WEBVTT - Global outlook, Iran Oil Tanker Attack, Market Volatility 0:00:02.640 --> 0:00:05.320 Welcome to the Bloomberg Penl Podcast. I'm Paul swing you. 0:00:05.360 --> 0:00:07.760 Along with my co host Lisa Brahmas. Each day we 0:00:07.880 --> 0:00:10.440 bring you the most noteworthy and useful interviews for you 0:00:10.520 --> 0:00:12.640 and your money. Whether at the grocery store or the 0:00:12.640 --> 0:00:15.960 trading floor. Find a Bloomberg Penl podcast on Apple podcast 0:00:16.120 --> 0:00:18.040 or wherever you listen to podcasts, as well as at 0:00:18.079 --> 0:00:22.079 Bloomberg dot com. It's time to read the tarot cards 0:00:22.280 --> 0:00:26.279 of the global economy for and look into the stars 0:00:26.320 --> 0:00:29.080 and figure out what the world will bring. Joining us now, 0:00:29.160 --> 0:00:32.199 Bart van Arc, executive vice president and chief economist for 0:00:32.520 --> 0:00:35.120 the Conference Board, Bart, thank you so much for joining us. 0:00:35.600 --> 0:00:39.120 I just but you did put together a outlook for 0:00:39.240 --> 0:00:43.360 the world economy, and you have some perhaps better than 0:00:43.440 --> 0:00:47.800 expected news. Mainly we'll avoid a recession. Is that right? 0:00:48.960 --> 0:00:51.279 That's right? I think I'm perhaps we picked a right 0:00:51.400 --> 0:00:55.040 day for this, given you know, pretty positive news on 0:00:55.120 --> 0:00:57.960 the trade disputes as well as on Brexit. Right, so 0:00:57.960 --> 0:01:01.800 so this might be the days maybe we can actually 0:01:01.800 --> 0:01:04.400 avoid the global recession. But you know, again, things may 0:01:04.480 --> 0:01:07.800 change next week. Let's hope it won't. But more seriously, 0:01:08.160 --> 0:01:10.479 we we do think that there is reason to believe 0:01:10.560 --> 0:01:13.600 that there is a very plausible scenario that we're really 0:01:13.680 --> 0:01:16.119 hitting the low point in the global economy right now, 0:01:16.160 --> 0:01:18.199 and that really has to do with the very rapid 0:01:18.280 --> 0:01:21.080 decline that we've been seeing in adust production around the world, 0:01:21.760 --> 0:01:24.400 and that's probably going to continue even into quarter four, 0:01:24.440 --> 0:01:27.800 but we think it will eventually bottom out, particularly because 0:01:27.920 --> 0:01:30.840 China is taking out a lot of excessive overcapacity, but 0:01:30.880 --> 0:01:33.280 also begins to stimulate the economy a little bit, not 0:01:33.360 --> 0:01:36.840 to drop off further. But then, you know, perhaps even 0:01:36.880 --> 0:01:39.680 more important, the consumers and the labor markets pretty much 0:01:39.720 --> 0:01:42.600 around the world are still so strong that we believe 0:01:42.680 --> 0:01:44.640 that I will really pull the economy along in two 0:01:44.640 --> 0:01:48.520 thousand twenty. So part, you're exactly right. The consumer has 0:01:48.560 --> 0:01:52.680 been the strong part of this economy relative to manufacturing 0:01:52.680 --> 0:01:55.320 and business investment. But we have seen some signs that 0:01:56.120 --> 0:02:00.040 employment growth is slowing. Um is that a concern of 0:02:00.120 --> 0:02:04.240 yours now? Of course it is, And and you know again, 0:02:04.280 --> 0:02:08.359 I mean the gap between consumer confidence and business confidence 0:02:08.440 --> 0:02:11.720 is usually large at the moment. So you know, why 0:02:11.800 --> 0:02:14.119 is the consumer hanging in there well? Because this job 0:02:14.160 --> 0:02:16.200 market has been so strong that have been seeing their 0:02:16.240 --> 0:02:19.480 wages increasing and the incomes improving, and frankly that's true 0:02:19.480 --> 0:02:22.799 around the world, um, and we see that reflected in 0:02:22.840 --> 0:02:25.880 consumer confidence. We we just released earlier this week our 0:02:25.960 --> 0:02:28.880 Global Consumer Confidence Index at the Conference Board, and you 0:02:28.919 --> 0:02:31.320 know there there we actually are showing the pretty much 0:02:31.320 --> 0:02:34.280 around the world, we still see very high levels of 0:02:34.280 --> 0:02:38.520 