WEBVTT - Johnson Says Deal Reached on Raising SALT CAP TO $40,000 0:00:02.720 --> 0:00:09.040 Bloomberg Audio Studios, podcasts, radio news, and Android auto with 0:00:09.119 --> 0:00:12.240 the Bloomberg Business App. Listen on demand wherever you get 0:00:12.240 --> 0:00:15.040 your podcasts, or watch us live on YouTube. 0:00:16.200 --> 0:00:18.560 Flex Deal Paul Sweeney live here in our Bloomberg Director 0:00:18.600 --> 0:00:21.720 Brokers Studio streaming live on YouTube as well. To check 0:00:21.800 --> 0:00:24.799 us out there. Hey, let's have some fun, kids, Let's 0:00:24.800 --> 0:00:28.760 talk tax policy. Gary Wilson, director of Policy analysis at 0:00:28.800 --> 0:00:32.120 the Tax Foundation. He's zooming in from Fadeville, Arkansas. All right, 0:00:32.159 --> 0:00:36.160 here's one of my lasting images from the early days 0:00:36.159 --> 0:00:38.440 of the lockdown in COVID is the people down in 0:00:38.479 --> 0:00:43.159 the Ozarks on the lakes, partying their brains out, Like none. 0:00:42.920 --> 0:00:44.640 Of this social distancing stuff. 0:00:45.200 --> 0:00:46.720 You can't tell those people not to have a good 0:00:46.720 --> 0:00:49.040 time in the summer done in the Ozarks. They're out 0:00:49.080 --> 0:00:50.600 there to have a good time. And that's where our 0:00:50.640 --> 0:00:52.639 next guest is, Hey, Garrett, talk to us about what's 0:00:52.680 --> 0:00:55.520 happening down in DC. I mean, it seems like this 0:00:55.680 --> 0:00:58.720 saw tax thing, which is really important to metro New York. 0:00:58.720 --> 0:01:01.040 I'm not so sure about Faydeville, Arkansas, but it's really 0:01:01.080 --> 0:01:02.240 important for us here. 0:01:02.600 --> 0:01:07.080 That seems to be a real sticking point isn't that's right. 0:01:07.480 --> 0:01:09.959 The leadership in the House is trying to get together 0:01:10.120 --> 0:01:12.360 the final votes and what is a very narrow margin 0:01:13.200 --> 0:01:16.240 in that chamber amongst Republicans. And the big sticking point 0:01:16.319 --> 0:01:19.680 right now is the fate of the state local tax deduction. Currently, 0:01:19.680 --> 0:01:22.679 it's capped at ten thousand dollars. You can write off 0:01:22.720 --> 0:01:25.600 your state local tax payments against your federal taxes spent 0:01:25.680 --> 0:01:27.600 that way since twenty eighteen and expires at the end 0:01:27.600 --> 0:01:29.960 of the year with the rest of the twenty seventeen 0:01:30.000 --> 0:01:33.479 tax law. But there's been a lot of intense negotiation 0:01:33.600 --> 0:01:36.800 about where to put that cap, going anywhere from making 0:01:36.880 --> 0:01:39.319 the current cap, making it permanent, extending it, or making 0:01:39.319 --> 0:01:42.160 it more generous upwards of we're now hearing a forty 0:01:42.160 --> 0:01:44.920 thousand dollars cap, maybe putting in income limits. The big 0:01:44.920 --> 0:01:47.000 sticking point is they haven't come to a compromise design 0:01:47.000 --> 0:01:50.360 that everyone can agree on that fits with the revenue 0:01:50.360 --> 0:01:52.320 needs for the rest of the package and the salt 0:01:52.320 --> 0:01:54.920 folks can live with to deliver to their constituents back 0:01:54.960 --> 0:01:55.320 at home. 0:01:56.680 --> 0:01:59.639 What do you think realistically winds up getting done? Since 0:02:00.200 --> 0:02:04.200 everyone loves to also hate cell caps, so at. 0:02:04.040 --> 0:02:05.560 This point it seems like it's just a matter of 0:02:05.880 --> 0:02:08.280 give and take on the exact numbers here. It seems 0:02:08.320 --> 0:02:10.720 like there will be definitely an increase in the cap, 0:02:10.840 --> 0:02:13.680 but a continuation of a cap, be it thirty thousand 0:02:13.720 --> 0:02:16.000 or forty thousand or something north of there. It does 0:02:16.040 --> 0:02:18.919 look like leadership wants to have some sort of additional 0:02:18.960 --> 0:02:19.640 income limit