Bloomberg Surveillance TV: March 20th, 2026

The thing about AI for business, it may not automatically fit the way your business works. At IBM, we've seen this firsthand, but by embedding AI across HR, IT, and procurement processes, we've reduced costs by millions, slash repetitive tasks, and freed thousands of hours for strategic work. Now we're helping companies get smarter by putting AI where it actually pays off. Deep in the work that moves the business. Let's create smarter business. IBM. Support for the show comes from public.com. If you're actively involved in your portfolio, you probably catch yourself repeating the same actions. Buying the dip, manually sweeping idle cash, putting on a hedge. On public, you can now create AI agents that handle all these tasks on your behalf. Just describe what you want to do in plain English. Like, if the VIX hits 25, buy a put option on the S&P 500. Or, if my cash balance goes above $20,000, move the excess into my direct index. You approve the workflow and your agent handles the risk. Monitoring the market, watching for your conditions, and executing your strategies exactly as defined. An investing platform driven by your intent, not just your clicks. You can also get full read and write access to your account via the public API. Go to public.com slash market and fund your account in five minutes or less. That's public.com slash market. Paid for by public investing. Brokred services by Open to the Public Investing Inc. member FINRA and SIPC. Advisory services by Public Advisors LLC, SEC registered advisor. Complete disclosures available at public.com slash disclosures. Healthcare doesn't always work great. If you've ever waited on a refill or couldn't schedule an appointment, you get it. That's the kind of stuff Optum is changing. They're using data and technology to integrate patient care, pharmacy, and everything else. So healthcare is connected, not complicated. What's that look like? Cheaper prescriptions that are easier to get and care that looks at the whole person, how you need it. Optum is helping make healthcare work as one for everyone. Learn more at business.optim.com. Bloomberg Audio Studios. Podcasts Radio News.

This is the Bloomberg Surveillance Podcast. I'm Jonathan Ferro, along with Lisa Abramwitz and Anne-Marie Hordern. Join us each day for insight from the best in markets, economics and geopolitics. From our global headquarters in New York City, we are live on Bloomberg Television, weekday mornings from 6 to 9 a.m. Eastern. Subscribe to the podcast on Apple, Spotify, or anywhere else you listen. And as always, on the Bloomberg Terminal and the Bloomberg Business Out. The White House. Taking an oil and gas export ban off the table as a way to bring down energy prices after the Vice President JD Vance met with oil executives. Stephen Shaw of the Short Group writing the Brent WTI spread will not narrow until one of two things happens, almost fully reopens or WTI stops pricing in diplomatic optionality that never materializes. Neither. is imminent. Stephen joins us now for more. Stephen, welcome to the program. I want to get to your line in your research. The Brent WTI spread says everything diplomacy won't. Stephen, just build on that. Yeah, absolutely. Thank you. So the Brent market is now the benchmark for the seaborn. trade in oil. And this is the market that is pricing the conflict, is pricing the war, is pricing the shortages that we are seeing. The WTI market prices optionality, prices optimism. It's a landlocked contract. It's a futures contract. And like every futures contract, it derives its value from a physical asset. The physical asset in WTI is landlocked in Oklahoma. It's a different type of crude oil. Brent is a similar crude oil but priced in the land basin barrels. And it's the benchmark for the C. born trade. So every time we see a dovish headline, the war might be ending or there's an off ramp. That optimism gets priced into the Brent, the WTI contract, and that is the hope contract. The Brent market is the real market. That is pricing the real events going on. And that blowout in the spread that we've seen over the past week, week and a half tells you that this war is far from over because we are seeing a tremendous bid in Brent over that WTI contract. Stephen, I want to pick up on your point about what the WTI is pricing in about policy. the U.S. government could do. So yesterday, Secretary Wright tweeted that there is going to be no export ban. But then I had a bunch of calls from people saying no export ban for now. Do you think this is something the U.S. will keep in their back pocket in case prices continue to rise? Absolutely. Now, let's be clear, an export pan would be catastrophic for our U.S. oil production because all it would do is pent up more supply here in the United States of oil we don't necessarily use, so we don't have a use for it. So we're not going to burn it. So inventories will just build. And as those inventories build, there's no place for new production to go. So ultimately, it's a catastrophic move for production. And I think it appears that the White House got that message. But you never know. It does make a nice headline.

