Oil Rises as Attacks Continue in Middle East; CPI on Deck | Bloomberg Brief 3/11/2026
Speakers
Summary
- Massive geopolitical escalation in the Middle East has effectively closed the Strait of Hormuz, driving oil to $90 despite the IEA proposing the largest-ever emergency reserve release (400-700 million barrels).
- The US military is rapidly depleting its stockpiles of high-end interceptors to counter cheap Iranian drones, creating an opportunity cost for Pacific theater readiness and necessitating massive replenishment.
- Oracle surged 10%+ post-earnings, proving strong AI infrastructure demand and easing fears that AI will displace traditional software business models.
- JP Morgan is restricting lending to private credit funds due to sloppy underwriting and AI threats to software collateral, putting pressure on publicly traded Business Development Companies (BDCs).
- Central bank divergence is widening: The ECB and BOJ may hike rates due to inflation and oil shocks, while the Fed is expected to hold, and the BOE leans toward cuts.
Trade Ideas
Groupon's outlook was not good for the coming year. Ahead of earnings Groupon was among the most shorted stocks among small caps, and that reflected in yesterday's and the stock today down 10%. Poor forward guidance confirms the bearish thesis held by short sellers. Deteriorating fundamentals in a challenging consumer environment will continue to pressure the stock, leading to further downside as turnaround efforts fail to materialize. A weak outlook and heavy short interest validation make Groupon a SHORT. A surprise buyout offer or a sudden short squeeze if the broader small-cap market rallies unexpectedly.
Tankers are stuck inside the Persian Gulf filled with oil or outside and cannot get in to load. We are looking at a 13 million barrel hole to fill. Even with the IEA releasing an unprecedented 400 to 700 million barrels, this only covers about a month of supply. If the Strait of Hormuz remains closed or mined, structural supply deficits will persist, keeping crude prices elevated and driving massive cash flow to Western energy producers. Sustained geopolitical supply shocks and physical bottlenecks make broad energy equities a LONG. A sudden ceasefire or rapid military clearing of the Strait of Hormuz would crash the geopolitical risk premium in oil.
It is putting strain on stockpiles of weapons that the U.S. gathered and created to fight a higher end adversary. The munitions meant for China... are being used against Iran. The US military is burning through expensive, hard-to-replace interceptors to shoot down cheap Iranian drones and missiles. The Department of Defense will be forced to issue massive, expedited replenishment contracts to prime defense contractors to rebuild depleted stockpiles for the Pacific theater. Accelerated depletion of high-end munitions makes major defense contractors a LONG. Congressional gridlock over defense spending or a sudden de-escalation in the Middle East reducing munition burn rates.
Nintendo soared 10%, the steepest climb since April, as the surprise success of its new Pokemon game helped offset worries around memory costs. Massive consumer demand—evidenced by physical copies selling out at major US retailers and Amazon raising prices to $80—proves immense pricing power and franchise strength. This will drive unexpected revenue beats and margin expansion, easily offsetting hardware supply chain concerns. Surprise blockbuster software sales and high pricing power make Nintendo a LONG. Rising memory costs could eventually compress hardware margins if software sales decelerate in future quarters.
JP Morgan is restricting lending to private credit funds. These were loans to software companies and they have come under pressure due to the potential impact of artificial intelligence on these business models. Private credit funds and publicly traded Business Development Companies (BDCs) aggressively underwrote loans to software companies during the boom. As AI threatens those software models, the underlying collateral is being marked down, leading to margin pressure, reduced borrowing capacity from prime brokers, and potential retail redemptions. Sloppy underwriting and AI disruption to software collateral make BDCs heavily exposed to private credit a SHORT. The Fed cutting rates aggressively could ease refinancing pressures and save struggling software borrowers from default.
They were talking about how they can use these AI coding tools to their advantage versus a lot of the smaller, nimbler companies out there fueling the SAASPOCALYPSE narrative. Oracle is successfully monetizing AI infrastructure while simultaneously using AI to reduce its own headcount and coding costs. With a $90 billion revenue guide and light hedge fund positioning, the stock has room to run as it proves AI is an enhancement, not a displacement, to its core business. Strong AI demand, upgraded revenue guidance, and bearish positioning unwinding make Oracle a LONG. A high CapEx-to-revenue ratio requires continuous proof of ROI; heavy reliance on OpenAI financing could present future credit risks.
The more demand I'm seeing from institutional clients is institutional software. Names that benefit from agentic AI, DigitalOcean, Cloudflare. There has been some demand on the security side of things. Names like Snowflake, Datadog. Institutional money is rotating out of vulnerable application software and into infrastructure, data, and security software. These companies can clearly demonstrate ROI to enterprise clients and are structurally positioned to benefit from the rise of agentic AI workloads. Clear enterprise ROI and institutional capital rotation make infrastructure and security software names a LONG. Nvidia launching its own competing agentic AI platform could commoditize or pressure these software providers.
Up Next
This Bloomberg Markets video, published March 11, 2026, features Abeer Abu Omar, Anthony DiPaola, Jeremy Doyle, Julie Fine, Bruce Douglas, Joel Kulina discussing GRPN, XLE, CVX, XOM, RTX, LMT, GD, NTDOY, BIZD, ARCC, OBDC, ORCL, DOCN, NET, SNOW, DDOG. 7 trade ideas extracted by AI with direction and confidence scoring.
Speakers: Abeer Abu Omar, Anthony DiPaola, Jeremy Doyle, Julie Fine, Bruce Douglas, Joel Kulina · Tickers: GRPN, XLE, CVX, XOM, RTX, LMT, GD, NTDOY, BIZD, ARCC, OBDC, ORCL, DOCN, NET, SNOW, DDOG