Oil Dips in Thin Post-Christmas Trade Amid Ukraine Talk Progress

0:00Hello, I'm Stephen Carroll. I'm in Brussels where many of Europe's biggest decisions get made. And I'm Caroline Hepker in London with the hosts of the Bloomberg Daybreak Europe podcast. We're up early every weekday keeping an eye on what's happening across Europe and around the world. We do it early so the news is fresh, not recycled and so you know what actually matters as the day gets going. From Brussels, I'm following the politics, policy and the people shaping the European Union right now. And from London, I'm looking at what all that means for markets, money and the wider economy. We've got reporters across Europe and around the globe feeding in as stories break.

0:37So whether it's geopolitics, energy, tech or markets, you're hearing it while it happens. It's smart, calm and to the point. And it fits into your morning. You can find new episodes of the Bloomberg Daybreak Europe podcast by 7am in Dublin or 8am in Brussels, Berlin and Paris. On Apple, Spotify, YouTube or wherever you get your podcasts.

1:02Bloomberg Audio Studios. Podcasts. Radio. News. You're listening to the Bloomberg Intelligence Podcast. Catch us live weekdays at 10 a.m. Eastern on Apple CarPlay and Android Auto with the Bloomberg Business App. Listen on demand wherever you get your podcasts or watch us live on YouTube. I want to check in with Ellen Wald. She is joining us here. Ellen, you know, a lot going on in the geopolitical markets impacting the global crude market. But we still got crude at low levels. Brent crude,$61. WTI,$57 here. What's your view of the supply and demand out there for global crude? Yeah, I think a lot of what we're seeing right now is, first of all, kind of end of year.

1:52Not a lot of trading going on in general. You know, not a lot of people, you know, working and trading a whole lot. But also, I do think that we are actually seeing a pullback because earlier this month, there were incredible hopes that we might see a resolution to the Russia-Ukraine conflict. And that would brought a lot of oil back on the market. I think we're kind of seeing kind of a pullback from that. People are realizing, like, that's not actually going to happen that soon. I also think that we're also seeing a little bit of a pullback from a slight fear of a supply disruption regarding Venezuela.

2:30It's pretty clear that the only supply disruption that's going on is Venezuela's supply is not going to reach the rest of the world. But the issue there is that once the U.S. has commandeered this crude and President Trump has said outright that he plans to just, you know, take the crude, put it into U.S. supplies, put it into the SPR and whatnot. And that actually introduces more supply into the system because this was crude oil that was sanctioned, was kind of being bought on the black market. But now it's being introduced onto into the larger supply. And so that's going to push prices down, believe it or not, though I do think that, you know, it's not quite settled there.

3:09We're really going off exactly what he said. You know, so I think that there's a fear that we've got rising supply and that demand is not all that firm, that we could definitely see declining demand. I do think when we're looking ahead to 2026, though, that people are looking very closely at the U.S. supply and whether it's going to start to show signs of pulling back. Interesting. So maybe an issue of oversupply going into 2026, where US becomes sort of a marginal barrel there. What's really interesting in some of your notes, and I'm thinking about today in particular, the move, we've got thin trading, but oil is lower.

3:48As you mentioned, maybe people are taking three steps ahead to think what Venezuela ultimately has in terms of impact on supply. But also there is tentative, even though you seem to say it's a little bit ahead of its time, but there is some tentative optimism around a long-stalled Ukraine peace talk, at least, and Zelensky looking to visit President Trump in Florida, we understand. You make the leap that maybe all of this is something that then ultimately affects China. Can you talk us through as to why we see Venezuela and Russia maybe impacting China in a way that we should keep an eye on? Yeah, exactly.

4:25So, right now, China is a huge purchaser of Russian oil. They're also a purchaser of Venezuelan oil, not to the extent that they purchase Russian and Iranian crude, but still. And so really, this impacts China's supply. And China has really been kind of getting away with an incredible amount of very low cost supply that they're buying off of this so-called black market. And if some of this supply that they've been buying off the black market gets transitioned into the regular, you know, oil market into regular supply. Yes, it's going to push prices down overall, but China is going to start to have to pay more because they're paying such incredible discounts for their sanctioned oil that they're buying right now.

