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Wall Street, Energy, And EVs (Podcast) · 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. We're going to bring
0:22
Speaker 1: in Shinali bassik Uh. She is our Wall Street reporter
0:25
Speaker 1: to talk to us about the reaction to j Palell
0:28
Speaker 1: and what to expect the rest of the week and
0:30
Speaker 1: of course after the long weekend. First off, though, I
0:33
Speaker 1: want to remind everyone listening that Bloomberg Markets is brought
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Speaker 1: financial advisors with the solutions they need to grow a
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Speaker 1: thriving business. Commonwealth go where you grow. Visit Commonwealth dot
0:47
Speaker 1: com to learn more. That was so good, Thank you, well,
0:50
Speaker 1: thanks Actually forgot that I had to do that until
0:53
Speaker 1: after I introduced Shnale, So that's a little bit awkward.
0:56
Speaker 1: That's okay, shally Um. What's going on? We basically the market.
1:03
Speaker 1: I noticed Katie Greifeld in her newsletter wrote the markets
1:05
Speaker 1: puked on Friday. I don't know if I love that terminology,
1:10
Speaker 1: but I guess that's a popular thing to say. Well,
1:12
Speaker 1: it's funny to think about the market puking. You do
1:14
Speaker 1: have volatility rising a little bit once again, it's at
1:17
Speaker 1: twenty six now if you look at the VIX and
1:18
Speaker 1: obviously all summer, even with volatility muted, you've had von volatility,
1:23
Speaker 1: the move in deck still moving around a bit. So
1:26
Speaker 1: what was the reaction you read one of my major
1:29
Speaker 1: notes that I got. When you look at how the
1:32
Speaker 1: by side is perceiving what happened at Jackson Hole, there's
1:35
Speaker 1: a lot of questions about not just what's going to
1:37
Speaker 1: happen in the next two months, but what happens in
1:39
Speaker 1: the next six to twelve months. The frustration here is, yes,
1:44
Speaker 1: they're happy that forward guidance went away, but at the
1:46
Speaker 1: same time they don't trust the FED to be consistent
1:49
Speaker 1: over the next six to twelve months, and well, because
1:53
Speaker 1: it has over the last six to twelve exactly. Actually,
1:56
Speaker 1: there was a great story out on the terminal that
1:58
Speaker 1: we me and my sources have been kind of sharing
2:00
Speaker 1: around by Katerina Suriva, and it's about the history of
2:04
Speaker 1: Jackson Hole over the last two years under Powell and
2:07
Speaker 1: how much of his manifesto has really held up over
2:09
Speaker 1: the last two years. So credibility is really the question
2:13
Speaker 1: here um and the willingness to combat inflation. What else
2:18
Speaker 1: are you watching? What else am I watching? We'll see
2:20
Speaker 1: we're talking. We started this talking about the Vicks at six.
2:23
Speaker 1: Why does that matter from a Wall Street perspective, from
2:26
Speaker 1: a banking perspective, the post Labor Day rush, should things
2:31
Speaker 1: stay muted, there was a sense that underwriting could come back,
2:34
Speaker 1: that maybe we can see an I p O or
2:36
Speaker 1: two again, a bigger one. There are some big names
2:40
Speaker 1: out there that we've been talking about instat cart for example.
2:43
Speaker 1: I know Emily Chain was talking to Venture Capitalist last
2:45
Speaker 1: week on her program about something like that. Can deal
2:48
Speaker 1: making comeback in true reform? It hasn't been that bad,
2:51
Speaker 1: but underwriting is really what the expectation has been. If
2:55
Speaker 1: you see the vix keep rising. And then also remember
2:58
Speaker 1: quantitative tightening is taking off in large reform in September
3:01
Speaker 1: and to talk October. Should markets tighten up again, then
3:05
Speaker 1: all the hopes of doing all the things that make
3:06
Speaker 1: the banker's real money start to go away again. Underwriting.
3:11
Speaker 1: What does trading look like into the second half of
3:13
Speaker 1: the year. You know, we talk about this. Paul, if
3:15
Speaker 1: he was here, would already be asking about it. Is
3:16
Speaker 1: what does it mean for bonus season? Paul cares about
3:20
Speaker 1: is what bankers get paid, because Paul was a banker
3:22
Speaker 1: and then all he cared about was what he got paid. Yeah.
3:24
Speaker 1: Well yeah, And and to be honest, you know, this
3:27
Speaker 1: is where the rubber hits the road. When you come
3:29
Speaker 1: back from Labor Day, there's a lot of travel. I know,
3:31
Speaker 1: I'm already going to be in Miami and Paris through
3:33
Speaker 1: the end of the year. We have our own conferences.
3:35
Speaker 1: Why are you going to Paris? Um to interview, to
3:38
Speaker 1: see you of Morgan Stanley and kick care and so
3:42
Speaker 1: you take like a week off before or after so
3:44
Speaker 1: you can just enjoy this. Okay, care to say this?
