Speaker 1: Bloomberg Audio Studios, Podcasts, Radio News.
Speaker 2: Hello and welcome to another episode of the Odd Lots podcast.
Speaker 3: I'm Joe Wisenthal.
Speaker 4: And I'm Tracy Alloway.
Speaker 2: Tracy, we're recording this March twenty fifth, twenty twenty six.
Speaker 3: That's nine ten am in there.
Speaker 4: Are you going to do the seconds as well?
Speaker 2: No, But the reason they do mention the time this
Speaker 2: cash trading in the stock market hasn't open. The reason
Speaker 2: I mentioned the time is not just because things are
Speaker 2: moving fast, but to establish we've had market moving headlines
Speaker 2: already this morning. Oh and so just in the last
Speaker 2: like fifteen to twenty minutes, we got some headlines attributed
Speaker 2: to the Forest News Agency out of Iran saying there
Speaker 2: is no interest in talks, there's no interest in ceasefire
Speaker 2: in the US position about pursuing a ceasefire is a
Speaker 2: logical that mood futures down a little bit. We're you know,
Speaker 2: it's a cliche, you know, a headline driven market.
Speaker 3: You hear that a lot.
Speaker 2: The last several weeks have felt like the headline driven
Speaker 2: market to drive all headline driven market.
Speaker 4: No, it really, I know it's a cliche, but it
Speaker 4: really is a headline driven market, and I think part
Speaker 4: of the issue here is because no one's entirely sure
Speaker 4: what the goals are when it comes to Iran, It's
Speaker 4: really hard to judge progress of the conflict on any
Speaker 4: sort of fundamental basis, right, so all you can look
Speaker 4: at is basically what Trump and the other two sides
Speaker 4: are saying, and so you get these big reactions every
Speaker 4: time they tweet something or post on truth social and
Speaker 4: then tend to contradict each other absolutely.
Speaker 2: And you know, I do think, Look, there is this
Speaker 2: extreme level of skepticism from almost any headline you get
Speaker 2: out of us White House. I think if you go
Speaker 2: back to the post Liberation day environment, particularly with these
Speaker 2: sort of modest approchement with China, you would get these
Speaker 2: headlines we're talking, and then the Chinese would put out
Speaker 2: a headline, we're not talking. But then it turns out
Speaker 2: that there was a little bit more talk than what
Speaker 2: maybe the Chinese side had admitted to. So often, I think,
Speaker 2: as much as you is, many people are inclined to
Speaker 2: disbelieve headlines. I don't think people disbelieve them entirely. When
Speaker 2: Trump said yesterday that the Iranians had sent him a prize,
Speaker 2: that was extremely valuable, and it's like, who, I mean,
Speaker 2: that's tough to take seriously, but is there.
Speaker 3: Some modest signal? I don't know. It's really tough.
Speaker 2: It's really tough, but I you know, I just want
Speaker 2: to say two other things real quickly on this, which
Speaker 2: is that even with the headlines today about Iran rejecting ceasefire,
Speaker 2: futures are still up. So it's not like people have
Speaker 2: like completely, oh, nothing's happening and for all.
Speaker 3: To talk about.
Speaker 2: And we've had multiple guests and they're the smartest people
Speaker 2: in the world to talk about. Oil is going to
Speaker 2: surge the longer this goes on. As of the time
Speaker 2: we're talking about this, Brent crude is still right around
Speaker 2: or just under one hundred dollars. We haven't had the
Speaker 2: mega surge yet. So I like to take market seriously,
Speaker 2: even if sometimes I don't always understand what.
Speaker 3: They're doing well.
Speaker 4: The big question to me is whether or not markets
Speaker 4: are still in denial right and you see people talking
Speaker 4: about like, oh, people are being very optimistic about the future.
Speaker 4: I saw the Morgan Stanley report saying that corporate profits
Speaker 4: were going to go up later this year. The oil
Speaker 4: price again, we're talking about the closure of the strait
Speaker 4: of war moves, which is the sort of thought experiment
Speaker 4: that has been deviled oil analysts for decades, and yet
Speaker 4: you know, the reaction has been kind of muted.
Speaker 3: Yeah.
Speaker 4: Meanwhile, in the rates market, there's a lot going on
Speaker 4: there too, and you still have a lot of bond
Speaker 4: traders who are very reluctant to price out the possibility
Speaker 4: of a rate cut later this year completely.
Speaker 2: And it feels like the idea of a rate cut,
Speaker 2: at least for now, does not seem anywhere near the
Speaker 2: quote table. But yeah, anyway, so how do traders even
Speaker 2: make sense of this headline? How do they know what
Speaker 2: headlines to believe? Why does there sometimes seem to be
Speaker 2: this gap between what a lot of people think the
Speaker 2: market should be and where it actually is very excited
Speaker 2: to say, we have one of the most plugged in
Speaker 2: people that we know as someone who is talking to
Speaker 2: people who move serious money every single days. He goes
Speaker 2: around the world and he has dinners with them and
Speaker 2: he talks to them about their trades. Even brought us
Speaker 2: a nice gift which is a core t shirt. It
Speaker 2: is the cover the Macro Dinner's twenty twenty six tour
Speaker 2: with a nice Deutsche Bank logo.
Speaker 4: You should read some of those cities just to get
Speaker 4: an ideas.
Speaker 2: To the Macro Dinner Tour Jan fourth, London, Jan twenty one, Geneva,
Speaker 2: Jan twenty ninth, Milan, Miami, buddhap Has, London, New York City, Montreal, Copenhagen, Ria, Dooha, Dubai, etcetera.
Speaker 3: You get the idea.
