Inflation, Commodities, And The Supply Chain

this big world. At Price, senior fellow and former British trade official at n y U joins us, and let's first talk about just the global energy markets. That's kind of been on topic today again. Brent crew down about eight percent today, below a hundred dollars just at one thirty. There's a lot of cross winds out there. What are you focusing on here right? Well, on those cross winds, honestly,

and it's it's a bit bizarre. Um. This war in Europe, I think is something of a mixed citty, and I think that that's something that everyone's looking at, including the FED. On the one hand, it's it's obviously inflationary, right because it's a supply disruption and that goes back to what you're saying about oil prices. They spiked, everyone freaked out at the pumps over here in the US. But on the other hand, it's deflationary in the sense that it could destroy global demand. Look at the I M S.

It's downgrading its global growth forecast. So I think it's it's very it's a good phrase that you're using their cross winds and we're just gonna have to lick our finger, put it in the air and see which one is stronger. What do you think ed about the story that Saudi Arabia is in talks with China to um basically accept you on instead of dollars for oil. I mean, um, this has to be a huge economic issue, right It centers around the world reserve currency and the power that

the US gets from that. But maybe a shift now towards UM, you know, the second biggest economy. Yes, this is I think everything that's happening now at roots is a dollar standard story. So you can you can look at the war in Ukraine, you can look at COVID, you can look at US domestic inflation, and I think with a big piece of paper and a market pin, you can draw the lines between all these things and what the world expects of the dollar and how people

are looking at the dollar in the future. So if if the Saudis are indeed doing that, UM, that's no bueno for us, for those of us who have a very strong stake in the dollar standards UM. And I think it's something that in this period of disruption we should definitely watch, definitely look at, not get too distracted.

Everything we're looking at is a dollar standard story. And what's kind of astounded me as as I think about this Russia Ukraine's situation is how it seems like it's so well coordinated some of the economic sanctions we're seeing from not just the US, but from other countries as well. From your perspective, how effective do you think they can be will be on Russia, Because just on the surface, to this late person, they seem pretty significant, right, I

think very significant. I've seen a few commentators saying, you know, don't count the Russians out. These these sanctions will will not have the sort of effect that you want. But honestly, I would not be surprised by a complete and total collapse in Russia in the social fabric. UM. I think part of this is the whole information scenery. It seems if you look at reports in New York Times and so on, it seems that the Russians still don't know that they're at war, most of them, which is bizarre.

But when they do find out, which you know, one has to think will happen as as the body count comes up, right, UM, I think that that, in combination with what's going on in the financial system, could really really put Russia into a serious problem. So I think one point to make though, just conceptually, is that a lot of people are talking about the Second Cold War. I think the difference here is that we're not trying

to contain Russia and the Russian economy. We're actually trying to export recession and even a financial crisis into Russia. So I think that can be very effective. UM. One of the interesting moves I've seen, as someone who you know lived in Germany but I know you studied also German history, is the shift towards, you know, finally spending

money on military equipment. They had been so not only understaffed, but also UM didn't have enough stuff previously and weren't spending enough of their UM weren't spending enough of their uh G d p on. You know, they had the two percent promise on military gear. Now they're gonna buy thirty five F thirty five's and fifteen new eurofighters and this seems to be you know, one of the um unintended consequences of Vladimir Putin's moving to Ukraine's that he's

united Europe and you know rearmed Germany. Well, I mean absolutely rearmament is the right phrase to use. Again. I mean, the fact that the Germans are now comfortable with weaponry, with rearming with a strong military force is incredible and for anyone with interest in European and German history, this shift is profound. It's also so something that I think is going to be thought about in London, right because of course the UK it's just left the European Union.

I don't think we foresaw a German standing army when we did that. But you're right, the real impact here is on Putin. He's made such a massive, massive error going into the Ukraine. And I think that the obvious bravery of the UK Ukrainian forces, Ukrainian civilians taking up arms. The longer that lasts, the longer Europe has time to rearm the longer a standing German army is going to be more of the prospect. I'd put one caveat in there.

There are long standing historical ties between Germany and Russia, and I think if you look back to the First and Second World War, you could argue that the United States intervene in both of those wars to prevent a continental economy in which Russian and German economics were combined under the leadership of either Moscow or Berlin. So in the future after this war in Ukraine, I wouldn't rule out one scenario, which is an armed Berlin and armed

Moscow shaking hats. All right, thank you so much for joining us. We really appreciate your perspective here. A lot of again cross winds here on a global geopolitical space impacting markets at prices and senior fellow and former trade official at New York University giving us some thoughts here.

