Trump Administration Eyes All Options to Cut Oil Prices Amid War

Summary

Bloomberg Businessweek Podcast Summary

Episode: Trump Administration Eyes All Options to Cut Oil Prices Amid War

Date: March 5, 2026
Hosts: Carol Massar and Tim Stenovec

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Episode Overview

This episode examines the soaring energy prices triggered by escalating conflict between the US and Iran, the Trump administration’s efforts to contain oil shocks, and related global economic and political fallout. The hosts are joined by Bloomberg's chief geo-economics analyst Jenny Welch, Washington correspondent Jeff Mason, and market/capital experts for a comprehensive analysis of macro trends, policy challenges, and market signals.

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Key Discussion Points & Insights

1. Energy Market Turmoil and Rising Oil Prices

• Timestamps: 02:09–06:46

• Summary:

  • Crude oil prices (WTI and Brent) have spiked dramatically (over 40% YTD; 20% within a week), largely due to the ongoing US-Iran conflict.
  • Tensions and fighting in the Strait of Hormuz have paralyzed tanker traffic, amplifying supply risks and volatility in global energy markets.
  • Inflation expectations are rising; Treasury yields are up, and markets are pricing in a drop in anticipated Fed cuts for 2026.

  Notable Quote:

  “If there are going to be sustained persistent disruptions to energy facilities in the region, the Strait of Hormuz ... could actually lead oil prices to top $100, we estimate reaching up to $108 a barrel.”
  — Jenny Welch (04:44)

• Fed Policy Response:
  Federal Reserve Richmond President Tom Barkin emphasizes a distinction between short-term and long-term effects:

  “Textbook monetary policy would be you look through a short term shock, but you don't look through a long term shock. And I think that's a lot of the assessment people are going to have to make.”
  — Tom Barkin (03:35)

• Market Sentiment:
  Bloomberg’s economics team initially saw the disruptions as likely short-term; however, with both US and Iran promising escalation, risks of a prolonged crisis are increasing. The oil market's "wait and see" approach may soon shift as realities of disruption sink in.

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2. Geo-Political Dynamics & Prospects for De-Escalation

• Timestamps: 06:46–10:55

• Iranian Political Signals:

  • Reports about Iran possibly offering to abandon its nuclear program if given the right incentives are undermined by the complexity of Iran’s internal factions.

    “There are multiple actors within Iran. Not all of them speak with the same voice … The more authoritative actors in Tehran [are] digging in their heels and preparing to fight for a longer period.”
    — Jenny Welch (07:16)

• Leadership Crisis vs. Venezuela Comparison:

  • Discussion of US hopes for an Iranian transition draws contrasts with Venezuela, highlighting the entrenched nature of the Iranian regime and lack of any clear alternative leader.

    “What we’re likely to see is either persistence of this system or a new but probably still authoritarian system take its place. I don’t think we're likely to see a Venezuela model …”
    — Jenny Welch (08:55)

• US Military and Policy Options:

  • President Trump is reportedly considering all options but seems wary of committing ground troops, given risks and costs. US use of regional proxies is considered, but history shows regime change is rarely accomplished by air power alone.

    “You can't really change a regime just through air power alone. You have to have boots on the ground.”
    — Jenny Welch (10:27)

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3. White House Shake-Up: Kristi Noem’s Removal

• Timestamps: 14:15–19:55
• Summary:
  • President Trump has fired Homeland Security Secretary Kristi Noem, appointing Senator Markwayne Mullin as replacement.
  • Noem's ousting followed congressional testimony in which she attributed approval of a controversial ad spend to Trump—an assertion strongly denied by sources and by Trump himself.
  • Despite previous controversies (notably the Minneapolis/ICE incident), Noem’s loss of Trump’s confidence for a direct misstatement proved fatal.
  • Jeff Mason highlights that while loyalty has been a hallmark of Trump's second term Cabinet picks, even loyalists aren’t immune to dismissal if they contradict the president.