Speaker 2: He's always talking to people and he has the one
Speaker 2: of the most plugged in people that we talked to.
Speaker 2: We are going to be speaking, of course, to the
Speaker 2: one and only Ozon Tarman, vice Chair of Global Macro
Speaker 2: at Deutsche Bank. So Ozon, thank you for coming back
Speaker 2: on out lots.
Speaker 5: Joe and Tracy's an absolute pleasure, highlights off the week,
Speaker 5: very close to it. I used to live in New
Speaker 5: York City as well.
Speaker 2: It's great have you here in the studio. It's a
Speaker 2: pretty wild market to trade, I assume.
Speaker 5: Very very wild market trade. And on the T shirt, unfortunately,
Speaker 5: for example, the three odd cutary leg that I was
Speaker 5: looking forward to, we'll see what happens. So we'll see,
Speaker 5: we'll see, we'll see what happens with that. But unnecessarily
Speaker 5: untradable still traders always smell things, always have a sense
Speaker 5: of where the painting is, where the momentum is. Even
Speaker 5: walking in now I became a veteran of this wonderful show.
Speaker 5: I was thinking, this time around, we should really say Wednesday.
Speaker 5: That's how I know that what I can say now
Speaker 5: one day later may look a little bit different exits, etcetera.
Speaker 5: But still walking now. Obviously it's a big cliche to
Speaker 5: say it takes two to tango or tackle three maybe,
Speaker 5: but that being said, at the moment of paint trade,
Speaker 5: the momentum trade is for this equity rally and oil
Speaker 5: fall to continue. There are many unfortunately, I have told
Speaker 5: all my clients friends since wounded hurt players out there,
Speaker 5: certainly in race markets, certainly on front end, so people
Speaker 5: are reluctant to take fresh bets. But as I constantly
Speaker 5: hold these conversations round tables, I do get the sense
Speaker 5: that now getting to know the president well as well,
Speaker 5: people did expect this. We want the war, I want
Speaker 5: the war mission accomplished moment, which is trying to do
Speaker 5: in a few ways. Then the big debate is yes,
Speaker 5: and we do get these spikes of equity sire, oil lower.
Speaker 5: At the end as you're rightly said, even Brent is
Speaker 5: lower than under them, we should talk vi Vidia is
Speaker 5: even lower. But do you fade it or not? That's
Speaker 5: what it boils down to. Another big true cliche is
Speaker 5: what does Iran do? What does Iran say? As we speak?
Speaker 5: Because of Fars? Like you said, Israel twelve said, these
Speaker 5: talks are happening fast. Iran said no, We're still waiting
Speaker 5: which one to fad. That's the big question. Mark my god.
Speaker 5: Feel from what I sense from the clients is there
Speaker 5: is room for a squeeze here in equity hire oil over,
Speaker 5: but the tail risk is very very fat.
Speaker 3: Yeah.
Speaker 4: Wait, so talk to us more about positioning. I mean,
Speaker 4: going into this war, I think everyone was pretty much
Speaker 4: expecting rate cuts later in the year, oil prices. Nothing
Speaker 4: dramatic there, certainly did Everyone just change very very quickly,
Speaker 4: And now we're left with positioning that can lead to
Speaker 4: a bigger squeeze higher.
Speaker 5: Very elevant question. I want to take us back to
Speaker 5: February twenty seven, the night before the attack on Iran. Again,
Speaker 5: I was visiting Palm Beach and Miami, and the field
Speaker 5: couldn't be more different. The main obsession focus of the
Speaker 5: US client based the key players was AI extreiny research.
Speaker 5: Something big is going to happen. Schumer how fifty percent
Speaker 5: of white color jobs could be lost in twelve to
Speaker 5: eighteen months. So finally, not only rate cut expectations where
Speaker 5: it can increasing, we were getting bull flatteners. So even
Speaker 5: long end was coming down. Thursday Friday, it was around
Speaker 5: four or five. And I do remember before Iran US
Speaker 5: ten year close top tick three point nine three and
Speaker 5: it cannot be named, but some one of those more
Speaker 5: legendary France clients of mine comes to me with an email, Osan,
Speaker 5: we nail this this that bond is the new gold.
Speaker 5: Oh we need to talk about our friend goals as well. Yeah,
Speaker 5: one more thing, another good friend. I did bring this
Speaker 5: on paper because it's very very telling. This guy sends
Speaker 5: me a message I think the Tuesday or Wednesday before Iran,
Speaker 5: the multi tillium question is can the rest of the
Speaker 5: world isolate itself from this destruction? I'm not sure he
Speaker 5: was talking more about the AI fears. Another observation today
Speaker 5: reminds me of early February twenty twenty. While we also
Speaker 5: people falling over in China. It became clear by the
Speaker 5: day that we were about to see a pandemic. The
Speaker 5: SMP made new all time high. The same is today
Speaker 5: with Iran. Nobody cares. I mean, yeah, rings sow true
Speaker 5: now right.
Speaker 2: Actually, let's a about Golden Position for a second. The
Speaker 2: last time we had you on with September, and one
Speaker 2: of the themes of that was the relentless bid into gold,
Speaker 2: and whenever we frame a conversation, I'm like, oh my god,
Speaker 2: this is gonna be the top. It was not the
Speaker 2: top even closed. So that was gold was around thirty
Speaker 2: eight hundred ounced during that episode. It got over fifty
Speaker 2: five hundred dollars. And now it's in early February. As
Speaker 2: of yesterday we saw a ten day gold sell off.
