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US midterms: An opportunity for voters to choose their economic future

This podcast was originally published by the BBC here: https://www.bbc.co.uk/sounds/play/w172ydq57tyy2z0

The midterms decide who controls Congress as well as state legislatures and governor’s offices. Rahul Tandon is joined by Dianne Brady, assistant managing editor of Forbes from New York and Tony Nash, the founder of Complete Intelligence in Texas.

Billions of US dollars are being spent on the election campaign adverts that voters will be seeing and hearing in the run-up to the elections – but is it worth the investment?

And has the economic situation in the US overshadowed the overturning of Roe v Wade?

Transcript

Rahul

Hello, and welcome to Business Matters here on the BBC World Service. I’m Rahul Tandonin-depth. On the program today, we’re taking an in depth look at the US midterms. As millions of Americans get ready to vote, we’re going to be looking at the economic factors that are going to have a huge impact on their decisions. I’ll be joined throughout the program, as always, by two guests on opposite sides of the world. We have Dianne Brady, assistant managing editor of Forbes, who’s in New York, was on the program just a couple of days ago, but she did so well, we decided to bring her back. Diane, is it exciting in New York? Are people gripped by election fever?

Dianne

Well, yes and no. Let’s just say New York is considered a flyover state by some, so I don’t think this would be considered a swing state. But yes, lots of excitement, of course, as we look around the country, and everything feels high stakes.

Rahul

It does indeed. The laugh you heard there was from Tony Nash, who is the founder of Complete Intelligence, who’s in Texas you need quite a lot of intelligence to understand the midterms. I think, Tony.

Tony

I’ve never heard of New York described as a fly overstate.

Dianne

All right, well, I’m a Canadian turned American citizen, so forgive me all listeners who think I’m being cavalier here, but I think it’s not inaccurate.

Rahul

But I don’t think there’s no need to ask for forgiveness so far in the program.

Dianne

The election is over.

Rahul

Yeah, maybe by the end of it you might need more than forgiveness, but who knows? Tony, for our listeners who will have heard of the midterms, can you try and explain what happens here? Because there’s lots of terms that we’re going to use. The Senate, the House, governors. I mean, what are people voting for?

Tony

Sure. So every four years we have a presidential election where you vote from the president on down to, say, local offices. Like in Texas, it’s people who run your waterboard and judges and your local commissioners. So it’s from the president on down. In between presidential elections, we have what are called the midterms.

Tony

So every two years so in the US. House of Representatives, those representatives have to campaign and be reelected every two years. Senators are reelected every six years. So not every senator is up for election in every election cycle. And then you have governors, and those governor’s terms change by state. They’re not always the same. In some cases, it’s four years. In some cases it’s five years. And I don’t know if there’s other places, but Americans are now voting on kind of everything except the president, and those, say, Senate seats and governorships that are not up for vote.

Rahul

Well, I tell you what. That was pretty impressive, actually. If you ever see a job as a sort of political correspondent, I think you might get one, Tony, I think we’re done here. Real quick.

Dianne

Tony, summer up beautifully.

Rahul

There we go. Should we all go? No. Oh, probably not, Dianne. And this is important, isn’t it? Because at the moment, the Democrats, which is the party of President Biden, they control the House and the Senate, there is a strong possibility that they may lose both, which will have huge implications for President Biden’s ability to pass legislation.

Rahul

I think Diane said there’s a lot to get through and we’re going to try and get through some of that. Let’s start by looking at the key economic issues.

Rahul

Cost of living, Tony, is something that people around the world want tackled. I’m sure that as people begin to cast their votes in a few hours time, when those polls do eventually open up on Tuesday for the midterms, that will be close to the top of the agenda. When we talk about the Democrats and the Republicans, the left and the right, what are the big economic differences between them and tackling this problem?

