WEBVTT - Bloomberg Surveillance TV: March 10th, 2026 0:00:02.360 --> 0:00:06.720 Bloomberg Audio Studios, Podcasts, radio News. 0:00:11.640 --> 0:00:15.400 This is the Bloomberg Surveillance Podcast. I'm Jonathan Ferrow, along 0:00:15.480 --> 0:00:18.680 with Lisa Bromwitz and Amrie Hordert. 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 --> 0:00:24.840 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 --> 0:00:36.920 Terminal and the Bloomberg Business app. Let's get to the 0:00:37.000 --> 0:00:39.720 view on Wall Street this morning, Nate's Earth of Manual Life, writing, 0:00:39.760 --> 0:00:43.320 we could see economic growth diminish if policy uncertainty increases, 0:00:43.360 --> 0:00:46.120 Corporate profit margins get prim due to higher energy inputcasts 0:00:46.120 --> 0:00:48.960 and higher gas prices will act as a consumer tax. 0:00:49.040 --> 0:00:51.120 Nate joins us now for more. Nate, good morning, Thank 0:00:51.120 --> 0:00:53.239 you for having me. What is the price for all 0:00:53.280 --> 0:00:54.120 this volatility? 0:00:54.800 --> 0:00:56.840 I mean, I think the reality is we have a 0:00:57.000 --> 0:00:59.000 bigger pogost going on, right. We have a lot of 0:00:59.080 --> 0:01:01.320 up and down, we don't have a lot of forward traction, 0:01:01.480 --> 0:01:04.240 and the uncertainty is very, very high. I think the prices, 0:01:04.280 --> 0:01:06.520 that we live in a world where volatility continues to 0:01:06.560 --> 0:01:09.320 be the theme, at least in the near future. To 0:01:09.360 --> 0:01:11.880 your point earlier, the signal is there is and everyone 0:01:12.000 --> 0:01:14.679 wants us to conclude quickly and the duration of it 0:01:14.720 --> 0:01:17.280 to be limited. But the reality is the on the 0:01:17.280 --> 0:01:21.280 ground activity and the idea that multiple players are involved 0:01:21.280 --> 0:01:23.800 could lead this to le lasts a lot longer than 0:01:23.800 --> 0:01:24.440 many people think. 0:01:24.440 --> 0:01:26.960 If you've had the comparisons to twenty twenty two in 0:01:26.959 --> 0:01:28.720 this moment, right, hey, what do you think the MIGHTIA 0:01:28.760 --> 0:01:29.479 difference is off? 0:01:29.920 --> 0:01:33.080 I think the comparison is that you have energy prices 0:01:33.120 --> 0:01:35.760 going up. What we don't know yet is the duration 0:01:35.959 --> 0:01:38.679 of that, or the infrastructure and how wide that is, 0:01:38.880 --> 0:01:41.880 let alone the escalation. Right, there's three big things there 0:01:41.880 --> 0:01:44.360 that we don't have the answer to. Twenty twenty two, 0:01:44.560 --> 0:01:46.679 we saw this dynamic war oil went up for a 0:01:46.680 --> 0:01:48.840 period of time. We saw interest rates go up for 0:01:48.880 --> 0:01:51.600 a period of time, and then eventually things pass. I 0:01:51.760 --> 0:01:54.480 think this time around, you're probably in a similar scenario 0:01:54.640 --> 0:01:57.360 where you do see some damage in the equity markets 0:01:57.400 --> 0:01:59.920 for a period of time, but ultimately we flow through 0:01:59.960 --> 0:02:02.000 it and we have to focus again on the underlying 0:02:02.040 --> 0:02:04.080 fundamentals which are going to be much more positive. 0:02:04.240 --> 0:02:06.640 Well, people are treating this as though it's an inflationary 0:02:06.680 --> 0:02:09.760 shock the way that twenty twenty two was, why don't 0:02:09.760 --> 0:02:11.000 you see it exactly that way? 0:02:11.680 --> 0:02:14.760 Well, this time I think, one, we've experienced it before, 0:02:14.800 --> 0:02:17.080 and the markets, as they've seen one thing before, they 0:02:17.120 --> 0:02:19.760 start to accept the fact that that's a possibility and 0:02:19.800 --> 0:02:22.120 are less concerned about it. The other thing I think 0:02:22.120 --> 0:02:24.440 when you think about it is when we look at 0:02:24.440 --> 0:02:28.720 