Weekly Macro Note: Bombs Away - What's Next & What are the Opportunities, Rally or Risk?

In this Weekly Macro Note - we discuss the latest escalations in the Middle East, talk about past and present Strait of Hormuz risks, review energy markets, technicals, rally tailwinds, & much more.

Good Sunday evening MacroEdge Readers and Community,

This weekend we held off on a release of the Redeye Macro Note, given all of the geopolitical headline volatility and (especially) noise. Next Friday or Saturday, we’ll have the first release of our Weekly Macro Briefing Video covering all of the important macro/geopolitical updates for the upcoming week, available through our YouTube and on Substack.

What’s Next from MacroEdge

> 6/27: MacroEdge Radio #53

> 6/27 or 6/28: First edition of the ‘Weekly Macro Briefing’

> 6/30: The First Half of 2025 in Review: What’s New, What’s Next, In the Business of You

• Research, Transform, Economic Advisory

• Introducing CEO Macro Briefings & AlphaSights + AlphaSights Solutions

• Breakdown of our full updated offering portfolio

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Geopolitical Escalation – Past Examples Visualized

In terms of geopolitical escalation, the United States targeted three key Iranian nuclear facilities - and more in a ‘stealth’ attack over the weekend. While we haven’t seen much of a response from the Iranians yet, we’ll let the situation evolve over the next several weeks to see what the eventual outcome may be. The most likely in our eyes falls between Iran taking more direct action against Israel militarily, including through it’s proxies, and directly avoiding the US as a target to avoid broader United States involvement. Iran also can take action against global trade and the global energy market. Risks as they pertain to the Stait of Hormuz are in fact, nothing new in the global economy:

Until we see any sort of tangible response from Iran or their proxies - the most likely scenario is some sort of continuation of the apathetic sentiment we’ve seen since Mid-May - even though equities have been sideways for ~year. Iran has significant ability to do a lot outside of military action — and markets seem to be unaware of that for the time being.

Israel/Iran Risk Matrix - Visualizing Present Risks

With the conflict at the front of everyone’s mind - the largest risks here from a macro perspective are primarily related to the oil markets and the Strait of Hormuz. The ‘big risk’ per se - is not an outright closure of the Strait - it’s the fact that Iran can disrupt flows enough to reroute tankers away from the Strait and that will send prices on an upward slope for goods and energy worldwide. While the biggest beneficiary of Iranian oil is China – China has alternatives if need be – so I don’t see that as the largest explainer for why Iran may opt out for retaliation measures related to the Strait. That is and has, in fact been, their biggest weapon for a very long time (dating back to and before the Iranian revolution).

In our 4-element risk matrix of largest risks here - we have: