Ryan Lemand 5.0 6 ideas

The actual oil price is around $140. Futures today do not really reflect where oil is and the stress we are seeing in oil. Almost 20% of total oil and gas production was cut off from the West. The market is currently underpricing the duration and severity of the Strait of Hormuz blockade. As the physical market tightens and the war drags on, futures prices and energy sector equities will be forced to reprice significantly higher to match the physical reality of $140/bbl oil. LONG because the structural supply deficit guarantees elevated energy prices until the conflict is fully resolved. A sudden diplomatic breakthrough or successful US-led coalition that reopens the Strait of Hormuz would cause a rapid collapse in oil premiums.

It is more Swiss Franc for us than US Dollar. We would be much more comfortable with the Swiss Franc because we believe the US Dollar could exit with high volatility. In a severe geopolitical crisis, investors rush to cash. While the USD is a traditional safe haven, its volatility is tied to US involvement in the war and shifting Fed policy. The Swiss Franc offers a purer, lower-volatility safe-haven exposure without the direct geopolitical baggage of the US Dollar. LONG because CHF provides optimal capital preservation during a global war and energy crisis. If the war ends quickly, risk-on sentiment will return, causing safe-haven currencies to depreciate against higher-yielding assets.

We are in a massive war happening in the Middle East. When this happens, people tend to run to cash. So we dump assets and hold cash. This is why you see gold like many other assets underperforming. Investors typically expect precious metals to rally during wars. However, in a true liquidity crisis where institutions need to raise capital, they sell everything—including gold and silver—to move into cash. Therefore, precious metals will not act as effective hedges in this specific environment. AVOID because the dash for cash overrides the traditional inflation/fear hedging properties of precious metals. If the banking system begins to fracture or inflation spirals completely out of control, investors may suddenly rotate out of fiat cash and back into hard monetary metals.

Oil shocks generally feed into direct inflation. For a potential return of inflation, it will bring back hawks. I do not foresee any cuts. I am starting to potentially think of hikes even. The market came into the year expecting the Federal Reserve to cut interest rates. The massive spike in energy prices will reignite headline inflation, forcing the Fed to pivot back to a hawkish stance. If the Fed hikes rates, long-duration Treasury bonds will suffer severe price declines. SHORT because rising inflation expectations and a hawkish Fed directly destroy the value of long-dated bonds. If the energy shock causes a severe global recession and demand destruction, the Fed may be forced to cut rates to save the economy despite high inflation.