Financial Fallout Will Persist Even When War Is Over

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Before we get into divining how the war will affect basis points and asset prices, let’s first acknowledge that there are very tangible and dire impacts on ordinary people in the conflict zone, as well as colleagues and their counterparts. Let’s hope for their safety, and that by the time you read this, there will be signs that the danger will ease.

Even when that finally happens, trends have been set in motion that will be hard to reverse, such as the knock-on effects of $5-a-gallon diesel fuel. French banks have the highest Middle East exposure among Europe’s banks. Stagflation is now on the radar, according to Bloomberg Intelligence, our subscriber-only analytical service. BI’s report published this week also says Europe’s banks might bear the brunt of the fallout among global banks; US lenders “should hold up well at first, then suffer if a recession spurs loan losses.” Midtier lenders in Saudi Arabia and Qatar are exposed to liquidity strain and hot money, BI warned. Another sign of stress: S&P told its subscribers that repeat defaulters reached a new high in February.