Oil Pushes Higher With Ukraine Talks and China’s Pledge in Focus

0:01Bloomberg Audio Studios Podcast 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 talks between the u.s and ukraine are helping to advance oil prices this morning let's get some more insight and now on this another commodity moves with miami mike maglone senior commodity strategist at bloomberg intelligence located in miami beach um mike talk to us about just i'm seeing you know wta crude oil 58 a barrel it's up a buck but this is really really low price for oil our good friends in the oil patch in odessa in midland texas they are not happy no they aren't um and unfortunately still producing more oil now that is on decline that should be it's the responsive elasticity to lower prices but what's happening in Russia, Ukraine, if there's detente, if there's significant peace, the first thing you should expect to go down is potentially gold and natural gas, natural gas prices, because we'll be bringing up more of that supply.

1:14So it's not really a good reason, unless there's some kind of curtailment of supply for prices to go up. It's an overall bear market. But if you look over next year, I think the range in crude oil can be from around 40 to 70. Now, that's a normal first standard deviation move, it's safely to end the year between 55 and 60. But the bottom line, Paul, is the average cost of production, the break-even cost in this country is around 55. So they can do pretty well. And the point is you basically have to get below those levels for an elongated period to offset these excesses of global supply versus demand.

1:46So I'm still bearish crude oil, but I wouldn't be surprised if we get it. I think traders are looking for bounces to sell. Okay. Let's talk about where perhaps geopolitical anxiety has fed into a rush to havens. Boy, did you see it in the run-up in gold, in silver. We're having a little bit of, is it profit-taking happening right now, Mike? Where do you point us towards in terms of buying the dips or selling where we're at? Caroline, I love how you went there. The phrase that I keep thinking of is you're supposed to be selling when they're yelling, particularly in silver. Silver is one of the most overbought commodities on the planet.

2:20You have to go back to 1979 to get a similar stretch almost two times versus this 50-week moving average. And that peak we put in that we closed at$32.32 that year. The next year that we closed above that level was this year. So that's what happens when you get this stretch. So I'm very concerned about things like silver. Yeah, it could get to 100, but it typically will drop towards 50. That's a full normal range for next year. It's what I expect. It's the number one medal I expect to be down next year because it's a short squeeze now. Now, gold's a little different story, but gold's expensive, too.

2:53So the whole precious metals to market looks to me like, yes, it's been great for those of us who've been bullish forever, but it never hurts to take some profits. And right now, I think we're seeing some of that. Mike, 2026, what's kind of the play in your world here, your 2026 outlook in global commodities? Am I buying pork bellies or where am I going? Yeah, I love how you always go to pork bellies, Paul, because I don't really try. I don't know much about pork bellies. And just to mess with you, you need to trip me up. That's important. The number one thing I'm worried about is this continued deflation in the elastic commodities, i.e.

3:25the grains, energy, crude oil, natural gas. I fully expect those to continue. So levels I'm looking for is crude oil to get to near 40, natural gas to get near two. That's not profound. It's what has always happened. Corn to drop down to like$3.50. Those are break-even costs. The key thing I'm worried about is the signals by having gold having its best year ever versus crude oil down. that exceeded the extreme we had in 2008. I'm really worried about this stock market problem. So right now, for industrial metals to go up, the stock market basically has to go up. But here's a key thing I like to end with.

3:59We've just never had this type of high-velocity rally in gold and silver and precious metals with stock market volatility this low. So typically, it means stock market volatility will go up next year, and that might be all that matters. What about digital gold, Mike? Going down. It's still a bear market. I think we're going to look at Bitcoin like we looked at silver in 1979. This year, it's a pretty significant peak. I think Bitcoin is more likely to head towards 50. That's a normal correction, particularly if the stock market goes down and the whole rest of the space to continue that bear market.

4:32So a good example is the Bloomberg Galaxy Crypto Index is down about 20 % this year. It's a key reversal. It was up about 20 % this year. It looks just like the U.S. stock market did in 1929. The difference is there's an unlimited supply of cryptocurrencies. There was only one in 2009. That was Bitcoin. Stay with us. More from Bloomberg Intelligence coming up after this.

4:57You'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. 2025 in many ways was not discerning there were record highs there were sudden reversals there was years of conviction trades there was costly comebacks and it's all been written down by our wonderful colleagues at bloomberg news and we can sit down with one of them michael regan he is bloomberg managing editor for u.s equities who drills into the ai trade and whether now it's time for the big short we all know what that word play is pointing towards one michael bury How did he really pour cold water on some of the big AI hype?

