At some point the impacts of the closure of the Strait of Hormuz are going to bite. Probably a few weeks left to resolve this. But given the intransigence of both sides regarding the nuclear materials, we could be staring down the barrel of a significant global event.
The ramifications from halting the flow of oil and other products will start showing up on supermarket shelves with potential shortages and higher prices, and work their way through other areas of our daily lives. While we don't want to sound alarmist, it is becoming more and more difficult to see how we resolve the potential impacts. Most energy experts are saying this is the worst energy crisis in history, and the impacts, regardless of when the war finishes, are going to be felt for a very long time.
This is structural change, not cyclical. It will change trade, economies, and financial systems. It will impact all sectors because energy is the base of our industrial society. The energy transition is now all about energy security, where economic matters will be given priority over environmental matters. Government policies will dominate free markets.
On the shorter term, markets will be more volatile, and we can assume that energy prices, if left simply to market forces, will go higher over the long term as countries seek to hoard commodities given the fragility and uncertainty of the global trading environment.
This is why the role of government is going to be dominant for at least the next decade. It will be much more about demand management than supply expansion. It is why all investments must be looked at with fresh eyes. The old days are over.
Oil. Carlyle's Jeff Currie warned this week that the oil market is "at tank bottoms" in Asia, and Europe is not far behind. That is not a forecast. That is a statement about physical inventories already drawn down to levels where any further disruption begins to bite immediately. We have been writing about this for weeks. We are now there.
Read on CNBC →
Art Berman. The well-known energy analyst has been pointing to the same dynamics in his recent commentary. Tight inventories. Strait risk. No spare capacity in OPEC. A market priced for continuity in conditions that no longer support continuity.
When physical commodity markets hit tank bottoms, the lag between trigger event and economic damage compresses to zero. Companies with concentrated exposure to oil-driven cost structures (airlines, agriculture, transport, manufacturing) repricing fast is now the base case, not the tail risk.
There is considerable anger regarding the government's tax changes. There is also considerable misinformation. The Albanese-Chalmers Budget 2026-27 included reform to negative gearing and capital gains tax, and the loudest commentary has come from property investors. What almost nobody is talking about is that the new changes apply to stock investments as well as property. Stock investors have barely whimpered, which reveals how heavily Australians are tilted toward property and how lightly they think about their equity holdings.
Be careful of "experts" highlighting examples to support or criticise their personal beliefs. Both sides are cherry-picking low-probability scenarios while trying to appear independent. Read the actual government document.
The changes apply to stock investments too. Over the long term, equities are just as important to wealth building as property, if not more. Anyone running multi-decade investment plans should be reading the actual rules, not the social media reaction.
For investors thinking about their property holdings, we recommend the Chris Bates and Pete Wargent podcast for a thoughtful, no-axe-to-grind perspective.
The ASX continues to grind sideways. The All Ordinaries are holding around 8,900 with most of the activity sector-specific rather than broad. Healthcare still digesting CSL. Energy holding up on the oil bid. Banks soft. Resources mixed.
The bigger picture is the US. The S&P 500 Shiller CAPE has now climbed to ~41.6, the second-highest reading in over 140 years of US market data. The only time it has been higher was the December 1999 peak of 44.2, right before the index lost roughly half its value over the following two and a half years.
Another agreement between countries seeking to break China's stranglehold on rare earth production. On May 26, the US, Japan, Australia, and India formally launched the Quad Critical Minerals Initiative Framework.
The United States, Japan, Australia, and India ("Quad partners") intend to support the development of secure critical minerals supply chains, which are essential for advanced technologies, economic growth, and the resilience of industrial bases. Through the Initiative, Quad partners intend to use economic policy tools and coordinated investment to accelerate the development of diversified and fair critical mineral markets.
While China holds a near monopoly on the production of rare earths, it also maintains a big lead in many other areas of metals production. We can expect these additional areas to be a future focus as the US and allies seek to move supply chains away from China. This is the multi-decade theme. The Quad framework is one more step in the same direction as the Northern Minerals divestment order and the Australia-US-Japan critical minerals partnership announced earlier this year.
We have been highlighting for some time that the world has changed. But we see many investors appear to be still thinking in the previous paradigm and refuse to change. It starts with accepting the rules have changed and generating an investment strategy that is able to grow wealth over the long term given the change in circumstances.
From 1964 to 1982, the Dow Jones went nowhere. Eighteen years of zero index return. And yet, look at what was possible during exactly that period for an investor who understood the regime they were in:
During the foundational period of his career, Buffett took control of Berkshire Hathaway, wound down his private investment partnerships, and began deploying insurance "float" to acquire compounding businesses like See's Candies. All while the Dow went nowhere.
Just because governments change tax rates, interest rates, and inflation does not mean you are going to finish poorer. The conditions of the 1960s and 1970s were arguably worse than today:
The lesson: regime change is not the enemy of wealth building. Failure to adapt is. The investors who win the next decade will be those who accept the rules have changed and rebuild their framework accordingly. We will be detailing exactly how in Premium over the coming weeks.
This Monday's live members call covers exactly what is in this week's edition. The Strait of Hormuz energy crisis, the new budget changes (which apply to stocks too), the CAPE at 41.6, the Quad Critical Minerals Initiative, and how to adapt your portfolio for the new regime. Bring your questions. If you cannot make it live, the recording will be available afterwards.
Available on Spotify, Apple, and YouTube. Leave a review to help us grow.
Listen on Spotify →
We will continue to update the sector scorecards, momentum indicators, and macro notes as the theme unfolds. If conditions shift, you will see it reflected in the Wells calls, Signals and Noise Premium updates, and portfolio insights.
At Total Money Management, we work alongside our clients for 12 months to help build and structure their share portfolio using disciplined, proven frameworks. Throughout the year you receive one-on-one support, guidance through market conditions, and the tools needed to manage your portfolio with confidence and clarity as you grow your wealth.
Learn About Our Courses →