Morning Bid: Three months, and counting

The market is underpricing how quickly prolonged Gulf disruption can transmit from commodities into real-economy demand destruction without needing an outright recession. The key second-order effect is not just higher pump prices; it is a renewed squeeze on rate-sensitive categories and freight, which pressures discretionary retail margins just as consumers were expecting relief from easing inflation. That makes the coming PCE print important less as a headline and more as a signal that the Fed’s easing path can be delayed again, extending the duration of restrictive financing conditions for retailers and hardware demand.

For the listed names, COST is the relative winner because its membership model and affluent customer base absorb inflation better than lower-income peers, but even there, multiple expansion is harder if rates stay higher for longer. BBY and DELL are more exposed to delayed replacement cycles: electronics is already a discretionary purchase class, and higher mortgage rates can leak into broader big-ticket hesitation through household balance-sheet effects. DLTR faces the worst mix — its customer base is most sensitive to food/fuel inflation, so any further energy impulse could shift spend from general merchandise to necessities and intensify mix pressure.

The contrarian point: the tape may be too focused on “inflation bad for everything” and too little on dispersion. If oil stays elevated for several weeks, the biggest loser may be not the obvious defensives but the companies with the weakest pricing power and the highest exposure to impulse buying. Meanwhile, any sign of diplomatic de-escalation would likely hit energy first but could paradoxically lift BBY/DELL on duration relief, creating a sharp factor reversal within days rather than months.