June 26, 2026 • 16 mins
Merryn Somerset Webb is joined by Sam Unsted, editor of Bloomberg’s Markets Today blog. Together they discuss rallying UK gilts in the wake of Prime Minister Keir Starmer’s resignation, inflation fears resulting from the artificial intelligence infrastructure boom and how narrative and sentiment look to be shaping the gold price.
See omnystudio.com/listener for privacy information.
Listen
Watch
Mark as Played
Transcript
Episode Transcript
Available transcripts are automatically generated. Complete accuracy is not guaranteed.
Speaker 1 (00:02):
Bloomberg Audio Studios, Podcasts, Radio News. Welcome to the Merrin
Drugs Money Market Wrap. What we talk about the biggest
(00:22):
moves in the market this week and what is driving them.
I'm Merrin sum Zip Web UK Money editor at Large
and whilst John is still out of the office on
a beach somewhere, I am joined by Sam and Stead.
Sam is editor of Bloomberg's Markets Today blog. I'm worried
about UK stocks, economics, central banks and global markets. Busy time. Sam,
thanks for joining me, Thanks for having me. If you
ordered the things to talk about them.
Speaker 2 (00:43):
Yes, indeed, yes, yeah, I mean you take your pick.
Speaker 1 (00:47):
I'll tell you what. Why don't we start with UK gilts?
Why don't we start with what's going on there? There's
a lot of political change. We are in chaos again.
We talked about this some link in our podcast earlier
in the week, but it is still ongoing. It's going
to be ongoing for weeks and weeks and weeks. I'm
going to say we have no idea what's going to happen.
We have a pretty good idea of what's going to happen,
and suddenly, from an investors point of view, you might
(01:09):
say well, nothing good.
Speaker 2 (01:11):
That's exactly how I would frame it, that we are
in yet another period of political chaos, turmoil, pick whatever
word you like for it in the UK. But guilts
are actually having a pretty good week. Ten year yields
down when I got up from my desk about sixteen
seventeen basis points over the course of the week. That
is almost entirely driven by oil, you know, Oild prices
(01:31):
have been coming down very significantly. Takes away some of
the inflationary risk. Bets on what the Bank of England
are going to do and how much they're going to
hike over the year have been pulled back as well.
But I find it a little bit curious because so
if we go back a couple of months so to
around the local elections and when they were these first
kind of really substantial speculation about kit Starmer's position. We
(01:54):
had a lot of strategists then come out and say
very clearly the most negative outcome for gilt markets would
be Andy Burnham becoming the prime minister. Right, so that
was very much baked into what to everyone's thinking. Now
we've reached that reality. So Kis Starmer has resigned on Monday,
We've effectively, as you kind of alluded to, moved on
to the idea that Andy Burnham will be the next premise.
(02:15):
That's what a lot of MPs keep coming out and saying,
there is a chance somebody challenges him. I think it's
will be so much fun fun, Isn't it a good
way to put it? Yeah, but it would be that
could well happen, but I think it looks increasingly unlikely, disappointing.
So you would expect, oh, I would expect, as someone
who's covered the Gill market for a while, that there
would be a bit more risk stign to come in,
(02:36):
at least a bit of uncertainty because at the moment
you really don't have any great idea at all about
what he would do, and because we have actually got
a pretty clear idea of who's going to be in
charge next, that question should be at the front of
minds and it is. People are asking that question, but
they're not asking you very forcefully. It's kind of just
they're just kind of waiting now to just see what happens,
(02:58):
which is not how the gil market has acted for
the last kind of two years or so.
Speaker 1 (03:02):
Interesting, wasn't it, Where it is something of a holding pattern.
I mean, there has been backtracking on the whole we
shouldn't be inho to the bond's market nonsense. He has
someone's explained how the bond market works to him, which
is great because it means we'll have a prime minister.
It's a tiny little idea of how it all works.
It's good news. And he does say that he will
stick to the fiscal rules, and again we talked about
that in the podcast earlier this week, and that he
(03:22):
isn't going to stick to the fiscal rules because that's
not really possible. Rates or reason was never going to stick
to the fiscal rules because they all depended on you know,
spending being really crunched towards the end of this decade,
which was never going to happen, and it's still never
going to happen. So we can talk about the physical rules,
but they'll be new fiscal rules at some point. Having
the fiscal rules are a statistical nonsense anyway. But nonetheless
he's talking the correct game.
Speaker 2 (03:44):
He's talking the correct game. Where the uncertainty I think
I would expect a little bit more insight to be
coming in is because they are talking already about flexibility
in those fiscal rules, and I didn't really know what
that means. That's going to well, we'll see what it
actually looks like when we when we eventually get there,
that uncertainty doesn't seem to be a price, you know.
