Episode summary
Relief Rally Stalls as Energy Concerns Linger | Bloomberg Surveillance
Bloomberg Surveillance
· · 53 min · Hosts: Tom Keene, Damian Sassower, Paul Sweeney, Lisa Mateo, Michael Barr · Guests: Ed Yardeni, Patrick Murphy, Andreas Utermann, Courtney Rosenberger Gelman, Jim Caron
Summary
The episode centered on how the Iran war, oil disruption risk and a jump in geopolitical uncertainty are affecting markets, with the host and guests debating whether the shock turns into a recession, a stagflation episode, or just a volatile but buyable pullback. Ed Yardeni said he raised his probability of a market meltdown to 35% from 20%, mainly because the Strait of Hormuz remains a live choke point, but he still argued for the broader “roaring 2020s” case and kept a 7,700 year-end target. Patrick Murphy argued the coverage understated the military and economic danger, saying the Strait is effectively shut and that Washington lacks a clear strategy or exit plan. Courtney Rosenberger Gelman framed the conflict as a leverage play ahead of US-China talks and said the administration wants energy dominance to strengthen its negotiating position.
Jim Caron said markets are treating the shock as inflationary rather than systemic so far: liquidity is functioning, repo markets are calm, and there is no broad contagion yet. He warned, though, that if oil stays near or above $100 for long enough, spreads could widen and the situation could become more damaging for credit and equities. Andreas Utermann added that the biggest hidden risk may be private credit, though he was not seeing evidence of a banking-system stress event.
Key takeaways
- Ed Yardeni cut his meltup odds to 5% and raised meltdown/recession odds to 35%, but still held to a year-end S&P 500 target of 7,700.
- Patrick Murphy said the Strait of Hormuz remains a real choke point and argued the US has no clear mission or exit strategy.
- Courtney Rosenberger Gelman said the administration sees Iran, Venezuela and energy policy as leverage ahead of talks with China.
- Jim Caron said the market is pricing the shock as inflationary, not systemic, because liquidity and repo markets are still functioning.
- Andreas Utermann said private credit is the biggest plumbing risk, but he does not yet see banking-system contagion.
Notable quotes
“my short-term caution, bearishness is, uh, totally predicated on this geopolitical development”
“the issue that I have here is that there's a high correlation between bonds and equities at this point”
“there's a high correlation market. Meaning that typically whenever equities take a take a hit, like what we're seeing with the shock with oil, typically bonds are there for a reasonable hedge”
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. Joining us in the last 48 hours, the great bull market pinata, Edward Yardi joins us of your Denny research.
How the last 48 hours been when I believe you just shifted probabilities absolutely of your roaring thesis. How's it been?
I got to be a bit of a realist given what uh is going on. Uh yeah, I I'm still sticking with 60% for what I call the roaring 2020s. However, um I had given 20% to a meltup because things kind of had that potential still. It's not a high probability and 20% to a meltdown or recession.
Kind of a bucket for everything that could go wrong. — Well, um now just 5% for a meltup. That's very unlikely and 35% for uh things going wrong, which they are. — Amazon does a 37 to 42 billion bond offering. Damian tells me it's going to be six phone calls. Heath Terry, brilliant over at Croup, publishes and reaffirms AI viability in revenue, in profit, in getting things done with all these cap X synthesize in
As you mentioned spreads haven't moved the bond market screaming stability these other news items scre fold them into your roaring uh 20s theme. Well, I mean, we've uh we've done pretty well with that thesis so far. We've got a few more years here left in the decade. Uh I think this will pass.
You're short selling yourself, folks. It's the Yardeni and Capora low of October a few years ago. Ed and Ralph Anapor, they nailed it.
From the episode’s captions: roughly the first two minutes, lightly cleaned. Keep watching on YouTube →
Topics
- energy concerns
- iran war inflation
- us market meltdown odds
- systemic stress
- white house political pressure
Companies and tickers mentioned
- MS
- Yardeni Research
- Hilco Global
- Vontobel
- Strategas Securities
- Morgan Stanley
Watch the episode
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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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