the dynamics here oil, while very important to economies globally, 0:02:29.200 --> 0:02:31.680 there is solutions to this, and we do think there 0:02:31.680 --> 0:02:34.200 will be a de escalation at some stage, just a 0:02:34.280 --> 0:02:37.480 question of timing right. And the longer we stay at 0:02:37.560 --> 0:02:39.800 high oal prices let's say one hundred or above, the 0:02:39.919 --> 0:02:42.840 more impactful it is to growth rates and inflation. We 0:02:43.000 --> 0:02:46.080 believe that from a developed markets perspective, if you stay 0:02:46.080 --> 0:02:48.240 above one hundred dollars a barrel for let's say a 0:02:48.360 --> 0:02:52.240 handful of months, you're arguably going to decrease growth rates 0:02:52.240 --> 0:02:54.200 by about a half a percent a year, and you're 0:02:54.200 --> 0:02:57.000 going to increase inflation rates about a one percent per year. 0:02:57.160 --> 0:03:01.359 For most major economies, that's very detrimental to the markets, 0:03:01.360 --> 0:03:04.000 both from an interest rate policy perspective, but also from 0:03:04.040 --> 0:03:05.000 an equity perspective. 0:03:05.080 --> 0:03:08.359 It's been treated like a stagflationary shock, which includes people 0:03:08.440 --> 0:03:11.600 selling long term bonds. It seems like what you're talking 0:03:11.639 --> 0:03:13.519 about is somewhat of a different prescription. 0:03:13.960 --> 0:03:17.280 Why well, I think why it's a bit different is 0:03:17.320 --> 0:03:20.359 I think this is short term. I don't think this 0:03:20.560 --> 0:03:23.480 is a secular theme that we are going into a 0:03:23.520 --> 0:03:27.040 stagflation period that's going to last multi years. I do 0:03:27.120 --> 0:03:29.880 think ultimately you're going to have central bank policy members 0:03:29.919 --> 0:03:32.760 look through this and say, hey, we care more about jobs, 0:03:32.800 --> 0:03:35.240 we care more about growth, and we're willing to look 0:03:35.320 --> 0:03:39.680 through a temporary shock attached to higher oil prices if necessary. 0:03:39.800 --> 0:03:41.880 That's not their preference, but they were willing to if 0:03:41.920 --> 0:03:45.000 it's necessary. And ultimately we get to a point where 0:03:45.000 --> 0:03:47.960 we have energy prices get back to a level that 0:03:48.120 --> 0:03:51.280 one more stable and not at this ninety plus or 0:03:51.280 --> 0:03:53.280 one hundred plus level. And I think that's where the 0:03:53.320 --> 0:03:55.920 market is hoping for, and I think that's what's most 0:03:56.000 --> 0:04:00.240 policy as well as political members out there think will 0:04:00.240 --> 0:04:02.600 still be in an environment where we will get to 0:04:02.680 --> 0:04:04.920 a solution here where we don't have to see the 0:04:04.920 --> 0:04:05.840 worst case scenario. 0:04:05.920 --> 0:04:07.360 What do you think that means for the stock bond 0:04:07.400 --> 0:04:09.560 cord lintion. I think that's the problem. 0:04:09.840 --> 0:04:12.360 I think the stock bond correlation has been a problem, 0:04:12.480 --> 0:04:14.640 will continue to be a problem, and this is why 0:04:14.680 --> 0:04:18.160 we continue to look for ways to improve portfolio construction 0:04:18.640 --> 0:04:23.200 beyond just relying on interest rates or lower interest rates 0:04:23.200 --> 0:04:23.960 being your insurance. 0:04:23.960 --> 0:04:24.760 But where do you go again? 0:04:25.480 --> 0:04:27.839 While you go to areas like commodities as an example 0:04:27.920 --> 0:04:30.320 that has been a good hedge in these types of environments, 0:04:30.320 --> 0:04:32.640 you go to things like gold, which maybe not working 0:04:32.720 --> 0:04:35.240 as well in the short term here, but has been 0:04:35.240 --> 0:04:37.520 working very well over the last couple of years, and 0:04:37.560 --> 0:04:39.719 you look at other types of alternatives. 