1
00:00:02,400 --> 00:00:08,560
Speaker 1: Bloomberg Audio Studios, Podcasts, radio News.

2
00:00:11,600 --> 00:00:15,440
Speaker 2: This is the Bloomberg Surveillance Podcast. I'm Jonathan Ferrow, along

3
00:00:15,440 --> 00:00:18,400
Speaker 2: with Lisa Bromwitz and a Marie Hordern. Join us each

4
00:00:18,480 --> 00:00:21,360
Speaker 2: day for insight from the best in markets, economics, and

5
00:00:21,400 --> 00:00:24,720
Speaker 2: geopolitics from our global headquarters in New York City. We

6
00:00:24,760 --> 00:00:27,400
Speaker 2: are live on Bloomberg Television weekday mornings from six to

7
00:00:27,480 --> 00:00:31,000
Speaker 2: nine am Eastern. Subscribe to the podcast on Apple, Spotify

8
00:00:31,200 --> 00:00:33,479
Speaker 2: or anywhere else you listen, and as always on the

9
00:00:33,479 --> 00:00:35,840
Speaker 2: Bloomberg Terminal and the Bloomberg Business App.

10
00:00:36,440 --> 00:00:38,720
Speaker 1: Your point the camera now to our first guest, Cameron

11
00:00:38,800 --> 00:00:41,080
Speaker 1: Dawson over a new Edge Wealth, joining us right now

12
00:00:41,080 --> 00:00:41,520
Speaker 1: to talk.

13
00:00:41,360 --> 00:00:42,800
Speaker 3: A little bit more a welded.

14
00:00:42,840 --> 00:00:45,120
Speaker 1: That lopsidedness that we saw at the start of twenty

15
00:00:45,240 --> 00:00:48,000
Speaker 1: twenty four is going to be lopsidedness at the start

16
00:00:48,000 --> 00:00:49,080
Speaker 1: of twenty twenty five.

17
00:00:49,400 --> 00:00:52,239
Speaker 4: I think the most important point about breadth is that

18
00:00:52,320 --> 00:00:53,240
Speaker 4: it actually has.

19
00:00:53,159 --> 00:00:54,440
Speaker 3: Been supported by earnings.

20
00:00:54,440 --> 00:00:57,480
Speaker 4: The reason why the market has been narrow, it's because

21
00:00:57,600 --> 00:01:00,800
Speaker 4: earnings growth has been narrow so it's not just valuation alone,

22
00:01:00,840 --> 00:01:03,120
Speaker 4: and we've seen that in the last four months. If

23
00:01:03,120 --> 00:01:05,399
Speaker 4: you look at the mag seven their earnings estimates have

24
00:01:05,440 --> 00:01:08,840
Speaker 4: actually been revised higher by about fifteen percent, but if

25
00:01:08,840 --> 00:01:11,040
Speaker 4: you look at the equal weight index, their earnings have

26
00:01:11,120 --> 00:01:15,080
Speaker 4: been revised lower by about five percent. So that's spread

27
00:01:15,200 --> 00:01:18,560
Speaker 4: in earnings revisions and earning strength is really what has

28
00:01:18,600 --> 00:01:20,920
Speaker 4: been driving the fact that this market is led by

29
00:01:20,959 --> 00:01:23,600
Speaker 4: such a few short names. The question is, if you

30
00:01:23,600 --> 00:01:26,440
Speaker 4: look at estimates in twenty twenty five, they have the

31
00:01:26,600 --> 00:01:30,440
Speaker 4: everything else starting to really participate in earnings. But that's

32
00:01:30,480 --> 00:01:32,920
Speaker 4: a pretty high bar and pretty much has show these

33
00:01:32,959 --> 00:01:34,160
Speaker 4: stories we get into next.

34
00:01:34,080 --> 00:01:36,680
Speaker 1: Year, how much if we do get a broadening of

35
00:01:36,720 --> 00:01:39,520
Speaker 1: the earnings picture, how much of that is dependent on

36
00:01:39,600 --> 00:01:43,520
Speaker 1: economic conditions and for that matter, policy conditions coming out

37
00:01:43,520 --> 00:01:44,080
Speaker 1: of Washington.

38
00:01:44,319 --> 00:01:47,600
Speaker 4: It is rather peculiar that we've seen this economic growth

39
00:01:47,680 --> 00:01:51,000
Speaker 4: environment where we've had consistent upside surprises to growth.

40
00:01:51,240 --> 00:01:53,440
Speaker 3: We've had growth be above.

41
00:01:53,200 --> 00:01:57,040
Speaker 4: Trend, and yet it has not materialized to the everything

42
00:01:57,080 --> 00:02:00,600
Speaker 4: else earnings, meaning that you've had this strong GDP environment,

43
00:02:00,720 --> 00:02:03,760
Speaker 4: but the average stock has continued to struggle. Part of

44
00:02:03,800 --> 00:02:06,160
Speaker 4: that is just an overhang from the pandemic. You had

45
00:02:06,160 --> 00:02:09,880
Speaker 4: some over earning that happened, margins got overextended, and that

46
00:02:10,040 --> 00:02:12,840
Speaker 4: was coming back in But what you have now is

47
00:02:12,880 --> 00:02:16,799
Speaker 4: this expectation that you'll have a huge reacceleration in those

48
00:02:16,840 --> 00:02:19,480
Speaker 4: four ninety three names. We're not sure if you get

49
00:02:19,480 --> 00:02:22,880
Speaker 4: that in a potentially decelerating nominal growth environment.

50
00:02:23,440 --> 00:02:26,040
Speaker 5: You know, it's a little earlier that Romayne had mentioned

51
00:02:26,080 --> 00:02:28,079
Speaker 5: the bond market. You're seeing that bid come back into

52
00:02:28,120 --> 00:02:29,519
Speaker 5: the bond market in the last.

53
00:02:29,200 --> 00:02:30,000
Speaker 3: Week of the year.

54
00:02:30,320 --> 00:02:34,040
Speaker 5: However, just last week we're at four sixty one again

55
00:02:34,320 --> 00:02:36,960
Speaker 5: on the ten year. At what point does that start

56
00:02:36,960 --> 00:02:38,919
Speaker 5: to get in the way of this equity market rally

57
00:02:39,040 --> 00:02:40,880
Speaker 5: or is it already getting in the way.

58
00:02:41,160 --> 00:02:44,119
Speaker 4: The thing that's been most surprising in twenty twenty four

59
00:02:44,280 --> 00:02:47,160
Speaker 4: is how much we've been able to see multiple expansion

60
00:02:47,360 --> 00:02:49,360
Speaker 4: despite having rising bond yields.

61
00:02:49,600 --> 00:02:51,760
Speaker 3: If you look forward, multiples.

62
00:02:51,240 --> 00:02:53,280
Speaker 4: For the S and P five hundred are up about

63
00:02:53,320 --> 00:02:56,120
Speaker 4: seventeen percent over the course of the year, and that's

64
00:02:56,120 --> 00:02:58,880
Speaker 4: with a bond market that has seen this constant pressure

65
00:02:58,919 --> 00:03:01,880
Speaker 4: and rising yields. So at a certain point is a

66
00:03:02,000 --> 00:03:05,640
Speaker 4: twenty two point three times forward multiple consistent with a

67
00:03:05,720 --> 00:03:09,000
Speaker 4: bond yield at four point six percent. We always have

68
00:03:09,040 --> 00:03:12,200
Speaker 4: to remember that valuations are a very poor timing tool,

69
00:03:12,440 --> 00:03:14,960
Speaker 4: but we're getting to a point where equity risk premiums

70
00:03:15,000 --> 00:03:19,280
Speaker 4: are incredibly narrow, incredibly tight, so as equity investors, you're

71
00:03:19,280 --> 00:03:21,799
Speaker 4: not necessarily getting well compensated for.

72
00:03:21,760 --> 00:03:22,560
Speaker 3: The added risk.

73
00:03:22,880 --> 00:03:25,400
Speaker 5: But even if you believe, if you believe that the

74
00:03:25,440 --> 00:03:28,200
Speaker 5: reason yields are higher is because of strong economic data,

75
00:03:28,440 --> 00:03:32,079
Speaker 5: then does that mean that any vulnerable economic data could

76
00:03:32,080 --> 00:03:35,160
Speaker 5: set the market a little Haywire, I think.