(04:04):
But then there is actually a sort of counter argument
to that, which is that you know, already the UK
pays much higher premium to borrow money anyway, so there
may well be a feeling that that's already priced in
extent now, you know. So as far as we're aware,
this is all already in there, and as you're kind
of mentioning there, the fact is, once he actually gets there,
(04:25):
a lot of these kind of initial questions, or these
initial policies, or these maybe slightly more popular policies that
are coming out now, he probably won't be able to
do because everyone is constrained by the same fiscal rules.
And as you kind of mentioned, it's all well and
good to kind of not want to be in hot
to bond markets. If you're not in hock to bond market.
Speaker 1 (04:40):
We are in hoe market exactly. The only way out
of that is to dramatically slash spending and slash borrowing,
and then you wouldn't be in hop of the bond
market exactly, and it's not going to happen.
Speaker 2 (04:49):
So I think so far, you know, he's surrounded himself,
particularly on the economic side, with a lot of kind
of big you know, one key figures if you like,
you know, these kind of like big names within within economics.
I think where there's still a lot of question. We
had a nice piece on Bloomberger about this over this
week foreign Policy know anything there, and I was just
(05:10):
mentioning the moving guilt. Marcus has been almost entirely down
to geopolitics over the course of the last week, so
that also needs to be kind of fleshed out as well.
Speaker 1 (05:17):
Well, let's come back to geopolitics, but actually let's just
come back to oil. I mean, price is now basically
down to where it was before the war started. There's
assumption and none of this really happened. None of this
really happened. Here we are back square one. So that's
good in that that inflationary impulse of higher all prices
is going to come through in the numbers. But we
could now genuinely we could say that was transitory, and
(05:38):
for the first time in quite a long time that
would be true. It genuinely would be transit reinflation. But
there are other things feeding in which we need to
talk about. And there is this thing that had happened
just a few hours ago of Apple saying they're putting
up their prices fairly substantially because the chip price is
going up. And we've been talking for a while on
the podcast about how when people talk about AI, they
talk about, you know, cost down, and they talk about productivity,
(06:01):
but in fact, of course the hard ware it's very,
very expensive, and that is a new inflation room impulse.
Speaker 2 (06:08):
Yeah, I mean, I mean, there are a couple of
inflationary impulses to think about with AI. So, as you mentioned,
with memory chip prices, so you had a really neat
thing happened today where we had Micron Technology, which is
the biggest memory chip maker in the world, with incredibly
good results, I mean, way way ahead of expectations, your
huge demand, revenue, profit, everything that could be.
Speaker 1 (06:27):
I can't get there's one numb and there I can't
get out of my head with an eighty six percent margin.
Speaker 2 (06:30):
Yeah, it's astonishingly high. Right, So that's on. That's one
side of the AI story. And so all the chip
makers and the memory companies are all going up with
them today and by a lot. And micro remember is
a big company. I mean, they're already worth nearly two
trillion dollars, so there's a huge move. But on the
complete other side of that, you get this other question
about the sort of the reason that they're making this
(06:52):
huge margin, which is the memory prices have gone through
the roof because everything is being directed to AI, so
the consumer stuff, so everything that's you know, and this
is we're talking memory chips that go into basically anything
electronic that exists in the world, from phones, you know
with Apple, with you know, iPads and mac works. You're
talking from there to you know, fridges, cars, like basically
(07:15):
anything anyone buys has any electronics in it will have
a memory chip in it. So you're getting an inflationary
impost coming from that because as Apple and Apple being
kind of the biggest electronics company in the world, they're
pushing through prices. So if they're a if they're not
able to sustain those margins and they're having to do it,
that's not a good sign for everywhere else. And then
the other side of it is, you know, there's another
(07:37):
side who gets a triangle is that is the is
data centers, you know, so spending huge amounts of money
on data centers, this huge AI capex boom that's going on,
but that requires lots of electricity, and people are going
to have to pay for that somewhere down the line, exactly,
And so eventually that is going to feed into people's
electricity prices. And so that may that may not be
(08:00):
because it does take quite a long time to build
a data center, but even so that will start to
happen as well, and the cost of building up the grid.
So you've got all sorts of extra inflationary impulses coming
from from it.
Speaker 1 (08:09):
It's difficult to tell whether you know, the end effective
areas should be deflationary, as with all wonderful new technologies,
but the creation of it did very inflationary. We can't
quite see where we're going to end up.
