Credit & Consequence
Editor’s Note: Small business owners are used to hearing about the economy in headlines—interest rates, tariffs, oil prices, recession risks. But what often gets lost is how those forces actually play out on the ground, where decisions about hiring, borrowing, pricing, and investing get made every day.
Dean Lyulkin and William Stern spend their time in the capital markets and working directly with businesses, giving them a vantage point that’s often more immediate—and more candid—than traditional economic commentary.
You may not agree with everything you read here. In fact, you probably won’t. But the goal isn’t agreement—it’s perspective. Because in uncertain times like these, understanding how money is moving—and where pressure is building—can make all the difference. —Rieva
Oil & Strait of Hormuz
What’s happening in the energy markets right now isn’t following the usual playbook. While geopolitical tensions in the Strait of Hormuz have fueled volatility in oil prices, broader financial markets remain surprisingly calm—raising questions about what investors believe comes next and whether traditional supply-and-demand models still apply.
Regardless of today’s volatility, recall we are well below peak pricing for this conflict. The crude oil market has had several opportunities to push meaningfully higher and has not done so. That suggests a bottom may already be forming, even as headlines remain uncertain.
What gives us more confidence is how other markets are trading. Global equities are near all-time highs, and bond markets have not shown any meaningful flight to safety. If this were truly escalating into a worst-case scenario, you would expect to see a broader risk-off move. Instead, oil is moving sharply while other asset classes remain relatively calm.
The recent zig-zagging in oil is constructive. We take it to mean that active, productive negotiations are shifting expectations rather than a breakdown in communication. Markets ultimately price probabilities, not headlines. While the risks around the Strait remain real, current pricing suggests the market still assigns a relatively low probability to a prolonged disruption. Our base case is that this situation moves toward a very positive resolution in the near term. That view is not based on dismissing the risks but on observing how different parts of the market are interpreting them. —Dean Lyulkin
Wall Street wonders why the old supply models are completely broken. It’s because the entire energy axis just flipped. The UAE officially broke up with OPEC to cozy up to the U.S. and Israel. They’re going to pump way more oil to satisfy global demand entirely on their own terms.
And while they step up, we’re going to totally suffocate Iran until they completely collapse. That isn’t a normal supply-and-demand curve. That’s a total economic war. Brent crude is going to keep moving wildly because we’re actively starving out a rogue regime while our new allies take all their business. The traditional spreadsheets are entirely useless right now. —William Stern
You can throw the old supply and demand spreadsheets right out the window. We’re in a brand-new game right now. People ask if $130 is still on the table. Of course it is. But it has nothing to do with basic inventory. The UAE just walked away from OPEC. They’re teaming up with the US and Israel to pump as much as they physically can. They want to grab all the market share while we actively choke out Iran. We’re starving a dying regime. You can’t model a geopolitical street fight on a standard graph. The market is pricing in a massive war for energy dominance. —William Stern
Wall Street treats the gas pump like a magic dial for the economy. The reality on the street is entirely different. Consumers aren’t just changing their driving habits. They’re actively gutting their own discretionary spending. A slight break on fuel doesn’t matter when structural costs are permanently higher. The working class is completely tapped out. You don’t fix a broken household balance sheet by saving a guy three dollars on his morning commute. —William Stern
Consumer Spending
Consumer spending continues to send mixed signals. While equity markets remain strong, many Americans are still grappling with higher everyday costs, creating a widening disconnect between Wall Street optimism and Main Street reality.
The people buying tickets to the stock market rally are not the same people paying $6 for gas in California. Both things are real.
The gap between equity market performance and consumer mood is real.
People are working, and wages are stable. But sentiment that low, sustained over time, may eventually translate into reduced spending. —Dean Lyulkin
Impacting Small Business Growth
Despite ongoing conversations about reshoring and manufacturing growth, many small businesses remain hesitant to expand. Rising fuel costs, tariffs, and margin pressure are making growth decisions far more complicated than the headlines suggest.
Something kind of striking caught my eye: the smallest firms actually lost more jobs in 2025 than they did during the pandemic. Which feels like it should be a bigger story given all the manufacturing revival momentum right now.
