Under the shroud of war, Wall Street veteran Adrian says: the probability of a US stock market crash this year has increased to 35%, with only a 5% chance of a rally.

Wall Street veteran strategist Ed Yarden has updated his outlook on the so-called "volatile times," believing that as the Iran war continues to escalate and impact global markets, the risk of a sharp selloff in the U.S. stock market is rising this year. Yarden has increased the probability of a U.S. stock market crash within the remaining time this year from 20% to 35%. At the same time, he has significantly lowered the likelihood of a stock market melt-up (a rise driven more by investor enthusiasm rather than fundamentals) from 20% to only 5%. This probability adjustment reflects growing concerns - if the Middle East conflict continues, along with the inflationary impact it brings, it may squeeze household spending, erode corporate profit margins, and make the Fed's policy path more complicated. On Monday, international oil prices broke through $100 a barrel for the first time since 2022, leading to declines in both the stock market and U.S. bonds. Yarden said, "The U.S. economy and stock market are currently caught between Iran and trouble, and so is the Federal Reserve. If the oil price shock continues, the Fed's dual mandate will be in trouble - on the one hand, there is an increased risk of rising inflation, and on the other hand, there is a risk of rising unemployment." Data released last Friday showed that the U.S. economy unexpectedly lost 92,000 non-farm jobs in February, causing the unemployment rate to edge up slightly to 4.4%. One of the clear winners is the U.S. dollar. Over the past week, the dollar has risen against almost all major currencies, while other safe-haven assets - including U.S. bonds, the yen, the Swiss franc, and gold - are seeing declines. In early Asian trading on Monday, S&P 500 futures fell 1.6%, indicating new pressure on the stock market, while hedge funds are also increasing their short bets on U.S. stocks. Yarden had previously successfully made market judgments. In December last year, the strategist advised reducing holdings of the so-called "Magnificent Seven" stocks relative to the S&P 500. However, his base scenario remains unchanged. The so-called "Roaring 2020s" scenario - a decade of strong and sustainable growth in the U.S. economy driven by rapid productivity gains - still has a 60% probability by the end of this year. Looking at a longer period, the outlook is more optimistic. Yarden believes there is an 85% probability that the "Roaring 2020s" will continue. At the same time, he also sees a 15% probability of a "repeat of 1970s-style stagflation" occurring. He wrote, "If investors start to anticipate stagflation, the likelihood of a bear market occurring will be greater."