In Michael Reinking, he is the senior market strategist at the New York Stock Exchange.
Michael, what is your takeaway from today right across the board?
Yes, Ashley, thanks for having me.
Look, I mean it was a rough day, you know, and that's not terribly surprising heading into a weekend, you know, we continue to be kind of mired in the fog of war, right?
And so, you know, kind of heading into the weekend, investors do tend to kind of be a little risk averse, as kind of Pete pointed out, we've been breaking some pretty key kind of technical levels.
Over the last week and you're starting to see here kind of see from a market perspective of the jawboning that's coming from the administration is not necessarily helping to kind of calm, kind of calm markets and as we've talked about in the recent days when I've been on with you, you know that as the longer this kind of carries on, right, the the the bigger the potential range of outcomes and you know the risks associated with kind of higher interest rates and higher oil prices and I understand.
During times of geopolitical uncertainty, we see a lot of volatility and then the markets even out.
We're past week 4 of this.
When do you think we'll see that evening out, if at all?
Yes, so look, I think this is the 5th consecutive week of declines for the S&P 500, right?
We've seen about a 9% decline from the all-time high.
The last time we've seen kind of 5 consecutive weeks of declines was back in 2022.
If you look at sort of some of the technical measures like RSI, which is relative strength, we're starting to get into kind of short term oversold conditions.
We just moved under 30 today, you know, and we're starting to see kind of the range on the days starting to expand, right?
So that does suggest that we could be getting closer to a little bit of a technical bounce, right, but I think the real key after that is how markets react to some of those broken technical levels that that we were talking about, right?
So around 6550, which was the October.
In November lows from last year and then just over 6600, which is where you have the declining 20 day moving average and the 200 day.
Ice crude was over $110 a barrel.
Why are markets so reactive to oil prices, and do you think today's result is a result of the volatile and choppy oil prices?
Yes, everything kind of does feedback in this situation to kind of oil prices, and oil prices are not only impacting. kind of the prices that pump, but it ultimately feeds into other products as well, things like, you know, kind of plastics and then kind of the cost of transportation, right?
So that does potentially have this inflationary kind of impact which is kind of something that central banks are kind of are going to have to struggle with, you know, kind of as we move forward and we're starting to see, you know, markets not only respond to the move higher in oil prices recently, but they're also becoming much more sensitive to the move higher in interest rates, right?
So you have The 2 year yield is right around 4% again.
The 10 years is around 4.5%, right?
So we are kind of pressing up against recent highs.
What will need to happen for the oil chopiness and volatility to stop?
Yes, so look, I mean, the longer this goes on, right, the higher the potential for kind of oil prices to really start to dislocate.
But if you think about where we were in 2022, you know, you had ice rent was closer.
150 right so right now things have actually kind of all things considered remain you know kind of pretty contained in order to you know to kind of really see some real relief here you have to see kind of the strait of Hormuz, you know, kind of reopen right we continue to hear the administration, you know, kind of talk about negotiations, right, but you know, until you know that that is going to be kind of a difficult process.
It's going to be a difficult process kind of to reopen the strait without, you know, kind of Iran.
And coming to some sort of an agreement with Iran which could potentially kind of entail putting boots on the ground, and that's like another whole escalation to this process, right?
But that is kind of really the key.
And then we also have to kind of pay attention to see, you know, kind of if the Red Sea, you know, if those, you know, kind of those shipping lanes start to close, that would be kind of another whole escalation.
All right, Michael Reinking, senior market strategist at the New York Stock Exchange, thank you so much for joining us.
