The Iran war is currently in a “mushy middle”, says Marko Papic, a macro and geopolitical expert at global investment research firm BCA Research, in the latest episode of Credit Exchange with Lisa Lee.

“[What] investors really have to focus on is not the verbiage, not the rhetoric, not the negotiations – but rather, the ships going in and out of Hormuz,” says Papic. While difficult to track, Hormuz has become a permeable membrane in the past few months. Combined with high oil reserves at the onset of the war, it’s helping prevent a calamitous global recession, and allowing time for the US and Iran to negotiate a truce.

Recalling Baron Rothschild’s famous utterance that you ‘buy on the sound of cannons and sell on the sound of trumpets’, Papic predicts problems for economies and markets after the conflict ends, with Europe probably already in a mild recession as a result of the war. Inflation will be stoked because government will attempt to refill depleted oil inventories, and the AI build-out is proving to be more inflationary than previously thought.

Papic, who is also the author of ‘Geopolitical Alpha: An Investment Framework for Predicting the Future’, also discusses mid-term elections in the US, the Federal Reserve, and China.