    “If you go and you say something about the President that isn't true, that's going to get under his skin. And it did.”
    — Jeff Mason (16:08)

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4. Credit Market Signals: BlackRock's Private Loan Write-Down

• Timestamps: 20:21–25:00
• Summary:

  • BlackRock has written a private loan down to zero, spotlighting broader concerns about private credit valuations and the quality of underwriting, especially loans issued during ultra-low rate environments.

  • Davide Shelley notes that multiple isolated losses are surfacing, raising fundamental questions for investors about hidden risks across the private credit sector.

    “For a loan to go from 100 to 0, something really dramatic has had to happen to the company or something really wrong was with the original underwriting.”
    — Davide Shelley (20:56)

    “Everyone is focused on … liquidity, especially in the private credit portfolios … [and] all of these funds have leverage.”
    — Davide Shelley (24:23)

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5. Market Watch: Retail & Oil Producers in Focus

• Timestamps: 28:26–35:45

• Costco and Retail Consumer Trends:

  • David Bush (Trajan Wealth) explains the importance of digital sales growth for Costco and the distinction between its higher-income customer base versus lower-end retailers.

    “Inflation is a tax on, on the poor and it's starting to work its way up into higher income, higher middle income earners.”
    — David Bush (30:45)

• Oil Producers and Geopolitical Risk:

  • Oil price spikes are creating tailwinds for North American producers as Strait of Hormuz disruptions persist.
  • Renewed talk of US reliance on Venezuelan oil may impact prices if supply comes back online.

    “More production is going to be focused either in the United States or in Canada which is, which is kind of interesting.”
    — David Bush (32:48)

• Risks to Micro-Caps:

  • Example: Full House Resorts, a micro-cap casino operator, is exposed to higher rates and inflation. Such companies may feel the economic pinch sooner than larger players.

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Notable Quotes

• Jenny Welch:
  “We’re likely to see fighting continue for at least the next few days. The question is how long can Iran in particular sustain its attacks while its leadership is also under siege?” (04:44)

• Tom Barkin:
  “Textbook monetary policy would be you look through a short term shock, but you don't look through a long term shock...” (03:35)

• Jeff Mason:
  “She was absolutely representing the policies that President Trump espouses and her hardline views about immigrants, her hardline views on the border echoed the message from the top...” (17:55)

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Segment Timestamps Overview

• Energy Market Analysis: 02:09–06:46
• Geo-Political Context/Iran: 06:46–10:55
• Noem Firing/White House Analysis: 14:15–19:55
• Private Credit Market/BlackRock: 20:21–25:00
• Market Watch: Retail & Oil: 28:26–35:45

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Summary

This episode offers a multi-angle deep dive into the consequences of war and disruption in the Middle East, tracing oil’s shockwave impact from tankers in Hormuz to consumer inflation and Fed policy. Political intrigue in both Iran and the White House brings focus to the difficulty of managing volatility—whether in geopolitics or in credit markets. Guest analyses balance data and insight to paint a live picture of risk, resilience, and the relentless search for off-ramps amid turmoil.

Transcript

[Carol Massar]

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[Tim Stenovec]

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[Carol Massar]

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[Carol Massar]

Bloomberg Audio Studios Podcasts Radio News this

[Tim Stenovec]

is Bloomberg Business Week Daily reporting from the magazine that helps global leaders stay ahead with insight on the people, companies and trends shaping today's comple economy. Plus global business, finance and tech news as it happens. The Bloomberg businessweek Daily Podcast with Carol Massar and Tim Stanweck on Bloomberg Radio.

[Carol Massar]

We got to talk about what's going on in the energy market because that has really been a large reason for what we are seeing in the trade today.

Okay, so I'm just going to GLCO on the Bloomberg Terminal Global Commodities WTI crude $80.90 a barrel Carol Trading is higher than average significantly by about more than 25% year to date. It's up 41% Brent 85.15a barrel up 40% so far this year.

