WEBVTT - US Retail Sales Strengthen 0:00:02.400 --> 0:00:06.760 Bloomberg Audio Studios, podcasts, radio news. 0:00:08.240 --> 0:00:12.119 You're listening to the Bloomberg Intelligence Podcast. Catch us live 0:00:12.200 --> 0:00:14.880 weekdays at ten am Eastern on Apple car Play and 0:00:14.880 --> 0:00:17.919 Android Auto with the Bloomberg Business App. Listen on demand 0:00:17.960 --> 0:00:22.280 wherever you get your podcasts, or watch us live on YouTube. 0:00:22.840 --> 0:00:24.320 So let's get more in those retail sales. 0:00:24.360 --> 0:00:27.400 Mari Shre, senior equity analyst at Columbia thread Needle Investments, 0:00:28.000 --> 0:00:30.639 joins us now on the headline, it looked quite good, 0:00:30.680 --> 0:00:33.080 particularly when it comes to the jump and car purchases. 0:00:33.280 --> 0:00:35.560 What were some of your takeaways from the report this morning. 0:00:36.920 --> 0:00:38.559 Yes, thank you again for having me. 0:00:38.720 --> 0:00:42.000 As you said, it was a solid sales report across 0:00:42.040 --> 0:00:45.640 the board, even when adjusting for the later start to 0:00:45.680 --> 0:00:48.880 the holiday and the unfavorable weather in the first part 0:00:48.880 --> 0:00:52.280 of the month, and we're really seeing the consumer show 0:00:52.360 --> 0:00:56.080 up and spend across category into the holiday season as 0:00:56.080 --> 0:00:56.840 we expected. 0:00:57.720 --> 0:00:59.280 That's kind of where I want to go, Mary. What 0:00:59.400 --> 0:01:02.400 are you hearing from the retailers just about the holiday 0:01:02.400 --> 0:01:02.920 shopping here. 0:01:04.480 --> 0:01:06.880 Yes, it's interesting because I think it was a very 0:01:06.920 --> 0:01:10.040 strong Black Friday. There was a lot of concern as 0:01:10.080 --> 0:01:15.800 we spoke about regarding the shorter holiday selling season, but 0:01:15.880 --> 0:01:19.640 I think that has in fact really motivated consumers to 0:01:19.680 --> 0:01:22.600 get out and spend, and if anything, I think the 0:01:22.640 --> 0:01:27.319 retailers have been positively surprised by the performance in the 0:01:27.360 --> 0:01:31.400 business post Black Friday, and we've even seen in some 0:01:31.520 --> 0:01:34.720 cases them pulling back slightly on promotions. 0:01:35.000 --> 0:01:37.800 So I think overall the tone. 0:01:37.520 --> 0:01:43.800 From the retailers is optimistic and hopefully we continue to 0:01:43.840 --> 0:01:46.120 see the strength as we as we moved through this 0:01:46.280 --> 0:01:47.280 final period. 0:01:47.600 --> 0:01:51.080 TBD on tariffs, though, so I'm wondering two things. One 0:01:51.160 --> 0:01:53.800 what you've heard from retailers about how they prep for tariffs, 0:01:53.840 --> 0:01:56.080 and two if we get a sense if people are 0:01:56.120 --> 0:01:59.600 buying ahead of particularly maybe when it comes to cars, 0:01:59.600 --> 0:02:02.160 for example, or like a dishwasher or something along those lines. 0:02:03.720 --> 0:02:05.120 Those are great questions. 0:02:05.560 --> 0:02:08.160 Most of the companies that I speak to have been 0:02:08.240 --> 0:02:12.400 moving production out of China for almost ten years now, 0:02:12.880 --> 0:02:16.720 so actually a lot of the companies are suggesting that 0:02:16.840 --> 0:02:20.240 the impact from tariffs will be pretty limited. I would 0:02:20.240 --> 0:02:24.360 say the one real exception is consumer electronics. Listening to 0:02:24.480 --> 0:02:28.000 best Buy talk, they still say fifty percent of their 0:02:28.080 --> 0:02:29.600 goods are sourced from China. 0:02:30.040 --> 0:02:31.880 So outside of consumer. 