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Joe Matthew
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Joe Matthew
We follow the Friday trade on a triple witching Friday, which could mean a lot more volatility, volume, hopefully not tougher numbers as we get closer to the close. The matter of Iran is also, of course, making many traders reluctant to go along into the weekend, and we'll keep tabs on this session as it unfolds throughout the day on a triple witching Friday, as I mentioned, and a President of the United States pushing back on criticism over this whole operation, even as the Strait of Hormuz remains closed and reports today by a number of organizations, including Axios, that the White House is eyeing Kharg island as its next stop, knowing that we are trying to pulverize the coast of Iran with the Strait of Hormuz in mind, General Dan Kane, the Chairman of the Joint Chiefs, telling reporters here that we are using heavily armed A10 warplanes, the warthogs that have massive guns aboard them, and Apache attack helicopters over the straight southern coast of Iran, going after boats, Iranian naval vessels shooting down Iranian drones. But it could indeed be Kharg island that comes next, that oil processing facility about 15 miles off the coast of Iran, which would likely require the use of ground troops, something that we have been talking about extensively here on Bloomberg over the past couple of days. Knowing that the President is not going to get the help in most cases that he was asking for in opening the strait, taking to Truth Social to call our NATO allies cowards and refer to NATO as a paper tiger, appearing before reporters and onlookers earlier today at an unrelated ceremony at the White House in which he expressed nothing but good news. For what it's worth in this military operation, listen to the President from earlier today. I want to begin by just saying
David Westin
we're doing extremely well in Iran. The difference between them and us is
Joe Matthew
they had a navy two weeks ago they have no navy anymore. They it's all at the bottom of the sea, 58 ships knocked down in
David Westin
two days and we have the greatest navy anywhere in the world. It's not even close. So but we are doing really well.
Joe Matthew
We're not going to let them have
David Westin
nuclear weapons because if they had them,
Joe Matthew
they'd use them and we're not going to let that happen. So very similar rhetoric to what we have been hearing for the past couple of weeks here on day 21 of these strikes. We start at the White House to get us rolling this hour. Christopher Smart will be with us in a moment, but Tyler Kendall joins us from the North Lawn on a gorgeous day here in the Capitol. For the latest on all this, Tyler, the president, I'm assuming, has pretty much wrapped up his public events here for the week. I don't know if there's going to be another opportunity, many maybe when he leaves for Palm beach later on today. But what is the narrative coming out of the White House aside from we've won or we are winning?
Tyler Kendall
Well, Joe, as you heard, President Trump started his public remarks today by reiterating what we have heard, including that the US Will not allow Iran to obtain a nuclear weapon. He then went on to suggest that he would be willing to talk with Iran, but in his words said that there is nobody left to talk to. President Trump also today taking aim at NATO allies, as you mentioned, as those disruptions through the Strait of Hormuz do continue. And there is reporting that this administration could be mulling a potential takeover or blockade of Kharg Island. Axios reporting that any potential operation would only take place after the US Further degrades Iran's military capabilities. Of course, one week ago today, last Friday, the Trump administration had confirmed that it hit military targets on the critical export hub, but refrained from taking hits on any of the energy targets. And I bring that up because the broader backdrop of today, Joe, is that this White House and Israel have both vowed to not hit energy infrastructure going forward after we saw Israel take responsibility overnight for what was that large scale strike on Iran's largest natural gas field that set off this wave of retaliation by Iran. But even as we get this pledge from the White House and Israel, Iran has continued its strikes against regional partners, including Kuwait, the UAE and Saudi Arabia, taking aim at energy infrastructure. Because, Joe, at the end of the day, this is really coming down to the White House's efforts to try to secure the strait. Energy is really at the center of this conflict. You mentioned how the Joint Chief of staff Dan Kaine did confirm that the US has started this new wave of operation with these attack planes and helicopters over the Strait of Hormuz. I'll also put on your radar the Wall Street Journal reporting earlier today that the Trump administration is now deploying three naval warships and thousand of marines to the region in a sign at this moment that there's no let up in the conflict.
Joe Matthew
All right, Tyler, there's headlines breaking as you and I speak, and one of them just went red on the terminal. Iran said to stick to hard line position on the Strait of Hormuz. This is not good news if you're in the energy market today. Iran is unwilling to discuss Hormuz while under attack, according to an official briefed on private talks. Commenting on Iran's position here, I'm looking back to the oil pits. WTI West Texas Intermediate now jumping above $99 a barrel. We're up over 3% here. 99, 36 having seen triple digits since the start of this. And of course, Brent's been there for some time. Brent now at $109, up 1%, approaching 110. It's at 1964. And of course, the reaction that we've seen in the bond market somewhat based on this, but also with our eyes on the Fed and interest rates 10 years at 4, 3, 7, the S&P 500 is down 55 points. Tyler, this is not the news the White House wants to hear.