Yeah and I'm just going to say both WTI and Brent up around 20% in just the last five to seven days. So essentially in the last week. So we've seen incredible upward momentum, understandably so about concerns about Iran and then ultimately the US war in Iran. Markets have been rocked by the war which entered its sixth day, no immediate prospect of a resolution in sight. As Tim mentioned, really boosting a lot of prices in the energy sector, product prices lifting freight rates and spawning a wave of disruption for producers and importers. So as inflation expectations have build, we've seen this play out certainly in the treasury market. We've seen US Yields move up. Traders have also pared bets on Fed easing swaps are pricing in less than 40 basis points of cuts in 2026. Tim. That compares with about 60 basis points at the end of last week.

Well, addressing the spike in energy, Federal Reserve bank of Richmond President Tom Barkin spok exclusively earlier today to Bloomberg News's Mike McKee.

[Tim Stenovec]

Gas prices obviously, if they're up, that is inflationary, textbook monetary policy would be you look through a short term shock, but you don't look through a long term shock. And I think that's a lot of the assessment people are going to have to make.

[Carol Massar]

Well, there you have it. That was Federal Reserve bank of Richmond President Tom Barkin. For more on the conversation, you can check it out on the Bloomberg terminal [e-mail] so Carol, let's get to the heart of the trade. Energy prices and how the President's war with Iran threatens to deal that severe blow to a global, global economy that's still grappling with the impact of that tariff hike.

So much to kind of take into account that is our world. Everybody, as you well know, Jenny Welch is with us. She's Bloomberg Economics chief geo economics analyst. She joins us from the Bloomberg News D.C. bureau. Jenny, so good to be back with you. A lot to take into account in today's environment. Tim and I were kind of musing in a stressful way just coming into our show. Like wait, it's all just continuing to come at us. It feels like many continue to kind of somewhat brush off higher energy prices markets. Not necessarily though today thinking this war may be a short thing. How are you in the Bloomberg Economics team kind of thinking about the impact and what is the impact already?

[Jenny Welch]

Yeah, exactly. On that point. We did a scenario exercise actually months ago, well before this conflict, looking at what could happen in the Middle east and gaming out worst case scenarios which are what's playing out right now in terms of a direct U.S. israel, Iran conflict. And in our estimation, if there are going to be sustained persistent disruptions to energy facilities in the region, the Strait of Hormuz that could actually lead oil prices to top $100, we estimate reaching up to $108 a barrel. That's not where markets are today. And we think that's probably because they think that these will be short term disruptions. But as you mentioned, the conflict, conflict doesn't look like it's anywhere close to ending. And in fact, Iran is promising a new wave of retaliation, just as President Trump is promising a new big wave of attacks. So I think we're likely to see fighting continue for at least the next few days. The question is how long can Iran in particular sustain its attacks while its leadership is also under siege?

[Carol Massar]

Jennifer? Well, while you're doing that scenario analysis, how are you defining short term versus long term? And what would it take in terms of a conflict such as this to to get oil prices up to that $112 a barrel?

[Jenny Welch]

I think it will be key to figure out for oil markets how long they think these disruptions are going to last. The Strait of Hormuz is effectively paralyzed right now. We don't see traffic really moving through it. The United States is trying to reopen it by promising naval escorts, insurance for ships. We haven't yet seen if there's going to be much uptake on it or how the US Is actually going to follow through on those policies. And the risk is that even if you take out a lot of Iran's missile launchers, as the United States and Israel have to date, they still have a lot other weapons that they can use to disrupt traffic. All it takes is the odd drone attack to make tankers question the risk assessment of whether or not it's worth trying to travel through the strait. I think what we're watching to see is when do oil markets start to grapple with that reality and do we start to see them price it in more? At the moment they seem to be betting that all of this is just going to be a few more days of disruption and we're going to be back to normal very soon.

