WEBVTT - Energy, Market, and Housing Outlooks 0:00:00.800 --> 0:00:04.040 Welcome to the Bloomberg Markets Podcast. I'm Paul Sweeney, alongside 0:00:04.040 --> 0:00:06.920 my co host Matt Miller. Every business day we bring 0:00:06.960 --> 0:00:11.520 you interviews from CEOs, market pros, and Bloomberg experts, along 0:00:11.520 --> 0:00:15.600 with essential market moving news. Find the Bloomberg Markets Podcast 0:00:15.600 --> 0:00:18.439 on Apple Podcasts or wherever you listen to podcasts, and 0:00:18.480 --> 0:00:21.120 at Bloomberg dot com slash podcast. I want to talk 0:00:21.239 --> 0:00:24.959 energy here, I don't. We'll talk fossil fuels, we'll talk oil, gas, 0:00:25.000 --> 0:00:26.360 all that kind of stuff, but I also want to 0:00:26.360 --> 0:00:28.640 talk solar and we can do that with Rob Barnett, 0:00:28.880 --> 0:00:31.960 Senior analyst. He's a team lead for all the European 0:00:32.040 --> 0:00:34.280 energy stuff that comes out of Bloomberg Intelligence. And I 0:00:34.680 --> 0:00:37.760 initially said earlier the worst haircut on on Wall Street, 0:00:37.760 --> 0:00:39.720 but it could, in the eyes of many, be the 0:00:39.840 --> 0:00:42.519 best haircut on Wall Street. And you haven't seen it. 0:00:42.560 --> 0:00:46.479 Go YouTube summer Rob's cool video clips. Rob, thanks so 0:00:46.520 --> 0:00:49.600 much for joining us here. What are your institutional investors 0:00:49.600 --> 0:00:51.160 want to talk about that they want to talk about 0:00:51.159 --> 0:00:54.440 Brent crude at seventy two dollars I'm sorry, seventies six dollars, 0:00:54.560 --> 0:00:56.680 or do they want to talk about solar and wind 0:00:56.720 --> 0:00:58.160 and that kind of stuff. What do your clients want 0:00:58.160 --> 0:01:00.760 to talk about. Look, it's all of the above. We've 0:01:00.800 --> 0:01:07.119 got an investor base that is really excited about what 0:01:07.200 --> 0:01:11.319 the oil market could do in three but solar is 0:01:11.360 --> 0:01:15.280 also really hot, and in our view, at least the 0:01:15.280 --> 0:01:18.000 way we look at it here at b I, there's 0:01:18.160 --> 0:01:22.840 nothing incongruous about the idea that you could perhaps have 0:01:23.000 --> 0:01:26.000 a bull run in the oil market and also have 0:01:26.319 --> 0:01:29.759 solar demand growing like crazy. And so that's really how 0:01:29.800 --> 0:01:32.640 we see the world next year. We've got a very 0:01:32.680 --> 0:01:35.560 strong call on how fast solar demands gonna grow. It's 0:01:35.560 --> 0:01:38.160 gonna be the fastest growing segment of energy by far. 0:01:38.800 --> 0:01:42.320 But the oil space looks pretty tight as well. You've 0:01:42.319 --> 0:01:45.400 got a tight set of supply demand fundamentals, and our 0:01:45.560 --> 0:01:48.320 our team that looks after the oil guys, uh, they 0:01:48.320 --> 0:01:51.080 see a pretty tight market. Yeah. I mean, I think 0:01:51.120 --> 0:01:55.040 it's interesting rob that, and I can understand why at 0:01:55.080 --> 0:01:58.000 first glance you would think that um solar and oil 0:01:58.040 --> 0:02:01.760 are competitors. But in the now they're not, are they. 0:02:01.840 --> 0:02:06.080 It's pretty easy to see a world where everybody wants 0:02:06.120 --> 0:02:09.240 to invest in solar because it's the future, and we 0:02:09.320 --> 0:02:13.720 still need to pay as much as is necessary to 0:02:13.800 --> 0:02:16.080 get the oil that we that we have to run 0:02:16.120 --> 0:02:19.920 our economy. Now, yeah, that's right. I think they're very 0:02:19.960 --> 0:02:23.320 loosely competitive at the moment. Over time that will grow, 0:02:23.440 --> 0:02:27.040 But right now almost no oil is used in the 0:02:27.120 --> 0:02:31.760 power sector, a very tiny amount. And so basically the 0:02:31.760 --> 0:02:35.440 the extrapolation to how you think about them maybe competing 0:02:35.480 --> 0:02:40.960 would be as electric vehicles. Uh it penetration grows through time, 0:02:41.440 --> 0:02:46.040 perhaps you'll have more e vs being charged with grid resources, 0:02:46.080 --> 0:02:48.960 including solar, and therefore you get a little bit more competition. 