Double Embargo? Stocks, Consumers Dance in the End Zone (E259)

DoubleLine Portfolio Manager Eric Dhall and Macro Asset Allocation Strategist Ryan Kimmel on April 24 review a market week with U.S. stocks nearing all-time highs (0:56), led by rampaging tech, in the teeth of Washington and Tehran’s “double embargo” of the Persian Gulf. Semiconductor hunger (2:58) fed historic rallies in chipmakers and in the South Korean and Japanese stock markets. Fixed income (4:18) staged no big moves, with investment grade sectors slightly lower amid steepening in the belly of the yield curve. Commodities (6:18) moved higher, led by energy, alongside a stronger dollar and weaker gold. Ryan explains the interesting month-long correlation between two-year Treasury yields and WTI prices. Macro news (8:16) was light for the week. Eric points out that retail sales and S&P Global manufacturing signal a U.S. economy “humming along” notwithstanding the wartime shock to energy prices. With Kevin Warsh having “dodged any flak” during his Tuesday congressional testimony and the Justice Department Friday dropping its investigation of Fed Chair Jerome Powell, “the path is pretty much clear” for Warsh’s succession to the chairmanship, Eric says. For the week ahead (15:05), with Wednesday’s FOMC likely promising a nothing burger for Powell’s last session presiding over the rate-setting body, Eric and Ryan will be on the watch for the S&P Cotality Case-Shiller house price indices, durable goods order, personal income & spending, the PCE Price Index.

Risk assets rallied the week ended April 17, sending stocks (0:43) to all-time highs on the S&P 500 and Nasdaq Composite, while fixed income (4:49) rallied across sectors, led by emerging markets, and across the yield curve. DoubleLine Portfolio Manager Eric Dhall and Asset Allocation Strategist Ryan Kimmel welcome the market driver: signs belligerents in the U.S.-Iran war might de-escalate and re-open the Strait of Hormuz. Eric and Ryan, however, take a wait-and-see stance amid uncertainties on a hope-for road from ceasefire to lasting peace. Within the rally in rates, Eric notes most of the gains occurred within the belly of the yield curve, with minimal easing in the long bond reflecting growing apprehension over America’s deficit and debt benders. Commodities (6:08) were lower on the week, led by energy, but beneath the broad indexes Eric points out areas of appreciation, including in precious and industrial metals as well as agricultural products. Surveying market moves over the breadth of the U.S.-Iran conflict, Ryan highlights that U.S. rates “are still quite a bit away” from their levels “at the start of conflict.” Inflation is still running higher than Federal Reserve targets, crude oil and distillate prices remain higher than before the conflict, and “one-year inflation swaps are 50 basis point higher. I think the market is pricing in a Fed on hold.”

DoubleLine Portfolio Manager Eric Dhall and Analyst Mark Kimbrough analyze two weeks ended April 10 of markets convulsed by the fog of war, then unleashed by a no-less nebulous ceasefire. Macro news similarly was dwarfed by events in and around the Persian Gulf. “This is not an easy market to see through,” Eric comments. “There’s a lot of fog of war, impeding investors’ ability to discern the fair price of securities right now.” As Exhibit #1, Eric cites the dramatic dispersions in stocks (2:18). For example, he points out the selloff in the SP 500 in the wake of the outbreak of war on Feb. 28 and the ferocious rally after the ceasefire announcement. Fixed income (6:56) likewise witnessed a selloff in rates, sending the Bloomberg U.S. Aggregate down about 1 1/2% after the bombs started dropping, but “April to date it’s up 29 basis points,” Eric says. “These competing forces on interest rates are duking it out: the short-term inflationary impulse and the longer-term inflationary impulse from the fiscal overhang because the war costs money and potentially increases deficits.” Commodities (11:24) were no exception to the split-personality markets, surging 34% from Feb. 27 but giving up about 5% in April month-to-date. Mark Kimbrough, while warning “economic data are being dwarfed by the impact of the headlines,” covers the macro reports (15:58) for the past two weeks. These include expected war-related spikes in energy prices and a drop in the U-3 unemployment rate to 4.3%. Mark cautions that the drop in joblessness was largely due to jobseekers dropping out the labor pool. Surveying the release of the March 18 FOMC meeting minutes, Mark sees “more support for the Fed to sit on their hands,” notwithstanding rising hopes among traders for fed funds cuts this year. “The fog of war is the state of ignorance in which commanders find themselves … not only of their enemies, but also of their friends.” Sir Lonsdale Augustus Hale, The Fog of War (1896) “we now see through a glass darkly” Paul of Tarsus, I Corinthians 13:12 (circa 53-55 C.E.)

