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What is more important is, hey, why all of a sudden you say you will give 300 billion to the reconstruction of the country. I am correct in saying that when you give money for reconstruction as a warring party, it means you are giving what? War reparations. If someone tells you, before the war started, there was a war for 3 days, and then you say, "The United States will lift all sanctions and pay Iran over 300 billion, 300 billion, and will not interfere in internal affairs, and will have the UN guarantee it." Do you believe it? I don't think anyone would believe it. You would think Suwat is crazy, but this is what is actually happening today. Right? No, I didn't make it up. Two matters are considered major news and important issues for our investments. The first is the signing of the peace agreement, electronically, which has already been completed between the United States and Iran. However, we will wait until tomorrow for the official signing, and the 14 points have been released. So, fans of the page can go and read them to see who has the advantage or disadvantage. We just interviewed Professor Panithan Yakkor about this. I will also ask P'Moo because it is also important, as the Middle East is, as we know, a source of oil and, importantly, a new open market where a lot of capital is invested. Today, we will ask about this. Another matter is the US Federal Reserve meeting, which is related. And today, I will also ask P'Moo, with oil prices dropping so much, will refineries incur losses because they have high oil stocks, but with prices dropping this much, will they have to record losses for the oil price? And gold, it's not going anywhere. Now, P'Moo is with Nao. Hello, P'Moo. Hello, Nao. It's a week with many turning points. We need to see how next week will react. P'Moo, because the Fed met today, the Fed kept interest rates unchanged, but the market interpreted it as there might be one more rate hike this year. But the very good news is the signing of the peace agreement. P'Moo, you said it was signed electronically. What are your thoughts? Is this the beginning of our relief, P'Moo, or could it be a trap that makes us have to keep watching interest rates? I think the risk from now on, Nao, is still with Trump. Oh, really? Why? I believe this. You believe that once this is over, Trump won't cause any more trouble? You're not tired of it? No, no, it might not be a war with Iran, but it could be something else. Don't forget, last week, or last year, since he took office, there have been 3-4 alternating issues. Do you notice? You can check the timeline. What did they alternate between? Trade wars, negotiations, didn't work, retreated, stock market dropped, stopped. Things like that. He does this periodically. Wars with Iran, Israel, for 12 days last week. They alternate, right? And there was a period when they were involved with the Ukraine war for a while, remember? Uh-huh. Ah, and he said he wanted a Nobel Prize. This is talking about last year. Yes. And during that time, there were other issues that came up periodically, like sanctioning China, or something else, I don't remember. So, I will say that even if I believe the war will end, 100% completely, or 90% completely, it doesn't matter. What matters is that it must end, because I have always believed and predicted that it must end this month, June. I joked with another program, Nao, that I said it must end before Sunthorn Phu's birthday. Do you know when Sunthorn Phu's birthday is? What day is it, P'? Sunthorn Phu's birthday, I don't remember, maybe June 24th, 25th? Or 26th? Yes. I said it because I knew most people wouldn't know which day it was. [Laughter] But what you meant was that it should end by the end of this month. This was said last month or two months ago, not now. Yes. The reason is, if I put it briefly, Nao, the main thing that forced Trump to end it, and that made America lose face a lot, I will explain how they lost face. First, economics. I have always predicted, and it is true, and it keeps happening, and we can still benefit from it. What is it? Whenever US inflation exceeds the Fed's interest rate, that is the tipping point. The higher it exceeds, the more pressure there is for the Fed to raise interest rates. Uh-huh. Now, going back about 4 months, before the war, US inflation was only a little over 2%, close to the Fed's target. Then the war happened, and what happened? Oil prices rose to over $60, then to $90 in the first month, March, averaging over $90. You can check it. I don't remember exactly, but it was over $90. Inflation jumped to about over 3%. Not exactly 3%. Then in April. Then in April, oil prices rose again, inflation rose again to 3.8. Then in May. Oil prices rose again. 1.2, 2. Ah, now it's important. You have to analyze it like this. Uh-huh. At what level of oil prices does this inflation occur? Because you can decode it. More than 90% of US inflation increases come from energy alone. Let's put it this way. It's not 100%, but about 90%. I've decoded it. Yes. Even though its weight in PCE and CPI is not much, only a little over 10%, but if it increases by 30%, then 10% means you increase by 0.3, or 0.4. Yes. And then you mix in a little bit of other things, because there are side effects, right? That will spill over into other things. So, it will pull it up further. Now, when you come to a month, let's say April, I'm standing in April. Inflation came out at 3.3. No, 3.8. 