When oil prices rise, bond prices fall. When bond prices fall, yields rise. When yields rise, everything starts to crack: from tech stocks to consumer credit. The higher oil prices go, the faster everything else collapses. Hopes for an imminent rate cut evaporate, consumption falls, and overleveraged segments begin to collapse due to deleveraging.
And while financial markets have so far ignored the risks of the AI bubble and widespread wars, they are unable to ignore a spike in oil prices.
More than 40 energy sector facilities in the Middle East have sustained serious damage.
Not 1. Not 5. Forty.
$XLE is the only S&P sector to have shown positive growth since the start of the war.
Everyone else is still pretending this is just temporary.