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Speaker 2: Lots of headlines going back and forth here as it
Speaker 2: relates to Iran in the Middle East. Let's get the
Speaker 2: latest reporting. Ethan Bronner Israel bureau chief for Bloomberg News.
Speaker 2: He is based in Tel Aviv. Ethan, I guess have
Speaker 2: nothing else Iran and the US as it relates to
Speaker 2: his fifteen point plan. Some progress seems to be being
Speaker 2: made here. What can you tell us?
Speaker 3: I'm not sure i'd characterize it as progress. Well, but
Speaker 3: I mean, you know, the the Americans have presented a
Speaker 3: fifteen point plan. I think it's fair to say that
Speaker 3: the fifteen points are pretty much what they demand that
Speaker 3: have run before they went to war with it. Iran
Speaker 3: said no. Then then they went to war, and now
Speaker 3: they're gone back and made the same demands. And it
Speaker 3: looks like Arena said no once again. So I don't know. Yeah,
Speaker 3: it doesn't like progress, does it. No?
Speaker 4: But I mean they're talking, is the fact.
Speaker 2: I mean, Scarlett and I were just saying just the
Speaker 2: fact that they're talking feels a little bit better.
Speaker 4: I guess.
Speaker 3: So, I mean, you know, it's it's an interesting question
Speaker 3: about good and bad. I mean, obviously from the most
Speaker 3: perspective abroad, everybody would like this thing to come to
Speaker 3: an end. I've just written a story that we put
Speaker 3: on the Bloomberg Wire a couple of hours ago that says,
Speaker 3: in this country, in Israel, that is not the goal.
Speaker 3: The goal is victory, not stopping the war. So you know,
Speaker 3: the idea is to stop around from having the capacity
Speaker 3: to threaten Israel and the region any longer. And if
Speaker 3: the war stops, that won't happen unless it stops on
Speaker 3: the under the terms that President Trump has put forward,
Speaker 3: and that doesn't seem very likely.
Speaker 5: At the same time, Iron moving forward, for instance, it's
Speaker 5: been able to export a lot of oil and make
Speaker 5: a lot of money by sending oil to China, for instance.
Speaker 5: It's also charging some ships a transit feed to get
Speaker 5: through the Strait of Hormuz, so.
Speaker 4: Financially, you know, they're pocketing some money. They are.
Speaker 3: I'm not sure you'd a lot of change places with them.
Speaker 3: They're losing all their infrastructure by pocketing a few bucks
Speaker 3: in oil. I mean, sure, Look, I am not saying
Speaker 3: that it's the war is going great from the American perspective,
Speaker 3: I don't know. It's very difficult for us to assess.
Speaker 3: And there's always a propaganda war underway at the same
Speaker 3: time there's an actual physical war, an attempt to persuade
Speaker 3: the other side to back down, and it doesn't look
Speaker 3: at the moment that either side is now. It is
Speaker 3: also true that from an American perspective, rising oil prices
Speaker 3: and all this kind of stuff for what has seen
Speaker 3: to be a war of choice is causing a lot
Speaker 3: of political trouble for the president. And in Iran, I
Speaker 3: think there's less political trouble. It's, after all authoritarian situation,
Speaker 3: so and they may be willing to put up with
Speaker 3: a lot more suffering than the West is. We shall see.
Speaker 2: Ethan, if President Trump were to decide to end this
Speaker 2: war for whatever reason he sees that, is it a
Speaker 2: fair assumption that Israel will go along with that.
Speaker 3: It's a fair assumption. Yes, I mean, as much as
Speaker 3: this country would like to see it completed appropriately, it
Speaker 3: is much more important to it to maintain its strong
Speaker 3: relationship with the United States with this administration, and it
Speaker 3: is certainly made clear that it will take its queue
Speaker 3: from the President on this absolutely.
Speaker 5: Ethan, what are you looking at next? How are you
Speaker 5: determining how to kind of keep score here?
Speaker 3: I'm trying not to keep score. I'm not really sure
Speaker 3: it's all that useful for me. I mean what I'm
Speaker 3: you know, there are a bunch of things we're watching
Speaker 3: all at once. What is the level of attacks by
Speaker 3: the Iranians on their names and on Israel? So those
Speaker 3: have gone down to some extent. In the first days
Speaker 3: of the war, there were maybe seventy five or eighty
Speaker 3: a day here, and now they're about a dozen or eight, ten,
Speaker 3: twelve that kind of thing. Is that because the Israelis
Speaker 3: have successfully taken out their launchers? Possibly? Is it because
Speaker 3: the Iranians are husbanding their stuff? Possibly? Another issue, of course,
Speaker 3: is in addition to the growing international markets pressure to
Speaker 3: end this thing, is the interesting fact that the Emmatis
Speaker 3: and the Saudis seem now, although they didn't want this
Speaker 3: war to happen, more enthusiastic about ending it along the
Speaker 3: same lines as Israel's argument has been because they feel
Speaker 3: there's a sort of damaicles hanging over their heads with
Speaker 3: these Iranian attacks of the last week. So will that
Speaker 3: make a big difference. It'll make some difference. And of
Speaker 3: course are there going to be airborne ground troops from
Speaker 3: the Americans heading there? Looks like they are in the
Speaker 3: coming days. So there's a lot that we're watching a lot.
Speaker 4: Stay with us more from Bloomberg Intelligence coming.
Speaker 3: Up for this.
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Speaker 5: Let's get a check on how this is all shaking
Speaker 5: out for the market's clearly, the Venezuelan case is not
Speaker 5: what's driving markets.
Speaker 4: It's all about oil prices.
