Latest / Bloomberg Intelligence / New York Fed Conducts Repo Operation; Oil Plunges

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New York Fed Conducts Repo Operation; Oil Plunges · Bloomberg Intelligence

• 0:02
  Speaker 1: Welcome to the Bloomberg Penel podcast. I'm Paul swing you.
• 0:05
  Speaker 1: Along with my co host Lisa Brahmas. Each day we
• 0:07
  Speaker 1: bring you the most noteworthy and useful interviews for you
• 0:10
  Speaker 1: and your money, whether at the grocery store or the
• 0:12
  Speaker 1: trading floor. Find a Bloomberg penl podcast on Apple podcast
• 0:16
  Speaker 1: or wherever you listen to podcasts, as well as at
• 0:18
  Speaker 1: Bloomberg dot com. Well, it's been a busy, busy morning
• 0:21
  Speaker 1: in the Fed repo market, lots of uncertainty. Let's get
• 0:26
  Speaker 1: some certainty around what is going on. We welcome my
• 0:28
  Speaker 1: next guest, Ira Jersey, chief rates strategist for Bloomberg Intelligence.
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  Speaker 1: Thanks so much for joining us and just give us
• 0:35
  Speaker 1: a sense of what is going on in the federal
• 0:39
  Speaker 1: repo market and why it's important. Yeah, so so. Basically,
• 0:42
  Speaker 1: the repurchase agreement market is really the plumbing that makes
• 0:45
  Speaker 1: the entire financial system work. Um where anyone who buys
• 0:50
  Speaker 1: a treasury bond can potentially fund those transactions through the
• 0:53
  Speaker 1: repo market. But um, But and sometimes repo markets get tight,
• 0:57
  Speaker 1: which means that it's hard to UM to basically fund
• 1:01
  Speaker 1: your treasury positions. Now, usually that happens at the end
• 1:03
  Speaker 1: of quarters or the end of end of the year
• 1:06
  Speaker 1: when banks and dealers have to contract their balance sheets.
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  Speaker 1: But on the last two days, you've just seen repo
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  Speaker 1: rates spike to you know, seven eight nine in some
• 1:15
  Speaker 1: cases there's been trades up that high. So the Fed
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  Speaker 1: actually did the first repo operation that they've done in
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  Speaker 1: twelve years this morning because they're worried about repo rates
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  Speaker 1: being so high and it being very hard to fund
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  Speaker 1: the treasury treasury holdings. So why would they do this now?
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  Speaker 1: Why would they try to arrange a test before they
• 1:35
  Speaker 1: knew they could conduct the test, Because we've seen headlines
• 1:39
  Speaker 1: in quick succession this morning they're gonna conduct a repo test.
• 1:44
  Speaker 1: They're not going to because there's a problem. No, now
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  Speaker 1: they will. This does not give confidence to the market. Well,
• 1:50
  Speaker 1: I think that they they've been doing small scale tests
• 1:54
  Speaker 1: um periodically, almost every month UM. But the small scale
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  Speaker 1: tests are a little bit different than when you're talking
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  Speaker 1: about doing a five billion dollar operation as opposed to
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  Speaker 1: you know, a couple of hundred millions so UM. So
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  Speaker 1: I think it may not have been like you know,
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  Speaker 1: we'll find out over time. I suspect it might not
• 2:11
  Speaker 1: have been technical necessarily on the Fed's end, but more
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  Speaker 1: technical on the dealer end, because you know some dealers,
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  Speaker 1: you know, we haven't done these operations in any kind
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  Speaker 1: of size for for a long period of time. So
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  Speaker 1: so once those were out of the way, they did
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  Speaker 1: do the operation. It just closed a couple of minutes ago,
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  Speaker 1: and they did fifty three billion dollars of of of
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  Speaker 1: repo with dealers, and you know, that was less than
• 2:33
  Speaker 1: what they thought maybe they had to. So so it
• 2:36
  Speaker 1: seems like we're right at this cusp of what Chairman
• 2:39
  Speaker 1: Powell calls the steep part of the demand curve for
• 2:42
  Speaker 1: reserves and and for bank balance sheets. And because because
• 2:45
  Speaker 1: if if really, you know, the interest rates are so
• 2:48
  Speaker 1: high like se and you only need forty billion dollars
• 2:51
  Speaker 1: to kind of alleviate that, then you're kind of where
• 2:54
  Speaker 1: reserves need to be. So one of the things I
• 2:56
  Speaker 1: think that this could mean is that when as the
• 2:59
  Speaker 1: FED meets the next two days and we get the
• 3:00
  Speaker 1: announcement tomorrow, that the FED could talk about doing a
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  Speaker 1: full allotment um REPO facility. I've talked about it with
• 3:07
  Speaker 1: you guys before, and I don't know why the Feds
• 3:10
  Speaker 1: dragging their feet, but really, now I think it's just
• 3:12
  Speaker 1: shows that it would be good for them to have
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  Speaker 1: a standing facility instead of having to do these you know,
• 3:17
  Speaker 1: overnight operations again and again like they did this morning.
