Don’t Fall For It, Nothing Has Changed

Yesterday morning, for a brief moment, it looked like the market might break.

Oracle was down 5%. Bond yields were screaming higher. The 10 year had pushed above 5.1%, the 30 year was hitting levels not seen in more than two decades, and the Oracle “force majeure” headline landed on top of an AI trade that is already showing signs of serious strain.

On top of that we had a shitty 7Y auction with its biggest tail since March.

Investors understandably didn’t love seeing the words “force majeure” attached to one of the enormous data center projects underpinning the AI boom. For a while, the market looked like it didn’t love it either.

Then, almost on cue, an Iran headline showed up to save the day, when Reuters reported at around noon EST that U.S. and Iranian negotiators were discussing a potential phased agreement under which Iran would reopen the Strait of Hormuz while the United States lifted its economic blockade.

Stocks immediately ripped off their lows. The S&P 500 and Nasdaq erased much of their declines, with the Nasdaq briefly turning positive, before the S&P ultimately finished roughly flat.

If this sounds familiar, that’s because it is. By my count, we’ve now seen roughly 8-10 major rallies or reversals over the last six months where an ugly trading day has been rescued, or at least substantially improved, by some variation of a positive Iran or Hormuz headline.

And this doesn’t even count the dozens of smaller Iran and Hormuz headlines that have briefly juiced futures, knocked oil lower, or sparked smaller intraday rallies along the way.

The details change, but the trade is basically the same: peace talks, negotiations, a ceasefire, Hormuz reopening or blockade relief hits the tape, oil drops, stocks rip off their lows and everybody breathes a sigh of relief. So far, obviously, none of these headlines have led to any actual progress…only to saving the trading day momentarily.

The problem is that we still don’t have..(READ THIS FULL COLUMN 100% FREE HERE).

Contributor posts published on Zero Hedge do not necessarily represent the views and opinions of Zero Hedge, and are not selected, edited or screened by Zero Hedge editors.

Today's Top Stories