Ellen Zentner Talks Market Volatility, Oil and Iran

Summary

Bloomberg Talks Podcast Summary

Episode Title: Ellen Zentner Talks Market Volatility, Oil and Iran
Date: April 1, 2026
Host(s): Tom Keene, Paul Sweeney
Guest: Ellen Zentner, Chief US Economist at Morgan Stanley

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Episode Overview

In this episode, Bloomberg’s Tom Keene and Paul Sweeney speak with Ellen Zentner of Morgan Stanley about current market volatility, the macroeconomic effects of oil prices and the conflict in Iran, and the state of the American consumer. Zentner brings both expertise and a personal touch, referencing her passion for fly fishing while delivering sharp analysis on economic uncertainty, consumer behavior, and investment trends amid ongoing global instability.

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Key Discussion Points and Insights

1. Market Volatility, Geopolitics, and Uncertainty

• Longer-Term Focus Dominates Conversations

  • Zentner explains that client conversations have shifted from trying to “time” the end of the conflict to bigger-picture themes: “It’s more of what does this mean in the bigger picture of long term national security and resource nationalism and resource scarcity and defense spending...” (Ellen Zentner, 03:01)
  • The current climate—marked by war-related uncertainty—opens the door to broader discussions beyond immediate market moves.

• Oil Markets and the Strait of Hormuz

  • Despite some stock rebounds, oil prices remain high, reflecting market doubts about the stability of oil flows through the Strait of Hormuz.
  • Even if the strait were to reopen tomorrow, effects would linger: “You’ve still got all of these price effects and shortages in the pipeline... Businesses have to absorb that, households have to absorb that... There will be pain.” (Ellen Zentner, 04:11)
  • Zentner pegs the probability of a US recession at “around 40%,” higher than many believe (Ellen Zentner, 04:36).

2. Impact of Oil Prices on US Consumers

• Regressive Effects and Behavioral Shifts

  • Rising gas prices hit lower-income households harder, especially in “big driving states” like Texas, Florida, and California. People in these regions obsess over price fluctuations, making it a regular topic of conversation (Ellen Zentner, 05:47).
  • Zentner notes: “It’s talking about gas prices for much of the rest of the country... It takes time to change those behaviors, and so you have to suck it up and pay it at the pump until you can cut costs elsewhere.” (Ellen Zentner, 06:23)
  • Behavioral adaptation includes buying cheaper gas, carpooling, or even switching vehicle types—and there’s renewed EV interest.

• Divergent Consumer Sentiment by Income

  • Lower-income consumers have essentially been in and out of recession, first losing their COVID savings, while higher-income households are now beginning to pull back on spending.
  • Zentner stresses: “If you’ve already met a lot of pent up demand... you’re sitting on a lot of equity in your home, but you’re not seeing further gains. It can cause you to pull back on spending. And that’s all it, all it takes.” (Ellen Zentner, 07:26)

3. Business Investment and Policy Response

• Recent Trends and New Incentives
  • Last year, business investment focused on tech and infrastructure; the new “One Big Beautiful Bill Act” has created optimism by introducing 100% bonus depreciation (Ellen Zentner, 08:00).
  • Zentner describes potential caution: “Is this a false start? Because now you have the conflict in Iran, you’ve got energy prices, food input prices for businesses and they’re going to have to eat a good chunk of that. Does that negate some of your decisions that you are going to make to invest?” (Ellen Zentner, 08:28)
  • The real concern is the “cliff” that may follow after all current incentives and pent-up demand are exhausted (Ellen Zentner, 08:52).

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Notable Quotes & Moments

• On Geopolitics and Exhaustion:

  • “It really gets exhausting trying to figure out when is this thing going to end, am I supposed to time it, what should I do here? ...I don’t think anyone knows when we’re going to be out of this and what does out of this even mean.”
    — Ellen Zentner (03:22)

• On Gas Prices and Daily Life:

  • “Talking about gas prices around the dinner table...is a pastime, just like for New Yorkers talking about the weather, it’s talking about gas prices for much of the rest of the country.”
    — Ellen Zentner (05:53)

• On Consumer Resilience:

  • “The low income consumer has been in and out of recession... Luckily wage growth has at least for a time been outpacing inflation. But the wealthy consumer, we don’t need [them] to just stop spending. It’s slowing spending... that’s all it, all it takes.”
    — Ellen Zentner (07:00 - 07:26)

• On Investment Incentives:

  • “We’ve done 100% bonus depreciation...and it’s on infrastructure as well. It’s really hard to not take advantage of that. But...is this a false start? Because now you have conflict in Iran, you’ve got energy prices...”
    — Ellen Zentner (08:07 - 08:28)

