According to reports, ship movement in the Strait of Hormuz shows significant improvement, with 25 ships passing through the strait yesterday,
and no attacks on ships in transit were confirmed.
Strait of Hormuz open = growth in oil supply
The result?
Positive domino effect:
Oil prices are falling...
Fuel prices are falling
Flight prices are falling
Inflation, which was mainly driven by rising energy prices, is calming down.
The Fed can relax and reverse interest rate hikes in the medium term.
Citizens' wallets are relieved, and Trump arrives at the midterms with low prices.
The calculation is simple!
Trump got what he wanted: arriving at the midterms with prices falling, not rising.
The bottom line is:
History tells us that the stock market adores two things above all else:
Stability + certainty.
The combination of:
The Strait of Hormuz is open.
Declining inflation.
And an administration arriving at the midterms with reassuring economic data.
creates exactly the optimistic scenario that Wall Street analysts love to see.
When political and economic pressure is off the table, market volatility can calm down.
And this reduces the chance of political shocks,
A politically calm market usually translates to lower volatility (low VIX); the market breathes a sigh of relief.