Markets reacted very sharply to news of the Iran ceasefire agreement last week,
only to be met with news to start this week of a U.S. Blockade of the Strait of Hormuz,
which is critical for global energy flows.
So how are markets navigating this uncertainty?
And what can investors expect ahead?
I'm Alison Nathan, and this is Goldman Sachs Exchanges.
My guest today is Dominic Wilson, Senior Markets Advisor in Goldman Sachs Research.
Dom, welcome back to Exchanges.
Thank you.
So, Dom, we have had nothing short of a roller coaster of developments and headlines related to the war in Iran.
And I have to say, the most recent ones in terms of this blockade I just mentioned
are not very encouraging about seeing a quick resolution to this conflict.
But if you look at the markets and the S&P 500 in particular,
it is pricing just below where we were before the conflict even began.
So let me just start by asking, does that surprise you at all?
And is the market really underestimating the downside risk here?
So the two parts of those questions, I think, are different from each other.
So the first, is it a surprise?
What I would say is that the thing that we 've been reminding ourselves is that as you move through crises,
as you move through these kinds of events, what you tend to see is the market worry a lot.