WEBVTT - Bloomberg Surveillance TV: March 26th, 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>anywhere else you listen, and as always on the Bloomberg

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<v Speaker 2>Terminal and the Bloomberg Business app. Let's get to view

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<v Speaker 2>on Wall Street this morning, Joe Cancarves and MUFG writing

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<v Speaker 2>the impact from the war will likely turn out to

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<v Speaker 2>be even more damaging than the tariff shark, especially considering

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<v Speaker 2>that the US jobs market and consumers are already on shaky ground.

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<v Speaker 2>George joins us now for more. George, good monic, Good morning.

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<v Speaker 2>Let's start with Lisa's world the auction soff two year, soft,

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<v Speaker 2>five year, seven year auction coming up a little bit later.

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<v Speaker 2>What do you think is behind the weakness and demand

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<v Speaker 2>for US government debt right now?

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<v Speaker 3>Look, I think it's a repricing that's happened globally on

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<v Speaker 3>the rate side, the US treasury market really lagged everything else,

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<v Speaker 3>and this, you know, this sort of concern around like

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<v Speaker 3>what is the new steady state for interest rates and

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<v Speaker 3>heading into the end of the month, end of the

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<v Speaker 3>quarter type environment. These auctions usually do well, and the

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<v Speaker 3>fact that they're you know, under pressure, does kind of

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<v Speaker 3>show that there's been some sort of kind of buyer

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<v Speaker 3>pull back.

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<v Speaker 2>Mohamad al Adim wrote in the FT earlier this week

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<v Speaker 2>about goal flows and the importance of the golf is

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<v Speaker 2>a source of capital, not just a source of energy.

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<v Speaker 2>It's something happening with those goal flows in respect to

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<v Speaker 2>what we've seen so far in the auctions looks.

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<v Speaker 3>It's hard to tell with public data and just you

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<v Speaker 3>know where we stand things right now. In general, fire

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<v Speaker 3>and flows could be impacted, you know, the longer this persists,

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<v Speaker 3>and that's that's really the big issue here.

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<v Speaker 1>Is there also a question around institutional credibility. What kind

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<v Speaker 1>of fiscal response there's going to be to this. I've

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<v Speaker 1>noticed that a lot of the increase in benchmark rates

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<v Speaker 1>in the US have come from really not at all

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<v Speaker 1>from inflation expectations. What's the read through in terms of

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<v Speaker 1>what the appetite for dead is internationally.

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<v Speaker 3>Yeah, absolutely so, Yeah, that's a great point. The fact

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<v Speaker 3>that we've seen real rates, especially out beyond the five

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<v Speaker 3>year point in the curve, so the ten year in

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<v Speaker 3>the thirty year has largely been a real rate move,

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<v Speaker 3>you potentially capturing this sort of fiscal concern. We've been

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<v Speaker 3>here before. We've seen this before in the times past.

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<v Speaker 3>When there's a risk of more supply coming down the pike,

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<v Speaker 3>you know, the bomb market does discount it. But we've

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<v Speaker 3>also seen the two yearself a decent amount, so we've

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<v Speaker 3>seen a level shift higher that's also infiltrated out the curve.

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<v Speaker 3>I think it's early days, but yes, I am conservative

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<v Speaker 3>fiscal outlook in general, and I'm usually more of a

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<v Speaker 3>fiscal hawk than and more of a central bank above.

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<v Speaker 3>But I do think that it's more inflation and then

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<v Speaker 3>the fear that we're going to have to address this

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<v Speaker 3>with more supply down the road.

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<v Speaker 1>The reason why we're focusing on the auctions is because

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<v Speaker 1>it's the front lines of real concern that we're seeing

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<v Speaker 1>that hasn't really been represented through broader markets. There hasn't

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<v Speaker 1>been this sort of capitulation to the fear that we

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<v Speaker 1>can represent on any given days, we try to extrapolate

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<v Speaker 1>out story. Why do you think there hasn't been that

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<v Speaker 1>sort of fear trade, that sort of wash out that

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<v Speaker 1>so many people have been talking about.

