WEBVTT - Hormuz Blockade Spurs Market Jitters 0:00:02.520 --> 0:00:13.760 Bloomberg Audio Studios, podcasts, radio news. This is the Bloomberg 0:00:13.840 --> 0:00:17.920 Surveillance Podcast. Catch us live weekdays at seven am Eastern 0:00:18.200 --> 0:00:22.000 on Apple CarPlay or Android Auto with the Bloomberg Business App. 0:00:22.360 --> 0:00:25.680 Listen on demand wherever you get your podcasts, or watch 0:00:25.760 --> 0:00:27.160 us live on YouTube. 0:00:27.480 --> 0:00:31.320 Peter Scher is at a macro strategy academy Securities. They 0:00:31.320 --> 0:00:36.440 have a real study of geopolitics and military affairs over 0:00:36.640 --> 0:00:39.920 arching their finance, which is wonderful for the guy with 0:00:40.000 --> 0:00:44.560 the incredible acclaim out of Waterloo and Vanderbilt over the years. 0:00:44.760 --> 0:00:49.720 Is the stock market dislocated from our geopolitics? 0:00:50.080 --> 0:00:52.400 I think it's behaving fairly this morning. 0:00:52.400 --> 0:00:54.440 I would have expected maybe down one percent, But I 0:00:54.440 --> 0:00:57.880 think the reality is if this blockad can be implemented 0:00:57.880 --> 0:01:01.279 in such way that the ceasefire is not broken, it's fine. 0:01:01.480 --> 0:01:04.200 I think that's the risk though, is that this just 0:01:04.280 --> 0:01:05.759 causes some degree of escalation. 0:01:05.920 --> 0:01:10.560 World War two analyze return seventeen percent per year, Korean 0:01:10.600 --> 0:01:15.120 War eighteen percent per year, Vietnam single digit six percent 0:01:15.160 --> 0:01:18.880 per year, Gulf War twelve percent per year, Iraq War 0:01:19.040 --> 0:01:23.440 ten percent per year. All up, stock markets do well 0:01:23.959 --> 0:01:26.000 in military conflict, don't they? 0:01:26.400 --> 0:01:28.080 They have in the past, and I think they could 0:01:28.080 --> 0:01:30.760 do again over time with this one as well. Again, 0:01:30.800 --> 0:01:33.319 we Russia Ukraine have been in conflict and stocks have 0:01:33.400 --> 0:01:35.679 generally done pretty well. I think this time, though, we've 0:01:35.680 --> 0:01:37.360 got to be a little bit cautious, because I feel 0:01:37.360 --> 0:01:39.280 like this is more once again a shifting of the 0:01:39.280 --> 0:01:42.080 world order, and some of the prior conflicts actually shift 0:01:42.080 --> 0:01:44.319 of the world order heavily in favor of the US. 0:01:44.800 --> 0:01:47.040 This seems to be kind of a continuing this theme 0:01:47.040 --> 0:01:48.000 of deglobalization. 0:01:48.840 --> 0:01:52.240 Where are people going for safety or hedging at the moment? 0:01:52.240 --> 0:01:53.520 I mean, you look at the dollar and had a 0:01:53.520 --> 0:01:56.720 great week last week. You look Bitcoin down about one percent. 0:01:56.880 --> 0:02:00.480 Where are people diversifying, if you will, away from exposure 0:02:00.480 --> 0:02:01.080 to equities? 0:02:01.160 --> 0:02:03.120 You know, things that I still like are what we've 0:02:03.160 --> 0:02:05.640 been calling production for security, So anything that the US 0:02:05.640 --> 0:02:08.200 needs to produce domestically they should be buying. You look 0:02:08.200 --> 0:02:10.320 at Intel. Intel had a phenomenal week. That would be 0:02:10.320 --> 0:02:13.160 in there. I think energy companies, rarest critical minerals. I 0:02:13.200 --> 0:02:15.120 think you're going to see some you know, good plays 0:02:15.160 --> 0:02:18.040 continuing in the nuclear sector. You're seeing the same thing 0:02:18.080 --> 0:02:20.680 in Europe. You're seeing Nokia do well BP shall So 0:02:21.000 --> 0:02:23.440 I think everyone's going, what do countries need to make 0:02:23.520 --> 0:02:26.640 more of their own buy those stocks, Those companies will 0:02:26.680 --> 0:02:28.680 benefit from this kind of deglobalization. 