Operation Epic Fury, the Strait of Hurmuz, and Your Portfolio – March 20, 2026

Last Week in Markets: March 16–20, 2026

The fourth straight losing week. The S&P 500 broke below its 200-day moving average for the first time in 10 months on Thursday, then fell another 1.5% on Friday to close at 6,506.48—its lowest level of 2026. The breach of the 200-DMA near 6,618 ends a remarkable 214-session streak above the long-term trendline. Iran widened its attacks on energy infrastructure across the Gulf, striking oil refineries in Saudi Arabia and Kuwait and forcing the UAE to shut two major facilities. The Federal Reserve held rates at 3.50%–3.75% on Wednesday and raised its 2026 core PCE inflation forecast to 2.7%, projecting only one rate cut this year. The 10-year Treasury yield surged to 4.39%. Late Friday, Trump said the U.S. was considering “winding down” military operations, and the Treasury lifted sanctions on Iranian oil at sea—a move expected to release roughly 140 million barrels into the global market.

Index	Week (Mar 13–20)	Since Feb 28*	MTD (March)	YTD (2026)	1-Year
S&P 500 Index	-1.9%	-5.4%	-5.4%	-5.0%	+14.9%
MSCI ACWI Index	-2.1%	-7.4%	-7.4%	-3.5%	+18.0%
MSCI EAFE Index	-2.8%	-9.4%	-9.4%	+0.6%	+16.6%
MSCI EM Index	-2.0%	-9.5%	-9.5%	+1.7%	+27.2%

Sources: S&P Dow Jones Indices LLC (S&P 500 daily closes confirmed via FRED/St. Louis Fed and StatMuse); MSCI Inc. Week return is Mar 13–Mar 20 close-to-close. S&P 500 Mar 20 close: 6,506.48. *“Since Feb 28” and “MTD” figures are now identical, as the conflict began on the last day of February. Feb 27 close used as the pre-operation baseline (markets were closed on Feb 28 when the operation launched over the weekend). MSCI index returns are approximate, sourced from ETF proxies (EFA, EEM, ACWI) and market commentary; subject to final confirmation against official MSCI end-of-day data. Returns are price returns in USD. Past performance is not indicative of future results.

International markets have taken a harder hit than U.S. equities since the conflict began, with both Developed and Emerging Markets now down more than 9% from pre-conflict levels. Asia and Europe’s higher dependence on Gulf oil is the primary driver. The year-to-date lead that international markets held over the S&P 500 coming into March has been almost entirely erased, though MSCI EAFE and EM still cling to small positive YTD numbers while the S&P 500 is now negative for the year.

The Strait of Hormuz: Why It Matters So Much

Twenty-one miles wide at its narrowest point. One-fifth of the world’s daily oil supply. No real alternative route. That’s the Strait of Hormuz in a nutshell. In 2024, about 20 million barrels of oil and petroleum products moved through it every day—roughly 20% of global consumption and more than a quarter of all seaborne oil trade. (Source: U.S. Energy Information Administration, “Amid Regional Conflict, the Strait of Hormuz Remains Critical Oil Chokepoint,” 2025.)

Saudi Arabia, the UAE, Kuwait, Iraq, and Qatar all depend on it to move their oil to market. There are partial workarounds—Saudi Arabia’s East-West Pipeline and the UAE’s Abu Dhabi Crude Oil Pipeline can handle some overflow—but nowhere near enough to replace full Strait capacity. When Hormuz is disrupted, there is no clean Plan B.

A serious, sustained shutdown doesn’t just push oil prices higher. It ripples into inflation, slows growth, and tightens financial conditions globally. That’s the transmission mechanism markets are pricing right now.

