Speaker 1: Welcome to the Bloomberg Surveillance Podcast. I'm Tom Keane. Along
Speaker 1: with Jonathan Ferrell and Lisa Brownowitz. Daily we bring you
Speaker 1: insight from the best and economics, finance, investment, and international relations.
Speaker 1: Find Bloomberg Surveillance on Apple Podcast, Suncloud, Bloomberg dot Com,
Speaker 1: and of course on the Bloomberg terminal. This could be
Speaker 1: a one hour conversation. It is so good and she
Speaker 1: is so qualified. She's chief economist at O. E. C. D.
Speaker 1: Lawrence Boon joins us now on a trip around the world.
Speaker 1: And Lawrence, I'm gonna be selfish and go to the
Speaker 1: growth through session you call for in the United States
Speaker 1: where you've got an ugly statistic and then the next
Speaker 1: year it gets uglier for the United States. Well take
Speaker 1: that out to a global economy and the benchmark you
Speaker 1: and I studied in school of three percent global growth,
Speaker 1: as being allows, is our global economy heading or in
Speaker 1: a growth recession? Why the kitem and thanks for inviting me, um.
Speaker 1: The global economy is is bating a very hefty price
Speaker 1: for the war that RuSHA is leading into Ukraine. And yes,
Speaker 1: this is pushing down growth quite a lot to three percent,
Speaker 1: as you say, which is UM just about one of
Speaker 1: the low rates we have seen, and it's pushing inflation
Speaker 1: even higher. We're getting close to nine percent or a
Speaker 1: little more than six if we're excluding Turkey in the
Speaker 1: O E c D economies. Do you ascribe to the
Speaker 1: idea that the only way to break Laurence Summers stagflation,
Speaker 1: the only way to break this, given the war and
Speaker 1: given the rest is tight monetary policy. Is that the
Speaker 1: only way you get this done? So I think we
Speaker 1: have a little more messages than this in THEIRS, and
Speaker 1: as far as monetary policies concerned, we have you know,
Speaker 1: still healthy growth, employment and high inflation. So what we're
Speaker 1: saying is remove some monetary policy accommodation UM monetary policy
Speaker 1: as you they well, no, cannot address supply shock, but
Speaker 1: they can signal that they will target this, you know,
Speaker 1: by telegraphing what they're doing, and in those countries where
Speaker 1: there is obvious success demand and yes, military policy should
Speaker 1: be tighter. Or also what's the main swing factor that
Speaker 1: led the downgrade and that could potentially more downgrades ahead.
Speaker 1: So the main storing factor is really Richard aggression into Ukraine. UM.
Speaker 1: As you know, we were already having UM inflation going
Speaker 1: up because of the pandemic. And the issue is China
Speaker 1: SUPPLIESHAIN and they will COVID policy. Um. So that was
Speaker 1: already affecting us. Now the options and the kit to
Speaker 1: the production of cereals of energy coming out of the
Speaker 1: war is obviously raising inflation, and this higher inflation is
Speaker 1: undermining consumer confidence and therefore consumption. One of the things
Speaker 1: we say, if you allow me just thirty second sentence
Speaker 1: on this, is it has the burden of inflation. The
Speaker 1: costs of the of the war should be fairly shared
Speaker 1: between employers and employees wages and profits, so as to
Speaker 1: avoid a wage face file. So this is one of
Speaker 1: the reasons why perhaps you accuse the United Kingdom of
Speaker 1: having taxes that were too high and saying that they
Speaker 1: had to cut them in order to give people more
Speaker 1: buying power. How much does there have to be in
Speaker 1: some ways fiscal expansion despite the idea that people are
Speaker 1: pointing to some of the physical expenditures as being the
Speaker 1: cause of inflation. When I say all reasons why and
Speaker 1: the UK has lower with them whether to seven economies
Speaker 1: next year, one is the higher inflation, the other is
Speaker 1: tighter and faster, faster monitary policy tightening and also finds
Speaker 1: the physical consolidation. So what we're recommending to the UK
Speaker 1: is actually to consider the pace at which physical consolidation
Speaker 1: is taking place, if if it goes was too slow
Speaker 1: as fast as what we're describing Laurence O E C
Speaker 1: as part of the alphabet soup of the O E
Speaker 1: C D are the people that actually prosecuted the martial plan.
