Market Pricing Peace Expectations Amid Asset Divergence

Garrett Jin, an agent for '1011 Insider Whale,' stated that the current market is pricing in 'peace expectations,' which is driving up risk assets. According to Odaily, this trend is diverging from the supply and demand situation in the energy market. Jin highlighted that while the S&P 500 Index has reached an all-time high, Brent crude oil prices have rebounded to approximately $103. Previously, hedge funds had significantly shorted oil, with Goldman Sachs data showing a short-to-long ratio of 7.6:1 at one point. The market's current rise relies on conditions such as the reopening of the Strait of Hormuz, a drop in oil prices, decreased inflation, and Federal Reserve rate cuts, none of which have been realized. The gap between forward earnings expectations and actual earnings has risen to its highest level since 2021.