BCA's Marko Papic recommends investing in European telcos
Marko Papic, BCA Research Chief Strategist, joins 'Closing Bell Overtime' to talk international investing as trade talks stall out in the U.S.
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Politico
9 hours ago
- Politico
Oil prices jump as market awaits Iran response to attacks
Oil prices surged Sunday evening to the highest levels since President Donald Trump returned to office as energy markets digested the U.S. military strike on Iran's nuclear facilities — and the risk that Tehran may try to disrupt the flow of crude oil out of the Middle East. U.S. crude oil futures rallied more than 6 percent to peak at $78 a barrel, more than $1 higher than the price on Jan. 20 when Trump was inaugurated. That jump is likely to filter through to gasoline prices just as drivers prepare to hit the road for the long July 4th weekend next week. Trump had campaigned on promises to lower consumer energy prices as part of his 'energy dominance' agenda, but the current average pump price of nearly $3.22 a gallon for regular gasoline is about 10 cents above the price when he was inaugurated — and likely to climb this week. How much higher oil prices might go now depends on how Tehran responds to the attacks. Iran's parliament's voted to close the Strait Of Hormuz, the narrow waterway at the mouth of the Persian Gulf where a quarter of the world's seaborne oil passes, but only an appointee of Iran's supreme leader Ali Khamenei can make that determination. Even if that were to happen, the impact on the oil market would depend on whether Iran and its allies are satisfied harassing the oil tankers traversing Hormuz or resort to a full-scale campaign to block traffic altogether. Reports that the White House gave Iran a head's up on the bombings and said there wouldn't be more to follow suggests the Trump administration is trying to avoid a full-scale war — and helping to keep oil prices in check. Energy analysts have said a disruption in the shipping traffic through the Strait of Hormuz could send oil prices above $100 a barrel. 'This choreography underscores that both sides want to calibrate this crisis, not lose control of it,' said Scott Modell, chief executive officer at energy and geopolitics analysis firm Rapidan Energy Group. 'We expect Iran's response to be stage-managed: think harassment of commercial shipping, symbolic seizures of tankers, and limited rocket fire on US military outposts — but not a full-scale campaign to choke energy flows through the Strait of Hormuz.' Some market analysts are confident that even if the fighting does escalate, the United States, OPEC countries such as Saudi Arabia and other suppliers will have enough product to meet demand. But others are warning that a price increase may have only just begun. 'True, these oil market dynamics indicate that investors have incorporated a greater risk premium to account for the increased probability of an oil supply shock,' BCA Research analyst Roukaya Ibrahim said in a note. 'Yet the more important question is whether this pricing adequately reflects the level of risk. Our sense is that crude price pressures will remain tilted to the upside over the near term.'
Newsweek
13 hours ago
- Newsweek
How Could Strait of Hormuz Closure Impact Americans?
