WEBVTT - Bloomberg Surveillance TV: March 16th, 2026 0:00:00.040 --> 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 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 --> 0:00:24.880 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 --> 0:00:37.000 Terminal and the Bloomberg Business app. So here's the LASS 0:00:37.080 --> 0:00:40.040 this morning. The President ramping gun pressure on other countries, 0:00:40.080 --> 0:00:43.080 demanding support for escorting vessels through the strain of for merge. 0:00:43.080 --> 0:00:46.040 Trump threatening NATO with a quote very bad future and 0:00:46.080 --> 0:00:48.840 to delay his summit would shine of President Jiji pink 0:00:49.159 --> 0:00:52.279 nom and rule. The former senior US Intelligence official and 0:00:52.320 --> 0:00:55.639 senior advisor at csis non welcome back to the program. 0:00:55.760 --> 0:00:57.960 We seen reports over the past few days of moving 0:00:57.960 --> 0:01:01.200 additional assets into the region and what does the next 0:01:01.240 --> 0:01:02.480 phase of this conflict look like? 0:01:03.560 --> 0:01:04.119 Good morning. 0:01:04.360 --> 0:01:08.160 The United States is not preparing for a greater involvement. 0:01:08.200 --> 0:01:10.080 It would lead to boots on the ground, but the 0:01:10.200 --> 0:01:12.760 commitment of the United States does remain focused on a 0:01:12.800 --> 0:01:15.600 coercive approach to this. There is no sign of a 0:01:15.640 --> 0:01:18.959 diplomatic engagement in the near term. So you basically have 0:01:19.000 --> 0:01:22.240 a situation where the United States approaches to beat down 0:01:22.280 --> 0:01:26.200 Iran's missile and drone capacity, to hit the regime on 0:01:26.280 --> 0:01:30.800 its police, its interior forces, and the hopes that this 0:01:30.880 --> 0:01:34.199 might provoke some sort of unrest to open the Strait 0:01:34.240 --> 0:01:36.959 of Hormuz. And at the same time the regime regime 0:01:37.040 --> 0:01:40.640 is trying to outlast this by striking economic targets that 0:01:40.800 --> 0:01:43.880 echo into the world economy to put pressure on the 0:01:43.959 --> 0:01:47.240 United States. Each side is trying to outlast the other. 0:01:47.680 --> 0:01:50.400 Norm when it comes to Carg Island, how significant was 0:01:50.440 --> 0:01:52.360 that hit over the weekend from the President. 0:01:53.360 --> 0:01:57.640 Well, the United States certainly destroyed every military site on 0:01:57.840 --> 0:02:02.680 the island, and the island is indeed the primary artery 0:02:02.800 --> 0:02:07.520 for Iran's outlet of oil. It has no secondary outlet 0:02:07.560 --> 0:02:11.040 of any any consequence. The port of Jask, which Iran 0:02:11.080 --> 0:02:13.359 has attempted to open in the Gulf of Oman, has 0:02:13.400 --> 0:02:19.480 a very modest output, but the the Harg Island appears 0:02:19.520 --> 0:02:23.360 to be operational for all of its oil output capacity. 0:02:23.360 --> 0:02:25.360 I think there are a couple of ships that burst 0:02:25.919 --> 0:02:28.799 very quickly after the U. S military operation, and I 0:02:28.800 --> 0:02:31.000 think that's consistent. But the President was trying to do 0:02:31.240 --> 0:02:33.640 trying to message the Iranians, Look, we can touch you 0:02:33.720 --> 0:02:36.959 here if we wish. We're going to touch the military elements, 0:02:37.000 --> 0:02:39.000 but we can take this farther. Why don't you win 0:02:39.080 --> 0:02:42.760 the conflict. I don't think it changed the Iranian position, 0:02:42.800 --> 0:02:44.760 but it certainly sent a message in. 0:02:44.800 --> 0:02:47.120 Terms of the military strike on carg Island. What does 0:02:47.160 --> 0:02:51.520 this mean for the operational capacity of the IRGC, Well. 0:02:51.280 --> 0:02:54.240 It doesn't really touch the IRGC's capacity per se. The 0:02:54.280 --> 0:02:58.000 iergy c's capacity is derived from its missiles, it's derived 0:02:58.000 --> 0:03:02.160 from its drones, and it's derived from its internal military 0:03:02.200 --> 0:03:06.240 placements that suppress the people. So it's got plenty of 0:03:06.320 --> 0:03:11.560 capacity that doesn't rely upon of the economy, doesn't rely 0:03:11.680 --> 0:03:16.240 upon the banking capacity. It's accessible reserve, so it's not 0:03:16.320 --> 0:03:20.080 a money issue that keeps the iergacy going at present. 