1 00:00:00,320 --> 00:00:04,160 Speaker 1: Who you put your trust in matters. Investors have put 2 00:00:04,200 --> 00:00:07,640 Speaker 1: their trust in independent registered investment advisors to the tune 3 00:00:07,640 --> 00:00:12,240 Speaker 1: of four trillion dollars. Why learn more and find your 4 00:00:12,240 --> 00:00:27,240 Speaker 1: independent advisor dot com. Welcome to the Bloomberg Surveillance Podcast. 5 00:00:27,280 --> 00:00:31,320 Speaker 1: I'm Tom Keane. Always with Michael McKee. Daily we bring 6 00:00:31,360 --> 00:00:35,280 Speaker 1: you insight from the best in economics, finance, investment, and 7 00:00:35,360 --> 00:00:41,519 Speaker 1: international relations. Find Bloomberg Surveillance on iTunes, SoundCloud, Bloomberg dot com, 8 00:00:41,560 --> 00:00:48,400 Speaker 1: and of course on the Bloomberg. It has been a 9 00:00:48,680 --> 00:00:51,480 Speaker 1: quiet on Wall Street this summer. Our single best chart 10 00:00:51,560 --> 00:00:54,880 Speaker 1: is a VIX and I introduce a presidential moving average 11 00:00:54,880 --> 00:00:58,480 Speaker 1: of forty eight months four year moving average on the vins. 12 00:00:58,520 --> 00:01:01,400 Speaker 1: The blue in the background is just simply the VIX 13 00:01:01,480 --> 00:01:05,120 Speaker 1: always volatile, but down we go through that twenty level 14 00:01:05,240 --> 00:01:07,960 Speaker 1: Stewart where there is with us working with Dennis to 15 00:01:08,000 --> 00:01:10,600 Speaker 1: Brusher and Ed Hyman at I S I years ago 16 00:01:10,680 --> 00:01:13,280 Speaker 1: now with b MP Perry bout what does the quiet 17 00:01:13,440 --> 00:01:18,080 Speaker 1: mean to derivative and quantz like you at BP color 18 00:01:18,360 --> 00:01:20,800 Speaker 1: The nature of the quiet that we're in, I would 19 00:01:20,800 --> 00:01:22,839 Speaker 1: say a couple of things, one of which being we've 20 00:01:22,959 --> 00:01:25,920 Speaker 1: entered this period following the FEDS taper tangent rhetoric where 21 00:01:26,200 --> 00:01:29,600 Speaker 1: we have more frequent draw downs. However, in times after 22 00:01:29,640 --> 00:01:31,680 Speaker 1: the drawdowns we go back to this very low level 23 00:01:31,720 --> 00:01:34,840 Speaker 1: of baseball. We've been almost forty days without a one 24 00:01:34,880 --> 00:01:37,320 Speaker 1: percent move in the SMP and for the VIX, it's 25 00:01:37,319 --> 00:01:40,400 Speaker 1: really that short dated realized VALL that drives the index. 26 00:01:40,560 --> 00:01:42,759 Speaker 1: So from that perspective, we're going to need some kind 27 00:01:42,760 --> 00:01:45,040 Speaker 1: of economic catalysts, some kind of political catalyst to drive 28 00:01:45,040 --> 00:01:47,440 Speaker 1: it higher. And um, you know, we actually did this 29 00:01:47,520 --> 00:01:49,480 Speaker 1: very interesting study. So we look back all the way 30 00:01:49,520 --> 00:01:53,440 Speaker 1: to the Truman Dewey election election of Thanking, and in 31 00:01:53,480 --> 00:01:55,680 Speaker 1: this kind of ten weeks ahead, eight weeks ahead of 32 00:01:55,720 --> 00:01:58,800 Speaker 1: the allot happens, realize all tends to be lower in elections, 33 00:01:58,840 --> 00:02:01,040 Speaker 1: so we drive even lower. Guy Johnson jump in here, 34 00:02:01,080 --> 00:02:04,680 Speaker 1: back to Truman and Dewey. Okay Stewart, Yeah, the bowls 35 00:02:04,760 --> 00:02:07,400 Speaker 1: really quiet at the headline level. But you look below 36 00:02:07,440 --> 00:02:09,799 Speaker 1: the surface and there's plenty going on in these markets, 37 00:02:09,919 --> 00:02:13,480 Speaker 1: Plenty of sector rotation, plenty happening. That's where the story is. 38 00:02:13,680 --> 00:02:16,840 Speaker 1: We can forget VIX because the story is actually in 39 00:02:16,880 --> 00:02:19,360 Speaker 1: a sector rotation that is taking us out of utilities 40 00:02:19,360 --> 00:02:23,440 Speaker 1: out of telecoms into the more high beta areas. Indeed, 41 00:02:23,840 --> 00:02:25,760 Speaker 1: the rotation and the financials, which have been a clear 42 00:02:25,760 --> 00:02:28,320 Speaker 1: out perform over the past five days, has been quite strong. 43 00:02:28,639 --> 00:02:31,720 Speaker 1: Energy being better for sale along with miners. I think 44 00:02:31,760 --> 00:02:35,240 Speaker 1: we're really actually seeing on an index level, realized volt 45 00:02:35,240 --> 00:02:37,359 Speaker 1: low because of the fact there's been such strong rotation. 46 00:02:37,720 --> 00:02:39,400 Speaker 1: Now if you look at DIF an AASA classes and 47 00:02:39,400 --> 00:02:41,839 Speaker 1: how they're actually pricing in the probability of a FED hike, 48 00:02:42,000 --> 00:02:44,000 Speaker 1: it seems that equities are actually almost leading the charge. 49 00:02:44,040 --> 00:02:47,600 Speaker 1: Equity risk premium overall has not um widened out to 50 00:02:47,639 --> 00:02:50,760 Speaker 1: a considerable degree, but we have seen very strong rotation, 51 00:02:51,160 --> 00:02:54,760 Speaker 1: and globally we've seen financial financials better bid over the 52 00:02:54,840 --> 00:02:58,280 Speaker 1: last few weeks, including eurostocks financials which have outperformed the 53 00:02:58,280 --> 00:03:01,560 Speaker 1: Eurostocks fifty index considerably in the last few days. Are 54 00:03:01,560 --> 00:03:04,240 Speaker 1: we also saying this this calm in the VIX because 55 00:03:04,639 --> 00:03:06,440 Speaker 1: part of the market believe that we're going to say, 56 00:03:06,440 --> 00:03:08,760 Speaker 1: actually the market going in one direction, and part of 57 00:03:08,760 --> 00:03:10,120 Speaker 1: the market thinks we're going to see it going in 58 00:03:10,160 --> 00:03:12,720 Speaker 1: the other direction. And there's also a kind of canceling 59 00:03:12,720 --> 00:03:16,760 Speaker 1: out process retail versus the pros. Indeed, there there definitely 60 00:03:16,800 --> 00:03:19,880 Speaker 1: is some dispersion amongst sectors. But I think one thing 61 00:03:20,000 --> 00:03:22,079 Speaker 1: when you talk about retail versus the pros that's very 62 00:03:22,080 --> 00:03:26,919 Speaker 1: interesting is the CFTC positioning report. So if you look 63 00:03:26,919 --> 00:03:29,400 Speaker 1: at last Friday's report, which is as of Tuesday, so 64 00:03:29,480 --> 00:03:32,760 Speaker 1: ahead of Jackson Hole, hedge funds leveraged funds were the 65 00:03:32,800 --> 00:03:36,960 Speaker 1: most short they've ever been. Ever. Ever you can say, ever, 66 00:03:37,120 --> 00:03:39,680 Speaker 1: as far as the as far as the data we have, 67 00:03:40,160 --> 00:03:42,080 Speaker 1: how far back to I believe it goes to back 68 00:03:42,120 --> 00:03:44,600 Speaker 1: to two thousand eleven. That's a better headline. David Kotok 69 00:03:44,640 --> 00:03:48,200 Speaker 1: just woke up from his morning. Now, hedge funds wicked short. 