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Oil prices? Is it deja vu all over again or something worse?
U.S. gasoline prices at the pump climbed back above the $4-a-gallon mark as the Middle East conflict intensified. Regular unleaded gasoline averaged $4.003 a gallon, according to daily prices posted by the American Automobile Association. Diesel has once again climbed above $5 a gallon.Heating oil futures jumped as much as 3.4% on Monday. For now, the strain on American households isn’t yet as bad as it was in May, when average pump prices were in excess of $4.50 a gallon. But there’s a good chance that things will get worse from here. Because this isn’t simple a replay of earlier stages in the oil price spike.
As expected, Houthis say they will block oil traffic in the Red Sea
“The Houthis, the Iran-backed armed faction in Yemen, said they would impose a blockade on Saudi ships entering and leaving the Red Sea, threatening to open a new front in the Middle East conflict and raising the pressure on volatile global energy markets.
Saturday Night Quarterback (on a Sunday) says, for the week ahead expect…
We’re used to talking about momentum markets only when stocks are going up. And investors buy more shares because they think yesterday’s gains will be repeated tomorrow. But momentum can work on the downside too when investors think that yesterday’s losses will be repeated tomorrow. And that’’s where I think we are after last week’s selling pushed the chip sector–and especially AI-related chip stocks into a Bear market 20% decline. At some point I expect a shift in sentiment. Investors will say, again, that the selling is a buying opportunity. If memory chip maker Micron Technology was a buy on June 22 as it climbed to an all-time high, isn’t it a bargain at 30% lower? I mean, Come on! the AI revolution isn’t ALL hype, right? But to get that change in sentiment, I think we need a catalyst or two to switch the focus from what might go wrong–a further escalation of the Iran war, fear of an interest rate surprise from a Federal Reserve that suddenly sounds very hawkish on inflation, more AI Bad news from China–to what might go surprisingly right.
Chip stocks move into bear market–what’s next?
The iShares Semiconductor ETF (SOXX), which stacks the Philadelphia Semiconductor Index (SOX) has moved into Bear market territory with a drop of more than 20% from its June 22 high. The Philadelphia Semiconductor Index is marginally short of the 29% drop that defines a Bear market. The pain was by no means equally distributed.
Did 2 oil tankers hit mines and explode in the Strait of Hormuz today?
Iran’s Revolutionary Guard is claiming that two oil tankers hit mines and exploded south of the Strait of Hormuz. The U.S. military is publicly denying that this actually happened. And no independent source has been able to confirm the sinking. Does the truth still matter in this war? Or is it now enough to merely announce an attack in order to paralyze oil traffic in the Strait?
China’s second quarter GDP badly misses 4.5%-5% growth target
China’s GDP grew at its slowest pace in more than three years in the second quarter, missing forecasts, with weak household consumption offsetting strong manufacturing and exports. The result increases worry about the long-term sustainability of China’s economic strategy of squeezing domestic consumer demand and putting the burden for growth on the export economy. At 4.3%, the gross domestic product growth rate in April-June eased from the first quarter’s 5.0%, landing below the lower end of China’s official 4.5% to 5.0% full-year target.
Part 2: After the Iran war: A revolution in global commodity markets–and you’re probably under invested. Today’s post: solar and COMING Part 3 the new chokepoint race
In Part 1 of this deep dive into the revolution in commodity markets set off by the Iran war, I focused on why the lessons currently being drawn from this war were a negative for LNG stocks and a plus for nuclear and uranium stocks.
Today in Part 2, I’ll go into why solar energy is a surprising winner from the war. And Part 3, coming soon, will cover how the lessons of the Strait of Hormuz are leading countries to look for new choke points. Or to spend big cash lessening their dependence of commodities with clear choke points.
SpaceX drops below IPO price–August 6 gets even more important
Shares of SpaceX (SPCX) dropped below their initial public offering price for the first time on Wednesday, just over a month after the company completed the biggest IPO ever. The shares slid 1.5% to $134, falling below the $135 IPO price and well below last month’s high of $236. The stock’s retreat “seems to be a combination of profit-taking, valuation reassessment and the unwinding of extremely bullish positioning following one of the most anticipated listings in recent years”, Daniela Hathorn, senior market analyst at Capital.com, told Bloomberg. The stock’s addition to indexes such as the tech-heavy Nasdaq 100 did not reverse the retreat. SpaceX’s shares have dropped 13% since they were included in the Nasdaq 100. All of which makes August 6 even more important.
