Latest / Merryn Talks Money / Markets Wrap: Ceasefire Uncertainty, Energy Supply Shocks, and Chancellor Miliband?

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Markets Wrap: Ceasefire Uncertainty, Energy Supply Shocks, and Chancellor Miliband? · Merryn Talks Money

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  Speaker 1: Bloomberg Audio Studios, Podcasts, Radio News.
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  Speaker 2: Welcome for the Marin Talks Money Market rap, where we
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  Speaker 2: talk about the biggest mats in the markets this week
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  Speaker 2: and what is driving them. I am Marin Sunset, Web
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  Speaker 2: Editor at Large for Bloomberg UK Wealth. John Staffick is
• 0:28
  Speaker 2: off this week, so we have invited the wonderful Helen Thomas,
• 0:31
  Speaker 2: founder and CEO of Blonde Money, to join us. Helen,
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  Speaker 2: I think will be familiar with quite a few regular
• 0:36
  Speaker 2: listeners of the podcast, and for good reason.
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  Speaker 3: Helen, welcome.
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  Speaker 4: That's a great pleasure to be here. Thank you very
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  Speaker 4: much for inviting me. Maren, Oh my pleasure.
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  Speaker 3: Now listen.
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  Speaker 2: You might find this irritating, but I'm going to try
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  Speaker 2: and talk really slowly today because I have had a
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  Speaker 2: significant number of complaints about speaking too fast.
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  Speaker 3: You can speak as fast.
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  Speaker 2: As you like, but I'm going to drag out the
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  Speaker 2: distance between my words so that people write in and say,
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  Speaker 2: please go back to speaking how you used to speak,
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  Speaker 2: because this is all right.
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  Speaker 3: So that's what's going to happen today.
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  Speaker 2: Right. So, over the last couple of days, there's either
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  Speaker 2: been lots of change in the war in the Middle East,
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  Speaker 2: or there has been no change.
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  Speaker 3: At all in the war in the Middle East.
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  Speaker 2: We have a cease fire that may or may not
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  Speaker 2: be a ceasefire. So people have started talking about not
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  Speaker 2: the fog of war, but the fog of ceasefire, which
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  Speaker 2: I think is quite clever really, So something may be happening,
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  Speaker 2: nothing may be happening. Markets yesterday or earlier in the
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  Speaker 2: week behaved as though something was happening. We saw some
• 1:30
  Speaker 2: phenomenal moves and stock markets after the maybe maybe not
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  Speaker 2: ceasefire was announced, even the foot seat two point fifty,
• 1:36
  Speaker 2: which is a market that we keep trying to convince
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  Speaker 2: people to be more interested, and then they all went
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  Speaker 2: up about four percent, so that was interesting. But of
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  Speaker 2: course here we are with it maybe not being a
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  Speaker 2: ceasefire after all, and markets tumbling, not tumbling, but beginning
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  Speaker 2: to edge down a little bit.
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  Speaker 3: So a lot of fog there.
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  Speaker 2: But I think what I really want to talk to
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  Speaker 2: you about, Helena, is not necessarily marg's going up a
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  Speaker 2: couple of percent here or down a couple of percent there,
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  Speaker 2: but the fact that regardless of whether there is a
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  Speaker 2: cease fire, isn't it ceasefire, Whether cesfire turns into a
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  Speaker 2: proper peace or not, the consequences of the last five weeks,
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  Speaker 2: particularly in energy terms, are going to remain with us
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  Speaker 2: for some time to come, and that is a very
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  Speaker 2: serious problem, in particular for the UK.
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  Speaker 1: Absolutely.
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  Speaker 4: So the way I think people need to look at this, so,
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  Speaker 4: let's this is a physical issue. It's had an overlap
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  Speaker 4: into financial markets. It's got political beginnings and it may
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  Speaker 4: have political ends, but the physical side of this can't
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  Speaker 4: be undone, right. So the way I've found useful to
• 2:35
  Speaker 4: look at this is the ever given ship. Do we
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  Speaker 4: remember this big ship that got stuck in the Suez
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  Speaker 4: Canal five years ago last month and there were all
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  Speaker 4: these memes and it was all kind of amusing at
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  Speaker 4: the time.
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  Speaker 1: There was a tiny little.
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  Speaker 4: Digger, little crane trying to get it out of Suez Canal.
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  Speaker 4: People were worried about the Amazon packages. It kind of
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  Speaker 4: consumed everyone that was still locked down. And you know,
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  Speaker 4: it was six days actually it was stuck for that's
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  Speaker 4: one ship in one waterway.
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  Speaker 1: It was stuck for six days.
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  Speaker 4: Three million barrels of oil were stuck and the all
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  Speaker 4: price did go up by six percent back then.
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  Speaker 1: But it got cleared. It got cleared.
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  Speaker 4: There was a backlog now there was a backlog of
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  Speaker 4: four hundred and fifty ships.
