Unlike Political Regime Change, the Market Shifts Regimes by Itself
The market uncertainty state turns Fragile in the face of war.
Two weeks ago Sheryl and I left for vacation. While it's always possible something could happen in markets while we were away, my process is long term and a regime shift seemed unlikely. My reasoning was based upon history where a sudden shift in market regime occurs due to endogenous factors. The market shifts for its own reasons, generally tied to fundamentals.
The outbreak of a new middle east war was an exogenous event. While the US administration had been building up its Middle East military presence, war did not seem inevitable when we left as it did after 9/11/2001.
But war has broken out. The Middle East is in turmoil. Oil supplies can no longer be shipped safely. Bombs are falling, and missiles are flying. So where do we stand?