The Pivot Point

The Week Ahead - March 30, 2026

The war in Iran moves into its fifth week, leading to higher oil prices, rising interest rates, lower stock prices, and growing concerns that what President Trump describes as a “little excursion” is turning into a quagmire that could upend the economic expansion and bull market. I think we saw two important developments last week. The first is that the Trump administration is far more responsive to activity in the bond market than the stock market. Rising Treasury yields seem to be what invoked the President’s Truth Social post last Monday morning, which indicated that “productive” talks with Iranian officials had been ongoing, leading to a five-day pause in his plan to attack energy infrastructure. That led to a huge rally in risk asset prices, but it didn’t last long.

Tough time diversify risk(Index chart)

The second is that when yields rose on Thursday to approach the prior week’s highs the President reacted by extending his deadline a second time until April 6, but investors were not impressed. The major market indexes fell to new lows on the year, as oil prices rose and bond yields crept higher. This is significant because it indicates that the President has lost control of the narrative and his ability to assuage markets with rhetoric. Investors now demand action over words, which is why the selling snowballed across all asset classes with stocks, bonds, precious metals, and cryptocurrencies are all declining in what has been the worst month in four years.

Earnings growth Q1 2026(FactSet)

The irony is that similar market conditions four years ago turned out to be an excellent time to invest in risk assets for the years ahead if you could look past the headlines and near-term headwinds. The difficulty today is in determining the inflection point in the current conflict, which is when de-escalation ensues, oil prices peak, and risk asset prices bottom. At the same time, we have to judge when the length of the conflict starts to inflict long-term damage to the economy and the fundamental outlook. It requires a daily reassessment. I have maintained that the conflict would be over by the end of this month, but my timeline is running out of runway. I still think we will see an inflection point in the coming week, but if we don’t then a more defensive investment strategy will be warranted. What has me so convinced that a turn comes this week?

It is based on my belief that President Trump is starting to think more about self-preservation than continuing a conflict that has marginal additional upside compared to significant downside. I see his repeated assertions last week that we have already won the war as laying the groundwork for the rationale behind an exit. What about the recent surge of soldiers being sent to the Middle East with some 3,000 paratroopers and 5,000 Marines already there and another 10,000 soldiers being considered. I am no military expert, but my voracious reading on the subject tells me that this is an intimidation tactic to encourage negotiations rather than the prelude to a ground invasion.