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Prestige's Schenker, Bloomberg's Adams-Heard, on Oil (Audio) · Bloomberg Intelligence

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  Speaker 1: the area. And that's the Bloomberg Business flash you're listening
• 1:35
  Speaker 1: to taking stock with Pim Box and Kathleen Hayes on
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  Speaker 1: Bloomberg Radio. The health of the global economy, the strength
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  Speaker 1: of manufacturers around the world post Brexit. This is what
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  Speaker 1: we're going to dive into now and what it may
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  Speaker 1: mean for some key commodities. To who's whose health is
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  Speaker 1: so important to the health of the US and global economy.
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  Speaker 1: Jason Shanker joins US now. He's President Prestige Economy X.
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  Speaker 1: He's located in Austin, Texas in studio Rachel Adams Hurt.
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  Speaker 1: She's part of Our America's Oil team here in New
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  Speaker 1: York City. So Jason, let's start with you. I spoke
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  Speaker 1: earlier today with Brad Holcomb from the Institute of Supply Management,
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  Speaker 1: and we talked about US manufacturing. It's going pretty decently,
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  Speaker 1: fastest growth in more than a year. But why don't
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  Speaker 1: you and I and Rachel look at the Euro Area
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  Speaker 1: numbers because it's surprising that Euro Area manufacturing was going
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  Speaker 1: as fast as pace in six months. But can that
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  Speaker 1: last post Brexit? Well, I think you know you've hit
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  Speaker 1: the nail on the head here that things looked pretty
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  Speaker 1: good going into Briggs and even the UK manufacturing numbers
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  Speaker 1: were up quite a lot, went up to fifty two
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  Speaker 1: point one from fifty point one, you know, uh, and
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  Speaker 1: and the Euros it was at fifty two point from
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  Speaker 1: fifty one point five. We're fifty as a break even
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  Speaker 1: for all of these. These all look good, but after breakfit,
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  Speaker 1: I think they're significant. Concern about investment and if that
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  Speaker 1: investment is reduced, you could see new orders be reduced
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  Speaker 1: as well. And I could weigh on on manufacturing. Although
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  Speaker 1: it's a bit of a mixed bag for the UK,
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  Speaker 1: where exporters might still do quite well in this low
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  Speaker 1: pound environment. You know, some are saying that it breaks
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  Speaker 1: it behind the commodities market. You know, door is open
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  Speaker 1: for prices of things like oil to keep rising. This
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  Speaker 1: is one of your specialties, Jason. What do you see
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  Speaker 1: for the price of oil moving ahead now? After breaks
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  Speaker 1: A lot of uncertainty is still around. Yeah, I know.
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  Speaker 1: I think for the balance of the year, we're going
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  Speaker 1: to spend most of the year between this second half
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  Speaker 1: between forty and sixty dollars a barrel. I think that
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  Speaker 1: what's really important here is kind of a mix. When
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  Speaker 1: I look at forecasting commodity prices, it's a mix of
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  Speaker 1: three p M I S I look at the I
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  Speaker 1: s M, which is expansionary right now UM at that
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  Speaker 1: high level for June and fifty three point two, the
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  Speaker 1: eurosone manufacturing which is pretty strong and fifty two point
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  Speaker 1: UH and the Chinese manufacturing p M I. If you
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  Speaker 1: look at the Sichine which is the privately conducted one
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  Speaker 1: of the government survey that's contracted now for eighteen of
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  Speaker 1: the past nineteen months. In other words, there's been a
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  Speaker 1: manufacturing recession in China for over a year and a half,
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  Speaker 1: so the mix of it is better than it's been
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  Speaker 1: in a number of months, which is positive, But China
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  Speaker 1: continues to risk being a drag and if there is
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  Speaker 1: reduced investment into Europe um then there could be issues
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  Speaker 1: with growth slowing there as well. So, Rachel, let's turn
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  Speaker 1: to you. You wrote a story this week about cheap
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  Speaker 1: gasoline and how that could mean a fuel record demand
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  Speaker 1: for the fourth of July holiday. What's going on? Yeah,
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  Speaker 1: so Triple A expects that nearly forty three million Americans
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  Speaker 1: are going to be traveling this holiday weekend and that's
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  Speaker 1: due in part because of cheap gasoline prices, but also
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  Speaker 1: because it's the three day weekend and we've had a
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  Speaker 1: few past couple of years for July four UM, so
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  Speaker 1: this one is no different. And with more people saving
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  Speaker 1: money from cheap gas and because that gasoline is so
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  Speaker 1: cheap right now, it s incentivising Americans to hit throat.
