Public and private unpredictability

Daily update

US policy in the Gulf war has been unpredictable, but publicly unpredictable. Yesterday’s retreat from“guiding”ships through the Strait of Hormuz was a public decision. The pressures of rising gasoline prices in the US economy are publicly visible. However, investors also need to know Iranian policy, which is privately unpredictable. The forces pressuring the Iranian government are difficult to determine.
Without clarity on Iran’s position, it is impossible to know what concessions the US may need to make to strike a deal. Without knowing that, it is difficult to judge whether the Strait of Hormuz will be reopened before physical energy shortages impact the economy. In the “Wile E Coyote” economic trajectory, the inability to resolve public and private unpredictability means we are off the edge of the cliff, but it is almost impossible to know whether economic gravity is going to take hold.
South Korea’s April inflation was constrained by the government’s energy price cap—higher oil price pain is felt by fiscal policy, not the consumer. However, market pricing is one of the most basic mechanisms for matching supply and demand—interfering in that has consequences.
There are assorted business sentiment polls cluttering the data calendar, rendered even less useful than normal by the fog of unpredictability.