3.8. Right, Nao? I predicted that it would end within 2 months. How did I know? 3.8 is equal to the Fed's interest rate. Uh-huh. Higher. The interest rate is about 3.77, let's say they are equal. This means it's a tipping point. And during that time, you can check, everyone, the market started to become volatile, yields started to rise. Yes. Now, we can predict further that in May, it must rise again. How do we know? Because oil prices rose. Uh-huh. We can see in advance, Nao, that oil prices are rising. Inflation follows oil prices. About 1 month, let's say. This means you can predict that inflation will definitely rise. But of course, you might not be able to predict precisely, like from 3.8 it will rise to 4.3, 4.1, 4.4. I don't know. But it doesn't matter. Because it's 3.8, and if it rises to 4.3, 4.2, then the pressure on the Fed to raise interest rates will be immense. Uh-huh. Because if you don't raise interest rates and leave it like this, even if the difference is just a point. Yes. But it will have a ripple effect because you can't control inflation anymore. The rule for controlling inflation, every time in history, is that inflation must be equal to or greater than the interest rate. It must be equal to or greater than inflation. You can only defeat inflation. But if it's lower, how can you defeat it? That means the Fed has to change its stance and has to raise rates. Yes. But if inflation, let's say, if the war doesn't end today, if the war doesn't end today, Nao, what will oil prices be? Maybe $110? Yes. 90, 100. Let's say 100, 110. That means this 4.2 inflation will not go down. Oh. At best, it won't go down. Yes. At worst, it might go up a bit. And what will happen? The pressure to raise interest rates will increase even more. Uh-huh. This is just about interest rates. Yes. And these things will have immense economic and capital market consequences for the United States. First, it will push up US mortgage rates, and it will affect or put the US real estate sector at high risk. Because it's already weak. I think Nao has interviewed about commercial real estate, right? Commercial real estate. I won't go into detail. Second. It will push yields up further. Yes. This is even more serious. Ah, yes. Third, it will cause the US government's interest burden to skyrocket. Because for every 1% increase in interest rates, the US government has to pay an additional $0.4 trillion in interest. Uh-huh. Think about how much that is of their annual budget. It's not trivial. What's next? If interest rates rise further, it will cause the bond market to become volatile, causing carry trades or carry swaps to go back and forth, making the stock market volatile, causing high beta. High growth stocks to fall. Which means it has to happen. Therefore, I am confident that economically and financially, this is putting a lot of pressure on Trump. And it really happened. No, that's not enough, Om. That's just one point. Second point. Second is energy. Yes. In reality, today, energy prices are rising, private companies are rich. Yes. Because they export. But the government is poor because it has to pay for the war. Yes. Right? Yes. But what's more frightening is, observe this war. Oil prices did not exceed approximately $120. Many people question why it didn't exceed $120, even though they reached the point of threatening to close the Strait of Hormuz, the Bab el-Mandeb Strait, and so on. In the world of energy, is there anything worse than this? If you close these two straits, there is nothing worse. Yes. [Coughs] Ask me, in the world of energy, right? So, if you do this, oil prices are still only this much. What is the reason? It's because the US is afraid of oil prices rising. Did you notice? As soon as oil prices rise, what does the IEA do? First, they announce. The IEA, which is European. Ah, you release Strategic Reserves. The US also released a lot. And other countries helped, Japan, Korea, they all released a lot. This helped to prop up oil prices so they didn't rise too much. It worked in the short term. Another reason is that Iran's supply, which couldn't be sold before sanctions, was floating. I think you've interviewed about this. And Russia's production that couldn't be sold. A portion of that also came in. All of this combined, it's a lot. There must be millions of barrels. And this is what prevented oil prices from rising too high. Ah, a lot. But, but, you. Yes. These things will run out this month. Uh-huh. Because I've counted the number. They are about to run out. And when they run out, what will follow is that since production cannot increase, the only thing you can do is to draw down demand. How? You have to draw down inventory. And today, the world has, we have global inventory of about 8 billion barrels. Uh-huh. So, when it drops quickly, and it will drop very quickly, because one day you use 100 million barrels, let's round it. Yes. One day you use 100 million. In 10 days, you use 1 billion barrels. In just 10 days, you use 1 billion barrels. The whole world has 8 billion barrels. How many days can it last? 80 days. Not 80 days for the whole world. In 80 days, inventory will be zero. What do you think will happen to oil prices then? It will rise again. The market will panic. This time. Uh-huh. I think it will panic even more than closing the Strait of Hormuz. This time. Uh-huh. And oil will skyrocket. You will see scenarios that people never thought would happen. It will happen. And I won't even be able to guess how high it will go then. Uh-huh. Because it can rise very quickly. And who will be the first to suffer? The US. This is the second point. And it will cause the world to suffer as well if that happens. Uh-huh. No one will win in that situation. Because in reality, Iran itself doesn't want oil prices to be too high. Why? Because if oil prices are too high, Iran will create enemies all over the world. Yes. But if oil prices are around $110-$120, others won't be too distressed. Europe won't want to get involved, China won't want to get involved much, Russia will be okay. But when it rises very high, the whole world