Nvidia Probe Follows Historic Selloff, Global Stocks Tumble

Bloomberg Audio, Studios, Podcasts, radio news. Good morning, I'm Nathan 0:00:11.200 --> 0:00:14.160 Hager and I'm Karen Moscow. Here are the stories we're 0:00:14.200 --> 0:00:15.480 following today, Garin. 0:00:15.560 --> 0:00:19.200 The selloff in Nvidia shares continues this morning. That stock 0:00:19.280 --> 0:00:22.120 is down one and a third percent in early trading, 0:00:22.120 --> 0:00:24.960 adding to a nine and a half percent dropped yesterday 0:00:24.960 --> 0:00:28.080 that wipe two hundred and seventy nine billion dollars off 0:00:28.080 --> 0:00:31.520 in Vidia's value. That was a record one day loss 0:00:31.600 --> 0:00:34.640 for a US stock. The latest catalyst for the selloff 0:00:34.720 --> 0:00:38.680 is a Bloomberg News exclusive. Sources say the Justice Department 0:00:38.720 --> 0:00:42.080 has sent subpoenis to Nvidia and other companies as it 0:00:42.159 --> 0:00:46.680 seeks evidence the chip maker violated competition laws. Officials are 0:00:46.720 --> 0:00:49.279 concerned in videos making it harder to switch to other 0:00:49.320 --> 0:00:54.280 suppliers and penalizes buyers that don't exclusively use its AI chips. 0:00:54.520 --> 0:00:57.800 Bloomberg Technology reporter Ian King broke the story. 0:00:58.160 --> 0:01:01.200 We reported a while ago that those question as going out, 0:01:01.240 --> 0:01:05.400 that they were just sort of asking customers, asking competitors, 0:01:05.440 --> 0:01:07.560 you know, what was going on in the market. The 0:01:07.600 --> 0:01:10.240 fact that this has gone to the subpoena stage, the 0:01:10.959 --> 0:01:15.560 legally enforceable request for information is usually a sign of 0:01:15.880 --> 0:01:17.119 an escalation. 0:01:17.400 --> 0:01:20.120 And response to questions about the pro Bloomberg zee in 0:01:20.200 --> 0:01:23.039 King Reports, Nvidia says its market dominance stems from the 0:01:23.120 --> 0:01:26.120 quality of its products, which deliver faster performance. 0:01:26.720 --> 0:01:30.160 Well, Nathan, it is risk off this morning around the world. 0:01:30.240 --> 0:01:33.360 Japan's and EKE fell four point two percent and stocks 0:01:33.360 --> 0:01:36.440 in Europe are down more than one percent. This follows 0:01:36.600 --> 0:01:39.399 yesterday's Wall Street selloff, which the S and P five 0:01:39.480 --> 0:01:42.240 hundred drop more than two percent. Well, the Nasdaq plunged 0:01:42.240 --> 0:01:45.640 almost three point three percent. The start of historically tough 0:01:45.680 --> 0:01:48.480 month for markets came as a closely watched a US 0:01:48.480 --> 0:01:53.640 manufacturer Engage again missed forecasts. Bloomer Smark Cranfield says investors 0:01:53.640 --> 0:01:55.800 are concerned that FED is not doing enough. 0:01:56.160 --> 0:01:58.520 In some people's minds, the Federals already behind the cove 0:01:58.760 --> 0:02:01.400 people may have come to the conclude that even cutting 0:02:01.480 --> 0:02:03.880 rates by twenty five basis points data this month is 0:02:03.920 --> 0:02:05.360 just not going to be enough. When they look at 0:02:05.400 --> 0:02:07.240 some of the data which has come through recently, and 0:02:07.240 --> 0:02:09.160 they look ahead to the employment report at the end 0:02:09.160 --> 0:02:11.919 of this week, they're probably saying, well, we really need 0:02:12.280 --> 0:02:14.400 fifty basis points to kick start this thing. We're not 0:02:14.440 --> 0:02:15.880 going to get it, and so it's time to take 0:02:15.919 --> 0:02:18.320 some risk off the table. There's just too much uncertainty 0:02:18.400 --> 0:02:20.480 of head. And on top of that, you see the 0:02:20.480 --> 0:02:23.200 most important stock in the world has a very very 0:02:23.240 --> 0:02:25.880 bad start, and that would just trigger a lot of 0:02:26.160 --> 0:02:28.120 defensive moves by people across the board. 