0:04:39.440 --> 0:04:41.160 Once you think going to open working well. 0:04:41.440 --> 0:04:43.400 I think gold hasn't been working well partly because it 0:04:43.440 --> 0:04:45.760 had been working well, right, It had worked very well 0:04:45.760 --> 0:04:47.680 for the last two years. You had a lot of 0:04:47.720 --> 0:04:50.200 players in there. Some of those players decided to exit, 0:04:50.200 --> 0:04:54.160 either for liquidity reasons or for reasons that they made 0:04:54.160 --> 0:04:56.280 a lot of money and they want to protect their profits, right. 0:04:56.560 --> 0:04:59.279 And then you also have what appeared to be the 0:04:59.400 --> 0:05:03.000 two plastic things that did work, which was the US dollar, 0:05:03.400 --> 0:05:07.320 and you had the overall dynamics of the market, such 0:05:07.360 --> 0:05:10.400 as oil, because that's centerpiece of the geopolitical concern work, 0:05:10.440 --> 0:05:11.040 and so got us. 0:05:11.000 --> 0:05:13.080 This trade moved into that. I got asked this question 0:05:13.080 --> 0:05:14.760 twelve months ago, you would have thought I was insane. 0:05:14.760 --> 0:05:16.600 It is five kan't good entry points? If I got 0:05:16.720 --> 0:05:17.200 I think it is. 0:05:17.320 --> 0:05:17.480 Yeah. 0:05:17.520 --> 0:05:19.800 Twelve months ago that would have sounded nuts. But now 0:05:19.839 --> 0:05:20.720 this is a good opportunity. 0:05:21.279 --> 0:05:24.279 We still believe that secularly we will see higher gold 0:05:24.320 --> 0:05:27.200 prices over the next several years going forward. 0:05:27.320 --> 0:05:30.159 I'm just wondering if you ratcheting back your returns profile 0:05:30.240 --> 0:05:33.200 more generally overall, whether you think that investors have to 0:05:33.240 --> 0:05:37.279 expect that in a reindustrialized world with a higher rate 0:05:37.400 --> 0:05:41.360 of potentially inflation, but also lower growth, this means that 0:05:41.440 --> 0:05:43.120 you're just not going to get the same kind of returns. 0:05:43.200 --> 0:05:45.520 You absolutely have to dial back your expectations. 0:05:45.640 --> 0:05:47.799 The reality is we are now in a world where 0:05:48.040 --> 0:05:52.240 equity evaluations are high. We have uncertainty round yield and 0:05:52.279 --> 0:05:54.240 they may not go down a lot. And so I 0:05:54.279 --> 0:05:58.560 think your expectations for total return from your portfolio, whether 0:05:58.600 --> 0:06:00.600 it's from the fixed income side or the equity side, 0:06:00.880 --> 0:06:02.600 have to be lower than what we've seen over the 0:06:02.680 --> 0:06:03.600 last twenty years. 0:06:03.920 --> 0:06:05.680 Is the US still the safe haven market? 0:06:05.839 --> 0:06:06.960 I think for the time being it is. 0:06:07.279 --> 0:06:08.839 But I do think once we get through some of 0:06:08.839 --> 0:06:12.000 this more geopolitical dynamic right now, I think we are 0:06:12.040 --> 0:06:13.760 going to go back to a trade where you do 0:06:13.880 --> 0:06:19.080 see diversification outside the US dollar dynamics start to be 0:06:19.240 --> 0:06:23.080 more on a backfoot, as in dollars starts to depreciate again. 0:06:23.320 --> 0:06:25.520 So we think ultimately over the next several years you 0:06:25.600 --> 0:06:28.760 are better served having a more diversified portfolio. But in 0:06:28.800 --> 0:06:32.760 the short term US dollar is a safe haven trade 0:06:32.800 --> 0:06:34.280 that does provide some level. 0:06:34.080 --> 0:06:38.040 Of hedge stay with US multiple implexsavandans coming up off 0:06:38.120 --> 0:06:50.000 to this, the signal from the president is important, so 0:06:50.279 --> 0:06:53.279 is the reality on the ground. Just as we speaking, 0:06:53.320 --> 0:06:56.760 these headlines crossing the UAA says it's currently responding to 0:06:56.800 --> 0:07:00.599 a missile threat, KATSA saying they intercepted a miss targeting 0:07:00.680 --> 0:07:03.719 the state of Catta. And we've seen headgund after headline 0:07:03.920 --> 0:07:05.800 like that and more still to count. 