0:02:49.000 --> 0:02:52.960 But that's that's the longer future. That's really very marginal 0:02:53.000 --> 0:02:54.680 in the here and now. You know. I was talking 0:02:54.720 --> 0:02:58.920 to Ola Klennius this morning, the CEO of Mercedes Benz 0:02:59.440 --> 0:03:05.119 and Um. One thing that's interesting is, uh, they are 0:03:05.160 --> 0:03:08.000 in a big push to put electric charging stations at 0:03:08.000 --> 0:03:11.880 gas stations all around the world, but gas station owners 0:03:11.919 --> 0:03:14.760 are not. You know. I remember when we interviewed Ben 0:03:14.880 --> 0:03:16.680 Van Burden from Shell and he's like, oh, yeah, we're 0:03:16.720 --> 0:03:19.239 doing it. It's just hard. It's like expensive and we 0:03:19.360 --> 0:03:22.200 gotta find the time and it's on the schedule somewhere. 0:03:22.240 --> 0:03:24.720 But come on, give me a break. You know that 0:03:24.800 --> 0:03:26.680 they don't want to do it, Otherwise it would be 0:03:26.680 --> 0:03:29.600 done already. Why why aren't there electric charging stations at 0:03:29.639 --> 0:03:33.080 every single gas station? Uh, you know in the Western hemisphere. 0:03:33.720 --> 0:03:36.520 I think folks are frankly still trying to figure out 0:03:36.560 --> 0:03:40.880 the business model. When you look at a company like Tesla, 0:03:41.000 --> 0:03:44.160 you've got the supercharger network, and there really just isn't 0:03:44.280 --> 0:03:48.160 an equivalent that has been built out for any of 0:03:48.200 --> 0:03:51.160 the other O E M s. They're essentially relying on 0:03:51.200 --> 0:03:54.000 those traditional businesses, and I think there's a lot of 0:03:54.040 --> 0:03:57.240 finger pointing going on, you know where You've got the 0:03:57.360 --> 0:04:00.440 utilities who are wanting to dab away it. I mean, 0:04:00.600 --> 0:04:04.240 I mean the electric utilities, but you've also got the 0:04:04.280 --> 0:04:09.480 traditional fuel retailers who are also experimenting with it, and 0:04:09.520 --> 0:04:13.480 it doesn't really seem like anyone's found the right formula 0:04:13.600 --> 0:04:16.880 for how to make money at it. And I think 0:04:16.920 --> 0:04:19.280 that's why you see some of the reticence there. Yeah, 0:04:19.440 --> 0:04:23.680 I mean, I can't drive five minutes without seeing a 0:04:23.720 --> 0:04:26.920 gas station. That's good when I'm driving six point two 0:04:26.960 --> 0:04:31.320 leader V eight. But the thing is, there's these huge 0:04:31.360 --> 0:04:34.159 networks of those everywhere, and if they could make the 0:04:34.200 --> 0:04:37.640 same marginal electricity that they could make selling you know, 0:04:38.120 --> 0:04:42.719 premium unladed gasoline, they would definitely already have installed them. 0:04:43.080 --> 0:04:44.760 But I but I think that that's this is a 0:04:44.800 --> 0:04:48.320 business model question. It's not something to lose sleepover. In fact, 0:04:48.480 --> 0:04:52.920 I think fuel retailers typically have pretty slim margins on 0:04:52.960 --> 0:04:55.760 the fuel. They make their money when you pop into 0:04:55.760 --> 0:04:58.400 buy the candy bar or the soda to go with it, 0:04:58.480 --> 0:05:01.279 and so there's no reason that you can't have that 0:05:01.880 --> 0:05:05.560 with an electric vehicle as well. And you know, I 0:05:05.600 --> 0:05:08.320 think through time these things will sort themselves out. I'd 0:05:08.360 --> 0:05:11.880 also say most electric vehicle charging probably gonna be done 0:05:11.880 --> 0:05:14.800 at home. You know, you you certainly need lots of 0:05:14.839 --> 0:05:18.400 electric vehicle charging for the long haul trip you know 0:05:18.440 --> 0:05:22.880 that you would take occasionally, but you're daily charging is 0:05:22.920 --> 0:05:25.400 probably at your garage unless you live in a city. 0:05:25.440 --> 0:05:28.680 Cities are the hard part of the problem. Rob twenty seconds. 0:05:28.680 --> 0:05:30.679 How tough is the winter going to be in Europe? 