After President Trump authorized a military strike killing a top Iranian military commander, the escalating conflict sent stocks down around the world, and oil and gold prices up on the first Monday of the new year.
Brent oil prices, the international benchmark, hit the $70 mark for the first time in three months and the price of West Texas Intermediate, the American oil benchmark, reached more than $63 a barrel after the Pentagon's announcement confirming an airstrike at Baghdad's airport. Crude oil last hit the $70 mark in September after drones suspected to have been launched by Iran struck Saudi Arabian oil plants. Saudi Arabia, Iran, and Iraq account for almost half of the world's oil reserves.
Prices are up amid a growing list of concerns after the killing of Gen. Qassem Soleimani: Iran may close the Strait of Hormuz, has already threatened retaliation, and said it will no longer abide by the 2015 nuclear deal the U.S. withdrew from two years ago, and Iraq voted to expel U.S. troops. The State Department warned of a "heightened risk" of a missile attack near U.S. bases.
It is unclear how Iran will respond to Trump's unilateral move. Oanda's Jeffrey Halley noted that "a big fat dollop of geopolitical uncertainty has landed on investors desks" in a report.
But J. Jay Park, CEO of ReconAfrica, said the geopolitical uneasiness isn't, alone, enough to continue driving oil prices up. He said what may continue to drive up prices is a change in supply. Park said supply, demand, OPEC decisions and compliance, geopolitics, and public sentiment about those four items affect oil prices. Uncertainty in Iran, coupled with a change in supply or demand may change the game. Iran may choose to close the Strait of Hormuz, a move Britain has forestalled by sending the Royal Navy to help ships pass through the Strait, through which 21 percent of 2018's global petroleum liquids consumption flowed.
"If that were to happen, the sky's the limit, over $100 easily," Park told Cheddar on Monday.
With the region on edge, stocks fell in Japan, Hong Kong, South Korea, and across European markets.
In the meantime, Park said the current crisis may not drive up oil prices further.
"In the recent past we've seen a number of conflicts, for example the suspected Iranian attack on Abqaiq in Saudia Arabia, that kind of underwhelmed in terms of the extent to which these changes affected the overall price and how long that effect lasted," he said.
According to the Federal Reserve, the investment gap between Black and white Americans has remained substantial, with only 34 percent of Black households joining in on the historic rise in the markets. Stacey Tisdale, the first Black woman to have reported from the NYSE and the CEO and president of Mind Money Media Inc., said that the data might not be as disheartening as it seems. "I think that number is very deceiving. That Federal Reserve study is actually from 2019, and it's very important that we all look beneath that number and look beneath the surface because there is nothing short of an investing revolution going on in the Black community," Tisdale said.
Facebook parent Meta’s miss on Q4 earnings raised alarm bells amongst investors. The tech giant lost users for the first time as it invests a lot into the metaverse, its virtual realm, in the hopes that consumers will move their social media consumption there. The stock dropped around 25 percent on the report, and CEO Mark Zuckerberg chalked it up to people flocking toward apps like TikTok, even as his own platform attempts to make a big pivot to the metaverse future. "It's gonna take a long time to develop and it's gonna take a long time to bring to fruition," Rebecca Walser, president of Walser Wealth Management told Cheddar. "In the meantime, the world is moving on. We have a very short attention span, especially on social media, and we want the short little videos. And Tiktok has just taken off."
Wall Street saw another volatile day after the Federal Reserve left rates unchanged for now, with plans to raise rates in March at its next meeting in order to ease inflation. Fed Chair Jerome Powell said the Fed has not made decisions on the size of rate increases, adding that the Fed is not trying to get inflation below two-percent. Ken Johnson, CFA and Investment Strategy Analyst explains why Powell thinks that high inflation is a significant threat to the labor market.
Ed Butowsky, managing partner at Chapwood Investments, joined Wake Up With Cheddar to break down the disappointing takeaways from Spotify's Q4 earnings report, which sent the stock plunging.
Anu Gaggar, global investment strategist for Commonwealth Financial Network, joined Cheddar News to discuss how global supply chains could be disrupted even further by an armed conflict in Ukraine.
Google parent company Alphabet saw yet another successful quarter reporting its final earnings report for 2021 on Tuesday. The tech giant beat Wall Street expectations across the board with much of that success owed to not only the growth of its cloud business, but also its multi-platform advertising. Joanna O'Connell, Principal Analyst at Forrester explains why advertising may be one of the keys to Alphabet’s future success.