Based on facts, either observed and verified firsthand by the reporter, or reported and verified from knowledgeable sources. Newsweek AI is in beta. Translations may contain inaccuracies—please refer to the original content. Iranian lawmakers have voted to support closing the Strait of Hormuz—a vital route for global oil and gas shipments—in response to U.S. airstrikes on three of the country's nuclear sites on Saturday, a move that if agreed upon by the Supreme Leader, could disrupt energy markets and drive up prices worldwide and stateside. Why It Matters Following U.S. strikes on three Iranian nuclear sites, Isfahan, Fordow, and Natanz, the world waits as Iran considers its response. The Strait of Hormuz is a narrow, yet incredibly strategic waterway connecting the Persian Gulf to the Gulf of Oman and the Arabian Sea. At its narrowest point, the strait is about 21 miles wide, with two shipping lanes that are 2 miles wide in each direction. Around 20 percent of global oil trade passes through the Strait, with any closure likely to spike global prices. What To Know In the first fiscal quarter of 2025, the U.S. Energy Information Agency (EIA) noted that just under 15 million barrels of crude oil and condensate, and about 8 million barrels of petroleum products were transported through the Strait. There are very few alternative routes for the large volume of oil that passes through the chokepoint. The average 20 million barrels of oil products that pass through make up around 20 percent of the global consumption. The price of Brent crude oil was already climbing ahead of the U.S. strikes, increasing from $69 per barrel on June 12 to $74 per barrel on June 13. While the EIA estimates that a large majority, around 80 percent, of the oil-based product moving through the Strait go to Asian markets, around 2 million barrels a day end up in the U.S. Stena Impero being seized and detained between July 19 and July 21, 2019 in Bandar Abbas, Iran as it passed through the Strait of Hormuz, a vital regional shipping channel. Stena Impero being seized and detained between July 19 and July 21, 2019 in Bandar Abbas, Iran as it passed through the Strait of Hormuz, a vital regional shipping channel. Tasnim/Getty Images If the Iranian government following the lead of the parliament, decides to close the Strait, Asian markets are expected to be most hit, but American markets will be too. Despite influence over the Strait, Iran doesn't supply the most oil that transports through it, Saudi Arabia does. Some experts have said that if Iran were to cut off access to the Strait, it could spike oil prices by 30 to 50 percent immediately, with gas prices likewise rising. "Oil prices would likely double, to well above $100. The extent to which that price shock would be sustainable is unclear," Marko Papic, chief strategist at BCA Research, told Newsweek in an email Sunday. He also noted that due to the overwhelming pressure campaign the country would face over its closure "the price shock would be of limited duration." "However," he continued, "it could impact confidence domestically, impact capex [capital expenditure] intentions by corporates, and thus trickle into the animal spirits [psychological factors that influence economic behavior] that affects not just stocks, but also the labor market." Fears that Iran could attack U.S. oil infrastructure in the region and levy its power over the Straits of Hormuz could "combine to make prices and speculation rise about the security and dependability of supply," Greg Kennedy, director of the Economic Conflict and Competition Research Group at King's College London, previously told Newsweek. "Lack of clarity of how long this condition will last will also lead to hoarding or preemptive purchasing by other nations, so there are competition supply fears that will drive up prices," he added. Iran has been reluctant to close to Strait, even during times of intense conflict during the heat of the Iran-Iraq war. Infographic with map of the Gulf showing maritime tanker traffic in September 2024 through the Strait of Hormuz. Infographic with map of the Gulf showing maritime tanker traffic in September 2024 through the Strait of Hormuz. NALINI LEPETIT-CHELLA,OMAR KAMAL/AFP via Getty Images) What People Are Saying Greg Kennedy, director of the Economic Conflict and Competition Research Group at King's College London, told Newsweek: "This is not an act that just stays in the Gulf region, it has wider global strategic ripples." Spencer Hakimian, founder of Tolou Capital Management, wrote on X, formerly Twitter, on Saturday: "There are close to 50 large oil tankers scrambling to leave the Strait of Hormuz right now. Looks like the oil industry is expecting the Strait to be blockaded in the coming days." President Donald Trump wrote on Truth Social on Saturday evening: "ANY RETALIATION BY IRAN AGAINST THE UNITED STATES OF AMERICA WILL BE MET WITH FORCE FAR GREATER THAN WHAT WAS WITNESSED TONIGHT. THANK YOU! DONALD J. TRUMP, PRESIDENT OF THE UNITED STATES." Brian Krassenstein, who has over 900,000 followers on X wrote on Sunday if the Strait is closed, people can expect: "U.S. Gas Prices likely Skyrocket. Potential $5–$7/gallon range depending on duration. Military Escalation Risk. U.S. Navy and allies likely to respond. Tanker delays affect oil, LNG, and related goods." What Happens Next? Any final decision on Iran's response, whether negotiation or closing the Strait or other, however, will largely rest with the country's leader Ayatollah Ali Khamenei. The parliament vote to close the Strait merely advises him of the option to pursue.