So we could potentially see it's a political tool. It's not an economic tool. So certainly there is that potential. And clearly with the way the Brent market has gone. We've gone from a $5 premium Brent over WTI at the start of the week to now it's upwards of $13 to $14. So we've tripled that premium. So clearly the market is skeptical that an export ban is not off of the table. Stephen, do you even think Brent right now is pricing in really what is going on in the region? When you look at Oman. futures. I think yesterday they blew past $170 a barrel. That's more tied to the physical barrels right now that are moving in the Gulf. So is Brent even accurate? It's an excellent question. And, you know, I'm reticent to say it's not because then I've been saying, oh, the market is wrong. But to your point, we have a bivocated market. So the Brent market is still an Atlantic basin market. That's where it's derived from. To your point that Oman and the Dubai futures contracts, which are linked more towards the Asian markets, that is really reflective of the shortage. So what the Brett Dubai or the Brent Oman, Brent's steep discount. to those markets is telling you is that we're looking at the Atlantic basin that is well supplied with oil. The problem is in Asia, where all that oil is still blockaded up in the state of Homoos, those are. So your refineries from India over through Japan, up through South Korea, are bidding for that oil. And hence why we're getting such a huge disconnect between the two markets. So to answer your question, Brent is certainly disconnected. It's more connected, as we've said, relative to WTI. But actually, where the shortages with the physical shortages represented in the Oman and Dubai markets, clearly, again, that is another telltale that this war is far from being resolved in any sort of positive manner. And Stephen, that's the reality for Asian importers, buyers off that crude, of that physical asset. Do you think this market's taking too much comfort from the futures curve? It's really interesting, and where we're really seeing the blowout, and to answer your question, I think the market is rather relaxed. If we look at the Brent to my market, for instance, if we believe in market theory or in that curve, then we're looking at Brent trading at a $30-40 discount to Dubai, $60-70 discount to Oman. So the question is, when does or does the market catch up? So that we'll take the Dubai market right now. We're trading out about a $35 discount, Brent below Dubai. That's not supposed to happen. Dubai is an inferior quality oil. It trades at a discount to Brent, but that's not the case, but we know why. But we go two months out, the Brent premium. And we said Brent normally trades that premium to Dubai is now trading at a life of contract high of nearly $8 of the barrel. So with the market, at least what the curve is telling us, is that, yeah, there's a real problem. There's a stranded barrels in the Strait of Huluz. They're not going out. Therefore, Dubai trades at a massive premium to Brent.

But going out two months, that premium reverses now to a significant discount. So the market, if you believe in term structure or in the forward curve of pricing theory, is telling us, yeah, we've got a real problem in the spot market. By the time we roll into summer, there's going to be some sort of exit in this war. Remains to be seen. We're not seeing it in the product markets, for instance. So another question now is the diesel market, the crack spread, the margin between diesel prices and oil prices in the Gulf Coast. is almost $70 a barrel. So one or two things are going to happen. Oil, WTO is going to have to catch up to where product prices are. But product crisis is going to crash because of demand destruction. And now we're talking about significant economic contraction. But the hearing now is that the spread is telling us significant shortage in the spot market month. But going to two months out, we should start to see some sort of resolution. At least that's how the market, that's what the forward curve is suggesting to blow up. Stay with us. More Bloomberg surveillance coming up after this.

