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Speaker 1: Welcome to the Bloomberg Surveillance Podcast. I'm Tom Keane. Along

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Speaker 1: with Jonathan Ferrell and Lisa Brownowitz. Daily we bring you

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Speaker 1: insight from the best and economics, finance, investment, and international relations.

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Speaker 1: Find Bloomberg Surveillance on Apple Podcast, Suncloud, Bloomberg dot Com,

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Speaker 1: and of course on the Bloomberg terminal. This could be

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Speaker 1: a one hour conversation. It is so good and she

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Speaker 1: is so qualified. She's chief economist at O. E. C. D.

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Speaker 1: Lawrence Boon joins us now on a trip around the world.

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Speaker 1: And Lawrence, I'm gonna be selfish and go to the

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Speaker 1: growth through session you call for in the United States

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Speaker 1: where you've got an ugly statistic and then the next

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Speaker 1: year it gets uglier for the United States. Well take

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Speaker 1: that out to a global economy and the benchmark you

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Speaker 1: and I studied in school of three percent global growth,

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Speaker 1: as being allows, is our global economy heading or in

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Speaker 1: a growth recession? Why the kitem and thanks for inviting me, um.

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Speaker 1: The global economy is is bating a very hefty price

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Speaker 1: for the war that RuSHA is leading into Ukraine. And yes,

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Speaker 1: this is pushing down growth quite a lot to three percent,

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Speaker 1: as you say, which is UM just about one of

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Speaker 1: the low rates we have seen, and it's pushing inflation

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Speaker 1: even higher. We're getting close to nine percent or a

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Speaker 1: little more than six if we're excluding Turkey in the

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Speaker 1: O E c D economies. Do you ascribe to the

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Speaker 1: idea that the only way to break Laurence Summers stagflation,

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Speaker 1: the only way to break this, given the war and

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Speaker 1: given the rest is tight monetary policy. Is that the

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Speaker 1: only way you get this done? So I think we

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Speaker 1: have a little more messages than this in THEIRS, and

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Speaker 1: as far as monetary policies concerned, we have you know,

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Speaker 1: still healthy growth, employment and high inflation. So what we're

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Speaker 1: saying is remove some monetary policy accommodation UM monetary policy

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Speaker 1: as you they well, no, cannot address supply shock, but

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Speaker 1: they can signal that they will target this, you know,

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Speaker 1: by telegraphing what they're doing, and in those countries where

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Speaker 1: there is obvious success demand and yes, military policy should

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Speaker 1: be tighter. Or also what's the main swing factor that

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Speaker 1: led the downgrade and that could potentially more downgrades ahead.

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Speaker 1: So the main storing factor is really Richard aggression into Ukraine. UM.

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Speaker 1: As you know, we were already having UM inflation going

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Speaker 1: up because of the pandemic. And the issue is China

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Speaker 1: SUPPLIESHAIN and they will COVID policy. Um. So that was

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Speaker 1: already affecting us. Now the options and the kit to

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Speaker 1: the production of cereals of energy coming out of the

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Speaker 1: war is obviously raising inflation, and this higher inflation is

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Speaker 1: undermining consumer confidence and therefore consumption. One of the things

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Speaker 1: we say, if you allow me just thirty second sentence

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Speaker 1: on this, is it has the burden of inflation. The

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Speaker 1: costs of the of the war should be fairly shared

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Speaker 1: between employers and employees wages and profits, so as to

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Speaker 1: avoid a wage face file. So this is one of

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Speaker 1: the reasons why perhaps you accuse the United Kingdom of

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Speaker 1: having taxes that were too high and saying that they

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Speaker 1: had to cut them in order to give people more

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Speaker 1: buying power. How much does there have to be in

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Speaker 1: some ways fiscal expansion despite the idea that people are

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Speaker 1: pointing to some of the physical expenditures as being the

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Speaker 1: cause of inflation. When I say all reasons why and

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Speaker 1: the UK has lower with them whether to seven economies

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Speaker 1: next year, one is the higher inflation, the other is

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Speaker 1: tighter and faster, faster monitary policy tightening and also finds

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Speaker 1: the physical consolidation. So what we're recommending to the UK

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Speaker 1: is actually to consider the pace at which physical consolidation

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Speaker 1: is taking place, if if it goes was too slow

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Speaker 1: as fast as what we're describing Laurence O E C

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Speaker 1: as part of the alphabet soup of the O E

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Speaker 1: C D are the people that actually prosecuted the martial plan.

