Odd Lots - This Is How Big Money Is Trading the War in Iran

Episode Date: March 26, 2026

Markets are often said to be "headline-driven," but that cliché has rarely felt more true than it does right now. A single tweet or Truth Social post can send prices sharply higher or lower, and investors (especially in the rates market) have been forced to rapidly reposition in response. But even as volatility has increased, traditional safe haven destinations like gold haven't been rallying. So how are big accounts actually trading this market? In this episode, we bring back Ozan Tarman, vice chair of global macro at Deutsche Bank and someone who meets regularly with large investors around the world. He tells us what he's seeing right now, including the potential for a squeeze higher in equities and left-tail risks in private credit. Read more:Oil Drops Near $102 as Traders Weigh Outlook for US-Iran TruceIran War Shows BRICS Limits as India Pushed to Choose Sides Only Bloomberg - Business News, Stock Markets, Finance, Breaking & World News subscribers can get the Odd Lots newsletter in their inbox each week, plus unlimited access to the site and app. Subscribe at  bloomberg.com/subscriptions/oddlots Subscribe to the Odd Lots NewsletterJoin the conversation: discord.gg/oddlotsSee omnystudio.com/listener for privacy information.

Bloomberg Audio Studios. Podcasts Radio News. Hello and welcome to another episode of the Odd Lots podcast. I'm Joe Wisenthall. And I'm Tracy Allaway. Tracy, we're recording this March 25th, 2026. That's 9, 10 a.m. Are you going to do the seconds as well?

No. But the reason I do mention the time, the cash trading in the stock market hasn't opened. The reason I mentioned the time is not just because things are moving fast, But to establish, we've had market moving headlines already this morning. Oh, absolutely. And so just in the last like 15, 20 minutes, we got some headlines attributed to the Fars News Agency out of Iran saying there is no interest in talks. There's no interest in ceasefire.

The U.S. position about pursuing a ceasefire is illogical. That moved futures down a little bit. We're, you know, it's a cliche, you know, headline-driven market. You hear that a lot. The last several weeks have felt like the headline-driven market to drive all headline-driven market. No, it really, I know it's a cliche, but it really is a headline-driven market. And I think part of the issue here is because no one's entirely sure what the goals are when it comes to Iran, it's really hard to judge progress of the conflict on any sort of fundamental basis, right? So all you can look at is basically what Trump and the other two sides are saying.

And so you get these big reactions every time they tweet something or post on truth social and then tend to contradict each other. Absolutely. And you know, I do think, look, there is this extreme level of skepticism from almost any headline you get out of the U.S. White House. I think if you go back to the post-liberation day environment, particularly with the sort of modest rapprochement with China, you would get these headlines we're talking and then the Chinese would put out a headline. We're not talking. But then it turns out that there was a little bit more talk than what maybe the Chinese side had admitted to. so often I think as much as you, as many people are inclined to disbelieve headlines, I don't think people disbelieve them entirely. When Trump said yesterday that the Iranians had sent him a prize that was extremely valuable,

and it's like, whew, I mean, that's tough to take seriously. But is there some modest signal? I don't know. It's really tough. It's really tough. But I, you know, I just want to say two other things real quickly on this, which is that even with the headlines today about Iran rejecting. Feastfire. Futures are still up. So it's not like people have like completely, oh, nothing's

happening. And for all to talk about, and we've had multiple guests and I, they're the smartest people in the world, talk about oil is going to surge the longer this goes on. As of the time, we're talking about this. Brent crude is still right around or just under $100. We haven't had the mega surge yet. So I like to take market seriously, even if sometimes I don't always understand what they're doing. Well, the big question to me is whether or not markets are still in denial, right? And you see people talking about like, oh, people are being very optimistic about the future. I saw the Morgan Stanley report saying that corporate profits were going to go up later this year. The oil price. Again, we're talking about the closure of the Strait of Ormuse, which is the sort of thought experiment that has bedeviled oil analysts for decades. And yet, you know, the reaction has been kind of muted. Meanwhile, in the rates market, there's a lot going on there too. And you still have a lot of bond traders who are very reluctant to price out the possibility of a rate cut later this year. Completely.