3:47
Speaker 1: I was literally over the weekend going to actually ASHIONALI
3:50
Speaker 1: if we should take a girl's trip to Paris. But
3:52
Speaker 1: now we can't do that because apparently James Warman is
3:56
Speaker 1: more important than me. Um, let's talk to Almir's that
4:01
Speaker 1: maybe you'll give us some time on both ends of
4:03
Speaker 1: the trip so that you and I can come back
4:05
Speaker 1: here super happy as we deliver reports. But you know
4:10
Speaker 1: the reality is two weeks right after Labor Day or
4:13
Speaker 1: the full week after that, you have a lot of
4:16
Speaker 1: things in New York as well. You have super Return
4:18
Speaker 1: to New York, so all the big private equity executives
4:20
Speaker 1: from across the US and internationally are going to be
4:22
Speaker 1: in New York. You also have Salt, which is that
4:25
Speaker 1: Anthony Scaramuchie Skybridge conference. So I know, you know September
4:29
Speaker 1: is heated, it's booked, but again the markets are choppy.
4:34
Speaker 1: Well with conferences and with interviews, but not with I
4:37
Speaker 1: p o S or with launches. R'm talk. It's a
4:41
Speaker 1: lot of talking to investors, it's a lot of preparing
4:43
Speaker 1: for more stable times ahead. But again to your point,
4:48
Speaker 1: today's conversations lead to tomorrow's deals, right, But this year,
4:52
Speaker 1: I mean, what's deal activity look like, what's ipe O
4:54
Speaker 1: activity look like? What's it seems? Kind of it's it's
4:57
Speaker 1: really bad out there. I don't even know what else
4:59
Speaker 1: to say, because remember last year, the year before that,
5:02
Speaker 1: people were excited about not just I P O S,
5:04
Speaker 1: people were also excited about direct listings, they were excited
5:08
Speaker 1: about spacks and now kind of the venue to go
5:11
Speaker 1: back just licking their wounds from all of those things
5:14
Speaker 1: that they unfortunately got involved in last year. Regrettably. Right,
5:18
Speaker 1: the hangover is real, and it'll probably be real into
5:21
Speaker 1: next year. Maybe one or two will squeeze through, but again,
5:24
Speaker 1: a lot of the things that really fueled the banking
5:27
Speaker 1: system this year does not seem to be continuing into
5:30
Speaker 1: next year. And again, VIX at today, we're in the
5:33
Speaker 1: last week of August. What does that look like into
5:36
Speaker 1: next year? The Future's curve is telling you that it's
5:38
Speaker 1: going to get choppier into the end of the year.
5:40
Speaker 1: It's pretty crazy. Although I have to say the VIX
5:42
Speaker 1: has been a pretty poor indicator of action. I mean,
5:45
Speaker 1: there were times last month when it felt incredibly heated
5:49
Speaker 1: and the VIX was doing a whole lot of nothing. Now,
5:51
Speaker 1: I know Friday was a big down day and that's
5:54
Speaker 1: when the VIX climbed up to basically twenty six, but
5:57
Speaker 1: it's it's not moving around that much today, and I
6:02
Speaker 1: I just don't know about the VIX as an indicator.
6:04
Speaker 1: We haven't jumped above thirty six, so I don't think
6:06
Speaker 1: the VIX needs to get all that high to stifle activity.
6:09
Speaker 1: Twenty five is the one year average. Now that that one,
6:12
Speaker 1: we haven't jumped above twenty six. You mean thirty six
6:15
Speaker 1: is where we were in March of right, Okay, so
6:20
Speaker 1: we haven't jumped above thirty six, and today we're at
6:23
Speaker 1: twenty six. But you can get to and things already
6:26
Speaker 1: still feel pretty choppy out there, all right, Join Allie Bassik,
6:29
Speaker 1: Wall Street Reporter, Thanks so much for joining us. Let's
6:36
Speaker 1: get over to Pete Anderson right now, joining us from
6:39
Speaker 1: Anderson Capital Management. Pete, I want to get first year
6:42
Speaker 1: take on um Powell's eight minute speech on Friday. It
6:47
Speaker 1: really the whole Jackson, whole event, Um that seemed to
6:49
Speaker 1: drag markets down pretty substantially last week. Well, good morning,
6:54
Speaker 1: and yes it did in eight minutes of really devastating testimony,
6:59
Speaker 1: in my opinion, very very frank uh uh narrative in
7:04
Speaker 1: terms of the way he had been speaking. So I
7:06
Speaker 1: think that's a pretty strong message. But you know, the
7:09
Speaker 1: other thing we have to keep in context is that's
7:12
Speaker 1: one speech of many, and he is trying to figure
7:15
Speaker 1: out where the heck we are in this market cycle,
7:18
Speaker 1: just like the rest of us. You know, they have data.
