Bloomberg Surveillance TV: March 9th, 2026

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This is the Bloomberg Surveillance Podcast.

I'm Jonathan Ferro, along with Lisa Abramowitz and Anne-Marie Horton.

Join us each day for insight from the best in markets, economics and geopolitics.

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Here's the view on Wall Street.

Stocks falling, crude jumping above $100 a barrel for the first time since 22.

Sarah Hunt of Alpine Sex and Words Write in the positives that investors were looking

for a hard-to-hang once had on, given the oil price surge.

Sarah joins us now for more.

Sarah Good morning.

Good morning.

I think it changes a lot of things.

I think it's really, as we've all spoken about many times, it's going to depend on how long

this lasts.

The Ford curve does not seem to think that this is a permanent state.

And I think that what it changes is, one, the possibility of an economic slowdown or even

going into recession, because higher energy prices can often cause that kind of an economic

shock.

And what happens on the earnings front, both to margins and to spending and to everything

else.

Right now, this is a near-term problem.

If it looks like it's going longer, it's going to change some of the math that everyone's

been looking for for the next couple of years in terms of earnings.

Consumer facing names getting beaten up, airlines, cruise lines, all get an absolutely hammered

as crude continues to tick up.

Are we at the point of demand destruction now?

I think it's a little early for demand destruction.

I think that there's some obvious things that are going to happen as you see prices move

very higher in the short term.

But I think from a longer term perspective, it takes longer than a couple of weeks of

higher prices.

Do we get a couple of months of higher prices?

That's definitely going to hurt it.

And there on the margins, people are going to travel less.

People are worried about traveling to begin with.

It's because there's something going on in a big part of the world that's really important.

So I think you're definitely going to see some pullback and activity.

And that is in and of itself slowing things down.

Sarah, have you been reluctant to sell stocks?

Any stocks in response to this, given the fact that in the past, geopolitics is something

that has always been a short term event for markets?

I think this is, yes, I would say I wouldn't say I'm afraid to sell anything, but it's more

that is this something that is really a permanent change in what's your time horizon.

If I needed, you know, I tell people all the time, if you need money in the very short

term, you should have it liquid.

If you're in there for the long term, you're going to see a lot of volatility.

We knew coming into this year was going to be volatile.

We didn't know why and how volatile it would be so quickly, but you expect after a couple

of years, especially if such strong equity performance, that you'll see more volatility.

The question is really going to be whether or not this sticks or whether or not this is

something that markets continue to see through and look through.

And I think that there are other things going on in the background that are also potentially

problematic.

So it's going to be interesting to see how that plays out and not interesting in a good

way.

Of course, what's going on with private credit, we see cracks in the US economy.

I'm just wondering, is there an inflection point, something that you're looking for that

would change your view, that would make you materially shift your longer term outlook

for 2026?

I think if this continues to go on without figuring out what the off ramps are, I think

that, you know, it was a good move to say that, well, globally, the G7 will release some

energy because prices spike so high, that's not going to solve the problem.

The problem needs to be solved by having some resolution and having tankers be able to

get through the straight-of-one moves.

Until we see some path for that, I think you're going to start to see people get more

and more worried about those longer term, both earnings estimates and just general economic

conditions and the market.

Right now, we're still in early days.

If that really extends, I think that's really going to be the tipping point.

Some of that depends on what your starting point is, what your assessment of current conditions

actually is.

And we've got very different views on that.

Some people think we're okay.

In fact, the Federal Reserve, the top of the Federal Reserve, Chairman Powell would insist

that things are stable.

They're okay.

Others would say things are fragile.

Where'd you come down on that?

One of the other.

I think that they are a little bit more fragile than they look.

I think that you've seen some disruptions in the labor market.

You certainly hear a lot of rumblings in the labor market about what's going to happen because

of AI in different sectors.

There's a lot of spending that's coming out of that, though.

So there are offsets to that.

I think, generally speaking, absent this shock, the economy was doing fairly well.

There were definite pockets of weakness, and you could see that in rotation in sectors

in the market.

You could see major rotation sectors.

The headline indices are still fairly close to all time highs, but there's been some

major devastation in different sectors along the way.

This is going to be one of those situations where, depending on how long it lasts, and

this is, you know, it's just going to keep saying that, we don't know yet what's going

to happen.

But on the margin, nothing good comes out of spiking oil prices this high and shutting

in oil infrastructure.

Well, let's pick a sector.

Financials.

That private credit, Blackstone, then BlackRock going into the weekend with a bit of trouble

there.

Then we've seen Morgan Stanley and Goldman Sachs start to underperform as well.

This is going through the whole sector now, and not just the private market players.

What do you think that's signaling?

I think that's signaling some concern about weakness ahead and some concern about what

are, if you're going to have potential issues in both equity and bond markets, but you

also have this private credit thing is, this would be the top of the story if we weren't

going on.

This would be the top story.

