Through All the Turmoil, the Tel Aviv 125 Index Has Extended Its Gains (Now What May That Be Signaling?)
Best to ignore the pessimists and think of a future of global peace — the Israeli stock market is flashing that signpost.
Key Takeaways
Hormuz Escort Plan Offers Only Partial Relief: President Trump’s plan to insure and escort tankers passing through the Strait of Hormuz has so far exerted just a mild source of comfort for the investment landscape (and is viewed by shipping officials as a partial fix, with the question being whether the U.S. has enough naval assets to adequately redress the paralysis and trigger any meaningful traffic to pass through).
Korea’s Crash Leads Asia’s Market Rout: Asia was clocked for deep losses yet again: Korea (-12.1%; you read that right, the worst day in its 46 year history for the world’s stock market leader this year), Thailand (-5.5%), Taiwan (-4.4%), Japan’s Nikkei 225 (-3.6%), Singapore (-2.4%), Hong Kong (-2.0%), India (-1.2%), and China’s Shanghai Composite (-1.0%). Going long the Shanghai index, while shorting the rest of Asia, is the sort of pair-trade hedging strategy to use, as we discussed yesterday.
Gold Retreat Reflects Demand for Cash: I keep getting asked about why gold has peeled off as it has, and this is what can happen when the winners (bullion had rallied more than +20% heading into this crisis) get sold to meet collateral commitments on the losses from other asset pricing. Remember what happened after Lehman collapsed in September 2008 — instead of rallying, sales of gold to cover the losses in equities and credit forced bullion down more than -20% in a month-long span — a year later, it was up more than +50%, more than recovering its initial losses and setting new record highs.
