This Is How Big Money Is Trading the War in Iran

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.

Speaker names marked ? are inferred from speaking time and the show’s known hosts — they are not voice-verified.

• 0:00Tracy Alloway?

  There are some market stories where you want every detail. Joe and I have made quite a few podcasts on that basis. But sometimes you've only got 10 minutes and just want to know what's moving markets fast. That's the Barclays Brief Podcast. Every week, experts from Barclays Markets and Research get you up to speed on what's happening and what to watch next. Concise, focused, and brief. Search Barclays Brief wherever you get your podcasts.

• 0:26Speaker 01

  This is the Bloomberg Tech Minute brought to you by ChatGPT. I'm Carol Muster. Getting hired at SpaceX requires exceptional ability and may include having Elon Musk review a candidate's resume. So writes Bloomberg Business Week's Lauren Grush. She reports that the company culture is defined by Musk and job candidates must understand that a commitment to SpaceX means adhering to this culture and exhibiting loyalty to Elon Musk. To get hired, candidates must demonstrate their achievements from past jobs and hands-on experience matters more to recruiters than advanced degrees, with the company looking for people with raw, innate intelligence. A spokesperson for SpaceX didn't respond to a request for comment on its recruiting

• 1:08Speaker 01

  and hiring practices, but according to recruiters, advisors, and those who've interviewed for jobs there, it's the space exploration dream that draws people to the company, and Musk invokes that dream regularly to remind workers why they're there. Prospective hires are told that the job will require stamina, including in job ads that candidates, quote, "must be willing to work extended hours and weekends as needed." One major perk for all that hard work? Employees' access to equity, either the right to buy shares or payment in the form of restricted stock units that vest over time. That's the Bloomberg Tech Minute brought to you by ChatGPT. Get started at chatgpt.com.

• 1:52Speaker 01

  Bloomberg Audio Studios. Podcasts, radio, news.

• 2:08Joe Weisenthal?

  Hello and welcome to another episode of the Odd Lots Podcast. I'm Joe Weisenthal.

• 2:13Tracy Alloway?

  And I'm Tracy Alloway.

• 2:14Joe Weisenthal?

  Tracy, we're recording this March 25th, 2026. It's 9:10 a.m. and the-

• 2:19Tracy Alloway?

  Are you gonna do the seconds as well?

• 2:21Joe Weisenthal?

  No, but the reason I do mention the time, the cash trading in the stock market hasn't opened. The reason I mention the time is not just because things are moving fast, but to establish, we've had market-moving headlines already this morning.

• 2:35Tracy Alloway?

  Oh, absolutely.

• 2:36Joe Weisenthal?

  And so just in the last like 15, 20 minutes, we got some headlines attributed to the farce news agency out of Iran saying, there is no interest in talks, there's no interest in ceasefire. The US 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 markets.

• 3:01Tracy Alloway?

  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.

• 3:30Joe Weisenthal?

  Absolutely. And you know, I do think, look, there is this extreme level of skepticism from almost any headline you get out of the US White House. I think if you go back to the post-Liberation Day environment, particularly with these sort of modest rapprochements 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 Iranians had sent him a prize that was extremely valuable.

• 4:13Joe Weisenthal?

  And it's like, phew. 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 ceasefire, futures are still up. So it's not like people have like completely, oh, nothing's happening. And for all the talk about, and we've had multiple guests and they're the smartest people in the world. Talk about, oh, 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 markets seriously, even if sometimes I don't always understand what they're doing.

• 4:55Tracy Alloway?

  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 Hormuz, 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.

• 5:23Joe Weisenthal?

  Yeah.

• 5:23Tracy Alloway?

  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.

• 5:34Joe Weisenthal?

  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 day. 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 his tour.

• 6:10Tracy Alloway?

  A tour t-shirt.

• 6:11Joe Weisenthal?

  It is the cover, the Macro Dinner 2026 Tour with a nice Deutsche Bank logo.

• 6:16Tracy Alloway?

  But you should read some of those cities just to get an idea.

• 6:18Joe Weisenthal?

