Circumstances are not moribund as the market appears superficially, rather it is tentative breath-holding (yes breadth, too), awaiting other shoes dropping for the most part. I say that because at least one shoe did drop but was ignored.

Unsplash

That was the Fed Chairman's remark about 'not having inflation under control yet' (no kidding, what did he expect if he merely looked at oil prices...certainly The White House has been watching oil, maybe why they lean against tactics regarding Russia (pressing Ukraine not to attack refineries), Iran (could easily blockade or sanction oil sales but aren't although China wouldn't cooperate, I should note Beijing did 'not' criticize Iran's capitation strike they attempted), or curiously opposing domestic drilling or pipelines, probably because that would increase oil production in the USA, even as it would also hold prices down).

In any event, as usual follow the money to an extent. There's also concern of an attack on Iranian oil loading facilities prompting retaliation against Saudi or similar targets across the Persian Gulf, which would also bump prices higher.

Israel is essentially 'saying' they're locked & loaded, may also be bravado for the moment, while they actually replenish spent missiles interceptors, as well as ammunition consumed during the Gaza conflict. Now, the Iranians 'say' to their people that any attack on them will be responded to 10x greater, which is unlikely capable from Tehran, but is conceivable if dealing with Hezbollah.

It's probably not without deductive reasoning that one could see how this may 'ratchet up' rapidly if we get into a tit-for-tat missile exchange. On the backside of this we have China, losing a lot by virtue of the Suez Canal closure due to their Islamic pals interfering with shipments to Europe, hence lower exports of Chinese goods. Thus, since Tehran was instrumental in 'patching things' up for a while between Saudi Arabia and Iran, any benefit from that is likely over, as of course the thing about MEAD, or any sort of retained Riyadh/Jerusalem mutual security deal. You sure saw elements of that in-play (quietly at times) Sunday.

Despite Iran's brazen attack, there's been virtually no public discussion about the extension of these accords, nor even a basic inquiry about whether they required U.S. concessions to achieve what Israel and the Arab states already want and have bargained for on their own (UAE and even Morocco, not just a welcomed 'peace' with Egypt, Jordan, and quietly with Saudi Arabia).

What the picture shows was the 'Negev Forum' that was part of it. As for the term MEAD, which a CEO of a key company enlightened me about (thanks) is formerly now known as a regional air defense network called the Middle East Air Defense Alliance (MEAD). Not much is known about MEAD, but news out of just realizing 'who' joined this fight against Iran affirms it's already active, if not entirely signed-off on. It's high-level cooperation between Israel, the UAE, Bahrain, Egypt, Jordan and apparently Saudi Arabia as well. To that obviously add classic allies like France and the U.K. and ponder the mischief of Turkey.

Market X-ray: 

Neutrality and tense consolidation. As to MEAD, I'm further concerned about the quality and shallowness of American media, as not only has this not been mentioned (aside noting Arabic help against Iran) as a quasi-alliance, but since I've learned of it on a personal basis, I can't imagine FOX or CNN don't know or even the BBC.

Perhaps avoiding naming MEAD aims to pacify the left wing or heavy Islamic populations in cities like London, Paris, or the Bronx (slight cynicism). Shrug, I don't know, but glad to see what's behind my simplified 'enemy of my enemy is my friend' thought of the other day.

The market is remaining on shaky footing, with mild 'tension on the tape', considering the Fed Chairman's comments. Technically a bit of consolidation after getting hammered is normal for the S&P, trying to find equilibrium but in this news backdrop only finding nibblers (as opposed to noshers) buying any sizeable quantity of stocks. A little bottom fishing likely going on, but it's more like fishing for 'gefilte fish' (a mix of white fish without being sure what it really is sometimes), to continue the deli analogy theme.

Bottom-line: 

This is a mixed market consolidation after a fairly heavy hit that's not just part of the anticipated and overdue S&P correction, but responding to Iran's blatant attack on Israel, and failure of media to note the Israeli Damacus attack on the so-called Iranian 'consulate', was very careful to select just that building (not the Embassy nor the neighbors), and most failed to denote 'who' those Generals were or that the facility directed regional terrorism. Again they know but mostly dumbed-down reporting fearful of what? Offending Islamists?

Anyway, Wednesday begins the same, sensitive to news and oil prices, and of course remains tense.  Most money managers will stay on-hold pending developments.

More By This Author: