AI Summary
5 min readAndrew Sheets, Global Head of Fixed Income Research at Morgan Stanley, uses the chaos of the NCAA basketball tournament—March Madness—as an analogy for this year's sharp market swings. Recorded on Friday, March 20th at 2 p.m. in London, the episode surveys how swiftly positive economic narratives reversed amid the Iran conflict and oil supply risks, leaving investors exposed.
March's History of Volatility
Sheets notes that March has often brought outsized market turbulence, citing examples from 2005, 2008, 2020, 2022, 2023, and 2025. This year aligns with that pattern, extending beyond the energy market disruptions discussed in a prior episode with colleague Martin Ratz. The current upheaval stems from a rapid storyline flip, akin to a basketball team's second-half momentum shift, where early underperformance gives way to dominance—or vice versa. Unlike sports, market forecasting in March proves particularly unreliable due to these recurring surprises.
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What you'll learn
- 1 (00:00) **Podcast Intro** - Andrew Sheets welcomes listeners and previews rapid shifts in key market narratives
- 2 (00:19) **March Madness Analogy** - Likens NCAA basketball chaos and momentum swings to current market volatility
- 3 (00:49) **Historical March Volatility** - Highlights outsized swings in markets during past Marches like 2008, 2020, 2022
- 4 (01:09) **Energy Disruption Context** - References prior discussion on historic energy market issues with Martin Ratz
- 5 (01:21) **Pre-Conflict Bullish Signals** - Recaps Jan/Feb 2026 strength from cheap energy, policy, AI investment, and global growth proxies
- 6 (02:06) **Iran Conflict Flip** - Sudden oil shock from Iran risk reverses nearly all prior storylines
- 7 (02:19) **Post-Shock Market Shifts** - Oil rises, cyclicals/financials fall, Europe/Asia lag, USD strengthens as safe haven
+ Full timestamped outline available in the app
Show Notes
As the Iran conflict upends market narratives, our Global Head of Fixed Income Research Andrew Sheets offers his take on how to view the historic disruption happening in March and what the next few weeks could bring.
Read more insights from Morgan Stanley.
----- Transcript -----
Andrew Sheets: Welcome to Thoughts on the Market. I'm Andrew Sheets, Global Head of Fixed Income Research at Morgan Stanley.
Today on the program, a survey of just how quickly key narratives have changed and how lasting that might be.
It's Friday, March 20th at 2pm in London.
The NCAA basketball tournament, also known as March Madness, is one of my favorite times of the year. The single elimination tournament of 64 teams is wonderfully chaotic with plenty of surprises, especially in the early games. And basketball is one of those sports where momentum often seems real. A team that has somehow forgotten how to shoot in the first half of the game can suddenly look unstoppable in the second.
As I said, March is one of my favorite times to watch sports. It is often not one of my favorite times to forecast markets. In 2005, 2008, 2020, 2022, 2023, and 2025, March saw outsized market volatility. And it’s the case again this year. I'm sure, it's just a coincidence.
This time, it's not just about a historic disruption to the energy markets, which my colleague Martijn Rats and I discussed on this program last week. It's also a major reversal of the market storyline. If this were a basketball game, the momentum just flipped.
In January and February of 2026, there were strong overlapping signals that the U.S. and global economy were in a good – even accelerating – place, boosted by cheap energy, stimulative policy, and robust AI investment. Oil prices were down as metals, transports, cyclicals and financial stocks, all rose. Europe, Asia, and emerging market equities – all more sensitive to global growth – were outperforming. Inflation was moderating. Central banks were planning to lower interest rates. The yield curve was steepening and the U.S. dollar was weakening. The January U.S. Jobs report was pretty good.
And then … it all changed. In a moment, the Iran conflict and the subsequent risk of an oil price shock flipped almost every single one of those storylines on its head. Now, oil prices rose and the prices for metals, transports, cyclicals and financial stocks all fell. Equities in Europe and Asia – regions that rely heavily on importing oil – underperformed.
The U.S. dollar rose as investors sought out safe haven. Inflation jumped following oil prices. The yield curve flattened on that higher inflation, as we and many other forecasters adjusted our expectations for what central banks would do. And, as it happens, the last U.S. Jobs repor
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