Tyler Kendall
No, Joe, not at all. And it also probably spells trouble for the message that President Trump has for our allies, particularly NATO's allies, as he renews his criticism when it comes to a potential naval escort through the Strait. Just to give context here about why this is such a critical area, about 90% of Iranian crude exports go through this water. And imagery analyzed recently by Bloomberg News shows that for the most part since this conflict started, those loadings have really continued unabated. Now, we know yesterday President Trump was in discussions with Japan about potential minesweeping options. And we did get this statement from seven other US Allies pledging that they would be interested in a potential coalition. But we haven't really gotten details about what that would really look like and on what timeline, as many of our allies have said that they would need to see a cease fire in place first. Joe, this is also going to spell trouble, the White House's push when it comes to combat those higher prices. We heard from the treasury secretary yesterday floating the idea that we could see some sanctions eased on Iranian crude barrels that are already at sea after the administration had already taken similar measures when it came to Russian crude barrels at sea. And we know there are a few other options on the table here, including potentially tapping the SPR again or maybe asking Congress for a federal gas tax holiday.
Joe Matthew
Wait, Tyler, thank you. Let us know if the president might take some questions in the driveway when he's leaving later on. We'll, of course, all be watching and listening live from the White House. Tyler Kendall, Washington correspondent here at Bloomberg. Indeed, this is something else. $99 WTI just below 110 right now on Brent, following the news that Iran is unwilling to even discuss Hormuz while under attack. The whole idea was using military pressure to bring Iran to the table and relent. Remember, unconditional surrender? That was some time ago. As we turn to Christopher Smart for insights. I'm a big fan of Christopher Smart at our growth group, which is why we bring him back here for advice on a lot of issues here to share insights based on his experience on the National Economic Council and the Obama administration. But there's nothing more attractive, at least in my opinion, than someone saying when they're wrong. And this is the top of Christopher Smart's substack, dated March 18, getting it wrong and correcting bad predictions on the Iran war, just in case. Sounds a lot like Christopher Waller from earlier this morning on a different network. There was a feeling 21 days ago that this, in fact, could be pretty quick. But even if you didn't necessarily believe that or trust in that narrative that the markets would somehow look beyond this, not unlike the Fed looking through, as it said, oil prices. The market was looking beyond this because of the Trump put, because of the Taco, because of so many other factors that have become ingrained in our habits here in the first year of this Trump 2.0. But things have changed. The market is certainly reflecting that. Christopher Smart is as well, the founder and managing partner at our growth group is back with us here on Bloomberg TV and radio. What has darkened the picture in the last couple of days here, Christopher, that's brought you and the likes of so many others to this conclusion?
Christopher Smart
Well, thanks, Joe. Great to be with you. And you know, maybe it's Christopher Waller. It's also John Maynard Keynes. When the facts change, I change my mind. What do you do? When I was on with your colleague Kelly Leinz a few weeks ago, it really did seem like this was going to to be a fairly focused operation, that the Navy on the US Side would have no trouble at all defeating the Navy on the Iranian side. But I Think what was not clear to me and maybe should have been clear, but is certainly clear now, is that Iran will continue to fight on. Fight on. Even after having suffered immense military losses, the political leadership still seems to be in place, still seems to be unrepentant and unwilling to negotiate. And we have seen, you know, currently and through history where a less able military force is able to harass and undermine the goals of a much more able military force. And if it's in a narrow strait of water with a lot of oil going back and forth, this thing could go on for a long time.
Joe Matthew
A long time indeed. As the White House prepares to ask for $200 billion in this report on potentially occupying Carg island might require another two to four weeks. It's interesting, we just saw a tweet from one of our colleagues in London who's also a little bit concerned about all of this. I don't know if we can find that tweet from Javier Blas once again here, James, because it's pretty important here. When we consider the hardware that's being sent to the region, it could take another month or so to try to pulverize the Iranian coast to prepare it or to prepare Kharg island for troops to occupy the region. Javier Blas on Twitter. Thank you, James. With a photograph retweeting Warship Cam Christopher, the USS Boxer just leaving San Diego for the Middle East. Considering she only left two days ago, she will not be near the Persian Gulf until mid April. If the reinforcements are intended to reopen the Strait of Hormuz, the oil market faces a very long wait. Christopher, this is why you're worried, right?