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Timestamps for Key Segments

• 00:47 – 02:09: Light-hearted opening & fly fishing anecdotes
• 03:01 – 03:57: Client conversations shift to long-term themes amid war
• 04:11 – 04:49: Oil market impact and ongoing uncertainty
• 05:10 – 06:52: Gas price pressures, adaptation in big driving states
• 06:58 – 07:48: Diverging fortunes—low vs. high income consumers
• 08:00 – 09:08: Business investment trends and new incentives, looming risks

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Tone and Style

The conversation remains insightful yet conversational, with Tom Keene’s playful banter complementing Ellen Zentner’s direct, nuanced economic analysis. Zentner’s ability to ground macroeconomic themes in everyday experiences (like gas prices at the dinner table) makes her insights accessible and resonate with a broad audience.

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Summary

Ellen Zentner’s discussion underscores the macroeconomic uncertainties driven by geopolitical conflict and resource scarcity. She provides a candid assessment of the pressures on American consumers—especially in lower-income and high-driving states—and the complicated effects on business investment. The episode is both pragmatic and personable, offering valuable perspective on how market participants and ordinary Americans are navigating the current volatile environment.

Transcript

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[Ellen Zentner]

Bloomberg Audio Studios podcasts Radio news

[Tom Keene]

we say good morning across the country. It is an April 1st ritual. And I do this because you should see my new Filson fishing guide vest.

[Paul Sweeney]

Really?

[Tom Keene]

$289.

[Paul Sweeney]

Wow.

[Tom Keene]

It's very good. It's designed for anglers to organize gear for a full day out out on the tundra as well on April 1. We always speak with Ellen Zetner because they said to Lisa Shallot, I'm sorry, I gotta do fly fishing here. There's the pre runoff window. Yeah, like, like the, the winter waters.

[Ellen Zentner]

Yeah.

[Tom Keene]

And the streams are like what?

[Paul Sweeney]

Clearer.

[Ellen Zentner]

The, the fish have been starving all winter and you get them before the runoff and so they're pretty excited about that. And you don't get a lot of pressure. You don't see a lot of other anglers out there. And actually some of the best fly fishing is going out for Mother's Day, which is actually just before the runoff, but won't make you very popular with mom.

[Tom Keene]

Okay, is this the Arkansas and South Platte? Is it the Yellow, the Jellystone in Missouri rivers? Where does Ellen Zentner go?

[Ellen Zentner]

Wow, Tom, you're really, you're really struggling with this this, this morning.

[Tom Keene]

Yeah, well, you know, it's, I think this is important. Like where, where is your chosen April river in America?

[Ellen Zentner]

Well, look, we don't ever give away the rivers that we like to fish. You don't do that.

[Tom Keene]

Compliance won't let her.

[Ellen Zentner]

But Montana is still a big favorite, a big favorite of ours.

[Tom Keene]

Driving so much at Morgan Stanley. Ellen Zentner with us today. How is the American consumer? This is how you and I first met.

[Ellen Zentner]

I know. Do you know talking about Apple's 50th anniversary. There's a big anniversary for us, Tom. It was 23 years ago that I was first on radio with you.

[Paul Sweeney]

Very cool.

[Ellen Zentner]

23 years ago you were three years old.

[Tom Keene]

Exactly.

[Ellen Zentner]

Yes.

[Tom Keene]

No, no, no, seriously, this is. She was 16 years old out of some high school in Texas. That's what I, it was you and

[Ellen Zentner]

Ken Prewitt and I in, in the studio.

[Tom Keene]

The Only reason you got on was you and Ken can fly fishing. Paul Sweeney with Ellen Zentner.

[Paul Sweeney]

Ellen, what do you, what are the conversations you're having with your clients as you do travel around the U.S. talking to your U.S. clients here, are they, do they want you to really help them think about on the other side of this war? What do we do here? Is that, what, what are the conversations you're having these days?

[Ellen Zentner]

I tell you what, there's, there's so much volatility and so much uncertainty out there that it has made the conversations all that much more interesting because they're much more longer term focus. So not necessarily when are we going to get beyond this? But it's more of what does this mean in the bigger picture of long term national security and resource nationalism and resource scarcity and defense spending and all of those things. And so it makes those topics really top of mind for clients because you can't. It really gets exhausting trying to figure out when is this thing going to end, am I supposed to time it, what should I do here? And so it just opens the door to some really interesting conversations. I don't think anyone knows when we're going to be out of this and what is out of this even mean.