that. 0:02:19.639 --> 0:02:20.160 Would be new. 0:02:20.280 --> 0:02:22.560 So if you are very high earning, say north of 0:02:22.560 --> 0:02:25.400 five hundred thousand dollars, there may be additional limits that 0:02:25.440 --> 0:02:28.280 are new there that could also limit the benefit of 0:02:28.280 --> 0:02:30.960 this expansion. The other thing that's sort of fun under 0:02:31.000 --> 0:02:34.680 the radar is there is some partial new limits for 0:02:34.960 --> 0:02:37.840 those folks who are working around the caps using their 0:02:37.880 --> 0:02:41.000 businesses through pass through firms. That's been a common tactic, 0:02:41.080 --> 0:02:44.360 and this bill would partially remove that for certain types 0:02:44.360 --> 0:02:46.400 of business income. So that's another thing for folks to 0:02:46.680 --> 0:02:49.280 watch out for if they're planning what this might do 0:02:49.440 --> 0:02:51.600 for their tax bill in the coming years. 0:02:52.000 --> 0:02:54.360 Hey, Garrett, when prisident Trump's on the campaign trailer, who's 0:02:54.360 --> 0:02:58.120 talking about eliminating or lowering limiting the taxes on tips, 0:02:58.160 --> 0:03:00.679 for example, overtime, that kind of stuff that works well 0:03:00.680 --> 0:03:01.640 on a campaign trail. 0:03:02.360 --> 0:03:04.480 Is that something that can get done in this package. 0:03:06.000 --> 0:03:08.120 So there are several sort of I would say trial 0:03:08.440 --> 0:03:11.560 balloons here that are temporary over the next four years 0:03:11.600 --> 0:03:15.120 that would deliver on a deduction for tipped income, for 0:03:15.240 --> 0:03:18.720 overtime income. There's a special four thousand dollars deduction for 0:03:18.800 --> 0:03:21.280 seniors in here, and even a deduction for a car 0:03:21.400 --> 0:03:25.240 loan interest for those payments for folks who are itemizing 0:03:25.280 --> 0:03:27.400 and non itemizing alike, so you don't have to itemize 0:03:27.440 --> 0:03:30.480 to get it. The big headline there is those are 0:03:30.680 --> 0:03:33.280 fairly open ended deductions for most taxpayers who are not 0:03:33.360 --> 0:03:35.640 very high earners, but they do expire at the end 0:03:36.080 --> 0:03:39.240 of the in the next four years, and so that 0:03:39.320 --> 0:03:42.160 will line up with potentially another debate about whether or 0:03:42.200 --> 0:03:44.720 not those are extended. Only to think about that is, well, 0:03:44.720 --> 0:03:46.520 have to see if they're popular, right, if people find 0:03:46.560 --> 0:03:49.800 them helpful. There's of course also the revenue costs. They 0:03:49.840 --> 0:03:51.720 add up to a few hundred billion over ten so 0:03:51.960 --> 0:03:53.960 they would need to figure out how to extend those 0:03:54.040 --> 0:03:55.920 moving forward. What that means is there may be another 0:03:55.960 --> 0:03:58.320 tax fight the end of Trump's term heading out of 0:03:58.320 --> 0:03:59.040 twenty twenty nine. 0:03:59.080 --> 0:04:00.680 If it goes forward, that. 0:04:00.840 --> 0:04:02.960 As an energy person, I'm obviously really interested in what 0:04:03.080 --> 0:04:06.160 happens with the tax cuts in the Inflation Reduction Act. 0:04:07.400 --> 0:04:10.280 What do you think and then the credit phase outs? Basically, 0:04:10.960 --> 0:04:13.000 do you think that those stick where they are right 0:04:13.000 --> 0:04:15.080 now or does it get more severe for some of 0:04:15.080 --> 0:04:16.440 the alternative energy players. 0:04:17.800 --> 0:04:18.000 Yeah. 0:04:18.080 --> 0:04:20.360 For the IRA credits, it's really been a balancing act, 0:04:20.720 --> 0:04:23.120 both at the committee level and amongst leadership, right to 0:04:23.160 --> 0:04:27.760 try to balance the concerns of members who are more 0:04:27.960 --> 0:04:30.320 sympathetic to those credits, amongst Republicans who may have a 0:04:30.360 --> 0:04:32.719 lot of projects in their districts worried about the disruption 0:04:33.040 --> 0:04:35.760 if they're phased out too aggressively, and other folks who 0:04:35.800 --> 0:04:37.880 are worried about the fiscal cost of these credits and 0:04:37.920 --> 0:04:41.039 want to see them phased out in a more aggressive timetable. 