Submitted By Peter Tchir of Academy Securities
This week’s market behavior had a mythical, almost magical tone to it.
InArabian Nights,Ali Baba was able to open a cave of riches by uttering the phrase “Open Sesame.” Markets responded to any and every sort of connotation of “The Strait is Open” by rewarding participants with riches. We started this week bright and early, kicking offBloomberg TV, and then moving on toBloomberg Radio, and Tom Keene’sBest Ideas.
At the time we were all trying to understand what “Blockade” meant. How and what was the U.S. going to do in terms of a blockade? Markets were jittery, but somehow, from almost the get go,markets seemed to take the combination of U.S. and Iranian snippets to mean the Strait was Open.
I am not sure how accurate this data set on Bloomberg is (TRHBTKCD index) given all the conflicting stories of what has transited or not, what is running without transponders, etc. But traffic remains subdued.
We have argued that a ceasefire benefited the U.S. more than Iran and that there were some very strong possible outcomes from U.S. efforts in the region.I underestimated how quickly and how big those good outcomes would be reflected in the market.
While “any option” still seemed viable, markets had moved on to not only is a deal close, but it will also be the best possible deal.A deal where Iran not only stops pursuing a nuclear weapon, but they would also provide the U.S. with all of their enhanced uranium.
As the weekend progresses, it is unclear how realistic this type of deal is.There are once again competing narratives about the Strait.
Weirdly, unless you are trading futures,you can skip the “green dot” Sunday night, as time and again,the Sunday night price action has done little to predict how markets would behave once the U.S. opens.
Last weekend, we went withMore Than Just Iran. Academy had delivered so much content on Iran, that we wanted to highlight some of the other issues (and opportunities) facing the market.
Source: ZeroHedge News