Speaker 2: How much is this just about all these different trades
Speaker 2: not working at once, the steepener trade not working at once,
Speaker 2: the oil trade not working at the same time, and
Speaker 2: essentially a lot of players being forced to liquidate the
Speaker 2: one big winning thing that they had in their portfolio.
Speaker 5: Very much so, and look, I love you guys. But
Speaker 5: on the last show as well, when we all started
Speaker 5: with Golden Media, Golden Media, I was very you know,
Speaker 5: happily and politely answering, but in my mind, I was saying,
Speaker 5: this is annoting sign. I know it, of course, and
Speaker 5: then I listened to our show this so I'm like,
Speaker 5: risk on this works, risk of these works. I'm like
Speaker 5: Joe Sacy, like it has to be something that comes
Speaker 5: from the left field that gets the whole thing. And
Speaker 5: even though the guy says here Iran, people look and
Speaker 5: nobody cares. The repercussions on the positions, just like you said,
Speaker 5: led people to get out of all winners, and gold
Speaker 5: was a big winner. Emerging markets were big winners. So
Speaker 5: that was the first trigger. And then another story. Now
Speaker 5: once you are in this position, once you realize it's
Speaker 5: not days, it's not weeks, this is going to continue
Speaker 5: on and on petro dollar countries, other people start selling
Speaker 5: their winners to build defense mechanisms. I mean, it's almost
Speaker 5: like public reporting. In terms of China, my motherland, Turkey, India,
Speaker 5: they have these gold reserves for reasons. So that's another
Speaker 5: reason why first technicals you go after your winner, and
Speaker 5: then fundamentally some of these strong hands, for understandable reasons,
Speaker 5: are selling them. Everything happened back to Tracy's question. So
Speaker 5: people were all into these bear flat steepeners first, then
Speaker 5: they believe in bull latinus because everything was all rys,
Speaker 5: We're coming down. Then you get into this world and
Speaker 5: thanks for jumping onto it Monday after Iran warflation. Warflation,
Speaker 5: this is serious inflactation. Expectations will increase. It's not as
Speaker 5: simple as finding the next Venezuela Jersey and my God
Speaker 5: from like getting ready for cut discussion one, two or
Speaker 5: maybe three in FED at least hold ECB and certainly
Speaker 5: cut the Bank of England. Look where we are now.
Speaker 5: For a while we've priced in four hikes for Bank
Speaker 5: of England and ECB. We're right below three now for both.
Speaker 5: That's huge. That means seats are lost, pods are closed.
Speaker 4: How many times have you heard the word liquidation or
Speaker 4: you know a pod shot blowing up in the past
Speaker 4: few weeks A lot?
Speaker 5: Unfortunately, right, capitulation. And I teach all our young stars
Speaker 5: or mentors. So after all, the cliche is, oh, investment
Speaker 5: bank will do well, trading floor will do well because
Speaker 5: you know, bit off fear or not like that. After
Speaker 5: a while, there is really something called bad wall stilty,
Speaker 5: and this is bad wall stilty from these crazy headlines
Speaker 5: being that much slaves to what somebody says at Friday
Speaker 5: ten pm to Saturday eight eleven pm. Two. Also this
Speaker 5: much of liquidation and capitation. After a while, people say
Speaker 5: the best thing is a blank piece of paper less trading,
Speaker 5: and let's watch. That's why you're opening question. Some people
Speaker 5: see this market as untradable, but unfortunately, in times like this,
Speaker 5: especially if you're not wounded, somehow flat is the new up.
Speaker 5: If you have survived, these are the moments to make
Speaker 5: the difference. Who knows, Joe, maybe this is right around
Speaker 5: April night, twenty twenty five moments. This is when maybe
Speaker 5: this is right around the dip and we will remember
Speaker 5: it like the time we were able to look through it.
Speaker 5: I have my doubts. But maybe.
Speaker 3: What is a pain trade?
Speaker 2: And why is that.
Speaker 3: A useful concept?
Speaker 5: Very good questions. You know, you know what triggers me
Speaker 5: a paintred I mean it's not the ideal definition, maybe
Speaker 5: because you don't want your clients and friends to be
Speaker 5: in pain, but a lot of it. Even before the
Speaker 5: days of quant trading, crowding out positioning is so important
Speaker 5: for this market. After a while, it can become as
Speaker 5: important as a fundamental factor. After a while, you do
Speaker 5: feel that in these echo chambers. Players almost want to
Speaker 5: believe because of the prising fundamentals and what they're talking about.
Speaker 5: So pain trade is when that hurd gets a belief
Speaker 5: in a trade so much and when it works just
Speaker 5: ether way around. I mean, what happens to gold is
Speaker 5: a big one because for a long time it was unshaken,
Speaker 5: but sometimes even smaller instances, for the past fifteen to
Speaker 5: eighteen months, we really believe that big dollar would trade salt.
Speaker 5: What I mean by that is either because of hage
Speaker 5: ratio didalarization, dollar wouldn't be the safe haven that it
Speaker 5: used to be. It would make sense to sell dollars
Speaker 5: whenever one has a chance now all of a sudden
Speaker 5: because of Iran, because of people building up setting their
Speaker 5: winners to go to save havens. If we trade towards
Speaker 5: the one ten, one eleven before one twenty one, twenty one,
Speaker 5: that's a much less talked about pain trade. Why because
Speaker 5: it's gonna further shake places like rest of the world,
Speaker 5: emerging markets, Korea, etcetera, et cetera. And of course it
Speaker 5: opens conversation right. Sometimes you say sometimes pain trade is
Speaker 5: to abvious. Sometimes we said, no, you know that trade
Speaker 5: is there for a reason. Conscience is going to continue
Speaker 5: to work. You develop a market, you trade on it
Speaker 5: on the.
