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00:11Good morning. Welcome to the Myers Report Fast 15. It is Friday morning, the 15th of May,
00:212026. An unfrenzied friend, Don Day, will give us the latest explanation of what a super
00:29El Nino is that has got the regular mainstream media in a bit of a tizzy. Of course, they look
00:36for anything but the distraction. Our logistics expert, Isaac Issa, has some latest on what is
00:43happening on our supply chain and something with the U.S. Supreme Court. An economist, Bob
00:50Janetsky, will discuss Fed policy and how it fits our crazy world. Don, CNN, NBC, MSN, and all the
01:00usual crew seem to be panicking all about the super El Nino coming in faster than expected.
01:07Is this a real concern? Are we all going to die? Well, it's interesting you say die because the
01:14Washington Post this week put out an article that said millions have died in El Ninos before
01:19and going back to an event in 1877, which we don't really know a lot about, but they implied in
01:27their headline that millions could die. So the hype is... Hold on a second. Don't millions of people die
01:32anyway? Was this the El Nino related, like COVID related? Yeah. So yeah, no, I would have to say the
01:38El Nino hype is reaching very high levels, but not, you know, there's some, there's some, like anything,
01:44there's a grain of truth with something. Well, that's how you make propaganda. You take a grain
01:50of truth and then you distort it, but go ahead. Yeah. But, you know, so let's talk a little bit
01:55about what El Nino is really quickly and I'm going to share a few slides here. And first of all,
02:04what is an El Nino? It is when the sea surface temperatures along the equator become warm. And
02:14you can see that this forecast starts in May and goes through November. You can see that red streak
02:20that goes from South America to just northeast of Australia there. This is a cyclical pattern. We
02:27alternate between El Nino and La Nina's, but this one is forecasted to be very strong. Why is it
02:34impactful? Well, it's because warm water releases a lot of water vapor into the air, which then
02:41creates weather. More in the way of heavy rain. It can cause drought. El Nino's can do a lot of
02:48things. And when they're this strong, sometimes they cause extremes. And if you were to look at sort
02:55of historical trends in El Nino's before, the southern part of the United States, including Canada,
03:02parts of all of the south and parts of the central United States can get very wet. Now,
03:08this is an idealized graphic. So every El Nino is a little bit different. But what also happens is
03:15you tend to get areas of drought in Brazil. You also get areas of drought in Australia and
03:21southeastern Asia. So it can bring extremes, extreme wetness. Southern California could have a very,
03:28very wet winter and flooding, landslides, those types of things. We also may see the drought
03:34in the southeastern United States and parts of the central United States get some relief.
03:40But what people are really jumping on is the fact that the computer models are predicting the
03:46strongest El Nino since 1877. And you can see here on this pretty chart here, all of these squiggly
03:54lines. I've got a fast question for you, Don. Sure. How good was the science of meteorology and the
04:02monitoring in 1877? I'll say in a very nice way, it was extremely poor. We had no satellites. We had
04:11no thermometers in the ocean. It's all reconstruction. However, I think we can say that we probably did have
04:19one in 1877. But it's a definite scientific... Most of the areas that they're talking about,
04:25many of the areas they're talking about also were not heavily populated. I know. I know.
04:30Don, is the economic impact of all this basically higher food prices because of the weather and the
04:36effect on crops, or is it not? Potentially. So the one thing that... And that's a really good
04:43question, Bob. So you can have parts of the world that have economic benefits from the extra rainfall.
04:49You can also have areas that have detrimental effects economically because of drought, depending
04:55on where you are in the world. But one thing that El Ninos do when they're strong is they really
05:00turn
05:00down the hurricanes in the Atlantic and the Gulf. There's a strong correlation.
05:04They turn them down or up?