[Carol Massar]

Hey, there are sometimes reports about off ramps, and there was something this morning. This is from CN Wire, Iran's deputy foreign minister. Iran ready to abandon nuclear program if the US Offers a satisfactory alternative. What are you guys hearing at all? Because this is what helps you figure out what the US or global economic impact is. What are you hearing at all about the possibility for some kind of conclusion or off ramp that Iran might be actually offering up to the United States?

[Jenny Welch]

I think an important point of context is that there are multiple actors within Iran. Not all of them speak with the same voice. Right. We heard similarly de escalatory remarks from the Foreign Ministry earlier this week where they said we're not going to close the Strait of Hormuz at the same time that the IRGC was telling tankers to stay away. So I think it's important to pay attention to who are going to be the more authoritative voices in the system. Those are probably the ones that, for example, are more hardline, are more conservative, are less willing to work with the US and are thinking we are suffering pain, but we're going to make us partners in the region and the global economy suffer more. And that's going to lead them to fold first. So at the moment, we see the more authoritative actors in Tehran just kind of digging in their heels and preparing to fight for a longer period of time.

[Carol Massar]

Yeah. Let's go to some of these headlines now. Iran hasn't asked for a cease fire, the minister tells NBC. Iran edges toward choosing a new leader. The president, though President Trump says he should be involved. We mentioned the rise in oil prices, the stocks that are weighed down by the ramifications of that war. And Israel continues to target include Iran's IRGC sites. So, so, Jenny, on Carol's question about a potential off ramp, we also consider the power vacuum in, in the country and curious about your view on this because the president seems to go back to what happened in Venezuela just a little over a month ago and talk about the success there. And Delsey Rodriguez is acting as president there right now. There is no Delsey Rodriguez of Iran. There is no person that the US had lined up to take the role of the ayatollah or at least rule the country. What's, what's a plausible scenario for what that looks like?

[Jenny Welch]

Yes, the contrast between Venezuela and Iran are limitless. And I think what's important to point out is first, yes, the Islamic Republic has suffered some major losses of leaders and senior officials, but the system remains in place and its widespread spread and it is entrenched. There are people who are in the process of choosing a new supreme leader. And if for whatever reason that gets disrupted, there will be other candidates that they will choose from. The IRGC itself is 200,000 people spread across the country. So, yes, Israel and US strikes have taken out quite a few of the senior leaders, but there are still many of them remaining. So I think what all of that suggests is we're not likely to see what President Trump hoped for for on Saturday morning when he announced these strikes of the Iranian people rising up and taking, I think, as he referred to it, their future into their own hands. What we're likely to see is either persistence of this system or a new but probably still authoritarian system take its place. And so I don't think we're likely to see a Venezuela model where you have a government that maybe could move towards democracy on a somewhat orderly timeline. I think the best case is we either get a cease to fire with the current system or we see a very chaotic and a very unpredictable world emerge where there is some sort of internal fighting or a complete collapse of the system and power vacuum.

[Carol Massar]

And safe to say, Jenny, you need boots on the ground in order for actually even to push for more change. I mean, you guys in this story say authorities are tightening control of the streets now. Organized opposition operates inside the country. So kind of business as usual to some extent.

[Jenny Welch]

Yeah. I think from the perspective of the United States, President Trump has been really clear to not put constraints on whether he would put boots on the ground. But that would be a really risky endeavor, put a lot of US Lives at risk and be very costly. So I think it's probably something he doesn't want to do. Now. There are other options. The US has used proxies in the past and that might be something that's under consideration. But the history of regime change efforts has shown you can't really change a regime just through air power alone. You have to have boots on the ground.

[Carol Massar]

Yeah. And all of this, of course, as central banks around the globe are trying to figure out the inflationary pressures as a result of higher energy prices. Do they persist short term, long term? They're going to have to figure out policy against all of this. Jenny, thank you as always. Jenny Welch, she's Bloomberg Economics chief Geo Economics Analyst.

Stay with us. More from Bloomberg Businessweek Daily coming up after this.