  The dates of the macro dinner tour, Jan 4, London, Jan 21, Geneva, Jan 29, Milan, Miami, Budapest, London, New York City, Montreal, Copenhagen, Riyadh, Doha, Dubai, etc. You get the idea. He's always talking to people and he is the, 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 Tarmen, Vice Chair of Global Macro at Deutsche Bank. So, Ozan, thank you for coming back on Odd Lots.

• 6:44Speaker 03

  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.

• 6:49Joe Weisenthal?

  It's great having you here in studio. It's a pretty wild market to trade, I assume.

• 6:54Speaker 03

  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.

• 7:03Joe Weisenthal?

  Oh, right.

• 7:04Speaker 03

  We'll see, we'll see, we'll see what happens with that. But not necessarily untradable. Still, traders always smell things, always have a sense of where the pain 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, nine.

• 7:23Joe Weisenthal?

  Yeah, that's right. You know.

• 7:24Speaker 03

  I know that what I can say now, one day later, may look a little bit different, etc., etc. 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 clients, friends, and, 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, round tables, I do get the sense that now

• 8:07Speaker 03

  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 sires, oil lower. At the end, as you rightly said, even Brent is lower than 100 and we should talk, VDI is even lower. But do you fade it or not? That's what it boils down to. Another big true cliche is what does Iran do? What does Iran say as we speak because of Farsi? Like you said, Israel 12 said that these talks are happening. Farsi, 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

• 8:50Speaker 03

  there is room for a squeeze here in equity desire, oil lower. But the tail risk is very, very fat.

• 8:57Joe Weisenthal?

  Yeah.

• 8:58Tracy Alloway?

  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 higher?

• 9:18Speaker 03

  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 different. The main obsession, focus of the US client base, the key players was AI. This is any research, something big is going to happen. Schumer, how 50% of white collar jobs could be lost in 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.

• 10:01Speaker 03

  And cannot be named, but one of those more legendary France 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. What happened to what? One more thing, another good friend, I did bring this on paper because very, very telling. This guy sends me a message, I think the Tuesday or Wednesday before Iran. The multi-tiling 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 clearer by the day that we're about to see a pandemic. The S and P made new all time high. The same is today with Iran, nobody cares. I mean, rings so true now, right?

• 10:44Joe Weisenthal?

  Actually, let's talk about gold and 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 announced 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 these 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.

• 11:24Speaker 03

  Very much so. And look, I love you guys, but on the last show as well, when we all started with gold media, gold media. I was very, you know, happily and politely answering, but in my mind, I was saying, this is an orange sign.

• 11:36Joe Weisenthal?

  I know, of course.

• 11:37Speaker 03

  So and then I listened to our show, we did so, I'm like, risk on this works, risk off 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, that people will get out of all winners. And gold was a big winner, emerging markets were big winners.

• 12:03Joe Weisenthal?

  Yeah.

• 12:04Speaker 03

  So that was the first trigger. And then another story now, once you are in this position, once you realize it's not days, it's not weeks, this is going to continue on and on. Petro dollar 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. For understandable reasons are selling them. Everything happened back to Tracy's question. So people were all into these bear flattens, steepeners first.

• 12:48Speaker 03

  Then they believed in bull flatteners because everything was, 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 cut, you know, discussion one, two, or maybe three in Fed. At least hold ECB and certainly cut Bank of England. Look where we are now. For a while, we 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.

• 13:28Tracy Alloway?

  I was gonna say, how many times have you heard the word liquidation? Or, you know, a pod shop blowing up in the past few weeks?

• 13:35Speaker 03

  A lot, unfortunately, right? Capitulation 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, bid 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 10pm to Saturday 11pm to. Also, this much of liquidation and capitulation, after a while. People say the best thing is a blank piece of paper, less trading and let's watch. That's why your opening question, some people see this market as untradeable.

• 14:19Speaker 03

  But unfortunately, in times like this, especially if you're not wounded, somehow fat 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 2025 moment. This is when, maybe this is right around, around the dip and we will remember it like the time we were able to look through it. I have my doubts, but maybe.

• 14:59Joe Weisenthal?

