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Talks between the US and Ukraine are helping to advance oil prices this morning.
Let's get some more insight now on this.
Another commodity moves with Miami Mike mcgloone, Senior Commodity Strategies, a Bloomberg Intelligence located in Miami Beach.
Mike, talk to us about just I'm seeing.
You know, w chech crude oil fifty eight dollars of barrets up a buck.
But this is really really low price for oil.
Are good friends in the oil patch in Odessa and Midland, Texas?
They are not happy, No.
They aren't, and unfortunately still producing more oil now that is on decline. That should be it's responsive elasticity to lower prices.
But what's happened in Russia Ukraine?
If there's dayton, if there's significant peace, the first thing you should expect to go down is potentially gold and natural gas natural gas.
Prices because we'll be bringing on more of that supply.
So it's not really a good reason unless there's some kind of curtailment of supply for prices to go up.
It's an overall bear market.
But if you look over next year, I think the range and crudel can be from around forty to seventy. Now that's a normal first standard deviation move safely end the year between fifty five and sixty.
But the bottom line, pol is the.
Average cost of production to break even costs in this countries around.
Fifty five, so they can do pretty well.
In the point is you basically have to get below those levels for an elongated period to offset these excesses of global supply versus demand. So I'm still bears CRUDEIL, but I wouldn't be surprised we'd get it, you know, I think traders are looking for bounces to sell.
Okay, let's talk about where perhaps geopolitical anxiety has fed into a rush to Haven's boy dof you see it in the run up in gold in well, we're having a little bit of is it profit taking happening right now?
Mike?
Where do you point.
Us towards in terms of buying the dips or selling where we're at. I.
Caroline, I love how you went there.
The phrase that I keep thinking of is you're supposed to be selling when you're they're yelling. Particular in silver, silver is one of the most over blought commodities on the planet. You have to go back to nineteen seventy nine to get a similar stretch. Almost two times versus is fifty week moving average, and that peak we put in that we closed at thirty two dollars and thirty two cents that year. The next year that we close above that level was this year. So that's what happens
when you get this stretch. So I'm very concerned about things like silver. Yeah, it could get to one hundred, but it typically will drop towards fifty. That's a full normal range for next year. It's what I expect. It's the number one metal expect to be down next year
because it's a short squeeze. Now, now gold's a little different story, but gold's expensive too, So the whole precious metals to market market looks to me like, yes, it's been great for those of us who have been bullish forever, but it never hurts, it takes and profits, and right now I think we're seeing some of that.
Mike, twenty twenty six. What's kind of the play in your world here? You're twenty twenty six out of look in global commodities? Am I buying pork bellies or where am I going?
Yeah?
I love how you always go to pork bellies plot because I don't really try. I don't know much about wyllies just to That's why you need to trip me off.
That's important.
The number one thing I'm worried about is this continued deflation in the elastic commodities, the grains, energy, crude oil, natural gas.
I fully expect those to continue.
So levels I'm looking for is crude oil to get to their forty natural gas to get in there too. That's not profound, It's what it's always happened. Corn corn to dropped down like three dollars and fifty cents.
Those are break even costs.
The key thing I'm worried about is this signals by having gold having its best year ever versus crude oil down that exceeded the extremely head in two thousand and eight, I'm really worried about this stock market problem. So right now, for industrumentals to go up, the stock market basically has to go up. But when here's a key thing I like to end with, we just never had this type of high velocity rally in gold and silver and precious
metals with stock market volatilely this low. So typically it means stock market volatile will go up next year and that might be all that matters.
What about digital gold like going down?
It's still bear market. We peaked. I think we're gonna look at bitcoin. Likely looked at silver in nineteen seventy nine. This year it's a pretty significant peak. I think bitcoin's more like the head towards fifty.
That's a normal correction, particularly if the stock market goes down and the whole rest of the space to continue that bear market. So good examples of Bloomberg Galaxy Crypto index is down about twenty percent this year.
It's a key reversal. Was up about twenty percent this year. It looks just like this US stock market did in nineteen twenty nine. The difference is there's an unlimited supply of cryptocurrencies. There's only one in two thousand and nine that was Bigcoin.
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In many ways was not discerning. There were record highs, there were sudden reversals, there was years of conviction trades, there was costly comebacks, and it's all been written down by our wonderful colleagues at Bloomberg News, and we can sit down with one of them, Michael Reagan. Here's Bloomberg Managing editor for US Equities, who drills into the AI trade and whether now it's time for the big short. We all know what that word play is pointing towards
and one Michael Berry. How did he really pour cold water on some of the big AI hag.
