Surveillance: Growth Outlook with Dutta

pushing against the gloom crew. Neil Datta has absolutely nailed the inability to go to recession and certainly nailed the market reaction to better than good news with China opening and with a more resilient American economy with Renaissance Macro. The optim optimists hang on every word. What is the distinction of your optimism right now? What is the thing that you would describe as the data optimism. Well, I

think it's the composition of growth that's improving. I was gonna say, you know, Mike, one reason why the Empire number is coming in maybe they surveyed people before the Giants win against the Vikings. I mean, that could that could be, that could be what's going on. But um, you know, Tom, I think the composition of growth is improving, right, so even though inflation is moderating, real economic growth is accelerating.

And um, I think that that combination of growth is the sort of challenge for for markets to kind of deal with. Let's dove till your comments with Ken Rogoff, with Lisa brand Wanson Davos. And this is the idea of disinflation. And even if we're having this parlor game of where it moves you put out a blistering chart. I'll say eight days ago they said, wait a minute, if you get disinflation and incomes do okay, real incomes can stabilize or dare I say inflation adjusted incomes could

actually go up. Well, they're accelerating right now. Real incomes net of transfer payments are accelerating. I mean, that's not even a debatable point. Um. You know, as an example, in December, we know that aggregate wages and salaries probably rose around two to three tenths and we know that headline inflation felt so that means that real incomes rose.

And then you have to basically make the assumption what do people go out and do with the new founder and um, you know, my senses that they probably spend it financial conditions have been easing. I don't think you can really make much of a case right now that people are going to just spontaneously increase their rates of savings. You know that should keep you know, firm under belly to consumer spending. And we know that housing is now picking up again. So Davos, I wouldn't do algebra, But

since we're in New York, we're gonna go algebra algebra Tuesday. Here. Why will see plus I plus G plus n x and all of a sudden to me, n X is a constructive mystery with China reopening, just China reopening and exporting important dynamics of America. Does that give you more data optimism that we could avoid a recession? Sure? I mean back in I think then Vice chairs to Only Fisher did a seminal speech on the impact of dollars on on inflation and growth. Remember, at the time the

dollar strengthening, the FED was backing off. But now it's kind of working in reverse. And if you look at the broad dollar index, it's off about ten percent um I think since September. And you know, the dollar has a very mechanical impact on the Fed's kind of workhorse models and the fact that the dollars declining UM. I think that boost real exports um maybe three to four percent in real terms, and it introduces some upside to

core inflation over the next year. So I think the dollar selling off is a sign that global growth expectations are improving, and I think it's an unambiguous positive. What is your two thousand, twenty three GDP number for the United States, I'll tell you what. It's not done. It's not zero point five percent. I think that it'll I mean, I look, I think something slightly above potential is plausible, maybe two. I mean, I think underlying growth right now

is around two and a half. I'll drive me key into this right now. Is to help me here with the dots, I mean, help me here with the dispersion of the dots. Are any dots as optimistic as dotta? Is there a Dotta dot on the dots? There's not a Dotta dot on the dots right now, Which sounds silly to say, rubber baby buggy bumpers. But what you've got going is is a situation. And Neil and I actually argued this out on the Bloomberg message system the

other day. The FED makes its forecasts, and they make nineteen forecasts, and we arbitrarily picked the media and say that's the FED forecast, and it's made once every three months, and Wall Street changes its mind about what growth and unemployment and UH interest rates are going to be every day, every five minutes. And so to go back and say the Fed is wrong by saying half a percentage point

growth in December, that's not really fair. The FED starts to change its mind as well, and they will have a new forecast in March. But even at this upcoming meeting, I suspect you're going to hear j Pill say that growth forecasts are rising. And we heard Pat Harker, the Philadelphia FED president, the other day say he's marked his

up to one percent for the right. But they're they're taking down there, they're taking let's assume that that's right there, taking up their growth forecast as we go into the

March f ONEm C meeting and in February. But at the same time, the market odds of a basis point move are also solidifying, So the idea that they're going to go another fifty that's going down even as they're raising their But I look at Bloomberg, though, look at your own Bloomberg consensus e CFC going every day q Q one Q one real g d P Q ever Q percent change annualized zero point one percent Q two

coming in at minus point six. These are very very depressed forecast for and this is the consensus, so the one that updates quite frequently. So I think that's dramatically offside. It's considering we're going into the year something close to three maybe if you trust the Atlanta had four percent. So I think there's the consensus had a lot of work to do and kind of adjusting their expectations. Okay, Well, in search of it, where is the dutta dot out there?