05:06Yes. There's a strong correlation to less hurricanes in the Atlantic and the Gulf of Mexico,
05:11Gulf of America, during strong El Ninos, which has a positive economic impact. So it's kind of
05:18pick your poison. But one thing that is a problem with all the hype is that the models are at
05:25their
05:25worst in the spring. And we call this the spring predictability barrier. But people are jumping on
05:33these models so strongly. And it's all over the media. And I will have to tell you, there's
05:39meteorologists who are not helping by posting a lot of these things. Now, this is a little bit hard
05:45to see. But what you see here are other predictions of strong El Ninos in the past. The red lines
05:53show
05:53the prediction. The black lines show the actual. So what you find here is that the models have not
06:00always been correct in the spring predicting the future El Nino. Now, to be fair, as you get to the
06:06later years, going back into like 2022, 23 and 24, they did better. But there's a lot of hype,
06:15a lot of doom and gloom. And again, we just have to step back, take a deep breath. And I
06:22will tell
06:22you this, we are going to have an El Nino. It's going to be impactful. Whether or not it's the
06:27biggest
06:28El Nino of all time is something that we just have to wait and see. So you have to take
06:33the hype,
06:33take the hype with a grain of salt. You know what this is all about. It's what world coming to
06:39an end,
06:40send money. Because all these people that are preaching the gloom and doom want grants in order
06:46to do their research to validate their life's work, irrespective of whether or not it's accurate.
06:53Yeah, I think that sums it up.
06:57Okay. How's the weather looking for us in the U.S. over the next week or so?
07:02We are going to have four to five days in a row of severe weather in the heartland.
07:06The western Corn Belt is going to start with severe weather today, and it's going to go probably
07:11through Tuesday. You're going to hear a lot about hail and tornadoes across Kansas, Nebraska,
07:17Oklahoma, Texas, possibly Iowa, and the Minnesota, Wisconsin, and maybe even western Illinois.
07:24How are Isaac's trucks going to do?
07:27Well, does he have his hail shields on?
07:30Always, always. We keep them handy.
07:34Okay. And how's it looking elsewhere in the world? Is it Iran and Ukraine?
07:38Well, Ukraine, Europe has gotten colder and wet, kind of like part of the central and eastern
07:43United States at times. So, still kind of in the spring, drying out, but they've had some rain
07:49in Ukraine here. Not much going on over in Iran.
07:54Okay. Isaac, the Supreme Court just made a landmark decision impacting the logistics industry.
08:03What was the ruling, and how is it going to affect the industry moving forward?
08:08Montgomery vs. Carbine Transportation. A driver named Sean Montgomery was seriously injured several
08:15years back in Illinois with a crash involving a carrier, Carbine Transportation, hired by a
08:21freight broker, C.H. Robinson. C.H. Robinson is one of the largest freight brokers on planet Earth.
08:28Montgomery alleged that the broker should have never hired that carrier because there was clear,
08:32major, major safety red flags. Horrible crashes, poor safety history, careless driving citations.
08:42The broker argued that federal law protected brokers against these state negligent lawsuits,
08:47which is what it's been for several, several decades, really the entire, as long as I've been
08:52doing this. Supreme Court rejected that argument.
08:56They ruled on behalf of Montgomery, where now brokers can be sued if the carrier gets into an accident
09:05and there's injury involved. Prior to yesterday, well, two days ago, that was not the case. It was all
09:12the carriers. Carriers held the insurance. Brokers simply held a $75,000 bond that really just protected
09:18carriers against financial situation. So now you have a nine to zero ruling in the Supreme Court
09:28telling all, everyone, everyone here in America that they can go after brokers. This is huge. This is
09:36probably arguably one of the most, I'd say the biggest decisions that we've seen in the last three
09:41decades in transportation. No longer will brokers, freight brokers, sacrifice safety over cost.
09:48No longer can they go after the cheapest carrier who are running double log books that have been in
09:53the news here for the last 12 months. A lot of the non-domiciled guys, a lot of the
10:00carriers who are completely neglecting public safety, they're still able to move freight
10:05due to brokers simply looking for the cheapest cost carrier. It's big. This is huge.
10:12This is all good news. This is all great news. This is all great news for our public safety. This
10:18is
10:18all great news for carriers who care, who care about the public safety, who care about the people
10:25on the road. This is big. Again, I'd say probably, arguably, maybe even bigger than deregulation back
10:32in the 1980s. Wow. Isaac, let's do a follow-up on that over the next several weeks, because obviously,
10:41we want to, there'll be a trickle-down effect. We want to know what it is. Isaac, we're now 60
10:46days plus
10:47into the elevated fuel price environment. How are fleets handling the heat? They're suffering, suffering.