This comes at a really bad time–U.S. AI models losing market share to Chinese open source AI
As a result of rising AI costs, American companies have begun to shift to Chinese open source models such as Alibaba’s Qwen, Z.ai’s GLM and Moonshot AI’s Kimi.
“This is the first time that it’s happening,” Rafiq Dossani, an economist at Rand, told the Washington Post. “China’s been able to catch up in software at a rate that it couldn’t do much earlier, even though [it’s] well resourced.” U.S. AI models ChatGPT, Claude and Google’s Gemini are all “closed” AI models:
Data centers send grid electricity prices up 60%
First thing you need to do is realize that a 60% increase in prices at the electric grid operator level doesn’t mean a 60% increase in your home electric bill. So take a deep breath. Second thing, though, is is realize that higher prices–just not 60% higher–at the grid level does mean higher prices in home utility bills.
CPI inflation better in june , but for how ling?
American consumers got some relief in June after months of soaring prices. The all-items Consumer Price Index (CPI) was up 3.5% in June from a year earlier, the Bureau of Labor Statistics said on Tuesday. That represented a cool-down from May, when annual inflation hit 4.2 percent, a three-year high. Prices actually fell 0.4 percent from May to June, the largest outright decline since 2020. BUT… The improving inflation picture was largely the result of tumbling oil prices.
War again–two big effects
Higher oil prices. Greater odds of an interest rate increase from the Federal Reserve.
Traffic in the Strait of Hormuz plummeted after Iran’s attack on a Cypriot-flagged container ship on Saturday set off an exchange of strikes with the United States. Just 14 ships passed through the waterway on Sunday in both directions, the fewest in a month, according to Kpler, a maritime data firm. Of those ships, only three were tankers exiting the Persian Gulf laden with crude oil, chemicals or other commodities, and all three were shadow or sanctioned vessels. Before the start of the war in late February, an average of more than 130 vessels transited the Strait daily. In mid-June, when the United States and Iran signed a preliminary agreement to reopen the strait, traffic spiked. In the seven days starting June 20, nearly 400 ships moved through the strait, the highest number in a one-week period since the war began. But hopes for a recovery in shipping quickly faded with renewed attacks on ships by Iran.
It’s not just the U.S.–China’s college graduates can’t find jobs either
The unemployment rate among 16- to 24-year-olds is 15.6% in China.
That’s comparable to the 16.2% in the UK and the 15.1% in the European Union. It’s significantly higher than in the United States.The U.S. unemployment rate for 16-24 year olds was 9.4% in June. (The overall U.S. unemployment rate (all ages) was about 4.2–4.3% in June 2026, so the unemployment rate for 16-24 year-olds is running near to the historical pattern of twice the overall rate.) But that number understates the crisis in the U.S. job market for recent college graduates.
And you’re worried that tech stocks make the U.S. market dangerously concentrated? Emerging market concentration is even worse
Just three technology stocks worth $4.4 trillion–Taiwan Semiconductor Manufacturing, Samsung Electronics, and SK Hynix–now make up more than 30% of the MSCI Emerging Markets Index. That’s as big a concentration as the concentration of the Magnificent 7 in the U.S. Standard & Poor’s 500. Overall, technology accounts for 45% of the emerging market index. Funds including JPMorgan Asset Management and Grantham Mayo Van Otterloo are turning to bets on the broader economy — such as gaming, energy, and even a Vietnamese milk company. JPMorgan is looking at India and China for diversification away from the giant tech companies, one of them in Taiwan and two in South Korea. “This type of concentration is never easy for a portfolio manager, it’s always difficult,” Warren Chiang, portfolio manager for systematic equity at GMO in Berkeley, California told Bloomberg. “The point here is to look for opportunity in as many places you can, but the absolute risk will be there no matter what.”
Which sets up a classic dilemma for investors: Stick with the potential outperformance from these tech stocks or diversify in a search for lower volatility.
Saturday Night Quarterback says, For the week ahead expect…
News, data, news, and more data. All of it capable of moving the stock market. Next week marks the beginning of earnings season for the second quarter of 2026. JP Morgan Chase (JPM), Bank of America (BAC), Goldman Sachs (GS), Wells Fargo (WFC), and Citigroup (C) all report on Tuesday. What does Wall Street expect? Very good things on earnings and potentially troubling news on inflation.
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