And it feels like the idea of a rate cut, at least for now, does not seem anywhere near the quote table. But yeah, anyway, so how do traders even like make sense of this headline? How do they know what headlines to believe? Why does there sometimes seem to be this gap between what a lot of people, think the market should be and where it actually is. Very excited to say we have one of the most plugged in people that we know is someone who is talking to people who move serious money every single days. He goes around the world and he has dinners with them and he talks to them about their

trades. He even brought us a nice gift, which is a tour t-shirt. It is the cover of the macro dinners 2026 tour with a nice Deutsche Bank logo. You should read some of those cities just to give an idea. The dates of the macro dinner tour, Jan 4th, London, Jan 21, Geneva, Jan 29. Milan, Miami, Budapest, London, New York City, Montreal, Copenhagen, Ria, Doha, Dubai, etc. You get the idea. He's always talking to people.

And he has one of the most plugged-in people that we talk to. We are going to be speaking, of course, to the one and only. Ozan Tarmand, Vice Chair of Global Macro at Deutsche Bank. So, Ozone, thank you for coming back on Adlaught. Joe and Tracy, it's an absolute pleasure. Highlights of the week, very close to where I used to live in New York City as well. It's great having you here in studio. So it's a pretty wild market to trade, I assume.

Very, very wild market to trade. And on the t-shirt, unfortunately, for example, this Riyadh, Qatar, Dubai leg that I was looking forward to, we'll see what happens. Oh, right. We'll see what happens with that. But not necessarily untradable. Still, traders always smell things, always have a sense of where the paint trade is, where the momentum is. Even walking in, now I became a veteran of this wonderful show. I was thinking this time around we should really say Wednesday.

Yeah, that's right. You know how much. I know that what I can say now, one day later may look a little bit different, etc, et cetera, but still, walking in now, obviously it's a big cliche to say it takes two to tango or tackle three maybe. But that being said, at the moment the pain trade, the momentum trade is for this equity rally and oil fall to continue. There are many, unfortunately, I have told all my client's friends hands, wounded hurt players out there, certainly in race markets, certainly on front end. So people are reluctant to take fresh bets. But as I constantly hold these conversations, roundtables, I do get the sense that now getting to know the president well as well, people did expect this. We won the war, I won the war, mission accomplished moment, which is trying to do in a few ways.

Then the big debate is, yes, and we do get these spikes of equity, sire, oil lower. At the end, as you're right, you said, even Brent is lower than 100 and we should talk. VTI is even lower. But do you fade it or not? That's what it boils down to. Another big true cliché is what does Iran do? What does Iran say? As we speak because of Fars, like you said, Israel 12 said these talks are happening.

Fars, Iran said, no, we're still waiting. Which one to fade? That's the big question mark. My gut feel from what I sense from the clients is there is room for a squeeze here in equity, higher, oil lower, but the tail risk is very, very fat. Yeah. Wait, so talk to us more about positioning. I mean, going into this war, I think everyone was pretty much expecting rate cuts later in the year,

oil prices, nothing dramatic there, certainly. Did everyone just change very, very quickly? and now we're left with positioning that can lead to a bigger squeeze hire? Very relevant question. I want to take us back to February 27, the night before the attack on Iran. Again, I was visiting Palm Beach and Miami. And the feel couldn't be more difference. The main obsession, focus of the U.S. client base, the key players, was AI,

history research, something big is going to happen, Schumer. How 50% of white-color jobs could be lost in 2020. 12 to 18 months. So finally, not only rate cut expectations were increasing, we were getting bull flatteners. So even long end was coming down. Thursday, Friday, it was around 405. And I do remember before Iran, US 10 year closed top tick 3.93. And it cannot be named, but some of one of those more legendary friends clients of mine comes to me with an email.

Ozan, we nailed this, this, that bond is the new gold. Well, we need to talk about our friend gold as well. Yeah, we should. One more thing. Another good friend, I did bring this on paper because it's very, very telling. This guy sends me a message, I think, Tuesday or Wednesday before Iran. The multithillion question is, can the rest of the world isolate itself from this destruction? I'm not sure.

