The 'Iran War Risk' Ramps Up Again
A trademark 'Iran war risk' day... Get ready for a big move... Another catalyst for defense stocks is just days away... The Federal Reserve probes private-credit exposure... It's always the debt markets – for better or worse...
We can't escape these 'Iran war risk' days...
I (Corey McLaughlin) wrote earlier this week about a stint of good market breadth. Many more stocks moved higher than lower for two straight days. Meanwhile, oil futures prices cooled off, even amid a rise in Treasury yields.
Well, today was different... It was another "Iran war risk" day.
Oil futures were up by at least 3% (they had been up as much as 5% in the past 24 hours), bond yields were initially higher, and the major U.S. stock indexes were down. But energy stocks posted gains and were the highest-returning sector of the S&P 500 Index.
The latest news?
Multiple reports say that President Donald Trump is considering restarting large-scale U.S. military operations in Iran.
Now, these leaks could just be part of another round of negotiating. Even if they are, though, the evidence suggests we'll see a significant move in the war over the next month...
We've seen and heard this before...
It looks a lot like what we saw back in February. Many folks didn't believe the U.S. would launch attacks against Iran, though we did. As we wrote in the February 19 Digest, after an unnamed White House official said the U.S. could soon ramp up its military presence in the Middle East...
This could be another way for the U.S. to apply negotiating pressure on Iran, or it could be a signal of the U.S. going to war with Iran, or both.
We'll repeat that, with some new context...
A fresh group of Navy sailors and U.S. Marines – attached to the USS Theodore Roosevelt Carrier Strike Group, which carries nearly 10,000 troops total – are en route to the Persian Gulf as we write, having left San Diego in late September with an estimated arrival of later this month or early November.
They're presumed to be relieving the USS George Washington, but... given what we see and hear, it's interesting timing, with Trump predicting that the war will end "immediately" or "right after" the U.S. midterm elections.
Trump has also recently said that he doesn't want a "deal" with Iran anymore, though he softened that stance in a Truth Social post today. He suggested talks with Iran are happening, but he also didn't rule out more attacks on the country tied a possible Election Day timeline...
We are having productive discussions with the Islamic Republic of Iran... we will not be attacking Iran at any time prior to the Midterm Elections to be held in the United States on November 3rd. IRAN WILL NOT HAVE A NUCLEAR WEAPON!
We've seen all this before...
After Trump's post, oil futures peeled back some of the gains, Treasury yields pulled back, and stocks got a midday lift. But by the close, oil was still higher for the day, and the U.S. indexes were lower, with the S&P 500 down 0.5%.
The energy sector was up 3%, followed by consumer staples, which was up around 2%.
There are reasons for oil traders to bet on high prices...
U.S.-friendly tankers moving through or near the Strait of Hormuz currently require U.S. military protection. At least a dozen tankers have been attacked over the past week.
Oh, and the Houthis are causing chaos in Saudi Arabia, firing ballistic missiles at the country's capital city of Riyadh over the past day. For the moment, pipeline workarounds have Middle East crude oil exports at prewar levels, but will it last?
This is all to say, don't get caught off guard by an Iran war "surprise" ahead. We could see more days like today and the type of volatility we saw in the spring, when the war began.
That might sound frightening, but it doesn't have to be. Keep owning hard assets. And volatility may create long-term buying opportunities, especially with many stocks already down this year.
Another catalyst is coming...
If missiles and bombs start falling throughout Iran again, it certainly won't help the inflation/interest-rate discussions that have been a big part of the market lately.
But renewed full-scale warfare would boost the argument for the U.S. military "reupping" its munitions supplies... and the bull case for certain stocks, as Joel Litman from our corporate affiliate Altimetry has been sharing.
Joel, the founder of Altimetry, has previously consulted with the Pentagon and the FBI. And Wall Street's biggest firms pay to use his forensic-accounting tools.
Joel says a $1.5 trillion tidal wave of cash is about to flow into a surprising group of defense stocks. That catalyst is now just a few days away.
Joel says that companies in one small corner of the defense industry have already started soaring hundreds and even thousands of percent – and this boom is just beginning. For a little while longer, you can get the details from Joel and position your portfolio to take advantage.
You won't hear about this story – or the investing opportunities Joel has identified – anywhere else. Click here to watch his free presentation right now. You'll notice a few familiar guests when you watch, including our own Whitney Tilson and Dave Lashmet.
Elsewhere, we're not the only ones sounding alarm bells on private credit...
For months, we've been tracking the ongoing issues in the private-credit market. We first wrote about a private-equity "reckoning" in the same February Digest where we discussed Iran war risks.