Speaker 2 (08:20):
Yeah, that's exactly right, you know. And so as you're mentioning,
so oil prices have come all the way down when
you look in the options market for Oilso what people
are betting on what's going to happen in this sort
of six months time, it's gone very bearish, Like everyone
thinks of you know, maybe sort of flat over the
course of the next sent I.
Speaker 1 (08:35):
Thing I was wondering about on that this is a
random thought and we should probably els go on to
oil expect tell us about that you're expending everythings. I'm
going to ask you. One of the reasons why the
oild person never went up to one hundred and fifty
dollars two hundred dollars, like some of the more excitable
people were suggesting at the beginning of the war, was
because of the drawdown from everyone's reserves, right, yeah, reserves,
and in particular from Chinese reserves. Massive drawdowns there because
(08:55):
you know, we never saw any any demand destruction in China,
so we know that huge amount of oil being useduff
they have to be refilled. Yes, so that's a huge
source of demand over the next couple of years. Yeah, yeah,
So surely that would suggest that oil prices aren't going
to fall below the use levels and may actually rise
from here.
Speaker 2 (09:15):
Yeah, there's certainly a risk that, I mean, I would
suggest it's more likely that they will stay kind of
where they are now, so not you know, may marginally
elevated from where they were before the war, but with
a lot of a lot of volatility and a lot
of wobbliness over the course of the rest of the
year for exactly the reason you're mentioning. So part of
it will require and this is this is why there's
(09:36):
such a huge focus on this all the time. That
the oil starts flowing through the straightforwar mirrors really sustainably
for an extended period of time now with no breaks
in it, with no issues, that's a big ask, like so,
so that has to happen, and during that happening, then
the reserves can start to be full. So you need
these two things to kind of happen in concert with
each other. But while they're happening in concert with each other,
(09:59):
the likely old presses don't go much further down from
where they are now, and those inflationary kind of impulses
that have happened with all going up for a few
months will still be flowing through during that during that time.
Speaker 1 (10:22):
The last thing I want to ask you about is
again all connected to your politics, connected to inflation, connected
for everything, and it's the gold price. Because this is disappointing,
isn't it for gold bugs, This is disappointing.
Speaker 2 (10:33):
Yeah, yeah, yeah, I mean I would say you know,
just calm everyone. You know, it's still only just a
little bit below four thousand dollars nouns, but that was
a really key level.
Speaker 1 (10:42):
Below four thousand dollars. I mean, remember the excitement when
over five thousand, John and I could barely contain ourselves.
Speaker 2 (10:47):
Yeah, and we are back. And actually, you know, as
we go as it comes back through that level again,
you know, that's the level that it went through as
gold stopped acting like gold, you know, it started to
become a kind of momentum trade. So the likelihood is
you will have had a lot of investors, probably a
lot of retail traders as well, coming in there as
it was going above four thousand dollars. So it may
(11:08):
well be that people are sitting on some some hefty
losses from gold as well.
Speaker 1 (11:12):
Okay, I thought you were going to say that clever
retail trades had ridden it all the way up and
sold it all the way down, and.
Speaker 2 (11:17):
If they hold on then it may well, you know,
and they've.
Speaker 1 (11:20):
Taken money out to pop into the SpaceX holdings, for example,
down again today.
Speaker 2 (11:23):
Right, Well, that's that's possible as well. SpaceX. Well, when
I got up from my desk every almost everything was
going up for a bit and then it was going
back down for a bit. And so whether what it's
doing right at this moment, I can't tell you, but
you know, yes, so gold, you know, we've had just
a long period of time when gold hasn't has not
been acting in the way that gold tradition acts, right,
(11:44):
and even now as doing what it's doing now, it's
still not quite doing that. It's not quite the gold,
you know. And I think there's still a lot of
air in that market, so it will have that might well,
you may well see a bit more volatility come through,
but you know, historically it does remain, you know, you
pretty elevated.
Speaker 1 (12:00):
Yeah, and I suppose if we've mentioned gold, we're going
to have to mention Bitcoin, which is now below sixt
two thousand and again, so we're back to September twenty four. Yes, yes,
that's quite a big ship.
Speaker 2 (12:11):
Yes, yes, and actually that one so you're just asking
about SpaceX. That was something we actually really did see
evidence of, was retail traders getting rid of their Bitcoin
holdings in order to buy SpaceX. And that was happening
actually across all sorts of spaces. It was happening with
some of the high flying kind of chip stocks as well.
Speaker 1 (12:29):
It cost to holding bitcoin forever. I thought that was
It's not. It wasn't. We've learned as not a currency,
and the new gig is that it's a long term assage.
You hold it forever. There's neither of those things.