7:21
Speaker 1: We all have the same data. And it is very
7:24
Speaker 1: challenging right now to formulate, you know, a pretty rational
7:28
Speaker 1: picture about where we are and how we should handle
7:32
Speaker 1: where we are and where we're going. So he's trying,
7:35
Speaker 1: like the rest of us. Hats off to him, But
7:38
Speaker 1: there are many many possibilities in this scenario. Isn't there
7:42
Speaker 1: certainly longer term? Um, it's a big question mark about
7:46
Speaker 1: what the FED does. Of course, in the next few months,
7:48
Speaker 1: it seems they are determined to continue raising at a
7:52
Speaker 1: if not seventy five then fifty basis point clip. What
7:55
Speaker 1: do you expect, Well, I expect that in lation is
8:00
Speaker 1: probably going to take care of itself, uh not completely,
8:05
Speaker 1: but you know, we have already seen really pretty remarkable
8:10
Speaker 1: changes in gas prices, housing inventories, and even lumber applywood prices,
8:16
Speaker 1: all those types of things, and we didn't require FED
8:19
Speaker 1: intervention for that. That was just supply and demand taking
8:22
Speaker 1: over classic dynamics like that. So what I worry about
8:27
Speaker 1: is that the FED might be acting too aggressively, and
8:30
Speaker 1: as you know, there's a delay and the impacts of
8:34
Speaker 1: his decisions, so we might be heading to a period
8:38
Speaker 1: where he might overtighten. As we see naturally, inflation just
8:43
Speaker 1: kind of receding. So that's what I worry about. But
8:46
Speaker 1: I do think that he probably will do fifty five
8:49
Speaker 1: uh coming this next month, and I do worry a
8:52
Speaker 1: little bit about that because I think by then we
8:54
Speaker 1: will see even more signs of inflation, you know, our deflation. Sorry,
8:57
Speaker 1: where we're not really focusing on the natural dynamics that's applied.
9:03
Speaker 1: Demand has And remember where there is no playbook for
9:07
Speaker 1: this recovery because it is truly unique. So as we
9:11
Speaker 1: struggle to look back at history and say these are
9:13
Speaker 1: the rules of thumb, I don't really think we have
9:16
Speaker 1: many rules of thumb given this unique circumstance that we're in. Well, Peter,
9:20
Speaker 1: you say there's no playbook, But let's go back to
9:23
Speaker 1: just a couple of years ago, where you had a
9:27
Speaker 1: series of rate hikes, you had quantitative tightening, you had
9:30
Speaker 1: an equity market that even by then at that point
9:33
Speaker 1: was also considered extremely hot and extremely overvalued. Isn't that
9:37
Speaker 1: the playbook to go by, the idea that the stock
9:39
Speaker 1: market can actually handle this QT and can handle these
9:43
Speaker 1: rate hikes because it has before well very good points.
9:46
Speaker 1: And you know, I struggle with that myself, to be
9:49
Speaker 1: honest with you. But I do think when we look
9:51
Speaker 1: at the root cause, where we find ourselves presently very
9:57
Speaker 1: very different from anything in the past. I mean even
10:00
Speaker 1: two thousand eight for instance, which I think is the
10:03
Speaker 1: most comparable in terms of the state of confusion that
10:05
Speaker 1: we're in right now. So I look at what caused
10:08
Speaker 1: us to get here, and I find that the cause
10:12
Speaker 1: is unique. And because the cause is unique, I also
10:16
Speaker 1: think the solution might be unique. And you know, we
10:19
Speaker 1: are desperately hanging on to every single data point that
10:23
Speaker 1: comes out, and many of these data points are approximations,
10:26
Speaker 1: So I think you have to blend all that together.
10:29
Speaker 1: I know what you're saying in terms of, oh, say,
10:32
Speaker 1: yield curve dynamics and rules of thumb about you know,
10:35
Speaker 1: if the yield curve is inverted. But even that, this
10:38
Speaker 1: time I think might be different in terms of, uh,
10:44
Speaker 1: you know, what the FED can do. You said you're
10:46
Speaker 1: concerned about overtightening. What what does that look like? Overtightening?
10:50
Speaker 1: What happens to an economy of this economy? Because it
10:54
Speaker 1: is pretty unique. M Yeah, I think, um, if they
10:59
Speaker 1: acknowledge edge that lets let's assume they do overtighten. Okay,
11:03
Speaker 1: and that's the biggessumption. But let's just play that scenario
11:06
Speaker 1: out then. I do think, um, if they acknowledge that
11:10
Speaker 1: they have overtightened, that could be a market rally. However,
11:14
Speaker 1: if they are denying or ignoring that and the market
11:19
Speaker 1: starts to signal that to them, that could be more
11:21
Speaker 1: dangerous because then we don't know what the next steps
11:25
Speaker 1: the FED will take well, and the and the effect
11:27
Speaker 1: on business, the effect on investment, the effect on consumers.