70 00:03:48,440 --> 00:03:51,000 Speaker 1: That's what we would say in Boston. That's a banner, folks, 71 00:03:51,120 --> 00:03:53,760 Speaker 1: hedge funds we could short. I love it. Let's go 72 00:03:53,800 --> 00:03:56,360 Speaker 1: to the chart for Kotak. Young Warther has never seen 73 00:03:56,360 --> 00:03:59,600 Speaker 1: this chart before. This is the acclaimed impots and chart. 74 00:04:00,160 --> 00:04:02,320 Speaker 1: If it said everybody had this on their wall thirty 75 00:04:02,400 --> 00:04:05,360 Speaker 1: years ago, young Kotak knew it. Then here we are 76 00:04:05,400 --> 00:04:08,520 Speaker 1: back to the depression, the Guadalcanal rally, and then we 77 00:04:08,640 --> 00:04:11,520 Speaker 1: got the malaise in the seventy or eight two rally 78 00:04:11,760 --> 00:04:13,400 Speaker 1: and help we go the red line on the left 79 00:04:13,640 --> 00:04:16,800 Speaker 1: is the depression, because it's log bring it over. Two 80 00:04:16,839 --> 00:04:20,120 Speaker 1: thou eight was nothing like the depression, David, I mean, 81 00:04:20,160 --> 00:04:23,000 Speaker 1: I'm sorry, that's the long term trend. Do I go 82 00:04:23,120 --> 00:04:27,920 Speaker 1: to cash? Amid Stewart Worther's quiet, I we think, so 83 00:04:28,120 --> 00:04:33,000 Speaker 1: we have a cash reserve? Come on, come on, I'm 84 00:04:33,000 --> 00:04:36,200 Speaker 1: paying you a fee. Well, you're paying me a fee 85 00:04:36,200 --> 00:04:38,640 Speaker 1: on eighty to do something. You want a fee to 86 00:04:38,680 --> 00:04:42,279 Speaker 1: take me to lunch? Let's do it all right? Look, cash, 87 00:04:42,440 --> 00:04:46,240 Speaker 1: I think we have head winds and the liveoar spreads 88 00:04:46,560 --> 00:04:52,719 Speaker 1: triggered this change. Liebor has forecast power over stock markets. Okay, well, 89 00:04:52,760 --> 00:04:55,120 Speaker 1: let's rip up the script here, guy, this is really important. 90 00:04:55,200 --> 00:04:57,440 Speaker 1: What does your take on the lift of live where 91 00:04:57,520 --> 00:05:00,640 Speaker 1: Bob Sine doesn't agree with David Kotak. He thinks just 92 00:05:00,760 --> 00:05:04,560 Speaker 1: basically rule changes in manipulation leading to a higher library, 93 00:05:04,600 --> 00:05:08,240 Speaker 1: which is a guy. Uh, if I was able to 94 00:05:08,279 --> 00:05:09,960 Speaker 1: come up with a decent answers to that one time, 95 00:05:09,960 --> 00:05:12,279 Speaker 1: I must be sitting on a beach somewhere enjoying myself 96 00:05:12,360 --> 00:05:17,520 Speaker 1: because doing yeah, well, she's she's at the aquarium, I think, 97 00:05:17,680 --> 00:05:20,440 Speaker 1: looking at sharks, which I think it's probably a useful 98 00:05:20,440 --> 00:05:23,200 Speaker 1: exercise in itself. UM, let me do. I just want 99 00:05:23,200 --> 00:05:25,600 Speaker 1: to come back to this cash position though, because at 100 00:05:25,600 --> 00:05:27,960 Speaker 1: the beginning of the year, we came into we came 101 00:05:27,960 --> 00:05:29,880 Speaker 1: off our holidays, and we came into the big beginning 102 00:05:29,920 --> 00:05:33,280 Speaker 1: of the year, David, and we we panicked and the 103 00:05:33,320 --> 00:05:36,440 Speaker 1: market just really rolled over aggressively. We're coming back off 104 00:05:36,440 --> 00:05:39,120 Speaker 1: our summer holidays. It's September the one. There's a big 105 00:05:39,120 --> 00:05:41,400 Speaker 1: cash position out there at the moment. How is that 106 00:05:41,440 --> 00:05:43,520 Speaker 1: cash position going to be put to work? If at all? 107 00:05:44,520 --> 00:05:47,839 Speaker 1: There's two issues here. Do you use valuation metrics, which 108 00:05:47,880 --> 00:05:51,800 Speaker 1: are traditional they don't seem to work now, or do 109 00:05:51,880 --> 00:05:56,280 Speaker 1: you use there is no alternative tina. Tina is very 110 00:05:56,320 --> 00:06:00,400 Speaker 1: seductive when you're up against a zero inter a strait, 111 00:06:00,680 --> 00:06:05,159 Speaker 1: it's very seductive. It's also dangerous. We're gonna continue this 112 00:06:05,200 --> 00:06:07,400 Speaker 1: discussion with Stewart. I want you to jump in here 113 00:06:07,720 --> 00:06:09,920 Speaker 1: on the Tina idea. I mean, you're a pro at 114 00:06:09,920 --> 00:06:12,680 Speaker 1: b MP Perry Bak saying you're gonna go to cash. 115 00:06:13,160 --> 00:06:16,040 Speaker 1: A lot of people, by perspectives, can't do that. Can 116 00:06:16,080 --> 00:06:20,680 Speaker 1: you protect yourself with derivative instruments? Yes you can. And 117 00:06:20,720 --> 00:06:23,080 Speaker 1: I think one area where we saw. This is if 118 00:06:23,120 --> 00:06:25,880 Speaker 1: you look at the two last draw down, so August 119 00:06:26,080 --> 00:06:31,159 Speaker 1: versus January February now implied vall levels actually spiked in 120 00:06:31,160 --> 00:06:33,800 Speaker 1: August because people were under hedged. People had not expected. 