The Market
INTERNAL MEMO — FOR DISTRIBUTION TO ANYONE STILL LONG EQUITIES
TO: The Market
FROM: Reality
DATE: Monday, March 9, 2026
RE: Your portfolio. We need to talk.
Please find attached: everything you were promised wouldn't happen.
The S&P 500 closed last week down 2%. The Dow shed 3% and 453 points on Friday alone, dragged down by Caterpillar (-3.57%), Nvidia (-2.93%), and Amazon (-2.62%). The Nasdaq held up better, off just 1.2% for the week, though that relative resilience owes more to rotation chaos than any particular strength. Overnight, S&P futures slid another 1.6%. Nasdaq-100 futures dropped 2%. This morning Asia opened like a fire drill. The KOSPI hit a circuit breaker. Japan's Nikkei sank 6.45%. Taiwan's TAIEX dropped nearly 5%.
Now. Before you fire off that message to your broker, let me explain what is actually happening.
Section One: The Narrative You Sold Yourself in January
You had a story. It was a good story. The kind that comes with bullet points and a macro backdrop that practically writes itself. Global PMI output hit one of its highest readings since the pandemic in February, signaling global GDP growth accelerating toward an annualized 3% rate. Disinflation was chugging along. The Fed was done hiking. Summer cuts were "consensus." Germany — Germany — was actually showing industrial production growing at a pace not seen in four years. You were, for the first time in three years, permitted to feel cautiously optimistic.
The market priced that story. Every single basis point of it.
Here's the thing about stories: they don't come with circuit breakers.
Section Two: The Bill Arrives
February 28. U.S. and Israeli strikes on Iranian infrastructure. By March 3, the Revolutionary Guard had declared the Strait of Hormuz closed and threatened to ignite any vessel attempting passage. Five tankers damaged. Two crew dead. Approximately 150 ships stranded. Shipping traffic through the world's most critical energy chokepoint down by at least 80%.
WTI crude, which started the month near $72, touched $120 this morning before paring gains to around $109 after the Financial Times reported the G7 is weighing an emergency reserve release. Kuwait, Iran, and the UAE have begun cutting output themselves as available storage capacity nears its limits. Brent is trading above $100. Murban crude — the benchmark for barrels that can actually move without risking a missile strike — is above $103.
Qatar's energy minister told the Financial Times, with the kind of calm that only comes from owning a lot of gas, that $150 oil would "bring down the economies of the world."
He said the quiet part into a microphone.
South Korea, which imports crude equivalent to 2.7% of its entire GDP, watched the Kospi lose 7.72% before trading halted. Japan, same story. The Nikkei is down over 6%. These are not sentiment numbers. These are real economies re-pricing the cost of their industrial base in real time.
Meanwhile the S&P 500 is only down 2% for the week because the United States is also an oil producer, which is about the only hedge it accidentally built into its equity market.
Section Three: The Fed Is Trapped in a Room With No Doors
There is a meeting on March 17–18. The Fed will attend. They will look at the data. The data will be offensive to every instinct they have, in two opposite directions simultaneously.
Nonfarm payrolls fell 92,000 in February. Analysts had penciled in a rise of roughly 50,000 to 60,000. It was the third consecutive month of deterioration in five months. The three-month rolling average of job creation is now approximately 6,000 — a number that, if you showed it to a first-year economics student, would make them check their spreadsheet formula before accepting it.
Wages, however, came in hot. Average hourly earnings up 0.4% month-on-month, 3.8% year-on-year. Both above forecast.
So. The labor market is generating no jobs, but the jobs that exist are paying more. Into this you are now dropping $110 crude oil. February's CPI — releasing Tuesday — hasn't even absorbed a single day of $100+ energy yet. March's CPI will. And you do not cut rates into a 3.8% wage print with Brent at $100 and a geopolitical shock that has no obvious off-ramp.
The 10-year Treasury yield spiked to 4.138% last week. Markets have now priced out nearly all summer rate cut expectations. The CME FedWatch probability of a March cut is approximately 4%. The Fed is about to do nothing, and doing nothing is a decision with consequences.
They know this. San Francisco Fed President Mary Daly said it plainly on Friday: "Both of our goals are risks now."
Both. Goals. Are. Risks.
Frame that. Hang it in the lobby.