0:05:30.680 --> 0:05:33.880 You're based in London. You know this winter looks okay. 0:05:34.400 --> 0:05:36.279 We're in a bit of a cold snap right now 0:05:36.640 --> 0:05:40.680 and that's pressuring the gas market and power markets. But 0:05:41.520 --> 0:05:44.279 the general view is that we've got enough gas to 0:05:44.279 --> 0:05:46.760 get through this winter. Next winter might be a little 0:05:46.800 --> 0:05:49.920 bit more challenging. Actually, all right, good stuff. Rob Barnett, 0:05:49.960 --> 0:05:52.840 Senior analyst. Uh. He leads our team of energy research 0:05:52.880 --> 0:05:56.520 folks over in London for Bloomberg Intelligence. I gotta see 0:05:56.520 --> 0:05:59.080 this haircut. Oh yeah, you gotta go check it. It's awesome. 0:05:59.120 --> 0:06:01.800 He's out there. Uh. And he is super smart on 0:06:01.839 --> 0:06:05.520 all that energy stuff, including the policy of energy policy 0:06:05.560 --> 0:06:08.520 and the regulation of the energy space. Or fortune to 0:06:08.520 --> 0:06:11.880 have him at Bloomberg Intelligence again, b I go to 0:06:11.960 --> 0:06:17.080 get some of the best research on Wall Street. We 0:06:17.160 --> 0:06:20.159 had some ECO data today. We had the pp I 0:06:20.360 --> 0:06:23.520 coming in hot, and then we had the you missed 0:06:23.600 --> 0:06:27.120 data coming in right after that. If you type in eco, 0:06:27.200 --> 0:06:30.480 go on your Bloomberg or week ago the University of 0:06:30.520 --> 0:06:33.520 Michigan w E c O CO is a great way 0:06:33.560 --> 0:06:35.680 to do it. Uh. And then you can pick out 0:06:36.320 --> 0:06:39.320 by flag um the country for the flag which you 0:06:39.320 --> 0:06:42.359 want to see the data anyway you missed. Uh. Current 0:06:42.400 --> 0:06:48.000 conditions stronger than expected, Sentiments stronger than expected. So um, 0:06:48.160 --> 0:06:51.359 inflation is hot, but so are expectations. Let's bring in 0:06:51.800 --> 0:06:55.320 a Nika Anika treon Um. She is the chief economist 0:06:55.480 --> 0:06:58.400 for Van Lanchet Kat kempin to talk about what this 0:06:58.480 --> 0:07:00.880 data means to us. Annika, thanks much for joining us. 0:07:01.720 --> 0:07:03.680 What do you think first about inflation? I mean, do 0:07:03.720 --> 0:07:07.480 we all agree that inflation looks like it's coming down 0:07:07.800 --> 0:07:11.240 and the FED has to some extent got this under control. Yeah, well, 0:07:11.280 --> 0:07:13.040 I think the point is and this is also why 0:07:13.080 --> 0:07:15.360 markets have had a good time since the second half 0:07:15.360 --> 0:07:17.720 of ox sober. I think one thing we know for 0:07:17.760 --> 0:07:20.920 sure is that we've surpassed the peak in terms of 0:07:21.160 --> 0:07:24.200 rates of increase of prices. So in terms of you 0:07:24.240 --> 0:07:27.440 know that the incremental increases in inflation, if not actually 0:07:27.440 --> 0:07:30.320 the fact inflation inflation of peaks, and the same goes 0:07:30.360 --> 0:07:32.560 from an interest rate perspective. And I think the one 0:07:32.560 --> 0:07:34.920 thing there's a lot of said bashing that's been going 0:07:34.920 --> 0:07:37.920 on because they've simply reacted to late etcetera. But the 0:07:38.000 --> 0:07:40.000 one thing that the Fed does seem to have under 0:07:40.000 --> 0:07:44.400 control is an anchoring of the long term inflation expectation 0:07:44.480 --> 0:07:48.640 and that's very, very important for the market. And one 0:07:48.640 --> 0:07:51.440 of the other issues is in addition to inflation, and 0:07:51.480 --> 0:07:54.720 again we'll get some CPI data next week, is kind 0:07:54.720 --> 0:07:57.800 of recession outlooks. I wonder from your perspective where you 0:07:57.840 --> 0:08:01.679 sit as you think that maybe European economic growth, US 0:08:01.760 --> 0:08:07.040 economic growth, what's your recession call. Yeah, I mean it 0:08:07.080 --> 0:08:09.960 looks like, you know, economic contractions are inevitable. I think 0:08:10.000 --> 0:08:12.160 it's more of a question of how long, how deep, 0:08:12.200 --> 0:08:15.920 how painful, exactly when, And quite frankly, that's that's more 0:08:15.920 --> 0:08:17.800 of an art than a