Mark, um, take on the week, and was PPI yesterday something of a game changer?
I think first of all this week has reaffirmed that probably the big theme for the next 6
months is inflation. It's not just about PPI. The details in the CPI were also not
encouraging. It's just because we didn't get a really scary print that there was a bit of
relief in the market, but the reaction in front end rates to CPI was more about the
pressure that we got. From Besant and this administration on the Fed and what's happening
there, but that again is inflationary. So the key takeaways are both CPI and the details and
the PPI show that tariffs inflation is coming through and we're going to have more inflation
coming through naturally from the trade policies that are happening from the US
government. On the other hand, we're also getting pressure on the. To have easier
monetary policy that would be justified by orthodox economic theory, which is also
inflationary. So the big takeaway from this week is that inflation is coming to the US. You
want to buy assets that will hedge against inflation, and you also should expect a
steepening of the yield curve with long end bonds ultimately suffering over the coming 6
months or so or maybe longer. Talk to us about that margin pressure question though. I mean,
we just had a guest on that talked about the PPI data being a canary in the coal mine. For
how long? When do we see the actual effect of that on corporate earnings?
Absolutely. What we're seeing now is companies are not passing on to consumers yet. We've
talked about this a lot the last month or so that essentially because the stop start nature
of tariffs and the fact that there are so many tariffs that are imposed that were later
revoked, it does not make sense for companies to be premature in acting. They want to wait as
long as possible and because we've known this tariff story is coming. For a long time it was
well flagged. People have been able to front load on their supply chains. They've bought
time to delay reactions. That means that I was expecting that we would see companies start to
react by the end of 3rd quarter, so we'd see it in those kind of earnings that come through
in 3 months' time. In fact, when I wrote a piece on this a couple of weeks ago saying
that's the rough timeline, most equity PMs. and said no, it's more likely in the 4th
quarter that we'll start seeing the pass through to consumers. Ultimately it will all be
passed on to consumers because there's no competitive advantage to taking on the pain
given that tariffs are everywhere. So it will all ultimately passed on to consumers, but
we'll only really start seeing the severe impact of that in the 4th quarter in pricing,
which means it will be in the earnings results that we get in January. Mark, I want to ask a
question on your thoughts on this summit between Trump and Putin happening in Alaska
today. How are markets playing this? I think that overall
expectations are very low. There's very little probability price for a positive outcome and
therefore I think there's a greater reaction if there is any positive outcome. I think a
very positive outcome like some peace deal framework announced, is an extremely unlikely
tail risk, but I think there are various other headlines that don't result in oil hire, don't
result in secondary sanctions that are ultimately be seen as being a risk on and a
positive for markets.