1 00:00:03,360 --> 00:00:06,520 Speaker 1: This is Bloomberg Surveillance. Is there a little fine of 2 00:00:06,640 --> 00:00:10,200 Speaker 1: concern in the banking system in the Eurozone, Yes, but 3 00:00:10,280 --> 00:00:13,920 Speaker 1: it's still very very contained. Do us pursued a very 4 00:00:13,920 --> 00:00:18,200 Speaker 1: aggressive polity early art and ageing payoff several years later? 5 00:00:18,360 --> 00:00:21,920 Speaker 1: You have a fundamental problem of architecture, and that's why 6 00:00:21,960 --> 00:00:26,280 Speaker 1: any small issue is amplified immediately in the marketplace. Bloomberg 7 00:00:26,320 --> 00:00:30,080 Speaker 1: Surveillance your link to the world of economics, finance and 8 00:00:30,200 --> 00:00:34,199 Speaker 1: investment on Bloomberg Radio. Good running everyone, Michael McKain, Tom King, 9 00:00:34,240 --> 00:00:37,160 Speaker 1: Bloomberg Surveillance, Who welcome all of you worldwide. Bloomberg Radio 10 00:00:37,200 --> 00:00:40,239 Speaker 1: Plus and out on Bloomberg dot Com. Serious the next 11 00:00:40,360 --> 00:00:44,080 Speaker 1: M Channel one nineteen across this nation, across Canada as well, 12 00:00:44,120 --> 00:00:49,280 Speaker 1: Bloomberg twelve, Boston, Bloomberg eleventh Rio. In a shocking temperature 13 00:00:49,360 --> 00:00:52,320 Speaker 1: change in New York, like from five degrees or whatever 14 00:00:52,680 --> 00:00:54,760 Speaker 1: up to fifty degrees today. All of that in twenty 15 00:00:54,760 --> 00:00:58,000 Speaker 1: four hours. That's amazing, maybe thirty hours as well. Where 16 00:00:58,000 --> 00:01:02,240 Speaker 1: else Bloomberg nine sixty, the Bay Areas in Francisco, and 17 00:01:02,360 --> 00:01:05,240 Speaker 1: FM in Washington, Good morning, and in Baltimore. Talked to 18 00:01:05,640 --> 00:01:10,520 Speaker 1: some Baltimore people yesterday who listen to us at FM. 19 00:01:10,720 --> 00:01:16,200 Speaker 1: We welcome Baltimore in Washington, UH to Bloomberg Surveillance this morning. 20 00:01:16,240 --> 00:01:21,640 Speaker 1: Bloomberg Surveillance brought you by Cone Resnick Accounting, tax advisory. 21 00:01:21,680 --> 00:01:25,640 Speaker 1: Regulatory changes can impact your business. Seeing all the experts 22 00:01:26,000 --> 00:01:29,240 Speaker 1: at Cone Resident can help you navigate these complexities. Find 23 00:01:29,240 --> 00:01:31,720 Speaker 1: out more at cone Resnec dot com. C O h 24 00:01:31,880 --> 00:01:35,240 Speaker 1: N R e z n I c K cone Resneck 25 00:01:35,480 --> 00:01:40,759 Speaker 1: dot com. Mike, we love up We love upstream, upstream OPEC, NANE, OPEC, 26 00:01:41,120 --> 00:01:44,560 Speaker 1: Bigger Nations stuff. And what we forget about is the 27 00:01:44,680 --> 00:01:48,120 Speaker 1: industry of what do you do with the stuff is upstream, 28 00:01:48,160 --> 00:01:51,840 Speaker 1: midstream downstream. We need to talk to somebody who can 29 00:01:51,960 --> 00:01:57,240 Speaker 1: parse upstream midstream downstream, like refines John Tucker, What are 30 00:01:57,280 --> 00:02:02,240 Speaker 1: you paying a gallon? Are you into a dollar fifty? 31 00:02:02,600 --> 00:02:05,360 Speaker 1: So John Tucker's in charge of our gallon of gas? 32 00:02:05,440 --> 00:02:08,400 Speaker 1: Here is Mr McKie and I move forward, Move forward 33 00:02:08,680 --> 00:02:11,200 Speaker 1: as well. I suppose we have to start the upstream 34 00:02:11,240 --> 00:02:15,240 Speaker 1: because the news of the day is this agreement whatever 35 00:02:15,280 --> 00:02:17,640 Speaker 1: it may be, between the Saudiast, the Russians, and a 36 00:02:17,680 --> 00:02:23,280 Speaker 1: couple other uh OPEC countries to freeze production. UM. The 37 00:02:23,360 --> 00:02:27,839 Speaker 1: general reaction uh, Michael Collins seems to be that there 38 00:02:27,960 --> 00:02:32,040 Speaker 1: is much less here than meets the headline, but it 39 00:02:32,080 --> 00:02:35,760 Speaker 1: does seem to have stabilized oil prices for the morning. 40 00:02:36,560 --> 00:02:41,880 Speaker 1: As a trader, what would you make of it? Right? So? Um, well, 41 00:02:41,919 --> 00:02:45,079 Speaker 1: just first off, I'm I head up our energy commodities research, 42 00:02:45,160 --> 00:02:47,080 Speaker 1: so I'm not I'm not on the trading desk, but 43 00:02:47,160 --> 00:02:50,520 Speaker 1: what I can, I'm asking you to put yourselves in 44 00:02:50,520 --> 00:02:52,160 Speaker 1: their mind. Yeah, we just want to know what you're 45 00:02:52,160 --> 00:02:55,360 Speaker 1: doing your private account this morning. Let me let me 46 00:02:55,400 --> 00:02:57,600 Speaker 1: tell you all about that. Um. So, I think the 47 00:02:57,600 --> 00:02:59,560 Speaker 1: first thing to understand is that it's really just a 48 00:02:59,680 --> 00:03:03,799 Speaker 1: ficial realizing what's already being expected in the market. Um. 49 00:03:04,120 --> 00:03:06,320 Speaker 1: And so you know, when you look at the countries 50 00:03:06,360 --> 00:03:09,600 Speaker 1: that are um taking part here, you have cut Our 51 00:03:09,639 --> 00:03:15,360 Speaker 1: Saudi Arabia, Venezuela. UH. In Russia and for cut oars part, 52 00:03:15,480 --> 00:03:18,480 Speaker 1: they have a mature field that's in decline. Their production 53 00:03:18,520 --> 00:03:21,120 Speaker 1: overall is in decline. So it's not really a change 54 00:03:21,120 --> 00:03:24,560 Speaker 1: in in the status quo. Russia had been expected to 55 00:03:24,720 --> 00:03:28,320 Speaker 1: grow its productions slightly this year. Um. Some of it 56 00:03:28,440 --> 00:03:31,480 Speaker 1: is crewed, some of it is condensate, so a freeze 57 00:03:31,480 --> 00:03:35,840 Speaker 1: in their output UM doesn't really material it materially change 58 00:03:35,920 --> 00:03:40,160 Speaker 1: the expectation for Russia for the year. Saudi Arabia, of course, 59 00:03:40,720 --> 00:03:44,000 Speaker 1: the big wild card, has some spirit production, but is 60 00:03:44,040 --> 00:03:47,600 Speaker 1: really producing at its limit UM. And so you know, 61 00:03:47,960 --> 00:03:50,000 Speaker 1: in the past, I think the interesting thing for Saudi 62 00:03:50,000 --> 00:03:54,200 Speaker 1: Arabia UM has been that when it comes to cutting production, 63 00:03:54,280 --> 00:03:57,400 Speaker 1: what they've always wanted to see is others cut first. 64 00:03:57,720 --> 00:04:01,840 Speaker 1: They've always taken an approach of it's sort of a 65 00:04:01,880 --> 00:04:04,600 Speaker 1: tip for cat fashion, so they will want to see 66 00:04:05,000 --> 00:04:08,000 Speaker 1: other producers cut. And that's the problem with this agreement 67 00:04:08,080 --> 00:04:10,800 Speaker 1: is that the producers they really need to be cutting 68 00:04:10,920 --> 00:04:14,680 Speaker 1: or restraining or freezing their output. Our Iran and Iraq, 69 00:04:14,720 --> 00:04:17,440 Speaker 1: and Iraq of course has been uh you know, war 70 00:04:17,560 --> 00:04:19,560 Speaker 1: for a number of years and and of course has 71 00:04:19,600 --> 00:04:22,120 Speaker 1: only just gotten its production back up. And and Iran 72 00:04:22,440 --> 00:04:24,919 Speaker 1: as you know, under sanctions for a number of years 73 00:04:24,920 --> 00:04:29,120 Speaker 1: and just recently had this agreement. So for Iran, they're 74 00:04:29,160 --> 00:04:32,520 Speaker 1: also not in the mood to cut production, especially at 75 00:04:32,560 --> 00:04:37,160 Speaker 1: these very low price levels. So it's important that it 76 00:04:37,279 --> 00:04:41,120 Speaker 1: sets a precedent. And obviously as Saudi Arabia as part 77 00:04:41,120 --> 00:04:44,640 Speaker 1: of it, it enhances the credibility of it. But we 78 00:04:44,680 --> 00:04:46,680 Speaker 1: still have yet to see whether it will result in 79 00:04:46,720 --> 00:04:52,720 Speaker 1: anything else from other OPEC members. So at this point 80 00:04:53,000 --> 00:04:56,560 Speaker 1: do we think we might have a floor or can 81 00:04:56,600 --> 00:05:00,240 Speaker 1: we break down farther? I still think that, you know, 82 00:05:00,320 --> 00:05:03,320 Speaker 1: should we see another black Swan event or even you know, 83 00:05:03,360 --> 00:05:07,480 Speaker 1: additional production than what the market expects from Iran or Iraq, 84 00:05:07,960 --> 00:05:10,520 Speaker 1: that that could, you know, make the market even more 85 00:05:10,560 --> 00:05:13,640 Speaker 1: overweight than it already is. Black Swan events that you know, 86 00:05:13,720 --> 00:05:18,479 Speaker 1: of course, the macro economic possibilities in terms of a 87 00:05:18,600 --> 00:05:22,480 Speaker 1: US recession or a global recession or a yuon evaluation, 88 00:05:22,520 --> 00:05:26,200 Speaker 1: all of those um are going to result in uh 89 00:05:26,240 --> 00:05:30,200 Speaker 1: in further macroeconomic pressures that you know could have an 90 00:05:30,200 --> 00:05:32,480 Speaker 1: effect on the US dollar and therefore would have an 91 00:05:32,480 --> 00:05:36,960 Speaker 1: effect on on oil. What do you see as you 92 00:05:37,080 --> 00:05:40,600 Speaker 1: link and you've done a lot of work on refinery recently, 93 00:05:40,680 --> 00:05:44,200 Speaker 1: how do you link the headline price of oil to 94 00:05:44,279 --> 00:05:48,960 Speaker 