Transcription of the vidéo "War is over?"

Jean-François Robin, Global Head of Natixis CIB Research, is speaking in front of the camera :

"War is over, « we have won » Trump keeps saying, but the truth is it continues. So we are a bit like George Orwell’s world when the war is peace, we don't know where we stand. But clearly, the war is not over yet. It's still our scenario that at some stage in July, the strait of Hormuz should be reopening.

And then, the depricing of oil should be quite quick. Obviously, stocks up, bonds hills down, oil and gas even further down. And that will be a temporary shock, a stagflationary shock in the sense lower growth, more inflation, but a temporary one. That would not be a major shock.

On the contrary, if the Strait of Hormuz – and we have this bottleneck on energy, on sulfur, on fertilizers, etc., - obviously the world economy would be much more impacted, probably below 2% for the first time since the Covid or the great financial crisis.

So that would be another story. But this is not our central scenario. Our central scenario is of a partial reopening. And then in this context, the US economy should be able to be at 1.9%, the European economy will be lower than we were expecting, but still at 0.7%, France at 0.6%. China will be at 4.6%. So, in this context, it will not be a major shock, at least not comparable to 2022.

In this context, what are central banks about to do in our opinion? Well, the Fed is in a statuS quo mode, certainly not a rate cut for now, Kevin Warsh? Chair of the Fed, has to build up its credibility before doing anything, and, at the moment, inflation is closer to 4%, there’s no way the Fed is able to cut rates.

When it comes to the ECB, it's a bit of a done deal that the ECB is about to, unfortunately, hike rates, as a bit of a dovish hike, a preventive hike - if I may - from the ECB. Probably, they are going to hike the rate by 25 bpi despite this supply shock driven inflation: 3.2% in Europe. But this would probably be a one off, in our view, from the ECB.

In this context, euro/dollar should be at 1,20. But again, this is if war stops for good. Well, that's anyone's guess now."