"Valuations will need to be dropped," Deluard said."Capital raises will slow. Investors who financed rounds at absurd multiples will need to write down t heir stakes. Option packages will lose value. Employees may leave." Venezuela or Iran cause a shock in global oil prices
When it comes to the oil market, Venezuela and Iran are the two nations with the most ability to cause trouble. Deluard notes that 20% of global oil consumption crosses the Iran-adjacent straits of Hormuz every day. And, with a whopping 297 billion barrels, Venezuela has the world's largest proven oil reserve.
But oil wouldn't directly hurt the stock market to the degree Deluard envisions. He thinks the real damage will come if an oil shock driven by geopolitics keeps the Fed from being able to tweak monetary policy like it wants."Despite the current euphoria about 'the death of inflation' and the 'goldilocks economy,' it is still possible for the Federal Reserve to find itself in the 1970s dilemma: accelerating inflation and a slowing economy," Deluard said.
"The demographic turning from boomers to millennials and Gen Z will lead to greater demand for redistributionist and inflationary policies in the 2020 election."With all of that established, Deluard isn't saying that any of these three situations are certain to unfold in the next 12 months. He just thinks they have a higher likelihood of transpiring than the perfect storm required for continued gains.This is a subscriber-only story.
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