Major Escalation with IRAN

Michael Zuber (0:02)

Unfortunately, this morning, we need to lead off with a major escalation in the Iran war conflict, whatever we are calling it. Apparently, for the first time, at least the first time reported in the media, Iran has started sending missiles or bullets or whatever the heck they are at actual US warships. According to some articles I read this weekend, Iran went after an aircraft carrier and a destroyer. Now, thankfully, none of these attacks landed. They were both intercepted or shot down or whatever the right verbiage is. But that is a major escalation. I want you to think about the horrible possibilities that one of these things gets through, and there is a major event in casualties. This is a major escalation, and this is not how this thing gets better. Again, it appears that Iran is doing this because they are upset about the naval blockade. Again, the naval blockade seems to be strangling the economy. They can't get out oil or other things, and thus the cash or money is being turned off. This is exactly what happens, or exactly what I feared would happen when an injured party starts to lash out. It gets very chaotic, very dangerous, and this major escalation basically this morning appears to be continuing, although the US has not confirmed this morning's, or I guess would be yesterday's attacks on more naval vessels. But it has been recorded, reported two days in a row, which again is not, not, not good. This is bad, bad.

Moving on from that, feels hard to do, but what we gotta do, because we gotta get through the daily news. Let's talk about earnings next week. So now Monday is Labor Day, kind of the full, kind of the, what, the end of summer, I guess, is typically seen as. So again, enjoy that extra day off. Wednesday, we're going to get Chewie, Signet, Jewelers, and American Eagle. For me, that's going to be what's going on with the high-end consumer. Again, we had some interesting earnings. I think it was Lululemon, who was a disaster last week. We're going to find out if that's an execution problem at Lululemon, or if the top end of the K is also pulling back. So we will get more retail earnings and see if it's a company problem, i.e. Lululemon, or a consumer problem, meaning broader based. Thursday, we will get Macy's, RH, Oracle, and Adobe. Oracle will be interesting for all the AI trade. Their debt is very close to junk status, which can't be good. RH is that high-end housing. So again, how bad is it out there, RH will tell us. And then Macy's is kind of what's Middle America doing. And then Friday, we will get a report from a supermarket, Kroger's.

I did read a lot of articles the last couple of days about what Wall Street expects, because again, the Fed is in a blackout period. I don't know if you know that. But two weeks out, the Fed goes into a blackout period. So Christopher Waller's talk last week was actually the last day, or the last interview we will get until Fed Day, a week away, or two weeks away. So RJ. Gallo, Chief Investment Officer, says, Leaning into the direction of a Fed hike, frankly, raising the Fed rate might lower the long end.

This is something I've tried to communicate. I've tried to share it with Taylor from Life Goal Investments. I've tried to share it with others. And I actually think, I really do think this. If the Fed raises rates 10 days from now, or whenever that is, could the long end come down? I think the end.

Now, folks, if you go back in the history books, the last three times the Fed moved, it was a cut and the long end went up.

So it should not be intellectually challenging to say, oh, Fed up, long end down. Now, again, most people think Fed rates, Fed raises, everything must go higher. That's just not how the party goes, folks. So again, I think it's very interesting that I think the, I do think the Fed will raise and thought that for months. And I actually do think the long end might come in because the Fed has a backbone or whatever, whatever the bond vigilantities might be thinking, they might go, okay, this guy is serious instead of being a Trump puppet. Let me be clear, if he does not raise in September, I expect the long end to move violently. Because again, he will be seen as all bark, no bite. He will be seen as a Trump puppet. He will be seen, frankly, his entire Fed team will be seen as yielding to the president. And that's not what you want as a Fed chair. You want your independence. So next week will be interesting. I've got some recommendations from some of you out there to read some more stuff from Kathy Wood. So I've added her to my search, and I saw a couple of things from her the last 48 hours. A couple of things I thought were interesting. One thing I had a question about.