Speaker 5: And oil prices right now are higher by more than
Speaker 5: three percent Brent crude the global benchmark at one hundred
Speaker 5: and six dollars. That is, of course raising concerns about
Speaker 5: inflation and stagflation and demand destruction. Let's bring Kathy and Twistle.
Speaker 5: She is managing director and private wealth advisor at Morgan
Speaker 5: Stanley joining us from Delray Beach, Florida. Kathy, the rise
Speaker 5: in oil prices has remained elevated, you know, day in
Speaker 5: and day out. In my backtrack, it might come back again,
Speaker 5: Yet we know that oil prices are unlikely to go
Speaker 5: down anytime soon, even when the Strait of hor moves
Speaker 5: opens up. How does that color how you view investing
Speaker 5: in risky assets.
Speaker 6: Absolutely, there's a lot of different things that we're thinking
Speaker 6: about right now, and clearly this you know, this Iran
Speaker 6: war oil shock is the big event. However, we want
Speaker 6: to think about our clients and what they're thinking about
Speaker 6: and how we can better position portfolio. So, you know,
Speaker 6: last week's data confirmed our inflation fears. PPI came in hot,
Speaker 6: and the longer oil stays elevated, the harder it will
Speaker 6: be for the FED to control these upstream price pressures.
Speaker 6: And what that means for you know, clients and just
Speaker 6: the general population is that everything is more expensive. They're
Speaker 6: getting like a tax on gas. And they're also very
Speaker 6: very concerned about their portfolios because usually when we have
Speaker 6: these issues with oil, we will see some downward pressure
Speaker 6: on both the equity and the bond market. So what
Speaker 6: we're looking at is favoring some high defensive stocks and
Speaker 6: such as like energy, financial, healthcare, reducing overbought semiconductors, unprofitable tech,
Speaker 6: and low quality credit. What's interesting the market looks like
Speaker 6: on the surface like surprisingly resilient, but underneath it's like
Speaker 6: a violent rotation going on, and energy and AI infrastructure
Speaker 6: are booming, while software companies and private credit lenders are
Speaker 6: showing signs of stress.
Speaker 4: So these are all.
Speaker 6: Things we think about, and we're trying to remove some
Speaker 6: of the risk in the client's portfolio and add some
Speaker 6: more forward looking investments.
Speaker 2: About on the fixed income side here, how much credit
Speaker 2: risk do you think folks should be taking in this environment,
Speaker 2: because more you can just sit there to two year
Speaker 2: treasury and get close to four percent here right now.
Speaker 6: Yeah. No, we think that investing right now in safer
Speaker 6: risk assets is the smarter move and the smarter play
Speaker 6: where advising clients not to be in high yield because
Speaker 6: you're not getting paid for high yield and these are
Speaker 6: the times where you'll start to see high yield assets
Speaker 6: start to crumble a little bit, so we want to
Speaker 6: avoid that. I look at it. If you've got money
Speaker 6: and investments and money in the bank. You've won the game.
Speaker 6: We want to protect it. We want to grow it methodically,
Speaker 6: not to get undue risk.
Speaker 4: Where does gold fit into that.
Speaker 5: For a while, everyone was flocking to gold and they
Speaker 5: saw it as almost a risk asset given how I
Speaker 5: was performing. And they've definitely pulled back from that as
Speaker 5: concerns about the prospect of fewer rate cuts and now
Speaker 5: even talk of a rate hike really infect the market.
Speaker 6: Yeah, on the rate hike issue, we don't anticipate a
Speaker 6: rate hike. We're still looking at two rate cuts towards
Speaker 6: the end of the year, so it will be interesting
Speaker 6: to see that unfold. In terms of positioning with gold,
Speaker 6: we still like real assets. We like energy, infrastructure, commodities, reads,
Speaker 6: and gold and metals still play a position there. Basically, again,
Speaker 6: when oil driven inflation fears take over, our stocks and
Speaker 6: bonds tend to drop at the same time. So real
Speaker 6: assets provide a national natural shield against inflation. So that's
Speaker 6: why we like to add that to the portfolio too.
Speaker 6: So we've been adding real assets.
Speaker 5: Even though gold is down about sixteen percent since the
Speaker 5: start of the war, it hasn't done very much, No, it.
Speaker 6: Hasn't, but it also anytime there's a downward trend, there
Speaker 6: also might be a buying opportunity there, And just with
Speaker 6: the thought of where we are in the markets and
Speaker 6: the economy right now, and with the oil prices going up,
Speaker 6: it's just basically a hedge. And we don't put a
Speaker 6: large percentage of clients into gold, but we do a
Speaker 6: small percentage.
Speaker 2: Inching Scarlett, just as you were talking about gold. Piece
Speaker 2: of research is hit my inbox from Richard Rosenberg Rosenberg
Speaker 2: Research first bulletpoint. We maintain our long term bullish call
Speaker 2: on gold and are looking for the most attractive reentry
Speaker 2: points since we trimmed our position. So he says, maybe
Speaker 2: buy on the weakness here, Kathy, how about numinisful bonds.
Speaker 2: I know Donner Florida, you guys famously do not have
Speaker 2: those state taxes, but for those of us in high
Speaker 2: tax jurisdiction, communis have been really, really attractive here. How
Speaker 2: do you allocated municipal bonds for your clients?
Speaker 6: Absolutely, that's a great question, and we have lots of
Speaker 6: clients in high tax rate states, including New York, so
Speaker 6: we are using municipal bonds the short term and intermediate
Speaker 6: termunible bonds are very pricey right now and not as attractive,
Speaker 6: so we are using long term municipal bonds, which have
Speaker 6: still great value for clients and placing them there. So
Speaker 6: we do like the municipal bonds, and we are continuing
Speaker 6: to utilize them, especially in an environment where you know
Speaker 6: taxes are high and they may go higher at some point.
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