Connect, Aggregate
and Analyze

After more than 230 rate cuts over 2 years by global central banks, now it’s the turn to hike. Or at least to think about hiking. If you look a the charts below, the top one shows the expected path for official interest rates in the U.S. at the beggining of 2026 (orange) and today (blue) using Fed Fund Futures. If there was going to be 2-3 cuts this year, right now, that expection is basically gone. The bottom chart shows the same conclusion for global central banks, with the

The center of attention continues to be the conflict on Iran. The US bombed yesterday Kharg island, a major oil infrastructure hub for Iran, and Iran continues to attack Israel, and Israel continues to attack the south of Lebanon where Hezbollah is located, which in turn continues to attack Israel. It does not look like the conflict wil be scaling down any time soon. In fact, the Sansom option, Israel’s unofficial, undeclared nuclear doctrine referring to a strategy of massiv

All roads lead to debt. That’s what investors are finding out these days. Let me elaborate: the Pentagon jus went to Congress to ask for $50 Bn to rearm the US military, since the cost of the first week of attack has been $11Bn. The best part? Congress did not authorize the war. If they agree, and it’s likely they will, this will be added to the deficit, and we’ll end up in the Treasury mandate to finance it. Today, Iran sent a suicide drone into Dubai and hit one of the most

There were no surprises in the U.S. inflation report yesterday. Both core and headline inflation came in line with expectations, at 2.5% and 2.4% respectively, and as you can see in the chart below, with a trend to stabilization, still above the 2% target, but close enough. The problem may start to come in March, as the oil shock due to the strait of a Hormuz closure hits gasoline prices at the pump. But the real kick may appear in April-May, as there is a lag in the transmi

The U.S. will publish today the CPI fo the month of February, a data point that will not include the oil shock due to the Iran conflict. Hormuz is still effectively closed, and Iran has just bombed a Thai ship that ventured to cross it. The U.S. Navy has declined to escort ships through the strait, arguing the 100% probability of a strike. Private credit woes continue, now with major banks marking down the loans in those funds that are used as collateral to juice returns. Pri

According to president Trump, the war is almost over. In his words, it’s been a “short excursion”, and he’s trying to de escalate the conflict, which leaves the question about what was the purpose of the attack in the first place, since it’s not clear what has been accomplished: if Americans and Israelis retreat, without Iranians conceding a victory, without a regime change and without stopping their uranium enrichment program, it would appear as if it was indeed a misdirecti

Oil keeps going up, and the current shock has become one of the most important ones in history and, as it usually happens, all kind of historical statistics start to pop up, which are informative of what happened in the past, and influence what can happen in the current episode. The bottom table below shows the duration in days of wars since the 1990 Gulf war, the stock correlation and stock max drawdown. Notice that the biggest stock drawdowns occur when the duration of the

After one week of the conflict in Iran, we can already see the impact on the global economy, and how, if sustained, it’s going to leave its mark on the world, perhaps like the pandemic. Despite the fact the U.S. is a net oil exporter, gasoline is up in the U.S., is going up in Europe, and it will be probably up in China. But one thing that is getting clearer is, who was ready for this conflict (or any conflict for that matter) and who wasn’t. The big loser so far is not China

Things are starting to get interesting. The U.S. unexpectedly lost 92,000 jobs in February (it was expecting a gain of 58k), and the unemployment rate ticked up to 4.4%. Oil prices keep going up, which means that gasoline will go up, and the conflict with Iran, which was expected to be short lived, seems today as it will be more than “a few days”, with the Pentapn now expecting the conflict to last till September. That’s way too long and way too close to the midterms. We cann

Expectations of a rate cut in the March 18th FOMC meeting are almost gone. A partial victory lap for J Powell which has seen his prudent approach to inflation concerns validated by the war started by his main critic. If you look at the chart below, you can see that PCE, the Fed’s preferred measure of inflation, will go up 20 bps if there is a 10% shock in the price of oil. It’s almost 50% up YTD. Gasoline will be the main transmission mechanism, but not the only one. The impl