121 00:06:34,040 --> 00:06:36,520 Speaker 1: So now they're all piling into hedging. And now if 122 00:06:36,560 --> 00:06:38,920 Speaker 1: you look at actually January and February, they did hedge 123 00:06:39,880 --> 00:06:42,280 Speaker 1: fabulous Stewart where they where this would be MP Perry Bark, 124 00:06:52,360 --> 00:06:56,000 Speaker 1: James Trevidas Uh considered it at one point, and the 125 00:06:56,120 --> 00:06:59,960 Speaker 1: vice presidential derby for Secretary Clinton, all those trevitas without 126 00:07:00,080 --> 00:07:04,119 Speaker 1: obvious political ilk joins us now from the Fletcher School, 127 00:07:04,160 --> 00:07:08,680 Speaker 1: Toughs University, Admiral I must digress away from the gent 128 00:07:09,480 --> 00:07:13,400 Speaker 1: to what we witnessed yesterday within diplomacy and within the 129 00:07:13,400 --> 00:07:17,280 Speaker 1: Fletcher School heritage, Robert Hormance and others that have darkened 130 00:07:17,280 --> 00:07:22,680 Speaker 1: the door of Toughs University's international relations effort. A candidate 131 00:07:22,880 --> 00:07:29,200 Speaker 1: going to see a major diplomatic partner, as we observe yesterday, 132 00:07:29,320 --> 00:07:32,800 Speaker 1: what will be the follow on effects for all? I 133 00:07:32,840 --> 00:07:37,960 Speaker 1: don't think there'll be a significant reaction to this tom 134 00:07:37,960 --> 00:07:40,640 Speaker 1: other than it will be an opportunity to kind of 135 00:07:40,680 --> 00:07:44,440 Speaker 1: compare and contrast the tale of two Trump's, one of 136 00:07:44,480 --> 00:07:47,520 Speaker 1: which was the Donald Trump that we saw in Mexico 137 00:07:47,640 --> 00:07:51,960 Speaker 1: City yesterday who read a prepared statement seemed quite congenial 138 00:07:52,000 --> 00:07:55,160 Speaker 1: around the President of Mexico. But that will be contrasted 139 00:07:55,240 --> 00:07:59,440 Speaker 1: throughout this campaign with the images of Donald Trump following 140 00:07:59,560 --> 00:08:01,760 Speaker 1: Mexico and his rapists and so on and so of course, 141 00:08:01,760 --> 00:08:03,640 Speaker 1: so I think it's gonna be very difficult for him 142 00:08:03,720 --> 00:08:07,040 Speaker 1: to spare that circle in terms of serious impact. None 143 00:08:07,360 --> 00:08:10,560 Speaker 1: a G twenty Meetings sneaks up on us. Mr Putin, 144 00:08:11,040 --> 00:08:16,480 Speaker 1: the embargoed Putin will attend. I'm caught unawares help us 145 00:08:16,560 --> 00:08:21,160 Speaker 1: here with who the Vladimir Putin is that potentially will 146 00:08:21,200 --> 00:08:24,360 Speaker 1: meet with the president in China. I think you're going 147 00:08:24,400 --> 00:08:28,560 Speaker 1: to see Vladimir Putin who is closing in on his 148 00:08:28,720 --> 00:08:31,400 Speaker 1: big objective at this point, which is to get out 149 00:08:31,440 --> 00:08:35,400 Speaker 1: from under the sanctions in u that have been imposed 150 00:08:35,440 --> 00:08:38,240 Speaker 1: upon him as a result of Ukraine. His strategy to 151 00:08:38,280 --> 00:08:42,520 Speaker 1: do that is twofold. One is to continue to sword 152 00:08:42,640 --> 00:08:46,920 Speaker 1: rattle at the Europeans and effectively make them nervous. Uh. 153 00:08:46,920 --> 00:08:49,680 Speaker 1: And the other is what's happening in Syria, Tom and Mike. 154 00:08:49,840 --> 00:08:53,920 Speaker 1: It is using Russian power in a way that he 155 00:08:54,120 --> 00:08:57,800 Speaker 1: believes will eventually force the United States to negotiate with 156 00:08:58,000 --> 00:09:01,760 Speaker 1: him in Syria, and that would of his quid pro 157 00:09:01,960 --> 00:09:04,199 Speaker 1: quote for that would be the knock on effect of 158 00:09:04,360 --> 00:09:07,320 Speaker 1: lifting sanctions. So he's playing a complex hand of cards 159 00:09:07,360 --> 00:09:09,960 Speaker 1: and he's pretty good at it. How do we counter that? 160 00:09:10,880 --> 00:09:13,440 Speaker 1: Is the U S strategy working and do we have 161 00:09:13,559 --> 00:09:16,839 Speaker 1: a good feel for what he's trying to do in 162 00:09:17,040 --> 00:09:20,839 Speaker 1: in in a way that enables us to develop accounter strategy. 163 00:09:21,080 --> 00:09:24,160 Speaker 1: I think unfortunately, the best we can say about our 164 00:09:24,160 --> 00:09:27,480 Speaker 1: current position, and it's a fact of the calendar in 165 00:09:27,480 --> 00:09:31,400 Speaker 1: our electoral politics, is that we're trading water. So we're 166 00:09:31,400 --> 00:09:34,480 Speaker 1: not going to see any big initiative or any big strategy. 167 00:09:34,480 --> 00:09:37,359 Speaker 1: I think we're gonna have to wait for the next administration, 168 00:09:37,440 --> 00:09:40,320 Speaker 1: be at Clinton or Trump, who's gonna might view have 169 00:09:40,520 --> 00:09:44,520 Speaker 1: to create a more holistic strategy for dealing with Moscow. 170 00:09:44,720 --> 00:09:48,400 Speaker 1: Until then, don't look for progress in the situation will 171 00:09:48,440 --> 00:09:51,400 Speaker 1: probably remain a bit frozen for the next six months. 172 00:09:51,640 --> 00:09:55,080 Speaker 1: We have basically no idea what Donald Trump would do. 173 00:09:55,120 --> 00:09:59,120 Speaker 1: But Hillary Clinton has a reputation of being more hawkish 174 00:09:59,200 --> 00:10:03,200 Speaker 1: than Yes Barack Obama. What kind of policy towards the 175 00:10:03,240 --> 00:10:06,319 Speaker 1: Soviet towards the Soviet units to tell my age towards Russia. 176 00:10:06,559 --> 00:10:10,200 Speaker 1: Do you think she would have then, um, if she 177 00:10:10,280 --> 00:10:14,160 Speaker 1: comes in as the new administration. Well, first of all, uh, Mike, 178 00:10:14,240 --> 00:10:16,920 Speaker 1: you're not that far off in terms of thinking. Coming 179 00:10:16,960 --> 00:10:19,520 Speaker 1: out in Moscow these days, it does feel a little 180 00:10:19,559 --> 00:10:23,360 Speaker 1: Soviet at times. But I think what you'll see Clinton 181 00:10:23,400 --> 00:10:26,800 Speaker 1: administration do is probably a four point plan, which would 182 00:10:26,840 --> 00:10:33,400 Speaker 1: be reassuring the NATO allies um with additional locational deployments 183 00:10:33,440 --> 00:10:37,880 Speaker 1: into Eastern Europe. Second will be attempting to keep coherence 184 00:10:38,000 --> 00:10:42,840 Speaker 1: in the sanctions regime because they really are biting on Moscow. 185 00:10:43,559 --> 00:10:47,080 Speaker 1: Third would be to up our presence in the cyber world, 186 00:10:47,080 --> 00:10:50,040 Speaker 1: where we're seeing a great deal of Russian activity, So 187 00:10:50,120 --> 00:10:52,840 Speaker 1: they'll be pretty aggressive package of three. And on the 188 00:10:52,840 --> 00:10:54,720 Speaker 1: other side of the coin, I think you will see 189 00:10:55,160 --> 00:10:58,959 Speaker 1: at least an attempt to keep communication open, to build 190 00:10:59,000 --> 00:11:03,880 Speaker 1: a transactional relationship, to cooperate where we can, but confront 191 00:11:03,920 --> 00:11:07,280 Speaker 1: where we bot mikes such ancient He goes back to 192 00:11:07,320 --> 00:11:11,640 Speaker 1: the Soviet Union. Unfortunately, I go back to the romanofs 193 00:11:12,520 --> 00:11:17,720 Speaker 1: Admal How czarist is Mr Putin, He's utterly Zaris. That's 194 00:11:17,760 --> 00:11:21,520 Speaker 1: really a nice historical point. Um. He is a unitary 195 00:11:21,600 --> 00:11:25,520 Speaker 1: decision maker. And in case you missed a tidbit, he 196 00:11:25,679 --> 00:11:31,000 Speaker 1: recently fired Sergey was the number two guy in Russia. 