1 00:00:02,440 --> 00:00:09,119 Speaker 1: Bloomberg Audio Studios, podcasts, radio news. You're listening to the 2 00:00:09,160 --> 00:00:13,320 Speaker 1: Bloomberg Intelligence Podcast. Catch us live weekdays at ten am 3 00:00:13,360 --> 00:00:17,040 Speaker 1: Eastern on Applecarplay and Android Auto with the Bloomberg Business App. 4 00:00:17,079 --> 00:00:20,320 Speaker 1: Listen on demand wherever you get your podcasts, or watch 5 00:00:20,360 --> 00:00:23,000 Speaker 1: us live on YouTube. 6 00:00:22,680 --> 00:00:24,919 Speaker 2: Now Every week around this time, we also bring your 7 00:00:24,960 --> 00:00:28,479 Speaker 2: research from Bloomberg and EF. It is new Energy finance 8 00:00:28,520 --> 00:00:30,800 Speaker 2: and it's powered by data sets and models, and it 9 00:00:30,840 --> 00:00:34,640 Speaker 2: looks at things like commodities, power, transport, industry, buildings, AG 10 00:00:34,760 --> 00:00:38,640 Speaker 2: sectors and talks about how businesses and governments can finance 11 00:00:38,760 --> 00:00:43,000 Speaker 2: and navigate change and as we transition to a green 12 00:00:43,159 --> 00:00:45,839 Speaker 2: energy future. And so today we're going to take a 13 00:00:45,840 --> 00:00:50,640 Speaker 2: look at US oil supply and basically global oil supply. 14 00:00:50,800 --> 00:00:53,280 Speaker 2: Really there is a falling rig count and the question 15 00:00:53,360 --> 00:00:55,800 Speaker 2: is does that mean we're going to see falling oil production? 16 00:00:55,840 --> 00:00:58,480 Speaker 2: And if not why Joining us now at the Interactive 17 00:00:58,480 --> 00:01:02,400 Speaker 2: Broker Studio is Tylou, global oil supply specialist over at 18 00:01:02,400 --> 00:01:05,760 Speaker 2: Bloomberg BNF. So Ty walk us through sort of the 19 00:01:05,800 --> 00:01:08,840 Speaker 2: picture when it comes to how many wells we have 20 00:01:09,120 --> 00:01:10,480 Speaker 2: just at this stage for US. 21 00:01:10,959 --> 00:01:14,720 Speaker 3: Yeah, yeah, So I think the declining recont in the 22 00:01:14,800 --> 00:01:16,760 Speaker 3: US that we've seen, it's not going to have that 23 00:01:16,880 --> 00:01:19,520 Speaker 3: much that bigger for an impact as it seems as 24 00:01:19,600 --> 00:01:22,240 Speaker 3: much as the headline number suggests. And part of the 25 00:01:22,319 --> 00:01:24,760 Speaker 3: reasons that is because like if you look at the Permian, 26 00:01:25,760 --> 00:01:29,039 Speaker 3: where we have the biggest all production region in the 27 00:01:29,160 --> 00:01:33,080 Speaker 3: US the world, completions is only done about four and 28 00:01:33,120 --> 00:01:35,959 Speaker 3: a half percent compared to the recount which is done 29 00:01:35,959 --> 00:01:38,960 Speaker 3: about fifteen percent, and so and on top of that, 30 00:01:39,000 --> 00:01:41,480 Speaker 3: you have a lot of efficiency gains in the sector, 31 00:01:41,600 --> 00:01:43,880 Speaker 3: so you are able to complete a lot more wells 32 00:01:44,120 --> 00:01:47,760 Speaker 3: with much fewer freight crews across the industry. So I 33 00:01:47,760 --> 00:01:50,440 Speaker 3: think the recon number could be a little bit misceeding 34 00:01:50,480 --> 00:01:51,760 Speaker 3: if you're focusing too much on that. 35 00:01:52,640 --> 00:01:55,840 Speaker 4: So I'm spres just just looking at your report here 36 00:01:55,880 --> 00:01:58,840 Speaker 4: and seeing how production in the US continues to increase, 37 00:01:58,840 --> 00:02:00,360 Speaker 4: but maybe at the slower rate. 38 00:02:01,080 --> 00:02:01,480 Speaker 5: I don't know. 39 00:02:02,560 --> 00:02:05,040 Speaker 4: I got WTI coroyal seventy seven bucks. Why don't I 40 00:02:05,120 --> 00:02:06,840 Speaker 4: drill some more? I can make money. I mean, it 41 00:02:06,840 --> 00:02:08,760 Speaker 4: only costs those guys for the bucks to get it 42 00:02:08,800 --> 00:02:09,519 Speaker 4: out of the ground. 43 00:02:09,360 --> 00:02:11,160 Speaker 3: Right, Yeah, yeah, for sure. Yeah, So when we look 44 00:02:11,160 --> 00:02:14,720 Speaker 3: at brick evens, especially in the Perman it's probably around 45 00:02:14,720 --> 00:02:17,160 Speaker 3: in the low to mid forties for their Miden basin, 46 00:02:17,639 --> 00:02:19,680 Speaker 3: and then for the Darrow basins probably even lower than 47 00:02:19,720 --> 00:02:22,040 Speaker 3: that because they produce a lot more gas. But part 48 00:02:22,080 --> 00:02:24,639 Speaker 3: of the reason is because the us L patch has 49 00:02:24,760 --> 00:02:28,920 Speaker 3: really pivoted and transformed itself in the past couple of years. Now, 50 00:02:29,000 --> 00:02:33,640 Speaker 3: before the pandemic, all producers were very much focused on 51 00:02:33,720 --> 00:02:37,680 Speaker 3: production growth. But after the pandemic, the industry has changed 52 00:02:37,919 --> 00:02:41,839 Speaker 3: and now they're focusing on financial returns. Now, in order 53 00:02:41,880 --> 00:02:44,960 Speaker 3: to improve the financial returns, they have to become more efficient. 54 00:02:45,600 --> 00:02:47,280 Speaker 3: So in the past few years you have seen a 55 00:02:47,360 --> 00:02:51,480 Speaker 3: lot of cost cutting initiatives, a lot of optimizations on 56 00:02:51,560 --> 00:02:55,280 Speaker 3: logistics and supply chains, a lot of investments in infrastructures. 57 00:02:55,480 --> 00:02:58,000 Speaker 3: So the entire industry has become a lot more efficient 58 00:02:58,320 --> 00:03:00,840 Speaker 3: in the past couple of years. And on top of that, 59 00:03:01,000 --> 00:03:04,440 Speaker 3: they have also become a lot more resident And what 60 00:03:04,480 --> 00:03:08,400 Speaker 3: that means is that nowadays the USL industry can produce 61 00:03:08,440 --> 00:03:12,360 Speaker 3: a lots more oil with much lower capital investments compared 62 00:03:12,360 --> 00:03:13,720 Speaker 3: to like just five years ago. 63 00:03:14,240 --> 00:03:16,799 Speaker 2: Also, what are the cool things that oil companies are 64 00:03:16,800 --> 00:03:19,920 Speaker 2: doing to extract more oil out of rock. At the 65 00:03:20,000 --> 00:03:21,280 Speaker 2: end of the day, I mean I went to a 66 00:03:21,320 --> 00:03:23,639 Speaker 2: conference but a year ago and everyone was like, ooh, 67 00:03:23,680 --> 00:03:25,680 Speaker 2: three mile laterals. And what that means is that you 68 00:03:25,680 --> 00:03:27,920 Speaker 2: basically drill a pipe down and then you drill it 69 00:03:27,960 --> 00:03:32,800 Speaker 2: across the rock basically lateral, and you fracture it. And 70 00:03:32,880 --> 00:03:35,720 Speaker 2: the longer you go, in theory, the more rock you'll 71 00:03:35,760 --> 00:03:38,120 Speaker 2: be able to access, and then in theory, the more 72 00:03:38,160 --> 00:03:41,880 Speaker 2: oil you'll get out of that rock. Wow, is that 73 00:03:41,920 --> 00:03:42,360 Speaker 2: too nerdy? 74 00:03:43,040 --> 00:03:43,120 Speaker 6: No? 75 00:03:43,160 --> 00:03:46,840 Speaker 4: Okay, cool, I've learned that frackening is short for fracturing. Yes, 76 00:03:46,880 --> 00:03:47,360 Speaker 4: I didn't know that. 77 00:03:47,400 --> 00:03:51,520 Speaker 2: Good job, we learned things here at Boomberg Intelligence. So 78 00:03:52,160 --> 00:03:54,280 Speaker 2: based on that, what are the cool technologies that are 79 00:03:54,280 --> 00:03:56,480 Speaker 2: coming up that's going to enable even more oil to 80 00:03:56,480 --> 00:03:57,200 Speaker 2: come out of the rock? 81 00:03:57,720 --> 00:04:00,520 Speaker 3: Yeah, So during these longer letters, it's definitely like a 82 00:04:00,560 --> 00:04:04,520 Speaker 3: big part of these efficiency games because you're reducing a 83 00:04:04,520 --> 00:04:07,240 Speaker 3: lot of the service costs when you're during longer letters, 84 00:04:07,440 --> 00:04:09,440 Speaker 3: and like you said, Alex, you're making a lot more 85 00:04:09,480 --> 00:04:13,080 Speaker 3: contact with the source rock, so you can pull out 86 00:04:13,120 --> 00:04:16,160 Speaker 3: a lot more resources from the same well. Had some 87 00:04:16,240 --> 00:04:20,000 Speaker 3: of these, like I guess, better practices would be having 88 00:04:20,000 --> 00:04:24,160 Speaker 3: a lot more building out the water handling infrastructure. Some 89 00:04:24,240 --> 00:04:26,800 Speaker 3: of them will be optimizing your frag designs. Some of 90 00:04:26,839 --> 00:04:29,440 Speaker 3: them would be let me see what else, I'm optimizing 91 00:04:29,480 --> 00:04:32,520 Speaker 3: your spacing between the wells. So a lot of these 92 00:04:32,560 --> 00:04:36,120 Speaker 3: like see many small things on individually, when they act together, 93 00:04:36,360 --> 00:04:39,799 Speaker 3: they can have a big impact, especially over time. For example, 94 00:04:39,800 --> 00:04:42,840 Speaker 3: one of the big producers in the perman I was 95 00:04:42,880 --> 00:04:44,880 Speaker 3: looking at the data and they were able to reduce 96 00:04:44,960 --> 00:04:48,480 Speaker 3: them costs per the well cause per letter foot by 97 00:04:48,480 --> 00:04:53,120 Speaker 3: about thirty percent between twenty yes, between twenty nineteen and 98 00:04:53,400 --> 00:04:56,120 Speaker 3: twenty twenty four. So there's a huge gains in terms 99 00:04:56,160 --> 00:04:57,000 Speaker 3: of percentage. 