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Speaker 1: How do you respond when we hear so many people

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Speaker 1: in a flippant way say what we need is a

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Speaker 1: new martial plan on Ukraine and the rest as well?

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Speaker 1: How does O E C D and you actually feel

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Speaker 1: we will affect a modern martial plan. So I think

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Speaker 1: the two things. One is what's happening in Ukraine, where

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Speaker 1: as we can see everything is being destroyed, all the

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Speaker 1: infrastructure and so the a large part of the infrastructure

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Speaker 1: and the capacity of the productive capacity of the economy,

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Speaker 1: and this will need to be rebuilt. The Marshall plan

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Speaker 1: goes and in hand, as you very well, not a

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Speaker 1: tomb um money on the one side, but also reform

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Speaker 1: structural policy reform on the other hand, to ensure that

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Speaker 1: the moment the money is very well channel So that's

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Speaker 1: one thing The other thing I think people have in

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Speaker 1: mind more immediately at the moment, and that we have

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Speaker 1: in mind as at least is globally to avoid a

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Speaker 1: food crisis. And for this, um, we're just saying a

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Speaker 1: couple of things. One is ensure the transport and logistics

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Speaker 1: of the cereals around the world so that it reaches

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Speaker 1: Middle Eastern Africa where it's most needed, where it could

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Speaker 1: cost not only starvation but also social and political unrest. Um.

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Speaker 1: And for this we might need more foreign add which

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Speaker 1: in a sense is also part of what we call

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Speaker 1: Martian plans. Lawrence, You've got a whole host of policy descriptions,

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Speaker 1: and I just wanted to finish on the UK because

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Speaker 1: you do offer some advice to the British government. Out

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Speaker 1: of the developed economies at the moment, that's the one

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Speaker 1: that seems to be really fighting with low growth and

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Speaker 1: much higher prices in a much more pronounced way than

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Speaker 1: say the United States or Europe for that matter. Can

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Speaker 1: you run us through your thoughts on what you think

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Speaker 1: this government should do right now? UM? I can try, um,

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Speaker 1: what the what's very um? What makes the UK different

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Speaker 1: from other G seven economies? As I was saying, higher inflation, UM,

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Speaker 1: faster tightening of monetary policy but also faster fiscal consolidation.

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Speaker 1: And then the description to manufacturing supply chain as we

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Speaker 1: know between China and some of the breaks in discussion.

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Speaker 1: So there are two things I think which stand out.

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Speaker 1: One to carefully wagh was happening with fiscone policy and

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Speaker 1: make sure that not only the most vulnerable but the

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Speaker 1: working class just to both the most vulnerable is actually

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Speaker 1: being sheltered from the cost of war and the wising

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Speaker 1: global oil prices defecting everyone as we know. UM. And

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Speaker 1: the second thing that we're saying is obviously trade has

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Speaker 1: to resume faster in the UK. Noe spoon thank you,

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Speaker 1: thank you very much from the O E c D

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Speaker 1: looking for three percent clubl GDP over the World Bank

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Speaker 1: looking at two point nine. We're gonna talk economics right

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Speaker 1: now and save the show. But first with David blanche

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Speaker 1: Flower of Dartmouth College, I must ask pages out saying

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Speaker 1: that Gareth Gareth has to play regular games to get

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Speaker 1: to the World Cup for Wales. I mean it sounds

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Speaker 1: to me like it's dustin for Cardiff. What do you

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Speaker 1: think sounds like it? We survived this year, but Whales

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Speaker 1: into the World Cup seems so quite a big deal,

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Speaker 1: are you. Are you willing to donate some money here

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Speaker 1: for Cardiff to play the big ticket for Mr Bill

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Speaker 1: versus going to the top He sounds pretty expensive to me.

