WEBVTT - Brexit, Markets, China Tariffs (Podcast) 0:00:02.640 --> 0:00:05.320 Welcome to the Bloomberg Penel podcast. I'm Paul swing you. 0:00:05.360 --> 0:00:07.680 Along with my co host Lisa Brahma Wicks. Each day 0:00:07.720 --> 0:00:10.240 we bring you the most noteworthy and useful interviews for 0:00:10.280 --> 0:00:12.520 you and your money. Whether at the grocery store or 0:00:12.560 --> 0:00:15.480 the trading floor. Find a Bloomberg penl podcast on Apple 0:00:15.520 --> 0:00:17.960 podcast or wherever you listen to podcasts, as well as 0:00:17.960 --> 0:00:22.000 at Bloomberg dot com. Right now, we gotta turn to 0:00:22.079 --> 0:00:24.320 what's happening in the United Kingdom, given the fact that 0:00:24.360 --> 0:00:27.240 Boris Johnson is officially playing a game of chicken with 0:00:27.280 --> 0:00:29.560 his opponents, saying, if you won't back me, let's hold 0:00:29.560 --> 0:00:33.600 another election and see what happens. Regardless, October thirty one comes, 0:00:33.680 --> 0:00:36.479 we are leaving the European Union, joining us now. Terese Raphael, 0:00:36.600 --> 0:00:40.920 Bloomberg opinion editor covering European politics and economics. She joins 0:00:41.000 --> 0:00:44.519 us from our London bureau. So Terse, why did Boris 0:00:44.640 --> 0:00:48.560 Johnson take this gamble to basically UH pose an ultimatum 0:00:48.720 --> 0:00:52.840 to his even in party opponents. I think the answer 0:00:52.880 --> 0:00:56.680 to that is very simple. Boris Johnson made a categorical 0:00:56.760 --> 0:01:01.240 promise to conservatives, to brexiters UH and to leave voters 0:01:01.560 --> 0:01:04.399 to leave the European Union on October thirty one, do 0:01:04.600 --> 0:01:09.080 or die, deal or no deal. His prime ministership absolutely 0:01:09.160 --> 0:01:11.440 rests on him being able to deliver on that promise. 0:01:11.680 --> 0:01:16.160 He therefore cannot oblige those in Parliament who want him 0:01:16.160 --> 0:01:19.480 to seek an extension. So if the negotiations that he 0:01:19.560 --> 0:01:23.880 says are uh proceeding, although the European Union doesn't seem 0:01:23.920 --> 0:01:26.960 to be very aware that their negotiations going on, um, 0:01:26.959 --> 0:01:29.480 but if those don't produce an outcome, he has to 0:01:29.520 --> 0:01:33.400 be prepared to deliver on on on his promise. So um, 0:01:33.480 --> 0:01:39.640 he has now faced with a opposition and Tory rebel 0:01:39.760 --> 0:01:43.399 movement to try to force him to ask for an extension. 0:01:43.400 --> 0:01:46.319 And rather than see that play out or get into 0:01:46.319 --> 0:01:49.360 the messy business of, you know, say, asking the Queen 0:01:49.440 --> 0:01:52.920 not to approve the legislation, which would uh you know, 0:01:52.960 --> 0:01:56.200 throw Britain into an even greater constitutional crisis, it's assumed 0:01:56.200 --> 0:01:59.080 that he's going to try to trigger an early election, 0:01:59.280 --> 0:02:02.200 but it's not automatic since he needs Parliament's approval for it. 0:02:02.320 --> 0:02:04.360 All right, So try's give us kind of a sense 0:02:04.400 --> 0:02:06.800 of next steps. How did how would this unfold? How 0:02:06.840 --> 0:02:11.359 does you know a British snap election to actually take place. Right, 0:02:11.400 --> 0:02:13.520 so the next sort of forty eight seventy two hours 0:02:13.520 --> 0:02:17.400 are pretty critical. There'll be a vote uh tonight on 0:02:17.720 --> 0:02:20.440 the bill that to try to force the government to 0:02:20.480 --> 0:02:25.120 ask for an Article fifty extension. UM. If that goes through, 0:02:25.160 --> 0:02:28.160 we would expect Boris Johnson to try to trigger a 0:02:28.280 --> 0:02:31.959 October fourteenth election. Now, then the question becomes what is 0:02:31.960 --> 0:02:35.959 the Labor Party's response. They the Labor leader Jeremy Corbyn 0:02:36.040 --> 0:02:39.400 is indicated he doesn't want an election on Johnson's timetable, 0:02:39.480 --> 0:02:42.880 he may seek to uh to put some kind of 0:02:42.960 --> 0:02:45.360 condition on it. Uh. So there's going to be a 0:02:45.400 --> 0:02:50.560 lot of machinations using parliamentary procedures, and we won't know 0:02:50.800 --> 