of consumer confidence. Now, employment is a very important leading 0:02:38.520 --> 0:02:42.720 economic indicator underlying this, and we do see some leveling 0:02:42.760 --> 0:02:45.840 off here, but again, unemployment rates are very low in 0:02:45.880 --> 0:02:49.000 the US and Europe, in Japan, in many emerging markets, 0:02:49.760 --> 0:02:52.560 demand for labor is still very strong. So so we 0:02:52.600 --> 0:02:54.640 can really see at the moment this is still very 0:02:54.720 --> 0:02:57.679 much in positive territory and you would expect, i think 0:02:57.720 --> 0:03:00.080 nothing else at this point that the rapid girl of 0:03:00.160 --> 0:03:02.240 that we've been seen in employment over the past couple 0:03:02.280 --> 0:03:05.360 of quarters is beginning to slow down a little bit. 0:03:05.400 --> 0:03:07.239 So now we're not we don't have a major concern 0:03:07.280 --> 0:03:10.520 about the numbers we're seen right now. Another interesting production 0:03:11.080 --> 0:03:14.720 that you have here is that the decline and industrial 0:03:14.720 --> 0:03:18.440 production will ease and eventually bottom out. How far away 0:03:18.480 --> 0:03:22.240 are we from that. Yeah, it's very important that we 0:03:22.360 --> 0:03:24.600 have the diagnosis around this clear. We think that a 0:03:24.639 --> 0:03:28.080 lot of this decline industrial production started already early in 0:03:28.120 --> 0:03:32.239 two thousand eighteen in China, and China, as I referred 0:03:32.240 --> 0:03:35.040 to earlier, had the huge amount of overcapacity, and China 0:03:35.160 --> 0:03:38.880 essentially stopped continuing to support it, particularly in the state 0:03:38.960 --> 0:03:41.600 or the enterprises. And you know in the first pace 0:03:41.640 --> 0:03:43.360 that we didn't feel that in two thousand and eighteen 0:03:43.400 --> 0:03:45.760 because it happens sort of upstream and supply chains. But 0:03:45.800 --> 0:03:48.760 then later on in the year, you know, multinationals started 0:03:48.800 --> 0:03:51.640 to feel this, and certainly into two thousand and nineteen, 0:03:51.680 --> 0:03:54.320 the countries that are most exposed, like you know, Japan 0:03:54.480 --> 0:03:57.160 and Germany, really started to feel the pain. As this 0:03:57.280 --> 0:03:59.880 worked itself with the global supply chain, a lot of 0:04:00.000 --> 0:04:04.400 excessive overcapacity has been taken out. China doesn't doesn't want 0:04:04.400 --> 0:04:08.080 to make a transition towards a more higher value added 0:04:08.680 --> 0:04:11.160 manufacturing sector, you know, go back to the to the 0:04:11.200 --> 0:04:14.760 trade disputes and discrestions that we're currently having. They're beginning 0:04:14.800 --> 0:04:17.159 to see some results of that. So so you know, 0:04:17.279 --> 0:04:19.360 even the latest numbers for China are giving us a 0:04:19.360 --> 0:04:21.919 little bit more comfort that this may begin to to 0:04:22.000 --> 0:04:24.320 do bottom out a little on top of that, you know, 0:04:24.520 --> 0:04:27.320 provided that the trade disputes indeed go a little bit 0:04:27.360 --> 0:04:30.560 to the background and the fact that technology and innovation 0:04:30.560 --> 0:04:33.520 are creating some more productivity growth. That's all good signs 0:04:33.520 --> 0:04:36.080 for for industrial production. That's why we believe it will 0:04:36.160 --> 0:04:38.120 begin to bottom out over the next couple of months. 0:04:38.279 --> 0:04:41.000 So part if the U s economy does manage to 0:04:41.120 --> 0:04:45.960 avoid recession in your forecasting is there how do you 0:04:46.040 --> 0:04:48.719 view the concern that maybe this economy is just going 0:04:48.760 --> 0:04:52.240 to be uh lower for longer, slower growth for longer 0:04:52.279 --> 0:04:54.640 one and a half to two percent for the foreseeable futures. 