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She has been a foundation for us in our coverage of this war. On a difficult Friday, into her afternoon and evening in Dubai, Jaban and Versati joins us now with Bloomberg Horizons. Jamana, I am thunderstruck by the message spinning in the American media and people covering mar Lago in the White House, and to look at the National in Dubai with every story being about attack and the results of those attacks, led by banner headlines about eight
being hit by rockets? Is the Persian golf as a general statement aware of how surreal the war is across so much of America.
Yeah, you know, when you use the word thunderstock, I thought for a moment you were talking about the storms, because that's also on the front page of the National Divine the UAE. I've been hit by really strong storms overnight. But I think to your point, there definitely is a disconnect between what we feel is happening on the ground and the skepticism about the possibility of a breakthrough versus
what is being presented back home. That is for sure, with President Trump yesterday sort of reiterating that the talks are going well, but the rhetoric coming from Iran doesn't suggest So it doesn't really indicate that there are any direct negotiations going on or that they've agreed to an in person summit, which is what people were talking about earlier this week. There are no signs of that happening anytime soon.
So Jamana, I guess one of the uncertainties I guess for market participants is we just don't know if any conversations are going between the two sides, if there's intermediaries. There doesn't seem to be any clear re reporting. What do you guys know in that part of the world.
Okay, So one thing we do know for sure is Pakistan are emerging as key mediators here. The Gulf States themselves have ruled themselves out as mediators for obvious reasons.
They're not going to be continued to be attacked and at the same time tried to mediate so Pakistan has stepped up alongside Egypt and Turkey, and actually the Iranian Forum Minister abbas I actually gave an interview yesterday to local state TV and he said, yes, the messages from the US are being delivered to US via Pakistan, but you should not read that as an indication that we're willing or wanting to end the war anytime soon. So that is coming through from one of the I would say,
more official political voices in the Iranian regime right now. Again, no real signs that they're looking to capitulate, and if anything, they seem to be consolidating the control that they have of the strait of hormones in the last twenty four hours.
Jumana.
Not to be snide or curged, but just let me make it short and sweet. Is the United States of America in Israel fighting the same war.
Well, they would say yes, They would say that they are militarily aligned, the objectives are aligned. But I think there's a key difference here, which is that the Israeli public is overwhelmingly behind this war. Our colleagues from the Tel Avi Boro Ethan Brunner, will say that around eighty percent of the Israeli public is behind it. That is
not the case in the US. And for as long as you continue to see pushing, the push up of energy prices, the knock on effects to the US consumer potential inflation, you are going to continue to see impact on the president's pulling and also the public opinion really turning tower on the steal. And we haven't even told talked about the potential for ground troops. And there's been a lot of reporting that the US are obviously looking to deploy more.
Can we do Bloomberg Horizons right now, Jumana? Can we like you know, you be the lead anchor, So, Jumana, you're in Dubai and you have the privilege of interviewing Anna Wong of Bloomberg Economics. Ladies and gentlemen from Dubai, Jumana burset you with doctor Wong here in our studios.
Take it away, Jumana.
She's fantastic. I don't know if you're being serious or not, but if she is, because I can't see the outpha, but she is. I think the big question that everybody is asking, Okay, the big question that everyone is asking is does the FED actually hike into this inflation shock or do they stand put.
Yeah, we're actually I'm here because there was a huge conference, the ten year anniversary its ANTI conference yesterday, and I was on the panel Rich Clarita, and we were just debating this question. And so you know, typically the the
FED should be seeing through an oil shock. So in the Furbus model that the FED used as a workhorse, it would say that a one hundred dollars additional increase in the oil price should actually result in a negative twelve BIPs of cuts, whereas today, I think the market has priced in about positive twelve BIPs of hikes. So I think and that's where that's a disconnect between market
pricing and a model. But I think the market is also thinking about all these other shocks aside from oil shocks, such as fertilizer shocks, such as computer memory chips shock, which personally I'm more concerned about.
Helped Youvana here, it's one hundred and eleven dollars a barrel oil? Is that a new tip point for anamog?
Yesterday I actually modeled I showed the result of a two hundred dollars barrel oil because I think if you and and you know, you think about the worst case two hundred dollars oil will cause the headline CPI to go up to possibly six percent five point five six percent. But even if it stays at two hundred dollars, the important insight that the year of year will immediately fall in twenty twenty seven and by the end of twenty twenty seven early twenty twenty eight, it will fall back
to pre aron. So that's the nature of a transitory shock.
Jumana.
Last question, if you didn't fall off your chair there, what does two hundred dollars a barrel oil do to the Arab world?