0:07:05.880 --> 0:07:08.040 Yeah, and the IRSTG coming out and saying this war 0:07:08.160 --> 0:07:11.000 isn't over until we say it's over. Even though the 0:07:11.080 --> 0:07:13.440 President is saying I can stop this at any point. 0:07:13.600 --> 0:07:15.480 Joining us now to discuss is Mark Shaw, the former 0:07:15.520 --> 0:07:18.520 chief of Staff to the form of Vice President Mike Pence. Mark, 0:07:18.520 --> 0:07:20.280 good to see you, great to be here. That this 0:07:20.440 --> 0:07:23.080 is not in the president's traditional playbook. This feels so 0:07:23.240 --> 0:07:27.000 so different. Typically he has something targeted, it's limited, it 0:07:27.120 --> 0:07:29.360 leads to a period of the escalation. This feels so 0:07:30.160 --> 0:07:32.920 open ended. How would you characterize what's evolving in the 0:07:32.920 --> 0:07:33.360 Middle East? 0:07:33.760 --> 0:07:36.560 Well, I think there's some true to that that. Obviously, 0:07:36.680 --> 0:07:39.120 you know Venezuela, he wasn't looking for regime change. He 0:07:39.240 --> 0:07:42.320 left Mondu's number two in place. But at the same time, 0:07:42.360 --> 0:07:45.200 I think the president always likes optionality, which I think 0:07:45.240 --> 0:07:48.800 you've witnessed over the last ten days. Is that explanations 0:07:48.840 --> 0:07:50.560 as to how long this is going to be continued 0:07:50.600 --> 0:07:52.800 to vary a lot, and so I think you'll continue 0:07:52.800 --> 0:07:54.960 to see him want to keep that optionality to whether 0:07:55.240 --> 0:07:57.240 he continues to prosecute this warpoo back. 0:07:57.520 --> 0:07:59.280 How different is this time in terms of the support 0:07:59.320 --> 0:08:02.120 from other republiclkens in Congress for the effort. I mean 0:08:02.160 --> 0:08:05.040 it was sort of pretty unified around Venezuela. Is it 0:08:05.120 --> 0:08:05.640 the same here? 0:08:06.520 --> 0:08:08.920 Well, I think that there's obviously been a growing thread 0:08:08.960 --> 0:08:12.080 of isolation inside their Publican party. I think it's been 0:08:12.200 --> 0:08:14.960 notable that Jade Vance has been pretty quiet and not 0:08:15.120 --> 0:08:18.720 as visible as far as advocating for these policies, and 0:08:18.840 --> 0:08:20.280 I don't think there was as much of an effort 0:08:20.320 --> 0:08:22.600 ahead of time to explain to the American people the 0:08:22.680 --> 0:08:24.440 priority and why we're doing this, which is why I 0:08:24.480 --> 0:08:26.760 think you see the pulling down. Having said that, Lisa, 0:08:26.800 --> 0:08:29.480 if the present's successful here and in many cases this 0:08:29.560 --> 0:08:32.559 milit operation has been successful, but if he also be 0:08:32.600 --> 0:08:35.120 able to transform the Middle East for generations to come, 0:08:35.320 --> 0:08:36.959 I think we'll see a lot of Republicans be on 0:08:37.040 --> 0:08:40.079 board with this. I think the greater political concern in 0:08:40.120 --> 0:08:42.920 the short term is that affordability remains number one issue 0:08:42.960 --> 0:08:45.959 for Americans. And you know, I think that even if 0:08:46.040 --> 0:08:48.520 best case scenario prices you now are an eighty to 0:08:48.640 --> 0:08:52.000 ninety dollars range of barrel, that's still a thirty three 0:08:52.080 --> 0:08:54.439 percent premium for what they were. That's not going to 0:08:54.520 --> 0:08:57.240 help with the affordability issue heading into the midterms of November. 0:08:57.360 --> 0:08:59.559 So what do you think is the most feasible counteraction 0:08:59.760 --> 0:09:02.200 to that by the president heading into the midterms. 