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Will Geopolitics Upset Market Carts? 🤔

Did you know that historically, stock markets decline by an average of 20% during geopolitical crises but tend to recover fully within six months following the resolution of the conflict?

Did you know that historically, stock markets decline by an average of 20% during geopolitical crises but tend to recover fully within six months following the resolution of the conflict?

With this in mind, the current global conflicts should not make you scared, but prepared.

In this edition of Equity Eats, we’ll be taking a closer look at the following:

  • Market Jitters Persist: First, as tensions escalate in the Middle East, global markets remain on edge 😱

  • Economic Strength Persists: Next, despite international unrest, U.S. economic indicators continue to impress  💪

  • Bad Guys Need To Not Persist: Finally, the call for decisive action grows as market stability hangs in the balance, highlighting the critical need for a resolution to ongoing conflicts 👿

Join us as we explore these developments, which will allow you to make informed trading decisions in these turbulent times.

Market Jitters Persist 😱

Markets are likely to remain jittery for some time as investors will be on edge over the prospects of escalation in the war between Israel and Iran.

Though the Biden Administration is urging Israel to show restraint to its closest ally, Israel cannot allow Hamas, Iran’s proxy, to remain in Gaza.

Since the 1979 Iranian Revolution when the Mullahs took over Iran, Israel has regularly been pressured by the United States and others to accept terrorist attacks and missile launches by Iran’s proxies to avoid escalation 💣

This collective appeasement of Iran has not only failed to avoid escalation, but it has also strengthened Iran and its proxies by allowing them time, money, and sophisticated weaponry to wreak havoc in the Middle East and throughout the world.

While Biden and most leaders in the world prefer to postpone and kick the can further down the road, Israel can no longer play along

The Israeli public has had enough, and they recognize they face an existential crisis.

The Israeli government has stated again and again, Hamas must be destroyed ⚔️

Economic Strength Persists 💪

Economic data continues to come in well above expectations.

Retail sales for March were strong, pointing to a healthy US consumer.

This makes sense given the strength of the labor market.

On the back of the data release, the Atlanta Fed’s US GDP tracker for the first quarter moved up to 2.8% from 2.4% 📈

Meanwhile, market pricing of Fed cuts continues to decline.

A June cut is pretty much out of the question now, with the odds at just 8%.

The odds of a cut in September are 83.5% at this point.

It would take some very low inflation prints in April and beyond for the Fed to regain confidence that rate cuts make sense this year ✂️

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Bad Guys Need To Not Persist 👿

The market no longer needs rate cuts to stabilize and rally.

What it needs most is some sense of stability in the Middle East.

Escalation will of course lead to more of a sell-off in the near-term, but any major step that would severely damage Iran’s war-making abilities would contribute greatly to a more stable geopolitical backdrop over the medium-term 🕊️

But we may have lots of bumps ahead to reach the medium-term.

Israel must be given a free hand to punch the bad guys a very hard and painful punch in the face and establish deterrence once and for all 🛡️

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