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Speaker 1: This is the Bloomberg Surveillance Podcast.

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Speaker 2: I'm Tom Keane, along with Jonathan Farrow and Lisa Abramowitz.

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Speaker 2: Join us each day for insight from the best an economics, geopolitics,

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Speaker 2: finance and investment. Subscribe to Bloomberg Surveillance on demand on Apple,

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Speaker 2: Spotify and anywhere you get your podcasts, and always on

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Speaker 2: Bloomberg dot Com, the Bloomberg Terminal and the Bloomberg Business app.

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Speaker 2: Deutsche Bank for David Folkritz Lando set in the intellectual

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Speaker 2: structure on equities and asset allocation. Chief global strategist spin

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Speaker 2: from Chauda joins us this morning.

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Speaker 1: With dby Binkie.

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Speaker 2: You nailed the bullmarket. Took a while to happen, the

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Speaker 2: Chada market. The Chada bullmarket took a while to happen,

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Speaker 2: and with a vengeance, you nailed this. And when we

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Speaker 2: were talking going to go in live here, you may

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Speaker 2: clear ten percent of the people have participated in ninety

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Speaker 2: percent of the people have been left behind. What's the

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Speaker 2: next leg look like for ninety percent of the people

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Speaker 2: that have missed this October market?

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Speaker 3: Yeah, so, I mean for them, you know, And the

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Speaker 3: distinction that I was drawing was, you know, we've had

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Speaker 3: to move up inequity positioning. So we have a simple

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Speaker 3: sort of Z score plus minus one band and you know,

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Speaker 3: we were at the bottom last year. That was the

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Speaker 3: reason for the call for a positioning squeeze. Positioning today

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Speaker 3: is sitting in the middle of the band. The entire

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Speaker 3: move in positioning up has come really from systematic strategies

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Speaker 3: as VOLL has come down from extremely elevated levels to

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Speaker 3: still very elevated levels outside I would say, you know,

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Speaker 3: especially driven by really rates VOLL discretionary investors, which you know,

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Speaker 3: in terms of assets under management or I would say

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Speaker 3: eight to one in terms of relative size to systematic strategies.

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Speaker 3: Their positioning has been what I would describe as firmly

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Speaker 3: underweight for the last year in you know, a very narrow.

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Speaker 1: Can I translate firmly underweight just.

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Speaker 3: So the participation has been you know, minimal to zero

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Speaker 3: to non existing night this week, what we are seeing

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Speaker 3: is basically some move up in what we put in

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Speaker 3: our positioning measures, but it's really a sentiment indicator, and

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Speaker 3: that's the aaii bullbear spread and that's moved up for

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Speaker 3: the first time. Whether or not that actually translates into

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Speaker 3: increased allocations we have to wait and see.

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Speaker 4: The call from here. From where we are at about

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Speaker 4: forty three hundred at of forty five, just written your

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Speaker 4: research last night, from the last week or so, it

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Speaker 4: feels like it's all about earnings. Can you pair this

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Speaker 4: view about earnings with what's happening on the other side

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Speaker 4: of the research team, with Mattlasli and Deutsche Bank ultimately

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Speaker 4: looking for a recession. Can you pay the two views

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Speaker 4: at the moment of Binki.

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Speaker 1: Oh?

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Speaker 3: Absolutely, So that's really easy because they are the same view.

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Speaker 3: The view so my earnings numbers te off of our

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Speaker 3: house economics forecast, but with a small twist, I would say,

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Speaker 3: remember that the S and P five hundred gets thirty

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Speaker 3: to forty percent of its earnings from the rest.

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Speaker 5: Of the world.

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Speaker 3: So I have you know, a sales weighted global GDP

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Speaker 3: measure obviously for US equities, you know, the US economy

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Speaker 3: matters a lot. We have a framework. I'm going to

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Speaker 3: leave that aside for a second. That's exactly what it is.

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Speaker 3: But it teas off of basically our house economics forecast.

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Speaker 3: So it's really a translation issue if you want. It

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Speaker 3: embodies a recession. In Q four and Q one, the

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Speaker 3: things to note about it are that the forecast is

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Speaker 3: for a pretty mild recession.

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Speaker 1: Number two.

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Speaker 3: You know, we do have growth happening until then, and

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Speaker 3: that means that the recession kicks in form a higher

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Speaker 3: level in terms of earnings. And you know, what I

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Speaker 3: would emphasize is that the equity market, when it looks

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Speaker 3: at aggregate earnings like the S and P five hundred earnings,

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Speaker 3: tends to look year and year and in year, you know,

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Speaker 3: we are still negative in terms of growth. It's slightly

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Speaker 3: less negative than you know, the prior quarter, but it's

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Speaker 3: still negative. But remember that, you know, when we look

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Speaker 3: at all macro series, we look quarter on quarter, which

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Speaker 3: in you know, equities, we call sequential growth, and our

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Speaker 3: estimate of sequential growth in S and P five hundred

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Speaker 3: earnings in Q one on a seasonally adjusted basis is

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Speaker 3: a solid five percent. And I would emphasize that's not annualized.

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Speaker 6: Markets are not the economy, and you have to just

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Speaker 6: keep repeating that markets are not the economy. Markets. John

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Speaker 6: was mentioning that earlier, and I am wondering whether this

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Speaker 6: could be the start of a bull market, even though

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Speaker 6: the US has not yet had a full blown recession.

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Speaker 1: Yeah.

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Speaker 3: So so you know, there's two sort of elements about

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Speaker 3: the recession that I would emphasize.

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Speaker 1: This is arguably the.

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Speaker 3: Most well telegraphed recession. Recessions, in my view, in terms

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Speaker 3: of their impact on financial markets, are not really about

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Speaker 3: you know, a couple of quarters of negative growth where

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Speaker 3: everybody agrees that it's modest and temporary because the market's

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Speaker 3: going to look through that. The market's meant to look

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Speaker 3: through that. You know, if you listen to corporates on

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Speaker 3: earnings calls, we're at the point where we've been talking

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Speaker 3: about recessions for at least three the impending recession basically

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Speaker 3: for at least three quarters, and so you know, corporates

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Speaker 3: are you know, already responding. And the idea I would

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Speaker 3: put on the table is that, you know, it's very

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Speaker 3: possible that the recession slow down. Part of that has

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Speaker 3: already you know, been brought forward if you want. If

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Speaker 3: a recession is very well anticipated, it's not very you know,

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Speaker 3: the little shock value to make you risk averse. So

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Speaker 3: there will be some negative impacts, but you know a

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Speaker 3: lot of the multipliers come really from a risk aversion,

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Speaker 3: and it's you know the concept of anticipated risk version.

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Speaker 3: You know, an anticipated shock is not a shock.

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Speaker 6: To tie this all together and to and where we began,

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Speaker 6: do you think that we are seeing durable signs of

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Speaker 6: a broadening out.

