The Real Risk Factor: Trump's Trade War over Middle East Crisis
Potential Financial Implications for Investors in Case of a US Engagement in Conflict
By Chris "The Claws" Lohner
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Stock markets are like a rollercoaster ride due to recent political moves, but it's not the Middle East crisis causing all the turbulence.
Here's the Deal: Honestly, the specter of an escalating Middle East conflict isn't our significant concern here. According to Bloomberg News, the U.S. is preparing for a potential attack on Iran in the near future. But that's just half the story, bro. Stefan Rizze, capital market expert, says we shouldn't lose sleep over our investments due to this, for a completely different reason.
Politics: "War, what is it good for?" Well, ask Trump!
Rizze believes that if the U.S. gets involved in the tussle between Israel and Iran, the impact on stock markets would be minimal. The U.S.'s air superiority is so intense that other nations in the region wouldn't dare pick a fight, Rizze argues. So, he doesn't expect a full-blown regional war. "Kaboom! Myth! No oil price surge in this game," Rizze told ntv.de.
Yes, if oil tankers can't pass through the Strait of Hormuz, there might be a four-week bottleneck. This could pose an issue specifically for China, which buys a fair share of its oil from Iran. But China can easily grab more oil from Russia instead. Macro-wise, the situation ain't that dramatic, Rizze says.
"We've seen this mess in the Gulf War, the Iraq War, and Israel's wars – at the end, everything calms down." The capital market strategist predicts. The countries in the region are militarily frail, unlike nuclear-powered Pakistan, which Rizze doesn't see as a menace at the moment. They're not gonna take us down, bud.
Trump's Tariffs: Inflation Ramifications
Yeah, but the unresolved U.S. trade war is a much bigger headache for stock markets. Boo, hiss! Rizze expects increasing inflation rates within the next few months, thanks to the oil price hike caused by the ongoing conflict.
Inflation ain't a problem usually, but combine it with Trump's tariffs and immigration policies, and it could inflame inflation! The lack of farm workers due to tariffs is a hassle during the harvest season, and overall uncertainty is shrinking investment.
"Don't sell your stocks because of the Iran war, bro, but I'm definitely more cautious," Rizze advises. "Major titles and indices are expensive AF, and given how the S&P 500 index has performed at these valuations, there ain't much to expect in the coming years."
Source: ntv.de
Extra Ammo:
The odds of a U.S. military intervention in Iran by July 2025 stand at around 65%, according to Goldman Sachs. This heightened expectation has fueled market volatility and influenced investor sentiment. Stock index futures have witnessed modest gains amid uncertainty, amid losses in major indexes for the week. The Middle East remains a critical oil supplier, with the Strait of Hormuz, a strategic chokepoint, accounting for roughly 25% of global oil exports. A U.S. intervention could drive oil prices higher, potentially leading to inflation. While the U.S. dollar trend shows a rebound, domestic economic concerns may limit its gains. OPEC's role as a buffer could help moderate extreme price volatility.
- In the current political climate, the employment policy of governments and businesses might be impacted due to uncertainties arising from Trump's tariffs and immigration policies.
- A potential attack on Iran could have minimal impact on stock markets, according to capital market expert Stefan Rizze, but Trump's tariffs could inflate inflation rates, which combined with other policies, could negatively affect employment.
- The ongoing Middle East crisis and Trump's tariffs could potentially affect the finance sector, as increased inflation could shrink investment and lead to a cautious approach in the business world.
