Trump has an unusual knack of doing the unthinkable without thinking through the full implications on everyone else. This time round, he is deep in the folly of hubris, because after the easy success of seizing President Nicolas Maduro in Venezuela, he may have been persuaded by Israeli Prime Minister Benjamin Netanyahu that regime change in Iran is possible for a quick win. If he succeeds, the US is back in full control of global oil and gas, the dollar will strengthen and his Make America Great Again (MAGA) vision will be celebrated wholeheartedly by financial markets.
What a difference a day makes. A fortnight ago, when I was looking at investing in yen assets as a hedge against geopolitical turbulence, the mainstream scenario then was a stable world economy with peace under negotiation.
On Feb 28, the US and Israel launched their attacks on Iran, killing Ayatollah Ali Khamenei, several members of his family and leading figures of the Iranian regime. Since then, the Iranians have closed the Strait of Hormuz, and oil prices have touched a peak of US$120 ($154) per barrel, cutting supplies to Europe, India, Japan and South Korea. If this is sustained, a global recession looms.
