The Iran War Heats Up (Again)
PCCM Weekly Market Update (July 12th, 2026)
Hello Investors, welcome to another free weekly update.
Last week, we talked about the pivot away from Semiconductors and towards Software, counter to the mainstream narrative that AI will decmiate Software companies. As well, we briefly discussed tensions flaring between Iran and the US, which was breaking news at the time.
This week, we will cover what is driving stocks (hint: it’s not just Semis nor Software) as well as an update on the latest in Iran and how this ties to our thesis on oil and broader markets.
Let’s dive in!
-Brian
By the Numbers
Equities
Stocks had a pretty good week this week with most of the gains skewed towards tech. The tech-heavy Nasdaq Composite rose 1.74% while the S&P 500 rose 1.23% and the Dow Jones Industrial Average actually fell half a percent.
The big theme in the market this week was neither Semiconductors nor Software, but a third, better option: Computer Hardware.
These companies sit in between Semiconductor companies and Software companies, turning computer parts into finished products. Names like Dell and HP come to mind. Computer Hardware found itself in the limelight this week after President Donald Trump endorsed Dell from the White House during the stock market’s opening bell on July 6th.
Dell’s stock rose 7% after Trump told America to “go out and buy a Dell computer,” kicking off a weeklong rally in the entire Computer Hardware space with many stocks seeing double digit gains in their share price.
While Semiconductor companies like NVDA 0.00%↑ and AVGO 0.00%↑ certainly rallied, the broader sector was muted throughout the week with the popular ETF SOXX 0.00%↑ up a more modest 2.65%.
As investors swooned over tech stocks, a storm in the Middle East began brewing in the background, the effects of which showed through via interest rates.
Fixed Income
Interest rates continued higher last week, with the 10-Year Treasury Yield up to 4.56% compared to 4.49% a week ago, continuing a sharp upward trend after a brief dip in June.
This recent move upwards comes on the heels of renewed conflict between the US and Iran over the Strait of Hormuz.
From July 7th through July 11th, the US conducted three rounds of strikes against Iran as retaliation for the country’s strikes on ships transiting the Strait of Hormuz. By Friday, Donald Trump declared in frustration that the ceasefire between Iran and the US is over, though it was unclear whether that was his personal interpretation or our country’s official stance.
Nevertheless, talks between the two countries are set to continue, though it is unclear to what end. As of this writing, there are reports that the US continues to strike the opposing country up and down its coast, and Iran’s Islamic Revolutionary Guard Corps (IRGC) has declared the Strait is closed to transit.
What does this have to do with interest rates?
For starters, conflict in the Middle East, and especially over the Strait of Hormuz, drives up oil prices which in turn drives inflation. When inflation rises, the Federal Reserve responds by raising interest rates. So when investors anticipate that inflation will be higher, they tend to price in higher interest rates as well.
Fed Chair Kevin Warsh has also made clear in recent weeks that the Fed will respond strongly to elevated levels of inflation, leaving little room for a “wait and see approach” favored by his predecessor Jerome Powell.
It is no wonder rates are elevated.
We are of the view that rates will be higher for longer, and monetary policy will be restrictive, meaning that the Fed would rather raise interest rates than lower them. We continue to believe being overweight fixed income and underweight duration is prudent in the current environment.
Commodities
Bitcoin continued to tread water this week, trading up to just over $64,000 per coin. The cryptocurrency is currently down 45% this year as investors look to other investible assets.
We have written at length about Strategy (Ticker: MSTR 0.00%↑) and their dividend-paying preferred shares traded under STRC 0.00%↑, including our view that the company is destined for a “death spiral” as soon as Q3 of this year, which would be sometime in the next three months.
Whether or not it plays out this quarter depends heavily on whether Bitcoin can sustain or even gain in price from these levels. Nevertheless, we see no other way out for MSTR and may consider entering a short position on any near-term strength in the stock.
Note: Pine Creek Capital does not currently hold a position in MSTR, STRC, or BTC, and our long-term intrinsic value estimate of Bitcoin is $0.
Crude Oil had a strong week, rising to nearly $76/barrel before moderating to just over $71. This volatility is directly tied to volatility in the war between the US and Iran. As tensions excalate, so too does the price of oil, and vice versa.
Last week, we discussed why we believe $65-$70 price range is a key level with potential upside to $100+ per barrel in the event that the war resumes in earnest. While we were looking at opening a position for PCCM’s fund, we feel that at this time, this asset does not meet our risk-return target.
Nevertheless, our view has not changed. We continue to believe $65-$70 is an effective floor for oil, and that there is much more risk to the upside than to the downside, with the potential for a quick spike to $100. PCCM currently does not hold a position.
Gold and Copper increased 0.37% and 1.62%, respectively, while Silver fell 0.51%. The precious metals remain volatile as they are coming off of historic highs and multiple competing pressures drive prices. Our view remains unchanged: we believe Gold and Silver remain too volatile to hold exposure to, while Copper remains attractive as a critical metal for supply chains. PCCM does not hold a position in any of the three metals.
Earnings & Data
This week will be a big week for earnings, with a heavy tilt towards Banking stocks as well as a few Technology Leaders:
That’s all we had for you this week, let us know your thoughts by leaving a comment! You can also like this article via Substack to show your support.