"President of the 'world's largest asset management': Investors are underestimating risks, even if the Iran war ends quickly."

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BlackRock CEO issues warning: the market may be severely underpricing the economic impact of the Iran war.

According to Bloomberg, BlackRock CEO Rob Kapito said on Thursday that even if the Iran war ends in the short term, its impact on economic growth and inflation will persist, and investors' currently optimistic expectations risk clear underestimation. He warned that oil prices could still surge to $150 a barrel, as damaged supply chains will take time to return to normal operation.

Apollo Global Management CEO Jim Zelter also sounded a warning at the same event, saying that a prolonged conflict would significantly increase the risk of a recession in the U.S. economy and pose a threat to the credit cycle. He pointed out that American consumers are showing clear signs of financial stress, with confidence continuing to decline.

These statements have heightened concerns about excessive optimism among investors. Since the outbreak of the war nearly a month ago, the S&P 500 has fallen less than 5%, while the performance of traditional safe-haven assets such as gold and U.S. Treasury bonds has deviated significantly from historical patterns.

Market pricing deviates from historical patterns

Kapito, at the Asia-Pacific Finance and Innovation Forum held in Melbourne, said that the current market reaction to the risk of the Iran war is quite different from historical experience.

He pointed out that in past similar conflicts, investors would usually buy short-term U.S. treasuries, buy gold, and short the stock market. However, this time, these traditional defensive trades have not worked as expected—gold has fallen by nearly 15%, U.S. Treasury prices have also declined due to inflation concerns from rising oil prices, and the S&P 500 has dropped less than 5%.

Kapito said his greatest concern is that investors have not seriously examined the potential impact of this conflict but have instead directly set an optimistic outcome. "Whether this conflict lasts a week, six months, or a year—what does it mean for the companies I hold?" he said.

Economic impact may linger even after the war ends

Kapito warned that even if the war ends tomorrow, oil prices could still rise to $150 a barrel, because the affected supply chains need time to return to full capacity.

He further estimated that this conflict may drag economic growth down by as much as two percentage points and push inflation up by a similar margin. This assessment means the market's current pricing of the war's impact may far underestimate the deep effects of continued supply chain disruption on the global economy.

Bloomberg previously reported that JPMorgan strategists also pointed out investors' excessive complacency regarding the Iran war.

Despite issuing these short-term risk warnings, Kapito said he remains optimistic about the long-term outlook. He listed the development of artificial intelligence and the rise of private markets as important long-term tailwinds for investors, believing these structural trends will provide continued support to the market.

U.S. consumer confidence under pressure, recession risk rising

Apollo's Jim Zelter, meanwhile, focused on the U.S. consumer sector. He said that the consumers who have supported the U.S. economy in recent years are now showing clear signs of financial stress—consumer confidence has weakened continuously in the first two months of this year, and further rises in oil prices will further erode their real purchasing power.

"This is not a true interest rate shock, but a confidence shock in consumer spending in the world's largest economy," Zelter said. He warned that if the conflict persists, the risk of recession in the U.S. economy will rise significantly, and the credit cycle will face greater pressure.

Risk Warning and DisclaimerThe market involves risk, and investment requires caution. This article does not constitute personal investment advice, nor does it take into account the particular investment targets, financial status, or needs of individual users. Users should consider whether the opinions, views, or conclusions herein suit their particular circumstances. Invest accordingly at your own risk. ```