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The war cannot be ringed fenced, no matter what we do. I don't want to sugarcoat it. We can't avoid this issue. People are trying to dismiss the impact of the war, or they're trying to see through it, see past it till it's over. They're saying that we've got 20 days of excess oil thanks to release of global strategic petroleum reserves, including hours as of this evening.
And by the time they run out, well, the war will be over, so you better start buying stocks right now because you got to be in before President Trump wraps everything up. Now, maybe that's why we aren't down more despite oil being up 5% today and 50% for the year with the Dow sinking only 289 points, S&P declining 0.08%, Nasdaq actually inching up 0.08%.
We are still very close to our highs. Why can't we cordon off Iran and just embrace good ideas? Simple. Without a real exit strategy, we could blow through 20 days worth of oil from our strategic reserves and still be stuck in an asymmetrical standoff with the Iranians. I have to admit to being a little thrown by Secretary of War Mattis yesterday when he talked about sending over, quote, "the most fighters, the most bombers, the most strikes," end quote.
At the risk of embarking on a bit of a history lesson, Mattis's language mimicked President Nixon's rhetoric when at the end of 1972, he unleashed what was known as Operation Linebacker II, the 11 days of bombing that brought the recalcitrant North Vietnamese to the peace table out of pure fear that we would never stop.
That operation was the largest strike of heavy bombers since World War II. We sent 200 B-52s, 700 sorties. We knocked out military installations, but also rail yards, power plants, communication centers, and both the capital, Hanoi, and Hai Phong. There was a 24-hour break for Christmas. The North Vietnamese feared that the bombing would never end.
I think at that point they thought that we were either too ruthless or too crazy to reckon with. So, they agreed to start the peace process. Amazing. Yes, they only prevailed because the American public got tired of our involvement years later. But purely in terms of forcing a negotiation, Nixon's strategy worked.
There was just no follow-through on the American side. After yesterday's big talk, I thought Hexeth was starting a similar campaign. But I didn't even see or hear about the damage from the most fighters, the most bombers, the most strikes. Did you? So, I sense that the Vietnam gambit, which is designed, by the way, by Henry Kissinger, is not in play despite the very similar rhetoric.
In some ways, I'm surprised that Trump isn't doing something similar to Kissinger's bombing campaign. Our government has a goal here, and that goal isn't really unconditional surrender. We've already degraded the vast majority of Iran's military apparatus. The goal now is to gain a ceasefire so that we can reopen the Strait of Hormuz and prevent an oil shock from devastating the global economy.
At this point, that is a real win. President Trump could claim that he decimated Iran in order to get it. And by the way, we would all go back to normal assuming he can convince the Iranians to get on board. But short of the brutal Kissinger game plan, I don't see an offense. At least this time, there are no boots on the ground.
Then again, that's why the ball is not in our court. Either the Iranians come to us through an intermediary, perhaps Qatar, and offer terms that let Trump declare victory, or they hang on and the price of oil stays sky-high. The first sends the stock market soaring. The second, it should be your biggest concern.
And it's a powerful negative that will certainly send all our stocks lower. Don't get me wrong. Look, I desperately want to take the president at his word and bet that the war's winding down. Maybe he just declares the war's over tomorrow by talking about how there's a possible back-channel agreement in the works where the Iranians agree not to mess with the straight, and we'll go operation operator uh linebacker three if they violate a potential truce.
But we're not the only ones who have a say in this. Iran has to let the ships pass through the strait, or else it's meaningless. Can they really be trusted? That's why I don't think the ring fence works, even though the stock market would rip to an all-time high in a day if Trump made such a declaration.
Without some reason believe that the war is ending, there's nothing that can stop oil from eventually soaring to $120 and beyond. That will bust any ring fence. All bullish bets would be off. The selling in the S&P 500 futures would be so outrageous that even the stocks of Exxon and Chevron would get crushed, simply because they're part of the index.
I will do this though. I'll tell you what themes can be bought if oil stabilizes and Iran shows signs of willingness to stop lobbing projectiles at neighbors. Traffic. First you have to like the data center theme. The war's obscured it right now, but we just got the best verification of this theme's strength when Oracle, the data center champ, last night reported fantastic set of numbers that indicated its build-out is going better than anyone thought.
It doesn't need to aggressively raise more money. It doesn't need to fire Cerner, its medical records division. I was stunned by how smoothly everything's going for them. More on this remarkable Oracle quarter later in the show cuz it's just too important to ignore. Oracle's fabulous fortune dovetails with next week's GTC event, the annual AI festival by Nvidia, which we're going to.
It It It continues to invest in companies that can help put up more data centers. Today Nvidia announced a $2 billion invest in Nebulous. That's an AI cloud company. That said, this theme can't really shine until the war is over, but it can be bought on the way down. Second theme, the memory shortage.
I keep thinking this has got to end, but we got confirmation this week from HP Enterprise that it's going to go on for much longer than people think. However, I can't recommend these memory stocks, even the ones I really like. But Western Digital, they're just too much, too high. Western Digital, Seagate, SanDisk, and Micron can all be bought uh on a big move down because of oil.
If we see the $120 oil, those are the four stocks you got to reach for. Or you can go with the semiconductor capital equipment makers, a little less risky, Lam Research and KLA. The Or you can do Applied Materials, too. Applied Materials. The memory shortage will ultimately drive lots of businesses their way.
Again though, none of these will be real winners until the war ends and the climb runs its course. Third theme is the trade downers. There are plenty of people who are being hurt by the new bout of oil shock induced inflation. We got a tame CPI number this morning, but it's it's from before we attacked Iran, so it doesn't count at all.
What does count is that the financially challenged families are moving down to Burlington, Ross Stores, and TJX with its Home Goods, Marshall, and TJX Maxx divisions. The more TJ Maxx, I'm sorry. The more adventurous can buy Dollar Tree or Dollar General, the latter of which reports tomorrow. By the way, I like Ulta Beauty, too, the cosmetics retailer that reports tomorrow night.
I don't like putting a gun to my head, though, but you should buy some of these here and then buy some more after you see the quarter. Finally, you have my blessing right now to buy Five Below, the eccentric eclectic specialty retailer that seems to unite all economic groups, but it caters to the families who don't want to pay an arm and a leg for some fun.
Oh, I wish I had more themes, but these are the only ones I know that can be bought after a run in oil that devastates the stock market. Even as oil is certainly less of a factor in our economy than it used to be, it's not enough to minimize it. Here's the bottom line. If Trump channels Kissinger and does something to push Iran towards negotiations, well, we could embrace these three themes sooner than you think.
Of course, the price to be paid to get there may be way too much. I know I thought it was in 1972, but the gambit worked. ]
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