WEBVTT - Surveillance: US Oil Reserves 0:00:05.120 --> 0:00:09.200 Welcome to the Bloomberg Surveillance Podcast. I'm Tom Keane. Along 0:00:09.200 --> 0:00:13.160 with Jonathan Ferrell and Lisa Abramowitz. Daily we bring you 0:00:13.280 --> 0:00:18.600 insight from the best and economics, finance, investment, and international relations. 0:00:18.840 --> 0:00:23.840 To find Bloomberg Surveillance on Apple podcast, SoundCloud, Bloomberg dot Com, 0:00:23.920 --> 0:00:29.920 and of course, on the Bloomberg terminal. He is Director 0:00:29.960 --> 0:00:33.880 of White House National Economic Council, which means he is 0:00:34.000 --> 0:00:36.960 mum during the political season, and we are knee deep 0:00:37.000 --> 0:00:39.920 in the political season now to the mid terms. Brian 0:00:40.000 --> 0:00:43.040 Deast joins us from the White House this morning. Brian, 0:00:43.120 --> 0:00:46.400 to me, the singular note which does wrap around your 0:00:46.440 --> 0:00:50.920 remit is a gentle lady from Hawaii has exited the 0:00:50.960 --> 0:00:56.240 Democratic Party, and Ms Gabbard was really something about the 0:00:56.400 --> 0:01:01.520 cowardly wokeness of the elitist Democratic Party. Your boss is 0:01:01.560 --> 0:01:06.279 the most middle class representative boss of his generation. Joe 0:01:06.319 --> 0:01:11.960 Biden breathe scramton, what's gonna be the reset on Democratic 0:01:12.040 --> 0:01:15.840 Party economic policy for the middle class coming out of 0:01:15.840 --> 0:01:20.160 this election? Well, look, I think you're seeing in real time, 0:01:20.200 --> 0:01:23.720 as you said, Joe Biden ran for presidents based on 0:01:23.920 --> 0:01:27.280 an economic theory that we needed to build this economy, 0:01:27.280 --> 0:01:30.280 in this economic recovery, as he says, in very practical terms, 0:01:30.280 --> 0:01:32.520 from the bottom up and the middle out, not from 0:01:32.520 --> 0:01:35.480 the top down. And you're seeing that in practice. If 0:01:35.520 --> 0:01:37.800 you look just for example of what's happening in American 0:01:37.840 --> 0:01:42.360 manufacturing across this country, nearly seven hundred thousand manufacturing jobs created, 0:01:42.760 --> 0:01:46.440 and you're seeing company after company make investments that they're 0:01:46.440 --> 0:01:48.440 making a bet, a long term bet to make capital 0:01:48.520 --> 0:01:52.279 investments in America. Today, just today, we're gonna announce almost 0:01:52.320 --> 0:01:55.960 three billion dollars in grants to battery battery manufacturers. I 0:01:56.000 --> 0:01:59.160 was in Cleveland last week. You're seeing this explosion of 0:01:59.240 --> 0:02:02.040 interest in making the United States the place where we 0:02:02.160 --> 0:02:05.040 build and and and and innovate, and that's that's going 0:02:05.080 --> 0:02:07.080 to pay benefits for the long term. You were just 0:02:07.120 --> 0:02:10.400 in Cleveland to see Cleveland Yankees. Admit it, Brian, I 0:02:10.440 --> 0:02:12.680 want to go. I want to go to the topic 0:02:12.680 --> 0:02:15.440 of the moment was just a strategic political reserve. We 0:02:15.480 --> 0:02:18.519 all get the politics of it, and that you took 0:02:18.600 --> 0:02:22.280 hydro carbon one on one at Middlebury years ago. Can 0:02:22.360 --> 0:02:26.040 you explain to me what the democratic politics is of 0:02:26.240 --> 0:02:32.320 refilling the strategic petroleum reserve down the road. You got it. 0:02:32.320 --> 0:02:34.079 I do have to clarify that I'm a Red Sox fan. 0:02:34.120 --> 0:02:37.080 It's important. It's important to me to get that very important. 0:02:37.280 --> 0:02:40.600 Um So, Look, the President's gonna announce two things today. 0:02:40.840 --> 0:02:45.119 The first is additional fifteen million barrels four December out 0:02:45.160 --> 0:02:47.640 of the spr That makes good on the commitment that 0:02:47.680 --> 0:02:50.560 he made several months ago to release a hundred and 0:02:50.600 --> 0:02:54.320 eighty million barrels and provide that stability to the market. 