Emerging Markets (EEM)

The dominant market narrative for the next 2-6 weeks is the US-Iran military confrontation: Trump's primetime address confirming named operations against Iran, IRGC retaliatory announcements, and Houthi continuation of the missile campaign form a coherent escalation ladder that is likely to sustain WTI in the $105-130 range as the base case. The critical insight the market may be underpricing is the inflation pipeline lag — PPI at +0.7% 3M is building pressure that will not appear in CPI until April/May releases, meaning financial conditions will face a second tightening shock from inflation data just as markets might be tempted to price in de-escalation. The highest-conviction trade in the book remains the Energy/Gold long pair versus Consumer Discretionary/REIT short — this positioning profits in both the base case (stagflation deepening, 50%) and the escalation scenario (20%), loses only in de-escalation (20%) which is the single thesis-invalidating tail.

Recent Data