1 00:00:02,360 --> 00:00:06,720 Speaker 1: Bloomberg Audio Studios, Podcasts, radio news. 2 00:00:11,640 --> 00:00:15,440 Speaker 2: This is the Bloomberg Surveillance Podcast. I'm Jonathan Ferrow, along 3 00:00:15,480 --> 00:00:18,680 Speaker 2: with Lisa Bromwitz and Amrie Hordernt. Join us each day 4 00:00:18,720 --> 00:00:22,280 Speaker 2: for insight from the best in markets, economics, and geopolitics 5 00:00:22,400 --> 00:00:24,840 Speaker 2: from our global headquarters in New York City. We are 6 00:00:24,920 --> 00:00:27,680 Speaker 2: live on Bloomberg Television weekday mornings from six to nine 7 00:00:27,720 --> 00:00:31,280 Speaker 2: am Eastern. Subscribe to the podcast on Apple, Spotify or 8 00:00:31,320 --> 00:00:33,919 Speaker 2: anywhere else you listen, and as always on the Bloomberg 9 00:00:34,000 --> 00:00:36,920 Speaker 2: Terminal and the Bloomberg Business App. Here's the view on 10 00:00:36,920 --> 00:00:39,320 Speaker 2: Wall Street this morning. Keith Lenard of truest Rant in 11 00:00:39,360 --> 00:00:41,519 Speaker 2: the following, the bull market still deserves the benefit of 12 00:00:41,520 --> 00:00:44,680 Speaker 2: the doubt that we expect shoppy rangebound trading to persist 13 00:00:45,000 --> 00:00:48,200 Speaker 2: given the geopolitical bankdrop. Keith joins us now for more. Keith, 14 00:00:48,240 --> 00:00:50,680 Speaker 2: welcome to the program. Let's just get to that calm 15 00:00:50,720 --> 00:00:54,080 Speaker 2: in this secuity market. Compared to the tention elsewhere, what's 16 00:00:54,160 --> 00:00:55,520 Speaker 2: anchoring the bullish view? 17 00:00:56,680 --> 00:01:00,480 Speaker 3: Yeah, well for us, Good morning to yours. It's one 18 00:01:00,520 --> 00:01:02,320 Speaker 3: of those years, Jonathan, and I'm glad I didn't have 19 00:01:02,360 --> 00:01:05,280 Speaker 3: the headlines ahead of time writing the outlook because as 20 00:01:05,319 --> 00:01:07,480 Speaker 3: you mentioned, we've had this kind of ongoing what I 21 00:01:07,560 --> 00:01:11,080 Speaker 3: call the carousel of concerns. Is one concern come or receives, 22 00:01:11,120 --> 00:01:13,520 Speaker 3: another one comes up, and obviously I ran as. 23 00:01:13,520 --> 00:01:14,279 Speaker 4: Front and center. 24 00:01:14,720 --> 00:01:17,039 Speaker 3: I think to your question, like, why is the market 25 00:01:17,080 --> 00:01:17,959 Speaker 3: somewhere stable? 26 00:01:18,040 --> 00:01:19,640 Speaker 4: Is you know, think about the. 27 00:01:19,640 --> 00:01:22,880 Speaker 3: Last five years, everything the market has gone through, whether 28 00:01:22,959 --> 00:01:27,160 Speaker 3: it's you know, COVID, supply chain disruptions, the fastest rate 29 00:01:27,280 --> 00:01:30,760 Speaker 3: increased by the FED since the eighties, the highest inflation 30 00:01:30,920 --> 00:01:34,160 Speaker 3: since the seventies, and despite all that, the market is 31 00:01:34,200 --> 00:01:36,200 Speaker 3: still close to all time highs. And I think the 32 00:01:36,240 --> 00:01:39,240 Speaker 3: north star of this full market has been earnings. Earnings 33 00:01:39,319 --> 00:01:43,119 Speaker 3: at this point are still trending higher. And I think 34 00:01:43,200 --> 00:01:45,840 Speaker 3: to my overall point, I think investors are giving this 35 00:01:45,880 --> 00:01:48,680 Speaker 3: full market the benefit of the doubt because we've seen 36 00:01:48,720 --> 00:01:51,280 Speaker 3: so many corrections, and the wrong thing to do historically 37 00:01:51,360 --> 00:01:55,640 Speaker 3: during these big events at the time was ultimate to sell. 38 00:01:55,680 --> 00:01:58,360 Speaker 3: So I think that's why the market is being somewhat 39 00:01:58,440 --> 00:02:01,320 Speaker 3: come I'd actually like to see a little bit more 40 00:02:01,640 --> 00:02:04,760 Speaker 3: patent to set up a better buying opportunity relative to 41 00:02:04,760 --> 00:02:05,760 Speaker 3: where we are right now. 42 00:02:06,200 --> 00:02:08,800 Speaker 1: Steve Path the federated to Hermes yesterday came on and 43 00:02:08,800 --> 00:02:11,680 Speaker 1: said that when oil prices get on average above ninety 44 00:02:11,760 --> 00:02:14,640 Speaker 1: dollars a barrel, that would change his constructive view because 45 00:02:14,639 --> 00:02:17,040 Speaker 1: would start to do damage to the underlying economy. 46 00:02:17,320 --> 00:02:17,720 Speaker 4: Do you have a. 47 00:02:17,680 --> 00:02:20,079 Speaker 1: Thesis like that where suddenly you start to get more 48 00:02:20,080 --> 00:02:23,679 Speaker 1: concerned about the cycle of the economy right now? 49 00:02:24,600 --> 00:02:27,239 Speaker 3: Yeah, I don't know that there's an exact number, per se, 50 00:02:27,360 --> 00:02:28,880 Speaker 3: but you know, we do follow a way of the 51 00:02:28,919 --> 00:02:29,880 Speaker 3: evidence approach. 52 00:02:30,360 --> 00:02:32,320 Speaker 4: Part of that is on the economy. 