Latest / Bloomberg Intelligence / Ukraine, Oil, And The Supply Chain

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Ukraine, Oil, And The Supply Chain · Bloomberg Intelligence

• 0:00
  Speaker 1: Welcome to the Bloomberg Markets Podcast. I'm Paul Sweeney alongside
• 0:04
  Speaker 1: my co host Matt Miller. Every business day we bring
• 0:06
  Speaker 1: you interviews from CEOs, market pros, and Bloomberg experts, along
• 0:11
  Speaker 1: with essential market moving news. Find the Bloomberg Markets podcast
• 0:15
  Speaker 1: called Apple Podcasts or wherever you listen to podcasts, and
• 0:18
  Speaker 1: at Bloomberg dot com slash podcast. All right, we've got many,
• 0:22
  Speaker 1: many bricks in the wall of worry. Now let's add
• 0:26
  Speaker 1: another one, geopolitical concerns, another significant headwind for this market
• 0:29
  Speaker 1: to digest. Let's see how the pros are doing it.
• 0:32
  Speaker 1: Tracy McMillian, Global head of Asset Allocation Strategy at Wells Fargo. So, Tracy,
• 0:37
  Speaker 1: you think about this stuff on a global scale. We
• 0:40
  Speaker 1: now have a hot war in yourp um. How does
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  Speaker 1: that factor into your calculus as you talk to your
• 0:47
  Speaker 1: clients about where to allocate capple on a global scale. Yes,
• 0:53
  Speaker 1: we we certainly have had to make um some adjustments here.
• 0:58
  Speaker 1: But what we are killing alliance telling investors is that
• 1:02
  Speaker 1: amid this uncertainty that is certainly being compounded by the
• 1:08
  Speaker 1: war in Europe, to make sure that they're going back
• 1:11
  Speaker 1: to basics thinking about what their risk tolerances, what their
• 1:15
  Speaker 1: time horizon is, and making sure that that does align
• 1:18
  Speaker 1: with their allocations. A short term horizon means they should
• 1:23
  Speaker 1: probably be holding more cash here, probably more short term
• 1:28
  Speaker 1: fixed income, and a longer term horizon, a more aggressive
• 1:34
  Speaker 1: risk tolerance. Those investors might want to start dollar cost
• 1:38
  Speaker 1: averaging in um We are down ten percent or more
• 1:42
  Speaker 1: in some equities markets globally, so it might be a
• 1:45
  Speaker 1: good time to, uh, you know, break their cash into
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  Speaker 1: different buckets and start dollar cost averaging into equities, especially
• 1:54
  Speaker 1: if they're below their longer term targets. And where would
• 1:58
  Speaker 1: you go? I mean, in terms of sectors, what do
• 2:01
  Speaker 1: you think is a good place to buy undervalued right now?
• 2:03
  Speaker 1: And what do you think has run too far too
• 2:05
  Speaker 1: fast and it's still overvalued because there's still a lot
• 2:09
  Speaker 1: of big evaluations out there. There are absolutely and you know,
• 2:14
  Speaker 1: one of the places that that we're looking right now
• 2:17
  Speaker 1: is information technology and communication services, so those growth areas
• 2:22
  Speaker 1: where we see very high quality earning. We also still
• 2:27
  Speaker 1: like financials because even though rates have come in here
• 2:31
  Speaker 1: um as we've seen a flight to quality, we do
• 2:33
  Speaker 1: think that the trend is higher in interest rates. So
• 2:37
  Speaker 1: we think that financials have uh you know, come down
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  Speaker 1: in price. The valuations looked there and uh you know,
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  Speaker 1: through the course of the next six eighteen months, we
• 2:47
  Speaker 1: see some value there. Um where we would stay away,
• 2:50
  Speaker 1: we'd stay away from things that are more defensive. So
• 2:54
  Speaker 1: you know, thinks of utilities um and also um consumers
• 2:59
  Speaker 1: stay poles, consumer shape as we think are going to
• 3:02
  Speaker 1: be hit very hard by additional commodities inflation. So those
• 3:06
  Speaker 1: are two areas speaking of speaking of tracy, commodities inflation.
• 3:11
  Speaker 1: Look at your oil shirt right now. Unbelievable. I mean,
• 3:16
  Speaker 1: Greg Jarrett was just telling me that the i e.