Speaker 1: How do you respond when we hear so many people
Speaker 1: in a flippant way say what we need is a
Speaker 1: new martial plan on Ukraine and the rest as well?
Speaker 1: How does O E C D and you actually feel
Speaker 1: we will affect a modern martial plan. So I think
Speaker 1: the two things. One is what's happening in Ukraine, where
Speaker 1: as we can see everything is being destroyed, all the
Speaker 1: infrastructure and so the a large part of the infrastructure
Speaker 1: and the capacity of the productive capacity of the economy,
Speaker 1: and this will need to be rebuilt. The Marshall plan
Speaker 1: goes and in hand, as you very well, not a
Speaker 1: tomb um money on the one side, but also reform
Speaker 1: structural policy reform on the other hand, to ensure that
Speaker 1: the moment the money is very well channel So that's
Speaker 1: one thing The other thing I think people have in
Speaker 1: mind more immediately at the moment, and that we have
Speaker 1: in mind as at least is globally to avoid a
Speaker 1: food crisis. And for this, um, we're just saying a
Speaker 1: couple of things. One is ensure the transport and logistics
Speaker 1: of the cereals around the world so that it reaches
Speaker 1: Middle Eastern Africa where it's most needed, where it could
Speaker 1: cost not only starvation but also social and political unrest. Um.
Speaker 1: And for this we might need more foreign add which
Speaker 1: in a sense is also part of what we call
Speaker 1: Martian plans. Lawrence, You've got a whole host of policy descriptions,
Speaker 1: and I just wanted to finish on the UK because
Speaker 1: you do offer some advice to the British government. Out
Speaker 1: of the developed economies at the moment, that's the one
Speaker 1: that seems to be really fighting with low growth and
Speaker 1: much higher prices in a much more pronounced way than
Speaker 1: say the United States or Europe for that matter. Can
Speaker 1: you run us through your thoughts on what you think
Speaker 1: this government should do right now? UM? I can try, um,
Speaker 1: what the what's very um? What makes the UK different
Speaker 1: from other G seven economies? As I was saying, higher inflation, UM,
Speaker 1: faster tightening of monetary policy but also faster fiscal consolidation.
Speaker 1: And then the description to manufacturing supply chain as we
Speaker 1: know between China and some of the breaks in discussion.
Speaker 1: So there are two things I think which stand out.
Speaker 1: One to carefully wagh was happening with fiscone policy and
Speaker 1: make sure that not only the most vulnerable but the
Speaker 1: working class just to both the most vulnerable is actually
Speaker 1: being sheltered from the cost of war and the wising
Speaker 1: global oil prices defecting everyone as we know. UM. And
Speaker 1: the second thing that we're saying is obviously trade has
Speaker 1: to resume faster in the UK. Noe spoon thank you,
Speaker 1: thank you very much from the O E c D
Speaker 1: looking for three percent clubl GDP over the World Bank
Speaker 1: looking at two point nine. We're gonna talk economics right
Speaker 1: now and save the show. But first with David blanche
Speaker 1: Flower of Dartmouth College, I must ask pages out saying
Speaker 1: that Gareth Gareth has to play regular games to get
Speaker 1: to the World Cup for Wales. I mean it sounds
Speaker 1: to me like it's dustin for Cardiff. What do you
Speaker 1: think sounds like it? We survived this year, but Whales
Speaker 1: into the World Cup seems so quite a big deal,
Speaker 1: are you. Are you willing to donate some money here
Speaker 1: for Cardiff to play the big ticket for Mr Bill
Speaker 1: versus going to the top He sounds pretty expensive to me.
Speaker 1: You and I will send up twenty bucks. John, pick
Speaker 1: it up here. You know you want me to get
Speaker 1: us out of this. You know, I think what you've
Speaker 1: been tremendous over the last ten fifteen years particularly is
Speaker 1: to provide this different perspective to the consensus view. You
Speaker 1: did that in the previous cycle with the labor market.
