Complete Intelligence

CI Banner
Login

Tag: covid

Categories
Podcasts

BBC Business Matters: Vaccine mandates announced

Biden just announced that all Federal employees are required to be vaccinated. What does this mean to the US and especially the private sector? Tony Nash joins the BBC Business Matters for a discussion on this. Also discussed are the BRICS and how they are catching up to the world’s major economies and will the environment be a big priority in the next US election?

 

This podcast was published on September 10, 2021 and the original source can be found at https://www.bbc.co.uk/programmes/w172xvqj8vfxhr5.

 

BBC Business Matters Description:

US President, Joe Biden, has announced that all federal workers have to be vaccinated against Covid-19. He’s also instructing the Department of Labor to draft a rule mandating that all businesses with 100 or more employees require their workers to get vaccinated or face weekly testing. And as the BRICS leaders meet, is the loose alliance of Brazil, Russia, India, China and South Africa working? We hear from Professor Miles Kahler, a Senior Fellow at the Council on Foreign Relations in Washington DC. Facebook has been accused of breaking UK equality law in the way it handles job adverts. The campaign group Global Witness said the social network failed to prevent discriminatory targeting of ads, and its algorithm was biased in choosing who would see them, as Naomi Hirst from the organisation explains. Also in the programme, we find out why the issue of climate change has become such a dominant theme in the upcoming German federal elections. And the American car giant, Ford will stop production in India; we get analysis from Nikhil Chawla, a business journalist and proud Ford owner based in Delhi. We’re joined throughout the programme by Jyoti Malhotra, National & Strategic Affairs Editor at The Print; she’s with us from New Delhi. And Tony Nash, co-founder and Chief Economist at Complete Intelligence, is with us from Houston, Texas. (Photo of President Joe Biden by Kevin Dietsch/Getty Images).

 

Show Notes

 

FW: It’s good to hear you, Tony. Back last summer, when the vaccine was a fantasy, we didn’t know how far they were getting and how fast they were working. I remember an astute commentator on this show saying it answers the question, should the federal government get involved in forcing people to have it, if and when it becomes available said, “no way, no way, because it’ll polarize opinion. Leave it to business.” Is the President going too far with this?

 

TN: I do think he is. I think forcing this through the private sector as an enforcement vehicle is polarizing, will say that much. I think this will drive a political wedge, like very few other things, and I think it’s somewhat intentional. I’ll say I don’t necessarily believe that public health is the guideline. I’m looking right now at COVID figures for Texas, and the fatality rate is something like 40% lower than it was during the cycle we had in Q1 in February.

 

So I think people are looking at the data we’re accustomed to COVID, and we’re accustomed to these data, and I think he sounded quite a lot like he was lecturing and talking down to people. And the folks that have not been vaccinated wouldn’t really appreciate that. So it’s politically polarizing. There will be more States rights issues that come out of this than I think he had intended.

 

FW: Okay, that’s an interesting thing that we’ll be watching. Is it not the case or there are those who may disbelieve the figures, the assertion being that 97% or so of those in hospital with COVID have not been vaccinated, and that would suggest that the president’s got the message exactly right. These 80 million, whatever their reasons, they are the most vulnerable.

 

TN: So, I haven’t seen those data divided at the state level, and those data differ dramatically from what we see out of Israel, which is one of the only governments that’s got very transparent data on who is vaccinated, at what stage they’re vaccinated and so on. So the data from Israel tell us very differently than 97%. So whether I’m vaccinated or not isn’t necessarily a part of this discussion. I think what really matters is we have to look at data, and the American system is one where if you look at American health care, if you look at American public health, for the most part in our history, individuals have been able to decide on the course of their own treatment and what has happened with American government that’s happened under Trump. This is happening under Biden. This has happened at some state levels where governments are telling people how they have to manage health care, and it’s not left up to them. So, again, this is translated by a number of Americans, not as a public health policy. iIt’s translated as an individual and States rights policy. So we’ve already had a number of governors, Oklahoma, Georgia, Missouri, other places, Florida and Texas will come out soon, basically saying this will not be enforced in my state and this is a state rights issue.

 

FW: Very interesting. Let’s go a very quick one if you would have both of you about the corporate side. Seems to me we discussed this a bit on the show, Tony, that in America, a company has immense power to tell its employees and fire them. We talked to one instance about CNN firing three employees who haven’t had the jab. Is that something that the President can count on?

 

TN: Can you count on companies to do that? Yeah. I think you’ll have plenty of companies who will not do it. So it will likely come the Federal through OSHA, which is a health and safety Department in the US government, and they’ll issue mandates. The question is around enforcement mechanisms. I think the main problem with this is the forcing it on smaller companies. The expectation is that it would be on bigger companies, but it’s companies down to 100 staff. And you’ve got a lot of very independent, very willful heads of smaller companies who will outright refuse to do this. I think larger kind of corporate America folks, no problem. They’ll get it done

 

FW.  From a US perspective. Tony, thanks, Joy. From a US perspective, is this a kind disaster for Ford, or is he just a really hard nose business decision that has been made by Jim Farley and 2 billion for Ford? It’s affordable. Yeah.

 

TN: I think it’s just a business decision. I think Americans obviously want to expand overseas, but in markets where the difficult people understand. So I just think it’s seen as a business decision.

 

FW: And that moved to China. That Jose said that is the business decision.

 

TN: It is. Yeah. And for got some catching up to do with General Motors there as well. So I think that’s the bigger priority.

 

FW: Tony, react to that if you would, because there’s a suggestion and I might be taking this too far from what Jody was saying. But when we had the professor talking about these constant ideas of reforming the multilateral system and redefining a multipolar world, it sounds what Jet is suggesting is actually this is all a bit hypocritical because it’s going to be mono, polo or unipolar. It’s just going to be China, that’s all.

 

TN: Well, I think that’s possible. But I also think that if we look at the three most active participants in BRICS, Russia, India, China, they’re strategic competitors. Yes, they’re rising fast, but their strategic competitors and they’re neighbors. So I think BRICS is a really interesting organization, kind of to ensure that they don’t become competitors or aggressive competitors too quickly to be able to cooperate in finance, cooperate and kind of cross border things. Other social programs, investment, that sort of thing. I think I remember when BRICS was announced, and I think it was kind of a neat thing to have, but there wasn’t an understanding of how important these economies would actually be. Now that they’re there, of course, as Jose mentioned, Brazil in South Africa just haven’t kept up in terms of relevance and importance. But the Russia, India, China part of BRICS really has, it really has. And I think it’s necessary to keep the kind of temperature low between those countries. I think there’s a lot of friction between the or potential friction between those countries.

 

FW: So just to pick up on that. From a DC perspective, does the State Department watch a BRIC summit and think the three primarily, China, Russia, India, these are countries need to be following closely in what they do in their internal relationship because we have to watch them all for different reasons.

 

TN: Will the State Department watch the brick summit. I think they would. I am not sure what they would do with it, because I think the US has opportunities to apply diplomatic carrots and sticks in different ways outside of multilateral, because it’s one of the leading economies and one of the leading powers. It has opportunities outside of multilateral environments to do that. So what we have with BRICS is some countries that were, I guess, economically considered kind of small countries 15 years ago when it was formed. Now they’re actually big countries, and so they needed the multilateral environment in those days to get things done.

 

Now, they don’t necessarily need the multilateral environment as much. They can do more on their own. I would argue that any one of those top three BRICS countries potentially has more diplomatic ability than many countries in Europe. Whereas 1520 years ago, you couldn’t say that. So it’s really the countries themselves are a lot more powerful than they were. So I think it could potentially be an important organization to keep them somewhat aligned.

 

FW: Equipped Tony to you. Cop 26, just coming up in November. I guess that’s a full year ahead of the next midterms in the US. Would the environment play at all in the campaign?

 

TN: I think it will. I think it will be marginal. I think things like COVID and some social issues and the business cycle, to be honest, will be bigger issues than the environment. But of course, it’ll hit certain cities and certain demographics, but I don’t think it will be a major issue.

 

FW: Well, thank you both. It’s great having you with us. We’re off for now. Bye bye.

Categories
QuickHit

The Fed & ECB Playbooks: What are they thinking right now? (Part 1)

Fed & ECB Playbooks: What are they thinking right now? (Part 2)

Geopolitics experts Albert Marko and Nick Glinsman are back on QuickHit for a discussion on the Federal Reserve, the ECB, and central banks. What are they thinking right now?

 

Albert Marko advises financial firms and some high net worth individuals on how politics works in D.C.. He worked with congressional members and their staff for the past 15 to 20 years. In his words, Albert basically is a tour guide for them to figure out how to invest their money.

 

Nick Glinsman is the co-founder and CIO of EVO Capital LLC. He does a lot of writing and some portfolio management. He was a macro portfolio manager in one of the big micro funds in London for quite a few years. Prior to that, Nick was with Salomon Brothers. Now, he concentrates on providing key intel, both economics and politics on a global level to finance managers and politicos.

 

You can go here for Part 2 of the discussion.

 

 

Subscribe to our Youtube Channel.

💌 Subscribe to CI Newsletter and gain AI-driven intelligence.

📊 Forward-looking companies become more profitable with Complete Intelligence. The only fully automated and globally integrated AI platform for smarter cost and revenue planning. Book a demo here.

📈 Check out the CI Futures platform to forecast currencies, commodities, and equity indices

 

This QuickHit episode was recorded on July 29, 2021.

 

The views and opinions expressed in this The Fed & ECB Playbooks: What are they thinking right now? (Part 1) QuickHit episode are those of the guest and do not necessarily reflect the official policy or position of Complete Intelligence. Any contents provided by our guest are of their opinion and are not intended to malign any political party, religion, ethnic group, club, organization, company, individual or anyone or anything.

 

Show Notes

 

TN: Today we’re talking about central banks and given where we are in “the cycle”, whatever that means at this point, post or late Covid, we’ve had waves of support coming from finance ministries and treasuries and central banks around the world. Central banks seem to be in a very weird position right now. So I’d really love to understand your point of view particularly what the Fed and the ECB thinking about right now and what are some of the biggest dilemmas they have? Nick, if you want to go first and frame that out a little bit and then Albert, will obviously go to you.

