Market Briefing For – Friday, Oct 4

Image Source: The ‘fog of war’ – coincides with the malaise of a semi-holiday environment, producing mostly ‘drift’ during Thursday; with some late Nasdaq recovery.In a sense this market continues to show resilience considering the backdrop including higher Oil (implies higher prices if it is ‘transitory’); and jitters about the next phase (retaliation) against Iran, where ‘even’ President Biden recognized the ‘discussion’ of the possibility of hitting Iranian Oil infrastructure. The final word was garbled, but might have implied ‘doing so would be a little . . . pale’?The global Oil markets can support an OPEC without Iran by the way. Brazil produces more oil than Iran these days; but they don’t ship to China, probably because the Panama Canal can’t handle those size tankers. (If we hadn’t of course given the Canal sovereignty to Panama; perhaps widened before now … but I won’t blame poor Jimmy Carter, and wish him a happy 100th Birthday.)Of course, the implications of a ‘combined Port strike’ along with higher Oil for any period of time, are not conducive to favorable inflation if any of it persists. Certainly, the Port strike would likely be concluded before hostilities abroad. In the meantime ‘if’ a broad war expands with an attack on Kharg Island (shared a map graphic the other night) disrupting Iran’s Oil sales; you’d only get a few more dollars/bbl. price jump. ‘If’ Iran were to then target Saudi Arabia… more.Market X-ray: this will be a brief overall report tonight, as basically this market held well when put on the defensive, and all awaits the Jobs number.Oil is probably more key both to how things go and inflation prospects. As to S&P, it’s skating what I called a ‘knife’s edge’ as stocks shuffle in ‘Rocktober’.As to Israel, something few noted: not a single Arab nation that established relations with Israel, broke away. Some rhetoric calls for peace, but notice a lack of protests (which would be organized) in Arab countries. There are more demonstrations in London or Berlin which are pro-Palestinian, than in any of the Arab countries. Nobody welcomes this, but obviously the reshaping of the Middle East will not go in the way the Iran-backed terrorists anticipated with a slew of preceding attacks. In fact, if the Saudis eventually settle with Israel, it will be a turn to modernity (which they extol as their plan) and mutual security. I wonder if Iran also fails to grasp that prospect; as their hostility backfires.If anything the Jobs data should reflect ‘slight’ weakness; unless massaged as we have assessed had sometimes been done in the past. ‘Bad news is taken as good news’ by the market, from the standpoint of keeping the Fed on track for more lowering of the Fed Funds rate; while of course geopolitical news will be treated ‘actually’ as bad or good depending on how things go.There’s no best or worst case with regard to the Jobs number, and none of it will factor in implications of a prolonged ‘Port strike’ by the way. Probably the number will show continued ‘cooling’ of the Jobs numbers; as previously was. Before that number, they had massaged the data and that was where we had suggested the report was disingenuous as there were more people with more than a single job, rather than more workers with more jobs. Hence interpreted it as people trying to make ends meet by working multiple jobs, as it was.Bottom line: ISM numbers and productivity were ok; but there’s much more to consider. And domestic politics; where there is something smelly about the Federal Government’s lethargic response sending troops but few helicopters, to the rural areas of North Carolina and so on.. then banning private drones (a key component of private rescuers, TV stations, or so on, looking for survivors) .. I don’t know if this is a serious concern, but the optics are pretty clear.Friday it would take a dramatic change in Jobs to move the Fed’s needle; so in the absence of that it’s Oil and what happens (or doesn’t happen) with ‘wars’. I also mention wars (plural) as Israel knocked out a Syrian/Iranian weapons storage facility ‘by’ the Russian airbase on the Med in Syria, and Ukraine knocking out the North Korean missiles in Russia… is this a World War now?In any case, we’ll be back tomorrow…More By This Author:Market Briefing For Monday, Sept 30Market Briefing For – Friday, Sept 27Market Briefing For – Thursday, September 26