# Oil Continues Gains as US Imposes New Blockade in Hormuz

An episode of [Bloomberg Daybreak: Asia Edition](https://invisiblenetwork.ai/podcast/1663863437), 14 Jul 2026, 22 min.

Audio: https://podtrac.com/pts/redirect.mp3/traffic.omny.fm/d/clips/e73c998e-6e60-432f-8610-ae210140c5b1/58e85be7-dbb5-4043-afed-af80014dc0b3/995c2f57-773d-4896-9641-b487002efc18/audio.mp3?utm_source=Podcast&in_playlist=27143354-63aa-4ac5-965d-af80014dc0d3

Business and finance news from the Asia-Pacific. Oil extended gains and Treasuries held their losses after the standoff between the US and Iran intensified, raising concern that supply disruptions will reignite inflation and strengthen the case for higher interest rates. Brent climbed as much as 2.8% to $85.64 a barrel. The commodity jumped 9.6% on Monday — its biggest gain since May 2020 — after President Donald Trump reinstated the US blockade of Iranian ships transiting the Strait of Hormuz and demanded a 20% reimbursement on all other cargo shipped through the waterway. We spoke to Rob Haworth, Senior Investment Strategy Director at US Bank Wealth Management. For more analysis on how the new blockades are affecting oil prices and inflation, Bloomberg TV Hosts David Ingles and Yvonne Man talked to Chris Weston, Head of Research at Pepperstone. See omnystudio.com/listener for privacy information.

## Transcript

[0:02] Speaker 1: Bloomberg Audio Studios, podcasts, radio news.
[0:10] Speaker 2: Welcome to the Daybreak Asia podcast. I'm Dog Krisner. Oil
[0:14] Speaker 2: prices are higher at this hour after the US began
[0:17] Speaker 2: conducting military strikes against Iran late Monday. Now this backs
[0:22] Speaker 2: up a threat from President Trump made earlier in the day,
[0:25] Speaker 2: and according to Politico, the President formally notified lawmakers over
[0:29] Speaker 2: the weekend that the US is once again at war
[0:32] Speaker 2: with Iran. So now his administration will have another sixty
[0:36] Speaker 2: day window to use the military in the region without
[0:40] Speaker 2: congressional approval. A key question is whether the Strait of
[0:44] Speaker 2: Horn Moves is open. On Monday, Trump said the US
[0:47] Speaker 2: would reinstate its blockade of Iranian ships through the strait,
[0:51] Speaker 2: and he demanded a twenty percent fee on all other
[0:55] Speaker 2: cargo transiting the waterway as reimbursement. Now on the other
[0:59] Speaker 2: side the story, Iran said the agreement with the US
[1:03] Speaker 2: has undoubtedly entered a crisis phase. We got reaction from
[1:07] Speaker 2: Laura Rudman, practitioner senior fellow at the University of Virginia's
[1:11] Speaker 2: Miller Center.
[1:12] Speaker 3: I think that, unfortunately, it's not just about trying to
[1:17] Speaker 3: strike a middle round, which, as you know, it is difficult.
[1:20] Speaker 3: It's about what the United States end goals are and
[1:23] Speaker 3: how they can be achieved. And there's very little indication
[1:27] Speaker 3: that increased military action alone is going to have a
[1:33] Speaker 3: wrong back off their behaviors in terms of the Strait.
[1:37] Speaker 3: And I have to say that the United States violating customary,
[1:42] Speaker 3: well respected, understood international law in terms of freedom of
[1:48] Speaker 3: navigation by charging tolls, which is precisely what we are
[1:52] Speaker 3: saying Iran should not be doing, is not only no solution,
[1:57] Speaker 3: but it just shows how much sadly this president does
[2:01] Speaker 3: not understand that law matters.
[2:04] Speaker 2: That is Maura Rudman from the University of Virginia's Miller Center.
[2:08] Speaker 2: For a look at market action. I'm joined now by
[2:11] Speaker 2: Rob Hayworth. Rob is senior investment strategist at US Bank
[2:15] Speaker 2: Asset Management Group. He's on the line from Greenwich, Connecticut. Rob,
[2:19] Speaker 2: Thank you for being here. I'm curious is how you
[2:22] Speaker 2: understand the risk that this renewed spike in oil prices
[2:27] Speaker 2: represents to the overall economy and to markets.