That might be because the "weak" stuff – perceived or real – tends to act even weaker when times get more uncertain...
Today, that includes many of the loans that private-equity firms hold. The value of these loans has plummeted, and more investors are trying to get their money out of the sector. To prevent a "bank run," many firms have capped redemptions.
As we shared in the March 10 Digest...
BlackRock (BLK), the world's largest asset manager... limited redemptions from its HPS Corporate Lending Fund after too many investors asked for their money back. The redemption requests came to 9% of shares.
BlackRock limited the redemptions to 5%, barely half that requested volume.
The redemptions have continued since then...
In the third quarter, BlackRock's HPS Corporate Lending Fund saw redemption requests equaling roughly 11.5% of its shares. While that was down from the previous quarter's 13%, it was still well above the 5% cap. That means less than half of the redemption requests will be paid out.
Private-credit bellwether Blue Owl (OWL) is seeing a similar trend. Its Blue Owl Technology Income Fund – which lends to software firms and other tech companies – reported redemption requests of 39%. According to Bloomberg, that's the highest redemption rate in the private-credit space.
Blue Owl is linked to a delayed Oracle (ORCL) data center in New Mexico, with power sourcing an issue.
Like BlackRock, Blue Owl capped redemptions at 5%. So folks who put in for redemptions only received about $0.13 for every dollar they requested.
That has the Federal Reserve's attention...
According to a report from Semafor, the New York Fed has begun asking big banks – including JPMorgan Chase (JPM), Wells Fargo (WFC), and Morgan Stanley (MS) – for more information on their dealings with the private-credit industry.
This includes their overall exposure, how they're managing the risk in the industry, and the collateral for those loans, according to the report. And it wasn't just redemptions that caught the Fed's eye. From Semafor...
The review was prompted in part by JPMorgan's move in March to mark down large swaths of loans in private credit portfolios, particularly those to software companies threatened by AI, [people familiar with the matter] said.
Investor worries are also showing up in these companies' stocks... Blue Owl's shares are down about 44% over the past 12 months and more than 65% from their January 2025 highs.
Now, credit markets aren't at their breaking point yet. We're not expecting the Fed or Treasury to step up with new "crisis fixes" right now.
But between the continued worries in private-credit markets and a spike in high-yield credit spreads, investors are starting to acknowledge the risks in the debt market, which the U.S. economy runs on – for better or worse.
New 52-week highs (as of 10/7/26): AbbVie (ABBV), Arista Networks (ANET), Alpha Architect 1-3 Month Box Fund (BOXX), GitLab (GTLB), Hafnia (HAFN), Hewlett Packard Enterprise (HPE), Marathon Petroleum (MPC), Saturn Oil & Gas (SOIL.TO), Invesco DB U.S. Dollar Index Bullish Fund (UUP), Valero Energy (VLO), and Zebra Technologies (ZBRA).
A busy mailbag again today... We have feedback about last week's annual Stansberry Research Conference & Alliance Meeting... thoughts on private versus public debt... and just how far back the U.S. government's spending deficit problems go... As always, send your notes to feedback@stansberryresearch.com.
"Once again, a big thanks for the Alliance conference. It all started years ago in Aspen, Colorado, my first Alliance meeting. I've lost count on how many I've been to but I do remember enjoying every one of them. This year was no exception, the interesting speakers, information and facts really make it all worthwhile. [In] addition, the AI robot was quite entertaining. And of course meeting other members is always fun as well. So I certainly hope to see all of you next year!" – Stansberry Alliance member Bob G.
"Since even if you buy the debt of the most worthy private debtor, you only get back the currency that the government has the ability to create in unlimited quantity, and, the government has the unlimited ability to tax assets of the private party, why would I ever consider the debt of the private party superior??" – Subscriber Klaus H.
"You can tell Chuck W. and Debbie J. that it goes much further back than Bill Clinton. It began during JFK, when they decided to have a 'little bit' of deficit spending. Then LBJ decided to wage two wars at the same time (never a good idea, if you can avoid it): the War on Poverty (which was part of the Great Society) and the War in Viet-Nam. There was even a one-time income tax surcharge of 10% to 'fix' the deficit (which did not work as well as they hoped). LBJ also decided to combine Social Security with the General Budget (SS was off budget, but was running a surplus, so why not try to hide the extent of the deficit? The chickens on that are about to come to roost!). That all led up to Nixon being essentially forced to go off the 'Gold Standard', which might have been the last remaining restraint. And Congress and presidents have been unrestrained since then.
"And other countries, figured they could do the same with their fiat currencies." – Subscriber Heinrich E.
All the best,
Corey McLaughlin and Nick Koziol
Baltimore, Maryland
October 8, 2026