Joe Weisenthal: Hello and welcome to another episode of the OddLots podcast. I'm Joe Weisenthal.

Tracy Aloway: And I'm Tracy Aloway.

Joe Weisenthal: Tracy, we're recording this March 25th, 2026. It's 9:10 a.m. And the reason I do mention the time, the cash trading and the stock market hasn't opened. The reason I mentioned the time is not just because things are moving fast, but to establish we've had market moving headlines already this morning. Oh, absolutely. So just in the last like 15 20 minutes we got some headlines attributed to the FARS 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 market

Tracy Aloway: 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.

Joe 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.

Ozan Tarman: I think if you go back to the post liberation day environment particularly with the sort of modest 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 dis as many people are inclined to disbelieve headlines, I don't think people disbelieve them entirely. When Trump said yesterday that the Iranians had sent him a prize that was extremely valuable and it's like 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 I 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.

Tracy Aloway: 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 straight of Hormuz, which is the sort of thought experiment that has bedeled oil analysts for decades. And yet, you know, the reaction has been kind of muted.

Joe Weisenthal: 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.

Ozan Tarman: 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 uh 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 uh his tour a tour. It is the cover the macro dinners 2026 tour with a nice Deutsche Bank logo.

Joe Weisenthal: But you should read some of those cities just to give an idea

Ozan Tarman: the dates of the macro dinner tour. Jan 4th London Jan 21 Geneva Jan 29th Milan Miami Budapest London New York City Montreal Copenhagen Riad 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 Tarman, vice chair of global macro at Deutsche Bank. So, uh, Ozan, thank you for coming back on OddLots.

Ozan Tarman: 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.

Joe Weisenthal: Uh, it's great having you here in studio. It's a pretty wild market to trade, I assume.

Ozan Tarman: Very, very wild market to trade. And on the t-shirt, unfortunately, for example, this Riyad Qatar Dubai leg that I was looking forward to. We'll see what happens.

Joe Weisenthal: Oh, right.

Ozan Tarman: We'll see. We'll see. We'll see what happens with uh with that. But not necessarily untradeable. Still traders always smell things, always have a sense of where the paint is, where the momentum is. Even uh walking in now, I became a veteran of this wonderful show. I was thinking this time around we should really say Wednesday night. Yeah, that's right. you know one I I 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 bit cliche to say it takes two to tango or taco 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 france wounded hurt players out there certainly in race market certainly on front end

Ozan Tarman: so people are reluctant to take fresh bets but as I constantly hold these conversations roundts I do get the sense that now getting to know the president well as well people did expect this we won the war I won the war mission accomplished moment which he's trying to do in a few ways then the big debate is yes and we do get these spikes of equity sire oil lower at the end as you rightly said even brand is lower than 100 than we should talk VT VI 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 fars like you said Israel 12 said these talks are happening farce 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 there is room for a squeeze here in equities sire oil over lower but the tail risk is very very fat.

Tracy Aloway: Yeah.

Tracy Aloway: 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?

Ozan Tarman: 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 research something big is going to happen. Schumer how 50% of white color jobs could be lost in 12 to 18 months. So finally not only rate cut expectations were increasing we were 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 close topic 3.93 and cannot be named but some 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.

Joe Weisenthal: We need to talk about our friend gold as well.

Ozan Tarman: One more thing, another good friend. I did bring this on paper because it's very very telling. This guy sends me a message I think the Tuesday or Wednesday before Iran. The multi-illium 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 clear by the day that we're about to see a pandemic. The S&P made new alltime high. The same is today with Iran. Nobody cares. I mean,

Tracy Aloway: yeah,

Ozan Tarman: rings so true through now, right?

Joe 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 uh the relentless bid into gold. And whenever we frame a conversation, I'm like, God, this is going to be the top. It was not the top, even close. So, that was uh gold was around 3,800 ounce during that episode. It got over $5,500 an ounce in early February. As of yesterday, we saw a 10day gold selloff. 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.