0:02:29.520 --> 0:02:34.080 So if the ceasefire holds, you say, hey, look, even 0:02:34.080 --> 0:02:37.680 if we're able to successfully block the straight up Hormos, 0:02:38.400 --> 0:02:39.040 no big deal. 0:02:39.800 --> 0:02:41.919 I think there's only been three or four ships going 0:02:41.919 --> 0:02:45.560 through as it is, So if it kind of goes smoothly, 0:02:45.880 --> 0:02:48.840 no big deal. The flips the positive side would be 0:02:48.840 --> 0:02:51.200 if we're actually in there clearing up minds, that would 0:02:51.200 --> 0:02:53.079 be an awesome step for it. Right all of a sudden, 0:02:53.160 --> 0:02:54.120 you're potentially opening it. 0:02:54.520 --> 0:02:55.240 The flip side. 0:02:55.280 --> 0:02:57.480 The bat negative side would be if we, you know, 0:02:57.960 --> 0:03:01.480 get China involve somehow things could go wrong or does 0:03:01.520 --> 0:03:04.000 this cause the hoodies to do something in the Red Sea. 0:03:04.560 --> 0:03:07.240 That's to me that's the escalation risk, and or if 0:03:07.240 --> 0:03:10.040 Iran goes back after Saudi Arabia's pipeline. So I could 0:03:10.080 --> 0:03:11.640 see this playing either way. I think that's what we're 0:03:11.680 --> 0:03:14.240 all sitting there watching, is one what does the military 0:03:14.280 --> 0:03:16.560 actually do, what does this blockade look like? 0:03:16.919 --> 0:03:18.320 And from there we'll get a better sense of what 0:03:18.360 --> 0:03:18.959 the risks are. 0:03:19.680 --> 0:03:21.359 I mean, I think that's the big question. You can 0:03:21.440 --> 0:03:25.399 say it, but in practice, how do we block Iranian 0:03:25.440 --> 0:03:26.959 oil from getting to the rest of the world. I 0:03:27.000 --> 0:03:29.480 think you bring up an excellent point with China because 0:03:29.520 --> 0:03:31.560 I think the one country here that could get really 0:03:31.639 --> 0:03:34.200 hurt is China because how would they get their oil. 0:03:34.200 --> 0:03:35.440 It's heavily dependent. 0:03:35.120 --> 0:03:35.640 On a run. 0:03:35.880 --> 0:03:36.080 Right. 0:03:36.200 --> 0:03:38.600 So now China, though, did stockpile I think a billion 0:03:38.600 --> 0:03:40.920 barrels of oil. I'm sure they're depleting some of that, 0:03:40.960 --> 0:03:43.640 so they've got some wiggle room there. The other thing 0:03:43.680 --> 0:03:45.880 that we don't know is how much economic pressure this 0:03:45.880 --> 0:03:48.240 really puts on a rank. Clearly it puts economic pressure, 0:03:48.320 --> 0:03:50.320 but do they have one months of savings, three months 0:03:50.320 --> 0:03:51.760 of savings, six months of savings? 0:03:51.760 --> 0:03:52.640 Have they struck deals? 0:03:52.680 --> 0:03:54.640 I think it's not going to work as well economically 0:03:54.800 --> 0:03:55.600 as the administration. 0:03:55.640 --> 0:03:57.440 I mean, it's the earning season here in a moment. 0:03:57.520 --> 0:03:59.400 But Peter Cheer, I think we need to clarify. This 0:04:00.240 --> 0:04:03.120 is great this morning on this we have moved from 0:04:03.160 --> 0:04:06.440 the hysteria of a blockade. I think it was two 0:04:06.520 --> 0:04:10.760 days ago, correct me, Alexis if I'm red Sex, it 0:04:10.840 --> 0:04:14.440 was a long weekend. We've moved from a total blockade. 0:04:14.480 --> 0:04:18.360 The world's coming to an end to now a blockade 0:04:19.120 --> 0:04:23.839 of Iranian port traffic, which AI tells me is ten 0:04:23.880 --> 0:04:27.800 to eleven percent of the oil flow of the Persian Gulf. 0:04:28.080 --> 0:04:33.000 So we're not blockading Kuwait. We're blockading one and eleven 0:04:33.080 --> 0:04:35.520 barrels one in ten barrels right right. 