WEBVTT - Verleger: this is oil's false dawn

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<v Speaker 1>This is Bloomberg Surveillance. The markets are very dysfunctional here,

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<v Speaker 1>and let's basically due to all this enormous corporate bond issuance.

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<v Speaker 1>We're getting even more confirmation at the global economy matters

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<v Speaker 1>more and more to the Fed, more than it ever has.

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<v Speaker 1>When you hold down rates, when you reduce rates by quie,

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<v Speaker 1>whatever it is you're doing in that direction, you're drawing

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<v Speaker 1>capital into the markets, and that's a good thing. Bloomberg

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<v Speaker 1>Surveillance your link to the world of economics, finance, and

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<v Speaker 1>investment on Bloomberg Radio. Good morning everyone, Bloomberg Surveillance, Michael

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<v Speaker 1>McKee and Tom Keenan. Is a perfect day in New

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<v Speaker 1>York right now, though, Michael, let's get you know, I mean,

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<v Speaker 1>bring in bringing Rob here, because what's so great about

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<v Speaker 1>Rob in December is the lack of hysteria, and then

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<v Speaker 1>in January there's a little more, and Rob gets exhausted

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<v Speaker 1>by March. So do you think, Rob, what do you think, Michael,

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<v Speaker 1>what's the level that you could be? Sunday is the

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<v Speaker 1>first day of spring and Rob Carolin has to come

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<v Speaker 1>on and tell everybody it's going to snow. Um, you know,

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<v Speaker 1>I'm sure that doesn't make you particularly popular. No, and

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<v Speaker 1>it's not doesn't mean I like doing it either. I

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<v Speaker 1>mean I gotta shovel my driveway to guys, So if

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<v Speaker 1>I don't have to do it, that's a positive. And

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<v Speaker 1>you know, looking at the date of this morning, I

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<v Speaker 1>can tell you that the models have started to shift

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<v Speaker 1>further east with the system. The U S model has

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<v Speaker 1>been the most consistent saying this is a light with

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<v Speaker 1>most moderate storm for the Tri State area in Boston.

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<v Speaker 1>The European went crazy on Wednesday and now it's backing

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<v Speaker 1>away from that heavy snowfall forecast more towards a lighter

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<v Speaker 1>or moderate snowfall. So that's good news. The trend is

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<v Speaker 1>our friend. It's in the right direction. But we think

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<v Speaker 1>if the storm does develop as the models have, that

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<v Speaker 1>snow is going to arrive in the Tri State area

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<v Speaker 1>early Sunday morning, right around sunrise, it'll end early Monday morning.

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<v Speaker 1>Three to six inches of a slushy snow could fall Boston.

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<v Speaker 1>It develops in the afternoon on Sunday and ends Monday morning.

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<v Speaker 1>Right now, Boston could end up with as much as

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<v Speaker 1>four to eight inches, but again the numbers right now

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<v Speaker 1>are fluid. If the models continue in their trend of

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<v Speaker 1>shifting further eastern. We look Rob carollin, thank you very much. Well,

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<v Speaker 1>keep an eye on the story. Just the fact, I

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<v Speaker 1>don't care if it's only three inches. It's still supposed

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<v Speaker 1>to be spring, not winter. When you grow up in

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<v Speaker 1>the tundra of the north. This is what's called normal.

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<v Speaker 1>I've seen it's snow in May up in the scene.

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<v Speaker 1>Can doesn't mean it exactly, I guess that would be

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<v Speaker 1>one way of putting it. It is nine o'clock. That

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<v Speaker 1>means we have to do our four X brief, of course,

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<v Speaker 1>always brought you by Interactive Broker's winner of FX Weeks

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<v Speaker 1>two thousand and fifteen award for the best Retail for

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<v Speaker 1>X training platform visit ib at ib kr dot com

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<v Speaker 1>slash four X. All you need to know yen stronger

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<v Speaker 1>over the week with a little bit of a pullback

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<v Speaker 1>today one eleven fifty three on Yeah and real movements

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<v Speaker 1>in for and Exchange Sterling almost everything stronger a US,

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<v Speaker 1>a weaker dollar and d X y point nine two.

