- Trump invites countries to get the Hormuz oil themselves; he won't help anymore
- Iran's Pres.: Iran seeks no war but is prepared to end it with guarantees against attacks
- Iran Foreign Minister Araghchi: We will not accept a ceasefire, want a complete end to war
- China and Pakistan presented a new Iran initiative to end the war - report
- JOLTs Job openings for February 6.882 million versus 6.918 million estimate
- US March consumer confidence 91.8 vs 88.0 expected
- US January CaseShiller 20-city house price index +1.2% vs +1.3% y/y expected
- Fed's Schmid: Inflation is the more salient risk for the economy
- Trump: The Strait of Hormuz will automatically reopen after US exit
- Iran's Revolutionary Guard names 18 American tech companies for retaliation
- Goldman Sachs highlights short CTA positioning behind the S&P 500 and Nasdaq rally
- Canada January GDP +0.1% vs 0.0% expected
Markets:
- Gold up $173 to $4683
- WTI down 88-cents to $102.02
- US 10-year yield down 5.1 bps to 4.29%
- S&P 500 up 2.9%
- EUR leads, CHF lags
The price action today in stock markets (and to some extent bonds) was consistent with a headline for 'peace in the Middle East' but the reality was much more complicated, and worrisome. You can't really point to a great headline at all for the biggest rally in stocks since May. Trump continues to be optimistic about a deal and there is evidence that China's getting involved and that Iran is listening but not much really changed today. The rally started with Trump basically saying the US is going to declare victory and leave others to clean up Hormuz. That's a good signal that we won't see targeting of Gulf energy infrastructure but it doesn't tell us when the oil will start flowing again, or how Iran might react.
The final leg higher in stocks came after the comment from Iran's President but that's something he's said before and something that's explicit in all of Iran's communications about ending the war. Moreover, it's not clear that he even has the power to decide what the IRGC will do.
Adding to the skepticism is that oil and FX didn't exactly validate the price action in stock markets. Yes, oil was down slightly at the front end (but Oct WTI was down 5%) while the US dollar was moderately lower. That may suggest that month-end/quarter-end magnified the moves in stocks and bonds.
Whether those moves stick on Wednesday will be an important text and going into the long weekend will be an even-bigger one. But note that bottoms often come on technical factors and squeezes. A 3% rally and +6% gains in some stocks (like META) can drag the bulls back in and lead to a re-leveraging. Ultimately though, we will go where Hormuz takes us.
Don't forget, tomorrow is April Fools so be ready for even more stupidity than usual.
