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Introduction

There is no shortage of adverse headlines to wade through, and each passing weekend seems to bring a fresh round of escalations—quickly followed by de-escalations. The messaging from POTUS has been anything but consistent, and at times outright erratic. So how is anyone supposed to make sense of these market-moving developments—let alone profit from them?

The answer is simple: It’s hard.

What you can do is step back and focus on the crosscurrents—monitoring the key macro inputs and forming a directional view. That’s easier said than done when traditional correlations are breaking down and price action feels increasingly detached from historical relationships. Much of this can be attributed to the ongoing unwind of gross exposure, where positioning—not fundamentals—drives price, and everything gets sold (or bought) to reduce leverage.

It’s after that process runs its course—when the dust begins to settle—where we can add real value.

But are we there yet? Eh…maybe.

The inflammatory Truth posts overnight are difficult to handicap, and we’ll need to see how the market digests this latest round of information.

What we do know is this: last week, everything was up.

Equities. Oil. Bonds. Gold. Even the USD.

And when everything is up at once, it’s usually telling you something—just not in a straightforward way.

And notably, stocks just notched their best weekly advance since December 2025—adding to the growing list of “everything up” anomalies.

Surely, some of this makes sense.

Not really—and it doesn’t have to when professional investors are unloading risk.

The real opportunity emerges as we move deeper into the dislocation. The rationale is straightforward: when gross leverage is reduced, everything tends to move in the same direction. That process often pushes certain instruments too far, creating opportunities for buyers who sidestepped the initial correction to step back in.

Remember, this market has been in distribution mode for months—something we began highlighting back in the fall of ’25. That leaves plenty of dry powder on the sidelines, ready to be deployed when dislocations present themselves.

But let’s be clear: this does not mean we’ve reached a bottom. Geopolitical risk continues to build, with escalating threats of large-scale infrastructure destruction on both sides of the Iran conflict.

This may be what oil was attempting to price in on Friday—rising nearly 10% despite headlines suggesting some flexibility between Oman and Iran to allow safe passage for vessels.

Oil remains the most critical macro input to track, and with prices now elevated for a sixth consecutive week, the economic impact is no longer theoretical—it’s beginning to permeate the conversation. Supply disruptions tied to the conflict have already removed a meaningful portion of global flows, reinforcing upward pressure on prices and, by extension, inflation expectations.

At these levels, oil is no longer just a headline—it’s a transmission mechanism. And the longer it stays elevated, the more likely it is to tighten financial conditions and weigh on growth.

At this stage, there is little to suggest oil is poised to revert, and it remains the single biggest risk to equities. That’s not a heroic call—it’s simply grounded in reality.

As the illustration from Bluekurtic Market Insights highlights, we saw a similar dynamic play out in 2022 at the onset of the Russia/Ukraine war. Oil spiked—and kept going—while the SPX rolled over and ultimately made new lows in the months that followed.

Make no mistake—the Trump administration understands this dynamic, which is why the rhetoric has escalated into ultimatums aimed at coercing Iran to reopen the Strait of Hormuz. Whether those efforts are successful is not for us to determine.

Stay tuned.

So where does that leave us? Right where we’ve been all along—hostage to the Iran headlines.

It’s possible Thursday’s reversal was the market attempting to front-run some form of resolution, but oil isn’t confirming that view. How long this tight relationship persists is anyone’s guess, but we’ll attempt to put our own spin on it in the analysis section below.

As for the macro backdrop, Friday’s jobs data—released after the close—did little to inspire confidence. Revisions to the employment picture point to a softer underlying trend, though stronger-than-expected gains in the prior month suggest conditions remain relatively stable, for now.

In the meantime, we have a pair of inflation reports on deck this week. Under normal circumstances, they would take center stage—but given the fluidity in oil and its downstream impact on inflation expectations, their importance may be somewhat diluted.

That said, the six-week stretch of elevated oil prices is beginning to work its way through the system, and it will start to show up in the data.

March CPI is expected to reflect that shift. Headline inflation will likely post its largest month-over-month increase since June 2022, with the year-over-year rate rising to 3.3% from 2.4%—largely driven by a surge in gasoline prices tied to the Iran conflict, according to Bloomberg estimates.

Taken together, the data point to an economy that’s still growing, with a stable labor market and rising inflation—hardly a backdrop that creates urgency for rate cuts.

Let’s see what the charts are telling us.