[2:31] Speaker 1: Yeah. Great to be with you, Doug. It is a challenge,
[2:34] Speaker 1: I know. I'm sure the President is frustrated as we
[2:36] Speaker 1: all are, that it has been a struggle to get the
[2:37] Speaker 1: straight of Homo's reopen, and it seems like we're since
[2:42] Speaker 1: negotiations didn't work in a memorandum of understanding didn't work,
[2:45] Speaker 1: we're into other attempts to get it reopen. I think
[2:50] Speaker 1: the challenge for global oil markets and the thing we're
[2:52] Speaker 1: watching closely is any sort of toll to remove oil
[2:57] Speaker 1: from the region will push prices much higher. Seeing a
[3:01] Speaker 1: huge reaction yet in oil markets, I think the key
[3:04] Speaker 1: level I'm watching at this point is on West Texas
[3:07] Speaker 1: or an immediate that's seventy eight to eighty two dollars
[3:10] Speaker 1: a barrel range, which defined the lower end of the
[3:13] Speaker 1: range when we were in conflict in the strait was
[3:15] Speaker 1: fully closed, and I think that's where we could see
[3:19] Speaker 1: some pressure on oil prices right I know we're headed
[3:23] Speaker 1: into US Consumer Price Index tomorrow morning here in the US,
[3:28] Speaker 1: and we've been looking for that to come down because
[3:30] Speaker 1: oil prices have come down. But now with oil price
[3:33] Speaker 1: is testing this higher range, I think that puts another
[3:36] Speaker 1: stressor on the consumer and a stress on the federal reserve.
[3:40] Speaker 1: So this is something markets are going to have to
[3:42] Speaker 1: continue to evaluate quickly. It is it will be a
[3:47] Speaker 1: challenge I think towards valuation, a challenge for interest rates
[3:51] Speaker 1: and perhaps a future challenge for the consumer that we
[3:54] Speaker 1: have to watch. We're still constructive, but it is something
[3:57] Speaker 1: where we're not sure that the consumer can really tolerate
[4:01] Speaker 1: another three months of elevated energy costs.
[4:04] Speaker 2: Well, I'm glad you mentioned that, because today we heard
[4:07] Speaker 2: from FED Governor Chris Waller, and he was saying the
[4:09] Speaker 2: Fed may need to raise rates in the near term
[4:11] Speaker 2: if underlying inflation continues to signal broad price pressures. Yep,
[4:17] Speaker 2: CPI Tuesday morning, that's tomorrow. US money markets right now
[4:22] Speaker 2: are already pricing a near fifty percent probability of a
[4:25] Speaker 2: quarter point hike in July. Do you think that's about
[4:29] Speaker 2: right or is it a little too aggressive?
[4:33] Speaker 1: In our view, We're hopeful that it's early. I think
[4:36] Speaker 1: the data will get tomorrow will tell us. One, right,
[4:40] Speaker 1: we've had an episode of lower energy costs, so that
[4:43] Speaker 1: will be embedded in the backward looking data. And two,
[4:46] Speaker 1: we know that shelter costs have been a big component
[4:49] Speaker 1: are a big component of consumer prices, and so those
[4:52] Speaker 1: should actually be softening the blow they're in that CPI calculation.
[4:57] Speaker 1: So flat to lower housing prices flat rental costs right,
[5:02] Speaker 1: easing pressure from owner's equivalent rents should ease some of
[5:06] Speaker 1: the provides some deflation in that consumer price index. So
[5:09] Speaker 1: the Fed may have some time that they don't need
[5:11] Speaker 1: to act quite as quickly as July, but it is
[5:16] Speaker 1: something they're going to have to pay attention to. I
[5:18] Speaker 1: think one other factor we look towards is the fact
[5:21] Speaker 1: that wage costs are not really keeping up at this
[5:24] Speaker 1: point with inflation in Retail sales from a real perspective
[5:29] Speaker 1: are probably going to be flat when we get those
[5:31] Speaker 1: on Thursday here in the US, and that's probably has
[5:35] Speaker 1: may have to Fed a little more concern than some
[5:38] Speaker 1: than a couple of prints of inflation at the moment.
