So we’re left with the strangest contradiction in markets: the most considerable tail risk in global markets is being casually discounted in real-time.
Putin wants higher oil prices. Qatar sends their gas to Europe. Tehran sends some of their oil to China. Closing the straits sounds good but probably doesn’t help Tehran.
If they attack Saudi Arabia, everything they have will be wiped out by the US military.
Russia is threatening to send Tehran nuclear warheads. That would be worse tail risk. I don’t know how it starts or ends, but the war increased risk and that’s worth something.
The market is discounting a lot: tariffs, an energy war, an unstable US President eager for war, Section 899, the billionaire bailout bill, the world’s oldest democracy facing civilian resistance on becoming a dictatorship, human trafficking and kidnapping by ICE. This is not a stable country to do business. That will be reflected in asset prices.
Surreal market action.
Putin wants higher oil prices. Qatar sends their gas to Europe. Tehran sends some of their oil to China. Closing the straits sounds good but probably doesn’t help Tehran.
If they attack Saudi Arabia, everything they have will be wiped out by the US military.
Russia is threatening to send Tehran nuclear warheads. That would be worse tail risk. I don’t know how it starts or ends, but the war increased risk and that’s worth something.
The market is discounting a lot: tariffs, an energy war, an unstable US President eager for war, Section 899, the billionaire bailout bill, the world’s oldest democracy facing civilian resistance on becoming a dictatorship, human trafficking and kidnapping by ICE. This is not a stable country to do business. That will be reflected in asset prices.
Gravity exists. It will not be denied.