Market_Recon_TSP1_KL
Enter Sandman
Sleep with one eye open
Holding your pillow tightly
Turn off the light
Enter the night
Take my hand
We are leaving to never stay
– Hetfield, Ulrich, Hammett (Metallica), 1991
Not As Planned?
That depends on who is expecting what. Departure is never without a country. Markets had bought into the talk of victory, which is kind of what they got. Kind of. Markets are expected to sense that the end of the war in Iran is near. Crude oil prices had fallen. Equity prices had risen. It wasn’t what they had.
Oh, the president of the United States told the audience that this war will end soon, but he added that there will be an increase in the speed of the kinetic process first. The markets did not expect this. Crude oil traded higher on Thursday morning. Treasury yields are higher. Gold and Bitcoin are trading lower. Oh, and equity index futures are also being canceled.
President Trump told Americans that the war with Iran will take another two to three weeks. He said, “We’re going to finish the job, and we’re going to finish it very quickly.” The president added, “In the next two to three weeks, we will return them to the stone age where they belong.” Tell us how you really feel. Some people like this president. Most people don’t know. You never have to wonder for too long what is really on his mind. He will tell you and he will be gloomy.
The Nitty Gritty
The entire speech lasted only 19 minutes. Perhaps what the financial markets, especially the commodity markets, liked the most was the lack of clarity regarding the reopening of the Strait of Hormuz. We’ve certainly seen more cargo moving through that narrow and critical area in recent days and it appears that Iran’s offensive capabilities are diminishing. That said, the president challenged America’s cultural allies to “take the lead” in clearing that waterway.
Regarding the Strait, which supplies the world with oil, but not so much the United States, the president said: “The countries of the world that receive oil through the Strait of Hormuz must take care of the way it travels. They must appreciate it. Announcement. Trump also said that the US campaign has eliminated Iran’s security so that “it should be easy” for the partners to open the fence again.
President Trump also renewed his aggressive tone when he threatened to remove Iran’s ability to produce electricity in the coming days if the leadership in the region could not agree on an acceptable agreement. The president said that the US military will hit “every single one of their power plants very hard and probably simultaneously,” while hinting that facilities related to the oil industry could also be taken out.
Related: Investors Sell News as No Worries Roar After Trump’s Speech
Paint it Black
I see a red door
And I want to paint it black
no more colors
I want them to turn black
Jagger, Richards (The Rolling Stones), 1966
The stage is below
Although the president told Americans that the war was about to end, and there is evidence in the field to support that, the speech was more than rising in nature. The president sounded angry. He is angry with Iran. Anger at America’s traditional allies. For markets, the bottom line is this: The war will continue for “at least” another two to three weeks and crossing the Strait of Hormuz will remain dangerous. That’s why oil prices are rising this morning and that’s why equity index futures and risk asset prices in general, are oversold.
In Economics
There was solid news on the economic front released on Tuesday. This was welcomed as the pace of growth in economic activity slowed down towards the end of 2025. The first issue was the ADP Employment Report on private sector job creation for March, which is an important issue because the Bureau of Labor Statistics survey data for March will be released on Friday and financial markets are closed. The ADP report showed an increase of 62,000 private sector jobs nationwide for the month, easily beating expectations by about 40,000. In February, private sector activities were also slightly revised.
Next up was the retail sales report for the month of February, released by the Census Bureau. For that month, sales of the main articles increased by 0.6% month-on-month, beating expectations of growth of 0.4% and up from the negative publication -0.1% for January. Excluding autos and auto parts, retail sales were up 0.5%. What was hot? Health and personal products, as well as clothing and apparel, which is unusual for the dead of winter. Grocery sales. I thought weird stuff and those were optional.
Perhaps most encouragingly, what I call the “fun index” was hot. Now, the entertainment menu includes things like sports, entertainment, music and books. These are things that people don’t buy when they are broken. The group rose 1.3% for February when economic data was thought to be weak. These conditions cannot exist together. You understand?
Either the economy is tough and people aren’t increasing their spending on discretionary items or the economy is doing well and that’s it. You don’t spend money on a hobby with the opportunity to feed your family a little, which is what happened in February, unless you are confident in the economy and your role in it.
ISM: Good and Not-So-Good News
The Institute for Supply Management’s August survey of manufacturing sector purchasing managers found nearly every key area improved from February: new orders, production, shipments and order fulfillment. The two problems, however, were industrial-based employment that contracted for the 30th consecutive month as prices (inflation) rose to higher levels, outpacing gains made in all the good sectors.
In that report, the Cleveland Fed upgraded its forecast this week for consumer price inflation in March and April. Cleveland now sees March consumer price index with monthly growth of 0.8% in the headline and 0.2% in the base. On a year-over-year basis, Cleveland sees March CPI growth of 3.25% (headline) and 3.6% (core). April is seen rising to 3.71% in the headline but holding 2.56% in the core.
Quote of the Day
“There aren’t enough Indians in the world to defeat the Seven Horsemen.”
– George Armstrong Custer
Tuesday
Readers will note that on Tuesday, the S&P 500, while posting a second consecutive day of strength, was rejected by the 21-day exponential moving av. This means that the swing trades took the time to share in the fun of the day. Business numbers also fell ahead of the president’s speech, suggesting a lack of confidence heading into the day. Also note that within the daily moving average of the confluence, the 12-day moving average has not yet reached the 26-day EMA.
That crossover was necessary for the index to move through its most important 200-day trend, at which point portfolio managers will be forced to pick sides. The game is about the main danger right now and the headlines can change quickly. That said, it looks like the S&P 500 will get a “break” on Thursday. At least. If the trading figures remain light, the attempted reversal could live to start the fight next week. I guess we’ll find out which way the wind blows later today. Happy Easter. Happy Easter. God bless.
Economy
(All Eastern Time)
08:30 – First Unemployment Claims (Weekly): Expected 214K, Last 210K.
08:30 – Continuing Reports (Weekly): Finally 1.819M.
08:30 – Trade Balance (Feb): At the end of $-54.5B.
10:30 – Natural Gas Resources (Weekly): Finally -54B cf.
The Fed
(All Eastern Time)
11:00 – Speaker: Dallas Fed Pres. Lorie Logan.
Today’s Salary Highlights
(Consensus EPS Expectations)
Before Opening: (DO) (4.06)
At the time of publication, Guilfoyle did not have any stated security status.
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