will be distressed. This means Iran won't just create enemies with the US, but with the whole world. So, Iran itself doesn't want oil prices to rise too much. Therefore, when oil prices are about to rise significantly, notice, not everyone, but everyone, observe. When it's about to rise very high, Iran will come. Okay, we will open the Strait of Hormuz. Ah, we will give that. This is what I like to call it, Om. It's "love to close, love to open." [Laughter] No. Or, Nao, would you use a more beautiful term? Call it "I love to close, I love to open, it's up to me." Yes. Ah, if it's too high, okay, we'll open it. Pay the money, or open it for China, for Thailand. Ah, oil prices fall, right? It softens. See? This is a game. This is the second point. The last point. What is pressuring Trump is domestic politics, Nao. Have you seen the latest? A bill proposed to parliament, it failed 7 times. Suddenly, on the 8th time, it passed. Why did it pass? Because some Republican snakes switched their votes to the Democrats. Uh-huh. Why? Those people were probably heavily criticized by the public and themselves. I guess. Because Americans do not support this war at all. Uh-huh. And another thing, I guess those people, Nao, you know that in November there will be midterm elections. In the midterms, all the representatives, over 400, will be elected. Uh-huh. But only one-third of the senators, 33 people. This means if you were a representative, Nao, what would you do? Would you protect your base? And the US political and financial system is not like ours. Yes. You can be in the Republican party but vote for Democrats, and you won't be kicked out of the party. Uh-huh. But in Thailand, you can't. If you vote like that, you'll be kicked out of the party. Once you're kicked out of the party, you lose your status as a representative. Yes. Because of that, Thai politics and laws seem to favor political parties. But US law is not like that. When this happens, that person switches sides. This means what? If Trump loses this election, not that he is running, but if the Republican party loses, and I am confident they will lose, if that happens, they will lose the majority in both houses. And there are still 2 years left. He's only been in office for a little over a year. And what do you think will happen in the next 2 years? Believe me, any law they pass will fail. Or, conversely, Republicans. Democrats pass laws like impeachment. Trump's impeachment, which was proposed, impeachment by Pete, was proposed, but all failed because Republicans have the majority. Before that, but if you change it, think about next year. Do you think Democrats won't play politics by proposing impeachment, proposing laws to limit the president's power, or whatever else? But I have the majority. So I can pass anything. And what do you think will happen? I think these 3 things: 1. Economics. 2. Energy. I don't know what to call it. Energy. The second one. 3. Politics, their own politics. These 3 things are pressuring Trump so much that he had to end the agreement with Iran in a way that I call losing face. Losing advantage. Think simply. Losing face. Why is it a good word? Look at the 14 points. Which points does the US gain from? Uh-huh. Stopping nuclear development. Can they stop nuclear development, P'? Can they gain an advantage? Because actually, I don't know if Iran has nuclear weapons. Right? If you stop it, it won't have much of an effect. Uh-huh. But the rest of the points, the US loses everything. For example, let me ask everyone. The 300 billion that they said would be a fund for Iran's reconstruction. Is it actually war reparations? Ah, so the US has to pay? I don't know if the US pays. The US might tell Europe to help pay. I don't know. But who pays doesn't matter. What matters more is, hey, why all of a sudden you say you will give 300 billion to the reconstruction of the country? Am I correct? Giving money for reconstruction as a warring party means you are giving what? War reparations. Uh-huh. Or not? Who told me that the US would never pay war reparations? And is this true? Uh-huh. Well, not only that, there's also another part of war reparations. This time it's Iran's own money that was frozen. Ah, so unlocking. Over 20 billion dollars. Ah, but that's right. You return the money you seized. Ah, unfreeze it, right? That money. I ask, is this true? And not only that, lifting all sanctions. Wow, this is even more confusing. Is this true? And the next point, not interfering in each other's internal affairs. I ask, has Iran ever interfered in the US? Or has the US interfered in Iran? We should ask that question. Uh-huh. Therefore, this point is meaningless to the US, but it is meaningful to Iran. See? This is just a sample. I won't go through all the points. Let's just say, and they even said the UN will guarantee it. Wow. Uh-huh. So, what does that mean? China and. It means this time, these 14 points. Yes. Do you think the US didn't lose face? Uh-huh. They lost a lot. But if you don't interpret it the way I do, you won't feel that it's okay. They are yielding. To put it nicely, but it's not just yielding. In reality, it's called retreating to the end of the alley. P'Moo, you read the 14 points. They said for 60 days, the Strait of Hormuz can be passed safely without fees. This means after 60 days, they will collect fees from those who never collected before. Of course. I ask, if not, why would they write 60 days? Uh-huh. You should just remove it. Uh-huh. It's clearly interpretable. That means the US also yielded again. Uh-huh. Right? Yielding to Iran collecting tolls. Actually, we have the Suez Canal, the Panama Canal, and now we have the Strait of Hormuz. Uh-huh. Collecting tolls. Which, I am saying that the US yielded. This writing is, it's, it's, in essence, like they yielded halfway, more than halfway. Therefore, my interpretation is very clear. The US wants to end the war to the point of yielding almost everything, losing on almost every point. Am I correct? Especially the point I use myself, which is like a war reparation. 