Market Overview — March 24, 2026

Summary

• Jin poured cold water on Monday’s “peace-talks rally”: the market is now a boat jointly steered by Trump, Netanyahu and “these mullahs in Iran,” with an engine powerful enough to drive against the wind. Trump said Monday that talks with Iran were going “very well,” sending risk assets higher and pushing oil down by at most the mid-teens, but Jin’s yardstick is logistics, not rhetoric: as long as oil is not moving through the Strait of Hormuz at scale, the variables remain wide open—“Has what he said actually been implemented? If not, it remains a question mark.”
• The arithmetic of the oil shock is settled. Under Goldman Sachs’ path, every 10% increase in the time-weighted oil price lifts PCE by 0.04 and cuts GDP by 0.1; the base case could shave 0.2–0.3 points off full-year growth—“damage is done”: even if the crisis ended today, the hit would still land. The extreme case—crisis lasting beyond June—means time-weighted oil above $150, headline PCE above 5% and a US recession, a scenario “not priced at all in capital markets today.”
• The year’s dominant theme is two “no capitulations” (没有投降). The market has capitulated neither to an Iranian oil cutoff on the scale of history’s most severe oil crises nor on token demand: it refuses to buy Nvidia’s sub-3-year, possibly just-over-2-year, roadmap to $1T in revenue because it keeps tying NVDA to capex. Jin sees no timing conflict: if Iran blows up, it will happen first; token demand will be validated as Anthropic and OpenAI usage grows crazily month after month. Once the second capitulation arrives later this year, many equities will definitely trade above prior highs.
• The Fed looks hawkish on the surface—hawkish dots, only 1 dissent and Powell showing no particular concern about unemployment—but rates markets are over-indexed to inflation. The 10-year is above 4.3, with JPMorgan appearing the most aggressive, even calling for no cuts, possibly hikes. Jin’s rebuttal is blunt: hikes have “no ground whatsoever”; in the 1990 Gulf crisis, the Fed held steady. This time’s inflation is a one-off war-and-energy shock, not a 2022-style wage spiral; the Fed is “always on the side of growth” and could turn dovish in September, once unemployment rises above 4.6% in Q3.
• The trading roadmap has 3 stages: first an oil-panic selloff in both stocks and bonds, then a recession trade, and finally capitulation on token demand. The second stage—buying Treasuries—is the best trade: “First ask yourself whether you’d dare buy bonds, buy a swaption or buy 3x-levered TLT; if you don’t dare buy those, you probably don’t dare buy stocks either.” The recession trade is driven by fears that growth falls below 2%, though liquidity is not bad and tax refunds are still coming in Q3 and Q4. Fundamentals do not support rates above 4.5%; Maximum Pain—when everyone thinks the war has no end—is the bond-buying point.
• The positioning bow is already nearly drawn to its limit. CTA sold about $80B over the past month and another $78B last week; order-book liquidity is down to roughly 1/3 of its former level (4.1 vs. 13), while negative gamma amplifies the decline. In the flat case next week, global systematic funds would sell another $47B, about half from the US, but if markets rise 1 standard deviation over the next month, systematic strategies will need to buy back $137B—the upside squeeze is building. US valuations are at the bottom: most Mega Cap names, excluding Google, are back at last April’s lows, while China remains relatively expensive.

Deep dive

1. Iran Is Far From as Clear as Monday’s Trading Suggested

• Jin’s opening framework: normally, sailing means watching the wind, but now “Trump, the war and US policy are a more powerful engine; they can drive against the wind.” Trump’s comments on negotiations with Iran sent risk markets sharply higher on Monday, while crude fell by at most the mid-teens—but Jin’s anchor is logistics, not statements: under normal conditions, the Strait carries “20” a day, using his own order-of-magnitude figure. As long as oil is not moving through the Strait at scale, many variables remain.
• He does not believe in a quick-win peace deal, chiefly because of chaos and factionalism inside Iran: Khamenei was killed in a bombing, 40 others died in the same strike, and the new Ayatollah was backed by the IRGC. His son should already be critically wounded, while the new Ayatollah may also be badly wounded. “Junior officers very much want their leader killed in the bombing, so they may take more extreme actions”—either turning anti-American to let their leader be killed and seize power, or using anti-Americanism to purge the appeasers. “A war is not something one party can simply declare over”; it cannot be settled by a China-US handshake or by some “big brother” stepping in to mediate.
• On reports that China is leading an effort to bring Iran and the US to de-escalation, he remains cautious: whether an agreement can be reached immediately, “I find that doubtful.” If you are convinced the situation will not worsen, this is the bottom—valuations have indeed returned to last April.

