The harsh truth behind a war in the crude oil region
The raw stock market shifts behind a war in the raw crude oil region.
The prevailing sentiment of week 11 was characterized by Fear and extreme volatility. The escalation of the conflict between the US and Iran, combined with uncertainty about the Federal Reserve's policy, has led to falling markets.
If we look at the consensus as presented by the most watched financial YouTubers, we see:
- Bearish (75%): The majority of sources warn of an impending crash, recession, or sustained selling pressure due to geopolitical tensions and inflation fears.
- Bullish (25%): A minority sees opportunities in specific sectors such as cybersecurity or finds value in stocks trading below their intrinsic value.
The smallest tweet or glimmer of hope often leads to a temporary boom.
Macro-Consensus
The most discussed macroeconomic data concerned inflation figures, Fed interest rate decisions, and the explosive rise in oil prices.
- Joint conclusion: The market fears that inflation will persist due to the energy shock in the Strait of Hormuz, where 20% of the global oil supply is blocked. This has fueled speculation about possible new interest rate hikes ("rate hikes back on the table"), which could put significant pressure on profits and thus on stock prices for the coming months for companies for which oil is important. Moody's now estimates the chance of a recession in America at 50/50.
Sector & Stock Focus
- To be avoided / Warnings: Urgent warnings have been issued for the semiconductor and tech sector, specifically for SMCI (collapsed), NIO, APLD and NVTS. Also Nvidia (NVDA) is considered risky by some after a 5.5% drop despite good figures, indicating a "beat the beat" requirement that seems unsustainable at a $4 trillion valuation.
- Worth buying / Focus: Despite the malaise, Adobe (ADBE) and HP (with a 6.5% yield) are mentioned as fundamental buys. Furthermore, Cybersecurity stocks and AI-related infrastructure (such as ARM) remain on the radar for the long term. Berkshire Hathaway (BRK) is specifically mentioned as trading below its intrinsic value.
The "Contrarian" Check
A striking contrasting opinion is the observation that the S&P 500 showed a massive rally of $2 trillion in market capitalization immediately after Trump announced "productive discussions" with Iran. While the consensus speaks of an inevitable crash, this suggests that the market is extremely sensitive to positive diplomatic news and that a rapid de-escalation could cause a powerful "short squeeze".
Looking more broadly at the S&P 500 chart, it is true, and a channel like "Verified Investing" has been warning for a while, that technically it looks like a big correction is brewing, but it might still drag on for a bit.
Disclaimer: We are not a financial advisor but an e-book magazine.
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Happy Findigesting
Fintube digest team