Joining us yesterday on Talking Markets was Vincent Deluard, Director of Global Macro at StoneX Group (and possible James Bond movie star if you’re to believe the people in the chat. We can see it).
ENERGY AND IRAN
Before Iran, and before Venezuela, Vincent had been saying for months that energy was his trade of 2026. While it has clearly gotten tailwind from the Iran conflict, Vincent doesn’t think the core bullish thesis has materially changed.
“I can’t say I got lucky because it’s a tragedy,” he said. “The energy call did not foresee this escalation, but it was based on the idea that you wanted energy as a type of Black Swan asset - that we have an increasingly chaotic administration and the biggest risk to a portfolio was inflation, and the best way to hedge that was energy.”
Add to that, he said he ran a correlation of a ton of industries, and energy had the lowest correlation to the Mag 7s, so energy has been pretty much “the cheapest way to correct people’s [over] exposure.”
On Iran, he doesn’t think a quick ending is incoming. “Obviously, if we have a swift resolution of the conflict, you could see a $15 drop in Brent,” he said. “The question is, is that very likely? I don’t think so. The situation seems to be escalating. On one side, we have someone who doesn’t have a plan. On the other side, we have someone who no longer has a government. So the chances for a complex resolution to a problem that has eluded diplomats for decades is quite low.”
And if we don’t have a quick ending, then the Strait of Hormuz could cause massive headaches. Vincent says that is a “lesson that you need more inventory - you cannot just run your economy with 5 days of inventory. Every government is going to start thinking the same way, and that just creates structural demand for energy.”
💡”Energy stocks are still massively under-owned,” Vincent said. “It’s probably like 4% of the equity market, so you’re not really taking a huge risk by being a little bit overweight energy.”
ALL ROADS LEAD TO SECULAR INFLATION?
“I don’t want to take credit for something I was wrong about a year ago,” Vincent said. “I’ve been a broken record on inflation, expecting the second wave of inflation and it hasn’t come.”
But now, he says, there are 3 important things to consider:
The DXY is 15% lower than it was last year
The cost of imported goods is 10-15% higher because of tariffs
And now we’re talking about a 15% increase in energy prices
Vincent said you can’t have that unholy trinity (more on the holy trinity in a sec) “and not expect to see inflation pick up.” “One thing I feel quite confident about is that the market is completely wrong on the pricing of inflation,” he added. “I don’t think we’re in a 2-2.3% inflation world. And that’s one of the clearest mispricings since the beginning of the year.”
THE HOLY TRINITY
Vincent thinks equities are in a topping process that started late last year. However, as “tops are a process and bottoms are an event,” he’s not willing to pull the trigger and sell everything because you could get chopped to pieces.
Add to that, he thinks that the US economy is actually in pretty decent shape, though he added: “I may be wrong on that one. Some very good and smart friends of mine, like Kevin Muir and PauloMacro, are on the other side of that.”
And he still thinks that we can expect what he called back in January “a deluge of Trump checks” in 2026.
Those factors are where Vincent’s Holy Trinity comes in:
Investing in Energy: hedging geopolitical risk and inflation
Investing in Healthcare: it’s a low beta sector so would perform less badly than most other stuff in a bear market. Plus, “long healthcare is being long government incompetency.”
Investing in Financials: Vincent has the least confidence in this but says it would work in a faster growth, steepening yield curve environment
And both energy (all those data centers) and healthcare (all those insurance companies) are likely beneficiaries of the AI race, too.
In general, Vincent has also liked a portfolio made up of gold, commodities, crypto and real assets, though he worries about commodities’ huge run up. “Cash is underappreciated,” he added.
Thank you Michael Angelo Truncale, RF, and many others for tuning in live!
Important Disclaimer: It is crucial to remember that this article is for informational purposes only and should not be considered investment advice. Consult with a qualified financial advisor to assess your risk tolerance, investment goals, and overall financial plan.
