GM. This is Milk Road Macro, the newsletter that helps you keep your cool while markets react like someone spilled Red Bull on the Bloomberg terminal.
Here’s what we’ve got for you today:
- ✍️ What’s the latest with the war and what does it mean for markets?
- 🎙️ The Milk Road Macro Show: The Gold Crash That Could Trigger a Bigger Rally w/ Jeff Clark.
- 🍪 Elon Musk’s SpaceX officially kicked off its IPO process.
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Prices as of 10:00 a.m. ET.
WHAT’S THE LATEST WITH THE WAR AND WHAT DOES IT MEAN FOR MARKETS?
The Iran war continues - and it’s now almost five weeks since the conflict began.
Global asset prices are being buffeted around on a wave of contradictory headlines.
And nobody really knows what’s going on.
Markets are confused, and so am I.
But one thing is for certain - the vital Strait of Hormuz waterway is still closed.
And this means around 10M barrels of oil are being piled on top of a massive global energy shortfall with every passing day.
Equities have found a footing in recent days but remain vulnerable.
And there are few places to hide, with traditional “safe haven assets” like U.S. Treasuries and gold also performing poorly.
So, what’s the latest with the war?
What’s the outlook for stocks?
And why are Treasuries and gold performing so poorly?
Let’s take a look…
What’s the latest with the war?
We’ve seen so many headlines this week that it sends your head spinning.
And, to be honest, I can’t work out what in the world is going on.
So, here’s a run-down of the latest noises from both sides of the war this week…
President Masoud Pezeshkian said the Islamic Republic has “the necessary will to end this war”, but only with “guarantees”, according to Iran’s state news agency.
It’s unclear what these “guarantees” might be.
But Iranian officials reportedly previously set out a 5-point plan, including assurances to prevent further fighting, war reparations, and sovereignty over the Strait of Hormuz.
Earlier this week, President Trump reportedly told the New York Post that the U.S. is “not going to be there too much longer”, adding that the Strait would open “automatically” after the U.S. leaves.
Later, he said he foresaw ending the war soon, leaving it to other nations to resolve issues with the Strait of Hormuz.
Then, in a social media post, Trump said “Iran’s New Regime President” has “just asked the United States of America for a CEASEFIRE!”
He added: “We will consider (a ceasefire) when the Hormuz Strait is open, free, and clear. Until then, we are blasting Iran into oblivion or, as they say, back to the Stone Ages!!!”
Iran’s foreign minister said Trump’s comments about Iran requesting a ceasefire were “false” and “baseless”.
Despite claims to the contrary from Trump, U.S. intelligence shows that only about one-third of Iran’s missiles have been destroyed “with certainty” so far, according to Reuters, citing “five sources”.
Prime Minister of Israel Benjamin Netanyahu said Iran was no longer an “existential threat” to Israel, for the first time since the war started.
That is perhaps him preparing the Israeli public for the end of hostilities and claiming success.
New York Times reported that U.S. intelligence has determined the Iranian government is not currently willing to engage in substantial negotiations over ending the war.
Meanwhile, reports suggest that more than 50,000 American troops are now deployed in the Middle East.
This includes several thousand elite Marines and members of the 82nd Airborne, which may foreshadow some kind of ground invasion.
So, if you can make sense of all the information above - let me know…
We’re still in a NACHO world
In recent days, we’ve seen an impressive rally across risk assets.
In particular, the S&P 500 shot up 2.8% in a single day on Tuesday, its best daily rally since May 2025.
But this rally on Tuesday was largely “mechanical” in nature.
It was partly fueled by positioning dynamics and month-end/quarter-end rotation, including a massive pension fund rebalancing involving $34B in equity purchases, the eighth largest in history.
So it’s tough to draw too many conclusions from the price action we saw on Tuesday.
Really, over the past few days, nothing has changed with the war.
It’s still happening, and crucially, the Strait of Hormuz is still closed, intensifying the biggest energy supply shock in history with each passing day.