Tony

Well, I think there was a bill passed about a year ago, the Inflation Reduction Act. Diane, tell me if I’m wrong. I think it was $3 trillion in spending, and I think that was one that many Republicans didn’t want because there was a feeling that that was going to contribute to inflation. And so I think there was. The irony of it is just a year earlier, in the depths of COVID there was a massive stimulus package passed under the Republicans that everyone was happy about. So I think it’s easy to say, while the Democrats are the ones who spend and the Republicans are the ones who don’t, it’s not really the case. It really just depends on what they spend on. Republicans tend to spend on things like defense and security and law enforcement and these sorts of things. Democrats tend to spend on things like social programs. So I don’t know that one is necessarily more disciplined than the other. They just have different spending priorities.

Rahul

When we think of Texas, we think of gas, gas prices. We’ve seen President Biden releasing those strategic reserves of oil to try and bring down the price of gas. Is it that crucial a factor, do you think, in these elections? Will Americans just look at the cost of putting it in their vehicles and say, it’s too high, I don’t want to vote for this government?

Tony

Well, I think I saw a poll earlier today and I think it said that 65% of Americans believe that Biden is responsible for high gasoline prices. And I thought that was really surprising. I think it was from Pew. I can’t remember who it was from, but it was credible polling group. So Americans do see that and they do see that on Biden’s first day, he killed the pipeline, a potential pipeline from Canada, which would have brought heavy sour crude from Canada to fill US refinery.

Rahul

But these are global factors really, aren’t? I mean, of course, there are individual factors that will impact that.

Tony

No, they’re not global factors because the fact is, the sources of the crude that we need for American refineries is heavy sour. And there’s places like Venezuela or Saudi Arabia or other places where we could get it. But the most accessible is Canada. And so Americans do pay attention to that stuff, and they do pay attention to what is impacting gasoline prices because it’s such a huge portion of their budget. And so I think policy does lead to the cost of living, and I think it is a big factor. And I think people are looking at the way the different parties have reacted to this. And when that pipeline was canceled, republicans were very unhappy and voiced it. So I think that’s the case. And like I said, I think 60, 65% of Americans believe that Biden does have responsibility for the gasoline price in the US.

Rahul

Tony, one thing that often happens after midterm elections in the US is we begin to get an idea of who the presidential candidates are going to be. Do you think that we are likely to see in two years time a rerun of President Biden against Donald Trump, or do you think it will be other candidates for both parties?

Tony

To be honest, I think it’s too early to tell. I think even if Donald Trump starts campaigning Tuesday or Wednesday, I don’t necessarily think that it’s a done deal because people like Ronda Santos have taken a national profile.

Rahul

That’s the governor of Florida, isn’t it?

Tony

Governor of Florida. That’s right. And so I don’t think that Trump kind of as the Republican candidate is a done deal. I also don’t think that Biden as the Democrat candidate is a done deal. I think we’re very much things are very much in play, and really, anything could happen. I wouldn’t want to put money on, say, Trump or Biden right now because I think two years is a long time.

Rahul

Is it a bit harder for the Democrats? Because we know that with the Florida governor, there is, it seems, a candidate that the Republican Party can get behind if it isn’t President Biden, is there an obvious Democratic candidate at this moment in time? Tony.

Tony

I think there are a lot of people who believe they are, but I think maybe Gavin Newsom in California, but I think his politics are a little bit too far left for most of those independent votes that both Republicans and Democrats really try to get in order to get elected. So I think people like Gavin Newsom in terms of, like, political consultants do, because he looks good on television and all this other stuff, but I just don’t think he’s electable for a nationwide office.

Rahul

What we’re seeing here, Tony, and there’s a large Hispanic community, isn’t it, in Texas who play a significant role in elections there. Are we seeing these communities, whether it’s the Latino voter, whether it’s the black vote saying, don’t take my vote for granted, and that’s a message for all parties.

