Interesting analysis by @gelliottmorris.com about the big disconnect between consumer sentiment readings and actual economic data in recent years, i.e. the "vibecession" debate. He argues that cumulative (3-5 year) price changes explain a lot of the unexplained sentiment changes.

Pretty solid rally in stocks today despite crude oil going up again. As long as oil doesn't go careening off far above $100/bbl, stocks don't seem to care much any more. Earnings reports are starting and Tech is still the leader on earnings. Tech stocks led today along with Financials.

@ericmbudd.com Definitely -- the percentage of GDP or income spent on energy is much lower now, as is the impact on corporate earnings. One view is the percentage of personal disposable income spent on gasoline, which was lately near all-time lows (except for the COVID spike) below 2%.

Seems pretty clear lately that stocks are losing their sensitivity to oil prices and Middle East developments. Investors continue to assume: 1) it will all work out somehow fairly soon, and 2) unless things get much worse, it won't affect aggregate corporate earnings much.

Waiting for Q1 earnings reports to start in earnest next week, but so far no signs that war/inflation is causing analysts to cut S&P 500 index EPS estimates: still rising. Analysts can't predict geopolitics or oil prices either, but six weeks in to the war and no major response for index EPS.

CPI today was somewhat better than expected, even with the huge surge in energy prices. Headline CPI +0.9%, but core CPI was moderate at 0.2%, some signs tariff impacts starting to come off. Risk is how much energy bleeds into other prices like airfares, shipping, etc. in the next few months.

On point 3 below, as some have noted, the real (inflation-adjusted) price of oil (using the 12-month futures strip) is still not very high. Real crude price was much higher for years in 2010-14 (and spiked to twice as high in 2008). We're still well below the 2022 Russia-driven spike.

Market behavior suggests: Investors want to believe major violence will end soon Some deal will be worked out for the Strait of Hormuz Even if oil is ~$80/bbl for a longer time, the economy will be ok and corporate profits won't be affected much. Fed won't respond to energy-driven inflation.

Looking forward to joining Trading 360 with Jenny Horne on the SchwabNetwork at 11:50am ET today to discuss the latest Personal Consumption data schwabnetwork.com

The PCE data today showed concerning trends for February, i.e. before the energy/war shock. Core inflation at 3.0% Y/Y, but 3.4% for 6-month annualized, and 4.4% 3m annualized. i.e., accelerating Real spending just 0.1% in Feb., still 2.5% Y/Y but just 1.3% 6m annualized and 0.8% last 3 months.

Looking forward to joining Trading 360 with Jenny Horne on the SchwabNetwork at 11:50am ET today to discuss the latest Personal Consumption data schwabnetwork.com

Oil and gasoline prices did fall today, but by the end of the day, the more stable 12-month futures strip (avg. of next 12 monthly futures prices) fell less than $2/bbl to about $79, vs a peak of $85. Gasoline futures fell about 8 cents to $2.51 on this basis, with a recent peak of $2.70.

There seem to be ongoing concerns about whether a cease-fire is really happening, and whether a meaningful number of ships will be crossing the Strait. Oil prices have moved back up this afternoon, but mostly beyond the front month. May26 WTI $-16.79 @ $96 Sep26 $-1.90 @ $78 Dec26 $-0.50 @ $74

Evidently Israel/Lebanon (Hezbollah) are not included in the cease-fire deal, and attacks there continue unabated. Apparently this may be an issue for Iran, which has indicated (via Tasnim news) that the truce deal may be withdrawn if attacks on Lebanon continue.

The VIX is looking to show one of its biggest one-day declines from the 25-30 level ever, down more than 5 points to about 20 (declines from more extreme readings have been larger). A VIX of 20 is reasonable if geopolitical conditions have in fact sustainably improved, but that remains to be seen.

The cease-fire news from last night has kept oil prices sharply lower and stock prices sharply higher this morning. Europe up 4-5% today. Bond yields and the US dollar are also down alongside the drop in oil. Still unclear if Israel is included in the plan, or what will happen in the Strait.

