WEBVTT - Bloomberg Surveillance TV: March 9th, 2026 0:00:02.360 --> 0:00:06.720 Bloomberg Audio Studios, Podcasts, radio news. 0:00:11.640 --> 0:00:15.440 This is the Bloomberg Surveillance Podcast. I'm Jonathan Ferrow, along 0:00:15.480 --> 0:00:18.680 with Lisa Bromwitz and Amrie Hordern. Join us each day 0:00:18.720 --> 0:00:22.280 for insight from the best in markets, economics, and geopolitics 0:00:22.400 --> 0:00:24.880 from our global headquarters in New York City. We are 0:00:24.920 --> 0:00:27.680 live on Bloomberg Television weekday mornings from six to nine 0:00:27.720 --> 0:00:31.280 am Eastern. Subscribe to the podcast on Apple, Spotify or 0:00:31.320 --> 0:00:33.919 anywhere else you listen, and as always, on the Bloomberg 0:00:34.000 --> 0:00:36.839 Terminal and the Bloomberg Business App. Here's the view on 0:00:36.880 --> 0:00:40.040 Wall Street stocks falling crew jumping above one hundred dollars 0:00:40.080 --> 0:00:42.200 a barrow for the first time since twenty two. Sarah 0:00:42.280 --> 0:00:45.239 Hunt of Valpine saxon words, writing, the positives that investors 0:00:45.240 --> 0:00:47.280 we're looking for are hard to hang one's hat on 0:00:47.440 --> 0:00:50.240 given the oil price Serge. Sarah joins us now for more. Sarah, 0:00:50.240 --> 0:00:52.480 good mornig, Good morning. What changed with triple digit crud 0:00:52.520 --> 0:00:52.720 for you? 0:00:53.440 --> 0:00:55.200 I think it changes a lot of things. I think 0:00:55.200 --> 0:00:58.160 it's really, as we've all spoken about many times, it's 0:00:58.160 --> 0:01:00.400 going to depend on how long this lasts. Curve does 0:01:00.440 --> 0:01:02.160 not seem to think that this is a permanent state, 0:01:02.520 --> 0:01:04.679 and I think that what it changes is one the 0:01:04.720 --> 0:01:07.480 possibility of an economic slowdown or even going into RECESSI 0:01:07.480 --> 0:01:09.640 because higher energy prices can often cause that kind of 0:01:09.680 --> 0:01:13.600 an economic shock, and what happens on the earnings front, 0:01:13.600 --> 0:01:16.920 both to margins and to spending into everything else. Right now, 0:01:16.959 --> 0:01:18.880 this is a near term problem. If it looks like 0:01:18.920 --> 0:01:20.640 it's going longer, it's going to change some of the 0:01:20.640 --> 0:01:22.680 mouth that everyone's been looking for for the next couple 0:01:22.720 --> 0:01:23.600 of years in terms of earnings. 0:01:23.680 --> 0:01:27.040 Consumer facing names get and beaten up airlines, cruise lines, 0:01:27.240 --> 0:01:30.080 or get an absolutely hammered as crew continues to tick out. 0:01:30.280 --> 0:01:31.600 We have the point of demand destruction. 0:01:31.720 --> 0:01:31.920 Now. 0:01:32.720 --> 0:01:34.680 I think it's a little early for demand destruction. I 0:01:34.720 --> 0:01:36.640 think that there's some obvious things that are going to 0:01:36.640 --> 0:01:38.640 happen as you see prices move very higher in the 0:01:38.680 --> 0:01:41.360 short term, but I think from a longer term perspective, 0:01:41.560 --> 0:01:44.440 it takes longer than a couple of weeks of higher prices. 0:01:44.440 --> 0:01:45.959 Do we get a couple of months of higher prices, 0:01:45.959 --> 0:01:48.240 that's definitely going to hurt it. And they're on the margins. 0:01:48.240 --> 0:01:50.000 People are going to travel less, people are worried about 0:01:50.000 --> 0:01:52.440 traveling to begin with, just because there's something going on 0:01:52.720 --> 0:01:54.800 in a big part of the world that's really important. 0:01:54.880 --> 0:01:57.040 So I think you're definitely going to see some pullback 0:01:57.080 --> 0:01:59.600 in activity, and that is in and of itself slowing 0:01:59.600 --> 0:02:00.000 things down. 0:02:00.240 --> 0:02:03.240 Sarah, have you been reluctant to sell stocks any stocks 0:02:03.280 --> 0:02:05.200 in response to this, given the fact that in the 0:02:05.240 --> 0:02:08.280 past geopolitics is something that has always been a short 0:02:08.360 --> 0:02:09.480 term event for markets. 