  There are some market stories where you want every detail. Tracy and I have made quite a few podcasts on that basis, but sometimes you've only got 10 minutes and need to know what's moving markets and why. That's the Barclays Brief Podcast. Every week, experts from Barclays Markets and research get you up to speed on what matters and what to watch next. About the time it takes to grab a coffee, so search Barclays Brief wherever you get your podcasts.

• 15:25Speaker 01

  This is the Bloomberg Tech Minute brought to you by ChatGPT. I'm Carol Muster. Getting hired at SpaceX requires exceptional ability and may include having Elon Musk review a candidate's resume. So writes Bloomberg Business Week's Lauren Grush. She reports that the company culture is defined by Musk and job candidates must understand that a commitment to SpaceX means adhering to this culture and exhibiting loyalty to Elon Musk. To get hired, candidates must demonstrate their achievements from past jobs and hands-on experience matters more to recruiters than advanced degrees, with the company looking for people with raw innate intelligence. A spokesperson for SpaceX didn't respond to a request for comment on its recruiting and hiring practices,

• 16:08Speaker 01

  but according to recruiters, advisors and those who've interviewed for jobs there, it's the space exploration dream that draws people to the company and Musk invokes that dream regularly to remind workers why they're there. Prospective hires are told that the job will require stamina, including in job ads that candidates, quote, "must be willing to work extended hours and weekends as needed." One major perk for all that hard work? Employees' access to equity, either the right to buy shares or payment in the form of restricted stock units that vest over time. That's the Bloomberg Tech Minute brought to you by ChatGPT. Get started at ChatGPT.com.

• 16:48Joe Weisenthal?

  What is a pain trade? And why is that a useful concept?

• 16:52Speaker 03

  Very good question. 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.

• 17:37Speaker 03

  Like, for the past 15 to 18 months, we really believed that big dollar would trade soft. What I mean by that is either because of hedge ratios, de-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, sending their winners to go to safe havens. If we trade towards the 110, 111, before 120, 121, 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?

• 18:22Speaker 03

  Sometimes you say, sometimes pain trade is so obvious. Sometimes someone will say, no, that trade is there for a reason. Consensus is going to continue to work. You develop a market, you trade on it.

• 18:32Tracy Alloway?

  On the dollar, and this is related to gold as well, we do seem to be in this weird situation where like, OK, 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 US. 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, US exceptionalism trade at the moment? Because there's two cross-currents.

• 19:06Speaker 03

  For sure. It's moving from US exceptionalism, selling your US 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.

• 19:23Tracy Alloway?

  Tell us about it.

• 19:25Speaker 03

  Powell's case, again, not necessarily selling your US asset, but buying more, buying less, increasing your hedge ratios, had become fashionable. But you're very right, Tracy. My partner in success, one of them, George Saros, head of our FX strategy, he has this...

• 19:40Joe Weisenthal?

  We love George.

• 19:41Speaker 03

  We all do. He has this rough formula, euro-dollar, roughly two-thirds oil price, one-third gas price. It should have traded around 1,1250, 1,130 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, wife's chair, Deutsche Bank, proudly waving my blue Make Europe Great again hat, it's in trouble a bit. Whether this war, you know, takes another one week, two weeks, two months, the wounds will stay. The wounds will especially stay in oil and gas prices.

• 20:25Speaker 03

  We disrupted supply enough, and the big importer, 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.

• 20:54Joe Weisenthal?

  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

• 21:39Joe Weisenthal?

  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 Strait of Hormuz, 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.

• 22:18Speaker 03

  I was, as the question was coming, I was preparing my next North to read. But first of all, on the oil and fire, we all see and respect Jeff Currie, what he said about molecules. And interesting people are watching, right? Did you see the tweet of head of Iran parliament?

• 22:35Joe Weisenthal?

  Oh, yeah. He used the you can't print molecules. 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 work 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.

• 23:02Tracy Alloway?

  A little bit depressing that this is the common language.

• 23:05Joe Weisenthal?

  Now this is the lingua franca of the internet.

• 23:06Speaker 03

  Everyone says warflation. Everyone says it takes two tacos, et cetera, et cetera.

• 23:10Joe Weisenthal?

  All right, but talk more about it.

