I'm very cautious. If no breakthrough over the weekend, I think we'll see $100 oil next week. That's a 70% increase from under $60 at year start. Gasoline is set to soar. The oil shock could be bigger than tax refund offsets. I wouldn't be surprised to see a correction in the market. We haven't had one for a long time. We're not even in the pullback zone yet (5-10%). I don't think any bear market is coming. If we get a breakthrough, we would get a coiled market spring upward, but trends look like this is going to drag on longer than hoped.

In the short run here, oil does matter more than anything else. The price of gasoline is the most visible price in the consumer basket. We're in a midterm year; politicians will make a lot of it. From what I've talked to oil experts, the shutdowns and global shipping issues cannot be fixed overnight. It will have some lasting effects, at least in the near term on the economy. In the long term, I'm as bullish as ever. But what I see short term does worry me.

I'm bullish on everything. I was puzzled by the jobless number today. If you take every short-term labor indicator, they didn't show a big decline. One positive thing is GDP estimates have not really gone down; Goldman Sachs is still over 3% for Q1. With a job loss and still over 3% GDP, that means productivity is really exploding, which is good for real wages and the economy. If this war gets resolved, boom, we're going to get on. But if it drags on, the visibility on oil prices is going to be a drag.

On private credit: Spreads on marketable bonds (investment grade vs. non-investment grade) have come up a little but not much. The whole thing about private credit agreements allowing a 5% drawdown is what a long-term illiquid investment is supposed to be. That said, I do believe that space got overcrowded and I wouldn't be surprised to see some investors there taking big losses. Banks will only take big losses if we have a recession. Could higher oil prices bring a recession? Given virtual energy independence, it's a very different story than the 70s/80s. So, slow down, no recession. Bank balance sheets look very good.