0:04:41.240 --> 0:04:44.160 And so right now we're seeing in the current package 0:04:44.400 --> 0:04:46.880 a phase out over the next five years through the 0:04:46.920 --> 0:04:50.200 early twenty thirties for projects that have not been underway 0:04:50.320 --> 0:04:53.600 at that point, but there's been a negotiation right now 0:04:53.640 --> 0:04:56.440 to move that up as soon as twenty twenty seven. 0:04:57.440 --> 0:04:59.479 I think that will be the question is to what 0:04:59.560 --> 0:05:02.240 extent do folks who are more on the sympathetic side. 0:05:02.600 --> 0:05:04.400 Are they okay with that right? Will that be too 0:05:04.440 --> 0:05:08.000 disruptive for projects that are currently being penciled out within 0:05:08.040 --> 0:05:11.040 their districts? And of course, the other thing looming over 0:05:11.040 --> 0:05:14.040 the IRA credits. I think that's we're saying is even 0:05:14.080 --> 0:05:15.800 if it does pass the House, the Senate may have 0:05:15.920 --> 0:05:18.960 very different ambitions on this. That's sure of the general package, 0:05:18.960 --> 0:05:21.440 but specifically with the IRA credits, we may see something 0:05:21.520 --> 0:05:24.240 very different, much less aggressive in there, but that comes 0:05:24.279 --> 0:05:26.120 with its own trade off in terms of the revenue cost. 0:05:26.279 --> 0:05:28.760 It will bring in five hundred billion over ten years 0:05:28.800 --> 0:05:32.320 according to the Joint Committee, and in additional revenue to 0:05:32.440 --> 0:05:34.400 offset other parts of the tax cuts, so they don't 0:05:34.400 --> 0:05:36.200 have a lot of wiggle room there. But we'll see 0:05:36.240 --> 0:05:37.680 if the Senate has different ideas. 0:05:37.800 --> 0:05:39.479 Hey, Garrett, i spent my whole career on Wall Street, 0:05:39.520 --> 0:05:42.080 so I'm all about making money minimizing taxes. But even 0:05:42.120 --> 0:05:45.359 I have to admit the favorable tax treatment that carried 0:05:45.560 --> 0:05:51.000 interest receives is just extraordinary. Can you give us how 0:05:51.040 --> 0:05:54.840 that came about? And is there any pressure to change that? 0:05:54.880 --> 0:05:56.520 Because it's kind of tough to see some of these 0:05:56.520 --> 0:05:59.440 private equity guys, you know, with effective tax rates in 0:05:59.480 --> 0:06:01.760 the single digits are the low teens, when everybody else 0:06:01.800 --> 0:06:03.480 is paying forty to fifty percent. 0:06:04.760 --> 0:06:07.279 Yeah, carried interest has come up time and time again 0:06:07.400 --> 0:06:09.440 in all these major tax battles. Of course, we had 0:06:09.480 --> 0:06:12.360 a small change on carried interest treatment in twenty seventeen, 0:06:12.440 --> 0:06:15.160 basically lengthening the amount of time it was required to 0:06:15.200 --> 0:06:18.599 hold a position to qualify for that carried interest, which 0:06:18.680 --> 0:06:22.160 is subject to the lower qualified capital Gains and dividends 0:06:22.240 --> 0:06:24.800 rate upwards of twenty or twenty three point eight percent. 0:06:25.400 --> 0:06:27.520 And there have been efforts to try to tax that 0:06:27.560 --> 0:06:30.440 income as ordinary income. Right with that, of course, I 0:06:30.480 --> 0:06:33.159 think two things. One, it isn't a major revenue raiser 0:06:33.200 --> 0:06:35.360 either way. So if you were to tax at ordinary rates, 0:06:35.480 --> 0:06:37.680 it only raises maybe about twenty billion over ten, which 0:06:37.720 --> 0:06:39.960 is a lot of money, but in the big picture, 0:06:40.040 --> 0:06:42.760 is not a lot when you're talking about trillions. So 0:06:42.800 --> 0:06:45.400 the major sort of policy debate is on, as you're 0:06:45.839 --> 0:06:48.200 hinting at, right, the fairness question of what is the 0:06:48.200 --> 0:06:50.400 appropriate tax treatment of that type of income. 