Iran Risk Looms, but Markets Don't Capitulate

Market Overview - The S&P 500 has experienced a third consecutive week of declines, indicating a bearish sentiment in the market [2] - Current market levels are just below 6700 and above the 200-day moving average, suggesting that a capitulation phase has not yet occurred [3] - Investors are advised to create a shopping list of undervalued assets in anticipation of a market recovery [4] Oil Market Insights - Brent crude oil prices have recently surpassed $100, driven by volatility and thin liquidity in the market [5] - The expectation is not for sustained prices above $100, but rather for a range of $85 to $95 per barrel, with potential impacts on inflation and consumer sentiment [6] Consumer Sector Analysis - The consumer sector is already under pressure, and rising oil prices are expected to exacerbate this situation, affecting mortgage rates and consumer spending [12] - There has been a significant pullback in certain sectors, with average drawdowns in double digits, indicating that many assets are currently on sale [7] Geopolitical Risks - The ongoing conflict in Iran introduces significant uncertainty, making it difficult for investors to determine the right time to enter the market [10] - The war's impact on oil infrastructure and production levels remains a critical concern for market stability [10] Interest Rate Trends - Since the outbreak of the war, interest rates have risen by approximately one-third of a percentage point across the yield curve, affecting both equities and bonds [11] Private Credit Market - The private credit market has seen elevated redemption requests, with historical data suggesting it may take about a year to return to normal redemption levels [16] - The 5% redemption limit in private credit funds is crucial for maintaining liquidity and should not be viewed as a negative aspect of these investments [19]