After the weekend market closure, looking at Friday, SPY rose 0.41%, QQQ rose 0.35%. But over the past 5 trading days, SPY has still fallen 1.37%, QQQ fell 2.41%, indicating the market steadied on Friday, but the week was still somewhat shaky.

Connecting today’s news, the main theme is clear: on one side the US and Iran’s “economic war” continues to intensify, and on the other the US-Canada trade war is deepening. What ETF Radar sees is not just a few headlines, but “geopolitical tension plus trade friction” together pushing the market toward greater caution.

First look at the Middle East thread. Iran publicly warned neighboring Middle Eastern countries not to join the “economic war” initiated by the US. To put it bluntly, this is not ordinary rhetoric; it’s a message to surrounding countries: whoever picks a side may get dragged in. Why does the market care? Because once sanctions, ports, shipping and settlement are involved, oil is not just a commodity but a geopolitical chip. Imagine crude as trucks on a highway: if checkpoints are set up at intersections, even if the total number of trucks doesn’t drop, delivery speed slows and the spot market can tighten.

At the same time, the media are tracking that Congress will announce more details today on economic measures against Iran. Reports already note that most Asian markets fell on Monday while oil initially pulled back slightly — not because risk vanished, but because the market is waiting for the details to land. Plainly put, everyone knows the situation is serious, but they haven’t seen the full menu yet, so they pull in their horns and don’t want to go all-in. This state often pushes capital toward two types of assets: one is energy, the other is safe-haven assets.

However, there is also a counter signal in the Middle East. Syria and Israel held US-mediated talks in Jordan aimed at cooling tensions. That matters because it shows the Middle East isn’t uniformly escalating; some parties are applying the brakes. The market picture therefore looks more nuanced: not one-sided panic, but “localized cooling while core risks remain.” That’s also why oil didn’t spike out of control that day, yet the energy rationale hasn’t disappeared.

Now look at the North America thread. The US-Canada trade dispute is continuing to deepen, and multiple reports say new tariffs will make life harder for consumers and businesses already squeezed by high prices. Canada is a very important neighbor and trading partner for the US; this is not a distant skirmish but a direct hit to supply chains. Simply put, tariffs are like adding another toll booth: goods can still pass, but costs are higher and speed is slower.

This thread also produced a more down-to-earth item today: Trump proposed importing up to 300,000 tons of tariff-free beef to try to push US ground beef prices noticeably lower, but the US cattle industry immediately pushed back. This looks like a food story, but behind it is the clash between inflation and trade policy. To be crystal clear: the White House wants more imports to lower grocery prices, but domestic industry fears being hurt first. So the issue arises that if the government is both fighting a trade war and relying on imports to cap prices, it shows inflationary pressure hasn’t truly eased.

This transmission is critical for markets. Price pressures remain, and policy is adding extra costs, making it harder for central banks to pivot to easing. In plain terms: if inflation is a bit higher and tariffs add another shove, the market will worry that “rates may not fall quickly.” Interest rates are the cost of borrowing. When borrowing costs are high, rate-sensitive assets such as real estate, preferred stock, and small companies that rely more on financing tend to come under pressure; whereas sectors with stronger cash flows and the ability to absorb costs are relatively better supported.

So today’s mainline is not a single event but two overlapping forces: Middle East risk raises concerns about energy and transportation, while a trade war around the US adds fuel to inflation. That makes investor sentiment more cautious: equities didn’t collapse, but it’s hard to take broad risk comfortably. This also explains why Asian markets were generally weak on Monday; ahead of the Jackson Hole meeting, the market wants to first see policy tone more clearly.

Now to ETFs. First look at XLE, the US energy sector. XLE actually rose 5.48% over the past 5 trading days. ETF Radar’s model is net-positive on XLE for the next 1 to 3 months, with fairly consistent signals. It links directly to today’s Middle East theme: as long as US pressure on Iran continues, the market will repeatedly worry about crude shipping and supply frictions.

