Macro

The closure choked off roughly 20 percent of global oil and major LNG flows, in what the IEA called the largest supply disruption in oil market history. Production losses reached 10 million barrels a day within a week and US pump prices climbed daily.

The energy sector is sharply bullish this month, driven by supply disruptions from Iran’s closure of the Strait of Hormuz and attacks on Qatar’s LNG infrastructure, triggering force majeure declarations and sending Brent crude above $120. Geopolitical escalation in the Middle East has intensified volatility, compounding inflationary pressures and reinforcing a risk premium in oil prices. Even as U.S. electricity generation dipped and prices rose, the dominant sentiment reflects heightened concern over energy security and sustained upward pressure on hydrocarbon valuations.

Iran's closure of the Strait of Hormuz spiked oil and gas, draining consumer discretionary budgets, while rising mortgage delinquencies signaled housing-affordability stress and major retail-store closures (footwear chain shutting 82 stores) confirmed weakening low-end demand.

Iran's closure of the Strait of Hormuz sent oil soaring, reigniting inflation and keeping mortgage and cap rates high; the energy-driven rate pressure hit the leveraged property owner even as real assets offered a partial inflation hedge.

Financial markets remain range-bound amid persistent geopolitical tensions from ongoing Hezbollah-Israel hostilities, which continue to weigh on risk appetite. While elevated Middle East tensions have supported safe-haven flows into bonds and pressured equities marginally, the absence of a broader regional escalation has contained spillovers. The sector’s neutral read reflects limited reaction to contained conflicts, with macro fundamentals still driving pricing more than peripheral flare-ups.

I entered the year still under policy pressure (MFN pricing implementation, tariffs, FDA/RFK uncertainty) and washed-out managed-care and biotech valuations, but as the mid-year Strait-of-Hormuz oil shock drove markets risk-off…

Since March 2026, ongoing conflict between Israel and Hezbollah has resulted in over 4,000 deaths and displaced more than a million people in Lebanon. Despite a US-brokered ceasefire in April and its reaffirmation in June, which reduced violence by about 35%, tensions remain high with Israel maintaining control in southern Lebanon. This standoff is exacerbating broader tensions between the United States and Iran.

Defense sector sentiment is elevated this month on persistent Hezbollah-Israel hostilities, which continue to drive demand for precision strike capabilities and air defense systems. Escalating tensions between the U.S. and Iran amid ongoing cross-border strikes reinforce expectations of sustained or increased defense spending, particularly in missile defense and regional force posture. The operational environment underscores a durable demand outlook for combat-ready systems and surveillance assets.

Tech giants' insatiable appetite for memory chips is causing a historic shortage, pushing spot prices of DRAM up to 700%. This shift prioritizes AI and data center demand over consumer devices, with no relief expected until late 2024.

The tech sector is sharply positive this month, driven primarily by surging demand for memory chips amid the global AI boom, which has tightened supply and lifted prices. A supportive policy signal emerged from the White House gathering where AI leaders pledged to mitigate downstream costs to consumers, reinforcing confidence in sustained investment and deployment. These developments underscore strong near-term fundamentals and reduced regulatory friction, anchoring the bullish sentiment.

Iran's closure of the Strait of Hormuz sent oil soaring mid-year, spiking fuel and input costs and hitting transports, but the structural reshoring/electrification buildout, strong defense demand and aerospace optimism (SpaceX's record IPO) restored momentum by year-end.

Digital-ad giants stayed resilient while linear cable eroded (Charter underperforming the S&P), but Iran's closure of the Strait of Hormuz and soaring oil stoked inflation and consumer strain mid-year, pressuring ad demand. Neutral, dipping on the oil shock.

The data-center load growth and grid capex supercycle sustained buoyant owner sentiment, tempered mid-year when Iran's closure of the Strait of Hormuz spiked oil and stoked fuel-cost and inflation worries, partly offset by the high power prices our generators captured.

Iran's closure of the Strait of Hormuz kept oil and commodity prices elevated and inflationary, sustaining strong revenue and lofty gold prices for materials owners, though 2025's mania plateaued into a high but steadier range.