Surveillance: Oil Price War With Yergin

that comes from your team and your research. COVID nineteen may simply be the accelerant for a cycle that was already on its way to ending your thoughts, Mike, Yeah, I think that's you know, our main message over the past month actually is that we actually think that this correction we're going through now is just a continuation of

the correction that really began almost two years ago. Okay, and you guys are familiar with our work on the rolling bear market, the consolidation call, and quite frankly, the fourth quarter of last year was a false breakout that was orchestrated by extraordinary liquidity. And sure, the fundamentals we're trying to bottom. But as you all know, and you know, we wrote about it, a lot of other people wrote

about it. You know, the market's got way ahead of the fundamental recovery that was apparent, and so it was a liquidity driven rally in the fourth quarter. And that's fine, and you know that trapped a lot of people, including us to some degree. And you know, now we're back to reality, which is that the cycle was already moving in this direction and it all you know, this is the way, this is the way recessions happened, right you. You have a host of headwinds and I'll just go

through a few of them. We had the margin pressure, you know, from the fiscal stimulus, and that's been that's been the crux of our call for the last two years, is that we're actually still in an earnings recession in the US for the average company. The second one was the tariffs, which are still in place. By the way, they haven't really gone away. They've just been, you know, not getting worse. Of course, we had a federal reserve that you know, went the distance on tightening two years ago.

They did a tremendous amount of tightening via both the balance sheet and rates, and that works with about a two year lag, and so we're kind of right back on schedule. And and but nobody ever knows what the event is going to be. That kind of pushes you over. But to look at the virus, or quite frankly, the price war in in oil markets, which is I think

even a bigger deal potentially for credit markets. You take the two of those together, and you know, in conjunction with what's already a headwind for you know, in the global economy and the US economy, and you have the recipe for just finishing the cycle. And I think markets have appropriately started to discount down and we've done a lot of damage in the last month. I mean stocks were down overnight, you know, from p to trough. So we're there and we're in a process of doing that.

And so today we're having a giant rally hopes for fiscal Eton. This is how bottoms are made. It will all happen on one day. It's gonna take you know, it's gonna take time, you know. And by the way, you know, policymakers, this is exactly what they typically do. They throw out a suggestion to the market and say, hey, how about you know, a fifty basist going emergency cut, the market doesn't like it, Oh, how about this? How about that? And then eventually, you know, we find a

level that you know, supports where we are. So Mike Lease is gonna want to ask you about credit and just the moment, I want to understand from your perspective, is there not a fiscal response that could be unvowed today that would be sufficient in your rise to extend this cycle. I don't think we can extend. I think we have to get away from this idea about extending the cycle and let's talk about how do we now deal with the downturn and protect the next cycle. Okay,

that's that's that's my mindset. And we don't know, we don't know if we're gonna have a recession right now, but good grief, I mean every cater we look at suggests that's what the market expects at this point. I mean, that's what the bond market has been telling us for quite frankly, for two years. And then this extraordinary move we've seen in the last month, which exceeded anything in our dreams in terms of how low we would go.

I mean, I think it's you know, I think the markets have basically spoken, and and so now policy choices should be about how do we make sure we don't get stuck, okay, in a trap where you know, we end up with rate at these levels in perpetuity and you know we're in a situation where the US looks like Japan Europe. That's not our view, by the way, we don't think that we are going to end up in that situation. But you know, that's what policymakers should be thinking about. How do we how do we kind

of get the next cycle going. What's the investor playbook given the fact that there is a lot of uncertainty about what this bottom will look like, and given the fact that we're going to get some policy response, I think the mark well, first of all, the play our playbook has been to be much more defensively oriented. You are in our sector preferences, right, So we've been playing

for this now for almost two years. We've we've been over what utilities and staples because those are always the sectors that do well at the end of a cycle. I mean clearly, things like software and technology that are defensive that they've done really well too, because they're they're geared to lower interest rates and there's somewhat defensive business models,

so it doesn't have to be pure defense. But my point is is that the playbook has been to be more defensively oriented in your positioning, whether it be long duration or long defensively oriented sectors away from cyclical areas. And I would argue we're in the eighth inning of that. I mean, this has been going on now for a

long time. So the playbook now is to think about when do I want to play for the next cycle and get more cyclically geared, and that would be things like you know, consumer discretionary and banks and materials and early cycle sectors. I think it's premature to do that. We're getting closer. I'm like going to catch up with this morning, busy morning on now for the whole team