Christopher Smart
Well, it's that, but it's also just the recent history of the Houthi attacks on shipping through the Gulf. You'll recall the the US Navy did a whole lot to try and take out their positions and reduce their capabilities, but it's really only a diplomatic agreement with them to stand down. That has kept shipping going up until this recent war. And so if the Iranians don't want to stand down, or at least some parts of them want to continue to harass shipping, it will be a passage that will have risk attached to it for the foreseeable future. And maybe the Navy can escort ships through, maybe there will be a resumption of that traffic, but it won't be the traffic that we had before. It won't be with the same risks that we've had before. And that all has to get priced in. The one thing I would just say quickly about the price of oil today. I think most people are still thinking within the next two or three weeks there will be flows of oil open up again. And that may be the base case that we should all accept. But there is this downside case where we're stuck with a pattern of much less oil getting through at a much higher risk, which will keep this price of oil much higher for a longer time, until, of course, there's a global recession, which will bring demand down and bring the price back down. So it never stays at $150 for too long. But that would be the worst possible outcome from an economic point of view.
Joe Matthew
And of course, it comes through on the consumer end with $3.91 gas today. That's the average, the national average, according to aaa. All the while, Christopher Smart Russia is cash in check making money here thanks to looser sanctions and now feeling emboldened by what it's watching. And many believe that China is the biggest winner in the end. How about you?
Christopher Smart
Well, I think that's the, those are the unintended consequences of a war like this where Russia not only benefits from the higher oil price, it benefits from Patriot and defense equipment that would be going to Ukraine or might be going to Ukraine now being diverted to the Middle east for the foreseeable future. And it, I think, feels like perhaps it has less reason to push for a quick, to be pushed into a quick ceasefire with Donald Trump and the White House tied up and distracted elsewhere. I think from China's perspective, China has very large oil reserves, large coal and clean energy sources, which will help cushion the blow from lost oil from, from the Gulf. Meanwhile, again, it's not such bad news from China's perspective that all of these naval assets in the South China Sea have been diverted to the Middle East. And if and when the summit does get back on the calendar, when Donald Trump does go to Beijing to negotiate whatever the future trading relationship is with China, I think Xi Jinping will feel like he's got a few extra cards in his hand against a president who really does will be looking for a diplomatic victory of some sort and a trade deal of some sort and probably will have to pay a little bit more, a little bit of a higher price for it when he gets to China.
Joe Matthew
What are you making of this market here? I know it's triple witching, but the VIX is close to 26. Christopher. Obviously stocks are lower and we're seeing that day after day, but we're also seeing metals fall out of bed. Gold is lower. The miners are down and you've got interest rates ticking higher. The 10 years at 4, 3, 7 basically right now. What do you make of this sell everything moment that we appear to be in?
Christopher Smart
You know, I think as soon as you get headlines around US Troops deploying for any kind of land action in Iran and reinforcements coming from halfway around the world to help out in a few weeks or months time, you start really wondering about the scenario that I and others bought into at the very beginning of this conflict. And even that, you know, our hope and expectation that it might start dwindling down in the next couple of weeks, you know, you start looking at those scenarios where it's months, months or even more of a conflict. And that's the kind of uncertainty that hits consumer confidence, consumer sentiment. And you know, you point out the gasoline prices. We're coming into the US Driving season. That's always the big hit on US US Spending. And so I think that's the beginning of what's being priced in there. On the treasury side, of course, it's probably worries about, you know, inflation and some of these other pressures where the Fed has never been able to get back towards its 2% target, has been struggling to get back to its 2% target and now these headwinds are going to push it the other direction.
Joe Matthew
Yeah. It's great to have you back. Christopher Smart, always a great pleasure. Our growth group. My regards to the great city of Boston and everyone listening on 92.9today. Christopher, thank you so much. I'm Joe Matthew in Washington. We'll assemble our political panel next and we'll hear from our friend David Westin, the host of Wall Street Week, who spent some time with Randy Quarles talking about uncertainty in the this market. With much more to follow here on the fastest show in Politics. Stay with us on Balance of Power. We'll have much more coming up after this.
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Joe Matthew
Welcome to the Friday edition of Balance of Power, live from Washington. As we keep our connection to New York, we're going to bring in David Westin in a moment here with breaking news on the terminal. It went red immediately as we were talking to Tyler Kendall on the north Lawn of the White House and oil prices snapped higher with officials saying that Iran is unwilling to negotiate. Even talk about reopening the Strait of Hormuz as long as it is under attack by the US And Israel. Of course there'd be a reaction in the oil pits on a day like this. We had WTI just south of $100 a barrel a couple of minutes ago. It's at 9893 right now and Brent is charging higher up now above $110 a barrel. WTI, that's a 3% jump in Brent showing a 2% increase here. Stocks are lower. And you know what? The conversation has been not only about the potential impact on inflation, but the potential for stagflation. There is great uncertainty over this market with A Vix approaching 26 now and an S&P 500 that's pointing lower with likely another losing week here in the cards. And we could see some acceleration in losses as we get closer to the bell. We'll find out together here on a triple witching Friday that is also bringing investors to a new point of reluctance to go long into the weekend. Good thing we have David Westin with us, the host of Bloomberg Wall Street Week, who's seen a couple of these before, is joining us now from world headquarters in New York. David, how does the market get its head around this other than sell everything? That's what I keep hearing.