77
00:03:34,960 --> 00:03:36,880
Speaker 4: That is a really good point, is that if you're

78
00:03:36,920 --> 00:03:41,160
Speaker 4: looking at things like credit spreads being ultra tight, valuations

79
00:03:41,200 --> 00:03:44,480
Speaker 4: being so high, it's not contemplating any kind of growth

80
00:03:44,520 --> 00:03:47,560
Speaker 4: slow down. So if you were an environment where you're

81
00:03:47,600 --> 00:03:51,480
Speaker 4: seeing growth estimates get cut versus getting raised, that would

82
00:03:51,520 --> 00:03:53,400
Speaker 4: be a challenge to valuations.

83
00:03:53,440 --> 00:03:54,960
Speaker 3: We think the most important.

84
00:03:54,560 --> 00:03:57,720
Speaker 4: Charts over the last two years is GDP estimates for

85
00:03:57,760 --> 00:04:00,360
Speaker 4: twenty three and twenty four. It has been a constant

86
00:04:00,520 --> 00:04:03,200
Speaker 4: climb upwards. And if that starts to go in the

87
00:04:03,240 --> 00:04:06,360
Speaker 4: other direction, meaning we're talking about GDP estimate scene to

88
00:04:06,400 --> 00:04:09,640
Speaker 4: being revised lower, that's a very different market mood.

89
00:04:10,160 --> 00:04:13,280
Speaker 1: I'm curious though, too, when we talk about the expectations

90
00:04:13,280 --> 00:04:15,600
Speaker 1: for economic growth, and we've seen what the market expects,

91
00:04:15,640 --> 00:04:18,480
Speaker 1: what economists expects, so you've even seen what the FED expects.

92
00:04:18,680 --> 00:04:21,560
Speaker 1: It's healthy. It may not be you know, Gangbusters, but

93
00:04:21,600 --> 00:04:23,760
Speaker 1: it seems like a healthy enough foundation. So why are

94
00:04:23,760 --> 00:04:26,120
Speaker 1: people why is there still some trepidation in the market,

95
00:04:26,279 --> 00:04:29,360
Speaker 1: particularly when it comes to like I said, midcaps, small caps,

96
00:04:29,480 --> 00:04:31,400
Speaker 1: the types of companies that would benefit from a stable

97
00:04:31,440 --> 00:04:32,280
Speaker 1: economic environment.

98
00:04:32,520 --> 00:04:33,440
Speaker 3: Well, I think first on.

99
00:04:33,400 --> 00:04:36,760
Speaker 4: The economic growth expectations is that recession risk has been

100
00:04:36,760 --> 00:04:39,880
Speaker 4: effectively completely priced out of the market as.

101
00:04:39,720 --> 00:04:40,600
Speaker 6: We forgot about recession.

102
00:04:40,600 --> 00:04:43,760
Speaker 3: P does that happen, But also it's been priced out

103
00:04:43,760 --> 00:04:44,279
Speaker 3: of the psyche.

104
00:04:44,320 --> 00:04:46,599
Speaker 4: If you go back to Palace comments from a couple

105
00:04:46,600 --> 00:04:49,599
Speaker 4: of weeks ago, he talked about how great the economy

106
00:04:49,760 --> 00:04:52,520
Speaker 4: was and how optimistic he was about future growth. So

107
00:04:52,760 --> 00:04:55,560
Speaker 4: if there's lue, believe me, Well, it does make us

108
00:04:55,600 --> 00:04:58,200
Speaker 4: a little bit nervous if we're not considering any kind

109
00:04:58,200 --> 00:05:01,640
Speaker 4: of downside risk, mostly as we're starting to see some

110
00:05:01,960 --> 00:05:05,000
Speaker 4: signs of things like continuing claims last week, continue to

111
00:05:05,120 --> 00:05:08,159
Speaker 4: march higher. When it comes to small caps in mid caps,

112
00:05:08,200 --> 00:05:11,400
Speaker 4: we have to acknowledge that it really is about the

113
00:05:11,480 --> 00:05:14,560
Speaker 4: balance sheets. It's about interest rates being so high, and

114
00:05:14,600 --> 00:05:16,960
Speaker 4: that there was this notion of sour five until twenty

115
00:05:17,000 --> 00:05:19,960
Speaker 4: twenty five because POWE is going to bail you out, We're.

116
00:05:19,839 --> 00:05:21,159
Speaker 3: Going to get interest rate cuts.

117
00:05:21,520 --> 00:05:24,000
Speaker 4: If those don't come, then we have that balance sheet

118
00:05:24,040 --> 00:05:24,920
Speaker 4: interest cost pressure.

119
00:05:24,920 --> 00:05:25,440
Speaker 3: That remains.

120
00:05:25,480 --> 00:05:27,640
Speaker 1: So in the realm of stocks in if I say

121
00:05:27,640 --> 00:05:30,240
Speaker 1: the word value to you, what does that even mean

122
00:05:30,480 --> 00:05:33,320
Speaker 1: right now? Is there value to be found in this market?

123
00:05:33,680 --> 00:05:37,120
Speaker 4: Value isn't necessarily dirt cheap at this point, but we

124
00:05:37,200 --> 00:05:41,000
Speaker 4: do know that the relative performance has been so abysmal

125
00:05:41,160 --> 00:05:44,839
Speaker 4: that it's likely primed for some kind of snapback. Jeff

126
00:05:44,839 --> 00:05:47,839
Speaker 4: de Graff pointed out this morning that the value relative

127
00:05:47,839 --> 00:05:51,880
Speaker 4: performance has been in about six percentiles, so very very depressed.

128
00:05:52,080 --> 00:05:55,240
Speaker 4: The question is does that start to rotate in the

129
00:05:55,320 --> 00:05:58,120
Speaker 4: other direction that is sustainable, And that's where it comes

130
00:05:58,160 --> 00:06:00,920
Speaker 4: back to earnings, meaning that you can see a snapback

131
00:06:01,000 --> 00:06:04,159
Speaker 4: in value simply because it's underloved and under owned. But

132
00:06:04,440 --> 00:06:07,680
Speaker 4: is that snapback lasting more than let's say, two weeks.

133
00:06:08,000 --> 00:06:09,839
Speaker 4: And that really is when it comes down to the

134
00:06:09,880 --> 00:06:12,359
Speaker 4: earnings line, because those have to deliver for it to

135
00:06:12,360 --> 00:06:14,200
Speaker 4: be more than just a flash in the pan, you know.

136
00:06:14,240 --> 00:06:16,560
Speaker 5: Speaking of value, a lot of investors have been trying

137
00:06:16,600 --> 00:06:19,320
Speaker 5: to rotate out of those high flyers, those big tech

138
00:06:19,360 --> 00:06:22,760
Speaker 5: stocks out of Nvidia, for example, and take on some

139
00:06:23,440 --> 00:06:27,040
Speaker 5: not Nvidia. You have seen some of that pullback here

140
00:06:27,040 --> 00:06:28,800
Speaker 5: and there. But you know, if you think about the

141
00:06:28,839 --> 00:06:31,400
Speaker 5: way that people are rotating, there is not a consensus.

142
00:06:31,440 --> 00:06:33,760
Speaker 5: You've seen that small cap trade, you've seen some value,

143
00:06:34,080 --> 00:06:36,400
Speaker 5: you've seen some rotation into different.

144
00:06:36,120 --> 00:06:38,640
Speaker 3: Sectors as well. How do you play it?

145
00:06:38,760 --> 00:06:42,560
Speaker 5: What is the most sustainable rotation at this point.

146
00:06:42,240 --> 00:06:45,320
Speaker 4: We think it's the steady hand of quality that remains

147
00:06:45,360 --> 00:06:48,520
Speaker 4: still very very important. Over the last four months or so,

148
00:06:48,680 --> 00:06:51,920
Speaker 4: you've seen a big surge in low quality, high beta,

149
00:06:52,080 --> 00:06:55,560
Speaker 4: high momentum kinds of names, and so we do think

150
00:06:55,640 --> 00:06:58,480
Speaker 4: that the best way to be able to take advantage

151
00:06:58,520 --> 00:07:00,800
Speaker 4: of these rotations is to content you to focus on

152
00:07:00,880 --> 00:07:04,240
Speaker 4: things like high free cash flow, good return on investing capital,

153
00:07:04,279 --> 00:07:07,120
Speaker 4: good balance sheets. They're getting left in the dust a

154
00:07:07,200 --> 00:07:09,560
Speaker 4: little bit recently, but we do think over the long

155
00:07:09,640 --> 00:07:11,080
Speaker 4: term that quality is the way to go.

