The opinions expressed below are my own and do not necessarily represent those of Visdom Investment Group, LLC.
Attitude shift.
Positivity w/r/t the Iranian situation gathered a little steam today. It started with overseas markets rallying some and our market continued the trend. Crude oil prices dropped and that buoyed stocks. Interestingly, Treasuries rallied today too. For a week or two, Treasuries have not reacted like a safe haven. Perhaps that was the fear of inflation. The Dollar dropped today as well. Across markets, prices reversed the trends we’ve seen since the start of the Iran war.
We didn’t experience any blockbuster headlines today. Nothing printed that should either allow investors to confidently see a resolution to the Straits of Hormuz situation. And yet, markets clearly thought today was a positive step towards a market-friendly outcome. Perhaps it was the news that Iranian ships have passed the Straits and the US announcement that it would not attack those ships. Perhaps it was the report from MarineTraffic that a non-Iranian Aframax tanker named Karachi, also passed through the Straits. The official reason is lacking but the speculation is that some countries have, or are, negotiating secretly with the Iranians to allow their vessels to pass.
Here’s the MarineTraffic tweet, if you’re interested
https://x.com/MarineTraffic/status/2033490585298915497?s=20
Whether this is a sign of the opening of the Straits or not, is unclear. Whether markets even drew today’s positivity from this information is also unclear. *Why* markets took a sanguine step today is less important than the fact that it *did* take a sanguine step.
Have investors decided that they were simply too pessimistic on Friday? Is this a trivial bounce that was bound to happen? Are markets sniffing out a true turning point in the conflict? Maybe it’s a bit of all three?
The overall uncertainty seems to be stable. We’re not gaining clarity but things aren’t becoming more opaque. Perhaps that fact alone, the non-worsening of things, is enough to allow the bulls control of the tape today.
Today, things feel better. Maybe it’s just that simple.
Is this the start of something? If it is, there should be some massive follow-through over the next few days.
See you tomorrow.
-Mike
Visdom Market Commentary
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