Speaker 1: Welcome to the Bloomberg Penel Podcast. I'm Paul Sweeney. Along
Speaker 1: with my co host Lisa Brahma Waits. Each day we
Speaker 1: bring you the most noteworthy and useful interviews for you
Speaker 1: and your money. Whether at the grocery store or the
Speaker 1: trading floor, find a Bloomberg penl podcast on Apple podcast
Speaker 1: or wherever you listen to podcasts, as well as at
Speaker 1: Bloomberg dot com. It's hard to pinpoint the biggest hot
Speaker 1: spot that we ought to be paying attention to, Paul Sweeney. Luckily,
Speaker 1: we have Jack Divine here to go through them all
Speaker 1: with us. He is the founding partner and president of
Speaker 1: the ark And Group, also former chief of the CIA's
Speaker 1: worldwide operations, joining us here in our Bloomberg Adder Active
Speaker 1: Broker's studios. Jack, we love having you. Thank you for
Speaker 1: being here. I want to start with Venezuela because a
Speaker 1: lot of people are pinpointing the fact that it's become
Speaker 1: sort of a proxy location for a battle for supremacy
Speaker 1: between Russia and China on one hand and the US
Speaker 1: on the other. And I'm wondering, from your perspective, how
Speaker 1: valid is it to view the conflict in Venezuela currently
Speaker 1: through that lens at Lisa. As you know, I'm a
Speaker 1: Cold warrior, unreformed if you will, and if you if
Speaker 1: you stay in a game long enough, it repeats itself.
Speaker 1: So when I look at Venezuela to day with my
Speaker 1: background having spent so many years in the struggle with
Speaker 1: the Russians and the Cubans, I mean, this is a
Speaker 1: very familiar pattern. And they see a vulnerability on our
Speaker 1: flank and in our sphere of influence, and they push
Speaker 1: it for maxim advantage. Now, I think most Americans haven't
Speaker 1: been following over the past several years just how important
Speaker 1: Russia's financial support has been to Venezuela. And on again
Speaker 1: the professional side, the part that I'm quite familiar with,
Speaker 1: having supported the Cuban intelligence group and being able to
Speaker 1: monitor the opposition and how to counteract. It's very reminiscent
Speaker 1: of the Cold War. Having said that, the second part
Speaker 1: of that play is we have always resisted uh those
Speaker 1: adventures into this hemisphere, and I the strong action of
Speaker 1: sanctioning Venezuela is all part of this bigger chess chess game,
Speaker 1: and I do think we have to keep rushing Cuba
Speaker 1: from gaining another foothold in the region. So, Jack, given
Speaker 1: your long experience in that region of the world, what
Speaker 1: is your sense of how this plays out? It seems
Speaker 1: like when the um there's a lot of support for
Speaker 1: we have two presidents now, I mean, I guess my
Speaker 1: sentence is very quickly. How do you think this will
Speaker 1: play out? I think it's a very complicated situation. We
Speaker 1: tend to underestimate how far a country has to fall
Speaker 1: before there's an eruption of of a regime change. So
Speaker 1: when you look at the dynamic, I mean the inflation
Speaker 1: and UH in Venezuela, the shortages it is the lack
Speaker 1: of UH sufficient protection for the city, a sence, the
Speaker 1: autocratic nature of of the Madero government. They're at a
Speaker 1: very low point UH in the process. That doesn't mean
Speaker 1: that it's going to be resolved quickly. Actually was reading
Speaker 1: an article today in which one of the opposition leaders
Speaker 1: had one of our vulnerabilities here, if we think that
Speaker 1: this is a short game, we're probably gonna be you know,
Speaker 1: we're gonna dissipate our energy. So this is a sustained,
Speaker 1: sustained effort. I don't think it's over anytime soon. And
Speaker 1: as you know, the key, or at least many analysts
Speaker 1: would say the key is where does the military come down?
Speaker 1: But the military is not a united, monolithic group. You
Speaker 1: have military leadership and then you have the private and
Speaker 1: sergeant that's living with inflation shortages and his family. So
Speaker 1: the military doesn't have a lock on it. And the
Speaker 1: question is at what point in this process does the
Speaker 1: system break? And it is uh. I always say it's
Speaker 1: a game of chicken that the manages it, but there
Speaker 1: is this is going to be a move and counter move.
