onight after the market close, Nvidia will report its Q1 earnings results. The world’s largest company, now valued at almost USD 6 trillion, is once again expected to deliver another very strong quarter.

Just a few hours earlier, the Federal Reserve will release the FOMC Meeting Minutes from Jerome Powell’s last meeting, where rates were left unchanged. Since Friday, new Fed Chair Kevin Warsh officially took over leadership of the US central bank.

Markets:

• Equities: Nvidia is up over 1% pre-market - Tech Futures trading positive as market participants wait for the numbers

My View: Nvidia alone has become one of the biggest drivers of the entire US equity market. A very small number of mega-cap technology companies have generated the majority of the S&P 500’s gains this year, highlighting how concentrated the current rally has become. Nvidia’s Year-To-Date (YTD) contribution to the S&P 500's performance is approximately 20% of the index's total gain. The stock has delivered a YTD total return of roughly 19%. The S&P 500 Index is up almost 9% YTD.

At current valuation levels, simply beating estimates may no longer be enough. Expectations are extremely high and the market likely needs numbers that significantly exceed forecasts alongside another very optimistic outlook for the stock to react positively.

At the same time, Nvidia CEO Jensen Huang will almost certainly continue to present a highly optimistic long-term vision for AI and future demand growth, something investors have become used to over recent quarters.

Personally, I do not want to place a directional bet ahead of tonight’s release. The AI sector remains heavily crowded and, in my view, clearly overpriced overall. While upside potential appears increasingly limited after the massive rally, downside risks continue to grow if expectations are no longer met perfectly.

The Fed Minutes could also reveal how divided the Federal Reserve currently is — normally not a particularly positive sign for markets, as the interest rate outlook becomes increasingly difficult to anticipate.

Rising uncertainty around monetary policy is usually not a supportive driver for financial markets, especially at a time when valuations already remain stretched across parts of the equity market, inflation seems to get out of control in combination with rising yields.

Japan reported surprisingly strong economic growth for the first quarter. Q1 GDP growth QoQ came in at +0.5% (est. +0.4%), while annualized GDP growth reached +2.1% (est. +1.7%).

The stronger economic data reinforces expectations that the Bank of Japan could continue its gradual tightening cycle after decades of ultra-loose monetary policy.

Markets:

• Equities: Japan’s Nikkei225 closed lower by -0.44%.

• Bonds: Japanese government bond yields continue to rise sharply. The 10-year yield reached 2.81% (!), marking levels not seen in decades.

• Currencies: The Japanese Yen weakened further

My View: It is becoming increasingly important to closely monitor developments in Japan.

After decades of zero interest rate policy, the Bank of Japan is now being forced to tighten monetary policy due to rising inflation pressures. Stronger economic data increases the probability of another rate hike already in mid-June.

The reason why this matters globally is the enormous size of the so-called Yen carry trade.

For years, global investors borrowed cheaply in Yen and invested the money into higher-yielding assets such as US Treasuries, US equities, or higher-yielding emerging market currencies like the Mexican Peso or Brazilian Real.

If Japanese interest rates continue to rise, funding costs for these positions increase significantly. Investors may then be forced to reduce leverage and unwind positions, potentially leading to forced selling pressure across global markets.

At the same time, rising US Treasury yields already mean falling bond prices, increasing stress within leveraged positions even further. This combination could quickly create a broader deleveraging spiral.

For the moment, the situation remains relatively stable because the Japanese Yen continues to weaken despite rising yields. However, should the Yen suddenly reverse and strengthen, pressure on carry trades would intensify dramatically.

The Bank of Japan is also not interested in a substantially weaker Yen. With lower Yen leading to higher import prices, this would further fuel inflation inside Japan. USD/JPY around 160 is widely seen as a critical level. The pair is currently trading close to 159, while the Japanese authorities already intervened twice in the currency market only two weeks ago to stabilize the Yen.

The amount of global carry trade exposure is enormous, running into hundreds of billions. The potential impact of a larger unwind should not be underestimated.

If Japanese yields continue to rise, this risk could materialize very quickly. That is why Japan may become one of the most important markets to watch right now.

Globally, bond yields continue to rise as investors increasingly dump government bonds on growing inflation concerns.

The UK 30-year government bond yield climbed to its highest level since 1998. Japan’s 10-year bond yield moved toward 2.6%, levels last seen in 1999. In the US, the 10-year Treasury yield is approaching 4.5% — the same level where Donald Trump last year stepped back from his “Liberation Day” tariff escalation shortly after announcing it. Meanwhile, the US 30-year yield has clearly moved above the 5% threshold.

Following yesterday’s hot CPI inflation print, today’s wholesale inflation data surprised significantly to the upside as well.

April PPI Inflation Data:

• PPI MoM: +1.4% (est. +0.5%)

• PPI YoY: +6.0% (est. +4.9%)

• Core PPI YoY: +5.2% (est. +4.3%)

Markets: Volatile following the inflation data release

• Equities: US futures remain slightly positive but lost some ground pre-market. Asian markets traded mostly higher this morning, while Europe trades mixed

• Bonds: Yields continue to rise globally. US 10Y at 4.48%, US 30Y at 5.04%, Japan 10Y at 2.59%

• Commodities: il prices continue to climb with WTI above USD 102/barrel and Brent around USD 107/barrel. Precious metals are mixed, with silver rising toward USD 86/oz while gold trades slightly lower near USD 4’685/oz.

