Asking what $100 oil from Iran conflict would do to equity space.
Tom
Chris Watling
Initial impact negative for equities. Every year we have stories about closing Strait of Hormuz or Iran being invaded that never happen.
Chris Watling
Oil has been in downtrend since Ukraine war because there's a lot of oil around. If conflict is quick, it will pass and be opportunity to sell oil and energy assets.
Asking about implications of oil staying higher for inflation narrative.
Guy
Chris Watling
Oil has been part of disinflationary force, but for oil to stay up here seems unlikely - either geopolitical events take over or it recedes.
Noting more people saying Fed shouldn't cut rates this year.
Guy
Chris Watling
Depends which part of K-shaped curve you look at. If entering deflationary productivity boom, every reason to cut.
Asking about rotation from tech to cyclicals looking stretched.
Tom
Chris Watling
Market very stretched on cyclical overbought measures. Real question is whether rotating in sideways market or preparing to roll over with volatility.
Asking why single stock volatility high while index volatility low.
Guy
Chris Watling
Lot of damage under surface in single stocks - software, anything disrupted by AI getting taken out. That's a concern creating risk warning signal.
Chris Watling
But macro environment for US and global stock market really good, so any wobble is opportunity to put money to work.
Asking if worried about private credit space.
Tom
Chris Watling
Yes and no - long-term problem, things brewing. Worry about money tightening up, not loosening.
Asking about 10-year yield moving higher as risk signal.
Guy
Chris Watling
Great signal telling us market believes in more growth. In 2 years time, 10-year yields at 6% and then it will be a problem.
Chris Watling
We're entering global cyclical upswing. Watch ISM manufacturing - should rally to 55-60 over next 18 months.