WEBVTT - Brexit, U.S-China Trade, AutoNation CEO 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 wits. 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 --> 0:00:23.279 at Bloomberg dot com. The pound today is rallying on 0:00:23.320 --> 0:00:27.520 the prospect of the lesser chance of a hard Brexit 0:00:27.600 --> 0:00:29.520 joining us now. Are very glad to say, as Terrace 0:00:29.600 --> 0:00:33.400 Raphael Bloomberg Opinion edited away in on the latest on Brexit, 0:00:33.520 --> 0:00:36.720 and I think that probably the most interesting story of 0:00:36.760 --> 0:00:39.280 the day are certainly one of them to me, Teres 0:00:39.640 --> 0:00:44.160 was the relationship between Joe Johnson and Boris Johnson, two brothers. 0:00:44.640 --> 0:00:49.239 Joe quitting parliament because he couldn't reconcile his relationship with 0:00:49.280 --> 0:00:54.240 his family Boris and his view that the UK should 0:00:54.360 --> 0:00:58.920 remain part of the European Union. What's the relationship like 0:00:59.040 --> 0:01:01.640 between these two? Well, I think the bigger surprise was 0:01:01.680 --> 0:01:04.800 that Johnson actually joined his brother's cabinet to begin with. 0:01:04.959 --> 0:01:09.039 Um Joe Johnson resigned uh from when when he was 0:01:09.120 --> 0:01:14.399 part of UH Theresa May's government over his UH, his 0:01:14.560 --> 0:01:17.240 preference for his second referendum. So he is a remainder, 0:01:17.319 --> 0:01:20.880 but he wants a second referendum rather than you know, 0:01:20.920 --> 0:01:24.000 his position isn't that just simply that that Britain should 0:01:24.000 --> 0:01:26.080 stay in the He would like to have a referendum 0:01:26.080 --> 0:01:29.240 on it. Now obviously that puts him into direct conflict 0:01:29.319 --> 0:01:31.840 with h with his brother, the Prime Minister, and it 0:01:31.880 --> 0:01:34.320 was quite a surprise when he announced that he would 0:01:34.360 --> 0:01:37.320 be that that Joe Johnson would be part of the cabinet. 0:01:37.600 --> 0:01:41.160 The timing of Joe's resignation is of course very pointed. 0:01:41.400 --> 0:01:45.440 Boris Johnson has just suffered major defeats in Parliament. His 0:01:45.560 --> 0:01:49.880 prorogration strategy, the decision to suspend parliament for five weeks, 0:01:50.200 --> 0:01:55.920 is hugely controversial. He is now uh potentially unable to 0:01:55.960 --> 0:01:59.080 get the election that he wants on October fifteenth, after 0:01:59.080 --> 0:02:00.920 parliament was he was not able to get the two 0:02:01.000 --> 0:02:03.520 thirds majority for that, and then on top of that, 0:02:03.600 --> 0:02:06.880 to have his brother say, you know, I'm out seems 0:02:06.920 --> 0:02:08.760 to be a sign that this purge of the of 0:02:08.840 --> 0:02:13.000 the Conservative Party, um, you know, has provoked a backlash, 0:02:13.120 --> 0:02:15.000 and you know he now has that to deal with 0:02:15.160 --> 0:02:18.040 on top of everything else. So Tos, I almost hate 0:02:18.040 --> 0:02:20.360 to put you on the spot here, but you know, 0:02:20.360 --> 0:02:23.000 because I'm sure nobody really has a good sense. But 0:02:23.080 --> 0:02:24.560 what are the next steps here? What do you how 0:02:24.560 --> 0:02:25.639 do you think this is going to play out in 0:02:25.680 --> 0:02:29.200 your term? I guess I heard someone say if you 0:02:29.280 --> 0:02:31.240 know what's going to happen, you haven't been paying attention. 0:02:31.960 --> 0:02:35.200 I think that's that's pretty accurate. So the next step 0:02:35.320 --> 0:02:37.639 is that Johnson will try one more time to get 0:02:37.880 --> 0:02:40.480 the October fifteenth election date, and he'll try to do 0:02:40.520 --> 0:02:46.240 that by a different parliamentary mechanism. You can't bring the 0:02:46.280 --> 0:02:50.240 same motion before in a parliamentary session twice, so he's 0:02:50.240 --> 0:02:52.960 going to use a different mechanism. Nowth that fails, and 0:02:53.000 --> 0:02:57.639 it may well fail. Parliament is suspended parode now until 0:02:58.000 --> 0:03:01.840 um the middle of October, and the no further