There's a Taleb quote I love: "The black swan is not the event. It's your blindness to it."
Well then. The Middle East caught fire — again — and half the market got caught with its pants down. Again. As if conflict between the U.S., Israel, and Iran were breaking news. As if oil above $90 a barrel were some unthinkable scenario. Damn, it's almost like watching that Joker scene where he says: "Nobody panics when things go according to plan... even if the plan is horrifying."
The plan was always this: geopolitical risk is structural, not episodic. Anyone who still hasn't figured that out is playing checkers on a chess board.
Oil Woke Up — and Whoever Was Positioned, Feasted
Crude oil blasted through $90, and the usual suspects rode the wave: Chevron (CVX), ExxonMobil (XOM), the entire energy sector (XLE, VDE, OIH) gaining traction while the rest of the market was coughing up blood.
On the other side, defense stocks — Northrop Grumman (NOC), RTX, Axon (AXON) — shot up like they were on the Pentagon's private elevator. Because, guess what: when the world gets more dangerous, the companies making missiles and surveillance systems don't need a pretty PowerPoint to close the deal.
It's the old lesson Benjamin Graham tried to hammer into people's heads: the market in the short run is a voting machine; in the long run, it's a weighing machine. This week, the "vote" was crystal clear: energy and defense up, everything else can fend for itself.
Who Got Wrecked
While oil companies and weapons manufacturers were popping champagne, airlines and tourism were crying in the bathroom.
United Airlines (UAL), Delta (DAL), Southwest (LUV), Carnival (CCL), Norwegian Cruise (NCLH) — all under pressure. Makes sense: pricier oil means pricier jet fuel, which means margins melting like ice cream on the asphalt in Riyadh.
Ground transportation took a hit too. ODFL and UPS felt the weight of diesel climbing. It's the domino chain that nobody in a research report likes to spell out because it's "too obvious." But the "obvious" is exactly what catches 90% of investors off guard.
Tech Held the Line — Thanks to AI
Here comes the week's plot twist. In the middle of all this geopolitical and macro turbulence, tech didn't crash and burn. Quite the opposite.
NVIDIA, Broadcom (AVGO), and Marvell (MRVL) held firm. The AI narrative continues to be this market's shock absorber. Broadcom is projecting $100 billion in AI revenue — a number that, if uttered in 2020, would've gotten you committed.
NVIDIA's new inference processor poured more fuel on the thesis. Semiconductors (SMH, SOXX) and enterprise software (NOW, INTU, WDAY) recovered midweek once it became clear that AI infrastructure capex isn't going to stop because of tension in the Persian Gulf.
It's like that scene in The Matrix: bullets are flying, but Neo dodges every single one. Tech is in Neo mode — for now.
Payrolls Came in Weak — Now What?
To round out the circus, the February jobs report came in below expectations. Fewer jobs created, but — and here's where things get ugly — wages rising and inflation hanging around like a bad guest.
Translation from Econ-speak: the economy is cooling off on job creation but still running hot on price pressure. That's the worst of both worlds for the Federal Reserve. It's like having a fever and chills at the same time.
The market has now pushed the expectation for the next rate cut to the second half of the year. If you were betting on a May cut, put the champagne back in the fridge. Jerome Powell is stuck in a no-win situation that even Walter White would envy — every decision carries lethal consequences.
What This Means for Those With Skin in the Game
Look, this week's message is simple and old as the market itself: diversification isn't some consultant's buzzword — it's survival.
Those with energy and defense exposure surfed. Those who were all-in on growth and airlines got smacked. Those with AI in their portfolio watched the sector take the punch and stay standing. Those holding only fixed income stared at the ceiling waiting for rate cuts that aren't coming.
No Instagram guru warned you about this on Monday. Not a single one.
The question that remains is this: are you building a portfolio to survive the next shock, or are you just praying the market goes up tomorrow?
Because the next bullet — geopolitical, macro, black swan, whatever — doesn't send advance notice.
