'Bloomberg The Open' Full Show (03/31/2022)
JONATHAN: CLOSING OUT Q1 2022. FUTURES JUST ABOUT POSITIVE. THE COUNTDOWN TO THE OPEN STARTS RIGHT NOW. >> EVERYTHING YOU NEED TO GET SET FOR THE START OF U.S. TRADING. THIS IS "BLOOMBERG: THE OPEN" WITH JONATHAN FERRO. JONATHAN: LIVE FROM NEW YORK CITY, WE BEGIN WITH THE BIG ISSUE. NEW SANCTIONS ON RUSSIA.
>> WE ARE CONTINUING TO LOOK AT OPTIONS TO EXPAND AND DEEPEN OUR SANCTIONS AND ANTICIPATE WE WILL HAVE MORE FOR YOU ON THAT IN THE COMING DAYS. JONATHAN: WRAPPING UP THE PRESSURE ABROAD AND LOOKING TO ALLEVIATE THE PRESSURE AT HOME. BLOOMBERG REPORTED THE WHITE HOUSE IS CONSIDERING A MASSIVE RELEASE OF CRUDE FROM ITS RESERVES. FRUIT TRADED CHART -- CRUDE TRADING SHARPLY LOWER ON THE NEWS. AT ONE FULL AND 30 EASTERN TIME
-- AT 1:30 EASTERN TIME PRESIDENT BIDEN PREPARED TO DELIVER REMARKS. TEAM COVERAGE FROM RIO TODAY OF AND EMILY WILKINS IN D.C.. THIS BLOOMBERG STORY ROCKING THE MARKET FOR CRUDE THIS MORNING. RUN US THROUGH THE DETAILS. EMILY: WE ARE EXPECTED TO HEAR FROM BIDEN ADMINISTRATION THAT THEY WILL START RELEASING A MILLION BARRELS OF OIL A DAY FROM THE U.S. STRATEGIC RESERVES. WE HAVE SEEN OTHER RELEASES IN THE LAST YEAR BUT THIS IS EXPECTED TO BE MUCH BIGGER, POTENTIALLY 180 MILLION BARRELS OF OIL WHEN ALL IS SAID AND DONE. THIS IS DIRECTED AT GAS PRICES
THAT HAVE CONTINUED TO GO UP. THE BIDEN ADMINISTRATION EXPECTED THEM TO GO DOWN. THAT HAS NOT HAPPENED AND NOW AMERICANS ARE FACING PRESSURE AT THE PUMP AND DEMOCRATS ARE ALSO FACING PRESSURE TO ADDRESS THIS ISSUE AS AMERICANS ARE STRUGGLING WITH INFLATION. THEY FACE AN ELECTION NOT EXPECTED TO GO THERE WAIT THIS NOVEMBER. -- TO GO THEIR WAY THIS NOVEMBER. JONATHAN: EUROPE HAS ITS OWN PROBLEMS. MARIA: YES IT DOES.
-- WE ARE PROBABLY NOT GOING TO SEE IT. IF ANYTHING THE DEBATE IS NOT TO WE NOT USE RUSSIAN GAS THIS WINTER. THE QUESTION IS HOW DO WE PAY IT. THAT IS THE REAL DEBATE IN EUROPE.
TODAY WE HEARD FROM THE ITALIAN PRIME MINISTER SIGNALING HE HAD A CONVERSATION WITH VLADIMIR PUTIN IN THAT CONVERSATION THE RUSSIAN PRESIDENT REPEATED EUROPEAN COMPANIES SHOULD BE ABLE TO PAY IN EUROS, THERE WOULD BE NO NEED TO PAY IN RUBLES. THAT WAS THE INITIAL DEMAND. IT DOES SEEM THAT THE RUSSIANS ARE BACKING AWAY FROM THAT. A WARNING FROM THE EUROPEANS THAT ANYTHING THAT LOOKS LIKE BREACH OF SANCTIONS WOULD BE INCREDIBLY PROBLEMATIC. JONATHAN: EMILY JUST WENT OVER -- WENT OVER THE OPPRESSION -- JUST WHENEVER THE PRESSURE THE ADMINISTRATION WAS OVER. THERE ARE A SERIES OF ELECTIONS IN EUROPE THIS WEEKEND. RUN US THROUGH THE PRESSURE
THEY ARE UNDER. MARIA: WE HAVE THE HUNGARIAN ELECTIONS. THIS WAS AN ELECTION THAT WAS SUPPOSED TO BE VERY POLITICAL ABOUT FAMILY VALUES, DEFENDING HUNGRY FOR THEY FROM GARY AND PEOPLE. -- DEFENDING HUNGRY FOR THE HUNGARIAN PEOPLE. UKRAINE HAS OVERSHADOWED ALL OF THIS. ORBAN HAS SAID WE WILL NOT GO FOR SUPERSTRONG SANCTIONS BECAUSE WE NEED TO WATCH OUR OWN ECONOMY. IT IS NOT THE UKRAINIAN PEOPLE I HAVE A DUTY WITH BUT IT IS A BLUNT MESSAGE.
THAT IS THE GIST OF THE CAMPAIGN. WHEN YOU LOOK AT THE FRENCH ELECTION NEXT WEEK, YOU HAVE THE FINAL RESULTS IN APRIL, IT IS COMPLICATED FOR EMMANUEL MACRON. EVERY DAY WAS A FINANCE MINISTERS SAYING WE ARE GOING TO NEED MORE MEASURES TO TRY TO CALM DOWN INFLATION.
AT THIS POINT IT IS VERY REAL PROBLEM AWAY FROM ALL THE POLITICAL ISSUES WE ARE FACING. THIS IS A PROBLEM FOR EUROPEANS FORCING THEIR BILLS GOING UP. JONATHAN: MARIA TADEO AND EMILY WILKINS ON THE CLINICAL SITUATION AND THE PROSPECT OF A MONSTER RESERVE -- ON THE POLITICAL SITUATION IN THE PROSPECT OF A MONSTER RESERVE RELEASE LATER TODAY. WE COULD SEE UP TO A MILLION BARRELS OF OIL RELEASED. JOINING US TO DISCUSS IS JIM KEENAN, BRIAN NICK, AND JULIE BIEL.
JULIE, THIS QUARTER HAS BEEN AMAZING AND AT TIMES AMAZING FOR ALL THE WRONG REASONS. TALK TO ME HOW ENERGY AND THE VIEW ON CRUDE THIS QUARTER HAS CHANGED A REVIEW ON THE YEAR AHEAD. JULIE: IT HAS NOW MADE IT MUCH MORE DIFFICULT FOR THINGS TO WORK OUT FOR THOSE -- A SOFT LANDING. -- IN TERMS OF BEING ABLE TO EXECUTE MORE GRADUAL POSITIONS.
WE ARE TALKING ABOUT -- IF YOU ASKED ME IN JANUARY IF THAT WERE POSSIBLE, I WOULD HAVE SAID NO BECAUSE I THOUGHT JAY POWELL WAS BEHIND THE CURVE. NOW HE IS REGULARLY TALKING ABOUT 50 TO 20 INCREASES IN THE WHITE HOUSE IS AWARE IT IS AN DIFFICULT POSITION FOR DEMOCRATS WHERE IT IS HARD FOR THE ADMINISTRATION TO DO MUCH ON INFLATION. -- RELEASING RESERVES DOES NOT HAVE A HUGE IMPACT BUT DOES IMPACT THE POLITICS. JONATHAN: JULIE, A PROBLEM WITH THE CONNECTION. JIM KEENAN, I KNOW YOU WANT TO JUMP IN. JIM: I WOULD SAY HIGHLY COMPLEX. LAST YEAR WE ALREADY STARTED WITH A TIGHT LABOR MARKET.