 

NG: Well, given how long I’ve been doing this, I’m more of a traditional, black coated central bank watcher. And I would say a couple of key comments to make right now is I think they’ve lost their independence to a large extent. Harder for the ECB to lose its independence. But with the commission, you have that loss.

 

I also think that we are, defective monetary financing. And again, I’ll go back to the ECB, who literally for the last month, for everything that was issued in Europe and this reluctance by the Fed to, even they admit talking about talking about tapering, but this reluctance to even consider a pullback on the mortgage-backed securities. The jest, pretty much the same, and it’s very clear with a lot of the actions that I’m in, my interpretation is, one, they’re working in cahoots with the political arm.

 

So treasury in the US, commission in Europe. Bank of England is a slight exception about to happen, but we can cover that later. So that’s clearly going on. And I think now Albert might do a lot of work together and I think this Albert came out with a comment a while back saying Yellen wants six trillion dollars fiscal. And the excuse that was given, aside from the political bias, was the Treasury market needs it.

 

And interesting enough, we saw the change to the Repos yesterday. This was after criticism by a committee that was published in the F.T. yesterday. And even Bill Dudley’s commented on Today suggesting that a lot more work needs to be done to ensure that the normal functioning of the plumbing behind the form of safe assets.

 

So it’s clear to me that things are being worked on in a politically coordinated way that impacts monetary policy. Now, I think they’ve got themselves into an economic or policy black hole. I think the mind set, and it’s been like this since probably ’08, which is they’re not prepared to accept the economic cycle anymore.

 

So back to one of my previous appearances on on your pod, the Fed not doing anything? Yeah, it seems to me that that’s an acceptable process, regardless of inflation is way above their forecast. And forecasting that’s a whole ‘nother bad area for the… Fed’s forecasts are terribly wrong. The ECB’s forecasts have been wrong for, you know, since time immemorial.

 

The ECB is more dangerous because they have a bias that keeps them on their policy’s wreck.

 

TN: So first on forecasts, if any central bankers are watching, I can help you with that. Second, when you say they don’t believe in the business cycle anymore, do you mean the central banks or do you mean the political folks?

 

NG: The central banks and government. I mean, funnily enough, I’m reading a biography on Jim Baker right now. And when you look at Reagan, when he came in and Volcker, economic data was pretty bad back at the beginning of the 80s. That. No way, no politician is prepared to accept that anymore. To be honest, I think the central bankers are prepared to accept that anymore. Any of the people leading the central banks being political appointees, of course.

 

TN: So this is kind of beyond a Keynesian point of view, because even Keynesians believed in a business cycle, right?

 

NG: It’s a traditional Keynesian point of view. The modern day, neo Keynesian, yes, you’re right. Way beyond what they’re thinking.

 

TN: There’s a lot of detail in that, and I think we could spend an hour talking about every third thing you said there. So I really do appreciate that. Albert. Can you tell us both Fed and ECB, what are they thinking about right now? What are the trade offs? What are the fears they have?

 

AM: We’ll start with the ECB. The ECB is not even a junior player right now in the central bank world. I know people want to look at the EU and say, oh, it’s a massive trading bloc, so and so. But the fact is, that it’s completely insolvent. Besides the Germans and maybe the French in some sectors, there’s nothing else in Europe that’s even worth looking at at the moment.

 

As for the ECB’s standpoint, you know, they’re still powerless. I mean, the Federal Reserve makes all the policy. They first will talk to the Anglosphere banks that are on the dollar standard basically. I mean, the Pound and the Australian dollar and whatnot. They’re just Euro Dollar tentacles. But, for the ECB, they’re frustrated right now because they see that the Euro keeps going up and their export driving market is just taking a battering at the moment. But they can’t do anything because the Fed goes and buys Euros on the open market to drop the price of the Dollar to promote the equities in the United States. And that’s just happening right now.

 

When it comes to the Fed, we have to look at what is the Fed, right? Normally what everyone is taught in school is that they are an independent entity that looks over the market and so on and so forth. Right. But these guys are political appointees. These guys have money and donors. They play with both political parties. Right now, the Democrats have complete control of the Federal Reserve. And everyone wants to look at Jerome Powell as the Fed chair, but I’ve said this multiple times on Twitter, the real Fed chair is Larry Fink. He’s got Powell’s portfolio under management of BlackRock. He’s the one making all the moves on the market, with the market makers and coordinating things behind the scenes. He’s the guy to look at, not Jerome Powell.

 

I mean, have anyone even watched Jerome Powell’s speech yesterday? It was appalling. He was overly dovish. That’s the script that he was written. He’s not the smart guy in this playing field, in this battleground.

 

TN: He needs a media training, actually. I think.

 

AM: He’s being set up to be scapegoated for a crash. He’s just no one to show. He’s a Trump appointee. So next time there’s a crash, whether it’s one week from now or one month from now, it’s going to be pointed on him that, you know, he’s the Fed chair. Look at the Fed chair. Don’t look at everything else that the political guys have made and policies in the past four or five years that have absolutely just decimated the real economy.

 

TN: This time reminds me, and I’m not a huge historian of the Fed, but it really reminds me of the of the Nixon era Fed where Nixon and his Fed chair had differences and they were known, and then the Fed chair ended up capitulating to do whatever Nixon wanted to get back in his good graces. Does that sound about right?

 

AM: No, that’s a perfect example. I mean, this idea that’s floated around by economists that economics and politics are separate entities is absolute fantasy. And it just it doesn’t exist in the real world.

 

NG: Just to pop in on this one because actually there is a new book out which I started three days at Camp David. Because it’s coming up to 50 years since that decision of the gold standard. Now, it’s just interesting you brought it up, because if you think of one of the rationales for coming off the gold standard, there’s several, but one that struck me as I was reading actually the review, the back cover show Percy.

 

This enables the government to stop printing in terms of fiscal, fiscal, fiscal. That’s what it did in effect. First of all, that’s one of the biggest arguments against people who argue for a return to the gold standard because that would decimate things or cryptos being in a limited supply of crypto as the new reserve currency because the gain that would be pulling against the elastic and you wouldn’t get, the economy would just boom. Right.

 

So that’s where I think it’s just huge, you know. I’ve always said that actually what we have is what we’re going to ultimately see is exactly the same cost that came with Lyndon Johnson paying for the Vietnam War, Covid. And then the Great Society, which is Joe Biden’s what I call social infrastructure and green ghost plan. So. Going back to that, Nixon was paying part of the price for all of that. With Volcke right. So I actually sit there thinking, well. There are similarities right now, and we’re seeing effectively a central bank and the Treasury, wherever you want to look, untethered from what used to be, well before I started in this business, to be part of the discipline. But even when they came off the gold standard, there was discipline. As you referred earlier, to, traditional Keynesians believed in the economic cycle of boom, bust. You know, boom, you tap the brakes a little bit, take the punch all the way. That’s gone.

 

That is to me what’s gone on recently, I don’t know whether you would say since the 08 or more recently is the equivalent of that ’73 meeting where they came off the gold standard. People just said no more cycles. Tapping the brakes and now the central banks are in a hole and politicized, they’re not independent because there are no.

 

AM: Yeah, yeah, that that’s real quick, Tony. That’s exactly right. I mean, even like, you know, I was on Twitter saying we’re going to go to 4400. We’re going to go to 4400 and people are like “No way. We’re in a bear market. This thing’s going back down 37, whatever charts and whatever Bollinger bands they want to look at. But the fact is because of the politics has a necessity to pump the market and then crash it to pass more stimulus packages. The only way was to go up to 4400 plus, right.

 

TN: Right. OK, now, with all of that in mind, Nick, you did a piece recently about the Fed and housing and some of the trade offs that they’re looking out looking at with regard to the housing market. Now, housing is an issue in Australia. It’s an issue in the UK. It’s an issue in the US and other places. Can you walk us through a little bit of your kind of reasoning and what you were thinking about with regard to the Fed and housing?

Categories
News Articles Uncategorized

Startup makes superforecasting possible with AI

This article originally published at https://blogs.oracle.com/startup/startup-makes-superforecasting-possible-with-ai on December 1, 2020.

 

 

Here’s a mathematical problem: The sum of all the individual country GDPs never equals the global GDP. That means forecasting models are flawed from the start, and it’s impacting global supply chain economics in a big way. Entrepreneur Tony Nash found that unacceptable, so he built an AI platform to help businesses “understand the sum of everything” through a highly automated, globally data-intensive solution with zero human bias.

 

Complete Intelligence, Nash’s Houston-based startup, uses global market data and artificial intelligence to help organizations to visualize financial data, make predictions, adjust plans in the context of a global economy, all on the fly. The globally-integrated, cloud-based AI platform helps purchasing, supply chain planning, and revenue teams make smarter cost and revenue decisions. It’s a way on how to make better business decisions.

 

“The machines are learning, and many times that has meant deviating from traditionally held consensus beliefs and causality models,” said Nash. “Causal beliefs don’t hold up most of the time—it’s human bias that is holding them up—our AI data is reducing errors and getting closer to the truth, closer to the promise of superforecasting.”

 

 

Massive datasets across 1,400 industry sectors

More than 15 billion data points run through the Complete Intelligence platform daily, making hundreds of millions of calculations. Average business forecasting saas software models use 10-12 sector variables. Complete Intelligence, on the other hand, examines variables across 1,400 industry sectors. The robustness gives businesses insights and control they didn’t have before.

 

“We’ve seen a big shift in how category managers and planning managers are looking at their supply chains,” said Nash. “Companies are taking a closer look at the concentration of supply chains by every variable. Our platform helps companies easily visualize the outlook for their supply chain costs, and helps them pivot quickly.”

 

 

Superforecasting brings a modern mindset to an old industry

 

Australia-based OZ Minerals, a publicly-traded company, is a modern mining company focused on copper with mines in Australia and Brazil. OZ says their modern mantra is more than technology, it’s also a mindset: test, learn, innovate. They wanted to better navigate and understand the multi-faceted copper market, where the connectivity between miner, smelter, product maker, and consumer is incredibly complex and dynamic. They turned to Complete Intelligence.