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  Speaker 1: So I were given since that this timing was unusual,
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  Speaker 1: i e. In the middle of the months, just suggest
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  Speaker 1: that maybe the FED is losing control a little bit
• 3:27
  Speaker 1: of raps. Well, that's what some people are saying, and
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  Speaker 1: I think the answer is no. I think there was
• 3:32
  Speaker 1: there was some unusual things. So we just put out
• 3:34
  Speaker 1: a piece actually about twenty minutes ago, talking about just
• 3:36
  Speaker 1: this thing. One is that normally during mid September you
• 3:40
  Speaker 1: get very high tax receipts and what that what happens
• 3:43
  Speaker 1: is is that those tax receipts end up on the
• 3:45
  Speaker 1: Fed's balance sheet and bank reserves fall. So that would
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  Speaker 1: make UH funding markets tighter, which is what you'd expect.
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  Speaker 1: But normally during that same period of time, treasury bill
• 3:54
  Speaker 1: supply goes down because September is usually a surplus month,
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  Speaker 1: so that the budget deficit is actually is is negative.
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  Speaker 1: This treasury takes in more cash than than than they expand,
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  Speaker 1: so um so t build balances go down. This time
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  Speaker 1: they will be thanks to the debt ceiling. T build
• 4:11
  Speaker 1: balances continue to go up, so the amount of T
• 4:13
  Speaker 1: bill's outstanding is rising. At the same time you have
• 4:16
  Speaker 1: less reserves in the system. So there's kind of this
• 4:18
  Speaker 1: indigestion that's going on, and it will be relieved, I
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  Speaker 1: think in a couple of days. But it's very worrying
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  Speaker 1: that we're at this point where you know, basically forty
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  Speaker 1: or fifty billion dollars means you know, four or five
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  Speaker 1: six on interest rates in the funding market. So that's
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  Speaker 1: something that the FED needs to really worry about. So
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  Speaker 1: I think the FED at this point needs to be
• 4:37
  Speaker 1: the lender of first resort as opposed to the lender
• 4:40
  Speaker 1: of last resort for for funding markets. So just to
• 4:43
  Speaker 1: sort of take this from a ten thousand foot level
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  Speaker 1: to sort of emphasize the importance of these funding markets.
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  Speaker 1: I mean, you said that this is really the plumbing
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  Speaker 1: of the financial system. What could be the consequence if
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  Speaker 1: these sort of kinks weren't worked out and these high, uh,
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  Speaker 1: these high spikes in rates and overnight rates persist. Well,
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  Speaker 1: it means that you wind up with a with a
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  Speaker 1: funding crisis. I mean, you're talking about a Bear Stearns
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  Speaker 1: Lehman Brothers kind of situation is the worst case scenario.
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  Speaker 1: Um So, extrapolate out what what happens, well, if you so,
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  Speaker 1: what happens is because because if you have a balance sheet,
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  Speaker 1: let's say you have a balance sheet of of a
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  Speaker 1: hundred billion dollars and you're funding that with overnight repo.
