Iran Bombing – Your Portfolio
How will the US bombing of Iran impact your portfolio? Perhaps it will bring short-term pressure as the US anticipates the Iranian response from attacks on their nuclear facilities.
Will Iran intentionally impact the price of oil by slowing supplies through the Strait of Hormuz? The price of oil, of course, is a major concern. A higher-for-longer price of oil has negative economic implications for the United States and the rest of the world.
While the price of oil is a major concern, I would be remiss not to mention the terroristic concerns, both to our citizens abroad as well as you and I. A heightened awareness for all is important.
A diplomatic way forward with the Middle East would be favored. On the other hand, we have been dealing with Middle East issues far too long. I can recall remarkably similar conversations from 10 to 20 years ago. Perhaps if we were truly energy and resource independent, our involvement would not be so important.
Geopolitical Events Historically
Historically, stocks have remained resilient when facing
geopolitical events. LPL Financial reviewed a list of 25
geopolitical shocks (wars, terror attacks, etc.) showing
S&P 500 stock index performance one day, 3 months,
6 months, and 12 months from the event date.
To read the article, please click here: https://www.lpl.com/research/blog/israel-iran-conflict
-stocks-face-another-geopolitical-test.html
Stocks and the Economy
Even though stocks have a history of resiliency, the current concern is in addition to the reprieved tariff expiration date of July 9th. Have tariff negotiations slowed because of our Iranian involvement? The lengthier the process-the greater the uncertainty. Imagine being a corporate CEO attemptingto make strategic decisions in this climate.
Beyond the ongoing tariff debate, the future of our tax code and spending plans is currently in the hands of Senate Republicans. They’re caught in a rather public squabble, debating not just deficit reduction itself, but also who actually gives a darn about it. The administration has a self-imposed July 4th date to move the bill to the President’s desk. It appears overall taxation may decrease, with our overall deficit increasing. Personally, I do not believe we have a revenue (Taxing) problem. We have a spending problem. However, to get our annual budget deficit under control, everyone may need to pitch in. It may seem a little silly, but a true cure to the debt problem may at some point require additional revenue through higher taxes and reduced spending.
The Fed and Economic Data
Last Wednesday, Fed Chair Jerome Powell held interest rates steady. The Fed’s dot-plot projection of future rate movements still suggests 2 rates decreases in 2025.
Retail sales dropped .9% in May, following a revised downward drop of .1% In April. With both retail sales and inflation dropping, why is the Fed on hold?
First, the Fed’s short-term economic projections; the Fed is suggesting the current 4.2% unemployment rate will rise to 4.4-4.5% by year end. They also project core PCE (Personal Expenditure Consumption) will rise to 3.1%.
On one hand, the Fed is saying costs and unemployment will rise. On the other hand, they are suggesting these projections are short-term as Tariffs may be a one-time hit to pricing.
I do agree the Fed should sit tight for the time being. I do not think it will be too much longer until the direction becomes clearer. The tax and spending bill will become law. Tariff negotiations and implementations will be over, I hope. The current geopolitical issue will also end up in the rearview at least for the time being.
For me it cannot happen soon enough; until we are back to discussing corporate profits, healthy ways to expand our economy, and how we can grow our portfolios.
All data sourced from Wall Street Journal, June 20, 2025.
The opinions voiced in this material are for general information only and are not intended to provide specific advice or recommendations for any individual. All performance referenced is historical and is no guarantee of future results. All indices are unmanaged and may not be invested directly.
