WEBVTT - Bloomberg Surveillance TV: April 13th, 2026 0:00:02.360 --> 0:00:06.720 Bloomberg Audio Studios, Podcasts, radio News. 0:00:11.640 --> 0:00:15.440 This is the Bloomberg Surveillance Podcast. I'm Jonathan Ferrow, along 0:00:15.480 --> 0:00:18.680 with Lisa Bromwitz and Amrie Hordern. Join us each day 0:00:18.720 --> 0:00:22.280 for insight from the best in markets, economics, and geopolitics 0:00:22.400 --> 0:00:24.880 from our global headquarters in New York City. We are 0:00:24.920 --> 0:00:27.680 live on Bloomberg Television weekday mornings from six to nine 0:00:27.720 --> 0:00:31.280 am Eastern. Subscribe to the podcast on Apple, Spotify or 0:00:31.320 --> 0:00:33.919 anywhere else you listen, and as always on the Bloomberg 0:00:34.000 --> 0:00:37.240 Terminal and the Bloomberg Business app. So here's the laces 0:00:37.280 --> 0:00:39.680 this morning, A round threatening to retaliate if the US 0:00:39.760 --> 0:00:41.960 blogs the stratiform most the ships that stop at its 0:00:42.040 --> 0:00:44.920 ports one quote, no port in the Persian Gulf and 0:00:44.960 --> 0:00:47.320 the Sea of Verman will be safe. Normal rule of 0:00:47.360 --> 0:00:51.159 csis writing it's the sharpest escalation since the ceasefire. This 0:00:51.280 --> 0:00:53.440 may not mark the formal end of the ceasefire, but 0:00:53.479 --> 0:00:56.520 it could represent the beginning of its unraveling. Norman joins 0:00:56.600 --> 0:00:58.880 us now for more. Norman, Welcome back to the program, 0:00:58.960 --> 0:01:01.760 Sir Norman. In your mind what happens several lasts from 0:01:01.800 --> 0:01:03.240 now at ten am Eastern. 0:01:03.240 --> 0:01:06.920 Sign at ten am. In essence, you will have the 0:01:07.000 --> 0:01:10.640 United States stop all shipping into Iranian ports, and for 0:01:10.720 --> 0:01:15.520 the Iranians, they will need to test US fortitude. They 0:01:15.520 --> 0:01:18.479 will likely try to do several things. They may try 0:01:18.520 --> 0:01:22.959 to run several tankers through the Iranian side of the 0:01:23.319 --> 0:01:26.080 Straight of Horror moves into Iranian waters to see what 0:01:26.760 --> 0:01:30.000 will we do if the tankers are instruct tanker captors 0:01:30.000 --> 0:01:33.360 are instructed to continue no matter what the US says, 0:01:33.959 --> 0:01:38.119 The Iranians will just see what happens. At the same time, 0:01:38.240 --> 0:01:41.000 the Iranians will look to see what ships go in 0:01:42.280 --> 0:01:45.680 outside under the US control and then perhaps threaten to 0:01:45.720 --> 0:01:49.760 target those ships or the ports where these ships attempt 0:01:49.840 --> 0:01:52.760 to dock. And last, of course, if the Iranian position 0:01:53.080 --> 0:01:57.080 is that their economy will suffer because of an inability 0:01:57.120 --> 0:02:00.760 to produce an export oil, they could in an extremes 0:02:00.760 --> 0:02:03.680 position attack golf oil producers. 0:02:03.960 --> 0:02:07.800 Normal is the blockade the appetizer potentially for full US 0:02:07.920 --> 0:02:09.480 naval escorts to the Strait. 0:02:11.400 --> 0:02:14.000 It is, but it may not. But it just may 0:02:14.080 --> 0:02:18.200 be a broader step for US policy to test run 0:02:18.360 --> 0:02:21.520 short of hostilities. We saw the two destroyers go through 0:02:21.520 --> 0:02:25.079 over the weekend, and that was interesting for several reasons. First, 0:02:25.240 --> 0:02:29.960 they faced no mines. Secondly, they faced no Iranian missiles, speedboats, 0:02:30.120 --> 0:02:34.360 or any other Iranian hostile activity which could have happened. Next, 0:02:34.480 --> 0:02:38.000 you had the US demonstrate freedom of navigation, which is 0:02:38.040 --> 0:02:40.600 a long standing US practice in the straight upoor moves 0:02:40.600 --> 0:02:44.360 and the Persian Gulf. So you've got a precedent beginning 0:02:44.400 --> 0:02:47.480 where the US is beginning to test a process that 0:02:47.639 --> 0:02:51.760 could lead to convoy operations. But it could be the 0:02:51.840 --> 0:02:56.520 convoy operations are not necessary. The straits naturally opens on 0:02:56.560 --> 0:02:59.440 its own at some point. But again we're in early 0:02:59.600 --> 0:03:02.320 days and hostilities could well break out again. 