Good Morning,
I hope everyone had a nice weekend. Parts of Michigan will reach nearly 70 degrees today. Time to uncover the grill (at least for a couple days)!
Markets opened with more volatility to start the week as the war with Iran continues. The biggest catalyst remains the price of oil and the effective closure of the Straight of Hormuz. Oil is a large input cost in most products but the Straight is also a critical route for aluminum, fertilizers and other refined products. Interest rate cut expectations have come down on inflation concerns with markets pricing ~0.44% of cuts for the year as of Friday’s close. The question is how long this all persists. I think the Straight will become accessible quicker than people think but similarly to the supply chain shocks coming out of Covid, getting production back to full capacity, will likely take longer. It’s critical to exercise patience in times like these given how fast the market moves. Think back to April of last year (Liberation Day Tariffs) when the S&P 500 fell nearly 20% in a handful of days to then rebound to record highs a few weeks later. Making brash decisions in the moment can lead to missed opportunity on the upside. This week we also get inflation data with CPI on Wednesday and CPE on Friday. I remain in the value camp within stocks with an emphasis on patience over the next few weeks. Please continue to reach out with questions.
Attached, please find this weeks Market Strategy Radar Screen Report from John Stoltzfus, Chief Investment Strategist of Oppenheimer Asset Management.
Have a great week!