Day 6: Trump is doubling down

It's Friday. End of the first full week of war.

You know how in Chinese culture we say 危机 ( Which means Crisis) is made up of two characters: Danger AND Opportunity? That's exactly the lens we need right now. Because there are so much noise this week, and I want to distill it down for you.

Here are the 3 things that matter most from overnight.

🏛️ Trump Wants to Pick Iran's Next Leader

This is no longer just a military operation. Trump said he wants to be personally involved in choosing who leads Iran after this conflict ends. His words is that he wants someone "great for the people, great for the country" so the US doesn't have to "come back every five years and do this again."

Translation: This is a regime change operation. Not a quick strike. Not a 72 hour shock-and-awe. The US is in this until the government of Iran falls or surrenders.

And Trump backed that up by offering immunity to any Iranian officials willing to step down. He's trying to collapse the regime from the inside while bombing it from the outside.

Why does this matter for investors? Because regime change timelines are measured in months. Not days. We need to price that in.

⚓ The Strait of Hormuz Is Still Effectively Closed

Iran has now fired over 500 ballistic missiles and nearly 2,000 drones since 28 Feb. A US submarine sank an Iranian warship off Sri Lanka this week — the first ship sunk by an American submarine since World War 2. Qatar has suspended most of its natural gas production after drones hit its energy facilities.

And tanker traffic through the Strait? Still at a standstill.

The White House was asked directly when oil tankers would be safe to pass through. The press secretary said she could not commit to a timeline.

That's the most important sentence of the week. No timeline. No visibility.

Brent crude settled at $85 a barrel on Thursday. WTI crossed $81. That is an 8% single day move. Oil has now risen roughly 27% since the war began just one week ago.

Meanwhile in China has halted export of oil amidst the tight supply. The squeeze is getting real.

💸 Congress Has Given Trump Free Rein

Both the Senate AND the House voted this week to reject war powers resolutions that would have required congressional approval to continue the war. The votes were mostly along party lines.

Four House Democrats even crossed over to kill the bill.

Bottom line: there is no legal or political mechanism right now to stop this war. Trump has full authority to continue as long as he wants. And given what he said about regime change, he clearly intends to.

The war is also costing the US around $1 billion a day according to sources cited by NBC. That number will matter when markets start pricing in fiscal risk on top of energy risk.

However, Secretary Hegseth just reiterated that US has sufficient munitions to complete the mission “for as long as it takes”. So the cost of this war is likely to be immense.

📊 What Markets Told Us Last Night (Thu 5 Mar)

Thursday was ugly again after Wednesday's brief recovery.

The Dow dropped 784 points to close at 47,954. The S&P 500 fell 0.56% to 6,830. The Nasdaq held up better, slipping just 0.26% to 25,020.

The hardest hit sectors were industrials and materials. Caterpillar dropped over 4%. GE Aerospace fell 3.5%. Airlines got crushed again as fuel costs continue to spike. Goldman Sachs and Morgan Stanley both dropped around 3 to 4%.

The only sector in the green? Energy. Up nearly 1%. No surprises there.

Gold is trading around $5,170 today. It hit an all time high of $5,595 in late Jan and pulled back since, but is finding a floor around $5,100 as investors look for somewhere to hide.

South Korea's Kospi triggered a circuit breaker again during the week, with two day losses hitting 17% at one point. Dubai and Abu Dhabi also reopened from emergency closures and dropped hard. Asia and the Gulf are feeling this far more than the US.

🧠 Pete's Take: What Do You Actually Do Now?

In the midst of chaos, there is also opportunity.

Here's how I see it.

The US market is holding up remarkably well relative to the scale of what is happening. The S&P is only down about 1.5% from where it was before the war started. That tells you institutional money is not panicking. They are rotating, not fleeing.

The rotation is clear if you look at where money is going:

Energy stocks are the obvious one. XLE is up big on the week. If oil stays above $80, these names keep grinding higher.

Defense is printing. Lockheed, Northrop, Raytheon are all up double digits since the war began. And the White House is meeting with defence contractors today to discuss weapons production. The order books are going to be enormous.

Gold is your insurance policy. $5,100 looks like a strong floor right now. JP Morgan's $6,300 target by end of 2026 suddenly looks conservative if this drags on through Q2.

Airlines and consumer discretionary are the pain trade. High fuel costs = margin compression = I will avoid for now.

The key question every investor should be asking: is this a 2 week war or a 6 month war?

Based on Trump's own words about regime change and the lack of any ceasefire signal from either side, I am planning for longer. Not panicking. Not selling everything. But making sure my portfolio reflects the reality of a prolonged conflict.

Position. Don't predict. 🎯

And finally my new course, Dividend Market Genius , is officially launched!

I’m very humbled by the overwhelming response with more than 200 sign ups already!

Dividend Market Genius could not have launched at a better time as the war brings uncertainty, the DMG strategies bring cashflow to fund our life experiences!

For those of you who missed it, you can watch the replay here: https://investwithpete.teachable.com/courses/dmg/lectures/65028151

The DMG promo launch price is here: https://rebrand.ly/DMG500 

Make sure you get it before promo ends next Sunday!

For those signed up for DMG already, the first LIVE zoom class is 27th Mar! Will send out more details soon!

Happy Hunting!

Pete
Invest with Pete

🚨‼️ By the way, I’ll never PM anyone on telegram or any other social media platforms. If you receive any “Pete” 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.