science because it's very, very 0:08:17.800 --> 0:08:20.600 hard to predict those factors. Clearly, Europe is in for 0:08:20.640 --> 0:08:22.560 a much type of time than the US, given that 0:08:23.040 --> 0:08:25.760 the general strength of the US economy of the European 0:08:25.760 --> 0:08:28.000 economy is clearly a laggered. I mean, let's remember that 0:08:28.080 --> 0:08:31.040 pre COVID, you know, Europe would actually it was almost 0:08:31.040 --> 0:08:33.840 setting into a recession anyway in this big pandemic. Rescue 0:08:33.840 --> 0:08:36.880 plan was very uplifting for Europe, but that was obviously 0:08:37.400 --> 0:08:40.800 a short lived rescue plan by definition. So I think 0:08:40.800 --> 0:08:43.480 that's that's the point. I think that means that, you know, 0:08:43.559 --> 0:08:46.800 with a higher rate environment, which makes economic conditions tougher, 0:08:46.960 --> 0:08:49.040 what we have to do to spend more time on 0:08:49.200 --> 0:08:52.720 is trying to figure out the calculations as to what 0:08:53.000 --> 0:08:56.760 exact impact on the real economy of these interest rates 0:08:56.840 --> 0:08:59.720 having and because they've gone up so quickly. I think 0:08:59.720 --> 0:09:02.960 we saw comes to get to make those calculations in 0:09:03.080 --> 0:09:06.880 terms of the China reopening. Um does that play into 0:09:06.880 --> 0:09:10.640 your calculus of global growth? It seemed like, you know, 0:09:10.800 --> 0:09:13.480 we were all hoping for it for so long, and 0:09:13.640 --> 0:09:16.400 it seemed like we thought that would underpin a huge 0:09:16.440 --> 0:09:22.200 jump in demand, but that hasn't played out in market pricing. Yeahman, 0:09:22.240 --> 0:09:23.680 I guess that The point is that the path of 0:09:23.720 --> 0:09:26.920 reopening for China is not that straightforward because obviously the 0:09:27.080 --> 0:09:29.880 zero COVID policy has lasted much longer than many people 0:09:29.880 --> 0:09:33.040 had expected, and the reopening is certainly with hiccup. So 0:09:33.040 --> 0:09:35.040 that's not a simple straight line that you can just 0:09:35.440 --> 0:09:37.040 you know, open the lid of the box and then 0:09:37.080 --> 0:09:40.960 bam comes this explosion of demands. But that clearly that 0:09:41.040 --> 0:09:43.520 clearly will be a supporting factor. You could argue that 0:09:43.520 --> 0:09:46.160 that could also be you know, a reopening story could 0:09:46.200 --> 0:09:49.960 also be dangerous from an inflationary perspective, because quite frankly, 0:09:50.000 --> 0:09:53.040 we've had an inflation problem without one of the world's 0:09:53.120 --> 0:09:57.520 largest drivers of demand really participating in the economy. So 0:09:57.600 --> 0:10:00.360 what will happen to energy prices once that gets go again. 0:10:00.440 --> 0:10:03.360 On the other hand, that also alleviates and supply chains. 0:10:03.360 --> 0:10:05.280 So it's it's it's it's something that we have to 0:10:05.320 --> 0:10:09.560 work our way through. So Anaka, you know, I'd love 0:10:09.559 --> 0:10:12.840 to get a sense of just kind of where you 0:10:12.920 --> 0:10:16.760 think the federal Reserve needs to be. Um, you know, 0:10:16.800 --> 0:10:18.839 I think you know, again, we're getting some inflation data 0:10:19.640 --> 0:10:22.720 that is, you know, as you suggested earlier, show signs 0:10:22.760 --> 0:10:24.599 that it has peaked at maybe the peaks in a 0:10:24.679 --> 0:10:26.480 rear view mirror, but it's still there. How do you 0:10:27.120 --> 0:10:31.160 in this policy is supposed to have what coming show 0:10:31.200 --> 0:10:34.200 its effects three to five quarters from now? Yeah, exactly, 0:10:34.240 --> 0:10:36.040 So what do you think the feds are gonna do? Anika? 0:10:37.600 --> 0:10:39.040 I think the point that you just made is a 0:10:39.040 --> 0:10:42.440 really valid one. So because the world is of volatile 0:10:42.440 --> 0:10:45.240 things are changing so fast, were forgetting some of the mechanics. 