Speaker 1: Everyone used to talk about a tight labor market, and
Speaker 1: by the time we got to the end of that cycle,
Speaker 1: a lot of people look back and said, maybe not,
Speaker 1: you're trying to do that again. I want to start
Speaker 1: with the data point, and that was the amount of credit,
Speaker 1: the amount of borrowing the consumers are making at the moment.
Speaker 1: What do you make of that and what does it
Speaker 1: speak to Well, obviously that's the starting point is mortgages
Speaker 1: are now obviously pretty high, and we're seeing slowing in
Speaker 1: applications and presumably we're seeing slowing in the in that
Speaker 1: housing market. I mean, the other part of it is
Speaker 1: presumably what we're seeing a people being stretched, um, and
Speaker 1: and you might expect as they're being stretched that they
Speaker 1: resort to credit cards and you know, trying to pay
Speaker 1: the bills as they go. So so I'm not exactly
Speaker 1: sure what to make of it. I mean, I think
Speaker 1: the answer is that you know, down the road, we're
Speaker 1: probably going to see some defaults. But I think I
Speaker 1: think your point is good in the sense that much
Speaker 1: of the discussion that I hear is really quite unbalanced.
Speaker 1: I mean, we're hearing all the conversation about the Fed's
Speaker 1: gonna the last commentator the fens going to to two
Speaker 1: rate rises. It's on, Well, that's fine. Um. It really depends, however,
Speaker 1: on the data. And I think you know, something that
Speaker 1: really sets us going is the O E c D
Speaker 1: forecast this morning, which again to me, looks really too optimistic.
Speaker 1: But they cut global they cut the global growth forecast
Speaker 1: from four and a half to three, and it certainly
Speaker 1: looks to be too optimistic. So I think the evidence
Speaker 1: going here is that you know, we're gonna wait till
Speaker 1: we're going to look at the data. But I think
Speaker 1: everyone seems to be saying the same thing, and there's
Speaker 1: a clearly credible argument to make that output is going
Speaker 1: to slow much quicker than you think. It's time to
Speaker 1: sit and watch and wait. And essentially that's the position
Speaker 1: that the ECB and the Bank of Japan have taken.
Speaker 1: So I don't think we've seen a very balanced discussion.
Speaker 1: I'm not saying I'm right, but I think, yeah, let's
Speaker 1: just clarify this for a second. What is the correct
Speaker 1: policy prescription in your view? Is it to not raise
Speaker 1: rates at all any more? In the FED? By the FED? No,
Speaker 1: I think the answer is that we really have no idea.
Speaker 1: We have no historical precedent or what to do. There's
Speaker 1: no data points. Perhaps the only data points we have
Speaker 1: a two thousand and eight and nine, and so we
Speaker 1: really have to be dependent on a set of scenario.
Speaker 1: Scenario one is inflation keeps rising, scenario to his COVID
Speaker 1: moves onwards. Scenario three is output collapses, people start to
Speaker 1: default on things. Depending upon those sets of scenarios, we
Speaker 1: will we would have to respond. The FED has to
Speaker 1: say we're dependent on the data. And my view is
Speaker 1: that it's perfectly feasible to argue right now that rate
Speaker 1: cuts are on the table. I mean, one possibilities. They
Speaker 1: are on the table, we're sitting, we're waiting, we'll watch.
Speaker 1: But suddenly some bad data comes and all the commentators
Speaker 1: saying they're going to raise ex times as on and
Speaker 1: we know what's coming and the only issue is whether
Speaker 1: it gets to four percent or three percent. Well, that
Speaker 1: depends on the data. And the first thing to say
Speaker 1: today the only CD realizes that they've got their output
Speaker 1: call wrong. And I was looking at France forecasting positive
Speaker 1: growth for France, the weakest for the UK. They all
Speaker 1: look overly optimistic. France has just had its first quarter
Speaker 1: at DP reduced from zero to negative point to So
Speaker 1: you're really going to argue that it's all going to
Speaker 1: be just finding quarter two, quarter three and quarter four.
