Iran bombs, stocks buy. The gap can't last.

Transcript

Tom Iran bombs, stocks buy. But here's the thing, buddy — oil's up three percent last session, the S&P is two percent from a record, and the VIX is sitting at sixteen. That gap? It can't last.

Marie Welcome to Investment Flash, New York Edition, for Thursday, July ninth. I'm Marie, joined by Tom and Gerald. Alright, let's get into it.

Gerald Morning. So, Tom, your oil buy from yesterday — up another three percent. That's two for two.

Tom Yeah, yeah! The US Oil Fund, USO, jumped three percent last session. And energy stocks — Exxon up one point eight, Chevron up one point one. We were all over that Strait of Hormuz call.

Marie Hold on — I'm going to push back here. The VIX is at sixteen — that's not wartime pricing. The S&P is almost at a record. You're telling me the energy sector is pricing in a windfall while the broad market is treating this as a contained skirmish? That divergence can't go on.

Gerald Exactly.

Tom That's the whole story.

Gerald The VIX at sixteen is a joke. Meanwhile, oil's still twenty-seven percent below its fifty-two-week high. The market's not pricing a prolonged disruption.

Tom Which is why I'm still buying the energy trade. Exxon at thirteen times forward earnings, Chevron at fourteen — these are cheap even if oil pulls back.

Marie Cheap? Maybe, but if this is a temporary spike, energy stocks will get crushed when de-escalation comes. Trump says negotiations are underway — he could flip on a tweet.

Gerald Yeah look, the bear case is real. If a ceasefire drops, crude tumbles, and that long energy trade unwinds fast. Watch for a White House signal.

Tom Yeah, but until then, the path of least resistance is up. And here's the thing — we haven't even seen safe-haven flows. Gold was down zero point eight percent. If risk-off returns, you want gold and oil.

Marie That's the trade. Own energy, hedge with gold and volatility. Not just long oil, but actually hedge. The market's too complacent.

Gerald Right, so buying volatility while it's low — that's like buying insurance before the house catches fire. Revolutionary stuff.

Tom ha — fair enough. But seriously, the VIX at sixteen is... it's absurd given the strikes.

Marie Alright, let's move to a non-consensus call. FT says China tech stocks could be a hedge against US tech. KWEB is down twenty-six percent year to date, while the US tech ETF is up twenty-six. Diversification argument.

Tom I saw that. And KWEB jumped three and a half percent last session. But, Marie, I mean, China? With all the regulatory risk? I don't know.

Gerald Tom, that's the point. It's a hedge precisely because it's uncorrelated. You're not buying China for growth; you're buying it as insurance if US tech's thirty-three times trailing earnings bubble bursts.

Tom Okay sure, but did you see that Luxshare I P O in Hong Kong? Fell on arrival. China's not out of the woods.

Marie Wait — wait a second. That I P O is a separate story. The hedge thesis is about portfolio construction, not a bet on China reopening. The FT's argument is that US and China tech have different risk drivers — regulatory, geopolitical. It's a diversification play.

Gerald And with KWEB down thirty-nine percent from its high, the valuation buffer is there. I'm not saying go all-in, but a small allocation makes sense.

Tom Alright, fair enough. A small hedge. I'll keep it on the radar.

Marie Meanwhile, in rare earths, the FT reports China's export ban is squeezing foreign rivals. The Rare Earths ETF, REMX, fell one point seven percent last session, but it's down twenty-nine from the high. Gerald, your thoughts?

Gerald This is a supply squeeze story. If non-China manufacturers can't get rare earths, those miners outside China — REMX — will benefit. The pullback might be an entry.

Tom I like it. And the Japan ETF, EWJ, faces headwinds — only five percent below its high, vulnerable if input costs spike. Sell Japan, buy rare earths.

Marie But hold on — the ban could also accelerate substitution. Remember, just today we saw the silver-to-copper switch in solar. What if rare earths get substituted too?

