Macro4Micro: Market Commentary

Market Lookback: Confusion Reigns, Dislocation Pours 3-22-26

Market Lookback: The Gulf of Cause and Effect 3-15-26

Housing Starts Jan 2026: Total Starts Up, Completions Up, Permits Down 3-12-26

The US as an Aspiring Emerging Market: Fiscal SNAFU, Political FUBAR 4-6-26

Market Commentary: Asset Returns 4-19-26

Glenn Reynolds, CFA — Mon, 20 Apr 2026 01:01:02 GMT

In the cross-eyed eye of the beholder.

Geopolitical events and policy reaction fall into the “erratic is as erratic does” state of affairs. The Strait of Hormuz opened and closed again within 24 hours with a blockade of Iran continuing and the US military trying out its shoot-and-board operations on Sunday.
The military action against Iranian ports (a blockade is an act of war under international law) is a policy that is not yet showing enough room to maneuver if Trump’s goal is to declare victory and escape. The Houthis are on standby and the very strong desire to avoid boots-on-ground escalation is obvious even if a self-inflicted wound can never be ruled out with Team Trump.
Like many, we are not sure how much weight to give to logic on how this all plays out. Iran cannot be broken by threats and the willingness of religious zealots and the “bomb vest crowd” don’t fit into easy profiling strategies. Misjudging an opponent is easy to do when you think only about your advantages. The famous history book “The March of Folly” has a subtitle of “From Troy to Vietnam,” and that just sounds bad. The hope is that Team Trump will avoid writing its own chapter. There are plenty of small and large parallels in that book to Team Trump. That is a story for another day. The broad military purges did not help.
Despite the bad ending to the week after the close, the UST curve rallied and equities soared as we detail in the charts below. Some oil industry watchers were highlighting the threat to oil supply remains, and the rally to $83 on WTI futures (almost $11 of that on Friday) is extremely optimistic. As the markets opened up Sunday evening, WTI oil futures are heading higher by almost $7 as we go to print and equities are moving lower. This will be a busy week for US-Iran back and forth.
The major financials weighed in this past week, and the numbers are solid and offer some support that volatility in the headline themes (“war is hell”) and the flow-through risks of oil prices into consumer health, cyclical trends and stagflation risk will need time to play out – but from a strong starting position. Higher inflation and a very weak 4Q25 GDP print (the advance 1Q26 GDP numbers are released April 30) are not inspiring but earnings season will be favorable. Despite all the private credit risk unknowns on quality of marks (obviously low quality), broader credit contraction is not a front burner risk.
Consumer credit bellwethers Capital One (COF) and Synchrony Financials (SYF) turned in strong stock performances on the week and for the trailing 1-month period, so that offers some comfort for markets along with the major bank color. More regionals and small banks earnings reports are ahead.

We look across asset class returns below, but we thought it worth highlighting the 1-week UST deltas above (Friday close). The above details the UST moves this past week with the deluge of news flow and wave of big bank earnings. Inflation fears eased and FOMC odds shifted.

We will see this week how oil reacts and flows into curve risk as negotiations resume and misinformation flows freely. The UST rally from 2Y to 10Y that we see above helped all the bond ETFs post positive returns this week. We see another FOMC meeting later this month, and that seems far away given the Iran backdrop.

Above we update the UST deltas for the YTD period in what was an adverse move.

“I did it my way” could apply to a lot of bad actors across history…

The equity markets and bond asset class had tailwinds on the week as we detail below, but the challenge is pricing the risk on a forward basis despite some very unpredictable moving parts. Even as markets should be pricing for the next round of geopolitical news, the range of potential outcomes is just too wide.

The logic of the good scenarios are just as easy to frame as massive downside and escalation (Houthis weigh in, rockets and drones flying all over the Gulf, Iraq militia joins the party, too many US boots-on-ground, Israel gets busy again, etc.).

That set of military and oil risks would drive FOMC policy more than a new Fed chair with an axe to grind. Meanwhile, Trump is threatening to fire Powell while replaying Sinatra songs in a truth social post (“I did it my way”). That Sinatra classic was recorded in 1968 (the year when Trump dodged the draft and met the Vietnam challenge “his way”). Trump should have gone with “Luck be a lady tonight.” After all, gambling is more relevant to the decision (Guys and Dolls).

The above table updates the rolling time horizon returns for fixed income and equities. A couple of good weeks in April made all the difference with the 1-month and 3-month returns all in positive range for equities and debt. That was especially the case in equities after posting a very impressive rally following a grim March (see Market Commentary: Asset Returns 3-30-26). The above table has now flipped back from all negatives in debt and equities to end March in 1-month and 3-months into the current profile of all positive.

The rolling return visual

The symmetry of returns clearly shifted into April as peace threatened to break out. For now, that peace is highly uncertain in the Gulf with the policy strategy more a matter of what markets might speculate will unfold rather than what is a more rational outcome across irrational parties.

The Iranian game plan is intrinsically overlapping with religion while the US toggles between a focus purely on national security (nukes that had been billed as “obliterated” not long ago) and an uncertain mix of religion and brinkmanship from Hegseth, who spends far too much time attacking the media in his updates and openly brings his evangelical extremism into briefings.

Add Team Trump’s public dispute with the Pope, and it safe to say the White House and Defense leaders have not delivered FDR-style pep talks.

Hegseth really went off the rails in an Iran update this week, calling the media “Pharisees” and quoting Mark 3:1-6, which implies Trump is Jesus. That did not get much follow-up coverage from the mainstream media who are semi-cowed these days. Hegseth’s routine was flat out bizarre.

The following took too much of Hegseth’s briefing:

From the Book of Mark 3:1-6 (KJV)
1 And he entered again into the synagogue; and there was a man there which had a withered hand.
2 And they watched him, whether he would heal him on the sabbath day; that they might accuse him.
3 And he saith unto the man which had the withered hand, Stand forth.
4 And he saith unto them, Is it lawful to do good on the sabbath days, or to do evil? to save life, or to kill? But they held their peace.
5 And when he had looked round about on them with anger, being grieved for the hardness of their hearts, he saith unto the man, Stretch forth thine hand. And he stretched it out: and his hand was restored whole as the other.
6 And the Pharisees went forth, and straightway took counsel with the Herodians against him, how they might destroy him.

A former Fox news personality lecturing the media on honesty and facts is not without its intrinsic humor, but the religious extremism closes the gap on common style points with the Iranians on the other side.

Attacking the media at length and then citing the above passage was just flat out strange. The use of the Mark language by Hegseth basically says, “Trump is Jesus, the media are evil pharisees, and they are plotting to destroy him.” It is hard to read any other way even if they deny the intent.

I had 4 priests and a nun in the family, so no disrespect to the religious among us. Some of my great uncles were redemptorist missionaries during their time (primarily serving Latin America) and served when fundamentalist evangelicals raged against Irish and Italian Catholics and immigrants. Anti-Catholicism, racism, and xenophobia were rampant, and they griped about the Pope in those days also (Papists, etc.). We have come so far.

The impulse to politicize the military while invoking prayer and scripture in such extremist fashion further inflames the sense of domestic political risk linked to the authoritarian ambitions of the leadership team (see The US as an Aspiring Emerging Market: Fiscal SNAFU, Political FUBAR 4-6-26).

The Magnificent 7 heavy ETFs…

The above table updates the returns for the tech bellwethers and various benchmarks and ETFs. The tech rebound was impressive to say the least with the volatile Oracle (ORCL) rebounding sharply but still negative over 3 months and 6 months. Taiwan Semi (TSM) was the only name slightly in the red, but TSM has been a winner YTD in the top quartile group.

We see 6 of the Mag 7 ahead of the S&P 500 and 5 of the Mag 7 ahead of the NASDAQ. The Software ETF (IGV) made a major comeback this past week but is still negative for 1 month, 3 months, 6 months and 1 year. The Semiconductor ETF (SOXX) has been the big winner vs. the IGV across 1-month and back across the other time horizons.

The commentary below is mostly a cut-and-paste from an earlier post on LinkedIn on Saturday with some additional input:

We update the 1-week total returns on the 32 benchmarks and ETFs we track. The scale and breadth of the rally was impressive as the market closed confident that the Strait of Hormuz was open and that the two sides (Trump vs. Iran) could climb down from the brink with stagflation threats easing.
After the market closed, the headlines turned sour. The Strait is no longer open as we go to print after Iran had closed it again (and fired on a tanker). Trump was active on the screen Saturday with extreme optimism, but that is a day ending in Y. He was making heavy threats again by Sunday and a vessel was fired upon and boarded by the US military.

The market needs to handicap outcomes facing the recurring problem that the representations of Trump and Iran are seldom on the same “fact” page – let alone how to interpret the “facts.” On one side, we have Trump, who changes his set of facts and opinions when the wind blows. It does not help that he seems to have a few loose bolts of late. On the other side, we have religious fanatics that hate America.

One person can see Trump as a game theory guru and brilliant negotiator while another person sees a serial liar whose faculties are on a shaky fault line. The world economy is in the grip of these negotiations. China is holding back on the situation so far with Iran a massive oil supplier. The potential boarding of a Chinese bound vessel could escalate tensions.

The idea that Iran would agree to all Trump’s demands was strange enough. A logical sequence would be that the Houthis would perk up and Iran’s response to Trump would be “You want ‘the dust’? Come and take it.” It all gets very subjective quickly.

The moving parts present a wide range of potential outcomes. That can make for herd investing and momentum chasing by investors with a range of time horizons that start “by lunchtime” and extend from there. More than a few are hanging on insider leaks and the disinformation circuit.

The 27-5 score above reflected the discounting of major progress peaking with the “Strait is open” news. The energy ETFs (XOP, XLE, AMLP) are in the bottom 5 joined by Utilities (XLU) and the chemicals-heavy Materials ETF (XLB).

The Tech ETF (XLK), Equal Weight NASDAQ 100 ETF (QQEW), and NASDAQ benchmarks were in the Top 5. We look at tech bellwethers in a separate weekly “Tech Check.”

The Transports ETF (XTN) ranked #1 as airlines soared on Iran expectations and related fuel optimism that might bring moderation in upward fare pressures that to this point have not put a dent in volume guidance – yet. The AAL M&A speculation helped during the week, but AAL rejected that overture by the weekend. Freight and logistics providers rallied impressively on a range of factors from Iran and diesel to an easing of AI jitters threatening business models (e.g. freight brokerage). BDCs (BIZD) posted their best week in a while and made the top quartile. The private credit drama will stay hot and heavy with 1Q26 earnings season.

The commentary below is mostly a cut-and-paste from an earlier post on LinkedIn on Saturday with some additional input:

The weekly Tech Check price return chart shows a wild rally for a wide range of the tech subsectors after some recent punishment of SaaS-centric services and software asset lines. The Iran chaos has been a problem for cyclical fears and valuation metrics setbacks that combined with anxiety around tech sector business model threats from AI.

The past week rode the Iran relief and some calming around the tech industry post-AI scenarios for some SaaS services names to post a 30-2 positive to negative score. Only Applied Materials (AMAT) and Taiwan Semi (TSM) were in the red but with very slightly negative returns. It is worth noting that AMAT and TSM are in the top quartile for returns in this mix on a YTD basis.

For the suffering holders of recent underperforming tech stocks, we see some good news with the SaaS-centric names in the top quartile and upper end of the second quartile. We see Zillow (Z) and ServiceNow (NOW) in the top 3 with the Software ETF (IGV) and Adobe (ADBE) also in the top tier. Just across the line we see Intuit (INTU), Salesforce (CRM), and FactSet (FDS) in the upper end of the second quartile. Those equities – INTU, NOW, Z, CRM, and ADBE – are the bottom 5 on a YTD basis with negative returns from -30% handles to -40% handles.

The winners on the week include Oracle (ORCL) at #1 (+26.8%) after a rough stretch that still shows ORCL at -10% YTD. The Mag 7 were spread across the quartiles with TSLA and MSFT in the top tier for this week but still being in negative range YTD with TSLA at -10.9% and MSFT at -12.5%. The bottom tier included Apple (AAPL) and Amazon (AMZN). Across the Mag 7+3, ORCL was leading the pack at #1 with Taiwan Semi at #31.

For the 32 benchmarks, ETFs, and bellwethers above, the median price return for the week was over +8.3%. Meanwhile, the median price return for this same mix on a YTD basis is only around +4.2% with a positive vs. negative score of 18-14.

The Hi-Lo return differential between #1 Intel and #32 Intuit is a lofty 126 price return points. If we throw out the Hi-Lo names, we see Micron at #2 vs. ServiceNow at #31 with a return differential of over 96 points YTD. We look at the broader time horizon mix in a separate asset return piece.

The 1-month returns in the 32 benchmarks and ETFs show 3 of the 4 major benchmarks in the top quartile with the small cap Russell 2000 at #4 just ahead of the NASDAQ at #5 and Midcaps at #6 with the S&P 500 in the upper end of the second quartile.

We see Transport ETF (XTN) getting a big boost this past week (see the 1-week numbers) as relief on jet fuel and fare pressure supported a rally for airlines. Meanwhile, less cyclical fears and relief on diesel help boost freight and logistic operators. The “AI panic” on business models has also eased a bit for data-centric freight brokerage operators.

The Tech ETF (XLK) at #3 is just behind Regional Banks (KRE) at #2. The Financials ETF (XLF) is just across the line the top of the 2^nd quartile.

Overall, that is a cyclically diverse mix in the top quartile. We even see the BDC ETF (BIZD) mounting a small comeback for this period with Homebuilders (XHB) climbing back after sitting in last place for 3 months.

In terms of bond ETFs, we see 6 of 7 in positive range. The long duration UST ETF (TLT) fell just below zero at -0.04%.

The 1-month “Tech Check” shows the divergence between semiconductors and software and the pain inflicted on the SaaS-centric services operators. The bottom 3 names include ServiceNow (NOW), Intuit (INTU), and Salesforce (CRM). Adobe (ADBE) has been another software name taking a beating along with Palantir (PLTR) as one of the bigger holdings in recent periods in the IGV ETF.

The gap between the Semiconductor ETF (SOXX) at +22.2% in the top quartile and the Software ETF (IGV) at -0.5% in the bottom quartile sizes up the recent trends. Some of the SaaS names have been swinging around in dramatic fashion such as Zillow (Z) and FactSet (FDS). Those two names were in positive range for the month but still deeply negative YTD as we cover in the next chart.

The YTD return profile for the Tech Check list of 32 is grim in broader market context at 18-14. If we exclude the 4 broad market benchmarks (S&P 500, NASDAQ, Midcap 400, Russell 2000) the score is14-14 in a market where the NASDAQ and S&P 500 have hit records.

The depth of the negative returns on the right side of the chart makes a statement with the bottom quartile running from -19.5% for the Software ETF (IGV) down to -40.6% for Intuit (INTU) in last place. The YTD price returns post a Hi-Lo range of 126 points. The AI panic around the sustainability of SaaS business models has been addressed constantly in recent weeks and the numbers are ugly YTD.

We see some old school legacy names on top with Intel (INTC) at #1 at over 85% followed by Micron (MU) at +59.4%, capex sensitive Applied Materials (AMAT) at +54.5%, and the Semiconductor ETF (SOXX) at #4 with 38.0%. As noted earlier, the return on SOXX blows away the Software ETF (IGV).

The score for 3 months for the 32 benchmarks and ETFs weighed in at 26-6. We see 3 energy ETFs in the top quartile with E&P (XOP), diversified Energy (XLE), and Midstream (AMLP). The Utilities ETF (XLU) is also in the top 5 with the chemicals-heavy and cyclically exposed Materials ETF (XLB). The Tech ETF (XLK) is the only tech-centric asset line in the top quartile, and we also see EM Equities (VWO) with the interest rate sensitive Real Estate ETF (XLRE).

As we discussed in the weekly and 1-month charts, we see Transports (XTN) rallying back impressively on what seemed to be a reasonable solution to the Strait of Hormuz problem before it immediately blew up.

Trump overplayed his hand by not easing the Iran blockade if his goal was to declare victory and avoid committing thousands of troops. If Iran was the GOP senate, he would be fine since they would all fold. Trump’s ignorance of Iran and the culture now put him in a very challenging situation that makes it harder for his ego risk. This in turn provides worse risk symmetry in the next steps.

The 6 negative returns in the mix are a diverse lot with Homebuilders (XHB) about more than mortgage rates as the outlook for housing has dimmed with consumer confidence tanking and fears of payroll setbacks and weaker real wage growth. The higher mortgage rates initially seen after Iran were joined by other headwinds for housing.

The trailing 1-year mix of returns is still riding a good 2025 with a mixed 2026 by sector. The 31-1 score just shows the BDC ETF (BIZD) at a modest negative. All the bond ETFs are positive with the 2025 UST shifts a bigger factor (Total Return Quilt Across Asset Classes 2008-2025 1-2-26). As noted earlier in the piece, the yield curve story in 2026 has been a tough one and remains highly uncertain around inflation and oil.

Existing Home Sales March 2026: New Beginnings or New Ends? 4-15-26

Producer Price Index March 2026: Heater or Curve Ball? 4-14-26

Market Commentary: Asset Returns 4-12-26

CPI March 2026: The CPI Cycle Could Prove Maddening 4-12-26

4Q25 GDP: More Adverse Revisions in the Golden Year 4-9-26

Employment Situation March 2026 4-4-26

Payroll Focus: ADP Highlights March 2026 4-1-26

JOLTS Feb 2026: Openings Down, Hires Down, Layoffs Up 3-31-26

Market Commentary: Asset Returns 3-30-26

Market Commentary: Asset Returns 3-23-26

Market Lookback: Confusion Reigns, Dislocation Pours 3-22-26

Market Lookback: The Gulf of Cause and Effect 3-15-26

Housing Starts Jan 2026: Total Starts Up, Completions Up, Permits Down 3-12-26

The US as an Aspiring Emerging Market: Fiscal SNAFU, Political FUBAR 4-6-26

Market Commentary: Asset Returns 4-12-26

Glenn Reynolds, CFA — Sun, 12 Apr 2026 20:29:47 GMT

It is only a small naval blockade…

The world just got a lot crazier with the failure of the Islamabad negotiations as Trump threatened a naval blockade of all traffic. That might not last the day once someone explains to him that is a de facto declaration of economic war on China, who can retaliate on a small scale (strategic metals, etc.) or large scale (Taiwan). Absolute control over the Taiwan economy would make the US captive overnight in semiconductors and electronics (see US-Taiwan Trade: Risks Behind the Curtain 2-1-26).
The latest round of asset return updates includes bullish views on the US-Iran war ceasefire working out, in turn leading oil to plunge with the Strait of Hormuz settled. If that was the case, the probabilities of supplier chain disruptions would be easier to handicap. The weekend just changed all that with Islamabad failing and now Trump threatening the counterintuitive action of reducing supply disruptions by dramatically increasing supply disruption.
In the meantime, trade issues are back in the headline with Trump threatening fertilizer producers on price gouging after his actions already sent fertilizer supplies into Gulf-based dislocations. The upcoming USMCA review includes Canada as one of the largest suppliers of fertilizer.
Under “bad allies for a thousand, Alex,” the active campaigning actions of Trump and Vance in favor of Orban might have flowed into US-EU relations (including trade) if Jan 6 style issues unfolded. However, as we go to print, we see that Orban has conceded defeat. Trump’s active support of Orban and the AfD in Germany already signal the authoritarian and pro-Russian flavor of Trump’s support. It seems more obvious across time that Trump desires to see the EU break up. Orban does not go into Trump’s win column.
The UST curve handicapping could go back into paroxysms following the Islamabad failure and the new threat of a full naval blockade. The world can hope for a TACO move there but it is uncertain. Behavioral odds-making is a very inexact science.
This week starts the financial sector earnings wave, and we will also get the PPI release on the heels of the commodity and materials cost pressures of March. Existing home sales will signal how the mortgage rate pressures of March weighed on volumes, and we get a fresh read on Industrial Production.

Even after a banner week in equities and some easing of UST curve pressures on bonds as detailed below, the trailing 1-month returns are a mixed bag with 3 of 4 bond benchmarks posting negative returns. Only US HY posted positive returns with a minimal +0.33%.

Equities have had tech challenges on multiple fronts with the fixation on AI threats to software worsened by the UST and inflation anxiety as discussed in commentaries along the way and broken out in the “Tech Check” charts further below. Looking back 3 months, we see NASDAQ and Russell 3000 Growth in the negative return range. The S&P 500 and the Dow were both in the red for 3 months.

Small caps have been the big winner looking back over 1 year and beat the NASDAQ and S&P 500. Small caps and Value stocks were the leaders over 6 months as the sector-rotation themes were playing out for value vs. growth and tech.

The rolling return visual

The 1-week and 1-month symmetry flipped back to positive with the ceasefire and hopes for a deal. That initial attempt at a deal just failed this weekend with the handicapping game a fresh new challenge for the markets. The 3-month symmetry is slightly positive at 19-13 while the 1 year timeline is still riding the rally at 31-1 with only the BDC ETF (BIZD) in the red.

The Magnificent 7 heavy ETFs…

The tech bellwethers were mixed for the week but with some key names having a very strong week as detailed further below in the “Tech Check” breakouts. The temporary relief on the US-Iran ceasefire will give way to turmoil in the markets later tonight and tomorrow as the global markets cast their votes not only on the failure to strike a deal in Islamabad but also on the threat of a full naval blockade that will make the supply shock that much worse.

For the week, software was again in the tank with the Software ETF (IGV) in last place at -7.06% for 1 week, -28.9% over 3 months, and -33.4% over 6 months. In contrast, the Semiconductor ETF (SOXX) was +13.8% for the week and +42.4% for 6 months. The stock picking challenge in the tech sector across 4Q25 and into 2026 is a major differentiator.

The setbacks since Friday have a very wide range of potential outcomes. If they can’t get back on track, the regions that will see the worst damage will be Asia and the EU given the consumption of Gulf product flows. Some US players can ride the global supply stress and pricing/cost impacts to their benefit as we have already seen (energy, petrochemicals, aluminum, fertilizer). Notable rallies were seen with Valero, CF Industries, Lyondell, and Alcoa.

The very detailed commentaries hitting the headlines in recent weeks around supplier chains (helium, fertilizer, aluminum, etc.) even beyond the oil-to-refined-products chain will get revisited on the customer fallout.

We assume someone will explain (very slowly) to Trump that a naval blockade will be worse by an order of magnitude than the current extortion by Iran. No supplies vs overpriced supplies could bring more production chains to a halt rather than just inflate the expenses in some cases.

The UST forecasts and inflation anxiety will go into a fresh round of handicapping while the FOMC will have an even worse set of circumstances to ponder later this month if we see any combination of boots on the ground or a full naval blockade. The full blockade plan and going after those that pay the fee to pass will be quickly adjusted since it is so self-destructive and damaging to global economies. It appears unworkable (boarding parties? Then what?). The explanation might have to come from a non-cabinet billionaire. The White House sycophants might not dare.

The commentary below is mostly a cut-and-paste from an earlier post on LinkedIn on Saturday with some additional input:

The chart updates the weekly total returns on the 32 benchmarks and ETFs we track. The Iran War has dulled the senses a bit through Friday with the end game getting worked on in Islamabad. With the complexity of the Israel-Lebanon War and its overlap with the US-Israel tag team on Iran, sorting out the pieces is no small challenge. As we know now, the Islamabad deal failed.

The complications are exacerbated by the fact that Team Trump and Iran have starkly different versions of what was agreed to the first time. The market last week was betting on a solution with a very strong week in equities.

With headlines flagging the “best week of the year in equities,” the NASDAQ came roaring back with all 4 major benchmarks (including Russell 2000, Midcaps and S&P 500) posting solid rallies. The market saw 10 of 11 S&P 500 sectors positive with only Energy negative. We saw 5% handles on the week for Communications Services and Tech in the S&P 500 sector mix with 4% handles on Real Estate, Industrials, and Consumer Discretionary. The Russell 2000 and Midcaps are still beating the large caps YTD.

Last week’s equity market performance was a bounce with breadth in a week when Trump started off with profane Easter rantings as he had threatened to annihilate a civilization and discussed moving on to the “next conquest.” The week saw Trump state that a “whole civilization will die tonight” if conditions were not met.

Such language – along with the hyped “Donroe Doctrine”– is not exactly a deterrent to China (Taiwan) or Russia (Ukraine, Baltics). In fact, it encourages a global carve-up. The potential domino effects of continuing down this path could pull in aggressive responses from China while Russia cashes in.

The scoresheet above is clear enough on what a solid performance the week saw in equities with a positive to negative score of 26-6. The 6 in negative return range include the 3 energy ETFs across the E&P ETF (XOP), the diversified Energy ETF (XLE), and Midstream ETF (AMLP). Those 3 are joined in the red by the BDC ETF (BIZD), the Equal Weight NASDAQ 100 (QQEW), and the long duration UST ETF (TLT) with a very slight negative.

The winners for the week cut across cyclically diverse subsectors including Transports (XTN), Homebuilders (XHB), EM Equities (VWO), Tech (XLK), Industrials (XLI), Regional Banks (KRE), and Consumer Discretionary (XLY). That breadth of rallies in the top quartile underscores how wide the damage from the Iran War was expected to be from inflation to FOMC policy to the consumer sector and the broader macro cycle. This coming week could see a quick reversal if damage control does not start right away.

Mortgage rates have declined from recent highs, and the FOMC easing odds have risen again off the recent plunge. The risk of tightening shifted lower as we covered in our separate CPI commentary (see CPI March 2026: The CPI Cycle Could Prove Maddening 4-12-26 ). Asset quality concerns remain a factor (private credit, pressure on consumer metrics). Those odds will once again get jumbled and gyrate again this week with the latest news.

The commentary below is mostly a cut-and-paste from an earlier post on LinkedIn on Saturday with some additional inputs:

The above chart frames price returns for the 32 benchmarks and tech-centric ETFs we track each week. At a 20-12 positive vs. negative score, there are more winners and losers on the week, but we see some very big moves for the winners in the top tier and material weakness for those among the bottom tier performers. The Hi-Lo range of returns was over 42 return points. That includes +23.8% for INTC at #1 and -18.6% for NOW at #32.

We see a big rally in the semiconductor-related names with two Mag 7 names in the top quartile (AMZN, META) and 2 Mag 7 names in the upper end of the 2nd quartile (Alphabet, NVIDIA). The Semiconductor ETF (SOXX) made the top 5. We see AAPL, MSFT and TSLA in the third quartile with MSFT and TSLA in the red. The Mag 7 score was 5-2 while the “Mag 7+3” was 7 positive and 3 negatives. Broadcom was a strong #2 at +18.1% behind Intel at #1 and Micron at #3 with a +14.8% return.

The SaaS-centric services names took a fresh beating this week with ServiceNow (NOW) sitting on the bottom at -18.6%. Joining NOW in double-digit negative range again is Intuit (INTU), Palantir (PLTR), and Salesforce (CRM). FactSet (FDS) in the bottom quartile and Zillow (Z) were again in the red. The software names again underperformed with the Software ETF (IGV) and Adobe (ADBE) in negative return range in the bottom quartile.

From discount rates in “long duration” tech equity valuation to cyclical and consumer sector worries, the Iran War risks directly impact the tech sector. The AI panic around software and related private credit noise was bad enough without the Iran War scenario spinning.

The 1-month score for the 32 benchmarks and ETFs was 20-12 as of Friday close. We see 5 of the 7 bond ETFs in negative zone on the UST curve spillover with HY bonds (HYG) and EM Sovereigns (EMB) slightly positive. The long duration 20+ UST ETF (TLT) is in negative range in the bottom quartile joined by the UST ETF (GOVT).