I think if we weren't going through what we're going through right now with Iran, because

this is one of those, it started out small, and now you're seeing a couple of other things,

then a couple of other things, and that's the kind of things that market don't like.

It's that uncertainty that markets don't like, and investors don't like, when everyone

has been sort of trying to reassure everyone that it's all OK, and then you start to see

things that make it look a little less OK.

So I think that would be a much bigger headline if we weren't in the middle of this, and

that would be something that would be starting to worry markets going forward.

Yeah, the idea that panic and sort of retail investors trying to pull their money and

not getting it all back is very concerning to people.

Can you put these two stories together of the oil price shock and credit concerns tied

to private credit, the idea that some kind of increase in oil and decrease in consumer

spending power could catalyze the fears that people see and credit sooner than maybe

otherwise would take place?

Well, it's interesting because I think those fears were catalyzing on the back of expectations

of problems in certain sectors, like the software sector specifically, but whether or not

the reality on the ground is that they were as bad as it looked.

I think the problem is more that everybody makes a decision in one direction.

I don't know that the higher oil prices are going to make that worse, because I don't

think that the credits the people are worried about are ones that are so tied to the consumer.

And I think that would be the link that I'm not sure we see yet, but it doesn't mean

that it isn't there, and certainly people are going to start looking for that.

Stay with us, Moulin Plexivan is coming up off to this.

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Absolutely.

I mean, this could definitely be their risk here for the United States is obviously that

this becomes a much more protracted war.

Or it also creates civil war and just chaos within Iran and then within the larger Middle

East region.

So there are definitely a lot of risks to the administration here.

But I do think that the administration is really focused on this fortified week timeline.

We do think that they think that they have a plan to accelerate attacks on Iran to try

to get to their specific goals, which is getting rid of the weapons that could be targeted

at the United States and Israel, getting annihilating the army of, I'm sorry, the Navy of Iran

and trying to then also prevent them from going after ships in the state of Hormuz.

And also maybe potentially trying to get some sort of regime change or at least governance

changes going forward.

So do you think there's obviously some risks but the administration probably is looking

at this still being a fortified week timeline?

Well, obviously see if that changes and then what does this look like?

They have that there is a surge coming that they will increase their attacks on Iran.

So we'll kind of have to see over the next week to see, well, how does this play out

and then how does that change the timeline going forward?

Jeanette, are there any independent assessments of where the administration is on achieving

main principles of that timeline in particular wiping out weapons that could attack US and

allies as well as potentially regime change at a time where we now have a new Supreme

Leader that President Trump has already said is unacceptable to him?

Yeah, I mean, I think obviously the regime change is going to be the biggest challenge

for the United States and Israel. And I think you have seen the United States a little bit walk back

that exact goal for this military operation. But you are kind of seeing the fact that they

are trying to, they were focused on getting Iran's air defenses along the coast, so they could

then strike deeper into Iranian territory. They just have to have achieved that goal at least

particularly so far. But I think that big question is there's a lot of unknowns. We don't know if

Iran has more missile capacity that they are still kind of holding onto. That would be important.

I think that the United States has been highlighting the fact that missile attacks and drone attacks

coming from Iran have been down 70 or 80 percent. And they do think that they are losing

firepower, but we don't also know what actually might still be there. So there's definitely still

this risk. But I do think the administration sees that they have made some progress with getting

out certain air defenses using up some of the supplies that Iran has that has been using against

US and its allies. And also that they're starting to be able to strike further and deeper into Iran.

So that is a little bit of some progress towards these ultimate goals.

The US is fighting this for alongside Israel. How aligned are these two nations and their

ultimate goals? Yeah, I mean, I think there's I think the one thing that was important about why

potentially we may have gone into this is that there was an alignment between the two countries

on the actual ability to go after Iran. And this is a they both, I think, see this as an

opportunity to really kind of strike at the weapons that Iran had that it was potentially

using to threaten both of those countries, also trying to go after certain, you know, other

pieces that the Iran has been trying to do with its nuclear program. But obviously we may see

some disagreements longer term. We saw the disagreement over the weekend about the fact that

Israel's strong oil depots in Iran and the US was opposed to that. We also may see differences

of opinion as to whether or not we're actually going to get regime change or would the US be

more willing to accept some other upward outcome versus Israel. So I think there could be more

fractures going forward, but we haven't seen a lot yet. But obviously the longer this takes that

could obviously become something that becomes a bigger risk. Jenna, how much visibility do we have

on what's happening inside Iran right now? This is a population of 90 million people, something

like that, with very, very complex power structures as anyone who's followed that country for a while

will understand. Jenna, those strikes from Israel are really, really important because that undermines

the domestic support for what is happening. And that's been an argument of both Israel and the US

for quite a while to try and get the Iranian people on side to ultimately topple the leadership.

There's a little sign of that right now. How do those strikes help?

