ALL IN

Tuesday morning.

If you were planning a quiet week, Trump had other ideas.

The ceasefire that gave markets a brief exhale last week is now holding by a thread. The Islamabad peace talks ended without a deal on Sat night. Trump woke up and announced a full US Navy blockade of the strait.

By 10am Mon, it was live.

46 days in. And somehow, it just escalated again.

Let's break it down.

🚒 THE BLOCKADE IS ON

Source: KUTV

After failed talks in Pakistan, Trump posted on Truth Social that the US Navy would begin blockading any and all ships trying to enter or leave the Strait of Hormuz.

CENTCOM confirmed it. The blockade covers all vessels entering or departing Iranian ports, across the Gulf of Oman and the Arabian Sea. Any ship that does not comply is subject to interception, diversion, or capture.

Iran's foreign ministry called it a threat to the global economy. China called it against the world's common interests and urged all parties to preserve the "extremely fragile" ceasefire.

Energy experts are warning this could keep oil elevated well into late 2026. The strait needs to physically reopen. Damaged oil facilities need to be repaired. Neither is happening fast.

Pete's Take πŸ‘‡

This is the most consequential move since the war began. A naval blockade is not a tweet. It is a physical act of force that puts US warships in direct contact with Iranian naval assets.

The fragile ceasefire was already cracking. This pours fuel on it.

For investors, the message is clear. The peace trade is off. Energy exposure stays relevant.

☠️ IRAN DRAWS A LINE IN THE WATER

The IRGC warned that any military vessel approaching the strait will be considered a ceasefire breach and dealt with "harshly and decisively."

The IRGC said enemies would be trapped in a "deadly vortex" in case of any wrong move. Iran's navy chief called the blockade "ridiculous and funny." State TV said the military was monitoring all American movements across the region.

Trump is reportedly considering resuming limited military strikes on Iran to break the peace stalemate. He also appeared to once again threaten Iran's critical infrastructure, including water, desalination plants, and power generation.

Iran's chief negotiator at Islamabad hit back by posting a photo of Washington DC gas prices on social media. The message was pointed. Enjoy the current prices. The blockade is going to make them much worse.

Pete's Take πŸ‘‡

Both sides are now posturing with military assets in a very small body of water. That is a recipe for an accident that nobody planned for.

The risk of unintended escalation is real. A ship that does not stop. A warning shot that misses. Markets hate surprises like that.

πŸ‡¨πŸ‡³ CHINA PLAYS BOTH SIDES

US intelligence indicates Beijing is preparing to deliver new air defense systems to Iran within the next few weeks. China denied it, saying they have never provided weapons to any party in the conflict.

Trump responded immediately. Any country caught assisting Iran gets a 50% tariff. Trump is also set to meet Chinese President Xi Jinping next month, which makes this particularly awkward. πŸ₯΄ 

Meanwhile, Hezbollah's leader rejected planned Lebanon-Israel talks scheduled in Washington this week. He called the talks "futile" and urged Lebanon to refuse to attend.

Lebanon's president pushed back, saying the negotiations are the responsibility of the Lebanese state and no other party. That was a direct shot at Hezbollah trying to block them.

Pete's Take πŸ‘‡

China is playing a long game. Keep Iran alive and dependent. Secure cheap oil. Make the US look like the aggressor on the world stage.

If Trump hits China with a 50% tariff over weapons deliveries, this becomes another front in an already stretched trade war.

This conflict is no longer just a Middle East story. It is a US-China story now too. Watch this space closely.

πŸ“Š MARKET SNAPSHOT

Oil surged back above $100 the moment the blockade was confirmed. Brent jumped around 8% on Monday, fully recouping last week's ceasefire-driven drop in a single session.

Equities held up relatively well. The Nasdaq even closed green 🟒 . That is the market saying it believes this eventually resolves. I would not fight that narrative. But I would not bet the house on a swift peace either.

🎯 Pete's Investment Takeaway

Day 46 and the blockade changes everything.

The peace trade that started building last week, airlines bouncing, energy pulling back, consumer names recovering, has been put on ice. The Islamabad failure and the blockade confirm we are in a prolonged standoff. Not a clean wind-down.

Energy wins again. XLE, XOM, CVX stay attractive with oil firmly back above $100. Defence names (LMT, NOC, RTX) remain in play as long as military posturing continues. Gold at $4,728 is holding but watch for a spike if the ceasefire collapses entirely.

Avoid airlines and anything with heavy fuel cost exposure until the strait physically reopens. That could be weeks or months away. Not days.

Watch CENTCOM movements in the Gulf of Oman. Any incident between US and Iranian vessels triggers a sharp selloff. Also watch US PPI data dropping this week. Inflation from this war is going to show up ugly in the numbers.

Position. Don't predict.

🚨 SMG LIVE Tonight 🚨

The market is trying to figure out what this means. Tonight, we will do the same.

Here is what we will cover:

πŸ›’οΈ What this blockade actually means for oil and energy stocks

πŸ“‰ How markets are likely to react this week

πŸ’‘ Pete's latest trade ideas to position around this move

This one is going to be a good session.

πŸ“… Tonight πŸ”— Register here: https://investwithpete.teachable.com/courses/smg/lectures/65448707 

SMG members only. See you tonight.

Pete
Invest with Pete

πŸš¨β€ΌοΈ By the way, I’ll never PM anyone on telegram or any other social media platforms. If you receive any β€œPete” messaging you, these are scammers impersonating me. Pls beware!

The information provided in this newsletter is for informational purposes only and does not constitute financial advice. Readers should seek their own independent financial advice before making any investment decisions. Please note that while Pete is a portfolio manager, the opinions expressed in this newsletter are his own and do not represent the views of any organization. Always perform your own research and due diligence before investing.