U.S. foreign policy used to be described as "gunboat diplomacy," wherein the U.S. Navy would sit off the coastline of the opposition and shell them into agreement on any demands the U.S. might be seeking. It wasn't new. Other countries such as France and Great Britain, used the tactic to great success in the 19th century. The U.S. experience was made by presidents Teddy Roosevelt and Woodrow Wilson.
Nowadays, the U.S. doesn't just use the threat of violence to get what it wants, it actually uses violence - as demonstrated over the weekend by the bombing of Iranian nuclear facilities - to achieve its ends. While some tomahawk missile strikes were made from submarines in the Persian Gulf, the bulk of the action was carried out by B-2 Stealth bombers with bunker-busters and other ordnance.
The strike on Iran and Monday's "cease fire" initiated by President Trump to end the conflict between Israel and Iran are being hailed as a big success in the military and political community. Wall Street loves it as well, sending stocks higher Monday with futures soaring Tuesday morning.
With the ability to strike virtually anywhere on the planet, Trump's "B-2 Diplomacy" resonates with Roosevelt's, "walk softly and carry a big stick," foreign policy. As far as the effectiveness of the policy is concerned, that remains to be seen. While the initial objective of crippling Iran's nuclear ambitions seems to have been achieved, the "cease fire" is nothing other than a pause in the Middle East miasma that's been going on for centuries.
Iran isn't going away, nor is Israel. For now, there's a break in the military action. There's no peace agreement, so the conflict will alsmost certainly go hot at some time in the future. Until then, Wall Street can focus on the President's "Big Beautiful Bill" and reaching for all-time highs on the various U.S. indices.
It won't take much to push stocks up, up, and away. Here are the all-tim high targets with their respective dates:
Dow: 45,014.04, 12/4/2024
NASDAQ: 20,173.89, 12/16/2024
S&P 500: 6,114.15, 2/19.2025
Given the MAGA theme and economic data suggesting a muddled business environment, a couple percentage points on the majors shouldn't be a problem. After all, stocks remain in one of the biggest bubbles in the history of the world.
The Shiller PE, closed yesterday at 36.72, short of the recent high from October, 2021, 38.58.
Meanwhile, just because Israel and Iran stopped shelling each other and the "threat" of a nuclear-armed Iran has been softened, gold is no longer as valuable as some might have hoped, at $3,329.00, down $66 this morning. Silver is back below $36.
Money Daily was dead on in the Weekend Wrap this past Sunday, saying:
Iran has threatened to close the Strait of Hormuz, which is laughable, since all Iranian oil flows through there with China as the destination 90% of the time. Because Iran presumably would not cut off its own revenue stream, oil remains only slightly elevated instead of stupidly high. Fact of the matter is that there's still a global glut and will be until either Russia, Saudi Arabia, or the U.S. is shut off, shut down, or the regular flow somehow curtailed, which is, naturally, very, very unlikely to occur.
Oil got crushed Monday, with WTI crude dropping more than $10, from a high of $75.29 to a low of $64.83.
Buy stocks. Be happy.
At the Close, Monday, June 23, 2025:
Dow: 42,581.78, +374.96 (+0.89%)
NASDAQ: 19,630.97, +183.56 (+0.94%)
S&P 500: 6,025.17, +57.33 (+0.96%)
NYSE Composite: 20,008.18, +139.82 (+0.70%)
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