0:09:02.480 --> 0:09:04.240 I think the most feasible is to get to you 0:09:04.280 --> 0:09:07.400 to explain why this is a necessary action. Why for 0:09:07.520 --> 0:09:09.559 forty seven years I Ran has been at war with 0:09:09.679 --> 0:09:13.040 the West. Why they've you know, going back to funding 0:09:13.720 --> 0:09:17.320 the Hamas and the Hesbalah and the Houthis, why they've 0:09:17.400 --> 0:09:19.920 killed Americans in Western Song. Why we did this. I 0:09:20.000 --> 0:09:21.760 think that's what he can do best. As far as 0:09:21.840 --> 0:09:23.839 your triggers, I think that one thing that would be 0:09:23.840 --> 0:09:25.760 helpful is if you relieve the Jones Act. But I 0:09:25.760 --> 0:09:28.000 think there's a lot of tension inside the administration because 0:09:28.280 --> 0:09:30.520 you have the protectionist and the Peter Navars. For him, 0:09:30.559 --> 0:09:32.719 that is that is sacricyanc They don't want to see that, 0:09:33.400 --> 0:09:36.160 you know. I think it's disappointed see actually leave providing 0:09:36.240 --> 0:09:38.839 relief for Russian oil. At this point, I think that 0:09:39.559 --> 0:09:41.760 Russia has been partying with Iran for quite some time. 0:09:42.040 --> 0:09:44.120 Iran has been funding, been providing them with drones, and 0:09:44.120 --> 0:09:46.559 they're warn in Ukraine. And our recourse of this is 0:09:46.600 --> 0:09:49.480 to actually reacts. The oil sanks on Russia. I think 0:09:49.520 --> 0:09:52.520 shows the sensitivity they have politically to rise in oil price. 0:09:52.559 --> 0:09:54.640 So there's something very backwards about the whole think we 0:09:54.800 --> 0:09:57.360 now mus Can have from the Ukrainians to help US 0:09:57.400 --> 0:10:01.079 intercept drones. At the same time, we're offering sanctions relief 0:10:01.160 --> 0:10:03.880 to the Russians who they're fighting with at the moment. 0:10:04.000 --> 0:10:04.880 Makes sense of vote off. 0:10:05.040 --> 0:10:07.640 No, thank you, that's basically I mean, ultimately, you're sort 0:10:07.679 --> 0:10:09.640 of putting your thumb on the scale on both sides. 0:10:09.640 --> 0:10:11.360 Anyone who's saying this is going to create a sooner 0:10:11.400 --> 0:10:13.959 resolution to the Ukraine Russian war, please explain to me 0:10:14.000 --> 0:10:14.600 exactly how. 0:10:14.559 --> 0:10:16.200 I could just make the question how perparent they were 0:10:16.320 --> 0:10:18.679 for this? Why the Chinese were able to stump pile 0:10:18.840 --> 0:10:21.800 energy over the last twelve months and America didn't refill 0:10:22.040 --> 0:10:22.640 the ESPN. 0:10:23.280 --> 0:10:25.400 Well, look, I mean, I think that there was a 0:10:25.440 --> 0:10:28.400 lot of depletion of this of the strategical patrolum reserved 0:10:28.440 --> 0:10:31.120 during the buy it and mass depletion, and I think 0:10:31.160 --> 0:10:33.559 there were opportunities to continue to replenish it. I do 0:10:33.679 --> 0:10:36.199 think that there's obviously more oil production out of the 0:10:36.320 --> 0:10:38.800 United States today, and I think that the present deserves 0:10:38.840 --> 0:10:41.520 credit for having lowered energy prices as significant as he did. 0:10:41.880 --> 0:10:44.319 But as we've talked about on your show, I think 0:10:44.400 --> 0:10:47.720 that the reduction energy prices in many cases was masking 0:10:47.920 --> 0:10:50.480 the trade agenda and the extra costs. If all of 0:10:50.520 --> 0:10:54.040 a sudden you've taken that relief off the table, I 0:10:54.120 --> 0:10:57.600 think you're going to see the trade agenda inflation come 0:10:57.679 --> 0:10:59.280 to the voters even more sensitively. 