53 00:02:32,360 --> 00:02:36,200 Speaker 3: So if our economic group in general starts to shave 54 00:02:36,280 --> 00:02:38,880 Speaker 3: back our forecast, that would be a concern. You know, 55 00:02:38,919 --> 00:02:41,480 Speaker 3: we look at relative prices, we look at the credit markets, 56 00:02:41,760 --> 00:02:44,760 Speaker 3: and I think those earning trends and earnings momentum in general, 57 00:02:44,960 --> 00:02:48,440 Speaker 3: all things that we're watching closely to say, hey, should 58 00:02:48,440 --> 00:02:50,880 Speaker 3: we be adjusting our overall position right now? We still 59 00:02:51,040 --> 00:02:54,480 Speaker 3: maintaining a modest overweight to equities. But we also wrote 60 00:02:54,480 --> 00:02:56,760 Speaker 3: a note earlier this week, you know, suggesting that this 61 00:02:56,800 --> 00:02:59,079 Speaker 3: is not the time we haven't had enough of a 62 00:02:59,200 --> 00:03:02,000 Speaker 3: correction relative to the risk to say this is a 63 00:03:02,120 --> 00:03:03,880 Speaker 3: you know, some type of buying opportunity. And you know 64 00:03:03,880 --> 00:03:06,800 Speaker 3: what's also notable is look at the indexes relative you know, 65 00:03:07,000 --> 00:03:09,840 Speaker 3: as Jonathan alluded to, like the Act, we our global 66 00:03:09,880 --> 00:03:12,000 Speaker 3: equities are still up about a percent, the S and 67 00:03:12,080 --> 00:03:14,760 Speaker 3: P's down one percent, the US dollars up one percent. 68 00:03:14,960 --> 00:03:16,280 Speaker 4: So if you didn't have the headlines, you thought you 69 00:03:16,320 --> 00:03:16,960 Speaker 4: would think this. 70 00:03:16,880 --> 00:03:19,680 Speaker 3: Is kind of a normal, kind of uneventful year. 71 00:03:20,200 --> 00:03:22,640 Speaker 1: Right now, I'm just struck by the fact that people 72 00:03:22,680 --> 00:03:24,600 Speaker 1: have been conditioned to buy the dip and they have 73 00:03:24,600 --> 00:03:27,480 Speaker 1: a conditioned year after year after year, partly because there 74 00:03:27,560 --> 00:03:31,520 Speaker 1: is a policy response that can be delivered. Right twenty 75 00:03:31,680 --> 00:03:33,480 Speaker 1: twenty we got what we got from the FED as 76 00:03:33,520 --> 00:03:36,640 Speaker 1: well as the bazooka from the federal government. Twenty twenty two, 77 00:03:36,680 --> 00:03:38,880 Speaker 1: there was a sense that also there was going to 78 00:03:38,880 --> 00:03:41,320 Speaker 1: be some response and there was more momentum in the economy. 79 00:03:41,720 --> 00:03:44,400 Speaker 1: Is there that same policy lever this time around. 80 00:03:44,920 --> 00:03:46,280 Speaker 4: Yeah, it's an open question. 81 00:03:46,600 --> 00:03:48,520 Speaker 3: You know, a lot of debate right now is you know, 82 00:03:48,560 --> 00:03:51,240 Speaker 3: it looks like the administration may be looking for an 83 00:03:51,320 --> 00:03:53,400 Speaker 3: offern but it may not be fully up to them, 84 00:03:53,440 --> 00:03:56,360 Speaker 3: because I obviously the Iranians have a lot to do 85 00:03:56,440 --> 00:03:58,720 Speaker 3: with this as well. But I do think big picture 86 00:03:59,240 --> 00:04:02,600 Speaker 3: that you know, there is a focus from the administration 87 00:04:02,680 --> 00:04:04,480 Speaker 3: and then also China you know, there's a lot of 88 00:04:05,520 --> 00:04:09,840 Speaker 3: China's imports go through the Strait as well, so you know, 89 00:04:09,840 --> 00:04:11,520 Speaker 3: it may not just be US, it may be China 90 00:04:11,560 --> 00:04:14,640 Speaker 3: as well. So I think ultimately there is likely some 91 00:04:14,680 --> 00:04:17,640 Speaker 3: type of off ramp, and that doesn't mean that some 92 00:04:17,680 --> 00:04:20,200 Speaker 3: of the volatility and intentions go away. But listen, the 93 00:04:20,200 --> 00:04:22,760 Speaker 3: administration is focused we all know as the midterm elections. 94 00:04:22,800 --> 00:04:24,320 Speaker 3: I do think there's going to be some things they 95 00:04:24,360 --> 00:04:26,560 Speaker 3: can do, but obviously it's different than the terrorists where 96 00:04:26,560 --> 00:04:29,719 Speaker 3: they can basically just step away themselves as other partners 97 00:04:29,720 --> 00:04:30,720 Speaker 3: that they have to rely on. 98 00:04:31,160 --> 00:04:33,080 Speaker 5: But Keith, how do you parse through what the administration 99 00:04:33,160 --> 00:04:36,000 Speaker 5: is saying? Yesterday the President told Axios there's practically nothing 100 00:04:36,080 --> 00:04:38,080 Speaker 5: left to target and Iran, and then last night at 101 00:04:38,080 --> 00:04:41,080 Speaker 5: a speech he said, we don't want to leave early, right, 102 00:04:41,440 --> 00:04:44,400 Speaker 5: So the president is opening the door for a prolonged 103 00:04:44,480 --> 00:04:47,520 Speaker 5: conflict to what they before they would decide that it 104 00:04:47,600 --> 00:04:48,800 Speaker 5: is mission complete. 105 00:04:49,080 --> 00:04:51,560 Speaker 3: Yeah, Well, the one thing I would you be thinking about. 