GUERRE & INFLATION : GARDER LA TÊTE FROIDE QUAND TOUT DEVIENT ROUGE. 🧊

This technical market debrief provides a comprehensive analysis of the current financial landscape, shaped by geopolitical tensions in Iran, fluctuating energy costs, and shifting macroeconomic expectations. The speaker introduces a new format for these updates, designating Wednesdays for in-depth technical analysis while reserving Saturdays for broader, simplified overviews. The core objective is to move beyond reactionary trading and focus on understanding the underlying market mechanics during a period of significant volatility. **Energy Markets and the Impact of Geopolitics** The primary driver of recent market sentiment has been the conflict involving Iran. While oil prices experienced a dramatic surge toward $115 per barrel following a particularly tense weekend, they have recently retraced to the $90 range. This easing is partly attributed to comments from Donald Trump suggesting the conflict might not be prolonged, which helped soothe immediate fears. However, the speaker cautions that the situation is far from resolved. Despite the recent dip, oil remains significantly higher than the $72 average seen earlier in 2024. As long as prices persist above the $80 to $90 threshold, markets will continue to price in heightened inflation risks. Traders are advised to monitor developments on an hourly basis, as the excess and liquidation of short positions can lead to rapid, unpredictable price swings. **Inflation Data and Monetary Policy Shifts** A critical piece of data released this Wednesday was the US inflation report for February. The figures were perfectly aligned with expectations: headline inflation stood at 2.4%, down from 2.5% the previous month, while the Core CPI (excluding volatile food and energy sectors) also hit the 2.4% mark. While this confirms a cooling trend since October, there is a major caveat: these February figures do not account for the massive spike in oil prices that occurred after March 2nd. Consequently, the timeline for interest rate cuts is being pushed back. While the market previously anticipated a pivot in July, expectations have now shifted toward September. The speaker highlights a divergence in central bank rhetoric; while the Federal Reserve observes employment data (which showed surprising job losses last week), the European Central Bank’s Christine Lagarde has not ruled out rate hikes if inflation remains stubborn. This environment has bolstered the US Dollar, which is reacting strongly at key levels. The speaker maintains a long-term bearish strategy on the Euro/Dollar pair, noting that as long as it remains below 1.1640, the short-term trend remains downward. **Equity Market Resilience and Technical Ranges** In the corporate sector, the focus remains on Artificial Intelligence. Oracle’s recent earnings report, which saw the stock jump over 10%, serves as a testament to the fact that high valuations in the tech sector are currently being supported by actual results rather than just hype. This performance is reflected in the major indices. The Nasdaq remains in a neutral range that has persisted since late 2023, with a critical support level at 24,000 points. As long as this floor holds, the underlying long-term trend remains bullish. The S&P 500 shows a similar pattern, staying above its 50-week moving average despite spikes in the VIX (the "fear index"), which recently hit 34. While there have been minor alerts, the speaker suggests that a true trend reversal would only occur if the index falls below 6,550. Meanwhile, the Dow Jones appears slightly weaker, reflecting concerns over industrial output and consumer spending. European markets present a more challenging picture. The French CAC 40 failed to sustain its break above 8,200 and has returned to the middle of its trading range. The speaker expresses skepticism about buying at current levels, preferring to wait for a retracement toward 7,600—a strategy described as "Investing By Level" (IBL). The German DAX is similarly trapped in a year-long range. It is currently described as being in the "eye of the storm," frequently swinging between 3% gains and 2% losses in a single day. The speaker warns against binary "all-in" or "panic-out" mentalities, advocating for smaller position sizes and a focus on long-term timeframes. **Commodities, Bonds, and Cryptocurrencies** Interestingly, gold has not acted as a traditional safe haven during this crisis. This is attributed to two factors: investors’ immediate need for cash to cover losses elsewhere and the mechanical pressure of a rising US Dollar. However, the speaker is watching for a potential breakout above the 5,250 level. In the bond market, US 10-year yields are rising toward 4.50%. This level is significant because it previously prompted a political "U-turn" regarding trade tariffs. In Europe, the possibility of rate hikes to combat energy-driven inflation remains a looming shadow over the economy, threatening to stifle growth while costs for producers and consumers rise. Finally, the cryptocurrency market mirrors the general indecision. Bitcoin has failed to establish itself as a safe haven, remaining stuck between $55,000 and $60,000 for the past month. Ethereum is even more stagnant, remaining within a broad range between $1,000 and $4,000 for several years. The speaker notes that while these assets are far below their all-time highs, they remain up significantly from their 2020 lows, underscoring the importance of perspective. In summary, while there is no evidence of a definitive "bear market" yet, the combination of geopolitical tension, energy costs, and shifting rate expectations has created a high-volatility, range-bound environment. The recommended approach is one of patience, focusing on key technical levels rather than chasing daily news cycles.