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<v Speaker 3>I mean the two years going from three point four

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<v Speaker 3>to close to four percent, I mean, that's pretty much

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<v Speaker 3>I think as qualifies as a wash how you know,

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<v Speaker 3>I think that's a pretty big move and really repricing,

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<v Speaker 3>realigning positioning, if you're if your motus operandi from this point,

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<v Speaker 3>for until we get some sort of conclusion on this

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<v Speaker 3>conflict is to trade small and to be very tactical.

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<v Speaker 3>It's hard to really come in with conviction.

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<v Speaker 2>Committing capital in this market. It's almost impossible. I think

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<v Speaker 2>that's been a feature of this week, not just around

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<v Speaker 2>this table, but a lot of people in this market, Bramo,

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<v Speaker 2>after what we saw earlier this week, particularly on Monday morning,

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<v Speaker 2>this is a really difficult moment for a lot of people.

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<v Speaker 2>Not just the economic bankdrop. That's shaky enough things are

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<v Speaker 2>French out at the moment, but going get into the

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<v Speaker 2>weekend not knowing which way this can go when the

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<v Speaker 2>risk on either side is so large, I'm not sure

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<v Speaker 2>what you're meant to do in this moment.

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<v Speaker 1>You're meant to sit on your hands and try to

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<v Speaker 1>take long term positions, which is the reason why you

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<v Speaker 1>see people not have conviction. Right now you're talking about

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<v Speaker 1>two risk. There also is no way to get an

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<v Speaker 1>edge the whole idea. And this is why I say

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<v Speaker 1>it's playing blackjack or it's playing slot machines. It's not

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<v Speaker 1>playing poker where you can kind of gauge and calibrate

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<v Speaker 1>the potential probabilities. How do you have any sense of that,

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<v Speaker 1>especially if you think maybe the other guy has better

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<v Speaker 1>edge than you do.

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<v Speaker 2>Have you ever seen it like this before? George, you're

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<v Speaker 2>an experience guy. You've seen many markets, many market Rejames.

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<v Speaker 2>What's this one?

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<v Speaker 1>Yeah?

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<v Speaker 3>I mean it's unique. It has a lot of different

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<v Speaker 3>elements to it. I've always thought, you know, down the line,

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<v Speaker 3>after years of accumulating all the death that we've had,

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<v Speaker 3>after really kind of relying on governments to be like

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<v Speaker 3>the real backstop of everything, that ultimately would come down

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<v Speaker 3>to something like this, it becomes geopolitical, where you know,

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<v Speaker 3>like this is the new chess game that we're playing.

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<v Speaker 2>This is different though central banks don't seem to have

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<v Speaker 2>a role in this moment. We're used to that, and

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<v Speaker 2>that's why I think what Jeff Curry of Carlile said

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<v Speaker 2>on this show just last week is so important. You

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<v Speaker 2>can't print miracles, molecules, you can't print barrels. The central

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<v Speaker 2>bank bank stop, the anchor isn't there for this market.

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<v Speaker 2>This is different though, No, clearly, I.

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<v Speaker 3>Mean, like we don't even know the full extent of

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<v Speaker 3>the show. Waves are still coming down the pike from

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<v Speaker 3>this the closure of the straight up formulas, right, I

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<v Speaker 3>mean like that, I think that's the unusual optimism that

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<v Speaker 3>somehow it's all going to turn around with this. We

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<v Speaker 3>can't just turn on a light switch.

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<v Speaker 2>Stay with us, multple impex. Savannah's coming up off to this.