106 00:04:51,640 --> 00:04:54,360 Speaker 3: I mean, obviously, as you look at even consumer confidence 107 00:04:54,440 --> 00:04:58,599 Speaker 3: serves over time and inflation expectations, they correlate very highly 108 00:04:58,680 --> 00:05:02,279 Speaker 3: with gas prices. So I just think, again, no one 109 00:05:02,360 --> 00:05:06,159 Speaker 3: knows exactly how long, what the pain threshold is. But ultimately, 110 00:05:06,600 --> 00:05:09,200 Speaker 3: you know, high gas prices isn't going to be helpful 111 00:05:09,240 --> 00:05:11,240 Speaker 3: going into a midterm election. So I think that's going 112 00:05:11,320 --> 00:05:13,679 Speaker 3: to be front end center. And I mean the open 113 00:05:13,760 --> 00:05:15,520 Speaker 3: question that no one can really say is does that 114 00:05:15,560 --> 00:05:18,960 Speaker 3: mean the threshold is you know, two weeks, you know, 115 00:05:19,320 --> 00:05:19,920 Speaker 3: two months? 116 00:05:19,920 --> 00:05:21,320 Speaker 4: It's hard to say. 117 00:05:21,400 --> 00:05:23,920 Speaker 3: But I think ultimately, just like there was a focus 118 00:05:23,960 --> 00:05:26,000 Speaker 3: last year about hey, if a ten year treasury starts 119 00:05:26,040 --> 00:05:29,600 Speaker 3: going about four fifty four seventy five, there's really a 120 00:05:29,600 --> 00:05:32,279 Speaker 3: more increased focus and even more headlines that are dropping 121 00:05:32,400 --> 00:05:33,359 Speaker 3: from the administration, I. 122 00:05:33,320 --> 00:05:35,000 Speaker 4: Think well likely would see that as well. 123 00:05:35,520 --> 00:05:38,000 Speaker 3: Again, if oil stayed elevated at these levels and we 124 00:05:38,000 --> 00:05:41,600 Speaker 3: started this continue to see some of the polling data deteriorate. 125 00:05:41,880 --> 00:05:44,000 Speaker 2: Keith, help me understand this one. We've had a major 126 00:05:44,040 --> 00:05:46,520 Speaker 2: move and crude by more than thirty percent so far 127 00:05:46,800 --> 00:05:49,800 Speaker 2: this month alone, and of repricing further out the curve 128 00:05:49,839 --> 00:05:52,320 Speaker 2: as well, and yet Keith and G Equities a runbinded 129 00:05:52,360 --> 00:05:54,479 Speaker 2: a more than one percent and she stucks on the 130 00:05:54,560 --> 00:05:57,039 Speaker 2: s and P five hundred have barely moved off the 131 00:05:57,040 --> 00:05:57,800 Speaker 2: back of this story. 132 00:05:57,800 --> 00:05:59,919 Speaker 4: What gives Yeah, Well, for one thing, that. 133 00:06:00,320 --> 00:06:03,680 Speaker 3: Energy stocks had a big had a big rise going 134 00:06:03,720 --> 00:06:05,919 Speaker 3: into this, So I think that's one thing. I think overall, 135 00:06:06,080 --> 00:06:08,680 Speaker 3: the energy market is still relatively constructive. And there's also 136 00:06:08,920 --> 00:06:10,880 Speaker 3: you know, some of the cost structure within the energy 137 00:06:11,680 --> 00:06:13,840 Speaker 3: complex will also go high, So there's some offices I 138 00:06:13,880 --> 00:06:16,960 Speaker 3: think all of me though, you know, the energy sector 139 00:06:17,040 --> 00:06:21,120 Speaker 3: on pullbacks is actually relatively attractive after not doing anything 140 00:06:21,120 --> 00:06:24,560 Speaker 3: for several years. But again cutting into this whole you know, 141 00:06:24,600 --> 00:06:29,039 Speaker 3: this whole tension, we saw the energy sector being among 142 00:06:29,080 --> 00:06:30,080 Speaker 3: the top sectors for the. 143 00:06:30,120 --> 00:06:31,039 Speaker 4: Year, and same with gold. 144 00:06:31,040 --> 00:06:34,839 Speaker 3: Gold went into this being up about forty percent, you know, 145 00:06:34,960 --> 00:06:36,360 Speaker 3: year to date. So I think that's just kind of 146 00:06:36,360 --> 00:06:38,080 Speaker 3: the reason why we haven't seen more of these moves 147 00:06:38,080 --> 00:06:40,240 Speaker 3: in both energy and gold prices per se. 148 00:06:40,800 --> 00:06:53,600 Speaker 2: Stay with US Multilemberg surveillance coming up after this. Brent 149 00:06:53,680 --> 00:06:56,640 Speaker 2: creag right now ninety six, Brent briefly toping one hundred 150 00:06:56,839 --> 00:06:58,920 Speaker 2: after more tank is were attanked in the Persian Gulf. 151 00:06:58,960 --> 00:07:02,200 Speaker 2: The IEA the war is causing the biggest ever disruption 152 00:07:02,520 --> 00:07:04,599 Speaker 2: to the market as it gives up for its largest 153 00:07:04,760 --> 00:07:08,240 Speaker 2: emergency release ever cohidly out of rightst energy rights, and 154 00:07:08,279 --> 00:07:10,040 Speaker 2: the key variable is the duration of the war. If 155 00:07:10,040 --> 00:07:12,560 Speaker 2: it lasts two months, price it could pick at one fifteen. 156 00:07:12,640 --> 00:07:14,480 Speaker 2: If it goes on for four months, they could reach 157 00:07:14,560 --> 00:07:17,480 Speaker 2: one thirty five. Koha joins us now for more. Oh, hey, 158 00:07:17,480 --> 00:07:19,960 Speaker 2: we almost hit once Wednesday on Sunday evening a rope 159 00:07:19,960 --> 00:07:20,400 Speaker 2: pad self. 160 00:07:20,440 --> 00:07:21,520 Speaker 4: Now, I think so. 161 00:07:21,680 --> 00:07:24,200 Speaker 6: I think it really depends on the on the duration, 162 00:07:24,400 --> 00:07:29,520 Speaker 6: and at least I correctly mentioned the idea of sporting vessels. 