0:06:50.800 --> 0:06:52.000 On the one hand, if it's just. 0:06:52.000 --> 0:06:55.839 Basically like wages, right, like labor income, that would be 0:06:55.839 --> 0:06:58.640 an argument in favor of taxing and ordinary rates. Folks 0:06:58.640 --> 0:07:00.720 who are more defensive of the current treatment would say 0:07:00.720 --> 0:07:04.160 it's more like capital gains income. It's more like investment income, 0:07:04.200 --> 0:07:06.680 and we don't want to penalize that kind of investment 0:07:06.800 --> 0:07:07.520 in the US. 0:07:08.279 --> 0:07:09.360 But the big. 0:07:09.120 --> 0:07:12.800 Trend, as you mentioned earlier, is it's been an uphill 0:07:12.800 --> 0:07:14.880 battle to make that treatment stick. 0:07:14.920 --> 0:07:15.880 We did see the. 0:07:15.840 --> 0:07:18.760 President express some interest in that change earlier, but that's 0:07:18.760 --> 0:07:20.960 been dropped out of the package, along with other things 0:07:20.960 --> 0:07:22.520 like raising the top rate on higher earners. 0:07:23.400 --> 0:07:24.680 These are also issues. 0:07:24.360 --> 0:07:26.520 That could come back back up again in the Senate 0:07:26.600 --> 0:07:28.680 potentially if they're looking at how to make the revenue 0:07:28.760 --> 0:07:29.240 numbers work. 0:07:29.320 --> 0:07:31.280 YEP, sounds super easy, not at all complicated. 0:07:31.320 --> 0:07:34.360 Garrett, Thanks a lot, Garrett Watson, Director of Policy Analysts 0:07:34.520 --> 0:07:37.200 Analysis at the Tax Foundation. We appreciate that in the 0:07:37.240 --> 0:07:39.920 latest news that it looks like a speaker at Mike 0:07:39.960 --> 0:07:42.200 Johnson and Security an agreement on a forty thousand dollars 0:07:42.200 --> 0:07:45.120 assault cap increase. We of course keep you updated on 0:07:45.200 --> 0:07:45.960 all the latest. 0:07:47.680 --> 0:07:51.360 You're listening to the Bloomberg Intelligence Podcast. Catch us live 0:07:51.440 --> 0:07:54.840 weekdays at ten am Eastern on Applecarclay and Android Auto 0:07:54.960 --> 0:07:58.000 with the Bloomberg Business app Listen on demand wherever you 0:07:58.040 --> 0:08:01.040 get your podcasts, or watch us live on YouTube. 0:08:01.880 --> 0:08:03.600 Alex Steeler, paulus, when you've done, Tucker. 0:08:03.680 --> 0:08:05.559 This is from BRIC Intelligence Radio. 0:08:06.280 --> 0:08:09.840 Karen Manna is investment director and portfolio manager at feted Hermes, 0:08:09.880 --> 0:08:12.560 and she joins us, now take us out of the 0:08:12.600 --> 0:08:15.680 blind spot conversation. So when I'm looking at the thirty 0:08:15.760 --> 0:08:20.360 year yield five percent, what is the correct term premium 0:08:21.000 --> 0:08:23.240 premia for the bomb market right now? 0:08:24.800 --> 0:08:27.240 Good morning Alex, Good morning Paul, Thanks for having me 0:08:27.280 --> 0:08:27.800 on again. 0:08:28.200 --> 0:08:29.920 Isn't that really the. 0:08:29.960 --> 0:08:33.719 Question of this era, the return of term premium and 0:08:34.200 --> 0:08:37.280 what should what level should we lend out to the 0:08:37.400 --> 0:08:40.240 US government, particularly in tens and thirties. I think the 0:08:40.320 --> 0:08:44.720 answer is far higher and steeper than we had grown 0:08:44.720 --> 0:08:48.920 accustomed to in the decade after the Great Financial Crisis. 0:08:48.960 --> 0:08:52.120 So setting that level is what the market is attuned 0:08:52.160 --> 0:08:55.800 to this week as we swing to the ring of teriff, 0:08:55.920 --> 0:08:59.680 sorry not tariff policy, but move on to extension of 0:08:59.720 --> 0:09:02.640 current tax policy, and how do we get there and 0:09:02.679 --> 0:09:06.720 get agreement on that? So same some resistance to directly 0:09:06.720 --> 0:09:10.520 answer your question around this five ish mark, but do 0:09:10.640 --> 0:09:13.760 the headlines steer us north of there, it's possible. 