[5:40] Speaker 2: So we had yields popping across the curve today at
[5:43] Speaker 2: the short end, we've got a two year at four
[5:44] Speaker 2: to twenty eight. It seems like the bond market maybe
[5:48] Speaker 2: getting out in front of the Fed. Is there the
[5:50] Speaker 2: risk here if the Fed does not move, that it
[5:52] Speaker 2: begins to fall behind the curve a little bit?
[5:57] Speaker 1: I think yes, the bond I mean, the job of
[5:59] Speaker 1: the bomb market is to really try and anticipate what
[6:02] Speaker 1: the Fed may may be forced to do, and I
[6:05] Speaker 1: think it's a question of how quickly. I think to
[6:06] Speaker 1: your point, the two year and even the ten year
[6:09] Speaker 1: getting above four to sixty here today is telling us
[6:12] Speaker 1: that the market is nervous, that inflation is a little
[6:15] Speaker 1: more persistent than the FED would like. I don't think
[6:19] Speaker 1: that means the FED is going to be forced into
[6:21] Speaker 1: action just yet, as there's a lot of there's a
[6:24] Speaker 1: lot of data for them to incorporate by the time
[6:26] Speaker 1: we get to the next meeting, much less than the
[6:29] Speaker 1: year end outlook.
[6:31] Speaker 2: I'd like to talk a little bit about what we've
[6:33] Speaker 2: been seeing lately in the semiconductor complex. US listed shares
[6:37] Speaker 2: and sk Heinex. In the Monday session, we're down more
[6:41] Speaker 2: than nine percent overnight in Seoul. That would be in
[6:44] Speaker 2: the Monday session. In South Korea, sk Heinex shares tumbled
[6:48] Speaker 2: nearly seventeen percent. There was a lot of commentary about
[6:52] Speaker 2: fear of lower than expected earnings. There was a firm
[6:55] Speaker 2: in South Korea Korea Investment in Securities projecting operating profit
[6:59] Speaker 2: for the company, and a May trail consensus by about
[7:03] Speaker 2: eight percent. Is the market too enthusiastic when it comes
[7:08] Speaker 2: to what's been going on with memory.
[7:12] Speaker 1: I think the market does appear that it's a little
[7:15] Speaker 1: ahead of itself, and this is after right, the offering
[7:19] Speaker 1: of s k Heinez here in the US was very
[7:22] Speaker 1: successful in its initial endeavor. Right, we've seen a little
[7:26] Speaker 1: sell off here in the couple days since the market
[7:29] Speaker 1: has been somewhat disappointed with earnings. As we go across
[7:32] Speaker 1: the board, Micron had very good results and yet it
[7:35] Speaker 1: also sold off as well. I think the market is
[7:37] Speaker 1: definitely concerning that we're a little stretched here in this
[7:41] Speaker 1: element of the ecosystem. But we are reminded that artificial
[7:44] Speaker 1: intelligence has a massive ecosystem. Stocks maybe running a little
[7:49] Speaker 1: a little hotter the semiconductors, we still have energy that
[7:54] Speaker 1: has to be built out, that data centers have to
[7:56] Speaker 1: be built out, and ultimately we need applications and usage.
[8:00] Speaker 1: So for us, there's a long way and a long
[8:03] Speaker 1: cycle that we think still has to run in artificial intelligence,
[8:07] Speaker 1: particularly in the application sector, which is where we all
[8:11] Speaker 1: use it anyway. In kind of lastly, right, the market
[8:16] Speaker 1: may have fully incorporated some fairly rich expectations for investment,
[8:20] Speaker 1: including in semiconductors, but that story looks like it has
[8:24] Speaker 1: to continue. This doesn't look like we're near the end
[8:27] Speaker 1: of the artificial intelligence story. We're somewhere in the middle innings,
[8:30] Speaker 1: and there's a lot left for us to build to
[8:32] Speaker 1: get the completion here. So this may be more of
[8:34] Speaker 1: a posit refresh.