He was talking more about the AI fears. Another observation, today reminds me of early February 2020. While we all saw people falling over in China, it became clear by the day that we're about to see a pandemic. The SMP made new all-time high. The same is today with Iran. Nobody cares. I mean, ring so true now, right? Actually, let's talk about gold in positioning for a second.

The last time we had you on was September, and one of the themes of that was the relentless bid into gold. And whenever we frame a conversation, I'm like, oh, God, this is going to be the top. It was not the top even close. So that was, gold was around 3,800 ounce during that episode. It got over $5,500 announced in early February. As of yesterday, we saw a 10-day gold sell-off.

How much is this just about all the, different trades not working at once, the steepener trade not working at once, the oil trade not working at the same time, and essentially a lot of players being forced to liquidate the one big winning thing that they had in their portfolio. Very much so. And look, I love you guys, but on the last show as well, when we all started with gold new media, gold new media, I was very, you know, happily and politely answering, but in my mind, I was saying, this is an orange sign. I know, of course, yeah. So, and then I listened to our show, we did, so I'm like, risk on this works, risk of this works.

I'm like Joe Tracy, like it has to be something that comes from the left field that gets the whole thing unwound. And even though the guy says here, Iran, people look and nobody cares, the repercussions on the position is just like you said, let people to get out of all winners. And gold was a big winner. Emerging markets were big winners. So that was the first trigger. And then another story now, once you are in the... this position, once you realize it's not days, it's not weeks, this is going to continue on and on, petrodollary countries, other people start selling their winners to build defense mechanisms.

I mean, it's almost like public reporting in terms of China, my motherland, Turkey, India, they have these gold reserves for a reason. So that's another reason why, first, technicals, you go after your winner and then fundamentally, some of these strong hands, for understandable reasons, are selling them. Everything happened. Back to Tracy's question. So people were all into these bare flatteners first. Then they believed in bull flatteners because everything was come.

All rates were coming down. Then you get into this world and thanks for jumping onto it. Monday after Iran, warflation, warflation. This is serious inflation expectations will increase. It's not as simple as finding the next Venezuela, Dersey. and my God, from like getting ready for cuts, you know, discussion one, two or maybe three in Fed, at least hold ECB and certainly cuts Bank of England. Look where we are now.

For a while, we've priced in four hikes for Bank of England and ECB. We're right below three now for both. That's huge. That means seats are lost, pods are closed. I was going to say, how many times have you heard the word liquidation or, you know, a pod shop blowing? up in the past few weeks. A lot, unfortunately, right? Capulation.

And I teach all our young stars or mentors. So after all, the cliche is, oh, investment bank will do well, trading floor will do well because, you know, be a offer, fear. No, not like that. After a while, there is really something called bad volatility. And this is bad volatility. From these crazy headlines being that much slaves to what somebody says at Friday 10 p.m. to Saturday, 11 p.m. to also this much of.

liquidation and capitalation. After a while, people say the best thing is a blank piece of paper, less trading and less watch. That's why your opening question, some people see this market as untradable. But unfortunately, in times like this, especially if you're not wounded, somehow flat is the new up. If you have survived, these are the moments to make the difference. Who knows?

Who knows, Joe? Maybe this is right around April night 20-25 moments. when maybe this is right around the dip and we will remember it like the time we were able to look through it. I have my doubts, but maybe. What is a pain trade? And why is that a useful concept? Very good questions.

You know what triggers me. A pain trade, I mean, it's not the ideal definition maybe because you don't want your clients and friends to be in pain. But a lot of it, even before the days of quant trading, crowding out, positioning is so important for this market. After a while, it can become as important as a fundamental factor. After a while, you do feel that in these echo chambers, players almost want to believe, because of the pricing, fundamentals on what they're talking about. So pain trade is when that herd gets a belief in a trade

so much and when it works just the other way around. I mean, what happens to gold is a big one because for a long time it was unshaken, but sometimes even smaller instances. Like, for the past 15 to 18 months, we really believe that big dollar would trade soft. What I mean by that is either because of hedge ratios, the dollarization. Dollar wouldn't be the safe haven that it used to be. It would make sense to sell dollars whenever one has a chance. Now, all of a sudden, because of Iran, because of people building up, selling their winners to go to safe havens. if we trade towards the 110, 111, 111, before 121, 21, that's a much less talked about pain trade.

