WEBVTT - Bloomberg Surveillance TV: March 20th, 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 Hordernt. 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 2>live on Bloomberg Television weekday mornings from six to nine

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<v Speaker 2>am Eastern. Subscribe to the podcast on Apple, Spotify or

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<v Speaker 2>anywhere else you listen, and as always on the Bloomberg

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<v Speaker 2>Terminal and the Bloomberg Business app. The White House taking

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<v Speaker 2>an oil and gas export band off the table as

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<v Speaker 2>a way to bring down energy prices after the Vice

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<v Speaker 2>President Jdvance met with oil executive Stephen Shork of the

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<v Speaker 2>Short Group, writing, the Brent WTI spread will not narrow

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<v Speaker 2>until one of two things happens. Homer's fully reopens or

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<v Speaker 2>WTI stops pricing. In diplomatic optionality that never materializes. Neither

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<v Speaker 2>is imminent. Stephen joins us now for more. Steven, welcome

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<v Speaker 2>to the program. I want to get to your line

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<v Speaker 2>in your research. The Brent WTI spread says everything diplomacy won't. Stephen,

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<v Speaker 2>just build on.

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<v Speaker 3>That yeah, absolutely, thank you.

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<v Speaker 4>So the bread market is now the benchmark for the

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<v Speaker 4>seaborn trade in oil, and this is the market that

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<v Speaker 4>is pricing the conflict is pricing the war is pricing

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<v Speaker 4>the shortages that we are seeing. If WTI market prices optionality,

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<v Speaker 4>prices optimism.

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<v Speaker 3>It's a landlocked contract.

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<v Speaker 4>It's a futures contract, and like every futures contract, it

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<v Speaker 4>derives its value from a physical asset. The physical asset

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<v Speaker 4>and WTI is landlocked in the Oklahoma.

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<v Speaker 3>It's a different type of crude oil.

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<v Speaker 4>Brent is a similar crude oil, a price in the

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<v Speaker 4>land basin barrels, and it's the benchmark for the seaborne trade.

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<v Speaker 4>So every time we see a dubbish headline the war

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<v Speaker 4>might be ending or there's an off ramp, that optimism

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<v Speaker 4>gets priced into the Brent, the WTI contract, and that

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<v Speaker 4>is the hope contract. The bread market is the real

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<v Speaker 4>market that is pricing the real event what's going on.

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<v Speaker 4>And that blowout in the spread that we've seen over

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<v Speaker 4>the past week we can have tells you that this

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<v Speaker 4>war is far from over because we are seeing a

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<v Speaker 4>tremendous bid in Brent over that WTI contract.

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<v Speaker 5>Steved I want to pick up on your point about

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<v Speaker 5>what the WTI is pricing in about policy, the US

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<v Speaker 5>government could do. So yesterday Secretary Right tweeted that there

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<v Speaker 5>is going to be no export pan, but then I

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<v Speaker 5>had a bunch of calls from people saying no export.

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<v Speaker 3>Pan for now.

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<v Speaker 5>Do you think it's something the US will keep in

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<v Speaker 5>their back pocket in case prices continue to rise?

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<v Speaker 3>Absolutely.

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<v Speaker 4>Now, let's be clear, an export pan would be catastrophic

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<v Speaker 4>for US oil production because all it would do is

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<v Speaker 4>pent up more supply here in the United States of

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<v Speaker 4>oil we don't necessarily use, so we don't have a

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<v Speaker 4>use for it, so we're not going to burn it,

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<v Speaker 4>so inventories will just build, and as those inventories build,

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<v Speaker 4>there's no place for new production to go. So ultimately

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<v Speaker 4>it's a catastrophic move for production. And I think it

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<v Speaker 4>appears that the White House got that message, but you

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<v Speaker 4>never know. It does make a nice headline, so we

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<v Speaker 4>could potentially see it's a political tool, it's not an

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<v Speaker 4>economic tool.

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<v Speaker 3>So certainly there is that potential.