0:02:54.360 --> 0:02:56.960 He's making good on that commitment with a fifteen million 0:02:57.000 --> 0:03:01.080 paril release today. But second, he's announcing on a plan 0:03:01.280 --> 0:03:04.680 and a policy to refill the Strategic Patrolling Reserve when 0:03:04.720 --> 0:03:07.480 the price of oil falls to about seventy dollars of barrel. 0:03:07.720 --> 0:03:10.880 That makes sense for two reasons. One, protecting taxpayers, we 0:03:11.000 --> 0:03:13.520 sold oil out of the sprow at a higher price 0:03:13.560 --> 0:03:17.600 and around of barrel. Repurchasing at seventy dollars of barrel 0:03:17.639 --> 0:03:19.760 means we can actually strengthen the asset. We can get 0:03:19.760 --> 0:03:23.200 more oil back into that national reserve. And second, it 0:03:23.200 --> 0:03:26.280 provides some certainty to the industry because we we we 0:03:26.320 --> 0:03:28.480 will have the authority to both purchase when the price 0:03:28.560 --> 0:03:30.840 comes down to seventy and also enter into contracts to 0:03:30.880 --> 0:03:33.960 purchase at around seventy dollars in the future. But one 0:03:34.000 --> 0:03:37.000 thing that's very difficult is that we're not talking about 0:03:37.040 --> 0:03:39.880 the present and what releasing more from the Strategic Petroleum 0:03:39.880 --> 0:03:42.600 Reserve will actually do to bring down prices not only 0:03:42.640 --> 0:03:45.920 of gasoline, but diesel, of the refined goods that we need. 0:03:46.160 --> 0:03:48.640 How much are you thinking about additional measures to try 0:03:48.680 --> 0:03:52.200 to shore up both the stores of diesel as well 0:03:52.240 --> 0:03:56.320 as lower prices. Are you talking about banning exports, for example, 0:03:56.360 --> 0:03:59.680 to Europe. Well, first, let's look at where we are. 0:04:00.440 --> 0:04:03.040 We have since the beginning of the summer scene, gas 0:04:03.040 --> 0:04:06.320 prices come down about they're about down about a dollar 0:04:06.400 --> 0:04:09.080 and fifteen cents a gallon at the pump. We see 0:04:09.160 --> 0:04:11.400 natural gas prices come off from a high of almost 0:04:11.480 --> 0:04:16.560 nine dollars two under six dollars in trading today. So 0:04:16.600 --> 0:04:20.000 we've seen a real reduction and energy prices, and that's 0:04:20.040 --> 0:04:23.520 consistent with and and and and driven by the policies 0:04:23.560 --> 0:04:26.880 that this administration and that the President have directed. At 0:04:26.920 --> 0:04:29.360 the same time, we continue to be very focused on 0:04:29.600 --> 0:04:32.760 making more progress seeing that price come down further, and 0:04:32.800 --> 0:04:34.680 the announcements today I think are going to help on 0:04:34.800 --> 0:04:39.040 that front, also addressing places where we have but but okay, 0:04:39.080 --> 0:04:41.240 that has come down, it hasn't come back that much. 0:04:41.400 --> 0:04:43.600 But diesel has not come down, and that affects the 0:04:43.640 --> 0:04:45.960 price of everything. And perhaps people don't see it and 0:04:46.000 --> 0:04:48.680 breathe that the way they view gasoline prices. But this 0:04:48.760 --> 0:04:51.480 is affecting very much the heating costs as well as 0:04:51.480 --> 0:04:55.240 a shipping costs and has raised questions about banning exports 0:04:55.240 --> 0:04:56.920 at a time when Europe is flat on its back 0:04:56.960 --> 0:05:01.360 as well. What's your view, absolute, We're very concerned about 0:05:01.360 --> 0:05:06.240 inventory levels for refined product diesel in particular, particularly across 0:05:06.279 --> 0:05:08.120 the East coast of the United States, and we are 0:05:08.160 --> 0:05:12.880 operating right now at unacceptably low inventory levels. Inventory levels 0:05:12.920 --> 0:05:16.280 for diesel that, for example, our fifty lower than their 0:05:16.360 --> 0:05:19.080 five year historical average. So this is a conversation that 0:05:19.120 --> 0:05:21.560 we have had with the industry consistently, and we've been 0:05:21.720 --> 0:05:24.880 very clear we need to see more progress in building 0:05:24.920 --> 0:05:28.800 those inventories. The federal government has some tools in that respect. 0:05:28.839 --> 0:05:31.200 We have a Northeast Home Heating Oil Reserve, which is 0:05:31.560 --> 0:05:35.240 diesel UH and we have looked very carefully at being 0:05:35.320 --> 0:05:38.960 prepared to deploy as and when necessary in that context. 