0:04:35.560 --> 0:04:37.800 And I think that's to me the one thing A 0:04:37.839 --> 0:04:40.119 couple of our CAAA people in particular are always careful 0:04:40.120 --> 0:04:42.160 about this, but some of our generals as well, is 0:04:42.240 --> 0:04:44.640 everything that is said by either the President or the 0:04:44.680 --> 0:04:47.440 Secretary of War has a political angle. Everything that the 0:04:47.480 --> 0:04:49.640 military says and done is meant to be a political 0:04:49.720 --> 0:04:51.760 So that's where you're getting the real story of what's 0:04:51.800 --> 0:04:52.200 going on. 0:04:52.320 --> 0:04:54.440 What's the real story right now that we don't know? 0:04:54.480 --> 0:04:56.440 I think until we see what actually gets put out 0:04:56.480 --> 0:04:59.359 there in display what we're actually doing. And again, I 0:04:59.360 --> 0:05:01.520 would love to see our ships go into the strait 0:05:01.560 --> 0:05:02.760 and actually do the mind sweeping. 0:05:02.800 --> 0:05:03.640 I think that would be great. 0:05:03.920 --> 0:05:05.560 Are they at risk if they do that? What do 0:05:05.640 --> 0:05:07.000 your ediminals in general say? 0:05:07.520 --> 0:05:08.600 I think they're definitely at risk. 0:05:08.640 --> 0:05:10.760 And that is you know what I think everyone's trying 0:05:10.760 --> 0:05:12.200 to figure out is we've had these three or four 0:05:12.279 --> 0:05:14.480 days or maybe a week where cost sides are bringing 0:05:14.480 --> 0:05:17.200 out more weapons. Who has what? It's kind of like 0:05:17.200 --> 0:05:19.839 those old six shooter movies. You know, everyone's counting the bullets. 0:05:19.920 --> 0:05:21.320 I think we're trying to figure out what the RAN 0:05:21.400 --> 0:05:22.919 has left. They're trying to figure out what we have. 0:05:23.520 --> 0:05:25.840 John Bolton with Bloomberg this weekend. We're going to play 0:05:25.839 --> 0:05:29.719 that later, really brilliant interview with attentions here in her moves. 0:05:29.760 --> 0:05:34.640 Bolton didn't dodger. Bolton didn't mince words at all. Okay, 0:05:34.680 --> 0:05:36.400 I want to get back to the earning season. Gulden 0:05:36.480 --> 0:05:39.719 secs starting us off in twenty minutes as well. I 0:05:39.760 --> 0:05:42.400 saw in the Zeitgeist this weekend some number, which of 0:05:42.440 --> 0:05:44.640 course I can't remember because they had a beverage in 0:05:44.680 --> 0:05:48.320 my hand. Let's go to AI, Peter Shre. Mag seven 0:05:48.640 --> 0:05:53.560 makes up forty percent of earnings growth, the growthiness of 0:05:53.680 --> 0:05:57.600 earnings two years ago. Now they maybe make up twenty 0:05:57.720 --> 0:06:00.719 some percent. Is that diminishing? Are we going to have 0:06:00.760 --> 0:06:03.960 a Meg seven earnings growth this time around? 0:06:04.000 --> 0:06:05.920 You know, I think the Mags seven and Compasses come 0:06:05.960 --> 0:06:08.800 companies that aren't necessarily part of the AI story the 0:06:08.839 --> 0:06:09.720 way they once were right. 0:06:09.720 --> 0:06:11.520 You're seeing software kind of get hit. 0:06:12.240 --> 0:06:15.160 You saw Mythos calm out, you know, the Anthropic latest release, 0:06:15.240 --> 0:06:19.000 and everyone's talking about that. It dropped not just the IGV, 0:06:19.080 --> 0:06:22.200 which is a software ETF, but cyber CIBR, which is 0:06:22.240 --> 0:06:24.680 a cyber ETF. So you saw that, and yet the 0:06:24.760 --> 0:06:26.919 chip stocks are doing really well. So maybe this is 0:06:26.960 --> 0:06:30.200 just telling you if AI gets good fast, they're gonna 0:06:30.240 --> 0:06:32.039 need more chips. We're gonna need more data centers and 0:06:32.080 --> 0:06:35.479 more AI processing, and it's going to diffuse who benefits. 0:06:35.520 --> 0:06:39.640 Though. Is there a broadening of the market into April 0:06:40.040 --> 0:06:43.920 bank earnings, tech earnings everybody else after that? Is there 0:06:43.920 --> 0:06:45.800 a legitimate broadening. 