economy
Morgan Stanley’s defensive playbook for spiking oil prices amid Iran war
Investors ought to prepare their portfolios for rockier times as energy supply becomes uncertain, according to a team of Morgan Stanley strategists.
TL;DR
- President Trump indicated the U.S. would hit Tehran "extremely hard," suggesting the Iran conflict could last weeks, leading to oil price surges.
- Morgan Stanley recommends investors "turn defensive" due to increasing downside risk in risk assets.
- Global equities are downgraded to equal weight from overweight, with reduced exposure to emerging markets.
- Government bonds are upgraded to overweight, noting their diversifying properties and historical effectiveness during oil price shocks.
- Morgan Stanley is increasing its allocation to cash to its highest level in years, viewing it as a prudent safe haven.
- Emerging markets in Asia are noted as being dependent on Middle Eastern supply of crude oil, refined products, and LNG.