Bloomberg Surveillance TV: March 19th, 2026

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I'm a Savannah's this morning, the Fed chair, staying put.

If my successor is not confirmed by the end of my term as chair, I would serve as chair

pro-tem until he is confirmed.

I have no intention of leaving the board until the investigation is well and truly over

with transparency and finality.

On the question of whether I will then continue to serve as a governor after my term ends

and after the investigation is over, I have not made that decision yet.

So here's the latest this morning.

The Fed chair, Jay Powell, vowing to stay on at the central bank until the DOJ investigation

into him comes to an end.

John Auguste, now to discuss this Christian Achoa of Everco.

Now, Christian, welcome, first of all.

Give us this question a number of times in the last 24 hours, I'd love your perspective

on it.

Does that provide consistency or invite controversy?

I think Powell has made explicit something that I think was very clear to anyone who knew

him that there is simply no way that he would even consider leaving the Fed under the

cloud of this investigation.

Not really because of what it means for him, but because of the precedent that it would

create that a future, that official, even Fed chair, could be on the face of it driven

out or at least helped through the door by a DOJ investigation.

This line here, though, I think is interesting, Krishna.

The first line from the chairman was that if my successor is not confirmed by the end of

my term as chair, I'll stay on.

That makes sense.

That's continuity.

Mark, it wants to see that.

The second line was I have no intention of leaving the board until the investigation is

well and truly over, with transparency and finality.

So ultimately, a lot of people will view that as defending central bank independence.

Granted.

The third point is interesting, though, and this is the bit where I'm intrigued, Krishna.

This line at the moment, on the question of whether I will continue to serve as a governor

after my term ends and after the investigation is over, I have not made the decision on that

yet.

What's the value of putting that out there?

Well, I think you're absolutely right that that was a very strong statement by

Powell, and as you'll recall, it wasn't something he was forced to say because of questioning.

It's something he volunteered.

He had it written down.

He knew he wanted to say that.

Look, there's a sort of narrow sense in which we can interpret that in a wider sense.

The narrow sense is that Powell doesn't want to look like he's offering a deal if he

dropped the investigation I walk, right?

That's almost as bad as looking like you're being hounded out by the investigation itself.

So there's a narrow way in which we might interpret that language, but I'm inclined to

read it also in a broader way.

The Powell is telling us that he is seriously considering staying on as a governor, as a regular

governor, at least for some time after the end of his term as chair, even if that investigation

is dropped.

It's not something I would have really bought into a few months ago, but I think the

DOJ investigation is backfired terribly on the administration, and I think that it feels

like Powell is inclined to stay possibly either way at this juncture.

I'm struck by the historical parallel, and we were talking about this yesterday.

The last person who is Fed Chair, who then stayed on as governor, was Mariner Eccles.

His term ended as Fed Chair in 1948, and he stayed on for a number of years after that.

This was following the Bretton Woods Accord, it followed the war, it followed a highly

tumultuous period in central banking history.

Are we marking another period, which is sort of setting off a new era for central banks,

where they have less power, or frankly, they don't necessarily drive the bus.

We're generation QE, as Michael Hartnett just said, is over.

Well, certainly, you know, the note we published on the Fed meeting yesterday sits specifically

what you've just mentioned, that look, this was actually in the circumstance is a pretty

dovish, Fed meeting, and it came with bullish upgrades to growth forecast, but we wrote

the Fed is not driving the bus.

Now, that's in the specific context of a war, and a war that generates a very large shock

to energy prices.

I'd be wary of making a generalized statement that central banks don't matter anymore.

I think that would be, I'm not saying you're saying that, but I think that that

would be far too sweeping, but certainly in the here and now, this is a context where

the central banks are to a very large degree in reactive mode.

They are not setting the agenda.

They are not shaping where we are going.

Does it feel to power potentially like this is a complex moment, both in terms of the

world and in terms of the Fed's institutional situation, where it may be advisable for

them to stay for a while, I guess that's certainly something that he will be considering

here.

One question I think is whether it would be a disaster for Chair Wart if Powell stayed

on.

Not clear to me that's the case.

I'm not sure they're particularly close to say the least, but Powell is underlying pretty

dovish, and there are versions of the world where Powell staying on as a regular governor

could ultimately help bridge to getting one or two cuts done later this year under

wash.

