Volatility is here, says Virtus' Joe Terranova
Speakers
Summary
- The panel agrees that volatility has returned to the market, driven by geopolitical tensions (Middle East) and lack of clarity on market direction.
- There is a significant divergence (dispersion) in the market: Energy and Materials are outperforming, while previous Tech leaders are seeing drawdowns.
- Despite the volatility, the consensus remains constructive for the long term, viewing current dips as opportunities to generate alpha through stock selection rather than broad index buying.
Trade Ideas
Terranova explicitly stated, "I said yesterday CF Industries, that is a name that's a equity that I purchased yesterday." In an environment lacking clarity with geopolitical risks, domestic fertilizer producers (CF) act as a defensive play and a beneficiary of potential global supply chain disruptions. Long for alpha generation during volatility. Resolution of geopolitical conflicts could lower agricultural commodity premiums.
"The volatility is here... Have some exposure to the financial exchanges... CBOE is the name that I am looking at currently." Financial exchanges make money on volume and trading activity. When uncertainty and volatility spike, hedging and trading volumes increase, directly boosting revenue for exchange operators. Long Exchanges as a direct play on market volatility. A return to low-volatility, range-bound markets reducing trading volumes.
"I told you last week I didn't think you would buy Microsoft. I will change that... I think there's resiliency in the Mag-7. I'm seeing it reflected in Microsoft and Apple and Meta." Despite broader market jitters, large-cap tech (Mag-7) is showing relative strength and "resiliency," acting as a flight-to-quality trade within the equity market. Long for quality/resiliency. Valuation compression if rates rise significantly; rotation out of crowded tech trades.
"I do think the market is still poised for an upward trajectory... at the end of the year we should see that." Despite the "exogenous" shocks (geopolitics) and historical data showing mid-term election year drawdowns of ~20%, the underlying corporate fundamentals remain intact to support a year-end rally. Long broad market (S&P 500) looking past near-term noise. Geopolitical escalation turning into a systemic economic event; persistent inflation.
Joe Terranova
Senior Managing Director, Virtus Investment Partners
"If you believe there is a supply disruption as it relates to oil in the Middle East, look up north Canada. You have Suncor, you have Canadian Natural Resources." Middle East tensions threaten oil supply routes (Strait of Hormuz). Canadian energy producers offer "safe jurisdiction" oil exposure that benefits from rising prices without the direct geopolitical risk of the region. Long as a geopolitical hedge. De-escalation in the Middle East causing oil prices to retrace.
Joe Terranova
Senior Managing Director, Virtus Investment Partners
"Maintain exposure to the refiners diesel prices. They are soaring today." Terranova notes soaring diesel prices. Refiners (Valero, Marathon, Phillips 66) capture the "crack spread" (difference between crude costs and refined product prices). When diesel prices soar, refiner margins expand. Long Refiners to capture widening margins. Demand destruction if fuel prices go too high; regulatory intervention.
Malcolm Ethridge
CIC Wealth Executive Vice President
Ethridge highlights market dispersion, noting that while tech is down, "You've got like Devon Energy for example, or Diamondback that are up... The dispersion between materials and energy... couldn't be better." In a "buyer's market" defined by dispersion, capital is rotating into sectors with momentum. Energy and Materials are leading the S&P 500 year-to-date, providing a hedge against the inflation/geopolitical risks hurting tech. Long Energy leaders (Devon/Diamondback) following the momentum dispersion. A sharp reversal in energy prices or a rotation back into growth/tech.
Up Next
This CNBC video, published March 03, 2026, features Joe Terranova, Sarat Sethi, Malcolm Ethridge discussing CF, CME, ICE, CBOE, MSFT, AAPL, META, SPY, SU, CNQ, VLO, MPC, PSX, DVN, FANG. 7 trade ideas extracted by AI with direction and confidence scoring.
Speakers: Joe Terranova, Sarat Sethi, Malcolm Ethridge · Tickers: CF, CME, ICE, CBOE, MSFT, AAPL, META, SPY, SU, CNQ, VLO, MPC, PSX, DVN, FANG