Tony

Sure, absolutely. If you look, say, on the border in the US. Part of my family lives in Del Rio, Texas, and they’ve never seen the quantity of people crossing the border that they’ve seen before, traditionally Democratic voters. And they’re really questioning their voting intentions because of the things that they’re seeing on the border. We’ve seen Texas border counties really start to swing right because of that. These communities that are small and safe and other things have really had an influx of people, and it’s really threatened, I guess, their way of life on the border. So some of these places that were very, very securely Democratic locations have started to move away from that.

Rahul

Tony, have you been flooded with lots of different political adverts as well across TV, across social media, across everything?

Tony

Yeah, I saw more during the World Series than I had seen in other places, but I just kind of ignore them, to be honest.

Tony

Yeah, I think it can I think a couple of dances on TikTok are probably worthwhile as well, but I think TV advertising is probably worth it.

Rahul

Are there any dancers of Tony Nash on TikTok, by any chance?

Tony

No, but I’ve seen some comments about different candidates kind of dancing on TikTok, and it was kind of silly. But it does get people talking about the candidate, and who knows if it works. I’m not 22 anymore, so it may work on me if I was 22.

Rahul

And when we’re looking at turnout here, we touched on it briefly before we heard John Sadworth saying to us that it was going to be a good turnout here. But the simple fact is, in the midterms, the majority of voters never vote, do they?

Dianne

That’s usually the case. I don’t think that will be the case this time. Tony, what do you think?

Tony

So I went to early vote last week, and I had to stand in line for quite a while to vote. So I think people are really, really engaged this time around, and I think it’s mostly because people’s pocketbooks are hurting and they’re just tired of it. So I think you’re hugely engaged because of the economy.

Rahul

That is interesting. Let us see what those numbers are. We will get them very, very shortly. Tony, if you believe the polls, and often that may not be a sensible thing to do nowadays when we talk about elections, they do seem to indicate that this is not going to be as important an issue. Clearly it’s a very difficult issue for many Americans, but it’s not going to sway voters as much as maybe people thought it was going to sway voters a few months ago.

Tony

It definitely won’t, I think. Look, all the Supreme Court said is that they’re leaving it up to the states, and so there’s no issue for mobility in the US. So people can go to another state to have an abortion if they want. So I think we had the initial emotion after the Supreme Court judgment, but I think when people really realized it’s a state issue and many of the things in the US. Constitution are really devolved to the states, and so this just takes that same issue and puts it up to the states unless the states decide. And so I think most adults, when they read it and they consider that if they really want to have an abortion, they can drive or get on a flight and go to another state, it’s really actually pretty simple.

Rahul

It’s a communicated economy, the US. Isn’t it? Because you look at it and we hear this talk of recession, we hear this talk about the incredible rises in inflation, cost of living, and at the same time, you sort of hear still about a very strong jobs market. Still.

Tony

Yes. But what we are starting to see there was an announcement yesterday, I think, that Meta, Facebook will soon be announcing major job cuts. And so job cuts are starting to hit the tech sector. Companies like Stripe laid off, I think, 18% of their workforce. Twitter had some big layoffs last week, and so tech is really starting to be hit hard with layoffs. So a lot of the discussion about job vacancies and unemployment, say, out of the Fed and the White House, that will start to even out. And the job market by the end of the year will likely be much less strong than it is right now.

Rahul

Yeah, I knew Twitter was going to make its way into the program at some particular point. Okay. Prediction diane. What is what’s going to happen?

Dianne

I think the House will go to the Republican. Senate, will hold Democrat, and Biden will have a tougher time the next two years.

Tony

Tony, Republicans get the House, they get 52 in the Senate, and they pick up a couple of governorships.

Rahul

Okay, well, thank you to both of you for your insights and thoughts on the American midterm elections. Americans will vote on Tuesday for the Senate, for the House, for governors as well. We’ll bring you all the results here on the BBC World Service. You.