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  Speaker 1: Then if the next day you can't fund because you know,
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  Speaker 1: no one's willing to lend you money, um at a
• 5:31
  Speaker 1: at any kind of price that makes any sense, then
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  Speaker 1: ultimately you either default or you have to sell all
• 5:37
  Speaker 1: of those securities. So the price of those securities would
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  Speaker 1: go down very quickly and very significantly. And that's you
• 5:42
  Speaker 1: know that, that's how financial crisis starts, is that a
• 5:44
  Speaker 1: financial institution can't fund itself. And um so that's the
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  Speaker 1: reason why during the crisis, the Federal Reserve had to
• 5:51
  Speaker 1: come up with all these facilities to allow different kinds
• 5:55
  Speaker 1: of financial entities to fund themselves. So this is this
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  Speaker 1: is a worry. I don't think it's this is anywhere
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  Speaker 1: near you know, two thousand seven kind of problems yet.
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  Speaker 1: But at the same time, you know, this is the
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  Speaker 1: kind of you know, foreshadowing and canary that needs to
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  Speaker 1: be worked out to ensure that you can get funding
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  Speaker 1: at least for good assets, right, because you're talking about
• 6:14
  Speaker 1: in here, we're talking about treasury collateral. Right. We're not
• 6:16
  Speaker 1: talking about corporates, or we're not talking about loans and
• 6:19
  Speaker 1: risky assets. We're talking about treasuries. And if you can't
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  Speaker 1: fund treasuries, you're not gonna be able to find anything
• 6:23
  Speaker 1: else either. I ret a Treasy with the interview of
• 6:25
  Speaker 1: the day, our Jersey chief US interest rates transist for
• 6:27
  Speaker 1: Bloomberg Intelligence. US home builder sentiment rises to an eleventh
• 6:46
  Speaker 1: month high as sales gain. The question is is that
• 6:49
  Speaker 1: sentiment warranted. We welcome our next guest, Doug Duncan, Fannie May,
• 6:53
  Speaker 1: Senior Vice president, Chief Economists. So, Doug, US home builders
• 6:57
  Speaker 1: feeling pretty good about the housing market. It should they be. Uh, Yeah,
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  Speaker 1: they are, and they should be. Rates are down and
• 7:05
  Speaker 1: in our surveys of consumers, consumers attitude about housing is up.
• 7:09
  Speaker 1: So those two things are going to meet. And at
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  Speaker 1: the margin, uh, you'll see some more homes built and
• 7:14
  Speaker 1: sold through the through the builder world that decline in rates.
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  Speaker 1: At the if you're looking at getting a mortgage to
• 7:24
  Speaker 1: buy the house that that builder is building than a
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  Speaker 1: decline in rates means a monthly payment falls, so there's
• 7:29
  Speaker 1: a few more people that can qualify for that at
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  Speaker 1: the margin. But the bigger issue here is still affordability, right,
• 7:35
  Speaker 1: and this is what we've seen is just slow down
• 7:36
  Speaker 1: in in the housing market. And I want you to
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  Speaker 1: sort of clarify for me the obstacles for home builders
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  Speaker 1: building housing for this sort of middle or lower entry
• 7:48
  Speaker 1: level tier of home buyers. Yeah, typically the first time
• 7:52
  Speaker 1: home buyer is buying an existing home that someone else
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  Speaker 1: is selling and then moving up to a new home
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  Speaker 1: they're buying from a builder. So the builders traditionally have
• 8:00
  Speaker 1: built for the move up buyer. It's been hard for
• 8:03
  Speaker 1: them to move to the entry level, which is where
• 8:05
  Speaker 1: the demand is. And the problem is that boomers are
• 8:08
  Speaker 1: not moving, and nor are the gen xers moving, and
• 8:11
  Speaker 1: that's where the existing home supply comes from. That supplies
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  Speaker 1: at thirty year lows and it's not the sweet spot
• 8:17
  Speaker 1: for builders to build too. So you still have a
• 8:19
  Speaker 1: problem at the end at the entry level. So where
• 8:22
  Speaker 1: are so are the gen xers and millennials Are they
• 8:25
  Speaker 1: buying homes if their supply they are absolutely they're driving
• 8:29
  Speaker 1: the rand curve that started in about two thousand and fifteen.