100 00:04:57,400 --> 00:04:59,599 Speaker 4: All right, So I thought, if you go into like 101 00:05:00,360 --> 00:05:03,120 Speaker 4: you find some shale somewhere, don't you do you? Don't 102 00:05:03,160 --> 00:05:06,120 Speaker 4: you do your good wells, your easy wells first, and 103 00:05:06,160 --> 00:05:08,320 Speaker 4: then shouldn't the productivity decline over time? 104 00:05:08,640 --> 00:05:08,839 Speaker 1: Yeah? 105 00:05:08,880 --> 00:05:12,279 Speaker 3: That's exactly pretty muchre what we've seen, like you said, 106 00:05:13,040 --> 00:05:15,320 Speaker 3: in the US, the oil and gas companies. So they 107 00:05:15,320 --> 00:05:17,040 Speaker 3: do is they drew their best say which first, because 108 00:05:17,040 --> 00:05:18,680 Speaker 3: they want to realize that that person why you have 109 00:05:19,760 --> 00:05:22,760 Speaker 3: better weals. And when we look at the data for 110 00:05:22,760 --> 00:05:26,480 Speaker 3: the past five years, what we're seeing is that all 111 00:05:26,520 --> 00:05:29,360 Speaker 3: production on a well level basis has been declining every 112 00:05:29,400 --> 00:05:31,400 Speaker 3: year for the past three or four years, pretty much 113 00:05:31,440 --> 00:05:34,839 Speaker 3: across the board. But what's interesting is that in twenty 114 00:05:34,880 --> 00:05:36,919 Speaker 3: twenty four, the data that are coming in so far 115 00:05:37,040 --> 00:05:38,320 Speaker 3: is they're looking different. 116 00:05:39,600 --> 00:05:39,840 Speaker 1: Well. 117 00:05:39,880 --> 00:05:43,000 Speaker 3: Production again, sorry i'm aill. Production on a well level 118 00:05:43,040 --> 00:05:45,960 Speaker 3: basis is actually better for the weals the camera line 119 00:05:45,960 --> 00:05:48,720 Speaker 3: in twenty twenty four compared to those last year. So 120 00:05:48,760 --> 00:05:51,599 Speaker 3: what that means is that technology improvements could be turning 121 00:05:51,600 --> 00:05:54,760 Speaker 3: back to tide. For this production declined on a well level. 122 00:05:54,560 --> 00:05:57,920 Speaker 2: Basis, which is why it's so cool when you when 123 00:05:57,920 --> 00:06:00,920 Speaker 2: you talk about laterals. Now we're talking about three miles. 124 00:06:01,040 --> 00:06:03,960 Speaker 2: That's all lot, and a lot can go wrong in 125 00:06:04,080 --> 00:06:04,919 Speaker 2: three miles. 126 00:06:05,240 --> 00:06:05,400 Speaker 1: Now. 127 00:06:05,440 --> 00:06:07,719 Speaker 2: Just about five years ago, the talk was like, oh, well, 128 00:06:07,760 --> 00:06:10,360 Speaker 2: if you frag here, then you're gonna hurt the rock 129 00:06:10,440 --> 00:06:12,599 Speaker 2: over here, and then it's gonna mess up the oil 130 00:06:12,640 --> 00:06:14,520 Speaker 2: distribution and all that kind of stuff. What are the 131 00:06:14,560 --> 00:06:17,359 Speaker 2: problems that are emerging the longer out we go in 132 00:06:17,400 --> 00:06:18,000 Speaker 2: these rocks. 133 00:06:18,279 --> 00:06:20,440 Speaker 3: I think one of the biggest risk rep factors, Like, 134 00:06:20,440 --> 00:06:22,960 Speaker 3: like you said, if something goes wrong on Alex, you 135 00:06:23,080 --> 00:06:27,279 Speaker 3: lose production from three mile worths worth of flattro. So 136 00:06:27,320 --> 00:06:30,760 Speaker 3: that's going to be a big opportunity. Opportunity costs for you. 137 00:06:31,279 --> 00:06:33,320 Speaker 3: But at the same time, if things go right, you 138 00:06:33,320 --> 00:06:36,400 Speaker 3: can save potentially save a lot of money. I think 139 00:06:36,640 --> 00:06:39,760 Speaker 3: not only during longer ladros. Some of these companies they're 140 00:06:39,800 --> 00:06:43,880 Speaker 3: actually making U turns under the ground so they can yeah, 141 00:06:43,920 --> 00:06:46,280 Speaker 3: so they can stay within the acreage and so they 142 00:06:46,279 --> 00:06:48,120 Speaker 3: can make more contact with the source rock. 143 00:06:48,360 --> 00:06:50,360 Speaker 2: So if you do that, do they you turn into 144 00:06:50,400 --> 00:06:52,240 Speaker 2: another layer of the rock or do they you turn 145 00:06:52,279 --> 00:06:53,280 Speaker 2: in the same layer. 146 00:06:53,320 --> 00:06:54,440 Speaker 3: The you turn in the same layer. 147 00:06:54,880 --> 00:06:56,560 Speaker 2: Oh my god, that feels like a lot can go 148 00:06:56,600 --> 00:06:58,960 Speaker 2: wrong there. Yeah, well what companies are doing that? 149 00:07:00,040 --> 00:07:02,800 Speaker 3: Remember method of resources in the permit is doing our 150 00:07:02,960 --> 00:07:05,080 Speaker 3: U turns on the letters, and there are a couple 151 00:07:05,080 --> 00:07:06,719 Speaker 3: other ones. I don't be on top of my head. 152 00:07:07,160 --> 00:07:09,400 Speaker 2: Oh man, is this nerdy enough for you? 153 00:07:09,520 --> 00:07:10,520 Speaker 5: Yeah, it's really cool. 154 00:07:10,960 --> 00:07:13,880 Speaker 4: Well, here's my dumb question of today, never other than 155 00:07:13,960 --> 00:07:17,000 Speaker 4: shale oil coming from shale? Do we still drill old 156 00:07:17,040 --> 00:07:18,960 Speaker 4: fashioned rigs and produce oil that way? 157 00:07:19,200 --> 00:07:19,480 Speaker 3: We do? 158 00:07:19,600 --> 00:07:19,840 Speaker 7: We do? 159 00:07:19,920 --> 00:07:20,120 Speaker 4: We do. 160 00:07:20,320 --> 00:07:23,440 Speaker 3: We still do that quite a bit. But the but 161 00:07:23,480 --> 00:07:27,760 Speaker 3: if you're talking about on shore the productivities of these wells, 162 00:07:27,760 --> 00:07:30,760 Speaker 3: it is probably like ten percent or maybe twenty percent 163 00:07:30,920 --> 00:07:34,120 Speaker 3: of these horizontal wells, so the impact is probably it 164 00:07:34,200 --> 00:07:36,360 Speaker 3: is definitely a lot smaller than the horizontal ones. 165 00:07:37,400 --> 00:07:40,640 Speaker 7: Really confused, Well, No, I'm just saying, if I'm jab 166 00:07:40,840 --> 00:07:44,000 Speaker 7: Clampe and you start drilling under my property. 167 00:07:43,600 --> 00:07:44,880 Speaker 4: See I doesn't get that reference. 168 00:07:45,320 --> 00:07:47,880 Speaker 7: Can I like, can you do that? Can you go 169 00:07:47,960 --> 00:07:50,000 Speaker 7: under my property with your what? 170 00:07:50,360 --> 00:07:50,560 Speaker 8: Yeah? 171 00:07:50,600 --> 00:07:51,400 Speaker 2: You can pay for it? 172 00:07:52,000 --> 00:07:54,560 Speaker 7: No, But I'm just saying, can a big oil company 173 00:07:54,600 --> 00:07:55,760 Speaker 7: go under my lane? 174 00:07:55,960 --> 00:07:56,440 Speaker 2: You for it? 175 00:07:56,520 --> 00:07:59,760 Speaker 7: They have to pay, yes, but actually also makes shale. 176 00:07:59,840 --> 00:08:01,840 Speaker 2: But that's what makes shales so unique in the US 177 00:08:01,960 --> 00:08:04,360 Speaker 2: is because they have to pay you. Like other areas 178 00:08:04,400 --> 00:08:07,640 Speaker 2: of the world, the people don't make the money, they 179 00:08:07,640 --> 00:08:09,840 Speaker 2: don't own the mineral rights, and therefore they don't have 180 00:08:09,880 --> 00:08:13,880 Speaker 2: the same kind of investment in making shale developed versus you. 181 00:08:13,880 --> 00:08:15,640 Speaker 2: You're like, yeah, you can have it, but you got 182 00:08:15,680 --> 00:08:17,520 Speaker 2: to pay me, and then you're actually invested in it. 183 00:08:17,920 --> 00:08:18,600 Speaker 2: But I digress. 184 00:08:18,680 --> 00:08:20,960 Speaker 7: All right, clamp it was from Feberleyfieldville. 185 00:08:21,000 --> 00:08:24,600 Speaker 2: Like still thanks a lot, Tyler. We appreciate it being 186 00:08:24,640 --> 00:08:27,360 Speaker 2: at a global oil supply specialist joining us on US 187 00:08:27,400 --> 00:08:28,160 Speaker 2: oil production. 188 00:08:32,800 --> 00:08:36,679 Speaker 1: You're listening to the Bloomberg Intelligence podcast. Catch us Live 189 00:08:36,760 --> 00:08:40,280 Speaker 1: weekdays at ten am Eastern on Applecar Play and Android 190 00:08:40,320 --> 00:08:43,079 Speaker 1: Auto with the Bloomberg Business app. You can also listen 191 00:08:43,200 --> 00:08:46,280 Speaker 1: live on Amazon Alexa from our flagship New York station. 192 00:08:46,640 --> 00:08:49,400 Speaker 1: Just say Alexa playing Bloomberg eleven thirty. 193 00:08:50,320 --> 00:08:52,319 Speaker 4: So all right, we've got that brank crude here. We've 194 00:08:52,320 --> 00:08:54,040 Speaker 4: been calling it out this morning. Eight one dollars and 195 00:08:54,040 --> 00:08:57,440 Speaker 4: fifty cents here up about three point one percent, So 196 00:08:57,480 --> 00:08:59,079 Speaker 4: a big move. So whenever we see big moves and 197 00:08:59,080 --> 00:09:01,280 Speaker 4: commodities we like, you got to get Mike mcgloan on 198 00:09:01,320 --> 00:09:06,080 Speaker 4: the phone. He's a senior commodity strategist for Bloomberg Intelligence. Mike, again, 199 00:09:06,480 --> 00:09:07,840 Speaker 4: like a lot of us, we woke up this morning 200 00:09:07,880 --> 00:09:09,640 Speaker 4: and we had to read up and read in on 201 00:09:09,679 --> 00:09:12,240 Speaker 4: what's happening in Libya. How much is the Libya situation 202 00:09:12,720 --> 00:09:15,160 Speaker 4: responsible here for this move in global crude? 203 00:09:16,200 --> 00:09:19,600 Speaker 8: It's much more positions. Libya exports about a million barrels 204 00:09:19,600 --> 00:09:22,840 Speaker 8: a day. Their average since two thousand was less than that. 205 00:09:23,240 --> 00:09:25,640 Speaker 8: If they shut off completely its way offset what what 206 00:09:25,880 --> 00:09:30,120 Speaker 8: Alex meant and mentioned earlier, massive oversupply of spare capacity 207 00:09:30,160 --> 00:09:32,640 Speaker 8: and OPEC and just look at the US and Canada, 208 00:09:32,760 --> 00:09:36,200 Speaker 8: our excess of liquid fuels supply over demand, which is 209 00:09:36,280 --> 00:09:39,000 Speaker 8: six million barrels a day I was compared to two 210 00:09:39,000 --> 00:09:42,679 Speaker 8: thousand and eight was ten million deficits. So it's in significant. 211 00:09:42,720 --> 00:09:44,679 Speaker 8: It's positions that matter, So I look at it as 212 00:09:45,160 --> 00:09:49,280 Speaker 8: manage money net positions, futures positions, Kruda which drives at market. 