Between Iran and Israel right now. US for the moment has opted to stay out of this war. But what are you making of the development between Iran and Israel? How bad could it get for global markets also in terms of crude?
Richard Harris: Well, first of all, the Israeli thing, the Israelis have been for this for quite a long time. It is well known that Trump has tried to persuade them not to. They have clearly gone against his advice and the Americans now are obviously up to prevent any attacks against US areas, but they have made it quite clear that they have not really been involved.
So, Iran then if they are looking at retaliation, they are really looking at Israel. Now, this may come explicitly in terms of the kind of drone strikes that they tried to do earlier, but Israel’s defences are quite strong there or implicitly, in terms of maybe terrorist attacks in other places, but it clearly does not help the situation. It adds to global uncertainty. It adds to the uncertainty in the market and actually Trump is probably feeling a little bit miffed that perhaps the Israelis have not quite followed his advice.
What do you think could be the impact on markets other than crude because what you are seeing today, of course, is a knee-jerk reaction. Most global markets were already scaling at an all-time peak, perhaps looking for a reason to profit take, but do you sense that we could spiral down further?
Richard Harris: Yes, I mean we have seen a very good recovery in markets generally. I mean, Europe because it is a diversifier to the US, the US because actually we have had the Trump taco trade which is where there have been small pieces of good news that has led a recovery in US share prices. We are now at a stage where markets pretty well are back to where Trump started, that is actually an important sign. But we are also much more fragile.
Unemployment is looking less good than it was. Growth is looking less good than it was. We have got the closing deadline of July the 9th for the tariffs to come back in line. So, we have got a lot of things coming up here and we are in danger of maybe some event, maybe it is this Israeli event, I do not think so, but maybe it is this event where the markets really say okay, that is enough. We have had enough. Markets are very fragile and it is just waiting for that unknown unknown event in order to unwind.
What happens to money flow in a case like this? I mean, this is not the first time that we have had two countries battle it out. We have seen that since Russia-Ukraine, then it was Israel and Gaza and now Iran again. We have seen that here in India as well with our own neighbour. But does it really impact money flows at all or do you think that is clearly restricted to tariffs and what comes of it?
Richard Harris: We have seen a lot of these issues over the last few years and markets react. It takes a day or so to react and then they come back. At the moment, we do not really know what is happening. But the markets are quite immune if you like to a number of these factors. They survived two major wars. They survived all sorts of issues with Trump and tariffs and still they are trading at a reasonably high level.
Bull markets die hard. I would expect that this will end up being another skirmish that will disappear in next two to three weeks. Maybe wrong, but I think the probabilities are like that. I think one escalation could be if the Iranians do decide to see if they can choke off oil deliveries out of the Arabian Gulf, then the Americans will step in because it is important for the world and the Americans do see it as part of their holy mission to keep that gulf open.
So, I think that if you are looking at oil prices, they are likely to be quite volatile because you have got these different factors involved. But at the end of the day, the US will look to keep it open, whether that will then cause a secondary dispute between the US and in Iran, well, that is probably going to happen anyway, but I think that will burn at a lower level.
Is the most obvious trade right now is maybe go ahead and buy gold because at the morning today gold is already at near to its all-time high, holding on to the gains of over 1.5%.
Richard Harris: Well, gold is flavour of the month, is not it, and the dollar it normally takes that view, but because we have had the whole issue with Trump and weakness in the dollar, I think it is being less successful. Of course, the other thing for those who actually believe it is Bitcoin, which the cryptos will probably do quite well in this environment. Crypto is actually quite focused on the equity market. So, they will come off, but in the very short term they may be seen as a gold substitute, but gold to my mind seems to be the key factor there that people will be looking at.