0:05:39.160 --> 0:05:41.600 But ultimately, what we need to see is the industry 0:05:41.640 --> 0:05:44.480 build those inventory levels so that we don't put ourselves 0:05:44.480 --> 0:05:47.440 in a situation. To your question about exports, the President 0:05:47.440 --> 0:05:48.960 has been very clear and what can need to be 0:05:49.040 --> 0:05:52.919 clear at this moment when we have uncertainty and uncertainty 0:05:52.920 --> 0:05:55.320 for American consumers, we have to keep all options on 0:05:55.360 --> 0:05:58.080 the table. That's what we're doing real quickly. What's going 0:05:58.120 --> 0:06:00.719 to be the trigger point to understand whether it is 0:06:00.760 --> 0:06:04.160 time to look at exports. Well, look, I'm not going 0:06:04.200 --> 0:06:08.440 to explicitly make a decision before the president's or articulated 0:06:08.480 --> 0:06:10.599 decision before the President has made it. But the President 0:06:10.680 --> 0:06:12.240 is going to continue to do what he has done 0:06:12.240 --> 0:06:14.040 over the course of the last several months, which is 0:06:14.360 --> 0:06:17.640 assessed the market, understand where we are, and understand the 0:06:17.640 --> 0:06:20.000 tools that we have in the impact that they'll have. Today, 0:06:20.000 --> 0:06:23.480 he's announcing a release from the spro but also importantly 0:06:23.520 --> 0:06:26.599 this repurchased plan, which is something that industry analysts and 0:06:26.600 --> 0:06:28.600 others have been calling for for some time. We think 0:06:28.640 --> 0:06:31.000 that this will make some difference. We're gonna keep at it, 0:06:31.240 --> 0:06:33.800 keep a close eye on these things with an understanding 0:06:33.839 --> 0:06:35.440 that we have these tools on the table, and we'll 0:06:35.440 --> 0:06:38.159 deploy them when it's in America's interests. Brand's Director of 0:06:38.160 --> 0:06:44.520 the White House National Economic Council, Thank you. This is 0:06:44.560 --> 0:06:48.000 a joy because when you go to Boulder, Colorado, you 0:06:48.040 --> 0:06:50.560 know that the Zoomies are down to Colorado Springs and 0:06:50.560 --> 0:06:53.039 they're the real deal. Out of the United States Air 0:06:53.080 --> 0:06:56.920 Force Academy, an actual pilot running an airline, the chief 0:06:56.920 --> 0:07:01.240 executive officer with United, the pilot Scott Kirby, joins us 0:07:01.240 --> 0:07:05.800 this morning. Scott, I got eighteen questions from viewers that 0:07:06.000 --> 0:07:08.960 have everything to do with the United Lounge, This, that, 0:07:09.080 --> 0:07:11.760 and the other thing. I want to talk about the 0:07:11.880 --> 0:07:17.000 ratio of business class to economy fairs. I follow one 0:07:17.120 --> 0:07:21.600 United fair and it's six dollars for every dollar of economy. 0:07:21.640 --> 0:07:26.120 I've never seen it. Where is business class in three years? 0:07:27.840 --> 0:07:30.800 So uh, thanks for thanks for the intro. By the way, 0:07:30.840 --> 0:07:35.000 that's a unique one and I like it. But business travel, 0:07:35.400 --> 0:07:40.120 business class is demand is really really strong. It's really 0:07:40.120 --> 0:07:43.080 really strong an economy, but it's even stronger at the 0:07:43.120 --> 0:07:46.320 premium cabinet. United has more premium seats than than any 0:07:46.320 --> 0:07:50.520 other airline in the country, and one long haul business 0:07:50.600 --> 0:07:53.120 demand has has mostly come all the way back to 0:07:53.160 --> 0:07:55.160 Europe at least, I mean it's even stronger than it 0:07:55.200 --> 0:07:57.880 is Bestically, it's harder to calls with someone in Europe. 