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Speaker 3: I think that it gets pretty choppy from here because

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Speaker 3: the positioning squeeze that I spoke about at the beginning,

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Speaker 3: that's mostly basically been done. I mean, as you you know,

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Speaker 3: as Tom mentioned a vix at fourteen and thirteen, you know,

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Speaker 3: the biggest driver of systematic strategies is decline involved and

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Speaker 3: we are not looking for a you know, vault to

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Speaker 3: really go down from here. We're not really looking for

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Speaker 3: discretionary investors to raise their positioning because as you said earlier,

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Speaker 3: there is this very long list of concerns that they're

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Speaker 3: focused on in on and I don't think the resolution

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Speaker 3: of those is easy. So we're going to continue to

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Speaker 3: have a tugger war. But the demand supply, the positioning

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Speaker 3: squeeze is done, but the demand supply balance still looks,

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Speaker 3: you know, constructive. So I would say a grind higher

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Speaker 3: forty five hundred per year, it should be pretty sharp.

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Speaker 3: Soft landing will easily give you five thousand. Yeah, we've

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Speaker 3: said that before, we published that before.

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Speaker 4: Think he's so measured out to take here. Last year,

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Speaker 4: same time?

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Speaker 5: Great?

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Speaker 4: Yeah, this year, same time you had this year because.

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Speaker 1: You make the call, but the exxies you never know.

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Speaker 4: The life of a strategist. Think you just quickly Yeah?

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Speaker 4: Does it feel a whole lot better when things are

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Speaker 4: going right? Or do you get nervous that things are

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Speaker 4: a bad to go wrong? Are you constantly paranoid? How

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Speaker 4: do you think about it?

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Speaker 5: Constantly paranoid?

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Speaker 3: You're asking me this on air?

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Speaker 4: Approach to that. Last year was tough. I've talked about

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Speaker 4: that with you many times. This year is better. You know,

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Speaker 4: how do you approach things when you're right.

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Speaker 3: The same way as you approach them when you're wrong.

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Speaker 3: You ask yourself, what have you got right? And I

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Speaker 3: know you're right for the right reason, and what have

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Speaker 3: you got wrong? And you were just your review accordingly, What.

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Speaker 4: Was the lesson from last year that helped you with

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Speaker 4: this year?

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Speaker 3: The lesson from last year was a confirmation of my

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Speaker 3: view earlier in the year that we would get a

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Speaker 3: massive amount of anxiety from the FED. But the anxiety

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Speaker 3: was of their own creation because they decided, for a

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Speaker 3: variety of reasons to wait a long time. So when

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Speaker 3: I listened to the fo mc now I hear calm.

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Speaker 3: I mean, and that that really reaffirms my view that

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Speaker 3: a lot of their nervousness, yes about inflation, still about inflation,

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Speaker 3: but you know they were at zero to start the year.

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Speaker 3: We are now at five and and and so there's

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Speaker 3: a lot less reason to be anxious.

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Speaker 1: Excuse to get out of the triple every doll case.

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Speaker 4: I mean, first order, I think this was great, tons

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Speaker 4: of respect for you, but it always grayst catch out.

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Speaker 4: Thank you out of the Deutsche Bank.

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Speaker 2: I get the Jones joins us right now their fixed

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Speaker 2: income strategy. And I'm going to go to someone we

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Speaker 2: were talking about with your exquisite ability to play piano,

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Speaker 2: which is Gershwin George, where he said life is a

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Speaker 2: lot like jazz boy, you better improvides. How do you

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Speaker 2: improvise in the bond market with the oddity of post

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Speaker 2: pandemic economics and the oddity of the ambiguity I.

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Speaker 1: Should say almost about where we are right now.

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Speaker 7: Yeah, I mean, I think that's really the challenge not

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Speaker 7: only strategists have, but also the FED is facing right

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Speaker 7: that how do they set policy in an environment that's

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Speaker 7: really very unfamiliar. The way we've been doing it is

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Speaker 7: simply either barbelling or laddering and not trying to play

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Speaker 7: every little up and down in the market. So if

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Speaker 7: you know you can stay short and try to roll

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Speaker 7: out and time it perfectly, but there's a lot of

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Speaker 7: reinvestment risk if you miss it because these moves are

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Speaker 7: so fast.

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Speaker 2: Are you doing this with combining your work with Lizae Saunders.

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Speaker 2: Are you doing it with the understanding there will be

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Speaker 2: a jump condition in the short end or even a

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Speaker 2: dramatic movement in the long end, or do you see

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Speaker 2: sort of stability out there as you barbell or.

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Speaker 7: Ladder We think in the bond market it'll be more stable.

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Speaker 7: We had huge volatility in the first half of the year,

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Speaker 7: and I think that was the market readjusting to FED

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Speaker 7: policy and all the surprises that we've had, and yet

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Speaker 7: we haven't gone anywhere right. We had all this volatility,

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Speaker 7: and yields pretty much from two years out are about

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Speaker 7: the same as they were at the beginning of the year.

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Speaker 7: But we think second half should be somewhat more stable.

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Speaker 7: I mean, barring some sort of crazy financial market event

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Speaker 7: that seems to happen every six weeks. But barring that,

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Speaker 7: I think that we should have a fairly stable move here.

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Speaker 6: There's this sort of renegade theory out there right now

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Speaker 6: trying to justify perhaps some of the moves and some

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Speaker 6: of the resilience in the economy or else it's just true,

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Speaker 6: which is we've been talking about the lure of five

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Speaker 6: to five and a half percent on cash as a negative,

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Speaker 6: a sucking liquidity out of the market. But some people

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Speaker 6: say it's actually stimulative because all of a sudden you

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Speaker 6: can get returns on your cash, which gives you more

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Speaker 6: money to go out and spend that much more. Which

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Speaker 6: is it?

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Speaker 7: I guess that's a tough question to answer. I think

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Speaker 7: the five percent, the higher yields are more punishment than reward,

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Speaker 7: right because the number of savers that are actually benefiting

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Speaker 7: from that are doing fine. But you have a whole

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Speaker 7: bunch of people who are companies and individuals trying to

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Speaker 7: borrow either get a mortgage a car loan, companies trying

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Speaker 7: to refinance at higher rates. I would say it's more

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Speaker 7: negative than positive.

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Speaker 6: It's negative in theory. But this is what I keep

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Speaker 6: hearing from people that nobody who's buying a home is

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Speaker 6: paying seven percent mortgage rate, everybody's getting some other mortgage rate.

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Speaker 6: Companies can get pretty low rates if they're a good company.

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Speaker 6: On average, they're high, but those companies that have to

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Speaker 6: pay through the nose aren't borrowing at those rates. So

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Speaker 6: this interest rate effect, the punishment isn't actually bleeding to

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Speaker 6: the economy, and the reward is actually driving even more investment.

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Speaker 6: Is that an accurate way to understand the dynamic that's

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Speaker 6: been so confounding so far this year?

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Speaker 7: Well, I would say, and the credit conditions have been

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Speaker 7: easier if you go to the capital markets, then you

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Speaker 7: know it would normally be under these circumstances. But if

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Speaker 7: you're a like I say, are you a low credit borrower,

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Speaker 7: those costs really are going up, and we're seeing a

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Speaker 7: lot of weakness at the low end of the credit spectrum.

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Speaker 7: And I think it's just a matter of time. It's

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Speaker 7: hard to believe that we can have all this tightening

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Speaker 7: five hundred basis points and a very short period of time,

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Speaker 7: qt also at the same time and not have an

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Speaker 7: economic effect one year forward.

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Speaker 2: Letdered or bar belled, whatever the blend is. Full faith

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Speaker 2: and credit corporate, are you clipping a coupon or can

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Speaker 2: you actually manage and position for total return.