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  Speaker 1: So the reporting of done for this story and other
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  Speaker 1: work you've done on oil is it? Is it the
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  Speaker 1: when you talk to the analysts and the oil experts,
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  Speaker 1: are are they seeing sufficient demand to keep oil prices
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  Speaker 1: around this level? Or higher. Well, a recent Bloomberg Intelligence
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  Speaker 1: survey actually found that more than fifty percent of analysts
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  Speaker 1: and energy professionals expect that gas will in the year
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  Speaker 1: I mean oil, excuse me, oil in the year at
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  Speaker 1: fifty dollars a barrel or more. Um. And those respondents
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  Speaker 1: were actually more bullish on Brent crude. Where about saw
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  Speaker 1: that that oil within the that price range? Okay, Jason
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  Speaker 1: Shanker back to you. Um if I'm oh boy there.
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  Speaker 1: The central banks are really in play right now, aren't they.
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  Speaker 1: The Bank of England maybe cutting the rate rates twice.
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  Speaker 1: It's a lot of economists think the Fed on hold.
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  Speaker 1: Stanley Fisher, FED Vice chair got to see what the
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  Speaker 1: impact of briggs It is before you look at rates.
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  Speaker 1: What's going to happen? Well, you know, I think I
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  Speaker 1: think you know my thoughts on this. I know I
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  Speaker 1: spoke with you when my my book Recession Proof came
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  Speaker 1: out at the end of February. I've been expecting on
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  Speaker 1: end of two thousand sixteen or two seventeen US recession.
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  Speaker 1: I think that's already been baked in. And regardless of
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  Speaker 1: what happened with Breggsit, I think Breggs it just pushes
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  Speaker 1: US further in that direction. I think there's a risk
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  Speaker 1: of a UK recession, and that's been acknowledged as a
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  Speaker 1: result of reduced investment despite a likely increase in exports.
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  Speaker 1: And you know, the Eurozone and the entire global economy
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  Speaker 1: are very much on the edge. I mean, the i
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  Speaker 1: m F lowered their growth forecast back in April significantly.
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  Speaker 1: In the press conference, one of the heads of research said,
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  Speaker 1: we're not presently in a crisis, we're on alert for
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  Speaker 1: a crisis. This was back in April, right, So I'll
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  Speaker 1: be very curious to see that next round of i
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  Speaker 1: m S growth forecast. But the world banks lowered THEIRS,
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  Speaker 1: and the IMF recently lowered the US growth forecast, not
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  Speaker 1: only two point two for the year. I think we're
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  Speaker 1: in for some real slowing. I think autos are the
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  Speaker 1: lynchpin for the US economy right now. They were very
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  Speaker 1: strong last year. If you look year over your retail
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  Speaker 1: sales excluding autos was at a lower pace than in
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  Speaker 1: two thousand one, so autos, a million extra cars were
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  Speaker 1: and light trucks were sold. Last year. We went from
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  Speaker 1: sixteen point four million vehicles in two thousand fourteen to
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  Speaker 1: seven teen point four million last year. And if the
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  Speaker 1: financial regulators push on banks to be more conservative with
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  Speaker 1: the credit, you're going to get a reduction in subprime
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  Speaker 1: auto loans at a time when the lease fleets that
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  Speaker 1: are coming back this year are three times the size
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  Speaker 1: of normal returning God, leave it there, Jason Shanker, thanks
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  Speaker 1: so much from Prestige Economics. Thanks to write Rachel Adams,
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