0:03:02.400 --> 0:03:04.919 Well in these early days, will golf partners help the 0:03:04.960 --> 0:03:06.600 United States in this blockade? 0:03:07.400 --> 0:03:10.040 I don't see that as being necessary, and the best 0:03:10.080 --> 0:03:13.400 way they could help out would be to produce oil 0:03:13.520 --> 0:03:17.200 and energy through other roots that don't rely upon these 0:03:17.200 --> 0:03:19.239 straight or for moves, and I think you're seeing Saudi 0:03:19.280 --> 0:03:22.520 Arabia and the Emirates do this. Also, you're seeing rhetoric 0:03:22.639 --> 0:03:25.680 by the Gulf of leadership such as doctor sultanal job 0:03:25.760 --> 0:03:30.200 Or and others where they state that no Iranian control 0:03:30.360 --> 0:03:32.280 of the straighter for moves can be tolerated. And I 0:03:32.280 --> 0:03:34.800 think you're going to continue to see that quite clearly, 0:03:35.600 --> 0:03:36.320 what left. 0:03:36.240 --> 0:03:38.840 Is there to negotiate if Iron doesn't want to give 0:03:38.920 --> 0:03:41.160 up control of the straight off moves and they're not 0:03:41.240 --> 0:03:43.760 willing to give up the nuclear ambitions. 0:03:44.760 --> 0:03:48.280 Constraints upon their missile program to ensure that they don't 0:03:48.320 --> 0:03:53.119 develop an intercontinental ballistic missile, and continued enhancements on their 0:03:53.640 --> 0:03:57.280 medium range ballistic missile that make it impossible or difficult 0:03:57.360 --> 0:04:01.400 for regional countries to stop them. But also the activities 0:04:01.400 --> 0:04:03.960 of the Goods Force. I mean recall that the Goods 0:04:04.000 --> 0:04:08.080 Force was proliferating missiles to the Houthis which did shut 0:04:08.120 --> 0:04:10.560 down the Red Sea for a period of time missiles 0:04:10.560 --> 0:04:12.880 and drugs. And there's no question that the Goods Force 0:04:12.920 --> 0:04:16.240 will continue to provide technology to the Houthis and other 0:04:16.279 --> 0:04:18.800 proxies in the region that will enable them to do 0:04:18.839 --> 0:04:21.320 similar things in the future. So for the United States, 0:04:21.880 --> 0:04:26.359 nuclear issues, missiles, and regional adventurism have always been the 0:04:26.400 --> 0:04:30.039 three issues of importance, and those issues have been shared 0:04:30.080 --> 0:04:32.960 by Europe and Golf partners, but how they're handled has 0:04:33.040 --> 0:04:35.400 been the difference in terms of an approach. 0:04:35.560 --> 0:04:38.280 How concerned are you that in response to the full 0:04:38.279 --> 0:04:41.560 blockade by the United States iron will get some of 0:04:41.600 --> 0:04:44.280 the Houthy militants involved in the Red Sea, and we 0:04:44.279 --> 0:04:47.719 could see more a broader blockage of all transport in 0:04:47.720 --> 0:04:48.159 the region. 0:04:49.279 --> 0:04:56.599 It's possible, however, the United States has will likely treat 0:04:56.640 --> 0:05:00.479 the Houthis very harshly militarily, and I think you're probably 0:05:00.480 --> 0:05:03.960 seeing a lot of diplomatic efforts by the Saudis to 0:05:04.400 --> 0:05:07.799 constrain Khuti action. The Huthis have on the ground issues 0:05:07.839 --> 0:05:12.279 dealing with Yemeny internal matters that have also focused their attention, 0:05:12.600 --> 0:05:17.560 and traditionally the Huthis have focused on Israel issues regarding Palestine, 0:05:17.600 --> 0:05:20.600 and their role has been limited thus far. So it's 0:05:20.640 --> 0:05:23.440 a possibility, but thus far a limited one, but it 0:05:23.520 --> 0:05:25.200 remains a possibility. 0:05:25.400 --> 0:05:27.599 No, just a final question, because it's on people's minds. 