1. Market Not Calibrated for Escalation
Everything remains fluid, but the market is not calibrated for this escalation of war.
Everyone had assumed that it would be like Venezuela, and it is very clear that it’s far from it at the moment. There’s still escalation, and really no sign of stopping soon.
Also, as per early estimates, this is about to cost the U.S. $210 billion. It could very likely be more. That’s a little more than $600 per citizen (assuming a 330 million population in the U.S.).
While we are at it, S&P 500 has broken below 6,800. You have been warned about this level for some time now.
2. Oil Breaking Out – Strait of Hormuz Impact
Oil is spiking. It is becoming very clear that the Strait of Hormuz is impacted.
The big thing to watch will be if pipelines around the region get impacted too. That will provide another punch in the face to the oil market.
Key levels to watch on WTI (Brent is really moving too):
We are breaking out of a downtrend that began in 2022.
Price is now above its 50-day moving average and the 200-day moving average.
Next levels to watch on the upside are the $82–$85 range. If that gets taken out, we will be looking at the $90–$100 range very quickly.
And, of course, we are going to get squeezed at the pumps.
3. Private Credit Implosion – The Overlooked Risk
While everyone is busy with Iran-related news, there’s a parallel story that shouldn’t be overlooked — private credit implosion.
Private credit funds are getting hit with significant redemptions. Look up “Blackstone private credit fund” for some perspective.
Make no mistake: private credit is a very opaque market, and it takes time for things to show up. We are seeing the tip of the iceberg, in my opinion — more could follow.
A bunch of margin calls and redemptions can easily impact other markets. There’s also potential for some liquidity issues here, and that could bite.
4. Silver Selling Off – What’s Happening?
“Moe, how come silver keeps selling off?”
Look, there are several factors at play:
- The dollar is rising.
- People are taking profits.
- Price discovery — are we going to move higher or lower?
- Broader market liquidity issues could easily be causing some selling.
Also, know that a lot of times in many assets, you don’t have a clear reason why things are moving the way they are. Gyrations in the markets are very normal.
Could silver go down? Yes, it can. The range to watch is between $70 and $90. Anything above or below that range is where the big move will happen.
5. Bitcoin, USD & BDCs – Liquidity Watch
Bitcoin is still stuck in a range. Be very careful here. This could very well also become a victim of liquidity. It’s not doing what we were told it would do.
The U.S. dollar (USD) is breaking higher. Not a surprise whatsoever. Whenever uncertainty increases, the USD catches a bid. It is considered a safe haven. But it’s also very important to keep in mind that the petro-dollar is being bombed.
BDCs are at a major support level and bounced a little. Let’s see. But the charts are really broken and suggest more pain ahead.
Support also building in software names? Also, BDCs and software names have very, very similar charts.