over at Morgan Stanley. We appreciate your time. Morgan Stanley's Mike Wilson, that chief US equity strategistic Who do you turn to in a given crisis like this when you look at the different shocks that we've seen, And one would be a gentleman who re affirmed a style of writing linking history and in this case in the hydro carbons and that of course is Daniel Jorgan's surprize that

in itself was extraordinary. Far more important was only seven years later he followed up with The Commanding Heights, which is a definitive look at how we have vaulted from World War Two forward in our capitalism. We're thrilled that Daniel Jorgan could join us today with I H S as well. Dr Jorgina, thank you so much for finding

time with us. Is this a set of crises that we get over, like the end of a IRUs or Russia and Saudi Arabia meeting together to get to a more stable oil price, or do you send some permanence in our in our lives due to the set of crises. I think that it's a that at some point you can imagine the Russians and the Saudis getting together again. But right now this is a grudge match that's going

on between the two countries. The Saudis of price cut their prices and oil particularly aimed at the Russia's market in Northwest Europe. So it's really two shocks at the same time. One is an unprecedented demand shock resulting from the virus, and then it's this declaration of battle for market share, and we've had those before, but we've never had this together. Is the OPEC imperium over is you wrote of in the prize twenty nine years ago? Is

the cartel broken? Well? I think I mean, at the end of the day, it's what a few countries want to do and whether how they want to use it. And I think the fact that they recognize that they needed to create this OPEC plus make a deal with Russia tells you how the world has changed right now.

It's really instead of the OPEC imperiments the Big three, it's what happens to Saudi Arabia, Russia, and what happens to the world's largest oil producer, which is the United States down I'm sure you've lost count the amount of times over the last few decades that we've declared the death of OPEC, but we seem to be doing it again. Shale, though, is a game changer. I'm trying to understand where the

greatest tension is right now. Is it between Saudi Arabia and Russia or between those two countries and US Shale. I think it's one for Saudi Arabia. It's between Saudi Arabia and Russia, right now, I think the Russians have their sights on US shale because of the tremendous growth, losing market share to it, and I think that they see the US now using its muscle energy and want to counteract ave. So the Russians have always over the last several years been more alarmed by the growth of shale.

It seemed to me that the Saudis had d of accommodated themselves to this is the new reality. I'm just wondering, Dan, going forward, does this ultimately destroy demand for oil or actually increased demand for oil? And I asked, because people were talking about peak oil demand in the next decade as renewable start to gain online, and does this actually

give oil a longer shelf life because it's cheaper. Well, I think it Normally would say that this would mean that demand, you know, you get prices like this, demand should really go up. That's what we've seen before. I think the difference here is the virus. I mean, what started this whole thing was this unprecedented demand shock. In the first quarter of this year, we think oil demand is almost four million barrels a day lower than it was in the same quarter last year, and that that

that is going to continue. And you know, we see the markets responding very positively as you've been talking this morning to the talks of the stimulus coming out of Washington. But keep in mind, and this is what really weighs in my mind. You have low gasoline prices, they don't really matter if schools are closed, if you've canceled your next two trips and you're working from home, you're not

going to see that up uptick in demand. And so I think when the Russians, in particular, we're looking at the market, they were seeing this virus spreading across North America and across Europe and demand continuing to be week going in at least going into the beginning of the summer.

So that's what's different I think about this time. And normally, normally a prices like this would be great for demand and it would be a stimulus to the economy, but not with the other things that are going on right now. But Dan just sort of pushing it forward longer term. Is there any longer lasting implication for oil? Is sort of the benchmark use of for energy going forward from

this coronavirus plus war between Saudi Arabia and Russia. Well, I think that going to your your question, I mean we still see demand continuing to grow into the twenty surgies in oil, which I know is not what other

people see. But looking at population grows an economic growth, I think that, um, you know this, this pandemic, when let's call it what it is, a pandemic, will end and it probably ends around you know, at least you hear public health authorities saying maybe somewhere in the second or third quarter, at that point you'll see the rebound. But when you have a whole country like Italy shut down, uh, that is that contributes to the demand shock. People are

not doing a lot of driving in Italy. Right now, we welcome all of you worldwide, including in Italy with us. Daniel, you're going to buy us, of course, the author of the prize, the quest and also the Commanding Heights. You have a brilliant section in the Commanding heightstand you're going to where Churchill marches off to Potsdam and marches back to massive electoral defeat. I mean the tumult of populism.

