The Macro Trading Floor Hormuz & The Terms of Trade Shock
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Mar 6, 2026 Discussion of the trade shock from a near-closure of the Strait of Hormuz and its market scenarios. Dollar safe-haven flows and liquidity strains in FX options get examined. Rising correlations and degrossing reduce diversification. Metal flows and distorted gold/silver behavior are highlighted. A trading framework favors leaning short until clearer visibility emerges.
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Buying The Dip Is A Reflex Not A Rule
- Geopolitical shocks no longer have a single reflexive outcome; markets now reflexively buy dips which can mask true risk.
- Brent and Alf argue buying-the-dip after geopolitics ignores initial market conditions and scale of conflict, making the reflex unreliable.
Multi Sigma Washout Revealed Liquidity Cracks
- The recent moves were broad, multi‑sigma selloffs reflecting indiscriminate de‑risking across EM and commodity‑sensitive assets.
- Brent notes option market liquidity started to evaporate, signaling cracks beyond a one‑day washout.
Oil Became The Dominant Portfolio PCA
- Portfolio correlations have collapsed into a single principal component driven by crude oil moves.
- Alf says most portfolios now move with oil, making it hard to find truly uncorrelated hedges.