David Westin
Well, I must say I really want to thank you for that cheerful introduction. I'm feeling really good about things after that. Joe, not Happy Friday, what you said. Yeah. The one thing that seems clear to me at least, is this is not going quite as fast as President Trump thought. I guess we're all learning something. He's learning, which is it's sometimes easier to start a war than to stop one. And right now, it's not clear where it all ends up. And as you say, there's a lot
Joe Matthew
of uncertainty in the market.
David Westin
We're seeing it from minutes a minute, not from day to day, a lot of uncertainty market. And against that backdrop, of course, the Fed had to meet this week and tell us what they're going to do with monetary policy. Jay Powell did his best. He talked about uncertainty repeatedly. So we talked with Randy Quarles, he's the former vice chair of the Fed, about how the Fed deals with this. And particularly something we hear something about is at what point does the energy prices and other disruption cause what is called demand destruction? And this is what part of what Randy Quarles had to say to us,
Randy Quarles
you're going to start seeing responses pretty quickly to higher energy prices in consumer spending. And, you know, and again, because of the uncertainty about the future macro environment and business investment, if that's relatively short, if we're talking a resolution in a month, even in two months, then that's from the point of view of the Fed, which looks over long arcs of time, a blip. If it goes on longer than that, you know, then you'll start to see, you'll start to see reaction. But on the flip side of that, which is partly why I think you're not going to see a hike in interest rates, but you're not going to see a low, lower interest rates either. Those are effects that slow the economy. But higher energy prices feed into higher prices generally, and that's inflationary. I think a lot of the other drivers of the economy, the fiscal stimulus that you have from the One Big Beautiful Bill act, which I thought was, I thought was excellent legislation, it provides the right incentives for the economy, but it is stimulative and pushing upward on inflation in the short term. So I think the balance over the course of the next several months is likely to be in favor of no moves either down or up.
David Westin
So there you have it, Joe. That's from Randy Quarles, former vice chair of the Fed, now runs Cynosure, an investment company for his family. Basically, no moves up or down. He thinks they're getting it just about right. At the same time, there's a lot of pressure on the Fed and a lot of uncertainty. We just don't know where we're going at this point.
Joe Matthew
We just don't know where we're going is the headline, it seems, of the day here. You've got a great view on this, David, not only from the investment community on Wall Street Week, but from your history as a news executive. You spent a good deal of time in the Middle east, in some cases dealing with the very parties who have their hands on the tiller right now. And I'm just wondering your thoughts as we consider a longer and prolonged conflict. A president of the United States who is talking about Carg island back in 1988, David, history is echoing here somehow.
David Westin
Well, no, no, King, I must say, I reacted when you heard Secretary of Defense Hegseth talk about, of course we knew about the Strait of Hormuz. Even I knew about the Strait of Hormuz knowing nothing about this. And I thought, well, it's good that you knew about it. What was your plan? And is this going according to plan? Because it seems not to be helping the whole globe. From going back to my experience, which doesn't mean it's true this time. Two things. Number one is the Middle east is fiendishly complicated. And if you think you understand it, then you don't because there's always wheels within wheels. You don't know where it's going and it spins out of control very easily. It's, as I said at the beginning, it's easier to get into these things than get out of them. I will say, and this will be editorializing a little bit, Joe, I'm sorry, I do. I'm old enough to remember the war, the first Gulf War, when President George Herbert Walker Bush went in. Remember how much time he took to get that coalition together and how much time he spent with those coalition partners. And also having a very specific objective. We're going to get the we're going to get the Iraqis out of Kuwait. And once that was done, he left. It is, in my mind at least, a sharp contrast with what we're seeing this time. I hope this works great for the United States, great for the world, but boy, it's different.
Joe Matthew
Yeah, his son had some experience assembling what they call the coalition of the willing when he had his turn as well. And David, both presidents addressed the American people about their plans. We still haven't seen that formal speech from Donald Trump. Is that just quaint now? I mean, he's talking under the wing and in the driveway every day anyway. Does that that matter to people in their living rooms anymore?
David Westin
Well, I'm old fashioned. I'm used to the Oval Office address when we go to war where the president comes and says why are we doing this and what's the objective?
Joe Matthew
Yes, sir.