213 00:09:50,280 --> 00:09:53,199 Speaker 8: We're at least a week ago the most sold out 214 00:09:53,200 --> 00:09:55,320 Speaker 8: in our database going back at least ten years. I mean, 215 00:09:55,600 --> 00:09:58,640 Speaker 8: brank crude hardly ever gets short and it was so 216 00:09:58,800 --> 00:10:01,320 Speaker 8: there's no room for anything but those positions that go 217 00:10:01,400 --> 00:10:04,560 Speaker 8: up from buyers to go higher. So to me, that's 218 00:10:04,640 --> 00:10:06,520 Speaker 8: much more significant. What's happening is we're just kind of 219 00:10:06,520 --> 00:10:09,360 Speaker 8: normalizing the positions a little bit. And the reason they're 220 00:10:09,360 --> 00:10:11,320 Speaker 8: sold out is because it's a bear market, and it's 221 00:10:11,320 --> 00:10:13,320 Speaker 8: just a bear market that's reading I think, a short 222 00:10:13,360 --> 00:10:13,920 Speaker 8: term bottom. 223 00:10:14,320 --> 00:10:17,240 Speaker 2: Not to get too nerdy, but what about differentials? So 224 00:10:17,440 --> 00:10:20,360 Speaker 2: Libya has a lot of light sweet crude, and there's 225 00:10:20,360 --> 00:10:22,760 Speaker 2: also dark, and there's medium and all that stuff. They 226 00:10:22,760 --> 00:10:25,160 Speaker 2: have light sweet, right, so are we going to see 227 00:10:25,200 --> 00:10:28,840 Speaker 2: some differential movement in terms of Libya? Like I appreciate 228 00:10:28,880 --> 00:10:31,080 Speaker 2: the fact that OPEC plus has a lot of spare capacity, 229 00:10:31,120 --> 00:10:32,599 Speaker 2: et cetera. But what do you think we're going to 230 00:10:32,640 --> 00:10:33,040 Speaker 2: see there? 231 00:10:34,040 --> 00:10:36,440 Speaker 8: So, Alex, you know that area a lot better than 232 00:10:36,480 --> 00:10:39,280 Speaker 8: I do. To me, it's more the macro and the 233 00:10:39,400 --> 00:10:42,280 Speaker 8: light or heavy doesn't make much difference. I mean, one 234 00:10:42,280 --> 00:10:45,200 Speaker 8: thing that's been significant is that narrowing spread between BRENT 235 00:10:45,360 --> 00:10:48,559 Speaker 8: and WTI. That's one thing that's news. Brent positions are 236 00:10:48,600 --> 00:10:51,080 Speaker 8: way sold out. In WTI. Pieces are normal ten percent 237 00:10:51,120 --> 00:10:54,199 Speaker 8: of open interest, our net lungs and those are specs. 238 00:10:54,280 --> 00:10:56,800 Speaker 8: So to me, it's much more the macro, and the macro, 239 00:10:56,880 --> 00:10:58,960 Speaker 8: to me, is overwhelming, and I'll bring in an uber 240 00:10:59,000 --> 00:11:01,960 Speaker 8: big macros. What's happening in China. We've seen declining demand 241 00:11:02,360 --> 00:11:04,520 Speaker 8: and their bond yilds are just plunging for a reason. 242 00:11:05,240 --> 00:11:07,760 Speaker 4: So if this move in, if this move and crude 243 00:11:07,760 --> 00:11:10,800 Speaker 4: feels a little bit more technical, when did the fundamentals 244 00:11:10,840 --> 00:11:11,959 Speaker 4: reassert themselves? 245 00:11:12,360 --> 00:11:13,840 Speaker 8: Good question. I don't know. I think it's a matter 246 00:11:13,880 --> 00:11:16,040 Speaker 8: of time it falls. Natural gas. Natural gas got to 247 00:11:16,080 --> 00:11:18,400 Speaker 8: that low price cure a level that was first traded 248 00:11:18,440 --> 00:11:20,800 Speaker 8: in nineteen ninety in futures. Now it's around two. That's 249 00:11:20,840 --> 00:11:23,720 Speaker 8: just hovering there. Corn's there now. Front corn at three 250 00:11:23,720 --> 00:11:27,160 Speaker 8: point sixty two is first traded in nineteen seventy three, 251 00:11:27,320 --> 00:11:29,760 Speaker 8: seventy four. It's getting plowed. It's got to shut off 252 00:11:29,760 --> 00:11:33,440 Speaker 8: that access supply. It's coming out. Copper's probably tilting lower. 253 00:11:33,520 --> 00:11:35,360 Speaker 8: I don't know how long, and when it takes I'm 254 00:11:35,400 --> 00:11:37,400 Speaker 8: surprised it's lasted this long. But one thing that's the 255 00:11:37,440 --> 00:11:40,559 Speaker 8: bottom line palls the US stock market has to go up. 256 00:11:40,720 --> 00:11:42,640 Speaker 8: And that's one thing we've noticed about Crudel in the 257 00:11:42,720 --> 00:11:45,240 Speaker 8: last maybe ten years or so. When we have a 258 00:11:45,280 --> 00:11:48,080 Speaker 8: normal correction in beta, crude all goes down a lot harder. 259 00:11:48,120 --> 00:11:50,320 Speaker 8: It's just much more correlated with the stock market now, 260 00:11:50,400 --> 00:11:53,080 Speaker 8: particularly what's happening in China. So I look at it 261 00:11:53,080 --> 00:11:55,360 Speaker 8: as a risk as to the downside. It's a matter 262 00:11:55,400 --> 00:11:58,000 Speaker 8: of time right now. We have to offset these positions. 263 00:11:58,000 --> 00:12:02,480 Speaker 8: But the headlines are just overwhelming lead tilting now towards 264 00:12:02,800 --> 00:12:05,520 Speaker 8: the opposite they were two years. One is recently oil's 265 00:12:05,559 --> 00:12:08,800 Speaker 8: hot summer's ending, posing risks for majors in opek. Those 266 00:12:08,840 --> 00:12:11,600 Speaker 8: are macro, which the big shifts, it's the big pendulum 267 00:12:11,679 --> 00:12:14,920 Speaker 8: shift and commodities is unfamble for Crudell, and it's on 268 00:12:14,960 --> 00:12:16,200 Speaker 8: the back of the high price cure. 269 00:12:16,480 --> 00:12:18,360 Speaker 2: So when you say that the stock market has to 270 00:12:18,360 --> 00:12:20,000 Speaker 2: go up. Do you mean that it just will go up, 271 00:12:20,120 --> 00:12:22,320 Speaker 2: or you're saying in order for oil to catch a bit, 272 00:12:22,400 --> 00:12:24,000 Speaker 2: it has to go up exactly. 273 00:12:24,040 --> 00:12:26,600 Speaker 8: So prerequisite I started writing about this a few years ago, 274 00:12:26,640 --> 00:12:29,640 Speaker 8: is it's the inordinate burden on commodities for stocks go 275 00:12:29,800 --> 00:12:32,040 Speaker 8: up because the correlations are just going up and up 276 00:12:32,040 --> 00:12:35,440 Speaker 8: and up, and at least historically they are. So though, 277 00:12:35,480 --> 00:12:37,480 Speaker 8: I look at right now, if you're managing Crudell, if 278 00:12:37,520 --> 00:12:39,840 Speaker 8: you have positions on Crudell, you know, okay, this is 279 00:12:39,880 --> 00:12:41,439 Speaker 8: our short It's okay to be I don't want to 280 00:12:41,480 --> 00:12:43,360 Speaker 8: run a positions are sold out. I can be long 281 00:12:43,400 --> 00:12:45,120 Speaker 8: here a little bit, but you have to look over 282 00:12:45,160 --> 00:12:46,920 Speaker 8: in your value at risk model. You have to say, okay, 283 00:12:46,960 --> 00:12:49,240 Speaker 8: as long as the SMB five hundred stay stable, I'll 284 00:12:49,240 --> 00:12:51,800 Speaker 8: stay stable. If you get a little ten five percent correction. 285 00:12:52,000 --> 00:12:54,360 Speaker 8: Crude oil dropped twenty percent. Now it didn't done that 286 00:12:54,440 --> 00:12:56,760 Speaker 8: last thing in October fifth because they were sold out. 287 00:12:56,960 --> 00:12:58,800 Speaker 8: But now it's starting to normalize. So it's just the 288 00:12:58,800 --> 00:12:59,800 Speaker 8: way markets work. Now. 289 00:13:00,640 --> 00:13:02,960 Speaker 4: Hey, Mike kew about gold. Earlier this morning, we were 290 00:13:03,000 --> 00:13:05,440 Speaker 4: speaking with Dennis Gartman, the former editor the Gartman Letter, 291 00:13:05,440 --> 00:13:08,439 Speaker 4: and an a vowed gold bull for a long period 292 00:13:08,440 --> 00:13:11,640 Speaker 4: of time. Here give us your gold call here, which 293 00:13:11,640 --> 00:13:13,480 Speaker 4: I'm sure is gonna be very consistent with what I've 294 00:13:13,480 --> 00:13:14,960 Speaker 4: known you for for these many years. 295 00:13:15,400 --> 00:13:17,520 Speaker 8: I would consider Dennis a friend, and I do appreciate 296 00:13:17,520 --> 00:13:19,080 Speaker 8: in the past you remember one of the few things 297 00:13:19,080 --> 00:13:21,439 Speaker 8: I've been getting right, and that's gold. The problem is, 298 00:13:21,520 --> 00:13:23,560 Speaker 8: and so I'm still quite bullish gold. It's the only 299 00:13:23,600 --> 00:13:25,960 Speaker 8: major commodity go up. And I think the notable mention 300 00:13:26,040 --> 00:13:28,680 Speaker 8: is a Bloomberg commodity index is down thirty percent since 301 00:13:28,679 --> 00:13:31,240 Speaker 8: it's peaking twenty twenty two, and gold's up thirty percent 302 00:13:31,280 --> 00:13:33,160 Speaker 8: over the same frame. But it's the fundamentals that are 303 00:13:33,160 --> 00:13:35,760 Speaker 8: still very bullish for gold. Deepest pockets on the planet. 304 00:13:35,800 --> 00:13:39,280 Speaker 8: Central banks are still buying ETFs, which events significant outflows 305 00:13:39,280 --> 00:13:41,320 Speaker 8: are STI just starting to turn upward. And then you 306 00:13:41,440 --> 00:13:43,559 Speaker 8: just look at the very expensive US stock market and 307 00:13:43,720 --> 00:13:46,880 Speaker 8: US debt to GDP. It's just fiscal spending is off 308 00:13:47,280 --> 00:13:50,040 Speaker 8: off the charts, and neither of the candidates are dressing that. 309 00:13:50,160 --> 00:13:52,760 Speaker 8: So to me, gold is that trade that's looking for 310 00:13:52,840 --> 00:13:56,760 Speaker 8: the normal recession to kick in. The eield curve, the 311 00:13:56,880 --> 00:13:59,240 Speaker 8: US eel curve, that's disinvert at some point, just the 312 00:13:59,280 --> 00:14:01,880 Speaker 8: normal cycles unemployment going up, and gold's kind of just 313 00:14:01,920 --> 00:14:02,840 Speaker 8: ahead of that trade. 314 00:14:02,960 --> 00:14:05,000 Speaker 2: You know, when I was covering gold back in the day, though, 315 00:14:05,200 --> 00:14:09,200 Speaker 2: it was very much of a inflation goes up, you 316 00:14:09,240 --> 00:14:11,280 Speaker 2: want to buy gold, it goes down, you want to 317 00:14:11,320 --> 00:14:13,880 Speaker 2: sell gold. Es Central banks are buying not because of 318 00:14:13,920 --> 00:14:16,319 Speaker 2: the macro, but because they have like a percentage they 319 00:14:16,360 --> 00:14:20,440 Speaker 2: need to diversify, which is not necessarily based on macro 320 00:14:20,600 --> 00:14:23,280 Speaker 2: headwinds or tailwinds. Is that still true. 321 00:14:23,880 --> 00:14:26,320 Speaker 8: The questions out of sam Alex, the answers have changed. 