As I've maintained since the beginning of the year, even throughout the Middle East conflict, we remain (for the moment) constructive on global equities.
Although that sentiment is on a pretty short leash... I've also maintained that we see not-small headwinds developing (per the 3rd paragraph in your morning wrap below) as we meander into the end of this year and on into next.
As for this morning, markets, save for bonds, are catching a bit of a bid... In terms of equities, this morning's bump embodies the selective character we've been noting of late.
Per Bloomberg's IMAP screen below, just roughly 40% of S&P 500 constituents are in the green thus far, while 4 sectors are either flat or in the red:
Bigger picture: As you've noticed, the Middle East conflict has heated back up markedly of late; interesting that risk assets, while taking somewhat of a hit last week (which may have been more about AI concerns than it was about Iran worries), have overall been holding up, I'd say remarkably well.
We can speculate whether, as is often the case, that's due to the sense that, as scary as they often seem, markets conclude that modern-day geopolitical frictions (even when they're kinetic) don't end up moving the needle as one might expect -- or is it that, in this instance, as long as the price of oil stays, say, sub-100ish, current general conditions are sufficiently positive to absorb the cost? Or is it the legitimate belief/understanding that the US administration will aggressively calm the waters if/when markets begin to crack -- thus leaving investors sanguine, and unwilling to capitulate to scary headlines?
As for this morning, per the following, said headlines are all over the place:
"Overnight reports had mediators pushing a 10-day ceasefire arrangement." (per the macro update below)
Morning Note: Pricing the Tankers, Not the Headlines
July 21, 2026
Adding to the above, perhaps equities are simply deferring to the one input that has reliably cut through headline noise all year — physical oil flows. This morning offers a near-perfect case study. Overnight reports had mediators pushing a 10-day ceasefire arrangement; then, as we type, the President announced that while Iran wants to meet, the US has "no interest" until Iran is "ready." Crude — up roughly 2% on the session, with the international benchmark pressing back above $91 — clearly wasn't waiting on the diplomacy anyway. The oil market isn't trading the headlines; it's pricing the tankers. Commercial shipping continues to steer clear of the Strait of Hormuz, and Yemen's Houthis have now threatened a naval blockade of Saudi Arabia — a potential disruption from an entirely separate direction. A ceasefire announcement and a functioning shipping lane are two very different things — we've made that distinction repeatedly this year, and mornings like this one are why.
What's notable, then, is that equities are managing this morning's advance with crude up 2% and with the White House publicly declining talks — which speaks directly to that absorption question we posed above. For now, the market appears to be treating sub-100 oil as a cost it can carry. We'd simply note that at least one prominent energy research shop argues the Hormuz slowdown alone could push crude to triple digits — which would put that threshold, and the market's equanimity, to a genuine test.
Which brings us to bonds, this morning's odd man out — and, frankly, the asset class telling the most coherent story. Inflation concerns are resurfacing as the conflict keeps oil prices elevated, and worries that higher energy costs will feed through to consumer prices have Treasuries on their back foot. This is the transmission channel we've been emphasizing all year: energy → inflation expectations → yields. It's also why we'd frame the recent (benign) inflation data with some care — those readings largely reflect conditions that predate the current flare-up. As one Wall Street rates desk put it, the July and August inflation reports will be needed before investors can conclude that energy-driven price pressures have peaked. In other words, the rear-view mirror is clean; the windshield, less so.
Beyond geopolitics, this week brings a heavy earnings slate that will test a tech/AI trade that's been under real pressure of late — a useful reminder that last week's equity wobble had more than one author. And next week delivers the more consequential cluster: the Fed and the Bank of Japan both meet, against a backdrop where energy costs are complicating what had been a friendly disinflation narrative.
Bottom line: we remain constructive, per the above, and today's tape — commodity and international exposure doing the heavy lifting while a few of the heavyweight domestic sectors rest — is consistent with how we've positioned for exactly this environment. But the leash stays short. We'll keep watching the water (literally, in the case of Hormuz and now the Red Sea), the July inflation prints, and the central bank calendar — and we'll let the physical data, not the diplomatic press releases, tell us when conditions have genuinely turned.
The information provided herein is for informational purposes only and does not constitute investment advice or a recommendation to buy or sell any security. Past performance is no guarantee of future results. All investments involve risk, including the potential loss of principal. Please consult your advisor regarding your individual circumstances.
*This commentary was prepared by Marty Mazorra, Chief Investment Officer, with AI-assisted research and drafting, and reviewed by your advisor prior to publication.
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