11:30
Speaker 1: How how bad does it get for the economy. I
11:33
Speaker 1: think it could be very serious in that, Um, you know,
11:36
Speaker 1: higher rates could just stifle a natural recovery. And that's
11:41
Speaker 1: the problem. You know, if you play out just as
11:44
Speaker 1: I mentioned, say lumber prices or housing inventory, you know,
11:47
Speaker 1: just imagine how that could get crushed if we actually
11:51
Speaker 1: put the brake on too strong. So, you know, nobody
11:54
Speaker 1: had envies the Fed's position, but I am hopeful that
11:58
Speaker 1: they are intuitive enough. And I hate to use the
12:00
Speaker 1: word intuition when we're talking about these kinds of things,
12:03
Speaker 1: but I do think it does come to the forefront
12:05
Speaker 1: where you have to try to blend all the scenario
12:09
Speaker 1: and signals that you're getting and try to incorporate the
12:12
Speaker 1: fact that we got here from coronavirus and it has
12:17
Speaker 1: impacted the nation in the world. Those are the things
12:20
Speaker 1: you have to factor in that are very different this
12:22
Speaker 1: time coronavirus. And then you know, like trillions upon trillions
12:25
Speaker 1: upon trillions of fiscal spending. Pete, we never have enough
12:29
Speaker 1: time with you. I'm so glad we could spend we
12:31
Speaker 1: could get you on the show though, So thanks so
12:33
Speaker 1: much for joining us. Peter Anderson is the founder of
12:35
Speaker 1: Anderson Capital Management. Let's bring in a true expert here,
12:42
Speaker 1: I mean a Baker chief OPEC correspondent and Dubai deputy
12:45
Speaker 1: beau chief of Energy Intelligence. Uh, let me put that
12:49
Speaker 1: question to you. Thank you for joining us as always
12:51
Speaker 1: back or excuse me, I am standing corrected. Let me
12:55
Speaker 1: ask you why do we see that spread in oil
12:57
Speaker 1: at the moment? Hi, good morning and thanks for having me. Um. Yeah,
13:03
Speaker 1: there is a huge spread between the two, as you noted,
13:06
Speaker 1: and uh, perhaps I mean we're we're going to see
13:09
Speaker 1: a further spread. And I mean this wasn't the case
13:15
Speaker 1: a few weeks ago. You saw that Brent fell to
13:19
Speaker 1: ninety dollars. Now it's back to a hundred and three. Um,
13:23
Speaker 1: and this mainly happened really because after comments UH from
13:28
Speaker 1: the Saudi Energy Minister hinting that Okay Plus had previously
13:35
Speaker 1: cut production, and that comment was enough for the market
13:39
Speaker 1: to realize that cutting production might be on the table again.
13:43
Speaker 1: So we saw Brent rise based on on that news. UM,
13:49
Speaker 1: whether or not we're gonna see the Open Plus group
13:52
Speaker 1: go ahead with that hint of a cut remains to
13:57
Speaker 1: be seen. The group is supposed to meet on the
13:59
Speaker 1: fifth of September and they say all options are open,
14:03
Speaker 1: but I think I mean, just looking at Brent prices here, UM.
14:08
Speaker 1: The main reason I believe the Saudi Energy Minister hinted
14:12
Speaker 1: that at these cuts UM wasn't really to to raise prices.
14:16
Speaker 1: It was more about gaining UH control over the market.
14:21
Speaker 1: He was worried that overbarish or over bullish uses moving
14:25
Speaker 1: this market. Speculation is moving this market. Use um daily
14:29
Speaker 1: news that we're seeing that perhaps the US is going
14:31
Speaker 1: to reach a deal with Iran and Iran would supply
14:35
Speaker 1: more barrels into the market. I mean, there's the influx
14:39
Speaker 1: of news and that's influencing the market. So I would
14:43
Speaker 1: say the market in general oil is not reacting on fundamentals,
14:48
Speaker 1: it's more of a kind of psychological disturbance or to
14:52
Speaker 1: borrow a phrase the Saudi Energy minister used, he says,
14:55
Speaker 1: it's a it's in a stage of like instab pity
15:00
Speaker 1: uh and she's afraidia. Um. So that's that's the situation. Uh.
15:07
Speaker 1: What's the real likelihood from from your vantage point of
15:12
Speaker 1: Iranian barrels coming on to um, you know, the Western
15:18
Speaker 1: market from here from America, it looks incredibly unlikely that
15:24
Speaker 1: that something's really going to happen that would lead to,
15:27
Speaker 1: you know, those sanctions coming off. Sure, UM, I would
15:31
Speaker 1: agree with that. I mean, I know that from from
15:34
Speaker 1: the Iranian press or Iranian media, even from Iranian officials,
15:38
Speaker 1: they seem to be a lot more optimistic and they
15:41
Speaker 1: want to keep reminding the market that in order to
15:45
Speaker 1: uh to to to to move prices down, Iran needs
15:49
Speaker 1: to come back. Iran needs to fill that gap there
15:51
Speaker 1: isn't enough spirit capacity and they're able to do that.