0:07:58.120 --> 0:08:01.280 But the other trend I think that's huge is there's 0:08:01.320 --> 0:08:03.880 more premium leisure demand, and really that is enabled by 0:08:03.960 --> 0:08:08.320 hybrid work. Hybrid work makes everything in the potential holiday weekend, 0:08:08.360 --> 0:08:10.320 and there's there's people that go to Europe and they'll 0:08:10.360 --> 0:08:12.000 work for one or two weeks in Europe, and they 0:08:12.040 --> 0:08:14.520 work during the day, they go out late at night 0:08:14.520 --> 0:08:16.040 with the French ship the Spaniards. By the way, that's 0:08:16.040 --> 0:08:17.760 the only way I could possibly go hang out with 0:08:18.200 --> 0:08:23.160 Spaniards by state on East Coast time. And this I 0:08:23.160 --> 0:08:26.840 think it's a permanent step level increase in demand both 0:08:27.320 --> 0:08:30.800 weekend travel but also for premium demands. To the volatility, 0:08:30.840 --> 0:08:34.360 the signal nature of your total return of stock is 0:08:34.400 --> 0:08:38.360 a new persistency of cash flow from business class enough 0:08:38.400 --> 0:08:41.760 to give you a more persistent cash flow on your 0:08:41.800 --> 0:08:46.080 financial statement. Well, look, I think we'll still have alatility, 0:08:46.080 --> 0:08:48.199 will still be iffected by the economy or short term 0:08:48.200 --> 0:08:52.760 in the fuel prices, so it won't eliminate um cyclicality, 0:08:52.840 --> 0:08:55.480 but What it does is more important, which I think 0:08:55.480 --> 0:08:59.960 it raises the level, so the lowest period of revenu 0:09:00.000 --> 0:09:01.559 you will be higher than it was before, and the 0:09:01.600 --> 0:09:04.280 highest period will be even higher. Um. It doesn't take 0:09:04.280 --> 0:09:08.640 out the cyclicality, but it it does raise the bar 0:09:08.800 --> 0:09:11.600 across the board. It's just a new, permanently higher level 0:09:11.600 --> 0:09:14.839 of demand. But to that point, Scott, we've spent the 0:09:14.880 --> 0:09:16.960 better part of the last three hours talking about whether 0:09:17.040 --> 0:09:19.200 or not we're seeing a softening in demand, which is 0:09:19.200 --> 0:09:22.160 what policymakers are trying to engineer to bring inflation down. 0:09:22.160 --> 0:09:24.960 Inflation which in some sectors of the economy means people 0:09:25.000 --> 0:09:27.240 are just spending less in certain areas. It does not 0:09:27.400 --> 0:09:30.200 seem that it has hit air travel yet. Do you 0:09:30.280 --> 0:09:33.480 expect that the demand deterioration is going to come and 0:09:33.520 --> 0:09:35.760 will that ultimately mean you don't have the pricing power 0:09:35.840 --> 0:09:40.280 to keep fairs high? Well, I think the slowing economy 0:09:40.520 --> 0:09:43.000 and or a recession are going to be a headwind. 0:09:43.360 --> 0:09:46.640 Already are a headwind demand. But there's three trends in aviation. 0:09:47.040 --> 0:09:49.760 I think more they're currently more than fully off setting. 0:09:49.760 --> 0:09:51.720 I think we'll continue one. We're still in the COVID 0:09:51.760 --> 0:09:54.880 recovery phase Japan just opened last week. No matter what 0:09:54.920 --> 0:09:57.440 you think, business travel isn't ultimately get to it is 0:09:57.480 --> 0:09:59.920 going to go almost certainly going higher from here. So 0:10:00.000 --> 0:10:02.760 we're still in COVID recovery unlike most industries. The second 0:10:02.800 --> 0:10:06.040 one is this hybrid work making every weekend to holiday trend. 0:10:06.120 --> 0:10:08.959 Like we third September was the third highest RAS a 0:10:09.040 --> 0:10:10.920 month in the history of United Airline. That is an 0:10:10.920 --> 0:10:13.920 off peak month. What happened during September, and we saw 0:10:13.920 --> 0:10:16.400 it even earlier. We were seeing in October. By the way, 0:10:16.440 --> 0:10:18.320 it's gonna better than September, so it's gonna bove to 0:10:18.320 --> 0:10:22.520 Fourth place is people are now able to work remotely 0:10:22.520 --> 0:10:24.600 for one or two days, so they can instead of 0:10:24.600 --> 0:10:26.320 being tethered to their desk at the office, they can 0:10:26.400 --> 0:10:30.160 leave Wednesday or Thursday, go somewhere remotely for one or 0:10:30.160 --> 0:10:32.920 two days. We're taking extra trips. That's a trend that's 0:10:32.960 --> 0:10:35.439 not appreciated by the market yet it's unique to aviation. 0:10:36.360 --> 0:10:40.600 It's offsetting those economic headwinds. It's a tailwind that's that's offsetting. 