0:02:10.600 --> 0:02:12.639 I think this is yes, I would say, I wouldn't 0:02:12.639 --> 0:02:14.600 say I'm afraid to sell anything, But it's more that 0:02:14.760 --> 0:02:16.800 is this something that is really a permanent change? And 0:02:16.800 --> 0:02:18.760 what's your time horizon if I needed you know, I 0:02:18.760 --> 0:02:20.320 tell people all the time, if you need money in 0:02:20.320 --> 0:02:22.320 the very short term, you should have it liquid. If 0:02:22.360 --> 0:02:23.959 you're in there for the long term, you're going to 0:02:23.960 --> 0:02:26.040 see a lot of volatility. We knew coming into this 0:02:26.120 --> 0:02:27.720 year it was going to be volatile. We didn't know 0:02:27.800 --> 0:02:30.200 why and how volatile it would be so quickly. But 0:02:30.320 --> 0:02:32.800 you expect after a couple of years, especially if such 0:02:32.840 --> 0:02:35.640 strong equity performance, that you'll see more volatility. The question 0:02:35.720 --> 0:02:37.280 is really going to be whether or not this sticks, 0:02:37.480 --> 0:02:39.960 or whether or not this is something that markets continue 0:02:39.960 --> 0:02:41.880 to see through and look through and I think that 0:02:41.919 --> 0:02:43.720 there are other things going on in the background that 0:02:43.800 --> 0:02:46.320 are also potentially problematic. So it's going to be interesting 0:02:46.360 --> 0:02:48.880 to see how that plays out, and not interesting in 0:02:48.880 --> 0:02:49.240 a good way. 0:02:49.320 --> 0:02:51.680 Yeah, we see, of course what's going on with private credit. 0:02:51.760 --> 0:02:54.560 We see cracks in the US economy. I'm just wondering, 0:02:54.919 --> 0:02:57.919 is there an inflection point, something that you're looking for 0:02:58.040 --> 0:03:00.200 that would change your view, that would make you materially 0:03:00.280 --> 0:03:02.640 shift your longer term outlook for twenty twenty six. 0:03:03.480 --> 0:03:07.639 I think if this continues to go on without figuring 0:03:07.639 --> 0:03:09.920 out what the off ramps are, I think that you know, 0:03:09.960 --> 0:03:12.399 it was a good move to say that we'll globally 0:03:12.400 --> 0:03:15.040 the G seven will release some energy because prices spikes 0:03:15.040 --> 0:03:17.160 so high, that's not going to solve the problem. The 0:03:17.160 --> 0:03:19.520 problem needs to be solved by having some resolution and 0:03:19.560 --> 0:03:21.160 having tankers be able to get through the straight up 0:03:21.160 --> 0:03:24.560 home moves. Until we see some path for that, I 0:03:24.600 --> 0:03:26.400 think you're going to start to see people get more 0:03:26.400 --> 0:03:29.639 and more worried about those longer term both earnings estimates 0:03:29.639 --> 0:03:32.760 and just general economic conditions and the market. Right now, 0:03:32.840 --> 0:03:35.600 it's still we're still in early days. If that really extends, 0:03:35.640 --> 0:03:37.720 I think that's really going to be the tipping point. 0:03:37.800 --> 0:03:39.640 Some of that depends on what your starting point is, 0:03:39.760 --> 0:03:42.520 what your assessment of current conditions actually is, and we've 0:03:42.520 --> 0:03:45.360 got very different views on that. Some people think we're okay. 0:03:45.560 --> 0:03:47.200 In fact, the Federal Reserve, the top of the Federal 0:03:47.200 --> 0:03:49.720 Reserve chair and power would it says that things are stable, 0:03:49.720 --> 0:03:52.480 they're okay. Others would say things at front out, what'd 0:03:52.480 --> 0:03:53.760 you come down on that one of the other. 