THE ENERGY MARKETS WERE REVAMPING DRAMATICALLY WITH REGARDS TO THE RESTART OF THE ECONOMY AT THE DEMAND SIDE OF THE EQUATION. IF YOU THINK ABOUT WHAT HAS GONE ON OVER LAST MONTH, WE'VE ACCELERATED SOME OF THE TRENDS. THE ENERGY MARKET IS INCREDIBLY TIGHT RELATIVE TO THE UNDERINVESTMENT WE HAVE SEEN FOR THE LAST FIVE OR SIX YEARS, AND YOU HAVE AN ENVIRONMENT WHERE THERE IS MORE DISCIPLINE WITH REGARDS TO BRINGING ON SUPPLY. IT IS DIFFICULT TO BRING ON SUPPLY BECAUSE OF THE LABOR ISSUES, THE SCARCITY OF THE MATERIALS NEEDED TO GET THE OIL MARKETS AND THE GAS MARKETS UP. I THINK THAT PUSHES THE FED INTO A MUCH MORE COMPLEX SCENARIO WITH REGARDS TO THE PRICES THEY ARE SEEING ON INFLATION AND THEIR LIMITATIONS ON HOW THEY WILL BE ABLE TO EASE THAT.
CERTAINLY YOU WILL SEE THE FED HOLD TO THIS HAWKISH TONE. YOU ARE SEEING THE CONSUMER SENTIMENT FROM DOWN QUICKLY WITH REGARDS TO UNCERTAINTY THEY ARE FEELING. I THINK THAT WILL CREATE A LOT OF VOLATILITY IN THE OVERALL MARKET. I DO NOT THINK IT CHANGES THE
LONG-TERM, BUT THIS TRANSITION TO WHERE WE WERE IN THE LAST COUPLE OF YEARS TO THE CONDITION TO MORE NORMALIZED TO CUT -- TO THE TRANSITION COMING INTO A MORE NORMALIZED ECONOMY OUT OF THE PANDEMIC WILL HAVE A LOT OF VOLATILITY AROUND THE OVERALL ECONOMY. JONATHAN: THAT TRANSITION IS COMING IN HIGHER PRICES. BRIAN NICK, TO GIVE YOU THE RESPONSIBILITY -- THE OPPORTUNITY TO RESPOND.
WE HAVE SEEN THIS STORY. THEY HAVE ACCRUED RELEASE, CRUDE GOES LOWER, AND THAT IT GOES HIGHER AGAIN. ANY REASON TO THINK THE PLANT WE HAVE OUTLINED IN OUR STORY WOULD NOT JUST LEAD TO THE SAME PLACE WITH CRUDE GAPPING LOWER AND THEN BACK TO WHERE YOU WERE BEFORE? BRIAN: NO.
I THINK YOU ARE RIGHT TO FOCUS ON THE POLITICAL DIMENSION. THERE IS A POLITICAL IMPERATIVE TO BE SEEN AS DOING SOMETHING TO TRY TO GET PRICES BACK DOWN. ABSENT A SUSTAINABLE INCREASE IN SUPPLY OR SOME RESOLUTION TO THE CONFLICT THAT RESULTS IN LOWERING SANCTIONS, YOU WILL NOT SEE A FALL IN THE OIL PRICE TO LEVELS WE SAW IN FEBRUARY, WHICH ALREADY ELEVATED. WHAT THIS HAS DONE IS THROWN A LOT OF CONFUSION INTO THE ECONOMIC OUTLOOK, AND SPECIFICALLY IT IS THE JOB POLICYMAKERS HAVE. WHAT THIS DOES IS ACT AS ATTACKS ON CONSUMERS. IMAGINE SEEING ONE MONTH INCREASE IN GERMAN INFLATION. THERE WERE ENTIRE YEARS WHEN
THEY DID NOT HIT 2.5%. THAT MAKES IT EXTREMELY DIFFICULT FOR POLICYMAKERS TO KNOW WHAT TO DO. IF THIS IS EFFECTIVELY A CONSUMPTION TAX AND WILL DETRACT FROM OTHER THINGS PEOPLE NORMALLY SPEND THEIR MONEY ON COMP IS NOT CLEAR THE RIGHT MOVE IS TO RAISE INTEREST RATES UNLESS YOU SEE INFLATION EXPECTATIONS ALSO BECOMING ENTRENCHED AT MUCH HIGHER LEVELS, AND IN THAT CASE THE FED AND THE ECB MAY THINK THEY HAVE TO RESPOND TO THESE HIGHER RATES. TOM: -- JONATHAN: IF THIS PLAYS OUT IN EUROPE AS SOME PEOPLE THINK, WE FACE THE PROSPECT OF INTEREST RATES GOING BACK THROUGH ZERO. THAT SOUNDS RIDICULOUS BUT 2014 WAS THE FIRST TIME THEY WENT TO NEGATIVE TERRITORY IN THE ECB. THEY HAVE STAYED THERE FOR EIGHT YEARS. I WONDER HOW THAT WOULD AFFECT
GLOBAL FIXED INCOME IF YOU CAN HAVE A POSITIVE NOMINAL RATE, HOW THAT WITH THE TRANSFER CASH HOW THAT WOULD TRANSFORM THE EUROPEAN BOND MARKET, WHAT IT WOULD MEAN FOR TREASURIES? JIM: IT GOES BACK TO THE POINT WITH REGARD TO COMPLEXITY. THE ECONOMY IS COMING OUT OF THE PANDEMIC. FOR THE LAST 12 MONTHS COMING INTO THIS YEAR, THERE WAS A LOT OF CERTAINTY IN THE OVERALL MARKET, THERE CERTAINTY WITH REGARD TO THE SPEED OF THE RECOVERY. AS YOU ENTER THIS NEXT PHASE, THERE IS A LOT OF COMPLEXITY. THERE'LL BE A LOT OF INEQUALITY WITH REGARDS TO WHAT THAT MEANS WITH DIFFERENT REGIONS BUT ALSO THE SECTORS, SPECIFICALLY EUROPE. THEY ARE MORE EXPOSED TO THE ISSUES OF THE GRADIENT-RUSSIAN CONFLICT AND WHAT THAT MEANS FOR GAS PRICES. -- UKRAINIAN RUSSIAN CONFLICT
AND WHAT THAT MEANS FOR GAS PRICES. I THINK THAT IS A PRETTY ACUTE ISSUE IN THE SHORT TERM WITH REGARDS TO A RECESSIONARY REST IN THE NEXT 12 TO 24 MONTHS. LONG-TERM WE WILL ALSO DEAL -- WE STILL HAVE TO DEAL WITH SIGNIFICANT AGGREGATE DEBT BURNINGS ON GOVERNMENT BALANCE SHEETS. THOSE WILL BE HEADWINDS TO LONGER-TERM GROWTH AND KEEP THE LONG END OF THE CURVE FAIRLY ANCHORED WITHIN THE RANGE. I THINK YOU ARE STARTING TO SEE, YOU'VE SEEN IT ALREADY WITH REGARDS TO THE YIELD CURVE GLOBALLY AND SOME INVERSION WITH THE LONGER-TERM ISSUES WE HAVE TO DEAL WITH. JONATHAN: JIM KEENAN STEPPING WITH US ALONGSIDE BRIAN NICK. JULIE BIEL BACK IN A MOMENT.