Speaker 2 (12:41):
That's a great point actually, so so yeah, so last
year we had this debasement trade, right, This was like
a for a few months. This was the idea that
the dollar is no longer king and that people are
putting their money into gold or bitcoin, and that seems
to have fritted away over the course of this past year.
I think a lot of the enthusiasm, you know, cooin
does rely to an extent on enthusiasm on investors just
(13:03):
being enthused about getting into gold, pumping their money into
the ets they've now been launched, you know, these kind
of institutional funds, all of those companies too. You know,
when you have this much equity supply, like SpaceX, when
you have this much excitement about a different corner of
the marketcoin yes, sorry, yes, about bitcoin, yes, they're so.
When you have this much excitement about AI or about
(13:28):
you know, SpaceX particularly and Big I pos coming later
in the year for open AI or anthropic. When all
of that is going on, it seems like the sort
of traders that are in bitcoin are the ones who
are then thinking, actually, I'm going to move a little
bit away from here.
Speaker 1 (13:43):
As all about stories, isn't it. I mean, bitcoin is
very story driven, and one of the things that we've
seen since since you first heard about bitcoin is the
constant renewal of the story. It's not there, we were,
it's not quite that is this? No, no, it is
this now, it's this, now, it's this, and when there
isn't a good story and right now there isn't a
good news story for bitcoin, but they're amazing stories results.
Where So if you're a story led investor, yeah, you're
heading to.
Speaker 2 (14:04):
The narrative is not good enough to bring you in.
Speaker 1 (14:06):
Yeah. Now, of course I'm a SpaceX investor, as all
listeners to my podcast, no, I have nine SpaceX shares,
and I had promised the team that I would use
my winnings to take them out for a drink. So
you know, sorry, guys, well sorry, not winnings. Not winnings,
and that's not how we call it. We are capital
gains capital again We're not gambling.
Speaker 2 (14:25):
Yet, but you know, we will see what happens that
because I mean it's just very briefly on SpaceX. I mean,
I mean, I've been a reporter on stocks for fifteen years.
I've never seen an IPO like that ever. And since then,
they've then they did an acquisition just two days later
with sixty billion dollars. They are borrowing a huge amount
of money in credit markets. They are sort of getting
into all sorts of corners of the market, and so
(14:46):
they're becoming already quite a kind of important company in
all sorts of different sexes of the market. It will
be really interesting to see.
Speaker 1 (14:53):
How that is interesting. And you know, there is nothing
average about SpaceX at all in there, I'm so interesting
in so many many ways. But the average tech ipo
end its first year down about eighteen percent. And my
concern is that maybe the one place in which SpaceX
sends out to be average.
Speaker 2 (15:10):
It's possible, It's possible, you know, but I think, you know,
when we're talking about bitcoin there and then this kind
of enthusiasm the AI story, there is obviously a huge
amount of enthusiasm for the AI story. No U and
SpaceX goes into that as well. But SpaceX is almost
like a narrative in and of itself, so yes, it
has kind of this AI element to it. But he's
the same kind of people who like a story, who
(15:31):
like a narrative, and if they can get that narrative going,
then you know, you never know.
Speaker 1 (15:36):
Of course, is the Skuy the limit or the moon
the limit? The moon that's fantastic. Beau is absolutely fantastic, Okay, brilliant.
Is there anything else that we need to tell people today?
Speaker 2 (15:45):
No, I think there is so many things to be
focused on in markets at the moment that if we
do that, we may never leave.
Speaker 1 (15:53):
We think we've given them enough for one day. Thank you, Sam,
Thank you so much. Thanks for listening to this week's
Marion Talks Money Market Rap. If you like our show,
rate review and subscribe wherever you listen to podcasts. Also,
be sure to follow me and John on ex or
Twitter at marinsw and John Underscore step Exammy on Twitter.
Speaker 2 (16:13):
I'm not very much on Twitter, but you can follow
me on LinkedIn and you can find the Market Today
blog on Bloomberg UK every day excellent.
Speaker 1 (16:19):
Thank you. This episode was produced by Summersadi and Moses
and questions and comments on this show and all our
shows are always welcome. Our show email is Merrior Money
at Bloomberg dot net
Bloomberg Audio Studios, Podcasts, Radio News. Welcome to the Merrin
Drugs Money Market Wrap. What we talk about the biggest
(00:22):
moves in the market this week and what is driving them.
I'm Merrin sum Zip Web UK Money editor at Large
and whilst John is still out of the office on
a beach somewhere, I am joined by Sam and Stead.
