While much recent commentary has focused on the Strait of Hormuz—and the implications for oil supply—the more consequential question for institutional investors lies elsewhere: the true liquidity profile of portfolios under stress. A sustained supply shock of meaningful magnitude is already exerting pressure on global growth. Yet this is occurring alongside a convergence of deeper structural forces: the expansion of private markets and shadow banking; rapid technological disruption, particularly from artificial intelligence; shifting demographic dynamics; intensifying geopolitical fragmentation and resource competition; and the accelerating impacts of climate change. Each of these forces is transformative. None can be forecast with precision, and their interactions are inherently nonlinear. […]
The full note on this important topic can be downloaded at this link: LTA Thinking – The Fluid State