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Speaker 1: Welcome to the Bloomberg p m L Podcast. I'm pim Fox.

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Speaker 1: Along with my co host Lisa Bramowitz. Each day we

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Speaker 1: bring you the most important, noteworthy, and useful interviews for

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Speaker 1: you and your money, whether you're at the grocery store

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Speaker 1: or the trading floor. Find the Bloomberg p m L

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Speaker 1: Podcast on Apple Podcasts, SoundCloud, and Bloomberg dot Com. Let's

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Speaker 1: turn our attention now to Argentina or the central Bank

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Speaker 1: has risen interest rates three times in the past week

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Speaker 1: just to support its currency. The result it is not working.

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Speaker 1: Joining us now, Paul McNamara, investment director for Emerging Markets

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Speaker 1: at gam UK Limited, overseeing about eleven billion dollars in

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Speaker 1: developing world assets. Paul, thank you so much for being here.

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Speaker 1: We're looking at a lira that is tanking. We're looking

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Speaker 1: at that yields are absolutely skyrocketing on Argentinean bonds. Is

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Speaker 1: this a buying opportunity? We think it is. Sorry you

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Speaker 1: said lira. The lira is the one that we don't

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Speaker 1: think is buying opportunity. Turkey has quite similar problems to Argentina. Sorry,

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Speaker 1: I'm getting my troubles back. Confused, Sorry, no, no, the

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Speaker 1: different the differences really favor Argentina. Argentina is a much

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Speaker 1: less indebted economy. So you know, the the Argentines did

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Speaker 1: three percent last Friday, they did three percent yesterday, they

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Speaker 1: did six and three quarter percent today. But you know,

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Speaker 1: this is an economy with a very low level of leverage,

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Speaker 1: where the burden of hiking rates is much less severe

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Speaker 1: on the real economy. Um, it's you know, it's something

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Speaker 1: that can translate relatively smoothly to currency strength, unlike you know,

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Speaker 1: most countries in the developed world, almost countries in e M,

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Speaker 1: where you know, obviously the conflicts between the damage done

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Speaker 1: by higher rates and the damage done by a weaker currency.

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Speaker 1: In Argentina, I think it's fairly here that that all

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Speaker 1: the all the burden, all the damage comes from a

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Speaker 1: weaker paco. Um, so everything favors that the the the

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Speaker 1: Argentine authorities doing everything they possibly can to keep the

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Speaker 1: paco in place. Well, just to push back a little bit,

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Speaker 1: because if you see, this is a buying opportunity for

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Speaker 1: the Argentine paco or perhaps some of the debt that's

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Speaker 1: selling off. I'm just wondering about the root of the

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Speaker 1: weakness here, which is the fear that the right leaning

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Speaker 1: leadership isn't doing as much as it needs to be

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Speaker 1: doing to support the nation's economy and its finances. What's

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Speaker 1: your take on that. No, I mean, you know, we've

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Speaker 1: got right wing governments or populist governments all over the

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Speaker 1: world sort of not supporting the economy. The economy, you know,

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Speaker 1: if you look at Russia, if you look at Poland,

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Speaker 1: if you look pretty much everywhere. I mean, the reason

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Speaker 1: that Argentina and again Turkey are getting hammered is not

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Speaker 1: so much to do with economic strength. It's to do

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Speaker 1: with the external balances. These are both countries where imports

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Speaker 1: are are rising much faster than exports. You know, that

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Speaker 1: the currency has become competitive, um, you know, and the

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Speaker 1: way to address that is to you know, is to

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Speaker 1: bring import demands down a bit and give people a

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Speaker 1: reason to hold their money in local currency, which I

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Speaker 1: think higher rates will help with. Um. You know, growth

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Speaker 1: growth in Argentina is respectable. It's you know, it's not

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Speaker 1: outrageously high, but I think it's you know, it's it's

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Speaker 1: positive that the authorities are willing to hike rates and

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Speaker 1: looking for stability ahead of a dash for growth. Paul,

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Speaker 1: why did this happen. I mean, what's the reason. Doesn't

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Speaker 1: this go back to something that happened in December? I

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Speaker 1: think the rate hikes at the end of last year

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Speaker 1: and the start of this year. Yes, that that that

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Speaker 1: there was a perception that the you know that that

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Speaker 1: the Argentines were kind of engaging in this dash for growth,

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Speaker 1: that you know that stability and lower inflation had taken

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Speaker 1: second place. But you know, the rate cuts that they did,

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Speaker 1: you know, across the turn of the year have been

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Speaker 1: more than reversed since then. So I think it would

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Speaker 1: be fair to say that the Argentines has got the

