Markets now face three distinct, costly scenarios:
Base case (60%) : Tensions remain high but limited.
Oil settles between $70-80, defense stocks gain steadily, gold, bitcoin BTCUSD -0.38% and cybersecurity stocks thrive.
Escalation scenario (25%) : Iran retaliates aggressively – missile attacks, drone swarms, cyber warfare, possibly blocking the Strait of Hormuz. Oil soars past $120, stocks fall 10%- 15%, defensive assets and other perceived safe-haven holdings jump.
Diplomatic miracle (15%) : Optimistic but improbable. Peace unexpectedly breaks out, markets rally sharply – then quickly sober up as geopolitical realities resurface.
Watch these panic indicators carefully:
- Oil rises above $90: Indicates imminent supply disruptions.
- USD/JPY above 155: Safe-haven stampede intensifying.
- Credit spreads above 150 bps: Corporate stress increasing sharply.
- VIX above 30: Market volatility signals widespread panic.
Israel’s attack marks a fundamental shift.Traditional deterrence and predictable geopolitics no longer apply. Israel chose to act now because waiting wasn’t strategic patience — it was strategic surrender.
This new Middle East means that chronic volatility, elevated energy prices and persistent geopolitical stress are now baseline conditions for markets and
your money.
Investors must diversify aggressively, hedge thoughtfully and abandon any visions of easy diplomatic solutions. Hope for peace – but prepare realistically for ongoing chaos.
Welcome to the new normal in Middle Eastern geopolitics: expensive; uncertain – and here to stay.
