Full Signal Stocks are up. That's the problem | Bob Elliott
Mar 18, 2026
Bob Elliott, co-founder and CIO of Unlimited Funds and former Bridgewater macro trader, offers a macro-minded take on markets. He discusses the economic shift from income to savings drawdown, how an oil shock lifts inflation and crimps growth, the Fed’s painful policy choices, why equities may be vulnerable, and the case for commodities, gold, and hedge-fund-style ETF positioning.
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Oil Shock Cuts Real Spending And Raises Inflation
- Rising oil prices act as a dual shock by pushing inflation up and reducing real consumer spending, which tightens monetary policy while shrinking demand.
- Bob Elliott estimates current oil moves could cut US real consumer spending about 1–1.5%, flipping growth from ~2% to near zero this year.
Fed Likely To Prioritize Inflation Over Immediate Cuts
- The Fed faces a classic dilemma: an oil-driven inflation reacceleration amid weakening growth, which historically leads the Fed to stand pat rather than cut.
- Elliott cites 1990 and 2008 oil shocks where the Fed prioritized inflation despite rising unemployment.
Equity Positioning Leaves Market Vulnerable To Repricing
- Markets were positioned for strong earnings growth early in the year, so an oil shock that weakens growth creates vulnerability for equities even without an immediate crash.
- Elliott calls current positioning “kindling” for a 10–15% equity re-rating if the shock persists.