Monitoring The Situation

Is This A Happening?

As you may have heard, the US and Israel launched strikes against Iran over the weekend. Generally speaking, about 90% of the information you get about what’s going on in this initial phase is wrong, so the safest course of action is as follows:

There is a Talebian point about turkeys and Thanksgiving you could make about the statement I’m about to make, but I’m going to do so anyway: most of the time these things don’t matter.

Sure, if you bought the dip of the Polish stock market when the Nazis and Soviets invaded you’d lose all your money so would have been wise to geopolitically panic, but most of these time these are events to look through, not react to.

That being said, you never know, ahead of time, if it’s another fade or if this time is the big one. As my former colleague Bob Elliott says:

The “Nothing Ever Happens” force is strong in most traders today. The reason is obvious - most folks trading today have never lived through a period of extended conflict. And so it’s no surprise that most strategic savings portfolios and tactical traders are totally unprepared for extended war conditions. Just as they never envisioned a period of high inflation until just a couple years ago.

The challenge for most investors is that the types of assets that do well in times of rising conflict run totally counter to the traditional savings mix. While bonds often initially rally, they almost always underperform in real terms and equities trail hard assets like gold and extractive commodities and that is assuming your side wins (twitter thread covering WWII if you want to dig in more). The assets most investors have the least of in their portfolios do the best in periods of extended conflicts.

So the best thing to do is construct a portfolio that’s robust to all scenarios.

The market consensus is pretty strongly tilted toward the side of a limited engagement. While that may be true it is far from certain. And that skew in views favors adding gold and extractive commodities to your portfolio today and diversifying the geography of your holdings more than ever.

News Scan

US-Israel Launch “Operation Epic Fury” on Iran; Supreme Leader Khamenei Killed

Source: Bloomberg / Reuters / NPR / CNBC
Date/Time: February 28 – March 2, 2026
The United States and Israel launched joint strikes on Iran beginning February 28 in what the Pentagon designated “Operation Epic Fury,” targeting military facilities, nuclear infrastructure, and senior leadership. Iranian state media confirmed Supreme Leader Ayatollah Ali Khamenei (86) was killed in airstrikes targeting his office in Tehran, along with chief of staff Abdolrahim Mousavi and former president Mahmoud Ahmadinejad. Iran’s IRGC retaliated by striking 27 US military bases across the Middle East and Israeli military facilities, hitting targets in nine countries including Saudi Arabia, UAE, Qatar, Bahrain, Kuwait, Oman, Iraq, and Jordan. A three-member governing council — including judiciary chief Mohseni-Ejei and President Pezeshkian — will govern until a new supreme leader is selected. Trump stated the bombing campaign “may last weeks” while simultaneously sending mixed signals about a possible endgame. Three US service members have been killed. The conflict represents the most significant US military escalation in the Middle East since the 2003 Iraq invasion and has triggered a cascade of energy supply disruptions, central bank reactions, and market repricing across every asset class.
NPR: U.S.-Israeli strikes in Iran continue into 2nd day

Strait of Hormuz Effectively Closed; Insurance Clubs Withdraw War Risk Coverage

Source: Bloomberg / Hapag-Lloyd / CNBC / Lloyd’s List
Date/Time: March 1–2, 2026
The Strait of Hormuz — through which roughly 20% of global oil and gas supply transits — has been effectively shut to commercial shipping despite technically remaining open. Seven of twelve International Group P&I clubs (Gard, NorthStandard, Steamship Mutual, Skuld, American Club, Swedish Club, and London P&I Club) withdrew war risk insurance for vessels entering the Persian Gulf, Strait of Hormuz, and Iranian waters. Without insurance, ships cannot legally sail. Maersk, MSC, Hapag-Lloyd, and CMA CGM have all halted vessel transits and rerouted around the Cape of Good Hope. Kuwait’s Shuaiba port suspended operations and is evacuating vessels; Bahrain’s Khalifa port suspended operations; Qatar suspended all maritime navigation. Approximately 170 containerships with combined capacity of 450,000 TEU are trapped inside the strait. Hapag-Lloyd introduced war risk surcharges of $1,500/TEU and $3,500/reefer. Near-term marine hull insurance rate increases of 25-50% are expected. This is the de facto enforcement mechanism that makes the supply disruption structural rather than transitory — insurance withdrawal is doing the work that physical blockade has not.
CNBC: The Strait of Hormuz crisis explained

Qatar Halts LNG Production at World’s Largest Export Facility; European Gas Surges 50%

Source: Bloomberg / Euronews / QatarEnergy
Date/Time: March 2, 2026
QatarEnergy ceased all LNG and associated product output at the Ras Laffan facility — the world’s largest LNG export plant, supplying roughly one-fifth of global LNG — after Iranian drones targeted the complex. Qatar’s defense ministry confirmed Shahed-type drones struck Ras Laffan and a power plant tank at Mesaieed. No timeline for resuming production was provided. Dutch TTF natural gas futures surged as much as 49% to €47.65/MWh, with Goldman Sachs estimating prices could double if the disruption persists. This is a distinct supply shock from the oil disruption: even if Hormuz partially reopens for crude tankers, Qatar’s LNG infrastructure damage requires physical repair. European gas storage, which entered March near 40% capacity after a cold winter draw, now faces a supply gap that cannot be easily backfilled — US LNG exports are at capacity, and Australian/Mozambican cargoes already have committed buyers. The energy cost pass-through to European industry and households creates a direct inflation channel that complicates the ECB’s March 12 meeting calculus.
Bloomberg: Gas Prices Surge as Qatar Shuts World’s Largest LNG Export Plant

Oil Surges to $80; Saudi Arabia’s Ras Tanura Refinery Shut After Iranian Drone Strike

Source: Bloomberg / CNBC / Euronews
Date/Time: March 1–2, 2026
Brent crude surged 9.3% to $79.40 and WTI rose over 9% to $73.10 as the Iran conflict combined with confirmed infrastructure damage to create a supply shock with no clear resolution timeline. Saudi Aramco halted operations at Ras Tanura — Saudi Arabia’s largest oil refinery, capable of processing 550,000 barrels per day — after Iranian Shahed-136 drones struck the facility on the Persian Gulf coast. Saudi Arabia described the fire as “limited” and caused by intercepted drone debris, but the shutdown pulls Saudi Arabia directly into the conflict as the first Gulf state to suffer major infrastructure disruption. The drone strike changes the calculus for Riyadh, which has so far refrained from direct military engagement. India’s refiners are already pivoting back to Russian oil as the Iran supply disruption materializes. The oil price spike carries direct implications for US gasoline prices (approximately 13 cents/gallon increase estimated), global inflation expectations, and central bank rate paths. Unlike prior geopolitical fear spikes, this one involves confirmed physical supply disruption — Hormuz closed, LNG halted, refinery shut — qualifying as the structural disruption exception.
Bloomberg: Saudi Arabia’s Biggest Oil Refinery Halts After Drone Attack

Traders Slash Fed and BOE Rate Cut Bets as Energy Shock Reprices Inflation

Source: Bloomberg / Reuters
Date/Time: March 2, 2026
Markets aggressively repriced central bank rate paths as the energy supply shock fed directly into inflation expectations. Traders cut BOE March rate cut odds to below 50%, down from over 80% before the conflict — a dramatic repricing in 48 hours for a meeting just two weeks away (March 19). Fed rate cut expectations were also trimmed as oil-driven inflation concerns collided with the already-sticky core CPI readings. US Treasuries fell as inflation fears eclipsed safe-haven demand — a notable signal that the market views this as inflationary rather than recessionary in the near term. The repricing is most acute for the BOE, where the March meeting was considered nearly certain to deliver a cut; the ECB’s March 12 meeting was already expected to hold but the bar for future easing has risen; and the Fed’s March 17-18 meeting was already pricing a hold. The key macro question is whether central banks treat the energy shock as a transitory supply-side event (look through it, as in 2022 initially) or as a regime change requiring tighter-for-longer policy. The answer depends entirely on how long the Hormuz disruption lasts.
Bloomberg: Traders Trim BOE Bets, See Less Than 50% Chance of Cut in March

ECB’s Wunsch: Wouldn’t “Rush” to React to Oil Price Jump

Source: Bloomberg
Date/Time: March 2, 2026
ECB Governing Council member Pierre Wunsch said he is inclined to look past the energy price spike caused by the Middle East conflict for now, but acknowledged that if an “oil shock” materializes, policymakers would need to assess the situation. Critically, Wunsch noted that despite higher oil prices weighing on economic activity, the net effect would “probably be inflationary” — explicitly framing the ECB’s dilemma as a stagflationary supply shock rather than a demand shock. This is direct reaction function intel from a sitting ECB governing council member: the ECB’s first instinct is to look through the shock (consistent with their 2022 playbook), but the threshold for action is an actual “oil shock” — implying persistent prices above current levels, not just a spike. The March 12 meeting was already expected to hold rates at 2.00%, but Wunsch’s framing suggests that even with a supply shock, rate hikes are not the ECB’s baseline — instead, fewer cuts become the adjustment mechanism. For eurozone rates positioning, this confirms the ECB would rather extend the pause than restart hiking, even in a supply shock.
Bloomberg: ECB’s Wunsch Wouldn’t ‘Rush’ to React to Jump in Oil Prices

