🐺 Oil Near $99. The Fed Meets Wednesday. Adobe Beat and Still Fell 8%.

Good afternoon. Happy Friday the 13th. The market is acting like it knows.

S&P 500 closed at 6,632 (-0.6% today, -2.8% this week). Nasdaq fell to 22,105. Dow dropped to 46,558. Oil is at $98.71 and climbing. Gold hit $5,150. Bitcoin bounced to $71,146. The 10Y sits at 4.21%.

This is the worst week for the S&P since last October. Next week the Fed meets.

OIL › WTI crude closed at $98.71, up 3.1% on the day and now within spitting distance of $100. Bloomberg published Hormuz closure scenarios this week: one month of shutdown puts oil at roughly $105, two months at $140, three months at $165. The Trump administration suspended the Jones Act to try to tame prices. The U.S. is releasing 172 million barrels from the Strategic Petroleum Reserve. None of it has been enough. Iran is reportedly still laying mines. The Strait is effectively a war zone.

EARNINGS › Adobe ($ADBE) beat EPS by 4.3% ($6.06 vs $5.81) and still fell 7.6%. Then the CEO announced he's stepping down after 18 years. Ulta ($ULTA) beat by 15% and cratered 14.3%. Lennar ($LEN) missed EPS by 42% and somehow went up 2.5%. The message is clear: in this tape, backward-looking beats don't matter. Guidance, leadership stability, and forward visibility are the only things getting rewarded. If you're trading earnings, the number isn't the trade anymore.

FED › The FOMC meets Tuesday and Wednesday. A hold is widely expected. The real event is Powell's press conference Wednesday afternoon. Trump posted: "Where is the Federal Reserve Chairman, Jerome 'Too Late' Powell, today? He should be dropping Interest Rates, IMMEDIATELY." Bessent responded separately: "A long way from Fed going back to QE." Powell has to thread the needle between an oil-driven inflation spike and a labor market that just printed negative payrolls. His tone will set the direction for weeks.

DEFENSE/AI › Palantir ($PLTR) is having a week. They announced a sovereign AI OS partnership with Nvidia, a multi-year expansion with GE, and posted that Maven Smart System is "deploying across the entire department" (the Pentagon). In a market where most tech is getting sold, defense-linked AI is the one pocket that keeps attracting capital. Palantir's stock outperformed the Nasdaq by a wide margin this week.

NEXT WEEK › Monday: Dollar Tree ($DLTR) earnings, retail sales data. Tuesday: Lululemon ($LULU) earnings, FOMC begins. Wednesday: Fed decision + Powell presser, Micron ($MU) earnings (consensus EPS $8.67, the AI memory demand read), General Mills ($GIS). This is the heaviest single-day calendar of the quarter: a Fed decision and a major semi earnings report on the same afternoon.

Oil at $99 isn't just a headline. It's a repricing engine that touches almost everything you own. Here's how to think about it.

The direct hit is inflation. Goldman's math from last week: every $10 sustained increase in oil adds roughly 0.4% to headline CPI over three months. Oil is up about $30 from pre-war levels. If it stays here, that's potentially 1.2% getting added to CPI by the May and June prints. That takes headline inflation from 2.4% toward 3.5%+, which doesn't just delay rate cuts. It reopens the conversation about rate hikes.

The second-order hit is margins. Airlines are already warning (United's CEO flagged "meaningful" fuel cost impact). Cruise lines have been getting destroyed for two weeks. Any company with significant transportation, logistics, or energy input costs is going to see margin compression in Q1 and Q2 reporting. That includes retailers, restaurants, and manufacturers.

The third-order hit is consumer spending. Gas prices follow crude with a lag. If WTI stays near $100, pump prices are heading toward $4.50+. That directly reduces discretionary spending, which is why consumer cyclical stocks have been the weakest sector for two weeks.

The Bloomberg Hormuz scenarios are the tail risk map. One month of full closure: $105. Two months: $140. Three months: $165. Trump says the war will "end soon." The Jones Act suspension and SPR release are real policy responses. But until ships are actually transiting the Strait again, the supply disruption is the dominant force.

For positioning: energy is the obvious hedge and has been the best-performing sector all year. Gold and commodities continue to work as inflation protection. On the other side, rate-sensitive growth, travel, and consumer discretionary are the most exposed. If you're long those sectors, this is the week to honestly assess your sizing. Powell's tone Wednesday will either validate the current selloff or give the market a reason to bounce. Don't position for both. Pick a side or stay small.

The Fear and Greed Index hit 21 this week. Extreme Fear. The last time it was this low was October 2025, right before a 15% rally. That doesn't mean it bounces on Monday, but historically, buying when the index is below 25 has been a positive expected value trade over the next 3 months. Ask Rallies what it means for your portfolio.

Ask Rallies →

Thanks for reading! Catch you in the next one!

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