Let's get to the big story breakdown while US stock futures are lower this morning and this has come on the heels of the latest CPI figures.
Meanwhile, the Iran and the Iranian conflict keeping traders on edge after another historically all day in the oil markets.
Now the slide and roller coaster ride driven by hopes of a coordinated strategic reserve release and comments from Trump signaling a limit to the hostilities as well as comments from the administration.
But the pain is already being felt at the pump.
The national average for gas has risen around 19% since the end of February.
Well joining me this morning to weigh in is Jonathan Corpina, Senior Managing Partner at Meridian Equity Partners.
Jonathan, good morning.
Thank you so much for joining me.
Good morning.
Well, geopolitics, oil prices and inflation are taking center stage.
So what do you expect to see in the near term?
Yes, I think you just said it that those items are center stage and they're going to be center stage at this point right now.
The headlines that we've had.
Over the last 10 days as far as the conflict coming out in Iran is forefront.
It's kind of pushed everything else to the side.
We have to remember we get our economic data, we get earnings, we get corporate headlines, and those things are important because without these Iranian headlines we would be talking about that stuff.
So we can't forget about that.
But right now our market is being driven by the sentiment of what's occurring in the Middle East, how that plays out, how long that.
Plays out, you know, we can see throughout the day when we get these headlines coming out of Washington or coming out of Iran of what's going on and how the market fluctuates so quickly off of that telling me this market is just waiting for more information.
This conflict we knew we were getting into this, right?
We've been talking for weeks and weeks about positioning fleets and how embassies were calling back employees so this was very well orchestrated.
This was Out there I think the question of how long is this going to last, how much further is our interaction here, the comments of boots on the ground, does that happen, does that not happen, is going to linger as this continues to play a longer term role in what's going on.
So I do feel our markets are going to continue to be volatile.
We're clearly watching our oil prices and what's occurring there in the strait, how that continues to play out, what the risks.
Of that unfolding is and hopefully we start to see some flow, so to speak, through there but for now we are going to continue to see volatility in our markets.
I do like to see that we had a positive market on Monday.
Yesterday it tried, wasn't successful, but wasn't an ugly day, right?
So to me that was showing a little bit of stability.
It will be interesting just to see how these days play out.
We've seen markets open.
And then rally back or try to rally back.
So it will be interesting to see how this happens today, how it unplays in front of us today.
Yes, Jonathan, as you mentioned, there are a lot of moving parts here and while we continue to monitor the headlines, we just monitor the volatility across all asset classes, whether we're talking about oil or equities.
So has anything changed when it comes to your bigger picture outlook for this year?
No, nothing has really changed again.
If we weren't talking about this, we'd be going back and talking about interest rates and other geopolitical risks that are out there, earnings season, our economic data, our jobs numbers, so we can't lose sight of kind of the foundation of our economy and our markets.
These occurrences like we're seeing in Iran, these things happen, right?
These are just risks of the world.
But getting back to the start of the year at the end of last year and talking to you about what's the outlook for the year, that shouldn't really change at this point.
Oil prices will come back down right once the strait opens, whenever that is.
Oil prices will come back down.
Hopefully our interaction there doesn't continue to grow.
It de-escalates.
Sentiment will feel a little bit more comfortable once those things start to happen and We'll get back to our conversations about where are interest rates going, where are mortgage rates going.
Are people discretionary spending, how do they feel about the economy?
We'll get back to that conversation and when we do, my sentiment is still the same as it was 36 months ago, right?
Our economy is moving in the right direction.
It's a slow moving ship.
It's going to take a long time for us to navigate back to these comfort levels that we feel comfortable with, that the market feels comfortable with.
Main Street feels comfortable with, so we will get back to there.
We have a new Fed chairman coming in.
What's going to happen with interest rates there?
We see mortgage prices ticking below 6%.
We see refinancing of mortgages starting to come back as these levels come back down.
So it's going to take time again for us to get to a comfort level, and we are going to have these detours along the way like were occurring right now in Iran.
Speaking of which, before the month of March kicked off, we are paying attention to software names.
What was happening across those AI names, and we just got earnings out from Oracle overnight and we are seeing a pop in that stock.
But when it comes to S&P 500 sectors, we know that energy is outperforming up by double digits, while financials are pulling back and is one of the laggards here.
So what do you think of what we're seeing in terms of sectors?
I think we see that rotation in the tech sector when people are feeling good about our markets and feeling good about our economy.
We clearly have seen the impact of what's happening in the Middle East on on our energy.
We're looking at financials.
Financials have been hit hard recently.
I think exposure to private credit, these headlines that we're seeing coming out, let's hope it's.
One-offs here and there.
It's not the tip of the iceberg of a bigger issue that's there, but that feeling that financials are going to remain under pressure for quite some time due to the fact of exposure to private credit and certain writedowns from that is going to be lingering in that area.
So it's all kind of cyclical at this point, I think we're going to have to continue to watch unfortunately in the short term how this unfolds in Iran, but again.
And I just keep urging investors, let's not forget about the fundamentals of our markets, of our economy.
If you took this off the table, right, we'd still be we'd still be trending in that direction where we were coming into this year.
So those fundamentals are still there.
That foundation is still there and less than 60 seconds, but you mentioned private credit and that is all something that we're all paying attention to and as you mentioned.
Might be the tip of the iceberg or as someone has said, if you see one cockroach, there may be many, but what is your take on this?
I think we got to a point in our economy and our banking system, not that this is going to mirror what we've seen before in 2008, 2009, but yes, lending got a little looser and lending was afforded to maybe riskier investors, so we might When you start to see volatility in the market, when you start seeing uncertainty in the market, it then can trickle down to those loans and how those play out.
So we're going to have to wait and see.
Well, we will have to wait and see, and we don't have a crystal ball, but I appreciate your insights today and as always, thank you so much for your perspective.
Thank you Jonathan.