Gerald Fair point, but substitution takes years. In the short term, the ban bites. I'm watching it.

Marie Speaking of substitution, Bloomberg reports China's biggest solar firm is swapping silver for copper. Silver's down nearly twenty percent year to date, near lows. That's a headwind.

Tom Yeah, the silver ETF fell three percent last session. But copper's near its high. So, hold silver, maybe hold copper. Not a trade to chase.

Gerald And the uranium trade — Australia selling to India. The uranium ETF is down nine point six percent year to date. But Cameco at fifty times forward earnings? That's a uranium miner, not a tech stock.

Tom ha — fair point. Stick to the ETF.

Marie Or just watch from the sidelines. India deal is long-term.

Tom But the demand driver is real — if India starts building reactors, that's a new floor under uranium. Speculative, but I'll take a nibble.

Marie Quick hits — Bank of Korea signaling a rate hike. South Korea ETF up seventy-nine percent year to date, the leveraged version up a hundred sixty-five percent. A rate shock could reverse those hard.

Gerald And this is the missing macro angle — if oil stays elevated, EM central banks tighten. The BOK is just the first. That'll hit credit spreads before equities.

Tom So watch South Korea, but also be careful on EM broadly.

Marie Data center crunch — Blackstone's QTS seeking a two billion dollar loan. Digital Realty at sixty-one times forward earnings, Equinix at fifty-three. That's pricing in perfection, and there's a transformer shortage delaying builds.

Gerald Right, so the AI growth story is great, but if you can't plug in the servers, those multiples don't hold. I'd rather own utilities — XLU, cheap at zero point seven times book, up five percent year to date with no fanfare.

Tom Yeah but data centers are still growing. The demand is there, even if there's a bottleneck.

Marie Tom — Tom, that's the point. The bottleneck means revenue gets delayed, earnings miss, and high-multiple stocks get hammered. Fade the data center REITs.

Tom Alright, alright. I'll hold my Digital Realty, but I'm not adding.

Gerald Boutique banks — Evercore down four point six percent last session, Lazard down two point three. The FT says they're spending over sixty percent of revenue on star banker pay.

Marie Sell the boutiques.

Gerald Absolutely.

Tom No doubt.

Marie ha — and we called Evercore yesterday. Moelis down seven and a half percent in one session. It's structural.

Tom Yeah, Gerald, your short on Evercore is printing.

Gerald It's not often I get to say 'I told you so,' but... well, I told you so.

Marie ha — don't gloat. But it's a structural issue.

Tom Then there's Burry — long DraftKings and Flutter. DraftKings down twenty-four percent year to date, Flutter down forty-nine. He's betting regulation chokes prediction markets and benefits sportsbooks.

Gerald Regulatory bets are dangerous. If the policy doesn't go their way, these stocks are dead money. But Burry's track record...

Marie Hold on — I'm going to push back. Regulation is slow. The thesis might play out over years. In the meantime, these stocks are bleeding.

Tom Yeah but if it works, you're in near the bottom. DraftKings forty-four percent below its high. Contrarian upside.

Gerald I'll hold off. Not my style.

Marie mergers and acquisitions rejection — Hugo Boss tells shareholders to reject Frasers' bid. The deal's dead. Frasers down four percent in a week, short on disappointment.

Gerald That's my beat. European mergers and acquisitions failing — the premium vanishes. Hugo Boss will probably drift.

Tom Alright, quick agree moment on the big picture?

Marie The gap can't last.

Gerald Exactly.

Tom Convergence trade. Now.

Marie And watch for de-escalation — that's the counter-argument. A White House signal flips it all.

Gerald Also remember, none of this is investment advice. Just our views.

Tom If you're just finding us, hit follow on Spotify — or check investmentflash.com for the full digest with charts and sources.

Marie We're back tomorrow at seven-thirty a.m. London time. See you then.