SNB Issues Unsolicited Intervention Threat as Franc Surges — First Since Brexit

Source: Bloomberg / Reuters / FXStreet
Date/Time: March 2, 2026
The Swiss National Bank issued an unsolicited statement declaring its “willingness to intervene in the foreign exchange market has increased” and that it is “prepared to intervene to counter a rapid and excessive appreciation of the Swiss franc.” This is the first unprompted SNB intervention warning since the 2016 Brexit vote — a notably rare communication tool that signals the franc’s haven-driven appreciation has reached a threshold the SNB considers destabilizing. With Swiss inflation at 1.4% in February (comfortably below the 2% target and price stability effectively achieved), the SNB’s policy priority has shifted entirely to protecting the export sector from currency appreciation. The franc surged as investors sought safe-haven assets amid the Iran conflict, with the dollar also gaining. The SNB’s willingness to intervene creates a floor under EUR/CHF and signals that the central bank views the current franc strength as exceeding fundamentals — actionable for FX positioning.
Bloomberg: SNB Touts Intervention Threat as Iran Crisis Rattles Markets

BOJ Deputy Governor Himino Refrains from Signaling March Hike; Iran Uncertainty Pushes Back Timeline

Source: Bloomberg / Japan Times / FXStreet
Date/Time: March 2, 2026
BOJ Deputy Governor Ryozo Himino delivered a speech reaffirming the bank’s commitment to further rate hikes but conspicuously refrained from dropping any hints about an imminent increase, reinforcing market expectations that the BOJ will stand pat at its March 13-14 meeting. Himino said the bank should “gradually shift to a more neutral stance through moderate rate hikes” but that it would be “premature to say underlying inflation has certainly reached the 2% target.” The speech’s timing — delivered as the Iran conflict erupted over the weekend — effectively confirms that the BOJ is shelving the March hike option that Governor Ueda had flagged as possible in late February. The Middle East energy shock creates a classic BOJ dilemma: higher energy import costs weaken the yen (inflationary, supporting hikes) but also threaten the fragile consumption recovery (arguing for patience). With Tokyo CPI already softening and the spring wage negotiations (shunto) results due in mid-March, the BOJ now has cover to wait until April or later. The yen implications are significant — a delayed hike keeps the rate differential wide and maintains pressure on yen weakness.
Bloomberg: BOJ Deputy Chief Refrains From Signaling Rate Hike in March

ECB’s Nagel: Doubts on Dollar’s Haven Status Have Risen

Source: Bloomberg
Date/Time: March 1, 2026
Bundesbank President and ECB Governing Council member Joachim Nagel stated that “doubts regarding the safe-haven status of the US dollar have risen” and that “dollar weakness is set to remain as international investors’ loss in confidence could well persist.” This is the head of Germany’s central bank publicly questioning the structural foundation of dollar hegemony — a statement that carries weight beyond typical academic commentary because it comes from an institution that manages eurozone monetary policy. The timing is notable: Nagel is making the statement as the dollar is actually strengthening on Iran-related haven flows, suggesting he views the safe-haven bid as temporary and the underlying structural erosion as persistent. Combined with the earlier ECB push for euro internationalization (covered in prior scans), Nagel’s comments represent an escalation of the eurozone’s challenge to dollar dominance — moving from policy proposals to public statements by the bloc’s most conservative central banker.
Bloomberg: ECB’s Nagel Says Doubts on Dollar’s Haven Status Have Risen

Italy’s 2025 Deficit Breaches EU’s 3% Ceiling; Meloni’s Early EDP Exit Hopes Dashed

Source: Bloomberg / Reuters / Investing.com
Date/Time: March 2, 2026
Italy’s 2025 fiscal deficit came in at 3.1% of GDP — down from 3.4% in 2024 but just above the EU’s 3% Stability Pact ceiling that PM Meloni had targeted. Economy Minister Giorgetti blamed the miss on lingering costs from the 2020 home-renovation “Superbonus” tax credits, which continue to drain fiscal resources years after their introduction. The miss is a setback for Meloni, who as recently as last week stated she expected a deficit “below 3%.” A sub-3% reading would have paved the way for an early exit from the EU’s Excessive Deficit Procedure — potentially a year ahead of schedule — removing constraints on election-year spending ahead of 2027 elections. Instead, Italy remains under fiscal surveillance, limiting Meloni’s ability to deploy stimulus or defense spending increases that the broader European rearmament push is demanding. For BTP spreads, the immediate impact is modest (the miss was narrow), but the inability to exit the EDP keeps a fiscal risk premium embedded in Italian sovereign debt relative to German bunds, particularly as Germany’s own fiscal rules debate continues.
Bloomberg: Italy’s Deficit Breached EU’s 3% Ceiling in 2025 After All

Disclaimer: The information provided on this blog is for informational purposes only and should not be considered investment, financial, or other professional advice. Nothing on this site constitutes a recommendation or solicitation to buy or sell any securities. You should consult with a qualified financial advisor before making any investment decisions. Investing involves risks, including loss of principal.