Episode summary
Fed Decision and Price Pressures | Bloomberg Surveillance
Bloomberg Surveillance
· · 28 min · Hosts: Tom Keene, Paul Sweeney, Lisa Mateo, Michael Barr · Guests: Glenn Hubbard, Libby Cantrill, Aakash Doshi, Suzanne Maloney
Summary
The host and guests focused on how the Iran conflict is feeding into inflation, energy prices, and the Fed’s path. Glenn Hubbard said the likeliest macro outcome is not recession but slower growth with inflation still stuck above target, and he argued that stronger investment in research, high-skilled immigration, AI, electricity generation, and training would be needed to widen participation in growth. He also expected no change in the funds rate at today’s Fed meeting and not many cuts in the near term.
Libby Cantrill said Congress will probably be forced to take up the war under the War Powers Act, but she framed the bigger pressure point as a possible $200 billion supplemental funding request tied in part to replenishing munitions. She argued that Republicans are publicly aligned with the president, yet privately more uneasy about the strategy, the endgame, and the political risks heading into the midterms.
Aakash Doshi said Chinese buyers and the PBOC are still adding to gold as Western investors take profits, with the Shanghai market trading at a premium to London. He framed gold as a beneficiary of de-dollarization, reserve diversification, and geopolitical fragmentation. Suzanne Maloney described the conflict as a standoff between Washington’s blockade and Iran’s leverage over the Strait of Hormuz, warning that the regime is likely to resist compromise and that reopening the strait is essential to limit broader economic damage.
Key takeaways
- Glenn Hubbard said the most likely economic hit from the Middle East war is slower growth with inflation still “uncomfortably stuck,” not an immediate recession.
- Hubbard expects no change in the Fed funds rate today and sees little chance of substantial cuts in the near term.
- Libby Cantrill said a $200 billion supplemental request could become the real congressional test on the Iran war, more than the War Powers vote itself.
- Aakash Doshi said Chinese demand, including PBOC buying, is supporting gold as a hedge against sanctions risk and geopolitical fragmentation.
- Suzanne Maloney said the key de-escalation step is reopening the Strait of Hormuz to something close to pre-war traffic.
Notable quotes
“I don't think it's the likeliest outcome. Remember, the United States in particular is much less energy intensive than in previous shocks”
“I think this probably will be at least in part a referendum on the Iranian conflict. And I mean, $200 billion, it's a lot of money”
“I think the key for gold here is the Fed can be on hold so long as they're going to cut”
How the episode opens
Bloomberg Audio Studios, podcasts, radio, news. This is the Bloomberg Surveillance Podcast. Catch us live weekdays at 7 a.m.
Eastern on Apple CarPlay or Android Auto with the Bloomberg Business App. Listen on demand wherever you get your podcasts or watch us live on YouTube. Glenn Hubard had the privilege of standing under Benjamin Freriedman who took our economics and our society and pieced it together.
Glenn Hubard definitive at Columbia uh business school, his public service to the nation as well. I was watching King Charles III Glenn Huard yesterday and you could feel the calm come across Republicans and Democrats. You are affiliated with a Republican tendency.
What does that Congress that we saw yesterday and the Republicans, what do they look like after Trump?
Well, I think from the king's remarks, you know, good policy runs deep. I think the king was calling for a return to openness, in markets, in trade, in tolerance. I think all those things have been a hallmark of conservatism. I think there's also a real opportunity to pivot while President Trump is here of course to growth to opportunity and to full participation in the economy.
The anger that's out there says that many people are not enjoying growth. How do we pull them into growth? — Well, first we've got to get growth itself up and that's going to require some things that might be controversial right now. more spending on research, more high-skilled immigration, a better policy toward AI and electricity generation. We need all of those things. To get more people into growth requires much more investment in people, better training, better resources, and better working with companies to do that.
Nancy Lazar has been brilliant on this, Paul, in market economics. Uh, professor, the the war in the Middle East, it's obviously uh wreaking havoc on a lot of economic uh parts of the economy here, uh, most notably in the energy markets.
From the episode’s captions: roughly the first two minutes, lightly cleaned. Keep watching on YouTube →
Topics
- fed decision
- price pressures
- iran war policy
- midterm elections
- gold outlook
Companies and tickers mentioned
- STT
- PIMCO
- State Street Investment Management
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Summary, takeaways and quote selection by Octagon. Quotes are short excerpts; the full conversation is in the episode.
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