156
00:07:11,200 --> 00:07:13,960
Speaker 5: It's people pulling out there at EQS screens on their

157
00:07:14,000 --> 00:07:17,240
Speaker 5: Bloomberg terminal and running those terminal charts. Hey, listen, do

158
00:07:17,280 --> 00:07:19,360
Speaker 5: you want to go back to something you'd said earlier

159
00:07:19,400 --> 00:07:23,760
Speaker 5: about GDP growth Because so many investors are looking here

160
00:07:23,840 --> 00:07:26,800
Speaker 5: at the way the Trump administration will tackle, of course, the.

161
00:07:26,760 --> 00:07:28,080
Speaker 3: Reorganization of the government.

162
00:07:28,120 --> 00:07:30,200
Speaker 5: Now we're talking about doge more and more on this program,

163
00:07:30,280 --> 00:07:31,480
Speaker 5: aren't we, And.

164
00:07:31,600 --> 00:07:34,400
Speaker 3: Do you believe that that could.

165
00:07:34,160 --> 00:07:36,280
Speaker 5: Cut into growth if we don't see the same type

166
00:07:36,280 --> 00:07:38,080
Speaker 5: of fiscal stimulus that we've seen in the last couple

167
00:07:38,120 --> 00:07:38,480
Speaker 5: of years.

168
00:07:38,720 --> 00:07:41,000
Speaker 4: I think it's a really important point, which is that

169
00:07:41,040 --> 00:07:45,000
Speaker 4: fiscal has been a big contribution to overall GDP growth,

170
00:07:45,200 --> 00:07:49,160
Speaker 4: and so if you start pursuing something that looks like austerity,

171
00:07:49,560 --> 00:07:51,960
Speaker 4: it might be beneficial in the long run if we

172
00:07:52,000 --> 00:07:55,280
Speaker 4: want to talk about budget deficits and balance budgets, But

173
00:07:55,480 --> 00:07:58,200
Speaker 4: in the short run, there is pain that you have

174
00:07:58,280 --> 00:07:59,440
Speaker 4: to have for that gain.

175
00:07:59,600 --> 00:08:02,360
Speaker 3: So it could be that if we actually.

176
00:08:01,960 --> 00:08:04,480
Speaker 4: Are able and that's a big if to rain in

177
00:08:04,520 --> 00:08:07,400
Speaker 4: some of the spending and do some reorganization of government,

178
00:08:07,680 --> 00:08:10,600
Speaker 4: that that could detract from overall GDP growth.

179
00:08:10,640 --> 00:08:12,360
Speaker 3: We saw that the last.

180
00:08:12,040 --> 00:08:14,880
Speaker 4: Time we went through a balanced budget kind of outlook

181
00:08:15,280 --> 00:08:17,720
Speaker 4: post squestration, it was a drag on growth.

182
00:08:17,760 --> 00:08:19,520
Speaker 3: So it is an important watch point.

183
00:08:19,640 --> 00:08:21,240
Speaker 1: Yeah, And it's a good point too, because I think

184
00:08:21,240 --> 00:08:22,920
Speaker 1: a lot of people kind of forget just how much

185
00:08:23,000 --> 00:08:25,520
Speaker 1: government spending contributes to the growth of the economy. And

186
00:08:25,560 --> 00:08:28,080
Speaker 1: it gets to this idea as well about the kind

187
00:08:28,080 --> 00:08:30,560
Speaker 1: of bifurcation. How you have kind of a higher end

188
00:08:30,640 --> 00:08:33,079
Speaker 1: consumer if you will higher income people I just say

189
00:08:33,080 --> 00:08:34,920
Speaker 1: that appear to be doing well. You have people in

190
00:08:34,960 --> 00:08:37,560
Speaker 1: the middle and the lower end that at least anecdotally

191
00:08:37,679 --> 00:08:39,000
Speaker 1: still seem to be struggling.

192
00:08:39,000 --> 00:08:40,000
Speaker 6: And there was some interesting.

193
00:08:39,760 --> 00:08:42,040
Speaker 1: Data that we just got out today about credit card

194
00:08:42,120 --> 00:08:45,960
Speaker 1: delinquencies arising, particularly amongst lower income folks.

195
00:08:46,640 --> 00:08:49,439
Speaker 4: It is still very present that we have this ca

196
00:08:49,559 --> 00:08:53,000
Speaker 4: shaped economy. And if you think about the lower income consumer,

197
00:08:53,120 --> 00:08:55,959
Speaker 4: they're sensitive to things like interest rates, they're far more

198
00:08:56,000 --> 00:09:00,400
Speaker 4: sensitive to inflation, and they're more sensitive to the job market.

199
00:09:00,520 --> 00:09:03,400
Speaker 4: So the fact that you're seeing hiring start to slow down,

200
00:09:03,720 --> 00:09:07,040
Speaker 4: that likely is what is creeping into those issues that

201
00:09:07,080 --> 00:09:09,559
Speaker 4: we're seeing with the delinquencies for the for the low

202
00:09:09,600 --> 00:09:12,760
Speaker 4: income consumer. Then if you shift to the high income consumer,

203
00:09:13,160 --> 00:09:16,000
Speaker 4: that's where we think the equity market is really important

204
00:09:16,160 --> 00:09:18,920
Speaker 4: because that's been one of the things. Loose financial conditions,

205
00:09:19,240 --> 00:09:22,840
Speaker 4: high interest rates, yet really strong stock prices, strong housing

206
00:09:22,920 --> 00:09:25,880
Speaker 4: prices has led to the high income consumer being so

207
00:09:26,040 --> 00:09:29,040
Speaker 4: resilient and good to remember, the top twenty percent of

208
00:09:29,080 --> 00:09:32,719
Speaker 4: consumers make up forty percent of overall consumption, so they

209
00:09:32,760 --> 00:09:33,959
Speaker 4: outpunch their weight.

210
00:09:34,360 --> 00:09:35,920
Speaker 3: And so if you start to see.

211
00:09:35,720 --> 00:09:38,360
Speaker 4: Equity market weakness, and that's an if, but if you

212
00:09:38,400 --> 00:09:40,360
Speaker 4: start to see it, that could be one thing that

213
00:09:40,360 --> 00:09:42,959
Speaker 4: could cause that high income consumer to begun to pull back.

214
00:09:43,120 --> 00:09:44,960
Speaker 1: I should just point out I did my economic part

215
00:09:44,960 --> 00:09:45,800
Speaker 1: this holiday season.

216
00:09:45,800 --> 00:09:47,080
Speaker 6: I haven't seen I haven't seen.

217
00:09:46,960 --> 00:09:48,839
Speaker 1: My credit card statement yet, but I'm sure it will

218
00:09:48,840 --> 00:09:49,880
Speaker 1: make me weep when I get it.

219
00:09:49,960 --> 00:09:51,960
Speaker 5: Yeah, I'm not excited to see it's the holiday seasons

220
00:09:52,000 --> 00:09:54,720
Speaker 5: are always tough, you know. The credit card delinquencies are

221
00:09:54,720 --> 00:09:56,360
Speaker 5: a great point. The other reason to look at them

222
00:09:56,440 --> 00:09:58,800
Speaker 5: is because weeks away we have earning season starting once

223
00:09:58,840 --> 00:10:02,240
Speaker 5: again and it's just starting to see credit card delinquencies rise.

224
00:10:02,679 --> 00:10:04,680
Speaker 5: Do you start to worry about the banks again or

225
00:10:04,720 --> 00:10:06,599
Speaker 5: do you shrug it off because the yields curve is

226
00:10:06,640 --> 00:10:08,160
Speaker 5: steeper and rates are staying hi.

227
00:10:08,760 --> 00:10:10,320
Speaker 3: Yeah, it's a really good question.

228
00:10:10,440 --> 00:10:12,880
Speaker 4: Is that there's also this notion that the banks are

229
00:10:12,880 --> 00:10:16,000
Speaker 4: going to see the benefit of a big IPO and

230
00:10:16,160 --> 00:10:17,040
Speaker 4: M and a cycle.