0:09:14.360 --> 0:09:15.920 So I mean, is it fair to look at a 0:09:15.960 --> 0:09:18.440 two year at four percent, at thirty year at five percent? 0:09:18.520 --> 0:09:22.000 Nice round numbers. One hundred basis points of premium there 0:09:22.679 --> 0:09:24.559 give us just some historic context. 0:09:24.640 --> 0:09:25.520 Is that a lot? 0:09:25.720 --> 0:09:26.319 Not a lot? 0:09:27.840 --> 0:09:30.480 It's getting steeper, Paul. I typically would look at FED 0:09:30.520 --> 0:09:34.640 funds to ten in my research in evaluating that, and 0:09:34.679 --> 0:09:40.120 you would usually see that on average over the period 0:09:40.480 --> 0:09:43.480 very long period of closer to one hundred and fifty 0:09:43.520 --> 0:09:47.400 basis points. We've been teetering around that level and pulling back, 0:09:47.440 --> 0:09:51.400 but one hundred and fifty basis points is about there 0:09:51.960 --> 0:09:55.800 bed funds to the ten year, so a little bit 0:09:55.840 --> 0:10:01.240 of room to go perhaps usually that metric, But that's 0:10:01.240 --> 0:10:03.880 something that we've been talking an awful lot about here 0:10:04.040 --> 0:10:06.680 at our shop. We do invest, and we have a 0:10:06.760 --> 0:10:11.440 separate allocation or positioning around that yield curve, and we 0:10:11.559 --> 0:10:14.720 have re entered a steepener and have been slowly wading 0:10:14.720 --> 0:10:17.600 into that trade in a diversified way, looking at twos 0:10:17.600 --> 0:10:20.680 and tens and fives and thirties to try to capture 0:10:21.040 --> 0:10:24.960 that movement in momentum in the market. Interestingly enough, that 0:10:25.160 --> 0:10:29.840 steepening had faded around late January and into February, but 0:10:29.920 --> 0:10:32.959 it seems to be back here with a renewed spirit 0:10:33.160 --> 0:10:36.839 and perhaps some energy around it. So what we ultimately 0:10:36.920 --> 0:10:41.320 could see happen is as the economy slows and if 0:10:41.360 --> 0:10:45.080 the data cooperates again, it's that tension between the hard 0:10:45.160 --> 0:10:49.080 data published on jobs reports and inflation and all of 0:10:49.080 --> 0:10:53.680 those sentiment surveys and indicators. They're moving in different directions. 0:10:53.720 --> 0:10:56.280 One is staying pretty firm or reasonable, while the other 0:10:56.320 --> 0:10:59.880 shows continued angst. But what we could see ultimately happen 0:11:00.200 --> 0:11:02.800 the two year goes down, but the ten and the 0:11:02.880 --> 0:11:06.200 thirty year don't cooperate and they continue to either hold 0:11:06.679 --> 0:11:09.880 near current levels or actually push up slately higher. 0:11:10.559 --> 0:11:14.600 What should the relationship be between your yield thesis and 0:11:14.640 --> 0:11:15.560 the equity market? 0:11:18.080 --> 0:11:20.760 Well, that gets tricky too, and not to always talk 0:11:20.840 --> 0:11:23.360 my fixed income book, but it's who I am, But 0:11:23.480 --> 0:11:27.480 I think you do start to struggle with financing growth 0:11:27.600 --> 0:11:32.400 equities as the tenure eclipses four seventy five approaches five, 0:11:32.880 --> 0:11:36.720 and if there's any sort of attitude or feel that 0:11:36.840 --> 0:11:40.679 the tenure could stay elevated above that five percent mark, 0:11:41.200 --> 0:11:45.439 I think you could see equities roll over for that 0:11:45.559 --> 0:11:49.360 financing cost reason, and then folks take a different look 0:11:49.520 --> 0:11:54.720 at fixed income more apportion to the income because when 0:11:54.720 --> 0:11:58.480 you're yield exceeds your duration, you do have some protection 0:11:58.760 --> 0:12:03.839 from volatile around interest rates. So it's bringing that conversation 0:12:03.920 --> 0:12:07.160 and fixed income back to the income component, but also 0:12:07.280 --> 0:12:11.720 recognizing that the tenure is largely the broad strokes base 0:12:11.920 --> 0:12:16.959 or funding costs for many elements of not just private 0:12:17.000 --> 0:12:19.600 finance or the public markets that we watch, but also 0:12:19.720 --> 0:12:22.040 public markets aka ammunis. 