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<v Speaker 4>And clearly with the way the Brent market has gone,

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<v Speaker 4>we've gone from a five dollars premium Brent OVERWTI at

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<v Speaker 4>the startup this week, so now it's upwards of thirteen

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<v Speaker 4>to fourteen dollars, so we've tripled that premium.

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<v Speaker 3>So clearly the.

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<v Speaker 4>Market is skeptical that an export ban is not off

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<v Speaker 4>of the table.

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<v Speaker 5>Steven, do you even think Brent right now is pricing

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<v Speaker 5>in really what is going on in the region. When

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<v Speaker 5>you look at Oman futures, I think yesterday they blew

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<v Speaker 5>past one hundred and seventy dollars a barrel that's more

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<v Speaker 5>tied to the physical barrels right now that are moving

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<v Speaker 5>in the Gulf. So is Brent even accurate?

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<v Speaker 4>It's an excellent question, and you know I'm restent to

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<v Speaker 4>say it's not, because then I've been saying, oh, the

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<v Speaker 4>market is wrong. But to your point, we have a

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<v Speaker 4>buibercated market, so the brand market is still an Atlantic

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<v Speaker 4>basin market.

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<v Speaker 3>That's where it's derived from.

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<v Speaker 4>To your point that Oman and the Dubai future contracts

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<v Speaker 4>which are linked more towards the Asian markets, that is

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<v Speaker 4>really reflective of the shortage. So with the Bread Dubai

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<v Speaker 4>or the Brent Oman, Brent steep discount to those markets

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<v Speaker 4>is telling you is that we're looking at the Atlantic

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<v Speaker 4>basin that is well supplied with oil.

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<v Speaker 3>The problem is in.

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<v Speaker 4>Asia where all that oil is still blockaded up in

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<v Speaker 4>the Straight of Jomus. Those are so your refineries from

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<v Speaker 4>India through Japan up through South Korea are bidding for

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<v Speaker 4>that oil and hence why we're getting such a huge

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<v Speaker 4>disconnect between the two markets. So the answer your question

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<v Speaker 4>Brent Brent is certainly disconnected. It's more connected as we've said,

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<v Speaker 4>relative to WTI. But actually the way the shortage is

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<v Speaker 4>with the physical shortages represented in the Oman and Dubai

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<v Speaker 4>markets clearly again that is another telltale that this war

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<v Speaker 4>is far from being resolved in any sort of positive manner.

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<v Speaker 2>And Stephen, that's the reality for Asian importers, buyers off

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<v Speaker 2>that crude of that physical asset. Do you think this

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<v Speaker 2>mark has taken too much comfort from the future's curve.

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<v Speaker 4>It's really interesting and where we're really seeing the blowout.

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<v Speaker 4>And to answer your question, I think the market is

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<v Speaker 4>rather relaxed. Is if we look at the Brent do

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<v Speaker 4>my market for instance, if we believe in market theory

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<v Speaker 4>or in that curve, then we're looking at Brent trading

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<v Speaker 4>at a thirty forty dollars discount to Dubai a sixty

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<v Speaker 4>seventy dollars discount to Oman. So the question is when

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<v Speaker 4>does or does the market catch up so that we'll

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<v Speaker 4>take to Dubai market. Right now, we're trading out about

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<v Speaker 4>a thirty five dollars discount Brent below Dubai. That's not

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<v Speaker 4>supposed to happen. Dubai is an inferior quality oil. It

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<v Speaker 4>trades at a discout to Brent. But that's not the case.

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<v Speaker 4>But we know why. But we go two months out

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<v Speaker 4>the Brent premium and we said Brent normally trades out

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<v Speaker 4>of premium to Dubai is now trading out a life

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<v Speaker 4>of contract high of nearly eight dollars of a barrel.

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<v Speaker 4>So what the market, at least what the curve is

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<v Speaker 4>telling us is that, yeah, there's.

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<v Speaker 3>A real problem.

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<v Speaker 4>There's a stranded barrels in the straight or hooves.

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<v Speaker 3>They're not going out.