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<v Speaker 1>Even renmn by strength was seen as well. That's enough

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<v Speaker 1>on for and Exchange our equity report before we go

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<v Speaker 1>to an important re guard comment. What do you have

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<v Speaker 1>divid Wilson, Well, let's talk about Bank of America. To start,

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<v Speaker 1>These shares are up one and a half percent in

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<v Speaker 1>early trading. The bank will buy back as much as

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<v Speaker 1>eight hundred million dollars in stock to off set act

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<v Speaker 1>when he grants to executives. That's on top of four

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<v Speaker 1>billion dollars in repurchases that Bank of America announced a

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<v Speaker 1>year ago. Now the bank is joining JP Morgan Chase

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<v Speaker 1>and Capital One Financial in expanding buyback programs. On the

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<v Speaker 1>deal front, Star Wars Hotels and Resorts up four and

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<v Speaker 1>a half percent. Company agreed to takeover by China's on

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<v Speaker 1>Bang Insurance for seventy eight dollars a share or thirteen

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<v Speaker 1>point one billion dollars. The prices two dollars a share

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<v Speaker 1>higher than a Bang's initial bid, which was disclosed on Monday.

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<v Speaker 1>Star Wars board found the offer superior to an earlier

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<v Speaker 1>proposal from Marriott International. Columbia Pipeline Group the most active

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<v Speaker 1>stock and early trading up six and a half percent.

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<v Speaker 1>The natural gas pipeline on Them agreed to a ten

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<v Speaker 1>point two billion dollar takeover from trans Canada. The deal

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<v Speaker 1>followed the rejection of Kuran's Canada's proposed Keystone Xcel pipeline

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<v Speaker 1>by President Barack Obama in November, and Trans Canada shares

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<v Speaker 1>down three and a half percent in US trading. Couple

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<v Speaker 1>more earnings, A Delbe Systems up seven percent, the graphics

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<v Speaker 1>software maker's fiscal first quarter earnings and revenue beating alas

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<v Speaker 1>average estimates of the Bloomberg survey. ALB benefited from growing

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<v Speaker 1>demand for its Internet based services, and Tiffany basically a

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<v Speaker 1>little change at this point. The luxury jewelry retailer said

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<v Speaker 1>fiscal first quarter earnings per share may drop at least

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<v Speaker 1>fifteen percent. Is a sluggish global economy, herd sales and

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<v Speaker 1>so I expected a seven percent decline on average. And

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<v Speaker 1>David Wilson thanks so much. I want to bring in

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<v Speaker 1>this uh sound from Christine Legarde. This really sets up

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<v Speaker 1>Phil Verliger on global oil very well. Leguard, as I

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<v Speaker 1>am a managing director. This is in Ho Chi Min

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<v Speaker 1>City speaking with our Bloomberg Vietnam Bureau chief K one.

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<v Speaker 1>Here is Madame Lego. What I think I can tell

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<v Speaker 1>you is that if we had not had those negative rates,

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<v Speaker 1>we would be in a much worse place today with

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<v Speaker 1>inflation probably lower than where it is, with growth probably

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<v Speaker 1>lower than where we have it. So it's only count

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<v Speaker 1>of factuals, of course, but it was a good thing

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<v Speaker 1>to actually implement those negative rates. And Madame m Guarde

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<v Speaker 1>in Vietnam with our Bloomberg Vietnam Bureau Chief Phil Verligher

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<v Speaker 1>listened carefully. He's heard this before from policymakers, and I

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<v Speaker 1>love Phil the idea of the counter factual. The ultimate

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<v Speaker 1>counter factual is oil went from a hundred to forty.

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<v Speaker 1>What would have happened if that hadn't occurred, Well, if

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<v Speaker 1>oil hadn't gone uh to forty one, we would still

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<v Speaker 1>be drilling, uh, wells in production would be high, fire

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<v Speaker 1>inventories would be much higher. We'd be swimming in it. Uh.

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<v Speaker 1>The economy would be somewhat slower, although the impact is

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<v Speaker 1>less than we used to say, because so many people

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<v Speaker 1>would still have jobs in North Dakota, Texas, uh and

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<v Speaker 1>in Europe making manufacturing goods for people people in Asia.