0:02:28.400 --> 0:02:31.359 And Bloomberg'smark Cranfield notes the S and P five hundred 0:02:31.440 --> 0:02:34.640 so its worst start to September since twenty fifteen. For 0:02:34.639 --> 0:02:37.200 the Nasdaq one hundred, it was the worst since two 0:02:37.280 --> 0:02:37.919 thousand and two. 0:02:38.240 --> 0:02:40.760 And Karen another chip maker besides in videos in the 0:02:40.800 --> 0:02:44.200 spotlight this morning, the Biden Harris administration's big bet on 0:02:44.480 --> 0:02:48.080 Intel to lead a US chip making renaissance is in 0:02:48.200 --> 0:02:52.280 grave trouble. Bloomberg's John Tucker joins us with more John, 0:02:52.320 --> 0:02:52.720 what's the. 0:02:52.680 --> 0:02:56.480 Issue Intel's mounting financial struggles? To start with, Nathan, the 0:02:56.560 --> 0:02:58.959 company's supposed to receive eight and a half billion dollars 0:02:58.960 --> 0:03:01.240 in grants and eleven billion dollars in loans from the 0:03:01.360 --> 0:03:04.160 twenty twenty two Chips and Science Act, but only if 0:03:04.160 --> 0:03:07.840 the chip maker meets key milestones. And Intel is mired 0:03:07.880 --> 0:03:11.880 and a sales slump worse than anticipated, it's also hambrhaging cash. 0:03:12.240 --> 0:03:16.119 We reported last week they're considering drastic actions, including possibly 0:03:16.480 --> 0:03:20.120 splitting off its manufacturing division or cutting back if global 0:03:20.320 --> 0:03:24.400 factory plans. What's more, of the company has resisted sharing 0:03:24.440 --> 0:03:28.160 certain information requested by US officials who're seeking to vent 0:03:28.200 --> 0:03:32.960 the viability of Intel's manufacturing roadmap. It's pretty troubling development 0:03:33.000 --> 0:03:35.880 for a company that's supposed to help boost the US 0:03:35.880 --> 0:03:39.360 semiconductor workforce. John Tucker, Bloomberg Radio, All. 0:03:39.360 --> 0:03:41.320 Right, John, thank you well. The reason sell off and 0:03:41.400 --> 0:03:45.440 oil continues. Checking crude right now, Nimex screwed oils downs 0:03:45.480 --> 0:03:49.040 extensive percent is its sixty nine dollars ninety two cents 0:03:49.080 --> 0:03:51.680 a barrel, while brand is at seventy three dollars forty 0:03:51.720 --> 0:03:55.720 two cents. The drop follows yesterday's more than four percent loss. 0:03:55.960 --> 0:03:58.320 The Libyan Central banker, at the heart of a power 0:03:58.360 --> 0:04:01.400 struggle between two rival government and said a deal appears 0:04:01.440 --> 0:04:04.960 imminent to resolve the dispute and resume oil output. Bloomberg 0:04:05.040 --> 0:04:10.040 Middle East Energy correspondent Anthony D. Paola says Libya's supply 0:04:10.360 --> 0:04:11.440 is still uncertain. 0:04:11.680 --> 0:04:15.000 According to reports that we've seen the Crewed available and 0:04:15.040 --> 0:04:17.760 the Cruden storage is really diminishing there, so it is 0:04:17.839 --> 0:04:19.640 kind of cycling up and down. But that's a real 0:04:19.720 --> 0:04:23.200 question in Libya there, we're talking about a million barrels 0:04:23.279 --> 0:04:26.600 or so of production that, according to some of our reporting, 0:04:26.640 --> 0:04:27.560 was down by at least half. 0:04:27.920 --> 0:04:31.200 Bloomberg's Anthony D. Paola says oil has now wiped out 0:04:31.320 --> 0:04:32.720 all of this year's gains. 