When are we going to see not just a single dot, but get you know, go plural, get datta dots out there from the FED? When do they migrate, how many meetings out do they migrate? Where the dispersion lifts up? And there's some real optimism about one or two even three g d P to me, the dots. The risk with the dots right now is that the cuts that are currently baked into the four outlook get priced out because growth is coming in a lot stronger than expect it.

So if the Fed I mean right, all of these are sort of premised on your your your assumptions around unemployment and so forth. The FED expects the unemployment rate to go up a full percentage point from where it is right now. And if growth is coming in slightly above potential, as I expect that, that means that there's room for the unemployment rate to fall. And if the unemployment rate remains low, then the likelihood of them cutting I think that goes away. So that to me is

the risk with they. I can tell you what it hap Pitged Thomas. There is the FED meeting at which they will have a new summary of economics. We will and data DUTs help me with retail sales here Mike was setting us up for it was this grim empire number. You know where I am on this, and I'm like, okay, whatever, But the answer is retail sales matter the economy. Inflation coming in, it's going to be dampened. So how do

you interpret retail sales with the dynamic of disinflation. There's some flukey season, I mean, I think, if I'm not mistaken, I think December of one was a really weird month. We had a big decline in in quar retail sales that month. And UM, I think there might be some seasonal adjustment issues that are going on, you know, following the pandemic that kind of depressed the numbers like retail sales in December, and you know, we probably make that

up and seasonally adjusted terms sometime in the spring. What I can tell you is that, UM, you know, it looks like the inventory adjustment is largely over and so um right, and so I think that could be one reason why prices and things like apparel aren't really collapsing as much as this is really important. I'm glad you bring this up. Dana Telsey has been lights out the last time of the tells the advisory group folks on

I don't retail. I sort of knew that was gonna happen, Mike, but school us on inventories, which is this obscure thing nobody really understand. Don't give me life of FIFO. But are you surprised, like Mr Dudda mentions here that we cleared inventories. It seems really rapidly. UM. I don't know if I'm surprised, because there's no point to a business

holding on the inventories, it's not gonna sell. So if you go to t J Max or Marshals or something like that, you'll see some of that inventory and it will be marked down because people are just trying to get rid of it because you get new stuff coming in all the time. But also in the retail sales report, um, we saw in December gasoline prices continue to fall, so that'll take some off of retail sales. Autos are they fell sales? They were not as high, but it's a

difficult one to translate into the retail sales report. You know, this is so important, Mike, that we've got people bring the camera over here. Uh and and they're talking about on the internet about your socks right now and the symbolism you know, low you know, I mean, these are extraordinary socks. So I could never be got dead using those. What is the economy is that those optimistic socks? Is that? What those well, if it's the donut, it was reflects

the donut on headline inflation. Okay, very good, Neil, donta there or the donut socks giving us a signal of optimistic, optimistic economic growth. And what's important here is the timeline Mike Wilson's idea of a long term within you know the structure of a big Wall Street firm, as I'm

gonna say, six months, nine months, maybe a year. What do you do, John, if you have a longer term time frame three years, five years, coming out of a pandemic China reopening, you've had this nice gift of a lift, then what And that's sort of where we are going into February. Let's say some of them right now with Christophe, the head off Exquvity Strategy Atlas Foco Securities. Chris, let's start. The band markets are like a whole a mirrors design

to confuse investors and take their money. Is this a band market rally? Um? Bear market rally? This is a rally, no doubt, has a lot of the hallmarkings of a January effect. As your point out, credit spreads are tightening, high yield I g but but risk is rallying, smaller caps are rallying. I don't know if i'd call it a bear market rally. What I what I think is we're probably going to begin to stall out here. We think fair value in the short terms somewhere around four

thousand at the end of the day. It's true that credit spread excusan not credit spreads, but margins are going to we're going to compress. EPs is going to come down. But we think we're really facing more of an economic malaise than than we are some sort a sharp recession. And so as a result, you have to be careful, you have to place your bets. We think maccap growth is that sweet spot, and overall the broader the broader

market is a little bit tough. We think things will trade higher, but you can't see a pretty big downside from here. So Chris within that there was a cool on the economy and there was a cool on annings. Can we just separate it so you just from i'ming to focus on Anne's Chris, what kind of learnings are you expect in this quarter and the outlook for the

