I get it — we are all temporarily obsessed with the Strait of Hormuz. We should be. It is like the aorta of the global energy system. And if it is clogged, or has thousands of land mines in it that could make it more risky to have oil tankers flow through those waters, we’re all impacted. And even while I feel there might be too much attention paid there versus a weakening economy and a range of other market risks, this is the leading issue as winter passes into spring.
However, there is another issue regarding “flows” that I watch just as closely — and not only when there’s an oil crisis stoked by a sudden war. That’s the flow of assets in and out of exchange-traded funds (ETFs). Because, as I have penned here many times, what was once viewed narrowly as a sign that the ETF business was emerging has now become something of a self-fulfilling prophecy. That is, the market’s moves are more directly impacted by ETF flows.
