Latest / Trend Watch / Episode 95: A World Under Pressure... Q&A with Neil Howe

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Episode 95: A World Under Pressure... Q&A with Neil Howe · Trend Watch

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  Ready to take a deeper look at where history,
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  politics,
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  and economics all intersect?
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  SPEAKER_01: Well then, you've come to the right place.
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  SPEAKER_01: Each week,
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  SPEAKER_01: here's where we pull back the headlines and focus on the big trends,
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  SPEAKER_01: the stuff that actually shapes our future.
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  SPEAKER_01: Through the noise, we focus on the signal.
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  SPEAKER_01: I'm your host, Neil Howe, and this is Trend Watch.
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  SPEAKER_01: Today is May 7th, 2026, and this is Trend Watch.
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  SPEAKER_01: Welcome back, everyone.
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  SPEAKER_01: As usual, I have on my fellow analyst, Christian Ford.
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  SPEAKER_01: So, Christian, as I so often ask, how was your week?
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  SPEAKER_00: Oh, it was good, Neil.
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  SPEAKER_00: My parents came down from Maine to visit and,
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  SPEAKER_00: you know,
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  SPEAKER_00: we did all the classic DC things,
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  SPEAKER_00: but we went somewhere I've never been before.
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  We went to the Smithsonian's National Air and Space Museum
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  that's located next to
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  SPEAKER_00: Dulles,
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  SPEAKER_00: the one outside of DC that has all the...
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  SPEAKER_00: Yeah,
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  SPEAKER_00: the big one.
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  SPEAKER_01: The one with the huge things.
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  SPEAKER_01: Yeah, yeah.
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  SPEAKER_00: And that was cool.
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  SPEAKER_00: I had never been there.
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  SPEAKER_00: You know, you see the space shuttles there, the SR-71 Blackbird.
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  SPEAKER_00: I thought it was pretty cool to see all those planes up close.
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  SPEAKER_01: Yeah, that's the enormous one, right?
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  SPEAKER_01: With the big hangers,
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  SPEAKER_01: you couldn't bring that stuff down to the little building down on...
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  SPEAKER_01: Where is it?
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  SPEAKER_01: I guess that's Independence, right?
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  SPEAKER_00: Independence and 14th Street or wherever that is.
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  SPEAKER_01: Yeah.
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  SPEAKER_01: I think that's... Yeah, and it shows you some of those big beasts.
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  SPEAKER_01: Yeah, the Blackbird with which we spied on the Soviet Union, right?
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  SPEAKER_01: Yes.
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  SPEAKER_01: In its later years.
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  SPEAKER_01: As for me,
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  SPEAKER_01: I am dealing with spring out on the farm,
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  SPEAKER_01: taking care of weeds and using plenty of glyphosate.
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  Anyone has any particular problem with Roundup,
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  I'm sorry you're talking to the wrong person.
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  SPEAKER_01: I really couldn't care less.
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  I've looked at all these studies about how mice have
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  practically drunk this stuff
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  SPEAKER_01: their entire lives and apparently have no ill effects.
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  SPEAKER_01: So it's quite all right with me.
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  SPEAKER_01: You know, that's a big deal in rural areas, right?
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  SPEAKER_01: Dealing with the proliferation of life.
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  SPEAKER_01: Just keeping it in check.
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  SPEAKER_01: So that's a large part of what I do.
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  SPEAKER_01: We have,
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  it's been two weeks since we last had our show and a lot of
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  different kinds of
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  SPEAKER_01: things are happening around the world.
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  SPEAKER_01: I guess
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  SPEAKER_01: This time,
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  SPEAKER_01: maybe we could do a kind of a round robin where you just simply,
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  SPEAKER_01: you know,
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  SPEAKER_01: bring up the various things that have gone on,
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  SPEAKER_01: starting,
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  SPEAKER_01: of course,
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  SPEAKER_01: with the Iran war.
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  SPEAKER_01: And we can go from there.
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  SPEAKER_01: So if you want, let's just go into the economy and cover that.
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  SPEAKER_01: I can give you my thoughts about what's happening now.