• Currencies: USD stronger

• Cryptos: slight pullback - Bitcoin USD 80k

• Volatility: The VIX remains around the 18 level

My View: If investors continue to ignore the inflation shock unfolding right in front of them, then I honestly struggle to understand current market pricing.

Inflation is becoming very real again. And I would not be surprised if the Federal Reserve soon starts discussing rate hikes again rather than remaining calm.

Rising yields are a major issue. Higher mortgage rates, higher refinancing costs for companies, sharply elevated credit card rates in the US, averaging around 21%, and significantly higher funding costs for governments themselves.

Bond investors increasingly seem to understand the situation correctly, while equity investors still blindly trust that the AI boom will overpower every macroeconomic problem.

Historically, bond markets tend to move ahead of the curve. Why should it be different this time?

What was previously only “cooking below the surface” is now becoming increasingly obvious.

And one critical factor remains largely ignored: the Strait of Hormuz is still effectively closed. Energy flows are far from normal, and a quick normalization scenario still appears unrealistic.

I do not want to call the exact timing of a crash. But in my view, markets have rarely been closer to a larger repricing than they are today.

And I am positioned accordingly.

Inflation in the US surged to its highest level since May 2023 as the Iran conflict and elevated energy prices continue to feed through the economy.

April CPI inflation data came in higher than expected:

• CPI YoY: +3.8% (est. 3.7%)

• Core CPI YoY: +2.8% (est. 2.7%)

Markets:

• Equities: US Futures initially traded lower, but saw a modest rebound after the data release.

• Bonds: Yields initially moved higher before easing slightly after the release. US 10Y at 4.43%, US 30Y at 5.0%, Japan 10Y at 2.55%. UK yields also moved higher amid political noise.

• Commodities: il prices continue to rise with WTI around USD 101/barrel and Brent at USD 107/barrel. Precious metals slightly weaker with silver at USD 84/oz and gold around USD 4’705/oz.

• Currencies: USD stronger

• Cryptos: slight pullback - Bitcoin USD 81k

• Volatility: The VIX tickt slightly towards 19

My View: I struggle to understand how markets interpret these inflation numbers in a constructive way. Inflation now appears on track to move closer toward the 4% level again.

The situation for the Federal Reserve is becoming increasingly complicated. The labor market still looks relatively resilient, while inflation remains the much bigger issue. In my view, markets still underestimate the possibility that the Fed may need to stay restrictive for longer, or potentially even consider another rate hike if higher energy prices continue to spread deeper into the economy through transportation, production, and consumer prices.

Higher interest rates also translate directly into higher mortgage costs for homeowners. Financial stress among consumers continues to build. Google searches for “help with mortgages” have reached levels last seen before the 2008 financial crisis. US foreclosures surged to a six-year high last quarter, while 55% of Americans say their financial situation is worsening. At the same time, the US savings rate dropped to its lowest level in 3.5 years.

The average American consumer is increasingly under pressure. High credit card balances and rising auto lease delinquencies are additional warning signs that should not be ignored.

Also, the argument of a “roaring economy” does not fully hold up anymore. Consumer finances are increasingly deteriorating beneath the surface. Rising living costs, expensive financing conditions, weakening savings rates, and growing debt burdens suggest that many households are already under significant pressure despite headline economic data still appearing resilient.

At the same time, the debt situation of the US government itself should not be ignored. The US remains heavily dependent on investors continuing to absorb massive Treasury issuance. With inflation staying elevated and interest rates remaining high, financing costs continue to rise. This increases pressure on the fiscal situation and leaves markets increasingly sensitive to any weakening in demand for US Treasuries.

US markets continue to trade around record levels despite the recent strong performance.

Warren Buffett recently stated in an interview that the stock market has increasingly become a casino, adding that speculative behavior and gambling activity among investors may be at the highest levels ever observed: “We’ve never had people in a more gambling mood than now”.

At the same time, Donald Trump described the current ceasefire with Iran as being “on life support”, highlighting how fragile the geopolitical situation remains.

India called for emergency energy measures, while authorities are increasingly encouraging people to work from home in order to reduce pressure on energy consumption and transportation systems

Markets: euphoria

• Equities: similar picture to last days - US strong, rest of the world sideways to weaker; Indian stocks fall

• Bonds: yields move clearly higher - US 10y at 4.41%, US 30y at 4.98%, Japan 10y at 2.53%

• Commodities: oiI prices moved higher fall - USD 98/barrel and Brent at USD 104/barrel.
  Precious metals: silver with strong rally to USD 86/oz while gold moved 0.5% up to USD 4’740/oz

• Currencies: USD unchanged, Indian Rupee under pressure

• Cryptos: moved higher - Bitcoin towards USD 82k

• Volatility: The VIX light uptick above 18

My View: Current market behavior increasingly reminds me of patterns seen during the dot-com bubble. Investors continue to chase momentum aggressively, while speculative positioning appears extremely stretched.

Following my Market Insights over recent months, I repeatedly shared my impression that a large number of market participants are no longer investing rationally, but rather gambling on ever-higher prices.

