Episode summary
Hormuz Blockade Spurs Market Jitters | Bloomberg Surveillance
Bloomberg Surveillance
· · 35 min · Hosts: Tom Keene, Paul Sweeney, Lisa Mateo, Michael Barr · Guests: Peter Tchir, Jean Boivin, Christopher Smart, Neil Sipes
Summary
The discussion centered on how a US naval blockade of the Strait of Hormuz could ripple through markets, oil flows, and geopolitics. Peter Tchir argued that the market is not yet pricing a catastrophic outcome, and that if the blockade is limited and the ceasefire holds, the direct economic damage may be manageable. He said the bigger risk is escalation: mines, attacks in the Red Sea, retaliation against Saudi infrastructure, or even greater Chinese involvement.
The conversation repeatedly returned to deglobalization and the idea that investors should own “production for security” names. Tchir pointed to Intel, energy, rare earths, nuclear, and European industrials as beneficiaries if countries push to make more at home. Jean Boivin of BlackRock said geopolitical shocks can temporarily disconnect equities from earnings strength, but if the shock is contained that gap becomes an opportunity. He argued central banks have limited tools against supply shocks and that staying entirely on the sidelines is costly.
The show also broadened into the state of diplomacy, the implications of Hungary’s political shift, and the start of bank earnings season. Christopher Smart said US diplomacy has been weakened by lost institutional memory, while Neil Sipes said Goldman Sachs posted a strong first quarter with a 19.8% return on average shareholders’ equity, though investors will focus on how trading and deal activity hold up into April.
Key takeaways
- Peter Tchir said the Strait of Hormuz risk is mostly about escalation, not an immediate market collapse, if the blockade stays limited.
- Tchir favored “production for security” stocks, naming Intel, energy, rare earths, nuclear, and European industrials as beneficiaries of deglobalization.
- Jean Boivin said geopolitical stress has created a disconnect from tech earnings, but contained shocks could make equities look attractive again.
- Boivin argued central banks cannot do much about supply shocks and that investors face a costly choice if they sit on the sidelines.
- Neil Sipes said Goldman’s first quarter looked strong, with 19.8% ROE, but warned investors will care more about April trends and capital-markets momentum.
Notable quotes
“if this blockade can be implemented in such a way that the ceasefire is not broken, it's fine”
“I think everyone's going what do countries need to make more of their own? Buy those stocks”
“there's no neutral position really in this in this environment”
“Return on average shareholders equity 19.8%”
How the episode opens
Bloomberg Audio Studios podcasts, radio, news.
This is the Bloomberg Surveillance podcast. Catch us live weekdays at 7:00 a.m. Eastern on Apple CarPlay or Android Auto with the Bloomberg Business app.
Listen on demand wherever you get your podcasts or watch us live on YouTube. Peter Shear is at Academy Securities. They have a real study of geopolitics and military affairs overarching their finance, which is wonderful for the guy that with the incredible acclaim out of Waterloo and Vanderbilt over at the years.
Is the stock market dislocated from our geopolitics? I think it's behaving fairly this morning. I would have expected maybe down 1%, but I think the reality is if this blockade can be implemented in such a way that the ceasefire is not broken, it's fine.
I think that's the risk though is that this just causes some degree of escalation. World War II annualized return 17% per year. Korean War 18% per year.
Vietnam single digit 6% per year. Gulf War 12% per year. Iraq War 10% per year.
All up. Stock markets do well in military conflict, don't they? They have in the past and I think they could do again over time with this one as well.
We again we Russia Ukraine have been in conflict and stocks have generally done pretty well. I think this time though we got to be a little bit cautious cuz I feel like this is more once again a shifting of the world order and some of the prior conflicts actually shifted the world order heavily in favor of the US. This seems to be kind of a continuing this theme of deglobalization.
Where are people going for safety or hedging at the moment? I mean you look at the dollar and had a great week last week.
From the episode’s captions: roughly the first two minutes, lightly cleaned. Keep watching on YouTube →
Topics
- strait of hormuz blockade
- geopolitical risk
- macro strategy
- earnings outlook
- iran developments
Companies and tickers mentioned
- BLK
- GS
- Academy Securities
- BlackRock Investment Institute
- BlackRock
- Arbroath Group
- Bloomberg Intelligence
- Goldman Sachs
Watch the episode
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Summary, takeaways and quote selection by Octagon. Quotes are short excerpts; the full conversation is in the episode.
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