WEBVTT - Prestige's Schenker, Bloomberg's Adams-Heard, on Oil (Audio)

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<v Speaker 1>Global business news twenty four hours a day at Bloomberg

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<v Speaker 1>dot Com, the radio, plus Globo lact and on your radio.

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<v Speaker 1>This is a Bloomberg Business Flash from Bloomberg World Headquarters.

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<v Speaker 1>I'm Katherine Cowdery. Stocks rose for a fourth day, sending

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<v Speaker 1>the SMP five fundered to its best week since November.

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<v Speaker 1>There was optimism about economic growth in the US and

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<v Speaker 1>about more signals at central banks will continue to help

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<v Speaker 1>stave off fallout from Britain's decision to leave the European Union.

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<v Speaker 1>It was the longest winning streak for stocks in smarch. Industrial,

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<v Speaker 1>energy and financial shares have led the comeback since Monday.

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<v Speaker 1>We took the markets every fifteen minutes. The Dow Industrial

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<v Speaker 1>Average gained at nineteen points a tenth of a percent

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<v Speaker 1>to close out the week at seventeen thousand, nine hundred

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<v Speaker 1>forty nine. SMP five founded up four points two tents

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<v Speaker 1>of a percent to twenty one oh two. The NAZDAC

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<v Speaker 1>added twenty points four tenths of a percent and closed

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<v Speaker 1>at forty eight sixty two. West Texas intermediate crude oil

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<v Speaker 1>of eighty seven cents of ARRO one eight percent to

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<v Speaker 1>forty nine eighteen spot called up twenty three dollar sixty

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<v Speaker 1>cents announced a thirteen ten year treasury have seven thirty

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<v Speaker 1>seconds that with the yield of one point for four

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<v Speaker 1>percent and repeating our top story. And Bangladesh local officials

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<v Speaker 1>say that two police officers have been killed in an

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<v Speaker 1>attack on a Bangladesh restaurant and that about thirty people

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<v Speaker 1>are being held hostage. A State Department spokesman says that

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<v Speaker 1>all American citizens that are under the authority of the

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<v Speaker 1>Diplomatic Chief of Mission and Dhaka were accounted for and

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<v Speaker 1>we're not involved in the incident. The Department is still

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<v Speaker 1>checking on private American citizens who may have been in

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<v Speaker 1>the area. And that's the Bloomberg Business flash you're listening

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<v Speaker 1>to taking stock with Pim Box and Kathleen Hayes on

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<v Speaker 1>Bloomberg Radio. The health of the global economy, the strength

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<v Speaker 1>of manufacturers around the world post Brexit. This is what

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<v Speaker 1>we're going to dive into now and what it may

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<v Speaker 1>mean for some key commodities. To who's whose health is

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<v Speaker 1>so important to the health of the US and global economy.

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<v Speaker 1>Jason Shanker joins US now. He's President Prestige Economy X.

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<v Speaker 1>He's located in Austin, Texas in studio Rachel Adams Hurt.

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<v Speaker 1>She's part of Our America's Oil team here in New

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<v Speaker 1>York City. So Jason, let's start with you. I spoke

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<v Speaker 1>earlier today with Brad Holcomb from the Institute of Supply Management,

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<v Speaker 1>and we talked about US manufacturing. It's going pretty decently,

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<v Speaker 1>fastest growth in more than a year. But why don't

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<v Speaker 1>you and I and Rachel look at the Euro Area

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<v Speaker 1>numbers because it's surprising that Euro Area manufacturing was going

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<v Speaker 1>as fast as pace in six months. But can that

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<v Speaker 1>last post Brexit? Well, I think you know you've hit

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<v Speaker 1>the nail on the head here that things looked pretty

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<v Speaker 1>good going into Briggs and even the UK manufacturing numbers

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<v Speaker 1>were up quite a lot, went up to fifty two

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<v Speaker 1>point one from fifty point one, you know, uh, and

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<v Speaker 1>and the Euros it was at fifty two point from

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<v Speaker 1>fifty one point five. We're fifty as a break even

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<v Speaker 1>for all of these. These all look good, but after breakfit,

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<v Speaker 1>I think they're significant. Concern about investment and if that

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<v Speaker 1>investment is reduced, you could see new orders be reduced

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<v Speaker 1>as well. And I could weigh on on manufacturing. Although

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<v Speaker 1>it's a bit of a mixed bag for the UK,

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<v Speaker 1>where exporters might still do quite well in this low

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<v Speaker 1>pound environment. You know, some are saying that it breaks

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<v Speaker 1>it behind the commodities market. You know, door is open

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<v Speaker 1>for prices of things like oil to keep rising. This

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<v Speaker 1>is one of your specialties, Jason. What do you see

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<v Speaker 1>for the price of oil moving ahead now? After breaks

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<v Speaker 1>A lot of uncertainty is still around. Yeah, I know.

