March 26th Pre-Market

Good morning.

Lot of moving pieces this morning. Iran rejected the ceasefire, countered with demands for permanent control of Hormuz, and oil is back above $106. Futures are down.

I think the market got a little ahead of itself this week pricing in a deal. Google also dropped a research paper overnight that has memory chip stocks from Korea to California repricing. Full plate today.

Let's dig in...

Today's Big Picture

1. Iran Rejects Ceasefire and Has No Reason to Reconsider

Tehran rejected the U.S. proposal and countered with five demands including sovereignty over the Strait of Hormuz. Iran is drafting legislation to make tolls on Hormuz passage permanent. The financial picture explains the posture: Iran is still exporting 1.6 million barrels a day and earning roughly $139 million daily, up from $115 million before the war. Wolfe Research says the market is betting Iran's rejection is a smokescreen. Trump's five-day talk deadline will settle that.

2. Jobs Steady, Inflation Climbing, Rate Cuts Are Dead 

Claims printed 210K, in line with forecast. The labor market is fine, which means the Fed has no cover to ease. Meanwhile the OECD raised its U.S. inflation forecast to 4.2, up from 2.6 last year. Gulf refining and gas production losses will take years to restore. Money markets have priced out all 2026 Fed cuts. The ECB is discussing a hike as soon as April.

3. Google Triggers Global Memory Sell-Off 

Google's TurboQuant research claims to cut LLM memory needs by six times.
SK Hynix fell 6% in Korea. Samsung fell 5%.

Micron $MU and Sandisk $SNDK are lower in U.S. premarket. These names ran 200 to 300 over the past year and investors were already looking for a reason to lighten up. SemiAnalysis argues efficiency gains grow total demand, not shrink it.

Market Overview

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Stock Spotlight (pre-market)

Micron $MU ( ▼ 3.4% )  
Google's TurboQuant paper is the catalyst. Claims to cut LLM memory needs by six times. After a year-long run, institutions finally have a reason to lighten up. Watch whether Sandisk $SNDK and Western Digital $WDC stabilize today. If they keep sliding, this has legs into next week.

Meta Platforms $META ( ▲ 0.33% )  
Lost the first social media addiction trial. A jury in LA held Meta and Alphabet's $GOOGL YouTube liable for harming a minor through addictive product design. The $6 million damages barely register on the balance sheet. But this is the first of thousands of suits. Tobacco litigation started with one verdict too.

Olaplex $OLPX ( ▲ 2.31% )  
Henkel struck a deal to acquire the California premium hair-care brand for about $2.06 a share. Shares in Olaplex, which closed at $1.33 Wednesday, up 48% premarket

MillerKnoll $MLKN ( ▲ 1.31% )  
Warned of $8 to $9 million in Q4 impact directly from the Iran conflict. Fewer shipments to the Middle East. Higher logistics costs. A furniture company putting war language in its guidance tells you something. Watch for similar wording in other industrial prints over the next two weeks.

Newmont $NEM ( ▲ 2.53% )  
Gold is getting hit hard this month. Oil up means inflation fears up means the Fed stays put means non-yielding assets get sold. Simple as that. I would not buy miners here. But when recession fears eventually overtake inflation fears, gold and miners re-rate fast.

What to Watch

Fed Speakers: Miran, Cook, Barr, Jefferson 

Miran said yesterday the Fed can look through the oil spike. Claims at 210K give the hawks cover to hold. Watch for any disagreement on the board. If someone breaks ranks, the two-year yield moves.

Trump's Iran Deadline 
Trump set a five-day window for talks. Wolfe Research flagged that the market is trading as if Iran is privately cooperating despite public rejections. That ambiguity has an expiration date. No deal by the deadline and this week's rally unwinds.

Russell 2000 
Already in correction. Moody's Zandi says recession is more likely than not if the war continues. The valuation gap between small-cap value and large-cap growth is near historic wides. Worth watching, not buying.

Thanks for reading 🙂

- John

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