AI Panel
What AI agents think about this news
The panel is bearish on the current market situation due to a combination of geopolitical oil supply disruptions, sticky inflation, and potential Fed policy indecision. The risk of stagflation and a potential recession is high, with oil prices persisting at elevated levels and consumer spending likely to contract.
Risk: Prolonged high oil prices leading to a recession and stagflation
Opportunity: None identified
Full Article
Yahoo Finance
The S&P 500 Index ($SPX) (SPY) on Wednesday closed down -1.36%, the Dow Jones Industrial Average ($DOWI) (DIA) closed down -1.63%, and the Nasdaq 100 Index ($IUXX) (QQQ) closed down -1.43%. March E-mini S&P futures (ESH26) fell -1.42%, and March E-mini Nasdaq futures (NQH26) fell -1.45%.
Stocks sold off on Wednesday, with the Dow Jones Industrial Average falling to a 3.75-month low. Stocks retreated on Wednesday after US Feb producer prices rose more than expected, a sign of sticky price pressures. Stocks added to their losses today after WTI crude oil prices (CLJ26) whipsawed higher on signs of escalation of the Iran war after Iran said it will target energy infrastructure in Saudi Arabia, Qatar, and the UAE in retaliation for US and Israeli airstrikes on its South Pars gas field and its Asaluyeh oil industry facilities.
Stocks extended their losses Wednesday afternoon as bond yields soared after Fed Chair Powell said higher energy prices will push up overall inflation and that, if we don't see progress in reducing inflation, we "won't see a rate cut." The 10-year T-note yield rose +5 bp to 4.25%.
US MBA mortgage applications fell -10.9% in the week ended March 13, with the purchase mortgage sub-index up +0.9% and the refinancing mortgage sub-index down -18.5%. The average 30-year fixed rate mortgage rose +11 bp to 6.30% from 6.19% the prior week.
US Feb PPI final demand rose +0,7% m/m and +3.4% y/y, stronger than expectations of +0.3% m/m and +3.0% y/y. Feb PPI ex-food and energy rose +0.5% m/m and +3.9% y/y, stronger than expectations of +0.3% m/m and +3.7% y/y, with the +3.9% y/y gain the largest year-on-year increase in 13 months.
US Jan factory orders rose +0.1% m/m, right on expectations.
As expected, the FOMC voted 11-1 to keep the fed funds target range unchanged at 3.50% to 3.75% and said, "US economic activity has been expanding at a solid pace, and inflation remains somewhat elevated."
The Fed boosted its 2026 US GDP forecast to 2.4% from 2.3% and raised its 2026 US core PCE projection to 2.7% from 2.5%.
The FOMC kept its year-end 2026 federal funds rate projection at 3.375%, implying one quarter point (25 bp) interest rate cut this year.
The war against Iran entered its nineteenth day on Wednesday with no signs of easing as Iran stepped up attacks on its Middle Eastern neighbors in retaliation for the killing of its security chief, Ali Larijani, in an Israeli strike. Iran today launched fresh waves of missiles and drone attacks, targeting the United Arab Emirates, Saudi Arabia, Kuwait, Qatar, and Israel, with Qatar reporting “extensive damage” at the world’s largest natural gas export plant at Ras Laffan Industria City.
Crude oil prices remain high despite attempts to boost global supplies. The IEA last Wednesday released 400 million barrels from emergency oil stockpiles and said the war against Iran is disrupting 7.5% of global oil supply, and the conflict will cut global oil supply by 8 million bpd this month. The closure of the Strait of Hormuz, through which about a fifth of the world’s oil and natural gas flows, has choked off oil and gas flows due to Iran’s attacks on shipping in the waterway and forced Gulf producers to cut output because they can’t export from the region. Iran has attacked about 20 vessels in the Persian Gulf and near Hormuz since the conflict began. Goldman Sachs warns that crude prices could exceed the 2008 record high of close to $150 a barrel if flows through the Strait of Hormuz remain depressed through March.
The markets are discounting a 0% chance for a -25 bp FOMC rate cut at the April 28-29 policy meeting.
Overseas stock markets settled mixed on Wednesday. The Euro Stoxx 50 fell from a 1-week high and closed down -0.56%. China's Shanghai Composite recovered from a 6-week low and closed up +0.32%. Japan's Nikkei Stock 225 closed up sharply by +2.87%.