0:10:59.440 --> 0:11:01.760 How much can do you think he has over the 0:11:01.840 --> 0:11:03.440 fate of what's developing before our eyes. 0:11:03.760 --> 0:11:06.120 I think he has more control than anybody else, But 0:11:06.840 --> 0:11:08.360 as you said, I don't think he has a total 0:11:08.440 --> 0:11:10.760 control over this. And you're saying I mean, I mean 0:11:10.800 --> 0:11:12.880 cutters still say one hundred and fifty dollars before this 0:11:13.000 --> 0:11:15.040 is all said and done. They have facilities, they are 0:11:15.040 --> 0:11:18.880 still offline. Bahrain has facilities offline, and so it seems 0:11:18.920 --> 0:11:20.880 to me there's a heck of a lot more volatility here, 0:11:20.920 --> 0:11:23.559 and it's just because the presence signaled maybe this will 0:11:23.600 --> 0:11:27.000 be a shorter term conflict, doesn't mean that that's guaranteed. 0:11:27.640 --> 0:11:40.760 Stay with us. More Bloomberg surveillance coming up after this, Abigo, 0:11:40.840 --> 0:11:43.480 what a ups rights in this? This morning, energy prices 0:11:43.520 --> 0:11:46.679 posed a near term headwind to real consumer spending. The 0:11:46.800 --> 0:11:48.760 old price shock is a more two sided risk for 0:11:48.840 --> 0:11:52.960 monetary policy rather than is perhaps appreciated. Abigaut joined us 0:11:52.960 --> 0:11:55.200 now for more good to see you, and good morning, 0:11:55.320 --> 0:11:57.199 Good morning. What did you mean by that last line? 0:11:58.160 --> 0:12:01.439 So, I think if we think about the repricing we 0:12:01.600 --> 0:12:04.079 saw off the back of the increasing oil prices in 0:12:04.160 --> 0:12:07.400 bond markets and expectations around easing from the FED this year, 0:12:07.559 --> 0:12:09.920 I think you saw obviously a clear focus on the 0:12:09.960 --> 0:12:13.719 inflationary impact of the oil price increase, and I think 0:12:13.960 --> 0:12:17.559 perhaps what's underappreciated is that this is coming alongside a 0:12:17.640 --> 0:12:20.640 point where the labor market looks a little vulnerable at 0:12:20.679 --> 0:12:24.800 this juncture still, and you're also it's also coming alongside 0:12:24.840 --> 0:12:27.360 potential growth hits, right, Like, this is something that could 0:12:27.480 --> 0:12:30.720 hit real spending, which is two thirds of the US economy. 0:12:30.840 --> 0:12:35.280 So I think perhaps the point around risk to rates 0:12:35.360 --> 0:12:38.600 being more two sided is this idea that it could 0:12:38.800 --> 0:12:40.920 come at a juncture where the labor market's already looking 0:12:41.440 --> 0:12:45.600 relatively vulnerable and the inflation shock, you know, it will 0:12:45.640 --> 0:12:48.000 depend on the persistence of the increase in price. 0:12:48.040 --> 0:12:49.880 So this is something we've been exploring all morning. We 0:12:49.960 --> 0:12:51.640 talked to Kathy Jones about it. At some point it's 0:12:51.640 --> 0:12:54.320 a tipping point, this starts to become bullish for bonds 0:12:54.559 --> 0:12:57.160 because of the potential output hit that we could see 0:12:57.200 --> 0:12:59.120 from higher energy prices. How close do you think we 0:12:59.160 --> 0:13:00.400 are to that point? 0:13:01.200 --> 0:13:03.920 I think this is one element of the consumer story, right. 0:13:04.000 --> 0:13:05.400 I think one of the things you've got to think 0:13:05.440 --> 0:13:08.199 about is the kind of other drivers that we had 0:13:08.440 --> 0:13:10.720 for the kind of strength that we were expecting from 0:13:10.760 --> 0:13:13.080 the consumer this year. Right, We're expecting that you see 0:13:13.240 --> 0:13:16.800 a strong tax refund season. Tax refunds are up ten 0:13:16.840 --> 0:13:19.640 percent in the latest IRS data on an average basis. 