Fisher Investments’ Michael Hanson on US-Iran Developments, Defense Stocks, IPOs and More
Michael Hanson of Fisher Investments addresses investor questions on US-Iran tensions, defense stocks, IPOs, the new Fed Chair, and private credit risks. He argues that markets are resilient and adaptive, typically recovering faster than expected from regional conflicts. He sees the second half of 2026 as potentially strong due to the 'Midterm Miracle' pattern of Congressional gridlock.
Summary
Michael Hanson, a member of Fisher Investments' Investment Policy Committee, answers a series of investor questions in a monthly mailbag format covering geopolitics, sector investing, monetary policy, and market history.
On US-Iran developments, Hanson argues that the Strait of Hormuz is becoming less critical as alternative energy supply routes emerge, mirroring how markets adapted during Ukraine-Russia and Covid disruptions. He contends that markets have already priced in worst-case scenarios and are moving toward new all-time highs, as evidenced by oil futures curves that show elevated near-term prices but declining expectations further out. He also frames 2026 within the typical pattern of a presidential second year — choppy in the first half, but historically strong in the second half due to midterm elections and likely Congressional gridlock, which he calls the 'Midterm Miracle.'
On defense stocks, Hanson is cautious, noting that expectations are already sky-high and that defense contracts, execution details, and conflict resolution timelines are difficult to predict. He warns that if conflicts resolve quickly, defense stocks could fall, and that the sector is currently highly speculative.
On energy prices and inflation, Hanson argues that high oil prices alone do not cause inflation — money supply growth does. He notes that oil's intensity in the modern economy has declined significantly over the past 40-50 years, making price spikes less disruptive than in previous decades. Consumer spending data from April confirmed only modest behavioral adjustments.
On IPOs, Hanson expresses concern about rising equity supply, particularly in Technology. He notes that street expectations for tech have now surpassed industry expectations — a reversal from recent years when the industry outperformed — making IPO valuations potentially overpriced. He also emphasizes that the actual market impact depends on how much of each company is floated publicly.
On Kevin Warsh becoming Fed Chair, Hanson downplays the significance, arguing that Fed Chairs have far less macroeconomic impact than people believe. He notes that Warsh is experienced, collegial, and politically centrist, but that the role will likely change how he governs regardless of his prior stated views.
On private credit risks, Hanson identifies a 'liquidity mismatch' problem — software company loans with 3-to-5-year lifespans on books with longer-duration private credit instruments — potentially exacerbated by AI disruption of SaaS businesses. He sees some individual impairments and sequestered capital, but no systemic contagion mechanism that would infect broader public markets.
Finally, on lessons from market history, Hanson emphasizes using the past for precedent and understanding human behavioral patterns, not direct extrapolation. He sees strong parallels between 2026 and historical regional-conflict-plus-midterm-year setups, and concludes that stock prices will likely be higher 12 months from now, driven by resilience exceeding lowered expectations.
Key Insights
- Hanson argues that the Strait of Hormuz is becoming less important in real time as alternative pipelines and supply sources like Venezuela and the US emerge, mirroring how markets adapted to prior disruptions like Ukraine-Russia and Covid — suggesting investors should look away from the flashpoint, not at it.
- Hanson contends that oil futures curves show elevated near-term prices but declining expectations over time, which he interprets as the market already signaling that the current energy disruption is temporary and that the economy is adapting.
- Hanson identifies a reversal in tech expectations: for the past 3-4 years, industry growth forecasts exceeded street analyst estimates — a setup that led to outperformance — but in 2026, street expectations have jumped above industry estimates, making tech IPOs likely overpriced.
- Hanson describes a 'classic liquidity mismatch' in private credit, where loans made to software companies — which typically last only 3 to 5 years — are booked on longer-duration private credit instruments, and AI disruption of SaaS businesses risks turning high-powered returns into 'dead money' that investors may not recover for years.
- Hanson argues that the second half of a presidential second year, particularly the fourth quarter, is historically one of the strongest periods for stock markets due to midterm elections almost always producing Congressional gridlock — a pattern he calls the 'Midterm Miracle' — and sees it as the dominant forward-looking catalyst for the rest of 2026.
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