The top quartile was cyclically diverse but shows no tech. The top quartile included energy (XOP, XLE) but Transports (XTN) came out on top despite the airline damage from fuel. Regional Banks (KRE), the chemicals-heavy Materials ETF (XLB), and small caps (RUT) and Midcaps (MDY) were in the top tier.

The Tech Check group was a tie at 16 positive and 16 negative returns. We see a good story for semiconductors and ugliness for software and SaaS-based services operators. We have covered the tech noise and subsector setbacks in prior weekly comments and in the weekly returns above. The fear of AI giants causing “business model extinction” for SaaS-centric services operators has been impossible to fully offset so far.

For the 1-month period, we see a Hi-Lo range over 62 points in the returns of #1 Intel (INTC) at 33.4% vs. #32 ServiceNow (NOW) at -28.8%. In the bottom quartile as noted, only Zillow avoided double-digit negative returns at -9.5%.

We see 4 of the Mag 7 in the red for the month with Amazon alone of the 7 in the top quartile with Alphabet and NVIDIA in the 2^nd quartile.

The top quartile for the month was heavy on semis with Intel (INTC) at #1out in front followed by Advanced Micro (AMD) at #2, capex-sensitive Applied Materials at #3, and the Semiconductor ETF (SOXX) at #4. In contrast, the Software ETF (IGV) was down in the bottom quartile at -12.8%. Software has taken a beating from AI fears and private credit panic headlines.

The YTD “Tech Check” score posted 13-19 positive vs. negative but with some dazzling winners (Intel, Applied Materials, Micron) and beastly losers (Intuit, ServiceNow, Zillow, Salesforce, Adobe).

The main theme is “semis vs. software” with semis winning and a range of software and SaaS-based names taking a beating. The Semiconductor ETF (SOXX) posted +28.4% and ranked #4 while the Software ETF (IGV) posted a grim -29.4%. We see 13 lines well into double-digit negative returns with the 13^th worst (IBM) posting -22.1%.

The above chart shifts back to our usual group of 32 benchmarks and ETFs for 3 months. The score of 19-13 shows no tech name in the top quartile with its 3 energy related ETFs (XOP, XLE, AMLP) joined by Utilities (XLU) and Materials (XLB) in the top 5. Real Estate (XLRE), Industrials (XLI) and Consumer Staples (XLP) round out the top quartile. That mix highlights the rotation trade that was unfolding in 2026 and some of the related fears that gripped software and SaaS services.

Sitting in the bottom tier we see the Equal Weight NASDAQ 100 (QQEW) in dead last with the BDC ETF (BIZD) one off the bottom. Financials (XLF) have been taking heat on the private credit noise and the concerns around the FOMC easing probabilities.

Homebuilders (XHB) felt a combination of cyclical pressure in housing but also the mortgage rate creep that came with the Iran War scenarios. Obviously that UST curve and steepening/shifting risk will come back into the dialogue with the ceasefire setbacks and Trump’s threats of a naval blockade. He already seems to be backpedaling as media flows, but that has to play out.

The 31-1 score looking back a year posts a median line-item return of over 24%. That median and range still makes for a very good rolling 1 year despite the weak start to 2026. The BDC ETF (BIZD) is down to -3.7% with 6 of the 7 bond ETFs sitting in the bottom quartile and only EM Sovereigns among bonds breaking into the 3^rd quartile.

We see energy at #1 (XOP) and #3 (XLE) with Transports (XTN) at #2 and the Tech ETF (XLK) and Russell 2000 rounding out the top 5. It took 40.6% to make the top quartile, so that is a banner LTM run rate for equities.

4Q25 GDP: More Adverse Revisions in the Golden Year 4-9-26

Employment Situation March 2026 4-4-26

Payroll Focus: ADP Highlights March 2026 4-1-26

JOLTS Feb 2026: Openings Down, Hires Down, Layoffs Up 3-31-26

Market Commentary: Asset Returns 3-30-26

Market Commentary: Asset Returns 3-23-26

Market Lookback: Confusion Reigns, Dislocation Pours 3-22-26

Producer Price Index Feb 2026: Getting Warmer 3-18-26

Industrial Production Feb 2026: Capacity Utilization 3-16-26

Market Lookback: The Gulf of Cause and Effect 3-15-26

Housing Starts Jan 2026: Total Starts Up, Completions Up, Permits Down 3-12-26

The US as an Aspiring Emerging Market: Fiscal SNAFU, Political FUBAR

Glenn Reynolds, CFA — Mon, 06 Apr 2026 18:28:12 GMT

Raise your hand if you are in favor of banning mail-in voting, weaponizing the Postal Service, and allowing the White House and DOJ to control state voter rolls.

With the SAVE Act faltering, Trump issued an Executive Order (“Ensuring Citizenship Verification and Integrity In Federal Elections”) that seeks to Federalize elections and to cede control of state voter rolls to Washington under the DOJ and executive branch. As evident in his recent challenge to birthright citizenship, Trump believes he has powers to ignore Congress and take action on anything he desires even if the constitution and/or legislation does not allow it (e.g., IEEPA, unilateral action on birthright citizenship, etc.). There is no constitutional line Trump will not cross.
After the rough trip to SCOTUS on the birthright citizenship debate, Trump now wants control of state voting rolls in what is an aggressive push to salvage midterms for the GOP and continue to feed his own story line that he did not get his ass royally kicked in 2020 by 7 million votes. This latest gambit once again crashes into clearly written constitutional rules.
The Executive Order comes with DOJ threats of criminal actions against state officials and enlists the postal service as well. Trump must be worried (he should be) that his plunging ratings to record lows will hit the GOP hard in midterms. Tariffs and now the Iran War have inflicted economic damage on both a global scale and at the national level and set the stage for pain in household budgets.
Trump’s less-than-dazzling performance on Iran includes his tragically incoherent, ill-advised, inconsistent, and self-contradictory statements this past week on what the goals were at the outset of the Iran War and what comes next. The economic fallout is unfolding into what could be a global disaster if escalation goes in the direction of “take the oil” or puts many boots on the ground. His grab of network time last week brought an internally inconsistent replay and offered nothing new. Trump is back to a countdown to blowing up all the power plants (a clear war crime).
The latest Executive Order on elections is the next step in his ambitions. Most people who read or are not “in denial of history” know the legacy of voter suppression – and literally disenfranchisement. Disenfranchisement and voter suppression are a matter of fact in the history books (see Martin Luther King Jr.—MLK was a Fact, Not a Theory 1-15-24). MLK was assassinated only 58 years ago this weekend (April 4, 1968), so it was a strange week to launch the order. It is not as if the baby boomers were not ringside and fully aware of the violent reaction to the 1965 Voting Rights Act. Trump’s Executive Order would be a stark setback.
We add a few links below as memory joggers on some ugly history some would deny and seek to erase. The fact that there is a lack of historical perspective on real events in the White House should not be a surprise since factual history is viewed as poison. These days, it is all about packaging themes and not the historical reality.

Trump should be quizzed by the press on the Elections Clause (Article I, Section 4, Clause 1). No way he read it. Or no way he cares.

Trump “going postal” and bringing DOJ threats…

Anyone can consult with the Constitution on who makes the call on state level voting rights. The “Elections Clause” is there for the reading. The Executive Order signed by Trump this past week will fail, but may have backstop plans to declare emergencies and try out a range of contingency plans to maintain power. Such a view is not far-fetched speculation since it is evidence-based (Jan 6, etc.). His motives could not be more transparent.

Trump’s order enlists the DOJ (now run by his personal attorney) and the Postal Service as he adds a new angle on “going postal.” If you read the executive order, it is easy to see the massive logistical maze that he is calling for and the extreme manpower demands and tech support to even execute something like what the order proposes.

The goal is to control voting rolls, but the intent of the plan design seems to be to assure failure. That would in turn justify other “emergency actions” by Trump. Remember back in 2020 when Trump’s appointee (a rich white male executive) was ordering high speed mail processing machines removed? This mail-in process is much worse as designed by Team Trump. It will be enforced and supervised by his executive branch loyalists.

Away from the illegitimacy and illegality of the executive order, the design of the proposal shows the darker side of intent. The US Postal Service lost $9 billion in FY 2025 and cannot even handle the burden it has now. Trump’s ability to influence the USPS can be debated, but the stakes are high.

This proposed voting process structure might offer a chance to Trump et al. to intercede on an emergency basis in 2026 and would also allow him to direct that disruptions of election operations be aimed toward key swing states and blue cities with high vote counts. What he proposes appears set up to fail and could allow for additional emergency action to throw out election results. It would also allow partisan state legislatures the opportunity to step in with some false grounds he devises. Refusal to certify elections could be a partisan maneuver in a way it was not (even if close) in 2020.

White House control of state voting rolls…

The immediate motive is to control elections at the White House and executive branch level. The main thrust is to have a subservient DOJ (provisionally run by his former personal lawyer) to mitigate Trump’s fear of power erosion. The legal risks to Team Trump of a Democratic led house include Epstein investigations and corruption hearings whether self-dealing conflicts of interest or family deals. That would get aired in detail.

It is also about Trump looking for more support for his “Big Lie” that he won the 2020 election (in a “landslide” for Trump) even though there is zero evidence produced despite the years that have passed. Trump still wants to obscure that he is 0 for 3 in winning 50% or more of the popular vote. The same is true for Trump losing the popular vote in 2 out of 3 elections.

The White House will try to understate the significance of his proposed mail-in actions, but it is an enormously threatening move. As a frame of reference, voting tallies in the 2024 election (won by Trump) indicates 1 in 3 voted by mail for an estimated 48 million. That includes 40% of that group comprised of voters 65+ years in age. The balance across “geographic settings” showed 1 in 3 urban, 1 in 3 suburban, and 1 in 4 rural voters. Of the 48 million, white voters were around 27 million. The stats include 1 in 4 Democrats and 1 in 4 GOP with 5 states showing 1 in 3 GOP. That is a lot of votes.

The desire to squeeze swing state turnout and especially in major urban areas is not a mystery if you give it a little thought. The election turns on Pennsylvania, Michigan, Wisconsin, Georgia, and Arizona. Trump also wants to mitigate risks in Nevada and Ohio (Obama carried in 2012 but GOP since).

Lack of evidence never gets in the way of a Trump story line…

We include some notable reading materials on immigration and voting below. The facts torpedo the false premises of Trump’s immigration themes and are worth a glance. The barriers to facts include disinformation waves and mental laziness exploited by Team Trump. Even the Heritage Foundation and CATO (the antithesis of left wing) have furnished studies and data that show how Trump’s claims on “illegals” voting are BS.

Trump is more of an adjective-heavy and “you lie, and I’ll swear to it” type. Trump has produced no factual support for his 2020 fraud claims – ever. He is a fact free, numbers free, declarative sentence and adjective-heavy kind of guy.

Evidence is not there, but it seldom matters in the power grab…

Trump’s Claims About Noncitizens Voting Are False. We Can Prove It. (CATO Institute)
Debunking Lies About Voting and Citizenship (Brennan Center for Justice)
How widespread is election fraud in the United States? Not very (Brookings)
Analysis: Heritage Foundation’s Database Undermines Claims of Recent Voter Fraud (Brennan)

As noted, we would highlight that the Heritage Foundation (the Project 2025 crowd) and CATO (Libertarian) are on the right wing and conservative side of the political spectrum on issues. Heritage is in a different zip code. Like Trump’s delusions around the 7 million votes in 2020, it is very hard for studies to find evidence of what is not there. Trump can just spout it without evidence and the red hat bobbleheads just fall into line.

Of the 47 Presidents, only two of them made this false claim of “rigged” election and massive, outcome-changing voter fraud, and they are both Trump (#45 and #47). Andrew Jackson had some gripes in 1824, so he gets a portrait on Trump’s Wall. Al Gore had the hanging chad controversy in 2000, but he was a classier and more patriotic guy than Trump. Of course, Gore would not complain at all if he had lost by 7 million votes. Trump’s behavior and recent executive order on voting is a sign of how far America has fallen as it starts to imitate an emerging market.

Jaded history of voter suppression…

While the historical revisionists who have been charged with rewriting history at the Smithsonian (JD Vance and his beauty queen legal eagle sidekick), the reality is that voter suppression has been a “great” American tradition.

The goal of undermining groups of Americans is usually about those that are on the “other side” politically or viewed in a racial or ethnophobic light. The word “disenfranchised” was a literal term for decades in the US. The history typically applied to blacks in the South, but it is now broader with a target on the back of immigrants broadly and those from Latin America and the Caribbean more narrowly.

The voter suppression topic is about historical facts vs. fiction and the need to cover up investigations of bad behavior (and worse intent) that we see today in many areas (e.g. Epstein). It literally takes a few minutes to google and confirm the voter suppression history even during the baby boomer years ahead of the Voting Rights Act. If we go deeper into Jim Crow history, it is of course much worse.

We include an excerpt below from an earlier note we published (see Martin Luther King Jr.—MLK was a Fact, Not a Theory 1-15-24). The history – denied or ignored by Team Trump – offers a reminder of why voting hurdles are such a sensitive topic. That is especially the case when the barriers being created are to deter a problem that has not been proven to even exist outside of Trump’s rambling blather and blind embrace by MAGA followers.

The history of voting rights ugly but Trump will not even admit it ever existed…

“A notable example of disenfranchisement… was Louisiana. Black voter registration fell from 95.6% before 1896 disenfranchisement laws were passed to 9.5% right after that and then down to 1.1% (not a typo) in 1904. Alabama voter registration fell from 180,000 in 1900 to 3,000 in 1903. Florida election law changes in 1888 saw black voter turnout fall from 62% to 11% in 1892 and to 5% by 1896. Black voter turnout in Mississippi was 29% in 1888, 2% in 1892, and 0% in 1895. You get the idea. There are a lot of examples.”

The above history is old, but it is a reminder that victories can soon give way to takebacks. That is the case with Trump’s latest actions. “Old news” does not change the history, and admitting it is a start for the voter rollback advocates to be taken seriously. Otherwise, it is just the same old racism and xenophobia and closet fascist impulses to suppress voting that extended into the early 1960s.

Those of us watching the voter suppression from afar on TV in the 1960s and reading the news in our younger years (Johnson Administration) underscore that it was not really that long ago with Year 250 for the nation teed up in 2026. This latest executive order from Trump would be a dismal way to celebrate the Declaration of Independence and the founding of the nation.

A few samples on suppression histories:

Mississippi as the champion of disenfranchisement and suppression: “Although Mississippi had the highest Black population of any state in the 1960s, only 6.7% of eligible Black voters were registered to vote by 1964.” The history of these states has made for a lot of movies. If you want to skip reading, check out Netflix or Prime. Mississippi Burning is a great one. So is the movie Selma for Alabama. The narrow topic of registration numbers (whether % of the black voters or the voter counts by number) are objective facts. The motive behind voting rules are more subjective these days (even if obvious to most rational thinkers).
Alabama is also on the All-America Team in disenfranchisement and voter suppression. The black voter registration numbers were ugly as JFK was on his way to the White House. Words like “Selma” and “Bloody Sunday” (1965) and racist cult heroes such as Bull Connor do not need much introduction. It is understandable that there would be sensitivities on voting rights as a topic in the ranks of baby boomers who witnessed it (live or on TV) or for anyone who can read a book (a group in apparent decline by choice). The movie Selma works for those bored by voter registration stats and blind acceptance of “voter ID” disinformation. The very real factual history underscores why many might challenge Trump’s desire to rewrite the Election Clause after he could not get Congress to pass suppression legislation (the election clause requires Congress to overrule states).
“In 1964, just prior to passage of the VRA, only Mississippi had a smaller percentage of eligible African Americans registered to vote than Alabama, 6.7 percent compared to 23.0 percent, though some sources say Alabama had less than that.”
Georgia looms larger than Alabama or Mississippi in the Senate and Presidential elections since GA is a critical swing state. GA leaders saw Trump pressure them to “fix” the election outcome after he lost that state. The GOP Governor and State Secretary told Trump to pound sand on his false claims. Such courage (integrity?) is scarce these days. GA is also in the top tier of suppression history. Senator Warnock has been taking heat (hate?) for his opposition to the SAVE Act. History is on Warnock’s side in Georgia. As a frame of reference, GA ranks #2 in the Tuskegee historical rankings for number of blacks lynched. Mississippi is #1, Texas #3, Louisiana #4, and Florida #5. Those don’t tie into voting rights, but they do tie into the concept of intimidation, violence and bad outcomes when people with hoods (or masks) hang out around the voting polls (about those ICE masks…).

The voting rights debate is intrinsically colored by racism and xenophobia …

The hard right political groups in the US, whether MAGA or old school Christian Nationalist racists, will deny the realities of the 3-state sample above (states like Louisiana and Texas are often overlooked in this peer group). The racists or historical revisionists will attack the whole concept of voter suppression in recent history, but at least the White House should admit the above histories are facts. They do not. That colors their current motives. After all, Trump had stated the Civil War could have been “negotiated” (he is not an avid reader of history).

There is plenty of history on voting rights struggles and bad stories across the decades with voting rights at the center of the issues and also as the trigger for Klan activity. Florida is a state that gets overshadowed by its noisier more troubled neighbors, but check out the movie Rosewood for some horrors of the past in Trump’s home state.

These are the types of histories that Trump and MAGA deny and will get erased by design. When it comes to voter actions from Trump, assume bad intent. It is not hard to find it if you look. His goal is to lower turnout and create room for challenges by his Federal and DOJ team with his personal lawyer now holding the top job at the DOJ.

You can’t blame a guy for trying? Yes, you can.

Trump using an Executive Order to take over state voting to suppress votes will violate the clear letter of the Constitution and the Elections Clause. That was the case in birthright citizenship also. The fact that they will push ahead on that path anyway speaks to the people involved and how the court was stacked.

Team Trump can ask “What have we to lose?” with such efforts. The country and its voters of course ask that same question. They have much to lose just like a few countries did in Europe in the 1920s and 1930s.

For many voters, running the gauntlet of ICE threats at the polling places has some parallels. The image of ICE as overpaid, underqualified, undertrained, masked thugs on high protein diets is not without merit. They freely beat up eligible voters and US citizens with immunity and get a blank check from above (it is on video but skate from accountability). So, what would regulate their behavior at the polls when it is risk free?

For voters, an ICE presence is not an incentive to get to the polling place. That is why Team Trump also wants to take away the mail option. Reduce the avenues available.

The bottom line is “ICE + voter intimidation + banning mail voting = lower turnout.” It is not complicated.

Some executive order excerpts…

The Executive Order seeks to institutionalize the control of state elections at the Federal level. We try to picture the DOJ and Trump taking arbitrary actions in swing states. It was not lost on Trump that his massive loss in 2020 was tied in part to the highest turnout rate since women got the right to vote. That turnout was still below many nations, so it is not impressive.

In other words, the voter turnout could rise quite a bit for a midterm if the Independents turn out and Democrats get off their couch. That outcome would be a major threat to Trump and his MAGA movement.

The 4 years of Trump 1.0 were enough for many to turn out after big wins in 2018 midterms. 4 years of Biden dimmed the enthusiasm in 2024. That expectation for a high turnout is likely to be back in the 2026 midterms, and Trump is panicking. Trump has to beat back that wave. It is that simple.

The legal challenges are already coming. The fact that Trump would go the route of issuing an executive order as his own personal Constitutional Amendment speaks volumes of his threat to Democracy and what might unfold. At some point, more global investors will question the role of the UST as the “risk-free asset.” Escalation on the level implied by his recent threats against Iran would take the US into a tier of crisis not seen since 1860.

Just a sampler of how votes can be challenged and derailed by the White House…

The bottom line is if Trump cannot ban voting by mail outright, his goal is to create as many administrative and institutional barriers as possible to deter people signing up. Then states can ban the voting by mail or face the challenge of hurdling the massive barriers that Trump seeks to build up. To the extent those mail-ins happen, Trump has failsafes in that the process is under his team’s supervision to sound the alarm. Trump can channel their actions toward key states and cities and suspend the election outcomes. Trump’s executive order piles on with more barriers led by appointees that he controls. It is the proverbial stacked deck.

Some excerpts from the executive order:

Team Trump dictates the plan to the states…(elections clause?)

Below we cut and paste some language from the executive order. It reeks of suppression via intentional burdensome institutional hurdles and tasks doomed to fail.

“The Secretary of Homeland Security, the Commissioner of SSA, and the Postmaster General shall coordinate with the Secretary of Commerce in effectuating all relevant aspects of the implementation of this order.”
“The Attorney General shall enforce compliance with the applicable Federal statutes referenced herein and provide guidance to election officials, including any instrumentalities thereof; contractors; individuals involved in the administration of Federal elections; or public or private entities engaged in the printing, production, shipment, or distribution of ballots.”
“The Secretary of Homeland Security shall, within 90 days of the date of this order, establish the infrastructure necessary to compile, maintain, and transmit the State Citizenship List described in section 2(a) of this order, and shall designate a point of contact within DHS to receive and process requests from individuals and State election officials regarding the relevant State Citizenship List. The Commissioner of SSA shall provide all necessary citizenship and identity data to the Secretary of Homeland Security in support of this requirement, consistent with applicable law, the Privacy Act, and all applicable use agreements.”

Our translation: Trump’s team rules the oversight of the process in case he needs to challenge later. The Feds will be de facto overseers of state election compliance. These sections alone underscore the nature of the people pulling the levers. This is a proverbial collection of lapdogs and includes some that are not exactly the brightest bulbs on the shelf. The sole virtue for Team Trump is unquestioned blind loyalty. That is what authoritarians need.

The weaponization of the post office or the excuse for the process failing?

For a sign of how convoluted this process is, we include a subset of the requirements below for state officials and the post office. The chain of mandated activity implies flawless execution by state and city officials, prudent and diligent focus by the voters to jump through all the hoops, and a post office system that will be locked in and very efficient. Those are impossible odds, and Team Trump knows it.

The bottom line is that your vote depends on civil servants, bureaucrats, and postal workers executing in record time with the validation of the votes still subject to White House appointees not throwing a penalty flag and staging a big excuse to challenge the outcomes.

In other words, once the turnout has been beaten down, Team Trump still gets a bite at the apple to challenge the outcome.

The civil service employees and administrative “cluster of circles” begs poor execution and failure subject to challenge as detailed earlier. We saw no reference to budgets and staffing support or a longer potential phase in period. They want to head off the 2026 elections now. One can suspect the swing states and blue cities would see their results challenged if SCOTUS lets this executive order fly. There is a target on their backs.

Some demands on the USPS (postal service):

Proposed provisions specifying that the USPS shall provide each State with a list of individuals (Mail-In and Absentee Participation List) who are enrolled with the USPS, pursuant to a process specified in the rulemaking directed by this subsection, for mail-in or absentee ballots provided by such State, along with unique ballot envelope identifiers, such as bar codes, for mail-in or absentee ballots provided to such individuals.

Proposed procedures enabling each State to routinely supplement and provide suggested modifications or amendments to the State’s Mail-In and Absentee Participation List in advance of any Federal election, consistent with applicable State law.
Proposed provisions specifying that all outbound ballot mail must be mailed in an envelope that:
(A) is marked as Official Election Mail, including through designated markings provided by USPS for this purpose, such as the Official Election Mail logo, as necessary and appropriate;
(B) is automation-compatible and bears a unique Intelligent Mail barcode, or successor USPS technology, that facilitates tracking and is consistent with the other requirements of this section; and
(C) has undergone a mail envelope design review by the USPS to ensure compliance with USPS mailing standards, including barcode placement.
(Proposed provisions specifying that, no fewer than 90 days prior to a Federal election, any State may choose to notify the USPS if it intends to allow for mail-in or absentee ballots to be transmitted by the USPS. As part of that notification, any notifying State should further indicate whether it intends to submit to the USPS, no fewer than 60 days before the election, a list of voters eligible to vote in a Federal election in such State to whom the State intends to provide a mail-in or absentee ballot to be transmitted via the USPS.

Our view: This is the hook where they ban mail-in voting in substance by using process obstacles and onerous admin demands even if not by outright policy that bans mail-in voting.

Proposed provisions specifying that the USPS shall not transmit mail-in or absentee ballots from any individual unless those individuals have been enrolled on a State-specific list…
Proposed provisions specifying that the USPS shall provide each State with a list of individuals (Mail-In and Absentee Participation List) who are enrolled with the USPS, pursuant to a process specified in the rulemaking directed by this subsection, for mail-in or absentee ballots provided by such State, along with unique ballot envelope identifiers, such as bar codes, for mail-in or absentee ballots provided to such individuals…

That authoritarian checklist needs voter suppression to succeed…

The usual playbook for authoritarians is not a big mystery. Two leading historians in this area who have published easy-to-read books include Ruth Ben-Ghiat (Strongmen) and Timothy Snyder (On Tyranny).

We look at some of the authoritarian checklist moves by Trump below just within the past year and a few months. Any single one is cause for alarm, but the collection is extraordinary and very dangerous for Democracy.

Those who have studied a lot of American geopolitical, domestic policy, and economic history cannot come up with anything close in prior American history to Trump’s totalitarian threat even in times of war (Wilson gave it a shot in killing free speech in WWI, and he was also a rabid racist. So he is the closest to Trump even if falling well short).

The view of the US among allies has been deteriorating rapidly and could get much worse in coming days if Trump pulls the trigger on massive escalation in the Mideast. At some point, the combination of massive deficits, economic uncertainty, and political instability will impact direct investment flowing into the US and could undermine offshore UST demand. The currency wildcard has already been on the table in 2025-2026. When the literal smoke clears in the Gulf, the petrodollar history of recycling into US investments could see material setbacks.

A QUICK LIST TO PONDER…

Constitutional amendments via executive order

We put this one first since it is recent and getting to be a habit with birthright citizenship and now state voting control in Trump’s crosshairs. The attempt to remove citizenship from those born in the US by immigrants does not hold up to a literal reading of the Constitution. Of course, some SCOTUS members are viewed as captive Trump votes, and some Supremes could change out of their originalist costumes when needed for their political “sponsor.” The arguments on the birthright topic is current news, so there is plenty to read on that topic.

The Team Trump argument on “birthright” was that it was “all about slavery.” That angle was decimated by the arguments that waves of immigrants (notably Irish) before and after the Civil War meant immigration factored into the 14^th amendment (ratified in 1868). Birthright citizenship had also been tested since SCOTUS affirmed it applied to immigrants in 1898 (a Chinese immigrant) at a time when blacks were being disenfranchised by Jim Crow laws in the South. A lot of Irish fought for the Union on the winning side as did many black soldiers. We will see how the Trump-stacked court, who Trump now calls “stupid,” plays this one out.

Attack the media

Attacks on media have escalated with threats to broadcast licenses by Trump and the head of the FCC (one of the Project 2025 authors). The situation has been worsened by direct attacks from the Presidential pulpit on media companies and specific journalists by name in tandem with White house freeze-outs. The rechanneling of focus to friendly right-wing media is par for the course.

The real threat is close allies of Trump gaining control of media assets and shifting the operations toward a state media profile in coming years. That would be a rather Soviet ambition. Fox News hosts are now in key positions in the Cabinet and DOJ.

That threat of media ownership concentration used to be closely monitored and prioritized by the FCC. Now it is tacitly supported by the FCC by favoring friendly interests. One recent example is how the White House put its thumb on the M&A scale to undermine Netflix and favor Trump allies.

Attack education

The attack on higher education from the White House is about inflicting financial damage on schools and painting universities and colleges as elitist, which is the enemy of MAGA. Painting schools as antisemitic is one strategy even though antisemitic idiots can be found in every school, the GOP, among the Democrats, and most certainly in MAGA and the White House crowd. It is not grounds for widespread attacks and financially trashing schools.

