Bloomberg's McGlone on Gold Correction and Oil Glut (Audio)

NAZAC is lower by seven at one point. The Dow is down a hundred and eighteen points, the small cap six hundred is little changed, and the US ten yield at one point seven four percent. Seven out of eleven sub sectors are higher let Big Games and Materials, real estate and technology, while healthcare, industrials and telecom fell down. Transports are a little change, NASA by Tech's fall seventy

and the vix is down by point three percent. Leaders to the downside and the down included American Express, Walmart, and Fiser, while dupot Apple and Mike McDonald's. Lad in jel News Quacom said to make progress and talks with n XP and Mars to buy out Berkshire Hathwayte equity stake in wrig Lely. In other news of Walster, John reported that Snapchat parents said he'll be working on an I p O valuing the firm at five billion or more.

Whole food spiked intured A gained as much as six point seven percent tweets residing takeover speculation, while al Nylum Pharma fell as much as forty nine percent after ending development of a key medicine. Live from the first back of news desk, gom Bill Maloney charge, all right, thank you very much, billing here live breaking news over your bloomberd Times squawk gasqu a w K on your terminal.

I'm Charlie Pellett. That's sub Bloombred Business Flash June listening to taking stock with pim Box and Kathleen Hayes on Bloomberg Radio. Gold the price of gold declining. Today. You can buy an ounce of gold for twelve hundred and fifty one dollars an ounce. That is fifteen dollars less than it costs yesterday. Here to tell us more about gold and other commodities is Mike mccloan. He is commodity strategist for Bloomberg Intelligence and he joins us here in

the studio. Mike, thank you very much for being here. Great to see you. Give us the story on goal. What's going on? Why the sell off? What are all the connections. I think gold is just doing a little bit of a catch up to the record high stock market prices. The dollar really hasn't been much of a factor this year, and gold really got its lift after Brexit. That's when it moved above thirteen hundred dollars announced. Both remember our gold started the year, It started the year

below eleven hundred dollars announced. Right now it's around twelve fifty, so it's still up eighteen percent on the year. And part of the reasons it's up, it's because there's this proliferation of negative interest rates in the world that's still a pretty good solid support for the world's really quintessential you know, alternative asset um. So it's worth a little bit about FED tightening. But you know we did that last year too, and actually within the tightening, gold within

a day or two put in its low. So so is this then okay? So is this then maybe just a bit of a correction. Are you just people like, you know, kind of lightning up to run it back up? Because I think partly what also is happening, there was this speculation that the ECB might be ready to start tapering off on its bond purchases, put thoroughly to bed today by the ECB minutes also by a couple of e CP Council members, at least one of them speaking

of New York. Um. So if the if the FED raises once, I think that's I'm a gold bull, That's what I'm saying. So what, especially if the west of the central banks in the world aren't gonna stop buying bonds. I think that's a good assessment. I mean, gold head, it got way overdone. Open interest reach a record high in futures in July and it's come off since. And this is very similar to what it did in two thousand ten before it ran up to that high, or

that took a major collapse in the dollar. Hopefully that won't happen. We don't think that won't happen. But gold still as its value. It's just pulling back. There's definitely been some profit taking. Open interests come off and the question is whereas it continue. I think for gold to really move and sustain above will probably needs something negative in terms of the stock market or the dollar like it did in two thousand ten. I guess we don't

really want that to happen. Well, that's where gold comes in play. It's a diversifier and it's really done a good job doing that this year. Tell us about what's going on in oil. I've got a print right now. Oil a front month at fifty and forty nine cents a barrel. It's up sixty six cents today. Well, I think there's two things to remember in oil. It's not so much that OPEC is gonna reduce production. Is they're going to stop the drill at will trend at least

they say they will. The market thinks it's gonna happen, It doesn't always know that will happen. And we have this hurricane brewing. That's really pretty good positive things for oil, but we all know they overwhelming. The most significant way to describe oil now is glut. One word glutt. We all know that. And if oil sustains much higher, we're gonna be more supply come on board. Yes, it doesn't

happen really quick. But oil and the fifty handle has been pretty good resistance since the beginning of the year. Last year. The key level is sixty, and I think most traders, most investors know that this is a level if they've been long and they should be lightning up and being a little carefully. It's just been good resistance for quite a while. It's been a good trade all year, right, I mean you take a look at crude oil, I mean it's up what more than thirty six percent in price?

This key thing to remember, it's been a good range trade. But gold different than than gold. You can't really invest in crude really has futures. So if you look at the number one traded um oil ETF this year us SO, it's up like five um. So. Actually, when it comes to investing standpoints, sometimes it's better. It has been better to sell oil on rallies rather than buy it on support. But it's been stuck between forty and fifty for a while. But yeah, that's where I like to really differentiate and

make the difference. If you look like you can buy gold in et F and get that gold return, but in oil it's a much different story. It has to use futures. It rolls, and there's a little it's a little more complicated, but for traders it's it can be fun. So what's the uh what would you say the odds are of oil going downhill? Again? I know we have the latest to his inventories and they showed more demand. But as you said, as people called call this glut,

this global glut a wall, right. And there's also I think a lot of people are going to really believe that Saudi Arabic can engineer this this kind of production until you actually see it on paper, right, So uh, and and and being carried out as well. Would you say, one intent chance, how much the risk the oil actually takes another turn towards the lows. We have to be careful of the actual probabilities. But I think the thing that remembers trends, your friend. And guess what, there's no trend.

It's been stuck in a range we all know supplies overwhelming. It's getting up near the upper end of the range, at least in the shorter term. It might extend a little higher. And I think that we should remember trends, your friend. It's near the upper end of the range, and what's just expected to stick in the stick within a trend and in the short term might be a new one, but who knows how long it's gonna last. Just quickly you want to do anything on corn or

or grains con there. Corn corn has reached recently reached a ten year low. Supply is just is you know, it's going to be the record year harvest in for corn and soybeans, but the prices are reached so much such a low level that the man is picking up exponentially. We're just one weather event away from a pretty substantial railly. I'm not predicting weather, but these things happen in cycles, and expect that happened at some point. All right, he

knows how to watch that. Stop watch very very well. Mike mclenn, Thank you so very much. Commodity strategist for Bloomberg Intelligence on Kathleen Hayes along with pim Fox and this is Bloomberg coming up on taking stock Walmart. Walmart says it's got more plans to focus heavily on its e commerce operations and also warned investors that it's going to cost more. We've got details coming up