0:04:32.960 --> 0:04:36.520 Turning to the presidential race now, Karen Goldman sachs economists 0:04:36.560 --> 0:04:39.160 are gaming out the impact of a potential Trump or 0:04:39.240 --> 0:04:42.920 Harris presidency. The Banks researchers are warning if Trump returns 0:04:42.960 --> 0:04:46.120 to the White House, higher tariffs and tighter immigration policy 0:04:46.360 --> 0:04:49.680 could lead to a hit to us GDP. Sha Kamala 0:04:49.720 --> 0:04:52.919 Harris win and Democrats take control of both chambers of Congress. 0:04:52.920 --> 0:04:57.120 Goldman says new spending and expanded middle income tax credits 0:04:57.360 --> 0:05:01.080 would slightly more than offset lower investments due to higher 0:05:01.120 --> 0:05:02.400 corporate tax rates. 0:05:03.080 --> 0:05:06.120 Well, Nathan Kamala Harris plans to unveil another tax credit 0:05:06.120 --> 0:05:09.320 as part of her economic policy rollout. A Harris campaign 0:05:09.360 --> 0:05:12.120 official says the vice president will call for raising the 0:05:12.240 --> 0:05:16.120 small business tax deduction for startup costs from five thousand 0:05:16.160 --> 0:05:19.600 to fifty thousand dollars. Harris and former President Trump are 0:05:19.680 --> 0:05:22.719 competing on tax policy, with a slate of tax cuts 0:05:22.839 --> 0:05:25.839 due to expire next year. The Vice President will unveil 0:05:25.920 --> 0:05:29.120 her latest proposals in his speech in New Hampshire later today. 0:05:29.400 --> 0:05:32.479 Meantime, Karen, former President Trump has taken a legal set back. 0:05:32.520 --> 0:05:35.160 A federal judge in Manhattan has turned down his bid 0:05:35.200 --> 0:05:37.800 to transfer his New York hush money case to federal court. 0:05:38.160 --> 0:05:40.599 The move could have delayed his sentencing on thirty four 0:05:40.640 --> 0:05:44.080 felony counsels right now is set for September eighteenth. Trump 0:05:44.160 --> 0:05:47.360 has argued the Supreme Court's ruling on presidential immunity means 0:05:47.400 --> 0:05:49.560 the case should be dismissed, even though it relates to 0:05:49.560 --> 0:05:52.840 actions he took before he was president. The trial judge, 0:05:52.880 --> 0:05:55.840 Juan Mershan says he will consider the immunity argument and 0:05:55.920 --> 0:06:00.000 decide on the motion to overturn Trump's conviction by September sixteenth. 0:06:00.480 --> 0:06:02.880 Now, Nathan, let's get to the latest. In the Middle East, 0:06:02.960 --> 0:06:06.960 the Justice Department has unsealed the terrorism and conspiracy charges 0:06:07.000 --> 0:06:11.920 against six senior Hamas leaders, including Yahya Sinwar and Ishmael Haniya, 0:06:12.040 --> 0:06:14.840 who was killed in Tehran in July Attorney General a 0:06:14.880 --> 0:06:18.240 Meeric Garland says AMAS has run a decades long campaign 0:06:18.279 --> 0:06:22.040 to murder Americans and endanger national security. 0:06:22.480 --> 0:06:25.920 The charges unsealed today are just one part of our 0:06:25.960 --> 0:06:29.640 effort to target every aspect of amasa's operations. 0:06:30.400 --> 0:06:33.400 These actions will not be our last. 0:06:33.320 --> 0:06:36.120 An Attorney General Merrick Garland waited for months to unseal 0:06:36.200 --> 0:06:39.560 these charges. As we hear from Bloomberg's Paul Wallace. 0:06:39.400 --> 0:06:43.839 They were filed in February, but only unsealed yesterday. It's 0:06:43.960 --> 0:06:48.400 unclear why the Justice Department has done that, but it's 0:06:48.440 --> 0:06:54.560 possible that last weekend's discovery of the six Israeli. 