← HerMoney with Jean Chatzky
HerMoney with Jean Chatzky
War, Markets, and Your Money: What the Middle East Crisis Means for Your Finances
00:24:25
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- [00:02]
Karen Feinerman
Hi everyone, I'm Karen Feinerman and I'm delighted to share that we have a new season for you of my podcast, How She Does It. You may have seen me on cnbc. I'm a long term Wall street investor and a mom of four and I love taking time to sit down with dynamic women leaders and touch on all things women, money and power. This season we have open Table CEO Debbie Sue, Today show hosts Jenna Bush Hager, author Gretchen Rubin, model and Beauty CEO Pritika Swarup and more. You can subscribe to How She does it on Apple Podcasts and learn more@hermoney.com we'll see you soon.
- [00:39]
Ben Wheeler
In times of conflict, oil is usually a good investment. I would also say things that have a locked in consumer base, pharmaceuticals, food, stuff like that. Things come and go, but people still need the prescription drugs, they still need food and also of oil and gas. Americans drive a lot.
- [01:00]
Jean Chatzky
Hey everyone, thank you so much for joining us for a very special episode of Her Money. I'm Jean Chatky and today we are bringing you an important and very timely conversation about what's unfolding overseas and what it could mean for your money. As of this recording and it's Monday, June 23rd, tensions are rising fast in the Middle East. Over the weekend, the US Officially became involved in the escalating conflict there. Late Saturday night, Eastern time, US Military forces launched strikes on three nuclear sites in Iran, strikes that President Trump said totally obliterated those facilities. And we now know that the situation might be a little different than that. We're unclear on the actual state of Iran's ongoing nuclear capabilities. And look, it's a lot. I know these headlines are hard to read, they're harder to process. I Woke up at 4am Sunday morning, read the headlines and could not get back to sleep. But we also know that global conflict always sends ripples through the economy. It can affect our investments, our retirement accounts, gas prices, the, the broader stock market. And in times like these, I think one of the best things that we can do is just try to stay informed so that we can make smart, calm financial decisions from a place of knowledge, maybe even confidence rather than fear. So what are the smart money moves right now? Should we be keeping more cash in a high yield savings account? Should we be looking at international stocks or defense stocks? And if the crisis continues to escalate, what then? So as we decided that we were going to take a look at this conflict and what it means for your money, we reached out to our friend Kyla Scanlon. You've heard her on the show before and said, who is the best person you know to talk about this? She said. Ben Wheeler. Ben is an international relations analyst and co host of the Unclassified podcast. He is here to walk us through the latest developments, how the markets are reacting and what we can do to protect ourselves at our money in the face of uncertainty. Ben, thank you so much for being here.
- [03:34]
Ben Wheeler
Thank you for having me.
- [03:36]
Jean Chatzky
So, before we get into the money, for listeners who may not be following closely, although I got to say, I don't even know how that's possible, can you break down what's happening in the Middle east right now? What are the key players doing? Where exactly does the US Sit in all of this?
- [03:56]
Ben Wheeler
Yeah, so Iran has this nuclear program and how much they are enriching up to depends on who you ask. But last week and a half ago, day 61 arrived, Trump gave them 60 days to negotiate to reach a nuclear agreement. And day 61 arrived and Israel launched a surprise attack on Iran, striking their nuclear facilities and their ballistic missiles facilities. As time went on, President Trump then made the decision that the United States needed to strike Iran's nuclear facilities. And that is what happened on Saturday. The reports are that Nantes, which is the big one they hit, is completely gone. But as for the other two, they are still not gone, just severely damaged. And now we await Iranian response. And this could look like a lot of things. They could hit US Bases in Qatar as we speak. It does appear like that is going to happen quite soon. You could also shut down the Strait of Hormuz. They could mine it and they could also kind of shut it down using drones. Right. They don't necessarily need to put physical mines in. By using drones. They can pick and choose who goes and where they're going. And so that is kind of the risk that we face. Iran has a lot of proxies in Yemen with the Houthis who announced that the ceasefire with the Americans is over and they will resume hitting ships in the Red Sea. They also have Hezbollah and Lebanon that can inflict a lot of damage on Israel. And then in Iraq and Syria, you have various militias. That can create a difficult time for the US Embassy in Baghdad when people.
- [05:32]
Jean Chatzky
Talk about the Strait of Hormuz. What is the significance of that?
- [05:36]
Ben Wheeler
So the straight of Hormuz is a narrow corridor in the Persian Gulf where almost all oil that comes out of the Middle east is transited through via tankers and then sent out to the rest of the world. And so Iran, they have most of the coastline along there, and so gives them a strategic position to close it down. They've done it in the past, they haven't done it since, and there are some efforts to try to get them to not do that, but they seem to perhaps justifiably pretty upset of what happened. And so they are going to have to figure that out.