Geopolitical events, when sustained long enough, end up morphing into economic events. They can be episodic, or they can be permanent, creating a new paradigm. The Iran war is starting to affect the energy sector globally, but as you can see in the chart below, we are in the early innings of what can happen. Both oil and Natural gas are well below their historical highs, and they are already the headline news around the world: (1) Japan refiners are requesting to tap the str

The first casualty of the potential closure of the Strot of Hormuz is South Korean stock market. In the top chart below you can see the correction of the KOSPI index since Friday. Today, it had to close temporarily as it hit the circuit breaker of 8% fall. One of the reasons for that fall is that 75% of South Korea oil consumption comes from Middle East. What’s interesting is that Hormuz is not physically blocked, ships can still go through it. The problem is financial. Insur

The private credit sector continues to be under pressure. As Blue Owl continues to deal with redemptions, now Blackstone Private credit fund BCRED ($82Bn), is facing record redemption requests in Q1 2026. Investors sought to withdraw 7.9% of shares, exceeding the typical 5% quarterly limit. If you look at the top chart below, BDCs (Business Development Companies) share price of those managers that are most exposed to redemptions continue to go down, experiencing drawdowns of

Oil is up 8% this morning. The strait of Hormuz has not been officially closed, but following U.S. and Israeli strikes on Iran, Iran’s Revolutionary Guard Corps (IRGC) began broadcasting VHF radio warnings to vessels stating that “no ship is allowed to pass the Strait of Hormuz.” Consequently, Ship-tracking data shows a 70%+ plunge, with tanker transits near zero in recent days, hundreds of vessels anchoring or holding outside the strait. Insurers have withdrawn coverage or j

The U.S. is at war with Iran. Reports of the death of Iran supreme leader Khamenei, might shorten the conflict, but it’s not clear if this is a precise short term attack similar to the one in Venezuela or a conflict that will require the U.S. military to deploy boots in the ground, and consequently, a long and costly conflict. What’s the goal? It appears to be another proxy war between the US and China, whereby American are trying to hit chinese choke points: Venezuela and Ir

There is a new narrative in the market, with its genesis in AI. The agentic economy narrative is hitting hard, partly because companies valuations are high, and AI is decreasing the visibility of future cash flows. The key metric has changed: growth rate is no longer the most important metric, it’s duration. How far into the future are the cash flows of consumer cyclicals, or software or healthcare services companies, visible and solid. You never had 20/20 into future cash fl

Do you want or know if Trump will keep a congress majority in the midterm elections on November? Take a look at the two charts below: on the top one, you can see the results of the Google search “help with mortgage” over the last 20 years, which happen to include the GFC, where mortgages where the epicenter of the crisis. Today, we’re way above the 2008 peak. On the bottom chart, you can see wages over the last 5 years. Nominally, they have grown 31%, but when adjusted for in

Investors are supposed to be rational and markets are supposed to be efficient, which should lead to a truly unpredictable returns. But markets exhibit some patterns and cycles, that force us to add the words “most of the time” to the efficient and rational hypothesis. Take a look at the chart below. It shows a chart with 10 year rolling reruns for the S&P500. Your brain, is automatically trying to complete the chart into the future with a downturn, because that si what would

It looks like Japan’s plan it’s working. After securing the snap elections a few weeks ago, to take full control of the government, investors seems to have cleared the uncertainty regarding who is in charge, andaré looking at Japanese bonds with a fresh look. In the chart below, you can see the open interest of 20 year JGBs futures. As Japan has opened the floodgates of price discovery in its long end of the curve, and international investors are taking the bait. When hedged

The situation between the United States  and Iran  is highly tense, marked by a combination of renewed diplomatic negotiations over Iran’s nuclear program and a massive U.S. military buildup in the Middle East, raising fears of potential conflict. The attention is once again devoted to what happens in the Middle East where the odds of a military conflict remain high. Israel is pushing hard for a regime change and for ending Iran nuclear enrichment program. The U.S. looks at I