attempt 0:03:01.880 --> 0:03:04.880 to get that election, and therefore it becomes impossible to 0:03:04.919 --> 0:03:08.240 imagine how he would get an election before October thirty one. 0:03:08.320 --> 0:03:11.360 And that puts us into slightly different territory because remember 0:03:11.440 --> 0:03:14.880 Johnson promised he would pull Britain out do or die 0:03:14.960 --> 0:03:18.320 by October thirty one. An election into November means he's 0:03:18.360 --> 0:03:21.119 broken that promise. Now, some polls are showing that Leave 0:03:21.240 --> 0:03:24.520 supporters would not blame him, they'd blame parliament or they 0:03:24.639 --> 0:03:27.840 blame the EU. But I think the longer this drags 0:03:27.840 --> 0:03:30.080 out before an election, the harder it will be for 0:03:30.200 --> 0:03:34.320 Johnson to just come in and sweep up that parliamentary majority. 0:03:34.400 --> 0:03:38.000 That is the key to him, um, to him delivering 0:03:38.040 --> 0:03:41.280 the Brexit that he's promising. What political leader in the 0:03:41.360 --> 0:03:46.240 United Kingdom could potentially get the support necessary to push 0:03:46.280 --> 0:03:49.680 this process forward, Well, depends on what process I mean that. 0:03:49.920 --> 0:03:52.360 You know, the problem for those that oppose Johnson's plan 0:03:52.480 --> 0:03:55.720 is that they don't have a single leader they can 0:03:55.800 --> 0:03:58.960 rally behind. Jeremy Corbyn, the Labor leader, is very unpopular 0:03:59.000 --> 0:04:02.200 even with many of his own MPs. The other opposition 0:04:02.240 --> 0:04:05.880 parties refused to have Corbin become a sort of national 0:04:05.960 --> 0:04:09.320 unity candidate. Uh And the Conservatives also don't have a 0:04:09.400 --> 0:04:11.600 leader other than Johnson that they would rally behind now 0:04:11.640 --> 0:04:14.960 and that party is utterly split between its two wings. 0:04:15.040 --> 0:04:17.840 So um, you know, the answer is an election could 0:04:17.839 --> 0:04:21.640 throw up any number of options from a Conservative majority, 0:04:21.680 --> 0:04:24.200 which is what Johnson is betting onto a hung parliament. 0:04:24.320 --> 0:04:27.000 It doesn't really solve the problem. So what is the 0:04:27.040 --> 0:04:28.800 sense of timing here? I mean, is there is there 0:04:28.920 --> 0:04:34.560 some drop dead date where something really has to happen. Well, 0:04:34.560 --> 0:04:37.920 October thirty one, something has to happen. Either Britain has 0:04:37.960 --> 0:04:41.400 to UH receive an extension from the EU. And now 0:04:41.640 --> 0:04:44.719 you know, let's let's uh remind listeners that that has 0:04:44.760 --> 0:04:48.719 to be unanimously approved by all of the EU's members. 0:04:48.720 --> 0:04:50.920 So even if one of them, say Emmanuel Macon in 0:04:51.000 --> 0:04:54.160 France or Victor Orbon of Hungary, some have suggested say no, 0:04:54.279 --> 0:04:57.120 we don't approve an extension that can happen in Britain 0:04:57.120 --> 0:04:59.680 crashes out on October thirty one. There is the other 0:04:59.800 --> 0:05:04.120 key date is the European Council summit in October seventeenth, 0:05:04.400 --> 0:05:07.760 and that is the UH the summit in which Johnson 0:05:07.800 --> 0:05:10.839 was promising to bring back a deal. Finally, closer date 0:05:10.839 --> 0:05:14.240 that we should all watch is Monday, UH. Next week 0:05:14.279 --> 0:05:18.200 Boris Johnson meets with the Irish T shirt Leah um 0:05:18.279 --> 0:05:21.320 Leo Vodka and that will be very interesting because Johnson 0:05:21.360 --> 0:05:25.240 has been promising that he will bring um solutions to 0:05:25.440 --> 0:05:30.040 this impass over the Irish backstop. He'll bring alternative ideas, 0:05:30.320 --> 0:05:33.200 so we shall hopefully see next week what he has 0:05:33.240 --> 0:05:36.040 in mind and whether there is any possibility that ire 0:05:36.200 --> 0:05:39.279 that Ireland or the E would take it seriously. Tres Rafael, 0:05:39.320 --> 0:05:41.720 thank you so much for bringing some clarity to an 0:05:41.800 --> 0:05:46.440 absolutely chaotic situation. Tres