322 00:14:26,680 --> 00:14:29,000 Speaker 8: And in terms of any other currency, I think that 323 00:14:29,080 --> 00:14:32,120 Speaker 8: was initially from Einstein coupling one time ago, but it's 324 00:14:32,280 --> 00:14:36,200 Speaker 8: it's the in terms of any melting currency. Sure, goal 325 00:14:36,280 --> 00:14:38,920 Speaker 8: is a great place to park your wealth, but in 326 00:14:39,000 --> 00:14:41,960 Speaker 8: terms of you as dollars, it's the world's shifting now 327 00:14:42,080 --> 00:14:45,360 Speaker 8: and it has a high correlation between that rising debt 328 00:14:45,360 --> 00:14:48,240 Speaker 8: to GDP. I just published that tomorrow this morning. And 329 00:14:48,320 --> 00:14:50,800 Speaker 8: key thing I'm concerned about is the number six forty three, 330 00:14:51,120 --> 00:14:53,040 Speaker 8: six hundred and forty three, here's one for you. Is 331 00:14:53,080 --> 00:14:55,880 Speaker 8: the number of bushels of corn equal to an ounce 332 00:14:55,880 --> 00:14:57,600 Speaker 8: of gold. That's the highest ever that's where we are 333 00:14:57,680 --> 00:15:00,680 Speaker 8: right now, So goals getting the expensive. But it's showing 334 00:15:00,680 --> 00:15:03,640 Speaker 8: you what happens with the store of value global liquid 335 00:15:03,680 --> 00:15:08,440 Speaker 8: assets going upward, and that's gold and elastic commodities like 336 00:15:08,520 --> 00:15:11,800 Speaker 8: crudel and corn going down because humans can create more 337 00:15:11,800 --> 00:15:13,600 Speaker 8: of it with less of it every day. So gold 338 00:15:13,600 --> 00:15:16,320 Speaker 8: to me is running ahead of what I see happening 339 00:15:16,320 --> 00:15:19,840 Speaker 8: with Ira Jersey says, a hard landing, lower US interest rates, 340 00:15:19,840 --> 00:15:22,560 Speaker 8: probably falling China, and at some point a little bit 341 00:15:22,560 --> 00:15:24,520 Speaker 8: of back and fill US stock market, which used to 342 00:15:24,560 --> 00:15:25,600 Speaker 8: happen in bull markets. 343 00:15:25,880 --> 00:15:28,560 Speaker 4: All right, here's the dumb question you get of the day, 344 00:15:28,600 --> 00:15:31,920 Speaker 4: No question, how do you value a commodity? Like on 345 00:15:31,960 --> 00:15:33,920 Speaker 4: a stock, I can say price to earnings ratio, on 346 00:15:33,960 --> 00:15:36,000 Speaker 4: a bond, I can say relative to treasuries? 347 00:15:36,840 --> 00:15:37,280 Speaker 8: Is gold? 348 00:15:37,320 --> 00:15:39,440 Speaker 4: When are you say gold's expensive or gold's cheap? 349 00:15:40,400 --> 00:15:42,840 Speaker 8: So gold's different from all most commodities of use stocks 350 00:15:42,840 --> 00:15:44,760 Speaker 8: to use. What are the stocks versus the use? So 351 00:15:44,800 --> 00:15:47,360 Speaker 8: stock's the use for all the grains and particularly crudels 352 00:15:47,480 --> 00:15:49,000 Speaker 8: very high. There's a lot of stocks, there's more and 353 00:15:49,080 --> 00:15:51,720 Speaker 8: more creative. What's that trend? Gold typically sticks with the 354 00:15:51,760 --> 00:15:54,760 Speaker 8: more macroeconomic I like to use to me right now, 355 00:15:54,800 --> 00:15:57,800 Speaker 8: it's interest rates, US interests, the trend in interest rates, 356 00:15:57,960 --> 00:16:01,080 Speaker 8: debt to GDP, and much more. How is it relative 357 00:16:01,080 --> 00:16:02,640 Speaker 8: to the stock market. And here's what I like to 358 00:16:02,720 --> 00:16:04,800 Speaker 8: end with. One of my most enduring charts I've looked 359 00:16:04,800 --> 00:16:08,200 Speaker 8: at free decades is that S and P five hundred 360 00:16:08,360 --> 00:16:11,400 Speaker 8: divided by the pronouncis prices of gold. Historically, gold's just 361 00:16:11,520 --> 00:16:14,240 Speaker 8: very cheap, and historically when you go to recessions that 362 00:16:14,320 --> 00:16:17,480 Speaker 8: fedieses un deployment goes up. That why this parriage just 363 00:16:17,560 --> 00:16:20,360 Speaker 8: kind of narrows a little bit. And that's the thing. 364 00:16:20,440 --> 00:16:22,760 Speaker 8: It hasn't narrow too much because gold's catching up. And 365 00:16:22,800 --> 00:16:24,480 Speaker 8: actually it is narrowing a little bit because gold on 366 00:16:24,520 --> 00:16:26,360 Speaker 8: a one, two and three year basis is outperforming the 367 00:16:26,440 --> 00:16:28,760 Speaker 8: S and P five hundred total return. The risk is 368 00:16:28,800 --> 00:16:29,760 Speaker 8: it just catches. 369 00:16:29,560 --> 00:16:31,600 Speaker 2: Up more bitcoin. 370 00:16:31,920 --> 00:16:37,080 Speaker 8: How you feeling, it's the end. It's the last big 371 00:16:37,120 --> 00:16:39,560 Speaker 8: trade and it's not the next big trade. So the 372 00:16:39,680 --> 00:16:43,080 Speaker 8: LBT is no longer the NBT. It's Bitcoin is overdone. 373 00:16:43,080 --> 00:16:45,880 Speaker 8: It's stretched. Everything that's happening in bigcoin where things we're 374 00:16:45,880 --> 00:16:48,480 Speaker 8: hoping would happen, that is, it's into the mainstream. We 375 00:16:48,560 --> 00:16:51,120 Speaker 8: have a former president who has embraced it because he 376 00:16:51,160 --> 00:16:54,120 Speaker 8: wants to get elected. We have the ETFs and now 377 00:16:54,160 --> 00:16:56,520 Speaker 8: everybody it's in the mainstream. The thing is also it's 378 00:16:56,520 --> 00:17:00,240 Speaker 8: showing divergent weakness versus what it should versus beta since 379 00:17:00,240 --> 00:17:03,800 Speaker 8: it made its peak in March, it's declining versus gold 380 00:17:03,920 --> 00:17:05,919 Speaker 8: versus stock market. So that's the problem. I think the 381 00:17:05,960 --> 00:17:08,240 Speaker 8: fastest horse in the race is telling us by showing 382 00:17:08,280 --> 00:17:10,960 Speaker 8: divergent weakness is a race might be over. So I'm 383 00:17:11,000 --> 00:17:13,800 Speaker 8: somewhat more defensive on bitcoin. A key thing I think 384 00:17:13,800 --> 00:17:16,400 Speaker 8: to remember of bitcoin it trades three times of voltuli 385 00:17:16,480 --> 00:17:18,680 Speaker 8: of gold and the SCDB five hundred. When the people 386 00:17:18,720 --> 00:17:20,920 Speaker 8: tell you that, oh, when the stock mark goes down 387 00:17:20,960 --> 00:17:23,119 Speaker 8: and we have a recession, bitcoin of our performance, well, 388 00:17:23,119 --> 00:17:25,600 Speaker 8: it usually doesn't work that way with very high voltuli 389 00:17:25,640 --> 00:17:27,440 Speaker 8: assets that are very speculative. 390 00:17:28,240 --> 00:17:35,080 Speaker 2: All right, Bitcoin to cold to corn, corn to gold ratio. 391 00:17:35,320 --> 00:17:37,640 Speaker 2: Oh okay, yeah, you got it. Just it's a it's 392 00:17:37,680 --> 00:17:39,640 Speaker 2: a lot, Hey, Mike, we appreciate it. Thank you so much. 393 00:17:39,640 --> 00:17:43,600 Speaker 2: Mike mcglohon Bloomberg Intelligence, a senior commodity strategist joining us 394 00:17:43,600 --> 00:17:45,320 Speaker 2: on all the things commodity related. 395 00:17:46,760 --> 00:17:50,639 Speaker 1: You're listening to the Bloomberg Intelligence Podcast. Catch us live 396 00:17:50,720 --> 00:17:53,359 Speaker 1: weekdays at ten am Eastern on Apple car Play and 397 00:17:53,359 --> 00:17:56,439 Speaker 1: Android Auto with the Bloomberg Business App. Listen on demand 398 00:17:56,480 --> 00:18:00,000 Speaker 1: wherever you get your podcasts, or watch us live on YouTube. 399 00:18:01,240 --> 00:18:03,520 Speaker 2: All right, let's go back to the trade situation here. 400 00:18:03,600 --> 00:18:06,320 Speaker 2: So the latest news is that Canada is going to 401 00:18:06,400 --> 00:18:10,159 Speaker 2: hit China with tariffs on EV's and steal Brian Platt, 402 00:18:10,160 --> 00:18:13,520 Speaker 2: Government News, Canadian Government Reporter, Bloomberg News, Canadian Government reporter. 403 00:18:13,600 --> 00:18:16,960 Speaker 2: I got that is joining us now on that from Ottawa. Hey, Brian, 404 00:18:17,200 --> 00:18:20,359 Speaker 2: what is this about? Is this about Canada wanting to 405 00:18:20,480 --> 00:18:23,520 Speaker 2: compete more in evs and steel or is this about 406 00:18:23,560 --> 00:18:26,960 Speaker 2: making sure that those things can't come through Canada into 407 00:18:27,000 --> 00:18:27,480 Speaker 2: the US. 408 00:18:28,560 --> 00:18:31,120 Speaker 9: Honestly, I would say it's about both. Canada has put 409 00:18:31,160 --> 00:18:35,159 Speaker 9: a lot of effort into attracting EV manufacturing and so 410 00:18:35,720 --> 00:18:38,840 Speaker 9: for sure Prime Minister Justin Trudeau's government wants to make 411 00:18:38,880 --> 00:18:42,640 Speaker 9: sure that those factories and investments and what they want 412 00:18:42,680 --> 00:18:45,679 Speaker 9: to attract in the future is not undermined by China. 413 00:18:46,119 --> 00:18:49,200 Speaker 9: But absolutely this is about Canada's relationship with the US 414 00:18:49,240 --> 00:18:51,720 Speaker 9: as well, and the last thing Canada wants is for 415 00:18:51,760 --> 00:18:55,120 Speaker 9: the US to see Canada as a weak point, right, 416 00:18:55,160 --> 00:18:58,560 Speaker 9: as a potential side door for Chinese evs, and so 417 00:18:58,720 --> 00:19:02,080 Speaker 9: I think it's really about both things, but especially that 418 00:19:02,160 --> 00:19:03,600 Speaker 9: Canada US relationship. 419 00:19:04,560 --> 00:19:08,159 Speaker 4: How much what's the support level amongst Canadians for just 420 00:19:08,400 --> 00:19:10,960 Speaker 4: tariffs in general, because a lot of folks will tell you, hey, 421 00:19:10,960 --> 00:19:12,960 Speaker 4: this is just a tax on consumers. 422 00:19:14,040 --> 00:19:16,560 Speaker 9: Yeah, there will be some pushback on this, but I 423 00:19:16,640 --> 00:19:19,800 Speaker 9: think I think generally there's a political consensus that these 424 00:19:19,840 --> 00:19:23,000 Speaker 9: tariffs are necessary. And again it's for both reasons, right. 