Point of View: The Federal Reserve Has Over-Eased, with a 65% Chance of Stagflation in the United States

March 23 — Amid ongoing escalation in geopolitical tensions, both Japanese and South Korean stock markets opened sharply lower on Monday. The Nikkei 225 dropped below 52,000 points, falling 3.04% intraday. The South Korean KOSPI plummeted 4.00% intraday, last trading at 5,548.94 points.

March 23rd: Per alternative data, the cryptocurrency Fear and Greed Index sits at 8 today—down from 10 yesterday and far below the 23 weekly average, signaling a continued deepening of extreme fear in the market. Note: The Fear and Greed Index ranges from 0 to 100, with weighted components including: Volatility (25%), Market Trading Volume (25%), Social Media Hype (15%), Market Surveys (15%), Bitcoin Dominance (10%), and Google Trends Analysis (10%).

March 23 — Bitcoin dropped below $68,000 this morning, per HTX market data, and is now trading around $67,800. The cryptocurrency is down 1.89% over the past 24 hours.

On March 23, data from CME’s FedWatch shows: - The Federal Reserve (Fed) has a 12.4% probability of hiking rates by 25 basis points (bps) at its April meeting, with an 87.6% chance of holding rates steady. - For the June meeting, the odds of a cumulative 25-bps hike are 21.9%, a cumulative 50-bps increase is 1.6%, and the probability of keeping rates unchanged is 76.5%. (Source: Oriental Wealth)

March 23: Middle East tensions escalate as Trump issues a 48-hour ultimatum to Iran, demanding "unconditional access" to the Strait of Hormuz. Failure to comply, he warns, will result in strikes on key infrastructure including power plants. Iran responds that any attack would prompt it to "completely shut down" the global energy artery and expand targets to cover energy, IT, and desalination facilities. The conflict enters its fourth week, disrupting roughly one-fifth of the world’s oil and gas shipments. Energy prices have spiked sharply, and markets fear supply chain disruptions will further stoke inflation, hit the global economy, and spread geopolitical risks.

Iran’s Ministry of Foreign Affairs issued a statement on March 23 regarding developments from the 22nd, confirming the Strait of Hormuz remains open. Vessels may transit the waterway provided they follow necessary precautions amid the ongoing conflict, the statement said, while outlining Iran’s core principles on the strait’s navigation and safety. The statement clarified that vessels linked to the U.S., Israel, and other "aggressor countries" do not meet criteria for normal, non-hostile passage. Iran will address such vessels in accordance with the law, it noted. Non-hostile vessels from other nations (or affiliated with them) that do not participate in or assist with aggression against Iran and comply with Iran’s announced safety rules and measures may transit safely after coordinating with Iran’s competent authorities. The statement stressed that fully restoring the Strait of Hormuz’s sustainable security and stability requires ending military aggression and threats against Iran,