Author：Wall Street CN

The U.S. economy is not as immune to energy shocks caused by war as many investors believe.

In a recent report released Monday, Michael Cembalest, Chairman of Markets and Investment Strategy at JPMorgan Asset and Wealth Management, pointed out that there are two widely accepted but fundamentally flawed assessments circulating in the market regarding the conflict with Iran:

First, the US economy can withstand the impact of a blockade of the Strait of Hormuz by virtue of its energy independence.

Secondly, the pressure from Iran reopening the Straits is enough to force a rapid de-escalation of the situation.

Cembalest believes both assessments are overly optimistic. The report was released as Trump's latest deadline for Iran to immediately reopen the Strait of Hormuz expires Tuesday evening. Meanwhile, the US stock market has seen relatively limited declines in this round of conflict, which some investors interpret as a sign of market "immunity" to the situation. However, Cembalest's analysis suggests that this calm may be based on a systemic underestimation of risk.

Misconception 1: U.S. energy independence can withstand external shocks.

Cembalest directly addressed this market consensus in his report: "The claim that the United States is immune to market disruptions caused by a Strait of Hormuz blockade is fundamentally flawed. The United States' fossil fuel independence does not constitute an economic firewall as you might imagine."

This conclusion is supported not by theoretical deduction, but by the actual market trend. While the outside world is generally focused on the risks faced by European and Asian countries due to the strait blockade,However, in reality, the price increases for many refined petroleum products and even crude oil itself have been more significant in the US market.

This means that even though the United States is a net exporter of certain fuels, a sharp rise in global energy prices will still be transmitted to the United States through market mechanisms, having a substantial impact on consumers and businesses.

Misconception 2: Iran will be forced to make rapid concessions.

The second misconception is that some market participants believe that US military pressure and economic costs will force Iran to reopen the Straits as soon as possible. Cembalest holds reservations about this.

In his report, he cited the views of Bloomberg Middle East economist Dina Esfandiary, who pointed out that Iran has realized that the strategy of holding the global economy hostage is less costly and more effective than expected. In other words, Iran has concluded from the current situation that this strategy has unexpectedly worked.

Cembalest also listed several structural factors that made it difficult for the situation to end quickly.First, even if the Strait of Hormuz reopens tomorrow, oil production in the region will take time to recover to pre-conflict levels. Second, the interceptor missile stockpiles of the United States, Israel, and Gulf states may be running low. Furthermore, Iran's significant progress in drone manufacturing has greatly enhanced its ability to conduct asymmetric warfare. Cembalest wrote in his report: "While drones have smaller payloads, a small payload can cause enormous damage to much more expensive aircraft, ships, and radar systems, and the payload per unit cost of a drone is higher than that of many missile systems."

The U.S. Navy's minesweeping capabilities are also a cause for concern—the fleet currently has only four aging minesweepers, all of which are scheduled for retirement.

Hidden Worries Behind the Calm Stock Market

Despite the continued accumulation of these risks, the US stock market has remained relatively stable in this round of conflict, with a significantly smaller decline than historical shocks such as last year's tariff crisis, the outbreak of the Russia-Ukraine conflict in 2022, and the early stages of the COVID-19 pandemic.

In an interview with MarketWatch, Stephanie Link, chief investment strategist at Hightower Advisors, said the resilience of U.S. stocks was “fascinating,” attributing it to two main factors: Wall Street analysts raising their earnings forecasts and the U.S. labor market remaining robust.

However, Link also warned of tail risks: "If the conflict lasts for more than a few months, I think the impact on the market and the U.S. economy will certainly be more severe."

In the opening of his report, Cembalest uses Stephen King's novel *Saloembourne* as a metaphor, suggesting that the current situation may unfold very differently from initial expectations—the protagonist arrives with good intentions to fight evil, only to have the town razed to the ground and everyone's situation worsened. This metaphor is perhaps his most concise assessment of the entire situation in Iran.