425 00:19:23,040 --> 00:19:26,159 Speaker 9: I mean, you know, Canada wants its own manufacturing sector, 426 00:19:26,280 --> 00:19:30,240 Speaker 9: especially that that share of the auto manufacturing sector in 427 00:19:31,400 --> 00:19:37,160 Speaker 9: especially electorally important regions around Toronto in southern Ontario. That's 428 00:19:37,160 --> 00:19:39,480 Speaker 9: where those factories tend to be, and so I think 429 00:19:39,480 --> 00:19:43,280 Speaker 9: there's a lot of support for protecting those jobs. But 430 00:19:43,400 --> 00:19:48,560 Speaker 9: Canadians also understand that Canada's got to make sure it 431 00:19:48,560 --> 00:19:51,040 Speaker 9: doesn't get too far offside with the US. I'm sure 432 00:19:51,040 --> 00:19:52,959 Speaker 9: there will be some people who are concerned that this 433 00:19:53,000 --> 00:19:55,320 Speaker 9: will make evs more expensive at a time when it's 434 00:19:55,320 --> 00:19:58,919 Speaker 9: hard to get to Consumer adoption of EV's is not 435 00:19:58,960 --> 00:20:03,359 Speaker 9: as high as as a lot of environmentalists especially would 436 00:20:03,400 --> 00:20:05,480 Speaker 9: want it to be. But I think generally you'll see 437 00:20:05,520 --> 00:20:07,159 Speaker 9: a lot of consensus in support of this. 438 00:20:08,400 --> 00:20:11,520 Speaker 2: Do Canada Does Canada buy a lot of China EV's. 439 00:20:11,280 --> 00:20:14,320 Speaker 9: At the end of the day, though, right now it's 440 00:20:14,359 --> 00:20:18,359 Speaker 9: basically Tesla's being manufactured in Shanghai. That's at the moment 441 00:20:18,440 --> 00:20:23,159 Speaker 9: that is the only significant inflow of Chinese made evs 442 00:20:23,160 --> 00:20:26,000 Speaker 9: into Canada. I suspect Tesla will move that production to 443 00:20:26,080 --> 00:20:30,000 Speaker 9: other factories to avoid these tariffs, but we know that 444 00:20:30,000 --> 00:20:34,840 Speaker 9: that byd in particular, the giant Chinese automaker is looking around. 445 00:20:34,920 --> 00:20:37,400 Speaker 9: They have They've hired lobbyists in Ottawa to look at 446 00:20:38,200 --> 00:20:42,120 Speaker 9: possible opportunities to build and or sell in Canada. So 447 00:20:42,520 --> 00:20:44,919 Speaker 9: Canada is trying to get ahead of that. But at 448 00:20:44,960 --> 00:20:46,760 Speaker 9: the moment, it's basically just Tesla's. 449 00:20:47,600 --> 00:20:50,000 Speaker 4: Brian, what is just in terms of the EV what's 450 00:20:50,040 --> 00:20:53,119 Speaker 4: the adoption been like in Canada? Because here in the 451 00:20:53,160 --> 00:20:55,320 Speaker 4: US it seems to have hit a kind of a 452 00:20:55,400 --> 00:20:56,960 Speaker 4: rough patch, a little bump in the road here in 453 00:20:57,000 --> 00:20:59,359 Speaker 4: terms of adoption. How is it in Canada? 454 00:20:59,520 --> 00:21:03,240 Speaker 9: It's pretty similar, I would say to the US. You know, Canadians, 455 00:21:05,080 --> 00:21:08,199 Speaker 9: the really the very popular vehicles here tend to be 456 00:21:09,119 --> 00:21:12,000 Speaker 9: SUVs and trucks, and I don't think that from what 457 00:21:12,040 --> 00:21:15,359 Speaker 9: I've seen, there's not a lot of EV adoption in 458 00:21:15,400 --> 00:21:18,040 Speaker 9: that space yet. It's pretty similar to the US. I 459 00:21:18,080 --> 00:21:20,280 Speaker 9: will say there are a couple of provinces, Quebec and 460 00:21:20,320 --> 00:21:24,880 Speaker 9: British Columbia who EV adoption is is higher in those 461 00:21:24,920 --> 00:21:27,840 Speaker 9: provinces because those provinces are pretty early at rolling out 462 00:21:28,200 --> 00:21:33,440 Speaker 9: consumer incentives and sales mandates. So some regions of the 463 00:21:33,480 --> 00:21:35,960 Speaker 9: country have seen higher adoption than others. 464 00:21:36,520 --> 00:21:40,439 Speaker 2: That's interesting. Is there going to be more? Is this 465 00:21:40,520 --> 00:21:41,760 Speaker 2: the beginning or is this the end? 466 00:21:42,920 --> 00:21:45,119 Speaker 9: I do think this is the beginning, and in fact, 467 00:21:45,160 --> 00:21:49,600 Speaker 9: today they Trudeau announced there will also be a consultation 468 00:21:49,720 --> 00:21:52,919 Speaker 9: on other products, basically again sort of following with the 469 00:21:53,040 --> 00:21:56,040 Speaker 9: US what US President Joe Biden announced earlier. So I 470 00:21:56,080 --> 00:22:00,359 Speaker 9: think the consultation that will start now on other potential 471 00:22:00,359 --> 00:22:06,159 Speaker 9: tariffs will focus on solar cells, semiconductors, critical minerals. I 472 00:22:06,160 --> 00:22:08,520 Speaker 9: think I suspect we will see more tariffs in the 473 00:22:08,560 --> 00:22:09,200 Speaker 9: near future. 474 00:22:09,960 --> 00:22:11,639 Speaker 4: All Right, Brian, thank you so much for joining us. 475 00:22:11,640 --> 00:22:14,479 Speaker 4: Brian Platt, he's a Canadian government reporter for Bloomberg News, 476 00:22:14,560 --> 00:22:17,560 Speaker 4: joining us from Canas. We appreciate getting the boots on 477 00:22:17,560 --> 00:22:19,959 Speaker 4: the ground perspective there. But again it seems like, as 478 00:22:20,000 --> 00:22:22,560 Speaker 4: Brian was reporting there, that this is as much a 479 00:22:22,600 --> 00:22:26,919 Speaker 4: political move from Canada to maintain, you know, a lockstep 480 00:22:27,000 --> 00:22:29,800 Speaker 4: policy with that of the US has released to China. 481 00:22:29,520 --> 00:22:31,720 Speaker 2: Right, because if you think about it, the US can 482 00:22:31,720 --> 00:22:34,240 Speaker 2: have all the tariffs that they want, but if there 483 00:22:34,240 --> 00:22:38,080 Speaker 2: are no tariffs between Canada and China and Mexico and China, 484 00:22:38,160 --> 00:22:40,520 Speaker 2: there's no reason they just can't move into those countries 485 00:22:40,560 --> 00:22:42,200 Speaker 2: and then they don't get the tariffs when they come 486 00:22:42,280 --> 00:22:45,080 Speaker 2: to the US. So this avoids it. Now Mexico kind 487 00:22:45,080 --> 00:22:46,760 Speaker 2: of has to do the same thing or else we 488 00:22:46,840 --> 00:22:48,600 Speaker 2: run that risk as well. 489 00:22:52,800 --> 00:22:56,680 Speaker 1: You're listening to the Bloomberg Intelligence Podcast. Catch us live 490 00:22:56,760 --> 00:23:00,280 Speaker 1: weekdays at ten am Eastern on applecar Play and Brot 491 00:23:00,320 --> 00:23:03,080 Speaker 1: Auto with a Bloomberg Business Act. You can also listen 492 00:23:03,200 --> 00:23:06,280 Speaker 1: live on Amazon Alexa from our flagship New York station 493 00:23:06,640 --> 00:23:09,879 Speaker 1: Just Say Alexa playing Bloomberg eleven thirty. 494 00:23:10,320 --> 00:23:13,840 Speaker 2: We also love talking about ETF flows. Eric Beltunas is 495 00:23:13,840 --> 00:23:17,040 Speaker 2: probably on vacation. Although I saw a license plate, we've 496 00:23:17,160 --> 00:23:17,600 Speaker 2: not he's here. 497 00:23:17,680 --> 00:23:18,560 Speaker 4: Yeah, we had him in this morning. 498 00:23:18,880 --> 00:23:21,000 Speaker 2: I saw a license plate yesterday. We're playing the license 499 00:23:21,040 --> 00:23:23,560 Speaker 2: plate game. Came back from Connecticut and had etf in it, 500 00:23:23,640 --> 00:23:24,520 Speaker 2: and I was like, who is. 501 00:23:24,480 --> 00:23:25,920 Speaker 8: That Eric car? 502 00:23:26,200 --> 00:23:29,320 Speaker 2: I mean, maybe it could also be Sean O'Hara's car. 503 00:23:29,560 --> 00:23:33,239 Speaker 2: He's president of pacer ETFs and he's joining us. How 504 00:23:33,280 --> 00:23:36,040 Speaker 2: to talk some more about flows? Hey, Sean, does your 505 00:23:36,119 --> 00:23:37,440 Speaker 2: license plate have et finite? 506 00:23:38,200 --> 00:23:42,640 Speaker 10: No? It does not. It might be might have cal 507 00:23:42,760 --> 00:23:44,760 Speaker 10: Z cowz nice. 508 00:23:45,720 --> 00:23:47,639 Speaker 2: Okay, So I've been reading a lot about where the 509 00:23:47,640 --> 00:23:49,960 Speaker 2: flows are going, where the funds are going. There's still 510 00:23:50,119 --> 00:23:53,720 Speaker 2: record amounts of money and money market funds just sitting 511 00:23:53,720 --> 00:23:56,000 Speaker 2: there in cash. Are you noticing any of that coming 512 00:23:56,040 --> 00:23:57,880 Speaker 2: into ETFs and wear are the flows? 513 00:23:58,640 --> 00:23:58,920 Speaker 8: Well? 514 00:23:59,160 --> 00:24:01,080 Speaker 10: Thanks for having me. It's been a little bit slow 515 00:24:01,160 --> 00:24:03,560 Speaker 10: here for August, I think, you know, and talking to 516 00:24:03,600 --> 00:24:05,440 Speaker 10: some of my friends around the industry, I think things 517 00:24:05,480 --> 00:24:07,440 Speaker 10: have slowed down. I would expect that, you know, once 518 00:24:07,480 --> 00:24:10,360 Speaker 10: we get past this weekend, things will pick back up. 519 00:24:11,000 --> 00:24:13,040 Speaker 10: A lot of the flows earlier in the year were 520 00:24:13,080 --> 00:24:16,480 Speaker 10: to the big broad market cap weighted indexes. You know. 521 00:24:16,560 --> 00:24:18,679 Speaker 10: The big risk there I think you guys were talking 522 00:24:18,680 --> 00:24:21,920 Speaker 10: about coming up is that there's such a high concentration 523 00:24:22,000 --> 00:24:24,480 Speaker 10: of the return on the S and P five hundred 524 00:24:24,520 --> 00:24:27,720 Speaker 10: for example, or the NASDAQ one hundred that is attributable 525 00:24:27,720 --> 00:24:30,480 Speaker 10: to five to seven names, and that happens from time 526 00:24:30,520 --> 00:24:33,119 Speaker 10: to time, but it never really lasts. And so I 527 00:24:33,160 --> 00:24:35,879 Speaker 10: think you're seeing, you know, going to see flows away 528 00:24:35,920 --> 00:24:39,120 Speaker 10: from traditional market cap as this market develops a little 529 00:24:39,119 --> 00:24:41,080 Speaker 10: bit of breadth into different waiting schemes. 