0:05:27.880 --> 0:05:29.680 How do you think the US would respond if a 0:05:29.760 --> 0:05:34.720 Chinese flag vessel attempted to go through this treniforms now. 0:05:34.800 --> 0:05:38.200 Intense diplomatic engagement with the Chinese to ask them why 0:05:38.240 --> 0:05:41.640 they are attempting to turn a regional conflict into an 0:05:41.680 --> 0:05:45.120 international conflict, and if someone in Beijing had actually lost 0:05:45.200 --> 0:05:46.200 their minds. 0:05:46.480 --> 0:05:49.919 Stay with US. Mul Bloomberg surveillance coming up after this. 0:05:59.240 --> 0:06:02.119 Just to break this down very quickly, start training comes 0:06:02.120 --> 0:06:05.680 in much firmer than anticipated. Another record. Danny went through 0:06:05.680 --> 0:06:08.279 the numbers. Just think about this. The record in the 0:06:08.320 --> 0:06:12.279 previous quarter was four point three to one billion. The 0:06:12.440 --> 0:06:15.599 record now is five point three to three billion. So 0:06:15.640 --> 0:06:17.680 that's the good news for Goldman. The miss is on 0:06:17.800 --> 0:06:20.960 thick and we can talk about that extensively throughout this morning. 0:06:21.200 --> 0:06:23.720 Whether it's also some strength and Danny talked about it too. 0:06:23.760 --> 0:06:27.200 That eighty nine percent and let's call it search in 0:06:27.320 --> 0:06:30.760 dealmaking advisory fees speaks to a theme that a lot 0:06:30.800 --> 0:06:33.080 of people were jumping on board for coming into this 0:06:33.160 --> 0:06:34.960 year and why this part of the market was a 0:06:35.000 --> 0:06:37.760 consensus overweight. Chris Marina could bring capital Well joined us 0:06:37.800 --> 0:06:40.440 now for more Chris, welcome to the program. How difficult 0:06:40.560 --> 0:06:44.520 is it to anchor the outlook in a moment like this, Well. 0:06:44.400 --> 0:06:46.640 John, I think that you may have trading losses in 0:06:46.720 --> 0:06:48.960 fig and that might be part of the problem. So 0:06:49.080 --> 0:06:51.080 I think as you move forward, this may not be 0:06:51.160 --> 0:06:53.039 as big of an issue. I think the pipeline being 0:06:53.120 --> 0:06:56.200 very strong on the banking side is very important, So 0:06:56.440 --> 0:06:58.599 I do think that is a win in the quarter. 0:06:58.920 --> 0:07:01.239 I still think that season the second quarter is also 0:07:01.400 --> 0:07:03.520 very strong, So I think the market can look past 0:07:03.560 --> 0:07:05.200 this disappointment initially. 0:07:05.600 --> 0:07:08.080 Do you have a sense of what David Solomon could 0:07:08.120 --> 0:07:09.880 be talking about when you said that he had seen 0:07:10.480 --> 0:07:13.840 some concerns he's worried about geopolitics. What are you looking 0:07:13.880 --> 0:07:15.800 for and how he speaks about that to get some 0:07:15.840 --> 0:07:18.200 guide on when it could hamper some of this capital 0:07:18.240 --> 0:07:20.400 markets activity, Well. 0:07:20.280 --> 0:07:22.280 I think it's things that are not announced that are 0:07:22.640 --> 0:07:24.720 in the works, and I think that there tends to 0:07:24.760 --> 0:07:27.640 be an attitude to go on hold when you have 0:07:27.720 --> 0:07:31.000 this geopolitical uncertainty, and that's the part that you can't 0:07:31.160 --> 0:07:33.880 account for. So I think as May and June come 0:07:34.200 --> 0:07:36.640 into greater focus, I think there is a high uncertainty, 0:07:36.640 --> 0:07:38.960 and I think he is trying to give a signal 0:07:39.000 --> 0:07:40.480 that that indeed may be the case. 0:07:41.120 --> 0:07:43.800 High uncertainty is part of what he might be pointing to. 0:07:43.880 --> 0:07:45.600 And you take a look at the ten percent build 0:07:45.840 --> 0:07:48.360 in provisions for credit loan losses, which is something that 0:07:48.400 --> 0:07:51.000 we heard Danny talking about. Now it's three hundred and 0:07:51.000 --> 0:07:54.400 fifteen million dollars. Is that number significant to you or 0:07:54.440 --> 0:07:57.160 does that signify still a pretty benign credit backdrop. 0:07:58.160 --> 0:08:01.160 Well, I think the credit has its own uncertainties, particularly 0:08:01.200 --> 0:08:02.960 in the private credit world. I think you have to 0:08:02.960 --> 0:08:06.080 build reserves now just to be safe. So I think 0:08:06.120 --> 0:08:09.679 the attitude about having higher provision is smart to some extent. 