0:10:45.240 --> 0:10:49.120 And to your point, there's a seriously significant time lag 0:10:49.559 --> 0:10:53.120 between third policy action and how the real economy should 0:10:53.120 --> 0:10:55.319 react to that. It's not as if you know, seventy 0:10:55.320 --> 0:10:59.559 five basis points lifts should suddenly impact next month's inflation reading. 0:10:59.559 --> 0:11:02.800 That's not our real life works. And I think taking 0:11:02.880 --> 0:11:06.800 that into accounts, the danger is that you're working off 0:11:07.400 --> 0:11:10.360 the FED is working off a signal board which is 0:11:10.400 --> 0:11:14.599 of actual data versus predicted data. I either FED is 0:11:14.720 --> 0:11:18.440 reacting by definition late to the game, and I think 0:11:18.440 --> 0:11:20.400 the FED has had no choice but to do this 0:11:20.480 --> 0:11:22.880 and to continue to do this, because the biggest issue 0:11:22.880 --> 0:11:26.200 that said had was the credibility issue. And if markets 0:11:26.240 --> 0:11:29.640 don't believe that our central banks can manage inflation, we've 0:11:29.640 --> 0:11:32.040 got a bigger problem to deal with. And that's why 0:11:32.080 --> 0:11:35.320 the fact that long term inflation expectations have been anchored 0:11:35.720 --> 0:11:38.640 thus far is very, very important, and that's why the 0:11:38.720 --> 0:11:41.719 FED will probably rather go on for a little bit 0:11:41.720 --> 0:11:44.120 longer in order to make sure they can maintain that. 0:11:45.080 --> 0:11:48.080 But why go on for I mean, do we really 0:11:48.080 --> 0:11:53.440 need another hudder basis points of tightening at this point? Well, 0:11:53.440 --> 0:11:55.760 I think I think it would be a delicate balancing acts. 0:11:55.800 --> 0:11:57.520 On one hand, you know, to your point, if you 0:11:57.600 --> 0:12:00.760 keep tightening away, you're you're triggering aid into the market 0:12:00.760 --> 0:12:02.640 that's going to take a very long time to correct, 0:12:02.720 --> 0:12:05.760 and why inflict that level of paint. On the other hand, 0:12:05.840 --> 0:12:10.640 the risk of pivoting too quickly and therefore unhinging that 0:12:10.760 --> 0:12:15.040 anchoring of long termslation expectations can be even more dangerous 0:12:15.120 --> 0:12:17.360 because the risk of then having to do a U 0:12:17.400 --> 0:12:20.760 turn because the next semplation reading is actually higher than expected, 0:12:20.840 --> 0:12:23.120 because I don't know, the China reopening has said to 0:12:23.120 --> 0:12:26.840 a bigger certain demandment expected um that couldn't actually end 0:12:26.880 --> 0:12:29.880 up inflicting more danger into the economy. So I think 0:12:29.880 --> 0:12:34.480 it's this awkward, delicate balance, which means probably the FED 0:12:34.520 --> 0:12:36.120 will probably go on a little bit longer than the 0:12:36.160 --> 0:12:38.840 market might expect. The FED pivot might be a little 0:12:38.880 --> 0:12:41.360 bit further out there than people expect. But at a 0:12:41.400 --> 0:12:43.880 certain point, of course, you know, the rate of change 0:12:44.120 --> 0:12:46.160 we've passed that we've passed the peak of the rate 0:12:46.200 --> 0:12:52.800 of increase of rates, that's for sure. Anka, I understand 0:12:52.840 --> 0:12:57.160 that you're based in Amsterdam, Is that right? Yes? Okay, 0:12:57.400 --> 0:13:00.840 So give us the feeling you know on the ground, 0:13:01.240 --> 0:13:05.640 how are consumers, how are companies thinking about kind of 0:13:05.640 --> 0:13:09.240 the war in Ukraine, a tough winter ahead in terms 0:13:09.240 --> 0:13:12.559 of energy, what's the what's what's the feeling across your 0:13:13.400 --> 0:13:17.760 based upon kind of the folks that you interact with. Yeah, well, 0:13:17.800 --> 0:13:20.280 the sentiment has sort of turned again with regards to energy, 0:13:20.320 --> 0:13:24.000 because obviously we've all had a relatively benign winter and 0:13:24.040 --> 0:13:26.760 all those sort of you know, scary stories as too, well, 0:13:26.800 --> 0:13:28.680 we've got reserves of energy, but is that going to 0:13:28.720 --> 0:13:32.080 be sufficient? So far, so good until the last couple 0:13:32.080 --> 0:13:34.880 of weeks, right, and now we see, you know, temperatures 0:13:34.880 --> 0:13:37.280 going into minus. It was minus this morning, for example. 