Rafael, Bloomberg opinion editor covering European politics, 0:05:46.800 --> 0:05:50.040 UH and economics for Bloomberg, calling this UH in from 0:05:50.360 --> 0:05:52.320 our London bureau. You can read more on this and 0:05:52.360 --> 0:05:56.480 other stories from Bloomberg Opinion at Bloomberg dot com, slash 0:05:56.480 --> 0:05:59.640 Opinion and on the terminal by typing O, P, I 0:06:00.040 --> 0:06:16.120 and go. Let's talk about trade because that seems to 0:06:16.120 --> 0:06:18.960 be one of the presiding factors when it comes to 0:06:19.000 --> 0:06:20.680 what direction the markets are going to be in any 0:06:20.720 --> 0:06:23.120 given day. There seems to be a little bit more 0:06:23.160 --> 0:06:25.400 optimism right now because there are talks about talks about 0:06:25.400 --> 0:06:27.839 talks about talks about getting maybe together to talk about trade. 0:06:28.000 --> 0:06:30.560 So let's have talk to Sean Donna, who's Bloomberg new 0:06:30.600 --> 0:06:34.200 senior trade reporter coming to us from our Washington d 0:06:34.240 --> 0:06:37.440 C studios. Sean, what actually do we know that has 0:06:37.480 --> 0:06:41.279 happened in order with respect to moving closer to some 0:06:41.320 --> 0:06:43.960 sort of trade resolution. Well, I think you nailed it there. 0:06:43.960 --> 0:06:47.160 We've got more talks about talks about talks coming, and 0:06:47.600 --> 0:06:51.400 we are expecting at some point in uh coming weaker 0:06:51.560 --> 0:06:56.400 ten days or so UH to see the Chinese send 0:06:56.400 --> 0:06:59.080 a delegation over here to Washington. Will be a working 0:06:59.160 --> 0:07:04.600 level delegation to try and hash out where they resumed 0:07:04.640 --> 0:07:09.840 these negotiations. And that's really the point to stress here. UH. 0:07:09.960 --> 0:07:13.520 When we when these talks broke down in May, UH, 0:07:13.600 --> 0:07:16.640 they had a hundred and fifty pages of text. UH. 0:07:16.760 --> 0:07:21.880 They were close to uh something meaningful on both sides 0:07:22.080 --> 0:07:25.440 and h then the Chinese walked away from that, in 0:07:25.520 --> 0:07:30.280 part because President Trump wasn't willing to withdraw tariffs or 0:07:30.320 --> 0:07:33.360 commit to that at that point. And what we've seen 0:07:33.400 --> 0:07:35.760 since is an escalation in tariffs, is a lot more 0:07:35.800 --> 0:07:39.760 tariffs in place. Now, the mistrust on both sides has 0:07:39.840 --> 0:07:42.680 grown over the summer, UH, and they're getting back to 0:07:42.720 --> 0:07:46.160 the table, but again they're they're trying to figure out 0:07:46.440 --> 0:07:50.920 how to start having substantive negotiations. Again, that doesn't mean 0:07:50.920 --> 0:07:54.200 that they are having substantive negotiations, and that doesn't mean 0:07:54.200 --> 0:07:57.160 that we're any closer to a deal today than we 0:07:57.160 --> 0:07:59.679 were before this call happened last night and the announced 0:07:59.680 --> 0:08:02.720 he's talked last night. So Sean, what does it mean 0:08:02.800 --> 0:08:07.080 typically historically when a country like China or the United 0:08:07.120 --> 0:08:12.360 States sends over a relatively high level negotiating team, does 0:08:12.400 --> 0:08:15.120 it is it? You know, does that typically mean oh boy, 0:08:15.200 --> 0:08:18.000 work close to something or serious or can it just 0:08:18.040 --> 0:08:22.240 be it for show one In First of all, we're 0:08:22.280 --> 0:08:24.320 not in a normal situation in terms, so if you know, 0:08:24.360 --> 0:08:27.160 the history is a tough guide here in terms of 0:08:27.160 --> 0:08:29.880 trade negotiations, just because the President Trump's approach to these things. 