MARKET CALL: Animal Spirits Are Back

When Kaiser Wilhelm II's Germany and Tsar Nicholas II's Russia squared off in the summer of 1914, the London Stock Exchange closed for five months. The New York Stock Exchange shut for four months. Investors assumed a continental war would be a calamity. World War I was a calamity for sure. However, by 1915, the NYSE had reopened, and the DJIA more than doubled by late 1916.

Last week, we wrote that the financial markets may be learning to live with the war in the Middle East, much as they learned to live with the war between Ukraine and Russia. We will get a test of that notion on Monday, given that crude oil prices are up around $5 a barrel this evening amid renewed tensions in the Strait of Hormuz.