530 00:24:41,880 --> 00:24:44,679 Speaker 4: Sean, we had an eventful day, certainly on Friday, BET 531 00:24:44,760 --> 00:24:46,840 Speaker 4: chairman j Palout and Jackson Hole in his speech. What 532 00:24:46,880 --> 00:24:48,440 Speaker 4: did you make of that speech and what do you 533 00:24:48,440 --> 00:24:49,560 Speaker 4: think it means for the markets? 534 00:24:50,400 --> 00:24:52,560 Speaker 10: Well, I think what I'm hopeful it means is that 535 00:24:52,560 --> 00:24:54,240 Speaker 10: they're going to stay true to their word. I mean, 536 00:24:54,240 --> 00:24:56,840 Speaker 10: they have not really deviated from what their message is. 537 00:24:57,800 --> 00:24:59,520 Speaker 10: I think they're indicating now that they're going to have 538 00:24:59,520 --> 00:25:02,200 Speaker 10: a cutout expected to be twenty five basis points, and 539 00:25:02,240 --> 00:25:04,720 Speaker 10: then I would expect another cut perhaps later this year, 540 00:25:05,640 --> 00:25:08,159 Speaker 10: to sort of deal with a little bit of the 541 00:25:08,240 --> 00:25:12,280 Speaker 10: slowdown that's occurring. Hopefully. You know, they're able to engineer 542 00:25:12,440 --> 00:25:16,119 Speaker 10: a soft landing as opposed to a crash landing, and 543 00:25:16,160 --> 00:25:18,800 Speaker 10: so their strategy has been all along to be very 544 00:25:18,840 --> 00:25:21,119 Speaker 10: very tight on money until they felt like inflation was 545 00:25:21,200 --> 00:25:23,840 Speaker 10: under control. I think they feel like that's the case 546 00:25:23,880 --> 00:25:26,040 Speaker 10: now and we're starting to see a little bit of 547 00:25:26,040 --> 00:25:27,760 Speaker 10: a crack here and there in the labor market, and 548 00:25:27,840 --> 00:25:30,040 Speaker 10: so that's their secondary concern, which is why I think 549 00:25:30,080 --> 00:25:33,000 Speaker 10: they'll in cut rates just a little. And I think 550 00:25:33,040 --> 00:25:36,200 Speaker 10: the market depending on what their message is. And I 551 00:25:36,560 --> 00:25:38,560 Speaker 10: for example, they did fifty basis points, I think it 552 00:25:38,560 --> 00:25:40,640 Speaker 10: would scare the market. So if they do twenty five, 553 00:25:41,560 --> 00:25:43,280 Speaker 10: I think that the market will view that as a 554 00:25:43,359 --> 00:25:46,240 Speaker 10: positive and continue to go up and forward from here. 555 00:25:47,119 --> 00:25:50,640 Speaker 2: So based on that, then do you see the flows 556 00:25:50,760 --> 00:25:53,280 Speaker 2: into more of the let me go buy super cool 557 00:25:53,359 --> 00:25:55,760 Speaker 2: tech on it dip flows or is it let's just 558 00:25:55,840 --> 00:25:58,040 Speaker 2: rotate into some defensives in case the FAD's going to 559 00:25:58,080 --> 00:25:59,439 Speaker 2: have to cut fifty basis points. 560 00:26:00,480 --> 00:26:02,040 Speaker 10: Yeah, I mean, I think you've seen some of that. 561 00:26:02,160 --> 00:26:04,840 Speaker 10: I mean, you know, our big calling card is value. 562 00:26:04,880 --> 00:26:07,320 Speaker 10: We think we redefined value with our cash Cow series 563 00:26:07,359 --> 00:26:10,000 Speaker 10: and we've had a terrific year there. We have a 564 00:26:10,080 --> 00:26:13,520 Speaker 10: growth strategy that we just launched Friday, a Nasdaq one 565 00:26:13,560 --> 00:26:16,040 Speaker 10: hundred growth strategy that it takes a bit of a 566 00:26:16,080 --> 00:26:19,040 Speaker 10: different take for that side of the equation. We use 567 00:26:19,080 --> 00:26:20,960 Speaker 10: free cash flow margin, which this is a measure of 568 00:26:20,960 --> 00:26:23,960 Speaker 10: how much free cash flow company generates based on the 569 00:26:24,000 --> 00:26:27,040 Speaker 10: sales that they make and so, and we're optimistic that, 570 00:26:27,200 --> 00:26:29,200 Speaker 10: you know, the success we've had on the value side, 571 00:26:29,280 --> 00:26:31,399 Speaker 10: we can have on the growth side with a couple 572 00:26:31,400 --> 00:26:34,400 Speaker 10: of those ETFs out there right now. And then one 573 00:26:34,480 --> 00:26:37,639 Speaker 10: more important point is some of the flows we've been 574 00:26:37,680 --> 00:26:41,520 Speaker 10: seeing here recently have been into risk management strategies. I 575 00:26:41,560 --> 00:26:43,720 Speaker 10: think people are starting to get a little bit more 576 00:26:44,000 --> 00:26:48,480 Speaker 10: position to if it's not a soft landing and the 577 00:26:48,520 --> 00:26:51,000 Speaker 10: economy really does go into a recession, how do I 578 00:26:51,040 --> 00:26:55,000 Speaker 10: position my portfolio manage to downside. 579 00:26:53,840 --> 00:26:55,480 Speaker 4: Gold higher yet again? 580 00:26:55,520 --> 00:26:55,879 Speaker 1: Today? 581 00:26:56,119 --> 00:26:59,480 Speaker 4: Sean, how do you see that extraordinary performance of gold 582 00:26:59,520 --> 00:27:00,720 Speaker 4: in your TF world? 583 00:27:02,160 --> 00:27:04,320 Speaker 10: Well, I mean the big ETFs there are taken in 584 00:27:04,400 --> 00:27:07,240 Speaker 10: some money, for sure. I think traditional gold investors would 585 00:27:07,320 --> 00:27:09,480 Speaker 10: rather you know, stack it, as they say, right, keep 586 00:27:09,520 --> 00:27:12,200 Speaker 10: it in a safe or store it somewhere in a 587 00:27:12,280 --> 00:27:16,720 Speaker 10: safety box. You know, I don't really think gold as 588 00:27:16,760 --> 00:27:19,640 Speaker 10: an investment is a good long term investment in true 589 00:27:19,640 --> 00:27:22,600 Speaker 10: you know, it hasn't been historically a very high returning asset, 590 00:27:23,000 --> 00:27:24,840 Speaker 10: although it goes through periods when you have a lot 591 00:27:24,880 --> 00:27:27,960 Speaker 10: of uncertainty where a disc does tend to move a bit, 592 00:27:28,080 --> 00:27:30,359 Speaker 10: and so I think that what's going on with the 593 00:27:30,359 --> 00:27:33,440 Speaker 10: gold trade has been driven primarily by two things. One 594 00:27:33,560 --> 00:27:36,560 Speaker 10: is people see it as an inflation hedge, and then 595 00:27:36,560 --> 00:27:39,000 Speaker 10: there are also people that see it as a hedge 596 00:27:39,000 --> 00:27:39,760 Speaker 10: against sort of a. 597 00:27:39,720 --> 00:27:43,360 Speaker 2: Disaster, right, and that which brings us to bitcoin too. 598 00:27:43,760 --> 00:27:47,119 Speaker 2: What kind of flows are we noticing into the ETFs 599 00:27:47,200 --> 00:27:48,480 Speaker 2: right now in the crypto space? 600 00:27:49,160 --> 00:27:51,359 Speaker 10: Yeah, well, we don't have anything in the crypto space. 601 00:27:51,400 --> 00:27:53,840 Speaker 10: I'm not sure we're big believers in it, Okay, but 602 00:27:54,640 --> 00:27:57,840 Speaker 10: I will tell you, just if you're from a market observer, 603 00:27:57,920 --> 00:28:00,800 Speaker 10: there's been enormous flows into bitcoin e, which again I 604 00:28:00,840 --> 00:28:03,159 Speaker 10: don't think makes any sense. I mean, if you're going 605 00:28:03,200 --> 00:28:05,040 Speaker 10: to hold bitcoin, you don't need to hold it in 606 00:28:05,080 --> 00:28:07,840 Speaker 10: a wrapper that charges you extra money on an average 607 00:28:08,080 --> 00:28:10,840 Speaker 10: daily basis like an ETF and has a management fee. 608 00:28:11,520 --> 00:28:13,560 Speaker 10: But there's been a great deal of money flowing into 609 00:28:13,560 --> 00:28:16,160 Speaker 10: these ETFs. I think that was a lot of anticipation 610 00:28:16,320 --> 00:28:19,280 Speaker 10: waiting for them to finally get launched, and I think 611 00:28:19,280 --> 00:28:22,399 Speaker 10: eventually what you'll see in the bitcoin space is what 612 00:28:22,440 --> 00:28:25,280 Speaker 10: we've seen in the broad market space, Like when you 613 00:28:25,320 --> 00:28:27,199 Speaker 10: look at the several different versions of the S and 614 00:28:27,200 --> 00:28:29,960 Speaker 10: P five hundred you can own. They're really all the same, 615 00:28:30,000 --> 00:28:31,800 Speaker 10: and so I think eventually we're going to wind up 616 00:28:31,800 --> 00:28:33,720 Speaker 10: seeing a fee war on the bitcoin side. 617 00:28:34,160 --> 00:28:37,840 Speaker 4: Interesting, So the ETF business, Sean, I mean, I'm just 618 00:28:37,880 --> 00:28:40,880 Speaker 4: looking at some of the research from Eric Balchunas from 619 00:28:40,880 --> 00:28:44,600 Speaker 4: Bloomberg Intelligence showing, you know, the big, big players just 620 00:28:44,720 --> 00:28:48,320 Speaker 4: dominating in terms of total assets, the vanguards of the world. 621 00:28:49,320 --> 00:28:52,280 Speaker 4: Is that a healthy market structure for any market? 622 00:28:54,520 --> 00:28:56,840 Speaker 10: Well, I think generally is big and it's not a 623 00:28:56,880 --> 00:28:59,280 Speaker 10: bad thing. I think, you know, the bulk of the 624 00:28:59,280 --> 00:29:01,880 Speaker 10: ETFs so far have been in what we would call 625 00:29:02,000 --> 00:29:05,720 Speaker 10: cheat beta replication strategies, taking and existing broad index and 626 00:29:05,800 --> 00:29:08,240 Speaker 10: just putting it in the ETF wrapper. So it adds 627 00:29:08,320 --> 00:29:10,000 Speaker 10: some utility if you will, you can own the whole 628 00:29:10,040 --> 00:29:12,160 Speaker 10: market for example, like the S and P pive hundred. 