1: the dynamics you see within downstream refinery. Well, I think 95 00:05:49,040 --> 00:05:52,840 Speaker 1: what's important to understand for the downstream sector is, you know, obviously, 96 00:05:52,880 --> 00:05:56,200 Speaker 1: what are the refining margins and the crack spreads between 97 00:05:56,360 --> 00:06:01,599 Speaker 1: the price of they refined product and the acquisition costs 98 00:06:01,680 --> 00:06:04,720 Speaker 1: or the cost of acquiring the crude oil. And so 99 00:06:04,760 --> 00:06:07,600 Speaker 1: what we've seen over the last year, as the consumer 100 00:06:07,640 --> 00:06:12,159 Speaker 1: has responded to strong demand, sorry, the consumer has responded 101 00:06:12,200 --> 00:06:15,640 Speaker 1: to the lower price level. In certain countries, you've seen 102 00:06:15,760 --> 00:06:19,360 Speaker 1: very strong demand for refined products. You've also seen over 103 00:06:19,400 --> 00:06:23,000 Speaker 1: the last year several different unplanned outages, especially in the 104 00:06:23,040 --> 00:06:26,640 Speaker 1: West coast of the United States, and that's essentially led 105 00:06:26,680 --> 00:06:30,760 Speaker 1: to higher refined product prices. And at the same time 106 00:06:30,800 --> 00:06:34,279 Speaker 1: as crude prices were declining, it's led to a widening 107 00:06:34,279 --> 00:06:38,280 Speaker 1: of the margins and enhanced profitability for the refining sector. 108 00:06:38,640 --> 00:06:40,839 Speaker 1: Is that temporary? I mean, I know you're not doing 109 00:06:40,920 --> 00:06:44,039 Speaker 1: bi hole cell on downstream. But with a question the 110 00:06:44,080 --> 00:06:47,560 Speaker 1: shock of two thousand and fifteen predicted by many is 111 00:06:47,720 --> 00:06:53,080 Speaker 1: you know, oil stocks hammered, except refinery because Barclay's think 112 00:06:53,120 --> 00:06:55,960 Speaker 1: that that pauses here or ends, right, I think that 113 00:06:56,400 --> 00:06:59,440 Speaker 1: from from the equity perspective, and and I don't want 114 00:06:59,440 --> 00:07:02,159 Speaker 1: to put words our our equity analysts mouth is that 115 00:07:02,480 --> 00:07:04,920 Speaker 1: you know, they do still see a positive story, both 116 00:07:04,920 --> 00:07:08,279 Speaker 1: the our European colleagues and our US colleagues because of 117 00:07:08,320 --> 00:07:12,000 Speaker 1: the consumer response. They do see this is not just 118 00:07:12,080 --> 00:07:15,280 Speaker 1: the one off but a continuing story of strong end 119 00:07:15,400 --> 00:07:19,840 Speaker 1: user demand for gasoline, and as the most interesting thing 120 00:07:19,880 --> 00:07:23,200 Speaker 1: about this is that as the consumer has responded with 121 00:07:23,440 --> 00:07:26,800 Speaker 1: the extra income in mind, they've also been spending more 122 00:07:26,840 --> 00:07:31,640 Speaker 1: money on premium gasoline. So not only are car sales 123 00:07:31,960 --> 00:07:35,200 Speaker 1: now in the in the vein of cars that will 124 00:07:35,240 --> 00:07:39,240 Speaker 1: be that that are requiring or prefer to use premium gasoline, 125 00:07:39,240 --> 00:07:41,960 Speaker 1: but also people with that extra money are spending more 126 00:07:42,000 --> 00:07:46,200 Speaker 1: money on spending that extra money on octane rich, higher 127 00:07:46,240 --> 00:07:51,200 Speaker 1: grade gasoline. And so as a result, uh, there are still, um, 128 00:07:51,240 --> 00:07:55,320 Speaker 1: there's still constraints in the downstream that will essentially lead 129 00:07:55,360 --> 00:07:58,560 Speaker 1: to stronger margins. I however, am a little bit more 130 00:07:58,560 --> 00:08:02,400 Speaker 1: skeptical of that story because broadly speaking, gasoline is not 131 00:08:02,480 --> 00:08:06,000 Speaker 1: going to be sufficient enough to support the whole refining 132 00:08:06,080 --> 00:08:09,640 Speaker 1: complex we see in the in the Middle East and 133 00:08:09,720 --> 00:08:13,360 Speaker 1: also in China new refineries they're now exporting more and 134 00:08:13,400 --> 00:08:17,680 Speaker 1: more refined product elsewhere, so that reduces the refining margin 135 00:08:18,000 --> 00:08:22,440 Speaker 1: in Europe and also in the United States. And as 136 00:08:22,480 --> 00:08:27,280 Speaker 1: we now have let the crewdex work band be removed. Um, 137 00:08:27,320 --> 00:08:29,720 Speaker 1: there's also you know, what we've seen is the spread 138 00:08:29,760 --> 00:08:33,120 Speaker 1: between w t I and Brent has also collapsed and 139 00:08:33,200 --> 00:08:37,480 Speaker 1: so you know, as inventories continue to mount higher, that 140 00:08:37,520 --> 00:08:41,080 Speaker 1: has meant that there are we are already seeing economic 141 00:08:41,200 --> 00:08:44,160 Speaker 1: run cuts in the middle of the in the middle 142 00:08:44,280 --> 00:08:49,240 Speaker 1: of the US, and that's essentially leading to less refined 143 00:08:49,240 --> 00:08:53,199 Speaker 1: products spy and less crude demand, which is bearish for prices. 144 00:08:53,559 --> 00:08:57,640 Speaker 1: I'm looking at a chart of crack spreads, the front 145 00:08:57,679 --> 00:09:01,600 Speaker 1: month spread here, and what I'm noticing is that the 146 00:09:01,640 --> 00:09:05,199 Speaker 1: annual highs are lower, I mean lower highs throughout the 147 00:09:05,280 --> 00:09:10,560 Speaker 1: last five years, and the current seasonal downs trend seems 148 00:09:10,600 --> 00:09:14,800 Speaker 1: to be lasting longer than it has in previous years. Right, 149 00:09:15,160 --> 00:09:19,000 Speaker 1: So part of that is also weather related. So you know, 150 00:09:19,120 --> 00:09:24,280 Speaker 1: distillate or middle distillate and other um fuel oil used 151 00:09:24,320 --> 00:09:28,400 Speaker 1: for for power and for heating, you know, for heating 152 00:09:28,400 --> 00:09:30,880 Speaker 1: oil in the Northeast, all of that has seen you know, 153 00:09:30,960 --> 00:09:34,240 Speaker 1: in the course of November and December a much much 154 00:09:34,280 --> 00:09:38,320 Speaker 1: warmer seasonal um trend than we've seen in the last 155 00:09:38,360 --> 00:09:42,319 Speaker 1: couple of years, and so that's also led to reduction 156 00:09:42,360 --> 00:09:46,360 Speaker 1: in demand for those are fine products. Miclcohn, thank you 157 00:09:46,400 --> 00:09:50,240 Speaker 1: so much. With Barclays as well, we'll continue this discussion 158 00:09:50,280 --> 00:09:53,199 Speaker 1: on oil and it's a Mike to meet today is 159 00:09:53,240 --> 00:09:55,960 Speaker 1: a jumble. I mean, look at West Texas now down 160 00:09:56,160 --> 00:10:00,760 Speaker 1: two cents. We're just folks, no holding the bid at 161 00:10:00,760 --> 00:10:03,240 Speaker 1: the moment. Yeah we we We got an advantage of 162 00:10:03,240 --> 00:10:06,600 Speaker 1: a fancy Bloomberg screen in front of us looking at equities, bonds, currencies, 163 00:10:06,600 --> 00:10:10,200 Speaker 1: commodities and like jobs day it's incredibly quiet waiting for 164 00:10:10,240 --> 00:10:13,360 Speaker 1: the information. Today's a jumble, and I mean that is 165 00:10:13,440 --> 00:10:18,320 Speaker 1: it's it's news that it's indeterminate either way. Dollar again 166 00:10:18,440 --> 00:10:22,440 Speaker 1: one thirteen seventy two is stronger, yen by point eight 167 00:10:22,440 --> 00:10:25,920 Speaker 1: eight points. And again West Texas Intermediate and Brent just 168 00:10:26,000 --> 00:10:28,640 Speaker 1: give it up here in recent minutes, and it's a 169 00:10:28,640 --> 00:10:31,839 Speaker 1: good time to speak with Michael Cohen of Barclays as well. 170 00:10:31,880 --> 00:10:36,240 Speaker 1: Futures up up uh DAL, futures up two oh two 171 00:10:36,559 --> 00:10:38,640 Speaker 1: are now up one sixty nine. So a little bit 172 00:10:38,640 --> 00:10:43,520 Speaker 1: of evan flow here on an odd Tuesday in February. 173 00:10:44,080 --> 00:10:47,920 Speaker 1: A gold again down twenty six dollars, Gold twelve fourteen 174 00:10:48,200 --> 00:10:54,000 Speaker 1: the ounce, that's check. Get with Michael bar now and 175 00:10:54,040 --> 00:10:56,840 Speaker 1: get the latest world in national headlines. Michael, my time, 176 00:10:56,920 --> 00:11:00,240 Speaker 1: Thank you very much. Government offices will open late. Becaus 177 00:11:00,320 --> 00:11:03,480 Speaker 1: of hazard designs glazing over the Washington region. The U 178 00:11:03,559 --> 00:11:06,760 Speaker 1: S Office of Personnel Management modify the work day for 179 00:11:06,760 --> 00:11:10,760 Speaker 1: the three thousand federal employees. Employees have the option of 180 00:11:10,840 --> 00:11:14,520 Speaker 1: unscheduled leave or telework. Freezing rain throughout the region overnight 181 00:11:14,920 --> 00:11:18,000 Speaker 1: is being blamed for at least three traffic deaths in Virginia. 