Hi YXI friends,
We used to have the Fed put. When the stock market tanked, we could predictably count on a dovish turn in the Fed policy to save it.
Today, the new put resides with Trump. Trump does not like high oil prices, inflation, a strong USD, high interest rates, or a market crash. Therefore, he predictably reins in aggression when the market turns against him.
Donald Trump predicted the war with Iran would resolve “very soon,” even as he vowed not to stop “until the enemy is totally and decisively defeated.”
The president said he didn’t believe the conflict would be over this week.
He is weighing waivers for some oil sanctions. Bottlenecks could still be seen at the Strait of Hormuz, where ship clusters pointed to elevated electronic interference.
On Monday, the expectations of a Trump-put squeezed the market higher in the afternoon (after 2:40pm). However, how fast Iran would “surrender” is a huge uncertainty, as they know the US does not want to put troops on the ground, and they could still “win” through a war of attrition.
At the time of writing, the WTI crude has reversed from Monday’s highs but still trades within Friday’s range, at $86 /barrel (4 am ET, March 10). The macro and geopolitical risks remain elevated for markets.
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