Originally published at: https://peakprosperity.com/finance-u-the-iran-war-is-roiling-markets-and-supply-chains/
Top of mind for this podcast was the Iran War, now entering its second week. Despite ever-increasing escalations targeting oil, refinery output, LNG and other downstream products like sulfuric acid and helium, US & oil markets have been remarkably calm.
So remarkable that many now suspect stabilization efforts by fiscal and monetary authorities.
It all has that same eerily quiet feel we experienced in 2008 as US equity markets ignored reality right up until they couldn’t. Ditto for February of 2020 when the markets blithely ignored Covid until they couldn’t any longer.
But, as with a beachball held under water, market suppression/tamping activities tend to burst quite suddenly when they slip from their tethers.
The primary effects will be higher gasoline prices at the pumps.
The secondary effects will be profound but impossible to predict in their exact details. Who can predict how thousands of middle managers will decide where to prune and which customers to shaft and which ones to honor?
The recommendations remain unchanged from prior weeks.
- Be sure you are managing your portfolio risks. Paul notes that losing portfolio value is asymmetric. A 50% decline needs to be matched by a 100% gain in order to get back to even. So, be sure not lose wealth you cannot afford to lose.
- Have emergency foods on hand.
- Have cash on hand to meet at least a few weeks of basic expenses.
- Start thinking carefully about the things you need in your life that may be affected by either the loss of those products from the market due to supply chain shocks (tires come to mind due to their dependency of both sulfuric acid and petrochemical inputs) or possibly trade cessation due to the war’s risks and country reactions.
Events are developing extremely quickly. Stay on top of events, adjust as rapidly as you can, and don’t be afraid to make decisions.
Timestamps
00:00 The Calm Before the Storm
03:26 Market Manipulation and Its Consequences
07:44 The Ripple Effects of Conflict in the Gulf
10:51 Investor Complacency and Market Risks
14:34 Inflation and the Fed’s Dilemma
18:05 The Importance of Market Integrity
22:12 Geopolitical Uncertainty and Market Reactions
26:35 Supply Chain Disruptions and Economic Fallout
32:07 The Ripple Effects of War
35:26 China’s Strategic Moves in Global Trade
39:20 Supply Chain Disruptions and Economic Consequences
44:02 Preparing for Economic Uncertainty
49:06 Resilience in the Face of Crisis
54:25 Navigating Complex Economic Realities
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