0:10:40.760 --> 0:10:42.800 And Scott, we call that doing a John Pharaoh. And 0:10:43.920 --> 0:10:46.719 why don't you continue Kayley with Mr Kara, Well, that's 0:10:46.720 --> 0:10:48.920 on on the demand side, Scott, but there also is 0:10:48.920 --> 0:10:51.480 the fact that you are still constrained on the supply side. 0:10:51.520 --> 0:10:54.200 Capacity is still more limited and the part of that 0:10:54.240 --> 0:10:56.679 has to do with the labor equation. Can you just 0:10:57.120 --> 0:10:59.880 give us your best estimate as to whether or not 0:11:00.040 --> 0:11:03.240 you're ultimately going to be able to expand capacity or again, 0:11:03.320 --> 0:11:06.000 or is this a structural labor issue in the air 0:11:06.040 --> 0:11:10.480 economy which is going to stick around? So, first of 0:11:10.559 --> 0:11:12.120 you're an airline investor. Would have been the third and 0:11:12.160 --> 0:11:15.400 maybe perhaps the most important trend that um, well, there's 0:11:15.440 --> 0:11:17.800 a really strong demand environment. Supply is going to be 0:11:17.840 --> 0:11:21.040 constrained for years to come by artificial factors. Now it's 0:11:21.160 --> 0:11:22.959 less of a constraint for United because we're at the 0:11:23.040 --> 0:11:24.640 high end. We're you know, we're at the top of 0:11:24.640 --> 0:11:28.120 the funnel, top of the pyramid for people wanting to 0:11:28.120 --> 0:11:30.640 be by it. But there's not enough pilots in the industry. 0:11:30.800 --> 0:11:33.280 That's not the only constraint. Bowing and Airbus are way 0:11:33.320 --> 0:11:36.440 behind and the supply changer way behind on their ability 0:11:36.800 --> 0:11:42.280 from airpoint air traffic control saturation. There's airports in Europe 0:11:42.280 --> 0:11:44.640 and other places that are full. These are like four 0:11:44.760 --> 0:11:47.600 or five year probably if you start fixing today multi 0:11:47.679 --> 0:11:49.720 year problems to Scott when you're in New York next 0:11:49.760 --> 0:11:52.599 time landing at Newark and hopefully landing at JFK with 0:11:52.720 --> 0:11:55.439 that battle, I want to talk about the landing gates 0:11:55.480 --> 0:11:59.440 and all that. But Mary Schlangenstein, who's our airport reporter, 0:12:00.000 --> 0:12:03.080 as if you don't ask Scott about Boeing seven thirties 0:12:03.120 --> 0:12:05.840 seven eight over to UH seven and they're gonna add 0:12:05.880 --> 0:12:08.360 twelve more seats and they're gonna take this wing and 0:12:08.400 --> 0:12:12.120 added on Scott, this is not confidence building with the 0:12:12.200 --> 0:12:15.440 redo of the seventh the Boeing Max, I mean, it's 0:12:15.480 --> 0:12:20.000 not confident building. Do you have confidence that you guys 0:12:20.040 --> 0:12:22.600 in the f a A can get together to get 0:12:22.640 --> 0:12:27.120 that plane up in the air. Yeah, well, I think 0:12:27.120 --> 0:12:29.400 you're talking about the Max tent and Hi, Mary, um 0:12:30.120 --> 0:12:34.120 good to hear from you virtually. But here's what I 0:12:34.120 --> 0:12:38.520 think about the Max ten. First for United if somehow 0:12:38.640 --> 0:12:41.280 the Eric Mack ten seven don't get certified at the 0:12:41.280 --> 0:12:45.240 current standards, but our plan is we're gonna convert some 0:12:45.320 --> 0:12:47.880 of those Max tens into Max eights and nine and 0:12:47.960 --> 0:12:51.280 our large airplane we're gonna order more and that's gonna 0:12:51.320 --> 0:12:53.679 be our larger plane, and Bowel compensates for that. So 0:12:53.720 --> 0:12:56.240 for United you know, it's not really a big deal 0:12:56.640 --> 0:12:59.480 um financially, but it's the right safety outcome. This is 0:12:59.480 --> 0:13:02.760 the most point you know, having it's just a different 0:13:03.000 --> 0:13:05.520 length of airplane. It's the same airplane in a different link, 0:13:05.800 --> 0:13:08.960 and you never want to make two different cockpits or 0:13:09.040 --> 0:13:13.080 procedures for the exact same airplane. That detracts from safety. 