"Iran striking within Israel would mark a significant escalation," Steno observes, highlighting the contrast with Tehran's usual tit-for-tat strategy. He anticipates a more measured response, likely outside of Israel proper, to convey a message of deterrence without inviting further conflict in a recent analysis posted on StenoResearch.com.
Steno also addresses recent market reactions, suggesting the sell-off might be somewhat overstated. He points to liquidity conditions and tax seasonality as factors contributing to market sensitivity, hinting at potential for corrections through April after two quarters of positive market performance.
The discussion shifts to energy markets, where Steno identifies a looming Q2 supply deficit. Despite rising demand signals suggesting OPEC+ should ramp up production, the consortium has opted to cut output, further tightening supply.
The commodity market's recent upswing catches Steno's attention, with a broadening rally beyond traditional strong performers like crude and gold. He views this trend as reflationary, especially for the U.S. consumer market in Q2, and reveals a strategic move into silver miners and the BCOM index as a response.
Steno also delves into the U.S. job market, specifically the wage growth aspect, predicting a potential surprise increase in wages based on leading indicators. He aligns this with Federal Reserve Bank of Minneapolis President Neel Kashkari's stance on interest rate cuts contingent on inflation progress.
Lastly, Steno contrasts U.S. inflation trends with those in the Euro area, where a surprising downturn in inflation rates, particularly in Germany, suggests potential for a dovish shift in European Central Bank policy. He attributes this trend to seasonal variations and lower energy price impacts compared to the U.S., forecasting a possible easing in inflation pressures in Europe.
Through his analysis, Steno paints a picture of cautious optimism in the face of geopolitical tensions and market fluctuations, advising close monitoring of these developments for their broader economic implications.