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Speaker 7: I think that the bulk of what you'll get will

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Speaker 7: come from the coupon, but you can position to get

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Speaker 7: some total return.

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Speaker 1: Youre going to give me a double digit total return?

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Speaker 7: Not double dita? I think that I can't. I'm sorry

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Speaker 7: now I think eleven percent.

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Speaker 2: Well, that was just folks, I'm busting chops with Kathy Jones.

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Speaker 2: That was a discussion from about ten, twelve, twenty years ago.

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Speaker 1: That was fun, wasn't it.

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Speaker 4: It was It was gott to give you a stamp.

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Speaker 4: It's a bolt off. What Lisa say is one set

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Speaker 4: of times in this country bulb of cash.

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Speaker 1: I noticed that, Glad you bring that.

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Speaker 4: Up high sharing like a decade. That was also the stamp,

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Speaker 4: by the way, for the whole of last year. Two

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Speaker 4: from redfins. So one third lease it to your point.

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Speaker 6: Yeah, they're bought in cash, and then the others are

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Speaker 6: bought from developers straight up that are offering them much

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Speaker 6: lower rates, or they're refinancing existing or they're sort of

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Speaker 6: taking on other loans for lower Again, the point being,

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Speaker 6: the impulse isn't making its way into slowing the economy

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Speaker 6: in a material way, and this is the reason why

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Speaker 6: people are wondering, why hasn't it been more painful?

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Speaker 4: Oh, they band new homes because they old ones out

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Speaker 4: for sale exactly, They've got people in them with mortgages

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Speaker 4: at three percent. This housing market is totally distorted completely.

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Speaker 4: It's totally totally distorted it.

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Speaker 2: I would suggest it's always been distorted in the pandemic

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Speaker 2: made it shockingly. I mean, the rent now is foury

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Speaker 2: three hundred something. Jonathan Miller Miller, it's nuts.

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Speaker 4: But said this, Tom, this is a big question to ask,

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Speaker 4: and it's connected to monetary policy and built on what

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Speaker 4: Least is talking about because it's so important. Are the

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Speaker 4: long and vailable lags longer, like thirty years long? Because

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Speaker 4: mortgages three percent like thirty years long? And everyone did that?

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Speaker 4: I hope you did that. I didn't do that. I

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Speaker 4: wish I had done that. Using the term everyone loosely?

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Speaker 4: Or are we just finding out this economy is way

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Speaker 4: more resilient, Kathy in that five percent doesn't get it done.

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Speaker 7: Yeah, I think it's the long and variable legs are longer.

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Speaker 7: And you know, let's put housing aside and let's look

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Speaker 7: at all the other costs. That are going up, and

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Speaker 7: also the fact that we've had sub two percent growth

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Speaker 7: now for several quarters. Manufacturing sector is really very weak,

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Speaker 7: and we're starting to see the ism numbers on the

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Speaker 7: service side come down as well new orders. So I

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Speaker 7: think it's been longer because we had such a fiscal

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Speaker 7: and monetary policy response to the pandemic that it's taking

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Speaker 7: longer for it to work its way out. But it's

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Speaker 7: hard for me to believe again that that's not going

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Speaker 7: to happen over time. And I think that's that the

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Speaker 7: Feds whole hold on to high rates because if inflation

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Speaker 7: continues to come down, holding is tightening, and particularly with

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Speaker 7: QT going out of this.

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Speaker 4: That's such a good point that's missed by so many people,

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Speaker 4: and I totally agree with you. You can keep the nominal

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Speaker 4: right study, but the real right shifts. That's the point,

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Speaker 4: right right, And.

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Speaker 7: Real rates are up, and if they stay up for

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Speaker 7: another year or so, that's going to have an impact

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Speaker 7: on the.

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Speaker 2: A ten year real rate one point five four percent,

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Speaker 2: I modeled out two point zero five percent, and sort

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Speaker 2: of before all this idiocy, do you people suggest we'll

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Speaker 2: see a ten year real rate that will migrate back

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Speaker 2: to the sort of the moving averages of another time

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Speaker 2: and place.

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Speaker 7: I think two percent might be a little bit on

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Speaker 7: the high side for a ten year, but we'd be

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Speaker 7: actually looking at tips right here and locking in some

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Speaker 7: of those really yields.

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Speaker 4: Interesting, Kathy, he's going to see Kathy John child swabble.

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Speaker 2: What we're going to do is talk to somebody who

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Speaker 2: has an immense respect for legal pros on this. Terry

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Speaker 2: Haynes is founder of penjea policy with decades of duty

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Speaker 2: on Capitol Hill.

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Speaker 1: Terry, you know, I go to Law Fair like.

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Speaker 2: Everybody else, because these guys are the adults in the room,

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Speaker 2: and they say, wait for the document.

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Speaker 1: What are we waiting for?

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Speaker 8: Well, we're waiting to see what the actual indictment says

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Speaker 8: and what the chargers actually are. You know, you and

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Speaker 8: John are absolutely right. You know, there's a lot of

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Speaker 8: dinner three sources to say, and you know, the former

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Speaker 8: president wasted no time not only in getting out there

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Speaker 8: and talking about it, but one thing I found significant

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Speaker 8: was the first fundraising email showed up at about a

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Speaker 8: half an hour after made that announcement, So you know,

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Speaker 8: there's clearly an attempt by him not only to frame

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Speaker 8: this thing, before the indictment whatever it is comes out

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Speaker 8: as well as raised money, and you know it'd been

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Speaker 8: gin up as followers.

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Speaker 2: Terry, My experience here goes as far as Perry Mason,

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Speaker 2: maybe law and order.

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Speaker 1: So you're going to help us right now.

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Speaker 2: To me, there's a massive distinguishing feature between state courts

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Speaker 2: in New York or.

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Speaker 1: Any other state for that matter, in a federal court anywhere.

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Speaker 2: In this case in Miami, what is the state court

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Speaker 2: versus federal court distinction for the former president.

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Speaker 8: Well, it's a couple of things. One is the is

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Speaker 8: the sorts of offenses. I mean, there are things that

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Speaker 8: are that are exclusively federal offenses, and you have in

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Speaker 8: the in the Trump case, you have not only documents

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Speaker 8: but kind of also investigations about January sixth matters. A

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Speaker 8: lot of the state court matters have to do with

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Speaker 8: things like his business and whether whether his business records

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Speaker 8: were on the up and up, the tax evasion matter

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Speaker 8: that they went through in Manhattan, those sorts of things.

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Speaker 8: But also the also one of the cases, which is

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Speaker 8: a Georgia case, possibly has to do with whether or

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Speaker 8: not he interfered with Georgia state election law as a

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Speaker 8: result of the January sixth matter, asking Georgia officials to

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Speaker 8: find him votes that sort of thing. So the matter

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Speaker 8: really is kind of civil versus criminal, and it also

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Speaker 8: has to do with the degree to which the former

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Speaker 8: president can be punished, either by incarceration or fines or

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Speaker 8: the like.

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Speaker 6: Terry John picked up on the right point here, which is,

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Speaker 6: how do the other Republican potential candidates really step up

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Speaker 6: and respond to this. Do they embrace the sort of

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Speaker 6: deep state conspiracy or do they say this just shows

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Speaker 6: he's not fit to run?

