“stocks are basically flat and bonds are basically flat since this whole thing has started”
US stocks are basically flat since the Iran oil shock started — the same shock that in 2022 drove a 25% drawdown. Elliott says markets are rushing to the resolution without pricing the second-order rate and growth impacts. When those flow through, equities reprice.
“Central banks never ease into an oil shock. Doesn't happen.”
Bob Elliott argues central banks historically never ease into oil shocks — they tighten or hold. Markets pricing 1-2 Fed cuts are wrong; short long-duration Treasuries captures the repricing when the Fed is forced to stay hawkish.
“gold rallies initially and then it sells off a lot. Why? Because rates go up and all asset prices go down and gold is just one of many assets”
Gold is a financial asset, not just a safe haven — it sells off when real rates rise. Positioning entering this shock mirrors 2022 when gold initially rallied, then fell hard as the Fed hiked aggressively. The same setup is in play: oil-driven inflation forces hawkish policy, gold unwinds.
“Japan and Europe are in bad shape when it comes to big oil price rises”
Europe has no domestic energy buffer — an oil shock at this scale hammers growth and blows out the trade deficit while the US, as a producer, absorbs the shock. The rest-of-world outperformance trade is already unwinding; short EUR is the cleanest expression.
“oil prices are projected to be 40% higher at the end of this year than they were at the beginning of this year”
The oil futures curve is pricing crude 40% above year-start levels by year-end — more extended than 2022. Bob Elliott says oil traders are physically counting barrels and the math does not close without sustained high prices; equity markets have not caught up.