0:02:53.320 yet whether there'll be a snap election. I mean, not 0:02:53.400 --> 0:02:55.720 everyone agrees with us, but if there is a snap 0:02:55.760 --> 0:02:59.720 election before October thirty one, it may lower the probability 0:02:59.760 --> 0:03:02.120 of an o'deal exit because if we assume that there's 0:03:02.160 --> 0:03:04.560 sort of a fifty fifty chance of Boris coming back 0:03:04.600 --> 0:03:09.640 with a majority or a say, remain leaning coalition taking over, 0:03:10.040 --> 0:03:13.400 then you know, you start to see other options, uh, 0:03:14.360 --> 0:03:16.680 alternatives to no deal. And I think that's sort of 0:03:16.960 --> 0:03:19.919 you know why Sterling kind of perked up um after 0:03:19.960 --> 0:03:23.320 the initial decline on the news of an early election. 0:03:23.440 --> 0:03:27.720 Theres I want to figure out what the popular feeling 0:03:27.960 --> 0:03:30.680 is in the United Kingdom if there were to be 0:03:30.840 --> 0:03:35.440 a snap election. Is the prevailing sentiment that Boris Johnson 0:03:35.600 --> 0:03:39.280 would win. It really depends on the grounds on which 0:03:39.320 --> 0:03:42.000 that election is fought. So Theresa May was twenty four 0:03:42.080 --> 0:03:44.240 points ahead in the polls in twenty seventeen which he 0:03:44.280 --> 0:03:47.280 fought an election. Turned out that election was fought on 0:03:47.560 --> 0:03:50.560 turf that the Labor Party said on domestic policies, and 0:03:50.640 --> 0:03:53.800 she squandered her parliamentary majority. Now, Boris Johnson does not 0:03:53.920 --> 0:03:56.080 want this election to be about Europe. He wants it 0:03:56.160 --> 0:03:58.840 to be about Jeremy Corbin, and he wants it to 0:03:58.920 --> 0:04:02.600 be about the fear that many voters have of corbin Omics, 0:04:02.640 --> 0:04:08.160 of a socialist UH candidate in office. So he will 0:04:08.160 --> 0:04:11.320 try to UH talk about all the spending that his 0:04:11.400 --> 0:04:14.600 government will do, not a typical conservative government. They've opened 0:04:14.600 --> 0:04:16.920 that they want to open. The spendings biggest. He'll make 0:04:16.960 --> 0:04:20.159 it about a Corbin prime ministership, and he'll of course 0:04:20.200 --> 0:04:24.160 promise to deliver Brexit if he succeeds on that, and crucially, 0:04:24.200 --> 0:04:27.000 if the Brexit Party do not field candidates in the 0:04:27.080 --> 0:04:30.559 same constituencies, that would cannibalize off the Conservative Party vote 0:04:30.720 --> 0:04:34.039 that he's got, you know, a pretty good chance according 0:04:34.040 --> 0:04:36.640 to what polls are telling us right now. What we 0:04:36.720 --> 0:04:40.359 don't know is whether the remain leading parties, the Labor Party, 0:04:40.400 --> 0:04:43.800 the Liberal Democrats, the Greens, will strike some kind of 0:04:43.880 --> 0:04:48.560 a tactical arrangement that will allow them to um, you know, 0:04:48.640 --> 0:04:52.160 to maximize Ah, the sort of remain vote in elections 0:04:52.240 --> 0:04:55.360 is very unpredictable. We have four parties that are all 0:04:55.400 --> 0:04:58.400 polling fairly well. It since you us wondering if you know, 0:04:58.880 --> 0:05:01.640 if it weren't bar, if it weren't Corbin, who else 0:05:01.680 --> 0:05:04.720 could the other side put up to perhaps be more 0:05:04.720 --> 0:05:07.760 of a remain candidate. Well, if you're talking about a 0:05:07.839 --> 0:05:10.880 sort of national unity candidate, which has been the subject 0:05:10.880 --> 0:05:14.919 of a lot of discussion here around the question of 0:05:14.920 --> 0:05:18.120 a no confidence vote, because then the those voting no 0:05:18.240 --> 0:05:21.320 confidence in the government would need to put forward an alternative. Um. 0:05:21.520 --> 0:05:24.039 You know that that whole that whole discussion was sort 0:05:24.040 --> 0:05:26.560 of dead on arrival because Corbin is the opposition leader. 