0:12:22.840 --> 0:12:27.640 Credit munimunis. Let's talk about the muni market because we 0:12:27.679 --> 0:12:29.600 do love the meuni market. See no, it's not Friday, 0:12:29.600 --> 0:12:32.240 we'll talk munis. How do you what's the exposure you 0:12:32.240 --> 0:12:33.760 want to have in the municipal bond market. 0:12:35.320 --> 0:12:38.920 Well, of course that's up to the individual, their financial advisor, 0:12:38.960 --> 0:12:44.000 their portfolio needs. But if your need that tax advantage 0:12:44.000 --> 0:12:46.240 to investing, I would be using it to the full 0:12:46.360 --> 0:12:50.400 extent that's reasonable within your portfolio construct. Communis here are 0:12:50.400 --> 0:12:55.840 priced attractively. The credit quality is attractive, its sound, nothing 0:12:55.920 --> 0:12:58.800 is without its risk, and there are definitely corners of 0:12:59.000 --> 0:13:01.880 the muni market that are more attractive than others. Active 0:13:01.920 --> 0:13:06.200 managers have feeled back those exposures. They're always assessing credit risk, 0:13:06.240 --> 0:13:09.840 They're always looking at valuation within the construct of risk 0:13:09.880 --> 0:13:14.839 and exposure and managing those and trimming and adding as appropriate. 0:13:15.080 --> 0:13:18.439 But we're very bullish on the media market right now, 0:13:18.480 --> 0:13:22.480 particularly you had to trade off because of headline risk 0:13:22.840 --> 0:13:26.680 surrounding perhaps you know, feeding the budget by eliminating the 0:13:26.720 --> 0:13:30.839 tax exemption that has faded somewhat but created I think 0:13:30.840 --> 0:13:32.160 a real buying opportunity. 0:13:32.320 --> 0:13:34.400 All right, Karen, thanks lot, We really appreciate it. Karen 0:13:34.440 --> 0:13:38.120 mana investment director and portfolio manager at Federated Hermes. 0:13:39.880 --> 0:13:43.559 You're listening to the Bloomberg Intelligence podcast. Catch us live 0:13:43.640 --> 0:13:46.720 weekdays at ten am Eastern on Apple Coarclay, and Android 0:13:46.760 --> 0:13:50.040 Auto with the Bloomberg Business app. Listen on demand wherever 0:13:50.120 --> 0:13:53.240 you get your podcasts, or watch us live on YouTube. 0:13:54.040 --> 0:13:56.600 So I can't believe what just happened. I know, I'm 0:13:56.760 --> 0:13:59.680 sitting in the radio studio and in walks and Mike mcgloone, 0:14:00.120 --> 0:14:02.960 think Miami Mike. Anyway, Miami Mike mcgloone. 0:14:03.000 --> 0:14:04.199 So we to see a. 0:14:04.160 --> 0:14:06.719 Season as he kind of follows like when the snowbirds 0:14:06.800 --> 0:14:09.319 go home, he feels the need to kind of come 0:14:09.360 --> 0:14:10.120 back a little bit. 0:14:10.240 --> 0:14:12.080 I think it's just a little bit of that genetics show. 0:14:12.120 --> 0:14:13.559 I see. Are they told him to comfort it? 0:14:13.640 --> 0:14:14.040 Yes? Yeah? 0:14:14.120 --> 0:14:18.000 Or that a junior or Michael McGlone is Boomergan Intelligence 0:14:18.040 --> 0:14:21.200 Senior commodity strategist. It's so great to see you in person. 0:14:21.920 --> 0:14:25.080 Bitcoin hitting a round the record. Is Bitcoin moving like 0:14:25.120 --> 0:14:27.440 gold as like a protection against what we're seeing in 0:14:27.480 --> 0:14:28.080 the bond market. 0:14:28.120 --> 0:14:29.120 Is that we're seeing right now. 0:14:29.200 --> 0:14:32.160 I think that's part of it. It's this year, it's unique. 0:14:32.160 --> 0:14:34.440 It's actually following gold because we know gold made a 0:14:34.440 --> 0:14:38.560 new high a few months ago and bitcoin's catching up today. 