Right now. We have a president today who's going to commit fiscal stimulus with his fellow Republicans on the hill. I guess, how have we come to a point where creating fiscal support to any given nation, any given economy is so diff the call that wasn't the case across your book the Commanding Heights, And now we have this embedded austerity. Where did it come from? Well, I think I think it looks like embedded austerity until you look at the budget deficits across the around the world and

uh rate that against GDP. But I think that what you're pointing to, I mean, certainly there's you know, we've seen a kind of loss of confidence in markets, and I think if we pick up on the Commanding Heights, we're really seen as a test of of of globalization as it's developed. As I wrote about it in Commanding Heights and in the in the people talked about decoupling from China. We have really discovered from this how coupled

we are with China, how interconnected this economy is. And going to your point, Tom, it's the question of international coordination. In two thousand and eight we had a lot of very clear international coordination going on. It's harder at the time because of the kind of populism and nationalism you're talking about, and yet yeah, you need it. This is exactly what Philip Hilda ran A black Rock said today,

John Ferrell. The lack of coordination here is critical. It's been a massive problem, and I think OPEC speaks to the much broader issue of a lack of coordination in the places we expect it at times like this. Dan, you've touched on globalization. I think it's critical. This issue of national security has been thrown around so much over

the last few years. But when you start to find out just how much you depend on one country to supply things like pharmaceutical ingredients, we've got a problem, haven't we, Dan, Well, absolutely, I mean we're you know, although we're scrambling to make masks here by the way, which are a petrochemical product, all those and mass we find out that the bulk of them and a lot of medical supplies come from China, and I think people didn't realize just how interconnected these

supply chains are and the stress on them and what's happening. Tankers were tens and tens of thousands of containers are in the wrong place or their right there's nothing to put back in them. So that's where I think this is really a test of globalization on top of everything else, Dan, You're gonna thank you so much for joining us today, Dr Jurgen. Of course with the prize. And even though it's twenty nine years old, John No, no, you used to walk around on campus because it was cool with

Da Battis at the time. For our listeners to haven't read this book. I mean, if you will take from Amazon, it will come in a very very large ball, as is the Community Nights as well. Dan, You're gonna of course the more modern the quest as well. Philip Bill the brand of black Rock, and Stephen Major of HSBC, their global head of fixed income research, and Philip, what I want to do a show a chart which you know, something I've used over the years with Bill Gross and

frankly I should use it with Steve Major. This is one of the great calls of all time. Think Eisenhower in the fifties up to the moment of Paul Volker and then the great great disinflation and what is so true along the way here and credit Sueez to me always said Steve Major, the best best idea. Rates are gonna go up. Rates are gonna go up. Rates are gonna go up. You get you get the theme here.

Rates are gonna go up, Rates are gonna go up, and now we're down here at an imaginable low interest rate, something that Stephen Major has absolutely nailed like no other strategists at no other house. We're thrilled to Steve Major could join us with Dr Hildebrand this morning. Steve Major, the cry is out there, rates are gonna go up. Why aren't they? Well, the first reason is we can't afford them to go up. And part of the explanation for low yields over the years has been the excessive debt.

So it's a question of servicing costs. The the economy, both the public and private set to combined, cannot afford to have higher rates. The the latest shock in the form of the virus as maybe accelerated an inevitable shift towards a weakening economy and even a recession. So for now rates are stuck close to the zero bound in the US and negative elsewhere. At the moment, all we're waiting to see is the central banks responding or even

reacting to what's already happened. That the interest rates are an outcome from what's come before. It's not like they're actually leading anything within there will be the new disinflation. Many people are writing about this demand shark, this supply shark, and the idea of an aggregate disinflation. Will we see rates drive ever lower? Will we see negative interest rates?

For example, in the United Kingdom, well, negative rates have been evident for the last deck aid in real terms, so every big country has had deep negative real rates. The US was the outlier in two thousand and eighteen with the rate hikes, which now with hindsight looked like a massive policy mistake. So negative real rates for the last decade has been normal. The UK has had deep nominal negative real rates. In Switzerland and Denmark you have

minus seventy five. I mean the direction of travels quite clear. M d CB isn't going to be hiking rates this week, is it? Obviously the mover is down. But Stephen, we'll get back to that in a second. You know, looking at the real yields, you know got negative US on the tenure US, but actually is the yield going to go negative? It's not the real but just is it going to go negative this year? Well, in the US, um it looks like there's a strong resistance to negative

policy rates and negative yields in the UK. Yesterday, we know that the market traded negative, but we're a long way from negative policy rates. The resistance to negative rates is quite strong, and there's a big banking lobby out there, and there's the existence of cash that for now is a big barrier to go in negative. But never say never, maybe for the next cycle. Did you agree with that?