0:05:26.560 --> 0:05:30.000 Absolutely refuses to countenance another candidate. So I think you know, 0:05:30.040 --> 0:05:32.760 we're looking at Joe Swinton, the Liberal Democratic leader, who's 0:05:32.800 --> 0:05:35.560 who's quite popular. Her party has been revived off the 0:05:35.680 --> 0:05:39.960 back of its very strongly pro remain stance, and so 0:05:40.000 --> 0:05:42.359 she will be expected her party will be expected to 0:05:42.400 --> 0:05:44.279 do well in an election. But there's you know, the 0:05:44.360 --> 0:05:47.520 Corbin is the main opposition leader right now, and that's 0:05:47.560 --> 0:05:49.800 been a big blessing for Boris Johnson. Yes, it has, 0:05:49.920 --> 0:05:52.760 tore As Raphael, thank you so much. Tres Rphael, Bloomberg 0:05:52.760 --> 0:05:56.760 Opinion editor covering European politics and economics, joining us from 0:05:56.800 --> 0:05:58.560 the London Brewer. You can read more on this and 0:05:58.600 --> 0:06:02.440 other stories from Bloomberg Opini at Bloomberg dot com, slash 0:06:02.440 --> 0:06:05.760 Opinion and on the terminal by typing O p I 0:06:06.120 --> 0:06:20.200 n Go. Tom String Fellow President, Chief Investment Officer Frost 0:06:20.279 --> 0:06:23.440 Investment Advisors, based in San Antonio, Texas, but joining us 0:06:23.480 --> 0:06:25.920 here today in our Bloomberg Interactive Broker studio. Tom, thanks 0:06:26.000 --> 0:06:29.040 so much for making a trip to our studio again. 0:06:29.680 --> 0:06:33.360 So much volatility in the marketplace, driven in large part 0:06:33.440 --> 0:06:36.240 by the ebbs and flows of trade talks. How do 0:06:36.320 --> 0:06:39.320 you position your portfolio. How do you think about kind 0:06:39.320 --> 0:06:41.440 of your investment process given some of the folatility that 0:06:41.480 --> 0:06:44.120 we have been seeing. It's a great question. It's something 0:06:44.160 --> 0:06:46.359 that our clients are asking on a continual basis, and 0:06:46.360 --> 0:06:49.440 we're certainly hearing it in the the media these days. 0:06:49.480 --> 0:06:52.880 It's so difficult to, you know, trade in an environment 0:06:52.920 --> 0:06:55.719 like this because the news, as you said, ebbs and flows, 0:06:55.760 --> 0:06:58.760 in the volatility ebbs and flows. So when we look 0:06:58.800 --> 0:07:01.479 at how the markets have done year to date, we're 0:07:01.480 --> 0:07:05.279 still positive across the board, across every major benchmark in 0:07:05.400 --> 0:07:10.080 throughoutmost sectors. So we're really cautious on making any extreme 0:07:10.240 --> 0:07:13.880 moves in this market. But we're always constantly looking for, 0:07:14.080 --> 0:07:16.680 you know, what is where are the growth opportunities and 0:07:16.720 --> 0:07:20.680 companies where are's more limited volatility. We want to see 0:07:20.680 --> 0:07:23.720 earning this visibility, although that's harder and harder to find, 0:07:24.280 --> 0:07:26.440 and to the extent you can find companies that are 0:07:26.440 --> 0:07:29.360 actually providing some kind of dividend stream, I think that 0:07:29.520 --> 0:07:34.920 just adds to the underlying strength sustainability of the companies. So, Tom, 0:07:35.000 --> 0:07:40.080 what you're talking about more defensive companies, companies that pay dividends, 0:07:40.240 --> 0:07:43.520 uh companies that are more immune to business cycles are 0:07:43.560 --> 0:07:45.800 ones that have been favored by a lot of other investors, 0:07:45.920 --> 0:07:49.080 leading some to say they're getting two pretty high valuations 0:07:49.120 --> 0:07:51.040 at this point. What do you say to people who say, 0:07:51.080 --> 0:07:53.400 you know, I just worry those those companies are too expensive. 0:07:53.840 --> 0:07:57.160 And again that's giving another fair point, and because valuations 0:07:57.520 --> 0:08:00.239 have certainly come off drough levels, but I wouldn't say 0:08:00.280 --> 0:08:02.720 that across the board, a lot of these good quality 0:08:02.760 --> 0:08:06.400 companies are trading at excessive premiums. Uh. If I look 0:08:06.440 --> 0:08:08.880 at you know, over prior periods, you know, we've come 0:08:08.880 --> 0:08:13.800 into a market environment where I'd say multiples are sustainable, 0:08:14.200 --> 0:08:18.600 markets are rational, multiples are rational. We don't see anything 0:08:18.680 --> 0:08:21.640 that is. Those that are trading excessive premiums, those are 0:08:21.680 --> 0:08:24.360 ones we do want to shy away from. So if 0:08:24.400 --> 0:08:26.960 you depend upon how you look at the equity markets SMP, 0:08:27.240 --> 0:08:29.360 you know, you get glass half full, glass half empty. 