00:00So it looks like immigration policy plus tariffs plus a war in Iran. All of these things are adding real
00:07upward pressure to inflation.
00:10What is the Fed going to be able to do. I mean we have a meeting in one week Diane
00:14and for the rest of the year. How does it look.
00:20It's getting harder and harder to justify another cut. And one even wonders if rates are going to be high
00:25enough to derail the inflation that we have.
00:28We hope this to be a supply shock that plays out over the course of months. It is months. We
00:34are not talking about in none of our scenarios do we have this playing out rapidly in the course of
00:39weeks even if the water were to come to an end within the course of four to five weeks.
00:44That does not change the disruptions to supply chains that are starting to mount beyond oil because the Strait of
00:52Hormuz being closed really matters to a bunch of things out there in the U.S. economy including prices of
00:59aluminum which have soared.
01:01It's affecting production in Brazil as well. These collateral damages are similar in scope not as bad but similar to
01:11what we saw during the pandemic when everything shut down.
01:14And what we learned then more than anything is that it's harder to ramp back up once you idle production.
01:21And that is what I'm worried about going forward is the price pressures due to that against the backdrop of
01:28the fiscal stimulus that we're seeing. We know that one two combination is
01:32what helped to keep inflation not transitory but more lingering. And we're not only still seeing it we're still seeing
01:42it and it's starting to show signs of accelerating again.
01:45We're still seeing it and are not going forward.
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