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<v Speaker 4>Let me have another threat, another warning from the White

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<v Speaker 4>House this morning, the President on truth social saying that

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<v Speaker 4>Iran needs to make a deal, make it fast, or

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<v Speaker 4>it will not be pretty. He says, before it is

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<v Speaker 4>too late, because once that happens, there is no turning back. Yesterday,

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<v Speaker 4>Jonathan I was with the President covering him part of

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<v Speaker 4>the press pool. He called what was going on with

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<v Speaker 4>this war an excursion into hell. Clearly he is weighing

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<v Speaker 4>his options this morning to try to understand exactly what

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<v Speaker 4>is going on in the political ramifications as well domestically.

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<v Speaker 4>John Lieber joined us, of course from the Eurasia Group. John,

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<v Speaker 4>thank you so much for your time this morning. I'd

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<v Speaker 4>love to just get your reaction to early this morning

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<v Speaker 4>before the market's open. There in it with this latest

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<v Speaker 4>threat to the Iranians, they better get serious before it's

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<v Speaker 4>two eight.

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<v Speaker 5>I think he wants this war to stop, and he's

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<v Speaker 5>recognizing that he's in a bit of a challenge. So

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<v Speaker 5>gas presses are headed over four dollars a gallon, and

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<v Speaker 5>his approval rating is headed to below forty points, and

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<v Speaker 5>that's not a good place for the president to be.

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<v Speaker 5>So he knows he needs to get out of this war,

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<v Speaker 5>and he knows that he can't get out of it alone,

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<v Speaker 5>because even if the US stops bombing, if he's in

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<v Speaker 5>a situation where the Iranians are the only ones who

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<v Speaker 5>are able to get oil or other products out of

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<v Speaker 5>the straight of horror moves, that's a bad outcome for

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<v Speaker 5>the world economy. So he's got to do something to

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<v Speaker 5>change the game right now to get the Iranians to

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<v Speaker 5>open up the straight and these threats I think are

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<v Speaker 5>his way of trying to do that, because I don't

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<v Speaker 5>think the Iranians are in a mood and negotiate right now.

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<v Speaker 4>Do you think the talk of diplomacy potentially reports of

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<v Speaker 4>the Vice President jd Vance going to Islamabad to maybe

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<v Speaker 4>meet with Iranian negotiators, is that real or do you

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<v Speaker 4>think that's just a distraction while the President and the

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<v Speaker 4>DoD get their personnel on the ground.

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<v Speaker 5>Don't I mean, I think it is real in the

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<v Speaker 5>sense that there are people who are trying to set

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<v Speaker 5>up talks and mediate talks. The Pakistanis are involved. Steve

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<v Speaker 5>Wikoff has been involved in talking to the Iranians, but

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<v Speaker 5>I don't know if these are going to go anywhere,

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<v Speaker 5>and I don't know if the Iranians right now have

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<v Speaker 5>the incentive that they need in order to show up

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<v Speaker 5>at these talks and make a good faith effort. He

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<v Speaker 5>also got to remember that the Iranians of zero reason

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<v Speaker 5>to trust the United States. Here they got attacked from

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<v Speaker 5>their perspective, they got attacked by America while they were

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<v Speaker 5>in the middle of negotiating a nuclear deal. And what

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<v Speaker 5>guarantees do they have that the US and Israel is

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<v Speaker 5>not attack them again while they're negotiating a peace deal.

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<v Speaker 4>It is a metron election here. You mentioned gas price,

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<v Speaker 4>is also the fact that there doesn't seem to be

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<v Speaker 4>an appetite for boots on the ground in Congress. What

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<v Speaker 4>kind of pushback do you think we could see You

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<v Speaker 4>were an advisor to Senator Mitch McConnell. What kind of

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<v Speaker 4>pushback do you think we could see, not from Democrats

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<v Speaker 4>but from his own party.