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Speaker 1: message gay. So you think it's a buying opportunity, what's

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Speaker 1: the best opportunity? Is it the paco? Is it a

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Speaker 1: certain bond issuance? I mean, you know, as ever, if

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Speaker 1: you say something something is a buy, I mean, as

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Speaker 1: somebody who's running an e M portfolio, we think relative

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Speaker 1: to other emerging markets, it looks like goodbye. We think

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Speaker 1: you know that the pacer has overshot here, that you're

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Speaker 1: getting an interest interest rates up at around on Argentine

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Speaker 1: paco assets. We prefer paco assets here. Yes, okay, what

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Speaker 1: about let's talk about Turkey because that's the other big,

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Speaker 1: big name in the news, and you're saying that you

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Speaker 1: are not positive on the lira there, which is tanking.

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Speaker 1: I believe in some measures to its weakest levels, uh

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Speaker 1: in near history. What's your take on what's happening there? Well,

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Speaker 1: I beat the problems in Turkey look to us fairly severe.

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Speaker 1: You know. Above all, you know, the one thing you

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Speaker 1: don't want to see an emerging market is a huge

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Speaker 1: build up of foreign debt to support ought activity, which

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Speaker 1: only generates local currency. You know, we saw its an Asia,

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Speaker 1: We've seen it in lots of countries along the way,

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Speaker 1: because what happens is as the currency falls, the ability

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Speaker 1: of the banks and the core protector to to pay

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Speaker 1: that debt falls um. You know. And unlike Argentina, you know,

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Speaker 1: the level of foreign debt in Turkey is extremely high

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Speaker 1: and at the same time activity in business activity in

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Speaker 1: Turkey is falling very slowly. Plus you have political changes

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Speaker 1: which I think militates in favor of capital flight and

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Speaker 1: moving money out of the country, and a very low

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Speaker 1: level of foreign exchange reserves. If you take that mix together, uh,

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Speaker 1: you know, we think that there's a real possibility of

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Speaker 1: a major economic crisis in Turkey this year, So what

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Speaker 1: would you do? Go short Turkey, go along Argentina. Would

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Speaker 1: that be a good trade? I think we'd find it

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Speaker 1: an attractive trade. But it's it's definitely one for the brave,

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Speaker 1: you know, this is this is not one for widows

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Speaker 1: and orphans. Just really quick. I'm wondering just in general,

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Speaker 1: we've seen two weeks of outflows from emerging market funds,

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Speaker 1: the most since December. Are you concerned about general broader

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Speaker 1: weakness due to the stronger dollar? M Well, yeah, I

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Speaker 1: mean if somebody, you know, kind of makes their living

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Speaker 1: in this market, I think we have to be concerned.

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Speaker 1: I mean, what we've seen is, you know, after two

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Speaker 1: years of quite a week dollar, we've seen the dollars

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Speaker 1: snap back. And it's always been the case that, you

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Speaker 1: know that when the dollar rallies against d M, it

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Speaker 1: rallies stronger against EM and everything we've seen since then

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Speaker 1: has been in line with that. Unlike you know, say

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Speaker 1: two thousand and thirteen or two thousand and eight, we

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Speaker 1: don't see weakness in EM We're not seeing external deficits,

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Speaker 1: so we think that the fundamentals in them this time

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Speaker 1: are much more supportive. Thanks very much. Paul McNamara, Investment

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Speaker 1: director for Emerging Markets for gam UK, helping to manage

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Speaker 1: about eleven billion dollars in developing world assets, earning us

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Speaker 1: on the phone from London. Right now, let's turn our

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Speaker 1: attention to the jobs data that we got out from

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Speaker 1: the US this morning. Yes, we saw the jobless rate

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Speaker 1: fall to three point nine percent, the lowis and April

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Speaker 1: two thousand, but wages did not increase as much as

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Speaker 1: many people had expected. Tom Gimble joins US now. He

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Speaker 1: is founder and chief executive officer of LaSalle Network. And Tom,

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Speaker 1: I'm really glad you're here. You're the person I want

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Speaker 1: to speak with. I want to talk about why we

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Speaker 1: are not seeing bigger increases in what we earn. Well.

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Speaker 1: Right now, we've got a labor market that um is,

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Speaker 1: as you said, the best labor market we've had since

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Speaker 1: two thousand, with unemployment below four. So the question is

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Speaker 1: we're bringing in the hourly wages reflecting the service wages.