300 billion, right? 300 billion, or you can include the over 20 billion dollars. It's the money Iran will get. Uh-huh. Let's put it that way. Yes. It's like Donald did something mischievous, and then his parents paid for the damages. And it's like he got nothing back, except Iran stops developing nuclear weapons forever, is that it? Actually, if you go back, Nao, if you go back before Trump came, Iran wasn't developing nuclear weapons to that extent. Because they had a signed agreement during Obama's time, right? Yes. And when he came, he just canceled it. Uh-huh. [Coughs] And you tell me this point is sacred or has weight? It doesn't have any weight. It was already there, but you canceled it yourself. Uh-huh. That's all. Yes, yes. Actually, in my opinion. Yes. The weight of this point is not high. But the weight of other points that Iran gained, wow, it's heavy, very clear. Uh-huh. If someone tells you that before the war started, there was a war for 3 days, and then you say, "The United States will lift all sanctions, pay Iran over 300 billion, 300 billion, return money to Iran, and will not interfere in internal affairs." I remember it roughly like this. And the UN will guarantee it. Do you believe it? We don't think anyone would believe it. You would think Suwat is crazy. Yes, uh-huh. But this is what is actually happening today, right? I didn't make it up. I'm just stating the facts. P'Moo, let me ask you, what are your thoughts on oil prices? Because right now, from around 100 something, it dropped to 70. Will it stay around 70, or will it drop further from here, back to the original 50-60 dollars? I think $70 something can be sustained. The reason is that there will be a premium before the war. During the war, it will average around $60 something. Yes. Let's add about $50 now. The reason is that there has been some damage. Second, in the short term, inventory can still be sustained. There's a premium for restocking. You release Strategic Reserves, or Iran sells its stored oil, including Russia's. You have to restock those, right? So, it's like there's a short-term high price. That's why I think there will be a premium of about $10. But after about 3-4 months, I think it will normalize, if there are no other events to affect it. It will normalize down to $60-70. Uh-huh. And the world will be free from inflation risk. Uh-huh. That's what I'm saying. Uh-huh. So, this year, we probably won't see the Fed raise interest rates as predicted. Oh, last night the Dow Jones dropped to its lowest point, swinging by 900 points, P'Moo, because it was interpreted as a rate hike. Ah, let's decode why the Fed would raise interest rates. Ah, I'll give you the numbers. Let's go back to inflation. Yes. The latest inflation in May was 4.2%, from oil at $102 WTI. Inflation in April was 3.8%, from oil at over $90. Uh-huh. WTI. This is WTI, because WTI is the oil the US uses to calculate CPI, not Brent. Then in March, oil was around $90 something. CPI was around 3% something. So, if you start with May as the last month for which we have data, 4.2%, oil was over $102. What is oil today? WTI. Uh-huh. 80. Yes. What is it? DVTI is also in the 70s, right? 70 something dollars, P'. How much? Let me check live. WTI. 74. 74 dollars. From 102 to 74. Let's say in April, no, in June, how much will CPI and PCE have to drop? Uh-huh. It will decrease. I don't know how much it will drop, but I know for sure it will be below 4. Right? Yes. But it might drop to 3.7, 3.8, 3.5. I don't know. But what's certain is that it will drop. Significantly, because oil prices dropped significantly. But this happened in the middle of the month. If you average it for the whole month, I don't know how much it will be. But it might not be 70 something. It might be 80 something for the whole month. But you are telling me, I am telling you that oil dropped from 102 to over 80 in June, let's say. That's a drop of about 20 dollars. 20 dollars is 20%. That means the minimum inflation must be below 4. That's the minimum. And if next month, as we discussed, oil drops to the 70s and then drops a bit further, Nao, where do you think inflation will be? Uh-huh. In the following months? Below 2. [Laughter] No, no, not below 2, probably below 3. It means it will go back to over 2. Close to the Fed's target. Ah, the question is, if I see this, do you think Kevin [Warsh] sees it the same way I do? Uh-huh. Can't they calculate this? Uh-huh. And do you think there are other factors that could cause inflation to surge? Uh-huh. We don't see them. Like non-farm payrolls, unemployment is still where it was. GDP is not booming crazily. Nothing is unusual. Everything is, I would call it normal. Most of the numbers and everything they talk about, right? And what is announced will be around that. So, it's inflated, just like CPI. Uh-huh. Because oil prices rose. But if you look at the real producer index and PCE, 4.2% in the same period, right? Uh-huh. But June's hasn't come out yet. Uh-huh. But do you think the producer index will drop in June? It must drop. Uh-huh. Especially the producer inflation, PPI. So, it must be in the same direction, only the scale might be different. That's all. This means that if that happens, at the FOMC meeting at the end of next month, do you think they will raise interest rates? Probably keep them the same? They will probably say, let's wait and see. It's dropping, but let's see if it continues to drop. Ah, and if there are no other significant factors to push oil prices up, it will drop further next