BlackRock CEO warns: Market underestimates the risk of conflict with Iran, inflation and growth may face a "double kill".

BlackRock President Rob Kapito said that investors may be underestimating the risks of the Iran war. Even if the conflict ends quickly, related risks could drag down economic growth and push up inflation. Kapito warned at the "Asia-Pacific Finance and Innovation Summit" in Melbourne on Thursday that even if the war ends in the short term, economic growth could be reduced by up to two percentage points, and inflation could rise by a similar magnitude. He pointed out that even if "we announce the end of the war tomorrow," oil prices could still soar to $150 per barrel, as disrupted supply chains need time to recover to full capacity. "If this interruption lasts for a week, six months, a yearwhat does that mean for the companies I own?" Kapito said. "What worries me the most is that people haven't seen thisthey are just assuming" an optimistic outcome. Since the outbreak of the war nearly a month ago, the US S&P 500 index has fallen by less than 5%, and some hedging trading strategies have not been effective. Gold prices have fallen by nearly 15%, and US Treasuries, typically seen as a portfolio anchor, have also declined due to inflation concerns triggered by rising oil prices. Kapito noted that in the past, "when faced with such conflicts, investors would buy short-term bonds, buy gold, and short the stock market," emphasizing that the market's current response to the war is mixed. At the same event, Jim Zelter, President of Apollo Global Management, also warned that if the conflict persists long term, the risks of a US economic recession and threats to the credit cycle will significantly increase. These warnings highlight the market's concerns about the economic impact of the conflictparticularly the potential repercussions of long-term disruptions in energy and shipping on global supply chainsexacerbating concerns that have become increasingly complacent. Zelter stated that in recent years, US consumers, who have been a pillar of the economy, have begun to show signs of pressure. He added that consumer confidence has been weakening in the first two months of this year, and rising oil prices will further squeeze their disposable income. Zelter emphasized, "This is actually not an interest rate shock, but a shock to the consumer confidence in the world's largest economy." Despite the risks of slower growth and rising inflation brought about by the war, Kapito said he remains optimistic about the long-term outlook and pointed out that the rise of artificial intelligence (AI) and the private equity market are key bullish factors for investors.