Consumers and businesses are only just starting to feel the impact of the current global turmoil. The squeeze is coming through fuel, interest rates, and now food and groceries. That alone is enough to put pressure on household budgets and business margins. But there’s something deeper going on.
Beyond the cost of living, there’s a growing psychological weight. People are trying to navigate a constant stream of bad news, and it’s starting to show. It’s not just that prices are rising. It’s that the backdrop feels less stable, less predictable. Conversations that once sat on the fringe now feel mainstream. World War III. AI taking jobs. What the future even looks like.
So, what do you do when things feel like this?
You start by controlling what you can control. That sounds simple, but it’s not easy, because the modern world is designed to pull your attention in the opposite direction.
Noise is everywhere. Not just the news, but the endless stream of content competing for your focus. What used to be “sex sells” has evolved into outrage and fear. These platforms are engineered to provoke emotional responses, because the stronger the reaction, the longer you stay. Once you understand that, it becomes easier to step back from it. Turn off notifications, reduce the firehose of daily information, and protect your attention. Block out the noise and decide deliberately what you feed your mind.
From there, come back to the basics. The things that are almost too obvious to take seriously, but matter more than anything else. Eat well, move your body, sleep properly, and stay hydrated. There’s nothing revolutionary in that, but during periods like this, the basics become your foundation. Most people let them slip at exactly the wrong time. You don’t need to be obsessive about these things. Just doing them better makes a huge difference.
The same principle applies financially. Don’t wait for a recession to be declared before you act like conditions are tightening. By the time it shows up in the data, behaviour has already changed. Spending slows, risk appetite fades, and businesses start to delay hiring and investment. That shift doesn’t just reflect a slowdown. It helps create it. From an individual perspective, it’s far better to prepare early while you still have flexibility than to react late when options are limited.
What makes all of this harder is uncertainty. People can handle bad outcomes. What they struggle with is not knowing what the outcome will be. Uncertainty lingers. It drains energy and creates anxiety that has nowhere to go. In many cases, it feels worse than the thing you’re actually worried about. Recognising that doesn’t remove the uncertainty, but it changes how you sit with it. You stop trying to eliminate it and start learning how to operate within it.
Perspective matters here as well. Things are rarely as bad as they feel in the moment, and they’re rarely as good as they seem at the top. There’s value in remembering that, especially when emotions are running high or you feel overwhelmed. I’ve been reading Viktor Frankl’s Man’s Search for Meaning, and it’s a powerful reminder that even in the worst imaginable conditions, your response remains within your control.
Finally, don’t forget to actually live and have fun. When things feel uncertain, people tend to narrow their world. Work, family, responsibilities, it’s easy to go into survival mode. The things that bring enjoyment are often the first to go. So, be deliberate in making sure you schedule time for fun and life's simple pleasures. For me, it’s an espresso to start the day and thirty minutes of reading at night. It’s not much, but I really enjoy that process each day.
In times like this, small anchors matter more than you think. You can’t control global events or financial markets. You can’t control how this plays out. But you can control how you respond. Over time, that’s what separates those who drift from those who move forward.
General Disclaimer: This information is of a general nature only and may not be relevant to your particular circumstances. The circumstances of each investor are different, and you should seek advice from an investment adviser who can consider if the strategies and products are right for you. Historical performance is often not a reliable indicator of future performance. You should not rely solely on historical performance to make investment decisions.
Markets Are Priced for the Best Case
While markets remain optimistic that President Trump will find a way to get Iran to reopen the Strait of Hormuz, the longer this goes on the more concerning this becomes a global economic catastrophe.
In the past, such as the introduction of tariffs in April last year, Trump has managed to push and pull the information flow to address problems as they escalate. This time he is trying to do the same, but he is learning the hard way that Iran was in a stronger position than he realised.
From an investors perspective this situation needs to be fixed quickly. The global economy needs the Strait of Hormuz to be reopened urgently. For Trump to do this it will require either massive concessions from the US via negotiations, regime change or a significant escalation.
The military might of the US is not in question. But Iran is clearly in control of the Strait of Hormuz. Trumps rhetoric around winning the war and ongoing negotiations with Iran seems to have placated investment markets so far. Markets are down slightly. But there is a general expectation that Trump will get a deal done, the Strait reopens and away we go. The concerns for markets will be if they stop believing Trump and realise that if he could have reopened the Strait by now, he would have.
If the Strait of Hormuz takes weeks or even months to reopen, then we are in for a severe 1970’s style energy shock that will reverberate through the global economy. In that situation you get rising prices across energy and food, interest rates rising, slowing global growth, falling company profits and rising unemployment.
In the late 1970s and early 1980s in the United States, oil prices more than doubled, inflation pushed above 13%, interest rates peaked near 20% under Paul Volcker, unemployment rose from around 6% to over 10%, and equity markets delivered negative real returns of roughly 50% over the broader period. In Australia, and across much of the world, the pattern was the same, high inflation, rising unemployment and weak real returns.
There is so much more downside risk than upside opportunity in the share market right now. The S&P500 and ASX200 are both down a little over –7% from their highs. So, if everything is reopened tomorrow that’s about the extent of your upside. But if this drags on the downside is significant, easily another –10% to –20% or even more. A global recession would wreak havoc with the economy and the share market. And the longer this goes the more likely that is.
Markets are underestimating the level of control the US has over this situation. But they are also underestimating the supply chain and second order effects. Investors have become so conditioned to the market recovering quickly after a crisis and buying the dip that they underestimate the potential of something deeper.
I usually describe myself as cautiously optimistic. However, as more time passes my approach is becoming increasingly cautious and far less optimistic. If Trump somehow conjures a deal, the US facilitates regime change or Iran willingly reopens the Strait of Hormuz, then markets will celebrate and away we go. But in the absence of the Strait reopening then markets will quickly adjust for what is ahead. As we’ve seen repeatedly in recent years, markets don’t price risk like they once did, they move once an event occurs. From here, outcomes for markets diverge sharply depending on what happens next. That’s the gap investors should be thinking about.
General Disclaimer: This information is of a general nature only and may not be relevant to your particular circumstances. The circumstances of each investor are different, and you should seek advice from an investment adviser who can consider if the strategies and products are right for you. Historical performance is often not a reliable indicator of future performance. You should not rely solely on historical performance to make investment decisions.