Categories
QuickHit

QuickHit: $70 Crude & $5 Copper are coming

Returning guest Tracy Shuchart graced our QuickHit this week with interesting and fresh insights about oil and gas. What is she seeing on the industry — is it coming back to the normal levels, or better? Why she thinks oil will reach 70+ USD per barel? What’s happening on copper and why does its price going up? And is she seeing any surprises under the Biden administration?

 

Tracy Shuchart is the energy and material strategist for Hedge Fund Telemetry and she is a portfolio manager for a family office. She’s pretty active on Twitter with a large following. Check out her on Twitter: https://twitter.com/chigrl

 

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This QuickHit episode was recorded on November 24, 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: We’re seeing a lot happening in markets on the energy side and in things like industrial metals. We’re starting to see some life back into energy not just food but even in energy companies who come a fair bit off of their loads that we saw in Q2 and Q3. Can you help us understand what’s happening there? Why are we seeing, if we see people walking down again in the US and locking down in Europe, why are we starting to see life in energy?

 

TS: Part of that reason is we are seeing a little bit of that rotation into value from growth and the energy sector has been really beat up. It’s finding a little bit of love just from that kind of rotation. But also, we’re seeing these lockdowns and things like that, but what people aren’t really realizing, because of all these lockdowns and things of that nature, we’re actually seeing demand up in other areas where there really was not so much demand before.

 

So everyone’s talking about nobody’s driving anymore. Nobody’s flying anymore. When you know in fact, everybody’s online, e-commerce, we’ve got cargo ships full in the port of Los Angeles. They’re lined up there. That’s shipping fuel. And it’s not just in Los Angeles. Asia’s seeing the exact same thing. Singapore. Trucking has become huge if you you know look at the truck index. It’s basically exploding from 2019-2018 levels because you you have trucks that have to go from the port of LA to all the way to Atlanta. You have everybody ordering on Amazon so you have all sorts of trucking going on. And even down to the little things like propane. They’re actually seeing double propane demand right now merely because everybody’s dining outside and it’s getting cold.

 

So demand showing up in these little places that typically didn’t have as much demand before. Recently, they were talking about the airlines this holiday season. That air travel is picking up in the United States. Domestic travel is almost completely back to normal in Asia and in China, particularly. So things aren’t as bad as it seems.

 

TN: So when we talk about oil and gas companies, we’re really starting to see some of those oil and gas companies to come back as well. We’ve spoken over the past six or nine months a couple times and it seemed like there were fundamental operating issues with those companies. Are you seeing those oil and gas companies cycle through their issues?

 

TS: A lot of the Q3 calls that I was on, a lot of these companies are changing their tune a little bit. We’ve also had a lot of of mergers and acquisitions in this space. We’ve had a lot of bankruptcies in the space. That pile, it’s gotten smaller. Only stronger surviving and not that I don’t think that they’re 100 in the clear, but the bigger names and the bigger companies are finding a little bit of love right now especially you see that in refining right now, because heating oil is actually pulling up that whole sector right now. The whole energy sector. Refiners were the first ones to really take off because refining margins are getting better as oil prices get higher and things of that nature. So that kind of started leading and then of course, they’re the safe havens likePBX, XOM, BP, Equinor…

 

Once people see oil getting some sort of footing, they’re more likely to move into those stocks. They’re beaten up. If you’re looking for value stocks, you want to look for something that’s 80 percent off the ties. It’s a bargain.

 

TN: We had also talked about crude prices would stay depressed into Q2 or something of next year of 21. Does that seem about right, still? Do we still expect things to stay in the low to mid 40s until Q2? Obviously, we’ll see bouncing around. I’m not saying I’ll never go above that. But do you expect people will think to stay in that range for the next two quarters or has that moved forward a little bit?

 

TS: That’s moved forward a little bit. I remember when we spoke last, we were talking it to the end of this year and I saw the upper 38s. Obviously that averaged this quarter so far. We’ll be a little bit higher. So I think that we’re still in that range. We’re not going to see a huge bounce in oil. Not yet, but it’s coming.

