Geopolitics is a major issue, much more complex today than since World War II. Looking at past wars, the market reacts but never had a real long-term effect other than the 1973 Israeli conflict where oil prices tripled for an extended period.

If the war with Iran is short and oil goes to 80, 90, 100, it would probably have a major effect. If it becomes prolonged, all bets are off the table.

There seems to be comfort with disinflation, but that was true before the war. Asset prices are high, credit spreads are low. There's a lot of complacency in the market. We look at the broad range of outcomes, and one negative outcome would be inflation.

Right now, this conflict will add a teeny bit to inflation, not a lot.

The most important geopolitical thing is what happens to the free Western democratic world, which is under attack. Global deficits are so large. These are like large moving tectonic plates that may not affect the economy in the short run but may be determinative in the longer run.

Right now, the economy is fine. Asset prices are high. I think there's a little more exuberance than there should be. The skunk could be inflation, so we have to keep our eyes on it.