Support for the show comes from public.com. If you're actively involved in your portfolio, you probably catch yourself repeating the same actions, buying the dip, manually sweeping idle cash, putting on a hedge. On public, you can now create AI agents that handle all these tasks on your behalf. Just describe what you want to do in plain English, like if the VIX hits 25, buy a put option on the S&P 500, or if my cash balance goes above $20,000, move the excess into my direct index. You approve the workflow and your agent handles the risk. Monitoring the market, watching for your conditions, and executing your strategies exactly as defined. An investing platform driven by your intent, not just your clicks. You can also get full read and write access to your account via the public API. Go to public.com slash market and fund your account in five minutes or less. That's public.com slash market. Paid for by Public Investing. Brokred services by Open to the Public Investing, Inc., member FINRA and SIPC. Advisory Services by Public Advisors LLC, SEC Registered Advisor. Complete disclosures available at public.com slash disclosures. Let's talk about health care for a second. It doesn't always work the way people expect it to. If you've ever waited on a prescription refill or had a hard time getting the care you needed, you know the feeling. The system should just work better for everyone. That's exactly what the people at Optum are trying to do every day. They're a health care company linking patient care and pharmacy services and using data and technology to drive the whole system, so care is connected, not complicated, for patients and providers. Things like making it easier to get care that looks at the whole person, from primary care doctors to mental health support and even in-home care, and then using technology to make sure they all work together. Technology designed to help doctors spend less time on busy work. and more time with their patients. In those prescriptions, Optum is working to bring costs down, save patients' money, and make it easier to get refills. Little by little, Optum is helping make healthcare work as one for everyone. Head to business.optim.com to see how. The thing about AI for business, it may not automatically fit the way your business works. At IBM, we've seen this firsthand. But by embedding AI across HR, IT, and procurement processes, we've reduced costs by millions, slash repetitive tasks, and freed thousands of hours for strategic work. Now we're helping companies get smarter by putting AI where it actually pays off, deep in the work that moves the business. Let's create smarter business, IBM.

The US and Israel, working to carb crude markets, both countries vowing to avoid targeting Iran's energy infrastructure following retaliatory attacks across the Middle East that fueled an oil spy spike. General Robert Walsh of Academy's securities writing the conflict is transitioning to a war of attrition. There is no clear checkmate scenario. General Walsh joins us now for more. General, welcome to the program, sir. Are you suggesting this war has entered a new, more enduring phase? Good morning, Jonathan. Thanks for having me today. You know, the war changes as time goes on. And what we're seeing now is from a U.S. perspective, it is going into a little bit more of a war of attrition. There's military sets that we've talked about in the past on what the U.S. military and the Israelis is trying to take out. They're systematically doing that. They're very successful from a military standpoint. But as we see that the nature of conflict is really a clash of wills. And that clash of wills is going on now between... both, you know, the U.S., Israelis, and Iran. And Iran has a say-so in this. And what we're seeing from Iran is they're taking a very asymmetric approach to this. And their asymmetric approach is, number one, their objective is the regime to remain. But we're now seeing what's changing a little bit in that, is they're also looking at cost imposition on the U.S. and Israelis and also the Gulf partners in the rest of the world. So that cost imposition now is changing. And we see those attacks now becoming more prevalent on infrastructure in the Persian Gulf, and we're seeing it more and more taking place. And that's that cost. in position that they're now starting to put to make it so painful that the U.S., the Israelis, and the world community want to get out of this situation. General, we do have the United States sending a second amphibious assault ship to the Middle East. Can you walk us through what these highly trained Marines could potentially be used for in the region? Sure. I think as you look at the combatant commander, Admiral Cooper in the Central Command, he wants to have as many capabilities in his hands as he can use as possible. As the planning takes place, we see what we call branches and sequels. As things start to change on the battlefield, then different branches and plans come into play. Having a marine amphibious group with a Navy amphibious ready group with it, Marine amphibious unit, that ARG MU capability brings, it's a toolbox in its own, which adds to the toolbox that he has.

and it brings many capabilities that comes to bear. It's got a reinforced infantry battalion with plenty of fires capability or attack capabilities. It has a full range of aviation assets from attack heloes, heavy transport heloes with the CH53s. It's got the MV-22s with our tilt rotor assault support aircraft that can go out long ranges and do raid-type missions or insert missions. And then it's got F-35s on board, too, that can provide the close-air support that the team would need. But in this case, they'd be inserting themselves into a very large joint. operation where there's many capabilities that the sent com commander has to be able to fit this tool into his toolbox and be able to use it as he sees fit. So some of the missions you could see, you talked about Carg Island. There could be raids there, going into the, if there were any indications that we'd go into the nuclear sites. to try to hold those. We've got very highly trained special operations forces that can do those missions, but you'd probably need a conventional force to go in that the Marine Expeditionary Unit can provide to go in and provide some of that security, along with many of the joint assets that would be on top of that providing air superiority. How vulnerable will they be, though, in a narrow corridor? I think what you're seeing right now is why the U.S. Navy is not operating inside the Straits. because those conditions have not been set by the joint force to be able to bring Navy ships in there yet. The Navy would rather stand off than stand inside there where there are much more risks. So the threats to the Navy, both from drones, missiles and fast attack craft, has to be taken down more before you start to see them entering. So this is a phase campaign based on conditions. And what we've seen recently start to really play out is, as the air security has been gained, The U.S. has now brought in capabilities like the A-10 aircraft, which you saw that operated at a very low altitude. It can see targets and take out small targets like the fast attack boats or where they've got missile sites hidden, along with these attack aircraft that are in. So they're bringing much more capabilities in there that are for that type of mission, the septic conditions, for a Navy aircraft that come in. Stay with us. More Bloomberg surveillance coming up after this.