0:08:29.360 --> 0:08:31.440 Whether it's a year to date, you know, good solid 0:08:31.480 --> 0:08:33.520 dot double digits, but on a trilling twelve month basis 0:08:33.600 --> 0:08:36.280 kind of flatished down a little bit. What sector has 0:08:36.600 --> 0:08:39.280 given that kind of odd performance? What sectors are you 0:08:39.280 --> 0:08:42.720 guys still looking at? Its still maybe offer some opportunities. Well, 0:08:43.280 --> 0:08:46.040 some of the groups in technology are still positive. You know, again, 0:08:46.080 --> 0:08:49.199 if we look at software manufacturers, you know, there's a 0:08:49.280 --> 0:08:53.080 number of good sectors that are interesting sectors. Uh. In 0:08:53.200 --> 0:08:57.000 the retail consumer discretionary. You know, we've seen some interesting 0:08:57.080 --> 0:09:00.120 data on Amazon here recently. You know that ten to 0:09:00.160 --> 0:09:02.719 be one of the go toos for a lot of investors. 0:09:03.080 --> 0:09:06.319 The question is how long, how sustainable is it over 0:09:06.320 --> 0:09:08.680 the next several years. I just know that the number 0:09:08.720 --> 0:09:11.800 of Amazon boxes I get at my house increases daily, 0:09:11.880 --> 0:09:16.080 So that tells me something. Uh, the sectors that I 0:09:16.120 --> 0:09:18.280 think tend to be a little more over bought and 0:09:18.559 --> 0:09:20.600 yet to be really cautious of o those that are 0:09:20.600 --> 0:09:23.360 more brought bond proxies. You know that falls into the 0:09:23.480 --> 0:09:26.880 you know, the utilities, real estate. There's still good opportunities, 0:09:26.920 --> 0:09:30.800 but there should be some warning signs there. So I 0:09:30.840 --> 0:09:34.080 guess we're talking a lot about US equities. Do you 0:09:34.120 --> 0:09:37.239 think that US equities will continue to be the outperformer 0:09:37.240 --> 0:09:40.840 globally near term? I do you know, Europe has you know, 0:09:40.920 --> 0:09:44.520 some great evaluations. These stays for a lot of obvious reasons. 0:09:44.600 --> 0:09:46.600 And you know, the one thing that you don't want 0:09:46.640 --> 0:09:48.800 to do is walk away from the European markets or 0:09:48.800 --> 0:09:51.800 the international markets. Just look at a long term period 0:09:51.960 --> 0:09:54.520 and there are several years where those sectors of the 0:09:54.559 --> 0:09:57.600 market are some of the top performers, and they occur 0:09:57.720 --> 0:10:00.400 in almost a heartbeat, So you need to stay with 0:10:00.440 --> 0:10:02.520 a foothold in them. But I don't think it's a 0:10:02.559 --> 0:10:05.400 focus of all your investimble dollars. Here in the US. 0:10:05.840 --> 0:10:10.160 We have visible growth here, we have uncertainty geopolitical there. 0:10:10.880 --> 0:10:14.479 So we got some I s M data that disappointing 0:10:14.480 --> 0:10:18.440 manufacturing data out today, again arguably putting more pressure on 0:10:18.480 --> 0:10:21.480 the consumer to continue to carry uh this economy. And 0:10:21.520 --> 0:10:23.880 again we'll have the jobs report out on Friday. Kind 0:10:23.880 --> 0:10:25.720 of what is your view of the consumer right here 0:10:25.800 --> 0:10:28.800 and should we be concerned? And great point. You know, 0:10:28.840 --> 0:10:31.400 if you looked at Friday, the data from the regional 0:10:31.559 --> 0:10:35.400 of FED offices was was positive today just went counter 0:10:35.520 --> 0:10:37.800 the I s M turning negative. You know that is 0:10:37.880 --> 0:10:40.040 probably one of those factors that the Fed's got to 0:10:40.080 --> 0:10:42.720 look at him as they're looking at rate cuts. And 0:10:42.800 --> 0:10:45.680 with that in mind, the consumer hasn't really seemed to care. 0:10:46.040 --> 0:10:49.360 You know, I'm I'm just amazed at how resilient the 0:10:49.360 --> 0:10:52.360 confidence surveys are if we can only turn that confidence 0:10:52.360 --> 0:10:55.400 into actual purchasing power, you know, that may take care 0:10:55.400 --> 0:10:57.120 of a lot of the ills we have right now. 0:10:57.160 --> 0:11:00.480 But you know, we've we've seen a bifurcation of the 0:11:01.240 --> 0:11:04.480 you know, University of Michigan and the consumer confidence. You know, 0:11:04.520 --> 0:11:08.560 they've they've kind of uh just separated diverted from one 0:11:08.600 --> 0:11:11.640 another here recently. But overall, i'd say the consumer is 0:11:11.679 --> 0:11:15.800 still looking at a positive six months twelve months ahead. 