- [06:13]
Jean Chatzky
When we look at the markets today, it seems to me, at least, and it's 12:07pm the markets are up a little bit overall, they seem to be shrugging at this. How does this compare to how markets typically react during times of war and during geopolitical tensions? Are you at all surprised at what you're seeing?
- [06:41]
Ben Wheeler
So, typically what we see is they sell off and then they come back and they rally back. Right. Because there's uncertainty and then there's certainty and they know what it looks like and it comes back. The market rallying today, I wouldn't say it surprises me because as we saw off the tariffs, the market seems to just keep going despite everything. It just seems like nothing can get the market to go down right now.
- [07:04]
Jean Chatzky
It does. And yet I continue to read stories and headlines and analyses that, you know, that point out considerable types of weakness that have absolutely nothing to do with the conflict in the Middle east, but just the pressure that consumers are under and the fact that we are an economy that is so reliant on consumerists continuing to spend. And I would have thought that we would have run out of steam a while ago.
- [07:35]
Ben Wheeler
Yeah, it seems whatever's going on on Wall street, they seem to be in their own world. So, yeah, today they're rallying. We saw the price of oil spike, but it's come back down after Trump's tweet today saying that he's watching and he demands that people stop selling. So that's what's happening now. I mean, we'll see with an Iranian response if the market tanks at all. But right now, they seem totally unfazed.
- [07:58]
Jean Chatzky
And with an Iranian response, how? I mean, you've watched these conflicts play out before. How soon do you think this will come? And when you look at the different pieces of our economy, including oil that could be impacted, what do you think it's going to look like?
- [08:21]
Ben Wheeler
So I think an Iranian response may be imminent either in the coming hours or the next 24 to 48 hours. And I think they're going to hit the air base in Qatar and they could be hitting air bases in the uae. Now, what happens from there depends on how these strikes go in 20, 20 after the US drone strike, Soleimani, the Iranian general, Iran fired, I believe, 2124 ballistic missiles at the US base in Iraq. There were no US deaths. We do know that US troops at the base had traumatic brain trauma, and the US To a certain extent, covered it up to just kind of make the crisis go away. And so, so long as there are no US Deaths on these bases, I imagine the same will happen and everyone will say, well, they have the right to retaliate. No deaths, move on. Does not seem to me that Trump is interested in a prolonged conflict. I could be wrong. He did tweet about regime change yesterday, but he says a lot of things. So I think that is what will happen there. In terms of the impact, I think a quick one for one, both ways. I don't know if there is an impact if they shut down the Strait of Hormuz. To be transparent, if I were Iran right now, I would be shutting it down. Right. I don't see how. This isn't an act of war. I would be going all out. But they seem to at least be telegraphing their attacks right now. So maybe they will not shut down. But if they do shut down, the price of oil will be astronomical, and that will perhaps trickle down to the.
- [09:50]
Jean Chatzky
Rest of the economy, and it'll be astronomical. Even though oil comes from other places these days, like Venezuela.
- [09:59]
Ben Wheeler
Yes. I mean, you're essentially severely limiting at least 20% of the world's supply. Right. So, you know, that will have an effect.
- [10:09]
Jean Chatzky
I recently saw a piece by Ben Carlson at Rithol's Wealth Management where he pointed out that during two of the worst wars in modern history, the US stock market actually gained 115%, which kind of feels counterintuitive. Can you explain why in times of war, that could potentially happen?
- [10:36]
Ben Wheeler
So the government spends more during war. It spends a lot more. It spends more on military contractors, on infrastructure, on energy. And so with this, you know, you get higher yields on the bonds, but also money trickles down through the economy. And so that's typically why it seems to surge. During World War II, of course, you had this mass mobilization. During Vietnam, you also had that with the way the US Fights war now with the standing army, there's really no impact to Americans at home, minus, like, supply shocks or anything. So, you know, there is not mass mobilization, there's not draft like you would see in Ukraine or Russia. It is pretty isolated. So it almost works as a stimulus to the economy in a way.
- [11:17]
Jean Chatzky
When we factor interest rates into the picture, I mean, The President has been calling for interest rate cuts for as long as he's been in office. It looks like we'll get a couple later this year, maybe the first in September. But do you think that this could accelerate the timetable?
- [11:36]
Ben Wheeler
I think so. However, I think so much depends on what ends up happening with Iran here that if we do see an oil shock, right, where they do something straight to Hormuz or they do something to damage the oil exporting, that will certainly drive inflation here in the United States, even though, you know, Bowman has communicated that they will cut in July. If we start seeing inflation go up because of oil prices, then I think, I don't know if we get the cut. What do you think?