rest of the year. Yeah, So let me say this, for the last two or three quarters, there's been a lot of fear mongering coming into earnings, right, and so when you fear monger, what happens is you lower expectations. We've lowered expectations so much in the last couple of quarters that the numbers haven't been great but the phrase things are better than expected has been true, and I think that's going to be true this time around. We are going to see some magic com pressure. We are

going to see some revisions down. But now is not the time where you really lowered guidance, because because it is still okay. What we're worried about more so is when you report first quarter numbers. But right now we think things will be okay for now or better better than feared. It's probably the right one, Christian, your beautifully concise note. You speak of a tactical shift, and as I guess that there's been a tactical shift, everybody's gotten

this mother of all recession calls wrong, wrong, wrong? Help me with April or May is June? How do I prosecute tactics now to survive in the second quarter? Tom That that's a great question, and that's a question that we're having with a lot of clients. We had a lot of clients that performed quite well last year come into this year and they've just gotten run over it. And what they're saying is, hey, do I turn, do

I shift? Do I do I tactically move? Our answer is no, right, because ultimately we're going to see some sort of downside. We're going to see some sort of pain, whether it's economic, whether it's earnings, or whether it's macro. And so you we have twelve months eleven twelve months in the year, too early to shift and is a lot of a lot of room between now that so at the end of the day we're having a bout. That bounce we kind of understand, but ultimately the worst

isn't over just yet. Christo financial media is guilty of this, and frankly Bloomberg and myself we're as guilty as anyone of a complete focus on the big banks, uh and you know, and the what Wills Fargo is doing and the rest okay, great after the big banks, Which earnings matter to you, Which earnest So what we're looking for is we're looking at cyclical earnings because we think that's where where the pain is going to be. Right, cyclical earnings.

The old economy stocks out outputs their weight last year, and that's where we think the pain is going to be. If you're going to believe that the economy is slowing down, which we do, that's where you should see most of the pain. That's where we should see the margin compression, and that's where I think stocks are most liable. Chris, and thanks that cycnical story that you just described. Yeah,

banks are part of that. But but we're not as worried about credit as other people because one of the reasons being is the job picture is much better than many people expecting. What we expect that the job picks should be pretty robustant, at least for now, and so as a result, credit should be okay. And what we've seen so far is credit is not great, but it's normalizing it. It's okay, or it's where it should be.

It's not worse than expectations. For a long time, we used to talk about tech as the secular growers, these big things that didn't worry about the cycles at the global economy. Christ do you think those tech names and now cyclicals? Um so? Someone, if you you look at semi semis are definitely cyclical software, I'd say less so. And one of the things that we're seeing is a lot of industrials are becoming a little bit more growthy um. And here here's the thing. The big debate that we're

having right now is what takes leadership? Is it energy, does tech come back, And what we think is it's going to be a lot more idios and cratic market. It don't look so much for this one big trade or this this one big knockout. Really get back to the fundamentals. Look for that good school again. We think it's in that MidCap growth space and you can get some good valuations down there fifteen times earnings or so um, and don't focus so much on the macro. Okay, well

that's great. I'm focusing right now on SMP five hundred four point two percent. And you know, ten days, whatever we've had this year, are you gonna give me a double digit return in two thousand twenty three. So what we think in two thousand twenty three is ultimately're gonna get toto. You're gonna get to forty two hundred. We think you're gonna come down. We think inflation is coming down,

and we think the economy is slowing. And what is that that's a growth market and what is the SMP five hundred that's a growth in the see and at the end of the year, even if a FIT doesn't cut, which we don't think it will cut, the market will believe that it's going to cut and we should see that reflecting the shape of deal curtain and interest rate. Zion go to Chris on this. This is the heart

of Bloomberg surveillance. Do we have two opposing views here between what we see from Welles farguing what we see from Morgan Stanley couldn't be farther apart? Are you talking about the path or points to point both because the shape of the path, I mean, Chris, didn't you talk about a potential for real downside here? So at least that's right. We we think there's downside the hundred, but

ultimately do recover, right. We we do think that we earn would excuse me, that we end up higher fort is the high for this year, and we do think we get there. We think that again, what you're facing is more of an economic malaise, not a sharp sell off, not something that that's going to be horrific. And as a result, we can muddle through that. And let's not forget the FETE is going through. We think the Fed is going to stop raising rates sometime this year. That's