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<v Speaker 5>Yeah, I think the pushback to putting American troops at

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<v Speaker 5>risk here is going to be enormous. And if that's

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<v Speaker 5>what it takes for Trump to de escalate this war,

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<v Speaker 5>is to get troops on the ground, seize the Iranian oil,

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<v Speaker 5>seize some Iranian territory, and potentially expose thousands of Marines

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<v Speaker 5>to hostile fire from the Iranians who have lots of

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<v Speaker 5>drones and missiles that they can turn away from the

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<v Speaker 5>UAE in Saudi and focus on American forces, which the Iranians,

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<v Speaker 5>of course would be happy to do. I think that's

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<v Speaker 5>a huge problem for President Trump, and I don't think

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<v Speaker 5>that's really a viable option for him right now. Maybe

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<v Speaker 5>in a few weeks he sees that as the only

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<v Speaker 5>path out of it here, but there's going to be

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<v Speaker 5>a lot of blowback on Capitol Hill and from the

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<v Speaker 5>American public to committing these troops, and so it just

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<v Speaker 5>doesn't leave him with great choices.

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<v Speaker 4>Where does that leave the two hundred billion dollars the

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<v Speaker 4>Pentagon is asking Congress to sign up for.

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<v Speaker 5>The Democrats are treating that two hundred billion dollars like

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<v Speaker 5>the authorization for use of force in the Iraq War,

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<v Speaker 5>which they later came to regret because that authorization of

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<v Speaker 5>the use of force had been used to create these

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<v Speaker 5>forever wars that cost trillions of dollars and got America

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<v Speaker 5>bogged down for two decades, and so the Democrats don't

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<v Speaker 5>want to vote for it. I think that's a tall

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<v Speaker 5>order to get that two hundred billion right now. It'll

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<v Speaker 5>happen probably eventually, maybe at the end of the year

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<v Speaker 5>when they have to do appropriations bills, but I don't

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<v Speaker 5>or Republicans have the option, of course, of doing a

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<v Speaker 5>party line reconciliation bill, which introduces a whole other bunch

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<v Speaker 5>of complexities, because you're going to have people that want

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<v Speaker 5>to do tax You're going to have people that want

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<v Speaker 5>to cut spending, and I think that's ultimately going to

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<v Speaker 5>be a huge problem for Trump.

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<v Speaker 4>If the President decides to take this action. Axios outlined

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<v Speaker 4>what potentially some of the strategic goals of that would

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<v Speaker 4>be this quote final blow. Wouldn't the Iranians just tell

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<v Speaker 4>the Houthies we need to create more chaos for the Americans.

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<v Speaker 4>We need to drive up oil prices higher. While they're

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<v Speaker 4>now engrossed with the Strait of Hormuz, the huthiechannew close

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<v Speaker 4>bob El Mundeb and close the Red Sea.

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<v Speaker 5>They could try it. The Iranian influence in the region

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<v Speaker 5>is waning. I think all the proxy groups are seeing that.

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<v Speaker 5>Right now, Iran's not what they used to be. I mean,

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<v Speaker 5>Iran does have a lot of money coming in their coffers.

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<v Speaker 5>But our understanding is that the Huthis are asking for

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<v Speaker 5>money from the Saudis to stay out of this war,

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<v Speaker 5>and the Saudis are happy to pay that for right now.

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<v Speaker 5>That could change over time. The Iranians could make them

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<v Speaker 5>an offer they can't refuse. But I think the Huthis

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<v Speaker 5>right now, we think stay out of this war because

0:10:03.480 --> 0:10:05.960
<v Speaker 5>they it's in their interests to not attack their neighbor.

