Oil, Missiles, and Market Panic
528: Return of Market Fear
Good morning.
Welcome to our 1,000+ new subscribers over the last two weeks.
This is going to be one of those weeks we have three posts (One this morning, one tomorrow morning, and one on Thursday).
There’s simply too much going on for us to cover it all in two posts.
Today’s post is going to be a quick hitter: the most critical news from the last 72 hours or so.
Tomorrow’s is going to be our Stock Picks for Spring post for all Arb Letter paid subs where I will outline 10 of my top conviction equity/stock picks for the coming months. We’ve nailed PLTR 0.00%↑ NVDA 0.00%↑ KTOS 0.00%↑ and others in the past year and tomorrow we will get into some of my new ideas that are already showing promise.
Good timing too since the week is likely going to be highly volatile.
Fear is growing which is good for those of you looking to be opportunistic.
Financial Markets
Looks like we are nowhere out of the woods yet, markets opened super bloody this morning.
Financial contagion is now beginning to spread with Japan’s Nikkei Index down as much as 6% while most of us were sleeping last night. South Korea’s market fell by 8% with trading halted as well.
US oil prices surged above $113/barrel for the first time since June 2022 but quickly gave up those gains this morning. (Kobeissi Letter). In big news, western governments are now reportedly discussing a coordinated release of strategic oil reserves as energy markets react to rising geopolitical tensions and higher crude prices.
Strategic petroleum reserves are generally treated as a last line stabilization tool, not something governments use lightly or put simply, it is a move typically considered when policymakers fear energy prices could quickly spiral and feed into broader inflation.
This will cause oil prices to drop in the short term if it happens. At the moment the Iranians really don’t have the capability to be a major issue in the strait of Hormuz for an extended period of time. Their navy is in shambles and their drone forces are being depleted quickly. Polymarket odds on the price of crude oil show a 96% chance this morning that we are still over $100 by the end of this month.
The latest news is that G7 countries are not yet decided.
If you dabble with any of the options we discussed last week to trade oil just make sure you understand the vibes are changing by the hour. You can get murked quickly if you are not nimble or hold a position for too long.
The Dow posted its worst week in nearly a year last week as the Iran conflict sent energy prices surging
Jim Cramer said this weekend he does not see a "path to de escalation" between the US, Israel and Iran. Might be good for us lmao (WatcherGuru)
A record 331,000 men are working two full-time jobs in the US (Bloomberg/Unusual Whales)
UBER 0.00%↑ has now made an option for riders to specifically request women
Trump says he won’t sign any other bills until the SAVE America Act is passed (Polymarket)
Palantir PLTR 0.00%↑ pumped last week as retail traders piled back into AI and defense tech names
ONDS 0.00%↑ has signed a merger agreement with defense contractor Mistral, gaining direct prime contractor access to U.S. defense programs
Interesting side story. Morgan Stanley recently downgraded investment bank Jefferies from Overweight to Equal Weight, citing rising legal and credit risks tied to several recent lending exposures. A theme we have touched on for about 3 weeks now.
The concerns mainly stem from Jefferies’ involvement with companies that later collapsed or became entangled in fraud investigations, including a failed UK lender and an auto parrts bankruptcy linked to receivables tied to one of its investment funds.
While the direct financial impact appears manageable relative to the firm’s balance sheet, the downgrade reflects growing investor concern about Jefferies’ higher risk appetite and aggressive lending strategy compared with many peers on the street.
This move also highlights broader scrutiny building up around credit risk and private lending exposure across Wall Street as markets become more sensitive to potential defaults.
"Resource risk will begin to outweigh increasingly marginal military gains and the conclusion to the conflict will come down to the three M’s : Munitions, Markets and Midterms."
— geopolitical analyst at JPMorgan
Crypto
Bitcoin spent the last few days consolidating in a relatively tight range, bouncing between the mid $65K area and just above $68K. Honestly not terrible to see.
Ethereum has struggled to decisively reclaim the $2,000 level, hovering just below that mark as buyers and sellers battle for control while the world descends into chaos.
For now, crypto appears to be in a consolidation phase, waiting for a clearer directional catalyst from macro markets, geopolitical developments, or renewed institutional flows. Not much to report as of now besides some interesting headlines that may help paint the picture for late spring and early summer.
Michael Saylor announced this morning on X that Strategy has bought 17,994 more Bitcoin worth $1.28 billion (average price of about $70,000). Guy is going to be the richest man in history or bankrupt, no in between in my opinion
Tom Lee's BitMine bought another 60,976 ETH worth about $122 million (WatcherGuru)
Nasdaq said on Monday that it is going to work with the crypto exchange Kraken and issuing companies in developing its plan to offer tokenized stocks on its exchange (WSJ)
Bitcoin’s relative strength here is encouraging, I am not buying anything else for the time being, just waiting to see how crypto performs if and when this global conflict starts to potentially wind down.
If you are in a degenerate mood, crypto investor Arthur Hayes wrote a substack post on why he thinks HYPE (Hyperliquid) is going to $150 by late summer of this year. You can read it here.