231
00:10:17,360 --> 00:10:19,040
Speaker 3: That could be a bit of a hope.

232
00:10:19,040 --> 00:10:22,720
Speaker 4: We are seeing good performance out of recently iPod stocks,

233
00:10:22,760 --> 00:10:25,560
Speaker 4: at least over the last couple of months, So maybe

234
00:10:25,559 --> 00:10:28,559
Speaker 4: that's something that can defrost the ice that has been

235
00:10:28,640 --> 00:10:30,920
Speaker 4: present for the last two years within that part of

236
00:10:30,960 --> 00:10:33,480
Speaker 4: the market. But I think it is an interesting point,

237
00:10:33,520 --> 00:10:36,480
Speaker 4: which is that markets have effectively priced out some of

238
00:10:36,480 --> 00:10:39,040
Speaker 4: this credit risk, saying that the economy is strong, so

239
00:10:39,080 --> 00:10:41,720
Speaker 4: we don't need as much compensation for credit risk. But

240
00:10:41,800 --> 00:10:44,640
Speaker 4: you're starting to see some pockets of weakness, and if

241
00:10:44,760 --> 00:10:48,680
Speaker 4: rates remain high, we can't forget that. You have a

242
00:10:48,679 --> 00:10:51,600
Speaker 4: big refinancing cycle that starts in twenty five and into

243
00:10:51,640 --> 00:10:54,520
Speaker 4: twenty six, and maybe that starts to pinch some.

244
00:10:54,520 --> 00:10:55,400
Speaker 3: Of these borrowers.

245
00:10:55,760 --> 00:10:57,200
Speaker 1: All right, Camera, I'm going to have to leave it.

246
00:10:57,200 --> 00:10:57,440
Speaker 7: There.

247
00:10:57,600 --> 00:10:59,480
Speaker 1: No better way to close out the year than a

248
00:10:59,520 --> 00:11:03,120
Speaker 1: conversation with Camera and Dawson to see Iisle over at

249
00:11:03,200 --> 00:11:15,160
Speaker 1: New Edge. Patrick joins us right now to talk a

250
00:11:15,200 --> 00:11:18,120
Speaker 1: little bit more about his outlook for energy prices, and

251
00:11:18,160 --> 00:11:20,240
Speaker 1: it's kind of a big contrast to what we saw

252
00:11:20,280 --> 00:11:22,640
Speaker 1: at the start of twenty twenty four when we had

253
00:11:22,800 --> 00:11:25,400
Speaker 1: that ten to fifteen percent rally and everybody was talking

254
00:11:25,400 --> 00:11:28,400
Speaker 1: about oil at one hundred bucks and beyond. And we've

255
00:11:28,400 --> 00:11:30,440
Speaker 1: come a long way since then, just not in the

256
00:11:30,480 --> 00:11:32,360
Speaker 1: right direction. Well, not in the right direction if you're

257
00:11:32,360 --> 00:11:33,120
Speaker 1: an oil producer.

258
00:11:34,200 --> 00:11:36,079
Speaker 6: Yeah, that's right. I think the bulls have been chased

259
00:11:36,080 --> 00:11:38,439
Speaker 6: away at least for now, and under the President Trump's

260
00:11:38,760 --> 00:11:40,920
Speaker 6: mantro drill, baby drill, I think it may be another

261
00:11:41,000 --> 00:11:43,520
Speaker 6: challenging year, at least for oil. Keep in mind OPEX

262
00:11:43,600 --> 00:11:46,800
Speaker 6: production cuts, keeping about five million barrels a day of

263
00:11:46,840 --> 00:11:50,120
Speaker 6: spare capacity offline. That's where some of the downside risks

264
00:11:50,120 --> 00:11:52,959
Speaker 6: potentially comes. Now. I don't necessarily believe that OPEC is

265
00:11:53,000 --> 00:11:55,400
Speaker 6: going to open this bigot back up in April. That's

266
00:11:55,440 --> 00:11:58,320
Speaker 6: what they've delayed their restoration to for now. But I

267
00:11:58,320 --> 00:12:01,160
Speaker 6: think it's going to be another challenging year for the upstream,

268
00:12:01,200 --> 00:12:03,880
Speaker 6: whereas you still are going to see your seasonal swings

269
00:12:03,920 --> 00:12:06,960
Speaker 6: when it comes to the midstream, the refiners. Maybe good

270
00:12:06,960 --> 00:12:09,480
Speaker 6: news though for pipeline operators who may be able to

271
00:12:09,520 --> 00:12:13,160
Speaker 6: expand a little bit more readily available. And then the

272
00:12:13,160 --> 00:12:15,400
Speaker 6: retail sector. I think the CE store level is going

273
00:12:15,400 --> 00:12:18,520
Speaker 6: to experience another good year. But for oil, you know,

274
00:12:18,760 --> 00:12:20,760
Speaker 6: there aren't a whole lot of upside risks now. I

275
00:12:20,800 --> 00:12:23,800
Speaker 6: think there's more downside potential than upside for twenty twenty five.

276
00:12:24,080 --> 00:12:26,120
Speaker 1: Just staying on oil for one second, particularly on the

277
00:12:26,160 --> 00:12:27,960
Speaker 1: production side, because I know there was a lot of

278
00:12:28,000 --> 00:12:32,040
Speaker 1: optimism about the Trump administration coming in, particularly given the

279
00:12:32,040 --> 00:12:34,480
Speaker 1: policies we saw the first time around. But there is

280
00:12:34,520 --> 00:12:36,920
Speaker 1: an issue of capacity right now and whether there is

281
00:12:37,080 --> 00:12:40,520
Speaker 1: anything to drill baby drill into that we haven't already

282
00:12:40,600 --> 00:12:42,200
Speaker 1: drilled baby drilled already into.

283
00:12:43,600 --> 00:12:46,679
Speaker 6: Yeah, I mean exactly right. The Permian has been maturing. Now.

284
00:12:46,720 --> 00:12:51,559
Speaker 6: There's been talk about potentially reopening the Arctic Wildlife Refuge,

285
00:12:51,559 --> 00:12:53,520
Speaker 6: so you know that's something there as well. But I

286
00:12:53,520 --> 00:12:56,200
Speaker 6: don't look for oil companies to go into rural Alaska

287
00:12:56,240 --> 00:12:58,559
Speaker 6: and to be really excited about potentially drilling there. I

288
00:12:58,600 --> 00:13:01,840
Speaker 6: think there's a lot of challenges with that. And keep

289
00:13:01,840 --> 00:13:04,560
Speaker 6: in mind getting that oil online could take potentially years,

290
00:13:04,559 --> 00:13:07,600
Speaker 6: if not longer than that. So the Permian is slowing down,

291
00:13:07,640 --> 00:13:10,920
Speaker 6: so there are potentially some upside there, but keep in mind,

292
00:13:10,920 --> 00:13:14,880
Speaker 6: ope spare capacity. Guyana as well seeing a huge increase

293
00:13:14,880 --> 00:13:17,600
Speaker 6: in capacity. Think one of the wild cards in terms

294
00:13:17,640 --> 00:13:19,920
Speaker 6: of risk. Keep in mind is that candidate sends US

295
00:13:19,920 --> 00:13:23,400
Speaker 6: over four million barrels of Canadian heavy oil every day

296
00:13:23,640 --> 00:13:25,920
Speaker 6: through a couple of different pipelines, and of course president

297
00:13:26,000 --> 00:13:29,280
Speaker 6: like Trump's promise on tariffs. I think that I'd like

298
00:13:29,320 --> 00:13:31,960
Speaker 6: to fall that hunder as talk, but you never really know.

299
00:13:32,200 --> 00:13:36,040
Speaker 6: And again, President Trump's kind of against the status quo

300
00:13:36,600 --> 00:13:38,680
Speaker 6: at least on some of these issues that do pose

301
00:13:38,720 --> 00:13:40,920
Speaker 6: a potential upside risk for oil in the year ahead.

302
00:13:41,480 --> 00:13:43,840
Speaker 8: I want to go to your outlook for twenty twenty five,

303
00:13:43,920 --> 00:13:47,040
Speaker 8: but first, can you just reflect back on the year

304
00:13:47,120 --> 00:13:52,160
Speaker 8: that was in oil WQI basically flat for twenty twenty four.