Ozan Tarman: Very much so. And look, I love you guys, but on the last show as well, uh when we all started with gold media, gold media, I was very, you know, happily politely answering, but in my mind, I was saying this is an orange sign of course. And then I listen to our show. We listen. So I'm like risk on this works. Risk of 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 at nobody cares. The repercussions on the position is just like you said that people to get out of all winners

Ozan Tarman: and gold was a big winner. Emerging markets were big winners. Yeah. 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 hands

Ozan Tarman: for understandable reasons are selling them everything happened back to Tracy's question so people were all into these bare flatten steepeners first then they believed in bull flatteners because everything was all rates were coming down then you get into this world and thanks were 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 jersey and my god from like getting ready for cuts 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've 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

Joe Weisenthal: are closed how many times have you heard the word liquidation or you know a pod shop blowing up in the past few weeks

Ozan Tarman: a lot unfortunately right capulation and I teach all our young stars or mentors so after the cliche is oh investment bank will do well trading floor will do well because you know be offer fear no not like that after a while there's really something called bad volatility and this is bad volatility from these crazy headlines being that much slaves to what somebody says at Friday 10 p.m. to Saturday 11 p.m. Also um this much of liquidation and capitation after a while people say the best thing is uh blank piece of paper less trading and let's watch that's why your opening question some people see this market as untradable but unfortunately in times like this especially if you're not wounded somehow flat 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 9, 2025 moment. This is when may maybe this is right around the around the dip and we will remember it like the time we we were able to look through it. I have my doubts, but maybe

Joe Weisenthal: what is a pain trade and why is why is that a useful concept?

Ozan Tarman: Very good questions. You know, you you know what triggers me? a pain 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 hurt 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

Joe Weisenthal: smaller instances

Ozan Tarman: 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 h ratios dollization 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 selling their winners to go to safe heavens. If we trade towards the 110 111 before 120121 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 sometimes you say sometimes pain trade is so obvious sometimes some say no this you know that trade is there for a reason consensus is going to continue to work you develop a market you trade on it

Joe Weisenthal: on the dollar and this is related to gold as well you do seem to be in this weird situation where like, okay, 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 crossurrens

Ozan Tarman: for sure. It's moving from US exceptionalism selling your US assets to more hedge ratios. It it definitely moved. Let's put it that way.

Joe Weisenthal: Again at the beginning of January, February, all these events one after another. Venezuela, Greenland. My god, so much happened in 3 months.

Ozan Tarman: Tell us about it. Pow Powell's case again, not necessarily selling your USS, but buying more, buying less, increasing your H ratios had become fashionable. But you're very right, Tracy. My partner in success, one of them, George Seros, head of our FX strategy, he has this, we love George, we all do. He has this um rough formula. Euro dollar roughly 2/3 oil price, one/3 gas price. It should have traded around 11250 113 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 oddlas every 3 months or so vice chair Dece bank proudly waving my blue make Europe great again hat it's in trouble a bit whether this world you know takes another one week two week two months the wounds will stay the wounds will especially stay in oil and gas prices we disrupt the supply enough and the big importers the ones who need those oil and gas price is lower is Europe. So in an understanding way talking about when consensus starts becoming more sense in these roundts 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.

Joe Weisenthal: So this is 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

Ozan Tarman: exactly

Joe Weisenthal: if you just talk to the oil analysts who I love like their hair is on fire right now and they pro 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 close to its highs in 2022

Ozan Tarman: 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 closed the straight of Hormuz, oil just exploded, etc. 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 knowowers versus the prices which are high, but even by the scale of the last 5 years, not insane. I was as as the question was coming I was preparing my next note to read but first of all on the oil and fire we all see and respect Jeff Curry what he said about molecules and interesting people are watching right did you see the tweet of head of Iran parliament

Joe Weisenthal: oh yeah

Ozan Tarman: he made he he used the you can't print molecule 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 of a friend who visited Afghanistan and he met some people working for the Taliban and like they started WhatsAppapping 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 but

Tracy Aloway: a little bit depressing that this is the common language

Ozan Tarman: now this is the lingua frank of the internet we all

Ozan Tarman: everyone says warlation everyone say etc etc all but talk more but but this physical versus paper the paper trading is very very important so this friend of mine an ex-colague I worked with him for decades big commodity trader now a dear client and you know one of these guys who he he talks math so MIT Russia's MIT etc he sends me a message and we are now even one more week late this is last week

