Geopolitical Escalation: How Its Shaping Investor Sentiment and Market Trends

Wall Street is soaring in New York morning trade with the S&P 500 back above the 100 level.

Meanwhile we are looking at WTI and futures higher as well.

While President Trump just extended the ceasefire with indefinitely citing a seriously fractured Iranian government and the US naval blockade remains strictly in place.

Now.

Last week, the S&P 500 erased all of its losses since the start of the Middle East conflict, closing above the 7100 level for the first time in history.

Now we are continuing to monitor what happens in the Middle East and joining us to break down what's affecting the markets is Jonathan Corpina, Senior Managing Partner at Meridian Equity Partners.

Well Jonathan, good morning.

Thank you so much for joining us.

We continue to monitor the situation in the Middle East, but for now we are looking at the S&P 500 reclaiming 7100.

So what's going on?

It's, you know what's going on is that this market is completely dependent on.

Every headline that's coming out of the Middle East or Washington DC, and we see that time and time again.

I think we're getting a little bored of it and we need to start getting back to some of the economic fundamentals that we always focus on.

But at this point right now all eyes are what's occurring in the Middle East and how that's going to play out.

It keeps shifting day by day.

The headlines change dramatically overnight.

We're seeing our markets respond to that, but keep in mind.

We are one headline away, one tweet away from this shifting in the opposite direction, so I think investors feel they're happy with, I guess, the market being up and the returns and recouping.

We saw the market take out, but the activity, the participation is just much less at this point because there's no real conviction into this market.

Yes, and you bring up an important point because despite all the green we're seeing across the board in terms of the equity averages, their performance today, we have to keep in mind that there is dispersion happening and despite this rally in terms of stocks that are hitting their 52 week highs, that is.

Fragmented as well.

So we are here in earnings season.

We're continuing to get mostly better than expected reports.

So what are you paying attention to when it comes to some of these earning calls, right?

So going through earnings season while we're going through this geopolitical conflict right now, I think we look at earnings season, we look at the numbers, we accept the numbers.

I think as always we look for the outlook, the forecast moving forward.

Unfortunate.

At this point we're going to get a lot of the same rhetoric, the same commentary of uncertainty moving forward, oil price impact on companies.

We'll go back to interest rate impact on companies, waiting for the Fed, what the Fed is going to do.

So we will get some information, but again, we're not going to get real conviction, real directional information of where some of these companies are going to go, and rightfully so, right?

I mean, put yourself.

In that seat of a CFO or CEO, the uncertainty is certainly there.

Yes, and uncertainty is something that is dominating as well and as we head into the rest of earnings season, we're going to be paying attention to tech, in particular some of the mag 7 names as well as semiconductor.

So what do you make of the performance or outperformance we've seen since March 30th?

Yes, it's it's the cyclical move, right?

It's the, you know, the hot, safe, quote unquote safe sector or area that investors feel that they should be in.

We've seen a lot of volatility in the market.

The market starts to sell off, we see money come out of that tech sector.

That's the first where investors start making those sales because they've seen a lot of profit or they've seen the volatility that could offer that opportunity for profit.

And then as the market starts to turn, they get back into that.

So there's clearly some of those stocks that have a lot of volatility to it.

We're going to continue to watch that, but I think again.

This market can move 23, 4% at any given point, so we're going to see quick moves in and out of stocks in and out of sectors and for Americans out there who are watching this right now and more worried about the driving season in terms of paying at the pump as well as the rate outlook because we know borrowing costs are affected by interest rates.

So what would you say to them and what does diversification actually look like right now?

Yes, I think we. bumpy road ahead as far as oil prices are concerned and the impact that we're all going to feel at the pump on that.

I think the Fed has to sit on their hands at this point.

Yes, they are data dependent, but some of that data is the geopolitical risks that's out there.

So we're going to hear that kind of same sentiment next week.

And I think investors at this point diversification is very important because we're seeing different sectors again moving in and out.

We're seeing money.

Shift from one sector to the next.

This all plays itself out in the long run, hopefully sooner than later, but having exposure to multiple different sectors is very important.

And finally, before I let you go, Jonathan, you've been on this trading floor for many years, so you've seen different cycles whether we're talking about midterm election years or economic or monetary policy cycles here.

So what do you make of this environment that we are.

In right now, is it different from what you've seen in the past?

It is quite different, right, because I don't think we've had, at least in my experience, any significant geopolitical escalation that we're currently experiencing.

And again, at any given point we could see this shift in any direction.

Clearly we want to get to an outcome on this, a peaceful resolution, and then a framework moving forward.

But at this point it just doesn't seem like we're getting close to that, and having our forces, our troops kind of moving closer and closer, it definitely raises the anxiety levels of the market and we all do know that the stock market is not the economy, so that is something to definitely keep in mind here.

So Jonathan, I always appreciate your time as well as your insights.

Thank you so much for joining us.

Remy.

Thank you very much.

Have a great day.