TS Lombard says multipolar shocks

TS Lombard is arguing that the Iran war is not a one-off shock but part of a new global pattern: more fragmented trade, more supply disruptions, and stickier inflation. (morningstar.com) (tslombard.com) Reuters reported on April 29 that European airlines are entering the summer season with jet fuel prices up nearly 84% since the conflict began on February 28. Airlines have used hedges to soften the hit, but executives and industry groups said shortages could emerge if the war drags on. (lse.co.uk) (gulftoday.ae) That is the kind of shock TS Lombard has been warning about. Its recent research and event material describe a macro regime shaped less by cheap goods and smooth logistics, and more by geopolitics, energy stress, and repeated cost-push inflation. (tslombard.com 1) (tslombard.com 2) In the old globalization model, companies could assume shipping lanes stayed open, energy stayed cheap, and production would move to the lowest-cost location. In the newer model TS Lombard describes, wars, tariffs, sanctions, and industrial policy can all raise costs at the same time. (tslombard.com) (unctad.org) The airline story makes that shift concrete. Flights between Europe and Asia have already been rerouted around Middle East airspace, fuel costs are climbing, and International Air Transport Association Director General Willie Walsh told Reuters there is a risk of fuel rationing in Asia and Europe if supply tightens. (lse.co.uk) (iranintl.com) Investors are adjusting too. Reuters reported on April 8 that fund managers were shifting toward shorter-term trades because inflation and interest rates had become harder to predict as geopolitics took over more of the economic outlook. (kitco.com) (journalrecord.com) TS Lombard’s broader point is that this is not just about airlines or one war. A world of “permanent risk,” in its phrase, makes long-term planning harder for manufacturers, transport groups, and investors that built their models around stable supply chains and falling traded-goods prices. (tslombard.com) (morganstanley.com) That leaves companies trying to do two expensive things at once: protect themselves with hedges, inventories, and backup suppliers, while still preserving margins for customers who got used to the cheaper world of the 2010s. (reuters.com) (tslombard.com) The immediate test is this summer’s travel season. The larger test is whether businesses and markets now accept TS Lombard’s premise that shocks are no longer interruptions to globalization, but part of the system itself. (lse.co.uk) (tslombard.com)