00:00So many questions. Seema, difficult to know where to begin, but we have to start with oil.
00:05Helima Croft of RBC saying this is going to go on for a few more weeks at the very least.
00:08She's more convinced of that, having had discussions in Washington, D.C.
00:12What are your thoughts? What's your base case?
00:14Thanks for having me on, Vani.
00:16Well, look, so our base case, I think it has to be this is going to be somewhat short-lived,
00:20that you see oil prices stabilizing around the $90 mark and then coming back down again.
00:25But I have to say there's very little confidence about that.
00:27And what's been interesting about certainly what Helima had said is that that downside scenario,
00:33the very severe case, has really shifted. It's really shifted in a more negative way in the past week.
00:38So just a week ago, people were talking about a worst-case scenario of about $100 to $120 a barrel
00:43for a couple of weeks.
00:44That severe scenario has now shifted to numbers like $150. I've even seen some for $200.
00:49And so the equity market response, although it's been negative, it's been quite muted.
00:52And to me, that does suggest there's maybe a little bit of complacency, some vulnerability for the market in the
00:58next few weeks.
00:58So we do see the VIX spiking every now and then, but then it sort of comes back.
01:02And as I say, we're really not that far off our records.
01:05Is the U.S. stock market more focused on things like private credit concerns, you know, software concerns,
01:10or will it at some point price in a worse outcome to this war?
01:15Well, I think the market has been conditioned to believe that geopolitical crises are typically very short-lived,
01:20and that has always been the case unless it starts to really hit fundamentals.
01:24And obviously, all prices are really key here.
01:26The other thing the equity market is focusing on is the idea that because affordability pressures in a mid-term
01:32election year,
01:33President Trump is likely to back down at some point, you know, call victory and bring this to an end.
01:37And then whenever that happens, there is a fairly good chance that you see a snapback in oil prices
01:42and the market, you know, resumes this upward trend.
01:45So I think the equity market is a little bit averse to changing positions significantly and responding to this.
01:51But this is a real contrast to what you're seeing from the bond market,
01:54where the bond market is more concerned that this is going to be a sustained crisis
01:58where you see oil prices remaining over $100 a barrel for a while and then that feeding through to inflation.
02:03So there is a real contrast between equities and bonds right now.
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