March 18th Pre-Market

Chinese chips. Inflation. Oil

Author

J.L. Bernstein
March 18, 2026

In partnership with

Good morning.

Futures were green for a third straight day until two things hit.

Producer prices came in at more than double what economists expected, the biggest monthly increase in seven months. Then Iran reported that U.S. and Israeli airstrikes hit South Pars, one of the largest natural gas fields on Earth. The S&P gave back its gains. Rate cuts were already fading, maybe one left this year (probably not).

Let's dig in...

Today's Big Picture

1. PPI Came In Hot And The Dot Plot Lands In Four Hours 

February PPI printed 0.7 month-over-month versus 0.3 expected, with headline year-over-year at 3.4, the highest in a year, and core at 0.5 versus 0.3. That's the last inflation read before the Fed's 2 PM decision and it makes a dovish dot plot nearly impossible. If the median dot shows zero cuts in 2026, that's the first time since easing began in September 2024 that the Fed officially signals a full-year pause. Equities haven't priced any of this.

2. South Pars Changes The Energy Calculus 

Iran's state TV reported that U.S. and Israeli strikes hit South Pars, the country's largest natural gas field. If confirmed, that's a direct hit on Iranian energy infrastructure, which raises the threshold for any near-term ceasefire. Hormuz throughput is already at 21 ships since February 28, down from over 100 a day, and Iran is stockpiling crude at its Jask terminal outside the Gulf at a record 5.42 million barrels. Signals conflict is escalating, not stabilizing.

3. Micron Earnings Are The AI Demand Reality Check Micron

$MUreports after the bell with a $520 billion market cap that now exceeds Oracle, and analysts expect revenue to more than double year-over-year. The shortage is so crazy that Samsung is considering shifting memory contracts from quarterly to three-to-five-year terms, and Beijing just approved Nvidia to sell H200 chips into China, which adds another source of GPU-driven memory demand. But DRAM prices are up five and a half times in six months, crushing PC and smartphone demand forecasts.

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Stock Spotlight (pre-market)

Microsoft $MSFT ( ▼ 0.14% )  
weighing legal action against Amazon $AMZN and OpenAI over their reported $50 billion cloud deal, per the Financial Times. The dispute is whether AWS can offer OpenAI's Frontier product without violating Microsoft's exclusive rights to OpenAI API access through Azure.

Micron Technology $MU ( ▲ 4.5% )  

Reports after the bell today. The stock has rallied hard in 2026 on a memory shortage that shows no sign of ending. Market cap topped $520 billion, passing Oracle. Analysts expect revenue to more than double year over year. Conference call at 4:30 PM ET.

Macy's $M ( ▼ 1.0% )  

Q4 beat. Earned $1.67 a share versus the $1.53 the Street expected. Revenue came in slightly ahead too. Bloomingdale's was the surprise driver. Management also said the tariff hit could ease in the back half of the year.

Lululemon $LULU ( ▼ 0.4% )  

Beat numbers but nobody cares. The 2026 guide is the problem. Revenue outlook of $11.35 to $11.50 billion missed the $11.52 billion consensus. Earnings guide missed too.

Got upgraded at two shops this morning. Rothschild moved to hold from sell after five years. Truist went to buy from hold. Both said the stock is just too cheap to ignore right now.

Lumentum $LITE ( ▲ 3.96% )  and Coherent $COHR ( ▼ 0.64% )  

Both moving premarket on optical networking buzz from Nvidia's GTC conference. Both stocks join the S&P 500 later this month. Yesterday they sold off when Nvidia said it would use both copper and optical. Today buyers are back on the optical side.

What to Watch

Fed Rate Decision (2:00 PM ET) and Powell Presser 

No cut expected. Rates stay at 3.5 to 3.75. Three things to listen for. First, the dot plot. Count how many members see zero cuts in 2026. Second, any upward revision to the inflation forecast. Third, whether Powell uses the word "patient" or "vigilant."

Four Central Banks In 48 Hours 

The Fed decides today. The ECB, Bank of England, and Bank of Japan all announce Thursday. All four are expected to hold. But four simultaneous holds with $100 oil in the background is a coordinated signal that rate relief is off the table globally.

Mitsui O.S.K. Lines & Elliott Investment Management 

Elliott disclosed a stake overnight and shares moved double digits in Tokyo. Tanker rates are elevated with Hormuz effectively closed and Elliott is betting the disruption has a longer duration than the market expects. Worth watching as a read on how activist capital is positioning around the conflict.


Thanks for reading 🙂

- John

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Note: This newsletter is intended for informational purposes only.