How Middle East War Could Expose AI Risks | The Pulse 3/5
Speakers
Christos Megalou — CEO, Piraeus Bank
— Chopping Block co-host
Summary
- War Escalation: The conflict has entered "Day 6." US/Israel vs. Iran. Significant escalation includes the US sinking an Iranian warship off Sri Lanka and Iran targeting Saudi refineries and Amazon data centers.
- Energy Supply Shock: The Strait of Hormuz is "effectively closed" due to insurance/risk. Qatar LNG production is halted (potentially for weeks), and Iraq has shut in 1M barrels/day.
- Physical Tech Risk: A new risk vector has emerged: Data Centers as war targets. Three Amazon facilities in the UAE/Bahrain were damaged by drones, forcing data migration.
- Macro Regime: Economists warn of "record high global inflation" if the conflict persists, potentially forcing central banks to reverse rate cuts.
- Corporate Resilience: Despite the war, specific pockets (Italian Spirits, Greek Banking) are delivering strong guidance and capital returns.
Trade Ideas
Joumanna reports the Qatar LNG facility has signaled halted production (could be closed "a couple of weeks") and the Saudi refinery was hit. Anthony confirms the Strait of Hormuz is "effectively closed" with tankers stuck inside and Iraq taking 1 million barrels offline. This is no longer a "fear premium" trade; it is a physical supply shock. With Qatar (major LNG exporter) and Iraq (major oil exporter) physically constrained, global supply balances are immediately tighter. Prices must rise to destroy demand. LONG. Physical disruption commands a higher premium than geopolitical anxiety. Rapid ceasefire or US naval escorts successfully reopening the Strait (though market is skeptical of this).
"The bigger risk out of all of this is we may have a record high global inflation... there will have to be either a cessation of cuts in interest rates or a reverse of the cuts." The market is currently pricing in rate cuts or stability. A supply-side energy shock (Oil/Gas) forces inflation up. Central banks cannot cut rates into rising inflation. Bond yields must rise (prices fall) to reflect the "higher for longer" reality. SHORT. Bonds are mispriced if inflation spikes back to record highs. The war causes a deflationary demand crash (recession) rather than inflationary supply shock.
Campari CEO states they are "outperforming the industry" with strong top-line growth in 2025. Specifically, Aperol is +15% on-premise in the US. They have deleveraged to 2.5x a year early. The "Lipstick Effect" applies to spirits. Even with macro pressure, consumers are shifting to "affordable luxuries" like Aperol Spritz. The company is fiscally disciplined (deleveraging) and growing volume despite price hikes, signaling pricing power. LONG. High-quality defensive growth stock trading at a discount due to general European market fear. Glass/Freight costs rising due to energy shock (CEO admitted this is a risk).
Piraeus Bank plans to distribute €5 billion to shareholders through 2030. Their shipping loan book has an LTV (Loan-to-Value) of below 50%, and the CEO notes shipping clients are getting "much higher" rates. While the war is bad for global growth, it causes shipping rates to spike (longer routes/risk premiums). Piraeus Bank is a second-derivative beneficiary: their clients (Greek shipowners) make more money, improving credit quality, while the bank pays out massive capital to shareholders. LONG. A yield/value play that acts as a partial hedge against shipping disruptions. Prolonged war causes global recession, hurting the non-shipping parts of the Greek loan book.
"The Gulf region has 200 data centers... three were hit and all of them were Amazon centers." Amazon is "telling people to move their data to other regions." This is a material operational failure and a reputational hit for AWS in the region. Unlike Microsoft or Google who use local partners (and are "under the radar"), Amazon owns the physical assets, making them direct targets. This exposes Amazon to higher capex for repairs and significantly higher insurance premiums. SHORT/AVOID. Direct asset damage and service interruption is a negative catalyst. The attacks are isolated; Amazon successfully reroutes traffic without client churn.
Olivia notes the industry is asking if they need "drone jammers on the roofs of data centers" or "rugged roofs" to protect against strikes. The war has expanded targets from military/energy to digital infrastructure. This creates a new, urgent TAM (Total Addressable Market) for defense contractors that specialize in C-UAS (Counter-Unmanned Aircraft Systems) and air defense to protect civilian commercial infrastructure in conflict zones. LONG. Defense spending will decouple from government budgets to include corporate capex for asset protection. Diplomatic de-escalation reduces urgency for defense systems.
Up Next
This Bloomberg Markets video, published March 05, 2026, features Anthony DiPaola, Trevor, Simon Hunt, Christos Megalou, Olivia Solon discussing USO, UNG, TLT, DVDCY, BPIRY, AMZN, RTX, LMT, NOC. 6 trade ideas extracted by AI with direction and confidence scoring.
Speakers: Anthony DiPaola, Trevor, Simon Hunt, Christos Megalou, Olivia Solon · Tickers: USO, UNG, TLT, DVDCY, BPIRY, AMZN, RTX, LMT, NOC