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Speaker 8: You know, the answer is, Lisa, is both. You know,

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Speaker 8: they have to attack Trump head on. I think you'll

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Speaker 8: see an intensification of what I call the pack swarm mentality,

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Speaker 8: where the pack of these candidates all talk about Trump's

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Speaker 8: unfitness to run and how he's not the best person

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Speaker 8: and why. And at the same time they hedge their

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Speaker 8: bets a little bit by raising concerns about out about

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Speaker 8: the justice system, and there are questions unresolved questions about

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Speaker 8: not only whether or not you know, the potential indictment

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Speaker 8: here is different treatment. I mean, remember, Trump's not the

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Speaker 8: only person that's had took records home with him, that

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Speaker 8: includes his vice president that includes the sitting president potentially others.

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Speaker 8: But also there's kind of a broader historical question about

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Speaker 8: how these laws were enforced, and you know, the president,

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Speaker 8: the President Trump is trying to make a case that

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Speaker 8: both there's different treatment here for him, as well as

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Speaker 8: a situation where these laws were never enforced in the

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Speaker 8: way that the Justice Department is proposing to enforce those laws.

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Speaker 8: You know, those are both questions that the Justice Department

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Speaker 8: is going to have to answer as this case moves forward.

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Speaker 6: Terry, you mentioned that the fundraising emails went out right

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Speaker 6: after the announcement by the former president. Does this type

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Speaker 6: of issue have the same resonance with voter that it

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Speaker 6: used to?

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Speaker 5: Oh?

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Speaker 8: I think it has a residence. You noticed in the

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Speaker 8: Trump's statement, he's pushing the buttons about you know, you know,

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Speaker 8: they talked about the Russia hopes and that was wrong.

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Speaker 8: They talked about this that was wrong, that this that

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Speaker 8: was wrong. Now this is the He refers to this

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Speaker 8: as the Box's hoax, so he's trying to gin that up.

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Speaker 8: What I will say on the primary battle is that

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Speaker 8: you know, forget about the national beauty contests. If you

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Speaker 8: look at the early states, you've got Trump about forty

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Speaker 8: percent in the field about sixty percent. And I think

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Speaker 8: that what happens is that a lot of these candidates

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Speaker 8: really kind of combined to take Trump down and at

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Speaker 8: the same time appropriate the policies and say, hey, look,

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Speaker 8: I'm your safer alternative.

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Speaker 4: Terry is so messy don in Washington, DC, as you know,

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Speaker 4: I just wonder how much pressure will build now on

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Speaker 4: House Republicans to push up their investigations into the sitting president.

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Speaker 4: How much pressure is going to be on them to

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Speaker 4: do that now?

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Speaker 8: Oh, I think there's no pressure on them. I think

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Speaker 8: they put pressure on themselves to do that. Frankly, One

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Speaker 8: thing I want to say here is that just because

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Speaker 8: the Trumpet I think is less likely to become president

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Speaker 8: as a result of all this, doesn't mean that Biden's

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Speaker 8: more likely to become president. One reason for that is

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Speaker 8: that those investigations I think intensify and ramp up. The

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Speaker 8: other reason is should an alternative to Trump emerge? And

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Speaker 8: we're really not going to know that for six months

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Speaker 8: or more. I mean, but if the Republican nominee isn't Trump,

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Speaker 8: you know that person is better able and better capable

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Speaker 8: of putting Biden on the back foot on policies as

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Speaker 8: well as his health and his age. So this doesn't

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Speaker 8: mean this isn't unalloyed good news for Biden by any means.

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Speaker 4: Terry Hines Panchee, Terry always appreciate it, said, thank you,

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Speaker 4: just fantastic.

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Speaker 2: Jeffrey Curry's going to come out with his version of

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Speaker 2: full by randomness on oil goal out of commodity at

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Speaker 2: Research at Gold and Sex. Jeff Curry, I say this

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Speaker 2: with a men's respect for your bulletproof University of Chicago

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Speaker 2: microeconomics and econometrics. How did oil fool you by its

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Speaker 2: randomness in the last twelve months?

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Speaker 5: Well, I have to say, we have never been this

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Speaker 5: wrong for this long without seeing evidence to change our views. Now,

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Speaker 5: obviously some of the upside has been taken away by

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Speaker 5: recent events with you know, the sanctioned oil surprising to

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Speaker 5: the upside, whether if it's Iran, Russia, Venezuela and more destocking,

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Speaker 5: But the core thesis still very much remains intact, and

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Speaker 5: I think one of the big drivers is you know,

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Speaker 5: you've lost two hundred and fifty million barrels of paper

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Speaker 5: link in this market. We're back to where the market

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Speaker 5: was as is as short as it was during COVID

440
00:22:54,560 --> 00:22:57,880
Speaker 5: when we saw negative prices, and you've erased the overall

441
00:22:57,960 --> 00:23:01,320
Speaker 5: length going back into the early two thousand and I've

442
00:23:01,680 --> 00:23:04,919
Speaker 5: chalked this up to you know, ultimately a broad what

443
00:23:04,960 --> 00:23:08,320
Speaker 5: we call the great d stocking. High interest rates are

444
00:23:08,359 --> 00:23:12,840
Speaker 5: forcing d stocking of physical barrels, D stocking the sanction barrels,

445
00:23:13,119 --> 00:23:16,879
Speaker 5: d stocking of sprs, D stocking of finished goods, even

446
00:23:17,000 --> 00:23:20,520
Speaker 5: de stocking of financial paper barrels. So we have been

447
00:23:20,680 --> 00:23:25,720
Speaker 5: just continuously selling for about six months to nine months.

448
00:23:25,720 --> 00:23:28,040
Speaker 6: Now, can you elaborate a little bit, because for people

449
00:23:28,040 --> 00:23:29,760
Speaker 6: who are not in the nitty gritty, a lot of

450
00:23:29,760 --> 00:23:32,600
Speaker 6: what you said was perhaps a bit opaque, the connection

451
00:23:32,720 --> 00:23:36,320
Speaker 6: of high interest rates to a lack of interest in

452
00:23:36,400 --> 00:23:39,080
Speaker 6: buying oil on a whole range of areas, or a

453
00:23:39,160 --> 00:23:43,359
Speaker 6: lack of sort of stockpiling physical or paper crude.

454
00:23:44,560 --> 00:23:47,000
Speaker 5: Let's just go yeah, let's go through the economics. Let's

455
00:23:47,000 --> 00:23:51,080
Speaker 5: say to borrow money today to buy a barrel of oil,

456
00:23:51,160 --> 00:23:54,000
Speaker 5: because you've got to you know, finance your your your

457
00:23:54,040 --> 00:23:57,880
Speaker 5: physical inventory. Let's say it's seven eight percent somewhere like that.

