Bloomberg Surveillance 3/10/2026
Speakers
Summary
- Geopolitical tensions in the Middle East, specifically involving Iran and the Strait of Hormuz, have caused massive volatility in crude oil prices, with Brent swinging violently between $80 and $119.
- Approximately 6.7 million barrels per day (about 6% of global supply) have been taken offline due to production cuts and infrastructure attacks in the UAE, Saudi Arabia, Kuwait, and Iraq.
- The US consumer remains somewhat resilient in the short term due to tax refunds, but a widening gap in wage growth between high-income and low-income households threatens future discretionary spending if gas prices remain elevated.
- Despite the macro uncertainty and energy shocks, capital markets remain wide open, evidenced by Amazon's massive $25-$30 billion investment-grade debt offering, which was met with strong investor demand seeking safe havens.
Trade Ideas
"Is $5,000 a good entry point to gold? Yes. We believe we will see higher gold prices over the next several years." Gold has worked well over the last two years, and despite short-term profit-taking by some players, the ongoing geopolitical volatility, shifting stock-bond correlations, and structural inflation risks make it a strong long-term portfolio hedge. LONG because macroeconomic uncertainty and inflation risks provide a multi-year tailwind for gold. A rapid de-escalation of geopolitical conflicts and a sharp drop in global inflation could reduce safe-haven demand for precious metals.
"We invest in the energy space, partially on the idea that the risk premium has ground to zero. That is now for the immediate future presumably not going to be zero anymore." The geopolitical conflict in the Middle East and actual supply disruptions (e.g., Strait of Hormuz blockades, refinery attacks) mean a geopolitical risk premium will be structurally priced back into oil and energy equities, lifting their baseline valuations. LONG because energy stocks will benefit from structurally higher oil prices due to the renewed geopolitical risk premium. A sudden peace agreement or massive Strategic Petroleum Reserve (SPR) release could cause oil prices to plummet, erasing the risk premium.
"Maybe you want to rotate out of energy, take some profits off the table and go into the airlines that have been hurt by this or perhaps the cruise lines." Travel and leisure stocks have been beaten down due to the spike in oil prices. If the conflict ends quickly and oil prices normalize, fuel costs will drop, leading to a rapid margin recovery and a stock price pop for these companies. WATCH for a resolution to the Middle East conflict as a trigger to rotate from energy into beaten-down travel stocks. The conflict drags on, keeping jet fuel and marine fuel prices elevated, which continues to compress margins and deter consumer travel.
"Kohls and a big disappointment. Comparable sales fell 2.8%. It has been years of declining sales. They cannot turn it around." The company is fundamentally struggling with competition and declining sales, indicating a structural inability to capture consumer spending even during key retail periods like Black Friday. SHORT because the retailer is showing chronic underperformance and losing market share regardless of the broader macroeconomic environment. A successful turnaround strategy by the new CEO or a buyout offer could cause the stock to squeeze higher.
"It is in the leverage loan market and in private credit where you start to get concerned because that is where the underwriting standards are weaker and the companies are smaller, the credit quality is lower." If the economy slows down due to energy shocks or prolonged high interest rates, lower-quality companies will struggle to refinance or exit. This will lead to stress, liquidity issues, and potential defaults in high-yield and leveraged loan markets. AVOID lower-tier credit instruments as they are highly vulnerable to economic deceleration and refinancing risks. The economy remains robust and the Fed cuts rates aggressively, providing a liquidity lifeline to lower-quality borrowers.
"American Airlines or Jetblue or Alaska. All three of those airlines have more sensitivity in their model to fuel prices for various reasons." These airlines lack adequate fuel hedges or physical refinery assets, making their profit margins highly vulnerable to the current spike in oil prices. SHORT because their unhedged exposure to rising fuel costs will severely compress margins and earnings. A rapid end to the Middle East conflict causing oil prices to crash would disproportionately benefit these unhedged airlines.
"Delta... They have the most buffer. They own a refinery in Pennsylvania so that provides an operational hedge." While the broader airline industry suffers from spiking jet fuel prices, Delta's ownership of a physical refinery allows it to offset some of the fuel cost increases, giving it a structural margin advantage over its peers during energy shocks. LONG because Delta is uniquely positioned to weather an oil price spike better than other airlines. A severe drop in consumer travel demand due to a recession would hurt revenues more than the refinery hedge helps costs.
"Bank of America reinstating Qualcomm at underperform, pointing to the tepid growth of the smartphone market plus high memory cost." Sluggish end-market demand for smartphones combined with rising input costs (memory) will squeeze Qualcomm's profitability and limit revenue growth. SHORT because of the dual headwinds of weak consumer demand and rising hardware costs. A sudden rebound in global smartphone upgrades (e.g., driven by new AI features) could boost demand unexpectedly.
"Cyclical broadening in the market is one of those [themes] and that is what we are doing... It means small caps and mid-caps relative to large caps." Assuming the economy avoids a recession and the oil shock is absorbed, the market rally will broaden out from mega-cap tech into smaller, cyclically sensitive companies that are currently trading at relatively cheaper valuations. LONG because small and mid-caps offer better relative value if the macroeconomic expansion continues. The oil shock translates into a severe growth scare or recession, which typically disproportionately hurts smaller, cyclical companies.
Up Next
This Bloomberg Markets video, published March 10, 2026, features Nate Thooft, Dan Greenhaus, Dani Burger, Kathy Jones, Tom Fitzgerald, Jim Caron discussing GLD, XLE, CVX, OXY, JETS, CCL, RCL, KSS, JNK, SRLN, JBLU, ALK, AAL, DAL, QCOM, IWM, MDY. 9 trade ideas extracted by AI with direction and confidence scoring.
Speakers: Nate Thooft, Dan Greenhaus, Dani Burger, Kathy Jones, Tom Fitzgerald, Jim Caron · Tickers: GLD, XLE, CVX, OXY, JETS, CCL, RCL, KSS, JNK, SRLN, JBLU, ALK, AAL, DAL, QCOM, IWM, MDY