Just real quick here, how high is the bar right now for the Fed to hike rates at some

point?

Well, the term some point obviously is elastic, right?

But I think the bar to the Fed hiking rates, let's say this year, I think is incredibly

high.

It's not literally impossibly high, but I think it's very, very high.

Look, we have an economy that faces growth as well as inflation risks, but one where

the baseline case, both growth and core inflation in the US ought to be relatively, relatively

resilient, as in limited effects, compared with the other economies in the rest of the

world.

It's not obvious that this juncture, a major shift in the direction of policy is appropriate.

The market obviously has been pushing back and shaving Fed rate cuts.

That seems like the vector that is in play at the moment.

I tell you, we still think that it's possible to get to a couple of cuts this year under

chair wash, so I'll take is more dovish than the market right now.

We think the all Fed signals yesterday, they're still inclined to cut the one rather than

two.

The question is, could the data plus the new chair potentially suddenly lock in that one

and maybe get them to two?

Stay with us, Moulinburg-Sophane is coming up after this.

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So here's the list is this morning.

The Energy Price is soaring as President Trump looks the curb attacks on infrastructure in the Middle East,

claiming the U.S. knew nothing of the Israeli strike on the critical South Powers gasfield in Iran.

This is what Edward Fishman of the Council on Foreign Relations has to say, writes the following.

Iran is waging war on the global economy.

Its strategy is clear.

Keep the straight of former's effectively closed until prices rise enough to force President Trump to back down.

The author of choke points American power in the age of economic warfare joins us now for more.

Any good morning.

Good to see you, John.

Now some books, let's talk about the significance of this choke point.

He's got control of this.

Iran, I think that's the one thing we've learned is that Iran has established very clear control over the straight of our moves.

And there's very little that the United States can do without committing ground forces to stop that.

Trump entered the war, assuming that Iran would not close the straight,

because the theory was that they would have to put thousands of sea mines in the straight to close it.

And if they did that, what would happen?

Iran would not be able to sell its own oil, so it would be economically suicidal.

But Iran has kind of created a new kind of economic warfare,

with just using cheap drones that cost, you know, $10,000 a pop,

and only hitting about a dozen ships, right?

They haven't hit that many ships.

They've changed the risk calculus of the entire shipping industry.

And so they've really created this very low cost way of disrupting shipping,

and we don't have a great answer for it.

I'm glad you brought up the cost, because these are howdy drones are $10,000 to $20,000 to produce.

How many's Iran right now have in stockpile?

Because how cheap they are to produce means they could potentially prolong this war

for as long as possible.

I think that they could prolong this war as long as they want,

if we're talking about producing and using low cost drones.

They've got tens of thousands of them, but I think more to the point,

the room we're sitting in right now is bigger than you would need to actually produce shahed drones.

And Iran is a huge country.

I think it's the 15th or 16th largest country in the world.

So even in a scenario in which we've got airstrikes for the next year,

and destroy every single thing in the country that looks like a military target,

we're not going to be able to stop them from producing drones.

Members of Iran's parliament right now are debating potentially making it,

basically, like we have on our transit system.

You have to pay a fee in order to get through the street of her moose.

So basically, is the United States at some point

seeding all control of this international waterway to the regime?

Yeah, I mean, look, one of the core factors underlying American

hegemony for decades has been that the United States provides open sea lanes.

What Iran has shown now is that they actually control the straight of her moose.

And even if this war were to end without regime change, so if this war ends

and Iran's decimated militarily, but you still have the IRGC in control,

Iran still controls the straight of her moose.

And to your point, Anne-Marie, I mean, it's quite remarkable,

Iran negotiating bilaterally with not only the Indians and the Turks and the Chinese,

but the French and the Italians know US allies about creating kind of like a TSA

pre-check line to get through the straight of her moose.

I mean, talk about leverage.

It's quite remarkable and not honestly anything I would have expected going into this conflict.

You said it's hard to see an out unless US, the US makes real concessions

or the US sends boots in the ground.

What would boots in the ground look like?

Sure. I think this is a really important point,

because I do really think there's a binary right here.

There's sort of two ways to reopen the straight.