Well, it depends on how long the disruptions around the Street of Humus last for. And I think the issue is that they're sitting on all of this oil that they would like to get out. But they can get it out. Obviously, in the case of Saudi Arabia and the UAE, they've managed to divert a good sum of it, you know, the the East West pipeline in Saudi Arabia. One thing I will leave you with though, we were looking at the local stock market industry's performance over the
last month. Tadowell, which is the Saudi stock market is actually positive since this war started. It's up four percent to account for the fact that oil prices are high. Right, That is not the case for the rest of the region, which obviously a lot more vulnerable and exposed from a non oil perspective.
Shamana, thank you so much on a Friday I for your leadership on all of this Bloomberg horizons in Dubai, and please have some sense of a RESTful weekend. Shell be out leading our coverage here in the coming days. Jaman E present you again in Dubai. We continue with Anna one of Bloomberg Economics. Okay, I don't need to know what you and Vice Jr. Mcclareda talked about. But at Chicago, you look at the Becker Freeman Institute define
demand destruction right now for Anna Wong. And when I look at my Bloomberg launch pad, are we going to enjoy demand destruction?
Yeah?
So the one big beautiful bill is probably going to boost the average household in buying three hundred and fifty to eight hundred dollars. And I think about demand destruction by how much oil price has to rise in order to completely offset this boost that they're supposed to get.
And my calculation is as long as oil price stays above eighty three dollars per barrel, you'll see there that And then if you look at the oil futures price, it has it's slightly at below eighty three dollars in the second half of this year into twenty twenty six. So I think that is telling you there's minor demand destruction. However, if oil price exceed the oil future curve, which I think there's a very good case to say it should be,
then I think there would be a demand destruction. I think that will shave off from GDP a couple percentage point from.
This year inflation.
You know, we're seeing it at the pump right now, it's real, it's tangible, or everybody out there. When we see it in the numbers that maybe the FED will really start to see it. I know they sent it's out there, but they'll see it.
Yes, they'll see it. And I mean in my simulation of a two hundred dollars per barrel oil, I see gasoline price going to eight dollars per gallon, and in that case, the headline CPI, as I said, we'll go to five point five to six percent. But I think the scarier thing is something that's more persistent because the oil shock will eventually go away. And as our reporter just said, there's all this oil stuck in the gulf. So what happens when the straight up horn mows is
partially open? You suddenly see this flood of oil coming?
Are you talking about a swing to I mean, I've heard this from a number of people. Were not there yet, but in your uncertainty one of your models is this inflation sudden disinflation?
Right, Yes, it's a risk that you cannot discount certainly. What I've also heard is that this war will raise the premium, you know, for oil, maybe by twenty dollars extra dollar per barrel. So if the fair price before before the war sixty five dollars per barrel, then it
permanently would be at eighty five dollars per barrel. But as I said, even if oil price stay elevated at that permanently higher level, is the delta that drives inflation, right, as long as inflation expectations are anchored, that delta would not keep pushing up and you will have a decline in your.
Okay, Paul wants to jump in here, I'm being rude. Is the FED down over anchored? Are we like almost too fixated unanchored?
I think the FED is not fixated u anchored, And it is because of that lack of confidence that it will be anchored. That they are talking about their job owning the finance market and they are kind of okay with the financial market pricing and twelve BIPs of hikes.
You know, yesterday I was filling up my car paying more and the woman next to me in a pickup truck, she has a landscape business. She was filling up like six or seven gas cans and I was talking to her about it, and she says, this is my profit.
I just lost my week's.
Profit right there due to this hiery That was my profit for the week on the number of jobs I had. When are we going to which was tough to hear, But when are.
You going to see? When will we see that?
In consumer spending?
Yeah, So suppose that the one big beautiful bill was supposed to give an average consumer an extra three hundred and fifty dollars to spend after this tax season, right, and the average households spent about two hundred dollars per month on gasoline. So if oil price has gasoline prices increased by thirty three percent, then you're basically you know, you you have to pay about sixty dollars more per month, and so three hundred and fifty dollars extra tax for
fund defined by sixty is the runway. So in maybe five to six months.
I got thirty seconds.
We got to get you up here because Tucker insists on sitting in the chair of the news is so difficult.
Anahom okay, two hundred dollars. We're all upset here.
Paul's breaking out the Tito's maintain, what if we only go up another twenty dollars, I mean one twenty eight, one thirty two a Brent crude barrel.
I'm sorry, that's not good, right.
Well, it's still not good. Higher oil price is not good. That would be the same as the peak in the twenty twenty two peak of the energy crisis. Then, so that would be doubling the oil price. And I will I think a gasoline price will go up to five dollars and in that case, headline CPI will go up by one point eight percentage point, so two point four pre war plus one point eight. But she's at four point two.
