The research firm whose AI paper knocked the whole stock market is out with another big call
Published on March 25, 2026, by Yun Li
Introduction
Citrini Research, the firm that previously issued a market-shaking bearish call on artificial intelligence, has released another significant warning. This time, the firm is cautioning investors about the potential impact of an oil-driven economic slowdown on stock markets. Founder James van Geelen has articulated concerns that persistent high energy prices could weigh heavily on consumer spending and corporate earnings, leading to a challenging environment for equities.
Background on Citrini Research
Citrini Research has gained a reputation for its contrarian macroeconomic views. Earlier in the year, the firm published a note that suggested the AI boom could have adverse effects on the economy. Their analysis indicated that the replacement of white-collar jobs by machines could push unemployment rates as high as 10%. This bold assertion caught the attention of investors and analysts alike, shaking market confidence.
Current Market Analysis
In a recent Substack post, van Geelen stated, “If the war doesn’t end, equities will go lower.” He emphasized that geopolitical tensions are a significant factor contributing to sustained oil price strength. The ongoing conflict in the Middle East has led to uncertainty in oil supply, which, in turn, affects global markets.
Impact of High Oil Prices
According to Citrini, elevated oil prices act as a tax on economic growth. This phenomenon erodes consumers’ purchasing power and tightens financial conditions, even without further action from the Federal Reserve. Van Geelen argues that with policy rates already near neutral, simply maintaining current rates could be restrictive enough to influence economic activity negatively.
Consumer and Corporate Effects
Van Geelen elaborated that even if geopolitical tensions were to ease rapidly, consumers would still emerge “slightly weaker” due to the higher fuel costs they have absorbed. This situation dampens the potential strength of any market rebound, as consumers may have less disposable income to spend on goods and services.
Contradicting Bullish Narratives
The firm’s perspective challenges the common bullish narrative that rate cuts by the Federal Reserve would act as a safety net for equities. Van Geelen suggests that any future easing of monetary policy is likely to occur in response to deteriorating economic conditions. Historically, such a backdrop has been associated with further declines in equity markets rather than sustained rallies.
The Fed’s Position
Van Geelen pointed out that the Federal Reserve understands that raising interest rates will not magically increase oil supply. As a result, policymakers are more inclined to “look through” the initial shock of high oil prices before eventually cutting rates as economic conditions worsen.
Market Reactions
On the day of Citrini’s announcement, stock markets exhibited some recovery following reports that the U.S. had provided Iran with a plan to bring the ongoing conflict to an end. This news initially caused crude oil prices to tumble. However, the two nations remain far apart in negotiations, with Iran rejecting the U.S.’s ceasefire offer and insisting on sovereignty over the strategically important Strait of Hormuz.
Conclusion
Citrini Research’s latest analysis highlights the interconnectedness of geopolitical events, energy prices, and stock market performance. Investors are advised to remain cautious, as high oil prices could create significant headwinds for both consumers and corporate earnings. As the situation evolves, it will be crucial for market participants to stay informed about geopolitical developments and their potential impact on economic conditions.
Note: The information presented in this article is for informational purposes only and should not be considered financial advice. Always conduct your own research or consult with a financial advisor before making investment decisions.