Speaker 1: I think for some period of time over the long
Speaker 1: play Madero goes not sustainable. I want to I want
Speaker 1: to shift gears a little bit. The way that we
Speaker 1: get a sense of how to engage most effectively is
Speaker 1: through our intelligence operations, both in Venezuela and elsewhere in
Speaker 1: the world. And I want to just check in with
Speaker 1: you about something that we've talked about over the over
Speaker 1: the past few years, which is morale at the CIA
Speaker 1: right now, Given the fact that we still are getting
Speaker 1: leeks about things out of the CIA and the fact
Speaker 1: that there does seem to be some dissonance disagreements within
Speaker 1: the administration right now, can you give us a read
Speaker 1: how are things just internally. My experience in the agency
Speaker 1: is that morale is often directly correlated to how important
Speaker 1: the agency is in the scheme of things in our
Speaker 1: policy and how much is an administration using the CIA
Speaker 1: that is really the ingredient. As a population has probably
Speaker 1: split fifty two Republican Democrats, switching is part of America,
Speaker 1: So it's not so politicized in that regard today, whether
Speaker 1: you have a Republican president or a Democratic president. The
Speaker 1: CIA is a really critical piece of the action. So
Speaker 1: I at the working level as opposed to uh, we're
Speaker 1: seeing it played out some policy level disputes, but the
Speaker 1: rank and file is more interested in doing doing the job.
Speaker 1: Now At the policy level, UM, I mean the mission
Speaker 1: of the CIA engraved on its wall, and we've talked
Speaker 1: about this before. Its product is just tell the facts
Speaker 1: the way they are, and when it gets in trouble,
Speaker 1: it deviates from that. So policymakers need to understand that
Speaker 1: and live with it. And the best ones understand that
Speaker 1: that is a strength. And so I think, um, looking
Speaker 1: at the situation today, UM, I think, um, you know
Speaker 1: everyone's looking that there will be a fight between the
Speaker 1: intelligence community and policy makers. I think that's not good
Speaker 1: for this country. UM And, I think over time, good
Speaker 1: objective intelligence prevails and most presidents events eventually succumbed to
Speaker 1: the to the importance of relying on it. So, how
Speaker 1: the so you're saying that the UM some the commentary
Speaker 1: from President Trump at administration detigrating UH the intelligence agencies.
Speaker 1: You're thinking your senses that these agencies can withstand that
Speaker 1: certainly in the near term, focus on the long term.
Speaker 1: You know, I may be an optimist, but my experience
Speaker 1: leads me to believe the truth does prevail, that reason
Speaker 1: does prevail. UM And I think when you look at
Speaker 1: the assessments, you know, there's things that are said in
Speaker 1: the public forms, other things were said in the back room.
Speaker 1: I don't think the intelligence being shocked. I know. Let
Speaker 1: me differently, I know the intelligence community really considers Iran
Speaker 1: and evil empire. Right. It's you know, my career, I
Speaker 1: was in charge of Iranian operations at one point. There's
Speaker 1: no school of thought inside the agency that Iran is
Speaker 1: a good nation and the part of the brotherhood U. So,
Speaker 1: I think the dispute is whether or not the specific
Speaker 1: ingredients of the UH of the treaty worked out with
Speaker 1: them on nuclear uh development is being adhere to, and
Speaker 1: I think the senses it is they would point out
Speaker 1: if pressed, and I believe it's probably even in the
Speaker 1: record that you know, this is not an ironclad agreement,
Speaker 1: the nuclear agreement, so there is room for developing missiles.
Speaker 1: There's sights that can't be worked, so it's it's not
Speaker 1: as clean as may be portrayed publicly. So I think
Speaker 1: the sea is very much awared about all of these
Speaker 1: things and understand the motivations. But if you look at
Speaker 1: the technical point A, point B, they haven't broken it.
Speaker 1: Chack Devine, we love having you on. Thank you so
Speaker 1: much for being with us. Jack Devine, founding partner and
Speaker 1: president of the ark And Group, also former chief of
Speaker 1: CIA's Worldwide Operations author of Good Hunting, A Spy Master's Story.