0:06:45.440 --> 0:06:46.000 There should be. 0:06:46.080 --> 0:06:48.360 I think we might finally be hitting the stage where 0:06:48.400 --> 0:06:50.520 the benefits of AI don't just accrue to a few 0:06:50.520 --> 0:06:53.840 AI companies, They accrue to the companies that are using them. 0:06:54.040 --> 0:06:57.480 Peer share of this with Academy Securities, Johmbo Van Blackrock 0:06:57.560 --> 0:07:01.839 coming up an extended conversation with doctor Boven the view 0:07:01.880 --> 0:07:05.159 of the global economics from the desk at black Rock 0:07:05.600 --> 0:07:08.920 as well. Henrietta Treys to be long later. Lori Kelvicina 0:07:09.360 --> 0:07:11.040 At some point in the show, I don't know when 0:07:12.480 --> 0:07:14.840 do we have a lineup real they've been on fire. 0:07:14.920 --> 0:07:19.520 You know what it is. Let's be honest. Winter and 0:07:19.640 --> 0:07:24.320 spring interns are always better than summer interns. They're not 0:07:24.360 --> 0:07:26.680 in the bars. I mean there's a big difference, Okay. 0:07:27.000 --> 0:07:29.880 I mean they're just simply they're more productive on Thursday 0:07:29.920 --> 0:07:32.800 and Friday. It's all there is to it. Alexis Christopher's 0:07:32.880 --> 0:07:33.840 with petershere. 0:07:34.360 --> 0:07:36.240 I'm glad we brought up AI because I want to 0:07:36.280 --> 0:07:38.880 talk about AI and how it relates to the banks. 0:07:38.960 --> 0:07:40.680 I mean, I think we all know trading volume was 0:07:40.720 --> 0:07:42.880 probably off the charts because of what's happening with the war, 0:07:42.960 --> 0:07:44.679 So the banks made a lot of big money there. 0:07:45.440 --> 0:07:47.800 But are we going to find out AI's impact on 0:07:47.840 --> 0:07:50.160 the banks during this earning season? Do you think it. 0:07:50.240 --> 0:07:50.880 Might be early? 0:07:50.920 --> 0:07:52.560 But again I think you're going to see some positive 0:07:52.600 --> 0:07:55.480 messages that they're getting some benefits, some efficiencies from this. 0:07:55.800 --> 0:07:57.760 I think the next wave too, will be probably a 0:07:57.800 --> 0:07:59.200 little bit early, but you're going to see I think 0:07:59.200 --> 0:08:01.600 a lot more m and a activity, more IPO activity 0:08:01.640 --> 0:08:04.320 that pickup in around this space. Again, also, I think 0:08:04.320 --> 0:08:06.440 in and around the new military. As you start thinking 0:08:06.480 --> 0:08:09.680 about there's going to be a push for drones domestically globally, right. 0:08:09.680 --> 0:08:11.040 I think that's one thing that comes out of this. 0:08:11.160 --> 0:08:13.040 So I think there's gonna be a lot of opportunity 0:08:13.080 --> 0:08:16.360 for some interesting private equity deals to get done, some IPO, 0:08:16.520 --> 0:08:17.640 some M and A activity. 0:08:17.840 --> 0:08:19.520 So I'm excited on that prospect. 0:08:19.960 --> 0:08:23.360 What do your people say about Baron's to big splash on? 0:08:23.400 --> 0:08:25.640 This is weekend and I'm not up to speed out 0:08:25.640 --> 0:08:31.080 of folks the musk Ipo. This is the first time 0:08:31.120 --> 0:08:34.280 I've ever asked this question, Peter. I apologize in advance 0:08:34.920 --> 0:08:36.520 the musk Ipo. 0:08:36.880 --> 0:08:38.920 You know, we think space has been a huge part 0:08:38.960 --> 0:08:40.880 of it. Again, I think space fits into what we've 0:08:40.880 --> 0:08:42.920 been talking about this production for security. I think it 0:08:42.960 --> 0:08:44.560 talks into a lot of the things that we've. 0:08:44.400 --> 0:08:44.920 Been looking at. 0:08:44.960 --> 0:08:47.960 Is is it profitable? I think it ultimately will be. 0:08:48.040 --> 0:08:49.840 I think it will ultimately be very proper. 0:08:49.960 --> 0:08:51.880 You can't say that with a straight face. 0:08:53.000 --> 0:08:55.120 I do think things will have to get done out there. 0:08:55.160 --> 0:08:56.839 I'm not so sure about the data centers in space. 0:08:57.240 --> 0:08:59.800 We went to the Moon because of the Russians were 0:08:59.800 --> 0:09:01.920 all in tears this weekend with Artemis too. 0:09:01.960 --> 0:09:04.000 It was absolutely Spectacu's pretty beautiful. 