0:10:06.400 --> 0:10:08.560
<v Speaker 4>Speaking of the midterm elections, speaking of the present waying

0:10:08.600 --> 0:10:10.520
<v Speaker 4>his options the Wall Street Journal this morning, so that

0:10:10.559 --> 0:10:13.160
<v Speaker 4>Trump is telling close associates he wants to avoid a

0:10:13.200 --> 0:10:17.120
<v Speaker 4>protracted war in Iran if he takes this decision to

0:10:17.640 --> 0:10:20.920
<v Speaker 4>send in troops to potentially seize an island or make

0:10:20.960 --> 0:10:23.000
<v Speaker 4>sure the military is there to try to clean the

0:10:23.000 --> 0:10:24.800
<v Speaker 4>Straight of Hormoves, some more vessels can go through a

0:10:24.880 --> 0:10:28.120
<v Speaker 4>mind sweepers and the likes Won't that mean we are

0:10:28.240 --> 0:10:32.120
<v Speaker 4>now running the Straight of Hormuz and this becomes a

0:10:32.160 --> 0:10:33.880
<v Speaker 4>protractive environment. Absolutely.

0:10:33.920 --> 0:10:36.040
<v Speaker 5>I don't think there's any easy way to get out

0:10:36.040 --> 0:10:39.800
<v Speaker 5>of this war right now. If the US de escalates unilaterally.

0:10:39.920 --> 0:10:42.360
<v Speaker 5>The your audience have proven that they control the straight

0:10:42.720 --> 0:10:44.600
<v Speaker 5>and they can let friends and family through, and they

0:10:44.640 --> 0:10:46.840
<v Speaker 5>can let shipments that are going to the United States

0:10:46.960 --> 0:10:47.560
<v Speaker 5>or from its.

0:10:47.480 --> 0:10:50.520
<v Speaker 4>Allies friends of family for two million dollars, you know, whatever.

0:10:50.240 --> 0:10:52.560
<v Speaker 5>The discount is. Yeah, you get a nice little rate

0:10:52.600 --> 0:10:54.760
<v Speaker 5>on your ship that's going through. But I think that

0:10:54.760 --> 0:10:56.240
<v Speaker 5>this is a there's just no way out of this,

0:10:56.320 --> 0:10:58.200
<v Speaker 5>So you can take it by force, but then you're

0:10:58.400 --> 0:11:02.000
<v Speaker 5>committing yourself to probably months or longer of US presence

0:11:02.000 --> 0:11:04.520
<v Speaker 5>in the region and again exposing a lot of American

0:11:04.559 --> 0:11:07.160
<v Speaker 5>troops to missile fire, which is not going to be popular.

0:11:07.200 --> 0:11:09.719
<v Speaker 4>Here, we're four dollars a gallon of gasoline. What does

0:11:09.720 --> 0:11:10.520
<v Speaker 4>he do with we at five?

0:11:11.679 --> 0:11:13.560
<v Speaker 5>I think he pauses. I think he's got to say

0:11:13.640 --> 0:11:15.839
<v Speaker 5>I'm done. You know, I expect the Iranians open the

0:11:15.880 --> 0:11:18.360
<v Speaker 5>straight and that's the easiest action for him to take.

0:11:18.400 --> 0:11:21.160
<v Speaker 5>It's the least risky action. It's a long run strategic

0:11:21.280 --> 0:11:24.040
<v Speaker 5>loss for the United States, and it puts a stronger

0:11:24.080 --> 0:11:26.439
<v Speaker 5>position than when they started this more. But I don't

0:11:26.480 --> 0:11:27.240
<v Speaker 5>see what choice he.

0:11:27.200 --> 0:11:31.320
<v Speaker 2>Has stay with US Multbleinberg surveillance coming up after this

0:11:40.840 --> 0:11:44.240
<v Speaker 2>energy price shocks fueling snackflation FIS. We'll move on the

0:11:44.280 --> 0:11:47.640
<v Speaker 2>OECD predicting average G twenty inflation will jump to four

0:11:47.640 --> 0:11:51.480
<v Speaker 2>percent while anticipating lower than expected global growth. The organization

0:11:51.600 --> 0:11:55.040
<v Speaker 2>releasing a new outlook this morning, writing persistent disruptions to

0:11:55.080 --> 0:11:58.760
<v Speaker 2>exports from the Middle East could trigger more extensive repricing

