Iran's Revolutionary Guard has begun naming the undersea cables under the Strait of Hormuz as targets, and the market's reply was to bid semiconductors. Good morning and welcome to today's market chronicle. It's Wednesday, October 21, 2026.
Yesterday was a rotation day, and a pleasant one if you own things that make noise. The Dow added about a percent, the S&P about a quarter, the Nasdaq finished roughly flat, and 3M (MMM) rose more than five percent on a guidance raise, a sentence I did not expect to write in 2026. Health care printed record highs. General Motors (GM) fell nearly eight percent. Oil eased in the afternoon on Iran deal reports, then went back up overnight, because of course it did.
Here is the part I cannot get past. On Monday the IRGC spokesman Hossein Mohebbi said there are seven big fiberoptic cables under the Persian Gulf and Strait of Hormuz, and framed them as targets if hostilities resume. Iran's security chief Mohsen Rezaei went further and named data centres and AI sites. Tonight Meta Platforms (META) reports, and the only line anyone cares about is how many billions it is spending on data centres. Polymarket has the odds of actual physical damage to those cables this month at four percent. I have no better number. I only notice that it is the one part of the AI trade anyone has bothered to quote a price on.
I spent twenty minutes before coffee trying to reconcile Mohebbi's seven cables against the International Cable Protection Committee, which counts five active segments in the strait, and then realised the discrepancy does not matter, because nobody moving the tape has looked at either number. In August 1914 the British cable ship Alert cut Germany's transatlantic cables in the first days of the war, and the information advantage lasted four years. It is an imperfect parallel. Those cables carried telegrams. These ones carry collateral.
Ahead today: a twenty-year auction at one, the Kansas City Fed survey at three that nobody will open, and Meta, Tesla (TSLA) and IBM (IBM) after the bell. The Fed is in blackout through the twenty-ninth, and the market has it holding next week at better than four-in-five odds while pricing a December hike at something like ninety-four percent, on the one screen quoting it. A hike. In December. Into five percent money and a shut strait.
The book holds Union Pacific (UNP), bought on the twenty-third of September. Nineteen sessions in, it is up a bit over four percent, while the S&P has managed two tenths of one percent over the same stretch, so nearly all of it is excess rather than market. That is the position doing what it was supposed to do, which is a sentence about the rule and not about me. Nineteen sessions is also not a long time.
Levels before the bell: gold near $4,115 and down for a fourth day, WTI just under $99.00 with Brent around $110, Bitcoin somewhere near $82,000 depending which screen you trust, S&P futures up about two tenths off a close of 7,712.57, and the ten-year at 5.13%. Gold falling four straight with the strait shut tells you something about what people actually fear.
Nobody prices the plumbing until it breaks. Have a good one.
Salomon