5 things to start your day

[Bloomberg]( Follow Us //link.mail.bloombergbusiness.com/click/19078281.237912/aHR0cHM6Ly90d2l0dGVyLmNvbS9idXNpbmVzcw/582c8673566a94262a8b49bdB674dd365 [Get the newsletter]( Soleimani killing fallout widens, market selloff deepens, and oil rally may be short lived. Now what? U.S. policy in the Middle East has become [much more uncertain]( in the wake of the killing of Iranian General Qassem Soleimani. Yesterday, Iraq’s parliament voted to [pursue the removal of U.S. troops from the country]( -- something President Donald Trump reacted to with a threat of sanctions against the American ally. Iran said it will [no longer comply with uranium enrichment limits]( under the 2015 nuclear deal, a move which seems to spell the death of that agreement. Nervous In markets this morning there is a continuation of last Friday’s moves, with stocks falling across the world while havens such as [gold are bid higher](. The MSCI Asia Pacific Index dropped 1%, the Stoxx 600 Index was 1.1% lower by 5:50 a.m. Eastern Time and U.S. stock futures also [pointed to losses at the open](. Treasuries edged higher after Friday’s jump, with the 10-year yield at 1.783% while the dollar slipped. Sponsored by [Global X ETFs]( Curious About Investing in Cannabis? Regulatory overhaul, changes in public opinion, and the presence of a large, proven addressable market are among the reasons why we believe cannabis is an investable theme worthy of attention. Learn more about the legal cannabis industry and [how to gain exposure]( to the companies contributing to its growth.  Oil watch One of the biggest moves in markets has been in the oil price, with Brent futures [rising as much as 3.1% to $70.74 a barrel]( before paring some of those gains. The rally comes with something of a health warning from a Goldman Sachs Group Inc. note which points out the price gains will be short lived unless there is an [actual supply disruption to global output](. The oil rally hasn’t been good news for the world’s largest company, with Saudi Aramco’s share price [adding to losses in trading today]( as fears over conflict in the region outweighed any short-term gain from higher crude prices. China visit Remember the trade war? While events in the Middle East have certainly taken over investor attention, there was more good news on progress towards getting a phase one deal signed, with China [planning to send top negotiator Vice Premier Liu He to Washington on Jan. 15 to ink the agreement](, according to people familiar with the matter. The South China Morning Post reported that the delegation changed their schedule after Trump unilaterally announced the signing date, and indicated he’d be willing to seal the deal with China’s President Xi Jinping being present. Here to stay Senior central bankers speaking at the American Economic Association’s annual meeting had a clear message. [Low rates are going nowhere]( and could even fall further in the future due to demographic trends and sluggish productivity growth. New York Federal Reserve Bank President John Williams sees nothing to break GDP out of its trend or move the neutral level of interest rates higher in [the next five to 10 years](. One bit of possible good news from Denmark, the country with the longest negative-rate policy, is that the fear below zero rates are propping up zombie firms [is unfounded](. What we've been reading This is what's caught our eye over the weekend. - Odd Lots: [Veteran fund manager]( on why emerging markets are so turbulent right now. - Carlos Ghosn [used public transport]( to escape Tokyo. - Venezuela’s latest problem is that [there are too many dollars](. - Musk’s [moment of truth]( arrives with made-in-China Teslas. - A $1 billion solar plant [was obsolete before it ever went online](. - HSBC walks [tricky political tightrope]( between Hong Kong and Beijing. - Doing good [makes everything hurt less](. And finally, here’s what Joe's interested in this morning Stocks are [down again today]( with the world focused on the rising tensions between the U.S. and Iran. On some gut level, you could make the case that markets are vulnerable to a significant slide. 2019 was an extraordinary year for stocks, and it certainly felt euphoric by the end. According to the latest Goldman Sachs Weekly Kickstart note, the S&P 500 made 35 new all-time highs last year with 20 of them coming in just November and December. Meanwhile, 92% of the price gains, per Goldman, were a result of multiple expansion, with forward PEs rising from 14x to 19x from the start to the end of the year. That said, as good as 2019 was for investors, maybe it wasn't such a wild party after all. I was struck [by a recent chart]( from University of Oregon economist and Bloomberg Opinion contributor Tim Duy. It plots the S&P 500 on a log chart and then observes a general straight-line trend going back to the mid 80s. Two things really stand out. The first is that the late 90s really were wild, demonstrating a massive deviation from the trend. Secondly, we have been on an impressively straight line-up trend (almost) since the financial crisis but while the trajectory is up, the level falls below the line, which is consistent with the notion that the crisis was so bad that it permanently or semi-permanently set the U.S. economy and market on the path of a lower equilibrium. None of this suggests that we can't see a major selloff now or in the near future. But looking at the stock market this way makes it less obvious that we've just been witnessing some bout of unsustainable exuberance that must inevitably end badly. 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