2022 redux
The market is trading like it’s 2022 all over again. Short end rates and government bonds are selling off, gold is plummeting, and equities are suffering. There are few places for investors to hide in this market.
The market is telling us that we are seeing an inflationary shock on par with 2022. Traders who are holding out hope that the inflationary impact will be short-lived are drawing dead. My Perplexity query estimates that 10-12 mb/d of Middle East oil production has been shut in. Even if the war stops today, it will take months for that supply to come back online, and some of those wells will be permanently degraded. QatarEnergy’s CEO said that 17% of its LNG export capacity was damaged and will take three to five years and roughly $26B to repair.