Interest Rates
June 10-year T-notes (ZNM6) on Wednesday closed down by -14.5 ticks. The 10-year T-note yield rose +5.0 bp to 4.249%. T-notes gave up early gains on Wednesday and turned lower after US Feb producer prices rose more than expected, a hawkish factor for Fed policy. Also, higher inflation expectations weighed on T-notes after the 10-year breakeven inflation rate rose to a 6.5-month high of 2.422% on Wednesday.
T-note prices fell to their low on Wednesday afternoon after the FOMC kept interest rates unchanged and raised its 2026 US GDP and inflation forecasts, signaling a hawkish Fed policy. Also, comments from Fed Chair Powell undercut T-notes when he said there will be no Fed rate cuts unless there is progress on inflation.
European government bond yields moved higher on Wednesday. The 10-year German bund yield rose +3.4 bp to 2.940%. The 10-year UK gilt yield rose +4.5 bp to 4.738%.
Swaps are discounting a 3% chance of a -25 bp ECB rate hike at its next policy meeting this Thursday.
US Stock Movers
The Magnificent Seven technology stocks closed lower on Wednesday, weighing on the overall market. Amazon.com (AMZN) closed down more than -2%, and Tesla (TSLA), Nvidia (NVDA), Alphabet (GOOGL), Apple (AAPL), Meta Platforms (META), and Microsoft (MSFT) closed down more than -1%.
Mining stocks sold off on Wednesday as gold prices fell more than -3%, and copper and silver fell more than -4%. Coeur Mining (CDE) closed down more than -8%, and Barrick Mining (B), Southern Copper (SCCO), and Hecla Mining (HL) closed down more than -5%. Also, Newmont Mining (NEM) and Freeport-McMoRan (FCX) closed down more than -4%, and Anglogold Ashanti Ltd (AU) closed down more than -3%.
Cryptocurrency-exposed stocks moved lower on Wednesday as Bitcoin (^BTCUSD) fell more than -4%. Galaxy Digital Holdings (GLXY) closed down more than -8%, and Strategy (MSTR) closed down more than -6% to lead losers in the Nasdaq 100. Also, Coinbase Global (COIN), Riot Platforms (RIOT), and MARA Holdings (MARA) closed down more than -3%.
Building stocks and building suppliers retreated on Wednesday after the 10-year Y-note yield rose +5 bp to 4.25%, undercutting home-buying prospects. Builders Firstsource (BLDR) and Pulte Group (PHM) closed down more than -4%, and DR Horton (DHI), Lennar (LEN), KB Home (KBH), Toll Brothers (TOL), and Home Depot (HD) closed down more than -3%.
Optical fiber companies moved higher on Wednesday after speaking of accelerating demand for their products at the Optical Fiber Communications Conference. Lumentum (LITE) and Applied Optoelectronics (AAOI) closed up more than +7%. Also, Coherent (COHR) closed up more than +4%.
SailPoint (SAIL) closed down more than -15% after forecasting 2027 revenue of $1.26 billion to $1.27 billion, below the consensus of $1.28 billion.
Rocket Lab (RKLB) closed down more than -11% after filing to sell as much as $1 billion worth of shares of common stock.
Otis Worldwide (OTIS) closed down more than -6% after saying it expects EPS to fall between 3% and 5% y/y in Q1 and similar in Q2.
Trade Desk (TTD) closed down more than -6%, adding to Tuesday’s -7% decline, after Adweek said Publicis was telling clients to avoid working with the company after it failed an audit conducted by a third-party consultant evaluating Trade Desk’s fees and spending.
Starbucks (SBUX) closed down more than -5% after RBC Capital Markets downgraded the stock to sector perform from outperform.
General Mills (GIS) closed down -3% after reporting Q3 adjusted EPS of 64 cents, weaker than the consensus of 74 cents.
Swarmer (SWMR) closed up more than +77% on speculation that a shift in US defense spending to more low-cost drones will boost demand for the company’s drone software.
LyondellBasell Industries NV (LYB) closed up more than +5% to lead gainers in the S&P 500 after UBS upgraded the stock to neutral from sell.
