Laura Cooper

US tech companies have pricing power and serve as an inflationary hedge, making them defensive in the near term while European equities are more exposed to the energy shock from the Iran war. The resilience of US tech earnings supports this view.

"We are seeing that disruption in oil flows be significant multiples of the disruption we saw back then... This is an environment where we are now unlikely in a higher for longer yield backdrop, because we do not see any near-term relief for yields to come down meaningfully." A sustained oil shock feeds directly into headline inflation. Central banks, bound by their mandates, cannot cut interest rates while inflation is accelerating, even if economic growth is slowing (stagflation). This forces the market to price out previously expected rate cuts, driving long-duration bond yields higher and prices lower. SHORT. Fixed income offers no protection in a supply-driven inflation shock; yields must rise to reflect the new inflation reality. The energy shock causes such a severe and immediate economic contraction that central banks are forced to abandon their inflation fight and cut rates to prevent a depression.