0:03:20.680 --> 0:03:22.560 What role do you think the ground trips would play 0:03:22.560 --> 0:03:24.840 You mentioned it does seem like there could be a 0:03:24.840 --> 0:03:28.360 preparation to send a special unit of marines over potentially 0:03:28.400 --> 0:03:30.880 even to carg Island. Do you understand or have an 0:03:30.960 --> 0:03:32.160 understanding of what that would look like. 0:03:33.280 --> 0:03:37.920 I think that's very unlikely at present. The US commander's 0:03:37.960 --> 0:03:40.080 first option at this point would not be to create 0:03:40.120 --> 0:03:43.160 a force protection problem for himself. His goals to create 0:03:43.200 --> 0:03:47.040 a force protection problem for the Iranians. This unit, although 0:03:47.080 --> 0:03:51.320 capable certainly of ground operations, probably would have its first 0:03:51.400 --> 0:03:57.119 goal to improve counter drone operations and improve protection capacity 0:03:57.160 --> 0:04:01.560 for units. Although some ground operations could conceivably be part 0:04:01.560 --> 0:04:06.440 of its mission, it's a relatively small force for such 0:04:06.480 --> 0:04:08.040 an activity, Norman. 0:04:07.840 --> 0:04:10.160 Are you seeing an off ramp evolving here? 0:04:11.160 --> 0:04:14.160 Not? At present, the conflict will likely continue for some 0:04:14.240 --> 0:04:18.560 weeks on each side. But this said, the United States 0:04:18.600 --> 0:04:25.120 and Israel have absolutely eroded Iran's missile and drone capacity 0:04:25.240 --> 0:04:28.320 to a far, far greater agree than Iran ever anticipated. 0:04:28.600 --> 0:04:30.400 And the golf partners, particularly the. 0:04:30.440 --> 0:04:33.560 United Arab Emirates in Saudi Arabia, have done an absolutely 0:04:33.560 --> 0:04:39.120 spectacular job of defense, as well as Bahrain, Kuwait and 0:04:39.120 --> 0:04:41.560 the Qataris. And I think you're seeing that years of 0:04:41.680 --> 0:04:46.640 investment of training, equipment, and the leadership of these programs 0:04:47.120 --> 0:04:50.760 has done spectacular work. And indeed Fujera's ability to put 0:04:50.760 --> 0:04:55.200 itself back online demonstrates just the redundancy of the systems 0:04:55.200 --> 0:04:58.599 and the leadership of the Amorti oil program under individuals 0:04:58.640 --> 0:05:01.479 such as doctor sultanage Job, where it's really coming to 0:05:01.520 --> 0:05:05.840 the forefront of keeping the world's economic programs going but normal. 0:05:05.839 --> 0:05:07.800 At what point do the Gold allies have to go 0:05:07.800 --> 0:05:09.720 to the White House and say enough is Enough's a 0:05:09.720 --> 0:05:11.719 lot of reporting over the week about Mohammed bin Salman 0:05:11.839 --> 0:05:14.560 urging harsh action against Iran, But at one point do 0:05:14.640 --> 0:05:17.000 they say this is just too harsh Right now in 0:05:17.040 --> 0:05:18.840 our economies, I. 0:05:18.760 --> 0:05:20.960 Don't see that happening yet. Now, certainly there's going to 0:05:20.960 --> 0:05:24.640 be an economic blow. Remember these countries derive their economic 0:05:25.560 --> 0:05:29.479 gains from tourism, from transit. Dubai Airport was hit today 0:05:29.480 --> 0:05:32.360 by a drone. That's a single drone attack. That's obviously 0:05:32.360 --> 0:05:35.080 a messaging attack by the Iranians. It's meant to disrupt, 0:05:35.160 --> 0:05:40.320 it's not meant to cause massive damage. So that economic 0:05:40.360 --> 0:05:43.279 blow is there. But these countries at the same time 0:05:43.880 --> 0:05:47.120 have shown tremendous resilience. So you're looking get it up. 0:05:47.160 --> 0:05:51.159 Going to Abu Dhabi in Dubai and Saudi Arabia. They've 0:05:51.279 --> 0:05:54.680 shown tremendous capacity to keep their economies going during all 0:05:54.720 --> 0:05:58.680 of this. Expatriates are generally quite comfortable in these environments 0:05:58.720 --> 0:05:59.880 by many many reports. 