15:54
Speaker 1: But just um, thinking about it in terms of signing
15:59
Speaker 1: a deal with the US, I I completely agree with
16:02
Speaker 1: what you're saying here that it's really complicated. Negotiation is ongoing,
16:07
Speaker 1: and I don't see the steal getting signed anytime soon.
16:10
Speaker 1: But that doesn't stop the market from reacting. Every time
16:12
Speaker 1: we see a proposal or talk of the proposals, we're
16:16
Speaker 1: seeing prices move on that. So that's that's a fair
16:19
Speaker 1: point in terms of spare capacity, I mean, talking about
16:23
Speaker 1: cutting production makes sense to be that the market would
16:26
Speaker 1: react to that. Talking about raising production, I mean, how
16:29
Speaker 1: much can they really raise production? Um, Well, let's look
16:34
Speaker 1: at the group as open plus. I would say that
16:37
Speaker 1: there are only two members out of that twenty three
16:39
Speaker 1: member group that have spare capacity left or have capacity
16:44
Speaker 1: that they could bring to the market and Saudi you
16:49
Speaker 1: Ai and Saudi. So between the two, I would say
16:52
Speaker 1: they're sitting at UM two point five two point three
16:56
Speaker 1: million barrels. Uh. So that's that's the amount that could
16:59
Speaker 1: be off to the market. But bear in mind that
17:02
Speaker 1: both countries they don't want to max out their capacity
17:06
Speaker 1: because we're at a time here where sitting on spare
17:09
Speaker 1: capacity is incredibly valuable. It's become more valuable than than
17:14
Speaker 1: actual production and provides these countries a lot of leverage
17:17
Speaker 1: and political leverage, and I think that part of why
17:20
Speaker 1: the Biden administration. Biden visited the Jedda recently was because
17:25
Speaker 1: Saudi Arabia still sits on that capacity, so they're not
17:28
Speaker 1: gonna max out to twelve anytime soon. And you know,
17:32
Speaker 1: UM not have that in their hands. So I mean,
17:35
Speaker 1: thus the supply side, speak to us a little b
17:36
Speaker 1: about the demand side. I mean, how do you go
17:38
Speaker 1: about calculating this kind of stuff? I really studying the
17:41
Speaker 1: demand picture When you do have the likes of China
17:44
Speaker 1: and India buying discounted crude from Russia, still, how does
17:47
Speaker 1: that affect the demand pressures on the commodity market? Um, well,
17:53
Speaker 1: we we saw. I mean OPEC predicts in three that
17:57
Speaker 1: there is gonna be an increment in demand. It's it's
18:00
Speaker 1: not going to be at the same level of two,
18:03
Speaker 1: but there's gonna be increased demand. The there's a risk
18:06
Speaker 1: of the recession still hitting and again that's uh that's
18:10
Speaker 1: impacting uh markets. But uh, I mean that small demand
18:16
Speaker 1: increase that really needs to be fulfilled by the remaining
18:20
Speaker 1: spare capacity, which isn't much. UM. OPIC members remain optimistic
18:25
Speaker 1: about the demand side, but also very cautious. UM as
18:30
Speaker 1: you noted that, yeah, Russia is diverting a lot of
18:33
Speaker 1: its crew that is normally sold into Europe. Now it's
18:36
Speaker 1: being sold at discounts to India and China, who we
18:40
Speaker 1: understand our our storing a lot of it and straight
18:45
Speaker 1: back to those Europeans at or straight back exactly doing
18:48
Speaker 1: that cycle, which which is happening. Uh so they're they're
18:52
Speaker 1: taking advantage of the situation. But at the same time,
18:54
Speaker 1: I mean we've we've gotten a lot of calls from
18:58
Speaker 1: from from people in India in China asking us if
19:01
Speaker 1: the Gulf is going to be reducing their their allocations
19:05
Speaker 1: there and looking to sell their oil at at higher
19:08
Speaker 1: prices to to europe um, which isn't the case. I mean,
19:12
Speaker 1: the Gulf states haven't cut their allocations well, and I
19:15
Speaker 1: mean a lot of a lot of European countries are
19:18
Speaker 1: also still buying Russian crude, right, I mean these uh Italy, Yeah,
19:24
Speaker 1: we we we can't pretend that everyone is UM following
19:27
Speaker 1: along and it doesn't even kick in. I don't think
19:29
Speaker 1: until February the real UM sanctions there. I mean a
19:32
Speaker 1: great having on. I hope we can get you back
19:34
Speaker 1: soon because your insight and your intelligence very key to
19:38
Speaker 1: helping us to understand these markets. I mean, a baker
19:41
Speaker 1: is chief OPEC correspondent at Energy Intelligence. We're watching uh
19:47
Speaker 1: brent crude At one oh three forty two. I got
19:53
Speaker 1: a great message from Dan Curtis earlier, who is he's
19:57
Speaker 1: one of one of our producers in London. I believe
19:59
Speaker 1: he's your ball um every something. That very cool, he said.