5:42Yeah, it was really interesting. I mean, you know, first, let's, you know, to be fair, it was a great year to own AI stocks. You know, as we get to the end of the year, NVIDIA's up 40-some percent. Palantir's up 140, I think. But Burry really did throw some cold water on the trade in a very high-profile manner in early November when he disclosed, put positions in Palantir and NVIDIA in his hedge fund, Cion Asset Management. He's since actually closed the fund. But it really sort of landed like a thud in the market. Both those stocks and the NASDAQ were really setting record high after record high.

6:20Again, they're still going to have, going to the books as very good years for both stocks. But they haven't set a new high since then. They both took a big dip. The Nasdaq hasn't set a new high since he disclosed these puts. So to me, it was like, you know, he really sort of hit a raw nerve, I think, in what people's concerns were about the AI trade that, you know, yes, there's a lot of promise there, much like the dotcom era. But the winners and losers, you know, it's a long way from knowing who they will all be. I mean, obviously, NVIDIA has a good case to be, you know, one of the main winners.

6:56So that was one of, you know, to us, we love writing about a good contrarian call, especially one that sort of hits the top of the market like that. So that was one of our big trades of the year. Mike, there's a lot of people in this market that don't recall a market where tech was not leading this market. That's true. I mean, and quite frankly, I'm not sure if you're telling me that tech's not going to be a driver in 2026. You know, you got to be cautious there if that's kind of your belief. Yeah, yeah. And I wouldn't, believe me, I would not be the one to say that, you know, to buck with the trend.

7:28I haven't heard that from the street because the street's still very bold. Yeah, yeah. I think, you know, what we've seen in the last couple months is sort of this, a little bit of a rotation into some of the other, you know, forgotten sectors, some of the more cyclical sectors. And, you know, obviously tech will go into the books as among the best gainers of the year. You're totally right. Most years they are. You know, you look at the NASDAQ 100's performance versus the S &P, and it's just on any given time frame. It's, you know, I mean, that is our economy, right? That's where the growth is.

8:00That's where all the excitement is. You know, I'm not sure anyone expects, you know, a big correction in tech stocks. I think Alex has written about, you know, a lot of strategists, though, are wondering if this rotation into other sort of least less loved pockets of the market could continue next year, though. And at the moment, speaking to Mark Howland, Mark's anxiety, everyone seems to be one side of this trade and the S &P 500 is going to go higher. But talk to us through some of it. It's just such a brilliant story that you've brought to us talking about all the ways in which 2025 was defined by certain trades.

8:34Crypto was another huge one. And if you look at Bitcoin, it's down on the year. You could have booked some enormous gains if you'd sold at the right time. And also, if you're trading some of these meme coins, particularly the Trump related ones, you've basically lost any gains if you'd held on to them. Yes, yes. Mind you, these are the big trades of the year. Not necessarily all winners, but they were sort of the trades that captivated. Defining. Defining trades of the year. You know, and here President Trump came in promising to be the crypto president, you know, basically getting rid of all the regulatory actions against the major crypto players, pardoning a bunch of people who were in jail for crypto, launching his own meme coins, you know, the Trump coin and the Melania coin.

9:18I think that was pretty dramatically surprising to a lot of people to think with the president's, the full power of the White House behind digital assets that we wouldn't see just this blockbuster year. But it just goes to show you, markets are designed to surprise you and upset you. And, you know, Trump's meme coin had a huge rally at the beginning. It's down something like 80 some percent now. Melania is same thing down, like, I think, 99 percent. So, you know, you don't need me to tell you that crypto is risky, but, you know, there's exhibit hype. Stay with us. More from Bloomberg Intelligence coming up after this.

10:01You'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. Let's turn now to the Big Take Story. We love the Big Take Stories that come out every day from Bloomberg News, deeply sourced, Just great, fascinating stories. Really well done. This one goes to Wall Street's balance of power is shifting. Big banks are roaring back as regulation eases, lending surges, and private credit giants lose some of their luster there.

10:35Bloomberg's Catherine Chiglinski helps lead our investing coverage. She is a pride of the William & Mary University. But she leads our coverage on all that stuff and investing in banks. She joins us for more. Talk to us about kind of the big banks. Like when I graduated from business school, went to the Chase Manhattan Bank, we did leverage lending, we made a fortune. And to see private credit take some of that business away really surprised me over the last 15 years or so. How's that balance of power these days? Well, it was huge. I mean, it was a huge shift to see all these private credit, private equity firms sort of really taking all this market share away from the banks.