At the same time, geopolitical escalation risks may be closer again than at any point since the ceasefire started. Several Asian countries have already begun evaluating contingency measures to address potential energy shortages, yet financial markets continue to largely ignore these developments.

The semiconductor sector, which has seen an extraordinary rally, up more than 60% in the last 30 days, could also become vulnerable if the Strait of Hormuz disruption persists. Helium supply chains are increasingly under pressure, an important factor for global chip production. Any prolonged shortages could eventually force production disruptions within the semiconductor industry.

With investor positioning reaching increasingly extreme levels, offering opportunities, I implemented several transactions today, both on the short side and into selected long-term investment opportunities. More to be mentioned in my next Weekly Market Snapshot.

Financial markets are increasingly betting on a resolution to the Middle East crisis. Several European equity indices gained more than 2% yesterday, marking one of the strongest sessions of the year. Meanwhile, Wall Street continues to push higher, driven by strong enthusiasm around AI, solid first-quarter earnings, and growing optimism that tensions with Iran may ease.

Markets: euphoria

• Equities: higher

• Bonds: yields slightly lower - Japan 10y at 2.48%, US 10y at 4.34%, US 30y at 4.92%

• Commodities: oiI prices continued to fall - USD 92/barrel and Brent at USD 98/barrel.
  Precious metals higher again- silver above USD 80/oz and gold above USD 4’700/oz

• Currencies: USD softer

• Cryptos: sideways - Bitcoin at USD 80k

• Volatility: The VIX light uptick above 17

My View: Markets are once again trading on hope. Investors appear willing to look through geopolitical risks, rising long-term bond yields, and still elevated inflation pressures. Instead, the focus remains on growth expectations, liquidity, and the belief that central banks will eventually support markets again if conditions deteriorate.

I experienced the Dot-com Bubble, when almost any stock linked to e-commerce surged 10–20% in a single day, only to repeat the same move again the next day. I see very similar patterns now in stocks that merely have a potential future connection to AI.

The market increasingly prices possibilities instead of realistic future cash flows. Billions continue to flow into companies where the long-term monetization path remains highly uncertain.

The question is how long this blind investment cycle, what I would call a phase of market madness, can continue before investors start focusing again on valuations, profitability, and economic reality.

At the same time, markets appear extremely relaxed regarding geopolitical risks. The Middle East conflict is far from solved. There is one person in the WH desperately looking for such an end. However, Iran regime does not seem to be willing to give up and accept the rules set.
Energy supply disruptions remain a major unresolved issue. It is given, that this will have an impact on the economy with a certain delay. Yet investors continue to behave as if the next positive headline will permanently remove all downside risks.

History shows that periods of euphoria often last longer than expected, but they also tend to end very abruptly.

US President Donald Trump announced last night the end of “Project Freedom”, stating that the US should be close to reaching a deal with Iran.

Starting the day, Trump warned that if Iran does not accept a peace agreement, “the bombs are back”.

At the time of writing and publishing this, Iran has not yet officially responded.

Markets: already celebrate the announcement

• Equities: jump globally

• Bonds: yields slightly lower - Japan 10y at 2.50%, US 10y at 4.34%, US 30y at 4.94%

• Commodities: oiI prices falling sharply - USD 93/barrel and Brent at USD 102/barrel.
  Precious metals jump - silver above USD 77/oz and gold around USD 4’675/oz

• Currencies: USD falls

• Cryptos: higher - Bitcoin at USD 81k

• Volatility: The VIX falls below 17

My View: The news came out last night. My immediate Instagram post already carried the hashtag #TACOTuesday, because for me this announcement had very similar characteristics to previous Trump headlines and policy reversals.

The key question remains: why would the US stop such a naval operation before an actual deal is reached?

“Project Freedom” already looks questionable from an operational perspective. The US Navy reportedly guided only two vessels through the Strait during two days of operations. That hardly changes the broader situation around global energy flows.

We are now waiting for Iran’s reaction. At the same time, the question remains what incentive the Iranian regime would have to suddenly accept a deal under pressure.

Markets are already trading as if the conflict is effectively over, the Strait of Hormuz fully normalized again, and global oil flows secured.

In my view, investors continue to underestimate broader structural risks building beneath the surface: rising debt levels, persistent inflation pressures, elevated bond yields, high leverage across markets, geopolitical uncertainty, and growing political instability.

Despite all these unresolved risks, markets continue to price in ‘over perfection’

The Middle East situation continues to dominate global markets. The Strait of Hormuz remains effectively closed, with shipping activity still close to a standstill, despite political statements suggesting stabilization.

Donald Trump announced the launch of “Project Freedom”, under which the US will begin guiding neutral ships through the Strait starting today. The move comes after he signaled that Iran’s latest peace proposal may not be sufficient.

Iran immediately warned that such actions would breach the ceasefire.

Markets remain highly headline-driven. Oil prices spiked after unverified reports of missile strikes on a US patrol boat. Claims later denied by the US. Meanwhile, the United Arab Emirates condemned renewed Iranian missile and drone attacks.

On the supply side, major OPEC+ nations agreed on a symbolic production increase. However, actual supply remains dependent on the reopening of Hormuz, which has not happened.