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<v Speaker 1>But what we would be doing is developing this incredible

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<v Speaker 1>surplus that someday had to be consumed and eventually, Tom,

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<v Speaker 1>we'll be using your bathtup to store oil. It's just yeah, Uh,

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<v Speaker 1>we let prices stay high much too long. Uh and uh,

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<v Speaker 1>and it's created a bubble, and it created a bubbles burst.

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<v Speaker 1>I want to ask you about a fascinating story in

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<v Speaker 1>the Wall Street Journal today. Maybe the surplus isn't as

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<v Speaker 1>big as we think it is. Uh. They suggest that

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<v Speaker 1>there's eight hundred thousand barrels UH of oil missing because

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<v Speaker 1>the i e. A. Estimates how much oil is going

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<v Speaker 1>to be produced, and then they actually add up the

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<v Speaker 1>oil that is in storage and in transit. It doesn't

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<v Speaker 1>come anywhere near what they thought was going to be produced.

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<v Speaker 1>So maybe we aren't producing as much. Well that's a

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<v Speaker 1>great wine. And Andy Hall is and who has asked

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<v Speaker 1>him back to keep sending these emails around pushing this point.

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<v Speaker 1>My question is, I look at the market man, why

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<v Speaker 1>are people renting ships? I mean last week this week

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<v Speaker 1>Glencore reported chartering a ship that will hold about two

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<v Speaker 1>and a half million barrels of oil. Now, the interesting

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<v Speaker 1>thing is the number I've been using as a buck

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<v Speaker 1>fifty amongst the store of the oil. They've charted it

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<v Speaker 1>for two years for fifty cents of barrel uh. The

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<v Speaker 1>U S numbers showed this high level of inventories and

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<v Speaker 1>and E I A has got problems. But we are

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<v Speaker 1>approaching the record level of inventories previously set in nineteen

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<v Speaker 1>twenty nine comments before you were born, and I was born,

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<v Speaker 1>And it was set when everybody was trying to produce

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<v Speaker 1>the oil under their ground, before the neighbor did. We

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<v Speaker 1>didn't have the rule of capture. We are literally a

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<v Speaker 1>hundred million, maybe two hundred million barrels above in the

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<v Speaker 1>US normal range and the rest of the world inventories

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<v Speaker 1>are high. That the tanks are full in Amsterdam where

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<v Speaker 1>they measure them. So there may be some discrepancy. There's

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<v Speaker 1>always some discrepancy. But and you know, if you if

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<v Speaker 1>you want to be a barrel accountant, you're gonna lose.

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<v Speaker 1>The only way to pay a understand this is to

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<v Speaker 1>look at the market and what the market is saying.

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<v Speaker 1>And the market is in contango, deep contango. It's been

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<v Speaker 1>in deep contango for quite a while. People are storing

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<v Speaker 1>oil everywhere and so uh, you know, the market tells

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<v Speaker 1>me that the oil is there. Well, where we were

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<v Speaker 1>over forty dollars now yesterday at one point West Texas

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<v Speaker 1>was going for more than than brand Uh. How much

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<v Speaker 1>farther do we go. You know, this is one of

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<v Speaker 1>the things I've been writing is is that this is

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<v Speaker 1>a bubble but going to be punctuated with price increases. Yeah,

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<v Speaker 1>this is like the housing crisis. The we had this

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<v Speaker 1>huge drop in in housing activity after the two thousand

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<v Speaker 1>nine San Francisco prices went down, Detroit prices went down.

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<v Speaker 1>Some prices come back up, and speculators will push prices

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<v Speaker 1>back up. There's a lot of hot money coming in

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<v Speaker 1>pushing prices up, creating the opportunity to hedge more oil

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<v Speaker 1>so that we'll produce more oil later this year and

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<v Speaker 1>next year, saving some bankruptcies of prudent firms. But you

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<v Speaker 1>know it's gonna fluctuate, and it's it will hold up

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<v Speaker 1>to forty until OPEC or this meeting of producers OPEC

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<v Speaker 1>plus others gets done in April. But they have the meeting.

