00:00Kerry, great to have you with us. I mean, last week it was all about that potential peace rally.
00:05What does this mean for the rest of the week? Because I feel like we're holding sort of a
00:10groundhog day pattern where we seem to be getting somewhere by the end of the week and then the
00:16weekend happens and we're not really getting anything the following week. And this is seven
00:19weeks into this conflict already. That certainly is the case. It does seem like moving in circles
00:26to a certain degree. But I think the way the markets are digesting it is they continue to see
00:30this as at least pointing towards an off-rape in the conflict in the Middle East. They're
00:35looking forward towards potentially some negotiations or a second round of negotiations
00:39happening. The potential at least flow of oil out of the Strait of Hormuz even if it's not fully opened.
00:45And I think they're looking through what could be the end or at least the beginning of the end of
00:49this conflict and focusing more on the micro fundamentals given we're entering the earnings
00:54season in the US and the strength of the earnings going on. So that's again why we're seeing the
00:59markets tend to move towards all-time highs in some areas and thinking about the prospects for
01:04a global economy that continues to rumble on and not really fearing some of those recessionary fears
01:09that may have been in the market when the oil price was much, much higher.
01:15Inflationary concerns still seem to continue. Of course, oil jumping early in the Asian session
01:19and we're seeing Treasury yields gaining as well. We've in fact seen the two-year yield
01:23at higher levels than before the war. How consequential would the Senate hearing by Kevin
01:30Walsh on Tuesday be in sort of markets assessing where potentially the Fed could go from here?
01:37Yeah, I mean Kevin Walsh has been pretty adamant about the lower, having lower interest rates in
01:41the US. He's been very vocal on the use of the balance sheet and changing the way the Fed has
01:46used
01:46the balance sheet in the past. So I think those are two clear things that will come out of the
01:50Senate
01:50hearing questions around his views on the balance sheet and also on interest rates. I think the
01:55conflict in the Middle East has obviously given a bit of a movement in terms of how he may interpret
01:59the short-term view on interest rates. The fact that the market is pricing out those rate cuts
02:05and thinking about potential for even a rate hike there may give him pause the thought to see
02:09that they still want to see lower interest rates overall. And I think there's a bit of a still
02:14disconnect between the confirmation hearing and him actually becoming the chair of the Federal Reserve
02:19in terms of what that means for the outlook. Certainly other members of the FOMC have been
02:24a little bit more or less dovish when it comes to that outlook and certainly thinking about a more
02:29patient outlook for federal banks and the Federal Reserve as they digest what the short-term
02:33inflationary consequences of this could be and also the implications for growth. Our view is that
02:39the Federal Reserve is likely to see inflation that will be relatively transitory and growth that
02:44will weaken over the course of this year and they'll be much closer to their inflation goal by the end
02:50of this year which would still allow them to ease policy rates.
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