0:04:54.640 --> 0:04:59.600 That's something you think is is possible likely. Yeah, that's 0:04:59.600 --> 0:05:01.680 a great point, Paul, because you know, we should be 0:05:01.720 --> 0:05:04.120 careful not to mix up the fact that we'll see 0:05:04.120 --> 0:05:06.680 some recovering in two thousand twenty. We have the fact 0:05:06.720 --> 0:05:08.520 that in the longer term we are looking at the 0:05:08.600 --> 0:05:11.640 slowing economy and most of the mature economy is including 0:05:11.680 --> 0:05:13.840 the United States, so that this sort of long term 0:05:13.839 --> 0:05:16.640 growth rate underlying the economy in the US is probably 0:05:16.680 --> 0:05:19.280 around two percent, and that's quite a bit weaker than 0:05:19.279 --> 0:05:21.159 what we had in the previous decades. A lot of 0:05:21.200 --> 0:05:25.360 that has to do with gradually lowing, gradually slowing supply 0:05:25.440 --> 0:05:28.159 of labor. There's just more people retiring and fewer people 0:05:28.279 --> 0:05:31.000 entering the labor force. We're not really making that up 0:05:31.080 --> 0:05:34.920 rapidly enough by things like immigration or speeding up participation 0:05:34.960 --> 0:05:38.040 in some segments of the population. So so that slowing 0:05:38.080 --> 0:05:40.320 labor supply is a major driver of that. Now you 0:05:40.360 --> 0:05:43.080 can make up for that by productivity growth, but that 0:05:43.160 --> 0:05:45.200 has been dismal for a long time. Now we see 0:05:45.320 --> 0:05:47.560 we see some good signs as I just mentioned earlier, 0:05:47.600 --> 0:05:49.760 that productivity is beginning to pick up a little bit. 0:05:50.120 --> 0:05:52.599 Some of that may just have been cyclical related to 0:05:52.640 --> 0:05:55.560 the strong growth in two thousands, seventeen and eighteen, but 0:05:55.680 --> 0:05:58.719 it might be that indeed, you know, technology digital transformation 0:05:58.880 --> 0:06:01.920 is beginning to results in companies, and that would help 0:06:02.000 --> 0:06:04.880 us to keep growth in the United States still at 0:06:04.920 --> 0:06:06.919 you know ABUF to pent in the longer term, and 0:06:06.960 --> 0:06:09.320 that would probably be good enough to support and sustain 0:06:09.400 --> 0:06:11.920 growth going forward. Part Van Ark, thank you so much 0:06:11.960 --> 0:06:14.840 for joining us bart as executive vice president and chief 0:06:14.839 --> 0:06:34.600 economists for the conference board. Oil is up today once again, 0:06:34.640 --> 0:06:39.240 Brent crude up about one point three five cents per 0:06:39.279 --> 0:06:42.080 barrel at some response to some news that I Rand 0:06:42.160 --> 0:06:44.080 said that missile struck one of its tankers in the 0:06:44.120 --> 0:06:46.359 Red Sea, which is would be the latest in a 0:06:46.400 --> 0:06:48.719 series of attacks on oil infrastructure in the region that 0:06:48.760 --> 0:06:51.520 have royal energy markets of late. To get a sense 0:06:51.600 --> 0:06:53.840 of what is going on, we welcome Will Kennedy. Will, 0:06:53.880 --> 0:06:56.880 as a managing editor covering all things energy and commodities 0:06:56.920 --> 0:06:59.479 for Bloomberg, joins us from London. So, well, what's the 0:06:59.560 --> 0:07:04.040 latest on this tanker attack in the Red Sea. So, 0:07:04.720 --> 0:07:07.599 an Irvanian tanker with about one million bottels of crude 0:07:07.640 --> 0:07:11.480 oil was sailing north through the Red Sea um it 0:07:11.560 --> 0:07:14.679 was attacked in the earlier this morning. The National Avanian 0:07:14.840 --> 0:07:17.960 Tanker Company, which owns the ship, says two missiles hit it. 0:07:18.000 --> 0:07:21.040 They're not saying exactly where they came from, although they 0:07:21.280 --> 0:07:24.040 one said one stage said they probably came from Saudi Abia, 0:07:24.080 --> 0:07:27.480 although later they decided to walk that back. As we 0:07:27.600 --> 0:07:31.480 understand it, the tanker shared a little bit of crude 0:07:31.520 --> 0:07:33.840 oil into the Red Sea, but that situation is now 0:07:33.920 --> 0:07:36.360 under control and the tanker has turned around and is 0:07:36.400 --> 0:07:39.440 sailing back towards the Persian Gulf. The fact that these 0:07:39.480 --> 0:07:43.880 attacks keep happening is a bit concerning and sort of 0:07:43.920 --> 0:07:49.000 points to the escalating tensions between Iran and Saudi Arabia. 