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Speaker 1: Bloomberg Audio Studios, podcasts, radio news.

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Speaker 2: You're listening to the Bloomberg Intelligence Podcast. Catch us live

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Speaker 2: weekdays at ten am Eastern on affocarplaying Android Auto with

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Speaker 2: your podcasts, or watch us live on YouTube.

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Speaker 3: We had some economic data, of course today, Retail sales

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Speaker 3: KIM in better than expected retail sales. The headline KIM

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Speaker 3: at zero point one percent positive for the month of August.

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Speaker 3: The expectation was negative zero point two percent, so better

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Speaker 3: than expected. The prior period also revised up, So that

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Speaker 3: kind of it's kind of a little bit different than

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Speaker 3: what we hear from some of the retailers who kind

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Speaker 3: of call out the weakness that they are seeing, particularly

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Speaker 3: from the lower end of their consumers. But let's let's

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Speaker 3: break down some of these numbers. We can do that

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Speaker 3: with Joe Blanchard, President of Enterprise Client Solutions at Advantage Solutions. So, Jill,

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Speaker 3: what did you make of the retail sales data we

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Speaker 3: got this morning?

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Speaker 4: So hello and thanks for having me back. It was

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Speaker 4: a surprise, right, This could be indicative of many things,

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Speaker 4: but the first thing that I'll point to is early

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Speaker 4: holiday earlier holiday spending, and so retailers have been pulling

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Speaker 4: holidays forward with good deals and it's kind of working.

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Speaker 4: Sixty three percent of consumers that that they would buy

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Speaker 4: products earlier if on sale. Holiday creep's always been a thing,

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Speaker 4: but it's so exaggerated today that virtually every week of

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Speaker 4: the year there's some sort of holiday in store. We

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Speaker 4: saw that this summer with Summer ween, if you've heard

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Speaker 4: that term before. So the back to school holiday shared

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Speaker 4: shelf space with ghosts and skeletons, and a lot of

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Speaker 4: orange and black TikTokers were making Jacko lanterns from watermelons.

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Speaker 4: There were skeletons on pol floats. Starbucks brought the ever

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Speaker 4: so popular Pumpkin spice latte out earlier than ever before,

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Speaker 4: and home improvement stores jumped on the bad and wagon

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Speaker 4: with halfway to Halloween in April in hopes of addressing

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Speaker 4: their slugs sales as well as trying to deplete that

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Speaker 4: inventory so they have less to discount come the first

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Speaker 4: day of November. So that could also be you know,

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Speaker 4: leaning in towards this increase spending.

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Speaker 5: Well, Jill love of pumpkins spice Lotte, that's a good

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Speaker 5: that's a good call out there. I wanted to know.

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Speaker 6: So.

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Speaker 5: Of course, when we're looking at retail sales, earnings and

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Speaker 5: just all the data that's coming in, it can really

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Speaker 5: feel like a slew. We can't really get a read

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Speaker 5: on the consumer here. Has this offered us any more clarity?

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Speaker 4: Offers more clarity? You know? Probably not, because again, consumers

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Speaker 4: are really shifting the way that they spend. The predictions

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Speaker 4: for this holiday seas that are to be softer than

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Speaker 4: last year, or two percent versus three percent. We we

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Speaker 4: we do see consumers continuing to buy, but trying to

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Speaker 4: buy lower cost alternatives. We saw that with back to school,

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Speaker 4: where the volume was flat but the dollars were down,

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Speaker 4: indicating that they're buying. They're just finding cheaper ways to

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Speaker 4: buy things. And I think we're going to see that

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Speaker 4: this holiday season too, especially with things like the deep

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Speaker 4: discount Chinese shopping apps t MoU, Shine, TikTok. Two thirds

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Speaker 4: of consumers have shot those apps, and that's a number

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Speaker 4: that will likely see go up. And I bring those

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Speaker 4: up at the examples to answer your question because it's

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Speaker 4: blurry out there. Things happening in both.

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Speaker 3: Directions, Jill.

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Speaker 7: For this holiday season, here.

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Speaker 3: How promotional do you think retailers are going to have

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Speaker 3: to be to drive their top line.

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Speaker 4: They're going to have to continue to be very promotional

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Speaker 4: to drive their top line. Historically, pricing and promotions were

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Speaker 4: used to boost near end sales, but now they're used

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Speaker 4: to boost everyday sales. And it's really driven by how

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Speaker 4: consumers are spending and potentially a permanent shift in how

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Speaker 4: they spend. And so we see a lot of growth

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Speaker 4: from discount retailers, private brand sales in general, and consumers

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Speaker 4: are definitely leaning in towards those strategies. In some household

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Speaker 4: are doing even more things, you know, like using alternative

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Speaker 4: pay pay plans like a buy now, pay later, getting

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Speaker 4: a second job, sharing groceries, leaning on social media. The

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Speaker 4: hashtag back to school Halls was a huge help to

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Speaker 4: parents during back to school season.

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Speaker 5: I mean, I think when we're looking at this and

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Speaker 5: the market has really been on edge with investors really

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Speaker 5: worrying about the consumer and how it may hurt the

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Speaker 5: economy and the labor market, I mean, does this really

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Speaker 5: show that the consumer may be stronger than many people think?

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Speaker 4: Oh my, I'm so hesitant to lean into that. All

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Speaker 4: predictions for the back half of this year as well

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Speaker 4: as a holiday season. You know, aren't incredibly positive. Economists

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Speaker 4: think that consumers will rein in their spending in the

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Speaker 4: back even though we didn't see that with the results

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Speaker 4: this morning, will rain in their spending in the back

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Speaker 4: half of this year due to depleted pandemic savings. Lower

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Speaker 4: income households have record levels of credit card debt uncertainty,

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Speaker 4: and those low income households, by the way, are proportionally

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Speaker 4: affected with inflation. We saw that a few weeks ago

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Speaker 4: when Dollar General said that the weekest three weeks of

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Speaker 4: their quarter were the last weeks of each month, indicating

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Speaker 4: that consumers are really struggling to stretch that budget. So

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Speaker 4: for those reasons, I'm super hesitant to lean into overall

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Speaker 4: growth in the back half of this year. We still

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Speaker 4: think it's going to be depressed.

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Speaker 7: What is skimpflation.

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Speaker 4: It's a great question. I'd say that this industry is

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Speaker 4: not short of creativity, right, so we all know what

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Speaker 4: shrinkflation is. We talked about upflation, which is that concept

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Speaker 4: of fining a new use for an existing product. Skipflation

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Speaker 4: is the concept of producing a product or a service

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Speaker 4: with a lesser equality or not equality lesser price ingredient,

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Speaker 4: So for a food product, or for a piece of

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Speaker 4: clothing that could be a cheaper ingredient, or material for

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Speaker 4: a service that could be something like a hotel's day

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Speaker 4: with no cleaning service.

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Speaker 3: Yeah, I've seen that more and more, but less and less.

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Speaker 3: Night after the pandemic, pandemic was really prevalent.

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Speaker 7: Now it's less, so definitely.

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Speaker 5: I mean, we can't really look at any one data point,

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Speaker 5: but as we're looking toward the Fed tomorrow, of course

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Speaker 5: this will that's not necessarily play into this one, but

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Speaker 5: we're looking toward the next job report. How is this

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Speaker 5: just telling us about the strink of the economy more broadly.

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Speaker 4: Yeah, so there's a lot of discussion around the rate

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Speaker 4: cuts and what that might ultimately do to spending. Historically,

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Speaker 4: spending goes up about a half percent in the year

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Speaker 4: following a rate cut, but also goes down to to

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Speaker 4: four percent in a recession. Where we are, you know,

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Speaker 4: soft but not quite a recession. You know, we could

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Speaker 4: see a slight decline in twenty twenty five, but overall,

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Speaker 4: it's going to take a while to revitalize the economy

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Speaker 4: via the rate cuts.

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Speaker 3: Just real quick, Jill, how important is brand loyalty these days.

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Speaker 4: Oh my gosh, I can't tell you how many times

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Speaker 4: they say this. The new loyalty is disloyalty. Which, the

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Speaker 4: new loyalty is disloyalty. We are training consumers to be disloyal.