 

“I need a firm understanding of both fiscal and monetary policies and foreign exchange rates to understand how commodity prices might react in the future because a depreciating and/or appreciating currency can impact the trade flows, and often very quickly, which might influence decisions we make,” said Luke McFadyen, Manager of Strategy and Economics at OZ Minerals.

 

“Our copper concentrate produced in Australia and Brazil may end up being refined locally or overseas. And then it is turned into a metal, which then may be turned into a wire or rod, and then used in an electric vehicle sold in New York, an air conditioner sold in Johannesburg, or used in the motor of a wind turbine in Denmark,” he explains. “The copper market is an incredibly complex system.”

 

With Complete Intelligence, McFadyen has a new opportunity to test for a bigger-picture understanding and responsiveness. Previously, he updated his models every few months. Now he could do it every 47 minutes if he needed to.

 

McFadyen points to the impact of COVID-19 as a “Black Swan” event that no business forecasting saas software could have predicted, but is nonetheless impacting currencies, foreign exchanges, and cost curves throughout global copper market and supply chains.

 

“If your model isn’t dynamic and responsive in events like we are experiencing today, then it is not insightful. If it’s not insightful, it’s not influencing and informing decisions,” he said. “Complete Intelligence provides a different insight compared to how the traditional price and foreign exchange models work.”

 

McFadyen says early results have reflected reductions in error rates and improved responsiveness.

 

 

Cloud power and partnership

 

Complete Intelligence needed a strong technology partner but also one with global expertise in enterprise sales and marketing that could help boost their business. They found it with Oracle for Startups.

 

“We have lots of concurrent and parallel processes with very large data volumes,” said Nash. “We are checking historical data against thousands of variables, anomaly detections, massive calculations processing, and storage. And it’s all optimized with Oracle Cloud.”

 

Nash, who migrated off Google Cloud, says Oracle Cloud gives him the confidence that his solution can handle these workloads and data sets without downtime or performance lapses. The partnership also gives him a credible technology that is native to many clients.

 

“As we have potential clients that come to us that are using Oracle, having our software on Oracle Cloud infrastructure will make it easier for us to deploy and scale. A seamless client experience is a critical success factor for us.”

 

Nash says the Oracle startup program‘s free cloud credits and 70% discount has allowed them to save costs while increasing value to customers. He also takes advantage of the program’s resources including introductions to customers and marketing and PR support.

 

“We’ve been impressed by the resources and dedication of Oracle for Startups team,” he said. “I’d recommend it, especially for AI and data startups ready for global scale.”

 

 

Beyond mining: superforecasting futures with AI

 

Beyond mining, Complete Intelligence is working with customers in oil and gas, chemicals, electronics, food and beverages, and industrial manufacturing. From packaging to polymers and sugar to sensors, these customers use Complete Intelligence for cost and revenue planning, purchasing and supply chain proactive planning, risk management, and auditing teams, as well as general market and economic forecasts.

 

The error rates for Complete Intelligence forecasts in energy and industrial metals performed 9.4% better than consensus forecasts over the same period, and Complete Intelligence continues to add methods to better account for market shocks and volatility.

 

OZ Minerals’ McFadyen said, “This is the next step in how economists can work in the future with change leading towards better forecasts, which will inform better decisions.”

 

Nash and Complete Intelligence are betting on it – and building for the future.

Categories
QuickHit

QuickHit: Understanding the Covid Vaccine Supply Chain

Blue Maestro co-founder Kirstin Hancock joined us this week on QuickHit to explain the sensitivities around transporting the Covid vaccines. How vaccine manufacturers are adjusting to the special handling requirements, and how technology helps make sure that these are delivered in perfect condition?

 

Kirstin is the co-founder of Blue Maestro, which was set up eight years ago. Blue Maestro designs and manufactures Bluetooth sensors and data loggers. These are very small devices that have a PCB chip in them that use Bluetooth technology to communicate with smartphones to measure variations of the environmental conditions such  as temperature, humidity, barometric pressure, etc.

 

💌 Subscribe to CI Newsletter and gain AI-driven intelligence.

📺 Subscribe to our Youtube Channel.

📊 Forward-looking companies become more profitable with Complete Intelligence. The only fully automated and globally integrated AI platform for smarter cost and revenue planning. Book a demo here.

📈 Check out the CI Futures platform to forecast currencies, commodities, and equity indices

 

This QuickHit episode was recorded on December 11, 2020.

 

The views and opinions expressed in this QuickHit episode are those of the guests and do not necessarily reflect the official policy or position of Complete Intelligence. Any content provided by our guests are of their opinion and are not intended to malign any political party, religion, ethnic group, club, organization, company, individual or anyone or anything.

 

 

Show Notes

 

TN: Great. Okay. That sounds really interesting and I’ve been looking at you guys for a long time and what I’m really interested initially to talk about as we look at the environment with Covid and a number of other things happening this week and next week, I’d really like to understand what you’re seeing around the vaccine supply chains because I know you guys do some work there and I know it’s critical to see your types of products in those supply chains. Otherwise, we don’t get live vaccine, right? So, can you talk to us about a little bit of the work that you’re doing there?

 

KH: One of the criteria for the CDC is that sensors and data loggers are able to measure temperature in real time and that this is able to be recorded over a period of time and that maximum and minimum temperatures can be seen throughout the time.  Our sensors and data loggers are all unique.

 

They have a unique MAC ID address on them and they can be named, and logging intervals can be set at specific intervals. So, within the storage and transportation of vaccine, Tempo Disc in particular, is a really useful tool because it does all of these things. Now, we have actually been using Tempo Disc in a number of different countries to transport vaccines already.

 

We’ve been working with the UN this year, 2020, to deliver vaccines in developing countries in Africa through a project that they’ve been working on and that’s been very successful.

 

TN: Very good. So, what are the considerations like how long are these things usually in transport? I mean, what variability are… are there huge temperature swing variabilities? Are there huge… What are the kinds of things that the vaccine makers are really worried about because this seems like a really delicate supply chain?

 

KH: What vaccine makers are really concerned about is that the vaccines go out of their temperature range. Now, using our app for Tempo Plus 2, you can see real-time data. So, you can see exactly what the temperature is of the container that the vaccines are being put in and that’s generally what our users are doing.

 

They’re using Tempo Disc in the containers and they’re labeling them according to that batch of vaccines and that’s really important so that they’ve got the traceability from when they go from the manufacture of the vaccine right out to the pharmacies, the nurses, the clinics where these vaccines are administered.  And I think that’s probably the number one concern that these vaccines go out of temperature range because when they do, there is an emergency procedure that goes into place and basically, all of the vaccines have to be disposed of.

 

TN: Interesting. Okay. I really wanted to talk to you because with all of the talk of this distribution, I know this is probably something that there’s not a lot of thought from kind of your average consumer. But it’s such an important part of what’s happening here that I wanted to get some understanding of that. So, can you also tell me or help me understand… Blue Maestro does a lot of other work around healthcare and we’re an artificial intelligence company, we use a huge amount of data. You guys are an IoT company. You do the same. So outside of the vaccine supply chain, how are people using your products around health care and life sciences?

 

KH: We have a number of different use cases for Tempo Disc in a number of different healthcare applications. We work with a number of different US companies to monitor specific environmental conditions and I’ll just give you a couple of examples. We’re working with Boston O&P Orthopedics and Prosthetics to develop a solution where Tempo Disc is used in prosthetics to monitor how long people are wearing their prosthetics.

 

We also work with a company called GoGoband on a device that monitors when children or people with disabilities have wet themselves at nighttime because then their parents can get alerted. So, there’s a variation. We work with some international companies to actually monitor and record the pharmaceutical equipment that they have throughout the factory and then for its transportation to particular pharmacies within a number of different countries.

 

TN: Interesting. So, with the pharmacy activity, I mean that’s very precise manufacturing processes. As we get more into say precision manufacturing, how are manufacturers using your devices to understand precision around their manufacturing processes? Because again, as we have more sophisticated products, manufacturers have to know this stuff. It reduces defects. But it also creates ultimately better products for customers. So, can you help us understand a little bit about that?

 

KH: So, we issue conformity certificates and calibration certificates. They’re a little bit different. But basically, what they do is they track the PCB devices from the very start of the manufacturing process. So then when they’re programmed by our team, we have each device has a unique ID so that particular device can be tracked right from its manufacturing cycle right to its end user.

 

Now this is really important for traceability within the supply chain because the end user knows exactly which product they’re using for what purpose. So, if they’re looking at just temperature, they can have an ID that they can trace all the way through. And this ID is, it’s embedded in the electronics firmware. But then the end user can also change this so they can give it its own name.

 

So, if you’ve got a vaccine batch, then you can give it that idea of the vaccine batch. But then you can trace it right back. Now, our calibration certificates are two-point temperature calibration certificates. They’re very accurate.  Our devices use a product called si7020 silicon labs sensor. It’s one of the most accurate on the market. Its accuracy is 0.3 percent and we’ve had that tested and very verified by labs and our devices are very accurate.

 

TN: Very interesting, Kirstin. I think we could go on for a couple hours talking about this stuff. But I just wanted to kind of get a quick overview out to people so they understand what’s happening particularly with vaccines but also with other aspects of the manufacturing supply chain. So, thanks so much for your time today. I really appreciate it.

 

For anybody who’s watching, please check out the details in the bottom of the page. Also follow us on Youtube. Thanks very much. Have a great day.

Categories
Podcasts

What’s Supporting This Risk-On Market?

In this discussion with BFM 89.9, Tony Nash speaks about the Dow breaking past 30,000 and what’s supporting this risk-on marketing? Also discussed are the stuttering economic recovery in the US, Janet Yellen as Biden’s Treasury Secretary and what that could mean to the world economy, and whether oil has more legs to rally right now.

 

This podcast first appeared and originally published at https://www.bfm.my/podcast/morning-run/market-watch/whats-supporting-this-risk-on-market on November 26, 2020.