With the S&P 500 nearing a 10% drawdown from its Jan. 27 closing high, DoubleLine Portfolio Manager Eric Dhall and Macro Asset Allocation Strategist Ryan Kimmel survey the week ended March 27. They start with a stock market with multiple stock sectors (0:30) in the red, energy the only positive sector for the week and month-to-date. Fixed income (3:43) was flat on the Bloomberg Aggregate investment-grade benchmark, albeit with rates higher in the belly of the Treasury curve. Commodities (6:14) as tracked by the BCOM were flat, with the energy sector actually down while agricultural products and industrial metals ended the week in the green. With the caveat that most macro reports (12:42) still have yet to catch up with reality post Iran war, Ryan looks beneath the relatively benign aggregate readings of S&P Global PMI goods and services reports for March and sees higher costs being passed along to consumers. Looking ahead to the Good Friday-abbreviated week of March 30-April 3, Eric is keen to see the March BLS payroll and unemployment reports (due Friday), “the first report that will take into account all the disruption we’ve seen” since the outbreak of Iran conflict.

DoubleLine Portfolio Manager Jeff Mayberry and Analyst Mark Kimbrough survey weakness across equity, fixed income and commodities for the week ended March 20 amid light macro reports, an uncertain Fed and war in the Middle East. For the week’s macro news, Jeff says surging energy costs and concerns over the Persian Gulf wiped out earlier expectations for federal funds rate cuts this year. Mark notes “everything across the board” in the February PPI report “exceeded expectations.” With a light economic calendar for March 23-27, Mark is more interested in the March data coming through in two weeks, showing “the effects of all the volatility we’ve been experiencing the last couple of weeks,”

At the end of a March 9-13 week whipsawed by the fog of war, DoubleLine Portfolio Manager Eric Dhall and Macro Asset Allocation Strategist Ryan Kimmel survey down but not (yet) correcting stocks, higher yields across the curve led by the front end on inflation jitters and energy surging amid rumor-fed price swings. In forex markets, they survey the dollar’s wartime dominance and the yen crushed on Japan and its neighbors’ vulnerability to the interruption liquified natural gas shipments through the Strait of Hormuz. Eric and Ryan cover the week’s macro prints, including the February CPI and January PCE Price Deflator, while cautioning against taking too much stock such rearview readings while the transience or permanence of the present energy shock remains a big unknown. Fed funds futures earlier in the week had priced in zero rate cuts for the remainder of 2026 before ending the week forecasting a single cut. Ryan fields a listener’s question on the revision-plagued nonfarm payrolls series. Looking to the week ahead, macro prints such as the February PPI remain subject to the same potential obsolescence affecting previous releases. Topping Eric and Ryan’s radar screen will be the Federal Open Market Committee meeting and Jerome Powell news conference on Wednesday. “There’s naturally not going to be a cut,” Eric notes. “But there’s going to be a lot of parsing of the language to see the setup for the new Fed chair” after Powell’s term in that seat ends in May and Kevin Warsh presumably takes over as his Senate-confirmed successor.

DoubleLine Portfolio Manager Eric Dhall and Analyst Mark Kimbrough cover a March 2-6 market week rocked by the Feb. 28 outbreak of war in the Middle East, related energy-supply shocks, private credit losses and labor weakness in February. Equities (0:31) sold off across the board with energy the only positive sector for the week with a mere 1% gain. Fixed income (2:52) saw Treasury yields rise across the curve with the exception of a rally in the 3-month T-bill. Bank loans (4:32) were a lone positive note in the spread sectors. Commodity indexes (6:04) surged higher, led by a 25% gain in the energy complex with spikes in oil distillates, notably a 50% surge in diesel for delivery to Europe.   On the macro front (11:16), albeit reflecting activity prior to global economy-roiling events in Iran and the Persian Gulf, ISM goods and services reports were solidly expansionary for February. Import prices ex-petroleum accelerated higher in January. Nonfarm payrolls suffered significant losses in February, even after adjusting for a strike affecting healthcare workers that has since been resolved. The week ahead will include the February CPI (Wednesday) and personal income & spending and PCE for January (Friday).

