Author: BlackMask Financial

Investors should exercise caution regarding US stocks as an increasing number of “bear market signposts” point to an approaching top, according to Bank of America Securities.

There are “too many red flags,” strategists led by Savita Subramanian wrote in a note dated June 5. “Take profits,” they advise.

Some 70% of those bear-market signals have recently been triggered, in line with the average observed during prior market peaks, the strategists said. The benchmark S&P 500 Index was “statistically expensive on 17 of 20 metrics, and trades rich versus its tech bubble metrics on eight,” Subramanian said. Measures include consumer confidence data, growth expectations, M&A scores, and credit stress as well as tightening conditions indicators, like the Federal Reserve’s Senior Loan Officer Opinion Survey, known as the SLOOS. The latter, released in May, showed consumer demand continued to soften. Additionally, stocks with high price-to-earnings ratios were leading those with low multiples by a wide margin, a “sign of excessive speculation,” according to the strategists.

Within technology, the spread between the best and worst performing quintiles was the widest it’s been since February 2000, Subramanian said. She added that strong performance for the S&P 500 has “masked internal drama,” with the difference between returns for the top and bottom-performing 10ths of index stocks over the last three months jumping to a post-Covid era high. She cited figures from 1986 through May. Some tech-stock fundamentals are healthy, like leverage, valuation and capital intensity. However, most have worsened since a BofA analysis in November. Notably, “cash flow conversion has flat-lined, investment grade and equity supply has increased, buybacks as a percent of market cap have slowed and capex as a percent of operating cash flow for hyperscalers is forecast to reach nearly 100% by year-end, up from 40% in 2023,” Subramanian said. “Extreme price action may signal rising instability,” she warned. Even so, individual stocks may yet outperform.

NN: This party is in its last hurrah. And the building oil crises will kick off the crash As elucidated in yesterdays editorial Titled: Disaster Looms

Oil jumped after Iran and Israel traded fire, despite US President Donald Trump’s calls for both sides to quit fighting, a fresh escalation in a war that has passed the 100-day mark. Global benchmark Brent added as much as 5.4% to more than $98 a barrel. Israel said it struck military targets in Iran, retaliating against earlier missile attacks by Tehran despite President Trump urging Prime Minister Benjamin Netanyahu to refrain from hitting back. Both countries must immediately stop shooting, Trump reiterated Monday in a post on Truth Social. Yemen’s Houthi rebels said they would impose a complete ban on Israeli vessels in the Red Sea, though a key industry group saw little significant change in the impact on shipping given that many vessels are currently avoiding the waterway anyway. Israel and Iran exchanged missile strikes on Monday despite President Donald Trump’s calls for both sides to halt the fighting and give peace talks a chance to succeed. Trump had earlier urged Tehran to return to talks after the attacks on Israel, Fox News reported. The US president separately told Axios he would press Netanyahu not to retaliate. The Israel Defense Forces see the campaign against Iran lasting several days and are preparing to mobilize reserve soldiers, Army Radio reported. While oil was up sharply on the day, it remained below $100, a sign of how the market has managed to avert the worst impacts of what the International Energy Agency describes as the biggest ever supply disruption. At its peak during the conflict, the global benchmark neared $130 a barrel. Still, with attacks now erupting again, the risk of a return to strikes on energy infrastructure has come back into focus. “Despite repeated optimism from the US administration, a lasting peace agreement appears increasingly elusive,” said Ole Hansen, head of commodities strategy at Saxo Bank A/S. “The continued lack of progress toward restoring normal energy flows from the Middle East is reinforcing expectations of a prolonged period of elevated oil prices.” There’s been a flare-up in hostilities over the past week across the Middle East that’s threatening to derail a truce and complicate negotiations to end the war. The conflict has led to the near-closure of the crucial Strait of Hormuz, choking off most supplies of crude, fuels and natural gas to global customers. At the weekend, US Central Command said it had downed two Iranian attack drones that threatened international maritime traffic in Hormuz, which followed six ballistic missiles fired at Bahrain and Kuwait on Friday. Those were intercepted, while the US struck Iranian coastal surveillance radar sites. The US president told the Financial Times that the Israeli leader would have to accept any deal the US strikes with Iran. “I call the shots. I call all the shots,” he said. Last week, Israel and Lebanon agreed to a truce, which hinged on Hezbollah halting hostilities, but the Iran-backed militia rejected the ceasefire. Fighting between Israeli troops and Hezbollah continued over the weekend. Even if a US-Iran peace deal is agreed, multiple hurdles will impede normal resumption of oil flows. Among them, mines in Hormuz must be removed, shut-in fields may take months to restart, and damage to energy infrastructure from drone and missile strikes needs to be repaired.

