The recent “regime alteration plan” in Iran—following a similar playbook in Venezuela—signals a shift toward a “short-war” scenario that, while volatile today, points toward long-term regional stability. Oil prices may spike on jitters, but the fundamental trajectory is lower. one could argue this is ‘peak threat’, and the adage; ‘sell the news’ is fair warned today. Lower energy prices are the ultimate economic lubricant, bolstering consumer power and anchoring disinflation.
A spike in gold may also prove to be a good selling opportunity. Treasuries bonds are catching a bid causing interest rates to fall, a supportive market soothing event. The real risk isn’t the Middle East, but the opaque private credit markets. If a credit crisis emerges there, expect the Fed to revert to its familiar “Whack-A-Mole” strategy, lowering rates to prevent a systemic seizure. “Same as it ever was” to quote Davis Byrne of the Talking Heads.
Despite geopolitical theatrics, and now well socialized AI temper tantrums, the underlying economy remains robust and corporate profits are soaring. The market’s recent movements have improved valuations significantly. While the “rental” crowd frets over the cooling AI bubble, the “ownership” class should find certain sectors increasingly compelling. Specifically, profits have surged but prices have plummeted, due to what some would argue are hysterical AI concerns. The margin of safety has widened not narrowed. We remain focused on the fundamentals, favoring a long-term ownership stake in high-quality companies over the frantic trading of headlines.
Leading technology giants and the banking sector now appear exceptionally attractive. Recent reactionary losses, sparked by transient AI skepticism rather than fundamental decay, offer a rare entry point for those focused on ownership.