0:13:20.000 --> 0:13:22.199 That's a little bit behind I think kind of some 0:13:22.400 --> 0:13:25.400 expectations of the fiscal stimulus. But that's another thing that 0:13:25.440 --> 0:13:28.880 should prove potentially supportive for household balance sheets. And if 0:13:28.920 --> 0:13:30.439 we think about kind of how this feeds through to 0:13:30.480 --> 0:13:33.880 household balance sheets as well, I think it's the kind 0:13:33.920 --> 0:13:36.959 of everyone outside the top twenty percent of the kind 0:13:36.960 --> 0:13:40.000 of income distribution potentially that's going to wear this kind 0:13:40.040 --> 0:13:42.760 of more. So, I think you've got a way potential 0:13:42.880 --> 0:13:46.520 kind of positive headwinds, positive tailwinds for the consumer versus 0:13:46.640 --> 0:13:49.760 some of the kind of negative impacts potentially from higher 0:13:49.800 --> 0:13:52.400 oil prices. So I think it will depend on how 0:13:52.520 --> 0:13:55.120 those kind of play out in the next couple of 0:13:55.640 --> 0:13:57.800 weeks and months. And I think the key thing here 0:13:57.920 --> 0:14:00.199 with all of the kind of potential impact for the 0:14:00.280 --> 0:14:03.640 economy from the oil price increase is really the extent 0:14:03.760 --> 0:14:06.480 and the persistence of that increase in oil prices, and 0:14:06.600 --> 0:14:08.120 that's I think that's what's going to be key in 0:14:08.240 --> 0:14:10.520 terms of how this feeds into kind of growth and 0:14:10.640 --> 0:14:11.600 also into inflation. 0:14:11.920 --> 0:14:13.679 One of the tailwinds has also been the idea of 0:14:13.760 --> 0:14:17.200 rate cuts. How much is there momentum in the consumer, 0:14:17.480 --> 0:14:20.560 particularly at the lower end should the FED remain on hold? 0:14:21.480 --> 0:14:24.040 Yeah, So, I mean in our expectations, we've got fifty 0:14:24.080 --> 0:14:26.600 basse points of cuts from the FMC this year, and 0:14:26.680 --> 0:14:28.520 in terms of the timing of that, we think it's 0:14:28.680 --> 0:14:32.400 potentially kind of second half, so July October. I think 0:14:32.480 --> 0:14:35.400 at the margin that easing and interest rates is something 0:14:35.440 --> 0:14:38.480 that is supportive and helpful for the consumer, but that 0:14:38.600 --> 0:14:42.120 would in theory bring you interest rates background to around neutral. 0:14:42.200 --> 0:14:45.560 It doesn't necessarily outright stimulate the economy at this point. 0:14:45.680 --> 0:14:47.640 I think for us, when we're thinking about the kind 0:14:47.640 --> 0:14:50.440 of resilience and the potential strength of the consumer, I 0:14:50.520 --> 0:14:53.440 think our fiscal story is actually potentially the more important 0:14:53.520 --> 0:14:56.160 part of the kind of outlook this year for the consumer, 0:14:56.840 --> 0:14:59.880 rather than necessarily the kind of tailwind from monitored policy. 0:15:00.400 --> 0:15:04.400 We've been talking about how that fiscal tailwind could potentially 0:15:04.440 --> 0:15:07.400 be absorbed by higher oil prices. How do you sort 0:15:07.400 --> 0:15:12.080 of weigh where oil prices are versus that fiscal boost 0:15:12.240 --> 0:15:13.360 that people were expecting. 0:15:14.120 --> 0:15:16.480 Yeah, so I think it's I think it's probably one 0:15:16.520 --> 0:15:18.440 of the key things to be thinking about at this juncture. 0:15:18.600 --> 0:15:20.480 I think, as I said, I think the kind of 0:15:20.520 --> 0:15:23.480 persistence and the increase in in kind of oil prices. 0:15:23.160 --> 0:15:25.520 Will be important. We've obviously already. 0:15:25.240 --> 0:15:28.080 Seen gasoline prices rising, and the consumer in the US 0:15:28.200 --> 0:15:31.760 is incredibly sensitive to higher gasoline prices. So I do think, 0:15:31.880 --> 0:15:33.480 you know, there is a potential that some of the 0:15:33.560 --> 0:15:37.040 positive kind of tailwinds we were expecting from fiscal policy 0:15:37.080 --> 0:15:40.680 could be offset, in particular for those lower income consumers 0:15:40.720 --> 0:15:43.400 where you know, you are seeing the fact that savings 0:15:43.440 --> 0:15:46.560 are running kind of below average. You know they've they've 0:15:46.640 --> 0:15:48.840 kind of spent down any excess savings that had been 0:15:48.880 --> 0:15:51.240 built up, and I think, you know, that's the area 0:15:51.320 --> 0:15:53.240 where I would think that you would feel that kind 0:15:53.240 --> 0:15:55.560 of gas price increase most acutely in the consumer. 