0:08:29.960 --> 0:08:33.080 We've seen that with his approach to dealing with Japan, 0:08:33.200 --> 0:08:36.040 for example. We have a great story up on on 0:08:36.120 --> 0:08:39.760 Bloomberg today from my colleague Jennie Lenard talking about how 0:08:39.760 --> 0:08:42.640 they're racing to try and work out some really important 0:08:42.679 --> 0:08:46.080 stuff in a deal that President Trump announced as being 0:08:46.120 --> 0:08:49.640 all all done at the G seven just a week 0:08:49.720 --> 0:08:52.920 or ten days ago, and and they're still negotiating some 0:08:52.960 --> 0:08:56.440 really substitutive stuff and they're hoping to sign that deal 0:08:56.520 --> 0:08:59.319 or or get an announce a final deal at the 0:08:59.440 --> 0:09:02.439 end of septem When you look at what's happening with China. Uh. 0:09:02.480 --> 0:09:06.920 It is not unusual for ministers to shuttle around the 0:09:06.920 --> 0:09:09.840 world as part of trade negotiations. That's what they do. 0:09:09.920 --> 0:09:12.920 That's what trade ministers do, That's what US trade representatives 0:09:12.960 --> 0:09:16.760 have done for years. So in some ways that's not 0:09:16.920 --> 0:09:20.680 meaningful and in itself. But that's where this is different, 0:09:20.800 --> 0:09:25.040 right because over the summer, these negotiations broke down and 0:09:25.240 --> 0:09:27.920 we are kind of seizing and markets certainly are seizing 0:09:28.559 --> 0:09:31.840 on any news of the two sides. Even talking is 0:09:32.360 --> 0:09:35.000 is something meaningful, So you know, I think we need 0:09:35.040 --> 0:09:39.079 to be really careful, uh, in terms of managing our 0:09:39.080 --> 0:09:42.360 own expectations with these things. This does not mean that 0:09:42.400 --> 0:09:45.960 a deal is nigh. Uh. It just means that they're 0:09:46.000 --> 0:09:48.640 back to talk. I think that a lot of investors 0:09:48.720 --> 0:09:50.600 right now, and you'll talk to people and they'll say, 0:09:51.120 --> 0:09:55.160 you know, we're trying to understand President Trump's motivations, the psychology, 0:09:55.240 --> 0:09:57.600 which you know, good luck. But I think that there 0:09:57.679 --> 0:10:00.840 is a question here of President Trump. Does he kind 0:10:00.880 --> 0:10:03.080 of have a put on the market? People are counting 0:10:03.080 --> 0:10:06.920 on him to, at some point close to elections try 0:10:06.960 --> 0:10:09.360 to make some sort of deal with China in order 0:10:09.400 --> 0:10:12.160 to give a boost to market. Uh, and and sort 0:10:12.200 --> 0:10:15.679 of have have sort of some momentum heading into the election. 0:10:16.760 --> 0:10:18.840 Is your sense from the people that you talked to 0:10:19.200 --> 0:10:23.800 that that belief is legitimate. Look, there's no doubt that 0:10:23.880 --> 0:10:27.080 President Trump has wanted to make a deal. That's that's 0:10:27.080 --> 0:10:31.200 in his nature. Uh. And the question is whether something 0:10:31.520 --> 0:10:35.200 has changed over the summer. And that's where what we're 0:10:35.240 --> 0:10:38.480 really trying to figure out. I've had people close to 0:10:38.480 --> 0:10:42.600 this administration say to me as recently as yesterday that 0:10:42.720 --> 0:10:45.000 they thought that they were seeing a new hard line 0:10:45.760 --> 0:10:49.000 from President Trump in his tweets, and that they thought 0:10:49.000 --> 0:10:51.400 that he had moved from wanting a deal to to 0:10:51.640 --> 0:10:55.760 wanting uh, to just sort of embracing this idea of 0:10:55.800 --> 0:11:00.520 the need for a standoff with China, for someone to 0:11:00.559 --> 0:11:02.800 take on China. We saw that in his comments yesterday 0:11:02.880 --> 0:11:05.040 about where he literally said, you know, I don't care 0:11:05.080 --> 0:11:08.640 about the economy. This is bigger than the economy, when 0:11:08.679 --> 0:11:11.400 he was talking to reporters about the China talx. So. 0:11:11.480 --> 0:11:15.760 I mean, the swings in sentiment here are are remarkable, 0:11:15.800 --> 0:11:20.160 and it makes it really really hard to try and uh, 0:11:20.200 --> 0:11:24.120 you know, discern the signal from the noise, you know, 0:11:24.280 --> 0:11:26.320 that's what we try to do every day. We talked 0:11:26.320 --> 0:11:30.360 to people inside administration, around the administration, and it's, you know, 0:11:30.440 --> 0:11:32.760 it's it's hard to know on a day to day 0:11:32.760 --> 0:11:36.480 basis where the President wants to take this, and it 0:11:36.600 --> 0:11:39.720 