Latest / Markets with Megan: A Quick Financial Markets Update / How Markets Are Reacting to Rising Tensions with Iran | S2 E053 | 06-23-25

Transcript

How Markets Are Reacting to Rising Tensions with Iran | S2 E053 | 06-23-25 · Markets with Megan: A Quick Financial Markets Update

• 0:00
  Megan Horneman: Well, it's been a bit of a wild day on Wall Street, as investors are absorbing the events that unfolded over the weekend.
• 0:06
  Megan Horneman: It's Monday, June the 23rd, and this is Markets with Megan.
• 0:09
  Megan Horneman: If you like this podcast, please subscribe.
• 0:11
  Megan Horneman: Hit that alarm bell.
• 0:12
  Megan Horneman: You can share with friends, family or colleagues.
• 0:14
  Megan Horneman: But we're here today to discuss what happened over the weekend and what we see going forward from a market perspective, how this may impact the economy and the markets going forward.
• 0:24
  Megan Horneman: So, as most know, the US bombs a certain amount of Iranian nuclear facilities over the weekend.
• 0:33
  Megan Horneman: How much they were damaged and what was taken out of those facilities ahead of time is still unknown and the situation is still very fluid.
• 0:41
  Megan Horneman: So we're going to focus on what we know at this point.
• 0:44
  Megan Horneman: What we've seen is that there has been some retaliation, not only from Iran into Israel, but now Qatar has intercepted some missiles coming from Iran to US interests in the country and these were successful interceptions.
• 1:00
  Megan Horneman: So we have seen some retaliation from Iran because of the action taken over the weekend.
• 1:05
  Megan Horneman: The market reaction, though let's focus on that.
• 1:07
  Megan Horneman: So you could say that maybe investors are getting a bit immune to some of the geopolitical events, but the markets started out higher.
• 1:15
  Megan Horneman: Equity markets were higher today than we saw, that there was some flight to safety in treasuries where yields were lower, gold prices were higher and the moves in oil were relatively muted.
• 1:26
  Megan Horneman: Now you fast forward to this afternoon and what we've seen, with Qatar successfully intercepting those missiles from Iran.
• 1:32
  Megan Horneman: The equities now are higher in the triple digit range, Oil prices are actually down.
• 1:37
  Megan Horneman: They're lower on the day and we're seeing bond yields still lower, but they have given up some of that steam.
• 1:42
  Megan Horneman: So investors are looking beyond these events and they're looking at this as a short-term impact, not a long-term impact.
• 1:51
  Megan Horneman: In fact, there are those that believe that this may help to bring the Federal Reserve to the table, because they may be concerned on what impact this may have from an economic standpoint.
• 2:03
  Megan Horneman: Now, what we have seen in history is, if you look at you know 10 different geopolitical events where the US took military action, what you tend to see is the S&P 500 is higher in the one year later.
• 2:15
  Megan Horneman: It's higher by about 8% and it's positive 80% of the time.
• 2:19
  Megan Horneman: So what we are doing is sitting tight.
• 2:21
  Megan Horneman: We're not making any rash decisions around what may or may not happen out of Iran and this conflict with the US and the Middle East.
• 2:28
  Megan Horneman: Instead, we're remaining disciplined long-term investors, focusing on the fact that investors sometimes can whipsaw markets and get emotional when we see these types of events, and we understand this is unnerving.
• 2:39
  Megan Horneman: The unknown is unnerving, but we are not making rash decisions in our portfolios at this time.
• 2:45
  Megan Horneman: What are the risks that we're monitoring going forward?
• 2:47
  Megan Horneman: Well, first of all, will Iran have to use the Strait of Hormuz as a weapon?
• 2:51
  Megan Horneman: This is where a fifth of the global oil production moves through there daily and they do own a part of the Strait.
• 2:59
  Megan Horneman: So if there is a shutdown of the Strait, this could impact oil prices, but we haven't seen that as of yet.
• 3:04
  Megan Horneman: As I mentioned, oil prices are lower with the anticipation that Iran won't use that.
• 3:09
  Megan Horneman: It doesn't do much benefit to the rest of the world either from an oil production standpoint and transferring that out of the Persian Gulf.
• 3:16
  Megan Horneman: What we're watching is any other strikes that they may take.
• 3:19
  Megan Horneman: We think at this point it is isolated to the Middle East area, but again, this is a very fluid situation.
• 3:25
  Megan Horneman: We'll come back to you with any developments that we see and how that may impact from an investment standpoint.
• 3:30
  Megan Horneman: And what does this mean for the Federal Reserve?
• 3:33
  Megan Horneman: Let's keep in mind that the Federal Reserve still is focused on inflation and if this does escalate further and this creates an increase in oil prices, that can impact inflation.
• 3:42
  Megan Horneman: So the Fed's going to be very vigilant on what these developments, how they unfold.
• 3:47
  Megan Horneman: We still think they'll be able to cut interest rates in September and then likely again in December, but that's going to be more on economic weakness here in the US than it will be on inflation, so that inflation is the unknown.
• 3:58
  Megan Horneman: If we see that this does impact the inflation standpoint, then this will possibly push the Fed out into later this year as well.
• 4:06
  Megan Horneman: Equity investors are pricing in the expectation of multiple rate cuts in the second half of this year.
• 4:11
  Megan Horneman: That's all we have today.
• 4:13
  Megan Horneman: We will be monitoring these events, as we said, very closely.
• 4:16
  Megan Horneman: We'll be back with additional podcasts as we see fit, but at this point markets are digesting the events very well and trading near record highs from an equity standpoint.
• 4:25
  Megan Horneman: That's all we have.
• 4:29
  Megan Horneman: If you'd like to see a history of our podcast, you can go to marketswithmeganfm.
• 4:32
  Megan Horneman: Thank you.