HERE IS ABBY. ABIGAIL: STIFFING WITH THE PAIN STORY IS THE IDEA THE BIDEN ADMINISTRATION IS WEIGHING THE POSSIBILITY OF A BIG RELEASE FROM U.S. RESERVES. OIL DOWN AROUND $102 PER BARREL. THE ENERGY COMPLEX GETTING HIT. CHEVRON DOWN 1.4%. SCHLUMBERGER DOWN 1.6%. MURPHY OIL DOWN 5% NOW. WHAT IS BENEFITING FROM THE TRAVEL TRADE. AMERICAN AIRLINES UP 1.2%.
IT WILL BE INTERESTING TO SEE HOW IT ENDS UP. JONATHAN: HERE'S ANOTHER ONE. ED LUDLOW JOINS US FROM THE WEST COAST. ANOTHER ROCKET LAUNCH. WHEN CAN I STOP PAYING ATTENTION TO THIS AND TREAT THIS AS A PLANE TAKING OFF AT JFK HEADED TO HEATHROW? ED: IT IS A VERY GOOD QUESTION.
FOR BLUE ORIGIN WE ARE NOT QUITE THERE YET. THIS IS NOT AS ROUTINE AS IT IS WITH SPACEX. THIS IS THE FOURTH TIME BLUE ORIGIN IT WILL CARRY HUMAN BEINGS TO SPACE. 62 MILES ABOVE THE EARTH WHICH IS THE INTERNATIONALLY REGARDED BOUNDARY OF SPACE. WE DO NOT KNOW HOW MUCH THESE FOLKS ARE PAYING.
IF YOU LOOK AT THE LEFT-HAND SIDE OF YOUR SCREEN YOU SEE THAT EIGHT 11 MINUTES. COULD BE ANY NUMBER OF FACTORS. THERE ARE NUMBER OF TEAMS PRESSING THIS LAUNCH AND A HOLD IS VERY NORMAL. I LOVE THAT QUESTION BECAUSE THE REASON I'M HERE IN SAN FRANCISCO TRACKING THIS IS THEIR IS BIG MONEY BEHIND IT. JEFF BEZOS HAS PUT $1 BILLION A YEAR INTO THIS COMPANY. NO IDEA HOW MUCH THOSE FOLKS ON
YOUR SCREEN ARE PAYING. ON THE LEFT-HAND SIDE, HE IS THE SUBSTITUTE FOR PETER DAVIDSON. HE WAS GOING TO FLY ON THIS MISSION BUT HE PULLED OUT AND A SENIOR EXECUTIVE AT BLUE ORIGIN IS TAKING HIS PLACE. A NOTABLE MILESTONE. IT IS A GOOD ONE FOR HIM
BECAUSE HE DESIGNED THIS ENTIRE LAUNCH SYSTEM. FOR HIM AS AN EXECUTIVE, THIS IS A FULL CIRCLE MOVEMENT -- A FULL CIRCLE MOMENT. JONATHAN: DOES ANYONE FEEL UNCOMFORTABLE ABOUT THIS? I STARTED TALKING ABOUT THE WAR IN UKRAINE AND ENERGY PRICES AND YOUR SIX PEOPLE ON A VANITY MISSION TO FLOAT AROUND IN SPACE AND COME BACK DOWN TO EARTH. ED: THE WAR IN UKRAINE AND RUSSIA HAS PUT A SPOTLIGHT ON THE COMMERCIAL SPACE INDUSTRY. BLUE ORIGIN IS NOT JUST DOING THIS. THEY ALSO HOPE TO BE A MANUFACTURER OF ROCKET ENGINES,
AND FOR A LONG TIME UNITED STATES HAS RELIED ON THE ROCKET BUILT IN RUSSIA. THE RUSSIANS HAVE WITHHELD ACCESS TO THOSE ENGINES BECAUSE OF SANCTIONS. THE OTHER PART OF IT IS THAT WITH EVERY ROCKET LAUNCH, NO MATTER WHO IS OPERATING IT, THERE IS RISK. WHEN THERE ARE HUMAN BEINGS INVOLVED THERE IS RISK.
WHILE THEY ARE CONFIDENT IN THE SAFETY OF THE SYSTEM WE ALWAYS WATCH BECAUSE THE RISKS IN BLUE ORIGIN SPACE, HYDROGEN AND OXYGEN, YOU ALWAYS HAVE TO PAY ATTENTION FOR THAT REGION -- FOR THAT REASON. JONATHAN: YOU ARE PAYING ATTENTION AND YOU WILL BE BACK LATER THIS HOUR TO KEEP US UP TO SPEED. COMING UP, WESTERN ALLIES SEE LITTLE REASON TO BELIEVE PUTIN IS DE-ESCALATING. >> IF THE RUSSIANS WERE SERIOUS ABOUT DE-ESCALATING, THE WAY THEY SPUN THIS YESTERDAY, THEN SEND THEM HOME. THAT IS NOT WHAT THEY ARE DOING. JONATHAN:
THE CONFLICT ON THE GROUND CONTINUES. THE FEDERAL RESERVE TRYING TO SHAKE THIS OFF. LOOKING FORWARD TO A 50 BASIS POINT RATE HIKE.
>> I AM OPEN TO IT. I THINK THE QUESTION IS, AND WE WILL MAKE THIS DECISION IN MAY, IS HOW STRONG DOES THE ECONOMY LOOK IN TERMS OF FOODS -- IN TERMS OF ITS ABILITY TO TAKE RATE INCREASES AND HOW IS INFLATION PERSISTENT. JONATHAN: EVERYONE MAKING THAT CALL FOR THEM. SEEMINGLY 50 BASIS POINT
INMATE. JP MORGAN ON BOARD WITH THAT. JUST GETTING A HEADLINE FROM VLADIMIR PUTIN SAYING "WILL CONTINUE SUPPLYING GASES AT THAT VOLUMES." PUTIN SANK RUSSIA TO HELP GAS CONTRACTS IF BUYERS DO NOT PAY IN RUBLES. THIS IS A TRICKY MOMENT FOR CENTRAL BANKERS MANAGING WHAT IS HAPPENING WITH ENERGY AND TRYING TO DO SOMETHING ABOUT INFLATION. MICHAEL: THE WHOLE RUSSIA GAS SITUATION RAISES THE QUESTION OF AN ENORMOUS JUMP IN INFLATION IN EUROPE AND WHAT DOES THE ECB DO? THEY CANNOT TURN ON THE GAS. IT IS TOUGH FOR THEM. IT IS ALSO TOP FOR THE FED. WE GOT A REMINDER OF WHY THEY
ARE RAISING RATES. LOOK AT THE PCE INDEX, THE FEDS ♪ 'S FAVORITE INFLATION -- THE FED'S FAVORITE INFLATION MEASURE. NOTICE IT IS NOW UP. THE CHART SHOWS YOU EVERY TIME THE FED'S HAD TO BRING INFLATION DOWN THEY MOVE THE FED FUNDS RATE ABOVE THE PCE LEVEL. THEY GET A 6% FED FUNDS RATE
OUT OF THIS AND WILL GET MAYBE 50 BASIS POINT BECAUSE THE CASE FOR 50 HAS BEEN JOINED BY EVERYBODY. BULLARD AND WALLER AND MASTER HAVE SAID THEY ARE ON BOARD. JAY POWELL STARTED OFF BY SAYING HE IS WILLING TO GO 50 AND THE OTHERS, WHO ARE VOTING MEMBERS OF THE OPEN MARKET COMMITTEE, HAVE AGREED THEY ARE WILLING TO DO IT IF NECESSARY AND TODAY'S NUMBERS REMIND US THEY MAY BE. HERE IS SOMETHING ELSE. WE DID SEE COMPENSATION GO UP
THIS MONTH, WAGES AND SALARIES .8% IN THE MONTH OF FEBRUARY. EVEN WITH ALL OF THE PAY GAINS PEOPLE HAVE BEEN GETTING, YOU CAN SEE THE EMPLOYEE SHARE OF CORPORATE PROFITS, THE CORPORATE PROFITS WERE UP 35%, THE HIGHEST SINCE 1950. THE EMPLOYEE SHARE HAS NOW DROPPED DOWN BELOW WHERE IT WAS IN 2019, WHICH TELLS YOU THERE'S NOT A WAGE PRICE SPIRAL. JONATHAN: THANK YOU. I KNOW YOU HAVE TO RUN TO GET A PLANE TO GO TO D.C. AND BRING US PAYROLLS TOMORROW.