0:09:04.040 --> 0:09:05.680 Are you telling me musk is going to be a 0:09:05.720 --> 0:09:07.160 profit function with space. 0:09:07.480 --> 0:09:09.280 I think we're going to see profitability up there, and 0:09:09.280 --> 0:09:11.079 I also think part of it's going to be driven 0:09:11.080 --> 0:09:14.240 by some military spending that we have treated space as 0:09:14.280 --> 0:09:17.920 a very friendly you know Kumbayas at a moment. Russia 0:09:17.920 --> 0:09:19.959 doesn't treat it that way, China doesn't treat it that way. 0:09:20.000 --> 0:09:21.840 So I think we're going to put together things to 0:09:21.840 --> 0:09:23.920 make sure that we secure a space right. It's if 0:09:23.960 --> 0:09:28.839 you think about how dependent we are on communications, satellite, communications, GPS, 0:09:28.880 --> 0:09:31.000 all these things that we kind of tossed up there 0:09:31.040 --> 0:09:32.560 and said, oh this is working. You know, it's ever 0:09:32.600 --> 0:09:34.360 going to be nefarious. So I think there's some real 0:09:34.400 --> 0:09:37.840 opportunities and kind of space defense effectly full disclosure. 0:09:37.920 --> 0:09:41.120 We're watching the re entry, you know, they're coming in 0:09:41.640 --> 0:09:44.600 at twenty four thousand miles per hour, and the coverage 0:09:45.080 --> 0:09:47.600 I watched it off the Associated pressed me down. Ludlow 0:09:47.840 --> 0:09:51.400 at Bloomberg doing a great job as well, and I'm 0:09:51.480 --> 0:09:53.920 like every other moron out there, going what if they 0:09:53.960 --> 0:09:56.199 hit a satellite. 0:09:56.440 --> 0:09:57.920 I mean, I thought. 0:09:57.720 --> 0:09:59.800 People in the business would laugh at before then, but 0:10:00.120 --> 0:10:01.760 that's what I was thinking. Oh, my god, I want 0:10:01.760 --> 0:10:03.440 to something. 0:10:03.800 --> 0:10:05.680 What you talked about M and A. I mean, we've 0:10:05.720 --> 0:10:08.800 seen the pickup in M and A activity in this 0:10:09.000 --> 0:10:12.120 environment with so much uncertainty. Are you surprised by that 0:10:12.280 --> 0:10:15.720 or is this the Trump administration being friendly to corporate America. 0:10:15.800 --> 0:10:18.520 I think it's partly the Trump administration being friendly to 0:10:18.520 --> 0:10:21.880 corporate America. And despite the uncertainty, again, you start looking 0:10:21.880 --> 0:10:24.000 at these themes, whether it's production for security data is 0:10:24.000 --> 0:10:26.800 an electricity generation? Right, those are the themes I think 0:10:26.800 --> 0:10:29.600 that are really catching on, and they're relatively new themes 0:10:29.640 --> 0:10:31.800 there the last couple of years. So I think as 0:10:31.800 --> 0:10:34.240 those themes play out, that's what creates the opportunity. Right, 0:10:34.280 --> 0:10:36.640 what can we do ourselves again? What can we mind? 0:10:36.640 --> 0:10:39.200 What can we do global shipping? We have to make 0:10:39.240 --> 0:10:41.160 ships again. So I think it opens up a whole 0:10:41.240 --> 0:10:43.520 new set of businesses that have been left for dead 0:10:43.600 --> 0:10:45.560 to some degree for the last five to ten years. 0:10:45.720 --> 0:10:47.480 And that's why you can get this MNA activity. You 0:10:47.480 --> 0:10:50.360 get good valuations and companies people believe will grow and 0:10:50.400 --> 0:10:51.520 be profitable. 