—— A final facade of calm.
Market atmosphere is unprecedentedly tense:
- Gold and oil opened slightly higher on Wednesday, while U.S. stocks fell across the board the previous night.
- VIX (Volatility Index) soared to 21, while VVIX (which measures VIX volatility) surged to a high not seen since April, even the "insurance for insurance" is rising — the market is actively buying "downside protection."
The market's nervous system is on alert; there is a sense that a great war is imminent.
1. Trump met with his national security team for over an hour, raising speculation about the U.S. potentially joining Israel in attacking Iran. The White House did not immediately issue a statement afterward.
Trump tweeted demanding Iran's "unconditional surrender" and warned of a possible attack on Iranian leader Ayatollah Ali Khamenei. "We know exactly where the so-called 'Supreme Leader' is hiding. He is easily hit, but he is safe there — we will not take him out (kill him!), at least not for now," Trump stated on social media.
If the U.S. intervenes, it's not a matter of how much the market will fall; it may skip the "normal adjustment" and directly enter a fault-line repricing.
2. Storm clouds are gathering, but the parachute hasn't opened yet. Most assets have not fully entered a risk-off state; market feedback remains conservative, and fluctuations across major markets are limited, indicating that "tail risks" have not been truly priced in. However, we must recognize a fact: when tail risks are increasingly mentioned by the market, they are no longer "tails" but one of the "prospective paths."
3. As tensions in the Middle East escalate, and traders await the Federal Reserve's decision, pervasive risk-off sentiment is weighing on the market. While it is certain that the Fed will not announce a rate cut this week, what the market is really concerned about is the latest released "dot plot" — if it retains the prediction of two rate cuts this year, it will be seen as good news. If the "dot plot" only shows one rate cut this year, it will be viewed as a significant negative. However, there is also a possibility that the "dot plot" only shows one rate cut this year, but Fed Chair Powell's tone is "slightly dovish" to balance things. But if news of U.S. intervention appears at the moment the Fed announces its interest rate decision, this Fed pricing framework will be temporarily abandoned, and the market will shift to fully assess the Middle East conflict.
