Journalist: Markets do not fear war. And rather, they begin to take advantage of. The US joined the contest. He bombarded three strategic nuclear facilities of Iran. The world was filled with doubts the weekend. Wall Street, on the other hand, did not show any. The bag went up. The bonds uploaded, and the long rate touched its minimum of the last month. There are no radioactivity signs, says the International Atomic Energy Office. In the markets, at least, no traces are seen. Is the worst? Or markets, this time, are wrong, as not a few oil specialists say?
Gordon Gekko: The price of the barrel sank more than 8%. You have to see it to believe it. The Brent was worth $ 77 before the incursion of the B2 over Iran. Today it falls to lead. Just drilling 70 dollars. The scale scale; But risk premiums, apparently, describe strong. They transmit a notable relief. Better like that.
Q.: Surprising, or not?
GG: In the era of “shale”, Middle East is important, but it is no longer vital. That said, yet, it is still very striking.
Q.: The Iranian threat of blocking the Ormuz Strait was not taken seriously.
GG: It was formulated and did not realize, what other response could expect then? The US already did what he had to do, he did the surgical work that Israel could not execute. He already hit the deep hammer on the critical facilities of the Tehran nuclear program. If there is no more energetic Iranian reaction now, it is less likely to be taken later.
Q.: The retaliation was to bombard a military base of the US in Qatar. Of course, with “notice.”
GG: Trump thanked. Is this a sign of relaxation? On the part of the US, the task concluded on Saturday. Although if Trump intends a regime change, as he outlined later, this goes for long. And with a doubtful result. There is no guarantee from Iran. But, it is their own restrictions that reduce risk premiums.
Q.: How is that?
GG: I could close the passage through the Ormuz Strait completely. He does not do it because economically it does not suit him. And that reality is more evident after the US aerial incursion than before the “test.” That is why the barrel quotes below Friday. It is not a whim.
Q.: It is proof and error.
GG: It is the Ukraine mold, applied to the occasion.
Q.: But when Putin invaded Ukraine in 2022, the price of the barrel shot before, during and after. He set up over 100 dollars, came to touch 130. And he had been appeasing for a few months.
GG: When Putin attached Crimea in 2014, oil (and gas) continued flowing. We attend the strange coexistence of war in the heart of Europe with the normal supply of energy at stable prices. Moreover, in 2015 Germany agreed to make the Nordstream II gas pipeline, which increased the provision of Russian gas with a trace through the bottom of the sea. That is, leaving Ukraine aside.
P.: An agreement that closed Angela Merkel with Putin.
GG: As is. That was Putin’s idea in 2022 when Ukraine invaded (with Nordstream II about to be released). He knew he was going to suffer – and that’s why he accumulated reservations in the Central Bank in large quantity, and outside the dollar – but erred as his magnitude. He did not foresee their hardness or that they were also going to reach energy sales. The 2022 shock was due to the fact that Russian oil ceased to flow to the West. What we see today in Iran is a 2014 Ukraine tracing. If the Ormuz Strait is closed, Ukraine 2022 would be a more violent phenomenon, but in the long run it ends the same. In the era of shale, we get oil and gas to the stones.
Q.: Do you think the strength of markets, and this ability to take distance from the political problems that the world is experiencing, will remain?
GG: Yes. And more than would seem prudent. The tariff war no longer takes away our dream. As with the Ormuz Strait, China has the key. And Trump knows it. When he realized, he moderated. The wars that are really -ucrania, the Middle East and many others of low profile- do not move the ammeter, beyond sporadic spark. If the energy calms down, they will leave the radar soon. And, contrary sensu, what is cooked is an important monetary relaxation. The ECB made eight rate sales in the year. The Bank of England, four. Last week, Switzerland, Norway and Sweden triggered new cuts.
Q.: And is the Fed turn?
GG: That’s how it is. It is about resuming the task that began with Biden in the White House. Last year there were three pruning for a total of a complete point.
Q.: There are already two votes to resume the task at the end of July. Two governors, Waller and Bowman, who at other times knew how to be aggressive hawks, made their guarantee public.
GG: Julio seems hurried. A trial balloon. September is the ideal date, because it will allow to gather the necessary data. For markets, in essence, it is the same. After a very hard semester, but that the economy absorbed without major damage, a decompression that makes feasible the soft landing that is already in prices is feasible.
Source: Ambito
