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Oil is higher, Treasury yields are lower, and the crowd has a renewed appetite for holding US dollars. The news du jour behind these events: anxiety about pending US military action in Syria, or so we're told. So much for the surprise factor. What's next? A press release with a detailed list of targets and specific bombing times? Well, that's a possibility, based on the current "wisdom" in such matters. Why? The goal is punishment rather than a conventional military victory. Hmm....

Military issues aside, red ink remains the dominant color on the table of year-to-date returns for the major asset classes. If history's a guide, emotion threatens to creep into portfolio decisions and market analytics in the current climate. "Syria's taking attention away from what's been generally better news out of the U.S. in terms of stronger growth," Sean Fenton of Tribeca Investment Partners tells Bloomberg.

Not surprisingly, the spread in allocations is relatively extreme these days for an equally weighted portfolio of all the major asset classes in terms of changes so far this year. Using a start date of Dec. 31, 2012 for the equal weights, the chart below depicts the current portfolio composition (based on proxy ETFs) in context with the range of allocations year to date. The strategy for this illustration is equally weighting everything and letting the unmanaged allocations fluctuate freely through yesterday's close (August 27).

Here's another view of how the major asset classes have performed this year (based on daily closing prices) in relative terms through August 27, 2013. In the next chart below, all the ETF prices have been reset to 100 as of Dec. 31, 2012:

(click to enlarge)

In the previous update I noted that the price trends looked rather ugly. More than a week later, there's still no sign that momentum is poised to become more attractive for long-only investing. The contrarian trade, in other words, remains a tough sell for obvious but not necessarily strategically enlightened reasons. "We could see a wider spillover [of the Syria-related conflict] into the region which could easily push oil prices up, at least temporarily, to $120 or $125 a barrel," Mike Gallagher, managing director of IDEAglobal, advises via Reuters. For the moment, that view (or something comparable) has captured the crowd's attention.