[Paul Sweeney]

And I think we're seeing that maybe in the oil markets we're seeing stocks rebound. Okay, that's fine, maybe goes to the growth issue but you know, oil still holding very high levels. That suggests maybe the market's saying, I'm not sure, the Strait of Hormuz things ever going to clear up in the near term.

[Ellen Zentner]

Yeah, well even if, I mean what does it mean to open the strait tomorrow? I mean let's, let's just assume that's a thing and that that could happen. You've still got all of these price effects and shortages in the pipeline and businesses have to absorb that, households have to absorb that and some countries are going to be able to absorb it better than others. There are countries that will step in with food subsidies and other assistance like that, but there will pain. Now does that mean recession? Not necessarily, but I think the probability of recession here is higher than people think and I would put it around 40% which is meaningful. It's uncomfortable.

[Tom Keene]

Right. Help me here again with the consumer and you know the modern statement is a case shape you literally invented. This is a cottage industry at UniCredit. I think it was years ago. I mean help us here with a fifteen hundred dollar disposable income lift and cost due to a gallon of gas it crushes how much of America?

[Ellen Zentner]

Yeah, so it always falls more heavily. It's very regressive. So it falls more heavily on lower income households. They also have to commute and drive to work. Especially in the big driving states. You'll see the bigger impacts and, and you'll see them change their behavior, but it takes time.

[Tom Keene]

Wait, wait a minute. Morgan Stanley, where everybody grew up in three zip codes and you're a country girl fishing and all that. We don't understand those driving times, those big driving states.

[Ellen Zentner]

Yeah.

[Tom Keene]

You know, children from the east just don't get it, do we?

[Paul Sweeney]

No. I spent half my life on New Jersey transit, so that's kind of how I work.

[Ellen Zentner]

So you don't. So. But many of your listeners will know the obsession that you have. Florida, Texas, California, these big driving states. It is a family obsession. Talking about gas prices around the dinner table. You pass by a gas station, you look at every single sign to see what the gas price is. You comment on how it's gone up. When was the last time you saw that price? Like it's a pastime, just like for New Yorkers talking about the weather, it's talking about gas prices for much of the rest of the country. And so this is meaningful. You can first, if you weren't buying the cheapest unleaded gasoline, you'll switch to the cheapest. Then after time maybe you start to commute. We did this in 2008, we started carpooling together. We started changing our, altering our behavior on the types of vehicles we were buying. You've seen all the reports of people now inquiring about EVs for instance. But it takes time to change those behaviors and so you have to suck it up and pay it at the pump until you can cut costs elsewhere.

[Paul Sweeney]

That being said, what's your view on the consumer? Because it seems like the consumer is more than hanging in there, I guess.

[Ellen Zentner]

Well, I mean this has been like how many years in a row we've been talking about this? Yeah, the low income consumer has been in and out of recession. The first recession they went to was when they worked through the excess savings that had been built up during COVID from the stimulus and just not being able to spend income. So they've been in and out of recession. Luckily wage growth has at least for a time been outpacing inflation. But the wealthy consumer, we don't need the wealthy consumer to just stop spending. It's slowing spending. And of course, if you've already met a lot of pent up demand, you've been out there spending for years now with this amazing run up in financial assets. You're sitting on a lot of equity in your home, but you're not seeing further gains. It can cause you to pull back on spending. And that's all it, all it takes.

[Tom Keene]

Let me get this in quickly. What's investment look like? We never talk about the eye of C plus I plus, you know, X etc. What's investment look like Forward so business

[Ellen Zentner]

investment had been very tech, tech and infrastructure related last year. The big optimism around this year has been with the One Big Beautiful Bill Act. As we turn the corner into this year, there were nascent signs of business investment starting to broaden out because it's really hard to not want to take advantage of that. We've done 100% bonus depreciation, sorry, 50% before. We've not done 100%. And it's on infrastructure as well. It's really hard to not take advantage of that. But is this a false start? Because now you have the conflict in Iran, you've got energy prices, food input prices for businesses and they're going to have to eat a good chunk of that. Does that negate some of your decisions that you are going to make to invest? I think they will still take advantage of the One Big Beautiful Bill act. But this is what as soon as we're able to look beyond the conflict and the Strait of Hormuzzi, here's what the next concern is. The cliff that we will fall off from having pulled forward all of the demand and tax breaks and everything else from the One Big Beautiful Bill act

[Tom Keene]

we have to run. Ellen Zentner, thank you so much. I learned so much today about trout fishing in the pre runoff. She is with Morgan Stanley.

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