Energy Shock Waves Hit Markets as Trump Trade Fades

By the Curmudgeon with Victor Sperandeo

Overview:

“There Is No Investment Playbook for This War,” was the title of a post by David Rosenberg on March 23^rd. “The technical picture for virtually every asset class has become ruptured on a near-term, and quite possibly, an intermediate-term basis,” he wrote. For corroboration, we echo last week’s 1^st of 2 Curmudgeon/Sperandeo post “There’s No Place to Hide,” as almost all investible liquid assets (stocks, bonds, commodities, gold/silver, bitcoin, etc.) were down this week and for the month. The only notable exceptions were oil, natural gas, and aluminum.

U.S. mortgage rates have risen in harmony with the yield on the 10-year U.S. Treasury Note, which closed 4.44% on Friday- the highest closing yield since July 2025. High mortgage rates makes housing less affordable, which reduces home sales, refinancing and construction. That, in turn, slows down already weak economic activity.

Stock Market’s Steep Downturn in March:

U.S. stocks declined for the fifth consecutive week (chart), marking the worst such stretch since Russia invaded Ukraine in February 2022 (sound familiar?). The DJI, NASDAQ and Russell 2000 are all in “corrections,” having fallen more than 10% from their respective peaks. The S&P 500 is down 8.7% from its record high on January 27. It fell below its 200-day moving average last week. The S&P 500 equal-weighted index slipped just below its 200-dma on Friday.

….………………………………………………………………………………………………………………

Put Option Volume Much Higher:

Demand for put options on U.S. stock indexes has surged over the past week which may NOT be a contrary sentiment indicator this time around. Investors and traders are aggressively hedging against a "triple threat" of macroeconomic pressures: escalating geopolitical conflict in the Middle East, persistent "sticky" inflation, and potential fiscal instability in Washington.

· S&P 500 put volume last week was 3.28M contracts or a +17.1% weekly increase.

· The CBOE Index Put/Call Ratio climbed to 1.21 on March 26, 2026, up from 0.95 earlier in the week, signaling a sharp shift toward bearish sentiment.

· Market analysts have warned that the S&P 500 trading below key "put strike" levels before upcoming quarterly fund resets on March 31^st could trigger automated selling, creating a "downward grind" for the U.S. benchmark index and the 500 stocks in it.

· The CBOE Volatility Index (VIX) jumped over 13% on Friday, March 27, closing at 31.05—its highest level in months—as the "volatility premium" expanded.

The Trump Social Media Trade is Fading:

Investors and traders have been monitoring President Trump’s social media account for market positioning clues based on his twist and turn (sometimes false) comments on the U.S. war with Iran.

Trump pushed back his initial Iran ultimatum deadline from last Monday to this weekend and now to Monday, April 6^th. In a Truth Social post Thursday, he noted that “talks are ongoing.” Yet Iran hasn’t publicly acknowledged any negotiations and has been dismissive of Trump’s claims. On Wednesday, its information council said, “Trump’s statements are false and should not be taken seriously,” The Wall Street Journal reported.

We suspect Trump’s flippant social media proclamations will now become “white noise” for the markets. Monday’s 2+% stock market pop at the open, due to another TACO deadline extension, was more than erased by week’s end.

àInformation like U.S. troop movements and confirmed statements from Iran’s leadership will be much more telling to determine when this internationally illegal war might end.

The Strait and Oil Prices:

Iranian media reported that all Strait of Hormuz traffic to and from ports of supporters of the U.S. and Israel is now prohibited. The effective closure of the strait, which analysts say curbs about 10 million barrels or more of oil a day (~20% of global oil supply) and ~20% of the world’s liquefied natural gas supply, has raised the prospect that the U.S. may need to reopen the strait by force. That has sent crude oil futures skyrocketing last week.

On Friday, Brent crude oil climbed to $114.81 a barrel, its highest close since July 2022. The benchmark global oil futures contract and the S&P 500 have moved in opposite directions in 12 of the past 13 trading sessions.

Secretary of State Marco Rubio confirmed a new worry, reported Thursday by Bloomberg: that even after the war ends, Iran may charge tolls on vessels passing through the strait of as much as $2 million each.

“Iran may decide that they want to set up a tolling system in the Strait of Hormuz. Not only is this illegal, it is unacceptable, it’s dangerous to the world, and It’s important that the world have a plan to confront it,” Rubio told reporters following a meeting of the Group of Seven industrialized nations.

Victor-- Impact of High Oil Prices on the Global Economy:

If crude oil prices remain above $100 per barrel for another two weeks, many economies could tip into recession as inflationary pressures accelerate and energy costs ripple through supply chains.

Energy-driven shocks are clearly visible: oil and gasoline prices have skyrocketed, food prices are rising rapidly, transport networks are under strain and global interest rates are expected to remain “higher for longer.”

Germany’s gas pump prices at roughly $10 per gallon have begun constraining labor mobility and consumption. Early signs of demand destruction are spreading through Europe.

The resulting surge in energy and food prices would likely reduce global GDP by 5–10% in several nations within a month, amplifying social and economic instability. Once strategic oil reserves are depleted, the situation could deteriorate further into a depression-like environment.

Investors and traders should expect heightened volatility in energy, currency, and equity markets as economic stress amplifies political tensions.

Victor’s Conclusions:

U.S. political leadership will inevitably come under intense scrutiny. Congress has done nothing to stop the war with Iran, while President Trump calls all the shots. He will surely face severe public criticism for his policies, rhetoric and threats to Iran which have heightened geopolitical and energy market instability. The broader scenario is not just a political setback—it represents a macroeconomic crisis of historic proportions with the potential for serious and significant asset re-pricing.

At the Conservative Political Action Conference (CPAC) in Grapevine, Texas, on March 26-27, 2026, Matt Schlapp, chairman of the American Conservative Union, had an awkward exchange where the audience cheered for the impeachment of President Donald Trump. While trying to energize the crowd, Schlapp twice asked the audience, "How many of you would like to see impeachment hearings?" The crowd erupted in cheers each time! Astonishingly embarrassed, Schlapp said, “NO, that was the wrong answer!”

-->Watch for yourself via this 33 second video clip.

We suggest readers ponder this strange incident along with very strong American opposition to the U.S. war with Iran, as we detailed in our companion piece this week.

….………………………………………………………………………………………………….

Stay calm. Wishing you good health, success and good luck. Till next time.

The Curmudgeon
ajwdct@gmail.com

Follow the Curmudgeon on Twitter @ajwdct247

Curmudgeon is a retired investment professional. He has been involved in financial markets since 1968 (yes, he cut his teeth on the 1968-1974 bear market), became an SEC Registered Investment Advisor in 1995, and received the Chartered Financial Analyst designation from AIMR (now CFA Institute) in 1996. He managed hedged equity and alternative (non-correlated) investment accounts for clients from 1992-2005.

Victor Sperandeo is a historian, economist and financial innovator who has re-invented himself and the companies he's owned (since 1971) to profit in the ever-changing and arcane world of markets, economies, and government policies. Victor started his Wall Street career in 1966 and began trading for a living in 1968. As President and CEO of Alpha Financial Technologies LLC, Sperandeo oversees the firm's research and development platform, which is used to create innovative solutions for different futures markets, risk parameters and other factors.

Readers are PROHIBITED from duplicating, copying, or reproducing article(s) written by The Curmudgeon and Victor Sperandeo without providing the URL of the original posted article(s).