Nick Hodge,
Publisher
April 7, 2026
We won the war in the first 24 hours.
But it’s going to take hundreds of billions more dollars, thousands of more troops, and further escalation to complete the objectives.
Same way Trump was going to drain the swamp and cut the debt and spending.
Yet we just got a 2027 budget proposal that tops out at $2.2 trillion in new spending with $1.5 trillion for defense. That’s more than 40% more than last year.
Those mixed messages are what’s driving market volatility to both the upside and downside.
That’s what happens when S&P volatility (VIX) is above 20 — you get wider price swings. When it’s at 38, like it is for gold volatility (GVZ) and 95, like it is for oil (OVX), the swings are that much wider. Again, to both the upside and downside.
Expect many more weeks of this.
In his speech last week, Trump alluded to two to three more weeks of bombings. The political talking heads are pointing to the already-delayed mid-May meeting with Xi as a natural date for deescalation.
A couple points…
First, whether it’s Epic Fury or Epic Failure, a new regime in the world’s energy markets has now been ushered in. Not only are oil prices much higher, making other commodities like coal attractive again, but countries in Europe and Asia will now need to think even harder about energy security. Nuclear, anyone?
Second, war or not, major macro factors are now changing, and that’s leading to a cyclical change in markets.
Inflation is back on the rise after several months of cooling. The CPI is headed back closer to 4% after cooling toward 2% over the past few pre-war months.
Simultaneously, growth is softening after 4%+ prints last year. Most estimates for Q1 GDP are at 2% or lower.
There’s a word for falling growth and rising inflation.
The dollar index (DXY) hit 100.6 last week, which is the highest it’s been since last May. Two-year yields cresting 4% in recent days are the highest they’ve been since last June.
Commodities, particularly those that hurt when dropped on one’s foot, are averse to rises in the dollar and yields, which is why inflation is now moving away from the metals and into the softs that now have much higher input costs in the form of fuel and fertilizer. It’s why a one-month chart of copper and corn looks like this:
None of this changes the world’s long-term demand for natural resources amid an ongoing energy transition.
And none of this changes a runaway public debt and political spending problem that is still bullish for gold.
Call it like you see it,
Nick Hodge
Publisher, Daily Profit Cycle