11:10as the banks, you know, post-financial crisis. We're sort of limited by regulations, and also we're arguably trying to be a lot, you know, safer overall. But now we're actually seeing it change a little bit, and I'm not trying to say, you know, banks are going hog wild on everything, but, like, they've been involved in a lot of the leveraged loan deals this year. We've seen them in some of the major acquisition financing, and it's been a good year for the banks. I mean, regulations have pulled back. J.P. Morgan's on track to have its highest annual profit, So it's actually been a pretty good time now to be a bank.

11:43Yeah, the balance has really shifted. It's revenge of the banks is how Mike Mayo, well-known analyst, bank analyst over at Wells Fargo, put it. These non-banks, though, do they in return perform less well, have less of the pie? How does ultimately it distribute itself? Because also just the sheer scale of non-usual assets or alternative assets has just grown exponentially to like$16 trillion. Grown exponentially. So obviously, I still think those firms will be fine overall, but you're really seeing the stock price talk a little bit. So the bank stock prices are up quite a bit. I mean, Citigroup, we had their price-to-book ratio climb above 1 % for the first time in a very long time.

12:25I think you're starting to see them sort of get their mojo back a little bit and really find the groove in the businesses that they're digging deeper into, investment banking, trading, etc. But I also think you'll still see these private credit firms work really hard and find different deals. But I do think it's more challenging. I feel like this year it was the credit cockroach debate that really reigned for a long time. And while some of the banks were involved in some of those cockroaches, like first brands, I think there is this growing sense that maybe we should scrutinize a little bit more these deals.

13:07And obviously, the alternative asset managers got so big in the private credit space for so long that I think there's a little bit more of a scrutinizing eye on those. Well, I mean, even in the Warner Brothers Discovery deal, there's a lot of big banks, bridge loans. I mean, bring back terms we haven't heard in a while, you know, a bridge loan, which would be refinanced with a bond deal or something like that. Some of the traditional M &A financing seems to be coming back. But these private credit folks, they're not going away because the money continues to flow into that asset class. Yeah, the money continues to flow.

13:37And I think, you know, I think every competitor of a private credit firm really understands that, you know, they're not going away. Like, you should be very careful. You are, you know, if you're a bank for these financing deals, you're going up against a lot. I mean, yeah, you look at the Warner Brothers situation. I mean, the amount of firms that were involved in each of those bids, it's kind of crazy to say, you know, it was banks, but it was also private credit firms and alternative asset managers. Stay with us. More from Bloomberg Intelligence coming up after this.

14:21I want to know who out there of our listeners and viewers was gifted an AI hardware product. Now, many people already wear perhaps an AI ring or an aura ring, but how is it starting to integrate more within your life? And what options are there at the moment? We're going to have a discussion about AI wearables, the promise and the hype. Is it living up to reality? We can ask Sandbar's CEO about his new smart ring because it's certainly on pre-order already, the stream. Mina Fahmy is with us, joining us. And you're talking about the Stream Ring in particular that lives beyond your screen more broadly.

15:02This is all about audio, all about speaking to your ring. Just talk us first through what exactly the Stream Ring is. Absolutely. Thanks so much for having me. So Stream has two parts. there's the Stream app, which is kind of like a conversational notes app that will take notes silently, that will respond to questions in a voice that sounds a bit like your own, and you primarily interact with it using the Stream ring. So it's this little device here with a touchpad on the side and a mic on top, and you just hold, speak into it, and release. And it'll vibrate to let you know that it heard you. And if you have earbuds in, you can then hear a response.

15:51I'm seeing people wearing all kinds of rings here. So it's obviously that the market is ready for this type of hardware here. What problem does it solve? What does it really do for the user here? What are you trying to capture? Definitely. So Sandbar is based in New York City. And while on On the go, often ideas will pop up where you'll want to take a note of something for later or you'll want to get a little bit of information like, hey, tell me what's new in the markets today and have that beam straight into your headphones while you're on your way into work. And being able to be in the moment and tap into those instances of flow without stopping and pulling out your phone makes a big difference to actually performing that interaction versus it getting lost in the moment.

16:44Dave Lee, our Bloomberg Opinion columnist, had the joy of using your ring, and I did as well. I've played with it a little bit already. And he sort of described how it basically is not drawing unwanted attention. And also key, doesn't make others feel uncomfortable. For me, I'm an avid cyclist, as you know, Paul, and I get to and from the office with that. The amount of times I've wanted Siri to just answer something about biking docs or about where I'm doing or the meeting I'm about to go to, and it just doesn't work. And I'm interested, Mina, from your perspective, how much, given it's coming out, I think, in the summer of 2026, how much is this predicated on the fact that Apple doesn't get its act together?

