00:00Crude oil, the front contract, stuck between 80 and 100.
00:03Getting above 100 is a problem.
00:05It means mostly inflation.
00:06Republicans get hammered in midterms.
00:08And that bond yield stays above 5%.
00:11Staying below 80, which I eventually expect is what Mr. Trump needs,
00:14it's just a question of how he figures that, how to do that.
00:17And we're seeing that nuances now.
00:18The key theme is the U.S., the largest producer and net export of crude oil,
00:23did attack Iran.
00:24The strait is closed and prices are higher because of that attack.
00:28What's he going to do to fix that?
00:30We'll figure that out.
00:30So I still tilt over to that December contract.
00:33It's like $78 a bill.
00:34And I fully expect that to head towards 50 by midterms.
00:37And we're seeing the nuances of how he's going to figure that out.
00:40I'm curious how he does.
00:42Yeah, so are we all.
00:44So is the market overall.
00:46Let's talk a little bit about Chinese demand for oil
00:49and how that factors into the price of Brent in particular.
00:53Because everyone had said that China would certainly be one of the countries
00:57that would suffer the most from the closure of the Strait of Hormuz.
01:00But by all indications, it appears that the demand from China
01:04is not as high as many people anticipated.
01:07Well, Scarlett, I really appreciate you going there.
01:09Our colleague Javier Blas, based in London,
01:11one of my favorite strategists and commas, pointed out
01:14the demand from China has been declining.
01:16They've been averaging imports around 11 million barrels a day
01:19for a number of years.
01:20It's been flatlined.
01:21It's really dropped recently,
01:23partly because they filled up their strategic petroleum reserve last year.
01:26And now they're potentially utilizing some of that.
01:28But what they're doing is accelerating that process
01:30of technology replacing fossil fuels.
01:35EVs, renewables, electric cars,
01:38the energy and density of batteries all going straight up.
01:40And China's winning there.
01:41But for now, they're helping alleviate this issue.
01:44It's like they had well planned for this event.
01:46And so far, it's working out well.
01:47But it's a key theme to remember is,
01:49even with their economy expanding,
01:50their crude oil demand actually was flatlining.
01:52And now it's declining.
01:53That's the problem with crude oil.
01:55The U.S. used to be the largest importer.
01:57Now it's China.
01:58And China's imports have probably declined.
02:00So I fully expect that crude oil price to continue to drift lower
02:02as we get through this crisis.
02:04Mike, your world of commodities,
02:05you cover everything from soybeans to Bitcoin.
02:08What are you working on these days?
02:10What are the conversations you're having these days?
02:11Well, definitely those two, Paul.
02:13First of all, soybeans have pumped up with corn
02:15on the back of crude oil.
02:17And it's a primary source of biofuel and food.
02:20And there's massive supply coming out of Brazil.
02:21So unless there's a drought, that price is going to go lower.
02:24And Bitcoin, to me, is my best leading indicator for all risk assets.
02:28It's down almost 20% on the year.
02:30It was up 10% in the beginning of the year.
02:31I think that's an indication of what's going to happen for risk assets.
02:34And the stock market follows Bitcoin.
02:36That means everything goes lower.
02:37But there's a key thing, problem with Bitcoin.
02:39It's a way oversupplied entity.
02:41There's massive supply of cryptocurrencies.
02:43It looked like a pretty good peak.
02:44And I think it's still going to head lower.
02:46And it could lead the way for post-inflation deflation.
02:49And of course, no conversation with Mike McGlone would be complete
02:52without any mention of gold, which is, you know, just kind of been,
02:56I wouldn't say struggling, but hasn't done a whole lot,
02:58even as the stock market has recovered dramatically since late March.
03:02The fact of gold is right now, I mentioned that long bond yield around 5%.
03:07The price of gold as of now is about the highest
03:10versus a basket of U.S. Treasuries, most notably long bonds, since 1982.
03:14So gold just got way too expensive versus that yield going up.
03:18People look over and say, yeah, well, forget that rock.
03:20Maybe I'll buy U.S. Treasury bonds.
03:22So can me, gold put in a high, along with silver this year,
03:24that might last for decades.
03:25It's probably going to be range bound for 10 years,
03:28maybe around 3,500 on the bottom.
03:30It could reach a new high,
03:31but I think it's stuck in a range for a long time.
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