Speaker 1: I think the answer is we really don't know, Lisa,
Speaker 1: we really don't know. And to actually argue we know
Speaker 1: what's coming, it's just a wing and a prayer. We
Speaker 1: don't account. There are counter arguments on the side that
Speaker 1: the labor market is much looser than you think. I
Speaker 1: have strong views about that. I think it is thin.
Speaker 1: People completely got the labor market wrong. As I've said
Speaker 1: for a decade, I happily talked to talk more about it,
Speaker 1: and I'll be a gonna work a lot more recently.
Speaker 1: But Danny, do you think that the reason why the
Speaker 1: third is taking the approach that they have is because
Speaker 1: it is politically infeasible for them not to come out
Speaker 1: with a much harder line despite the fact that, as
Speaker 1: you say, there could be a more material slowdown. But
Speaker 1: right now, that is not the main economic problem facing
Speaker 1: the US. Well in a sense that, I mean, you
Speaker 1: may be right, but the reason that you have an
Speaker 1: independent FED is to try and cut through that political push.
Speaker 1: I would have liked to see a more balanced discussion
Speaker 1: on the one hand. On the other hand, I mean, yes,
Speaker 1: you argue that politically, but that's the reason you have
Speaker 1: an independent central bank to say, hang on, folks, we're
Speaker 1: going to cut through the political rhetoric. We're going to
Speaker 1: cut through what politicians want us to do, and we're
Speaker 1: going to try and look at the data and understand
Speaker 1: what's going on. And I don't really see that. I mean,
Speaker 1: I think if you go to the UK, the UK
Speaker 1: that the votes on the NPC for the rate rises
Speaker 1: last month and three people wanting more, a meeting coming
Speaker 1: next week, and basically there is a counter argument to
Speaker 1: say that you shouldn't raise it. Also, I'm not saying
Speaker 1: that you shouldn't, but I'm just saying that the argument
Speaker 1: is much more balanced output. Potentially it's going to fall.
Speaker 1: And the big thing we know is that at points
Speaker 1: where would turn downs calm, the revisions get you. So
Speaker 1: the consumer confidence data around the world is predictive of recession,
Speaker 1: predicular recession in the United States, in the UK, in
Speaker 1: Japan and in Europe. Now you can ignore it, but
Speaker 1: this is the best data we have. And it just
Speaker 1: strikes me that all these folks maybe polically being pushed there,
Speaker 1: but they're being pushed into making an error. And what
Speaker 1: you need to see is a balanced discussion saying on
Speaker 1: the one hand, the consumer confidence data are saying this.
Speaker 1: In Europe, we've certainly seen a collapse in the last
Speaker 1: two months, collapse in people's views about their financial situation,
Speaker 1: collapsing consumer conference which presume and we know with Christine
Speaker 1: Lagarland the ECB is taking very seriously. So if they're
Speaker 1: taking it very seriously, why is there not a serious
Speaker 1: discussion at the FED? The worry is the FED is
Speaker 1: beaten by events and it starts to see some horrible
Speaker 1: data that it's really not prepared people for horrible data
Speaker 1: on the real economy, on the labor mark, on output,
Speaker 1: on retail sales, on default. Yeah. So I think it's
Speaker 1: just we need to balance this discussion. And I certainly
Speaker 1: think that you know that if you look at the
Speaker 1: f O m C and you look at the NBC,
Speaker 1: discussion is unbalanced and that's potentially dangerous. Danny. One thing
Speaker 1: we can agree on group think is deadly it's going
Speaker 1: to catch up, Buddy, gonna hear from you, Danny, Blanche
Speaker 1: feud there of Dartmouth and a Stagia Amarro. So the
Speaker 1: chief Investments trying to just eye capital joins us now
Speaker 1: and I stay, let's start here. You're looking for a
Speaker 1: soft dish landing. Let's talk about the issue. Any evidence
Speaker 1: of that developing at the moment as you look at
Speaker 1: the incoming data. Yeah, John, get to see you. I
Speaker 1: think there's a few things that I look at the
Speaker 1: give me a hope that we meet actually have a
Speaker 1: wider path to a soft landing here. The first one
Speaker 1: is you look at the growth numbers. I mean, even
Speaker 1: with the O E c D down grading growth today,
Speaker 1: it's still a part of number. And if you look
Speaker 1: at the US, we're expecting two point six percent this here,
Speaker 1: two percent next year. This has not fallen off the cliff.