[8:35] Speaker 2: So when you're talking about applications, I'm wondering whether you
[8:38] Speaker 2: would include the financials in that. And I say that
[8:41] Speaker 2: because Tuesday in the States, five of the big US
[8:45] Speaker 2: banks will report earning. So it's Bank of America, It's
[8:47] Speaker 2: Jpmoregan Chase, along with Wells, Fargo, Goldman, and City. Do
[8:53] Speaker 2: they need to say something to the marketplace? Put trading
[8:57] Speaker 2: revenue aside, put investment banking fees a side. Do these
[9:01] Speaker 2: banks need to talk about the impact of productivity visa Vai.
[9:08] Speaker 1: Well, Actually, our first look from the financials is really
[9:12] Speaker 1: going to be what is the consumer? What is the
[9:16] Speaker 1: story from the consumer? But I think for every industry,
[9:19] Speaker 1: we are as a market interested in how the application
[9:23] Speaker 1: of artificial intelligence is progressing and where is it heading
[9:26] Speaker 1: towards monetization. We'd probably look more to the healthcare sector
[9:30] Speaker 1: as the first early user where we should see some results,
[9:34] Speaker 1: but certainly it is something we will pay attention to
[9:37] Speaker 1: in the story tomorrow morning from these from the financial
[9:41] Speaker 1: sector earnings.
[9:42] Speaker 2: Rob Bell leave it there, Thank you so very much.
[9:44] Speaker 2: Always a pleasure. Rob Hayworth is senior investment strategist at
[9:48] Speaker 2: US Bank Asset Management Group. Joining today from Greenwich, Connecticut
[9:51] Speaker 2: here on the Daybreak Asia podcast. Welcome back to the
[10:00] Speaker 2: Daybreak Asia podcast. I'm dog Chrisner. So the renewed military
[10:04] Speaker 2: strikes between the US and Iran have not surprisingly pushed
[10:08] Speaker 2: oil prices higher, and that in turn has stoked inflation worries.
[10:13] Speaker 2: Markets are reacting, and we have insight from Chris Weston.
[10:16] Speaker 2: He is head of research at Pepperstone Group, and he
[10:19] Speaker 2: spoke with Bloomberg TV host David I. Glace and Ivonne Mann.
[10:23] Speaker 4: Chris, we walk up to the reality of oil back
[10:25] Speaker 4: at eighty five dollars. How should I be looking at
[10:27] Speaker 4: this now this morning?
[10:30] Speaker 5: Well?
[10:30] Speaker 6: Confused, I think is the issue because we're trying to
[10:33] Speaker 6: understand the probabilities and the assumptions that have been made
[10:37] Speaker 6: a week or two weeks ago firmly being challenged. I mean,
[10:40] Speaker 6: we're doing assumptions on inflation. Has inflation peaked? That's being challenged.
[10:45] Speaker 6: What could it mean for fair policy? Obviously that's kind
[10:48] Speaker 6: of concerned. What does it mean for volatility in broader markets?
[10:50] Speaker 6: What does it mean for the dollar? All of the
[10:52] Speaker 6: assumptions that we were pricing in and fairly convicted of
[10:55] Speaker 6: a week ago are firmly being challenged, and that distribution
[10:58] Speaker 6: is widening. Liquidity might be fitting out the top. But yeah,
[11:01] Speaker 6: there's a lot of flow based effects that are still
[11:02] Speaker 6: taking place in the oil market, and that's reverberating round.
[11:05] Speaker 6: I mean, there's a lot of legacy shults are being
[11:08] Speaker 6: cut up and people are flipping now to long positions
[11:11] Speaker 6: on CTAs the options markets coming alive. There's you know,
[11:16] Speaker 6: the premium for one month calls on wt I and
[11:18] Speaker 6: BRINT options is blowing up. In terms of the implied volatility,
[11:22] Speaker 6: it's widening up, and of course you know dealers are
[11:25] Speaker 6: going to be short in gamma and then of course
[11:26] Speaker 6: in that situation, you know they're going to be buying
[11:28] Speaker 6: the underlying to hedge their deltas back to zero. So
[11:31] Speaker 6: you know, you've got these flow based effects which still
[11:33] Speaker 6: need to work themselves out. But I think at the
[11:34] Speaker 6: very issue is this view last week that we had
[11:38] Speaker 6: or that we're going to see this normalization over time
[11:40] Speaker 6: of logistics through the straits of Hummers. That was going
[11:44] Speaker 6: to lead to a surplus in queue for a glut
[11:47] Speaker 6: in twenty twenty seven, and that's just now being firmly
[11:49] Speaker 6: challenged each day. So there's a lot of markets are
[11:52] Speaker 6: moving around, and that's what we're trying to price that
[11:54] Speaker 6: risk and price that certainty, and that's why we're just
[11:57] Speaker 6: it's very, very confusing at the moment.
