Well, by now everyone should be aware that the US dropped several bunker busters on Iran’s three nuclear facilities over the weekend. If you don’t know how bunker buster bombs work, check out this interesting animated explanation on YouTube — Bunker Buster Bomb Explained: How It Destroys Deep Underground Targets

What to expect in the coming weeks?

1. Continued attacks on military targets inside Iran by Israel. Continued attacks by Iran on Israeli civilian targets in the hope that the Israeli government begins to question the cost of continued engagement. >> We believe it is likely Israel recognizes this as an opportunity to remove the threat that current Iranian governments presents. After years of Iran stating that they want to wipe Israel off the face of the planet, it is likely Israel only ceases its operation when a new, more moderate, political regime in Iran emerges.
2. Iran and its proxies (such as the Houthis) seek to close the Strait of Hormuz and impact global shipments of oil as a means to put economic pressure on nations hoping they can put political pressure on the US to end their engagement.
3. Random (likely smaller) terrorist attacks around the world against US and western assets. Iran is known to have sleeper assets around the world and the likelihood that they, their supporters, or those with an anti-Israeli sentiment will act.
4. A key question is what military capabilities does Iran have left to respond to the US and Israeli attacks over the past week? The US Director of National Intelligence has stated that before the Israel attack, Iran had the largest stockpile of cruise and ballistic missiles in the region with the range to hit targets in the Middle East. The country also has domestically produced drones, hypersonic missiles (though not in large quantities), and anti-ship missiles. Despite launching hundreds of missiles targeting Israel, only a few have gotten through as Israel’s anti-missile capabilities along with US naval vessels in the region have succeeded in intercepting most of the incoming missiles–though some have caused significant damage to an apartment building as well as the Weizmann Institute of Science.
5. Israel’s initial actions have taken out many of Iran’s air defense capabilities and they control the sky–enabling them to attack military targets at will and eliminate future threats. We can expect this campaign will continue.
6. From an investment standpoint…(1) We expect oil prices to rise in response to the risk to vessels traveling in the Strait of Hormuz, (2) stock markets around the world will be under pressure, especially early in the week (3) US defense stocks will outperform the market until it is known what future actions the US plans to take and for how long, (4) European defense stocks have surged in recent months but a further increase in defense spending in the region may already be baked in to share prices.