Speaker 4: Dollar, and this is related to gold as well. We
Speaker 4: do seem to be in this weird situation where like, okay,
Speaker 4: people are liquidating the successful trades to raise cash, go neutral, whatever.
Speaker 4: But at the same time, you still have plenty of
Speaker 4: people talking about diversification away from the US, and you
Speaker 4: could make a very strong argument that given what's happening
Speaker 4: in the oil market right now, maybe you don't want
Speaker 4: to only price that in dollars. Maybe you want to
Speaker 4: start thinking about other currencies. How are people thinking about
Speaker 4: the I guess like US exceptionalism trade at the moment,
Speaker 4: because there's two cross currents.
Speaker 5: For sure, it's moving from US exceptionalism setting your US
Speaker 5: assets to more hag ratios. It definitely moved, let's put
Speaker 5: it that way again. At the beginning of January February,
Speaker 5: all these events one after another, Venuezuela, Greenland, Mike got
Speaker 5: so much happened in three months?
Speaker 4: Tell us about it?
Speaker 5: Well, Powell's case again, not necessarily selling your US set,
Speaker 5: but buying more, buying less, increasing your heratios had become fashionable.
Speaker 5: But your very right races my partner and success one
Speaker 5: of them. George was head of our effects strategy. He
Speaker 5: has this, George, yeah, we all do. He has this
Speaker 5: rough formula euro dollars roughly two thirds oil price, one
Speaker 5: third gas price. It should have traded around one twelve
Speaker 5: fifty one thirteen as we speak, it doesn't. Part of
Speaker 5: the reason is exactly this. Despite what oil is doing,
Speaker 5: despite what gas is doing, people do want to own
Speaker 5: a little bit less dollars. But unfortunately, as I sit here,
Speaker 5: as I come to my old lost every three months
Speaker 5: or so wide Shaedasche Bank proudly waving my blue make
Speaker 5: europreate again, hat it's in trouble of it. Whether this world,
Speaker 5: you know, takes another one week, two week, two months,
Speaker 5: the wounds will say, the wounds will especially stay in
Speaker 5: oil and gas prices. We disrupt the supply enough and
Speaker 5: the big important with the ones we need those oil
Speaker 5: and gas price is lower is Europe. So in an
Speaker 5: understanding way, it's talking about when concent starts becoming more
Speaker 5: sense in these on tables and beyond, it's becoming a
Speaker 5: bit fashionable to start questioning the European equities, European credits.
Speaker 5: Funny enough, it doesn't show as much yet in the effects,
Speaker 5: but watch out for the equity and credit angle of
Speaker 5: the zurop date.
Speaker 2: So this is really important, which is that basically, okay,
Speaker 2: there's this long term pessimism about Europe, but there had
Speaker 2: been some optimism recently, and cheaper energy prices certainly help
Speaker 2: the relative competitiveness and profitability of the domestic industrial giants
Speaker 2: and so forth. But we're going to probably be regardless
Speaker 2: of the length of the war, in a period of
Speaker 2: structurally higher energy prices, and that continues to build to
Speaker 2: the negative side of Europe. So let's talk a little
Speaker 2: bit more about oil, because if you just talk to
Speaker 2: the oil analysts who I love, like their hair is
Speaker 2: on fire right now and they probably you know, this
Speaker 2: is cataclysm. But Brent crude not only is it well
Speaker 2: off its highes from a week ago, it's not even
Speaker 2: anywhere close to it ties in twenty twenty two at
Speaker 2: the peak of the inflation. I mean, we got at
Speaker 2: one point in March twenty twenty two, Brent crude was
Speaker 2: at one thirty nine. We're below ninety nine. Actually right
Speaker 2: now when I'm talking about this, the thing is like, oh,
Speaker 2: you close the straight of hormones oil just explodes, et cetera.
Speaker 2: We all know it, we all see it. There is
Speaker 2: nothing that any of us. You can be online all
Speaker 2: day and talk to all the energy experts. You are like,
Speaker 2: you do not know more information than the market does.
Speaker 2: So talk to us like how you're thinking about oil
Speaker 2: and the fact that there does seem to be this
Speaker 2: gap between the hair on fire rhetoric of the oil
Speaker 2: and oers versus the prices which are high but even
Speaker 2: by the scille last five years not i'msand.
Speaker 5: I was as the question was coming. I was preparing
Speaker 5: for my next but first of all, on the oil
Speaker 5: on fire. We all see and respect Jeff Curry what
Speaker 5: he said about molecules and interesting people are watching right.
Speaker 5: Did you see the tweet of head of Iran Parliament?
Speaker 2: Oh yeah, you also he usually you can't print molecule exactly.
Speaker 2: This is another thing. He also referred to another thing
Speaker 2: as fake news. Everyone around the world is now talking
Speaker 2: the same. That actually reminds me of a friend who
Speaker 2: visited Afghanistan and he met some people working for the Taliban,
Speaker 2: and like they started what's happening him like Pepe the
Speaker 2: frog names and they called him a soy boy and
Speaker 2: stuff like that, like everyone talks the same way anyway,
Speaker 2: A bit of a divergence, but a little.
Speaker 4: Bit depressing that this is the common liguage.
Speaker 3: Now, this is the lingua frank of the internet.
Speaker 5: We all everyone, but this physical versus paper, the papers trading.
Speaker 5: He's very very important. So this friend of mine, ex collegue,
Speaker 5: I worked with him for decades, big commoditistrators. Now a
Speaker 5: dear client and you know one of these guys he
Speaker 5: talks to meth t Russia's mit execuse. He sends me
Speaker 5: a message and we are now even one more weekly.
