The Defeat of the Deal.
This deal is taco with a price tag.
For markets no war is a win. For investors it leaves us in Limbo- not Heavan or Hell. For the Iranian regime they emerge as the strategic victor from the war.
It achieves lots of IRGC objectives like putting IRGC back in the US$ flows of oil sales and tanker levies. It cements IRGC in power in Iran. And it increases the sway over Gulf States and Shipping. Risk premia will remain in place.
It is hard to see what the wins for the US are. It emerges less powerful and credible from the war having wrought big damage to the global economy. For President Trump to turn this into victory in the eyes of the voters will be a tough sell.
Bottom line: I reckon Brent oil price $85 - 95bbl. Equity Markets up 5 - 10%. Risk premia remain in place. Inflation impact is seen as temp. Central banks on hold. Sovereign debt markets start to focus on costs and deficits. So, only temporary reprieve for LT Treasury yields. US$ weak. Gold up. Gold will be helped by less official fire sales and less transaction and safe haven demand.
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