Differentiate your client advice in a crisis

Geopolitical turmoil has one reliable side effect: it humbles capital markets professionals. The headlines arrive in torrents, expert panels multiply, op-ed pieces proliferate in the media, talking heads flood the airwaves, and suddenly every academic, strategist and part-time geopolitical savant has a view on the conflict du jour.

Most of those views turn out to be wrong, and the rest are indistinguishable from the ones that are. The signal-to-noise ratio collapses. We are left peering into a kind of epistemological fog, convinced something important is happening but unsure what, exactly, we are seeing.

For those advising companies on equity or debt issuance, this creates a very particular professional predicament. Your clients can read the same front pages you can. They’ve perused the same breathless commentary, watched the same footage, heard the same confident predictions that have a shelf life shorter than last week’s milk delivery. The last thing they need is your personal take on the crisis. After all, they acquired several of those at the board chair’s dinner party the night before.

So how do you add value when the issue is both widely discussed and universally (mis)understood?

You can start by reframing the issue. Stop trying to interpret geopolitics. Start interpreting how markets interpret geopolitics. It sounds like a semantic trick. It isn’t. It is, in fact, the job. You are, whether you like it or not, a semiotician.

Look at what markets have done since hostilities in the Gulf began at the end of February. The S&P 500 fell more than 7% at its worst, only to claw its way back and, as I write, sit roughly where it started.

Oil has behaved as though it inhabits a different reality: Brent crude has moved from about $60 a barrel to something closer to $100, with some wild and crazy gyrations along the way.

Sovereign bond yields, rather than offering the traditional flight-to-safety comfort, have widened across developed markets, reflecting supply-side inflation fears tied to energy and nagging concerns about fiscal incontinence.

What do we make of this? Equities: phlegmatic. Oil: alarmed. Bonds: uneasy, perhaps even slightly irritated. Private credit: mostly focused on AI’s impact on SaaS firms. Gold: lower because… frankly, I have no idea. Bitcoin: rising because Iran might charge Hormuz tolls in its crypto.

Different asset classes are pricing different worlds simultaneously and none of them is obviously wrong. The neat, single-threaded, monocausal narrative one might hope for — markets down because war is bad, bonds up because fear is high — hasn’t materialised. Things are a lot messier than our Cartesian constructs.

This is where you can help. Inside a bank, you have access to a formidable array of perspectives across the full waterfront of financial products from macro, to rates, credit, commodities, equities and beyond.

Your corporate client cannot easily assemble all of this into a coherent whole. More importantly, you can connect those bits and pieces in real time and combine and synthesise them into something usable they can act on.

The divergence across asset classes is not a puzzle to solve so much as a condition to work with. The S&P 500 isn’t a referendum on the Strait of Hormuz. It is a messy amalgam of earnings expectations, positioning, buy-backs, index flows, technology narratives, hopium, copium, and whatever else happens to be in fashion that week.

Reading its resilience as investor calm about the conflict is a category error. Interpreting oil’s spike and as a forecast of Ragnarok is equally reductive.

Price formation, in other words, resists tidy explanation. Markets are not machines processing a single input. They are sprawling, adaptive systems — aggregations of beliefs, constraints, incentives and hedges that update continuously and often contradict themselves. The confident attribution (“equities are up because…”) is usually just a well-dressed guess.

But this does not make the exercise futile. Au contraire, market movements form a kind of language, and price, spreads, yields and volatilities are the vocabulary. Your task is to read them. Your job is hermeneutical at heart.

When credit spreads widen but issuance continues, you learn something about the gap between sentiment and actual liquidity. When volatility surges in commodities but stays moderate in equities, you can see where fear is concentrated and, arguably, where it is not. When bonds sell off into a geopolitical shock, you are reminded that concerns over inflation and fiscal discipline can outweigh the instinct for safety.

None of these are answers. They are clues, grounded in the behaviour of capital rather than anyone’s opinions. They are saying not what you want to hear but what’s worth hearing.

For a treasurer weighing a bond deal in the middle of all this, such clues are far more valuable than any sweeping geopolitical thesis. She doesn’t need you to explain the conflict’s historical roots or to predict the next escalation. She wants to know: is the market open, at what cost, for how long, who else is issuing, and how are investors likely to react? By mapping the behaviour of different asset classes — and, crucially, where they diverge — you give her something to work with.

Geopolitical chaos does not render the capital markets advisor obsolete. If anything, it sharpens the need for the role. Not as a forecaster of events — that territory is already crowded with the professional class of confident soothsayers and fortune tellers on the buy-side and sell-side — but as a careful, slightly sceptical reader of a market story that no one fully understands, least of all the people trading it.