It’s Dire Straits for the Sultans of Swing Trading

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The war continues,

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What a mess.

Last week, US crude oil prices jumped 35.63% in a single week, the biggest weekly gain in the entire history of oil futures trading, which goes all the way back to 1983. That's right, this week was more dramatic than anything that happened during the Gulf War, the 2008 financial crisis, or even when Russia invaded Ukraine.

Why is this happening? The US-Iran war has basically shut down the Strait of Hormuz, which is like the main highway for oil coming out of the Middle East. Tankers are too scared to go through because they think Iran might attack them, so oil is just sitting there with nowhere to go. Countries like Kuwait and Iraq are running out of storage space and having to shut down production. Qatar's energy minister straight up told reporters that if this keeps going, oil could hit $150 per barrel and "bring down the economies of the world." No pressure or anything!

Trump is trying to fix it by offering a $20 billion insurance program for oil tankers willing to risk the trip, but so far, that hasn't really moved the needle, probably because $20 billion means jack-squat to the crew that gets blown sky-high.

Here's where it gets weird, though: oil prices actually dropped 6-7% on Tuesday after Trump told CBS he thinks the war is "very complete, pretty much" and will be over "very soon." Markets apparently took that as a sign to chill out, even though the administration ended up contradicting that claim later.

Either way, we’re not getting too comfortable. Saudi Aramco's CEO warned that this is "by far the biggest crisis the region's oil and gas industry has faced" and that there would be "catastrophic consequences" if the disruption keeps going. The vibes are bad, and the numbers are worse. Unless this war actually ends soon, like Trump is promising, your wallet is about to feel it every time you fill up your tank or buy literally anything that needs to be shipped somewhere.

Speaking of things that could hurt, JPMorgan's trading desk just put out a warning: the S&P 500 could drop 10% from its recent peak if the US-Israel-Iran War keeps going.

The bank’s trading desk is warning that the S&P 500 could drop 10% if things keep escalating. They’ve flipped “tactically bearish,” basically meaning they’re nervous in the short term.

Why does oil matter so much? Because energy sources (like oil) are the lifeblood of everything in the economy. If oil stays high, gas prices jump. When gas prices jump, people spend less at Target and more at the pump. When people spend less, company profits take a hit. And when profits wobble, stocks usually follow.

The analysts are saying most investors haven't really prepared for how bad this could get. The big fear is a 1970s-style stagflation combo: slow growth plus high prices. The worst of both worlds.

But there’s a sorta-kinda silver lining. JPMorgan also said if there’s a “definitive off-ramp” to the war, they’d flip back bullish. So they’re confident this is geopolitical panic, not a broken economy. Corporate earnings are still solid. AI is… doing whatever it’s doing. The problem is just that little existential threat of destruction.

So basically: things are messy right now, but it's not the time to panic. Just... maybe don't check your portfolio every five minutes.

A lot can happen in a week!

Let’s take a quick look at who struck gold and who struck out since our last issue:

Amazon.com, Inc. (AMZN): +2.94%
Microsoft Corporation (MSFT): +1.84%
NVIDIA Corporation (NVDA): +1.58%
Meta Platforms, Inc. (META): +0.82%
Alphabet Inc. (GOOG): +0.49%

Taiwan Semiconductor (TSM): -4.55%
Apple Inc. (AAPL): -1.44%
Walmart Inc. (WMT): -1.40%
Eli Lilly and Company (LLY): -1.15%
Tesla, Inc. (TSLA): -0.39%

That’s all for today. Write us and let us know your thoughts on the market, the newsletter, or the weather—we’d just love to hear from you.

Till next time,
— Brandon and Blake of Invested Inc.