Oil Edges Higher | Fed Divides | Hassett Pushes Back

You could feel the temperature shift before the open. 

Brent pushed through $71, the highest level since summer, as U.S. air power stacked up in the Middle East. 

The Dow, S&P 500, and Nasdaq all opened softer and stayed measured, while the 10-year Treasury held above 4.10%. 

Not disorderly. Just less generous.

Then Walmart entered the frame. A strong quarter on the surface. But the full-year outlook came in lighter than hoped. 

When the country’s largest retailer lowers its earnings trajectory, the consumer complex recalibrates quietly. Multiples don’t collapse. They compress.

Underneath, dispersion widened.

• Etsy surged on the Depop sale.
• DoorDash bounced on order growth.
• Carvana and Wayfair fell despite revenue beats.

This wasn’t a selloff. It was a sorting process.

The market is currently pricing contained escalation and conditional Fed patience. 

The variable is persistence. If oil stays elevated, inflation math firms on its own, and duration carries the burden.

The Filter

Energy is nudging rates without asking permission. That matters for portfolios built on long-dated growth assumptions.

Retail reminded us that guidance shapes valuation more than headlines do.

Software showed the new filter. AI inside the product is table stakes. Pricing architecture is the differentiator.

The Fed just held rates steady, and in crypto, that often marks the start of major positioning before liquidity flows back in. 

These macro transitions have kicked off some of the biggest runs in past cycles. But the real gains don’t go to every coin, they go to projects with real adoption, strong fundamentals, and infrastructure institutions are already using. 

One coin is flashing those signals right now and still trades at a steep discount.

Get the full breakdown before the window closes.

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This isn’t a headline about war. It’s a headline about probability. And probability is enough.

The U.S. just assembled the largest air presence in the Middle East since 2003. Carriers. F-35s. Command aircraft. Options on the table. Diplomacy still alive, but not in control.

You don’t need a strike for markets to move. You just need credible escalation.

Escalation Math
• Additional carriers and stealth jets shift the baseline risk higher.
• Iran signals talks, but missile capacity remains intact.
• Traders start pricing shipping lane vulnerability.
• Oil pushes higher even before a single shot is fired.
• Yields firm as energy risk seeps into inflation expectations.

See how this works? Energy doesn’t wait for impact. It front-runs the possibility.

Higher crude tightens conditions quietly. It acts like a rate hike without a vote. 

And when markets feel a rate hike without a meeting, the next question isn’t geopolitical. It’s monetary.

Duration feels it first. Defense and energy leverage catch a bid. Even “risk on” days start carrying fine print.

If oil stays elevated, inflation math changes on its own. That shifts positioning. Not panic. Posture.

This isn’t about predicting conflict. It’s about respecting that energy now sits at the margin of the rate conversation.

For months, the glide path felt implied. Now it needs approval.

The January minutes made one thing clear: there’s no urgency inside the room. 

Inflation isn’t defeated. Labor isn’t collapsing. And the committee isn’t unified on what comes next.

That changes the tone. Not dramatic. Just tighter.

Policy Split
• Most officials want more inflation progress before cutting again.
• A few would have preferred language that kept hikes alive.
• Two dissented in favor of another cut.
• Tariff effects show up in goods prices.
• Labor looks stable enough to wait.

This isn’t “cuts are gone.” It’s “cuts need proof.”

That keeps every CPI and payroll print market-moving. The front end can’t confidently price a glide path, so rallies lose breadth. When communication is stop-start, multiples hesitate.

The market is currently pricing selective easing later this year. The primary risk is inflation that drifts sideways and forces patience longer than expected.

Especially if the definition of inflation itself becomes contested, and the debate shifts from price levels to credibility.

This sustains discipline. Funded growth holds up. Balance sheets matter more.

Anything that needs multiple expansion to work faces pressure.

In this environment, rallies broaden less and fade faster. When the Fed waits for data permission, the tape does too.

