Are we having fun yet?
At least one person (two if you count Pete Hegseth) is. “We may hit it a few more times just for fun,” Donald Trump said, of Kharg Island, Iran’s main oil export terminal which was bombed on Saturday by the US.
The cavalier nature of Trump’s remarks — delivered during a weekend interview with NBC News — was a reminder to market participants that this is no ordinary administration. And that anything can happen at any time. (Not that any such reminders are necessary by now.)
If forecasting macro eventualities and equity prices is tantamount to tarot cards in the best of times, it’s pure guesswork currently. Suffice to say the distribution of possible outcomes is wide. In a new note, Goldman stuck with their year-end house call for the S&P (7600) but cautioned that in the near-term anyway, stocks are at risk of a further de-rating.
The figure above gives you a sense of the forward index multiple and where it troughed in late 2023 and around “Liberation Day,” which is to say the low valuation points of the post-ChatGPT-launch, AI boom era.
“[A newly] unfavorable skew to our oil price and economic forecasts, combined with the modest decline in equity prices and positioning so far, creates an unfavorable skew to the distribution of near-term outcomes for share prices,” Goldman’s Ben Snider wrote, describing a “moderate growth shock scenario” in which the S&P trades down to 19x, or ~6300.
Of course, it’s possible we could get something more severe (more “fun”) than a “moderate” shock, in which case the losses for equities would be worse.
The table above, from the same Goldman note, gives you some historical perspective. The median peak-to-trough decline for the S&P in and around history’s “greatest” crude disruptions was 23%.
“An equity market decline matching the most severe oil supply shocks in recent decades would reduce the S&P to 5400, bringing the P/E multiple to 16x,” Snider went on.
Trump doesn’t know those numbers, per se, but he does understand the wealth effect from a conceptual perspective. More importantly, his vanity can’t suffer bad press, and unlike the “fake news media,” you can’t accuse stocks of “lying.”
It’s thus difficult (for me anyway) to imagine Trump countenancing a scenario where the S&P trades down to 5400. Let alone to the sub-5000 “Liberation Day” lows.
Not intending to be flippant, but when you say, “this is no ordinary administration” is this to imply the previous administration was ordinary? To be fair, was it not the previous administration, laden in gaffes and falls (the physical kind) who had four years (or more) to prepare to defeat Donald Trump.
Was is it not the previous administration, through the likes of George Clooney and Barack Obama, who pinned their hopes to Kamala Harris and Tim Walz to prevail. Tim Walz! Was it not obvious from go this would not be a good setup for success.
If I have a answerable question; what does an “ordinary” administration look like?
Two things, Paul.
First, you’re quibbling over the definition of the word “ordinary” in the comments section of an article about the Strait of Hormuz and the near- to medium-term outlook for the S&P 500, which is to say that voice in the back of your mind which tried to warn you while you were typing (“Paul, you’re irritable and being flippant. Just let it go because once you post this, you probably won’t be able to edit it or take it back”) had it right.
Second, the suggestion (implicit in your comment) that this administration isn’t extraordinary flies in the face of common sense, and is also starkly at odds with Trump’s own pronouncements, each and every one of which is in some way, shape or form a declaration of extraordinariness. Put another way: If you were to tell Trump his administration is ordinary, I can assure you he’d disagree vehemently.
Three things, H.
First, quibbling is fair and borders on a waste of time (yours and mine), admittedly. At the same time, irritable is fair too. I’m sure you can appreciate this as “irritable” is in almost every, single article and comment I’ve read in my short time on these pages. The only difference is the shoe is on the other foot.
Second, and this is a real question, would you agree a high degree (or any degree) of “common sense” was exercised in choosing Kamala Harris and Tim Walz to stand for democracy? Let’s not forget, Kamala Harris wasn’t even chosen by the people.
Third, devils advocate is often times healthy in debate. My hunch was my original comment would illicit such a response and in a timely manner, which it did. Thank you.
People like Paul are the reason we’re in this mess. And by “people like Paul”, I of course mean people who don’t read about history and/or lack basic critical thinking skills. It’s depressing how many of them are out there.
Febby, it’s rare I would engage someone like you. In this case, I will.
I could plug in any number of names who fall under the category of “people like Paul”. Afterall, implicit in your comment, you’re directly referring to anyone who has differing political views than you.
For this instance and in the general scheme of things here, I’ll plug in Kevin Warsh. Would you be so kind as to share your opinion on Kevin and his basic thinking skills please?
Paul, I don’t care. I’ve never voted in my life. For anything. You’re new here, but if you stick around long enough — and particularly if you read the Monthly Letters — you’ll get to know me a little better.
Once you do, you’ll realize, in hindsight, how funny it was that you ascribed to me a vested mental interest in… well, in anything. In engaging me, you’re debating a slightly melancholic, wholly apathetic, nihilistic piece of drywall.
Don’t worry, though. Eventually you’ll rile up another reader who’ll debate you and who’ll be actually irritated as opposed to feigning it for editorial purposes.
(This message was brought to you by clonazepam. Your results may vary. https://kitschregister.com/2026/03/13/still-stoned-on-ocean/)
I take the lowest dose of clonazepam I can every evening and it keeps me too mellow to want to debate about anything.
Oddly and perhaps surprisingly, in hindsight, I won’t think it’s funny. Sorry to disappoint and here’s why; I don’t care. One way or the other, I don’t care at all. You can believe that or not.
My life revolves around wind conditions and pickleball games (each independent of the other). These things – I “care” about.
I read the first two paragraphs from the link you sent (I’ll read the rest later). I’m reasonably certain you’re versed in The Ashton Manual. Dr. Ashton was a remarkable women. It is a relatively unfortunate few who are essentially forced to know of her work. Almost equally unfortunate of those unfamiliar – are the prescribers.
And a kind ‘thank you’ to Febby for stepping up, as you knew someone would.
Found the sea lion!
https://wondermark.com/c/1062/
One that doesn’t mint their own cryptocurrency, accept jumbo jets from foreign nations, tear down a wing of the White House, politicize every single Federal agency, layoff federal workers in the name of efficiency while also spending more than any administration in US history, Arrest a foreign leader in his own country using the military, assassinate a foreign leader in his own country using the military, assassinate potential criminals extrajudicially using the military, and invade cities he took an oath to protect and murder citizens extrajudicially for exercising their 1st amendment right.
How’s that for a start?
Candidly, it’s a poor start. Maybe it’s a comprehension thing. I asked what it “does” look like, not what is doesn’t.
Well then I think you can probably answer your own question. There are numerous examples of presidents who exhibited behavior that defined normalcy over the course of 2.5 centuries. Perhaps you are merely bored and looking for social engagement via the comments section of a newly discovered blog?
Regardless, this entire discourse is devoid of meaning, normalcy is no longer achievable and must be re-defined in a hypothetical future presidency wherein which we don’t completely fail as a democracy.
In other words – I don’t want to talk to you no more, you empty-headed animal food trough wiper! I fart in your general direction! Your mother was a hamster and your father smelt of elderberries!