0:06:00.560 --> 0:06:04.040 Stay with us. More Bloomberg surveillance coming up after this. 0:06:13.440 --> 0:06:16.000 We begin this hour with stocks pushing higher on the 0:06:16.080 --> 0:06:18.279 S and P five hundred by about seven tenths of 0:06:18.320 --> 0:06:21.000 one percent. Stephen Parker of JP Morgan Private Bank with 0:06:21.040 --> 0:06:23.720 a seventy four hundred to seventy six hundred year end 0:06:23.800 --> 0:06:26.599 SMP target and right in the following, we've not changed 0:06:26.600 --> 0:06:30.240 our base case forecast for growth, but acknowledge increasing downside 0:06:30.360 --> 0:06:33.599 risk the longer energy prices remain elevated. Stephen joins us 0:06:33.600 --> 0:06:35.360 now for more. Stephen, good morning, morning. It's going to 0:06:35.400 --> 0:06:37.120 see it. So let's talk about what we've seen so far. 0:06:37.240 --> 0:06:40.400 Five percent move on stocks, sixty bases points of widening 0:06:40.400 --> 0:06:42.040 on high yield spreads from the ties of the year 0:06:42.080 --> 0:06:45.040 so far. Is that a sign of resilience or complacency? 0:06:45.680 --> 0:06:47.479 You know, I do you think the markets are probably 0:06:47.520 --> 0:06:49.839 a bit complacent given the move that we've seen in 0:06:50.000 --> 0:06:52.080 energy markets. We've always said to clients, so when it 0:06:52.080 --> 0:06:56.440 comes to geopolitics, geopolitics rarely have long term impacts on markets, 0:06:56.680 --> 0:06:59.240 but we have to acknowledge that, particularly when energy is 0:06:59.240 --> 0:07:01.240 at the center of the storm here, they can certainly 0:07:01.240 --> 0:07:04.520 have a bigger impact on markets in the short term. 0:07:04.720 --> 0:07:06.840 You mentioned the pullback that we've seen in the US. 0:07:06.880 --> 0:07:10.040 We've seen a bigger impact in international markets, particularly in 0:07:10.040 --> 0:07:12.760 places like Europe and Asia who are more exposed and 0:07:12.760 --> 0:07:15.080 more at risk to these higher prices. But there does 0:07:15.120 --> 0:07:16.840 seem to be a bit of complacency in markets. 0:07:16.920 --> 0:07:19.640 Where do you see that complacency concentrated at the moment. 0:07:19.560 --> 0:07:22.480 Well, I think the investors are just looking at the 0:07:22.520 --> 0:07:26.080 fact that the expectations for energy prices are to recover 0:07:26.200 --> 0:07:28.120 and be back around eighty dollars in the not too 0:07:28.200 --> 0:07:30.760 distant future, and in that sort of world, then we 0:07:30.800 --> 0:07:34.000 can get back to the fundamental story around US equity 0:07:34.040 --> 0:07:36.640 markets and double digit earnings growth, which is what we expect. 0:07:36.840 --> 0:07:38.840 The challenge is if we end up in a situation 0:07:38.880 --> 0:07:41.760 where we're looking at triple digit oil not just for 0:07:41.800 --> 0:07:43.640 the next month or two, but for the next three 0:07:43.720 --> 0:07:46.360 to six months, then you have to start asking yourself 0:07:46.400 --> 0:07:48.920 about the outlook for growth and the outlook for inflation. 0:07:49.120 --> 0:07:52.920 Are people more accurately pricing. In that perspective. Internationally, you 0:07:52.960 --> 0:07:55.240 talked about the hit to international markets. 0:07:55.400 --> 0:07:56.080 Well, I think you're. 0:07:55.920 --> 0:07:59.240 Seeing two things. One, places like Europe and Asia are 0:07:59.280 --> 0:08:02.040 more exposed to higher prices in the near term, and 0:08:02.040 --> 0:08:05.080 the risks of those prices remaining higher are there for 0:08:05.120 --> 0:08:08.000 a longer time period. The US is buffered by a 0:08:08.040 --> 0:08:11.240 greater percense of energy independence. I think you're also seeing 0:08:11.280 --> 0:08:13.640 a bit of a flight to safety of flight to quality. 