Traders are simultaneously pricing in two contradictory scenarios: continued political de-escalation on one hand, and the possibility of renewed escalation on the other. This fragile balance leaves the market vulnerable to sudden movements, especially given oil prices' high sensitivity to geopolitical developments in the Middle East.
High anxiety is seen when measuring average results for the three months ending in October and the same period 12 months earlier, just before Trump won the presidential election. The most striking change is the 23% slide in the expectations slice of the confidence index basically, the Californian view of the financial future. That put this yardstick of economic hopes 16% below its average since 2007.