I pulled up my g l g l c O screen on the Bloomberg Terminal global commodities prices, and on a year to date basis, everything is pretty much everything is up double digits, whether it's energy, medals, aggs, and I guess that's what you call inflation. Um, the question is when does it peak? How click that doesn't come down? How do I play it? Will Ryant, chief executive officer for Grantit Chairs Advisors, joins us Will again, I'm looking at my commodities pretty much everything is up big time.

When does this peak? Do you think this inflation in this U S economy? Well, it's a great question. Um, I think that's you know, Unfortunately, for as far as inflation goes, these things tend to take a number of years. No cycles, particularly on the commodity side, tend to last in years, not days or months. Um. I think at

this stage you're really talking about two possible scenarios. Really, if you're talking about inflation easing, that's going to come from an increase in supply, and an increase in supply you know, will happen, um as long as high prices stay or prices stay elevated, but it takes time. The other thing, probably the most likely thing that will happen

if prices keep continuing to rise, is demand destruction. In other words, the consumer just gives up at some point and says, you know what, I can't pay five dollars per gas or six or seven or eight or whatever it may be at that time. And once that happens, then you start to see using because of demand for that commodity falls. How much is how a law stick is the oil patch? I was talking to a gold miner yesterday who said, it's very that come out of

the right now is very inelastic. They're taking as much out of the ground as they can, and the and the ramp up time for new production is is much longer. Um, what does what does oil look like in those terms? Yeah? I think that's right. Um that you know, again, you know it depends on what country you know you're talking about. Definitely some more production can be brought online. And clearly the the the easiest winds, if you want to look at it that way, are going to be from existing

producing countries. And that's what the administration is doing, is going to going to produces like Saudi Arabia, going to the OPEC countries, even to Venezuela places like that, and trying to get more barrels. So that's certainly possible. But in terms of domestic production, you know, again those um fields sites that are already in operation may be able to to increase but really you're looking for much more of an increase from likes of shale et cetera. What

is the problem with getting more out of the shale? Um? I heard somebody this morning say costs to bring oil out of the ground in the US are thirty three dollars a barrel. Shouldn't that motivate? You know? You hear the Biden administration talk all the time as if they've done literally everything they can about these nine thousand leases. Um. If that's really how it is, wouldn't the massive you know, sixties six dollars in profit per barrel of oil drive

everybody out to bring it to use those leases? Yes? And no? Um. So here's what happened last time. You may remember that there was a huge boom in US shale and because of that, you know one, prices collapsed, and ultimately they did so partly because the U S shale industrial US got into a market share war with Sadia, Arabia and Opeque in terms of competing for market share.

The price well went down. A lot of those a lot of those shell producers went bust, and in that sort of rush to produce more production, banks have lent them a lot of money as a lot of financing there, and a lot of people lost a lot of money in that particular collapse. So long story short is, the producers are going to be more disciplined. They're going to be more disciplined because the banks and the lenders are

making them mean more disciplined. But they're also fearful of, you know, the oil price collapsing again like it did last time. So people are going to be more disciplined and therefore a bit more cautious about bringing that production on because of the cautions and retail that we had last time. Hey, well, I'm looking at my metal screen here and one of the medals that is kind of lagged a little bit is platinum. What's the call on

spot platinum here? Well, plantinum is an interesting one because palladium went to the Moon after the war broke out, and that was because simply Russia is the largest producer of palladium in the world. Russia is also the second largest producer of platinum. Number one producer is South Africa. But those metals can be interchanged one for one. They're both used for catholytic converters to clean the emissions that

come out of an internal combustion engine. And you know, with the price of palladium almost three times the price of platinum, they can be exchanged or substituted one for one. So people are looking at platinum right now, both in terms of you know, the war situation and a supply disruption coming from Russia, but also because with the price of pladium so high, I thinking automakers have to come in here and substitute these metals in the favor of platinum. Hey, well,

thanks so much for joining us. Really appreciate it. Next time we're gonna talk a little pork bellies, maybe I'm going to lean hogs up to five year to date?

How about that tree ripping face? Will Ryan, chief executive officers for granted Chairs advisors will always checking when with Will whenever there's big moves in the commodities space, as there has been here over the last uh several truly unbelievable, right, I mean, we saw Brent crude um went up to what a hundred and thirty nine dollars of barrel like literally seven days ago, and now it's trading at Yeah, it's amazing. And you know, oil traders, I used to

know a few oil traders. I would trade this stuff in the pits, and they say you will get crushed in this market if you don't pay attention, and that's certainly the case here. Dave Major's joins us the CEO of me Com Collector Car Auctions. Before we get down to the business side of it. Um, Yeah, what is going on with with the prices in terms of these cars? I mean, for regular every day like an F one fifty, Um,