0:07:49.080 --> 0:07:52.000 Are you at all surprised that oil prices aren't up more? 0:07:53.240 --> 0:07:55.480 I mean, this takes us back, I think to the 0:07:55.520 --> 0:07:58.400 attack we saw miss a month ago on the Abcate 0:07:58.440 --> 0:08:01.360 crude processing plant in so the Arabia, at the very 0:08:01.360 --> 0:08:04.000 heart of the Saudi oil industry, five million dollars a day, 0:08:04.040 --> 0:08:07.840 and when that got hit by some missile strikes, possibly 0:08:07.960 --> 0:08:12.400 sponsored by Iran, we saw oil react as you'd expect, 0:08:12.440 --> 0:08:16.200 it rose in one day. But what's been really interesting 0:08:16.200 --> 0:08:18.560 about the event is that we've grown up all those 0:08:18.600 --> 0:08:22.280 gains and more. I there is no that that attack 0:08:22.320 --> 0:08:25.040 has produced no risk premium in the market, and I 0:08:25.040 --> 0:08:27.320 think what it really speaks to is the over riding 0:08:27.360 --> 0:08:29.120 inncern of the oil market is that there's just too 0:08:29.200 --> 0:08:32.880 much oil around and that situation is only going to 0:08:32.920 --> 0:08:35.680 get worse next year, where most analysts see a mismatch 0:08:35.720 --> 0:08:38.880 between supply and demand. The International Energy Agency says early 0:08:38.880 --> 0:08:41.160 next year they expect global inventories to build more than 0:08:41.200 --> 0:08:43.080 a million dollars a day, and I think the market 0:08:43.160 --> 0:08:45.640 is much more focused on that and the same concerns 0:08:45.640 --> 0:08:48.040 of everyone else about the trade war and the slowing 0:08:48.120 --> 0:08:52.320 US economy than they are on geopolitics so well. One 0:08:52.360 --> 0:08:55.200 of the things I think these series of attacks in 0:08:55.240 --> 0:08:58.440 the Middle East oil infrastructure have shown those of us 0:08:58.480 --> 0:09:00.679 who don't follow the supply side in the Middle East 0:09:00.800 --> 0:09:05.040 oil supply that closely is just maybe how vulnerable the 0:09:05.120 --> 0:09:09.440 supply chain is. What is the thinking within energy circles 0:09:09.480 --> 0:09:12.960 about can anything be done to make it more secure? 0:09:13.760 --> 0:09:16.400 It's very difficult. I mean, tankers are not armed, there's 0:09:16.440 --> 0:09:20.079 no real way to protect them. They have to sail 0:09:20.160 --> 0:09:24.000 close to coastlines at times, so you know, they are 0:09:24.320 --> 0:09:26.800 easily targeted. But this is not the first time that 0:09:26.840 --> 0:09:28.520 we've seen this. In the Avan of Ark War in 0:09:28.559 --> 0:09:31.240 the nineties there was a so called tanker war where 0:09:32.360 --> 0:09:36.120 tankers would repeatedly attacked as they sailed through the Persian Gulf. 0:09:36.200 --> 0:09:39.440 Of course, you know we've seen tankers attacked more recently 0:09:39.520 --> 0:09:42.920 or for Yemen by al qada um in in you know, 0:09:42.960 --> 0:09:44.920 ten years ago or so. So it has something that 0:09:45.480 --> 0:09:48.559 becomes a problem every now and again. Um and though 0:09:48.600 --> 0:09:50.559 there's very little you can do. The only thing you 0:09:50.600 --> 0:09:53.200 can do is to try and make sure that no 0:09:53.240 --> 0:09:56.520 one's no one wants to attack them from the shore 0:09:56.559 --> 0:10:00.000 to to to the you know, de escalate the issue 0:10:00.360 --> 0:10:04.120 behind the attacks. Here's here's one thing that I'm struggling 0:10:04.120 --> 0:10:07.040 to understand today. Not only do we have this attack 0:10:07.200 --> 0:10:11.400 on supply, but also there is better than expected trade development. 