5:11So China could be kind of looking at this with, they probably are looking at this with a lot of interest in, you know, what's going to be the prices that we're going to have to pay for oil in 2026, given all of these shifting geopolitical factors. And so they may actually be anticipating having to pay more, whereas the rest of the world is looking at paying less. Caroline, you may not know this, but I'm a big fan of the television show Landman. So I now consider myself an expert on all things oil and gas. So Ellen, our good friends down in the oil patch, they can't be very happy with WTI with a 57 handle.

5:48What are they doing these days? What are they doing? So it's really interesting because if you want to know or if you want to get an idea about what's going on in the oil patch, yes, you could watch Landman. Or you could hop on over to the Dallas Federal Reserve where they do a quarterly survey of oil producers and also oil services companies. And they will give you a little glimpse into the mind of what they're thinking. And so the latest survey has showed everything from things are looking up. I'm not planning to reduce any production to I have to pay people to take my natural gas so that I can continue to produce.

6:27So I think the answer is it's really mixed. And some producers are looking at a better outlook and other producers are looking at a much more dismal outlook. And I do think that depends a lot on exactly where they're producing and how they're producing and what their wells look like. Because it's really become a very complex game out there in terms of what kind of wells you have, what stage they're in, where you are in drilling in terms of how much you're going to get per barrel. This is a term that nobody in the oil business likes to hear, but is there a glut in global oil supply? That depends who you ask.

7:05I think if you ask the IEA, they'll tell you, yes, we're in a huge oil supply glut. If you ask OPEC, they're going to say, no, it's definitely not as bad as the IEA seems. Now, why can we have these two competing answers? Well, because it's actually really hard to count all those barrels of oil out there. It's not like you just get a number out of a computer spits you a number for, you know, what's global consumption today? These are things that have to be measured and it can be quite difficult, particularly with all of the sanctioned oil going on out there. So I can see why they're coming up with different different answers.

7:40Fascinating. Always catching up with Ellen Wald of the Atlantic Council. She's also got a book, Saudi Inc. Yeah, we love to read that. So thank you. Stay with us. More from Bloomberg Intelligence coming up after this.

7:56You're listening to the Bloomberg Intelligence Podcast. Catch us live weekdays at 10 a.m. Eastern on Apple CarPlay and Android Auto with the Bloomberg Business App. Listen on demand wherever you get your podcasts or watch us live on YouTube. All right. Retail sales. I think this Christmas season, the holiday season, from what we heard from the experts, Caroline, been pretty solid. kind of people are spending money, you know, so it's anecdotally, anecdotal. I spent some money. Okay. Now we've got some hard data, folks. Joining us now is Michelle Alon, CEO of June Group and chief business officer at Verve.

8:33Talk about just kind of the consumer out there and retail and how's the consumer doing? We've all heard about the K-shaped economy, but what does that really mean for retailers out there and dollars being spent? So, Michelle, thanks so much for joining us here. What can you tell us about what we've learned over the last several weeks, maybe about the U.S. consumer? Yeah, thanks for having me, first of all. You know, we analyze billions of search queries on a monthly basis using our Captify product. And what we're seeing in this holiday season is this very interesting behavior from consumers where, you know, instead of being focused on deal-driven shopping, they are shifting to an intent-driven one.

9:17Obviously, before Black Friday, you see a lot of consumers looking for deals. But what we saw in the time leading to Christmas after Black Friday is that consumers were looking for trusted brands. They were looking for creative toys, and they were looking for subscriptions that remove friction and deliver instant value. Overall, this tells us that consumers weren't overwhelmed by what was available there. They were more intentional and selective around the brands that they chose. That's the term I've heard, like more intentional, intentional buying. That's the first time I've heard that term here, but I've heard it a few times here this holiday season.

10:00How promotional were retailers out there? How promotional did they have to be, Michelle, to drive traffic? Yeah, some of them, you know, there are two sides of the spectrum. You know, if you look at the markets, you still have the marshals and team users of the world who are looking to cast a wide net and to attract those consumers that are looking for the deals. At the same time, when you look at the DTC brands, you know, the Warby Parkers of the world, they were more focused on creating this, you know, premium experience around the shopping. And you saw that translate into searchers that were, you know, very specific to those brands.

10:40I think that consumers will look for brands that are trustable, that, you know, will allow them to cast a white net when they're going and, you know, buying gifts for their friends and relatives, but also tried and true brands that will never be objectionable or questionable for their loved ones. How are people coming to those brands at the moment? There's companies that really managed to interweave the really bricks and mortar element as well as the online and advertising. How are you seeing people building a relationship with a brand at the moment? Yeah, I think that some of it is traditional buying, traditional e-commerce buying.