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Speaker 1: So we haven't seen the influx from the municipalities increasing

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Speaker 1: minimum wage, and I think we'll start to see that

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Speaker 1: as that minimum wage continues to grow, But the service

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Speaker 1: positions are still not are still driving the unemployment ranked down,

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Speaker 1: and what we're not seeing is when people get hired

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Speaker 1: in white collar jobs and someone goes from making fifty

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Speaker 1: thousand to sixty thousand, they're also being replaced by people

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Speaker 1: coming in at lower salaries. So it's not as easy

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Speaker 1: as saying, oh, well, if unemployments low, then everybody's making

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Speaker 1: more money. That's not where the markets at right now.

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Speaker 1: And that's because of the global economy in a sense

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Speaker 1: as well, that we can there's so much production being

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Speaker 1: done around the globe that we're not competing against the

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Speaker 1: neighbor and that we're not getting more money tomorrow than

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Speaker 1: we were yesterday. That's the channel. But the good news

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Speaker 1: is there's more jobs, but there's there's no one should

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Speaker 1: be out of work right now. Well okay, but but Tom,

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Speaker 1: I want to push back a little bit because you're

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Speaker 1: saying that that basically people don't have to pay more.

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Speaker 1: Companies don't have to pay more unless the minimum wage

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Speaker 1: rules are are changed. But aren't a lot of ceo

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Speaker 1: is saying that they have trouble finding qualified workers right now,

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Speaker 1: and wouldn't they have an easier time if they just

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Speaker 1: offered more money. No, So, so paying more doesn't get

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Speaker 1: somebody more qualified, So to pay more with the vision

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Speaker 1: of most CEOs and CFOs are not the vision. The

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Speaker 1: reality is they're not going to pay more for the

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Speaker 1: exact same person they can get. This is what happened

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Speaker 1: in two thousand and two until two thousand and eight,

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Speaker 1: is that that boom was fueled by companies were paying

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Speaker 1: more for people just for the sake of saying we

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Speaker 1: need more people, We're gonna pay outrageous amounts of money,

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Speaker 1: and it didn't work. Right now, I'm not saying that

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Speaker 1: the housing market wasn't the driver for that crash, but

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Speaker 1: we have now is a more responsible group of lead

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Speaker 1: corporate leaders, and they're saying that we're not going to

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Speaker 1: pay more just for the sake of paying more unemployment

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Speaker 1: at three point to go hire some who's unemployed and

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Speaker 1: just pay them more, that doesn't make fiscal sense. Tom uh.

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Speaker 1: There are five point nine million open jobs in the

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Speaker 1: United States at least that's according to Lasal Network. Right, Okay,

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Speaker 1: where are the most Where's the most demand? And I

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Speaker 1: mean demand, not that you need a PhD in you know,

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Speaker 1: astrophysics or mathematics. Where's the biggest demand? Right now? So

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Speaker 1: the biggest demand is in sales in computer and technology developers,

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Speaker 1: coders and programmers, and then in healthcare, right and that's

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Speaker 1: been the same way going on for half a decade.

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Speaker 1: Now that those are the drivers sales really more in

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Speaker 1: the past three years. To keep fueling this economy, corporations

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Speaker 1: want to increase revenue. Where I think we're gonna get

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Speaker 1: at births. I think the July numbers and the August

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Speaker 1: numbers are going to be really good because you're gonna

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Speaker 1: see it's a great time to be graduating college right now,

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Speaker 1: all right, And that's why, Well, I'm glad you mentioned

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Speaker 1: graduating college because I'm wondering these entry level positions or

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Speaker 1: these positions for which you need a lot of experience,

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Speaker 1: or would even internships qualify you. Yeah, no, it's it's

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Speaker 1: it's it's for all of the above. And so that's

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Speaker 1: the big difference is that companies would love to hire

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Speaker 1: some experienced people. However, the ones who are unemployed, that's

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Speaker 1: where the skills gap exists. The long term unemployed don't

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Speaker 1: have the skills to be hired in this market. So

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Speaker 1: what companies do is they hire younger people out of college,

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Speaker 1: and that doesn't increase the wages because those people are

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Speaker 1: coming in at entry level salaries, and so we'll see

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Speaker 1: as a boost. My guess is July, August, September numbers

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Speaker 1: are gonna be well over two hundred thousand a month

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Speaker 1: because this economy engine is gonna keep going, and you're

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Speaker 1: gonna see higher volumes of people being hired because they're

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Speaker 1: more available. So what do you think the unemployment rate

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Speaker 1: will be by the end of the year. I think

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Speaker 1: it stays around the same. It really the Even if

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Speaker 1: the FED raises interest rates by another quarter of a point,

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Speaker 1: I don't think that moves the needle on hiring. I

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Speaker 1: think it can't really get much lower. What what used

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Speaker 1: to be a rule of thumb twenty years ago that

