Near-term, the situation is ongoing so expect impacts on equities. The trade is to move from semiconductors to semi, which is staples, energy, materials, and industrials.

Track three things: 1) Oil price staying above $100 for a month becomes a bigger economic challenge. 2) Indications that positions have been wiped out (not seen yet). 3) How the geopolitical events evolve, especially the Strait of Hormuz reopening.

Fundamental damage occurs if oil prices go to $150 or stay at $100 for an extended period, leading to equity market declines, bond sell-offs, and tightening financial conditions.

We have been pushing commodity as an interesting space due to a fragmenting world, secure supply chains leading to hoarding, anti-involution in China reducing supply, and commodities being the only diversifier if equity-bond correlations are positive.

The 'wall of liquidity' for EM is still a scenario unless there's a global recession or a permanently strong dollar. Global portfolios want to diversify out of concentrated US tech positions into EM.

China has emerged from a four-year down cycle. The recovery is real, driven by innovation, policy support, and property market stabilization. The first leg higher could be driven by domestic money, not foreign inflows.