Speaker 1: It is still hanging in there. So yes, we're squarely
Speaker 1: in a slow down part of this, but this doesn't
Speaker 1: yet have to be in amin a recession. You know.
Speaker 1: The second thing that I look at and frankly, I've
Speaker 1: not been able to say that, yes we have seen
Speaker 1: peak inflation, and yes this is it. But now I
Speaker 1: feel like there is more and more evidence building that
Speaker 1: maybe we are starting to see peek inflation. I mean,
Speaker 1: look at use car prices, they are starting to decline.
Speaker 1: Look at the businesses intentions to continue raises prices. They
Speaker 1: just can't do it anymore. So more and more of
Speaker 1: them are saying we're gonna pause. If you look at
Speaker 1: businesses intentions to raise wages, they're pausing as well. So
Speaker 1: they're starting to be sort of a preponderance of evidence
Speaker 1: that maybe inflation is in fact easing. And this is
Speaker 1: commodity is notwithstanding, but the other inflationary pressures seem to
Speaker 1: be easy. And then the third thing John that really
Speaker 1: gives me some confidence that maybe we can engineer soft
Speaker 1: landing is the FED is starting to sound a little
Speaker 1: bit more are balanced. Yes, of course they need to
Speaker 1: fight inflation, but maybe it doesn't have to only be
Speaker 1: by raising rates well into tightening territory, you know, maybe
Speaker 1: they can pause and let the hype prices naturally bring
Speaker 1: down demands. So I think if they back away just
Speaker 1: in time, we might end up with the ninety four
Speaker 1: scenario versus the seventies and the stage everyone wants to
Speaker 1: game out where we're heading right now? What does that
Speaker 1: mean for what you're actually buying? Because you have to
Speaker 1: come up with a thesis before we have all of
Speaker 1: the dots of what the Fed willer won't do and
Speaker 1: how the data is going to come in. How risk
Speaker 1: going are you right now? Yes, So it's all about
Speaker 1: the balance of risks. And and I would say, just
Speaker 1: a month or so ago, it seems like we have
Speaker 1: priced in a lot. We were already at that point
Speaker 1: the equity markets were pricing in a fifty seven probability
Speaker 1: probability of recession, and now we've re traced some of that.
Speaker 1: Where I am today is I think we're trapped in
Speaker 1: a rage. I always thought the thirty night hundred for
Speaker 1: this economic environment could sort of be the level of support.
Speaker 1: We seem to have bounced off that level. But at
Speaker 1: the same time, how much are you gonna pay for
Speaker 1: two thirty five dollars worth of learnings? Sixteen and a
Speaker 1: half times is fair? Maybe seventeen and a half times
Speaker 1: is fair, which is roughly where we are today SMP.
Speaker 1: But how much more do you push that? So? I
Speaker 1: think you know, Tom, we are trapped in arrange for now,
Speaker 1: but still there's some investment opportunities to look at. You
Speaker 1: know that I've liked technology, but one of the calls
Speaker 1: I have now is actually on financials. You have an
Speaker 1: un financials. But part of this is the overarching theme,
Speaker 1: and that goes back to expect the unexpected, and I'm
Speaker 1: talking about overcome by events July. There's a mix of
Speaker 1: dynamics on the screen which are clearly out of sorts.
Speaker 1: What's the thing you're looking at for July that could
Speaker 1: be the unexpected? Well, I think the big thing, well,
Speaker 1: I don't know if it's unexpected, Tom, but maybe you
Speaker 1: could still surprise us. Um is the commodity shock, right,
Speaker 1: even though I'm saying the supply chain bottomlegs are raising
Speaker 1: another inflationary pressure. Easy the commodity shortages are kind of away.
Speaker 1: I'm going to stop the show. You, more than anyone
Speaker 1: we know, have a visceral understanding of the coast of
Speaker 1: the Black Sea. You own the high ground on this.
