Trade Idea: Long US vs. European equities (BBXTUESU Index): while we are no geopolitical experts, the events over the past week are worrying nonetheless — both from a humanitarian perspective as well as for financial markets. In light of the rising Middle East tensions, we believe long European equities vs. US equities could provide investors with a tactical hedge to the Middle Eastern flare-up resulting in a continued bearish development in financial markets. The events of the past week have seen energy markets behave similarly to 1Q22 during the Russia–Ukraine conflict, which saw European equities significantly underperform US equities by more than 10% just after the Russian invasion. This divergence in performance was largely driven by Europe’s higher sensitivity to energy price shocks and tighter energy market conditions following disruptions to key supply routes. The recent Middle East escalation has already triggered sharp spikes in energy prices and heightened volatility in European markets, underscoring concerns about inflationary pressures and stagflation risks globally. Given Europe’s higher dependency on imported energy and the potential for prolonged supply disruptions, we believe a similar underperformance pattern could be repeated, with US equities proving more resilient by comparison. The risk to this trade could come from a quick resolution of the current conflict and, as a result, implementation via options could minimise downside risk of this strategy.