The Hormuz Rotation
This week in the Laboratory, we are tracking four signals.
This week in the Laboratory, we are tracking four signals: the war trade hiding in plain sight, a Canadian power company that could 5x, the case for betting on Israel, and what a Roman emperor writing philosophy during wartime can teach us about investing.
Let’s dive in.
Dispatches from a War Zone
I am writing this from Israel, where I am currently stuck.
This is the second time this has happened to me. I was here last June during the Twelve-Day War. And now I am here as the United States and Israel conduct operations against Iran, with the Strait of Hormuz effectively shut and oil at $100+ a barrel.
Here is what I can tell you from the ground: the atmosphere is electric. Israelis are not panicking. They are going to work, eating at restaurants, and arguing about politics—which is what Israelis do when things are normal, and what they do when things are not. These are among the most resilient people on earth. They have been forged by conflict, and they respond to it not with fear, but with a kind of focused intensity that I find genuinely inspiring.
I will come back to why this matters for your portfolio in a moment.
The Rotation No One Is Talking About
The consensus narrative right now is simple: war is bad, sell everything, hide in cash. As usual, the consensus is wrong.
What is actually happening in markets is not panic. It is a rotation. Capital is leaving growth and tech and flooding into hard assets, commodities, energy, and defense. The indexes are strained—but they are not broken. The S&P and Nasdaq are still technically in bullish territory. What has changed is the leadership underneath.
A friend of mine who runs one of the sharper macro research desks has been walking me through this framework in real time. His thesis:
This is not a trade. It is a regime change.
The data supports it:
Gold at ~$5,172/oz, pulled back from the $5,400 test earlier this month. The all-time high of $5,600 (set in January) is only 8% away.
GDX (Gold Miners ETF) is up 170% over the past twelve months. Miners are the leveraged play on gold—when gold moves 10%, miners move 20-30%.
GLD, SLV, and GDX are all in confirmed bullish trends. So are Agnico Eagle, Wheaton Precious Metals, Alcoa, and Rio Tinto. This is not one trade; it is a structural shift across the entire commodity complex.
Defense names—Lockheed Martin, Northrop Grumman, RTX—are all making new highs. The market is not just pricing in war; it is pricing in a world that permanently needs more security infrastructure.
Meanwhile, technology leadership is weakening. Long bonds are in bearish territory. The old playbook—buy tech, ride disinflation, wait for rate cuts—is being rewritten in real time.
The signal: Smart money is not hiding in cash. It is rotating into things that are scarce, essential, and hard to replicate. If you are sitting in a portfolio of high-multiple growth stocks and nothing else, this is your wake-up call.
The Stock That Wins Either Way
We will have enough chips. We will have enough data centers. We do not have enough electricity.
Energy is the bottleneck for AI. Every new data center that Amazon, Google, or Microsoft builds requires 24/7 “firm” power—the kind you cannot get from solar panels alone. You need gas. You need hydro. You need infrastructure that already exists and is already connected to the grid.
Enter TransAlta ($TAC).
TransAlta is a Canadian power company trading at roughly $12.70 with a $3.8 billion market cap. On the surface, it looks like a boring utility. Under the surface, it is one of the most interesting energy infrastructure plays I have found:
They just signed an MOU with Canada Pension Plan Investments and Brookfield to develop a data center at their Keephills site in Alberta—starting at 230 MW with the potential to scale to 1 GW.
They locked in a 16-year, 700 MW tolling agreement to convert their Centralia plant from coal to gas.
Institutional money is pouring in. Someone recently swept 2,160 call contracts at the $16 strike for June—a $270,000+ bet that this stock is going materially higher.
The 52-week range is $7.82 to $17.88. My end-of-year target is bullish target is $35.
The thesis is simple: the world is about to need dramatically more electricity, and companies that already have the land, the transmission lines, the gas supply, and the water infrastructure will be the landlords of the AI era.
I bought out-of-the-money calls for end of year. The risk is obvious—this is a utility with a negative P/E ratio and regulatory exposure. But if the data center thesis plays out and TransAlta re-rates from “boring utility” to “AI infrastructure provider,” a move from $12 to $35 represents a near-3x on shares and multiples of that on options.
Full disclosure: I own TAC call options. This is not financial advice. Do your own research.
The Israel Trade
Back to Israel.
Here is the thing that most investors miss about this country: Israel goes higher after every conflict. Every single time. The pattern is almost mechanical. During war, the geopolitical risk premium crushes Israeli equities. Then the war ends, the enemies are weakened or defeated, and capital floods back in.
The iShares MSCI Israel ETF ($EIS) just hit a new 52-week high at $124.80 earlier this month—and it is rallying during the war. Markets are already beginning to unwind the risk premium. When peace is achieved and Iran’s threat posture is permanently degraded, I expect EIS to move meaningfully higher.
Why? Because Israel’s economy is a machine. It is the most innovative country per capita on earth. The tech sector, the defense industry, the energy discoveries in the Eastern Mediterranean—all of these are secular tailwinds that get amplified once the security overhang lifts.
Having been on the ground twice now during active conflict, I can tell you: the spirit of this country does not waver. That resilience is not just admirable. It is investable.
What I Am Reading
Streetwise by Lloyd Blankfein. The former Goldman Sachs CEO’s memoir, just published this month. It is a genuinely frank account of getting from the projects of New York City to the top of Wall Street—rare for someone at that level. If you manage money or aspire to, this is required reading. The sections on navigating the 2008 crisis alone are worth the price.
Meditations by Marcus Aurelius. I am re-reading this, as I do periodically. Marcus Aurelius wrote much of this book at Aquincum—the Roman military fortress on the banks of the Danube that became modern-day Budapest, where I used to live. There is something powerful about reading the private journal of a man who was running an empire and fighting a war, written in the same city where you once sat in a café and tried to figure out your own life.
The most relevant passage for right now: “The impediment to action advances action. What stands in the way becomes the way.”
War, volatility, uncertainty—these are not obstacles to finding opportunity. They are the conditions that create it.
───
Cheers to the Freedom Fighters.
— Jordan Fried