We have been waiting for the entire month of April for an immediate end to the conflict with Iran, but the reality is that this end has not yet come. Neither side wants to remain the one who gave in, the reality is that everyone has something to lose, the Iranians themselves and also the Trump administration.
A month that has been very positive in the markets, with a round trip that has sent them to maximums again with markets driven by expectations of a conclusion to the conflict and a season of business results that is being very strong. The big question is whether the market is not being excessively optimistic about the opening of the Strait of Hormuz, we will see…
The change in bias of the central banks is confirmed, it is assumed that the ECB’s next move will be to raise rates, with inflation data in Europe beginning to move away from the 2% objective, the duration of the closing of Hormuz It will be key to see if these data can worsen significantly or not. We will have to see how the FED behaves, the Trump administration insists on lowering rates, but it does not seem very likely with inflation above 3% and an economy that remains strong. There is a lot of emphasis on comparing this period with the one experienced in the 70s, there are obvious similarities, but also substantial differences, the most important being that OPEC in those years had absolute power that it does not have now, the strongest of the yard in the energy sector is the USA.
We are going to have markets still marked by the Iran conflict, even if it ended immediately, energy prices are going to be structurally higher for a while. Investments in real assets, infrastructure and quality stocks still make much more sense when the conflict ends, all-terrain companies with pricing power, real assets and infrastructure are the best recipe for this geopolitical environment.