Oil continues to move higher under these conditions. At the same time, the US 30-year Treasury yield crossed 5% for the first time in a year, reflecting rising inflation expectations and growing pressure on long-duration assets.

Markets: remain headline driven

• Equities: mainly lower

• Bonds: yields sideways to slightly higher - Japan 10y at 2.50%, US 10y at 4.4%, US 30y at 5.02%

• Commodities: oiI prices continue to rise - USD 105/barrel and Brent at USD 114/barrel.
  Precious metals lost some ground - silver around USD 73/oz and gold around USD 4’5250/oz

• Currencies: USD rises slightly

• Cryptos: higher - Bitcoin at USD 79k

• Volatility: The VIX back above 18

My View: Investors remain in denial mode. Despite a constant flow of negative headlines, markets are holding up surprisingly well. Risk assets continue to be supported, not by fundamentals, but by liquidity.

This is the key driver: The Federal Reserve’s balance sheet expansion since January is supporting markets in the short term. But it is also laying the foundation for persistent inflation.

The energy shock is real and unresolved. The war is clearly not over. The fragile ceasefire is already being tested, with both sides engaging again in the Strait of Hormuz. This remains the critical point: No flow, no normalization.

At the same time, political messaging remains disconnected from reality. Announcements of “progress” or even an “end of the war” have had no impact on actual oil flows. The physical constraints remain fully in place.

All this leads to the next phase: Higher rates for longer.

With that, it is not the question if, but when the pressure on equities will increase.The upcoming transition from Jerome Powell to Kevin Warsh adds another layer of uncertainty. Leadership changes at the Fed are typically accompanied by volatility and often weaker equity markets.

My base case remains unchanged: Markets are still underpricing the downside.

What we see right now is a market driven by headlines and liquidity, not by reality.

The Federal Reserve delivered its most divided decision since 1992, holding rates steady at 3.5%–3.75% in an 8–4 split. A clear sign that internal disagreement is rising at a time when macro visibility remains low.

While this may mark one of the final meetings under Jerome Powell as chair, he signaled his intention to remain on the Board of Governors.

Away from central banks, earnings season painted a more constructive picture, at least on the first sight.

Alphabet delivered strong results with 20% revenue growth and lifted its capex outlook to as much as USD 190 billion for 2026. Microsoft also beat expectations but flagged sharply rising memory costs as AI-related spending accelerates.

Across Big Tech, including Amazon and Meta Platforms, the message is consistent: the AI arms race is intensifying. Combined hyperscaler capex is now expected to reach roughly USD 725 billion in 2026.

In Asia, Samsung Electronics reported an over eightfold increase in quarterly operating profit, highlighting how deeply the semiconductor cycle is tied to this spending boom.

Markets: Iran developments continue to weigh on sentiment

• Equities: mostly down in Asia and Europe - only Nasdaq Futures with a light plus

• Bonds: yields keep rising - Japan 10y at 2.52%, US 10y at 4.41%

• Commodities: oiI prices jump - USD 108/barrel and Brent at USD 121/barrel.
  Precious metals regain - silver around USD 73/oz and gold around USD 4’620/oz

• Currencies: USD slightly falls

• Cryptos: lower - Bitcoin down to USD 76k

• Volatility: The VIX sideways around 19

My View: Reading between the lines, the picture is no longer as clean as markets would like to believe.

I see the AI narrative clearly shifting from excitement to escalation.

Anthropic is reportedly seeking funding at a USD 900 billion valuation, above OpenAI, which was valued at USD 852 billion just weeks ago. Backed by massive capital injections from players like Amazon, Nvidia, and SoftBank, the scale of investment is unprecedented.

This is exactly the point. Competition in AI is no longer about innovation. It is about financial firepower. Hundreds of billions are being deployed, with trillions potentially to follow. However, one key question remains unanswered: Where are the sustainable business models and future cash flows?

At current trajectories, this risks evolving into a classic capital destruction cycle, a race where multiple players spend aggressively, compress margins, and struggle to monetize at scale. A potential lose-lose scenario.

At the same time, markets are facing rising yields, elevated energy prices driven by geopolitical tensions, and increasingly stretched positioning.

The combination matters. We have:

• Expensive equity markets

• Rising cost of capital

• Massive upfront investment cycles

• And unresolved geopolitical risks

• Rising prices for goods

• Depressed consumer sentiment

• Greedy investors sentiment

That is not a stable equilibrium. The market continues to trade on pure optimism. But the margin for error is almost zero.

This week stands out as one of the most important macro and market inflection points in recent months. A rare combination of Big Tech earnings and a global cluster of central bank decisions will set the tone across asset classes.

Big Tech Earnings:
On the corporate side, the spotlight is clearly on the US mega caps. Results from Alphabet, Microsoft, Meta Platforms, Apple and Eli Lilly are expected to drive index direction, particularly given their heavy weight and ongoing AI-driven narrative.

In Europe, key updates from Airbus, Air Liquide, AstraZeneca, TotalEnergies, UBS and Schneider Electric will provide further insight into industrial demand, energy dynamics and financial sector resilience.

Central bank decisions:
At the same time, monetary policy takes center stage. A rare alignment of decisions from the Federal Reserve (Fed), European Central Bank (ECB), Bank of England (BoE), Bank of Canada and Reserve Bank of Australia adds another layer of uncertainty.