0:11:59.080 --> 0:12:02.720
<v Speaker 2>in financial marks THEE see the secondary General Mattias Coman

0:12:02.840 --> 0:12:04.839
<v Speaker 2>joins us now for Morematis, thanks for making some time

0:12:04.880 --> 0:12:06.920
<v Speaker 2>for us this morning. Can we just start with how

0:12:06.960 --> 0:12:09.440
<v Speaker 2>difficult it might have been to be put together a

0:12:09.480 --> 0:12:12.800
<v Speaker 2>forecast in a moment like this, How complex was it

0:12:12.840 --> 0:12:14.920
<v Speaker 2>for you and the team?

0:12:15.800 --> 0:12:19.560
<v Speaker 6>Well, you know, obviously the level of uncertainty is extremely high,

0:12:19.640 --> 0:12:22.320
<v Speaker 6>and so what we do in these circumstances is use

0:12:22.960 --> 0:12:25.400
<v Speaker 6>technical assumptions. I mean, you know, the key factor of

0:12:25.440 --> 0:12:29.079
<v Speaker 6>course here, you know, relates to the energy supply and

0:12:29.120 --> 0:12:33.000
<v Speaker 6>the energy price shock. So you know, the technical assumption

0:12:33.200 --> 0:12:37.280
<v Speaker 6>that we have used as the basis for our projections

0:12:37.400 --> 0:12:42.079
<v Speaker 6>is essentially aligned with the future markets pricings as I

0:12:42.160 --> 0:12:45.680
<v Speaker 6>stood on twenty March. Now, the truth is we can't

0:12:45.720 --> 0:12:48.800
<v Speaker 6>predict how much longer the conflict will last or how

0:12:48.840 --> 0:12:53.000
<v Speaker 6>much worse it could get. So I mean, we really

0:12:53.000 --> 0:12:57.600
<v Speaker 6>don't have much choice but to use a baseline scenario.

0:12:57.720 --> 0:13:00.800
<v Speaker 6>And of course, but we've also included a worst guise

0:13:00.840 --> 0:13:04.959
<v Speaker 6>scenario in our report today. There clearly is a level

0:13:04.960 --> 0:13:09.280
<v Speaker 6>of quite a significant level of downside risk to ourtlook.

0:13:08.840 --> 0:13:11.520
<v Speaker 2>Today, Mattias. The inflation component of this is the piece

0:13:11.559 --> 0:13:12.960
<v Speaker 2>that we can focus on now, and then we can

0:13:13.000 --> 0:13:16.079
<v Speaker 2>turn to growth. There are some people who believe the

0:13:16.120 --> 0:13:19.000
<v Speaker 2>potential for second order effects is low because the economies

0:13:19.000 --> 0:13:21.280
<v Speaker 2>aren't as strong as they were, and maybe balance sheets

0:13:21.280 --> 0:13:25.360
<v Speaker 2>for consumers aren't as well built resilient right now as

0:13:25.400 --> 0:13:27.959
<v Speaker 2>they were coming out of the pandemic. Mattias, where do

0:13:28.040 --> 0:13:29.920
<v Speaker 2>you stand on that? I remember the first time we met,

0:13:29.920 --> 0:13:32.480
<v Speaker 2>you were part of the Australian government. You know these things, well,

0:13:32.480 --> 0:13:35.240
<v Speaker 2>how to run a treasury? Do these governments have the

0:13:35.280 --> 0:13:38.000
<v Speaker 2>fiscal space to respond to this energy shock and provide

0:13:38.000 --> 0:13:40.679
<v Speaker 2>the fiscal support the consumers might be looking for.

