ETF IQ 3/2/2026
Speakers
Sylvia Jablonski — CEO/CIO, Defiance ETFs
— Defiance ETFs CEO
Summary
- Macro Context (2026): The US is 3 days into a conflict involving Iran. Oil (Brent) is up 6%, sparking volatility across asset classes.
- Contrarian EM Play: While most are fleeing the Middle East, Stone Harbor is buying the dip in Gulf debt (specifically Bahrain), citing excessive spread widening. They view Latin America (Venezuela/Argentina) and Africa as the primary beneficiaries of the conflict due to oil exports.
- The "Fear" Trade: Gold (GLD) is breaking records again, and Energy (XLE) is seeing massive inflows. However, broad US equity flows (SPY) remain calm, suggesting investors are sector-picking rather than panic-selling the whole market.
- Shipping Disruption: Tanker shipping rates are spiking, creating a "shiny object" trade in futures-based shipping ETFs, though structural risks (contango/backwardation) make this a dangerous hold for non-professionals.
- Nuclear Reality: The IAEA has lost contact with Iranian regulators. France is increasing its nuclear arsenal, signaling a long-term structural shift toward defense and nuclear deterrence independent of US guarantees.
Trade Ideas
XLE is trading at inception highs (since 1998) with record inflows. OXY specifically mentioned as surging due to efficient Middle East operations despite the war. Geopolitical risk premium is returning to oil. Unlike previous crises, the US is energy independent, making US-based energy producers (held in XLE) a safe haven that benefits from global price spikes without the direct operational risk of assets located in the war zone. Momentum trade. Energy is the only sector acting as a true hedge right now. A quick diplomatic resolution or ceasefire could cause oil prices to crash rapidly.
The Private Credit ETF (PRIV) has tripled in size to $800M and is 80% investment grade. In a volatile environment where public equity markets are jittery about war, private credit offers yield with lower mark-to-market volatility. The focus on investment grade (rather than junk) provides a safety buffer against a recessionary shock caused by high oil prices. A defensive yield play. Liquidity events in the private credit space (referenced Blue Owl redemption issues, though Paglia dismisses the contagion risk).
Global defense spending is at post-Cold War highs, but the nature of warfare has shifted from "heavy metal" to unmanned systems, space, and AI. Traditional defense primes (Lockheed/Raytheon) are stable, but the *growth* alpha is in the companies building the "nervous system" of modern war: drones (AVAV, KTOS) and AI targeting (PLTR). The Iran conflict validates the shift toward drone swarms over manned aircraft. Long the modernization of warfare. High valuation multiples on tech-defense names compared to traditional primes.
Cruise operators are plunging today. This is a classic "double whammy." First, rising oil prices directly hit fuel costs (their biggest variable expense). Second, war in the Middle East and global tension dampens consumer appetite for international travel/cruises. Short/Avoid. Margins will be compressed from both the revenue side (demand) and cost side (fuel). If oil stabilizes, these stocks are high-beta and could rip higher on relief rallies.
Jim Craig
CIO, Stone Harbor Investment Partners
Stone Harbor has "beefed up" exposure to Argentina and Venezuela (bonds up 46% YTD). They view Latin America as a "winner" in this geopolitical setup. As the Middle East becomes uninvestable or risky, capital flows to other commodity-rich regions. Argentina offers oil exposure and a reform narrative that is uncorrelated to the war in Iran. Long LatAm as a geopolitical diversifier. Argentina's idiosyncratic political risks and history of default.
Eric Balchunas
Senior ETF Analyst, Bloomberg Intelligence
This ETF tracks tanker shipping futures and is up 25% in a day due to the Iran conflict disrupting Middle East oil transport. Disrupted supply chains spike shipping rates. Crucially, the futures curve has flipped into "backwardation" (spot price higher than future price), meaning the fund actually gets paid to roll contracts, reversing the usual "contango" decay that destroys value in these funds. A high-risk, tactical trade for the duration of the conflict. "Red Light" rating due to volatility and complexity. If the curve flips back to contango, the fund will bleed value rapidly.
Up Next
This Bloomberg Markets video, published March 02, 2026, features Anna Paglia, Sylvia Jablonski, News Anchor (Norma), Jim Craig, Eric Balchunas discussing XLE, OXY, PRIV, AVAV, KTOS, PLTR, JEDI, NCLH, CCL, RCL, ARGT, BWET. 6 trade ideas extracted by AI with direction and confidence scoring.
Speakers: Anna Paglia, Sylvia Jablonski, News Anchor (Norma), Jim Craig, Eric Balchunas · Tickers: XLE, OXY, PRIV, AVAV, KTOS, PLTR, JEDI, NCLH, CCL, RCL, ARGT, BWET