0:08:09.720 --> 0:08:11.880 I think the market would be disappointed if you had 0:08:11.920 --> 0:08:13.480 not built reserves at this juncture. 0:08:13.640 --> 0:08:16.320 At this point, though, is that a significant build, right? 0:08:16.360 --> 0:08:18.120 I mean, I guess I'm trying to get some perspective 0:08:18.200 --> 0:08:20.560 on this. Does that indicate that they're really concerned about 0:08:20.560 --> 0:08:23.160 stress because right now you're not seeing it and any 0:08:23.160 --> 0:08:25.840 of the preliminary comments. But this is a fear aside 0:08:25.840 --> 0:08:28.960 from private credit, it's the broader sense of rerating and 0:08:29.000 --> 0:08:32.400 specific wholesale industries in the credit area, particularly tied to 0:08:32.480 --> 0:08:35.440 software disruption, trade, et cetera. I mean, how much would 0:08:35.440 --> 0:08:37.840 you expect loan losses to have to increase to truly 0:08:37.880 --> 0:08:40.160 offset some of that potential risk? 0:08:41.240 --> 0:08:43.680 So I think it's a moderate build your first question, Lisa, 0:08:43.679 --> 0:08:45.640 and I think going forward, I think you have to 0:08:45.679 --> 0:08:49.400 have a significant change in credit losses to really warrant 0:08:49.960 --> 0:08:52.559 much greater concern. I think right now it's a preliminary 0:08:52.640 --> 0:08:58.199 move to be conservative to Playcate. I think investor concerns 0:08:58.480 --> 0:09:02.040 that perhaps the companies are doing enough. So I've expected 0:09:02.040 --> 0:09:04.400 to see some provision increases quarter, so I'm not that 0:09:04.559 --> 0:09:05.760 surprised by it, Chris. 0:09:05.760 --> 0:09:07.920 This year we were meant to see a boom in 0:09:08.000 --> 0:09:11.040 economic activity, particularly the kind of boom that some of 0:09:11.040 --> 0:09:13.800 these names would take advantage of. We still might see 0:09:13.960 --> 0:09:16.839 two or three of the biggest IPOs we have ever 0:09:16.920 --> 0:09:20.120 seen in the history of capital markets, Chris. Which banks 0:09:20.160 --> 0:09:21.800 were in a position to take advantage of that? 0:09:22.920 --> 0:09:25.959 Well, clearly the national leaders from the JP, Morgan and 0:09:26.040 --> 0:09:29.040 b of A and Goldman should have that. I think 0:09:29.080 --> 0:09:32.320 those big IPOs are still out there. I agree with you, John, 0:09:32.360 --> 0:09:34.240 It's a long year, so I would not give up 0:09:34.240 --> 0:09:36.960 hope at all. I think this uncertainty can pass, just 0:09:37.000 --> 0:09:39.600 like it did last year. So I still think there's 0:09:39.640 --> 0:09:40.880 a very good road ahead. 0:09:40.960 --> 0:09:42.640 Are you willing to look through some of the gloom 0:09:42.679 --> 0:09:44.760 that might take place on some of these calls, Chris, 0:09:45.120 --> 0:09:48.679 No executive wants to be dismissive of risk that might 0:09:48.720 --> 0:09:51.480 be brewing. Not a single executive on Wall Street wants 0:09:51.520 --> 0:09:54.000 to be the person that does that. On these earnings calls, 0:09:54.160 --> 0:09:57.520 do you think they might really understate the potential for 0:09:57.600 --> 0:09:59.360 gains in the year ahead. And I'm not just thinking 0:09:59.400 --> 0:10:02.240 of Solomon, so I'm thinking of maybe Diamond tomorrow. 0:10:03.600 --> 0:10:04.080 Oh sure. 0:10:04.160 --> 0:10:07.040 I think they're going to be very careful and cautious, 0:10:07.080 --> 0:10:09.360 No different than they were in April twenty twenty five. 0:10:09.440 --> 0:10:11.679 You know, we had Liberation Day and then markets were 0:10:11.760 --> 0:10:14.959 very uneasy for several days, as you remember, and most 0:10:15.040 --> 0:10:18.600 calls were very sort of quasied, negative and cautious. In 0:10:18.640 --> 0:10:21.000 April twenty five. It turned out to be a much 0:10:21.000 --> 0:10:23.760 better year as the second quarter played out, So I 0:10:23.800 --> 0:10:27.079 think this could be a repeat, just totally different circumstances. 