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Speaker 4: We are training them that there is always a deal

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Speaker 4: to be had out there, whether it's at a different

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Speaker 4: outlet or whether it's waiting. So loyalty has definitely declined

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Speaker 4: and retailers are trying to get that back. So, for example,

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Speaker 4: take retailers loyalty programs. It's a great way for retailers

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Speaker 4: to pull that consumer into their store for that trip

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Speaker 4: because it's the only place to get that price. But

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Speaker 4: consumers beware. It often does have consumers buying things that

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Speaker 4: they didn't need or more than they need. In fact,

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Speaker 4: we just did a recent survey. We're eighty percent of

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Speaker 4: consumers so that they're buying more product than they need

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Speaker 4: because of a good deal.

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Speaker 2: Ye.

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Speaker 4: So it's a great strategy for retailers, but consumers aware.

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Speaker 3: Entry load is what it's called. Jill Blanchard, thanks so

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Speaker 3: much for joining us. Jill Blanchard. She's president of Enterprise

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Speaker 3: Client Solutions. The firm name is Advantage Solutions. Joining us

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Speaker 3: via zoom from California.

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Speaker 2: Today, you're listening to the Bloomberg Intelligence Podcast. Catch us

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Speaker 2: live weekdays at ten am Eastern on Apple car Play

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Speaker 2: and Android Auto with the Bloomberg Business. You can also

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Speaker 2: listen live on Amazon Alexa from our flagship New York station.

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Speaker 2: Just say Alexa play Bloomberg eleven thirty.

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Speaker 7: All right, it is time to get right to it.

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Speaker 3: I'm going right to our guest, daniel De Martino, Booth

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Speaker 3: CEO and chief strategist QI Research. You want to talk FED,

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Speaker 3: this is the go to source. We're so glad to

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Speaker 3: have her in our studio. She's based down on Dallas.

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Speaker 3: She was a former FED person down there in the

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Speaker 3: Dallas Fed, so she knows a thing or two about

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Speaker 3: this Central bank. Here, Danielle, what do you think they

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Speaker 3: should do tomorrow?

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Speaker 8: I think they should have I mean, since we're doing

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Speaker 8: shows right and by the way, by the way, I

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Speaker 8: do analog. So it's my birthday today, so I'm just.

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Speaker 7: I'm right there with you with them. Legal to drink

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Speaker 7: now barely possibly. It's also lis In Saunders birthday.

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Speaker 8: It is also lis In Saunders.

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Speaker 7: We always are like that.

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Speaker 8: The first ones to wish each other had we go

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Speaker 8: down Constitution Day. Anyways, I think that they should have

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Speaker 8: if we're doing shoulda kuda lowered in July? And I

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Speaker 8: think that they know that, and I think that had

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Speaker 8: they lowered in July, because they had a quote unquote

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Speaker 8: real conversation about it, according to J. Powett, the podium

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Speaker 8: that they would subsequently be lowering again twenty five basis

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Speaker 8: points tomorrow, which is why I think fifty kind of

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Speaker 8: makes sense because the level of interest rates fifty basis

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Speaker 8: points lower than what it is right now is appropriate

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Speaker 8: given Bloomberg's bankruptcies came in at eight in the last week,

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Speaker 8: and we've seen another one since then, the second highest

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Speaker 8: this year. I mean, obviously the lag effect is taking

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Speaker 8: effect in the credit markets. It's much more difficult to

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Speaker 8: find funding if you're a bad building or a bad business,

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Speaker 8: so I think, And it's harder by a car, and

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Speaker 8: it's harder to refinance your home, and it's a lot

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Speaker 8: of things say that the level of interest rate is

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Speaker 8: too high, and I think that that's what they should

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Speaker 8: be focused on the level.

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Speaker 5: So you said that you think that they should have

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Speaker 5: cut back in July. So what are your expectations for tomorrow?

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Speaker 5: I mean, are you in the more ambitious camp, are

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Speaker 5: you looking for fifty basis point cut or so?

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Speaker 8: I mean, I have Look, I've been around the Fed

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Speaker 8: for a very long time, and to say, and Bloomberg

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Speaker 8: does a great job of tracking the volatility in the

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Speaker 8: uncertainty of the wagers on whether it's going to be

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Speaker 8: twenty five or fifty, we haven't seen uncertainty this high

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Speaker 8: since two thousand and seven, wow, in terms of the

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Speaker 8: WORP WRP GO. So it's so difficult to say. And

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Speaker 8: Bank of America came out and drew the lines hard

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Speaker 8: this morning and they're like, it should only be twenty five,

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Speaker 8: And Michael Furley at JP Morgan Chase is like, it

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Speaker 8: absolutely should be fifty. My buddy, George Goncalvez at MUFG,

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Speaker 8: kudos to him. He's been saying fifty the whole time

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Speaker 8: because he's looking at the level. So I think that

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Speaker 8: they've done enough broadcasting and moved markets to a great

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Speaker 8: enough extent to break the seventy five percent rule.

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Speaker 7: If need be.

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Speaker 8: But that's what it would come down to, It would

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Speaker 8: be breaking the seventy five percent probability role.

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Speaker 3: So once the FED does begin tomorrow, what's the cadence

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Speaker 3: after that, Like, when would they like to be done?

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Speaker 7: Where would I mean, how does that all work?

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Speaker 8: So I think it from my experience on the inside,

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Speaker 8: you sort of know it's time to ease off on

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Speaker 8: on easing, yep, when you start to see the lag

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Speaker 8: effect from tightening dissipate. Okay, And those are things that

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Speaker 8: are visible right because BC, why go you can track

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Speaker 8: the level of bankruptcy, you can track the level of

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Speaker 8: distress in the system. When that starts to ebb off,

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Speaker 8: then obviously financing is opening up enough to provide adequate

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Speaker 8: liquidity to the system, adequate liquidity to the credit markets.

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Speaker 7: And so that's kind of when you know yep.

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Speaker 8: And I think J Powell at AL, I think it's

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Speaker 8: what's unique right now is we've got a FED that

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Speaker 8: wants to stop with a two or three percent handle.

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Speaker 8: They're like, you know, we can put three percentage points

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Speaker 8: of cuts out there and still not have to worry

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Speaker 8: about going back to the zero bound, which they know

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Speaker 8: is a failed experiment and encouraged too much speculation.

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Speaker 5: And going off of that, I mean, markets are pricing

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Speaker 5: north of one hundred basis plantes of cuts through the

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Speaker 5: end of this year. If that holds, does that mean

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Speaker 5: that the later meetings would all be fifty basis? How

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Speaker 5: would that work exactly?

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Speaker 8: You know, I look, j Powell is the least political

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Speaker 8: FED chair since Paul Volker wondered the buildings and gave

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Speaker 8: the staff and you know, seminars on on why the

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Speaker 8: tailor rode was broken just for fun and did not

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Speaker 8: care what Wall Street thought. Jay Powell is very a

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Speaker 8: political So if it needs to be fifty, it'll be fifty.

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Speaker 8: Because he's when he says I'm data dependent, he's dated dependent.

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Speaker 8: If we see that, you know, there's enough gig workers

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Speaker 8: out there that have been absorbed and ergo, they're finally

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Speaker 8: starting to apply for unemployment because we're seeing a massive

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Speaker 8: runoff from the million full time jobs we've lost in

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Speaker 8: the last twelve months into the part time for economic reasons.

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Speaker 5: Pool.

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Speaker 8: I had an uber driver yesterday, first drive of his

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Speaker 8: Uber life.

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Speaker 7: Wow.

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Speaker 8: But you get that a lot because people are like, Okay,

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Speaker 8: the state's gonna get wherever I live, stay x y. Heck,

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Speaker 8: if it's tennessee twelve whole weeks, that's their max for

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Speaker 8: unemployment benefits. I can maybe get two hundred and ninety

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Speaker 8: five from the state, or I can get at least

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Speaker 8: five seven one thousand dollars five hundred and seven driving Uber,

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Speaker 8: delivering door dash, whatever it is. But at some point

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Speaker 8: you're going to saturate that market in terms of I mean,

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Speaker 8: it's a lot quicker to get an Uber today than

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Speaker 8: it was nine months ago.

