US stock markets are higher today.
I have shown signs of a recent emerging American strategy, towards which they have been moving since the war began. It’s basically a “cut and run” strategy, where they blow up everything in Iran and then leave the rest of the world with the hard part: making peace and opening the Strait of Hormuz.
“Go get your own oil,” Trump wrote in a message to the world.
I do not consider this good news because it would leave Iran with the ability to keep the strait closed or manage the toll collection system.
But the market is optimistic, so what does it give?
There was a report yesterday that stated that officials from some neighboring countries are looking to China to serve as a security guarantor for Iran. This could be a path to an actual agreement that leaves its energy intact and allows it to accept a deal, which would obviously need to include sanctions relief as well.
Something like this appears to be what the market is pricing in now, and only time will tell if this is misleading or not. Note that the oil market is not exactly waving an “all clear” signal with WTI falling 70 cents to $102.20 today.
A rebound in stocks could also reflect washed-out sentiment. Fear and Greed Index in “Extreme Fear” condition.
Goldman Sachs also wrote:
Systematic positioning is now approaching washed-out levels. Our CTA estimates suggest that positioning has flipped to a sell-off in US stocks, which has historically been associated with more supportive near-term price action.
We certainly got that near-term rally today with the S&P 500 up 1.6% and the Nasdaq up 2.1%.
Finally, it’s worth taking a look at the VIX as it quickly fell from 30 to 27 but remains high. Note that the shock is nothing compared to the day of liberation.
Fix daily