- [12:07]
Jean Chatzky
No, possibly not. I mean, I think if we, if we start to see those inflation figures start to rise, that's been the factor that they're reacting to more than anything else. Right. So at that point, they're probably going to say, no, we can't. There are too many pieces of information in the soup. Which is why I tend to come back to, these things are so out of my control. They're so out of the control of every individual consumer and investor that at uncontrollable times like these, we all need to take a step back and look at our own personal economies and ask the question, all right, if these uncontrollable factors shift, how do I shore up my own personal finances? How do I make sure that I'm okay, that my family is okay, that I can continue to pay my mortgage, put food on the table, take care of my kids, do the things that I have to do in order to get through this period of unrest until things settle down again. When I want to talk about that, and I want to do it in just a sec. We're going to take a very quick break. One of the smartest apps to have on your phone in 2025, it's upside. It's an app that gives users the power to earn real money that you can spend however you want on everyday purchases. Whether filling up the tank, shopping for groceries, or grabbing dinner, Upside makes it simple. Just open the app, claim a nearby offer, pay as usual with a card, and snap a photo of the receipt. The cash back adds up fast. Users are earning hundreds of dollars a year. And here is the best part. It stacks with your credit card reward. So it's kind of like double dipping on savings, which of course, we love. Download the free Upside app and use the promo code Hermoney to get an extra 25 cents back for every gallon on your first tank of G, that's an extra 25 cents for every gallon on your first tank of gas. Using promo code Hermoney the human body is pretty amazing. It can heal, rebuild and adapt in ways that even science is still catching up to. Trust me on this, I ran the marathon last year. But let's get real. As we age those natural processes, they slowed down. That's where Ancient Nutrition's multi collagen advanced lean comes in. This is not just any collagen supplement. It's powered by clinically studied ingredients that are shown to support fat loss, build lean muscle, reduce joint discomfort and bonus, improve the look and growth of skin, hair and nails. And right now in Ancient Nutrition is offering 25% off your first order when you go to ancientnutrition.comhermoney that's ancientnutrition.comhermoney for 25% off your first order. Ancientnutrition.comhermoney we are back with Ben Wheeler, international relations analyst. So when you think about your own money in times like this, Ben, and things are, I mean, they felt out of control for a while, long before this conflict, at least from where I sit. How do you manage your own personal economy?
- [15:51]
Ben Wheeler
For the most part, I use a high yield savings account. I also use a portfolio where I don't have to pick and choose, you know. But in terms of what other people should do in times of conflict, oil is usually a good investment. I would also say things that have a locked in consumer base, pharmaceuticals, food, stuff like that. Things come and go, but people still need the prescription drugs, they still need food. You know, there's not much you can do about that. And also with oil and gas, Americans drive a lot. We, you know, we have one walkable city in America, New York. And then, you know, Chicago is walkable, but not to the extent of New York. Americans drive everywhere. So in many ways this kind of falls into that category of food and pharmaceuticals and that Americans need gas. Whether it's $5 a gallon or $0.89 a gallon, they have to buy it.
- [16:42]
Jean Chatzky
So when you're looking at the energy sector, are you investing right in the oil and gas companies? Are you investing in the companies that do the servicing? What, what are you looking at? All of the above.
- [16:54]
Ben Wheeler
All of the above. I also think American oil and gas companies, ones that are drilling in the United States, really serve to do quite well. Because if we do, see, I mean Russian gas and oil is already off the table, at least for Europe and most of the world. If all of a sudden the Middle east gets taken off with, you know, a slowdown, supply may have fully taken off. The United States has the largest exporter of oil and gas right now. And when their two top competitors are taken off the board, we're the only shop in town. Right. So people have to buy from us. And so that seems like a good bet.
- [17:32]
Jean Chatzky
We've come through a period where the credit rating of the United States got slashed by Moody's. People are looking at the United States a little bit differently this year than in previous years. What do you make of the safety of the United States, of our bond market at this point?
- [17:52]
Ben Wheeler
I think we're in deep trouble. I do believe the inherent problem is the president and the unpredictability, as we saw with the tariffs that hit the bond market, as we're seeing with this big, beautiful bill, as he calls it, there is a lot of cutting revenue streams while raising spending while claiming to do the opposite. And then, of course, essentially destimulating, if that's a word, de. Stimulating the economy through the tariffs. We already have 36 trillion in debt. The big beautiful bill, over a dynamic basis in 10 years, will raise that to 50 trillion. I mean, we're selling the future for our Roaring Twenties, and we need to get that under control. And so I think we're in a big, dangerous spot right now. And unless we get our spending under control, and it's not even getting our spending under control, in reality, we just need to raise revenue and we're cutting revenue. So I think we're in a very dangerous spot. There are some ways we can get things under control. For instance, we don't have to keep saying every two weeks on the tariffs. And we can also write a big, beautiful bill that is actually big and beautiful and not whatever this thing is.
