“Markets are making a bold bet: that corporate efficiency, AI productivity gains, and strong earnings momentum can absorb a sustained energy shock without meaningful multiple compression. It is a bet that has worked, so far, because the shock has been gradual rather than acute.”
tldr: traders think that the worst effects of the imminent supply crash are going to fall on the periphery, on emerging markets, with no appreciable ripples back into the core of the sp500 and nasdaq
“History is not encouraging on this point. The 1973 oil embargo, the 1979 Iranian Revolution, the 1990 Gulf War — each began with equity markets underpricing the duration and severity of the supply disruption. In each case, the repricing, when it came, was sharp and fast.”
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“Markets are making a bold bet: that corporate efficiency, AI productivity gains, and strong earnings momentum can absorb a sustained energy shock without meaningful multiple compression. It is a bet that has worked, so far, because the shock has been gradual rather than acute.”
tldr: traders think that the worst effects of the imminent supply crash are going to fall on the periphery, on emerging markets, with no appreciable ripples back into the core of the sp500 and nasdaq
“History is not encouraging on this point. The 1973 oil embargo, the 1979 Iranian Revolution, the 1990 Gulf War — each began with equity markets underpricing the duration and severity of the supply disruption. In each case, the repricing, when it came, was sharp and fast.”
tldr: they’re gonna be wrong, again