Watching the Canary in the Coalmine

Andrew Sheets, head of corporate credit research at Morgan Stanley, discusses the limited market impact of recent geopolitical events, specifically focusing on the conflict between the U.S., Iran, and Israel. He argues that while such events are serious, their effect on markets is often short-lived unless accompanied by a significant (75% or more year-over-year) increase in oil prices. Since oil prices are currently down, he suggests that other factors, such as positive credit market conditions and seasonal trends, will likely dominate market performance in the near term. However, he cautions that a significant oil price spike or a shift in these favorable conditions could alter this outlook.