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Speaker 1: You and I will send up twenty bucks. John, pick

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Speaker 1: it up here. You know you want me to get

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Speaker 1: us out of this. You know, I think what you've

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Speaker 1: been tremendous over the last ten fifteen years particularly is

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Speaker 1: to provide this different perspective to the consensus view. You

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Speaker 1: did that in the previous cycle with the labor market.

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Speaker 1: Everyone used to talk about a tight labor market, and

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Speaker 1: by the time we got to the end of that cycle,

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Speaker 1: a lot of people look back and said, maybe not,

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Speaker 1: you're trying to do that again. I want to start

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Speaker 1: with the data point, and that was the amount of credit,

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Speaker 1: the amount of borrowing the consumers are making at the moment.

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Speaker 1: What do you make of that and what does it

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Speaker 1: speak to Well, obviously that's the starting point is mortgages

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Speaker 1: are now obviously pretty high, and we're seeing slowing in

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Speaker 1: applications and presumably we're seeing slowing in the in that

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Speaker 1: housing market. I mean, the other part of it is

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Speaker 1: presumably what we're seeing a people being stretched, um, and

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Speaker 1: and you might expect as they're being stretched that they

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Speaker 1: resort to credit cards and you know, trying to pay

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Speaker 1: the bills as they go. So so I'm not exactly

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Speaker 1: sure what to make of it. I mean, I think

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Speaker 1: the answer is that you know, down the road, we're

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Speaker 1: probably going to see some defaults. But I think I

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Speaker 1: think your point is good in the sense that much

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Speaker 1: of the discussion that I hear is really quite unbalanced.

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Speaker 1: I mean, we're hearing all the conversation about the Fed's

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Speaker 1: gonna the last commentator the fens going to to two

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Speaker 1: rate rises. It's on, Well, that's fine. Um. It really depends, however,

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Speaker 1: on the data. And I think you know, something that

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Speaker 1: really sets us going is the O E c D

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Speaker 1: forecast this morning, which again to me, looks really too optimistic.

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Speaker 1: But they cut global they cut the global growth forecast

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Speaker 1: from four and a half to three, and it certainly

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Speaker 1: looks to be too optimistic. So I think the evidence

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Speaker 1: going here is that you know, we're gonna wait till

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Speaker 1: we're going to look at the data. But I think

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Speaker 1: everyone seems to be saying the same thing, and there's

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Speaker 1: a clearly credible argument to make that output is going

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Speaker 1: to slow much quicker than you think. It's time to

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Speaker 1: sit and watch and wait. And essentially that's the position

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Speaker 1: that the ECB and the Bank of Japan have taken.

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Speaker 1: So I don't think we've seen a very balanced discussion.

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Speaker 1: I'm not saying I'm right, but I think, yeah, let's

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Speaker 1: just clarify this for a second. What is the correct

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Speaker 1: policy prescription in your view? Is it to not raise

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Speaker 1: rates at all any more? In the FED? By the FED? No,

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Speaker 1: I think the answer is that we really have no idea.

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Speaker 1: We have no historical precedent or what to do. There's

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Speaker 1: no data points. Perhaps the only data points we have

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Speaker 1: a two thousand and eight and nine, and so we

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Speaker 1: really have to be dependent on a set of scenario.

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Speaker 1: Scenario one is inflation keeps rising, scenario to his COVID

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Speaker 1: moves onwards. Scenario three is output collapses, people start to

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Speaker 1: default on things. Depending upon those sets of scenarios, we

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Speaker 1: will we would have to respond. The FED has to

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Speaker 1: say we're dependent on the data. And my view is

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Speaker 1: that it's perfectly feasible to argue right now that rate

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Speaker 1: cuts are on the table. I mean, one possibilities. They

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Speaker 1: are on the table, we're sitting, we're waiting, we'll watch.

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Speaker 1: But suddenly some bad data comes and all the commentators

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Speaker 1: saying they're going to raise ex times as on and

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Speaker 1: we know what's coming and the only issue is whether

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Speaker 1: it gets to four percent or three percent. Well, that

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Speaker 1: depends on the data. And the first thing to say

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Speaker 1: today the only CD realizes that they've got their output

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Speaker 1: call wrong. And I was looking at France forecasting positive

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Speaker 1: growth for France, the weakest for the UK. They all

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Speaker 1: look overly optimistic. France has just had its first quarter

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Speaker 1: at DP reduced from zero to negative point to So

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Speaker 1: you're really going to argue that it's all going to

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Speaker 1: be just finding quarter two, quarter three and quarter four.

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Speaker 1: I think the answer is we really don't know, Lisa,

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Speaker 1: we really don't know. And to actually argue we know

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Speaker 1: what's coming, it's just a wing and a prayer. We

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Speaker 1: don't account. There are counter arguments on the side that

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Speaker 1: the labor market is much looser than you think. I

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Speaker 1: have strong views about that. I think it is thin.

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Speaker 1: People completely got the labor market wrong. As I've said

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Speaker 1: for a decade, I happily talked to talk more about it,

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Speaker 1: and I'll be a gonna work a lot more recently.

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Speaker 1: But Danny, do you think that the reason why the

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Speaker 1: third is taking the approach that they have is because

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Speaker 1: it is politically infeasible for them not to come out

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Speaker 1: with a much harder line despite the fact that, as

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Speaker 1: you say, there could be a more material slowdown. But

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Speaker 1: right now, that is not the main economic problem facing

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Speaker 1: the US. Well in a sense that, I mean, you

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Speaker 1: may be right, but the reason that you have an

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Speaker 1: independent FED is to try and cut through that political push.

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Speaker 1: I would have liked to see a more balanced discussion

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Speaker 1: on the one hand. On the other hand, I mean, yes,

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Speaker 1: you argue that politically, but that's the reason you have

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Speaker 1: an independent central bank to say, hang on, folks, we're

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Speaker 1: going to cut through the political rhetoric. We're going to

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Speaker 1: cut through what politicians want us to do, and we're

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Speaker 1: going to try and look at the data and understand

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Speaker 1: what's going on. And I don't really see that. I mean,

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Speaker 1: I think if you go to the UK, the UK

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Speaker 1: that the votes on the NPC for the rate rises

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Speaker 1: last month and three people wanting more, a meeting coming

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Speaker 1: next week, and basically there is a counter argument to

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Speaker 1: say that you shouldn't raise it. Also, I'm not saying

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Speaker 1: that you shouldn't, but I'm just saying that the argument

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Speaker 1: is much more balanced output. Potentially it's going to fall.

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Speaker 1: And the big thing we know is that at points

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Speaker 1: where would turn downs calm, the revisions get you. So

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Speaker 1: the consumer confidence data around the world is predictive of recession,

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Speaker 1: predicular recession in the United States, in the UK, in

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Speaker 1: Japan and in Europe. Now you can ignore it, but

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Speaker 1: this is the best data we have. And it just

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Speaker 1: strikes me that all these folks maybe polically being pushed there,

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Speaker 1: but they're being pushed into making an error. And what

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Speaker 1: you need to see is a balanced discussion saying on

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Speaker 1: the one hand, the consumer confidence data are saying this.