JIM KEENAN, RIGHT NICK, JULIE BIEL. 50 BASIS POINT SEEMS TO BE THE CONSENSUS ON THE STREET FOR THE NEXT MEETING AT THE MEETING AFTER THAT. WHERE ARE YOU? THIS FEELS LIKE A FIGHT ON WALL STREET BETWEEN WHO CAN OUT TALK -- OUT HAWK EACH OTHER. JULIE: EVERYONE WAS SLOW TO CATCH ON TO THE CONCEPT THAT INFLATION WOULD BE DURABLE AND EVERYONE NOW IS GOING TO RESPOND. THE BIGGER QUESTION IS DOES THE
FED ALSO OVERREACT AND CREATE A MUCH MORE PAINFUL IT TO DEMAND THAT IT EXPECTED. I THINK THERE IS REAL RISK THE FED MAINTAINS THIS STANCE BEHIND INFLATION AND WE HAVE A PERIOD WHERE DEMAND TOOK A REAL HIT IT INFLATION IS STILL HIGH. THAT IS PAINFUL. THAT IS PROBLEMATIC FOR VOTERS TO THINK ABOUT. JONATHAN:
JIM KEENAN, WHAT IS YOUR ASSESSMENT OF FED ACTION ON MARKET PRICING? JIM: WE TALKED ABOUT THE COMPLEXITY. I THINK THE FED WILL TRY TO BE DICTATED -- TO BE DATA-DEPENDENT. I THAT THEY HAVE TO MOVE AGGRESSIVELY. AS THE MARKET GOES, WE HAVE TO
LOOK THROUGH WHAT IS THE EASING OF SOME OF THESE SUPPLY CONSTRAINTS THAT YOU HAVE SEEN COMING OUT OF THE PANDEMIC. HOW DO YOU KNOW THE ANSWER TO THAT? WE TALK ABOUT UKRAINE AND RUSSIA . ALL OF THE THINGS WILL BE VOLATILE IN THE FED WILL TAKE ITS TONE ON THE BACK HALF OF THE YEAR. THE MARKET PRICING IS GOING TO
BE INCREDIBLY VOLATILE. THAT INFLATIONARY PRESSURE HAS A HUGE DIFFERENCE DEPENDING ON WHAT SECTOR AND WHO IS LOSING AND WHO IS WINNING. THE MARKETS FROM A PRICING STANDPOINT ARE GOING TO CONTINUE TO DEBATE IN A TUG-OF-WAR BETWEEN EVERY INFLATIONARY DATA POINT. WHAT THEY THINK THE FED SHOULD DO, OTHER CENTRAL BANKS COULD DO . I THINK THE RISK PREMIUMS WILL
BE VOLATILE. I THINK THAT CONTINUED THROUGHOUT THE YEAR. JONATHAN: BRIAN NICK, I WANT TO SHARE THIS QUOTE FROM DEUTSCHE BANK. IF YOU BELIEVE ASSET MARKETS
HAVE ALREADY ABSORBED THE CURRENT RATE STRUCTURE AND ARE NOW PRICED FOR A 3% TERMINAL RATE, THERE ARE GOOD ARGUMENTS THE TERMINAL RATE CAN GO HIGHER STILL UNTIL SUCH TIME AS FINANCIAL CONDITION STATEMENT TO. WOULD YOU AGREE WITH THAT STATEMENT? BRIAN: THAT IS THE THING THAT IS CONCERNING ABOUT SEEING ANOTHER RATE HIKE SEEMINGLY GET PRICED IN AND THE EQUITY MARKET CONTINUE TO RISE. WE HAVE THE INVERTED YIELD CURVE ON THE SHORT-TERM. THE FED WILL HAVE TO BE CUTTING BY THE END OF NEXT YEAR. THERE IS SOMETHING TO THIS THAT IF THE FED WANTS TO TIGHTEN FINANCIAL CONDITIONS BECAUSE THEY SEE THEMSELVES AS TOO LOOSE FOSTERING HIGHER INFLATION, THERE FORECAST FOR CORE PCE IS 4%, THEY WILL NEED TO LOOK AT HOW THE MARKETS ARE RESPONDING, LOOK AT HOW FINANCIAL CONDITIONS ARE TIGHTENING OR NOT TIGHTENING AND MAYBE HAVE TO GO FURTHER.
THIS IS WHY YOU LOSE A SENSE OF A LIMITING PRINCIPLE. HOW HIGH DOES THE FED HAVE TO HIKE? THEY HAVE TO HIKE UNTIL THERE SOME KIND OF PAIN UNLESS INFLATION STARTS TO COME DOWN ON ITS OWN. WHAT OF THE ENCOURAGING THINGS THIS MORNING WAS PCE INFLATION OR DURABLE GOODS WAS ZERO. THE TRANSITORY CROWD GETS A VICTORY, MAYBE TOO LITTLE, TOO LATE TO GET SLAMMED BY THE ENERGY PRICE INFLATION STORY IN MARCH, BUT FOR NOW SOME OF THE DISINFLATIONARY THINGS ARE PLAYING OUT. DATA-DEPENDENT IS THE NAME OF THE GAME. AS LONG AS THEY SEEM LIKE THEY'RE WILLING TO CONTINUE HIKING, IT SEEMS THAT IS WHAT THE MARKETS ARE PRICING IN.
MICHAEL: WILL CARRY -- JONATHAN:WILL CARRY ON BUILDING ON THIS STORY. FROM VLADIMIR PUTIN, RUSSIA TO HALT GAS CONTRACTS UNLESS BUYERS PAY IN RUBLES. THAT WAS NOT THE IMPRESSION MARIO DRAGHI HAD THIS MORNING. DOLLAR RUBLE IS NOT MUCH OF A MARKET. I KNOW PEOPLE TOLD ME SO MANY TIMES.
