What Smart People Are Saying About the Market Sell-Off – markets.businessinsider.com

Investors are on edge as the US and Israel’s war on Iran enters a second month, pushing oil prices higher and rattling global markets.

On Monday, oil prices spiked, and stocks slipped after Iran-backed Houthi rebels in Yemen entered the conflict over the weekend. The Washington Post also reported that the Pentagon is preparing for weekslong ground operations in Iran.

The latest developments come after a sell-off on Friday as stocks tumbled to their lowest level since August of last year amid growing worries over oil prices. The Dow and the Nasdaq are now in correction territory.

Business Insider reporters and editors scanned social media and our inboxes for insights from top financial minds on what’s driving the sell-off — and where stocks may be headed next.

The responses largely pointed in the same direction: the White House.

Researchers from Barclays put it this way: “Flip-flopping and headline fatigue is starting to seriously undermine the efficacy of the ‘Trump put’,” referring to a popular options trade that protects against losses.

The term refers to a popular belief that President Donald Trump will step in to support markets during downturns. Increasingly, investors are losing faith in that backstop — particularly when it comes to the end of the conflict.

Here’s what smart people are saying about the latest market sell-off:

Mohamed A. El-Erian, economist

Famed economist and former PIMCO CEO Mohamed A. El-Erian wrote on X that markets ended the week on a volatile note, with both stocks and bonds falling. He pointed to the “60/40” portfolio — 60% stocks and 40% bonds — as a sign that even diversified investors are taking a hit.

In a typical market environment, bonds help cushion the losses when stocks decline. But amid this week’s sell-off, even balanced portfolios are under pressure.

“A rough end to the trading week for both US stocks and bonds, worsening a month where the classic ‘diversified’ 60/40 portfolio is experiencing its steepest monthly loss since 2022,” El-Erian wrote.

Marko Kolanovic, former JPMorgan chief market strategist

Marko Kolanovic, former JPMorgan chief market strategist, wrote in an X post on Friday that delaying the reopening of the Hormuz Strait — a critical waterway for the world’s energy supply — is harming the global economy, and that the Trump administration’s tactics to calm oil prices have not worked.

“All the verbal gymnastic from the administration to keep oil prices low was in the end counterproductive. Masking the magnitude of the problem and delaying actions to reopen Hormuz. Buying time — but time that works against the global economy so effectively in favor of Iran,” he wrote.

Peter Mallouk, CEO of Creative Planning

Peter Mallouk, CEO and president of Creative Planning, a wealth management firm, framed the sell-off as driven by short-term noise in a Friday post on X, adding that only one thing matters in the long run: earnings.

“What matters in the short run: wars, oil prices, tariffs, interest rates, sentiment, a million other things,” he wrote. What matters in the long run: Earnings. Speculators focus on the short run. Investors play the long game.”

Torsten Sløk, chief economist of Apollo Global Management

Torsten Sløk also took the contrarian view that the Iran war won’t have long-term impacts on the broader economy.

“Markets are overreacting to what will likely be a 4- to 6-week period of volatility, which will ultimately result in 50 years of stability in oil markets, supply chains and geopolitics,” he said in a blog post on Friday.

The top Apollo economist added that the “Gulf region will become more stable and even more closely integrated with the global economy.”

Peter Tuchman, ‘Einstein of Wall Street’

Peter Tuchman, the New York Stock Exchange trader better known as the “Einstein of Wall Street,” said on X that March is on pace to be the worst month since 2022 and warns of major inflationary consequences.

“There is no end in sight with this war. Oil is going up, up, up. When you’ve got oil at the levels where it’s at for a sustained period of time, the inflationary impact is huge, and that’s where the problem lies,” Tuchman said in a video posted on X, adding that interest rates may rise.

Larry Weiss, head of trading at Instinet

Larry Weiss, Instinet’s head of trading, said investors are skeptical of reassurances from administration officials about the war’s timeline.

