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We're gonna pause here with Steven Anglan Dirt and we could do this with standard Charter Bank.
And just look at the larger view, Paul.
I'm going to go to seventy thousand feet on this. On the dollar, the single number on my screen which screams flight to quality is a DXY of ninety nine yen back to a one fifty nine handle. Just a remarkably resilient dollar. Steven England, There's been a student of this since time began. Are you shocked at the resiliency of the dollar.
We're not shocked, because we've been dollar bulls in a market that's overwhelming the dollar negative, but you know, you're always a little bit surprised at the timing. What seems to have happened is a combination of US interest rates finally going up, reflecting some positives in the sense of US economic growth and earnings resiliency and you know, as well as some negatives, which is the inflation picture.
But the market is responding.
Explain us right now. I got to get the academics in what's great there? And I think if John Ryden iconic and Bear sterns with Breen as well is Paul In every dynamic there's an ambiguity. This word ambiguous. So if a dollar goes up, everybody's like gloom boom boom. But in a second order condition, it's about economic might, isn't it.
Yeah, the causality is always important. And you know, if dollars going up for some arbitrary reason, yeah, it's not competitive.
But if every quarter.
You're always surprised at how resilient earnings are and how they surprise to the upside, and you're surprised at productivity growth and how strong it is, that tells you something about the return to capital. And that's why money keeps flowing into the US that you know, the risk adjusted return to capital estimates seem to be, you know, keep going up, and that attracts capital globally in a world that's slowing down.
We have a new chairman of the US Federal Reserve.
What's he going to do.
I mean, presumably he's got some pressure to cut race, but the data doesn't really support that at all.
You know, we just put out a piece today and adjusting that question, and the title was he won't cut but hook cap of it that you know, and we say out theright that if it was say a yelling or a bernanky, you know, we'd probably have rate hikes in our foretest. As it is, we're flat because the chair does have a certain amount of power, and unless things really fall apart on the inflation side, he can certainly delay hikes for for a period of time.
So how pronounced is your concern about inflation here? How do you think about that?
You know, your kid has a ninety nine and a half degree you know temperature, yep, and you think it's going up a little bit, but you know you don't see any sign that's going to one o five. So you start to say, yeah, I got to watch this and make sure that you know it's it stays kind of at these levels. And you know, we're not a defcom one on inflation. It's higher than it we want it to be, and the best indications are that it's
sort of going up very slowly. Plus he is right that the productivity story puts downward pressure on unit labor costs. So it's not like everything is falling apart. There's sort of there's concern, but not despair.
Stephen Engelder.
Where this is Standard Charter Bank, all of their heritage of the Pacific RIM and around India as well, it's off your remit, but I got.
To go there.
Given your team at Standard Charter Bank, is there a tradable currency opportunity given the the difficult energy template for the Pacific RIM and around India, is there an opportunity?
Well, some of it's already priced in, and you know that's the part of the world that's been hit the worst that the you know, energy prices. Most of that region doesn't have energy. China is a bit aside because of the huge stocks of that it has on the energy side. But if you're looking at places like India, it's a real problem. And we've seen the currency adjust downward.
Where's value out there in the currency markets today?
Do you think you know, I think that there's always a problem and that I can say that I think the dollar is value and that you know it's going to go up, and that you know our our forecast for the euros one twelve a year out, but there's a lot of in betweens where you kind of say, is this the right timing to go long dollars short euros? Could something happen And that's always the art of trading to get the timing right.
Thank you so much for coming in today and really really appreciate it. With the standard Charter Bank, Steven Englander with us is well, stay with us. More from Bloomberg Surveillance coming up after this.
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YouTube to start a three hour conversation with Paul Sankie. He's founder Sankie Research, absolutely definitive in his independence within the petroleum analysis of the world. So I see Ed Morris out doing all sorts of stuff. He's like holding you sixty nine years old curries out doing microeconomics out of Chicago, price theory and a price oil away from the headlines in the zeitgeist that we're living every day. What is your curiosity right now? What is the odd thing you're studying?
Well, we got into group three base oils. Do you know about that?
Please help me? Or is that like?
No, it's very striking. Last week this is quite a big deal. Actually, last week Walmart and Costco warned that they didn't have enough base oils to put on their shelves. You know, the stuff you put in your engine was running out. And the reason for that is basically, we're heavily dependent on bas oil from hor Moose. So it's a very interesting end of the chain story. And this is not you know, some deli down the road. This is Walmart, Costco, Toyota, Xon, then warm Day don't have
enough motor oil. It's a physical shortage here in the US right now. And I thought that was pretty fascinating.
