Update on Iran

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At its core, innovation thrives where risk is rewarded. The United States created a system where entrepreneurs can fail, start over, and try again—without permanent financial or social stigma. That’s a powerful advantage. From Silicon Valley tech boom to today’s AI revolution, the willingness to take risks has consistently produced world-changing companies and massive wealth creation.

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The legal framework matters just as much. Strong property rights, enforceable contracts, and intellectual property protections give innovators confidence that their ideas—and the profits from them—are secure. Without that foundation, innovation stalls. With it, innovation compounds.

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From a financial planning perspective, this matters more than most people realize. Innovation drives productivity, and productivity drives economic growth. That growth ultimately flows into corporate earnings, market returns, and long-term portfolio performance. The dominance of U.S. equities—particularly in the S&P 500—is not just about size; it’s about the concentration of innovative companies that continue to redefine industries.

For investors, the takeaway is simple: innovation is not just a headline—it’s a long-term asset class. Allocating capital to economies and companies that prioritize innovation can lead to outsized returns over time. While diversification remains critical, underweighting U.S. innovation has historically meant missing out on some of the greatest wealth-building opportunities in modern history.

In the end, America’s edge comes down to a system that rewards ideas, supports risk, and scales success. For those building financial plans, aligning with that system—rather than betting against it—has been, and likely will continue to be, a winning strategy.

Don’t leave your financial future up to chance. Let’s build a plan that gives you confidence today and peace of mind for tomorrow. Click here to schedule a meeting — I’m here to help you take the next step toward financial freedom.

Colin Symons, CIO Lloyd Financial Group

Obviously, Iran war news is in the headlines and is the thing everyone is focused on. Of course, that’s important, but I always try to focus on exactly what is moving the market and what are the big levers moving forward?

In this case, I can’t help but notice that oil is nowhere close to the $120 level it briefly touched early in the war. Obviously, oil is a concern, and as you get closer to the location of the conflict, prices are notably higher. That said, the market still seems to believe, at least currently, that the threat of massively higher oil prices is fairly contained.

And of course, you can think that’s wrong, and maybe it is. Maybe oil should be back at $120 or higher, and maybe it will be in the near future. All that I can say is that historically, the market is remarkably wise about finding fair value, so you’d better have some good edge for why it’s wrong. I’d also further admit that what the market focuses on is way more short-term than it used to be. We care about what happens, today and tomorrow, and next month is a more distant memory, right or wrong.

So, if oil isn’t causing the market stress, what is? What’s really blown out and hurt the market is bond yield spreads soaring. This has the effect of hurting all markets, as pricing in inflation hurts pricing for everything. At this point, we’ve gone from pricing in rate cuts to rate hikes, as seen in the chart, below.

I admit, from a global perspective, that’s a tough call. Many central banks had already completed their rate cut cycle and were awaiting further information. It’s relatively reasonable for discussions of rate hikes to come up, internationally, and a few hikes have already happened.

For better or worse, the US has been fairly slow to cut rates versus the world, though, and rates remain relatively high. In addition, a new Fed head is supposed to be coming in this year, and the expectation is they will be more ready to cut rates. Anything can happen, but calling for rate hikes in the US strikes me as an overreaction.

Even if you believe the current Fed is more friendly to rate hikes, they also move slowly and await data. The Fed doesn’t anticipate, they react and often look late. For instance, the start of the last rate hike cycle didn’t even start until inflation was already at 6.5%.

In contrast, the market has an increasing tendency to worry about hours and days more than weeks and months. That’s something I try to take advantage of, as my holding period is longer than most market participants. To me, the market pricing in a 6% chance of a rate hike next month as basically absurd.

Reflexivity and momentum are features of the market, but often it pushes things too far. The Fed will have no real evidence to hike rates in April, but the market is pricing it in. We’re already seeing the market went too far, as the pricing of a cut by the end of the year has already gone from 29% to 5%.

Why does this matter? Buying some form of short-term fixed income seems like an easy buy, here. 2Y Treasuries were hit hard and should bounce. This curve surge is also what is really hurting markets, at least aside from the usual greed and fear cycle we get. No promises, but as we slow down the pricing of these fears, that will be a support for markets. No promises, of course, but the problems we see at the end of this week may not look as bad as the problems the market sees, right now.

Trump told Iran they have 48 hours to open the Strait of Hormuz, which ends at 7PM EST tonight.

The Russell 2000 fell over -10% from the top, officially hitting correction territory.

Oil initially spiked over $100 when futures open but quickly settled back.

Similarly, SPX kneejerked lower but quickly recovered.

Markets are well-hedged for downside, with the put-call index showing high put skew. The market can still decline, but upside could be powerful. Risks look binary on the week ahead.

Construction spending, today, is a pretty minor report. There are also two Fed speakers.

What does it all mean? Markets nervous but hanging in there, so far.

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