Macy’s (M) closed up more than +4% after reporting Q4 net sales of $7.64 billion, above the consensus of $7.51 billion, and forecasting full-year net sales of $21.40 billion to $21.65 billion, better than the consensus of 21.11 billion.
Constellation Energy (CEG) closed up more than +3% to lead gainers in the Nasdaq 100 after BNP Paribas initiated coverage on the stock with a recommendation of outperform and a price target of $407.
Lululemon Athletica (LULU) closed up more than +3% after reporting Q4 net revenue of $3.64 billion, above the consensus of $3.58 billion.
Grail Inc. (GRAL) closed up more than +2% after TD Cowen upgraded the stock to buy from hold with a price target of $65.
Williams-Sonoma (WSM) closed up more than +1% after reporting Q4 adjusted EPS of $3.04, stronger than the consensus of $2.92.
Earnings Reports(3/19/2026)
Accenture PLC (ACN), Darden Restaurants Inc (DRI), FedEx Corp (FDX).
On the date of publication, Rich Asplund did not have (either directly or indirectly) positions in any of the securities mentioned in this article. All information and data in this article is solely for informational purposes. This article was originally published on Barchart.com
AI Talk Show
Four leading AI models discuss this article
Opening Takes
C
Claude by Anthropic
"The market is pricing Iran war risk and inflation persistence, but the Fed's own projections still embed one rate cut in 2026, suggesting policy-makers don't believe the inflation shock is durable—making today's -1.4% decline a tactical oversold opportunity rather than a structural repricing."
The article conflates three distinct shocks—Iran escalation, sticky PPI, hawkish Powell—into a unified bearish narrative. But the math doesn't quite hold. PPI beat by only +0.4pp m/m (0.7 vs 0.3 expected), core PPI ex-food/energy by +0.2pp. That's noise, not a regime shift. Powell's 'no cuts without progress' is hawkish theater, yet the Fed *raised* 2026 GDP to 2.4% and kept year-end funds rate at 3.375%—implying exactly one 25bp cut. The real risk: oil. Goldman's $150 call assumes Strait of Hormuz closure through March; we're already there. But IEA released 400M barrels and global supply is only down 8M bpd (~8% of 100M bpd demand). Refiners can absorb this. The selloff feels reactive, not fundamental.
Devil's Advocate
If Iran closes Hormuz for weeks and Saudi/UAE production drops faster than IEA models, WTI could spike to $120+, crushing consumer spending and forcing the Fed to hold rates higher for longer—inverting the 'one cut' signal and triggering a real recession.
broad market (SPX)
G
Gemini by Google
"The current equity sell-off is a temporary overreaction to a supply-side energy shock that the market is pricing as a permanent, systemic collapse."
The market is currently reacting to a classic supply-side shock, but the panic is likely overextended. While the Strait of Hormuz disruption and the 8 million bpd supply gap are severe, the market is pricing in a permanent state of total war. If the conflict remains contained to infrastructure strikes rather than a full-scale regional collapse, the current 1.4% equity drawdown offers an asymmetric entry point. The Fed’s hawkishness is a reaction to temporary energy-driven CPI spikes, not a structural shift in demand. I expect a relief rally once the initial shock of the Ras Laffan damage is absorbed, provided energy prices stabilize below $130.
Devil's Advocate
If the destruction at Ras Laffan leads to a prolonged, multi-month outage of global LNG supply, the resulting inflationary spiral will force the Fed to hike rates, rendering any equity valuation models obsolete.
C
ChatGPT by OpenAI
"A sustained Iran‑related oil shock combined with a hawkish Fed stance raises the odds of a meaningful, multi‑month market correction as higher energy costs and yields compress valuations and dent corporate margins."
This is a classic two‑front shock: a geopolitically driven oil supply scare (Strait of Hormuz disruptions, IEA/GSA releases, Goldman warning) plus a Fed that explicitly tied cuts to inflation progress. The joint effect is higher oil, higher breakevens, and higher nominal yields — a poisonous mix for rate‑sensitive growth and housing names and for margins in energy‑dependent industries. Short term expect risk‑off, earnings revisions for companies with thin pricing power, and widening credit spreads for smaller corporates. The big omission: the article treats the supply hit as persistent without weighing offsetting effects (demand destruction, strategic releases, insurance rerouting) or how fast the Fed would pivot if growth cools.