0:03:54.360 --> 0:03:56.240 I think that they are a little bit more fragile 0:03:56.240 --> 0:03:58.720 than I look. I think that you've seen some disruptions 0:03:58.720 --> 0:04:00.360 in the labor market. You certainly hear a lot of 0:04:00.400 --> 0:04:02.800 rumblings in the labor market about what's going to happen 0:04:02.840 --> 0:04:05.720 because of ai different sectors. There's a lot of spending 0:04:05.720 --> 0:04:07.600 that's coming out of that, though, so there are offsets 0:04:07.640 --> 0:04:10.720 to that. I think generally speaking, absent this shock, the 0:04:10.720 --> 0:04:14.480 economy was doing fairly well. There were definite pockets of weakness, 0:04:14.480 --> 0:04:16.159 and you could see that in rotation in sectors in 0:04:16.200 --> 0:04:19.360 the market. You could see major rotation sectors. The headline 0:04:19.360 --> 0:04:21.880 industries are still fairly close to all time his, but 0:04:21.920 --> 0:04:25.040 there's been some major devastation in different sectors along the way. 0:04:25.360 --> 0:04:27.880 This is going to be one of those situations where 0:04:28.080 --> 0:04:30.240 depending on how long it lasts, and this is you know, 0:04:30.480 --> 0:04:33.120 just going to keep saying that we don't know yet 0:04:33.160 --> 0:04:35.520 what's going to happen. But on the margin, nothing good 0:04:35.560 --> 0:04:38.200 comes out of spiking oil prices this high and shutting. 0:04:37.960 --> 0:04:40.200 In oil and for well, let's pick a sector, financials. 0:04:40.320 --> 0:04:43.400 Lisa talked about private credit, Blackstone, then black Rock going 0:04:43.440 --> 0:04:45.720 into the weekend with a bit of trumble there. Then 0:04:45.760 --> 0:04:48.160 we've seen Morkan, Stanley and Goldman Sachs start to want 0:04:48.200 --> 0:04:50.880 to perform as well. This is going through the whole 0:04:50.920 --> 0:04:53.240 sector now, and not just the private market players. What 0:04:53.240 --> 0:04:54.200 do you think that's Siglink. 0:04:54.760 --> 0:04:57.159 I think that's signaling some concern about weakness ahead and 0:04:57.200 --> 0:04:59.880 some concern about what are if you're going to have 0:05:00.240 --> 0:05:03.240 potential issues in both equity and bond markets, but you 0:05:03.360 --> 0:05:06.120 also have this private credit thing. Is this would be 0:05:06.120 --> 0:05:09.200 the top of the story if we weren't going on this, 0:05:09.200 --> 0:05:11.120 this would be the absolute top story. I think if 0:05:11.160 --> 0:05:13.039 we weren't going through what we're going through right now 0:05:13.200 --> 0:05:15.800 with I Ran because this is one of those it 0:05:15.960 --> 0:05:17.840 started out small and now you're seeing a couple of 0:05:17.920 --> 0:05:19.279 other things and then a couple of other things, and 0:05:19.320 --> 0:05:20.920 that's the kind of things that market don't like. It's 0:05:20.920 --> 0:05:23.359 that uncertainty that markets don't like and investors don't like 0:05:23.600 --> 0:05:25.760 when everyone has been sort of trying to reassure everyone 0:05:25.760 --> 0:05:27.760 that it's all okay, and then you start to see 0:05:27.760 --> 0:05:29.560 things that make it look a little less okay. So 0:05:29.600 --> 0:05:31.600 I think that would be a much bigger headline if 0:05:31.600 --> 0:05:33.200 we weren't in the middle of this, and that would 0:05:33.240 --> 0:05:35.600 be something that would be starting to worry markets going forward. 0:05:35.640 --> 0:05:38.040 Yeah, the idea that panic and sort of retail investors 0:05:38.080 --> 0:05:39.640 trying to pull their money and not getting it all 0:05:39.680 --> 0:05:42.280 back is very concerning to people. Can you put these 0:05:42.320 --> 0:05:45.040 two stories together off the oil price shock and credit 0:05:45.080 --> 0:05:48.400 concerns tied to private credit. The idea that some kind 0:05:48.400 --> 0:05:52.760 of increase in oil and decrease in consumer spending power 0:05:53.120 --> 0:05:56.880 could catalyze the fears that people see in credit soon 0:05:57.000 --> 0:05:58.760 arthan maybe otherwise would take place. 