The Saturday Hark Back - 20 Apr 2024
Capturing the themes of the week when there’s more time to digest them.
The Hark Back
The key narratives that drove markets last week:
Theme 1 - Israel vs Iran... Known unknowns?
Theme 2 - Fed sees no urgency to cut
Theme 3 - What if Erdogan was right?
Theme 4 - What comes after the Halving?
Theme 5 - Q2 the mirror image of Q1 for Tech stocks?
Theme 6 - Last week's AI stories
Theme 7 - A must read from Brent Donnelly
Theme 8 - On the campaign trail
Top 10 Reads of the Week on Harkster.com
Top 5 Podcasts of the Week
Week Ahead Preview
Theme 1 - Israel vs Iran... Known unknowns?
After an historic week of missiles, drones, fighter jets, unanswered calls, funding battles in Washington and attacks on military targets. The current "perception" is that the Israeli strike appears to have matched Iran's in terms of target, scope and damage. The verbal response from the Iranian regime has been controlled, limited and has crucially not called for revenge (yet). So, have we seen the last step in an "escalate to de-escalate" tit for tat between the nations? Will Iran retaliate once again or show restraint? Who benefits from a war?
The rising tensions in the middle east have added to the April slide in assets. Having been discarded in Q1, investors have rushed to cash, gold and bonds looking for certain returns in an uncertain world. However, if and it is a big if, we've seen peak tension between Israel/Iran and the current market consensus is correct that both sides have followed the correct playbook to de-escalate the situation with their actions, then the blowout highs in USDMXN, capitulation hammer lows in equities maybe a short-term nadir in risk sentiment. Adding in the Fed Blackout period and the seasonal performance of equities in the second half of April, we could potentially see a bounce over the next two weeks as hedges get unwound and Israel/Iran walk back from the brink.
Watch for basing in QQQ and XBT to be a tell. If tensions ease in the middle east we can see a reprieve in this technical equity selling. After all their are 9 trillion USD sitting in the wings (Bloomberg - BlackRock’s Kapito Says Stocks Are Primed for a Comeback)
Brent Donnelly am/FX - Blowoff
Capital Spectator - Is Israel’s Strike On Iran The End Or The Beginning?
Apollo Academy - Capital Markets Reopening After the Fed Pivot
The Rest Is Politics - Iran, Israel, and the Middle East: Stopping the slide into all-out war