The Bank of Japan already set the tone this morning. As widely expected, it kept its policy rate unchanged at 0.75% (6–3 vote), but delivered a clearly hawkish message. The central bank reiterated its intention to continue tightening gradually, supported by rising inflation expectations and ongoing geopolitical uncertainties, particularly linked to the Middle East conflict.

Markets reacted accordingly. The Nikkei 225 slipped following the announcement while the Japan 10-year yield moved closer to 2.5%. Precious metals such as gold and silver saw some weakness on the back of the more hawkish tone.

Markets:

• Equities: mixed in Asia and Europe while Futures are negative in the US

• Bonds: yields remain elevated - Japan 10y at 2.48%, US 10y at 4.37%

• Commodities: oil prices supported by supply concerns with WTI USD 100/barrel and Brent at USD 111/barrel.
  Precious metals fall - silver around USD 73/oz and gold around USD 4’600/oz

• Currencies: USD rising while CHF weakens

• Cryptos: fall - Bitcoin down to USD 76k

• Volatility: The VIX rises from lower levels towards 19

My View: The market is becoming extremely stretched to one side. This is clearly reflected in the historic 17-day winning streak of the Philadelphia Semiconductor Index. A move never seen, driven by the latest earnings momentum from Texas Instruments and Intel. This record run eclipsed the previous 15-day record from 2014.

Valuations in parts of the market have now moved beyond levels seen during the dot-com bubble. That alone should raise attention.

The setup is simple: the bow is under extreme tension. When positioning, sentiment, and price action all align in one direction, it only takes a small trigger to unwind the move. The coming days offer plenty of potential catalysts: earnings, central banks, geopolitics.

At the same time, the situation around Iran remains unresolved. The market continues to largely ignore this risk. Current political positioning by Trump suggests more of a wait-and-see approach rather than a clear path toward resolution. The probability of renewed escalation remains elevated.

And this is where I see investors underestimating the bigger picture: the global economy is increasingly exposed to an energy shock scenario. Supply disruptions, fragile logistics, and geopolitical uncertainty are not reflected in current in prices of risk assets.

In such an environment, the downside reaction can be significantly faster than the upside build-up.

Is this the time of a turning point? At least, the current setup leaves very little margin for error. I expect at least bumpy markets ahead with more downside, why I increased my bets on falling stock markets by adding more short positions in the portfolio during the last days.

The US has extended its ceasefire with Iran for an undefined period. Meanwhile, Iran has reportedly targeted three vessels transiting the Strait without authorization.

Planned talks in Pakistan have been called off, as Iran indicated it would not send a delegation.

The situation remains fragile and highly unpredictable.

Markets: US equities continue to reach new all-time highs, with investors seemingly brushing aside geopolitical tensions and rising risks. At the same time, oil has climbed back above USD 100 per barrel, reflecting growing concerns in energy markets.

My View: Current investor behavior, particularly the persistence of systematic and momentum-driven strategies, feels increasingly detached from underlying realities. Markets are priced for pure optimism, yet the risk backdrop has not improved. If anything, uncertainties are compounding almost daily.

I remain highly attentive to headlines, as any sudden development, or even a single tweet, has the potential to shift market direction abruptly.

At this stage, I see no compelling reason to adjust my allocation. The current risk-reward profile does not justify increasing exposure, especially given the potential for sharp downside moves driven by escalating uncertainty or negative economic news.

That said, I acknowledge the possibility that this risk-on environment may persist longer than expected, and I am willing to accept that risk.

The core issue remains unchanged: uncertainties are not decreasing, they are accumulating.

We are now in the final hours of the temporary ceasefire. The situation is once again shifting toward escalation. A US delegation has travelled to Pakistan in an attempt to keep diplomatic channels alive. However, Iran signaled it will not participate in any talks, putting negotiations effectively at risk before they even begin.

At the same time, both sides are already accusing each other of violating the ceasefire terms, a typical pattern seen ahead of renewed conflict phases. The window for de-escalation is narrowing quickly.

Markets: US markets are holding up quite well for now, supported by hope rather than clarity. While European markets moved lower into the closing.

My View: Markets remain optimistically positioned, arguably too optimistic given the underlying reality. Investors are still conditioned to expect the next supportive headline, whether it’s another statement published by Donald Trump or a last-minute “TACO-style” announcement that delays escalation once again.

Sentiment indicators continue to hover in “greed” territory, close to “extreme greed.” That is typically not the environment where risks are properly priced.

The clock is ticking. The situation is once again at the critical point.

If the ceasefire officially expires without a credible path forward, the probability of a renewed escalation increases materially. This is not just about headlines, it directly ties into the unresolved issue of energy flows and the structural risk around the Strait of Hormuz.

A re-acceleration of the conflict would likely trigger:

• Downside pressure on equities

• A sharp move higher in oil prices

• A delayed reaction in volatility, followed by a potential spike

This remains a headline-driven market, but one where the gap between positioning and reality is widening again.

The Middle East conflict is back at the center of market attention, with the Strait of Hormuz remaining the critical pressure point.

Tensions are rising again. Both sides reportedly fired on vessels attempting to transit the strait, while the US intervened directly, taking control of tankers and cargo ships trying to pass through. What was framed as a temporary stabilization phase is clearly starting to unravel.

