Market Commentary

Market Commentary - Week of April 13, 2026

Trump gave Tuesday-night deadline to Iran. At the last minute, announced a two-week ceasefire. Iran pledged to reopen the Strait of Hormuz
Oil collapsed 15% on the news. S&P closed +2.5%
But VP Vance called it a "fragile truce" on Wednesday. By Wednesday evening, Iran accused the US of violating the ceasefire and said the Strait would remain closed
Sticking point: Iran believes ceasefire covers Lebanon. US and Israel say it does not
Vance leading peace talks in Pakistan — reporting suggests US is choreographing behind the scenes; Pakistan PM's first post had "draft" at the top. These are US-initiated negotiations to exit a quagmire
Three aircraft carriers now in position. Possibility that talks are cover to rearm. Past pattern (JCPOA, Feb/June negotiations) has been: negotiate → attack
Economic damage still filtering through. European airlines weeks away from jet fuel shortages. Ireland already seeing protests. Some gas stations dry
Iran's leverage: controls 20% of global oil supply through Strait. Reportedly charging $2M tolls in RMB to Chinese accounts. Could potentially become a nuclear power in months. Regional hegemon status cementing
Nuclear escalation assessment: Professor Pape argues fallout risk makes ground-detonated nuke unlikely, but airburst remains a possibility that limits fallout. "A very dangerous situation"

S&P -4%, NASDAQ -7%
Six of eleven sectors up: Energy +37%, Materials +9%, Utilities +8%, Consumer Staples +7%, Industrials +4%, Real Estate +2%
Five sectors down: Healthcare -5%, Communications -7%, InfoTech -9%, Consumer Discretionary -9%, Financials -10%
Energy's +37% is entirely war-driven. Occidental and Valero up 58% and 52%. US energy sector ~size of entire Saudi Arabian economy, yet only 4% of S&P
Healthcare broken safety trade: UNH -18%, Centene -20%, Humana -32%. CMS raised 2027 Medicare Advantage pricing to 2.5% (vs. initial 0.09%). UNH +10% Tuesday on final pricing — mostly short covering
Tech is 33% of S&P. When tech drops 9%, the market can't hold up

Adobe -31%, ServiceNow -32% in Q1
For the first time in decades, software P/Es are below the market multiple. The group has been humbled
Framework: Software valuations rested on two assumptions going up every year — seat growth and pricing power. AI erodes both. Seat growth slows as AI agents replace human users. Pricing power weakens as AI-native competitors enter at lower cost
Private equity buying binge of software companies 2018–2022 now underwater. "Every one of those transactions is underwater and probably by a lot." PE sector "buried in software"
Multiple compression is severe: stocks down AND multiples lower — the classic double-hit for a broken thesis

Blue Owl OCIC (flagship $36B): 21.9% redemption requests — unheard of levels
Blue Owl OTIC ($3.3B tech-oriented): 41% redemptions, capped at 5%
Carlyle CTAC ($7B): 16% redemption notice, honored only 5%
Moody's moved OCIC outlook to negative. Also changed the entire BDC industry outlook to negative
Silver lining: credit spreads widening = future loans more lucrative
Blackstone closed $10B opportunistic credit fund (oversubscribed) — institutional only
Goldman lined up $10B+ in institutional commitments in weeks for new direct lending drawdown fund
The pattern: distress in existing funds, massive capital raising for new vintages. The next generation of private credit loans will be underwritten at much better spreads
Eisman on PE growth: "Intellectual disguise" — institutional investors use PE's opacity as "volatility laundering" to claim higher Sharpe ratios. Not less volatile — just priced less often

CPI hot month-over-month (energy spike); core CPI tame at 2.6% YoY
Core PCE printing ~3% per Cleveland Fed — difficult for Fed to ignore. PCE now running above CPI (historical inversion)
Market pricing zero 2026 rate cuts despite Fed dot plot guiding to one cut
Fed minutes split: most members would cut through an energy spike (historical pattern); minority hawks want to hold or hike
10-year yield 4.4% — historical boundary. Above 4.5% equities tend to sell off sharply
Consumer sentiment at multi-decade lows. War + high gas + AI job fears

Anthropic announced Project Glasswing April 7. Coalition of 50+ organizations (AWS, Apple, Microsoft, Google, JPMorgan Chase, Cisco, NVIDIA, CrowdStrike, Broadcom, Linux Foundation, Palo Alto Networks) + $100M in usage credits + $4M donated to open-source security
Claude Mythos Preview autonomously found thousands of zero-day vulnerabilities including: 27-year-old OpenBSD bug (TCP SACK), 16-year-old FFmpeg flaw (H.264 codec), 17-year-old FreeBSD NFS root access bug
Anthropic will not release Mythos publicly. "Do not plan to make Claude Mythos Preview generally available due to its cybersecurity capabilities" — Frontier Red Team Cyber Lead
NBC calling it "Vulnpocalypse." Anthropic now 50-60% of AI coding token share
OpenClaw friction: Anthropic cutting off subscription-bundled access for heavy OpenClaw users, forcing them to API pricing (10x cost). Simultaneously releasing competing agent product

Polymarket: Democratic sweep at midterms now better than even odds
Trump losing MAGA base support (Tucker, Alex Jones, Megyn Kelly publicly splitting from administration)
Dem sweep implications: non-stop investigations, potentially higher taxes, more public services — negative for stocks

China helped bring Iran to the negotiating table
Trump administration removing China hawks from national security roles. Reporting suggests move toward more conciliatory posture
US military supply chains heavily dependent on Chinese components — can't make missiles without Chinese help
eIBD cover story: China's AI ambitions hinge on chip technology control. US firms have the goods but also a "big weakness"
Multipolar world emerging — US sphere, China sphere, mutual trade. Gulf states hedging

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