0:02:31.480 --> 0:02:34.560 Electronics, I think the companies feel pretty good about their 0:02:34.639 --> 0:02:39.079 ability to manage through this situation, but of course they 0:02:39.080 --> 0:02:42.440 are also saying any tariffs that they do feel they 0:02:42.520 --> 0:02:45.920 will try to pass along some of that costs to 0:02:46.160 --> 0:02:50.600 the consumer in terms of bringing in goods earlier or 0:02:50.760 --> 0:02:52.760 consumers buying goods are earlier to. 0:02:52.760 --> 0:02:53.480 Get ahead of that. 0:02:53.919 --> 0:02:57.200 I don't really get the sense that companies are going 0:02:57.240 --> 0:02:58.160 to be doing that. 0:02:58.200 --> 0:03:01.919 Aggressively because there are still a lot of questions about 0:03:01.919 --> 0:03:03.760 what the what the tariff. 0:03:03.400 --> 0:03:07.640 Outcome is, So I think those impacts are more minimal 0:03:07.840 --> 0:03:08.600 at this point. 0:03:09.280 --> 0:03:12.480 How are consumers paying for this stuff that they're buying 0:03:12.520 --> 0:03:14.919 with all these goods and services here it seems like 0:03:14.960 --> 0:03:18.640 they've drawn down here reports that they've drawn down their savings. 0:03:18.680 --> 0:03:20.520 Are they putting this stuff on credit? And is that 0:03:20.560 --> 0:03:21.000 a concern? 0:03:22.280 --> 0:03:25.600 I think at the lower end, we're absolutely seeing that consumer, 0:03:25.680 --> 0:03:28.720 which has you know, been stretched for a couple of 0:03:28.800 --> 0:03:31.959 years now rely more on credit, as you said. 0:03:32.240 --> 0:03:33.160 But at the high. 0:03:33.120 --> 0:03:35.760 End, you know that consumer is in very good shape 0:03:35.760 --> 0:03:37.280 with the wealth effect between the. 0:03:37.240 --> 0:03:40.920 Housing market the stock market. So I think that. 0:03:40.840 --> 0:03:45.080 Consumer is you know, behaving a little differently versus at 0:03:45.080 --> 0:03:48.320 the low end, where we are seeing them rely more 0:03:48.360 --> 0:03:48.840 on credit. 0:03:49.040 --> 0:03:50.280 What are your topics right now? 0:03:51.800 --> 0:03:56.160 So I my topics are kind of a combination of 0:03:56.200 --> 0:04:01.440 some of the quality share gainers that we've talked about 0:04:01.440 --> 0:04:02.080 on this show. 0:04:02.160 --> 0:04:06.559 So some of the large retailers that offer. 0:04:06.360 --> 0:04:11.720 That combination of valuing convenience that's really resonating with the 0:04:11.800 --> 0:04:16.040 consumer right now. So I would put the Walmart, Amazon, Costco, 0:04:16.200 --> 0:04:17.800 TJX in that bucket. 0:04:18.000 --> 0:04:19.760 But then on the other hand, I think there. 0:04:19.680 --> 0:04:24.359 Are some really interesting turnaround names, specifically in the apparel space, 0:04:24.839 --> 0:04:27.320 where you don't need a lot of top line growth 0:04:27.400 --> 0:04:31.479 to generate pretty meaningful margin and free cash flow improvement. 0:04:31.920 --> 0:04:33.760 So some of the names I would highlight on that 0:04:33.960 --> 0:04:37.200 list would be some of the specialty retailers like Gap 0:04:37.200 --> 0:04:41.320 and Victoria's Secret, and even some global brands like PDH 0:04:41.480 --> 0:04:42.760 and Contour Brands. 0:04:43.360 --> 0:04:44.960 All right, Mari, thank you so much for joining us. 0:04:45.000 --> 0:04:48.080 Mari Sure, she's a senior equity analyst at Columbia thread 0:04:48.080 --> 0:04:50.280 Needle Investments. I love to chat with her on these 0:04:50.320 --> 0:04:52.080 days when we get retail sales, get a sense of 0:04:52.080 --> 0:04:53.799 how the consumer's doing out there. 0:04:55.240 --> 0:04:59.119 You're listening to the Bloomberg Intelligence Podcast. Catch us Live 0:04:59.200 --> 0:05:03.120 weekdays at two Am Eastern on Applecardplay and Android Auto 0:05:03.160 --> 0:05:05.919 with a Bloomberg business ad. You can also listen live 0:05:06.040 --> 0:05:09.200 on Amazon Alexa from our flagship New York station, Just 0:05:09.279 --> 0:05:11.880 say Alexa playing Bloomberg eleven thirty. 