The criticism was more than justified for inaction and feeble, slow response, but it is interesting that memories lapsed about the Charlottesville Tiki Torch antisemites (“Jews will not replace us”) and how Trump could only muster up a comment of “Fine people on both sides.” (Reminder: Gary Cohn almost resigned over the weak Trump response).

My own personal view more narrowly on the head of Harvard was, at the very least, she was incompetent and lacked leadership skills. However, her gender and race were perfect for a MAGA broadside. Either way, any head of Harvard that cannot win a debate in Congress with Elise Stefanik should go back to the beginning and enroll in community college.

The leadership weakness at some of these schools was used as a smokescreen and provided a readily available tactic to insist on the “MAGA-fication” of higher education by the White House using a new arsenal of threats. That is tough to do when facts and concepts are core to higher education. Facts tend to be inconsistent with MAGA. It is a safe assumption that Team Trump will not be investigating any schools in deep red states for racism or Islamophobia.

Attacking education is an old trick, but it harms free speech and generates even more division in the country. Division is a Trump priority to preserve his power base and cow academics (grants, etc.) and Congress. Such actions also financially undermine schools and thus financial aid for the deserving students who worked hard and earned a spot (not everyone has a daddy that can buy them a seat).

Attacks on universities also undermines critical investment in areas such as plant and equipment, technology, and housing. The financial penalties discourage infrastructure investment in the local economies. The economic multiplier effects are there. The fact that such local economies tend to be blue cities of course was the cherry for Trump.

In the end, you cannot cut through the irony and hypocrisy with a chainsaw given how Trump has prioritized Ivy League status in his own life (still need to see those transcripts!). The fact that so many GOP noisemakers have Ivy League degrees reminds us that DEI applies to home state locations also (i.e. it is easier to get accepted from Arkansas than NY, Connecticut and Massachusetts). The JAG career plans of some notable GOP Senators who were part of the applicant pool to places like Harvard get some “diversity” treatment also for “military” status. Few would dare to admit that or even bring it up.

Attacking top universities also undermines research budgets for those who cure disease and reward the world (that is economically the best deal in town for research economics and risk-reward). China will exploit those penalties in areas such as biotech, medicine, and pharma. China has now eclipsed the MIT area in Cambridge in biotech. High value industries were supposed to be protected by Trump (see Not Again: Why the United States Can’t Afford to Lose Its Biopharma Industry 2-29-24). Recruiting biotech by China got more press in media such as the Boston Globe. The fact that Trump is slapping high tariffs on pharma while undermining academic research is more than a little dumb. Punishment of non-supporters takes priority.

Inflate external enemies and vilify opposition parties…

In the 1920s and 1930s, Germany used the threat from Communists (the “Reichstag moment” reference cited in the 2020 election period by Milley). Chile and Argentina had the same boogeyman on the way to mass murder (backed by US interests). China had the US as the enemy after 1949. North Korea is obvious enough, but they will just kill you if you look cross-eyed. That is a simpler model. Russia has Ukraine and Poland and anyone who is embracing Democracy. There is always something to inflate and use.

Now it is Democrats (“radical left”) as part of the overly repeated Trump refrain. European nations that are not led by strongmen are the bad guys. Attacks on Europe now get more ammo since they did not take orders from Trump after the fact on Iran. Russia gets a pass by Trump for Ukraine. Instead, China is the enemy for Trump and Congressional talking heads. The theory is that Trump wants the EU to break up and he can strike deals with China and Russia as the “new Triumvirate.”

That creates hard choices for the center right (“Join the red hats or die)”. The center left seems homeless and downtrodden. The reality here is that self-identified independents are bigger than the GOP or the Democrats. Trump will face an uphill battle with independents in 2026 if he continues down the current path. That said, the Democrats always fall for the traps and need to do better work in reaching Independents, who will be the key swing factor.

Attack law firms

This move against the legal profession was headline material for some time as Trump set a goal of vengeance on lawyers. He was targeting and financially damaging major firms that were willing to represent legal opposition to Trump policies in the White House or in his personal behavior. It could not have been more brazen. Some law firms fought and won. Some did not fight and saw no cash value in having a spine.

Stack the Department of Justice and Courts

The DOJ has been self-evident in staffing intent (Pirro, Patel, Halligan, Habba, the rogues gallery, etc.). In a discipline where knowledge of the law is supposed to reign, it is now about personal attachments to Trump and the vindictive pursuit of enemies. We will not dwell on it. Turn on the TV. The DOJ had widespread purges and has become a halfway house for loyalists and mediocrity who do Trump’s bidding.

Attack judges

This is a carryover from Trump 1.0 with a gender, ethnic and a racial tinge often at play. Now Trump feels emboldened to attack SCOTUS as we saw recently. They have jobs for life, so that may not be the best strategy.

Purge the military

This has been a self-evident process from the start but has accelerated with internal opposition to the Iran strategy. The recent senior military turnover begs more than a few questions on motives and intent. Hegseth has accelerated stacking his team with “his kind” (white, evangelical, and obedient). The blurring of religion and military power is considered an outrage even among many Christian military experts and retired leaders. His overt racism has infected the promotion process.

ICE as freelance enforcers

The role of ICE has been a major headline controversy that we do not need to replay. It has flowed into the budget shutdown with little room for compromise on basic reforms. The masks and violence is easy enough to see on video. The Gestapo and Stasi did not wear masks. Neither do city cops or “Staties.” Even the Nazi Brownshirts did not wear masks. A good compromise might be to have ICE wear armbands like the Brownshirts. At least there is a precedent.

That simple mask requirement is a divide without a bridge, which says a lot. The doxxing theme applies to all. On the short list of very bad ideas would be showing up at the door of a roid-rage ICE employee who owns an assault rifle and multiple handguns. On the other hand, if an ICE enforcer is ashamed to show his face, maybe he should think that through.

The massive budgets allocated to ICE is a warning sign for those worried about Trump ambitions as ICE moves from seizing and abusing immigrants (and beating on protestors) to manning airports. The logical question is “What will they be doing next?” Manning voting stations? Beating down 1^st amendment protests?

The extraordinary outlays to build more de facto internment facilities is a daunting wildcard in how far a “wannabe dictator” (to quote the former head of the Joint Chiefs) will go to suspend elections and discourage free speech and demonstrations. The fact that ICE has a bigger annual budget than the Marines raises some concerns for obvious reasons.

Shadow immunity promises for ICE. Jan 6 Part Deux?

The blanket pardon for all the Jan 6 criminals and the signals (clear statements in the case of JD Vance) of immunity from prosecution or state level prosecution for ICE sends a less-than-subtle signal to “stand back and stand by” as the next election approaches. What will happen before the election between now and then and what will happen after is a matter of speculation. What has happened already in pardons and non-prosecution is a fact. That encourages more bad behavior as Trump’s ratings hit all-time lows.

To go where no man has gone…

This above checklist is unprecedented in US history for a President even if some pieces of it surfaced occasionally along the way. It is a Trump-only set of behavior patterns across the 250 years the nation will be celebrating in 2026.

SCOTUS and Congress are the only ways to head this off. It’s time for courage and integrity to make a comeback.

Market Commentary: Asset Returns 3-30-26

Glenn Reynolds, CFA — Mon, 30 Mar 2026 14:53:11 GMT

It will only be a small, brief holy war! Trust me.

The asset return performance in 2026 has been ugly with a raft of negative numbers in tech and negative impacts on duration.
Unfavorable YTD UST curve shifts throw the favorable move of 2025 into reverse with sharply higher mortgage rates a threat to housing (see UST Deltas: Elevation Realities 3-29-26). We see bouts of UST curve relief (including today) as the handicapping ebbs and flows.
A wide array of energy related household costs and price threats could undermine consumer health, spending appetites, and GDP growth after a poor set of 4Q25 growth numbers (see GDP 4Q25 Second Estimate: Sharp Move Lower 3-13-26).
The stagflation threat remains real, and the juggling act of inflation vs. payroll fears and cyclical growth setbacks make for a very challenging set of conditions for the FOMC, which has seen the predictability of policy thrown into a state of disarray with Warsh facing a big challenge when he eventually gets in front of a confirmation process.

The update of the high-level debt and equity benchmarks captures the obvious pain of 2026 with all negative numbers for 1-month and 3-month timelines for both debt and equity. Tech and growth stock returns in the chart are especially ugly with double digit negative returns for the NASDAQ and Russell 3000 Growth lines.

The recent correction headlines for the Dow, NASDAQ and Russell 2000 raise the question of whether the S&P 500 will get there in the holiday-shortened week. The S&P 500 closed Friday only down by -8.74% from the late January peak. The “buy the dip” discussions will be a recurring feature until the escalation risk plays out to a finish.

The rolling return visual

The positive vs. negative symmetry has been grim over the 1-week, 1-month, and 3-month horizons. We see the weak numbers in 2026 starting to eat into the still favorable 1-year returns.

The Magnificent 7 heavy ETFs…

The tech bellwethers show only 1 positive weekly return with Apple (AAPL). We see zero positive returns looking back over 1 month. Over 3 months, the only 2 lines that are positive are Taiwan Semi (TSM) and the Semiconductor ETF (SOXX). For 6 months, we are up to 4 positive lines (only 3 tech lines) with the Semi ETF (SOXX) and Taiwan Semi (TSM) well ahead of the comps. Alphabet (GOOGL) is a distant #3. The Equal Weight S&P 500 Index (RSP) was barely positive for 6 months at +0.76%.

The commentary below is mostly a cut-and-paste from an earlier post on LinkedIn on Sunday with some additional inputs:

The chart details the weekly returns for the 32 benchmarks and ETFs we monitor. While this week overall was another grim one with NASDAQ and S&P 500 posting negative returns, the small cap Russell 2000 and Midcaps posted positive returns for the week even as they struggled YTD with small caps in the red and midcaps slightly above 0% YTD.

Small caps had already entered correction territory the prior week. The S&P 500 shows half the industry sectors in correction as the S&P 500 and NASDAQ reside in the bottom quartile this week as noted in the chart. The11 S&P 500 sectors showed a higher positive count this week than the last few with the positive count doubling to a still unsightly 4 of 11. The 4 positive S&P 500 sectors included Energy, Utilities, Consumer Staples, and Materials.

We see a positive vs. negative score of 13-19 this week in the 32 asset lines in the chart, and that is better than the 6-26 last week and the 3-29 the prior week. Tech was a mess last week with the Equal Weight NASDAQ 100 ETF (QQEW) in last place and the bottom 4 including Communications Services (XLC), the Tech ETF (XLK), and NASDAQ (IXIC).

The UST curve has been going the wrong way in 2026 with UST deltas rising YTD. We saw 6 of 7 bond ETFs in negative range this week with only the short duration UST (1Y-3Y) ETF (SHY) able to edge (barely) across the zero line into positive range.

We looked at the running YTD UST deltas in a LinkedIn post on Friday and updated that in a separate note on the weekend (see UST Deltas: Elevation Realities 3-29-26). The 30Y Mortgage rates have edged higher with the Mortgage News Daily survey closing at 6.64% on Friday. That comes after a brief dip below the 6.0% line in late February.

As already detailed in separate commentaries, the FOMC handicapping has been dramatically revised since the Iran fallout. Using the Oct 2026 FOMC meeting as a guide, FedWatch as of Monday morning has set the odds at 89.7% (up from 74.5% on the weekend) that fed funds will remain unchanged. There is an 8.1% (down from 23% on the weekend) chance of 1 hike and a 2% chance (up from 0% on the weekend) of 1 cut by then. As of 1 month ago, the odds were a 35% chance of 2 cuts.

The shifting debate is whether the oil spike will materially undermine growth and prompt Fed caution. It is worth noting that we have seen negative GDP growth in some quarters during past cycles without an NBER recession flag being thrown.

Iran has complicated life for the FOMC and Warsh. We assume Trump will continue to demand multiple cuts and negative real fed funds rates. That outcome just got more event-driven in nature. It takes more than a few Trump-appointed votes to make that happen.

The commentary below is mostly a cut-and-paste from an earlier post on LinkedIn on Sunday with some additional inputs:

The chart updates the weekly “Tech Check” list with 32 benchmarks and ETFs that we built out since the AI mini-panic and now the Iran drama. The simple realities include a higher UST curve flowing into discount rates that could be used in valuation. Shifting revenue expectations on price and volume are among the more obvious worries.

The positive vs. negative score is not pretty at 5-27 this week. That score is below the 8-24 from last week and 7-21 the prior week. If we take out the Russell 2000 and Midcaps (MDY) from the positive count this week, we only see Cisco (CSCO), Advanced Micro Devices (AMD), and Apple (AAPL) slightly positive.

We see a long negative tail with Micron (MU) on the bottom at -15.5% with Meta (META) also in double digit negative return range at -11.4% after the court decisions. Within the mix of Mag 7+3, we see 6 of the Mag 7 in the red and the same for 9 of the Mag 7+3. That’s a bad week.

The more mature “incumbents” are in the top quartile even if 3 of the top quartile members (Taiwan Semi, Tesla, Apple) posted negative returns. That is a low bar to clear to make the top tier.

The wrestling match around AI undermining current business models is ongoing, and the YTD returns for numerous SaaS-centric bellwethers are downright glum. The trailing 1-month score is 4-28 and 7-25 YTD.

For the YTD period, we see 5 of the bottom 6 in the YTD Tech Check from the SaaS-heavy services tier. YTD returns in the bottom 6 range from Zillow (Z) at -40.7% coming in last to FactSet (FDS) at -31.6%. FDS is 6 notches off the bottom. The top of the lowest quartile was the Software ETF (IGV) with a YTD return of -27.2%.

More investors are flagging the direct and indirect impacts of Iran on pricing, volumes, and overall demand and the potential to undermine unit cost structures. That includes the full range of global tech and services industries from semiconductors to data centers. Assumptions around growth rates (and thus multiples) are subject to challenge.

Meanwhile, cyclical anxiety can flow into IT budgets and what that means for tech sector growth rates and pricing power. Valuation and buy-the-dip signals get debated daily, but the moving parts are anything but straightforward when it comes to Iran. Tariffs were easier for investors to quantify with more confidence.

The 1-month review of the 32 benchmarks and ETFs weighed in at a score of 3-29 with only the 3 main energy ETFs in positive range across the E&P ETF (XOP), Energy (XLE), and Midstream ETF (AMLP). We see a Hi-Lo return range from #1 to #32 at 39 points with Homebuilders (XHB) sitting on the bottom at -16.1%. The median return in the mix of 32 was around -7.0%.

The trailing 1-month score for the 32 “Tech Check” names was 4-28 with Palantir (PLTR) at #1 followed by Intuit (INTU) at #2, Advanced Micro (AMD) at #3, and Cisco (CSCO) at #4. Taking the #1 rank only required a +4.28% return for PLTR. Meanwhile, the bottom quartile showed 7 of 8 lines with double-digit negative returns. Meta (META) sat in dead last at -18.9% after the adverse court decisions. We see 3 of the Mag 7 in the bottom quartile with Alphabet (GOOGL) and Tesla (TSLA) joining Meta in the lowest tier.

The YTD “Tech Check” list underscores a grim year with a 7-24 score. That includes Midcaps at barely positive. The heavy mix of SaaS-centric services names dominate the worst returns with Zillow (Z) in last place at -40.7%. We see such names comprising 5 of the worst 6 with Intuit (INTU) at -37.1%, ServiceNow (NOW) at -35.1%, Salesforce (CRM) at -32.3%, and FactSet at -31.6%.

At the top of the bottom quartile we see the Software ETF (IGV) at -27.2% just ahead of Oracle at -28.2%. That is a grim set of returns at the low end that drove a Hi-Lo range in the 32 Tech Check names of almost 72 points. At the top of the rankings we see Applied Materials (AMAT) at +31.2% with Micron (MU) #2 at +25.2% and longtime legacy leader Intel (INTC) at #3 with a +16.9% YTD.

The 3-month period for the broader mix of 32 benchmarks and ETFs posted a score of 9-23 with energy ETFs (XOP, XLE, AMLP) holding down the top 3 slots followed by the more defensive Utilities ETF (XLU). An interesting twist was the cyclical Materials ETF (XLB) given the heavy chemical mix and the ability of US petrochemicals names to see upward pricing power in the Iran global meltdown. The US producers maintain access to lower cost natural gas feedstocks.

For bond ETFs, we see 6 of the 7 in negative range with the short duration UST 1Y-3Y ETF (SHY) very slightly positive. We covered the UST curve dynamics in this post-Iran mess in a commentary posted yesterday (see UST Deltas: Elevation Realities 3-29-26). The to-and-fro on inflation risk vs. cyclical pressures on payrolls will keep bulls and bears armed with talking points, but the potential for stagflation is on a scale we have not seen since the early 1980s.

Trump was out this morning with escalation threats again and deadlines ahead. Putting war crime threats in print (power plants, water, etc.) is not a PR enhancer with allies. The potential response from the Houthis adds one more major threat to shipping costs and supply and even more importantly a fresh potential oil supply shock via the Bab-el-Mandeb Strait. The threatened actions against Kharg Island and Iran power plants would take the Iran War to a radically more intense level.

The trailing 1-year still impresses at 27-5 as the numbers keep benefiting from earlier results in 2025. The BDC ETF (BIZD) is the outlier at -19.3% with Financials (XLF) in second to last at only -3.26%. Homebuilders (XHB) and Real Estate (XLRE) are showing the adverse impact of the UST yield curve. The Equal Weight NASDAQ 100 ETF (QQEW) joined the 5 negative lines for the past year.

The top tier shows E&P (XOP) and Energy (XLE) well ahead of the pack. The Tech ETF (XLK) is still in the top tier despite the -9.9% performance over the last 3 months. A notable ranking for LTM is the fact that Russell 2000 is ahead of the NASDAQ and S&P 500 despite the small caps being the first benchmark to post a correction in this recent sell-off. The correction parade included the NASDAQ and the Dow to end last week with the S&P 500 a short distance away from the magic -10% correction line. We see a rally today (Monday morning) in stocks and bonds after a rough week.

See also:

Market Commentary: Asset Returns 3-23-26

Market Lookback: Confusion Reigns, Dislocation Pours 3-22-26

Producer Price Index Feb 2026: Getting Warmer 3-18-26

Industrial Production Feb 2026: Capacity Utilization 3-16-26

Market Lookback: The Gulf of Cause and Effect 3-15-26

PCE Inflation Jan 2026: Personal Income & Outlays 3-13-26

Housing Starts Jan 2026: Total Starts Up, Completions Up, Permits Down 3-12-26

Employment Situation Feb 2026: Payrolls Get Ugly 3-8-26

UST Deltas: Elevation Realities

Glenn Reynolds, CFA — Sun, 29 Mar 2026 18:45:09 GMT

Higher tariffs, energy costs, and UST supply are not all that magical.

The combination of Iran side effects and lingering tariff uncertainties is the enemy of duration given the UST trends, but the scenarios also bring materially negative fundamental factors into play at the industry and company level on a global scale.
The impact on mortgages has been damaging with Friday closing at 6.64% for 30Y mortgages. The shifting FOMC odds now point at hikes in 2026, so we can expect a lot of noise from the White House during a Fed transition period that is not even set yet with the DOJ think tank playing games on Powell and some Senate types not happy.
Lurking in the background is the USMCA review that will come at a crucial time when Trump sees worsening relations with all major trade partners around support for his chosen geopolitical game plan. China has much to worry about in the Middle East.

The commentary below builds off a recent LinkedIn post of ours.

The chart updates the YTD UST curve deltas as the market wrestles with inflation anxiety around Iran fallout and gauges how badly the odds of FOMC easing have been damaged. We now see FedWatch showing a higher chance of hikes in 2026 than cuts.

The more intensive the media coverage of the Strait of Hormuz, the more markets hear about the full scale of the supplier chain impacts that go well beyond oil and LNG and spill into a wide range of downstream production supply risks and unit cost pressures.

We have the Houthis in the picture now getting warmed up as well as yet another oil volume threat given the importance of the Red Sea shipping routes and the Bab-el-Mandeb Strait. Oil is the main focal point, but any escalation into the Red Sea would also flow into broader shipping and freight costs overall.

The relationship of cost pressure to pricing is a natural one as the market knew even if the White House was still learning (maybe). Even if the monetary purists will not call it “inflation” and take the “transitory” or “one time” interpretation, more Iran fallout would lead to even more erosion of affordability for the “household basket.”

The threats from Iran fallout cut across the full spectrum from high value-added to commodity-like products. We hear about market setbacks from semiconductors to fertilizers, organic and inorganic chemicals, pharma ingredients, and metals (notably aluminum) among others. Handicapping that into inflation targets from PPI to CPI across regions and subsectors is no small challenge for the burdened planners and economists.

The significance of low-cost power (notably electricity) in the Gulf covers a lot more than just fertilizer/metals. Even data centers are on the alert to risks of escalation and scenarios of more missiles and drones flying (and perhaps boots on the ground). The immediate speculation is around which military actions will amp up (82^nd Airborne drops, Marine landings, bombing escalation of energy assets and power plants, island seizures, etc.). The decisions could bring an exponential increase in secondary and tertiary multiplier effects. Extreme escalation could even pull in Iraq into more action given the heavy Shiite mix in its country and armed forces.

There are also the inherent knock-on effects of rising costs across the supply chain for materials and components as costs need to be eaten or passed on. That means Asia and Europe where exports to the US could have a price impact. At least the dollar is recovering, but that comes with higher rates and higher costs for nondollar economies to buy dollar-based energy and food (notably ag commodities).

The above chart breaks out just the past week’s UST deltas. The front end got a little relief.

The “FOMC Vegas Line” says hikes more likely than cuts….

The shifting odds in monetary policy are something you cannot blame on Powell. There are 19 bodies in the dot plot with 12 FOMC votes (not the 7 Board of Governors). Trump’s foreign policy actions are driving the bus, and the Fed will need to react under its dual mandate (price stability, full employment). We will get a slew of employment data this week including JOLTs, ADP, and the payroll data on Good Friday. The Iran wildcard shifted the weight back toward price stability from payroll unless the jobs data says otherwise.

The impact on the UST curve as shown in the chart is in flux. We already have seen material, stark revisions of FOMC handicapping and mortgages are climbing. The Mortgage News Daily (“MND”) and Freddie Mac 30Y numbers are on the rise with MND posting 6.64% Friday close. Freddie Mac 30Y was set Thursday afternoon at 6.38%, which is up from 6.22% last week and down from 6.65% last year at this time.

In terms of the “Vegas line” on FOMC (i.e., CME FedWatch), we can look to the Oct 2026 FOMC meeting as a guide. As we go to print, we see 74.5% odds of fed funds unchanged, 23.0% odds of 1 hike, 2.4% odds of 2 hikes, and the odds of 1 cut at a cool 0.0%. As of 1 month ago, the odds of 2 cuts by Oct 2026 was over 35%. That has been a very dramatic swing in the handicapping with a lot still to play out.

You can link to the FedWatch site and go meeting-by-meeting for shifting odds. The odds of a fed funds hike rise gradually into June (7.7%), July (9.5%), Sept (20.4%) and then Oct (23.0%). That was from Sunday morning post time.

The above chart is a simple YTD price performance chart of the short duration 1Y to 3Y ETF (SHY) vs. the long duration UST 20+Y ETF (TLT). It is a low ambition chart that breaks out how the bond ETF curve risks played out so far in 2026. We see both in negative territory YTD in price returns. Duration took a hit on the curve shift YTD.

For the TLT, the 1-month return as of Friday was -5.6% across a timeline when many were still talking about FOMC easing. As evident in the time series, TLT was shaping up as a winner into February and then reversed course with Iran and is now back in negative range. We covered those shifting odds on “cuts vs. hikes” in the prior chart. SHY for the 1-month was a slight negative at -0.68%.

The above swings unfolded during a period where we still heard Powell blamed by Trump for everything and Trump’s own policies blamed for nothing. That is his right to indulge, but the 19 (12 + 7) dots in the dot plot are more than one economist with opinions. They know as a fact the “buyer writes the check” for the tariff (Trump still says the seller and selling country pays. That is false.). The fact that Trump sticks to that version of “facts” on tariffs is alarming. Pride – whether admission of error or just being wrong – dictates reality. Export that mentality to “war decisions,” and that offers troubling signals.

If an asset allocation strategy is pondering the basic, high level asset allocation decision of equities vs. bonds, the last 60 days tell a story that life just got more complicated. Over the past month, the UST curve took a decided turn for the worse as detailed above. That backdrop faces considerable uncertainty in the Iran War and related reverberating effects that hit many different subsectors in the US as well as bringing severe global impact (see Market Lookback: Confusion Reigns, Dislocation Pours 3-22-26).

The above chart updates the running 10Y UST vs. the Freddie Mac 30Y mortgage (Freddie is set on Thursday). We see the 5.98% recent low for 30Y ahead of the invasion. The 10Y UST drives 30Y mortgage rates and it has been going in the wrong direction.

The above chart updates some notable points in history for 30Y mortgages and the UST yield curve. The dates include Friday’s numbers and the yield curve and mortgage rates at the end of the peak homebuilding year of 2005. We also include mid-2006 as the quality erosion in RMBS (notably subprime) was starting to rattle some corners of the market.

That mid-2006 period was before more serious problems in 2007, when hedge funds started blowing up and mortgage banks were seeing the crisis unfold in the summer of 2007 (e.g., Countrywide was soon rescued by BofA) on the way to the systemic bank crisis of 2008.

We highlight that current mortgage rates just moved ahead of 2005 with the next stop potentially at the mid-2006 levels. Things did not go well for housing after that. We also highlight the flat yield curves of late 2005 and mid-2006 and how that contrasts with the upward slope of the UST we see today. Some FOMC tightening in 2026 or some upwards shifting by the UST curve would raise a lot of bearish lookback commentaries.

The above chart updates the 2Y to 30Y slope using the shorter time horizon while the chart below details the long-term time horizon from 1984. We see the curve slope effects of rising inflation and then into a tightening/easing cycle with the recent 2Y to 30Y at +110 bps, which is only modestly below the long-term median of +122 bps.

The period from early 2021 to current times was very distinctive on the journey from ZIRP and then across the most intensive inflation cycle since the early 1980s. The 2022/23 period saw a relatively brief but very successful tightening cycle that triggered no recession. By the end of 2024, CPI was back straddling the 3.0% line at 2.9% in Dec 2024 (see CPI Feb 2026: It’s Making You Wait… 3-11-26). Trump likes to pretend his term started in Jan 2025 at 9.1% inflation.

During 2022, the economy pushed right through the worst of it with low unemployment and higher rates of personal consumption expenditure (PCE) growth (see Unemployment, Recessions, and the Potter Stewart Rule 10-7-22). Financial assets (debt and equity) were slammed in 2022 by the tightening cycle and market worries but came storming back in 2023-2025 (see Total Return Quilt Across Asset Classes 2008-2025 1-2-26).

The challenge now has more fundamental factors at work that are hitting economies hard globally with the worst of the lag effects ahead.

The journey across the cycles – economic or monetary – shows a wild ride with the 2Y to 30Y slope posting material moves for bond asset allocation in the “duration vs. credit” decision.

A stagflation scenario makes the allocation process especially difficult. That will be the challenging exercise in allocation decision-making ahead. We have not faced this type of decision since the period when the modern capital markets and corporate bonds were just getting launched in debt markets (early 1980s).

The severity of the “Iran trap” and very unstable and dysfunctional US political backdrop will be brutal to navigate. Even getting Warsh nominated is being held back by the brain trust at the DOJ investigating Powell in a politically motivated intimidation action. The leadership of the FOMC is thus under a cloud for a while.