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Speaker 1: In Europe, we've certainly seen a collapse in the last

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Speaker 1: two months, collapse in people's views about their financial situation,

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Speaker 1: collapsing consumer conference which presume and we know with Christine

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Speaker 1: Lagarland the ECB is taking very seriously. So if they're

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Speaker 1: taking it very seriously, why is there not a serious

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Speaker 1: discussion at the FED? The worry is the FED is

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Speaker 1: beaten by events and it starts to see some horrible

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Speaker 1: data that it's really not prepared people for horrible data

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Speaker 1: on the real economy, on the labor mark, on output,

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Speaker 1: on retail sales, on default. Yeah. So I think it's

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Speaker 1: just we need to balance this discussion. And I certainly

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Speaker 1: think that you know that if you look at the

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Speaker 1: f O m C and you look at the NBC,

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Speaker 1: discussion is unbalanced and that's potentially dangerous. Danny. One thing

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Speaker 1: we can agree on group think is deadly it's going

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Speaker 1: to catch up, Buddy, gonna hear from you, Danny, Blanche

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Speaker 1: feud there of Dartmouth and a Stagia Amarro. So the

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Speaker 1: chief Investments trying to just eye capital joins us now

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Speaker 1: and I stay, let's start here. You're looking for a

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Speaker 1: soft dish landing. Let's talk about the issue. Any evidence

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Speaker 1: of that developing at the moment as you look at

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Speaker 1: the incoming data. Yeah, John, get to see you. I

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Speaker 1: think there's a few things that I look at the

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Speaker 1: give me a hope that we meet actually have a

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Speaker 1: wider path to a soft landing here. The first one

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Speaker 1: is you look at the growth numbers. I mean, even

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Speaker 1: with the O E c D down grading growth today,

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Speaker 1: it's still a part of number. And if you look

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Speaker 1: at the US, we're expecting two point six percent this here,

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Speaker 1: two percent next year. This has not fallen off the cliff.

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Speaker 1: It is still hanging in there. So yes, we're squarely

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Speaker 1: in a slow down part of this, but this doesn't

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Speaker 1: yet have to be in amin a recession. You know.

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Speaker 1: The second thing that I look at and frankly, I've

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Speaker 1: not been able to say that, yes we have seen

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Speaker 1: peak inflation, and yes this is it. But now I

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Speaker 1: feel like there is more and more evidence building that

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Speaker 1: maybe we are starting to see peek inflation. I mean,

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Speaker 1: look at use car prices, they are starting to decline.

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Speaker 1: Look at the businesses intentions to continue raises prices. They

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Speaker 1: just can't do it anymore. So more and more of

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Speaker 1: them are saying we're gonna pause. If you look at

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Speaker 1: businesses intentions to raise wages, they're pausing as well. So

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Speaker 1: they're starting to be sort of a preponderance of evidence

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Speaker 1: that maybe inflation is in fact easing. And this is

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Speaker 1: commodity is notwithstanding, but the other inflationary pressures seem to

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Speaker 1: be easy. And then the third thing John that really

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Speaker 1: gives me some confidence that maybe we can engineer soft

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Speaker 1: landing is the FED is starting to sound a little

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Speaker 1: bit more are balanced. Yes, of course they need to

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Speaker 1: fight inflation, but maybe it doesn't have to only be

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Speaker 1: by raising rates well into tightening territory, you know, maybe

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Speaker 1: they can pause and let the hype prices naturally bring

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Speaker 1: down demands. So I think if they back away just

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Speaker 1: in time, we might end up with the ninety four

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Speaker 1: scenario versus the seventies and the stage everyone wants to

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Speaker 1: game out where we're heading right now? What does that

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Speaker 1: mean for what you're actually buying? Because you have to

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Speaker 1: come up with a thesis before we have all of

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Speaker 1: the dots of what the Fed willer won't do and

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Speaker 1: how the data is going to come in. How risk

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Speaker 1: going are you right now? Yes, So it's all about

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Speaker 1: the balance of risks. And and I would say, just

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Speaker 1: a month or so ago, it seems like we have

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Speaker 1: priced in a lot. We were already at that point

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Speaker 1: the equity markets were pricing in a fifty seven probability

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Speaker 1: probability of recession, and now we've re traced some of that.

