Macro Theme:

Key dates ahead:

Founder’s Note:

Futures are flat: ES ~7,190 (-0.1%)

Iran floated a new proposal over the weekend to reopen the Strait of Hormuz and defer the nuclear file, with JD Vance, Witkoff, and Kushner traveling to Islamabad Tuesday for a second round of talks.

OIL: WTI +2% to ~$96, Brent +2% to ~$107.

VIX closed Friday at ~19.3. T

On tap this week:

4/28: Alleged JD Vance + Iran talks

4/29 Wed: MSFT, GOOGL, META, AMZN, QCOM ERs + FOMC

4/30 Thu: AAPL, SNDK ER + March PCE & GDP

Signal reads:

The market is now structurally similar to the start of last week, with a pocket of light-to-negative dealer gamma from 7,100 to 7,000. However, the catalyst stack 10x denser. A repeat of Thursday’s Iran-triggered spasm Wednesday/Thursday this week (during the actual Mag7 prints) hits the index directly without the gamma absorption. Said another way: downside jump risk remains very high. If the Iran situation remains quiet, and semis remain strong, then that downside probably doesn’t manifest.

For today, “catalysts” are not on the docket, and first arrive on Tuesday with another alleged Iran/US meeting. Given that, we expect a fairly muted session for today, with support at 7,150 & 7,120. Resistance is at 7,200.

In the short term (1-2 weeks), one could argue an Iran stalemate continues to not matter against the major earnings window, as results in AI/chips have been very positive. That AI/chip sector is absolutely driving the positive index movement, as you can see with SMH (top green line) +30% in a month vs QQQ (blue) and equal weighted SPX (RSP, bottom green).

Most other sectors are flattish over the last month, with the exception of XOP (energy production) and ITA (aerospace + defense). That’s curious….

As semis scream higher, the cheap part of the configuration is index vol. This is broadly measured by 1-month SPX realized vol marked at the current VIX level. The argument we hold is that traders should be maintaining a geopolitical risk premium. That is not us offering geopolitical analysis; it’s instead a simple reference on oil prices: $97 isn’t “a-ok”.

If an Iran deal comes across the table, then SPX RV collapses, and VIX goes down with it – and that is constructive for stocks. Conversely, there is no downside “shock” cushion. This isn’t really just about a kinetic war, there is a “Strait Shot Clock”, and at some point the closure itself starts to impose serious blows to global economies ex: China sulfuric acid exports to stop in May.