Why? Because it's going to further shake places like rest of the world, emerging markets, Korea, etc, etc. And of course, it opens conversation, right? Sometimes you say, sometimes pain trade is so obvious. Sometimes somebody says, no, that trade is there for a reason. Consensus is going to continue to work. You develop a market, you trade on it. On the dollar, and this is related to gold as well, we do seem to be in this weird situation where like, okay, people are liquidating the successful trades to raise cash, go neutral, whatever. But at the same time, you still have plenty of people talking about diversification away from the U.S. And you could make a very strong argument that given what's happening in the oil market right now, maybe you don't want to only price that in dollars. Maybe you want to start thinking about other currencies. How are people thinking about the, I guess, like,

U.S. exceptionalism trade at the moment because there's two cross currents. For sure. It's moving from U.S. exceptionalism, selling your U.S. assets to more hedge ratios. It definitely moved, let's put it that way. Again, at the beginning of January, February, all these events, one after another, Venezuela, Greenland, my gosh, so much happened in three months. Tell us about it. Powell's case. Again, not necessarily selling your U.S. asset, but buying more, buying less, increasing your H. ratios had become fashionable. But your very right traces.

My partner in success, one of them, George Seroz, head of our FX strategy. We love George. We all do. He has this rough formula, Euro dollar, roughly two thirds oil price, one third gas price. It should have traded around 112, 1.15, 113, 13 as we speak. It doesn't. Part of the reason is exactly this. Despite what oil is doing, despite what gas is doing,

people do want to own a little bit less dollars. But unfortunately, as I sit here, as I come to my odd loss every three months or so, vice chair, Deutsche Bank, proudly waving my blue, make Europe great hag and hat, it's in trouble of it. Whether this war takes another one week, two weeks, two months, the wounds will stay. The wounds will especially stay in oil and gas prices. We disrupt the supply enough.

And the big import, the ones who need those oil and gas prices lower, is Europe. So in an understanding way, it's talking about when consensus starts becoming more sense, in these roundtables and beyond, it's becoming a bit fashionable to start questioning the European equities, European credits. Funny enough, it doesn't show as much yet in the FX, but watch out for the equity and credit angle of this Europe trade. So this is really important, which is that basically, okay, there is this long-term pessimism about Europe, but there had been some optimism recently and cheaper energy prices

certainly helped the relative competitiveness and profitability of the domestic industrial giants and so forth, but we're going to probably be, regardless of the length of the war, in a period of structurally higher energy prices, and that continues to build to the negative side of Europe.

So let's talk a little bit more about oil, because if you just talk to the oil analysts who I love, like their hair is on fire right now. And they probably, you know, this is cataclysm. But Brent Crude, not only is it well off its highs from a week ago, it's not even anywhere close to its highs in 2022 at the peak of the inflation. I mean, we got at one point in March 2022, Brent Crude was at 139. We're below 99 actually right now when I'm talking about this. The thing is like, oh, you close the straight, hormones, oil just explodes, et cetera. We all know it. We all see it. There is nothing.

that any of us, you can like be online all day and talk to all the energy experts. You are like, you do not know more information than the market does. So talk to us like how you're thinking about oil and the fact that there does seem to be this gap between the hair-on-fire rhetoric of the oil knowers versus the prices which are high, but even by the scale of the last five years, not insane. I was, as the question was coming, I was preparing my next note to read. But first of all, on the oil on fire, we all see and respect Jeff Curry. what he said about molecules.

And interesting people are watching, right? Did you see the tweet of head of Iran Parliament? Oh, yeah. He used the you can't print molecule. Yeah, exactly. This is another thing. He also referred to another thing as fake news. Everyone around the world is now talking the same.