Support for the show comes from public.com. If you're actively involved in your portfolio, you probably catch yourself repeating the same actions, buying the dip, manually sweeping idle cash, putting on a hedge. On public, you can now create AI agents that handle all these tasks on your behalf. Just describe what you want to do in plain English. Like, if the VIX hits 25, buy a put option on the S&P 500. Or, if my cash balance goes above $20,000, move the excess into my direct index. You approve the workflow and your agent handles the risk. Monitoring the market, watching for your conditions, and executing your strategies exactly as defined. An investing platform driven by your intent, not just your clicks. You can also get full read and write access to your account via the public API. Go to public.com slash market and fund your account in five minutes or less. That's public.com slash market. Paid for by Public Investing. Brokridge services by Open to the Public Investing, Inc., member FINRA and SIPC. Advisory Services by Public Advisors LLC, SEC Registered Advisor. Complete disclosures available at public.com slash disclosures. Let's talk about health care for a second. It doesn't always work the way people expect it to. If you've ever waited on a prescription refill or had a hard time getting the care you needed, you know the feeling. The system should just work better for everyone. That's exactly what the people at Optum are trying to do every day. They're a health care company linking patient care and pharmacy services and using data and technology to drive the whole system, so care is connected, not complicated, for patients and providers. Things like making it easier to get care that looks at the whole person, from primary care doctors to mental health support and even in-home care, and then using technology to make sure they all work together. Technology designed to help doctors spend less time on busy work. and more time with their patients. In those prescriptions, Optum is working to bring costs down, save patients' money, and make it easier to get refills. Little by little, Optum is helping make healthcare work as one for everyone. Head to business.optim.com to see how. So there's a lot of noise about AI, but time's too tight for more promises. So let's talk about results. At IBM, we work with our employees to integrate technology right into the systems they need. Now, a global workforce of 300,000 can use AI to fill their HR questions, resolving 94% of common questions. Not noise. Proof of how we can help companies get smarter by putting AI where it actually pays off. Deep in the work that moves the business. Let's create smarter business. IBM.

The conflict in the Middle East pushing global bond yield tire as central banks way increasing inflationary risk. Terry Wiseman of Macquarie, writing the ultimate cost of the war is unknown, but bond traders aren't taken any chances. Terry joins us now for more. Terry, good morning. Terry, Warden, I said, what's going on? What kind of a question's that? The day like today. It's going to see what a ride it's been in the old bond market. What's your reaction to the moves we've seen, particularly at the front end of the curve? Well, the front end of the curve is responding to policy, of course, John. What we wrote on March 4th, actually, just a few days after the war began, was that central banks were going to respond to this war and to the implications having for oil prices in a hawkish fashion. Now, that might not have been obvious on March 4th, right? In terms of crisis and certainly in terms of high oil prices, we've also seen historically higher unemployment. We've seen recessions in some cases. But I felt that these central banks would have been felt burned by what had happened in 2022 and 2023, and that they weren't going to take any chances. So it's not just the bond traders are not taking any chances here. The central banks aren't taking any chances as well, certainly not through their rhetoric. And that's why the front end of the curves have moved up, and that's why you've seen these very wide swings in the last few days in the money market's projection of where central bank policy rates are going to be at the end of this year. well, Terry, because the consensus view coming into these central bank meetings is they would look through this shock. Chairman Jerome Powell effectively said it's not that simple. And the takeaway from the ECB and the B.O.E is they might actually hike. in the next several months. Sure. And keep in mind, there's something going on here besides just the increase in oil prices and its transmission to CPI, for example. Because if it was just that, it might not be that big a deal, because in many of these industrialized countries, you know, the energy products are not that large a component of the CPI basket. I think what central banks are worried about are the so-called second-order effects, whereby if you do get an increase in inflation, they buy half a percent or three quarters of a percent, it becomes sticky because it becomes embedded in inflation expectations. It then becomes embedded in wage demands. And you don't have just the impulse from the original increase in oil prices, but you have a propagation of inflation expectations that causes more inflation. That's why they're trying to nip this in the bud right now, admittedly through their rhetoric at first, but if they have to raise rates, they will raise rates. Can we talk about the cost of this more? For a day, I believe you said it's $1 to $2 billion. Now you have the Pentagon asking Congress for $200 billion. Are we going to see movement on the long end of the year old curve because of this? I think the long end of the curves have moved up for three reasons, and one of them is clearly the fiscal implications. But let's talk about the first two reasons. The first reason, the most important reason I think is just higher inflation. When you have higher inflation, nominal assets, nominal paying coupon assets like long-term bonds, just seem all of a sudden less attractive. And we know that's the case because break-evens. in these markets have gone up. Inflation break-even, that is, telling you that the market itself is expecting more long-term inflation. People have been fleeing into the inflation-protected products. They've been fleeing out, relatively speaking, of the nominal products. So yields are going up on the long end of the U.S. Treasury curve and in the long end of the curves in Europe.