20:04
Speaker 1: The Tesla model s uh sixty, so that's the cheaper one.
20:08
Speaker 1: It has a sixty two kilowatt hour battery with a
20:11
Speaker 1: two mile range, meaning it's about zero point three kilowatt
20:15
Speaker 1: hours per mile um. So he has worked out through
20:19
Speaker 1: that at a thousand euros per megawatt hour, which is
20:23
Speaker 1: one europe Er kilowatt hour, that works out to like
20:25
Speaker 1: thirty euro cents per mile and as I said, red parody,
20:27
Speaker 1: so that's it about the same as thirty cents cents um.
20:31
Speaker 1: Fuel economy in Europe, the average is six leaders per
20:35
Speaker 1: hundred kilometers that's how they measure it, instead of miles
20:38
Speaker 1: per gallon or about zero uh point one leaders per
20:43
Speaker 1: mile um. Premium gas in Germany is one seventy nine
20:47
Speaker 1: and euros, which as we know is one dollar and
20:50
Speaker 1: seventy nine cents per leader um or seventeen cents per mile.
20:56
Speaker 1: So in order to have parody between a Tesla and
20:59
Speaker 1: an internal combush an engine car, one that burns gasoline. Um,
21:02
Speaker 1: with gas at these prices, electricity needs to drop to
21:06
Speaker 1: five and eighty six euros or dollars a kill one hour.
21:09
Speaker 1: Right now we're approaching a thousand, So right now it's
21:13
Speaker 1: more economical to drive a gas car in Europe, which
21:16
Speaker 1: I thought was that's is interesting. Actually, now that you've like,
21:19
Speaker 1: let's bring in Kevin Tynan from Bloomberg Intelligence. He's a
21:22
Speaker 1: senior automotive analyst and Kevin, you know, there are a
21:25
Speaker 1: couple of news events that prompted me to say, let's
21:28
Speaker 1: get Kevin on. First was the news out of California
21:32
Speaker 1: that they want to um ban uh the selling of
21:38
Speaker 1: internal combustion engines by so no more gas engines by then. Okay,
21:44
Speaker 1: it's a long way off, but is that possible? Uh,
21:48
Speaker 1: well saying it as possible. And and by the way,
21:50
Speaker 1: I'm with you on the James Taylor thing. Um but Kevin,
21:54
Speaker 1: that was a big trail. Yeah. Well I'm a big
21:57
Speaker 1: Carlie Simon fans, so anyway, but um but you know,
22:01
Speaker 1: I I laugh because I don't think any of these
22:03
Speaker 1: people are going to be making decisions in if we're
22:07
Speaker 1: put on that path now anyway. Um, And I still
22:11
Speaker 1: feel like, and you know this matter, right, we talked
22:12
Speaker 1: about this all the time, like there's so many unintended
22:15
Speaker 1: consequences of this technological singularity of going to e V
22:22
Speaker 1: right that that I feel like we're just looking at
22:25
Speaker 1: one very very short part of the process, I mean,
22:29
Speaker 1: from mining of materials to disposal of batteries that says
22:35
Speaker 1: this is better, this is the way we should go.
22:37
Speaker 1: And I'm just not sure. And I think we're starting
22:40
Speaker 1: to hear a little bit more about like, hey, maybe
22:42
Speaker 1: we need some diversity in how we're powering these things
22:46
Speaker 1: and what choices we have as consumers. Yeah, yeah, I
22:50
Speaker 1: mean I I just I just feel like we're so
22:53
Speaker 1: focused on this one on the tail pipe or lack thereof,
22:58
Speaker 1: and saying this is bad, and I'm just not I'm
23:01
Speaker 1: just not convincing. I'm not anti e V, I'm not
23:04
Speaker 1: pro internal combustion. I'm just saying I think we're being
23:07
Speaker 1: very very nearsighted on this hundred percent, because who can
23:11
Speaker 1: forecast out I mean, it's hard enough to forecast out
23:16
Speaker 1: the other story. I don't even know what's for lunch
23:19
Speaker 1: today exactly. Uh, well, if Paul Sweeney were here, he
23:22
Speaker 1: would tell us he always knows what. Yeah, sometimes I
23:26
Speaker 1: think there's actually a function on the terminal that tells
23:28
Speaker 1: you what's for lunch. At least here a Bloomberg cho
23:31
Speaker 1: chomp go. That's right. Another story over the weekend that
23:34
Speaker 1: is um closer on the horizon France, because I guess
23:40
Speaker 1: I promise by Macron during his campaign, France is now
23:45
Speaker 1: going to or at least it thinks it can allow
23:48
Speaker 1: any consumer to lease or rent an electric vehicle for
23:53
Speaker 1: one hundred euros a month, a hundred dollars a month,
23:56
Speaker 1: because we're at parody. Um, that to me seems nuts.
24:00
Speaker 1: I mean, what if too many people are takers? Yeah?
