Read on the Trading Floor - 15 April 2024
Today’s focus… Iran, Israel, Tesla, Halving and much more
Macro Themes At Play
Theme 1 - Restraint in the Middle East?
Theme 2 - Retail Sales, Earnings, Tesla cuts, Apple
Theme 3 - The Halving
Further reading and listening of note
Theme 1 - Restraint in the Middle East?
The market has spent the day unwinding Friday's angst. I'm certainly no Middle East geopolitical expert but the current assumption is Iran gave enough warning to Israel and her allies for the historic attack to be a case of "escalation to deescalate". Whether that is true or not comes down to Netanyahu and how he responds. Biden's stance in the public is clear "You got a win. Take the win" (Telegraph). Mr. Price is comfortable digesting a one-off event, the "real panic" and/or aggressive portfolio realignment will come if Iran/Israel escalates into a broader, longer and more devastating tit-for-tat attacks.
For markets, deep OTM Crude calls will be utilized as portfolio hedges and should now price the fatter tail of a potential increased risk premia of an escalation in attacks between Iran/Israel. However today Crude / Brent have dropped over 1% as the short-term tension is released. Bloomberg's Javier Blas believes "unless Israel and Iran engage in tit-for-tat attacks that disrupt oil flows, OPEC+ has more than enough spare production capacity to control a price rally".
Bloomberg - Iran Attacks Israel: What It Implies for Global Economy, Markets
Reuters - US will not take part in any Israeli retaliatory action against Iran
Bloomberg - Iran's Attack on Israel Upsets OPEC+ Search for Goldilocks Price
ZeroHedge - Iran Threatens America's Military Bases Across Middle East If US Supports Israeli Counterattack
Axios - Israel will retaliate against Iran attack, defense minister tells U.S.
FT - Oil traders bet Iran will want to keep its exports flowing
Bloomberg - Israel—Iran Conflict: How Hostilities Began, and Could They Now Escalate?
BNYM Special Report - Israel-Hamas-Iran & Markets
Axios - U.S. urges Israel to "be careful and strategic" regarding response to Iran attack