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  Speaker 1: It took a few.
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  Speaker 4: Days to get them through, but you know, another couple
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  Speaker 4: of weeks because thick tankers are in the wrong place
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  Speaker 4: and other tankers have had to go round, and frankly,
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  Speaker 4: the whole thing took about two months to really get
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  Speaker 4: back to where it was before. That was one ship
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  Speaker 4: six days. There are eight hundred ships sitting in the
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  Speaker 4: Persian Gulf according to the latest piece analysis I saw.
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  Speaker 4: We've also had a normal throughput of apparently around one
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  Speaker 4: hundred hundred and fifty ships per day through his Strait
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  Speaker 4: of Hormuz. Apparently, you know something like one hundred and
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  Speaker 4: fifty you have gone through the whole month of the
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  Speaker 4: last six weeks.
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  Speaker 1: That to me gets the scale of this.
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  Speaker 4: Across what what has missed, and of course production then
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  Speaker 4: the all production is shut down. Even if it which
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  Speaker 4: we open, it takes ages to just unload things, get people,
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  Speaker 4: get things started again.
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  Speaker 1: And if we go into the other end of it,
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  Speaker 1: if we.
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  Speaker 4: Go to Asia, which is one of the biggest recipients
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  Speaker 4: of a lot of this, it's not just oil, of course,
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  Speaker 4: it's all these other really important commodities for fertilizer in particular,
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  Speaker 4: you've got the problem of unloading at the other end
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  Speaker 4: because of petrol shortages and diesel shortages. So can the
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  Speaker 4: guys get to work to unload the tanker, to put
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  Speaker 4: it on whatever it goes on, to get down to
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  Speaker 4: the fields to get then fertilizer out, et cetera, et cetera.
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  Speaker 4: And we're just hitting the key point of when fertilizer
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  Speaker 4: has to arrive in places such that in June it
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  Speaker 4: can be on the fields ready to be deployed, and
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  Speaker 4: then of course get you a harvest, proper harvest in September.
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  Speaker 4: So we're literally in like a really key window here.
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  Speaker 4: And it's exponential with things like fertilizer. If you don't
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  Speaker 4: get that, the yield will fall dramatically if you even
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  Speaker 4: have five or ten or fifteen percent less fertilizer. So
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  Speaker 4: that is you know where we are today. Even whatever happens,
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  Speaker 4: even if this ceasfar is just remarkably brilliant and everything
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  Speaker 4: starts moving again, you know by the end of our
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  Speaker 4: phone call today.
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  Speaker 2: Yeah, Okay, So whatever happens, there's already fairly serious inflation
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  Speaker 2: baked in. Yeah, and not necessarily just inflation but a
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  Speaker 2: genuine supply problem, the one type of supply problem where
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  Speaker 2: supplier is more limited than it would be otherwise, and
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  Speaker 2: so prices go up. And then there's a more serious
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  Speaker 2: supply problem where it doesn't matter how much prices go up,
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  Speaker 2: you still can't get everything that you need.
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  Speaker 4: Absolutely. I mean, the jet fuel is a super interesting one.
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  Speaker 4: I'm kind of obsessed actually by air travel at the
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  Speaker 4: moment because so, for example, I was reading that in
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  Speaker 4: March twenty five percent of US jet fuel came to
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  Speaker 4: the UK. We became their top export destination because we
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  Speaker 4: weren't getting it from the Middle East.
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  Speaker 1: And that's just that was just in March.
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  Speaker 4: Now what's happening then is people start to outbid one
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  Speaker 4: another because they desperately need this stuff, and then what
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  Speaker 4: do you do. I mean, I'm fascinated. I'd love it, Mary,
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  Speaker 4: if you can get one of the airline bosses on.
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  Speaker 4: I don't even know how they think about this, right,
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  Speaker 4: the jets can't all get to where they need to
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  Speaker 4: if they can get to where long haul like Vietnam
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  Speaker 4: or something, Vietnams said, we're going to prioritize jet fuel
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  Speaker 4: for domestic flights.
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  Speaker 3: So how do you get back.
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  Speaker 1: How do you get back?
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  Speaker 4: India is talking about okay, we're going to cut it's
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  Speaker 4: very domestic, right, They're going to cut landing in parking
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  Speaker 4: fees for the Indian airlines for three months temporarily try
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  Speaker 4: and ease the problem with the cost pressure. So you
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  Speaker 4: know you're going to get a lot more activity.
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  Speaker 1: With the Indian airlines.
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  Speaker 4: What about airspace, I mean Cathay, Well, here's the flip
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  Speaker 4: to this. Cathay apparently is now doing more flights to
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  Speaker 4: Europe because you can fly. They can fly with China
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  Speaker 4: and Russia and obviously a lot of the European airlines.
