THE DEAN’S LIST: The Week Diplomacy Fought for the Steering Wheel

Dean’s note: You're looking at that scoreboard and your brain is screaming to sell everything. I get it. Before you do anything, pull up the Single-Digit Millionaire portfolio. Take a look.

I built it because I got tired of watching good people make bad decisions with their money based on one scary number on a screen. What you'll see when you click is this: half the S&P 500 sectors are flat to positive this year. The equal-weight index is barely down. Small caps and foreign stocks are quietly doing their job. The loudest number on the screen is hiding a much calmer story underneath. And that calmer story is where your actual money lives. Go see it. Then come back. I promise the rest of this newsletter hits different when you realize your portfolio isn't doing what the headlines say it should be doing. And if it helps, forward this to someone you care about who's staring at their 401(k) right now wondering if the sky is falling. It's not. But they need to see the data to believe it.

Dean’s note:
Five straight weeks of losses. The Nasdaq is down 13% from its peak. And for the first time, futures markets are pricing in better than even odds that the Fed’s next move is a rate hike, not a cut. That sentence alone should give you a sense of how much has shifted in four weeks.

But here’s the week in two sentences. Monday, the S&P soared nearly 2% on hopes of a peace deal. Friday, the market dropped about the same amount because the deal hasn’t happened yet. It’s desperately searching for a reason to rally while it flirts with a correction. And the moment it gets a real ceasefire, a reopening of the Strait, a credible de-escalation, the snapback will be violent to the upside. The spring coils more each week. That doesn’t mean more pain isn’t ahead. There likely is. And there is always the possibility we’re wrong and a destructive bear market and recession are on the horizon. We just don’t think the probability is material for now. I’ll tell you a story that will make you feel better at the end.

Meanwhile, above the noise: Arm Holdings  just launched its first chip in 35 years and the stock jumped 16%. And a 15-point peace proposal is sitting on a table in Pakistan. None of that changes the fact this is painful. But it does change the setup for what comes next.

A week of whiplash. Monday was a rocket. Friday was a gut punch. Here’s what actually mattered:

Monday (March 23): The best day in weeks. Trump posted over the weekend that the administration was considering winding down the military campaign and claimed very good and productive conversations with Iran. The S&P surged 1.8% to close at 6,631. Oil dropped below $88 on WTI, its sharpest single-day decline since the war began. Every sector was green. Traders were pricing in a peace deal. It felt like the bottom might be in.

Tuesday (March 24): Reality checked in. Iran denied any negotiations were happening. The speaker of Iran’s parliament said the talk of talks was fake news designed to manipulate oil markets. The S&P gave back 0.37% to close at 6,556. Oil crept back up. Meanwhile, Arm Holdings unveiled its first in-house chip in 35 years. The AGI CPU is designed for AI inference in data centers. Meta is the lead customer. OpenAI, Cerebras, and Cloudflare are launch partners. Arm expects $15 billion in annual revenue from the chip by 2031. 

Wednesday (March 25): The day diplomacy made the headlines. The Associated Press reported that Iran received a 15-point peace proposal from the administration, delivered through Pakistan. The New York Times confirmed it. The plan included a 30-day ceasefire, nuclear dismantlement, and reopening of the Strait of Hormuz. Markets liked it. Then Iran’s state media said Tehran would reject the offer and issued its own five-point counterproposal that included sovereignty over the Strait and war reparations. The market held its gains anyway. The fact proposals were being exchanged at all was a material positive.

Thursday (March 26): The selloff resumed. The Wall Street Journal reported that Saudi Arabia and the UAE are considering joining the military campaign against Iran, which would be an escalation. The Nasdaq fell 2.4%, officially entering correction territory at 13% below its October high. Memory stocks got hit after Google unveiled TurboQuant, a technique that could reduce memory needed for AI models. Micron, which had been the star of the previous week, pulled back. The S&P lost 1.74%. The 10-year yield hit 4.42%.

Friday (March 27): The worst day of the week. Trump extended his deadline for Iran to reopen the Strait by 10 days, to April 6, citing ongoing talks. But Iran turned back two Chinese container ships from the Strait, tightening the blockade further. Pentagon reports said up to 10,000 additional troops could be deployed. Israel’s defense minister said attacks on Iran will escalate and expand. The S&P fell 1.67% to 6,369, its fifth straight weekly loss. The Nasdaq dropped 2.15%. And in the futures market, the probability of a Fed rate hike by year-end crossed 50% for the first time. That’s the moment the narrative shifted from “when does the Fed cut”? to “what if the Fed has to raise”?

This is the one that should stop you in your tracks.

One month ago, the debate was whether the Fed would cut rates once or twice in 2026. As recently as the March 18 FOMC meeting, the dot plot showed a median of one cut. That was eight days ago.

On Friday, CME FedWatch showed a 52% probability that the Fed’s next move is a rate hike. Not a cut. A hike. The first time that threshold has been crossed.

