Daily update
Daily update
- We live in a world of political polarization and soundbite economics. That encourages sensationalism. Deckchair generals will offer extreme opinions on the US attacks on Iran. Both supporters and opponents the attacks are likely to dramatize events. Investors should be cautious of knee-jerk overreactions.
- Investors’ principal concerns are oil supplies and non-oil shipping. While there have been casual threats to close the Strait of Hormuz, Iran does need oil revenue and does not need the anger of oil-exporting Gulf states. Attacks on shipping by terrorist groups might be more likely. However, US trade taxes pose a far bigger threat to shipping volumes than events in the gulf.
- US President Trump’s ruling out near-term attacks immediately before attacking might be tactical, but their suggestion of regime change in opposition to official US policy causes uncertainty. That raises trust issues relevant to trade negotiations. Even modest oil price increases will raise US gasoline prices just as trade tariffs push up other prices, and may add to profit-led inflation too. Tourism in the gulf region is already at risk, with flights being canceled.
- Assorted central bankers speak, including ECB President Lagarde. South Korean trade data showed strong exports to Europe, and some increase to the US ahead of presumed trade tax increases.