Sam is editor of Bloomberg's Markets Today blog. I'm worried
about UK stocks, economics, central banks and global markets. Busy time. Sam,
thanks for joining me, Thanks for having me. If you
ordered the things to talk about them.
Speaker 2 (00:43):
Yes, indeed, yes, yeah, I mean you take your pick.
Speaker 1 (00:47):
I'll tell you what. Why don't we start with UK gilts?
Why don't we start with what's going on there? There's
a lot of political change. We are in chaos again.
We talked about this some link in our podcast earlier
in the week, but it is still ongoing. It's going
to be ongoing for weeks and weeks and weeks. I'm
going to say we have no idea what's going to happen.
We have a pretty good idea of what's going to happen,
and suddenly, from an investors point of view, you might
(01:09):
say well, nothing good.
Speaker 2 (01:11):
That's exactly how I would frame it, that we are
in yet another period of political chaos, turmoil, pick whatever
word you like for it in the UK. But guilts
are actually having a pretty good week. Ten year yields
down when I got up from my desk about sixteen
seventeen basis points over the course of the week. That
is almost entirely driven by oil, you know, Oild prices
(01:31):
have been coming down very significantly. Takes away some of
the inflationary risk. Bets on what the Bank of England
are going to do and how much they're going to
hike over the year have been pulled back as well.
But I find it a little bit curious because so
if we go back a couple of months so to
around the local elections and when they were these first
kind of really substantial speculation about kit Starmer's position. We
(01:54):
had a lot of strategists then come out and say
very clearly the most negative outcome for gilt markets would
be Andy Burnham becoming the prime minister. Right, so that
was very much baked into what to everyone's thinking. Now
we've reached that reality. So Kis Starmer has resigned on Monday,
We've effectively, as you kind of alluded to, moved on
to the idea that Andy Burnham will be the next premise.
(02:15):
That's what a lot of MPs keep coming out and saying,
there is a chance somebody challenges him. I think it's
will be so much fun fun, Isn't it a good
way to put it? Yeah, but it would be that
could well happen, but I think it looks increasingly unlikely, disappointing.
So you would expect, oh, I would expect, as someone
who's covered the Gill market for a while, that there
would be a bit more risk stign to come in,
(02:36):
at least a bit of uncertainty because at the moment
you really don't have any great idea at all about
what he would do, and because we have actually got
a pretty clear idea of who's going to be in
charge next, that question should be at the front of
minds and it is. People are asking that question, but
they're not asking you very forcefully. It's kind of just
they're just kind of waiting now to just see what happens,
(02:58):
which is not how the gil market has acted for
the last kind of two years or so.
Speaker 1 (03:02):
Interesting, wasn't it, Where it is something of a holding pattern.
I mean, there has been backtracking on the whole we
shouldn't be inho to the bond's market nonsense. He has
someone's explained how the bond market works to him, which
is great because it means we'll have a prime minister.
It's a tiny little idea of how it all works.
It's good news. And he does say that he will
stick to the fiscal rules, and again we talked about
that in the podcast earlier this week, and that he
(03:22):
isn't going to stick to the fiscal rules because that's
not really possible. Rates or reason was never going to stick
to the fiscal rules because they all depended on you know,
spending being really crunched towards the end of this decade,
which was never going to happen, and it's still never
going to happen. So we can talk about the physical rules,
but they'll be new fiscal rules at some point. Having
the fiscal rules are a statistical nonsense anyway. But nonetheless
he's talking the correct game.
Speaker 2 (03:44):
He's talking the correct game. Where the uncertainty I think
I would expect a little bit more insight to be
coming in is because they are talking already about flexibility
in those fiscal rules, and I didn't really know what
that means. That's going to well, we'll see what it
actually looks like when we when we eventually get there,
that uncertainty doesn't seem to be a price, you know.
(04:04):
But then there is actually a sort of counter argument
to that, which is that you know, already the UK
pays much higher premium to borrow money anyway, so there
may well be a feeling that that's already priced in
extent now, you know. So as far as we're aware,
this is all already in there, and as you're kind
of mentioning there, the fact is, once he actually gets there,
(04:25):
a lot of these kind of initial questions, or these
initial policies, or these maybe slightly more popular policies that
are coming out now, he probably won't be able to
do because everyone is constrained by the same fiscal rules.
And as you kind of mentioned, it's all well and
good to kind of not want to be in hot
to bond markets. If you're not in hock to bond market.
Speaker 1 (04:40):
We are in hoe market exactly. The only way out
of that is to dramatically slash spending and slash borrowing,
and then you wouldn't be in hop of the bond
market exactly, and it's not going to happen.