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Speaker 1: two and a half to three percent was the acceptable

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Speaker 1: unemployment rate. That's that there's just a certain number of

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Speaker 1: people that are unemployable. I think that number today is

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Speaker 1: probably right around three to three and a half. So

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Speaker 1: I don't think we get much lower than three nine,

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Speaker 1: maybe three eight. Tom. The cover story of Bloomberg Business

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Speaker 1: Week this week, Just Out, is about the workplace. It

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Speaker 1: says the workplaces complicated the business of equality. What a

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Speaker 1: graduates want out of their jobs. The number one thing

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Speaker 1: that it's really been a change is that and this

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Speaker 1: is one thing that will probably they could go counter

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Speaker 1: to what I just said, is that graduates now are

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Speaker 1: seeing the market and they're seeing that they can probably

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Speaker 1: get a higher wage. So more than ever before since

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Speaker 1: pre crash in two thousand and eight, you're seeing graduates

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Speaker 1: not accepting jobs early into their senior year. So they're

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Speaker 1: waiting until after graduation and see how the market. The

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Speaker 1: market checks out, so they want compensation, They want location,

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Speaker 1: so they want to work in cities, major metropolitan areas

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Speaker 1: of where they want to go. So death the Nation

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Speaker 1: is number two. And really culture continues to be. They

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Speaker 1: want to work in a plant that the company appreciates

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Speaker 1: the employees, We appreciate you being with us. Tom Gimble,

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Speaker 1: the founder, the chief executive a list solum that we're

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Speaker 1: talking about today's non farm paywall report. Two days of

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Speaker 1: US and China trade discussions ended in Beijing with little accomplished.

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Speaker 1: Here to talk about the sort of escalating rhetoric between

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Speaker 1: the US and China, at what point it will tip

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Speaker 1: into a more severe trade war is Mike McDonough, chief

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Speaker 1: economist for Financial Products here at Bloomberg LP. Mike, you

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Speaker 1: you pend an opinion piece that I thought was fascinating

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Speaker 1: looking at how a bankruptcy of a major tech company

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Speaker 1: in China could be the real tipping point for a

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Speaker 1: true trade war. Can you explain? Yeah, I think you know,

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Speaker 1: every everyone's focusing on the trade delegation that just visited Beijing,

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Speaker 1: and I think very few people thought we would get

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Speaker 1: something meaningful out of this visit. Right, at best, you

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Speaker 1: would get an agreement to keep talking, and that's more

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Speaker 1: or less what we got, UH. And I think everyone's

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Speaker 1: missing the real front line of a potential trade war,

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Speaker 1: which was the decision the US government made UH in

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Speaker 1: mid April to ban the exports of any US products

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Speaker 1: to z T the telecommunications maker. It's one of the

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Speaker 1: biggest telecommunications equipment makers and it's definitely one of the

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Speaker 1: biggest in China, and it's a very important, very important company. Now.

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Speaker 1: You know, if you know the U S World implements,

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Speaker 1: you know there's some tariff and tariffs on alluminum and steel.

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Speaker 1: They're mostly inconsequential in the global scheme of things, especially

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Speaker 1: when you look at all the countries that had gotten exemptions. UM,

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Speaker 1: there's a list of tariffs that could be put on

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Speaker 1: on Chinese goods. They're a bit more meaningful, but again

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Speaker 1: in the scheme of things, not not that pertinent. Where

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Speaker 1: China is going to be troubled is if U S

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Speaker 1: policy leads to the bankruptcy of a Chinese technology company.

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Speaker 1: This is a critical sector in China. They have big

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Speaker 1: plans for the technology sector. It's an important part of

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Speaker 1: the future. So if if the US government starts implementing

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Speaker 1: policy that's going to bankrupt these companies or meaningfully disrupt

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Speaker 1: these companies, that is what could actually trigger a trade ward,

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Speaker 1: not these tariffs. Mike McDonough looking at the most recent

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Speaker 1: issue of China Daily dot Com, one of the stories

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Speaker 1: is headlined China US agree on some trade issues. Indeed,

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Speaker 1: they even mentioned ZTE Corps. They say China made solemn

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Speaker 1: representations to the U S side regarding the case of

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Speaker 1: z t E and that the U S side expressed

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Speaker 1: that they will pay attention to these representations and will

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Speaker 1: report China's position to the President of the United States.