• 23:11Speaker 03

  But, but this physical versus paper, the 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, etc, etc. He sends me a message, and we are now even one more week late, this is last week. And he doesn't do Ozan High all the time. Ozan, 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.

• 23:45Joe Weisenthal?

  Yeah, yeah.

• 23:46Speaker 03

  Qatar LNG will need months to restart, once the Hormuz is clear. And in oil, we have ten millibites of shut-ins already. And Asian refineries are very, very starved. Pipelines to Red Sea would take years, and also Arata Peninsula, etc, etc. He talks about Houthis. So, I get it. Brand versus what WTI, WTI is trading even better, etc, etc. But especially if the likes of Farz is correct. If we have a lot of talk, but one way or another, this Hormuz is only two, three tanks, you know.

• 24:16Joe Weisenthal?

  Yeah.

• 24:16Speaker 03

  One Indian tank, one China tank. I do fear that these guys warning us about physical delivery, maybe more right.

• 24:24Joe Weisenthal?

  Yeah, and I look, of course, and I get the logic. But the people in the oil market who are trading, whether they're speculators, whether they're hedge funds, whether they're real oil companies who are having to 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 they get shut in, blah, blah, blah, we're running out of storage. It's gonna take time to rebuild. There's nothing that could be said, and yet here we are at the.

• 24:51Speaker 03

  And I, and I, 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 off that much. At the end of the day, okay, it may not be Venezuela. We didn't find the Dersi. But I think people do believe that this squeeze, longer squeeze will come. And it's not that easy to fake. 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 credits. That's why the tail is big. That's why.

• 25:35Speaker 03

  Okay, another, I'm choosing my words carefully as well, but Marines are approaching. We're talking about Carg Island. These French clients talk to that ex-general, this ex-general. Some claim that taking control of Hormuz, 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 hit. These are not, these are not army professionals driving those ships. These are people, 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.

• 26:15Speaker 03

  Oil 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, she sounded calm. She didn't say, I embrace the three hike pricing, I will hike. But she did say, we will be, we're watching this. So back to 2020 analogies, people don't want to be seen late.

• 26:40Joe Weisenthal?

  Mm hmm.

• 26:40Speaker 03

  Things can move very, very fast.

• 26:43Tracy Alloway?

  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 to, 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

• 27:24Tracy Alloway?

  showing Trump doing something or showing their reaction to Trump doing something, are traders watching those and thinking seriously about them?

• 27:34Speaker 03

  Thinking seriously about them, I don't know, but, and they're watching, they're forwarding each other the things. But more key thing is, yeah, people do start to weed 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.

• 28:03Speaker 03

  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, 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.

• 28:32Joe Weisenthal?

  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 into 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?

• 28:54Tracy Alloway?

  I saw it.

• 28:54Joe Weisenthal?

  They may move some traders to Jersey, which, okay, cards on the table, like Dubai, not probably, I've never been. I doubt it's my cup of tea.

• 29:04Tracy Alloway?

  I feel I can say with some certainty that Dubai is more fun than Jersey.

• 29:08Joe Weisenthal?

  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 in the amount of money flowing into the Gulf? Is that real?

• 29:27Tracy Alloway?

  Flowing in and out of the Gulf.

• 29:29Joe Weisenthal?

  Flowing in and out, yeah.

• 29:29Speaker 03

  Short term and medium term answer, medium term answer, 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 heart goes out to them, but at the same time, it affects the sentiment as well. By the way,

• 30:12Speaker 03

  Part of the reason why many people got the whole Iranian thing wrong.

• 30:16Joe Weisenthal?

  Yeah.

• 30:16Speaker 03

  Eh, warflation, 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, up to lot to face the lie, et cetera, you know, there was no regime change. But Iran immediately began hitting GCC. Lifestyles got affected, that affect sentiment. So way before the worries about inflation and warflation and spy change, spy change, 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, eh, it's not going away. It's, it's, it's an important market moving factor.

• 31:02Joe Weisenthal?

  By the way, did you see that, um, Dulce Rodriguez is going to be speaking in Miami at a investment conference backed by Saudi Arabia? I'm just saying they don't make communists like they used to.

• 31:29Speaker 01

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• 32:52Tracy Alloway?

