The writer is the Rene M Kern professor of practice at Wharton School, chief economic adviser at Allianz and chair of Gramercy Funds Management
A string of record highs for the US stock market might have seemed unlikely to many investors at the start of the year if they had known what was coming — a military conflict in the Middle East, a surge in global energy prices, serious disruptions to maritime supply chains and a mounting risk of global recession.
After all, conventional wisdom dictates that such “geoeconomic” dislocations undermine corporate earnings expectations, increase investor risk aversion and suck capital out of stocks and into “safe assets” such as government bonds, gold and cash. Instead, we find ourselves in the opposite situation, a twilight zone of sorts.