17:22I think that there's a lot of opportunity for new companies to demonstrate new products that are focused on, I guess, very specific applications to start that hopefully grow over time. A big limitation of existing AI products, especially those built into devices, is they'll give you a single response to a single query. But if I want to do a really fast back and forth, not only do I need great hardware, but I also need great software that's capable of a thoughtful response, that's really high intelligence, that's emotionally aware. And solving all of those difficult personality challenges and hardware challenges is something we're excited to dedicate ourselves to and something we really haven't seen anyone do before.

18:10Some people with just devices in general, Amina, have a concern of it's always listening to me. And I'm not sure I like that from a security perspective. Address that issue. Absolutely. So at Sandbar, we love thinking of the bar test, which is what would you wear at a bar and feel comfortable wearing and the people around you would also feel comfortable wearing. So the really nice thing about the Stream Ring is it only listens when this touchpad is held. And the mic only picks up basically what's right in front of it. So you really have to whisper into it. And that's great if you're on the subway and it's really loud and you want to take a note.

18:50or that's great if you're walking on the street or you're driving and you don't want to disturb the people around you and mention something quietly. But it's really not designed for picking up what's around you or recording everything. What's so interesting is about where you've come from and a lot of work academically done, but also you were inside Meta. Meta bought your previous startup, Control Labs. And in many ways, Meta has gone all in on the future of eyewear and the idea that you can have these Ray-Bans that will interact with your surroundings visually and be able to talk to you as well.

19:22People have loved that product. With you and the focus on audio, what I'm really interested in is that it speaks to you in your own voice or like your voice. Why do people like that rather than an unfamiliar voice that perhaps they currently are using, whether it's a Google Home or an Amazon Alexa or indeed with Siri? Definitely. So our core design philosophy is that we want Stream to feel like an extension of your own thinking. And if we look at how the public and consumers are beginning to view AI, people are, I think, excited by the benefits that it brings, but they're also nervous about whether AI will replace their relationships or replace their jobs.

20:06and something nice about this extension framing is that the AI is always in your control. It only listens when you want, you know, you can tap to interrupt it really quickly, it responds when you ask things of it, and that changes the relationship from one of replacement to one of extending your own ability to think and answer questions and remember. And when we were testing out different voices, one day my co-founder Kurok suggested, well, hey, why don't we just try a version of your own voice? And initially it was a bit strange, but quite quickly it feels much more natural than anything we had tried before.

20:49And so that became a surprising, really nice finish to that design philosophy. Mina, to what extent is AI in your product here and where do you think it can take you as more and more people get more and more comfortable entrusting some functionality to AI? Absolutely. I mean, basically none of this product would be possible without all of the incredible advancements in models. Models handle creating notes and organizing them and providing the response and creating memories that your stream can draw on to continue conversations over time. and as those models get more intelligent and more useful you could imagine this becoming a portal to all kinds of things you're querying off you're prepping so you know you could imagine saying hey give me a podcast of all of the things I have to get done today and by the way can you draft some of those so they're ready at my computer when I get to work and then you sit down and things are basically already there for you.

21:55And those kinds of deeper actions and sequential processing will require advancements beyond what we have today, but that'll just add to the experience over time. I'm right in thinking it's$249. Is that the asking price? That's right. $249 for the silver, and then it'll be$299 for gold. So I'm already wearing an aura ring, and I've already got some rings on some other the hip of fingers, luckily, thanks to my husband and sister and the like. So is your competition Aura and the health device, or do you encompass that space too? Is your competition really what Sam Altman is now building with Johnny Ive and the idea of future AI hardware?

22:34It's a good question. And I think that what we're offering today is pretty different than anything that exists so far. It's really an input-focused wearable device that's centered around providing you control. And so I think that if you're looking for that kind of an experience, hopefully we're providing something special in the market. And in the same way that I continue to, you know, use my iPhone and I continue to use a laptop, we hope that other devices will coexist with their own philosophies of how humans and technology can relate. This is the Bloomberg Intelligence Podcast, available on Apple, Spotify, and anywhere else you get your podcasts.

23:14Listen live each weekday, 10 a.m. to noon Eastern on Bloomberg.com, the iHeartRadio app, TuneIn, and the Bloomberg Business app. You can also watch us live every weekday on YouTube and always on the Bloomberg Terminal.