What Iran Has Actually Done

In the first two weeks of the conflict, Iran imposed a systematic blockade of the Strait of Hormuz. On March 2, an IRGC official formally declared the Strait closed. By March 11, daily vessel crossings had collapsed from the normal 35–40 transits to just two—a greater than 95% drop in traffic. (Source: Windward AI Maritime Intelligence Daily, March 12, 2026.) The IRGC struck more than a dozen commercial vessels regardless of flag or nationality, and war-risk insurance was effectively withdrawn by most underwriters. U.S. Central Command confirmed it destroyed 16 Iranian minelayers near the Strait on March 11.

Between March 17 and March 19, Iran dramatically widened its attacks on Gulf energy infrastructure and military installations across at least six countries. (Source: Long War Journal, March 20, 2026.) The IRGC launched hundreds of drones, dozens of ballistic missiles, and multiple rocket attacks targeting Saudi Arabia, the UAE, Kuwait, Qatar, Bahrain, and Iraq.

The strikes hit critical energy infrastructure for the first time. On March 19, a drone struck Saudi Arabia’s SAMREF oil refinery in Yanbu, on the Red Sea coast—far from the Strait of Hormuz and well outside the conflict’s initial geographic footprint. The same day, drones struck operational units at Kuwait’s Mina al Ahmadi and Mina al Abdullah refineries, igniting small fires. In the UAE, missiles targeted the Habshan gas facility and the Bab oil field, forcing both to shut after sustaining debris damage. A projectile struck near Al Minhad Air Base in Dubai on March 18, sparking a fire and damaging facilities. (Sources: Long War Journal; AP News, March 2026.)

In total, Bahrain reported intercepting 143 missiles and 242 drones since February 28. Iran announced its 70th wave of strikes by March 21. The International Maritime Organization reported more than 3,000 vessels immobilized in the Middle East, with the Persian Gulf effectively a holding area for ships awaiting resolution.

Iraq declared force majeure on all oilfields. The combination of direct attacks on production and refining infrastructure—not just shipping—marked a significant escalation from the initial Strait closure, raising the stakes for a broader supply disruption beyond the chokepoint itself.

Meanwhile, a limited number of vessels have begun transiting the Strait under Iranian authorization—a development that is reshaping the geopolitics of the blockade. According to Lloyd’s List, at least ten ships have navigated a corridor through Iranian waters near Larak Island, monitored by the IRGC and port authorities. (Source: The New York Times, March 20, 2026.) Iran has granted passage to vessels from China, India, Pakistan, and Turkey on a case-by-case basis, and announced on March 20 that Japanese ships would also be permitted. (Source: Al Jazeera, March 21, 2026.) Iran is reportedly negotiating with eight countries outside the Middle East to allow tanker passage on the condition that oil is traded in Chinese yuan—a move that, if formalized, would create a politically segmented transit regime unprecedented in modern maritime history. (Source: CNN, via Chosun Ilbo, March 18, 2026.) Iraq is coordinating with Tehran to facilitate its own oil tanker passage, and India confirmed two LPG tankers successfully transited the Strait on March 15 after direct negotiations. (Source: Reuters, March 16, 2026.) On the diplomatic front, the UK, France, Germany, Italy, the Netherlands, Japan, and Canada issued a joint statement condemning Iran’s attacks on commercial vessels and expressing readiness to contribute to efforts ensuring safe passage. (Source: Naval News, March 19, 2026.) However, even if Iran establishes a formal framework for permitting ships to pass, the trickle of approved transits falls far short of the 35–40 daily crossings needed to satisfy global oil and gas demand. The Treasury’s decision on March 20 to lift sanctions on approximately 140 million barrels of Iranian oil stranded on tankers at sea represents a separate effort to ease supply constraints. Treasury Secretary Bessent described this as “10 days to two weeks of supply” that could reach Asian ports within three to four days. (Source: Reuters, March 19–20, 2026; U.S. Energy Secretary Chris Wright via Reuters.)