That actually reminds me I have a friend who visited Afghanistan and he met some people who working for the Taliban and like they started WhatsApp him like Pepe the Frog memes and they called him a soy. boy and stuff like that. Like everyone talks the same way. Anyway, that a bit of a divergence. A little bit depressing that this is the common language.

Now this is the lingua franca of the internet. Everyone says morphlation. Everyone says it takes to taco etc. All right, but talk more about it. But this physical versus paper trading is very, very important. So this friend of mine, ex-colleague I worked with him for decades, big commodity trader, now a dear client. And, you know, one of these guys, he talks math.

So, MIT, Russia's MIT. He sends me a message, and we're now even one more week late, this is last week, and he doesn't do ozone high all the time. Ozan high on Hormuz. If it's not starting to open in one month, now three weeks, the world has a huge, huge, huge problem. And this is not Ozan. This guy doesn't say here. Qatar LNG will need months to restart once the rumours is clear.

And in oil, we have 10 milliseconds already, and Asian refiners are very, very starved. Pipelines to RETC would take years and also are not. Panacea, et cetera, he talks about Houthis. So I get it. Brand versus what WTI. WTI is trading even better, et cetera, et cetera. But especially if the likes of Fars is correct. If we have a lot of talk, but one way and another, this Hormuz is only two, three tanks, you know, one Indian tank, one China tank.

I do fear that these guys warning us about physical delivery, maybe more right? Yeah. And look, of course, and I get the logic. But the people in the oil market who are trading, whether they're speculators, whether their hedge funds, whether the real oil companies who are having the hedge production, they have a lot of money at the line. They know all of this. There is nothing that can be said about the longer this goes on, blah, blah, blah, the more that gets shut in, blah, blah, blah, we're running out of storage. It's going to take time to rebuild. There's nothing that could be said.

And yet here we are at the problem. And we all know this. And I respect their approach as well. This comes back to also why equities haven't sold off. that much. Why credit hasn't sold up that much? At the end of the day, okay, it may not be Venezuela. We didn't find the dirty. But I think people do believe that this squeeze, longer squeeze will come, and it's not that easy to fade. So whether it's Islamabad, whether it's Vance meeting somebody in Islamabad, whether president, I wouldn't be surprised in two days saying, I need one more

week and, you know, creating a delay, people do believe that in three months time, six months time, That's the forward oil market as well. We will not be talking about this. We will be talking much more about AI or private credit. That's why the tale is big. That's why, okay, another, I'm choosing my words carefully as well, but Marines are approaching. We're talking about cargo islands. These friends clients talk to that X general, this X general, some claim that taking control of Formuz

once Marines are there may not be that difficult. Imagine that going wrong. imagine, you know, of course, lives being lost. But even Joe, one or two ships getting it. These are not army professionals driving those ships. These are people on payroll. So even on one gas ship, one oil ship hit, things can get out of hand very, very quickly.

And that's why, by the way, let's link it back to markets. Okay, you have a point. Brand is still below 100. But look what ECB and Bank of England pricing did. and they're not backing away. They're saying Madame Lagarde today, of course, like she sounded calm. She didn't say, I embrace the three-hike pricing, I will hike. But she did say we will be watching this.

So back to the 2020 analogies, people don't want to be seen late. Things can move very, very fast. I do want to talk about private credit because I think it's important and it's kind of gotten overshadowed by the Iran situation for obvious reasons. But just going back to. the Taliban and Soy Boys, which is a sentence I never thought I would say on this podcast. I mean, this is the first like major conflict-related market event where we have both sides to some extent using AI generated memes and content for, you know, propaganda purposes to express their

point of view on how the conflict is going and what they're trying to achieve. I am very curious, on a trading floor, if you're a big investor, when Iran tweets like a Lego video showing Trump doing something or showing their reaction to Trump doing something, are traders watching those and thinking seriously about them? Thinking seriously about them, I don't know, but they're watching. They're forwarding each other the things. But more key thing is, yeah, people do start to read out the more credible sources or the more credible reverse signs. In this day and age, we all translate from Arabic very, very quickly.