Seems the critical detail on passage through Hormuz is still unclear, particularly for any US-allied ships. Guess we'll have to just keep watching to see if ships actually get through . . .

Markets moving sharply after hours on news of the cease-fire, which is hopefully real, though unclear if Israel is a party to it. Oil futures down sharply, about 16% on front-month, less on later months. S&P 500 futures up 2.2%, coming after a late afternoon rally. Dollar down, bond yields down.

Another day of Semis over Software within Tech. Zooming out, earnings estimates are still being raised in Software (IGV), but at a slower pace than much of last year. Estimates in Semis (SOXX) are still being raised extremely aggressively, with few signs of slowing down.

It is worth noting that Broadcom (AVGO) is one of the most dramatic examples of a persistent "beat and raise" company. Analysts have basically been surprised to the upside consistently for 5 years now, always raising EPS estimates: red line in the chart rising and blue bars above zero.

Here is the news driving the gains in Broadcom and some related stocks today. www.marketwatch.com/story/broadc...

Stocks are under some pressure today as oil prices are up again on concerning headlines from the Middle East and Trump. Big Tech is a drag today despite gains in Broadcom, Intel, and Alphabet, as Apple, NVIDIA, Tesla, Microsoft, and Amazon are all down 1%+ Autos and airlines also down.

While a few ships have come through the Strait lately, the latest Bloomberg data show that it is still a tiny fraction of the normal pace. Clearly lots of negotiating going on between other (non-US) countries and Iran to get ships through, but not much so far.

Good data from @josephpolitano.bsky.social showing that high-end tech hardware is a key driver of both US capex trends and the US trade deficit: still a hockey stick chart. As he often reminds us, much of the imported high-end AI hardware has been exempt from tariffs the whole time.

This may be one reason consumer spending is holding up relatively well so far: tax refunds are running higher. Some of this may be offset by higher fuel prices, and is inherently temporary, but reminds us that fiscal policy is still pretty loose, even if not distributed well.

More info on the new estimates of breakeven job growth: much lower now due to low (near zero) net population growth. Get used to seeing monthly job growth that oscillates much closer to zero than in any recent history, i.e. Feb NFP was -133K, March was +178k.

Good summary from @econberger.bsky.social about today's employment data. Solid report overall, though could be some skew from weather, strikes, and birth-death model changes. The key prime-age employment/population ratio stayed solid at 80.7%. Wage growth and hours worked ticked down.

Zooming out slightly from oil prices, the broader Bloomberg commodity index is now just breaching the 2022 peak (Russia/Ukraine). The sub-index that has all commodities except petroleum is also up 19% from its August low, but still below its January peak and below 2022 levels.

So Trump's "speech" of slurred, incoherent but disastrous comments last night did not go over well. Oil prices are sharply higher since then, and stock futures are down 1.5-2%. More war to come, and it looks like this chart is not going to improve any time soon, which means supply disruptions grow.

Talk about not reading the room right now . . . Trump changing tariff rules (again) on steel and aluminum which will have the net effect of raising costs. www.wsj.com/economy/trad...

No doubt a small part of the business by itself and the amount of damage is unclear, but a reminder that any company with fixed assets in the Middle East is at some risk right now, even if not involved in energy or commodities, including cloud computing.

The letter from Iran to the US

Stocks slightly off earlier peaks on some headlines saying the Israeli broadcasting authority indicated US-Iran talks are stalled. This comes after Iran's president released an open letter to the American people saying they are acting in self-defense and not fighting the American people.

Among the sectors with more direct exposure to the supply shock, it's been Energy vs Industrials lately. As oil prices have eased in the last two days, Energy stocks (XLE) are down 5%, while Industrials (XLI) are up 5%. S&P 500 is up 3.8%, as most sectors have rallied since Monday.