changes on a day to basis. Socialan just thirty seconds, 0:11:39.760 --> 0:11:42.720 any sense of where China is? Has anything changed for 0:11:42.800 --> 0:11:45.840 China over the summer from your perspective, Yeah, I think 0:11:46.080 --> 0:11:48.120 what we hear from Beijing, and what we hear from 0:11:48.280 --> 0:11:52.480 from people who meet with Chinese officials regularly, is that 0:11:52.480 --> 0:11:55.880 there's been a change in Beijing and in their approach 0:11:55.920 --> 0:11:59.320 of this, they now believe that they are involved in 0:11:59.320 --> 0:12:03.720 a longer term fight with the Chinese. They have a 0:12:03.800 --> 0:12:07.360 higher level of suspicion of Donald Trump and his ability 0:12:07.480 --> 0:12:12.320 to deliver a deal. Uh and UH. They are approaching 0:12:12.360 --> 0:12:15.880 this much more warily than they were even six months ago. 0:12:16.600 --> 0:12:18.840 Sean Donna, thank you so much. I feel like we're 0:12:18.840 --> 0:12:21.600 gonna be talking to you a lot more going forward. 0:12:21.720 --> 0:12:24.160 There's still much more to go on this story, obviously, 0:12:24.200 --> 0:12:27.720 Sean don and senior trade reporter for Bloomberg News. Uh, 0:12:28.160 --> 0:12:46.360 talking to us from our d C of bureau crewed 0:12:46.760 --> 0:12:49.120 very much getting a bid today on the heels of 0:12:49.200 --> 0:12:52.000 some softening and trade talks between at the US and China, 0:12:52.160 --> 0:12:54.320 perhaps talks about talks about talks. We're saying crewed up 0:12:54.920 --> 0:12:57.760 about one percent today following a two point three percent 0:12:57.840 --> 0:13:00.920 gain yesterday. But really, what is going to be the 0:13:01.040 --> 0:13:04.600 longer term driver of crude prices? Joining us now, Stephen Short, 0:13:04.679 --> 0:13:07.240 president of the Short Group Group and editor of the 0:13:07.280 --> 0:13:10.640 Short Report, joining us on the phone. So Stephen, let's 0:13:10.640 --> 0:13:14.800 just get started. Um crude prices they've been bouncing around 0:13:14.880 --> 0:13:19.280 pretty much in sandem with the feeling from trade. How 0:13:19.320 --> 0:13:23.040 long is this sustainable? Uh? Well, for the foreseeable future. 0:13:23.080 --> 0:13:26.440 We're going into Lisa now, a very volatile time in 0:13:26.480 --> 0:13:30.040 the market. Uh To your point, oil is rallying hard. 0:13:30.160 --> 0:13:32.920 We got some good numbers a DP employment. We have 0:13:33.000 --> 0:13:36.920 some bullish support numbers from today's weekly update on petroleum stocks. 0:13:37.600 --> 0:13:40.320 But first and foremost, the driver currently now is the 0:13:40.360 --> 0:13:44.240 market's taken another hit of hopium, that is to say, 0:13:44.400 --> 0:13:47.080 hope that we might actually get some sort of resolution 0:13:47.120 --> 0:13:51.199 with the China trade riff. So at this point, this 0:13:51.280 --> 0:13:54.960 is where these speculators are pouring their hearts and souls into. 0:13:55.480 --> 0:13:59.079 Uh so going forward, now when we talk about volatility, 0:13:59.240 --> 0:14:02.360 it is September. So over the next two months, oil 0:14:02.440 --> 0:14:06.320 refineries here in North America in northern Europe are going 0:14:06.360 --> 0:14:08.760 to go into their maintenance season, so they're going to 0:14:08.840 --> 0:14:12.120 be buying fewer barrels as they shut in operations to 0:14:12.120 --> 0:14:14.600 get ready for the winter demand season. So when you 0:14:14.640 --> 0:14:16.800 take that fundamental out of the market, when you take 0:14:16.840 --> 0:14:20.800 that fundamental um driver, that buyer out of the market, 0:14:20.880 --> 0:14:23.360 it creates a void. And when you have that void, 0:14:23.360 --> 0:14:26.440 you have the chance for volatility. So once again we're 0:14:26.440 --> 0:14:29.000 gonna be looking at markets that can can continue over 0:14:29.040 --> 0:14:32.119 the next two three months to trade off of headlines. 