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The Stagflation Trap: Navigating a Fourth Week of Market Red · The SPY Trader

• 0:00
  Welcome to the weekend edition of Spy Trader !
• 0:03
  It is exactly 6 am on Saturday morning , March 21st , 2026 , here in the Pacific time zone .
• 0:11
  I am your host , Barnaby Bumper , and it is a pleasure to have you with us for our early morning market debrief .
• 0:17
  If you are just waking up and smelling the coffee , I hope you have a strong brew today because the market news from this past week has been a bit of a roller coaster .
• 0:26
  Let's dive right into the heart of it .
• 0:29
  We just wrapped up the week ending March 20th , and for the fourth week in a row , the major indices finished in negative territory .
• 0:37
  This marks the longest weekly losing streak we have seen in over a year , and it has certainly put a damper on the spring mood .
• 0:44
  The S&P 500 , which many of you track through the SPY ETF , fell 1.9 percent this week to close near 6,506 .
• 0:54
  This leaves the index down about 5 percent for the year already .
• 0:58
  The techheavy Nasdaq , or the QQQ , took an even harder hit , dropping 2.1 percent over the week with a particularly sharp 2 percent decline on Friday alone .
• 1:09
  Tech investors are feeling the pinch , as the QQQ is now down nearly 7 percent yeartodate .
• 1:15
  Even the blue chips in the Dow Jones , represented by the DIA , were not spared , losing 981 points to finish at around 45,577 .
• 1:26
  So , what is causing all this pressure The big word on everyone's lips this week is stagflation .
• 1:33
  We are seeing a shadow cast by the ongoing war with Iran , which has disrupted the Strait of Hormuz and sent energy prices soaring .
• 1:41
  Brent Crude is currently trading in a high range between 100 and 120 dollars per barrel .
• 1:48
  This spike in energy costs is making inflation very sticky , and it is putting the Federal Reserve in a tough spot .
• 1:56
  In their meeting on March 18th , Chair Jerome Powell and the Fed kept interest rates at the 3.5 to 3.75 percent range , but the tone was decidedly hawkish .
• 2:08
  Powell warned that the progress they were making on inflation has stalled out because of this energy shock .
• 2:14
  Because of this , the market has basically canceled any bets on a rate cut for the rest of 2026 .
• 2:21
  In fact , some traders are starting to wonder if we might even see a rate hike if oil does not settle down soon .
• 2:28
  To make matters more complicated , we saw some worrying signs in the labor market .
• 2:33
  Data from the Bureau of Labor Statistics showed a surprise loss of 92,000 jobs in February .
• 2:39
  Usually , you would think a cooling labor market might lead to lower rates , but because inflation is still high due to oil , we are stuck in that stagflation trap — slow growth combined with high prices .
• 2:53
  Looking at specific sectors , Energy , via the XLE , was the only real bright spot this week .
• 2:59
  When oil is expensive , the producers see massive margin expansions .
• 3:04
  On the other hand , the Technology sector , the XLK , is having a rough time .
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  Rising bond yields are hurting growth stock valuations , and we had some serious drama with Super Micro Computer , or SMCI .
• 3:19
  Their stock crashed over 27 percent this week after the U.S.
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  government accused them of smuggling advanced Nvidia chips into China .
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  This weighed heavily on the whole semiconductor group , including Nvidia .
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  However , it was not all bad news .
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  FedEx , ticker FDX , provided a rare positive surprise , jumping 9 percent after they beat earnings and raised their guidance .
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  This suggests that the global logistics world is still resilient despite the conflict .
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  We also saw some strength in the defense sector , with the ITA ETF seeing gains in companies like Northrop Grumman , ticker NOC , and the drone maker Red Cat , ticker RCAT .
• 4:01
  Now , let’s talk strategy .
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  In a market like this , capital preservation is the name of the game .
• 4:08
  For our Spy Trader recommendations , I suggest looking at defensive rebalancing to hedge against inflation .
• 4:15
  The Energy Select Sector SPDR Fund , ticker XLE , or a company like Texas Pacific Land , ticker TPL , are great ways to play the energy surge .
• 4:26
  TPL is particularly interesting because they own land in the Permian Basin and have very low capital expenditure .
• 4:33
  For your fixed income , keep it short .
• 4:36
  With the 10year Treasury yield hitting 4.38 percent , longterm bonds like TLT are risky .
• 4:44
  Stick to the short end of the curve with the iShares 1 to 3 Year Treasury Bond ETF , ticker SHY .
• 4:50
  You get the yield without as much price risk .
• 4:52
  In the tech space , if you have a longterm view , look for quality on the dip .
• 4:58
  Micron , ticker MU , reported strong earnings thanks to AI demand , and even though the broader market selloff pulled it down , the underlying AI supercycle is still very much alive .
• 5:11
  Finally , if you are looking for alternatives , consider Gold through the GLD ETF or highquality industrial real estate like Prologis , ticker PLD , which benefits from the logistics trends we saw in the FedEx report .
• 5:25
  Treat the Vanguard Real Estate ETF , VNQ , with caution though , as high mortgage rates hurt residential demand .
• 5:32
  Right now , our overall market status is one of caution and bearishness .
• 5:36
  Stay liquid , stay diversified , and keep an eye on those geopolitical headlines .
• 5:43
  I am Barnaby Bumper , and this has been your early morning update on Spy Trader .
• 5:48
  I will be back in a few hours with more insights .
• 5:51
  Stay safe and happy trading !