0:06:54.120 --> 0:06:56.040 Hostages who were killed, including. 0:06:55.640 --> 0:06:59.880 An Israeli American, might have had something to do with that. 0:07:00.279 --> 0:07:03.800 And Bloomberg's Paul Wallace reports that Justice Department is investigating 0:07:03.839 --> 0:07:07.200 the death of that American hostage, Hirsch Goldberg Poland, as 0:07:07.240 --> 0:07:13.400 an act of terrorism. And it's time now for a 0:07:13.400 --> 0:07:15.240 look at some of the other stories making news in 0:07:15.360 --> 0:07:17.360 New York and around the world. And for that we're 0:07:17.400 --> 0:07:19.120 joined by Bloomberg's Michael Barr. 0:07:19.160 --> 0:07:20.559 Michael, good Morning, Good morning. 0:07:20.600 --> 0:07:24.160 Karen Linda's son, a former aide to New York governors, 0:07:24.200 --> 0:07:28.320 Kathy Hokul and Andrew Cuomo has been arrested son and 0:07:28.360 --> 0:07:31.480 her husband Chris, who have been charged with spying for 0:07:31.560 --> 0:07:35.680 the Chinese government. They were accused of allegedly receiving millions 0:07:35.720 --> 0:07:39.120 of dollars and kickbacks from Beijing. Sun and her husband 0:07:39.200 --> 0:07:42.560 both pleaded not guilty to the criminal charges and their 0:07:42.600 --> 0:07:46.160 free you Own bond. An official says Ukrainian Foreign Minister 0:07:46.240 --> 0:07:50.760 to Metro Koleba has resigned. The foreign Minister's resignation today 0:07:50.880 --> 0:07:53.800 came as at least seven people were killed thirty five 0:07:53.880 --> 0:07:57.840 injured in an overnight strike in Leviv. The mayor says 0:07:57.920 --> 0:08:00.480 a child and a medical worker were ung. The dead 0:08:00.520 --> 0:08:03.640 and others are in critical condition. Yesterday, at least fifty 0:08:03.640 --> 0:08:06.040 one people were killed and at least two hundred heart 0:08:06.360 --> 0:08:09.280 and a deadly air strike in eastern Ukraine. The strike 0:08:09.360 --> 0:08:12.040 hitting a hospital and college in the city of Poltava, 0:08:12.520 --> 0:08:15.640 and Ukrainian forces say it was the work of Russian 0:08:15.680 --> 0:08:20.200 ballistic missiles. State Department spokesman Matthew Millers said that the 0:08:20.320 --> 0:08:24.440 US military is constantly assessing Ukraine's need. 0:08:24.840 --> 0:08:28.200 We have adapted our policy over time based on changes 0:08:28.280 --> 0:08:31.880 in the battlefield. We continue to remain flexible and look 0:08:31.920 --> 0:08:35.240 at changes in the battlefield and adapt and adjust our 0:08:35.240 --> 0:08:38.440 policy when necessary. Something the Secretary has spoken to and 0:08:38.480 --> 0:08:39.480 that's what we'll continue to do. 0:08:39.920 --> 0:08:42.920 Ukrainian President Lensky has been urging the US to lift 0:08:42.920 --> 0:08:46.160 its restrictions on using military aid inside Russia, but the 0:08:46.280 --> 0:08:49.560 US says it's being cautious since it could lead to 0:08:49.600 --> 0:08:53.559 retaliation from Moscow. The seventeen year old who allegedly shot 0:08:53.679 --> 0:08:57.200 NFL player Ricky Piersoll over the weekend in San Francisco 0:08:57.240 --> 0:08:59.920 will be charged with attempted murder. He'll be a rain 0:09:00.120 --> 0:09:03.080 in juvenili court this afternoon at the Youth Center in 0:09:03.160 --> 0:09:07.240 San Francisco. District Attorney Brooke Jenkins said whether he'll be 0:09:07.360 --> 0:09:10.280 tried as an adult is not her decision at this time. 0:09:10.320 --> 0:09:13.880 The charges will be filed in the juvenile court. No 0:09:13.960 --> 0:09:18.040 longer under California law can a district attorney choose to 0:09:18.200 --> 0:09:20.920 file those charges against a minor in adult court. 