Volatility and uncertainty have made client conversations more interesting and longer-term focused, shifting to themes like long-term national security, resource nationalism, scarcity, and defense spending.

Explains it's exhausting for clients to try to time the end of the conflict, so they focus on bigger-picture implications instead.

Even if the Strait opened tomorrow, price effects and shortages already in the pipeline must be absorbed by businesses and households, causing pain. Puts recession probability at a meaningful 40%.

Notes that some countries will use subsidies to help, but the burden will be uneven.

Higher gas prices fall most heavily on lower-income households, especially in big driving states, forcing behavior changes over time.

Describes gas price obsession in driving states and the sequential consumer response: switching to cheaper gas, then carpooling, then considering EVs, but these changes take time.

Low-income consumer has been in and out of recession, while the wealthy consumer only needs to slow spending for an impact, which is likely as financial asset gains stall.

Notes low-income consumers exhausted excess savings, but wage growth helped. Wealthy consumers, having met pent-up demand and facing stalled home equity gains, may pull back.

Business investment was tech/AI-focused last year, with optimism for 2024 broadening due to tax incentives, but the Iran conflict and input prices may cause a false start. The next concern is a 'cliff' after tax break demand is pulled forward.

Explains that businesses will still take advantage of tax breaks, but high energy/food prices force them to 'eat a good chunk' of costs, potentially delaying investment decisions.