General Market News

Lloyd Blankfein, former Goldman Sachs CEO who led the bank through 2008, warns that hidden risks in the private credit market 'smell like' conditions before the Global Financial Crisis. His concerns join other Wall Street veterans like JPMorgan's Jamie Dimon who fear the private credit market, now similar in size to the 2008 subprime mortgage market, poses systemic contagion risks. The warning comes as the industry and White House push to include private assets in Americans' 401(k) retirement accounts.

• Private credit concerns recently centered on AI-exposed software companies, triggering significant redemption requests: Blue Owl faced outflows and Blackstone allowed 8% withdrawals ($3.8 billion) from its flagship private credit fund
• Major firms like Blackstone, KKR, and Blue Owl are heavily exposed to private software companies whose valuations are pressured by fears AI is commoditizing their products
• Critics warn that adding illiquid, opaque private assets to retirement accounts exposes everyday savers to excessive risk, with Blankfein noting consequences are 'much more highly consequential' for retirees than institutional investors

U.S. Democratic lawmakers Representative Mike Levin and Senator Chris Murphy are drafting legislation to restrict prediction markets after controversial bets on Iran air strikes raised concerns about insider trading and financial incentives for conflict. The bill targets platforms like Polymarket and Kalshi, though passage in the near term is unlikely.

• Six accounts reportedly made $1.2 million profit on Polymarket bets regarding Iran's Supreme Leader just hours before the air strikes that killed him, suggesting potential insider trading
• Polymarket removed bets on nuclear explosions worldwide after public backlash, with lawmakers arguing the Commodity Exchange Act gives prediction markets too much leeway despite barring contracts 'contrary to the public interest'
• A separate incident involved a user profiting roughly $410,000 betting on Venezuelan President Maduro's ouster, prompting six Democratic senators to criticize the platforms last month

The February jobs report, releasing Friday at 8:30 a.m. ET, is expected to show 50,000 jobs added with unemployment holding steady at 4.3%. The labor market continues in a 'low-hire low-fire' climate where companies remain cautious about hiring amid uncertainty over tariffs, inflation, and geopolitics, though economists characterize conditions as stable rather than robust.

• Health care and social assistance sectors drove nearly all January job growth, adding 124,000 of 130,000 total positions, raising concerns about unbalanced growth across the economy
• A Kaiser Permanente strike affecting 31,000 workers during the survey week could pressure February numbers below the 50,000 consensus, with Bank of America forecasting only 35,000 jobs added
• The 2025 labor market averaged just 15,000 monthly job gains, which would have been negative without health care sector contributions, while construction lost 88,000 jobs despite government incentives

U.S. employers announced 48,307 layoffs in February 2026, down 55% from January's 108,435 cuts and 72% lower than February 2025. The combined January-February total of 156,742 job cuts marks the lowest start to a year since 2022, though concerns remain about potential increases due to Middle East conflict impacts on costs and economic uncertainty.

• Technology sector led with 11,039 February cuts (33,330 year-to-date), driven by AI pressures, regulatory concerns, digital advertising slowdown, and higher employment costs
• Transportation sector cuts surged 872% year-over-year to 31,702, with the Iran war expected to further impact the sector through oil price volatility and supply chain disruptions
• Hiring plans fell 63% from February 2025 to 12,755, with year-to-date hiring announcements down 56% to just 18,061 workers compared to 40,669 in early 2025

Wall Street investors are increasingly turning to the 'HALO trade' (Heavy Asset, Low Obsolescence) as a hedge against AI disruption, focusing on companies with massive physical infrastructure that cannot be easily replaced by artificial intelligence. This strategy includes energy, industrial, and mining stocks while avoiding traditional tech and software companies vulnerable to AI displacement. The shift comes as AI hyperscalers have invested $1.5 trillion in capex since 2022, yet many major AI stocks have struggled in 2025.

• HALO trade stocks like Newmont, Exxon, Valero, Deere, and Comfort Systems have gained 25-30% year-to-date, significantly outperforming major AI stocks.
• The five U.S. AI hyperscalers (Alphabet, Meta, Oracle, Microsoft, Amazon) are projected to spend over $650 billion in capex in 2026 alone, exceeding their total pre-2022 investment.
• Major AI stocks have underperformed in 2025, with Oracle and Microsoft down 13-15%, Amazon down 6%, and Alphabet down 10% from its January breakout despite a 70% gain in 2024.