WTI & Brent Crude Oil Futures — Key Price Levels (as of close of business, March 20, 2026) WTI Crude Oil (NYMEX April '26 Futures) Pre-conflict close (Feb 27): $67.00/bbl Conflict intraday peak (Mar 9, overnight):  $119.48/bbl     (+78.3% from pre-conflict) Friday March 13 close: $98.71/bbl Friday March 20 close: $98.32/bbl     (+46.7% vs. pre-conflict) Down from peak:     -$21.16/bbl  (-17.7% from the Mar 9 high) Brent Crude Oil (ICE May '26 Futures) Pre-conflict close (Feb 27): $72.50/bbl Conflict intraday peak (Mar 9, overnight):  $119.50/bbl     (+64.8% from pre-conflict) Friday March 13 close: $103.14/bbl Friday March 20 close: $112.19/bbl     (+54.7% vs. pre-conflict) Down from peak:     -$7.31/bbl  (-6.1% from the Mar 9 high) Sources: CME Group (WTI NYMEX April settlement); Yahoo Finance / ICE (Brent May futures); CNBC (Mar 9 intraday peak confirmation). WTI 52-week range: $54.98–$119.48.

Oil diverged sharply this week. WTI held roughly steady near $98, while Brent surged to $112 as direct attacks on Gulf production and refining infrastructure raised the specter of broader supply disruption beyond just the Strait closure. The Brent-WTI spread widened to nearly $14—reflecting the international market’s more acute exposure to Gulf supply. The Treasury’s decision to lift sanctions on Iranian oil at sea on Friday—potentially releasing roughly 140 million barrels—is a new policy tool, alongside the earlier IEA reserve release of 400 million barrels.

The risk premium for WTI is now approximately $31 per barrel. The risk premium is calculated as the difference between the current market price and an estimate of where oil would trade based on supply-and-demand fundamentals absent the geopolitical disruption—in this case, the pre-conflict close of $67 per barrel for WTI serves as the baseline. (Source: Capital Economics methodology; pre-conflict WTI close per CME Group.) For Brent, the premium has actually increased to nearly $40 per barrel as Iran’s attacks on refineries and production facilities added a new dimension of supply risk beyond the Strait blockade. That premium will compress rapidly if and when credible evidence of Strait reopening emerges, and it represents both the near-term headwind for inflation and the near-term catalyst for an equity rally when it eventually unwinds.

What This Is Doing to Markets

The S&P 500 is now down 5.4% since the conflict began and closed below its 200-day moving average for the first time in 10 months. Oil has NOT pulled back as expected—WTI held near $98 while Brent surged to $112 as Iran’s attacks on energy infrastructure widened. The question is no longer just about the Strait. It’s about whether Iran can sustain direct attacks on Gulf production and refining capacity—a risk the market had not previously priced in.

How $100 Oil Moves Through the Economy

At roughly 47–55% above pre-conflict levels (WTI at $98, Brent at $112), the pressure from elevated oil prices continues to spread:

• Transportation and logistics costs rise immediately, hitting retailers, manufacturers, and food supply chains.
• National average gasoline prices hit $3.91 per gallon as of March 20, up 93 cents since February 28—a direct and immediate hit to consumer purchasing power. Three states now exceed $5 per gallon (California, Washington, Hawaii) and six more exceed $4. Analysts at Pantheon Macroeconomics project the national average could reach $4.20 in the near term at current oil prices. (Source: AAA/Investopedia.)
• Airline, trucking, and shipping stocks face margin compression unless costs can be passed through.
• The Federal Reserve faces a stagflationary dilemma: inflation driven by an external supply shock, not domestic demand—making rate cuts politically difficult and rate hikes economically counterproductive.
• The Federal Reserve held rates at 3.50%–3.75% on March 18 and raised its core PCE inflation forecast to 2.7% for 2026 (up from 2.5% in December). Fed Chair Powell emphasized “uncertainty” from the oil crisis and indicated insufficient progress on inflation. The median FOMC projection now calls for only one rate cut in 2026. The 10-year Treasury yield surged to 4.39% on March 20, reflecting the market’s recalibration of rate expectations.
• International markets, particularly in Asia and Europe which are heavily dependent on Middle East crude, face even more acute pressure.

There is one period in history where a sustained, politically motivated oil supply cut turned into a multi-year bear market and a decade of inflation. The key question is whether the current situation rhymes with that—or whether the world has changed enough that it doesn’t. We address that directly in the section below.

What History Tells Us: Wars and Markets

Conflict is unsettling, but markets have seen a lot of it. The table below covers every major oil-related conflict in modern history. The pattern holds up pretty consistently: sharp short-term pain, then recovery. A few episodes stand out as reminders of what can go wrong when a supply shock is severe and prolonged.

The Gulf War (1990–1991)

When Iraq invaded Kuwait in August 1990, oil jumped nearly 57% in 30 days and the S&P 500 fell more than 10%. But once Desert Storm launched and it became clear that Gulf infrastructure would be protected, the risk premium collapsed almost overnight. Oil fell sharply. The stock market bottomed before the fighting even ended and rallied hard through 1991.

The read-through today: what matters most isn’t how bad things look at peak fear—it’s the moment when the Strait threat is credibly neutralized. That’s when the premium unwinds.

The Iraq War (2003)

By the time the U.S. invaded in March 2003, markets had already priced in the war. Oil actually fell from $36 to around $26 in the first two weeks once the uncertainty lifted. The S&P 500 was up 2.4% a month later. The lesson: markets hate uncertainty more than they hate bad news. Once the path becomes clearer, risk premiums tend to compress quickly.

Russia’s Invasion of Ukraine (2022)

Oil surged past $100 and the S&P 500 dropped more than 7% in the weeks after the invasion. Within a month, equities had fully recovered—even as oil stayed elevated. The energy shock lasted; the equity shock did not.

S&P 500 Returns Around Conflicts With Oil Supply Disruptions

Date	Conflict	1 Week	30 Days	90 Days	180 Days	1 Year
October 19, 1973	Arab Oil Embargo	-0.3%	-13.8%	-22.5%	-30.1%	-43.3%
October 29, 1956	Suez Crisis	1.2%	-3.2%	-3.0%	-1.8%	-12.9%
February 11, 1979	Iranian Revolution	0.9%	1.8%	0.7%	7.8%	20.4%
August 2, 1990	Gulf War (Iraq Inv. Kuwait)	-1.1%	-10.0%	-5.0%	7.4%	21.4%
January 17, 1991	Desert Storm	2.1%	11.0%	11.0%	18.2%	16.6%
March 19, 2003	Iraq War	0.8%	1.7%	15.5%	15.6%	27.0%
February 24, 2022	Ukraine / Russia	1.7%	5.4%	-1.8%	-3.5%	-6.4%
February 28, 2026	Iran War (Op. Epic Fury)	-1.9%	TBD	TBD	TBD	TBD

Source: Vistamark Investments Research. Past performance is not indicative of future results.

Every episode is different. But the table above—covering only the conflicts that involved actual oil supply disruptions—shows that even in the most energy-sensitive events, the market tends to find its footing. The one exception is instructive, and we address it in the next section.

1973 and the Strait: What That Crisis Can and Can’t Tell Us

What Happened

In October 1973, Arab members of OPEC cut off oil exports to the U.S. and several Western allies in retaliation for supporting Israel in the Yom Kippur War. The embargo ran until March 1974. It didn’t close the Strait of Hormuz—but it accomplished something economically similar: it severed a supply line that the Western world had no real backup for.

The U.S. was importing about 30% of its oil at the time, and the entire economy had been built around the assumption that petroleum would always be cheap and available. (Source: Council on Foreign Relations, “Oil Dependence and U.S. Foreign Policy.”) There was no strategic reserve, no shale industry, no global LNG network to reroute supply. When the taps closed, there was genuinely nothing to replace what was lost.