NN: What peace?  this war only pauses so Iran can rearm.

The US and Iran have made little progress in talks over an interim peace deal this week, with the sides seeing their worst clashes since an April ceasefire began and fighting continuing in Lebanon. Skirmishes continued overnight between Hezbollah and Israel in southern Lebanon after the Iran-backed group rejected a US-brokered proposal aimed at securing a broader truce. Even so, Hezbollah’s attacks on northern Israel have eased, while Israel has held off striking Beirut after threatening to do so earlier this week. Iran insists on a ceasefire in Lebanon before accepting a deal with the US that’s meant to extend their truce by two months and reopen the Strait of Hormuz. US President Donald Trump on Thursday said negotiations are in the “final” stages without elaborating. Iran’s Foreign Minister Abbas Araghchi earlier said there had been “no tangible progress” even though the two sides continued to exchange messages via mediators. On Wednesday, Iran fired missiles and drones at Kuwait and Bahrain, killing one person and injuring dozens at Kuwait’s main airport, after the US struck an oil tanker headed to the Islamic Republic. That was the worst of several flareups since the current ceasefire between the US and Iran took hold on April 8.

In Lebanon, Hezbollah militants said they refused to abide by the conditions of a ceasefire announced by the US State Department only hours earlier. At least eight people were killed in Israeli strikes, according to the Lebanese Health Ministry. And Israel’s military said Hezbollah launched several rockets toward its soldiers, with no injuries reported.

Asked by reporters Thursday in the Oval Office about Hezbollah’s rejection of the truce, Trump said “they didn’t reject me” and claimed “they called us” to discuss a cessation of hostilities. Brent crude edged up to near $96 a barrel and gold slipped lower in response to the ongoing uncertainty over the status of US-Iran talks. Trump has repeatedly claimed a deal is close even as Iran refuses to give in to his demands on its nuclear program and the reopening of the Strait of Hormuz. Before the war, the waterway carried about a fifth of global oil supplies, but traffic has been sharply reduced since the US and Israel struck Iran on Feb. 28. Industry officials have warned prices could spike again as inventories are drawn down. On Thursday, Trump said in a social media post he’s “right in the middle of my final negotiations to end the War with the Islamic Republic of Iran.” He didn’t elaborate on the talks, using the post to blast a vote by the Republican-led House of Representatives to halt the war. While it won’t end the US military campaign against Iran, the move is a reflection of the increasing unpopularity of the conflict in the US and worries from Trump’s own party about the conflict’s impact on the midterm elections.

Trump’s post came hours after Iran’s semi-official Tasnim news agency cited Araghchi as saying that there had been no real progress in peace talks recently.

Among the conditions Iran has set was an end to Israel’s attacks in Lebanon, where its forces have launched a major drive to oust Hezbollah. “For Iran, the question is ‘Will Trump restrain Israel?’” said Nate Swanson, a senior fellow at the Atlantic Council and a former US official who worked on Iran at the State Department and White House National Security Council. “If he can’t restrain them in Lebanon, how can he restrain them in Iran?” On Thursday, Hezbollah chief Naim Qasem dismissed the US-brokered deal between Israel and the Lebanese government as “absurd.” The group, which is not a party to the negotiations, will not accept linking its presence in Lebanon with stopping the war and Israel’s withdrawal, he said in a letter.