Yeah, I think that was one of the main concerns that the United States had was that those

attacks could actually make opposition less willing to go after the regime and less willing to

kind of arise off in that way. And so that was why the administration was a little bit more upset

with Israel for going after those attacks because they do want to make sure that there are

conditions where we're not actually helping to rally the Iranian people behind the leadership

and feeling like they in particular are being attacked rather than the regime and the security

forces that hold up that regime. So that is definitely a risk. Obviously, the other issue is that

we do have these internet blackouts, which doesn't mean we always have a full understanding of what

is actually happening within Iran. And that makes it a little bit more difficult to know what could

be the ultimate outcome. Obviously, one of the big issues here is that we don't necessarily have

a good understanding of could there be an opposition leader who could actually rise up and take over

in Iran, like what you saw in 1979, the fact that the IHOLO was a particular figure,

that I think is something that is going to be a risk going forward and to see if that ultimate

goal can be achieved. Stay with us, Maul Plumberg Savannah's coming up after this.

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Surging all prices sending bond your time across the globe, investors raising

bets central banks will keep rates on hold. The former Kansas City Fed President Esther George,

writing, with all prices surging over $100 a barrel inflation is sure to move higher.

The Fed will want to look through this price pressure, but it will likely stay their hand for

entering rate cuts or entertaining rate cuts. The former Fed President joins us now for more.

As they're welcome to the program, let's just get to that statement and your experience too.

I always want to lean on that. You live the 22 energy shark. Can you frame for our audience the

similarities, the differences between this moment and that one?

Well, good morning, Jonathan. Yeah, I think I think the uncertainty that we've talked about for

some time is one of the characteristics here that we have to remember. We have been relying heavily

on a consumer that has faced significant price shock coming out of the pandemic. This is a consumer

that has felt the impact of the tariffs and they also have felt the uncertainty associated with

a job market that has shifted significantly. And so when we rely on the consumers, we do here in

the US, that becomes a real focal point, I think, for trying to understand. Now we have added a new

shock, this gasoline price at the pump. We understand that diesel prices will be affected, which,

of course, will feed into the cost of transportation and other things. And I think it creates a real

point, not just of uncertainty, but I think heightened risk around consumer spending and growth as

we look ahead. When you were at the Federal Reserve through the 22 shark, household balance sheets

were arguably much stronger and the labor market was much tighter. Do you think differently about how

this price shock and the energy market will work its way through the economy? Yeah, I think you

hear a lot about the K-shaped economy and I think that will come into the fore now. We have really

been relying on a group of consumers that can power through this. But you can only stress weaker

household balance sheets that have, again, had the benefit of having jobs, that has been really,

I think, one of the tailwinds here. But there is a breaking point, I think. And so I think the fed

will have to be particularly focused on thinking about how that consumer is going to be positioned

today to be able to look through this kind of additional price pressure. As to that could go one or

two ways. On one hand, you can make an argument for easing policy to try to give lower income

consumers a better scenario, a better backdrop to meet this price shock. On the other hand,

you could say the Fed has a role to play to combat inflation. Which side of the equation do you

fit on? Well, the Fed has been focusing on the labor market and on weakness at, I think, the risk

of inflation even before this oil price shock. Now, I think the Fed, and you hear them increasingly

talking about the risk of inflation, they have allowed it to extend out for a period of time that

now puts them in a very, very difficult position, I think, in understanding how they're going to weigh

their policy risk. Whether they continue to think they are as well-balanced

coming into this March meeting, I think, is going to be something to listen for here because

you are going to have headline inflation for sure. We'll be getting more numbers in this week to

see that. And I think the calculus around keeping those inflation expectations in the long run

anchored is going to be a point worth talking about.

Rates traders are pricing in rate hikes over at the ECB as well as the Bank of England.

Do you think that as this progresses, if it does continue for a longer period of time,

that that's going to be a scenario that's reflected in how the Federal Service being priced?

Well, I think, obviously, a little bit different for the US to think about that and the Fed,

as it contemplates its updated dot plots. But I do think it stays their hand on being able to

suggest that they are looking to rate cuts, but maybe in a pause mode. I think this kind of

environment will really remind them that inflation target has to be credible, and they have to keep

focused on that. Even if their tools right now are in conflict, they are looking at a job market

that may be stable, but has shown signs of weakness while they have been looking at inflation that

continues, not only to be persistent, but as we've been talking about, is now going to show some

upward pressure. Esther, would you describe this labor market as stable?

You know, I consider it stable in the sense when you step back and look at the unemployment rate,

which is our best gauge, I think, of how that labor market looks. It does mask what is underneath

that surface of a lot of moving parts. I think we're beginning to see the real impact of some of

the immigration policy hits here. We're beginning to see the uncertainty. I would argue play out,

where businesses are happy to hire for positions that you feel confident about, but they're not going

to move hard and fast relative to the growth levels that we've seen. So I think it's a tentative

labor market in my view, even though we continue to enjoy a relatively low unemployment rate.

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