U.S. Prepares for War with Iran
Weekly Investment Update | By Brian Schreiner
STOCKS, COMMODITIES, GOLD & BITCOIN UP; BONDS DOWN - Last week, the major U.S. stock indexes recovered most of the ground they lost the previous week, extending the market’s meandering start to 2026. The Nasdaq finished 1.5% higher—snapping a string of five consecutive weekly declines—while the S&P 500 gained 1.1% and the Dow added 0.3%.
ATTACK ON IRAN IS "AN ABSOLUTE CERTAINTY” - In an interview with Jesse Day of Commodity Culture, former U.S. Army Colonel Douglas Macgregor said that a U.S. military strike on Iran is certain. The Trump Administration says it must prevent Iran from developing weapons of mass distruction. Macgregor described the conflict as "Israel’s war," claiming that the Trump administration has essentially subordinated U.S. defense policy to Israeli command and control following a recent meeting between President Trump and Prime Minister Netanyahu to finalize the operation. Macgregor notes a massive methodical assembly of U.S. air and naval power, including F-35s, F-22s, and multiple carrier strike groups. Initial strikes could comeat any moment. Despite the U.S. capability to "reduce most of Iran to rubble," Macgregor warns that such destruction will likely fail to achieve its political objectives and highlights the risk of "unanticipated consequences.” Moscow and Beijing have already moved beyond mere support and may feel compelled to intervene directly if the Iranian state is threatened with total destruction. He says 70% of the American public remains opposed or indifferent, which could lead to a breakdown of civil order within the U.S. (Commodity Culture on YouTube)
GDP SLOWED TO 1.4% IN Q4; INFLATION STICKY AT 3% - The U.S. economy expanded at a slower pace than expected at the end of 2025. GDP grew at an annualized rate of 1.4% in the fourth quarter, far below expectations of 2.5% and the third quarter’s 4.4% rate. Federal spending declined due to a government shutdown in Q4. The annual inflation rate rose in December to 3%, the fastest pace in nearly a year. (CNBC)
US INDUSTRIAL PRODUCTION SURGED IN JANUARY - Despite slumping sentiment surveys, hard data continues to suggest the US economy is ticking along nicely with Industrial Production surging 0.7% month-over-month in January, well up from 0.2% in December—and the third straight monthly increase, lifting growth to 2.3% year-over-year—the best annual growth since Sept 2022. (Bloomberg)
TRUMP TARIFFS RULED ILLEGAL, FUTURE UNCLEAR - In a 6-3 decision, The Supreme Court ruled that the Trump administration exceeded its legal authority when it imposed tariffs on most of the nation’s largest trading partners. After the ruling last week, acting under different law (Section 122 of the Trade Act of 1974), President Trump announced global tariffs would increase from 10% to 15% immediately. These tariffs can take effect for a maximum of 150 days, barring congressional approval for an extension. The new tariffs essentially reset the legal clock, turning Trump’s tariff policy fights into legal "Whack-a-Mole,” including likely extended legal battles over billions in potential refunds to companies that paid the now illegal reciprocal tariffs. (CNBC)
PRIVATE CREDIT FIRM SELLS ASSETS & LIMITS LIQUIDITY - The risks in the private credit market, which I have been warning about for months, are real. Blue Owl Capital (NYSE: OWL), a powerhouse in the world of private investments, with over $300 billion in assets under management, announced that it was selling $1.4 billion in private loans from three of its funds at 99.7 cents on the dollar and, at the same time, restricted investors from taking redemptions from one of its funds. The firm’s CEO, Craig Packer, said that the price of the loans near par means the big risk of wildly mismarked loans within the portfolios was off the table, but a press release from Saba Capital Management and Cox Capital Partners—firms specializing in secondary market transactions in private assets—announced an offer submitted to Blue Owl to buy shares “at a 20%-35% discount to the most recent estimated net asset value and dividend reinvestment price." The offer suggests that Blue Owl may have managed to somehow rig the price of the loans or cherry picked for the best assets in the portfolio for sale, leaving more illiquid and mismarked loans on the books. The value of this debt will eventually be realized, one way or another. In the meantime, since the loans are not marked-to-market, investors can only make educated guesses as to what they’re actually worth. (CNBC)
