1. Oil: Trump Signals Peace — Don’t Relax Yet
The WSJ reported overnight that Trump told aides he’s willing to end the US military campaign against Iran — even if the Strait of Hormuz stays mostly closed. WTI is trading around $103, Brent near $107.
For context, WTI oil is up over 57% over the month. The Hormuz isn’t open, Iran is still running a toll booth for tankers, and the war isn’t officially over.
Don’t mistake a headline from Trump as everything being over. He has claimed victory several times already, yet the entire gulf region is still burning.
You do know this spike in oil and if it remains here for some time is going to bite consumers, right?
2. S&P 500…
Futures are higher on the Iran peace signal this morning. Time to load up?
Market has given us it’s hand, and it’s important you watch: each rally is being sold. Did you see what happened yesterday? Don’t be shocked if today is not different.
Headlines are great, but market is looking for something concrete. No clear directions from geniuses who started the war so far.
The S&P 500 came close to correction territory yesterday. Trend continues to point lower. There’s a gap just below 6,500 that would potentially like to fill.
But, there’s value being created. Zulfiqar Research is launching two publication – for traders and investors. Check out the trade ideas page for more details.
3. Gold at $4,600 — Corrected, Not Broken?
Gold is trading around $4,600 per ounce.
Easy to forget gold peaked near $5,600 in January — so we’ve had a real correction, roughly 20% off the highs.
But the reason to be bullish still here: geopolitical risk, central bank buying, dollar uncertainty, and inflation that won’t cooperate.
Silver is at $73 today. Finding buyers as there’s talk about some peace. But, if you are chart watcher, you have probably seen how $71-$72 is acting as a resistance level. Close above $73 will be some relief for bulls.
4. Private Credit: Somebody Is Likely Swimming Naked
The most underreported systemic risk right now.
The $1.8 trillion private credit market is showing serious cracks: The list of places where investors aren’t allowed to take their money out is getting bigger. Ares Management capped redemptions at 5% after investors tried to pull out 11.6% of the fund. Blue Owl, Cliffwater, Blackstone — similar story.
Default rates have hit 5.8% and are climbing. Apparently, could hit as high as 8%.
Look, there’s a big difference between “perceived value,” and actual value. There are a lot of questions in this market. But the most important question is who likely swimming is naked here.
5. The Inflation Trap – With Deflation Staring In The Eye
This is not a take at the moment, but at the same time very little attention is being paid here.
Oil shock is going to be inflationary, and with economy relatively weak, the case for stagflation is also somewhat getting stronger. The longer the oil price remain high, you can bet economy struggles a bit more and prices increase.
However, very few are paying attention to what happens afterwards. At Zulfiqar Research, we are building a thesis that some sort of deflation – where inflation rate drops quickly because of demand destruction, is a possibility as well.
In case of deflation, central banks and government will print like no tomorrow, and that could open doors to even more money destruction.