From Islamabad to Islamaworse

I have no earthly idea what is going on behind the scenes between the U.S., Israel, Iran, Pakistan, and Lord knows who else may be involved with these "talks" for a potential peace deal. But what I can say for sure is that the nonstop contradictory headlines surpasses even the desperation of 2008, which seems absurd given that the major indices are suddenly back at new highs. 

However, that remains the case, as even the Hail Mary attempts by Bear Stearns (including soliciting external, well known people like Jim Chanos to try to help talk up their stocks) and Lehman to jawbone their financial predicaments in 2008 cannot hold a candle to the 'round-the-clock Trump tweets and various reporters relaying an alleged scoop that a peace deal is imminent, or so it seems.

The latest chapter in this saga hinges on whether a J.D. Vance-led envoy will return to Islamabad for talks early this week, which had better happen soon since it is about a nineteen hour flight from D.C. to Pakistan. In the last twenty-four hours, for example, I have lost track trying to accurately count how many conflicting headlines we have seen about whether 1) the U.S. will attend the talks with Vance, and 2) whether Iran will attend the talks at all. In some cases, various news outlets and reporters blasted headlines the talks will happen, only to change five minutes later, and then change back again. 

Ultimately, the actionable information to take away from this drama is that the Strait of Hormuz remains largely closed, which means every single day which passes an even deeper supply shock (not just for oil, but also chemicals, etc.) awaits as the market will eventually need to tango with reality. 

Furthermore, this is all happening as we have speculative fervor which rivals the dot-com era. Last week it was BIRD and MYSE basically adding "AI" to their firm names (in so many words, as they announced a pivot to AI) and the market promptly rallied both of those stocks many times over. 

But we also have Avis, first below on the daily chart. The car rental firm announced they were leveraging AI to transform into a "mobility company," and the stock squeezed the 26% short float relentlessly, with overkill today. Beyond that, the monthly chart, second below, shows us we actually saw a similar squeeze back in 2021. If you needed evidence that rate hikes are appropriate, this one chart could suffice.