[11:59] Speaker 5: We just got to follow price, Chris.
[12:03] Speaker 7: Something that's somewhat different this time compared to let's call
[12:06] Speaker 7: it late March. The whole of April is that when
[12:11] Speaker 7: you look at so AI managed to keep the boat afloat.
[12:13] Speaker 7: When you look on an index level, very very simply,
[12:17] Speaker 7: AI started to rotate. We've started to see some wobbles there.
[12:20] Speaker 7: Why do you think we are getting that reaction in
[12:22] Speaker 7: the equity markets? Or am I just overthinking the connection there?
[12:28] Speaker 6: No, I think you're You're wise in that assumption. So
[12:32] Speaker 6: I think probably what the thing is is that, yeah,
[12:34] Speaker 6: when you've got that narrow leadership, that consultation in breadth,
[12:37] Speaker 6: is that we we yeah, we saw this the index
[12:41] Speaker 6: being fairly well supported because the heavyweights were controlling us.
[12:44] Speaker 6: Now what we're seeing, obviously is this idea about a
[12:46] Speaker 6: broadening of ownership, and people are looking not just within
[12:50] Speaker 6: styles and factors, but within AI itself.
[12:52] Speaker 5: It's so, yeah, where do we want to go? Do
[12:54] Speaker 5: you want to come out of memory?
[12:55] Speaker 6: Do we want to redistribute that into into other areas
[12:57] Speaker 6: of AI? Do we want to go more into which
[13:00] Speaker 6: has been a big trade recently and nothing that people
[13:02] Speaker 6: are starting to say, well, we want those strong cash
[13:04] Speaker 6: flow businesses, we want the low beta businesses at the moment,
[13:07] Speaker 6: and go a bit more defensive. So there is a
[13:10] Speaker 6: broadening out as we go into earning season of ownership.
[13:14] Speaker 6: And what that means is people have been sort of
[13:15] Speaker 6: becoming more market weight in various parts of the AI spectrum,
[13:19] Speaker 6: the semis. And therefore, I would say, right now, if
[13:23] Speaker 6: we were to see WTI crew pushing firmly above eighty,
[13:26] Speaker 6: if we were to see Brent pushing up into the
[13:29] Speaker 6: nineties and volatility spiking, and then people are really concerned
[13:33] Speaker 6: about what's happening in inflation manifesting again. Inflation expectations which
[13:38] Speaker 6: collapsed recently start pushing back up. People start pricing a
[13:42] Speaker 6: sixty percent chance of July high two and a half
[13:45] Speaker 6: three hikes by March next year. Then what happens in
[13:48] Speaker 6: the equity market is those drawdowns will be more pronounced
[13:51] Speaker 6: than what we saw before because that leadership is being
[13:53] Speaker 6: called into question and those stocks which are supported the
[13:56] Speaker 6: index don't carry that weighting. So I think in this dynamic,
[14:00] Speaker 6: if the market is challenged the right tail risks really
[14:02] Speaker 6: pick up, then the extent of the drawdowns that we're
[14:04] Speaker 6: going to see in the equity at an index level
[14:06] Speaker 6: will be more pronounced.
[14:09] Speaker 7: Is there anything in the earning season coming up? So
[14:13] Speaker 7: three major themes are intersecting. You mentioned geopolitics rereading its
[14:16] Speaker 7: ugly head again, AI is rotating, broadening out, and you
[14:19] Speaker 7: have an earning story that's coming through pay the picture
[14:21] Speaker 7: for us. He's next for a week in the equity
[14:23] Speaker 7: markets as we move into the thick of summer too.