0:05:12.560 --> 0:05:14.080 All right, let's get back to the markets here. 0:05:14.120 --> 0:05:16.719 Bank of America had an interesting note up that said, look, guys, 0:05:16.760 --> 0:05:19.320 cash levels are going to the point where you might 0:05:19.400 --> 0:05:23.080 actually want to start selling equities rather than buying them. 0:05:23.080 --> 0:05:25.760 Apparently fund managers have been reducing cash holding to a 0:05:25.880 --> 0:05:28.120 record low, and they're now. 0:05:27.960 --> 0:05:30.240 Below four percent. So is that a cueue for you? 0:05:30.320 --> 0:05:32.720 Well, joining us now for more as James Abade, Managing 0:05:32.720 --> 0:05:36.600 director and Chief investment Officer of ourt Center Asset Management. James, 0:05:36.640 --> 0:05:38.880 is there a cell signal within the equity market? 0:05:40.320 --> 0:05:43.240 Well, I think if you look at you know, just 0:05:43.279 --> 0:05:45.880 like at the tail end of the dot com bubble, 0:05:46.360 --> 0:05:50.000 clearly price momentum and valuations now are beginning to outpace 0:05:50.080 --> 0:05:53.159 the improvement and fundamentals. I mean, just looking at the 0:05:53.160 --> 0:05:57.440 top ten stocks, probably the biggest disconnect is in Microsoft 0:05:57.480 --> 0:06:01.600 and Broadcom. I mean, clearly what we see that's similar 0:06:01.640 --> 0:06:05.000 to the dot com environment, namely like a company of 0:06:05.040 --> 0:06:08.480 Merxisco in nineteen ninety nine. You have returns on assets 0:06:08.839 --> 0:06:13.280 or returns on investor capital trending lower, highlighting that margins 0:06:13.279 --> 0:06:17.039 and our asset efficiency is rolling over despite sales growth, 0:06:17.279 --> 0:06:20.480 heavy cap x in the case of Microsoft acquisitions in 0:06:20.520 --> 0:06:24.599 the case of Broadcom. The other MAC seven are simply overvalued, 0:06:24.640 --> 0:06:28.159 but there's no evidence yet of fundamental deterioration to the 0:06:28.160 --> 0:06:30.400 same degree that we see in those two names. But 0:06:30.440 --> 0:06:32.640 there's no margin of safety for investors. I mean, the 0:06:32.680 --> 0:06:36.640 group as a whole is trading at thirteen times sales exactly. 0:06:36.680 --> 0:06:39.760 The valuation is just extraordinary. The only differential I call 0:06:39.800 --> 0:06:41.800 out from the late nineties is they actually have earnings 0:06:41.839 --> 0:06:44.120 in free cash flow, which is a little different from. 0:06:43.920 --> 0:06:45.680 Some of the stuff I was selling back in the day. 0:06:46.880 --> 0:06:49.440 James, where do we go here in twenty twenty five, 0:06:49.520 --> 0:06:53.440 if in fact we have some valuation concerns in this market. 0:06:54.240 --> 0:06:56.000 Well, I think you know, the way we look at 0:06:56.080 --> 0:07:00.760 stocks from evaluation perspectives, we emphasize future growth reliance. That 0:07:00.920 --> 0:07:04.400 is essentially, you know, what is the metric companies need 0:07:04.440 --> 0:07:08.080 to reach to be able to justify their existing valuations. 0:07:08.120 --> 0:07:11.640 And for us on the overall SMP five hundred, the 0:07:11.680 --> 0:07:15.800 measure now hasn't been this optimistic on future economic profit 0:07:15.840 --> 0:07:20.000 creation going forward since two thousand and nine, and close 0:07:20.080 --> 0:07:22.400 to the all time high back in two thousand and two. 0:07:22.840 --> 0:07:26.200 Now those times, we're both at the bottom of a 0:07:26.360 --> 0:07:30.720 very deeper session and set for a very sharp cyclical recovery. 0:07:31.200 --> 0:07:33.760 And the S and P five hundred pe multiple back 0:07:33.800 --> 0:07:37.240 then was that are eleven and thirteen times respectively, not 0:07:37.360 --> 0:07:40.160 twenty four times like they are now. So we have 0:07:40.320 --> 0:07:45.040 to basically essentially see a rapid acceleration in economic activity 0:07:45.600 --> 0:07:49.040 just simply to justify the multiples that we're seeing today, 0:07:50.520 --> 0:07:53.360 and we have a hard time reconciling those figures with 0:07:53.680 --> 0:07:55.480 what we're seeing from bottoms up perspective. 