month. Uh-huh. Right? If it drops further next month, there's even less reason for them to raise rates. If it doesn't drop, I still don't predict that they will lower interest rates. Let's put it this way. But I predict they won't raise interest rates. The market thinks they will raise once. I have to question the market first. Why do you think they will raise? The US economy is very good. It's not that good. 2.2.3%. How is that good? It's not that good, is it? AI earnings are very good. Well, it's not AI. That's probably not the reason for raising interest rates. That's different. And another thing, especially under Trump, I think Kevin probably won't lower interest rates easily. Let's put it this way. Uh-huh. But what reason will you use to raise interest rates? Uh-huh. None. Especially if you raise interest rates while inflation is rapidly declining, I think you will be criticized. Are you crazy? Meaning, is the FOMC insane? Not to mention how angry Trump will be, and what will Americans think? Yes. No explanation. I believe that the market thinking that America will raise interest rates once is overreacting. Analyzing inflation further, and with the war ending, even if you don't believe inflation will go back to 2% again, you must believe that inflation will at least drop. I think at least by about 1%. So, from 4.2, it might drop to 3.2, 3, or something like that in the next 2-3 months. Yes. Maybe not in 1-2 months. If that's the direction, then the chance of the Fed raising interest rates, I give it very little, almost zero. But they won't lower them, right, P'? I don't know if they will lower them. We have to wait and see. Because we have to admit that the Fed has its own style. Uh-huh. If inflation keeps dropping, even if it drops below 3. I'm still not sure if they will agree to lower interest rates. I don't know if they will say, "It's below 2%, but it's still higher than our target of 2%." And I don't know if they think like this. And another thing, at that time, we also have to look at unemployment, non-farm payrolls, and GDP. Is it following the trend? Is it? If these numbers come out, let's assume they are booming as expected. They might use the reason not to lower interest rates. Uh-huh. Not raise. Yes. But if they come out like yesterday's announcement, it comes out around this, we think around this, let's assume. If it comes out around this, they might lower them. I believe so. And another thing, the end of this war will allow the dollar to maintain its status to some extent. This means the US will continue to be the number 1 in the global financial market. The dollar will definitely remain number 1. Those who say the dollar will collapse, it won't happen. It hasn't happened yet. You have to distinguish first. The US losing a lot in the 14-point agreement does not mean the dollar will collapse. It's not like that. It's different. Because the dollar is supported by economic numbers and interest rates. What are US interest rates now? Even if they don't rise or fall, over 3% is high. Yes. It's high, not low. Is it higher than Japan? Higher than the EU? Higher than Thailand? So, saying US interest rates are low now is not true. Therefore, in the overall context, I say the chance that Kevin will say he will raise interest rates in the next 3-4 months is, wow, I think it's mission impossible, in my belief. Uh-huh. Very difficult. Yes. So, risky assets can still rise. P'Moo, let me ask you, the first 3 points analyzed about the Middle East war, based on the first 3 points, does it mean we can be confident that Trump won't change his mind this time and won't cause any more trouble? Because he just spoke at the G7 saying that if they don't sign, he might attack again. Is that just a threat, P'? Because the market wasn't very confident that they would really sign, that there would be nothing real, or about the 14 points, which do not include Israel. Let's start with this. I think they really signed. They signed electronically. But it might not be official yet because, as I explained with the 3 major points, Trump is under high pressure in terms of timing. They have to sign first. But they have signed. What about the next point? Will Israel accept it? I have to say the chance of Israel accepting is low. Because in Netanyahu's case, he has a weakness. If there is no war, internal politics in Israel will hit him hard. Because he has cases against him, right? And his term is ending, and the parliament is about to remove him. I think we should know this before the gloves come off with Iran. These things are there. But because the country is in a state of war, everything related to him has been postponed. Yes. Similar to Zelensky. Zelensky's term actually ended a long time ago, maybe 2-3 years ago. But today he is still in office because he claims the country is in a state of war, so there are no elections. Uh-huh. Do you see it as similar? Yes. So, Israel, if you expect them to comply or truly make peace with Iran, I don't think it will happen. However, we have to ask again, if that's the case, will Israel start the next war? Meaning, will they attack Israel, and will the US come to help like the previous two times? Once was the 12-day war last year. The second time was this one, where they fully intervened. Right? Nao, let me ask you, or everyone. If, let's say, in another 3 months, Israel attacks Iran again. [Coughs] Do you think the US will come to help Israel like this happened? Probably not anymore. Why? First, the US lost a lot. Second, the US has many of its own problems. They have midterm elections. Why would you get involved in this? They will definitely lose if they do that. Third. You have to maintain your numbers. Let's use the word "numbers." Yes. And another thing. The bases you have in the Middle East are