Strike on Iran, told you so

S&P 500 gave up its opening Friday run, and market breadthwas steadily deteriorating war drum leading to direct US involvement in strikes on Iran (my premium prediction last week, and we‘re not done given the degree of damage done at Fordow yet), markets will still price it in on the upcoming Globex open – and in a bearish way. What‘s equally important, is that the Nasdaq is having trouble pushing higher against S&P 500? Stalling?

In a way, yes – leadership isn‘t exactly broadening, and select other sectors I see as outperformers. Outperforms alongside tech in S&P 500, which be still be on the top rangs, just not the top one as I discuss further on.

What I see as a strong macro factor to reckon with, is the yields path – I don‘t think that for all the tariffs uncertainty (it constricts supply as business needs clarity of what‘s to come so as to allocate production, and consumers get jittery seeing the slow cracks in the job market, those claims), inflation isn‘t set to rise right away, but it‘s building up, and likewise (with of without, and now it‘s still without, Hormuz closed), we‘re looking at oil prices being well bid up and supported (think of them as of shadow Fed funds rate, and the Fed is in no hurry to cut on top) – these would exert pressure on stock prices, and drive yields ultimately lower in the 2H 2025.

That means we‘re set up for short-term underperformance in the stock market in what would otherwise turn out to be another good year, and and likewise for the USD to not put in a bottom for a while (enjoying current stabilization that started before stablecoins news). Not even Japanese government bonds are surging non-stop, for all the BoJ decrease in bond purchases – larger consolidation in yields worldwide is the name of the game while I‘m watching European stock markets (DAX most of all) for risk appetite signs. Not totally there.