Morning Market Brief

The Monday market brief opened with a striking reminder that U.S. equity indexes have surged to fresh all‑time highs, extending a 13‑session rally—the longest streak since 1992. Lawrence Fuller linked this optimism not only to a tentative cease‑fire announcement but also to President Trump’s confident rhetoric about Iran negotiations, which quickly unraveled when Tehran shut the Strait of Hormuz and attacked cargo vessels. The brief flash of optimism was tempered by a modest dip in the major indices, underscoring how volatile geopolitical headlines can instantly reshape market sentiment.

A deeper look revealed that the closure of the Strait of Hormuz is now feeding a broader supply‑chain shock. The last container ship to exit the chokepoint six weeks ago is only now reaching global destinations, tightening supplies of crude, jet fuel, helium for semiconductors, and fertilizer. These constraints are expected to lift oil and energy prices, driving inflation back above the 3.5% threshold and outpacing the 3.5% average hourly earnings growth. With real wages poised to turn negative, consumers will feel the pinch as tax refunds—up roughly 11% or about $350 per household—fail to offset rising gasoline and other essential costs.

Given the looming inflationary pressure and the pending earnings season, Fuller advises investors to shift toward a more defensive posture. He recommends increasing cash reserves, trimming exposure to high‑growth mid‑cap value stocks, and preparing for a potential 5% market correction over the next few months. While maintaining a long‑term bullish outlook, the strategy emphasizes protecting gains now and positioning for opportunistic buying when the market stabilizes after the anticipated pullback.