The war in Iran continues... The market doesn't expect it to end soon... The promise of more oil was not enough... Rates might not go lower anymore... Oracle has gotten the message... Buyer beware...
Updates from the Middle East keep coming fast...
We went to bed reading about Iranian drone attacks continuing, with reported strikes on three tankers near the Strait of Hormuz and at Dubai's airport... Then we woke up to news about Iran threatening to "target economic centers and banks" linked to the U.S. and Israel.
Meanwhile, President Donald Trump gave another interview today, saying the war would end "soon" because there was "practically nothing left to target."
He's talking about the military infrastructure, most likely.
But, clearly, with Iranian attacks ongoing across the Persian Gulf, it now looks like a regional war is underway... And nobody seems sure what Iranian leadership will look like tomorrow or weeks from now.
As we wrote just earlier this week, the market is showing some "less bad" signs. But the markets remain volatile. And for yet another day, it didn't look like investors expected things to settle down anytime soon.
The promise of more oil was not enough...
When it comes to market impact, it's all about oil (and gas)... Roughly a quarter of the world's typical seaborne oil supply has stopped. Energy production has stopped in many cases, too, including at Qatar's key natural gas facility.
This morning brought some relief from the International Energy Agency ("IEA"), which coordinates oil reserve policy among 32 nations, including the U.S. The IEA announced plans for the release of 400 million barrels of oil reserves, which is about a third of all the members' emergency stockpiles.
That may sound like a lot. But before the war, that much oil passed through the Strait of Hormuz every three weeks... And we're more than a week into the conflict already.
Also, details about the IEA's plan are hazy.
Its announcement said that "the emergency stocks will be made available to the market over a timeframe that is appropriate to the national circumstances of each Member country and will be supplemented by additional emergency measures by some countries."
Sounds to an objective observer like "everyone for themselves." In any case, the news didn't ease market concerns and arguably heightened them. Oil prices are actually higher over the past day, by about 5% for both West Texas Intermediate and Brent crude.
As we go to press, they trade at around $88 and $92 per barrel, respectively. The major U.S. stock indexes were little changed to slightly lower... with the energy sector of the S&P 500 the lone significant gainer, up 2.5%.
At least inflation hasn't been a surprise (yet)...
This morning, the Bureau of Labor Statistics showed the consumer price index ("CPI") rose 0.3% in February from the prior month and 2.4% year over year. On a core basis, stripping out energy and fuel prices, the CPI rose 0.2% month over month and 2.5% year over year.
All four of those readings were in line with what Wall Street expected. At a 2.4% headline increase, February's reading matches January's for the lowest reading since last May.
So, on first glance, the inflation data was exactly what the market would want. Lower inflation would bolster the case for the Federal Reserve to cut interest rates, as investors have been craving. But today, stocks remained lower anyway...
A big reason is that while February's inflation reading appeared fine, it also marks a baseline for a likely worse-off report next month. And investors are already looking ahead to what may come next.
The recent surge in oil prices means more inflation...
In February, the CPI's energy component rose 0.6% from the prior month and 0.5% from February 2025. That's already about a 6% annualized pace. And next month, higher energy costs will show up in CPI numbers even more.
With West Texas Intermediate crude prices around $88 per barrel today, oil is up more than 15% from the end of March last year. And gasoline, which fell 5.6% year over year in February, is up more than 16% from a year ago, according to AAA.
Already, the Cleveland Fed – which runs an inflation "nowcast" – projects the CPI will climb back up to near 2.9% year over year for March's reading.
And if the tensions with Iran send oil prices back to $100 per barrel in the next couple weeks, energy prices could drive inflation higher... which wouldn't be good news for the broader economy.
One estimate from Apollo Global Management Chief Economist Torsten Slok is that $100 oil would boost headline inflation by 0.7 percentage points. That would put it closer to 4% than 3%, to say nothing of the Fed's supposed 2% target.
That puts the Fed in a tough spot...
For months, we've been sounding alarm bells about stagflation – high inflation and high unemployment. The Fed's typical solutions to these problems would contradict each other...
To combat rising unemployment, the Fed would typically lower rates. And as we've seen in the past couple of years, the Fed has raised rates with the intention of bringing inflation lower.
But right now, the Fed is worried about both higher inflation and higher unemployment. It has been in "wait and see" mode to figure out how or if it should act.
The market expects this "do nothing" stance to continue at the Fed's policy meeting next Wednesday. Federal-funds futures traders see a 99% chance that the Fed will keep the fed-funds rate the same, according to CME FedWatch.
But we'll be watching the Fed's quarterly Summary of Economic Projections, due to be released as well. This is the quarterly exercise where the Fed gives its estimates for inflation, unemployment, and economic growth.
Jerome Powell's term as Fed chair is winding down in May. Still, these projections will be important as they could provide clarity for what the Fed may or may not do before Powell hands over the reins.