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Speaker 1: That sounds a little bit concilius, where it doesn't. I

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Speaker 1: I the first headline I saw about the trade talks

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Speaker 1: where they agreed on some things and disagreed on other things,

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Speaker 1: which is not incredibly useful. UH. You know, sure, if

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Speaker 1: they go back to the President and the President changes

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Speaker 1: as rhetoric or or they change the ruling on ZT,

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Speaker 1: that would be quite positive. But at the same time,

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Speaker 1: there's UH it's been reported that they're working on executive

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Speaker 1: orders that would ban the sale of telecom equipment in

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Speaker 1: the US by other Chinese firms. UH. And the most

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Speaker 1: important telecom communications maker in China is Hawei. UH. And

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Speaker 1: there's I think the Wall Street Journal first reported that

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Speaker 1: they have opened a similar investigation against Hawei that they

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Speaker 1: had on ZT that led to this band UH. A

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Speaker 1: similar move against Hawei would have I think pretty significant repercussions.

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Speaker 1: I mean. The other thing to think about is it's

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Speaker 1: an important part of China's economy. China is leading the

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Speaker 1: world right now when it comes to mobile payments these

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Speaker 1: you know, this telecom equipment is an important part of that. UH.

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Speaker 1: So this could be very disruptive for the entire Chinese economy,

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Speaker 1: which has the UH. You know, you could see a

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Speaker 1: rise in sort of nationalistic tendencies against the US. When

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Speaker 1: when you do have this disruption the ZT stock, for example,

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Speaker 1: has been I halted I believe in Hong Kong and

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Speaker 1: Shenzen since April seventeen. So if you're a shareholder of ZT,

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Speaker 1: you right now don't know what's going on and you

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Speaker 1: can't get out, and that's the US fault. Well, that's

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Speaker 1: exactly what I was going to ask about. I mean,

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Speaker 1: using z T E as sort of a poster child

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Speaker 1: of what could happen, and just give a little more. Caller,

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Speaker 1: we were talking. You said, uh that the ban on

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Speaker 1: their gun selling goods to them and selling their goods

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Speaker 1: came from they're providing goods North Korean arm. They are

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Speaker 1: not an innocent victim, right, Okay, So this is this

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Speaker 1: is part of what's going on. But do we have

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Speaker 1: any sense of the financial impact on z T E

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Speaker 1: so far and whether they have any recourse to overturn

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Speaker 1: this ban? Uh? You know, one of the recourses they

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Speaker 1: had the conversation with the trade delegation to bring message

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Speaker 1: to the president. Uh, you know, in terms of long

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Speaker 1: term health, I can't speak to that as well. There's

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Speaker 1: various reports of like ranging from they'll be okay, so

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Speaker 1: they could potentially go bankrupt to I think they have

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Speaker 1: some loans that are are coming due in the near future.

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Speaker 1: But can you give a sense of just how vast

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Speaker 1: this band is and who it could affect the US? Well,

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Speaker 1: I mean, you know, Intel is a big provider, Micron

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Speaker 1: Technologies is a big provider. Microsoft. Um, there's one company

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Speaker 1: I'm not sure how to pronounce it as communication about

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Speaker 1: forty of their revenue comes from ZT. So this does

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Speaker 1: have a pretty big impact on this. You know, I

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Speaker 1: don't know the full number. I think there's something like

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Speaker 1: fifties fifty or so suppliers that we have on the

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Speaker 1: Bloomberg Terminal SPLC go for anyone listening where you could

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Speaker 1: actually go see all those suppliers UH and and their

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Speaker 1: exposure to ZT. So you get an idea. And then

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Speaker 1: that's on the input side. And then of course there's

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Speaker 1: the UH stores that sell ZT equipment, right, that actually

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Speaker 1: sell their phones UH and sell the phones of other

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Speaker 1: Chinese technology company is that pending how this goes could

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Speaker 1: also be impacted just quickly, you go to China, you

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Speaker 1: don't use your own mobile phone, and you don't use

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Speaker 1: your corporate laptop, right, I use my my corporate lab

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Speaker 1: I have my phone in my laptop. When I go

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Speaker 1: to China and you use it, I use it and

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Speaker 1: you don't worry about it being hacked. I'm not I'm

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Speaker 1: not doing anything that I'm okay. I'm just saying because

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Speaker 1: you know, no, no, but I'm serious. I mean, pretty

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Speaker 1: substantial corporate policy is around the United States. Beware when

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Speaker 1: you go to places like that and be careful with

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Speaker 1: your I try to remain aware everywhere honestly nowadays. All right,

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Speaker 1: we'll leave it there. Well done. Mike McDonough he's an

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Speaker 1: expert in all things economic, chief economist Financial Products for

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Speaker 1: Bloomberg LP. Check out his column about the trade in

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Speaker 1: China how China has a decided advantage. The value of

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Speaker 1: gold has dropped about four percent since mid April. Indeed,

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Speaker 1: at thirteen hundred and eleven dollars an ounced, gold is

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Speaker 1: pretty where near it was at the beginning of the year.