we're paying out the nose. But the prices that I'm seeing for like a goat as as as Greg Jarrett just mentioned, are just huge. Yeah. Well yeah, first, good morning from State Farm Stadium in Glendale, Arizona. We're getting ready to get started with another big MICAM auction starts tomorrow and we're expecting to see prices continue to be

in the stratosphere for collector cars. That that phenomenon started for us back in the summer of when we came back to auction coming out of the pandemic, and and actually has has been picking up steam ever since, as evidenced by our well even before that with the Big Muscle. I remember ten years ago looking at Plymouth couta Barracuda UM that you sold for I think three point four million dollars um. Why is this? That's the holy grail

of collector cars? I see? So that's why because it's the one um It's not like a GT five hundred or a Chevrolet um at sas now, the Plymouth Plymouth heavy Couta has always been that that car that if you're if you're a serious collector of American muscle cars, you have to have one of those in your collection. And as you said, they go for multimillions of dollars, which you know, it's just incredible. But the whole collector car market, you know, return something like thirty or forty

percent a year over the last ten fifteen years. So that's the cream of the crop that the markets exactly. Hey David, you know, unlike Matt, I'm not a car geek, although I do own BMW five thirty five with a manual transmission. So if you want to make a bid, uh, feel free. What's driving this market? Is this just the people saying, oh my god, they aren't going to make any more you know, gasoline driven cars, so I better

get one, you know, gasolene cars, manual shift. Uh, it's a lot of you know, people my age coming of age and remembering the cards of their youth from the sixties and seventies in particular. But now we're starting to see cars in the eighties and nineties pick up steam as well. And so, you know, I think a lot of things happened during the pandemic that that built the steam for the collector car market, and we're seeing that continue with a lot of great cars coming to the market.

We've got fifteen cars here in Arizona, the largest number of cars ever to come to this office. It doesn't look like it's selling down at Yeah, we should definitely go there. You you sell though the cream of the crop we're talking about. You have a nineteen sixty seven Ferrari to s G t V four, So this is another level. But on a lower end, have things like bring a trailer or what's Doug Demro's thing called cars and bids um you know Hemming's have they kind of

helped push up the top end. Yeah, I think particularly in the collector car market, that rising tide lifts all boats certainly holds true. There's you know, they're bring a trailer. There's a certain clientele that wants to just transact transact business. When you come to make and makeam auction, it's more of an experience. You want to you want to come and look at the cars and touch and feel them and talk to your friends. Will you never do a day?

Will you never do an online auction platform, you know, eBay style like those others we do. We do online live auctions. So for instance, our auction here from Glendale, you can bid online right along with those people that are sitting in the seats, and and if you look on the website on makam dot com as you're bidding, it looks just like you're sitting in the front row of the auction. So we're we're a live auction company.

We prefer to, you know, to include the excitement of a live auction, whether you're in person, on the phone, or via the internet. However you want to bid with us, you can participate, Dave. But I understand it correctly that you're at the big football stadium in in Glenville, correct. State Farmers. State Farmers our oldest and and largest sponsor, and we're really happy to have this third year. I believe that we've been at State Farm Stadium where the

Arizona Cardinals. I mean that suggests you're gonna have a lot of people, a lot of Matt Miller type people come through. How many people are going to come through this auction, Well, we'll probably have over the four days of the auction, we'll probably have somewhere around twenty people. You know. I certainly wish that we could fill the sixty five thousand seats in the arena every day, but

that that doesn't quite happen. Have you seen any effect of I mean, I don't know Russians, uh what their taste is in cars, but have you ever seen have you seen any effect on the the sanctions? You know, we haven't yet. We do have a few Russian collectors that work with us. I assume that we're going to see you know, that fall off. They're typically not at this auction there at one of our two biggest auctions, either in cas Semi, Florida that we just had in

January or Indianapolis, Indiana in May. But I would expect that we're probably going to see them apps and hopefully this conflict is over by the time we get to May and things get back to normal little bit, not just for the sake of our auctions and our collector and look for the world in general. From your mouth to God's ears. Dave, thanks so much for joining us. Dave Major's there, the CEO of me Com Collector Car Auctions. The auction I think its off tomorrow in Glendale. I'm

definitely gonna be sitting home watching it. You can follow that TV, yeah, for sure, or or online or online, but I'm probably not gonna be bidding during this entire pandemic and the resulting economic dislocation. One of areas of the economy that just always amazed me to the upside was the real estate business, whether it's new home sales, new home construction, um existing home sales just really really strong. And obviously there's a lot of reasons for that, not

the least which is a record low interest rate. But a lot of folks are thinking about ways to play that, and one way might be through the technology side. Uh two weeks Court Demaunch. He's the CEO of pro Corps technolog He joins us here. See thanks so much for joining us here. Tell us about procure pro Core pro Core Sorry, and how you guys kind of kind of fit into the construction business. Yeah, no, Paul, by the way, thank you for having me nice too, nice to meet you.