 

 

Show Notes

 

 

WSN: To help us make sense of where international markets are heading, we have with this Tony Nash, CEO of Complete Intelligence. Good morning, Tony. Now, it’s a bit confusing when it comes to markets because yesterday the Dow broke 30,000. But there’s a bit of correction this morning. So do you think this rally has legs? Is it a risk on or risk off for equities at the moment?

 

TN: Well, I think people really just took a breather today. I don’t necessarily think we’re seeing a fundamental shift or risk off environment. Equities are definitely a risk on environment, especially if you look at certain techs like Palantir. They were up almost 20 percent today. But, you know, when you look at things like the stimulus, we’ve had and the vaccine environment, you almost have a double accelerator environment where you’ve got this windfall of vaccines and all the same monetary and fiscal stimulus and potential new packages coming out. So there’s a lot of hope in these numbers. Valuations are really extended, assuming best case all around, which is what people do in situations like this. So it’s risk on at the moment, but we don’t necessarily expect this to be sustainable over a long period.

 

WSN: We look at the data that’s come out just on the eve of Thanksgiving, and it’s not positive at all because you’ve got higher unemployment claims and also weak consumer sentiment suggesting that the actual economic recovery may take longer than anticipated. So how do you reconcile all this with the actual market performance?

 

TN: What’s happening is we’ve had some state and local governments who are starting to shut things down again, worried that Covid will spread over Thanksgiving. And so, we get these legs to recovery coming and then the local, state and local bureaucrats who have absolutely no consequences to the decisions, they really kill economies that start coming back. And so Americans are really starting to push back and really starting to complain. So I think this is probably the last round of hard Covid lockdowns you’re seeing in different jurisdictions in the US because Americans are just fed up.

 

Maybe there may be something going into Christmas, but I doubt it. But I just don’t see much patience for this, because just as we have some sort of recovery coming, local governments come in and just suffocate any sort of recovery. So the jobless claims rising again. It’s more and more of the same where we have legs to recovery and then local governments come in and kill it.

 

I guess on a good note, orders for kind of good nondefense good rose almost one percent, which is pretty good news. It’s not terrible. They’re our collapsing consumer spending rose half a percent. So, again, it’s nothing to shout out, but at least we have growth there. So there is still positive news, but it’s slowing dramatically. And if these local government officials continue to suffocate local economies, we’re going to see things get much, much worse.

 

WSN: And what do you think about Janet Yellen as possible appointment as Treasury secretary? Do you think it’ll be good for markets.

 

TN: Markets like it. Some of the legislators like it. I think when she was the Fed secretary, she talked about fiscal stimulus not happening at the rate that it needed to happen. So if she’s a Treasury secretary, I think we can expect a big push for fiscal stimulus. We’ll see. My worry is, will the US become Japan with this kind of endless loop of debt being issued that then gets bought by the central bank? And there’s this circular economy that happens at the level that really doesn’t do much aside from a wash from the Treasury to the central bank. If that’s the case, then it could be problematic and it could be somewhat inflationary. But I just don’t think we’re going to see inflation here for at least a few years.

 

WSN: Meanwhile, does all look overbought to you at current prices? I mean, this morning, when I look at this Bloomberg screen is 45 U.S. dollars for the WTI delivery in January next year. Do you see any short term resistance? And what are the support levels we’re looking at?

 

TN: Right now, I think it’s because we’re seeing a lot of airline travel going into this Thanksgiving weekend. Airports here are packed. It’s the first time we’ve seen that in a long time since Covid. So people are a bit excited. I think jet fuel has been one of the main missing components for refined products in terms of demand. So I think there’s hope that maybe air travel is back, but I think that’s a bit early.

 

We really do expect some acceleration in the crude price in late December. And Jan, this is a bit early, but I don’t think this will last. Support prices, low 40s, 40 to something like that, which is right around where we’ve expected and where we’ve seen it. So things are a little bit ahead at the moment, but it’s not too far. We’re not seeing a six at all price, which we’re well ahead of demand.

Categories
Podcasts

BBC Business Matters: President Trump announces new US sanctions on Iran

Tony Nash joins Fergus Nicoll at the BBC for Business Matters podcast where they discussed about US sanctions on Iran, the battle for the new head of World Trade Organization, Texas’s stand on green technology, and the coronavirus update right in Houston, Texas.

 

This podcast was published on October 9, 2020 and the original source can be found at https://www.bbc.co.uk/sounds/play/w172x18z44jxg52

 

BBC Business Matters Description:

 

The US has imposed sweeping new sanctions on Iran, this time targeting its major banks as the Trump administration continues its strategy of “maximum pressure.” We’ll hear from Barbara Slavin, Director of the Future of Iran Initiative at the Atlantic Council. Also in the programme, the selection of a new director general of the World Trade Organisation (WTO) is entering its final stage and with both the final candidates being female, whoever gets it, it will be the first time the job has been taken by a woman. We’ll hear from Annamie Paul, the new leader of the Green Party of Canada on her vision for how the economy can be overhauled to create sustainable jobs. And we’ll hear from one entrepreneur who has taken the pod-serving idea of coffee machines like Nespresso, and used it to serve different kinds of whiskey.

 

All through the show we’ll be joined by financial professional Jessica Khine in Malaysia and Complete Intelligence economist Tony Nash in Texas.

 

Show Notes

 

FN: On US sanctions on Iran: it’s damned if you do and damned if you don’t, I guess at this kind of fervid election time, you’ve got to have a foreign policy and yet you get a slamming if it comes up at what looks like a cynical moment.

 

TN: I just want to clarify something that your guest said. The U.S. Treasury Department made a specific statement about agriculture, food, medicine and medical devices and said that they specifically don’t apply to those commodities. This applies to 11 Iranian banks. The U.S. is working on peace agreements across the region. They’re working on withdrawing troops from Afghanistan by the end of the year. Saying that this is whipping up disagreement in the region, I actually don’t think is the case. The U.S. is proving with the actions that it’s really going to great lengths to bring peace to the region.

 

FN: So you would say presumably that when we heard Barbara say that Mike Pompei just kind of looking busy for busy’s sake, you’d say the State Department, Foggy Bottom is much more active, proactive.

 

TN: Well, if Mike Pompei wants to just look busy, there’s plenty of other stuff we can do. It’s not as if Iran is just something on the edge waiting to happen. There’s a lot going on with the US State Department, quite frankly, a lot more than has gone on for years.

 

As you know, I lived in Asia for 15 years. I lived in Europe for a spell before that. I’ve seen the U.S. State Department in action in these cities. Although the U.S. State Department has become quite assertive over the last two or three years, at least they’re doing something productive. There wasn’t much going on previously aside from upholding status quo, kind of rigid lines.

 

FN: OK, Tony, thanks. Great to have you with us. Now, I’m hoping are we going to bring you a first time appearance on Business Matters on the part of the financial professional? Jessica Khine’s with us from Nusajaya in southern Malaysia. Jessica, you’re hearing us okay? I know we’ve had a little bit of difficulty establishing connection. Good morning.

 

JK: Good morning, gentlemen. Glitches are over and delighted to join you.

 

FN: Well, that’s fantastic. Tell us a bit about Nusajaya. I had to admit I had to look it up, but it looks to me about perfect for commuting over the strait to Singapore.

 

JK: Yes. That is provided that the pandemic does not frighten the two governments, Singapore and Malaysia. And once upon a time, I was able to pop into my car, drive down with a special cash card to pay the Singapore Transport Authority as I crossed the causeway, you know, quickly flashed my passport at both customs and Immigration and pop into a meeting in the central business district in Singapore. But sadly, that has now been prevented and forbidden since March the 18th. And if you think that today where, you know, October the 9th in Asia, it has been an absolute business killer.

 

FN: In what sense? A business killer?

 

JK: No physical driving over a causeway for a meeting with a client, an institution, you know, a lunch with a friend. It’s quite frustrating to be a mere 10 kilometers north of Singapore. Tony, you have your Asian experience. I don’t know if you ever knew that the tip of southern Malaysia was so close to Singapore.

 

TN: Of course, I was actually in Nusajaya for one of the launch events years and years ago, and the intention was that it would be kind of a suburb to Singapore.

 

JK: Something like that, I think. Was it was it Mark Mobius who identified the state called Leisure Farmers as somewhere where, you know, the sultan had provided affordable land and wanted to have a lot of Singaporeans have a decent second weekend home?

 

TN: I’ve had a lot of friends who lived in that area and in those developments, and the plan was that they would commute into Singapore. Of course, that’s been very difficult in 2020.

 

FN: Jessica, what’s the state in Malaysia? Across Malaysia, if you look north to Kuala Lumpur, what is the state of the domestic fight against coronavirus? Because I’ve seen a spike in the last week or so, I think.

 

JK: Yes, indeed. They badly calculated the outcome after holding some elections in the state of Sabah, which you might know is to the east of the of peninsular Malaysia. And I think where you have a lot of people congregating together, insufficient ventilation. I actually even found out that a particular NGO had lured Sabah citizens to fly back by subsidizing their flight tickets, saying, come on, come back and vote for us, etc.. So that was slightly poorly planned. Numbers of new cases which had been, you know, a very proud single digit for a thirty four point six million population nation, suddenly got catapulted right up into 600, 400, 300. And it’s quite a sort of a, you know, quote unquote horror movie situation at the moment.

 

FN: Go on, finish that. And then just tell us quickly whether there’s been an impact within Malaysia on business and the way people travel around to do business.

 

JK: I think the complete lockdown in the first quarter was grim. And now interstate travel is not banned. But is business choked? Absolutely. And I think, you know, it’s such a global pattern that, you know, I couldn’t beg to differ in any way. But I think we we are already aware that many governments have not been able to implement, you know, the best policy. And the continuing discussion does seem to be, do we sacrifice growth or do we pander to the the virus?

 

And and it’s, you know, unique, unique nature.

 

FN: And a quick word. Bring us up to date. And in Texas, Tony, how do things stand since we last spoke?

 

TN: I think they stand pretty well. The governor here just started to lift even more restrictions here. We’re in the top five states in terms of the the lowest R0 contagion rate in the U.S. It’s very low here. We may hear case numbers, but the hospitalization and casualty numbers are very, very low here. So things here seem to be getting much, much better and have done so over the past six to eight weeks very much. And so it’s getting better. I just hope things move on.