2. The Oil-Shock Math: Damage Is Done; the Extreme Case Is Completely Unpriced

• The key variable is the time-weighted, not instantaneous, shock: oil hitting $150 today does not by itself “count.” A 10% rise in time-weighted oil prices through year-end means PCE +0.04 and GDP −0.1—the impact is “a bit like tariffs, or more severe.” This supply disruption is also larger than those of 1973 and 1990.
• The shock is taking time to digest because both supply and demand are highly inelastic. The SPR and IEA have released roughly 400M barrels, but it will take about 120 days to rebalance, with transit through the Strait expected to be resolved in early April. Rebuilding reserves will then require buying oil again and pushing prices higher—this supply shock “cannot be resolved immediately.” Goldman Sachs’ base case could cut 0.2–0.3 points from growth; “even if the crisis stopped today,” the damage would still be unavoidable. Inflation pass-through is more muted because it is coming through oil and travel, not services and wages.
• In the extreme case, with the crisis lasting past June, time-weighted oil rises above $150, headline PCE may break 5%, core PCE reaches 3% and the US enters recession—“this is something that is completely unpriced in capital markets today.” Jin sees it as unlikely, “but even if it doesn’t happen, it could still trade there at some point.”
• The pressure on global growth is greater: most of the oil through the Strait is bound for China and East Asia, while the US is itself an exporter, already controls Venezuelan oil and has the strongest currency in the world. He calls this “persistent war”—America’s new war model in the AI era: as long as the Strait remains open and there are no domestic deaths or public backlash, “it can keep fighting you indefinitely,” while buying more US oil.

3. The Fed: Hawkish Dots Are Surface-Level; It Is Always on the Side of Growth

• Last week’s FOMC was hawkish on the surface: Powell showed no particular focus on unemployment, and dissents fell to 1 from 2 or 3 previously—suggesting that policymakers were generally inclined to wait. Markets accordingly pushed rate pricing toward inflation: the 10-year moved above 4.3, the entire front end moved higher and the investment banks diverged sharply. JPMorgan appeared to be the most hawkish, saying “not only no cut, there could even be a hike.”
• Jin draws a sharp line: no cut this year is a defensible view, but a hike “has no ground whatsoever.” His reference point is the first Gulf crisis in 1990—perhaps Saddam burned all the oil wells and oil prices stayed high for a long time, but the Fed cut once before the crisis and then held steady.
• His baseline is that by September, or in Q3, the tariff effect will have faded and unemployment will have risen above 4.6%. At that point, even if oil prices and headline PCE remain high, the Fed could turn dovish.

4. Two “No Capitulations,” One Before the Other

• “No capitulation is the theme of the year.” First, the Iran crisis has not gone through a capitulation phase: short positioning is nearly at its limit, but the market has not priced in persistently high oil. Second, the market has not capitulated on token demand or AI demand. The views appear to conflict, “but in terms of timing they do not”: if Iran is going to blow up, it will happen first, while token demand needs time and continuous confirmation.
• GTC was the second “no capitulation” marker. Nvidia laid out a sub-3-year, possibly just-over-2-year, roadmap to $1T in revenue, and supplier sentiment is strong, “but the market has still not really bought Nvidia”—because it continues to tie the company to capex. Jin reiterated his view from 2 weeks ago: slower capex growth should not materially change Nvidia’s revenue; what the market really wants to see is demand growth.
• The confirmation process is already under way: Anthropic and OpenAI call volumes are “rising crazily every month,” while usage across other AI platforms is also substantial. At some point the market will capitulate. When the second capitulation arrives, “a lot of equities will go crazy… they will definitely rise above the previous highs. I have absolutely no doubt about that.”

5. Three-Stage Market Path: The Best Trade Is Buying Bonds in Stage 2

• The worst-case trading sequence starts with an oil-crisis panic: fear of oil and inflation drives rates and risk markets lower, producing a selloff in both stocks and bonds, as happened last week. The market then moves into a recession trade, worrying that growth will fall below 2% and that the economy will enter recession. Eventually it realizes the recession is not that severe—liquidity is actually not bad this year, and tax refunds are still coming in Q3 and Q4.
• His position-sizing test is worth preserving: “First ask yourself whether you’d dare buy bonds, buy a swaption or buy 3x-levered TLT… If you don’t dare buy that, you probably don’t dare buy stocks either.” Risk assets still have to absorb a second wave of recession fears.
• The entry point is Maximum Pain: when the war “seems to have no end,” Trump’s statements keep changing, talks are supposedly done but ships are still being attacked, and investors begin questioning everything collectively—“when it bottoms, you buy bonds.” Rates above 4.5 are “completely unsupported by the economic fundamentals.”

6. Positioning: The Bow Is Fully Drawn; Upside Elasticity Is Building

• Three microstructure signals are combining to amplify the selloff: under negative gamma, dealers sell into declines; top-of-book liquidity in the S&P has fallen from about 13 to 4.1, “roughly 1/3… it falls harder on the way down because nobody is posting orders”; and CTA and other systematic positions mechanically chase volatility, “without caring about valuation.”
• The numbers: CTA sold roughly $80B over the month around the Lunar New Year, followed by another $78B last week. In the flat case next week, global systematic funds would sell another $47B, with the US accounting for about half; on a flat case over the next month, they would still sell $50–60B. But the asymmetry has reversed: a 1-standard-deviation rise over the next month would force them to buy back $137B—the mirror image of February, when upside bounces had little traction and downside would bring substantial buying.
• The evidence for a bottom is building: global CTA shorting has already exceeded last April’s level, even though the S&P has not fallen to its position then. Excluding Google, valuations for most Mega Cap names, including Microsoft, are back at last April’s lows. Jin’s conclusion: selling pressure is certainly not over yet this week, “but upside momentum is accumulating to a significant degree.” The outcome ultimately depends on the Iran negotiations, and he sees a fairly high probability that failed talks create another buying opportunity.