Joe Weisenthal: and he doesn't do ozan high all the time

Ozan Tarman: ozan high onmus 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

Ozan Tarman: Qatar LNG will need months to restart once hormos is clear and in oil we have 10 mibes of shutins already and Asian refiners are very very start pipelines to rate C would take years and also Arnata Panacea etc et talks about hoodies so I get it brand versus what WTI WTI is trading even better etc etc but especially if the likes of Fars is correct

Ozan Tarman: if we have a lot of talk but one way or another this hormos is only two three tanks you know

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

Ozan Tarman: Yeah. And 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. We're running out of storage. It's going to take time to rebuild. There's nothing that could be said. And yet here we are at the

Ozan Tarman: 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 dirty but I think people do believe that this squeeze longer squeeze will come and it's not that easy to fade. 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 3 months time, 6 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 okay another I'm I'm choosing my words carefully as well but marines are approaching we're talking about car island

Ozan Tarman: these French clients talk to that ex general this ex general some claim that taking control of foremost 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 people people on payroll. So even on one gas ship, one oil ship hit,

Ozan Tarman: 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. Oil brand is still below 100. But look what ECB and Bank of Bank of England pricing did and they're not backing away. They're saying Madame Lagard 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, uh,

Joe Weisenthal: back to the 2020 analogies. People don't want to be seen late.

Ozan Tarman: Mhm.

Ozan Tarman: Things can move very, very fast.

Tracy Aloway: 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 showing Trump doing something or showing their reaction to Trump doing something. Are traders watching those and thinking seriously about them?

Ozan Tarman: Thinking seriously about them? I I don't know. But and they're watching, they are forwarding each other the the things. But the 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. After all, 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 Yeah, the I completely get you. Lego and memes is one extreme. Not very useful. But on the on the useful side,

Tracy Aloway: yeah, there's the the Iranian credible journalist is right there on the table

Ozan Tarman: tweeting and telling you, "Look at that. Look at this." That helps. 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?

Tracy Aloway: I saw it. They may move some traders to Jersey, which okay, cards on the table. Like Dubai, not probably. I've never been.

Joe Weisenthal: I doubt it's my cup of tea.

Tracy Aloway: I feel like say with some certainty that Dubai is more fun than

Joe 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 golf

Ozan Tarman: is that really and flowing in and out short-term and medium-term answer medium-term of course I do I have some dear friends there beyond the this industry other other industries like direct analogy when I come to uh 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

Ozan Tarman: different funds, taxes, you 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, part of the reason why many people got the whole Iranian thing wrong.

Tracy Aloway: Yeah.

Ozan Tarman: 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, upd. But Iran immediately began hitting GCC. Lifestyles got affected that affects sentiment. So way before the worries about inflation and warflation and supply change supply 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 u it's not going away. It's it's it's an it's an important market moving factor. 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.

Tracy Aloway: 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, Aries, 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 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 eb 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.

Ozan Tarman: Right before Iran, it was all about private credit and AI of the world. Now, as immediate headline to you last night when I did a small round table, 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. It's not 2008 maybe 2001 that yeah 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 would have done much better than US so that's another sad thing right it's 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. If it feels more and more like this, A B C, you see the headlines, you're not going to be able to get your money for a while. Then first time you mention my binky, I'm very curious to see what he says tonight on my macro dinner. It's a Wednesday macro dinner, big macro dinner tonight. is he's still sticking to his 8,000. 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 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 2008 but it's maybe something between this 2001 to 2008 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 2007208 all these cues and stuff it's a more quote unquote 1% 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.

Joe Weisenthal: It's going to be okay. It's almost like uh the bank crisis of two years ago in this place. I'm more worried than that.

