Wild times we’re living in. The situation in Iran is evolving from a short conflict to a multi-week battle, and according to White House officials, American boots on the ground are being seriously considered.
Another flash crash?
For us stock market lovers, this means more volatility is ahead. The Volatility Index ($VIX) closed above 30.00 last week, the last time it did so was during Liberation Day in April of last year...which it then shot up to 60.00 when the market suffered a “flash crash” in reaction to newly introduced tariffs. Now, just one year later, the market is being tested again, this time with geopolitical warfare and extremely high oil prices.
Who benefits from expensive oil and who does it hurt?
The biggest beneficiaries of the high oil prices are energy companies like Exxon, Chevron, APA, Devon, Valero…etc. We’ve covered many of the prominent names in our watchlists over the last few months and have been holding Exxon and XLE (the energy ETF) in our Hyper Wealth positions. These have paid off, but the rest of the market is suffering. High oil prices are good for oil companies, but terrible for everything else. Costs of everything from transportation to food becomes more expensive when fuel is expensive, and that doesn’t just risk a U.S. recession, it risks a global one. In fact, the U.S. is the largest oil producer in the world, it’s even less exposed to the risk than the many countries that don’t produce oil at all and rely on exports (and they’re having to pay $100+ per barrel right now).
Strategic Petroleum Reserves (SPR) - China
The world’s largest economies maintain Strategic Petroleum Reserves (SPRs) to cushion supply shocks, but they’re not unlimited. The U.S., for example, holds enough crude in its SPR to cover only a few weeks of total consumption, though it can offset imports for longer depending on conditions. China’s reserves are less transparent, but estimates suggest they hold a few months’ worth of import coverage. That said, this dynamic gives the U.S. meaningful leverage, and it may help explain why the meeting between Trump and Xi was postponed. China currently controls close to 90% of the production for several critical rare earth elements, while the U.S. has been strengthening its position in global energy markets, including influence over Venezuelan oil flows.
If the U.S. were to extend that control further, particularly over key chokepoints like the Strait of Hormuz, it would significantly shift the balance of power across both energy and supply chains, putting additional pressure on China and other import dependent economies.
Economic calendar this week:
- Federal Reserve Chair Jerome Powell speaks (Mon)
- March Consumer Confidence Report (Tue)
- ADP Jobs data (Wed)
- Initial Jobless Claims (Thu)
- U.S. Trade Deficit (Thu)
- U.S. Unemployment Rate (Fri)
This week’s big economic focus will be on the labor market, which plays a huge role in deciding interest rates. We’ll be updating the data as it is released throughout the week and discussing the implications of it in our Hyper Stocks Pro group.
SPY Technical Analysis and Market Overview:
There is no sugarcoating it, the market is looking weak across the board and we’ll likely see more red before we turnaround. IF, and ONLY IF, the Trump administration is successful at capturing the Island of Kharg, then we’ll likely witness one of the most historic market comebacks in history, but that depends on execution. Our pullback target on $SPY is 605.00-615.00 it it breaks the 630.00 support this week.
Analysis by Q. Ali Founder, Hyper Stocks
Focus: Equity Analysis | Macro Economics | Swing Strategy
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Disclaimer: This article is for informational and educational purposes only and does not constitute financial advice. Investing involves risk, including the possible loss of capital. Always conduct your own research or consult with a licensed financial advisor before making investment decisions.
Hyper Stocks and its contributors may hold positions in some of the securities or assets mentioned above. These positions are subject to change without notice. Any opinions expressed reflect current views at the time of writing and are not guarantees of future performance. Past performance does not guarantee future results.