Speaker 1: Really interesting to get this perspective because the intelligence community
Speaker 1: is so pivotal in national security and has been under
Speaker 1: under a lot of scrutiny of late. The US retail
Speaker 1: industry continues to undergo tremendous disruption brought about by e
Speaker 1: commerce writ large and perhaps Amazon dot Com in particular,
Speaker 1: and no US name has been more impacted, arguably than Sears,
Speaker 1: the venerable Sears Brandon the United States to help us
Speaker 1: kind of passed through what is going on in retail
Speaker 1: these days, particularly with Sears. There's been some more news.
Speaker 1: There's Bert Flickinger. Burg is a manager director at Strategic
Speaker 1: Resource Group. Bert joins us in our Bloomberg Interactive Broker studio. Bert.
Speaker 1: We love to have you here. Thank you very much.
Speaker 1: Can you give us the latest on what is going
Speaker 1: on at Sears? It looks like Eddie Lambert one another
Speaker 1: round of to keep this company afloat. My question to
Speaker 1: you is what is going on? What's the latest Paul
Speaker 1: and Lisa. Another really regrettable example of bankruptcy Judge Bob
Speaker 1: drain who was a big Wall Street partner let letting
Speaker 1: Lampert's lawyers, who making thousands of dollars per hour, just
Speaker 1: run rough shot. In my professional view, with a lot
Speaker 1: of experience in this area, run rough shot over the
Speaker 1: creditors Um, including the vendors, the workers, the landlords, and
Speaker 1: Lampert is epitomized retail and aptitude throughout his career, and
Speaker 1: and for drain Um to not have the right person
Speaker 1: with Lampert, with his advisers, with the law firm wild
Speaker 1: gotchall without the right skills. How to you know? It's
Speaker 1: an institutionally an excuseable view. So Sears has been an
Speaker 1: absolute mess for a while, and certainly that's been reflected
Speaker 1: in the fact that the shares are trading under a
Speaker 1: dollar until very recently they've surged. They've actually almost doubled
Speaker 1: from sixty cents to a dollar in the past two sessions.
Speaker 1: But I'm just wondering what could Sears do at this
Speaker 1: point to rejuvenate itself, Lisa key question you're asking, And
Speaker 1: here's where Lampert fails to have a good grasp for
Speaker 1: the obvious. He had e commerce right in front of him.
Speaker 1: As you've presently pointed out a number of times, the
Speaker 1: Sears catalog couldn't have been converted to e retail to
Speaker 1: compete with Amazon, but it could have been effective. Kurt Avalon,
Speaker 1: who was one of the founders of Takeoff e Retail,
Speaker 1: was the chief merchant for Lampert. Uh Lampert let him
Speaker 1: leave the company. Avalon's done ninety e retail micro fulfillment
Speaker 1: centers were body sized, mechanized eight thousand square feet, can
Speaker 1: do a million a week. That would have saved Sears.
Speaker 1: The guys sitting in the executive suite with Lambert, and
Speaker 1: Lambert doesn't want to invest in sales circulars, doesn't want
Speaker 1: to rental, and Revinal the store raises prices with impunity,
Speaker 1: sees the solution to save the company, lets it go.
Speaker 1: What do we do here? We bring back Bob Mettler,
Speaker 1: Arthur Martinez, the dream team that saves Sears twenty years ago,
Speaker 1: and the boards Tip two is to do it and Lambert,
Speaker 1: in my views, has has too much ego to do it.
Speaker 1: And the American taxpayers are going to pay a very
Speaker 1: painful price for this one. So is Lambert's play here,
Speaker 1: in your opinions, simply a real estate play of the
Speaker 1: stores and so on and so forth. I just don't
Speaker 1: see away how he recovers anything remotely close to what
Speaker 1: he I'm sure originally planned. Polish is you referenced, well,
Speaker 1: it was a real estate play to start with Marty
Speaker 1: Whitman when they controlled Kmart almost twenty years ago. In
Speaker 1: that bankruptcy combined with Sears real estate play and huge
Speaker 1: fees to Lampard and his company in addition to him
Speaker 1: demification for him not to have litigation liability, and in
Speaker 1: my view, he should be investigated and if investigated, pay
Speaker 1: the commercial consequences. So that sort of takes us to
Speaker 1: the whole concept of shopping malls and the role of
Speaker 1: them going forward. And honestly, this was called into relief
Speaker 1: by j Z Penney, which decided to stop selling major
Speaker 1: appliances as well as furniture in some US stores this week.
