Global Financial Assets Plunge in Sync

Pay close attention to crude oil's trajectory. In this round of volatility, oil prices are acting like the leading force. Many other assets are now simply reacting to its movements.

The first and most critical observation point right now: Will oil prices spike and then retreat, or will they stay elevated and refuse to come down? If it's just a sudden jab, the market can catch its breath. But if Brent—the barrel most commonly referenced as the benchmark in international oil pricing—stays above $100 or even $110, then the problem won't be a matter of a day or two. Instead, it will begin affecting global inflation, corporate costs, consumer confidence, and ultimately stock market valuations as well.

Now let's talk about gold. Many people find it strange: logically speaking, with a conflict going on, shouldn't gold rise? How has it instead fallen to around the 4850 level? Actually, it's not hard to understand. Because the market isn't only looking at the safe-haven logic—it's also watching interest rates simultaneously. You could think of it this way: gold does have safe-haven attributes, but if the market simultaneously believes inflation will rise and interest rates will be higher for longer, then gold will also face pressure.

So it's no surprise that Bitcoin is being hammered right now. As the Middle East situation deteriorates and oil prices spike, stock markets weaken, and the dollar strengthens, investors are increasingly worried about long-term stagflation rather than a brief short-term shock. Bitcoin taking hits in this environment is completely normal.

The reason U.S. stocks are falling is that once oil prices rise, corporate costs increase. Higher costs mean profits get squeezed.

Once profits are squeezed, stock valuations can't hold up.

If inflation is then ignited by oil prices, the Fed becomes even more unwilling to cut rates quickly. That means U.S. stocks face a squeeze from both sides: one side has rising costs, the other side has interest rates that won't come down. So what really deserves attention right now isn't whether any particular level holds or breaks, but three bigger issues:

First, will the Middle East conflict continue escalating to the point of hitting energy chokepoints?

If the fighting continues, oil prices won't come down easily.

Second, will oil prices stay elevated for an extended period?

As long as they remain elevated, inflation pressure won't ease.

Third, will the Fed use this as a reason to maintain higher interest rates for even longer in its messaging?

This will directly impact gold, Bitcoin, and U.S. stocks.

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