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Speaker 1: Here to tell us about the precious metal and more

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Speaker 1: commodities is Will Ryan. He is the founder and the

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Speaker 1: chief executive of Granite Chairs. He joins us here in

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Speaker 1: our eleven three oh studios. Well, thanks for coming in.

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Speaker 1: Why has gold fallen in value since so, let's say

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Speaker 1: mid April. Is it because of dollar strength? Primarily from

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Speaker 1: the dollar strength, yes, um, there there haven't really been

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Speaker 1: any catalysts to speak of that would have driven the

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Speaker 1: price higher. You know, the potential geopolitical tensions that people

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Speaker 1: were expecting to blow up have actually gone in the

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Speaker 1: other direction, namely North Korea, and so the Korean penincia

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Speaker 1: now looking to be much safer than a proposition than

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Speaker 1: it was a year ago. So that that's sort of

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Speaker 1: taken the shine off gold a little bit. How about

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Speaker 1: the fact that inflation expectations also have kind of tempered

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Speaker 1: a little bit, given the fact that we haven't seen

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Speaker 1: the wage increases that many people were expecting. I think

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Speaker 1: a little bit. But there's still kind of bubbling under

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Speaker 1: the surface that you know, we have the strongest inflationary

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Speaker 1: platform for last ten years, and so while in the

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Speaker 1: short term, you know, the numbers off of you know,

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Speaker 1: the February numbers weren't as strong as as people expected,

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Speaker 1: there are more kind of forces at work that are

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Speaker 1: giving people pause on the inflation side. So is there

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Speaker 1: a bullish case to be made for goal at eleven

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Speaker 1: dollars an ounce? I think yes, because in my view,

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Speaker 1: this the dollar strength is temporary. Um that this is

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Speaker 1: not a longer term thing. UM. I think that you know,

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Speaker 1: in an environment of rising interest rates and you know,

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Speaker 1: increasing inflation expectations UM, plus the higher volatility, the gold

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Speaker 1: and commodities more broadly are a a place to be.

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Speaker 1: And you know, people are looking at uncorrelated or low

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Speaker 1: correlated assets right now in order to take some risk

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Speaker 1: out of the equity or bomb market, and gold is

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Speaker 1: one of those places. I want to shift focus to

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Speaker 1: oil simply because prices there have risen to the highest

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Speaker 1: since and there's a big question of how much higher

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Speaker 1: they can possibly go, nearly at the seventy barrel mark.

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Speaker 1: What's your taken on that, well, I mean this is

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Speaker 1: a very interesting story. And you know, if you go

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Speaker 1: back to last summer when I launched granite shares in

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Speaker 1: the market, I mean some of our ETFs have oil exposure,

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Speaker 1: and a common thing I would hear from people as

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Speaker 1: oil is never going to go above forty dollars again.

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Speaker 1: And that was just last summer, and since then we've

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Speaker 1: had this huge rally, and really the main reason is

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Speaker 1: because there's been a huge amount of demand synchronized global

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Speaker 1: economic growth. But these opeque cuts that they've put in

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Speaker 1: place have really kind of bitten back on the supply.

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Speaker 1: And then I think more recently, the dollar weakness and

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Speaker 1: tensions again in the Middle East, particularly with Syria and Iran,

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Speaker 1: have sort of kept momentum going right, But but to

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Speaker 1: some degree that's already being all baked in. Should those

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Speaker 1: tensions ease, should the dollar strengthen as we're seeing it

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Speaker 1: do so today it's actually at the highest levels of

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Speaker 1: the year. Now, I'm just trying to understand at what

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Speaker 1: point do people start to say, wait a second, this

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Speaker 1: seems unsustainable. At some point production from from from shale

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Speaker 1: drillers and from you know, Iraq you've been, you know,

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Speaker 1: might might off set this. Yeah, I mean I think

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Speaker 1: people thought that at fifty dollars, they thought that at

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Speaker 1: sixty dollars, and I thinking it's seventy dollars. And yeah.

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Speaker 1: The point is that a lot of you know, when

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Speaker 1: commodity moves happen, a lot of its momentum driven. And

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Speaker 1: you know what's different about oil is that there is

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Speaker 1: there is a strong fundamental demand there the markets and vaquidation,

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Speaker 1: which means that people are willing to pay a premium

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Speaker 1: for oil of the delivery now versus in the future.