0:10:11.559 --> 0:10:14.920 So why isn't that giving people a little bit more 0:10:15.440 --> 0:10:18.400 hope when it comes to demand for oil and they're 0:10:18.400 --> 0:10:21.520 sending prices even higher. Well, that's true, and you might 0:10:21.520 --> 0:10:23.280 have expected to see a better day. But we also 0:10:23.360 --> 0:10:26.200 had a report this morning from the International Energy Agency 0:10:26.320 --> 0:10:29.079 that again locked a little bit off its demand forecast 0:10:29.200 --> 0:10:31.640 for next year. And you know, just to go back 0:10:31.640 --> 0:10:34.640 to this idea that at the moment, the supply demand 0:10:34.640 --> 0:10:36.559 bances next year don't look good. And that's going to 0:10:36.640 --> 0:10:38.760 put a lot of focus as we go towards the 0:10:38.800 --> 0:10:41.480 end of the year on OPEX politic to reaction. Will 0:10:41.480 --> 0:10:45.200 Saudi Arabia have to cut more production? Isn't OPAQ in 0:10:45.200 --> 0:10:47.840 a position to do that or not? And you know, 0:10:47.920 --> 0:10:53.760 until we get some really firm uh policy clarity from 0:10:53.800 --> 0:10:56.080 OPEC plus that they're going to do what it takes 0:10:56.080 --> 0:10:58.480 to bring the market into what they call balance. I 0:10:58.760 --> 0:11:01.840 support prices up above six seals about I think the 0:11:01.840 --> 0:11:06.280 the oil market may struggle to really get a lot higher. Well, Kennedy, 0:11:06.320 --> 0:11:08.319 thank you so much for being with us. Will Kennedy, 0:11:08.720 --> 0:11:13.360 Bloomberg News Managing editor for Energy and Commodities. Talking about 0:11:13.440 --> 0:11:16.760 that attack on the Iranian oil tanker, it just is 0:11:17.240 --> 0:11:20.720 uh an interesting idea that even as we have those 0:11:20.760 --> 0:11:42.360 tensions rising, people don't really care that much. Not only 0:11:42.360 --> 0:11:45.960 are we getting positive discussion out of Washington, but Boris 0:11:46.040 --> 0:11:49.319 Johnson and the European Union evidently are working well together. 0:11:49.400 --> 0:11:52.439 They have entered the tunnel, the cone of secrecy as 0:11:52.480 --> 0:11:57.000 they try to hash out a Brexit deal, and evidently 0:11:57.040 --> 0:12:00.280 things are going pretty well. That lack of d tell 0:12:00.480 --> 0:12:04.480 is sending the pound to its biggest two day rally 0:12:04.520 --> 0:12:08.400 on a percentage basis since December two thousand and eight. 0:12:09.160 --> 0:12:12.840 This has been a just incredibly slow process, but a 0:12:13.000 --> 0:12:14.600 little bit of light at the end of the tunnel 0:12:14.679 --> 0:12:16.800 perhaps here as we get down to that, you know, 0:12:16.880 --> 0:12:20.400 October thirty one date, which is really the hard, hard data. 0:12:20.400 --> 0:12:23.280 I think. Meanwhile, we are seeing the more happy the 0:12:23.600 --> 0:12:27.160 talk yets, the less there is a bid for gold. 0:12:27.559 --> 0:12:30.840 We have gold today down sharply at one point two 0:12:30.880 --> 0:12:34.040 percent lower, joining us now Frank Holmes, chief executive officer 0:12:34.080 --> 0:12:37.880 and chief investment officer of US Global Investors. Gold had 0:12:37.960 --> 0:12:40.600 been in the sweet spot, a lot of investors saying 0:12:40.880 --> 0:12:43.880 it was headed straight to sixteen hundred dollars. Currently is 0:12:43.920 --> 0:12:47.360 at one thousand, four hundred and seventy five dollars and 0:12:47.480 --> 0:12:51.079 some change. I'm wondering what it will take to prop 0:12:51.160 --> 0:12:53.839 the prices back up, given the fact that we are 0:12:53.880 --> 0:12:58.080 not done with the uncertainties and yet people still seeing 0:12:58.120 --> 0:13:02.040 a time to sell. Well, there's two big drivers for 0:13:02.080 --> 0:13:04.720 the demand for gold, and I've characterized as the fear 0:13:04.760 --> 0:13:07.640 trade and the love trade. And what's interesting is the 0:13:07.720 --> 0:13:11.400 love trade is of all demand for gold and really 0:13:11.480 --> 0:13:14.200 is highly correlated the use of Bloomberg functions to the 0:13:14.240 --> 0:13:18.200 GDP per capita of Chindia affectually known as China and India, 0:13:18.400 --> 0:13:21.760 which is the world's population. So what they're rising g 0:13:21.880 --> 0:13:26.240 D people income to consumption of gold cold jewelry has 0:13:26.240 --> 0:13:29.040 been in stellar. The fear training is what's really been 0:13:29.080 --> 0:13:31.920 driving gold this year, and that's negative real interest rates 0:13:32.400 --> 0:13:35.800 and uh, I'm precedent around the globe slowed down with 0:13:35.880 --> 0:13:38.120 