WEBVTT - Bloomberg Surveillance TV: April 7th, 2026

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<v Speaker 1>Bloomberg Audio Studios, Podcasts, radio News.

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<v Speaker 2>This is the Bloomberg Surveillance Podcast. I'm Jonathan Ferrow, along

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<v Speaker 2>with Lisa Bromwitz and Amrie Hordern. Join us each day

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<v Speaker 2>for insight from the best in markets, economics, and geopolitics

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<v Speaker 2>from our global headquarters in New York City. We are

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<v Speaker 1>Here's of you on Wall Street this morning, Marvin Low

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<v Speaker 1>of State Street writing equities remain relatively well supported and

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<v Speaker 1>while credit remains a concern that has not shown capitulation

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<v Speaker 1>around the private credit meltdown. Marvin joins us. Now, Marvin,

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<v Speaker 1>we were just hearing from Jumana about how tons it

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<v Speaker 1>is in the region. Before that, we were talking about

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<v Speaker 1>the seeming calm, if anything, optimism in markets. How do

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<v Speaker 1>you square that day of the potential stakes that are

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<v Speaker 1>heading into that eight pm deadline that seemed to be

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<v Speaker 1>brushed off by markets.

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<v Speaker 3>Yeah, I mean, you know, the certainly is a fundamental

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<v Speaker 3>aspect of holding on to if you will somewhat positive

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<v Speaker 3>bias on the risk side of things. It's not as

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<v Speaker 3>if all of your risk assets have ignored everything, but

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<v Speaker 3>certainly the amount of downside has probably been less than

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<v Speaker 3>anyone would have expected. So there is a degree of

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<v Speaker 3>looking past this. The timing of it is questionable, but

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<v Speaker 3>from an earning's perspective, as we kind of go into

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<v Speaker 3>earning season, I was just looking at where estimates were

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<v Speaker 3>before we started the conflict versus where we are now,

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<v Speaker 3>and they're actually up. So from a fundamental perspective, you

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<v Speaker 3>still have ultimately that support. It's a few of the

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<v Speaker 3>asset classes, the dollar, the fixed income markets, which are

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<v Speaker 3>really kind of showing the potential that not only that

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<v Speaker 3>this is longer term, but that things might be different

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<v Speaker 3>once everything settles down.

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<v Speaker 4>Mervin, if I'm not mistaken, the reason that earning's estimates

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<v Speaker 4>have been rising just in recent weeks is because of

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<v Speaker 4>energy stocks, because of the oil majors and what's happening

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<v Speaker 4>with the conflict. So what does it take to maybe

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<v Speaker 4>look past some of that and for equity markets to

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<v Speaker 4>start to price in longer term pain and more sustained

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<v Speaker 4>energy prices that the likes of which we're starting to

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<v Speaker 4>see get priced in to your point to rate markets

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<v Speaker 4>and oil.

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<v Speaker 3>Yeah, I mean, I you know, for you know, unfortunately,

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<v Speaker 3>I think that at least when it comes to a

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<v Speaker 3>lot of the more global equity markets, if you will,

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<v Speaker 3>the more international smp A focused type of companies, it's

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<v Speaker 3>going to take a broad slow down. And that isn't

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<v Speaker 3>necessarily making its way into the commentary at this point. Certainly,

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<v Speaker 3>recessionary risk taflation is something that shows up occasionally within

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<v Speaker 3>the numbers, but it's not prevalent in a broad slowing

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<v Speaker 3>of global growth. And I think that that's what it

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<v Speaker 3>would take to really knock it, knock.

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<v Speaker 4>It off, if we do get some flowing but not

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<v Speaker 4>broaden off to knock everything off. Marvin, do you expect

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<v Speaker 4>the S and P to coalesce around the typical market

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<v Speaker 4>leadership that we've seen in other similar periods, that is

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<v Speaker 4>big tech?

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<v Speaker 3>Yeah, and you know, outside of energy, when we talk

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<v Speaker 3>about big tech, they were the second best performing sector

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<v Speaker 3>industry group, you know, since the beginning of the conflict.

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<v Speaker 3>But also on this on this upward bias, So yes,

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<v Speaker 3>there is that coalescing around it, and based on the

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<v Speaker 3>data that we see within our flows of institutional investors,

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<v Speaker 3>there is a reordering going back into maybe some of

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<v Speaker 3>the more beat up tech sectors, particularly as of Lates

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<v Speaker 3>and Marvin.