10:56Fuels here in Illinois is averaging about 630 a gallon. The reality is many carriers, especially
11:01the small demand. One second, $6.30 a gallon? Oh, absolutely. Absolutely. Is that before or after
11:08the normal fleet discounts? That's before the normal fleet discounts. But here's the piece though,
11:13Gary, right? A lot of these smaller outfits don't get significant discounts, and they definitely don't
11:18get a fuel surcharge from the brokers who are taking advantage of them. They're hurting in a really,
11:23really bad way. The independent guys and the smaller carriers are getting absolutely crushed
11:28right now. Mind you, the brokers are still collecting fuel surcharge from their customers.
11:33They're getting it from the customers. They're simply not passing it down. This gap is absolutely
11:38devastating. Already after a four-year-long freight recession, and now a lot of these smaller guys have
11:44to deal with fuel costs north of $6 a gallon already operating on razor-thin margins. Here's what's
11:51really going on. I'm hearing more and more stories. Take a deep breath. I'm hearing more and more stories
11:57of drivers and small carriers taking major risks just to survive and eat right now, including running
12:05off-road farm fuel illegally. Never seen this. I've been doing this 15 years. I've never seen carriers
12:13and truck drivers who take that huge risk. I think this is just a sign of the times. When truckers
12:21start
12:21gambling with DLT penalties and equipment seizures just to keep food on the table, it really tells you
12:28how much pressure is building underneath the industry right now. When you look at it, the average
12:33truck over-the-road truck carries between 250 and 300 gallons of fuel, you're talking about $2,000
12:43of fill-up. Correct. Absolutely. That's serious, serious money. Serious money.
12:51Wow. I take it that's the biggest headwind that the trucking industry is looking at for the remainder
12:57of 2020. Oh, absolutely. Yeah, fuel, fuel. I would say this. The biggest headwind that I'm foreseeing
13:03is if the fuel, you know, if fuel stays elevated, and I know Bob would speak more on this piece,
13:09is what I'm concerned about is demand erosion. You know, your average consumer right now is spending
13:15a whole lot of money on gas, and your average truck driver is spending their entire check on diesel
13:20just to stay on the road, right? But again, you know, that's more of a Bob piece. But that,
13:24I believe, the biggest headwind is demand erosion here in the upcoming months.
13:30Okay. Dr. Bob. I got one more for you, Gary. The biggest tailwind. We got a big tailwind here,
13:36and surprisingly, it's also fuel for the intermodal guys. With fuel being elevated the way it is right
13:42now, intermodal containerized freight, you know, things that move on the trains and get here inland,
13:50when containers hit our coast, drayage carriers, intermodal freight, are in constant competition
13:59with truckload carriers. Right now, intermodal is gaining a tremendous amount of market share
14:04because it's simply way too expensive to take a truck from California to Grand Rapids, Michigan.
14:12It's much more cost effective for it to hit the rail right now. So the intermodal carriers are
14:18benefiting in a great way right now. So although fuel is our biggest headwind in terms of demand
14:24erosion, and the reality is for smaller carriers right now just to survive another day, it's also
14:30the biggest tailwind specifically for drayage carriers. And so over the next six to 12 months,
14:37you're looking at some significant shrinkage in capacity with fleets going out of business that
14:45probably would be up for sale. And then with a fuel recovery, there'll be somebody there to pick up
14:51the pieces. Absolutely. Okay. Wow. Dr. Bob Janetsky, since December 10th, the Fed has, well,
15:02has held its target rate to between 3.5 and 3.75. On April 29th, they announced no change was
15:11in the
15:11offing. In addition, it seems that the Fed has gradually, I know it's only a little, been putting
15:18a little bit money back in the economy. Is this a change of possible Fed policy? No, I think the
15:25Fed
15:25has been pretty stable through this whole period of time. I don't think the increases in money have been
15:30all that significant. Remember in the past, they would announce that they were going to increase
15:36purchases of securities by 100 billion, 75 billion, whatever, a month. That starts to get into real
15:43money. This time, they've held it down to maybe 20, 30 billion dollars. So it's not that much.