0:13:37.640 --> 0:13:40.120 People are waking up and realizing, Okay, I've managed my 0:13:40.200 --> 0:13:42.200 energy bill at home thus far because it's not been 0:13:42.240 --> 0:13:45.959 that cold outside. But while the temperatures dropped, so there's 0:13:46.000 --> 0:13:48.680 definitely nervousness around there. You know, You've have you know, 0:13:48.720 --> 0:13:52.600 some of the local the largest energy suppliers literally pointing 0:13:52.600 --> 0:13:55.480 out to the fact that there's huge percentage of their 0:13:55.559 --> 0:13:57.920 client base who are likely to go through cash flow 0:13:58.000 --> 0:14:01.400 problems from a family perspective, I mean, you have staters 0:14:01.480 --> 0:14:04.880 that are entering the economy into their job market who says, all, 0:14:04.920 --> 0:14:07.320 my energy bill is not that different to my rental 0:14:07.520 --> 0:14:10.280 price of my apartment. So especially for the low energy 0:14:10.320 --> 0:14:14.320 label building, so it's it's it's scary, it's it's complicated. 0:14:14.360 --> 0:14:17.480 Having said that, you've got this sort of juxtaposition I 0:14:17.480 --> 0:14:20.320 think in many in many countries, in many cities where 0:14:20.880 --> 0:14:22.960 you've got all of those concerns and you know, recession 0:14:23.000 --> 0:14:26.160 seems inevitable in Europe and obviously the gas sights, etcetera. 0:14:26.520 --> 0:14:28.040 On the other hand, try and book a restaurant on 0:14:28.040 --> 0:14:30.360 a Friday night, it's pass by in book on all 0:14:30.400 --> 0:14:34.240 the days yourself, it's fully books. So it's this bizarre juxtaposition. 0:14:35.040 --> 0:14:38.480 So Taylor Swift tickets exactly. I'm not sure if you're 0:14:38.640 --> 0:14:42.000 a football fan, but the Netherlands has a football match 0:14:42.680 --> 0:14:44.640 he means soccer in a few hours, and I'm going 0:14:44.640 --> 0:14:47.080 with the football cause I'm speaking with a European Netherlands 0:14:47.080 --> 0:14:51.680 against Argentine. What's the feeling within Amsterdam on the street today? 0:14:51.840 --> 0:14:55.080 How hyped up is the average you know, Dutch fan? 0:14:55.680 --> 0:14:58.360 Very hyped up? I mean this is this is, this 0:14:58.400 --> 0:14:59.960 is a very big thing for the Dutch will be 0:15:00.040 --> 0:15:03.520 orange clofted everywhere and very excited. See I told you 0:15:03.560 --> 0:15:07.440 that Dutch, I mean, id they love and it's such 0:15:07.440 --> 0:15:10.080 a small cuntry but they produced so many good soccer players. 0:15:10.120 --> 0:15:11.760 I don't know how they do it, but it was 0:15:11.840 --> 0:15:14.080 my pick is my pick in this year's World Cup. 0:15:14.240 --> 0:15:16.040 So I'm looking pretty good here. But we'll see, Argentina 0:15:16.080 --> 0:15:19.080 is gonna be toughly destroyed. The US Yeah, the only 0:15:19.120 --> 0:15:21.560 goal we scored against them looked like it was an accident. 0:15:21.800 --> 0:15:24.480 Kind of well, I don't know. We're coming up there 0:15:24.560 --> 0:15:28.320 on a trey on Chief Economist International, Van launch Shot Kempen, 0:15:28.680 --> 0:15:33.720 based in Amsterdam. Let's talk to Vince Sagnarella. He does 0:15:33.760 --> 0:15:35.920 that market stuff for us. He's a market strategist. He 0:15:36.000 --> 0:15:38.120 spent years on the street trading all kinds of things. 0:15:38.720 --> 0:15:40.960 We don't really want to ask too many questions about that, 0:15:41.000 --> 0:15:44.360 but he's with us now, Vince Sagnarella. Vince, you get 0:15:44.360 --> 0:15:48.200 the inflation print today? UM, I guess that gives the 0:15:48.680 --> 0:15:52.120 Fed some room to continue to be hawk is here. 0:15:52.240 --> 0:15:55.600 What was your take? I don't think so. Actually, it's 0:15:55.640 --> 0:15:57.720 just one number. It's p p I. I put a 0:15:57.760 --> 0:16:00.240 little bit more weight on cp I next week, which 0:16:00.280 --> 0:16:02.880 is expected to moderate if that comes in hot again. 