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<v Speaker 1>This comes on the equity side, but also on the

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<v Speaker 1>dead side. And we saw yesterday this Microsoft tied data

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<v Speaker 1>center deal, a bond offering investment grade get sold and

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<v Speaker 1>actually attracting an incredible volume of bids to try to

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<v Speaker 1>get in on this. Capital markets seems wide open to

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<v Speaker 1>a lot of projects that people seemed concerned about just

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<v Speaker 1>a couple of months ago. How do you again square

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<v Speaker 1>that with apparent risk aversion in other pockets of the market.

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<v Speaker 3>Yeah, I mean, so, you know, this credit story is evolving.

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<v Speaker 3>You know, nobody on television knows the credit world as

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<v Speaker 3>well as U Lisa. So it's really a function of

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<v Speaker 3>whether or not the liquidity exists out there, and certainly

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<v Speaker 3>for these large names, that liquidity is out there. There

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<v Speaker 3>have been days that you know, I really didn't think

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<v Speaker 3>we were going to see in the credit market where

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<v Speaker 3>it closed for a few days, it really looks shaky,

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<v Speaker 3>and then once it opened, we had, you know, nearly

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<v Speaker 3>one hundred billion dollars in deals being sold. That shows

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<v Speaker 3>that there's a lot of liquidity. On the other side

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<v Speaker 3>of that, certainly is the private credit discussion, which is

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<v Speaker 3>still somewhat fragile, but at this point there are large

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<v Speaker 3>institutional investors that are in that space getting compensated for

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<v Speaker 3>the risk. And we're still, if you will, debating whether

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<v Speaker 3>or not this is a liquidity issue, particularly around maybe

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<v Speaker 3>some of these less liquid products that is the flagship

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<v Speaker 3>in the private credit world versus a credit issue, and

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<v Speaker 3>so paik and it kind of keeps us guessing because

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<v Speaker 3>of that.

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<v Speaker 1>The common thought on Wall Street are certainly among private

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<v Speaker 1>credit executives when they talk in public or frankly, even

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<v Speaker 1>in private, is it probably will be okay on a

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<v Speaker 1>fundamental level. Is not as long as there isn't some

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<v Speaker 1>sort of economic downturn, as long as there isn't really

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<v Speaker 1>a test of the credit cycle, which hasn't been had

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<v Speaker 1>frankly going back almost twenty years, right, How concerned are

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<v Speaker 1>you that this kind of stacflationary hit to the economy

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<v Speaker 1>could expedite that kind of credit cycle that really hasn't

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<v Speaker 1>come to fruition since two thousand and eight.

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<v Speaker 3>I mean, I'm concerned about it. I wouldn't say that

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<v Speaker 3>I'm one of those that is comparing it back to

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<v Speaker 3>the GFC, if you will, I think dynamics are very,

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<v Speaker 3>very significantly different and really kind of that broad liquidity

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<v Speaker 3>that seems to be prevalent both in the equity and

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<v Speaker 3>the fixed income markets is one that will you know,

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<v Speaker 3>for utter for work keep valuations potentially not adjusting as

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<v Speaker 3>quickly as maybe they should.

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<v Speaker 2>Stay with us Mulblindex Savana's coming up off to this,

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<v Speaker 2>General Robert.

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<v Speaker 1>Walsh of Academy Securities writing, infrastructure is only a legal

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<v Speaker 1>target if it directly supports military operations. Dual use systems

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<v Speaker 1>like energy, ports, oil are where things get legally and

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<v Speaker 1>politically risky. General Walsh joins US. Now, General, thank you

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<v Speaker 1>so much for being with us, and we'll get to

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<v Speaker 1>the legality of certain types of strikes in a moment.

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<v Speaker 1>I just want to start with how likely do you

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<v Speaker 1>see escalation as the outcome of tonight.

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<v Speaker 5>I think the path we're on, Lisa, good morning, thanks

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<v Speaker 5>for having me today, is we're on that escalation. We're

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<v Speaker 5>probably seeing some of those strikes start to happen today.