305
00:13:52,640 --> 00:13:57,199
Speaker 8: What was really driving that? I guess lack of movement.

306
00:13:58,600 --> 00:14:00,679
Speaker 6: Well, you know, on the supply side, Dopek had been

307
00:14:00,720 --> 00:14:02,880
Speaker 6: taking barrels out of the market. There wasn't a whole

308
00:14:02,920 --> 00:14:05,000
Speaker 6: lot to get excited. On the demand side of things,

309
00:14:05,080 --> 00:14:08,000
Speaker 6: China's economy has been incredibly weak. Not only that, but

310
00:14:08,000 --> 00:14:11,160
Speaker 6: they've been pushing evs much harder. And keep in mind

311
00:14:11,200 --> 00:14:14,160
Speaker 6: that their gasoline demand may have already peaked now moving forward,

312
00:14:14,160 --> 00:14:18,720
Speaker 6: and so Chinese demand is a huge headwind for this market.

313
00:14:19,160 --> 00:14:20,920
Speaker 6: And it comes as there's a lot of supply that

314
00:14:20,960 --> 00:14:24,000
Speaker 6: remains offline. In the US's back at producing record amounts

315
00:14:24,040 --> 00:14:26,680
Speaker 6: of crudal ourselves at about thirteen point six million barrels

316
00:14:26,720 --> 00:14:28,760
Speaker 6: a day. So I think a lot of this story

317
00:14:28,840 --> 00:14:32,040
Speaker 6: is really focused on the China economy that really has

318
00:14:32,040 --> 00:14:34,080
Speaker 6: struggled for much of this year. Now there's a promise

319
00:14:34,080 --> 00:14:37,840
Speaker 6: of stimulus moving forward, but there's simply too many spare

320
00:14:37,880 --> 00:14:40,520
Speaker 6: barrels sitting offline here for the market to really see

321
00:14:40,600 --> 00:14:42,560
Speaker 6: much of a run up. Now. I think we could

322
00:14:42,560 --> 00:14:45,080
Speaker 6: see a bit of a spring surge that may be

323
00:14:45,320 --> 00:14:48,360
Speaker 6: tied more to refined products, but we'll have to keep

324
00:14:48,400 --> 00:14:49,920
Speaker 6: an eye on the US economy. I mean, there's a

325
00:14:49,960 --> 00:14:52,600
Speaker 6: lot of potential possibilities that could slow our economy down,

326
00:14:52,640 --> 00:14:55,600
Speaker 6: which in turn could also slow down global oil consumption.

327
00:14:56,200 --> 00:14:58,880
Speaker 8: How do you think about inflation for twenty twenty five,

328
00:14:58,960 --> 00:15:02,560
Speaker 8: because at least the Federal Reserve, the FOMC members did

329
00:15:02,720 --> 00:15:05,600
Speaker 8: up their inflation projections. How do you kind of take

330
00:15:05,880 --> 00:15:09,479
Speaker 8: inflation into your forecast well.

331
00:15:09,600 --> 00:15:10,320
Speaker 7: As you indicate.

332
00:15:10,360 --> 00:15:12,040
Speaker 6: I mean a year ago, we were sitting here talking

333
00:15:12,040 --> 00:15:15,080
Speaker 6: about waiting for the Fed to cut interest rates rather aggressively,

334
00:15:15,120 --> 00:15:17,040
Speaker 6: and now they've really toned that down, and now there's

335
00:15:17,080 --> 00:15:19,920
Speaker 6: more caution in their statements, and that could post a

336
00:15:20,000 --> 00:15:23,200
Speaker 6: negative for oil as well. I don't think oil or

337
00:15:23,360 --> 00:15:26,720
Speaker 6: energy is going to be inflationary in twenty twenty five,

338
00:15:26,800 --> 00:15:30,600
Speaker 6: but it's obviously a risk factor. If the FED slows

339
00:15:30,680 --> 00:15:34,080
Speaker 6: down its interest rate cuts, there could be ramifications for

340
00:15:34,120 --> 00:15:36,480
Speaker 6: the dollar, and of course a dollar right now has

341
00:15:36,480 --> 00:15:39,040
Speaker 6: been fairly strong. So keep in mind that oil is

342
00:15:39,080 --> 00:15:41,400
Speaker 6: globally traded in dollars. That could even have an impact

343
00:15:41,400 --> 00:15:43,680
Speaker 6: on the price of oil and certainly something we'll be watching.

344
00:15:43,720 --> 00:15:44,600
Speaker 6: In your head.

345
00:15:44,800 --> 00:15:46,480
Speaker 1: I am curious that Patrick could maybe if you can

346
00:15:46,520 --> 00:15:49,240
Speaker 1: circle this back to the consumer. There was obviously a

347
00:15:49,240 --> 00:15:51,880
Speaker 1: lot of talk during this election cycle about gas prices,

348
00:15:51,880 --> 00:15:54,280
Speaker 1: despite the fact that at least as of today, gas

349
00:15:54,280 --> 00:15:56,680
Speaker 1: prices at the pumper about forty percent lower than where

350
00:15:56,680 --> 00:15:58,600
Speaker 1: they were I think about a year ago or so.

351
00:15:59,200 --> 00:16:01,440
Speaker 1: It gets to the question here as to whether we

352
00:16:01,520 --> 00:16:03,840
Speaker 1: see prices at the pump at the retail level kind

353
00:16:03,840 --> 00:16:06,400
Speaker 1: of remain where they are, maybe even go lower, or

354
00:16:06,440 --> 00:16:08,640
Speaker 1: are there some forces out there where maybe we should

355
00:16:08,640 --> 00:16:10,760
Speaker 1: prepare our sales for higher prices ahead.

356
00:16:11,800 --> 00:16:13,520
Speaker 6: Well, I think for consumers it's going to be a

357
00:16:13,560 --> 00:16:17,080
Speaker 6: third year straight of decline so ever since twenty twenty two,

358
00:16:17,160 --> 00:16:20,200
Speaker 6: the yearly national average again in twenty twenty five likely

359
00:16:20,240 --> 00:16:23,200
Speaker 6: to trend lower. Now, consumers shouldn't mistake that for flat

360
00:16:23,280 --> 00:16:25,560
Speaker 6: gas prices through the year, because we will see gas

361
00:16:25,600 --> 00:16:27,560
Speaker 6: prices start to go up as we get closer to

362
00:16:27,600 --> 00:16:30,120
Speaker 6: warmer weather. By the way, according to gas Pity data,

363
00:16:30,160 --> 00:16:32,440
Speaker 6: this morning one of those rare moments where the national

364
00:16:32,480 --> 00:16:35,480
Speaker 6: average has slipped below the three dollars a gallon mark.

365
00:16:35,600 --> 00:16:37,720
Speaker 6: I do think that will be temporary, and in the

366
00:16:37,760 --> 00:16:40,600
Speaker 6: spring we will see that surge. Prices will probably run

367
00:16:40,720 --> 00:16:43,520
Speaker 6: up twenty five to fifty cents a gallon, and they

368
00:16:43,560 --> 00:16:46,320
Speaker 6: could get closer to the mid and upper three dollars mark.

369
00:16:46,480 --> 00:16:48,240
Speaker 6: But that's going to stop short of what we saw

370
00:16:48,320 --> 00:16:50,320
Speaker 6: last year when the national average peaked at about three

371
00:16:50,440 --> 00:16:53,280
Speaker 6: sixty seven a gallon. So it's good news for consumers.

372
00:16:53,280 --> 00:16:56,280
Speaker 6: They probably won't be shelling out as much in twenty

373
00:16:56,320 --> 00:16:59,440
Speaker 6: twenty five. But keep in mind President Trump's promise to

374
00:16:59,480 --> 00:17:02,680
Speaker 6: cut energy prices in half. That's a big difference talking

375
00:17:02,680 --> 00:17:05,639
Speaker 6: about prices at three dollars versus his promise of cutting

376
00:17:05,640 --> 00:17:08,119
Speaker 6: them in half, which would represent a price below two dollars.

377
00:17:08,480 --> 00:17:10,919
Speaker 1: Yeah, something we haven't really seen on a sustained basis,

378
00:17:11,080 --> 00:17:14,480
Speaker 1: probably since I was in diapers. Patrick, I am curious

379
00:17:14,760 --> 00:17:19,280
Speaker 1: about this idea of an export economy for our energy.

