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- March 17th Pre-Market
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Good morning.
Futures are pointing higher but the headlines haven't improved. Iran hit the UAE overnight, oil is back above $100, and Trump's plan to protect shipping through the Strait of Hormuz still has no real backers yet. The Fed starts meeting today.
Their problem is straightforward: fuel prices are making inflation worse and there's nothing they can do about it without slowing the economy down further.
Let’s dig in…
Today's Big Picture
1. Oil Won't Stay Down
Yesterday's dip lasted twelve hours. Iran struck the UAE overnight and set fire to Fujairah, one of the region's biggest oil export terminals. Brent is back at $103. WTI is above $95. Diesel crossed $5 a gallon for the first time since 2022, and gasoline hit $3.79. Trump asked allies to send warships to escort tankers through the Strait of Hormuz. Most declined.
Israel killed Iran's security chief overnight. The Strait handles roughly 20 percent of global oil supply. Until shipping resumes, energy prices are the dominant force in every other market.
2. Every Major Central Bank Meets This Week and They All Have the Same Problem
The Fed starts its two-day meeting this morning. The ECB, Bank of England, and Bank of Japan all meet Thursday. Australia already hiked to 4.1 today in a tight 5-4 vote, citing oil-driven inflation. Oil is pushing inflation higher while also threatening to slow growth.
Goldman's David Mericle put it plainly: the war raises the case for rate cuts to support a weakening economy and simultaneously raises the inflation risk that prevents those cuts. Markets have gone from pricing two Fed cuts this year to one. The Fed is expected to hold tomorrow. The language in the statement is what matters.
3. Nvidia Put a $1 Trillion Number on AI Chips
Jensen Huang's GTC keynote on Monday had one headline: $1 trillion in expected chip revenue through 2027 from Blackwell and Vera Rubin orders. For context, Nvidia's prior forecast was $500 billion through 2026. The stock ran up five points during the speech and gave back most of it by the close. Nvidia also announced deals with Uber $UBER, IBM $IBM, and Hewlett Packard Enterprise $HPE, plus a new chip for orbital data centers. The question is whether that's enough to drive returns in a macro environment where oil and rates are dominating the tape.
Market Overview
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Stock Spotlight (pre-market)
Delta Air Lines $DAL ( ▲ 3.51% )
Raised Q1 revenue guidance to high single digit growth, up from its prior range. Airlines have been crushed since the war started so the bar was low. American $AAL ( ▲ 1.85% ) is riding the draft up with it.
Nvidia $NVDA ( ▲ 1.65% )
Barely green after the GTC keynote. The $1 trillion revenue forecast got the headlines but the stock gave back a five point intraday run. That tells you expectations were already ahead of the news.
Honeywell $HON ( ▲ 0.0% )
Warned the war will hit Q1 revenue. Second industrial to say this after SLB weeks ago. This is becoming a pattern for any company with Middle East exposure.
Uber $UBER ( ▲ 1.81% )
Up on the Nvidia robotaxi deal. Fleet of self-driving vehicles in 28 cities by next year. Aggressive timeline but the market is buying it today.
Eli Lilly $LLY ( ▲ 0.41% )
Lower after HSBC downgraded to reduce. They called the obesity drug market overhyped. First major shop to go negative on the name. Worth watching if others pile on.
Lululemon $LULU ( ▲ 1.35% )
Reports after the close. This is a consumer confidence read more than an earnings call. Soft guidance confirms the bear case on spending and takes the whole discretionary sector down with it.
What to Watch
Fed Decision (Wednesday PM)
Meeting starts today. The hold is priced. What matters is Powell’s framing. If oil is treated as persistent inflation, the last rate cut gets pulled and the front end sells off.
Strait of Hormuz (All week)
Still the single most important variable. Any credible escort plan sends oil lower quickly. No progress keeps Brent grinding higher and pressure building on margins.
Private Credit Stress
Cliffwater gated redemptions. Morgan Stanley capped withdrawals on a $7.6B fund. Saba Capital is bidding at discounts. Defaults rise if rates stay elevated. This is the slow bleed behind the macro story.
Thanks for reading 🙂
- John
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