0:13:43.800 --> 0:13:47.679
<v Speaker 6>Well, I mean that levels across the world are elevated

0:13:47.720 --> 0:13:51.000
<v Speaker 6>and including because of some of the fiscal responses in

0:13:51.040 --> 0:13:53.760
<v Speaker 6>the wake of the COVID pandemic, but also you know,

0:13:53.840 --> 0:13:58.400
<v Speaker 6>structural pressures on spending around the world. But you know,

0:13:58.720 --> 0:14:01.600
<v Speaker 6>in terms of the inflation story now, I mean the

0:14:01.679 --> 0:14:05.120
<v Speaker 6>story really is different in different parts of the world.

0:14:05.160 --> 0:14:06.760
<v Speaker 6>And I mean in terms of the impact of the

0:14:07.200 --> 0:14:10.240
<v Speaker 6>energy price shock and the flow and that hasn't I mean,

0:14:10.320 --> 0:14:13.160
<v Speaker 6>you know, some are more directly exposed than others. I

0:14:13.160 --> 0:14:15.600
<v Speaker 6>mean here the direct exposure you know, is probably more

0:14:15.600 --> 0:14:19.600
<v Speaker 6>into the Asian markets and to the Asia Pacific. But

0:14:20.240 --> 0:14:23.720
<v Speaker 6>you know, in other areas like Europe, you know, for example,

0:14:23.760 --> 0:14:26.240
<v Speaker 6>I mean, the effect, the price effect is more indirect.

0:14:26.240 --> 0:14:28.640
<v Speaker 6>But I mean there is an impact on global prices.

0:14:28.640 --> 0:14:30.120
<v Speaker 6>When we look at the United States. I mean, in

0:14:30.120 --> 0:14:32.400
<v Speaker 6>the United States, the reason we say what we're saying

0:14:32.800 --> 0:14:35.640
<v Speaker 6>about inflation is there. I mean, we do actually see

0:14:35.920 --> 0:14:39.040
<v Speaker 6>that the liber market remains relatively tight, and you know,

0:14:39.080 --> 0:14:42.640
<v Speaker 6>in the context of now this energy this global energy

0:14:42.880 --> 0:14:46.240
<v Speaker 6>price shock, and also the delight effects still of some

0:14:46.320 --> 0:14:50.400
<v Speaker 6>of the tariff price effects, but also the impact on

0:14:50.400 --> 0:14:53.640
<v Speaker 6>the liber market of slowing net migration. I mean, we

0:14:53.880 --> 0:14:56.440
<v Speaker 6>do think that there is a combination of factors there

0:14:56.480 --> 0:14:59.520
<v Speaker 6>that is likely to have a bearing on the inflation

0:14:59.560 --> 0:15:00.840
<v Speaker 6>outlook the United States.

0:15:01.080 --> 0:15:03.520
<v Speaker 1>Mitias, We've been trying to wrap our heads around the

0:15:03.560 --> 0:15:06.440
<v Speaker 1>idea that the ECB and the Bank of England are

0:15:06.720 --> 0:15:10.560
<v Speaker 1>now expected to hike rates several times, even potentially this

0:15:10.640 --> 0:15:14.520
<v Speaker 1>year in response to inflationary pressures at the same time

0:15:14.560 --> 0:15:17.880
<v Speaker 1>that you and many others are down growthing, their downgrading

0:15:17.920 --> 0:15:21.000
<v Speaker 1>their growth prospects. At what point do you see the

0:15:21.080 --> 0:15:26.680
<v Speaker 1>necessity to hike rates as torpedoing any potential growth going forward,

0:15:26.840 --> 0:15:29.200
<v Speaker 1>forcing you to lower expectations further on growth.

0:15:32.200 --> 0:15:37.000
<v Speaker 6>Well, look, I mean there's obviously now different factors impacting

0:15:37.040 --> 0:15:39.120
<v Speaker 6>the inflation outlook, and that is going to have a

0:15:39.120 --> 0:15:42.040
<v Speaker 6>bearing on the response of central banks. I mean, it

0:15:42.080 --> 0:15:44.360
<v Speaker 6>is it is it is you know, of course true.

