QCP Capital: Middle East geopolitics should not distract investors, the market's willingness to buy risky assets remains strong

QCP Capital posted on its official channel that the conflict between Israel and Iran has intensified. Earlier this week, Israel launched a ground offensive against Lebanon, and Iran fired more than 180 missiles yesterday in response. However, the risk of TradFi asset transfer is small. The S&P closed down 1% and the WTI index closed up 2%, with little follow-up to today's price action. However, Crypto was hit much harder, with BTC closing down 4% and seemingly finding some support at the $60,000 level, but further escalation could push BTC down to $55,000. Middle East geopolitics will attract attention, but shallow selling shows that the market's willingness to buy risky assets remains strong. This small setback should not distract people from the big picture. China's actions and economic situation are reminiscent of Japan in the 1990s. In response to Japan's deflation, the Bank of Japan cut interest rates, introduced negative interest rates, and launched a then-novel quantitative easing program. The flood of liquidity from the PBOC and potential fiscal support is likely to support Chinese asset prices, and bullish sentiment could spread globally, supporting risk assets including cryptocurrencies. In a recent Q&A, Powell supported further rate cuts in 2024. Asset prices are expected to remain supported heading into 2025 as the world's largest central banks, including the Federal Reserve and the PBOC, have begun a rate cut cycle.