629 00:29:12,320 --> 00:29:14,760 Speaker 10: I think there's a very very good use case for 630 00:29:14,840 --> 00:29:18,480 Speaker 10: that in people's portfolios, and it presents a challenge for 631 00:29:18,520 --> 00:29:21,040 Speaker 10: folks like us, which you know, we're right across the 632 00:29:21,040 --> 00:29:23,320 Speaker 10: street from Vanguard, who are fully aware of who they are. 633 00:29:24,280 --> 00:29:27,160 Speaker 10: We tend to build product that we think is innovative, disruptive, 634 00:29:27,240 --> 00:29:29,000 Speaker 10: or unique, and I think there's plenty of room for 635 00:29:29,040 --> 00:29:32,360 Speaker 10: folks like us in this business. We always focus on 636 00:29:32,400 --> 00:29:34,880 Speaker 10: an outcome in mind or a customer in mind, like 637 00:29:35,360 --> 00:29:38,000 Speaker 10: is this something that would be useful in their portfolio 638 00:29:38,040 --> 00:29:40,880 Speaker 10: that's not out there, and we either try to design 639 00:29:41,040 --> 00:29:44,560 Speaker 10: ets that are stretching for extra return or creating alpha 640 00:29:45,000 --> 00:29:47,640 Speaker 10: or managing risk to the downside. And there's a place 641 00:29:47,680 --> 00:29:50,480 Speaker 10: for that in people's portfolios as well. So I think 642 00:29:50,560 --> 00:29:54,440 Speaker 10: the ecosystem in general has been very, very healthy. I 643 00:29:54,480 --> 00:29:56,560 Speaker 10: think that you know that if you're not in that 644 00:29:56,680 --> 00:29:59,960 Speaker 10: trillion dollar plus category, then you're in the bottom eighty 645 00:30:00,080 --> 00:30:03,880 Speaker 10: five percent of issues in terms of dollars. But I 646 00:30:03,880 --> 00:30:06,240 Speaker 10: think as an etf issuore, I think we're almost forty 647 00:30:06,240 --> 00:30:09,680 Speaker 10: seven billion dollars today. We've grown almost nine or ten 648 00:30:09,720 --> 00:30:12,240 Speaker 10: billion so far yere to date, which puts US at 649 00:30:12,280 --> 00:30:15,040 Speaker 10: like six or seven in terms of year to date netflows. 650 00:30:15,360 --> 00:30:18,440 Speaker 10: I think we can continue to chug along alongside of 651 00:30:18,440 --> 00:30:22,400 Speaker 10: those folks and add value for financial advisors and investors 652 00:30:23,080 --> 00:30:23,760 Speaker 10: going forward. 653 00:30:23,960 --> 00:30:26,120 Speaker 2: Before I let you go with like thirty seconds, have 654 00:30:26,160 --> 00:30:28,880 Speaker 2: you seen anything in terms of people betting on election 655 00:30:28,960 --> 00:30:31,000 Speaker 2: outcomes or anything like that, or any ETFs that you 656 00:30:31,040 --> 00:30:34,880 Speaker 2: see there, I have not seen anything. 657 00:30:35,280 --> 00:30:38,720 Speaker 10: Yet, I think what you'll see is as we get closer, 658 00:30:38,800 --> 00:30:43,160 Speaker 10: I think you'll see people trying to play that angle, 659 00:30:43,200 --> 00:30:47,240 Speaker 10: if you will. I mean there's a pretty diverse philosophy 660 00:30:47,280 --> 00:30:49,520 Speaker 10: between the two candidates, if you will. One is a 661 00:30:49,520 --> 00:30:52,520 Speaker 10: little more less regulation, less tax, one is more government. 662 00:30:53,120 --> 00:30:55,680 Speaker 10: And so I think we get closer to the investment 663 00:30:55,840 --> 00:30:58,520 Speaker 10: to the election date and we see whether and people 664 00:30:58,560 --> 00:31:00,000 Speaker 10: start to feel like whether or not there's going to 665 00:31:00,200 --> 00:31:03,280 Speaker 10: be a clear winner. You may see some people betting 666 00:31:03,400 --> 00:31:07,400 Speaker 10: with sector exposures for example. Yeah, as a way to 667 00:31:08,280 --> 00:31:09,520 Speaker 10: play the election odds. 668 00:31:09,640 --> 00:31:11,960 Speaker 2: All right, we appreciate that. Thanks so much, John Shan O'Hara, 669 00:31:12,040 --> 00:31:13,480 Speaker 2: President of pacer ETFs. 670 00:31:15,000 --> 00:31:18,880 Speaker 1: You're listening to the Bloomberg Intelligence Podcast. Catch us live 671 00:31:18,960 --> 00:31:22,520 Speaker 1: weekdays at ten am Eastern on applecar Play and Android 672 00:31:22,520 --> 00:31:25,280 Speaker 1: Auto with the Bloomberg Business app. You can also listen 673 00:31:25,400 --> 00:31:28,520 Speaker 1: live on Amazon Alexa from our flagship New York station. 674 00:31:28,880 --> 00:31:31,640 Speaker 1: Just say Alexa, play Bloomberg eleven thirty. 675 00:31:32,160 --> 00:31:34,600 Speaker 2: All right, let's go macro here. So every once in 676 00:31:34,640 --> 00:31:37,600 Speaker 2: a while, I love checking in with the real economy folks. 677 00:31:37,640 --> 00:31:40,680 Speaker 2: So the companies that move the things all around the world, 678 00:31:40,720 --> 00:31:43,160 Speaker 2: and to me, they're such a great indicator of what's 679 00:31:43,160 --> 00:31:45,240 Speaker 2: happening in the supply and demand front. For that, we're 680 00:31:45,240 --> 00:31:47,840 Speaker 2: going to start with Gene Soroka, Executive director of the 681 00:31:47,920 --> 00:31:51,040 Speaker 2: Port of Los Angeles. Hey, Geene, just on a basic 682 00:31:51,120 --> 00:31:53,720 Speaker 2: question here. You know, last week I was really struck 683 00:31:53,880 --> 00:31:57,240 Speaker 2: with the two rail lines coming off line because of strikes. 684 00:31:57,440 --> 00:32:00,640 Speaker 2: Operations have kicked back once the Canadian government came in. 685 00:32:00,680 --> 00:32:04,320 Speaker 2: There are still some that are striking. Now have you 686 00:32:04,440 --> 00:32:07,640 Speaker 2: noticed anything, Has anything been diverted to you guys. 687 00:32:09,280 --> 00:32:11,040 Speaker 6: Good morning Alex and good to have you on the 688 00:32:11,160 --> 00:32:14,520 Speaker 6: radio side today. No, we haven't seen much. The cargil 689 00:32:14,520 --> 00:32:18,680 Speaker 6: that's moving from the Transpacific theater in through Canada will 690 00:32:18,680 --> 00:32:21,640 Speaker 6: pretty much stay in that lane, even with the. 691 00:32:21,640 --> 00:32:23,400 Speaker 5: Short disruption we saw last week. 692 00:32:23,720 --> 00:32:27,240 Speaker 6: The bigger issue for American economy is the cargo that 693 00:32:27,280 --> 00:32:30,280 Speaker 6: moves north south. So whether it be autoparts that you 694 00:32:30,640 --> 00:32:34,480 Speaker 6: uses the USMCA agreement to go back and forth, grain, 695 00:32:34,760 --> 00:32:39,080 Speaker 6: agriculture products, steel, that's what's impacted the most. You may 696 00:32:39,120 --> 00:32:41,560 Speaker 6: see a couple of shippers in Asia try to book 697 00:32:41,560 --> 00:32:44,720 Speaker 6: on Transpacific vessels coming down to LA but it will 698 00:32:44,720 --> 00:32:48,880 Speaker 6: be very small amounts in an already over capacity over 699 00:32:49,000 --> 00:32:51,880 Speaker 6: demand situation versus the capacity. 700 00:32:51,720 --> 00:32:55,600 Speaker 4: Geene, I would think seasonally right here, we have retailers, 701 00:32:55,720 --> 00:32:59,320 Speaker 4: you know, starting to build their inventories for the holiday season. 702 00:32:59,760 --> 00:33:01,720 Speaker 4: What the traffic going through your poor what does it 703 00:33:01,760 --> 00:33:04,200 Speaker 4: look like today versus some prior years. 704 00:33:05,720 --> 00:33:08,240 Speaker 6: Yeah, Paul, great to hear from you. We're up eighteen 705 00:33:08,280 --> 00:33:11,360 Speaker 6: percent year on year off of very modest comps. But 706 00:33:11,480 --> 00:33:15,520 Speaker 6: we just crossed the five hundred thousand container unit mark 707 00:33:15,920 --> 00:33:18,080 Speaker 6: last month and it's only the fourth time in our 708 00:33:18,120 --> 00:33:21,120 Speaker 6: history we've had more than half a million imports coming 709 00:33:21,160 --> 00:33:25,160 Speaker 6: through Los Angeles. Big number for US, and it continues 710 00:33:25,600 --> 00:33:28,760 Speaker 6: the trend that we've seen thus far this year. In addition, 711 00:33:28,960 --> 00:33:32,480 Speaker 6: exports are now up fourteen consecutive months year on year. 712 00:33:32,800 --> 00:33:36,760 Speaker 6: So the volume as a whole is really great, based 713 00:33:36,800 --> 00:33:40,160 Speaker 6: mainly on a strong economy and then some geopolitical issues 714 00:33:40,440 --> 00:33:42,760 Speaker 6: around the around the world that I'm sure we'll talk about. 715 00:33:42,920 --> 00:33:46,720 Speaker 2: Yeah, So, Gin, I'm curious how much are your customers 716 00:33:46,800 --> 00:33:50,680 Speaker 2: talking about the geopolitics abroad? But also here in the 717 00:33:50,840 --> 00:33:53,800 Speaker 2: US Anecdotally, I keep hearing that certain companies are just 718 00:33:53,880 --> 00:33:57,120 Speaker 2: holding back on investments until we get clarity on who's 719 00:33:57,120 --> 00:33:59,480 Speaker 2: going to be in the White House. Are you seeing any. 720 00:33:59,320 --> 00:33:59,600 Speaker 8: Of that. 721 00:34:01,120 --> 00:34:04,600 Speaker 6: In just about every conversation, alex It is an election 722 00:34:04,760 --> 00:34:07,200 Speaker 6: year and folks are looking to see and try to 723 00:34:07,240 --> 00:34:09,840 Speaker 6: hedge as to what type of policies will be in 724 00:34:09,880 --> 00:34:11,200 Speaker 6: place after inauguration. 725 00:34:11,719 --> 00:34:13,400 Speaker 5: You've got a protracted labor. 726 00:34:13,120 --> 00:34:16,120 Speaker 6: Negotiation on the East Coast with the Dock Workers and 727 00:34:16,160 --> 00:34:19,759 Speaker 6: Employers Association that's coming up for expiry at the end 728 00:34:19,800 --> 00:34:22,880 Speaker 6: of September. The Panama Canal drought issues have been in 729 00:34:22,920 --> 00:34:25,000 Speaker 6: the news for well over a year and a half, 730 00:34:25,320 --> 00:34:28,600 Speaker 6: and the ongoing security concerns in the Red Sea have 731 00:34:28,800 --> 00:34:32,680 Speaker 6: steymied crossings at the Suez Canal for more than a 732 00:34:32,760 --> 00:34:35,920 Speaker 6: year as well. All of that put together fractionally, you 733 00:34:36,040 --> 00:34:38,600 Speaker 6: see cargo coming to the West coast of the United 734 00:34:38,640 --> 00:34:41,880 Speaker 6: States and specifically Los Angeles in addition to the strength 735 00:34:41,880 --> 00:34:42,600 Speaker 6: of that economy. 736 00:34:42,719 --> 00:34:44,120 Speaker 5: That shows where the numbers are going. 737 00:34:44,560 --> 00:34:44,920 Speaker 10: Hejean. 