Volatility Grips Wall Street, Judge Rejects Subpoenas of Fed Board | The Close 3/13/2026
Speakers
Summary
- Brent crude oil has spiked above $100 a barrel amid the third week of conflict in the Middle East, creating a significant headwind for US consumer discretionary spending.
- A federal judge quashed subpoenas against Fed Chair Jerome Powell citing zero evidence of criminality, though the DOJ plans to appeal, which will continue to delay Kevin Warsh's confirmation to the Fed Board.
- High-grade corporate bond issuance is seeing near-record volume, heavily driven by mega-cap tech "hyperscalers" funding AI capex, which is actually improving the overall credit quality of the investment-grade market.
- The market is showing zero tolerance for AI execution risks, heavily punishing Adobe (CEO stepping down amid AI skepticism) and Meta (underperforming AI model), while rewarding hardware/memory providers like Micron.
- Theatrical release windows are stabilizing, with major studios like Universal committing to 45-day theatrical exclusivity, easing fears that streaming would destroy the traditional box office.
Trade Ideas
"I would not be bullish on buying writ large because I do think there is some real existential risk to software. The type used for pure optimization is fertile ground for any type of AI disruption. You need to have some proprietary data sets and regulatory variables." Generative AI will commoditize basic optimization and workflow software. However, enterprise software companies that own massive, proprietary data moats and operate in complex regulatory environments will be insulated from AI disruption and can actually monetize AI features effectively. Long high-quality enterprise software companies with deep proprietary data moats, while avoiding speculative, narrative-driven tech. A broader macroeconomic slowdown could cause enterprise IT budgets to contract, hurting even high-quality software vendors.
"If you are a consumer and everything already costs too much in your view and now you have to choose between filling up your car to go to work versus going to the movies or doing something else, you are going to choose to put gas in your car, but that means you are not engaging in other activities." With Brent crude sustaining above $100 a barrel, the immediate pass-through to gasoline prices acts as a regressive tax on the consumer. This forces demand destruction in non-essential categories like retail, apparel, and entertainment. Short consumer discretionary and retail ETFs as wallet share shifts to mandatory energy and food costs. A sudden geopolitical de-escalation could cause oil prices to crash, providing immediate relief to consumer wallets and sparking a rally in discretionary stocks.
"It is the hyperscalers that are funding to fund capex plans... This is incredibly high quality debt coming reasonably cheap to comparables. And so that is improving their credit quality over the overall market. For example, the AA portion of our market is the largest it has been in about seven years." Mega-cap tech companies are issuing massive amounts of debt to build out AI infrastructure. Because these companies have fortress balance sheets, their issuance is increasing the overall safety and quality of the investment-grade corporate bond market, making it an attractive yield vehicle. Long high-grade corporate bond ETFs to capture safe yield backed by cash-rich tech monopolies. If inflation remains sticky due to energy shocks, the Fed may hold rates higher for longer, causing duration risk and price depreciation in corporate bond ETFs.
"Micron Technology up about 5%. The top gainer in both of the major indices. Set to benefit from dynamic memory." The massive build-out of AI infrastructure by hyperscalers requires unprecedented amounts of high-bandwidth memory. As a primary supplier, Micron is capturing this structural demand, allowing it to outperform even on days when the broader market and software names are selling off. Long Micron as a direct hardware beneficiary of the AI capex cycle. The semiconductor memory market is historically cyclical; any slowdown in data center capex could lead to an oversupply of chips.
"Adobe down 7.6%... The CEO will step down... amid deep skepticism about the company's ability to thrive in the AI era. Shares of Meta Platforms taking a hit. The New York Times says that latest AI model has underperformed." The market has shifted from blindly buying "AI narratives" to demanding flawless execution. Companies showing leadership instability or technical failures in their foundational AI models are facing severe, immediate multiple compression. Avoid legacy tech companies that are struggling to prove their AI competitiveness or facing internal turmoil over their AI strategy. These companies have massive free cash flow and could quickly acquire successful AI startups or release updated models that reverse the negative sentiment.
"The fear that streamers would collapse windows, it looks like that threat is gone. Universal said they are committing to a 45 day window. You are seeing everybody say this industry is still strong." During the pandemic, the existential threat to movie theaters was that studios would release films directly to streaming. With major studios now officially recommitting to exclusive theatrical windows, the business model for theater operators is secure, allowing them to benefit from a recovering box office driven by new, original IP. Long theater operators and premium large-format cinema companies as the structural threat of day-and-date streaming releases evaporates. A severe consumer recession driven by inflation/gas prices could still keep audiences at home, regardless of exclusive theatrical windows.
Up Next
This Bloomberg Markets video, published March 13, 2026, features Julie Biel, Dana Peterson, Nathaniel Rosenbaum, Romaine Bostick discussing MSFT, CRM, NOW, XLY, RTH, LQD, IGIB, MU, ADBE, META, CNK, IMAX. 6 trade ideas extracted by AI with direction and confidence scoring.
Speakers: Julie Biel, Dana Peterson, Nathaniel Rosenbaum, Romaine Bostick · Tickers: MSFT, CRM, NOW, XLY, RTH, LQD, IGIB, MU, ADBE, META, CNK, IMAX