Who certainly would never say never? Yeuh, that's a that's a good dictim I mean, look, from a macro perspective, something has to change for rates to change. As steven she said, the rates are not low because central banks put them there, but because of macro phenomena. So what could change. Demographics aren't going to change. Productivity could in principle change. You know, we don't fully understand why productivity

has been solo. So we could see at some point a jump in productivity, or we could see a major shift in policy. But something has to change for the rate outlook to change. And as I said earlier, if you look at the inflation forecast for a very long time to come measure in years, the market right now does not expect that. I mean, this is such an interesting discussion, and what Steve Major said there and then this is what we always hear from a brave guy

like Steve Major. Dr Hilda Brand is the banking lobby who is the blame? I mean, you're a connected guy. Who is the banking lobby out there dictating what policy should be two institutional policy holders as you were at this SISS National Bank. Did these guys calling up means there a special phone. There's not a special phone. But I certainly went through my bruising exchanges with some CEOs. But at the end of the day, you know, I think, um, look,

nobody likes when the environment makes you job difficult. So I have some sympathy for bankers, but they also need to recognize that again, as Steve said, you know rightly, this is not the low interest rate environment. Is it difficult for banks? Yes? Was it caused by policy makers? Know? It is a result a consequence of demographics of savings. These are global phenomena, which is why we have low

interest rates throughout the world. So bankers need to also brush up on their macs a little bit and understand why we are where we are. Steve major. I mean, this is such a delicate conversation, as you say, there's a banking alabbya out there. I mean, they've observed negative interest rates in Europe and basically the Anglo Saxon world is saying no, Anglo American world is saying, no, we don't want to do that. Are our mechanisms any better

than negative interest rates? Well, you might notice that I worked for a bank, and the concern I have is that the central banks do not set the policy rates so banks can make money and pay bonuses. They set policy rates for the real economy. So that's why there's that tension there. Obviously, negative rates and very flat curves are not very good for banks, but everyone knows that. Um so, so the alternative so interesting, and that's why the market has moved on to start debating about yield

curve control. As we've seen in Japan. We've had caps in place in the US throughout history. People will remember financial repression from war, bonds and consoles in the UK, so people are thinking along these lines. Um I think QUE is not an obvious next step either, because the more central banks do QUE, the more pressure they put on the banking system. Because of the reserves that are created and that and that's quite unproductive for banks. So so I think the next step needs to be a

little bit more creative. And that's why over the years people have started to talk about all these alternative policies and and you know, helicopter money has been suggested, etcetera. I was going to ask you about that, Stephen, what would it take for the FED to use helicopter money or any other central bank? Actually, well, we know back in yeah, we're back in two thousand and sixteen, we wrote papers about this and it was that it was at the time what we called the elephant in the

room that and in fact it was wrong. We we got completely wrong sided. And there is a danger sometimes people like me could get too gloomy. I am actually worried that in two thousand and twenty we might be on the verge of some kind of paradigm shift and so more of a secular kind of shift. And and that's a big worry because you don't know it's happened until afterwards. So helicopter money, in its various guys has shown some except it has been shown around the world.

In Hong Kong, something similar was tried recently. Although it was funded out of reserves, it was funded, so it wasn't the purest form. But but you know, there are many proposals that have been around for a few years and I think that we'll see them try it. You go, I'm loving this conversation, folks. Steve Major where this is HSBC, and Philip hilden Brand of Black Rock as well. Dr hilder Brand, let me go to you on the paradigm

shift which is called Japanification. How close are we to UM exporting Japanification and importing it into Europe and for that matter, into America. Is it a paradigm shift where we become like Japan. Well, we're about to see the cb UM is redoing their projections, the economic projections that you know, I'm sure some of them, as they work through them in the next governing Council will imply or suggest that we are going to go back to recession

or environment. So the reality is the escape out of this uh low interest rate environment, the escape out of zero rates, you know, has not happened. There was some hope early in the year that we could be set up for it, but certainly with this sharp and potentially deep in pact of the coronavirus. I think that story is over. We all need to reassess, and so do central banks. I don't think you can throw up your hands and say that's just the way it's going to be.

