Episode summary
Ceasefire Claims Diverge as Hormuz Stays Blocked | Bloomberg Surveillance
Bloomberg Surveillance
· · 41 min · Hosts: Tom Keene, Paul Sweeney, Lisa Mateo, Michael Barr · Guests: Sebastien Page, Jennifer Welch, Andre Perold, Courtney Rosenberger Gelman, Andrew Jackson
Summary
Sebastien Page argued that the stock-bond relationship is unstable and that inflation volatility is the key risk to watch over the next 6 to 12 months. He said diversification should go beyond Treasuries, because private assets are still financial assets whose risks need to be modeled thoughtfully rather than treated as free lunches. He also said the economy does not look like it is heading into recession, with growth data still solid and the Federal Reserve likely to stay on hold unless inflation surprises higher.
Jennifer Welch said the US-Iran ceasefire looked fragile and ambiguous, with the Strait of Hormuz still effectively under Iranian control and talks likely to be narrow and difficult. She framed President Trump’s main pressure point as oil prices and domestic political fallout, while saying the administration has limited options beyond diplomacy if it wants to avoid a wider military escalation. She also said any deal could still leave the region permanently altered.
Andre Perold said AI, war, deficits, energy, and immigration are creating a world of exponential change that favors active investors willing to shorten time horizons. Courtney Rosenberger Gelman said NATO is underpriced by markets and that the ceasefire and US strategy could weaken alliances even if the US does not formally withdraw. Andrew Jackson said investors should trade more actively in a more uncertain world, with credit fundamentals still looking strong and emerging markets gaining appeal as a diversification play.
Key takeaways
- Sebastien Page said inflation volatility is likely to dominate over the next 6 to 12 months, making Treasuries alone an insufficient hedge.
- Page said the economy does not look recessionary and the Fed’s base case is to stay on hold unless inflation moves higher.
- Jennifer Welch said the ceasefire with Iran remains fragile and the Strait of Hormuz is still a major sticking point.
- Andre Perold said AI and other disruptions are shortening investors’ time horizons and making active management more valuable.
- Courtney Rosenberger Gelman said NATO is being underpriced by investors and could be weakened even without a formal US withdrawal.
- Andrew Jackson said uncertainty argues for more trading and more diversification toward emerging markets and non-US assets.
Notable quotes
“I do think looking out 6 to 12 months that inflation volatility is going to dominate”
“So I'm arguing you should diversify your hedges not just use Treasuries”
“the ceasefire at the moment is looking rather fragile and rather ambiguous”
“The Strait of Hormuz seems still be subject to Iranian control”
“start by being scared. If you don't understand AI and use it yourself, you will be out of a job”
How the episode opens
Bloomberg Audio Studios podcasts radio news.
This is the Bloomberg Surveillance podcast. Catch us live weekdays at 7:00 a.m. Eastern on Apple car play or Android Auto with the Bloomberg Business app.
Listen on demand wherever you get your podcasts or watch us live on YouTube. Sebastian page has been writing up a storm. He wrote a book about the Baltimore Orioles psychology of leadership.
Oh. It's working out. Orioles starting strong 500 ball I believe there.
He's a T Rowe Price. We're thrilled that Sebastian page could get us started and he's been much
On my mind the last two or three days because everyone's talking about diversification and what it means and rebalancing and that. His book is definitive. It is beyond diversification.
Whatever investor needs to know when there's a war and we're thrilled Sebastian page could join us this morning. I got so many pundit Sebastian going back and forth on stocks bonds correlation. Cliff Asness had a beautiful tweet out going what is this hot air?
What should we do with diversification given this war? Tom the stock bond correlation is super hard to understand and predict. But financial advisers everywhere just use a negative return correlation assumption and to me that's wrong.
The 12-month correlation historically between stocks and bonds has flipped time as flipped signs 29 times over the last 80 years from positive to negative. It has ranged from minus 80 to plus 80. Now the key to understanding the correlation is a simple question.
Are we facing a growth shock or an inflation shock? If you're facing a little bit of both that's complicated, but if inflation volatility dominates, both stocks and bonds can go down together. We learned this in 2022 and by the way if you're a nerd like me and you studied correlations back to the 70s, same thing that happened in the 70s.
From the episode’s captions: roughly the first two minutes, lightly cleaned. Keep watching on YouTube →
Topics
- inflation hedging
- us-iran ceasefire
- strait of hormuz
- nato strategy
- em credit dispersion
Companies and tickers mentioned
- TROW
- SR
- T. Rowe Price
- Bloomberg Economics
- HighVista Strategies
- Strategas Securities
- Vontobel Asset Management
Watch the episode
Watch “Ceasefire Claims Diverge as Hormuz Stays Blocked | Bloomberg Surveillance” on YouTube
Summary, takeaways and quote selection by Octagon. Quotes are short excerpts; the full conversation is in the episode.
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