0:08:13.640 --> 0:08:15.760 You're seeing it in the rally and the dollar. You're 0:08:15.760 --> 0:08:18.120 also seeing it in the recent out performance of tech. 0:08:18.480 --> 0:08:20.880 Not too long ago, we were talking about tech being 0:08:20.920 --> 0:08:24.160 under pressure, the rotation into more cyclical parts of the market. 0:08:24.320 --> 0:08:26.800 I think investors are looking at this environment and saying 0:08:27.000 --> 0:08:30.160 the long term structural fundamentals, the earnings growth, the upgrades 0:08:30.200 --> 0:08:32.360 that we're seeing in the tech sector, and that's bringing 0:08:32.400 --> 0:08:35.360 money back into the US and supporting US equity markets. 0:08:35.400 --> 0:08:37.760 Do you think this has materially shifted the narrative that 0:08:37.800 --> 0:08:39.480 took hold in the first two months of the year, 0:08:39.720 --> 0:08:43.000 which is diversify outside of the United States, diversify outside 0:08:43.000 --> 0:08:46.240 of tech. Has that pulled it full circle and actually 0:08:46.360 --> 0:08:49.160 caused the leadership to come from the United States and 0:08:49.200 --> 0:08:50.000 from big tech. 0:08:50.160 --> 0:08:51.720 I think perhaps in the near term, but I do 0:08:51.760 --> 0:08:54.600 think that longer term there is still that diversification story. 0:08:55.120 --> 0:08:58.040 In particular, we think there are interesting opportunities in emerging 0:08:58.040 --> 0:09:00.760 markets who have been hit the hardest in this recent 0:09:00.840 --> 0:09:03.720 move higher in oil prices. But still there's a really 0:09:03.760 --> 0:09:07.400 interesting story, particularly in Asia around the tech story. There 0:09:07.679 --> 0:09:11.520 the hardware sector. We've seen massive earnings upgrades in places 0:09:11.559 --> 0:09:15.440 like Taiwan, Korea, India. We think that story continues, and 0:09:15.480 --> 0:09:17.920 we're looking to build a shopping list with our clients 0:09:17.920 --> 0:09:21.040 to say, if this volatility continues, what are we thinking 0:09:21.040 --> 0:09:24.120 about adding emerging markets would be sparely in that bucket at. 0:09:23.960 --> 0:09:25.920 The top of a shopping list over at Newberger Berman 0:09:26.200 --> 0:09:28.760 just on the program months ago. The bond market, they 0:09:28.800 --> 0:09:32.199 believe all roadally to lower bondiards here even if you 0:09:32.280 --> 0:09:34.800 fix this crisis over in the Middle East, lower bonyards, 0:09:34.800 --> 0:09:37.280 if you don't lower bond yards, because if you don't, 0:09:37.400 --> 0:09:39.920 ultimately it's going to hit growth and yield to the 0:09:39.960 --> 0:09:41.640 long end of the curve, are going to roll over. 0:09:41.880 --> 0:09:43.840 Is there an opening kit in the bond market? 0:09:44.200 --> 0:09:45.839 You know, our view of around rates is that we're 0:09:45.880 --> 0:09:49.120 probably more rangebound. We came into this year a little 0:09:49.160 --> 0:09:51.120 bit more conservative than the market. We thought we would 0:09:51.160 --> 0:09:53.280 see one cut from the FED. That's still our base 0:09:53.320 --> 0:09:55.480 case view. The challenge is going to be this push 0:09:55.520 --> 0:09:58.360 and pull between potential for lower growth and potential for 0:09:58.400 --> 0:10:00.400 higher inflation. That's why it's going to be in interesting 0:10:00.400 --> 0:10:02.080 to listen to what we hear from the Fed this 0:10:02.160 --> 0:10:04.240 week as they try to set the narrative, as they 0:10:04.240 --> 0:10:07.000 try to guide markets in terms of which one they're 0:10:07.040 --> 0:10:10.160 going to prioritize. I still think that there's room potentially 0:10:10.200 --> 0:10:13.160 for another cut, but we don't think necessarily that rates 0:10:13.160 --> 0:10:14.920 are going to move meaningfully lower from here. 0:10:15.000 --> 0:10:17.040 How do they guide the market in this moment when 0:10:17.120 --> 0:10:19.800 in the past, when we saw energy price spikes, they 0:10:19.840 --> 0:10:21.880 just called it transitory and they were wrong. 