[14:25] Speaker 5: Fourth element there well banks as well.
[14:29] Speaker 6: I mean, what we're going to see on the net
[14:30] Speaker 6: interest income relative to margins, I mean that's going to
[14:33] Speaker 6: be a big one there. And what we're going to
[14:34] Speaker 6: see for is it going to be any sort of
[14:36] Speaker 6: tepid sign of loan.
[14:37] Speaker 5: Growth coming through?
[14:37] Speaker 6: But I mean for me as a trader, it's really
[14:39] Speaker 6: about the idea that the average stock in the market
[14:42] Speaker 6: is priced for earning stay moves are just over five percent,
[14:45] Speaker 6: which is punchy. I think it might actually be underpricing it.
[14:48] Speaker 6: The number of companies that we've seen recently that have
[14:51] Speaker 6: ten percent movies on the day of earnings have been
[14:53] Speaker 6: increasing to the highest level for some time, and I
[14:56] Speaker 6: think given where the market's all time highst just off
[14:59] Speaker 6: all time highs, there is just going to be no.
[15:01] Speaker 5: Tolerance for error.
[15:03] Speaker 6: But that said, I think what we're going to be
[15:05] Speaker 6: looking at is companies that have rich positioning that have
[15:10] Speaker 6: a really good story that the market still likes that
[15:13] Speaker 6: sells off because the numbers are in line with expectation,
[15:17] Speaker 6: they haven't blown the lights out that sell off. I
[15:18] Speaker 6: think when you see those kind of conjecture, those sell
[15:21] Speaker 6: offs will be a really good buying opportunity. So they're
[15:23] Speaker 6: the sort of businesses that we're looking from from a
[15:25] Speaker 6: trading perspective. Positioning comes out still like the story, nothing's
[15:29] Speaker 6: really changed, so just made expectations, and I think that's
[15:31] Speaker 6: where they're the places you want to be buying the dip.
[15:33] Speaker 6: But yeah, from a from a big level, we're looking
[15:36] Speaker 6: at anything around sort of cyclical story We're still looking
[15:39] Speaker 6: at the idea about hyperscalar demand, the investment in data centers,
[15:44] Speaker 6: and whether that continues at the pace which we expect.
[15:48] Speaker 6: We see after the earning season, things like n video
[15:50] Speaker 6: gets more of a capitalist and we start seeing rotation
[15:52] Speaker 6: back into the AI story at the expense of some
[15:55] Speaker 6: of the low volatility plays. So yeah, there's a lot
[15:57] Speaker 6: going on, but certainly yeah, I think my tactic is
[16:00] Speaker 6: to buy those businesses that meet expectations but get sold
[16:03] Speaker 6: off because positioning is riched, and then we're looking to
[16:05] Speaker 6: buy the pullbacks into those businesses.
[16:07] Speaker 4: I still want us as Chris Western had a research
[16:09] Speaker 4: at Pepperstone Group. Chris, it's interesting we ended the last
[16:12] Speaker 4: conversation talking about, you know, the prefer strategy is still
[16:16] Speaker 4: to buy on dips here right now, what are you
[16:19] Speaker 4: still looking at those those pockets of opportunities for you?
[16:21] Speaker 4: I mean, I want to talk about chips in particular.
[16:24] Speaker 4: Here there's this unwine that we're seeing in crea as
[16:26] Speaker 4: the light. Would that still be a buying opportunity for you?
[16:31] Speaker 5: I wouldn't. I'm not.