182 00:11:18,440 --> 00:11:21,880 Speaker 1: A Turkish official says his country believes ground operations aren't 183 00:11:21,880 --> 00:11:26,319 Speaker 1: necessary in Syria to oppose the Islamic State Group. Meanwhile, 184 00:11:26,320 --> 00:11:30,240 Speaker 1: a spokesman for Russian President Vladimir Putin disagreed with claims 185 00:11:30,280 --> 00:11:33,960 Speaker 1: that Russian warplane struck a hospital in northern Syria. The 186 00:11:34,000 --> 00:11:37,520 Speaker 1: World Health Organization says it might be necessary to use 187 00:11:37,559 --> 00:11:42,199 Speaker 1: controversial methods like genetically modified mosquitoes to fight and eliminate 188 00:11:42,240 --> 00:11:45,080 Speaker 1: the Zeka virus. The virus that has been spreading across 189 00:11:45,120 --> 00:11:47,680 Speaker 1: Latin America has been linked to a spike in baby's 190 00:11:47,679 --> 00:11:50,840 Speaker 1: born with birth defects. Global News twenty four hours a day, 191 00:11:50,840 --> 00:11:54,520 Speaker 1: empowered by our two hundred journalists. I'm Michael Barr lights up. 192 00:11:54,840 --> 00:11:57,800 Speaker 1: Might say so much. I really appreciate that. Again. West 193 00:11:57,840 --> 00:12:02,679 Speaker 1: Texas down five ounce. We speak on oil next. Stay 194 00:12:02,720 --> 00:12:08,120 Speaker 1: with us. The news update brought to you by Mazda 195 00:12:08,200 --> 00:12:23,160 Speaker 1: White Plains. Visit Mazda White Plains dot com Global Business 196 00:12:23,200 --> 00:12:26,160 Speaker 1: News twenty four hours a day. If Bloomberg dot com, 197 00:12:26,400 --> 00:12:29,120 Speaker 1: the Radio plus mobile app and on your radio. This 198 00:12:29,640 --> 00:12:32,840 Speaker 1: is a Broomberg business flash and I'm Ker in Moscow. 199 00:12:33,000 --> 00:12:36,000 Speaker 1: US stock index futures are rising along with oil. Let's 200 00:12:36,040 --> 00:12:38,040 Speaker 1: go to the First Word Breaking news desk for today's 201 00:12:38,080 --> 00:12:41,840 Speaker 1: morning call. Here's Bill Maloney. Good morning Bill, Good morning Karen. 202 00:12:41,880 --> 00:12:44,959 Speaker 1: That's right. US futures are trading higher. Down futures currently 203 00:12:45,000 --> 00:12:48,000 Speaker 1: hired by A hundred and eight hundred eighty points. SP 204 00:12:48,080 --> 00:12:51,320 Speaker 1: futures gained twenty two and A futures rise by sixty one. 205 00:12:51,720 --> 00:12:54,360 Speaker 1: The US ten yield at one point seven eight percent 206 00:12:54,760 --> 00:12:58,160 Speaker 1: and W check for futures are now little changed. Main 207 00:12:58,280 --> 00:13:01,720 Speaker 1: UPM markets are trading mixed this morning. Germany is down 208 00:13:01,920 --> 00:13:04,920 Speaker 1: point seven per cent on the US Economic Front Day 209 00:13:05,000 --> 00:13:08,520 Speaker 1: thirty Empire Manufacturing and at ten o'clock Housing Market Index 210 00:13:08,679 --> 00:13:11,920 Speaker 1: estimate sixty. In deal News, a d T agrees to 211 00:13:11,920 --> 00:13:14,600 Speaker 1: be acquired for forty two hours to share. And finally 212 00:13:14,600 --> 00:13:17,280 Speaker 1: some of your key Wall Street upgrades and downgrades. Dish 213 00:13:17,280 --> 00:13:20,640 Speaker 1: Network raised to equate at Barkley's Qualcom raised out perform 214 00:13:20,679 --> 00:13:24,000 Speaker 1: at Bernstein Community Health Systems cut to hold, the Jeffreys 215 00:13:24,360 --> 00:13:27,280 Speaker 1: at JP Morgan Goldman, Sax and Morgan Stanley both raised 216 00:13:27,320 --> 00:13:31,120 Speaker 1: to overweight. Micron Technology raised to buy versus neutral and Mazoujo, 217 00:13:31,400 --> 00:13:33,679 Speaker 1: And finally at stern A g Board Warner cut to 218 00:13:33,760 --> 00:13:36,959 Speaker 1: neutral and Procter and Gamble raised to buy. Live from 219 00:13:36,960 --> 00:13:40,400 Speaker 1: the first breaking news desk on Bill Maloney, Karen, all right, 220 00:13:40,440 --> 00:13:42,520 Speaker 1: thanks to bailan to hear live breaking news over your 221 00:13:42,559 --> 00:13:45,240 Speaker 1: Bloomberg type squawk and go on your terminal. That's s 222 00:13:45,320 --> 00:13:48,280 Speaker 1: q U a w k go. That's a Bloomberg business flash. 223 00:13:48,320 --> 00:13:50,920 Speaker 1: Tom and Mike, Karen, thanks so much. Good morning everyone. 224 00:13:50,920 --> 00:13:55,559 Speaker 1: Bloomberg Surveillance brought you by Investco. Investing isn't about meeting benchmarks, 225 00:13:56,280 --> 00:13:59,640 Speaker 1: It's about achieving goals. Find out how invest goos high 226 00:13:59,640 --> 00:14:04,520 Speaker 1: convey action approach can help. Visit investco dot com slash 227 00:14:05,000 --> 00:14:09,080 Speaker 1: high conviction, Investco I n v s c O Investco 228 00:14:09,160 --> 00:14:13,320 Speaker 1: dot com slash high Conviction. We need to be smarter 229 00:14:13,400 --> 00:14:17,160 Speaker 1: on oil. We've been doing that with Michael Cohen at Barclay's. 230 00:14:17,240 --> 00:14:20,680 Speaker 1: How do their energy and commodities research? Michael, are we 231 00:14:20,720 --> 00:14:23,920 Speaker 1: clearing markets? I mean, it's a great phrase, and clowns 232 00:14:23,960 --> 00:14:26,280 Speaker 1: like me like to toss it out. You've got to 233 00:14:26,360 --> 00:14:29,760 Speaker 1: live with. The observation is supply and demand. Are we 234 00:14:29,840 --> 00:14:34,400 Speaker 1: clearing oil markets? Um? Yeah, tomma. I mean, you know, 235 00:14:34,440 --> 00:14:38,360 Speaker 1: everyday oil trade hands and uh, you know the the 236 00:14:38,360 --> 00:14:41,120 Speaker 1: the issue is, you know, what is driving oil on 237 00:14:41,160 --> 00:14:43,760 Speaker 1: any given day is a function of a whole bunch 238 00:14:43,800 --> 00:14:47,120 Speaker 1: of different things. And you know, the issue right now 239 00:14:47,280 --> 00:14:51,200 Speaker 1: is that the fundamental data is lagging the reality. And 240 00:14:51,240 --> 00:14:53,560 Speaker 1: the only thing that we have to show us what 241 00:14:53,720 --> 00:14:57,480 Speaker 1: the reality is is things like the grades and different 242 00:14:57,520 --> 00:15:01,280 Speaker 1: basins around the country that can show production declining in 243 00:15:01,400 --> 00:15:04,200 Speaker 1: advance of e I A data that may take two 244 00:15:04,240 --> 00:15:07,640 Speaker 1: months to put together. You know. You the amazing thing 245 00:15:07,680 --> 00:15:10,560 Speaker 1: now in oil markets is that, um, you know, now, 246 00:15:10,680 --> 00:15:13,120 Speaker 1: compared to four or five years ago, we have all 247 00:15:13,160 --> 00:15:16,200 Speaker 1: of these things like clipper data and gen escape and 248 00:15:16,200 --> 00:15:19,040 Speaker 1: and even Bloomberg that are that are providing all of 249 00:15:19,080 --> 00:15:23,400 Speaker 1: this new high frequency oil data um to to the 250 00:15:23,440 --> 00:15:28,280 Speaker 1: market participants, and that has essentially made the market um. 251 00:15:28,360 --> 00:15:31,640 Speaker 1: While while other things are becoming less liquid and fewer 252 00:15:31,680 --> 00:15:35,800 Speaker 1: participants in the market, the participants that do remain have 253 00:15:36,000 --> 00:15:39,080 Speaker 1: more tools at their disposal. To sip through to figure 254 00:15:39,120 --> 00:15:43,960 Speaker 1: out what is actually the fundamental backdrop. Are there more 255 00:15:44,000 --> 00:15:48,080 Speaker 1: retail investors than in these days using E T S. Yeah, 256 00:15:48,120 --> 00:15:51,120 Speaker 1: we do see that UM and you can track it 257 00:15:51,440 --> 00:15:54,600 Speaker 1: UM and I think that it essentially has played a 258 00:15:54,720 --> 00:15:58,080 Speaker 1: role also in exacerbating some of the moves that we 259 00:15:58,160 --> 00:16:01,480 Speaker 1: see driven by fundamental dry verse over the last year 260 00:16:01,520 --> 00:16:05,520 Speaker 1: and a half in well. I mean, for example, on 261 00:16:05,560 --> 00:16:08,720 Speaker 1: a day where you see, you know, prices start to 262 00:16:08,800 --> 00:16:13,600 Speaker 1: move slightly, sometimes there's nothing else that really drives UM, 263 00:16:13,720 --> 00:16:17,560 Speaker 1: nothing other fundamental that nothing else fundamental that necessarily drives 264 00:16:17,640 --> 00:16:20,680 Speaker 1: that uh move the rest of the day. In other words, 265 00:16:20,720 --> 00:16:23,520 Speaker 1: that they're not incremental. There's not incremental news. And so 266 00:16:23,520 --> 00:16:27,480 Speaker 1: what you see sometimes is that uh, you know et 267 00:16:27,640 --> 00:16:30,960 Speaker 1: F investors are either liquidating or adding to their to 268 00:16:31,040 --> 00:16:33,920 Speaker 1: their book. Are we clearing other markets? I mean, if 269 00:16:33,920 --> 00:16:36,840 Speaker 1: we're clearing oil and we're working our way through it, 270 00:16:36,840 --> 00:16:39,920 Speaker 1: it's not the same in industrial medals, is it. It's 271 00:16:39,920 --> 00:16:42,480 Speaker 1: a whole different dynamic, isn't it right. I Mean, when 272 00:16:42,480 --> 00:16:46,560 Speaker 1: we talk about clearing, you know, the the issue of oversupply. 273 00:16:47,520 --> 00:16:50,200 Speaker 1: Right now, we stand ad about one point to one 274 00:16:50,200 --> 00:16:53,320 Speaker 1: point three million barrels a day of discrepancy between global 275 00:16:53,360 --> 00:16:59,160 Speaker 1: supply and global demand. And so as prices have fallen um, 276 00:16:59,200 --> 00:17:01,840 Speaker 1: you know, we stimulate a demand. We started to see 277 00:17:01,880 --> 00:17:05,200 Speaker 1: a couple of north sea fields UM actually get shut in. 278 00:17:05,640 --> 00:17:08,000 Speaker 1: We're going to see extended maintenance in some of the 279 00:17:08,040 --> 00:17:12,080 Speaker 1: Canadian oil sands. We're seeing a reduction and drilling activity. 