0:14:32.480 --> 0:14:35.520 Today we happen to have a bullish headline and so 0:14:35.600 --> 0:14:38.640 the market is finding good support here. So it's interesting 0:14:38.640 --> 0:14:40.720 when you know, when we talked to you, um Stephen 0:14:40.760 --> 0:14:42.680 about the you know, the energy markets, we always have 0:14:42.680 --> 0:14:45.080 discussions about the you know, the demand side of the 0:14:45.080 --> 0:14:47.360 equation and the supply side of the equation. But it 0:14:47.480 --> 0:14:51.040 seems like what's really driving oil prices, energy prices in 0:14:51.320 --> 0:14:54.200 general is really the demand side, and again tied very 0:14:54.280 --> 0:14:56.480 much to trade. Is that kind of how the traders 0:14:56.480 --> 0:14:59.840 are positioning themselves. Yes, and absolutely and in fact, we 0:14:59.840 --> 0:15:03.160 we had some numbers that came out the surveys before. 0:15:03.720 --> 0:15:07.440 And keep in mind demand is still strong. The the 0:15:07.440 --> 0:15:11.600 the economy is still finding support. It's just this this 0:15:11.760 --> 0:15:15.560 overhang of this trade riff, and and everyone's talking about 0:15:15.600 --> 0:15:18.760 potential recession, and we're starting to see the pull back 0:15:18.800 --> 0:15:22.720 on the manufacturing side. And the manufacturing side tends to 0:15:22.760 --> 0:15:25.560 be a bell weather. So even though it is only 0:15:25.560 --> 0:15:28.440 ten to twelve of the U S economy, it's still 0:15:28.480 --> 0:15:32.080 a significant driver. And and that is really where the 0:15:32.120 --> 0:15:36.880 concern is um so on the supply side. Look, we're 0:15:36.920 --> 0:15:40.040 starting to degluct the market here in the United States. 0:15:40.040 --> 0:15:43.040 Over the past month, we've had two major pipelines that 0:15:43.080 --> 0:15:45.640 have started shipping crude oil out of the West Texas 0:15:45.720 --> 0:15:49.320 Permian Basin to the export markets near in Corpus Christie. 0:15:49.760 --> 0:15:52.040 By the end of the year, we'll have another pipeline 0:15:52.040 --> 0:15:55.640 that comes online. So our takeaway capacity with all that 0:15:55.680 --> 0:15:58.320 oil being produced in West Texas is going to increase 0:15:58.400 --> 0:16:01.520 by by two thirds. So we're starting to deglute and 0:16:01.520 --> 0:16:04.840 we're starting to balance the market at this point. So, yes, 0:16:04.960 --> 0:16:07.400 it is the demand, and keep in mind the underlying 0:16:07.440 --> 0:16:10.800 economic demand story is still firm at this point. But 0:16:10.880 --> 0:16:13.160 it's all about the future. It's all about perception, and 0:16:13.280 --> 0:16:16.920 right now people are are very cautious and that is 0:16:16.920 --> 0:16:21.240 certainly a concern that is overhanging the commodity markets. Stephen, 0:16:21.320 --> 0:16:23.520 I remember when people cared about what was going on 0:16:23.640 --> 0:16:27.200 with respect to Iran, what was happening with with respect 0:16:27.280 --> 0:16:32.640 to Libya, Venezuela, Argentina. I mean, they're all of these 0:16:32.760 --> 0:16:37.760 issues that used to matter and that don't seem to anymore. Yep. 0:16:37.920 --> 0:16:40.440 And again right, and to your point's an excellent point, 0:16:40.440 --> 0:16:43.880 And it's all about perception. I mean, OPEC, when's the 0:16:43.960 --> 0:16:47.880 last time headline of OPEC actually moved this market? Uh, 0:16:47.880 --> 0:16:51.320 this is a US centric story. United States is the 0:16:51.440 --> 0:16:54.280 nine pound gerrilla in the oil market. At this point. 0:16:54.920 --> 0:16:59.440 We are burgeoning export, uh powerhouse with all this production 0:16:59.520 --> 0:17:02.520 coming out out and and that kind of masks you know, 0:17:02.600 --> 0:17:07.480 the concerns here to your point, Iran, Venezuela, Right, Venezuela 0:17:07.560 --> 0:17:11.119 used to be our fourth largest supplier of crudel and 0:17:11.200 --> 0:17:16.840 now their production has has fallen off significantly, and so 0:17:16.960 --> 0:17:21.080 that is the concern that potentially that will start to 0:17:21.119 --> 0:17:26.159 see a pullback in demand. Uh. You know that is 0:17:26.240 --> 0:17:28.240 being masked right now by the loss of supply, and 0:17:28.560 --> 0:17:31.520 all it's going to take is what one good good 0:17:31.520 --> 0:17:35.520 disruption and uh, you know, all of this goes to 0:17:35.640 --> 0:17:38.040 not Stephen, what are your thoughts on the natural gas 0:17:38.040 --> 0:17:40.240 market as we look ahead to kind of the colder 0:17:40.240 --> 0:17:44.119 months coming up. It's pathetic, I mean the natural gas market. 