We do compare what a US source says on a potential Islamabad meeting versus what an Iranian source says. After a while, you do get a sense that which Iranian source seems to be more connected than the other. All of these things are, I'm not going to say it makes our job easier, but it makes our job even more spicy, complicated. In a way, we do have, yeah, I completely get you. Lego and memes is one extreme, not very useful, but on the useful side, yeah, there's the Iranian credible journalist is right there on the table tweeting and telling you, look at that, look at this, that helps. You know, I'm thinking about your shirt again and the dinners that are scheduled in the

Gulf region that may or may not happen, which brings me, you know, you're someone who is extremely plugged in to money in that area, and there's this question. of like, does something change in the trajectory about the business of Dubai? There was a headline about Millennium. Did you see that? I saw it. They may move some traders to Jersey, which, okay, cards on the table, like Dubai, I've never been. I doubt it's my cup of tea.

I feel I can say with some certainty that Dubai is more fun than Jersey. Well, this is what I'm saying. It looks nicer than what I imagine the island of Jersey is, which I just imagine is very gray and bleak all the time. I don't know, but I assume. Like, you know, do you think there's any of the talk about is there going to be a real trajectory and the amount of money flowing into the Gulf? Is that real in and out of the goal? Short term and medium term.

And so, of course, I do. I have some dear friends there beyond this industry, other industries. Like, direct analogy. When I come to New York, obviously you see your clients, but you see your friends. In Dubai, you have to give even more time because there has. been such a move for different funds, taxes, you know the deal. People do have short-term memory, do remember COVID, but at the same time, of course, this will have an effect. Other areas may try to get some of that influence. Maybe some of those people go back to London, maybe places like

Milan, other areas of Asia, gets more interesting. Absolutely hard goes out to them, but at the same time it affects the sentiment as well. By the way, part of the reason why many people got the whole Iranian thing wrong, warflation and all that. It was that too. So not only from that Friday night, Saturday morning of attack to Monday, we didn't get a dirty, you know, the way I put it, you know, Abdulah to phase July, et cetera. There was no regime change. But Iran immediately began hitting GCC, lifestyles got affected, that affects sentiment. So way before the worries about inflation and warflation and supply change, the sentiment got affected. Right there. So my hope and thinking a year from now, when we do the show again, the effect and power of Dubai and Qatar will still be there. But yes, in the short term, it's not going away. It's an important market moving factor.

By the way, did you see that Delsi Rodriguez is going to be speaking in Miami at a investment conference back by Saudi Arabia? I'm just saying they don't make communists like they used to. Let's talk private credit because we have all these headlines coming out about redemption requests and a bunch of funds livening those, as is there right in the fund documentation. However, I am starting to get frustrated with this knee-jerk response, which is you see all these headlines, you know, Ares, Apollo, curbing withdrawals. And then everyone in private credit is like, well, this is fine. This is a feature of the system. It's not a bug. And obviously investors should have read the docs. is exactly what's supposed to happen. Whereas to me, it seems very clear there is stress

in private credit, regardless of what's actually happening with withdrawals. And if you think about private credit as this huge asset class that was growing enormously in recent years and was a major source of credit and financing for companies in America, then it seems very clear to me that what we should be talking about right now is a potential tightening of financial conditions as some of that demand starts to ebb away. How are you thinking about the private credit space? And when you're doing your meetings with investors, I'm very curious how much time is spent on private credit versus Iran right now. Right before Iran, it was all about private credit and AI's world. Now, as immediate headline to you, last night when I did a small roundtable, of course,

it all started with Iran, but I did make sure that we went to private credit. And I'm with you, Tracy. The immediate reaction there from directly involved people to more macro tourists, it's not systemic, it's not systemic. It's not 2008, maybe 2001. We smile at each other. That to me immediately a bit of an orange sign. Okay, I understand. So it all seems orderly, withdrawals that are orderly, et cetera, et cetera. But headlines are not going away.

