It’s Monday, and your broker, if you have one, is smiling. That alone should make you nervous.
Over the weekend, the tit-for-tat between Israel and Iran escalated — more missiles, more drones, more scorched infrastructure. But markets barely noticed.
Tehran’s natural gas fields near the Strait of Hormuz were the latest flashpoint. Traders were all over X speculating what would happen if Iran freaked out and closed the Strait. Twenty percent of the world’s oil passes through Hormuz every day… mostly, we learned, bound for China.
For about a minute and a half on Friday, oil spiked — jumping 7% and closing in on the psychological barrier of $75 per barrel.
Restaurant goers in Beirut watching missiles from Iran being intercepted by the Iron Dome over Israel.
But by this morning, it had tiptoed back into the high $60s, as if the Strait weren’t a powder keg and the markets weren’t on edge.
Gold? $3,415 an ounce. Still glimmering beneath its recent $3,500 peak, a soft pillow for the anxious. As we’ve covered extensively, central bank buying is the culprit behind gold’s rising price – and this week’s flare-up hasn’t moved the metal even as it should be screaming higher.
The dollar? Firm. Stocks? Floating on retail. Investors? Still pretending that wars only matter when they hit your 401(k).
The Next Phase of the Collapse
This isn’t fearmongering. It’s already happening.
The dollar is slipping. Yields are spiking. Debt is spiraling past $36 trillion.
And now, according to one financial expert who’s been right before… we’re entering the most dangerous phase of all:
The lie that holds the entire economy together is beginning to crack.
When it gives — retirement accounts, savings, and the dollar itself could be devastated.
Click here now to see what’s coming next — and how to prepare before the unraveling accelerates.
The Delusion of Detachment
Airlines, cruise lines, and hotel groups did take it on the chin Friday — punished for their reliance on cheap oil and open skies. United, Delta, Marriott, Hilton, Carnival – the usual suspects – are reversing higher today.
Meanwhile, Lockheed, Exxon, and Halliburton popped champagne — war, once again, proving to be recession-proof for the right clientele.
If you want some light reading to while away your time today, consider this from one of our researchers. It’s a list of stocks that derive 75% of their revenues from military contracts that are not widely known or relatively new to the field:
KBR, Inc. – The Halliburton spin-off, originally an engineering/construction firm, is now reclassified by MSCI as an IT consulting company — but over 70% of its (~$5 bn 2023) revenue comes from government services. They engineer digital twins, astronaut support, naval systems, and run labs tied to military and space agencies.
Booz Allen Hamilton—Labeled a consulting/business firm, Booz Allen historically generates up to 98% of sales from U.S. government contracts. They’re major players in cybersecurity, AI, and national‐security modernization efforts — even though the brand doesn’t scream “military-industrial.”
Palantir Technologies – Our buddy Ian King’s favorite stock from 2024 is known for enterprise data platforms. In 2023, Palantir’s government business accounted for approximately 55% of revenue (~$1.2 bn). But its “warrior culture” push and AI‐ground systems like TITAN are fueling heavy defense contracts.
Voyager Technologies – A fresh IPO (June 2025), 80% of its ~$144 M 2024 revenue came from government agencies, especially Defense and NASA. But it’s not on the radar alongside classic defense giants.
New War, Same Pattern?
Here’s what we might expect if the missiles and drones give way to more aggressive tactics in the Arabian Peninsula.
IMF data supports the drama — stocks dip ~1% on average after a military flare-up… before bouncing back, like drunks in a saloon fight.
According to Gregory Daco of EY-Parthenon, the global economy, already under pressure from tariffs, could shave half a percentage point off global GDP from this modest escalation.
The real pain isn’t in the daily news. It’s in the lost GDP potential over time as conflict drags on.
Inflation in Disguise
Trump’s newly minted 55% tariffs on Chinese goods are, for now, buried beneath retail stockpiles ahead of any lasting tariff price damage. Last week’s CPI and PPI prints were predictably benign.
On Friday, consumer sentiment just notched its most significant positive jump since early 2024 — the University of Michigan’s index hit 60, up 8 points. Apparently, patriotism sells better when you’re not yet paying the bill.
But we remain cautious and unconvinced. When the inventory buffer cracks, prices could still rise like mercury in a busted thermostat.
A Rally Built on the River Da Nile
Over the weekend, S&P futures show a mild lift, half a percent. Calm, yes — but it’s the kind of calm you get in a minivan full of kids when you take your foot off the gas just before hydroplaning.
Over the weekend, the Kobeissi Letter posted this observation:
To the list of red flags, we’ll add May’s federal deficit, which skooshed up another $316 billion.
Retail investors now hold 53% of all U.S. stock allocations. That’s a level higher than the dot.com boom in 2001. The herd is running toward the edge, app in hand.
Institutional investors, we remind you, have been stealth sellers all year.
Alas, as we have posited more than once since the first edition of Empire of Debt: “Investors come to believe whatever they must believe, when they must believe it.”
Right n0w, they believe this market is impervious to bad news.
Markets in the Fog of War
Global behemoth RBC warns of a 20% haircut in equities should Middle East tensions spread. Allianz’s El‑Erian calls it “a classic stagflationary shock.”
The Fed meets this week. Powell will speak on Wednesday. We anticipate he’ll hold rates as they are, and Trump will once again mock him on Truth Social. The insinuation that Treasury Secretary Scott Bessent should replace Powell… or at least succeed him early next year… will get bandied about on X.
But in a very real sense, the Fed’s hands are tied, oil is climbing, and the market’s PE ratios are puffed up like a banker’s ego before a Senate hearing. RBC’s Lori Calvasina pegs fair value for the S&P at 4,800–5,200 by year’s end — lower than today, but not yet a reckoning.
Reuters put it more elegantly: “Core investors are skittish… stocks are hanging on.” But we’ve seen this before — when retail holds the bag, and institutions sneak out the back, guess who gets left at the altar.
If this conflict fizzles, the market may get its dopamine fix and climb anew. But if it doesn’t — if inflation roars back, if Powell panics, if China rethinks its role in the Pacific — this thin calm may evaporate.
All that, and, fortuitously, markets will go dark Thursday in observation of Juneteenth.
~ Addison
P.S. Despite the Federal holiday, we will host Grey Swan Live! Thursday at 11 a.m. ET all the same. We’ll revisit our current research and investment thesis. Where exactly are we in the “Trump Reset”?
With conflicts between Israel and Iran heating up… Russia and Ukraine showing no signs of abating… and China itching to get its hands on Taiwan… there’s a lot of geopolitics to cover. What we’re mostly concerned with however, is what’s happening beneath the surface… whence comes the next Grey Swan event?
Your thoughts? Please send them here: addison@greyswanfraternity.com
