06/22/2026
Last week’s shortened trading week was modestly positive as the Federal Reserve held rates steady under the leadership of a new Chair and the world watched waiting to see if a deal with Iran would in fact be signed. Driven in part by the initial public offering for SpaceX the NASDAQ led the way with a gain just shy of two and a half percent. The Global Dow gave up just over half a percent for the week. While the Fed held rates steady last week the yield on the Ten Year Treasury slipped three hundredths of a percent. Oil retreated more than ten percent on hopes of a deal with Iran while the Dollar climbed over one percent. Gold slipped one one hundredth of a percent.
With the new Fed Chair, last week’s after meeting statement was quite brief by recent standards. While rates were held in place the Fed did signal the likelihood of one rate increase before the end of the year due to continued concerns regarding elevated inflation. Consumer spending grew according to the retail sales figures which showed nearly a seven percent increase in the last year. Manufacturing growth was not nearly as robust with growth in manufacturing up one and seven tenths of a percent in the last year. The weekly employment data continues to reflect what has been characterized as the no hire/no fire economy. Finally gasoline prices have begun to fall on the hopes of a lasting deal with Iran.
This week is packed with economic releases. New home sales, durable goods orders, the final estimate for GDP in the first quarter, personal income and outlays, and finally international trade figures are all slated to be released. In spite of the abundance of economic data the focus may continue to be on the geopolitical front.
A deal with Iran was signed last week. At this juncture it would be laughable to categorize the agreement with Iran as anything but an epic blunder. In the deal Iran has agreed to not purse the development of a nuclear weapon, just the same as they had agreed to in the previous multilateral JCPOA that this president abandoned in their first term. Because this MOU (Memorandum of Understanding) is nothing more than a framework for discussions over the next sixty days, it may be wise to withhold judgement until such time a final agreement is made. If that happens. It seems unlikely that Iran will be quick to fold at the negotiating table.
This framework for the future discussions over the next sixty days has fourteen points. There is a return of billions of dollars of Iranian funds that have been frozen since the Iranian Revolution. Sanctions relief on Iranian oil, removal of military forces from around Iran, unfettered access to the Strait of Hormuz for sixty days and more are included in the agreement. In its current form there is nothing that makes this agreement a clear improvement from the agreement this president abandoned in 2017. Iran will likely receive billions more in assets and sanctions relief, the Strait of Hormuz will likely cease to be a freely navigable body and little has been done to defang Iran’s missile and drone capabilities. If anything this chapter in US/Iran relations has emboldened Iran. Iran’s neighbors who have been attacked by Iran are being driven to negotiate and come to terms with an armed neighbor who can inflict a real cost for cooperating with the Untied States or Israel. There is no way to view this except as a set back for the United States.
Perhaps the most important lesson Iran has learned is that they can turn traffic off and on in the Strait of Hormuz at will. Because of continued fighting between Hezbollah and Israel in Lebanon, in violation of the MOU’s terms, Iran has again closed the Strait of Hormuz. How long will traffic be held in check is anyone’s guess. It would be folly to believe that the United States holds all the cards. Militarily speaking the United States could wrestle control of the Strait from Iran. This would likely take troops on the ground and a massive build up of forces in the region. The cost in treasure and blood would be catastrophic for a war that is already exceedingly unpopular. Until there is the will to take the Strait from Iran they hold some pretty powerful cards.
Shipping in the region may be forever changed. Don’t be surprised if in the future you see a classic mob movie shakedown perpetrated by Iran.
“That’s a real nice ship you’ve got there. You should probably get insurance on that. It would be a real shame if your ship had some sort of “accident”. It is a rough neighborhood. By the way we can insure that for you.”
The Iranian government has already established a new “insurance agency” for this very purpose. Add to this the likelihood that the actual insurance companies that insure ships and their cargo will likely re-evaluate the risk of passage through the Strait of Hormuz and companies may expect higher rates which will mean higher prices to consumers or end users. The administration also signaled this weekend that the United States may begin collecting tolls for passage through the Strait.
In 2015 seven nations, including Iran, signed an agreement that Iran would not pursue a nuclear weapons or highly enriching uranium. There were financial incentives and agreements For monitoring and inspections. By most accounts this agreement was working until the United States abandoned it. At which time Iran ramped up their enrichment activities and the world has been without an agreement to keep an eye on Iran’s ambitions. The attack on Iran has failed to achieve any of the objectives set by this administration outside of Iran again committing to not pursue a nuclear weapon. Something that had been previously agreed to in 2015. The world has been left with an emboldened Iran, probable higher shipping, fertilizer and energy costs and a diminished U.S. presence in the region if not the world. The next sixty days will be telling. I would like to say that I am optimistic but I am not.
Yesterday was Father’s Day. Father’s Day was first celebrated in the nineteen twenties but did not become an official holiday until the nineteen seventies. As a holiday, Father’s Day continues to have the unique distinction of being the busiest day of the year for collect phone calls. Hopefully you had a terrific weekend celebrating the Dad’s in your life and that you have a terrific week. As always we are here with financial advice for you that we think may rival your Dad’s, and short of that we always can come up with a corny dad joke. Thanks for reading and enjoy this first full week of summer!
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