Depending on where you get your news, the ceasefire with Iran was either a master stroke 4D maneuver or a complete failure based on a stack of lies. Oil is still 40% more expensive than it was before the US attacked Iran, and 60% more expensive than it was a year ago. This doesn’t bode well for inflation. And, then there’s the matter of weapons continuing to be fired at each other.

Nevertheless, SPX soared on the initial news, leapfrogging its SMA200 and SMA50,  and not very surprisingly held onto its gains despite the qualifiers that came late yesterday afternoon. It didn’t make it out of its falling channel, however, so the stage is set for a retracement unless TPTB can convince the algos that the ceasefire is real and will last.

That’ll be hard to do unless VX breaks down…

…and CL stops rebounding.

Once again, the market is celebrating the (not quite) elimination of a very serious threat to the global economy. Of course, it’s a two-week pause.  But, it gives the US an off ramp that appears less a TACO and more a magnanimous concession to peace and brotherhood.

Futures are up over 2.5%, bumping up against the falling channel top.

VX is off over 13%, but keep an eye on its RSI, which has yet to break down below a TL from last May.

Stocks aren’t quite out of the woods, perhaps reflecting the fact that it’s only a pause and not necessarily a lasting solution to high oil prices which are still in the 90s. Whether or not the Hormuz Strait is open, a lot of oil production and transportation has been interrupted, and it will take months to get it back online.

In the meantime, we will have inflation which will, at the very least, prevent any rate cuts any time soon.

The bulls also need DXY to dip below its 200-day moving average.

stay tuned…

WW3 isn’t the dominant scenario, but it is attracting more and more adherents. Serious institutional estimates range from 18-30% depending on how things go tonight with Trump’s deadline. Polymarket rated the odds at 22% before the scenario was pulled. RAND sees a 20-30% chance of a global conflict in 2026.

Futures are off only 30 points, less than 0.50%. So, it’s safe to say that markets aren’t as worried as they could be and, perhaps, should be. Maybe it’s because Trump has a long history of chickening out after issuing bombastic threats. But, this time he just might have unwittingly set a trap for himself that cannot be easily escaped.

Unless he does back down, SPX’s chart suggests immediate downside to 6150-6225 (ES 6260.)  Stay tuned.

Futures are flat as another week of war worries will challenge Friday’s CPI print for the most important driver for markets.

continuing…

We asked yesterday whether we could believe that Trump was really ready to quit the Iran war. Watching his television spot last night as he maintained an even, conciliatory tone for a few minutes, it seemed like there was a good possibility.

Then came the comments about bombing them “back to the stone age, where they belong.” This was the Trump we know so well, the one who just can’t help himself. For a moment, I was transported back to 2020 when his daily comments on COVID were so obviously wrong, so blatantly self-serving, and ultimately so fatal to millions.

Needless to say, investors were disappointed. The market is not buying the idea of an imminent end to the war. But, there’s plenty of oil buying. WTI is over 13% higher overnight, well on its way to our 121.89 target.

Futures are off about 1.5% and in danger of breaking below recent lows, where there would be a dramatic downdraft.

VX held the yellow channel bottom and is up around 9%, but have yet to make new highs. Note that equity bottoms don’t usually produce new highs in VX unless there’s a panic.

Currencies are still pretty quiet, with DXY strengthening in response to elevated equity risk and higher interest rates.

Bottom line, the risk of another 10% drop increased rather than decreasing over the course of Trump’s 21 minute screed. We’ll see what happens now that thousands of marines and paratroopers have arrived…

With any other administration, I might believe that there is a good possibility of a negotiated settlement with Iran that allowed oil prices to tumble back to the 60s. But, with thousands of troops steaming toward the war zone, I have a hard time believing that Trump is prepared to pull out and leave the Hormuz problem (that he created) to others to solve. At current levels, we’re merely testing a channel top…

…and, with SPX, a channel midline. SPX is still some distance away from its SMA200.

It would be easier to get on board if VX broke down.

Note that CL hasn’t come close to breaking down.

And, what happens after Iran escalates attacks on western targets? They will reportedly attack numerous tech firms such as Apple, Google, IBM, Intel, Microsoft, Tesla, and Boeing beginning at 11:30 ET this morning.

SPX is wrapping up the first quarter with a loss of around 7% (-10% from Jan highs) and a 1% VIX-inspired ramp job. It’s the first quarterly loss since Q1 2025 and fairly mild considering the global macroeconomic picture.

Energy prices are a challenge not seen since Russia invaded Ukraine in Feb 2022, when WTI hit 130 and inflation hit 8.5% on its way to 9.1%. The 10Y went from below 2% to 5%.

March inflation, due out Apr 10, should easily top 3.25% and have a shot at 4%.

Unless gas prices come back down quickly, we could see a repeat of 2022 when the 10Y broke out of a large falling channel dating back t0 2000.  It is still broken out and oscillating higher.

Notice anything interesting in the chart below?

The large red candles show big drops in VX, the VIX futures contracts. Notice there are 4 of them – one for each of the last three Mondays as well as today. Since algos are well trained to respond to big drops in VIX, and VIX is easily manipulable, this suggests that the start of each of the past four weeks has been manipulated higher.

It’s easier to manage prices higher in the Sunday night low-volume environment. But, once the latest positive pronouncement from the White House fades and heavy selling pressure resumes, these bumps have quickly turned into slumps. Chase them at your own peril.

Today is no exception. Futures are up over 40 points on what is really very bad news: the Iran-backed Houthis have joined the war and shipping through the Bab el-Mandeb Strait, a key channel linking the Gulf of Aden to the Red Sea, could soon be shut down.

Currencies continue to hold on for dear life, with DXY still bumping up against 100.

And, CL pushing to fresh highs.

The 10Y is all over the map, undecided between responding to spiraling inflation or the nearly 10% decline in stocks. 

Stay tuned…

There are continuing rumors of a peace deal in the Middle East, but no one with any credibility can say exactly what the deal is or even who in Iran is negotiating it. Iran says there is no deal, and in fact there are no negotiations going on. So, color me skeptical.

There was that big drop on Mar 23, but otherwise oil has remained range bound. No lower lows over the past two sessions.

Nevertheless, Trump will likely continue touting the deal as long as it pumps the Dow.

Meanwhile, 2s10s are down to 45 bps and targeting 40 bps – supporting the stagnation half of the stagflation argument.

Just a reminder, there will be no posts on Thursday or Friday as I will be traveling.

GLTA

By now it’s obvious to most that Trump was at least exaggerating (the charitable term) when he posted that a deal was being hammered out with Iran.

“…VERY GOOD AND PRODUCTIVE CONVERSATIONS REGARDING A COMPLETE AND TOTAL RESOLUTION OF OUR HOSTILITIES IN THE MIDDLE EAST.”

Trump has always had a very tenuous relationship with the truth. As the neurons fray, however, it’s becoming easier and easier to tell, like those spam emails promising millions. In this case, it was the phrase “complete and total resolution.” No president in their right mind would use that phrase until a deal was done. He got what he wanted, though, a substantial drop in oil prices (and rally in stocks) which was the target of a $580 million wager moments before he announced it.

ES took a run at its SMA200, but didn’t come close to holding it and is about 150 points lower at this point.

The dollar continues to strengthen as the fear trade takes hold and rising inflation drives interest rates higher. But it has yet to signal a panic. Time will tell.

Oil and gas are both higher, strong 3-4% bounces off yesterday’s lows, contributing to rising interest rates.

Stay tuned…