If anything, they are definitely hiding behind Iran at the moment. It would be almost all we would be talking about, especially in U.S. if it wasn't for Iran. And by the way, because of that, my blue hat would have done much better than US. So that's another sad thing, right? It's like, quote, unquote, US and Israel's war, but Europe and UK and rest of the world gets hurt more. But anyway, these are the new cars we're dealt with. The key thing to watch is, at the moment, they claim it's orderly you get your money.

If it feels more and more like this A, B, C, we see the headlines. You're not going to be able to get your money for a while. then first time you mentioned my binkie. I'm very curious to see what he says tonight on my macro dinner. It's a Wednesday, a big macro dinner dinner tonight. He's still sticking to his 8,000. Why? If people cannot take their money away from private credit and have to sell something liquid,

then watch out for public credit. That has been sitting very resilient. And of course, watch out public equity. So I'm watching that space very, very carefully. I do understand why they immediately say it's not systemic. I get it, but, you know, okay, maybe it's not 2008, but it may be something between this 2001 to 2008. Also, it's very in to say, yeah, it's not leverage is not there. Thank God we may not see the Northern Rock BBC scenes of 2007, 2008, all these cues and stuff.

It's a more quote-unquote 1% problem. But what if it spreads and spreads and some of the big U.S. banks start landing less to these friends? what if insurance companies get hit more and more? Watch this space. I think it's a bit too superficial to say it's not systemic. It's going to be okay. It's almost like the bank crisis of two years ago in this place. I'm more worried than that.

You know, one of the things we're talking about is there's very violent rate to move and war inflation and so forth. But one of the things that's emerged in the last few weeks is there's growing evidence that actually inflation was re-accelerating even pre-efficient. even prior to the start of the war. And so when we look at these moves, we might attribute some of them to the war itself and the pastor of oil prices and the military spending. And that, of course, Trump gets another $200 billion for defense.

That's more spending. That's inflationary. But maybe, like, could it be that that is actually not the story, that the bigger story in rates is simply that the data showing that through the end of February, there is more evidence that inflation was not heading down to 2%. as many people had maybe wishcasted. And that's a really blow to my heart in terms of expectations and stuff, right?

Because quote unquote, we almost had them. Yeah. On Feb 27. It's close. We had a good thing going. It was a hurricane. Obviously, much more important than market. It's a tragedy for humanity, war, et cetera.

But for the market as well, it was a hierarchy. Ty W. If that NFP printed like that, maybe we would be talking in the 10-year-370s, etc. Now, Gene is completely out of the battle for very understandable reasons. Another world I want to relate to inflation. And before we wrap up, this whole rationing.

That's a big watch out for Europe in Asia. If this continues like this, if my Russia-M-I-T friend is right about Furmuz and the problems, after a while, I mean, people are already talking about. Look at Philippines headlines today for their airlines. We may very soon be at a point when some of these Asian countries can say, look, I need to give energy and fuel to my very important. famous company, but much more important than that, I need to give fuel and energy and electricity to my households. Sorry, I have to choose. In Europe, we may be told maybe, maybe, you know,

don't use that air conditioning too much, work from home more, travel less. Back to my t-shirt. Sadly, Dubai, Qatar may be postponed for understandable reasons, but what about Asia? All these airline prices will shoot up. Maybe for work I will go, but for leisure, maybe there will be one less trouble. All of this stuff will hurt growth. At the same time, it will need, you know, rationing means, more fiscal measures means, more inflation expectations. So you know, I'm not in love with the world stackflation, but also I'm a rational guy. My job is to smell the market. Yeah, we woke up that stacflation fear. Oh, it's on tournament. Thank you so much for coming back on Adlaas. Thank you for the T-shirts.

