Charles Savage reflects on oil near $100, rising geopolitical tensions, and a pivotal Federal Reserve decision this week. Yet beneath the headlines, he points to something more important: why markets are waiting and where the next structural shift may come from.

Summary

1. Oil remains near $100 per barrel after strikes on major Gulf energy infrastructure increased fears of supply disruption.
   
   
2. The VIX volatility index climbed above 27, its highest level in over a year, while the S&P 500 has fallen less than 1% this month,  a rare divergence between fear and market performance.
   
   
3. Africa’s largest banks remain resilient, with Standard Bank reporting record earnings above R49 billion, Sanlam approaching R500 billion in new business volumes, and Absa delivering R24.8 billion in headline earnings.

A note before we begin

My 27 year old son Tristan read Edition 3 and had a critique that made me smile. He said it had “too much AI rhetoric.”

Fair enough.

It is probably a criticism we will hear more often as AI quietly finds its way into writing, thinking and analysis. That raises an interesting question. Will readers ultimately prefer human dialogue or something more structured and factual that feels almost machine perfect?

My instinct is that the balance will prevail. Human judgement supported by intelligent tools. Not replaced by them. So thanks for the push, Tristan. Consider this one step up the ranks.

Now, back to the markets.

From Charles

Some weeks test conviction. Others test patience. This one tests nerves.

The Week That Was

The conflict escalated further over the weekend.

US forces struck Iran’s main oil export hub at Kharg Island. Retaliation followed quickly. The UAE’s Fujairah facility, which sits outside the Strait of Hormuz and handles close to a million barrels of oil a day, was also hit.

Oil is back near $100 a barrel as I write.

Trump has declared military victory while warning NATO allies of a “very bad future” if they do not help reopen the Strait. These are the same allies who were recently on the receiving end of his Greenland overtures.

Iran’s Foreign Minister indicated over the weekend that they welcome any regional initiative that leads to a fair end to the war. Compensation for damages, they say, remains non negotiable.

Every day oil remains near $100 increases the probability of a global slowdown.

And yet markets this morning are behaving better than many expected. Japan’s Nikkei is only modestly lower. Hong Kong’s Hang Seng is up more than one percent. Tencent is trading close to three percent higher.

Something is holding. Markets are not behaving the way the headlines suggest they should. For now they are not panicking. They are waiting.

What Is Holding

To understand why markets have not broken, it helps to look at the options market.

The VIX, Wall Street’s fear gauge, moved from roughly 22 at the start of March to above 27 last week. That is its highest level in more than a year. At those levels the options market is pricing daily swings in the S&P 500 approaching 1.7 percent.

Investors are clearly buying protection.

And yet the S&P 500 itself is down less than one percent for the month. That combination of rising volatility without a meaningful fall in equities is unusual. It suggests investors are hedging aggressively but they are not yet prepared to abandon risk.

Look beneath the surface and the market appears weaker than the headline index suggests. Breadth has deteriorated sharply. Fewer companies are participating in rallies and the gap between the cap weighted S&P 500 and its equal weighted version has widened significantly. A small cluster of mega cap technology companies continues to carry much of the index.

When leadership becomes this concentrated, markets become fragile. Not dangerous yet, but fragile.

Positioning tells a similar story. Short exposure in S&P futures has risen meaningfully in recent weeks. Sentiment indicators such as the CNN Fear and Greed Index sit deep in extreme fear territory.

Ironically that kind of pessimism often creates the conditions for sharp reversals. If any good news emerges, such as a ceasefire, the reopening of Hormuz, or credible diplomatic negotiations, the move higher from these positioning levels could be fast.

Nobody wants to be short when peace breaks out.

There is also a political dimension to consider. Trump won the 2024 election on three promises:

• No wars
• Lower prices
• Improved affordability for working Americans

Right now the scorecard on all three is deteriorating. Even some media voices closest to his coalition have begun to distance themselves from the escalation. Pressure to find an exit from this conflict is building both globally and domestically.

That pressure may ultimately become the strongest force pushing toward de escalation.

The Macro Wreckage Beneath

Geopolitics is not the only pressure building beneath markets.

The US economy was already slowing before the oil shock arrived. GDP growth was revised lower late last year. Consumer sentiment has softened. Inflation, which had been drifting down, was proving stubborn even before energy prices surged again.

The rate cuts markets were confidently expecting this summer have quietly been pushed further out.

Which brings us to Wednesday.

The Fed’s Impossible Week

The Federal Reserve announces its March decision this week. A hold is almost certain. But this meeting is anything but routine. It is the first Federal Reserve meeting where policymakers must absorb three forces at once:

• An oil shock
• A geopolitical conflict
• A slowing growth picture

Only weeks ago markets were expecting rate cuts by mid year.