Speaker 3: This is last week.
Speaker 5: And he doesn't do on high all the times on
Speaker 5: High on if it's not starting to open in one
Speaker 5: month now three weeks, the world has a huge, huge,
Speaker 5: huge problem. And this is not all on this guy
Speaker 5: doesn't say, yeah, kutart ELNGI will need months to restart
Speaker 5: once rooms is clear. And in all we have ten
Speaker 5: millibytes of shuttings already, and Asian Refinance are very very
Speaker 5: start pipelines to date CEA would take years and also
Speaker 5: are not a panacea.
Speaker 3: Et cetera.
Speaker 5: That he talks about woties, so I get it brand
Speaker 5: versus what WTIWTI is trading even better, etcetera, etcetera. But
Speaker 5: especially if the like so far is correct, if we
Speaker 5: have a lot of talk. But one way another, this
Speaker 5: rumos is only two three tanks, you know, Yeah, one
Speaker 5: Indian tank, one China tank. I do fear that these
Speaker 5: guys warning us about physical deliberty maybe more right?
Speaker 2: Yeah, And look, of course, and I get the largic
Speaker 2: But the people in the oil market who are trading,
Speaker 2: whether they're speculators or they're hedge funds, whether they're real
Speaker 2: oil companies who are having the hedge production, they have
Speaker 2: a lot of money at all, and they know all
Speaker 2: of this. There is nothing that can be said about
Speaker 2: the longer this goes on blah blah blah, the more
Speaker 2: they get shut in blah blah blah, running out of storage.
Speaker 2: It's going to take time to rebuild. There's nothing they
Speaker 2: could be said. And yet here we are.
Speaker 3: And I respect their approach as well.
Speaker 5: This comes back to also why equities haven't sold off
Speaker 5: that much, why credit hasn't sold off that much. At
Speaker 5: the end of the day, Okay, it may not be venezuela,
Speaker 5: we didn't find the dirty but I think people do
Speaker 5: believe that this squeeze longer squeeze will come and it's
Speaker 5: not that easy to fade. So, whether it's is Lamabat,
Speaker 5: whether it's Evans meeting somebody in Islamabat, whether President I
Speaker 5: would be surprised in two days saying I need one
Speaker 5: more week and you know, creating a delay. People do
Speaker 5: believe that in three months time, six months time, that's
Speaker 5: the forward all market as well, we will not be
Speaker 5: talking about this. We will be talking much more about
Speaker 5: AI or private credits. That's why the tale is big.
Speaker 5: That's why Okay, another I'm choosing my words carefully as well.
Speaker 5: All but marines are approaching. We're talking about car gu Islands,
Speaker 5: these trans clients talk to that ex general, this ex general.
Speaker 5: Some claim that taking control of Foremost once marines are
Speaker 5: that are there may not be that difficult. Imagine that
Speaker 5: going wrong. Imagine you know, of course, lives being lost.
Speaker 5: But even Joe one or two ships getting kids, these
Speaker 5: are not These are not army professionals driving those ships.
Speaker 5: These are people on payroll. So even on one gas ship,
Speaker 5: one oil ship hit, things can get out of hands
Speaker 5: very very quickly. And that's why, by the way, let's
Speaker 5: think it back to markets. Okay, you have a point.
Speaker 5: Oil brand is still below one hundred. But look what
Speaker 5: ECB and Bank of England pricing did and they're not
Speaker 5: backing away. They're saying Madame Lagart today of course, like
Speaker 5: she sounded calm, she didn't say I embraced the three
Speaker 5: high pricing, I will hike, but she did say we
Speaker 5: will be were watching this. So back to twenty twenty analogies.
Speaker 5: People don't want to be seen laid m hm. Things
Speaker 5: can move very, very fest I do.
Speaker 4: Want to talk about private credit because I think it's
Speaker 4: important and it's kind of gotten overshadowed by the Iran
Speaker 4: situation for obvious reasons. But just going back to the
Speaker 4: Taliban and soy boys, which is a sentence I never
Speaker 4: thought I would say on this podcast. I mean, this
Speaker 4: is the first like major conflict related market event where
Speaker 4: we have both sides to some extent, using AI generated
Speaker 4: memes and content to for you know, propaganda purposes to
Speaker 4: express their point of view on how the conflict is
Speaker 4: going and what they're trying to achieve. I am very
Speaker 4: curious on a trading floor if you're a big investor,
Speaker 4: when Iran tweets like a lego video showing Trump doing
Speaker 4: something or showing their reaction to Trump doing something. Are
Speaker 4: traders watching those and thinking seriously about them.
Speaker 5: Thinking seriously about them. I don't know about them, and
Speaker 5: they're watching thereforelding each other the things. But more key
Speaker 5: thing is, yeah, people do start to read out the
Speaker 5: more credible sources or the more credible reverse signs. In
Speaker 5: this day and age, we all translate from Arabic very
Speaker 5: very quickly. We do compare what a US source says
Speaker 5: on a potential exam about meeting versus what an Iranian
Speaker 5: source says. After a while, you do get a sense
Speaker 5: that which Iranian source seems to be more connected than
Speaker 5: the other. All of these things are I'm not going
Speaker 5: to say it makes our job easier, but it makes
Speaker 5: our job even more spicy complicated in a way we
Speaker 5: do have. Yeah, I completicate your lego and memes is
Speaker 5: one extreme, not very useful. But on the useful side, yeah,
Speaker 5: there's the Iranian credible journalist is right there on the
Speaker 5: table tweeting and telling you look at that, look at this.