Absolutely. Always appreciate checking in with you and we'll talk to again soon. next quarter. We'll do our quarterly check. I'd love. I'd love. Wait, will you put us on the t-shirt? Is one of your stops? I should have. You guys are the highlight. Thanks, O-Zone. Yeah, thank you so much. I always love catching up with Ozone. I just find it, you know, it's just incredibly useful to talk to someone who's always talking to people. For sure. Right? Like, that is a valuable thing in its own right. OZon has very interesting perspectives, but to be able to just, like, channel his brilliant MIT friend, what the people said at the MacRour.

road dinner last night, always very useful. You know, also to Ozan's point about actual capacity cuts in Asia and Europe. So, you know, because I travel a lot and I've lived in different places, I'm on all these different random emailing lists for like services and flights and airlines and transportation and things like that. And I am starting to get the fuel surcharge emails. I got one from an Australian car service that I used once ages ago. A lot of Indian Airlines are starting to add fuel surcharges.

Like, you can see it coming. And it's happening actually, like, pretty quickly. I just don't want to travel right now, especially with all the lines you see in the U.S. No, seriously. Well, that's a separate issue. I know it's a separate issue. But it's like, I just want to cancel as much as I can. I'll remind you of that the next time we're debating whether or not to go to an external event.

And you're like, yeah, I want to go. I don't want to go right now. I don't want to go to anything. But anyway, seriously, you know, I do think, like, this is the thing that I think about a lot, which is that I've always been a take. market seriously and sometimes take them literally guy. And I actually really don't like. I know you're a secret EMH, bro. Yeah, 90% so secret. And I really don't like, you know, there will be a headline from the White House and oil will go down and everyone will say, oh, people are so stupid. They're being,

you know, the investors are so stupid. Traders are so stupid. There's a lie, whatever. And I'm like, I don't know about that. But like my point is there's a lot of money on the line for people who are to take this very seriously. And if oil, is trading below 100, I take that seriously, and I want to understand why there's the gap, because there's nothing that all of us online and in the media know that the people with a lot of money on the line don't know, right? This is a fact. And I do think that's a very interesting point that the people with a lot at stake, yeah, oil is high, but it's certainly not at the here on fire levels that we even saw in 2022. Well, my guess is that what we're seeing also is a divorce

between the financial and the physical. That's true. Right. So you can trade oil futures and assume that you're not going to have to take delivery at some point. But at the same time, if you're after the physical barrels, you can't get those at the moment. So I don't even know how that actually relates to price. There's apparently some price that we see. Rory Johnston is always quoted about the actual physical price in Oman.

Yeah. But the two eventually have to merge, right? Like they cannot remain disconnected forever. Not for a while. So I think that disconnect is kind of like what's in focus at the moment. Well, if you're trading front month oil, you have about a month, right? Yeah, okay. Fine. But like, I think people are betting on like, I don't have to worry about it for a month. That's what I'm saying. Very plausible. It's certainly a very, very difficult, unusual time. I mean. Oh, totally. And this is the other thing. To your point, like, it is very true that the outcome of all of this basically hinges on three players.

and one player in particular. And at any moment in time, you could have someone come out and announce a ceasefire. Yeah. At which point to Ozan's comments earlier, like, you could see an almighty rally just because of positioning going into this.

You could see a squeeze, like, without an agreement. And so I think, like, that's also where a lot of the nervousness is coming from. Like, no one wants to be caught completely offside if the conflict suddenly ends. You know, Ozan used the term bad fall. Yeah. And I think that makes sense, which is, okay, on one hand, the trading desks, sure, there's a lot of activity in some sense. And so that is a source of profit. On the other hand, this is the type of environment where it's like maybe you just want to stay away.

You want to keep positions light. If you have a position, you don't want to like go all in or anything like that. I'm imagining a trader like staring at the VIX curve and going bad fall, bad, bad. All right. Shall we leave it there? Let's leave it there. This has been another episode of the Odd Thoughts podcast. I'm Tracy Alloway. You can follow me at Tracy Alloway. And I'm Jill Wisenthall.

You can follow me at the stalwart. Follow our guest, Ozan Tarman. He's at Ozan K. Tarmond. Follow our producers, Carmen Rodriguez at Carmen Armin, Dashel Bennett at Dashbot, and Kail Brooks at Kail Brooks. And for more Oddlots content, go to Bloomberg.com slash Oddloss. We have a daily newsletter and all of our episodes. You can chat about all these topics 24-7 in our Discord.

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