Tracy Aloway: You know, one of the things we're talking about is this very violent rates move and war inflation 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 reacelerating 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 pasture 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 showing that through the end of February there is more evidence that inflation was not heading down to 2% as many people had maybe wish casted

Ozan Tarman: and that's a really blow to my heart in terms of expectations and stuff right because quote unquote we almost had them on on Feb 27

Joe Weisenthal: close we had a good thing going it was a hurricane it was a hurricane obviously much more important market it's a tragedy for humanity war etc but for the market as well it was a hierarchy ty was at 393 if that NFP printed like that maybe we would be talking 370s etc now genie is completely out of the bottle for very understandable reasons another reason another world I want to relate to related to inflation and before we wrap up

Ozan Tarman: this whole rationing that's a big watch out for Europe for in Asia if this continues like this if my uh Russia MIT friend is right about and the and the problems after a Oh, 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 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. Yeah,

Ozan Tarman: 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 uh Dubai Qatar may be postponed for understandable reasons but what about Asia all these airline prices will will shoot up 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 you rationing means more fiscal measures means more inflation expectations. So, you know, I'm not in love with the word stackflation, but also I'm a rational guy. My job is to smell the market. Yeah, it's uh we woke up that station fear.

Joe Weisenthal: Tarman, thank you so much for coming back on Oddlos. Thank you for the t-shirts.

Ozan Tarman: Absolutely.

Joe Weisenthal: Always appreciate checking in with you and um we'll talk to you again soon. Next quarter, we'll do our quarterly checking next time. I'd love

Tracy Aloway: Wait, will you put us on the t-shirt as one of your stops? I should

Ozan Tarman: you guys are the highlights.

Tracy Aloway: Thanks.

Joe Weisenthal: Yeah, thank you so much.

Tracy Aloway: 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. For sure.

Joe 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.

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

Joe Weisenthal: and flights and airlines and transportation and things like that.

Tracy Aloway: And I am starting to get the fuel sir charge email. 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 search charges. Like, you can see it coming and it's happening actually like pretty quickly.

Joe Weisenthal: I just don't want to travel right now, especially with all the lines you see in the US. No, seriously.

Tracy Aloway: Well, that's a separate issue.

Joe Weisenthal: I know it's a separate issue, but it's like I just want to cancel as much as I can.

Tracy Aloway: 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. 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 market seriously and sometimes take them literally guy. And I actually really don't like

Joe Weisenthal: I know you're a secret EMH bro.

Tracy Aloway: 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. and traders are so stupid. There's a lie, whatever. And like I don't know about that. But like my point is there's a lot of money on the line for people who are paid to take this very seriously.

Joe Weisenthal: 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 a fact. And I do think that's a very interesting point that the people with a lot at stake. Yeah, oil is high, but it's certainly not at the hair on fire levels that either that we even saw in 2022.

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

Joe Weisenthal: That's true.

Tracy Aloway: Right. So, you can tra you can trade oil futures and assume that they'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. There's apparently some price that we see Rory Johnston is always quoted about the actual physical price in Oman and it's like significantly high but the two eventually have to merge right like they cannot remain disconnected.

Joe Weisenthal: Yeah, but not for not for a while. So I think that disconnect is kind of like what's in focus at the moment.

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

Joe Weisenthal: Yeah. Okay, fine. But like I think people are betting on like

Tracy Aloway: I don't have to worry about it for a month. That's what I'm saying.

Joe Weisenthal: Very plausible. It's it's certainly a very very difficult unusual time. I mean

Tracy Aloway: 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 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.

Joe Weisenthal: You know, uh Ozan used the term bad 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.

Tracy Aloway: I'm imagining a trader like staring at the VIX curve and going bad vault bad.

Joe Weisenthal: All right. Shall we leave it there?

Tracy Aloway: Let's leave it there.

Tracy Aloway: This has been another episode of the Odd Thoughts podcast. I'm Tracy Aloway. You can follow me at Tracy Aloway.

Joe Weisenthal: And I'm Joe Weisenthal. You can follow me at the stalwart. Follow our guest Ozan Tarman. He's at Ozan Karman. Follow our producers Carmen Rodriguez at Carmen Armano Bennett at Dashbot and Kalebrooks at Kalebrooks. And for more OddLots content, go to bloomberg.com/odlotss. We have a daily newsletter and all of our episodes. You can chat about all these topics 24/7 in our Discord, discord.gg/odlots.

Tracy Aloway: And if you enjoy OddLots, 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 adree. All you need to do is find the Bloomberg channel on Apple Podcast and follow the instructions there. Thanks for listening.