 

FN: Tony Nash on Texas of course, you know, massively organized around the petroleum industries. What is the tolerance or or interest in Green Party as such a green new deal as such in Texas?

 

TN: I’m in Houston. It’s not very high at all. Obviously, that endangers a lot of jobs here. What’s happening in Canada is slightly different with the Tarzans and the cost of getting crude out of the ground there versus shale in west Texas, which is cheap on a relative basis. We produce much less expensive from a cost perspective, hydrocarbons in Texas. In parts of Canada, you have to have crude trading at relatively high levels for it to be economical. I can understand why it would be more interesting there. Here in Texas, we get out of the ground a lot cheaper. So it makes kind of less sense here.

 

FN: We’ve got to go to a break in a moment, Tony, but what’s been the impact. Has the coronavirus shut down earlier in the year? What happened with with fracking and so on in Texas?

 

TN: Coronavirus is one blow, but what we had about three or four weeks before coronavirus was, if you remember, the Saudis and the Russians did an OPEC deal where they really crushed the price of crude. The crude markets were oversaturated on the supply side and the price was down already. And then we had a second blow with a coronavirus. The oil and gas sector is really damaged this year, not only because of COVID, but also because of what the Russians and the Saudis did to prepare crude markets for this, meaning oversupply in a market where demand just evaporated.

 

FN: Tony, how on earth do you pick between two talented, experienced, clever people of this in a competition of this kind?

 

TN: Yeah, they’re both great. I think we have a trade expert against a reformer expert. And I think the question really is, what does the WTO need right now? Do they need trade expertise or do they need reform? Given that Azevêdo regime at Servicio has been pretty lackluster and so well, I would love to see an Asian head at the WTO. At this point, a reform is much more important because issues like nontariff barriers continue to allow countries to circumvent trade rules. And until there is reform to actually track and name the names of that stuff, we’re going to continue to see massive problems in trade.

 

FN: Will come to Jessica in a moment on that desire for an Asian head of the organization. But, Tony, just amplify that point about reform, because both candidates use that word. Everybody says the WTO is seriously wanting. But what are the most egregious problems and who’s standing in the way of this reform?

 

TN: I think it’s an institutional problem more than an individual problem. What is it? I think it’s the ability for countries to try to circumvent the rules. The WTO hasn’t necessarily kept up with technology and kept up with trade policies and the value buildup of goods. And this is why, like in the U.S., I moved to the U.S. three years ago. I spent most of my life in Asia.

 

This is why the U.S. has done things like the USMCA to really prepare for re-regionalization of trade patterns. What we saw from 1990, 2000 until 2015 was the clustering of trade power in Northeast Asia. And that has led to a lot of concentration of risk and supply chains. What we’re seeing, especially in the wake of coronavirus, is a desire for companies and countries to de-risk their supply chains by re-regionalizing, their supply chain.

 

So in the late 80s, early 90s, we saw regionalization of supply chains with the E.U., with NAFTA and with other regional agreements. It’s only when China came into the WTO that you saw this real dash for a hard centralized concentration in Northeast Asia.

 

FN: Very interesting, Jessica. I’m not sure what whether you want to add to that. But just let’s start at least with this point about maybe it’s a myth, Asian solidarity for an Asian candidate. Would you assume that across Southeast Asia, for example, there would be enthusiasm for the candidate presented by Seoul?

 

JK: I think the important point is that just to honor someone we have recently lost Ruth Bader Ginsburg. Women belong in places where decisions are being made. So I, for one, am absolutely over the moon about the two candidates. It is true that there is some tension from China and Japan regarding a union, his candidacy. But I think that it’s time to grow up. I fully concur with Tony that, you know, in. The whole organization called WTO, I think reform is crucial, the ability to track name and shame, you know, perpetrators who are consistently breaking rules and laws and policies is absolutely important.

 

But the other the counter weight to that is that I think we’ve also got to fight this big move, which has been reinforced post pandemic of kind of globalization. Tony used the word re regionalization. But I think the supply chain issues, I think there’s whoever comes in is going to have, in a way, a sort of a poisoned chalice. There’s got to be a lot of work that’s done to clean the house. I’m delighted that its two strong candidates, but I might agree with Tony that the reformer might possibly win over the candidate with a strong color and background in trade.

 

TN: And Tony, it’s worth noting that, you know, we should probably just stop. You know, it is no longer a remarkable thing for a woman to head such an organization. We have Christine Lagarde at the ECB. We have Kristalina Georgieva, the IMF chief economist, the IMF, Gitter Gopinath, and so on. We had the former head of the Fed, of course, was a woman. So is this now normalised?

 

TN: I think it’s great that we’re in this position. But I don’t think anybody is as shocked that there are two women battling to enter the WTO. I don’t think this is the 1980s. It’s in 2020. I think it’s definitely normalize.

 

FN: These guys do Martin and their colleagues. These are the dreamers who who just turn everything over, reinvent things and and who’s who’s to who’s to quibble about that centuries old tradition, whatever these guys are doing something radical and new.

 

TN: It’s a tough hill to climb because the whiskey drinkers that I know like the tradition and they like the process. Your comment about the chemistry set was pretty apt, actually, because it’s for anybody who has a taste for any certain kind of food, it doesn’t matter what can be done super quickly. The enjoyment is in the process. It’s in the refinement and it’s in the care that it takes for that stuff to come to market.

 

FN: That’s what they say about Business Matters. Thank you very much, guys. Great pleasure. Good to have you with us, Tony, as always.

 

Categories
QuickHit Visual (Videos)

QuickHit: Permanent demand destruction in fuels markets

Patrick De Haan, Head of Petroleum Analysis at GasBuddy, joins us for this week’s QuickHit episode where he discusses the loss of demand in gasoline (petrol) and fuels markets in the wake of Covid-19. How much gasoline demand has been lost and when will it recover? How far have prices fallen – and how long will they remain low? Patrick explains the dark clouds that have formed around petroleum and when we’ll get back to a “sense of normal.”

 

GasBuddy helps motorists save at the pump by showing low gas prices across North America and down under in Australia. Patrick has been with GasBuddy for over a decade basically helping millions of users understand what goes into what they’re paying at the pump and to understand how complex issues can influence their annual fuel bill.

Follow Tony on Twitter: https://twitter.com/TonyNashNerd

Follow Patrick on Twitter: https://twitter.com/GasBuddyGuy

Check out the CI Futures platform to forecast currencies, commodities, and equity indices: https://www.completeintel.com/ci-futures/

 

***This QuickHit episode was recorded on September 16, 2020.

Last week’s QuickHit was with TankerTrackers.com co-founder Samir Madani explaining half a billion barrels of oil going to China right now.

 

The views and opinions expressed in this QuickHit episode are those of the guests and do not necessarily reflect the official policy or position of Complete Intelligence. Any content provided by our guests are of their opinion and are not intended to malign any political party, religion, ethnic group, club, organization, company, individual or anyone or anything.

 

Show Notes:

 

TN: I was following you particularly in the last couple of weeks going into the U.S. Labor Day weekend in early September and then coming out of it. It seemed to me that consumption going into Labor Day seems pretty strong but coming out of it seemed like things really fell off even on an annualized basis. Can you talk us through what is that telling you if anything meaningful and is that telling you anything about the recovery from COVID, the consumption recovery?

 

 

PD: We’re just entering this post-summer time of year. That we really get a good idea of where we’re going and obviously, COVID19 has really influenced every angle of what’s normal for this time of year.

 

 

What’s normal is that demand for gasoline typically drops off notably. Kids are back in school. Vacations are done. Americans are staying closer to home. But this year, a lot of what we’re seeing in the media, the current events headlines are playing into how Americans are feeling and that plays into where they go. How often they do and so all of this is really factored in and probably one of the top economic indicators of what to expect.

 

 

And so far in the week after Labor Day, we did see a nice run up to Labor Day. I think it was probably one of the best summer holidays, which gave us some glimmer of optimism. But now, we’re coming down from the sugar crash and we are starting to see demand fall off. Where we go from here? I think, we’re at a turning point. Will we see demand continue to kind of plunge or will we start to see a little bit more optimism? I think obviously a vaccine would be the holy grail. But for now, really we’re kind of looking at seasonal trends that may be enhanced by a lot of the restrictions motorists are contending with state by state.

 

 

TN: Next to my office is a commuter lot, and that commuter lot has been closed. We’re outside of Houston. So, people get on a bus to go into downtown Houston for work. That’s been closed since February. Yesterday, I noticed they’re mowing the lawn. They’re getting it ready to reopen. How much of an impact are those commuters, who are driving, who would normally use bus into a downtown? Is that having an impact on the consumption and on the demand or is it pretty marginal at this point?

 

 

PD: At this point, we’ve seen a lot of demand come back. We were at one point down 55% in March or April and basically everyone stayed home. Now we have rebounded. We’re still down about 15 to 20% compared to last year. But it’s that last 15% percent that’s probably going to take more than a year, maybe, two years to fully come back as businesses slowly reopen. That’s a really good benchmark of how quickly that last 15 percent in demand is going to take and I think at this case, it’s going to take quite a long time for people to be comfortable getting on mass transit.

 

 

I have the same thing here in Chicago. I was recently down in Northwest Indiana. There’s a lot of commuters that come up from Indiana during the day. And again a massive parking lot satellite imagery shows that parking lot filled for the last 10 years consistently, suddenly it’s empty. Some of the big businesses, they’re not really talking about getting a lot of people back into the offices by the end of the year. All the focus really is going to be on early next year or if there’s a major disruption like a vaccine that would cause businesses to move their timelines up. But for now, when it comes to gasoline, distillates even jet fuel, it looks rather bleak.

 

 

TN: Yeah, I think so and I think we’re getting to that point of the year. Even if there was a vaccine tomorrow, I don’t know if people would necessarily call everyone back before the end of the year. It just seems like we’re getting into a really awkward time where it’s hard to tell people to come back. Is that the sense you get as well? I mean JP Morgan aside, right? You know, they’ve called everyone back on September 21st but do you see, are you seeing much activity around other people heading back into the office?