The physical shortages in the Pacific room as well. Francisco Blanche was in saying by Foreign Way, the Pacific rim Indo Pacific is affected.
Yes, absolutely, but I think compared to where we were when this started. We immediately looked at Australia and it's interesting that Australian inventories are actually higher now than they were when we started this crisis. So there is crisis management being successfully employed, and I think you can see that around the world. I've just been in Mexico. All the planes are flying, the place is basically booming and
going into the World Cup. And the joke that I had in my research this weekend is that the moors are all buzzing, and these are high end moors. They're all buzzing with kids buying Mexican World Cup tops, you know, because the Mexicans always have the best strips. The other name for that is Asian Petrochemicals, so you know there is a petrochemical major issue that's about to emerge through the chain as well. You've shut down, you know, forty percent of Asian petrochemical capacity.
So the straight upward moves, I mean, I'm speaking for most of our listeners and viewers here. We couldn't find that on a map before. Now we all know about it. Is it ever going to go back to where it was January?
No? No, But you know what's happening today is a couple of tankers have bussed, so you're going to see you know, the oil industry will work out a way to smuggle. You can be sure of that. And I think that the US announcement that they would kind of they would allow Russia and oil sales tells you that there's going to be you know, that kind of a move where they probably you U U turn and start turning a blind eye to the Iranians moving stuff. And
that would come out of the China meetings. The other huge thing, by the way, which is huge, is after China Trump you obviously saw China putin. Yeah, you know that's a big deal in oil, believe me.
So how if we're twenty percent of our oil and gas comes out of that part of the world. Did they just build more pipelines? But pipelines are also susceptible to stuff. I mean, what do we do in the straighter removes? Are you got to open that thing up, don't you?
Well, I think we've characterized this is an incredible time where it's OVAX versus u at VAX. So it's the the US potential, you know, the US Treasury's global power against drones, and drones have totally change the shipping you know, entire future. It's just changed pipelines. You have two hundred and fifty thousand miles of pipelines in North America. You have forty thousand in the Middle East, so pipelines are
totally a solution. And it's just that, you know, tank has never had a problem previously and so you didn't worry about it. And actually it's the Hooties that showed you know. That's what was so scary to me when the straight shutdown is, by the way, we haven't opened the suits canal properly and it's been three years, Is that right? Yeah? No, no, no, the suits canal throughput volumes are fifty percent of where they were before the Hootie shut up.
I got a different question, but let me get to it then, right now, what's your gallon?
A guess? Guess?
Yeah?
Out a year? I mean, are getting used to five dollars a gallon?
You know Midwestralia always want me on when the gas price goes crazy. So I go on those shows and I told them the other day you're going to six. I don't think there's any doubt about six dollars a gallon here this summer because we're just going into some And now you'll get big data from the DOE today. Last night, the API data had one huge number in it, which was ten million drawer in the SPR. So you're running the sa PR and over obviously over a million
in a week. Yeah, a day, you know what I mean. So you're going you're gonna run into a question. With three hundred and ninety million barrels in the SPR, You're going to run into a question. Now do you just keep allowing that to come into the market? And it's material, So there's a lot of inventory days coming.
Up, Alexa, Should I ask about the wah Wah or the caspianc which one?
Oh I go ibolt wah Wah?
Whoa, Okay, lit'sten to geal?
I guess you're telling me John Tucker at the wah Wah is going to be six bucks a gallon?
Well, because that's nationwide average, so that would be like eight nine in California. Yeah, so I'm talking nationwide average soon.
I looked at Berlin the other day. They're going to go to eleven or twelve bucks ago.
Yeah they will. Oh yeah, No, I don't have any doubt about that. And what's happening is that because the refiners are really pushing hard to make jet feel so fascinating thing here is our jet field inventries are record high. Absolutely fascinating because they're training to do that. They're going to make less gasoline into driving season. And the other thing you got to watch I was talking about base all is Alki, which gives you octane is short in California.
So they can't make great They can't make the fancy stuff. No, they can't get the stuck.
Okay, you know Paul and I say risk, folks, Well we're done with the show. Paul comes off at twelve noon and we're usually playing a board game of risk. I would guess one hundred and five of one hundred Americans don't know where the Caspian Sea is. I would say, right now, it's fascinating that transport, that dynamic you're encyclopedic on something like Baku to this pipeline or that. Tell us give me a forty second, one minute critique here of how we should look at the Caspian Sea.