0:11:15.960 --> 0:11:19.600 We've not seen it in the the business sector, though, 0:11:19.880 --> 0:11:24.199 what are your clients ask you right now? Asset allocation 0:11:24.360 --> 0:11:27.319 is probably one of the key questions these days, because 0:11:27.360 --> 0:11:31.160 we've tried to, uh, you know, learn with our clients 0:11:31.200 --> 0:11:34.480 that you know, picking a particular stock isn't going to 0:11:34.559 --> 0:11:37.600 necessarily be the key to their success. It's staying invested 0:11:37.640 --> 0:11:40.320 in the question though, is what are the target investments? 0:11:40.320 --> 0:11:44.079 And that proverbial how much bonds first as cash? And 0:11:44.200 --> 0:11:47.760 you know, we'll just say cash would always be that 0:11:47.760 --> 0:11:51.959 that safety net for investors. Well, fixed income has gotten 0:11:52.000 --> 0:11:55.760 a little more risky these days as yields have continued 0:11:55.840 --> 0:11:58.920 to uh to plunge, as dollars are moving into it. 0:11:59.200 --> 0:12:02.600 I find that so unique in this market the the 0:12:02.800 --> 0:12:06.440 risk trade is becoming a more risk on trade as 0:12:06.480 --> 0:12:10.480 investors moving into bonds. We are talking about staying into 0:12:10.520 --> 0:12:15.360 shorter maturities intermediate to lower duration fixed income. Don't take 0:12:15.440 --> 0:12:19.240 chances on longer term That speculative. But staying invested in 0:12:19.320 --> 0:12:22.800 the right sectors in the equity markets, that's key, and 0:12:23.360 --> 0:12:26.679 having good quality is key. Anything we need to just 0:12:26.720 --> 0:12:30.400 stay away from here for ten plus years into this cycle. Well, 0:12:30.480 --> 0:12:33.960 as have read many times, markets don't die of old age, 0:12:34.320 --> 0:12:38.200 but they die because of an overly aggressive FED heightening 0:12:38.679 --> 0:12:45.000 or a sector bubble, or that unexplained unforeseen risk. We 0:12:45.080 --> 0:12:48.360 have an accommodating central bank globally, we have no real 0:12:48.440 --> 0:12:51.720 sectors that I would consider bubble territory. What we don't 0:12:51.760 --> 0:12:55.000 know is whether or not trade or the UK, or 0:12:55.280 --> 0:12:59.520 geopolitical with Russia China becomes that unknown. We know about it, 0:12:59.520 --> 0:13:01.840 so I'm not so convinced that those are the unknowns 0:13:01.840 --> 0:13:04.599 that worries today. Tom Stringfellow, thank you so much for 0:13:04.640 --> 0:13:07.520 being with Thank you. Tom Stringfellows, President and Chief Investment 0:13:07.559 --> 0:13:10.760 Officer at Frost Investment Advisors, usually based in San Antonio, 0:13:20.600 --> 0:13:23.480 joining us now Jason Shanker, President of Prestige Economics and 0:13:23.520 --> 0:13:26.679 a Bloomberg Opinion columnist Jason, I want to get started 0:13:26.920 --> 0:13:29.520 with why, right, I mean, is this a really a 0:13:29.600 --> 0:13:32.920 function of people looking around and saying it's unlikely the 0:13:32.960 --> 0:13:35.320 US and China will come to any kind of trade agreement, 0:13:35.440 --> 0:13:38.000 or is this people looking around saying the global economy 0:13:38.040 --> 0:13:42.000 is slowing period the end? Yeah, I think it's both. 0:13:42.480 --> 0:13:44.160 If you look at what's going on with the p 0:13:44.320 --> 0:13:47.440 m I data, Uh, not only did we have the 0:13:47.559 --> 0:13:52.040 U S s M Manufacturing Index contract for the first 0:13:52.080 --> 0:13:55.240 time in a few years, but we've also had uh, 0:13:55.480 --> 0:14:01.240 the combined Eurozone manufacturing m I out of China and 0:14:01.440 --> 0:14:03.400 the U S I s M. We combine those and 0:14:03.440 --> 0:14:05.800 look at all three