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[Carol Massar]

President Trump removing Kristi Noem as Homeland Security Secretary after months of controversy. A lot been going on. Even just this week as she was answering questions before a congressional committee, he did announce he would replace her with Oklahoma Senator Mark Wayne Mullen. So joining us now with more watching this unfold as well as our own Jeff Mason, Bloomberg News Washington and White House correspondent. He is on the North Lawn of the White House. Jeff, maybe not a total surprise, but is she by being named to do something else? Is she being removed or or is this a better thing for her?

[Jeff Mason]

Oh no, no no no. She's been fired. I mean, that's what this means. She's being replaced. She's being taken out of the Cabinet. Have you guys heard of this other thing? I haven't heard of it.

[Carol Massar]

The special Envoy for the Shield of Americas? Is that what it is?

[Jeff Mason]

Yeah. So I think it's fair to conclude that she has been toppled and that the President was very upset with her. And in fact, I have a source who said just that, that he was really mad that she said in her congressional hearings this week that he had. Pardon me. That he had approved this roughly $200 million ad spend, which was so controversial at that hearing. He hadn't, according to my source. And he has also said publicly now that he hasn't or that he hadn't. And of the multiple mistakes I think it's fair to say that Secretary Noem has made over the last year, it was this that really got her, because she said something about the President that wasn't true.

[Carol Massar]

That's. That's really. That kind of goes to my next question, Jeff. And it's this idea that, you know, if we were to be talking about this four or five weeks ago, we'd be talking about what happened in Minneapolis. And there were a lot of people around that time who thought that maybe it was the ISIS killing of two Americans in Minneapolis that would lead to the loss of her job. But you're saying no, it's one thing that she said in congressional testimony earlier this week.

[Jeff Mason]

Yeah, that's exactly right. And you're absolutely right to have mentioned what happened in Minneapolis, certainly in a more traditional administration, which this is not, a Secretary of Homeland Security presiding over the deaths of two civilians by ICE agents who, when she was referring to those civilians, her initial instinct was to call them domestic terrorists. That probably would have gotten you fired in another administration. It didn't here. It did create some bad press, obviously. And the President generally doesn't like bad press, although I think his attitude about press generally stems from his time in New York, where no press is bad press. But in this case, that wasn't the thing that brought her down. It was the congressional testimony this week, which was quite dramatic. And I think you showed a little clip of that, or at least we did earlier on btv. And that's just. If you go and you say something about the President that isn't true, that's going to get under his skin. And it did.

[Carol Massar]

Yep.

Even for someone who was certainly very loyal, a loyal lieutenant to the.

[Jeff Mason]

She was.

[Carol Massar]

To the Trump administration. Jeff, we're going to come back to you in just a moment. Right now, though, Kristi Noem continuing to speak at the Sergeant Benevolent Association Major Cities Conference. It's underway in Nashville, Tennessee. We are monitoring headlines and we'll certainly bring you any as she continues speaking there. But Jeff, having said that, it does remind us all that you do have these loyal lieutenants that, you know, she took a very hard line approach. She helped, you know, in this sharp drop in illegal crossings at the US Southern border. But it is a reminder that there is even a line for the president when it comes to even those who are so loyal to him.

[Jeff Mason]

That's the line. I think that's exactly right. But I also, but I also think you're right to note that she has been a loyal lieutenant and she hasn't been freelancing in that sense. I mean, she was absolutely representing the policies that President Trump espouses and her hardline views about immigrants, her hardline views on the border echoed the message from the top. And that was the message from her boss, President Trump. I also think it's pretty important to note that this is the first major Cabinet firing, President Trump's presidency. Right?

[Carol Massar]

Yes.

[Jeff Mason]

And that's a big deal. Number one, because it's a Cabinet firing. But number two, because that hasn't been his MO in term 2.0.

[Carol Massar]

What does it, Jeff, what does that say about that's I think, a really important point because we were talking about that in the newsroom. For him to do this, what does

that kind of there was a reassignment for Michael Waltz from national security, right? Yeah.