Speaker 3: That helps you know I'm thinking about your shirt again.
Speaker 2: And the dinners that are scheduled in the golfer that
Speaker 2: may or may not happen, which brings me. You know,
Speaker 2: you're someone who is extremely plugged into money in that area,
Speaker 2: and there's this question of like, does something change in
Speaker 2: the trajectory about the business of Dubai. There was a
Speaker 2: hamlet about millennium. Did you see that they may move
Speaker 2: some traders to Jersey? Which, okay, cards on the table
Speaker 2: like Dubai probably I've never been. I doubt it's my
Speaker 2: cup of tea.
Speaker 4: I feel I can say with some certainty that Dubai
Speaker 4: is more fun than well, this.
Speaker 3: Is what I'm saying.
Speaker 2: It looks nicer them what I imagine the island of Jersey is,
Speaker 2: which I just imagine it's very gray and bleak all
Speaker 2: the time. I don't know, but I assume, like you know,
Speaker 2: do you think there's any of the talk about is
Speaker 2: there going to be a real trajectory and the amount
Speaker 2: of money flowing into the golf?
Speaker 3: Is that really? Yeah?
Speaker 5: Short term and medium to a medium to a manser,
Speaker 5: of course, I do. I have some dear friends that
Speaker 5: be on this industry, the other industries, like I react
Speaker 5: anology when I come to New York. Obviously you see
Speaker 5: your clients, but you see your friends in Dubai. You
Speaker 5: have to give even more time because there has been
Speaker 5: such a move for different funds, taxes, you know the deal.
Speaker 5: People do have short term memory, do remember COVID. But
Speaker 5: at the same time, of course it would have an effect.
Speaker 5: Other areas may try to get some of that influence.
Speaker 5: Maybe some of those people go back to London, maybe
Speaker 5: places like Milan, other areas of Asia gets more interesting.
Speaker 5: Absolutely heart goes out to them, but at the same
Speaker 5: time it affects the sentiments as well. By the way,
Speaker 5: part of the reason why many people got the whole
Speaker 5: Iranian thing wrong, warflation and all that, it was that too.
Speaker 5: So not only from that Friday night, Saturday morning of
Speaker 5: attack to Monday, we didn't get a dirty you know
Speaker 5: the way I put it, you know, up to a
Speaker 5: lot to face with e C. There was no regime change,
Speaker 5: but Iran immediately began hitting GCC. Lifestyles got affected. That
Speaker 5: affects sentiments. So way before the worries about inflation and war,
Speaker 5: inflation and supply change sly change is sentiment got affected
Speaker 5: right there. So my hope and thinking a year from
Speaker 5: now when we do the show again, the effect and
Speaker 5: power of Dubai and Katar will still be there. But yes,
Speaker 5: in the short term, it's not going away. It's it's
Speaker 5: an important market moving factor.
Speaker 2: By the way, did you see that Delcia Rodriguez is
Speaker 2: just going to be speaking in Miami at a investment
Speaker 2: conference back by Saudi Arabia. I'm just saying, they don't
Speaker 2: make communists like they used to.
Speaker 4: Let's talk private credit, because we have all these headlines
Speaker 4: coming out about redemption requests and a bunch of funds
Speaker 4: limiting those as is there right in the fun documentation. However,
Speaker 4: I am starting to get frustrated with this knee jerk response,
Speaker 4: which is you see all these headlines, you know, ares
Speaker 4: Apollo curbing withdrawals, and then everyone in private credit is like, well,
Speaker 4: this is fine, this is a feature of the system,
Speaker 4: it's not a bug, and obviously investors should have read
Speaker 4: the docs and this is exactly what's supposed to happen.
Speaker 4: Whereas to me, it seems very clear there is stress
Speaker 4: in private credit regardless of what's actually happening with withdrawals.
Speaker 4: And if you think about private credit as this huge
Speaker 4: asset class that was growing enormously in recent years and
Speaker 4: was a major source of credit and financing for companies
Speaker 4: in America. Then it seems very clear to me that
Speaker 4: what we should be talking about right now is a
Speaker 4: potential tightening of financial conditions as some of that demand
Speaker 4: starts to EBB away. How are you thinking about the
Speaker 4: private credit space and when you're doing your meetings with investors,
Speaker 4: I'm very curious how much time is spent on private
Speaker 4: credit versus Iran right now.
Speaker 5: Right before you're on a private credit and ais of
Speaker 5: the world now as immediate headline to you. Last night
Speaker 5: when I did a small round table, of course it
Speaker 5: all started of Iran, but I did make sure that
Speaker 5: we went to private credit. And I'm with fut Tracy
Speaker 5: the immediate reaction there from directly involved people to more
Speaker 5: macro tourists. It's not systemic. It's not systemic. It's not
Speaker 5: two thousand and eight, maybe two thousand and one that
Speaker 5: with smaller teacher. That that to me immediately a bit of
Speaker 5: an orange sign. Okay, I understand. So it all seems
Speaker 5: orderly with troubles are orderly, etcetera, et cetera. But headlines
Speaker 5: are not going away. If anything, they are definitely hiding
Speaker 5: behind the Iran at the moment. It would be almost
Speaker 5: all what we would be talking about, especially in US,
Speaker 5: if it wasn't for Iran. And by the way, because
Speaker 5: of that, my blue hat would have done much better
Speaker 5: than us. So that's another sad thing, right, It's like
Speaker 5: quote unquote US and Israel's war, but Europe and UK
Speaker 5: and rest of the world gets hurt more. But anyway, these
Speaker 5: are the new cars we're dealt with. The key thing
Speaker 5: to watch is at the moment they claim it's orderly,
Speaker 5: you get your money. If it feels more and more
Speaker 5: like this ABC, if you see the headlines, you're not
Speaker 5: going to be able to get your money for a while. Then,
Speaker 5: first time you mentioned my binkie, I'm very curious to
Speaker 5: see what he says to night on my macro dinner.
