent Crew to seventy a barrel? Um, 0:14:26.840 --> 0:14:28.400 I'm not. I haven't looked at my screen in the 0:14:28.440 --> 0:14:35.200 last five minutes. It may already be there. It shows 0:14:35.200 --> 0:14:40.280 you reminded us. Yeah, I would argue that oil is 0:14:40.280 --> 0:14:43.680 going to have a much more difficult time um getting 0:14:43.760 --> 0:14:46.720 upside pressure unlike copper. And the reason for this is 0:14:46.960 --> 0:14:50.760 the long term oil supply story is oversupplied, so you 0:14:50.840 --> 0:14:53.000 have producers are going to go sell that back in 0:14:53.240 --> 0:14:55.680 every time you go to the metals has a long 0:14:55.800 --> 0:14:58.320 term supply story that's bullish. Means both the up back 0:14:58.360 --> 0:14:59.840 in and the front end of medals can go up 0:14:59.840 --> 0:15:02.600 with just why we prefer price perspective by the medals. 0:15:02.720 --> 0:15:05.160 Great briefing, Jeffrey Curry, GOLBN Sex, thank you so much. 0:15:05.360 --> 0:15:20.280 Real effort there from Frankford is all you may know 0:15:20.600 --> 0:15:23.960 nationwide that there is with the worship of a football 0:15:24.000 --> 0:15:28.320 player in the New England region one T. Brady, or 0:15:28.360 --> 0:15:32.600 maybe it's Lawrence Bird of basketball fame of a time ago, Bobby, 0:15:32.640 --> 0:15:35.920 you are leaping across to St. Louis Blues goal. The 0:15:35.960 --> 0:15:38.360 same can be said of academics out of Fall River, 0:15:38.400 --> 0:15:42.760 Massachusetts in Boston College. He has held court in science 0:15:42.960 --> 0:15:46.480 at the Massachusetts of Institute of Technology, where it's been 0:15:46.480 --> 0:15:49.320 known that he fly fishes on the Charles River. He's 0:15:49.320 --> 0:15:53.320 a former Secretary of Energy. Earnest Money's professor. Money's wonderful 0:15:53.360 --> 0:15:57.000 to have you back with us. UM. I would suggest 0:15:57.120 --> 0:16:02.080 we have wandered into an anti science, anti math moment 0:16:02.280 --> 0:16:05.320 in Washington. Do we need to reverse it or do 0:16:05.360 --> 0:16:08.080 we need to get used to it and live with it? Well, 0:16:08.120 --> 0:16:11.520 I think the issue of addressing the whole range policy 0:16:11.560 --> 0:16:15.400 issues based on facts. I mean, there's science, but there's 0:16:15.440 --> 0:16:20.240 also facts and analysis. UH, scientifically based is absolutely critical. 0:16:21.040 --> 0:16:24.880 Otherwise we're just we'll just be lurching, uh from one 0:16:24.920 --> 0:16:27.040 side of the room to the other side of the room, 0:16:27.040 --> 0:16:29.320 if you like. UH. In terms of in terms of 0:16:29.320 --> 0:16:32.400 how we put our policies together, and frankly, I think 0:16:32.480 --> 0:16:37.560 that this UH is creating tremendous problems UH in terms 0:16:37.680 --> 0:16:41.520 of the underpinnings of our global strength, which is the 0:16:41.600 --> 0:16:45.160 set of alliances and institutions that this country spent seventy 0:16:45.280 --> 0:16:48.880 years building. UH. If we are viewed as unreliable, as 0:16:49.040 --> 0:16:52.360 as not uh not moving forward on the basis of 0:16:52.400 --> 0:16:55.840 facts and analysis and science, UH, that's going to shake 0:16:55.920 --> 0:17:00.000 confidence in those institutions and and undercut again our our enginet, 0:17:00.040 --> 0:17:03.000 national strength, and in our our our ability to lead. 0:17:03.240 --> 0:17:06.480 The kids that come into the Massachusetts Institute of Technology 0:17:06.520 --> 0:17:10.000 are all top shelf. They wander with great arrogance through 0:17:10.000 --> 0:17:13.440 physics one, physics to physics three, and then there's a 0:17:13.520 --> 0:17:18.920 great divider course number eight point zero four, quantum physics one. 0:17:19.720 --> 0:17:23.640 What's it like making the leap to pretend to be 0:17:23.680 --> 0:17:28.480 like Professor Moneies. Well, first of all, I should say 0:17:28.520 --> 0:17:32.480 that the students, no matter what their majors are, are 0:17:32.520 --> 0:17:37.080 required to take UH to take physics here, UH and UH. 0:17:37.240 --> 0:17:40.919 They are not required to take quantum physics unless they 0:17:40.960 --> 0:17:43.399 are in physics or one of the engineering disciplines that 0:17:43.960 --> 0:17:47.080 calls for it. But it certainly is. UH. It's a 0:17:47.240 --> 0:17:50.000 it's a mind stretching experience to you to uh to 0:17:50.600 --> 0:17:52.760 at the end of the second year to to start 0:17:52.800 --> 0:17:57.359 looking at quantum physics. But I think the arrogance you 0:17:57.440 --> 0:18:01.240 referred to uh is is gone by that time. Frankly, 0:18:01.560 --> 0:18:04.160 you beat it out of them. I bring this up, folks, 0:18:04.200 --> 0:18:06.760 because I just spoke to a wonderful student out of 0:18:06.760 --> 0:18:09.960 a major state university who got through college with no 0:18:10.119 --> 0:18:12.800 science and only one marginal math course. And I just 0:18:12.840 --> 0:18:15.800 think the death of this is is a hugely important 0:18:16.040 --> 0:18:17.960 Let's move on to important. If I could just add on, 0:18:18.680 --> 0:18:21.000 I think it's it's that that's a disservice. I believe 0:18:21.040 --> 0:18:24.520 to those students that she knew that. Yeah, she was 0:18:24.560 --> 0:18:28.160 more than aware that she had been cheated. We are 0:18:28.200 --> 0:18:30.520 not cheated by your expertise when we see North and 0:18:30.560 --> 0:18:33.879 South Korea get together, and this does come down to 0:18:33.960 --> 0:18:38.480 the physics of UH, nuclear science. Do you have a 0:18:38.560 --> 0:18:42.560 legitimate belief that North Korea has the monies physics to 0:18:42.640 --> 0:18:47.040 attack someone and do harm. Well, first of all, we 0:18:47.119 --> 0:18:49.199 have to say that it's a fact that they have 0:18:49.400 --> 0:18:54.040 had a remarkable trajectory in developing their nuclear weapons and 0:18:54.080 --> 0:18:59.560 developing their their missile capabilities. Now, UH, it's maybe, and 0:19:00.480 --> 0:19:02.639 I believe actually it is likely that they did have 0:19:03.200 --> 0:19:06.880 some assistance in in both arenas. But one cannot take 0:19:06.880 --> 0:19:10.640 it away from them that they have They've trained their 0:19:10.680 --> 0:19:15.040 their scientists to a large extent internally, UH and UH, 0:19:15.080 --> 0:19:18.800 and they've had they've moved rather rather quickly. In fact, 0:19:18.840 --> 0:19:23.320 I think that we have underestimated that consistently, UH, in 0:19:23.359 --> 0:19:26.680 the sense that we prefer to call a nuclear test 0:19:27.040 --> 0:19:30.000 in North Korea a provocation as opposed to what I 0:19:30.040 --> 0:19:34.640 believe it really is a a systematic step along a 0:19:34.640 --> 0:19:39.200 longer trajectory, UH, to to make nuclew weapons uh, and 0:19:39.200 --> 0:19:41.919 and with a strong commitment to it. So so I 0:19:41.960 --> 0:19:43.959 think we we we make a mistake if we if 0:19:44.000 --> 0:19:47.800 we