No. of Recommendations: 15
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https://discussion.fool.com/t/control-panel-iran-w...The Iran attack was not exactly a surprise since the U.S. has been moving significant naval forces toward Iran for weeks. Not to mention that the recent negotiations failed.
Iran threatened to block the Straits of Hormuz. It’s possible that the Houthis will threaten shipping in the Red Sea.
This reminds me of the OPEC oil price shock of 1973 which triggered major inflation in the late 1970s. A significant difference is that the U.S. is currently energy-independent. However, oil prices are impacted by worldwide supply so it’s possible that the U.S. could also see a rise in oil price and inflation.
An energy-driven inflation spike could be a long-lasting Macroeconomic trend change. The Federal Reserve will surely take this into account when debating the fed funds rate. History would not be kind to a Fed that cut interest rates just as a potentially inflationary shock hit the markets.
The market has been front-running this risk as shown by the gradual increase in VIX. The price of oil and the energy index have been climbing for months.
It’s possible that the situation will fall back to the status quo. The Iranians will move their second-rank hard-liners into the recently vacated positions. The U.S. is running out of weaponry and can’t (hopefully won’t try to) enter a war of attrition.
https://www.wsj.com/world/middle-east/u-s-races-to...
U.S. Races to Accomplish Iran Mission Before Munitions Run Out
Trump says the Iran campaign might last a week or longer, but dwindling stockpiles could limit his options
By Michael R. Gordon
and Shelby Holliday, The Wall Street Journal, March 1, 2026
…
The precise size of the U.S. stock of air-defense interceptors—what the Pentagon calls magazine depth—is classified. But repeated conflicts with Iran and its proxies in the Middle East have been eating into the supply of air defenses in the region.
Since Saturday morning Tehran time, the U.S. and its allies in the region have pounded an array of leadership and military targets in the country, including Iran’s missile launchers, drones and airfields. One reason the U.S. and Israel struck first, a senior official said Saturday, was to blunt Iran’s ability to retaliate with its missiles and drones.
It isn’t yet clear how long the strikes will need to last. … [end quote]
The trends in Treasury yields, VIX and gold have all shown increased Fear. The trade is risk-off as the 10 year Treasury price has risen relative to SPX and junk bonds. Junk bond spreads are rising as zombie debt matures into a higher-yield environment, increasing risk of default.
The so-called “Saas-copalyse” affects stocks as well as bonds. The fear that AI will cut the SaaS field off at the ankles has caused a deep plunge in the price of SaaS stocks. Since SaaS companies are heavily indebted with junk ratings the private lenders are also losing confidence. A lot of “zombie” debt will need to be rolled over at higher interest rates. Many of these bonds are “covenant-lite” which means the companies were allowed to borrow heavily regardless of prior borrowing.
SPX has been stable but this hides an extraordinary amount of trading under the surface.
Citadel Securities – 18 Feb 26
Market Internals - Citadel Securities
Market Internals
By Scott Rubner, Citadel Securities, February 18, 2026
Retail participation remains historically elevated, ETF flows are tracking at one of the strongest early-year paces on record, and liquidity has thinned during episodic selloffs. At the same time, AI-driven disruption narratives have accelerated repricing across vulnerable business models, intensifying rotation even as headline performance remains contained.
The speed of the recent factor rotation has translated directly into elevated dispersion. Single-stock dispersion is at extreme levels**. Over the past 30 days, the S&P 500 is down 1.4%, while the average stock in the index has moved 10% in absolute terms, placing the 8.6% dispersion spread in the 97th percentile over the past three decades.** Earlier this month, this spread surged to 10.8% – a 99th percentile event and a 3.5σ outlier over the past thirty years…
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Importantly, part of this resilience appears reactive, particularly in sectors that have borne the brunt of recent factor moves. Software is the clearest example – as the group has come under pressure, retail investors have leaned aggressively into the weakness, driving flows decisively into single-stock software names… [end quote]
Translating this into plain English, the market average has been steady but the price of individual stocks and ETFs have been swinging much more than usual. It’s like a duck swimming calmly on a lake but the feet paddling like crazy under the water.
“Liquidity has thinned” means that investors want to sell but there aren’t enough buyers so the price dropped. This is characteristic of past bubbles.
Institutional investors have dumped SaaS stocks but retail investors have seen the lower prices as a bargain and have been backing up the truck to buy. The sellers think that AI can replace a huge part of SaaS business. The buyers think the customers are locked in to the SaaS software and AI would improve profits.
I expect a wild opening in the markets tomorrow. The futures markets (according to Gemini) are already predicting a rise in the oil and gold price and a fall in Treasury yields. The oil majors and defense contractors will probably see moves. @HohumYNWA has already told METAR about the rise in shipping prices which will impact inflation.
I’m going to keep an eye on the Financial Stress and MOVE indexes which track the bond market and liquidity. A spike in VIX and these indexes together is a sure sign of a financial crisis which is different than a stock market crash and far more dangerous. I don’t expect that at this time and the data needs to be updated to be useful.
The METAR for next week is stormy.
Wendy
stockcharts.com
CandleGlance | StockCharts.com
Quickly and easily view and analyze mini-charts of up to 12 different symbols simultaneously, all displayed side-by-side on a single page
stockcharts.com
CandleGlance | StockCharts.com
Quickly and easily view and analyze mini-charts of up to 12 different symbols simultaneously, all displayed side-by-side on a single page
stockcharts.com
CandleGlance | StockCharts.com
Quickly and easily view and analyze mini-charts of up to 12 different symbols simultaneously, all displayed side-by-side on a single page
stockcharts.com
Dynamic Yield Curve | StockCharts.com
Visualize the relationship between interest rates and stocks over time using our draggable, interactive yield curve charting tool.
CNN
Fear and Greed Index - Investor Sentiment | CNN
CNN’s Fear & Greed Index is a way to gauge stock market movements and whether stocks are fairly priced. The index uses seven market indicators to help answer the question: What emotion is driving the market now?
fred.stlouisfed.org
ICE BofA CCC & Lower US High Yield Index Option-Adjusted Spread
ICE BofA CCC & Lower US High Yield Index Option-Adjusted Spread