[Jeff Mason]

Yes. But this is, you're right to mention that one. And technically, was he in the Cabinet? I'm not sure if that counts as being in the Cabinet when you're the national security adviser, but certainly that was a big move as well. But he landed in a much more high profile position at the UN And Secretary Noem, it does not seem like that' syou know, the landing for her is going to beis going to be as soft either way. It's the first major, it's the first Cabinet secretary who's been fired. And that was a more frequent, frequent occurrence during his first term, which I covered as well. It has not been a hallmark of his second term. And that is largely, I would say, because he has surrounded himself with loyalists. He has surrounded himself with people who don't challenge him, who represent exactly what his inner desires are, whether with regard to domestic policy or foreign policy. And Secretary Noem fits that mold. She, she really was a Lieutenant, as you said, and a spokesperson for him and for them, them being the rest of the administration on immigration until now.

[Carol Massar]

All right. Well, another busy day certainly in the nation's capital. Jeff Mason, thank you so much. Jeff, of course, is Bloomberg News Washington and White House correspondent.

[Tim Stenovec]

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[Carol Massar]

Well, with more on where we are when it comes to private credit and someone who was at Bloomberg Invest this past week, Davide shall you joins us. He's Bloomberg News chief correspondent for Private Capital. He joins us here in the studio. I want to start with BlackRock slashing the value of that private loan to zero just just three months after assessing it at 100 cents on the dollar. It's, it's not a big loan.

[Davide Shelley]

Absolutely. Yeah.

[Carol Massar]

But I mean $25 million is a lot of money in the scope of

[Davide Shelley]

the money that BlackRock manages. It's, it's not a big deal.

[Carol Massar]

But, but what does it signal to you and to us?

It's blackrock.

[Davide Shelley]

Look, it's, it's blackrock. It's one of the most sophisticated professional managers out there. You know, when I was a cub reporter covering credit, I learned one thing. Like in credit you have a good day if you're making your coupon and you're not losing any money. So for a loan to go from 100 to 0, something really dramatic has had to happen to the company or something really wrong was with the original underwriting. So that's why those situation, it's the second one that BlackRock has had in this private credit fund kind of matter even though they're small.

[Carol Massar]

How do you kind of cross because things that we heard at investors, things that we are hearing in general when it comes to private credit and I, you know, I'm always a little skeptical for people who are, you know, maybe talking their book, you know that they're going to be careful. But I also know they also have fiduciary responsibilities too. Right. To their investors too. But I don't know what was your takeaway especially after Bloomberg Invest. You you talked several panels and talking to people in yeah, I think the

[Davide Shelley]

message is pretty consistent. We you just had David Solomon, he summed it up pretty well. Like the portfolios overall and the returns of the funds are actually performing well. There have been situations idiosyncratic where we've seen losses and those matter and we should pay attention to them. I think what they bring to the fore though is a broader kind of underlying concern about the quality of the valuations and the marks, particularly in private credit. That's a concern that people have had for a very long time. Right. And now they're getting spooked when they see loans drop so fast and so dramatically. They kind of worry about what else is out there that we're not seeing yet.

[Carol Massar]

Well, why are the loans dropping so quickly? Is it because people are having trouble paying them back?

[Davide Shelley]

It's a combination of issue. I would say that this, this one we wrote about recently was in a space Amazon aggregators that had a tremendous amount of disruption. So this is not something that's happened yesterday. It's a sector that's received a lot of capital back in 2122 and since then has performed really poorly across the board. And BlackRock had flagged this in their filings that there was going to be a big write down. They wrote down the value of the entire fund by 19%. So when you look at the individual loans, that's not a big deal. But 19% of the entire fund starts becoming like a bigger issue. So it's a combination of like companies that weren't performing well and maybe managers were slow to recognize problems and just the reflection of the underwriting environment that we were in back in 2020.

[Carol Massar]

Well, that's what I want to go. How much of is that? How much of this was the underwriting happened when money costs nothing? And so a deal that looks good when rates are at nothing look great, but not where they are today, is it. How much of it is that? How much of the loans were written back then? And that's what we're dealing with.