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  Speaker 4: We're not going over Russia, and they are worries about
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  Speaker 4: going over over the Middle East still, of course, and
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  Speaker 4: I think that will persist for quite some time. So
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  Speaker 4: again I don't I don't want any of this to
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  Speaker 4: be alarming to people. I want them to be aware
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  Speaker 4: this is a very significant shock.
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  Speaker 1: Whatever the politicians figure out, that's.
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  Speaker 3: Interesting, isn't it.
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  Speaker 2: So Really, when you're flying long haul, you've got to
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  Speaker 2: add another risk on the top of this.
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  Speaker 3: I may get there, but when I get there, there
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  Speaker 3: are strong jobs in my flow.
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  Speaker 2: Maybe it canceled or very seriously delayed or because the
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  Speaker 2: LAN simply can't get hold of the fuel when when
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  Speaker 2: I get to where I'm.
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  Speaker 4: Going exactly, And I've struck by that Mervin King quote
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  Speaker 4: from the financial crisis where he said that you know,
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  Speaker 4: banks are international in life, but national in death, you know.
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  Speaker 1: So it's a bit like that.
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  Speaker 4: When you when the supply crunch comes, of course countries
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  Speaker 4: will try and put domestic supplies first and so. But
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  Speaker 4: but then there's a quid pro cro there of you know,
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  Speaker 4: the geopolitics on top, because okay, maybe the US then
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  Speaker 4: suddenly becomes this big exporter to certain nations, but what
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  Speaker 4: about China, you know, the other way around. So I
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  Speaker 4: mean it's sort of fascinating, but it's it's it's volatile.
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  Speaker 4: That's the one the one thing we sure of.
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  Speaker 2: And having that dependence on the US when one of
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  Speaker 2: the things that Trump has tweeted him and I'm saying,
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  Speaker 2: it's hard to keep up with social media accurity, but
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  Speaker 2: go get your own oil, Go get your own oil.
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  Speaker 2: And when you're the UK and you go, well, you know,
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  Speaker 2: actually we get quite a lot of from from you. Yes,
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  Speaker 2: adds another element of uncertainty.
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  Speaker 4: So the one thing about Donald Trump that I always
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  Speaker 4: like to refer to is in nineteen eighty seven, he
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  Speaker 4: took out a newspaper advert, which, by the way, is
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  Speaker 4: a bit strange for some real estate mogul in the
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  Speaker 4: US of the eighties. But here we go because it's
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  Speaker 4: worth everyone having a look. It's the headline is it's
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  Speaker 4: an open letter to America. Headline there's nothing wrong with
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  Speaker 4: America's foreign defense policy that a little backbone can't CUREO.
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  Speaker 4: And he says in it, he says, at the beginning
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  Speaker 4: of this letter to the world, the world is laughing
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  Speaker 4: at America's politicians as we protect ships we don't own,
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  Speaker 4: carrying oil we don't need, destined for allies who won't help.
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  Speaker 1: He said that in nineteen eighty seven.
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  Speaker 3: God he has not changed his mind on stuff.
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  Speaker 1: He has not, by the way, the end of that letter.
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  Speaker 4: His analysis for sorting this out is end our huge deficits,
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  Speaker 4: reduce our taxes, and let America's economy grow unencumbered by
• 8:54
  Speaker 4: the cost of defending those who can easily ford to
• 8:56
  Speaker 4: pay us for the defense of their.
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  Speaker 1: Freedom, which is pretty much you know where he's at.
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  Speaker 4: So there is this sort of he is, you know,
• 9:04
  Speaker 4: somewhat erratic in the way he conducts himself by tweet,
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  Speaker 4: but his theory of life has been fairly consistently.
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  Speaker 3: Very consistent.
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  Speaker 1: Fascinating anyway, anyway, thanks for that.
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  Speaker 3: Moving moving back to the situation in the UK finds
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  Speaker 3: itself in.
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  Speaker 2: Yes, so we have this inflation probably built in now
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  Speaker 2: for the next but I don't know how long, but
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  Speaker 2: for a fairly lengthy period of time at least depending
• 9:32
  Speaker 2: on how quickly things get resolved or not.
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  Speaker 3: What does that mean for us? We've already seen.
• 9:36
  Speaker 2: Mortgage rates go up, for example, the housing marketing in
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  Speaker 2: all sorts of trouble it was before. But rising mortgage
• 9:41
  Speaker 2: makes rates don't exactly help people already having a lot
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  Speaker 2: of trouble selling their houses, particularly in central London.
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  Speaker 3: But that's just an immediate impact. What happens over the next.
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  Speaker 4: Year, Well, I think in a way you couldn't have
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  Speaker 4: come up with a more toxic shock for Britain because
• 9:57
  Speaker 4: we already had some of the highest energy costs, which
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  Speaker 4: Merin I know you have been absolutely on top of
• 10:03
  Speaker 4: over the last few years.
• 10:05
  Speaker 3: See, we are very irritated by that on this podcast,
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  Speaker 3: but taking me as it is not necessary.