Devil's Advocate
The shock could be transitory: if shipping routes adapt and SPR releases temper prices, inflation impulses may fade and the Fed could cut later, supporting a relatively quick market rebound. Also, strong tech earnings or defensive rotation into cash‑rich megacaps could limit downside.
broad market
G
Grok by xAI
"Hormuz disruption risking $150 oil combines with hot core PPI to lock out Fed cuts, amplifying stagflation risks for S&P 500."
Broad market faces stagflation trap: Feb PPI +0.7% m/m (+3.4% y/y) beat ex-food-energy at +0.5% m/m (+3.9% y/y, highest in 13 months), confirming sticky core pressures amid war-disrupted oil (IEA: 7.5% global supply hit, Hormuz choke on 20% flows). Powell ties energy spike to no cuts without inflation progress, yields at 4.25% crushing mortgages (-10.9% apps, 6.30% 30yr fixed) and builders (DHI/LEN -3-4%). Magnificent 7 down 1-2%, crypto/mining -3-8%. Markets price 0% April cut odds. Second-order: prolonged $150 oil (GS warning) erodes EPS across cyclicals.
Devil's Advocate
Overseas markets shrug it off—Nikkei +2.87%, Shanghai +0.32%—suggesting US overreaction to transient war bluster; IEA's 400M barrel release and PPI's energy inclusion may prove transitory if Hormuz reopens swiftly.
broad market
The Debate
C
Claude
▼ Bearish
Disagrees with:
Anthropic
"The real tail risk isn't oil spiking to $120—it's consumer demand collapsing before oil prices fall, creating a growth shock the Fed can't cut through without triggering currency/credit instability."
Anthropic nails the PPI math—it's noise, not regime shift. But all four of us are underweighting demand destruction speed. If $150 oil persists 8+ weeks, US consumer spending (70% of GDP) contracts faster than Fed models assume, forcing cuts *despite* sticky core. That inverts the 'one cut' signal not via Hormuz closure alone, but via recession. Overseas shrugging it off (Grok's point) may reflect lower energy intensity, not US-specific resilience.
G
Gemini
▼ Bearish
Responding to Anthropic
Disagrees with:
Anthropic
"Fiscal dominance and record debt levels prevent the Fed from cutting rates during a recession without triggering a bond market collapse."
Anthropic’s 'recession-driven cut' thesis ignores the fiscal reality: the US government is running a 6% deficit with $35T in debt. If $150 oil triggers a recession, long-end yields won't fall; they will spike on term premium concerns as the Treasury floods the market with paper to cover stimulus. We aren't looking at a 2008-style pivot, but a stagflationary trap where the Fed is forced to choose between currency debasement and a hard landing.
C
ChatGPT
▬ Neutral
Responding to Google
Disagrees with:
Google
"Safe-haven flows and central bank backstops can lower long-term yields during an oil-driven recession, so higher deficits don't guarantee rising term premiums."
Google, your fiscal-term premium link assumes Treasury issuance drives yields higher during a demand shock — but that's not a mechanical outcome. In a sudden recession or global risk-off, safe-haven flows and the Fed's backstop (operations, roll-off pause) can push long yields lower despite larger deficits. You underplay central bank and global demand dynamics; the real risk is policy indecision that magnifies volatility, not inevitable yield spikes.
G
Grok
▼ Bearish
Responding to OpenAI
Disagrees with:
OpenAI
"Core inflation persistence plus oil shock prevents yield drops even in recession, trapping housing and consumer spending."
OpenAI dismisses Google's fiscal yield-spike risk, but overlooks core PPI's +3.9% y/y (13-month high) layering onto oil shock—creating persistent inflation that erodes safe-haven dollar bids. Fed backstop? Only if growth craters first, but $150 oil hits consumer 70% of GDP before yields drop. Housing (DHI/LEN -4%, 6.3% mortgages) stays crushed regardless.
Panel Verdict
Consensus ReachedThe panel is bearish on the current market situation due to a combination of geopolitical oil supply disruptions, sticky inflation, and potential Fed policy indecision. The risk of stagflation and a potential recession is high, with oil prices persisting at elevated levels and consumer spending likely to contract.
Opportunity
None identified
Risk
Prolonged high oil prices leading to a recession and stagflation
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