 

 

PD: Not a whole lot. It’s really interesting actually. I was talking to my wife this morning, who does investment bacon and she said that some of the JP Morgan traders had been called back earlier only to be now sent back home because of a coronavirus in the office. That’s kind of the risk that businesses are taking here. That’s why it’s going to take a while for us to get that confidence back to go in offices.

 

 

Now even more so than ever, businesses are becoming accustomed to this new era and telecommuting is likely to really surge. That could mean a permanent demand destruction of at least 5% maybe even more than that. Maybe we don’t get 10% of demand back and it takes years for us to start building up our confidence to get back on planes, to get back on trains and that’s where the dark clouds are forming for petroleum is that the longer we remain in this era, the longer it’s going to take us to get that confidence back to go back to some sort of sense of normal.

 

 

TN: Since you focus on gas prices, petrol prices. What does that do if we don’t recover that 10% in commuter consumption or driver consumption? Putting even the jet fuel stuff aside. What does that do for overall gasoline pricing in the U.S.? Are we at a kind of a step lower than we’ve normally been or do we still see say intermittent seasonal volatility where we go up to normal prices? What does that look like for the average consumer?

 

 

PD: I think it was back in 2015 at some point when OPEC opened the Spigot up and oil prices were low. We all had this phrase “it was lower for longer.” That’s a phrase that may be in a different use here but that’s what we may be looking at for both gasoline and distillate prices lower for longer because of this very slow return of demand. And so I foresee that gasoline prices will struggle for quite some time. Maybe, a period of years to get kind of back into where they normally would go and it’s because of this demand destruction that could stick around. I think most of this winter motorists will be looking at prices under $2 a gallon. Of course barring the traditional high-taxed, high-priced states like California and Hawaii where the sun is shining and unfortunately right now they have a lot of forest fires but for everyone else it’s going to be a sub $2 gallon winter. Next summer is probably going to be another good one. But the future next summer does get a little murky if we do get some demand back. Keep in mind that we’re making a lot of permanent decisions today on the era wherein that is oil production has been shut down, drilling is offline, even some refineries in Europe are shutting down. And if we do get some sort of bounce, that could lead these shutdowns today, could lead to higher prices whenever we do turn that corner.

 

 

TN: Just for context when you say sub $2 a gallon? How much is that off of normal prices? What are normal prices? Is it 2.53 dollars?

 

 

PD: It typically is in the last few years we’ve held remarkably stable somewhere in the mid to upper two dollar gallon range nationally. So, very, very rarely with the exception of I believe early 2016 and early 2015 have we seen the national average spend a considerable amount of time under two dollars.

 

 

TN: So you’re saying 30% off of what had been traditionally normal prices? Is that fair to say for the next maybe 12 months or something?

 

 

PD: Yeah, I think six to 12 months and potentially beyond that and the amazing thing about those prices is before this, that would entice motors to hit the road. Now, it’s not really doing a whole lot.

 

 

TN: If gasoline prices are 30% off of normal but commuting is down these sorts of things. Is there an upside? What are you telling your clients about this?

 

 

PD: The upside here potentially and my clients at GasBuddy members so we’re looking at this a little bit differently. Is that low prices probably here to stick around? I think given the situation, low prices will actually keep America using more petroleum than the early era 2014, 2013 when motorists were really looking at Prius’s, EVs. I think that’s going to really slow down given the environment of low prices kind of incentivizing motorists not to ditch their fossil fuel cars at this point.

Categories
Podcasts

BBC Business Matters Podcast: What Tesla needs to do to justify valuation

Our CEO and founder Tony Nash joins Jimmy Robertson at the BBC for Business Matters podcast where they discussed about the importance of Tesla in the stock market and in the auto industry. What is the additional factor that really helps Tesla justify its valuation? Also discussed are the protests in Ukraine dominated by women, community theaters in COVID era, and how the future of work from home looks like.

 

This podcast was published on September 2, 2020 and the original source can be found at https://www.bbc.co.uk/sounds/play/w172x18xp28m1xj

 

BBC Business Matters Description:

 

The chief and other police leaders step down following accusations of cover-up in the Daniel Prude case, a black man who was hooded and restrained during an arrest. Michael Wilson is a reporter at the New York Times who’s been covering the story.

 

Also in the programme electric car company Tesla’s shares tumble almost 20 percent after it failed to be included in the S&P 500 index. Richard Waters, the Financial Times West Coast Editor in San Francisco explains. And English composer and theatre impresario Andrew Lloyd Webber warns the future of theatre is on a knife edge.

 

Show Notes

 

JR: Tony, is this getting any coverage at all in the U.S.?

 

TN: Very little, actually. There’s a great story of three leading women in Ukraine with the Tikhanovskaya election, I think what’s happening with Kolesnikova is pretty amazing and the fact that she’s staying becauseTikhanovskaya actually left the country, of course. So there is such passion here about Belarus that is pretty incredible. And one has to wonder, can they be determined enough to see this through? I think they can. And would it have other effects on other countries in the region? I think it’s possible actually. If they can have a peaceful protest, which is amazing to bring this change about, I think it’s possible that this could happen to other countries in the region.

 

JR: The situation does seem to be very much on a knife edge. I mean, everyone is very worried about what how Russia is going to react and also, of course, how the West is going to react as well. But it was just a small comment which was made about the fact that women have been very prominent in this particular line of protest, basically as opposition leaders, but also actually out on the streets. Now, just trying to think whether I’ve known of any other protests where you’ve had women dominating the protests. I think you perhaps probably in Argentina where you seen you remember the mothers who protested about the disappeared children. But I can’t think of many other places. I’m not quite sure why women dominate this particular protest.

 

TN: Was it in Georgia? I think like 20 years ago, what was her name? But I know that former Soviet republics have had women protest leaders and female prime ministers. And so I do think that that it’s not I’ll try to dig up her name, but it’s not unprecedented. But I think the determination is because it is a woman who was elected and then the protest leaders are also women. I think it’s very amazing.

 

JR: Well, Tesla’s importance, but to two things. One, its importance to the stock market, to the Nasdaq and how it is a kind of bellwether within the actual tech stocks and the other is its importance within the auto industry. Let’s just talk about, of course, two things are connected, but let’s just talk about its importance in on the stock market. I mean, it really is one of the reasons why the stock market has fallen. But Nasdaq I mean, I don’t know if people have been following this, but Nasdaq has fallen in the last three trading days, has fallen 10 percent. I mean, we’re talking about a proper correction here. A lot of that was Tesla, wasn’t it?

 

TN: It was and just today, Tesla fell 21 percent in value. So if we looked at Tesla last week, the valuation was around 1,100 times earnings. Today, the value is 855 times earnings. So it’s still incredibly highly valued. You know, valuations range between, say, 15 and 25 times earnings, maybe more 30, 35. But Tesla is trading at, 100, more than 100, almost 200 times earnings of a car company. And so it is incredibly highly valued. Whether it’s overvalued or not, that depends on what the market says. But just to put it in perspective, Tesla makes about 400,000 vehicles a year. Volkswagen makes almost 11 million. Yet Tesla is valued much more highly than Volkswagen is.

 

JR: But we are talking about potential. And I mean always when you’re buying a stock, you’re not looking really at what it has done. You’re looking at what it’s going to do. And that is why people have been buying it.

 

TN: Is it overvalued?

 

JR: I know you. The answer is I don’t know. But I mean, it’s over. But it’s…

 

TN: It’s really interesting that the founder of Great Wall Motors in China, I think that’s who it was, once said that a car is nothing more than four wheels and two sofas. And, you know, he really helped build the Chinese auto industry on the back of that philosophy. So, Tesla is four wheels in two sofas with some really interesting interfaces and monitors. And, of course, it has an electric engine, these sorts of things. But the real question is, are they selling units or are they selling technologies?

 

Because if you’re selling, let’s say, a piece of software, Apple sells the iPhone, but they also sell a lot of software around that. OK, is Tesla pushing the number of units to be able to sell the amount of software it needs to sell to justify the valuation it has? So if you take that comparison to, say, Tesla is equivalent to, say, an Apple, they just don’t have the number of units in the market to push the software they would need in my mind to justify the valuation. That’s nothing against Tesla. I just think they need more units in the market to be able to push that software technology story.

 

JR: You’re talking about the software technology that surrounds the car you mean, that sort of self-driving stuff or whatever. It’s going to be electronics, not all that.

 

TN: That’s right. Because you would pay subscription fees and other things on that software and the upgrades and the safety and other things. Right. Because without that, it’s just four wheels and two sofas. Right. It’s a pretty cool four wheels and two sofas. But for the most part, it’s four wheels that gets you around from place to place. So what is that additional factor that really helps Tesla justify its valuation?

 

They’ve got a very outspoken CEO. They do a lot of cool stuff. It’s electric, but a lot of companies have electric car technology now. So they’re not unique.

 

JR: So what you’re saying also, I mean, the question which I asked Richard right at the end was about whether it’s going to be tech companies are going to be buying cars from the future or whether it’s going to be the likes of Volkswagen and whether Volkswagen and GM and the rest of them can actually turn themselves around and become tech companies. I suppose that really is the question.

 

TN: Well, I guess the question is, is that tech modular enough for them to buy and integrate into their manufacturing scale? And so, you know, can they buy the electronic displays? Can they buy and build the electric engine technology? Can they have their own, say, autopilot or self-driving software?

 

I think it’s possible for all of them to do it, especially when you look at a Volkswagen or something like that. So, Tesla always has to be on the edge. And I don’t have a position in Tesla. I don’t have anything for or against Tesla. I just think that as a technology company, they need to make sure that they’re so far ahead of every other auto company. And if they aren’t, then people are going to start questioning their valuation.

 

JR: Are they that far ahead? We don’t know yet. You know,

 

TN: I think they probably are far ahead in some areas. But for the most part, most drivers really are not that discerning around the technology. Most people don’t have the newest iPhone. They have an iPhone. Most people don’t have the newest, you know, fill in the blank. They have something that works. And so, you know, the real question is, can Tesla… Well, they’ve already cashed in, as your story said, they pulled five billion dollars out of the market last week. Right. So they’re cashing in on this and good for them. That’s a good management decision for them to look at a share price that’s really highly valued and pull some money out. That’s a great management decision. And so the real question is, can they continue to keep their valuation up?

