Oil is up 50% since february and the market just doesn't care
u/Hungry-Command-8454 ·
Reddit — r/investing
· May 11, 2026 at 21:24
· ⬆ 62 pts
· 💬 30 comments
| View on Reddit ↗
AI Summary
Summary
The post highlights a divergence between surging crude oil (+50% since Feb, now ~$98) and the S&P 500 hitting all-time highs, arguing the market is ignoring risks from geopolitical tensions (Hormuz, Iran) and eventual inflation pass‑through.
The author moved 15% of equity allocation into short‑duration Treasuries, citing poor risk/reward for equities if oil stays elevated and the Fed cannot cut rates.
Quality assessment: Moderate – references credible energy analysts and CPI data, but remains a tactical macro opinion rather than deep company‑level DD; leans speculative on timing.
Score62
Comments30
Upvote %82%
▶ Full Post Text
Crude is at 98 bucks. Gas is over 6 dollars in half the country. The strait of hormuz is still disrupted. Trump rejected Iran's latest peace proposal today. And the S&P 500 closed at an all time high on friday for the sixth week in a row.
Amrita Sen from Energy Aspects went on CNBC last week and called this "extremely misplaced euphoria" and said we're sleepwalking into a recession. Morgan Stanley's chief europe economist said we're "nearing a day of reckoning." These are not perma-bears, these are energy market specialists who watch supply flows for a living.
The bull case is all earnings. 29% Q1 growth, 78% beat rate, great. But that was last quarter. Oil was at $85 for most of Q1. It's been $95-100 for the last 3 weeks. That feeds into transport, logistics, manufacturing, food production. None of that shows up until Q2 and Q3 numbers.
CPI comes out tomorrow. Core was 2.6% last month. Polymarket has traders watching for a possible reacceleration toward 3.7% when the oil passthrough hits. The Fed is at 3.50-3.75 with a 96% chance of holding in June. If CPI comes in hot, the one remaining cut everyone's hoping for in September evaporates.
I'm not selling everything. But I moved about 15% of my equity allocation into short duration treasuries last week. If oil cools and Iran resolves, I'll rotate back and miss a couple percent upside. If it doesn't, I'll be glad I have the dry powder. The risk reward just feels off when crude is doing what it's doing and the index is pretending it isn't happening.
Author notes S&P 500 hitting all‑time highs despite oil at $98 and geopolitical disruption – “market doesn’t care.” Historical pattern of lagged oil passthrough into transport, logistics, and consumer spending could pressure Q2/Q3 earnings. Current euphoria may be misplaced; a near‑term correction is possible if data turns, but no active short is taken. Earnings continue to beat, inflation remains contained, or Iran tensions ease – market can rally further.
Author explicitly moved 15% of equity allocation into short‑duration Treasuries as a defensive hedge. If oil‑driven inflation reaccelerates and the Fed stays on hold, risk assets could fall; short‑term bonds provide yield and principal stability. A direct cash rotation into SHY (iShares 1‑3 Year Treasury ETF) to preserve capital and earn yield while waiting for clarity. Oil resolves quickly (Hormuz reopens, Iran deal) → equity rally could cause underperformance vs. longer‑duration bonds or stocks.
This Reddit post, published May 11, 2026,
features u/Hungry-Command-8454
discussing SPY, SHY.
2 trade ideas extracted by AI with direction and confidence scoring.