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Speaker 1: And so there's a real strong underpinning underpinning for gold

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Speaker 1: demand right now. And you know how far it can go. Obviously,

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Speaker 1: who knows, but certainly it's a market that's caught a

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Speaker 1: lot of people by surprise. All right. But the same

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Speaker 1: reason that you said the goal was down in price

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Speaker 1: since mid April, wouldn't that apply all sort of oil?

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Speaker 1: Couldn't you just say that oil has reached a sort

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Speaker 1: of near term peak at seventy dollars a barrel, particularly

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Speaker 1: when you know you have, as Lisa said, you've got

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00:24:10,960 --> 00:24:13,679
Speaker 1: share producers who can turn on this bigot and they

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00:24:13,760 --> 00:24:16,040
Speaker 1: can produce as much oil as you want. The only

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00:24:16,119 --> 00:24:19,159
Speaker 1: constraint is actually the pipeline system and the logistics of

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00:24:19,200 --> 00:24:22,080
Speaker 1: getting it to the marketplace. Yeah, I think that's true.

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Speaker 1: But the lesson that they've learned from last time is

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Speaker 1: that if they do that, that that's one shore fire

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00:24:27,560 --> 00:24:30,840
Speaker 1: way to make the price go lower again, which reticent

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00:24:30,920 --> 00:24:33,480
Speaker 1: to do after what happened in the can make a

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00:24:33,560 --> 00:24:36,119
Speaker 1: lot of shell producers can make money, can make pretty

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00:24:36,160 --> 00:24:38,359
Speaker 1: good money at forty and fifty dollars a barrel. Well,

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Speaker 1: I'd say if fifty. Most people are making good money now,

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00:24:41,160 --> 00:24:43,880
Speaker 1: so it's seventy seventy dollars a barrel. They're making really

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00:24:43,920 --> 00:24:46,159
Speaker 1: good money. Um, And I think people are just a

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00:24:46,240 --> 00:24:50,720
Speaker 1: bit more cautious. Certainly the bigger producers about increasing production.

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00:24:51,000 --> 00:24:53,200
Speaker 1: I think, well you may see production coming on board.

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00:24:53,280 --> 00:24:55,960
Speaker 1: Is actually the small or startup producers who are thinking

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00:24:56,400 --> 00:24:58,480
Speaker 1: exactly what you were saying. Hang on a minute, if

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00:24:58,520 --> 00:25:00,600
Speaker 1: we put the money in that we can get capital,

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00:25:00,680 --> 00:25:02,760
Speaker 1: we can start drilling, and we can produce and we

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00:25:02,800 --> 00:25:05,720
Speaker 1: can make money. That's I think where there's a potential risk.

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00:25:06,040 --> 00:25:10,399
Speaker 1: How do you think it could go? Um, honestly, no idea.

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00:25:10,800 --> 00:25:14,680
Speaker 1: All right, fair enough, let's let's move to aluminum, because

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00:25:14,720 --> 00:25:16,720
Speaker 1: that's been in the news very much recently. It was

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Speaker 1: huge run up as Roussel came into the crosshairs of

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00:25:21,200 --> 00:25:26,000
Speaker 1: US regulators. I'm wondering your view given the tremendous rally here,

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00:25:26,320 --> 00:25:28,800
Speaker 1: do you think that, uh, you don't really want to

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00:25:28,800 --> 00:25:31,200
Speaker 1: be holding aluminium right now? Yeah, I mean I think that,

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00:25:31,920 --> 00:25:33,520
Speaker 1: like a lot of these things, there was a big

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00:25:33,760 --> 00:25:37,840
Speaker 1: hype um when the sanctions you know, came in um

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00:25:37,960 --> 00:25:42,200
Speaker 1: and aluminum, steel, palladium. To a lesser extent, but the

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00:25:42,359 --> 00:25:45,960
Speaker 1: Russia metals, if you want to call them, that got

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00:25:46,160 --> 00:25:48,560
Speaker 1: bit up a lot and a lot of analysts we're

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00:25:48,560 --> 00:25:51,320
Speaker 1: talking about you know, I'm still talking about you very

468
00:25:51,400 --> 00:25:53,960
Speaker 1: very high prices for aluminum and some of the other metals.