0:07:55.920 --> 0:07:59.080 So what's your best well, not guess because you're actually 0:07:59.080 --> 0:08:01.440 putting money to work, Well, what's your best set up 0:08:01.440 --> 0:08:02.440 then into next year? 0:08:04.120 --> 0:08:07.760 Well, I think when you look at next year, you know, 0:08:07.800 --> 0:08:10.920 you have to think about two events happening, right, we have, 0:08:11.240 --> 0:08:14.560 you know, heading into the year, investors appear to be 0:08:14.760 --> 0:08:18.280 universally bullish. In fact, we saw yesterday the Conference Boards 0:08:18.280 --> 0:08:22.080 Consumer Confidence Survey showing individual investors being the most bullish 0:08:22.120 --> 0:08:25.320 they've been in forty years, and consensus seems to be 0:08:25.320 --> 0:08:27.680 the nominal and economic growth is going to be exceptionally strong. 0:08:27.960 --> 0:08:31.320 Profits going to accelerate, and additional fiscal and monetary stimus 0:08:31.400 --> 0:08:33.960 might help further, you know, in a broadening out of 0:08:34.000 --> 0:08:34.960 market performance. 0:08:35.040 --> 0:08:35.640 I mean, at the. 0:08:35.600 --> 0:08:39.520 Same time this is happening, while manufacturing PMIS remains stuck 0:08:39.520 --> 0:08:43.200 in recessionary levels, services actually appear to be rolling over 0:08:43.280 --> 0:08:47.720 and even today US industrial production and capacity utilization fell 0:08:47.840 --> 0:08:49.360 not showing any type of inflection. 0:08:49.520 --> 0:08:51.520 So our view is to stay defensive. 0:08:52.559 --> 0:08:56.240 We think long treasuries might be the ultimate contrarian trade 0:08:56.240 --> 0:09:00.160 for twenty twenty five, and classic defensive growth stocks in 0:09:00.200 --> 0:09:03.480 healthcare and staples, although very out of favor right now, 0:09:04.080 --> 0:09:06.120 but many of you could pick up the pees of 0:09:06.240 --> 0:09:09.200 nine to ten is the place to be heading into 0:09:09.200 --> 0:09:09.680 next year. 0:09:10.480 --> 0:09:13.000 How about the fixed income here? Do I sit my 0:09:13.040 --> 0:09:15.160 two year treasury at four point twenty four percent or 0:09:15.200 --> 0:09:16.200 do I take some credit risk? 0:09:17.880 --> 0:09:19.960 I would stay away from credit risk clearly if you 0:09:20.040 --> 0:09:24.800 think that the economy is not one where the cyclical 0:09:24.880 --> 0:09:28.200 or industrial side is going to catch up to at 0:09:28.240 --> 0:09:32.079 least the buoyancy and the services, I think you want 0:09:32.120 --> 0:09:36.120 to with credit spreads being at extremely tight levels. Consistent 0:09:36.160 --> 0:09:39.120 with really a zero equity risk premium. You want to 0:09:39.120 --> 0:09:41.319 be in safe assets, and that would be treasures instead 0:09:41.360 --> 0:09:41.720 of credit. 0:09:42.480 --> 0:09:44.200 All right, James, thanks so much for joining us. Always 0:09:44.200 --> 0:09:47.080 appreciate getting a couple of minutes of your time. James Abote. 0:09:47.160 --> 0:09:49.640 He is managing director and chief investment Officer a Center 0:09:50.080 --> 0:09:51.079 Asset Management. 0:09:51.360 --> 0:09:53.240 He is in New York City. 0:09:54.640 --> 0:09:58.480 You're listening to the Bloomberg Intelligence podcast. Catch us live 0:09:58.600 --> 0:10:01.679 weekdays at ten ams on Apple Cardplay and then broud 0:10:01.679 --> 0:10:04.800 Otto with the Bloomberg Business app. Listen on demand wherever 0:10:04.840 --> 0:10:09.120 you get your podcasts, or watch us live on YouTube. 