24:04
Speaker 1: And and this, you know, is one of those things
24:07
Speaker 1: that you know, you have to think about the entire transaction, right,
24:11
Speaker 1: And I've said this for years that really who controls
24:14
Speaker 1: this is the manufacturer. So what basically is being said
24:18
Speaker 1: here is like, yeah, you you can create demand at
24:20
Speaker 1: a hundred dollars a month, can we do the supply?
24:24
Speaker 1: And how are those manufacturers made whole by the government? Right?
24:28
Speaker 1: So the vehicle costs a certain amount and you can
24:34
Speaker 1: give it to somebody. You can sell things improfitably all
24:36
Speaker 1: day long if you want to. But does the government
24:39
Speaker 1: step in and say, like, hey, that least should be
24:42
Speaker 1: you know, four times that five times? I'm guessing there.
24:45
Speaker 1: I'm guessing they're going to make the manufacturer whole. But
24:47
Speaker 1: even if even if they said to the manufacturer will
24:51
Speaker 1: give you a million dollars a month, they still can't
24:53
Speaker 1: produce that many vehicles that fast time. That's exactly right.
24:57
Speaker 1: And where are you going to charge them? I mean
24:59
Speaker 1: I don't already can't find a charger, and you know,
25:02
Speaker 1: when I'm driving an e V just me around New York.
25:05
Speaker 1: Admittedly Paris could have more, but I don't think it's
25:07
Speaker 1: that manymore. All right, We don't have time, unfortunately, but Kevin,
25:10
Speaker 1: thanks so much for joining us. Pretty good here in
25:16
Speaker 1: the studio with me, Matt Miller and as you know, Cretty,
25:19
Speaker 1: I lived in Germany for many, many years. Um studied
25:22
Speaker 1: there for a little while and tubing in and worked
25:24
Speaker 1: there for Bloomberg couple of stints, and I love the country.
25:29
Speaker 1: So with all due respect, I'm gonna tell you something
25:33
Speaker 1: ridiculous about Germany under the current system. And this is
25:37
Speaker 1: regulated by law, energy producers in Germany that have lower
25:43
Speaker 1: costs or could charge lower costs to consumers, like wind energy.
25:48
Speaker 1: There tons of windmills around Germany, or solar power providers.
25:52
Speaker 1: Their prices are set by whoever has the highest price
25:58
Speaker 1: in the market, so they could offer lower prices to
26:02
Speaker 1: consumers with wind and solar. But since gas fired power
26:07
Speaker 1: plants demand higher prices, wind and solar prices are set
26:12
Speaker 1: at those levels. Is that not ridiculous? It so, just
26:17
Speaker 1: to be clear, it means that you can't actually afford
26:20
Speaker 1: the renewable energy. No, it means that they can't charge
26:23
Speaker 1: lower prices. The regulator makes them charge the same price
26:27
Speaker 1: as whoever has the highest price. Right now, I think
26:31
Speaker 1: Robert Habeck and some others in Germany want to reform that.
26:34
Speaker 1: Like obviously, let's bring in Maria today, a Bloomberg opinion reporter,
26:39
Speaker 1: and she is deep in it when it comes to
26:42
Speaker 1: energy pricing, energy shortages, and European law and regulation. Wait,
26:48
Speaker 1: first of all, where are you, Maria? I'm uh and
26:53
Speaker 1: you know what, I'm gonna giving a little secret, but
26:55
Speaker 1: just don't tell anyone. I'm on my way to meet
26:58
Speaker 1: our friend and colleague and Marie, and this time it's fun,
27:02
Speaker 1: not work. We're going to get to Vita. I mean,
27:07
Speaker 1: it didn't invite us to me, just sounds like work,
27:11
Speaker 1: but I get it. UM for young people, it's a
27:13
Speaker 1: great place to party around the clock. In terms of
27:17
Speaker 1: UM European energy prices UM, what is going on over there?
27:22
Speaker 1: I mean, you've already got a huge crisis due to
27:26
Speaker 1: supply shortage UM thanks to Vladimir Putin's war in Ukraine.
27:32
Speaker 1: But the regulatory framework seems ludicrous, not just in Germany
27:38
Speaker 1: but across the continent. What is ursula funder lyon UM?
27:42
Speaker 1: The EU President planning, on commission president planning on doing
27:45
Speaker 1: about it. Well, listen, Matt, I think to me the
27:49
Speaker 1: relevant thing today that Brussels finally woke up today. Remember
27:55
Speaker 1: for weeks and now already you know I wrote about
27:59
Speaker 1: this at length back on TV by the way next week,
28:02
Speaker 1: and essentially they kind of seemed to be in this
28:08
Speaker 1: illusion that yes, winter is going to be very tough,
28:11
Speaker 1: but somehow we'll manage. But there was no policy action
28:14
Speaker 1: behind it. I think last week, of course, where every
28:17
Speaker 1: record and you know this very well, was smashed on
28:20
Speaker 1: the gas market, the futures market, they really kind of
28:24
Speaker 1: something hid and and and it really quicked. The market
28:26
Speaker 1: is broken and the issue here is that it goes
28:29
Speaker 1: down to consumers and we're in for a very tough winter.