0:13:13.080 --> 0:13:15.800 So I think because it's the right safety outcome, we 0:13:15.840 --> 0:13:18.240 will get to the right answer where the Max seven 0:13:18.240 --> 0:13:21.079 and ten will get certified like the Max eight and 0:13:21.120 --> 0:13:23.480 the Maximum. I think the more important point is a 0:13:23.520 --> 0:13:25.439 bigger one for the country. For the United States of 0:13:25.480 --> 0:13:30.439 American bowing is our largest exporter, high tech exports, manufacturing jobs, 0:13:30.520 --> 0:13:34.000 high paying jobs. And the question is about our airlines 0:13:34.040 --> 0:13:36.240 around the world gonna buy Max tens or are they 0:13:36.240 --> 0:13:38.720 gonna buy Airbus A three? And the real question is 0:13:38.840 --> 0:13:41.199 is the right safety answer? Are these planes gonna get 0:13:41.200 --> 0:13:43.680 produced in Seattle? Are they gonna get built in Europe 0:13:43.920 --> 0:13:47.360 and a China? I want both Boeing and Airbus to 0:13:47.400 --> 0:13:50.400 do well for healthy competition, but at the right end, 0:13:51.200 --> 0:13:53.040 Scott we're out of time. We need to see you 0:13:53.040 --> 0:13:55.040 when you're in New York. In New York next time. 0:13:55.120 --> 0:13:58.680 Scott Kirby with United Airlines, after a very strong earnings 0:13:58.720 --> 0:14:12.040 report to say, at least we want to reset and 0:14:12.080 --> 0:14:14.440 get a sense of what this election is gonna look like. 0:14:14.480 --> 0:14:17.280 We have three weeks. Mohammed Unas has been tracking this 0:14:17.400 --> 0:14:20.120 all from Gallup. He is the editor in chief there. Mohammed, 0:14:20.360 --> 0:14:22.360 what are you looking for in terms of turnout, in 0:14:22.480 --> 0:14:25.840 terms of excitement around an election where we really have 0:14:25.880 --> 0:14:28.960 seen the odds shift pretty dramatically whipsaw over the past 0:14:29.000 --> 0:14:33.800 few weeks. The number one issue voters have in mind 0:14:33.840 --> 0:14:36.360 when they vote, and we know this from generations, is 0:14:36.560 --> 0:14:39.920 the economy. UM. We also see that in our data 0:14:40.680 --> 0:14:43.520 of Americans now mentioned the economy or some sort of 0:14:43.560 --> 0:14:47.400 reference to inflation as the number one problem, most important 0:14:47.440 --> 0:14:50.560 problem facing the country. UM. So that is going to 0:14:50.640 --> 0:14:54.160 be front and center more than anything. In terms of turnout. 0:14:54.200 --> 0:14:57.240 We've certainly seen higher than average turnout last week checked. 0:14:57.240 --> 0:14:59.720 We're actually in the field checking that now, but it 0:14:59.840 --> 0:15:02.600 was in as high as we saw with the fervor 0:15:02.600 --> 0:15:05.560 we saw two years ago. UM. The social issues that 0:15:05.600 --> 0:15:09.320 should lead to be critical in some of these contests, 0:15:09.360 --> 0:15:13.360 but overwhelmingly, the economy is going to be central on 0:15:13.440 --> 0:15:16.400 people's minds as they go to vote. I've got Mohammed 0:15:16.400 --> 0:15:18.880 a hundred and fifty nine million, which is a ginormous 0:15:19.040 --> 0:15:21.520 number for the two thousand twenty election. I don't have 0:15:21.600 --> 0:15:25.960 the mid term statistic of two thousand eighteen. What do 0:15:26.000 --> 0:15:29.920 you people see on the turnout of America for this election? 0:15:31.560 --> 0:15:36.800 It's still too early to tell. We don't and there's 0:15:36.880 --> 0:15:39.160 we don't know, and I don't think anybody really knows. 0:15:39.200 --> 0:15:42.400 For a series of reasons, we certainly ask Americans are 0:15:42.480 --> 0:15:45.000 you planning to vote? Are you more excited to vote 0:15:45.320 --> 0:15:49.440 this time than in previous elections? That metric is tracking 0:15:50.200 --> 0:15:53.160 higher than average, but certainly not as high as we 0:15:53.200 --> 0:15:55.920 saw two years ago. It's about ten points lower than that. 0:15:55.960 --> 0:15:58.160 We're actually asking that again this month. But as we 0:15:58.240 --> 0:16:01.320 get closer to the elect action um there are a 0:16:01.360 --> 0:16:04.840 lot of factors that play into making this one really 0:16:04.880 --> 0:16:07.720 hard to guests turn out. First of all, people's voting 0:16:07.720 --> 0:16:11.560 habits have changed. Second of all, people's attitudes about voter 0:16:11.720 --> 0:16:15.400 laws have changed. People want to really open the doors 0:16:15.600 --> 0:16:18.320 to make it easier for people to vote. Most American 0:16:18.400 --> 0:16:21.520 support voter i D for example, to