The Fed is caught between a slowing economy and an oil-driven inflation shock – the same trap that’s caused recessions in 1974, 1980, 1991, and 2008
Historical record is damning: the Fed made the wrong policy call in 8 out of 12 quarters during oil shocks since 1973
Leading indicators falling 3.7% annually while coincident indicators grow just 0.9% – signals say the Fed should already be cutting
But oil surging toward $88 could push inflation from 2.4% to 5% – making cuts politically and economically impossible
Kevin Warsh takes over from Powell in May, inheriting the worst possible starting hand for a new Fed Chair
CME FedWatch shows less than 4% chance of a March cut, rate cuts pushed to September at the earliest
Bond options traders are now betting the Fed may not cut at all in 2026 – some positioning for potential hikes
Gasoline jumped 11 cents in one day to $3.11 per gallon – the largest single-day increase since Hurricane Katrina in 2005

∙ Monday’s dead cat bounce evaporated overnight – S&P futures down 2%, Nasdaq -2.5%, Dow losing nearly 1,000 points pre-market
∙ Europe getting demolished: DAX -4.3%, STOXX 600 biggest 2-day drop since April, every single sector red
∙ KOSPI plunged 7.4% in catch-up trade – Asia/Pacific all deep red across the board
∙ Iran struck the U.S. Embassy in Riyadh with drones – Trump now says operations could last weeks
∙ Amazon AWS data centres in UAE and Bahrain physically hit by Iranian drones – first military strike on major U.S. tech infrastructure ever
∙ QatarEnergy shut LNG production indefinitely after Iranian attacks – European natural gas surged 34%
∙ Oil continues climbing: WTI $76.19 (+7%), Brent $80.49 (+7.2%) – Rabobank sees Hormuz disrupted for weeks to months
∙ Bitcoin erased Monday’s bounce to $70K, back down to $66,300 as risk-off returns with force

∙ U.S. and Israel launched coordinated strikes across Iran including Tehran – Trump called it “major combat operations” under Operation Epic Fury
∙ Iran retaliating with missiles at Israel and U.S. bases across the Gulf – Qatar, UAE, Kuwait, Bahrain, Jordan all reporting explosions
∙ IRGC has radioed closure of the Strait of Hormuz – roughly 20% of global oil supply transits this chokepoint
∙ Bitcoin dumped 6% to $63,000 as the only liquid risk asset trading over the weekend – $515M+ in liquidations
∙ JP Morgan estimates full Hormuz blockade could push oil past $120-130/barrel – currently around $70
∙ Stock and bond markets closed until Sunday night futures – Monday’s open is where the real repricing begins
∙ I’ve been warning about the seasonal crash window – this is exactly the kind of catalyst that turns corrections into crashes

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Michael Burry just bet $1.1 billion against AI giants. Tech stocks tanked. The real contagion risk isn’t AI valuations—it’s that when the Magnificent Seven sneeze, the entire market catches pneumonia. Here’s what we discovered trading through the chaos.