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00:00Given the news that the strait is closed, we had this huge rally on Friday, capped off one of the
00:05biggest rallies in decades. The S&P was above 7,100. NASDAQ was on its longest positive streak
00:11since 1992. And the Dow was up 1.8. The question I had written down yesterday for you was, do
00:16you
00:17expect this rally to continue? I think it's still the same question, but possibly with a different
00:20answer now. I think the thing, though, for markets is they're very happy to price in the off-ramp
00:26to peace rather than peace itself. So I think given the developments that we've had today and
00:30what we'll see over the weekend and that we're at all-time highs, I think it's fair to say that
00:35there's an expectation that maybe we pull back, but still it is a market. I've talked to so many
00:40bulls right now that say, look, earnings look good. And in fact, earning expectations have gone up. So
00:46the fact that we sold off just made stocks more attractive and valuations more attractive. So
00:50even if there's some uncertainty as to whether ships can actually go through the strait of Hormuz,
00:55markets are just excited that there is a whimsy, just an air of peace, that talks aren't even
01:00happening. You think they're going to give peace a chance? Markets are absolutely giving peace a
01:04chance. Thank you for that, Christine. Did you write that down too? No, it's not on here,
01:08I promise. Danny, let me pick up on that, though. And I'm curious, as you talk to all of these
01:12investors and portfolio managers, how much they are, seven weeks into this, tuning out what's
01:17happening. You mentioned the fact that expectations for earnings are much better. How much is there a
01:20shift underway now, kind of looking through perhaps this war so much as folks can? I think
01:24that's absolutely happening. And I think it's this like Pavlovian urge also to buy the dip,
01:29whether it be institutional retail investors, because they've been burned before. I had a
01:34conversation with one sell side analyst from Oppenheimer, who's the biggest bull on Wall
01:39Street, that during the tariff liberation day, he had taken down his estimate for where he saw the S&P
01:44500 ending year end. And he said that was a huge mistake. We rebounded. Stocks looked really good
01:49afterwards. And he was like, I was burned. I'm not doing it again. I'm not moving my price
01:53expectation. So I feel like it's just this recent history in investors' minds saying,
01:57we've had big disruptions before, and it didn't matter.
01:59And Liberation Day really looming large for a lot of people is kind of the analog, I think,
02:03for folks for what this is like.
02:05I just love a good Pavlov reference.
02:07All right, Mike, I want to ask you almost the same question, but only with oil. Because
02:12for me, oil has been a little bit more realistic coming from the diplomacy, whether or not this is
02:16actually going to make a difference. We saw oil plummet yesterday. Brent was down 9%. WTI was dropped
02:2312% to $83. What do you expect to see from oil when it opens on Monday? Do you expect
02:29that to
02:30continue, or do you think that will change given the light of recent headlines?
02:34Well, I think you've got that. Given the recent news, it's probably going to be up a little bit.
02:38But I think oil's stuck in a new range now between 80 and 100. If we stay above 100, that
02:43breaks things.
02:44We're seeing what happens when crude oil rallies at such high velocity. The whole global economy is
02:48tilting downward. GDP estimates are lower. If it stays above 100, it'll make it go lower.
02:52Below 80, I think eventually it'll get there, but not right now. I think the market's looking at
02:57what's happening in the straight right now is a bit of the battle of the balls during World War II.
03:01We'll get through it. It's just a little bit of an aberration of what happened, and it's
03:04eventually a matter of time. It'll be open and free shipping will be there. And then it'll be what
03:08happened in markets. And the key thing to remember about commodity markets is there's a
03:12complete bull market in elasticity. Now, we saw that natural gas this year went up too much.