0:10:10.000 --> 0:10:12.640 Something is evolving quite interestingly in the oil and gas 0:10:12.679 --> 0:10:14.920 market for next year. Yeah. Yeah, we still care about shale, 0:10:14.960 --> 0:10:17.040 and we care about Guyana, and we care about the Saudia's, 0:10:17.080 --> 0:10:20.480 but offshore drilling, particularly in the Gulf of Mexico, is 0:10:20.520 --> 0:10:24.640 becoming more and more of a topic in conversations among 0:10:24.640 --> 0:10:27.800 my oil and gas folks. And let's get to one 0:10:27.800 --> 0:10:31.080 of them now. Brian Gavari is chairman of Ineos Energy. 0:10:31.679 --> 0:10:34.920 Ineos Energy private company and it recently bought c Nook, 0:10:34.960 --> 0:10:37.959 which is a Chinese oil company, a golf of Mexico 0:10:38.120 --> 0:10:41.000 assets Brian is also the former CFO of BP, so 0:10:41.080 --> 0:10:42.880 he knows like a thing or two about how to 0:10:42.880 --> 0:10:45.520 put together assets and finance them and do stuff with them. 0:10:45.920 --> 0:10:47.720 Brian, it's good to see you. It's been a long time. 0:10:50.320 --> 0:10:52.280 Hey yeah, Hey, good to see you as well. It's 0:10:52.280 --> 0:10:52.800 been a while. 0:10:53.160 --> 0:10:55.520 So tell me what led to this acquisition, Why do 0:10:55.559 --> 0:10:56.640 you like it and why now? 0:10:58.520 --> 0:10:58.720 Yeah. 0:10:58.760 --> 0:11:02.360 Look, we create in ours Energy just literally out of 0:11:02.360 --> 0:11:04.960 COVID in twenty twenty one. We brought together a collection 0:11:05.000 --> 0:11:07.080 of all and gas assets we had, We did some 0:11:07.559 --> 0:11:10.400 major portfolio transition. We took a big us on shore 0:11:10.440 --> 0:11:15.040 position last here from Chesapeake, so that sort of built 0:11:15.120 --> 0:11:17.080 up a decent sized two thousand and six and a 0:11:17.080 --> 0:11:20.560 well positioned an LNG export option. And then the next 0:11:20.600 --> 0:11:23.560 obvious spot to go to was the offshore Gulf Mexico, 0:11:23.600 --> 0:11:26.800 which is probably one of the highest margin barrels available globally. 0:11:27.480 --> 0:11:29.480 And we've been looking around now for the best part 0:11:29.480 --> 0:11:31.480 of three years for the right deal, and this was 0:11:31.520 --> 0:11:35.360 the right It's the right group, it's a great team 0:11:35.400 --> 0:11:38.680 that we get with this. It's the next entem that's 0:11:38.679 --> 0:11:40.600 seen I could acquired. So we'll get head of the 0:11:40.600 --> 0:11:42.520 CEO and area of the CFO as part of that 0:11:42.600 --> 0:11:45.000 transaction will come across. So yeah, we're pretty happy about it. 0:11:45.600 --> 0:11:47.520 So talk to us about that part of the world. 0:11:47.600 --> 0:11:48.680 Energy in that part. 0:11:48.440 --> 0:11:51.080 Of the world, the Golf of Mexico specifically, what are 0:11:51.160 --> 0:11:54.320 it the dynamics of getting a barrel of oil out 0:11:54.360 --> 0:11:57.359 of the Golf of Mexico seems like a tough business. 0:11:58.760 --> 0:12:01.160 Now, look, it's one of the most biations in the world. 0:12:01.720 --> 0:12:04.040 I've got personal experience of it. Sort of you know, 0:12:04.160 --> 0:12:08.640 twenty thirty years ago, the early pioneering groups of effecting 0:12:08.720 --> 0:12:12.439 back then, Chevron SHELLBP, that kind of went into that zone. 0:12:12.520 --> 0:12:16.240 I think there's still a lot of legs. And I 0:12:16.240 --> 0:12:19.840 think the most important thing about that particular region is 0:12:19.880 --> 0:12:24.520 we've got a very stable fiscal regime. Its successive governments 0:12:24.800 --> 0:12:29.400 have continued to support that region in particular, and the 0:12:29.480 --> 0:12:32.640 on shore And yeah, I think back to the last 0:12:32.679 --> 0:12:36.839 conversation alex I think was when the Biden administration was 0:12:36.840 --> 0:12:38.560 coming in. It was concerned about what would happen with 0:12:39.000 --> 0:12:42.000 on shore fracking in the United States. That's got to 0:12:42.040 --> 0:12:44.320 record high. So, I mean, the US now accounts for 0:12:44.360 --> 0:12:48.600 something like twenty percent of all the world's oil production, 0:12:48.679 --> 0:12:51.880 including commentsates and natural gas liquids. So look, it just 0:12:51.960 --> 0:12:53.600 continues to be a great place to do. 0:12:56.920 --> 0:12:59.840 Yeah, exactly, which is so interesting. So you have now 0:13:00.080 --> 0:13:03.920 Gulf of Mexico, say's deep water, you have LNG export assets, 0:13:04.000 --> 0:13:05.280 and then you also have gas. 0:13:05.320 --> 0:13:07.240 How are all of them going to wind up working together? 