0:16:03.000 --> 0:16:05.680 I think the FEDS still sits um sits where they 0:16:05.680 --> 0:16:09.440 are with fifty basis points next week. UH, potentially fifty 0:16:09.440 --> 0:16:13.040 basis points in February. But as the data I'm looking 0:16:13.080 --> 0:16:15.560 at and a couple of people out and talking to, UH, 0:16:15.640 --> 0:16:20.120 the expectations come January. Buddy of my in South Bay 0:16:20.160 --> 0:16:24.520 Research out in San Francisco, sees jobless claims jumping in 0:16:24.680 --> 0:16:30.160 late January, and that uptick will pull in UH forecasts 0:16:30.440 --> 0:16:33.240 for rate cuts next year. So if he's right and 0:16:33.280 --> 0:16:38.040 we get a jobless claims going higher from now into January, 0:16:38.120 --> 0:16:40.960 that is the feds. Uh, that's what the FEDS watching 0:16:41.000 --> 0:16:44.520 these days. Jobs. I mean, what, how can you claim 0:16:44.640 --> 0:16:48.840 joblessness when there's over ten million job openings out there. Well, 0:16:48.880 --> 0:16:51.640 the point, the point that he makes, and I probably 0:16:51.680 --> 0:16:53.720 would argue the same thing, is that you know, as 0:16:53.720 --> 0:16:57.160 you're heading into a downturn, which is largely predicted, UH, 0:16:57.360 --> 0:17:01.000 employers stop hiring and then that's followed by layoffs. And 0:17:01.040 --> 0:17:03.160 while there's a delay in white college jobs, which are 0:17:03.200 --> 0:17:07.800 obviously the higher paying jobs, uh, they then surge in 0:17:07.960 --> 0:17:11.600 layoffs going into that. So if that trend holds, come 0:17:11.840 --> 0:17:13.960 you know, the middle of the first quarter next year, 0:17:14.080 --> 0:17:16.360 maybe the end of the first quarter next year, we're 0:17:16.359 --> 0:17:18.720 going to see a situation where there won't be that 0:17:18.800 --> 0:17:22.639 many job openings available, or if there are job openings, 0:17:22.920 --> 0:17:26.720 they're probably jobs people don't want them. Let's see, we 0:17:26.760 --> 0:17:30.080 need talk to traders, Vince out there, how concerned are 0:17:30.119 --> 0:17:33.080 they about a recession? And there's a lot of everybody's 0:17:33.119 --> 0:17:35.440 talking about it, everybody is calling for it. But boy, 0:17:35.480 --> 0:17:37.840 the consumers still strong out there. The consumer still has 0:17:37.880 --> 0:17:40.760 a job kind of I don't know, what are you 0:17:40.800 --> 0:17:43.320 what are you hearing? Well? I mean the the ideas. 0:17:43.359 --> 0:17:45.240 I mean, everybody thinks there's going to be a recession, 0:17:45.280 --> 0:17:46.879 most of the folks I talked to, But from a 0:17:46.880 --> 0:17:50.400 trader standpoint, whether it's a soft landing or whether it's 0:17:50.440 --> 0:17:53.520 a severe downturn, that they can't predict that, so they 0:17:53.520 --> 0:17:56.040 don't actually price for it. That del price for that 0:17:56.040 --> 0:18:00.080 when it comes. UM. So we could see if we 0:18:00.119 --> 0:18:03.400 have a mile downturn, a nice bid going into risk 0:18:03.480 --> 0:18:06.280 next year. Obviously the opposite is true if we get 0:18:06.280 --> 0:18:09.680 a severe downturn UM. But you know, what they are 0:18:09.760 --> 0:18:14.720 talking about is essentially the feel that we're nearing a bottom, 0:18:14.840 --> 0:18:17.840 that feel that we're nearing a top in rates. UH 0:18:18.000 --> 0:18:20.280 take a page out of the Bank Accounada's book this 0:18:20.320 --> 0:18:24.359 week where they rose, uh rose, where they raised rates 0:18:24.800 --> 0:18:27.919 and and then basically said we're nearing a pause. That 0:18:28.040 --> 0:18:31.520 they've done U, that their work has done its job 0:18:31.640 --> 0:18:34.560 on the economy. And a lot of a lot of 0:18:34.560 --> 0:18:36.359 traders here in the States think that we're going to 0:18:36.440 --> 0:18:39.200 see something similar to that coming from the set. If 0:18:39.200 --> 0:18:42.160 it doesn't come next week, they'll expect that they expected 0:18:42.240 --> 0:18:45.919 to come early next year. Surely they're doing Surely this 0:18:46.000 --> 0:18:48.479 