Brant Hammer (Professor BTC)

💡Most investors watch one variable. The Fed. Earnings. Headlines. Equity prices are the output of a five-channel system: → Net liquidity → Earnings & margins → Fiscal policy & Treasury issuance → Positioning & microstructure → Geopolitics I broke down all 5 forces, their transmission channels, and the exact toolkit I use to monitor them in real time. This is the post I wish someone handed me ten years ago.

📉 The volatility term structure is once again inverted, indicating market participants anticipate near term volatility to be greater than intermediate term vol. This tends to happen when markets are in panic mode and are closer to a bottom than they are to a top. 👉 However, a buy signal is only generated once the term structure normalizes (closes back below the 1.0 inversion level).

🚨🙏 Quick ask for anyone who wants to support valuable financial education or knows someone who does. You can support WVU’s Student Managed Investment Fund directly through Day of Giving: 1.Go to: dayofgiving.wvu.edu/amb/SMIF 2.Set Department to “Chambers College of Business & Economics” 3.Change Fund Designation to “Other” and type: Student Managed Investment Fund - SMIF If you want to set it and forget it: select Recurring, Monthly, 12 months. $5/month is $60/year to a program that gave a lot of us our start. Also check the “Double The Donation” section and search for your employer. A lot of firms match charitable gifts and it takes 30 seconds to find out. Learn about the program here: wvusmif.substack.com 👉 The WVU SMIF runs on donations like this. Please consider paying it forward, and share this with anyone connected to the program.

The Risk Master Composite just flipped negative for the first time since mid 2025. This is intermarket confirmation of what sentiment and vol are already telling us: leadership has shifted defensive across equities, fixed income, and currencies. I’m not calling a bottom. But I am watching this carefully because previous risk off flips at sentiment extremes have marked turning points for long term investors willing to be patient.

Truflation’s real time inflation reading has been plunging well below official CPI (2.4%). My shifted Truflation line forecasts CPI heading toward 1.7%. This chart likely captures the pre oil shock disinflationary trend. Truflation has since bounced on the Iran war oil spike (gasoline up 19-20% in weeks). The question is whether this underlying disinflationary impulse reasserts itself once geopolitical pressures ease. If the disinflationary trend resumes post conflict, the Fed gets room to cut. Duration plays and rate sensitive assets would benefit. If the oil shock persists, stagflation risk rises and the Fed stays frozen.

💡Most investors watch one variable. The Fed. Earnings. Headlines. Equity prices are the output of a five-channel system: → Net liquidity → Earnings & margins → Fiscal policy & Treasury issuance → Positioning & microstructure → Geopolitics I broke down all 5 forces, their transmission channels, and the exact toolkit I use to monitor them in real time. This is the post I wish someone handed me ten years ago. 🔗 capitalnotes.substack.com/p/what-actuall…

$VIX at 25.8 is not fun, historically S&P 500 12-month forward returns by VIX level

@EPBResearch Oil price shock isn't going to help.

Real growth remains stable everywhere, except in the most cyclical (leading) sectors.

Truth be told, I'd rather my local community bank hold my deposits and intermediate between my liquid savings and someone in my community buying a house as opposed to parking my savings in US T-bills by way of USDC or USDT, thus directly facilitating US government spending on wars, etc.

ECB Working Paper #3199 reveals central banks’ quiet panic: "stablecoins drain cheap retail deposits, lock banks into volatile wholesale funding, slash real-economy lending, and weaken their precious monetary policy transmission. USD ones risk importing foreign shocks, eroding their treasured sovereignty." The control machine trembles.

💡 Cross-asset sentiment is dropping fast. Not at extreme fear yet, and that's the point. This composite tracks capital flows across risk/safe haven pairs: discretionary vs. staples, junk vs. treasuries, high beta vs. low vol, EM debt vs. safe havens. Currently at -0.5 and accelerating lower. When this indicator has reached extreme fear (COVID crash, 2022 bear market, April 2025 tariff selloff), forward 21-day returns averaged 4.8%. From extreme greed, just 1.1%. But we're not there yet. And 2022 proved the journey to extreme fear can take months. War, oil shocks, sticky inflation, a boxed-in Fed. I think sentiment has further to fall before this becomes actionable. The opportunity is forming, not here. Prepare now so you're ready when it arrives. 📊 Are we closer to the beginning of this fear cycle or the end of it?

💡 Credit markets are telling a different story than equities right now. That's worth paying attention to. This chart from Capital Notes tracks the 1-year range rank of high yield credit (red) vs. the S&P 500 (black). When credit drops and equities don't confirm, it often means institutional capital is pricing in risk that equity investors haven't yet. In late 2021, this exact divergence appeared. Credit fell apart while stocks made new highs. The S&P 500 eventually declined over 30%. Today the pattern is forming again. The list of potential causes is long: private credit defaults just hit their highest level on record at 5.8%. The oil shock is repricing corporate borrowing costs in real time. The Fed appears boxed in. Tariff uncertainty is compressing margins. I'm not claiming to know exactly which of these is driving the divergence. But I know credit markets tend to be early, and they tend to be right. This doesn't mean equities are about to crash. It means the risk that equity investors are ignoring something is elevated. 📊 What's your read on this divergence? Is credit leading, or is the equity market correct to shrug it off? #investing #markets #credit #Iran #oil #CapitalNotes

🛢️Oil up 50% in a week. War in the Middle East. Tariff drag. A Fed that can't cut. Jobs data rolling over. Private credit funds restricting redemptions. The S&P 500 just posted its worst week since the April 2025 tariff panic. I went through 17 charts across volatility, credit, sentiment, and breadth. Here's what the weight of evidence says: 🧵

💡 A short-term buy signal just fired for risk assets. But there's a catch. The VIX/VXV ratio (30-day vs. 3-month implied volatility) closed above 1.0 on Friday. That's panic. By Monday it closed back below. Tuesday it's holding at 0.96. Historically, this pattern has been a reliable buy signal. The event driving the panic gets digested, uncertainty lifts, and risk assets recover. The catch: this inversion was driven by an active war, a historic oil supply shock, sticky inflation, and rate uncertainty. A single headline could send the ratio back above 1.0 overnight. The signal is valid. But if you act on it, do it with tight risk management and selective positioning. This is not an environment for leverage. Knowing when to expect volatility is a superpower. If you expect it, it's no longer surprising. 📊 Are you acting on this signal or waiting for more confirmation?

📈 Solid bounce for $SPY off the 200 day MA after oil prices declining back below $100. Tradable bottom could be forming based on the levels of short term panic reached and discussed in my latest post. Read that post here 👇

So where does the data leave us? RISK OFF regime. Vol expanding but not extreme. Term structure in panic. Credit not fully confirming a systemic event, yet. Sentiment nervous, not despondent. Breadth damaged, not broken. I think we're in that tricky middle ground where selective buying can begin for long-term investors. But the data doesn't support going all in. Oil at $100+. Fed meeting March 17-18. Midterm election year seasonality. The downside could extend before a higher-quality setup presents itself. Be patient. Be selective. If you expect something to occur it is no longer surprising. Let's see what happens. Full analysis with all 17 charts including on my newsletter. If you found this useful, please repost, subscribe to my newsletter, and follow @CapitalNotes.

Last chart. The VIX9D/VIX ratio is hovering right at 1.0, the panic threshold. Above 1.05 = extreme short-term fear, often marks tradeable bottoms. Below 0.85 = complacency. We're right on the edge. Watching for a significant spike above 1.05 as the signal the washout is peaking.