280 00:17:12,520 --> 00:17:15,679 Speaker 1: We're seeing billions of dollars of investments that it is 281 00:17:15,720 --> 00:17:18,880 Speaker 1: being deferred in that we should have been on by 282 00:17:18,880 --> 00:17:22,600 Speaker 1: the time frame because of time. Can you take that 283 00:17:22,720 --> 00:17:26,520 Speaker 1: over to copper or iron words for that matter, Well, 284 00:17:26,560 --> 00:17:28,919 Speaker 1: I think those of those medals are obviously there's a 285 00:17:28,960 --> 00:17:32,320 Speaker 1: there's a different story there, and they're the cash costs 286 00:17:32,400 --> 00:17:35,880 Speaker 1: are are not being covered um. And so what you've 287 00:17:35,880 --> 00:17:38,440 Speaker 1: seen is some of the big producers actually have started 288 00:17:38,480 --> 00:17:43,080 Speaker 1: to cut back from their supply. But the difference is 289 00:17:43,119 --> 00:17:47,720 Speaker 1: that in is that the makeup in oil is much 290 00:17:47,720 --> 00:17:52,359 Speaker 1: more heterogeneous. You've got national oil companies, you've got small 291 00:17:52,440 --> 00:17:56,200 Speaker 1: producers in the United States, stripper well operators, you've got 292 00:17:56,280 --> 00:18:00,359 Speaker 1: major oil independence and international oil companies. So you know, 293 00:18:00,400 --> 00:18:03,840 Speaker 1: when you see things like this today for for Russia, 294 00:18:04,080 --> 00:18:09,240 Speaker 1: Qatar and Venezuela, we're talking about essentially a paintavesa a 295 00:18:09,960 --> 00:18:13,879 Speaker 1: you know, Katari company, and near ninety to a hundred 296 00:18:13,880 --> 00:18:17,200 Speaker 1: different Russian companies that are essentially agreeing to do something 297 00:18:17,280 --> 00:18:20,800 Speaker 1: and the track record is just not good, but could 298 00:18:20,880 --> 00:18:25,080 Speaker 1: just be the predicate to some sort of an actual 299 00:18:25,240 --> 00:18:28,960 Speaker 1: agreement or do we even need a monitored agreement if 300 00:18:29,000 --> 00:18:32,480 Speaker 1: the world thinks there is an agreement? Right, I think 301 00:18:32,760 --> 00:18:36,359 Speaker 1: that it definitely does set the president and I think 302 00:18:36,480 --> 00:18:39,680 Speaker 1: what we've seen in the past in is that this 303 00:18:39,760 --> 00:18:44,040 Speaker 1: kind of thing um was the the impetus for further 304 00:18:44,119 --> 00:18:48,359 Speaker 1: agreements across the board. We think that in at least 305 00:18:48,359 --> 00:18:51,359 Speaker 1: in our view in this time period right now, given 306 00:18:51,400 --> 00:18:55,760 Speaker 1: the oversupply that we have, and given the intractable issues 307 00:18:55,880 --> 00:19:02,120 Speaker 1: between uh Russian and Saudia Arabia, either that that it's 308 00:19:02,160 --> 00:19:04,359 Speaker 1: going to be and also Saudi Arabia and you're on 309 00:19:04,400 --> 00:19:07,120 Speaker 1: that it's going to be much more difficult to get 310 00:19:07,160 --> 00:19:10,520 Speaker 1: to that next day. And I should mention also just 311 00:19:10,640 --> 00:19:14,680 Speaker 1: briefly that in and in the eighties when we did 312 00:19:14,680 --> 00:19:16,560 Speaker 1: see these kind of cuts, they took a year and 313 00:19:16,600 --> 00:19:20,040 Speaker 1: a half or so to really get together. So we're 314 00:19:20,119 --> 00:19:23,199 Speaker 1: very much at the beginning stage. Is still okay. This 315 00:19:23,280 --> 00:19:25,800 Speaker 1: has been a terrific brief. Michael Cohen, thank you so much, 316 00:19:25,840 --> 00:19:28,679 Speaker 1: Barkley's head of Energy Commodit th Research, Mike, this is 317 00:19:28,720 --> 00:19:31,239 Speaker 1: just what I needed after a three day weekend. Let 318 00:19:31,280 --> 00:19:33,800 Speaker 1: me let me I'm gonna put this out on Bloomberg 319 00:19:33,840 --> 00:19:37,440 Speaker 1: Radio Plus right now. This Charter West Texas Intermediate inter 320 00:19:37,600 --> 00:19:44,479 Speaker 1: Day is twenty seven on the eleventh, fifty even up 321 00:19:44,480 --> 00:19:49,240 Speaker 1: to twenty nine and the twelve, then the weekend yesterday 322 00:19:49,320 --> 00:19:51,920 Speaker 1: nine to thirty, and then up to thirty one today 323 00:19:52,240 --> 00:19:56,000 Speaker 1: and we've given all of that, uh that Tuesday game back. 324 00:19:56,040 --> 00:19:59,400 Speaker 1: We're a long way from the low scene on February eleventh, 325 00:19:59,440 --> 00:20:02,880 Speaker 1: one day, but War Abraham Lincoln's birthday stay with us 326 00:20:06,280 --> 00:20:08,159 Speaker 1: coming up there with all due respect. Highlight brought you 327 00:20:08,200 --> 00:20:10,040 Speaker 1: by land Rover. If it's in your nature to cast 328 00:20:10,040 --> 00:20:12,160 Speaker 1: off the every day and seek adventure, the Discovery Sport 329 00:20:12,200 --> 00:20:14,240 Speaker 1: was built to help your search. Visit Landbover tin state 330 00:20:14,280 --> 00:20:17,200 Speaker 1: dot com for special offers during the only Adventure Sales event, 331 00:20:17,480 --> 00:20:25,680 Speaker 1: Rob Above and Bat broadcasting live to New York, Gloomberg 332 00:20:25,760 --> 00:20:30,720 Speaker 1: Eleventh Rio to Washington, d C, Bloomberg to Boston, Bluemberg 333 00:20:30,840 --> 00:20:34,280 Speaker 1: Well Unders to San Francisco. BLUEMBERG nine six to the 334 00:20:34,359 --> 00:20:38,280 Speaker 1: Country Series Exam Channel one ninety and around the globe 335 00:20:38,359 --> 00:20:41,800 Speaker 1: the Bloomberg Radio plus Aben Bloomberg dot Com. This is 336 00:20:41,840 --> 00:20:45,680 Speaker 1: Bloomberg Surveillance. Morny. It's a thirty on Law Street. I 337 00:20:45,800 --> 00:20:48,879 Speaker 1: Michael McKee along with Tom Keene Ecademic indicators brought to 338 00:20:48,880 --> 00:20:51,800 Speaker 1: you by Commonwealth Financial Network. When it's time to change 339 00:20:51,800 --> 00:20:54,040 Speaker 1: the conversation, talk with a broker dealer r I A 340 00:20:54,200 --> 00:20:56,520 Speaker 1: that's ready to listen, Call eight six six four six 341 00:20:56,560 --> 00:21:00,000 Speaker 1: two three six three eight or visit Commonwealth dot com 342 00:21:00,119 --> 00:21:03,320 Speaker 1: to learn more of any Dell jude C. Empire manufacturing 343 00:21:03,400 --> 00:21:08,600 Speaker 1: numbers are out. They're better in their unusual way. Well, 344 00:21:08,640 --> 00:21:11,320 Speaker 1: they're not as much of a contraction, Michael. The Empire 345 00:21:11,359 --> 00:21:16,399 Speaker 1: State Manufacturing Index coming in at negative sixteen point six. 346 00:21:16,440 --> 00:21:19,440 Speaker 1: It had been negative nineteen point three seven a prior 347 00:21:19,520 --> 00:21:24,960 Speaker 1: month February versus January negative. Nonetheless, contractionists index last positive 348 00:21:25,000 --> 00:21:29,400 Speaker 1: in July. It covers the New York Region manufacturing from 349 00:21:29,400 --> 00:21:31,760 Speaker 1: the New York Fed uh In the days ahead, the 350 00:21:31,800 --> 00:21:34,840 Speaker 1: spotlight though, turns to inflation, with the Labor Department issuing 351 00:21:34,880 --> 00:21:38,080 Speaker 1: a pair of reports. The PPI Producer Price Index and 352 00:21:38,200 --> 00:21:42,520 Speaker 1: CPI Consumer Price Index for January. Low prices for petroleum 353 00:21:42,560 --> 00:21:46,160 Speaker 1: other commodities, keeping a tight lid on inflation. Last week, 354 00:21:46,240 --> 00:21:49,440 Speaker 1: the government's import price index dropped in January for the 355 00:21:49,520 --> 00:21:52,080 Speaker 1: seventh month in a row. Also on the calendar this week, 356 00:21:52,119 --> 00:21:55,680 Speaker 1: Gentlemen Housing starts industrial production at the Bluebird First Work 357 00:21:55,720 --> 00:21:57,880 Speaker 1: Desk Company, del Judice. Let's go back to New York. 358 00:21:58,600 --> 00:22:01,280 Speaker 1: Vide tell Judis thank you. We should point out tom 359 00:22:01,400 --> 00:22:05,280 Speaker 1: um there are there is a speech do this morning 360 00:22:05,320 --> 00:22:09,520 Speaker 1: from the Philadelphia Fed President Patrick Harker. It's been delayed 361 00:22:09,520 --> 00:22:11,800 Speaker 1: by the weather. I'm not going to happen noun till 362 00:22:13,720 --> 00:22:16,400 Speaker 1: this morning. We should New York is actually pretty good, 363 00:22:16,440 --> 00:22:18,560 Speaker 1: but we might point out that the weather is UH 364 00:22:19,400 --> 00:22:23,400 Speaker 1: sporting throughout much of the northeast UH this morning. This 365 00:22:23,440 --> 00:22:26,280 Speaker 1: is an important time to spend a good amount of 366 00:22:26,320 --> 00:22:29,240 Speaker 1: time with Conrad to Quadras out of University of Western 367 00:22:29,280 --> 00:22:33,119 Speaker 1: Ontario working with John Writing at RTQ Economics. He is 368 00:22:33,560 --> 00:22:38,320 Speaker 1: truly expert. It's slicing the data and folding it into 369 00:22:38,400 --> 00:22:42,600 Speaker 1: a cogent story. Conrad, let me start with the American consumer. 