On Wednesday evening, Trump gave a highly anticipated primetime speech that lacked detail and a precise timeline for any potential exit from the war or a reopening of the Strait, and he pledged more aggressive strikes “in the next two to three weeks”.
This was not what markets wanted to hear.
Globally, asset markets reacted negatively to this.
Not Actually Changing Hormuz Opening.
Global risk asset markets will probably continue to come under pressure until it becomes clearer that the Strait of Hormuz is likely to fully reopen.
Brent crude oil continues to settle above $100 - the “stagflation zone”.
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WHAT’S THE LATEST WITH THE WAR AND WHAT DOES IT MEAN FOR MARKETS? (P2)
Foreigners are selling U.S. Treasuries
As the war continues, foreign central banks are slashing their holdings of U.S. Treasuries as they sell American bonds to prop up their economies, with energy prices surging.
Foreign central bank holdings of Treasuries have fallen to the lowest level since 2012, an $82B drop since February 25.
This is a problem for the U.S. - with Treasury yields moving higher, meaning government borrowing costs are increasing.
Brad Setser, a Senior Fellow at the Council on Foreign Relations, said that big oil importers like Turkey, India, and Thailand were among those selling U.S. Treasuries as they pay higher prices for oil, which is denominated in dollars.
Meghan Swiber, rates strategist at Bank of America, noted that Middle Eastern oil-exporting countries could also be selling Treasuries to make up for lost oil revenue.
The data suggests that foreign official holders could be “stocking the war chest” by cashing out Treasuries, according to Stephen Jones, chief investment officer at Aegon Asset Management.
Jones said: “They are pulling in rainy-day money.”
Gold has also been hit hard since the war began, falling 15%, despite its reputation as a “safe haven asset”.
This might be partly due to central banks selling off gold holdings to raise funds.
The Turkish central bank has sold 58 tons of gold since the conflict began.
Wrapping up
I feel like a broken record at this point.
But it’s the same story.
We’re on the path to a serious global growth slowdown/recession.
And this path will likely only change course if/when the Strait of Hormuz reopens.
And the longer it stays closed, the more damaging the economic consequences will be.
Crude oil is still the most important chart to watch.
Settling where it is now (around $100) is already quite a bad environment - but moving higher above $120 would be a lot worse.
And there are few places to hide, with traditional safe-haven assets like gold and U.S. Treasuries performing poorly.
This week, I’ll be publishing my monthly Macro PRO report - where I will go into detail on the current situation and what I’m doing.
GOLD PULLBACK OR BULL MARKET PAUSE? 🥇
In today's episode, we sat down with Jeff Clark, founder of The Gold Advisor, to talk about the recent pullback in gold and silver, whether the bull market is over, and how to position yourself in precious metals right now.
Here's what you'll hear:
- Why gold's recent correction is normal bull market behavior, and what separates this dip from a trend reversal.
- What triggered the sell-off: overbought conditions, a dollar spike, hawkish Fed expectations, and forced institutional deleveraging.
- How to evaluate miners using Jeff's three-legged stool: people, property, and politics, and why producer margins make the sector compelling.
- Practical rules for both physical metal and equities: buy in tranches, take profits on 2x gains, and aim for up to 20% gold allocation.
Tune in and see for yourself 👇️
YouTube | Spotify | Apple Podcasts
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BITE-SIZED COOKIES FOR THE ROAD 🍪
Elon Musk’s SpaceX officially kicked off its IPO process, which could result in the biggest public offering ever. It’s reported that SpaceX is expected to raise up to $75B in its offering.
Despite fears over how the energy shock will impact the economy, U.S. retail sales jumped by the most in 8 months in March. American manufacturing sentiment also rose in March, but prices paid jumped too, reflecting inflationary pressures.
The United Arab Emirates called on the United Nations to authorize a range of measures, including force, to reopen the Strait of Hormuz. Persian Gulf countries continue to pressure Iran to restore free passage along the vital global energy corridor.
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