0:14:39.040 --> 0:14:41.800 And all the crypto people say, oh, Bitcoin's going to outperform. 0:14:41.840 --> 0:14:43.640 But I think the key risk for bitcoin is I 0:14:43.720 --> 0:14:45.760 like to put him in the same category because they 0:14:45.800 --> 0:14:50.480 basically are just the ones much more speculative and excessive 0:14:50.560 --> 0:14:53.120 like bitcoin, and the other one's a store value. But 0:14:53.120 --> 0:14:56.240 it's set ratio the ounces of gold per one bitcoin 0:14:56.520 --> 0:15:00.000 about thirty three right now. That's the same as twenty twenty. 0:15:00.600 --> 0:15:04.760 So this rock is outperforming this hot performing crypto asset, 0:15:04.760 --> 0:15:06.600 which is I am a bit concerned about. 0:15:06.640 --> 0:15:08.800 The key thing is so I like to point out big. 0:15:08.720 --> 0:15:11.920 Coin will do fine, and it'll do fine versus gold 0:15:11.960 --> 0:15:13.600 as long as the stock market's going up. And we 0:15:13.720 --> 0:15:16.280 proved in Q one that if the stock market's going down, 0:15:16.360 --> 0:15:18.720 bitcoins one of the first things people sell. 0:15:18.880 --> 0:15:21.600 So all right, let's go to gold here, because I'm 0:15:21.600 --> 0:15:23.320 going to just front run Alex a little bit here. 0:15:25.760 --> 0:15:27.640 I mean, I don't like what I'm hearing out of Israel, 0:15:27.680 --> 0:15:30.800 out of a Ran. Potentially there's be some more stuff 0:15:30.840 --> 0:15:31.440 going on over there. 0:15:32.040 --> 0:15:33.480 Will not higher. 0:15:33.720 --> 0:15:36.240 Yes, Well, here's the problem with oil. Last year's low 0:15:36.280 --> 0:15:39.400 is sixty five. It's looking up at that level. It's 0:15:39.400 --> 0:15:42.760 a bear market, yep. And just the latest data from 0:15:42.800 --> 0:15:47.040 even you know, we have access to supply increasing inventories. 0:15:47.240 --> 0:15:49.640 The driving season is just getting started. This weekend, you 0:15:49.680 --> 0:15:52.640 had gasoline demands somewhat declining. The whole picture for crude 0:15:52.640 --> 0:15:54.720 oil is bad. It needs some kind of supply shock 0:15:55.200 --> 0:15:56.240 to really get it to go. 0:15:56.200 --> 0:15:59.000 Higher, and a supply shock of the dudes in you know, 0:15:59.040 --> 0:16:01.760 the basins and the fracking rock. 0:16:01.600 --> 0:16:04.360 Every all over the place. The US has put not 0:16:04.440 --> 0:16:07.240 a lot of oil exactly. Finally, Paul, you're heading towards 0:16:07.240 --> 0:16:10.240 the low price cure. We're hearing stories now the declining 0:16:10.280 --> 0:16:13.840 potential production from the Permian is, which is way you 0:16:13.840 --> 0:16:16.360 know in alk space. The key thing is it's taking 0:16:16.360 --> 0:16:19.640 low prices. That's what it ticularly takes, and those the 0:16:19.680 --> 0:16:21.960 big spike in prices. We got to the peak in 0:16:22.000 --> 0:16:25.280 two twenty twenty two just brought on that access supply. 0:16:25.360 --> 0:16:26.640 Now we're getting to that scale. 0:16:26.680 --> 0:16:28.840 But typically you have to get below the US cost 0:16:28.920 --> 0:16:31.920 of production, which is between fifteen and fifty five dollars 0:16:31.920 --> 0:16:34.160 a barrow to really shut that off in curtail, and 0:16:34.160 --> 0:16:35.840 that's what we've done for the last twenty years. 