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Intro
Welcome back to your weekly update. What started as a hopeful week for global diplomacy rapidly devolved into a high-stakes military game of chicken by the weekend. While Wall Street experienced a historic, record-shattering structural rotation out of tech and into defensive sectors, all eyes are pinned back on the Middle East, where a fragile U.S.-Iran ceasefire is hanging by a thread after a sudden exchange of military strikes. Per our typical arrangement, strikes and anything negative relating to the middle east was delayed until after markets closed on Friday.
What Happened
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The Ceasefire Unravels: After a brief drop in energy prices following the U.S.-Iran framework agreement, hostilities erupted again. On June 25, Iranian forces attacked a cargo ship in the Strait of Hormuz. The U.S. military responded on June 26 with retaliatory airstrikes on Iranian missile and drone facilities. By June 27, Iran launched drone attacks against U.S. positions in Bahrain, triggering another round of U.S. strikes. President Trump took to Truth Social to warn that Iran could face total military destruction if they continue to violate the deal, while Vice President JD Vance defended the administration's leverage on television, calling the 60-day roadmap negotiations "messy."
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The Great Tech Rotation: On Wall Street, investors aggressively pulled capital out of mega-cap tech titans—sending the Nasdaq Composite down 4.6% across a grueling five-day losing streak. This cash didn't flee the market; it rotated into long-neglected sectors like healthcare and real estate. The frenzy peaked on Friday afternoon during the semi-annual Russell index rebalancing, which triggered a staggering $334 billion in trades in just 1.63 seconds as funds scrambled to adjust to the new market leadership.
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Below are the weekly charts for WTI Crude and $QQQ. Crude experienced its worst weekly drop since early April, though we expect a potential reversal given this weekend’s headlines. Meanwhile, $QQQ suffered its worst weekly loss since March 2025!
Retrieved from: https://www.tradingview.com/ on June 28, 2026
Retrieved from: https://www.tradingview.com/ on June 28, 2026
Why It Matters
The Return of the Energy Risk Premium
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The short-lived market relief that dragged Brent and WTI crude back down to pre-war levels (~$70–$73 a barrel) is facing a reality check. If the Strait of Hormuz remains a combat zone and the 60-day peace roadmap collapses, global supply chains will choke up again, bringing back the very inflationary and stagflationary pressures central banks have been desperately trying to cool. Remember, geopolitically we are seeing inflationary pressures, yet domestically we are in a mid-term election year. Such pressures, especially unnecessary pressures, are sure to have negative consequences on the President’s polling numbers, as well as the GOP more broadly.
A Stretched Sector Seeks Balance
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Mega-cap tech names (like Apple navigating high component costs and Alphabet facing key AI talent departures) were overdue for a breather. Investors used the legendary gains over the last few months to actively pocket AI profits and diversify into cheaper, value-driven areas of the market, signaling that the broader equity rally might finally be widening out. Tech stocks saw six weeks of straight, and extremely impressive, returns from March to May, with the weekly RSI hitting over 77. Last week $QQQ closed -4.60%, marking its second week out of the last four with a loss of 4.50% or more. Last week also marked the worst weekly loss for $QQQ since March, 2025. Time will tell whether this is a normal pullback or a sign of increased skepticism in the valuation for some of these big names.
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