380
00:17:19,320 --> 00:17:22,160
Speaker 1: We've obviously seen the US over the last few years

381
00:17:22,200 --> 00:17:25,520
Speaker 1: become energy independent, and of course now has a relatively

382
00:17:25,560 --> 00:17:30,199
Speaker 1: thriving export business. How much can that expand based on

383
00:17:30,240 --> 00:17:33,040
Speaker 1: our own demands here locally and how much is going

384
00:17:33,080 --> 00:17:34,920
Speaker 1: to be left over to ship out and sell to

385
00:17:34,960 --> 00:17:36,880
Speaker 1: other folks overseas well.

386
00:17:36,880 --> 00:17:38,720
Speaker 6: I mean, you look at US exports, A lot of

387
00:17:38,760 --> 00:17:41,399
Speaker 6: that is lighter, sweeter crude oil, and really the bigger

388
00:17:41,440 --> 00:17:44,920
Speaker 6: boom is LNG, and that's what certainly could expand under

389
00:17:44,920 --> 00:17:47,640
Speaker 6: President Trump, the exports of LNG. I mean, he's already

390
00:17:48,200 --> 00:17:51,040
Speaker 6: threatening Europe that if they don't buy additional US energy

391
00:17:51,080 --> 00:17:53,160
Speaker 6: that there's going to be ramifications. And I do think

392
00:17:53,160 --> 00:17:54,120
Speaker 6: there's room to grow.

393
00:17:54,520 --> 00:17:54,639
Speaker 4: Well.

394
00:17:54,800 --> 00:17:57,320
Speaker 6: Natural gas prices have been blossoming here in the last

395
00:17:57,359 --> 00:17:59,840
Speaker 6: couple of months on the promise of potential more exports.

396
00:17:59,880 --> 00:18:02,760
Speaker 6: Now natural gas now above the three dollars mark, so

397
00:18:02,800 --> 00:18:04,719
Speaker 6: I think there is room to grow. The US is

398
00:18:04,760 --> 00:18:07,960
Speaker 6: the world's largest any energy producer, and I think we'll

399
00:18:08,000 --> 00:18:10,119
Speaker 6: probably see that continue to grow in the years ahead,

400
00:18:10,200 --> 00:18:15,040
Speaker 6: especially as Russia continues it's war in Ukraine and Europe

401
00:18:15,119 --> 00:18:17,080
Speaker 6: continues to turn to the US. So I think there's

402
00:18:17,119 --> 00:18:20,040
Speaker 6: a lot of premise in US exports, and again look

403
00:18:20,080 --> 00:18:23,080
Speaker 6: for exports, especially of LNG and crude oil to continue

404
00:18:23,080 --> 00:18:26,480
Speaker 6: increasing this year as countries potentially make the shift, and

405
00:18:26,560 --> 00:18:30,080
Speaker 6: as President Trump may push countries to make the switch

406
00:18:30,080 --> 00:18:31,000
Speaker 6: over to US energy.

407
00:18:31,440 --> 00:18:35,760
Speaker 8: Patrick, what geopolitical risks are you looking at for twenty

408
00:18:35,840 --> 00:18:39,160
Speaker 8: twenty five that could potentially pose a risk to your forecasts?

409
00:18:40,280 --> 00:18:42,199
Speaker 6: Well, again, I think President Trump is a bit of

410
00:18:42,200 --> 00:18:45,040
Speaker 6: a wildcard. You know, what he says and what he does.

411
00:18:45,400 --> 00:18:47,320
Speaker 6: It's a little bit against the status quo to come

412
00:18:47,359 --> 00:18:49,840
Speaker 6: out and you know, talk about potentially putting tariffs on

413
00:18:50,640 --> 00:18:54,000
Speaker 6: oil and other things, everything really from Canada and Mexico.

414
00:18:54,160 --> 00:18:58,680
Speaker 6: So the political relationships could shift in the years ahead.

415
00:18:58,680 --> 00:19:01,399
Speaker 6: And keep in mind China still really big one. How

416
00:19:01,440 --> 00:19:05,080
Speaker 6: they're shifting away from fossil fuels is a big turning

417
00:19:05,080 --> 00:19:09,000
Speaker 6: point here. They've potentially already seen peak consumption. We turned

418
00:19:09,040 --> 00:19:11,880
Speaker 6: to India to see growth there as well. And there's

419
00:19:11,920 --> 00:19:14,359
Speaker 6: a lot of geopolitical issues. The Middle East has been

420
00:19:14,440 --> 00:19:17,080
Speaker 6: quieting down, but there's still the potential of conflict there

421
00:19:17,080 --> 00:19:20,159
Speaker 6: in Russia's invasion of Ukraine certainly something to keep an

422
00:19:20,160 --> 00:19:23,680
Speaker 6: eye on. But I think geopolitically, with somebody like President

423
00:19:23,680 --> 00:19:27,120
Speaker 6: Trump in the White House, he may strong arm other

424
00:19:27,160 --> 00:19:30,680
Speaker 6: countries into potentially doing what he likes a little bit more,

425
00:19:31,240 --> 00:19:35,480
Speaker 6: and that certainly could keep energy prices from climbing much

426
00:19:35,480 --> 00:19:37,520
Speaker 6: more substantially if he uses that strong arm.

427
00:19:37,640 --> 00:19:40,040
Speaker 1: Frequent life curious, do you think there will be any

428
00:19:40,080 --> 00:19:43,560
Speaker 1: sort of meaningful global coordination on some of this? Obviously

429
00:19:43,560 --> 00:19:46,080
Speaker 1: we know OPEK plus has its own cartel, but in

430
00:19:46,119 --> 00:19:49,400
Speaker 1: the past we had seen I guess, cooperation for lack

431
00:19:49,440 --> 00:19:51,680
Speaker 1: of a better word, among some of the other major

432
00:19:51,680 --> 00:19:54,720
Speaker 1: oil producers that aren't in OPEK in dealing with OPEK

433
00:19:54,880 --> 00:19:57,600
Speaker 1: Or is this the relationship so fractured and so disparate

434
00:19:57,680 --> 00:20:00,320
Speaker 1: right now that investors she really shouldn't pay any attention

435
00:20:00,359 --> 00:20:00,560
Speaker 1: to that.

436
00:20:01,560 --> 00:20:04,120
Speaker 6: Well, I think it is certainly fractured. I think there's

437
00:20:04,160 --> 00:20:07,040
Speaker 6: a dissension amongst the ranks at OPEK. I mean, we've

438
00:20:07,040 --> 00:20:09,680
Speaker 6: already seen some of that. Some countries certainly want to

439
00:20:09,760 --> 00:20:12,879
Speaker 6: raise production, Saudi Arabia and Russia kind of going against that,

440
00:20:13,040 --> 00:20:16,080
Speaker 6: trying to hold the line. The Saudis are spending a

441
00:20:16,080 --> 00:20:17,760
Speaker 6: lot of money and they have a lot at stake

442
00:20:17,800 --> 00:20:20,960
Speaker 6: here if oil prices were to decline even more significantly,

443
00:20:21,040 --> 00:20:25,240
Speaker 6: So there's certainly some driving factors. But again some OPEC

444
00:20:25,320 --> 00:20:27,679
Speaker 6: members do want to increase production while others do not,

445
00:20:27,800 --> 00:20:30,440
Speaker 6: And that's something to keep an eye on because certainly

446
00:20:31,040 --> 00:20:32,879
Speaker 6: not as coordinated as it once was.

447
00:20:33,200 --> 00:20:36,600
Speaker 1: All Right, Patrick Craig Patrick Dahan, overhead gas buddy of

448
00:20:47,160 --> 00:20:49,679
Speaker 1: Terry Haynes a Pangaea policy, joins us right now to

449
00:20:49,720 --> 00:20:52,160
Speaker 1: help reflect on the life and legacy of Jimmy Carter.

450
00:20:52,240 --> 00:20:53,440
Speaker 1: A lot of important dates there.

451
00:20:53,480 --> 00:20:54,400
Speaker 7: We talk about.