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<v Speaker 1>I think for the balance of the year, we're going

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<v Speaker 1>to spend most of the year between this second half

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<v Speaker 1>between forty and sixty dollars a barrel. I think that

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<v Speaker 1>what's really important here is kind of a mix. When

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<v Speaker 1>I look at forecasting commodity prices, it's a mix of

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<v Speaker 1>three p M I S I look at the I

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<v Speaker 1>s M, which is expansionary right now UM at that

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<v Speaker 1>high level for June and fifty three point two, the

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<v Speaker 1>eurosone manufacturing which is pretty strong and fifty two point

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<v Speaker 1>UH and the Chinese manufacturing p M I. If you

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<v Speaker 1>look at the Sichine which is the privately conducted one

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<v Speaker 1>of the government survey that's contracted now for eighteen of

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<v Speaker 1>the past nineteen months. In other words, there's been a

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<v Speaker 1>manufacturing recession in China for over a year and a half,

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<v Speaker 1>so the mix of it is better than it's been

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<v Speaker 1>in a number of months, which is positive, But China

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<v Speaker 1>continues to risk being a drag and if there is

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<v Speaker 1>reduced investment into Europe um then there could be issues

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<v Speaker 1>with growth slowing there as well. So, Rachel, let's turn

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<v Speaker 1>to you. You wrote a story this week about cheap

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<v Speaker 1>gasoline and how that could mean a fuel record demand

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<v Speaker 1>for the fourth of July holiday. What's going on? Yeah,

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<v Speaker 1>so Triple A expects that nearly forty three million Americans

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<v Speaker 1>are going to be traveling this holiday weekend and that's

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<v Speaker 1>due in part because of cheap gasoline prices, but also

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<v Speaker 1>because it's the three day weekend and we've had a

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<v Speaker 1>few past couple of years for July four UM, so

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<v Speaker 1>this one is no different. And with more people saving

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<v Speaker 1>money from cheap gas and because that gasoline is so

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<v Speaker 1>cheap right now, it s incentivising Americans to hit throat.

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<v Speaker 1>So the reporting of done for this story and other

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<v Speaker 1>work you've done on oil is it? Is it the

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<v Speaker 1>when you talk to the analysts and the oil experts,

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<v Speaker 1>are are they seeing sufficient demand to keep oil prices

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<v Speaker 1>around this level? Or higher. Well, a recent Bloomberg Intelligence

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<v Speaker 1>survey actually found that more than fifty percent of analysts

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<v Speaker 1>and energy professionals expect that gas will in the year

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<v Speaker 1>I mean oil, excuse me, oil in the year at

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<v Speaker 1>fifty dollars a barrel or more. Um. And those respondents

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<v Speaker 1>were actually more bullish on Brent crude. Where about saw

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<v Speaker 1>that that oil within the that price range? Okay, Jason

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<v Speaker 1>Shanker back to you. Um if I'm oh boy there.

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<v Speaker 1>The central banks are really in play right now, aren't they.

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<v Speaker 1>The Bank of England maybe cutting the rate rates twice.

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<v Speaker 1>It's a lot of economists think the Fed on hold.

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<v Speaker 1>Stanley Fisher, FED Vice chair got to see what the

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<v Speaker 1>impact of briggs It is before you look at rates.

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<v Speaker 1>What's going to happen? Well, you know, I think I

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<v Speaker 1>think you know my thoughts on this. I know I

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<v Speaker 1>spoke with you when my my book Recession Proof came

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<v Speaker 1>out at the end of February. I've been expecting on

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<v Speaker 1>end of two thousand sixteen or two seventeen US recession.

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<v Speaker 1>I think that's already been baked in. And regardless of

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<v Speaker 1>what happened with Breggsit, I think Breggs it just pushes

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<v Speaker 1>US further in that direction. I think there's a risk

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<v Speaker 1>of a UK recession, and that's been acknowledged as a

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<v Speaker 1>result of reduced investment despite a likely increase in exports.

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<v Speaker 1>And you know, the Eurozone and the entire global economy

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<v Speaker 1>are very much on the edge. I mean, the i

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<v Speaker 1>m F lowered their growth forecast back in April significantly.

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<v Speaker 1>In the press conference, one of the heads of research said,

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<v Speaker 1>we're not presently in a crisis, we're on alert for

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<v Speaker 1>a crisis. This was back in April, right, So I'll

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<v Speaker 1>be very curious to see that next round of i

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<v Speaker 1>m S growth forecast. But the world banks lowered THEIRS,

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<v Speaker 1>and the IMF recently lowered the US growth forecast, not

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<v Speaker 1>only two point two for the year. I think we're

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<v Speaker 1>in for some real slowing. I think autos are the

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<v Speaker 1>lynchpin for the US economy right now. They were very

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<v Speaker 1>strong last year. If you look year over your retail

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<v Speaker 1>sales excluding autos was at a lower pace than in

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<v Speaker 1>two thousand one, so autos, a million extra cars were

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<v Speaker 1>and light trucks were sold. Last year. We went from

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<v Speaker 1>sixteen point four million vehicles in two thousand fourteen to

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<v Speaker 1>seven teen point four million last year. And if the

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<v Speaker 1>financial regulators push on banks to be more conservative with

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<v Speaker 1>the credit, you're going to get a reduction in subprime

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<v Speaker 1>auto loans at a time when the lease fleets that

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<v Speaker 1>are coming back this year are three times the size

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<v Speaker 1>of normal returning God, leave it there, Jason Shanker, thanks

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<v Speaker 1>so much from Prestige Economics. Thanks to write Rachel Adams,

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<v Speaker 1>heard from Bloomberg. Keep it right here. This is Bloomberg

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