03:18It was up 100 percent, got to seven. Now it's down to 2.6. It's down almost 20 percent year
03:23over
03:23year. That was the guidance for what happened in crude oil in 2022-23. Natural gas led the way down,
03:28and I think it's going to do the same thing. And I like to end with a key thing is
03:32we like to
03:33skate where the puck's going in futures. And that December crude oil future is running at $72 a
03:38barrel. It drops to $22. By the time we get to midterms, when it'll be the front month,
03:42it goes to $50. And that's still my call. But, Mike, one of the things we were talking about
03:45last weekend is even if the straight gets fully open, and that's a big if, and there's a timeline
03:50for that happening, don't you think that the costs are going to rise just by default because you're
03:55going to have to pay these sailors more? You're going to have to pay more for insurance for these
03:59ships. The default cost of doing business in that region, I would assume, has to go up.
04:06Absolutely. So we keep talking about 20 percent of the world's crude oil or exports and production.
04:12Maybe it's really now 10 percent because Saudi Arabia has found ways around it and different
04:16things, and we might have sanction relief or Iran can release. So let's talk about the other 80 percent.
04:20And that is if you look at U.S. and Canada, that access, the surplus versus a surplus of supply
04:26versus demand is running 8 million barrels a day. And that's just, that's getting, becoming a
04:30surplus in the market. What stops that gun from going to 10 million barrels a day? And I'll tell
04:34you one key thing that would is lower prices. That's the shift on the global economy is the
04:39answers have changed. Now, price maker status in crude oil is the Western Hemisphere with the center
04:44being the U.S. Danny, I want to return to bank earnings. You were here all week watching those
04:49come out in real time, listening to the conference calls, these chief executives talking to reporters
04:52and to analysts as well. A two-part question. One, what is the biggest takeaway from how they've
04:58performed and how they're navigating all of this? And the second is, we listened to the likes of
05:01Jamie Dimon for some indication of how he's thinking about geopolitical risk broadly. I think
05:06he's comfortable talking, he's comfortable opining on it. People are eager to hear what he has to say.
05:09What did we hear from him, from Jane Fraser, from the likes of these executives about how they're
05:12thinking about the impact of this war on their businesses in the Middle East and on the global
05:16economy more broadly? I think it's fair to say that this was the right kind of volatility for them.
05:21And I know it always feels heartless to discuss war and saying it's good for business. But for
05:24these banks, it was extremely good for business. All of their trading desks, every single bank that
05:29reported had record equity trading revenue. All of them also had a really strong quarter for M&A,
05:36despite all of this disruption. And I think that really fed into the commentary you heard from
05:40these executives. A couple of them flagged this uncertainty going forward, Jamie Dimon being one of
05:44them. But he wasn't as negative as we've heard in the past. In the past, he warned about clouds,
05:49storms, hurricanes. And to be honest, they never quite came to fruition. This time, he said,
05:54look, there are some things out there, specifically the war in Iran, that are big question marks. And
05:59we don't know how it will play out. However, we are still really positive. Consumers are still
06:03spending a lot. He got questions as to whether high gasoline prices were making consumers pull
06:08back. He said, gas prices don't matter. The fact that jobs are plentiful and that market and labor
06:14markets are holding up means we're extremely confident. So it was this air of confidence. And again,
06:18you could see it in the numbers. They had really strong results.
06:21Your specialty very much is deal making. You have the deal show on Mondays.
06:24Thank you for that.
06:25Yes, that's why I can do it. But of course, so much attention has been focused on the Middle East
06:30as kind of a font for deals in recent quarters. I'm curious what you're hearing from the likes of
06:34lawyers and bankers about how this, even if it's just the uncertainty and the pause that we're in
06:38right now, is affecting the appetite for those deals going forward. Is it changing the way that the
06:43Gulf and the Middle East is perceived right now?
06:45It's such an important question because this has been the source of funding for deals,
06:49be it private equity or be it for funding in the markets and financing markets. What I've heard
06:54is the only thing that's really changed is just the inability or the difficulty to get to that
06:59region.
06:59Can't travel.
06:59To travel, to get on a plane to meet face-to-face with these people.
07:03Which is very important.
07:04It is extremely important, especially for things like fundraising. And you have the fact as well
07:08that these nations are now spending more on their own domestic projects to try to guarantee
07:13security. However, we should keep in mind that these are massive sovereign wealth funds,
07:18that there's a lot of appetite. And even prior to this war, they committed massive amounts of
07:22capital. They are the steady source of funding in a world that's been beset by uncertainty. And
07:27that doesn't look like it's changing, even if you can't get bankers literally traveling to the
07:31Gulf to meet with these folks.