458
00:23:58,880 --> 00:24:01,520
Speaker 5: Live Or is paid you five and a quarter. That's

459
00:24:01,560 --> 00:24:04,040
Speaker 5: your opportunity cost and putting your money into a risk

460
00:24:04,080 --> 00:24:08,000
Speaker 5: free investment. So your net cost to holding physical inventory

461
00:24:08,359 --> 00:24:12,879
Speaker 5: run somewhere around thirteen potentially even fifteen percent in this environment,

462
00:24:13,880 --> 00:24:16,119
Speaker 5: Why are you going to do that? You've got Navidia

463
00:24:16,160 --> 00:24:19,280
Speaker 5: and Nasdak going up. There's so many better places to

464
00:24:19,359 --> 00:24:21,640
Speaker 5: put your money. And I think the other point too,

465
00:24:22,440 --> 00:24:25,199
Speaker 5: Oil copper and the rest of these markets don't have

466
00:24:25,240 --> 00:24:27,720
Speaker 5: a positive carry, so they cost you to own it,

467
00:24:27,760 --> 00:24:30,560
Speaker 5: cost you to store it. You're going to drain down

468
00:24:30,880 --> 00:24:34,680
Speaker 5: these inventories as much you can. So oil copper, they

469
00:24:34,720 --> 00:24:37,760
Speaker 5: are a liability right now. They are not an asset,

470
00:24:37,840 --> 00:24:40,280
Speaker 5: and until they become an asset, no one's going to

471
00:24:40,320 --> 00:24:42,439
Speaker 5: want to hold them, hold them in an inventory, or

472
00:24:42,440 --> 00:24:44,760
Speaker 5: hold them in a pay per form. And so you

473
00:24:44,800 --> 00:24:47,359
Speaker 5: could just think about that the cost of holding these

474
00:24:47,680 --> 00:24:51,920
Speaker 5: these commodities has risen so much that ultimately are de stocking.

475
00:24:52,000 --> 00:24:55,159
Speaker 5: Now we've been waiting nearly a decade for the Iranian

476
00:24:55,320 --> 00:24:59,400
Speaker 5: floating storage to discharge. It's finally discharging right now, which

477
00:24:59,440 --> 00:25:03,679
Speaker 5: shows you no, nobody really wants to hold this commodity.

478
00:25:04,160 --> 00:25:05,960
Speaker 5: We think that's going to change, and I think it

479
00:25:06,000 --> 00:25:09,440
Speaker 5: has to start with lower inventories, forcing what we call

480
00:25:09,480 --> 00:25:12,679
Speaker 5: a backwardation, which is a positive carry in the curve,

481
00:25:12,920 --> 00:25:14,280
Speaker 5: then somebody will want to own it.

482
00:25:14,480 --> 00:25:17,080
Speaker 6: This is fascinating because for years people were decrying the

483
00:25:17,080 --> 00:25:21,720
Speaker 6: financialization of crude as sort of a bed on the macroeconomy.

484
00:25:22,000 --> 00:25:24,000
Speaker 6: Are you saying that it is no longer in the

485
00:25:24,040 --> 00:25:26,679
Speaker 6: same kind of way that this is basically where it

486
00:25:26,760 --> 00:25:29,159
Speaker 6: is traded, but it's actually a liability now that the

487
00:25:29,160 --> 00:25:31,840
Speaker 6: financialization has come to such a place where people look

488
00:25:31,840 --> 00:25:34,880
Speaker 6: at it as comparable to an interest bearing type of instrument,

489
00:25:35,240 --> 00:25:37,840
Speaker 6: and you're waiting for some sort of not I want

490
00:25:37,840 --> 00:25:40,720
Speaker 6: to say crisis, but a complete lack of inventory to

491
00:25:40,840 --> 00:25:43,080
Speaker 6: spur prices in such an extreme way that you get

492
00:25:43,119 --> 00:25:45,560
Speaker 6: a violent shift up that really forces a hand of

493
00:25:45,560 --> 00:25:49,280
Speaker 6: people who are left kind of in the dust.

494
00:25:48,920 --> 00:25:51,920
Speaker 5: I'm not going to say it's one hundred percent interest rates.

495
00:25:51,960 --> 00:25:55,760
Speaker 5: It's fear of recession why people don't want to own these.

496
00:25:56,000 --> 00:25:59,880
Speaker 5: The government discharge their reserves do over fears of inflation.

497
00:26:00,280 --> 00:26:02,480
Speaker 5: So there's other factors at play here, But I think

498
00:26:02,520 --> 00:26:05,880
Speaker 5: your broader point is absolutely right. We think about when

499
00:26:06,200 --> 00:26:10,399
Speaker 5: was oil financialized in the two thousands, when interest rates,

500
00:26:10,440 --> 00:26:13,080
Speaker 5: you know, is right after September eleventh in two thousand

501
00:26:13,080 --> 00:26:15,280
Speaker 5: and one, when interest rates first went to near zero.

502
00:26:16,080 --> 00:26:19,080
Speaker 5: That's when you started to see the explosion in the

503
00:26:19,119 --> 00:26:23,320
Speaker 5: financialization of oil and commodities. And we stayed into this

504
00:26:23,440 --> 00:26:26,560
Speaker 5: loose money environment for nearly fifteen twenty years. And now

505
00:26:26,600 --> 00:26:27,480
Speaker 5: money costs something.

506
00:26:27,680 --> 00:26:29,919
Speaker 2: There are a set of world cluss leaders, and you're

507
00:26:29,960 --> 00:26:32,199
Speaker 2: one of them, Jeff Curry on this and with the

508
00:26:32,240 --> 00:26:35,119
Speaker 2: acuity of the what I'm going to call almost the

509
00:26:35,160 --> 00:26:39,760
Speaker 2: general equilibrium theory of hydrocarbons, you parachute into riod right

510
00:26:39,800 --> 00:26:44,119
Speaker 2: now and you have to advise the Saudis on the

511
00:26:44,200 --> 00:26:49,320
Speaker 2: elasticities of supply and demand around this new world, which

512
00:26:49,359 --> 00:26:51,600
Speaker 2: is the old world of a cost of money.

513
00:26:52,080 --> 00:26:54,160
Speaker 1: How do you advise Saudi.

514
00:26:53,760 --> 00:26:58,160
Speaker 2: Arabia in this new world of higher nominal and real

515
00:26:58,200 --> 00:26:58,959
Speaker 2: interest rates.

516
00:27:00,119 --> 00:27:03,200
Speaker 5: Their market power has never been higher. And one of

517
00:27:03,280 --> 00:27:06,919
Speaker 5: the reasons why is you combine the higher cost of

518
00:27:07,000 --> 00:27:13,160
Speaker 5: money combined with issues around the cost of funding hydrocarbon

519
00:27:13,240 --> 00:27:16,120
Speaker 5: type of investments. They're the only game in town. They

520
00:27:16,200 --> 00:27:19,000
Speaker 5: have no competition right now. When we look at the

521
00:27:19,040 --> 00:27:21,800
Speaker 5: cut they made in October, that was the very first

522
00:27:21,840 --> 00:27:25,280
Speaker 5: preemptive cut we've ever seen. Opak do, and we just

523
00:27:25,359 --> 00:27:29,240
Speaker 5: saw two more cuts announced in the last the last

524
00:27:29,240 --> 00:27:33,920
Speaker 5: three months. Why because they don't have fear of competition. Yes,

525
00:27:33,960 --> 00:27:37,639
Speaker 5: the oil that's coming on market is Russian, Iranian, in

526
00:27:37,720 --> 00:27:40,399
Speaker 5: Venezuelan sanctioned oil, and eventually you'll run out of it

527
00:27:40,440 --> 00:27:44,040
Speaker 5: and there's nothing behind it. But is there competition from

528
00:27:44,119 --> 00:27:45,960
Speaker 5: the rest of the world. The answer is really no.