• 8:32
  Speaker 1: We actually track people as they age, as opposed to
• 8:35
  Speaker 1: going in and looking in the census data at thirty
• 8:38
  Speaker 1: year olds today versus five years ago. We actually watched
• 8:43
  Speaker 1: the year old to turn to two thousand fifteen, the
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  Speaker 1: driver the demand curve became that younger age group and
• 8:52
  Speaker 1: that they've been building. So there were still there was
• 8:55
  Speaker 1: concerns that they would just stay in their parents basement.
• 8:57
  Speaker 1: But that's not true. It's like every it's like every
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  Speaker 1: other generation. Are surveys of them starting in June of
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  Speaker 1: two thousand ten plus said they eventually want to own
• 9:05
  Speaker 1: a home. There is one difference between them and previous generations.
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  Speaker 1: If you ask them to rank home ownership against say
• 9:13
  Speaker 1: five or six other things, ten years ago, it would
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  Speaker 1: have ranked probably third. Today it might rank six. So
• 9:21
  Speaker 1: asked in isolation, would you eventually want to own a home?
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  Speaker 1: Will say yes. But if you ask compared to doing
• 9:29
  Speaker 1: things that are enriching or fun or things like that,
• 9:34
  Speaker 1: take put housing in a little bit different position for
• 9:36
  Speaker 1: this age group. Can you can you speak a little
• 9:38
  Speaker 1: bit about the shift from rural areas or suburban areas
• 9:42
  Speaker 1: to urban areas because for a while everyone was talking
• 9:44
  Speaker 1: about how this was the move that was unstoppable and
• 9:47
  Speaker 1: the younger people flooding into the cities, uh for going
• 9:51
  Speaker 1: extra space for an apartment in a central location. But
• 9:55
  Speaker 1: recently there's been a number of reports about sort of
• 9:57
  Speaker 1: a reversal of that. How how much traction is that game.
• 10:00
  Speaker 1: That's true if you go back to the original stages
• 10:03
  Speaker 1: of this expansion. So we're coming out of the recession.
• 10:06
  Speaker 1: This was the most urban core centric job growth of
• 10:10
  Speaker 1: any post War War two expansion. So part of the
• 10:13
  Speaker 1: stories of about the millennials not wanting to buy a
• 10:15
  Speaker 1: house had actually to do where they were, where they
• 10:18
  Speaker 1: could get a job. And we tried making loans to
• 10:21
  Speaker 1: people that didn't have jobs and it didn't work out
• 10:23
  Speaker 1: that well. So they got that right, so they said,
• 10:26
  Speaker 1: and they told us in the survey, is the first
• 10:28
  Speaker 1: thing we have to have his job. Then we're gonna
• 10:30
  Speaker 1: want it to have a growing income. Then we're going
• 10:32
  Speaker 1: to get a credit and shape. Then maybe we'll get
• 10:34
  Speaker 1: radically absolutely all new thinking. So uh so they were
• 10:41
  Speaker 1: being very rational. But once they had the job, the
• 10:44
  Speaker 1: question was could they afford a house in that area
• 10:47
  Speaker 1: and in the urban core, you can't build single family
• 10:50
  Speaker 1: detached affordable houses. What's happened since then is the geography
• 10:54
  Speaker 1: of job growth has spread out across the country into
• 10:59
  Speaker 1: areas where the race of land and the availability of
• 11:02
  Speaker 1: labor and other materials is much more affordable. That's what
• 11:06
  Speaker 1: opened the door for the millennials to start driving the
• 11:08
  Speaker 1: demand curve in in the two thousand and fifteen time period.