Speaker 1: How do you respond to the idea that Odessa with
Speaker 1: one S or two s is could be shut down. Look,
Speaker 1: this has a big implication for the commodity market. And
Speaker 1: you know, as I mentioned, the world is short of everything.
Speaker 1: The world is short of wheat, the short the world
Speaker 1: is short of drains, the world is short of oil
Speaker 1: and natural gas. To the extent that you close off
Speaker 1: that corridor, to the extent that the tension is continuing
Speaker 1: to escalating, you can get product out of that region.
Speaker 1: That is that is really really tough. I mean, I
Speaker 1: think that's what people perhaps don't fully price it and
Speaker 1: don't appreciate. Commodity prices are up a lot this year,
Speaker 1: and you know, I think a lot of investors say, well,
Speaker 1: how much more do you chase that? But what people
Speaker 1: probably underappreciate is that we have a structural deficit of
Speaker 1: many of these commodities. So this is not just a
Speaker 1: tactical trade for this year, but this is longer lasting.
Speaker 1: Such a good point, honesty, Thank you said that of
Speaker 1: my capital. This is the privilege that we have not
Speaker 1: only working with Haveve Blass, so Will Kennedy and all
Speaker 1: of Bloomberg Hydrocarbons and commodity coverage, but also digging deep
Speaker 1: into the analysis of global thinkers. The giant of all
Speaker 1: this is Edward Morris with Daniel Jurgen separate, looking at
Speaker 1: the global macro moment of this commodity boom. He is
Speaker 1: global head of Commodities at City Group, and as John says,
Speaker 1: has a bit of an outlier call right now at Morris,
Speaker 1: how do we migrate back to your oil fundamentals under
Speaker 1: ninety dollars a barrel? What are the trigger points or
Speaker 1: catalysts that break the ascent of oil? So the catalysts
Speaker 1: really are very simple. They're called supply and demand. And
Speaker 1: we've got to get through the next few weeks to
Speaker 1: see whether there actually is going to be a driving
Speaker 1: season this summer. But under lying the the differences of
Speaker 1: you is really what we think is raising prices now,
Speaker 1: and we think of raising prices now are the dislocations
Speaker 1: that have occurred as a result of countries and companies
Speaker 1: refusing to take on Russian oil. There's no easy substitute
Speaker 1: for urals. We're not in a one oil pricing system
Speaker 1: or the two oil pricing system. And we have to
Speaker 1: remember that while w T I maybe at a hundred
Speaker 1: and twenty a brent, maybe at the hundred twenties something,
Speaker 1: urals is trading at thirty lower than that. So it's
Speaker 1: it's not one clear market, and it's the disruption of
Speaker 1: that lower price that we have to think about and
Speaker 1: ask why we have these higher prices. And I'm gonna
Speaker 1: just say that we're planning a trip Lisa, John and
Speaker 1: I to Abu Dhabi, and of course we're gonna have
Speaker 1: an oil summit there, and we're gonna have on stage
Speaker 1: Francisco Blanche, Christian May, look of JP Morgan, Blanche of
Speaker 1: Bank of America, You and other worthies. And the singular
Speaker 1: distinction seems to be the guests at hydrocarbon investment will
Speaker 1: or will not come on if we get higher oil prices.
Speaker 1: Are you more optimistic than others that investment will materialize? Well,
Speaker 1: I think we first started. I don't think there's that problem.
Speaker 1: I think we have more than enough investment in hydrocarbons.
Speaker 1: I think we have a problem in the hydrocarbon world
Speaker 1: in that the United States, the short cycle Big Guy,
Speaker 1: has lost a lot of oil production. The US was
Speaker 1: producing we have to remember, thirteen million barrels a day
Speaker 1: in March of they went down to ten point two
Speaker 1: million a day. Is now at eleven point nine million
Speaker 1: a day. It's well below where it was and where
Speaker 1: it would have been had we not had that drop
Speaker 1: in drolling, we would have been at fourteen and a
Speaker 1: half million barrels a day and they would not be
Speaker 1: this problem. We have more than enough spending into oil
Speaker 1: and gas finding and development. It's shifted a little bit.
