Marcin Jasinski @MJ_Lux: "𝙈𝙞𝙨𝙨𝙞𝙡𝙚𝙨 𝙖𝙣𝙙 𝙢𝙖𝙘𝙧𝙤 Since late February,..."

Poland

𝙈𝙞𝙨𝙨𝙞𝙡𝙚𝙨 𝙖𝙣𝙙 𝙢𝙖𝙘𝙧𝙤 Since late February, coordinated US-Israeli strikes and Iranian retaliation have turned the Strait of Hormuz into the fault line between geopolitics and markets, with commercial transit “nearly” or “effectively” halted in several assessments. Around a fifth of global oil flows and a major share of LNG normally move through this chokepoint, so disrupted shipping, damaged infrastructure, and higher war‑risk insurance premia are tightening effective supply even without full upstream shut‑ins. That’s pushed Brent back toward 100 dollars, alongside stress in refined products and LNG as facilities like Qatar’s Ras Laffan face curtailments. 𝙄𝙣𝙛𝙡𝙖𝙩𝙞𝙤𝙣, 𝙜𝙧𝙤𝙬𝙩𝙝, 𝙖𝙣𝙙 𝙩𝙝𝙚 𝙥𝙤𝙡𝙞𝙘𝙮 𝙗𝙞𝙣𝙙 Macro coverage leans on a familiar rule of thumb: a sustained 10 dollar per barrel rise in oil can add roughly 0.3 percentage points to headline inflation and shave 0.1-0.2 percentage points off growth. In a scenario where crude hovers near 100 dollars, that translates into something like 1.25 percentage points more inflation and roughly 0.5-0.75 percentage points less output versus a no‑shock baseline. More severe cases, with a multi‑quarter Strait closure and oil above 125 dollars, would likely pull US growth down by 0.5-1 percentage point and keep core inflation above 3.5 percent, forcing central banks back toward a tighter stance just as markets had been pricing easier policy. 𝘾𝙧𝙤𝙨𝙨‑𝙖𝙨𝙨𝙚𝙩 𝙧𝙚𝙖𝙘𝙩𝙞𝙤𝙣 So far, cross‑asset behavior has looked “textbook”: oil and energy equities up, global stocks wobbling but not collapsing, and a bid for the dollar on safe‑haven and “war‑flation” grounds. Historical work on past conflicts suggests the S&P 500 is usually volatile around the outbreak of war, but on average has posted positive 12‑month returns as markets look through one‑off shocks. This time, though, elevated starting valuations, fragile growth, and the prospect of a persistent energy bottleneck mean that history is more rhyme than rulebook. Higher term yields, tighter financial conditions, and pressure on long‑duration assets are the obvious second‑order channels. 𝙍𝙚𝙜𝙞𝙤𝙣𝙖𝙡 𝙖𝙣𝙙 𝙨𝙚𝙘𝙩𝙤𝙧 𝙨𝙥𝙡𝙞𝙩𝙨 Under the surface, this is creating clear winners and losers. Energy importers in Europe and parts of EM wear the terms‑of‑trade hit, while select exporters such as Norway, Canada, Brazil, and Saudi Arabia may see relative support–albeit with a geopolitical risk discount for credits closer to the conflict. Within equities, US markets have been relatively resilient, helped by net energy independence and a tilt toward quality and defensives, whereas more cyclical, energy‑sensitive markets and sectors have underperformed. Credit markets are feeling the squeeze via wider EM spreads, a stronger dollar, and higher Treasury yields as foreign demand for duration wobbles. 𝙒𝙝𝙖𝙩 𝙖𝙘𝙩𝙪𝙖𝙡𝙡𝙮 𝙢𝙖𝙩𝙩𝙚𝙧𝙨 𝙛𝙧𝙤𝙢 𝙝𝙚𝙧𝙚 Across my research, one variable keeps coming up as the true “switch”: the duration and severity of disruption in physical energy flows through Hormuz. A short‑lived scare looks digestible, even if it extends the inflation plateau and delays rate cuts; a multi‑quarter closure risks moving the narrative from “inflation scare” to “demand destruction and recession.” For investors, that argues less for trying to trade every headline and more for stress‑testing portfolios against a fatter‑tailed energy path–thinking deliberately about exposure to energy and materials, the vulnerability of long‑duration growth assets, and the resilience of balance sheets in a world where geopolitics is once again a core macro input, not a tail risk. $USDOLLAR $OIL $SPX500 $NSDQ100 $DJ30

Not investment advice. The author may have financial interests in the mentioned instruments.

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