Here’s more on the war:

• Iran allowed the United Nations atomic watchdog this week to visit its Bushehr nuclear power plants, while stonewalling inspectors’ demands to verify the condition and location of its enriched uranium stockpile.
• The UK and France have finalized plans to lead a multinational mine-clearing mission in the Strait of Hormuz within days of an agreement between the US and Iran to reopen the waterway, according to people familiar with the matter.
• Operations at Oman’s main crude oil export terminal at Mina Al Fahal have resumed after an explosion on Friday halted some loadings, according to traders familiar with the matter.

The US and Iran clashed again overnight, with Kuwait and Bahrain caught in the crossfire of one the most serious flare-ups since a ceasefire went into effect in early April. The developments follow days of rising tension, including over Israeli operations against Tehran-backed Hezbollah militants in Lebanon, that threatens to derail US-Iran talks about an interim peace deal. The sides have agreed on a rough framework that should extend their truce by two months and reopen the Strait of Hormuz, though negotiations over the final details are dragging on. Shortly after “disabling” an empty oil tanker heading to Iran, the US military said it came under missile and drone attack. Iran targeted the US’s main naval base in the region, located in Bahrain, and the Ali Al-Salem airbase in Kuwait. At least one person at Kuwait’s civilian airport was killed in a separate strike. The US said Iran fired several ballistic missiles at its allies Bahrain and Kuwait, with all “failing to hit their intended target,” as well as drones at commercial ships. American forces struck a communications tower on the Iranian island of Qeshm near the strait as part of the skirmishes.

Kuwait said its airport was significantly damaged and it suspended flights for a few hours. A number of people were injured in addition to the person who was killed, it said. The US military said its strikes on Iran were all in self-defense and no American personnel or assets were harmed. Iran’s foreign ministry “strongly condemned” the US attack on the Iranian tanker and Qeshm, adding that Kuwait and Bahrain’s rulers bear a “direct and clear responsibility” for Washington’s actions. “Disrupting security in the Strait of Hormuz will carry a heavy cost for the US aggressor army,” Iran’s Islamic Revolutionary Guard Corps said in a statement. Trump has spent months projecting confidence that an interim deal, to be followed by further talks over Iran’s nuclear program, is within reach. He’s largely brushed off suggestions the ceasefire, which began on April 8, is fraying. In Lebanon, the US and Israel have different ideas about what an end to the war should look like. Israel is keen to continue attacking Hezbollah. Yet Iran insists there must be a ceasefire there too as part of an interim accord with the US, and President Donald Trump urged Israeli Prime Minister Benjamin Netanyahu in a call on Monday to abandon plans to bomb the Lebanese capital of Beirut. Israel has, for now, refrained from that and Hezbollah has reduced its drone attacks on the Jewish state. Fighting, however, continues in southern Lebanon, much of which is now occupied by Israel. Fresh US-Iran Fighting Puts Ceasefire Under Strain  While Trump says Iran is desperate for a deal, the Islamic Republic has repeatedly pushed back against American demands and says it’s prepared for a resumption of all-out war. US and Iranian negotiators are grappling with several critical questions beyond Lebanon, including whether Tehran will allow free passage for ships under an interim accord, which the sides are describing as a memorandum of understanding. Iran also wants billions of dollars of funds stuck in countries such as Qatar to be unfrozen and is resisting US pressure to destroy or send to a country like China its stocks of highly-enriched uranium. The wider talks, to commence once there’s a short-term deal in place, will be complicated and focus on Washington’s demand that Iran holds off on processing uranium for around 15 years. Washington fears Tehran wants to enrich uranium build an atomic weapon. Iran has always denied that, but has processed the metal almost to military-grade levels.

NN: I am adamant Iranian scum bags will milk the peace negotiations to gain time to rearm and build nuclear weapons . The ony solution is to eliminate their leaders….. all of them!