Well, I think the difference between playing a board game and going to the Caspian I've been to Tangies, where the huge Chevron project is a million barrel to day giant reef that was discovered from space by the cosmic Soviets. It's so huge the tide there is eight miles bailey. That's how flat, and you know how far the water moves and how difficult it is to develop oil there.
But the generally speaking, yeah, the Casipian has a unique position as well because Kazakhstan is sat right between Russia, China and the US with Chevron and now Ukraine and the drones. So it's a fascinating and huge potential. Yeah. I mean there's a lot of non opec oil that's going to be developed here, no doubt, because.
Excuse me, I'm so lined up. I forgot my micage.
I'm thinking about John Ducker.
In six bucks again.
So to Paul's question about the Hormuz, is what's really going to happen here?
Is all this nan opek is going to come on?
Oh? No question, Yeah, over time. I mean, you know one country I'm very interested right now is Argentina going to grow massively. Brazil has huge incremental sales to China of oil, and of course Venezuela hopefully will boom. You know, Venezuela can easily suppli.
Dormose doesn't matter. Yeah, I'm not there yet.
I mean, Paul, your energy guys supply demand you get that. If I'm a politician, I can't allow six dollars. I guess that can't happen.
No, that's right, and that's going to be very interesting. And so my notes on Sunday was called watching the frog boil with that blinking, and that I think is the outlet. I think that's what will trigger a crisis. Response is actually going to be the US gasoline price. When it comes down to it, You've got the nasdak at a record high. Everything seems fine, The Knicks are on a great you know, Nicks have got a great crumback.
The world is not just simply not ending in the United States, and I think that's affecting the president's sense of the crisis. But you know, as oil analyst, we've almost gone quiet because we were screaming so much six weeks ago. It's continued to progress on the exactly the screaming bath and you'll see it in the DOE data today, you know, big draws. Eventually, you'll get to a point where the US has to compete with international exports sales.
So the export sales are going to start fighting our domestic on price, and that's going to make US domestic prices go vertical, especially as we don't really know where operational limits are. So there's a point in inventory where you can't run the system, and we're going to hit that and that's when prices go nuts, and we haven't hit it yet.
Interesting, you lead a romantic life. It's like out of the Price by Daniel Jurgen. Where are you going next? Give me some romantic.
Look, did you know? Sure? Shakdemption one of the great Wall Street films, and they dream of going to Ziwata Nejo in the Pacific is where they want to escape to, and in fact do escape to. And that's where I'm going next June the eleventh to watch the World Cup. I got my Mexican shirts ready to go, and yeah, I'm really looking forward to that, really looking forward to the World Cup. I mean, I'm.
America can pull off the World Cup.
You know, you always back the hosts, So I love here, you know, and traditionally do awfully. Obviously Mexico, US Canada. I really think you typically you do, and it's a traditional way of looking at You always get a run, you know, of the host nations. And so we'll see Mexico's got a tough group, and they don't have that much talent. I don't understand why the US is one of the greatest of.
Oh yeah, thank you, thank you so much, legendary. I know he SANKI at Research. We'll have them back soon. Stay with us. More from Bloomberg Surveillance coming up after this.
You're listening to the Bloomberg Surveillance podcast. Catch us Live weekday afternoons from seven to ten am Eastern Listen on Applecarplay and Android Otto with the Bloomberg Business app, or watch US live on YouTube.
We start strong here.
He's a wonderful perspective out of me and Andrea Suderman has always given his great perspective with Vauntable, chairman of their board of directors, and of course venerated across finance in Europe as well. Just what's the mood into the summer in Europe? I mean, I know everyone takes a month of August off onlike the ugly Americans, but just what is the continental zeitgeist right now?
Well, listen, thanks for having me on. By the way, Tom Paul's great to be on the side, guys, is really one of questioning, you know, well, what's going to happen politically in Europe. There are a lot of elections coming up that look a bit dicey, and we saw hungry swing in the pro European camp. But there's a lot of concern about France, about Germany going forward.
The UK.
People are concerned about competitiveness with the United States, they're concerned about the trade war, They're concerned about their auto industry. So there is a lot of questioning, well, let's.
Go there, because you've got some visceral knowledge, and is the auto is manufacturing done in Germany? Is it so messed up, particularly with the China manufacturing at any price, that the Germany under threat of losing that iconic image.