0:17:44.480 --> 0:17:49.960 And yeah, exactly. Now, natural gas market is getting a 0:17:50.080 --> 0:17:52.720 nice rally right now. If and I've been telling all 0:17:52.760 --> 0:17:55.880 my hedging hedging clients in the short report that over 0:17:55.880 --> 0:17:58.200 the past month, if you have not been buying every 0:17:58.200 --> 0:18:01.200 single molecule of natural gas at these levels for your 0:18:01.240 --> 0:18:04.399 winter needs, you're really being foolish because the market is 0:18:04.440 --> 0:18:08.199 really gifting you this opportunity. Uh. To that point, we 0:18:08.240 --> 0:18:10.520 have so much gas. There is the pullback on the 0:18:10.560 --> 0:18:15.520 industrial side, so that is overhang. Supplies are plentiful, but 0:18:15.600 --> 0:18:18.200 the market has rallied about twenty cents at Decca therm 0:18:18.880 --> 0:18:21.639 over the past month, and that is because Wall Street 0:18:21.760 --> 0:18:24.840 speculators have never been more barished this market. So this 0:18:24.880 --> 0:18:27.560 is a market that is extremely over sold. So we're 0:18:27.600 --> 0:18:31.200 getting kind of a counter uh intuitive rise in price 0:18:31.280 --> 0:18:33.600 right now, which probably has a lot of speculatives scratch 0:18:33.640 --> 0:18:36.760 in their head because the fundamentals are so barrashed. So 0:18:36.840 --> 0:18:38.879 that's to say that we tend to see in the 0:18:38.960 --> 0:18:42.560 natural gas market, we get this rally before the winter, 0:18:42.640 --> 0:18:45.880 before the heat heating season kicks in, and I think 0:18:45.880 --> 0:18:48.840 we're in the midst of that. How high can we go? 0:18:49.520 --> 0:18:53.160 Our quant models right now are looking at potentially this 0:18:53.240 --> 0:18:56.520 month we could see natural gas prices rally about another 0:18:56.600 --> 0:19:00.520 forty cents higher, which would really be more of a 0:19:00.600 --> 0:19:04.280 short covering rally, not fundamentally driven. But we're looking going 0:19:04.320 --> 0:19:07.240 into the winter and market that if you're hedging, you 0:19:07.280 --> 0:19:10.199 should have been buying. You'll still have opportunities. We're in 0:19:10.200 --> 0:19:14.200 the midst of a counter shortcovering rally, but the overall 0:19:14.400 --> 0:19:17.720 is still barish. Stephen Short, thanks so much for that overview. 0:19:17.800 --> 0:19:20.560 Excellent overview as always on the energy markets looking accrued 0:19:20.600 --> 0:19:23.639 and nanny guess at the moment. Right Stephen Shark's President 0:19:23.760 --> 0:19:41.960 Short Group of phoning in from Pennsylvania. Right now, we 0:19:42.080 --> 0:19:45.640 have the honor of speaking with Auto Nations new chief 0:19:45.680 --> 0:19:50.320 executive officer, Cheryl Miller. She came in about forty five 0:19:50.400 --> 0:19:54.560 days ago to head Auto Nation, which she's normally based 0:19:54.600 --> 0:19:57.200 in Fort Lauderdale in Florida, but she's here in Ourlubritter 0:19:57.240 --> 0:20:00.760 Active Broker Studios. Sharyl, congratulations. The shares of the company 0:20:00.920 --> 0:20:04.159 up more than thirty six percent year to date. I 0:20:04.200 --> 0:20:07.159 want to start with the transition in your first forty 0:20:07.200 --> 0:20:10.800 five days, taking over after a very brief stint uh 0:20:11.000 --> 0:20:16.119 for the previous CEO, Carl Liebert. So what what's it 0:20:16.200 --> 0:20:18.000 been like, given the fact that it's been a little 0:20:18.000 --> 0:20:20.440 bit tumultuous over the past couple of months. Yes, it's 0:20:20.440 --> 0:20:22.840 great to be here today with you, Lisa, with you, Paul, 0:20:23.359 --> 0:20:25.560 and it's been great. The last forty five days have 0:20:25.680 --> 0:20:30.360 