a positive. And if we get through a situation where it's more of an economic malaise, than a sharp sell off, then their earnings they'll be dent died, but they won't be they won't collapse. Chris enjoyed this, Thank you, BUDDYGA. So why's Chris Hamphy there? Wils Farca now Seleneo's Global Ahead of Fact Strategy ABC. Join just right now, Alse we'll talk about the BJ in just a moment. I think investors not interested in good versus bad, but better

versus worse as things getting better or worse. So it feels like you've got conflicting signals coming at the moment, muddeled outlook for many in that if you look at the equity market, as you highlighted at the start, huge rallies to start the years, some real optimism airing in at the same time, yields moving lower, so bonds rallying. It's that kind of bond equity rally that's the perfect storm for the U. S. Dollar. But it does feel like there's a bit of a conflict between the messages

we're getting from the two sides. Do you think that move we've seen the dollar so far is sustainable? Are there some sustainable headwinds against the U. S Dollar that you think last three. We've had a ten percent plus move since the end of September our, so that's quite a move exactly. And I think the danger is we're falling into the same traps that markets fell into at the start of twenty two and at the start of twenty one, where everybody starts the year with a very

strongly bearished dollar concern insis. I know it feels weird given how strong the dollar wasn't twenty two, but that was the consensus at the start of the year, and we spent all of January putting on those positions, and then it snaps back, you know, whether it's snaps back in February March, whether this year takes a little bit longer, maybe in the back half of the year. Um, it's not going to be quite straightforward. It's just sell dollars

and close your eyes. Also, Lisa Abramowitz in the last hour with Kenneth Rogoff at Davos in the World Economic Forum, and they're talking there about the FED in about this relentless rate increase against that is a distraction of Japan. I thought Ambrose seven's preachered in the Telegraph with Professor Rogoff today with anad Olivier Blanchard was just brilliant. The giant wild card Japanese inflation is returned in the aftermath of COVID, pushing the country from a bed but stable

equilibrium into an unstable equilibrium. And just for perspective, folks, Japan owns eight percent of Francis public debt ELSA, how do you synthesize the Japanese conundrum? Just a really interesting point, Tom, because we've actually started to see it in the data coming out from Japan. They have turned into sellers of European government dead um and as you highlight, there are

big holders of French government bonds. My colleague m Call has done a lot of fantastic work on this and that they've been selling treasuries in large size for a while. The last few months have been notable in that we've seen e g b s take the lead. Why is

that happening, Well, it's the cost of hedging. It's euro yen and the cost of hedging the exposure what you do on this and A P has a wonderful chart in this should take the yen swap yield versus the published yield and one folks at Johan Farrell follows so closely, and there's a huge gap. Where does dollar yen go

on that presumed gap? Can you get the one twenty or dare I say an even stronger yen down to parody so that I actually look at it the other way and say, unless the Fed is going to be cutting rates dramatically in three and we're not talking one or two cards, but really slashing raids under most other scenarios, the cost of hedging continues to rise for Japanese investors, they're actually going to have to reduce those hedge ratios dollar yen goes higher. I know that's not a popular

thing to say. That could be what we see for the balance of the year as a whole. Now, so can we talk about the b J this week? There is massive speculation they're going to adjust yield curve control, maybe drop it all together, adjust the band, move the maturity they focus on, what are you focused on? So it's the combination of factors, right, It's yield curve control coupled with the inflation forecast. A lot of speculation that Corona's going to want to leave a clean slate for

the next incoming Bank of Japan governor in April. It may not happen today. Actually, I think most analysts expected happen in March. But as you said, a huge amount of speculation. We've actually gone long Swiss end into this meeting only because we might be getting a bit ahead of ourselves in terms of how much we're expecting for tonight.

So that's a long swissy against the Japanese en looking for a weaker Japanese yen here, how sir, that's right as Selina what they call their tom long swissy against the JAMPANESEPEC, the JP rather the BJ to disappoint. And this is important, folks, and that you don't look at just dollar against a pair. There's other cross rates as well. Also, what do you do on a Pacific rim if we have an opening up? John mentions Europe on a relative basis off the mat doing better, but it's a Pacific

rim play. What does OURBC capital markets look for? What's the best pair? So we've been looking at a number of pairs. The Australian dollar. We don't typically love it, but actually there have been good opportunities. We were long Aussie against CAD last week and it's something we'll look

to revisit on an office the year goes on. There has been a lot of speculation, a lot of positioning around China reopening, but that may have a little bit further to run, and not just the reopening, but also apparent thawing in relations between Australian China that I think is worth paying close attention to, you know. I I look also at the moment, as John mentions, it's a Bank of Japan week. Everybody's radars off Europe. What are