0:05:59.200 --> 0:06:01.880 Well, it's interesting because I think those fears were catalyzing 0:06:01.960 --> 0:06:04.880 on the back of expectations of problems in certain sectors, 0:06:04.920 --> 0:06:07.760 like the software sector specifically, But whether or not the 0:06:07.800 --> 0:06:10.200 reality on the ground is that they were as bad 0:06:10.240 --> 0:06:12.359 as it looked I think the problem is more that 0:06:12.400 --> 0:06:14.919 everybody makes a decision in one direction. I don't know 0:06:14.960 --> 0:06:16.680 that the higher oil presses are going to make that worse, 0:06:16.680 --> 0:06:19.120 because I don't think that the credits that people are 0:06:19.120 --> 0:06:21.160 worried about are ones that are so tied to the consumer, 0:06:21.320 --> 0:06:22.920 and I think that would be the link that I'm 0:06:22.920 --> 0:06:25.000 not sure we see yet, but it doesn't mean that 0:06:25.040 --> 0:06:26.680 it isn't there, and certainly people are going to start 0:06:26.720 --> 0:06:27.240 looking for that. 0:06:27.880 --> 0:06:31.359 Stay with us more Bloomberg surveillance coming up after this. 0:06:40.520 --> 0:06:43.040 Janette laws Statigue's right to the following. President Trump can 0:06:43.040 --> 0:06:45.600 pull out of Iran in three weeks and gas prices 0:06:45.640 --> 0:06:47.680 will go back to normal. The risk is if the 0:06:47.760 --> 0:06:50.960 conflict lar Slonka Jeanette joined just now for more Jeanette, 0:06:51.080 --> 0:06:53.719 that statement begs the question if the president, if this 0:06:53.800 --> 0:06:56.640 is still in the President's hands, and if Iran wants 0:06:56.680 --> 0:06:58.720 to make this messy, they can make this messy for 0:06:58.800 --> 0:06:59.400 quite a while. 0:07:01.279 --> 0:07:04.000 Absolutely, I mean this could definitely be their risk here 0:07:04.040 --> 0:07:06.320 for the United States is obviously that this becomes a 0:07:06.400 --> 0:07:09.960 much more protracted war, or it also creates civil war 0:07:10.200 --> 0:07:13.440 and just chaos within Iran and then within the larger 0:07:13.520 --> 0:07:15.800 Middle East. Region. So there are definitely a lot of 0:07:16.000 --> 0:07:18.360 risks to the administration here, but I do think that 0:07:18.400 --> 0:07:20.800 the administration is really focused on this four to five 0:07:20.840 --> 0:07:23.400 week timeline. Do you think that they think that they 0:07:23.480 --> 0:07:27.760 have a plan to accelerate attacks on Iran to try 0:07:27.760 --> 0:07:31.120 to get to their specific goals, which is getting rid 0:07:31.200 --> 0:07:33.040 of the weapons that could be targeted at the United 0:07:33.080 --> 0:07:37.480 States and Israel, getting annihilating the army of I'm sorry, 0:07:37.520 --> 0:07:40.320 the Navy of Iran, and trying to then also prevent 0:07:40.360 --> 0:07:42.800 them from going after ships in the Strait of Hormuz, 0:07:43.080 --> 0:07:45.400 and also maybe potentially trying to get some sort of 0:07:45.480 --> 0:07:48.760 regime change or at least governance changes going forward. So 0:07:48.840 --> 0:07:51.240 do you think there's obviously some risks, but the administration 0:07:51.360 --> 0:07:53.400 probably is looking at this still being a four to 0:07:53.480 --> 0:07:57.200 five week timeline. We'll obviously see if that changes, and 0:07:57.240 --> 0:07:59.080 then what does this look like they have so that 0:07:59.120 --> 0:08:02.000 there is a surge coming that they will increase their 0:08:02.040 --> 0:08:04.320 attacks on Iran. So we'll kind of have to see 0:08:04.400 --> 0:08:06.480 over the next week to see how does this play 0:08:06.480 --> 0:08:08.800 out and then how does that change the timeline going forward? 