US, Iran Strike Defiant Tones | Balance of Power: Early Edition 3/12/2026
Speakers
Summary
- Crude oil is surging toward $100 a barrel as the Strait of Hormuz remains effectively closed due to the ongoing US/Israel conflict with Iran.
- The US government has spent over $11 billion in the first six days of the war, prompting expectations of a massive $50 billion to $100 billion supplemental funding request.
- The Trump administration is tapping 172 million barrels from the Strategic Petroleum Reserve and waiving the Jones Act to combat rising domestic energy prices.
- Despite geopolitical turmoil, Microsoft and Meta committed $50 billion each to data center leases, underscoring relentless AI infrastructure spending.
- Dollar General suffered a massive 5% drop after cutting forecasts, signaling severe pressure on low-income consumers exacerbated by rising energy costs.
Trade Ideas
West Texas Intermediate crude up now by about 8.5 percent. Brent at 99.24 a barrel. Exxon Mobil up 1.7 percent. Chevron up 3.3 percent. The effective closure of the Strait of Hormuz creates a severe supply bottleneck that cannot be quickly resolved by SPR releases alone. This geopolitical premium will sustain high oil prices, directly expanding profit margins and free cash flow for major US domestic oil producers. Go LONG on major US energy producers and broad energy sector ETFs as they are the primary beneficiaries of the ongoing Middle East supply shock. A sudden diplomatic resolution, regime change in Iran, or a severe global recession that destroys oil demand.
US officials briefed lawmakers that the US spent more than $11 billion in the first six days of the war and it doesn't include the buildup of US military assets in the weeks leading up to it. The rapid burn rate of tactical military assets and the shift toward kamikaze drone warfare require immediate replenishment of US stockpiles. This guarantees a massive influx of federal spending via a $50B-$100B supplemental budget, directly flowing into the order books of defense prime contractors. Go LONG on defense and aerospace contractors as they are guaranteed beneficiaries of the accelerated military procurement cycle. Political gridlock in Congress delaying the supplemental funding bill, or a rapid de-escalation of the conflict.
Microsoft and Meta have committed nearly $50 billion each in additional data center leases in their most recent quarters underscoring an escalating bet the tech industry is making on AI. Despite rising 10-year yields and geopolitical fears, mega-cap tech companies are completely insulated from the macro slowdown regarding their capital expenditures. Their massive, committed spending provides a highly visible growth floor for their own AI ecosystems. Go LONG on mega-cap tech leaders aggressively building out AI infrastructure, as their spending is secular and decoupled from the current oil shock. Regulatory crackdowns on AI development or a broader market liquidity event that drags down all high-beta tech stocks.
We did see some results out of Dollar General, the stock down more than 5 percent. This is after we are seeing the company heading for its worst day since 2024... annual and long-term forecast that both disappointed. Rising energy costs act as a highly regressive tax on the lower-income consumer. Even though discount retailers usually benefit from consumers trading down, the absolute destruction of discretionary income at the bottom tier of the economy is causing these retailers to miss earnings and lower guidance. AVOID discount retail stocks, as their core demographic is disproportionately damaged by the re-inflationary spiral caused by $100 oil. Oil prices collapse, providing immediate relief at the gas pump and sparking a rapid recovery in low-income consumer spending.
Up Next
This Bloomberg Markets video, published March 12, 2026, features Charlie Pellett, Tyler Kendall, Norah Mulinda discussing COP, XLE, XOM, CVX, ITA, LMT, RTX, MSFT, META, DG. 4 trade ideas extracted by AI with direction and confidence scoring.
Speakers: Charlie Pellett, Tyler Kendall, Norah Mulinda · Tickers: COP, XLE, XOM, CVX, ITA, LMT, RTX, MSFT, META, DG