The other issue here, of course, is that central banks are tightening. And that makes it more expensive to carry a position in the long bond. You're financing it at a higher rate. It becomes less attractive to do that. You sell off the long bond. And the third reason is the one you've just highlighted, which is that there might be more issuance. Why? Because there's a cost to managing and running a war. And I've seen reports suggesting it's... One to two billion dollars per day is the cost of the U.S. right now. So obviously if this becomes a long war, it could start to impinge on the outlook for deficits. We've got about 45 seconds left. We had a guest earlier on the program who said some value had opened up at the front end of the curve. The barter hike is simply too high. Yields are through where Fed funds are right now. Can't push it much further. And if they do hike over the next two years, they may well cut in response to those hikes further down the road. Where do you think value has opened up across the curve? Look, I think it's not just a question of where on the curve, but maybe where internationally. We have seen very aggressive swings, let's say, in where the market expects the ECB to be at the end of the year. Three hikes, for example, is priced in currently. three from the BOE. I think there the market may have overreacted. And the market may be anticipating that this war will take. will last longer that it might actually do so. And of course, if it doesn't, and if it ends somewhat sooner, you're going to see those violent reactions in the front end come back down. So if I were looking for value in the short end of the curve, it's not so much we're on the curve. You know, six months, 12 months, 18 months, it's internationally. I think some markets have simply reacted more than others and that might be where the value is. This is the Bloomberg Surveillance Podcast, bringing you the best in markets, economics and geopolitics. You can watch the show live on Bloomberg TV, weekday mornings from 6am to 9 a.m. Eastern. Subscribe to the podcast on Apple, Spotify or anywhere else you listen. And as always, on the Bloomberg Terminal and the Bloomberg Business Out.

Health care doesn't always work great. If you've ever waited on a refill or couldn't schedule an appointment, you get it. That's the kind of stuff Optum is changing. They're using data and technology to integrate patient care, pharmacy, and everything else. So health care is connected, not complicated. What's that look like? Cheaper prescriptions that are easier to get and care that looks at the whole person, how you need it. Optum is helping make healthcare work as one for everyone. Learn more at business.optim.com. As industries evolve faster than ever, companies need an environment that accelerates strategic growth, and Michigan delivers on that promise. From emerging startups to global enterprises, Michigan offers what executives value most, a resilient, innovative ecosystem, diverse communities that attract top talent, and a quality of life that supports work-life balance. With our unified T-Michigan approach, businesses scale faster and compete at the highest level. Michigan. opportunity. Sees your opportunity at michigan business.org. These days, it seems like AI agents are just about everywhere you turn, every field and every function. But without identity, you can't trust they'll serve your business instead of jeopardizing it. Fortunately, ACTA helps you get identity right by securing your AI agents' identities, giving you a single layer of control, a single standard of trust. So whether an AI agent supports a single user or your entire enterprise, with ACTA, you'll turn risk into opportunity. Secure every agent, secure any agent. Octa Secures AI.