0:10:22.760 --> 0:10:24.720 Well, I think what's going to be interesting is to 0:10:24.720 --> 0:10:27.480 listen to their comments on not just energy markets, because 0:10:27.520 --> 0:10:30.480 I think those are more difficult to prognosticate, not just 0:10:30.520 --> 0:10:32.520 for us, but also for the FED. I think it's 0:10:32.520 --> 0:10:34.360 going to be interesting to listen to what they say 0:10:34.400 --> 0:10:37.640 about labor markets. Obviously, recent data has been a bit 0:10:37.679 --> 0:10:40.640 weaker than what we would like to see. The question 0:10:40.720 --> 0:10:42.280 is going to be about not just sort of the 0:10:42.440 --> 0:10:44.960 demand for labor, but the supply of labor, and if 0:10:45.000 --> 0:10:48.120 they indicate that that is front and foremost at the 0:10:48.160 --> 0:10:50.800 top of their mind, that could indicate that they're willing 0:10:50.840 --> 0:10:52.599 to let inflation run a little bit hotter at the 0:10:52.640 --> 0:10:53.960 expense of supporting labor markets. 0:10:54.000 --> 0:10:56.319 You mentioned semiconductor some of these companies you like. Have 0:10:56.400 --> 0:10:58.800 you thought about other issues with the strader form moves 0:10:58.840 --> 0:11:01.720 besides oil? A third of global helium gooes to shade 0:11:01.800 --> 0:11:04.319 removes that is needed when you make semi conductors. 0:11:04.559 --> 0:11:06.880 Yeah, I mean what we're seeing everyone is looking at 0:11:06.920 --> 0:11:09.280 the first order effects, which is higher energy prices, higher 0:11:09.280 --> 0:11:12.240 gasoline prices. But as you point out, Amory, there are 0:11:12.520 --> 0:11:17.240 long term, meaningful impacts around supply chains, broadly speaking, in 0:11:17.280 --> 0:11:20.240 different industries around the world. And the challenge is if 0:11:20.240 --> 0:11:22.360 these things get turned off, they don't just get turned 0:11:22.400 --> 0:11:24.920 on with a flip of the switch. One of the 0:11:24.920 --> 0:11:26.920 themes that we've been talking about a lot with clients 0:11:27.040 --> 0:11:30.199 is this idea of the shift from globalization to global fragmentation, 0:11:30.600 --> 0:11:32.800 and the idea that countries and companies are going to 0:11:32.800 --> 0:11:37.000 be more concerned about supply chain resiliency rather than supply 0:11:37.080 --> 0:11:40.240 chain efficiency. And so one of the areas of focus 0:11:40.240 --> 0:11:43.280 has been on this idea of national champions and strategic 0:11:43.320 --> 0:11:47.120 industries as the US, as Europe, as Asia look to 0:11:47.200 --> 0:11:51.320 develop these national champion companies in places like power and infrastructure, 0:11:51.440 --> 0:11:53.119 security and defense, and technology. 0:11:53.160 --> 0:11:55.080 I'm going to ask you a really unfair question. Surprise 0:11:55.120 --> 0:11:57.720 yourself and forgive me. Forgive me for doing this. But 0:11:57.760 --> 0:11:59.040 as I sit here and listen to this and you 0:11:59.040 --> 0:12:01.800 bring up chips and about geopolitics, a lot of this 0:12:01.880 --> 0:12:04.000 is scenario analysis, but I think it's a scenario that 0:12:04.040 --> 0:12:07.679 we need to explore. How would you react if China 0:12:07.760 --> 0:12:10.319 use this as an opportunity to go after Taiwan. 0:12:11.640 --> 0:12:14.080 I think that question is coming up more and more 0:12:14.120 --> 0:12:14.959 in our conversation. 0:12:15.080 --> 0:12:16.319 What do you say back to clients? 0:12:17.000 --> 0:12:18.880 I think we have to acknowledge that it is a 0:12:18.960 --> 0:12:21.559 significant risk, and I think that markets would react more 0:12:21.600 --> 0:12:24.720 aggressively to that type of news even than what we're 0:12:24.720 --> 0:12:28.480 seeing as it relates two energy prices. I do think 0:12:28.520 --> 0:12:30.679 at the end of the day, there is still an 0:12:30.720 --> 0:12:33.960 economic agreement amongst the world, and the impact that that 0:12:34.040 --> 0:12:37.760 might have on the economy probably reduces some of the 0:12:37.840 --> 0:12:39.920 risks there, but it's a risk that we need to acknowledge. 