BREAKING: STRAIT OF HORMUZ IS CLOSED AGAIN!?!
In a Nutshell
Iran closed the Strait of Hormuz again after accusing the US and Israel of ceasefire violations, particularly Israeli attacks in Lebanon. Markets rallied on Thursday expecting a peace deal, but renewed conflict now threatens oil supply and could trigger sharp moves in oil prices, airline stocks, and broader indices. The speaker is considering a small long oil position as a hedge while warning that higher oil could pressure airlines and that markets may react more sensitively now that Trump’s alleged manipulation of sentiment is exposed.
These notes were generated by AI and may contain inaccuracies.
Very unfortunate news regarding developments in the Middle East. The date is June 20th at 10:15 a.m. in Arizona. Iran's top joint military command officially released a statement about closing the Strait of Hormuz. There was speculation about this the previous day, but the news was not shared then due to an apparent disconnect between the IRGC and the actual Iranian government. The statement confirms the Strait of Hormuz is now closed again.
The full statement cites the blatant breach and violation by the United States of the first clause in the ceasefire agreement. It also references continuous and relentless violations of the ceasefire by the Zionist regime in southern Lebanon, including attacks on Lebanon, merciless killing and displacement of hundreds of thousands of oppressed people, and the failure of Zionist occupied forces to withdraw from southern Lebanon. As a result, the Strait of Hormuz is declared closed to vessel traffic.
US intelligence agencies warned the Trump administration that Israel's Prime Minister Netanyahu is likely to take steps that will undermine President Trump's effort to reach a lasting peace deal with Iran. This pattern has been observed repeatedly. The speaker expresses hope this is not true, as it would mean an ally is intentionally disrupting a peace deal important to Americans under an "America first" approach.
Trump and JD Vance have been more vocal about this issue in recent days. The speaker notes the sensitivity of the topic but emphasizes the direct implications for the stock market.
Yesterday, Iran demanded that Israeli attacks on Lebanon end before resuming talks with the US. Vice President JD Vance postponed his planned trip to Switzerland for US-Iran talks that were expected to begin Friday. Signs indicated the deal signed on Thursday may have been an attempt to allow markets to celebrate ahead of weekend developments.
The NASDAQ experienced a nearly 3% push, likely because markets anticipated what would happen over the weekend. Trump understood this dynamic, as he had previously spoken about how peace deal news would cause markets to skyrocket while lack of deals would not cause crashes. Trump carried this approach forward for the past 9 to 10 weeks.
Attacks by Israel are still occurring in the Middle East, directly creating potential for closure of the Strait of Hormuz. The NASDAQ is nearly at all-time highs. Trump knowingly understands markets have rallied and has acknowledged this, yet the speaker questions whether markets will continue the same behavior now that the manipulation Trump has been aware of for 9-10 weeks is known.
Trump openly stated the US only had about four weeks left of oil reserves when closing the deal. This contradicts what Trump said a few weeks ago about the US being super oil rich with nothing to worry about.
If attacks resume and closures continue, the speaker questions how oil markets will react given the scarcity and lack of supply. Markets may become more sensitive knowing this information. Uncertainty remains about whether the closure will continue until Monday, as Trump has been known to attack over the weekend with peace deals announced Sunday night.
First, the peace deal and opening of the Strait of Hormuz appear to be falling apart because of Israel attacking Lebanon, which Iran opposes. All signs were present and known in advance.
Second, if there is a closure, how markets will react now that it is known Trump has been aware of and playing with market manipulation levers for the past 9-10 weeks. Markets may either continue not caring or become more sensitive.
Third, how oil markets will react if there is a closure. UCO is at one of its lowest levels. Oil may begin to rebound given only four weeks of reserves remained. A sharp recovery is possible, or Trump may open the strait again leading to further drops.
The speaker did not previously care to buy the dip on oil but is now willing to entertain a very small long position on oil, given uncertainty about the peace deal. Trump appeared eager and open to making a deal last week, but Israel does not seem willing to allow it. The United States will likely continue backing Israel, at least for now, which could lead to resumed attacks.
If closures happen and more attacks occur, oil is likely to recover, making a long position on oil potentially sensible. Speculative assets are likely to drop, along with airline stocks.
Oil makes up 20-30% of expenses for airline companies. American Airlines recovered sharply from lows of $10 to $16. If attacks resume and oil prices rise, airlines are likely to drop.
Airline stocks to monitor: American Airlines, Southwest Airlines, Boeing, JETS (airline sector ETF), Alaska Airlines, United Airlines, and Delta Airlines.
If attacks happen, closures continue, and markets drop, options include inverse ETFs, shorting markets, going long on oil, or going short on sectors affected by higher oil prices such as airlines.
If closures do not happen and the peace deal continues, the speaker is interested in seeing how markets trade on Monday given they are nearly at all-time highs.
The speaker asks whether the peace deal with Iran and the US will continue or if Israel will cause it to break, leading to market drops. The speaker wants to know what others are doing to prepare: continuing to go long, shorting the market, using inverse ETFs, or buying the dip on oil to go long as a hedge in case oil goes up and markets go down.
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