• 3:18
  Speaker 1: A Is going to deploy emergency oil stockpiles. Um, how
• 3:22
  Speaker 1: much can they really deploy? Mr market asked and bid
• 3:25
  Speaker 1: up eight percent? So now uh w t I is
• 3:30
  Speaker 1: trading at a hundred and three dollars and forty cents
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  Speaker 1: a barrel. Brent is up at one oh five thirty. UM.
• 3:38
  Speaker 1: It's just amazing to watch these games in oil. Whatever
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  Speaker 1: I'm going to enter, Paul, are we energy independent? I
• 3:45
  Speaker 1: thought we were. I thought we're all going green? Tracy,
• 3:47
  Speaker 1: have I missed the energy trade? Uh? Oil is certainly
• 3:53
  Speaker 1: much higher than we originally thought going into this year.
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  Speaker 1: But things have changed, and the war in Europe is
• 4:01
  Speaker 1: making a tight commodities market and tighter UM. So the
• 4:05
  Speaker 1: off ramp to lower inflation, we think it could be prolonged.
• 4:10
  Speaker 1: And a big part of that UH inflation is going
• 4:13
  Speaker 1: to be that commodities markets and that is across the
• 4:16
  Speaker 1: commodities complex are going to continue to be pressured higher.
• 4:22
  Speaker 1: If we get this kind of inflation continuing, you're gonna
• 4:24
  Speaker 1: have to be Tracy mcbillian. But it was unfair. I'm
• 4:30
  Speaker 1: sure you hear that all the time. That will be
• 4:32
  Speaker 1: here all week. I looked it up and mcmillian's apparently
• 4:35
  Speaker 1: an old Scottish name referring to I guess the offspring
• 4:39
  Speaker 1: of a bald man, or maybe it's a Gaelic like
• 4:43
  Speaker 1: a monastery or community of Gaelic monks. What do you think, Tracy,
• 4:47
  Speaker 1: I mean, it's a perfect name for wealth management, isn't it? Yes,
• 4:51
  Speaker 1: it is. But I have heard from my clients UM
• 4:54
  Speaker 1: that I should be Tracy mcfillian, So I'll have to
• 4:57
  Speaker 1: look into that. What's the what are you look for
• 5:00
  Speaker 1: from the State of the Union addressed tonight? We think
• 5:01
  Speaker 1: the market is going to be paying attention to so
• 5:04
  Speaker 1: there's certainly going to be a paying attention to any um,
• 5:09
  Speaker 1: you know change and energy policy. I would say, uh,
• 5:12
  Speaker 1: you know, do we need to be focusing more on
• 5:16
  Speaker 1: energy security? Um over you know any climate objectives at
• 5:22
  Speaker 1: this point? Um, so that that's certainly something we'll be
• 5:25
  Speaker 1: looking for. We'll be looking for, um you know, what
• 5:28
  Speaker 1: the plans are at this point for build back better
• 5:31
  Speaker 1: you know, is that still alive or are we moving
• 5:34
  Speaker 1: on to other uh initiatives? And you know, I think, um,
• 5:40
  Speaker 1: you know, another thing that we're certainly going to be
• 5:43
  Speaker 1: watching for is any change to our policy towards um,
• 5:48
  Speaker 1: your Russia or Ukraine. So you know, three big things
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  Speaker 1: there absolutely or I think a lot of folks for
• 5:55
  Speaker 1: with tuning in here Tonitracy McMillian, although the do pit
• 5:58
  Speaker 1: games on tonight, so I'm gonna have to go back
• 5:59
  Speaker 1: and fourth. But devil sale goes Tracy McMillian, head of
• 6:02
  Speaker 1: Global Asset Allocation Strategy for Wells Fargo, giving us her thoughts. Boy,
• 6:10
  Speaker 1: looking at oil here nine up nine percent here a
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  Speaker 1: hundred four hours forty cents of barrel. Let's break that down.
• 6:15
  Speaker 1: Let's take a little bit of extra time and look
• 6:17
  Speaker 1: at oil here. We can do that with Julia Fanzerious
• 6:19
  Speaker 1: Bloomberg News. Oil's future reporting pretty grouped to Bloomberg Markets corresponded, Julia,
• 6:24
  Speaker 1: what's going on today? Is this technical? What's going on?
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  Speaker 1: Why is oil up nine? It is not technical. It
• 6:31
  Speaker 1: is all on the headlines right now. So starting off
• 6:34
  Speaker 1: with the fact that traders are finally deciding that oil
• 6:37
  Speaker 1: exports from Russia and energy supplies in general are going
• 6:41
  Speaker 1: to be impacted by sanctions, even if it is indirectly,
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  Speaker 1: and today is the day where they're just realizing, Okay,
• 6:47
  Speaker 1: this is the moment that we have to start pricing
• 6:49
  Speaker 1: this in more. And then we saw that the i e.