529
00:27:46,720 --> 00:27:51,440
Speaker 2: Is the United States not ignorant but unaware of the

530
00:27:51,480 --> 00:27:55,760
Speaker 2: international dynamics of oil, of moving oil up to Japan,

531
00:27:55,840 --> 00:27:59,199
Speaker 2: across the Pacific Rim and all the dynamics of the

532
00:27:59,240 --> 00:27:59,879
Speaker 2: Middle East?

533
00:28:00,240 --> 00:28:01,400
Speaker 1: Have we gotten lazy?

534
00:28:02,760 --> 00:28:06,119
Speaker 5: I think it was a bigger focus on immediate term issues,

535
00:28:06,200 --> 00:28:09,160
Speaker 5: things like inflation fighting, which is why we saw such

536
00:28:09,200 --> 00:28:13,919
Speaker 5: a sharp rundown in the SPR And you know you're talking.

537
00:28:13,960 --> 00:28:16,800
Speaker 5: You put all the sprs together, it was two hundred

538
00:28:16,840 --> 00:28:19,840
Speaker 5: and fifty million barrels drawn down. That is a lot

539
00:28:20,000 --> 00:28:22,640
Speaker 5: of oil. So I think the focus from a policy

540
00:28:22,680 --> 00:28:26,520
Speaker 5: perspective is get the inflation down and keep it down.

541
00:28:26,680 --> 00:28:28,879
Speaker 5: But here's a fact I like to throw out. You know,

542
00:28:28,960 --> 00:28:31,960
Speaker 5: you look at core CPI at somewhere around five point five.

543
00:28:32,040 --> 00:28:34,600
Speaker 5: It was at that level, you know, going back nearly

544
00:28:34,640 --> 00:28:38,000
Speaker 5: two years ago, what's changed is oil prices went down,

545
00:28:38,080 --> 00:28:40,680
Speaker 5: taking headline from nine down to four point.

546
00:28:40,520 --> 00:28:41,400
Speaker 7: Five just quickly.

547
00:28:41,480 --> 00:28:43,720
Speaker 6: Jeff, do you think that that's the reason why the

548
00:28:43,800 --> 00:28:46,760
Speaker 6: US is not refilling the spr more aggressively because they're

549
00:28:46,800 --> 00:28:49,200
Speaker 6: still concerned about inflation and that that could on the

550
00:28:49,240 --> 00:28:50,480
Speaker 6: margins push prices up.

551
00:28:51,240 --> 00:28:54,040
Speaker 5: Well, I think, with you know, the showdown over the

552
00:28:54,080 --> 00:28:56,560
Speaker 5: debt ceiling, getting money to go buy oil would be

553
00:28:56,600 --> 00:28:59,960
Speaker 5: really difficult to come by. But that aside. Listen to Frank,

554
00:29:00,200 --> 00:29:03,360
Speaker 5: so listen to Germany. The focus now is building strategic

555
00:29:03,440 --> 00:29:07,760
Speaker 5: reserves of green metals, you know, like battery metals like copper, lithium, cobal.

556
00:29:08,320 --> 00:29:11,520
Speaker 5: So if you're going to build strategic reserves, you're probably

557
00:29:11,520 --> 00:29:14,680
Speaker 5: gonna do it in you know, the green economy commodities,

558
00:29:14,960 --> 00:29:17,040
Speaker 5: not in the old economy commodities.

559
00:29:17,280 --> 00:29:18,440
Speaker 1: Jeffers oil in a year.

560
00:29:18,640 --> 00:29:21,240
Speaker 2: I know it's an unfair question, given all the ambiguities

561
00:29:21,240 --> 00:29:23,080
Speaker 2: out there right now, but I've got to ask. I mean,

562
00:29:23,120 --> 00:29:27,560
Speaker 2: we're down, down, down, right wrong whatever scope out where

563
00:29:27,640 --> 00:29:28,920
Speaker 2: we are in twelve months.

564
00:29:29,200 --> 00:29:32,680
Speaker 5: Yeah, I our viewers are going to be seeing substantial

565
00:29:32,720 --> 00:29:37,400
Speaker 5: physical inventory draws because of these OPEC production cuts, particularly

566
00:29:37,480 --> 00:29:39,680
Speaker 5: during the third quarter. As well as in fourth quarter.

567
00:29:40,040 --> 00:29:42,400
Speaker 5: That's going to push us up into the low nineties.

568
00:29:42,680 --> 00:29:45,760
Speaker 5: Now the question is will you bring the investor back

569
00:29:45,760 --> 00:29:47,480
Speaker 5: into this market? And by the way, I put a

570
00:29:47,520 --> 00:29:50,320
Speaker 5: question mark on it because it'll have to be a

571
00:29:50,440 --> 00:29:53,760
Speaker 5: new class of investor. It takes that investor buying to

572
00:29:53,840 --> 00:29:56,840
Speaker 5: push you back up towards one hundred. We're not you know,

573
00:29:57,120 --> 00:29:59,320
Speaker 5: I know a lot of them have gone left and

574
00:29:59,360 --> 00:30:01,160
Speaker 5: it'll be difficul call to get them back. But I

575
00:30:01,160 --> 00:30:04,760
Speaker 5: think the key question fundamentally, we can get this market higher,

576
00:30:04,840 --> 00:30:06,840
Speaker 5: and I think it we get Once you turn oil

577
00:30:06,880 --> 00:30:09,960
Speaker 5: into an asset, you'll track capital back to it. But

578
00:30:10,000 --> 00:30:12,000
Speaker 5: I don't think it's going to be the same cast

579
00:30:12,000 --> 00:30:12,600
Speaker 5: of characters.

580
00:30:12,720 --> 00:30:15,360
Speaker 2: Jeffrey Curry, thank you so much. Just absolutely brilliant there

581
00:30:15,360 --> 00:30:28,120
Speaker 2: with Goldman Sachs. Right now, we are going to digress

582
00:30:28,640 --> 00:30:30,760
Speaker 2: and we are thrilled to bring in someone who runs

583
00:30:30,800 --> 00:30:33,280
Speaker 2: an economy that is better than good. She's picking up

584
00:30:33,280 --> 00:30:36,960
Speaker 2: a trophy in New York this evening. Nadia Calvino is

585
00:30:37,040 --> 00:30:41,680
Speaker 2: Spanish Vice President Minister for the Economy and Digitalization of

586
00:30:41,840 --> 00:30:45,240
Speaker 2: Number one performing always Spain in the continent of John

587
00:30:45,280 --> 00:30:47,960
Speaker 2: Why is Spain always the number one performer, what what.

588
00:30:47,920 --> 00:30:48,880
Speaker 4: Are talking about football?

589
00:30:49,000 --> 00:30:50,560
Speaker 1: The pixie dust there we're.

590
00:30:50,400 --> 00:30:51,240
Speaker 4: Talked about football?

591
00:30:51,320 --> 00:30:53,240
Speaker 1: Well football, yeah.

592
00:30:53,160 --> 00:30:56,800
Speaker 2: I mean there it is. But the answer is Spain

593
00:30:57,040 --> 00:30:59,520
Speaker 2: is unique. We're thrilled that the Vice President could join

594
00:30:59,600 --> 00:31:02,040
Speaker 2: us this morning. Thank you so much for joining us.