0:13:08.840 --> 0:13:11.520 Well, look, so we will be exporting LNG probably twenty 0:13:11.520 --> 0:13:14.320 twenty six onwards. We have the new contract in place, 0:13:14.520 --> 0:13:17.880 we have effective We have the last eighty months repositioned 0:13:17.920 --> 0:13:21.000 that onshore position that we picked up from Chesapeake, the 0:13:21.040 --> 0:13:23.640 Eagle Food position, which was mostly oil. Actually it's like 0:13:23.679 --> 0:13:26.000 sort of eighty five percent oil with oil liquids. It's 0:13:26.000 --> 0:13:29.160 got a decent amount of gas. In the these two assets, 0:13:29.200 --> 0:13:32.600 they're not operated. We've got great operators in both shell 0:13:32.679 --> 0:13:34.840 in one asset hes and the other which is obviously 0:13:36.160 --> 0:13:40.000 becomes Chevron, and we'll learn a lot about that particular region. 0:13:40.200 --> 0:13:42.480 We then also have a growth oil business in Denmark 0:13:42.520 --> 0:13:44.920 and a gas business in the UK. So we'll start 0:13:44.960 --> 0:13:48.960 to bring that web, virtual web together and as you'd expect, Alex, 0:13:49.000 --> 0:13:52.240 on top of that, what we're building around that web 0:13:52.360 --> 0:13:58.480 of assets is a trading business. Both LNG gas and 0:13:58.559 --> 0:14:01.120 oil trading, so that will then start to ensure that 0:14:01.120 --> 0:14:02.840 we can pick up the incremental value that comes from 0:14:02.800 --> 0:14:03.960 moving those products around the world. 0:14:04.480 --> 0:14:07.760 What's the competitive environment for you in kind of your businesses. 0:14:07.800 --> 0:14:11.040 They're down in the golf down in the South Texas area. 0:14:11.120 --> 0:14:13.439 How do you compete against some of the bigger companies there. 0:14:13.440 --> 0:14:17.600 What's the strategy in this case? 0:14:17.600 --> 0:14:19.360 We're not operated, right, so we get carried by the 0:14:19.360 --> 0:14:21.280 two main operators, which, as I say, are sort of 0:14:21.520 --> 0:14:24.120 two the sort of top operators in the Gulf of 0:14:24.200 --> 0:14:26.400 Mexico and have got the long history of operating there, 0:14:26.560 --> 0:14:28.560 so we'll get carried as part of that, we'd like 0:14:28.640 --> 0:14:29.960 to get an operated position. 0:14:30.360 --> 0:14:31.800 I think we have big ambitions. 0:14:31.800 --> 0:14:35.320 And when we started to create this company out of Ineos, 0:14:34.800 --> 0:14:40.480 Ineos already massive footprint the United States as a petrochemical company, 0:14:40.960 --> 0:14:43.240 and as we started to build up the energy business 0:14:43.240 --> 0:14:45.640 in twenty twenty one, you know that the ambition of 0:14:45.640 --> 0:14:49.080 our owners Jim Ratcliffe and his two partners has no bounds. 0:14:49.080 --> 0:14:52.040 And therefore I could see us at some point in 0:14:52.120 --> 0:14:55.280 the future building this out into something much bigger, maybe 0:14:55.320 --> 0:14:58.680 in the same sort of size nical company. 0:14:59.320 --> 0:15:01.280 Hey, Brian, before we let you go talk about the 0:15:01.280 --> 0:15:06.960 trading part of it, because clearly BP's trading arm was it. 0:15:06.680 --> 0:15:10.479 Is the giant right of all the oil majors. 