The current geopolitical environment remains uncertain following the outbreak of the war between the U.S. and Iran in late February 2026. Recent negotiations in mid-April between the two countries concluded without achieving a permanent ceasefire, suggesting that uncertainty will likely persist for the short to medium term.

It’s Mostly About the Strait

Prior to the conflict, approximately 130 vessels transited the Strait of Hormuz daily. Recently, traffic has declined sharply to approximately 15 vessels per day. The U.S. naval blockade of the Strait, announced earlier this week, will effectively halt all maritime transit through this critical waterway. The Strait is extremely important, as around 20% of the world oil supply, as well as other key commodities including fertilizers, travel through it. Importantly, over the past four decades the United States has significantly reduced its energy dependency on other countries. Additionally, oil has become less important to the U.S. economy. The amount of oil necessary to produce one unit of U.S. GDP (Gross Domestic Product) has fallen by about 70% since 1980. Also, the U.S. is now a major crude oil exporter. The reduced traffic through the Strait will directly benefit the U.S. in the form of higher export revenues as countries look for alternatives to Middle Eastern oil. While nobody knows where the price of oil will be in the next few months, we strongly believe that staying the course with your long-term investment plan is the best approach. The table below illustrates that following U.S. military conflicts, stock market returns have been strong in the subsequent months and years.

Exponential Growth of AI

In the first quarter of 2026 we witnessed accelerated development across multiple AI domains. This momentum is expected to intensify further. Beyond conversational AI platforms (ChatGPT, Gemini, Claude), Physical AI applications - including autonomous vehicles, humanoid robots, and drones - are experiencing significant advancement. Notably, the drone sector, which has become important in the U.S./Iran war, has entered a period of hypergrowth. The market size has expanded from approximately $20 billion in 2020 to over $40 billion in 2025. Business models of companies in every industry will need to adapt and incorporate AI or risk getting left behind. In our business, we are actively integrating AI into our research and analytical processes and continue to assess how AI will impact the competitive position of each of the companies we invest in.

Pearlstein Wealth Team

We are excited to share that Carmen is expecting her second child later this year! Beyond Carmen, all our team members are doing well and keeping busy. Many have young families and are keeping busy at dance studios and hockey rinks.

Wishing everyone a great spring!