EURO-DOLLAR DOES ROLLOVER BY .8%. SESSION LOWS. COMING UP, THE MORNING CALLS. LATER, CLOSING ON A TOUGH Q1. JONATHAN: FOUR MINUTES AWAY FROM THE OPENING BELL. BARCLAYS DOWNGRADING AMT TO
EQUAL WEIGHT. CITI UPGRADING FIVE BELOW TO BUY. GUGGENHEIM RAISING ITS ROKU PRICE TARGET TO $145, HIGHLIGHTING STRENGTHENING DATA IN EUROPEAN MARKETS. JONATHAN: 24 SECONDS AWAY FROM THE OPENING BELL IN NEW YORK. WRAPPING UP Q1 AND THE MONTH OF MARCH. Q1 MESSY BUT THE MONTH OF MARCH
HAS BEEN A MONTH OF GAINS. UP MORE THAN 5% INTO THE FINAL TRADING DAY. FUTURES DOWN ABOUT .1% ON THE S&P. WHAT A MOVE WE HAVE SEEN ACROSS
THE TREASURY CURVE. ON TENDS, YIELDS LOWER. ON THE MONTH YOUR TWO YEAR UP MORE THAN 80 BASIS POINTS IN A SINGLE MONTH. HERE WE ARE WITH THE NET WE MARKET DOING OK. -- WITH AN EQUITY MARKET DOING OK. ENERGY UNDERPERFORMS, DOWN .4%. LET'S GET YOU SOME MOVERS. ABIGAIL: LET'S STICK WITH THE ENERGY STORY.
THE ENERGY MOVERS DO STAND OUT. EXXON MOBIL BIG OIL DOWN SHARPLY, ALTHOUGH OFF OF ITS LOWS, DOWN 1%. OCCIDENTAL PETROLEUM DOWN MORE, DOWN 1.5%. A BIG SURPRISING MOVE. BANKS A LITTLE BIT SOFTER. YIELDS DOWN, USUALLY GOOD FOR TECH. WE HAVE SOME TECH NAMES HIGHER BUT AMD, DOWNGRADE, MICRON SEEMS TO BE DOWN IN SYMPATHY WITH THAT.
YESTERDAY THAT STOCK WAS UP ON STRONGER EARNINGS. ACROSS THE BOARD. A LITTLE BIT OF WEAKNESS. JONATHAN: A CONFUSING TIME FOR ENERGY. LATER WE WILL HEAR FROM THE PRESIDENT OF THE UNITED STATES ON ENERGY. THIS IS WHAT THE TEAM AT
BLOOMBERG LEARNED IN WASHINGTON, D.C., THAT THEY ARE CONSIDERING THE POTENTIAL OF A MASSIVE RESERVE RELEASE, COULD BE ANYTHING UP TO 180 MILLION BARRELS OVERALL. IN EUROPE, THERE IS A STRANGE SPAT EMERGING BETWEEN THE RUSSIANS AND THE EUROPEANS OVER GAS SUPPLY AND WHAT CURRENCY TO SECURE THAT GAS SUPPLY. VLADIMIR PUTIN HAS SAID THIS
MORNING BUYERS OF RUSSIAN GAS SHOULD OPEN ACCOUNTS IN RUSSIAN BANKS. NEW RULES FOR GAS PAYMENTS WILL BE VALID FROM APRIL 1. RUSSIA TO CONSIDER -- RUSSIA TO CONTINUE SUPPLYING GAS BUT THEY WANT THE VOLUMES TO BE PAID FOR IN RUBLES. NOT IN EUROS, NOT IN DOLLARS. HOW CAN THAT TAKE PLACE IN THE CURRENT SANCTIONS REGIME IN WITH EUROPEANS GO ALONG? EVERY SINGLE EUROPEAN LEADER HAS PUSHED BACK AGAINST THIS SUGGESTION SO FAR. WE WILL HEAD TO EUROPE IN ABOUT 15 MINUTES TO RUN THROUGH THE DETAILS. GERMANY SAYING GAS SUPPLIES ARE
STABLE FOR NOW. THEY WILL INTRODUCE SOLAR AND WIND PROJECTS SOON. THE LATEST SANCTIONS PACKAGE IS NOT THE FINAL ONE. THAT IS THE LATEST LINE FROM GERMANY. AS FOR THIS MARKET, THE FINAL
TRADING DAY FOR Q1. STOCKS HITTING TO THEIR BIGGEST QUARTERLY DECLINE IN TWO YEARS. TAYLOR: THE THEME FOR THE QUARTER IS IT IS ALL ABOUT PERSPECTIVE. WE ARE LOOKING AT ONE OF THE BIGGEST QUARTERLY DROPS IN'S MARCH 2020 ON THE S&P, BUT LOOK HOW FAR WE HAVE COME BACK FROM SOME OF THE BOTTOMS. WE PEAKED ON JANUARY 3, WE WERE DOWN IN CORRECTION TERRITORY AS MUCH AS 14% OFF SOME OF THOSE RECENT RECORD HIGHS. WE ARE ONLY CLOSING DOWN 3.5%
FOR THE YEAR. A LOT OF PEOPLE WILL CALL THAT A WIN GIVEN HOW FAR WE HAVE COME BACK FROM SOME OF THE LOWS. AS YOU KNOW, THIS STORY IS ALL ABOUT THE BOND MARKET. IT IS THE BIGGEST QUARTERLY INCREASE IN BASIS POINTS ON THE TWO YEAR SINCE 1984. DEPENDING ON HOW TODAY SHAKES OUT, COULD BE ONE OF THE BIGGEST INCREASES IN A QUARTER ON THE 10 YEAR GOING BACK TO MORE THAN A DECADE. IT HAS BEEN A BOND STORY. LOOK AT SOME OF THE PANDEMIC
WINNERS AND LOSERS. A LOT OF THE WINTERS WE HAD SINCE MARCH 2020, THOSE WITH THINK ABOUT THE ROTATIONS, SOME OF THOSE STOCKS ARE THE UNDERPERFORMERS. IT IS VROOM AND NESTLE. ZOOM VIDEO OFF 20% TO 30% FOR THE QUARTER. JONATHAN: WHAT YOU MAKE OF RESTORATION HARDWARE AND THAT CALL? TAYLOR: THEY MADE A GOOD POINT YESTERDAY WHERE THEY CLEARLY HAVE A CERTAIN CUSTOMER.
THEY ARE SPEAKING TO A CERTAIN AUDIENCE. IF YOU THINK ABOUT THE COMPANY AND THE CEO ON THAT CALL USING THAT MACROENVIRONMENT TO TALK ABOUT THE SUPPLY CHAIN, TO TALK ABOUT THE INFLATION, YOU WONDER IF IT IS THAT IDIOSYNCRATIC RISK THOSE MACRO COMMENTS DO APPLY ACROSS THE BOARD. WE ARE MINDFUL THERE'S A CLEAR CUSTOMER WHEN IT COMES TO RH. JONATHAN: A FURNITURE STORE WHICH FANCIES THEMSELVES A LIFESTYLE BRAND, YOU CAN GO THERE AND HANG AROUND THE RESTAURANT IN NEW YORK CITY, IF THAT IS WHAT YOU DO WHEN YOU ARE BORED ON A WEEKEND, YOU HAVE TO BE VERY BORED IN MY OPINION, THEY CAME OUT OF THE CALL AND SAID THINGS HAVE ACCELERATED MATERIALLY. IS IT RH SPECIFIC OR SOMETHING BROADER? TAKE A LISTEN TO WHAT DAVID COSTON OF GOLDMAN HAD TO SAY ON EARNINGS.
