Alexander Campbell
· Campbell Ramble
· March 23, 2026 at 01:18
· ⏱ 12 min read
| Read on Substack ↗
Summary
The Iran conflict has escalated beyond regional fighting into a direct challenge to the dollar's reserve currency status, with Iran's parliament explicitly calling for sovereign wealth funds and central banks to dump US Treasuries. This creates a stagflationary shock — oil price spikes from Hormuz closure, bond selloffs, and eventual forced deleveraging from vol-control and real money accounts — that the market has not fully priced (only ~4% equity drawdown vs a historical median of 23% for major oil shocks).
•Iran's parliament speaker declared war on the dollar by urging sovereign wealth funds and central banks to dump US Treasuries, linking purchases to 'buying a strike on your own assets.'
•The market has only priced in roughly a 4% drawdown in equities since the escalation began, versus a historical median of 23% for major oil shocks.
•Sixty days of Hormuz closure would add $24–42 to December 2027 Brent, implying front-end oil prices of $120–200/bbl given backwardation.
•A 100% increase in oil price would create a 2–3% direct inflationary impulse through CPI Energy (6.4% of basket), plus knock-on effects, while tightening financial conditions historically hurt stocks.
•Real money accounts remain heavily overexposed to tech and underexposed to energy; vol-control and risk-parity funds are near full equity allocation and will become forced sellers if realized volatility picks up.
•The author's positioning is 300% short credit, long gold, long energy (natural gas exporters, pipelines), and long wheat — betting against a quick resolution.