油价80-90美元成常态，美联储加息预期与中期选举博弈

Um, you know, I think, uh, you know, ultimately, what this means is 80 to 98 out of oil is a new 60. And I think we need to be comfortable with that level, at least over, uh, the near term that there was a lot of, uh, worry, um, particularly when this conflict first, uh, flared up, uh, that, that sort of inventory level where we were going to start to see more higher upward pressure on oil prices was expected to be reached sometime around the July August timeframe.

We've now pushed that back, uh, particularly to the end of the year, potentially. Uh, and if this is, you know, ultimately what it appears to be, it appears to be a stalemate. Mhm. Um, you know, I think we just got to get comfortable with higher oil prices and, you know, maybe not higher long term inflation breakeven but higher inflation volatility. And I think we're seeing some of that being priced into bond yields.

Jordan when I saw $80 80 to 90 barrel of oil being the new 60. My brain almost exploded. Um, I'm so curious as to what you believe the long term impact of this inflation would be on the way that the fed battles it. Well, So it's interesting. I think that 80 to 90, that new 60 narrative is, is a near term. So let's call it through the end of the year. But I do think actually over the longer term oil prices are probably going to be lower.

And the reason being is obviously you have less cooperation across OPEC and OPEC plus uh, members leaving few big, big producers over the last few years. Uh, and that shift, their focus is to gain market share that is going to be bringing more barrels onto the market over the longer term. And I think that's going to push oil prices down. However, I still do think that this translates to higher oil volatility and higher inflation volatility.

Um, we can there's been a lot of kind of, you know, folks trying to assign what's moving bond yields. Yes. This fed repricing. Um, but you know while longer inflation break evens have been moved all that much. The sensitivity to bond yields on those break evens, um, has has increased. And so even minor moves, uh, I think will be exacerbated, uh, at the long and just given technical factors. Now that duration is just going to go a little on that.

Absolutely. Yeah. Okay. Well, and we haven't even kind of added in the Venezuela part to the oil story as well. The USA will think more about the fed in terms of the next moves. I mean, why are markets pricing in a hike as firmly as they are? When Bush gave himself plenty of room to punt until January. In terms of waiting for the outcome of the various panels that he's convened. So, you know, why are markets at the point that they're at now?

You're exactly right. He brought himself time, um, with these task force. Um, I also think the fed is in a bit of a bit of a quagmire, right? There's no real right decision right now. I don't want to be a fed governor. If you hike rates at the job to the administration, uh, if you cut rates, you're surrendering to the administration. If you stay on hold. Uh, you now are starting to threaten your credibility and you show hesitation.

Um, so I think that there's there's no great decision right now. Um, I actually appreciate Warsh buying himself a little bit of time to see how the, uh, to see how inflation and labor markets evolve. I think what's also interesting is, uh, one of the things that that jumped out to me in his comments in Jackson Hole was being committed to discipline, not a decision. And my read is is discipline is a bit more of a sort of hiking cycle.

Right. We've got to do more to really combat the inflation narrative. 125 basis point hike isn't going to do much of anything. It's certainly not going to impact oil prices, and it's not going to impact the demand side of the story either. So, um, you know, I think, uh, the best course of action for the fed right now is to stay on hold, and that remains our base case. How does that relationship really get complicated or a lack thereof or not get complicated with upcoming midterms?

Right. So we're kind of on this collision course, right, with like we're coming off of really strong earnings season. We've got the September sort of rate hike being priced in. And midterms. Walk me through how you see these two. All these elements these three elements really coming together in the near term. Yeah. Um, you know, one, uh, on the political side of things, it kind of gets back to my earlier point that any move that the fed does or doesn't do is going to be viewed politically.

Uh, and so from, from that lens, uh, I think the fed is its best sort of same patient. He's here seeing how the data evolves. What was also interesting was, um, you know, Powell, this, uh. Sorry, I'm so used to talking about Powell for years. What Warsh, uh, highlighted was, um, uh, you know, kind of moving away from this idea of, of a wage, uh, wage at wage inflation and not really being important in terms of wage inflation feeding into the overall narrative.

So even if we get a strong job print, uh, you know, in the next couple, a couple of days, weeks, um, I don't think that this changes his narrative, uh, because he doesn't think that's going to feed through into broader, uh, inflationary pressures. Um, altogether, obviously, you have, you know, I the spending boom, the earnings boom, uh, as well, uh, none of that really seems to me to be driven either. So, you know, uh, as you paint sort of this broader picture, whether it be earnings, whether it be resilient growth, whether it be, uh, a non inflationary labor market, just buy yourself some time.

Stay on hold. And I think he's done that with these task force through January. Yeah I mean coming from Europe like right this like 1% if we're lucky uh maybe a little bit above and in the U. The strength of the US economy. How negative can he really be? How small? How much strength can the sell America, as it's called, trade be in the equity market? It's in in September. Historically it's a tough month. But do you really think that that happens this year?

Uh, I think so, just because it's an election year. Right. So markets don't like uncertainty. We're going into the November midterms. And uh, you know, September tends to be seasonally a bit of a bit of a tough month. Um, so, you know, I anticipate perhaps some sideways markets, you know, markets don't really like what the equity markets don't like what the bond markets are telling us right now. Uh, I tend to think of, uh, equity investors as optimists, uh, bond investors as realists.

So the debt issues, all these types of dynamics are worrying, uh, bond investors. But, you know, again, the resilience that we've seen in the US economy where we've shouldered a number of different supply side shocks, uh, there's two narratives. You've got the I CapEx boom, you've got upper income households that are continuing to spend. The both of those dynamic dynamics are very much powering the U.S. economy. And we don't see any of those kind of structural, uh, things changing.