197 00:11:31,120 --> 00:11:34,280 Speaker 1: Just took him out. I mean that's really something only 198 00:11:34,320 --> 00:11:37,559 Speaker 1: his dark could do. Well, Okay, if that's the view, 199 00:11:37,800 --> 00:11:39,880 Speaker 1: and we're sending a lamp you know, by by our 200 00:11:39,960 --> 00:11:43,400 Speaker 1: process of lame duck president of China, is the president 201 00:11:43,520 --> 00:11:46,440 Speaker 1: effective at the G twenty meeting or is this just 202 00:11:46,520 --> 00:11:50,640 Speaker 1: a dashed November and frankly to the European elections beyond. 203 00:11:51,880 --> 00:11:55,160 Speaker 1: It's the latter. If you want another analogy, it's running 204 00:11:55,160 --> 00:11:57,600 Speaker 1: out the clock in basketball. We're not going to see 205 00:11:58,040 --> 00:12:01,120 Speaker 1: a big move. Everybody know it. Well, let's move on. 206 00:12:01,240 --> 00:12:04,000 Speaker 1: Give us an update on populism in Europe right now. 207 00:12:04,880 --> 00:12:07,120 Speaker 1: With then you're gonna be teaching this a Fletcher along 208 00:12:07,160 --> 00:12:10,800 Speaker 1: with your faculty. I mean, the mind blurs. But is 209 00:12:10,800 --> 00:12:13,880 Speaker 1: it a populism like Sanders Trump or is it a 210 00:12:13,960 --> 00:12:18,640 Speaker 1: unique calculus in France, in Italy and elsewhere. I think 211 00:12:18,800 --> 00:12:22,600 Speaker 1: there's a bit of the same populism you see here. 212 00:12:22,640 --> 00:12:26,599 Speaker 1: This uh idea of quote the system is raised unquote 213 00:12:26,720 --> 00:12:32,079 Speaker 1: and also a sense of nationalism. Um, those are consistent 214 00:12:32,120 --> 00:12:35,640 Speaker 1: across the entire European milieu. However, when you get in 215 00:12:35,760 --> 00:12:39,760 Speaker 1: country by country, as is usual in Europe, which clings 216 00:12:39,920 --> 00:12:43,880 Speaker 1: nation by nation to its its precious nationalism, you will 217 00:12:43,920 --> 00:12:47,040 Speaker 1: see different strains of it. I think the most virulent 218 00:12:47,200 --> 00:12:51,880 Speaker 1: tom is in France with the Lippin family, which has 219 00:12:51,920 --> 00:12:55,480 Speaker 1: a long history, but it's really continuing to build momentum, 220 00:12:55,520 --> 00:12:59,400 Speaker 1: and it's not impossible to consider trance of flipping in 221 00:12:59,480 --> 00:13:02,200 Speaker 1: this way. That would be a shocking tournament. I don't 222 00:13:02,240 --> 00:13:04,720 Speaker 1: think that will happen, but it's well at this point. 223 00:13:04,720 --> 00:13:07,480 Speaker 1: The French election is going to be one of the 224 00:13:07,480 --> 00:13:12,000 Speaker 1: more interesting events of two thousand seventeen, given the candidates 225 00:13:12,240 --> 00:13:17,240 Speaker 1: who have already announced. Uh does France end up changing 226 00:13:17,400 --> 00:13:20,199 Speaker 1: foreign policy or does that stay relatively stable while they 227 00:13:20,240 --> 00:13:24,520 Speaker 1: fight things out on a domestic economic basis. I think 228 00:13:24,559 --> 00:13:27,360 Speaker 1: the latter we should remember in Europe as as I know, 229 00:13:27,440 --> 00:13:31,200 Speaker 1: we all know that Chancellor Angela Merka remains the dominant 230 00:13:31,240 --> 00:13:34,559 Speaker 1: figure in that landscape. In Germany, because of its size 231 00:13:34,559 --> 00:13:38,880 Speaker 1: and pro away will continue to dominate from the national perspective. 232 00:13:39,000 --> 00:13:42,800 Speaker 1: So I think what happens in France is important but 233 00:13:43,000 --> 00:13:46,960 Speaker 1: not determinative in terms of correction of Europe. Do you 234 00:13:47,080 --> 00:13:52,719 Speaker 1: teach Hubbins spoke international relations? It toughs? Are you back 235 00:13:52,800 --> 00:13:56,920 Speaker 1: stuck in a Westphalian world? Which is um We are 236 00:13:57,360 --> 00:14:02,120 Speaker 1: shifting our emphasis from the class passic Westphalian world, the 237 00:14:02,240 --> 00:14:06,520 Speaker 1: nation state dominated train that's going to continue for for 238 00:14:06,840 --> 00:14:10,679 Speaker 1: decades uh and perhaps a century or two. But the 239 00:14:10,679 --> 00:14:14,719 Speaker 1: new areas of the rise of biology, cyber the role 240 00:14:14,840 --> 00:14:18,959 Speaker 1: of women, social networks in their connectivity. We're injecting that 241 00:14:19,040 --> 00:14:22,320 Speaker 1: into the curriculum because those lines are blurring over time. 242 00:14:23,400 --> 00:14:25,320 Speaker 1: I mean, I'll go with the idea they're blurring. I 243 00:14:25,320 --> 00:14:27,200 Speaker 1: don't think they're gonna be blurring a G twenty with 244 00:14:27,280 --> 00:14:32,920 Speaker 1: Mr Putin, I mean he seems as Westphalian folks. This 245 00:14:32,960 --> 00:14:37,040 Speaker 1: is we're talking here of Henry Kissinger's arch classic Diplomacy, 246 00:14:37,120 --> 00:14:40,480 Speaker 1: which is a required read. Admiral Stevinus read that Mike, 247 00:14:40,880 --> 00:14:43,600 Speaker 1: he was stuck on a like a p T boat 248 00:14:44,080 --> 00:14:47,600 Speaker 1: in the Persian Gulf. The no no no, I was out. 249 00:14:47,680 --> 00:14:50,600 Speaker 1: I was out fishing like mine. That's where I read it. 250 00:14:51,560 --> 00:14:54,320 Speaker 1: James Trevinas is with us, the aberal Isladin of the 251 00:14:54,320 --> 00:14:59,080 Speaker 1: Fletcher School of Tufts University. UH. I wanted to follow 252 00:14:59,160 --> 00:15:02,120 Speaker 1: up an early a question I had, which was about 253 00:15:02,200 --> 00:15:08,560 Speaker 1: Hillary Clinton's policies. Um, you noted that, UM, A lot 254 00:15:08,600 --> 00:15:10,880 Speaker 1: of what's been going on with with Vladimir Putin is 255 00:15:10,920 --> 00:15:14,520 Speaker 1: his effort to distract and UH people from what went 256 00:15:14,560 --> 00:15:20,440 Speaker 1: on in Ukraine and um uh loosen the sanctions there. 