00:00Jean Bavard of BlackRock writing, the energy-led supply chain shock is likely to be short-lived.
00:04We see disruptions measured in weeks rather than in months.
00:08Jean joined us now for more. Jean, it's good to see you.
00:10Good to see you.
00:11Can you ignore this?
00:12No, cannot ignore it.
00:14But I think we need to, two things need to be tracked, right?
00:17We need to see the disruptions that continue to evolve.
00:21And the Strait of Ormus is the thing to watch.
00:24How many flows of, you know, tankers and so on we see going through.
00:27We're about 16% in our analysis of the normal level.
00:32So this is clearly a massive shock for now.
00:35But at the same time, we think we need to think about the response, right?
00:41I mean, all prices, you know, the conflict is driving all prices, but all prices will be driving the response
00:46as well.
00:46And that part, I think, needs to be kept on the radar as well.
00:50I don't think the world can sustain months of 100-plus dollars.
00:57And people will react to that.
00:58So I think that's why, I mean, we think this is not days, for sure.
01:02But it's not months either.
01:04I mean, maybe a couple of months, but it's not months.
01:06So I think this is more of a, we're in a realm of weeks.
01:10Just hold on a second.
01:11You said maybe a couple of months.
01:13Goldman is out saying that if this goes on for 60 days, their forecast include in the 90s for the
01:18fourth quarter.
01:18That's not spot right now.
01:20They're talking about where December is currently trading.
01:23And December is currently trading where?
01:2470s, 80s over the last week or so.
01:2790 in the fourth quarter.
01:28Doesn't that change the story at all?
01:30Well, the market has already been, you know, assuming we're going to get like the kind of 90s-plus number
01:36until, you know, into June, right?
01:38So and then declining to December.
01:41That's already a couple of months.
01:42And that's the wall I'm describing here.
01:44So if we go with what the curve is pricing, I think it's a shock.
01:47It's going to add to an inflation narrative.
01:49It's going to challenge the benign inflation narrative that had been prevalent before.
01:53So I think that is a big story there.
01:55But at the same time, it's not the staked inflationary shock that, you know, would be a risk.
02:00And that would be more like if we're in months of 100-plus, then it's, you know, shaving 0.5
02:06% on growth.
02:08And it's an additional one percentage point on inflation globally in this environment.
02:12So that would be a significant risk.
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