11:25You see that a lot with the DTC brands who have their own e-commerce environments. But you also see a big shift into social. There was around 180 % increase in searches related to the TikTok shop. So if you consider that, you know, in the past, TikTok was a great venue for brand discovery. It was kind of like a PR tactic in a way. But now it's much more than that. It allows consumers to really close the loop and make a purchase very quickly. So it went beyond just, you know, a discovery tool as it used to be. And I think that brands that are smart about reaching their target audiences are going to put more focus on those types of shopping environments because shopping windows are becoming shorter and shorter.

12:15And consumers want to feel good about the decisions that they make. And the social environment is allowing them to do that. I mean, how do we break down generationally or just bring us with people who are on TikTok? Is it who is the person that's spending right now? What do they seem like? What are their views on gifting? Is it mainly parents that are coming into TikTok and doing it? What are you seeing in terms of the Gen Z cohort as well? We see the full gamut. I think that if you look at some of the brands that were mentioned in our research, you know, some of them cater to younger audiences, others cater to older audiences.

12:54So we see really the full range. I think that sometimes people assume that TikTok and those types of remindments are a better fit for the younger generations. But based on what we're seeing, it's actually the full range. And that's just the beginning, right, with the introduction of LLMs and creating shoppable experiences with LLMs. I think that we're going to see more and more shopping experiences becoming more focused and shorter. And again, consumers will want to feel good about what the decisions that they made. Removing, reducing that level of anxiety or FOMO is going to be key to those brands that are interested in being successful in these environments.

13:39Michelle, I think we're just starting to see consumers broadly defined, starting to get a little bit comfortable with AI and how AI might be helpful to them. Probably could say the same thing about retailers. How are they using AI? Just give us an overview of kind of what we learned maybe during this shopping season. Was AI prominent with the consumer, with the retailer? I think we're in early stages of that. I do think that there are certain verticals in the market that are already taking advantage of, you know, consumers' ability to find the right solution for them. I think travel is a great example for that.

14:19I mean, think about how much time you normally spend in finding the best flight or the best hotel and using AI in order to do that work for you using agents is going to reduce a lot of that FOMO or anxiety that people normally have when they search for travel. And, you know, travel is one of our biggest verticals. And we always look at, you know, what can travel clients or brands can do better. And I think that they are ahead of the game. And I'm expecting others in retail, in other areas to follow suit and optimize, you know, in the same way that they used to optimize for web searches to optimize for how their brands appear in those LLM AI environments.

15:05So this year, though, Michelle, talk to us. Is it still e-commerce taking share from bricks and mortar? Or do we have maybe kind of a new status quo there between e-commerce and bricks and mortar? I think that one interesting thing that we saw was actually digital subscriptions. I think that those generate this instant value. You don't need to wait for a product to be delivered. And in the past, those types of products had a stigma to them that they were not thoughtful enough or not specific enough to the person that you were trying to gift. And we've seen that shift over time. I think that based on the data that we're seeing, this year, we saw some strong signals that digital products now carry as much weight as physical products, especially when time is scarce.

15:57And I think that what makes it even more interesting is if you look at the types of products that were being promoted, you know, Kindle Unlimited or Peloton, those also give a nod to everyone's New Year's resolutions, right? and making sure that there is some alignment between the gift and what people are trying to do in Q1 or Q5, as we sometimes call it internally. All about the wellness. Michelle Alon, Chief Business Officer over at Verve, Verve connecting advertisers to publishers across emerging channels. Great to get your expertise today. Thank you very much, Ed. Stay with us. More from Bloomberg Intelligence coming up after this.

16:43you're listening to the bloomberg intelligence podcast catch us live weekdays at 10 a.m eastern on apple car play and android auto with the bloomberg business app listen on demand wherever you get your podcasts or watch us live on youtube we're not going to look at the day we're going to look at the year and we're going to look at what 2026 brings to with carol pepper paul we've got the perfect guest absolutely carol pepper pepper international ceo carol again we're carolina and I were just kind of going over the total returns here in 2025. What's the conversation you're having with your family office clients about 2026?