Global News
Global tensions continued to rise this week as the conflict in the Middle East began spilling beyond its initial flashpoints.
Markets were forced to factor in a steady stream of wild headlines involving missile strikes, air defense interceptions, and threats to regional infrastructure. What initially appeared to be a contained exchange between Israel and Iran is increasingly showing signs of broader regional involvement, raising concerns about escalation across the Gulf and Eastern Mediterranean.
It is evident now we won’t get the nice succint conclusion in Venezuela for our situation here in Iran.
Iranian missiles were able to get through Israeli air defenses in Tel Aviv as well as hit a major social security building in Dubai. Just this morning there are reports of NATO intercepting a ballistic missile that was entering Turkish airspace.
French President Emmanuel Macron (who has been on his warhorse lately) signaled a significant shift in Europe’s defense posture as France increases military deployments.
Paris has just moved additional warships and air defense assets toward the eastern Mediterranean and Red Sea while reinforcing some positions in Cyprus following recent security incidents in the region.
At the same time, Macron has indicated France may expand elements of its nuclear deterrence and potentially position nuclear capable aircraft within allied European countries as part of a broader forward defense strategy.
What happens next in the short term?
Visegarad 24 is reporting that three American B-52 Stratofortress strategic bombers just landed at RAF Fairford in the UK which might suggest we are going to hit Iran again this week. President Trump has said that “Unconditional surrender” is the only way this ends.
It’s also worth mentioning the two major downside risks I see to this “conflict”:
Ground troop use
A draft
I only mention the draft because there’s been some chatter about it online. Needless to say this would be a very big f*cking deal and would likely spark mass protests in the US. I don’t see this as likely unless this conflict expands to involve ground troops or Iranian allies (China/Russia).
As far as ground troops, this has not been ruled out by this administration and the odds of it happening sit at 50% on Polymarket.
In either of these cases you would see economic ramifications and conditions worsen throughout 2026.
I should mention as someone who is terminally online for work, that there seems to be growing doomerism and alarmism over the situation in the Middle East. Everything from speculation on the use of nuclear weapons to devastating financial market drop theories is circulating.
Make no mistake, there is the potential for calamity in this backdrop but I think we are approaching peak levels of fear and wouldn’t be surprised to hear some positive developments begin to emerge by week end.
My two cents. We will re-evaluate at the end of the week.
Terror Threats
As we outlined at the beginning of last week, terror threats continue to escalate globally in the wake of the US and Israeli strikes on Iran, kicked off by the shooting in Austin.
A Department of Homeland Security bulletin stated last week when this all began:
“Although a large-scale physical attack is unlikely, Iran and its proxies probably pose a persistent threat of targeted attacks in the Homeland, and will almost certainly escalate retaliatory actions, or calls to action, if reports of the Ayatollah’s death are confirmed”
Evacuations in Manhattan’s Upper East Side began this weekend after NYC bomb squad and FBI agents found suspicious devices near protests close to Mayor Zohran Mamdani's residence.
One device, thrown towards NYPD, was later discovered to be a homemade bomb filled with TATP (Triacetone Triperoxide). TATP is a highly volatile explosive compound ( made from acetone and hydrogen peroxide) that has been used in past terror attempts and attacks.
Mamdani of course took the opportunity to talk about the dangers of Islamophobia and condemn white supremacy.
The men suspected to be involved are Emir Balat, 18, and 19 year old Ibrahim Kayumi. Video from the event shows that Balat yelled “Allahu Akbar”.
Reports are now indicating that the suspects referenced ISIS during questioning with the FBI.
The irony of the event is pretty insane. A man named Walter Masteron was literally in the middle of saying “as a born and raised New Yorker, we welcome everyone into this city” when the radical Islamist threw the bomb over his head (see below).
You cannot make this shit up.
Over the past 48 hours, there has also been multiple aviation security scares that have triggered evacuations, flight diversions, and federal investigations across the U.S.
Kansas City International Airport temporarily evacuated its main terminal after authorities received a report of a possible explosive device in the terminal and nearby parking structure.
Roughly 2,000 passengers were moved outside onto the tarmac while bomb squads and K-9 units searched the area.
In a separate incident, a Southwest Airlines flight traveling from Nashville to Fort Lauderdale was diverted to Atlanta following a security threat involving a passenger while the aircraft was in the air. The plane landed safely and law enforcement removed and questioned the individual involved.
Expect more of this.
My false flag radar is also on.
As public sentiment, protests, and condemnation of the actions in the Middle East increases, the motivation to redirect and optimize outrage is going to jump up.
See you guys tomorrow morning for our Spring Stock Picks. Have some solid picks in here that I am pretty excited about walking through it all. Think they offer a solid opportunity, particularly with the volatility we are getting due to Iran.
Better entries for us before all of this hopefully blows over.
Godspeed.
Have a great Monday see you guys tomorrow. I will be on X and Discord today.
Stay frosty frens, keep your heads on a swivel. All will be well.
"My false flag radar is also on." Touch grass Andy.