Market Lookback: Confusion Reigns, Dislocation Pours 3-22-26

Producer Price Index Feb 2026: Getting Warmer 3-18-26

Industrial Production Feb 2026: Capacity Utilization 3-16-26

Market Lookback: The Gulf of Cause and Effect 3-15-26

PCE Inflation Jan 2026: Personal Income & Outlays 3-13-26

Housing Starts Jan 2026: Total Starts Up, Completions Up, Permits Down 3-12-26

Employment Situation Feb 2026: Payrolls Get Ugly 3-8-26

Market Commentary: Asset Returns 3-23-26

Glenn Reynolds, CFA — Mon, 23 Mar 2026 19:20:57 GMT

A Whole New World…for 5 days?

The wags are already out there declaring “Taco Monday” but the ability to manipulate markets with a combination of brinkmanship and false deal chatter will remain a tactic to watch… that is, until it stops being a tactic.
The matchup of Trump whims vs. Iranian ideologues is a very challenging game when one side is offered extinction (or submission) and the other side shows a lack of consistency and confuses the world with so many conflicting statements. The backdrop will remain an endurance contest until the offramp materializes and Hormuz opens to a wider range of nations.
The rising cost of energy remains a fact of life with the question of “how high and for how long” the ongoing handicapping exercise. The big decline in oil today still sits on a very thin layer of assumptions. As we saw in the FOMC odds-making data (e.g. FedWatch) the probability has now shifted to negligible odds of FOMC easing in 2026 with higher odds of hikes by the fall per FedWatch (see Market Lookback: Confusion Reigns, Dislocation Pours 3-22-26).
Given the whipsaws of information and disinformation that are intrinsic to this high stakes “game theory” (if it can be called that), we saw the VIX swing to 31 before dropping back to just over 25 as we go to print. The Hormuz situation is being managed in a way that helps Iran (and Russia) and takes some pressure off China and others in Asia who are getting very annoyed. Meanwhile, Europe and Trump hold tighter to their mutual disdain (see VIX: Market Still Not Getting the Vapors 3-6-26). That could spell trouble later on trade.

The above table updates the running returns across a range of timelines for our high-level debt and equity benchmarks. We line up the indexes in descending order of 1-year total returns.

The ugly 1-month numbers are apparent in the across-the-board negatives for debt and equity. For the rolling 3-months, only the Russell 2000 small caps generated a minimal positive return of just under +1.0%. Looking back over 6 months, large caps still struggled in the red zone while Russell 2000 and Russell 3000 value were at least positive. Growth benchmarks were negative with NASDAQ at -4.0% and Russell 3000 growth at -8.5%.

The rolling return visual

There is not much mystery in the return symmetry over 1-week, 1-month, and 3 months with the heavy weighting of negative returns. The story is clear with the word “correction” creeping into the market commentary lately.

The reality is corrections are quite common across cycles, so that is routine across time. The 2018 volatility in Trump 1.0 saw some corrections and even bear market commentary after a summer of 2018 that also saw some record highs (see Histories: Asset Return Journey from 2016 to 2023 1-21-24). Few in Washington seem to remember that 2018, back during Trump 1.0, saw negative returns on all the major bond and equity indexes. Cash was a top performer with sub 2% returns. 2018 continued what would be a record expansion from mid-2009 until COVID in Feb 2020.

What makes this market different is the long-term speculative flavor in tech and AI and now the turbocharged short-term speculation of geopolitics and how an Iran War will play out. Relative to the fruitless wars in Afghanistan and Iraq, a sustained clash with Iran would be without doubt the most unpredictable kind of war. That is especially the case given the history with the US vs. Iran, the decades of preparation by Iran for a war with the US, and the radical extremism of a heavily indoctrinated nation of over 90 million. Trump is not dealing with a spineless GOP Congress. This is the “bomb vest crowd” and not a limp and lame Senator looking to duck a primary. Trump may be using the wrong tactics.

Further below, we also look at the YTD “Tech Check” peer group of 32. That YTD timeline had a top quartile with negative returns in the bottom 2 slots with the Russell 2000 and Midcaps. The YTD charts for the tech check showed a 6-26 score for positive vs. negative.

Tech was the defining broad sector play with “AI fixation” but that started to go awry on AI fallout speculation. Now we add a damaging Iran War backdrop, energy spike, and supply crisis not only in energy but also across numerous critical supplier chains (helium sulfur, fertilizers, pharma inputs, etc.) that flow into pain for tech and agriculture among others.

The Magnificent 7 heavy ETFs…

The above table updates the tech bellwethers against some broad benchmarks and notable subsector ETFs. For the week, we see a single line in positive range with the Semiconductor ETF (SOXX). All the Mag 7 names are negative and the same for the collective Mag7+3 (with Taiwan Semi, Broadcom, and Oracle). The Equal Weight NASDAQ 100 ETF (QQEW) was second with a negative return while Tesla was on the bottom at -5.9% and NVIDIA second to last at -4.2%.

We see a lot of negative returns across 1-month and 3-months with Tesla uglier than most back to 3 months. Even NVIDIA is in the red back to 6 months. Microsoft is in the red all the way back to trailing 1 year. Meta and Amazon generated negative returns back to 6 months. This backdrop is not 1999-2000 with the wide array of cash bleeders, but the valuation excess debate will not go away.

The software leveraged finance excess will remain a hot topic in private credit and how more trouble could reprice higher risk credit alternatives and lead to more dramatic HY bond repricing from the bottom up, but that is a story for another time.

The commentary below is mostly a cut-and-paste from an earlier post on LinkedIn on Sunday with some additional inputs:

The above chart posts the weekly returns for 32 benchmarks/ETFs we monitor. The 6-26 positive-to-negative score marked an improvement from the 3-29 last week. That was a low bar.

Narrowing down themes is hard since it was a week where most everything went wrong even if energy assets performed well. Rates, cyclical expectations, fear of stagflation and myriad scenarios including steady escalation of a damaging war has dramatically shifted the odds of Fed easing and rising odds of FOMC hikes.

We cover the revised probabilities from FedWatch in a separate note (see Market Lookback: Confusion Reigns, Dislocation Pours 3-22-26). The news is not good even if Trump once again backed down by Monday on his threat to escalate by bombing civilian power assets (actually a war crime). That action would have crushed markets and set off chain reactions in the Gulf. The stagflation scenarios remain stubborn.

The checklist presents a range of fundamental, financial and geopolitical risks subject to decisions that face a lot of scrutiny. There is no shortage of “March of Folly” history where leaders ignore the realities of critical risks that cause wars and bring severe consequences. The rise of nationalism (think Vietnam), political ideologies (think China), ethnic enmity (think Balkans), religious factors (think Middle East) or racial lines (think South Africa) have brought their share of brutal wars and mass death.

Power-hungry, arrogant leaders often think they know more than everyone else (whether “the Best and Brightest” of Camelot or MAGA) and often fail to properly factor in underweighted risks. If they fail, they go about finding someone to blame when it all blows up. We are now in one of those N+1 moments.

Bad decisions and flawed assumptions are reflected in the current misinformation waves and recurring brinkmanship. The idea seems to be you just threaten to kill people to get them to submit. It is not a new strategy, but it is usually not plan A when you threaten the “martyr” and “bomb vest” culture.

Away from war scenarios, interest rate sensitivity and global cyclicality remain headwinds with Base Metals (DBB) last in weekly returns and Utilities (XLU), Materials (XLB), Homebuilders (XHB), Consumer Staples (XLP) and Real Estate (XLRE) among the worst performers. Materials (XLB) faces hydrocarbon-heavy costs and cyclical end markets.

The S&P 500 posted positive returns in only 2 of 11 sectors with Energy and Financials. In the ETF mix, XLF faced tough headlines and negative returns for the 1-month and 3-months. XLF is 2nd to last over 3 months with only Consumer Discretionary (XLY) worse. When financials and consumer names both struggle, that should ring some bells.

The 6 of 32 positive include 3 across E&P (XOP), Energy (XLE), and Midstream (AMLP). We see stragglers such as Financials (XLF) and the BDC ETF (BIZD) back in positive range this week. BDCs were a rock bottom performer over LTM at -15.6%.

Transports (XTN) was barely positive after posting negative double-digit returns over the trailing 1-month on airline pain and the potential for freight trouble as fuel cost soar and working capital dislocation could plague trade flows.

The commentary below is mostly a cut-and-paste from an earlier post on LinkedIn on Sunday with some additional inputs:

The above chart updates the returns on our “Tech Check” names that we started tracking with the AI replacement panic before the Iran War pyrotechnics. This week we added 4 more names to the list for a total of 32 companies, market benchmarks, and ETFs.

In descending order of market cap, we added Micron (MU) with $477 bn in market cap, IBM with $227 bn, ServiceNow (NOW) at $115.4 bn, and Adobe (ADBE) at over $101 bn.

IBM checks off a box as a legacy diversified tech and services operator. NOW and ADBE are in the IGV ETF. Of the four added, Micron was ranked #1 in performance YTD with IBM in the 3rd quartile and NOW in the bottom quartile at a YTD of -27.9% just ahead of ADBE at -29.1%.

The return score weighed in at 8-24 for positive vs. negative with fresh signs of a slow SaaS rally as AI displacement fears struggle to find the right valuation. Intuit (INTU), Zillow (Z), FactSet (FDS), and Salesforce (CRM) were in the top quartile this week. All four of those are deeply negative YTD and in the bottom quartile returns.

The top tier performers for this week were Applied Materials (AMAT) at #1 followed by Advanced Micro (AMD) at #2 with Qualcomm (QCOM) and the Semi ETF (SOXX) in the bottom two slots of the top tier.

The Mag 7 was entirely in the red with 4 of 7 in the bottom quartile (TSLA, NVDA, MSFT, and META). We see Alphabet (GOOGL) near the upper end of the second quartile with Apple a few slots below that, also in negative range. Within the Mag 7+3, we see Oracle (ORCL) and Broadcom (AVGO) in the bottom quartile with Taiwan Semi (TSM) just across the line at the bottom of the 3rd quartile.

Making a top quartile spot only required a positive return. The NASDAQ was negative and in the third quartile with the S&P 500, Midcaps, and the small cap Russell 2000. The Software ETF (IGV) was at the top of the third quartile.

We await the market wrestling with how to treat the Iran War fallout and how that could impact corporate sector IT budgets, AI economics, and how the software players will navigate what is expected to be some credit contraction headlines ahead in private credit.

The 1-month returns for the broader peer group of 32 benchmarks and ETFs weighed in at an ugly 3-29 positive vs. negative. The 3 positive lines were comprised of the E&P ETF (XOP), the broad Energy ETF (XLE), and midstream energy ETF (AMLP). We see 5 of the 8 names in the top quartile with negative returns for the month. That tells the story by itself.

The bottom tier shows the increasing worries about UST curve dynamics and stagflation worries. We already detailed the radical shift in FOMC handicapping, and the steep UST curve in a separate commentary (see Market Lookback: Confusion Reigns, Dislocation Pours 3-22-26).

The bottom performer was Homebuilding (XHB) as residential struggles in this market (see New Homes Sales Jan 2026: The Nays Carry 3-19-26, Existing Home Sales Feb 2026 3-10-26). We see some of the commodities sensitive cost structures feeling the pain and the same for cyclicals. The Transports ETF (XTN) has been hit hard as jet fuel spikes and diesel costs soar. Airlines (excluding Delta) have been crushed even if they see some relief today on the oil plunge of the day.

The 1-month “tech check” names posted a score of 8-24 on many of the same issues we discussed in the 1-week section. The challenge for tech valuation is increasing now given the inherent cyclicality of many customers and the potential need to revisit expense and capex budgets.

Challenges such as power costs will keep the focus on unfavorable energy CPI trends (even ex-oil) as electricity and piped utilities gas have been major headlines. Now we add oil into the equation along with soaring downstream products (gasoline, jet fuel, diesel).

We see the top quartile posting positive returns and everything else negative. Within that top quartile mix, we see some gradual recovery from the pain delivered in the SaaS panic. The YTD negative returns are broken out in the next chart. The top quartile in the 1-month returns includes such names as Intuit (INTU), FactSet (FDS), ServiceNow (NOW), and Salesforce (CRM). As detailed in the next chart, all 4 of these names remain deeply negative YTD. We see Zillow still in dead last YTD as that name had more than its share of other challenges.

The YTD Tech check tells a clear story with a score of 6-26. Two of the top quartile names are negative and comprised of Midcaps S&P 400 ETF (MDY) and Russell 2000 at #7 and #8, respectively.

The winners YTD include Micron (MU) at #1 with a dramatic ride higher of +48.2%, Applied Materials (AMAT) at #2 with 38.9%, and Intel (INTC) #3 at 18.9% with the SOXX ETF at #4. Taiwan Semi (TSM) and another legacy name, Cisco (CSCO), rounded out the 6 of 32 running with positive returns YTD.

Sitting on the bottom is the collection of names impacted by the AI displacement panic. We see Zillow (Z), Intuit (INTU), ServicesNow (NOW), FactSet (FDS), and Salesforce (CRM) all worse than a -26% return YTD. Adobe (ADBE) was also in the bottom mix at -29.1% as various software names drove the Software ETF (IGV) to -21.4% at the bottom of the 3^rd quartile.

The 3-month mix across 32 benchmarks and ETFs stayed relatively consistent with a score of 10-22 and energy related ETFs (XOP, XLE, AMLP) holding down the top 3 spots with Utilities (XLU) a distant #4.

We see no tech-centric names in the top quartile, but the benefits of the earlier sector rotation saw the top quartile feature Industrials (XLI), Materials (XLB), and Consumer Staples (XLP). Real Estate (XLE) managed to edge into the top quartile despite the UST curve setbacks.

The bottom quartile mixed in some tech with interest rate sensitive equities (XHB) and some asset quality concerns found in the BDC ETF (BIZD) and Financials (XLF).

The trailing 1-year score of 29-3 is still living off the “old days” with the top quartile featuring Energy (XOP, XLE) on top and the Tech ETF (XLK), NASDAQ, and Communications Services (XLC) in the upper tier mix. Industrials (XLI) has been a steady, solid performer with a display of cyclical resilience and solid earnings trends. Small caps had a good year and beat the S&P 500, but that has been faltering of late.

Producer Price Index Feb 2026: Getting Warmer 3-18-26

Industrial Production Feb 2026: Capacity Utilization 3-16-26

Market Lookback: The Gulf of Cause and Effect 3-15-26

Market Commentary: Asset Returns 3-15-26

PCE Inflation Jan 2026: Personal Income & Outlays 3-13-26

Housing Starts Jan 2026: Total Starts Up, Completions Up, Permits Down 3-12-26

Employment Situation Feb 2026: Payrolls Get Ugly 3-8-26

Market Lookback: Confusion Reigns, Dislocation Pours 3-22-26

Glenn Reynolds, CFA — Sun, 22 Mar 2026 20:00:38 GMT

All I said was “We don’t use the Strait.”

The “we don’t use the Strait” line is on a very long list of statements that Trump’s own terminology would qualify as “low IQ and stupid.” A globally connected market is a reality whether with or without tariffs. The Strait is a crucial factor for all major US trading partners. Under the Powell “you break it, you own it” rule, the Iran War and energy fallout is another case of “the buck stops everywhere else.”
The game of framing secondary and tertiary multiplier effects of policy actions has never been a strength of Team Trump or the economic mouthpiece echo chamber at the White House (think “seller pays the tariffs”). Hasset saying the economy would not be affected but “the consumer might be” was a new low. National Retail Gasoline hit $3.94 per gallon (3-22-26, Source: AAA) and is up 35% in a month. Diesel, which is literally a key driver of freight costs, rose to $ 5.25 or +41% higher in one month.
The energy market chaos is now juxtaposed against the material tech valuation uncertainty that has spilled over from AI. Inflation worries are heightened. The FOMC outlook is now posting odds that favor “no easing” for the remainder of 2026. We even see rising tightening odds. Trump can’t blame Powell or Biden for this one (but he will). Higher short rates or any bear steepener of the UST curve undermines sea level economics (demand, unit costs, working capital, durable goods financing, and more), hurts valuation of growth equities, and falls directly on the housing sector via mortgage rates. The Mortgage News Daily survey ended Friday at 6.53%.
The Fed meeting gave the impression that the SEP report and dot plot should be discounted. The SEP report saw mixed adjustments to the overall 2026 expectations given the array of highly uncertain variables. Even Powell essentially said (our paraphrase): “If you were going to skip a SEP report, this would be the one.” We revisit the overall flavor of FOMC updates and the dot plot further below.
The geopolitical policy incoherence on the Iran War game plan dictates energy market handicapping (escalation risk by US, duration of Hormuz closing, damage to infrastructure now or potentially coming, Gulf nation planning for their operations). The discussion of how to frame inflation fallout is complex, but monetary policy predictions lean toward “do nothing for a while.” That is what the market is signaling. The consumer reactions and corporate budgeting plans in turn will set the bar for the cyclical outlook with the consumer (PCE) at 68% of GDP and small business the key driver of payroll. Fixed investment plans (capex) could shift along the GDP line mix.
The global nature of oil and gas supply/demand imbalances means global cost trends and supplier chains face turmoil regardless of the US being a major oil exporter. The US energy players will mint cash flow. So will the Canadian oil sands. On the other hand, the semiconductor chain (helium has been a hot topic), pharma ingredients (downstream derivatives), the fertilizer chain, and myriad unit cost pressures along the supplier-to-OEM chain will be headwinds. Cyclical end market demand comes into play as moving parts across US export demand and US import pricing. Data centers will face new challenges in costs and project economics. That gets back into the AI longer term valuations.

The above chart updates the equity market fallout across some of the major trade partners using benchmark indexes. We detail US, Europe, China, and Canada above. The returns on such ETFs reflect the effects of Iran, and it is not pretty. We have commented on these time series frequently. The US had been lagging in last place through much of 2025 on weak currency trends. That has now shifted as everyone tanks.

What we see since the Iran War started is that the US has moved up to #2 behind Canada but everyone has faded sharply. The Iran fallout hits everyone even if you don’t – in Trumps words – “use the Strait.” For the record, that statement is factually incorrect since the Strait “supplies the suppliers” with Europe, China, Taiwan (and more) very much influenced directly by the Strait. Similarly, the tech sector has been getting analyzed by industry experts on how the supplies out of the Gulf region are critical drivers of tech activity in Taiwan and South Korea, who are both selling critical tech goods to the US. That certainly matters to the US. So does the fertilizer cost issues in the ag sector.

FOMC update: small moves, big questions

The FOMC is not getting the focus it was getting in 2025, with minimal expectations of near-term action priced into the market. For a quick summary of the SEP moving parts, we line up a few points below for those who took Powell’s unspoken (sort of) advice to discount current forecasts in light of the magnitude of the risks and moving target variables:

Dot Plot: The score was 7 of 19 votes calling for no change in 2026 and 7 calling for 1 cut as “appropriate.” There were 2 dots calling for 2 cuts, 2 votes for 3 cuts and 1 calling for 4 cuts. The 4 cuts would be in the 2.5% to 2.75% range. As of now, Trump has been demanding a negative real fed funds rate.
GDP Growth: The median ticked higher to 2.4% in March from 2.3% in the December meeting, so it is better than what we saw in 2025 after the weak 4Q25 numbers (see GDP 4Q25 Second Estimate: Sharp Move Lower 3-13-26). The 2% handle GDP growth is standard mediocrity in the new millennium. As a reminder, annual GDP growth was 2.1% in calendar 2025 vs. 2.8% in 2024 (just don’t tell Hassett).
PCE inflation: The headline PCE inflation median ticked up to 2.7% for 2026 from the 2.4% in December 2025. The energy cost and tariff cost estimates require a Ouija board at this point to commune with dead doves and stuffed hawks. Payroll will be the swing factor but with the first stagflation threat since the Volcker years.
Core PCE inflation: The Core PCE median rose to 2.7% in March from 2.5% in Dec 2025. That is still well above target, and that might be one reason why we saw a single hike cited as appropriate on the dot plot in 2027 (none for 2026). Odds of hikes in 2026 are rising on FedWatch.
Fed funds rate: the median projected fed funds rate for 2026 was 3.4% again in March or the same as in the December meeting.

The “Summary of Economic Projections” (“SEP report”) did not seem to have much impact at all with the Iran War ramping up, Trump raging, energy costs soaring with supply shrinking, and macro variables moving. The fact that the FedWatch odds have shifted so dramatically across the week was troubling and we just saw a whole new set of numbers roll into the FedWatch site today (Sunday).

If we use the Oct 2026 Fed meeting as an example of shifting odds, the volatility of these odds are picking up. We had been updating the odds this weekend and this morning before we looked back at the data, and it has been radically overhauled on the FedWatch site. That tells a story of the rate uncertainty.

The odds of no action in Oct 2026 was 92.0% to end the week. Those just shifted today to 59% odds of unchanged. Now the odds of one rate hike are at 29.2%. One week ago, the odds of a rate hike in Oct was 0%. That is a major shift in the numbers updated as of today. Last week, the odds of a cut by Oct 2026 was 50%. The odds of a single cut in Oct 2026 are now down to 6%. Two hikes is now at 5.4%.

Handicapping how the slope of the UST curve will shift in longer maturity segments of the yield curve has been a major wildcard since the easing cycle began back in Sept 2024. The bear steepener that unfolded after the initial bull flattener in fall 2024 and into 2025 has been tough to shake (see The Curve 12-15-25). We could see a growing worry over an upward UST curve shift.

The above chart updates the DXY trend line showing the recovery of the dollar since the Iran War kicked into high gear. We track that against the 30Y UST. The good news is that the currency risk might now be down the list for international investors. The flip side is the international investors can worry about US inflation, rising rates, and an ungodly increase in UST supply to fund much higher deficits.

“War is hell” is an old one even if Hegseth fails to footnote Sherman (we suspect Hegseth might have desired a different outcome than Sherman. Too DEI.). “War is expensive” also. We will see if any “Supplemental” bill to fund the Iran War expenses (headlines signal $200 bn) will include revenue proposals (aka taxes). Another theory is that the supplemental will be rolled into the $1.5 trillion defense ask for the 2027 budget, or essentially a 50% increase talking point even before the Iran War activity.

The time series updates the 30Y Freddie Mac mortgage benchmark (set each Thursday), and we see 6.22% or around 30 bps below where the Mortgage News Daily survey closed Friday (6.53%).

As housing support legislation gets debated, any potential benefit gets wiped away by Iran War effects as mortgage rates rise. This rate pressure can hit new home sales (see New Homes Sales Jan 2026: The Nays Carry 3-19-26, Housing Starts Jan 2026: Total Starts Up, Completions Up, Permits Down 3-12-26) as well as existing home sales (see Existing Home Sales Feb 2026 3-10-26).

The golden handcuffs in existing sales just got tighter on refinancing costs from the heavy mix of 3% and 4% mortgages held by potential sellers.

The above chart frames the current UST yield curve and Freddie Mac benchmark (horizontal line). The current 6.22% Freddie Mac 30Y is flat with the rate posted at the end of 2005, which was the peak homebuilding year of the housing bubble. We also break out the differential of the Freddie 30Y mortgage vs. the 10Y UST. The current differential is moving closer to the mid-range between the bubble period of 2005 and 2006 when a growing share of RMBS quality was getting “found out” as very high risk in the structured credit boom.

The yield curve now also presents a very different slope than what the market saw in 2005 and 2006. That period saw flat yield curves and an upward shift from 2005 to 2006. The rule of thumb is that flat signals peak or possible recession risks. The other rule of thumb is that stagflation risk throws a lot of rules out the window.

We know what came after that 2006 period as the credit markets melted down in 2008 after freezing in the summer of 2007. The fact that the S&P 500 kept on rising to highs well into Oct 2007 despite the credit market pain is worth remembering.

The above breaks out the UST deltas for the past week in what was a bad news week for the yield curve. As we cover in a separate chart set, all the bond ETFs were negative in what was even a worse week for equities.

The above chart updates the running YTD UST yield curve deltas. The +44 bps on the 2Y UST reflects serious doubt on FOMC easing unless Trump can get Pirro to investigate the entire FOMC. We assume “Judge Jeanine” is still trying to get through Monetary Policy for Dummies. Alternatively, Trump can have Markwayne Mullin threaten to beat up Warsh and any other takers.

As we cover below, there is ample room for the 3M to 10Y slope to steepen based on historical medians. The energy and tariff pain adds to the strain on global “alliances” and potential UST demand challenge (as in ongoing insults and alienation do not promote UST exposure). We also will face a lot more trade clashes in 2026 on Trump tariff action. The record US deficits and funding needs make for a strain on bull flattening optimism if allies start to dial back UST holdings. Stagflation as a threat complicates the journey to a flattening outcome.

The above chart updates the 3M to 10Y slope since 1984. As a reminder, we chose 1984 as a starting point to isolate the distorting visual effects of the record steepening and inversions of the 1980-1982 stagflation double dip. That period saw Volcker prevail in the war on inflation (CPI 1% handle reached by1986).

We detail the UST segment slopes in the box with current levels and long-term medians. The lack of confidence in FOMC cuts during 2026 leaves the shapeshifting debate more about the 10Y UST area. As detailed earlier, the 10Y UST is higher by +21 bps YTD with 3M UST +7 bps higher. The 2025 period posted a bull steepener. As of now, the 2026 action has been a bear flattener from 2Y to 30Y.

Producer Price Index Feb 2026: Getting Warmer 3-18-26

Industrial Production Feb 2026: Capacity Utilization 3-16-26

Market Lookback: The Gulf of Cause and Effect 3-15-26

Market Commentary: Asset Returns 3-15-26

PCE Inflation Jan 2026: Personal Income & Outlays 3-13-26

Housing Starts Jan 2026: Total Starts Up, Completions Up, Permits Down 3-12-26

Employment Situation Feb 2026: Payrolls Get Ugly 3-8-26

Market Lookback: The Gulf of Cause and Effect 3-15-26

Glenn Reynolds, CFA — Mon, 16 Mar 2026 01:52:14 GMT

Chaos blurs the line of sight.

The above visual showed up under a search for the Greek God of Chaos, so we ran with this one instead of a scantily clad glowering God. With the Strait of Hormuz setting the stage for material escalation of the Iran war, there are many scenarios to spin. On the “brighter side,” we already see rumored deals with Iran and India and France and Italy that offer separate pathways from more military escalation.
Trump asked for (demanded?) more military and naval support from “allies” (a tricky term these days) while issuing threats to the future of NATO (at first, he was confused and threatened to primary them). Meanwhile, Trump had just derided and rejected offers from the UK almost two weeks ago. Trump’s request for naval support from Asia and the EU could also set the stage for a fresh round of ugly rhetoric if they do not comply.
Asset performance is feeling stress, and Sunday night initial saw WTI over $100 after trading opened. It is now back under $98 as we go to print. We already looked at the asset return volatility, the equity beatdown, spiking oil, the UST setbacks of recent weeks with duration taking a hit, and mortgages moving higher. FedWatch odds are pushing the “no action” timeline out to the late fall (see Market Commentary: Asset Returns 3-15-26).

In case anyone wondered whether the Iran issue was a global macro risk, the benchmark index ETFs (with currency effects) answers that question. The trend is clear. Everyone loses from the Iran War effects.

In this case, the US has been doing better recently relative to the big 4 trading partners after spending most of 2025 in last place. We tracked that across the year and the weak dollar was a big part of it (see Market Lookback 2-17-26).

The above chart updates our UST 30Y vs. DXY time series. The dollar is mounting a comeback with the recent developments, but the UST is going in the wrong direction with budget deficits set to explode for many reasons. While “war is hell” for budget deficits, the fiscal actions and fraying global investor relationships will keep UST supply and demand as a negative factor in the overall picture.