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Speaker 1: Where I am today is I think we're trapped in

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Speaker 1: a rage. I always thought the thirty night hundred for

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Speaker 1: this economic environment could sort of be the level of support.

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Speaker 1: We seem to have bounced off that level. But at

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Speaker 1: the same time, how much are you gonna pay for

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Speaker 1: two thirty five dollars worth of learnings? Sixteen and a

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Speaker 1: half times is fair? Maybe seventeen and a half times

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Speaker 1: is fair, which is roughly where we are today SMP.

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Speaker 1: But how much more do you push that? So? I

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Speaker 1: think you know, Tom, we are trapped in arrange for now,

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Speaker 1: but still there's some investment opportunities to look at. You

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Speaker 1: know that I've liked technology, but one of the calls

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Speaker 1: I have now is actually on financials. You have an

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Speaker 1: un financials. But part of this is the overarching theme,

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Speaker 1: and that goes back to expect the unexpected, and I'm

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Speaker 1: talking about overcome by events July. There's a mix of

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Speaker 1: dynamics on the screen which are clearly out of sorts.

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Speaker 1: What's the thing you're looking at for July that could

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Speaker 1: be the unexpected? Well, I think the big thing, well,

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Speaker 1: I don't know if it's unexpected, Tom, but maybe you

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Speaker 1: could still surprise us. Um is the commodity shock, right,

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Speaker 1: even though I'm saying the supply chain bottomlegs are raising

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Speaker 1: another inflationary pressure. Easy the commodity shortages are kind of away.

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Speaker 1: I'm going to stop the show. You, more than anyone

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Speaker 1: we know, have a visceral understanding of the coast of

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Speaker 1: the Black Sea. You own the high ground on this.

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Speaker 1: How do you respond to the idea that Odessa with

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Speaker 1: one S or two s is could be shut down. Look,

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Speaker 1: this has a big implication for the commodity market. And

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Speaker 1: you know, as I mentioned, the world is short of everything.

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Speaker 1: The world is short of wheat, the short the world

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Speaker 1: is short of drains, the world is short of oil

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Speaker 1: and natural gas. To the extent that you close off

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Speaker 1: that corridor, to the extent that the tension is continuing

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Speaker 1: to escalating, you can get product out of that region.

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Speaker 1: That is that is really really tough. I mean, I

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Speaker 1: think that's what people perhaps don't fully price it and

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Speaker 1: don't appreciate. Commodity prices are up a lot this year,

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Speaker 1: and you know, I think a lot of investors say, well,

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Speaker 1: how much more do you chase that? But what people

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Speaker 1: probably underappreciate is that we have a structural deficit of

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Speaker 1: many of these commodities. So this is not just a

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Speaker 1: tactical trade for this year, but this is longer lasting.

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Speaker 1: Such a good point, honesty, Thank you said that of

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Speaker 1: my capital. This is the privilege that we have not

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Speaker 1: only working with Haveve Blass, so Will Kennedy and all

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Speaker 1: of Bloomberg Hydrocarbons and commodity coverage, but also digging deep

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Speaker 1: into the analysis of global thinkers. The giant of all

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Speaker 1: this is Edward Morris with Daniel Jurgen separate, looking at

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Speaker 1: the global macro moment of this commodity boom. He is

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Speaker 1: global head of Commodities at City Group, and as John says,

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Speaker 1: has a bit of an outlier call right now at Morris,

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Speaker 1: how do we migrate back to your oil fundamentals under

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Speaker 1: ninety dollars a barrel? What are the trigger points or

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Speaker 1: catalysts that break the ascent of oil? So the catalysts

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Speaker 1: really are very simple. They're called supply and demand. And