 

I guess a precursor question is to that is what is keeping their valuation up? And then they have to look at do they have that much of a technology lead that people care about to be able to justify that, let’s say, high valuation? And I think those are really, really important questions. No doubt they have cool technology, but cool technology is not necessarily the most useful technology, especially if it’s not resulting in unit sales. Again, Tesla sells 400,000 units. Volkswagen sells 11 million units, yet Tesla is valued much higher.

 

JB: In Texas. I gather you have you managed to buy into it? You have been to the theater?

 

TN: Yes, I’ve been to the theater twice, two times over the past month.

 

JB: Fantastic. What?…

 

TN: My son is an actor and he acts in community theater and it was great to be in the theater. But there were social distancing and all sorts of considerations wearing masks, these sorts of things. People sat in family groups. There had to be distance between family groups, that sort of thing. So the financial issues that were discussed at length, you know, it’s the same thing with community theater here. I think they could only sell, say, 30 percent of the tickets that they would normally sell. So, you know, it’s a great performance on a really creative budget. And so but it is amazing to get out, be with people, see people, be at the theater. It’s fantastic.

 

JR: Can they can they survive as a community? I mean, are they able to make enough money to keep going?

 

TN: They can. In some cases, people bought tickets and chose not to attend so that they could help the theater out while still having distance, so that’s one way to do it. The theater had some additional things you could buy, that sort of thing, but I think they could do it. I think they could do it, but the productions would probably have to be a bit smaller. And so, you know, anyway, I think they could continue to do it, but obviously wouldn’t be preferable.

 

JR: Sort of One-Man shows and things like that. Perhaps that one person shows.

 

TN: Know this was actually a pretty big cast, but it’s not paid. This is community. So, you know, it’s not paid. So they can you know, they have different budget constraints than than, say, a professional theater.

 

JR: Are they getting any government, central, regional, state health or anything like that?

 

TN: Theater group is not. This was all done through personal kind of buying of things and donations and other things.

 

JR: I find this really interesting about if we’re all going to change the way we work, we’re going to be working at home. We’re not going to be working so much in big cities. How is the money going to be spent now? It’s not going to be spent on sandwiches and on trains and all cars, even perhaps. How do you think we’re going to spend that money?

 

TN: Amazon. I mean, I don’t know, it’s like food delivery in Amazon. I just I mean, you know, if if people are at home and they’re eating from home, it’s great to have that, you know, homemade sandwich or whatever, you know, on a regular basis. But they’re going to order out or go out locally or something like that. So it’s great to save more money, but I think that’s relatively short term. I think over time, you know, people spend what they make. That’s just what happens. You spend what comes in. I mean, you set some aside from savings, but once you hit that threshold, you spend what you make so people will find ways to spend it. I think they’ll be home delivery. I think there’ll be other things where people just eat better stuff for lunch at home.

 

JR: I think the other thing is and I think this is probably most worrying side of it, is the people who continue to work will actually do very well and actually be saving money and spending money, making a lot of money. And the people who don’t are going to be very badly off and we’re going to have quite a wealth divide as a result.

 

TN: No, it’s terrible. And I think the, you know, the sandwich shops and other things. So my company, we haven’t closed our office through COVID. We live in a county where it wasn’t mandated. And so we’ve tried to patronize the shops around us. But it’s been hard. Many of them have been closed. And but we’ve been trying to go to them, not really to splash out, but just to support people. But in some cases, you know, they were just doing the best they could to serve us.

 

JR: OK, Tony Nash in Houston, Texas, thank you very much indeed for joining me here on Business Matters has been a pleasure to have you here. And we’ll be back again tomorrow with business matters to join us in.

Categories
QuickHit Visual (Videos)

QuickHit: There are a quarter billion barrels of oil headed to China right now

Co-Founder of TankerTrackers.com Samir Madani joins us for this week’s QuickHit episode where he talked about where the oil is coming and going, explained the volatility around oil and VLCCs, and if China has the capacity to store the quarter billion barrels of oil that they are buying on the cheap.

 

TankerTrackers.com is a service that Sam started with a couple of friends from four years ago. They track tankers that carry crude oil and gas condensates, to give the moms and pops of this world a heads up on what’s happening in the oil flow situation. The company aims to deviate from the black-and-white narrative in mass media to show the world the grey area that oil is not always the cause of war.

 

Follow Tony on Twitter: https://twitter.com/TonyNashNerd

Follow Sam on Twitter: https://twitter.com/Samir_Madani

Check out the CI Futures platform to forecast currencies, commodities, and equity indices: https://www.completeintel.com/ci-futures/

 

***This QuickHit episode was recorded on September 2, 2020.

Last week’s QuickHit was with political economic consultant Albert Marko where he explained about this “perceived recovery” and the artificial market.

 

The views and opinions expressed in this QuickHit episode are those of the guests and do not necessarily reflect the official policy or position of Complete Intelligence. Any content provided by our guests are of their opinion and are not intended to malign any political party, religion, ethnic group, club, organization, company, individual or anyone or anything.

 

Show Notes

 

TN: Crude oil and trade have a lot to do with economic health globally. We’ve just gone through COVID. We’ve gone through a lot of government-mandated closures and there’s been quite a lot of discussion about the rate at which economies are coming back. You see this every day, right? You see the crude trade, you see international trade. How do things look from your perspective?

 

SM: What we’ve noticed is that since January to now, exports have (except the USA) fell from 19 million barrels a day in exports to around 14 million barrels a day. 4.5 million barrels a day in drop between January and now. That’s a lot. That’s 120 million barrels a month, which is not shipped out now.

 

We see immense amount of barrels heading over to China because they are buying on the cheap. We saw around a quarter billion barrels of oil headed towards China right now. And of that quarter billion, half of it is already in their Anchorage area. They have over 100 million barrels that are just floating and waiting to get on to shore.

 

The reason for this is because of the flooding in China, which slows down consumption of gasoline. But it picks up consumption of diesel for the heavy machines that are going to move on the land and so on.

 

Refinery runs worldwide right now are much lower than the year on year because of the fact that gasoline consumption is down.

 

What I’m waiting for in the EIA report is not how much inventory has been removed or added, but the refinery runs. How much gasoline is being created out of the food processing? So I’m waiting for a moving average because you shouldn’t rely on the weekly numbers. You should look for the moving average. Wait for that number to cross 15 million barrels per day. That’s my threshold to say that the U.S. economy and the whole thing is coming back roaring again. So because there’s only a small window between 15 and 18 and around 17.5, 18 when it was actually at peak. So I’m very positive that we’ll come across 15 probably in the new year for sure.

 

TN: In the new year. So Q1, you think things are coming back?

 

SM: Definitely. Definitely.

 

TN: Brent is in the mid 40s now. We see both Brent and WTI climbing slowly through the end of the year. Our view is that pricing will tick up in Q1 and then we see it trailing off a little bit later in the year. But we really do see a build through Q1. So it’s good. Thank you for confirming what we’re seeing.

 

You’re saying China’s got a quarter billion barrels in Anchorage and in transit, right? What’s their storage capacity? Is their storage capacity in excess of that, or will this stuff stay in floating storage?

 

SM: We did an actual manual survey. We went to storage farm of the storage farm with satellite imagery. And as compared to 2 years ago, you will actually see on Google Earth around 250 to 300 million barrels more than what it had. We have day-fresh images from Planet Labs and we were able to go in and see that year on year, China has the ability to add around a quarter billion barrels of free space. This is a drag and drop method with the standard size storage tanks of 100,000 cubic meters, which is 620,000 barrels. They just drop farms and you see just a whole new farm will pop up.

 

Since the consumption is down, there’s no pressure for them to do more. But we saw around 1.4 billion barrels of space and 1.1 billion barrels of occupancy. That was two years ago.

 

TN: Two years ago. It just seems like there’s so much supply and burning off that supply is still a challenge. We spoke with somebody from the Panama Canal about a month ago when she was talking about how LNG was redirected from the US to China to Europe or something. Are you still seeing redirection of shipments? Or are we back to almost normal trade patterns?

 

SM: In crude oil, we actually see a dog-eat-dog situation going on right now. For instance, Venezuela’s exports are down. It’s a toilet flush. It went down to a quarter million barrels a day now in our latest report. We’re using visual confirmation and I’ve never seen the number that low out of Venezuela. But here we are, we’re under 300 thousand for sure. For the average this year, it was around over half a million barrels a day.

 

But now lately, what happened is it just completely plummeted. A lot of the exports are going just to other countries so that they can bring in gasoline in exchange. It’s a barter.

 

What happens is, because they are shipping heavy sour crude oil, somebody else is going to eat their lunch. China wants to import that. India wants to import that. A lot of other countries in the Far East, they have heavy sour because they need the asphalt, they need the diesel. Why? Because they’re expanding their infrastructure.

 

What happened is that Iran started sending off a lot of the heavy sour lately. I noticed a lot of barrels heading out over that way. They’re getting assistance from other fleets from outside the country. The Chinese refiners and so on, they are dispatching vessels to pick up the oil. It’s not just the national running tanker company that’s delivering the oil.

 

TN: I’m really interested in that Iran-China trade lane. And you covered that a lot. With the circumvention of different agreements and embargoes, I see a lot of coverage of that. Do you see a growing dependence on Iranian oil out of China or does that seem to be declining? Do you see a diversity of suppliers? Of course, China has never had a single supplier. But do you see a growing number of suppliers and a growing dependence, say on Iranian crude? Or is it the other way around? Is Iran becoming increasingly dependent on China as an export market?

 

SM: Iran is growing more dependent on China because they’ve had four decades to prepare the whole Plan B for sanctions and so on. So they’ve really polished it up. They’ve smoothened out all the rough edges when it comes to sanctions so they know what they’re doing. But now, when I see how many barrels are leaving the country, and they look at the ratios of where it’s being sent, yes, they do send a lot to Syria, but it’s no more than usually around 100,000 barrels a day.