almost all destroyed. Uh-huh. It's not like last year when the bases were not yet damaged. Yes. But today, how many good US bases are left in the Middle East? Uh-huh. This is very different. So, even if the US wanted to help like before, they don't have the same capacity to help as before, in terms of finance, politics, and military. Let's go back to assuming that Trump is acting for himself. Let's not worry about whether he's acting for Israel. The next question is, does he have the capacity to win against Iran or attack Iran? Or, conversely, if they provoke Iran, then Israel will attack Iran, right? Yes. Ah, and the question is, will it go back to the 12-day war last year? Uh-huh. This time, what Israel might do is attack Lebanon, let's say. Attack Gaza. Because these two places are their supporters. But not Iran. Uh-huh. I think even if you believe that Israel will not abide by this agreement, even if you believe that Israel will start causing trouble for Netanyahu himself, as I just told you, you should believe that the US's capacity or motivation has decreased significantly. It won't jump in like last time, for sure. Yes. Meanwhile, Netanyahu's capacity is still high, but Israel's capacity is not as good as before. Uh-huh. [Coughs] Right? So, what does that mean? It means the chance of widespread chaos in the Middle East is low. It will not erupt violently like it has in the past. But I believe it will not end at zero. Uh-huh. There will be some skirmishes, but they won't affect the overall global picture. Yes. And I also don't believe, Nao, that Trump will have no other issues arise. [Laughter] Everyone says that. Because I think he definitely will, but how many months do you give him? [Laughter] Before he has something, I don't know. During the election campaign, P', he might not do anything that looks like it would lose votes. This might be one reason why he is forced to focus on.
Country, right? >> Yes. >> Because if what I explained just now, if they lose, if they lose this election by a lot, they themselves won't survive. >> Hmm. >> I'm not talking about other people. >> Yes. >> The cabinet, I think many of them will be affected. >> Uh-huh. >> You have to understand, this is politics, right? >> Yes. >> I'm not saying the Democratic Party is good or anything, but this is politics. >> Uh-huh, P'Moo. And what about oil? What about oil, P'Moo? Because both oil and gold, especially regarding oil, if we look at businesses in our country before, there were times when, uh, oil prices rose during the period when, uh, the oil crisis was happening, the oil crisis was happening, and oil prices in our country rose. There were problems regarding refineries hoarding. Now, coming to this point, will refineries worldwide be severely affected? When it went up, they might have gained good profits, but when it falls so rapidly, will they incur huge losses, P'Moo? The industrial groups, if we look from a stock perspective first. >> Yes. >> Which is temporary, right? >> Uh-huh. >> It's possible they might incur losses because the oil price has fallen. >> Yes. >> But if you focus on refining margins, which are different, right? >> Okay. >> Refining margins will still be good. >> Ah, why are they still good? Because if we look at the margins of jet fuel and diesel, these two combined are called middle distillates. Combined, they are normally about 50 to 60% of the yield. >> Or of the total production from the refinery. Another 20% will be gas oil or gasoline. Another 20% will be naphtha, and the remaining will be, uh, bitumen, other things, naphtha, etc. Roughly, that's it. What's happening now is during the war, there was an impact on the supply chain, right? What happened is that the margins of, uh, diesel, gasoline, and jet fuel shot up from over $20. >> Uh-huh. >> To $50, $70. At that time, it led to the question of why refining margins were so high. If you increase from over $20 to $50-$70, and you produce about 60% of these products, calculate how much the refining margins would increase. Wow. >> Uh-huh. >> This is what happened before. Now, coming to today, after the war ended, these margins I talked about, from over $20 to $50-$70, what are they now? Ah, now, diesel is currently over $40. Jet fuel is still over $40. Uh-huh. >> Gasoline or gas is still at $30. The question is, why, why are the margins of these products not falling as fast as crude oil prices? Let's think about it a bit. Do you know why? Firstly, the damage to Russian refineries. From whom? From Ukraine. >> Uh-huh. >> Oh, I think this news has been reported in many places. People see it, and it causes Russia to export less. Or is this also a factor? Secondly, before, China was the largest importer of oil in the world, but it seemed not to be affected by the war as much. Instead, it was the United States that was worried, even though it produces the most oil in the world. This seems contradictory, right? >> Uh-huh. >> But it's not, actually. It's because of this: when you think about oil, what will you use it for? The simplest is transportation. >> And industry. >> Uh-huh. >> Secondly, you use it to produce some electricity. Ah, electricity, you can completely disregard for China because China's electricity, 100% of its electricity, 50% comes from coal, produced almost entirely domestically. So they don't need to rely on anyone. Another 14% comes from hydropower, like the Three Gorges Dam, which is very large, over 20,000 meters. >> Yes. >> Ah, I'm using China as an example of a country that uses water very efficiently, both in electricity production and transportation. >> Uh-huh. >> And another 20% is renewable energy. No need to ask, China is already good at this. >> Yes. >> And about 10% is nuclear. Just add these four categories together, and it's almost 