• 6:51
  Speaker 1: A decided to go and have a crude tap into
• 6:55
  Speaker 1: their crude releases for sixty million barrels, which at first
• 6:58
  Speaker 1: you're like, okay, so maybe crew prices should have slowed
• 7:01
  Speaker 1: down a bit, but no, but you know, it's supercharged
• 7:05
  Speaker 1: the rally, unbelieved supercharge the rally. And the reason is
• 7:10
  Speaker 1: because trainers are saying, well, that's not really that much
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  Speaker 1: compared to Russian experts. I think it's up to six
• 7:16
  Speaker 1: days of Russia's more than zero. It's more than zero,
• 7:20
  Speaker 1: but it's letty, what in the heck is going on here?
• 7:23
  Speaker 1: I mean, yeah, I get that, you realize, oh, that's
• 7:27
  Speaker 1: not very much in wait, what we used twenty million
• 7:29
  Speaker 1: barrels a day here, a hundred million barrels a day globally. Uh,
• 7:34
  Speaker 1: but you knew that before this, right, and it's better
• 7:36
  Speaker 1: than zero. Well, folks, you guys should really witness Matt
• 7:39
  Speaker 1: Miller's face. Rain is exploding. Not even talking cars yet.
• 7:44
  Speaker 1: I know, let's not, let's not, let's not open that door.
• 7:48
  Speaker 1: But to Julia's point, what's interesting here is and I
• 7:50
  Speaker 1: mean it's everything that Julie said. I asked her this
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  Speaker 1: before we became on the show. Why is oil supercharged
• 7:55
  Speaker 1: right now? Because nothing has really changed? But she makes
• 7:58
  Speaker 1: a really good point on the sanctions bit of it,
• 8:00
  Speaker 1: because that's the part that I think a lot of
• 8:02
  Speaker 1: people are looking at. Remember, the energy payments have been
• 8:04
  Speaker 1: taken out of swift for the moment, or any transactions
• 8:07
  Speaker 1: or any swift actions that they might do. But I
• 8:09
  Speaker 1: think the assumption here is that eventually that's going to change. So, yes,
• 8:13
  Speaker 1: you're right, oil was soaring quite a bit before. But
• 8:18
  Speaker 1: these headlines sometimes if there you did see immediate drop
• 8:21
  Speaker 1: on the headlines, which would be where you're simple extra
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  Speaker 1: supply drops oil narrative comes from, but then you really
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  Speaker 1: have traders reconsider and it's kind of supercharged it. And
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  Speaker 1: that's a pretty normal thing to see for traders, not
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  Speaker 1: just an oil but you see in stock markets. You
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  Speaker 1: see it in all assets. Right when when there's a
• 8:37
  Speaker 1: sign that an incredibly large institution is all of a
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  Speaker 1: sudden freaking out, then traders go, WHOA, we're going to
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  Speaker 1: run out of oil, Let's buy as much as we
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  Speaker 1: can right now, exactly. And it was that knee jerk
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  Speaker 1: reaction that from the I A that then have the
• 8:52
  Speaker 1: kne jerk reaction in the crewde markets. What's the futures markets?