The above chart updates the 1-week and 1-month spread deltas for IG and HY and for the BBB tier down to the CCC tier. A rising UST curve plus widening credit spreads make for unfavorable bond return math (see Market Commentary: Asset Returns 3-15-26).

The past week brought some notable moves higher along the UST curve with the 2Y UST leading the double-digit pack but with a relatively uniform rise from 2Y to 30Y.

The YTD UST has been so far delivering a bear flattener with the 2Y UST at +26 bps with the 10Y UST at +10 bps. The eroding odds of easing this year could create some interesting dialogue in the FOMC meeting this week with some veiled digs and the ability of Warsh to execute on a Trump-dictated auto-easing regime when he takes the helm in May. The Iran adventure (war? excursion?) has certainly complicated the FOMC rates picture.

The above time series updates the 10Y UST vs. Freddie Mac 30Y mortgage timeline. Freddie is set on Thursday midday, and we saw some wild action in the broader mortgage markets with the Mortgage News Daily survey at 6.41% by late Friday.

The above chart frames the current UST curve and Freddie Mac 30Y and compares it to what was in place at the end of the peak homebuilding year (2005) and the mid-2006 time frame as the RMBS quality problems were starting to surface. We also frame the differential of the 30Y mortgage and the 10Y UST.

We could start to see the 30Y mortgage rate and 10Y UST both moving higher, and the question will be whether that will drive any pricing adjustments (lower?) in the housing sector. The housing supply-demand dynamics do not signal that as likely, but we are seeing more pricing pressures in the homebuilding sector. We are not seeing that in the existing home sales reporting (see Existing Home Sales Feb 2026 3-10-26). New home sales report this week.

As noted in the UST deltas above, the UST curve is shifting higher with the 2Y UST moving more in light of the declining odds of FOMC easing. We include a number of UST segment slopes in the box within the chart and plot the longer term 2Y to 10Y in the time series line.

The upward sloping curve at +55 bps for 2Y to 10Y is inside the long-term median of +88 bps. The expectation of a bull flattener from UST bulls looks to be disappointed again, but the steepener trade will require some Fed support from the front end. The Iran events are diminishing those easing odds of late with stagflation now showing the highest risk of unfolding since the 1980-1982 double-dip years.

The above chart updates the time series for HY OAS from mid 2024, and we see the upward climb back to +328 bps from the +264 lows of Jan 2026. That remains well below the long-term median of +454 bps and post-Liberation Day spike to +461 bps in early April 2025.

While we are now comfortably above the June 2007 bubble levels where the markets have been hovering, the current +328 bps is in the neighborhood of two cyclical low points from bygone years such as in June 2014 when HY spreads hit +335 bps (6-23-14) and early Oct 2018 when HY hit +316 bps (10-3-18). Dec 2021 saw lows of +301 bps during the ZIRP period.

That history and risk-reward symmetry leaves a lot of room for HY spreads to go wider.

The above time series updates the quality spread differential for IG vs HY (HY OAS minus IG OAS). Quality spreads are trending wider but with the current +235 bps much tighter than the long-term median of +320 bps.

The above time series updates the quality spread differential between the BB and BBB tier (BB OAS minus BBB OAS). The differential of +91 bps is well inside the +132 bps long-term median and materially wider than the high 50+ bps and low 60s bps seen from mid-2024 through early 2026.

The Hi-Lo quality spread differential frames the upper HY tier BB OAS levels vs. the high risk CCC tier. The current +772 bps is wide to the +649 bps long-term median OAS. With the BB tier tight and a high mix of BBB tier investors who have dropped down into being BB tier buyers across the years, there is a different demand dynamic.

There is a different supply mix flavor in the CCC tier this cycle since the most leveraged deals, and the late cycle crazy deal flow of past cycles are not in the HY bond index in scale this time but in private credit. The stress in private credit will necessarily impact CCC tier HY bond pricing as investment alternatives, but the origination cycle and borrower profile this time is a departure from the past.

The above time series shortens up the Hi-Lo, BB vs. CCC tier timeline to a start date in early 2022 just ahead of the tightening cycle. The spike from +468 bps in Jan 2022 to a wide of +935 bps in Nov 2022 offers a reminder of how credit volatility can turn on quickly and with material pricing impacts.

PCE Inflation Jan 2026: Personal Income & Outlays 3-13-26

Housing Starts Jan 2026: Total Starts Up, Completions Up, Permits Down 3-12-26

Employment Situation Feb 2026: Payrolls Get Ugly 3-8-26

Industrial Production Jan 2026: Capacity Utilization Trends 2-19-26

2025 Spread Walks and Multicycle Return Histories 1-5-26

Annual Return Differentials: HY vs. IG Across the Cycles 1-3-26

Total Return Quilt Across Asset Classes 2008-2025 1-2-26

Cyclical Histories: Will Facts Be in Vogue in 2026? 1-2-26

Market Commentary: Asset Returns 3-15-26

Glenn Reynolds, CFA — Sun, 15 Mar 2026 18:54:12 GMT

The real enemy is the media (and the Constitution). Not Salidin.

Equities and debt have both been mired in the red zone as the UST curve faces pressure, the FOMC handicapping keeps pushing the odds of easing into late fall, and credit spreads are starting to feel widening. At +328 bps to end last week, HY OAS has moved well wide to the June 2007 levels (sub-300 bps) where it had been hovering but still is in the area of where low spread levels were seen in June 2014 and Oct 2018.
The effects of the oil crisis (consumer threat in the US?) and natural gas dislocation (notably LNG for the EU and Asia) have been picked over daily with the past week ending with WTI at $98.71 and Brent at $103.14. Over a 1-month period through 3-14-26, national retail gasoline prices are up by 25% to $3.67 (CA at $5.48, AZ at $4.30) and diesel up by 35% to $4.94 as we go to print. That diesel cost will run right through the buyers of goods and services in some form including direct surcharges from food to merchandise.
It is always a strange week when Pentagon updates begin with attacks on the media from a former Fox show host (Fox as an arbiter of facts?) whose anti-media rants were sandwiched between prayers this week. The Hegseth Templar posing (matches his tattoo) and misinformation is getting old, but the strategic confusion and apparently poor grasp of the Hormuz risks have shocked many. The potential for open-ended escalation lurks, and we now see Trump demands for more European and Asian allies to get involved on the Naval side (from “coalition of the willing” in 2003 Iraq to “coalition of the intimidated”?). This is where allies matter since many can in theory cut deals with Iran. In a twisted irony, Russia is getting rewards on sanction relief even as Ukraine trains the US on drone combat. Meanwhile, China faces material risk on oil supply. At this point, all we need is an Archduke to shoot.
For the best objective and granular color on risks and capabilities of the parties (on the ground and at sea level), we recommend Black Man Spy - Malcolm Nance | Substack. He has been literally on the ground and sea (military and intelligence) and in that game in the Middle East since the 1980s in the risky end of the business. He cuts through the Hegseth chanting and hand waving.
The moving parts of the Iran War and policy game plan have turned into a hyperactive, ADHD-impaired changeling. The themes have run from a containment policy to saturation bombing with geopolitical positioning teed up by religious fanatics (on both sides) talking about death and destruction like a video game. Now the Marines are on the way, and they don’t mess around. No wonder the oil markets are confused with Kharg Island now the next level in the Warfare Strike video game. Destruction of Kharg would only further damage the global supply and demand imbalances and set off more intra-Gulf violence and infrastructure damage. US would get some benefit on oil and LNG exports dollars.

The above chart hammers home that the path to springtime has been a painful one with a lot of uncertainty ahead. The chart details returns across a number of our debt and equity asset class benchmarks. We see all of them negative for 1-month in debt and equities. Debt is mixed over 3 months with duration the victim of the UST curve with IG Corporates negative. As we cover in a separate commentary, IG and HY spreads are both wider over the past week and month. IG OAS is +16 bps wider for 1-month and HY OAS by +44 bps. IG was +9 bps for the week and HY +15 bps.

The equities story has been mixed with concerns around excessive AI valuations rolling into a sector rotation theme with the latter now flowing into the energy crisis and how that will undermine cyclical trends for transports and industrials and the consumer sector. Looking back 3 months, the only positive line was Russell 3000 value. As we cover in the chart collection below, the 3-month period saw Materials (XLB), Consumer Staples (XLP) and Industrials (XLI) make the top quartile joined by 3 energy ETFs (XOP, XLE, AMLP) and the Utilities ETF (XLU). Base Metals (DBB) made the top quartile as tech-centric ETFs were shut out of the top tier for 3 months detailed further below.

The rolling return visual

The 1-week and 1-month story is clear enough in the symmetry. It has been a very rough ride as a mild tech panic on AI displacement and disruption theories gave way to an unfolding energy crisis and a major Middle East war. Iran War effects are reverberating across the region and now the world. The damage to EU and Asia from the supply-demand imbalance and price shock is real and immediate.

The strategic reactions, corporate level adjustments, and macro and geopolitical decisions will take time. Where and when suicide speedboats, drones, and missiles will see higher rates of deployment is not an exact science. Neither is the long tail of asymmetric terror threats and how nations will respond.

The Magnificent 7 heavy ETFs…

The tech bellwether returns across a range of timelines is broken out above. We see only 4 lines in positive return range for 1 week across the 16 lines. The Semi ETF (SOXX) is on top ahead of Oracle (ORCL), NVIDIA (NVDA), and Alphabet (GOOGL). We see 4 Mag 7 names in the bottom 5 returns for the week joined by the Software ETF (IGV).

Looking back 3 months, we only see Taiwan Semi, NVIDIA, the Semi ETF (SOXX) in positive range in the tech equity mix with only the Equal Weight S&P 500 ETF (RSP) barely positive. We also see some double-digit negative returns in that 3-month horizon such as IGV, ORCL, MSFT, AAPL, AVGO, and TSLA.

We also recently added a “Tech Check” bar chart with 28 asset lines from benchmarks to ETFs to single name stocks. We include 1-week and 1-month versions further below.

The commentary below is mostly a cut-and-paste from an earlier post on LinkedIn Saturday with some additional inputs:

The equity benchmarks around the world moved into negative return range for this past week and joined the US. The US broad market benchmarks were in the red from large caps (Dow, S&P 500, NASDAQ) down to Midcaps and the Russell 2000. The S&P 500 saw 9 of the 11 sectors in negative return range after 10 of 11 were in the red last week. This week, Utilities joined Energy in positive range in the S&P sector mix.

The chart updates weekly returns for the 32 benchmarks and ETFs we watch, and the concerns around the direct and indirect impact of the Iran War are evident and justified. Those of us in the work force during the 1980-1982 stagflationary double dip (or filling up Mom’s car with gas after the oil embargo triggered the late 1973 to early 1975 recession) can remember that the words “multiplier effects” is about more than a lesson-of-the-day in intro economics.

The multiplier effects include food pricing and how consumer goods got hit by delivery costs. Demand was undermined on weaker household budgets after the zero-sum effects of gasoline and home heating bills played out. There was severe damage done to the manufacturing sector back in those earlier crisis periods and notably in 1980-1982.

Oil price headlines do not need revisiting, but the week ended with WTI at $98.71 as retail gasoline and diesel immediately spiked. The concept of lower discretionary household cash flow and consumer fallout does not need a lot of debate. The adverse direction of the 4Q25 GDP update this week hit the headlines while the challenge of disposable income vs. PCE was seen in the PCE Income & Outlays report (see PCE Inflation Jan 2026: Personal Income & Outlays 3-13-26, GDP 4Q25 Second Estimate: Sharp Move Lower 3-13-26). The spike in retail gasoline and diesel will bring headwinds to go with recurring payroll worries.

The positive vs. negative score in the chart posted 3-29, so there is little left to the imagination on the left side of the mix. It is easy enough to click on the holdings of any of these subsector ETFs and see the company connections to Iran War fallout.

US Energy is doing well as Trump emphasized this past week, but he forgot to mention the old rule of “one person’s revenues are another person’s expenses.” The hydrocarbon chain flows into quite a bit of the economy from direct costs to inputs along the materials chain (petrochemicals and downstream derivatives).

Transports (XTN) were in last place with ground transport, air freight, and airlines feeling pressure. Airlines will see jet fuel soaring and pressure on volumes. Elasticity of demand will kick in with leisure and business travel budgets gut-checked. For “Cargo Ground,” the cost pressures from gasoline to diesel and potential volume risk will get reassessed in equity valuation.

The UST curve is seeing pressure from Iran fallout with bond ETFs negative. The Homebuilder ETF (XHB) was 2nd to last with mortgages ticking higher by Friday to 6.41% (Mortgage News Daily). The mortgage move was sharp from the low 6% range to wind down the week with Freddie Mac at 6.11% (set on Thursday). A quick search showed how mortgages were all over the lender map (refi rates are typically higher than purchase mortgages).

We see Financials (XLF) and Regional Banks (KRE) sitting in the bottom quartile as credit risk fears were elevated again on cyclical worries as well as the deterioration in private credit color with some lenders to the BDC entities reportedly haircutting the loan values in their lending assessments. FOMC-based funding cost relief for deposits is also under a cloud as the FedWatch odds of easing signal no action at least until late fall.

There certainly are a lot of direct, indirect, primary, secondary, and tertiary effects to ponder. The challenges in a highly partisan environment is that the policy makers and economists will simply fall in behind the President out of fear, loyalty, or cowardice. For example, it took months for anyone on Team Trump to admit who “writes the check” for a tariff. Trump was angry with his Trump 1.0 team (e.g. Cohn, Mnuchin) for telling the truth, so he found a more conceptually and factually “flexible” team for Trump 2.0

The commentary below is mostly a cut-and-paste from an earlier post on LinkedIn on Saturday with some additional inputs:

We started the “Tech Check” list of ETFs and issuers around 6 weeks back, and the swings have been dramatic across the YTD period with running returns heavily weighted to the downside. We include major benchmarks as well in the mix (S&P 500, NASDAQ, Midcaps, Russell 2000), and those were all negative for the week.

Of the 28 detailed, we see 7 positive and 21 with negative returns. We see 5 of the Mag 7 in negative range with NVIDIA and Alphabet in the top quartile in positive range. Among the Mag 7, META ranked at the bottom.

Tech services have been getting some very recent relief in the SaaS-heavy names as discussed in recent commentaries, but this past week saw them holding 4 of the bottom 5 returns with those all in the negative return zone. The four we had chosen to track after the AI-driven mini-panic included Salesforce (CRM), Intuit (INTU), FactSet (FDS) and Zillow (Z). All 4 were deeply negative this week. The best of the 4 in terms of YTD price performance is Salesforce (CRM) at -27.2% with the worst being Zillow (Z) at -37.1%. That has not been pretty in “SaaS land.”

The sell-off has been tied to fear of AI displacement for company services, but the Iran fallout can also bring fear of adjustments to customer planning and IT budgets. The cycle cannot help but loom as a factor given uncertainty around expense management and capex decisions. The other theory is higher UST rates tied to energy market pressure will intrinsically take the edge off long term valuation math and the discount rates of choice. That hits the (misnamed) “long-duration equities.”

The question of how much risk tomorrow’s AI customers will be willing to take in reshaping their business models to prepare for AI growth is a subjective variable. For some, the opportunity to shed payroll as offsets will be an attraction. For others, the need to overhaul systems and disrupt established vendor relationships might sound more reasonable on the “tech heads” whiteboard than to those who actually approve diving into the process with its disruptions and the operating risks that comes along with it. AI fans will have a few million counters to every concern that customers might raise.

Oracle (in the chart) and Adobe (not shown in the chart) both released earnings this past week with ORCL posting good numbers with a solid week for the stock during a bad YTD period (-20.4%). Adobe posted a bad week during a bad YTD period (-28.8% price return). The software ETF (IGV) has both those names among its top holdings with the IGV ETF still landing in the upper end of the bottom quartile this week. In contrast, the Semiconductor ETF (SOXX) was in the top quartile at #3.

Two tech legacy leaders in the form of Intel (INTC) and Applied Materials (AMAT) held down the top two slots. INTC is +24.0% YTD price return with AMAT’s YTD return at 32.9%. In other words, some old school names are winning this year including Taiwan Semi at +11.3% YTD.

The chart frames the returns on our 32 benchmarks and ETFs across a challenging 1-month span that included tech subsector turmoil but more importantly a war with Iran that is creating havoc in energy markets and across the Gulf with oil and LNG spiking. The score of 5-27 tells the story.

Iran will remain the main event in coming days. Confidence is low in the coherence and prudence of the strategy given the myriad and sometimes conflicting rationales provided and the inconsistency with past declarative statements (“obliteration” of nukes, etc.). The criticism of whoever is in power when wars happen in the Middle East is not new (George HW Bush, George W Bush, Obama, Biden, and now Trump), but the political toxicity makes this time more threatening with the FCC threats this week continuing the backdrop of constitutional abuse.

The White House reaction and free speech attacks is more like Wilson in a declared war than Vietnam in an undeclared war. Cronkite in 1968 at CBS after Tet would have been threatened by FCC head Carr if that happened in 2026. It is a sign of troubled times.

Carr’s warning this week will not reduce political risk and policy turmoil:

“Broadcasters that are running hoaxes and news distortions — also known as the fake news — have a chance now to correct course before their license renewals come up,” Carr wrote in a post on X. “The law is clear. Broadcasters must operate in the public interest, and they will lose their licenses if they do not.”

With Trump 0 for 3 on popular vote majorities, we are not clear how Carr defines
“public interest.” Apparently, public interest is a cabinet meeting or a room of 2.

The market has seen wild oil and LNG swings as recently as 2022, so this is not new. What is new is the fact that Iran has now officially been bombed to the point of desperation, and that takes constraints off that would deter the worst sort of asymmetric threats (routine, open, state sponsored terror on the US). If there ever were any controls or checks on the radical leadership of Iran, it was the fear of being bombed into the stone age. That “check” on such rampant behavior is now gone.

Anyone in a logical terrorist target area who does not see that risk has increased is missing something (I lived across the street from the twin towers for almost 3 decades). While we will all go about our business, the reaction from the US if bad events unfold will be more bombing and more retaliation against the Gulf states by Iran. There is a lot of energy infrastructure in the Gulf for Iran to aim at. That means this war zone backdrop could be around for a while even if Trump declares victory and exits.

The 1-month Tech Check has a very distinct story from Iran on the core drivers of overall risk as markets get dominated by the Iran War. We see a score of 6-22. The rebound of some key software lines were the main winners. We see 1 Mag 7 name in positive range with Amazon. The remainder of the Mag 7 were spread across the other 3 quartiles.

Tech valuations will by definition be influenced by the UST curve and cyclical trends. That said, AI and secular changes tied to AI and business models are the main events for tech equities as we have addressed in other commentaries.

The 3-month timeline is split at 16-16 with the big winner naturally being energy with XOP #1 and XLE #2 with Midstream (AMLP) a distant #3. Utilities (XLU) and Base Metals (DBB) round out the top 5 with the rotation theme in evidence with Materials (XLB), Consumer Staples (XLP), and Industrials (XLI) also in the top quartile. For bond ETFs, we see 4 positive and 3 negative with HYG, LQD, and EMB negative.

The big losers for the rolling 3 months with double-digit negative returns include the BDC ETF (BIZD) and Financials (XLF). Private credit is mired in redemption headlines that raise fears of more challenging mark-to-market risks with liquidity needs to fund outflows. The worry is around how that will flow into the broader carrying value debate beyond the private non-public funds and extending into valuation questions in the public BDCs.

The credit rating firms that were involved will face some regulatory pressure in a flashback to the RMBS days of 2009-2010 when the SEC and Congress got involved. The banks will also see some regulators (notably the Fed and OCC) sampling how banks treat their “loans to the private lenders” and what that means for reserving needs.

The LTM return chart is looking more like nostalgia these days at 30-2. The BDC ETF is in dead last at -14.3% and we see a slight negative for the long duration UST ETF (TLT) at -0.23%. TLT is coming off a -2.2% week as the UST curve is facing some setbacks with Iran and inflation fears.

Housing Starts Jan 2026: Total Starts Up, Completions Up, Permits Down 3-12-26

Employment Situation Feb 2026: Payrolls Get Ugly 3-8-26

PCE Income & Outlays Dec 2025: Inflation Reversal? 2-20-26

4Q25 GDP (Advance Est.): Less Distortion This Time 2-20-26

Industrial Production Jan 2026: Capacity Utilization Trends 2-19-26

Market Lookback 2-17-26

2025 Spread Walks and Multicycle Return Histories 1-5-26

Annual Return Differentials: HY vs. IG Across the Cycles 1-3-26

Total Return Quilt Across Asset Classes 2008-2025 1-2-26

Cyclical Histories: Will Facts Be in Vogue in 2026? 1-2-26

Market Commentary: Asset Returns 3-8-26

Glenn Reynolds, CFA — Mon, 09 Mar 2026 03:46:53 GMT

Trump: “I got this. I saw Argo twice.”

The week was a wild one even if that phrase is getting old after the tech equity volatility gave way to a war with Iran that has shut down the Strait of Hormuz and turned the Gulf into a shooting gallery of drones, missiles, bombing runs, and potentially speedboat suicide missions.
The S&P 500 saw a near shutout for the week with 10 of the 11 sectors in the negative zone and only energy putting up positive numbers. From Friday (2-27) to Friday (3-6-26), the market saw WTI oil was up by just under an incremental $28 ($67.02 to $90.90 per oilprice.com). Oil futures showed a record % increase for a single week. As we go to print tonight, oil soared again but this time above $100 to around $113 by late evening. That is around a $46 per bbl increase since Friday (2-27-26).
Retail gasoline jumped by almost 16% on the week to $3.45 by 3-8-28 (from $2.98). Retail gasoline will light up tomorrow. We will get CPI and PCE inflation this week, and there will not be excessive focus on those headline numbers with so much turmoil dead ahead. That said, the “other” consumer hot button in the CPI lines still matter – a lot. The health care insurance line was showing deflation last month. That tells a story of too much model theory and not enough reality over at the BLS.
The complexity of the problem Trump faces now goes beyond a massive spike in oil. The pain gets into more damage being done to infrastructure and attacks across the Gulf that are now leading to a shutdown of some major operations of the #1 LNG supplier (Qatar) and moves to shut in oil production by Kuwait with a storage crisis on its hands. On a side note, this would be a bad time to start a trade war with Canada, the largest oil supplier to the US. On another side note, there’s a mini war stirring around attacking desalination facilities…water wars have begun. That could get ugly (see Black Man Spy - Malcolm Nance | Substack).
The markets face more explosive risks to sort out ahead given Trump’s demands for “unconditional surrender” by Iran and Trump’s demands to choose the next Iranian leadership team. That set of conditions dooms this outcome to protracted conflict and boots on the ground. This is not Venezuela. Trump got his answer tonight on the new Supreme leader of Iran. He was not wearing a red hat.

The above table updates our broad benchmarks for debt and equity and the 1-month timeline brings very little good news with equities all in the red and a split of low positive and negative returns in bonds. HY had a mild widening on the week but with a +13 bps move on Friday feeding a +27 bps move for the month. At +313 bps for the HY Index OAS, that is still dramatically inside a long-term median of around +454 bps. Bonds are feeling the adverse move on the UST curve with the 10Y UST going the wrong way and the FOMC handicapping getting reassessed on the inflation threat from energy.

The rolling return visual

We also recently added a “Tech Check” chart with 28 asset lines from benchmarks to ETFs to single name stocks.

The above chart collection hammers home the rough ride over the past week and 1-month with the 3-month running returns holding in well based on the performance before the tech chaos and now the Iran turmoil. The bull market that drove the impressive 1-year score of 31-1 positive is a good memory but 2026 is now facing some major tests now and even more dead ahead.

The Magnificent 7 heavy ETFs…

The above table details the returns across the tech bellwethers and a collection of benchmarks and tech-centric ETFs. We see Nasdaq and the S&P 500 in the red for the 1-week, 1-month, and 3-month time horizons, so that ranks as unimpressive. We see 3 of the Mag 7 positive for the week and 5 of the Mag 7+3 (with ORCL and AVGO) positive for the week.

We see a strong comeback by the Software ETF (IGV) for the week, but IGV is deeply in the red for 3 months, 6 months and modestly negative for 1 year. The Semiconductor ETF (SOXX) was hit hard this week at -8.2% and negative for 1-month. The overwhelming mix of asset lines are negative for 3 months with TSM a positive outlier at +15.3% for the rolling quarter.

The commentary below is essentially a cut and paste from our LinkedIn post from Saturday where a routinely post weekly returns.

There was zero mystery to asset returns this week other than “How bad?” The ugly jobs number on Friday was almost an afterthought, but that trend will be a critical variable later in the election year.

Returns across our 32 benchmarks/ETFs posted a 5-27 score with 3 of the 5 positive in energy (XOP, XLE, AMLP) plus Base Metals (DBB) while BIZD saw some relief. All bond ETFs were negative while airlines (in the XTN) and Homebuilders (XHB) were slammed.

The escalation, misinformation, disinformation, speculation, and recurring adjudication (IEEPA refunds and legal challenges to new tariffs) require skepticism to temper the White House jawboning to bolster confidence. When we hear “unconditional surrender” and what amounts to “I pick the new leader” we know we are in a zone of extreme behavioral unpredictability.

One of the talking media heads cited Truman on the topic of unconditional surrender (Note: Casablanca Conference in 1943 was FDR). If you asked Trump about Casablanca, he might reply “Ingrid was hot. A little old for me though”. Unconditional surrender demands can have the opposite effect of bringing wars to an end quickly. It also implies “boots on the ground.”

Trump’s escalation running alongside his promises to open the Strait of Hormuz with naval support and tanker/cargo insurance fell flat. Peeling back even a single layer undermines it, especially with his insurance promise (it would need a US guarantee to be viable in this situation, require legislation, or at least be a better capitalized entity).

We have been listening to an impressive expert on the Middle East military, logistical and intelligence issues on Substack that we recommend. He lived and breathed the issues in the military and intelligence world since Desert Storm. The granular details are worth the time. The mainstream media is useless at this point on this topic. Malcolm Nance is also entertaining (see Black Man Spy - Malcolm Nance | Substack).

Qatar is leading the charge on delivering facts, and we see a major OPEC player and global leader in LNG and fertilizer as more reliable to gauge the sea level realities. Qatar has emphasized time lags in restarting LNG operations. It is not news that LNG has been critical in the economies of Europe and Asia. The presence of low-cost power in Qatar has attracted a wave of data center building in the area, which means reverberating secondary and tertiary multiplier effects. That is a topic for another day.

Kuwait spoke of shutting in production given the lack of adequate storage. US oil markets remember the storage crisis of COVID when there was no place to store oil. That led to a negative oil price in the futures market of around -$37 per bbl (Cushing was filled or spoken for and flashing “no vacancies”). In the Kuwait case (and others), they face trapped supply and that worsening imbalance is flowing into global oil prices.

The commentary below is essentially a cut and paste from out LinkedIn post from Saturday:

The Iran fallout has flowed into mixed effects on the recent tech equity trends as investors sort out the energy stress (e.g. crucial power cost issues, construction lags, etc.), inflation risks, UST curve shapeshifting potential, and how the global supplier chain might see some turbulence (note the South Korean market’s “worst day ever”). A steeper UST curve and lag on FOMC easing would weigh on valuations (that “long duration equities” label that we hate).

The simple question of whether capex forecasts will be tempered or even materially reduced by cyclical worries is at least worth reassessing. That is especially the case if macro stress curbs consumer appetites. The negative payroll numbers did not help. Markets also need to ponder the relative aggression of IT budgets and potential speculation on how much AI will bring in the form of productivity improvements.