0:15:55.640 --> 0:15:57.680 My McKey was talking about where FED fund futures. We're 0:15:57.720 --> 0:15:59.880 trending right now, what's your FED bet for you? 0:16:01.120 --> 0:16:04.520 So we're expecting that the FED deliver fifty based prints 0:16:04.560 --> 0:16:07.400 cuts this year rate I think the risk if we're 0:16:07.440 --> 0:16:11.640 thinking about the distribution around that, I think, you know, potentially, 0:16:11.840 --> 0:16:13.520 if you see kind of more of a growth it, 0:16:14.040 --> 0:16:17.120 if you see this kind of labor market vulnerability persisting, 0:16:18.160 --> 0:16:20.640 I think that you could potentially see the risk that 0:16:20.840 --> 0:16:24.320 rate cuts come come sooner than we're expecting. And then 0:16:24.400 --> 0:16:26.960 I think, you know, if we think about the kind 0:16:26.960 --> 0:16:29.480 of risks on the opposite side, you know, the potential 0:16:29.720 --> 0:16:31.960 risk for rates coming later and then holding longer. I 0:16:32.000 --> 0:16:33.520 think that's really going to depend on what we see 0:16:33.520 --> 0:16:36.800 in the inflation data. Obviously, we'll get the February CPI 0:16:36.880 --> 0:16:39.280 this week. We're expecting that you see a slowing in 0:16:39.360 --> 0:16:41.120 terms of the monthly prints there. But we do think 0:16:41.160 --> 0:16:43.200 that will be the low point for the CPI this year. 0:16:43.640 --> 0:16:45.600 So you know, we're expecting that that push is higher 0:16:45.640 --> 0:16:46.840 and we see inflation peaking. 0:16:46.600 --> 0:16:48.600 As independent of what happens in the Middle East, that 0:16:48.680 --> 0:16:49.600 that's the low for this year. 0:16:50.200 --> 0:16:52.880 Yeah, So that was our profile previous thing as well, 0:16:52.920 --> 0:16:54.960 because I mean we're still seeing that tara of pass 0:16:55.000 --> 0:16:56.880 through coming through. I mean you are seeing kind of 0:16:56.920 --> 0:17:00.120 elevated core goods price increases, even if you are seeing 0:17:00.160 --> 0:17:03.000 a little bit better inflation on the services side. 0:17:03.040 --> 0:17:04.680 So the call for fifty basis points is that a 0:17:04.760 --> 0:17:06.720 call based on the economy or the man who's going 0:17:06.760 --> 0:17:07.400 to be the FED share. 0:17:07.960 --> 0:17:09.879 So it's based on the idea that you know, if 0:17:09.920 --> 0:17:12.439 we think about when we're thinking we see inflation peaking, 0:17:12.560 --> 0:17:14.640 we do think that the run rates of inflation will 0:17:14.680 --> 0:17:16.880 begin to peak in the second quarter. And I think 0:17:16.920 --> 0:17:19.040 at that point as well, we're expecting the labor market 0:17:19.160 --> 0:17:22.080 still looks vulnerable. We have the unemployment rate pushing higher 0:17:22.119 --> 0:17:25.160 from here to four and a half ur six by 0:17:25.200 --> 0:17:28.240 the summer. So I think with that dynamic, I think 0:17:28.320 --> 0:17:30.840 that's a point not which in July you should see 0:17:30.920 --> 0:17:33.080 kind of a nough inflation progress for them to think, okay, 0:17:33.080 --> 0:17:35.159 we should remove a little bit of that access restricting it. 0:17:35.280 --> 0:17:39.119 Got it. This is the Bloomberg Survendans podcast, bringing you 0:17:39.560 --> 0:17:42.679 the best in markets, economics, enti at politics. You can 0:17:42.720 --> 0:17:45.480 watch the show live on Bloomberg TV weekday mornings from 0:17:45.520 --> 0:17:48.720 six am to nine am Eastern. Subscribe to the podcast 0:17:48.840 --> 0:17:52.320 on Apple, Spotify or anywhere else you listen, and as always, 0:17:52.400 --> 0:17:54.920 on the Bloomberg terminal and the Bloomberg Business app.