Investors may be seriously underestimating the global economic impacts of the war in Iran, executives warned Thursday.
US stocks have recovered their initial wartime losses and surged to record highs this week on hopes for a more lasting peace in the Middle East.
The head of the London Stock Exchange said at Semafor World Economy Thursday that markets have adopted a sense of “rational complacency” that threatens to “tip over into irrational complacency.”
Citadel Securities’ president said there is a “generation of investor that really never learned the price of being wrong,” while the head of private equity firm I Squared Capital said the war, which the market is “underestimating significantly,” will upend supply chains and lead to inflation.
Amos Hochstein, a top energy and national security adviser to former President Joe Biden, argued that the market is underestimating the economic impact of the war, “at its own peril.” He cited the gap between the spot and futures prices for oil, which suggests that investors are anticipating a quick end to the disruptions caused by the conflict.
“The market doesn’t really care about low income countries or middle income countries,” Hochstein said. “They only care about the United States and a few other countries.”
Citadel is a sponsor of Semafor World Economy. Jim Esposito made his comments in an unsponsored editorial interview.