0:08:09.040 --> 0:08:13.080 Janette, are there any independent assessments of where the administration 0:08:13.280 --> 0:08:16.880 is on achieving main principles of that timeline, in particular 0:08:17.320 --> 0:08:21.320 wiping out weapons that could attack US and allies, as 0:08:21.360 --> 0:08:24.280 well as potentially regime change at a time where we 0:08:24.320 --> 0:08:26.920 now have a new supreme leader that President Trump has 0:08:26.920 --> 0:08:28.480 already said is unacceptable to him. 0:08:29.760 --> 0:08:32.040 Yeah, I mean, I think obviously the regime change is 0:08:32.040 --> 0:08:35.040 going to be the biggest challenge for the United States 0:08:35.040 --> 0:08:37.480 and Israel. And I think you have seen the United 0:08:37.480 --> 0:08:41.040 States a little bit walk back that exact goal for 0:08:41.120 --> 0:08:44.320 this military operation, but you are kind of seeing the 0:08:44.360 --> 0:08:46.839 fact that they are trying to They were focused on 0:08:47.040 --> 0:08:51.160 getting Iran's air defenses along the coast so they could 0:08:51.200 --> 0:08:55.760 then strike deeper into Iranian territory. They to have achieved 0:08:55.800 --> 0:08:58.880 that goal at least particularly so far, but I think 0:08:58.920 --> 0:09:00.839 the big question is there's a lot of unknowns. We 0:09:00.920 --> 0:09:04.960 don't know if Iran has more missile capacity that they 0:09:04.960 --> 0:09:08.160 are still kind of holding onto, that would be important. 0:09:08.440 --> 0:09:10.760 I think that the United States has been highlighting the 0:09:10.840 --> 0:09:14.280 fact that missile attacks and drone attacks coming from Iran 0:09:14.320 --> 0:09:16.920 have been down seventy or eighty percent, and they do 0:09:17.000 --> 0:09:19.760 think that they are losing firepower, but we don't also 0:09:19.960 --> 0:09:22.440 know what actually might still be there, So there's definitely 0:09:22.520 --> 0:09:25.120 still this risk, but I do think the administration sees 0:09:25.120 --> 0:09:27.640 that they have made some progress with getting out certain 0:09:27.640 --> 0:09:30.960 air defenses, using up some of the supplies that Iran 0:09:31.080 --> 0:09:33.960 has that has been using against the US and its allies, 0:09:34.600 --> 0:09:36.760 and also that they're starting to be able to strike 0:09:36.960 --> 0:09:39.600 further and deeper into Iran. So that is a little 0:09:39.600 --> 0:09:42.720 bit of some progress towards these ultimate goals. 0:09:43.040 --> 0:09:46.720 The US is fighting this war alongside Israel. How aligned 0:09:46.760 --> 0:09:48.920 are these two nations that they are ultimate goals? 0:09:49.960 --> 0:09:52.000 Yeah, I mean, I think there's I think the one 0:09:52.000 --> 0:09:55.080 thing that was important about why potentially we may have 0:09:55.120 --> 0:09:57.959 gone into this is that there was an alignment between 0:09:58.000 --> 0:10:02.880 the two countries on the actual ability to go after Iran, 0:10:02.920 --> 0:10:04.560 and this is a they both I think see this 0:10:04.720 --> 0:10:08.280 as an opportunity to really kind of strike at the 0:10:08.320 --> 0:10:10.760 weapons that Iran had that it was potentially using to 0:10:10.880 --> 0:10:14.680 threaten both of those countries, also trying to go after certain, 0:10:15.640 --> 0:10:18.200 you know, other pieces that the Iran has been trying 0:10:18.240 --> 0:10:21.400 to do with its nuclear program. But obviously we may 0:10:21.480 --> 0:10:24.960 see some disagreements longer term. We saw the disagreement over 0:10:24.960 --> 0:10:27.840 the weekend about the fact that Israel struck oil depots 0:10:27.840 --> 0:10:30.360 in Iran and the US was opposed to that. We 0:10:30.400 --> 0:10:33.079 also may see differences of opinion as to whether or 0:10:33.120 --> 0:10:35.320 not we're actually going to get regime change, or would 0:10:35.320 --> 0:10:40.040 the US be more willing to accept some other outcome 0:10:40.200 --> 0:10:43.720 versus Israel. So I think there