163 00:07:29,600 --> 00:07:32,240 Speaker 6: I think right now we don't see any progress there. 164 00:07:32,360 --> 00:07:34,320 Speaker 6: So at the end of the day, this really comes 165 00:07:34,320 --> 00:07:37,120 Speaker 6: down to mass. The straight over moves around ten million 166 00:07:37,120 --> 00:07:38,760 Speaker 6: barrels per day that we think are going to be 167 00:07:38,800 --> 00:07:40,920 Speaker 6: closed because of the of the of the. 168 00:07:41,080 --> 00:07:41,800 Speaker 4: Of the situation. 169 00:07:42,680 --> 00:07:46,080 Speaker 6: Sbr's four hundred million barrels that is not going to 170 00:07:46,240 --> 00:07:50,360 Speaker 6: upset any any upside press pressure that we're seeing right now. 171 00:07:50,360 --> 00:07:51,920 Speaker 4: And interestingly, when. 172 00:07:51,760 --> 00:07:55,720 Speaker 6: The announcement of the four hundred million barrels was done, 173 00:07:55,880 --> 00:07:59,000 Speaker 6: prices barely reacted because I think that the market already 174 00:07:59,120 --> 00:08:02,600 Speaker 6: assumed that something going to happen. But last time that 175 00:08:02,680 --> 00:08:05,680 Speaker 6: we saw spr's being released was in March twenty twenty 176 00:08:05,720 --> 00:08:08,360 Speaker 6: two in the middle of the Russia Ukraine War. And 177 00:08:08,480 --> 00:08:12,520 Speaker 6: back then when the announcement was made. Prices failed by 178 00:08:12,600 --> 00:08:15,400 Speaker 6: five dollars per viral right now they didn't. And this 179 00:08:15,680 --> 00:08:19,000 Speaker 6: really shows how important, how critical the situation is at 180 00:08:19,040 --> 00:08:19,360 Speaker 6: the moment. 181 00:08:19,440 --> 00:08:22,320 Speaker 2: Oh, hey, we've seying production bank cup, You've seeing certain 182 00:08:22,360 --> 00:08:25,960 Speaker 2: shot sains taking place in certain places. Restarting from there 183 00:08:26,480 --> 00:08:29,120 Speaker 2: isn't necessarily painless, And I wonder from your perspective, what 184 00:08:29,200 --> 00:08:32,560 Speaker 2: kind of damage we're already doing to supply chains. 185 00:08:32,960 --> 00:08:35,559 Speaker 6: That's the key supply chain. I mean, you really hit 186 00:08:35,600 --> 00:08:39,040 Speaker 6: the supply chain. And more importantly, from the geology point 187 00:08:39,040 --> 00:08:41,880 Speaker 6: of view, the moment that you shut in production, you 188 00:08:42,000 --> 00:08:44,920 Speaker 6: are changing the pressure of the reservoir and that could 189 00:08:45,080 --> 00:08:50,120 Speaker 6: potentially damage your reservoir forever. So we think that coming 190 00:08:50,160 --> 00:08:53,079 Speaker 6: back to to you know, normal production states, state production 191 00:08:53,440 --> 00:08:55,960 Speaker 6: is not a matter of days, is essentially a matter 192 00:08:56,160 --> 00:08:57,600 Speaker 6: of weeks, if not months. 193 00:08:57,600 --> 00:09:00,360 Speaker 4: So yes, the straight Orf almost could be reopened tomorrow. 194 00:09:00,960 --> 00:09:03,760 Speaker 6: It will take a few weeks to clear up all 195 00:09:03,800 --> 00:09:07,160 Speaker 6: the logistic backlock. But then you also have the problem 196 00:09:07,240 --> 00:09:11,000 Speaker 6: of rumping up production again. In some countries, especially Iraq, 197 00:09:11,200 --> 00:09:13,480 Speaker 6: might have severe problems doing that. 198 00:09:14,000 --> 00:09:15,040 Speaker 4: In response to higher. 199 00:09:14,840 --> 00:09:16,599 Speaker 1: Oil prices, You've seen a lot of flights that have 200 00:09:16,760 --> 00:09:20,080 Speaker 1: neither canceled, the prices of the tickets go up substantially. 201 00:09:20,360 --> 00:09:24,199 Speaker 1: You've seen mandates to use either car pooling or bike 202 00:09:24,280 --> 00:09:27,240 Speaker 1: to work in certain places, particularly in Southeast Asia. How 203 00:09:27,320 --> 00:09:30,120 Speaker 1: much demand destruction have you already started to see a merge? 204 00:09:30,920 --> 00:09:31,560 Speaker 4: Excellent point. 205 00:09:31,600 --> 00:09:33,160 Speaker 6: I think that the man destruction is one of the 206 00:09:33,200 --> 00:09:36,200 Speaker 6: important leavers that how the market is going to react. 207 00:09:36,360 --> 00:09:39,719 Speaker 6: We've seen during March to start the conflict, around one 208 00:09:39,720 --> 00:09:42,000 Speaker 6: point four million barrels per day of the man destruction. 209 00:09:42,200 --> 00:09:44,160 Speaker 4: That is quite quite significant. 210 00:09:44,240 --> 00:09:47,679 Speaker 6: One point four million barrels per day initially aviation and 211 00:09:47,760 --> 00:09:50,960 Speaker 6: now gradually that impact is going to be translated into 212 00:09:51,440 --> 00:09:55,240 Speaker 6: transport fuels and heating oil. And if the conflict lasts 213 00:09:55,240 --> 00:09:58,200 Speaker 6: for longer, then we are probably going to see a 214 00:09:58,240 --> 00:10:02,760 Speaker 6: refueling of inflation, which could change the attitude of central 215 00:10:02,800 --> 00:10:05,240 Speaker 6: banks around the world. To give you a data point, 216 00:10:05,480 --> 00:10:07,960 Speaker 6: before the war, we thought that oil demand was going 217 00:10:08,000 --> 00:10:10,800 Speaker 6: to grow by one million barrels per day. Even the 218 00:10:10,840 --> 00:10:14,600 Speaker 6: war extends for around four months, let's say oil demand 219 00:10:14,720 --> 00:10:17,920 Speaker 6: growth is cut down to just four hundred thousand barrels 220 00:10:17,960 --> 00:10:18,280 Speaker 6: per day. 221 00:10:18,320 --> 00:10:20,400 Speaker 4: So that's really showing you. 222 00:10:20,400 --> 00:10:24,160 Speaker 6: How important the demand destruction could be in the coming 223 00:10:24,240 --> 00:10:24,920 Speaker 6: days and weeks. 224 00:10:25,120 --> 00:10:27,959 Speaker 1: One of the other leavers Orge is more production from 225 00:10:27,960 --> 00:10:30,160 Speaker 1: other areas that aren't as affected, like Russia. Do you 226 00:10:30,160 --> 00:10:32,680 Speaker 1: have a sense of how much more Russia is earning 227 00:10:32,760 --> 00:10:34,800 Speaker 1: as a result of higher energy prices, in the fact 228 00:10:34,840 --> 00:10:37,440 Speaker 1: that it's actually increasing production to help meet the needs 229 00:10:37,480 --> 00:10:39,680 Speaker 1: of its allies like China. 230 00:10:40,960 --> 00:10:45,080 Speaker 6: Sure, we've seen the waivers that India received to continue 231 00:10:45,120 --> 00:10:49,680 Speaker 6: inputting Russian could. Before the sanctions, Russia was exported around 232 00:10:49,720 --> 00:10:52,880 Speaker 6: one point six million barrels per day to India. Then 233 00:10:53,400 --> 00:10:55,840 Speaker 6: last numbers before the war was around eight hundred thousand 234 00:10:55,880 --> 00:10:59,199 Speaker 6: barrels per day, so quite a significant decrease, and. 235 00:10:59,240 --> 00:11:01,240 Speaker 4: With the waivers, think that there's a little bit of. 236 00:11:01,160 --> 00:11:04,800 Speaker 6: An upside potential around one point two medium barrels per day. 237 00:11:04,840 --> 00:11:08,040 Speaker 6: But importantly, there's a lot of Russian oil right now 238 00:11:08,120 --> 00:11:12,200 Speaker 6: in offshore storage. So the fact that India is going 239 00:11:12,240 --> 00:11:15,760 Speaker 6: to be able to increase its purchases of Russian could 240 00:11:16,000 --> 00:11:19,800 Speaker 6: does not directly mean that Russia could start bumping up more. 241 00:11:19,880 --> 00:11:22,800 Speaker 6: I think what it means is that the offshore storage 242 00:11:22,880 --> 00:11:26,200 Speaker 6: will be gradually clear up and going forward, we think 243 00:11:26,200 --> 00:11:29,840 Speaker 6: that the upside potential for Russia is actually quite limited. 244 00:11:29,880 --> 00:11:32,480 Speaker 6: No more than two hundred three hundred thousand barrals per day. 245 00:11:32,600 --> 00:11:36,000 Speaker 6: Apart from that, you don't really have much reaction in 246 00:11:36,040 --> 00:11:39,120 Speaker 6: the very short term. Yes, shale can react, but that 247 00:11:39,280 --> 00:11:41,320 Speaker 6: is something towards the end of the year and again 248 00:11:41,440 --> 00:11:42,040 Speaker 6: very limited. 249 00:11:42,160 --> 00:11:44,480 Speaker 4: I don't think more than three hundred thousand barrels per day. 250 00:11:44,760 --> 00:11:46,760 Speaker 5: There was a report even just this morning about Indian 251 00:11:46,840 --> 00:11:49,800 Speaker 5: oil purposes from Russia increase by nearly forty five percent 252 00:11:50,360 --> 00:11:53,160 Speaker 5: in March. So basically, does Russia just get back their 253 00:11:53,480 --> 00:11:56,679 Speaker 5: entire export capacity that they had in India before the 254 00:11:56,800 --> 00:11:58,560 Speaker 5: United States started putting pressure on your. 255 00:11:58,480 --> 00:12:02,439 Speaker 6: DELI probably yes. Now the big question there is what 256 00:12:02,520 --> 00:12:06,080 Speaker 6: happens when the war ends. Will those waivers expire at 257 00:12:06,080 --> 00:12:08,320 Speaker 6: among those waivers are supposed to expire at the end 258 00:12:08,360 --> 00:12:12,439 Speaker 6: of April. Now, when the war ends, will those sanctions 259 00:12:12,480 --> 00:12:16,360 Speaker 6: be put back into place or not? And my hunch 260 00:12:16,400 --> 00:12:19,720 Speaker 6: here is that once you lift the waivers, once you 261 00:12:19,800 --> 00:12:23,000 Speaker 6: lift the sanctions, it is pretty difficult to go back 262 00:12:23,000 --> 00:12:24,160 Speaker 6: and implement in them again. 263 00:12:24,800 --> 00:12:28,480 Speaker 5: I remember when the Red Sea was shot basically for months, 264 00:12:28,480 --> 00:12:30,640 Speaker 5: and tankers and cargo ships didn't want to go through 265 00:12:30,640 --> 00:12:32,160 Speaker 5: it because it was going on with the who thies 266 00:12:32,520 --> 00:12:35,320 Speaker 5: even if the United States Jorge is able to reopen 267 00:12:35,320 --> 00:12:37,800 Speaker 5: the Strait of Hormuz, when we'll go back to quote 268 00:12:37,840 --> 00:12:39,359 Speaker 5: unquote normal. 