Stocks end the first quarter on a high note... Don't go all in on stocks just yet... Consumer confidence rebounds for the second month in a row... The red flags in the auto loan market... Folks are falling behind on more than just car payments... $100 oil may be the last straw...
Another 'relief rally'...
Like we saw last Monday, stocks were up today on positive news around the Iran war.
In a phone interview with the New York Post, President Donald Trump said that the U.S. military is "not going to be [in Iran] too much longer."
He added that he believes the Strait of Hormuz – which has been effectively closed and is keeping 20% of the world's oil from reaching its destination – will open "automatically" once the U.S. operation is done.
This afternoon, Bloomberg reported that Iranian President Masoud Pezeshkian said he is prepared to end the conflict, if the country receives "guarantees."
However, there's still no firm date for a U.S. exit. And Secretary of Defense Pete Hegseth said the operation could match Trump's timeline of four to six weeks, or it "could be any particular number" of weeks before it's over.
Still, the good news outweighed any uncertainty today. All three major U.S. indexes rose by more than 2%. Oil was also lower, but remained around $100 per barrel.
But one day doesn't make a trend for stocks...
Yesterday, we urged caution about going "all-in" on stocks... highlighting Ten Stock Trader editor Greg Diamond's view that a short-term bounce in stocks could "trap" investors before a move lower.
In an update today, Greg attributed the bounce to the end of the quarter. From Greg...
Today is the last day of the month and the end of the quarter – so this – along with the news [that Trump is willing to end the war] could see some position squaring and rebalancing from the big funds.
Greg warned that any bounce isn't likely to last.
Legendary investor Warren Buffett also said that the recent volatility is "nothing to make you get excited," in an interview with CNBC today.
Elsewhere, consumer sentiment continued its rebound...
This morning, the Conference Board's monthly Consumer Confidence report showed that folks are continuing to feel more optimistic about the current state of the economy.
The overall Consumer Confidence Index rose from 91 in February to 91.8 this month, marking the second straight month of increasing optimism.
The Conference Board's Present Situations Index, which measures respondents' current feelings about the economy, also increased, with more folks becoming optimistic about business conditions and the labor market.
However, folks are still worried about the future. The Expectations Index fell from 72.6 in February to 70.9, with both the outlook on employment and future income declining in March.
Importantly, the Expectations Index remains below the key level of 80, which the Conference Board says indicates a coming recession.
But we are seeing some red flags in the economy...
Last week, consumer analytics firm J.D. Power released its latest report on the auto market. This month, J.D. Power expects total auto sales to fall more than 11% from March 2025.
Meanwhile, auto prices continue to rise, with the average auto transaction hitting nearly $46,000. That's putting more strain on consumers. From the report...
Higher average prices are translating to higher monthly payments, with the average monthly finance payment reaching $805, up $38 from a year ago and the highest ever for the month of March.
Back in 2017, the Stansberry's Investment Advisory team explained how folks deal with a higher monthly payment...
Many of these new, lower-quality customers are going to need more "creative" loan terms in order to make their payments. So lenders may extend the terms of the loans and accept lower down payments than usual.
That's exactly what we're seeing. J.D. Power estimates that more than 12% of all vehicle sales in March came with an 84-month loan – up from 11% a year ago. That comes with several problems.
For one, it takes folks a lot longer to build equity in their vehicles...
So we're seeing more and more folks "underwater" on their loans. This means folks owe more on their auto loan than the car is worth.
J.D. Power expects more than 30% of trade-ins to be underwater on their loans in March.
But it's not just the share of negative equity that's the problem – it's how much these loans are underwater. As online car-buying site Edmunds explained in a January report...
In Q4 2025, the average amount owed on underwater trade-ins climbed to $7,214, the highest level Edmunds has ever recorded.
And 27% of car owners are underwater by $10,000 or more, meaning that they owe $10,000 more on their loan than the car is worth. This is a direct result of longer loan terms.
Edmunds said that more than 40% of cars with negative equity are financed with 84-month loans.
At some point, the combination of high monthly payments, long loan terms, and underwater balances is going to lead to defaults. As the Stansberry's Investment Advisory team explained in 2017...
[Folks] will simply walk away. Without any equity in their cars, they have no incentive to keep paying.
We're starting to see that play out...
According to the New York Federal Reserve, 5.2% of auto loan debt was more than 90 days delinquent at the end of 2025. Said another way, 5.2% of auto loans haven't had a payment made in more than three months.
And it's not just auto loans... At the end of 2025, 12.7% of credit card debt was more than 90 days delinquent.
Auto loans and credit cards are the first- and third-largest forms of nonhousing debt, accounting for $2.94 trillion in debt at the end of 2025.
We've noted our concerns with the consumer several times in recent Digests.
In short, folks are falling behind on credit card payments at a rate we haven't seen since the financial crisis. Student loan repayments have added another bill to the mix, and buy now, pay later ("BNPL") loans have moved from discretionary goods to everyday purchases.
For the most part, the market has ignored these cracks forming in the economy...
Between the AI frenzy and Federal Reserve interest rate cuts, investors have had enough "good" news to keep plowing money into stocks.
But oil is at a four-year high. And the average gas price just crossed above $4 per gallon for the first time since 2022. Diesel fuel is faring even worse, hitting $5.45 per gallon. It's up more than 45% since the Iran war started.
As we said yesterday, higher oil and diesel prices mean higher costs for a lot of businesses and investors. And the longer the Iran conflict goes on, the greater the risk that energy prices will continue to rise and influence the economy more.
Coupled with a worsening consumer debt picture, this could be exactly what wakes the market up to the cracks in the real economy.
New 52-week highs (as of 3/30/26): Alpha Architect 1-3 Month Box Fund (BOXX), BP (BP), CF Industries (CF), Chord Energy (CHRD), Diversified Energy (DEC), EOG Resources (EOG), Equinor (EQNR), Pfizer (PFE), USCF SummerHaven Dynamic Commodity Strategy No K-1 Fund (SDCI), Sempra (SRE), and ExxonMobil (XOM).
In today's mailbag, feedback on yesterday's Digest, which included a report on Federal Reserve Chair Jerome Powell's comments to a class at Harvard... and thoughts on the economic impacts of the war in Iran... Do you have a comment or question? As always, e-mail us at feedback@stansberryresearch.com.
"Hello, regarding Jerome Powell, I think when he can't honestly answer a question by a Harvard student, it's definitely time for him to move on to retirement." – Subscriber Richard S.
"Stand by for some massive inflation from all the gas and oil price increases! As your report says EVERYTHING moves by truck. As transportation costs go up so does everything else..." – Subscriber Jon M.
All the best,
Nick Koziol
Baltimore, Maryland
March 31, 2026