[Davide Shelley]

Yeah, I mean, I think we've heard Lloyd Blankfein talk about that point to like the kind of behavior that sets in towards the end of a credit cycle when money is easy and you can, you know, you're kind of under pressure to make more loans because you have capital to deploy. And so we have seen a lot of situations in 2122 that turned out to be very bad deals. And that cuts both ways. It's not just the private markets, it's also the public markets. And you've seen banks suffer from that as well.

[Carol Massar]

So Davide, at what point are you going to be sitting here writing that that the contagion has, has spread into the wee hours? Not a prediction for when that happens, but the signal that will tell you that okay, this is something bigger.

[Davide Shelley]

I think what everyone is focused on right now is liquidity, especially in the private credit portfolios or you've seen investors try to redeem their their shares. The other piece of it is all of these funds have leverage. So there are bank lines.

[Carol Massar]

Right.

[Davide Shelley]

At some point if a lot of the money from the retail investors, that's the equity comes out, you need to see a readjustment in the amount of leverage and borrowing that those funds can support. I think we're far from that.

[Carol Massar]

But bank earnings are always opportunities to see right. Because of their exposure.

[Davide Shelley]

I think it'll be interesting to watch the language from bank executives around that space for sure.

[Carol Massar]

Davide, thank you so much. Really appreciate it. You've had a busy week. Pleasure is ours to Davide Shelley. So he is Bloomberg News chief correspondent for Private Capital.

Stay with us. More from Bloomberg businessweek Daily coming up after this.

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[Carol Massar]

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[Tim Stenovec]

You're listening to the Bloomberg BusinessWeek Daily Podcast. Catch us live weekday afternoons from 2 to 5pm Eastern. Listen on Apple CarPlay and Android Auto with the Bloomberg Business app or watch us live on YouTube.

[Carol Massar]

I want to bring in David Bush, the co chief Investment officer of Trajan Wealth. The Firm has about $2.4 billion in assets under management. He joins us from Scottsdale, Arizona. David, good to have you on the program. We spent a lot of time talking about the macro environment. You've got some great views on individual companies, individual stocks and what those can tell us about the macro. I want to start with just Costco Aftermarket. Today we're expecting to hear from the company and its latest results. Another check on the consumer. How does, how does Costco look to you?

[Tim Stenovec]

Yeah, well first of all, thank you so much for having me. So when we look at the two retail announcements today, earnings announcements, we had Burlington this morning which they beat. Now we have Costco after the close. And what's interesting is for the Burlington stores there's a trade down effect going on with retailers and shoppers and treasure hunters. With Costco being more of a big box hypermarket if you will, there is some opportunities there. Especially what I'm watching for is digital growth. So this is growth in digital sales for shipping and also for in store pickup. And I think that Costco is going to help us get another view of how the consumer is faring in this inflationary environment.

[Carol Massar]

Why are those though such important metrics to Costco's bottom line?

[Tim Stenovec]

Yeah, a lot of it has to do with, with the way that they operate because you know, with Costco it's, it's a massive retailer. But if they start to compete with clicking and shipping, if you will, like with the Amazons of the world, that's going to open up a whole new revenue chain or add to their bottom line. And so I think that that's really one place to look is those digital sales growth.

[Carol Massar]

What would disappoint you in the company? Because what's interesting is David, as you know, we've increasingly talked about Costco's consumer. It certainly seems to be a wealthier consumer at this point. I mean, what does it tell us about in general a consumer that we think has actually been doing certainly better than customers who are at the lower income spectrum, if you will. So I'm just curious, like what are, what might it tell us about the health of the consumer and what it tells us about the US Economy?

