The operating word really is tail risk realization. The black swan is here. We are transitioning from terror risk to policy risk.
Frank Monkam
How come we're not seeing $90, $100 a barrel? The answer is positioning. We came into this war weekend with the market already heavily positioned in the 90th percentile. That's why the move feels tame.
How much is the market digesting the ability of OPEC-plus to add further supply?
Haidi Stroud-Watts
Frank Monkam
I think that buffer is real. I think they're doing this in coordination with the US.
How do you trade all this?
Avril Hong
Frank Monkam
Positioning is really important. The way to think about this is how long are we going to stay in this heightened level of geopolitical volatility? Is it going to be a two-week affair or a two-month affair?
Which markets are more vulnerable to the inflationary impulse from higher energy prices?
Avril Hong
Frank Monkam
Clearly the spike in energy prices is going to present an additional inflationary risk to global markets. We've seen PCE taken back up.