For the past 1-week return profile detailed in the chart, our “tech check” mix of 28 asset lines rang up a positive vs. negative score of 11-17. We see 4 of the Mag 7 in the red with a 5-5 split on the Mag 7+3 (with ORCL, AVGO, TSM). We see the recovery continuing for the theoretically AI-exposed SaaS-heavy businesses services companies we added to the tracking list (INTU, FDS, CRM, Z).

If one insists on finding a pattern in a 1-week move, the worst performers for the week included some names that would be highly sensitive to modest bearishness on total capex spend and global expansion follow-through.

Applied Materials as a capex play sits on the bottom, and TSM joins some semiconductor names. That included the Semiconductor ETF (SOXX). The market took a timeout to sort through what could spiral from here if the Mideast situation goes full-on dark side. The Software ETF (IGV) moved into rebound mode for the week after some recent beatings.

The data center end markets are like a case study in extreme capex needs, and that goes for everything from “what fills them” to the power demands and the investment needed to make the AI wave happen.

The extreme noise in the South Korean equity markets got a lot of attention on these topics as the Kospi posted up “the worst day ever” at -12% on Wednesday led on the downside by tech names. The ability of a radiating spiral from the Iran War multiplier effects could prompt some headline revisions in capex levels from “the bears” if this all gets worse across the US and the world. Europe and Asia will feel the LNG supply and cost fallout along with oil. As they stand now, those capex numbers in AI and related markets look more like sovereign GDP numbers.

The 1-month time horizon for the 32 benchmarks and ETFs weighed in with a positive-negative score of 11-21 with a wide Hi-Lo gap of over 24 points with E&P bouncing to #1 and Transports (XTN) tanking to dead last as airlines were pounded.

We see all the bond ETFs high in the rankings but only 4 were positive. That was another sign of the painful price action in equities when 1.39% for a bond ETF put TLT in the top quartile. Banks and Financials (XLF, KRE) took a beating as did Homebuilders (XHB), the small cap Russell 2000, and Midcaps.

There is little surprise that energy related ETFs were strong with 3 of the top 4 (XOP, XLE, AMLP) while Utilities (XLU) came out at #2. The electricity and piped utility gas inflation and now the oil and gas spike will make for some interesting policy debates around how to ease the high energy inflation metrics that will now get even worse with the Iran fallout hitting gasoline prices.

The 1-month “Tech Check” weighed in at 10-18 for the rolling 1-month with 3 of the 4 SaaS-based business services companies we dropped into the mix bouncing back. That includes FactSet (FDS) at #2, Intuit (INTU) at #3, and Salesforce (CRM) at #6. Zillow (Z) remains in the tank in last place. Palantir (PLTR) has rebounded from the selloff back to #1. Only 2 of the Mag 7 (MSFT, AMZN) posted positive returns and 3 of the Mag 7+3 (ORCL also positive).

The 3-month mix posted a 24-8 score with all 7 Bond ETFs positive. We see no tech-based asset lines in the top quartile with the 3 energy names including XLE at #1, XOP at #2, and Midstream (AMLP) at #4. The rotation themes were in evidence with the top quartile featuring Materials (XLB), Base Metals (DBB), Industrials (XLI), and Consumer Staples (XLP). As usual, Utilities (XLU) performed well at the bottom of the top quartile.

The bottom quartile featured tech-heavy assets and financials with the BDCs (BIZD) dead last for 3 months and also for 1-year in the next chart. Equal Weight NASDAQ 100 (QQEW) was second to last and the Tech ETF (XLK) was 3rd to last.

The 1-year time horizon is still riding a solid multisector performance across much of 2025 with a score of 31-1. Only the BDC ETF (BIZD) generated a double-digit negative return at -14.5% as BDCs were plagued by bad headlines and arguably bad due diligence, bad auditing, and excessive asset gathering impulses outpacing quality loan growth.

Employment Situation Feb 2026: Payrolls Get Ugly 3-8-26

VIX: Market Still Not Getting the Vapors 3-6-36

Market Commentary: Asset Returns 3-1-26

US Trade with the World: Import-Export Mix 2-25-26

Fun Facts: State of the Union Prep Kit 2-24-26

Market Commentary: Asset Returns 2-23-26

New Home Sales Dec 2025: Fresh Game Clock 2-21-26

PCE Income & Outlays Dec 2025: Inflation Reversal? 2-20-26

4Q25 GDP (Advance Est.): Less Distortion This Time 2-20-26

Industrial Production Jan 2026: Capacity Utilization Trends 2-19-26

Market Lookback 2-17-26

CPI Jan 2026: Reassuring Numbers, Missing Pieces 2-13-26

Employment Jan 2026: Good Headline, So-So Mix 2-11-26

Switzerland-US Trade: A Deficit that Glitters 2-3-26

Mexico Trade: Gearing up for More Trade Trouble? 1-27-26

Policy Mud on the Wall: Consumer Debt, Residential Mortgages 1-15-26

2025 Spread Walks and Multicycle Return Histories 1-5-26

Annual Return Differentials: HY vs. IG Across the Cycles 1-3-26

Total Return Quilt Across Asset Classes 2008-2025 1-2-26

Cyclical Histories: Will Facts Be in Vogue in 2026? 1-2-26

VIX: Market Still Not Getting the Vapors

Glenn Reynolds, CFA — Fri, 06 Mar 2026 22:05:34 GMT

We revisit the wild ride of VIX across a period stacked with “events” from 1997. We look across the tech bubble and eventual implosions, the Greenspan hyper-easing, the Iraq War period of rising oil prices in 2003, the housing excess and related structured credit excess and mortgage pyrotechnics, the bank systemic crisis and counterparty shock that gave us bailouts and years of ZIRP, the shale boom and oil/gas binge-and-purge, the COVID pandemic and return to ZIRP, the inflation spike into a tightening cycle, and now the tariff and trade chaos alongside a fresh Middle East war between the US/Israel and their largest, most extreme enemy.
VIX as a volatility metric can wag risk pricing for a brief period and spill into credit, but the operating and financial risk fundamentals at the macro level, across industries and down to the issuer profiles are still the main event. Oil prices are still below numerous periods in the new millennium and that includes very recent periods. From the March 2003 invasion of Iraq through 2026 with Iran, the market watchers can look at the oil price charts and consider what came after for the broader economy. It offers a soothing lookback when volatility flares up. There are a lot of months with oil in the $80s, $90s and over $100 per barrel. WTI crossed the $90 line today and some dire supply warnings are coming from Qatar and Kuwait.
It is important not to disrespect the supplier chain shock potential. That flows into macro and micro financial performance, inflation, and Fed policy. Supply-demand imbalances cut across the usual energy layers (oil, gas/LNG) and power cost impacts. We will see effects on materials from chemicals to tech components. While oil always grabs the headlines, the Qatar impact from LNG to fertilizer and related inputs are also radiating out across global economies in Asia and Europe. China is facing rising risks while Ukraine and Russia policy is getting more attention. Zero sum effects are a worry.
When you consider the checklist in the first bullet point above, it is no wonder it takes a lot to shake the market when the events are understandable. That is the case now even if moving parts are not fully grasped in terms of the cascading effects and unpredictable reactions of an inherently volatile US leader. The Iran War is at least operating in a well-traveled area of oil and gas price uncertainty and the protracted economic grind of war and contingent terrorist threats. The market has seen plenty of both.
The tail risk is the current backdrop flowing into trade wars (Trump embargo threats and the EU using the anti-coercion bazooka). EU and Canada in trade wars with the US is not in the pricing yet. The demands for Iran’s unconditional surrender and Trump able to approve Iran’s leaders certainly would require boots on the ground (many and for a long time). Kurds being armed and Turkish anger are other risks “not on the VIX checklist” at this point.

Note on chart format: We use a scale for the VIX chart up to 60 so the moves in the 20 to 50 range do not get visually minimized by the two outliers above the 80 line that came with the credit crisis in fall 2008 and the VIX peak that unfolded with the COVID pandemic panic of March 2020.

VIX spikes in theory react to surprising events that carry material effects that could flow into securities markets and the financial system. We see the current VIX reaction as very muted compared to what unfolded with the Liberation Day fiasco. Liberation Day had the combined effects of being economically damaging, conceptually clueless, and a case study in fact denial. Some would say that should not have been a surprise given the rhetoric, but it was dramatically dialed back as it took a toll on markets. The murky part was the behavioral analysis and lack of checks and balances. That was new to the US.

We highlight that this chart reflects the market close on each day and not the intraday highs, which on numerous occasions were much higher than the closing level.

March 5 closed at 23.7, but Friday saw a jump to 29.9 as more bad news on supply and capacity shut-downs stream out of Qatar and Kuwait among many other sources with less of a political axe. The sea level (literally) pragmatic, realistic assessments have little in common with White House attempts to “jawbone” some confidence.

In the context of this VIX timeline, the post-Iran move is low relative to many past headline events. The VIX move so far is less about shock and more about gauging the scale of the damage across the macro picture (notably inflation, energy setbacks, and FOMC action). The drag on the consumer from higher prices looms large for gasoline at the pump but also how that flows into food, freight/ logistics and surcharges, etc. The negative payroll numbers out today seem more like a sideshow. We will look at those in a separate comment.

A great big trade risk spike dead ahead?

With Trump threatening Spain with an embargo as punishment for not supporting the Iran attack, the EU anti-coercion instrument would seem to apply there. The threats from Trump against Spain and thus the EU fits the reasons for why the EU was formed and the ACI was approved. If the EU does nothing, Trump will have mortally wounded what the EU stood for. Then he wins, and the EU loses.

With energy markets under siege and Qatar a leading player globally in the fertilizer chain, a clash with Canada in the USMCA review ahead could create some troubling scenarios. If Trump is threatening the EU (Spain embargo) and Canada (USMCA review) both in 2026, the plot just gets thicker.

Kuwait has joined the chorus on supply alarm and their storage crisis is not new to the US markets. Back in 2020, the inability to move oil with a COVID demand crisis ran into a storage challenge but with the flip side effects of a negative WTI futures market. This time, the storage challenge would lead to shutting in capacity due to the inability to move the oil out of the Strait of Hormuz. Some oil trade rags and industry leaders (including Qatar) have cited $150 oil price risk and material lags to restarting some operations.

Quick recap of spikes in the VIX chart…

Below we revisit some of the big events along the timeline of the VIX history in the chart.

October 1998: The Russian default in Aug 1998 was obviously bad news, but the portfolio impacts and excessive leverage in the system (e.g. LTCM) created a bad case of nerves on the suspected fallout (rumored or otherwise). The Fed intervened to a degree but essentially forced the major banking and securities parties to bail out LTCM in a private market solution (only Bear said “no!”). Among the potential victims the market worried about in Oct 1998 was Lehman. The main rumors were tied to Lehman’s theoretical CDS exposure to defaults. That crisis at Lehman did not come to pass based on their documentation tweaks on Russian exposure among others (which various back channels confirmed). EM contagion was a real worry in 1998 and the FOMC eased in the fall to mitigate market risk (see Credit Cycles: Historical Lightning Round 8-8-24).

Aug 2002: The summer of 2002 saw chaos in the HY and IG credit markets as WorldCom set off a multiplier effect panic. That came after WorldCom’s June shocker headlines that the company had been capitalizing billions in expenses and overstating its earnings (aka committing fraud). The series of market shocks started with Enron in late 2001 and spread to a range of other Chapter 11 cases in TMT and power (including utilities) and other controversial headlines (e.g. Tyco). Events in 2001 and 2002 were bad enough to bring down one of the largest and most successful accounting firms (Arthur Andersen) and brought waves of investigations and new regs (Sarbanes-Oxley). That stretch of time in 2002 crushed confidence, credit contracted and defaults were spiking (see Greenspan’s Last Hurrah: His Wild Finish Before the Crisis 10-30-22).

Nov 2008: The VIX closed above the 80 line in the aftermath of the credit crisis, Lehman collapse, and AIG bailout. Multiple banks merged with the Fed’s active involvement. The timeline since the emergency kicked into gear in mid-Sept 2008 saw the market more broadly come around to how life-threatening the “bank crisis” was to the functioning of the economy (credit contraction risk, household credit card lines, LOCs and trade credit, ABS market functionality, etc.). Simplistic revisionists still understate how many dominoes were lined up to fall if action had not been taken.

May 2010, Aug 2011: The EU-based sovereign crisis was in some ways a PTSD flashback to the bank crisis. The idea was “if the sovereigns go, the banks go.” Many marveled at how a nation such as Greece could set off such a panic in May and June 2010, but the reality was, “when you looked at Greece in 2010, you see Italy and Spain.” The “whatever it takes” ECB mantra calmed the EU markets down by summer of 2012 for a big credit market rally, but the evolving risk checklist and fears around sovereign exposure saw VIX peak in Aug 2011 with HY spreads hitting cyclical highs in the fall. The US downgrade and budget brinkmanship all weighed in.

August 2015: The China equity markets were in a meltdown and that was hitting global market valuations with the #2 economy wandering into some uncharted territory to that point. In context, a VIX of over 40 in Aug 2015 was well below where Liberation Day shook out in April 2025. The 2015 market panic period also saw oil prices collapsing and outsized E&P concentration in the HY credit markets driving defaults across 2015 and into early 2016.

Feb 2018: The 37 handle VIX in early 2018 and the spectacular moves in equities (multiple 1,000 point declines) are long forgotten except in some charts. Trump extols his first term as the “best economy in history” (ever, ever), but the rise of tariffs as a priority, the NAFTA renegotiation, and slowing economy into 2019 do not agree with his memory. The year 2018 proved to be a challenging ride with all the major equity and debt benchmarks posting negative returns for the calendar year with cash outperforming (see HY Pain: A 2018 Lookback to Ponder 8-3-24, Histories: Asset Return Journey from 2016 to 2023 1-21-24). When 2019 started off under pressure, Trump was screaming for negative fed funds rates, and the FOMC delivered part of the easing he needed in 2H19. Powell basically bailed out Trump’s 2019 economy with 3 cuts in 2H19.

March 2020 and COVID: We are not surprised that COVID posted the highest VIX of the timeline with a modestly higher level than what the VIX posted during the systemic bank crisis of late 2008. The bank crisis was at least something you could frame and conceptualize even if the quantification of the loss exposure and government relief action was essentially impossible. For COVID, it was “all new” even if some of us had heard stories from relatives (or read books) about the misnamed “Spanish Flu.”

The solutions for COVID were heavily event-driven with a vaccine launched by Nov 2020. With the earlier credit crisis playbook in hand, the Fed could mitigate liquidity risk in the COVID environment to guard against bank line and credit card drawdowns. ZIRP returned, liquidity backstops were in place, and ABS support was revisited. The stage was set for risky asset rallies with ZIRP and a UST bull flattening that supported liability management (“refi and extend”), lower coupon costs for borrowers, and lower mortgage rates for households.

Liberation Day April 2025: The move to 52.3 for VIX was more about the shock of what Trump announced and how he announced it (see Reciprocal Tariff Math: Hocus Pocus 4-3-25. Reciprocal Tariffs: Weird Science Blows up the Lab 4-2-25). We have had a lot to say on the topic, but overall the barrage of pure fabrication and disinformation from the start to even this past week does not help confidence (see Meanwhile…Back in Economics and Tariffs 3-2-26).

Market disrupting events come and go. The overriding focus should still be on how it translates into economic growth, jobs and national security. Given the array of events now unfolding, all of those are subject to considerable second guessing. The direction of events from here unfortunately will be wrapped up in war, geopolitics and the unpredictability of the major moving parts in commodities, inflation and currencies. The potential for escalation of trade conflict is a rare overlay.

Meanwhile…Back in Economics and Tariffs

Glenn Reynolds, CFA — Mon, 02 Mar 2026 18:27:23 GMT

The above “Truth social” might challenge the theory that people can learn facts over time with experience and counseling from helpful advisors.
This gem was posted just ahead of the start of the Iran bombing campaign, which is an unfortunately timed Truth Social post for those relying on a learning curve.
The billions in refunded tariffs would go to US buyers/importers. Team Trump should state that fact.

Trump’s message is simple enough. He is seeking a “rehearing or readjudication” of the SCOTUS ruling on IEEPA. On a side note, if a “Super Duper Supreme Court” of appeals is a near term apparition, perhaps an appeal can also be made on the earlier ruling of the President being above the law.

The main purpose here is it to highlight how Trump sees the economic interests of those seeking refunds on IEEPA tariffs that have been ruled illegal and not in line with the good old fashioned constitutional reality that Congress controls taxation (originates in the House). There are many laws that have delegated tariff authority to the White House, but IEEPA was not one of them.

Trump’s post essentially states that that those who will benefit from IEEPA tariff refunds are the sellers (“countries and companies”) and not the US-based buyer/importer who wrote that tariff check. Those who ate the costs, consumers who felt the price increases, or those who were the victims of “tariff cost mitigation actions” (layoffs) will get mixed chances for relief in court. The strongest case is those that paid the tariffs to customs.

In Trump’s comments he sees refunds (“billions and billions” and “undeserved windfall, the like of which the World has never seen before”) going to selling nations and their exporters/sellers. That of course is a fabrication that should be seen as knowingly false at this point.

Trump regularly claims that he collected “hundreds of billions” from such countries in Trump 1.0. As rational fact-based humans know, Trump collected zero from those countries since the importer/buyer, as a matter of factual reality, writes the check.

Among the immediate thousands of US corporate movers in legally seeking refunds was FedEx, who is obviously an American company with corporate headquarters in Memphis TN (not Shanghai). FDX has a huge international business and is being sued by customers for refunds. FedEx has promised to return any refunds it gets from the government to customers.

Many small businesses in the US were crushed by the tariff program with more than a few not around to seek refunds.

The only certainty in life is no White House officials will contradict the above “facts” in this Trump post with Bessent likely willing to risk a neck injury from nodding so hard.

Switzerland-US Trade: A Deficit that Glitters 2-3-26

Mexico Trade: Gearing up for More Trade Trouble? 1-27-26

Market Commentary: Asset Returns 3-1-26

Glenn Reynolds, CFA — Sun, 01 Mar 2026 19:52:00 GMT

One big happy family.

The 4 broad benchmarks (S&P 500, NASDAQ, Russell 2000, S&P 400 Midcap) as well as the Dow were all negative even before Iran. We at least saw some of the SaaS-centric business services companies rebounding as the AI fear contagion eased. AI anxiety got back in touch with pragmatic timing realities and as management teams engage in some pushback. The tech and SaaS equity return story is still ugly for the trailing 1-month as we detail below.
The results during the week were set against the backdrop of a likely Iran attack, and that “likely” became a larger scale reality during the post-midnight, early morning hours of Saturday. The joint attack by the US and Israel on such a scale gave the event even more significance in the Mideast political dynamic.
The past week saw a rambling SOTU filled with many false statements on factual economic indicators that were easy to anticipate (see Fun Facts: State of the Union Prep Kit 2-24-26). That said, the UST curve saw a rally with the 10Y UST under 4% and Freddie Mac 30Y mortgages dipping slightly below 6.0% line to 5.98% (6.76% 1 year ago). We get BLS payrolls and ADP data this coming week for another FOMC check with the Fed now needing to factor in the Iran variables.
The UST curve looked past a hot PPI release. We also saw confirmation that the “value of construction put in place” declined in 2025 after 4 years of increases in what was another “not the greatest economy” moment. That might surprise some with the constant data center headlines.
The Iran story will dominate for a while as oil reacts and inflation expectations move around with consumer moods and corporate sector cyclical reassessment. We already see attacks on oil tankers overnight, and that will stoke up inflation (or “one-time event”) chatter. The direction of volumes with major trading partners on the back of new tariffs and the USMCA review will be challenging enough.
If one believes that the US has not been directly targeted by Iran and proxies in recent years for asymmetric action (i.e. terrorist acts) and the reluctance was based on a desire to avoid getting bombed into the stone age by Trump, that restraint was just erased. As someone (among many) who lived across the street from the Twin Towers on 9/11, more than a few people will be thinking this latest sequence opens up many more scenarios to be nervous about with the lid off. It is not just in the movies.

The above table updates the time horizon returns for the debt and equity asset classes we monitor each week. The UST curve had some good news this week while we see spreads going wider in credit. IG was +7 bps on the week and +12 bps for the trailing 1-month. HY was +12 bps on Friday, +24 bps for the week, and +38 bps for the trailing 1-month.

The real struggle has been over in equities as covered in various other commentaries as tech valuation optimism had already given way to the usual “too far, too fast” discussion. We also now give way to the questions of, “Which business models will be most damaged by AI?” That has in turn hit some very profitable and highly valued SaaS-centric business models.

AI vs. legacy business services: the new wall of worry?

The software and semiconductor equity setbacks are a big slice of the worry, but the business services themes have been especially neurotic. The idea is that revenue models will get tossed out the window in a sea of volume pressure and loss of pricing power. Lower margins and slower growth should and would hit multiples and undermine valuation (so the theory goes). That puts pressure on management teams to push back on that theory. The assumption is that there is a wide range of industrial structural issues including IP rights, copyrights, trademarks, etc., to protect the core business. They need to make the case or face the pressure.

While every bear scenario has to be intelligently addressed and weighed, it reminded us of the theme that Amazon would put all the auto retailers out of business. At the time, we noted the numbers of service and repair bays, auto diagnosticians, and parking space for Amazon appears a bit low. In real estate, the Zillow crash is in part tied to its data and SaaS-centric operations, but almost 90% of homebuyers use an agent. You can debate fees and margins across that services chain, etc,. but “bodies” play a role. That said, Zillow equity is still struggling while numerous other services subsectors rallied on the week (discussed below).

The rolling return visual

The positive vs. negative symmetry has been breaking down in recent weeks on equity weakness with the UST curve finally moving slightly below what has been a rangebound period. We address those timeline returns in comments below.

The Magnificent 7 heavy ETFs…

We added a few new lines to the tech bellwether table this week beyond the “Mag 7+3” (the 3 = TSM, AVGO, ORCL). We dropped in the Software ETF (IGV) and Semiconductor ETF (SOXX) given the multi-sector disarray in tech in recent periods. We also break those out in the timeline return charts we started a few weeks ago under the heading of “Tech Check” (see charts below).

The table above shows the entire Mag 7 in the red for the week. The Mag 7 names were joined in negative range by Broadcom and Oracle with only Taiwan Semi positive at #1. Taiwan the nation as well as TSM as a company have been having a very good time on pumped up US demand (see US-Taiwan Trade: Risks Behind the Curtain 2-1-26).

Looking back over the trailing 1-month is not pretty with only 4 of the lines in positive range. If we exclude the Equal Weight S&P ETF (RSP), the only positive returns were TSM on top with Apple a distant second and the Semiconductor ETF (SOXX) barely positive.

For the 1-month period, the Software ETF (IGV) at -16.6% makes a statement, and the same for MSFT (-18.1%), Oracle (-16.9%), and Amazon (-14.2%). The S&P 500 weighed in at -1.3% for the month.

The below is mostly a cut and paste from a post on our LinkedIn this weekend. We added some edits and tweaks:

The week’s market action and macro developments seem like very old news at this point when the post-midnight hours brought headlines of a major Congress-free war unfolding with Iran, a nation of 90 million people led by religious fanatics who see America as the Great Satan.

The Iran whiteboard game plan of regime change with no boots on the ground may not work out as planned. Beyond retaliation against neighbors and US assets in the region, we already see attacked on tankers and insurance getting repriced or yanked. The market awaits official market price action to show up the screens in the early evening tonight. The supply handicapping and war and escalation premiums will make life interesting for those in the energy CPI and PCE handicapping business.

The hours and days ahead will see plenty of speculation on how oil will react to potential supply shocks, and more guesswork will continue on the geopolitical premium needed. We already have seen a range of $10 to $20 per barrel price hike ballparking on the screen with news of ship insurance getting pulled or premiums spiking for the Strait of Hormuz. We have seen a few $100 oil headline grabbers, but the moving parts are anything but clear or easily handicapped. The “Strait of Hormuz” is everyone’s favorite panic button scenarios and now it will get put to the test.

There is the question of how OPEC+ will react to stabilize supply, but much of that oil moves through that strait. There will also be the handicapping of what it all means for the economics of drilling in the US. The economics will certainly improve. This also could be Russia’s lucky day in seeing more markets reopen despite Ukraine.

We highlight that the US picking a fight with Canada in the USMCA review process and threatening them with more tariffs does not show up on the short list of “smart policy” with Canada the#1 importer of oil into the US. Canada also might see this as a good time to get some commitments from China for capital investment in their energy resources. China has just seen two its major suppliers implode (Iran, Venezuela) and saw some major setbacks in Panama. Life could get tense with China from here. The Strait of Hormuz is also very important to LNG and major export markets.

Monday will bring direct market feedback on the direction of oil prices and the side effects on the energy sector, raw material costs, and how the geopolitical chaos will flow into consumer confidence, earnings, and capex expectations.

Positive vs. negative scoresheet…

The group of 32 benchmarks and ETFs shows a positive vs. negative score of 18-14 with 6 of 7 bond ETFs in positive range with the notable exception of HY (HYG). The HY Index saw spreads move +12 wider on Friday, +24 bps wider on the week, and +38 bps wider on the trailing 1-month. HY OAS broke outside the June 2007 bubble band and ended at +310 bps. That negative excess return stretch of around -88 bps MTD as of Friday could be part of a risk repricing that lasts.

Geopolitical scenarios and asymmetric event risk fears could get spun up over the near term and flow into more risk aversion in the markets. The scenarios could impact decision making at the corporate level and consumers at the spending level. The tariff questions are bad enough and the same is true for the upcoming USMCA review.

There are more than a few scenarios for inflation to go higher and payroll actions to get more defensive. The recurring story of oil is that it can obviously hit gasoline/fuels, raw materials (petrochemicals), and freight and logistics costs (and thus delivery of food and goods). Shipping in the Suez could be a flash point again as well. Lebanon and Gaza interests “on the other side” will be an open question also as Iran allies react.

The below is mostly a cut and paste from a post on our LinkedIn this weekend. We added some edits and tweaks:

The tech volatility calmed down somewhat this past week in terms of the SaaS-centric business services sell-off, but banner earnings from NVIDIA did not calm the valuation nerves in AI and the related family tree of tech subsectors.

The chart updates our weekly return details on a range of tech names and tech ETFs. We added 4 more tech-based services names to the group we track (now 28 asset lines). We added FactSet (FDS), Intuit (INTU), Salesforce (CRM), and Zillow (Z) to the chart as good bellwether names with lead positions in their disciplines. I routinely use or have been exposed to all four of them, so they were easy choices to relate to.

As the headlines have blared there was a broad-based beatdown of numerous services operators over the past month on the basis that AI would be a solution for numerous disciplines (data broadly, finance, tax, law, housing information/brokerage, etc.). Under that scenario, volume growth and pricing power would get shredded by AI services and in some cases companies would be obsolete. This week we saw FactSet rebound with Intuit and Salesforce, but Zillow remained negative.

The 1-week chart weighs in at 10-18 for the positive vs. negative score. We see all the Mag 7 names in the red with only Taiwan Semi positive among the Mag 7+3 (Mag 7+TSM+AVGO+ORCL). We see all 4 broad index benchmarks in the red also across the S&P 500, NASDAQ, Midcaps (MDY), and Russell 2000 (RUT) small caps.

Among ETFs, we see Communications Services (XLC) in positive range and the Software ETF (IGV) got back into positive after being negative last week and -16.6% over the trailing 1-month. The Tech ETF (XLK) is still negative as is the Semi ETF (SOXX). We include the Equal Weight NASDAQ 100 ETF (QQEW) in a separate broad peer group (not shown above), and QQEW was sitting in the red again this week also.