Speaker 1: As Bloomberg News reported yesterday, I'm just wondering, you know,
Speaker 1: what will be the role of shopping malls, just how
Speaker 1: much of the carnage has already happened versus needs to happen,
Speaker 1: Lee Lisa, what's happening in the US will be much
Speaker 1: worse than what's happening overseas. And our worldwide work for
Speaker 1: arbitration tribunals Paris, Dubai, we had to do a worldwide
Speaker 1: study of research luxury to mid mid tier to downstream
Speaker 1: and what we see in London is Selfridge's store the
Speaker 1: year three years ago in a row. Harvey Nichols digit
Speaker 1: digitized the experience, so they get young consumers. It's almost
Speaker 1: like going to a Disney property and they get all
Speaker 1: kinds of graphics one would see on her his mobile phone.
Speaker 1: What the Parisian retailers do when Bloomberg is not correctly
Speaker 1: reporting the yellow vests um rioting in the streets. The
Speaker 1: retailers in South Korea, Japan here know how to evolve
Speaker 1: with the future investing malls to make them exciting. Here. Uh,
Speaker 1: they're they're dead elephants, just waiting to be restructured by
Speaker 1: private equity firms. Some of the private equity firms are
Speaker 1: good in our view. I don't think uh Lambert's private
Speaker 1: equity firm in anybody's view, is constructive. So you still
Speaker 1: think that there is a role for bricks and mortar retail,
Speaker 1: but is your view that has to be much more
Speaker 1: closely tied in and aligned with the digital e commerce offering.
Speaker 1: That is that the life the life raft for bricks
Speaker 1: and mortar exactly as you stated, Paul. And here's the
Speaker 1: example Sears four in Hamburg, where the Buffalo bills played
Speaker 1: close to the Canadian border. Like all the Sears Canadian
Speaker 1: border stores should be doing lots of business. It's not.
Speaker 1: But Amazon moved in to Niagara Falls Boulevard with a
Speaker 1: combination Amazon Whole Food Store where they blew up the
Speaker 1: whole on Niagara Falls Boulevard and mall replaced the Bontan
Speaker 1: bankrupt department store with an Amazon Amazon Whole Foods. That
Speaker 1: store is supposed to do one point to five million
Speaker 1: a week. That store is now doing less than two
Speaker 1: hundred thousand a week a year after its opening, is
Speaker 1: going to close like the Amazon bricks and mortar stores.
Speaker 1: So the retail a cop apocalypse or ice ages affecting
Speaker 1: everybody from Sears to Amazon. Because while Bezos and my views,
Speaker 1: most brilliant person who's ever worked in retail, when he's
Speaker 1: running the show, he's great. But now he's going to
Speaker 1: the show and all these side shows that he's personally
Speaker 1: distracted with his divorce. So Amazon's failing in bricks and
Speaker 1: mortar as his seers and the guys with the great
Speaker 1: leaders will win. So let's talk about who's actually doing
Speaker 1: a good job of adopting brick and mortar to the
Speaker 1: modern era in the United States. Uh, look at what
Speaker 1: Frank Blake did to completely turn around Home Depot before
Speaker 1: he became chairman of Delta doing doing tremendous job off price.
Speaker 1: Uh is you've referenced well a number of times, Lisa,
Speaker 1: whether it's Ali's bargain stores on the low end or
Speaker 1: Burlington or t j X or Ross off price. Customers
Speaker 1: want to shop primarily on price Chris Baldwin. But this
Speaker 1: has something to do with the experience, right, Uh, the
Speaker 1: experience and and price. So it's a combination, uh, treasure hunt.