370 00:22:43,160 --> 00:22:46,160 Speaker 1: I can't get a straight answer. Is there a mystery 371 00:22:46,240 --> 00:22:50,159 Speaker 1: to what the American consumers doing Thanks for having me 372 00:22:50,200 --> 00:22:52,600 Speaker 1: on TOM. I'm not sure that there's a mystery in 373 00:22:52,640 --> 00:22:57,680 Speaker 1: that there's some confusion about uh an apparent lack of 374 00:22:58,040 --> 00:23:01,800 Speaker 1: a stronger consumer given the positives that we have, including 375 00:23:01,800 --> 00:23:06,159 Speaker 1: the labor market, um the reduction in expenses related to 376 00:23:06,280 --> 00:23:08,919 Speaker 1: energy costs that consumers have. But I would say that 377 00:23:08,960 --> 00:23:11,080 Speaker 1: maybe some of that confusion has been cleared up by 378 00:23:11,080 --> 00:23:13,200 Speaker 1: the most recent data. Of course, on Friday we had 379 00:23:13,960 --> 00:23:17,199 Speaker 1: quite encouraging retail sales report that puts the consumer on 380 00:23:17,240 --> 00:23:19,640 Speaker 1: a strong track at the start of the year. But 381 00:23:19,800 --> 00:23:23,800 Speaker 1: I think the story here is we've seen the immediate 382 00:23:23,960 --> 00:23:27,479 Speaker 1: negative impact on the economy from lower oil prices, and 383 00:23:27,520 --> 00:23:31,280 Speaker 1: that oil producers have to react immediately to lower oil 384 00:23:31,359 --> 00:23:34,880 Speaker 1: prices by reducing employment levels, by cutting back on capital spending. 385 00:23:35,119 --> 00:23:37,280 Speaker 1: Consumers have the luxury of waiting, and I think that 386 00:23:37,280 --> 00:23:40,520 Speaker 1: that's what they're doing. We're not seeing a weak consumer. 387 00:23:41,040 --> 00:23:43,399 Speaker 1: The first quarter looks like it could give us a 388 00:23:43,400 --> 00:23:46,840 Speaker 1: gain in real PC close to three, but we're not 389 00:23:46,960 --> 00:23:50,359 Speaker 1: necessarily seeing consumers spend that those savings that they're getting 390 00:23:50,359 --> 00:23:52,400 Speaker 1: from lower energy prices. But the fact is they don't 391 00:23:52,480 --> 00:23:55,840 Speaker 1: have to. They can wait to see if these prices 392 00:23:55,840 --> 00:23:59,639 Speaker 1: will be maintain um and generally speaking, consumers will spend 393 00:23:59,760 --> 00:24:01,800 Speaker 1: say things like that over time, and I think that 394 00:24:01,800 --> 00:24:05,640 Speaker 1: that's what they're doing so far, and we repeat, we're 395 00:24:05,680 --> 00:24:09,080 Speaker 1: only just now getting January data, but so far it 396 00:24:09,119 --> 00:24:12,359 Speaker 1: looks like the slowdown in the fourth quarter is at 397 00:24:12,400 --> 00:24:15,480 Speaker 1: an end. The Atlanta Feds GDP NOW tracker at two 398 00:24:15,520 --> 00:24:19,320 Speaker 1: point seven percent after retail sales on Friday, two point 399 00:24:19,359 --> 00:24:24,680 Speaker 1: seven for the first quarter eight you know, a hundred Well, 400 00:24:24,720 --> 00:24:26,359 Speaker 1: I don't know how many percent off top of my 401 00:24:26,440 --> 00:24:29,000 Speaker 1: head because it's Tuesday, and I'm not thinking stranger, but 402 00:24:29,119 --> 00:24:31,800 Speaker 1: a major change from what we saw in the fourth quarter, 403 00:24:31,800 --> 00:24:34,560 Speaker 1: which you learning about a tenth of a percent. Well, 404 00:24:34,600 --> 00:24:37,639 Speaker 1: I think on the Atlanta Fed measure, it's just reflecting 405 00:24:37,760 --> 00:24:40,480 Speaker 1: the flow of data that have been have been coming 406 00:24:40,480 --> 00:24:44,600 Speaker 1: in quite encouragingly, despite concerns related to the economy that 407 00:24:44,640 --> 00:24:49,040 Speaker 1: are more being driven by market volatility. The actual activity data, 408 00:24:49,080 --> 00:24:53,240 Speaker 1: whether it's the labor market data, with the jobs reports. Um, 409 00:24:53,280 --> 00:24:55,320 Speaker 1: obviously we had a slower pace of job gains and 410 00:24:55,359 --> 00:24:57,800 Speaker 1: the most recent report, but the trend has been quite solid. 411 00:24:58,359 --> 00:25:01,520 Speaker 1: Hours worked are on arising, and the retail sales report 412 00:25:01,600 --> 00:25:04,879 Speaker 1: was quite solid higher frequency data like jobless claims are 413 00:25:04,920 --> 00:25:08,600 Speaker 1: are not suggesting any pick up in the pace of layoffs, 414 00:25:08,600 --> 00:25:12,280 Speaker 1: so reflecting that we've had this pick up in Atlanta 415 00:25:12,320 --> 00:25:15,440 Speaker 1: fed GDP now. But I would also say, looking back 416 00:25:15,440 --> 00:25:18,520 Speaker 1: at the fourth quarter, we are clearly we had a 417 00:25:18,640 --> 00:25:21,919 Speaker 1: very slow rate of growth as reported by the GDP report, 418 00:25:22,280 --> 00:25:25,919 Speaker 1: but the message wasn't consistent on the economy. If we 419 00:25:25,960 --> 00:25:30,160 Speaker 1: compare the labor market to the GDP data, the labor 420 00:25:30,200 --> 00:25:32,800 Speaker 1: market was still rising quite strongly. So we do have 421 00:25:32,880 --> 00:25:34,720 Speaker 1: this mixed message for the fourth quarter. I'm not sure 422 00:25:34,760 --> 00:25:37,280 Speaker 1: it was as weak as the seventh tenth increase in 423 00:25:37,800 --> 00:25:40,679 Speaker 1: GDP suggests, but it probably wasn't as strong as the 424 00:25:40,880 --> 00:25:43,160 Speaker 1: as the very strong increase in employment that we saw. 425 00:25:43,760 --> 00:25:47,000 Speaker 1: Utifually said Mike, what, Mike, where is the estimate for 426 00:25:47,080 --> 00:25:50,119 Speaker 1: first quarter that you see within all the literature you 427 00:25:50,160 --> 00:25:52,440 Speaker 1: look at, I've never seen Mike as great a divide 428 00:25:52,760 --> 00:25:56,439 Speaker 1: between considered economists and the public. The public is like, 429 00:25:56,480 --> 00:25:58,480 Speaker 1: this is all bologna. It's slower than I'll get out, 430 00:25:59,000 --> 00:26:01,960 Speaker 1: and yeah, people like kind. Maybe I'm not sure that 431 00:26:02,920 --> 00:26:04,880 Speaker 1: I don't. I don't think the public sees it that way. 432 00:26:05,080 --> 00:26:09,040 Speaker 1: Conrad Um because they're spending money. They're not They're not 433 00:26:09,480 --> 00:26:13,359 Speaker 1: pulling back as you would expect during the run up 434 00:26:13,400 --> 00:26:15,679 Speaker 1: to a recession, when when people sense things are going 435 00:26:15,720 --> 00:26:18,040 Speaker 1: to be bad. Well, if if you look at the 436 00:26:18,680 --> 00:26:22,840 Speaker 1: consumer sentiment numbers, whether it's the the Michigan measure that 437 00:26:22,920 --> 00:26:26,600 Speaker 1: was released on Friday or Bloomberg's weekly measures UM, and 438 00:26:26,640 --> 00:26:30,560 Speaker 1: particularly Bloomberg's weekly measures, are really showing a consumer with 439 00:26:30,640 --> 00:26:33,200 Speaker 1: comfort levels that are quite high UM and I think 440 00:26:33,240 --> 00:26:36,000 Speaker 1: that makes sense. I don't think that consumer sentiment necessarily 441 00:26:36,080 --> 00:26:39,760 Speaker 1: drives consumer activity and spending decisions, but they reflect the 442 00:26:39,800 --> 00:26:43,600 Speaker 1: same things. What will drive consumer spending will be most 443 00:26:43,600 --> 00:26:46,960 Speaker 1: importantly trends and income UH in conditions of the labor market, 444 00:26:47,200 --> 00:26:50,280 Speaker 1: and those will also have their influence on consumer comfort. 445 00:26:50,280 --> 00:26:53,320 Speaker 1: And so that's why the Bloomberg measure is showing relatively 446 00:26:53,600 --> 00:26:57,760 Speaker 1: elevated levels on comfort. The blind buying climate has been 447 00:26:57,760 --> 00:27:01,600 Speaker 1: on the rise, and so the conditions that consumers are 448 00:27:02,320 --> 00:27:04,720 Speaker 1: seeing away from the markets in terms of the labor 449 00:27:04,760 --> 00:27:08,679 Speaker 1: market situation and income trends are generally positive. Let's come 450 00:27:08,680 --> 00:27:10,360 Speaker 1: back kind of right to cross us for this lad 451 00:27:10,440 --> 00:27:13,040 Speaker 1: Que Economics on the American consumer, Mike, I'm going to 452 00:27:13,119 --> 00:27:15,920 Speaker 1: do this because it's Tuesday and everybody's got both hands 453 00:27:15,920 --> 00:27:19,080 Speaker 1: on the steering wheel anyways, because of ice and snow 454 00:27:19,400 --> 00:27:22,240 Speaker 1: and all that. We should talk business inventories, which you 455 00:27:22,240 --> 00:27:25,040 Speaker 1: can only do with both hands on the steering mill, 456 00:27:25,680 --> 00:27:29,359 Speaker 1: as like belt and suspenders economics. But you gotta have 457 00:27:29,440 --> 00:27:31,200 Speaker 1: both hands in the students. We will do that. Yeah, 458 00:27:31,200 --> 00:27:35,680 Speaker 1: you asked me, and I looked the futures up twenty one. 459 00:27:37,960 --> 00:27:39,760 Speaker 1: Time to check in with Michael Byr now and get 460 00:27:39,760 --> 00:27:43,080 Speaker 1: the latest world and national headlines. Michael, Mike, Tom, thank 461 00:27:43,080 --> 00:27:45,360 Speaker 1: you very much. President Obama will wrap up a two 462 00:27:45,400 --> 00:27:48,639 Speaker 1: days seven in California with leaders of the Southeast Asian 463 00:27:48,760 --> 00:27:52,399 Speaker 1: Nations Today. The President and Asian leaders will discuss regional 464 00:27:52,440 --> 00:27:57,399 Speaker 1: security issues, including counter terrorism and China's territorial claims of 465 00:27:57,440 --> 00:28:01,400 Speaker 1: disputed waters of the South China Seat. Remember when Donald 466 00:28:01,400 --> 00:28:04,760 Speaker 1: Trump and Ted Cruz were sort of nice to each other. 