Yahoo
2 days ago
- Yahoo
Why a top market strategist says his base case is still a 25% stock drop and a recession in 2025
Peter Berezin of BCA Research maintains a bearish outlook despite a tariff pause. Berezin predicts a 60% chance of recession, with the S&P 500 dropping to 4,500. Economic concerns include trade uncertainty, rising delinquencies, and a weakening labor market. At a time when strategists across Wall Street are dialing back their recession probabilities, Peter Berezin of BCA Research is doubling down. President Donald Trump's 90-day tariff pause was enough to ease the worries of some investors, but the chief global strategist at BCA has maintained his bearish outlook. While Berezin has lowered his recession outlook from Liberation Day levels, he still expects an economic slowdown to unfold this year. "I've brought down my recession probability from 75% to 60%, so it's not an overwhelming likelihood of recession, but it is still my base case. And in that base case, I would expect the S&P to trade down to around 4,500," Berezin told Business Insider. That would mark a 25% decline for the benchmark index from levels on Friday. While 4,500 sounds like a steep drop from the near-record highs the stock market is trading out now, Berezin doesn't think it'll take much to trigger the fall. A plunge to that level would require the S&P 500 to trade at 18 times earnings with EPS of $250. The index is currently trading at around 23 times earnings with EPS of around $260 — not too far off, in Berezin's opinion. "At this point, it's hard to make a case to be very optimistic on either the stock market or economy," Berezin said. The economy was already showing signs of weakness prior to the trade war fallout, Berezin said. Back in December of 2024, Berezin was calling for a recession in 2025 coupled with a stock market plunge of over 20%. His S&P 500 target of 4,452 was one of the lowest on Wall Street. Today, Berezin is concerned about continued trade uncertainty, a growing deficit, and a weakening consumer. Job openings have been on a downward trend since early 2022, "removing a lot of insulation that had protected the labor market," Berezin said. Indeed, other economists agree that the labor market might be weaker than it seems — Sam Tombs of Pantheon Macroeconomics is concerned with slowing hiring and declining small business sentiment. Berezin also points out that consumer delinquency rates on credit cards and auto loans have been rising. In the first quarter of 2025, credit card delinquencies hit 3.05%. That's the highest level since 2011, "a year in which the unemployment rate was 8%," Berezin said. Furthermore, as student loan collections restart after a five-year hiatus amid the pandemic, consumers' credit scores are taking an even bigger hit. The housing market has also been a pressure point in the economy since COVID, with home affordability and inventory challenges mounting for buyers. Berezin pointed to falling construction in May—housing starts dropped 9.8% in the month— as another sign of a slowdown. The effective tariff rate is hovering around 15%, which is still a level that Berezin considers dangerous. "There's probably no ideal for a tariff rate, but there are numbers that are more punitive for the economy than others," he said. If Trump doesn't solidify trade deals soon, the economy could be in store for some major pain as businesses start to pass along price increases to consumers. A tariff rate lower than 10% would be less disruptive to the economy, but Berezin isn't hopeful that Trump will lower his policies to that level. "Since tariffs on China probably will be higher than tariffs in other countries, that means Trump would have to roll back his 10% base tariff that he's applied to almost all countries," Berezin said. "I don't see him doing that unless the market forces him to do it." In fact, Berezin thinks Trump might even increase tariffs on some industries such as pharmaceuticals, semiconductors, and lumber. Berezin doesn't see an easy way around an impending recession. Some strategists might be hoping for Trump's Big Beautiful Bill to boost the economy through tax cuts, but unfunded tax cuts could push bond yields higher and cancel out any any stimulus. According to the Congressional Budget Office, while the tax bill would increase GDP growth by 0.5% on average over the next 10 years, it would also push up 10-year Treasury yields by 14 basis points and increase the deficit by $2.8 trillion. A stock market crash and economic downturn could actually be the turning point for Trump to reverse course on his policies, Berezin said. The S&P 500 dipping below 5,000 and the 10-year Treasury yield spiking above 4.5% probably influenced Trump to paus tariffs for 90 days, Berezin added. "We could get more tariff relief, but the market has to force that. I don't think it's going to come from any other source," he said. Read the original article on Business Insider