• 10:09
  Speaker 4: Yeah, exactly indeed, so we have those very high energy
• 10:13
  Speaker 4: and electricity costs. We've had politicians of various stripes making
• 10:17
  Speaker 4: decisions over the years that have contributed to that and
• 10:20
  Speaker 4: have contributed to a lack of storage, which of course
• 10:22
  Speaker 4: is going to come into full salience at this point
• 10:26
  Speaker 4: of supply shortages. So you've got the energy but element
• 10:29
  Speaker 4: to this, and you've got the inflationary element where the
• 10:32
  Speaker 4: UK has tended to be a slightly more inflationary economy,
• 10:36
  Speaker 4: and again political decisions have exacerbated that with minimum wage rises,
• 10:41
  Speaker 4: national insurance increases, you know, other political decisions.
• 10:44
  Speaker 1: So in a way you've got this. It's very toxic.
• 10:46
  Speaker 2: Now.
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  Speaker 4: The irony is that the UK apparently has this extremely
• 10:51
  Speaker 4: big majority government which should be able to manage and
• 10:55
  Speaker 4: master all of this. But as we well know, that
• 11:00
  Speaker 4: juda majority masks a huge, huge split underlying the Labor Party.
• 11:05
  Speaker 4: So the Labour parties both government and opposition, and at
• 11:09
  Speaker 4: this moment of great volatility, effectively, you know, Kiss Starmer
• 11:14
  Speaker 4: has been sidelined and although he remains in office, there's
• 11:19
  Speaker 4: this book about him where he talks one of his
• 11:21
  Speaker 4: someone in his world talked about him being like at
• 11:24
  Speaker 4: the front of the DLR the Docklands Rollay in London.
• 11:26
  Speaker 4: That effectively someone put him at the front of the train,
• 11:29
  Speaker 4: but he's not actually driving it, and where Morgan McSweeney
• 11:32
  Speaker 4: used to drive it and is no longer around. Ed
• 11:35
  Speaker 4: Miliband has very much stepped into the forefront of course
• 11:38
  Speaker 4: as Energy Secretary, but also a standard bearer for the
• 11:42
  Speaker 4: left of the Labor Party.
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  Speaker 2: Yes, so interesting. I mean you would think that if
• 11:46
  Speaker 2: a kissamer had any power, Ed Miliband would no longer
• 11:49
  Speaker 2: be Energy Secretary. To the fact that he hangs out
• 11:51
  Speaker 2: to that job suggest that the power lies much more
• 11:54
  Speaker 2: with him than with anyone else in government.
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  Speaker 4: Absolutely, and you can see from Ed Miliband, I mean
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  Speaker 4: he's really quite got almost religious zeal about his position
• 12:03
  Speaker 4: on moving to more renewable sources of energy and he
• 12:08
  Speaker 4: has been doubling down on how this means that and
• 12:11
  Speaker 4: you know what, it's an argument. It's an argument to
• 12:13
  Speaker 4: say it means that we must become more self efficient.
• 12:16
  Speaker 4: We should do that through heat pumps, and we should
• 12:20
  Speaker 4: do it through wind farms and through solar and all
• 12:22
  Speaker 4: of this.
• 12:23
  Speaker 3: There are other ways that the UK can become more
• 12:25
  Speaker 3: se sufficient in energy.
• 12:26
  Speaker 4: Well, go on Maren perhaps we could use some of
• 12:29
  Speaker 4: our own fossil fuels.
• 12:32
  Speaker 1: Indeed, indeed exactly.
• 12:34
  Speaker 4: But here's the thing, because of the again, we're a
• 12:37
  Speaker 4: quite a key moment of course in as I say,
• 12:40
  Speaker 4: the leadership of the Labor Party, where there was this
• 12:45
  Speaker 4: you know, rumbling warfare that was going on, and effectively
• 12:49
  Speaker 4: sort of the centrist moderate element have been diminished by
• 12:54
  Speaker 4: the demise of McSweeney and Manulssen, and there's sort of
• 12:58
  Speaker 4: been a rise in the left and look ed Millivan
• 13:00
  Speaker 4: is on track to become chancellor. That's how this all
• 13:04
  Speaker 4: looks after a very likely soggy set of elections in May.
• 13:09
  Speaker 2: How will that happen? Why would it be after these elections?
• 13:11
  Speaker 2: And if it is after these elections, why would.
• 13:13
  Speaker 3: You do it in with Milivan?
• 13:15
  Speaker 4: In effect, there already has been a change of leader
• 13:18
  Speaker 4: because of that shift I said, where the sort of
• 13:21
  Speaker 4: modern right wing crew have gone and the left are
• 13:24
  Speaker 4: much more dominant. It was already happening anyway. Obviously, look
• 13:27
  Speaker 4: at all the U turns on tetemic policies like the
• 13:29
  Speaker 4: two child benefit cap.
