Weekly Commentary: Scorched Earth

2026-03-07 03:40:38 ET

The week experienced the problematic scenario for highly levered global markets: sharply lower stock prices, widening spreads/risk premiums, rising Treasury/sovereign yields, and currency volatility. Seemingly no place to hide, with virtually all strategies faltering. De-risking/deleveraging has rapidly intensified. This is precisely how crises erupt, and the metastasizing Iran War poses clear and present catalyst risk. All bets are off if hostilities continue to expand. And while the Islamic Revolutionary Guard Corps (IRGC) military power is rapidly neutralized, it still holds alarming power over global markets.

The S&P 500 dropped 2% this week. This moderate decline was not reflective of the stress throughout global markets. Myriad speculative Bubbles faltered.

At Tuesday's lows, the South Korean KOSPI Index was down 20% from the previous Friday's high. Wednesday's sharp rally cut the week's losses to 10.6%. Japan's Nikkei 225 index fell 5.5%, with Japan's TOPIX Bank Index hit 7.6%. Major indices were down 5.1% in Taiwan, 7.9% in Indonesia, 8.0% in Thailand, 4.6% in the Philippines, and 6.0% in Vietnam. Stocks were down 6.8% in Pakistan and 6.7% in Turkey....

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