The ceasefire agreement is set to expire in just two days. At this stage, there are no clear signals that an extension or sustainable resolution is in place.

Markets: oil prices move higher on renewed supply fears, equities broadly lower

My View: Markets are once again trading on hope, as equities should trade much lower. But the underlying reality is shifting.

The focus should not be on whether a ceasefire headline gets extended for a few more days. The real issue is the functionality of the Strait of Hormuz. As long as transit remains disrupted or controlled, the global energy supply is effectively constrained.

We are now seeing the first signs of what I have been highlighting: escalation risk was never off the table, it was just temporarily paused. Both sides are still too far apart to reach a meaningful deal, and that is exactly what markets continue to underestimate.

If the ceasefire expires without a credible framework, the situation can deteriorate quickly. Oil becomes the key transmission channel into inflation expectations, central bank policy, and ultimately equity valuations.

Markets still appear complacent relative to the magnitude of this risk.

This remains a highly headline-driven environment, but with increasingly asymmetric downside if the situation escalates further.

The market momentum continues to accelerate. The Nasdaq has now posted 10 consecutive days of gains — the longest winning streak in years — highlighting the strength of the current risk-on environment.

Equities are increasingly pricing in a near-perfect scenario: progress in peace talks, a lasting ceasefire, declining oil prices, and cooling inflation. The combination of these factors fuels the perception that the macro backdrop is turning decisively supportive again.

At the same time, volatility has faded, and fear has largely disappeared from the market. Positioning reflects confidence. Markets are not trading current reality, but a forward-looking, highly optimistic outcome.

The Warren Buffett Indicator shows its highest point ever, marking with today’s value of 221% an overvaluation. Regarding Buffett, an overvaluation starts at 150%, a level above 200%, he calls it “playing with fire”.

Markets: overall sideways move after latest rally

My View: This is a classic “mania phase” — where markets extrapolate best-case scenarios and price them in as the base case.

The key driver right now is the expectation that upcoming talks will lead to a lasting resolution. But this also defines the risk.

If negotiations next week fail and the ceasefire expires, this entire setup can reverse very quickly. The current positioning leaves little room for disappointment. This is a situation to monitor closely as it unfolds.

At the same time, AI mania is back on the trading floor.

Those following my work know my stance: the biggest bottleneck remains energy. The scale of power required for data centers is massive, and often underestimated. This alone challenges the sustainability of the current investment wave.

Beyond that, the key question remains unanswered: how will the hundreds of billions being invested today translate into future free cash flows?

At this stage, I do not see a clear, scalable business model that justifies these valuations. AI will undoubtedly continue to develop and improve productivity, but in my view, it will remain a supportive tool, not a full economic replacement engine.

Markets, however, are once again pricing a much bigger story. And that gap between narrative and reality is where risk builds.

Markets have staged a strong rally over the past days, pushing indices back above pre-war levels. The move appears largely sentiment-driven, with investors leaning on optimism rather than fundamentals.

On the macro side, US PPI, with 0.5% MoM (est. 1.1%) surprised to the downside, offering short-term relief on the inflation front. In contrast, inflation data across Europe showed upside pressure.

Markets: risk-on

• Equities: moved higher, with major indices trading above levels seen before the escalation in the Middle East.

• Bonds: yields fell back from recent highs - Japan 10y at 2.41%, US 10y at 4.26%

• Commodities: oil prices fell based on hopes war ends - WTI USD 91/barrel and Brent at USD 95/barrel. Precious metals rallied - silver above USD 79/oz and gold above at USD 4’800/oz

• Currencies: USD fell from recent highs -

• Cryptos: falling back from yesterday’s highs - Bitcoin down to USD 74k

• Volatility: The VIX fell back to 18

My View: This rally is built on one key assumption: that the ceasefire will hold and the war will end soon which rather looks like a dream to me.

Nevertheless, markets are focusing on the wrong variable. It is not about if or when the war ends, it is about energy flows.

Roughly 20% of global oil supply moves through the Strait of Hormuz. Since early March, flows have been severely disrupted following the attacks of US and Israel on Iran when the Strait of Hormuz got closed. We are now 43 days into this shock. A timeframe that historically would have already triggered a much stronger repricing across assets.

Assuming that the Strait opens today again, it would take weeks to get the energy market and supply back into balance. And shortages are seen across Asian countries while Europe and US just see higher prices at the petrol stations, however also thanks to oil stocks built up in case of crisis.

This disconnect of the markets with the reality is striking. The reason, why I do not put my money on this bet as I do not see equity markets rallying further. Or in case they do, it could end in a disaster.

At the same time, monetary policy expectations remain overly optimistic. In Europe, rising inflation increases the probability that the ECB may be forced into a more hawkish stance, potentially even considering rate hikes. In the US, despite similar underlying inflation pressures, markets continue to price a “best case” scenario, the Fed staying on hold or even leaning dovish.

This reflects a broader belief: that loose monetary policy will continue to support markets. However, liquidity is already elevated. Money supply remains high and is itself a contributor to persistent inflation, making the 2% target increasingly difficult to achieve.

As long as liquidity expectations dominate, risk assets may continue to ignore the oil shock. But, in my view, this comes at a cost.