  Let's talk private credit because we have all these headlines coming out about redemption requests and a bunch of funds limiting those, as is their 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. And this 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

• 33:34Tracy Alloway?

  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?

• 34:00Speaker 03

  Right before Iran, it was all about private credit and AI's of the 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.

• 34:21Tracy Alloway?

  Right.

• 34:21Speaker 03

  It's not 2008, maybe 2001. That, you know, we smile at each other. That to me, immediately a bit of an orange sign. Okay, I understand. So it's, it all seems orderly, withdrawals. Are orderly, etc, etc, but headlines are not going away. If anything, they are definitely hiding behind Iran at the moment. It would be almost all what we would be talking about, especially in US, 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 cards we're dealt with. The key thing to watch is, at the moment, they claim it's orderly, you get your money.

• 35:03Speaker 03

  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 binky, I'm very curious to see what he says tonight on my macro dinner. So Wednesday macro dinner, big macro dinner tonight, he's still sticking to his eight thousand, 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 seeing 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 two thousand eight, but it may be something between this two thousand one to two thousand eight.

• 35:47Speaker 03

  Also, it's very into say, yeah, it's not, leverage is not there. Thank God, we may not see the Northern Rock BBC scenes of two thousand seven, two thousand eight, all these queues and stuff. It's a more quote unquote one percent problem. But what if it spreads and spreads and some of the big US banks start lending 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 gonna be okay. It's almost like the bank crisis of two years ago in this place. I'm more worried than that.

• 36:24Joe Weisenthal?

  You know, one of the things we're talking about is this very violent rate move and warflation 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 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 past through 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 is showing that through the end of February, there is more evidence that inflation was not heading down to 2% as

• 37:07Joe Weisenthal?

  many people had maybe wish casted.

• 37:10Speaker 03

  And that's a really blow to my heart in terms of expectations and stuff, right? Because, quote unquote, we almost had them.

• 37:15Joe Weisenthal?

  Yeah.

• 37:16Speaker 03

  On Feb 27.

• 37:17Joe Weisenthal?

  We were this close. We had a good thing going.

• 37:19Speaker 03

  It was a hurricane. It was a hurricane. Obviously, much more important than market. It's a tragedy for humanity, war, etc. But for the market as well, it was a hurricane. TY was at 3.93. If that NFP printed like that, maybe we would be talking US 10-year, 3.70s, etc. Now, genie is completely out of the bottle for very understandable reasons. Another word I want to relate to inflation, and before we wrap up, this whole rationing, that's a big watch out for Europe, for in Asia. If this continues like this, if my Russia MIT friend is right about Hormuz 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

• 38:03Speaker 03

  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.

• 38:14Joe Weisenthal?

  Yeah.

• 38:15Speaker 03

  In Europe, we may be told, 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. Mm hmm. 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 in rationing means, more fiscal means, more inflation expectations. So you know, I'm not in love with the word stagflation, but also I'm a rational guy. My job is to smell the market. Yeah, it's the we woke up that stagflation fear.

• 38:58Joe Weisenthal?

  Ozan Terman, thank you so much for coming back on Adlas. Thank you for the T shirts.

• 39:02Speaker 03

  Absolutely.

• 39:02Joe Weisenthal?

  Always appreciate checking in with you and we'll talk to you again soon. Next quarter, we'll do our quarterly check.

• 39:09Speaker 03

  I'd love, I'd love.

• 39:10Tracy Alloway?

  Wait, will you put us on the T shirt as one of your stocks?

• 39:13Speaker 03

  I should.

• 39:13Joe Weisenthal?

  That's what I did, yeah.

• 39:14Speaker 03

  You guys are the highlight.

• 39:17Tracy Alloway?

  Thanks, Ozan.

• 39:18Joe Weisenthal?

  Yeah, thank you so much.

• 39:31Joe Weisenthal?

  I always love catching up with Ozan. I just find it, you know, it's just incredibly useful to talk to someone who's always talking to people.

• 39:38Tracy Alloway?

  For sure.

• 39:38Joe Weisenthal?