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<v Speaker 4>Therefore, Dubai trades at a massive premium to Brent. We're

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<v Speaker 4>going out two months that premium reverses now to a

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<v Speaker 4>significant discount. So the market, if you believe in term

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<v Speaker 4>structure or in the forward curve of pricing theory, is

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<v Speaker 4>telling us, yeah, we've got a real problem in the

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<v Speaker 4>spot market. By the time we roll into summer, there's

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<v Speaker 4>going to be some sort of exit in this war

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<v Speaker 4>remains to be seen. We're not seeing it in the

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<v Speaker 4>product markets, for instance. So another question now is the

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<v Speaker 4>diesel market. The crack spread of the margin between diesel

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<v Speaker 4>prices and oil prices in the Golf Coast is almost

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<v Speaker 4>seventy dollars a barrel.

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<v Speaker 3>That so one of two things are going to happen.

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<v Speaker 4>Oil WTS is going to have to catch up to

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<v Speaker 4>where product prices are. A product price is going to

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<v Speaker 4>crash because of demand destruction. And now we're talking about

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<v Speaker 4>significant economic contraction. But the here and the now is

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<v Speaker 4>that the spread is telling us significant shortage in the

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<v Speaker 4>spot market prompt month, but going for two months out

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<v Speaker 4>we should start.

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<v Speaker 3>To see some sort of resolution. At least that's how

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<v Speaker 3>the market.

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<v Speaker 4>That's what the foward curve is suggesting to the globe.

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<v Speaker 2>Stay with us. More Bloomberg surveillance coming up after this.

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<v Speaker 2>The US and Israel working to calm crude markets, both

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<v Speaker 2>countries vowing to avoid targeting Iran's energy infrastructure. Following retaliatory

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<v Speaker 2>attacks across the Middle East. The fuel and oil spies

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<v Speaker 2>spike general Robert Welsh of Academy Securities, writing, the conflict

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<v Speaker 2>is transitioning to a war of attrition. There is no

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<v Speaker 2>clear checkmate scenario. General Welsh joins us now for more General,

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<v Speaker 2>welcome to the program sir, Are you suggesting this war

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<v Speaker 2>has entered a new, more enduring phase.

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<v Speaker 6>Good morning, John Jonathan, Thanks for having me today. You know,

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<v Speaker 6>the war changes as time goes on, and what we're

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<v Speaker 6>seeing now is from a perspective, it is going into

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<v Speaker 6>a little bit more of a war of attrition. There's

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<v Speaker 6>military sets that we've talked about in the past and

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<v Speaker 6>what the US military in the Israelis is trying to

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<v Speaker 6>take out. They're systematically doing that. They're very successful from

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<v Speaker 6>a military standpoint. But as we see that the nature

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<v Speaker 6>of conflict is really a clash of wills, and that

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<v Speaker 6>clash of wills is going on now between both the US,

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<v Speaker 6>Israelis and Iran. And Iran has to say so in

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<v Speaker 6>this and what we're seeing from Iran is they're taking

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<v Speaker 6>a very asymmetric approach to this, and their asymmetric approach

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<v Speaker 6>is number one. Their objective is the regime to remain.

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<v Speaker 6>But we're now seeing what's changing a little bit in

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<v Speaker 6>that is they're also looking at cost imposition on the

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<v Speaker 6>US and Israelis and also the golf partners in the

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<v Speaker 6>rest of the world. So that cost imposition now is changing,

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<v Speaker 6>and we see those attacks now becoming more prevalent on

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<v Speaker 6>infrastructure in the Persian Gulf, and we're seeing it more

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<v Speaker 6>and more taking place. And that's that costant position that

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<v Speaker 6>they're now parting to put to make it so painful

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<v Speaker 6>that the US, the Israelis, and the world community want

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<v Speaker 6>to get out of this situation.

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<v Speaker 5>General, we do have the United States sending a second

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<v Speaker 5>amphibious assault ship to the Middle East. Can you walk

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<v Speaker 5>us through what these highly trained marines could potentially be

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<v Speaker 5>used for in the region.

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<v Speaker 3>Sure.