0:16:35.840 --> 0:16:37.800 It's around forty dollars of barrow. So I stick with 0:16:37.840 --> 0:16:38.320 that call. 0:16:38.840 --> 0:16:41.840 And the key thing for crudeil right now is it's 0:16:41.840 --> 0:16:44.800 the macro increasing demand and excess supply out of the 0:16:44.840 --> 0:16:47.760 US and decreasing demand from China, and it's the US 0:16:47.800 --> 0:16:49.840 stock market has to stay point. If we just roll 0:16:49.880 --> 0:16:51.800 over a little bit, that takes crude oil down the 0:16:51.800 --> 0:16:52.240 forty bis. 0:16:52.240 --> 0:16:54.440 Which brings me to the question that John Tucker smartly 0:16:54.480 --> 0:16:57.640 asked with WTI at sixty two. But then the energy 0:16:57.680 --> 0:16:59.760 stocks getting hammered, and I realized it's just. 0:16:59.720 --> 0:17:01.960 Propose because a lot of that says Phillip sixty six. 0:17:02.520 --> 0:17:05.520 I'm wondering why that discrepancy and if it's if it's 0:17:05.560 --> 0:17:07.600 just lack of confidence in sixty two. 0:17:07.440 --> 0:17:09.000 Oil, Yeah, I think that's what it is. 0:17:09.040 --> 0:17:10.800 Well, the good news is we're starting to refill the 0:17:10.920 --> 0:17:12.920 spr strategic Patolarum music. 0:17:12.720 --> 0:17:14.080 So there's some kind of support. 0:17:14.320 --> 0:17:18.200 Yes, in the market that's happen. 0:17:18.880 --> 0:17:20.480 Buy and who do they buy from? 0:17:20.560 --> 0:17:22.560 But that's also a good better question for people digging 0:17:22.600 --> 0:17:23.840 in the market closer than I do. 0:17:23.720 --> 0:17:26.439 Do youmever whoever they want? I mean, it depends on 0:17:26.440 --> 0:17:27.000 what they need. 0:17:26.880 --> 0:17:28.000 To fill the US government. 0:17:28.040 --> 0:17:30.440 I call up Exon and say I want to buy 0:17:30.480 --> 0:17:32.280 some of your oil that's sitting there in the. 0:17:33.119 --> 0:17:35.680 I mean, it just also depends what oil you want. 0:17:36.160 --> 0:17:38.879 So if you want like heavier oil, which is what 0:17:38.920 --> 0:17:41.440 a lot of the refiners here use, you can't really 0:17:41.440 --> 0:17:44.080 call up anyone from the US, You're going to have 0:17:44.119 --> 0:17:46.720 to call overseas operations. That could still be a chep 0:17:46.760 --> 0:17:49.399 runner Exxon, but it needs that the oil needs. 0:17:49.680 --> 0:17:51.720 But when you talk about producers, a key thing I 0:17:51.760 --> 0:17:54.440 look at is the future's curve, and it's very flat. 0:17:54.480 --> 0:17:56.639 Means that these producers have been selling out on the 0:17:56.640 --> 0:18:00.280 future's curve. For years it's called normal backwardation, and right 0:18:00.280 --> 0:18:02.439 now it's flat across the curve around sixty, which is 0:18:02.680 --> 0:18:04.840 pretty rare. I think they're they're hoping for some kind 0:18:04.880 --> 0:18:06.920 of reasons, some kind of spike so they can sell 0:18:06.960 --> 0:18:09.800 forward and add to their production. And right now, just 0:18:09.880 --> 0:18:12.440 every time we get these little bounces, you see the furve, 0:18:12.560 --> 0:18:14.160 the curve come back a little bit, you see more 0:18:14.160 --> 0:18:15.040 selling out in the curve. 0:18:15.400 --> 0:18:18.960 So it's May twenty first you're in Miami. Do you 0:18:19.200 --> 0:18:23.960 notice people going back north? You can get the reservation. 0:18:23.960 --> 0:18:25.320 Maybe you couldn't get in the restaurant before. 0:18:25.359 --> 0:18:27.639 Yeah, well it's as soon as the tulips start popping 0:18:27.680 --> 0:18:28.760 up in New York, they're out of there. 0:18:28.800 --> 0:18:30.440 In Easter weekend, it's a big weekend. 0:18:30.480 --> 0:18:30.960 Is that the one? 0:18:31.200 --> 0:18:31.520 Whit did? 0:18:31.520 --> 0:18:32.200 They come down? 0:18:33.080 --> 0:18:36.359 Typically by November Christmas typically they're coming down. 0:18:36.480 --> 0:18:38.200 Yeah, definitely by December. 0:18:37.800 --> 0:18:39.600 And then it's just madhouse. 0:18:40.000 --> 0:18:41.880 It's madhouse. But I don't really. 0:18:42.160 --> 0:18:43.960 My wife and I never have a problem getting reservations 0:18:43.960 --> 0:18:44.760 because we go early. 0:18:45.040 --> 0:18:47.040 You know, I usually early there. 0:18:47.040 --> 0:18:47.320 It is. 0:18:47.359 --> 0:18:49.320 I usually in bed by eight or nine because everybody 0:18:49.359 --> 0:18:50.480 else in Florida go to bed. 0:18:50.960 --> 0:18:53.200