• 13:31
  Speaker 1: So it was already headed in that direction. You know,
• 13:33
  Speaker 1: we got to that point on the ninth of February.
• 13:35
  Speaker 4: I think it was where Annasawa was calling for Starmer
• 13:39
  Speaker 4: to go and the cabinet waited. Now in action also
• 13:43
  Speaker 4: creates change politically, so effectively, the left who are.
• 13:48
  Speaker 1: In the ascendancy know that they don't actually have to
• 13:51
  Speaker 1: change starm.
• 13:52
  Speaker 2: Okay, so we're not talking about standing him down, leaving
• 13:55
  Speaker 2: him as Prime Minister and replacing Reeves with Milivan, correct,
• 13:59
  Speaker 2: which takes away the last pillar of Dama's power.
• 14:03
  Speaker 1: Yeah, exactly.
• 14:18
  Speaker 4: So this is the other thing, right, But there's been
• 14:19
  Speaker 4: This government's really, as we know, really struggled in the polls,
• 14:22
  Speaker 4: actually hasn't had a really bad economic shock to deal
• 14:25
  Speaker 4: with until now. This is this is a real significant
• 14:30
  Speaker 4: global shock. As we've just talked about the knock on
• 14:33
  Speaker 4: ramifications for this. I mean, we think about and I
• 14:36
  Speaker 4: say this, I pick my words carefully because we're not
• 14:39
  Speaker 4: alarmists here, we're sensible people. But some countries are now
• 14:43
  Speaker 4: concerned about petrol shortages. There have been you know, people
• 14:47
  Speaker 4: dash into the pump to fill up with diesel and
• 14:49
  Speaker 4: petrol in Australia, in Sri Lanka, in Kenya and other places.
• 14:53
  Speaker 1: It has happened before.
• 14:54
  Speaker 4: In the UK, it last happened in September twenty twenty one.
• 14:56
  Speaker 4: I don't people remember when the HGV drivers get enough
• 15:00
  Speaker 4: of them and there was like a sort of localized
• 15:02
  Speaker 4: run on petrol in certain places. Now we are quite
• 15:04
  Speaker 4: self effient in petrol in this country.
• 15:05
  Speaker 3: It has happened already.
• 15:06
  Speaker 2: I mean, you know, quitely the garages they live in
• 15:08
  Speaker 2: Scotland is you know quite a few of the garages
• 15:10
  Speaker 2: here have been out of petrol recently, exactly.
• 15:12
  Speaker 3: People topping up when they wouldn't have otherwise.
• 15:14
  Speaker 2: You're saying, well, I better go fill the tank whatever
• 15:16
  Speaker 2: it is, and then suddenly four garages have run out
• 15:18
  Speaker 2: and next thing you know, people notice that some have
• 15:21
  Speaker 2: run out and they're acute.
• 15:22
  Speaker 3: It takes it doesn't take.
• 15:23
  Speaker 4: Much, correct, So we're on a bit of a hair
• 15:26
  Speaker 4: trigger on shortages at the same time as the leadership
• 15:31
  Speaker 4: of the country are very unpopular, at the same time
• 15:34
  Speaker 4: as a cost of living shock on top of cost
• 15:36
  Speaker 4: of living problems that got us to this point. And
• 15:40
  Speaker 4: finally for everyone lit is this financial markets guilts. Guilts
• 15:44
  Speaker 4: are extremely volatile in both directions, it should be said.
• 15:47
  Speaker 4: So we've had a rally back in bonds well gone
• 15:49
  Speaker 4: the other way. Again, there's a time of us talking.
• 15:51
  Speaker 4: But you know every time they move, they sell off
• 15:53
  Speaker 4: or they rally. Guilt sell off more than everybody else,
• 15:55
  Speaker 4: will rally more than everyone else because of this political
• 15:57
  Speaker 4: risk premium. So added all together sort of political weakness,
• 16:02
  Speaker 4: the lurch to the left, toxic energy shock, cost of living,
• 16:06
  Speaker 4: rise of the Greens, and and oh, one more thing
• 16:10
  Speaker 4: about guilts.
• 16:11
  Speaker 1: One more thing about gilts. Two hundred and fifty two billion.
• 16:14
  Speaker 4: Pounds of guilt sales in marked this year for the DMO,
• 16:17
  Speaker 4: for this fiscal year. And I had a quick look
• 16:19
  Speaker 4: back at twenty twenty two, twenty three, the famous sort
• 16:21
  Speaker 4: of trust hunt year that was I think one hundred
• 16:25
  Speaker 4: and seventy billion pounds of guilts were issued. So although
• 16:28
  Speaker 4: it went up by more and it has come down,
• 16:30
  Speaker 4: that is that means this year will they'll need to
• 16:32
  Speaker 4: sell the government needs to sell half as many again
• 16:35
  Speaker 4: gilts as they did back in twenty twenty.