David Westin
Going back to you covered it so well, the State of the Union address. There wasn't much on Iran as I recall. There wasn't a whole lot to talk about it. So we haven't heard much from the president other than some posts, of course. And we've heard a fair amount from Secretary of Defense Exeth on this, but we haven't had a lot of explanation. I mean, it's going to be interesting to see what happens comes midterms, you know, what the American people are going to be saying, saying why did we do this and what do we get out of it? As I say, I hope it works beautifully and by then we're all really happy and celebrating. But boy, there's going to be some explaining to do if things don't fit together. Well.
Joe Matthew
God, everyone wants this to work beautifully. We just also want to address reality. David, it's great to see you. Thank you so much. And we'll be looking forward to Wall street week coming up 6pm Eastern Time, Wall street time, as they say at world headquarters in New York. That's right after the late edition of Balance of Power. So make sure you spend some time here a little bit later on today with some very insightful conversation on Bloomberg TV and radio. Let's assemble our panel for their take on everything we just heard. Bloomberg Politics contributor Jeannie Shan Zaino is back with us. Democracy visiting fellow at Harvard Kennedy School's Ash center and Republican strategist Maura Gillespie. Bluestack Strategies founder and veteran of John Boehner Speaker's Office. Great to see you both here. Jeanne, the economic side of this could get very difficult if this does become protracted and the market is forecasting that right now. David Westin just invoked midterm campaigns. Once we start getting through the primary cycle here or getting into the bulk of it, are we going to see Democrats and Republicans both singing the same tune on inflation, on the economy?
Jeannie Shan Zaino
He we should.
Joe Matthew
He is.
Jeannie Shan Zaino
He is. I love him for doing that, Joe. You know, we love elections, so thank you. David Westin. You know, the problem politically, in addition to everything else is that as Ron Klain used to say, when gas prices go this high and we are now, what, a dollar over what they were when the war began three weeks ago, they are, you know, hovering around 390 and on average in the US for a gallon could go as much as $4 or more. That is like putting a political billboard on everybody's, you know, the end of everybody's street saying we are in a red zone, danger zone. So when you talk about the midterm and you talk about the politics of this thing, that is a problem. And of course it is exacerbated by what you and David were talking about, which is the fact that no one has yet explained in coherent terms what the goal is, what the end game is. So people are suffering, certainly military families are suffering, but people are suffering, gas prices and other prices increasing. And no one has yet explained to them why that is, why they should be in pain this way. Except yesterday, as the President noted, he didn't think it was all so bad. So that is a problem politically and the GOP knows it.
Joe Matthew
Maura it was interesting to hear David Westin reflect on George H.W. bush and his invasion of Iraq. You remember Desert Shields, of course, was followed by Operation Desert Storm. By the time we got into 1991, his approval ratings were like 91%. I mean he was just cruising to a second term until the economy got in the way and the recession that followed completely destroyed his approval ratings. And he is of course now will go down as a one term president. Even with success in Iran, there could still be economic reverberations that cause a recession that could bring out stagflation. How much of a concern should that be for Republicans in this cycle?
Maura Gillespie
Well, it's concern in terms of not only the economic outlook and what happens in the next roughly seven to eight months, but it also a matter of why we are here in the first place. There wasn't necessarily a galvanizing force. I mean to get behind in a patriotic way like in the past or there's been something that happened to then us to garner a response. I also think that that's something to be on the lookout for. That's not being talked about necessarily is this potential for more troops going over. We already saw it today. 4,500 in the Navy are headed over. And so if there's more ground troop or if there is ground troop, you know, deployments, you're going to see a visceral reaction from many Americans, but especially those Republican based voters for the Trump administration who don't want to see that happen. I also have to point out that in the NDA that was passed in December, there was the automatic select service implemented that goes into effect in December so that people, voters, they care about what happens to them directly, what's going to impact their day to day lives. The economy is the first thing that's going to impact their day to day lives and second to that is if, if the draft is still on the table. I think, you know, Caroline Levitt two weeks ago when she was asked directly about it, she said that the president would not take off any options from the table, leaving them all on there. I do think that when you talk to people about what's going to impact their day to day lives, that's going to really drive whether they decide to turn out for the vote in November for the midterms or to vote against what the administration is doing. And so Republicans in Congress seem to be very conscious of that.
Joe Matthew
So then in the end, Jeannie, we've got about a minute left. The economy is still decided on or the election, I should say still decided on the economy, whether it's being impacted by war or some other force.
Jeannie Shan Zaino
Absolutely. It is the number one issue on voters minds. And I'll tell you on the GOP side, it is complicated by this push for the Save America Vote act because the president is talking about how people can't trust elections at a time when Republicans are not as enthusiastic as Democrats. So all of that is complicated. And of course, what were voters told before the 24 election? As JD Vance said to Tim Dillon days before the election, we're not going to go to war in Iran. It would be a huge distraction, waste of resources and massively expensive. He was right on that. And now they've got to explain why we're there.