together, and they're at the lowest 0:14:05.880 --> 0:14:10.559 levels right now since December of during European sovereign detet 0:14:10.640 --> 0:14:14.120 crisis and then after and this is the third consecutive 0:14:14.160 --> 0:14:16.040 months that the some of those three p m I 0:14:16.120 --> 0:14:18.800 s is below a break even of one fifty. In 0:14:18.800 --> 0:14:23.400 other words, of global manufacturing has been contracting for three 0:14:23.440 --> 0:14:27.160 consecutive months. So, Jason, as you just summarized that, you know, 0:14:27.400 --> 0:14:30.160 the oil markets really being driven in large part by 0:14:30.200 --> 0:14:33.640 the slowing demand across the globe. Give us a sense 0:14:33.680 --> 0:14:37.520 of what the supply situation looks right now. Well, you know, 0:14:37.600 --> 0:14:42.640 supplies fairly robust. We have the situation with shale barrels 0:14:42.640 --> 0:14:44.960 that can be brought relatively quickly to market. You know, 0:14:45.000 --> 0:14:47.000 we've seen OPAC and I think I'll know we've done 0:14:47.080 --> 0:14:48.920 radio hits when I've gone to OPEC meetings. I'll be 0:14:48.960 --> 0:14:51.920 at the one this December. You know, they've worked with 0:14:52.000 --> 0:14:54.920 non OPAQUE members to try to curtel production, but the 0:14:55.040 --> 0:14:57.840 US has been going into this year, the risk was 0:14:57.880 --> 0:14:59.960 that we see between you know, one and a half 0:15:00.000 --> 0:15:02.160 from two million barrels of showe oil per day added 0:15:02.160 --> 0:15:05.600 to the market. And China is the biggest net marginal 0:15:05.680 --> 0:15:10.200 consumer of oil and they've been contracting and manufacturing terms 0:15:10.240 --> 0:15:13.440 in five and the last nine months. So you know, 0:15:13.680 --> 0:15:18.200 there's the supply situation isn't particularly tight and the demand 0:15:18.320 --> 0:15:20.680 side is not great. And if the U s summer 0:15:20.800 --> 0:15:23.880 driving season is over, which also you know here we 0:15:23.920 --> 0:15:26.240 are coming back from Labor Day weekend. The driving season 0:15:26.640 --> 0:15:28.880 ended on the night mix in the third week of July. 0:15:29.120 --> 0:15:31.960 But now it's also physically over, and that means that 0:15:32.200 --> 0:15:35.360 there was more downside risk oil prices after the driving 0:15:35.360 --> 0:15:38.240 season ends, because there's this seasonal drop off in what's 0:15:38.240 --> 0:15:42.240 called shoulder demand. Jason, I've read a number of stories 0:15:42.440 --> 0:15:47.760 overnight talking about how Hurricane Dorian would affect somehow the 0:15:47.840 --> 0:15:51.800 demand side of the equation, lowering it in certain regions, 0:15:51.840 --> 0:15:55.960 certainly in Florida, Etcetera's people hunker down to weather the storm. 0:15:56.040 --> 0:15:58.560 How much credence is there in that kind of I 0:15:58.600 --> 0:16:03.640 guess explanation of today's route. I don't think that's a 0:16:03.680 --> 0:16:05.880 big chunk of that. I mean, the summer driving season 0:16:06.000 --> 0:16:07.920 is over. You know, if this is fourth of July weekend, 0:16:08.000 --> 0:16:11.000 we might be having a very different conversation. But you know, 0:16:11.040 --> 0:16:14.320 we're past labor day. I don't think that's a really 0:16:14.360 --> 0:16:16.600 big part of it, because I you know, the summer 0:16:16.640 --> 0:16:19.960 driving seasons over. And furthermore, as I mentioned it, and 0:16:20.000 --> 0:16:22.840 it ended on the NIMAX on the twenty two, they 0:16:22.840 --> 0:16:25.880 think of July when the contract rolled to September. Right, 0:16:25.880 --> 0:16:29.160 we're training October crew. If the prompt month, refiners are 0:16:29.160 --> 0:16:32.640 not as incentivized to hedge at this time. Uh, and 0:16:32.720 --> 0:16:34.760 so there's just not as big a bid in the 0:16:34.840 --> 0:16:38.760 market because the downside risk is already greater because demand 0:16:38.880 --> 0:16:42.160 is off. So Jason, what's the latest, uh, you know 0:16:42.280 --> 0:16:47.840 policy or posturing coming out of OPEC these days. Well, 0:16:47.880 --> 0:16:50.520 you know, I think they're trying to hold together the 