p m s. It'll take a while before you get 0:13:38.280 --> 0:13:42.040 get those to turn and be sustainable. So I think 0:13:42.080 --> 0:13:45.320 that we're living in an era where governments still have 0:13:45.360 --> 0:13:48.559 not got with the program that we need fiscal stimulus 0:13:48.559 --> 0:13:52.240 by extremelining all the regulations. Uh, it's all now by 0:13:52.320 --> 0:13:55.760 negative real interest rates and printing money. So this makes 0:13:55.800 --> 0:13:59.240 gold a very attractive asset class. And there's actually peak 0:13:59.320 --> 0:14:03.800 golds coming from minds. There's been no major discoveries and 0:14:03.880 --> 0:14:06.120 so I think that's gold is in a very served 0:14:06.200 --> 0:14:10.040 unique secular trend. Again. So Frankie, we're in the month 0:14:10.040 --> 0:14:14.199 of October that's historically been a very volatile month for 0:14:14.440 --> 0:14:17.760 the equity markets. Is that an argument to maybe increase 0:14:17.800 --> 0:14:21.440 allocations to gold here, No, I don't think so. I 0:14:21.440 --> 0:14:23.760 think that you have to take the thought process of 0:14:23.840 --> 0:14:26.520 the largest head spot in the world, Bridge Water, Brade, Dalios, 0:14:26.800 --> 0:14:29.840 Pilosity having said six to ten percent and gold, and 0:14:29.920 --> 0:14:33.800 you rebalance it and it has the volti of the 0:14:33.800 --> 0:14:36.640 stock markets only one sort of component to it. I 0:14:36.680 --> 0:14:40.760 think it's really important is real is what's called real 0:14:40.840 --> 0:14:43.600 interest rates and uh, and I think that the world 0:14:43.640 --> 0:14:46.440 is going to continue to try to stimulate with negative 0:14:46.480 --> 0:14:49.000 real interest rates and this is bullets for gold. Now, 0:14:49.040 --> 0:14:52.840 go ahead, of spectacular run. It was up three standard deviations. 0:14:52.880 --> 0:14:54.680 We like to look at it over sixty trade days. 0:14:54.760 --> 0:14:57.840 Is now back to almost at par now with this 0:14:57.920 --> 0:15:01.360 correction today, we're just back to where it's a very 0:15:01.400 --> 0:15:03.440 healthy way to take a look of entering into gold. 0:15:05.160 --> 0:15:07.400 So you like gold, where do you think it goes 0:15:07.480 --> 0:15:11.800 by the end of say the next six months? Um. 0:15:11.960 --> 0:15:15.520 You know, the DNA of altally of gold is now 0:15:15.760 --> 0:15:18.240 over a ten day or in period, the SMP is 0:15:18.280 --> 0:15:20.760 three percent, and that means severy percent of the time 0:15:20.800 --> 0:15:22.640 it's non event for goal to go up, but down 0:15:22.640 --> 0:15:26.720 two percent was the SMPS three percent? So I think 0:15:26.760 --> 0:15:29.160 that you know, asked by year end, I think that 0:15:29.360 --> 0:15:33.440 the goal could easily be seventeen hundred dollars. I think that, 0:15:34.320 --> 0:15:36.400 and it could also correct the hundred dollars from here. 0:15:36.880 --> 0:15:39.480 That's sort of the normal trading range. It's going to 0:15:39.600 --> 0:15:41.920 be much more important is what Europe is doing in 0:15:42.040 --> 0:15:45.320 Japan is doing on this negative real interest rate scenario. 0:15:45.920 --> 0:15:49.160 And I don't see anything of fiscal policy changes and 0:15:49.240 --> 0:15:52.520 regulations to say we're going to have a complete sea 0:15:52.640 --> 0:15:54.400 change and what we how we're going to try to 0:15:54.400 --> 0:15:57.480 grow our economy. I want to shaft gears a little bit. 0:15:57.640 --> 0:16:01.000 I know that not only do you focus on precious metals, 0:16:01.000 --> 0:16:04.280 but you also focus on the airline industry with your 0:16:04.440 --> 0:16:06.880 e t F that trades as jets on the New 0:16:06.960 --> 0:16:11.200 York Stock Exchange and Delta shares have been doing pretty 0:16:11.240 --> 0:16:15.120 poorly after they said that they're seeing rising costs and 0:16:15.360 --> 0:16:19.160 slowing revenue growth. Do you think that the outlook has 0:16:19.240 --> 0:16:24.440 materially deteriorated for the airline industry. No, I don't. You 0:16:24.480 --> 0:16:27.480 