What changed? Oil. February inflation data was collected before the war. March data, due April 10, will show some damage. Gas prices are the highest they’ve been in either Trump term. And the Philadelphia Fed president said Friday she’s growing more apprehensive about the path forward.

The 10-year yield is at 4.42%, its highest since July. The bond market appears rattled.

Dean’s note:
Let me be clear about what this means and what it doesn’t. The market pricing in 52% odds of a hike doesn’t mean the Fed will hike. It means traders are hedging for the possibility. That’s a huge difference. The Fed has been emphatic about patience. Powell said it explicitly at the March meeting. And Powell is gone by mid-May. Warsh, who is expected to take over, has been more dovish on rates. Even if it never happens, hike talk tightens financial conditions to a degree.

But, and there is a BIG BUT–SOFR, the corporate borrowing rate benchmark, hasn’t budged, nor have HELOC or adjustable mortgage rates. That’s great news for the economy for now. Yes, fixed rate mortgages are back at nose bleed levels. But it’s a mixed bag so far, not apocalypse now. It matters what you pay attention to.

While the market was obsessing over ceasefire proposals, Arm Holdings quietly dropped a bomb of its own.

On Tuesday, Arm unveiled the AGI CPU, its first production-ready chip in 35 years of existence. For context, Arm has always been a licensing company. It designs chip architecture and lets companies like Apple, Nvidia, and Amazon build chips using its blueprints. Arm has never sold its own silicon. Until now.

The AGI CPU is built for AI inference in data centers. It has up to 136 cores on a 3-nanometer process from TSMC. Arm claims it delivers twice the performance per watt compared to x86 chips from Intel and AMD. Meta is the lead customer and co-development partner. OpenAI, Cerebras, Cloudflare, and SAP are launch partners. More than 50 companies endorsed it.

The financial projections: $15 billion in annual revenue from this chip alone by 2031, bringing Arm's total annual revenue to $25 billion and earnings per share to $9. For a company that generated $4 billion in revenue in 2025, that's a 6x increase. The stock surged 16% on Wednesday as the market digested the implications. Citi called it "the most significant shift in the company's history." Raymond James offered up a $166 target. Needham went further with a $200 target. UBS went to $175.

Dean’s note:
This is the most significant strategic shift in Arm's history, and it tells you something important about where AI is heading. The chip is called the "AGI CPU" optimized for agentic AI workloads, not traditional chatbots. As AI moves from conversation to action, from prompts to agents that actually do things in the world, the computing demands shift dramatically. Arm is betting its entire future on that shift.

And with Meta, OpenAI, and Cerebras already signed up, it's not a speculative bet. I spent some time playing with Perplexity Computer, an agentic tool designed for dummies to build any kind of application. I am impressed to a degree. I get the excitement, and it’s not just hype. I’ll give more details in the wrap-up below.

Let me walk you through the diplomacy, because it matters for your money.

Trump claimed productive talks. The market soars to start the week. Then Iran denies any talks. The market gives back gains. AP and NYT confirm a 15-point peace proposal delivered through Pakistan. Market rallies again. Iran rejects the proposal and issues a five-point counterproposal that includes sovereignty over the Strait of Hormuz and war reparations. Now reports say Saudi Arabia and UAE may join the war. Market tanks. And Trump extends his deadline by 10 days to April 6. But Iran turns back Chinese ships from the Strait and the Pentagon discusses 10,000 more troops. Outcome is a shitty week for investors in anything but commodities.

Dean’s note:
Here’s my honest read. The fact proposals are being exchanged is progress, even if the public posturing says otherwise. Both sides are using high temperature positions as opening bids. That’s how negotiations work. Iran’s five conditions are laughable as final terms. War reparations and sovereignty over the Strait? Come on.

But they’re not laughable at the start of a conversation. Pakistan, Egypt, and Turkey are all positioned as mediators. The April 6 deadline gives both sides 10 days. That’s not a long time, but it’s enough for back-channel progress. The market priced in peace on Monday and threw it out with the bathwater by Friday. That’s the rhythm we’re going to live in until something breaks through. Stay patient.

The Nasdaq closed Friday at 20,948, down 13% from its October record. The S&P 500 is at 6,369, down 9.1% from its January peak. Getting close.

Here’s what I want you to remember: corrections are common. They happen roughly once every 18 months on average. Since 1950, the S&P 500 has experienced a 10%+ decline in about 60% of all calendar years. Most of those did not turn into bear markets. They were temporary. Painful, but temporary.

The current drawdown has a specific, identifiable cause: an oil shock from a war. Oil shocks have a beginning and an end. The futures market is still pricing oil in the high $60s for 2027. The structural economy, evidenced by last week’s FedEx and Micron earnings, is bending, not breaking.

Dean’s note:
Corrections feel like the end of the world when you’re in them. They look like buying opportunities in the rearview mirror. That’s the cruel irony of investing. The discomfort you feel right now is the cost of admission for long-term returns. I’m not telling you to buy aggressively today. I’m telling you not to sell into panic. Those are two very different things.