0:15:10.880 --> 0:15:12.680 Excellent has wanted to kind of build up its own 0:15:12.720 --> 0:15:15.200 trading unit, like everyone kind of wants a pizza that pie. 0:15:15.280 --> 0:15:16.520 How are you guys going to do it? 0:15:19.120 --> 0:15:19.880 Look as surely hard. 0:15:19.920 --> 0:15:21.240 You have to You have to have the DNA and 0:15:21.240 --> 0:15:23.800 your system to really be successful. We've hired a couple 0:15:23.880 --> 0:15:26.600 of people that we know well. The first thing we 0:15:26.640 --> 0:15:29.400 did over the last six months actually last eighteen months 0:15:29.400 --> 0:15:32.440 who built out a risk structure because of course if 0:15:32.480 --> 0:15:34.560 you're going to trade commodities, you need to be absolutely 0:15:34.600 --> 0:15:37.000 ensure that you have the risk framework around that. So 0:15:37.040 --> 0:15:40.640 we built out the risk capability. We've started now getting 0:15:40.840 --> 0:15:43.520 ramped up for our LNG trading operation, which should start 0:15:43.560 --> 0:15:46.880 in the next two years, and then oil trading is 0:15:46.920 --> 0:15:49.640 short steps, but it's with an experienced team that we 0:15:49.680 --> 0:15:52.520 already know, and of course three because we have this 0:15:52.640 --> 0:15:55.760 massive industrial footprint called Ineos. It's it's the third largest 0:15:55.840 --> 0:15:59.680 chemical company in the world that gives us as to 0:15:59.720 --> 0:16:02.880 flow globally, so that will be short steps. But the 0:16:02.960 --> 0:16:04.960 key is to make sure that we've got that capability 0:16:05.320 --> 0:16:07.320 that allows us to add those extra extra sense to 0:16:07.360 --> 0:16:08.600 the margin on the barrel. 0:16:08.840 --> 0:16:11.000 All right, Brian, really looking forward to get getting a 0:16:11.040 --> 0:16:13.160 more update from you. Keep in touch, let us know 0:16:13.200 --> 0:16:16.720 when the next events happen. Good to see you, Brian Gavari. 0:16:17.080 --> 0:16:20.920 He is joining us from Ineos. He's the chairman of 0:16:20.960 --> 0:16:24.320 Ineos Energy, previously the CFO of BP, which is where 0:16:24.600 --> 0:16:25.880 he and I started talking. 0:16:25.640 --> 0:16:26.840 Years and years and years ago. 0:16:26.960 --> 0:16:28.840 So you see, kind of the evolution of someone's career 0:16:28.880 --> 0:16:29.760 is really quite interesting. 0:16:29.880 --> 0:16:33.040 I want to get on one of those offshore rigs, 0:16:33.200 --> 0:16:33.720 me too. 0:16:34.680 --> 0:16:35.840 Did you know that if you do that, though, you 0:16:35.840 --> 0:16:36.840 need helicopter training. 0:16:37.280 --> 0:16:39.120 Helicopter training, yes, passenger. 0:16:39.280 --> 0:16:41.960 Yeah, So the helicopter training is you're in a pool 0:16:42.320 --> 0:16:44.800 and they put you in a helicopter and they dunk 0:16:44.880 --> 0:16:46.680 you and you have to swim out by yourself, and 0:16:46.720 --> 0:16:49.000 you don't get certified unless you're able to swim. 0:16:48.800 --> 0:16:51.600 Out by yourself. Oh and one of my biggest fears 0:16:51.640 --> 0:16:52.440 is doing that. 0:16:52.680 --> 0:16:55.520 So that's an issue. Okay, I'd still like to try it, 0:16:55.560 --> 0:16:57.640 but even all right, we'll see how it goes. I 0:16:57.640 --> 0:16:59.760 always thought that would be I can't imagine being at 0:16:59.800 --> 0:17:01.280 the the notion on one of those things. 0:17:01.480 --> 0:17:04.239 Yeah, I'm doing that dangerous hard work too. 0:17:04.359 --> 0:17:04.840 Yeah. 0:17:04.920 --> 0:17:07.440 Well, that's why the automation piece of oil and gas 0:17:07.480 --> 0:17:09.800 is so critical because if you can do that reducing 0:17:09.800 --> 0:17:12.280 the amount of people that you're putting in any sort 0:17:12.280 --> 0:17:15.320 of harm's way offshore, like, that's huge, and that's an 0:17:15.320 --> 0:17:18.560 industry and mining also, where like that automation hand is 0:17:18.600 --> 0:17:20.639 not just a cost saver, it's like a life saver. 