The opinions expressed below are my own and do not necessarily represent those of Visdom Investment Group, LLC.
Where’s the progress?
The US/Iran situation remains front-and-center. The state of negotiations is unknown. The tweets by the President and the statements by Iran are more confusing than clarifying. Shipping through the Strait of Hormuz isn’t resuming and there are news items reporting both US and Iranian interdictions. Markets don’t like what they’re seeing but they aren’t panicking either. They responded with the usual war-is-ramping-up reaction today, albeit in small magnitude. The S&P traded mostly flat until falling down significantly in the afternoon and finishing down small. Treasury yields climbed again. The Dollar strengthened. Precious metals and Bitcoin took hits. Crude prices climbed across the futures curve.
The US/Iran situation is a doozy. What is there to say about it that we haven’t already? Markets want peace and commerce. They are kinda sorta mostly pricing that in. The new headlines don’t suggest that the realities of the situation are heading in the direction the market wants. Prices are incrementally reflecting the negative direction of the prospects for a quick and economically clear resolution.
We are left wondering a few things:
How much patience does the market have?
When will diplomatic progress show up?
When will diplomatic progress result in actual economic relief?
These questions are unanswered and nobody has more than a speculative guesses anyway. We’re left in a limbo where the status quo is no longer a neutral environment. As usual, we have to wait and watch.
Turning to earnings season. Telsa did not wow the market. They beat the Street but didn’t do enough. The stock lost about 3% today. The drop in TSLA didn’t really spill over to the broader market. US equity investors seem to be compartmentalizing. While TSLA’s market cap directly affects the S&P significantly, it’s power to affect broader sentiment is even greater. The fact that it didn’t is interesting. Investors are not extrapolating the TSLA case to the rest of the market.
See you tomorrow.
-Mike
Visdom Market Commentary
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