0:10:27.200 --> 0:10:29.280 Chris, is it basically a quarter where numbers could be 0:10:29.280 --> 0:10:32.839 pretty solid, but the rhetoric is concerning given what's going 0:10:32.880 --> 0:10:35.840 on in the world, so that shares ultimately just are depressed. 0:10:37.000 --> 0:10:39.440 Well, I think investors always hit the sidelines when you 0:10:39.480 --> 0:10:42.040 have uncertainty, and I think we have that moment. They 0:10:42.080 --> 0:10:44.720 acted better last Thursday Friday than I would have fought. 0:10:44.800 --> 0:10:48.000 Quite honestly, I do think the rhetoric could keep the 0:10:48.000 --> 0:10:51.440 incremental buyer helding back in the short run. 0:10:51.600 --> 0:10:53.600 So the stock right now in trading in pre market 0:10:53.960 --> 0:10:56.000 on this thick miss, and I'd love to get your 0:10:56.080 --> 0:10:59.280 sense of why you saw such a big miss. When 0:10:59.280 --> 0:11:01.640 it comes to fix sales and trading, A real concern 0:11:01.720 --> 0:11:03.680 here is that interest rates are going to be higher 0:11:03.920 --> 0:11:06.920 and then potentially incredibly volatile, making it really difficult for 0:11:07.120 --> 0:11:09.520 big banks. How much of a headwind is that, I mean, 0:11:09.520 --> 0:11:11.400 are we skipping over that too quickly? 0:11:12.559 --> 0:11:14.800 Well, I think people had thought that the FED would 0:11:14.800 --> 0:11:17.080 be easing once or twice as we got in the 0:11:17.080 --> 0:11:19.880 second quarter, that obviously is off the table, So that 0:11:20.040 --> 0:11:22.480 is part of the headwind. I think to some extent, 0:11:22.559 --> 0:11:25.160 the uncertainty about whether the war is going to go 0:11:25.240 --> 0:11:27.520 away or still be lingering from the next four to 0:11:27.600 --> 0:11:30.560 six weeks also as a concern. I think to some 0:11:30.720 --> 0:11:33.360 extent there is a lot of optimism built into this 0:11:33.480 --> 0:11:34.160 quarter from. 0:11:34.040 --> 0:11:35.079 A trading perspective. 0:11:35.480 --> 0:11:39.080 So now that you have a slight miss that pushes 0:11:39.120 --> 0:11:41.920 everybody now to be negative, I think that's a short 0:11:42.000 --> 0:11:44.200 run thing. I think we still have a lot of 0:11:44.240 --> 0:11:47.120 positivity happening in the business. You know, on their ordinary 0:11:47.120 --> 0:11:50.040 bank side, the deposits are growing really well, and that's 0:11:50.080 --> 0:11:54.200 ultimately going to have many players buying securities as this 0:11:54.320 --> 0:11:55.640 next two quarters play out. 0:11:55.920 --> 0:11:58.000 You know, volatility is a funny thing. On one hand, 0:11:58.040 --> 0:12:00.280 volatility can be really good for the banks, and they'll say, well, 0:12:00.280 --> 0:12:02.720 we benefited from the volatility, see this in equity trading. 0:12:03.000 --> 0:12:04.760 On the other hand, it can be bad when it 0:12:04.880 --> 0:12:08.400 is just an unpredictable macro environment. Are we entering bad 0:12:08.520 --> 0:12:10.920 volatility or good volatility? Then what do you expect the 0:12:10.960 --> 0:12:12.760 commentary to be from the big banks. 0:12:13.880 --> 0:12:16.120 Well, most of the volatility, I think is positive. I 0:12:16.120 --> 0:12:19.000 think the companies understand how to make a dollar when 0:12:19.040 --> 0:12:21.800 you have these top suturnity markets. They've been here before. 0:12:21.880 --> 0:12:24.760 We've seen many examples of volatility the past several years, 0:12:25.120 --> 0:12:27.400 So I think it's just a different circumstance, but the 0:12:27.440 --> 0:12:31.400 same volatility to some extent. I think volatility is your friend, 0:12:31.720 --> 0:12:33.760 but you may have had a loss of the Goldman quarter, 0:12:33.800 --> 0:12:36.280 and I think as we see the other players come 0:12:36.320 --> 0:12:38.240 out the next couple of days and may look and 0:12:38.280 --> 0:12:39.319 feel a lot different. 