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Speaker 1: we've got to get through the next few weeks to

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Speaker 1: see whether there actually is going to be a driving

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Speaker 1: season this summer. But under lying the the differences of

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Speaker 1: you is really what we think is raising prices now,

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Speaker 1: and we think of raising prices now are the dislocations

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Speaker 1: that have occurred as a result of countries and companies

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Speaker 1: refusing to take on Russian oil. There's no easy substitute

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Speaker 1: for urals. We're not in a one oil pricing system

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Speaker 1: or the two oil pricing system. And we have to

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Speaker 1: remember that while w T I maybe at a hundred

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Speaker 1: and twenty a brent, maybe at the hundred twenties something,

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Speaker 1: urals is trading at thirty lower than that. So it's

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Speaker 1: it's not one clear market, and it's the disruption of

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Speaker 1: that lower price that we have to think about and

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Speaker 1: ask why we have these higher prices. And I'm gonna

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Speaker 1: just say that we're planning a trip Lisa, John and

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Speaker 1: I to Abu Dhabi, and of course we're gonna have

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Speaker 1: an oil summit there, and we're gonna have on stage

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Speaker 1: Francisco Blanche, Christian May, look of JP Morgan, Blanche of

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Speaker 1: Bank of America, You and other worthies. And the singular

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Speaker 1: distinction seems to be the guests at hydrocarbon investment will

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Speaker 1: or will not come on if we get higher oil prices.

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Speaker 1: Are you more optimistic than others that investment will materialize? Well,

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Speaker 1: I think we first started. I don't think there's that problem.

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Speaker 1: I think we have more than enough investment in hydrocarbons.

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Speaker 1: I think we have a problem in the hydrocarbon world

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Speaker 1: in that the United States, the short cycle Big Guy,

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Speaker 1: has lost a lot of oil production. The US was

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Speaker 1: producing we have to remember, thirteen million barrels a day

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Speaker 1: in March of they went down to ten point two

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Speaker 1: million a day. Is now at eleven point nine million

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Speaker 1: a day. It's well below where it was and where

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Speaker 1: it would have been had we not had that drop

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Speaker 1: in drolling, we would have been at fourteen and a

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Speaker 1: half million barrels a day and they would not be

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Speaker 1: this problem. We have more than enough spending into oil

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Speaker 1: and gas finding and development. It's shifted a little bit.

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Speaker 1: But if we look at the next two or three

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Speaker 1: years and compare expectations of demand and supply, we think

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Speaker 1: the market is oversupplied. And have you seen any signs

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Speaker 1: that demand is starting to cool for driving for flying?

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Speaker 1: That gives you confidence that perhaps we might not see

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Speaker 1: the driving season that some people are expecting. Well, we

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Speaker 1: actually just we're trying to observe that. And we decided

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Speaker 1: to look at not only the four week average this

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Speaker 1: time a year for NASH for gas excuse me, gasoline

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Speaker 1: and diesel demand in the United States, and we went

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Speaker 1: back and discovered at first glance that it was the

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Speaker 1: lowest it's been in five years. Other than in that

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Speaker 1: that that big year when demand collapsed completely, We've now

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Speaker 1: gone back ten years to find a time when demand

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Speaker 1: for gasoline and diesel were as low as it is,

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Speaker 1: and we had to go back to So if we

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Speaker 1: think the e I a weekly data have a semblance

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Speaker 1: of reality to it, Gasoline demand is down yearine year,

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Speaker 1: Diesel demand is down yearine year, and it's the lowest

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Speaker 1: it's been for a decade. And that's a sign that

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Speaker 1: the price of oil has had an impact on where

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Speaker 1: demand is going and what still is the biggest oil

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Speaker 1: consuming country in the world. So, ed, why did you

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Speaker 1: end up shifting your expectations, your forecasts higher if you

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Speaker 1: still hold to that conviction that we might not see

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Speaker 1: the driving season, uh that a lot of people are