269 00:12:40,600 --> 00:12:44,560 Speaker 6: That's the key variable here. I don't think that, first 270 00:12:44,559 --> 00:12:46,800 Speaker 6: of all, the scenario of the US is coating vessels. 271 00:12:47,080 --> 00:12:50,319 Speaker 6: We don't see appetite from shipping companies to take that 272 00:12:50,880 --> 00:12:54,120 Speaker 6: option at all right now. The mechanism is still not 273 00:12:54,240 --> 00:12:56,199 Speaker 6: in place, and we don't think that this. 274 00:12:56,240 --> 00:12:57,720 Speaker 4: Is likely to happen anytime soon. 275 00:12:57,960 --> 00:13:00,240 Speaker 6: So to me, the only way forward for this street 276 00:13:00,240 --> 00:13:03,520 Speaker 6: door foremost to be reopened east through two channels, regime 277 00:13:03,640 --> 00:13:06,480 Speaker 6: chinch which at the moment doesn't seem very visible, and 278 00:13:06,520 --> 00:13:08,160 Speaker 6: the other one needs to through US fire. 279 00:13:08,800 --> 00:13:12,319 Speaker 2: Stay with US. More Bloomberg surveillance coming up after this. 280 00:13:21,559 --> 00:13:23,920 Speaker 2: So here's the lass this morning. Crude climbing even as 281 00:13:23,960 --> 00:13:26,760 Speaker 2: President Trump vows the lower prices with a massive release 282 00:13:26,960 --> 00:13:30,199 Speaker 2: from the US Strategic Petroleum Reserve. Lebby cancel a PIMCO 283 00:13:30,320 --> 00:13:32,560 Speaker 2: with this to say, the longer this conflict plays out, 284 00:13:32,559 --> 00:13:35,960 Speaker 2: the more ugly the political environment may become. Lebby John's 285 00:13:36,040 --> 00:13:37,640 Speaker 2: surround the table, let me good morning, it's going to 286 00:13:37,679 --> 00:13:39,760 Speaker 2: see you. What do you make of the policy response 287 00:13:39,800 --> 00:13:41,480 Speaker 2: so far? Yeah, so I think. 288 00:13:41,640 --> 00:13:44,599 Speaker 7: I mean, the expectation was that there would be a 289 00:13:44,679 --> 00:13:47,120 Speaker 7: dramatic release from the strategy petroleum reserve, and of course 290 00:13:47,120 --> 00:13:49,240 Speaker 7: that's what we have seen. I do think that, as 291 00:13:49,240 --> 00:13:52,240 Speaker 7: your previous guests have pointed out, that is only so effective. 292 00:13:53,200 --> 00:13:56,880 Speaker 7: In terms of other tools, the president is pretty limited. 293 00:13:57,480 --> 00:13:59,960 Speaker 7: There are obviously Russian sanctions that he can tweak with 294 00:14:00,160 --> 00:14:03,920 Speaker 7: a little bit of that last week export controls that's 295 00:14:03,960 --> 00:14:09,320 Speaker 7: really an extreme, some modifications or exemptions to the Jones Act. 296 00:14:09,679 --> 00:14:11,560 Speaker 7: But outside of this is sort of all nibbling around 297 00:14:11,559 --> 00:14:16,720 Speaker 7: the edges in terms of really addressing the what it 298 00:14:16,760 --> 00:14:20,000 Speaker 7: looks like maybe one hundred dollars oil and of course 299 00:14:20,080 --> 00:14:23,720 Speaker 7: then the price of gas, which is really the issue politically, domestically. 300 00:14:23,760 --> 00:14:27,320 Speaker 7: And this is exactly the opposite of what Republicans plan 301 00:14:27,560 --> 00:14:29,040 Speaker 7: was for twenty twenty six. It was going to be 302 00:14:29,080 --> 00:14:32,040 Speaker 7: all about affordability. It was going to be pushing their agenda, 303 00:14:32,160 --> 00:14:34,120 Speaker 7: even if maybe they weren't able to get things done, 304 00:14:34,200 --> 00:14:36,920 Speaker 7: they were going to be at least rhetorically talking about it. 305 00:14:37,240 --> 00:14:40,680 Speaker 7: And now that's been completely kind of undermined by this. 306 00:14:40,960 --> 00:14:42,840 Speaker 5: We came into the new year with the White House 307 00:14:42,960 --> 00:14:47,080 Speaker 5: squarely focused on affordability. How do they change their message 308 00:14:47,200 --> 00:14:49,640 Speaker 5: now going into the summer and going to the midterms 309 00:14:49,640 --> 00:14:52,240 Speaker 5: where it's clear the House likely is going to flip. 310 00:14:52,600 --> 00:14:54,640 Speaker 5: But I'm talking to people who think that there is 311 00:14:54,680 --> 00:14:56,360 Speaker 5: a chance Republicans lose the Senate. 