One is you cut a deal with the Iranians in which you're making painful concessions,

probably leaving almost certainly leaving the regime in power,

but beyond that, maybe drawing down some US forces in the region,

maybe providing some security guarantees to Iran in the form of Russian or Chinese boots on the

ground. A kind of tripwire in Iran, the way that the United States has in the NATO countries.

I think if you were to put boots on the ground, what would you need to do?

If the goal is reopening the straight, you need two things.

One, you need naval patrols in the straight of her moose.

The US Navy has not wanted to do this because we could lose these exquisite warships just by

short-range missiles or drones.

But two, we would also need to occupy quite a lot of the coastal part of Iran and the Persian Gulf

to get enough of a buffer zone so that it's out of range of the drones.

So the point we made before, they're going to have drones,

so we need to actually build a very big buffer zone to prevent them from using them against ships.

How much of a ticking point is this in terms of the Middle East's power as a financial center,

as a place that's been attracting a lot of money, as sort of a new growth area that everyone

wants to get into, at least until now?

You know, I think this is one of the more tragic elements of this war because I think in the last

few years, Gulf countries have made really substantial strides to diversify away from just being

commodities producers. We've seen, you know, the UAE Saudi really invest in the future economy,

becoming sort of hubs for data infrastructure, AI, etc. Well, guess what, we've now seen

for the first time in wartime a handful of AWS data centers struck by Iran and the real question

I think that will come out of this is even if there is some stability, will investors feel confident

putting these really important AI data centers in the Middle East? I'm not so sure. And then for

the perspective of the Gulf countries, they're going to have a big reconstruction bill. I mean,

all these investors who come on your show, who are they going to for LPs? It's the sovereign

well funds of these Gulf countries. They're not going to have as much money, I think, to splurge

on Western private equity funds if they're needing to invest in rebuilding the Ross Lafone,

you know, natural gas facility in Qatar. Eddie, final question, 40 seconds,

ram a speculation. We'll be forgiving in the future because this is a super fluid situation.

How do you think this ends? Well, please do forgive me. I do think that it's

likely that Trump escalates than that he caves. So I've always been skeptical that Taco

applies in this scenario. Taco in a trade war, Trump can unilaterally suspend tariffs,

and no one's all the wiser, everyone says, okay, well, you know, we won. In this, if Trump backs

down militarily, he has to walk away with his tail between his legs. And we never know if Iran

actually would even allow ships to go through the straighter form is. Stay with us,

Montpellin-Paxe-Vanon's coming up after this.

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Takes quiz in gas prices, particularly in Europe. Rent the big move overnight, of course,

rising close to 120. As Iran ramps up attacks on energy infrastructure in the Middle East,

some method out of Goldman Sachs writes in the following,

the developments underscore upside risk to our price forecast from longer

Hormuz disruptions and persistent damage to energy production. Even after Hormuz reopens,

Sam joined us now for more. Sam, good morning. Good to see you.

Let's start where we kicked off this program this morning.

Brent at 115, WTI at 98, and a spread starting to open up even more. What do you think it speaks to?

So I think the market is pricing in this probability that maybe the U.S. government will

restrict exports. And if you're not exporting TI to the rest of the world, then you have a bigger

oversupply within the U.S. So WTI prices would stay on the low end and sort of disconnect from

international prices. Can we explore that a little bit further? What would happen if they actually

introduce that policy? So if you're blocking exports, I think the main risk, for example,

especially product exports that everybody's talking about, the main risk is that the refineries

in the Gulf Coast will lose those high margins they are seeing in the market right now.

And they may choose, okay, I don't have the same incentive to produce that I did just a minute

ago, I might reduce my production. So it's not obvious what the net impact will be in terms of

product prices to the rest of the U.S., also because we don't know if other countries might retaliate.

At the moment, if you look at the northeast of the U.S., it has to net import products,

same thing with the West Coast, and Marie mentioned earlier. So it's not that easy to balance everything.