Speaker 1: But if we look at the next two or three
Speaker 1: years and compare expectations of demand and supply, we think
Speaker 1: the market is oversupplied. And have you seen any signs
Speaker 1: that demand is starting to cool for driving for flying?
Speaker 1: That gives you confidence that perhaps we might not see
Speaker 1: the driving season that some people are expecting. Well, we
Speaker 1: actually just we're trying to observe that. And we decided
Speaker 1: to look at not only the four week average this
Speaker 1: time a year for NASH for gas excuse me, gasoline
Speaker 1: and diesel demand in the United States, and we went
Speaker 1: back and discovered at first glance that it was the
Speaker 1: lowest it's been in five years. Other than in that
Speaker 1: that that big year when demand collapsed completely, We've now
Speaker 1: gone back ten years to find a time when demand
Speaker 1: for gasoline and diesel were as low as it is,
Speaker 1: and we had to go back to So if we
Speaker 1: think the e I a weekly data have a semblance
Speaker 1: of reality to it, Gasoline demand is down yearine year,
Speaker 1: Diesel demand is down yearine year, and it's the lowest
Speaker 1: it's been for a decade. And that's a sign that
Speaker 1: the price of oil has had an impact on where
Speaker 1: demand is going and what still is the biggest oil
Speaker 1: consuming country in the world. So, ed, why did you
Speaker 1: end up shifting your expectations, your forecasts higher if you
Speaker 1: still hold to that conviction that we might not see
Speaker 1: the driving season, uh that a lot of people are
Speaker 1: saying we will. Well, we drove prices higher first of all,
Speaker 1: to mark to market. We had second quarter results that
Speaker 1: are marking it to market higher than what we where
Speaker 1: we were at, and we try to figure out what
Speaker 1: was really happening. What was really happening was that companies
Speaker 1: and countries were for swearing Russian crude. They could find
Speaker 1: no substitute for it. So they had to bid up
Speaker 1: the availability of light suite crude in the world that
Speaker 1: is not the same as yours. They bid it up
Speaker 1: from the country that has the most amount of this,
Speaker 1: namely the US with our open borders. Uh. And the
Speaker 1: fact of the matter is that US exports have been
Speaker 1: booming are combined exports of crude oil and petroleum products
Speaker 1: in recent weeks have been at the ten and a
Speaker 1: half million barrel day rage. That would make the US
Speaker 1: the largest liquids provider in the world, bigger than Russia,
Speaker 1: bigger than Saudi Arabia. That's up by a couple of
Speaker 1: million barrels a day from where we were. So when
Speaker 1: companies had to look away from Russia for diesel, where
Speaker 1: did they go? They went to the US. When companies
Speaker 1: had been worked for crude oil, where did they go?
Speaker 1: They came to the US, and our inventories came down,
Speaker 1: giving a misleading impression that the whole world was going
Speaker 1: down in the inventory side the same way the US
Speaker 1: is just quickly. And if iin't got a minute, and
Speaker 1: this deserves a much longer conversation, of course, how sustainable
Speaker 1: do you think that is? Politically? Because I don't think
Speaker 1: those numbers are that well known outside of conversations like
Speaker 1: this one. Well, I I agree with you if the
Speaker 1: if it became political, people would start talking about stopping
Speaker 1: the exports, just as they talked about stopping the exports
Speaker 1: of natural gas. But it could be politicized in a
Speaker 1: way that it would be in an election year with
Speaker 1: gasoline prices being as important as they are. And most
Speaker 1: thank you, sir as always of City Greek refreshing. Just
Speaker 1: to have someone site we'll mark into market, Lisa, That's
Speaker 1: what we had today. This is the Bloomberg Surveillance Podcast.
Speaker 1: Thanks for listening. Join us live weekdays from seven to
Speaker 1: ten am Eastern on Bloomberg Radio and on Bloomberg Television
Speaker 1: each day from six to nine am for insight from
Speaker 1: the best in economics, finance, investment, and international relations. And
Speaker 1: subscribe to the Surveillance podcast on Apple podcast, SoundCloud, Bloomberg
Speaker 1: dot com, and of course on the terminal. I'm Tom Keene,
Speaker 1: and this is Bloomberg