BERKSHIRE HATHAWAY DUMPED AMAZON SHARES - Amazon (AMZN) has declined by 9% year-to-date and is down 3% over the past year. In contrast, the S&P 500 (SPY) is up 16.3% and Alphabet (GOOG) is up 74% over the past year. In the last quarter of 2025, Warren Buffett’s Berkshire Hathaway sold 75% of the company’s Amazon shares. The company has not said why it slashed its Amazon stake, but it likely stems from a shrinking competitive moat and the high-stakes AI arms race. While AWS was once the undisputed cloud leader, Microsoft and Google are rapidly closing the gap, threatening Amazon’s most profitable segment. This is particularly concerning because Amazon’s massive e-commerce business remains a low-margin drag, generating 82% of revenue but less than half of the company's total profit. Ultimately, the requirement to spend hundreds of billions on AI infrastructure with no guaranteed winner creates a level of capital risk that simply doesn't fit Buffett’s traditional value-investing playbook. (Yahoo! Finance)
JAPAN MAY CHANGE ACCOUNTING RULES TO SAVE BOND MARKET - Last month the Japanese bond market suffered cardiac arrest after the government proposed tax cuts and the central bank raised interest rates. Long-term Japanese government bonds plummeted, with some losing more than 50% of their face value. The crash caused nearly $1 trillion in losses across the bank and insurance sector. To prevent a systemic collapse, Japanese regulators have introduced a controversial fix: allow institutions to change how they categorize these bonds so they no longer have to officially record those losses on their balance sheets. Under the proposal, bonds held by life insurers to match long-term policies would be treated as held to maturity if certain conditions are met, and would not be subject to impairment accounting. Japan is essentially buying time and hoping to avoid a financial meltdown, though "kicking the can" may lead to a more severe crisis down the road. (Japan Times)
CHINA’S DEEPSEEK 2.0 MOMENT ALMOST HERE - After my post last week: China’s Threat to U.S. AI Dominance, more analysts are expressing concerns about the U.S. AI sector. Stephan Kemper, Chief Investment Strategist at BNP Paribas Wealth Management, said that the "perception of AI seems to have changed completely from the angel of mercy to the kiss of death," due to growing concerns over whether hyperscalers can monetize their massive, ever-growing investments and when ROI will turn positive. One year after “DeepSeek Moment 1.0,” it looks like we’re headed for “DeepSeek Moment 2.0.” Last week Morgan Stanley’s Tom Wigg wrote that “it’s already here with a bevy of popular launches ahead of the Chinese New Year" although he notes that the collective impact on US stocks seems fairly manageable this time, Chinese AI firms like Zhipu, ByteDance, DeepSeek and BABA, are catching up to US rivals quickly. At some point China's top AI models will be virtually indistinguishable from their U.S. peers and U.S. markets will be forced to reprice their assumptions. It won’t be pretty. (ZeroHedge Premium)
TRUMP ORDERS RELEASE OF ALL FILES RELATED TO UFOs & ALIENS - President Trump has just issued a statement via his social media feed that he will order the release of any and all files related to UFOs and aliens: “Based on the tremendous interest shown, I will be directing the Secretary of War, and other relevant Departments and Agencies, to begin the process of identifying and releasing Government files related to alien and extraterrestrial life, unidentified aerial phenomena (UAP), and unidentified flying objects (UFOs), and any and all other information connected to these highly complex, but extremely interesting and important, matters. GOD BLESS AMERICA!” (Donald Trump on Truth Social)
JEOPARDY QUESTION ON ETFs STUMPS CONTESTANTS - Despite successfully answering question about the title of an old Radiohead album and famous museums like El Greco in Spain, none of the contestants on a recent episode of Jeopardy could identify what the letter “E” stood for in ETF…a good sign for investment advisors’ job security. (Jeopardy)
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