The Maginot Line and Oil

By Jeff Kelly on April 2, 2026

In the 1930s France built the Maginot Line. The Maginot Line was a sophisticated 800-mile system of concrete bunkers, fortifications, and weapon installations along its borders with Germany, Italy, and Switzerland to prevent a direct invasion.

It was built to prevent attack primarily from Nazi Germany. Unfortunately for France, the German army did not attack the strongest parts of the line directly, choosing instead to execute an “end-run” around the fortifications by moving through the Low Countries (Belgium) and the “impenetrable” Ardennes Forest. The German “blitzkrieg” conquered France in 6 weeks.  At the outbreak of World War II in 1939, France mobilized approximately 5 million men. By May 1940, about 2.2 to 3.5 million troops were active against Germany.

An army of 2.2 to 3.5 million troops was defeated in 6 weeks. The nature of war had changed, and France had not adapted. In the Middle East we are seeing extensive use of drones and drone technology. In many cases 4-million-dollar rockets are being used to shoot down 20,000 drones.

The use of drones has allowed the Ukraine to survive a brutal attack from Russia. It’s worth contemplating the effectiveness of current strategies with the introduction of AI and other previously under used technologies.

We do need to cut spending at some point, maybe looking at the waste in the defense budget is a better place to start than healthcare, veteran’s benefits or education. Crazy, I know, but maybe we could take a look.

Markets have seen a volatile week culminating with a volatile Friday. Markets were down about 1.5% to start the day but have recovered to a small loss as I write. Oil has surged to 111.00 per barrel for west Texas crude, up 10.9% on the day.

We are about 10 days away from the start of earnings reporting season for the first quarter. We will get a massive amount of economic data next week and the jobs report will post tomorrow even though markets are closed for Good Friday.

The only thing moving markets at this juncture is the war news. Hopefully we see an end to this soon. We believe the market is under pricing the risks of a more severe event, such as the destruction of desalination plants or the targeting of nuclear reactors. But we need to be mindful of the strength shown by markets this week and particularly today.

Markets had all the ingredients needed to stage a major selloff today. Oil prices up over 10%, a disappointing speech last night and major weakness in the overnight session. Yet they have held in well. Let’s hope that’s a harbinger of good news this weekend and better news for our world over the coming weeks.

CHARTS FROM THE WEEK PAST

“Trump’s 50% tariff and removal of an exemption for Canada drove producers there to send US-bound shipments to Europe instead. In just a few months, Aluminerie Alouette – North America’s largest smelter – saw its European sales rise from 4% of production to 57%. Rio Tinto Plc largely stopped shipping Canadian aluminum to the US, and even Alcoa diverted around 100,000 metric tons to non-US destinations.”

_{Source: Bloomberg Opinion, 03/26/2026}

Oil ripping higer in the biggest move since the Covid lows in 2020.

The net long position of hedge funds is very low.

Denying disaster relief from half of the country doesn’t seems wise.

This is something to keep an eye on.

Ukraine has been damaging Russian oil export capacity, via drone. The country’s seaborne shipments last week were the lowest since 2022, but unclear if it’s the start of a longer trend.

Russian Oil Exports Plunge as Drone Strikes Cripple Baltic Ports

Headline Retail Sales = +0.6% M/M = +50bps acceleration to +3.7% Y/Y.

Control Group = +0.5% M/M = -90bps deceleration to +3.8% Y/Y.  The deceleration was exclusively a comp dynamic as the 2 year actually accelerated 20bps to a 12-month Rate of change high at +4.8%. Industry: Sales increased in 10 of 13 categories with Clothing, Sporting Goods and Electronics (i.e. Discretionary tilted) pacing both sequential and Y/Y gains.

Stocks as a percentage of household assets are at levels where corrections have occurred in the past.

National gas price comparison by year.

S&P 500 and oil have moved in the opposite direction a record 38 of the last 50 trading days…

MBA mortgage applications fell by -10.4% this past week vs. -10.5% prior….third consecutive weekly decline.      

Half of Americans worry about inflation.

March Dallas Fed Services Index fell to -13.3 vs. -3.2 prior…lowest since April 2025.

Sectors’ percentage of stocks trading at various period highs.

The National Association of Realtors has become a very large lobbying spender.

Challenger job cuts announcements up to 60k in March.

Rig counts continue lower.

Technology has a big impact on the number of rigs needed.

The monthly inflation projection continues higher.

April is usually a good month for equities.

Private equity concerns have been rising.

Federal workers are increasingly afraid to report illegal activity.

Mortgage rates have been moving higher in each of the past 4 weeks; and every week, the magnitude has been greater.

The Bloomberg Commodity Spot Index rose by 10.5% in March … its best month since December 2010.

Rail traffic, Intermodal up 1.6% on the week but still down YTD.

With oil up 12.6 a barrel, it’s a tough morning to be short.

WEEKEND HOMEWORK

Can the oil price collapse after the war with Iran? An alternative view to conventional wisdom.

The war against Iran is creating a global oil shock, both in price and supply. How serious and long-lasting is this likely to be? And what will the knock-on effects be: for future oil & gas flows, for other conventional fuels like coal, and for the future of alternative sources like nuclear energy? To discuss in depth, we’re fortunate to sit down with the green chicken himself, the energy expert Doomberg.

Adam Taggart | Thoughtful Money – Oil To Collapse To $30/Barrel After Iran War Ends? | Doomberg

Quite a week. The news flow and how its presented can be daunting. At times it makes my head spin. It’s more important than ever to take an occasional break from the chaos. Outside of 2008, I can’t remember a more chaotic 1^st quarter. Get your exercise done. Get those steps in. Read something just for fun. Play with the kids or grandkids. Summer’s coming! Days get longer and spring will bloom. Many good things are coming despite the madness. The fourth turning will end. Honor, integrity and sanity are going to be the new (again) cool things. It will be fabulous. Have a great weekend.