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00:25:54,080 --> 00:25:55,879
Speaker 1: I think it's probably a little bit overblown at the

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00:25:55,960 --> 00:25:58,560
Speaker 1: moment um, but certainly there was a lot of fever

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00:25:58,720 --> 00:26:01,320
Speaker 1: because by definition and all these sanctions when they happen,

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00:26:01,320 --> 00:26:05,600
Speaker 1: they're inflationary for the underlying commodity markets. Well, we're gonna

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00:26:05,640 --> 00:26:07,480
Speaker 1: have to sort of see what happens because the European

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00:26:07,600 --> 00:26:10,679
Speaker 1: Union is also negotiating with the United States on steel

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00:26:10,720 --> 00:26:13,760
Speaker 1: and aluminum tariffs as well, right, so that would affect

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00:26:13,920 --> 00:26:17,639
Speaker 1: not necessarily the price as much as the Russian issue,

477
00:26:17,920 --> 00:26:21,880
Speaker 1: but it would certainly affect the supply in the United States. Correct,

478
00:26:22,400 --> 00:26:24,560
Speaker 1: But a lot of that comes from outside of the States.

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00:26:24,600 --> 00:26:26,600
Speaker 1: You know, Canada is obviously a big producer for the

480
00:26:26,840 --> 00:26:31,120
Speaker 1: for the States, um as is Brazil career as well.

481
00:26:31,240 --> 00:26:35,040
Speaker 1: But yeah, of course, any kind of trade war affects

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00:26:35,080 --> 00:26:39,640
Speaker 1: the baseline commodities or whatever piece of legislation is being

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00:26:39,680 --> 00:26:42,200
Speaker 1: talked about at that time. Now, I know that you

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00:26:42,280 --> 00:26:44,920
Speaker 1: were talking to Lisa offline, about platinum, right, you want

485
00:26:44,920 --> 00:26:47,600
Speaker 1: to give us your thoughts on platinum, another precious metal

486
00:26:47,720 --> 00:26:51,040
Speaker 1: used particularly in the automobile industry and also in fuel

487
00:26:51,080 --> 00:26:55,080
Speaker 1: cell technology. Correct, So one one story that you know

488
00:26:55,240 --> 00:26:58,200
Speaker 1: doesn't get talked about a lot because the conversation here

489
00:26:58,280 --> 00:27:02,720
Speaker 1: around future metals and largely tends itself or lends itself

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00:27:02,760 --> 00:27:07,040
Speaker 1: to lithium and cobalt, manganese, other sort of components of

491
00:27:07,119 --> 00:27:09,960
Speaker 1: the lithium ion battery. And of course that there's a

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00:27:10,080 --> 00:27:13,680
Speaker 1: big ground swell of support and a huge momentum around

493
00:27:13,760 --> 00:27:17,600
Speaker 1: battery technology, particularly for cars, but a lot of people

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00:27:17,800 --> 00:27:20,920
Speaker 1: don't necessarily realize that there's also a lot of technology

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00:27:20,960 --> 00:27:25,520
Speaker 1: around hydrogen fuel cell vehicles. Now it's not happening in

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00:27:25,600 --> 00:27:27,960
Speaker 1: the US, the same extent is happening in China and

497
00:27:28,000 --> 00:27:32,280
Speaker 1: other places. But the battery argument sort of goes to

498
00:27:32,320 --> 00:27:34,920
Speaker 1: the point where it's binary. You believe that the market

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00:27:34,960 --> 00:27:38,320
Speaker 1: becomes all electric, and therefore there's huge demand for battery

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00:27:38,359 --> 00:27:40,600
Speaker 1: and the metals associated with it, but there's no demand

501
00:27:40,720 --> 00:27:44,280
Speaker 1: for any other technology. I believe that there will be

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00:27:44,359 --> 00:27:47,600
Speaker 1: a market for hydrogen fuel cells, and you don't have

503
00:27:47,680 --> 00:27:50,359
Speaker 1: to increase that by much for that to dramatically increased

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00:27:50,400 --> 00:27:53,639
Speaker 1: demand for platinum for example. Thanks very much. Yeah, this

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00:27:53,800 --> 00:27:56,679
Speaker 1: is really fabulous. We really appreciated. Thank well. Ryan Founder,

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00:27:56,840 --> 00:28:04,119
Speaker 1: Chief executive Granted shares interesting conversation issue. Thanks for listening

507
00:28:04,200 --> 00:28:07,080
Speaker 1: to the Bloomberg P and L podcast. You can subscribe

508
00:28:07,119 --> 00:28:10,640
Speaker 1: and listen to interviews at Apple Podcasts, SoundCloud, or whatever

509
00:28:10,760 --> 00:28:14,200
Speaker 1: podcast platform you prefer. I'm Pim Fox. I'm on Twitter

510
00:28:14,520 --> 00:28:18,040
Speaker 1: at pim Fox. I'm on Twitter at Lisa Abramo. It's

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00:28:18,080 --> 00:28:21,080
Speaker 1: one before the podcast. You can always catch us worldwide

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00:28:21,160 --> 00:28:22,040
Speaker 1: on Bloomberg Radio