Greetings,

You might not know it if you're looking at the stock market, but global business is taking some big hits right now. At least, bigger hits than it feels like on the surface. Check out the FT's charticle highlighting how much AI-driven market highs are masking the business impact of the Iran war.

Also in this edition:

• Supply chain strains from Middle East conflict affect AI
• Wall Street eyes new "NACHO" trade
• US corporate bond market sees $18B in new issuance
• Senate releases revised crypto bill ahead of markup

Customization is often promised in OCIO relationships—but how does it show up in practice? Explore what to evaluate when assessing whether portfolios reflect your organization's needs.

The ongoing Iran conflict has disrupted global business, leading to reduced flights, cautious consumer spending and anticipated price increases. However, a surge in AI-driven technology stocks has offset these challenges, with major companies gaining $5.4 trillion in value. Semiconductor companies have seen a 26% increase in market value, and oil companies such as Saudi Aramco have benefited from rising oil prices.

The Middle East conflict has caused a significant global supply shock, notably impacting Asian supply chains crucial for US AI infrastructure. The closure of the Strait of Hormuz has led to soaring prices for petrochemical products and industrial inputs, with the Global Supply Chain Pressure Index rising sharply. While high-income Asian countries have substantial petroleum reserves, ASEAN nations are more vulnerable to energy shortages, which could quickly affect US imports.

Wall Street is focusing on the "NACHO" trade, short for "Not A Chance Hormuz Opens," reflecting skepticism about the reopening of the Strait of Hormuz amid US-Iran tensions. This has driven US oil prices up and affected Treasury yields. However, stocks have reached record highs, driven by energy shares and enthusiasm for artificial intelligence. Despite concerns about inflation and limited Federal Reserve rate cuts, investors remain optimistic about the economy's resilience.

US companies issued $18 billion in investment-grade bonds in a single day as tech hyperscalers accelerated borrowing to fund artificial intelligence infrastructure. Heavy issuance from firms such as Alphabet and Meta is shifting market dynamics, with issuers moving to lock in funding while credit spreads remain tight, even as Treasury yields and geopolitical risks push overall borrowing costs higher.

Devesh Kumar of EY-Parthenon highlights the critical issue of the post-merger integration investment gap, where CFOs meticulously budget for advisory fees but often underfund integration efforts. Kumar suggests using the integration investment ratio to benchmark integration budgets and emphasizes the need for dedicated commercial execution, pre-close synergy validation and robust value-capture instrumentation.

The Senate Banking Committee released revised text of a sweeping crypto market structure bill ahead of a committee markup on Thursday. The 309-page proposal would divide oversight of digital assets among regulators and includes updated language limiting certain stablecoin rewards programs, a key point of contention between banks and crypto firms. Lawmakers may still offer amendments during the markup.