• 16:37
  Speaker 2: It does none of us make you feel that the
• 16:39
  Speaker 2: UK might be relatively near a physical crisis.
• 16:42
  Speaker 1: Of some kind. Yes, absolutely, And it's.
• 16:45
  Speaker 2: How does that unfold? I mean, you know, no one's
• 16:47
  Speaker 2: going to buy long term guilts at the moment. I mean,
• 16:49
  Speaker 2: they're certainly not for a balanced portfolio, or maybe they would,
• 16:52
  Speaker 2: I don't know, when you know, yields.
• 16:54
  Speaker 1: And more attractive.
• 16:54
  Speaker 4: I believe there's just been an auction and in the
• 16:56
  Speaker 4: time of us talking actually and it went okay, and
• 16:59
  Speaker 4: that's that.
• 16:59
  Speaker 1: There is another that right, there's a.
• 17:02
  Speaker 4: If you get a high yield, then you will get
• 17:04
  Speaker 4: you will get your auctions done and you there will
• 17:06
  Speaker 4: be interesting.
• 17:07
  Speaker 1: I absolutely agree.
• 17:08
  Speaker 2: But is the yield high enough to compensate for the
• 17:11
  Speaker 2: real risks here? I mean, I think, you know, I
• 17:13
  Speaker 2: don't know how many people spend their time trawling through
• 17:15
  Speaker 2: the actuality of them for the UK public finances, but
• 17:18
  Speaker 2: they're absolutely appalling. And we did have a guest on
• 17:20
  Speaker 2: the other day who suggested that at some point the
• 17:23
  Speaker 2: government will have no choice but to slash the coupon
• 17:27
  Speaker 2: on existing guilt, you know, old fashion full on financial
• 17:31
  Speaker 2: opperations like that.
• 17:33
  Speaker 4: Is yeah, that is a I think we can These
• 17:36
  Speaker 4: are the kinds of things we need to consider because
• 17:38
  Speaker 4: we are, you know, we are heading into it kind
• 17:42
  Speaker 4: of a rolling it kind of be a slow motion crisis.
• 17:44
  Speaker 4: I mean nothing, It doesn't always have to be a
• 17:45
  Speaker 4: kind of Trustian implosion. It's it's just that constant ratchet
• 17:50
  Speaker 4: because the course as there's there is now going to
• 17:52
  Speaker 4: be a repricing in the world. We've seen a bit
• 17:54
  Speaker 4: of it, but now we have to reprice to a
• 17:56
  Speaker 4: more inflationary, permanent lot of output world. Now there are
• 18:02
  Speaker 4: going to be sort of stagflationy tendencies. So there is
• 18:04
  Speaker 4: an element where maybe Fronten Yield and Bank of England
• 18:07
  Speaker 4: and ECB may actually just try and hold on and
• 18:10
  Speaker 4: not do very much because you know that growth could
• 18:12
  Speaker 4: be stogging. But if we go into a recession in
• 18:15
  Speaker 4: the UK again, you'll need to issue more guilts because
• 18:17
  Speaker 4: there'll be more automatic stabilizers.
• 18:18
  Speaker 1: And all of that going on.
• 18:20
  Speaker 4: And if you get more inflation, you get higher coupon
• 18:22
  Speaker 4: payments and all. It's a bit of a toxic mess.
• 18:25
  Speaker 4: We all know about it, Mary, and you have talked
• 18:26
  Speaker 4: about it for many years, and you've had a number
• 18:29
  Speaker 4: of excellent guests talk about this on your podcast. I think.
• 18:33
  Speaker 4: But the reason I think we're in quite a key
• 18:35
  Speaker 4: moment is general levels of volatility markets a quite high.
• 18:40
  Speaker 4: We'd had a very good run for quite some time,
• 18:42
  Speaker 4: it was relatively benign. This is a genuine shock that
• 18:45
  Speaker 4: no QE, no politician, nobody can sort it out. Even
• 18:51
  Speaker 4: this spr release, right, the draw from the Strategic Petroleum
• 18:54
  Speaker 4: Reserve was going to get up to about two million
• 18:56
  Speaker 4: a day. I hasn't got there yet, but there are
• 18:57
  Speaker 4: eight million barrels a day. Short would take me down barrowsing.
• 19:01
  Speaker 4: I mean, it's just it's not there. So you know, again,
• 19:05
  Speaker 4: I'm a genuinely and optimistic person. I know I sound pessimistic,
• 19:09
  Speaker 4: but I want people to be sort of realistic and prepared.
• 19:13
  Speaker 4: I mean, one of the things that could happen is
• 19:14
  Speaker 4: in rather than guildts.
• 19:15
  Speaker 1: It could be the currency.
• 19:17
  Speaker 4: It could be the pound that takes some of the brunt,
• 19:19
  Speaker 4: but again, unfortunately if the pound falls, you tend to
• 19:21
  Speaker 4: get more inflationary pressures.