know so much of this sentiment just recently, just prior 0:16:27.520 --> 0:16:31.760 to this conversation we're having, we talked about the Pound 0:16:31.800 --> 0:16:35.080 having one of the biggest rallies so much as sentiment 0:16:35.200 --> 0:16:37.920 driven right now, and so they say costs of risings 0:16:37.960 --> 0:16:41.200 or sentiment and meeting sells off. But there's it's very 0:16:41.240 --> 0:16:44.520 difficult to build an airport. The baris to entry are 0:16:44.520 --> 0:16:47.920 extremely high. And uh. And when you take a look 0:16:47.960 --> 0:16:51.320 at global travel and tourism, one of the things I 0:16:51.400 --> 0:16:53.320 just noted when I was in New York Stock Exchanged 0:16:53.400 --> 0:16:57.440 yesterday tours or Chinese tourists. I was in Salzburg last 0:16:57.480 --> 0:17:00.320 week and the same thing there. So I think that 0:17:00.360 --> 0:17:05.080 you're seeing a global tourism is growing much faster out 0:17:05.080 --> 0:17:09.520 of the middle class of China and India in particular China. UH, 0:17:09.640 --> 0:17:12.080 it was always led by America, and now there's three 0:17:12.960 --> 0:17:16.639 entities that are dominating it. And there's just difficult to 0:17:16.680 --> 0:17:19.959 get the building of these new airports and and UH, 0:17:20.160 --> 0:17:23.080 I think is a very boyish scenario. And the incillary 0:17:23.160 --> 0:17:25.520 fees ten years ago with three big in dollars a 0:17:25.600 --> 0:17:27.919 year with a charge for a bag or change your ticket, 0:17:28.640 --> 0:17:30.280 I can go out the whole list of them. They're 0:17:30.280 --> 0:17:32.400 now pushing. They're going to push through a hundred day 0:17:32.440 --> 0:17:35.560 in next year, so the cost of fuel is not 0:17:35.680 --> 0:17:38.320 as significant because they're making so much money from these 0:17:38.320 --> 0:17:42.000 incillary fees. And Delta, yes, they talked about their Amics 0:17:42.560 --> 0:17:45.520 Matter Express contract. Well that and that was almost fourth 0:17:45.520 --> 0:17:47.600 big in the revue last year, and I think could 0:17:47.600 --> 0:17:50.200 be seven big in dollars over the next year. So 0:17:50.400 --> 0:17:52.960 we look at American airlines what they're making for their 0:17:53.000 --> 0:17:56.840 credit card um so I think that the airline's industry 0:17:57.119 --> 0:18:00.520 is buying the tips. Do I buy et f R. 0:18:00.520 --> 0:18:01.920 I just go out and buy a basket of these 0:18:02.400 --> 0:18:05.400 airlines stocks, global stocks. You go out and buy his ets, 0:18:08.920 --> 0:18:12.360 not the football team. You buy jets because it diversified 0:18:12.359 --> 0:18:14.679 your risk. And we also have airports in there. Did 0:18:14.680 --> 0:18:20.119 you know, like, um, the airport for Bangkok is public. Uh. 0:18:20.320 --> 0:18:24.040 Some of the airports in Mexico or public h istern bowls, 0:18:24.119 --> 0:18:29.199 public Beijing is public. So you get these airports as 0:18:29.280 --> 0:18:31.560 a mixture, but they have to have a quant model 0:18:31.560 --> 0:18:33.639 of very high returns to investor capital and make to 0:18:33.680 --> 0:18:37.200 the jets etf So I I mean very very bullish, 0:18:37.200 --> 0:18:39.520 and I think that Bowling will in the next next 0:18:39.640 --> 0:18:42.600 year with the worst behind this quarter and uh, and 0:18:42.640 --> 0:18:45.160 I think that will then turn around also help Southwest 0:18:45.160 --> 0:18:50.040 Airlines and American Airlines uh increase their uh, their their 0:18:50.560 --> 0:18:53.000 their routes. Right. Frank Colins, thanks so much for joining us. 0:18:53.000 --> 0:18:56.160 We appreciate your thoughts on both the gold sector as 0:18:56.200 --> 0:18:58.920 well as the global airlines business. Frank Colmins is the 0:18:59.000 --> 0:19:02.760 CEO and she investment officer for us A Global Investors. 