Stocks Tumble, Oil Jumps With No End In Sight For Iran Conflict

Welcome to Risk Reversals Market Matrix, your AI-generated podcast curated by Guy

Adami and Dan Nathan, breaking down the days most impactful stock market and business

headlines.

I'm your host, Brunson, and all of today's market data is provided by FACSET, its Thursday

March 12, and these are your top stories.

Stocks fill sharply Thursday, as escalating tensions in the Middle East pushed oil prices

higher and rattled global markets.

The Dow Jones industrial average dropped 1.6%, while the S&P 500 index lost 1.5%, and

the NASDAQ composite index slid 1.8% as selling spread across banks and technology shares.

Crude surged after Iran's new Supreme Leader, Mojtaba, Kamene, said the straight of

Hormuz should remain closed, sending West Texas intermediate crude oil up nearly 10%,

to about $96.40 per barrel, and Brent crude oil above $100 for the first time since 2022.

While most sectors fell, energy stocks such as Chevron Corporation and Exxon Mobile Corporation

moved higher alongside oil prices.

While financials weakened with Morgan Stanley, leading declines after limiting withdrawals

from a private credit fund.

The surge in oil has also raised fresh inflation concerns and push treasury yields higher, prompting

traders to scale back expectations for federal reserve easing.

Markets are now pricing in less than one quarter point rate cut this year, compared with expectations

for multiple cuts just weeks ago.

Here yields are already feeding into consumer borrowing costs, with the average 30-year mortgage

rate climbing to about 6.11% comma, the biggest weekly jump in nearly a year.

The rise in borrowing costs is adding new uncertainty to the spring housing market, just as sales

and affordability had begun to improve.

According to CNBC, the surge in oil toward $100 a barrel is reviving concerns about

stagflation, a scenario where high inflation coincides with slowing economic growth, making

it difficult for policy makers to respond.

With inflation still above the federal reserves 2% target and the labor market showing signs

of cooling, some economists say the risk is rising.

Ed Yardini of Yardini Research recently raised his odds of a stagflation scenario to

about 35% if elevated oil prices persist.

Economists say the key variable is duration.

If energy prices remain high long enough, they could push inflation higher while weakening

growth at the same time.

While markets grapple with geopolitical risk, investors are also watching developments

in the private credit market.

Blue Owl Capital is defending a $1.4 billion loan portfolio sale after the transaction

sparked renewed concerns about liquidity across the $1.8 trillion sector.

The firm said the loans were sold to four institutional investors, including major pension

funds and insurers, at roughly $99.7 on the dollar, with no special guarantees or hidden

incentives.

The sale is part of a plan to return cash to investors in its Blue Owl Capital Corp.

2 fund after the firm halted quarterly redemptions, a move that rattled sentiment and sent its

stock lower.

Bloomberg notes the episode comes as other firms, including BlackRock and Morgan Stanley,

have also limited withdrawals from some private credit funds amid rising redemption requests.

The Wall Street Journal writes that another shift is playing out in markets, as investors

try to identify the winners and losers of the AI trade.

Some hedge funds have generated huge gains this year, by betting on the hardware companies

powering the AI boom, especially semi-conductor and infrastructure names, while betting against

software firms that could eventually be disrupted by the technology.

At 0.72, portfolio manager John Thompson reportedly made hundreds of millions of dollars using

that strategy.

On the other side of the trade, longtime software-focused investor, RGM Capital, is shutting

down after nearly 23 years in business, following losses this year.

The divergence highlights how investors are increasingly favoring AI infrastructure companies,

like applied materials and micron technology, while becoming more cautious on software

names such as Salesforce and Workday, as they assess how disruptive AI could ultimately

become.

A federal judge granted Amazon a preliminary injunction blocking perplexity's AI shopping

agent from accessing password protected areas of its website, while the legal battle continues.

The Wall Street Journal reports that the dispute highlights a growing conflict between retailers

and AI companies, as automated agents begin shopping on behalf of consumers.

Retailers worry that AI bots bypass their websites, ads, and sponsored search results.

Threatening billions in high margin retail advertising revenue that depends on direct user traffic,

while Amazon is trying to keep shopping within its own ecosystem with tools like its

Rufus AI Assistant, competitors like Walmart and Target are experimenting with integrating

AI platforms into their shopping experiences, signaling a broader shift in how consumers

may shop online.

Bloomberg reports that the surge of interest in artificial intelligence companies is driving

wealthy investors to hunt for private shares in firms like SpaceX, OpenAI, and Anthropic.

Many are gaining exposure through special purpose vehicles, or SPVs, which pool investor

money to buy steaks in private companies ahead of potential IPOs.

Investment in these vehicles has surged more than 11fold since 2021 as investors chase

the possibility of big gains if these companies go public at higher valuations.

But the structures can be opaque and expensive, often layering on management fees, and complex

ownership arrangements that make it unclear whether investors actually own the shares

they think they do.

In some cases, the rush has even attracted fraud schemes, highlighting the risks of chasing

access to the hottest private AI companies.

The race to integrate artificial intelligence into everyday life is also reshaping the auto

industry.

Tesla has begun producing its first cyber cap, a fully autonomous vehicle with no steering

wheel, or pedals, that is designed to run entirely on the company's full self-driving

software.

The car is expected to power Tesla's planned Robotaxi network, and could eventually

sell for under $30,000, though the company still needs regulatory approval from the National

Highway Traffic Safety Administration before it can be sold.

CEO Elon Musk has positioned the cyber cap as central to Tesla's shift from a traditional

automaker to an artificial intelligence and robotics company.

The bet comes at a crucial moment for Tesla, as vehicle sales, which still make up more

than 70% of its revenue, declined last year, and some analysts expect another drop in

2026.

That's your risk-reversal market matrix.

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All of the articles mentioned on today's podcast can be found in the show description.

To get Guy Adami and Dan Nathan's market analysis, on these topics and more, listen to

market call on risk-reversals YouTube page Monday through Thursday.

Story curation by risk-reversal, scripts by perplexity-proud, voice by 11 laps.

I'm Brunson.

Thanks for listening.