You can bring a bar conversation to Did I do okay? Picking Berry King Green as my book of the summer, Money and Borders.
He was my former he was my undergraduate thesis advisor.
He yeah, so I did okay?
Yes, I mean people, it's a little it's a little more weighty than Rogoff's book last year.
It's like Berry Iking Green. Serious. But if you're going to do the dollar, you go to King Green. Right, that's right. So I did okay. Okay, You're dismissed and thank you so much. Stay with us more.
From Bloomberg Surveillance coming up after this.
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S SHAW with us.
Now Chief Clothes Strategy Principal Asset Management SIMA. What does the bond market tell equity stock market and participants?
Yeah, Hi, Tom, it's good to be with you.
Well.
I think what we've been seeing in the last couple of weeks is that the bond market has been very, very concerned about the conflict the potential impact inflation pressures, how centromats are going to be responding, Whereas with the acuty market, there's ontainly been more of a reaction this week, but there has been I think a little bit of complacency. So there's something in between the bond market saying this is really severe, the actually market has been a little
bit more muted. We think the reality is somewhere in between.
So, Asima, how do you what are the conversations you're having with your clients these days? Are people pulling in risk waiting to see how this plays out, or are they trying to look to the other side, look through this and try to focus on the fundamentals here. What are those conversations.
Yeah, it's been really interesting. I think generally investors want to see how this is going to pan out. You know, typically gyboltical crossis they don't have a very sustained significant impact on the market. But I think from early days investors were more worried about this one, more concerned that they could be a more protracted impact. And so certainly what we're seeing is that although they're trying to stay quite positive and looking at the constructive macro foundations that
were already in play. There are concerns about trying to buy the dip and repositioning off the back of this. So I think that this is something of a bit of a parallel paralysis across investors, rather than looking at it as an opportunity to kind of buy some things which are on good offer at the.
Moment, baseline outlook, how do you kind of frame out where this might check out it? I mean, a lot of folks are concerned that this oil may in fact be higher for longer, It may have an impact on economic growth that may have an impact on inflation.
What's your view?
Yeah, it's almost impossible to play out how this conflict is going to be going on. So I know a lot of people have been trying to utilize scenarios. We've done the same thing, But I think we are leaning towards the idea that, look, this is going to be more protracted. We think anti prices are going to stay more elevated than people were anticipating, and they're going to stay more elevated for a longer time period given the
impact to in guinefrastructure. The other thing that we're doing is we're trying to put a little bit more emphasis on the fact that this isn't just about the direct energy and all prices, it's all the other goods which are going to be impacted by the conflict. So that's helium, words, that's sulfur, fertilizer, et cetera. So with that, we are downgrading forecasts almost around the world, the US the least, obviously because of energy exporter status, but we are seeing
that now. The thing that we are probably feeling more confident about is around the Central Bank forecast and they're rather than the leaning on scenarios and that we have clearly stated that we're adjusting our forecasts, moving the sight to the more hawkish ground. But there is a symmetry across a global central bank space.
What's the value looking at risk, uncertainty, ambiguity and our listeners and viewers Seemen can choose whichever of those they're looking at, of do nothing? What's the value to Seema Shah of do nothing on this Friday?
Well, I think I mean the value is that there is so much noise, even the various posts that we're seeing from the President, the responses that we're getting from wrong, it's very difficult to understand how this exactly is playing out. So trying to make moves on something which is generally a lot of noise at the moment is I think
very difficult. It's very uncertain exactly how this is going to play out, which is why we're seeing so many investors just sit still and really focusing on the fact that there has been macro strength and so once this conflict ends, some of the things that will already employ the various dynamics that were there will reassert themselves. But you know, this is a very very challenging environment for investors simply of not knowing how long this is going to go on, for how severe it's going to be.
Past Screenian term Kein of Sema Shaw, we continue now with the chief Global strategist Principal Asset Management Sima. What will you write about Monday within the study of markets in linking them into a global strategy, What's going to be your theme to publish for Monday Morning?
I mean, gosh, it could be anything, but I think at the moment it's really about trying to focus on whether or not which reagions are the most exposed. We already know that the US is looking the most resilient. But how long that can can that persist for? And what are the vulnerabilities that One of the interesting things I think is it coming into this year, there was an expectation that US consumers would be quite resilient, particularly because of this for stimulus coming through from the One
Big Beautiful Bill. Now what we're seeing is that the gasoline prices increase that's coming through more than offsets some of that benefit from the One Big Beautiful Bill. So we're trying to understand exactly how vulnerable US consumers are this year relative to where we started the twenty twenty six SEEMA.