0:12:39.920 --> 0:12:41.640 And at the end of the day, when it comes 0:12:41.679 --> 0:12:45.040 to geopolitics, we don't manage portfolios around tail risks, and 0:12:45.800 --> 0:12:48.520 in the long run, that's a losing strategy. It's why 0:12:48.559 --> 0:12:51.280 we lean into diversification. It's why we think about global 0:12:51.280 --> 0:12:55.000 investing stocks and bonds, but also diversifiers in a portfolio 0:12:55.080 --> 0:12:57.600 related to higher inflation, which has been top of mind 0:12:57.640 --> 0:12:58.040 for our client. 0:12:58.120 --> 0:12:58.720 And that's the risk. 0:12:58.800 --> 0:13:02.439 It's because those supply chains diversified enough stay with us. 0:13:02.760 --> 0:13:15.320 More Bloomberg surveillance coming up after this. Francisco at lunch 0:13:15.360 --> 0:13:18.000 of Bank for America writing this, Brent could well average 0:13:18.040 --> 0:13:20.480 one hundred dollars a barrel for the year if the 0:13:20.520 --> 0:13:23.719 war impacts oil balances significantly into the third quarter, and 0:13:24.040 --> 0:13:27.440 could average near one thirty if the disruptions extend into 0:13:27.440 --> 0:13:30.640 the fourth quarter. Francisco joins us now for more. Francisco, 0:13:30.720 --> 0:13:32.760 welcome to the program, sir. I want to start with 0:13:32.800 --> 0:13:35.600 a key assumption of yours in your research, we do 0:13:35.720 --> 0:13:39.880 not embed any permanent supply loss from this war. Francisco, 0:13:40.040 --> 0:13:41.360 why is that line so important? 0:13:43.640 --> 0:13:46.040 Thanks for having me, John, and great to see you again, 0:13:46.600 --> 0:13:49.679 it's very important because if we end up with some 0:13:50.360 --> 0:13:54.680 meaningful destruction of energy acids, we are going to have 0:13:54.720 --> 0:13:58.040 to We're going to see former points increasing very quickly 0:13:58.040 --> 0:14:03.120 in the curves in this curves that that mister Hassett 0:14:03.160 --> 0:14:07.280 was referring to his comments. So of course we've seen 0:14:07.840 --> 0:14:12.080 Hart Island, Iran's main oil loading terminal being struck over 0:14:12.080 --> 0:14:15.600 the weekend, and there was a clear point made that 0:14:15.760 --> 0:14:20.120 energy infrastructure was still intact even though military acids had 0:14:20.160 --> 0:14:21.560 been specifically targeted. 0:14:21.600 --> 0:14:23.200 So I think it's it's very important. 0:14:23.200 --> 0:14:28.600 But of course in wars, as you know, it's difficult 0:14:28.640 --> 0:14:34.400 to find sometimes a closure and and and you know 0:14:34.440 --> 0:14:36.600 we are we are always one step away from a 0:14:36.640 --> 0:14:40.600 major escalation on the energy side, and that's I think 0:14:40.600 --> 0:14:41.760 the fear the all market has. 0:14:41.880 --> 0:14:44.520 There are supply chain realities though that we could discuss 0:14:44.960 --> 0:14:48.280 right now. If you shut in production, how hard is 0:14:48.320 --> 0:14:50.720 it to restart it and get back production to where 0:14:50.760 --> 0:14:51.400 it was before? 0:14:52.920 --> 0:14:54.520 Well, I mean, I think I think there are some 0:14:54.600 --> 0:14:58.000 concerns around that, but again, most oil fields across the 0:14:58.000 --> 0:15:01.880 Middle East are are conventional, so I would expect a 0:15:01.920 --> 0:15:04.440 lot of the production to come back relatively quickly. 0:15:05.000 --> 0:15:07.480 Refineries are another point of concern. 