1. Oil stocks already look expensive.

Investors have capitulated into buying oil stocks, overlooking weak longer-term fundamentals in a bet that major supply disruption will give an extra boost to earnings.
But it’s tough to make the case for a sustainable surge in crude prices.
The market is firmly in surplus, with demand drivers subdued. And if the conflict weakens global growth, then consumption will take a further hit. So it’s clearly the potential for supply disruption spurring investors to dive in.
Also, the durability of gains in crude depends on how long the conflict lasts, as well as on any longer-term damage to oil infrastructure. The sector already looks relatively expensive after this week’s re-rating.

2. Market strategist Ed Yardeni hiked the probability of a systemic market crash to 35%.

“The dual threat of an oil shock and rising unemployment has trapped the Fed between "Iran and a hard place," forcing traders to push rate-cut expectations back to September.”

While Yardeni maintains a long-term "Roaring 2020s" outlook, the immediate combination of a hardline transition in Tehran and a potential 1970s-style stagflation loop has triggered a massive flight to the dollar.

3. ETF flows.

"Investors rotated aggressively out of U.S. large caps last week, favoring global funds, bonds, and broader equity universe (with a tilt towards consumer cyclicals)".

4. Big Picture analysis for the Korean Kospi Index.

The recent correction in the KOSPI index drove its forward P/E to ~9!

Here is the scenario analysis from MS.

5. Sectors most inversely correlated to oil prices are Airlines, Autos, and Luxury.

No surprise. But contrarians are watching.

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