Our indicator based on VIX vs realized vol had shown VIX "too high" even before the war, and more so lately. That's one big reason we've gotten a big short-covering rally yesterday and today. VIX is down further today and realized vol is rising, so that contrarian sentiment setup is fading.

Seems a bit pointless in the current environment, but economic data was released today: retail sales and ISM Retail sales in February were up, rebounding from a weak January caused by weather. Consumer seems to have been ok before the war, but total spending hampered by low job growth.

Markets saw a lot of short-covering yesterday, and looks like more today ahead of a news conference Trump is having tonight. Trump's posts this morning are still bizarre and confusing, indicating he will stop the war when the Strait is open, and also that Iran asked for a cease fire (doubtful).

It's been a month now and still waiting for S&P 500 earnings estimates to show any meaningful negative response to the war/supply shock so far. Equity analysts can't predict geopolitics any better than the rest of us, and could end up being late, but helps explain why stocks aren't down more.

Bloomberg's latest reporting on the comments from Iran, apparently in a call between the Iranian president and the EU Council president yesterday. Hard to see if this is meaningful or just more "you stop shooting first" talk.

More news-driven vol: a sharp rally in stocks and drop in oil in the last half hour on thin news about Iran reiterating that they are willing to end the war if their demands are met. Waiting for more info, but markets seem pretty hair-trigger to move on anything that vaguely sounds positive.

Got a question recently: what stocks are improving in your work recently, and is there anything besides Energy? While stocks are not trading as much on company fundamentals lately, below is a screen of Russell 1000 stocks that rank in the top quintile that improved most in the last month.

Stocks trading higher ahead of the US open with oil prices down somewhat on vague headlines suggesting Trump will just accept Iran's control over Hormuz, etc. and give up in defeat at some point. Also helping is Marvell Technology surging on news NVIDIA is investing in them.

Looking for some positive action, Insurance stocks are doing well today, +2%. All 55 members of the S&P 1500 Insurance index are up today. Lower bond yields tend to help insurance companies, and they are not as exposed to private credit. Insurance outperforming over the last two weeks.

Lower bond yields not able to keep stocks afloat today as oil prices still high and risk appetite is fading. Semis a big drag: 29 of the 30 members of the SOXX ETF down. Apple, NVIDIA, Broadcom, and Micron are the biggest drags on the S&P 500. Amazon, Meta, Microsoft the most positive impacts.

Bond yields are down today after Fed Chair Powell said that tariffs are a one-time price impact, and the Fed has little control over supply shocks (e.g. Iran). This made markets reduce earlier odds of a Fed rate hike this year -- Fed seems willing to "look through" oil shock for now.

Stocks mixed today, seem to be trying to rebound after recent declines but oil/Iran still not allowing risk appetite to fully recover. Oil little changed today. Bond yields down as worries about growth have increased. Big "Software over Semis" day in Tech: IGV +2%, SOXX -2.4%.

Interesting that, due to falling risk appetite, Tech stocks (XLK) are still falling despite EPS estimates still rising. The XLK is as cheap on NTM estimates as it was near the lows in 2022, and cheaper than April 2025. Either estimates are about to start coming down or Tech is getting cheap.

Note, however, that futures markets showed December gasoline priced at ~$1.80/gal (wholesale) at the start of February, so locking in $2.33 for December delivery now would be a ~30% increase from what we thought two months ago.

Markets still thinking the supply shock will be over in a few months, and by early next year things will be mostly normal in energy/inflation. WTI (CL future) now $97.38/bbl, Dec26 futures at $77.84. Gasoline (XB future) at $3.18/gal now, $2.33 for Dec. Inflation 3.2% next 12 months, then 2.4%.

Oil still rising, getting closer to the highs from earlier this month. All attempts to TACO are failing, more troops seem to be going to the Middle East, and bombs are still falling. Stock futures returning to last week's lows, and bond yields jumping to highest since July. VIX near 30.