Steady As She Goes 🚢

The S&P 500 is priced at 27.52x forward earnings — a level that historically demands flawless macro execution — yet the macro backdrop is anything but flawless: core PCE is running at 3.4%, headline PCE at 4.1%, and the Fed has no credible path to cut rates. Layered on top, IRGC strikes on US bases in Qatar and Syria over the weekend, three confirmed US military deaths, and active Congressional movement on Iran secondary sanctions create a genuine Brent oil spike scenario ($88-100+) that would re-accelerate inflation and further compress equity multiples. With VIX at 17.81 and falling, the options market is offering protective puts at bargain prices — investors still holding long equity exposure should use this window to buy August/September S&P puts or rotate into energy names (Brent-leveraged producers) as a natural hedge against the Hormuz tail risk. Watch the 4.16% 2-Year Treasury yield: any move above 4.35% on hot inflation data or a Fed hawkish surprise would be the confirming signal that the multiple compression has further to run.