Yeah, it was really interesting. I mean, you know, first, let's you know, to be fair, it was a great year to own AI SoC you know, as we get to the end of the year in videos up forty percent, pollunteers up one hundred and forty I think, but Burry really did throw some cold water on the trade in a very high profile matter in early November when he disclosed put positions in Palenteer and in Vidia in his
hedgephund see on asset management. You know, since actually closed the fund, but it really sort of landed like a thud in the market. You know, both those stocks and the NASDAC were really setting record high after record high. You know, again, they're still going to have go into the books as very good years for both stocks, but they they haven't set a new high since then.
They both took took a big dip.
The Nasdaq hasn't set a new high since he disclosed these puts. So to me it was like, you know, he really sort of hit a raw nerve I think in what people's concerns were about the AI trade that you know, yes, there's a lot of promise there, much like the dot com era, but the winners and losers, you know, it's a.
Long way from knowing who they will all be.
I mean, obviously in Nvidia has a good case to be you know, one of the main winners. So so that was one of you know, to us, we love writing about a good trarian call, especially one that sort of hits the top of the market like that.
So that was one of our big trans of the year.
Mike.
There's a lot of people in this market that don't recall a market where Tech was.
Not leading this.
That's true, I mean, and I'm quite frankly, I'm not sure if you're telling me that Tech's not going to be a driver in twenty twenty six.
You know, you got to be cautious there, if that's kind of your belief.
Yeah, yeah, And I wouldn't believe me. I would not be the one to say that. Yeah, to buck with the trend.
And I heard that from the street, because the street's still very bold.
Yeah, yeah, I think you know, what we've seen in the last couple of months is sort of this a little bit of a rotation into some of the other, you know, forgotten sectors, some of the more cyclical sectors. And you know, obviously Tech will go into the books as among the best gains of the year.
You're totally right, most years they are.
You know, you look at the NASDAQ one hundreds performance versus the S and P, and it's just on any given time frame, it's you know, I mean, that is our economy, right, that's where the growth is, is that that's where all the excitement is. You know, I'm not sure anyone expects, you know, a big correction in tech stocks.
I think Alex has written about, you know, a lot of strategies though, are wondering if this rotation into other sort of least less loved pockets of the market could continue next year.
Though, And at the moment, speaking to Mark how Marx's anxiety, everyone seems to be one side of this trade and the S and P five hundred is going to go higher, but towards us through some of It's just such a brilliant story that you've brought to us talking about all the ways in which twenty twenty five was defined by certain trades.
Crypto was another huge one, and if.
You look at me at Bitcoin, it's down on the year. You could have booked some enormous gains if you'd sold at the right time. Also, if you're training some of these mean coins, particularly the Trump related ones, you've basically lost endying gains if you'd held on to Yes.
Yes, mind you, these are the big trades of the year.
Not necessarily all winners, right, but they were sort of the trades that captivated, defining the defining.
Trades of the year.
And here President Trump came in promising to be the crypto president, you know, basically getting rid of all the regulatory actions against the major crypto players, pardoning a bunch of people who were in jail for crypto, launching his own mean coins, you know, the Trump coin and the Milania coin.
I think that.
Was pretty dramatically surprising to a lot of people to think with the President the full power of the White House behind digital assets that we wouldn't see just this blockbuster year. But it, you know, it just goes to show you markets are designed to surprise you and upset you. And you know, Trump's mean coin had a huge rally at the beginning.
It's down something like eighty some percent.
Now Malania is the same thing, down like I think ninety nine percent. So you know, you don't need me to tell you that crypto is risky. But you know there's there's exhibit A.
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Just turn out to the Big Takes story. We love the Big Takes stories that come out every day from Bloomberg News. Deeply sourced, just great, fascinating stories, really well done. This one goes to Wall Street's balance of powers shifting. Big banks are roaring back as as regulation eases, lending surges and private credit giants lose some of their luster.
There Bloomber's Katherine Chiglinsky helps lead our investing coverage. She is a pride of the Wayman Mary University, but she leads our coverage on all that stuff and investing in banks. She joins us for more talk to us about kind of the big banks. Like when I graduated from business school, went to the Chase Manhattan Bank, we did leverage lending, we made a fortune, and to see private private credit take some of that business away, it.
