On casting a long shadow

Hello, Subscribers:

Markets have, thus far, absorbed the Iran war with notable calm. As Friend of Haymaker, Louis-Vincent Gave, writes, “markets have broadly taken the Iran war in their stride,” with global equities down only modestly and bonds showing limited stress despite a steady accumulation of negative developments. This resilience, however, may reflect a misplaced reliance on historical precedent. Louis notes that “for most of the past 40 years the global economy has operated in a structurally deflationary environment,” where shocks could be offset by central bank policy easing.

That cushion is gone.