the degrees of freedom? And Christine lagar hairs right now, she's the most she's the least talked about, I would

suggest right now, and all my radars up on that. Yeah, she's probably happy to be out of the spotlight for a bit, right But there was a really interesting article interview this morning given by Philip Laine, the Chief European Economists, and he was highlighting that rates will have to rise further, but that Europe is facing a shock in terms of energy prices that the US is not facing, and that at the end of the day that does mean rates will have to rise less in Europe than they have

risen in the US. I think that's an important reminder to just you know, there are critical differences between here and on the other side of the Atlantic. I I look at uh also the moment in foreign exchange, and it is about a certain weak dollar. What is the level of week dollar? I think it's so important to reset going into the end of March into April. How much is the week dollar move going to be? Look I think in terms of the year as a whole. I actually explain, and again I know this is going

to sound controversial. I actually expect the dollar to end a little bit stronger, certainly across um at the yen, and you know, probably against the U as well. Just given where we are now, how far we over extending to the end of March is really anybody's guest, because I do think that momentum for the week dollar trade has some more legs as further to run. But again, as I said, I would be looking for that as an opportunity to reposition for a slightly stronger dollar in

the back half of the year. Just to final one from me, was the number one factor behind that dollar strength that you anticipate in a back half of twenty three combination of the Fed potentially not easing as much as people anticipate. Coupled with the fact that, as you said earlier, we've had a temper cent moves in September, we've priced a lot of that story and already an amazing term We've seen in a couple of weeks, nine trading days, and all of a sudden, a lot of

people change in their minds, absolutely of OURBC. I can't tell you, Lisa, how my life changed in Colorado engineering under the hard wooden ruler of Ruth Rebecca Stewark. And I know Mike Worth survived the mathematics of Colorado as well well, from the hard role that you experience to the Davos Alps and what we're talking about here with Mike Worth of Chevron are a host of geopolitical issues

that are coming together with Oil Front and Centel. Mike Worth, CEO of Chevron, so happy to have you with us, but I want to start there. Everyone here is talking about China, the reopening, how much it's going to reduce the global economy, what is it going to affect commodity prices? And the white people have been predicting it could be coming. Lisa, I've met with some people from China even today and what they tell me is the pandemic is largely moved

through the big cities. People are back at work, the economy is beginning to move forward. We're not really seeing it in commodity markets yet, but the absence of that demand is one of the reasons why we've seen prices soften, and the return of that demand is what could start to firm them up again. Although some people say that China is getting all of their supplies geared up from Australia,

from coal, from all sorts of different supplies. They have huge stockpiles that they're going to unleash to dampen any kind of sudden surge in demand. Do you agree with that assessment. Well, the data out of certain parts of the world is a little bit harder to interpret than others. In China sometimes sysmatic is um is a little bit

difficult to see in the short term what's happening. But clearly in the longer term we can see that oil demand out of China has been down here during the pandemic and um and and they will use coal, they'll use liquefied natural gas, but they'll use oil as well. And uh And as their economy does return to full strength. I think we will see it in demand in a world is pretty tight right now, and so that's the I think that's the case for some upside and commodity

prices this year. Is a strong return of the Chinese economy. How much upside could that be? It's really hard to say. We try not to predict prices because you're always wrong. What I will say is its supply and demand are fairly finally balanced and post the pandemic, as economies have opened, suppli has been struggling to keep up, which is why even before the war began we started, we saw some

strengthened prices. And we have markets now that are constrained by rules on who can sell to, which countries can buy from from other countries, what prices things can transact it, Shipping legs are longer than they were before. There's a lot of strain on these markets. And it wouldn't take a big search from China to really start to to

push against some of those constraints. Because of some of those concerns and some of the frictions that you're talking about, have you changed where you do some of your production, where you focus some of Chevron's drilling and exploration, we really haven't. Those are long term decisions that we make based on a long term view on supply demand technology.

In the short term, we need to be nimble with logistics, with the way that we manage supply relationships with our customers in order to try to be sure that we meet our obligations. So there's a lot of commercial activity and logistics activity to respond to the kinds of things that we're talking about. For the long term, decisions are made on, you know, the fundamentals of the geology of the markets and a long term view of those things.

