00:00The slightly weaker oil price, slightly weaker today, weaker yesterday, this on the back of the expectations that maybe diplomacy
00:07can bring, you know, cool heads to bear, Mark.
00:12What do you make of the price action around this lower oil price? What impact is it having on global
00:17bond markets and your thinking from here?
00:21So I think this is the sixth day in a row we're seeing Brent crude prices lower, which would be
00:26the longest streak in more than a year.
00:27So obviously long before the U.S.-Iran war started.
00:31We talked about that Thursday, almost two weeks ago, Trump put in a massive extra premium in oil prices.
00:37And so from that moment onwards, you know, after months of seeing asymmetric risk to the top side, it's skewed
00:44to being asymmetric risk to the downside.
00:46Now, there's two potential ways that might come.
00:48There's the, you know, potential optimism around Russia-Ukraine deal that you've just kind of analyzed ahead of the winter.
00:54And there's also just the fact that we might get something more positive in U.S.-Iran.
00:58That might just be more flows.
00:59We're seeing more flows go through the Strait of Ramuz.
01:01We're seeing Saudi Arabia possibly restore its pipeline.
01:05So the point is that going into the midterms, there is massive incentive out of the U.S.
01:09to do something to get those oil prices lower.
01:11So I still think even after the declines the last six days, I still think the asymmetric risk reward is
01:17for oil prices to have much bigger down moves than top side moves.
01:20And that's positive for stocks.
01:22It continues to be positive for Treasuries.
01:24So at the moment, the thing that's worrying me is that everything's kind of going to plan in the last
01:28few weeks in markets.
01:29Everything's looking very bullish.
01:31And I get worried when things are looking very bullish and going to plan because that means I'm missing something.
01:36What's the catch?
01:37The obvious catalysts, you know, there's always the risk that something goes wrong in the A.I. trade.
01:42But that's been there for a long while.
01:43There's always a risk that we get another random flare up in the Middle East.
01:47But again, the incentives are lower for that to happen ahead of the midterm from the U.S. side.
01:51So it's not, you know, that's not a fresh one.
01:53So what's the risk out there?
01:55Trump, Xi, summit again, where's the incentive to blow that up?
01:58So I'm really struggling to understand why markets aren't even higher.
02:01It seems very bullish out there.
02:03So why aren't funds re-risking?
02:05Why is that not happening?
02:09I am struggling.
02:10And in my clutch for reasoning, I think, one, I think that the gains are very concentrated in the A
02:18.I. sector,
02:18which means there's a risk of volatility.
02:20Breadth is never reasonably bearish, but it does mean there's higher volatility.
02:23So people are perhaps waiting for better opportunities to enter.
02:26But that, again, is more structurally bullish into year end if there's a lot of money waiting to buy a
02:31dip that may not come.
02:32There's a September seasonality, which I have been worried about, but we're seeing no sign of that really hitting yet.
02:37There's always a risk that Trump is Trump into the Trump-Xi summit.
02:42It would seem strange that the incentives for him to cause a real risk off ahead of the midterms does
02:48not seem to make sense.
02:49But there's there is a chance that, you know, he just, you know, comes out of the media and kind
02:53of goes, you know what, we're going to reimposing, you know, temporary tariffs on China or, you know, I'm upset
03:00with what they've done or whatever something aggressive there.
03:02But I don't think that any of these risks are either new or the risk reward is to be negative.
03:08I think there are a lot of people like I was kind of thinking that, you know, there might be
03:12some dip in the second half that, you know, that's the chance to get the year end rally.
03:15I think we see the turn of the month into October and people might be chasing this aggressively if nothing
03:20bad happens soon.
