Are the markets right or wrong about Iran? - Unhedged Recap

Podcast: Unhedged

Published: 2026-03-17

Duration: 22 min

What Happened

Despite investors being spooked by geopolitical tensions in Iran and concerns over private credit, financial markets, including stocks and bonds, remain relatively stable. Katie Martin and Robert Armstrong discuss the peculiar situation where investor sentiment is negative, yet markets are not reflecting panic or significant downturns.

The hosts talk about the VIX index, also known as the 'fear index,' which measures expected volatility in the S&P 500. The index has seen fluctuations, peaking at 29 on March 6th before settling back to 22. This indicates a more volatile environment than at the start of the year but not one indicating a market collapse.

A Bank of America survey highlights a shift in mood from optimism to stagflation concerns, with fund managers moving more assets into cash. This is the largest move into cash since March 2020, reflecting a cautious approach amid geopolitical uncertainties and economic concerns.

Despite the geopolitical issues, including the potential closure of the Strait of Hormuz, oil prices have not skyrocketed to extreme levels. Future oil prices suggest a moderate increase, indicating that markets do not expect prolonged disruption.

The episode also touches on the idea that while certain sectors, like AI and private credit, are reminiscent of past financial bubbles, they are not currently at crisis levels. The hosts cite Anton Isa from Rebecca, who suggests that while there are elements of past crises present, they are not severe enough to cause widespread financial turmoil.

The impact of oil prices on the global economy is discussed, with a potential price doubling to $200 a barrel posing significant risks. However, current market indicators do not suggest this is expected, with future contracts indicating stability.

The conversation also humorously touches on Mark Andreessen's comments about introspection and a hypothetical scenario involving Donald Trump and Cuba, illustrating the often unpredictable nature of geopolitical and market-related discussions.

Key Insights

• Despite geopolitical tensions in Iran, financial markets remain relatively stable, with the VIX index indicating increased volatility but not a crisis-level panic.
• A Bank of America survey reveals a significant shift in fund managers' strategies, with many moving assets into cash, marking the largest such move since March 2020.
• Future oil prices suggest that markets do not expect prolonged disruptions from geopolitical tensions, with current contracts indicating moderate price increases.
• While elements of past financial crises are present in sectors like AI and private credit, they are not currently severe enough to indicate an impending financial meltdown.