Jurrien Timmer of Fidelity Investments describes the current market climate as ‘another wild ride,’ with each week presenting increasingly bizarre headlines.
Despite the volatility, he maintains a cautiously optimistic outlook for markets. According to Timmer, markets are currently factoring in a resolution to geopolitical tensions, especially regarding Iran, ‘sooner rather than later,’ he shared in an interview with CoinDesk.
Although crude prices have exceeded $100 per barrel, the futures curve is in backwardation, indicating that contracts further out trade around $40 below the front month. This suggests markets perceive current supply disruptions as temporary issues rather than prolonged crises, Timmer explains.
The S&P 500’s recovery from a 9% drop to about a 1% drawdown and contained credit spreads imply limited systemic stress. Gold and bonds, traditionally less correlated, are showing closer movements due to global capital flows. Countries constrained in moving energy through the Strait of Hormuz may be liquidating assets like gold and U.S. Treasuries for liquidity, leading to unusual correlations.
Bitcoin received a boost after President Donald Trump announced a two-week ceasefire with Iran on Tuesday, causing oil prices to drop over 17% and equity markets to rise. WTI has since rebounded to around $100.
Bitcoin, trading at $70,837.72, is behaving more like gold, while gold shows characteristics similar to bitcoin at times. When bitcoin peaked at $126,000 last October, capital quickly shifted from crypto to gold. Now, with a 50-60% decline from its peak, Timmer notes fewer ‘paper hands’ remain in the market.
Selling pressure has been absorbed, and while gold appears vulnerable after a strong run, Timmer remains bullish on both assets. He finds bitcoin technically intriguing, with $65,000 serving as solid support and potentially forming a base. However, he stresses that a catalyst is needed for further growth.
At publication time, the world’s largest cryptocurrency was trading in the low $70,000s. Timmer believes equities are priced for success with single-digit drawdowns despite geopolitical uncertainties, citing strong corporate earnings as a key factor.
He notes that before the Iran conflict, conditions were already positive, with improved policy environments from tariff rollbacks by the U.S. Supreme Court and no AI-driven market bubble materializing. Investor skepticism toward AI and software valuations is seen as healthy, preventing overvaluation.
The Middle East situation remains fluid, with potential severe outcomes if Iran targets Gulf energy infrastructure, leading to a stagflationary shock due to 20% of global oil supply passing through the Strait of Hormuz.
Timmer believes markets have become more measured in responding to geopolitical shocks. After false alarms like last year’s tariff-related selloff, investors are less prone to panic, adopting a ‘show-me’ attitude.
Despite risks such as concentration risk in technology stocks and rising interest rates, with the 10-year Treasury yield nearing 4.5%, Timmer sees opportunities for disciplined investors during volatility by providing liquidity and rebalancing portfolios when others retreat.
He emphasizes that remaining sidelined due to fear is not viable, advocating a diversified portfolio approach combined with engaging during stress periods as a strategy.