The opinions expressed below are my own and do not necessarily represent those of Visdom Investment Group, LLC.
Opened Strait
Markets were quietly bullish in the premarket until news of the opening of the Strait of Hormuz broke. Risk-on reactions ensued. The S&P opened up about 40 points and climbed further until 11 AM, up about 90 points then. The index bobbed around that level for the afternoon. Yields fell hard across the curve, 1 to 8 bips. Crude fell hard across its curve, 10 points on the front and less as you went out. Capital flow was only slightly elevated today, 104%.
The markets just priced in the end of the US/Iran conflict. The peace has to actually show up of course but investors are expecting that with a high probability. If *some* kind of deal is made, markets don’t care too much about the political details but do care that the *usual* commerce resumes in the region. Anyone wanting to play the peace trade is now too late. Maybe they’ll get another chance if things go poorly and the missiles and drones start flying again… but that’s currently priced as very unlikely.
Markets will continue to pay attention to the US/Iran situation, but it is no longer the high-risk/high-reward catalyst that it has been. Now we move on to traditional items. We’re going to be focusing on earnings, and jobs, and inflation, and macro data.
Earnings season accelerates next week with 94 companies in the S&P 500 reporting. The mood in anticipation is that the results will be positive. I don’t sense a greed-based race to get long ahead of all the reports but markets are certainly expecting the longs to be happy. The first Mag 7 company to announce will be Tesla. They report on Wednesday after the close. That stock will affect the mood of the entire market. Lately, its disappointments have tended to be compartmentalized by the market. I expect similar treatment this quarter if things disappoint. However… if results really impress, I see TSLA catalyzing a broader sentimental pop, with a real potential for an upside scramble.
In the meantime, we have a weekend of US/Iran developments to get through. Things need to proceed smoothly for the equity party to continue.
Have a great weekend, see you Monday.
-Mike
Visdom Market Commentary
IMPORTANT INFORMATION
This is general educational information and market commentary and is intended for informational purposes only and is not intended as an offer or solicitation for the purchase or sale of any financial instrument or as an official confirmation of any transaction.
All market and economic data herein is as of the date hereof and sourced from Bloomberg unless otherwise stated. The information is subject to change without notice and we have no obligation to update you.
This general market commentary is intended for informational purposes only and is not intended as an offer or solicitation for the purchase or sale of any financial instrument or as an official confirmation of any transaction. The views and opinions expressed constitute the author(s) judgment based on current market conditions, are subject to change without notice, and may differ from those expressed by other employees of Visdom Investment Group LLC ("Visdom") and Visdom. Past performance and any forward-looking statements are not guarantees of future results. It is not possible to invest directly in an index.
We believe the information contained in this material to be reliable and have sought to take reasonable care in its preparation; however, we do not represent or warrant its accuracy, reliability or completeness, or accept any liability for any loss or damage (whether direct or indirect) arising out of the use of all or any part of this material. Any securities referenced are shown for illustrative purposes only, and are not intended as a recommendation or endorsement by Visdom or by the author(s) in this context. The information presented is not intended to be making value judgments on the preferred outcome of any government decision. This information does not constitute Visdom research, nor should it be considered a recommendation of a particular investment strategy or an offer or solicitation for the purchase or sale of any financial instrument. Investing involves market risk, including the possible loss of principal. You should speak to your financial advisor before making any investment decisions. Visdom and its affiliates do not provide legal, tax or account advice so you should seek professional guidance if you have questions.