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<v Speaker 6>I think as you look at the combatant Commander Admiral

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<v Speaker 6>Cooper in the Central Command, he wants to have as

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<v Speaker 6>many capabilities.

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<v Speaker 3>In his hands as he can use as possible.

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<v Speaker 6>Is the planning takes place, we see what we call

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<v Speaker 6>branches and sequels. As things start to change on the battlefield,

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<v Speaker 6>then different branches and plans come into play. Having a

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<v Speaker 6>marine amphibious group with a Navy amphibious ready group with

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<v Speaker 6>it marine amphibious unit, that capability brings it's a toolbox

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<v Speaker 6>in its own which adds to the toolbox that he has,

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<v Speaker 6>and it brings many capabilities that comes to bear. It's

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<v Speaker 6>got a reinforced infantry battalion with plenty of fire's capability

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<v Speaker 6>or attack capabilities. It has a full range of aviation

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<v Speaker 6>assets from attack helos, heavy transport helos with the H

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<v Speaker 6>fifty three's, it's got the MV twenty two's with our

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<v Speaker 6>rotor assaults support aircraft that can go out long ranges

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<v Speaker 6>and do raid type missions or insert missions. And then

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<v Speaker 6>it's got F thirty five's on board two that can

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<v Speaker 6>provide the close air support that.

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<v Speaker 3>The team would need.

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<v Speaker 6>But in this case, they'd be inserting themselves into a

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<v Speaker 6>very large joint operation where there's many capabilities that the

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<v Speaker 6>Centcom commander has to be able to fit this tool

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<v Speaker 6>into his toolbox and be able to use it as

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<v Speaker 6>he sees fit. So some of the missions you could

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<v Speaker 6>see you talked about carg Island, there could be raids

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<v Speaker 6>there going into the if there were any indications that

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<v Speaker 6>we'd go into than nuclear sites to try to hold those.

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<v Speaker 6>We've got very highly trained special operations forces that can

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<v Speaker 6>do those missions. But you'd probably need a conventional force

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<v Speaker 6>to go in that the Marine Expigracery Unit can provide

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<v Speaker 6>to go in and provide some of that security along

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<v Speaker 6>with many of the joint assets that would be on

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<v Speaker 6>top of that providing air superiority.

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<v Speaker 5>How vulnerable will they be though in a narrow corridor.

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<v Speaker 6>I think what you're seeing right now is why the

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<v Speaker 6>US Navy is not operating inside the Straits because those

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<v Speaker 6>conditions have not been set by the Joint Force to

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<v Speaker 6>be able to bring Navy ships in there. Yet the

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<v Speaker 6>Navy would rather stand off than stand inside there where

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<v Speaker 6>there are much more risks. So the threats to the Navy,

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<v Speaker 6>both from drones, missiles, and fast attack craft has to

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<v Speaker 6>be taken down more before you start to see them entering.

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<v Speaker 6>So this is a phase campaign based on conditions, and

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<v Speaker 6>what we've seen recently start to really play out is

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<v Speaker 6>as the air superority has been gained, the US has

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<v Speaker 6>now brought in capabilities like the A ten aircraft, which

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<v Speaker 6>you start and operated at a very low altitude, can

0:12:09.600 --> 0:12:12.160
<v Speaker 6>see targets and take out small targets like the fast

0:12:12.160 --> 0:12:15.040
<v Speaker 6>attack boats or where they've got missile sites hidden along

0:12:15.080 --> 0:12:18.080
<v Speaker 6>with these attack aircraft they're in so they're bringing much

0:12:18.120 --> 0:12:21.760
<v Speaker 6>more capabilities in there than are for that type of mission.

0:12:21.800 --> 0:12:24.520
<v Speaker 6>The septic conditions for navy aircraft could come.

0:12:24.440 --> 0:12:28.839
<v Speaker 2>In stay with us. More Bloomberg surveillance coming up after this.