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<v Speaker 5>You've had some of your reports that the IDEAF and

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<v Speaker 5>started that. I think this is just kind of a

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<v Speaker 5>test of wills here now to see where today goes.

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<v Speaker 5>And I think Trump President Trump was very clear yesterday

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<v Speaker 5>that if Iran does not come to the negotiating table

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<v Speaker 5>to negotiate, you know, fairly and honestly, then they're going

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<v Speaker 5>to continue to escalate this and the escalation will continue

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<v Speaker 5>until Iran really decides that they want to negotiate in

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<v Speaker 5>good faith and start to give into some of the

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<v Speaker 5>things that the Trump administration is looking for.

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<v Speaker 4>And one of the things, you know, the Trump administration

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<v Speaker 4>is now looking for general is to have the Straight

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<v Speaker 4>of Horror moose open. You do believe that Iran will

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<v Speaker 4>open or ease the Straight, but you say, only when

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<v Speaker 4>it extracts enough value. What does that scenario look like?

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<v Speaker 5>I think that value they're looking for is one of

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<v Speaker 5>the things they're saying is they want control the Straits

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<v Speaker 5>when this is over, and I don't think that's anything

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<v Speaker 5>anybody in the Gulf region or the US side wants

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<v Speaker 5>it all. They also would like the US and Israel

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<v Speaker 5>to stop all, you know, military actions. One of their

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<v Speaker 5>earlier things was they would like the US to leave

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<v Speaker 5>the Middle East. So I think, you know, and another

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<v Speaker 5>big one that is on the table by Irn. They'd

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<v Speaker 5>like to continue enrichment. So controlling the straits into the

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<v Speaker 5>future and continuing to be able to enrichment is one

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<v Speaker 5>of those things that's just off the table for the

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<v Speaker 5>US as to how far we've been, and I think

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<v Speaker 5>this escalation will continue. There's a point in time here

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<v Speaker 5>that the US makes the decision that we continue to

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<v Speaker 5>escalate and eventually you just go for ending this thing,

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<v Speaker 5>and you just go after taking down their military capabilities

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<v Speaker 5>just as far as you can take it. Some of

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<v Speaker 5>these infrastructure targets we talk about that would be dual

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<v Speaker 5>use type targets. The US has to be careful on that.

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<v Speaker 5>But you start to really just take down their military

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<v Speaker 5>capabilities to go back into production and be able to

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<v Speaker 5>build these capabilities up again. I think that becomes a

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<v Speaker 5>real challenge for them when you start to take down

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<v Speaker 5>some of these infrastructure capabilities. And I think Tyler also

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<v Speaker 5>mentioned China. I think China's a key thing going into

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<v Speaker 5>this is when this is all over, I think President

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<v Speaker 5>Trump needs to look President g in the eye and

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<v Speaker 5>go which side are you really on when it comes

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<v Speaker 5>to the global community you're supporting? You know, President Putin

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<v Speaker 5>in the Ukraine war, and here you are so supporting

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<v Speaker 5>the Iranians with missiles and technology. Are you going to

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<v Speaker 5>continue that or are you going to be more on

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<v Speaker 5>the side of the world community.

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<v Speaker 4>I suppose though, if President Trump does want to end it,

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<v Speaker 4>and he does so with more military force, General, do

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<v Speaker 4>you expect that they need to also be able to

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<v Speaker 4>regain or get control of the Strait of Horror Moves

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<v Speaker 4>and allow for free passage And how difficult would that

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<v Speaker 4>be of an operation?

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<v Speaker 5>Yeah, I think that's very clear that the path that

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<v Speaker 5>the US is on as they start to continue to

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<v Speaker 5>take down the Iranian military capabilities in conjunction with the

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<v Speaker 5>Israeli Defense Force, they continue to take it down, they've

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<v Speaker 5>put this bubble really over the entire country. Now they

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<v Speaker 5>really have to focus on another phase and just really

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<v Speaker 5>focus on the Straits of Horn Moves to be able

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<v Speaker 5>to make that more safe for commercial navigation. It obviously

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<v Speaker 5>would get to the point where the US Navy could

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<v Speaker 5>come into the Gulf they get escort commercial tankers through there,

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<v Speaker 5>and that's a another phase that we could be going into,

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<v Speaker 5>and I certainly think it's doable with the capabilities that

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<v Speaker 5>the US military has, and that would be another phase.

