Markets have shown remarkable complacency, treating geopolitical events as buying opportunities. The longer the conflict goes on, the bigger the risk to markets. Trump delaying his China trip suggests no backing down soon.

Short-term, the conflict is a relative positive for the US market vs. energy-dependent countries and supports the dollar. If the conflict persists with a massive global energy price increase damaging GDP growth, the best equity market to own is Chinese mainland.

Views Chinese stock market as a slow bull market, bottomed in Sept/Oct 2024. Government is preventing boom-bust cycles via pressure on dividends, buybacks, and controlling IPO supply. The 'national team' has started buying again after a correction.

Best hedges: Chinese stocks and energy stocks. Gold is in a consolidation period (trading range $4,500-$5,500) as it didn't make a new high on the conflict outbreak. Gold miners also consolidating due to higher energy costs.

Has owned gold for years, had a $3,500 target since 2002. Long-term gold can go much higher due to central bank buying driving a de facto gold standard.

Look at VIX, which is well below pandemic and taper tantrum levels. Could return to those levels if conflict worsens. Key issue is potential US troops on ground; markets were hoping for a truce.

Fed may have to acknowledge at some point, but more important is Treasury bond market staying well-behaved. The key central bank now is Bank of Japan, which is behind the curve and should raise rates.