467 00:28:05,160 --> 00:28:10,119 Speaker 1: Those days are over. I actually think he's a very thin, 468 00:28:10,680 --> 00:28:15,159 Speaker 1: very Trump speaking to ABC News, called Trump a liar 469 00:28:15,240 --> 00:28:17,440 Speaker 1: for some of the content and then add against him 470 00:28:17,440 --> 00:28:21,719 Speaker 1: and has threatened to sue Cruise unless he apologizes. Meanwhile, Cruise, 471 00:28:21,760 --> 00:28:24,520 Speaker 1: at an event in Camden, South Carolina, talked about Trump. 472 00:28:24,600 --> 00:28:27,560 Speaker 1: It is a very odd reaction when somebody points to 473 00:28:27,600 --> 00:28:30,240 Speaker 1: their rector points to the words that came out of 474 00:28:30,240 --> 00:28:34,520 Speaker 1: their own mouth, for them simply to respond by yelling 475 00:28:34,560 --> 00:28:38,800 Speaker 1: and screaming. Liar, Liar, liar. Prosecutors believe last week's train 476 00:28:38,840 --> 00:28:41,560 Speaker 1: crash in Germany was caused by human error by the 477 00:28:41,600 --> 00:28:45,000 Speaker 1: train dispatcher. Two trains collided head on about forty miles 478 00:28:45,000 --> 00:28:48,360 Speaker 1: southeast of Munich, killing eleven people and injuring scores of others. 479 00:28:48,640 --> 00:28:51,120 Speaker 1: Global News twenty four hours a day, powered by our 480 00:28:51,200 --> 00:28:54,240 Speaker 1: twenty four hundred journalists and more than one hundred fifty 481 00:28:54,280 --> 00:28:58,040 Speaker 1: news bureaus from around the world. Michael bar Mike Tom, 482 00:28:58,200 --> 00:29:00,360 Speaker 1: Thank you, Michael. Time now for the rain Continue Auto 483 00:29:00,360 --> 00:29:05,040 Speaker 1: Group Bloomberg NBC Sports Update with Mike Whordon is the 484 00:29:05,080 --> 00:29:07,240 Speaker 1: Nets eleven new general manager sometime this week in their 485 00:29:07,320 --> 00:29:10,840 Speaker 1: three final as former Phoenix in Toronto g M. Bryan Colangelo, 486 00:29:10,880 --> 00:29:14,640 Speaker 1: San Antonio assistant GM Shawn Marks and Denver assistant GM 487 00:29:14,680 --> 00:29:17,120 Speaker 1: are tourist carnissvs who has the advantage of being a 488 00:29:17,200 --> 00:29:19,800 Speaker 1: native of Russia like the guy doing the hiring. The 489 00:29:19,800 --> 00:29:23,160 Speaker 1: team owner Kyle broker Off Islanders beat Detroit four one 490 00:29:23,200 --> 00:29:25,960 Speaker 1: that's four straight home winds by combined twenty two to seven. 491 00:29:26,000 --> 00:29:28,800 Speaker 1: Monmouth and iona top two teams in the MAC. They 492 00:29:28,840 --> 00:29:31,360 Speaker 1: had a contentious first meeting, a fight broke out after 493 00:29:31,400 --> 00:29:34,040 Speaker 1: it was over. They'll play Friday both one. Last night 494 00:29:34,120 --> 00:29:36,680 Speaker 1: the Hawks seventy nine seventy over Manhattan. The Gayles beat 495 00:29:36,720 --> 00:29:39,480 Speaker 1: Quinipiac seventy eight fifty nine. L I You beat St. 496 00:29:39,480 --> 00:29:42,680 Speaker 1: Francis eight two sixty seven. Maybe everyone was wrong about 497 00:29:42,680 --> 00:29:45,280 Speaker 1: Matt Harvey. Last year was all about an innings limit, 498 00:29:45,320 --> 00:29:47,720 Speaker 1: and yet he demanded to pitch the extra inning in 499 00:29:47,760 --> 00:29:50,280 Speaker 1: the last game of the season. Filling has also always 500 00:29:50,280 --> 00:29:52,080 Speaker 1: been that Harvey is out in New York when he 501 00:29:52,080 --> 00:29:54,520 Speaker 1: can be a free agent after twenty eighteen, But as 502 00:29:54,520 --> 00:29:56,800 Speaker 1: he arrived for spring training, he said he won't rule 503 00:29:56,880 --> 00:30:00,200 Speaker 1: out a long term extension. Met pitchers and catchers had 504 00:30:00,200 --> 00:30:03,440 Speaker 1: their first workout tomorrow for the Yankees. It's Thursday, and 505 00:30:03,440 --> 00:30:06,800 Speaker 1: that includes Masahiro Tanaka, who just did his first throwing 506 00:30:06,800 --> 00:30:09,040 Speaker 1: off a mound since elbow surjury last fall and said 507 00:30:09,040 --> 00:30:12,080 Speaker 1: there was no pain. With the Bloomberg NBC Sports something 508 00:30:12,200 --> 00:30:15,640 Speaker 1: I'm John Stash, John thinks so much, greatly appreciate that 509 00:30:16,000 --> 00:30:21,360 Speaker 1: futures are up. SB futures up nineteen point seven five. 510 00:30:21,440 --> 00:30:25,240 Speaker 1: Right now, dealt features have pulled back sixty points. UH 511 00:30:25,400 --> 00:30:28,400 Speaker 1: is well the tenure yield Michael McKee one point seven six. 512 00:30:29,560 --> 00:30:31,920 Speaker 1: I'll be interesting to see if we're if we decouple 513 00:30:32,560 --> 00:30:37,000 Speaker 1: oil from equities. We've got UH sort of a one 514 00:30:37,040 --> 00:30:39,160 Speaker 1: to one relationship of the last couple of weeks. Doesn't 515 00:30:39,160 --> 00:30:42,080 Speaker 1: seem to be holding this morning. Yeah, the oil we'll 516 00:30:42,080 --> 00:30:45,560 Speaker 1: have to watch closely. Brent down seventeen cents. The backdrop 517 00:30:45,600 --> 00:30:48,479 Speaker 1: of this might help me with this. Russia and Saudi 518 00:30:48,480 --> 00:30:51,840 Speaker 1: Arabia got together and cut her, and they put out 519 00:30:51,960 --> 00:30:56,400 Speaker 1: a very cryptic statement saying they're not gonna cut but 520 00:30:56,440 --> 00:31:00,520 Speaker 1: that January levels of production are adequate. So they say 521 00:31:00,560 --> 00:31:03,719 Speaker 1: that right in in January, Saudi production levels were a 522 00:31:03,800 --> 00:31:07,120 Speaker 1: little bit lower than their peak. Russia is pumping at 523 00:31:07,160 --> 00:31:10,440 Speaker 1: the highest levels ever. So we got oil with red 524 00:31:10,440 --> 00:31:13,680 Speaker 1: on the screen. Don't overplay that. But nevertheless, oils pulled 525 00:31:13,720 --> 00:31:17,280 Speaker 1: back Gold down twenty four dollars stay with US worldwide 526 00:31:17,280 --> 00:31:22,680 Speaker 1: Bloomberg surveillance. The sports report was brought to by Recotina 527 00:31:22,720 --> 00:31:25,080 Speaker 1: Auto Group. Everyone deserves to drive a Mercedes has been 528 00:31:25,120 --> 00:31:27,880 Speaker 1: from Racotina, make it happen at Rakotina Motorcar and Edison 529 00:31:28,080 --> 00:31:31,080 Speaker 1: Recotina of Union and the new Rankotina of Freehold. Or 530 00:31:31,160 --> 00:31:39,200 Speaker 1: go to Racotina dot com Global Business News twenty four 531 00:31:39,200 --> 00:31:42,280 Speaker 1: hours a day. If Bloomberg dot com the Radio plus 532 00:31:42,360 --> 00:31:45,520 Speaker 1: mobile act and on your radio. This is a Bloomberg 533 00:31:45,560 --> 00:31:48,760 Speaker 1: business flash and I'm covering Moscow. This updates brought to 534 00:31:48,800 --> 00:31:51,360 Speaker 1: you bi sector spidery t F Why buy a single 535 00:31:51,400 --> 00:31:54,200 Speaker 1: stock when you can invest in the entire sector? Visits 536 00:31:54,240 --> 00:31:58,280 Speaker 1: sector spd r s dot com or call sector et 537 00:31:58,560 --> 00:32:01,400 Speaker 1: f u S. Stock index futures are higher as US 538 00:32:01,440 --> 00:32:04,480 Speaker 1: markets reopened after the President's Day holiday, lifted by the 539 00:32:04,480 --> 00:32:07,480 Speaker 1: biggest rally and Chinese shares in three months. We checked 540 00:32:07,520 --> 00:32:10,040 Speaker 1: the markets every fifteen minutes throughout the trading day. All 541 00:32:10,080 --> 00:32:13,600 Speaker 1: Bloomberg SNP EVENI futures of eighteen points and DOWI mini 542 00:32:13,640 --> 00:32:16,480 Speaker 1: futures have a hundred forty eight to nas DOCUMENTI futures 543 00:32:16,520 --> 00:32:19,720 Speaker 1: up fifty four decks. In Germany's down nine tenths per 544 00:32:19,760 --> 00:32:22,760 Speaker 1: cent ten your treasury down three thirty seconds. The yield 545 00:32:22,760 --> 00:32:25,600 Speaker 1: one point seven six percent yield on the two year 546 00:32:25,680 --> 00:32:28,760 Speaker 1: point six nine percent now I'm excret oil turn lower 547 00:32:28,840 --> 00:32:30,920 Speaker 1: down four tenths per cent or eleven cents at twenty 548 00:32:31,000 --> 00:32:33,960 Speaker 1: nine thirty three a barrel. COMACS gold is down two 549 00:32:33,960 --> 00:32:36,880 Speaker 1: percent or twenty four dollars twenty cents to twelve fifteen 550 00:32:36,920 --> 00:32:39,960 Speaker 1: twenty an ounce the Euros at a dollar eleven seventy two. 551 00:32:40,040 --> 00:32:43,959 Speaker 1: The end one thirteen point eight two a DT agreeing 552 00:32:43,960 --> 00:32:46,480 Speaker 1: to be acquired for about six point nine billion dollars 553 00:32:46,480 --> 00:32:49,480 Speaker 1: by the private equity firm Apollo Global Management. I