Latest from BCA Research
Investors are too complacent on the closure of the Strait of Hormuz. Upgrade cash and downgrade equities, both to neutral.
The conflict in Iran has entered the “post-Trump taco zone” where it is now all about Tehran’s reaction function.
Regional geopolitical risk is rising for Europe, EM Asia, and South Asia. We adjust our regional risk matrix accordingly.
The spike in oil and gas prices has raised the odds of a global economic downturn. Combined with a more negative signal from our MacroQuant model, this warrants tactically downgrading stocks from neutral to underweight. Looking further ahead, the Iran war will lead to bigger defense budgets and a greater focus on energy self-sufficiency.
The Iran war remains a terms-of-trade shock rather than a classic flight to safety – for now. As oil risks skew higher, policy repricing and growth differentials should continue to favor a tactical rebound in the USD.
Oil prices will likely rise in the near term, irrespective of developments in the Strait of Hormuz. Given that global share prices have become correlated with crude prices, global stocks will continue selling off. Go short the EM equity index and take profits on our open trades that have benefited from the global risk-on environment.
This report unpacks this year’s uneventful NPC, reading the tea leaves of key messages and offering insights on the impact of rising oil prices on China.
Drone and ballistic missile attacks were slowing, as of March 11. Air traffic in the region was also slowly recovering, as the pace of attacks declined. Warning, however: Reports from US CENTCOM and the IDF claim that Iran still has around 40% to 50% of its stockpile of missiles and launchers. Attacks are continuing, even though at a reduced tempo.
With all eyes on the Strait of Hormuz, BCA Research has created a dashboard of data for your convenience.