Speaker 2 (04:49):
So I think so far, you know, he's surrounded himself,
particularly on the economic side, with a lot of kind
of big you know, one key figures if you like,
you know, these kind of like big names within within economics.
I think where there's still a lot of question. We
had a nice piece on Bloomberger about this over this
week foreign Policy know anything there, and I was just
(05:10):
mentioning the moving guilt. Marcus has been almost entirely down
to geopolitics over the course of the last week, so
that also needs to be kind of fleshed out as well.
Speaker 1 (05:17):
Well, let's come back to geopolitics, but actually let's just
come back to oil. I mean, price is now basically
down to where it was before the war started. There's
assumption and none of this really happened. None of this
really happened. Here we are back square one. So that's
good in that that inflationary impulse of higher all prices
is going to come through in the numbers. But we
could now genuinely we could say that was transitory, and
(05:38):
for the first time in quite a long time that
would be true. It genuinely would be transit reinflation. But
there are other things feeding in which we need to
talk about. And there is this thing that had happened
just a few hours ago of Apple saying they're putting
up their prices fairly substantially because the chip price is
going up. And we've been talking for a while on
the podcast about how when people talk about AI, they
talk about, you know, cost down, and they talk about productivity,
(06:01):
but in fact, of course the hard ware it's very,
very expensive, and that is a new inflation room impulse.
Speaker 2 (06:08):
Yeah, I mean, I mean, there are a couple of
inflationary impulses to think about with AI. So, as you mentioned,
with memory chip prices, so you had a really neat
thing happened today where we had Micron Technology, which is
the biggest memory chip maker in the world, with incredibly
good results, I mean, way way ahead of expectations, your
huge demand, revenue, profit, everything that could be.
Speaker 1 (06:27):
I can't get there's one numb and there I can't
get out of my head with an eighty six percent margin.
Speaker 2 (06:30):
Yeah, it's astonishingly high. Right, So that's on. That's one
side of the AI story. And so all the chip
makers and the memory companies are all going up with
them today and by a lot. And micro remember is
a big company. I mean, they're already worth nearly two
trillion dollars, so there's a huge move. But on the
complete other side of that, you get this other question
about the sort of the reason that they're making this
(06:52):
huge margin, which is the memory prices have gone through
the roof because everything is being directed to AI, so
the consumer stuff, so everything that's you know, and this
is we're talking memory chips that go into basically anything
electronic that exists in the world, from phones, you know
with Apple, with you know, iPads and mac works. You're
talking from there to you know, fridges, cars, like basically
(07:15):
anything anyone buys has any electronics in it will have
a memory chip in it. So you're getting an inflationary
impost coming from that because as Apple and Apple being
kind of the biggest electronics company in the world, they're
pushing through prices. So if they're a if they're not
able to sustain those margins and they're having to do it,
that's not a good sign for everywhere else. And then
the other side of it is, you know, there's another
(07:37):
side who gets a triangle is that is the is
data centers, you know, so spending huge amounts of money
on data centers, this huge AI capex boom that's going on,
but that requires lots of electricity, and people are going
to have to pay for that somewhere down the line, exactly,
And so eventually that is going to feed into people's
electricity prices. And so that may that may not be
(08:00):
because it does take quite a long time to build
a data center, but even so that will start to
happen as well, and the cost of building up the grid.
So you've got all sorts of extra inflationary impulses coming
from from it.
Speaker 1 (08:09):
It's difficult to tell whether you know, the end effective
areas should be deflationary, as with all wonderful new technologies,
but the creation of it did very inflationary. We can't
quite see where we're going to end up.
Speaker 2 (08:20):
Yeah, that's exactly right, you know. And so as you're mentioning,
so oil prices have come all the way down when
you look in the options market for Oilso what people
are betting on what's going to happen in this sort
of six months time, it's gone very bearish, Like everyone
thinks of you know, maybe sort of flat over the
course of the next sent I.
Speaker 1 (08:35):
Thing I was wondering about on that this is a
random thought and we should probably els go on to
oil expect tell us about that you're expending everythings. I'm
going to ask you. One of the reasons why the
oild person never went up to one hundred and fifty
dollars two hundred dollars, like some of the more excitable
people were suggesting at the beginning of the war, was
because of the drawdown from everyone's reserves, right, yeah, reserves,
and in particular from Chinese reserves. Massive drawdowns there because
(08:55):
you know, we never saw any any demand destruction in China,
so we know that huge amount of oil being useduff
they have to be refilled. Yes, so that's a huge
source of demand over the next couple of years. Yeah, yeah,
So surely that would suggest that oil prices aren't going
to fall below the use levels and may actually rise
from here.