>> THERE'LL BE A SIGNIFICANT NUMBER OF NEGATIVE EARNINGS SURPRISING -- NEGATIVE EARNINGS SURPRISES. YOU HAVE THESE EVENTS THAT HAVE IMPEDED A LOT OF SALES FOR A LOT OF COMPANIES. I THINK MANAGEMENT HAS BEEN RELUCTANT TO GIVE GUIDANCE. JONATHAN: BACK WITH US, JIM KEENAN, BRIAN NICK, JULIE BIEL.
YELLOW FOR EARNINGS. THE FED SAID -- THE OUTLOOK FOR EARNINGS. THE FED SAYING NEGATIVE SURPRISES. WOULD YOU GO WITH THAT? JIM: I WOULD BUT THE OUTLOOK WILL BE FAIRLY BALANCED. NOMINAL GROWTH IS STILL GOOD. WE ARE DOWNGRADING REAL GROWTH. I THINK YOU WILL SEE A HUGE BIFURCATION BETWEEN WHAT INDUSTRIES ARE BENEFITING AND WHAT INDUSTRIES WILL GET SQUEEZED BECAUSE OF THE LABOR COSTS, THE INPUT COSTS, EVEN SUPPLY DISRUPTIONS IN WHICH CASE THEY CANNOT DELIVER THE GOODS. I THINK THERE WILL BE A PRETTY
BIFURCATED STORY BETWEEN WHAT YOU ARE LOOKING AT. IN AGGREGATE I THINK THE EARNINGS STORY WILL BE PRETTY STRONG. I THINK MARGINS COME IN A BIT, BUT THE TOP LINE HOLDS AS EASY CONSUMER AND THE LABOR MARKET CONTINUES TO BE GOOD -- AT THE SAME TIME I THINK BUSINESS INVESTMENT WILL CONTINUE BECAUSE OF THE NEED FOR RESILIENCY. AT THE END OF THE DATE YOU'RE
LOOKING AT ALL THE SUPPLY CHAIN CONSTRAINTS. BUSINESSES AND GOVERNMENTS WILL HAVE TO INVEST IN MORE INFRASTRUCTURE ON SECULAR TRENDS. I THINK THE EARNINGS STORY IS PRETTY GOOD BUT I WOULD SAY VALUATIONS -- I THINK THAT WILL BE VOLATILE. WE STILL LIKE THE CREDIT MARKETS BECAUSE OF THAT AND CERTAINLY MORE ON THE FRONT END WHERE WE REDUCE SOME OF THE INTEREST RATES. JONATHAN: JULIE, DO YOU SHARE THAT WORK
CONSTRUCTIVE VIEW ON EARNINGS? JULIE: I THINK IT WILL BE MUCH MORE OF A MIXED BAG. THEY'RE GOING TO BE COMPANIES THAT BENEFIT OR TO MANAGE THROUGH SUPPLY CHAINS. THOSE THAT HAVE DIFFERENTIATED BUSINESS MODELS. I THINK ONES THAT ARE JUST YOUR AVERAGE COMMODITY BUSINESS THAT DOES NOT HAVE A LOT OF PRICING POWER, THOSE WILL STRUGGLE. I THINK WE ALL CAN AGREE
MARGINS ARE PRETTY CLOSE TO PEAK AND MARGIN DEGRADATION IS NOT TYPICALLY GOOD FOR VALUATIONS OR EARNINGS. WE ALSO HAVE CONCERNS ABOUT WHAT WILL HAPPEN WITH BUYBACKS IN TERMS OF REGULATIONS. I THINK THERE IS A CONCERN OF WHAT EARNINGS CAN LOOK LIKE. TRYING TO FIND BUSINESSES THAT HAVE EARNINGS DURABILITY AND RESILIENCE IS THE WAY GOING FORWARD. JONATHAN: WHERE ARE YOU FINDING THEM?
YOUR POINT IS AN IMPORTANT ONE. HOW CAN YOU MAKE A FORECAST IN THIS ENVIRONMENT. SPEAK TO THE VOLATILITY OF THE NEXT YEAR OR SO. YOU SHY AWAY FROM IT.
WHERE ARE YOU FOCUSED? JULIE: WHERE WE ARE FOCUSED IS TRYING TO FIND BUSINESSES WITH ENOUGH OF AN EARNINGS TRACK RECORD CAN SEE HOW THEY BEHAVE IN AN INFLATIONARY ENVIRONMENT OR EVEN AN ENVIRONMENT WHERE THERE IS A SLOWDOWN IN THEIR OWN INDUSTRIES. YOU LOOK AT A COMPANY THAT SERVES FINANCIAL INSTITUTIONS, YOU LOOK AT THAT BUSINESS THROUGH THE FINANCIAL CRISIS AND IT LOOKS LIKE IT DID NOT EVEN HAPPEN. THAT IS WHY DO SO CENTRAL TO THE OPERATING OF ANY FINANCIAL INSTITUTIONS. THAT IS THE TYPE OF BUSINESS WE LIKE. JONATHAN:
WHERE DO YOU COME DOWN ON THIS? BRIAN: BRIAN: THE IMPORTANT STORY IN THE FIRST QUARTER IS THAT THE ECONOMY HAS BEEN QUITE GOOD. FIX MONTHS AGO OR FOUR MONTHS AGO WE WERE TALKING ABOUT OMICRON. THAT IS NOT WHAT WE ARE SEEING. THE STRONGEST PART OF GDP GROWTH WILL BE SALES. PEOPLE BUYING STUFF IN
BUSINESSES BUYING STUFF. THE QUESTION WILL BE ON THE COST SIDE. THE FIRST MONTHS OF THE YEAR WE HAD 1.6 MILLION PEOPLE ENTER OR REENTER THE LABOR FORCE.
THEY ARE STILL RUNNING REALLY HIGH. AGGREGATE WAGE GROWTH HAS BEEN CLOSE TO 10%. THAT COULD BE A CONCERN FOR PROFIT MARGINS.
I STILL THINK LARGER COMPANIES MORE ORIENTED TOWARDS GROWTH ARE GOING TO BE THE PREFERRED MARKET AS WE NORMALIZE BACK DOWN PAST THE REOPENING PHENOMENON, AND ALSO IS COMPANIES THAT HAVE AN ABILITY TO MEET THOSE RISING WAGE PRESSURES WITH OFFSETTING COSTS ELSEWHERE AND MORE ROOM TO KEEP PROFIT MARGINS WIDE. SMALL BUSINESSES ARE THE ONE STRUGGLING AT THIS POINT. JONATHAN: SINCE EVERYONE IS RELUCTANT TO COME OUT WITH A CRYSTAL BALL, CAN WE TRY THAT NOW? WHERE'D YOU SEE THE ECONOMY AT THE END OF THIS YEAR? CONSUMER CONFIDENCE ROCK-BOTTOM, GAS PRICES SKYHIGH. I'M SEEING INFLATION START TO FIGHT FOR A LOT OF PEOPLE. AT SOME POINT YOU HAVE TO
BELIEVE THE HIT TO ACTIVITY -- I AM WONDERING WHEN PEOPLE STOP BUYING. IS WHAT DAVID KOSTIN IS GETTING AT. BRIAN: I AM NOT THAT ALARMED BY IT. THE INTEREST RATE IS STILL 6.3%. I THINK ENERGY WILL FEED INTO
THAT. THERE'S ALSO A LOT OF ACCUMULATION. WE HAVE ABOUT $2 TRILLION OF EXTRA CASH. IT IS NOT DISPERSED EQUALLY INTO THE ECONOMY. THE CONCERN IS PEOPLE CAME -- A LOT OF THE GROWTH LAST YEAR CAME FROM THE BOTTOM 40% OF INCOME EARNERS WHO HAD MORE MONEY THAN THEY NORMALLY DO BECAUSE OF THE STIMULUS.