17:20Yeah, well, family offices are excited about this strong rally. And although some of them still sat a bit on the sidelines during 25, because in the beginning of the year, it did look a bit dicey. They're all ready to take their dry powder and start investing. So I think it's going to be a very strong year. The fundamentals are there. We got a rate cut in December, which is phenomenal. The markets are strong. There's strong underpinnings. And so I think people are going to be going in early on. And as you say, if you can't make a deal in this market, go home because it's going to be a fantastic market in 26.

17:56How much risk do you think your clients are going to be looking to take here after three strong years of equity returns? Maybe looking outside of traditional public equity for maybe some other areas that might generate return? Well, family offices are always interested in alternative investments and non-correlated assets because we create asset allocations that last for generations. And portfolios are each tailored to the particular purpose of that portfolio. So for sure, we were in precious metals a couple of years ago. We've written that trend up. The AI data center trend is honestly just getting started.

18:32And a lot of those deals have been in the private side through private debt deals and private hedge funds that are funding these plays. But those things will begin to come into the public markets as well. So AI, technology, rare earth metals required to build a lot of this new technology that we're looking for in our country, deposits being found onshore that are going to be able to empower the resurgence of this new AI world that we're creating. There's a lot of areas to invest in this year, in 2016. Carol, can I jump in on that? Because we are anticipating some mega IPOs potentially in the AI world.

19:08We're expecting maybe SpaceX, that's sort of AI and defense in many ways, but OpenAI could well tap the markets. If you're someone who hasn't managed to gain access through the private markets, are you left holding the baby? Do you think, though, that actually there's more room to run in terms of valuations once in the public market? Absolutely, because you'll have an even larger capital base, and they're just getting started. Family offices are working on this. You know, if you think about how quickly the Internet changed, double, triple, quadruple that rate of change. So even though we've got cutting-edge ships today from NVIDIA, we don't know what they're going to look like even by the end of the year.

19:44Data centers that are the size of 20 football fields are going to shrink down to the size of shipping containers. Very shortly, you're going to find AI data centers inside of huge office buildings, for example, that have been repurposed to handle all the new compute power that's required. So you're going to see tremendous change happening in the AI space. And as that happens, you need a lot of capital. So, yes, when it comes public, obviously the first few days is going to drift down. That's when you grab it. Or on a fear day, because it's not like we're not going to have fear days in 26. We always have fear days.

20:18but yes there will be opportunities for you to get into that trend stick it in files uh college account or in your retirement account and just let it run but how much is the ai bubble going to be the fear trend like we've have this on again off again view it feels as though people are bought back into ai optimism just in the last couple of weeks but since october and onwards we've had these fleeting moments of panic really that the debt that's getting loaded onto certain companies or indeed just whether the productivity gains are going to be enough to vindicate the amount of infrastructure investment that we're seeing?

20:49Well, they will. It's just a question of timing, honestly. And the good part for the AI companies, unlike during the dot-com, these companies have a boatload of cash. If you recall, during the dot-com era, people were basically buying on vaporware with no cash, no earnings, no nothing. And in this case, there is a massive cash hoard behind a lot of these plays. They learn their lessons. And so, they're ready to ride through those periods when there's doubt because other things are happening in the world besides AI. So I don't think we're going to see that. Yes, other things are happening, whether they notice it or not.

21:27Carol, 2026 is an election year, and that presumably will bring some level of uncertainty back into the marketplace. How much of a risk, if any, is that to you? I think it's going to be a lot of noise. I mean, unless you have an impeachment of the president due to a regime change in the House or the Senate, it will be noise. There'll be a lot of noise. You know, Epstein is a disgusting situation, but again, not economically changing the country's profile. So as long as there's more steadiness this year, hopefully on the direction of the economics and hopefully some further relief on tariffs, you'll see the market happy enough.

22:06And it's still an open question of who's going to win the midterms, us. But it will be something that will take up a lot of airtime, but not necessarily a lot of economic change, per se, for the markets. Carol, it's been great getting your expertise as we wrap up this year. An extraordinary year of record high on the S &P 500 as we speak. Carol Pepper, great task of time, Pepper International CEO. This is the Bloomberg Intelligence Podcast, available on Apple, Spotify, and anywhere else you get your podcasts. Listen live each weekday, 10 a.m. to noon Eastern on Bloomberg.com, the iHeartRadio app, TuneIn, and the Bloomberg Business app.

22:45You can also watch us live every weekday on YouTube and always on the Bloomberg Terminal.