Daily Commentary

MarketMinder’s View: Keep the following thoughts in mind when you read this long piece that documents the fact gold is down more than US stocks and as much as the world’s since Israel and the US launched strikes on Iran at February’s end. One, many say gold is a hedge against chaos and war. Two, many say gold is an inflation hedge. Three, many say gold benefits from interest rate cuts. Four, many say it moves opposite the dollar. The trouble is that all four of these theses are contradictory, as the piece inadvertently highlights. If you get chaos and war, people usually flock to the dollar, driving it up versus other currencies, which means point one is offset by point four. If you argue rising oil prices are inflationary, a hedge should rise. But it also likely means you won’t get rate cuts, so point two is offset by point three (and vice versa). It all highlights what we think is a basic point: Gold’s swings are all about sentiment. There is no guideline to apply, no rule, no if-then formula. Investing in it is speculating about others’ emotions, full stop. While it is only a few weeks since the war started, a short period, gold’s slide since is a reminder of just that. All the same holds for silver, which has a little more industrial use, but is still subject to speculation.

MarketMinder’s View: Lots of politics here, so please note MarketMinder is nonpartisan. We prefer no party nor politician, assessing political developments solely for their potential economic and/or market effects. First, the details: In Sunday’s first round of municipal elections, France’s populist National Rally (RN) and its allies “… won outright in Perpignan, clinched a strong lead heading into the second round in Nice — France’s fifth-largest city — and is running neck and neck in Marseille, where a victory would mark a landmark breakthrough for the far right.” The graphic herein gives a visual for all of this, showing minor RN gains—outside of huge jumps in Nice and Toulon—versus 2020’s first round. But as one political analyst notes herein, the RN missed high expectations following historic gains in 2024’s European and snap French parliamentary elections. And, importantly, no candidate exceeded the 50% vote threshold granting an immediate election win, so all of these seats are still up in the air. As explained here, “Under France’s two-round system for local elections, a candidate who wins more than 50% of the vote in the first round is elected outright. Those who secure more than 10% qualify for the second round. Whether the far right turns its gains into victories in the March 22 runoff will depend on the continued viability of the so-called Republican Front — alliances between parties to merge or stand aside that’s been used for decades to try to keep the National Rally out of office.” The RN’s ability to negotiate remains to be seen, and runoffs will determine winners on March 22. That said, we wouldn’t use this to make any predictions about 2027’s presidential elections. French politics have proven volatile lately and a lot can change between now and then. For now, this hints at the continuation of the National Rally’s gradual warming with voters—a years-long trend not sneaking up on stocks.

MarketMinder’s View: The Strait of Hormuz, a key oil and gas shipping route in the Middle East, has been in the spotlight after the latest Middle East conflict led to disruptions and attacks on ships in the region. As this article highlights, reports suggest plenty of Iranian oil is making it through the strait at near the same volumes before the fighting commenced. “Energy analysts at trade data and analytics company Kpler estimated Thursday that Iran had been able to export 12 million barrels since the conflict began on February 28. Maritime intelligence company TankerTrackers has an even higher estimate: 13.7 million barrels as of the middle of last week.” As noted herein, this puts Iranian exports at around 1 million barrels per day (bpd), down from last year’s average of about 1.69 million and last month’s 2.04 million as exporters front-ran the highly anticipated attacks. This oil is reportedly finding its way to non-Western buyers (i.e., India and China), similar to how Russian oil found buyers despite Western sanctions in 2022—a reminder of how adaptive global markets are today. Now, shipments from other, bigger producers have been interrupted, which likely explains the rise in oil prices in recent weeks. That said, when you consider Iran’s exports, the 5 million barrels per day Saudi Arabia has shifted to export from Yanbu (outside the Strait on the Red Sea) and others like Oman shifting transport points, the “Closure” doesn’t really mean a fifth or world oil supply is off the market. All in all, that suggests to us that reality is likely to prove more benign than feared, a bullish factor. And we doubt strongly the Hormuz remains as interrupted as it is today for very long. For more on why, see our commentary, “February’s Growthy Data—and the Iran War’s Souring Sentiment.”