Igor de Maack's chronicle
Following the war in Ukraine and the invasion of Gaza, a new wave of missiles and air strikes has erupted between Israel, supported by American raids, and Iran. The point of contention, still the same as always, concerns Iran’s uranium enrichment program aimed at developing a nuclear bomb. This latest conflict quickly pushed the price of oil up (to $77 a barrel). The prospect of a potential closure of the Strait of Hormuz (through which 20% of the world’s oil supply passes) continues to raise fears of a real oil shock. For European economies, this surge in oil prices is very bad news for GDP growth, in an environment where consumer spending is already sluggish. The European recovery, already hampered by unresolved tariff issues with the United States, now faces a new hurdle with rising energy costs. When another war, albeit a brief one, erupts, it also brings about a wait-and-see attitude and ever-increasing military spending, at the expense of other expenditures more beneficial to the proper functioning of human societies. Like a horse suddenly rearing up, equity and bond markets are showing a volatility that’s hard for investors to grasp. Admittedly, equity markets have managed to withstand these aerial raids and missile exchanges on both sides, even the surprise involvement of the U.S., especially since the announcement of a ceasefire. However, the hope of a reinvigorated global economic recovery is becoming increasingly faint. Summer is approaching, and the mindset of the European, and especially French, investor is turning more toward upcoming vacations, which are expected to be sweltering (yet another ecological and human disaster). These negative signals shouldn’t overshadow the opportunities. Certain sectors and companies, such as energy and aerospace, continue to enjoy strong business momentum; recent Airbus orders at the Paris Air Show include 250 firm aircraft orders and 400 on option.
It is not easy to make investment or allocation decisions, even though the easing of monetary conditions by accommodating central banks provides a reassuring framework for investors. Let’s remember a maxim that has always held true across time and asset classes, and applies equally to someone building a stable: “Investment is neither an art nor a science, but rather a discipline and a method.
So the question is not whether and when to invest, but rather where and how.”