28:32
Speaker 1: Today Brussels finally woke up and to me, that's a
28:35
Speaker 1: positive spin on this. Today we heard from the head
28:38
Speaker 1: of the Commission of Underlying which she said this is
28:41
Speaker 1: not just about demand destruction, and nonetheless that is the
28:44
Speaker 1: key issue. By the way, they really say this behind
28:48
Speaker 1: the scenes. It has to be about demand destruction. It's
28:50
Speaker 1: the only way you can deal with a supply shock
28:53
Speaker 1: of this magnitude. But the other thing is the electricity market.
28:57
Speaker 1: The energy market in Europe's very complex, but it's this
28:59
Speaker 1: isn't a similar market. It really changes by country. You know,
29:02
Speaker 1: it's very well you're in Germany, I mean Brussels. We
29:05
Speaker 1: probably have a very different energy market the two of us.
29:08
Speaker 1: But one thing, and you alluded to this, is that
29:10
Speaker 1: gas is really setting the price for everything else. Gas
29:14
Speaker 1: is going through the roof. It trickles down to everything
29:17
Speaker 1: else renewable. The attitude that it priced all of this,
29:20
Speaker 1: and I think for European officials is now very clear
29:23
Speaker 1: that they have to aid stage and intervention and to
29:26
Speaker 1: change the way the market operated. So I think we're
29:29
Speaker 1: heading into a new space in which gas is not
29:32
Speaker 1: going to call the shops at least the price for it.
29:35
Speaker 1: And I was having a conversation with a contact of mind,
29:38
Speaker 1: and I asked him, you know, what does it mean?
29:40
Speaker 1: And he decided a terminator. I mean, we have to
29:42
Speaker 1: go all in into this market, but also change the
29:45
Speaker 1: fact that gas should not be the benchmark. So what
29:48
Speaker 1: about how do you actually decouple some of these markets.
29:51
Speaker 1: Is there any sort of methodology that's actually been put
29:54
Speaker 1: forward on how you actually do this or is this
29:56
Speaker 1: still just in the early idea stage. Look, I I
30:00
Speaker 1: think it's very early days. This is gonna warrant a
30:02
Speaker 1: big debate, the fact that this isn't a single market
30:06
Speaker 1: and the rules are not apply to all of the
30:07
Speaker 1: same way. But I think if I look at the
30:09
Speaker 1: countries like Spain and Portugal, and of course I always
30:13
Speaker 1: keep a very close eye on my home country, I
30:15
Speaker 1: have a national bias there. But to me and I
30:18
Speaker 1: bring up scene because in this case, the Spanish, I
30:20
Speaker 1: kind of thought is coming a year ago, and they
30:22
Speaker 1: looked at their own market and they went, we don't
30:25
Speaker 1: really use that much gas. We have a lot of
30:27
Speaker 1: renewables are electric that is jumping for ways that we
30:30
Speaker 1: do not think are warranted or actually reflect our energy
30:34
Speaker 1: mixed and consumption. So we want to break away from
30:37
Speaker 1: the gas. They pulled out of a single bunchmark. They
30:39
Speaker 1: were able to get exemptions from the country which they
30:43
Speaker 1: separate the gas from the actual cost of making the electricity,
30:47
Speaker 1: so they were able to low ball their bill. So
30:49
Speaker 1: there was an uncoupling there from the electricity price to
30:53
Speaker 1: the gas price. And if you look at bills, of
30:54
Speaker 1: course have jumped in Spain and Portugal, but there are
30:58
Speaker 1: nowhere near the prices that we're seeing in jur me
31:00
Speaker 1: and and the French or Belgian Tino. The pay maybe
31:03
Speaker 1: six time of years for Spanish castle was more a
31:06
Speaker 1: hundred fifty so plus there was an effector that really
31:09
Speaker 1: brought it down. Could this be replicated for the entire
31:12
Speaker 1: European market. I'm not sure, but it does also clues
31:15
Speaker 1: so there are ways to get flexibility and also break
31:18
Speaker 1: away from gas, which is now the big issues. And
31:20
Speaker 1: Maria today, oh thanks for joining us. I can't wait
31:23
Speaker 1: till you re emerge on Bloomberg Television in September. Everyone,
31:28
Speaker 1: have a fantastic Monday. Thanks for listening to the Bloomberg
31:32
Speaker 1: Markets podcast. You can subscribe and listen to interviews with
31:36
Speaker 1: Apple Podcasts or whatever podcast platform you prefer. I'm Matt Miller.
31:41
Speaker 1: I'm on Twitter at Matt Miller. Put on false Sweeney
31:45
Speaker 1: I'm on Twitter at pt Sweeney Before the podcast. You
31:48
Speaker 1: can always catch us worldwide at Bloomberg Radio