0:09:21.080 --> 0:09:24.640 DA Brooke Jenkins says the team also faces firearms charges 0:09:24.679 --> 0:09:27.280 and as for Pearsall, the rookie was back at the 0:09:27.360 --> 0:09:30.960 Niners training facility working out. There's dangerous heat in the 0:09:30.960 --> 0:09:34.600 western US this week from Spokane and Portland down to 0:09:34.679 --> 0:09:38.520 Las Vegas and Palm Springs. It has been potentially record 0:09:38.559 --> 0:09:40.800 breaking heat in Vegas. It will be around one hundred 0:09:40.800 --> 0:09:43.400 and seven degrees for the next three days. Global News 0:09:43.440 --> 0:09:45.520 twenty four hours a day and whenever you want it, 0:09:45.640 --> 0:09:48.760 Bloomberg News Now. I'm Michael Barr. This is Bloomberg. Karen. 0:09:49.040 --> 0:09:55.800 All right, Michael Barry, thank you time now for the 0:09:55.800 --> 0:09:59.640 Bloomberg Sports update. Went Dan Schwartzman, Dan, good morning. 0:09:59.480 --> 0:10:02.280 Good morning, Karen. Yankees drop out of first place in 0:10:02.400 --> 0:10:05.840 the Al East in walk off fashion. The bases are 0:10:05.880 --> 0:10:09.240 loaded for Wyatt Langford with the Rangers trailing four to three. 0:10:09.800 --> 0:10:12.360 The set by homes and the payoff fips swing on 0:10:12.520 --> 0:10:13.720 and a deep drive a left. 0:10:13.960 --> 0:10:15.600 That bowl is way way back. 0:10:16.040 --> 0:10:17.520 That ball is history. 0:10:18.200 --> 0:10:22.360 Oh, walk off slam for Wyatt Langford. That's Curtsey the 0:10:22.400 --> 0:10:25.320 Rangers TV Network. Rookie Wyatt Langford hitting the game winner 0:10:25.360 --> 0:10:28.160 off closer Clay Holmes was now blown a major league 0:10:28.200 --> 0:10:31.439 leading eleven saves with the loss, Yankees dropping a half 0:10:31.480 --> 0:10:34.040 game behind the Oils in the Al East after Baltimore 0:10:34.120 --> 0:10:37.079 knocks off the White Sox nine to nothing. Matt's meanwhile, 0:10:37.120 --> 0:10:39.280 stay hot they win their six in a row seven 0:10:39.280 --> 0:10:41.600 to two over the Red Sox. Matt's Day half game 0:10:41.640 --> 0:10:44.040 back of the Braves the final wildcard slot in the 0:10:44.160 --> 0:10:47.280 NL as Atlanta shuts out Colorado three to nothing. Elsewhere, 0:10:47.360 --> 0:10:49.719 Nationals beat the Marlin six to two. Giants loose to 0:10:49.760 --> 0:10:52.880 the Diamondbacks eight to seven. A slip past the Mariners 0:10:52.920 --> 0:10:55.800 three to two, there will be an all American semifinal 0:10:55.840 --> 0:10:58.960 at the US Open, Taylor Fritz knocking off Alexander Zaverev 0:10:58.960 --> 0:11:02.240 in four sets. Well, Francis Tiafo beats Grigor Dimitrov as 0:11:02.240 --> 0:11:05.040 a Bulgarian retires due to injury in the fifth set, 0:11:05.080 --> 0:11:07.880 down two sets to one. The Americans will play each 0:11:07.880 --> 0:11:11.120 other on Friday, and the women's draw. American Ema Navarro 0:11:11.240 --> 0:11:13.400 moves on to the semis a straight sets win over 0:11:13.400 --> 0:11:16.920 at Paula Badosa and the other quarterfinal match, Arena Sabulenka 0:11:17.040 --> 0:11:21.679 dominates Zenkin when losing just three games total. Today, Topsyedonyx 0:11:21.720 --> 0:11:25.120 Center battles Daniel Medvedev, Jack Draper faces Alex de Minar, 0:11:25.360 --> 0:11:28.840 while top Siediga Shiatek plays American Jessica Pegoula and Beatrice 0:11:28.840 --> 0:11:31.480 Hadad Maya takes on Carolina Muchova. 