Making sense of this crazy world
Who and what to believe?
It’s not easy watching the news from the Middle East, is it? Sentiment swings dramatically, false hope giving way to anxiety, only for the emotions to repeat themselves again and again. Who really knows what the truth is, and, as someone said to me the other day, “would you trust either regime”?
The question on everyone’s mind is “how long will this last”?
Time will tell, but it’s very obvious that the “needle on the dial is very sensitive”. Last Friday, I showed all European indices responding positively to the latest news, only for equity indices to go into reverse by circa 2-3%, just 80 minutes later. On the Monday morning, European indices had fallen by another 2-3%, only for them to recover most of this lost ground in just a few minutes after Trump announced on ‘Truth Social’ that peace talks were underway. Later, Tehran stated there were no peace talks happening, and market enthusiasm waned.
All equity indices have fallen over the month (since the conflict escalated). Portfolios with an exposure to Bonds have also been hit due to higher yields over inflationary fears. UK gilts have seen their yields rise towards 5%, reaching post-financial crisis levels as markets price in persistent inflation and fiscal sustainability risks. Even gold has seen its safe haven status questioned, as there has been a marked pull-back in its value.
There is no doubt that Trump is feeling marginalised on the global stage and, to boot, markets don’t like what’s unfolding. How he now reacts will determine how these markets respond. Either way, there will be surprises, guaranteed.
The latest update at 7.45am Friday morning (27th) is Trump’s announcement about pushing back his deadline (10 days) for Iran to reach a deal, saying talks with the country were going “very well”. This is the second extension since last Saturday’s threat to attack Iranian power plants. The oil price slipped and US stock futures rose after a tough session.
This week’s content:
- The Vix index fluctuates wildly
- Abnormal oil trades
- Market whiplash
- Market strategy… what now?
- Diversity matters
- Infrastructure assets make a lot of sense
- Conclusion
The Vix index fluctuates wildly
This is how the Vix index, the so-called ‘fear index’ in the US responded to Trump’s announcement around peace talks at the start of the week.
Continues…
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