257 00:15:20,560 --> 00:15:24,480 Speaker 1: UM Trump has suggested that he's a friend of Vladimir 258 00:15:24,520 --> 00:15:28,400 Speaker 1: Putin and that and we saw his former campaign manager 259 00:15:28,680 --> 00:15:31,280 Speaker 1: made a lot of money trying to lobby on behalf 260 00:15:31,320 --> 00:15:35,320 Speaker 1: of the pro Russian Ukrainian government that was in place 261 00:15:35,360 --> 00:15:38,000 Speaker 1: there is Do we have any reason to believe that 262 00:15:38,040 --> 00:15:40,160 Speaker 1: there would be some policy of the United States could 263 00:15:40,520 --> 00:15:44,760 Speaker 1: adopt under Trump that would work against our interests and 264 00:15:45,040 --> 00:15:48,160 Speaker 1: the Ukrainians interests? Or is that reading too much into it? 265 00:15:49,160 --> 00:15:54,840 Speaker 1: I think that probably overstates the direction Trump presidency goes, 266 00:15:55,520 --> 00:15:59,520 Speaker 1: because the big muscle movements that drive policy decisions in 267 00:15:59,560 --> 00:16:02,240 Speaker 1: the end on turn on personality that can to turn 268 00:16:02,320 --> 00:16:06,720 Speaker 1: on the big imperatives in the system, and the big 269 00:16:06,720 --> 00:16:11,280 Speaker 1: imperative visa the Russia is the need to reassure our 270 00:16:11,320 --> 00:16:16,440 Speaker 1: European allies that'll be irresistible for either administration to keep 271 00:16:16,440 --> 00:16:20,160 Speaker 1: those links alive, even though we've also heard from candidate 272 00:16:20,200 --> 00:16:23,640 Speaker 1: Trump about pulling out a NATO. I think that's all 273 00:16:23,840 --> 00:16:27,920 Speaker 1: very unlikely. It's a campaign kind of spark interest rhetoric 274 00:16:28,000 --> 00:16:31,800 Speaker 1: type thing. But in the end, there are too many 275 00:16:31,800 --> 00:16:35,800 Speaker 1: systemic forces that will continue to drive that transatlantic connection 276 00:16:36,280 --> 00:16:38,480 Speaker 1: help us out. As we move towards the debates with 277 00:16:38,560 --> 00:16:41,440 Speaker 1: the presidential candidates. I mean, we in the media and 278 00:16:41,520 --> 00:16:44,840 Speaker 1: people on Wall Street tend to focus on the immediate, 279 00:16:45,000 --> 00:16:47,520 Speaker 1: the story that is right in front of us, and 280 00:16:47,560 --> 00:16:50,320 Speaker 1: it's the G twenty in Obama meeting with Putin now. 281 00:16:50,800 --> 00:16:54,160 Speaker 1: But for the next president who takes office January, what's 282 00:16:54,200 --> 00:16:58,240 Speaker 1: the biggest foreign policy challenge they're going to face? I 283 00:16:58,280 --> 00:17:03,280 Speaker 1: would argue it's actually a technological challenge. And we've talked 284 00:17:03,280 --> 00:17:05,639 Speaker 1: about this before. It's the what is happening in the 285 00:17:05,720 --> 00:17:10,360 Speaker 1: cyber world. So that is the rise of very offensive 286 00:17:10,520 --> 00:17:15,280 Speaker 1: capable nations like Russia and China, but also Iran in 287 00:17:15,359 --> 00:17:20,760 Speaker 1: North Korea obtaining weapons that can can flip serious damage 288 00:17:20,880 --> 00:17:25,440 Speaker 1: on our national economy. Um and so as that moves forward, 289 00:17:25,600 --> 00:17:28,400 Speaker 1: I think that will become a foreign policy issue. Back 290 00:17:28,400 --> 00:17:31,879 Speaker 1: to Tom's comments about the blurring of national lines, This 291 00:17:32,040 --> 00:17:37,680 Speaker 1: cyber world is an unbordered, unboundary global comments and weal 292 00:17:37,760 --> 00:17:39,720 Speaker 1: I just did a Google search on the word migrants 293 00:17:39,840 --> 00:17:42,720 Speaker 1: and it is heartbreaking for any and all of any 294 00:17:42,800 --> 00:17:46,399 Speaker 1: political ar persuasion. Ian wish shard at Bloomberg talking about 295 00:17:46,720 --> 00:17:49,720 Speaker 1: three thousand one or sixty seven migrants dead are missing. 296 00:17:50,520 --> 00:17:53,800 Speaker 1: In the first piece of two thousand and sixteen the 297 00:17:53,920 --> 00:17:59,600 Speaker 1: Australian looking at Angelo Miracle isolated, Time magazine talks about 298 00:18:00,080 --> 00:18:04,240 Speaker 1: migrants last hope. What is the dynamic into autumn of 299 00:18:04,320 --> 00:18:10,080 Speaker 1: the international relations of these migrants and these refugees. Unfortunately, 300 00:18:10,440 --> 00:18:13,200 Speaker 1: I don't have good news. As we look at the 301 00:18:13,280 --> 00:18:16,000 Speaker 1: populism that's bubbling in Europe, A great deal of it 302 00:18:16,119 --> 00:18:19,199 Speaker 1: is directed against these migrants. So I think you're going 303 00:18:19,240 --> 00:18:23,080 Speaker 1: to see a series of policy choices that will be 304 00:18:23,320 --> 00:18:28,439 Speaker 1: very unfavorable to these waves of migrants. Hopefully, the brighter 305 00:18:28,520 --> 00:18:31,280 Speaker 1: side of the equation is that a realization of these 306 00:18:31,320 --> 00:18:35,040 Speaker 1: ways and time, these numbers are just staggering millions moving 307 00:18:35,040 --> 00:18:39,600 Speaker 1: around the globe, um that those numbers will drive a 308 00:18:39,680 --> 00:18:42,399 Speaker 1: call for action to go into Syria, which is the 309 00:18:42,480 --> 00:18:46,600 Speaker 1: epicenter of this, and create an imposed solution like we 310 00:18:46,640 --> 00:18:50,040 Speaker 1: did in the Balkans twenty years ago. That breaks down 311 00:18:50,160 --> 00:18:53,960 Speaker 1: this chain of migrants that are flown across the Agama 312 00:18:54,160 --> 00:18:57,000 Speaker 1: and well, thank you so much. Wonderful September kickoff with 313 00:18:57,000 --> 00:19:00,840 Speaker 1: you on international relations. James te Vitas is at Fletcher School, 314 00:19:01,160 --> 00:19:08,439 Speaker 1: Toughs University. Who you put your trust in matters. Investors 315 00:19:08,440 --> 00:19:11,800 Speaker 1: have put their trust in independent registered investment advisors to 316 00:19:11,840 --> 00:19:16,239 Speaker 1: the tune of four trillion dollars. Why they see their 317 00:19:16,320 --> 00:19:20,199 Speaker 1: role is to serve, not sell. That's why Charles Schwab 318 00:19:20,280 --> 00:19:23,240 Speaker 1: is committed to the success of over seven thousand independent 319 00:19:23,240 --> 00:19:28,119 Speaker 1: financial advisors who passionately dedicate themselves to helping people achieve 320 00:19:28,119 --> 00:19:32,440 Speaker 1: their financial goals. Learn more and find your independent advisor 321 00:19:32,520 --> 00:19:40,919 Speaker 1: dot com. We have had an insatial demand to drag 322 00:19:41,040 --> 00:19:44,520 Speaker 1: back onto the show's Stephen Short. There is a wide 323 00:19:44,560 --> 00:19:51,000 Speaker 1: body of listeners questioning oil stability an oil price increase. 