Monday Preview: Iran Headlines, Oil Moves, and What They Mean for Our Portfolio

Good morning. If you read Saturday's Weekend Review: Honest Lessons from a Tough Week in Our Portfolio, you know I didn't sugarcoat things. Our portfolio returned -0.98% in a week where the S&P 500 gained meaningfully. I laid out exactly where we went wrong and what needed to change. Now it's Monday morning, and the week ahead is already giving us plenty to work with.

The central question this week: Does the Iran situation escalate or de-escalate. and which way does oil break? The answer will ripple through inflation expectations, the Fed rate-cut debate, and at least two of our four positions. Let me walk through the full chain.

What Happened Over the Weekend

The biggest story heading into this week is Iran. Trump has threatened additional strikes, which sent oil prices jumping and put downward pressure on equity futures over the weekend. But here's the nuance: there are simultaneous reports of a push for an Iran ceasefire. Oil is swinging both ways as traders try to figure out which headline matters more. the escalation or the de-escalation.

This matters far beyond the oil patch. Here's the full chain of causality:

Every position in our book sits somewhere along this chain.

Separately, a global forecasting group now projects U.S. inflation at 4.2% for 2026, well above the Fed's own estimates. That's a meaningful gap, and it matters because it shapes the rate-cut debate. Speaking of which, there's a compelling counterargument circulating: some analysts believe $4-a-gallon gas, rather than triggering rate hikes, could actually accelerate cuts because it acts as a tax on consumers and slows the economy. That logic may sound backwards, but it makes sense when you think of gas prices as a demand destroyer rather than a purely inflationary force. The Fed has historically prioritized headline inflation in its decisions, but history also shows. as in the 2008 oil shock. that when energy prices crush demand fast enough, the growth side of the mandate wins out. That tension is exactly what's playing out now.

Recession odds are climbing on Wall Street. not because the sky is falling, but because cracks are forming beneath the surface. March ADP private payroll data came in at 62,000 jobs, better than expected but still modest. Friday's official jobs report will be the bigger tell. If payrolls disappoint meaningfully, it would reinforce the demand-destruction narrative and likely push bond yields lower and rate-cut probabilities higher.

The bond market is already leaning that direction. The 10-year yield settled at 4.313% (down 0.14%) and the 30-year fell to 4.89% (down 0.20%). A 0.20% decline in the 30-year is a notable move. it tells us the bond market is beginning to price in slower growth ahead, even as inflation forecasts are rising. That tension between falling yields and rising inflation expectations is a classic pre-stagflation signal, and it will resolve one way or another in coming weeks.

Asian Markets: A Mixed Monday Open

Asian markets opened the week with a clear split, and the drivers behind each move are instructive.

Winners: Japan's Nikkei gained 0.55%, likely benefiting from continued yen weakness that boosts the competitiveness of its export-heavy economy. South Korea's KOSPI rose a strong 1.36%, the best performer among major Asian indices, with Korean exporters benefiting from similar currency dynamics and ongoing demand for memory chips. a theme that connects directly to the AI infrastructure buildout supporting our TSM thesis.

Losers: Shanghai fell 1.0%, Hong Kong's Hang Seng declined 0.7%, and Taiwan's TAIEX dropped 1.82%. the sharpest decline among major Asian markets. Australia pulled back 1.06%.

The Shanghai and Hong Kong weakness ties into the broader China narrative. The ongoing uncertainty around China's consumer recovery and geopolitical posture continues to weigh on Chinese equities. Beijing's tech ambitions remain a wildcard, but for investable purposes, the risk-reward on Chinese equities still doesn't pencil out for us. This is exactly why we exited BABA recently, and I remain comfortable with that decision.

Taiwan's sharper decline is more notable for us given our TSM position, which I'll address below.

European and U.S. Setup

European markets are just opening as I write this, and the early signals are mixed. Friday's data showed the FTSE up 0.69%, while the DAX fell 0.56% and the Euro Stoxx 50 dropped 0.70%. With the Iran situation fluid and European energy security back in focus, the continent's markets face a familiar headwind: any oil price spike hits Europe's energy-import-dependent economies harder than the U.S. If European weakness persists early Monday, it could set a cautious tone for U.S. markets at the open. particularly for internationally exposed sectors.

In other geopolitical developments, Ukraine and Syria announced cooperation on security, per President Zelenskyy. This adds another thread to the complex global security picture but has more direct implications for European defense stocks than for our current U.S.-focused positions.

As of Friday's close, the S&P 500 stood at 6,582.69 (up 0.11%), the Nasdaq at 21,879.18 (up 0.18%), and the Dow slipped 0.13%. Small caps had a decent day with the Russell 2000 gaining 0.70%. The VIX eased to 23.87, down about 2.7%, which suggests some calming of nerves heading into the weekend. though still elevated enough to signal that traders aren't complacent.