100%. >> Uh-huh. >> Therefore, you can say that China's electricity sector barely cares about oil prices, barely cares about LNG prices, because they hardly rely on them. So, if you go to China today, you will still see big cities with lights on as if it's free. Uh-huh. >> This is the reason. And it will affect EVs. China's EV sector is growing a lot. Per year, I ask, if there are many EVs and your electricity doesn't depend on anyone, there's no risk of energy shortages. Ah, that means you will reduce the risk from oil in the transportation sector significantly, right? Okay, it's not zero yet, but it's significantly reduced. This is the second measure. The third thing that makes China less affected by oil prices is that China ordered it. Ah, refineries, you used to run at 100%, like in Thailand, run at 100%, export 15%. No more. Run only as much as you need. >> Uh-huh. >> Run at 80%, 85% is enough. No need to run for export. Prohibit export. >> Yes. >> They ordered it. So, when they ordered this, what happened? Ah, the oil they used to import decreased. We don't need to talk about them having the largest strategic reserves in the world. China is the country with the largest strategic reserves in the world. Just now, I mentioned over 8,000 million barrels, China alone has over 1,000 million. The US doesn't even have 1,000. >> Uh-huh. Therefore, coming back to everything, it can be said that China was not worried. That's why oil prices are falling rapidly now. Because China is not importing much, China has reduced its imports significantly. But after this, China might start importing again. Therefore, I see it this way: oil prices that should have a premium. I explained 2-3 reasons earlier, but I will add the next reason, which is that China might start restocking. The world might start restocking because they released a lot of oil from their own stocks. But that won't make oil prices exceed $80, I think. When it doesn't exceed $80, it's not a very high level, so inflation can be managed. Therefore, the risk of global inflation will be lower. I'm not sure if this answers your question from the beginning. >> Yes. Uh. >> And did you ask about gold? >> No, we asked about refineries, P'Moo. About refineries. >> Refineries. >> Then, going like this. >> Will it be the second quarter? We will see. >> In the second quarter, refining margins will be good. I think refining margins will be over $10 for sure. >> Uh-huh. >> Because the margins of diesel, jet fuel, and gasoline are high. But at the beginning, there were problems that might cause them to incur losses. There are two factors. The first one, which has almost disappeared now, means that the major risks that might cause them to incur losses have almost disappeared. The first one, we call premium. Crude premium. There was a period of premium. Normally, this figure is $3, $5 above Dubai crude, gasoline, etc. For example, if Brent is at this level, it will be plus $3, $5, whatever. There was a period when it was $20, $30. This figure went up like this. Therefore, it means that at that time, there was a risk. And coincidentally, at that time, refineries had to buy oil two months in advance. Meaning, if they were to use it in June, they had to order it in April. >> You can imagine if you ordered oil in April, would you get it at a high price? >> Uh-huh. And use it in June. This is a negative impact on refining margins. But because the margins of diesel and jet fuel are still high, and another reason is that they can buy the remaining oil, whether domestically, which is not very high, or import more to mix. Finally, I think their refining margins will not be less than $10, $10-$12, depending on the case. >> Yes, it's still considered high. >> So, the second quarter is considered good, but it might be offset by stock losses. >> Uh-huh. >> Earlier, don't forget, they are separate. Refining margins have nothing to do with stock losses. They are separate. >> Uh-huh. >> Right? Yes. >> Now, it depends on whether, if, if, if in June, let's say, if oil ends at $75, then in April, March, when the first quarter ended, oil ended at about $100. That means they will lose $20. Uh-huh. >> This is stock loss. Stock loss. >> Yes, yes. >> So, refining margins in the second quarter, from what seemed like stock losses and high crude premiums that might cause refining margins to be negative, these two factors were originally like this. Combine the two: negative plus negative. >> That's what we were initially afraid of: will the refining margins in the second quarter be difficult? Will they be negative? Initially, yes. After the war ended, but now that the war has ended, the stock loss variable has increased because oil has fallen faster. Compared to if the war hadn't ended, but [coughs] refining margins have improved. >> Uh-huh. >> When you combine them, my understanding is that they are still profitable. >> Uh-huh. >> But whether the profit is high or low, we'll have to see, because each company doesn't hold the same stock, and the timing of their purchases and bookings might have details. But to summarize for you simply: refineries in the second quarter, will they be good? The answer is, refining margins will be very good, but they will be offset by stock losses. Net result, it's expected that all refineries will still be profitable. >> Okay, but the profit will decrease. >> Profit will decrease. >> Okay. >> Yes, that's correct. Because of the stock loss. Ah, yes. So, today, should we sell now? Or what, P'Moo? What should we do? >> When buying, when investing, you. >> When we invest, why? Because the profit will be better than expected. >> Yes. >> Is that correct? >> Yes. >> We don't invest just because the profit is good. >> Yes. >> Because actually, if the profit is very good, but if it's lower than expected, the