The world’s markets may be about to learn an abrupt and unfortunate lesson in assessing tail risks. The war between the US and Iran has just expanded to effectively include a new theater and new combatants. In Yemen, the Houthis, an Iranian proxy group, announced a maritime blockade on Saudi Arabia. Although the Houthis are fairly independent of the Iranian regime compared with some other groups, it’s still hard to believe this wouldn’t have been coordinated with Tehran.
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