595
00:31:02,040 --> 00:31:04,560
Speaker 2: I've got to go to the weather IMF for meat

596
00:31:04,600 --> 00:31:07,400
Speaker 2: and Marrakesh and the idea is there is a drought

597
00:31:07,440 --> 00:31:12,480
Speaker 2: in Africa coming over that will grossly destabilize the agricultural

598
00:31:12,560 --> 00:31:15,360
Speaker 2: dynamo that is Spain and quite frankly, just worry about

599
00:31:15,400 --> 00:31:19,200
Speaker 2: drinking water as well. How urgent is the drought in

600
00:31:19,240 --> 00:31:20,000
Speaker 2: southern Spain.

601
00:31:20,480 --> 00:31:23,440
Speaker 9: Well, it is a very serious issue because Spain is

602
00:31:23,760 --> 00:31:26,480
Speaker 9: a world superpower in the agri food sector and so

603
00:31:26,640 --> 00:31:29,360
Speaker 9: the drought is having an impact on the harvest in

604
00:31:29,920 --> 00:31:32,920
Speaker 9: some areas, having to do with cereal for example. But

605
00:31:33,840 --> 00:31:37,880
Speaker 9: drinking water is guaranteed and we're investing very heavily, actually

606
00:31:37,880 --> 00:31:41,200
Speaker 9: more than six billion euros in the digitalization of water

607
00:31:41,280 --> 00:31:45,160
Speaker 9: management and the efficient infrastructures for water management. You may

608
00:31:45,240 --> 00:31:47,880
Speaker 9: know or not that Spain is the second most efficient

609
00:31:47,880 --> 00:31:51,120
Speaker 9: country in the world after Israel in water management, and

610
00:31:51,160 --> 00:31:53,440
Speaker 9: so we're heavily investing in that. So that we can

611
00:31:53,680 --> 00:31:55,680
Speaker 9: continue to be highly performant.

612
00:31:56,040 --> 00:31:57,080
Speaker 1: There's so many other issues.

613
00:31:57,120 --> 00:31:58,880
Speaker 2: I'm going to leave it there that there's much to

614
00:31:58,920 --> 00:32:00,480
Speaker 2: talk about, and that I'm sure we were on the

615
00:32:00,520 --> 00:32:05,040
Speaker 2: coming months. What has changed is you and mister Sanchez

616
00:32:05,080 --> 00:32:08,640
Speaker 2: have a snap election to deal with our landso Soto says,

617
00:32:08,680 --> 00:32:11,680
Speaker 2: this is absolutely front and center. How will you approach

618
00:32:11,840 --> 00:32:12,680
Speaker 2: the snap election?

619
00:32:13,520 --> 00:32:17,360
Speaker 9: Well, you know, the economy is performing, is outstanding. As

620
00:32:17,400 --> 00:32:18,760
Speaker 9: you rightly pointed out.

621
00:32:18,640 --> 00:32:19,520
Speaker 5: It's good.

622
00:32:20,000 --> 00:32:21,800
Speaker 1: I read the notes, did okay.

623
00:32:21,720 --> 00:32:24,320
Speaker 9: Yeah, you did very well. Actually, no, it's better than good.

624
00:32:24,440 --> 00:32:27,719
Speaker 9: And indeed, I mean the strong growth, strong job creation.

625
00:32:28,360 --> 00:32:31,200
Speaker 9: Inflation is down to round three percent already in Spain.

626
00:32:31,640 --> 00:32:34,960
Speaker 9: So the performance of the performance of the economy is outstanding,

627
00:32:35,400 --> 00:32:39,480
Speaker 9: and I trust you know that Spanish citizens will Actually.

628
00:32:39,520 --> 00:32:41,920
Speaker 2: Why I don't mean to interrupt, this is important. The

629
00:32:41,920 --> 00:32:46,720
Speaker 2: political turmoil in Spain is tangible. Why given a good

630
00:32:46,760 --> 00:32:49,000
Speaker 2: inflation and good economy picture.

631
00:32:49,320 --> 00:32:52,840
Speaker 9: Well, we had regional and local elections and they what

632
00:32:52,880 --> 00:32:55,120
Speaker 9: we saw there was a rise of the right and

633
00:32:55,280 --> 00:32:59,120
Speaker 9: more importantly, the extreme right. This movement is not only

634
00:32:59,400 --> 00:33:02,360
Speaker 9: is not only happening in Spain, you were talking about it.

635
00:33:02,640 --> 00:33:04,920
Speaker 9: Of course, it's relevant here in the US. It is

636
00:33:04,960 --> 00:33:08,160
Speaker 9: happening throughout the EU and this is a movement that

637
00:33:09,560 --> 00:33:15,680
Speaker 9: I personally hope does not continue. And President Sanchez decided

638
00:33:15,760 --> 00:33:18,080
Speaker 9: to call the snap election so that we can have clarity.

639
00:33:18,240 --> 00:33:21,520
Speaker 9: Spain will take over the presidency of the EU in July,

640
00:33:22,080 --> 00:33:24,520
Speaker 9: and we need to have clarity and a stable government

641
00:33:24,600 --> 00:33:27,560
Speaker 9: and not be in the middle of a campaign for

642
00:33:27,600 --> 00:33:28,280
Speaker 9: the presidency.

643
00:33:28,320 --> 00:33:31,000
Speaker 4: It still work to do before we get there. Vice

644
00:33:31,040 --> 00:33:34,120
Speaker 4: President Cavin, one thing you mentioned there was the drought

645
00:33:34,440 --> 00:33:36,400
Speaker 4: and that's had an effect on price pressure. Now you've

646
00:33:36,440 --> 00:33:39,360
Speaker 4: made some progress on inflation. You do have an anti

647
00:33:39,400 --> 00:33:42,280
Speaker 4: inflation package due to expire at the end of this month.

648
00:33:42,360 --> 00:33:43,800
Speaker 4: Is that something you're thinking about renewing.

649
00:33:44,440 --> 00:33:47,520
Speaker 9: Well, we're assessing which measures we should continue to have

650
00:33:47,840 --> 00:33:50,640
Speaker 9: in the second part of the year and which no

651
00:33:50,760 --> 00:33:54,520
Speaker 9: longer make sense because the evolution in international energy markets.

652
00:33:54,520 --> 00:33:57,160
Speaker 9: You are just discussing that energy prices have gone down.

653
00:33:57,440 --> 00:34:01,320
Speaker 9: We are in pre war level already, so we have

654
00:34:01,400 --> 00:34:04,960
Speaker 9: to see whether those measures should continue or not beyond June.

655
00:34:05,200 --> 00:34:10,000
Speaker 9: And likewise for VAT so indirect taxes on food and others.

656
00:34:09,719 --> 00:34:11,200
Speaker 4: Could you give me some insight on that now?

657
00:34:12,120 --> 00:34:14,040
Speaker 9: No, because we're in the midst of the analysis, and

658
00:34:14,080 --> 00:34:16,200
Speaker 9: we know what we have been doing since the pandemic

659
00:34:16,320 --> 00:34:19,719
Speaker 9: hit us is it just measures every three or six months,

660
00:34:19,760 --> 00:34:22,080
Speaker 9: so that we could have a flexible approach and an

661
00:34:22,120 --> 00:34:24,759
Speaker 9: efficient use of public resources. I mean, we talked about

662
00:34:24,800 --> 00:34:28,240
Speaker 9: public money when we reduce taxes or we give public support,

663
00:34:28,640 --> 00:34:31,080
Speaker 9: so we have to be very focused and very efficient.