07:33All right, Mike, I want to ask you about our favorite subject, and that is commodities.
07:37We saw gas prices are coming down a little bit, but not as much as I personally would like them,
07:42or I'm sure a lot of people. They're down about a dime over the past week. How are we seeing
07:46other
07:46commodities responding? And how is natural gas doing? Oh, we've got a chart right there.
07:53So first, we mentioned natural gas. Natural gas has been a great lead indicator in its U.S.
07:57Remember the thing about natural gas is we have an ocean of natural gas in this country,
08:01and it's proven in price. Every time it gets above five, it goes back down. But it's the number one
08:05measure or use or source of heat, electricity, and fertilizer from the corn belt. We just call it
08:12anhydrous. So that's not a big thing. But what happened when crude oil pumped, it pumped prices of corn
08:16and soybeans. And one thing that's happening in that space is, yes, it's a fertilizer issue,
08:22but most of the decisions for this year's crop were made last year. And the key theme is corn and
08:27soybeans. But every conference I go to, the key thing they say is we need some more demand, which
08:32means potentially biofuels, which means more fuel. It just increases that super abundance of food
08:37and energy in this country. Now, also, at the same time, we're seeing a spike in diesel and gas
08:44prices. That spike is significant because it really shuts off consumer spending. It messes
08:48up capital budget decisions. And it's like one of those things where you look over and like,
08:52yeah, honey, we probably should lay low on what we're going to spend for a while until this
08:54alleviates. So the data from this period, I think, is going to be pretty bad. And you can see that
08:59in
08:59the polls. Polls are very negative on Mr. Trump. Obviously, that might change. But overall, this reminds me
09:05very much what happened in 2008 when we had that spike in energy prices and the Great Recession
09:10accelerate. And also in 9-11, when the event happened and people just shut off their spending.
09:15So that's what I'm worried about as we go forward. And the stock market doesn't care yet.
09:20And how are you feeling about crypto? Because here on the weekend, that's one of the few things
09:23we get to track live. It's Adam and Polly Markets, which we're going to talk a lot about later.
09:28How are you feeling about Bitcoin?
09:30I sense in the space most people are still it's like I think of that Bruce Springsteen song,
09:35Glory Days. They're trying to live the old glory days. That whole bull market is over.
09:39Now it's in the purge. And I look at it. It's a space with excessive supply. There's millions
09:44of cryptos. Bitcoin had the blessing and curse of being the first. And I fully expect it's going
09:48to continue downward. And the key thing, I think I put it in the same bucket as copper
09:52industrial metals. The only way that space can go up is if the stock market goes up. And now
09:56they're starting to lag the performance. It used to lead the performance in the stock market.
09:59And that started in 2021. Since then, it's been lagging, and most notably since ETFs were launched.
10:05So I think it's Bitcoin's more likely to head towards 50 this year. And we're at a pretty good
10:08resistance level right now. Danny, we've got about 30 seconds, but really quickly,
10:12because you always look so chic. LVMH had a bad reporting. And you're seeing that across a lot
10:19of luxury brands as well. Yeah. Is that because people in the Middle East are big customers and
10:24not spending? Or is that just how luxury consumers are feeling? No, they definitely chalked it up to the
10:29Middle East. That was a really big factor in it. But you've seen that kind of across the spectrum
10:32of luxury goods, not even just clothes, which obviously in handbags I care more about,
10:36but things like Ferrari. Same girl, same. But yeah, yeah. I'm glad. I'm glad. Kindred spirits.
10:39But Ferrari as well, they've been unable to actually deliver cars to the Middle East. That being said,
10:44we had the Rolls-Royce CEO on. They just unveiled this super exclusive car. I think only 100 of them
10:49made. He wouldn't say the price because, you know, it's... You have to ask.
10:52To discuss prices. And he said there were plenty of buyers in the Middle East.
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