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Speaker 3: So just real quick, what's the labor number that gets

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Speaker 3: you spooked, whether it's an unemployment rate or just what's

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Speaker 3: the labor number that gets you spooked?

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Speaker 7: To maybe art you might already be there.

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Speaker 3: I don't know.

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Speaker 8: Well, I'm kind of are yeah, spoop. I really am.

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Speaker 8: To see the rise in part time employment. To see

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Speaker 8: the economic depopulation ratio already dive down into recessionary territory

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Speaker 8: that's on par with that of the two thousand and

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Speaker 8: seven two thousand and nine Great Recession. To see in

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Speaker 8: University of Michigan bad news heard on unemployment go spiking.

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Speaker 8: To see people's expectations for their income go down for

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Speaker 8: six months in a row. That's a data series that

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Speaker 8: goes back to nineteen eighty. We've never seen six months

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Speaker 8: in a row of people saying my income is going

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Speaker 8: to decline in the coming twelve months. Why is that

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Speaker 8: because they're going from full time to part time. They

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Speaker 8: know that what they're we have three hundred and seventy

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Speaker 8: nine thousand and fifty five year old plus rejoin the

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Speaker 8: workforce in August. Hey, I'm going to go back to

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Speaker 8: work to help my kid who doesn't have a full

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Speaker 8: time job anymore. We've got to put food on the

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Speaker 8: table for the grandkids.

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Speaker 3: And I just saw that Sam's Club they're raising the

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Speaker 3: base rates starting wages in the US from fifteen to

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Speaker 3: sixteen dollars. And I keep an eye on that because

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Speaker 3: my last job will be as a greader at walmart

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Speaker 3: Danielle Dee martinmo Booth CEO, Chief Strategist QI Research during

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Speaker 3: US Live here in a Bloomerg interrector Broker studio, which

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Speaker 3: is an absolutely perfect guest to have the day before

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Speaker 3: the FED.

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Speaker 2: You're listening to the Bloomberg Intelligence podcast. Catch us live

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Speaker 2: weekdays at ten am Eastern on Apple car Playing and

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Speaker 2: broud Otto with the Bloomberg Business app. Listen on demand

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Speaker 2: wherever you get your podcasts, or watch us live on YouTube.

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Speaker 7: Nor are you a TikToker?

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Speaker 5: I am. I'm excited for this segment.

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Speaker 3: All right, Well good, I mean, I'm not even going

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Speaker 3: to ask John Tucker he's a TikToker. I know where

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Speaker 3: that's going to stay.

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Speaker 7: Do you know what that is? What's that?

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Speaker 5: You go?

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Speaker 7: All right?

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Speaker 3: Apparently yesterday the hearing went poorly for TikTok and it's

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Speaker 3: legal fight against a US law enforcing servers and app

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Speaker 3: stores stop hosting the video sharing app in January. That's

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Speaker 3: not bueno for them. Matt Sheltonham, he follows all of

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Speaker 3: this stuff media litigation. He's down in Washington, d C.

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Speaker 3: For Bloomberg Intelligence.

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Speaker 7: MAC.

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Speaker 3: You summarize what the case was before the court and

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Speaker 3: what their ruling was. Are we gonna be able to

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Speaker 3: still have TikTok come January?

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Speaker 2: Well?

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Speaker 6: I think if TikTok wasn't concerned about a potential ban

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Speaker 6: before yesterday's hearing, it should be concerned after that hearing.

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Speaker 7: Yesterday it did not go.

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Speaker 6: Well for the company. What's an issue here is in April,

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Speaker 6: Congress passed a law that said unless TikTok is divested

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Speaker 6: to a company that doesn't have its parent in China,

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Speaker 6: that companies in the US can no longer carry the app.

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Speaker 6: In app stores. Companies can no longer host it in

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Speaker 6: a way that the app can be distributed, updated, or

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Speaker 6: maintained in the United States, all of as of January nineteenth,

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Speaker 6: and TikTok is said, look, we can't do a divestiture.

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Speaker 6: It's certainly not on that timeline. And so TikTok's only

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Speaker 6: chance to survive in the United States after January nineteenth

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Speaker 6: is to win this legal case. And yesterday's hearing was

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Speaker 6: the big, big hearing on the case, and the three

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Speaker 6: judges on the case, in my view, were not very

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Speaker 6: sympathetic to the company's First Amendment case.

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Speaker 5: And so is this isolated to the United States? Are

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Speaker 5: there any other you know, countries that are also trying

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Speaker 5: to crack down on TikTok and its influence.

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Speaker 6: I think different countries are taking different approaches. The EU

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Speaker 6: has taken a harder approach to tech regulation generally and

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Speaker 6: likely would apply that to TikTok without a specific ban

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Speaker 6: in the same way. According to our analyst Hamlin Basin.

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Speaker 6: There so this law is US specific. It was passed

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Speaker 6: by Congress specifically to target the company, and so it's

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Speaker 6: a different remedy here in the US. But there's a

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Speaker 6: tendency I think to think, you know, nothing's going to

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Speaker 6: happen in Congress. Nothing ever gets done there, just a

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Speaker 6: lot of talk. Well, here, Congress did it. It's done.

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Speaker 6: It's law, and TikTok's only chance to overcome it is

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Speaker 6: to win this legal case.

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Speaker 3: So the parent company for TikTok is Byte Dance, a

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Speaker 3: Chinese controlled company. If I've misstated that, let me know

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Speaker 3: what has Bite Dance said about their options, what they

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Speaker 3: plan to do scenarios.

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Speaker 6: Yeah, so that's right, that Byte Dance is the parent

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Speaker 6: company of TikTok. Now, TikTok is a is a US subsidiary,

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Speaker 6: It's a US company. TikTok is a privately owned company,

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Speaker 6: but it happens to have its headquarters in China, and

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Speaker 6: that's the concern. And you know, TikTok and Byte Dance

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Speaker 6: in this legal case have basically said, look, a divestiture

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Speaker 6: is just not technically or legally feasible. And so there's

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Speaker 6: really no indication that they're pursuing a divestiture at this point,

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Speaker 6: and at least that's their indication to the court. The

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Speaker 6: law allows a ninety day extension if the president sees

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Speaker 6: their making progress on a sale, but the company, they've

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Speaker 6: made no indication they're pursuing that route. They say this

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Speaker 6: is a blatant violation of the constitution, and so they

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Speaker 6: think they can win in court. But I'm not so

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Speaker 6: sure after yesterday's hearing.

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Speaker 5: I mean, so what do analysts think are the brought

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Speaker 5: would be the broader readout for the corporate side of things.

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Speaker 5: I mean, of course, we know so many companies actually

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Speaker 5: promote their products and their companies on TikTok. I mean,

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Speaker 5: when I'm scrolling through, I'm always seeing a new pitch.

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Speaker 5: So what does that look like in terms of advertisement

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Speaker 5: and the ripple effects there?

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Speaker 6: Yeah, that's right, And part of the litigation yesterday was

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Speaker 6: brought by users of TikTok that say, look, there isn't

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Speaker 6: a good substitute.

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Speaker 7: Yeah, there are other.

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Speaker 6: Social media companies, but we've built our businesses here. We

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Speaker 6: are expressing ourselves as a first Amendment matter on TikTok,

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Speaker 6: and the government can't take that away. And there's also

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Speaker 6: a big business impact in terms of TikTok's competitors. Is

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Speaker 6: one of the leading social media apps in the country,

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Speaker 6: so if it goes away, it's a great opportunity for

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Speaker 6: the competitors for Google, for Meta and so there are

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Speaker 6: serious business implications by forcing a divestiture that isn't going

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Speaker 6: to happen in effectively forcing a ban.

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Speaker 7: Is this something that could get to the Supreme Court.

