Markets weigh geopolitics, tariffs and tech pullback risks

Market Analysis: Geopolitical Risks, Economic Indicators & Bull Market Resilience (February 13, 2026)

Key Concepts:

• Geopolitical Risk: Increased tensions in the Middle East, specifically involving Iran, and the potential for military action by the US.
• Dollar Decline: A 12-month trend of the US dollar weakening, potentially influenced by geopolitical factors and protests in Iran.
• Bull Market: The ongoing upward trend in the S&P 500 and Dow Jones Industrial Average, despite recent volatility.
• CPI (Consumer Price Index): A key economic indicator measuring inflation, with an upcoming report anticipated to influence market direction.
• Tariffs: Trade barriers impacting affordability and potentially influencing fiscal policy.
• XLK: The Technology Select Sector SPDR Fund, used as a gauge of technology sector performance.
• SaaS (Software as a Service): A software distribution model where applications are hosted by a vendor and made available to customers over the internet.
• VIX (Volatility Index): A measure of market expectations of volatility, currently elevated at 20.
• CNY: The ISO 4217 currency code designating the Chinese Yuan Renminbi.

1. Geopolitical Tensions & Market Impact

The discussion began with escalating geopolitical tensions in the Middle East. President Trump is signaling a willingness to use military action against Iran if negotiations fail to yield a satisfactory deal. This follows recent actions like “Operation Midnight Hammer” (bombing of Iranian nuclear facilities) and the arrest of Nicolas Maduro. Michelle Caruso-Cabrera emphasized that these actions demonstrate Trump’s resolve and are intended to exert pressure during negotiations.

Ryan Dietrich noted that comments from the Treasury Secretary regarding the use of the dollar to fund protests in Iran are noteworthy, though he attributes the dollar’s 12-month decline to broader factors. He highlighted a key difference between the current situation (early 2026) and 2025: Iran is currently more vulnerable domestically, making it potentially more dangerous. He observed that oil prices have sustainably risen this time, unlike in 2025, indicating a heightened level of risk perception.

2. Market Performance & Sentiment

Despite geopolitical concerns, the market has shown resilience. Ryan Dietrich pointed out that the S&P 500 has been up for nine consecutive months on a total return basis, and the Dow Jones has also experienced a nine-month winning streak. He acknowledged a potential “banana peel” moment – a short-term correction of around 5% – due to optimistic sentiment and a weak historical pattern in February. However, he maintains a bullish outlook, citing strong earnings and solid fundamentals.

Michelle Caruso-Cabrera observed a shift in market sentiment from “greed” to “fear,” with indiscriminate selling across various sectors. She cautioned against assuming all AI companies will disrupt legacy businesses, emphasizing the need for selective investment.

3. Technology Sector Analysis

The technology sector, specifically as represented by the XLK ETF, is experiencing increased short interest – one of the highest levels in years. Ryan Dietrich views this as a potential opportunity, drawing a parallel to the situation with Deepki last year. He noted that software valuations are currently at their lowest levels since 2013, suggesting potential undervaluation. He indicated that Carson Group has been adding to technology and software positions.

4. Inflation, Trade & Fiscal Policy

Marco discussed the potential impact of a Supreme Court decision on tariffs, which could disrupt the bond and equity markets. He believes President Trump is under pressure to address affordability concerns ahead of the midterms and anticipates potential tariff relief, aiming for a reduction from the current 14.2% to around 10% by year-end. He views this as a form of fiscal stimulus.

He also predicted a significant trade deal with China this year, potentially including a currency component that would put downward pressure on the dollar and the Chinese Yuan (CNY). Michelle Caruso-Cabrera agreed, noting that China strengthening its currency would be beneficial in addressing Trump’s concerns about trade deficits, though she expressed skepticism about China’s willingness to do so.

5. Upcoming Economic Data & Positioning

The panel discussed the upcoming CPI report as a key event. Ryan Dietrich recommended maintaining an overweight position in equities but diversifying. He highlighted Japan’s recent decision to increase spending as a positive signal. He also noted the elevated VIX at 20, indicating continued market volatility.

Notable Quotes:

• Ryan Dietrich: “If everybody is thinking like somebody thinking General Patton, I don’t think it’s going to be that simple.” (Regarding the technology sector and potential short squeeze)
• Michelle Caruso-Cabrera: “We’ve gone from the greed part of the market. Now we’re deeply in fear.” (Describing the recent shift in market sentiment)
• Marco: “I think by the end of the year, we’re closer to ten [percent tariffs] than to 14.” (Predicting tariff relief)

6. Logical Connections & Synthesis

The discussion flowed logically from geopolitical risks to their potential impact on markets, then to a broader analysis of market performance, sector-specific trends, and macroeconomic factors. The panelists consistently connected these elements, highlighting how geopolitical events can influence economic indicators like the dollar and oil prices, and how these factors, in turn, affect market sentiment and investment strategies.

7. Data & Statistics:

• Dollar Decline: The US dollar has been declining for the past 12 months.
• S&P 500 & Dow Jones: Both indices have experienced nine consecutive months of gains on a total return basis.
• VIX: Currently at 20, indicating elevated market volatility.
• Current Tariff Level: 14.2%
• XLK Short Interest: Soared over the past month to one of the highest levels in years.
• Software Valuations: Cheapest since 2013.

Conclusion:

Despite heightened geopolitical risks and recent market volatility, the panelists maintain a generally bullish outlook. They emphasize the importance of diversification, selective investment, and monitoring key economic indicators like the CPI and the Supreme Court decision on tariffs. The potential for a trade deal with China and a possible easing of tariffs are seen as positive developments. While acknowledging the possibility of a short-term correction, the underlying fundamentals of the market remain strong, suggesting continued growth potential.