15:49You know, for a month, in a month. Yeah. That's still money.
15:52Very interesting thing with respect to that rate that you talk about, that Fed has held constant.
15:59I just read this morning that one analyst is advising everyone to get ready for a huge drop
16:06in the Fed funds rate because the fellow coming on as head of the Fed, which is Kevin Walsh,
16:14has been arguing that there just isn't enough money in the economy to boost it. And so this fellow is
16:20arguing, the financial advisor, that we should get prepared for a big cut in interest rates. I doubt
16:26that's going to occur. In fact, if it does occur, I believe it would be a huge negative. In the
16:32face
16:32of inflation, I believe markets would do just the opposite. They would send the market interest rates
16:38a lot higher, especially in the long term. And because of the fact that they would believe that
16:44this was the end of any constraints on inflation. So I do not expect that there will be a cut
16:50in interest
16:51rates. My belief is that the Fed will just keep them where they are. So the question in terms of
16:56huge,
16:57is it this huge or this huge?
17:10I don't necessarily agree with you, Bob, because I think you and I had discussed about inflation,
17:16that the high fuel prices are going to be very inflationary. They are. But as soon as the Iran
17:23situation gets settled, fuel prices are going to drop precipitously. And that's going to have a
17:30positive impact as well. Absolutely. But each week that that war continues on in a stalemate,
17:38carries the short term inflationary pressure that much further. And all sides are hurting right now,
17:46which is why I think there's going to be a solution quickly. But if there's not a solution,
17:50this is going to be a very bad scene. Bob, yes, with all of this going on,
17:56the stock markets continue to rise. Do you believe we're going to have a like,
18:03do you believe that the markets are anticipating, anticipating a general positive outcome?
18:08So long as they go up, they are anticipating that positive outlook. The problem right now is
18:13we have not only upward pressure on stock prices, the momentum continues to be very strong,
18:19in spite of a decline today. The decline is not significant in terms of reversing that pressure,
18:26but also the long term interest rates are under upward pressure. And we're hitting new recent highs
18:33in that area too. And again, this is very unusual for both stock prices to be going up and for
18:39interest
18:40rates in the long term areas to be going up at the same time. It's my view that one of
18:44these has to
18:45change quickly because you're not going to see interest rates and stock prices continuing under
18:51upward pressure for very long. But mortgage rates on the 30 and 15-year fixed, according to Freddie Mac,
19:00dropped a little bit this past year. Yeah, they have since reversed that on a daily basis.
19:05So I expect that those rates are going to be a lot higher the next time they take that risk.
19:11Okay. So what does your stock model, your stock market model show?
19:16The stock market model says that we are still with very, very strong momentum. So the odds
19:22based on this are that we will continue to see an upward pressure on stock prices.
19:27And the same is true for interest rates. So the technicals are all saying both are going to go up.
19:32I just don't think that that's viable for an extended period of time. So I expect that sometime
19:38within the next couple of weeks, one of those, either the stock market or the interest rates are going
19:43to be heading down. And of course, we all hope that it's a solution with Iran and that it's the
19:49interest
19:50rates that head down. Okay. Our question for the day, guys, will President Trump come back from
19:57China with any wins? Don, what say you? He always comes back with wins, whether it's a win or not.
20:10Isaac, what are your thoughts? That's great. I'm going to copy Don. I concur. Yes.
20:18Bob? A win is in the eye of the beholder here. I see
20:23no major significant benefits other than the fact that when people praise each other and think that
20:31and start extolling the virtues of each other and each other's country, I feel a little more
20:37comfortable than I do when they start yelling at each other and complaining. So I think that there is
20:43some goodwill coming out of it, but nothing significant.
20:47I don't agree with you guys. I think there will be something significant coming out of it,
20:54particularly with the issue of Iran and the flow of oil, because China is desperate for oil.
21:06Iran can't supply it, even if they were able to get the fuel out. So we'll see what happens.
21:14With that, I want to say thank you guys. It's always great to see you. It's always great to hear
21:17your
21:17voices. Have a safe weekend, be well, and God bless America.
21:43love
21:43Be well.
21:44If that's all right, we can find money or to trustury.
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