EJ Antoni: Who has the MOST influence on Iran?

追加: 2026-05-17

[00:00:00]Welcome back. Now a look where markets ended a jam-packed week for stocks. Uh the market shrugged off two hotter than expected inflation reports while cheering the confirmation of new Federal Reserve Chairman Kevin Worsh set to begin his term this upcoming week.

[00:00:14]Stocks also moving on headlines out of the president's two-day meeting with China's Xi Jinping. Uh but oil prices back above $100 a barrel. Joining me now is Heritage Foundation chief economist EJ Anton. EJ, good to have you. Thank you so much for being here. Let me start with the president's trip. Uh your thoughts on what came out of it and what is most important for the macro story right now.

[00:00:36]>> Well, taking that last part first, Maria, I I think it's definitely inflation. It's oil prices. It's what's going on with all of these inputs that affect countless areas of the economy.

[00:00:47]It it's all of the knock-on effects that are coming as a result of the Iran war.

[00:00:51]That that's really what's driving, I think, that whole macro story. not just macroeconomically here in the United States but globally too. You can look at the the investment manager index for example and that's definitely the consensus there and I think that's the correct consensus. I I think those folks are are looking at the situation pretty accurately in terms of what what we saw come out of uh you know the President Trump's meeting with President Xi in China. I think China is definitely going to be a key ally. I know we talk about them a lot as an adversary and they are, don't get me wrong, but in terms of Iran, I think they're a key ally in getting the straight back opened back open again. If we look at all the different nations around the world, who's got the most influence in chi in uh in Iran? China is definitely high on that list.

[00:01:36]>> Yeah, I'm just wondering if China is going to keep its commitment or promise to actually buy oil from the United States. We'll see about that. On the inflation situation, we really didn't see markets react so negatively. In fact, when you look at this market since the end of March, you're talking about the Nasdaq up 28%, the S&P 500 uh also up 17%, the Dow industrials up 10% just in the last two months. What is driving this market even in the face of war and spiking oil prices?

[00:02:05]>> Well, some of it, Maria, I I think is a question of of breath here. In other words, take the the equal weighted S&P versus the the actual S&P. you can see a big disparity that continues there. Uh unfortunately we've seen in I think in the postcoid period a bit of an unmoring sometimes between equities and fundamentals and and we saw that under Biden right look at the massive rallies we had in equity markets under Biden. It turns out a lot of that was just inflation. I wonder if now when we look at equities and we also look at bond markets if markets are increasingly pricing in more inflation than we previously anticipated. You can see business expectations from uh the Atlanta Fed are up. Uh if we look at the Cleveland uh Fed, their 10-year inflation expectations, that's up to 2 and a half%. May not sound like a lot, but it's the highest since 2007.

[00:02:57]>> Oh, absolutely. No, the 10-year was the highest in some time on Friday. We had big spikes in interest rates. Uh the 2-year, the 10-year, and the 30-year.

[00:03:06]And you mentioned the right point. It's inflation. So, what about Kevin Worsh?

[00:03:09]He's coming into the Federal Reserve beginning next week. What are you expecting from the Worsh Federal Reserve?

[00:03:14]>> Well, Kevin has talked a lot about shrinking the balance sheet, and I definitely think that that's the right way to go. What one of the things that uh that Kevin Walsh has pointed out is that the Fed really the past couple decades has been an engine to drive wealth away from Main Street and to Wall Street, the financialization of everything, these artificially low interest rates, etc. And so, by shrinking that balance sheet, you're going to put downward pressure on inflation. And that's a good thing.

[00:03:42]That's something we desperately need in the economy right now. But I also think Kevin Marsh is wise enough to look past the spike in oil. In other words, we saw a mistake previously in this country several decades ago where the Fed responded to an oil shock by hiking rates. Look, an oil shock, yes, that's causing prices to go up. I've been shouting that probably more than anybody else. But at the same time, Maria, as you know, it's not a monetary phenomenon. It is not something that higher or lower interest rates are going to affect.

[00:04:13]>> Yeah, all great points. EJ will be watching uh this new era at the Fed.

[00:04:17]Thanks so much for being here, >> EJ joining us. All right, we'll see you soon.