Joe Matthew
Really sharp panel today with great analysis. Jeanne Shan Zaino and Maura Gillespie, thank you both for being with us here. And thanks again to David Westin for setting up our conversation. Stay with us on Balance of Power. We'll have much more coming up after this.
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Joe Matthew
Triple Witching Friday so we've got a good dose of volatility. There's a lot of volume and a reluctance to go long into the weekend, which is not a great combination. A Vix of 26 and this whole sell everything vibe that seems to be sparing very few. Although I guess if you're FedEx, you're living in a world of your own. Let's get with Nora right now, of course, watching the markets with us every day as Bloomberg's markets correspondent in New York. It's great to see you, Nora. This is getting a little bit scary for investors as they look at not only oil prices but just the headline risk that's coming out of the Middle East. What are you hearing?
Nora
Well, people are really trying to figure out where to be in this market. I mean, we're looking at AN S&P 500 that's lower, the Nasdaq 100 lower by more than 1%. We see the broader market, the S&P 500, heading for a fourth straight week of losses. If the S&P 500 holds these losses at the closing bell, we'll see its longest weekly drop in a year. So we are really seeing a streak some size and scope there. You are seeing a bit of people anxious about where to be. We've been talking so much about the idea of higher energy prices really pushing up inflation fears. A lot of people also concerned that this could potentially change the rate cut trajectory that so many people have been waiting for. They've been waiting to see rates come down lower. But it seems as though with the escalating tensions in the Middle east, it might actually delay that longer than anticipated. So you're seeing a bit of that activity not only playing out in the bond market, but equity markets as we're really trying to figure out where to be. You see Energy as the best performing group in the s and P500 and some of those tech names, the bigger growth year names falling on the day.
Joe Matthew
Yeah, well, I'll tell you, I mentioned FedEx and I'd love to hear from you on this because we had a beat and raise last night, you know, very strong earnings report and the stock is, is popping. I'm just, I'm really taken by this whole narrative today because we're looking at jet fuel prices going through the roof, a potential consumer slowdown. People are talking out loud about the possibility of stagflation in this economy. And this is a company that would be impacted by all of these. Right. As goes FedEx, so goes the nation.
Christopher Smart
Right.
Nora
I mean we've always thought about FedEx as a barometer for the economy. People love to parse through their report, but it does seem to be going in a different direction than the majority of the rest of the market. I'm looking at shares of FedEx right now higher but above 1.8% as we speak. Paring some earlier gains. But we did see the stock earlier seeing its biggest intraday gain in 10 months. We know this is after it raised its full year profit guide and we're really seeing the company having some plans to restructure its delivery network and that still continues to gain traction despite the fact that we are seeing all these different macroeconomic woes. But I mean, take a look at the year to date Scope and the stock is up about 25% percent. So it's interesting to see some of these idiosyncratic moves despite the fact that we always think about this as maybe a sense of some sort of indication about where the economy stands.
Joe Matthew
Yeah, bounced right off the 50 and looking pretty good. On the other side of that coin is Super Micro. Is this something Nora the headlines. Remarkable. It really stopped me in my tracks when I saw this last night. Three individuals associated with this company that was already dealing with some accounting issues that, that made for a tough year earlier. Indicted for allegedly conspiring to provide in video Blackwell chips illegally to China. Investors have no time for this, do they?
Nora
At all? I mean, this is the stock that's already been pressured much of this year. Take a look at the year to date. Scope stock is down about 26%. But important to point out the activity that we're seeing today. The stock is down right now, as we speak, almost 30%. And these headlines are really ricocheting through this company and how investors are really thinking about where they want to be as it relates to Super Micro. I mean, of course we know the US Charging a co founder with illegally smuggling billions of dollars in Nvidia powered chips to China. So that's really weighing on sentiment here as we think about where investors are viewing this company, especially given the fact that they're getting a lot of pressure from the United States. Supermicro has said that they are cooperating with US Authorities, but this doesn't change the fact that it's a major overhang for a lot of investors that have already been a bit cautious about this stock.
