The opinions expressed below are my own and do not necessarily represent those of Visdom Investment Group, LLC.
Confusion.
The ceasefire deadline approaches and markets aren’t sure what to make of things. Overnight futures for the S&P were slightly higher, Asian markets closed up modestly, European stocks fell about a percent. Our market opened up small and stayed in the green until the European close. We treaded water in the down 10 to down 50 point range for the bulk of the day. The tape caught a bid late, reducing some of the midday damage. Late in the day, the tape gave out and the S&P fell significantly. Crude oil rallied again and yields climbed across the Treasury curve, although the net effect was a flattening.
The US/Iran conflict continues to throw curveballs at the markets. The resolution of the situation remains indefinitely in the future and the nature of the eventual agreement remains completely unspecified. It is remarkable that the market has been so optimistic for so long. Most market-watchers assumed that the market’s patience would wear out and that investors would clammer for an actual agreement with clear details. That hasn’t happened and maybe it doesn’t need to. For whatever reason, the markets have become comfortable with, or just accustomed to, the fiery rhetoric that bridges the various ceasefires.
While markets have been shockingly robust to the Middle East situation, nerves are still frazzled and one never knows what might change perceptions. Not only are we juggling the facts on the ground, and in the Strait, and between the US and Iran… we need to juggle the changing tolerance for the drama by the markets. To call the situation confusing is an understatement.
To top things off, the first big batch of earnings announcements happened this morning. The beats still far outnumber the misses. Individual stock performance doesn’t suggest and earnings season trend. Whatever influence earnings reports are having on the general mood of the market is unclear and far outweighed by the headlines concerning the US and Iran.
Here we are. On the cusp of another deadline/moment-of-truth. What’s going to happen? Nobody ever knew in the past cases. I doubt anyone knows this time around either.
See you tomorrow.
-Mike
Visdom Market Commentary
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