Now I understand the question. I think it's it's a relevant question, but I don't think I think it's way too early to say Germany is done. We've seen waves of competitiveness in the past. If you recall, you know, the Japanese auto manufacturers getting into Europe in the seventies. Initial response by the Europeans was again import restrictions, tariff. As a matter of fact, people don't remember that, but they sort of adapted and survived. There is a renaissance
of the defense industry. As everybody knows, some of these car plants, idle car plants are being repurposed to grow the defense industry in Europe. So yeah, I think it's too early to say, but certainly a lot of work ahead for the Europeans, in particular the Germans.
Talk to us just about how Europe thinks about their energy dependence or their energy policy, energy strategy, because first you had the Ukraine War and the challenges with Russia and that supply, now you've got the Mid East. How was Europe thinking about its energy policy.
Well, it's certainly thinking it needs to be more independent, though I think the market's making too much of the dependency. If you recall, I think we even talked about this last time I was on the show in March in four years ago. When the Ukraine War broke, everybody's saying that, you know, the Germans wouldn't be able to heat their houses in the following winter, and nothing like that happens.
So I think the Europeans are quite adaptable. I think it's going to push them more towards renewables, but certainly also and that's an increasing discussion, certainly more towards going back to some form of nuclear as well to ensure the baseload of the grid.
What's your view or what's the view of Vontanamo about global markets here today? Where do you want to be given some of the geopolitical risk? Are you thinking geographically?
US?
Non US, Europe?
Asia?
How do you think about just the geographics about I.
Think overall emerging markets look attractive. I think fixed income looks attractive. The risk to to to to the capital that you invest in fixed income with yields being much higher than there were four or five years ago, even if rates continued to back up, it's fairly low. So the rolldown will make that good very quickly. So I think fixed income security is certainly attractive. I also think, funnily enough, that equity markets are quite reasonably prior for
the majority of them. I mean this, You've said this on this program, that the rally has been very very narrow, and a lot of stocks, a lot of sectors that consumer durables, you know, are actually modesty valued.
Right, you areas qualified as anybody I know to take this train of thought. I hope, I hope you're Can you see Andreas Uderman having to deal with compliance?
Oh?
Yeah, James Diamond wants to come into Europe with a digital banking model. Is it a threat to the European complex of the financial system? How do they adapt to the idea that JP Morgan wants to come over to Europe.
I don't think that's that's a concern for anybody. By the way, I do deal with compliance a lot increasingly, I meant a huge concern also, particularly for front Tobl. I mean front Tobos has a very large US person's client base, and as you know, that's a pretty tricky thing to deal with. No, but I think I think the real threat or the real risk to the European banking see the competitive threat comes from the revolutes. Then
twenty fours. These are proper indigenous native digital startups and I think they can do most things better than even the mighty JP Morgan.
See how he did that? He dodged some questions like.
It's skilled to say, why did you save the interview exactly?
How do you How do the investors in Europe think about AI and how big of it is here? It just seems to be everywhere, and that's all people want to talk about. What's what's you from Europe? When you're talking to investors.
I think I think it's a concern for for a lot of people. Similarly to the United States. I think people in Europe particularly are concerned about the job market, employment, what it means for graduates, what it means for the education system.
Do we need to retool the education system?
Do we need to shift more towards vocational training, which is perhaps slightly less by a I. I think the investors buy and large, the private investors that invest in our certificates and our struct solutions, they do pretty much the same thing as in the US. They go for these these big and videos.
And so on of the stock market.
Should I put some money on Belgium in the World Cup?
Certainly a dark horse, A dark horse dark horse as always, okay, I.
Mean, I gotta you never I'm always looking at these guys. They could always pop out it. It's always like, you know, you think about Holland as well. That part of the world produces some soccer players that I don't know where they come totally.
And remember we arsenally asked me about that last time in March won the League of twenty Year for the first time.
There you go, I'm.
Looking like we gotta go. We gotta go here.
But Andreas group g Belgium, Egypt, Iran, Iran's gonna have a team New Zealand. I mean basically, I like Belgium.
Is Egypt like a threat to Belgium.
No, I think I think Belgium will go through the first round.
Yeah, for sure, that's my sleep.
Do you sense any enthusiasm in America for the World Cup?
This is a nobody not age issue. I haven't heard anybody. You are the first one to ask you and on us solo, to ask me about the world The.
Final is gonna take across take place just across the river there in the swamps of Jersey.