324 00:19:51,240 --> 00:19:54,639 Speaker 1: Mr shork is with a short report Philadelphia, Stephen wi 325 00:19:54,680 --> 00:19:57,800 Speaker 1: are oil price is going to go down? Uh, well, 326 00:19:57,960 --> 00:20:00,840 Speaker 1: part of it is a big part of it is lality. Tom. 327 00:20:01,040 --> 00:20:03,320 Speaker 1: We're at the time of the year that the peak 328 00:20:03,400 --> 00:20:06,199 Speaker 1: season for crude oil demand is over, the peak season 329 00:20:06,320 --> 00:20:10,720 Speaker 1: for gasoline demand is over. So with this Libertary weekend. 330 00:20:10,840 --> 00:20:13,399 Speaker 1: We now transition into the fall, and this is the 331 00:20:13,440 --> 00:20:17,600 Speaker 1: maintenance season for refineries, So refinery demand for crude oil 332 00:20:17,680 --> 00:20:20,480 Speaker 1: in the United States and in other key markets in 333 00:20:20,480 --> 00:20:24,280 Speaker 1: the Northern Hemisphere will drop off significantly over the next 334 00:20:24,280 --> 00:20:27,920 Speaker 1: two months. So essentially we came out of this demand 335 00:20:27,960 --> 00:20:32,000 Speaker 1: season with very high inventory levels. That is to say, 336 00:20:32,280 --> 00:20:35,800 Speaker 1: we did not degluct the market. And now we're going 337 00:20:35,920 --> 00:20:39,520 Speaker 1: into the fall turnaround, We're demand here in the United 338 00:20:39,520 --> 00:20:42,160 Speaker 1: States will drop off by one million barrels a day. Okay, 339 00:20:42,160 --> 00:20:45,639 Speaker 1: within this is the idea of a smaller, shorter term 340 00:20:45,800 --> 00:20:49,479 Speaker 1: price decline. Right now at West Texas fort o nine 341 00:20:49,960 --> 00:20:54,439 Speaker 1: barrel I get that. Do you support Edward Morris City 342 00:20:54,440 --> 00:20:58,080 Speaker 1: Group and other optimists that there can be stability out 343 00:20:58,200 --> 00:21:01,879 Speaker 1: one year and two years to a better oil price, 344 00:21:02,200 --> 00:21:06,640 Speaker 1: or do you take your forecast out further right now, 345 00:21:06,720 --> 00:21:09,679 Speaker 1: I'm going out for one year, and certainly I do 346 00:21:09,880 --> 00:21:12,840 Speaker 1: like and I've been a bear enough for two years. Uh, 347 00:21:13,119 --> 00:21:16,000 Speaker 1: we were down below forty dollars just a month ago. 348 00:21:16,160 --> 00:21:18,120 Speaker 1: I think in the near term where you're heading back 349 00:21:18,160 --> 00:21:22,320 Speaker 1: below forty through this turnaround season. Uh, as far as 350 00:21:22,320 --> 00:21:25,840 Speaker 1: the year goes, I don't see stability in the market yet, 351 00:21:26,119 --> 00:21:29,199 Speaker 1: simply because guys, what have we been hearing now for 352 00:21:29,240 --> 00:21:32,119 Speaker 1: the past two years. The market's going to balance, the 353 00:21:32,160 --> 00:21:35,720 Speaker 1: market's going to balance. Well, the market is still not balanced. 354 00:21:35,880 --> 00:21:38,639 Speaker 1: There is still too much crudal out there. There is 355 00:21:38,720 --> 00:21:43,040 Speaker 1: not enough demand chasing that production. And therefore I still 356 00:21:43,119 --> 00:21:46,640 Speaker 1: think we're going to see a considerable amount of volatility 357 00:21:46,760 --> 00:21:49,080 Speaker 1: for at least one year going out. So I don't 358 00:21:49,080 --> 00:21:52,240 Speaker 1: think we're going to see any significant improvement in price 359 00:21:52,760 --> 00:21:57,640 Speaker 1: going through. This is a demand story, though. Is supply 360 00:21:58,400 --> 00:22:03,120 Speaker 1: starting to ratchet back, well, you can make that argument. 361 00:22:03,320 --> 00:22:07,360 Speaker 1: I don't see it. For instance, let's take yesterday's Department 362 00:22:07,359 --> 00:22:12,400 Speaker 1: of Energy weekly update on storage. Well, interestingly enough, over 363 00:22:12,440 --> 00:22:15,800 Speaker 1: the past three weeks, the deal we has issued not one, 364 00:22:16,200 --> 00:22:20,399 Speaker 1: but two mia culpas. The first miacopo happened three weeks 365 00:22:20,400 --> 00:22:24,080 Speaker 1: ago when they admitted what I've been saying all year long, 366 00:22:24,520 --> 00:22:28,600 Speaker 1: that they are over estimating the amount of production declines 367 00:22:28,920 --> 00:22:32,080 Speaker 1: in the United States. I say that with confidence because 368 00:22:32,080 --> 00:22:34,920 Speaker 1: when you looked at the weekly numbers, they simply did 369 00:22:34,960 --> 00:22:38,480 Speaker 1: not jive with the monthly numbers. The monthly numbers from 370 00:22:38,480 --> 00:22:43,040 Speaker 1: the Department of Energy showed considerably slowered the production declines 371 00:22:43,200 --> 00:22:46,720 Speaker 1: in the United States, so three weeks ago. And let 372 00:22:46,720 --> 00:22:48,960 Speaker 1: this be a caveat to anyone who wants to trade 373 00:22:49,200 --> 00:22:52,400 Speaker 1: the nymex oil based on these weekly d o E reports, 374 00:22:52,600 --> 00:22:54,399 Speaker 1: You have to take them with the grain of salt. 375 00:22:54,720 --> 00:22:57,679 Speaker 1: Because the Dale came out three weeks ago with the 376 00:22:57,720 --> 00:23:01,600 Speaker 1: Midia Coppa, they rebounced the product numbers, so lo and behold. 