Depends on longevity of Middle East war and infrastructure destruction. Ceasefire could lead to faster recovery, but uncertainty is profound.

Even if war ends tomorrow, recovery would take time due to infrastructure damage and slow-moving tankers (40 days to Pacific Islands).

Markets are geared by positive events in US economy - only large economy with high productivity growth. Technology optimism is here, markets are rushing on it.

US is oil exporter not importer, creating picture of dynamism. But rest of world already has a lot of pain. Supply chain disruptions are already significant.

Short-term inflation expectations moved up (3.8% to 4.2%), but long-term expectations well anchored. Central banks with credibility can take wait-and-see attitude.

Worry that because of 2022 experience, central banks may move faster, which could suffocate growth. Must signal preparedness to act but not rush.

Good functioning of markets helps avoid panic. Financial conditions have tightened some but not dramatically. As long as trajectory for war to end exists, we're in good place.

If prolonged period of time, would be hard to keep optimistic.