could be more fractures 0:10:43.760 --> 0:10:46.840 going forward, but we haven't seen a lot yet. But 0:10:46.920 --> 0:10:49.800 obviously the longer this takes, that could obviously become something 0:10:49.840 --> 0:10:50.839 that becomes a bigger risk. 0:10:51.200 --> 0:10:52.719 How much physipal they say, do we have on what's 0:10:52.720 --> 0:10:56.120 happening inside Iran right now? This is a population of 0:10:56.200 --> 0:10:59.280 ninety million people something like that, with very very complex 0:10:59.520 --> 0:11:02.160 power stress. As anyone who's followed that country for a while, 0:11:02.360 --> 0:11:05.560 we'll understand, Janet, those strikes from Israel are really really 0:11:05.600 --> 0:11:09.520 important because that undermines the domestic support for what is happening. 0:11:09.760 --> 0:11:12.240 And that's been an argument of both Israel and the 0:11:12.320 --> 0:11:14.080 US for quite a while to try and get the 0:11:14.080 --> 0:11:17.640 Iranian people on side to ultimately tople the leadership. There's 0:11:17.640 --> 0:11:19.559 a little sign of that right now. How do those 0:11:19.600 --> 0:11:20.200 strikes help? 0:11:21.360 --> 0:11:21.520 Yeah? 0:11:21.520 --> 0:11:23.079 I think that was one of the main concerns that 0:11:23.120 --> 0:11:26.920 the United States had was that those tacks could actually 0:11:27.040 --> 0:11:31.040 make opposition less willing to go after the regime and 0:11:31.120 --> 0:11:33.680 less willing to kind of a rise up in that way, 0:11:34.160 --> 0:11:35.880 And so that was why the administration was a little 0:11:35.920 --> 0:11:39.160 bit more upset with Israel for going after those attacks, 0:11:39.640 --> 0:11:41.240 because they do want to make sure that there are 0:11:41.360 --> 0:11:45.160 conditions where we're not actually helping to rally the Iranian 0:11:45.200 --> 0:11:48.439 people behind the leadership and feeling like they in particular 0:11:48.559 --> 0:11:51.199 are being attacked rather than the regime and the security 0:11:51.240 --> 0:11:54.280 forces that hold up that regime. So that is definitely 0:11:54.320 --> 0:11:56.760 a risk. Obviously. The other issues that we do have 0:11:56.800 --> 0:11:59.600 these internet blackouts, which doesn't mean we always have a 0:11:59.600 --> 0:12:03.040 full understanding of what is actually happening within Iran, and 0:12:03.080 --> 0:12:05.120 that makes it a little bit more difficult to know 0:12:05.600 --> 0:12:08.200 what could be the ultimate outcome. Obviously, one of the 0:12:08.200 --> 0:12:12.040 big issues here is that we don't necessarily have a 0:12:12.080 --> 0:12:15.560 good understanding of could there be an opposition leader who 0:12:15.559 --> 0:12:19.360 could actually rise up and take over in Iran like 0:12:19.440 --> 0:12:21.280 what you saw in nineteen seventy nine. The fact that 0:12:21.559 --> 0:12:24.480 the Iotola was a particular figure that I think is 0:12:24.480 --> 0:12:26.480 something that is going to be a risk going forward, 0:12:26.600 --> 0:12:29.040 and to see if that ultimate goal can be achieved. 0:12:29.520 --> 0:12:33.040 Stay with us more Bloomberg surveillance coming up. After this 0:12:42.400 --> 0:12:45.360 surging oil prices sending bond you attire across the globe, 0:12:45.520 --> 0:12:48.280 investors raising bet central banks will keep ranks on hold. 0:12:48.440 --> 0:12:50.960 The former Kansas City FED president as the George, writing, 0:12:51.200 --> 0:12:53.920 with oil prices surging over one hundred dollars a barrel, 0:12:53.960 --> 0:12:56.560 inflation is sure to move higher. The Fed will want 0:12:56.600 --> 0:12:59.320 to look through this price pressure, but it will likely 0:12:59.360 --> 0:13:03.800 stay there and for entering radcouts or entertaining redcouts. The 0:13:03.840 --> 0:13:06.400 former Fed president joins us now for more and so 0:13:06.520 --> 0:13:08.600 welcome to the program. Let's just get to that statement 0:13:08.640 --> 0:13:10.600 and your experience too. I always want to lean on 0:13:10.640 --> 0:13:13.800 that you lift the twenty two energy shock. Can you 0:13:13.840 --> 0:13:17.160 frame for our audience the similarities the differences between this 0:13:17.320 --> 0:13:19.679 moment and that one. 0:13:20.200 --> 0:13:21.400 Well, good morning, Jonathan. 