The market is not exactly paralyzed but uncertainty makes investors understandably and justifiably pragmatic. It appears that they find it unnecessarily risky to leave positions open for more than a day or maximum two. Two days of marching higher was followed by two days of profit-taking. Fears of supply disruptions subsided but rest assured they have not gone AWOL.
Oil moved lower yesterday in tandem with bond prices and equities as the dollar kept advancing and gold scaled yet another historic peak before retreating. The price action had the hallmark of growing macroeconomic concerns as risk was disposed of and sanctuary was sought.
The Middle East war premium comes marching back just in time to save Brent drifting into the ignominy of a $60/barrel handle. Two days of rallies eat at much of last week's 7% loss due to market perceptions of how the pieces of the war puzzle are falling into a timely picture in which Israel finally strikes directly at Iran. A compelling argument emerges that it is due to the US election on why Israel seems intent on keeping the pace of war in such a state.
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