Speaker 5: It's a Wednesday macrod big macro Dinner's right, he's still
Speaker 5: sticking to its eight thousand y If people cannot take
Speaker 5: their money away from private credit and have to sell
Speaker 5: something liquid, then watch out for public credits that has
Speaker 5: been seeing very resilient, and of course watch out public equities.
Speaker 5: So I'm watching that space very carefully. I do understand
Speaker 5: why they immediately say it's not systemic. I get it.
Speaker 5: But you know, okay, maybe it's not two thousand and eight,
Speaker 5: but it's maybe something between this two thousand and one
Speaker 5: to two thousand and eight. Also, it's very in to say, yeah,
Speaker 5: it's not leverage is not there. Thank god, we may
Speaker 5: not see the Northern Rock BBC scenes of two thousand
Speaker 5: and seven, two thousand and eight, all these q's and stuff.
Speaker 5: It's a more quote unquote one person problem. But what
Speaker 5: if it's spreads and spreads and some of the big
Speaker 5: US banks start lending less to these friends? What if
Speaker 5: insurance companies get hit more and more watch this space.
Speaker 5: I think it's a bit too superficial to say it's
Speaker 5: not systemic, it's going to be Okay, it's almost like
Speaker 5: the bank crisis of two years ago in this place.
Speaker 5: I'm more worried on that.
Speaker 2: You know, one of the things we're talking about is
Speaker 2: there's very violent rate to move and war inflation and
Speaker 2: so forth. But one of the things that's emerged in
Speaker 2: the last few weeks is there's growing evidence that actually
Speaker 2: inflation was reaccelerating even prior to the start of the war.
Speaker 2: And so when we look at these moves, we might
Speaker 2: attribute some of them to the war itself, and the
Speaker 2: pastor of oil prices and the military spending, and that
Speaker 2: of course Trump gets another two hundred billion dollars for defense.
Speaker 2: That's more spending that's inflationary. But maybe, like, could it
Speaker 2: be that that is actually not the story. That the
Speaker 2: bigger story in raids is simply that the data is
Speaker 2: showing that through the end of February there is more
Speaker 2: evidence that inflation was not heading down to two percent
Speaker 2: as many people have maybe wishcasters.
Speaker 5: And that's really blow to my heart in terms of
Speaker 5: expectations and stuff, right because quote unquote we almost had
Speaker 5: them on twenty seven close.
Speaker 3: We're a good thing. It was a hurricane.
Speaker 5: It was a hurricane. Obviously much more important than market.
Speaker 5: It's a tragedy for humanity, war, et cetera. But for
Speaker 5: the market as well. It was a hurricane. Ty was
Speaker 5: a three ninety three. If that NFP printed like that,
Speaker 5: maybe we would be talking, yes than your three seventies,
Speaker 5: et cetera. Now, Genie is completely out of the bottle
Speaker 5: for very understandable reasons. Another reason another world I want
Speaker 5: to relate to relate to inflation. And before we wrap
Speaker 5: up this whole rationing, that's a big watch out for
Speaker 5: Europe in Asia. If this continues like this, if my
Speaker 5: Russia and my t friend is right about Humus and
Speaker 5: the problems, after a while people are already talking about
Speaker 5: look at Philippines headlines today for their airlines. We may
Speaker 5: soon be at a point when some of these Asian
Speaker 5: countries can say, look, I need to give energy and
Speaker 5: fuel to my very important, famous company, But much more
Speaker 5: important than that, I need to give fuel and energy
Speaker 5: and electricty to my households. Sorry, I have to choose.
Speaker 5: In Europe, we may be told maybe, you know, don't
Speaker 5: use that air conditioning too much, work from home, more
Speaker 5: travel less, back to my T shirt. Sadly, Dubai cut
Speaker 5: on maybe postponed for understandable reasons. But what about Asia?
Speaker 5: All these airline prices will shoot up. Maybe for work
Speaker 5: I will go, but for leisure maybe there will be
Speaker 5: one less trouble. All of this stuff will hurt growth
Speaker 5: at the same time, it will need interrational means more
Speaker 5: physical mesages means more inflation expectations. So you know, I'm
Speaker 5: not in love with the word taclation. But also I'm
Speaker 5: a rational guy. My job is to smell the market. Yeah,
Speaker 5: we woke up that taclation.
Speaker 2: Fear an urmm. Thank you so much for coming back
Speaker 2: on Atlas. Thank you for the T shirt. Always appreciate
Speaker 2: checking in with you, and we'll talk to you again
Speaker 2: soon next quarter.
Speaker 3: What do our quarterly?
Speaker 5: Wait?
Speaker 4: Will you put us on the T shirt? Just one
Speaker 4: of your stocks.
Speaker 5: You guys, the highlights.
Speaker 3: Thanks, thank you so much.
Speaker 2: I always love catching up with Ozon. I just find it,
Speaker 2: you know, it's just incredibly useful to talk to someone
Speaker 2: who's always talking to people, for sure, right, like that
Speaker 2: is a valuable thing in its own right. Ozon his
Speaker 2: very interesting perspectives. But to be able to just like
Speaker 2: channel his like his brilliantt friend what the people said
Speaker 2: at the Macro dinner last night, always very useful, you know.
Speaker 4: Also to Ozone's point about actual capacity cuts in Asia
Speaker 4: and Europe. So, you know, because I travel a lot,
Speaker 4: and I've lived in different places, I'm on all these
Speaker 4: different random emailing lists for like services and flights and
Speaker 4: airlines and transportation and things like that, and I am
Speaker 4: starting to get the fuel surcharge emails. I got one
Speaker 4: from an Australian car service that I used once ages ago.
Speaker 4: A lot of Indian airlines are starting to add fuel surcharges,
Speaker 4: like you can see it coming, and it's happening actually,
Speaker 4: like pretty quickly.
Speaker 2: I just don't want to travel right now, especially with
Speaker 2: all the lines you see in the US.
Speaker 3: Serious.
Speaker 4: Well, that's a separate issue.
Speaker 3: It's a separate issue. But I just want to cancel
Speaker 3: as much as I can.
Speaker 4: I'll remind you of that the next time we're debating
Speaker 4: whether or not to go to an external event and
Speaker 4: you're like, yeah, I want to go.
Speaker 3: I don't want to go right now. I don't want
Speaker 3: to go to anything.
Speaker 2: But anyway, seriously, you know, I do think like this
Speaker 2: is the thing that I think about a lot, which
Speaker 2: is that I've always been a take market seriously and
Speaker 2: sometimes take them literally guy.
Speaker 3: And I actually really don't.
Speaker 4: Like, I know, you're a secret emh bro.
Speaker 2: Yeah, not even so secret, and I really don't like,
Speaker 2: you know, there will be a headline from the White
Speaker 2: House and oil will go down, and everyone will say, oh,
Speaker 2: the people are so stupid, they're being you know, the
Speaker 2: investors are so stupid, traders are so stupid, there's a
Speaker 2: lie whatever, And I don't know about that. But my
Speaker 2: point is there's a lot of money on the line
Speaker 2: for people who are paid to take this very seriously.
Speaker 2: And if oil is trading below one hundred, I take
Speaker 2: that seriously. And I want to understand why there's the
Speaker 2: get because there's nothing that all of us online and
Speaker 2: in the media know that the people with a lot
Speaker 2: of money on the line don't know. Right, this is
Speaker 2: a fact, and I do think that's a very interesting
Speaker 2: point that the people with a lot at stake. Yeah,
Speaker 2: oil's high, but it's certainly not at the hair on
Speaker 2: fire levels that either we even saw in twenty twenty two.
Speaker 4: Well, my guess is that what we're seeing also is
Speaker 4: a divorce between the financial and the physical. That's true, right,
Speaker 4: So you can you can trade oil futures and assume
Speaker 4: that you're not going to have to take delivery at
Speaker 4: some point. But at the same time, if you're after
Speaker 4: the physical barrels, like, you can't get those at the moment.
Speaker 4: So I don't need know how that like actually relates
Speaker 4: to price.
Speaker 2: There's apparently some price that we see. Rory Johnston is
Speaker 2: always quoted about the actual physical price in Oman.
Speaker 3: Yeah, significantly.
Speaker 2: But the two eventually have to merge, right, Like, they
Speaker 2: cannot remain disconnected.
Speaker 4: Yeah, but not for a while. So I think that
Speaker 4: disconnect is kind of like what's in focus at the moment.
Speaker 2: Well, if you're trading front month, oile, you have about
Speaker 2: a month, right.
Speaker 4: Yeah, okay, fine, But like I think people are betting
Speaker 4: on like, no, I don't have to worry about it
Speaker 4: for a month. That's what I'm saying.
Speaker 2: Very plausible. It's it's certainly a very very difficult, unusual time.
Speaker 3: I mean, oh totally.
Speaker 4: And this is the other thing to your point, Like
Speaker 4: it is very true that the outcome of all of
Speaker 4: this basically hinges on three players and one player in particular,
Speaker 4: and at any moment in time, you could have someone
Speaker 4: come out and announce the ceasefire. Yeah, at which point,
Speaker 4: to Ozan's comments earlier, like you could see an almighty
Speaker 4: rally just because of positioning going into this, you could
Speaker 4: see a squeeze, like without the agreement. And so I
Speaker 4: think like that's also where a lot of the nervousness
Speaker 4: is coming from, Like no one wants to be caught
Speaker 4: completely offside if the conflict suddenly ends.
Speaker 2: You know, Ozon used the term badvall, and I think
Speaker 2: that makes sense, which is okay. On one hand, the
Speaker 2: trading desks. Sure, there's a lot of activity in some sense,
Speaker 2: and so that is a source of profit. On the
Speaker 2: other hand, this is the type of environment where it's
Speaker 2: like maybe you just want to stay away, you want
Speaker 2: to keep positions light. If you have a position, you
Speaker 2: don't want to like go all in or anything.
Speaker 4: That I'm imagining a trader like staring at the Vick's
Speaker 4: curve and going bad. All right, shall we leave it there,
Speaker 4: Let's live it there. This has been another episode of
Speaker 4: the Odd Thoughts podcast. I'm Tracy Alloway. You can follow
Speaker 4: me at Tracy Alloway.
Speaker 2: And I'm Joe Wisenthal. You can follow me at the Stalwart.
Speaker 2: Follow our guest Ozon Tarman. He's at Ozon k Tarman.
Speaker 2: Follow our producers Kermen, Rodriguez at Krman, Arman, dash Oll,
Speaker 2: Bennett at Dashbot, and kel Brooks at Kelbrooks. And for
Speaker 2: more Odd Laws content, go to bloomberg dot com slash
Speaker 2: odd Laws.
Speaker 3: For daily news, learnar and all of our episodes.
Speaker 2: You can chat about all these topics twenty four to
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