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Speaker 6: Yes, So if TikTok loses in the DC Circuit, I

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Speaker 6: expect we'll see a decision by early December from the

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Speaker 6: DC Circuit. As I said, the key deadline is January

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Speaker 6: nineteenth here, so there's not a lot of time. If

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Speaker 6: we see a decision in December from the DC Circuit,

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Speaker 6: TikTok's realistic only chance at that point is going to

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Speaker 6: be a last ditch plea to the Supreme Court to

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Speaker 6: hit pause on this, to say, look, nothing should move

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Speaker 6: this fast when you have such a major restriction under

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Speaker 6: the First Amendment. The Supreme Court should issue a stay

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Speaker 6: and take up this case. That's going to be the

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Speaker 6: TikTok's last chance to dodge a man by January nineteenth

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Speaker 6: if this ruling goes against it, and I'm not sure

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Speaker 6: the Supreme Court will necessarily take it. Yes, it's a

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Speaker 6: major question that they might be interested in. But if

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Speaker 6: TikTok gets a major loss at the d C Circuit.

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Speaker 6: The Supreme Court could say, look, you know they got

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Speaker 6: it right. We don't need to step in here. So

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Speaker 6: it's not even a sure thing that the Supreme.

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Speaker 9: Court will take it.

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Speaker 6: We'll have to watch that in after the d C

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Speaker 6: Circuit rules.

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Speaker 3: All right, Matt, thanks so much for joining us. Expert

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Speaker 3: expert analysis there tall you folks. It's hard to find

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Speaker 3: that kind of analysis anywhere else but Bloomberg Intelligence. Mett

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Speaker 3: shutting home media litigation analysts from Bloomberg intelp just down

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Speaker 3: in Washington, DC.

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Speaker 7: It's a huge case. I mean, you think about.

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Speaker 3: Not just all the people that are on TikTok, but

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Speaker 3: all the businesses that are built upon.

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Speaker 5: What happens to the dances.

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Speaker 7: Are we not going to dance anymore? Exact?

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Speaker 9: So you'll get like fifteen second videos of some guy

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Speaker 9: chopping wood or somebody dancing.

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Speaker 7: I don't know something. We're afraid that we're going to lose.

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Speaker 7: That it's going to be big. We'll stay on top

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Speaker 7: of it. This is Bloomberg.

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Speaker 2: You're listening to the Bloomberg Intelligence Podcast. Catch us live

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Speaker 2: Say Alexa playing Bloomberg eleven thirty.

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Speaker 3: It's not just us here at Bloomberg that are fixating

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Speaker 3: on what the Fed's going to do tomorrow. Real people,

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Speaker 3: smart people in Cleveland, Ohio, they also are going to

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Speaker 3: focus on that. Anna Rothbund joints us here. She's a

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Speaker 3: chief investment officer lyrical sopranis soprano, lyrical soprano Seebiz Investment

437
00:22:36,240 --> 00:22:39,199
Speaker 3: Advisory Services. They're based in Cleveland, but she joins us

438
00:22:39,200 --> 00:22:42,560
Speaker 3: here in our Bloomberg Interactive Brokers studio. So on, when

439
00:22:42,600 --> 00:22:44,679
Speaker 3: you take a look at your portfolio, kind of the

440
00:22:44,680 --> 00:22:47,040
Speaker 3: advice you're giving your clients, what have you been telling

441
00:22:47,040 --> 00:22:50,119
Speaker 3: them about the FED and what the Fed's doing and

442
00:22:50,160 --> 00:22:52,640
Speaker 3: why it matters or does it matter that those types

443
00:22:52,680 --> 00:22:53,879
Speaker 3: of discussions.

444
00:22:53,320 --> 00:22:56,400
Speaker 1: Oh it matters, Okay, you know it has plateaued for

445
00:22:56,480 --> 00:23:01,240
Speaker 1: over a year now, and they're tomorrow twenty five or fifty.

446
00:23:01,280 --> 00:23:03,760
Speaker 1: In some ways it doesn't matter because it's just the

447
00:23:03,800 --> 00:23:06,159
Speaker 1: first step that they're taking in what we believe is

448
00:23:06,160 --> 00:23:10,160
Speaker 1: a cycle of cuts. It's still going to be restrictive

449
00:23:10,200 --> 00:23:13,360
Speaker 1: after twenty five basis points or fifty. We do think

450
00:23:13,400 --> 00:23:16,720
Speaker 1: that there are other considerations they need to think about,

451
00:23:17,000 --> 00:23:20,200
Speaker 1: which is, if you go back to the March projections

452
00:23:20,359 --> 00:23:23,199
Speaker 1: and then look at the June projections, there was a

453
00:23:23,320 --> 00:23:27,119
Speaker 1: huge revision, right, they got more hawkish. Now it looks

454
00:23:27,160 --> 00:23:29,760
Speaker 1: like the March revisions maybe they had they it would

455
00:23:29,760 --> 00:23:31,879
Speaker 1: have been better if they had stayed put. So if

456
00:23:31,920 --> 00:23:35,000
Speaker 1: we look at that, we have three cuts coming up,

457
00:23:35,080 --> 00:23:38,959
Speaker 1: twenty five basis points each September tomorrow twenty five basis

458
00:23:38,960 --> 00:23:42,200
Speaker 1: points that we're expecting, and then maybe November and another

459
00:23:42,240 --> 00:23:44,520
Speaker 1: one in December. So that's what we've been sort of

460
00:23:44,520 --> 00:23:48,000
Speaker 1: relaying to our clients and certainly preparing our portfolios.

461
00:23:48,320 --> 00:23:51,919
Speaker 5: And this has definitely been such an interesting cycle, unprecedented.

462
00:23:52,040 --> 00:23:53,960
Speaker 5: But I mean, when you're looking at those projections for

463
00:23:54,119 --> 00:23:56,560
Speaker 5: cuts throughout the end of the year, is that based

464
00:23:56,560 --> 00:23:59,880
Speaker 5: on historical patterns or are you all you know, what's

465
00:24:00,119 --> 00:24:02,200
Speaker 5: the thought process behind not moving forward?

466
00:24:02,280 --> 00:24:05,040
Speaker 7: I don't think history helps us, right, not at all.

467
00:24:05,760 --> 00:24:09,200
Speaker 1: No, it's you know, this was a pandemic driven inflation

468
00:24:09,760 --> 00:24:13,760
Speaker 1: and the Fed had to do something pretty dramatic coming down.

469
00:24:13,880 --> 00:24:16,320
Speaker 1: I mean it was sort of obviously had to raise rates, right,

470
00:24:16,400 --> 00:24:18,560
Speaker 1: maybe it wasn't at the time, but in hindsight it

471
00:24:18,680 --> 00:24:20,760
Speaker 1: was going down. I don't think is going to be

472
00:24:20,800 --> 00:24:21,480
Speaker 1: as easy.

473
00:24:22,119 --> 00:24:23,440
Speaker 7: And the data.

474
00:24:23,200 --> 00:24:25,880
Speaker 1: Dependency, I think comes from the fact that we can't

475
00:24:25,880 --> 00:24:28,640
Speaker 1: rely on history. But at the same time, data dependency

476
00:24:28,720 --> 00:24:32,359
Speaker 1: is making things very volatile, especially on market expectations. So

477
00:24:32,400 --> 00:24:35,240
Speaker 1: we're literally taking I mean we're taking it three cuts

478
00:24:35,280 --> 00:24:38,800
Speaker 1: in twenty twenty four, but also one meeting at a time.

479
00:24:39,720 --> 00:24:42,680
Speaker 3: How about if you haven't put cash to work here,

480
00:24:44,240 --> 00:24:45,719
Speaker 3: I don't know, it's kind of tough one. I think

481
00:24:45,800 --> 00:24:47,720
Speaker 3: John Tucker was going to put some cash to work

482
00:24:47,720 --> 00:24:50,040
Speaker 3: in some money market at four point was it six

483
00:24:50,080 --> 00:24:50,840
Speaker 3: percent or something?

484
00:24:51,119 --> 00:24:54,359
Speaker 9: Was well known the Goldman Sachs markets market. Just like

485
00:24:55,000 --> 00:24:58,080
Speaker 9: my question is of our stock's going to see competition

486
00:24:58,240 --> 00:25:02,200
Speaker 9: from the higher or for bonds at some point fixed.