Scenario Framework for the Week

Before I get into individual positions, here's how I'm thinking about the key scenarios:

How This Affects Every Active Position

Let me run through our entire book.

ConocoPhillips (COP): Currently around $130.52, about 0.9% below our $131.70 entry. The Iran headlines are directly relevant here. Oil prices jumped on Trump's strike threats, which is exactly the geopolitical premium thesis behind this position. But I want to be honest: we learned from last week that our energy overweight was our biggest drag. We had two energy positions (COP and XLE) and both suffered. We've already acted on the lesson and cut XLE. COP remains our single energy name, and the Iran situation gives it a reason to hold, but I'm watching closely. Under my base case (ceasefire gains traction), COP gives back some of its geopolitical premium. It needs to prove itself within the next few trading sessions, or I'll reconsider.

Adobe (ADBE): At around $242.92, essentially flat from our $242.60 entry (up 0.13%). Tech had a decent Friday with the S&P 500 Information Technology sector gaining 0.73%, and the Nasdaq outperformed the Dow. Adobe is our patient, long-duration bet on AI-driven creative software demand. The 12-month time horizon means I'm not sweating weekly noise. What encourages me is that tech continues to be one of the few sectors actually working in this portfolio. As I discussed in our Weekend Review, technology was our only winning sector last week. Adobe's valuation, while historically rich for a software company, offers relative value compared to many AI-adjacent names trading at significantly higher multiples. The thesis is intact.

Taiwan Semiconductor (TSM): This is the one I'm watching most carefully this morning. Taiwan's TAIEX fell 1.82% on Monday, the sharpest decline among major Asian markets. The EWT (Taiwan ETF) dropped 1.32% in its last session. TSM entered our book at a reasonable forward valuation, and the AI chip demand story remains powerful. reinforced by the strong performance of Korean memory-chip-heavy KOSPI today, which suggests the semiconductor demand narrative is intact even as Taiwan-specific risk weighs on TAIEX. Taiwan is caught between strong structural demand for advanced semiconductors and growing geopolitical risk as the U.S.-China-Taiwan dynamic stays tense. The thesis here is a 6-month play on AI infrastructure buildout, and I still believe in it. Monday's Taiwan weakness bears watching but doesn't change the fundamental picture.

Ethereum (ETH): Our crypto position is up roughly 3.57% from entry, trading around $2,130 versus our $2,056.56 cost basis. Of our four active positions, ETH is actually performing best in percentage terms. The risk-on/risk-off dynamic in crypto is interesting right now. when equities wobble on geopolitical fears, crypto sometimes acts as an uncorrelated asset and sometimes sells off in sympathy. So far, ETH has held its gains through the Iran headlines. Our base case target of $2,509 still represents solid upside, and momentum has been constructive. I'll note this is a high-risk position with 0.58 confidence, so I'm not adding here. just holding what we have.

The Bigger Picture: Execution Over Analysis

Here's something I've been thinking about all weekend. Our biggest problem isn't analysis. We correctly identified last week that we needed to cut energy exposure and add beta. We identified that BABA was a low-confidence drag. The problem was execution. we knew what to do and didn't do it fast enough.

Here's a concrete example: we flagged BABA's weakening thesis on Tuesday but didn't exit until Thursday, costing us two days of decline. That delay alone accounted for a meaningful chunk of our weekly underperformance.

That's changing. As I mentioned in Week 3: Faster Alerts, Deeper Analysis, we've been building the infrastructure to act faster on our own signals. This week, I'm putting that into practice. We have four active positions, all with clear theses, and I'm applying the hard rule we set: no new entries below 0.55 confidence, no sector doubling unless justified by benchmark weight.

What I'm Watching This Week

Friday's jobs report is the main event for U.S. markets. The ADP number at 62,000 jobs was modest but not alarming. If the official payroll number disappoints meaningfully, recession chatter will get louder, and the Fed rate-cut probability will shift. For our positions, a weak jobs number is a double-edged sword: it could boost rate-cut hopes (good for growth names like ADBE and TSM) while simultaneously raising recession fears (bad for cyclicals like COP). Watch bond yields on Friday afternoon. they'll tell us which narrative the market chooses.

Iran is the wild card. The gap between "more strikes" and "ceasefire talks" is wide, and oil will swing depending on which narrative wins each day. For our COP position, I need to see oil hold its recent gains rather than give them all back on de-escalation hopes.

And that 4.2% inflation forecast? If it gains traction among more forecasters, the Fed is in an uncomfortable spot: rising inflation expectations on one side, rising recession odds on the other. Classic stagflation setup. We're not there yet, but I'm keeping it on the radar.

The week is young. Let's see what London and New York make of all this when they open.

This content is for educational and informational purposes only. It does not constitute financial advice. Always consult a qualified financial advisor before making investment decisions. Past performance does not guarantee future results.