Even on the crude side, yes, the U.S. produces a lot of light crude, but we import a lot of heavy

crude, a lot of our refineries are set up to run a heavier type of crude. So what if other

countries retaliate on exporting that to the U.S.? So it's not an obvious answer. It can lower

WTI prices. It can potentially even lower product prices for the rest of the country,

but we don't know what other ramifications might be. And when we saw that in the past, we saw the oil

industry lobby against those types of measures. So I am curious to see where those conversations

end today. Are you saying that you think the market's wrong, that you think that this gap has to

close one way or another, potentially with WTI coming up to meet Brent crude? No, I think with

these conversations happening, the market is just trying to price a probability that they go

ahead with it. And I think because of the sharp spike in prices that we've seen so far,

it almost puts everything on the table. And in the hopes that, okay, we produce a lot of oil,

we produce a lot of products. Maybe we can pull this off. So I think it's correct to price

in a probability that happens. I just don't know if the outcome will be the desired one. Are you

surprised that the market, the paper market, isn't reacting more strongly to what a lot of people

are saying is a real shift that we saw yesterday. We're suddenly gas facilities came under attack.

Suddenly oil facilities came under attack, both suffering damages that could potentially take

them offline for a longer period of time. Are you surprised that there isn't an even bigger reaction,

not only in current futures, but also three months, six months, 12 months out? Yes, I am. What we've

seen is that your Middle East price rose up the most. And that makes sense. That's where the shock

is. And when you look at Brent, not quite as much, you still see a big differential. And even in

the Middle East, when you look at their physical prices, they are even higher than their financial

prices. So it's almost like the market is saying, maybe this can still be a short-lived event. So

you price the most your physical local market. Then second, you price your local financial

market. And third, you price the financial market elsewhere. When this is not a given today that

is going to be short-lived, in fact, the escalation that we saw over the past few hours would,

I think, suggest an increased risk that this goes on for a little bit longer. So yes, I am surprised.

And I would expect the longer this goes, the more those financial prices will embed those

risks in it and will go higher. I'm glad you bring up this point. The essential closure straight

of her most is short-lived, because that can reopen if there's a datant. Actually hitting energy

infrastructure and long-term damage, I was already long-term. How long for this all to be rebuilt

and the supply chains to get back to normal, when actually the product itself is getting hit?

That is a key point. I like to say that there are two variables first to watch in all this

confusion. One is how much volume is out of the market. And that hasn't really changed,

because you're hitting infrastructure that wasn't really sending product or oil or gas

through the straight to begin with. So you're not changing today what's coming out of the market.

But the second variable to watch is how long this lasts. And the straight of her most

to your point is just one part of that answer. The second part is, well, if you're destroying

infrastructure, this may take longer to fix. This might not be a four-week run-up of operations

in a refinery that you chose to shut down. This might take longer. It might take a few months

if you have extensive damage in some of that infrastructure. So that second variable, the risk

of how long the disruption lasts, you're essentially making that risk higher. The more infrastructure

gets hit, the higher the risk that disruptions last longer. As we look ahead to JD Vance

Vice President, staying down with oil executives, the United States is not a monolith.

If we have an export ban control, what does this do for the West Coast that are so reliant on

Asian imports for their products? Yeah, and it's difficult to, so you produce a lot of those

products in the Gulf Coast. And it's difficult to move to the West Coast in particular because you're

not going to have enough pipeline capacity to do it. So you have to ship it around and it's not

quite as easy as shipping to the East Coast. So it'll be a bit clunky, not without friction,

which means prices can still stay higher for a little bit longer. We've seen big moves in

crude, big moves in gas prices. Have you started to see anything happen in acts in self-commodities

off the back of this? We're definitely getting a lot of questions on it. And we also see direct

headlines saying Pakistan, Bangladesh, India supply to fertilize their plants in those locations

already being curtailed because they don't have enough natural gas to do it. So we were talking

to our chemicals analysts in the US asking, well, the US still has supply. Do we have any

spare capacity to fill in that gap? But the answer is, well, the US has cheaper natural gas

than everybody else to begin with. So we're already cranking this up as high as possible.

So you don't have spare capacity to crank this up. And planting season is coming. So everybody's

going to need a lot of this stuff coming soon. When do you think we'll be confronted by that reality?

Oh, I don't think it takes long at all because already supply is being affected. The production

of fertilizers being affected and planting season is coming. This is the Bloomberg

surveillance podcast, Bringing You, the best in markets, economics and geopolitics. You can

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