【Founder’s Article】 Geopolitical triggers have accelerated valuation adjustments, and the key timing has now been revealed!

This content will be included in the April Investment Monthly Report published on 2026.03.27〈Founder’s Intro〉

Dear all,

In the March monthly report introduction, we stated that** oil prices would become a key factor affecting liquidity conditions and the level of holdings**, and we warned that when WTI oil prices move above 70 USD per barrel, it may lead to “the Fed delaying rate cuts, a higher probability of a pullback in the broad market, and a need to reduce positions.” Then, as the conflict between the U.S. and Iran escalated, oil prices surged quickly: WTI West Texas Intermediate crude oil rose 35.9%, while gold was hit by the rise in real yields, falling -13.7%. And amid the continued Iran-U.S. war, stocks, FX, rates, and gold all saw losses in March, a “all-hit” situation. The U.S. dollar index rose, and risk-on capital fled across the board; valuation adjustments arrived earlier than expected.

Note: 2/28 and 3/1 were holidays, so the statistical period was moved to the most recent trading day for calculation.

If you want to better understand our views on each time period, in addition to the reports, this year the research team will accompany you in quarterly outlooks and theme-sharing sessions. On 3/31, Ralice will kick things off and share how assets are being repriced under the escalation of geopolitical conflict and intensifying AI concerns—welcome to join!

1. The current market reaction is still limited to valuation adjustments; it has not yet reflected fundamental shocks

Since February, we have observed that whether it’s 13F filings, large trader positioning, or ETF fund flows, we can see money moving into “energy stocks” in a concentrated manner. At the same time, some “inflation data” has been cautiously stirring as well. In the ISM manufacturing sub-details released on 3/2, the most crucial “raw materials price index” jumped sharply from 59 to 70.5, with nearly all procurement managers reporting price increases. On 3/18, just ahead of the Federal Reserve meeting, the PPI—reported as increasing on a month-over-month basis for the third consecutive month—was also released, which triggered a sell-off in U.S. stocks. What’s worth noting is that these data had not yet fully incorporated the impact after the U.S.-Iran conflict, further deepening market worries that pressure from future inflation may be rising.

Changes in inflation expectations also transmit quickly to the rates market. Even though the Federal Reserve, during the meeting, repeatedly emphasized “we are still observing and uncertainty is high,” the market has already clearly lowered this year’s rate-cut probability and is even beginning to price in expectations that the European, UK, and Canadian central banks will shift toward rate hikes.

Based on current observation, the market is heading back toward the early stage of the Russia-Ukraine conflict, with corrections mainly focused on valuation adjustments in terms of “inflation” and “rates.” However, as of now, we still have not seen further reflection at the level of fundamentals—specifically, corporate earnings. This suggests that the market is still setting this round of shock as a “short-term event.” The IEA also quickly released strategic oil stocks, keeping the real supply shortfall controlled at about 3% to 5%, and expecting the impact to last roughly about a quarter.

2. Is there a Davis double whammy—after finishing the correction path of inflation > rates > economic fundamentals?

As for whether this time will evolve into a “Davis double whammy” where “valuation” and “fundamentals” decline in sync? We still believe that compared with the Russia-Ukraine war, the current situation is relatively protected,

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