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<v Speaker 5>As we move forward, the US is not going to

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<v Speaker 5>allow Iran to continue to have this leverage over the

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<v Speaker 5>Straits are On. This will take longer than the original

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<v Speaker 5>planet thought because the enemy has a vote. The enemy

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<v Speaker 5>has voted to use the Straits are On Hormuz as leverage,

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<v Speaker 5>and now that they're using it, the US is going

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<v Speaker 5>to have to move to a phase where they make

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<v Speaker 5>that much more safe, where they can bring into commercial shipping.

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<v Speaker 5>And again I'll say that they can do that.

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<v Speaker 1>We just have a bet a minute left, just getting

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<v Speaker 1>some headlines reporting from Axio saying that the US conducted

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<v Speaker 1>strikes on military targets on Carg Island. Based on your

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<v Speaker 1>understanding of the region, how important is carg Island, what

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<v Speaker 1>kind of targets could be in their sights?

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<v Speaker 5>I think the big thing is this is really kind

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<v Speaker 5>of the key thing for the Iranian government but also

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<v Speaker 5>for the IRGC, which gets fifty percent of its funding

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<v Speaker 5>from the oil that goes through Carg Island. So this

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<v Speaker 5>is a lifeline to the regime, and if the US

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<v Speaker 5>starts to hit these military targets, it's a signal today

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<v Speaker 5>that we're serious about going after infrastructure that is important

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<v Speaker 5>to the regime, and the more and more we see

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<v Speaker 5>with this regime, the let more that we're seeing that

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<v Speaker 5>they're isolating the current political leadership, President Posesskian, and they're

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<v Speaker 5>taking more and more control and becoming more and more hardline.

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<v Speaker 5>So an attack on carg Island would send a clear

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<v Speaker 5>signal to the IRGC that President Trump is serious, the

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<v Speaker 5>Israelis are serious about not allowing them to continue to

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<v Speaker 5>control oil, get money, and continue to grow on their

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<v Speaker 5>military capabilities.

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<v Speaker 2>Stay with US multil index Savidance coming up off to this.

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<v Speaker 1>Or Hey Leon of risetead Energy writing, this is no

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<v Speaker 1>longer just a supply story. It's a broader macro story

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<v Speaker 1>impacting growth, inflation and policy. Jorge joins us, Now, what

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<v Speaker 1>do you make right now of the forward looking curve

0:12:06.160 --> 0:12:10.480
<v Speaker 1>in crude the points to de escalation that the market

0:12:10.559 --> 0:12:12.400
<v Speaker 1>is taking a signal from.

0:12:12.280 --> 0:12:15.360
<v Speaker 6>Aliza, thank you for the invitation. Indeed, this is I

0:12:15.360 --> 0:12:17.560
<v Speaker 6>think that right now the market is trying to understand

0:12:17.640 --> 0:12:20.800
<v Speaker 6>what is likely to happen. Are we going going to

0:12:20.840 --> 0:12:23.480
<v Speaker 6>see escalation or de escalation in the coming hours. On

0:12:23.480 --> 0:12:26.280
<v Speaker 6>the one hand, we have a deadline, that is, clocks

0:12:26.280 --> 0:12:28.720
<v Speaker 6>are ticking. On the other hand, we have the news

0:12:28.760 --> 0:12:31.920
<v Speaker 6>that there was an attack on card Island, so still

0:12:32.160 --> 0:12:35.439
<v Speaker 6>very much unknown. But at the same time, I think

0:12:35.480 --> 0:12:39.760
<v Speaker 6>that we should brace ourselves for possibility that this becomes

0:12:39.800 --> 0:12:43.840
<v Speaker 6>becomes a longer conflict, that this, you know, the traffic

0:12:43.840 --> 0:12:46.599
<v Speaker 6>through the straight of Moves remains close for an extended

0:12:46.720 --> 0:12:49.400
<v Speaker 6>period of time. So I think that that's what is

0:12:49.480 --> 0:12:51.720
<v Speaker 6>trying to the market is trying to figure out that

0:12:51.800 --> 0:12:54.040
<v Speaker 6>this at this at this moment, and.

