Last night missiles were launched into Iraq from Iran. Iran issued a statement that read in part: “This morning, courageous fighters from the IRGC’s Air Force launched a successful operation called Operation Marty Soleimani.” Apparently, tens of ground to ground missiles were fired at various American military facilities, including Erbil and Al Asad Air Base. These missiles were all fired from inside Iran. Equity futures declined on the news, with the Dow off more than 400 points, as gold and oil surged.
This comes after a lackluster session where the market couldn’t find its footing yesterday, finishing slightly lower, as investors brace for the onslaught of economic data, which culminates with the jobs report on Friday. There was never any sense of panic during the session, as it was mostly a wait and see.
On election night 2016, I was in the studio with Neil Cavuto, Lou Dobbs and Trish Reagan, and initially was told by experts it would be a fast evening with Hilary projected to be declared the winner before midnight. Then tallies began to roll in, and it was clear, the night would be longer than promised by the experts.
As it looked like Donald Trump would become the next President of the United States, equity futures began to slide. When it was clear the Republican candidate won, Dow Jones futures were down 900 points, and the media paraded expert after expert calling for all out calamity with some famous mavens wondering out loud if the stock market would ever recover.
Then came the acceptance speech:
I've just received a call from Secretary Clinton. She congratulated us. It's about us. On our victory, and I congratulated her and her family on a very, very hard-fought campaign.
I mean, she fought very hard. Hillary has worked very long and very hard over a long period of time, and we owe her a major debt of gratitude for her service to our country. I mean that very sincerely. Now it is time for America to bind the wounds of division, have to get together. To all Republicans and Democrats and independents across this nation, I say it is time for us to come together as one united people.
It is time. I pledge to every citizen of our land that I will be President for all of Americans, and this is so important to me. For those who have chosen not to support me in the past, of which there were a few people, I'm reaching out to you for your guidance and your help so that we can work together and unify our great country.
The selloff improved and the next day the Dow rallied 257 points.
When President Trump speaks today, he will have a chance to prove his critics wrong. I think he will show restraint and allow for de-escalation after the Iranian attack, which was designed not to harm Americans, but as a claim they fought back. Every country has to show resolve to its citizens. But last night, the top spokesperson for Iran suggested the reprisals are over, and there would be no more attacks.
Of course, Iran has its mission in the region that will continue; although, it will do so with the knowledge America isn’t afraid to step up.
President Trump will reiterate the goal of peace through strength and the practice of diplomacy backed with hard power.
There are lots of proxies to gauge how the Iran conflict is affecting economies and markets and investor confidence, but the best to watch are bond yields and the spread between the 2- and 10-year Treasuries.