0:10:51.559 --> 0:10:55.800 Quarter after quarter after quarter. We low ball earnings, OMG, 0:10:55.960 --> 0:10:59.200 that came in better? What this the pre war earnings 0:10:59.280 --> 0:11:04.640 granted earnings end of March. Fine guidance. We're just I mean, 0:11:04.840 --> 0:11:07.360 you can literally write the script right now. Everybody's gonna 0:11:07.360 --> 0:11:09.760 be OMG, they're gonna be terrible, right, We're all gonna 0:11:09.800 --> 0:11:11.600 wait for June thirtieth. Yeah. 0:11:11.640 --> 0:11:14.400 And what I'm even more than the geopolitical, which is 0:11:14.400 --> 0:11:16.319 obviously a big part of it. I want to see 0:11:16.320 --> 0:11:19.839 what they're seeing in global sales. How badly has Asia 0:11:19.920 --> 0:11:21.640 been hit. I think Asia has been hit much harder 0:11:21.679 --> 0:11:24.280 than us by the rise in oil prices, the inability 0:11:24.280 --> 0:11:27.679 to get oil. I think Europe's having their own set 0:11:27.679 --> 0:11:31.040 of affordability issues again, consumer confidence, which I don't pay 0:11:31.080 --> 0:11:32.840 a lot of attention to. It came out the worst 0:11:32.880 --> 0:11:34.320 of all time, so at least that I have to 0:11:34.320 --> 0:11:37.560 pay some attention to. I'm concerned that we are going 0:11:37.600 --> 0:11:39.679 to see a slowdown and spending as everyone becomes a 0:11:39.720 --> 0:11:43.719 little bit more conservative due to so much uncertainty and affordability. 0:11:44.000 --> 0:11:47.160 I got to go to news. There's so much newsflow. Also, 0:11:47.200 --> 0:11:49.719 we have somebody new doing news, so I got to 0:11:49.760 --> 0:11:53.680 get to them earliest. So it doesn't you know, doesn't 0:11:53.720 --> 0:11:57.000 screw up needs your side flash, you know, I'm nervous 0:11:57.040 --> 0:12:00.120 going to them. He's brand new. Here's here think thank 0:12:00.120 --> 0:12:05.640 you so much, Academy Securities. Stay with us. More from 0:12:05.679 --> 0:12:08.319 Bloomberg Surveillance coming up after this. 0:12:15.600 --> 0:12:19.160 You're listening to the Bloomberg Surveillance podcast. Catch us Live 0:12:19.240 --> 0:12:22.400 weekday afternoons from seven to ten am Eastern. Listen on 0:12:22.480 --> 0:12:26.120 Applecarplay and Android Auto with the Bloomberg Business app, or 0:12:26.280 --> 0:12:27.800 watch US Live on YouTube. 0:12:28.160 --> 0:12:30.360 So here's the way we roll, folks. J'all movan with 0:12:30.480 --> 0:12:34.760 US Global had a research Blackrock Investment Institute. And the 0:12:34.920 --> 0:12:38.920 reason that he's here is because Cole Calawfield had fifty 0:12:38.960 --> 0:12:41.760 goals plus and mister suzuki At I think his one 0:12:41.800 --> 0:12:45.000 hundredth point last night for Les Abidan. And it's good 0:12:45.320 --> 0:12:48.680 to have you been up to Montreal to see the excitement. 0:12:49.080 --> 0:12:49.880 I didn't get a surce. 0:12:49.920 --> 0:12:52.000 It was in Montreal a few weeks ago, but I 0:12:52.000 --> 0:12:54.400 didn't get a chance to see the hobs. But it's 0:12:54.400 --> 0:12:55.640 great to see the outcome. 0:12:55.720 --> 0:12:58.760 So I skim the politics this week. In a Quebec 0:12:58.800 --> 0:13:01.679 there's a new leader of the very very far Love 0:13:01.760 --> 0:13:05.600 Quebec Party. Are the elements of Trudeau and Quebec of 0:13:05.840 --> 0:13:09.560 Trudeau's senior incorrect or beyond that to where it's much 0:13:09.600 --> 0:13:16.200 more nationwide Liberal party affecting Quebec politics. I don't know. 0:13:16.240 --> 0:13:22.120 I think the election from the Miss Madame Cochette now is, 0:13:22.360 --> 0:13:25.120 I think is an interesting outcome. I'm not like a 0:13:25.200 --> 0:13:29.520 very closely following the Quebec politics to be honest, but yeah, 0:13:29.600 --> 0:13:30.839 I think there's going to be a change. 0:13:31.160 --> 0:13:33.640 It's like a generational change. This to me as well, 0:13:33.800 --> 0:13:36.400 let's get to the moment at hand. You're writing for 0:13:36.480 --> 0:13:39.720 Blackrock with all your wonderful people as well. Is there 0:13:39.720 --> 0:13:44.119 a good linkage of our geopolitical stress from the earnings 0:13:44.240 --> 0:13:48.240 juggernaut that is technology, the growth of earnings, of growth 0:13:48.280 --> 0:13:52.680 and revenues. Are they separate things or do they conflict together? Yeah? 0:13:52.720 --> 0:13:56.600 No, I think there has been with the conflict we've 0:13:56.600 --> 0:13:59.679 seen in the Middle East, a