D 554 00:32:49,920 --> 00:32:52,200 Speaker 1: eight d T shares up more than fifty two percent 555 00:32:52,280 --> 00:32:55,680 Speaker 1: this morning, and shares of Community Health Systems down about 556 00:32:55,680 --> 00:32:58,680 Speaker 1: twenty two percent after the US's second largest chain of 557 00:32:58,680 --> 00:33:02,920 Speaker 1: for profit hospitals reported an unexpected fourth quarter loss. That's 558 00:33:02,920 --> 00:33:06,080 Speaker 1: a Bloomberg business flash, Tom and Mike Karen, thanks so much. 559 00:33:06,080 --> 00:33:08,440 Speaker 1: Watching oil very carefully. We'll keep you up to breath 560 00:33:08,720 --> 00:33:11,960 Speaker 1: up to date on that. Right now, it is on 561 00:33:12,000 --> 00:33:16,200 Speaker 1: Wall Street. The following is from Bloomberg View, opinions and 562 00:33:16,280 --> 00:33:20,080 Speaker 1: commentary from Bloomberg columnists. I'm Christopher Flavel, a columnist for 563 00:33:20,080 --> 00:33:23,040 Speaker 1: bloom Review. President Barack Obama's proposal this month for a 564 00:33:23,080 --> 00:33:25,160 Speaker 1: ten dollar per barrel tax on oil, which has been 565 00:33:25,200 --> 00:33:27,840 Speaker 1: overwhelmingly rejected by Republicans, could make it easier for the 566 00:33:27,840 --> 00:33:30,280 Speaker 1: next president to sell a carbon tax by showing how 567 00:33:30,320 --> 00:33:32,720 Speaker 1: not to do it. Obama made three mistakes. First, he 568 00:33:32,800 --> 00:33:35,760 Speaker 1: charged one single industry and one that many Americans believe 569 00:33:35,800 --> 00:33:38,200 Speaker 1: he doesn't like. That plays into the understandable fear that 570 00:33:38,240 --> 00:33:41,880 Speaker 1: governments will use climate policy to reward friends and hurt adversaries. Second, 571 00:33:41,920 --> 00:33:44,200 Speaker 1: Obama said he would use the money games from attacks 572 00:33:44,280 --> 00:33:47,080 Speaker 1: to fund things that mostly benefit cities. That amounts to 573 00:33:47,120 --> 00:33:49,520 Speaker 1: a wealth transfer from rural areas to urban ones and 574 00:33:49,560 --> 00:33:51,680 Speaker 1: from red states to blue. Republicans have every right to 575 00:33:51,720 --> 00:33:54,360 Speaker 1: oppose that. Third, research shows Republicans are more likely the 576 00:33:54,360 --> 00:33:56,880 Speaker 1: supporter of carbon tax if the government turns the money. 577 00:33:56,920 --> 00:34:00,719 Speaker 1: Inteen survey research has found that just fifteen and Republicans 578 00:34:00,720 --> 00:34:03,600 Speaker 1: would back carbon tax in the abstract, But if the 579 00:34:03,640 --> 00:34:08,080 Speaker 1: revenue went back to the public via rebate checks support triple. Obviously, 580 00:34:08,120 --> 00:34:10,960 Speaker 1: any carbon tax would be enormously difficult to sell. But 581 00:34:11,040 --> 00:34:13,719 Speaker 1: if officials treat this episode as reason not to try 582 00:34:13,840 --> 00:34:16,319 Speaker 1: their drawing in the wrong lesson, I'm Christopher Fall. For 583 00:34:16,360 --> 00:34:18,600 Speaker 1: more view please go to Bloomberg View dot com or 584 00:34:18,719 --> 00:34:22,279 Speaker 1: view go on the Bloomberg Terminal. This has been Bloomberg 585 00:34:22,360 --> 00:34:25,759 Speaker 1: View and bloom Review. Commentaries can be heard hourly weekdays. 586 00:34:25,880 --> 00:34:29,840 Speaker 1: I'm Bloomberg Radio, Michael, Thank you, Tema. This hour of 587 00:34:29,880 --> 00:34:32,799 Speaker 1: Bloomberg Shrevelance brought you by Volvo Cars, White Planes. Visit 588 00:34:32,880 --> 00:34:37,160 Speaker 1: Volvo Cars, White Planes dot Com. Conrad du Quadras is 589 00:34:37,200 --> 00:34:39,960 Speaker 1: with r d Q Economics. We're talking about the outlook 590 00:34:40,000 --> 00:34:43,760 Speaker 1: for the first quarter, which in many ways Conrad depends 591 00:34:44,080 --> 00:34:46,960 Speaker 1: on the fourth quarter and the numbers we finally get. 592 00:34:47,000 --> 00:34:49,920 Speaker 1: Of course, when you put together the GDP reports we've 593 00:34:49,920 --> 00:34:52,680 Speaker 1: gotten so far, the government is only estimating what happens 594 00:34:52,680 --> 00:34:57,080 Speaker 1: with trade and inventories. We got some inventory numbers on 595 00:34:57,400 --> 00:35:00,279 Speaker 1: Friday that don't give you a lot of hope. So 596 00:35:00,320 --> 00:35:03,359 Speaker 1: the fourth quarters up the business inventories just a tenth 597 00:35:03,400 --> 00:35:06,319 Speaker 1: of a percent. But that's just better news ahead for 598 00:35:06,360 --> 00:35:09,200 Speaker 1: this quarter. Well, I think you're right there. We we 599 00:35:09,480 --> 00:35:12,040 Speaker 1: with the inventory numbers that we had out on Friday. 600 00:35:12,080 --> 00:35:15,400 Speaker 1: There is the suggestion that we'll get a downward division 601 00:35:15,400 --> 00:35:17,880 Speaker 1: to fourth quarter GDP, maybe as much as half a 602 00:35:17,920 --> 00:35:21,399 Speaker 1: percentage point. So the fourth quarter might look like real 603 00:35:21,480 --> 00:35:25,000 Speaker 1: GDP growth only up about a quarter of a percentage point. 604 00:35:25,480 --> 00:35:27,239 Speaker 1: You know, it looks when we look at to the 605 00:35:27,280 --> 00:35:30,719 Speaker 1: first quarter, though, our expectation is that we're probably not 606 00:35:30,760 --> 00:35:33,279 Speaker 1: going to get a significant add to growth in the 607 00:35:33,320 --> 00:35:37,359 Speaker 1: first quarter from inventories. Generally speaking, in an environment of 608 00:35:37,560 --> 00:35:41,120 Speaker 1: low inflation, low interest rates, that's not one where companies 609 00:35:41,120 --> 00:35:43,800 Speaker 1: seek to build up inventories. So our our fielding is 610 00:35:43,840 --> 00:35:48,520 Speaker 1: at inventory levels will remain quite low um. But it 611 00:35:48,560 --> 00:35:52,239 Speaker 1: does look like that drag on growth from inventories in 612 00:35:52,239 --> 00:35:55,040 Speaker 1: the fourth quarter is unlikely to be repeated in the 613 00:35:55,080 --> 00:35:57,480 Speaker 1: first quarter. So we're probably looking at a first quarter 614 00:35:57,520 --> 00:36:00,400 Speaker 1: GDP growth grade somewhere in the neighborhood of to in 615 00:36:00,440 --> 00:36:02,640 Speaker 1: a quarter percentage point. And of course there are higher 616 00:36:02,760 --> 00:36:05,480 Speaker 1: estimates out there from groups like the Atlanta FED, which 617 00:36:05,480 --> 00:36:09,799 Speaker 1: are tracking a number closer to andree that number, as 618 00:36:09,800 --> 00:36:12,560 Speaker 1: you mentioned, it sort of aggregates the data up to 619 00:36:12,600 --> 00:36:15,000 Speaker 1: this point. But I do note and I've never been 620 00:36:15,440 --> 00:36:17,359 Speaker 1: a fan of saying, hey, that's what growth is going 621 00:36:17,360 --> 00:36:20,160 Speaker 1: to be, because it does change. But throughout the fourth 622 00:36:20,200 --> 00:36:24,080 Speaker 1: quarter everybody was citing that in their pessimistic outlooks going forward, 623 00:36:24,080 --> 00:36:28,960 Speaker 1: while Atlanta is only showing x yes. And of course 624 00:36:29,360 --> 00:36:34,520 Speaker 1: estimates for for GDP growth are are very volatile, and 625 00:36:35,239 --> 00:36:37,640 Speaker 1: the reach out sales report, for example, points to us 626 00:36:37,640 --> 00:36:40,439 Speaker 1: stronger consumer than we were expecting for the first quarter, 627 00:36:40,440 --> 00:36:44,560 Speaker 1: But we hesitated about making that change official because the 628 00:36:44,640 --> 00:36:47,239 Speaker 1: January numbers could get revised. We don't know to what 629 00:36:47,400 --> 00:36:50,520 Speaker 1: extent spending in one month is borrowing from the from 630 00:36:50,560 --> 00:36:53,760 Speaker 1: the upcoming month, UM, so we don't like to change 631 00:36:53,760 --> 00:36:55,680 Speaker 1: our our outlook too much. But I would say that 632 00:36:55,760 --> 00:36:59,440 Speaker 1: the the general field of the data has been a 633 00:36:59,480 --> 00:37:02,520 Speaker 1: somewhat wronger, whether it's the reports that we've already seen 634 00:37:02,640 --> 00:37:04,319 Speaker 1: or or I even think the reports that we're going 635 00:37:04,360 --> 00:37:07,040 Speaker 1: to get out this week. For example, the industrial production 636 00:37:07,120 --> 00:37:11,239 Speaker 1: data UM, given the fact that ours worked rose by 637 00:37:11,280 --> 00:37:15,240 Speaker 1: five tenths of a percent and that's for manufacturing workers, 638 00:37:15,280 --> 00:37:18,799 Speaker 1: that points to a rebound in industrial production, and you 639 00:37:18,840 --> 00:37:21,040 Speaker 1: know the rope that might have the same kind of 640 00:37:21,040 --> 00:37:23,680 Speaker 1: feel as some of the other reports for January, suggesting 641 00:37:23,719 --> 00:37:26,439 Speaker 1: that the economy UM has a little bit more life 642 00:37:26,480 --> 00:37:29,080 Speaker 1: in it than than people may have thought. Again, based 643 00:37:29,120 --> 00:37:32,080 Speaker 1: on I think a lot of times people's views on 644 00:37:32,080 --> 00:37:34,600 Speaker 1: the economy right now are being driven by the volatility 645 00:37:34,600 --> 00:37:36,520 Speaker 1: and the markets, and that might not be giving us 646 00:37:36,520 --> 00:37:39,719 Speaker 1: the best picture of growth can I ask. I don't 647 00:37:39,719 --> 00:37:42,279 Speaker 1: believe Mike, I've ever asked this question in empteen years 648 00:37:42,280 --> 00:37:46,600 Speaker 1: of Bloomberg on the economy or Bloomer surveillance kind of quadros. 