Section Four: Gold Is Having an Identity Crisis
Gold touched an intraday record of $5,419 per ounce last week. Then it sold off. By Monday morning, spot gold is down roughly 2.5% to around $5,041, and silver is off nearly 4% to $80.99.
This is not what the gold trade is supposed to look like. You buy gold because war breaks out. War breaks out. Gold goes to $5,400. Gold then... falls.
Here is why, and it is worth understanding. Rising oil prices rekindle inflation expectations. Inflation expectations push Treasury yields higher. Rising yields increase the opportunity cost of holding non-yielding bullion. A stronger dollar — and the DXY climbed above 99.20 last week — makes gold more expensive for foreign buyers. The two "twin assassins" of gold, as one analyst memorably described them, are a strong dollar and high real yields. War delivered both, as a secondary effect, which is the kind of irony that only macroeconomics produces.
Longer-term, the structural bull case survives. Central bank demand is running at 585 tonnes per quarter. Global physically backed gold ETFs posted $18.7 billion of inflows in January alone, a record. J.P. Morgan's commodities desk has a year-end target of $5,000 — which the metal is currently trading below, on a good day.
But right now, gold is in that messy middle zone where geopolitics says "up" and the bond market says "not yet." Expect it to remain violently indecisive until either crude stabilizes or yields crack.
Section Five: The Only People Smiling
Palantir jumped 15% last week. Defense, surveillance, logistics intelligence, AI for war planning. The market has a very direct way of pricing who benefits from armed conflict, and it is not subtle about it.
The other winner hiding in plain sight: Hewlett Packard Enterprise, which reports earnings today. After a week in which Nvidia fell nearly 3% and the broader tech complex took a beating, HPE's edge infrastructure and hybrid cloud angle is suddenly looking more defensible. The market is watching. So is everyone who got burned holding AI-adjacent froth through a geopolitical shock.
Boeing, interestingly, was one of last week's rare positive outliers, gaining 4.11% on Friday even as the broader index sold off. Defense contracts tend to have that effect on airframe manufacturers when the world is actively reminding itself why they exist.
And Oracle — up 9% just a few weeks ago on its AI infrastructure buildout, earnings due Tuesday — is the week's most important data point for anyone trying to figure out whether the $600 billion hyperscaler capex supercycle is geopolitically insulated or not. Amazon, Alphabet, Microsoft, Meta: their combined Q4 capital expenditure alone was $120 billion. The full-year 2026 combined tab is projected above $600 billion — exceeding the GDP of the UAE, Singapore, and Israel individually. All of that infrastructure needs chips, power, and time. None of that slows because oil is at $110.
That may be the one structural fact keeping Nasdaq futures from an absolute freefall.
Section Six: What the Week Ahead Will Tell You
Tuesday: February CPI. This is the first major inflation read since the war started. It will not yet capture the oil spike, but the baseline number matters enormously for how the Fed frames its March 17–18 posture.
Tuesday: Oracle earnings. AI capex supercycle, stress-tested.
Thursday: Jobless claims, Q4 GDP second estimate.
Friday: University of Michigan Consumer Sentiment. January PCE. January JOLTS.
The PCE print originally scheduled for March 27 has been rescheduled to April 9 — meaning the Fed walks into its own meeting without the most important inflation gauge it normally uses. It will have CPI. It will have the jobs report. It will have $110 oil and no clear exit from the Strait of Hormuz crisis.
And it will do nothing.
Closing Remarks
The economy coming into this week was actually in decent shape. That is what makes the current situation particularly vicious — there was something real to damage. Global growth had momentum. Earnings were solid. The AI infrastructure buildout was generating genuine revenue. Germany was waking up. The story had internal logic.
Wars don't care about internal logic. They care about chokepoints, and the world built its energy system around a chokepoint that is now, functionally, closed.
The G7 reserve release will provide a few days of relief. Crude will dip. Futures will recover. Someone on financial television will use the word "contained." Markets will exhale.
Until the next tanker report. Until the next satellite image. Until Tuesday's CPI lands and everyone remembers that $110 crude is not yet in the data — it is merely waiting.
The memo has been delivered.
Act accordingly.
This newsletter is not investment advice. It is, however, an accurate account of what is happening, which is sometimes more useful.