have people vote, 0:16:21.720 --> 0:16:24.360 but they also support a series of other measures that 0:16:24.440 --> 0:16:27.080 make it easier for people to vote. So in addition, 0:16:27.120 --> 0:16:30.520 in addition to excitement to vote, there are also structural 0:16:30.680 --> 0:16:33.440 changes to the way we vote in America that are 0:16:33.440 --> 0:16:36.880 going to continue to roll out for these next several elections. Well, Mohammed, 0:16:36.920 --> 0:16:39.040 when we talk about excitement to vote, there were a 0:16:39.120 --> 0:16:41.720 number of social issues that the thought was would be 0:16:41.760 --> 0:16:45.040 a galvanizing force in these elections, one of them being 0:16:45.120 --> 0:16:48.240 abortion rights. Is that taking shape doesn't have as much 0:16:48.320 --> 0:16:51.680 firepower as initially thought several months ago when Rovie Wade 0:16:51.680 --> 0:16:56.800 was overturned. We certainly have seen an uptick in people 0:16:56.880 --> 0:16:59.680 saying that it's important for them as a voter to 0:16:59.800 --> 0:17:02.800 vote for someone who shares their view on abortion. Now 0:17:02.800 --> 0:17:06.800 it's about fifty of Americans hold that view, and that 0:17:06.920 --> 0:17:10.840 is a relative high compared to before. However, it's only 0:17:10.960 --> 0:17:14.720 really about a ten or eleven point jump from before 0:17:15.000 --> 0:17:18.920 the Roe v. Wade overturned decision was leaked out, So 0:17:19.080 --> 0:17:23.200 it hasn't exploded, but it certainly has risen in terms 0:17:23.200 --> 0:17:25.639 of being an important issue. One of the things we 0:17:25.640 --> 0:17:28.200 were talking about in the break, is everybody voting is 0:17:28.240 --> 0:17:30.760 thinking about inflation because we're all impacted by it. Not 0:17:30.920 --> 0:17:34.199 everybody voting is voting somewhere where abortion is really on 0:17:34.240 --> 0:17:36.439 the ballot. Mom, and I want to go to the 0:17:36.480 --> 0:17:39.680 heritage of Gala back to the thirties, you guys basically 0:17:39.720 --> 0:17:42.919 invented the industry and you have a monitor and a 0:17:43.000 --> 0:17:47.119 body of knowledge about say that evening when LBJ stepped aside, 0:17:47.760 --> 0:17:51.679 what did presidents do the evening or the day after 0:17:51.880 --> 0:17:58.359 a mid term election? Well, most incumbents usually don't do 0:17:58.560 --> 0:18:02.119 great in a midterm allow action. It's always an uphill 0:18:02.200 --> 0:18:06.879 battle no matter who the president is. So President Biden 0:18:07.040 --> 0:18:12.359 is not facing an easy route. However, these social issues 0:18:12.400 --> 0:18:16.640 and some of these other factors may play a role 0:18:17.040 --> 0:18:21.280 in really helping the Democrats, um, you know, not Ferris poorly. 0:18:21.359 --> 0:18:23.640 The other thing we're not talking about, which is more 0:18:23.640 --> 0:18:27.800 important than any of this, is the is the jurisdictions 0:18:27.800 --> 0:18:32.040 and how districts are managed throughout the United States and 0:18:32.040 --> 0:18:35.400 and what seats are really at stake between Republicans and Democrats. 0:18:35.400 --> 0:18:38.399 And Democrats are really facing a huge challenge just in 0:18:38.520 --> 0:18:41.240 terms of the seats that are up for grabs, Momma, 0:18:41.280 --> 0:18:43.600 thank you so much for Mohammed and a definitive as 0:18:43.720 --> 0:18:50.320 editor in chief, and go up joining us now. Dennis 0:18:50.320 --> 0:18:54.359 Gartman surviving two thousand twenty two. Dennis, your opinion on 0:18:54.560 --> 0:18:58.560 the street, tell us where you are right now, and 0:18:58.600 --> 0:19:03.359 how ugly two thousand and two has been. Two thousand 0:19:03.359 --> 0:19:06.240 two has been demonstrably ugly. It's been very ugly. It's 0:19:06.280 --> 0:19:10.360 been unbelievably ugly. It's going to get uglier, I'm afraid. Nonetheless, 0:19:10.400 --> 0:19:13.720 we've had a good bounce. Bounces are required in bear markets. 