The S&P 500 is at the highs of the day, up 1.45%, or 102 points to 7143. I highlighted cruise ships in particular.
3) Disinflation and rate cuts
4) Global stocks
5) Short USD
6) Gold, depending on how the peace was reached
Every single one of those as worked and they’re all working today. The biggest one remains the most-obvious one, as oil is down $11.37, or 10.3%, to $83.37 today and fell as low as $80.56. To be honest, I would have thought more of a chance of peace was priced in but the surprise was Iran opening the Strait immediately, which is particularly good for short-dated futures. Clearly there were still some specs in the market and they were blown out today. Looking further out, December crude futures are at $72 vs $62 pre-war.
Secondly, I highlighted Carnival Cruise Lines as a good bet near the bottom in mid-March and that’s worked out well. Today it’s up 9.1% and is the third-best performing stock in the S&P 500 behind United Airlines and Royal Caribbean Cruise Lines.
The disinflation trade is right behind it. US 2-year yields are down 8.9 bps today to 3.69% and rate cut stocks like housing aren’t far behind the cruise lines and airlines. Lennar and Pulte are both up 6% today on a big rally in the group.
Global stocks had a big day and are likely to see more of that in the days to come. I highlighted Germany and Japan and the DAX was up 2.3%. The Nikkei was down in regular hours as the news of reopening hit when it was closed by the EWJ Japan ETF is up 1.4% in US trade despite the 1.7% decline in the Nikkei in regular hours. It still has about 5% to go to hit pre-war levels.
Finally, gold is up a tidy $80 today and it also still has some room to run to get back to pre-war levels. I think deleveraging did a number on the late-coming longs but it was also hurt when emerging markets — including Turkey — sold gold to protect their currencies during the oil spike