- [18:57]
Jean Chatzky
Yeah. Hopefully when it shakes out, it'll be a little less big, maybe, and a little less beautiful and focused on shoring up the issues that we have with programs like Social Security. I mean, the Social Security administration came out with a report just last week that said the important trust fund, and there are four trust funds, but the important one that actually pays Social Security benefits is going to run out of money sooner than it was projected to, as early as 2033. So something is going to have to happen, I think, sooner rather than later. Although with this Congress, they'll take it as close to the line as they possibly can because that's the way they seem to roll. Do you, for all of these reasons, do you think that People should be warier of bonds at this point, of.
- [19:49]
Ben Wheeler
Our bonds, I think it's hard to say, you know, you should never doubt the American consumer and you should never doubt the United States. I also think we're only five months into this, right? And so this has been five crazy months of unpredictability and maybe, maybe things will get ironed out. But I also think that these are five months of radical change where other nations are looking at our bonds, our debt, investors are looking at it and they're seeing, sure, it may only be four years, but I don't know, maybe this can happen again and people are going to try to lower their exposure to the United States in many ways and tried to work around being so dependent on it. And so I think it calls into question the dominance of the US dollar as well as so many other things. So I don't know. I mean, there's a chance you buy the bonds now and you make out like a madman. There's also a chance you could be severely disappointed.
- [20:42]
Jean Chatzky
I want to ask you about two other categories that we've been talking about a lot lately. Gold, which has had quite a run, and crypto, which has also had a real run up in the past couple of months. Where are you on investing in both of those sectors?
- [20:58]
Ben Wheeler
I think you could never go wrong of gold, right? There will always be a need for it. It's at its highest price. I believe in human history, which I found hard to believe, but I guess that's true. And on crypto, I am a big non believer in it. I think it's an imaginary asset backed by nothing and it essentially relies on other people believing in it. And I guess you can say that with everything, but with the dollar, there is stuff backed by it of gold. There is a demand for gold. You know, crypto, I'm, I'm not a believer in it and I think people will be wise to kind of get out of it now. Perhaps that's foolish. Maybe the US will make a reserve cryptocurrency and we will go that route. But I'm very down on crypto and I don't think it's a wise investment.
- [21:43]
Jean Chatzky
Let's look out ahead a few months. Where do you think we'll be three months from now, six months from now? And do you have words at all of optimism for people who are worried about their money at this point, where.
- [21:58]
Ben Wheeler
We'Ll be at in three months, three months from now? I think maybe things are better. Perhaps this Iran situation goes away, things kind of settle down on that front, perhaps the tariffs are pushed off again for another three months or however long the pauses. And I think things maybe kind of reach a good stability. I think in terms of optimism, Trump does seem to care about the market again. And I think as we saw in the first term, he cared a lot about the market. He would not do things that hurt the market. And so now that he's kind of gotten the tariffs out of his system for now, I think that things will kind of iron out and kind of calm down. I could be terribly wrong, though. You could play this back in three months and say what a fool. But that is my guess is that perhaps there is stability on the horizon. Who's to say?
- [22:50]
Jean Chatzky
Right? Right. I'm hopeful that you're right. Let's just sort of, let's put it that way. Ben, before I let you go, tell us about Unclassified.
- [22:58]
Ben Wheeler
So the Unclassified podcast is a joint podcast between Preston Stewart and I. We are both content creators. The focus on international news and conflict. We talk about current affairs and more importantly, international affairs as well as war. Right now we're really covering this conflict between Israel and Iran. We also before that covered Pakistan, India, and then of course we have Russia and Ukraine in the background. A lot of war. And so there's always something to talk about, but we really get in the weeds and tell you what you need to know and why you should listen. So if you're interested in that, check it out and I'm sure it can help you be informed on your monetary choices going forward.
- [23:35]
Jean Chatzky
Absolutely. I'm sure that you'll have a lot of our listeners checking it out because you managed to explain it to us in plain English, which is very, very difficult to do. So thank you for that. Thank you for being here. We appreciate the time.
- [23:48]
Ben Wheeler
Of course. Thank you so much.
- [23:50]
Jean Chatzky
If you love this episode, please give us a five star review. On Apple Podcasts, we always value your feedback and if you want to keep the financial conversations going, join me for a deeper dive. HerMoney has two incredible programs, finance Fix, which is designed to give you the ultimate money makeover, and Investing Fix, which is our investing club for women that meets bi weekly on Zoom. With both programs, we are leveling the playing fields for women's financial confidence and power. I would love to see you there. Her Money is produced by Hayley Pascalides. Our music is provided by Video Helper and our show comes to you through Megaphone. Thanks for joining us and we'll talk soon.