07 Apr 2026
An experiment in demand destruction
Last month, we went to war with Iran, but it appears that we might already be looking for the exit, at least according to the latest tweets. It would be convenient if we could wrap up our participation in the war within one month.
Demand destruction is the concept where prices of an asset – like oil – rise high enough that it begins to impact demand and have greater implications on other assets, like stocks. In the case of oil, there is a theoretical price at which consumers and businesses will consume less and find substitutes.
As it stands today, oil prices and expected shortages in Asia are contributing to already rising inflation. Furthermore, oil prices tend to rise like a rocket and fall like a feather, so don’t expect rapid relief.
Stocks, on the other hand, take the escalator up and the elevator down. Far more damaging than rising oil prices, there is a theoretical loss that can occur to stock prices where consumer and business demand grinds to a halt. It is easy to deal with rising oil prices, but it is hard to ignore falling asset prices.
Read more in the April Monthly Briefing.
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