Hamas’s surprise attack against Israel has fanned the flames of an age-old conflict in the Middle East and sparked fears that the global economy faces a repeat of the turbulent 1970s. Almost exactly 50 years ago, an oil price shock caused by the Yom Kippur War and subsequent crude embargoes against nations that supported Israel in the conflict helped usher in a decade of stagflation—a toxic mix of weak economic growth and spiraling inflation. Now, as the current war in Israel continues to escalate, Deutsche Bank’s macro strategist Henry Allen can’t help but feel a sense of déjà vu.
“As we look back at the 1970s today, there are a striking number of parallels with our own time,” the Wall Street veteran wrote in a Monday note. “Over the weekend, the attacks on Israel showed how geopolitical risk can return unexpectedly.”