If you ask the man on the street or the woman on the street, probably wouldn't even know it takes place, right Yeah, it's.
A big worry right now, you know, I mean, our Jersey's our World Cup correspondent.
We have to see. We got to run. Andrea's thank you.
So much for joining us, having us here. Andreas Uderman, you're the chairman and a great student of what's going.
On in Europe.
Stay with us. More from Bloomberg Surveillance coming up after this.
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YouTube with US Now to get our Nvidia coverage started.
We wanted to start strong. What matters is not only.
The Berkeley parchment and onto Chicago, but he spent a decade in China. There's no substitute for that experience.
Jake Goldberg joins us.
On in video this morning. What did you make of Jensen's soiree in China? The most important image of the entire trip was Jensen eating noodles in some noodle shop in Beijing, Jay, What'd you make of that?
So?
I gotta admit Jensen, Jensen's in a tough spot. He has to walk this very fine balancing line between being a good US CEO running a US company and China, which is a big market, and he's of course bicultural. I actually think this is this is not the first time he's been photographed on the street in Asia, in China going to some small restaurant. This is actually pretty normal for him. He's very very adept at playing the press in and that sort of hometown local feel is
I think part of his messaging. I think he also likes good food, so that doesn't hurt.
What's the streat going to be looking for with Nvidia's earnings tonight? I mean, you know, three years ago this in Nvidia shocked the world with their big revenue guidance upside, which really crystallized the AI story for a lot of investors. What are investors looking for now?
I think the main thing we're gonna be looking for is the the impact of the Vera Ruben upgrade to their numbers. They have a new every year, they have a new generation of chips, and this one is called Vera Rubin and it's rolling into numbers now, and we're gonna be looking for how big that impact is and and how you know how big how much upside there there could be to numbers.
Jay, you look.
At a n R on the screen, and boy, I'll tell you, Jacobberg, you're a lonely voice you gotta sell on in Nvidia? Do you maintain that now? And what do you need need to capitulate and go long at four twenty this afternoon.
So just I've always thought of this as an underperformed. I've never told anyone that's short in video. I've always told my clients like, yeah, to be careful. But I think, but the way our rating structure works is we don't have underperformed. We have buy and sell. And I think that that thesis has played out. It is underperformed pretty much since I launched coverage last year. If you look at look at it versus most of the rest of
the semiconductor complex, it's underperformed. You know, the SMAGTF, it's underperformed certainly this year, is underperformed pretty much all the major large gap semis. And there's like, just to be clear, I think in video is a good is a good company, Like they have good products. I think highly of Jensen, but they've just gotten so big it's hard for them to excite expectations the way they used to.
Where is the competitive threat for a company of the size of.
In video everywhere?
Yeh?
Everywhere?
Now, So what are the names that you look at as real competitors doing video right now?
So, right now, the biggest competitor is Google's TPU, which is produced in large part through Broadcom. Right anytime in video losers share today, it's to someone making chip with Broadcom. But then that's just the start coming on stream. We have AMD is looking really really good with their four fifty series which is rolling out later this year, and their numbers next year. Sarah Bros. And then all the hyperscalers are making their own chips as well.
Right Jam, before you go, You've done four thousand, three hundred roadshow lunches doing IPOs. No one's ad more rubber Chicken than Jay Goldberg. The IPOs that are coming you've never seen. I've never seen, Paul Sweeney's never seen. Are these items sellable? How do you do SpaceX I p O of that magnitude?
That's a that's a very good question. I think there is a lot of enthusiasm for tech right now. I mean I think that goes without saying so I think they're they're you know, Elon and his complex always attract enthusiastic followers. I think the demand story for the the ai I pos that could be coming later this year, like Anthropic and Open AI, those will be those will have some incredible revenue numbers and some incredible operating losses.
That will be wild to see those numbers. So I think people just I think that's the big The big story in you know, certainly in tech and probably across the broader economy is the re of the Paul get one.
We're in here, Jaye.
What did you make of the IPO of Cerebras last week? Just a massive, massive I PO huge uh price above the h you know, the trade above the IPO price.
Yeah, that's one more in video competitor out there. I think, you know, I think the story this year is for inference, which is like getting AI to actually do useful things for people. There's in very very tight supply. There's not enough of it, and so everybody who does that for a living is scrambling to get supply. And Sarah Buss came out right at the right time.
Jay, Don't be a stranger. Love to have you on again, legendary Jay Goldberg. Where this is seedport.
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