0:12:39.920 --> 0:12:43.360 Stay with us Multilinpeck Savana's coming up off to this 0:12:52.640 --> 0:12:54.600 to begin this sound with stocks adding to losses as 0:12:54.600 --> 0:12:58.160 Golment Sacks fails to lift markets. Jason Drajo ubs Global 0:12:58.160 --> 0:13:00.920 Wealth Management right sing the start off quarter rounding season 0:13:01.080 --> 0:13:04.280 should support our forecast for eleven percent EPs growth in 0:13:04.320 --> 0:13:06.040 the S and P five hundred this year, with a 0:13:06.080 --> 0:13:09.800 price target of seventy five hundred. In December, Jason joins 0:13:09.840 --> 0:13:12.120 us Now for more Jason good Mornic won in how 0:13:12.160 --> 0:13:13.720 shakey is that outlook for earnings now? 0:13:14.480 --> 0:13:16.679 Well, the guidance going into q on earning season has 0:13:16.720 --> 0:13:18.719 been good. We've actually seen you know, kind of in 0:13:18.840 --> 0:13:21.280 terms of revisions outwards or downwards, it's actually been realpily 0:13:21.280 --> 0:13:24.640 optimistic versus other quarters. We've seen some good results from 0:13:24.760 --> 0:13:28.839 tech companies, some semiconductory companies, So the setup going in 0:13:29.120 --> 0:13:31.160 is good. Similar we talked about, you know, the high 0:13:31.160 --> 0:13:33.559 bar perhaps for the market performance, the bars highbrid in 0:13:33.640 --> 0:13:36.559 terms of actually achieving that eleven percent. Nothing so far 0:13:36.600 --> 0:13:38.559 we've seen going into the season will suggest that's a 0:13:38.640 --> 0:13:40.880 real sort of jeopardy. Again, we're making the caveat in 0:13:40.960 --> 0:13:43.680 terms of the whole Middle East situation, but you know, 0:13:43.720 --> 0:13:46.240 attracting that the earning story still looks very much on track. 0:13:46.640 --> 0:13:48.840 This is anchored pretty much everyone on Wall Street, so 0:13:48.880 --> 0:13:51.000 farther small and I say pretty much loosely forgive me, 0:13:51.080 --> 0:13:55.400 but the likes of Morgan Stanley, JP, Morgan, HSBC, black 0:13:55.520 --> 0:13:58.240 Rock all saying something similar. It's an opportunity to buy 0:13:58.440 --> 0:14:01.200 this from Morgan Stanley. We'll find ways to solve a 0:14:01.240 --> 0:14:03.880 problem that is intolerable for the global economy, much like 0:14:03.960 --> 0:14:06.480 they did in twenty twenty two. Is this so bad 0:14:06.480 --> 0:14:08.079 it's got to get better? And then you should look 0:14:08.080 --> 0:14:10.319 through it. Is it that simple, because it feels much 0:14:10.320 --> 0:14:11.120 more complicated. 0:14:11.360 --> 0:14:13.400 Well in terms of like kind of solving the problems, 0:14:13.520 --> 0:14:15.760 you know, I think some lesson we learned from the 0:14:15.800 --> 0:14:19.440 pandemic error is that the supply chains, you know, create problems, 0:14:19.440 --> 0:14:22.240 but they also create opportunities, say companies, the ability the economy, 0:14:22.320 --> 0:14:24.600 especially the US economy, to kind of solve the problems. 0:14:24.640 --> 0:14:27.120 Have the price systems sort of equiliberate again, you know, 0:14:27.160 --> 0:14:28.640 I think it does it very well. And so the 0:14:28.720 --> 0:14:31.160 lesson from my takeaway from that experience is out, don't 0:14:31.200 --> 0:14:34.720 underestimate to the economy's resiliency. Now, the economic conditions today 0:14:34.720 --> 0:14:36.640 are in the strong. The finetic you know, the healthy 0:14:36.640 --> 0:14:38.520 consumers is not kind of strong, but fiscal support it's 0:14:38.560 --> 0:14:40.280 not there. So a lot of reasons to obviously be 0:14:40.360 --> 0:14:42.600 more concerned at the same time, you know, I don't 0:14:42.600 --> 0:14:44.720 want to sort of doubt the ability of the US 0:14:44.720 --> 0:14:47.840 economy to be somewhat resilient, you know, to this whole situation, 0:14:47.920 --> 0:14:49.760 resilient enough that you know our forecast. Do you think 0:14:49.760 --> 0:14:52.240 we still feel pretty comfortable about ultimately by the end 0:14:52.240 --> 0:14:54.480 of the year equities being up you know, about ten percent. 