Valuations may look more attractive after recent volatility. But they do not reflect a sustained high oil price environment. If oil remains at current levels or moves even higher due to prolonged disruption, the repricing could be abrupt.

Markets are once again priced for perfection, in a world that is anything but perfect.

In my main scenario remains unchanged, I see a potential for higher oil prices from here, lower equities, higher bond yields and precious metals with wider swings also higher.

A cautious stance remains warranted.

Talks in Islamabad between the US and Iran ended after 21hours negotiations without reaching a deal.
Donald Trump issued a new threat to block the Strait of Hormuz for any type of shipments. Iran responded with a stark warning: if its ports are threatened, no port in the Gulf will be safe.

At the same time, geopolitical risks broadened. Trump signaled potential 50% tariffs on China, following reports that Beijing may deliver new air defense systems to Iran.

Markets: back and forth - today: back again

• Equities: globally down again

• Bonds: broadly tick higher - Japan 10y at 2.47% (!) highest since decades, US 10y at 4.35%

• Commodities: oil prices jumped higher: WTI USD 104/barrel and Brent at USD 102/barrel. Precious metals fall - silver above USD 74/oz and gold above at USD 4’700/oz

• Currencies: up again - USD unchanged

• Cryptos: under pressure - Bitcoin down to USD 70k

• Volatility: The VIX back above 20 at level 21

My View: What started as a regional conflict is increasingly turning into a multi-front geopolitical escalation.

Talks failed. Strategy failed. The key question now: what is the exit strategy?

For the US administration, stepping back would implicitly mean admitting a major miscalculation. That makes a quick resolution politically difficult and increases the risk of further escalation.

At the same time, markets remain surprisingly resilient, especially equities.

This is where the disconnect becomes critical:

• Energy shock → inflation pressure rising again

• Yields moving higher → tightening financial conditions

• Consumer sentiment risk → with rising costs for goods and transportation

• Geopolitical risk expanding → tail risks increasing

Yet equities are still trading as if this is a quick and only temporary disturbance.

To me, current valuations do not reflect this reality. Positioning, liquidity, and still-present “buy-the-dip” behavior seem to dominate, for now. But this setup looks increasingly fragile.

I remain cautious. Risk/reward at current levels is unattractive.
I continue to run limited exposure and stay positioned for a market stress scenario. Because if this “double blockage” of the global oil artery persists, the repricing across assets is not a question of if — but when.

This weekend, the first talks between the US and Iran are set to take place —

In the meantime, the Strait of Hormuz, a vital artery for global oil shipments, remains effectively blocked. Despite the announced ceasefire, tanker traffic is still near a standstill. According to Reuters, flows are running at well below 10% of normal volumes, an extraordinary disruption for global energy markets.

At the same time, Saudi Arabia reports additional supply constraints after damages:
– Pipeline flows reduced by ~700,000 barrels per day following pump station damage
– Output capacity down by ~600,000 barrels per day

This afternoon, markets will focus on the US March CPI release — the first major inflation print since the Iran conflict triggered a severe energy shock. This data point will be critical for rate expectations and overall market direction.
Markets: mixed

• Equities: Asia, Europe higher, US flat

• Bonds: broadly tick higher - Japan 10y at 2.44% (!) highest since decades

• Commodities: oil prices moved higher with WTI above USD 98/barrel and Brent at USD 96/barrel. Precious metals rise further - silver above USD 76/oz and gold above at USD 4’775/oz

• Currencies: no big moves - USD unchanged

• Cryptos: up - Bitcoin above USD 72k

• Volatility: The VIX little changed - remains below 20

My View: Fragile oil flow. Fragile economy. Fragile consumers.

Despite clear signs of ongoing supply disruption and rising cost pressure, equity markets continue to show a surprising level of optimism.

My view remains unchanged: investors are broadly too complacent.

At least, investors continue to weigh the persistent supply risks, with oil prices edging higher again.

US-Iran talks this weekend, investors believe to be a potential turning point. However, it will be far from a resolution. The way the ceasefire was announced and Irans 10-points plan published right after let me believe that the talks will not end successfully after the weekend, leaving investors to be rather disappointed.

Today’s inflation data could act as a key catalyst. A stronger-than-expected CPI print would reinforce the reality of the energy shock and likely push rate expectations higher, a combination that markets are not fully pricing in.

The disconnect between macro risk and market pricing remains elevated.

A cautious stance remains key. After this weeks strong rally, a near-term dip cannot be ruled out this moment.

The Middle East conflict remains the dominant market driver. News flow is relentless, with new developments emerging almost on an hourly basis.

This afternoon, Israel agreed to enter direct negotiations with Lebanon — a potentially constructive signal. However, at the same time, the Strait of Hormuz remains effectively closed, keeping the core risk unresolved.

Markets: mixed

• Equities: US indices turned positive in the later trading session

• Bonds: largely unchanged

• Commodities: oil prices moved higher with WTI close to USD 100/barrel and Brent at USD 97/barrel. Precious metals rise further - silver above USD 76/oz and gold above at USD 4’775/oz

• Currencies: USD lower again

• Cryptos: higher - Bitcoin above USD 72k

• Volatility: The VIX falls below 20

My View: As already highlighted yesterday on Instagram, the more details emerge around the announced US-Iran ceasefire deal, the less convincing the overall setup appears to me to move in a positive direction.

