Dire Straits No More...?

Tl;dr: There was blood in the streets as futures opened last night with oil up 25-30% (depending on regional measure), stocks puking, dollar safe-haven panic bid, and TSY yields surging as everything was sold to cover margin calls and de-gross. Chatter of a coordinated SPR release (that failed to actually appear) prompted some calm to return and with the help of retail and 0-DTE traders, the machines lifted stocks back to unchanged, oil plunged back to unchanged, bonds were bid to unch, dollar fell to unch.

All of which prompted one bright spark from a Manhattan trading floor to remark to us: "do these fucking idiots think it's over? ... did [they] turn oil into a meme stock?"

Then President Trump talked to CBS and saved the day...

Dire Straits No More...

Update: everything accelerated with Trump's reported comments to a CBS reporter that 

“I think the war is very complete, pretty much. They have no navy, no communications, they’ve got no Air Force.”

He added that the U.S. is “very far” ahead of his initial 4-5 week estimated time frame.

So far, so normal... as the historical precedent for geopolitical crisis appears to be playing out (surge in oil, drop in stocks lasts briefly before 'action' prompts a reverse). During seven geopolitical risk episodes since 1950, the S&P 500 declined by an average of 4% in the first week but recovered within the subsequent month...

But, the question is - as we have highlighted numerous times in the last week - how long will it last? The market (stocks and oil) appear to have decided the "four-six weeks" estimate from The White House is overdone and it's time to front-run the Endgame.

Today's reversal appears to have been triggered (at least from a headline perspective) by the jawboning (and notably lack of actual action) by the G-7 leaders over their stance that - any minute now - they 'stand ready' to unleash a holy hell of SPR releases to tamp down the fire of global recession risks driven by exploding oil prices.

WTI went out around 30% off its overnight highs by the settle (tumbling deep into the red on Trump's comments)...

We would expect to see these on-again, off-again headlines, throwing strawmen estimates of the size and scale of any actual release to force weak long hands out of the market and calm oil volatility (if only a bit as oil vol remained higher on the day)...

While on the topic of oil - which appears to be all that matters for now, Bloomberg's ETF guru, Eric Balchunas, noted earlier, USO (the US Oil ETF) has broken its all time daily volume record. "Dwarfing the volume it saw in 2020 and 2022. Prob mix of pro traders and retail degens. While it is arguably the most sensitive equity(esque) to price of oil, the  roll costs will eat you up long term - not to mention potential for sharp reversal - so be careful out there..."

Did retail just get trapped long? USO puked hard, then dead-cat-bounced, then 

As a reminder, Goldman noted four drivers behind the oil pressure:

1) we estimate that shipments going through the Strait of Hormuz are down 90% from normal, curtailing 18mbpd from the global market (~18% of global oil);

2) 25% of the theoretical redirection of oil in the Middle East through pipelines is being currently achieved -- partly due to physical disruptions;

3) there are no quick-shipping solutions and most shippers are in 'wait-and-see' mode 

4) oil prices may need to go to demand destruction levels even more quickly than history and simple models focusing on Persian Gulf exports only suggest.

And adding supply via a global SPR release solves none of those (especially given the lack of scale and transport), but nevertheless, the jawboning of 'some intervention' and Trump's scolding last night that "only fools" would believe oil will remain elevated appears to have worked... for now.

Nevertheless, equities followed the inverse of oil, ramping back to unchanged from an ugly overnight open.

Late-day HLs: "*TRUMP SAYS WAR COULD BE OVER SOON: CBS" and "*TRUMP SAYS US VERY FAR AHEAD OF 4-5 WEEK TIME FRAME: CBS"...

NEW—In a phone interview, President Trump told me the war could be over soon: “I think the war is very complete, pretty much. They have no navy, no communications, they’ve got no Air Force.” He added that the U.S. is “very far” ahead of his initial 4-5 week estimated time frame.

— Weijia Jiang (@weijia) March 9, 2026

...prompted a strong bid in the last hour in stocks, smashing all the majors strongly into the green led by Nasdaq. Small Caps went from down over 4% to up over 1%...

The Nasdaq is now almost unchanged since the start of the war...

Bear in mind that before Trump's comments, this was NOT a full-throated rush back in as Goldman's traders pointed out that overall desk activity levels were muted at a 2 out of 10, with a small buy skew

• LOs are 5% better for sale on smaller notionals. Selling Fins and Consumer Discretionary

• HFs are 6% better to buy. Buying TMT and Industrials. 

Bring back strong memories of the put-selling-driven ramps of early last week, as evidence by positive-delta flow via outs from 0-DTE traders...

Moves under the surface are muted today – none of Goldman's baskets or stocks in the S&P saw 3 sigma moves. 

• Top of screens:  Data Centers (GSTMTDAT) +280bps, Nuclear (GSXURANI) +148bps, Biotech (GSX1BIOT) +80bps.

• Bottom of screens: Retail (GSX1RETL) -245bps, Homebuilders (GSXUBLDR) -290bps, Physical Assets (GSXEPHYS) -170bps. 

Gamma and Positioning

But as Bloomberg macro strategist, Simon White, noted however, the underlying dynamics have shifted in a way that leaves the market in a more treacherous position.

Option dealers are now more likely to be forced to be net sellers into falling markets to hedge their positions. In a market that is trending higher, investors tend to sell calls a little above spot price, while their puts, acting as insurance, are further out of the money. This type of behaviour, ie when gamma is positive, leads dealers to buy after declines and sell after rallies, stabilising the market. But when prices start to fall, call selling tails off, and the delta of existing calls falls to zero. Put hedging starts to dominate as the puts become more in the money, and dealers must sell to hedge. This is a gamma-negative regime, and one we are now in.

Crucially, given today's high velocity move in stocks and oil, Goldman trader John Flood notes that this market has proven it has the ability to move violently in both directions with dealers short gamma right now.

However, right tail (squeeze) risk at the index level is primed to be the most extreme (what we are witnessing right now after the 2 headlines above).

HF gross leverage is essentially at an all time high driven by continued shorting (hedging) via macro products.

Per GSPB short exposure in US Macro Products (Index + ETF) - as % of total US Gross MV on our Prime book - now stands at the highest level since Sep '22 and ranks in the 93rd percentile vs. the past five years.

Every Other Asset Class Reversed Too...

Treasury yields tumbled from being up as much as 8bps overnight to end lower across the curve (accelerated lower on Trump's comments)

Tick for tick with crude...

The dollar reversed its overnight spike and tumbled into the red on Trump's comments...

Gold rallied back up towards $5150 as the dollar fell...

And Crypto was bid all day off the initial futures opening triggered drop, with Bitcoin back above $69,000...

Finally, as a reminder, given Trump's proclamations, Goldman's Shreeti Kapa warns (in addition to the Iran-dominated headlines):

...we remain in a uniquely challenging risk environment.

• War in the middle-east is raging on,

• inflation remains sticky & now faces a supply shock,

• labor market is stalling,

• fed is boxed in,

• tariff policy is in legal chaos,

• stress in private credit markets,

• AI dispersion & disruption risks,

• hyperscaler capex vs ROI problem & cash flow concerns,

• data-center obsolescence/stranded assets risks &,

• the remarkably consistent ‘pre-midterm election weakness’

To add on, the technical picture is challenging as well:

• dealers are short gamma,

• implied volatility is high,

• liquidity is low,

• and positioning is still elevated.

All this with the backdrop that we have been in an extraordinary equity bull market since the pandemic & valuations & market concentration leave little room for error.

But, for now, as we noted at the beginning, 'some fools' believe it's all over.