Goldman’s David Solomon says market reaction to Iran conflict is “benign”

Market Sentiment - Goldman Sachs CEO David Solomon expressed concern that there is not enough fear in the market regarding the ongoing crisis in the Middle East, indicating that the market's reaction has been surprisingly benign [1] - Solomon warned that the cumulative effects of current events may take weeks for investors to fully price in, suggesting a potential for a harsher market reaction in the future [1][6] Market Performance - Following the U.S. and Israel's actions in the Middle East, oil prices surged, global stock indexes declined, and the dollar strengthened as investors moved away from risk [2] - The S&P 500 index was down less than 1% for the week despite significant market volatility, indicating a somewhat contained damage [2] - On Monday, the Dow fell by 0.15% while the S&P 500 rose by 0.04%, but on Tuesday, the Dow dropped by 403 points and the S&P fell by 0.94%, reflecting a more honest market response [3] Volatility Indicators - The VIX, a measure of market volatility, closed at 23.57, its highest level since November 20, and reached an intraday high of 28.15, but decreased to 22.51 by Wednesday morning as traders speculated on potential diplomatic resolutions [4] Investment Trends - There has been a significant shift in investment preferences, with cash becoming the preferred asset as stocks, bonds, and gold have all been sold off together, leading to a notable inflow of $47.9 billion into global money market funds, the largest since February 17 [5] - According to market analysts, oil and the dollar are currently the only assets that investors are keen to hold [5] Economic Outlook - Solomon highlighted the macroeconomic backdrop as supportive, citing an easing cycle and a solid U.S. economy, but acknowledged the possibility of inflation running slightly higher than consensus expectations [6]