Everyone's talking Hormuz, but here's what they're missing

Yeah, there's definitely a lot to unpack there, and she left us with a lot of great thoughts on specific components of the market that are impacted, and in different ways, that not all of it is gonna necessarily move the same.

Given your expertise, Dustin, and your area, I'm actually curious to get your thoughts on inflation.

What we've just heard would suggest that we'll continue to see an environment that is probably going to have rates that are sustained at a higher level.

What's your perspective on that?

Yeah.

So in March, I, uh, started to repurpose the old higher for longer saying.

And of course, we use that a lot in the pandemic and coming out of the pandemic, particularly around inflation, and this obviously has inflation connotations as well.

But higher for longer, in particular in this case for the energy oil and the energy complex, which leads to higher inflation, higher sustained, uh, and consistent inflation.

And then kind of in my day-to-day, week-to-week, sitting on fixed income team, higher for longer term structure of interest rates.

But obviously, that has implications for, you know, raw commodities, has implications for high beta equities, uh, has implications for credit, has implications for currencies kind of across, you know, the big five asset classes.

I have been going along the, the lines of higher for longer.

I don't see the Strait opening up anytime soon, particularly to full volumes and, you know, Amrita seemed to suggest that was the case.

And then there's the infrastructure issue, obviously, in the Gulfies in the Middle East, and she talked a lot about it on the LNG side, the liquefied natural gas side, and, and Qatar, and a number of other fields, I think, that are around the G- the Gulf Coast, uh, countries.

So I think, you know, as I like to say, it's not particularly eloquent, but, you know, we are in it, and we're gonna be in it for a while.

I've kind of been using that line as well since probably late March.

And, uh, you know, here we are late May, and obviously with spot oil, Brent oil has come off.

You know, but as Amrita said, the physical prices are depending on where and what, you know, ten to twenty dollars a barrel higher.

And so people are still paying hundred and ten, hundred and twenty dollars a barrel here-ish for various, uh, types of oil, whether it's Brent or whether it's the, you know, Dubai blend or what have you.

And, you know, that's expensive.

Right.

That's a very expensive wh- where we were six months ago, 12, and 12 months ago.

Yeah.

So this is significant, and, uh, we're gonna be dealing with this for a while, in my opinion.

Right.

So then when I think about what are the implications then to a portfolio, how do you kind of manage through this inflation, which is definitely becoming more episodic.