CNN and CNBC trumpeted the Iranian attack boat story very hard between 8 and 9 AM this morning. That is a very important time frame. Why?
Because it is just before the opening of the NYMEX (New York mercantile Exchange) opening. The beginning of that time frame is the end of the electronic overnight trading - a market where you can head fake the market much more easily than during the open outcry (day) session.
What happened below the fold:
There is a saying in the trading world "If you don't know who the fool at the table is by the end of five minutes, you're the fool." The other is "you can always make money as long as there is a bigger fool at the table" - affectionately know as the greater fool theory.
The recession information, the US consumer collapse and the housing collapse are storm clouds on the horizon. If you are a smart trade you want to trim your sails. But if everyone lightens their position at the same time, you all lose money. So what do you need? A really juicy rumor.
Now, I would never presume to imply that the US military would promote a rumor to allow the investor class and hedge funds a chance to dump their dog positions into a rally. We all know such a thing would never happen.
But the Hormuz incident and its promotion may have more to do with short term profits than it has to do with military build up. Just remember, there ain't a lot of budget left to support companies over there but there is a lot of foolish investor money to support hedge funds here.
Or, in the immortal (sort of) words of GWB "Why fleece them over there when you can fleece them over here".