So pro Core is a construction project management platform and we have provided we provide solutions to everybody involved in the construction process. So if you've ever built anything like remodeled the bathroom or built a house, you know that you're going to hire a general contractor and a bunch of subcontractors and these folks are going to come together, uh, probably never worked together as a team before and try to solve the complexities of your project, which is a prototype.

And it doesn't matter if it's a house, doesn't matter if it's a nuclear power plant or a port, or a bridge or a highway. Uh. You know, construction is everywhere and pro Work platform brings everybody together onto a single source of truth uh and enables jobs to get done on time and on budget. And it's um you know, we've we've now been in business for twenty years and we're a global company and we're having a lot of fun. So how much of your business is retail, residential versus

um you know, commercial? So it's actually even way broader than that, Pall. It's it's interesting people tend to think of construction as being residential and commercial. Um, there is industrial, there's warehouses, there is ports and harbors and civil engineering projects and you know, uh, nuclear power plants. So um, we are very diversified across a very broad spectrum. There's very little construction on this planet that doesn't benefit from

using pro corps across all of those sectors. So we're very much not concentrated. All right, So give us a sense of kind of how your business fared during the pandemic and kind of what's the near term outlook. Yeah, so um, we we we tend to follow the macro economic environment pretty pretty closely, which was as as the pandemic came on. Um, the general sense it in the building industry was there was some fear about what was

coming in the future. Um. So what we what we saw was there were some headwinds in the industry, but then there were some tail winds. So let me the headwinds that we faced when we were going into the pandemic was, uh, there's been a labor shortage in construction for years and that only got more challenging during the during the pandemic. And then you you you know, you've probably talked a lot about the supply chain challenges and the global economy, and that's been an issue as well

as commodity prices and inflation. So those are the headwinds um that we see in the industry, but we are benefiting from some tail winds. And the tail winds are that this industry is one of the last to go through the digital transformation uh phase, so in it's still early days in digital transformation, and COVID brought on two new kind of opportunities for pro Core. One was because of the remote work environment that came out of COVID.

A platform like pro Corp, which brings everyone together virtually is really really beneficial to come and so it enables people to not have to drive into the job site every day that don't aren't required to be there. Number one and number two was some of the some of the folks that had been in the industry for a long time retired during COVID, and then a lot of

the younger folks that were coming out of university. We're coming in to the industry expecting the technology that would be uh you know, mobile centric and more consumer based, and that's where pro Bowl really shines. So what we like to say, is that on net net basis, the headwinds and the tail winds kind of um netted themselves out. But I will tell you that the head winds are working themselves out over time, and we are incredibly optimistic

about this fourteen trillion dollar TAM that we're looking at all. Right, So in terms of your company, you mentioned it was twenty years old, came public last year, had some gold plated underwriters there sixty seven dollars share the stocks that just under fifty two dollars today. The good news, it's up four percent today. The bad news is down about the thirty year today. What's the market concern around your stock over the last several months. I don't believe that

our stock has been singled out. I believe that our sector, the high growth vertical SAS market, has been uh challenged across so our cohorts I think are spacing the same challenges. I think we because we closed out the year so strong and we're so optimistic about the future that I think all of this will work itself out over time. So talk to us about the growth driver. What's the key growth driver that you guys are real is he

really is focusing on right now. Aside from just the economic expansion, yeah, so um our platform is very much driven around driving growth uh and and driving adoption of new users and new pain customers. Interestingly enough, our platform allows our customers to bring on unlimited collaborators onto the platform, So if you're general contractor, you can bring all your

subs on it no additional costs to the platform. And because of that, we create this fly wheel effect of more The more people on our platform that see the value of it, the more people that want to be our customers. So the growth factors are the network effect that we get from the from our platform, our international expansion of the CAM is outside the US, and our

international group last year. We have a lot of new products that our customers can can put us on our platform, and so there's just a lot of ways that we look at growth in four and it's exciting. Some good stuff. There to a quarterma CEO of pro Court Technologies joining us here talk about technology coming to the construction business and where the upside might be. Thanks for listening to

the Bloomberg Markets podcast. You can subscribe and listen to interviews with Apple Podcasts or whatever podcast platform you prefer. I'm Matt Miller. I'm on Twitter at Matt Miller. Three pt on Fall Sweeney, I'm on Twitter at pt Sweeney. Before the podcast. You can always catch us worldwide at Bloomberg Radio