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  SPEAKER_01: And we can, you know, start as usual.
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  SPEAKER_00: All right, Neil.
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  Well,
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  the S&P closed down today 0.38%,
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  and over the last five trading days is up 1.78%.
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  As for the global Dow,
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  that closed down today 0.5%,
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  and over the last five days is up 1.44%.
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  As for the VIX,
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  that closed at 17.03%,
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  so significantly lower than what we have been seeing.
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  SPEAKER_00: And as for the 10-year Treasury,
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  SPEAKER_00: that was up today 0.034%,
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  SPEAKER_00: and over the last five days is up one basis point.
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  Yeah,
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  you don't often see the VIX go down when the market goes down
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  nearly half a percent.
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  SPEAKER_01: And a lot of that was simply due to the fact that oil prices were down,
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  SPEAKER_01: although they came back,
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  SPEAKER_01: you know,
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  SPEAKER_01: fascinatingly enough.
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  SPEAKER_01: I'm going to get back to this in a second, right?
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  SPEAKER_01: No one knows where to price oil right now.
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  SPEAKER_01: And that's sending the market crazy.
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  SPEAKER_01: I think
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  You can talk about the last two weeks the market has been
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  undecided between going
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  SPEAKER_01: for the moon on AI and dealing with a war.
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  SPEAKER_01: And dealing with a war means it's going to have a bad day.
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  SPEAKER_01: And typically the dollar will be up.
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  Interest rates are fascinatingly kind of going either direction
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  on those days.
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  SPEAKER_01: But the dollar will be up.
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  and all the tech-related stuff will not be doing much and then
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  things go toward,
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  well,
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  very
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  SPEAKER_01: Things would go more toward consumer defensives and stuff like that.
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  SPEAKER_01: And then on the other day, the opposite happens, right?
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  SPEAKER_01: It all goes toward tech.
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  So the way you play this as an investor is sort of go a little
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  bit more for the
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  SPEAKER_01: barbell strategy,
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  SPEAKER_01: right?
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  SPEAKER_01: So if you were actually doing options,
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  SPEAKER_01: you'd be definitely in on the straddle trade or something like that.
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  SPEAKER_01: You're just looking for a lot of volatility up or down.
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  um and to some extent I think that's the way people are playing
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  it today was
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  different because today uh it was not an AI day and it was
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  definitely not a um uh
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  you know oil price energy uh sector up today right it was sort
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  of uh a weird day
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  right and we may have more weird days in the future which is
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  going to make
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  investing and dealing with this market even harder um tell well
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  you might as well
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  SPEAKER_01: get into the uh uh to the uh
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  SPEAKER_01: economic indicators.
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  SPEAKER_00: That's right, Neil.
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  SPEAKER_00: We have GDP growth, which came in at 2.0% in Q1.
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  SPEAKER_00: That's a rise from 0.5% growth in Q4.
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  SPEAKER_00: We also had the ISM PMIs for April.
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  SPEAKER_00: Manufacturing remained undeniable.
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  SPEAKER_00: changed at 52.7,
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  SPEAKER_00: retaining its highest level since August 2022,
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  SPEAKER_00: and services slightly declined from 54.0 to 53.6,
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  SPEAKER_00: but still quite strong.
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  SPEAKER_00: We also had the Jolts job openings for March,
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  SPEAKER_00: which fell by 56,000 to 6.9 million,
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  SPEAKER_00: but that was still above expectations of 6.8 million.
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  SPEAKER_01: Well, you know, that's it.
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  SPEAKER_01: I mean, the GDP was
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  SPEAKER_01: Much better showing than Q4,
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  SPEAKER_01: certainly not up to the stratospheric levels that we had in Q2 and Q3,
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  SPEAKER_01: at least initially.
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  SPEAKER_01: I think the market looks good from that point of view.
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  SPEAKER_01: Earnings are breaking expectations.
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  SPEAKER_01: It looks like GDP is okay.
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  SPEAKER_01: The
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  you know these ISM indicators look fine you were I think you
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  had some news out of
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  SPEAKER_01: Europe right which I think didn't look as good
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  SPEAKER_00: Yeah, we had Eurozone PMIs for April.