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  Speaker 1: What are they telling you as you take a look
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  Speaker 1: at them now? Is just oil gonna come down? Ice
• 9:00
  Speaker 1: going forwardard? What? Oh? No, the futures market is saying
• 9:02
  Speaker 1: quite the opposite. We're backward dated. So we are seeing backwardation, backwardation, yeah,
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  Speaker 1: and that find that for me again because I'm in
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  Speaker 1: equad worse No. Yeah, So that means that traders are
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  Speaker 1: paying more money to get their hands on barrels right now,
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  Speaker 1: and we're not seeing that go away because supply is
• 9:19
  Speaker 1: tight and demand is high, so these prices are not
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  Speaker 1: going to go down anytime soon. OPEC they're meeting tomorrow
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  Speaker 1: and it looks like they're also going to continue with
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  Speaker 1: their four hundred thousand barrels a day, and we know
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  Speaker 1: that they're not actually meeting that output. So still supplies
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  Speaker 1: are tight and demand is high. Every time oil gets
• 9:34
  Speaker 1: to these prices or goes down drastically, I have to
• 9:38
  Speaker 1: relearn how to look at the forward curve. CT is
• 9:42
  Speaker 1: a great way to do. Do you see t also
• 9:44
  Speaker 1: on the Bloomberg terminal. I was using Ohman before and
• 9:48
  Speaker 1: trying to figure it out from there, but it's so
• 9:50
  Speaker 1: difficult through the options market the contract. So I'm you know,
• 9:54
  Speaker 1: I don't think about it the right way, but if
• 9:56
  Speaker 1: you use CT you can. Actually it's right there in
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  Speaker 1: front of you. Paul, on any uh, I'm guessing on
• 10:01
  Speaker 1: pretty much any commodities contract, you can just type CT
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  Speaker 1: go and pretty when are some of these oil companies
• 10:08
  Speaker 1: in the shell patch, you can and say I gotta
• 10:10
  Speaker 1: I'm gonna start drilling. Yeah, And re told us just
• 10:12
  Speaker 1: now that the Biden administration is reminding people there are
• 10:17
  Speaker 1: nine thousand leases out there that haven't been used. Greg Jared,
• 10:21
  Speaker 1: at some point it is just gonna leave exactly, wildcatting exactly. Well,
• 10:26
  Speaker 1: it comes down to the point on backwardation, right because
• 10:28
  Speaker 1: if you actually listen to what some of these CEOs
• 10:29
  Speaker 1: are saying, they're saying, well, yeah, we're in deep backwardation. Yeah,
• 10:32
  Speaker 1: the spot prices are looking really good right now, but
• 10:35
  Speaker 1: that's not sustainable. Remember, you have to look at the
• 10:36
  Speaker 1: future's curve and if you have all that demand right now,
• 10:39
  Speaker 1: what are good people going to buy later? So a
• 10:41
  Speaker 1: lot of a lot of these American companies or American
• 10:44
  Speaker 1: shale producers are looking for that backwardation to lessen just
• 10:47
  Speaker 1: a little bit. So those spot prices aren't all your
• 10:50
  Speaker 1: demand essentially isn't targeted in one point in time, and
• 10:53
  Speaker 1: it's more of a longer term play and production plan.
• 10:56
  Speaker 1: To add some Mike mcgloan Bloomberg Intelligence, Commodity strategist, he's
• 11:00
  Speaker 1: saying we're gonna see fifty dollar oil and then not
• 11:02
  Speaker 1: to distant future. He thinks it's gonna come back big time.
• 11:05
  Speaker 1: Uh So that whole supply demand thing. But we appreciate
• 11:08
  Speaker 1: getting some color here. Juliette Fanzaris, Bloomberg News. Oil's future
• 11:11
  Speaker 1: reporter and Cretu Gupta Bloomberg Markets correspondent, just helping us
• 11:15
  Speaker 1: break down a little bit this big move up what
• 11:16
  Speaker 1: we've seen in energy across the energy complex. But we're
• 11:19
  Speaker 1: we focus here on w t I crude oil, Brent
• 11:22
  Speaker 1: crude oil brants up on seven point four percent on
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  Speaker 1: five dollars per barrel, so definitely some supply issues. We
• 11:30
  Speaker 1: know the demand is there as this global economy continues
• 11:33
  Speaker 1: to reopen, the question really is supply So interesting to
• 11:36
  Speaker 1: see what we hear out of OPEC tomorrow. Another difficult
• 11:42
  Speaker 1: day in the markets here as in vestors trying to
• 11:45
  Speaker 1: digest what we're seeing on the geopolitical front, particularly out
• 11:49
  Speaker 1: of Ukraine. Let's get the latest with Megan Hornuman, director
• 11:52
  Speaker 1: of Portfolio Strategist Strategy Advertence, Chief Investment Strategists Adverten's Capital Advisors. Megan,
• 11:58
  Speaker 1: thanks so much for joining us here. How do you
• 12:01
  Speaker 1: think about your portfolio your discussions with your portfolio managers
• 12:07
  Speaker 1: as you have to add geopolitical risk to the potential
• 12:11
  Speaker 1: wall of worry. Ye. Absolutely. The one thing that's the
• 12:15
  Speaker 1: most important is knowing what you own, So not just
• 12:18
  Speaker 1: from the broad asset allocation perspective, making sure you're well diversified.
