Oil Is Driving Everything
Still stuck
SPX's eternal range stays intact. With equities stuck in a range, the real action continues to come from oil and the macro shock it is sending across assets.
Source: LSEG Workspace
All about oil
SPX and oil moving in pretty much perfect inverse tandem. Correlations since March 4th around 96%.
Source: LSEG Workspace
The crowd
Bullish bets are at the highest levels since 2020. Let's see if the crowd proves to be the crowd once again.
Source: Bloomberg
Computers love it
CTAs have added aggressively to oil longs. These strategies are not debating fundamentals, they simply follow momentum, and momentum works both ways.
Source: Menthor Q
OVX reversal?
Oil volatility (OVX) is seeing its biggest down move since the latest oil panic began. As we explained earlier today, a pause or reversal in spot would quickly expose just how expensive theta is at these levels, potentially accelerating downside selling. Latest notes on oil here and here.
Source: LSEG Workspace
Size buying
Global emerging market funds are buying EM equities at the fastest annual pace in two decades. More on EM and the oil connection here.
Source: GS
Inflation tsunami
Peter Berezin: "Europe, and to a lesser extent the US, are about to be hit by an inflation tsunami."
Source: BCA
Kicking Europe when it’s already down
Goldman's model suggests the energy shock will reduce growth by roughly 0.3–0.4pp this year.
GS: "We have lowered our 2026 GDP growth forecast for the euro area by about 0.4pp and increased our inflation forecast by roughly 0.8pp." Full note here.
Source: Goldman
Financials positioning
Financials positioning took a huge leg down last week in the Deutsche Bank positioning indicator. 2nd percentile - extreme. More here.
Source: Deutsche Bank
No edge hedge
Gold has not behaved like a global hedge lately, even though many still cling to that narrative. Markets evolve, and recognizing when an asset’s behavior changes is critical. Trading yesterday’s narrative is trading with no edge. More on gold here.
