The ongoing war in Iran is projected to cause stagflation and scarcity due to significant oil and fertilizer supply reductions. This inflationary pressure could lead to a liquidity drain from financial markets, potentially bursting the AI stock bubble.

The Iran war has baked in stagflation and starvation through big reductions in the supply of oil and fertilisers. This inflationary pressure will only increase. As inflation sucks liquidity out of financial markets and into the real economy, bond yields are being pushed up across the world. If bond yields rise by more than a percentage point, a likely scenario before the year’s end, the liquidity diversion could be big enough to pop the AI bubble. The US-Israeli war on Iran has disrupted the...