We are in a high-velocity phase of the conflict, requiring a defensive stance. This is a stagflationary shock similar to 2022. Equities and bonds are positively correlated, offering few safe havens. We are overweight cash and short-dated fixed income for safety.

The oil price is the lead indicator. Markets have treated this as a rate shock, not yet a growth shock. We are still in the high-velocity phase with convexity risk. The longer the conflict lasts, the more stagflationary momentum we get. A growth repricing lower would be the latter end of this phase.

It's a tough spot for central banks due to an unpredictable supply-side shock driving inflation. They are focused on managing inflation expectations, which so far seem anchored. Central banks have come out quickly, conditioned by 2022. The damage to medium-term inflation expectations is limited.

Our team now expects Brent in the low 80s. There will be some lasting damage. We can all safely assume inflation will be higher and growth lower for the rest of the year. A resolution would bring significant relief initially, then we see where equilibrium settles.

Central banks are fighting inflation harder than expected. In 2022, the Fed was first/most credible, making the dollar a stagflation hedge. I'm not sure that's the case now. The dollar has benefited from energy independence, but all central banks are out of the starting blocks. We lean towards fading dollar strength eventually and into safe havens like Swiss franc and yen.

We have more focus on private credit due to bad headlines. It's an active form of credit, so there will be winners and losers. At the margin, this ecosystem can deal with credit shocks better than public markets. We are underweight credit in our asset allocation; public credit markets are also vulnerable due to financial conditions shock.