Markets are still weeks away from 'peak panic,' research firm says. Here are 3 tips for navigating war-fueled volatility.

• Alpine Macro strategist Dan Alamariu thinks financial markets have yet to experience "peak panic."
• In his view, the Iran war will likely escalate for the next two weeks before tensions ease.
• He thinks investors should remain bullish on energy and buy beaten-down equities outside the US.

Volatility in financial markets has been high since the Iran war broke out late in February, and one research firm thinks investors have yet to experience "peak panic."

Alpine Macro sees weeks of escalating tension ahead in the Middle East, despite President Donald Trump's statements that Iran wants to make a deal. While Alpine's chief geopolitical strategist Dan Alamariu thinks the war will likely de-escalate sometime in the coming weeks, he believes more escalation is likely before that.

"Peace is not 'at hand' yet," he noted. "The conflict is likely to escalate before it de-escalates, meaning peak market panic is probably still in the next ~2 weeks or so."

In a note on Thursday, Alamariu said he expects the conflict to continue, describing the diplomacy from both Trump and Iranian leaders as "largely performative."

If markets are still approaching the peak panic, he sees several steps investors can take to guard their portfolios against further volatility.

• Go long energy investments through peak panic
• Buy beaten-down stocks as panic subsides
• Add exposure to longer-duration Treasurys, especially if the 10-year bond yield tops 4.5%
  
  Oil prices have been highly volatile as the Strait of Hormuz, a key chokepoint for global flows, remains largely closed to shipping. Similar to his view of the broader market, Alamariu sees oil prices as yet to reach their peak.

"Oil prices will likely move higher before lower, with peak oil coinciding with peak war panic in the next few weeks. Hold energy longs through peak panic, then take partial profits," he stated.

Alamariu is also focused on snapping up struggling equities battered by the war. While he noted that the S&P 500 has displayed strong resilience, he sees opportunity in markets outside the US.

"If peak panic arrives in the next few weeks, beaten-down Asian, GCC, and European equities present compelling buy-the-dip opportunities," he advised. "The end of the conflict would trigger a hard mean reversion."

Finally, Alamariu sees an opportunity for investors to increase their exposure to US Treasurys. He added that US government debt isn't actually a hedge against geopolitical risk, but can protect against a recession.

"A longer conflict with persistently high oil prices would lower growth and potentially trigger a recession," he wrote. "When oil shocks end, bond yields have historically declined
sharply."