RiverFront Investment Group upgraded its tactical rating from 'flashing yellow' to 'flashing green' for equities, signaling a more bullish outlook over the next 3-6 months. The upgrade is based on three factors: the Fed's pivot to fighting inflation while holding rates steady, the S&P 500's trend slowing to a more sustainable 31% annualized rate, and investor sentiment becoming more neutral as conflicting polls neutralized crowd extremes.

• The Fed held rates steady at 3.50-3.75% with core PCE inflation at 3%, pivoting focus from employment to inflation as unemployment fell to 4.3%, maintaining a 'green light' rating
• The S&P 500's 200-day moving average is rising at 31% annualized (down from unsustainable levels), which historically correlates with better-than-average odds of positive returns when trending between 20-30%
• International equities outperformed domestic by 630 basis points since January 20th, but the ACWX trend at 42% annualized was downgraded to 'flashing red' as it remains above sustainable levels

Emerging markets experienced significant selloffs following U.S.-Israeli military action in Iran, with stocks and currencies posting their biggest weekly losses in three years. However, veteran investors believe strong economic fundamentals and diverse capital flows will allow these markets to recover, barring prolonged high oil prices or further major shocks. South Korea's KOSPI index exemplified the volatility, crashing nearly 20% before rebounding 10%.

• MSCI's emerging market equities index lost over $1 trillion in market capitalization from last Thursday's peak to Wednesday's close, prompting JPMorgan and Citi to reduce their emerging market exposures
• Oil prices above $100 per barrel pose the biggest threat to recovery, potentially driving global inflation and preventing rate cuts, though Latin American commodity exporters could benefit from higher prices
• Growing 'South-South' investment flows from Asian wealth and Gulf sovereign funds provide a buffer for emerging markets, as these investors are less likely to flee during volatility compared to Western hedge funds

A federal trade judge ordered the Trump administration to begin refunding $130 billion in tariffs to importers after the Supreme Court struck down the levies last month. Judge Richard Eaton directed US Customs and Border Protection to calculate and issue refunds, though the White House is expected to appeal. Over 2,000 lawsuits have been filed by companies including Costco, FedEx, and Pandora Jewelry seeking to recoup the tariffs.

• Judge Eaton rejected the administration's claim that manual processing would be too time-consuming, stating computers could handle the refund calculations for millions of import entries
• The Supreme Court struck down Trump's 'Liberation Day' tariffs for improper use of the International Emergency Economic Powers Act, but did not address whether refunds were required
• Trump quickly imposed new tariffs under a different statute (Section 122 of the Trade Act of 1974), setting a baseline 10% global rate with plans to raise it to 15%

Despite elevated geopolitical concerns, labor market deceleration, and trade policy uncertainty in 2026, the U.S. household sector remains resilient with net worth at approximately $18 trillion (800% of disposable income). However, this resilience creates systemic vulnerability as roughly 33% of household wealth is now held in equities, up dramatically from less than 10% four decades ago, making the economy increasingly sensitive to asset price declines.

• Household net worth has reached $18 trillion, equivalent to roughly 800% of disposable income, with equity holdings now representing 33% of total household wealth versus less than 10% forty years ago
• The shift toward equity-heavy household balance sheets means sharp market declines could create negative feedback loops affecting consumption and confidence, presenting systemic risk through wealth effects rather than traditional banking stress
• The Federal Reserve and Treasury are likely to show greater sensitivity to equity market volatility and financial conditions, as tightening could translate directly into slower economic growth given households' increased dependence on asset prices

Market volatility stemming from military tensions with Iran serves as a wake-up call for investors nearing retirement to reassess their portfolio allocations. Financial experts recommend pre-retirees ensure adequate exposure to safe assets while maintaining some equity holdings for long-term growth. Those within a few years of retirement should have 2-5 years of spending needs in cash or bonds to avoid selling stocks during downturns.

