The S&P is above 6,900, very close to the January 27 all-time high. Two more green days and we're at a new record. This is during an active naval blockade, with 4% PPI, and the Strait of Hormuz is still closed.
At this point, the market is telling you something very clearly: it does not care about the war, the inflation data, the GDP weakness, or the failed talks. It cares about Q1 earnings, AI momentum, and the belief that a deal is imminent.
Either the market is right, and all of us looking at the macro data and physical oil markets are overthinking it, or this is one of those moments that looks obvious in hindsight, where the market was pricing in a perfect outcome right before the reality caught up.
The thing that would make me nervous if I were long equities here is that there is almost no margin for error left. We've fully recovered from the worst of losses. We're approaching all-time highs, and none of the underlying problems have been resolved.
If earnings disappoint even slightly, if oil spikes on the April 21 futures expiration, or if the blockade escalates, or even stays the same, the market has no cushion.
The market has priced in a perfect resolution for the Iran conflict. There is no margin for error left.
byu/fungi43 ineconomy
Posted by fungi43
2 Comments
The Fed’s Plunge Protection Team is buying up stocks with created-out-of-thin-air funny money to prop up its Ponzi markets. We haven’t had markets based on fundamentals since the early 1990s.
Agree…both Iran and US are miles apart in their negotiations, and the problem is each one thinks they have the upper hand. Plus Israel is pushing for no deals. The markets are getting too optimistic. Even without the war, inflation was heading up due to Tariffs.