Weekend Edition: Phil Suttle on Blockades, AI booms and the end of efficiency
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Why are global markets showing unbridled enthusiasm despite war and oil‑price risks?
The war, the newfound optimism, growth prospects for the United States, Europe and China, it is time for another whirlwind tour of the global economy with economist Phil Suttle. That's this week.
The morning call from NAV with Phil Dobby. The weekend edition.
Well, we should uh point out that this podcast is being recorded a day and a half before it is published, and anything and everything could have changed in that time a whole day and a half. But markets have been quite positive this week, it's fair to say, about the upcoming peace talks, even though the last talks went nowhere and the US is uh now joining Iran in Iran in making sure that no oil seeps through the Hormuz Strait. Uh well just about anyway. Yeah, the SP We hit a new high this week. Does it all make sense? Uh well let's get Phil Suttle's take on this. Phil is uh and look, Phil, I got AI to write this 'cause I'm getting lazy. Phil is a veteran international macroeconomist with nearly forty years experience across the Bank of England, JP Morgan, the IIF, Barclays, and Tudor, now making running his own consultancy, Sattle Economics.
How does that sound? For AI. Not bad.
Sounds very good. Yeah, yeah, absolutely. Yeah,
it could catch on, couldn't it? So uh are markets managing this war risk and the oil price risk? Are they are they doing that well right now, or is there a bit of bit too much unbridled enthusiasm, do you think?
Well, I I think the way I look at it at least is they're sort of almost ignoring it. Um, in some sense. I when you say markets, I mean obviously specifically the US equity markets, resilience I think is more uh a function of just a a focus on you know, I believe that corporate earnings will continue to be strong under almost any scenario. Now now so far that belief has sort of held up. And we're early on in the first quarter earnings season and the banks have done well. They're the main people reporting so far. So I think really the equity story is, okay, forget about the Middle East, forget about the rest of the world. Um, we're doing okay on the on the earnings.
But that's looking backwards, of course, isn't it? And then you look forwards and you go, Okay, well, oil prices are probably gonna be a bit higher at the end of all of this. But there's oil prices and oil supply, isn't there? I mean they're they're very different things. You look at it six months out and and oil is well damned, that doesn't mean there's going to be any more of it, of course.
Yep. No, I I I please don't get me wrong. I'm not trying to suggest that the global economy somehow looks better. In fact, I think it looks a lot worse. Uh it's just so far, you know, the corporate sector doesn't seem to be being affected. Uh you know, it it is being affected, but at the level of reported earnings and the level of forward looking statements about earnings, there's a degree of um sort of imperviousness here, which I don't think is sustainable, but for now that's
where we are. Okay. Well I mean let's talk about central bank's response to all of this then. Cause the uh and and and the way it's driving bond markets. Because I mean the obvious c because everyone just looks at inflation and goes, Well, okay, we've we've got inflation into the mix now. We thought we had inflation coming down Now I've got inflation going back up again, uh, but we've also got flagging demand and and flagging confidence as well as a result of all of this uncertainty. It's a it's a difficult time for central banks, isn't it, to know which direction they should take in all of this.
Yep. Well I I I I mean there are Yeah, one of my favorite quotes at the moment is the the Mike Tyson quote, the the the boxer, the US boxer, who said, Everyone has a plan until they get hit in the mouth meaning, you know uh step into that ring and, you know, you get the real the real fight begins and, you know, you have to start making some tough decisions. Um, I think where central banks stand is they know the theory. And the theory, very briefly put, is that, you know, when you get a negative uh supply shock, in other words, the global supply curve moves to the left.
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Chapters
6 chapters
1
Why are global markets showing unbridled enthusiasm despite war and oil‑price risks?
0:01–4:50
2
How does the S&P 500 keep hitting new highs while US households see flat disposable income?
4:50–13:13
3
What is the “Mike Tyson” moment for central banks and how should they react to supply shocks?
13:13–21:02
4
Can the AI‑driven investment boom sustain growth when consumer spending is stagnant?
21:02–26:49
5
How will the 2026 US mid‑term elections reshape fiscal and monetary policy?
26:49–32:11
6
Why is Europe struggling with energy, productivity and defence spending?
32:11–32:22