underestimate their their capabilities. UH. I know my my colleague, 0:19:48.320 --> 0:19:51.679 UH sig Hecker, who used to be the director of 0:19:51.720 --> 0:19:55.639 the Los Alamos National Laboratory, UH, an expert in in 0:19:55.680 --> 0:19:59.639 the weapons arena. Uh, he visited North Korea many times 0:19:59.640 --> 0:20:02.960 and and already uh seven years ago he told me, 0:20:03.080 --> 0:20:06.280 just in fact recently again how stunted he was to 0:20:06.320 --> 0:20:11.840 see a enrichment plant. Uh. That was extraordinarily modern, all 0:20:11.880 --> 0:20:14.959 the modern technologies. And so you know, we have to 0:20:14.960 --> 0:20:17.320 take we have to take this threat for for what 0:20:17.359 --> 0:20:19.440 it is. We all have our benchmarks along the way. 0:20:19.480 --> 0:20:21.920 And for those of us more fossil nature, there's Ted 0:20:22.000 --> 0:20:25.359 Taylor's the Curve of binding Energy that John mcfeebook, or 0:20:25.400 --> 0:20:30.080 there's something as myth making is doctor Strange Love from four. 0:20:30.600 --> 0:20:33.800 Do they have the rocketry? Do they have the telemetry? 0:20:34.040 --> 0:20:38.600 Do they have the ignition systems within their physics to 0:20:38.880 --> 0:20:42.040 make the toy work if they launch it at us? 0:20:42.640 --> 0:20:45.600 So they clearly have the rockets, they have demonstrated that. 0:20:45.760 --> 0:20:48.520 But when you start getting into telemetry, etcetera. Etcetera. I 0:20:48.520 --> 0:20:52.320 think you put your finger on what we have as 0:20:52.359 --> 0:20:53.920 far as I can see at least, and of course 0:20:53.960 --> 0:20:57.240 I no longer have access to all the information. But 0:20:57.520 --> 0:21:00.679 from what we can see, uh, they certainly have a 0:21:00.680 --> 0:21:03.399 long way to go in terms of getting the entire 0:21:03.520 --> 0:21:10.240 system together to deliver a nuclear weapon over intercontinental distances, 0:21:10.840 --> 0:21:15.480 because they're telemetry and including meaning making all of the 0:21:15.520 --> 0:21:19.359 physical measurements, uh, to understand how the how the system 0:21:19.720 --> 0:21:23.080 works and survives. I've seen no evidence of that. But 0:21:23.119 --> 0:21:26.040 when I say, can I say a long time? I actually, Uh, 0:21:26.320 --> 0:21:29.239 it depends what what the time scale is here. I 0:21:29.280 --> 0:21:32.240 think we have to assume that we're only talking about 0:21:32.720 --> 0:21:36.320 a couple of years of dedicated effort for the entire 0:21:36.359 --> 0:21:39.400 system to be to be brought together. Whether that happens, 0:21:39.440 --> 0:21:41.920 I don't know, but I think it's the planning basis 0:21:42.119 --> 0:21:44.600 that we need to use as we think about how 0:21:44.600 --> 0:21:48.240 to address the North Korean situation. Each administration is different, 0:21:48.280 --> 0:21:52.400 your sector of energy for President Obama. But if each 0:21:52.440 --> 0:21:55.480 administration is different, do you have confidence that the General's 0:21:55.480 --> 0:21:59.800 General of Master, General Maddis, General Kelly and others are 0:22:00.040 --> 0:22:05.960 are moving forward our defense against this physics? Well? First 0:22:05.960 --> 0:22:11.399 of all, UH Secretary Secretary Maddis UH formerly General Madness 0:22:11.880 --> 0:22:15.320 UH McMaster and and and also the Secretary of State Tillerson. 0:22:15.880 --> 0:22:18.959 I think they have all stated explicitly that they understand 0:22:19.440 --> 0:22:24.520