It’s 8:30 AM EST, and President Trump posted a few minutes ago on Truth Social that: “A whole civilization will die tonight, never to be brought back again…”
Over the weekend, he gave an ultimatum to Iran about making a “deal” by 8:30 PM EST Tuesday — that’s roughly 12 hours from now.
Markets don’t care about data at the moment. It’s all about the headlines. With that said, no daily 5 Things I am Watching Today.
There will be a lot of noise and all sorts of rumors in the coming hours. Beware.
The key thing to watch is oil prices. Currently, WTI crude is at $115, and Brent is at $111.
An oil shock is running through the system right now.
No one really has a clear idea what long-term impacts this will have. But if there’s further escalation in the war, don’t be shocked to see oil prices spike significantly higher. There’s a good chance $150 oil shows up very quickly in the event of escalation, as Iran has made it clear that energy infrastructure in the Gulf region will be on the line.
In the near term, higher oil prices are hurting consumers — very evident. Have you filled up your car recently? If oil prices don’t come down meaningfully, this is also demand destruction event.
The stock market over the past few weeks has been trending down. In the case of escalation, we expect further deterioration. The only bright spot might be the energy sector, which is already a fan favorite these days. If 6,500 on the S&P 500 doesn’t hold, we could be looking at a move below 6,000 very quickly.
If there’s a ceasefire, at Zulfiqar Research we expect oil prices to slide and stocks to catch a bid. More specifically, we think airlines and travel-related industries could find more buyers. But, it would make sense for market to be cautious rather than be extremely optimistic – there are problems in the economy too.
The 200-day moving average on the S&P 500 remains a key level that shouldn’t be overlooked. If that’s crossed, then the 50-day moving average will be the next level to watch.
What we hope doesn’t happen: attacks on nuclear facilities.
That would have severe consequences that could be felt for years to come. And if you think uncertainty is high now, that would only exacerbate it.
All in all, this is shaping up to be an event that will be remembered for years.
This is different from the wars in Iraq or Afghanistan. At the moment, the U.S. appears somewhat isolated, with many allies essentially backing off and signaling: “This is your war, not ours.” That in itself could lead to significant geopolitical consequences.
Stay tuned. And remember: as an investor/trader, the last thing you’d want to do is panic when everyone is panicking.