  Right? Like that is a valuable thing in its own right. Ozan has very interesting perspectives, but to be able to just like channel his like his brilliant MIT friend, what the people said at the macro dinner last night, always very useful.

• 39:50Tracy Alloway?

  You know, also to Ozan's point about actual capacity cuts in Asia and Europe.

• 39:55Joe Weisenthal?

  Yeah.

• 39:55Tracy Alloway?

  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

• 40:02Joe Weisenthal?

  Uh huh.

• 40:03Tracy Alloway?

  And flights and airlines and transportation and things like that. And I am starting to get the fuel surcharge.

• 40:09Joe Weisenthal?

  Oh, interesting.

• 40:10Tracy Alloway?

  So 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.

• 40:22Joe Weisenthal?

  I just don't want to travel right now, but especially with all the lines you see in the U S. No, seriously.

• 40:27Tracy Alloway?

  That's a separate issue.

• 40:28Joe Weisenthal?

  I know it's a separate issue, but I think I just want to cancel as much as I can.

• 40:32Tracy Alloway?

  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.

• 40:39Joe Weisenthal?

  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 markets seriously and sometimes take them literally guy. And I actually really don't like-

• 40:53Tracy Alloway?

  I know you're a secret EMH, bro.

• 40:55Joe Weisenthal?

  Yeah, not even 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, they're 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 is a lot of money on the line for people who are paid 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,

• 41:36Joe Weisenthal?

  yeah, oil is high, but it's certainly not at the hair on fire levels that either that we even saw in 2022.

• 41:42Tracy Alloway?

  Well, my guess is that what we're seeing also is a divorce between the financial and the physical.

• 41:49Joe Weisenthal?

  That's true.

• 41:49Tracy Alloway?

  Right. So you can trade, 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, like you can't get those at the moment. So I don't even know how that like actually relates to price.

• 42:04Joe Weisenthal?

  There's apparently some price that we see Rory Johnston is always quoting about the actual physical price in Oman. And it's significantly higher, but the two eventually have to merge, right? Like they cannot remain disconnected forever.

• 42:15Tracy Alloway?

  Not for a while. So I think that disconnect is kind of like what's in focus at the moment.

• 42:20Joe Weisenthal?

  Well, if you're trading front month oil, you have about a month, right?

• 42:23Tracy Alloway?

  Yeah, okay, fine. But like, I think people are betting on like,

• 42:27Joe Weisenthal?

  I don't have to worry about it for a month. That's what I'm saying. Very plausible. It's, it's certainly a very, very difficult, unusual time. I mean-

• 42:36Tracy Alloway?

  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.

• 42:51Joe Weisenthal?

  Yeah.

• 42:51Tracy Alloway?

  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.

• 43:11Joe Weisenthal?

  You know, Ozan used the term bad vol.

• 43:14Tracy Alloway?

  Yeah.

• 43:14Joe Weisenthal?

  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.

• 43:33Tracy Alloway?

  I'm imagining a trader like staring at the VIX curve and going, bad vol, bad, bad. All right, shall we leave it there?

• 43:39Joe Weisenthal?

  Let's leave it there.

• 43:40Tracy Alloway?

  This has been another episode of the Odd Lots Podcast. I'm Tracy Alloway. You can follow me at Tracy Alloway.

• 43:45Joe Weisenthal?

  And I'm Joe Weisenthal. You can follow me at the Stalwart. Follow our guest Ozan Tarmun. He's at Ozan K Tarmun. Follow our producers, Carmen Rodriguez at Carmen Armin, Dashel Bennett at Dashbot, and Kail Brooks at Kail Brooks. And for more Odd Lots content, go to Bloomberg.com/oddlots, where we have a daily newsletter and all of our episodes. You can chat about all these topics 24/7 in our Discord, discord.gg/oddlots.

• 44:10Tracy Alloway?

  And if you enjoy Odd Lots, if you like it when we bring on Ozan to talk about his binky, then please leave us a positive review on your favorite podcast platform. And remember, if you are a Bloomberg subscriber, you can listen to all of our episodes absolutely ad free. All you need to do is find the Bloomberg channel on Apple Podcasts and follow the instructions there. Thanks for listening.

• 45:01Speaker 04

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