We see the dollar resuming kind of a safe safe haven status, rising from a dxy, rising from a ninety six level to today around one hundred. Is that kind of does that make sense for you, because boy, that wasn't the case during the tariff situation last year when people kind of were shedding the dollar.
I guess I think it has been a little bit surprising given them. I think the structural aspects which we're pushing DOLLI lower were very much in play, and particularly when you consider that this is from a central bank perspective, the FED is likely to be the most dubvish, So we are expecting that once it comfort ends whatever that is, that the dollar reasserts that down which trend that had already been in play.
See we got to let you go.
But the headline just comes out Paul Sweeney right in the headline for Bloomberg nasdeck one underdrops ten percent from October high set to enter correction.
Is there a.
Sema Shaw fear of missing out when the nasdeck pulls back ten.
I know we don't have. Really, it's really important. You asked me before what I've been writing about, and this is actually a key thing is that technology has been a favorite for investors over the last couple of weeks, but there are vulnerabilities within that tech supply chain, which I think is starting to feed through to invest his perspectives about how to position.
Seema, Thank you so much, Sema Shaw with us the principal asset management, greatly appreciate that.
Stay with us.
More from Bloomberg Surveillance coming up after this.
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We are skilled to bring you Bob Michael Global Ahead of fixed Income JP Morgan Asset Management the real yield out of two point one one percent.
I haven't done a standard deviation study. When does a higher real yield.
Impinge on the American economy and on industry in America?
Well, I would argue right now it's already starting to have an impact, because it was only a week ago that we came out of the FMC meeting expecting a couple rate cuts, and you looked at the labor market that was their primary concern for good reason, it seemed a bit soft. Now you're paying a lot more to fill up your automobiles, and if you're a business, your input costs or energy's gone up. I would say it's having an impact right about now.
If that is the case, certainly for a lot of folks that are starting to feel it. How does the FED react to that? There's really not a whole lot they can do, is there.
I think the problem is at these levels there's no obvious solution because even ourselves with one hundred dollars oil, we don't see recession. We see growth slowing down a lot from where we had it, inflation going up a little bit. Then they just have to wait and see what cracks First. Does the labor market come under a lot of pressure and unemployment go up? Or do they see energy prices passed through to finish goods and services and consumers still buying and demanding wage price spirals.
David Rosenberg in Toronto publishes moments Ago Rosenberg Research quotes still no market panic inequities even with a vis out of twenty nine point five three. How do you measure in? Is there panic in the Bob Michael world? I mean price down, yield up?
How does it?
You know?
Equity panic? How does it work in the bond space.
It's well, there are also volatility indicators in the bond market, and they've actually been muted. So it's been a prizingly orderly sell off a little bit at a time. A lot of confidence that you have an administration looking for an off rapp they'll find one. They watch the markets, they know the midterm elections are coming up soon. They have to figure out how to extricate themselves from the Middle East, and that's what the market's hanging it's hot on.
So the FED has a little bit of leeway the US economy. We are a net exporter of oil. But boy, I guess we're all learning how exposed other parts of the world are to this pinch in Mid East oil. How do you expect other central banks around the world to react here?
It's strange, right, because this all started with us being told that twenty percent of oil passes through the Strait of Hormuz. So you say, okay, sixty dollars a barrel, let's go to seventy two dollars a barrow, maybe a little premium in there. You're up at eighty. Not you're going right to one hundred and hanging out there and expectations I saw one could be two hundred dollars. I think that's a bit extreme. I think by the time you get to one twenty to one point fifty, you'll
create a tremendous amount of demand destruction. So it's a bit puzzling that you're there. Unlike the FED, which has a dual mandate, they have to watch the labor market as well as inflation, the ECB and the Bank of England have single mandates. They have to watch inflation and there's no differentiation between core and headline. All they know right now is headlines going up a lot. Hence they're
talking hawkish. You would expect the ECB to hike grates once or twice in here, or watch for the Bank of England.
Who knows you.
Have a sterling academics which goes back as far as Persian. You're working Greek and Latin with all of your academics at pen and your work of course driving the bondship from mister Diamond. The cultural overlay here of Persian patients. What I keep reading and informed articles is these people are patient. Is that what you would would you agree with that Iran will be patient beyond anything?
Well, if you look at their position, there's little else they can do, a lot of the infrastructure in their country has been destroyed, and yet somehow they're able to control the global supply of oil by controlling the Strait of Hormuz with a fleet of drones, despite all the military might of the West. And I think this is what the market's starting to get concerned about. The administration may want an offramp, but the Iranians don't need to give him one.
Some bym Michael. Thank you so much.
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