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Speaker 1: saying we will. Well, we drove prices higher first of all,

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Speaker 1: to mark to market. We had second quarter results that

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Speaker 1: are marking it to market higher than what we where

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Speaker 1: we were at, and we try to figure out what

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Speaker 1: was really happening. What was really happening was that companies

433
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Speaker 1: and countries were for swearing Russian crude. They could find

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00:23:34,920 --> 00:23:37,600
Speaker 1: no substitute for it. So they had to bid up

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00:23:37,680 --> 00:23:40,440
Speaker 1: the availability of light suite crude in the world that

436
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Speaker 1: is not the same as yours. They bid it up

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Speaker 1: from the country that has the most amount of this,

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00:23:46,200 --> 00:23:49,560
Speaker 1: namely the US with our open borders. Uh. And the

439
00:23:49,600 --> 00:23:52,240
Speaker 1: fact of the matter is that US exports have been

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Speaker 1: booming are combined exports of crude oil and petroleum products

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00:23:56,520 --> 00:23:58,639
Speaker 1: in recent weeks have been at the ten and a

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Speaker 1: half million barrel day rage. That would make the US

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00:24:01,960 --> 00:24:05,720
Speaker 1: the largest liquids provider in the world, bigger than Russia,

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00:24:05,960 --> 00:24:09,280
Speaker 1: bigger than Saudi Arabia. That's up by a couple of

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00:24:09,320 --> 00:24:11,800
Speaker 1: million barrels a day from where we were. So when

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00:24:11,840 --> 00:24:14,480
Speaker 1: companies had to look away from Russia for diesel, where

447
00:24:14,480 --> 00:24:16,840
Speaker 1: did they go? They went to the US. When companies

448
00:24:16,840 --> 00:24:18,480
Speaker 1: had been worked for crude oil, where did they go?

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00:24:18,600 --> 00:24:21,359
Speaker 1: They came to the US, and our inventories came down,

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00:24:21,800 --> 00:24:25,720
Speaker 1: giving a misleading impression that the whole world was going

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Speaker 1: down in the inventory side the same way the US

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Speaker 1: is just quickly. And if iin't got a minute, and

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00:24:29,920 --> 00:24:32,720
Speaker 1: this deserves a much longer conversation, of course, how sustainable

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Speaker 1: do you think that is? Politically? Because I don't think

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00:24:35,040 --> 00:24:38,159
Speaker 1: those numbers are that well known outside of conversations like

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Speaker 1: this one. Well, I I agree with you if the

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00:24:42,640 --> 00:24:45,400
Speaker 1: if it became political, people would start talking about stopping

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Speaker 1: the exports, just as they talked about stopping the exports

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Speaker 1: of natural gas. But it could be politicized in a

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00:24:51,119 --> 00:24:54,200
Speaker 1: way that it would be in an election year with

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Speaker 1: gasoline prices being as important as they are. And most

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Speaker 1: thank you, sir as always of City Greek refreshing. Just

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00:24:59,480 --> 00:25:02,880
Speaker 1: to have someone site we'll mark into market, Lisa, That's

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Speaker 1: what we had today. This is the Bloomberg Surveillance Podcast.

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Speaker 1: Thanks for listening. Join us live weekdays from seven to

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Speaker 1: ten am Eastern on Bloomberg Radio and on Bloomberg Television

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00:25:14,160 --> 00:25:18,119
Speaker 1: each day from six to nine am for insight from

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00:25:18,160 --> 00:25:22,720
Speaker 1: the best in economics, finance, investment, and international relations. And

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00:25:22,840 --> 00:25:27,960
Speaker 1: subscribe to the Surveillance podcast on Apple podcast, SoundCloud, Bloomberg

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00:25:28,040 --> 00:25:31,760
Speaker 1: dot com, and of course on the terminal. I'm Tom Keene,

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Speaker 1: and this is Bloomberg