00:00Adam, I wonder what role you think the Iran story is playing in the markets thinking right now.
00:04The latest news lines from the Wall Street Journal suggesting that perhaps we're in for a prolonged closure.
00:09We'll have to see whether that is substantiated by the U.S. administration.
00:13We just don't know, do we?
00:14But I wonder what reaction function we're seeing in markets to that kind of news versus earnings stories versus all
00:20the other news flow.
00:21Yeah, definitely.
00:22I mean, I think a part of the case we've been making over the past few weeks is the equity
00:25market is content to look through Iran
00:27as long as there's a no material escalation, which we're not seeing at the moment, and there is some progress
00:32towards a deal.
00:33I mean, obviously, the latest Wall Street Journal report is negative on the making progress element.
00:38And, you know, if you look at Brent, that's up around 30 percent off the April low.
00:41Better markets are increasingly pricing the probability that Hamus will remain closed until the end of June.
00:47But I think what we've seen at equity market is just very much what we've seen at every juncture.
00:51They want to take, you know, the most positive outcome and run with that.
00:55And I think there's maybe some hopes this is just a negotiating stance and things can turn on a dime.
01:00But also, you know, I think there's an element of market bandwidth.
01:03You've got a exceptionally busy week of earnings.
01:06You've got a busy central bank docket.
01:08And in the interim, Q1 earnings aren't really reflecting the impact of the Iran conflict yet.
01:13And then also as well, the data capture isn't really showing us too much about it as well.
01:18Yeah, and we'll get that inflation data out of Spain shortly, of course.
01:21So markets, markets bandwidth.
01:23I like that.
01:24Is today more about the earnings story for the markets than what's happening in Iran?
01:29Absolutely, I'd say so, definitely.
01:30I mean, if you look at the big four aftermarket, their market cap themselves is 15 percent of the S
01:34&P 500.
01:35So if you're an index trader, obviously that's important.
01:38But there's the rip-and-effects beyond those companies, you know, all their customers, suppliers,
01:42of course, AI, cloud computing, advertising, etc.
01:45If you look at the SPLC function on your terminal for NVIDIA, those four account for nearly 50 percent of
01:50NVIDIA's earnings.
01:51They're the biggest company in the S&P 500.
01:54So I think, you know, in terms of earnings themselves, I don't think Q1 results will tell us too much.
01:58It's more about what does CapEx say, what's said on the conference calls.
02:01And for CapEx, it does appear to be a little bit of a sweet spot where, you know,
02:05markets don't want these companies to be too frivolous in their spending,
02:08but also they don't want them to rein it back too much.
02:10You know, that could be potentially negative for the AI trade,
02:13which we did actually see a little bit of signs of wavering yesterday.
02:15We saw that open-air report, which was clearly a negative.
02:19And, you know, so I think if you kind of do see, if you consider how narrow this rally's been,
02:25if you see negative read on that front, particularly as well as some negative Iran news flow,
02:28that could boost a headwind for stocks.
02:30What do we look for at the Fed then, Adam?
02:32I mean, this probably might be Powell's last as governor, as chair, but then he might stay on.
02:40I mean, any guidance around that could be interesting.
02:43Yeah, I mean, the decision itself isn't really particularly interesting.
02:45We're looking for an unchanged rate.
02:47There's no dot plots and the market is very much moving towards what does life look after Powell
02:51and what does this Fed, you know, look like under Walsh.
02:54I think, obviously, if he does stay on as governor, that could potentially elicit some response and effects in bonds,
02:59as, you know, Walsh would have potentially less of a tighter grip on the FOMC.
03:03But for stocks, I don't think they'll be too fussed.
03:05It's all about those large-cap earnings.
03:06Adam, thank you very much indeed.
03:08Adam Linton from Bloomberg Markets Live on what to focus in on when it comes to the markets today.
03:12There's a lot.
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