• Market had dramatic reversal yesterday from down 200 to up 1000 points on headlines.
    Speaker1
  • Kevin Gordon
    Expect reversals while in whiplash market where S&P 500 is driven by one variable: Brent crude, with near-perfect inverse correlation.
    If crisis extends weeks, market will shift to fundamentals and growth hit, potentially seeing stagflationary impulse if oil production stays low.
  • Kevin Gordon
    Knee-jerk reaction to oil headlines may not be as extreme as yesterday due to oversold equity positioning and overbought oil positioning last week.
    Wouldn't extrapolate yesterday's move as direction of travel; war dynamics now depend on Middle East reaction function.
  • Kevin Gordon
    Labor market weakest part of economy, concentrated on hiring slowdown not layoffs. Bottom-line economic risk depends on jobless claims.
    Without income shock from layoffs, consumption shock from higher energy prices may not cause protracted downturn.
  • Kevin Gordon
    Fed in tougher position than 2022 due to fragile labor market; might stay on hold even with inflationary spike if concentrated in headline not core.
    Elevated risk of labor market weakness if demand destruction follows energy price spike.
  • Gold at $4300, far from recent highs; metals were safe havens, what happened?
    Speaker1
  • Kevin Gordon
    Metals not necessarily viewed as safe haven but as speculative hideouts during geopolitical instability.
    Recent unwind is classic sentiment/positioning washout; gold now behaves like risk asset correlated to S&P 500, not as defensive asset class.
  • Kevin Gordon
    For equity market, rate of change in yields matters more than level; rapid spikes cause bigger corrections.
    More important dynamic: yields rising while oil pushes equities around is consistent with stagflationary periods, creating precarious environment.
  • Kevin Gordon
    Housing in its own recession, disconnected from rest of economy; will take time to heal.
    Higher energy prices add consumption shock that doesn't help prospective buyer traffic.
  • Kevin Gordon
    Most important thing is trajectory of oil and how long production takes to return; this is Middle East dependent, not US controlled.
    Ceasefire talks are one component, but oil flow restoration is more important for post-crisis market.
  • Kevin Gordon
    Energy sector extremely overbought with extreme flows; potential for aggressive swings in opposite direction if positioning unwinds.
    Tactical warning about swift sector moves when positioning is stretched.
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