Really surprised me. Over the last fifteen years or so, how's that balance of power these days?
Well, it was huge.
I mean it was a huge shift to see all these private credit, private equity firms sort of really taking all this market share away from the banks. As the banks, you know, post financial crisis, we're sort of limited by regulations and also we're arguably trying to be a lot you know, safer overall.
But now we're actually seeing it change a little bit.
And I'm not trying to say, you know, banks are going hog wild on everything, but like they've been involved in a lot of the leverage loan deals this year, We've seen them in some of the major acquisition financing. And it's been a good year for the banks. I mean, regulations have pulled back. JP Morgan's on track to have its highest annual profit, so it's actually been a pretty good time now to be a bank. Yeah, the balance is really shifted.
It's revenge of the banks, is how Mike Mayo, well known analyst Bank panast Over at Wells Fargo put it. These non banks, though, do they in return perform less, well have less of the pie? How does ultimately and distribute itself? Because so just the shist scale of non non usual assets so well turn into acets has just grown exponentially to like sixteen trillion.
Grown exponentially.
So obviously I still think those firms will be fine overall, but you're really seeing the stock price talk a little bit, so like the bank stock prices are up quite a bit. I mean, City Group we had their price to book ratio climb above one percent for all the time in a very long time. Like, I think you're starting to see them sort of get their mojo back a little bit and really find the groove and the businesses that they're you know, digging deeper into investment, banking, trading, et cetera.
But I also think you're.
Seeing you know, I think you'll still see these credit private credit firms you know, work really hard and like you know, find different deals.
But I do think it's more challenging.
I mean we've had that whole you know. I feel like this year it was the credit cockroach debate. Yeah, that really rained for a long time and involved some of the banks were involved in some of those cockroaches, like first brands.
You know, I think there is.
This growing sense that like, maybe we should be a little more, we should scrutinize a little bit more of these deals. And obviously the alternative asset managers got so big in the private credit space for so long that I think there's a little bit more of a scrutinizing eye on those well.
I mean, even in a Warner Brothers Discovery deal, there's a lot of big banks bridge loans bring back terms we haven't heard in a while.
You know, a bridge loan which will be refinanced with a you know, a bond deal or something like that.
Some of the traditional MNA financing seems to be coming back. But these private credit folks, they're not going away because the money continues to flow into that asset.
Last.
Yeah, the money continues to flow.
And I think, you know, I think every competitor of a private credit firm really understands that, you know, they're not going away, Like you should be very careful.
You are.
You know, if you're a bank for these financing deals, you're going up against a lot. I mean, yeah, you look at the Warner Brothers situation. I mean, the amount of firms that were involved in each of those bids. It's kind of crazy to say, you know, it was banks, but it was also private cat at firms and alternative asset managers.
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I want to know who out there of our listeners and viewers was gifted an AI hardware product. Now many people already wear perhaps an AI ring or an or ring, but how is it starting to integrate more within your life?
What options are.
There at the moment, we're going to have a discussion about AI wearables, the promise and the hype. Is it living up to reality? We can ask Sandbar's CEO about his new smart ring because it's certainly on pre order already. The stream mena Famy is with us joining us, and look, you're talking about the stream ring in particular, that lives beyond the well your screen. More broadly, this is all about audio, all about speaking to your ring. Just talk us first through what exactly the stream ring is.
Absolutely, thanks so much for having me.
So stream has two parts. There's the stream app, which is kind of like a conversational notes app that will take notes silently, that will respond to questions in a voice that sounds a bit like your own, and you primarily interact with it using the stream ring. So it's this little device here with a touchpad on the side and a mic on top, and you just hold speak into it and release and it will vibrate to let you know that it heard you, and if you have earbuds in you can then hear a response.
I'm seeing people wearing all kinds of rings here, So it's obviously that the market is ready for this type of hardware. Here, what we need, what problem does it solve? What does it really do for the user here? What are you trying to capture?
Definitely? So Sandbar is based in New York City, and while on the go often ideas will pop up where you'll want to take a note of something for later, or you'll want to get a little bit of information like hey, tell me what's new in the markets today, and have that beam straight into your headphones while you're
on your way into work. And being able to be in the moment and tap into those instances of flow without stopping and pulling out your phone makes a big difference to actually performing that interaction versus it getting lost in the moment.
Davely All, Bloomberg opinion columnist, had the joy of using your ring and I did as well. I've played with it a little bit already, and he sort of described how it basically is not un drawing unwanted attention, and also key doesn't make others feel uncomfortable. For me, I'm an avid cyclist, Paul, and I get to in from
the office with that. The amount of times I've wanted Siri to just answer something about biking docs or about where I'm doing, or the meeting I'm about to go to, and it just doesn't work.
And I'm interested, meaning from.
Your perspective, how much, given it's coming out I think in the summer of twenty twenty six, how much is this predicated on the fact that Apple doesn't get his act together.
I think that there's a lot of opportunity for new companies to demonstrate new products that are focused on I guess, very specific applications to start that hopefully grow over time. A big limitation of existing AI products, especially those built into devices, is they'll give you a single response to
a single query. But if I want to do a really fast back and forth, not only do I need great hardware, but I also need great software that's capable of a thoughtful response that's really high intelligence, that's emotionally aware, and solving all of those difficult personality challenges and hardware challenges is something we're excited to dedicate ourselves to and something we really haven't seen anyone do before.
Some people with just devices in general, me to have a concern of it's always listening to me, and I'm not sure I like that from a security perspective.
Address that issue absolutely so at Sandbar, we love thinking of the bar test, which is what would you wear at a bar and feel comfortable wearing and the people around you it also feel comfortable wearing. So the really nice thing about the stream ring is it only listens when this touch pad is held, and the mic only picks up basically what's right in front of it, So you really have to whisper into it.
And that's great if you're on the subway.
And it's really loud and you want to take a note, or that's great if you're walking on the street or you're driving and you don't want to disturb the people around you and mention something quietly. But it's really not designed for up what's around you or recording everything.
What's so interesting is about where You've come from and a lot of work academically done, but also you were inside Meta. Meta bought your previous startup Control Labs, and in many ways, Meta's gone all in on the future of eyewear and the idea that you can have these ray bands that will interact with your surroundings visually and be able to talk to you as well. People have loved that product with you and the focus on audio. What I'm really interested in is that it speaks to
you in your own voice, or like your voice. Why do people like that rather than an unfamiliar voice that perhaps they currently are using, whether it's a Google Home or an Amazon Alexa or indeed with Siri definitely so.
Our core design philosophy is that we want stream to feel like an extension of your own thinking. And if we look at how the public and consumers are beginning to view AI, people are I think excited by the benefits that it brings, but they're also nervous about whether AI will replace their relationships or replace their jobs. And something nice about this extension framing is that the AI is always in your control. It only listens when you want.
You know, you can tap to interrupt it. Really quickly. It responds when you ask things of it, and that changes the relationship from one of replacement to one of extending your own ability to think and answer questions. And remember, and when we were testing out different voices, one day my co founder Careoc suggest said, well, hey, why don't
we just try a version of your own voice? And initially it was a bit strange, but quite quickly it feels much more natural than anything we had tried before, and so that became a surprising, really nice finish to that design philosophy.
Mean it to what extent is AI in your here and where do you think it can take you? As more and more people get more and more comfortable in trusting some functionality to AI.
Absolutely, I mean basically none of this product would be
possible without all of the incredible advancements and models. Models handle creating notes and organizing them and providing the response and creating memories that your stream can draw on to continue conversations over time, and as those models get more intelligent and more useful, you could imagine this is becoming a portal to all kinds of things you're querying off your prepping, So you know, you could imagine saying, hey, give me a podcast of all of the things I
have to get done today, and by the way, can you draft some of those so they're ready at my computer when I get to work, and then you sit down and things are basically already there for you. And those kinds of deeper action and sequential processing will require advancements beyond what we have today, but that'll just add to the experience over time.
I'm not thinking it's two hundred and forty nine dollars, is that the asking price?
That's right, two forty nine for the silver and then it'll be two ninety nine for gold.
Well, I've got so I'm already wearing an Ora ring and I've already got some rings on some other things, luckily thanks to my husband and sister. And they're like, so, is your competition Aura and the health device or do you encompass.
That space too.
Is your competition really what some Altman's now building with Johnny Ive and the idea of future AI hardware.
It's a good question, and I think that what we're offering today is pretty different than anything that exists so far. It's really an input focused wearable device that's centered around providing you control, and so I think that if you're looking for that kind of an experience, hopefully we're providing
something special in the market. And in the same way that I continue to, you know, use my iPhone and I continue to use a lap top, we hope that other devices will coexist with their own philosophies of how humans and technology can relate.
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