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Lots of headlines going back and forth here as it relates to Iran in the Middle East. Let's get the latest reporting. Ethan Bronner Israel bureau chief for Bloomberg News. He is based in Tel Aviv. Ethan, I guess have nothing else Iran and the US as it relates to his fifteen point plan. Some progress seems to be being made here. What can you tell us?
I'm not sure i'd characterize it as progress. Well, but I mean, you know, the the Americans have presented a fifteen point plan. I think it's fair to say that the fifteen points are pretty much what they demand that have run before they went to war with it. Iran said no. Then then they went to war, and now they're gone back and made the same demands. And it looks like Arena said no once again. So I don't know. Yeah, it doesn't like progress, does it. No?
But I mean they're talking, is the fact.
I mean, Scarlett and I were just saying just the fact that they're talking feels a little bit better.
I guess.
So, I mean, you know, it's it's an interesting question about good and bad. I mean, obviously from the most perspective abroad, everybody would like this thing to come to an end. I've just written a story that we put on the Bloomberg Wire a couple of hours ago that says, in this country, in Israel, that is not the goal. The goal is victory, not stopping the war. So you know, the idea is to stop around from having the capacity
to threaten Israel and the region any longer. And if the war stops, that won't happen unless it stops on the under the terms that President Trump has put forward, and that doesn't seem very likely.
At the same time, Iron moving forward, for instance, it's been able to export a lot of oil and make a lot of money by sending oil to China, for instance. It's also charging some ships a transit feed to get through the Strait of Hormuz, so.
Financially, you know, they're pocketing some money. They are.
I'm not sure you'd a lot of change places with them. They're losing all their infrastructure by pocketing a few bucks in oil. I mean, sure, Look, I am not saying that it's the war is going great from the American perspective, I don't know. It's very difficult for us to assess. And there's always a propaganda war underway at the same time there's an actual physical war, an attempt to persuade the other side to back down, and it doesn't look
at the moment that either side is now. It is also true that from an American perspective, rising oil prices and all this kind of stuff for what has seen to be a war of choice is causing a lot of political trouble for the president. And in Iran, I think there's less political trouble. It's, after all authoritarian situation, so and they may be willing to put up with a lot more suffering than the West is. We shall see.
Ethan, if President Trump were to decide to end this war for whatever reason he sees that, is it a fair assumption that Israel will go along with that.
It's a fair assumption. Yes, I mean, as much as this country would like to see it completed appropriately, it is much more important to it to maintain its strong relationship with the United States with this administration, and it is certainly made clear that it will take its queue from the President on this absolutely.
Ethan, what are you looking at next? How are you determining how to kind of keep score here?
I'm trying not to keep score. I'm not really sure it's all that useful for me. I mean what I'm you know, there are a bunch of things we're watching all at once. What is the level of attacks by the Iranians on their names and on Israel? So those have gone down to some extent. In the first days of the war, there were maybe seventy five or eighty a day here, and now they're about a dozen or eight, ten, twelve that kind of thing. Is that because the Israelis
have successfully taken out their launchers? Possibly? Is it because the Iranians are husbanding their stuff? Possibly? Another issue, of course, is in addition to the growing international markets pressure to end this thing, is the interesting fact that the Emmatis and the Saudis seem now, although they didn't want this war to happen, more enthusiastic about ending it along the same lines as Israel's argument has been because they feel there's a sort of damaicles hanging over their heads with
these Iranian attacks of the last week. So will that make a big difference. It'll make some difference. And of course are there going to be airborne ground troops from the Americans heading there? Looks like they are in the coming days. So there's a lot that we're watching a lot.
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Let's get a check on how this is all shaking out for the market's clearly, the Venezuelan case is not what's driving markets.
It's all about oil prices.
And oil prices right now are higher by more than three percent Brent crude the global benchmark at one hundred and six dollars. That is, of course raising concerns about inflation and stagflation and demand destruction. Let's bring Kathy and Twistle. She is managing director and private wealth advisor at Morgan Stanley joining us from Delray Beach, Florida. Kathy, the rise in oil prices has remained elevated, you know, day in
and day out. In my backtrack, it might come back again, Yet we know that oil prices are unlikely to go down anytime soon, even when the Strait of hor moves opens up. How does that color how you view investing in risky assets.
Absolutely, there's a lot of different things that we're thinking about right now, and clearly this you know, this Iran war oil shock is the big event. However, we want to think about our clients and what they're thinking about and how we can better position portfolio. So, you know, last week's data confirmed our inflation fears. PPI came in hot, and the longer oil stays elevated, the harder it will be for the FED to control these upstream price pressures.
And what that means for you know, clients and just the general population is that everything is more expensive. They're getting like a tax on gas. And they're also very very concerned about their portfolios because usually when we have these issues with oil, we will see some downward pressure on both the equity and the bond market. So what we're looking at is favoring some high defensive stocks and such as like energy, financial, healthcare, reducing overbought semiconductors, unprofitable tech,
and low quality credit. What's interesting the market looks like on the surface like surprisingly resilient, but underneath it's like a violent rotation going on, and energy and AI infrastructure are booming, while software companies and private credit lenders are showing signs of stress.
So these are all.
Things we think about, and we're trying to remove some of the risk in the client's portfolio and add some more forward looking investments.
About on the fixed income side here, how much credit risk do you think folks should be taking in this environment, because more you can just sit there to two year treasury and get close to four percent here right now.
Yeah. No, we think that investing right now in safer risk assets is the smarter move and the smarter play where advising clients not to be in high yield because you're not getting paid for high yield and these are the times where you'll start to see high yield assets start to crumble a little bit, so we want to avoid that. I look at it. If you've got money and investments and money in the bank. You've won the game. We want to protect it. We want to grow it methodically, not to get undue risk.
Where does gold fit into that.
For a while, everyone was flocking to gold and they saw it as almost a risk asset given how I was performing. And they've definitely pulled back from that as concerns about the prospect of fewer rate cuts and now even talk of a rate hike really infect the market.
Yeah, on the rate hike issue, we don't anticipate a rate hike. We're still looking at two rate cuts towards the end of the year, so it will be interesting to see that unfold. In terms of positioning with gold, we still like real assets. We like energy, infrastructure, commodities, reads, and gold and metals still play a position there. Basically, again, when oil driven inflation fears take over, our stocks and bonds tend to drop at the same time. So real
assets provide a national natural shield against inflation. So that's why we like to add that to the portfolio too. So we've been adding real assets.
Even though gold is down about sixteen percent since the start of the war, it hasn't done very much, No, it.
Hasn't, but it also anytime there's a downward trend, there also might be a buying opportunity there, And just with the thought of where we are in the markets and the economy right now, and with the oil prices going up, it's just basically a hedge. And we don't put a large percentage of clients into gold, but we do a small percentage.
Inching Scarlett, just as you were talking about gold. Piece of research is hit my inbox from Richard Rosenberg Rosenberg Research first bulletpoint. We maintain our long term bullish call on gold and are looking for the most attractive reentry points since we trimmed our position. So he says, maybe buy on the weakness here, Kathy, how about numinisful bonds. I know Donner Florida, you guys famously do not have those state taxes, but for those of us in high
tax jurisdiction, communis have been really, really attractive here. How do you allocated municipal bonds for your clients?
Absolutely, that's a great question, and we have lots of clients in high tax rate states, including New York, so we are using municipal bonds the short term and intermediate termunible bonds are very pricey right now and not as attractive, so we are using long term municipal bonds, which have
still great value for clients and placing them there. So we do like the municipal bonds, and we are continuing to utilize them, especially in an environment where you know taxes are high and they may go higher at some point.
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