Goldman Sachs (NYSE:GS) CEO David Solomon says he’s surprised at the “benign” market reaction to the Iran conflict, warning it may take “a couple of weeks” for investors to digest impacts even as Bitcoin (CRYPTO: BTC) surged 5%.
The ‘Benign’ Market Reaction
Solomon spoke at a business summit in Sydney, expressing surprise at muted market reactions given the magnitude of the conflict, according to Reuters.
“I look at the market reaction, and I’m actually surprised that the market reaction has been more benign given the magnitude of this as you might think,” Solomon said.
Markets tend to react in a muted way to geopolitical events unless they have a direct impact on economic growth.
“There’s a cumulative effect of everything that’s happening and a much harsher reaction. Up to this point, we haven’t seen that cumulative effect,” he said.
The delayed reaction concerns Solomon. “I think it’s gonna take a couple of weeks for markets to really digest the implications of what has happened both in the short term and medium term, and I can’t speculate as to how that would play out.”
The Mixed Market Signals
Oil prices spiked as the widening conflict stoked supply worries, exacerbating investor concerns about inflation.
Global stock indexes slumped while the U.S. dollar strengthened as investors sold riskier assets and flocked to traditional safe havens.
However, Wall Street losses have been relatively mild.
The S&P 500 (NYSE:SPY) is down less than 1% this week after paring early losses.
Solomon attributed economic resilience to a combination of factors including an easing monetary cycle and significant relaxation of regulatory practices.
Looking past the conflict, Solomon sees a compelling U.S. economic growth trajectory.
“There is definitely a reasonable probability this year that the U.S. economy runs a little bit hot. And with that, is it possible that inflation can wind up being slightly higher than the consensus expectation? Yes.”
Bitcoin Breaks Key Resistance
Bitcoin is reclaiming the 20 EMA at $68,718 and challenging the Supertrend at $72,497.
The Supertrend sits just 1.5% above current price and is on the verge of flipping bullish. A daily close above $72,497 would flip the indicator green, confirming the downtrend is breaking.
Bitcoin’s reclaim of the 20 EMA after weeks of trading below shows buyers are regaining control.
Critical resistance ahead sits at the Supertrend at $72,497, 50 EMA at $74,363, psychological $75,000, and 100 EMA at $81,920.
Meanwhile, support sits at the 20 EMA at $68,718 and the $60,000-$65,000 zone.
Image: Shutterstock
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