487
00:25:01,960 --> 00:25:06,240
Speaker 1: Income, well, cash has been nearer five and there was

488
00:25:06,280 --> 00:25:10,080
Speaker 1: no competition, right, So I'm not sure if bonds are

489
00:25:10,200 --> 00:25:15,200
Speaker 1: going to be necessarily any different now the price has

490
00:25:15,240 --> 00:25:18,520
Speaker 1: been it's been favorable for bonds, right, but that also

491
00:25:18,560 --> 00:25:20,800
Speaker 1: means the incomes going down, so lock them in.

492
00:25:21,040 --> 00:25:25,600
Speaker 3: We've heard some people maybe reposition the portfolio, maybe maybe

493
00:25:25,600 --> 00:25:27,600
Speaker 3: take some of the gains from the stocks that really run,

494
00:25:27,600 --> 00:25:29,080
Speaker 3: whether it's the big tech and putting.

495
00:25:29,400 --> 00:25:31,920
Speaker 7: Is that something you guys do too, and repositioning your portfolio.

496
00:25:32,000 --> 00:25:32,800
Speaker 7: How often do you do that?

497
00:25:33,160 --> 00:25:38,320
Speaker 1: Yeah, So we have institutional portfolios, so we have it's

498
00:25:38,320 --> 00:25:40,960
Speaker 1: pretty much fully invested and there's an ips that we

499
00:25:41,000 --> 00:25:43,679
Speaker 1: have to stick to. So what we do is oftentimes

500
00:25:44,040 --> 00:25:47,080
Speaker 1: we have seen this in the last not just two years,

501
00:25:47,119 --> 00:25:50,600
Speaker 1: but going back to pre pandemic, a huge discrepancy between

502
00:25:50,600 --> 00:25:53,520
Speaker 1: growth stocks and value stocks. So we do separate them.

503
00:25:53,800 --> 00:25:56,840
Speaker 1: And when growth stocks run as they have, we take

504
00:25:56,880 --> 00:25:59,280
Speaker 1: the gains. We take the gains and reinvest it into

505
00:25:59,320 --> 00:26:02,160
Speaker 1: the cheaper stock. So that's kind of how we deal

506
00:26:02,200 --> 00:26:04,600
Speaker 1: with some of the irrationalities of the market.

507
00:26:04,840 --> 00:26:07,600
Speaker 5: So I'm always looking at interest rate sensitive sectors as

508
00:26:07,600 --> 00:26:09,760
Speaker 5: I'm sure everyone is. I look at real estate stocks,

509
00:26:09,800 --> 00:26:12,679
Speaker 5: I cover them. Are there any sectors in particular that

510
00:26:12,720 --> 00:26:15,760
Speaker 5: you're really eyeing as we head through this, you know,

511
00:26:15,920 --> 00:26:18,400
Speaker 5: rate cut cycle. Are there any sectors that you think

512
00:26:18,440 --> 00:26:19,720
Speaker 5: could really outperform from this?

513
00:26:20,640 --> 00:26:24,879
Speaker 1: So small caps certainly, and we have seen that actually

514
00:26:24,960 --> 00:26:28,359
Speaker 1: starting in July. Also starting in July, what you saw

515
00:26:28,400 --> 00:26:32,199
Speaker 1: were some rates public rates that were recovering just to

516
00:26:32,240 --> 00:26:35,719
Speaker 1: give a sense. I think office rates since the end

517
00:26:35,760 --> 00:26:39,760
Speaker 1: of twenty twenty one, when FED really started to raise rates,

518
00:26:40,359 --> 00:26:42,800
Speaker 1: it was down like forty percent or so, but you

519
00:26:42,840 --> 00:26:46,399
Speaker 1: really saw that recover since July. So a lot of

520
00:26:46,440 --> 00:26:50,639
Speaker 1: the interest rates sensitive areas. Not every area was max seven,

521
00:26:50,640 --> 00:26:54,200
Speaker 1: definitely wasn't. I think those areas are poised to.

522
00:26:54,160 --> 00:26:56,919
Speaker 3: Outperform, and again they're are performing today. The S and

523
00:26:56,920 --> 00:26:58,680
Speaker 3: P five hundreds up four tens of one percent, but

524
00:26:58,720 --> 00:27:01,439
Speaker 3: the Russell two thousand and so point seven percent, so

525
00:27:01,480 --> 00:27:03,240
Speaker 3: we're starting to see that already. Anna, thank you so

526
00:27:03,320 --> 00:27:07,600
Speaker 3: much for joining us on a Rathbund Chief Investment Officer

527
00:27:08,200 --> 00:27:11,439
Speaker 3: lyrical soprano. I am googling for some of her performances

528
00:27:11,480 --> 00:27:12,040
Speaker 3: as we speak.

529
00:27:12,040 --> 00:27:13,119
Speaker 7: That's what I was doing earlier.

530
00:27:13,119 --> 00:27:14,679
Speaker 3: Oh no, so I'll be checking it out on the

531
00:27:14,760 --> 00:27:17,400
Speaker 3: commute home here see BIZ Investment Advisory Services.

532
00:27:17,400 --> 00:27:18,160
Speaker 7: That's the day job.

533
00:27:18,200 --> 00:27:20,080
Speaker 3: But a lyrical soprano, I want.

534
00:27:19,960 --> 00:27:21,000
Speaker 5: To learn to hit those notes.

535
00:27:21,080 --> 00:27:21,560
Speaker 7: Oh please.

536
00:27:22,800 --> 00:27:25,000
Speaker 3: My sister's a great singer, so she's the only one

537
00:27:25,080 --> 00:27:25,879
Speaker 3: that got to I think I'm like.

538
00:27:25,880 --> 00:27:29,840
Speaker 5: An alto too. Whatever is probably maybe right before tenor okay,

539
00:27:30,040 --> 00:27:30,680
Speaker 5: we can't do a due.

540
00:27:31,000 --> 00:27:32,960
Speaker 7: Get up there. Thank you.

541
00:27:32,960 --> 00:27:33,280
Speaker 9: So much.

542
00:27:33,280 --> 00:27:38,800
Speaker 2: Annah, you're listening to the Bloomberg Intelligence Podcast. Catch us

543
00:27:38,840 --> 00:27:42,240
Speaker 2: live weekdays at ten am Eastern on applecar Play and

544
00:27:42,240 --> 00:27:45,160
Speaker 2: Android Auto with the Bloomberg Business app. You can also

545
00:27:45,240 --> 00:27:48,400
Speaker 2: listen live on Amazon Alexa from our flagship New York

546
00:27:48,480 --> 00:27:52,800
Speaker 2: station Just Say Alexa playing Bloomberg eleven thirty.

547
00:27:53,560 --> 00:27:55,919
Speaker 3: We love talking to Kate Richard. She's the CEO and

548
00:27:56,000 --> 00:27:58,840
Speaker 3: co CIO at Warwick Investment Group. We love talking to

549
00:27:58,920 --> 00:28:00,879
Speaker 3: Kate just to get a So what's happening in the

550
00:28:00,920 --> 00:28:05,760
Speaker 3: world of global energy, natural gas, crude oil? Kate, thanks

551
00:28:05,760 --> 00:28:07,600
Speaker 3: so much for joining us here in our studio. Let's

552
00:28:07,600 --> 00:28:09,960
Speaker 3: talk about just WTI crude oil WORRE. It's seventy one

553
00:28:10,000 --> 00:28:12,680
Speaker 3: bucks a barrel here, we did fall below seventy here.

554
00:28:12,920 --> 00:28:16,280
Speaker 3: Give us the state of just global crude oil. Is

555
00:28:16,320 --> 00:28:18,160
Speaker 3: it a supply issue that's.

556
00:28:18,000 --> 00:28:20,000
Speaker 7: Been pulling oil down or is it demander a little

557
00:28:20,040 --> 00:28:20,440
Speaker 7: bit of both.

558
00:28:20,720 --> 00:28:23,000
Speaker 10: I would say it's probably sentiment more than anything else.

