Quick Morning Note

Contradictory signals hitting the tape this morning... 1. The Wall Street Journal is reporting that the President told aids that he's willing to end the war without opening the Strait of Hormuz... 2. Hegseth, while claiming that regime change in Iran has been accomplished, implies that strikes will be stepped up this week, in "decisive" fashion... 3. Headline: "Iran sets giant oil tanker ablaze off Dubai."

The market is clearly leaning into Trump's comment for the moment, and interpreting that "decisive" means conclusive in the very near-term, and, for now, leaning away from the implications of Iran's simultaneous strike on the oil tanker.

Stocks are wrapping up a historically-ugly -- even if this morning's rally holds -- month today... And while our core allocation is not entirely tethered to the equity market, and didn't take quite the hit stocks did, it nevertheless saw an uncharacteristically large drawdown... Although still notably better than the equity market year-to-date.

I.e., as I've continually stressed during the war, positions (commodity-oriented) that would likely do well in a protracted conflict (until recession worries firmly set in, that is), nevertheless took their lickings as well, along with those (oil consumption-related) whose hits made perfect sense... During the few short-lived relief rallies along the way these happened to be the best performers -- which essentially confirms our go-forward thesis at this juncture.

The signal we're watching for is whether today's optimism holds into the close, and whether the tanker strike produces a market response in the next 24 hours. That divergence could be telling right here.

Stay tuned...