Oil prices went from $2.90 a barrel to $11.65 by January 1974—nearly a fourfold increase in a matter of months. (Source: Federal Reserve History, “Oil Shock of 1973–74.”) Gas lines stretched around blocks. The government rationed fuel. Airlines cut routes. The price shock is estimated to have shrunk the U.S. economy by about 2.5% and triggered a severe recession that ran through 1975. (Source: CSIS, “The Arab Oil Embargo—40 Years Later.”) Equity markets didn’t fully recover in real terms for nearly a decade.

The deeper damage came from what followed: a decade of stagflation. The Fed had no good options. Raise rates to fight inflation and you deepened the recession. Hold rates steady and inflation entrenched. That trapped policy environment is what turned a supply shock into a lost decade for investors.

Why a Repeat Is Unlikely—and What’s Still Worth Watching

The world looks fundamentally different today, and those differences matter a lot for how this plays out.

Where Things Have Changed

In 1973, the Persian Gulf produced roughly 37% of global oil and dominated international trade flows. (Source: The Geography of Transport Systems / Dr. Jean-Paul Rodrigue, Texas A&M; OPEC data showing OPEC’s share peaked at 52% of world production in 1973.) Today that concentration has eased considerably:

• The U.S. now produces approximately 13.7 million barrels per day. Weekly EIA data shows output held near 13.7 million bpd through February, and while production dipped slightly to 13.67 million bpd in the week ending March 13—a modest decline likely tied to logistical disruptions rather than field shutdowns—the EIA’s March Short-Term Energy Outlook projects that higher oil prices will support increased drilling activity, pushing 2027 output to 13.8 million bpd. (Source: EIA Weekly Petroleum Status Report, March 18, 2026; EIA March STEO.) That’s a complete reversal from 1973. The shale revolution didn’t just reduce U.S. import dependence—it made America a net exporter. A Hormuz closure hurts U.S. consumers through global price effects, but it doesn’t cut off our supply.
• North America now accounts for about 30% of global oil output. (Source: Visual Capitalist / EIA, 2025.) Russia, Canada, Brazil, Norway, and Guyana have all become serious producers. The Gulf’s share of world supply has shrunk meaningfully from its 1973 peak.
• Strategic reserves exist now because of 1973. The IEA was created specifically in response to that crisis. The U.S. SPR held about 415 million barrels entering 2026, and the IEA has already committed to releasing 400 million barrels collectively—the largest coordinated release in history. (Source: U.S. Department of Energy / EIA.) That’s not a permanent fix, but it buys time in a way that simply didn’t exist fifty years ago.
• Oil’s role in the economy has narrowed. In 1973, oil powered electricity generation across the developed world. Today it’s concentrated in transportation and petrochemicals. That limits how broadly a price spike spreads through the economy.

What Hasn’t Changed

The Gulf still matters enormously. The GCC states produce about 22% of global oil supply, and the broader Gulf region including Iraq and Iran accounts for roughly 31% of world output. (Source: Gulf International Forum, “What the Data Tells Us About Hydrocarbon-Producing States,” 2025.) More importantly, these countries hold most of the world’s spare production capacity. They are the swing producers the market has always relied on to fill gaps. In the current conflict, that spare capacity is effectively offline.

Asia is also more exposed than the headline numbers suggest. Japan and South Korea get more than 80% of their oil from the Middle East. China’s Gulf dependency runs 40–45% even accounting for Russian pipeline supply. A prolonged Hormuz shutdown doesn’t just pinch Gulf producers—it slows Asian manufacturing, which flows back into global supply chains and U.S. corporate earnings. In 2024, the Strait handled more than a quarter of all seaborne oil trade. (Source: U.S. Energy Information Administration, 2025.) That number hasn’t shrunk the way the Gulf’s production share has.

A 1973-style lost decade is unlikely because the structural conditions that made that crisis so severe—extreme U.S. import dependency, no backup supply, no policy tools, an economy running entirely on cheap oil—no longer exist in the same form. But a meaningful energy shock with real inflation consequences is already underway, and how long the Strait stays effectively closed will determine how bad it gets. That’s the variable we’re watching most closely.