Speaker 2 (09:15):
Yeah, there's certainly a risk that, I mean, I would
suggest it's more likely that they will stay kind of
where they are now, so not you know, may marginally
elevated from where they were before the war, but with
a lot of a lot of volatility and a lot
of wobbliness over the course of the rest of the
year for exactly the reason you're mentioning. So part of
it will require and this is this is why there's
(09:36):
such a huge focus on this all the time. That
the oil starts flowing through the straightforwar mirrors really sustainably
for an extended period of time now with no breaks
in it, with no issues, that's a big ask, like so,
so that has to happen, and during that happening, then
the reserves can start to be full. So you need
these two things to kind of happen in concert with
each other. But while they're happening in concert with each other,
(09:59):
the likely old presses don't go much further down from
where they are now, and those inflationary kind of impulses
that have happened with all going up for a few
months will still be flowing through during that during that time.
Speaker 1 (10:22):
The last thing I want to ask you about is
again all connected to your politics, connected to inflation, connected
for everything, and it's the gold price. Because this is disappointing,
isn't it for gold bugs, This is disappointing.
Speaker 2 (10:33):
Yeah, yeah, yeah, I mean I would say you know,
just calm everyone. You know, it's still only just a
little bit below four thousand dollars nouns, but that was
a really key level.
Speaker 1 (10:42):
Below four thousand dollars. I mean, remember the excitement when
over five thousand, John and I could barely contain ourselves.
Speaker 2 (10:47):
Yeah, and we are back. And actually, you know, as
we go as it comes back through that level again,
you know, that's the level that it went through as
gold stopped acting like gold, you know, it started to
become a kind of momentum trade. So the likelihood is
you will have had a lot of investors, probably a
lot of retail traders as well, coming in there as
it was going above four thousand dollars. So it may
(11:08):
well be that people are sitting on some some hefty
losses from gold as well.
Speaker 1 (11:12):
Okay, I thought you were going to say that clever
retail trades had ridden it all the way up and
sold it all the way down, and.
Speaker 2 (11:17):
If they hold on then it may well, you know,
and they've.
Speaker 1 (11:20):
Taken money out to pop into the SpaceX holdings, for example,
down again today.
Speaker 2 (11:23):
Right, Well, that's that's possible as well. SpaceX. Well, when
I got up from my desk every almost everything was
going up for a bit and then it was going
back down for a bit. And so whether what it's
doing right at this moment, I can't tell you, but
you know, yes, so gold, you know, we've had just
a long period of time when gold hasn't has not
been acting in the way that gold tradition acts, right,
(11:44):
and even now as doing what it's doing now, it's
still not quite doing that. It's not quite the gold,
you know. And I think there's still a lot of
air in that market, so it will have that might well,
you may well see a bit more volatility come through,
but you know, historically it does remain, you know, you
pretty elevated.
Speaker 1 (12:00):
Yeah, and I suppose if we've mentioned gold, we're going
to have to mention Bitcoin, which is now below sixt
two thousand and again, so we're back to September twenty four. Yes, yes,
that's quite a big ship.
Speaker 2 (12:11):
Yes, yes, and actually that one so you're just asking
about SpaceX. That was something we actually really did see
evidence of, was retail traders getting rid of their Bitcoin
holdings in order to buy SpaceX. And that was happening
actually across all sorts of spaces. It was happening with
some of the high flying kind of chip stocks as well.
Speaker 1 (12:29):
It cost to holding bitcoin forever. I thought that was
It's not. It wasn't. We've learned as not a currency,
and the new gig is that it's a long term assage.
You hold it forever. There's neither of those things.
Speaker 2 (12:41):
That's a great point actually, so so yeah, so last
year we had this debasement trade, right, This was like
a for a few months. This was the idea that
the dollar is no longer king and that people are
putting their money into gold or bitcoin, and that seems
to have fritted away over the course of this past year.
I think a lot of the enthusiasm, you know, cooin
does rely to an extent on enthusiasm on investors just
(13:03):
being enthused about getting into gold, pumping their money into
the ets they've now been launched, you know, these kind
of institutional funds, all of those companies too. You know,
when you have this much equity supply, like SpaceX, when
you have this much excitement about a different corner of
the marketcoin yes, sorry, yes, about bitcoin, yes, they're so.
When you have this much excitement about AI or about
(13:28):
you know, SpaceX particularly and Big I pos coming later
in the year for open AI or anthropic. When all
of that is going on, it seems like the sort
of traders that are in bitcoin are the ones who
are then thinking, actually, I'm going to move a little
bit away from here.