 

Once in March, a saw over a quarter million barrels a day. That’s because they have so much production going on in Iran and so little storage space. They have to get rid of it. And they are shipping a lot. So the current media narrative is that they’re exporting about somewhere between 70,000 and 200,000 barrels a day. That’s because those factories are only using AIS data, which is automatically picked up by systems. But what we do is the visual confirmation with satellite imagery, and we see around three to five times that. Somewhere between 600 and a million. And 600,000 barrels a day, that’s a lot. That’s 30 million barrels a month.

 

And so they have to get rid of these barrels because if they don’t, their production will have to drop even more to a point where they can’t revive those mature oil wells. It’s very costly to kick them back into action once sanctions do get listed.

 

And with the virus, what they do is they consume a lot domestically. They make it very cheap. And, because they’ve got to get rid of it, they store as much as they can. If they ran out of storage space on land, they put it on the vessel and they put on many vessels.

 

But now I’ve seen that the floating storage has dropped and shipped out a lot. China is the big buyer and there’s so many ways to deliver it to China. You can either go straight or you can meet another vessel halfway in the Strait of Malacca and so it’s a ship to ship transfer.

 

So, yes, Iran is more dependent on China than vice versa. And China does report their barrels is coming in from whoever the last port call was. So it’ll be Malaysia, it’ll be Indonesia, or someplace in between. It’s not coming in as Iranian anymore. Although in the latest monthly report, they had to show something, because this was obviously direct.

 

TN: You mentioned floating storage and VLCC market and it’s gone from a quarter million dollars a day back in April to like 6,000 dollars a day now. What happened there and why is that price just collapsed?

 

SM: It just deflated so rapidly. That thing was so much more volatile than Bitcoin back in 2017, 2016. The first thing you heard was the sanctions scare, the volume type of fleets back when, it’s almost a year ago or so. And so the Dalian Tanker Fleet was a large fleet or VLCC supertankers. 2 million dollars a piece and about 40 of them. So that created a scare hype in the market that there’ll be a shortage of vessels which were allowed to go to certain ports or most ports.

 

What happened was that the US, they used that as a means to improve the negotiation when it comes to the Phase 1 Trade Deal. And so they loosened up on those waivers, and eventually that was the main issue.

 

Then came the floating storage situation as a result of COVID and then that spike the price again. After that, it has come down quite a lot. So that’s moving a lot of oil back in Q2. And then it just quickly plummeted because Saudi just went from over 9 million barrels a day down to 6. That killed off the demand.

 

We saw occupancy of the VLCCs go from more than 50% down to early 40s. And these are 802 operating VLCCs worldwide, 600 something Suezmas and 1,053 Aframax. It’s a lot of barrel space out there available still today. So obviously, the prices have dropped.

Categories
QuickHit Visual (Videos)

QuickHit: Market unknowns and apprehensions

A returning guest joins us for another QuickHit talking about how the current market unknowns are affecting the economy, and what are these “unknowns” anyway? Independent trader Tracy Shuchart discusses with Tony Nash about the “buy-everything” market and why is it happening despite the worries and crashes of economies because of COVID. We’ve also looked at the crude oil market and whether it will recover or not and how? She also shares what she thinks about the regionalization and shifts in supply chain.

 

Tracy Shuchart is a trader portfolio manager and all-around high-profile, social media person on markets. We did the first two QuickHit episodes with her with the recent one on “Oil companies will either shut-in or cut back, layoffs not done yet“ last May.

 

 

This QuickHit episode was recorded on August 14, 2020.

 

The views and opinions expressed in this QuickHit episode are those of the guests and do not necessarily reflect the official policy or position of Complete Intelligence. Any content provided by our guests are of their opinion and are not intended to malign any political party, religion, ethnic group, club, organization, company, individual or anyone or anything.

 

Show Notes

TN: It feels like the markets have taken a breather this week. Is that what you’re seeing and also what are we waiting for?

 

TS: You notice all this entire summer, actually, that it’s been a buy-everything market. Bonds are up, equities are up, gold’s up, crude oil’s up, across the board, everything was up. Commodities, equities, fixed income, and then just starting in August about a week, week and a half ago, we started seeing some of that error let out of those sales.

 

Equities are still grinding higher but gold futures reached 2,089 dollars, and then came off to 200 dollars really quickly. It has stalled out over the last couple of days.

 

Crude oil in general, this summer has been stuck in a range. So, I guess you could say OPEC did their job. They wanted to stabilize the oil market. They did that.

 

Then this week we’ve seen some of the air come out of bonds. So I think, right now, it was kind of buy-everything. We had all this government stimulus, we had central bank stimulus and now we’re at the point where the government stimulus is out. The extra unemployment, PPP loans, there’s no more checks things like that. And then we have the election come up. The markets are waiting to see what’s going to happen.

 

 

TN: And RobinHood closed their api. So, we don’t know what the Robinhood traders are doing anymore.

 

 

TS: Yeah, so it just seems like there’s a lot of things that are unknown. If you look at the vix curve structure you see the kink in that November area. So, the markets are forward looking at that as an unknown. So, these next couple months might be either going to be flat until we find out or it’s going to get really volatile.

 

 

TN: Right, the one that really told me that we are in a pause is when gold turned around. When we started to see gold turning around and we’ve seen it paused where it is now, that’s really what showed me that things have changed or things have at least slowed down. And so, are we waiting for clarity around stimulus? Because I don’t think it’s earnings or anything like that that we’re looking for. It really does, as you said, kind of a stimulus-driven market. Is that really the next thing that we’re looking for?

 

TS: I think it’s a combination of things. Fed purchases have curtailed a tiny bit. We still have an unknown about what’s going to happen and congress just adjourned for recess without a decision. So, we won’t find out what a decision is really probably until September. That leaves a whole unknown, especially, when you’re talking about that extra unemployment.

 

The big thing is the election because we don’t know what the market’s going to do. If there’s a Biden win, that will only be a sector rotation in my opinion, because of what their agenda is. Everybody’s just very apprehensive right now. They are pulling back on, their involvement in the market being that there are a lot of big unknown factors out there right now.

 

TN: It’s really one of the only recessions where incomes have actually grown during the recession, which is weird. We’ve seen retail sales and industrial production in recent months come in and they’re actually okay. It seems like the breaks are put on that with stimulus stopped as well. The question really about being stagnant or rising? Or is there a possibility that we tip over and start to decline if stimulus isn’t forthcoming by the end of August or early September?

 

TS: That’s a possibility that we see a pullback in the markets absolutely. I don’t think you’re going to see anything, like we saw obviously back in February. But I could definitely see a market pull back just on people’s apprehensions of the unknown.

 

TN: As you mentioned OPEC and that crude oil has settled and it’s been horizontal for the past couple months. What would move that either way? Do you see airlines coming back online? Do you see major events happening that would really push the oil price up? Or do you think we’re just also in a waiting pattern there?

 

TS: We’re in a waiting pattern. But from what I’m seeing, the fundamentals are improving. Even though people don’t really want to see that. I look at driving patterns not only in the States but driving patterns in the world. I look at airlines and things of that nature and we are seeing a slight improvement. Everybody’s looking for a big crash in oil prices again but I don’t foresee that at this point. Unless, obviously, something fundamental changes, like the whole world goes on a lockdown again or some unforeseen event happens. But right now, the crude oil market looks pretty strong. We’re still over supply but we’re working off that oversupply. Especially going forward into 2021, when that supply really starts to be worked off, then we have a Capex problem. We’re gonna have a supply problem. I can forsee the oil prices even going higher into next year. But right now, I would say we’re stable to drift higher at to the end of the year. We are hitting that soft season. But again, I don’t see the oil market really pulling back that much at this point.

 

TN: Is the back-to-school factored into your expectation of rising oil prices or would that accelerate it?

 

TS: I believe that people will be apprehensive to send their kids on a school bus. So they’ll probably be driving them to school. That’s actually oil demand positive for me.

TN: Our view is to see oil grind higher into the end of the year. As of August 1st, that was our view as well. I’m also curious about your views on the dollar. Do you see any dramatic movements either way in the dollar or are we in the low 90s for the next few months?

 

TS: The market is so oversold at this point and everyone is so leaning bearish. I wouldn’t be surprised in he next couple of months if prices don’t go lower that people start to unwind those short trades and we could see not a huge spike in the dollar. But just a general unwind of that shortness.

 

TN: Great, okay, is there anything out there that you’re seeing that’s really interesting that we should know about? It’s late summer. People are tired. They’re not really all into work. Is there anything that you’re looking at that we’re not really paying attention to?

 

TS: The lumber market. I sent out a few tweets about that. I think that’s definitely something to watch because the housing market is doing better than anticipated. However, we don’t need things like extra ten twenty thousand dollars added on housing costs for new home builds. So, that’ll put a very big strain on the market and on home builders. So that’s definitely something to watch at this point.

TN: I noticed if you go to home depot, the lumber section is empty. That’s not where home builders go, but that’s what I see as a consumer is. It’s just empty. There look to be seriously obviously. There’s demand pulled but there really seems to be some sort of supply issue there as well.

 

TS: Yeah, there’s a supply issue. A lot of the mills have been closed like they’ve been closing for the last couple of years because the demand hasn’t really been that high, well at least in British Columbia. But with this new surge, I’m hearing that tons of mills are back up and running shifts  24/7 now. Even smaller mills that you used to do little to no business are back up and running. So, I think that looking forward October, November, we should see some more supplies.

 

 

 

TN: What we’ve seen since COVID from toilet paper to meat processing to lumber is real stress put on supply chains. And from your perspective as a portfolio manager and a trader, do times like this make you concerned about the stability of the U.S. economy or do these tests make you feel like the people participating in that economy are making their supply chains more resilient? Do you think people are actually investing to make those things more resilient or do you think they’re just getting through and they’ll forget about it within a few months?

 

TS: No, we are seeing some improvement on supply chains and moving forward. There are companies that are diversifying out of China. It’s in supply chains closer to the U.S., Mexico, Latin America. This particular incident, this COVID really made people rethink and reassess things and I think we are seeing changes. It’s not easy to move supply chains obviously, right? So, it’s just going to take some time but I definitely see in the markets where companies are changing.