559
00:28:23,720 --> 00:28:27,120
Speaker 10: There's nothing that could explain a twenty to twenty five

560
00:28:27,280 --> 00:28:31,880
Speaker 10: dollars barrel drop in prices for oil fundamentally. But it's

561
00:28:32,000 --> 00:28:35,040
Speaker 10: very important to remember that oil is often not a

562
00:28:35,080 --> 00:28:40,479
Speaker 10: fundamentally driven commodity in terms of pricing, the financial demand

563
00:28:40,520 --> 00:28:43,600
Speaker 10: for oil and petroleum products is actually thirty times the

564
00:28:43,640 --> 00:28:45,959
Speaker 10: size of the physical market. So if you look at

565
00:28:46,000 --> 00:28:48,480
Speaker 10: all of the contracts that are treating for oil and

566
00:28:48,560 --> 00:28:52,080
Speaker 10: oil products such as gasoline, jet fuel, et cetera, that

567
00:28:52,160 --> 00:28:54,520
Speaker 10: market is thirty times the size of the actual physical

568
00:28:54,560 --> 00:28:56,719
Speaker 10: market for oil. And so what that means is that

569
00:28:56,760 --> 00:29:00,360
Speaker 10: the financial sentiment around oil can actually have an enormous

570
00:29:00,400 --> 00:29:03,680
Speaker 10: impact on prices that isn't actually reflected in fundamentals. And

571
00:29:03,680 --> 00:29:05,160
Speaker 10: I'll talk about fundamentals.

572
00:29:04,680 --> 00:29:05,200
Speaker 7: In a second.

573
00:29:05,400 --> 00:29:07,760
Speaker 10: If you go back to twenty fifteen to kind of

574
00:29:07,800 --> 00:29:11,280
Speaker 10: illustrate the point that I just made, in twenty fifteen,

575
00:29:11,440 --> 00:29:15,480
Speaker 10: we had a two percent oversupply, so not horribly oversupplied

576
00:29:15,520 --> 00:29:19,080
Speaker 10: market that triggered a sixty percent price decline. That doesn't

577
00:29:19,080 --> 00:29:20,680
Speaker 10: happen in a normal market. You don't have like a

578
00:29:20,720 --> 00:29:24,200
Speaker 10: two percent oversupply and multifamily and a sixty percent decline

579
00:29:24,200 --> 00:29:27,040
Speaker 10: in rents. So that's fundamentally what we're dealing with in

580
00:29:27,120 --> 00:29:29,560
Speaker 10: terms of sort of the sentiment around oil, and that

581
00:29:29,640 --> 00:29:31,160
Speaker 10: kind of goes to the hedge fund point we were

582
00:29:31,160 --> 00:29:34,840
Speaker 10: talking about earlier. I will say that this sentiment around

583
00:29:34,840 --> 00:29:37,320
Speaker 10: oil is a little bit driven by Chinese demand. So

584
00:29:37,480 --> 00:29:40,640
Speaker 10: Chinese demand numbers are not great. They actually contracted in

585
00:29:40,720 --> 00:29:43,240
Speaker 10: Q two on a year over a year basis. However,

586
00:29:43,440 --> 00:29:46,280
Speaker 10: twenty twenty three was exceptionally strong, and China is about

587
00:29:46,280 --> 00:29:49,800
Speaker 10: seventeen percent of the market. When we look at the

588
00:29:49,880 --> 00:29:53,240
Speaker 10: idea that you could extrapolate Chinese demand to what's actually

589
00:29:53,280 --> 00:29:57,320
Speaker 10: going to happen in oil prices, I would say two things.

590
00:29:57,400 --> 00:30:01,040
Speaker 10: Number one, the correlation of Chinese demand to global demand,

591
00:30:01,200 --> 00:30:04,000
Speaker 10: so seventeen million barrels a day of demand to what

592
00:30:04,080 --> 00:30:06,040
Speaker 10: happens with the other eighty three million barrels a day

593
00:30:06,040 --> 00:30:08,560
Speaker 10: of demand is like six point eight percent, So on

594
00:30:08,560 --> 00:30:11,320
Speaker 10: an our square basis, that's meaningless. And if you look

595
00:30:11,360 --> 00:30:14,880
Speaker 10: at Chinese demand, when you look at Chinese demand to

596
00:30:15,240 --> 00:30:18,080
Speaker 10: non OECD demand, which has been a driver oil growth,

597
00:30:18,080 --> 00:30:21,160
Speaker 10: and so that's important, it's zero point one percent, so

598
00:30:21,480 --> 00:30:24,800
Speaker 10: obviously meaningless as well. So China's weighing on sentiment, but

599
00:30:24,840 --> 00:30:26,440
Speaker 10: we need to think about what that actually means in

600
00:30:26,520 --> 00:30:29,880
Speaker 10: terms of global demand growth. And the last thing I

601
00:30:29,880 --> 00:30:34,080
Speaker 10: would say is that oil and gasoline demand were at

602
00:30:34,120 --> 00:30:36,240
Speaker 10: all time highs last year, and they are also at

603
00:30:36,280 --> 00:30:38,560
Speaker 10: all time highs this year, so really nothing.

604
00:30:38,320 --> 00:30:40,680
Speaker 9: To explode three dollars a gallon, I'm coming.

605
00:30:40,440 --> 00:30:46,160
Speaker 3: In gasoline correspondent, this is guy.

606
00:30:46,200 --> 00:30:48,160
Speaker 10: Well, I mean, you could the FED can think oil

607
00:30:48,200 --> 00:30:50,920
Speaker 10: prices for being able to, you know, even entertain a cut.

608
00:30:50,920 --> 00:30:53,240
Speaker 10: If you had ninety to one hundred dollars oil prices

609
00:30:53,320 --> 00:30:54,320
Speaker 10: right now there, it would be.

610
00:30:54,520 --> 00:30:57,800
Speaker 9: Said on an inflation adjusted basis deflation.

611
00:30:58,120 --> 00:30:58,760
Speaker 6: Good question.

612
00:30:58,920 --> 00:31:01,720
Speaker 10: Oil is at two thousand and four levels. Wow, wow,

613
00:31:01,760 --> 00:31:04,920
Speaker 10: which is incredible for the most probably valuable commodity in

614
00:31:04,920 --> 00:31:05,280
Speaker 10: the world.

615
00:31:05,360 --> 00:31:06,680
Speaker 5: So, I mean, of course we're sitting here in a

616
00:31:06,760 --> 00:31:08,760
Speaker 5: very special week. We've got the FED tomorrow. How does

617
00:31:08,800 --> 00:31:10,959
Speaker 5: this all play into that expand a bit more on that.

618
00:31:11,520 --> 00:31:14,440
Speaker 10: Well, you know, obviously, I think when you look at

619
00:31:14,560 --> 00:31:17,520
Speaker 10: the impact to consumers, we also are thinking about it

620
00:31:17,560 --> 00:31:20,000
Speaker 10: being an election year, and I would not say that

621
00:31:20,040 --> 00:31:23,760
Speaker 10: the correlation is you know, it's a spurious, spurious in

622
00:31:23,840 --> 00:31:26,480
Speaker 10: terms of correlation, and it may not be causal. But

623
00:31:26,560 --> 00:31:28,880
Speaker 10: normally we have weak oil prices in an election year.

624
00:31:28,920 --> 00:31:29,600
Speaker 7: That's number one.

625
00:31:29,720 --> 00:31:34,160
Speaker 10: Number two, it's refinery turnaround season after peak driving season,

626
00:31:34,200 --> 00:31:36,640
Speaker 10: and so you are going to have you know, refineries

627
00:31:36,720 --> 00:31:39,360
Speaker 10: undergoing maintenance, so they will be consuming less oil that

628
00:31:39,480 --> 00:31:41,520
Speaker 10: will make demand look a little bit worse, and so

629
00:31:41,680 --> 00:31:43,440
Speaker 10: we're seeing a little bit of an impact from that.