Do investors reward you more for investing in production in a way that they hadn't a couple of years ago, simply because of suddenly this renewed focus at fossil fuels after they've been left for dead. Certainly, our sector for the last decade has not performed like the rest of the market and uh and some of that was I think a lack of capital discipline by companies in our sector. Some of it was the narrative that oil and gas

were going away sooner than than they likely will. And we certainly saw last year of the sector performed very strongly and I do think that investors have re equated themselves with the fundamentals of the energy business, with the cash that that companies generate in this sector. We we've by the end of the third quarter last year, had had generated record cash in our business. And uh and so you know, there's more capital discipline. I think the demand is there, and I do think the market is

beginning to come back to us. But what I'll say is, you know, earnings in our sector through three quarters of represented SMP earnings by market capitalization, it's only five of the SPID. So I think they're still upside. You know, earlier this year, earlier last year, the Biden administration came out and said, we're going to lower prices as as gasoline prices surged, We're going to do these releases from the Strategic Petroleum Reserve. Do you think that was a

good policy? You know, I think it. Uh. It's certainly provided oil supply to a world that was concerned about the reliability of oil supply. Uh. The reserve wasn't really set up for price excursions. It was set up for

true supply outages, which we didn't experience last year. Uh. So the risk in having used the supplies the way they've been used is if we were to run into something that is more serious in terms of the availability of supply, there's not as much dry powder left as as there has been for the last several decades, so it's it's run things lower. I think it did have a bit of a calming effect on markets, but it's left us in a little bit more of a delicate situation.

And now they're saying that they're going to potentially repurchase around seventy dollars. Perhaps they've missed that, but they might start refilling it come February. Is this the role of the government, I mean, to sort of set a floor. Is that basically what they've done. It's very interesting, Uh, the amount of intervention we've seen governments engage in into markets that historically they really have have allowed to function

on market fundamentals. Uh. My personal view is that a price that the government says will refill the spr at this price doesn't change investment decisions for our company. If we want to sell our barrels in the future at a certain price, we can go to financial markets and do that today. So, Uh, these kinds of things won't change the way that we invest. I can't speak for

other companies in our industry. Do you think that this could potentially affect pricing next year if there is a push to refill, or that that pressure on the other side of supplies coming into the market is not there. I mean, are you expecting that to kind of change the dynamic in a way that the market isn't fully reflecting at this time. Well, it would certainly be incremental demand in the market that would be buying the commodity

which has been selling it over the last year. Uh. My guess is, and I don't have any unique information here, is that the government will refill slowly over time and uh, and then it won't come in in a large surge, but in a more measured way that will, you know, probably be something the market can handle. A lot of people are talking about this renewed focus and fossil fuels and energy companies being their top bet for this year.

So suddenly people are absolutely flooding back and saying, you know, perhaps we got carried away with E s G. Have you stopped investing quite as much in some of the renewables? Are you emphasizing that even more as sort of energy security how are you playing that given that the dynamic the conversation has shifted. Our strategy has been to leverage our strengths to provide lower carbon energy to a growing world. And so we're spending the same money, we're investing in

the same technologies. We're working on the same kinds of projects in our new energies business, renewable fuels, hydrogen, carbon capture and storage technologies like geothermal. Again, we take a long term view on markets and on investment, and so the I think the dialogue being reset, and I wouldn't say it's fully reset, but it had become very polarized.

And what I've been arguing for is a more balanced approach that recognizes the importance of affordability, recognizes the important of reliable supply for for national security reasons, and protects the environment, and an approach both from governments and from companies that balances these out. And that's what we've certainly been trying to do. Just lastly, I'm curious about some of these sanctions that have been put on Russian oil and some of which are going to come online come

next month, particularly around diesel in Europe. How much do you think that's been priced in. How much is that going to be an additional price? Stock markets are certainly forward looking. This has been telegraphed for for quite some time, and so I think that, just as we saw when the oil price cap in the European sanctions came in, the market was generally prepared. I think people anticipate it. Uh. The risk is unintended consequences and products tend to move

in smaller quantities to local markets. UH. Not moving UH steady sources supply into Europe means that supply will go to more distant markets, and Europe will have to find their supply from new markets. And so I think some of that is underway, more of it is likely to follow. So there is the risk for some disruptions. Mike Worth, thank you so much for being with us. Wonderful speaking with you. This is the Bloomberg Surveillance Podcast. Thanks for listening.

Join us live weekdays from seven to ten am Eastern on Bloomberg Radio and on Bloomberg Television each day from six to nine am for insight from the best in economics, finance, investment, and international relations. And subscribe to the Surveillance Podcast on Apple podcast, SoundCloud, bloomberg dot com and of course on the terminal. I'm Tom Keene, and this is Bloomberg