The 1-month timeline for the 32 benchmarks and ETFs weighed in with a 21-11 score, so that is a good story line considering the disarray in tech. When we factor in slower GDP growth in 4Q25 and higher PCE inflation, that also reminds us how resilient the market has been. That could (should) change quickly this week with Iran events.

The 1-month returns show 6 of 7 bond ETFs in positive range. We see the long duration UST ETF (TLT) in the upper half of the second quartile as duration was rewarded. We see HY as the only negative return bond ETF as HY spreads widened by +12 bps on Friday, +24 bps for the week, and +38 bps for the 1-month period.

Notable losers in the bottom quartile are led by the BDC ETF (BIZD) on the private credit setbacks and extrapolation effects in the headlines. Emerging asset classes (as mature as private loans are in reality) have a well-traveled history of excess AUM focus out of the chutes that bring problems across the developmental stage of new asset management P&Ls. Here we are again.

The rest of the bottom quartile has a heavy tech flavor (even the S&P 500), but Financials (XLF) and Regional Banks (KRE) are getting hit by a number of factors from UST slope question marks (interest rate margins) to asset quality and what the AI side effects might bring to loan quality and private credit blowback.

The “tech check” issues have been discussed already in other commentaries, and the trouble is readily evident in the 1-month score of 8-20 in the 28 asset lines we selected. It is notable that Applied Materials (AMAT) is on top again since very few (no one?) expects capex to decline from 2025 levels. Forecasts may change, but investment capex is a matter of “How high?”

In the context of the SaaS-centric business sell-off, we see Zillow in last joined in the bottom 4 by Intuit (INTU) and FactSet (FDS). Of the 4 business services names we added to the group this week, we see Salesforce (CRM) in negative return range but at least making it into the low end of the third quartile at –14.8%.

The 3-month score of 26-6 shows 4 tech-based names joined by the BDC ETF (BIZD) on the bottom and Financials (XLF) in the mix. BIZD posted up -10.4% or materially worse than the -4.5% in second to last place with the Equal Weight NASDAQ 100 ETF (QQEW).

The top quartile included 3 energy related ETFs (XLE, XOP, AMLP). Tech or tech-heavy saw no members in the top quartile. Materials (XLB), Transports (XTN), Industrials (XLI), and Base Metals (DBB) flagged cyclical rotation while Consumer Staples (XLP) added the element of dividend-heavy companies sensitive to interest rate impacts on valuation.

The trailing 1-year score of 31-1 does not leave much room for debate with BDCs a distant last place at -18.3%.

A notable winner is Industrials (XLI) at #1 with EM Equities (VWO), Base Metals (DBB), Energy (XLE), Utilities (XLU), Transports (XTN), and Russell 2000 small caps reminding us of the virtues of diversification. VWO added the currency element as the dollar was beaten up. The only tech play in the top quartile was the Tech ETF (XLK) at #6.

The bottom quartile included 4 of the 7 bond ETFs in the bottom quartile. HY (HYG) and IG Corporates (LQD) were at the bottom of the third quartile. The Real Estate ETF (XLRE) in the bottom tier was also feeling the UST curve action in the performance

Fun Facts: State of the Union Prep Kit 2-24-26

Market Commentary: Asset Returns 2-23-26

New Home Sales Dec 2025: Fresh Game Clock 2-21-26

PCE Income & Outlays Dec 2025: Inflation Reversal? 2-20-26

4Q25 GDP (Advance Est.): Less Distortion This Time 2-20-26

Industrial Production Jan 2026: Capacity Utilization Trends 2-19-26

Market Lookback 2-17-26

CPI Jan 2026: Reassuring Numbers, Missing Pieces 2-13-26

Employment Jan 2026: Good Headline, So-So Mix 2-11-26

Switzerland-US Trade: A Deficit that Glitters 2-3-26

Mexico Trade: Gearing up for More Trade Trouble? 1-27-26

Policy Mud on the Wall: Consumer Debt, Residential Mortgages 1-15-26

2025 Spread Walks and Multicycle Return Histories 1-5-26

Annual Return Differentials: HY vs. IG Across the Cycles 1-3-26

Total Return Quilt Across Asset Classes 2008-2025 1-2-26

Cyclical Histories: Will Facts Be in Vogue in 2026? 1-2-26

US Trade with the World: Import-Export Mix

Glenn Reynolds, CFA — Wed, 25 Feb 2026 21:54:59 GMT

Like Kilroy, Trump’s tariffs are ubiquitous and will leave a mark everywhere.

The tariff rules of the game have not changed much in terms of the economics for trade partners and all-in tariff exposure. The potential for the EU and Canada to fight back still lurks. In particular, Canada faces major risks ahead in the USMCA review while Mexico tends to surrender. Canada is the largest export market for almost 3 dozen states, so macro risks are not small there if national pride causes resistance.
The behavioral dynamics and rules of engagement in tariff negotiations could certainly change. Limits on Trump’s typical behavior could narrow the tariff risks to legitimate trade gripes. For example, 50% tariffs on Brazil with a US-Brazil trade surplus should not - under non-IEEPA rules - allow a Trump reaction such as “I don’t like that you arrested my ‘coup bro’ so I am hitting you with 50% tariffs.” We assume Trump would lose the legal right to say, “France, you said mean things and did not kowtow, so here are 200% tariffs on wine.” Then again, Trump likes testing legal theories.
The legacy delegation of tariff authority by Congress to the Executive Branch is a well-travelled story, so we are surprised so many observers just seem to suddenly see that fact. Trump tried to turn IEEPA into an unbridled trade bludgeon he could use at his whim. The constitution is clear that taxes originate in the House of Representatives – not the White House. Tariffs were called “taxes” nonstop back in the Ryan/Brady “border adjusted tax” reform bill of 2017 (shot down by Trump and the Senate).
Trump tried to get around Congress with IEEPA to give himself maximum, unchecked control. He failed and now has less leverage to flare up and aim tariffs at whim. Laws and legal avenues are still available even if the tariff reality (effective rates in total) has not changed much.
Trump has already abused the clear intent of Section 232 “national security” tariffs (Upholstered furniture? Kitchen cabinets? Seriously?!). When some smart GOP Senators such as Corker and Toomey tried to reel in Section 232 abuse during Trump 1.0, they got crushed. The GOP Senate sheep got the message and started to imitate the House bobbleheads.

The above table updates the product line trends. We already addressed the record trade deficit in goods in earlier commentaries (see 2025 trade Deficits: Reality vs. Rhetoric 2-19-26, Trade Deficits: Math Challenge 1-30-26). The above just adds some useful granularity around major product lines. We line them up highest to lowest. We include YoY deltas in the column on the right.

The product groups with the largest moves in imports across 2025 have resulted from major moves in Switzerland (see US-Taiwan Trade: Risks Behind the Curtain 2-1-26) and Taiwan (see US-Taiwan Trade: Risks Behind the Curtain 2-1-26). Those two nations have some interesting story angles with Switzerland showing major variances in the two-way traffic of the gold trade (gold vs. refining vs. bullion). Given the erratic trade behavior of Trump and fears around UST and the dollar, it is no small irony that he made that US-Swiss trade deficit worse.

For Taiwan, the geopolitical stakes are very high given the “one China” priority of the PRC and tension over arms sales to Taiwan. This topic cuts across a lot of history. The tech boom has driven soaring demand for Taiwan-based products from semis to tech and electronics. We look at those issues in the country trade links below. China + Taiwan as a combined economic power would rattle some nerves in the GOP.

The export list shows the power of US aerospace with Boeing and US aerospace leaders always there near the top of the export lines. The strong presence in pharma and energy is routine as well. The table also shows some of the big swings in gold (in “nonferrous”) that we highlighted in the Switzerland trade commentary. The US is a major factor in the export of crude oil, natural gas, and petrochemicals (and resin and synthetic rubber).

The fact that the US is a massive crude oil exporter while it has a goods trade surplus with Canada ex-crude is supposed to elicit a flicker of awareness in Trump on the nature of the import-export mix. A few years of record US energy exports can easily dovetail with Canadian imports of crude that drive a goods deficit. While Trump may look to Venezuela as a supplier of heavy crudes in the future, the heavily favored discounted heavy crudes from Canada make that trade partner a key supplier to sophisticated complex US refineries. Otherwise, refined product prices would be higher in the US.

Canada has the highest value-added export mix among leading trade partners (see Canada-US Trade: Trump Attack N+1 1-25-26). Despite what Trump says (“Canada has nothing we need”), the US arm’s length buyers would be inclined to disagree (they prove that in their independent free market decisions). The natural resource mix from Canada is critical (e.g. perhaps Trump has found some potash and uranium in Palm Beach).

The above chart gives another angle on major import deltas into the US in 2025. We show the biggest import increases and decreases with the delta column on the right. Energy, Tech, Pharma and Gold ruled the headlines. There is not much drama in aerospace in 2025, but Trump seems determined to change that with Canada in 2026.

The above chart gives another angle on major export deltas from the US in 2025. We show the biggest increases and decreases with the deltas on the right. The spike in nonferrous is tied in part to increased demand for gold and higher shipments to refining centers (Switzerland). Soybeans took a beating on lower China volumes in 2025 as Trump delivered a very unsurprising bailout to the ag sector again (first one in his 1^st term), raising the indirect costs of his tariff program even more.

Switzerland-US Trade: A Deficit that Glitters 2-3-26

Mexico Trade: Gearing up for More Trade Trouble? 1-27-26

Fun Facts: State of the Union Prep Kit

Glenn Reynolds, CFA — Tue, 24 Feb 2026 18:56:05 GMT

Protracted tariff wars can heighten emotion and impair judgement.

With the State of the Union Address teed up for tonight, we thought some warm-up facts might be in order. We don’t expect Trump to admit to any of them.
Annual GDP growth was lower in 2025 vs. 2024, annual personal consumption expenditure growth was lower in 2025 vs. 2024, and fixed investment growth was lower in 2025 vs. 2024. That could change in 2026, but the facts of 2025 are on the books.
Annual GDP growth in 2025 was well below 2024 but also well below the long-term median from 1976 of 2.8%. The Golden Years must be in transit.
Headline and Core PCE inflation are currently above the median posted from 1972 and also above the median from 1997. Prices are not “way down” (they are higher) since inflation is positive. PCE inflation is up – not down.
The US benchmark indexes as packaged in various ETFs have underperformed Europe and Canada on an LTM basis and only recently caught up to China. For those diversifying their sovereign exposures in equities, currency was a key swing factor against the US for the relevant ETF returns.

Slower annual GDP growth in 2025 (+2.2% for “annual to annual”) vs. 2024 (+2.8%) is now on the books while higher Headline PCE inflation and Core PCE inflation (the metric the FOMC cares about) are the facts as of now. The 2.2% annual GDP growth is below the annual GDP growth median posted since 1976 of 2.8% as noted. The GDP accounts show headline GDP growth down, PCE growth down, and fixed investment growth down (see 4Q25 GDP (Advance Est.): Less Distortion This Time 2-20-26).

To add insult to injury, the GDP growth in 2025 is below 3 of the 4 years under Jimmy Carter (4.6% in 1977, 5.5% 1978, and 3.2% in 1979). Trump might learn from Carter’s mistakes. The Iran crisis of 1979 sent inflation soaring. Iran has 90 million people and is led by religious fanatics who are not always cooperative or easily intimidated. The geopolitical talking heads and military types have been highlighting a raft of risks from the Strait of Hormuz to the uncertain capabilities of Iran’s missile program. One way or the other, an armed conflict with Iran on any scale will be costly and generate other unpredictable risks.

Sharply lower 4Q25 GDP (+1.4%) vs. 3Q25 (4.4%) is also a recent data point. That 3Q25 GDP number came with some asterisks of material distortion as we also saw in 1Q25 and 2Q25 with swings in trade deficits and inventory (see 1Q25 GDP Advance Estimate: Roll Your Own Distortions 4-30-25, 2Q25 GDP Final Estimate: Big Upward Revision 9-25-25, 3Q25 GDP: Morning After Variables to Ponder 12-27-25).

The above chart frames the total returns of some benchmark ETFs that detail the performance of the trade partners highlighted above (Europe, Canada, China). The returns include currency effects, which has been a drag on US performance. The US finally edged ahead of China the past week after spending months at #4.

While the US and numerous markets have performed well, the returns above do not signal “hottest country in the world” based on what returns have been generated on $1 invested a year ago. The US was #4 in this group during calendar 2025. Perhaps “Hottest” means “most divided and politically dysfunctional by design.” Perhaps “Hottest” means like Chernobyl.

The above chart frames the ride of the 10Y UST and Freddie Mac 30Y mortgage from the ZIRP year of 2021 through Friday close. The news has been very good in relative terms for mortgages since the late 2023 mortgage peak of 7.8%. The 2022 tightening cycle took effect on inflation and the curve without triggering a recession. The 7.0% handle mortgages to start 2025 are now close to 6.0% and the 10Y UST is down near the low 4% area.

The reality is that the longer end of the UST curve has been stubborn after the initial FOMC easing of Sept 2024, when the 10Y UST hit 3.6% and 30Y mortgage rates were close to 6.0%. During 2025, the tariff wave and record budget deficits have kept the 10Y UST range-bound and mortgages closer to 6.0%.

The rising inflation seen this past week (Trump will say it is lower) needs better news ahead to increase curve optimism with respect to short end easing– let alone long end flattening. Any new spike in military costs and worsening relationships with “former” allies (EU, Canada) will not help the demand side. Tension with China is also a wildcard. The IEEPA rejection by SCOTUS raises the risks of trade conflict with Europe (EU, UK) and also with Canada and Mexico in the USMCA review.

The above chart is the latest reminder on where the UST curve and Freddie Mac mortgage rates stand relative to the wild days of the housing sector bubble (2005 peak homebuilding year), RMBS and counterparty catastrophe (ticking in later 2006), and ensuing bank systemic crisis. The market of 2026 has very little in common with that period, but the chart makes a statement on absolute rates. Mortgage rates are lower now and the UST curve steeper, much lower in the front end, and lower in 10Y UST.

If Trump hammers Powell tonight for the housing drag, he might want to check these rates vs. the booming financing of the markets with much higher rates. The housing story is not about Powell. That is a topic for another day.

The above chart is one of those memory lane moments across the cycles. The message is inflation is higher today vs. history as we saw in the PCE inflation release of Friday (see PCE Income & Outlays Dec 2025: Inflation Reversal? 2-20-26). Those medians noted in the box on the lower left (2.6% headline, 2.5% core) are part of a crazy Hi-Lo range of interest rates and inflation of years gone by whether PCE or CPI (see CPI Jan 2026: Reassuring Numbers, Missing Pieces 2-13-26).

We highlight the median headline PCE from 1972 of 2.6% and the median Core PCE of 2.5%. Those are both lower than what we have as of Dec 2025. When Trump says in the State of the Union address that prices are “way down,” he might fail to cite the definitional fact that +2.9% PCE inflation and +3.0% Core PCE inflation are positive numbers. That means prices are higher in aggregate. It is amazing (and embarrassingly shameful) that the talking media heads let that slide. As highlighted in the chart, periods of deflation (mid 2009) are not times you want to revisit.

As of Dec 2025, the headline PCE of 2.9% is above the median from 1997 of 2.0%. The Core PCE of 3.0% is also above the 1.8% median. The PCE inflation metrics remain well above the target of 2.0%.

When Trump says prices are “way down” or that he has zero inflation in his SOTU address, substitute the term “well above median inflation since 1997.” That is factually accurate. The same for the median from 1972 as noted above.

Current inflation is a far cry from the brutal spike of 2022. The 2021-2022 periods saw a lot that went wrong in major areas both outside and inside of Biden’s control. We are still waiting for Trump to mention the energy spike and invasion of Ukraine 4 years ago (this week) in 2022 as a contributor to the inflation spike.

Putin was most certainly a major cause of inflation even if Trump never cites the invasion as a factor. Anyone who studied or lived through (or both) the 1973-1975 contraction and the 1980-1982 double dip recessions with the bouts of stagflation know how important oil prices were in those periods of economic torture. Putin was a big part of 2022.

We would also highlight that by the time Trump took office in Jan 2025, inflation had already been beaten back significantly by Powell and the FOMC. Current PCE inflation is now above where we were at the end of 2024.

New Home Sales Dec 2025: Fresh Game Clock 2-21-26

PCE Income & Outlays Dec 2025: Inflation Reversal? 2-20-26

4Q25 GDP (Advance Est.): Less Distortion This Time 2-20-26

Industrial Production Jan 2026: Capacity Utilization Trends 2-19-26

Market Lookback 2-17-26

CPI Jan 2026: Reassuring Numbers, Missing Pieces 2-13-26

Employment Jan 2026: Good Headline, So-So Mix 2-11-26

Switzerland-US Trade: A Deficit that Glitters 2-3-26

Mexico Trade: Gearing up for More Trade Trouble? 1-27-26

Policy Mud on the Wall: Consumer Debt, Residential Mortgages 1-15-26

2025 Spread Walks and Multicycle Return Histories 1-5-26

Annual Return Differentials: HY vs. IG Across the Cycles 1-3-26

Total Return Quilt Across Asset Classes 2008-2025 1-2-26

Cyclical Histories: Will Facts Be in Vogue in 2026? 1-2-26

Market Commentary: Asset Returns 2-23-26

Glenn Reynolds, CFA — Mon, 23 Feb 2026 19:22:31 GMT

How dare you?! Let’s make it 15%.

A busy week for economic releases and tariff chaos overshadows the basic reality that annual GDP for 2025 (2.2%) was down from 2024 (2.8%) with personal consumption expenditure growth lower in 2025 (2.7%) vs. 2024 (2.9%) and fixed investment growth lower in 2025 (+2.7%) vs. 2024 (+3.0%). As far as Golden Ages go, 2025 is in a different block on the periodic table. The 4Q25 GDP numbers were subpar also (see 4Q25 GDP (Advance Est.): Less Distortion This Time 2-20-26).
Higher PCE inflation marked a setback on Friday with the headline PCE price index rising to 2.9% from 2.8% and Core PCE moving to 3.0% from 2.8%. Interest rate sensitive sectors saw that flow into weekly returns for subsector and industry ETFs (see PCE Income & Outlays Dec 2025: Inflation Reversal? 2-20-26).
The asset return picture the last week was solid and steady despite the headlines, but the FOMC handicapping is showing higher odds of no change in April and June as the consumer appears to be steady with PCE outpacing DPI in the Friday release even though the 4Q25 advance estimate of 2.4% for PCE was down from 3Q25 and well below 3Q24 and 4Q24.
The trade policy wonks are working their way through the numbers on the SCOTUS IEEPA smackdown, but Trump has always had myriad laws on the books where Congress had delegated their constitutional control of tariffs to the Executive branch. The main distinctions are behavioral and in terms of negotiating leverage since Trump just cannot threaten a 200% tariff on French wine at his whim (he has actually done that before).
Process and law and timelines will rule tariff economic risk while screwing up the ability of capital budgeting pros to plan. That is not an aphrodisiac for reshoring/onshoring capex. The USMCA review also lurks. The Section 122 path limits the tariff rate and the timeline and needs to eventually go to Congress during an election year. The Section 301 and 232 gambits have been actively used since Trump 1.0, so tariff chaos will still reign. That said, there are clear and specific legal statutes and not just mood swings. My favorite Section 232 national security tariff is upholstered furniture (guard against the terrorist threat of uncomfortable chairs).

The above table updates the benchmarks for the debt and equity markets we monitor. We see the debt benchmarks in positive range across recent timelines while equities have seen value beat growth the past month on the AI chaos and sudden wave of second-guessing on winners and losers. Investors are struggling to find the sweet spot on valuation metrics in a sector rife with the speculation that is intrinsic to longer term forward valuation models.

The credit spread backdrop remains mired in the range of past credit cycle peaks and notably in HY where the OAS is below the high end of the June 2007 bubble month. HY OAS is +17 bps wider on the month and -9 bps tighter on the week at +286 bps. As we have covered in numerous past commentaries, that HY OAS is dramatically inside the long-term median of around +455 bps.

The rolling return visual

The return symmetry has been favorable despite the recent beatdown of so many tech or tech-centric names. We cover the time horizons and mix details below, but it is hard to see much bad news in the above mix as earnings growth has been impressive and overall economic metrics are at worst constructive despite weaker GDP growth and mindset erosion in inflation.

Trump’s reaction to a clear violation of traditional tariff law as practiced under IEEPA is not helping confidence in his next round of reactions. IEEPA mitigates Trump’s ability to indulge himself in negotiation by Truth Social. The SCOTUS move to 15% also appears to limit his ability to counter trade retaliation with nuclear proclamations (100% and 200% threats, etc.). Of course with Trump that could get tested. We’ll undoubtedly get an earful about the “Greatest Economy in History” built around tariffs in tomorrow night’s State of the Union address.

The Magnificent 7 heavy ETFs…

The tech bellwether checklist above shows some comebacks from the recent weakness with 5 of the Mag 7 in the top 5 slots and those 5 better than NASDAQ and the S&P 500. We saw only 3 names from this group in negative range for the week with Microsoft, Tesla and Oracle.

The text below is essentially a cut-and-paste of a LinkedIn post on this chart:

The dominant headlines for the week revolved across SCOTUS ruling against Trump on IEEPA, but the weaker GDP numbers and rising PCE inflation metrics were more immediate and clearly defined variables in terms of the story they told about the curve and sea level industry fundamentals.

The fact that the annual 2025 GDP growth number was only 2.2% vs. 2.8% in 2024 got little headline play with the noise around the IEEPA decision and some White House rage. The unfavorable PCE inflation release shows up in some weaker performers in the chart.

We see our group of 32 benchmarks and ETFs weigh in with a solid score on the week at 22-10 favoring positive with the 4 major benchmarks all positive with two in the top quartile (NASDAQ and Midcaps) and two in the 2nd quartile with the S&P 5000 at the top of the 2nd quartile and Russell 2000 at the bottom of that tier.

The winners at the industry level included E&P with Iran a major X factor. The tech line items also were attempting comebacks on the week with Communications Services (XLC) and NASDAQ back in the top tier. For cyclicals, we see Transports (XTN) and Industrials (XLI). That diversified mix of subsectors was not signaling cyclical worries.

The losers on the week include a heavier mix of lines with interest rate risk and duration exposure including two UST ETFs (GOVT, TLT) along with Homebuilders (XHB) and dividend sensitive equity ETFs such as Utilities (XLU) and Consumer Staples (XLP). The private credit headlines with a focus on OWL and the loan sale commentaries kept the private credit market nervous even though loan sales were pitched as “proving par markets” and showing support from the major institutional bidders.

With inflation anxiety a critical variable around FOMC easing timing and how a UST curve steepener might play out, the stubborn PCE price index this week was clear in the monthly PCE (Income & Outlays) release and also in the PCE price index disclosure with the GDP release for 4Q25.

In the GDP report, the annual PCE price index for gross domestic purchases rose to +2.6% in 2025 from 2.4% in 2024. For the 4Q25 period alone, the same metric rose to +3.7% from +3.4% in 3Q25. In the separate PCE report, the headline number rose to 2.9% from 2.8% and Core PCE price inflation to 3.0% from 2.8%. On a day when GDP was weaker, rising inflation was not good news. FedWatch saw the odds of no FOMC action in April rise to 82.1% (Monday) from 70.1% the prior week. For the June FOMC meeting, the odds of no cut rose to 48.0% (Monday) from 31.4%.

The PCE pressure plus a constructive, balanced set of signals overall last week from macro and micro releases (industrial production/durable goods, mixed GDP, PCE outpacing DPI, new home sales, etc.) and earnings (e.g. WMT) leave the market with plenty of moving parts to digest as it try to sort out what comes next after SCOTUS shot down IEEPA.

The text below is essentially a cut-and-paste of a LinkedIn post on this chart:

The tech recovery this past week does not clear up a lot of speculative moving parts, and companies will have their work cut out to help ease the fear factor around business models and how much damage AI might do.

We will get a key industry earnings report this week with NVIDIA, but now Salesforce (CRM) will also be a focal point. CRM has always been a hot name but now it gets attention for the anxiety around the AI multiplier effects on SaaS players. The doom scenarios being spun are a reaction to AI fallout and what that might mean for other tech sectors from semis to software to business services.

The chart updates the group of 24 asset lines we look at as part of a “tech check” we started doing a few weeks ago with tech chaos and fears around more drastic divergence within and across the tech bellwether universe. That case of nerves has spread with a vengeance to private credit as well as equity markets with so many software names leveraged up on the basis of high margins and recurring cash flows.

This week saw a score of 18-6 positive vs. negative in this mix of 24 names. That score is moving in the right direction relative to the 12-12 score over the trailing 1-month timeline. Oracle is on the bottom again this week and it is one off the bottom for the 1-month period. The 1-month (not shown) sees Palantir on the bottom. PLTR YTD has generated a -23.9% price performance.

The 1-week chart shows Applied Materials on top again at +17.9% along with some legacy leaders in the top quartile such as Taiwan Semi, Meta, Cisco, Apple, and NVDA. The score includes 5 of the Mag 7 in positive range with 4 of the 7 in the top quartile.

Negative returns on the week were seen at MSFT and TSLA in the Mag 7 with Oracle in last at -7.5%. The software ETF (IGV) was in the red zone, and IGV is 3 off the bottom for the trailing 1-month at -15.8% with only ORCL (-17.7%) and PLTR (-19.8%) worse.

We may need to revamp and expand this list to add some content/analytics/data SaaS players. For YTD price returns (2-20-26 close), we would note such examples as S&P Global (SPGI) at -20.1%, Salesforce (CRM) at -30.1%, FactSet (FDS) at -32.8%, and Intuit (INTU) at -42.6%.

The 1-month score for the 32 benchmarks and ETFs shows 26-6 with weakness in tech the main theme on the loser side of the ledger. The BDC ETF (BIZD) sits in dead last again as tech and software weakness and SaaS business services took a beating and piled onto the existing fears around private credit that had been boiling over after the high-profile credit blowups that brought Jamie Dimon to utter the dreaded “cockroach” theory. The concentration of software issuers or SaaS-based borrowers has received nonstop coverage in recent days.

We see the Equal Weight NASDAQ 100 ETF (QQEW) in second to last, the Amazon-heavy Consumer Discretionary ETF (XLY) in the red, and the Tech ETF (XLK) and NASDAQ also sitting in the bottom tier of negative names. The broad Financial ETF (XLF) has also been feeling the second-guessing of tech exposure hitting major asset managers with XLF lagging badly of late. Meanwhile, Regional Banks (KRE) are at the bottom of the top quartile.

The running 1-month “tech check” posted a score of 12-12, which is still ugly even if improved from 7-17 last week. Palantir remains mired in last place with 5 asset lines in negative double digits. The worst laggards also include Oracle, the Software ETF (IGV), Advanced Micro (AMD), and Microsoft (MSFT).

Applied Materials (AMAT) is on top as investment programs will surge, Taiwan Semi is well set at #2, and then we see some of the legacy leaders in the remainder of the top tier including Meta, Cisco, Apple and the Semi ETF (SOXX).

The 3-month returns for the group of 32 weighed in at 30-2 with BIZD in last place, only posting a mild -1.99% return. The bottom quartile includes 6 of the 7 bond ETFs with EM Sovereign bonds (EMB) making it into the third quartile.

We see Midcaps and Russell 2000 small caps well ahead of the large cap S&P 500 and NASDAQ. Midcaps made the top quartile while the Russell 2000 just missed.

The sector rotation dynamics shut tech out of the top quartile with Transports at #1, Materials at #2, two energy names (XLE, XOP), Regional Banks (KRE), and Industrials (XLI) in the mix. Interesting twist is that Homebuilders (XHB) made the top tier for 3 months before resuming a fade with this past week’s bad inflation numbers and some new curve anxiety.