is the first of two fifty basis point hikes. Right, 0:18:49.640 --> 0:18:52.560 No guarantees of February. I mean next week I think 0:18:52.640 --> 0:18:56.680 is in stone, but I think February. Um, we'll watch 0:18:56.720 --> 0:18:59.240 the data and and see where it goes. I mean, 0:18:59.600 --> 0:19:01.439 you know, we're starting to see some things and this 0:19:01.480 --> 0:19:04.760 is in your wheelhouse. Um, use car prices are coming down, 0:19:05.240 --> 0:19:08.760 but um, new car prices have searched, so you're gonna 0:19:08.840 --> 0:19:11.480 see a switch and consumer spending. You know, when when 0:19:11.560 --> 0:19:14.960 beef prices go up, people buy more chicken. When new 0:19:15.080 --> 0:19:17.679 car prices go up, people probably go back to use 0:19:17.800 --> 0:19:21.920 cars or even uh just delay a car purchase if 0:19:22.000 --> 0:19:26.320 they can. So those kind of things from an inflation standpoint, 0:19:26.320 --> 0:19:29.040 when they're way through the economy and take some pressure 0:19:29.040 --> 0:19:31.480 off the inflation scenario. You know who says we won't 0:19:31.560 --> 0:19:37.080 have a recession. Treasury Secretary Janny Ellen. She says the 0:19:37.200 --> 0:19:40.919 US is going to avoid a recession, talking you know 0:19:41.400 --> 0:19:43.280 it would. When was the last time, Vince, you heard 0:19:43.280 --> 0:19:46.280 a Treasury Secretary say we're definitely going into a recession 0:19:46.280 --> 0:19:50.240 next year. Well, I mean talking about talking to your book, 0:19:50.240 --> 0:19:53.000 as a trader would say, I mean, she's she's got 0:19:53.000 --> 0:19:55.160 to be you know, she she's in the Biden camp. 0:19:55.200 --> 0:19:58.920 She has to speak to speak um and and frankly, 0:19:59.160 --> 0:20:01.520 I wonder what it's like to go from you know, 0:20:01.560 --> 0:20:06.960 an academic, uh, you know, an economist too well as 0:20:07.040 --> 0:20:09.520 as the FED chair. She already had a taste of it, 0:20:09.560 --> 0:20:12.560 but really to to to be a politician, you're just 0:20:12.640 --> 0:20:16.719 throwing away all of that data based scientific, you know, 0:20:17.200 --> 0:20:21.560 uh stuff and and going completely to um, you know, 0:20:21.600 --> 0:20:25.080 talking your book. It's gotta be weird. I mean, give 0:20:25.160 --> 0:20:27.080 it to this way the way traders look at it. 0:20:27.080 --> 0:20:29.560 When she was the chair of the FED, she was 0:20:29.680 --> 0:20:33.080 listened to and respected. As the Treasury secretary, no one 0:20:33.119 --> 0:20:36.320 trades on what she says saying because they know that, 0:20:36.600 --> 0:20:38.640 you know, she's saying what she has to say rather 0:20:38.680 --> 0:20:40.520 than what she wants to say. And there was a 0:20:40.520 --> 0:20:42.880 time when she was in the closet for a long time, 0:20:42.920 --> 0:20:45.720 and it's probably because she disagreed with the administration, and 0:20:46.080 --> 0:20:48.360 so they just kept her off the tape because they 0:20:48.480 --> 0:20:50.960 didn't want her to say anything that was that was 0:20:51.359 --> 0:20:54.719 contrary to what the picture they wanted to paint. All right, 0:20:54.760 --> 0:20:56.600 So if I'm a trader here for the rest of 0:20:56.680 --> 0:20:58.920 today and going into next week, do I just wait 0:20:58.960 --> 0:21:01.000 on the CPI datas at the next data point and 0:21:01.000 --> 0:21:04.640 then of course the FED meeting on Wednesday. Yeah, I mean, 0:21:05.160 --> 0:21:06.960 you know, whatever you're seeing today and p p I 0:21:07.040 --> 0:21:09.760 is and knee jerk reaction, Um, I wouldn't put a 0:21:09.760 --> 0:21:12.840 lot of I wouldn't put a lot of credit it. Um. 0:21:12.880 --> 0:21:14.719 You know, in fact, you know, big sell off might 0:21:14.760 --> 0:21:16.920 be a buying opportunity going into c p I of 0:21:17.000 --> 0:21:21.439 CPI moderates and Vince just on the dollar, still no 0:21:21.720 --> 0:21:24.600 credible bear case out there for the US dollar has 0:21:24.600 --> 0:21:28.040 come off a lot, has come off a lot. Well, 0:21:28.080 --> 0:21:29.960