IT’S NOTHING TO DO WITH TRUMP, G7 OR AI

It was good news that the Americans and Iranians announced this week to end the war between themselves and the Big Sign-off on Friday in Switzerland. 

But what happened?  Nothing much!  

Oil prices went down, which was good for everyone. However, International Equity markets hardly moved, some even went down and the all-important International Bond markets didn’t even blink. 

From here on in, the recovery of the world economies and world markets will not be dependent on big announcements on social media or the broadcast words of politicians. 

The recovery is now in the hands of real people, carrying out constructive operations after careful considerations and planning. 

The world's attention is now back on to the infamous Straits of Hormuz. There are still more than 500 major ships, tankers and cargo ships anchored and stuck inside the Gulf with the others waiting at anchor, to come into the Gulf. Before the conflict, up to 140 ships a day on average passed through the Straits, now the average is between 2 and 7 a day and yesterday only 2 ships risked the crossing.

Ship owners are very careful and commercially minded people and sea captains are professional seaman with the responsibility for the lives of their crew. They are not going to risk their very valuable ships and the lives of their crews on uncertainty and weak decisions by politicians and signed agreements. 

There still remains the high risk of the mines scattered around the Strait and nobody knows their locations. Some underwater, some floating.  A ship carrying oil or Liquid Natural Gas (LNG) hitting a mine would cause a major disaster with loss of life and damaged environment. 

Ship owners and captains are not going to take that risk of traversing the Strait, until all the mines are cleared and other points agreed. 

The other risk is that Iran wants to charge ships to go through what they consider is 'their' Strait. It is in fact an International waterway and should be Free of Passage. This is a big sticking point remaining.   

World economies and international markets are not going to recover until the ships start moving and then it will be a slow recovery. Once that starts to happen then the Equity and Bond markets will recover gradually as the backlog is slowly released. Nothing will happen, till the big ships move.

Enjoy the Summer sunshine and the World Football.

Regards

Ray