Three Ways This Could Go

Everything flows from one question: how long does the Strait stay effectively closed?

Scenario 1 — Hormuz Reopens, Conflict Winds Down

U.S. naval forces neutralize Iran’s ability to threaten shipping, the conflict moves toward some kind of endpoint, and tanker traffic resumes. Oil falls sharply—probably back toward $80–$85—as the risk premium unwinds. The S&P 500 recovers recent losses. This is the 1991 Desert Storm playbook, and it’s what markets would reward immediately. Trump’s “winding down” comments and the Treasury’s sanctions relief on Iranian oil at sea provided the first concrete signals of potential de-escalation—but markets await actions, not words.

Scenario 2 — Partial Disruption Drags On (Our Base Case)

Shipping stays constrained but not fully blocked. Oil holds in the $95–$120 range, with Brent’s move to $112 reflecting the escalation of attacks on production infrastructure—a new risk dimension. Inflation picks up but doesn’t spiral. Equities stay roughly 5–10% below pre-conflict levels while markets wait for resolution. Duration: another 3–7 weeks. Uncomfortable, but manageable.

Scenario 3 — Full Blockade, Extended (Tail Risk)

The Strait stays effectively closed for months. Oil moves sustainably above $120. Inflation re-accelerates and the labor market deteriorates simultaneously—the hallmarks of stagflation. Ed Yardeni of Yardeni Research has raised the probability of a 1970s-style stagflationary outcome to 35% for 2026. (Source: Fortune, March 9, 2026.) Goldman Sachs has lifted its 12-month U.S. recession probability to 25%, up from 20%, citing upside risks to oil and a weakening labor market. (Source: Goldman Sachs via Fortune, March 12, 2026.) BCA Research places the odds higher, at 40%. Oxford Economics estimates that a sustained spike to $140 per barrel for two months could push parts of the global economy into a mild recession. (Source: Business Insider, March 13, 2026.) The European Central Bank has warned that a prolonged conflict could trigger stagflation and push energy-dependent economies like Germany and Italy into technical recession by year-end. The Fed would face its worst policy dilemma since the 1970s: an economy needing stimulus while inflation demands restraint. This is a fat-tail risk, not a base case—but it is the scenario that would most fundamentally alter the investment landscape from one of patience to one of defensive repositioning.

What We’re Watching

• Hormuz tanker traffic (still the primary indicator; 3,000+ vessels immobilized). The Windward AI maritime tracker and AIS vessel data provide near-live reads on whether the Strait is reopening in any meaningful way.
• Oil price and the risk premium: WTI premium ~$31/bbl, Brent premium ~$40/bbl. Brent’s widening premium signals the market is now pricing infrastructure attacks beyond the Strait.
• The 200-day moving average: S&P 500 broke below 6,618 for the first time in 10 months. Technical analysts note the next support at 6,500; if that fails, 6,350 (10% correction from highs) is the next major level.
• Credit spreads (more below).
• Coalition formation: Whether allies (UK, France, Japan, Canada, and others) move from rhetoric to actual naval deployments for Strait security.
• The Fed’s next move: Rate held at 3.50–3.75%, 1 cut forecast for 2026, core PCE now 2.7%. Any further hawkish shift would compound the equity downturn.
• Trump’s “winding down” follow-through: Words vs. actions. The simultaneous deployment of 2,200 more Marines contradicts the wind-down rhetoric.

Upcoming Macroeconomic Events: Week of March 22

• Tuesday 3/24: S&P Global Flash PMIs (manufacturing, services, composite), Richmond Fed Manufacturing
• Wednesday 3/25: Import/Export Prices, EIA Weekly Oil Inventories (crude builds and gasoline draws will be watched closely), Current Account
• Thursday 3/26: Initial Jobless Claims, 30-Year Mortgage Rate
• Friday 3/27: University of Michigan Consumer Sentiment Final (preliminary came in at 55.5—the lowest since late 2022; inflation expectations at 3.4% are at their highest since 2023), Baker Hughes Oil Rig Count

Note: PCE inflation data (next release April 9) and the March CPI (not yet scheduled but expected mid-April) will be the first reports to fully capture the energy price spike. These will be the most important inflation readings of the year for the Fed.