• 12:23
  Speaker 1: Even though coming into this crisis no one wanted to
• 12:26
  Speaker 1: touch bonds at all, we continue to advise our clients
• 12:29
  Speaker 1: at least have some portion of the portfolio in some
• 12:32
  Speaker 1: defensive bond positioning because they will consistently be used as
• 12:37
  Speaker 1: a portfolio diversification tool. So in that event, you have
• 12:41
  Speaker 1: to know what you want from the asset class perspective.
• 12:44
  Speaker 1: Then when you delve into your whether it's regions or sectors,
• 12:47
  Speaker 1: what is your exposure to Russia itself? Um? Investing in
• 12:51
  Speaker 1: international equities, specifically on the developed side has been something
• 12:55
  Speaker 1: that we haven't shied away from. So we're consistently having
• 12:58
  Speaker 1: conversations with our manager looking at what is the company's
• 13:03
  Speaker 1: balance sheet look like, what can they withstand from an
• 13:06
  Speaker 1: energy or commodity increased perspective, seeing what kind of impact
• 13:09
  Speaker 1: that may have on future earnings. So are you're going
• 13:12
  Speaker 1: into portfolios and selling uh Russian assets and anything related
• 13:20
  Speaker 1: to Russia? And I wonder, I mean, I can understand
• 13:24
  Speaker 1: making that move, um obviously, but it must be difficult
• 13:27
  Speaker 1: at a time when there probably are few buyers. Am
• 13:31
  Speaker 1: I seeing that correctly? Yeah? Unfortunately, we have very little
• 13:36
  Speaker 1: of any exposure to Russia. When we look at our
• 13:38
  Speaker 1: overall asset allocation, our managers that we utilize have done
• 13:43
  Speaker 1: that job for us before the crisis and then throughout
• 13:46
  Speaker 1: the crisis. So I'm not necessarily concerned about the exposure
• 13:50
  Speaker 1: to Russia itself. You have to look beyond that now,
• 13:52
  Speaker 1: um you know, is their bigger concern and some of
• 13:55
  Speaker 1: the other exposure that we have. The one thing that
• 13:58
  Speaker 1: history tells us is you had mentioned selling into this.
• 14:01
  Speaker 1: It's very dangerous to sell into geopolitical events when you
• 14:05
  Speaker 1: don't know what kind of change, if any of this
• 14:08
  Speaker 1: is going to have to the fundamental perspective. It's also
• 14:11
  Speaker 1: dangerous if you don't know, um, how far the leader
• 14:14
  Speaker 1: is going to take this, which we do not know
• 14:16
  Speaker 1: how long, how far Putent is going to take this.
• 14:19
  Speaker 1: The most important thing is just to make sure that
• 14:21
  Speaker 1: you're well diversified, that your portfolio over time can withstand
• 14:25
  Speaker 1: short term periods of volatility. We ultimately do believe that
• 14:29
  Speaker 1: this will end up being short lived. We don't know
• 14:32
  Speaker 1: how much pain that will occur. In the meantime, it's
• 14:35
  Speaker 1: very difficult to watch, not just from the humanity humanitarian perspective,
• 14:39
  Speaker 1: but also watching these daily moves in the market. So
• 14:42
  Speaker 1: we're telling our clients consistently, so let emotions override your
• 14:47
  Speaker 1: long term risk, your long term objective. Be very careful
• 14:51
  Speaker 1: to be selling, because once you sell, your locking in losses,
• 14:54
  Speaker 1: and that can be dangerous for the long run. It's
• 14:56
  Speaker 1: proven to be dangerous for the long run. Stay invested.
• 15:00
  Speaker 1: Have dry powder, which we do and we have had
• 15:02
  Speaker 1: coming into this year, some dry powder to look for opportunities.