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<v Speaker 1>Does it accomplish anything? No, But does it change prices?

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<v Speaker 1>Even if it doesn't accomplish it, it doesn't attain prices temporarily,

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<v Speaker 1>they'll go up, then they'll go back down still never

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<v Speaker 1>enough time. We're gonna have to have you back soon

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<v Speaker 1>because the price of oil suddenly getting back into the news.

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<v Speaker 1>Is West Texas crushes the forty dollar barrier. Now a

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<v Speaker 1>forty dollars and ninety one says heading for forty one.

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<v Speaker 1>We we have been as high as forty one twenty

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<v Speaker 1>in the electronic trading session. We'll see if we can

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<v Speaker 1>get over that number. It's almost two percent increase for

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<v Speaker 1>both West Texas and Brent today, Tom, Brent for all

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<v Speaker 1>dollar dynamic, right, and I mean it's all currency related. Well, yes,

0:10:28.440 --> 0:10:30.800
<v Speaker 1>except that the d X Y dollar index is a

0:10:30.800 --> 0:10:35.000
<v Speaker 1>little stronger today, not completely but mostly mostly, and it's

0:10:35.040 --> 0:10:38.400
<v Speaker 1>feeding into equities, you know, folks. All I know is

0:10:38.400 --> 0:10:41.079
<v Speaker 1>there's consensus. As we see consents I is that the

0:10:41.160 --> 0:10:44.360
<v Speaker 1>right word. We see consents I hear, and they always

0:10:44.400 --> 0:10:49.119
<v Speaker 1>get run. Consents I always get destroyed. Here on Bloomberg surveillance.

0:10:53.080 --> 0:10:54.480
<v Speaker 1>Let's check it with like a bar and get the

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<v Speaker 1>latest world of national headlines. Mike, Tom, thank you very much.

0:10:57.360 --> 0:11:00.880
<v Speaker 1>A long time effort to improve cybersecurity is coming to fruition.

0:11:01.280 --> 0:11:04.440
<v Speaker 1>The Homeland Security Department has formerly begun sharing the tales

0:11:04.480 --> 0:11:08.200
<v Speaker 1>of new digital threats with private business and other government agencies.

0:11:08.360 --> 0:11:12.200
<v Speaker 1>The program is voluntary. North Korea fire to ballistic missile.

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<v Speaker 1>Today it fell into the sea Washington State authorities say

0:11:15.840 --> 0:11:20.000
<v Speaker 1>an online church scam believers out of almost eight million dollars.

0:11:20.320 --> 0:11:23.079
<v Speaker 1>Authorities say the owner of the Christian Prayer Center charge

0:11:23.120 --> 0:11:27.040
<v Speaker 1>people between nine and thirty five dollars for every prayer

0:11:27.160 --> 0:11:31.600
<v Speaker 1>using fake religious leaders. Washington Attorney General Bob Ferguson pay

0:11:31.720 --> 0:11:34.120
<v Speaker 1>to prey. That's exactly what it was, no doubt about it.

0:11:34.120 --> 0:11:36.960
<v Speaker 1>Pay to prey and under deceptive circumstances. Nothing about it

0:11:37.040 --> 0:11:40.160
<v Speaker 1>was real, Ferguson, says owner Benjamin and Ogilvie, who has

0:11:40.160 --> 0:11:42.720
<v Speaker 1>agreed to pay back the money the thousands of customers.

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<v Speaker 1>Global News twenty four hours a day, powered by our

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<v Speaker 1>two d journalists and more than a hundred fifty news

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<v Speaker 1>bureaus from around the world. Michael Barr Time and Michael,

0:11:51.520 --> 0:11:53.960
<v Speaker 1>thanks so much. Coming up in our next half hour,

0:11:54.679 --> 0:11:58.520
<v Speaker 1>we have a discussion on the topic of America, which

0:11:58.559 --> 0:12:03.080
<v Speaker 1>is our education in our declining math abilities. It's Bloomberg

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<v Speaker 1>Surveillance Market Drivers brought to you by Mercedes Benz. This month,

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