We need to learn from history. We need to think about creative ways to respond, and most importantly, we need this aggressive and coordinated response. I think you know Step is right to point out to some of the flaws, deep flaws around the sort of purest form of helicopter money. Certainly that is not where we want to go. But I do think what we need to have is a way to basically for fiscal policy to work directly to

consumers and households. That is the key right now in this in this sort of natural disaster paradigm, because if you don't have that, just to hope that it somehow works through the financial system isn't gonna work. Samese. If they can't pay their rent because they have no customers, there's no place to go for them in the capital markets.

We have to be realistic. The only way a good business can survive if the customers has certainly gone suddenly gone, because they can come to the store is if they get direct financial support. When you talk about decisive policy action now, is in the next two weeks or is it a month? I mean the timeline seems very crucial here. Yeah, I think it has to step up or you know,

it has to begin immediately. Look, I'm not a medical expert, but most of the medical expertise that I read and studies suggest that this is going to be with us for some time measured in months, not weeks. So I think it's it's a matter of sustained support for some time, and if we do that, this will prove to be temporary. I think that's the key. You know. One of the things I learned in the crisis, and Tim Guydner was a great advocate of this, don't ever assume when you

have a problem that everything else stays the same. This is where government action comes in and can make a difference.

So if we want this to be temporary, which by nature it should be, provided we have the right response on the medical side, then we need aggressive and bold direct support through the fiscal channel, and monitored policy can can be a piece of a coordinated approach, but it's a limited piece by definition, because a it's exhausted or nearly exhausted, and B it's really not per se the right the right way to to deal with the natural disaster, which is what this effectively is. Phil Thanks so much,

philipill the brand of Black Rock. Stephen Major of HSBC, You're not Meridith Sumpter does. It's great she brings in the Chinese headlines. I know when you asked single time to do that and she killed it. It's a really different view from Washington. You write a group head of research strategy, Meredith Saves. So great to have you with us on the phone. Let's just start with a pretty simple question. President Shakes turning up in Wuhan, is that just a p our event. It's not just a pr

event for the external audience. It's also a leadership event for the domestic audience as well. This is she trying to own the crisis and putting an underscore below his view that this is the ultimate test of not only his leadership ability, but of the Communist Party's governance ability.

He's responding to what was criticism with his handling of the virus early on and not showing up when his premier Lee Ka Chong did so this is in part to boost his domestic standing and try to boost fragile confidence at home that China might be getting ahead of where the virus is going there. Meredith, can we just take a step back away from just the progression of the virus? Will it come back? Won't it come back?

And get a sense of how damaging the one to punch to China is Right now, the idea that the supply chains got uh disrupted completely by the shutdown of the Hubei district, but then also now have a slow down and global growth as Italy shuts down in a growing number of nations quarantine entire sections of their countries. How difficult will it be for trying to recover from this. It's going to be incredibly difficult. But I think what what what's key here is not so much the Communist

Party leadership. They're not as concerned about how they're necessarily going to recover. They're still much more focused on containing new outbreaks, and so the political priorities there is not let's restart the economy quickly. It's more so, let's make sure that we are on top of containment, and if that means a much slower recovery period will deal with that. Is that really the case, because actually some people are saying one concern is they're going to ramp up factories,

uh too quickly that it will reignite another spread. Is that is that a false narrative? No? No, I think that's actually that's quite an accurate narrative. And I think that the Communist Party leadership as well as local leaders are quite nervous out the opening of factories and about

the spread of workers across countries. They want to get ahead of new outbreaks that could that that could throw off their ability to to well manage the crisis Emeritithumter, the President stunned the world and took away the tariffs, looking for a bilateral approach there from the Chinese as well. What would be the effect on the economies? Not as

great as an effect as both leaders would like. And and frankly, look, and this is we have the world's too largest economies that are increasingly at the center of this global disruption. But it's much bigger than just the US and China. And look, we we've had global crisis before, but this time it's different. This is not what we saw in with the committee to save the world from

the Asian financial crisis. Nor is it two thousand eight where we saw significant coordinated action across core economies to save off the absolute worst of that global financial crisis. What is marking the global response is more so a lack of meaningful coordination amongst global leadership at the very top to get ahead of where we are, to get ahead of the crisis from both a health and a

market standpoint. And this is really resulting in a lower confidence by the public and by investors in the global leader's ability UH to stave off further spread of the virus and its related economic and growth cost Well, not if there's reasons not to have that confidence. I mean, I look at the situation in China right now. There's some people who think the w h O are afraid of criticizing China publicly because they might lose access to China.