been fantastic. And coming in, my core focus was execution, right, 0:20:30.440 --> 0:20:34.240 so we're an operating business execution of our existing play 0:20:34.320 --> 0:20:36.239 and then also I'm making sure we're working on this 0:20:36.320 --> 0:20:40.400 automation brand extension strategy. So when I stepped into the role, 0:20:40.480 --> 0:20:43.080 I met immediately with our leadership team I've known for 0:20:43.240 --> 0:20:46.840 many years, our operational leadership team. I met with them personally, 0:20:46.880 --> 0:20:50.480 we talked about the strategy, had their full confidence, and 0:20:50.520 --> 0:20:53.199 I also met with the corporate team. I reminded the 0:20:53.240 --> 0:20:55.879 corporate team, as we always do, that our focuses on 0:20:55.960 --> 0:21:00.359 servicing our customers and really pulled together that leadership team 0:21:00.440 --> 0:21:03.280 to focus on the core. I've had some initial O 0:21:03.320 --> 0:21:05.520 E M discussions, but certainly I've known many of them, 0:21:05.560 --> 0:21:08.400 having been in the industry for years as well. So 0:21:08.600 --> 0:21:11.159 I'm just looking at the stock stocks done well, up 0:21:11.200 --> 0:21:14.840 thirty seven percent this year, there's only one analysts recommending 0:21:14.840 --> 0:21:16.600 it in nine have a hold, and there's a couple 0:21:16.600 --> 0:21:18.680 of cells. What are what's the bear case out there? 0:21:18.680 --> 0:21:21.280 What are analysts not seeing having missed kind of this 0:21:21.320 --> 0:21:23.199 run up in the stock? Yes, and Paul, I think 0:21:23.240 --> 0:21:25.680 it's a great observation. I think what people are missing 0:21:26.000 --> 0:21:28.000 is really the thought out there has been. Are we 0:21:28.080 --> 0:21:32.040 at peak auto? And if you think about that, years ago, 0:21:32.119 --> 0:21:34.199 we knew we would have a gradual climb out of 0:21:34.200 --> 0:21:36.720 those lower star levels, and we always said we thought 0:21:36.760 --> 0:21:40.280 we would level off somewhere between sixteen and seventeen million 0:21:40.359 --> 0:21:42.560 units of sales, and and that is where we have 0:21:42.800 --> 0:21:44.840 leveled off. But keep in mind that we're not just 0:21:44.920 --> 0:21:47.600 about new vehicle sales. We also do a lot of 0:21:47.800 --> 0:21:51.200 nearly new, and you've seen the customer preference shifts somewhat 0:21:51.240 --> 0:21:54.680 towards nearly new and we also have the service aspects 0:21:54.680 --> 0:21:57.840 of the business. And so I think the analyst thesis 0:21:57.880 --> 0:22:00.880 has been around sort of peak auto, and I think 0:22:00.920 --> 0:22:04.080 we've got a lot more than that. And you've been 0:22:04.119 --> 0:22:07.280 with automation for years, so you have a sense of 0:22:07.320 --> 0:22:12.040 the sort of h the breakdown between used and new 0:22:12.080 --> 0:22:14.880 cars and car sales. Can you speak a little bit 0:22:14.920 --> 0:22:17.679 more about the shift that you've seen recently in preference 0:22:17.720 --> 0:22:22.000 for almost new vehicles by the US consumer. Yeah, absolutely, 0:22:22.040 --> 0:22:23.720 So I've certainly been in the industry for a while, 0:22:23.760 --> 0:22:25.680 and my one of my fun facts is the fact 0:22:25.680 --> 0:22:27.840 that I actually was an automation the first time before 0:22:27.920 --> 0:22:30.280 Mike so I was was there back in ninety eight, 0:22:30.280 --> 0:22:32.320 and I saw the early days of the company through 0:22:32.359 --> 0:22:36.600 the evolution today. But as I think about the consumer, um, 0:22:36.680 --> 0:22:39.159 I think about most of the customers coming back into 0:22:39.240 --> 0:22:42.160 our show rooms are coming online to interact with us. 0:22:42.440 --> 0:22:45.000 The last time they may have purchased a vehicle could 0:22:45.000 --> 0:22:47.439 have been when interest rates are basically at zero. So 0:22:47.520 --> 0:22:51.399 now they're coming back in and although rates fortunately we're 0:22:51.400 --> 0:22:54.000 not going to have the hikes we originally anticipated this year, 0:22:54.040 --> 0:22:56.640