• 19:22
  Speaker 1: Again, it's just.
• 19:27
  Speaker 4: I guess I'd put it this way. We've focused for
• 19:29
  Speaker 4: quite a long time on the political risk. Now there's
• 19:32
  Speaker 4: a genuine economic risk that's now sort of mixed in
• 19:36
  Speaker 4: with that political risk, which is making it the UK
• 19:38
  Speaker 4: particularly vulnerable.
• 19:39
  Speaker 2: Well, I suppose that you know they're combined, aren't they,
• 19:42
  Speaker 2: And that the political risk in the UK right now
• 19:44
  Speaker 2: is that our political class is simply not for the
• 19:46
  Speaker 2: job of dealing with the problems that exist around us,
• 19:48
  Speaker 2: and so you know, the political risk and the financial
• 19:51
  Speaker 2: risk are almost as one at the moment. And previously,
• 19:54
  Speaker 2: while we've had in the law twenty years, we've had
• 19:56
  Speaker 2: landless crises, but they've all been crisis.
• 19:59
  Speaker 3: That one or another you can print your way out of.
• 20:02
  Speaker 2: And this is the first crisis that we've had in
• 20:04
  Speaker 2: the last couple of decades that you simply can't press
• 20:06
  Speaker 2: the print button and make go away.
• 20:08
  Speaker 1: It's not going away exactly. You can't just you know,
• 20:11
  Speaker 1: the Bank of England cannot just produce diesel.
• 20:14
  Speaker 4: No.
• 20:15
  Speaker 2: No, So we are we are, as a regular guest
• 20:19
  Speaker 2: Alec Cutlet regularly says, we are the bit where platitude
• 20:23
  Speaker 2: made physics.
• 20:24
  Speaker 1: Oh that's it, he's done it.
• 20:26
  Speaker 3: He's got a little one right.
• 20:27
  Speaker 2: So is there anything that we can say here at
• 20:30
  Speaker 2: the end Helen to be optimistic? I mean, I suppose
• 20:32
  Speaker 2: we can say that with markets rebounding, people's portfolios are
• 20:34
  Speaker 2: going to look happier than.
• 20:35
  Speaker 3: They have in a while.
• 20:36
  Speaker 4: Yes, And you started this actually by saying, you know,
• 20:39
  Speaker 4: has anything really changed? It has changed, because it could
• 20:42
  Speaker 4: have got a lot worse, a lot quicker. So we
• 20:46
  Speaker 4: pulled back from that abyss. There is now something, There
• 20:50
  Speaker 4: is someone somewhere.
• 20:51
  Speaker 1: On either side. There's a dialogue, and that is good.
• 20:56
  Speaker 4: There will also be a redrawing of supply chains that
• 20:59
  Speaker 4: was kind of happening after Brexit for US, it was
• 21:01
  Speaker 4: happening after COVID for everyone Ukraine contributed. It's just more
• 21:05
  Speaker 4: of the same sense of Okay, where do I get
• 21:07
  Speaker 4: my staff? Am I is it secure?
• 21:09
  Speaker 1: Who do I trust? I should say, By the.
• 21:11
  Speaker 4: Way, in some respects, the UK is in a good position,
• 21:14
  Speaker 4: things like we've.
• 21:14
  Speaker 1: Got our link to Norway.
• 21:17
  Speaker 4: Great that we're getting this American jet fuel he throws
• 21:19
  Speaker 4: at massive airport and got loads of airlines here.
• 21:21
  Speaker 1: And people travel a lot. We're also Actually people.
• 21:25
  Speaker 4: Might not feel it, but I can imagine people listening
• 21:27
  Speaker 4: to this thing sort of shaking their head going, oh.
• 21:29
  Speaker 1: God, not again.
• 21:31
  Speaker 4: Actually though, it breeds resilience. I mean, even if the
• 21:33
  Speaker 4: political class have been.
• 21:35
  Speaker 2: I'm rolling my eyes really now, you know, It's like
• 21:39
  Speaker 2: it's like I would say, well, you know, when people
• 21:41
  Speaker 2: and bad stuff haven't your kids, everyone says, oh a
• 21:43
  Speaker 2: little does make them resilient a little, And sometimes you say, well,
• 21:46
  Speaker 2: how much resilience do.
• 21:47
  Speaker 1: You need there is Okay, that's a fair point. That
• 21:50
  Speaker 1: is a fair point.
• 21:51
  Speaker 4: Well, we got through the nineteen seventies in Britain and
• 21:55
  Speaker 4: there are many respects in it to our economy is
• 21:57
  Speaker 4: better weathered to deal with this. But but remember we
• 22:01
  Speaker 4: had quite a nasty political environment in the in the
• 22:04
  Speaker 4: nineteen seventies. But then it leads to you know what,
• 22:05
  Speaker 4: it leads to better outcomes in the end. We're now
• 22:09
  Speaker 4: having the discussion about our energy security.
