Wednesday, March 4, 2026

The Morning Call--How high do oil prices have to go to create a recession?

 

The Morning Call

 

3/4/26

 

The Market

         

    Technical

 

            Before the open.

            https://www.zerohedge.com/markets/hedge-fund-bloodbath-biggest-crash-liberation-day-here-are-3-biggest-risks

 

            Tuesday in the charts.

            https://www.zerohedge.com/markets/everyone-getting-pounded

 

Note: a rough day in stock land, though the late afternoon proposal by Trump to provide insurance to ships transiting the Hormuz Straits kept prices off the bottom of the day’s trading range. Nonetheless, the S&P did close below the lower boundary of that ever tightening gap between the 100 DMA (~6834) and the all-time high (~6924)---but not by much. Givern that it has tested the 100 DMA and bounced on three prior occasions, I don’t think that one day’s negative pin action is sufficient to get beared up just yet. Though clearly any negative follow through would likely spell much lower prices---the next visible support level being the 200 DMA (~6569).

            https://www.zerohedge.com/markets/weve-broken-box-these-are-key-levels-watch-stocks-slump

 

                Tuesday in the technical stats.

            https://www.barchart.com/stocks/momentum

            https://www.barchart.com/stocks/market-performance

            https://www.barchart.com/stocks/sectors/rankings

            https://www.barchart.com/stocks/signals/new-recommendations

 

            The Market performance following the first cannon shot.

https://www.riskhedge.com/outplacement/update-from-Abu-Dhabi/rcm?utm_campaign=RH-144&utm_content=RH144OP870&utm_medium=ED&utm_source=rcm

 

            Keep an eye on the dispersion trade.

            https://www.zerohedge.com/markets/dispersion-trade-unwind-fastest-route-higher-index-vol

 

            Volatility shock.

            https://www.zerohedge.com/the-market-ear/volatility-shock-panic-spreading

 

    Fundamental

 

       Headlines

 

              The Economy

 

                        US

 

Weekly mortgage applications were up 11% while purchase applications were up 6.1%.

 

The February ADP employment change report showed job increases of 63,000 versus consensus of 50,000.

 

                        International

 

The January EU unemployment rate was 6.1% versus predictions of 6.2%; January PPI was up 0.7% versus +0.2%.

 

The February Japanese services PMI came in at 53.8, in line; the February composite PMI was 53.9 versus 53.8; the February Chinese manufacturing PMI was 49.0 versus 49.1; the February services PMI was 49.5 versus 49.8; the February composite PMI was 49.5 versus 50.2; the February German services PMI was 53.5 versus 53.4; the February composite PMI was 53.2 versus 53.1; the February EU services PMI was 51.9 versus 51.8; the February composite PMI was 51.9, in line; the February UK services PMI was 53.9, in line; the February composite PMI was 53.7 versus 53.9.

 

                        Other

 

                          January median household income.

                          https://politicalcalculations.blogspot.com/2026/03/median-household-income-in-january-2026.html

 

            Iran

 

              Vessel struck in Straits of Hormuz.

              https://www.zerohedge.com/geopolitical/unknown-projectile-strikes-container-ship-strait-hormuz-maritime-crisis-explodes

 

            Inflation

 

              Iran, oil prices and inflation.

              https://www.nytimes.com/2026/03/03/business/us-iran-israel-economic-fallout.html

 

            Recession

 

              How high do oil prices need to go to create a recession?

              https://bonddad.blogspot.com/2026/03/the-potential-of-us-war-with-iran-for.html

 

            AI

 

              SaaS; Is there opportunity in destruction?

              https://talkmarkets.com/article/saas-is-there-opportunity-in-the-destruction-1772463015

 

              AI’s impact on interest rates.

              https://www.zerohedge.com/markets/citadel-warns-ai-will-displace-feds-view-neutral

 

            Tariffs

 

The price we pay for tariffs. I have noted several times that I believe that there are some perfectly valid reasons for using tariffs as a political tool (Chinese theft of US intellectual property; EU not paying its way for its defense). But as an all-encompassing strategy designed to raise vast amounts of money, it has been a failure.

              https://www.realclearmarkets.com/articles/2026/03/03/will_another_wave_of_tariff_uncertainty_hold_economy_back_1167562.html

 

            The Dollar

 

              The dollar reclaims its safe haven role.

                          https://www.bloomberg.com/news/articles/2026-03-03/dollar-set-for-biggest-surge-in-a-year-as-inflation-fears-mount?srnd=homepage-americas&sref=loFkkPMQ

 

     Investing

 

            Keep calm and carry on.

            https://alhambrapartners.com/weekly-market-pulse-keep-calm-and-carry-on/?src=news

 

            The long term benefit to exploiting myopia.

            https://alphaarchitect.com/long-term-investing/

 

            More on valuation.

            https://www.advisorperspectives.com/dshort/updates/2026/03/03/regression-to-trend-s-p-composite-196-above-trend-in-february

 

            Three red flags that you can’t ignore.

            https://talkmarkets.com/article/three-red-flags-you-cant-ignore-why-this-bull-market-may-be-over-1772561215

 

            Near term risks are elevated.

            https://www.zerohedge.com/the-market-ear/grand-old-man-strategy-warns-near-term-risks-are-more-elevated

 

    News on Stocks in Our Portfolios

 

 

 

What I am reading today

 

           

 

 

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