DoubleLine Portfolio Manager Jeff Mayberry and Fixed Income Allocation Strategist Ryan Kimmel review February performance during the final market week of the month ended Feb. 27. The S&P 500 finished the month down only 1% despite all the negative headlines and volatility. While tech and financials struggled, equities experienced wide dispersion, with the S&P 500 Equal Weight Index marking its biggest outperformance versus its market-weighted sibling since the GFC era. Also of note, a Cetrini paper on a dark AI future for the economy stoked tech sector concerns. Over in fixed income (6:21), the Agg turned in a nice month while a new bankruptcy continued to mount about private credit. Commodities were up on the week and month (10:55), with oil prices impacted by the Iran situation, and Bitcoin (12:31) may have found a floor. It was a light week in Macro Land (13:19), with updates on consumer sentiment; employment; and inflation, with these numbers not going the Fed’s way. Next week’s releases (18:05) will include ISM PMI prints as well as January retail numbers.

DoubleLine Macro Asset Allocation Strategist Ryan Kimmel and Analyst Mark Kimbrough note a rotation (0:05) in favor of communications services and financials as well as industrials in the stock market for the week ended Feb. 20. The previous week’s winners – Old Economy sectors: utilities, materials, consumer staples and real estate – were down this week. In fixed income (4:09), investment grade sectors faced the headwind of a slight rise in yields across the Treasury curve while high yield and bank loans had positive returns. The long bond led yield-curve steepening Friday on the U.S. Supreme Court’s decision to strike down President Trump’s tariffs. Commodities (6:41) moved higher with crude oil up 6%. Among the week’s macro news (8:32), Ryan Kimmel sees positive signs for U.S. manufacturing; but headline and core PCE moving higher in December, decelerating wage and salary growth; and more signs of a K-shaped economy in the University of Michigan consumer sentiment survey for February. Mark Kimbrough spies a “hawkish tilt” in the minutes of the Jan. 28 Federal Open Market Committee meeting. Looking ahead (20:41) to the week of Feb. 23-27, Ryan and Mark will be on the lookout for home price appreciation indexes, the Conference Board’s consumer confidence report, jobless claims and the producer price index for January.

Under the hood of broad stock indexes (00:19) for the week ended Feb. 13, Macro Asset Allocation Strategist Ryan Kimmel and Analyst Mark Kimbrough see ongoing rotation from knowledge-economy sectors such as financials, communication services and tech as well as consumer discretionary into old-economy sectors such as utilities, materials, real estate, consumer staples and energy. These money flows largely continued the stock-market leadership of the prior week. Ryan and Mark also note a change of the guard, year-to-date, in investment styles with equal-weighted large caps outperforming market-weighted large caps and value outperforming growth. In fixed income (4:06), bull curve-flattening lifted the Bloomberg US Aggregate Bond Index, with Agency mortgage-backed securities outperforming investment grade corporates and Treasuries. In risky credits, emerging markets debt kept up with Agency MBS. Commodities (6:54) weakened, while in precious metals, silver stabilized and gold recovered above $5,000 per troy ounce. A heavy week for macro news (8:22), retail goods sales came in somewhat weak. Encouraging news on inflation arrived with the Employment Cost Index for 4Q2025 and the Consumer Price Index for January. Nonfarm payrolls for the month came in unusually strong versus expectations. Mark cautions that the bulk of the new hires were concentrated in healthcare and social assistance, and Ryan is taking a wait-and-see attitude given this data series’ history of downward revisions. Looking ahead to the abbreviated holiday week (22:09) of Feb. 17-20, Ryan and Mark will be on the lookout for the Wednesday release of minutes of the Jan. 28 meeting of the Federal Open Market Committee (to see whether there is corroboration for a reprise in U.S. manufacturing) and Friday’s release of the Personal Consumption Expenditure Deflator report for December.