Speaker 1: In terms of the experience home DEEPO is a great
Speaker 1: experience in store online uh. And if and if you
Speaker 1: look at a number of others from the department stores
Speaker 1: and luxury start with South Korea, then then go to London, Paris, Uh,
Speaker 1: you go to Dubai uh and and throughout the PRC
Speaker 1: in Japan. A lot of great in store experiences, but
Speaker 1: the retailers are looking at everything in cap as access
Speaker 1: and expense rather than an investment to profitably drive sales. Yeah,
Speaker 1: definitely gonna be a big challenge. How do you invest?
Speaker 1: Will also watched declining sales and adopt to a modern
Speaker 1: era both in brick and mortar as well as on
Speaker 1: their online platforms. But Bert flickant Jer, thank you so
Speaker 1: much for being here. As always, Bert flickint Jer, Managing
Speaker 1: director at Strategic Resource Group. You know, definitely a big
Speaker 1: existential question facing retail. How big can the brick and
Speaker 1: mortar presence be? How do you fight against Amazon dot Com.
Speaker 1: So trade talks on off, on again, perhaps off again.
Speaker 1: Now we know that President Trump is not going to
Speaker 1: be meeting with jumping ahead of that March first deadline.
Speaker 1: Why what happened? It's hard to know, but we knew.
Speaker 1: The one person is keeping track of it very closely.
Speaker 1: Mike McDonough, chief economist for Financial Products at Bloomberg LP,
Speaker 1: joining us here in our Bloomberg Atta Active Brokers studios. Mike,
Speaker 1: what happened? Why are the talks now off before the
Speaker 1: March first deadline? I mean, are they all right? Well?
Speaker 1: There we go? It seemed like, I mean, the Trump
Speaker 1: she meeting may apparently be postponed, but they're still having
Speaker 1: talks next week. So I mean, it's really hard to
Speaker 1: decipher what this means. I mean, I think, why are
Speaker 1: we hearing about all this? Why? Why the chatter? Why
Speaker 1: the it seems like someone asked him a question and
Speaker 1: kind of a random press conference are just discussion he
Speaker 1: was having. I'm not really sure how we we we
Speaker 1: got the information. It was actually a little bit confused
Speaker 1: by that yesterday. It was not a formal pronounced and
Speaker 1: and you know, I noticed the earliest headline I could
Speaker 1: see was at eleven thirty, and I think the um
Speaker 1: uh you know, the mark was actually selling off before that.
Speaker 1: So the whole thing kind of confused me. But so
Speaker 1: let's take a step back. Um, you know, I I
Speaker 1: don't know what this says about a potential deal. I
Speaker 1: do think that President Trump's bar for a deal has
Speaker 1: come down quite meaningfully because of what's been happening in
Speaker 1: the markets and concerns that the economy has been slowing.
Speaker 1: In fact, I wouldn't be surprised if it's come down
Speaker 1: so far. It may actually be at odds now with
Speaker 1: the people negotiating the trade deal primarily what I mean
Speaker 1: by that is Lighthouser, so you know, we could have
Speaker 1: a conflict there. Uh So I'm still optimistic we're going
Speaker 1: to reach some sort of deal. I think we'll get
Speaker 1: the best possible deal, which will not be what Trump
Speaker 1: had originally proposed, but we will. He will get some
Speaker 1: uh consolations. I think that we'll have some tangible stuff
Speaker 1: as it relates to the deficit, and I think we'll
Speaker 1: have promise is for some of the more difficult challenges,
Speaker 1: the intellectual property opening up an investment in some Chinese sectors,
Speaker 1: and I think right that the difficult thing is going
Speaker 1: to be uh what kind of measures are put in
Speaker 1: place to enforce those? And I think that's probably where
Speaker 1: the negotiations are centered right now. And I think the
Speaker 1: Chinese are realized now and are more willing to to
Speaker 1: give more concessions as well. So I do think a
Speaker 1: deal is possible. This delay of of the She Trump
Speaker 1: meeting is confusing because he said that it will be
Speaker 1: finalized at a meeting between us. If they don't meet
Speaker 1: by the deadline, what happens. Do we get the tariffs?