 

TN: You say it’s coming. What brings that about? Is it demand? Is it supply? Is it a massive shortfall? Where’s the pressure that would bring about that 70 plus?

 

TS: We’re going to have a supply shock just like we had a demand shock this time. We’ll have a supply shock just because of the sheer lack of Capex in the market and the sheer amount of companies that have gone under. I don’t think that you’re going to see shale back at 13.5 million barrels per day anytime in the near future ever again. A lot of those wells are closed. They’re gonna open them up again. It’s just not cost effective. So we lost a lot of producing capacity just because that. So as we move on and we move forward in time and flights come back and we start having more and more demand, I think we’re gonna find a shortfall so I wouldn’t be surprised if we see 60, 70 dollars a barrel in 2022.

 

TN: We’ve seen copper have just a stellar few months and given the demand issues that we’ve seen in the markets probably a little bit surprising. So can you talk us through some of those dynamics and help us understand is this here to stay? Are these elevated prices here to stay? Or is this something that we’ll see for a relatively quick cycle then it will turn back?

 

TS: With copper, we really had a supply issue because a lot of the mines were closed during the summer. China by that time had already been pretty much back up and running and ordering what they normally order. That’s kind of lifted prices off of that like two dollar level initially because we had a supply problem and then I think the expectation is, there’s a lot riding on electric vehicles, which require a lot of copper.

 

Manufacturing is rebounding in a lot of places. Maybe not Germany. But it is rebounding here. It is rebounding in Asia, not just China. It’s rebounding in Australia. There is that anticipation of demand. We’re starting to get supply back online and yet you know prices are still going higher. I don’t think we’re gonna go straight to five dollars by stretching the imagination. But that’s kind of where copper lost its disconnect with the market. When you know markets started coming down, copper’s still shooting up because it’s generally considered a gauge of the health of the global economy. But that kind of correlation went out of whack when we had a whole bunch of supply problems.

 

TN: And based on copper prices today, I would think everyone was back to work, we’re all traveling, probably with disposable income. So there is that weird disconnect right now and I’m not sure that it’s necessarily an indicator that a lot of people really point to.

 

So we’ve just had a big change in the US as well with the election and some shifting around. What are you expecting over the next few months? Are you expecting big surprises, big moves or what are you looking at over the next few months?

 

TS: Everybody pretty much knows Biden. Everybody knows his voting record. I looked at it as an energy strategist, obviously. I’m looking at his voting record and went on his past history and is the new green deal going to dictate the markets or how is he prone to be? He’s been in the office since the 70s. So we already know him. All his picks so far have been in been in DC forever, right. Whether it’s in an Obama administration, etc. So I don’t think there’s really a whole lot of surprises, which is why I think the market is so calm right now, because the election’s basically over. We don’t have that anymore. We’ve got this vaccine and the people that are going to be taking office in January are people that everybody’s familiar with. So I think that’s also giving the markets a little bit of complacency at this point.

 

TN: Right. It does feel a little bit complacent to be honest. I think you’re right. I think you’re right. So let’s see if there’s a surprise over the next few months.

 

TS: Right? You never know.

 

TN: Tracy, hey, thanks again for your time. It’s always great to talk to you. We really appreciate everything you say. I just want to ask everyone watching if you could follow us on YouTube. We look forward to seeing you next time. Great! Thanks.

Categories
Visual (Videos)

CNA Asia First: How the US Foreign Trade Policies will Change after the US Election

Founder and CEO of Complete Intelligence, Tony Nash joins CNA Asia First to give insights around the 2020 US Elections and how the possible turnout will affect US’s foreign policies, economy, and trade. Was the delay in stimulus affected the voters’ decisions? Can oil companies be greener without causing a lot of disruptions? And did Trump’s trade strategies yield results?

 

This video segment was published on November 5, 2020 and is originally from Channel News Asia’s videos on demand, which can be found at https://www.channelnewsasia.com/news/video-on-demand/asia-first

 

Show Notes

 

CNA: Now for more on the markets, the US elections, and economy including trade policy from whoever takes place in the White House going forward, Tony Nash founder and CEO at Complete Intelligence joins us from Houston, Texas.