0:11:31.760 --> 0:11:32.080 That's you. 0:11:32.120 --> 0:11:35.319 Bloomberg Sports Update on Dan Schwartzman, Karen and Nathan. 0:11:37.440 --> 0:11:41.560 Coast to Coast on Bloomberg Radio nationwide on Syrias XM, 0:11:41.640 --> 0:11:44.560 and around the world on Bloomberg dot Com and the 0:11:44.600 --> 0:11:48.840 Bloomberg Business app. This is Bloomberg Daybreak. Good morning, I'm 0:11:48.880 --> 0:11:52.199 Nathan Hager. With oil sinking to its lowest level of 0:11:52.240 --> 0:11:54.680 the year, investors are trying to gauge how far the 0:11:54.720 --> 0:11:58.880 selloff could extend. Jeff Curry, chief Strategy Officer of Energy 0:11:58.920 --> 0:12:02.000 Pathways at the Carlisle Grop, joined Bloomberg Television for a 0:12:02.040 --> 0:12:04.560 discussion on the path forward for energy and commodities. He 0:12:04.640 --> 0:12:08.480 talked about being short oil and how seventy dollars WTI 0:12:08.720 --> 0:12:10.720 could impact global growth. Let's listen in. 0:12:11.240 --> 0:12:15.560 We'll definitely stimulate it relative to eighty five ninety. But 0:12:16.120 --> 0:12:20.400 I think yes, you're right, it's still sell off based. 0:12:20.160 --> 0:12:22.160 Upon concerns around China. 0:12:23.120 --> 0:12:28.199 But the data disappointment was a PMI that was expected 0:12:28.200 --> 0:12:31.240 to be forty nine point five and came out at. 0:12:31.080 --> 0:12:32.480 Forty nine point one. 0:12:33.120 --> 0:12:37.440 Does that justify the oil market being at a record short? 0:12:38.080 --> 0:12:39.000 Absolutely not. 0:12:39.160 --> 0:12:42.240 No, I'm not going to argue Chinese demand growth is 0:12:42.400 --> 0:12:45.280 robust in any shape or form, and yes they have 0:12:45.400 --> 0:12:50.880 structural problems on the longer term outlook, but by all means, 0:12:50.960 --> 0:12:54.360 it's not a collapse that would justify the market being 0:12:54.559 --> 0:12:58.400 as short today as it was in the global financial 0:12:58.440 --> 0:13:02.440 crisis of eight. So you've got to ask what's going 0:13:02.520 --> 0:13:06.320 on here. It's something far deeper than a slow down 0:13:06.400 --> 0:13:09.880 in China, because when you look at this market, fundamentally, 0:13:10.200 --> 0:13:14.280 inventories are low, the forward curve today even after the selloff, 0:13:14.400 --> 0:13:18.040 is backwardated, and a very high level of bagradation, which 0:13:18.080 --> 0:13:24.520 is consistent with a very tight, fundamentally strong market. And 0:13:24.559 --> 0:13:29.440 then the third issue is concerns around OPEK bringing on supply. 0:13:29.920 --> 0:13:33.200 They're bringing on a small amount that is being completely 0:13:33.240 --> 0:13:38.400 compensated for by decreases out of Cosic stand as well 0:13:38.440 --> 0:13:42.640 as Iraq, and given the credibility of OPEC recently, it's 0:13:42.679 --> 0:13:45.160 going to be important that that credibility is maintained. 0:13:45.559 --> 0:13:47.480 So I think these fears. 0:13:47.360 --> 0:13:49.760 Need to be put in the context of what the 0:13:49.800 --> 0:13:54.320 physical market looks like, which is relatively robust. Oil is 0:13:54.320 --> 0:13:57.560 more volatile than most of the other sectors, so it 0:13:57.600 --> 0:14:01.080 has an extra cost of holding it estimate that to 0:14:01.360 --> 0:14:04.840 hold oil with a risk free return of five point 0:14:04.920 --> 0:14:07.440 twenty five percent, which is where the money markets are 0:14:07.440 --> 0:14:10.360 paying you right now, you need a return in excess 0:14:10.520 --> 0:14:14.360 of fourteen point twenty five percent, call it fifteen percent. 