Speaker 1: Do we not get the tariffs? I suppose we'll know
Speaker 1: more next week when the the meetings do happen, not
Speaker 1: between uh She and Trump, but between more junior negotiation. So, Mike, again,
Speaker 1: it's do you have a sense of who's more incentive
Speaker 1: to get a deal done? I think we hear about
Speaker 1: China's economy slowing. Obviously we know that that. Maybe we've
Speaker 1: had some people come in here saying it's slowing materially
Speaker 1: more than the government is letting on, I e. They
Speaker 1: may be more incentive to do a deal. Do you
Speaker 1: buy into that? Well? I think you know, looking at
Speaker 1: last year, you had a problem where it was their
Speaker 1: deleveraging agenda that was causing the slowdown in the country.
Speaker 1: Trade wasn't really a factor. Yet you still have the
Speaker 1: issue with the deleveraging agenda slowing down growth more than
Speaker 1: they anticipated. And then you add on top of that trade.
Speaker 1: So yeah, that does put a lot of pressure on China.
Speaker 1: But I think if you look at you know, when
Speaker 1: President Trump started this um with China, US GDP growth
Speaker 1: was over three percent, the markets were rallying, everything was
Speaker 1: looking great. In the US, things don't look as good now.
Speaker 1: Sentiment is collapsing. If you look at one measure in
Speaker 1: the University of Michigan and the percent of people who
Speaker 1: um randomly make good comments about government economic policy, it's
Speaker 1: at the lowest it's ever been. During the Trump presidency,
Speaker 1: you had the shutdown, So there's some erosion and confidence
Speaker 1: in the economic agenda in the US. So Trump needs
Speaker 1: some wins, and this could be a nice, good, easy
Speaker 1: win that could bring some confidence back. Which brings us
Speaker 1: back to the confusing head scratcher of yesterday when we
Speaker 1: got the headlines at President Trump was not going to
Speaker 1: be attending a meeting with President of China and just
Speaker 1: to put this in a perspective about why we're focusing
Speaker 1: on it if we don't really have a lot of
Speaker 1: clarity there. Arguably that's what sunk the NASDAC and the
Speaker 1: DOO in particular, and sort of led the week into
Speaker 1: a rather negative tone, right. I mean, this actually did
Speaker 1: have a market effect. We saw it happen when the
Speaker 1: headlines hit. We saw stocks taken a further leg lower
Speaker 1: in the US. So my question is, if they are
Speaker 1: not talking, or if President Trump doesn't meet with Jim Ping,
Speaker 1: could we still get a deal ahead of that March
Speaker 1: first deadline? I think anything Obviously it is possible, but
Speaker 1: I mean, though it seems unlikely, but maybe we could
Speaker 1: get an extension of the deadline to accommodate the meeting.
Speaker 1: And what would I mean, would that be considered a
Speaker 1: win for who? Fair enough? My point is that is that,
Speaker 1: I mean, is that enough of the market thank you?
Speaker 1: Oh yeah, I mean I think I think thank you
Speaker 1: for understanding. Maybe if you if you get that extension,
Speaker 1: I think that would imply a deal is basically has
Speaker 1: been reached and it's a formality that they need to
Speaker 1: meet and then sign the deal. So I think that
Speaker 1: the market would look at that as a positive. If
Speaker 1: there I'm not talking about like another three six month extension.
Speaker 1: I'm talking about saying we're going to extend this deal
Speaker 1: another couple of weeks or whatever to accommodate a meeting
Speaker 1: between President and President Trump to finalize some of the
Speaker 1: loose ends our promises enough, like if they promised on technology,
Speaker 1: that's not enough. No, And I think that's that's one
Speaker 1: of the key points right now is they're trying to
Speaker 1: figure out what enforcement mechanisms they could put in place
Speaker 1: that they could track over the next two years on
Speaker 1: some of the uh following through with some of the
Speaker 1: more difficult challenges. I mean, you know, you know, it's interesting.