377 00:23:01,880 --> 00:23:05,080 Speaker 1: Production the United States is falling, but not nearly at 378 00:23:05,080 --> 00:23:07,439 Speaker 1: the pace that it was falling or assumed to be 379 00:23:07,480 --> 00:23:11,119 Speaker 1: falling back in June and July. And then yesterday the 380 00:23:11,240 --> 00:23:16,920 Speaker 1: dew We released second musical saying they've been overestimating consumption 381 00:23:17,119 --> 00:23:21,000 Speaker 1: this summer. That not take that in, guys, for the 382 00:23:21,280 --> 00:23:24,879 Speaker 1: entire peak demands season. The deal we was giving us 383 00:23:25,040 --> 00:23:29,240 Speaker 1: false signals. They were overestimating the amount of decline of 384 00:23:29,280 --> 00:23:32,399 Speaker 1: supply in the market, and they were overestimating the amount 385 00:23:32,400 --> 00:23:36,320 Speaker 1: of demand in the market. And yet still oil prices 386 00:23:36,400 --> 00:23:39,320 Speaker 1: have continued to drift the lower. So where are we 387 00:23:39,440 --> 00:23:42,879 Speaker 1: at this point? Well, gasoline demand in the United States, 388 00:23:43,280 --> 00:23:46,520 Speaker 1: intuitively two dollar a gallon of gasoline, you would say 389 00:23:46,600 --> 00:23:50,359 Speaker 1: demand was strong, and your intuition is correct, because we've 390 00:23:50,400 --> 00:23:53,520 Speaker 1: never had demand for gasolene stronger than we had it 391 00:23:53,600 --> 00:23:57,880 Speaker 1: for this summer, so trude oil demand was also at 392 00:23:57,920 --> 00:24:01,200 Speaker 1: a near record high. But even the record height demand 393 00:24:01,240 --> 00:24:04,600 Speaker 1: for gasoline near record height demand for crud all, we 394 00:24:04,720 --> 00:24:08,480 Speaker 1: are still coming out of this summer with a considerable 395 00:24:08,560 --> 00:24:11,240 Speaker 1: amount of oil in the ground. That is to say, 396 00:24:11,280 --> 00:24:15,000 Speaker 1: we did not see any sort of appreciable decline in supply, 397 00:24:15,720 --> 00:24:18,399 Speaker 1: let alone in the middle of peak demand. Stephen, I 398 00:24:18,440 --> 00:24:24,240 Speaker 1: gotta switch assets to natural gas. We gotta storm a 399 00:24:24,320 --> 00:24:26,960 Speaker 1: common as they say, Well, there's two storms, a common 400 00:24:27,000 --> 00:24:30,600 Speaker 1: one that may go into the Gulf and then run 401 00:24:30,680 --> 00:24:33,240 Speaker 1: up the East coast. Known may just hit the East coast. 402 00:24:33,600 --> 00:24:36,120 Speaker 1: And the implications I've been talking to the communities people 403 00:24:36,119 --> 00:24:38,680 Speaker 1: are obviously, if storm goes into the Gulf and keeps going, 404 00:24:38,720 --> 00:24:42,720 Speaker 1: it runs into the oil and gas wells that are there. 405 00:24:43,320 --> 00:24:46,000 Speaker 1: But along the East coast, it's gonna bring rain, it's 406 00:24:46,040 --> 00:24:49,639 Speaker 1: gonna bring a little cooler temperatures, air conditioners don't run 407 00:24:49,720 --> 00:24:52,640 Speaker 1: as much. That should probably depress the price of natural gas, 408 00:24:52,680 --> 00:24:56,200 Speaker 1: I would imagine, And well, it's exactly. It's certainly keeping 409 00:24:56,200 --> 00:24:59,040 Speaker 1: a lid on the market. Pity, and it just goes 410 00:24:59,080 --> 00:25:01,840 Speaker 1: to share you how really these markets have changed ten 411 00:25:01,920 --> 00:25:05,040 Speaker 1: years ago, right around Hurricane I, even Katrina and so forth. 412 00:25:05,960 --> 00:25:08,720 Speaker 1: Back then, in natural gas, if you saw a cluster 413 00:25:08,840 --> 00:25:12,879 Speaker 1: of thunderstorms form off the coast of the Azores three 414 00:25:13,160 --> 00:25:16,840 Speaker 1: weeks outside of the Gulf of Mexico, natural gas would 415 00:25:16,840 --> 00:25:19,960 Speaker 1: have begun to rally. So if this was ten years ago, 416 00:25:20,080 --> 00:25:23,000 Speaker 1: I could promise you natural gas prices would have rallied 417 00:25:23,040 --> 00:25:25,960 Speaker 1: by at least a dollar by now. But ten years 418 00:25:25,960 --> 00:25:31,240 Speaker 1: ago of the US is gas production came from the 419 00:25:31,280 --> 00:25:34,200 Speaker 1: shallow water Gulf of Mexico. But thanks to my home 420 00:25:34,240 --> 00:25:36,920 Speaker 1: state of Pennsylvania and our neighbor over there in Ohio 421 00:25:37,200 --> 00:25:40,639 Speaker 1: with the Marcellus and the Uticus shale, today the Gulf 422 00:25:40,640 --> 00:25:44,400 Speaker 1: of Mexico contributes less than four percent of gas production. 423 00:25:44,840 --> 00:25:47,840 Speaker 1: So we have now transitioned into a period where a 424 00:25:48,000 --> 00:25:51,919 Speaker 1: hurricane now is potentially a barrish driver as to the 425 00:25:51,960 --> 00:25:55,720 Speaker 1: points you just reference, rather than the bullish driver. So yes, 426 00:25:55,880 --> 00:25:58,000 Speaker 1: if this storm does go and it looks like it's 427 00:25:58,000 --> 00:26:01,159 Speaker 1: going to avoid the oil and s interests in the 428 00:26:01,200 --> 00:26:05,040 Speaker 1: shallow water Gulf of Mexico, veer into the Panhandle, come 429 00:26:05,160 --> 00:26:08,200 Speaker 1: up the east coast, you do have the prospects for 430 00:26:08,320 --> 00:26:11,480 Speaker 1: Kulu weather. You have the prospects to think about this 431 00:26:11,600 --> 00:26:14,920 Speaker 1: of power outages, of high winds knocking down power line. 432 00:26:15,280 --> 00:26:17,800 Speaker 1: So even though there might be demand for natural gas, 433 00:26:18,000 --> 00:26:20,840 Speaker 1: the utility cannot get that natural gas to the market. 434 00:26:21,119 --> 00:26:25,040 Speaker 1: So it is a significant driver right now. But whereas 435 00:26:25,080 --> 00:26:27,320 Speaker 1: ten years ago, as I said, it was a BULLUS driver, 436 00:26:27,480 --> 00:26:32,240 Speaker 1: today is potentially a barrish driver. And hence why this summer, Guys, 437 00:26:32,359 --> 00:26:35,800 Speaker 1: if you're a bull a natural gas, you were pulling 438 00:26:35,920 --> 00:26:39,280 Speaker 1: the hair out of your head because the fundamental the 439 00:26:39,400 --> 00:26:42,800 Speaker 1: weather could not have lined up any more better than 440 00:26:42,840 --> 00:26:45,239 Speaker 1: they have for you. You You would have dialed up this 441 00:26:45,320 --> 00:26:48,400 Speaker 1: weather and prayed you got the weather that we did, 442 00:26:48,720 --> 00:26:52,639 Speaker 1: very hot, humid in the upper parts of the United States. 443 00:26:52,720 --> 00:26:56,440 Speaker 1: And yet natural gas prices are still struggling to get 444 00:26:56,440 --> 00:26:59,400 Speaker 1: the eighteen dollar barrel oil equivalent or to be dollars. 