[16:31] Speaker 6: I mean, career is a bit a bit, a bit
[16:34] Speaker 6: too crazy for me at the moment. I mean I
[16:35] Speaker 6: think there's you know, you still are talking about two
[16:38] Speaker 6: stocks in the space, and we've got this sort of
[16:41] Speaker 6: the various flow based effects from the leverage dtfs on
[16:43] Speaker 6: single stocks, which just you know, So for me, I'll
[16:47] Speaker 6: be if I'm if I'm wanting to express the view
[16:49] Speaker 6: on memory, I'm still going in a micron on in
[16:52] Speaker 6: that space. I think that's probably where you want to
[16:53] Speaker 6: be going. The volatility is still there, which is great
[16:57] Speaker 6: for traders in today and and sort of short term,
[16:59] Speaker 6: but just getting sort of less on the flow based
[17:02] Speaker 6: effects on that situation. But I think what we see
[17:05] Speaker 6: now is people the intra day correlations and the realized
[17:09] Speaker 6: correlations and imply correlations not just in the S and
[17:12] Speaker 6: P they are a six percentile of the five year range,
[17:15] Speaker 6: but also those relationships within chips, within AI more broadly
[17:20] Speaker 6: have come right down. So people are so much more
[17:23] Speaker 6: selective than they've really ever been in that space, and
[17:26] Speaker 6: people are looking at it's not just a one size
[17:28] Speaker 6: fits all. I think once we get into the meter
[17:31] Speaker 6: earning season, we're going to know a lot more.
[17:33] Speaker 5: I think the video is going to be interesting.
[17:34] Speaker 6: What there's the market searching for a catalyst to really
[17:37] Speaker 6: sort of push it back above nicely, use that to
[17:40] Speaker 6: two hundred dollars as a platform going forward. And there's
[17:44] Speaker 6: just so much of the different factors that are working
[17:46] Speaker 6: on an idiosyncratic basis, and a lot of positioning has
[17:48] Speaker 6: come out. But I think people are starting to look
[17:52] Speaker 6: more at the space now about what's happening in China.
[17:55] Speaker 6: China putting data centers under the sea, they're doing the
[17:57] Speaker 6: open source model much for the demand seems to be there.
[18:00] Speaker 6: The US are now saying Trump saying that we want
[18:01] Speaker 6: to see more open source models from these spaces. So
[18:04] Speaker 6: it's a really difficult one now to come out and
[18:06] Speaker 6: just use it AI as a one size fit. So
[18:09] Speaker 6: all people are now looking at the space so much
[18:12] Speaker 6: more selectively, and those relationships have really broken down into
[18:15] Speaker 6: inter sector there.
[18:18] Speaker 7: Well, specifically on China. Since you talked about that, Is
[18:21] Speaker 7: there anything specific that's catching your eye.
[18:26] Speaker 6: Yeah, I mean we don't offer I don't look too
[18:29] Speaker 6: much of the individual stocks. Rather we're looking at as
[18:32] Speaker 6: more of a competitive player. I mean, it's not just
[18:34] Speaker 6: in the the Internet stocks, but you know what we're
[18:38] Speaker 6: seeing in space.
[18:39] Speaker 5: Exploration as well.
[18:40] Speaker 6: I think the US versus China and all those sort
[18:42] Speaker 6: of forms is very much there. But look, I think
[18:45] Speaker 6: global flows need to go somewhere, and I think people
[18:47] Speaker 6: are looking at probably the biggest risk not just to
[18:50] Speaker 6: the AI spaces and the chip chip stocks, but also
[18:54] Speaker 6: SpaceX as well. I mean, probably the biggest risk of
[18:56] Speaker 6: SpaceX at the moment is what's happening in China's exploration
[18:59] Speaker 6: as well. So really, for me from a risk management perspective,
[19:02] Speaker 6: it's about where those flows are going to go and
[19:04] Speaker 6: are people seeing a relative attractiveness in China, especially when
[19:09] Speaker 6: you know you've got the authorities, they're probably backing a
[19:11] Speaker 6: lot of you know, the movement that's taking place, and
[19:14] Speaker 6: those chips are very cheap in China on a relative
[19:16] Speaker 6: basis as well and very effective. So I think, yeah,
[19:19] Speaker 6: when we'll talk about individual names as such, but we
[19:21] Speaker 6: are seeing the idea that one of the biggest risks
[19:23] Speaker 6: of SpaceX and also obviously chips in the US is
[19:26] Speaker 6: what's happening in China and where those flows are going
[19:28] Speaker 6: to be going.