There are some people who think economists are basically high bowling their estimates for the economy because they're afraid of losing access to China. Just how much of a problem is that Transparency has been a core of of the complications of understanding the severity of the crisis in China. And it's caused that country to be back footed and

its initial handle of the spread of the virus. I think also, though, what's really at play here is is not just what's happening in China, but you you really hit the nail on the head, Jonathan. You have a w h O in a fragmented global environment that is

playing much more of a guiding role. It is not as authoritative as one would think for an international body that is trying to direct country governments to make the right choices, to do the right things that would that would be able to enable this public health crisis to abate faster than it is. And the result is we have a scattershot approach of how country governments are trying to deal with the crisis, and that's resulting a lot

of confusion. It's resulting in a lot of inefficiencies, and it's essentially elongating uh the spread of the virus and the related economic crisis that we're dealing with. Meredith thanking there in China, and of course it redounds back to Washington's a Bacheli's japes. Satage General's head of US Right Strategy. She joins US now so Batric Great to catch up with you treasury yields while through some aggressive targets that you started at the start of the year. Where are

you now? UM? I think EF have made a very good point, which is it's really hard to sort of look at this market from a fundamental perspective. Yes, we had a massive rally yesterday. We're giving up some of those games today. But it's really hard to look at deals and say and sort of affirmatively say where things should trade. What the bond market is now pricing in is for zero interest rate policy and looking past that, the potential for quantity of easing or forward guidance or

more extraordinary measures coming from the Federal Reserve. So any volatility in risky assets translating to games in the bond market. The great call you've had, combined with the suck gen caution, calls for an important reassessment right now. Have you brought in your house call on disinflation and sluggish real GDP growth? Have you brought that in evermore so? UM? Again, if the move in a break even seems like it's again a little bit too over them, But it's really hard

to know. If we start seeing UM oil prices declined to new loads or below thirty, you'll start you're talking about more of a financial stability risk. Break evens below a hundred is very troubling. Um, I'm sure the set is being very close attention to that. But broadly speaking, what the bond markets are reaffirming is our call for a recession this year. And now this is not just a US reception. It's looking more like a global recession

and a global decline in in in bond yields. So the the policy prescription has to come from sort of coordinated action globally. I'm looking at the moving every study to break evens at least, it's real simple. Yeah, break evens a spiked down to indicate significant disinflation guestiment. These are tenure break evens. But on a moving every study, the vector has been disinflation since two thousand thirteen. Yeah.

And the implication here is that, yes, the federal reserve is going to drop to zero and it's not gonna matter. That They're gonna try to go as as low as they can go, at least out within modern history, and it's not gonna work. I'm just wondering what that means for treasuries as an asset class going forward. JP Morgan's Bob Michael came on with US yesterday yesterday afternoon and said that frankly, treasuries will not act as a haven asset class going forward just because we've reached a certain

lower bound for the time being. Do you agree? Um? I agree with that view, And I think that that's really the risk, right, is that you're starting to see a gradual Japanification of the U S curve. So you know, once you start getting closer and closer to the to the zero lower bound, it's going to be very, very hard for treasuries to actually act as that safety of an asset. It's uh, you know, and that's ultimately the risk.

And and as you point out earlier, I think the fact that central banks um easing even back to the zero lower bound is not going to do a lot for inflation expectations is also troubling. I mean, the trajectory for inflation globally, not just in the US and US actually, you know, CPI has held up pretty well even in the last couple of years, but it's the global inflation picture that's been dragging US inflation expectations lower. And it's not clear that policy can do a whole lot to

reverse that. BAA fantastic to catch up with your Sabata's jappest Stage General's head of US right Strategy calling for much lower yill to the start of the year, and wow it she turned out to be right. Thanks for listening to the Bloomberg Surveillance podcast. Subscribe and listen to interviews on Apple Podcasts, st Cloud, or whichever podcast platform you prefer. I'm on Twitter at Tom Keene before the podcast. You can always catch us worldwide. I'm Bloomberg Radio