0:15:44.640 --> 0:15:47.400
<v Speaker 6>I mean, our current expectation is that the energy price

0:15:47.440 --> 0:15:51.120
<v Speaker 6>effect will be temporary and as such, I mean, you know,

0:15:51.160 --> 0:15:53.640
<v Speaker 6>central banks of course would be able to tag that

0:15:53.680 --> 0:15:57.080
<v Speaker 6>into account. And there is a softening in liber markets

0:15:57.120 --> 0:16:00.000
<v Speaker 6>and an economic outlook in some economies around the world.

0:16:00.080 --> 0:16:01.680
<v Speaker 6>But I mean, in the end, but we are signed

0:16:02.040 --> 0:16:05.200
<v Speaker 6>to central banks, is that I need to continue to focus,

0:16:05.320 --> 0:16:08.120
<v Speaker 6>you know, very closely on the data as it evolves,

0:16:08.120 --> 0:16:12.040
<v Speaker 6>and be very prudent to ensure that, you know, inflation

0:16:12.360 --> 0:16:16.280
<v Speaker 6>expectations are well anchored and that the inflation outlook you know,

0:16:16.440 --> 0:16:18.320
<v Speaker 6>is as they would want it to be.

0:16:18.800 --> 0:16:22.520
<v Speaker 1>Do you see Matias a real concern about runaway inflation globally?

0:16:22.600 --> 0:16:24.880
<v Speaker 1>I mean, this ultimately is the real question. Do you

0:16:24.920 --> 0:16:27.720
<v Speaker 1>think that this shock is similar to what we saw

0:16:27.840 --> 0:16:32.240
<v Speaker 1>in twenty twenty one, twenty twenty two, especially because inflation

0:16:32.560 --> 0:16:34.840
<v Speaker 1>has been above the targets for quite a while.

0:16:37.720 --> 0:16:40.520
<v Speaker 6>But I mean, inflation prior to this, you know, lightest

0:16:40.520 --> 0:16:42.720
<v Speaker 6>shock was on a downward path, and you know, we

0:16:42.720 --> 0:16:46.960
<v Speaker 6>were certainly expecting that in most G twenty economies, you know,

0:16:47.000 --> 0:16:51.360
<v Speaker 6>inflation was going to get back within the central bank

0:16:51.400 --> 0:16:54.080
<v Speaker 6>target range by the end of this year sometime next year.

0:16:54.600 --> 0:16:57.360
<v Speaker 6>But you know this, this now you know clearly is

0:16:57.400 --> 0:17:00.240
<v Speaker 6>having a material impact. I mean we are expecting or

0:17:00.280 --> 0:17:03.160
<v Speaker 6>we have upgraded our inflation o woutlook for this year

0:17:03.160 --> 0:17:06.679
<v Speaker 6>about globally by one point two percent, looking across the

0:17:06.800 --> 0:17:10.879
<v Speaker 6>G twenty economies. I should say, now you know, it

0:17:11.000 --> 0:17:13.600
<v Speaker 6>remains to be seen. As we've said at the beginning

0:17:13.640 --> 0:17:16.439
<v Speaker 6>of this conversation, we don't know what we don't know.

0:17:16.480 --> 0:17:18.359
<v Speaker 6>I mean, we don't know how much longer this conflict

0:17:18.400 --> 0:17:20.880
<v Speaker 6>we last. We don't know how much worse it could get.

0:17:20.920 --> 0:17:24.040
<v Speaker 6>And I mean there's there's significant downside risk, but there's

0:17:24.080 --> 0:17:27.840
<v Speaker 6>also upside risk or upseide opportunity. I mean, things could

0:17:27.920 --> 0:17:29.679
<v Speaker 6>turn out better than what we're fearing.

0:17:31.119 --> 0:17:34.399
<v Speaker 2>This is the bloomberg S Events podcast, bringing you the

0:17:34.440 --> 0:17:37.800
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