It increasingly looks like a rushed attempt by Trump to engineer a ceasefire, without a clear and credible plan to resolve the underlying conflict. The US assumption that this would be a short and straightforward operation was fading quickly.

Most importantly:
The Strait of Hormuz is still not truly open.

At the same time, Saudi Arabia is now indicating a production loss of roughly 600’000 barrels per day due to damage, a disruption that cannot be restored overnight.

Oil remains the key barometer for now.

While equities are currently drifting higher and behaving as if risks are fading, the oil market is telling a very different story. This divergence is critical.

Markets appear disconnected from reality, and that is where the real risk lies.

If and when investors start to reprice based on actual supply disruptions and prolonged geopolitical stress, the adjustment in risk assets could be sharp.

A cautious stance remains key.

One hour before the deadline, US and Iran agreed on a two weeks ceasefire plan which was mediated by Pakistan. During this time the Strait of Hormuz should be open again.

Ten terms by the Iranian proposal got accepted by the US for negotiations. Among these, Iran should charge all ships passing the Strait and should take full control of the entire passage.

First negotiations are scheduled for Friday 10 April.

In the meanwhile, Israel came out with a statement, noting that it was a decision by the US president. Israel makes clear that it has not achieved the goals as the Iran regime is still there. Lebanon is not included in the ceasefire.

Markets: equities are pumping oil is dumping

• Equities: indices jump globally

• Bonds: yields fall - US 10y yield at 4.24% - Japan 10y 2.37%

• Commodities: oil prices slump - WTI crude oil down USD 96/barrel and Brent at USD 95/barrel. Precious metals surge - silver above USD 77/oz and gold above at USD 4’800/oz

• Currencies: USD falls while Swiss franc strengthened

• Cryptos: jump - Bitcoin above USD 71k

• Volatility: The VIX falls back to 20

My View: The short-term market reaction makes sense. At first sight, this looks like an all-clear signal: less immediate war risk, lower oil, lower volatility, higher equities. But I do not see this as a convincing reason for markets to keep rising from here.

The key issue is that the underlying conflict is not resolved. The ceasefire is temporary, Israel has already distanced itself from parts of the arrangement, Lebanon is excluded, and the situation around the Strait of Hormuz remains operationally and politically fragile. Shipping and energy markets may have received short-term relief, but the operational reality in the Strait is far from normal.
On top of that, I struggle to see how the US would accept a lasting framework in which Iran exerts full control over the passage and charges vessels at will.

For me, this looks more like a relief rally than the start of a sustainable upside leg. Markets have priced out a portion of the immediate worst-case scenario, but they may be far too quick to price in stability.

Tonight marks another key moment in the ongoing geopolitical escalation: Donald Trump’s latest deadline for Iran to reopen the Strait of Hormuz and reaching a deal expires at 8pm ET (2am CET).

It is already the fourth adjustment of this ultimatum, raising the key question: Will this deadline going to be moved again?

Meanwhile, reality on the ground tells a different story.
Both sides continue military actions, with Iran intensifying activity across the Persian Gulf.

Markets: continue to show remarkable resilience.

• Equities: broadly down - however show high resilience to the developments

• Bonds: yields almost unchanged - US 10y yield at 4.32% - Japan 10y 2.41%

• Commodities: oil prices higher again - WTI crude oil USD 114/barrel and Brent at USD 108/barrel. Precious metals fluctuate - silver at USD 72/oz and gold almost at USD 4’700/oz

• Currencies: USD falls while Swiss franc loses ground against the euro

• Cryptos: lower - Bitcoin USD 68k

• Volatility: The VIX fairly up to 27

My View:The situation is becoming increasingly concerning.

The White House appears overwhelmed by the dynamics of this conflict. What initially may have been perceived as a controlled escalation has clearly moved beyond predictable boundaries.

Repeated deadline extensions, combined with increasingly aggressive rhetoric, highlight a lack of strategic clarity. The tone and threats coming from Washington are unprecedented in modern times and reflect weakness rather than strength and definitely crossed a red line.

From a market perspective, the key framework remains unchanged, as I outlined in the latest Weekly Market Snapshot sent out over the weekend.

Scenario 1: reaching a deal (low probability):
Relief rally in equities, lower yields, sharp decline in oil, precious metals higher.

Scenario 2: prolonged conflict (base case):
Higher oil, supported precious metals, rising yields, falling equities.

Two days later, I continue to firmly lean toward the second scenario.

The Strait of Hormuz and the oil remains the single most important barometer. Sustained levels above USD 100 are no longer a temporary spike. Infrastructure damage lead to future disruptions and are increasingly pointing toward structural supply issues.
This is critical, as higher energy costs feed directly into inflation, central banks lose flexibility and economic growth comes under pressure.
In Asia, the stress is already visible, with countries facing increasing oil and gas shortages.

Markets are far too optimistic and continue to underestimate the severity of the situation. The current resilience in equities is not a sign of strength. It is a sign of complacency.

Risk-reward is highly asymmetric. Therefore my stance remains unchanged:

• Stay cautious

• Avoid adding risk

• Be prepared for volatility spikes

This environment is not about chasing returns, it is about protecting capital and waiting for better opportunities.