Bloomberg Intelligence, Gina Martin Adams, Michael Clone discussed on Bloomberg Businessweek


And let's set the business week agenda on this busy Tuesday Michael clone is senior commodity strategist at Bloomberg intelligence on the phone from the international technology summit in Bermuda Gina Martin Adams chief equity strategist at Bloomberg intelligence on the phone from New Jersey lots to get to including the commodity trade that nickel trade but Gina I gotta start with you because can't count on a lot when it comes to the equity trade but you can count on volatility Yeah I think this is the year of volatility to say the least especially considering the rough start that you and Tim we're speaking to And sadly I'm not sure that's going to go away anytime soon Given the ongoing risk emanating out of Ukraine Russia war as well as very very high commodity costs which are now starting to create some risks to the longer term growth outlook The longer this goes on the more we have to really question our second half bounce back series Can I ask you okay that's what I wanted to know because I think it's very easy for some to say hey if we get a resolution soon we can kind of disregard this in terms of market economic impact Certainly not the individual and people impact not at all But I do wonder how you gauge it How long does it go on that We start to say okay we've really got to reassess our models and our forecasts Yeah I think that's a great question And frankly we're still in the process of trying to figure out some different scenarios for the meaning of this spike and commodity prices for the broader index I do think the one thing that you can take some solace in is at least so far Analysts are not reducing the revenue expectations for S&P 500 companies And I think that that's the key trigger to watch is it's very unlikely that this is impact going to impact first quarter earnings season But will it impact second and third quarter earnings forecast via the revenue lines is a huge question because what we've seen over the course of this year is revenue estimates are still going higher Earnings estimates are going lower So the predominant impact of this crisis is still viewed as an inflationary impact that creates a lot of margin tension but does not create a downdraft in growth And I think we're all on guard for that down graft We haven't seen it in the numbers yet Right Will we start to see it in the numbers in the second and third quarter is a big question I think it needs to go on for at least a month Before we start to see it in the second and third quarter numbers because frankly growth is just that strong the consumers in just that greatest shape and the financial sector is very liquid and well positioned in comparison to past crisis periods Hey Michael mcclone come on in here I want to talk a lot about commodities with you and certainly get to oil But first I want to talk nickel because the London metal exchange suspended trading in its nickel market after an unprecedented price spike left broker struggling to pay margin calls against unprofitable short positions What's going on here Nichols is not something we talk about a lot Yes I appreciate that Tim and I certainly appreciate my colleague Jean is comments because you need to get a little bearish and equity Thank you Me too Agreed The key thing about Nicholas it was a major short squeeze out of a supplier at a China It's already been alleviated maybe up to a hundred that 100,000 now it's already down to 48 So the key thing about that is that's usually a sign of distress on a genus that is not in a data but I'm counting from commodities You will see distress in markets and a key place you're seeing and it's not only to spike in crude oil It's almost like guarantee that's going to shut off consumer spanning spending and really hurt consumer Senate but you're seeing in the copper gold ratio I think the most significant statement out of today is gold is broken above $2000 an ounce At the same time the cocker copper is going down That's a good indication that we are heading towards recession And if that continues which I expect then it'll trickle down to all assets All right so I'm just thinking you're sitting at the bar tonight and Bermuda lucky you first of all But I'm just thinking somebody kind of comes next to you and says hey Mike what's the deal with nickel What is it that we need to understand about that Even if we don't talk about it a lot it's hard not to sit up and take notice I like to look at it What does this mean It was a short squeeze and it usually indicative of a tight Mark What is the typical outcome from things like this It's crushes the man in commodities When you have spikes like this now obviously it hurts some people who are in those positions and you're seeing that in all commodities When they spike this fast they are their own worst enemies They create massive demand destruction So I expect that in crude oil I expect that in nickel and maybe not as much in the grains because you got to eat Right Certainly in corn and soybeans and the number one is kudos So I'll just leave you with this The price on the screen you've seen crude oil about a $130 a barrel It's almost as famous as that peak of 40 and 1990 and that peak of 145 in 2008 on a relative basis versus a 60 month average So prices are that extended Yeah it's funny I was seeing somebody reading in this morning about somebody saying that if you want to really think about the spike it needs to go up but I think something like one 70 because of inflation in terms of compared to other peaks we've seen in the past Very fast fed meeting next week What is it that the fed could say that might make you start to rethink about that second half I know what you said about it It has to go on for another month But what could the fed say in Jay Powell just very quickly Oh gosh Sorry Careful Sorry I think that what the fed needs to do is give us some very significant very strong clarity on the balance sheet and probably walk back some of the second half sort of chatter in the market The fed needs to make sure that the market understands that they're very data dependent they are concerned about growth risks and they're not likely to allow runoff of the balance sheet in my opinion because that is something the market certainly fears You guys are incredible Gina Martin Adams chief equity strategist at Bloomberg intelligence Mike McCollum senior commodity strategist at Bloomberg intelligence All right we're going to do an update on world of national news Nancy Lyon standing by in our Washington D.C..

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