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Welcome to Wednesday! Don’t touch that dial—we’ve got all your favorite reruns coming up next!

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Will Trump finally conquer his arch-nemesis, the dreaded Count Hormuz? Will Jamie Dimon finally fly too close to the sun? Stay tuned to find out! 📺

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Brent crude posted its biggest single-day jump since May 2020 after President Trump reinstated the naval blockade against Iran and proposed a 20% toll on all cargo passing through the Strait of Hormuz…before backpedaling and saying he’d settle for “trade and investment deals”, whatever that means.

Quick recap in case you were just enjoying your week and not doomscrolling the headlines: the US resumed nightly bombings of Iranian infrastructure, Iran's Revolutionary Guard attacked two UAE tankers in the Strait on Monday, and shipping traffic through Hormuz has dropped 52% in a week.

But this time, the international community pushed back hard. The UN's maritime agency said there's "no legal basis" for mandatory tolls on international waterways. But with 20% of the world's oil historically flowing through that chokepoint, prices don't wait for legal debates. Analysts expect gas to hit $4 per gallon within the next 7-10 days as retailers pass through higher crude costs.

As we’ve learned already this year, higher oil feeds directly into inflation, which keeps the Fed cautious on rate cuts. Consumer discretionary stocks tend to suffer when gas eats into household budgets. Energy names got a short-term boost from the spike, but sustained prices above $80 start pressuring the broader economy. The global economy has been weirdly resilient to oil shocks so far this cycle, but that resilience has limits. If you're heavy in consumer retail or expecting a lax Fed pivot soon, this situation is worth watching closely.

So five megabanks just reported earnings on the same morning this week, which almost never happens, aaaaand every single one beat expectations.

JPMorgan's earnings jumped 41%, Goldman's popped 8%, and Bank of America's CEO called it "one of our strongest quarters to date." The SpaceX IPO (the biggest in history) drove massive underwriting fees, and trading desks rode the Iran-driven volatility instead of getting crushed by it.

There’s also an AI headline buried in all this: Jamie Dimon said JPMorgan has already cut 30-40% of jobs in certain roles using AI. Most employees were moved internally, but that number is real, and it's happening now. Goldman's CEO took a softer stance, saying AI should "enhance, not replace" talent. Bank of America's Moynihan said handling AI displacement is "up to management teams." Whatever your preferred flavor of optics, this is already reshaping headcount at the biggest financial institutions on the planet.

Basically, banks are winning on both sides right now. Wall Street activity is surging (investment banking fees up 30% at JPM, deals backlog at Goldman is the highest in five years), and Main Street consumers are still spending. Financial stocks have outperformed the broader market for two years running. The risk is that this "everything working at once" environment can’t (historically speaking) last forever, and AI-related cost cuts could accelerate if growth slows. Banks look strong, but the easy gains may already be priced in.

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:

Meta Platforms (META): +10.14%
NVIDIA Corporation (NVDA): +6.89%
Broadcom Inc. (AVGO): +5.78%
Apple Inc. (AAPL): +0.83%
Amazon.com, Inc. (AMZN): +0.43%

Space Exploration Technologies Corp. (SPCX): -11.95%
Taiwan Semiconductor (TSM): -6.51%
Tesla, Inc. (TSLA): -4.79%
Alphabet Inc. (GOOGL): -2.31%
Microsoft Corporation (MSFT): -0.22%

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.