312 00:14:57,640 --> 00:14:59,880 Speaker 7: Yeah, So, I mean again, I think this is sort 313 00:14:59,880 --> 00:15:03,160 Speaker 7: of their their sort of best laid plans here, have 314 00:15:03,360 --> 00:15:05,720 Speaker 7: you know, gone a bit of rye. I mean, I 315 00:15:05,760 --> 00:15:08,000 Speaker 7: think what the hope is is that this is going 316 00:15:08,040 --> 00:15:10,880 Speaker 7: to be able to be finished right going into the 317 00:15:10,920 --> 00:15:13,680 Speaker 7: summer months now. Of course, I mean it's it sounds 318 00:15:13,680 --> 00:15:16,400 Speaker 7: sort of flippid, but you know, wars or conflicts are 319 00:15:16,440 --> 00:15:20,280 Speaker 7: easy to start, much much harder to finish, particularly given 320 00:15:20,320 --> 00:15:23,240 Speaker 7: the complexity of this of this region. So you know 321 00:15:23,320 --> 00:15:26,040 Speaker 7: that intention, of course, may not be realized. I do 322 00:15:26,080 --> 00:15:28,160 Speaker 7: think though, just you know, again, you saw a little 323 00:15:28,160 --> 00:15:30,960 Speaker 7: bit of this yesterday with President Trump trying to get 324 00:15:31,000 --> 00:15:35,440 Speaker 7: back onto that sort of affordability you know mantle. But again, 325 00:15:35,480 --> 00:15:38,040 Speaker 7: I mean people you know, voters are are or not 326 00:15:38,680 --> 00:15:41,840 Speaker 7: I'm not stupid, right, they see what's happening. The price 327 00:15:41,880 --> 00:15:44,040 Speaker 7: of the p I just can't reinforce this enough because 328 00:15:44,040 --> 00:15:46,040 Speaker 7: if you go back to spring of twenty twenty two, 329 00:15:46,360 --> 00:15:48,840 Speaker 7: and you had, you know, almost five dollars oil June 330 00:15:48,880 --> 00:15:52,960 Speaker 7: of twenty twenty two. The president's approval reading President Biden 331 00:15:53,000 --> 00:15:54,400 Speaker 7: at that point, I mean, it took a huge hit. 332 00:15:54,480 --> 00:15:56,920 Speaker 7: And they're basically inversely correlated. If you look at the 333 00:15:57,160 --> 00:16:00,000 Speaker 7: graph of a presidential approval rating versus the price of gas, 334 00:16:00,280 --> 00:16:02,920 Speaker 7: these things, you know, gas and groceries. People really care 335 00:16:03,440 --> 00:16:06,440 Speaker 7: about these kitchen table issues, and so you know, people 336 00:16:06,480 --> 00:16:08,600 Speaker 7: may not be paying attention to exactly what's happening from 337 00:16:08,640 --> 00:16:10,960 Speaker 7: a foreign policy perspective and in terms of some maybe 338 00:16:11,000 --> 00:16:14,040 Speaker 7: the wins that the US may ultimately achieve, but they 339 00:16:14,080 --> 00:16:15,960 Speaker 7: really do care about the price of the pump. And 340 00:16:15,960 --> 00:16:17,720 Speaker 7: this is going to be a big, a big headwind 341 00:16:17,720 --> 00:16:18,160 Speaker 7: going into the. 342 00:16:18,200 --> 00:16:21,520 Speaker 5: And Biden was then forced to abandon another foreign policy priority, 343 00:16:21,560 --> 00:16:23,880 Speaker 5: which was to make Saudi Arabia or Muhammed ben Salmon 344 00:16:23,960 --> 00:16:27,280 Speaker 5: a Priya, and he actually went to Jetta. When it 345 00:16:27,320 --> 00:16:29,440 Speaker 5: comes to potentially what the US is going to have 346 00:16:29,480 --> 00:16:30,680 Speaker 5: to or the Ministration is going to have to have 347 00:16:30,720 --> 00:16:34,000 Speaker 5: Congress for is their appetite for more or defense spending 348 00:16:34,160 --> 00:16:35,160 Speaker 5: going to the maternal This. 349 00:16:35,120 --> 00:16:37,120 Speaker 7: Is going to be a very difficult vote, I think, 350 00:16:37,280 --> 00:16:38,920 Speaker 7: I mean that what it looks like is that the 351 00:16:38,920 --> 00:16:41,880 Speaker 7: White House is preparing what's called the supplemental package. You know, 352 00:16:42,000 --> 00:16:44,840 Speaker 7: could be fifty billion dollars, could be more. Honestly, just 353 00:16:44,880 --> 00:16:48,360 Speaker 7: given sort of the pace of spending and the extent 354 00:16:48,400 --> 00:16:51,680 Speaker 7: of the conflict, they will probably you know, as Anne Marinos, 355 00:16:51,680 --> 00:16:54,120 Speaker 7: they usually like to add sweeteners in order to get 356 00:16:54,160 --> 00:16:55,040 Speaker 7: that sixty votes. 357 00:16:55,040 --> 00:16:55,640 Speaker 3: That's what they need. 358 00:16:55,680 --> 00:16:58,200 Speaker 7: In the Senate, Republicans only have fifty three votes right now, 359 00:16:58,240 --> 00:17:01,560 Speaker 7: so you kind of by definition you need eight Democrats 360 00:17:01,560 --> 00:17:04,280 Speaker 7: because Paul will probably vote against it. It will be a 361 00:17:04,400 --> 00:17:07,800 Speaker 7: very difficult vote, and it just means that more deficit spending, 362 00:17:07,960 --> 00:17:10,520 Speaker 7: right it means that we could see a supplemental and 363 00:17:10,560 --> 00:17:13,080 Speaker 7: sort of the one hundred billion dollar range, you know, potentially. 364 00:17:13,400 --> 00:17:15,280 Speaker 7: So I think it's going to be a very very 365 00:17:15,720 --> 00:17:18,439 Speaker 7: tricky vote, you know. I think going back though to 366 00:17:18,680 --> 00:17:20,840 Speaker 7: your excellent point though about the Senate, and this is 367 00:17:20,840 --> 00:17:24,040 Speaker 7: something we've been looking at. Two big indicators going into 368 00:17:24,080 --> 00:17:27,119 Speaker 7: the midterm elections that sort of have correlated with previous 369 00:17:27,119 --> 00:17:29,320 Speaker 7: election outcomes. One is just called the generic ballot, sort 370 00:17:29,320 --> 00:17:31,879 Speaker 7: of the general view of one party over another, and 371 00:17:31,920 --> 00:17:35,640 Speaker 7: the other's an enthusiasm gap. How