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<v Speaker 2>The conflict in the Middle East pushing global bond the

0:12:40.280 --> 0:12:44.199
<v Speaker 2>attire as central bank's way, increasing inflationary risk. Terry Weiseman

0:12:44.280 --> 0:12:46.240
<v Speaker 2>of Macquarie Rights and the ottomate cost of the war

0:12:46.280 --> 0:12:49.560
<v Speaker 2>is unknown, but bond traders aren't taking any chances. Terry

0:12:49.600 --> 0:12:51.720
<v Speaker 2>Johns is now for more its Terry Carnic twkerd boarding

0:12:51.880 --> 0:12:53.800
<v Speaker 2>Terry Watson I said, what's going on? What kind of

0:12:53.840 --> 0:12:57.160
<v Speaker 2>a question is that in daylight today? See whatd ride

0:12:57.320 --> 0:12:59.480
<v Speaker 2>it's been in the old bond market. What's your reaction

0:12:59.520 --> 0:13:01.640
<v Speaker 2>to the most same, particularly at the front end of

0:13:01.640 --> 0:13:01.920
<v Speaker 2>the cave.

0:13:02.679 --> 0:13:05.160
<v Speaker 1>Well, the front end of the curve is responding to policy,

0:13:05.200 --> 0:13:07.960
<v Speaker 1>of course, John, it's you know what we wrote on

0:13:08.760 --> 0:13:11.120
<v Speaker 1>March fourth, actually just a few days after the war began,

0:13:11.240 --> 0:13:14.920
<v Speaker 1>was that central banks were going to respond to this

0:13:15.040 --> 0:13:17.840
<v Speaker 1>war and to the implications having for oil prices in

0:13:17.880 --> 0:13:20.280
<v Speaker 1>a hawkish fashion. Now that might not have been obvious

0:13:20.320 --> 0:13:23.280
<v Speaker 1>on March fourth, right, you know, in terms of crisis

0:13:23.320 --> 0:13:25.640
<v Speaker 1>and certainly in terms of high oil prices, we've also

0:13:25.679 --> 0:13:30.000
<v Speaker 1>seen historically higher unemployment. We've seen recessions in some cases.

0:13:30.559 --> 0:13:32.559
<v Speaker 1>But I felt that these central banks would have been

0:13:32.720 --> 0:13:36.920
<v Speaker 1>felt burned by what had happened in twenty twenty two

0:13:36.960 --> 0:13:39.120
<v Speaker 1>and twenty twenty three, and that they weren't going to

0:13:39.120 --> 0:13:41.360
<v Speaker 1>take any chances. So it's not just the bond traders

0:13:41.360 --> 0:13:43.520
<v Speaker 1>are not taking any chances here. The central banks aren't

0:13:43.520 --> 0:13:46.280
<v Speaker 1>taking any chances as well, certainly not through their rhetoric.

0:13:46.480 --> 0:13:48.840
<v Speaker 1>And that's why the front end of the curves moved up,

0:13:48.880 --> 0:13:51.600
<v Speaker 1>and that's why you've seen these very wide swings in

0:13:51.640 --> 0:13:55.920
<v Speaker 1>the last few days in the money markets. Projection of

0:13:55.960 --> 0:13:58.640
<v Speaker 1>where central bank policy rates are going to be at

0:13:58.640 --> 0:13:59.360
<v Speaker 1>the end of this day.

0:13:59.200 --> 0:14:01.840
<v Speaker 2>I can tell you as well, because the consensus view

0:14:02.080 --> 0:14:04.400
<v Speaker 2>coming into these central bank meetings is they would look

0:14:04.440 --> 0:14:07.120
<v Speaker 2>through this shock chair and power effectively said it's not

0:14:07.160 --> 0:14:09.720
<v Speaker 2>that simple. And the takeaway from the ECP and the

0:14:09.720 --> 0:14:12.840
<v Speaker 2>bays they might actually hike in the next several months.

0:14:12.880 --> 0:14:15.280
<v Speaker 1>Sure, and keep in mind there's something going on here

0:14:15.320 --> 0:14:18.960
<v Speaker 1>besides just the increase in oil prices and its transmission

0:14:19.040 --> 0:14:22.640
<v Speaker 1>to CPI, for example, Because if it was just that

0:14:22.760 --> 0:14:24.680
<v Speaker 1>it might not be that big a deal because in

0:14:24.680 --> 0:14:29.040
<v Speaker 1>many of these industrialized countries, you know, the energy products

0:14:29.240 --> 0:14:32.120
<v Speaker 1>are not that large a component of the CPI basket.