Speaker 1: Thank you, Mike McDonald, Thank you very much. We always
Speaker 1: appreciate your your insights here. Mike is the chief economist
Speaker 1: financial Products from Bloomberg LP. He joins us in our
Speaker 1: Bloomberg eleven three oh studios. Uh. You know, I don't know,
Speaker 1: color meet pessimistic, but that you know, I think some
Speaker 1: of the big issues that have to be addressed here
Speaker 1: on the trade deal are the very hard issues about technology,
Speaker 1: about intellectual property. It's about soybeans, paulbeans, but at some
Speaker 1: point they're gonna have to get down to brass tacks
Speaker 1: and go to those very tough issues which are really
Speaker 1: economically material. We have seen the price of iron or
Speaker 1: surge by more than twenty five over the past ten sessions,
Speaker 1: catching a lot of people's attention. But you know, it's
Speaker 1: catching even more people's attention, at least the attention of
Speaker 1: Mike McLoone, that is corn and crops and the fact
Speaker 1: that we are finally going to get some information for
Speaker 1: the first time in two months about just how well
Speaker 1: US farmers have been doing over the past couple of months.
Speaker 1: Mike mcloan joining us here in our Bloomberg at Active
Speaker 1: Broke Studios Commodity Strategy for Bloomberg Intelligence. So what's up
Speaker 1: with this, with this report that we're about to get. Well,
Speaker 1: we haven't had data from us d A for two months,
Speaker 1: so everybody is waiting for the market's stuck in a
Speaker 1: range and it's waiting for the data to night fear
Speaker 1: the market more likely kind of do what iron Ore has.
Speaker 1: You know, commodities have been pretty beat up, the dollar
Speaker 1: has been very strong, and then you just get a
Speaker 1: little piece of news like what happened with the ballet
Speaker 1: and the market just has the path of least resistance
Speaker 1: seems to be up, and I think that's might be
Speaker 1: the more of the case today with with um, the
Speaker 1: grains and eggs. So what commodities in particularly are you
Speaker 1: most looking forward to seeing data? You just I just
Speaker 1: I'm a little bit I need this data to help
Speaker 1: me form my opinion because it's been two months and
Speaker 1: there's a lot of altility. Which what are some of
Speaker 1: the data points you're most looking forward to today? Well,
Speaker 1: you mentioned corn, corn, soybeans, and we eat The key
Speaker 1: issue has been soybeans. We all know there's this way
Speaker 1: too much supply soy means because of the trade war UM,
Speaker 1: and we all expect the thing. It's already priced in UM.
Speaker 1: But I'm kind of watching corn because corn has the
Speaker 1: best balance, and all the estimates are that all the
Speaker 1: that we had last year, yields of probably declined a
Speaker 1: little bit. The production estimates have probably come off a
Speaker 1: little bit, and so corn is gonna be the one. Also,
Speaker 1: once we think we can virtually guarantee next year we're
Speaker 1: gonna get a lot more corn planting. It's just a
Speaker 1: question of how much it's marketed, and we don't export
Speaker 1: a lot of corn. We use a lot, actually use
Speaker 1: most are cornel for ethanol. Interesting, So, Mike, given the
Speaker 1: fact that you've done this for decades and you've been
Speaker 1: intimately connected with just how volatile things can get, look
Speaker 1: into your crystal ball. If we get a positive reading
Speaker 1: out of this FDA report or USDA usd A report,
Speaker 1: how much could you see the price of corn rice
Speaker 1: right now? My estimate is for to five percent and
Speaker 1: it's simple analysis session just well overall, maybe take a
Speaker 1: few said. But even if the data is neutral, if
Speaker 1: you look at the futures curve, because there's really not
Speaker 1: a lot of data, the futures curve is switched towards
Speaker 1: more towards backwardation, which means the fritures curve is expecting
Speaker 1: demand to pick up versus supply. And then you look
Speaker 1: at one other key factor, the Brazilian real Remember we
Speaker 1: had the big election last year. It looks like the
Speaker 1: realist bottom. So these two factors are turning positive. In addition,
Speaker 1: we all know what's going to happen when this trade issue.
Speaker 1: It's got to go back. It's not gonna get as
Speaker 1: bad as last year. We should see some mean version
Speaker 1: which mean to me means this data has to be
Speaker 1: really bare, so the market is more likely to go higher. So, Mike,
Speaker 1: let's switch from the softer commodities to the hard of stuff.