Recall that Trump has nominated Kevin Warsh, who still needs to be confirmed by the Senate. Barring surprises with Warsh's nomination, which are entirely possible, next week's meeting is just one of two chances (along with April's meeting) for Powell's decisions and words to have an impact.
Our bet is that Powell signals no moves coming over the next few months while the Fed continues to wait and see what happens with inflation and employment, not wanting to rock the boat. As our colleague Mike Barrett wrote in his Select Value Opportunities weekly update today...
Outgoing Fed Chair Jerome Powell will resist changing monetary policy, regardless of the worsening outlook for employment and inflation. He'll likely leave any decisions to presumptive incoming chair Kevin Warsh, who should lead his first meeting on June 16.
But the breakout of the war in Iran sets up an interesting situation come June... and the market's next problem.
As we've been writing about for the past year, the market has grown to expect lower interest rates once a new Fed chair is installed in May. But the case for cutting rates in a few months likely won't be justified as it once was.
The bond market may be starting to show that. Today, U.S. Treasury rates moved higher across the curve... The 10-year yield reached 4.2% and the 2-year moved above 3.6%, hitting a six-month high. Further moves higher could take a bite out of stock prices.
So prepare for more volatility ahead... not just from Iran headlines, but now from how the Fed handles it, too.
An update on our AI canary...
As we've discussed for months, we're tracking cloud-computing giant Oracle (ORCL) as a possible "canary in the AI coal mine"... Its performance could signal what to expect or be cautious about moving ahead.
We first got skeptical after a nearly 40% one-day spike in Oracle shares after a quarterly earnings report back in September. The company had projected growth that didn't seem sustainable or justified given its reliance on "remaining performance obligations," or contracted revenue that the company hasn't received yet.
And, since then, Oracle has become increasingly dependent on debt to fuel AI growth plans... without the profitable payoffs investors can envision from other "hyperscalers."
As our colleague and True Wealth editor Brett Eversole predicted in his presentation at our annual conference in October, Oracle may need to "go cash-flow negative" and borrow around $100 billion over the next three to five years.
And last month, Oracle took steps to prove that prediction correct. It announced plans to raise up to $50 billion in 2026 to build out cloud infrastructure for its big-name AI clients like OpenAI, Nvidia (NVDA), and Meta Platforms (META).
These expenses come even while Oracle's cash flows are a concern. Wall Street analysts expect its free cash flow to run a $20 billion deficit in each of the next three years.
Fellow hyperscalers like Meta, Alphabet (GOOGL), and Microsoft (MSFT) produce loads of free cash flow from their existing core businesses. So they can make expensive AI investments without this deep level of debt.
Oracle has revenue coming down the road, but its cloud build-out – which it needs to meet AI demand, current and future – is happening right now.
Oracle's shares have fallen about 50% since its all-time high in September as more investors have figured out this dynamic. It sounds like Oracle has gotten the message...
Numbers and words...
After posting strong third-quarter earnings last night, Oracle execs suggested on the company's earnings call with Wall Street analysts that they don't plan to borrow more money, this year at least, beyond what the company has already announced.
"Investing in AI infrastructure is capital-intensive, but our operating model is optimized to ensure profitability," Oracle CEO Clayton Magouyrk said.
Take him at his word, I guess? Some people did. Oracle shares rose about 9% today, but buyer beware.
As Stansberry's Credit Opportunities editor Mike DiBiase wrote in an update for his subscribers in December...
The only way Oracle can afford its infrastructure build-out is by borrowing. That means tens of billions of dollars of new debt.
Anyone buying Oracle stock today is betting on everything going right in two areas... Oracle's business (like its backlog of orders generating enough profits in the future) and the AI story in general. But we remain skeptical.
Even with today's rise, Oracle shares are still down 50% from September. And they remain below their 50-day and 200-day moving averages, technical indicators of short- and long-term trends...
At the same time, our proprietary Stansberry Score for Oracle comes in at a 64 out of 100, with a "D" grade for valuation. There are better things to buy than Oracle shares if you're looking to put new money to work today.
New 52-week highs (as of 3/10/26): BAE Systems (BAESY), Simplify Managed Futures Strategy Fund (CTA), Omega Healthcare Investors (OHI), Starbucks (SBUX), and Sprott (SII).
In today's mailbag, we've had a few more folks asking about a replay of Ten Stock Trader editor Greg Diamond's 2026 Market Crash Summit. If you missed the debut of the event yesterday, you can watch it at your convenience here...
Also, as always, Greg's existing Ten Stock Trader subscribers and Stansberry Alliance members have access to all his work here...
And stay tuned to the Digest for more about his latest outlook. We'll have a special Q&A with Greg tomorrow.
All the best,
Corey McLaughlin with Nick Koziol
Baltimore, Maryland
March 11, 2026