0:19:02.760 --> 0:19:19.320 They're based in San Antonio, Texas well. It is certainly 0:19:19.400 --> 0:19:21.760 a risk on day today A great way to end 0:19:21.800 --> 0:19:24.560 the week for equity bulls. All took was a little 0:19:24.560 --> 0:19:27.800 bit of positive news on the geopolitical front to help 0:19:27.840 --> 0:19:29.080 us get a sense of kind of how to think 0:19:29.080 --> 0:19:32.040 about this market going forward. We welcome and Witty Bahuguna 0:19:32.320 --> 0:19:34.359 and widy as a senior portfolio manager and head of 0:19:34.440 --> 0:19:38.239 multi asset strategy for Columbia Threadneedle Investments, joining us on 0:19:38.280 --> 0:19:40.600 the phone from Boston. And Witty, thanks so much for 0:19:40.760 --> 0:19:43.520 joining us. What do you make of today's action in 0:19:43.560 --> 0:19:48.360 the market. Um, it's certainly optimist, Sick Paul. Sounds like 0:19:49.000 --> 0:19:53.640 progress on several funds on the trade front on the Brexit, 0:19:53.760 --> 0:19:57.439 but I will say that I haven't seen details yet 0:19:57.480 --> 0:20:08.600 of either. It's really just optimistic sounds a missing sounds 0:20:08.640 --> 0:20:10.760 good enough for a lot of people out there, evidently 0:20:10.880 --> 0:20:13.320 to try to cash in. I mean, given the fact 0:20:13.320 --> 0:20:16.280 that we've got zero details or at least to give 0:20:16.320 --> 0:20:18.440 you any tangible sense that this is actually going to 0:20:18.560 --> 0:20:23.160 go through, would you be selling this rally? We are 0:20:23.280 --> 0:20:28.280 actually underweight in our portfolios, so yes, it's definitely not 0:20:28.600 --> 0:20:33.040 something that I would trade client money on rumors alone. 0:20:33.119 --> 0:20:36.479 At this point, we need to see what is actually 0:20:36.560 --> 0:20:40.639 agreed upon, whether it's temporary or another one of those 0:20:40.840 --> 0:20:42.760 ten or so head fakes we have seen in the 0:20:42.840 --> 0:20:45.399 last one year. Lisa, so on when when when you 0:20:45.400 --> 0:20:49.000 think about your positioning again, you mentioned your underweight global equities. 0:20:49.080 --> 0:20:51.200 Is it give us a sense of kind of how 0:20:51.240 --> 0:20:53.840 you weight that or what drives that? Is it evaluation? 0:20:54.160 --> 0:20:58.119 Is it slowing global economic growth? Or is it you know, 0:20:58.200 --> 0:21:00.600 kind of like the global macro uncertainty, trade and so 0:21:00.720 --> 0:21:05.400 and so forth. So it's several of those factors. Evaluation 0:21:05.560 --> 0:21:09.520 is one component. Fundamentals is really the driving component of 0:21:09.520 --> 0:21:12.719 how we think about the world. And on that front, 0:21:12.800 --> 0:21:16.760 we have seen nothing but downgrades to global growth outlook 0:21:16.840 --> 0:21:19.640 this entire year. Whether you look at what the bond 0:21:19.680 --> 0:21:22.240 market has done, whether you look at how equity markets 0:21:22.240 --> 0:21:26.040 have performed outside of the US, we have seen nothing 0:21:26.080 --> 0:21:29.239 but downgrades to growth for the entire year. Now, it's 0:21:29.359 --> 0:21:33.960 better priced in in some markets than others. But what 0:21:34.000 --> 0:21:37.239 I would what would what would really matter to us 0:21:37.400 --> 0:21:41.000 is how does the growth outlook change going forward? And 0:21:41.160 --> 0:21:44.399 trade and b exit our component of that. Um We 0:21:44.440 --> 0:21:48.600 will wait to see the details of all those, but 0:21:48.960 --> 0:21:54.600 it won't be just a day's sentiment change. For example, 0:21:55.480 --> 0:21:57.480 I was looking at at some of your calls. You 0:21:57.560 --> 0:22:00.280 also are saying that it's a good time to maintain 0:22:00.359 --> 0:22:04.240 treasury allocations just because of some of the bearishness in 0:22:04.800 --> 0:22:09.240 the economic outlook going forward. I guess what would it 0:22:09.280 --> 0:22:14.199 take for you to reverse that call? Right? So that 0:22:14.640 --> 0:22:18.040 is important on the multi asset portfolios, since we take 0:22:18.200 --> 0:22:22.320 risks in equities commodities to have some hedges, and treasuries 0:22:22.359 --> 0:22:27.320 have been excellent hedge this entire yearly, sir, The thing 0:22:27.440 --> 0:22:30.119 that would matter to me on the treasury front is 0:22:30.240 --> 0:22:33.520