08 Jan ARE WE LIVING IN A COMPLACENT WORLD?
Equities fell nominally as some are wary of escalation in tensions with Iran. Oil also declined believing that such any escalation will not impact supplies. Treasuries were essentially unchanged.
As inferred above, it is now largely expected any retaliation by Iran will not be of great significance thus generating a muted reaction in the global markets. Is this complacency misplaced? Neither I nor does anyone else knows.
Perhaps the greatest danger is this sense of global complacency that forces Iran to take more dramatic action. To date Iran’s actions are far from its hyperbolic and apocalyptic rhetoric.
Changing topics, yesterday’s data released was more upbeat than expected. The ISM non-manufacturing index was higher than expected rising considerably from November’s disappointing level. The trade gap fell to the lowest level in three years and factory orders contracted less than expected. There was little reaction to the data.
Speaking of complacency, or perhaps misguided optimism, Tesla which sells about 5 cars is up about 97% in three months making the company the most valuable car company ever in America. Wow!
I thought the forward looking prognosis regarding Apple as a large capitalized growth opportunity, which is worth about $1.3 trillion and advanced about 87% in 2019, was nuts. Incidentally Apple is the second most valuable company today in the world eclipsed only by the Saudi Arabian oil giant.
It is often said the most obvious conclusions are those which are ignored. It is also said the markets can remain irrational one day longer than one can remain solvent. Perhaps both axioms are appropriate today.
Last night the foreign markets were mixed. London was down 0.02%, Paris up 0.04% and Frankfurt up 0.18%. China was down 1.22%, Japan down 1.57% and Hang Sang down 0.83%.
The Dow should open nominally higher following an overnight plunge in S & P futures, the result of the Iranian missile strike. Iran stated it did not seek war with the US. The 10-year is unchanged at 1.82%. Oil is flat following an overnight surge of 4%.