0:12:54.040 --> 0:12:56.320
<v Speaker 1>A lot of people are turning to scenario analysis simply

0:12:56.360 --> 0:12:59.240
<v Speaker 1>because we don't have a lot of facts. One question

0:12:59.320 --> 0:13:01.760
<v Speaker 1>has been what point is this a growth shock and

0:13:01.800 --> 0:13:04.600
<v Speaker 1>at what point is this an inflationary shock? What are

0:13:04.640 --> 0:13:07.440
<v Speaker 1>the thresholds you have on oil prices where it's one

0:13:07.640 --> 0:13:08.080
<v Speaker 1>or the other.

0:13:09.160 --> 0:13:12.360
<v Speaker 6>Sure, So the moment, let's let's think about scenarios. Evoid

0:13:12.440 --> 0:13:16.280
<v Speaker 6>price averages one hundred and ten dollars per barrel this year,

0:13:16.920 --> 0:13:21.920
<v Speaker 6>global growth will be will be trimmed down around one

0:13:21.960 --> 0:13:24.559
<v Speaker 6>percentage point, so from around right now with three percent

0:13:24.600 --> 0:13:28.000
<v Speaker 6>before the crisis to two percent now. At the same time,

0:13:28.440 --> 0:13:31.800
<v Speaker 6>one hundred and ten dollars per barrel means that global

0:13:31.880 --> 0:13:35.920
<v Speaker 6>inflation will pick up rapidly, and then you have the

0:13:35.920 --> 0:13:38.880
<v Speaker 6>secondary effect. So if the central banks around the world

0:13:38.920 --> 0:13:42.880
<v Speaker 6>are going to start increasing interest rates, then that complicates

0:13:42.880 --> 0:13:45.760
<v Speaker 6>even more than macroeconomic outland. Let's not forget that the

0:13:45.840 --> 0:13:49.080
<v Speaker 6>ECB here in Europe and the FED in the US

0:13:49.280 --> 0:13:53.120
<v Speaker 6>have the next meeting on April thirty, and there is

0:13:53.160 --> 0:13:56.880
<v Speaker 6>a lot of possibilities at this moment if the war continues,

0:13:57.080 --> 0:14:00.199
<v Speaker 6>that we are going to see actually increase is in

0:14:00.400 --> 0:14:03.719
<v Speaker 6>interest rates. As I said on April the thirties.

0:14:03.960 --> 0:14:07.240
<v Speaker 4>Well hey somehow pointed to Penco being among them. The

0:14:07.280 --> 0:14:10.000
<v Speaker 4>opposite side of that which Lisa was also getting at,

0:14:10.160 --> 0:14:13.080
<v Speaker 4>that it would result in a hit to growth. Why

0:14:13.120 --> 0:14:15.440
<v Speaker 4>would the next move be a hike and not a

0:14:15.480 --> 0:14:17.800
<v Speaker 4>cut if you do see lower growth as a result

0:14:17.840 --> 0:14:20.480
<v Speaker 4>of higher energy prices, that's a.

0:14:20.520 --> 0:14:22.840
<v Speaker 6>That's a that's a great question. This is normally part

0:14:22.920 --> 0:14:25.120
<v Speaker 6>of the of the of the book of central banks,

0:14:25.160 --> 0:14:28.800
<v Speaker 6>right fighting against inflation. That is the key for any

0:14:28.960 --> 0:14:33.320
<v Speaker 6>micro economic director, for any any director of a central bank.

0:14:33.560 --> 0:14:38.280
<v Speaker 6>Inflation is the key, you know, enemy of macroeconomic growth

0:14:38.640 --> 0:14:41.880
<v Speaker 6>in the medium and long term. So and that is

0:14:42.040 --> 0:14:45.360
<v Speaker 6>part of the mandate of central banks. So I would

0:14:45.400 --> 0:14:48.160
<v Speaker 6>I would assume that that same manual is going to

0:14:48.200 --> 0:14:51.440
<v Speaker 6>continue in this this this time around. That is what

0:14:51.560 --> 0:14:54.080
<v Speaker 6>central banks have been doing when there is a supply

0:14:54.200 --> 0:14:59.680
<v Speaker 6>show which increases oil prices. Killing the inflation is fundamental

0:15:00.160 --> 0:15:04.480
<v Speaker 6>for a more optimistic macroeconomic output. Not in the very

0:15:04.480 --> 0:15:06.840
<v Speaker 6>short term, I agree with you, but if we're thinking

0:15:06.920 --> 0:15:12.520
<v Speaker 6>about how we exed this conflict, then increasing interest rates

0:15:12.600 --> 0:15:15.760
<v Speaker 6>killing inflation is probably one of the most sensible things

0:15:15.800 --> 0:15:16.080
<v Speaker 6>to do.