0:16:51.560 --> 0:16:55.200 coalition they have with NANOPEC members and convey the fact 0:16:55.240 --> 0:16:58.720 that you know, they're they're keeping a tight rain on 0:16:59.400 --> 0:17:02.320 production to prevent it from getting out of control because 0:17:02.600 --> 0:17:08.040 when prices really collapsed between what happened was and people 0:17:08.040 --> 0:17:10.400 talk a lot about shale, but the truth is there 0:17:10.480 --> 0:17:13.920 was a Traineese manufacturing recession going on at that exact 0:17:13.960 --> 0:17:17.720 same thing period and that's what drove down not just oil, 0:17:17.840 --> 0:17:22.600 but rubber, nickelton, led, zinc, iron ore, copper, you name it. 0:17:22.800 --> 0:17:25.760 All the medals and industrial commodities took hits. And if 0:17:25.760 --> 0:17:28.199 you look right now, oil isn't just at risk to 0:17:28.200 --> 0:17:31.040 the downside, but you know, we've seen aluminum, copper, and 0:17:31.119 --> 0:17:33.479 almost all industrial medals except for nickel and iron ore. 0:17:33.520 --> 0:17:35.080 And there are a couple of exception reasons for that. 0:17:35.359 --> 0:17:37.879 Ones in Indonesian expert band On nickel and iron ore 0:17:37.920 --> 0:17:41.200 had some supply disruption issues earlier in the year. Um 0:17:41.280 --> 0:17:43.760 that that's going to continue to wait forward. But aside 0:17:43.760 --> 0:17:47.119 from those exceptions, most industrial medals have been absolutely whacked 0:17:47.240 --> 0:17:51.280 this year. And that isn't the function of the hurricane. 0:17:51.280 --> 0:17:53.400 And that's the reason that oil prices are under pressure. 0:17:53.640 --> 0:17:56.639 It's because the global economy is slowing down quite quickly, 0:17:57.119 --> 0:17:59.720 just quickly. Here. I'm looking right now at crew traded 0:17:59.760 --> 0:18:03.080 on the IMAX treating at fifty three and sixteen cents. 0:18:03.119 --> 0:18:07.040 Where do you think we're going by your end? Well, 0:18:07.080 --> 0:18:08.960 you know, I think there's there's gonna be some more 0:18:09.000 --> 0:18:11.440 downside risk from where we are now for w T I. 0:18:11.640 --> 0:18:13.639 You know, if we lose another five bucks, wouldn't you 0:18:13.640 --> 0:18:18.200 surprise me? Um? It's going to depend on what happens 0:18:18.200 --> 0:18:20.400 with the messaging from OPEC in the late in the year. 0:18:20.480 --> 0:18:24.280 But there there's more downside risk. There's easily I wouldn't 0:18:24.280 --> 0:18:27.679 be surprised to see a price in dollar range in 0:18:27.680 --> 0:18:29.879 that time window. Is there anything OPEC could do in 0:18:29.880 --> 0:18:36.320 the short term? Do you think to impact supplies? You know, honestly, 0:18:36.640 --> 0:18:39.240 there's a saying in the commodities world, commodities are bought 0:18:39.320 --> 0:18:43.320 and not sold. And if the buying slows up, and 0:18:43.359 --> 0:18:46.040 if we see things go back, if trying to remains 0:18:46.080 --> 0:18:49.720 under the furniture. As we expect the global economy remains 0:18:49.760 --> 0:18:52.840 under pressure, those kinds of things could uh, you know, 0:18:52.960 --> 0:18:55.800 continue to land prices. That's really outside of OPEC control. 0:18:55.840 --> 0:18:58.399 All they can do is try to keep inventories from 0:18:58.440 --> 0:19:02.639 ballooning so that the the downward bearish price pressure doesn't 0:19:02.640 --> 0:19:05.360 hang over the next few years the way it did 0:19:05.400 --> 0:19:09.200 after Jason Schanker, thanks so much for joining us. Jason 0:19:09.200 --> 0:19:11.800 as the president of Prestige Economics, also the chairman the 0:19:11.800 --> 0:19:16.880 Futurist Institute and a Bloomberg Opinion contributor based in Austin, Texas. 0:19:26.040 --> 0:19:28.800 Joining us here in our Bloomberg Interactive Broker Studios is 0:19:28.880 --> 0:19:32.720 Leland Miller, chief executive Officer of the China Beige Book International. 0:19:33.280 --> 0:19:38.119 So what actually is going on between the US and China. 