[19:31] Speaker 4: I think we covered oil. We covered equity markets quite
[19:34] Speaker 4: extensively in terms of risk assets and other acid classes
[19:37] Speaker 4: that you're looking at of the dollar in the rates
[19:40] Speaker 4: markets are moving, what are you looking out for there
[19:43] Speaker 4: in terms of what could lead to more of us
[19:44] Speaker 4: sustained sort of breakout of the dollar. Now, Chris.
[19:49] Speaker 6: Well, I think one of the things we're looking at
[19:50] Speaker 6: now is really what's happening in the real rate space.
[19:52] Speaker 6: I mean, it's driving nominals. We're seeing a breakout and
[19:55] Speaker 6: the new cycle highs. So you know, we've seen that
[19:59] Speaker 6: movement up in in the two year real rates, as
[20:01] Speaker 6: I say, to new highs. That's taking gold down as well.
[20:05] Speaker 6: But you know, the moves we're seeing in the dollar
[20:06] Speaker 6: are glacial on a relative basis. We obviously seeing very
[20:08] Speaker 6: high volatility re emerging in the crude markets. We're seeing
[20:12] Speaker 6: some buying of skew in inequities as people look to
[20:16] Speaker 6: hedge out some of that risk around single stocks, and
[20:19] Speaker 6: then in index levels. We go into earning season and
[20:21] Speaker 6: so the earnings one day average move is expected to
[20:24] Speaker 6: be up or down sort of five point one percent.
[20:26] Speaker 6: But yeah, I think that the dollar moves really I
[20:29] Speaker 6: think we are going to need to see continued move
[20:32] Speaker 6: up in real rates, not just in two's but across
[20:34] Speaker 6: the back end of the curve as well. And I
[20:37] Speaker 6: am a bit skeptical about what's happening in the Fed
[20:39] Speaker 6: rates pricing.
[20:40] Speaker 5: You know, as you say that the.
[20:44] Speaker 6: US dollar as is now pricing implying a forty four
[20:46] Speaker 6: percent probability that they hike in July, are just I
[20:50] Speaker 6: don't see it happening. I think the Feder obviously institutionally dubbish.
[20:53] Speaker 6: I know that we've been hearing positive retro or hawkish
[20:55] Speaker 6: directric I late, but yeah, I think when we can
[20:58] Speaker 6: look at this CPI number in the session ahead, is
[21:01] Speaker 6: it stale now? I mean the idea that the inflation
[21:04] Speaker 6: has peaked. A lot of people have been saying CPI
[21:07] Speaker 6: and pc have peaked and we'll dissipate. Is this now,
[21:09] Speaker 6: if we're going to see this oil back above ninety dollars,
[21:14] Speaker 6: and if we're seeing w t I bucke firmly above,
[21:17] Speaker 6: firmly high then and we're seeing agricultural prices higher, is
[21:21] Speaker 6: this going to lead to a rethink of that situation?
[21:23] Speaker 6: Can the Fed raise rates in a situation where that
[21:27] Speaker 6: situation is moving around so violently It's just a very
[21:30] Speaker 6: difficult one to do.
[21:31] Speaker 3: So.
[21:31] Speaker 6: I think we need to see that interest rate price
[21:33] Speaker 6: and continue to build, and the real rate story to
[21:36] Speaker 6: continue to push higher and I think ye, the dollar
[21:38] Speaker 6: continues to kick there.
[21:40] Speaker 2: That is Chris Weston, head of research at Pepperstone Group,
[21:43] Speaker 2: speaking with Bloomberg TV host David and Glace and Yvonne Mann,
[21:46] Speaker 2: bringing you their conversation here on the Daybreak Asia Podcast.
[21:51] Speaker 2: Thanks for listening to today's episode of the Bloomberg Daybreak
[21:54] Speaker 2: Asia Edition podcast. Each weekday, we look at the story
[21:58] Speaker 2: shaping markets, finance, and geopolitics in the Asia Pacific. You
[22:02] Speaker 2: can find us on Apple, Spotify, the Bloomberg Podcast YouTube channel,
[22:06] Speaker 2: or anywhere else you listen. Join us again tomorrow for
[22:09] Speaker 2: insight on the market moves from Hong Kong to Singapore
[22:13] Speaker 2: and Australia. I'm Doug Prisoner and this is Bloomberg

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