• Many older investors have become overweight in stocks due to market gains: a 50/50 stock-bond allocation from 2020 would now be approximately 68% stocks and 31% bonds without rebalancing
• Experts recommend maintaining at least 2-5 years' worth of portfolio spending in cash or short-term bonds to weather downturns, since typical bear markets recover within 13 months on average
• Pre-retirees should calculate annual retirement expenses minus other income sources (Social Security, part-time work) to determine required portfolio withdrawals and ensure adequate liquidity cushions

Online travel agency stocks rallied sharply after reports that OpenAI will scale back direct checkout features in ChatGPT due to low purchase completion rates. Expedia surged over 12%, while Booking Holdings and Tripadvisor rose 8% and 5% respectively. The move eases investor concerns about AI platforms disintermediating traditional travel booking companies.

• OpenAI found ChatGPT users research products in the chatbot but don't complete purchases through it, prompting a shift to focus on checkouts within third-party apps that integrate with ChatGPT
• Analysts view the news as 'incrementally positive' for online travel agencies, allowing Booking and Expedia to continue reaching consumers on AI platforms while reducing disintermediation risk
• Both Expedia and Booking Holdings were early adopters of OpenAI's plugin program when it launched in 2023

Wall Street's main indexes fell on Thursday, with the Dow dropping nearly 800 points (1.6%), as a sixth day of US-Israeli air war against Iran raised inflation concerns and complicated Federal Reserve policy decisions. The conflict threatens to disrupt shipping through the Strait of Hormuz, driving up energy and shipping costs at a time when inflation pressures were already complicating monetary policy.

• US crude prices jumped 6% to above $79 per barrel, with concerns that prices hitting $100 would further worry markets and potentially force the Fed to delay rate cuts from July to September
• Travel stocks sensitive to energy prices declined, with Delta Air Lines falling 3.3%, while tech stocks showed mixed performance with Nvidia down 0.3%
• Booking stocks surged significantly (Booking Holdings up 11%, Expedia up 8%) after reports that OpenAI was scaling back shopping checkout plans for ChatGPT, easing disruption concerns for internet marketplace businesses

Clark Capital Management Group projects the S&P 500 will reach 7,700 by year-end 2026, representing a 12.5% gain, driven by expected 3.0% GDP growth, continued Fed rate cuts, and corporate earnings expansion. The outlook anticipates mid-year volatility due to midterm elections and a new Fed chair, followed by a year-end rally. Despite elevated valuations for large-caps, the firm cites supportive factors including abundant liquidity, broadening market participation, and disinflationary trends.

• The economy posted 4.3% annualized GDP growth in Q3 2025, with momentum expected from fiscal stimulus via the 'One Big Beautiful Bill' and 2-3 additional Fed rate cuts in 2026, though labor market weakness remains a concern with unemployment rising to 4.5%.
• Historical midterm election year patterns suggest a potential 17% average correction (non-recession scenario) into Q2-Q3 before recovery, with Democrats favored to capture the House given President Trump's 42% approval rating.
• Earnings growth is projected to drive market gains as forward P/E multiples are extended at 22.1x for the S&P 500 and 28x for the Magnificent 7, while mid-cap and small-cap stocks trade at 26-30% discounts, offering diversification opportunities.
• International markets are trading at a 30% valuation discount to U.S. equities and outperformed in 2025, potentially positioned for continued gains amid a weaker dollar (down 9.4% in 2025).

The U.S. economy exhibits a K-shaped pattern where asset owners benefit from market gains while broader consumer sentiment remains depressed across all income levels. Analysis suggests artificial intelligence-driven job displacement fears may now impact consumer confidence more significantly than inflation concerns, with higher-income earners perceiving a 20-25% probability of job loss despite just 4.3% unemployment.

• Consumer sentiment among top-income earners is worse than during the 2008 Financial Crisis, despite the S&P 500 trading near record highs, indicating economic gains are not translating to confidence
• An internal weighted index assigns 60% weight to job-loss expectations and 40% to inflation expectations, suggesting AI displacement concerns now drive sentiment more than price increases
• While inflation moves slowly and allows policy responses, AI adoption is advancing rapidly with benefits accruing to capital owners while labor faces uncertainty during the transition period

The U.S. Federal Reserve terminated its enforcement action against Wells Fargo on March 5, ending nearly a decade of regulatory restrictions stemming from the bank's fake accounts scandal. The 2018 action included an unprecedented asset cap on the bank's growth, which was lifted in 2025 after Wells Fargo completed extensive remediation work to overhaul its operations.

