00:00It's things away from crude maybe that maybe we should spend more time talking about.
00:04Gas prices higher, diesel prices higher, all of these conflicts leading to some of these refined products
00:09and in the case of natural gas to be at elevated levels.
00:12What are you watching for here as this conflict seems to persist in the Middle East?
00:18If we think about the most directly impacted, it's clearly Europe.
00:21Gas levels very low, as you spoke about earlier.
00:24Diesel, a key component of the European fuel mix as well.
00:27So I think, you know, Europe has a headwind from a macro perspective.
00:30How vulnerable is Europe at this point?
00:33So we're paying an 8x for gas in Europe compared to the U.S.
00:37And if you look into the winter months, it's currently trading just around the same level.
00:41And there is obviously the risk that if we do get a very cold winter after a very warm summer,
00:48then supplies are not ample.
00:50Oil prices are focused right now from an inflationary perspective,
00:53but the food prices inflation is one we unfortunately probably will have to deal with in the coming months as
00:58well.
00:59We've been really lucky this year.
01:00Food inflation has been really low.
01:01In fact, actually, it's been negative the year to date.
01:04I think that kicks in next year.
01:05It could add 1% to overall inflation levels versus expectations.
01:09And on that basis, inflation is going to stay much higher for longer than anybody anticipates.
01:15And so some of the sell-off in bonds, be it in the U.S. or Europe or the U
01:19.K.,
01:19is there because actually I think the bond market is working out.
01:23Growth is better and inflation will be more persistent into 2027.
01:27I think gilts are definitely potentially in the firing line.
01:30We know we have this acute energy exposure in the U.K.
01:33And I think what's interesting is, and the data we've seen this week,
01:36we saw the BRC shock price data.
01:38That was elevated and we've seen real evidence now that costs have been passed on to consumers.
01:42How do you hedge your portfolio when bonds are doing what they're doing,
01:46equity markets are doing what they're doing,
01:48and hard assets are doing what they're doing as well?
01:50How would you hedge it?
01:51Right now, the earnings outlook, the resilience of the global economy,
01:56even in regions very exposed to oil prices,
02:02all of this has been supportive for a pro-risk stance.
02:07Yes, there's a risk around consumer and the domestic economy
02:10if gas prices keep going higher.
02:12We are still well off where we were four years ago when the war in Ukraine started,
02:17but there is a risk here, and I think we need to hedge that.
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