Episode summary
The Risks of a Prolonged Iran War | Bloomberg Surveillance
Bloomberg Surveillance
· · Hosts: Tom Keene, Paul Sweeney, Lisa Mateo, Michael Barr, Alexis Christoforous · Guests: Gita Gopinath, Ed Morse, Steven Major, Charles Kantor
Summary
A prolonged Iran conflict was framed as a broad macro shock, with the guests arguing that the first-order channel is energy. Gita Gopinath said the oil-price surge could shave global growth by 1 to 2 percentage points in a best-case scenario, but a longer disruption could cut growth by as much as 3 to 4 percentage points while lifting inflation by 50 to 60 basis points. She said emerging markets are especially exposed because many are energy importers and are already facing dollar strength and rationing.
Ed Morse argued that the market is still underestimating the risk to shipping through the Strait of Hormuz and that prices could go higher if disruption lasts. He said the US and IEA releases are not enough to offset lost flows, and that Brent could move above 120 if the supply shock persists. He also said Gulf states, especially Saudi Arabia and the UAE, are adapting by accelerating diversification.
Steven Major said the war has turned stagflation risk from a tail scenario into something closer to a coin toss, and he recommended TIPS as a portfolio diversifier. Charles Kantor said investors should move up in quality, noting that megacap technology companies still have earnings and cash-flow strength even as tariffs and war add volatility.
Key takeaways
- Gita Gopinath said a prolonged oil shock could shave 1 to 4 percentage points off global growth, depending on how long prices stay elevated.
- Ed Morse said the Strait of Hormuz remains the key bottleneck and that crude could rise above 120 if shipping disruption lasts.
- Steven Major said stagflation risk has risen sharply and that TIPS look attractive versus cash in the current environment.
- Charles Kantor said investors should favor quality, because large-cap tech still has strong earnings and cash flow despite the turmoil.
- Gopinath said emerging markets that import energy are most vulnerable because higher oil prices and a stronger dollar squeeze them simultaneously.
Notable quotes
“if this continues well past a few weeks, and we're looking at now average for the year hitting 85, now that's beginning to shave off like 3 percentage point to global growth”
“There have been a lot of questions about the dollar's dominance and whether we've seen some sort of financial decision-m shift sufficiently in the world”
“I think it's easy to get it out to 120. We're in a world of unbelievable volatility in this market”
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. Katie Gopenath was an academic at Harvard.
She was known within the racket. We all knew that. But found immense acclaim as the former deputy managing director of the International Monetary Fund.
She brought an academic gravitas to it that was just absolutely wonderful. As they do, they wanted her to stay at IMF. She had to return to Harvard.
Professor Gopenath joins us in this time of international turmoil. Uh Gada, thank you so much for joining this morning. What was it like your first day back at Harvard?
You go from Gorgie Eva and 400 PhDs telling you what to do at the IMF. What was it like in front of the kids at Harvard the first day?
Hi Tom. Uh always I always miss speaking to you. So it's great to kick off with you know this kind of a question that I don't usually get from anybody else. This is great. — What was it like? I mean, did you Stanley Fischer says he that that um that uh Samuelson used to throw Chuck. What did you do with the dumb students after the fancy people at the IMF?
I It's actually been going great. I am enjoying very much being back at Harvard and it also helps to be able to be able to speak a little more freely than one does when when you're when you're at the IMF. So I I'm enjoying this moment a lot and also uh I love working with the students and getting back into research and something I did miss.
From the episode’s captions: roughly the first two minutes, lightly cleaned. Keep watching on YouTube →
Topics
- iran war risk
- global growth slowdown
- energy market disruption
- stagflation risk
- fed path
Companies and tickers mentioned
- Bloomberg
- Hartree Partners
- Tradition
- Neuberger Berman
Watch the episode
Watch “The Risks of a Prolonged Iran War | 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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