Iran

The situation between the United States and Iran is highly tense, marked by a combination of renewed diplomatic negotiations over Iran’s nuclear program and a massive U.S. military buildup in the Middle East, raising fears of potential conflict. The attention is once again devoted to what happens in the Middle East where the odds of a military conflict remain high. Israel is pushing hard for a regime change and for ending Iran nuclear enrichment program. The U.S. looks at Iran as a destabilizing state in the region, as they are funding terrorist organizations like Hamas or Hezbollah among others. Tensions escalated significantly in early 2026, triggered by Iran’s crackdown on nationwide anti-government protests. President Trump threatened military action in response to the protests and Iran’s nuclear activities. This led to a major U.S. deployment of forces, and Iran has responded defiantly, conducting live-fire drills, including temporarily closing parts of the Strait of Hormuz for exercises, fortifying military and nuclear sites, and warning of a “ferocious” retaliation to any U.S. attack, potentially targeting American bases and risking a broader regional war. Markets are still relatively calm with respect to this conflict, but Energy stocks and Metals and Mining continue to be the most bid sectors YTD, as you can see in the table below. Trump may use this conflict to distract the public attention from the Epstein files and the tariff fiasco, but it’s a risky move if the conflict were to last beyond the mid term elections in November. This will be a hot topic on today’s State of the Union address.

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