• 11:11
  Speaker 1: How are some of the younger demos dealing with the
• 11:13
  Speaker 1: student debt? We know this is an increasingly big issue
• 11:17
  Speaker 1: for younger demographics, and is that impacting their ability to
• 11:20
  Speaker 1: buy a home and get credit. It is a challenge,
• 11:23
  Speaker 1: and particularly so for those people who took on student
• 11:27
  Speaker 1: that but did not get the terminal degree, because the
• 11:30
  Speaker 1: expectation is with the terminal degree, you will have a
• 11:33
  Speaker 1: higher growth income path, which will both defease that student
• 11:37
  Speaker 1: that but also then get you into into home ownership
• 11:40
  Speaker 1: if you didn't get the degree. Those folks actually have
• 11:44
  Speaker 1: a lower first time homewership rate than people who have
• 11:47
  Speaker 1: only a high school education. A little bit of the
• 11:49
  Speaker 1: sub story there is there's a bunch of people that
• 11:51
  Speaker 1: went into the military and got training in the military,
• 11:55
  Speaker 1: didn't go to college and take on student that they're
• 11:57
  Speaker 1: back in the civilian world in jobs. That makes sense.
• 12:00
  Speaker 1: So just give us an overview, please, of where we're
• 12:03
  Speaker 1: seeing the fastest housing price growth and where we're seeing
• 12:08
  Speaker 1: potentially the biggest declines in the United States. And an
• 12:11
  Speaker 1: easy way to look at that is to take the
• 12:12
  Speaker 1: case Shiller twenty metro area index. And if you do
• 12:17
  Speaker 1: that and divide each market by high, medium, and low
• 12:20
  Speaker 1: price houses and then look at the pace of price
• 12:23
  Speaker 1: change in each of those brackets. In every market of
• 12:28
  Speaker 1: those twenty, the bottom tier is appreciating fastest. So that's
• 12:31
  Speaker 1: that's the evidence of the entry level. So it would
• 12:34
  Speaker 1: be Seattle, it would be San Jose, it would be
• 12:37
  Speaker 1: you know, the major markets. That's a twenty major market survey, Chicago,
• 12:41
  Speaker 1: New York, all of that. In every market, it's the
• 12:44
  Speaker 1: entry level where prices appreciating most rapidly. Actually, the upper
• 12:48
  Speaker 1: tier in a number of those major metro markets is
• 12:51
  Speaker 1: now falling or at least flat. Are there any markets
• 12:54
  Speaker 1: I'm thinking back to the housing crisis and some of
• 12:56
  Speaker 1: the markets that really jumped out and just really just
• 13:00
  Speaker 1: rolled over a big time. You know, the Vegas is
• 13:03
  Speaker 1: of the world, of Miami's the Phoenix is um. Are
• 13:05
  Speaker 1: we seeing any markets out there that it just look boy,
• 13:08
  Speaker 1: this is overheated. Um, that's going to be in some
• 13:12
  Speaker 1: of the coastal places. I think the last time I
• 13:14
  Speaker 1: was here, we talked a little bit about San Jose,
• 13:16
  Speaker 1: and I think what you're seeing is in those markets,
• 13:19
  Speaker 1: businesses are now starting to relocate because the wage rates
• 13:24
  Speaker 1: they can afford to pay to their employees will not
• 13:27
  Speaker 1: cover the housing costs in those areas. So you've seen
• 13:30
  Speaker 1: some jobs moved from that area to Salt Lake, or
• 13:33
  Speaker 1: to Chicago even or to Indianapolis places like that. So
• 13:38
  Speaker 1: you're seeing the migration of the jobs because the cost
• 13:41
  Speaker 1: of housing is so is so great. Thank you so
• 13:44
  Speaker 1: much for being with us. Great to be here. It's
• 13:46
  Speaker 1: always a pleasure to have you here. Dug Duncan as Fenny,
• 13:48
  Speaker 1: my senior vice president and chief economist, talking about a
• 13:51
  Speaker 1: really important issue, which is the housing market in the
• 13:53
  Speaker 1: United States. It really hasn't accelerated in the past few years,
• 13:57
  Speaker 1: and some people have pointed to weakness there as a
• 14:00
  Speaker 1: sign of some sort of downturn. But now we're seeing
• 14:02
  Speaker 1: signs of optimism as those benchmark rates go even lower.
