Russia, Iran and China: How These Experts Think About Global 'Black Swans'

• An Iranian regime collapse could eliminate OPEC and Russia's spare oil capacity, potentially driving oil prices up more than 3% short-term and 10% over three and 12 months, with BCA estimating a 38% probability of this shock occurring
• A China tech breakthrough similar to January's DeepSeek moment could pressure valuations of major U.S. tech stocks (Alphabet, Amazon, Apple, Meta, Microsoft, Nvidia, Tesla), with BCA assessing a 50% probability of a bubble bursting
• If Russia seized NATO territory and the U.S. refused to aid allies, 20% of U.S. economic output could be at risk if Taiwan electronics shipping halted, potentially impacting long-term treasuries held by institutions

Summary: Global Black Swan Risks and Market Implications

BCA Research has identified several potential "black swan" events that could significantly impact global markets, assigning probability estimates to each scenario.

Iran Oil Shock (38% probability): A collapse of Iran's government could disrupt oil markets, eliminating OPEC and Russia's spare capacity. BCA estimates oil prices could rise over 3% short-term, with 10% increases in the following 3- and 12-month periods. Bond yields would initially rise before falling as global demand destruction materializes.

China Tech Breakthrough (50% probability): A major Chinese technology advancement could pressure valuations of leading U.S. tech stocks, including Alphabet (GOOGL), Amazon (AMZN), Apple (AAPL), Meta (META), Microsoft (MSFT), Nvidia (NVDA), and Tesla (TSLA). BCA assigns coin-toss odds to a tech bubble bursting, threatening American companies' pricing power.

Taiwan Scenario: While not BCA's base case, a Chinese move to seize Taiwan by 2027 would put 20% of U.S. economic output at risk due to disrupted electronics shipments.

Russia-NATO Conflict: Russian aggression against NATO members could either widen or heal the U.S.-Europe rift. A potential U.S. refusal to aid NATO allies would threaten long-term treasuries and U.S. GDP growth.

Investment Strategy: BCA recommends holding European stocks, bonds, currency, and emerging market stocks (excluding China) currently. Investors should consider diversifying away from U.S. assets when signs of Chinese economic stimulus emerge.

The analysis emphasizes the importance of planning for unexpected geopolitical events to avoid emotionally-driven investment decisions that typically erode returns.