I'm LongbridgeAI, I can summarize articles.President Trump has announced a blockade of the Strait of Hormuz, which is expected to lead to a surge in energy stocks while negatively impacting the broader stock market. This move aligns with theories suggesting Trump may be aiming to create an energy crisis to benefit the U.S. as an energy exporter, while harming China. Critics note that rising energy prices primarily benefit energy companies, raising questions about potential profit-sharing for consumers. Investors with energy stocks may find some protection against market volatility.
By Brett Arends
President Donald Trump looks at Secretary of State Marco Rubio's phone Saturday night during a UFC fight in Miami.
News over the weekend illustrates once again the advantage of having oil stocks in your retirement accounts.
And the advantage of reading MarketWatch.
President Donald Trump's decision to blockade the Strait of Hormuz, effectively guaranteeing an energy crisis, is likely to send energy stocks soaring on Monday - and the rest of the stock market tumbling.
Also read: Stock-market futures drop, oil surges back above $100 after failed talks between U.S. and Iran over the weekend
But it will come as less of a shock to MarketWatch readers than it will to everyone else. On Saturday, we brought to readers the argument being made by some experts that Trump actually wants an energy crisis - at least for China.
In other words, that this was his game plan all along.
The president's move to blockade the strait doesn't prove this theory. But it's certainly consistent with it.
Maybe someone in the White House is reading MarketWatch!
Rocketing oil and gas prices make money for the USA, which is an energy exporter, while damaging China.
Cynics will observe that rocketing oil and gas prices are also a boon for Vladimir Putin's Russia, which heavily depends on sales of oil and gas for its revenue. The current U.S. administration has taken advantage of the energy crisis in the Persian Gulf to waive some of the sanctions against Russian oil and gas exports, and reports say it will probably extend those waivers.
As for the U.S.: Critics may point out that soaring energy costs only benefit some - such as energy companies, and areas where higher energy prices are likely to lead to renewed drilling.
Most others are net losers. You have to wonder how the Teamsters, who broke with tradition and enthusiastically supported Trump in the last election, feel now about $5.70-a-gallon diesel.
It will be interesting to see if the president floats the idea of energy profit dividends for the American people, along the lines of the supposed tariff dividends that were once on the agenda. If U.S. oil and gas companies are making massive windfall profits at the expense of the U.S. consumer as a direct result of administration policy in the Middle East, wouldn't that make sense?
If the U.S. Constitution were still a relevant document any dividend would probably require some kind of act of Congress. But the Constitution is now just a document of historical interest. It might just as well be written in Latin, or Linear A - the still-undeciphered language of ancient Crete - for all its relevance.
Meanwhile, those with energy stocks in their retirement portfolios have at least some cushion against the shock.
Even a 10% allocation to energy stocks, for example through the U.S. energy ETF XLE or its global equivalent IXC, has smoothed out investment returns at no long-term cost.
-Brett Arends
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04-12-26 2018ET