630
00:31:44,040 --> 00:31:47,400
Speaker 10: But you know, when you look at like overall inflation levels,

631
00:31:47,760 --> 00:31:50,600
Speaker 10: inflation has cooled over the past year, but we're not

632
00:31:50,680 --> 00:31:53,400
Speaker 10: back to twenty nineteen levels. We're still you know, if

633
00:31:53,400 --> 00:31:56,200
Speaker 10: you look at the price of bread to gasoline, you're

634
00:31:56,240 --> 00:31:59,600
Speaker 10: still much higher than twenty nineteen levels. And oil just

635
00:32:00,200 --> 00:32:03,720
Speaker 10: has helped a little bit because it probably really is undervalued,

636
00:32:03,800 --> 00:32:05,760
Speaker 10: especially relative to the cost of supply.

637
00:32:06,240 --> 00:32:09,760
Speaker 3: Alps front, at least from my perspective and reporting on

638
00:32:09,840 --> 00:32:13,360
Speaker 3: this whole AI play for global energy, and it comes

639
00:32:13,360 --> 00:32:15,840
Speaker 3: down to simply, you're going to build all these computer

640
00:32:16,080 --> 00:32:18,480
Speaker 3: farms and things and all that kind of stuff. Somebody's

641
00:32:18,480 --> 00:32:21,200
Speaker 3: got to fuel it. And the question is it coal?

642
00:32:21,320 --> 00:32:25,880
Speaker 3: Is it gas? Is it oil? Is it nuclear? How

643
00:32:25,920 --> 00:32:26,960
Speaker 3: do you guys think about that?

644
00:32:26,960 --> 00:32:27,320
Speaker 2: Whole thing?

645
00:32:27,480 --> 00:32:29,720
Speaker 3: Is people trying to say there's an energy play here

646
00:32:29,760 --> 00:32:30,200
Speaker 3: to AI.

647
00:32:30,880 --> 00:32:32,840
Speaker 10: Yeah, I mean the future of AI is going to

648
00:32:32,880 --> 00:32:35,800
Speaker 10: be who controls the energy infrastructure related to it? Clearly,

649
00:32:36,120 --> 00:32:38,680
Speaker 10: and so then the question becomes is it natural gas,

650
00:32:38,880 --> 00:32:40,800
Speaker 10: is it nuclear? Is it renewables?

651
00:32:40,880 --> 00:32:41,480
Speaker 8: Is it coal?

652
00:32:42,640 --> 00:32:44,280
Speaker 10: I think that you know, what we see as big

653
00:32:44,320 --> 00:32:47,800
Speaker 10: tech is certainly hanging hopes on the AI revolution and

654
00:32:47,840 --> 00:32:50,040
Speaker 10: the growth and data centers that will be needed on

655
00:32:50,200 --> 00:32:53,280
Speaker 10: a nuclear renaissance, and there's some interesting things to say

656
00:32:53,320 --> 00:32:56,040
Speaker 10: with respect to that. So number one, uranium prices are

657
00:32:56,040 --> 00:33:00,080
Speaker 10: down twenty percent, and that's partly because Kazakhstan announced that

658
00:33:00,120 --> 00:33:04,800
Speaker 10: it's increasing production a bit. Secondly, the House and Senate

659
00:33:04,960 --> 00:33:08,160
Speaker 10: just passed a ban on Russian imports of uranium, which

660
00:33:08,160 --> 00:33:10,400
Speaker 10: is about twenty percent of the US market. US is

661
00:33:10,400 --> 00:33:12,960
Speaker 10: the largest consumer of uranium in the world and that

662
00:33:13,080 --> 00:33:15,800
Speaker 10: kicks in in twenty twenty eight, so the US consumers

663
00:33:15,800 --> 00:33:18,760
Speaker 10: will be needing to look for alternative sources of supply

664
00:33:18,840 --> 00:33:23,480
Speaker 10: for about twenty percent of their supply. And lastly, we

665
00:33:23,560 --> 00:33:26,400
Speaker 10: are starting to see groups like Amazon go and buy

666
00:33:26,600 --> 00:33:29,280
Speaker 10: nuclear power plants to see if they can power some

667
00:33:29,720 --> 00:33:34,320
Speaker 10: of data centers with uranium powered. Nuclear nuclear is clearly

668
00:33:35,040 --> 00:33:37,400
Speaker 10: carbon neutral, and it also has the most uptime of

669
00:33:37,400 --> 00:33:41,120
Speaker 10: any power producing asset in the world. It's like over

670
00:33:41,240 --> 00:33:45,680
Speaker 10: ninety percent uptime, So uranium is very interesting, especially given

671
00:33:45,720 --> 00:33:48,080
Speaker 10: the selloff. The other question is how much of this

672
00:33:48,120 --> 00:33:50,760
Speaker 10: is powered by natural gas, and that is a very

673
00:33:50,760 --> 00:33:53,920
Speaker 10: interesting strategic question for the US, because the US is

674
00:33:54,440 --> 00:33:56,960
Speaker 10: North America is a natural gas province, and we are

675
00:33:57,000 --> 00:34:00,000
Speaker 10: the Saudi Arabia of natural gas, and we have cheap

676
00:34:00,080 --> 00:34:04,480
Speaker 10: domestics sources, especially with gas at two forty. However, gas

677
00:34:04,520 --> 00:34:07,520
Speaker 10: is in pretty steep contango. So December twenty twenty four

678
00:34:07,560 --> 00:34:10,320
Speaker 10: prices are at three dollars three dollars a M versus

679
00:34:10,360 --> 00:34:13,279
Speaker 10: you know, two forty spot prices, and next year it's

680
00:34:13,320 --> 00:34:16,840
Speaker 10: at three eighty and M. So that it shows that

681
00:34:16,880 --> 00:34:20,160
Speaker 10: we're in pretty steep contango. The market's expecting future higher prices,

682
00:34:20,440 --> 00:34:23,279
Speaker 10: but remember gas is fundamentally driven by weather, and if

683
00:34:23,320 --> 00:34:25,160
Speaker 10: winter doesn't show up this year, as it has not

684
00:34:25,239 --> 00:34:28,080
Speaker 10: for the past three winters, you could see lower prices.

685
00:34:28,120 --> 00:34:30,320
Speaker 3: Although I have to admit, I just got a tweet

686
00:34:30,320 --> 00:34:32,839
Speaker 3: from one of my favorite ski resorts out west. It's

687
00:34:32,840 --> 00:34:33,600
Speaker 3: snowed last night.

688
00:34:33,640 --> 00:34:34,440
Speaker 7: It's coming.

689
00:34:34,480 --> 00:34:37,799
Speaker 5: Good news almost times guess that.

690
00:34:37,880 --> 00:34:38,279
Speaker 7: Guess now?

691
00:34:38,320 --> 00:34:40,000
Speaker 3: I just looked at my little Bloomberg charge down like

692
00:34:40,080 --> 00:34:42,040
Speaker 3: thirty percent from recent highs over the last year.

693
00:34:42,080 --> 00:34:44,920
Speaker 7: So is that a supply issue?

694
00:34:45,120 --> 00:34:47,680
Speaker 10: Yeah, You've had a fair amount of new supply come

695
00:34:47,680 --> 00:34:49,960
Speaker 10: online in the US because of droll and completed wells

696
00:34:49,960 --> 00:34:51,960
Speaker 10: and you also have to remember that most oil wells

697
00:34:52,000 --> 00:34:54,719
Speaker 10: in the US produce natural gas as well. You know,

698
00:34:54,880 --> 00:34:57,960
Speaker 10: like thirty percent of permium production right now is natural gas,

699
00:34:58,000 --> 00:35:00,759
Speaker 10: and as those wells get older, they become gas or overtime.

700
00:35:01,040 --> 00:35:02,719
Speaker 10: So this is one of the reasons that people have

701
00:35:02,760 --> 00:35:06,080
Speaker 10: confidence in building petrochemical and lergy export facilities in the

702
00:35:06,160 --> 00:35:08,719
Speaker 10: US because we have such robust supply and we're even

703
00:35:08,760 --> 00:35:11,480
Speaker 10: getting it basically as a free buy product from our

704
00:35:11,560 --> 00:35:12,360
Speaker 10: oil wells.