 

So Tony, it’s been a very divisive election and I don’t know at this point is it worth looking back at how there was gridlock and was difficult for congress to push forward any form of stimulus leaving a lot of Americans out in the cold. I don’t know if there’s weight on the minds of voters that maybe the whole of congress was complicit in this issue. But where do you think paving the way forward for the American economy needs to start.

 

TN: It really depends on where in America you are. There are parts of America that just can’t wait to get out and work and there are restrictions. There are other parts of America where people want to stay in under restrictions and generally that’s the red-blue divide in the US.

 

What we’ve seen is more people wanting to push out demonstrations and say California and other places where people just want to get out. The stimulus issues with congress, there were a number of windows where stimulus could have come out. But it didn’t. And that was a lever that was pulled largely by the house of representatives before the election. They wanted to hold off from it. Especially business owners, very frustrated by that. People who have been laid off, very frustrated by that. Certainly, some of this has been a part of the voting consideration.

 

CNA: Both sides red and blue are blaming each other on why stimulus was difficult and not being pushed forward before the election. But I want to get to the issue of the backbone of some of the sectors of the economy in this election. Climate change featured very heavily. You come from an oil state. The bigger question now going forward is because of this increasing climate consciousness, can these sectors actually pivot away from oil without causing huge disruption, political and economic?

 

TN: That’s fine in terms of climate change. The US actually performed very well in terms of emissions and efficiency. The bigger issue for these oil companies is actually the inefficiencies of their organizations and we’ve seen a lot of oil companies come out to say that they’d be laying off 16 percent of their global workforce. They’re realizing that with oil prices where they are and gas prices where they are,
they just can’t sustain the bloated workforces that they’ve had to date.

 

So, yes climate change is an issue and that’s a consideration. But with the fossil fuel companies, they’ve had bloated workforces that they’re having to contend with now that oil prices are lower.

 

CNA: As we look back at what the Trump administration set out to achieve with its very aggressive trade policy based on the metrics of leveling or gaining leverage to negotiate better terms for trade deals, do you think it has achieved this?

 

TN: What the current administration has been doing is a long game. It’s not something that is a short-term plan. To get factories to move, to get capital investment, to get say supply chains to move, that’s a three to five to ten-year process and can be even longer for industries that have super heavy capital investment. It’s making progress. If you look at investments say in electronic supply chains going into Mexico, I think both the aggressive nature toward China and the USMCA have really helped.

 

The electronics industry come back to Mexico and to the US. Those are some of the faster moving industries where we’re starting to see some real traction. But it is a long game. It’s something that if that’s dialed back now, you won’t necessarily see that continue or you may not see that continue.

 

CNA: The way that the Trump administration up and NAFTA, it does seem that it antagonizes some of its closest security partners including Canada. Is that counterproductive trying to form an alliance to counter the rise of China?

 

TN: There are two things with the USMCA, the kind of NAFTA part two. There was an agreement among the partners that it was a much better agreement. Getting them to the negotiating table was the first hurdle. But once they realized what the US wanted to do, what I understand is all sides were very happy especially Mexico. But in terms of getting a coalition against China together, I don’t think the US has necessarily tried to do that. The US has understood that where there are multilateral organizations or multilateral relationships countering China, that China will peel off one or two or three to create division. And so the US has taken China on one on one. This was a strategy from the very beginning and it’s yielded some of the results. But again, it’s a longer term strategy that they’ve tried to undertake.

Categories
Visual (Videos)

US Election: How Will Results Impact Markets

Tony Nash, chief economist and managing partner at Complete Intelligence, discusses the US election and how the results could impact markets around the world. He speaks to Bloomberg’s Yvonne Man and Betty Liu on “Bloomberg Daybreak: Asia.”