738 00:34:45,120 --> 00:34:48,480 Speaker 4: Just last week, Bloomberg News published a really in depth. 739 00:34:48,600 --> 00:34:50,120 Speaker 5: Big Take story. Now look at. 740 00:34:51,600 --> 00:34:55,279 Speaker 4: Your world ports around seaports around the world and how 741 00:34:55,320 --> 00:34:58,560 Speaker 4: some governments are using them as really strategic tools here 742 00:34:59,160 --> 00:35:02,200 Speaker 4: because they're becoming it's so important for global trade just 743 00:35:02,480 --> 00:35:04,920 Speaker 4: for the US. Do you feel like our ports are 744 00:35:04,920 --> 00:35:07,319 Speaker 4: where they need to be in terms of, you know, 745 00:35:07,440 --> 00:35:11,840 Speaker 4: investments capacity or does the US whether it's a public 746 00:35:11,840 --> 00:35:14,200 Speaker 4: private partnership, need to invest more. 747 00:35:15,760 --> 00:35:20,560 Speaker 6: We absolutely need to invest more, but beginning with the Infrastructure, 748 00:35:20,560 --> 00:35:24,160 Speaker 6: Investment in Jobs Act, the Inflation Reduction Act, and now 749 00:35:24,280 --> 00:35:27,320 Speaker 6: applications that are in front of the Environmental Protection Agency, 750 00:35:27,760 --> 00:35:30,319 Speaker 6: We've seen a focus on ports over the last three 751 00:35:30,360 --> 00:35:32,680 Speaker 6: and a half years here in the United States we 752 00:35:32,719 --> 00:35:36,319 Speaker 6: haven't seen in a generation. We'd like to have this 753 00:35:36,440 --> 00:35:39,480 Speaker 6: type of federal investment budgeted annually. 754 00:35:39,680 --> 00:35:40,719 Speaker 5: And I also know that. 755 00:35:40,640 --> 00:35:43,919 Speaker 6: The work here in California under Governor Gavin Newsom has 756 00:35:44,040 --> 00:35:47,480 Speaker 6: the same bent paying attention to these ports, investing not 757 00:35:47,680 --> 00:35:52,240 Speaker 6: only in the infrastructure, but digitalization as well as clean 758 00:35:52,440 --> 00:35:56,160 Speaker 6: and green technologies. This has to continue, But I like 759 00:35:56,320 --> 00:35:58,120 Speaker 6: the trajectory that we're on right now. 760 00:35:58,480 --> 00:36:00,759 Speaker 2: Going back to what you were mentioning about customers talking 761 00:36:00,760 --> 00:36:04,640 Speaker 2: about election uncertainty, what's your best guess as to what 762 00:36:04,719 --> 00:36:07,440 Speaker 2: happens after that? I'm trying to get a handle on, like, Okay, 763 00:36:07,480 --> 00:36:08,920 Speaker 2: now I know who wins the White House. Are we 764 00:36:08,960 --> 00:36:11,120 Speaker 2: going to see a flood of money coming in like 765 00:36:11,200 --> 00:36:13,560 Speaker 2: a flood of buying or is it just going to 766 00:36:13,600 --> 00:36:14,359 Speaker 2: be incremental. 767 00:36:15,840 --> 00:36:17,959 Speaker 5: Well, Alex take away the politics. 768 00:36:18,680 --> 00:36:22,719 Speaker 6: The presumptive Republican nominae and now Republican nominee has said 769 00:36:22,719 --> 00:36:25,239 Speaker 6: he wants to put a ten percent tariff on all 770 00:36:25,320 --> 00:36:28,480 Speaker 6: three trillion dollars worth of imports that come to the 771 00:36:28,560 --> 00:36:33,239 Speaker 6: United States, sixty percent on those emanating from China, and 772 00:36:33,280 --> 00:36:36,440 Speaker 6: potentially sixty percent on automobiles and other products coming out 773 00:36:36,480 --> 00:36:39,040 Speaker 6: of Mexico. That would change the landscape here at the 774 00:36:39,040 --> 00:36:43,000 Speaker 6: Port of Los Angeles forever, and it would create inflation. 775 00:36:43,520 --> 00:36:46,840 Speaker 6: On the Democratic side, what we've seen is a continuation 776 00:36:47,280 --> 00:36:50,960 Speaker 6: of this teriff regime and get tough on China policy, 777 00:36:51,160 --> 00:36:56,160 Speaker 6: but in very small, targeted ways. What happens to investment 778 00:36:56,200 --> 00:37:00,719 Speaker 6: after this has to revolve around international and trade aid policy. 779 00:37:00,920 --> 00:37:03,480 Speaker 6: What are we going to do to stimulate not only 780 00:37:03,520 --> 00:37:07,400 Speaker 6: the continuation of that government investment federal and state level, 781 00:37:07,600 --> 00:37:09,760 Speaker 6: but how we can give confidence to the private sector 782 00:37:09,800 --> 00:37:11,160 Speaker 6: to invest behind us. 783 00:37:11,760 --> 00:37:14,280 Speaker 4: Gee, you know, nobody has a better view of China 784 00:37:14,480 --> 00:37:18,080 Speaker 4: than you guys in the Port of Los Angeles. Are 785 00:37:18,120 --> 00:37:21,160 Speaker 4: the boats still coming? Are they loaded as much? Because 786 00:37:21,320 --> 00:37:23,640 Speaker 4: there's real concern about the Chinese economy. 787 00:37:25,120 --> 00:37:29,000 Speaker 6: Yeah, A couple things, Paul. When we concluded calendar year 788 00:37:29,040 --> 00:37:33,280 Speaker 6: twenty twenty two, fifty seven percent of our business portfolio 789 00:37:33,360 --> 00:37:37,120 Speaker 6: here in Los Angeles was China cargo, imports and exports. 790 00:37:37,520 --> 00:37:41,920 Speaker 6: Right now it's about forty three percent. Yet we're still growing. 791 00:37:42,320 --> 00:37:44,960 Speaker 6: We've been nimble enough here in Los Angeles to attract 792 00:37:44,960 --> 00:37:47,960 Speaker 6: the cargo in Southeast and South Asia. There are more 793 00:37:48,000 --> 00:37:51,920 Speaker 6: NonStop services being put in place by the shipping lots. 794 00:37:52,360 --> 00:37:54,880 Speaker 5: Speed has always been. 795 00:37:54,920 --> 00:37:58,360 Speaker 6: Our selling point with cargo coming from Asia and distributing 796 00:37:58,360 --> 00:38:02,680 Speaker 6: throughout the country. These NonStop services in place, that speed 797 00:38:02,760 --> 00:38:04,760 Speaker 6: variable remains in our favor. 798 00:38:05,520 --> 00:38:07,680 Speaker 2: What's your biggest problem right now, Gene, Like, what keeps 799 00:38:07,680 --> 00:38:08,200 Speaker 2: you up at night? 800 00:38:10,080 --> 00:38:10,319 Speaker 4: Well? 801 00:38:10,360 --> 00:38:13,239 Speaker 6: Looking across the board, making sure we keep our costs 802 00:38:13,280 --> 00:38:16,480 Speaker 6: in place. And we do that with a relatively expensive 803 00:38:16,560 --> 00:38:19,799 Speaker 6: landscape on how we move cargo. But more volume means 804 00:38:19,840 --> 00:38:23,280 Speaker 6: our unit cost becomes much more competitive, and we're trending 805 00:38:23,280 --> 00:38:26,960 Speaker 6: in that direction nicely. We've got a very complex labor landscape. 806 00:38:27,080 --> 00:38:29,760 Speaker 6: Our dock workers have a contract for another five years, 807 00:38:30,000 --> 00:38:33,719 Speaker 6: but it's the trucker's warehouses folks in it and manufacturing. 808 00:38:33,960 --> 00:38:37,560 Speaker 6: We've got to keep trained up and moving with this economy. 809 00:38:37,760 --> 00:38:40,520 Speaker 6: And then, lastly, along the regulatory environment. Got to make 810 00:38:40,560 --> 00:38:43,640 Speaker 6: sure the clean air is a priority, but making sure 811 00:38:43,800 --> 00:38:46,520 Speaker 6: that we're balanced, because every four containers here in Los 812 00:38:46,560 --> 00:38:48,160 Speaker 6: Angeles creates a job. 813 00:38:48,880 --> 00:38:52,000 Speaker 4: Interesting, So, Gin, you mentioned some of your partners there, 814 00:38:52,040 --> 00:38:56,160 Speaker 4: whether that are the docks, the warehouses, the transportation, the 815 00:38:56,239 --> 00:38:59,360 Speaker 4: rails and trucks. How is that supply chain, how is 816 00:38:59,360 --> 00:39:03,440 Speaker 4: that legit to chain performing in your area these days? 817 00:39:04,920 --> 00:39:07,439 Speaker 6: I look at the vital statistics every morning, and after 818 00:39:07,560 --> 00:39:09,879 Speaker 6: just checking in with you all, I saw that they're 819 00:39:09,880 --> 00:39:12,520 Speaker 6: at or better than where they were pre COVID, with 820 00:39:12,840 --> 00:39:16,600 Speaker 6: one exception, are on doc rail cargo sitting a little 821 00:39:16,600 --> 00:39:19,240 Speaker 6: bit longer than I would like. We're working very closely 822 00:39:19,320 --> 00:39:22,520 Speaker 6: with both the Union, Pacific Railroad and BNSF to make 823 00:39:22,520 --> 00:39:26,240 Speaker 6: sure we have railcars, engine power, and crewing to match 824 00:39:26,400 --> 00:39:29,840 Speaker 6: this surgeon cargo that we have coming now. Nothing sinister 825 00:39:30,000 --> 00:39:31,920 Speaker 6: is happening on the ground. Just need to keep that 826 00:39:32,040 --> 00:39:35,239 Speaker 6: velocity going so the next chips of which we have 827 00:39:35,320 --> 00:39:37,880 Speaker 6: fifty six on the way from Asia, can be worked 828 00:39:37,880 --> 00:39:41,040 Speaker 6: expeditiously by our long shore members and then gotten off 829 00:39:41,120 --> 00:39:44,560 Speaker 6: into the American economy. And that's with all this data, Paul, 830 00:39:44,800 --> 00:39:48,480 Speaker 6: we see these micro in many spikes or changes in 831 00:39:48,560 --> 00:39:51,200 Speaker 6: the supply chain data so we can act much quicker 832 00:39:51,200 --> 00:39:52,360 Speaker 6: than we ever have before. 833 00:39:52,640 --> 00:39:54,160 Speaker 4: All Right, Gene, thank you so much for joining us. 834 00:39:54,200 --> 00:39:56,800 Speaker 4: Gen Roka, Executive director of Port of Los Angeles. 835 00:39:57,400 --> 00:40:01,960 Speaker 1: This is the Bloomberg Intelligence Podcast, available on Apples, Spotify, 836 00:40:02,120 --> 00:40:05,800 Speaker 1: and anywhere else you get your podcasts. Listen live each weekday, 837 00:40:05,920 --> 00:40:08,880 Speaker 1: ten am to noon Eastern on Bloomberg dot com, the 838 00:40:09,000 --> 00:40:12,440 Speaker 1: iHeartRadio app tune In, and the Bloomberg Business app. You 839 00:40:12,480 --> 00:40:15,640 Speaker 1: can also watch us live every weekday on YouTube and 840 00:40:15,840 --> 00:40:17,440 Speaker 1: always on the Bloomberg terminal