[Tim Stenovec]

Yeah, so, so with Burlington that's more of a lower middle, middle income earner, whereas Costco to your point is more of a middle to high middle income earner that's going to, that's going to go to those stores. So what we're going to see is our customers switching from higher, higher end retailers to lower end. But with Costco specifically, they have so many, they're so competitive on pricing and there's so much availability and I know that they do a good job in terms of, you know, trying to stock their stores and negotiate prices. But it will show us like, is the health of the consumer still as strong as we expect it to be in the future? Because right now to your point, inflation is a tax on, on the poor and it's, it's starting to work its way up into higher income, higher middle income earners.

[Carol Massar]

You know, I'm just looking at the stock. It's up just about 14% year to date ahead of earnings later on today after the close forward PE of 48. Is it pricey, the valuation?

[Tim Stenovec]

Well, the, the price, the PE multiple is, is kind of a double edged sword. So it either indicates that one, investors expect earnings growth to continue, which I would expect some earnings growth especially in 2026 and into 2027. But given that high PE ratio, there could be some price correction. But we will have to wait and see what they announced at their earnings call.

[Carol Massar]

Okay. Well, we'll wait to hear that. Let's talk a little natural resources and oil. If we look at just prices right now, I've been going through this all day GLCO on the Bloomberg terminal. We're not, we're off of, of highs when it comes to oil, but still over $80 a barrel on WTI Brent is up to $84 a barrel. Both of those about 39% higher on the year. On energy. On oil, your picks you've got, you're interested in Canadian natural resources, Petrobras and integrated oil and gas. What are you looking at?

[Tim Stenovec]

Yeah, so right now with higher oil oil prices and actually higher gas prices, it's going to be a tailwind for oil producers and natural gas prod. And this is true in my mind across the globe. What's interesting is right now we have the Strait of Hormuz that is closed or at least there's some concern that we're not going to be able to ship oil through that strait, which represents roughly 20% of the global traffic. That means that more production is going to be focused either in the United States or in Canada which is, which is kind of interesting. So, so in Canada they could we, we do buy some of their oil from, from these producers. And so it should actually benefit North American producers and even Central and South American producers.

[Carol Massar]

The Venezuela question here, which is something that we, you know, maybe it's too early to, to, to be talking about this, but the president certainly, you know, before Iran talked a lot about how the US Will get Venezuelan oil. Is there, is there an update on that and an idea for how that you think that will affect global oil prices? Yeah.

[Tim Stenovec]

Venezuela is interesting because they sit on the largest proven reserves of oil and it is a heavier crude so it has to be refined. And so when that oil production comes back online, it should be hugely beneficial for consumers consumers because oil prices should come down. But it also should be beneficial to refiners, particularly in the Gulf states because when you think about production in Venezuela and where it has to be shipped to be refined, those, those refineries should be a beneficiary. But once that comes fully online, if, if and when it comes fully online, it should really add some supply to the global oil production and ultimately drive oil prices down.

[Carol Massar]

So one other company that you're watching, it's a real like micro cap and that's Full House resorts ticker is FLL. It's about an 82 million dollar market cap. It does report after the close today, stock is down about 13% year to date. Why is this something that you look at? It's a pretty small player. Yeah. And just quickly. Just got about.

[Tim Stenovec]

Yeah, it's, it's interesting because, because it's in the leisure space. Right. So they, they own region regional casinos. And so one, we'll see consumer foot traffic. But two, they're also leveraged. And so this is, this is one of those companies that, in that small to mid or small micro cap space that are leveraged and, and so higher rates.

[Carol Massar]

Yeah.

[Tim Stenovec]

And it all comes together. We have higher oil which leads to higher inflation. Higher inflation leads to higher rates. And so we're going to see how they put it together, what the impact is.

[Carol Massar]

Yeah, gotta leave it there. David Bush, thank you so much. Really appreciate it.

[Tim Stenovec]

This is the Bloomberg Business Week daily podcast available on Apple, Spotify and anywhere else you get. Your podcasts listen live weekday afternoons from 2 to 5pm Eastern on Bloomberg.com, the iHeartRadio app, TuneIn and the Bloomberg Business app. You can also watch us live every week weekday on YouTube and always on the Bloomberg terminal.

[Carol Massar]

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