WILL NOT GROW AT 5.5% BUT WE COULD STILL GROW AT 2.5% AFTER A SHAKY FIRST QUARTER. IN GENERAL I STILL THINK WE WILL BE AT OR ABOVE TREND THROUGHOUT THE BALANCE OF THIS YEAR IN TERMS OF REAL GDP GROWTH.
WE WENT UP SOMEWHERE IN 2.5% TO 3.5%. JONATHAN: JULIE, THE CONTROL ROOM TELLING ME IS SHAKING. UP OR DOWN OR SIDE TO SIDE? JULIE: I HAVE TO BE MYSTERIOUS. THE CONSUMER IS SUCH A CENTRAL DRIVE TO THE U.S.
ECONOMY IT IS STARTING TO COME UNDER MATERIAL PRESSURE. WE ARE SEEING THAT IN WHAT IS BEING BOUGHT. WE ARE SEEING FEWER DURABLE GOODS. THE BUDGET OF THE LOWER INCOME CONSUMER IS GOING TO GROCERIES AND GAS. THAT IS A MATERIAL IMPACT ON THE REST OF THE ECONOMY. IF YOU THINK ABOUT WHAT THE FED IS DOING, WHAT HAS BEEN DRIVING SO MUCH OF THE ECONOMY IS PURCHASES OF HOMES AND CARS. HAVING AN INCREASE OR RISING
RATE ENVIRONMENT IS HOPEFULLY GOING TO SLOW DOWN DEMAND. I'M NOT SURE YOU WILL SEE A PICKUP IN DURABLE GOODS OR THE REST OF THE ECONOMY. I THINK THERE IS DOWNSIDE RISK IN TERMS OF THE CONSUMER'S ABILITY TO CONTINUE TO SPEND. JONATHAN: HOME DEPOT ALREADY HAVING A VERY UGLY START TO THE YEAR. ON THE COURT ARE DOWN 25% SO
FAR YEAR TO DATE. JULIE, THANK YOU. ALONG SIGN JIM KEENAN AND BRIAN NICK. OPEC STAYING THE COURSE.
>> WE HAVE ONE OBJECT, TRYING TO MAINTAIN SUPPLIED TO THE MARKET AND ENSURE THAT SUPPLY IS AFFORDABLE. JONATHAN: I ASKED THE MINISTER FROM UAE WHY THE LAST MEETING LASTED FOR TO DATE -- LASTED 30 MINUTES. THE TEAM REPORTING OPEC-PLUS HEADED THROUGH ITS LAST MEETING AND JUST 13 MINUTES. IT BE THAT RECORD BY A MINUTE AT TODAY'S TALKS. THAT CONVERSATION IS STILL AHEAD.
IN NEW YORK, 6:30 IN LONDON. THIS IS BLOOMBERG. JONATHAN: IF YOU'RE TRYING TO FOLLOW THE GAS STORY OUT OF EUROPE AT THE MOMENT, IT IS DIFFICULT. BREAKING NEWS IN 15 MINUTES FROM VLADIMIR PUTIN. TO BUY RUSSIAN GAS THE NEED TO OPEN RUBLE ATTACK -- RUBLE ACCOUNTS IN RUSSIAN BANKS. IF SUCH PAYMENTS ARE NOT MADE, WE WILL CONTINUE THIS A FAILURE BY THE CLIENTS TO COMPLY WITH OBLIGATIONS. I WANT TO CATCH UP WITH GUY JOHNSON OUT OF LONDON. CAN YOU COMPARE AND RECONCILE
THE COMMENTS FROM VLADIMIR PUTIN WITH WHAT WE HEAR FROM CHANCELLOR SCHULZ AND PRIME MINISTER MARIO DRAGHI ABOUT WHAT THEY SAID VLADIMIR PUTIN TOLD THEM? GUY: I THINK THEY COULD FIT TOGETHER. HERE IS HOW. BASICALLY YOU AS A GASIFIER OPEN AN ACCOUNT IN RUSSIA -- AS A GAS FIRE OPEN AN ACCOUNT IN RUSSIA AND TRANSFER FOREIGN CURRENCY INTO THE ACCOUNT AND THEN THE BANK BUYS RUBLE'S WITH THAT MONEY AND BUYS THE GAS. IT IS UNCLEAR. THAT FITS REASONABLY WELL WITH WHAT WE GOT FROM MARIO DRAGHI.
I THINK THIS IS A WAY OF BOTH SIDES GETTING WHAT THEY WANT. I STILL THINK, JUDGING FROM WHAT I HAVE READ, I THINK IS UNBELIEVABLY CONFUSING IN THE MESSAGES UNBELIEVABLY MIXED. THE TEXT BASICALLY SAYS FOREIGN BUYERS TRANSFER FOREIGN CURRENCY TO A SPECIAL FOREIGN CURRENCY ACCOUNT THAN THE BANK BUYS RUBLE'S ON THE EXCHANGE, WHICH IS THEN USED TO DIVIDE GAS. -- TO BUY GAS. DOES THAT EXPLAIN IT? JONATHAN: THAT IS BETTER THAN MY EXPLANATION. I WILL STICK TO REPORTING.
ARE THE GERMAN SATISFIED WITH THE VOLUME OF GAS THEY ARE CURRENTLY RECEIVING? GUY: AT THE MOMENT I THINK CONTRACTS ARE BEING SATISFIED STOP WHETHER OR NOT THAT WILL BE ENOUGH TO DELIVER WHAT WE NEED GOING FORWARD IS AN OPEN QUESTION. AT THIS POINT WHEN WE THINK ABOUT GAS IN EUROPE, YOU NEED TO THINK NOT ABOUT WHAT IS HAPPENING NOW, BUT WHAT IS GOING TO HAPPEN NEXT WINTER. FOR THE MOMENT STORAGE IS CIRCA 25% FULL.
THE RECENT WEATHER HAS BEEN QUITE WARM, AND WE ARE BACK IN TWO WHERE WE WOULD ROUGHLY NORMALLY BE AT THIS STAGE IN THE YEAR. THE TANKS ARE NOT THAT DEPLETED. THEY'VE BEEN REFILLED BECAUSE THE WEATHER HAS BEEN SO WARM. WE ARE NOT TOO FAR AWAY FROM WHERE WE WOULD NORMALLY BE. THE QUESTION GOING FORWARD IS CAN EUROPE BUY ENOUGH GAS TO GET THE TANKS TO WHERE THE EU WOULD LIKE THEM TO BE.