AI hardware keeps charging ahead, market wobbles can’t slow the build.

Five weeks. The longest losing streak since 2022. The Nasdaq in correction. Oil above $100 for a fourth week. Rate hike odds crossing 50%. A ceasefire proposal rejected. Ground troops being discussed. If you are sitting at your kitchen table feeling sick about your portfolio, that is a completely rational response to an irrational situation.

But let me tell you what happened to me Friday. I played a competitive pickleball match at a friend’s house who just retired. He’s not old, just rich enough to be done. One of the players works at William Blair, a big investment shop working with high net worth folks just like you.

What did he talk about all game? Three year structured notes. The kind that shave your downside by 20% while still offering all the stock market upside. A free lunch of sorts, before you dig into the fine print and illiquidity. Wall Street is busy building products that sell like hot cakes right now with an elevated VIX. This tells you what the high net worth set demands. They’re scared, but not so scared they would take less than the full upside in three years.

•  The April 6 deadline is the next inflection point for markets. Trump extended the Strait ultimatum by 10 days. That gives diplomacy a window. Pakistan, Egypt, and Turkey are all active mediators. Iran’s foreign minister acknowledged receiving messages from the administration, even while denying direct talks. Proposals are being exchanged. Back channels are open. If something breaks through before April 6, the market snapback will be violent and fast. The spring is coiled.

•  Oil futures for 2027 are still in the high $60s. Brent at $112 today. $68 next year. I keep saying this because it’s the most important data point on the planet. The futures market is telling you this war premium will evaporate. Not if. When. The timing is the only question.

•  The rate hike whisper is real but don’t overreact. Yes, 52% odds of a hike crossed for the first time. But the median FOMC dot still shows one cut. Powell has been emphatic about patience. Warsh is coming. And if the war ends and oil crashes, the rate hike conversation disappears overnight. The bond market is pricing in the worst case that may never arrive.

•  AI infrastructure continues to operate in a parallel economy. Arm’s 16% surge on its AGI CPU launch. Nvidia’s $1 trillion in orders. Micron’s $33.5 billion guidance (even after the Google TurboQuant pullback). Meta’s $27 billion data center deal. These companies are making decade-long bets. Oil shocks don’t cancel decade-long bets.

•  Corrections are common and survivable. Since 1950, 10%+ pullbacks have happened in about 60% of calendar years. Most did not become bear markets. The cause of this one is identifiable and temporary. The economy is bending, not breaking. FedEx told you that last week with $24 billion in receipts.

•  Keep contributing to your 401(k). The $24,500 limit is in effect. If you’re 60-63, use the $35,750 super catch-up. The S&P is now 9% below its January high. You are buying at prices you haven’t seen since September. That feels terrible. That’s the point.

Five straight weeks of losses. I know. I feel it too. Just look at my single digit millionaire portfolio. Look through the benchmarks, the sector returns within the S&P 500, non-US and small caps. Half the S&P 500 sectors are flat to positive for 2026. Its equal weight index isn’t down much for the year and neither are foreign stocks or small caps. There are plenty of reasons to stay cautiously optimistic.

“But Dean, what about consumer discretionary being the second worst sector performer of 2026, just above financials?  Isn’t it pointing to economic doom ahead?” Relax. That’s mostly drive by Tesla and Amazon. They are the biggest weights in that index and both trade more like AI technology stocks than the usual batch of consumer names including McDonald’s, Nike or Home Depot. 

Last week I told you: temporary crises are where permanent wealth is built. Not enjoyed. Built. And then I asked, “what if I’m wrong?” I told you bear markets are long-form drama. A Hollywood epic running over three hours. We have time. Moving averages get breached and the breaches hold. Relief rallies stage and fail. It takes months, not weeks.

We’re in that movie right now. And I want to be honest with you: I don’t know how the next scene goes. Nobody does. But I know the spring is getting tighter. Proposals are being exchanged. Mediators are active. The deadline is April 6. And oil futures say $68 next year.

We have a 10% cash buffer for a reason. We’re watching. We’re patient. We’re ready.

Stay zoomed out. Breathe. And watch April 6.

— Dean

P.S. Here’s the number that sticks with me this week: 52%. That’s the probability the futures market assigned to a Fed rate hike by year-end. One month ago, that number was 0%. Four weeks of $100+ oil did that. But here’s the thing: if the Strait reopens and oil drops back to $70, that 52% goes right back to zero and the rate cut conversation restarts. The entire trajectory of monetary policy in 2026 hinges on one shipping lane. That’s not a prediction. It’s math.

And one more thought. Arm’s AGI CPU launch is quietly one of the most important moments in the chip industry this year. A 35-year-old licensing company deciding to make its own silicon, naming it after artificial general intelligence, and getting Meta and OpenAI to sign up as customers on day one? That’s not marketing. That’s a company that sees where the puck is going. The AI trade is evolving from building big language models to building agents that do real work. Arm just built the CPU for that world. Pay attention.

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