0:13:21.480 --> 0:13:21.680 Yeah. 0:13:21.760 --> 0:13:25.160 I think I think the uncertainty that we've talked about 0:13:25.200 --> 0:13:28.720 for some time is one of the characteristics here that 0:13:28.760 --> 0:13:31.600 we have to remember. We have been relying heavily on 0:13:31.640 --> 0:13:37.480 a consumer that has faced significant price shock coming out 0:13:37.480 --> 0:13:41.079 of the pandemic. This is a consumer that has felt 0:13:41.240 --> 0:13:44.199 the impact of the tariffs, and they also have felt 0:13:44.200 --> 0:13:49.679 the uncertainty associated with a job market that has shifted significantly, 0:13:49.880 --> 0:13:52.560 and so when we rely on the consumer, as we 0:13:52.600 --> 0:13:56.600 do here in the US, that becomes a real focal point. 0:13:56.679 --> 0:13:59.880 I think for trying to understand now we have added 0:14:00.440 --> 0:14:04.160 a new shock, this gasoline price at the pump. We 0:14:04.280 --> 0:14:07.520 understand that diesel prices will be affected, which of course 0:14:07.600 --> 0:14:10.600 will feed into the cost of transportation and other things. 0:14:10.640 --> 0:14:13.720 And I think it creates a real point not just 0:14:13.800 --> 0:14:17.320 of uncertainty, but I think heightened risk around consumer spending 0:14:17.360 --> 0:14:18.640 and growth as we look ahead. 0:14:18.760 --> 0:14:21.120 When you were at the Federalserve through the twenty two shock, 0:14:21.520 --> 0:14:25.240 household balance sheets arguably much stronger and the labor market 0:14:25.480 --> 0:14:28.600 was much tighter. Do you think differently about how this 0:14:28.680 --> 0:14:30.720 price shock or the energy market will work its way 0:14:30.760 --> 0:14:31.920 through the economy. 0:14:33.240 --> 0:14:35.720 Yeah, I think you hear a lot about the K 0:14:35.960 --> 0:14:38.560 shaped economy, and I think that will come into the 0:14:38.600 --> 0:14:41.160 four now. We have really been relying on a group 0:14:41.200 --> 0:14:44.520 of consumers that can power through this. But you can 0:14:44.560 --> 0:14:49.720 only stress weaker household balance sheets that have again had 0:14:49.760 --> 0:14:52.600 the benefit of having jobs. That has been really I 0:14:52.600 --> 0:14:55.560 think one of the tailwinds here. But there is a 0:14:55.640 --> 0:14:58.120 breaking point, I think, and so I think the FED 0:14:58.240 --> 0:15:02.360 will have to be particularly focused on thinking about how 0:15:02.400 --> 0:15:05.880 that consumer is going to be positioned today to be 0:15:06.000 --> 0:15:10.720 able to look through this kind of additional price pressure after. 0:15:10.800 --> 0:15:12.880 They could go one or two ways. On one hand, 0:15:12.920 --> 0:15:15.160 you can make an argument for easing policy and to 0:15:15.200 --> 0:15:19.040 try to give lower income consumers a better scenario, a 0:15:19.080 --> 0:15:22.440 better backdrop to meet this price shock. On the other hand, 0:15:22.480 --> 0:15:24.640 you could say the FED has a role to play 0:15:24.960 --> 0:15:28.080 to combat inflation. Which side of the equation do you 0:15:28.120 --> 0:15:28.480 fit on? 0:15:29.720 --> 0:15:30.000 Well? 0:15:30.120 --> 0:15:33.040 The FED has been focusing on the labor market and 0:15:33.080 --> 0:15:38.720 on weakness at I think the risk of inflation even 0:15:38.760 --> 0:15:42.880 before this oil price shock. Now, I think the FED 0:15:42.920 --> 0:15:46.040 and you hear them increasingly talking about the risk of inflation. 