Credit Spreads: What the Bond Market Is Telling Us

Credit spreads—the extra yield investors demand to hold corporate bonds instead of Treasuries—are one of the more reliable real-time signals of genuine financial stress. Equity markets react fast and ask questions later. The bond market tends to be slower and more deliberate, which makes it a better barometer of whether the economy is actually breaking.

So far, the bond market isn’t panicking. Spreads have widened since the conflict began, but the move has been measured, not alarming.

Investment grade corporate spreads (ICE BofA US Corporate Index OAS) are running at about 90 basis points as of March 19—essentially flat since our last update and still within normal range. The initial widening from 85–90 bps to 93–94 bps in the first week of the conflict has partially reversed, suggesting the investment-grade bond market views the disruption as transitory. (Source: ICE Data Indices / FRED.)

High yield spreads have widened further. The ICE BofA US High Yield Index OAS is now at 3.27%—up about 57 basis points from 2026 lows and modestly wider than the 3.1% we noted last week. (Source: ICE Data Indices / FRED.) Still well below the 5–6% historical average that signals real default risk.

The most telling signal is in the lower-rated debt. CCC and below spreads have widened, but there’s been no spike of the kind that typically precedes a default cycle. Blackrock briefly capped withdrawals from one private credit fund in early March, which got attention—but there’s been no broad contagion into the liquid credit markets.

Stocks are worried. Bonds may be starting to show signs of worry. That gap between equities and credit remains important—but it narrowed this week, and the direction matters as much as the level. The 10-year Treasury yield surged to 4.39% on March 20, up 14 basis points in a single session—a sharp move that reflects the market digesting the Fed’s hawkish hold and the realization that rate cuts are being pushed further into the future. Rising yields in a risk-off environment is an unusual and uncomfortable combination.

Our Message to You

Oil near $100 WTI and $112 Brent, a widening war with Iran striking energy infrastructure across six Gulf states, an S&P 500 that just broke below its 200-day moving average for the first time in 10 months, the Fed raising its inflation forecast, and Trump sending mixed signals about winding down—markets have even more to process than they did a week ago.

But: the evidence still points toward a disruption that is serious and manageable, not a structural break. Credit markets agree. The Treasury’s decision to lift sanctions on Iranian oil at sea and the IEA’s reserve release show that policy tools are being deployed. The historical record from every major oil-related conflict supports patience. And the 200-day moving average, while a significant technical event, has historically been a poor sell signal when breached in the context of geopolitical fear rather than deteriorating fundamentals.

Our VistaBuilder™ and VistaBalancer™ systems will be running scenario stress tests continuously— including the likely global economic and financial markets impact of a full Hormuz disruption — and will rebalance portfolios efficiently as new information emerges. Where we see opportunity, we will make targeted adjustments; where we see elevated uncompensated risk, we will reduce exposure. We will not make sweeping changes based on headlines. If the Strait of Hormuz situation escalates, the market impact could be significant, and if that happens, our systems will be positioned to respond quickly. We will update you if and when conditions develop materially.

As always, please reach out directly if you have questions about your portfolio or would like to discuss the current environment as it relates to our portfolio in more detail.

Matthew Rice, CFA, CAIA

Managing Partner, Chief Investment Officer

mrice@vistamarkllc.com  |   312-895-3001

 This communication is for informational purposes only and does not constitute investment advice, a solicitation, or an offer to buy or sell any security. Past performance is not indicative of future results. Investing involves risk, including the possible loss of principal. Please consult your Vistamark advisor regarding your individual circumstances.