THIS YEAR'S 80% FULL, NEXT YEAR IS 90% FULL. THAT IS THE TRAJECTORY AT THE MOMENT. IN ORDER TO MAKE THAT HAPPEN EUROPEAN PRICES NEED TO REMAIN ABOVE ASIAN PRICES BECAUSE ULTIMATELY THE SWING FACTOR IS NOT RUSSIAN GAS BUT GLOBAL LNG, WHICH WILL FILL THE GAP. JONATHAN: A FINAL QUESTION FROM ME. THIS SIDE OF THE ATLANTIC WILL BE LOOKING AHEAD TO THE PRESIDENT LATER IT IS CONVERSATION ABOUT A MONSTER RESERVE RELEASE. HOW IS THIS PLAYING OUT IN
EUROPE AS MOST PEOPLE ASSUME THERE WOULD BE A GREATER EFFORT FROM THIS WHITE HOUSE TO GET IN TOUCH WITH RIYAHD. CAN WE ASSUME THAT OUTLOOK HAS FAILED AND CAN ANYONE BRIDGE THE GAP AND CANNOT BE DONE OUT OF EUROPE? GUY: I AM NOT SURE IT CAN BE DONE OUT OF EUROPE. LOOK AT WHAT HAPPENED WHEN BORIS JOHNSON WENT TO THE GOLF IT DID NOT COME BACK WITH ANY EXTRA BARRELS OF OIL.
YOU THINK ABOUT WHAT IS HAPPENING AS WELL WITH THE IRAN STORY, BASICALLY ONE MILLION BARRELS A DAY IS WHERE IRAN WOULD BE. YOU TAKE IRAN OUT AND YOU PUT THIS OIL IN. ULTIMATELY THIS WILL PROBABLY WIDEN THE SPREAD BETWEEN TI AND BRENT. IT WILL HAVE MORE OF AN EFFECT IN THE UNITED STATES. LONG-TERM, WE WILL TALK TO A CHIEF ECONOMIST LATER ON, THIS IS A BONUS RATHER THAN A PAY RISE AND IT MAY DISCOURAGE SHALE FROM SHIPPING EXTRA BARRELS OR PRODUCING EXTRA BARRELS. THE OTHER FACTOR YOU HAVE TO
BEAR IN MIND IS IF THE REFINERIES STILL HAVE NOT GOTTEN THE BARRELS FROM THE PREVIOUS RELEASE IT WILL TAKE A WHILE FOR THIS TO COME THROUGH. JONATHAN: IT WILL BE MESSY. LOOKING FOR TO THE PROGRAM IN 10 MINUTES. 1:30 THIS AFTERNOON. JOE MATHIEU FROM D.C. JOINS US MORE.
WHAT SHOULD WE EXPECT TO HEAR FROM THIS PRESIDENT? JOE: WE WILL HAVE THIS CONVERSATION IN DOLLARS. 1:30. AS YOU JUST REFERRED TO, THIS WILL BE A MAJOR ANNOUNCEMENT AS A RELEASE OF OIL FROM OUR STRATEGIC PETROLEUM RESERVE, BUT NOT LIKE THE SINGLE ACTION WE HAVE SEEN HISTORICALLY WHEN THE PRESIDENT MAKES A MOVE LIKE THIS. THIS WILL BE A ROLLING RELEASE OVER THE COURSE OF MANY MONTHS. ONE MILLION BARRELS PER MONTH. WE DO NOT KNOW HOW LONG THAT
WOULD LAST BUT IT COULD BE A TOTAL RELEASE OF 180 MILLION BARRELS. THIS IS A PRETTY BIG DEAL. THE PRESIDENT HAS DONE THIS TWICE. 50 MILLION BARRELS IN NOVEMBER FOLLOWED BY ANOTHER 30 MILLION IN MARCH FOLLOWED BY THE INVASION OF UKRAINE, AND WE CAN SEE IN THE NUMBERS NEITHER WENT VERY FAR TO GET THE PRICES. AAA HAS A NATIONAL AVERAGE OF $4.24. THIS COMES DOWN TO WHAT YOU WERE JUST TALKING ABOUT.
OPEC NOT BUDGING DESPITE A LOT OF EFFORT FROM THIS WHITE HOUSE TO GET THEM TO INCREASE PRODUCTION. TODAY THE ADMINISTRATION TRYING TO DO WHAT IT CAN TO IMPACT PRICES. JONATHAN: THE PUSHBACK WE HAVE HAD, ON THE PROGRAM EARLIER COMMENT AGAIN TODAY, SKEPTICAL MINDS, WHY WOULD THIS MAKE A DIFFERENCE? JOE: IT MIGHT NOT. THERE ARE TWO DIFFERENT CONVERSATIONS. BLOOMBERG WANTS TO KNOW WHAT THIS MEANS FOR PRICES AND SUPPLIES. IN WASHINGTON THIS IS ABOUT
POLITICS. THE WHITE HOUSE -- THE WHITE HOUSE WANTS TO BE SEEN DOING WHATEVER IT CAN TO LOWER PRICES FOR AMERICANS. THIS'LL BE IN INFLATION -- EVEN IF IT DOES NOT WORK, THEY CAN SAY WE DID WHAT WE COULD WITH THE TOOLS WE HAVE. JONATHAN:
WE WILL SEE. JOE MATHIEU, LOOKING FORWARD TO THE SHOW LATER. JOE MATHIEU, SOUND ON, BLOOMBERG RADIO. FOR THE COVERAGE WITH DAVID
WESTIN AS WELL GOING INTO THAT ADDRESS BY THE PRESIDENT AT 1:30. FRUIT IS LOWER 4%. WTI DOWN 3%. LET'S GET YOU SOME SECTOR PRICE ACTION WITH ABBY. ABIGAIL: INTERESTING GIVEN THE FACT WE HAVE OIL. THE ENERGY SECTOR IS UP. FOLLOWED BY THE DIVIDEND RICH SECTORS, REAL ESTATE AND UTILITIES.
TECH AND COMMUNICATION SERVICES THE WORST, DOWN .6%. ALL OF THE YEAR IS ALL ABOUT ENERGY. THIS IS AN INCREDIBLE CHART. THE INDEX OF DOMESTIC PRODUCERS
UP 52%. JONATHAN:, YOUR TRADING DIARY PUSHING AHEAD TO PAYROLLS FRIDAY IS JUST AROUND THE CORNER. JONATHAN: WE HAVE THE RESPONSE FROM CHANCELLOR SCHULZ WHO SAID COMPANIES MUST FILL OUT THE PAPER GAS IN EUROS. THAT IS THE RESPONSE FROM GERMANY. COMPANIES MUST BE ALLOWED TO
PAY FOR GAS IN EUROS. VLADIMIR PUTIN SANG TO BUY RUSSIAN GAS THE NEED TO OPEN RUBLE ACCOUNTS IN RUSSIAN BANKS. IT IS FROM THOSE ACCOUNTS GAS WILL BE PAID FOR. IF SUCH PAYMENTS ARE NOT MADE IT WILL BE CONSIDERED A FAILURE OF THE CLIENT TO PAY. I WANT TO RUN FOR YOUR TRADING DIARY. YOU HEAR FROM THE PRESIDENT AT 1:30. FRIDAY THE MAIN EVENT, PAYROLLS
FRIDAY. THAT'S BE CONTINUING WITH CHICAGO FED PRESIDENT -- FED SPEAK CONTINUING WITH CHICAGO PRESIDENT CHARLES EVANS. AND WE WILL GET THE FEDS LATEST MEETING MINUTES. THANK YOU FOR CHOOSING
BLOOMBERG TV. THIS WAS "THE COUNTDOWN TO THE OPEN."
2022-04-03 12:10