0:14:32.280 --> 0:14:34.160
<v Speaker 1>I think what central banks are worried about are the

0:14:34.160 --> 0:14:39.200
<v Speaker 1>so called second order effects, whereby if you do get

0:14:39.240 --> 0:14:42.480
<v Speaker 1>an increase in inflation, let's say by half a percent

0:14:42.600 --> 0:14:45.440
<v Speaker 1>or three quarters of a percent, it becomes sticky because

0:14:45.440 --> 0:14:48.720
<v Speaker 1>it becomes embedded inflation expectations. It then becomes embedded in

0:14:48.720 --> 0:14:51.360
<v Speaker 1>wage demands, and you don't have just the impulse from

0:14:51.360 --> 0:14:54.160
<v Speaker 1>the original increase in oil prices, but you have a

0:14:54.200 --> 0:14:58.680
<v Speaker 1>propagation of inflation expectations that causes more inflation. That's why

0:14:58.720 --> 0:15:00.840
<v Speaker 1>they're trying to nip this in the bud right now,

0:15:01.720 --> 0:15:03.920
<v Speaker 1>admitedly through their rhetoric at first. But if they have

0:15:03.960 --> 0:15:04.720
<v Speaker 1>to raise rates, they.

0:15:04.640 --> 0:15:05.320
<v Speaker 3>Will raise rates.

0:15:05.320 --> 0:15:06.680
<v Speaker 5>Can we talk about the cost of this war?

0:15:07.040 --> 0:15:07.200
<v Speaker 3>Sure?

0:15:07.200 --> 0:15:09.040
<v Speaker 5>To day, I believe you said it's one to two

0:15:09.040 --> 0:15:11.960
<v Speaker 5>billion dollars. Now you have the Pentagon asking Congress for

0:15:11.960 --> 0:15:13.920
<v Speaker 5>two hundred billion. Are we going to see movement on

0:15:13.960 --> 0:15:15.760
<v Speaker 5>the long end of the year old curve because of this?

0:15:15.880 --> 0:15:17.800
<v Speaker 1>I think the long end of the curves have moved

0:15:17.840 --> 0:15:19.800
<v Speaker 1>up for three reasons, and one of them is clearly

0:15:19.840 --> 0:15:22.880
<v Speaker 1>the fiscal implications. But let's talk about the first two reasons.

0:15:23.240 --> 0:15:25.360
<v Speaker 1>The first reason, the most important reason, I think, is

0:15:25.400 --> 0:15:29.320
<v Speaker 1>just higher inflation. When you have higher inflation, nominal assets,

0:15:29.360 --> 0:15:32.920
<v Speaker 1>nominal paying coupon assets like long term bonds just seem

0:15:32.960 --> 0:15:34.960
<v Speaker 1>all of a sudden less attractive. And we know that's

0:15:35.000 --> 0:15:38.000
<v Speaker 1>the case because break evens these in these markets have

0:15:38.040 --> 0:15:40.600
<v Speaker 1>gone up inflation break evens that is telling you that

0:15:40.680 --> 0:15:43.920
<v Speaker 1>the market itself is expecting more long term inflation. People

0:15:44.000 --> 0:15:47.520
<v Speaker 1>have been fleeing into the inflation protected products. They've been

0:15:47.520 --> 0:15:50.080
<v Speaker 1>fleeing out, relatively speaking of the nominal products. So yields

0:15:50.080 --> 0:15:51.480
<v Speaker 1>are going up on the long end of the US

0:15:51.520 --> 0:15:53.320
<v Speaker 1>Treasury curve and in the long end of the curves

0:15:53.320 --> 0:15:56.560
<v Speaker 1>in Europe. The other issue here, of course, is that

0:15:56.560 --> 0:15:59.400
<v Speaker 1>central banks are tightening, and that makes it more expensive

