Oil prices surge to two-week winning streak as Iran supply fears grip markets
There are a lot of investor distractions out there, so let me address them. Wall Street celebrated that the Supreme Court last Friday ruled 6 to 3 that President Trump’s “use of emergency powers” without Congressional authorization is prohibited. Interestingly, since the Supreme Court has no remedy to enforce its decisions, the lower federal courts have to enforce the Supreme Court’s ruling, which means the companies that paid $170 billion in tariffs likely have to request their money back via the federal courts. In fact, the Supreme Court did not address whether the federal government would have to pay back the tariff revenue it already collected.
The Trump Administration, after the Supreme Court ruling, implemented “Plan B” and imposed new 10% across the board global tariffs. Then, a day later, President Trump announced that he would be increasing the new global tariffs to 15% across the board. So effectively, tariffs remain in place.
The second investor distraction pertains to the U.S. negotiations with Iran, which has caused crude oil prices to rise based on the fear of a military strike. Iran has apparently proposed a pause in uranium enrichment and even proposed possible business deals with the U.S. Naturally, this is not what the U.S. wants in its negotiations with Iran.
Gold prices are expected to benefit as the tension between the U.S. and Iran persists. Some of the gold stocks I recommend are Agnico Eagle Mines (AEM), Alamos Gold (AGI), Barrick Mining (B), Compania de Minas Buenaventura (BVN), Coeur Mining (CDE), Centerra Gold (CGAU), Caledonia Mining (CMCL), Eldorado Gold (EGO), Equinox Gold (EQX), Hecla Mining (HL), IAMGold Corporation (IAG), OR Royalties (OR), New Gold (NGD), Idaho Strategic Resources (IDR), Integra Resources (ITRG), Kinross Gold (KGC), SSR Mining (SSRM), Triple Flag Precious Metals (TFPM), and Wheaton Precious Metals (WPM).
Iran conducted some military operations that briefly shut down part of the Strait of Hormuz, which was apparently a threat of how Iran could cut off critical crude oil supplies. In the meantime, the U.S. has implemented its largest buildup of forces in the region since the Gulf War to intimidate Iran. Apparently, the U.S. military is reportedly ready to strike Iran within days if negotiations stall. Normally, military actions do not disrupt the stock market, but it is imperative that if the U.S. does strike Iran, it is fast and furious, so it is over quickly. I should add that Elbit Systems Ltd. (ESLT), Howmet Aerospace Inc. (HWN), and Palantir Technologies Inc. (PLTR) are my primary defense stocks.
Another investor distraction is that private credit firm Blue Owl recently announced that it permanently restricted investors from exiting one of its retail funds. Namely, Blue Owl Capital Corp II. This news caused the stock prices of Ares Management, Apollo Global Management, KKR, Blackstone, and TPG to all sell off.
Complicating matters is that BlackRock slashed the value of some of its private credit holdings in the past month. The former head of Pimco, Mohamed El-Erian, on X posted the question, “Is this a ‘canary-in-the-coalmine’ moment?” Since private credit is now a $3 trillion per year industry and does a lot of the lending that Dodd-Frank made difficult for banks, the U.S. now has a “shadow banking system.” In the event that there is a private credit “Black Swan” event that disrupts credit markets, then the Fed may have to step in to provide liquidity and/or slash key interest rates to help stabilize the situation.