UBS analysts looked at an Iran nuclear deal and decided Southwest Airlines would benefit. They connected these dots with the confidence of a man who has never flown Southwest.
The logic goes like this. Iran deal happens. Oil prices drop. Fuel costs fall. Airlines print money. Except every retail trader on Earth already knows this trade. It's been priced in since 2015. UBS is selling you a nine-year-old idea and calling it research.
Eastman Chemicals also made the list. Because nothing says geopolitical analysis like a chemical company in Tennessee. The thesis assumes Iran floods the market with oil, crude crashes, feedstock costs plummet, and somehow Eastman's margins expand before every competitor notices the same thing. Bold.
Here's what actually happens when the Iran deal finalizes. Oil dips for three days. Algos front-run the move in twelve microseconds. By the time UBS publishes the note, the trade is over and reversed twice. Southwest is back to losing your luggage. Eastman is back to doing whatever Eastman does. And you're holding shares you bought at the top because a Swiss bank told you to.
The real tell is the phrasing. "Should outperform" means nothing. It's not "will outperform" because that would require conviction. It's certainly not "buy these stocks" because that would require accountability. It's should, the word banks use when they want credit for being right but distance when they're wrong.
Technical analysis says Southwest has been rangebound for two years and Eastman's chart looks like an EKG during a heart attack. But sure, let's trade off Iranian diplomacy instead.
UBS gets paid either way. You get to explain to your spouse why you're long chemical stocks because of Middle Eastern foreign policy.
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