0:14:54.640 --> 0:14:57.320 One of the reasons that people seem somewhat optimistic when 0:14:57.360 --> 0:14:59.880 I speak to a number of investors, they say, ultimately, 0:15:00.000 --> 0:15:03.160 all of these supply shocks will create the greater need 0:15:03.360 --> 0:15:06.840 to invest in artificial intelligence, the greater need to get bigger, 0:15:06.880 --> 0:15:10.880 to engage in deals to create a critical mass and 0:15:10.920 --> 0:15:13.680 economies of scale. How much do you see the uncertainty 0:15:13.720 --> 0:15:17.360 and the ongoing supply shocks as only accelerating some of 0:15:17.400 --> 0:15:19.960 the capecks that we've seen that have really driven some 0:15:20.000 --> 0:15:22.080 of the gains that we see not only in equities, 0:15:22.120 --> 0:15:23.880 but more broadly in the overall economy. 0:15:24.120 --> 0:15:27.040 Well, the cappecs for AI, that's we're seeing strong numbers there. 0:15:27.120 --> 0:15:29.120 If you abstract from that, if you look at residential 0:15:29.160 --> 0:15:32.360 non residential other investment, it's actually well to three weeks. 0:15:32.360 --> 0:15:34.480 So we're not seeing companies saying we need to invest 0:15:34.480 --> 0:15:37.760 more necessarily and AI specifically, so from a near term 0:15:37.760 --> 0:15:39.920 growth perspective, that's sort of not driving it in terms 0:15:39.920 --> 0:15:42.400 of ultimately of creating supply chain resiliency. I mean, this 0:15:42.440 --> 0:15:44.400 is now a story almost kind of going back a 0:15:44.440 --> 0:15:46.800 decade with you first with tariffs, with the pandemics. I 0:15:46.840 --> 0:15:48.480 think you're going to see companies move in that direction. 0:15:48.960 --> 0:15:50.360 But it's hard to invest when there's a lot of 0:15:50.400 --> 0:15:51.920 uncertainly at this point in time. So I wouldn't view 0:15:51.960 --> 0:15:53.800 that as a key driver for the next say quarter 0:15:53.840 --> 0:15:55.160 or two to really lift us growth. 0:15:55.200 --> 0:15:58.600 One of the difficulties is people look to a potential upside, 0:15:58.800 --> 0:16:01.800 significantupside of a hundred other people completely agree with you, 0:16:02.360 --> 0:16:04.840 is that there isn't an obvious hedge. We used to 0:16:04.880 --> 0:16:07.240 talk about bonds, we used to talk about gold. Nothing's 0:16:07.280 --> 0:16:09.520 really performed consistently. I mean, how do you think about 0:16:09.800 --> 0:16:12.880 a possible hedge to optimism that seems to be pervasive 0:16:12.920 --> 0:16:13.320 right now? 0:16:13.600 --> 0:16:15.000 Well, it ultimately depends, like what are you trying to 0:16:15.000 --> 0:16:17.080 hedge against. You know, if it's ultimate oil prices going 0:16:17.080 --> 0:16:19.720 to higher commodity prices, that's an inflation shock. It's really 0:16:19.720 --> 0:16:21.640 difficult to hedge that. So you can look at things 0:16:21.720 --> 0:16:24.880 like oil or having exposure to commodities that worked earlier 0:16:24.960 --> 0:16:26.720 this year, like in March we go back to twenty 0:16:26.720 --> 0:16:29.160 two that would have worked in that time period. You 0:16:29.160 --> 0:16:30.840 can also need sort of de risk and have sort 0:16:30.880 --> 0:16:33.280 of less exposure overall. You can have less risk exposure 0:16:33.440 --> 0:16:35.840 in interest rates markets. You know, we're saying stay in 0:16:35.840 --> 0:16:37.240 the front of the curve. We've like, you know, no 0:16:37.320 --> 0:16:39.040 more than about the five year point. You don't want 0:16:39.040 --> 0:16:41.640 that interest exposure, so you can make changes of the margin. 0:16:41.960 --> 0:16:44.360 But ultimate inflation shock is really really hard to hedge. 0:16:44.400 --> 0:16:46.440 I mean, other than sort of de risking. 0:16:46.160 --> 0:16:48.200 Significantly, are there any parts of the market that are 0:16:48.240 --> 0:16:49.800 prepared for serious escalation? 