Five Weeks of Pain: The Market Is Officially Having a 'Hormuz Moment'

Five consecutive weeks of losses. The S&P 500 is down more than 8% from its January high, the Nasdaq 100 has officially entered correction territory — off 10% from recent highs — and the Strait of Hormuz is doing more damage to your portfolio than any earnings miss ever could. Brent crude surged above $112/barrel, WTI is knocking on $100's door, and Bloomberg Economics is out here modeling scenarios where CPI hits 5.5–6% and gasoline goes to $8/gallon. Cool, cool, cool.

Meanwhile, the Fed is frozen like a deer in headlights. Former Dallas Fed President Richard Fisher called the ~24% market-implied probability of a rate hike being 'a bit over their skis,' but JPMorgan's Michele and CNBC's Steve Liesman are both flagging real stagflation risk — 50% odds of a hike this year per Liesman. Incoming Fed Chair nominee Kevin Warsh wants rate cuts and balance sheet slashing, but his confirmation hearing is delayed due to a Senate probe into current Chair Powell. This is fine. Everything is fine.

The only people not stress-eating right now? Energy investors. $HAL, $CVX, and $COP are having their moment, value portfolios at Ariel Investments are up roughly 7% while the rest of the market weeps, and $APA is trading at a P/E of ~5 and 2.5x EBITDA — the kind of valuation that makes deep value investors write love poems. The rotation is real, it's brutal, and it's telling you everything you need to know about where we are in this cycle.