• The Fed's enforcement action, imposed in 2018 following the widespread fake accounts scandal, lasted nearly 10 years
• The action included an unprecedented asset cap restricting Wells Fargo's growth, which was removed in 2025
• The termination follows the Fed's determination that Wells Fargo has sufficiently overhauled its operations through remediation efforts

New York Attorney General Letitia James and 23 other state prosecutors filed a lawsuit seeking to block President Trump's new 10% global tariffs imposed under Section 122 of the Trade Act of 1974. The legal challenge comes days after the Supreme Court struck down Trump's previous tariffs that were based on the International Emergency Economic Powers Act, with states arguing the new tariffs are an illegal attempt to circumvent that ruling.

• States claim Trump is misusing Section 122 of the 1974 Trade Act, which was designed to address monetary imbalances under the gold standard rather than trade imbalances
• The lawsuit argues the tariffs violate constitutional separation-of-powers principles and the Trade Act's requirement for consistent application across countries
• A federal court ruled Wednesday that companies are due billions of dollars in refunds for tariffs invalidated by the Supreme Court

Citi warns that stock market volatility will likely persist as Middle East conflict enters its sixth day. The bank notes that the conflict began when market sentiment was exceptionally strong and valuations stretched, with PE multiples at historic highs. Elevated investor positioning outside Nasdaq suggests markets will remain sensitive to news until concrete conflict resolution emerges.

• Conflict started at point of exceptionally strong sentiment and stretched valuations, with PE multiples 'effectively as high as ever' heading into the geopolitical shock
• Sharpest moves occurred in indices with strongest year-to-date returns, particularly Korea's Kospi
• Citi's positioning model shows still-elevated levels of both net and gross investor positioning outside of Nasdaq, indicating continued volatility risk

Global markets rebounded on Thursday with Asian stocks surging, led by South Korea's KOSPI rising nearly 10% and Japan's Nikkei up 2%, following Wednesday's tech-led rally in U.S. markets. The brief respite comes amid ongoing Middle East conflict and uncertainty over the Strait of Hormuz disruption, with reports of Iranian diplomatic outreach and U.S. support for tanker escorts providing cautious optimism. However, oil prices jumped over 2% and analysts warn the conflict could persist for months.

• U.S. markets showed strength Wednesday with Nasdaq up 1.29% and S&P 500 rising 0.78%, supported by strong economic data including higher-than-expected private payrolls and ISM non-manufacturing PMI hitting a three-year high
• Broadcom reported first-quarter revenue of $19.31 billion (up 29%) and forecast AI revenue exceeding $100 billion next year, positioning itself as a strong competitor to Nvidia
• Despite the market bounce, geopolitical risks remain elevated as oil topped $83 per barrel, gold rallied on safe-haven demand, and the U.S. Senate backed expanded presidential war powers against Iran

Global X ETFs is recommending investors double down on emerging markets despite Iran war risks, citing expected U.S. dollar weakness from war spending as a key catalyst. The firm's senior portfolio manager Malcolm Dorson suggests buying the dip in emerging markets, while VettaFi highlights energy sector opportunities, particularly for European markets dependent on Middle East oil supplies.

• Global X expects increased U.S. war spending to weaken the dollar after its recent jump, creating favorable conditions for emerging markets
• The iShares MSCI Emerging Markets ETF has underperformed recently, presenting what the firm views as a buying opportunity
• Energy is identified as a critical area to watch, with European markets highly dependent on Middle East oil; the U.S. Oil Fund ETF is up 12% this week and 32% year-to-date

Kevin Warsh, President Trump's nominee for Federal Reserve chair, is expected to continue cutting interest rates despite oil price spikes from the Iran war, unlike current Fed officials who are considering pausing rate cuts. Warsh's inflation theory focuses on government spending and money printing rather than oil prices, making him likely to maintain his dovish stance. Oil prices have risen from $72.50 to over $82 per barrel since the conflict began.

• Current Fed officials like Minneapolis Fed President Neel Kashkari have expressed concern about the Iran conflict's impact, suggesting a potential pause in rate cuts, while New York Fed President John Williams wants to assess persistence of oil price increases
• Warsh believes the Fed's 'core theory of inflation' is mistaken and attributes inflation primarily to excessive government spending and money printing, not factors like oil price fluctuations
• A sustained $10-per-barrel oil price increase could add up to 0.1 percentage point to core inflation, but Warsh expects AI productivity gains and Fed credibility restoration to justify rate cuts toward Trump's preferred 1% target