• 15:06
  Speaker 1: Just consistently be monitoring what you own. We do believe
• 15:09
  Speaker 1: the managers have made the right decisions within our asset
• 15:12
  Speaker 1: allocation to mitigate some of the exposure that they may
• 15:15
  Speaker 1: have to this crisis. And Megan, we also have a
• 15:18
  Speaker 1: State of the Union address this evening the first by
• 15:20
  Speaker 1: President Biden. What will you be looking for? What will
• 15:23
  Speaker 1: your fund managers be looking for? Here? Right now? I
• 15:28
  Speaker 1: think the one thing that that's working as unity. We've
• 15:30
  Speaker 1: seen that just from these sanctioned perspective is the Western
• 15:35
  Speaker 1: world forming together and putting these sanctions from the Russian
• 15:39
  Speaker 1: government one by one um and it is the very
• 15:42
  Speaker 1: unified approach that right now, especially with the just the
• 15:46
  Speaker 1: tragic situations that everybody is looking at on television all
• 15:50
  Speaker 1: day long. We need some unity and confidence. But as
• 15:53
  Speaker 1: far as I think what people will be looking for
• 15:56
  Speaker 1: tonight is is that, you know, bringing the conference back
• 15:59
  Speaker 1: in the United States, because people are already speculating about
• 16:02
  Speaker 1: what may or may not happen as a results of
• 16:04
  Speaker 1: this with other countries, and I think that's dangerous, and
• 16:07
  Speaker 1: so we really have to create a sense of confidence
• 16:10
  Speaker 1: that we are unified with our other counterparts and we
• 16:15
  Speaker 1: against what Russia is doing. I think that that will
• 16:17
  Speaker 1: help to some degree. But people will be looking from
• 16:19
  Speaker 1: the energy perspective, and it's difficult at this point for
• 16:23
  Speaker 1: the administration to kind of do a three sixty on
• 16:26
  Speaker 1: some of the green energy initiatives. But I think people
• 16:29
  Speaker 1: will be looking on some of the things that the
• 16:31
  Speaker 1: administration can do for the short term that can help
• 16:34
  Speaker 1: alleviate some of the pain at the pump for for Americans.
• 16:37
  Speaker 1: By the way, just got about thirty seconds left. But
• 16:40
  Speaker 1: when you're looking to diversify, do you look into commodities
• 16:45
  Speaker 1: as well? I mean typically people and retail investors think
• 16:48
  Speaker 1: of just stocks and bonds, But do you look at gold,
• 16:51
  Speaker 1: do you look at oil? Do you look at aggs?
• 16:52
  Speaker 1: Like how far do you go, so we will always
• 16:57
  Speaker 1: look at them because they're considered. We kind of lumped
• 16:59
  Speaker 1: the commodity these into what is our alternative exposure, but
• 17:03
  Speaker 1: instead of focusing on some of the different commodities with
• 17:08
  Speaker 1: its crude oil goal because they're highly volatile and our
• 17:10
  Speaker 1: clients really have more of an eighteen to twenty four
• 17:13
  Speaker 1: month time frame. So what we would focus on is
• 17:16
  Speaker 1: other real assets that that can give the same types
• 17:19
  Speaker 1: of characteristics in the given our expectation for economic growth.
• 17:24
  Speaker 1: So thinking about things like real estate or infrastructure. These
• 17:27
  Speaker 1: are summarias the market that we would focus on. Now.
• 17:29
  Speaker 1: I think it's it is a very risky game to
• 17:32
  Speaker 1: be entering into oil now, specifically because people will be
• 17:37
  Speaker 1: doing it on a speculation trade on what's going on
• 17:39
  Speaker 1: over these all right, Megan, thank you so much for
• 17:42
  Speaker 1: joining us giving a couple of minutes of your time.
• 17:44
  Speaker 1: We appreciate it. Megan Hordeman, she is a chief investment
• 17:47
  Speaker 1: strategist Adverten's Capital Advisors. This is the big take, the
• 17:53
  Speaker 1: best of Bloomberg's in depth original reporting from around the globe.
• 17:58
  Speaker 1: We're running on a financial system that's on old technologies.
• 18:01
  Speaker 1: We're seeing prices reach fresh record ties what unfolds in
• 18:05
  Speaker 1: mid terms, we will no doubt see again in the
• 18:07
  Speaker 1: next presidential election. The Big Take on Bloomberg Radio. All right,
• 18:13
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• 18:17
  Speaker 1: on the Terminal and on Bloomberg dot Com Slash Big
• 18:21
  Speaker 1: Take this one. This time Bloomberg Opinion measure at President
• 18:23
  Speaker 1: Biden's presidency across fourteen metrics. And we have the reporter
• 18:27
  Speaker 1: here that focused on the supply chain because that's one
• 18:29
  Speaker 1: of our favorite topics here on Bloomberg Markets, Brooks Sutherland.