Weiss said “the market would have popped” after Secretary of State Marco Rubio said the war would take “weeks, not months” to end.

However, “no one knows the next steps, and there’s an inherent distrust regarding the statements made by both the administration and the Iranians,” Bloomberg reported.

Mark Zandi, chief economist of Moody’s Analytics

Mark Zandi of Moody’s Analytics said on Monday that the price of oil needs to near $125 per barrel in the second quarter of the year for the US economy to reach a tipping point.

“Based on simulations of our global macroeconomic model, oil prices would only need to average close to $125 per barrel in the second quarter of this year,” Zandi wrote. “With tensions still elevated, that’s not a stretch.”

A barrel of Brent crude was hovering around $112 as of Friday.

Barclays European Equity Strategy analysts

“Trump’s de-escalation talk has kept equities afloat. But constant flip-flopping and headline fatigue is starting to undermine the put efficacy,” Barclays European Equity Strategy analysts wrote in a Friday note.

“As the war goes on, the stagflation threat grows, though the energy shock for Europe is not as severe as in 2022,” they said, referring to Russia’s invasion of Ukraine.

JPMorgan analysts

Analysts at JPMorgan project a slowdown in global growth and a 1-percentage-point increase in inflation, even if tensions in the Middle East ease later in the year.

The “baseline” scenario is that the price of Brent crude remains elevated through the middle of the year, the analysts wrote on Friday. “If followed by a receding of tensions that push oil to $80bbl ($80 a barrel of oil), we estimate 2026 global growth will be lowered by 0.6% and CPI inflation raised by 1%.”

A scenario in which the Strait remains closed for another month could push crude oil prices to $150 per barrel, the analysts added.

Goldman Sachs

Market reactions are consistent with fundamental shocks, but investors are pricing in “a much larger hawkish shock than historical experience would suggest,” wrote analysts at Goldman Sachs.

“We think the market is mispricing the policy distribution now, though the 1990 experience suggests the market could struggle to reverse that properly while oil prices are rising sharply,” they wrote.

That’s because traders are pricing in aggressive rate hikes across major economies, even though past oil shocks have typically seen growth concerns dominate over time.

Higher oil prices push up inflation. But they also weigh on economic growth, suggesting central banks may not deliver the full extent of rate hikes markets are currently pricing in.

“Given market pricing, a reduction in downside tail risks would be enough to generate significant relief, though that will likely require clearer evidence of de-escalation,” Goldman’s analysts wrote.

Steven Blitz

Investors are trying to price the uncertainty that the war in Iran is injecting into markets, wrote Steven Blitz, the chief US economist at GlobalData.TS Lombard.

“Equity values rise and multiples expand on the stability of expectations. US government policies that set out to reorder the world play against that,” Blitz wrote in a note.

He warned that while major geopolitical shifts aren’t inherently negative, pursuing them without a clear plan and commitment to follow through risks fueling volatility and leaving markets without a firm anchor.

That’s because “uncertainty is not something markets price well,” Blitz said, adding that the mix of policies under Trump’s second term — including the war — could undermine the foundations of a roughly 45-year bull market.

Vishnu Varathan

The US may be headed into a “Hotel California” quagmire in Iran that could trap it in a prolonged conflict, wrote Vishnu Varathan, Mizuho’s head of macro research for Asia, excluding Japan.

“Despite obvious signs that Trump wants to wind down the war with Iran, bets on ‘TACO’ may prove misguided,” wrote Varathan, referring to shorthand for Trump Always Chickens Out — that is, expectations that Trump will ultimately pull back from escalation.

That in turn could drive repeated swings in sentiment. Oil prices are likely to stay elevated, with a higher floor even in the event of a ceasefire. Meanwhile, US Treasury yields may remain volatile but trend higher as inflation and fiscal risks persist.

In currency markets, the US dollar could stay supported by safe-haven demand and stronger energy security.