0:16:53.560 --> 0:16:55.040 I mean, I think it depends if you think of 0:16:55.040 --> 0:16:57.800 serious escalation. I think the front of the curve pricing 0:16:57.880 --> 0:16:59.640 in like now to go a couple weeks ago, actually 0:16:59.720 --> 0:17:02.720 hikes seemed optimistic to me in terms of the optimistic 0:17:02.800 --> 0:17:04.280 in the sense of the markets that are pricing the 0:17:04.320 --> 0:17:07.200 Fed to hike, because ultimately, if you really get significant escalation, 0:17:07.240 --> 0:17:09.439 I think the markets transition from we treat this as an 0:17:09.440 --> 0:17:11.480 inflation shock and therefore the Fed has to hike to 0:17:11.480 --> 0:17:12.600 we treat as a shock. 0:17:12.720 --> 0:17:16.479 You know, what's an escalation? From my standpoint, the status 0:17:16.560 --> 0:17:19.800 quo is bad enough. Really need an escalation from here? 0:17:20.200 --> 0:17:24.159 Physical markets really tight shortages are beginning to merge across Asia. 0:17:24.640 --> 0:17:27.160 Europe is bracing for them to confront the same thing 0:17:27.600 --> 0:17:29.040 in the next month or so. I'm not sure do 0:17:29.040 --> 0:17:30.800 we need an escalation? What kind of escalation? Do we 0:17:30.840 --> 0:17:34.120 need just the status quote to persist? Where things are 0:17:34.200 --> 0:17:37.440 right now? For that to persist, we come week on wee, 0:17:37.480 --> 0:17:39.320 come week on week, You're going to see more damage 0:17:39.320 --> 0:17:42.040 to the global economy every single week. That's logical. 0:17:42.160 --> 0:17:44.600 Yes, that's correct, Although Max keett Over at HSBC is 0:17:44.600 --> 0:17:47.639 saying that actually it's the pace of bad news getting 0:17:47.640 --> 0:17:50.399 worse and so if it's not getting worse as quickly 0:17:50.480 --> 0:17:53.480 as it was before, that's enough to keep people optimistic 0:17:53.520 --> 0:17:54.919 in the markets. I mean, you're just giving you a 0:17:54.960 --> 0:17:58.560 sense of what the register is right now on Wall Street. 0:17:59.000 --> 0:18:02.199 Le's bad is good enough? Good enough? The line from 0:18:02.280 --> 0:18:05.399 mass Count of HSBC your conclusion too well. 0:18:05.400 --> 0:18:07.159 In terms of escalation, really the key is do we 0:18:07.240 --> 0:18:09.199 get you know, oil flowing through the strait of Homove. 0:18:09.320 --> 0:18:12.040 So status quo means whether military escalation or not. If 0:18:12.040 --> 0:18:13.919 you don't get that improvement, that's a problem because I think, well, 0:18:13.920 --> 0:18:15.720 the markets are assuming, and what we're assuming is ultimately, 0:18:15.800 --> 0:18:17.320 as we go forward the next month or two, you 0:18:17.359 --> 0:18:20.439 get improvements. If that doesn't happen, yes, prices go higher. 0:18:20.480 --> 0:18:22.040 Economic growth has to be sort of marked down. The 0:18:22.080 --> 0:18:23.239 markets are not pricing for that. 0:18:23.560 --> 0:18:25.480 But then they're not pricing and what's going to happen 0:18:25.600 --> 0:18:28.640 less than two hours today? There is an escalation. There's 0:18:28.680 --> 0:18:30.719 a blockade of the blockade, so even a little bit 0:18:30.760 --> 0:18:32.680 of oil that was getting out will be stopped. 0:18:32.680 --> 0:18:34.840 Well, if you're talking about an oil tanker two versus 0:18:34.880 --> 0:18:36.320 the thirty that we normally go through, I'm not sure 0:18:36.320 --> 0:18:38.480 that marginally makes a change. Like this is a question, 0:18:38.600 --> 0:18:40.959 you know, have to believe will the administration do a blockade? 0:18:41.040 --> 0:18:42.919 There's also reports over the weekend that they're going to 0:18:42.920 --> 0:18:44.840 prepare to try and do sort of like sweeping of minds, 0:18:45.280 --> 0:18:47.119 you know, could there be also, goodness, you know, a 0:18:47.119 --> 0:18:49.080 week or so from now that all right, we'll do this, 0:18:49.119 --> 0:18:51.160 But we're trying to actually improve the flow of oil. 0:18:51.240 --> 0:18:53.280 I mean, so that's not something the market is talking about. 0:18:53.280 --> 0:18:56.160 But what is the ultimate plan for the administration. Ultimately, 0:18:56.520 --> 0:18:58.399 I don't think you want to have oil not flowing through. 0:18:58.800 --> 0:19:00.680