AI fears have crushed tech stocks.

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This stopped being a trade debate. It just became a temperature check.

A White House adviser publicly called a New York Fed tariff study “an embarrassment” and suggested the authors should be disciplined. 

Now markets have to process more than the data. They have to process the tone around it.

Credibility Clash
• A New York Fed paper said most tariff costs hit U.S. buyers.
• The White House rejected the findings outright.
• Officials argued tariffs lifted wages and standards of living.
• The language shifted from disagreement to discipline.
• Governance headlines entered the inflation conversation.

Inflation risk is no longer just about supply chains and demand. It is about how aggressively tariffs are used and how stable the fact base remains.

The market is currently pricing tariffs as a policy tool with measurable costs. 

The primary risk is that political temperature rises and reframes how those costs are discussed… or dismissed.

When independence looks debated, risk premiums adjust.

The dollar, front-end rates, and equities can move on rhetoric alone. Even if the data doesn’t change.

In this environment, inflation is harder to handicap. Not because the math changed. Because the rules around it might.

This is where the tone shifts from narrative to math.

Software loans are selling off. Not because maturities are tomorrow. Because investors don’t want to wait until 2028 to ask hard questions. 

More than half the sector sits at B-minus or worse, which matters more when AI skepticism rises.

Credit is doing what it always does late in the cycle. It is forcing the timeline forward.

Refi Pressure
• 53% of issuers are rated B-minus or in CCC.
• $59 billion comes due in 2028.
• 21% of loans trade below 80.
• Two-thirds of CCC paper sits under 80.
• New-money issuance has slowed sharply.

First comes spread widening. Then secondary prices crack. Then sponsors explore liability management.

The market is currently pricing AI disruption as a sector-wide risk premium, not an issuer-by-issuer debate. The primary risk is access to capital, not product quality. Even “fine” businesses can get dragged if financing windows narrow.

This isn’t about who builds better software. It’s about who can refinance.

If spreads stay elevated into 2027, the conversation shifts early. Capital structure answers get demanded a year ahead of schedule.

For portfolios, AI disruption is no longer abstract. It is visible in spreads, prices, and the rising probability of liability management.

If software is on trial, this was a live verdict.

Figma jumped 15% after earnings. Not because it mentioned AI. Because it showed how to charge for it. 

Revenue grew, net dollar retention hit 136%, and gross margins held at 86%, even as AI usage surged. 

That isn’t hype. It is pricing architecture, and the mood isn’t excitement. It is selective confidence.

Monetization Test
• Revenue beats and 38% forward growth guide.
• AI tool adoption expands across enterprise tiers.
• Monthly AI credit limits begin in March.
• Power users shift to paid AI subscriptions.
• Margins hold despite 70% AI usage growth.

First comes usage. Then cost discipline. Then wallet expansion.

The market is currently pricing a sharp divide inside software. “AI inside the product” is no longer enough. The primary risk is margin leakage from giving AI away.

The Pricing Filter

Figma showed the counterexample. 

If AI drives higher spend without compressing margins, multiples can stabilize. If it doesn’t, compression follows.

The new filter is simple. Growth funded by disciplined monetization gets rewarded. Growth fueled by free features does not.

Legendary investor William O’Neil said it best:

“The biggest source of demand in stocks is institutional investors.”

When institutions move, prices follow.

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Step back for a moment.

Energy firmed and pulled rates with it. Retail guidance tightened valuation. AI separated into disciplined monetization and speculative expansion, while credit quietly moved first.

Oil above $70 reintroduces an inflation undertone that the market had begun to relax about. Walmart’s tempered outlook reminded investors that even scale does not guarantee earnings expansion.

This is not a fragile tape. It is a discerning one.

Capital is flowing, but it is flowing toward resilience — toward companies that can fund growth internally and navigate a rate environment that may stay higher for longer.

The question isn’t whether risk exists. It always does.

The question is who can compound through it.