March 20th Market Overview

Happy Friday

Brent hit $119 this morning and the Dow was down almost 500 points.

By afternoon, oil reversed below $95 after Netanyahu said the war could end sooner than people think and Trump ruled out ground troops. Stocks clawed back to nearly flat. Three weeks into this conflict and I think the market is running out of patience for headlines that don't lead anywhere.

Let’s dig in...

Today's Big Picture

Middle East Energy Disruptions

Iraq declared force majeure on all foreign-operated oilfields today. Qatar says 17 percent of its LNG capacity is offline, possibly for five years. Brent settled at $112.19 but physical barrels of Dubai and Oman crude are already trading at $158. Saudi officials told the WSJ that $180 is their base case if disruption drags past April.

The Everything Selloff 

Gold had its worst week in over a decade despite the ongoing war. When gold and equities sell off together, it means investors are liquidating to raise cash. The Nasdaq and Russell 2000 both entered correction territory today with $5.7 trillion in options expiring into the chaos.

Rate Cut Hopes Evaporate 

Fed Governor Waller was ready to dissent for a cut two weeks ago, then the Strait of Hormuz closed and he flipped. Traders went from pricing a 6 percent chance of a rate hike to over 30 percent in 24 hours. Morgan Stanley calls the hike fears overdone and still expects two cuts starting September. They could be right long-term, but the next few months are going to be messy.

Market Overview

Index Performance (Brent Crude today)

Stock Spotlight

Super Micro Computer $SMCI ( ▼ 32.04% )  
placed its co-founder on leave after federal prosecutors unsealed an export-control indictment. The government alleges he smuggled restricted AI servers into China through a network of shell companies. This is the same co-founder who resigned during a 2018 accounting scandal and was quietly rehired in 2022. Hindenburg flagged this exact problem last year.

FedEx $FDX ( ▲ 0.98% )  
raised its full-year outlook after posting a strong third quarter. Revenue came in at $24 billion with adjusted EPS of $5.25, well above the $4.09 consensus. Strongest domestic market share gains in 20 years. They're actually executing ahead of spinning off their freight business.

Planet Labs $PL ( ▲ 22.59% )  
beat on revenue and guided way above expectations. Defense and intelligence now accounts for 59 percent of the company's revenue and all of its growth over the past two years. CEO Will Marshall called 2026 a "transformational year" and the company ended the year with a $900 million backlog.

Big Name Updates

Uber $UBER ( ▼ 2.14% )  
is investing up to $1.25 billion in Rivian $RIVN to deploy up to 50,000 electric robotaxis through 2031. I'm skeptical about the timeline, but it shows Uber is actively trying to bypass the human driver bottleneck.

Unilever $UL ( ▲ 0.08% )  
is in talks to spin off its food division and merge it with McCormick $MKC. This would create a giant in the condiment space and simplify their core beauty business. Interesting timing since the CEO said in February he was in no rush to divest food.

Chevron $CVX ( ▲ 0.53% )  
got upgraded to buy at HSBC with a $215 target. Only 4 percent of upstream production comes from the Middle East, making it cleaner exposure to high oil prices than most peers.

Alibaba $BABA ( ▼ 1.95% )  
set an aggressive $100 billion annual revenue target for AI and cloud in five years. Management is trying to distract from a shrinking e-commerce business, but the market didn't buy the pivot today. Earnings fell 67 percent.

Other Notable Company News

Amazon $AMZN ( ▼ 1.48% )  
is quietly building an AI smartphone internally called Transformer. Their first phone attempt since the Fire Phone disaster.

Cheniere Energy $LNG ( ▲ 1.49% )  
, Venture Global $VG, and NextDecade $NEXT all moved higher again as the Ras Laffan LNG terminal damage continues to ripple through global supply. Month-to-date gains on these names are massive.

Costco $COST ( ▲ 0.05% )  
is seeing a big uptick in gas station traffic as fuel prices climb, which usually translates to more foot traffic inside the actual warehouses.

Chipotle $CMG ( ▲ 1.05% )  
got upgraded to outperform at Mizuho. Early data shows foot traffic improving alongside new menu items and value offerings.

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Sector Watch

Bond Market

Treasury yields climbed again as bond traders price in stickier inflation. The 10-year hit 4.39 and the 2-year rose to 3.94. Over in the UK, the 10-year touched 4.96, highest since 2008.

Policy Watch

The White House released its legislative framework for AI. They're trying to pre-empt a messy patchwork of state laws while setting some basic copyright and safety guardrails. Silicon Valley has been lobbying for this for months. AI super PACs are pouring hundreds of millions into elections to keep momentum going.

Transportation Secretary Sean Duffy warned the ongoing government shutdown could bring domestic air travel to a halt by next week. Congress goes on a two-week recess starting next Friday. That timeline matters.

Washington is getting creative to bring oil prices down:

• Authorized delivery of Russian crude already at sea

• Floating the idea of lifting sanctions on Iranian tankers

• Goldman estimates the combined supply would only cover about two weeks of disrupted Hormuz flows

Every major central bank held rates steady this week except Australia, which hiked. Two things worth noting:

• Traders are now pricing three rate hikes from both the ECB and the Bank of England this year

• Switzerland announced it will not export arms to the U.S. during the Iran war

What to Watch

Strait of Hormuz 

The shipping lanes are practically paralyzed. I'm watching for concrete U.S. military movements to clear the waterway. There's an Axios report that the administration is considering plans to occupy or blockade Kharg Island, which is vital to Iran's oil exports. That would be a major escalation. Freight rates stay elevated until commercial vessels feel safe again.

Gas Prices at $4 

National average is $3.91 right now, up 93 cents since the war started. California is already at $5.66. Diesel at $5.16 nationally. Every 10-cent increase hits consumer spending and retail margins. I'm watching this number more closely than any index right now.

Private Credit Cracks 

Morgan Stanley expects direct lending default rates to hit 8 percent, approaching COVID peak levels. BlackRock, Morgan Stanley, and Blackstone $BX have all imposed redemption limits on private debt funds. Software and AI-adjacent sectors are the concentrated risk. This is a slow-burn story that could accelerate fast.

Thanks for reading - you are now the more informed 🙂

- John

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Surprise, surprise; gold crashed 16%. Silver plunged 34%. Bitcoin dropped to 1 year lows.

All supposedly "uncorrelated" assets moving in lockstep largely because of overleveraged margin.

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