disconnect that has been 0:13:59.679 --> 0:14:05.439 a peer between what we think are very solid catalysts 0:14:05.480 --> 0:14:08.760 for for earnings and that have been materializing, especially in 0:14:08.840 --> 0:14:12.480 the tech space, and the degrading we've seen inequities during 0:14:12.480 --> 0:14:15.800 that period. So that is understandable in the context where 0:14:15.840 --> 0:14:19.280 there's significant worries about the knock on effect of the 0:14:19.320 --> 0:14:21.920 supply shocks and what that might be doing to the 0:14:21.960 --> 0:14:26.080 global economy, but to the extent that those get to 0:14:26.120 --> 0:14:31.160 be contained, and I think that gap becomes an opportunity. 0:14:32.000 --> 0:14:35.600 You know, Look, the markets are a forward looking animal, right, 0:14:35.680 --> 0:14:38.000 and it makes you wonder, what does the market know 0:14:38.120 --> 0:14:40.760 that we don't know when we're just an hours away 0:14:41.160 --> 0:14:43.800 from this blockade that that Trump is threatening against the 0:14:43.800 --> 0:14:46.560 straight of hormones and we just have WTI creweded about 0:14:46.600 --> 0:14:47.920 about one hundred and four a barrel. 0:14:48.560 --> 0:14:50.480 Yeah, I don't think the I don't think the market 0:14:50.560 --> 0:14:53.120 knows more than anybody. Actually, I don't know who knows 0:14:53.120 --> 0:14:56.840 anything about what's going to really happen, even the key 0:14:56.920 --> 0:15:00.160 decision maker involved. I mean they're they're you know, we're 0:15:00.160 --> 0:15:02.880 going to figure out a way out of it. But 0:15:03.000 --> 0:15:05.400 I do think that these are events that the markets 0:15:06.200 --> 0:15:08.280 cannot really priced in one way or the other. I mean, 0:15:08.280 --> 0:15:11.880 these are binary. If we're going to see a bad 0:15:11.920 --> 0:15:14.960 outcome coming, then your market will react. But until then, 0:15:15.800 --> 0:15:18.680 I think it's very costly to stand the sideline for 0:15:18.680 --> 0:15:19.920 for market participants. 0:15:20.440 --> 0:15:20.840 Uh. 0:15:20.880 --> 0:15:26.320 And there is a credible likely scenario where things, you know, 0:15:26.360 --> 0:15:29.160 the escalate from here, and I think that's that's what 0:15:29.240 --> 0:15:30.120 the market's gonna run. 0:15:30.080 --> 0:15:32.400 You're saying staying on the sidelines, hanging on a dry 0:15:32.440 --> 0:15:34.360 powder is not the way to go right now. 0:15:34.560 --> 0:15:37.680 I think I think, you know, there's no neutral position 0:15:37.840 --> 0:15:40.560 really in this in this environment. So you you can 0:15:40.640 --> 0:15:42.720 decide to say, I'm going to stand the sideline, but 0:15:42.840 --> 0:15:45.120 that could be the time where we get very significant 0:15:45.120 --> 0:15:49.200 return coming would be bad for our clients, or you 0:15:49.200 --> 0:15:52.080 can decide to to stay in and then if we 0:15:52.160 --> 0:15:54.880 do get a bad outcome, then that's gonna be that's 0:15:54.920 --> 0:15:59.280 gonna be, uh, you know, also detracting from portfolios. I 0:15:59.320 --> 0:16:02.480 think at the moment, it's a bigger call to say 0:16:02.520 --> 0:16:06.000 that we're going to see a very bad outcome that's 0:16:06.000 --> 0:16:08.280 going to sustain because I believe, I mean that's a 0:16:08.320 --> 0:16:10.480 strong belief, right, is that at the end of the day, 0:16:10.920 --> 0:16:15.280 they are very strong economic incentives that will shape the 0:16:15.280 --> 0:16:19.320 behavior of the actors and everybody is affected by these 0:16:19.520 --> 0:16:20.840 strong economic incentives. 0:16:20.880 --> 0:16:23.280 Jem levent with his folks Global how to Research black 0:16:23.360 --> 0:16:27.120 Rock Investment Institute out of the University of Montreal, and 0:16:27.120 --> 0:16:30.120 then he wandered to Princeton under a guy named Bernanki. 