• 14:06
  Speaker 1: So people are looking at this is more of an
• 14:08
  Speaker 1: affordability issue right now, it's just focus to oil since
• 14:28
  Speaker 1: that really has been front and center all week after
• 14:30
  Speaker 1: the attacks on Saudi Arabian production joining us. We are
• 14:33
  Speaker 1: so lucky to have Ellen Walled. She is a Bloomberg
• 14:36
  Speaker 1: opinion columnist. She also is an Atlantic Council Global Energy
• 14:39
  Speaker 1: Center nonresidency and your fellow and transversal consulting president. She's
• 14:43
  Speaker 1: written books. She's a wonderful, wonderful contributor. Thank you so
• 14:47
  Speaker 1: much for being here. So first of all, we're hearing
• 14:50
  Speaker 1: this morning the news that Saudi Arabia expects to get
• 14:52
  Speaker 1: se his production up and running in short order. Do
• 14:56
  Speaker 1: you buy it? I do? I do buy it, And
• 14:59
  Speaker 1: here's here's why. First of all, they're a RAMPO is
• 15:03
  Speaker 1: a company that has great resiliency UH and built into
• 15:07
  Speaker 1: its system. I know that the opcake plan has a
• 15:10
  Speaker 1: lot of specialized parts, and people were talking about how
• 15:12
  Speaker 1: long it's going to take to get those parts and
• 15:15
  Speaker 1: repair it. But this is a company that loses millions
• 15:18
  Speaker 1: of dollars for every hour that output is down. So
• 15:22
  Speaker 1: I think we can expect that they have contingency plans,
• 15:24
  Speaker 1: They have parts ready yes, full repairs are going to
• 15:28
  Speaker 1: take time, but they will be able to get output
• 15:31
  Speaker 1: back up by working around things, by increasing output from
• 15:35
  Speaker 1: other fields. This is a company that has a great
• 15:37
  Speaker 1: deal of spare capacity and by accessing storage, so I'm
• 15:41
  Speaker 1: not surprised to hear at all that they expect for
• 15:44
  Speaker 1: output to return. However, we are going to get a
• 15:48
  Speaker 1: update from the new Saudi Oil minister, Prince Ablozi has
• 15:51
  Speaker 1: been Salmon, and I would expect that he may deliver
• 15:55
  Speaker 1: a more sobering account of the damage and the repairs.
• 16:00
  Speaker 1: So Ellen, I know the investigations obviously very very early stages.
• 16:04
  Speaker 1: Is there any sense of how this happened? Don't they
• 16:07
  Speaker 1: have defenses against this? Um? Seems like this was a
• 16:10
  Speaker 1: pretty big attack. Yeah, and they're still finding there's still
• 16:15
  Speaker 1: finding out exactly what causes. Was it drones, was it
• 16:18
  Speaker 1: cruise missiles? Was it a combination of this? And I
• 16:21
  Speaker 1: do think that there are going to be questions that
• 16:23
  Speaker 1: need to be answered, and security plans are going to
• 16:26
  Speaker 1: be need to be made more clear, particularly as a
• 16:29
  Speaker 1: RAMCO moves towards its I p O. People are going
• 16:32
  Speaker 1: to want to know are these facilities safe and what
• 16:34
  Speaker 1: plans do you have to defend them as opposed to
• 16:37
  Speaker 1: what do you have in place to repair I'm looking
• 16:42
  Speaker 1: right now at uh some CB news being reported by
• 16:46
  Speaker 1: CBS that John Tucker just shared with US that seems
• 16:50
  Speaker 1: to claim the US has identified exact locations from Iran
• 16:53
  Speaker 1: where the missile is stemmed from. And I'm just wondering
• 16:57
  Speaker 1: what the implications are for tensions in the Middle East.
• 16:59
  Speaker 1: I mean, which talk about that sort of as a
• 17:01
  Speaker 1: you know, escalation scenario, But doesn't this seem more likely
• 17:05
  Speaker 1: than perhaps some people are letting on. So it's interesting
• 17:08
  Speaker 1: because things were definitely escalating over the weekend and then
• 17:12
  Speaker 1: had uh, the u S coming out and saying, we've
• 17:16
  Speaker 1: identified this the culprit as Iran, but you had Saudi
• 17:19
  Speaker 1: Arabia actually taking a step back and saying, hey, we
• 17:22
  Speaker 1: we believe that the parts came from Iran, but we're
• 17:25
  Speaker 1: not We're stopping short of identifying Iran as the exact culprit.