The quant readings align. First, the WTI near-month vs 12-month price slope is about +17.02%. Plainly, near-term crude to be delivered is pricier than the far-month, indicating near-term tightness. Second, CFTC crude net long positions are +87,479 contracts, up 7,563 contracts week-on-week. CFTC net longs are, in plain terms, large traders’ net bullish positions in the futures market after subtracting shorts. Third, during this theme window XLE has outperformed SPY by 0.34%. Excess return versus SPY means it ran a bit more than the broad market. One more detail: XLE also had +0.22% AUM net inflow over the past 5 days; AUM is fund size, and inflow as a share of AUM shows real money is entering. Note that the market-implied probability that the ceasefire holds through the end of the month is 0.92 — in plain terms, the majority are betting “don’t fully explode,” so energy isn’t in a runaway one-way trade, but the medium-term support remains.

Second look at IAU, which is gold. IAU actually rose 5.48% over the past 5 trading days. ETF Radar’s model is net-positive on IAU for the next 1 to 3 months, with fairly consistent signals. That also ties to today’s mainlines: Middle East tension and rising trade friction will push some capital toward assets that “hold up better when things go wrong,” and gold is a typical example.

On the quant side, first, CFTC gold net long positions are +141,648 contracts, increasing by 3,986 contracts week-on-week. That means large traders are still adding net bullish positions in gold. Second, total open interest (OI) is 406,260. OI is the number of outstanding contracts; rising OI often indicates new money coming in, not just old positions rotating. Third, IAU has had net inflows of +$214M since 8/14, that is $214 million, about 0.32% of AUM. This shows the hedging is real money entering, not just talk. One more background point: the 10-year real rate is 2.35%, down 4 basis points over 20 days. Real rates — in plain terms, interest after adjusting for inflation — easing a bit reduces pressure on non-yielding assets like gold.

Third look at QQQ, which is US tech growth. QQQ actually fell 2.41% over the past 5 trading days. Yet the model is still net-positive on QQQ for the next 1 to 3 months, with fairly consistent signals. Here we must honestly point out the divergence: QQQ fell in the past week, but the model’s view is on the next 1 to 3 months; the recent pullback hasn’t erased the medium-term view.

This thread doesn’t directly tie to today’s headlines; it’s an independent, systemic medium-term stance. On the quant side, first, since 8/3, QQQ has seen net purchases of +$15,845M, about 3.25% of AUM. Net purchases mean new money has continued flowing into the fund. Second, options IV is at only the 16th historical percentile. IV is implied volatility for options — the market’s “insurance price” for future moves — and a low percentile means that insurance is relatively cheap. Third, VXN is 23.26, at a low level. VXN is like the Nasdaq’s “nervousness index”; a low reading means the market as a whole hasn’t gone into a high state of panic. So although today’s news isn’t friendly for risk sentiment, the data haven’t fully overturned tech’s medium-term trend.

Fourth look at PFF, which is preferred stock. PFF actually fell 0.03% over the past 5 trading days, almost unchanged. For the outlook, the model reads net-negative on PFF with fairly consistent signals. That connects to today’s “inflation plus tariffs” theme because preferreds are sensitive to the rate environment. If trade friction pushes up price pressures, the market will worry that rates stay higher for longer, and PFF tends to suffer.

Quant readings: first, ZQ-implied federal funds path is 3.735%. This can be read as the market using rate futures to guess future policy rates and roughly reflects “where future rates may land.” Second, the 10-year US Treasury yield is 4.69%. A high yield, in plain terms, means the market demands higher returns to hold long bonds, which also depresses valuations of rate-sensitive assets. Third, the high-yield bond spread (HY OAS) is 2.75%, widening 4 basis points over the past 5 days. Spreads are, in plain language, the extra return investors demand to take credit risk; widening indicates risk appetite hasn’t improved. Add to that PFF’s net outflow of -0.50% of AUM over the past 5 days, and the funding picture isn’t helping.

Putting today’s threads together, the market faces “geopolitical risk that hasn’t retreated, a ramp-up in trade friction, and renewed inflation concerns.” In ETF Radar’s medium-term readings, energy and gold map more directly to today’s news transmission, while tech and preferreds reflect a different systemic judgment about medium-term flows. The news is fresh while the model is more medium-term; divergences between short-term and medium-term are themselves a signal.

A final reminder: the above are the system’s quantitative model directional forecasts for the general market and do not constitute investment advice tailored to you; consult a licensed investment advisor before investing.