445 00:26:59,440 --> 00:27:03,640 Speaker 1: Will there be a differential between Brent and West Texas intermedia, 446 00:27:03,640 --> 00:27:06,240 Speaker 1: I mean within the natural guest dynamics. Does the US 447 00:27:06,359 --> 00:27:09,200 Speaker 1: dynamics as we go into the winter, does it make 448 00:27:09,240 --> 00:27:12,320 Speaker 1: that spread widen between Brent or West Texas? Or do 449 00:27:12,359 --> 00:27:15,400 Speaker 1: we stay at a two dollar three dollar level. We're 450 00:27:15,440 --> 00:27:18,600 Speaker 1: still looking at an area where I do think that. No, 451 00:27:18,760 --> 00:27:21,040 Speaker 1: I don't think the winter in general will have a 452 00:27:21,359 --> 00:27:25,360 Speaker 1: material impact on the Brent t I spread. Uh, this 453 00:27:25,440 --> 00:27:27,879 Speaker 1: is more of a spread that is driven not necessarily 454 00:27:27,920 --> 00:27:30,800 Speaker 1: by by the weathers or by the season, but more 455 00:27:30,920 --> 00:27:33,199 Speaker 1: about the but the global pace. And as you just 456 00:27:33,280 --> 00:27:37,040 Speaker 1: pointed out prior to coming on about the dismal outlook 457 00:27:37,359 --> 00:27:41,480 Speaker 1: for US economic growth, Yes, there is a uge over 458 00:27:42,280 --> 00:27:44,280 Speaker 1: in supply, but a lot of this because we don't 459 00:27:44,280 --> 00:27:47,320 Speaker 1: have demand. And I've got news for you guys the 460 00:27:47,400 --> 00:27:50,679 Speaker 1: United States. It isn't all great here from from an 461 00:27:50,680 --> 00:27:54,440 Speaker 1: economy standpoint. We are going into now a record year, 462 00:27:54,560 --> 00:27:58,240 Speaker 1: a tenth year where we're going to have sub growth 463 00:27:58,320 --> 00:28:02,320 Speaker 1: in the United States. So there is a supreme lack 464 00:28:02,359 --> 00:28:06,320 Speaker 1: of economic demand. Hence, why not just oil but my 465 00:28:06,800 --> 00:28:10,359 Speaker 1: consumption commodities in general are lower and cannot break out 466 00:28:10,400 --> 00:28:14,520 Speaker 1: of the dulgrums. You mentioned oil prices going into the winter. 467 00:28:14,680 --> 00:28:17,480 Speaker 1: We're in the shoulder season, and what they may do 468 00:28:17,480 --> 00:28:19,480 Speaker 1: in the winter. What about gas prices? We keep reading 469 00:28:20,000 --> 00:28:22,560 Speaker 1: that every month that goes by in two thousands sixteen 470 00:28:22,640 --> 00:28:25,719 Speaker 1: is the warmest month ever. Uh. Does that suggest that 471 00:28:25,720 --> 00:28:28,160 Speaker 1: we are going to use a lot less natural gas 472 00:28:28,200 --> 00:28:30,159 Speaker 1: during the winter? And that the long term prospects for 473 00:28:30,200 --> 00:28:34,160 Speaker 1: that commodity aren't so hot, right they are, Let's say 474 00:28:34,160 --> 00:28:37,200 Speaker 1: they are challenged right now because as they just pointed 475 00:28:37,240 --> 00:28:41,000 Speaker 1: out this right, this weather has been phenomenal. If you 476 00:28:41,040 --> 00:28:43,000 Speaker 1: were a bull, it just doesn't get any better with 477 00:28:43,040 --> 00:28:46,520 Speaker 1: the amount of air conditioning demand. And hence the summer 478 00:28:46,640 --> 00:28:50,760 Speaker 1: rebuild in storage for next winter for for natural gas 479 00:28:50,760 --> 00:28:53,560 Speaker 1: stores is dismal. I mean, we are coming in at 480 00:28:53,640 --> 00:28:57,560 Speaker 1: less than half been normal the build now coming into 481 00:28:57,720 --> 00:29:02,280 Speaker 1: this winter, and yet gas prices cannot rally. So it 482 00:29:02,360 --> 00:29:04,880 Speaker 1: all comes down to mother nature. If we get another 483 00:29:04,920 --> 00:29:07,840 Speaker 1: winter like we saw last winter, that is to say, 484 00:29:07,880 --> 00:29:10,560 Speaker 1: when we did not have a winter, then it's going 485 00:29:10,600 --> 00:29:13,600 Speaker 1: to be a horrendous first six months of the year 486 00:29:13,600 --> 00:29:16,800 Speaker 1: for natural gas. Natural gas prices are right now flirting 487 00:29:17,280 --> 00:29:20,320 Speaker 1: right around two dollars and deck of therm. We got 488 00:29:20,360 --> 00:29:23,640 Speaker 1: down to below two dollars last year. And if we 489 00:29:23,680 --> 00:29:26,800 Speaker 1: get another winter, if if, if right, if we get 490 00:29:26,800 --> 00:29:31,040 Speaker 1: another winter, then clearly we are still headed significantly lower. 491 00:29:31,400 --> 00:29:34,440 Speaker 1: But but I have to point out because people get 492 00:29:34,440 --> 00:29:38,640 Speaker 1: themselves destroyed in natural gas because there's an overwhelming sense 493 00:29:38,640 --> 00:29:42,400 Speaker 1: of complacency. That's said, if we get a winter like 494 00:29:42,560 --> 00:29:46,200 Speaker 1: two winters ago. You to talk about polar vortex gas 495 00:29:46,760 --> 00:29:48,920 Speaker 1: short of gas will rip your face off and more 496 00:29:48,960 --> 00:29:52,120 Speaker 1: worried about the short vortex. Stephen Short, thank you so much, 497 00:29:52,640 --> 00:29:58,240 Speaker 1: always talking for you, that trader talking. I tell you, Mike, 498 00:29:58,480 --> 00:30:00,560 Speaker 1: we get a huge response. Five mis to Short is 499 00:30:00,560 --> 00:30:02,920 Speaker 1: on a lot of people, you know, whether right or wrong. 500 00:30:02,960 --> 00:30:04,800 Speaker 1: I mean, we just like to do the different opinions, 501 00:30:04,800 --> 00:30:07,920 Speaker 1: and we're honor to Edward Morris joined us. I believe 502 00:30:07,920 --> 00:30:11,040 Speaker 1: it was yesterday but with City Group. But there are 503 00:30:11,160 --> 00:30:14,280 Speaker 1: a lot of this, there's a dispersion of opinions. To 504 00:30:14,280 --> 00:30:18,280 Speaker 1: put it politically delicately on oil. Right now, Stephen Short 505 00:30:18,320 --> 00:30:21,200 Speaker 1: with a short report. Again we protect the copyright of 506 00:30:21,200 --> 00:30:27,520 Speaker 1: our guests. Get the report from the Short Report. Thanks 507 00:30:27,560 --> 00:30:31,680 Speaker 1: for listening to the Bloomberg Surveillance podcast. Subscribe and listen 508 00:30:32,000 --> 00:30:37,360 Speaker 1: to interviews on iTunes, SoundCloud, or whichever podcast platform you prefer. 509 00:30:37,960 --> 00:30:41,400 Speaker 1: I'm on Twitter at Tom Keane, Michael McKee is at 510 00:30:41,560 --> 00:30:45,760 Speaker 1: Economy Before the podcast, you can always catch us worldwide. 511 00:30:46,160 --> 00:30:56,000 Speaker 1: I'm Bloomberg Radio. Who you put your trust in matters? 512 00:30:56,640 --> 00:31:00,480 Speaker 1: Investors have put their trust in independent registered investment advisors 513 00:31:00,520 --> 00:31:04,560 Speaker 1: to the tune of four trillion dollars. Why learn more 514 00:31:05,000 --> 00:31:09,120 Speaker 1: and find your independent advisor dot com, m