The Market Brief
Global markets sold off sharply as optimism for a swift resolution to the Middle East conflict fades, with investors increasingly pricing in a deeper and more prolonged supply shock.
Macro Viewpoint
Fundamentally, higher oil prices are often coinciding with higher rates, given the inflation impact. Equities get impacted as well by the general risk aversion.
We typically see the impact of geopolitical crises through the lens of oil price moves. If oil prices spike, risk assets are usually negatively impacted. However, the shock wears off as soon as oil stabilises.
The statement that geopolitical shocks are sharp but short is not all that useful, because volatility is so high, that stopping out one day too late, or buying the dip one day too early can have severe consequences.
Today’s brief includes the full institutional note on oil’s impact on equities and the geopolitical playbook. Subscribe to access it.
Prime Intelligence
We switch our longer term view from tactically bullish to tactically cautious as we prepare for what may be a multi-week period of elevated uncertainty.
The quote above was shared last Tuesday exclusively with our subscribers, along with the reasoning behind why we identified this as a risk-off moment.
A core part of understanding markets is recognising deteriorating structure before it fully develops, as this is precisely what creates asymmetric risk-reward setups. Once that condition is identified, buying protection and booking portfolio profits becomes the priority to preserve capital.
Larger moves in the market happen because the stage is already set for them behind the scenes.
Short SPX gamma forces market makers to sell into falling equity markets, amplifying downside moves rather than absorbing them. The natural volatility-dampening mechanism that dealers typically provide is gone. The last comparable regime was the tariff-driven selloff last year, and the current volatility environment reflects similarly stressed conditions.
If you are new to trading and assumed this was an easy profession, as the significant number of LARPs on social media who are allergic to math would have you believe, this week is delivering a hard lesson. Volatility rules everything, and understanding regime shifts and risk management will always matter more than any individual strategy.
We share what’s next for this market in today’s brief 👇
