A short excursion

According to president Trump, the war is almost over. In his words, it’s been a “short excursion”, and he’s trying to de escalate the conflict, which leaves the question about what was the purpose of the attack in the first place, since it’s not clear what has been accomplished: if Americans and Israelis retreat, without Iranians conceding a victory, without a regime change and without stopping their uranium enrichment program, it would appear as if it was indeed a misdirection operation. Crude Oil round tripped to almost $120 and crashed overnight to $90, even though Hormuz is still operating at very low crossing rates. The U.S. equity markets are flat since the beggining of the conflict and it seems that investors want to believe the war is over, and similar thoughts seem to be going through Asian investors as the Kospi and Nikkei indices calm down. The bond market has barely moved, even though the cost of this conflict will be mostly financed by debt. What’s the bottom line? No clear accomplishment in terms of the war, Hormuz still clogged, volatility is up, but market levels remain still. Was it a short excursion to nowhere? Or is it the beggining of a longer and more complex trip than we’re willing to accept?

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