Principal's view on energy shock and market impact (with Jonathan Ferro, Lisa Abramowicz, Annmarie Hordern)

Yields cautious up , short term, interviewee implicit

implicit

NDX cautious up , short term, interviewee explicit

explicit

RUT

Oil up , medium term, interviewee explicit

explicit

Metals

USD

Principal 6.0
Asset Manager $880.00B
Seema Shah 8.5

Principal's view on energy shock and market impact (with Jonathan Ferro, Lisa Abramowicz, Annmarie Hordern)

ndx

With that comes a technology trade... when you're going through tough times, particularly from a macro perspective, tech is relatively macro-agnostic asset class... that's where investors will be focusing on in moments of difficulty. Sees US tech as a relative safe haven and beneficiary of a flight to quality/resilience within the US market during the shock.

3 calls

+4

no reliable edge (random outcomes)

9/9/2025 2:41:59 PM	medium term up	20 days later	+3.48%	+3.48%
8/26/2025 2:40:28 AM	medium term cautious down	20 days later	+3.01%	-1.50%

wti

We would certainly assume at this point in a time that oil prices... will stay fairly elevated through the rest of the year even if the conflict comes to an end in the next few days. The shift in dynamic where Iran, not the US, can call the shots means supply disruption risks are more persistent.

3 calls

+28

reliable positive edge across multiple calls

yields

States that equity markets perform worse when central banks hike in response to inflation from a geopolitical crisis, implying yields could rise if central banks feel compelled to act against inflation. However, she emphasizes central banks are currently paralyzed and waiting, suggesting the move is not certain or aggressive.

Asks about the widening spread between Brent and WTI and what it signifies.

Jonathan Ferro
Seema Shah

The spread highlights Europe's greater exposure to the conflict. The economic impact for Europe could be considerably greater than for the US.

This is key from a portfolio perspective as international markets had outperformed and seen inflows, but this is now an uncomfortable time for investors.
Asks if a gap has opened in international equities providing a buying opportunity.

Jonathan Ferro
Seema Shah

A gap has opened, but it's too early for key portfolio decisions given the uncertainty. The overnight escalation has increased downside risks.

The base case of a short-lived conflict where oil prices return to pre-crisis levels is receding quickly. Investors are paralyzed, waiting to see how the conflict ends.
Asks if the US is seen as a haven again, given its insulation from the price shock rippling through Europe and EMs.

Lisa Abramowicz
Seema Shah

Absolutely. The US reminds everyone it tends to be the outperformer during shocks as it's considered more resilient. With that comes a technology trade.

Tech is relatively macro-agnostic, shows strong balance sheets and cash flows, and is where investors focus in moments of difficulty.
Asks if she's more concerned about risk assets broadly because central banks are having trouble responding to a potential stagflationary shock.

Lisa Abramowicz
Seema Shah

Equity markets typically perform worse in a geopolitical crisis when central banks hike in response to inflation. But like investors, central banks are also waiting to see how this pans out, making decisions tough.
Asks if the market is waking up to the fact that Trump cannot control the outcome, referencing an RBC note.

Annmarie Hordern
Seema Shah

Yes, that's an important point. The view is shifting from a short-lived conflict where Trump calls victory, to understanding Iran can call the shots.

This is why expectations for oil prices to jump back down are fading. We assume oil prices will stay fairly elevated through the rest of the year even if the conflict ends soon.

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