Yes, it was correctly a H.O. on June 8, but this marks only the 2nd one recently. Several other days which saw both NH and NL exceed 2.8% of A+D were disqualified for other reasons.
The cyclical bull market that started on October 13, 2022, has now turned 45 months, well past the median age of 30 months.
The 118% return places this cyclical bull in the top 4 of strongest bulls since 1960. It remains quite narrow in terms of breadth, making for an interesting comparison to the 169% bull market from October 1998 to March 2000.
Broadcom down 12% post ER. $AVGO
Semiconductors are very over-extended and the odds for a big pullback are elevated.
Over the past few trading sessions, we've drastically reduced our exposure to AI hardware stocks and now ~45% of our portfolio is in cash.
It was another relentlessly bullish week...
🔶 Hopes for a resolution in the Strait of Hormuz pulled Brent down to $91/barrel and took the 10-year yield back into its triangle after reaching 4.69%
🔶 AI stocks led the charts as usual, with participation from the more speculative side of the market spectrum (below)
🔶 With commodities down on the week, TIPS break-evens retreated back to the mid-2’s
This market continues to be in a tug-of-war between two sharp tails, with an earnings-driven AI boom (possibly turning to bubble?) on the right, and higher inflation and a tighter Fed triggering the Fed model lurking on the left. In between is a cyclical bull market that has turned 45 months old, producing a 118% return (based on the S&P 500). At the same time, the secular bull market is ongoing, and whether it will eventually end with a valuation bang or an inflation bust is the topic of discussion in this week’s WAAR.
https://t.co/xNe9j7Qz2j
Nothing would be better for my maritime media business than pumping doom and gloom: the world is over if the Strait of Hormuz doesn’t reopen.
The mainstream press is happy to write that story. I’m not.
Yes, the situation is bad. But I keep explaining the part nobody wants to hear: nobody in power actually cares.
Not really.
Not the White House.
Not the US Navy.
Not the Department of War.
Not the average American.
And certainly not the stock market.
They all care a little. None of them care enough. Hormuz is not the priority and the data keeps proving it.
Even those most directly hurt haven’t made it a priority. Europe for example desperately needs the strait open but refuses to “join Trump’s war”… even just on the defense.
The overall fallout is both better and worse than anyone is predicting.
Better because shipping is doing what shipping always does: absorbing the shock, eating the ton miles, finding routes nobody had on the chart a year ago.
Worse because every product, every input, every energy-dependent supply chain is taking on inflationary water.
Those costs will keep climbing, and once they’re baked into the economy, they will be almost impossible to pull back out, even after the strait reopens.
Operationally the picture is also better and worse than the reporting suggests.
Better because the US Navy is performing well above what the press will credit. Overall military dominance by the joint force is real and it is being demonstrated daily.
Worse because this entire operation has become a strategic distraction from the things that actually decide the next war: shipbuilding, defense reindustrialization, and reform of the institutions that have failed at both.
And why is this a surprise to anyone?
We saw massive anger and panic over Russia turning the Black Sea into a way zone.
Shipping adapted around the problem and the world stopped looking for a solution. Even those who care deeply about Ukraine stopped caring about the shipping of UKR grain and Russian oil… and hyperfocused on the land war
Same with the Houthis in the Red Sea
The stock market, politicians and everyone else were fine with massively higher costs from reroutings and delays becoming the new norm.
The stock market recovered after ukraine despite the problem only getting worse long term.
The stock market recovered after the Red Sea closed despite the problem only getting worse,
Everyone became ok with the inflationary tax from both.
So why would Hormuz be any different?
Let's unpack this..
What if the White House has no intention of reopening the Strait of Hormuz?
What if this war is really about ships & tariffs?
I had a long discussion with senior DOE official yesterday on background. I can’t share any details but it’s clear everyone’s Strait of Hormuz calculus is wrong.
We need to go back to the drawing boards.
That's it. That's the tweet. Now a hypothetical 🧵 with my personal thoughts.