0:15:59.480 --> 0:16:01.880
<v Speaker 1>to carry a position in long bond you're financing at

0:16:01.880 --> 0:16:03.960
<v Speaker 1>a higher rate. It becomes less attractive to do that

0:16:04.160 --> 0:16:06.360
<v Speaker 1>you sell off the long bond. And the third reason

0:16:06.360 --> 0:16:08.640
<v Speaker 1>is the one you've just highlighted, which is that there

0:16:08.720 --> 0:16:12.400
<v Speaker 1>might be more issuance. Why, because there's a cost to

0:16:12.960 --> 0:16:17.080
<v Speaker 1>managing and running a war and I've seen reports suggesting

0:16:17.080 --> 0:16:20.280
<v Speaker 1>it's one to two billion dollars per day is the

0:16:20.280 --> 0:16:22.560
<v Speaker 1>cost of the US right now. So obviously, if this

0:16:22.600 --> 0:16:25.000
<v Speaker 1>becomes a long war, it could start to impinge on

0:16:25.080 --> 0:16:26.040
<v Speaker 1>the outlook for death.

0:16:26.080 --> 0:16:28.080
<v Speaker 2>So we've got about forty five seconds left. Where a

0:16:28.120 --> 0:16:30.400
<v Speaker 2>guests earlier on the programmer said some value would opened

0:16:30.440 --> 0:16:32.160
<v Speaker 2>up at the front end of the curve, the barter

0:16:32.280 --> 0:16:35.360
<v Speaker 2>hike is simply too high yields of three where fat

0:16:35.400 --> 0:16:37.880
<v Speaker 2>funds are right now, can't push it much further, and

0:16:37.920 --> 0:16:40.120
<v Speaker 2>if they do hike over the next two years, they

0:16:40.120 --> 0:16:42.560
<v Speaker 2>may well cut in response to those hikes further down

0:16:42.600 --> 0:16:44.480
<v Speaker 2>the road. Where do you think value has opened up

0:16:44.520 --> 0:16:45.240
<v Speaker 2>across the curve?

0:16:45.360 --> 0:16:48.360
<v Speaker 1>Look, I think it's not just a question of where

0:16:48.360 --> 0:16:52.800
<v Speaker 1>on the curve, but maybe where. Internationally we have seen major,

0:16:53.080 --> 0:16:56.120
<v Speaker 1>very aggressive swings. Let's say in where the market expects

0:16:56.120 --> 0:16:57.560
<v Speaker 1>the ECB to be at the end of the year,

0:16:57.880 --> 0:17:00.880
<v Speaker 1>three hikes, for example, is priced, and currently two or

0:17:00.960 --> 0:17:04.439
<v Speaker 1>three from the BOE. I think there the market may

0:17:04.520 --> 0:17:07.200
<v Speaker 1>have overreacted. In the market may be anticipating that this

0:17:07.240 --> 0:17:10.480
<v Speaker 1>war will take will last longer than it might actually do.

0:17:10.560 --> 0:17:12.399
<v Speaker 3>So, and of course if.

0:17:12.280 --> 0:17:15.040
<v Speaker 1>It doesn't and if it ends somewhat sooner, you're going

0:17:15.080 --> 0:17:18.480
<v Speaker 1>to see those violent reactions in the front end come

0:17:18.480 --> 0:17:20.280
<v Speaker 1>back down. So if I were looking for value in

0:17:20.320 --> 0:17:22.720
<v Speaker 1>the short in the short end of the curve, it's

0:17:22.760 --> 0:17:26.280
<v Speaker 1>not so much we're on the curve six months, twelve months,

0:17:26.560 --> 0:17:29.119
<v Speaker 1>eighteen months. It's internationally. I think some markets have simply

0:17:29.119 --> 0:17:31.240
<v Speaker 1>reacted more than others, and now might be where the

0:17:31.320 --> 0:17:31.760
<v Speaker 1>value is.

0:17:32.480 --> 0:17:36.040
<v Speaker 2>This is the Bloomberg Sevents podcast, bringing you the best

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