Episode summary
Iran and Israel Keep Up Attacks; President Trump Extends Deadline | Bloomberg Surveillance
Bloomberg Surveillance
· · Hosts: Tom Keene, Paul Sweeney · Guests: Joumanna Bercetche, Anna Wong, Seema Shah, Bob Michele
Summary
The episode focused on the market implications of the Iran-Israel conflict, with the guest in Dubai saying there is a clear disconnect between the tone in the U.S. and what is being felt in the Gulf. She said Pakistan, along with Egypt and Turkey, has emerged as a key intermediary, but there are no clear signs of an imminent breakthrough and Iran does not appear ready to capitulate. The discussion framed the conflict as a direct risk to oil supply through the Strait of Hormuz and a growing source of uncertainty for investors.
Anna Wong argued that the main economic channel is oil-driven inflation and demand destruction. She said the Fed typically looks through an oil shock, but market pricing is reflecting more concern about broader supply disruptions, including fertilizer and chip shocks. She modeled $200 oil as a severe case that could push gasoline to $8 a gallon and headline CPI to roughly 5.5% to 6%, while also warning that elevated fuel costs could offset the benefit from the one big beautiful bill within months.
Seema Shah and Bob Michele both said markets are still struggling to price the conflict. Shah described equity investors as relatively complacent compared with bonds, while Michele said the selloff remains orderly but that the Fed, ECB and Bank of England are likely to turn more hawkish if headline inflation stays elevated.
Key takeaways
- The guest in Dubai said Pakistan has become a key mediator, but Iran is not signaling a near-term willingness to end the war.
- Anna Wong said oil above $83 a barrel could offset the consumer boost from the one big beautiful bill, creating demand destruction.
- Wong’s worst-case $200 oil scenario implies gasoline near $8 a gallon and headline CPI around 5.5% to 6%.
- Seema Shah said the bond market is pricing a more severe inflation shock than equities, and investors are mostly waiting rather than buying the dip.
- Bob Michele said a rise to 120 to 150 oil would likely create major demand destruction and force the ECB and Bank of England toward rate hikes.
Notable quotes
“there definitely is a disconnect between what we feel is happening on the ground and the skepticism about the possibility of a breakthrough”
“Pakistan has stepped up alongside Egypt and Turkey”
“the big question that everyone is asking is does the Fed actually hike into this inflation shock or do they stand put”
“my calculation is as long as oil price stays above $83 per barrel, you'll see there”
“we are leaning towards the idea that look, this is going to be more more protracted”
How the episode opens
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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. She has been a foundation for us in our coverage of this war on a difficult Friday into her afternoon and evening in Dubai.
Jabana Versace joins us now with uh Bloomberg Horizons. Jamanna, I am thunderruck by the message spinning in the American media and people covering Mara 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 Kuwait uh being hit by rockets. Is is is the Persian Gulf as a general statement aware of how surreal the war is across so much of America?
Yeah. You know, when you use the word thunder struck, I thought for a moment you were talking about the storms because that's also on the front page of the national. The Dubai and the UAE have been hit by really strong storms overnight.
But I 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 uh the rhetoric coming from Iran doesn't suggest so 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.
From the episode’s captions: roughly the first two minutes, lightly cleaned. Keep watching on YouTube →
Topics
- geopolitical risk
- us macro outlook
- fixed income
- market impact
- investment strategy
Companies and tickers mentioned
- PFG
- JPM
- Principal Asset Management
- JPMorgan Asset Management
Watch the episode
Summary, takeaways and quote selection by Octagon. Quotes are short excerpts; the full conversation is in the episode.
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