649 00:37:46,600 --> 00:37:51,520 Speaker 1: How do you measure inventories in the service sector. Well, 650 00:37:51,840 --> 00:37:55,440 Speaker 1: that's one of the big problems in that the the 651 00:37:55,480 --> 00:38:00,800 Speaker 1: inventory numbers as they're measured in GDP are taken from manufacturers, 652 00:38:00,800 --> 00:38:04,920 Speaker 1: from the wholesale sector um and from the retail sector, 653 00:38:05,000 --> 00:38:07,920 Speaker 1: and there are no it's inventories of of goods. There's 654 00:38:07,960 --> 00:38:11,680 Speaker 1: no measurement of of inventories outside of that. And and 655 00:38:12,640 --> 00:38:15,880 Speaker 1: at the inventory picture from these monthly numbers, like the 656 00:38:15,960 --> 00:38:19,480 Speaker 1: numbers that were released on Friday, and then the numbers 657 00:38:19,520 --> 00:38:21,600 Speaker 1: that we see in the GDP, they can in the 658 00:38:21,640 --> 00:38:24,840 Speaker 1: GDP report, they can present somewhat different pictures. So, for 659 00:38:24,880 --> 00:38:27,400 Speaker 1: an example, if we look at the inventory to sales 660 00:38:27,480 --> 00:38:31,640 Speaker 1: ratio that was released on Friday, it points to a 661 00:38:31,719 --> 00:38:34,520 Speaker 1: fairly significant pick up in an inventory to sales. And 662 00:38:34,560 --> 00:38:36,680 Speaker 1: our feeling is that part of that is due to 663 00:38:36,920 --> 00:38:41,240 Speaker 1: oil prices and the difficulty in measuring um the oil 664 00:38:41,280 --> 00:38:44,200 Speaker 1: prices on on inventories versus oil prices on what's being 665 00:38:44,200 --> 00:38:47,360 Speaker 1: shipped out. If you look at inventory to sales ratios 666 00:38:47,360 --> 00:38:50,160 Speaker 1: that are adjusted for those price levels. In the GDP report, 667 00:38:50,360 --> 00:38:52,560 Speaker 1: it doesn't show anywhere near the same sort of picture 668 00:38:52,640 --> 00:38:55,880 Speaker 1: of rising inventories to team and so it is a 669 00:38:56,000 --> 00:38:58,560 Speaker 1: very it's a big question mark in the GDP numbers. 670 00:38:58,560 --> 00:39:01,000 Speaker 1: And of course as we make these projects is we're 671 00:39:01,080 --> 00:39:03,600 Speaker 1: looking at a at a first quarter GDP number, We're 672 00:39:03,640 --> 00:39:05,880 Speaker 1: we're not even going to know the full quarter worth 673 00:39:05,920 --> 00:39:09,160 Speaker 1: of inventory numbers when we have to make those projections. So, uh, 674 00:39:09,280 --> 00:39:11,759 Speaker 1: it is a big swing factor that that has a 675 00:39:11,760 --> 00:39:17,160 Speaker 1: lot of uncertainty associated with it. Where do we where 676 00:39:17,200 --> 00:39:19,799 Speaker 1: do we see that the year ending up? Now, um, 677 00:39:21,719 --> 00:39:26,040 Speaker 1: it's only February. It's a key question. But these people 678 00:39:26,160 --> 00:39:31,160 Speaker 1: make forecasts. The FED has to make a decision based 679 00:39:31,239 --> 00:39:36,920 Speaker 1: on the forecast. So are are we downgrading what's going 680 00:39:36,960 --> 00:39:39,239 Speaker 1: to happen in two thousand sixteen based on what's happened 681 00:39:39,280 --> 00:39:43,200 Speaker 1: in the financial markets the first six weeks in the year. Well, 682 00:39:43,440 --> 00:39:45,760 Speaker 1: since you started on the battle, I'll start there. I'm 683 00:39:45,840 --> 00:39:49,880 Speaker 1: not a believer that the FED is to be blamed 684 00:39:50,000 --> 00:39:54,160 Speaker 1: for volatility in markets because they lifted off at the 685 00:39:54,200 --> 00:39:57,080 Speaker 1: wrong time. So no criticism there, But I will say 686 00:39:57,239 --> 00:40:00,000 Speaker 1: related to your question that I do have some criticism 687 00:40:00,080 --> 00:40:03,319 Speaker 1: about the the FEDS communication in the last few weeks, 688 00:40:03,360 --> 00:40:05,759 Speaker 1: and that the fact that they're unwilling to make an 689 00:40:05,800 --> 00:40:08,960 Speaker 1: assessment of the risks, I don't think instills a lot 690 00:40:09,000 --> 00:40:12,719 Speaker 1: of confidence in in the public or in markets. So 691 00:40:12,760 --> 00:40:15,200 Speaker 1: I think that that's problematic and it's reflective of the 692 00:40:15,200 --> 00:40:18,040 Speaker 1: fact that there's, um just a lot of questions in 693 00:40:18,080 --> 00:40:20,239 Speaker 1: people's minds about what the outlook looks like now with 694 00:40:20,320 --> 00:40:22,279 Speaker 1: the FED can't make an assessment of the risks with 695 00:40:22,400 --> 00:40:25,160 Speaker 1: all of their UH research staff that's probably one of 696 00:40:25,200 --> 00:40:28,640 Speaker 1: the biggest research staff any institution in the world. Um, 697 00:40:28,760 --> 00:40:30,520 Speaker 1: what what hope do the rest of us have? But 698 00:40:30,560 --> 00:40:33,600 Speaker 1: I will say that my feeling is that the the 699 00:40:33,640 --> 00:40:37,360 Speaker 1: outlook hasn't changed significantly. We are on GP measures, we 700 00:40:37,400 --> 00:40:40,960 Speaker 1: are on a slow growth track. I think that that 701 00:40:42,040 --> 00:40:44,839 Speaker 1: will probably see real GDP growth that's a little bit 702 00:40:44,880 --> 00:40:47,840 Speaker 1: better than the one in three percent growth rate that 703 00:40:47,880 --> 00:40:50,799 Speaker 1: we had for my forecast is for a growth out 704 00:40:50,800 --> 00:40:53,399 Speaker 1: of more like two percent. I still think that that's 705 00:40:53,400 --> 00:40:57,480 Speaker 1: well ahead of the current potential growth rate of the economy, 706 00:40:57,480 --> 00:41:00,360 Speaker 1: and that's going to result in the unemployment rate coming down, 707 00:41:00,520 --> 00:41:02,640 Speaker 1: and and that will present a challenge for the Fed. 708 00:41:02,680 --> 00:41:05,880 Speaker 1: We had this continued picture of software GDP growth, but 709 00:41:06,160 --> 00:41:09,080 Speaker 1: signs that the labor market is tightening UM and that's 710 00:41:09,120 --> 00:41:11,160 Speaker 1: something that the Fed will have to judge as they 711 00:41:11,160 --> 00:41:13,799 Speaker 1: make decisions on rates going forward. Thirty seconds, do we 712 00:41:13,880 --> 00:41:18,320 Speaker 1: get nominal GDP above four percent? Does animal spirit recovery 713 00:41:18,360 --> 00:41:21,160 Speaker 1: within the nation. I think this year we'll see nominal 714 00:41:21,200 --> 00:41:25,880 Speaker 1: GDP above four because I combined with that real GDP 715 00:41:26,000 --> 00:41:29,680 Speaker 1: growth rate, I don't think we'll see the inflation numbers 716 00:41:29,719 --> 00:41:34,040 Speaker 1: as soft as they were in UM. Oil prices obviously 717 00:41:34,120 --> 00:41:38,120 Speaker 1: remain low, but unless they fall materially further, we're probably 718 00:41:38,120 --> 00:41:40,680 Speaker 1: not going to see a big drag on the consumer 719 00:41:40,719 --> 00:41:43,080 Speaker 1: area of prices within the later So I think that 720 00:41:43,080 --> 00:41:44,800 Speaker 1: inflator might be closer to two and we might have 721 00:41:44,840 --> 00:41:47,800 Speaker 1: a little bit better than four real for present nominal 722 00:41:47,840 --> 00:41:53,520 Speaker 1: GDP growth. In great brief with r d Q Economics Michael, 723 00:41:54,000 --> 00:41:56,400 Speaker 1: this news in while we were chatting with Conrad. The 724 00:41:56,520 --> 00:41:59,720 Speaker 1: Ukrainian President Petro Porschenko was calling on the Prime Minister 725 00:42:00,120 --> 00:42:03,040 Speaker 1: all Right sending to resign. They want to form a 726 00:42:03,080 --> 00:42:07,080 Speaker 1: technocratic government. Also wants the Chief prosecutor Prosecutor General to 727 00:42:07,280 --> 00:42:12,080 Speaker 1: quit so um upheaval in Ukraine again. I don't know 728 00:42:12,320 --> 00:42:15,479 Speaker 1: to what extent that will affect the markets, but something 729 00:42:15,480 --> 00:42:18,440 Speaker 1: to keep an eye on. Yeah, the currency, the currency 730 00:42:18,480 --> 00:42:20,960 Speaker 1: got stronger off that we're twenty seven and change, and 731 00:42:21,000 --> 00:42:22,919 Speaker 1: the currency is coming a little bit. Don't wanna, don't 732 00:42:22,920 --> 00:42:26,240 Speaker 1: want to put too much into that right now. Patrick Harker, 733 00:42:26,320 --> 00:42:29,400 Speaker 1: the Philadelphia Fed President, giving a speech at ten o'clock 734 00:42:29,440 --> 00:42:32,840 Speaker 1: this morning in Delaware. Yes, delayed because of the weather, 735 00:42:32,880 --> 00:42:38,240 Speaker 1: but um NBC Philadelphia notes a Wilmington couple paid UH 736 00:42:39,400 --> 00:42:42,560 Speaker 1: dollars for the license plate with the number fourteen. Low 737 00:42:42,719 --> 00:42:47,440 Speaker 1: numbers apparently good in Delaware. Figure news you can use 738 00:42:47,600 --> 00:42:48,759 Speaker 1: Bloomberg's surveillance