00:00 Speaker A
you’ve seen a lot of action even just over the last 24 hours. Remember, we’re still less than 48 hours away out from when President Trump initially announced that ceasefire agreement. Now you look at some of the shipping data, you were mentioning the straight of Hormuz there. According to S&P, only four ships have crossed on Wednesday. Reuters is reporting that five have made the crossing, only one of those was an oil tanker. This is also far below the levels we were seeing even just a few days before. So it shows you this is not easing up as the White House was hoping. You’ve seen Vice President JD Vance coming out and saying that they’re not going to move forward if the straight’s not open. Iran saying that the US has violated the ceasefire agreement, citing the attacks in Lebanon by Israel, citing the US’s demands that Iran will give up its nuclear development program. These are all red line issues for both sides and it’s only getting more complicated seemingly ahead of talks beginning in Islamabad, Pakistan on Saturday. In response, you’ve seen the oil markets ticking back up. Brent Crude up more than 4% this morning. USWTI up more than 5%. The market’s not really sure what to make of this. From what I hear from people I talk to on the ground in the area, strategist I talk to, until there is real convincing arguments that ships can make that crossing safely, we’re going to sit in this unease for a while.
01:23 Speaker B
Yeah, Jake, you look at that market action yesterday, you would think uh everyone uh was suddenly thinking we’re gonna get hundreds of ships going through the street. Life is back to normal and oil price is going straight back down. But Jake, let me just stay with you for a second. Goldman Sachs out this morning with a note, uh sticking with their call for oil prices. One thing, once things subside to end the fourth quarter around $75 a barrel. Does that sound about right to you if we do get back to some form of normalcy?
01:52 Speaker A
If we do get back to some form of normalcy, I think so, but that is a big if. All the strategists I talked to have pointed to that if this does open up, if those 800 tankers that are stuck on either side of the straight of Hor moves can start moving again, we could see some significant rebalancing down in oil prices. That said, the bull case for oil right now, let’s say this this lasts through April or through June or into the further into the summer, we could be looking at $100 barrel oil through the end of the year and possibly even into 2027. This is a huge if right now for the market. And again, everything I keep hearing, the market needs to see ships moving. Action is going to speak much louder than words here.
02:46 Speaker B
Keith, that was uh good to see you my friend as always. Uh I was always I was thinking back into today, uh how much did I ever spend this much time thinking about the straight of her moves in my life? I don’t even know if I talked about it in high school, Keith, but this remains very much top of mind for the markets and you, my friend, came out and upgraded the energy sector, right?
03:19 Speaker C
That’s right. Well, hey, always great to be with you. Uh hopefully I can cheer you up a little bit, right? Yeah, cheer me up. That’s why you’re here. a little bit. Um, yeah, so listen, um, I have to say more broadly on the market last week, our indicators got pretty oversold. So we told we we started to tell our investors that the risk reward was improving somewhat even though there is a lot of uncertainty. But then yesterday when oil went down about, uh, you know, sorry, the energy stocks went down about 4 and a half percent, we took that as an opportunity to upgrade energy for some of the reasons that were just outlined. We think energy will likely stay somewhat elevated. We still have an overweight in areas like industrials and technology, but this is where it’s going to be somewhat messy. And if it does escalate, you want to have some hedge within portfolios and we think the energy sector, um, does that. Now, Brian, I will also just remind us, this is the one-year anniversary of that almost 10% pop on the tariff pause last year. I expect things to be messy, but the other thing to just keep in mind is markets tend to bottom when when there’s peak uncertainty, if you wait for clarity, full clarity, the market’s already moved.
