Why Hormuz Worst-Case Scenario Says 'Hold Off'

Adopt a HOLD: heightened geopolitical risk around the Strait of Hormuz raises the probability of an energy crisis that could materially impact oil supply. The note warns a severe oil shock could trigger stagflation, prolonged market underperformance and roughly a decade of flat or negative real returns, implying elevated downside risk to equities and upside pressure on inflation.

Analysis

Adopt a HOLD: heightened geopolitical risk around the Strait of Hormuz raises the probability of an energy crisis that could materially impact oil supply. The note warns a severe oil shock could trigger stagflation, prolonged market underperformance and roughly a decade of flat or negative real returns, implying elevated downside risk to equities and upside pressure on inflation.