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  Manufacturing rose from 51.6 to 52.2,
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  highest reading in nearly four years.
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  SPEAKER_00: So pretty good on that front.
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  SPEAKER_00: But services, that declined from 50.2 to 47.6.
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  SPEAKER_00: That's the first decline in a year.
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  SPEAKER_00: And that was caused by a dramatic decline in new orders.
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  SPEAKER_01: Yeah, and I think that just has to do with demand destruction, you know.
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  where because of the energy crunch people have to do with less
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  and so what are they
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  doing well they're doing through most of the economy which is
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  services right what
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  else do we want to talk about we could if you want talk a
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  little bit about oil
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  SPEAKER_01: since that seems to be looking at the market you know
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  SPEAKER_01: As far as I see it, I mean, this is the usual arithmetic.
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  SPEAKER_01: You have about normally 18 million barrels a day through the straight.
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  SPEAKER_01: After all, you exclude all the bypasses and so on.
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  SPEAKER_01: It's about 12, right?
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  SPEAKER_01: And net new supply from other areas of the world.
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  SPEAKER_01: It's about 12 million barrels a day.
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  SPEAKER_01: That's over about two months now.
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  SPEAKER_01: So it's about 10% of global consumption.
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  SPEAKER_01: Demand destruction In other words,
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  people consuming less Mainly in the Mideast and Asia That
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  subtracts another four So
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  you have basically 8 million barrels of oil per day That has to
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  come from somewhere
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  SPEAKER_01: And consider over two months That's about 480 million barrels,
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  SPEAKER_01: right?
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  SPEAKER_01: Half a billion barrels
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  SPEAKER_01: Well,
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  SPEAKER_01: strategic reserves,
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  SPEAKER_01: we have 400 million barrels coming out of that,
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  SPEAKER_01: 100 thus far,
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  SPEAKER_01: 75 more through the end of June.
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  SPEAKER_01: That'll be tapering off, actually.
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  SPEAKER_01: Turns out you can only take those strategic reserves out so fast,
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  SPEAKER_01: particularly after our own strategic reserves.
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  You take them out too fast and actually the walls of the caves
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  begin to actually crumble,
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  right?
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  SPEAKER_01: Well, we already took them down during the Biden era.
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  SPEAKER_01: Remember,
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  SPEAKER_01: I mean,
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  we wanted to make sure that the voters are not inconvenienced
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  due to the situation
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  SPEAKER_01: in Ukraine.
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  SPEAKER_01: So as a result, we are way down from where we thought we were, right?
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  SPEAKER_01: Well, anyway, so you have that.
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  SPEAKER_01: So after you take out strategic reserves,
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  SPEAKER_01: that still leaves about 5 million barrels of oil per day.
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  SPEAKER_01: Where is that coming from?
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  SPEAKER_01: Well, it's coming out of global oil inventories.
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  So you have all of the ships afloat,
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  of which there are many fewer now than there were before.
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  SPEAKER_01: That represents a lot of extra oil.
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  I guess that's going to have to be refilled right back when
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  we're back to full operation again.
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  SPEAKER_01: But that represents actually a pretty big lag.
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  SPEAKER_01: And then you've got all the other,
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  SPEAKER_01: you know,
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  SPEAKER_01: gas tanks,
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  SPEAKER_01: fuel tanks and oil bunkers and all kinds of other stuff.
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  SPEAKER_01: It's amazing,
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  SPEAKER_01: actually,
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  SPEAKER_01: how much inventory there is in the system,
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  SPEAKER_01: even in the pipelines themselves,
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  SPEAKER_01: assuming you don't want to use them anymore.
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  SPEAKER_01: So that's kind of the situation we're in.
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  SPEAKER_01: And what's fascinating to me is you look at all of these people,
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  SPEAKER_01: energy experts,
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  SPEAKER_01: and they're not quite sure when it really pinches.
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  SPEAKER_01: One issue is,
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  SPEAKER_01: is that when the inventories get low enough,
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  SPEAKER_01: people actually start resisting drawing them any lower,
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  SPEAKER_01: right?