0:14:14.840 --> 0:14:18.600 A fifteen percent price move at a seventy five dollars 0:14:18.600 --> 0:14:22.200 price level means somewhere around you know, ten or eleven 0:14:22.240 --> 0:14:25.080 dollars a barrow. And then so your expectations have to 0:14:25.120 --> 0:14:27.640 be for a big upward move before you're going to 0:14:27.720 --> 0:14:28.040 own it. 0:14:28.320 --> 0:14:28.880 Now, with the. 0:14:28.920 --> 0:14:31.760 Sell off down to seventy three on a print basis, 0:14:31.960 --> 0:14:35.680 the probability of seeing that upside is now much more likely. 0:14:35.960 --> 0:14:38.160 You're probably going to see investors pull money out of 0:14:38.200 --> 0:14:40.000 the money markets and put it. 0:14:39.920 --> 0:14:40.800 Back into oil. 0:14:40.840 --> 0:14:44.280 But when I talk about the borrowing costs and being 0:14:44.400 --> 0:14:48.320 short oil, essentially by drawing down your inventories to very 0:14:48.320 --> 0:14:53.240 low levels, you're leaving yourself very exposed to being short. 0:14:53.320 --> 0:14:55.720 If something were to happen, like a demand surprise to 0:14:55.760 --> 0:14:58.840 the upside or some type of supply shock, then the 0:14:58.880 --> 0:15:01.600 physical guys that have to come in cover that short, 0:15:01.680 --> 0:15:04.640 which may increase the demand for the physical barrels. 0:15:04.840 --> 0:15:07.560 And then you look at the paper inventories. 0:15:07.600 --> 0:15:10.080 You know, I call it working capital of physical oil, 0:15:10.480 --> 0:15:12.640 working capital of financial oil. 0:15:12.760 --> 0:15:15.760 They're also short the financial oil. And so when we 0:15:15.800 --> 0:15:16.280 look at the. 0:15:16.240 --> 0:15:19.880 Market today, you have you know, record shorts against really 0:15:20.000 --> 0:15:23.120 low inventories that historically doesn't happen. 0:15:23.440 --> 0:15:25.360 The only explanation. 0:15:24.920 --> 0:15:28.400 For that is people are taking money out of this market, 0:15:28.440 --> 0:15:31.880 taking working capital out of this market and putting it 0:15:31.920 --> 0:15:33.720 into higher returning endeavors. 0:15:34.040 --> 0:15:36.640 Now, with the pullback, you're likely to see some of 0:15:36.640 --> 0:15:38.560 that money come back in. You'll race back on. 0:15:38.960 --> 0:15:41.840 This is Bloomberg day Break Today, your morning brief on 0:15:41.920 --> 0:15:45.600 the stories making news from Wall Street to Washington and beyond. 0:15:45.760 --> 0:15:48.520 Look for us on your podcast feed at six am 0:15:48.600 --> 0:15:52.240 Eastern each morning, on Apple, Spotify, and anywhere else you 0:15:52.320 --> 0:15:53.360 get your podcasts. 0:15:53.600 --> 0:15:56.280 You can also listen live each morning starting at five 0:15:56.360 --> 0:15:58.920 am Wall Street Time on Bloomberg eleven three to zero 0:15:59.000 --> 0:16:02.600 in New York, ninety nine one in Washington, Bloomberg one 0:16:02.640 --> 0:16:05.680 oh sixty one in Boston, and Bloomberg nine sixty in 0:16:05.760 --> 0:16:06.520 San Francisco. 0:16:06.960 --> 0:16:10.120 Our flagship New York station is also available on your 0:16:10.160 --> 0:16:15.240 Amazon Alexa devices. Just say Alexa play Bloomberg eleven thirty. 0:16:15.280 --> 0:16:19.080 Plus listen coast to coast on the Bloomberg Business app, SERIUSXM, 0:16:19.160 --> 0:16:22.760 the iHeartRadio app, and on Bloomberg dot Com. I'm Nathan 0:16:22.760 --> 0:16:24.360 Hager and I'm Karen Moscow. 0:16:24.560 --> 0:16:27.320 Join us again tomorrow morning for all the news you 0:16:27.440 --> 0:16:30.680 need to start your day, right here on Bloomberg Daybreak