452
00:20:54,320 --> 00:20:58,399
Speaker 1: January ninth being a day of reflection and remembrance, of

453
00:20:58,400 --> 00:21:01,760
Speaker 1: course his birthday October first, back in nineteen twenty four,

454
00:21:01,840 --> 00:21:04,240
Speaker 1: his death of course on December twenty ninth. But I

455
00:21:04,280 --> 00:21:07,600
Speaker 1: want to start Terry with July fifteenth, nineteen seventy nine.

456
00:21:07,640 --> 00:21:10,600
Speaker 1: That was the day that Carter gave that famous Malaise

457
00:21:10,680 --> 00:21:13,400
Speaker 1: speech and just a few weeks after that appointed Paul

458
00:21:13,480 --> 00:21:15,840
Speaker 1: Vulker as Chairman of the FED to fight what at

459
00:21:15,840 --> 00:21:19,360
Speaker 1: the time was just an almost unprecedented level of inflation

460
00:21:19,400 --> 00:21:22,240
Speaker 1: that this nation was facing, a levelly of the inflation

461
00:21:22,320 --> 00:21:25,080
Speaker 1: that for years he didn't necessarily get credit for taming.

462
00:21:26,600 --> 00:21:29,040
Speaker 9: Oh, I think that's absolutely true, Ramaan, good morning to

463
00:21:29,080 --> 00:21:33,040
Speaker 9: you and Critty. I think it's absolutely true. You know,

464
00:21:33,359 --> 00:21:35,520
Speaker 9: I said to Marcus this morning, I think they should

465
00:21:35,520 --> 00:21:40,439
Speaker 9: all thank and remember Carter for the crucial role that

466
00:21:40,520 --> 00:21:44,200
Speaker 9: he played in breaking the back of inflation.

467
00:21:43,840 --> 00:21:44,920
Speaker 7: Over several years.

468
00:21:45,000 --> 00:21:49,240
Speaker 9: I mean, that was as well as not only appointing

469
00:21:49,240 --> 00:21:55,480
Speaker 9: Paul Vulker, but defending Vulgar personally and fed independence through

470
00:21:55,560 --> 00:21:59,640
Speaker 9: his term, something which President Reagan also did no small

471
00:21:59,640 --> 00:22:02,360
Speaker 9: pull up cost to Reagan, even though he eventually got

472
00:22:02,359 --> 00:22:06,439
Speaker 9: the benefits out of it. You know, that set the

473
00:22:06,520 --> 00:22:09,960
Speaker 9: stage for not only you know, the great markets runs

474
00:22:09,960 --> 00:22:13,840
Speaker 9: that we've seen, even through you know, great geopolitical crises,

475
00:22:14,280 --> 00:22:17,520
Speaker 9: health crises like COVID, a bunch of other things, but

476
00:22:17,600 --> 00:22:20,600
Speaker 9: also set the stage in helping the United States win

477
00:22:20,680 --> 00:22:25,240
Speaker 9: the Cold War by boosting the relative economic strength of

478
00:22:25,280 --> 00:22:29,879
Speaker 9: the United States against the Soviet Union at a crucial time.

479
00:22:30,119 --> 00:22:32,640
Speaker 1: It's kind of interesting to read some of the biographies

480
00:22:32,920 --> 00:22:34,720
Speaker 1: of Carter, particularly some of the ones that have come

481
00:22:34,720 --> 00:22:36,880
Speaker 1: out over the last decade or so that have really

482
00:22:36,880 --> 00:22:39,040
Speaker 1: painted him, I think, in a much better light than

483
00:22:39,080 --> 00:22:42,359
Speaker 1: maybe how the country viewed him back in nineteen eighty

484
00:22:42,359 --> 00:22:45,120
Speaker 1: when he lost to Ronald Reagan. And I am curious

485
00:22:45,160 --> 00:22:48,080
Speaker 1: that if it weren't for the hostage crisis in Iran,

486
00:22:48,240 --> 00:22:51,520
Speaker 1: the oil embargo, and of course the level of inflation.

487
00:22:51,920 --> 00:22:54,240
Speaker 1: Is it possible that he might have been re elected

488
00:22:54,320 --> 00:22:55,399
Speaker 1: in nineteen eighty.

489
00:22:55,800 --> 00:22:56,879
Speaker 7: Oh sure, absolutely.

490
00:22:57,800 --> 00:23:02,400
Speaker 9: You know, the President Reagan's run, the then candidate Reagan's

491
00:23:02,440 --> 00:23:06,680
Speaker 9: run began fairly late, uh and and Carter was absolutely

492
00:23:06,720 --> 00:23:11,439
Speaker 9: bedeviled by a lot of these policies. You know, I've

493
00:23:11,560 --> 00:23:14,560
Speaker 9: met President Carter, but I was privileged to know a

494
00:23:14,560 --> 00:23:17,160
Speaker 9: lot of the people that were his senior aides, most

495
00:23:17,200 --> 00:23:21,840
Speaker 9: prominently including Jody Powell, who I knew decently well and

496
00:23:22,119 --> 00:23:24,800
Speaker 9: so got a window into a lot of these things.

497
00:23:24,880 --> 00:23:30,280
Speaker 9: And you know, Carter's Carter's strengths turned out also to

498
00:23:30,320 --> 00:23:31,520
Speaker 9: be some of his weaknesses.

499
00:23:31,560 --> 00:23:31,760
Speaker 6: You know.

500
00:23:31,840 --> 00:23:35,960
Speaker 9: The mulishness and commitment that he showed to Vulcar, which

501
00:23:36,000 --> 00:23:39,240
Speaker 9: made such a huge difference for the country even today,

502
00:23:40,040 --> 00:23:43,280
Speaker 9: was also in large part what helped bring him down.

503
00:23:43,520 --> 00:23:46,520
Speaker 9: He had a split in his own party that led

504
00:23:46,520 --> 00:23:49,480
Speaker 9: to a primary challenge from Ted Kennedy. He had a

505
00:23:49,520 --> 00:23:55,400
Speaker 9: revitalized right under Reagan that ultimately that ultimately swept him

506
00:23:55,400 --> 00:23:56,040
Speaker 9: out of office.

507
00:23:56,359 --> 00:23:59,000
Speaker 7: And he also was guilty.

508
00:23:58,640 --> 00:24:02,479
Speaker 9: Of probably too much candor in talking to the American public.

509
00:24:02,560 --> 00:24:05,360
Speaker 7: About things lays that you bring up that.

510
00:24:05,440 --> 00:24:07,520
Speaker 9: Led to the impression that he was either out of

511
00:24:07,520 --> 00:24:09,679
Speaker 9: control or unable to respond effectively.

512
00:24:11,560 --> 00:24:13,840
Speaker 10: So, Terry, that's a lot of the domesticstoril. Let's talk

513
00:24:13,840 --> 00:24:16,880
Speaker 10: about his record internationally as foreign policy record, the Camp

514
00:24:16,920 --> 00:24:21,159
Speaker 10: David Accords, his role in the Panama Canal, even boycotting

515
00:24:21,160 --> 00:24:23,760
Speaker 10: the Moscow Olympics as well. These are all flashpoints that

516
00:24:23,800 --> 00:24:26,400
Speaker 10: are just as relevant today as they were during during

517
00:24:26,400 --> 00:24:29,600
Speaker 10: his tenure as president. What does Donald Trump take away

518
00:24:29,600 --> 00:24:31,040
Speaker 10: from that? Are there lessons to be learned?

519
00:24:32,359 --> 00:24:35,720
Speaker 9: Absolutely, And the first lesson to be learned, I think

520
00:24:35,960 --> 00:24:41,520
Speaker 9: is that the presidency has limits. You know, every victor

521
00:24:41,600 --> 00:24:44,919
Speaker 9: in a presidential campaign, and you know the people around

522
00:24:45,000 --> 00:24:47,440
Speaker 9: him tend to be a little triumphalist. They all want

523
00:24:47,480 --> 00:24:51,080
Speaker 9: to talk about the legacies and or excuse me, mandates

524
00:24:51,080 --> 00:24:54,840
Speaker 9: and the like. You know, Clinton came in in ninety

525
00:24:54,840 --> 00:24:57,720
Speaker 9: two talking about a mandate when he had basically won

526
00:24:57,800 --> 00:24:59,879
Speaker 9: forty three percent of the vote. You know, there's the

527
00:25:00,000 --> 00:25:03,320
Speaker 9: there's always a lot of salesmanship that involved in it.