Speaker 1: Commodities are arguably iron ore. How surprised are you know,
Speaker 1: as Lisa mentioned, you know a big move up in
Speaker 1: iron ore of the last tent tent sessions doing part
Speaker 1: I guess in large part to the supply disruption from
Speaker 1: valet in Latin America. UM, How surprised are you with
Speaker 1: the volatility of that commodity given what is you know,
Speaker 1: I guess a meaningful supply disruption. Yes, it was significant.
Speaker 1: It's just like natural gas last year. The path of
Speaker 1: least resistance with some of this news is up because
Speaker 1: that's what commodities are doing in their bottom I mean
Speaker 1: the significance of iron ores. It's just not widely traded.
Speaker 1: There's no real active futures UM. And for me as
Speaker 1: a strategist, it's also not highly correlated to industrial metals.
Speaker 1: It's ironic, but it isn't, so I just kind of
Speaker 1: keep it as a as an Ey'm the backburner, and
Speaker 1: I watched copper and I watch aluminium, but iron ore
Speaker 1: as an indication where things are going. It's not going down, yeah,
Speaker 1: but I mean I understand that it's it's might be
Speaker 1: thinly traded, but it's still is a commodity, that it's
Speaker 1: an essential ingredient in any infrastructure spending, and frankly that
Speaker 1: is often used as a gauge of global economic growth.
Speaker 1: So I mean, is there a bigger kind of message
Speaker 1: to take away here that as a slid disruption and
Speaker 1: a major producer of iron ore could cause really, I
Speaker 1: mean twenty seven increase in the price and ten sessions.
Speaker 1: This is traumatic. I have to temper my enthusiasm to
Speaker 1: be bullish commodities because obviously I'm a commodity guy. But
Speaker 1: I look at this year, is this is an indicative
Speaker 1: of where markets are going with just little tweaks. It's
Speaker 1: much easier for them to go up with little things
Speaker 1: like this, and that this is a you know, this
Speaker 1: is a canary and the coal chef. But you look
Speaker 1: at copper, it's just bottom from a good level. Aluminiums
Speaker 1: just bottom from a good level. We're going to see
Speaker 1: corn today, and all these demands supply demand factors are
Speaker 1: switching positive. In addition, the key factors of US though,
Speaker 1: if the dollars peaked from that sixteen year high last year,
Speaker 1: which I think it has, that's a pretty strong tail
Speaker 1: wind for all commodities. In addition, we get these little
Speaker 1: supplied rustions. But key thing remember about slight disruptions are
Speaker 1: usually short term events, and they come back. What's your
Speaker 1: number one commodity right now? Real? Ten seconds? Good Gold,
Speaker 1: unfortunate Gold. I have to I have to give my credit.
Speaker 1: He's been making a very popular and a very good
Speaker 1: gold call for two or three months. I heard it
Speaker 1: just kind of in the background in the office about
Speaker 1: his gold. I read his reports and uh, spot on,
Speaker 1: spot on. So gold, safety, safety, and gold. Mike mcglowan,
Speaker 1: thanks very much, Mike, as a commodity strategist for Bloomberg
Speaker 1: Intelligence joining us today in our Bloomberg Interactive Broker studio
Speaker 1: here in New York. Thanks so much, Mike. So again Gold,
Speaker 1: But I go, I can see gold in the space
Speaker 1: and gold, so again, gold in the market that is
Speaker 1: down two hundred sixty points on the Dow. Gold does
Speaker 1: not sound so bad. We've got the you know, people
Speaker 1: concerned about the economic outlook, certainly in the back half
Speaker 1: of the year, So why not gold so Mike, we'll
Speaker 1: we'll take it. Thanks for listening to the Bloomberg P
Speaker 1: and L podcast. You can subscribe and listen to interviews
Speaker 1: at Apple Podcasts or whatever podcast platform you prefer. Paul Sweeney,
Speaker 1: I'm on Twitter at pt Sweeney, I'm Lisa bram Boyd's
Speaker 1: I'm on Twitter at Lisa Abramo. It's one before the podcast.
Speaker 1: You can always catch us worldwide on Bloomberg Radio