Iran's Potential "Samson Moment"

1) INTERNATIONAL – There appears to be a growing dominance of international equities relative to U.S. stocks.  Was 2025 a “one-off”?  In 2025, the S&P 500 gained roughly 16%.  And yet, despite those strong returns, U.S. stocks still underperformed international equities by the widest margin since 1993.  That’s not a signal yet, but it’s not noise either.  It’s not something we see very often.  What we really want to know is whether this is signaling a regime change in global markets.  To answer that, we have to start with the US Dollar.  The following relationship is something to watch.  When the U.S. Dollar Index (DXY) is rising, the blue line falls. That tells us international equities are underperforming U.S. stocks.  When the dollar rolls over and starts to weaken, that relationship flips.  But markets are never that “simple”.  The dollar is the largest part of that equation, but only a part of it.  The other piece is sector exposure.  Most international markets don't have massive weights in mega-cap technology, which, as we’ve discussed, has “rolled over” relative to equal weight S&P 500.  Europe and emerging markets are far more concentrated in financials, industrials, and natural resources.  So, their “lack of tech” might be their real benefit.  Regardless, all eyes are on the U.S. dollar.  If it moves lower or even stays sideways, international equities could potentially lead.  The US Dollar Index (DXY) level to watch is 98.24.  If it breaks below that and holds, we have a USD that is back into bearish territory and this international relationship becomes more clear.  Conversely, if it breaks above 99.31 and holds, US leadership remains.

2) IRAN – Ever read the story of Samson?  If not, I suggest giving it a try.  Why?  Well, in the ancient Biblical story, Samson is captured by the Philistines.  Blinded, humiliated, paraded as a trophy, he understands one thing with absolute clarity: there is no escape.  No redemption.  No future in which he survives.  So he makes a final decision.  If he is going down, the temple is coming down with him.  He braces himself between the pillars, pulls with everything he has left, and collapses the entire structure—killing his enemies, and himself, in a single irreversible act.  Why is this relevant?  Because history is full of “Samson moments”.  I rarely single out geopolitical issues, but Iran might actually be something to keep an eye on this time.  What are they really facing?  Internal pressure.  External isolation.  Economic suffocation.  Loss of regional control.  A population that no longer believes.  A regime that understands—not fears, the possibility of collapse.  The question is not whether it wants stability.  The question is whether, when faced with its own end, it chooses survival… or spectacle.  If the regime concludes that it cannot rule, will it still choose to restrain itself?  Or will it pull on the pillars of the Middle East, shipping lanes, oil infrastructure, proxy wars, regional chaos and bring the whole structure down with it?  Samson didn’t act out of strategy.  He acted out of inevitability.  Will Iran?  So how does this impact markets?  Likely the biggest “benefactor” of an Iran “spectacle” would be crude oil.  And right now, it is trying to hold a bullish regime shift…bullish oil…exactly NOT what the consumer wants/needs.

3) VIX – Did it “feel” like yesterday was a big move in volatility?  Well, if it did, you wouldn’t be wrong.  Yesterday was only the 5th time in the history of the VIX that it's gone from 15 to > 20 in a day.  What does that mean?  Probably not too much in the intermediate term… short term it just shows the degree of hedging going on.  Traders are buying protection as Implied Volatility is still signaling a PREMIUM at 98% for the S&P 500.  Still very high, which tends to be good for market structure.  So will this bout of volatility be episodic and non-TRENDING?  No one knows for sure since everyone’s panic tends to be tied to whatever is coming out of Trump’s mouth these days.  What I do know is that VIX is still below TREND giving it a downward bias… for now.  That TREND level is the Rate of Change of Price, Volume, and Volatility with a time series of more than 3 months and that level is at 22.21 with VIX trading at 18.50 this AM.  So probabilities are that VIX breaks down toward 16.27, the low end of the daily TRADE range.  If that happens, the S&P 500 could move toward 6965.  But on the way, it could have a hurdle at 6886.