What has changed?
The hosts discuss a shaky ceasefire between the US and Iran, analyzing how markets bounced on peace hopes despite ongoing tensions and closed shipping lanes. They argue that markets won't return to pre-war conditions, with oil prices permanently higher and expected interest rate cuts now off the table.
Summary
The episode covers the market reaction to Trump's declared ceasefire with Iran, which initially caused oil prices to drop and stock prices to jump, though the peace appears fragile with shipping lanes still closed and drones continuing to attack targets. The hosts examine how different markets are responding, noting that the S&P 500 is within 1-2% of pre-war levels and 10-year Treasury yields have returned to February levels, but 2-year yields remain elevated, indicating fewer expected Fed rate cuts. They discuss how US markets are showing more resilience than European markets due to America's energy export position and less inflation-sensitive economy, leading investors to rotate money back to US assets from Europe and emerging markets. The conversation touches on how analyst earnings estimates for US companies continue rising despite the war, making stocks appear cheaper, with Microsoft cited as an example now trading at 20 times earnings. A significant portion covers Iran's reported plan to collect Bitcoin tolls for Strait of Hormuz passage, which the hosts see as an acceleration of de-dollarization trends, though they note the practical challenges of converting large amounts of Bitcoin back to usable currency. The episode concludes with their 'Long Short' segment, where one host goes long bank earnings expecting strong trading desk performance during volatile times, while the other criticizes the trend of 'friction maxing' - deliberately adding inconveniences to daily life.
About this episode
<p>As President Donald Trump’s confusing messages on the Iran war seem to coalesce around a retreat, markets have risen. But are we really going back to anything like what we had before February 28? Today on the show, Katie Martin and Rob Armstrong try to understand the meaningful changes that will persist. Also, they go long bank earnings and short "maxing" anything. </p><br /><p>For a free 30-day trial to the Unhedged newsletter go to: <a href="https://www.ft.com/unhedgedoffer" rel="noopener noreferrer" target="_blank">https://www.ft.com/unhedgedoffer</a>.</p><br /><p>You can email Robert Armstrong and Katie Martin at <a href="mailto:[email protected]" rel="noopener noreferrer" target="_blank">[email protected]</a>.</p><br /><p><a href="https://www.ft.com/content/c09d8dd5-b324-40ba-87fd-c0f5aeb43893" rel="noopener noreferrer" target="_blank"><strong>Read a transcript of this episode on FT.com</strong></a></p><p><br /></p><hr /><p style="color: grey; font-size: 0.75em;"> Hosted on Acast. See <a href="https://acast.com/privacy" rel="noopener noreferrer" style="color: grey;" target="_blank">acast.com/privacy</a> for more information.</p>
Key Insights
- The hosts argue that markets cannot return to pre-war conditions from February 27th, as oil has permanently reset about $20 higher and fundamental economic relationships have changed
- Armstrong contends that the war injected realism into rate cut expectations, noting it was unrealistic to expect Fed cuts when US inflation was already a full percentage point above the 2% target
- Martin observes that investors are rotating money from Europe back to US markets because America is a net energy exporter and has a less inflation-sensitive economy than Europe's energy-intensive industrial base
- The hosts claim that US analyst earnings estimates continue rising despite the war, with analysts essentially deciding the conflict 'is not their business' and focusing only on company fundamentals
- Armstrong suggests Iran's Bitcoin toll plan represents 'speed running' de-dollarization, skipping intermediate steps like the petro-yuan and jumping directly to cryptocurrency for international transactions
Topics
Transcript
Markets move fast. Get the insights you need in 10 minutes with Barclays Brief, a podcast from Barclays Investment Bank. Each week, our experts analyze market themes, helping you anticipate what's next. Listen to Barclays Brief wherever you get your podcasts. Pushkin. Trump, for it is he, declared he had reached a ceasefire with Iran. Pete Hegseth, Defense Secretary, said Iran had in fact begged for one. Rob, I can hear you slurping your coffee. Sorry. Oil prices dropped, stock prices jumped, happiness and joy across the world for like a day. Today on the show, the ceasefire seems to be shaky, but markets are trying to cling onto it. Why? What is that about? This is Unhedged. The market…
Full transcript available for MurmurCast members
Sign Up to AccessMore from Unhedged
The Fed’s silent treatment
The resurgence of US-Iran conflict has pushed oil prices higher and created market uncertainty about whether the Federal Reserve under new Chair Kevin Warsh will raise interest rates. Warsh's philosophy of minimal communication and reliance on market discipline rather than forward guidance is creating confusion about the Fed's inflation response strategy.
Software stocks got crushed. Did they have it coming?
Software stocks have been crushed (down 21% year-over-year) due to fears that AI will eliminate the need for enterprise software, but hosts Rob Armstrong and Katie Martin argue this market reaction is likely overdone given the massive switching costs and regulatory complexity of mission-critical business systems. Meanwhile, concentration risk in AI-related stocks poses broader systemic concerns, with AI companies now accounting for half the S&P 500 despite fundamental uncertainties about how the technology translates to profits.
Halftime for the markets
The Unhedged podcast discusses market volatility in the first half of 2026, marked by a significant rotation away from the Magnificent Seven tech stocks toward small caps and other sectors. Despite geopolitical threats and internal market turbulence, the hosts debate whether softer-than-expected June jobs numbers could allow the Federal Reserve to avoid raising interest rates, potentially supporting continued asset price appreciation in the second half of the year.
New UK prime minister, same bond market
UK markets are reacting calmly to incoming Prime Minister Andy Burnham, despite his left-wing reputation, because inflation threats are easing and he has presented himself as fiscally disciplined. The gilt market's real sensitivity depends on Bank of England rate policy and whether Burnham can deliver growth to escape the UK's structural economic constraints.
Why are investors so jumpy?
Hosts Rob Armstrong and Dara McFadden discuss the causes of recent equity market volatility, centered on a surprisingly strong May jobs report that paradoxically spooked markets by raising fears of higher interest rates. They also examine concerns about narrow market breadth, weakening real wages, oil supply risks from the Strait of Hormuz, and the upcoming SpaceX IPO and its potential impact on market liquidity.