0:15:07.840 --> 0:15:10.680 We saw the Terran refinery, or at least the run 0:15:11.000 --> 0:15:14.880 refinery fuel depots being targeted. The refined itself is unclear 0:15:15.560 --> 0:15:19.440 what's its scarence status, but I think I think generally 0:15:19.520 --> 0:15:22.240 most assets should be able to come back within a 0:15:22.280 --> 0:15:26.960 month or two months and when the war ends. And 0:15:27.000 --> 0:15:29.560 now having settled that, another key assumption in our numbers 0:15:29.600 --> 0:15:32.520 is that Hormos is going to be reopening sometime soon 0:15:33.240 --> 0:15:37.080 to and record the majority of this traffic, which might 0:15:37.160 --> 0:15:41.440 also be maybe too far fretter an assumption. That's one 0:15:41.600 --> 0:15:45.240 very very important concern. Hormos, as you pointed out, is 0:15:45.640 --> 0:15:48.320 the joke point for a lot of the commodity flow 0:15:48.440 --> 0:15:49.600 in and out of the world. 0:15:50.240 --> 0:15:52.760 Francisco, do you have a day circled on the calendar 0:15:52.800 --> 0:15:55.920 this week to John's point earlier where you start to 0:15:56.160 --> 0:15:59.000 challenge some of your assumptions and shift to some of 0:15:59.000 --> 0:16:01.840 the one hundred and thirty dollar a barrel base cases. 0:16:03.680 --> 0:16:06.480 Well, look, I mean, we know the hoodies were able 0:16:06.480 --> 0:16:10.200 to disrupt traffic in Babblement that for about twenty eight months, 0:16:10.280 --> 0:16:14.160 so I wan't to remind everybody of that flows were 0:16:14.880 --> 0:16:17.000 down from nine million barrels a day to. 0:16:17.640 --> 0:16:19.360 Four point one four point two. 0:16:19.760 --> 0:16:22.240 Now, the difference between mavem Mon Devn and Hormosis that 0:16:22.240 --> 0:16:27.800 there's clear alternatives that allowed shippers to reroute. Those seventy 0:16:27.880 --> 0:16:31.320 vessels that used to cross, a lot of them rerouted 0:16:31.440 --> 0:16:36.000 through the cape. So also I think a big relief 0:16:36.040 --> 0:16:40.800 valve for Bible that here there's no clear rerouting. So 0:16:40.840 --> 0:16:43.760 I think I think the options are not great to 0:16:43.840 --> 0:16:47.440 reopen the strait pretty good in the line of all 0:16:47.560 --> 0:16:52.680 the capabilities that that Iran might have. And also, to 0:16:52.720 --> 0:16:54.800 be honest, this quickly becomes a bit of a guerrilla 0:16:54.840 --> 0:16:58.080 war like we saw in Yemen, and I think shippers 0:16:58.080 --> 0:17:01.640 themselves will will be very very costures not to take 0:17:01.640 --> 0:17:04.919 that route if there's risk of their vessels sending up 0:17:04.960 --> 0:17:08.960 in fire, and we've seen twenty of those already being attacker, 0:17:09.080 --> 0:17:12.360 so I think so it's a difficult time for shippers, 0:17:12.359 --> 0:17:13.080 for insurers. 0:17:13.720 --> 0:17:15.360 Everyone's kind of waiting for a resolution. 0:17:15.560 --> 0:17:18.760 But if it doesn't come up in the next few weeks, 0:17:19.080 --> 0:17:20.439 I mean I'm going to give it maybe until the. 0:17:20.480 --> 0:17:23.359 End of the month. Things can get very very complicated 0:17:23.359 --> 0:17:24.200 for weight prices. 0:17:24.359 --> 0:17:26.399 We had Jeff Curry of Carlisle on last week, and 0:17:26.440 --> 0:17:28.560 he was talking about how even if the straight up 0:17:28.560 --> 0:17:31.720 removes is opened this week or next week, there is 0:17:31.760 --> 0:17:35.480 going to be an extra risk premium placed not only 0:17:35.520 --> 0:17:38.240 on oil, but a whole bunch of different commodities, partly 0:17:38.280 --> 0:17:40.560 because there'll be nations that are stockpiling and kin to 0:17:40.600 --> 0:17:43.000 what China has done, and partly because people will understand 0:17:43.040 --> 0:17:46.240 that there is that risk of transporting goods on the seas. 0:17:46.800 --> 0:17:48.200 Do you agree with that thesis? 0:17:49.480 --> 0:17:51.719 Yeah, I think the war is going to it's going 0:17:51.760 --> 0:17:54.640 to transform the way we think about commodities more fundamentally. 0:17:55.400 --> 0:17:59.399 Remember in the nineteen nineties, Japan pushed for just in time, 0:18:00.080 --> 0:18:02.919 and in the twenty twenties it's been China's just in 0:18:03.000 --> 0:18:05.040 case strategy. 