1 year seems like a very long time with post-election policy implementation and a tariff wave joining a musclebound foreign policy strategy (hold that thought on Iran risk and geopolitics). With a pay-to-play UN substitute (Board of Peace) under Trump’s control in process; the relationships with the EU a disaster; Canada and Mexico about to be under siege (literally in Mexico’s case) in the USMCA review; and the post-SCOTUS evolution of tariffs underway, there is much to play out in coming weeks.

PCE Income & Outlays Dec 2025: Inflation Reversal? 2-20-26

4Q25 GDP (Advance Est.): Less Distortion This Time 2-20-26

Industrial Production Jan 2026: Capacity Utilization Trends 2-19-26

Market Lookback 2-17-26

CPI Jan 2026: Reassuring Numbers, Missing Pieces 2-13-26

Employment Jan 2026: Good Headline, So-So Mix 2-11-26

Switzerland-US Trade: A Deficit that Glitters 2-3-26

Mexico Trade: Gearing up for More Trade Trouble? 1-27-26

Policy Mud on the Wall: Consumer Debt, Residential Mortgages 1-15-26

2025 Spread Walks and Multicycle Return Histories 1-5-26

Annual Return Differentials: HY vs. IG Across the Cycles 1-3-26

Total Return Quilt Across Asset Classes 2008-2025 1-2-26

Cyclical Histories: Will Facts Be in Vogue in 2026? 1-2-26

Market Lookback 2-17-26

Glenn Reynolds, CFA — Tue, 17 Feb 2026 17:14:18 GMT

Getting ready for more GDP data. Toys to shape and reform.

The macro data is catching up since the shutdown, and this week brings the advance estimate for 4Q25. We can expect a wave of political exercises locking in on annualized numbers or nominal numbers or both to paint 2025 as an economy that dwarfed the best of the 1980s and 1990s. As usual, we will lock in on PCE and fixed investment (see 3Q25 GDP: Updated Estimate 1-22-26, Cyclical Histories: Will Facts Be in Vogue in 2026? 1-2-26, 3Q25 GDP: Morning After Variables to Ponder 12-27-25).
The CPI and payroll numbers last week helped the macro story even if there are quite a few line items that push back on cyclical overconfidence. The lower headline and core CPI remain above target, but there is a growing base of market watchers who do not take 2.0% seriously (getting below 2.0% for a protracted period took multiple crises). The reality in CPI that is not part of the pitch is that food inflation is higher than 2024 and the energy support from lower gasoline does not diminish the household pain in energy services in electricity and piped utility gas (see CPI Jan 2026: Reassuring Numbers, Missing Pieces 2-13-26).
Payroll as the swing factor for FOMC policy will need more numbers to fortify the easing story line since the quality of the mix is weak (too much “Health Care and Social Assistance”) while the FOMC has not really shown its hand on AI multiplier effects. The Fed is likely as confused on AI fallout as the equity markets right now (see Market Commentary: Asset Returns 2-16-26). Presumably the AI and payroll commentary (What is full employment?) will bring some forceful ambiguity. The market awaits the messaging from the incoming Fed Chair.
The strong rally in the UST curve this past week might rejuvenate the UST bull flattener fans as the 10Y UST got close to 4.0% (4.05% as we go to print this afternoon). The 3.6% handle on the 10Y UST seen (briefly) at the start of the easing cycle (Sept 2024) can serve as fuel for the optimists seeking the bull flattener and lower mortgage rates or as a discussion topic for why a bear steepener ensued after that date with record deficits, mixed macro trends, a weaker dollar and strained relations with major sources of UST demand around the world. The recovering good news in the consumer sector and the much-ballyhooed trillions in fixed investment promised by trade partners and how that flows into multiplier effects are forward-looking wildcards.

The above chart updates the running returns on benchmark ETFs that cut across the Big 4 trade partner equity markets and reflect currency effects. The chart has been a recurring one with the US remaining in last place. The nondollar effects offer an easy reminder that there are more than a few ways to invest in international exposure while diversifying dollar risk. Europe and Canada are well ahead.

The above chart updates the trailing 1-week and 1-month credit spread deltas for IG and HY and from the BBB tier down to the CCC tier. The theme has been spread widening while IG and HY OAS still remain at very low levels in absolute terms.

We looked at the UST deltas for the week in a commentary we posted earlier on LinkedIn. This is largely a cut and paste of that note:

The optimism of the UST bull flattener crowd just got a lift this past week as duration was rewarded and CPI numbers improved. All the bond ETFs we track posted positive returns.

As we detail in the chart above, the double-digit decline in UST yields from 2Y to 30Y rewarded bond returns as we cover in a separate LinkedIn post. We also are seeing anxiety pick up across tech subsectors that includes worries around “tech-on-tech violence” from potential AI side effects on software and providers of analytics and data. That recent development brings some new drama to dislocation risk and potential valuation and payroll pressures.

The payroll debate continues with the 130K job adds showing a consensus “beat.” That modestly reshaped the discussion after the weak JOLTS numbers, the ugly Challenger report, and soft ADP release had cast a pall over job prospects.

The details of the 130K are discussed in our Substack commentary, but the excitement of higher-than-expected jobs is curbed by the fact that over 123K of the additions fall under the “Health Care and Social Assistance” category. That is considered a low multiplier effect occupation. The overall mix factor is suboptimal and narrowly concentrated.

The lagging Manufacturing payroll in the Jan 2026 details at least showed a rare 5K addition but are down -83K YoY. That opens up the tariff topic as a headwind in reality even if being sold politically as a tailwind.

Jan 2026 payrolls offered headline bragging rights as did the lower CPI, but the inflation line items still have a lot of worrisome CPI comparisons including food (higher now than in 2024). We also see energy services as a drag with high inflation in electricity and piped utility gas as one of a number of troubling and stubborn consumer realities. The coffee, beef, and sweet consumers are especially unhappy.

The current 4.0% handle 10Y UST is well above the 3.6% handle of Sept 2024 when the easing cycle began. That was before the bull flattening expected by many transformed into a bear steepener. Mortgages are still hanging around the low 6.0% area. People will have a very hard time making a case for lower UST supply given the revised estimates on deficits.

The YTD deltas were heavily about the moves just this past week with good news for duration and bonds but still a lot of questions on the timing of FOMC action on the front end. The front-end inversion remains an anomaly as the curve steepened beyond 2Y.

The above time series updates the 10Y UST vs. the Freddie Mac 30Y benchmark (set on Thursday). The dip to the low 4.0% range for the 10Y UST was favorable as it flowed into a low 6.0% range on mortgages (6.04% for Friday close in Mortgage News Daily). The action has been rangebound for the 10Y UST after the exciting drop to a 3.6% handle 10Y UST with the initial round of easing back in Sept 2024.

The ensuing steepener since that earlier period has been a challenge for the bond bulls who keep hoping that flatter and lower from the long end might tag team with a more material shift lower with Fed easing (see The Curve 12-15-25). The longer end is what drives housing, so there is no shortage of skin in the game. Global military adventurism could keep deficits moving higher (war costs money) as the US fleet positions near Iran and the 2027 defense budget plans are calling for a 50% increase.

The above chart updates the latest UST curve with the Freddie Mac 30Y (horizontal lines). We picked the Dec 2005 and June 2006 periods as comps for the UST curve and mortgages since 2005 was the peak homebuilder year and June 2006 was when the mortgage quality problems were growing more concerning. Any RMBS structure with a remote pulse seemed to get rubber stamped.

The steep curve of today contrasts with the flat UST curves of those earlier periods, making for interesting discussion points as covered in other commentaries along the way. We see 6% handle mortgage rates both then and now despite a lower UST curve today. That keeps mortgage rate bulls in the game.

The above chart updates the 2Y to 10Y curve segment slope across time from 1984. The current 2Y to 10Y slope of +64 bps as of Friday is modestly inside the long term median of +88 bps. The FOMC easing potential together with the supply-demand anxiety tied to record UST funding needs could get that slope back to median levels very easily.

HY OAS widened on the week by +8 bps to +295 bps, but that remains inside the June 2007 bubble range and dramatically inside the long-term median of +455 bps as noted. As we saw with Liberation Day when HY OAS spiked to +461 bps in April 2025, it takes a lot to drive a sustained spread widening trend.

With this economic backdrop, that catalyst for pain would likely need to fall under the heading of geopolitical event risk. Invading a NATO ally (Greenland/Denmark) would qualify, but Iran would likely be viewed more in the context of CPI and inflation. Iran would be damaging, but Greenland would be an other-worldly risk extrapolation exercise with trade war proliferation (EU, Canada) being a handicapping exercise.

The “HY OAS minus IG OAS” quality spread differential of +216 bps remains well inside the long-term median of +320 bps. HY was +8 bps on the week while IG was +3 bps, the quality spread widening was quite mild.

The “BB OAS minus BBB OAS” quality spread differential of +78 bps is also well inside the long-term median of +132 bps. The BB tier moved +7 bps wider on the week and BBBs +4 bps wider, so the credit spread action and risk repricing has been mild.

CPI Jan 2026: Reassuring Numbers, Missing Pieces 2-13-26

Employment Jan 2026: Good Headline, So-So Mix 2-11-26

Market Commentary: Asset Returns 2-8-26

Switzerland-US Trade: A Deficit that Glitters 2-3-26

Market Commentary: Asset Returns 2-1-26

Mexico Trade: Gearing up for More Trade Trouble? 1-27-26

PCE Income & Outlays Nov 2025: Resilient Consumer, Higher Inflation 1-24-26

3Q25 GDP: Updated Estimate 1-22-26

Industrial Production Dec 2025: CapUte Resilience 1-17-26

Policy Mud on the Wall: Consumer Debt, Residential Mortgages 1-15-26

CPI Dec 2025: Sideways Calms Nerves – For Now 1-13-26

2025 Spread Walks and Multicycle Return Histories 1-5-26

Annual Return Differentials: HY vs. IG Across the Cycles 1-3-26

Total Return Quilt Across Asset Classes 2008-2025 1-2-26

Cyclical Histories: Will Facts Be in Vogue in 2026? 1-2-26

Market Lookback: Last Call for Unusual Behavior 12-22-25

Market Commentary: Asset Returns 2-16-26

Glenn Reynolds, CFA — Mon, 16 Feb 2026 20:32:38 GMT

The Dow hit “50,000 dollars.” Need I say more?

A bull flattener carried the day for bonds this week while credit is feeling some slight pressure with +19 bps of HY OAS widening over the past month and +8 bps this week. The trend toward mega-issuance from Big Tech to fund the hyperscalers’ capex programs will get a lot of attention in 2026 around how the profile of the index will change in terms of issuer concentration, credit risk, correlation, and duration sensitivity.
The favorable CPI release helped the rally, but there are still plenty of worrisome line items to annoy the consumer and the voter when they hear how great things are (see CPI Jan 2026: Reassuring Numbers, Missing Pieces 2-13-26).
The payroll numbers beat consensus, but there is still a heavy concentration of the job adds in low economic multiplier sectors such as “Health Care and Social Assistance.” The Manufacturing line posted a rare increase while remaining down by -83K jobs YoY (see Employment Jan 2026: Good Headline, So-So Mix 2-11-26, Payrolls Jan 2026: Into the Weeds 2-11-26).

The above table updates some of the main benchmarks in credit and equities that we monitor. The struggles of tech and growth stocks are clearly in evidence in the returns. The trailing 1-month for NASDAQ is -4.87% while the rolling 3-months return is also in the red at -1.27%. Russell 3000 Growth was tagged at -5.89% for the month, -4.06% for 3-months, and a very slight negative for 6 months.

Debt has posted more favorable results on tight spreads and a constructive UST curve move in 2026 with a solid UST rally this week being the main driver. Credit spreads have been steady and largely stable up until the recent HY OAS widening. HY OAS still cleared the week slightly under the high end of the range seen in the June 2007 bubble month. IG OAS remains (barely) in the +70 bps handle range.

The rolling return visual

The positive vs. negative symmetry is still favorable with some signs of weakening in early 2026 with all the tech noise as we detail in the charts below. The FOMC policy betting is mixed, but the bias is still favoring easing once the FOMC gets a few more payroll reports and CPI releases under its belt ahead of the new Warsh regime. The “new guy” in the Chair seat will still need to get the broader FOMC team on board.

In terms of economic growth, the sequential GDP and PCE numbers have been trending favorably. We get more data this week. There is plenty to come as key swing factors. The dual mandate needs (full employment, price stability) are subject to plenty of to-and-fro as evident in the Fed leaders’ “speechifying.”

The Magnificent 7 heavy ETFs…

The above table breaks out more time horizon returns for the tech bellwethers including the Mag 7 and the “Mag 7+3” (including Broadcom, Taiwan Semi, and Oracle). For the trailing 1-month, we see 6 of the Mag 7 in the red with only Meta positive. In the other 3 bellwethers, only Taiwan Semi is positive for the month among the “Mag 7+3.”

Perhaps the most telling number is in the trailing 1-year return at this point with Oracle, Microsoft, Meta, and Amazon in negative range. NVIDIA is barely positive looking back 6 months.

We looked at the trailing 1-week returns for the 32 benchmark and ETFs we monitor each week in a commentary we earlier posted on LinkedIn. This is a cut and paste of that note:

Favorable payroll trends and lower inflation did not get the job fully done this past week. A solid 4Q25 earnings season also did not offset some investor angst.

The past week kept the broad benchmarks under pressure with the S&P 500, NASDAQ, Russell 2000, and S&P 400 Midcap all in the red. The UST rally sent the long duration UST ETF (TLT) into the top quartile in our peer group of 32 benchmarks and ETFs. The overall score of 19 positive and 13 negative reflects a mixed set of moving parts across subsectors and industries – and notably tech.

The 11 S&P 500 sectors posted a score of 6-5 favoring positive returns, but the larger sectors such as Info Tech and Communications Services, Financials, and Consumer Discretionary dominated the negative bias in total.

We see the Financials ETF (XLF) on the bottom in the group of 32 with Regional Banks (KRE) 3 off the bottom. The bottom quartile also features NASDAQ, the tech-heavy S&P 500, the Equal Weight NASDAQ 100 ETF (QQEW), and the Tech ETF (XLK). Also lagging was the Consumer Discretionary ETF (XLY) with its heavy weighting in Amazon, which posted a -5.5% return on the week. Consumer credit quality is drawing some headlines lately including from the NY Fed, which includes some attention to upticks in delinquent mortgages.

The Utilities ETF (XLU) was the runaway winner for the week at +7.3% as XLU has hung around in the top quartile for the trailing 1-month and 3-months period as well as the trailing year. The sleepy dividend-fixated utility sector of bygone years has morphed into a growth story now. Electricity prices and supply-demand imbalances show up in detail as part of the AI and Data Center fundamentals and in a damaging Energy Services CPI story line. For piped utility natural gas, the CPI headlines also are tough on consumers and businesses.

The energy story was positive again this week for the Energy ETF (XLE) and Midstream ETF (AMLP) with the E&P ETF (XOP) just short of the top quartile. The UST rally rewarded the Homebuilder ETF (XHB), the cyclical Materials ETF (XHB), and the dividend-heavy Consumer Staples ETF (XLP). All 7 bond ETFs were in the positive return range despite HYG feeling some spread widening and thus barely positive.

We looked at the trailing 1-week returns for the 32 benchmark and ETFs we monitor each week in a commentary we posted on LinkedIn earlier today. This is a cut and paste of that note:

The tech bellwethers remained under the gun this past week following the turmoil of the prior week. The debate around the Good, Bad, and Ugly checklist of AI evolution is now setting off bouts of volatility tied to the downside of the multiplier AI effects.

The worries have infected major software and analytics providers as worst case scenarios get handicapped. We addressed the moving parts in last week’s LinkedIn posts, and the negative bias was evident again this week.

The above chart updates the peer group of benchmarks, single names, and ETFs that we use in our weekly tech check. The 24 lines show 8 positive and 16 negative price returns with the main broad benchmarks/ETFs (S&P 500, NASDAQ, Russell 2000, and S&P 400 Midcaps) all in the red.

We see 5 of the Mag 7 post negative price returns on the week with MSFT barely positive and TSLA marching to its own beat with a more distinctive set of valuation drivers. ORCL bounced back to #1 in the current week with +12.1% after being dead last the prior week with -13.2%. ORCL has experienced an especially rough ride of late at a -26% return over the rolling 3 months.

The software ETF (IGV) clawed back into positive range this week while the Semis ETF (SOXX) was positive in both weeks. IGV has been beaten up since late fall while SOXX had been strong.

Last week had some old school names (Intel, Cisco) at #1 and #2, but those two dropped back down to near the bottom of the list this week. The tech equity community is in a mad scramble to get into the weeds on which names are more exposed or insulated and which subsectors (semis, capital equipment, software) can make their case as winners or get tagged as losers. Applied Materials (AMAT) was in the positive range both weeks and the same for Taiwan Semi.

The valuation boom was built on speculative assumptions (even if very well informed speculation). The 1000-pound gorillas in the space are doing a lot more than guessing with close to $1 trillion in 2026 capex announcements with a big slice of that from the major names at over $600 bn. The speculative fervor is now looking for negative outcomes and assembling a “winners and losers” list.

The above chart plots the trailing 1-month returns for the 32 benchmarks and ETFs that we monitor. A positive vs. negative score of 23-9 is a respectable start to 2026 by the numbers. There were no shortages of record high stock prices under both Biden and Trump, but the trick is voters want to feel like they are in on the good news.

For the month, all the bond ETFs are positive with HYG only slightly so on credit spread widening. The UST move was supportive this week, and the strong 4Q25 earnings season should be offering some comfort to the upper HY credit tiers, medium grade layers, and higher quality credit tiers. The high grade tiers will be facing some supply tests with the sheer volume of tech issuance to fund capex during a period when tech equities have been volatile.

The bottom tier returns for the 1-month timeline is concentrated in tech with 5 of the 8 names in the low quartile being tech-based names. We see the Equal Weight NASDAQ 100 ETF (QQEW) in dead last joined in the bottom ranks by Consumer Discretionary (XLY) with its Amazon concentration, the NASDAQ, the Tech ETF (XLK) and Communications Services (XLC). Just above, in the bottom of the 3^rd quartile is the S&P 500 with its heavy weighting of Info Tech and Communications Services. Financials (XLF) has also been a laggard.

The top quartile has 3 energy related names with the Energy ETF (XLE) at #1 and E&P (XOP) at #2 and Midstream (AMLP) at #7. The favorable UST curve dynamics supported dividend heavy ETFs such as Consumer Staples (XLP), Utilities (XLU), and Real Estate (XLRE).

The above chart highlights the tech chaos with so many of the 24 names included above in the red. The weakness is tied to speculative scenarios around AI fallout. We see 17 of the 24 asset lines in negative range. We see Midcaps and Russell 2000 in positive range with the Semiconductor ETF (SOXX), but the few single names in positive range include Applied Materials at the #1 slot followed by Taiwan Semi at #2. The sole Mag 7 name to post a positive return was Meta.

The weakest performers are easy to scan, but Palantir sits on the bottom with Oracle in second to last with the Software ETF (IGV) three off the bottom. Amazon and Qualcomm round out the bottom 5 just slightly worse than Microsoft.

The trailing 3-month performance is solid at a 27-5 score. The sector rotation theme is very much in evidence with the cyclical Materials ETF at #1, Transports at #3 with Industrials (XLI) in the mix at #7. We even saw some data centric freight and logistics services providers take some heat for AI risk.

We see the UST curve supporting the interest rate sensitive Homebuilders (XHB) for the past three months and the dividend heavy Consumer Staples (XLP) along with it. The Energy names took some top tier slots with XLE and AMLP, but XOP just outside the top quartile.

The big gap between Regional Banks (KRE) in the top quartile and broad Financials (XLF) in the bottom quartile is a trickier topic. The regional banks have had their scary moments in recent years (spring 2023) but are in consolidation mode and are less exposed to the credit card regulation headlines. The FOMC actions and cyclical credit quality apply to both KRE and XLF.

As we see in other recent timelines, tech has badly underperformed with 4 tech-centric lines in the bottom quartile. The Equal Weight NASDAQ 100 ETF (QQEW) is on the bottom with the BDC ETF (BIZD) in second to last with all the adverse coverage of private credit and some headline meltdowns that fed extrapolation exercises and dividend warnings.

The bottom quartile includes the Tech ETF (XLK), the NASDAQ, and the Consumer Discretionary ETF (XLY) with its heavy Amazon exposure. AMZN equity posted an ugly -16.3% over 3 months.

The 30-2 score LTM makes for an easier assessment on a good trailing year overall with the median return in the mix just under 13% and 17% handle returns to make the top quartile. The Hi-Lo range (VWO vs. BIZD) was almost 45 points. The big loser was the BDC ETF (BIZD) on the back of brutal headlines around private credit even if the brush was spreading a lot of paint on BDCs that showed better underwriting and risk management practices. The dispersion across the BDC peers in equity performance was extreme. The reality is that a few major private credit borrower meltdowns and some major fraud cases spooked the markets.

Employment Jan 2026: Good Headline, So-So Mix 2-11-26

Market Commentary: Asset Returns 2-8-26

Switzerland-US Trade: A Deficit that Glitters 2-3-26

Market Commentary: Asset Returns 2-1-26

Mexico Trade: Gearing up for More Trade Trouble? 1-27-26

PCE Income & Outlays Nov 2025: Resilient Consumer, Higher Inflation 1-24-26

3Q25 GDP: Updated Estimate 1-22-26

Industrial Production Dec 2025: CapUte Resilience 1-17-26

Policy Mud on the Wall: Consumer Debt, Residential Mortgages 1-15-26

CPI Dec 2025: Sideways Calms Nerves – For Now 1-13-26

2025 Spread Walks and Multicycle Return Histories 1-5-26

Annual Return Differentials: HY vs. IG Across the Cycles 1-3-26

Total Return Quilt Across Asset Classes 2008-2025 1-2-26

Cyclical Histories: Will Facts Be in Vogue in 2026? 1-2-26

Market Lookback: Last Call for Unusual Behavior 12-22-25

Market Lookback: Monkey Business 2-9-26

Glenn Reynolds, CFA — Mon, 09 Feb 2026 18:28:38 GMT

To my fellow Irish American Catholics: A handful of generations ago, we were the apes at the beck & call of Papist radicals (some “Christian” elements never change).

Something for Irish to ponder. Similar forces of hate and ignorance pushing agendas.

In a strange week of wild tech equity valuation swings alongside more than a little xenophobic and racist hatemongering, the Friday rally eased some pain ahead of a big week ahead with payroll data and CPI.
We looked at the asset return mix already across our group of 32 benchmarks and ETFs, and this week we added another chart with 24 benchmarks and tech equities (single names and ETFs) as we expand what we monitor (see Market Commentary: Asset Returns 2-8-26). We picked up the pace recently in terms of writing up single chart comments on our LinkedIn page (under Glenn Reynolds, CFA).
The new tech equity comp chart is one to watch with the AI multiplier effect story lines getting more complex. The software fear immediately put private credit investors on alert given the high exposure to the subsector in leveraged transactions.
The story lines around inflation, payrolls, and tariff lag effects will heat up ahead of Warsh taking the helm. The “low hire, low fire” payroll theme could easily shift into “low hire, more fire” based on some of the ugly numbers from the Challenger report this week and soft ADP numbers. The BLS gets back in action this week with the employment report, but JOLTS releases are still lagging.

The above chart updates the running returns for the S&P 500 ETF (SPY) vs. three ETFs reflecting the performance of some critical trade partners (Europe, Canada, and China). The chosen ETFs reflect the currency impact and offer a reminder that even with the US stock market reaching new highs, there were other places to be in a diversified portfolio as the dollar was battered. By this metric, the US finished last among the four ETFs.

As we hear about “record stock markets and 401(k)s” we like to point out that the only Presidents to see record stock markets the last 50 years were…all of them. You can slice and dice the numbers by record high index prices (in an “up and to the right” world) or look at each year with annual return metrics. The various metrics can drive different conclusions on relative performance. That is a story for another day

.The above chart breaks out the 1-week and 1-month OAS deltas and we see some modest widening in the HY and IG indexes. We see +7 bps for HY on the week and +8 bps for 1-month. The headline index OAS for HY at +287 bps is still inside the range of the June 2007 bubble spreads. IG with a 70-handle is also still in a very rare zone.

The above chart updates the weekly UST curve deltas, and the fear factor managed to generate a very slight flattening that was, in context, fairly minimal. This coming week’s payroll and CPI numbers could shake things up.

The above chart updates the YTD UST deltas and reminds us that the long end has been stubborn and nothing is all that reassuring for the risk of UST supply-demand imbalances in the dollar trends, deficit funding needs (supply), or the alienation (growing enmity?) of former allies (big UST holders). We are still looking for UST steepening in 2026.

The above chart updates the running 10Y UST time series and the Freddie Mac 30Y mortgage benchmark (released on Thursday). Friday saw the Mortgage News Daily survey close at 6.15

The above chart offers some historical context for the current UST curve and 30Y Freddie Mac level. We choose the date of mid-2006 as the RMBS market started to show signs of trouble. We also include year-end 2005 as the peak homebuilding year. The plunge in housing came on with a vengeance from the end of 2005 into 2006 as the crack in mortgages and RMBS in late 2007 and 2008 was one for the ages.

We include the 10Y UST and 30Y mortgage rates and the “30Y mortgage minus 10Y UST” in the box. Those markets in 2005 and 2006 showed relatively flat UST curves beyond 1Y out to 30Y while the current UST curve has grown steeper in the current cycle with the notable exception of the front-end inversion. The current Freddie 30Y is the lowest of the group. The 2Y to 10Y segment of the curve is also lower and steeper now

.The above chart updates the 3M to 5Y UST segment slope at +8 bps vs. a long-term median of +106 bps. That certainly signals a lot of room for normalization and steepening with FOMC easing, but the case for lower 5Y UST could also get caught up on the same debate that revolves around the sticky 10Y and 30Y.

The box in the chart includes a number of curve segment slopes we like to monitor with the relevant long-term medians. Anything starting from 3M has a lot of room to steepen in historical context.

Historically a steep 3M to 5Y segment encourages extension in the usual reach-for-yield impulse with the curve and the OAS levels experiencing some natural tension in risk and term premiums. Easing is also supposed to intrinsically lessen floating rate debt pressures and interest costs for more leveraged entities. That can be a double-edged sword in private credit with lower interest expense for borrowers but less income for lenders

.The above chart plots the HY OAS from mid-2024 across the Liberation Day whipsaw in April 2025 up through the recent milder gyrations. After the Thursday tech equity carnage this week, HY OAS did a mild pop to +297 bps before rallying back to +287 bps to close Friday. Those spreads are very compressed vs. the long-term median of +455 bps

.The above chart updates the “HY OAS minus IG OAS” quality spread differential. The sub-200 bps “credit compensation” seen in recent lows (+190 bps Jan 2026) has decompressed modestly out to +211 bps after hitting +221 bps on the tech equity selloff this week. The current +211 is still a long way from the long-term median of +320 bps. Highly compressed credit spreads remain a fact of life.

The above chart updates the “BB OAS minus BBB OAS” quality spread differential along the speculative grade divide. The current +75 bps is comfortably above the lows seen on the chart at or near the high 50s and low 60s from 2024 through early 2026, but the long-term median of +132 bps makes another statement on extreme spread compression.

See also:

Market Commentary: Asset Returns 2-8-26

Switzerland-US Trade: A Deficit that Glitters 2-3-26

Market Commentary: Asset Returns 2-1-26

Mexico Trade: Gearing up for More Trade Trouble? 1-27-26