Joe Matthew
Boy, isn't that the truth? This is a stock that topped out almost $119 almost exactly one year ago and is now selling for $21, down 30% today. Incredible move. Nora, thank you so much. It's great to see and I hope you have a good weekend. Normal Melinda with us live from New York with our eyes on the market today for a lot of different reasons, these are really important stories, but so is Iran, and that seems to be captivating the market here as a whole. The s and P 500 is now down 71 points. We're looking at new lows here, 1% decline for the S&P. The Nasdaq is down 364 points, more than 1 1/2% with headline risk, as I keep pointing in this case, a number of reports today suggesting ground troops will in fact be required to achieve, to achieve the objectives of this administration. And that's something that we talked to Leon Panetta about, of course, the former defense secretary, the former director of the CIA, spent time as a White House chief of staff and a member of Congress, ran the budget office and understands all of the different angles on this story. Listen to what he said.
Christopher Smart
But that's going to be one of the tough issues that has to be looked at because it may require some boots on the ground in order to initially secure that area, would require a
Joe Matthew
tremendous amount of air surveillance.
Christopher Smart
It would require a tremendous amount of targeting whatever capabilities they have within that area.
Joe Matthew
And as I said, it would be a no fly zone.
Christopher Smart
Secretary Exactly. You've got to have a total no fly zone and we have to totally be in the air 100% of the time in order to make sure that it remains secure. It's not easy. It's tough. And obviously it's going to expand the war.
Joe Matthew
The idea of reopening The Strait of Hormuz. Militarily, the secretary speaking about the idea of troops on the coast 50 miles in each direction, 100 miles deep would be required, not to mention boots on the ground on Carg island, which the White House has now reportedly eyeing. 50 miles off the coast of Iran, the big transfer station that the president has been talking about since long before he was president. With a 1988 interview from the Guardian emerging in which he was clearly concerned with this crown jewel, as he called it, of Iran, saying that they've been beating us psychologically, making us look like a bunch of fools. One bullet shot at one of our men or ships and I do a number on Carg Island. Fast forward to 2026 and here we are. I'm really glad to say that we can spend some time with Jen Gavito today, senior advisor with the Cohen Group, former acting principal Deputy Assistant Secretary of State for Near Eastern affairs in the Biden administration has been a great help with us since before this began. Jen, it's great to see you. And I want to go back a couple of weeks from when you talked about to us because you got a lot of people talking here in the newsroom. As you described a millennia old empire, Right. And the prospect of toppling the Ayatollah. Every simulation you said the military has done is that if you took out the Ayatollah, you empower the irgc. I know that you're a sage, Jen, but I could also ask you if we've simply forgotten some of the lessons of the past.
Jen Gavito
First of all, Joe, thanks for having me back. It's great to see you. You know, this is a circumstance in which I wish I had not been right. But I do think that that is in fact what we are, what we are seeing. A lot of attention is, of course, being paid to the lines of succession, particularly as various regime figures are killed in US And Israeli strikes, but particularly with the naming of Mushroom Khamenei, excuse me, you know, whether whatever state he, he may be in, all reports are that that this was an installation more or less by the irgc. So I do think we're seeing that consolidation of power.
Joe Matthew
What do you think of the talk of troops on Carg island, occupy that position and use it as leverage to reopen the strait? Is this something that could work?
Jen Gavito
I mean, certainly not on its own, as Secretary Panetta said, I think that, you know, you would have to secure parts of the Iranian border itself in order along the, along the Gulf in order to or along the strait in order to really secure passage. I would note that the reason, one of the many reasons that this has not been undertaken in the past, despite decades of, I think, US Administrations, Israeli governments, wanting to dislodge this regime is precisely for this reason. Because the ability of Iran to disrupt the strait has been well known and always seen as, you know, no pun intended, but the nuclear option. And that does seem to be where we are at now. And getting it back open is proving, I think, to be every bit as difficult as everyone feared.
Randy Quarles
Boy.
Joe Matthew
So the Secretary also talked about what would be required to keep the strait open, the number of troops involved, and we've already started to pulverize their military capability in that area. General Dan Kane said a 10 warthogs are at it. We've got Apache helicopters at it. If this continued for some more time, another month even, would that be an easier exercise? Or is it simply just not acceptable to be wrong? Once if you have an errant attack coming off a speedboat that hits a cargo vessel, then all of this is for naught.
Jen Gavito
Exactly. You know, it's not just about air or land superiority. It's about, it's, it's the fact that it doesn't take a lot for, for Iran to continue to disrupt, whether it's drones, whether it's mines. Exactly. As you say, whether it's a speedboat passing by. And so now that this has been unleashed, convincing, you know, and it's, it's not about going on TV and telling people that it is now safe for transit, but it's about insurance companies and transit lines having that confidence. And so restoring the confidence that Iran will not utilize those tactics in the future, I think, is going to be a very, very hard sell regardless of what we do militarily. And the other thing I would note to that is, you know, I think there's no doubt that there have been significant tactical successes through this. And yet we still keep, we still keep attacking. Right. Which says that despite the President's assertions, we have not, in fact taken out all of their capabilities. And so those can continue over time to be rebuilt, reasserted. And so, you know, this, it really muddies the water as far as what an off ramp to this could, could in reality look like.