• 18:32
  Speaker 1: She's a calumnist for Bloomberg Opinion. She joins us here live,
• 18:37
  Speaker 1: I say, live in our Bloomberg Interactor broker studio. So
• 18:40
  Speaker 1: after a couple of years of call ins, we got
• 18:42
  Speaker 1: broke back in the studio, Brooke. You gotta fix the
• 18:45
  Speaker 1: supply chain for us. It's killing us. Where are we
• 18:49
  Speaker 1: right now when you step back and we take a
• 18:52
  Speaker 1: look at the global supply chain? Are we any closer
• 18:55
  Speaker 1: to fixing it? We are? But I will say that
• 18:58
  Speaker 1: nothing is moving is quickly as anybody would like, at
• 19:02
  Speaker 1: least of all c e O s, but certainly also
• 19:05
  Speaker 1: yes or President Biden. Um So we I mean, I
• 19:07
  Speaker 1: will say there's been incremental positive commentary coming out of
• 19:12
  Speaker 1: industrial CEOs where they are seeing some improvements on things,
• 19:15
  Speaker 1: whether it be resins, uh you know, GM is saying
• 19:17
  Speaker 1: they'll have enough semiconductors to significantly ramp up auto production
• 19:21
  Speaker 1: this year. Rockwell Automation is also seeing some improvements and semiconductors.
• 19:24
  Speaker 1: So there is progress, but it's taking a long time.
• 19:27
  Speaker 1: And I think what the result is is then you
• 19:29
  Speaker 1: have a lot of these industrial companies banking on a
• 19:32
  Speaker 1: significantly better environment in the back half of the year.
• 19:35
  Speaker 1: That tends to make investors very nervous. These back end
• 19:37
  Speaker 1: waited forecasts have a way of not always playing out
• 19:40
  Speaker 1: like we all hoped they might um and so, you know,
• 19:43
  Speaker 1: I think it's just it's slow people. I should point
• 19:47
  Speaker 1: out the people that you're you know, in your day,
• 19:49
  Speaker 1: what you do every day is for Bloomer Opinion, it's
• 19:51
  Speaker 1: cover the industrial sector of America, the heartland of America,
• 19:55
  Speaker 1: the really cool companies. That's why we're talking about some
• 19:57
  Speaker 1: of these companies. But the auto companies, they were the
• 19:59
  Speaker 1: kind of the first place where consumers saw, boy, we've
• 20:02
  Speaker 1: got a problem out there. And I think that's where
• 20:04
  Speaker 1: consumers are really looking to see when auto production does
• 20:06
  Speaker 1: in fact ramp up right, And you know, the hope
• 20:09
  Speaker 1: is this year that we're going to see some big
• 20:11
  Speaker 1: improvements in volumes. But again, I mean, I think it's
• 20:14
  Speaker 1: anybody's guests how that actually plays out. And you know,
• 20:18
  Speaker 1: the answer to the semiconductor problem particularly is very intractable.
• 20:21
  Speaker 1: The way you solve it is by adding significant amounts
• 20:23
  Speaker 1: of new supply. You cannot do that overnight. So there's
• 20:27
  Speaker 1: a huge wave of investment underway just in the US
• 20:29
  Speaker 1: alone to build new semiconductor plants. But this takes years,
• 20:33
  Speaker 1: It takes along TI. I just called yesterday the GMC,
• 20:36
  Speaker 1: my dealer up in Westchester, Empire UMU MC, and she said,
• 20:42
  Speaker 1: I haven't seen a Yukon in months here, and if
• 20:45
  Speaker 1: we do get one, it's not gonna have uh might
• 20:49
  Speaker 1: not have blind spot um detection, it might not have
• 20:52
  Speaker 1: adaptive cruise control, it might not have heated and ventilated
• 20:56
  Speaker 1: seats because the chips just aren't there for those things.
• 20:59
  Speaker 1: I'm also hearing about delivery issues. Verry rid Holtz just
• 21:04
  Speaker 1: had a Toyota FJ forty shipped up from Columbia and
• 21:08
  Speaker 1: it sat in customs for five weeks. This is the
• 21:11
  Speaker 1: kind of thing that the president can actually impact. Is
• 21:14
  Speaker 1: he doing stuff like that at the borders? Is he
• 21:17
  Speaker 1: encouraging people to onshore UM production? You know, what is
• 21:21
  Speaker 1: the administration doing in terms of actions now to try
• 21:26
  Speaker 1: and get it going again? Sure? I mean on the
• 21:27
  Speaker 1: semi conductor front, just one point. So the manufacturers are
• 21:30
  Speaker 1: also redesigning their products to get around UM some of
• 21:33
  Speaker 1: these issues where you know, you have shortages of one
• 21:35
  Speaker 1: ship but more of a supply of others, and so
• 21:37
  Speaker 1: they're retrofitting up. So it's not just cars. But to
• 21:39
  Speaker 1: your point, I mean, it is actually very hard for
• 21:42
  Speaker 1: the Biden administration to make a huge different in the
• 21:45
  Speaker 1: supply jam because so much of this is controlled by
• 21:47
  Speaker 1: private entities, and not just you know a handful of
• 21:50
  Speaker 1: private entities, but an entire system that historically has not
• 21:53
  Speaker 1: always had the best track record of talking to each other.