664
00:34:31,440 --> 00:34:34,480
Speaker 9: This has worked well so far, and that explains why

665
00:34:34,520 --> 00:34:37,040
Speaker 9: the Spanish economy is doing so well. And we should

666
00:34:37,040 --> 00:34:40,360
Speaker 9: continue on the same line of responsibility and effectiveness.

667
00:34:40,520 --> 00:34:43,000
Speaker 6: How much have you enjoyed the europe being weak versus

668
00:34:43,000 --> 00:34:45,640
Speaker 6: a dollar and sort of the tourism boom that has

669
00:34:45,680 --> 00:34:46,920
Speaker 6: a verged on the heels of that.

670
00:34:47,440 --> 00:34:50,960
Speaker 9: Well, we've seen a very strong performance of the tourism sector, indeed,

671
00:34:51,120 --> 00:34:55,080
Speaker 9: and April has been a record month in terms of

672
00:34:55,200 --> 00:34:58,080
Speaker 9: number of visitors and in terms of the revenues of

673
00:34:58,120 --> 00:35:00,200
Speaker 9: the sector. And we expect the summer to be so

674
00:35:00,760 --> 00:35:04,719
Speaker 9: extremely positive. But the current account surplus that Spain is

675
00:35:04,760 --> 00:35:08,080
Speaker 9: showing and this is a historical first. You know, never

676
00:35:08,239 --> 00:35:12,000
Speaker 9: in history did we have the surplus, particularly when we

677
00:35:12,080 --> 00:35:16,680
Speaker 9: have so strong growth. But what's remarkable is not the

678
00:35:17,120 --> 00:35:21,800
Speaker 9: good performance of tourism experts, but non tourism related services,

679
00:35:21,880 --> 00:35:25,880
Speaker 9: showing that the Spanish economy is gaining competitiveness and market share.

680
00:35:26,040 --> 00:35:29,640
Speaker 9: Not only the goods sectors, but the non tourism related

681
00:35:29,680 --> 00:35:33,799
Speaker 9: services are being very positive and pulling growth up.

682
00:35:34,200 --> 00:35:36,120
Speaker 6: Is that what you're trying to emphasize right now, the

683
00:35:36,160 --> 00:35:38,719
Speaker 6: sort of manufacturing side, the non tourism side, even as

684
00:35:38,760 --> 00:35:41,440
Speaker 6: the tourism side really is one of the main drivers

685
00:35:41,480 --> 00:35:44,040
Speaker 6: of the strength that has in some cases been unprecedented

686
00:35:44,239 --> 00:35:44,720
Speaker 6: in Spain.

687
00:35:45,200 --> 00:35:47,359
Speaker 9: What I think should be highlighted is what we're talking

688
00:35:47,400 --> 00:35:49,680
Speaker 9: about is not just a bouncing back or a strong

689
00:35:49,719 --> 00:35:54,080
Speaker 9: recovery from a macroeconomic or micro magnitude point of view,

690
00:35:54,080 --> 00:35:57,680
Speaker 9: but that there is a structural modernization and transformation of

691
00:35:57,680 --> 00:36:00,520
Speaker 9: the Spanish economy ongoing, which has to do with the

692
00:36:00,560 --> 00:36:03,759
Speaker 9: new Green economy, which has to do with digitalization, and

693
00:36:03,840 --> 00:36:06,280
Speaker 9: it has a lot to do with the European Funds

694
00:36:06,400 --> 00:36:10,920
Speaker 9: Next Generation EU Investment and Reform program. We have front

695
00:36:10,960 --> 00:36:14,400
Speaker 9: loaded that investment and reform plan and the results are

696
00:36:14,440 --> 00:36:15,200
Speaker 9: already visible.

697
00:36:15,280 --> 00:36:18,000
Speaker 4: If you had a chat with Elon muskets All, no,

698
00:36:18,600 --> 00:36:20,920
Speaker 4: should you have a conversation with him, because he's reportedly

699
00:36:20,960 --> 00:36:23,320
Speaker 4: in talks to build an EV factory in Spain.

700
00:36:23,719 --> 00:36:26,960
Speaker 9: Yes, I mean we hear regularly. I should say, you know,

701
00:36:27,000 --> 00:36:29,680
Speaker 9: we hear about a possible that.

702
00:36:30,040 --> 00:36:31,800
Speaker 4: You try to reach out and have that conversation.

703
00:36:32,480 --> 00:36:36,200
Speaker 9: I personally don't don't have a relationship with him, or

704
00:36:36,239 --> 00:36:38,160
Speaker 9: I haven't had a chance to talk to him. But

705
00:36:38,280 --> 00:36:40,640
Speaker 9: I am sure that the Prime Minister, the President's office

706
00:36:41,040 --> 00:36:43,960
Speaker 9: is in contact with anybody that's interested in investing in Spain.

707
00:36:44,320 --> 00:36:46,600
Speaker 9: Due to you know, thanks to the lower energy prices,

708
00:36:46,680 --> 00:36:50,320
Speaker 9: high penetration of renewables and the competitiveness of the Spanish economy,

709
00:36:50,400 --> 00:36:52,759
Speaker 9: we're attracting unprecedented investments.

710
00:36:52,760 --> 00:36:53,600
Speaker 1: Ask you for a friend.

711
00:36:53,600 --> 00:36:56,560
Speaker 2: I was in Washington and the Dutch Finance minister could

712
00:36:56,560 --> 00:36:58,919
Speaker 2: not get us tickets to Vermire. The whole team wanted

713
00:36:58,960 --> 00:37:01,560
Speaker 2: to go to Amsterdam and see the Vermire. Can we

714
00:37:01,680 --> 00:37:03,640
Speaker 2: can you get us tickets to the Prado here with

715
00:37:03,800 --> 00:37:07,960
Speaker 2: the Picasso opening up, I'm the fifteenth anniversary of this

716
00:37:08,040 --> 00:37:09,640
Speaker 2: giant of Spain with old Greco.

717
00:37:09,960 --> 00:37:11,400
Speaker 1: We need tickets to the Produn.

718
00:37:11,600 --> 00:37:14,160
Speaker 9: I mean, Tom, anything you need, you.

719
00:37:14,320 --> 00:37:20,719
Speaker 4: Know, you know, last week of June from Madrid Vice

720
00:37:20,719 --> 00:37:23,040
Speaker 4: President Calvino Nadia, thank you good to see it.

721
00:37:23,280 --> 00:37:27,120
Speaker 2: Subscribe to the Bloomberg Surveillance podcast on Apple, Spotify, and

722
00:37:27,239 --> 00:37:31,440
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723
00:37:31,719 --> 00:37:35,200
Speaker 2: starting at seven am Eastern on Bloomberg dot com, the

724
00:37:35,360 --> 00:37:37,760
Speaker 2: iHeartRadio app tune In.

725
00:37:37,840 --> 00:37:41,560
Speaker 1: And the Bloomberg Business app. You can watch us live on.

726
00:37:41,600 --> 00:37:46,360
Speaker 2: Bloomberg Television and always on the Bloomberg Terminal. Thanks for listening.

727
00:37:46,840 --> 00:37:49,640
Speaker 2: I'm Tom Keane, and this is Bloomberg