Last night’s ZeroHedge debate featured the cautiously bullish Adam Parker, former Morgan Stanley chief equity strategist who now runsTrivariate, and bearish money manager Michael Pento, hosted by Adam Taggart ofThoughtful Money.
While Parker is largely optimistic about equities, he put forth a gloomy prediction on gas prices, based on what he is hearing as a consensus on Wall Street. Namely thatprices will remain high for at least a yearevenif Hormuz were to open today.
His full comments below and highlights from last night's debate. Check out the full discussion to hear how both Pento and Parker are positioned going into year-end:
Parker warned that oil markets may remain structurally elevated even if the Strait of Hormuz reopens immediately, arguing that current pricing still underestimates how long normalization could take.
“The consensus view is it takes much longer to normalize than what’s in the 12-month forward Brent,” Parker said, noting that forward oil pricing in the high-$70 range likely needs to be revised upward.
“Even if we’ve really truly reached some agreement now, it’ll take several months to get back toward where we were already,maybe a year.”
Parker added that economic damage from the energy spike has likely already occurred, particularly for consumer-facing sectors.
“There’s damage done already to consumer discretionary and staples earnings.”
He argued the bigger debate now is whether equity markets continue looking through the near-term pressure on the assumption conditions eventually improve.
Renewed hot Middle East conflict and continued closure of the Strait of Hormuz would quickly mean severe inflation and a likely recession, according to Pento. In other words: stagflation.
Source: ZeroHedge News