0:17:21.080 --> 0:17:23.919 So interesting to see how they manage on with that. 0:17:25.440 --> 0:17:29.280 You're listening to the Bloomberg Intelligence podcast. Catch us live 0:17:29.400 --> 0:17:32.480 weekdays at ten am Easter on Apple, Cardplay and Android 0:17:32.480 --> 0:17:35.600 Auto with the Bloomberg Business App. Listen on demand wherever 0:17:35.640 --> 0:17:39.480 you get your podcasts, or watch us live on YouTube. 0:17:40.440 --> 0:17:42.440 All right, in the markets, SMP is down by four 0:17:42.480 --> 0:17:44.040 tens of one percent, the nest I got by three 0:17:44.040 --> 0:17:44.800 tens of one percent. 0:17:44.840 --> 0:17:46.359 What to do? Headed into the FED? 0:17:46.640 --> 0:17:51.639 Danadoria's co chief investment officer at Investment joining us. Now, okay, 0:17:51.680 --> 0:17:53.760 you have on one hand, Bank of America is saying that. 0:17:53.760 --> 0:17:56.280 Cash levels are hitting a level where you may actually. 0:17:56.080 --> 0:17:58.439 Want to sell equities to your rope price sing you 0:17:58.480 --> 0:18:01.239 could hit six percent of the ten next year, what 0:18:01.280 --> 0:18:01.840 do you do. 0:18:03.920 --> 0:18:04.120 Well? 0:18:04.119 --> 0:18:06.040 That certainly flies in the face of what we've been 0:18:06.040 --> 0:18:08.600 hearing for a long time, which is, you know, more 0:18:08.600 --> 0:18:12.080 consistent with a risk on market. You know, consumer spending 0:18:12.200 --> 0:18:16.520 obviously doing well, you know, not a not a bad 0:18:16.560 --> 0:18:17.480 nothing like. 0:18:17.440 --> 0:18:19.119 A bleak picture for employment. 0:18:19.400 --> 0:18:21.119 But I think what's happening and what you're starting to 0:18:21.160 --> 0:18:25.160 hear in reference is things are getting ahead of themselves 0:18:25.240 --> 0:18:27.959 as they as they sometimes do, right and you know, 0:18:28.320 --> 0:18:31.000 as good as it seems right now, and not a 0:18:31.000 --> 0:18:34.399 lot of reason to expect headwinds. The market is just 0:18:34.640 --> 0:18:37.520 pricing in good times at a faster rate maybe than 0:18:37.960 --> 0:18:40.840 what we think that we can actually sustain. And so 0:18:41.320 --> 0:18:45.040 you know, value matters, price matters, and as and you're 0:18:45.040 --> 0:18:46.880 seeing a little bit of that now, right, So maybe 0:18:46.880 --> 0:18:49.200 a little bit of a back pedaling there. 0:18:49.320 --> 0:18:51.919 But you know, I think the market has been and. 0:18:52.280 --> 0:18:55.479 Continues to be pricing in a very rosy scenario. And 0:18:55.520 --> 0:18:58.080 you know it's not that we're without reasons to think 0:18:58.160 --> 0:19:00.399 that that could tamp down, and one of them, of 0:19:00.440 --> 0:19:04.879 course being that notwithstanding you know, the rate cut this month, 0:19:05.080 --> 0:19:07.080 when are we going to get continued rate cuts? Are 0:19:07.080 --> 0:19:08.800 we going to or we're going to have a pause 0:19:08.800 --> 0:19:09.840 as soon as January. 0:19:10.560 --> 0:19:15.000 So from a positioning standpoint, Dana is twenty five. The 0:19:15.000 --> 0:19:17.360 beginning of twenty five look different for you guys than 0:19:17.760 --> 0:19:19.520 kind of made me where you ended twenty four. 0:19:21.400 --> 0:19:23.880 I think twenty five it's interesting because we sit at 0:19:23.880 --> 0:19:26.200 the nexus of a lot of different you know, economic 0:19:26.240 --> 0:19:30.879 input from macro analysts and asset managers, et cetera. And 0:19:30.880 --> 0:19:32.960 it's interesting just to look across what you're starting to 0:19:32.960 --> 0:19:34.640 see come in around twenty twenty five. 0:19:34.720 --> 0:19:35.240 Outlooks. 0:19:35.440 --> 0:19:37.000 Some of them are you know, we're going to see 0:19:37.000 --> 0:19:38.959 some consolidation, A lot of it is. 0:19:39.400 --> 0:19:41.080 We have a good reason to think that the. 0:19:41.000 --> 0:19:43.960 Good times keep rolling, at least at at least in 0:19:44.000 --> 0:19:47.840