0:19:38.920 --> 0:19:41.760 We had one of the busiest months you can ever imagine, 0:19:42.400 --> 0:19:45.320 and I think the next month is going to be 0:19:45.359 --> 0:19:48.640 clawing back some of the damage done over the last 0:19:48.680 --> 0:19:51.280 four weeks. So if you look back to what happened 0:19:51.280 --> 0:19:53.840 in the beginning of August, we had the President Trump 0:19:53.920 --> 0:19:58.240 extend tariffs, if not shooting the gun, then loading, locking 0:19:58.240 --> 0:20:01.399 and loading the gun for all hundred fifty billion worth 0:20:01.440 --> 0:20:04.640 of tarriffs on on all five billion of Chinese imports 0:20:05.080 --> 0:20:08.680 by December. And since then there's been a bit of 0:20:08.760 --> 0:20:12.159 damage control because they realized that, well, one, you're not 0:20:12.200 --> 0:20:14.640 gonna have as much leverage if you shoot all those tariffs. 0:20:14.840 --> 0:20:16.520 And the second thing is the markets didn't like that 0:20:16.640 --> 0:20:18.680 very much. And and and so you've seen a very 0:20:18.720 --> 0:20:21.399 negative market reaction, and the White House is trying to 0:20:21.400 --> 0:20:22.639 come to terms with how do you how do you 0:20:22.680 --> 0:20:26.280 wage the war on China using tariffs at the same 0:20:26.320 --> 0:20:28.920 time as you manage expectations on a trade war and 0:20:28.920 --> 0:20:33.040 and and and hope that you are also encouraging businesses 0:20:33.080 --> 0:20:35.320 to invest and to produce. And of course you're seeing 0:20:35.359 --> 0:20:36.720 some of that in the I s M surveys. And 0:20:36.800 --> 0:20:40.199 so right now the White House is trying to some 0:20:40.280 --> 0:20:43.119 degree walk back some of the some of the some 0:20:43.160 --> 0:20:45.479 of the damage done, and they're trying to figure out 0:20:45.520 --> 0:20:47.879 how to how to make September more productive month. Lean 0:20:47.920 --> 0:20:51.920 and what is your sense of the likelihood that President 0:20:51.920 --> 0:20:53.680 Trump has just had enough of this trade thing. He's 0:20:53.720 --> 0:20:55.119 just going to kick the can down the road and 0:20:55.359 --> 0:20:57.919 wait till after the election. He kind of suggests it's 0:20:57.960 --> 0:21:01.120 a little bit of that in this tweets this more ing. Yeah, 0:21:01.160 --> 0:21:03.000 I think that that that's that was likely, but I 0:21:03.000 --> 0:21:04.840 think it's even more likely that the Chinese are done 0:21:04.840 --> 0:21:08.560 with this. So the weird dynamic that has been sort 0:21:08.560 --> 0:21:11.399 of coming together since June, when there was still the 0:21:11.440 --> 0:21:15.679 possibility of a trade deal before before election, is that 0:21:16.040 --> 0:21:19.440 you've seen both sides come to this de facto stalemate 0:21:19.720 --> 0:21:21.800 and there's lots of ups and downs. I mean, we 0:21:21.840 --> 0:21:24.600 saw with August just how big the ups and downs 0:21:24.600 --> 0:21:28.159 could be. But neither side really wants to get to 0:21:28.160 --> 0:21:31.440 the end of this. There's an incentive to state connected 0:21:31.760 --> 0:21:34.400 through negotiations and to make sure markets aren't falling off 0:21:34.400 --> 0:21:37.199 a cliff because they think that the trade wars has 0:21:37.240 --> 0:21:39.760 gone past the point of no return. At the same time, 0:21:39.800 --> 0:21:42.360 nobody wants to give up ground, nobody wants to make 0:21:42.359 --> 0:21:46.160 any any real um concessions, and it looks like both 0:21:46.160 --> 0:21:48.520 sides no longer have any faith whatsoever in each other. 0:21:50.200 --> 0:21:52.560 One thing that markets seem to be betting on is 0:21:52.600 --> 0:21:55.560 that there's a Trump put that if markets sell off enough, 0:21:55.960 --> 0:22:01.200 President Trump will make nice with China. At what point 0:22:01.600 --> 0:22:05.000 can President Trump no longer make nice with China even 0:22:05.000 --> 0:22:07.399 if he wants to He's pretty close to that point. 0:22:07.600 --> 0:22:09.520 That's why the what happened in August I think was 0:22:09.560 --> 0:22:12.760 an inflection point for this entire trade war. Before that, 0:22:12.840 --> 0:22:16.639 you had the possibility that the Chinese things going to 0:22:16.640 --> 0:22:19.040 have the indirection. You could have more tariffs, you could 0:22:19.040 --> 0:22:21.280