0:16:30.240 --> 0:16:33.800 Bernanke's heart and soul is the integrity of the financial 0:16:33.840 --> 0:16:36.680 system is the most important thing in crisis. That was 0:16:36.720 --> 0:16:41.200 a huge difference between Freeman's and Schwartz's work years ago. 0:16:41.600 --> 0:16:44.200 Do we have a solid financial system? To me, it's 0:16:44.240 --> 0:16:48.560 looking pretty well. As Jean Belevan worried about private credit 0:16:49.240 --> 0:16:52.880 creating the angst of previous eras, I think. 0:16:52.760 --> 0:16:54.960 We are in a very different situation than we have been. 0:16:55.480 --> 0:16:58.000 You know, if we go in the most recent financial 0:16:58.000 --> 0:17:00.640 crisis in two thousand and eight, right, so we have 0:17:01.200 --> 0:17:05.280 had a major uh you know, pause initiative that have 0:17:05.359 --> 0:17:07.879 been built over them many years. I think we've seen, uh, 0:17:08.400 --> 0:17:11.760 you know, a different financial system. And if you go 0:17:11.840 --> 0:17:14.680 back to the same kind of like source of crisis 0:17:14.680 --> 0:17:18.280 that we've seen back then, leverage in the system, hidden 0:17:18.359 --> 0:17:20.720 leverage and so on, it's difficult to put the finger 0:17:20.880 --> 0:17:23.680 on the on the same kind of phenomenon, right play here. 0:17:24.080 --> 0:17:27.400 Uh it doesn't mean and every crisis becomes a different things, 0:17:27.440 --> 0:17:30.320 right So, it doesn't mean that there we won't discover 0:17:30.560 --> 0:17:33.439 that there was some uh some excessive risk ticking. But 0:17:33.480 --> 0:17:35.879 I think at this juncture, it's hard for us to 0:17:35.960 --> 0:17:40.560 see uh, you know, systemic risk that creates these. 0:17:41.119 --> 0:17:42.639 John, you know where I am on this and the 0:17:43.080 --> 0:17:45.560 huge body of the financial media. I call it the 0:17:45.600 --> 0:17:49.879 parlor game. Want central banks and particularly the FED to 0:17:50.000 --> 0:17:53.240 get out front, to be ex ante. All of the 0:17:53.400 --> 0:17:56.600 history is an ex post study as well. They wait 0:17:56.720 --> 0:17:59.760 and they wait. How does that ex post study chain 0:18:00.600 --> 0:18:03.720 given a war? I mean they just have to wait. 0:18:04.560 --> 0:18:10.200 Yeah, I think in terms of you know, we're actually 0:18:10.440 --> 0:18:12.640 more jilly in this environment for central bank. I think 0:18:12.640 --> 0:18:15.040 we're facing a set of shocks. We call that an 0:18:15.119 --> 0:18:19.639 environment shape by supply. We face a set of shocks 0:18:19.680 --> 0:18:22.840 to which central banks are not that well equipped to 0:18:22.880 --> 0:18:26.640 deal with and as a result, you know, I think 0:18:26.640 --> 0:18:29.040 there's a good debate to know when central bank should 0:18:29.080 --> 0:18:33.760 lean against excessive restaking in accenty as you say, or not. 0:18:34.040 --> 0:18:36.440 But right now I think it's a different question. I mean, 0:18:36.920 --> 0:18:40.880 these are shocks to which, uh, you know, supply shocks 0:18:41.320 --> 0:18:44.320 to which monetary policy has a little to do about. 0:18:44.760 --> 0:18:47.760 And so I think that reinforces the case to you know, 0:18:47.960 --> 0:18:50.560 look at the inflation consequences and respond to that. But 0:18:50.600 --> 0:18:52.920 I don't think there's a financial objective. 0:18:53.040 --> 0:18:57.399 What's what's the choice set of data they look at 0:18:57.600 --> 0:19:01.000 to see if inflation shifts? Is it just ampule? Is 0:19:01.040 --> 0:19:02.600 wage and real wage growth. 0:19:03.440 --> 0:19:05.640 No, I think in this environment, in this and now, 0:19:05.680 --> 0:19:07.800 with the nature of the shock we're we're facing, I 0:19:07.800 --> 0:19:10.960 think it's going to be about tracing out the effect 0:19:11.000 --> 0:19:14.280 on the supply chains of the shock. It's not about oil. 0:19:14.320 --> 0:19:16.520