0:19:13.760 --> 0:19:15.960 I think it's been a bear market since actually since 0:19:16.240 --> 0:19:18.960 January fIF of this year, and I continue to think 0:19:19.000 --> 0:19:21.280 it's going to remain a bear market. The Fed has 0:19:21.320 --> 0:19:23.880 been has told us it's going to reduce the size 0:19:23.880 --> 0:19:25.960 of its balance sheet. I think that's the most important 0:19:26.320 --> 0:19:29.800 prospect or aspect of the markets to to understand. They 0:19:29.840 --> 0:19:33.120 expanded their balance sheet from nine billion dollars to nine 0:19:33.119 --> 0:19:35.040 trillion dollars over the course of the last decade and 0:19:35.040 --> 0:19:37.000 a half, and now they said they're going to reduce 0:19:37.040 --> 0:19:39.680 the size of the balance sheet by billion dollars a month, 0:19:40.160 --> 0:19:42.640 probably taking it back to four or five trillion dollars. 0:19:43.040 --> 0:19:45.320 Over the course of the next several years, we've gone 0:19:45.320 --> 0:19:50.639 from having an expansionary, wonderful, bullish phenomenon to a I 0:19:50.680 --> 0:19:53.399 think a contractionary, bearish phenomenon. And I think you have 0:19:53.440 --> 0:19:56.439 to remain bearish. Let's bring that over to corporations and 0:19:56.600 --> 0:19:59.680 do go grammed doubt and coddle you. And I remember 0:20:00.119 --> 0:20:03.920 the vogue. It was like spacks Paul, every single specialty 0:20:04.000 --> 0:20:06.560 chemical company was rolled up. It was like a roll 0:20:06.640 --> 0:20:09.880 up is the word that was invented Dennis Gartment. Are 0:20:09.880 --> 0:20:12.800 we gonna have a zombie roll up where the nonprofitables 0:20:12.800 --> 0:20:15.280 that have had a free lunch for a decade get 0:20:15.440 --> 0:20:18.320 rolled up into something new and different. I think they 0:20:18.320 --> 0:20:21.280 get rolled down into into bankruptcy rather than something new 0:20:21.359 --> 0:20:24.840 and in different. I think bankruptcy is is there is 0:20:24.880 --> 0:20:29.520 their future. I'm afraid that nonprofitable industries, businesses have to 0:20:29.520 --> 0:20:32.920 be allowed to to to to to go into the 0:20:33.040 --> 0:20:35.920 atmosphere and disappear. We've kept them alive. You've used the 0:20:36.000 --> 0:20:38.360 term zombie. I think that's a good term. It's been 0:20:38.960 --> 0:20:40.879 a term that's been banned about for a long period 0:20:40.880 --> 0:20:42.800 of time, and I think that the zombies will actually 0:20:43.240 --> 0:20:45.639 end up being dead, not not kept alive. Let us 0:20:45.680 --> 0:20:48.680 hope that capitalism and in its in its freest and 0:20:48.760 --> 0:20:53.200 best circumstances prevails Dennis, as it relates to this Federal Reserve, 0:20:53.280 --> 0:20:55.200 it feels like that, you know, kind of the backbone 0:20:55.200 --> 0:20:58.119 to your bearish call is the Federal Reserve. Yes, do 0:20:58.160 --> 0:21:01.000 you have a sense of when they feel like they 0:21:01.000 --> 0:21:03.800 will have done their job and maybe they can back 0:21:03.840 --> 0:21:06.560 off and if if nothing else to see if these 0:21:06.600 --> 0:21:09.880 interest rate increases do in fact, I didn't do inflation. 0:21:10.359 --> 0:21:12.280 If I've learned anything in the nearly fifty years that 0:21:12.320 --> 0:21:14.280 they've been involved in the markets is that when once 0:21:14.320 --> 0:21:17.480 the Fed begins to change its policies, it moves rates 0:21:17.560 --> 0:21:21.120 farther and lasts longer than anybody ever wants to anticipate. 0:21:21.160 --> 0:21:23.600 When they when they ease monetary policy, they take rate 0:21:23.640 --> 0:21:26.520 slower than anybody believes for a longer period of time. 0:21:26.800 --> 0:21:29.240 When they tighten, they take rates higher for a longer 0:21:29.280 --> 0:21:31.800 period of time than anybody wants to anticipate. I think 0:21:31.840 --> 0:21:34.400 it's going to be at least until late in maybe 0:21:35.040 --> 0:21:38.679 four before the long awaited pivot occurs. So it's just 0:21:38.800 --> 0:21:41.520 historically that's what they've done. I believe that the FED 0:21:41.640 --> 0:21:45.199 is a historical precedent setting and precedent following circumstance, and 0:21:45.200 --> 0:21:46.600 I think it will be a long time before the 0:21:46.640 --> 0:21:51.320 pivot is available to anybody who wants to think that 0:21:51.359 --> 0:21:53.879