Bank Earnings And Market Reaction
Goldman Sachs fell 2.5% despite EPS of $17.55 versus $16.49 and revenue of $17.23bn versus $16.97bn. Equities trading revenue rose 27% year on year to $5.33bn, while FICC revenue fell 10% to $4.01bn, about $900m below StreetAccount estimates. Oracle rose 8%, Palantir gained more than 3%, and ServiceNow and Workday rose more than 5%. Existing home sales fell 3.6% to 3.98m, the lowest since June 2025, while the median price rose 1.4% to about $409k. The 10-year yield rose 3 basis points to 4.34% and the 30-year rose 2 to 4.93%. March PPI is due Tuesday, seen at 4.6% year on year and 1.2% month on month, with core PPI at 4.2%. We remember how the Strait of Hormuz blockade in April of last year sent oil futures soaring over 5% in a single session. That event showed how quickly geopolitical flare-ups can inject volatility into the market, even if equities manage to recover intraday. Considering the renewed tensions in the Middle East, we are watching for similar sharp moves.Hedging Ideas For Renewed Volatility
Given this backdrop, we should consider hedging against a sudden oil spike by looking at call options on energy ETFs like the XLE. Last week, the CBOE Volatility Index, or VIX, already jumped over 30% to nearly 19, showing that fear is returning to the market. Buying VIX calls or puts on the S&P 500 can provide a direct hedge against a broader market downturn. The surge in oil back then reignited inflation fears, and we are seeing a parallel today. The recent Consumer Price Index report showed core inflation remains sticky at 3.8%, which has already pushed traders to price out expectations for near-term rate cuts from the Federal Reserve. Positions that bet on bond yields remaining elevated, such as shorting Treasury futures, could be effective. Last year’s turmoil triggered a clear rotation out of financials and into enterprise software stocks driven by the artificial intelligence narrative. We see a similar flight to quality in technology now, suggesting a pairs trade could be beneficial. This might involve going long a basket of software leaders while simultaneously shorting a financial sector ETF to capitalize on this divergence. We also saw last year how rising rates choked off the housing market, with existing home sales hitting a nine-month low in March 2025. With 30-year mortgage rates once again climbing back above 7% according to Freddie Mac, rate-sensitive sectors remain vulnerable. Exploring put options on homebuilder ETFs could be a prudent way to position for continued softness in this area. Create your live VT Markets account and start trading now.
Start trading now – Click here to create your real VT Markets account