• 21:56
  Speaker 1: So whether that's manufacturers, whether that's railroads, trucking company, the
• 22:00
  Speaker 1: sport operators, the actual workers on the docks, warehouses. So
• 22:04
  Speaker 1: what the Biden administration is said is they are trying
• 22:07
  Speaker 1: to be a deal broker. They want to bring these
• 22:09
  Speaker 1: different parties to the table. They want to make sure
• 22:11
  Speaker 1: that those lines of communication are open. Now, we are
• 22:14
  Speaker 1: seeing a little bit of progress in the ports, specifically
• 22:17
  Speaker 1: those West coast ports Los Angeles and Long Beach, where
• 22:20
  Speaker 1: you know, there's been such a long back all the
• 22:22
  Speaker 1: ships that has gotten incrementally better. We are still a
• 22:25
  Speaker 1: long way away from normal operating conditions in those ports. Um.
• 22:30
  Speaker 1: And then longer term, you know, what they would like
• 22:32
  Speaker 1: to do is make investments in infrastructure, and you know
• 22:35
  Speaker 1: a huge portion of that goes to the ports in
• 22:38
  Speaker 1: terms of making our existing set up much better suited
• 22:41
  Speaker 1: to handle the kind of cargo demand that we're seeing. Um.
• 22:44
  Speaker 1: You know, there's a lot that could be done in
• 22:47
  Speaker 1: terms of automation, in terms of you know, just rearranging
• 22:51
  Speaker 1: how this logistical apparatus works for the ships that we
• 22:55
  Speaker 1: have in our time. But again, you know, back to
• 22:57
  Speaker 1: the point about the semiconductor plants, those are not things
• 22:59
  Speaker 1: that you can do overnight. Are we gonna on shore anything?
• 23:01
  Speaker 1: Of note? Your your Industrial America. Are we gonna on
• 23:04
  Speaker 1: shore anything? So I think this is happening to some degree,
• 23:08
  Speaker 1: and you've seen companies like snyd Air say, look, we're
• 23:11
  Speaker 1: going to add some manufacturing capacity to support the high
• 23:15
  Speaker 1: levels of demand. Um, you know, I talked to the
• 23:17
  Speaker 1: automation companies like Siemens and Rockwell, which of course would
• 23:20
  Speaker 1: be big beneficiaries that any onshoing movement, because you're not
• 23:23
  Speaker 1: going to do it to hire a ton of American workers.
• 23:26
  Speaker 1: You're going to do it if you can make the
• 23:27
  Speaker 1: automation investment to make all of the economics work. So
• 23:30
  Speaker 1: I think we are seeing this particularly lower down the
• 23:34
  Speaker 1: supply chains, not necessarily the big name brand manufacturers that
• 23:36
  Speaker 1: we know, but their suppliers. I want to see a
• 23:38
  Speaker 1: big fab plant built right in maybe Columbus, a high
• 23:41
  Speaker 1: right writ in the middle. We're doing that, okay, in
• 23:45
  Speaker 1: the great state of Ohio in the vehicles the other
• 23:49
  Speaker 1: the Ohio State University. Brook Solyin, thanks so much for joining.
• 23:52
  Speaker 1: She's a columnist for Bloomberg Opinion. Joining us here in
• 23:54
  Speaker 1: our Bloomberg Interactive Broker Studio. You can read all this
• 23:57
  Speaker 1: cool big take stuff Bloomberg dot Com Slag Big Take
• 24:01
  Speaker 1: or Ni Space Big Take go on the terminal. Thanks
• 24:07
  Speaker 1: for listening to the Bloomberg Markets podcast. You can subscribe
• 24:11
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• 24:14
  Speaker 1: platform you prefer. I'm Matt Miller. I'm on Twitter at
• 24:18
  Speaker 1: Matt Miller three. Pet On Fall Sweeney, I'm on Twitter
• 24:22
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• 24:24
  Speaker 1: us worldwide at Bloomberg Radio