• 17:29
  Speaker 1: And I think that that was a move to kind
• 17:31
  Speaker 1: of try to bring in international intervention, say let's let's
• 17:35
  Speaker 1: put this in the u n's hands. And I think
• 17:37
  Speaker 1: that's part that the reason for that is because MBS
• 17:42
  Speaker 1: knows that getting into a direct confrontation with Iran is
• 17:44
  Speaker 1: bad business for him. So it's interesting. The timing of
• 17:48
  Speaker 1: this is amazing given the pending I p O of
• 17:52
  Speaker 1: a Ramco. So what's the thinking out there? Was this
• 17:56
  Speaker 1: coincidence or is this something you know? Maybe you stay
• 18:00
  Speaker 1: it's sponsored. It seems just tremendously odd to me. The
• 18:03
  Speaker 1: timing could not be ignored, and you're not the first
• 18:06
  Speaker 1: person to come up with this, this idea and to wonder,
• 18:09
  Speaker 1: to wonder whether there is some relationship between it, and
• 18:13
  Speaker 1: in fact, we have heard reports that a Ramco and
• 18:16
  Speaker 1: Saudi officials are rethinking at least the timing of the
• 18:20
  Speaker 1: i p O, which according to reports, was supposed to
• 18:22
  Speaker 1: be as soon as November. They wanted to list on
• 18:25
  Speaker 1: the Saudi Stock Exchange. But look at what happened to
• 18:28
  Speaker 1: the Saudi Stock Exchange during this attack. It tanked, It
• 18:32
  Speaker 1: dropped I think three percent on Sunday before they kind
• 18:35
  Speaker 1: of lifted it up or helped helped helped it, help
• 18:38
  Speaker 1: keep it from falling. Further, imagine if one percent of
• 18:42
  Speaker 1: a Ramco shares had been listed on the Saudi Stock
• 18:44
  Speaker 1: Exchange at the time of this attack, they would have
• 18:47
  Speaker 1: been hard pressed to prevent the entire exchange from crashing.
• 18:51
  Speaker 1: So it does seem like a prudent idea to perhaps
• 18:53
  Speaker 1: rethink these plans and definitely rethink the timing and how
• 18:57
  Speaker 1: do they put this as a risk factor in their perspectives. Well,
• 19:01
  Speaker 1: the risk the risk factors for the prospectives section just
• 19:04
  Speaker 1: got a lot larger um pre subject to drone attacks
• 19:09
  Speaker 1: by unknown attackers. The thing is that those those of
• 19:13
  Speaker 1: us who are familiar with a RAMCO understand that this
• 19:16
  Speaker 1: was these were risks, and have been familiar with a
• 19:18
  Speaker 1: lot of the risks to various oil facilities. In fact,
• 19:21
  Speaker 1: the US State Department actually did an assessment in the
• 19:25
  Speaker 1: late nineties of a ramco's vulnerabilities to terrorist attacks. Of course,
• 19:29
  Speaker 1: we didn't have drones back then, but they concluded that
• 19:32
  Speaker 1: because everything is very spread out, it would be very
• 19:35
  Speaker 1: difficult for a coordinated attack to really take out oil collection. Okay, well,
• 19:40
  Speaker 1: what's a new risk for the I Pioty extent? It
• 19:42
  Speaker 1: wasn't there. Ellen Wall, thanks so much for joining US
• 19:45
  Speaker 1: Atlantic Council Global Energy Center Non Residents Senior Fellow and
• 19:48
  Speaker 1: transversal consulting president on a RAMCO. Appreciate you coming in
• 19:52
  Speaker 1: in our Bloomberg Interactive Broker Studio very helpful on this news.
• 19:56
  Speaker 1: Thanks for listening to the Bloomberg P and L podcast.
• 19:59
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• 20:01
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• 20:04
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• 20:07
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• 20:10
  Speaker 1: You can always catch us worldwide. I'm Bloomberg Radio