Fast-moving headlines can distract from slower-moving trends. Looking beyond the dominant market narrative can help surface other portfolio-relevant dynamics and clarify which trends may prove enduring, or even be accelerated by today’s monoculture moment.
What is odd about this whole thing, regarding volatility, is that the ratio between oil and gold volatility is not nearly as wide. Clearly, oil and gold vol are elevated, and S&P 500 vol is not.
From an economic perspective, the primary issue is what happens in the Strait of Hormuz. But the United States and Iran are currently at an impasse with respect to the conditions each country is willing to accept for the Persian realm.
Stock markets are not particularly adept at pricing in geopolitical risks as compared to their commodity and fixed income counterparts. At some point, if the situation in the Gulf fails to improve, we will all need to reckon with its effects upon stock valuations.
This International Workers’ Day, or Labor Day, let’s remember our duties more than our rights. Because that’s when the whole becomes greater than the sum of the parts.
Stocks were mixed last week as investors gauged potential outcomes of the Middle East conflict amid an ongoing ceasefire.
Once the Bureau of Labor Statistics (BLS) released its March CPI report, the markets received their first ‘official’ glimpse of how the surge in energy prices following the Middle East war, has begun to impact the U.S. inflation setting.
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Stocks finished mixed, and 1-year inflation expectations appear to be coiling, with a bullish-looking flag of their own, suggesting higher inflation may be on the way.
Stocks continued to ride the hopeful sentiment of a ceasefire at the start of last week, with all three averages advancing. The S&P 500 has recouped all its losses since the start of the war.
Easing geopolitical tensions and weaker pricing power support a limited inflation impact, while stronger Japanese machinery orders point to resilient growth and a plausible April policy hike.
The possibility of more violence and a potential oil shortage have raised the cost of crude, lifted interest rates and sent stocks south just as the Nasdaq could have posted its 14th consecutive gain.