Oil prices fade into the gap with JD Vance set to land in Pakistan
This Iran war saga is unlike anything in modern markets. The amount of information, disinformation and utter nonsense is unprecedented. It’s a cesspit of information that’s nearly impossible to swim through without being dragged down into an abyss of uncertainty and second guessing.
The market today is ignoring the collapse of Friday’s heralded reopening of the Strait of Hormuz and instead focusing on the ongoing ceasefire and talks in Pakistan. Trump today said two important things:
- JD Vance is heading back to Pakistan for talks
- He believes they’re talking to the right people
The market also believes that Trump is about power, self-preservation and boosting the stock market above all. A reversal of the ceasefire and scorched earth infrastructure war would send oil above $150 with no going back.
With that, the market continues to conclude that all setbacks are temporary and that a ceasefire is coming. The problem is that Iran and the US will need to agree on the terms. Sure, both sides may want peace but the details are critical — particularly from Iran’s angle. They don’t want to agree to terms and then end up back in war or under sanctions in the near future.
The crude market tells the story as it opened at $91.20 but that’s been the high so far. After a few hours of consolidation above $88, it’s now broken into the opening gap and is up $3.55 to $87.42.
That same sort of optimism is clear in bonds and stock markets. The S&P 500 is down just 6 points to 7120 despite a monster rally in the past two weeks, including on Friday.
Today is a pivotal day for the war trade and hopefully we get some clarity. There are legitimate reasons for optimism but a 14-day rally in the Nasdaq is very, very tough to chase without some clarity.
This article was written by Adam Button at investinglive.com.