Markets Weekly March 14, 2026

"The straight up Hermuz is basically shut... futures curve for Brent crude, you can see that over the past few weeks, even longerdated futures are shifting higher." With the Strait of Hormuz closed due to military conflict and physical risks to shipping, global energy markets are facing a massive, potentially prolonged supply shock. This bottleneck will force crude prices and energy sector equities significantly higher as the conflict drags on and global inventories deplete. LONG because physical supply destruction in a high-demand commodity directly translates to massive pricing power for producers outside the conflict zone. The US and Iran reach a sudden diplomatic resolution, or a severe global recession destroys oil demand faster than supply is constrained.

"You add on to that higher fertilizer prices that's going to cause food inflation... a lot of the people who import fertilizer are these poor countries that are dependent upon Gulf sourced fertilizer." The inability to export fertilizer from the Middle East creates a massive global supply deficit. North American agricultural chemical and fertilizer producers will experience a surge in demand and pricing power as global buyers scramble to replace trapped Gulf-sourced materials. LONG because these companies operate outside the geopolitical danger zone and will capture the premium pricing caused by the supply shock. Alternative supply chains adapt quickly, or governments intervene with price controls on agricultural inputs to prevent famine.

"Helium is a very important industrial input into things like semiconductors. So maybe that impacts the production of chips which of course is a very important part of the AI trade." Qatar is a major global producer of helium, and its exports are trapped behind the Hormuz blockade. A shortage of this critical input gas will bottleneck semiconductor manufacturing, threatening the production capabilities and high valuations of the entire AI chip sector. AVOID because the semiconductor sector is priced for perfection based on the AI boom, and a physical supply chain disruption will force severe downward earnings revisions. Semiconductor foundries have larger strategic reserves of helium than anticipated, or alternative extraction sources ramp up immediately.

"I think the market is way too hawkish right now. It's much more likely in my view that we would have a new Fed that is inclined to interpret things to be more doubbish... we have a very obviously weakening labor market and are very likely to be heading into a global recession." The bond market is currently selling off (yields rising) because it fears the inflationary impact of the oil shock. However, if the Fed follows its standard playbook of looking through supply shocks and instead cuts rates to combat the weakening labor market and global recession, long-duration bonds will aggressively rally. LONG because the market is mispricing the Fed's reaction function to a stagflationary environment, creating an asymmetric entry point for long-dated Treasuries. The Fed prioritizes its inflation mandate over employment due to political pressure, leading to further rate hikes.

"You see the big private credit sponsors. Their stock prices have declined significantly right look at companies like Aries and you also hear all sorts of headlines about investors in private credited funds trying to withdraw." AI is rapidly disrupting the middle-market software businesses that many private credit funds and Business Development Companies (BDCs) lend to. This fundamental deterioration is sparking investor panic and redemption requests, which will continue to pressure the equity valuations of publicly traded private credit sponsors. AVOID because even though the structure prevents a systemic bank run, the equity tranches of these BDCs will absorb the loan losses and suffer from negative sentiment. The disruption to software companies is overstated, and the high dividend yields of BDCs attract aggressive dip-buying from retail investors.