528
00:25:03,359 --> 00:25:06,719
Speaker 9: But the lesson you can learn from a from Carter's presidency,

529
00:25:06,760 --> 00:25:09,840
Speaker 9: and you know a lot of presidencies, frankly is that

530
00:25:09,960 --> 00:25:14,480
Speaker 9: presidency has limits and it is uh, it's wise to

531
00:25:14,600 --> 00:25:18,679
Speaker 9: remember those even even while you're trying to maximize your

532
00:25:18,680 --> 00:25:22,880
Speaker 9: political benefit in the moment. Uh. You know, Carter. What

533
00:25:22,960 --> 00:25:27,440
Speaker 9: Carter's presidency showed really was that he found it very

534
00:25:27,440 --> 00:25:30,240
Speaker 9: difficult to bring his own congressional party along with him.

535
00:25:30,960 --> 00:25:33,520
Speaker 9: Congress is a co equal branch for government and acts

536
00:25:33,600 --> 00:25:38,000
Speaker 9: like it. Uh and uh, and he didn't. And Carter's also,

537
00:25:38,160 --> 00:25:41,240
Speaker 9: while president, did not bring the public along with him

538
00:25:41,720 --> 00:25:45,720
Speaker 9: as much as as try to try to lead public opinion,

539
00:25:45,920 --> 00:25:48,400
Speaker 9: and that also came back to bite him. So it's

540
00:25:48,440 --> 00:25:51,720
Speaker 9: a balancing act with presidents, and any any president after

541
00:25:51,800 --> 00:25:53,800
Speaker 9: Carter was wise to remember that.

542
00:25:55,840 --> 00:25:58,800
Speaker 10: Terry, we we talk a lot about energy security, and

543
00:25:59,000 --> 00:26:02,040
Speaker 10: we certainly did and the contents of oil embargo during

544
00:26:02,359 --> 00:26:04,880
Speaker 10: during Carter's time as president, but we're also talking about

545
00:26:04,920 --> 00:26:07,000
Speaker 10: it now in terms of tariffs, in terms of what's

546
00:26:07,040 --> 00:26:08,840
Speaker 10: going on in the Middle East, and the idea that the

547
00:26:08,880 --> 00:26:11,240
Speaker 10: United States is the largest energy exporter in the world

548
00:26:11,359 --> 00:26:14,000
Speaker 10: at the moment. What does that mean for the here

549
00:26:14,080 --> 00:26:16,440
Speaker 10: and now when we're talking about modern politics. Is that

550
00:26:17,040 --> 00:26:18,640
Speaker 10: is that a good thing or is that a bad

551
00:26:18,680 --> 00:26:20,400
Speaker 10: thing for the United States?

552
00:26:21,520 --> 00:26:23,320
Speaker 9: On balance, I think it's a good thing. I mean,

553
00:26:23,359 --> 00:26:27,359
Speaker 9: we you know, we have strengths and weaknesses geopolitically, but

554
00:26:27,440 --> 00:26:31,280
Speaker 9: one of our geopolitical strengths is energy and energy export.

555
00:26:31,720 --> 00:26:34,119
Speaker 9: And we are in a situation now where we're in

556
00:26:34,760 --> 00:26:39,719
Speaker 9: the most difficult geopolitical risk situation in more than fifty years.

557
00:26:40,040 --> 00:26:43,160
Speaker 9: So it be who's the United States, no matter who's president, frankly,

558
00:26:43,240 --> 00:26:49,040
Speaker 9: to make sure that it uses its advantages wisely, but

559
00:26:49,080 --> 00:26:52,439
Speaker 9: that it maximizes those advantages as well. Certainly energy is

560
00:26:52,440 --> 00:26:54,960
Speaker 9: one of those. And you know, I frankly look to

561
00:26:54,960 --> 00:26:58,639
Speaker 9: the next administration and President Trump personally to try to

562
00:26:58,680 --> 00:27:00,840
Speaker 9: do everything possible to maximum is that advantage.

563
00:27:01,359 --> 00:27:04,359
Speaker 1: Let's talk about President Trump, the forty seventh president, his

564
00:27:04,400 --> 00:27:08,159
Speaker 1: inauguration on January twentieth, what is his relationship going to

565
00:27:08,240 --> 00:27:12,160
Speaker 1: be like with world leaders, particularly in contrast to kind

566
00:27:12,160 --> 00:27:14,920
Speaker 1: of what we saw with Carter back in the seventies.

567
00:27:15,000 --> 00:27:17,080
Speaker 1: I know, there are two completely different people with two

568
00:27:17,080 --> 00:27:20,439
Speaker 1: completely different agendas here, But are there any parallels that

569
00:27:20,480 --> 00:27:20,920
Speaker 1: we can draw?

570
00:27:21,640 --> 00:27:21,840
Speaker 6: Oh?

571
00:27:21,840 --> 00:27:25,680
Speaker 9: Absolutely, And I think Carter had you know, it's Carter

572
00:27:25,760 --> 00:27:29,560
Speaker 9: had a very fractious relationship with many with many countries

573
00:27:29,560 --> 00:27:33,520
Speaker 9: in the world. You know, his China policy was very successful.

574
00:27:33,560 --> 00:27:35,679
Speaker 9: But on the other hand, you know, even coming up

575
00:27:35,720 --> 00:27:39,639
Speaker 9: with the Camp David Accords required that kind of hardheadedness,

576
00:27:39,720 --> 00:27:44,679
Speaker 9: that mulishness that I lauded him for earlier on monetary

577
00:27:44,720 --> 00:27:48,600
Speaker 9: and economic policy, and he succeeded in that. He did

578
00:27:49,680 --> 00:27:55,400
Speaker 9: not shrink from from confronting world leaders in a way

579
00:27:55,480 --> 00:28:01,680
Speaker 9: that he tried to push the benefit of peace and

580
00:28:02,920 --> 00:28:06,760
Speaker 9: the United States a gemony. Frankly, this is a different world,

581
00:28:07,640 --> 00:28:11,640
Speaker 9: but you know Trump is has that same broadly kind

582
00:28:11,640 --> 00:28:15,280
Speaker 9: of push poll relationship and fractiousness. It's going to be

583
00:28:15,880 --> 00:28:18,040
Speaker 9: you know, the thing I would just say to President

584
00:28:18,080 --> 00:28:21,280
Speaker 9: Trump is, you know, a spoonful of sugar will really

585
00:28:21,280 --> 00:28:24,880
Speaker 9: help a little bit. He's he's been largely succeeding in

586
00:28:25,200 --> 00:28:28,439
Speaker 9: pushing allies towards a greater defense spending and a variety

587
00:28:28,480 --> 00:28:32,600
Speaker 9: of other things. He can continue that, but it's going

588
00:28:32,680 --> 00:28:35,120
Speaker 9: to take a little more. It's going to take some finesse,

589
00:28:35,200 --> 00:28:38,440
Speaker 9: and then he's shown the ability to at least understand that,

590
00:28:38,480 --> 00:28:39,200
Speaker 9: and that's a good thing.

591
00:28:39,880 --> 00:28:43,120
Speaker 1: Terry, appreciate you coming on. Obviously we had a totally

592
00:28:43,120 --> 00:28:45,440
Speaker 1: different conversation planned for you, but really great to get

593
00:28:45,480 --> 00:28:47,920
Speaker 1: your insights on the life and legacy of Jimmy Carter,

594
00:28:48,040 --> 00:28:50,360
Speaker 1: Terry Haynes, there of Pangaea policy.

595
00:28:51,240 --> 00:28:54,800
Speaker 2: This is the Bloomberg Seventans podcast, bringing you the best

596
00:28:54,840 --> 00:28:58,160
Speaker 2: in markets, economics, antient politics. You can watch the show

597
00:28:58,200 --> 00:29:00,960
Speaker 2: live on Bloomberg TV week more links from six am

598
00:29:01,080 --> 00:29:04,240
Speaker 2: to nine am Eastern. Subscribe to the podcast on Apple,

599
00:29:04,520 --> 00:29:07,360
Speaker 2: Spotify or anywhere else you listen, and as always on

600
00:29:07,360 --> 00:29:14,200
Speaker 2: the Bloomberg Terminal and The Bloomberg Business OLM