705
00:35:12,920 --> 00:35:14,840
Speaker 5: And I know, as we were talking about earlier, hedge

706
00:35:14,840 --> 00:35:17,560
Speaker 5: funds are net suor oil for the first time since

707
00:35:17,560 --> 00:35:20,359
Speaker 5: the datas started being collected in twenty eleven. I mean,

708
00:35:20,400 --> 00:35:22,680
Speaker 5: when we think about smart money making this decision, do

709
00:35:22,680 --> 00:35:24,320
Speaker 5: you think that that permeates into the rest of the

710
00:35:24,360 --> 00:35:26,520
Speaker 5: market when we're looking at investors more broadly.

711
00:35:26,320 --> 00:35:29,520
Speaker 10: I think tactically, Number one, it's refinery season. It's refinery

712
00:35:29,560 --> 00:35:31,759
Speaker 10: maintenance season, so your bid for oil is less. That's

713
00:35:31,840 --> 00:35:35,320
Speaker 10: number one. Number Two, it's an election season, and usually

714
00:35:35,520 --> 00:35:38,160
Speaker 10: prices go down into an election. I mean you could

715
00:35:38,200 --> 00:35:43,320
Speaker 10: say that's in the interest of an incumbents. And then lastly,

716
00:35:43,360 --> 00:35:45,640
Speaker 10: you have a weak Chinese number and that is going

717
00:35:45,640 --> 00:35:48,600
Speaker 10: to spook the market, although we do not think weak

718
00:35:48,760 --> 00:35:51,840
Speaker 10: Chinese demand can be extrapolated to global demand today. So

719
00:35:52,040 --> 00:35:54,759
Speaker 10: if I were tactically positioning, I would say I would

720
00:35:54,800 --> 00:35:58,200
Speaker 10: be pretty net short too, however, but I would probably

721
00:35:58,239 --> 00:36:00,720
Speaker 10: close that trade out pretty quickly because we have probably

722
00:36:00,760 --> 00:36:04,200
Speaker 10: the most disciplined OPEC we've ever had, and OPEK under

723
00:36:04,239 --> 00:36:07,200
Speaker 10: the current Saudi leadership is very focused on price stability.

724
00:36:07,200 --> 00:36:08,840
Speaker 10: They do not want thirty they do not want one

725
00:36:08,920 --> 00:36:10,840
Speaker 10: hundred and twenty dollars oil. They really want it to

726
00:36:10,880 --> 00:36:13,480
Speaker 10: stay in a tight band because they view that as

727
00:36:13,520 --> 00:36:15,759
Speaker 10: best for their customers, and they've done a very good

728
00:36:15,840 --> 00:36:18,680
Speaker 10: job governing the market. So you know, just an example

729
00:36:18,680 --> 00:36:20,560
Speaker 10: of that is two weeks ago, OPEC came out and

730
00:36:20,600 --> 00:36:22,560
Speaker 10: said we were supposed to increase production one hundred and

731
00:36:22,560 --> 00:36:24,839
Speaker 10: eighty thousand barrels a day, and we won't. And that's

732
00:36:24,880 --> 00:36:27,120
Speaker 10: how they're governing the market. So I think you can

733
00:36:27,120 --> 00:36:29,759
Speaker 10: make these tactical trades, but you're probably trading in a

734
00:36:29,800 --> 00:36:30,359
Speaker 10: tighter band.

735
00:36:30,400 --> 00:36:30,520
Speaker 6: Now.

736
00:36:30,520 --> 00:36:32,080
Speaker 10: It doesn't mean that you won't. You couldn't have a

737
00:36:32,120 --> 00:36:35,600
Speaker 10: temporary real trade off or trade up, but I think

738
00:36:35,680 --> 00:36:37,719
Speaker 10: you have a market that's being governed in bands the

739
00:36:37,800 --> 00:36:39,880
Speaker 10: way that it wasn't in two thousand and eight, for example,

740
00:36:40,440 --> 00:36:40,879
Speaker 10: is the.

741
00:36:40,800 --> 00:36:43,239
Speaker 3: Fact that the US is now a net exporter for

742
00:36:43,280 --> 00:36:46,880
Speaker 3: the first time like in ever? Does that undercut Opek's

743
00:36:46,920 --> 00:36:49,680
Speaker 3: ability to really be that driver of price.

744
00:36:49,880 --> 00:36:52,320
Speaker 10: OPEC has teamed up with Russia and they are definitely

745
00:36:52,320 --> 00:36:55,000
Speaker 10: the largest producer in the world. US is like thirteen

746
00:36:55,000 --> 00:36:56,120
Speaker 10: percent of supply.

747
00:36:56,440 --> 00:36:58,359
Speaker 7: So a lot though, isn't that on the margin? Does

748
00:36:58,400 --> 00:36:59,080
Speaker 7: that not impact that?

749
00:36:59,280 --> 00:37:01,600
Speaker 3: So I got some knucklehead in Texas or you know,

750
00:37:01,680 --> 00:37:04,800
Speaker 3: Louisiana pump and oil because he or she can and

751
00:37:04,840 --> 00:37:07,000
Speaker 3: their cost is for your fifty dollars a barrel?

752
00:37:07,760 --> 00:37:09,200
Speaker 7: Is that not impact the world markets?

753
00:37:09,360 --> 00:37:09,760
Speaker 2: It does?

754
00:37:10,000 --> 00:37:12,960
Speaker 10: It absolutely does. The point I'm really making is that

755
00:37:13,000 --> 00:37:16,359
Speaker 10: OPEK has a cartel with Russia, controls over a third

756
00:37:16,400 --> 00:37:20,640
Speaker 10: of global production, and they have been committed to price stability.

757
00:37:21,200 --> 00:37:24,920
Speaker 10: But yes, of global production growth over the past ten

758
00:37:24,960 --> 00:37:28,000
Speaker 10: years has come from the United States. Right, the United

759
00:37:28,040 --> 00:37:29,240
Speaker 10: States is really only jurisdiction.

760
00:37:29,480 --> 00:37:32,359
Speaker 9: But here's here's the final question. Can you answer this one?

761
00:37:32,360 --> 00:37:34,840
Speaker 9: Because nobody else can and I can't and you can't.

762
00:37:35,400 --> 00:37:38,759
Speaker 9: Why can't we pump gas in New Jersey?

763
00:37:39,360 --> 00:37:43,640
Speaker 5: Do you have any ideas The question of the day it.

764
00:37:43,719 --> 00:37:45,200
Speaker 9: Actually there are only two states.

765
00:37:45,200 --> 00:37:47,919
Speaker 5: It's I don't think it's you mean where they pump

766
00:37:48,000 --> 00:37:49,400
Speaker 5: it for you, right.

767
00:37:49,880 --> 00:37:53,080
Speaker 7: A pump it for you organ. That organ just went

768
00:37:53,160 --> 00:37:55,040
Speaker 7: to like, it's a good question.

769
00:37:55,200 --> 00:37:56,359
Speaker 5: I think it's a luxury.

770
00:37:56,600 --> 00:38:01,440
Speaker 7: I agree, and it's a luxury for you. Thanks Homer.

771
00:38:01,640 --> 00:38:03,200
Speaker 3: All right, that's how we roll, Kate. We see when

772
00:38:03,200 --> 00:38:05,359
Speaker 3: Alex is not here, we go off the rails. Yber.

773
00:38:05,400 --> 00:38:07,480
Speaker 7: We appreciate it. Kate. Thank you so much for joining us.

774
00:38:07,560 --> 00:38:10,080
Speaker 3: You know some of the smartest talk that we have

775
00:38:10,160 --> 00:38:13,359
Speaker 3: discussion that we have on global energy, thanks to Kate

776
00:38:13,440 --> 00:38:17,160
Speaker 3: Richards as CEO and co CIO of Wark Investment Group

777
00:38:17,239 --> 00:38:19,520
Speaker 3: joining us live here in our Bloomberg Interactive Broker studio.

778
00:38:19,760 --> 00:38:24,239
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779
00:38:24,480 --> 00:38:27,680
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780
00:38:27,680 --> 00:38:31,080
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781
00:38:31,160 --> 00:38:34,560
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782
00:38:34,680 --> 00:38:37,799
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783
00:38:37,920 --> 00:38:39,760
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