Now expectations have shifted toward the back end of the year. Some economists have even begun floating the possibility of another hike if inflation accelerates.

The Fed finds itself caught between two forces pulling in opposite directions.

• A weakening economy suggests easing.

• Rising oil prices demand caution.

That combination has an uncomfortable historical echo. Stagflation. Powell’s press conference and the updated dot plot may prove to be the most consequential market moment of the week.

The Event Nobody Is Talking About

While markets watch the war, something very different is unfolding in San Jose.

Nvidia’s GTC conference has just opened its doors.

Jensen Huang takes the stage in front of roughly thirty thousand attendees from around the world, unveiling the next wave of developments in artificial intelligence. Agentic AI, physical AI, new chip architectures and the infrastructure required to power them.

Huang’s central argument is simple: AI is no longer just software. It is infrastructure.

There is a temptation to see this moment as immediate disruption. It is not. No bank is replacing its core system tomorrow and no hospital is rewriting its electronic records next month.

The incumbents understand this. But they may still be missing the point. The question is not whether AI replaces these systems tomorrow. It is whether it eventually does.

Legacy infrastructure is not a moat. It is a delay. The institutions that use that delay to embed real intelligence into their platforms will create advantages that compound for decades.

Nobody knows exactly when the shift becomes visible.  But the direction is unmistakable.

Africa’s Week

While global markets processed war and oil, three of Africa’s financial heavyweights quietly reported results.

• Sanlam reported record new business volumes approaching R500 billion and strong client inflows.
• Absa posted headline earnings of R24.8 billion, with strong growth from its African operations.
• Standard Bank delivered record earnings exceeding R49 billion, with Africa Regions contributing a significant share of profits.

On the surface the story is straightforward. Africa’s large financial institutions remain profitable, resilient and expanding across the continent.

But listening closely to their strategy commentary reveals something interesting. The language is almost identical.

Digital transformation. AI. Client ecosystems. Platform modernisation. Africa.

All sensible. All necessary.

But also remarkably similar.

For much of the past decade the sector has focused on catching up digitally. Replacing legacy systems, modernising infrastructure and improving mobile platforms.

Important work. But not really transformative.

The next decade in finance will be shaped less by digital access and more by financial intelligence. Platforms that understand their clients well enough to anticipate decisions, not simply enable them.

That shift lowers one of the largest historical barriers in finance. Access.

When intelligent platforms combine with open markets, entire populations can participate in investing in ways that were previously reserved for a small minority.

Sub Saharan Africa is projected to grow significantly faster than many developed economies in the coming years. The institutions that embed intelligence fastest will not simply gain market share.

They will influence how an entire generation saves, invests and builds wealth.

Why I’d Still Be a Buyer

Let me be contrarian for a moment.

The macro backdrop is difficult.

• Oil near $100
• Inflation still sticky
• Rate cuts delayed
• Growth slowing

But beneath the noise something structural may be beginning.

The United States is slowly eroding its credibility as the world’s anchor. Not through weakness but through unpredictability.

When the issuer of the world’s reserve currency becomes an unreliable partner, the consequences do not immediately show up in equities. They appear first in confidence.

And confidence eventually shows up in capital flows.

US Treasuries have long served as the world’s default risk free asset. Not because the US was perfect, but because there was no credible alternative large enough to absorb global capital.

That assumption is now being tested.

If trust in the dollar gradually weakens, capital will not disappear. It will rotate.

The destinations will be markets capable of offering what investors increasingly value above everything else.

Liquidity.

Deep, transparent markets where capital can move freely and price discovery still works.

Within that world, regions combining real earnings growth with genuine liquidity, including parts of Asia, Africa and selective European markets, may quietly attract structural inflows over the coming decade.

Gold already appears to be sensing this shift.

This is not a trade for this week.

But I remain a buyer into this fear because I believe we are still early in a reallocation many investors are not yet positioned for.

The Savage Take

Oil near $100.
A Federal Reserve caught between inflation and growth.
War headlines dominating the news.

And yet markets are holding.

Fear is elevated. Positioning is defensive. Sentiment is pessimistic.

Which means the potential for a sharp reversal, if good news arrives, is equally elevated.

But the deeper transformation shaping finance is not happening in the Strait of Hormuz.

It is happening in San Jose, Johannesburg, Lagos and Nairobi.

In every boardroom where someone is deciding whether AI is a feature or the foundation.

The institutions that win the next decade will not simply build bigger platforms.

They will build smarter ones.

And when that shift finally becomes visible to markets, it will look obvious in hindsight.

It almost never does at the time.

As always, this is not financial advice. Do your own research. Speak to your advisor. Make your own decisions.

But stay curious. Stay informed. Stay in the game.

Stay Savage,
Charles.

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