Good News is...
Fake News?
Crude is down over ten percent on the session. That single data point tells you everything about where we are and what just happened.
After a few weeks of selling, a market flirting with correction territory across every major index, and a weekend where most of the financial world was bracing for U.S. strikes on Iranian power plants, President Trump posted on Truth Social this morning announcing “very good and productive conversations” with Iran and a five day pause on all military strikes against Iranian energy infrastructure. Dow futures ripped over 1,000 points before the open. The S&P, Nasdaq, and Russell 2000 are all up north of two percent as I write this. Oil collapsed from above $112 on Friday to the low $100s on Brent and sub-$92 on WTI. Gold was getting hammered, down over three percent after its worst week since 1983. Silver was off even more. Commodities have already reversed that move and are now trading in the green. The VIX is pulling back. This could be the start of the ‘relief rally’.
And yet…
Iran’s FARS news agency immediately denied any direct or indirect contact with the Trump administration. That little detail didn’t stop the tape from running, but it matters. Because this is the exact kind of headline driven, whiplash inducing environment we’ve been living in for the last month, and today’s flow confirms that institutional money is treating it that way. Nobody is making clean directional bets right now. They’re hedging, they’re spreading, and they’re playing both sides of the same names. We saw this type of action last year during this same time frame during the tariffs, tacos, and liberation day.
Let me walk through where we stand.
The Indexes
The S&P 500 closed Friday at 6,506 after shedding 1.5% on the day, its lowest close in over four months, sitting below its 200d moving average. Today it’s ripping back above 6,600 & the 200d. The Dow went out at 45,577 on Friday and is up over a thousand points on the session. The Nasdaq closed at 21,647 and is rallying north of 2%. The Russell 2000 officially entered correction territory on Friday, down over 10% from its 52-week high, but is bouncing nearly 2% today with over 1,700 of its components advancing against fewer than 200 declining. These are massive moves in both directions. The 10-year is hovering near 4.37%, pulling back slightly as the immediate stagflation panic fades.
But make no mistake. This is a headline market. One Truth Social post reversed four weeks of selling. The next post could erase it. The underlying picture has not changed. The Strait of Hormuz is still effectively closed. The IEA called this the largest supply disruption in the history of the global oil market. Goldman raised its Brent forecast to $110 for March and April and warned that if Hormuz flows stay at 5% for ten weeks, daily Brent prices could exceed their 2008 record. Iraq declared force majeure on all foreign operated oilfields on Friday. The Fed is still higher for longer.
So what does the flow look like in this environment? Exactly what you’d expect. Messy, two-sided, and loud.