Speaker 1 (13:43):
As all about stories, isn't it. I mean, bitcoin is
very story driven, and one of the things that we've
seen since since you first heard about bitcoin is the
constant renewal of the story. It's not there, we were,
it's not quite that is this? No, no, it is
this now, it's this, now, it's this, and when there
isn't a good story and right now there isn't a
good news story for bitcoin, but they're amazing stories results.
Where So if you're a story led investor, yeah, you're
heading to.
Speaker 2 (14:04):
The narrative is not good enough to bring you in.
Speaker 1 (14:06):
Yeah. Now, of course I'm a SpaceX investor, as all
listeners to my podcast, no, I have nine SpaceX shares,
and I had promised the team that I would use
my winnings to take them out for a drink. So
you know, sorry, guys, well sorry, not winnings. Not winnings,
and that's not how we call it. We are capital
gains capital again We're not gambling.
Speaker 2 (14:25):
Yet, but you know, we will see what happens that
because I mean it's just very briefly on SpaceX. I mean,
I mean, I've been a reporter on stocks for fifteen years.
I've never seen an IPO like that ever. And since then,
they've then they did an acquisition just two days later
with sixty billion dollars. They are borrowing a huge amount
of money in credit markets. They are sort of getting
into all sorts of corners of the market, and so
(14:46):
they're becoming already quite a kind of important company in
all sorts of different sexes of the market. It will
be really interesting to see.
Speaker 1 (14:53):
How that is interesting. And you know, there is nothing
average about SpaceX at all in there, I'm so interesting
in so many many ways. But the average tech ipo
end its first year down about eighteen percent. And my
concern is that maybe the one place in which SpaceX
sends out to be average.
Speaker 2 (15:10):
It's possible, It's possible, you know, but I think, you know,
when we're talking about bitcoin there and then this kind
of enthusiasm the AI story, there is obviously a huge
amount of enthusiasm for the AI story. No U and
SpaceX goes into that as well. But SpaceX is almost
like a narrative in and of itself, so yes, it
has kind of this AI element to it. But he's
the same kind of people who like a story, who
(15:31):
like a narrative, and if they can get that narrative going,
then you know, you never know.
Speaker 1 (15:36):
Of course, is the Skuy the limit or the moon
the limit? The moon that's fantastic. Beau is absolutely fantastic, Okay, brilliant.
Is there anything else that we need to tell people today?
Speaker 2 (15:45):
No, I think there is so many things to be
focused on in markets at the moment that if we
do that, we may never leave.
Speaker 1 (15:53):
We think we've given them enough for one day. Thank you, Sam,
Thank you so much. Thanks for listening to this week's
Marion Talks Money Market Rap. If you like our show,
rate review and subscribe wherever you listen to podcasts. Also,
be sure to follow me and John on ex or
Twitter at marinsw and John Underscore step Exammy on Twitter.
Speaker 2 (16:13):
I'm not very much on Twitter, but you can follow
me on LinkedIn and you can find the Market Today
blog on Bloomberg UK every day excellent.
Speaker 1 (16:19):
Thank you. This episode was produced by Summersadi and Moses
and questions and comments on this show and all our
shows are always welcome. Our show email is Merrior Money
at Bloomberg dot net
Host
Merryn Somerset Webb
Popular Podcasts
Stuff You Should Know
If you've ever wanted to know about champagne, satanism, the Stonewall Uprising, chaos theory, LSD, El Nino, true crime and Rosa Parks, then look no further. Josh and Chuck have you covered.
Dateline NBC
Current and classic episodes, featuring compelling true-crime mysteries, powerful documentaries and in-depth investigations. Follow now to get the latest episodes of Dateline NBC completely free, or subscribe to Dateline Premium for ad-free listening and exclusive bonus content: DatelinePremium.com
Betrayal Weekly
Betrayal Weekly is back for a new season. Every Thursday, Betrayal Weekly shares first-hand accounts of broken trust, shocking deceptions, and the trail of destruction they leave behind. Hosted by Andrea Gunning, this weekly ongoing series digs into real-life stories of betrayal and the aftermath. From stories of double lives to dark discoveries, these are cautionary tales and accounts of resilience against all odds. From the producers of the critically acclaimed Betrayal series, Betrayal Weekly drops new episodes every Thursday. If you would like to share your story, you can reach out to the Betrayal Team by emailing them at betrayalpod@gmail.com and follow us on Instagram at @betrayalpod and @glasspodcasts. Please join our Substack for additional exclusive content, curated book recommendations, and community discussions. Sign up FREE by clicking this link Beyond Betrayal Substack. Join our community dedicated to truth, resilience, and healing. Your voice matters! Be a part of our Betrayal journey on Substack.