0:15:16.960 --> 0:15:19.960
<v Speaker 4>I just keep thinking about what we heard from the IA,

0:15:20.120 --> 0:15:22.920
<v Speaker 4>who called this year's disruption the worst ever for the

0:15:22.960 --> 0:15:26.000
<v Speaker 4>global economy, equivalent to the two major crises of the

0:15:26.080 --> 0:15:29.680
<v Speaker 4>nineteen seventies and of oil crisis in twenty twenty two.

0:15:30.000 --> 0:15:33.080
<v Speaker 4>When it comes to natural gas, are you looking at

0:15:33.080 --> 0:15:38.280
<v Speaker 4>a similar environment a disruption the worst ever for energy markets?

0:15:39.040 --> 0:15:41.720
<v Speaker 6>Yes, and no. There are some elements that point towards

0:15:41.840 --> 0:15:45.280
<v Speaker 6>this is much more serious than let's say, the two

0:15:45.400 --> 0:15:47.880
<v Speaker 6>oil crisis of the nineteen seventies. And there are all

0:15:48.000 --> 0:15:50.120
<v Speaker 6>other elements that say no, they're probably a little bit

0:15:50.240 --> 0:15:52.840
<v Speaker 6>less less serious. Let's focus on the ones that show

0:15:52.880 --> 0:15:56.000
<v Speaker 6>that this is slightly less serious. First of all, the

0:15:56.040 --> 0:15:59.200
<v Speaker 6>world depends less on oil right now right than we

0:15:59.320 --> 0:16:02.560
<v Speaker 6>did in nineteen seventy. Now we have nuclear we have renewable.

0:16:02.640 --> 0:16:06.880
<v Speaker 6>So the oil intensity of the global economy is lower,

0:16:07.000 --> 0:16:10.960
<v Speaker 6>significantly lower now than in nineteen seventy. But then you

0:16:11.000 --> 0:16:13.840
<v Speaker 6>have the other argument that back then in nineteen seventy,

0:16:14.120 --> 0:16:17.040
<v Speaker 6>there was not a lot of gas demand, right and

0:16:17.200 --> 0:16:20.440
<v Speaker 6>right now you have a double crisis, which is oil

0:16:20.720 --> 0:16:23.440
<v Speaker 6>and gas. So those are the two elements that we

0:16:23.760 --> 0:16:27.280
<v Speaker 6>could probably think think about, you know, when comparing to

0:16:28.040 --> 0:16:30.920
<v Speaker 6>the to the you know, to the previous energy crisis.

0:16:30.920 --> 0:16:33.000
<v Speaker 6>But I agree with you whether it's you know, a

0:16:33.000 --> 0:16:36.280
<v Speaker 6>bit more serious or less less serious than the previous crisis,

0:16:37.440 --> 0:16:39.320
<v Speaker 6>sort of it's sort of slightly relevant.

0:16:39.520 --> 0:16:39.840
<v Speaker 2>Right now.

0:16:39.880 --> 0:16:42.680
<v Speaker 6>What we need to focus is on how long this

0:16:42.840 --> 0:16:44.880
<v Speaker 6>is going to last for to make sure that we

0:16:44.960 --> 0:16:47.520
<v Speaker 6>have you know, the correct variedyt at the end of

0:16:47.560 --> 0:16:51.520
<v Speaker 6>the of the crisis. The duration is the key variable here.

0:16:51.720 --> 0:16:55.240
<v Speaker 6>Is this going to end up being an extended, a

0:16:55.280 --> 0:16:57.760
<v Speaker 6>prolonged crisis or this is going to be a short

0:16:57.840 --> 0:16:58.800
<v Speaker 6>lived crisis.

0:16:59.560 --> 0:17:03.120
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0:17:03.120 --> 0:17:06.440
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