stock will fall. >> Uh-huh. >> So, let's go back. If now, I think the market is still confused because the dust has just settled. That is, will the profit of refineries be good or not good? Or what will happen in the second quarter? Because we haven't finished the second quarter yet. I believe that the results of refineries will be better than the market thinks, but not better than Q1. When it's better than the market thinks, it means, in my belief, refinery stocks will rise more. Because the opportunity for refinery stock profits to come out better than the market thinks. >> Uh-huh. >> Is high. >> Yes. >> This is important. >> Yes. >> But it's not that it grows from Q1 to Q2. It's not like that. >> Uh-huh. Different, different issue. >> Yes. >> Ah, okay, P'Moo, what about gold? Actually, I thought gold would rise more strongly, but it's around this level, 4,300. P'Moo, do you think it will continue like this, or is the era of gold over? >> It's because of the reason why the stock market is falling. >> Yes. >> But it hasn't fallen that much. Why? The reason is that today the market interprets that interest rates will rise. >> Okay. >> Because when interest rates are about to rise, gold would be good, so it doesn't fall. You see, it doesn't fall. It actually rose from 4,000, meaning it rose by $300, which is almost 10%. But it didn't rise further because people are not sure if it will really rise. >> Uh-huh. >> Or if it rises, you have to interpret it the other way: does it mean inflation will be high? And if I ask, actually, if interest rates rise, I misspoke a bit. If interest rates rise, it's actually negative for gold, right? >> Yes. >> So, actually, gold should fall, right? Like stocks, like stocks. But why hasn't gold fallen much? Because I think there are three groups of investors. To put it briefly, the first group, the group that has the most influence on gold prices now, normally it's about 10%, 20% of the market. This is the group that buys for capital gains. Now, if today, you are not sure if, ah, interest rates will rise or not. If you were in your position, would you buy now? You would hesitate. Hmm, let's wait and see if the Fed will definitely not raise interest rates, then we can buy, or if the Fed will lower interest rates, that would be even better. Ah, who are the other two groups? The groups that used to be the main buyers of gold are those who buy for risk hedging. >> Uh-huh. >> Do you think this group has changed a lot? I think it has changed a lot. >> Uh-huh. >> Why? Because in the past, this war was very clear. The more the war, the more gold falls. Ah, the war ends, gold rises. So, does that mean those who buy for risk hedging are buying or selling? >> Uh-huh. >> Is that right? Actually, do you know why? Because this war is a hybrid war. Simply put, you are also not sure if the US will win or lose, lose strategically. I'm not talking about losing militarily. Which, today, is the case. So, if you want to buy for risk hedging, you have to think further: what risk are you hedging against? Because the war won't end for a long time. Will inflation be high or low? Will the global economy be good? I ask you, now, what do you think it is? >> Uh-huh. Inflation, is it high? Not very high. >> Yes. But the stock market is rising. The US economy is still good. It makes people think, so, should I buy for risk hedging? >> Uh-huh. >> Or should I buy AI stocks instead? >> That's clear, the direction is clear. >> See? So, this group is not buying. I guess, they are not buying just in case, they are selling. Because why? Because this uncertainty, not knowing which card will be played, I'd rather use my money to buy AI, which is more certain, right? >> Ah, the last group, which is important in terms of buy and hold, is the central bank group. I ask you, if you have been following closely recently, you will know that most central banks have reduced their purchases, except for China. That's it. But China buys 20 tons, 30 tons, not 500 tons at a time. So, it means China is helping to support gold from falling below 4,000, let's put it that way. But China doesn't have enough capability to make gold prices rise back to 5,000 alone. It can't be done. Other central banks must come back and buy. Other investor groups that I mentioned earlier must also buy. So, overall, I'll summarize like this: I think in the next 2-3 months, until we are confident that inflation will fall to the point that the Fed is unlikely to raise interest rates, that's when gold will rise well. And I think it will be within 3 months. >> This is the picture I believe in. I think gold will rise back to 4,000, 5,000 within 3 months. Right now, what is it? It's June. I think by September, not later, there will be an opportunity. >> Yes. >> Uh-huh. Okay, let's hope, because P'Moo has given good news. Many people say, will it reach 80,000? I think it's possible. >> It's possible, it's possible, but not this month, not next month. >> Yes. Uh. Okay, today, we talked with P'Moo, because as I said, today there are two pieces of good news. And listening to P'Moo, I feel like, wow, it's like the sky has opened. >> [Laughter] >> It's like the sky has opened. P'Moo analyzed the war and it's unlikely to resume fighting, and it will likely continue to de-escalate. The Fed that everyone feared would raise interest rates, listening to P'Moo, there's still no reason to raise interest rates. And gold, which many people have been waiting to hear about, it's possible that gold in the latter part of the year could reach $5,000. Today, thank you very much, P'Moo, for joining us for this discussion. Thank you. Goodbye, P'Moo. >> Hello, hello. Hello. >> To not miss any investment information and news, don't forget to like, share, [music] subscribe to all channels of Money Chat.