0:15:46.800 --> 0:15:49.600 They have allowed it to extend out for a period 0:15:49.640 --> 0:15:52.600 of time. That now puts them in a very very 0:15:52.640 --> 0:15:56.400 difficult position, I think, and understanding how they're going to 0:15:56.440 --> 0:16:00.280 weigh their policy risk, whether they continue to think they 0:16:00.320 --> 0:16:04.680 are as well balanced coming into this March meeting, I 0:16:04.680 --> 0:16:06.880 think is going to be something to listen for here, 0:16:06.960 --> 0:16:11.200 because you are going to have headline inflation for sure, 0:16:11.320 --> 0:16:14.040 We'll be getting more numbers than this week to see that, 0:16:14.880 --> 0:16:19.760 and I think the calculus around keeping those inflation expectations 0:16:19.760 --> 0:16:23.080 in the long run anchored is going to be a 0:16:23.120 --> 0:16:24.360 point worth talking. 0:16:24.040 --> 0:16:27.200 About rates Traders are pricing in rate hikes over at 0:16:27.200 --> 0:16:29.680 the ECB as well as the Bank of England. Do 0:16:29.720 --> 0:16:32.440 you think that as this progresses, if it does continue 0:16:32.480 --> 0:16:34.920 for a longer period of time, that that's going to 0:16:34.920 --> 0:16:39.000 be a scenario that's reflected in how the Federal Reserve 0:16:39.120 --> 0:16:39.760 is being priced. 0:16:41.200 --> 0:16:41.520 Well. 0:16:41.680 --> 0:16:44.520 I think obviously a little bit different for the US 0:16:44.640 --> 0:16:47.840 to think about that in the FED as it contemplates 0:16:47.440 --> 0:16:51.880 its updated dot plots, But I do think it stays 0:16:51.920 --> 0:16:56.520 their hand on being able to suggest that they are 0:16:56.720 --> 0:17:00.680 looking to rate cuts, but maybe in a pause mode. 0:17:00.720 --> 0:17:04.320 I think this kind of environment will really remind them 0:17:04.480 --> 0:17:08.200 that inflation target has to be credible and they have 0:17:08.280 --> 0:17:11.640 to keep focused on that, even if their tools right 0:17:11.680 --> 0:17:14.960 now are in conflict. They are looking at a job 0:17:15.040 --> 0:17:19.240 market that may be stable but has shown signs of weakness, 0:17:19.840 --> 0:17:22.879 while they have been looking at inflation that continues not 0:17:22.920 --> 0:17:25.520 only to be persistent, but as we've been talking about, 0:17:25.960 --> 0:17:28.320 is now going to show some upward pressure. 0:17:28.600 --> 0:17:30.400 Would you describe this lave market as stable? 0:17:32.480 --> 0:17:35.440 You know, I consider it stable in the sense when 0:17:35.440 --> 0:17:38.280 you step back and look at the unemployment rate, which 0:17:38.320 --> 0:17:40.679 is our best gauge. I think of how that labor 0:17:40.720 --> 0:17:45.560 market looks, it does mask what is underneath that surface 0:17:45.920 --> 0:17:48.919 of a lot of moving parts. I think we're beginning 0:17:48.960 --> 0:17:51.840 to see the real impact of some of the immigration 0:17:52.000 --> 0:17:56.800 policy hits here. We're beginning to see the uncertainty, I 0:17:56.840 --> 0:17:59.920 would argue, play out where businesses are happy to hire 0:18:00.119 --> 0:18:03.200 for positions they feel confident about, but they're not going 0:18:03.240 --> 0:18:07.960 to move hard and fast relative to the growth levels 0:18:07.960 --> 0:18:11.119 that we've seen. So I think it's a tentative labor 0:18:11.200 --> 0:18:14.000 market in my view, even though we continue to enjoy 0:18:14.160 --> 0:18:15.920 relatively low and employment br. 0:18:16.680 --> 0:18:20.240 This is the Bloomberg Surveillance Podcast, bringing you the best 0:18:20.240 --> 0:18:23.800 in markets, economics, angiopolitics. You can watch the show live 0:18:23.880 --> 0:18:26.880 on Bloomberg TV weekday mornings from six am to nine 0:18:26.960 --> 0:18:30.679 am Eastern. 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