0:18:04.640 --> 0:18:05.760 Of inventory accumulation. 0:18:06.200 --> 0:18:10.520 So they've been building up huge oil reserves, and we've seen, obviously, 0:18:10.760 --> 0:18:13.240 in part because trade tensions, in part of it because 0:18:13.280 --> 0:18:15.720 of political slash military tensions, we've seen a big buildout 0:18:15.720 --> 0:18:19.520 in commodity inventories. I think this trend only speeds up 0:18:21.600 --> 0:18:25.960 once the war's over, and I think that provides support 0:18:25.960 --> 0:18:27.840 to long dated commodity prices. 0:18:28.119 --> 0:18:29.680 Sooner or later, and we'll. 0:18:29.520 --> 0:18:32.000 See I think a bit of a bit of a 0:18:32.040 --> 0:18:35.520 mad rush once we are out of the war, but again, 0:18:35.560 --> 0:18:37.680 we need to finish. We need to see this war 0:18:37.760 --> 0:18:40.600 coming out to an end, because if we don't, I 0:18:40.600 --> 0:18:42.920 think the risks of recession will grow by the week 0:18:43.760 --> 0:18:46.399 as we head into April, and definitely if we are 0:18:46.400 --> 0:18:47.520 still in the same place in. 0:18:47.440 --> 0:18:49.760 May looking into a third quarter. 0:18:50.200 --> 0:18:52.200 I've already mentioned we could see spikes t one hundred 0:18:52.240 --> 0:18:55.639 and sixty hours of barrel. If things keep going, we 0:18:55.680 --> 0:18:58.920 could see Brent breaking two hundred doors of barrel. I 0:18:58.960 --> 0:19:01.119 think it may take a longer to get there, but 0:19:01.560 --> 0:19:03.040 it's important to understand that. 0:19:04.880 --> 0:19:07.119 We don't have that much time, and. 0:19:08.000 --> 0:19:11.280 Obviously at US a little more instaly than all regions. 0:19:10.920 --> 0:19:15.000 But I think in particular Europe is very very exposed, 0:19:15.800 --> 0:19:19.280 as are many other Asian countries, particularly in Northeast Asian countries. 0:19:19.440 --> 0:19:21.640 Francisco, I know you that you track what is going 0:19:21.680 --> 0:19:23.879 on in terms of the OPEC countries, and we've learned 0:19:23.880 --> 0:19:27.160 this morning at Bloomberg that the UAE production has fallen 0:19:27.160 --> 0:19:29.280 to about two million barrels a day. It was closer 0:19:29.280 --> 0:19:32.159 to three point six in February. What other countries do 0:19:32.160 --> 0:19:35.080 you see production really falling off a cliff when it 0:19:35.080 --> 0:19:35.879 comes to the Gulf. 0:19:37.040 --> 0:19:39.960 Well, so it is known that the Iraq has been 0:19:40.040 --> 0:19:45.920 a curtailing output as Haskubai remember that, I mean, I 0:19:45.960 --> 0:19:48.679 mean we think probably about ten to eleven million barrels 0:19:48.680 --> 0:19:52.880 a day of production has been curtailed in the past 0:19:52.920 --> 0:19:55.359 two weeks, so it's about ten percent of the world supplies, 0:19:56.240 --> 0:19:57.560 about twenty percent. 0:19:57.640 --> 0:19:59.040 This will pass us through hormus. 0:20:00.080 --> 0:20:05.520 So we've seen about profunctional academy our health. The other 0:20:05.560 --> 0:20:08.600 big issue I think is refined petroleum products. Refineries have 0:20:08.680 --> 0:20:11.480 been shut down across the board. And the issue with refineries, 0:20:11.680 --> 0:20:14.399 as you know, we don't really have a strategy paternal 0:20:14.440 --> 0:20:18.120 reserve for petroleum products. We have it for crue oil, 0:20:18.880 --> 0:20:21.080 so it's a little bit in mislabeled. Real reserve is 0:20:21.080 --> 0:20:22.959 really so it's through the crudel oid reserve. So if 0:20:23.000 --> 0:20:27.399 we lose refining capacity, that impacts petrochemical units. You pointed 0:20:27.400 --> 0:20:32.760 out to weddings in India for LPGs like propane, and honestly, 0:20:32.880 --> 0:20:37.119 like it's the supply chain, there's locations that are building 0:20:37.160 --> 0:20:40.199 up in the background that are gigantic. I mean, remember 0:20:40.280 --> 0:20:42.840