00:00Let's start with what we're seeing in energy markets because are you sensing that with Brent
00:04at 114, sure WTI looks fairly restrained, but Brent at 114 gas prices jumping 24% in just this
00:12morning, are you sensing that we're about to take a step change into new territory in terms of
00:17people's expectations, assumptions about how elevated energy prices are over the first and
00:25second quarter of this year? I think that's absolutely what's playing out right now. And
00:32I think the way this is kind of transpiring is probably the trajectory for the next couple of
00:37weeks in terms of that we'll go through periods of trying to be in denial or being optimistic
00:42and then have step shifts lower until we have clarity about the strait being sustainably open.
00:49And I just don't see how that clarity comes anytime soon. So I think what people are really starting
00:54to suddenly get a kind of grasp is that the impact on some of the derivative oil products,
01:01whether it's other commodities or whether it's natural gas or whether it's things like helium
01:07and fertilizer or whether it's jet fuel, shipping fuel, they're realizing that there's a lot of
01:12industries that are going to be particularly badly targeted. What we're seeing in oil markets
01:16today is quite extraordinary because WTI, when I walked down to the studio, was pretty much flat
01:21for the day. And yet we're seeing Brent really surge higher. So that spread is absolutely blowing
01:27out at the moment. And I think it's really problematic for specific economies, specific
01:32sectors, apart from the broader wealth destruction we're seeing.
01:37Mark, what did you make of how Jay Powell responded to this conflict, the inflationary impacts,
01:42and how it kind of feeds into the Fed's thinking? What was the key line that stood out to you
01:46from
01:47yesterday? I think the two big takeaways were that two of the previous dissenters no longer dissented,
01:54which made sense, so slightly hawkish to the margin. And Powell saying he'd stay until the
02:00investigation is over, you know, not guiding on longer. But the idea is that he might be around
02:04for quite a while. So, you know, the Fed could never say anything useful about the conflict because
02:09no one really has a clue on the trajectory. And we don't. Therefore, you know, if it ends,
02:12if it in the optimistic scenario, which I don't believe, that it ends imminently and oil prices
02:17collapse, well, then they can kind of ignore all this shock. But, you know, as it goes further,
02:22we have a stagflationary impulse. We do have both inflation and demand destruction, which matters
02:28more will depend on the extent of that energy surge and how long it lasts. So for me, it was
02:32the other
02:33points that take away. It was a marginally hawkish meeting, but, you know, it's completely
02:36overshadowed by what's happening in the Middle East. And what are you watching for the rest of
02:40the day, Mark? Because there is a lot going on, certainly in terms of central bank decisions,
02:45but a headline risk around the Middle East, of course, is on our list.
02:51Yeah, we have a load of central banks and, you know, a short term watching it for the guidance
02:57of how they all speak about this. But we know, again, that like the Fed, there's not much they
03:02can do yet. This is a major problem brewing from them. But which way they're going to react
03:05will depend on the duration, which just sounds like such an annoying phase because it's so
03:10overused at the moment. It depends on the duration of the conflict. So I think the central banks
03:14won't really matter. I'm interested in the price action. And, you know, do equities start pricing
03:18in more of the damage that's caused from energy markets and related commodity markets? Because
03:23I still think there's a lot more downside in equity markets, despite it already being the
03:27worst month for global stocks in three and a half years, as we talked about before.
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