The stock market is about to close on its fifth straight week of losses as investors grow increasingly concerned about the impact that the conflict in the Middle East will have on production, trade, and fulfillment. Stocks aren’t the only asset class taking the beating. Gold has plummeted 17% in the same timeframe; losing 10% over a five day period last week is the sharpest decline in almost 50 years.
Which leads us to interest rates. Depending on the coupon duration, rates are up 0.375% to 0.75% from the day the US bombed Iran. I mention once again that the flow of money is generally from bonds to stocks and vice versa as traders seek “risk-on” or “risk-off”, respectively. And when everybody’s nervous, then tangible assets like gold and real estate become the beneficiary of the deposits, which causes those prices to rise.
Right now, normal is not the norm. All asset classes are selling off and money is being parked in cash accounts, waiting for the prices to find a stable floor to settle on. Unfortunately, it looks like this trend can continue until we see peace talks.