• 22:11
  Speaker 2: You know that that is yeah, well, I suppose that
• 22:14
  Speaker 2: the key thing to say, The key thing is that
• 22:17
  Speaker 2: pretty much everything that is wrong with the UK is
• 22:19
  Speaker 2: a political choice. All these things can be changed. Our
• 22:24
  Speaker 2: energy security environment can be changed, our fiscal position can
• 22:28
  Speaker 2: be changed, you know, our housing market can be changed.
• 22:32
  Speaker 3: Everything that you look at and I can.
• 22:35
  Speaker 2: Maybe it's not my place to do it right now,
• 22:37
  Speaker 2: but I can tell you the solution of pretty much
• 22:39
  Speaker 2: every single one of the UK's problems. It just takes
• 22:42
  Speaker 2: a significant amount of political will and intelligence, rationality, and.
• 22:47
  Speaker 3: At some point believe in the market.
• 22:50
  Speaker 2: Well, we might be overstepping our brief yet, Hello, I
• 22:52
  Speaker 2: suppose we're talking about markets.
• 22:53
  Speaker 4: Well, it is about markets, no, but this is important
• 22:56
  Speaker 4: You're absolutely spot on because I often say, you know,
• 22:59
  Speaker 4: business is about what works and politics is about what sells,
• 23:03
  Speaker 4: and the best politicians combine that and that's when it works.
• 23:07
  Speaker 4: And so, you know, Lord Ashcroft has just released some
• 23:09
  Speaker 4: polls of the Green Party's policies and it's quite interesting
• 23:12
  Speaker 4: to see how you know, many of the British public
• 23:14
  Speaker 4: agree with. The one they agree with most is you know,
• 23:17
  Speaker 4: taxing energy companies more, and then the other one is taxing.
• 23:21
  Speaker 1: Villionaires, taxing billionaires.
• 23:23
  Speaker 4: I know, I know.
• 23:24
  Speaker 1: So it's interesting.
• 23:24
  Speaker 4: You know, you what is entirely rational for you, and
• 23:27
  Speaker 4: I think for many people in markets, and probably from
• 23:29
  Speaker 4: anybody listening to this, the interesting question is, well, how
• 23:31
  Speaker 4: do you prosecute that argument to the public.
• 23:33
  Speaker 1: You know, they don't all have to be on board.
• 23:35
  Speaker 4: In fact, with a very very fragmented four or five
• 23:38
  Speaker 4: parties to choose from, that means you only need to
• 23:40
  Speaker 4: sort of win twenty five percent plus one of the
• 23:42
  Speaker 4: vote and you could get quite a big majority. So
• 23:44
  Speaker 4: those are the reasons for optimism. It's like, do you
• 23:46
  Speaker 4: trust the British people? It's probably more the question to
• 23:49
  Speaker 4: end on about it.
• 23:50
  Speaker 2: I will let our listeners write in and tell us
• 23:52
  Speaker 2: how they feel about that. But look, I'll tell you
• 23:53
  Speaker 2: what you have done for me today, Helen, as you've
• 23:55
  Speaker 2: given this podcast a new slogan which we will. Damn
• 23:58
  Speaker 2: I've forgotten to talk slowly, haven't. I forgot almost immediately now.
• 24:01
  Speaker 3: Sorry everybody. I'll try talking clowly next time. But the
• 24:04
  Speaker 3: slogan that you've given us is it could have been worse.
• 24:09
  Speaker 2: I think that. I think that's really well. Maren talks money.
• 24:12
  Speaker 2: It could have been worse.
• 24:15
  Speaker 1: Very British, I think that isn't it.
• 24:16
  Speaker 3: Yeah, Helen, thank you so much for joining us today.
• 24:20
  Speaker 1: Thank you, it's been great.
• 24:28
  Speaker 2: Thanks for listening to this week's Marin Talks Money Debris.
• 24:31
  Speaker 2: If you like our show, rate review and subscribe wherever
• 24:33
  Speaker 2: you listen to podcasts. This episode was produced by Moses
• 24:36
  Speaker 2: and Avian Summersadi sound designed by Aaron Casper and special
• 24:40
  Speaker 2: thanks to Helen Thomas. Helen.
• 24:42
  Speaker 3: What is your Twitter handle?
• 24:44
  Speaker 1: Oh at market blondes at.
• 24:47
  Speaker 2: Market Blonde, So do contact Helen on that if you'd
• 24:50
  Speaker 2: like to I argue with her on any of the
• 24:51
  Speaker 2: points we've discussed today.
• 24:52
  Speaker 3: Good luck with that, Helen, Please do.
• 24:56
  Speaker 2: And always questions and comments on this show and all
• 24:58
  Speaker 2: our shows are always welcome. Our show email is Merrimaney
• 25:01
  Speaker 2: at Blomberg dot net