Joe Matthew
When you were acting Principal Deputy Assistant Secretary of State for Near Eastern affairs, what would your thought have been right now on a potential regional conflict? How close are Iran's neighbors to engaging?
Jen Gavito
So I think we are continuing to see them do everything in their power. I mean, they take hit after hit and are clearly resisting what is a very understandable instinct to hit back out of concerns that the damage that we've seen so far just expands if they engage in this conflict in an offensive way. That being said, you know, as you've alluded to the economic and global economic damage globally, but certainly to the Gulf states and their long term economic visions cannot be overstated. It is catastrophic. And so I am watching that carefully. How long can they endure this without feeling like they need to take a more direct role in it?
Joe Matthew
No, that would be a big deal. And I can only imagine the market reaction. What's $200 billion tell you, General, before you leave us today? That's the figure we're expecting for a supplemental budget request and people are trying to read into that. Does that mean restocking all of the supplies we gave to Ukraine, or is this implying some sort of anticipation of a longer conflict? What do you buy with 200 billion?
Jen Gavito
You buy a lot with 200 billion. There's no question that our stockpiles do need to be replenished. And so from that angle, I think that those numbers are not as stunning as one might think. But it also does suggest that this conflict, you know, which initially was described as very short, we're now several weeks in, I don't see a resolution to this in the next two or three weeks at least. And you know, if you do insert boots on the ground, whether on Kharg island or on the coast of Iran itself, that complicates certainly what the outlook is for then pulling them back and for this conflict really coming to resolution. So I think the 200 billion number is, is, is concerning.
Joe Matthew
Yeah, Jen, it's great to see you and great to have you back. Jen Gavito at the Cohen Group, thank you so much for the insights. With an S&P 500 down 65 points and all time highs today for ExxonMobil and Chevron. Thanks for listening to the Balance of Power podcast. Make sure to subscribe if you haven't already at Apple, Spotify or wherever you get your podcasts. And you can find us live every weekday from Washington, D.C. at noontime eastern@bloomberg.com for many men, mental health challenges aren't recognized until they've already taken a toll. Work pressure, financial stress, changing relationships and traditional expectations around masculinity concern can quietly wear men down, often without clear warning signs. In season three of the Visibility Gap, Dr. Guy Winch and his guests explore how these pressures show up, how to spot them earlier, and how men can access meaningful support. Listen to the new season of the Visibility Gap, a podcast presented by Cigna Healthcare.
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Host: Joe Mathieu (Bloomberg)
Guests: Tyler Kendall, Christopher Smart, David Westin, Randy Quarles, Jeannie Shan Zaino, Maura Gillespie, Nora, Jen Gavito
Date: March 20, 2026
This episode of Balance of Power delves into the rapidly escalating crisis around the closure of the Strait of Hormuz, heightened military action against Iran, and the sweeping global economic and political repercussions. The conversation threads expert analysis from Bloomberg’s correspondents, defense and policy insiders, and Wall Street watchers, reflecting on both the immediate impact and the deep uncertainties invoked by the U.S. and its allies’ posture, Iran’s refusal to negotiate while under attack, and the specter of an extended conflict affecting energy markets, global trade, and election-year politics.
"They had a navy two weeks ago. They have no navy anymore. It's all at the bottom of the sea, 58 ships knocked down in two days and we have the greatest navy anywhere in the world."
— President Trump, (as quoted by David Westin), 02:50
“Iran will continue to fight on… Even after immense military losses, the political leadership still seems to be in place, still seems… unwilling to negotiate.”
— Christopher Smart, 09:54
“This is not good news if you’re in the energy market today… The whole idea was using military pressure to bring Iran to the table and relent. Remember, unconditional surrender? That was some time ago.”
— Joe Mathieu, 05:39
"I'm old fashioned. I'm used to the Oval Office address when we go to war, where the president comes and says why are we doing this and what’s the objective?... So we haven’t heard much from the president other than some posts."
— David Westin, 25:04
“That is like putting a political billboard on everybody's… the end of everybody's street saying we are in a red zone, danger zone.”
— Jeannie Shan Zaino, 26:48
“It may require some boots on the ground in order to initially secure that area… It's not easy. It's tough. And obviously it's going to expand the war.”
— Leon Panetta (quoted), 38:15
The discussion is urgent, analytical, and frequently sober—anchored in breaking news and real-time market reactions. Guests and panelists balance data and firsthand policy experience, often referencing recent history. There’s a through-line of uncertainty, with even seasoned voices highlighting just how unpredictable and consequential the situation has become.