enthusiastic are one set 372 00:17:35,640 --> 00:17:39,119 Speaker 7: of voters over another, and you know, the generic ballot, 373 00:17:39,200 --> 00:17:41,399 Speaker 7: it's sort of plus five for Democrats. That's sort of 374 00:17:41,480 --> 00:17:44,720 Speaker 7: like pointy to a fine night. Probably the House flipping, 375 00:17:45,119 --> 00:17:48,800 Speaker 7: but Republicans keeping the Senate. The enthusiasm gap, however, that 376 00:17:48,880 --> 00:17:51,280 Speaker 7: is suggesting a wave of election, and so that is 377 00:17:51,280 --> 00:17:54,040 Speaker 7: just those are just two variables to sort of look 378 00:17:54,080 --> 00:17:56,720 Speaker 7: at as we go into the midterm election. But to 379 00:17:56,800 --> 00:17:59,360 Speaker 7: your point, I think that the conventional wisdom Republicans would 380 00:17:59,440 --> 00:18:01,800 Speaker 7: keep the Senate because of that challenging map. For Democrats 381 00:18:02,040 --> 00:18:04,959 Speaker 7: that could be thrown out the window again the longer 382 00:18:05,000 --> 00:18:05,680 Speaker 7: this persists. 383 00:18:05,760 --> 00:18:07,480 Speaker 1: The Iron War has definitely taken a lot of the 384 00:18:07,560 --> 00:18:12,439 Speaker 1: energy of everyone's agendas recently, but the government's still impartial shutdown, 385 00:18:12,480 --> 00:18:13,800 Speaker 1: and if you want to travel, not only is it 386 00:18:13,840 --> 00:18:15,960 Speaker 1: going to cost you more because of higher oil prices, 387 00:18:15,960 --> 00:18:18,320 Speaker 1: but also the lines are going to take you potentially 388 00:18:18,320 --> 00:18:21,760 Speaker 1: substantially longer because TSA agents are not showing up. 389 00:18:21,920 --> 00:18:23,160 Speaker 4: What are they going to get reopened? 390 00:18:23,880 --> 00:18:26,359 Speaker 7: Yeah, I mean, this is I think fault on both sides, honestly, 391 00:18:26,400 --> 00:18:29,359 Speaker 7: and Republicans and Democrats you can probably say that about 392 00:18:29,359 --> 00:18:30,240 Speaker 7: a lot on Washington. 393 00:18:30,280 --> 00:18:32,040 Speaker 4: These days, you. 394 00:18:32,000 --> 00:18:35,040 Speaker 7: Know, and again, the people's view of Congress just in general, 395 00:18:35,240 --> 00:18:38,600 Speaker 7: it's like at you know, all time lows, and this 396 00:18:38,680 --> 00:18:40,240 Speaker 7: is just going to make them more angry, right, I 397 00:18:40,240 --> 00:18:41,879 Speaker 7: mean this again, and this is just if you the 398 00:18:41,920 --> 00:18:45,200 Speaker 7: way to sort of disenfranchise voters is to like make 399 00:18:45,320 --> 00:18:48,760 Speaker 7: things that used to be more convenient less convenient. So again, 400 00:18:48,960 --> 00:18:51,560 Speaker 7: price of the price of gas, now if you can afford, 401 00:18:51,840 --> 00:18:53,960 Speaker 7: you know, an airplane ticket, which is obviously going to 402 00:18:54,040 --> 00:18:56,640 Speaker 7: be higher now, making you in a way in line. 403 00:18:56,640 --> 00:18:59,040 Speaker 7: So you know, I think we all hope that there 404 00:18:59,119 --> 00:19:02,520 Speaker 7: is some resolution, but it does feel a little bit 405 00:19:02,560 --> 00:19:05,480 Speaker 7: intractable because of what Democrats want on the ice. 406 00:19:05,600 --> 00:19:05,719 Speaker 3: Now. 407 00:19:05,760 --> 00:19:07,960 Speaker 7: I think that politically speaking, if you look at sort 408 00:19:07,960 --> 00:19:11,040 Speaker 7: of the breakdown of President Trump's approval readings, one issue 409 00:19:11,080 --> 00:19:14,320 Speaker 7: where he did consistently pull above water was on immigration, 410 00:19:14,640 --> 00:19:16,800 Speaker 7: and that has changed over the last three months. And 411 00:19:16,840 --> 00:19:20,040 Speaker 7: you were already seeing this this pivot away from some 412 00:19:20,119 --> 00:19:23,400 Speaker 7: of this more the stronger rhetoric about deportations to kind 413 00:19:23,400 --> 00:19:26,360 Speaker 7: of a softer Jetlar immigration approach, and so you could 414 00:19:26,359 --> 00:19:27,920 Speaker 7: actually I think you could sort of see the White 415 00:19:27,960 --> 00:19:30,240 Speaker 7: House trying to kind of come to a deal on 416 00:19:30,280 --> 00:19:32,480 Speaker 7: this on immigration to sort of maybe pivot some of 417 00:19:32,520 --> 00:19:34,320 Speaker 7: that that more draconian. 418 00:19:33,960 --> 00:19:35,360 Speaker 4: Right I turn around is crazy there. 419 00:19:36,080 --> 00:19:39,640 Speaker 2: This is the Bloomberg Survendments podcast, bringing you the best 420 00:19:39,680 --> 00:19:43,000 Speaker 2: in markets, economics, and geopolitics. You can watch the show 421 00:19:43,040 --> 00:19:46,000 Speaker 2: live on Bloomberg TV weekday mornings from six am to 422 00:19:46,119 --> 00:19:49,879 Speaker 2: nine am Eastern. Subscribe to the podcast on Apple, Spotify, 423 00:19:50,040 --> 00:19:52,240 Speaker 2: or anywhere else you listen, and as always, on the 424 00:19:52,280 --> 00:19:54,720 Speaker 2: Bloomberg Terminal and the Bloomberg Business app.