On the ground, the vibe is complicated. Facing tariffs, rising fuel costs, and tighter margins, businesses want to grow, but the math isn’t making expansion easy to justify, even with new federal incentives in the mix. —Dean Lyulkin
AI
Wall Street continues to frame AI as the next great economic growth engine. But for many small business owners, the reality is far more immediate and practical: cash flow, operating costs, and day-to-day survival still take priority over long-term technology optimism.
It’s easy for analysts to sit there and project a massive growth cycle fueled by AI. That is a great story for the stock market, but it means absolutely nothing to a small business owner today. They aren’t reading Bank of America research notes to figure out how to run their companies. They are looking at the actual cash they have on hand. You can’t fund your daily operations with Wall Street optimism. Real businesses are making hard decisions based on current cash flow because they don’t have the luxury of waiting for next year’s upside. —William Stern
Borrowing & Lending Money
So far, geopolitical uncertainty has not materially changed lending conditions in the B2B market. But lenders are watching closely, balancing headline risk against real-time credit performance and borrower stability.
Right now, in B2B lending, we are not seeing a material shift in real-time performance data. Approval rates, payback behavior, and loss curves are largely tracking where they were before the Iran conflict. We have to make forward-looking assumptions every single day, but stable real-time metrics carry a big weight. We won’t tighten underwriting standards just because of geopolitical noise.
Will some lenders get anxious and pull back? Of course. There is always a segment of the market that reacts to headlines and sheds risk early. But the majority is looking at two things: credit quality from application flow and real-time portfolio performance. If both are holding up, there is little incentive to “rock the underwriting boat” and risk losing volume to competitors.
Geopolitical shocks require confirmation from markets and credit data. Equity markets remain near highs, and credit markets have not shown a meaningful risk-off signal. That matters because lenders take cues from those markets when assessing forward risk.
On the borrowing side, access to credit in B2B markets will still come down to performance and cash flow. If small businesses continue to generate stable revenue and service their obligations, capital will stay available. If that changes, then you will see tightening. But today, the data does not support a widespread pullback. —Dean Lyulkin
Stock Market
The stock market often reacts to probabilities long before economic outcomes become clear. Recent market behavior suggests investors believe the broader economic risks tied to geopolitical conflict may be more contained than many feared.
The stock market is a discounting mechanism. It doesn’t wait for final outcomes to begin pricing probabilities and using all available information, whether or not it’s publicly available to the general public or media. Recall that even during recessions, stocks bottom far ahead of the economy.
This holds just as true for geopolitical conflicts. Whether the conflict ends or drags on in a new form, the stock market sent a powerful signal that the risk to the global economy has dropped materially. As investors digest recent news surrounding the war, their appetite for the Mag 7 giants has returned with a vengeance.
This is a shift from the rotation into value stocks to companies less prone to AI-driven disruption. The signal is worth noting, but investors should also pay attention to continued leadership out of U.S. small-cap stocks. They are leading, thanks to expectations of lower interest rates as oil prices subside, central banks turn more dovish, and a cooling global economy helps snuff out inflation.
We will monitor the technology sector to see if it can maintain its leadership—the longer it holds, the more meaningful it is. We expect energy and materials stocks to continue underperforming as oil prices decline. —Dean Lyulkin
Tariff and Refunds
Potential tariff refunds could provide some financial relief for businesses that have absorbed higher import costs. But while the refunds may help margins, they do little to resolve the broader uncertainty surrounding long-term trade policy.
This is one of those moments that sounds bigger than it is, at least at first. Businesses getting tariff refunds is clearly a positive, but it’s really a return of capital, not new stimulus. It helps clean up their finances more than it changes behavior overnight.
The rollout through U.S. Customs and Border Protection will separate companies pretty quickly. Those that already have their systems in place and know how to navigate the Automated Commercial Environment will move first. Everyone else is about to find out that getting set up under heavy demand takes time. So, the cash won’t hit evenly, and it won’t hit all at once.
From a business standpoint, think of this as a delayed margin giveback. Companies have been eating higher costs for a while, and now some of that is coming back. That can support profitability, maybe ease pricing pressure a bit, and give small businesses a little more flexibility. But it’s not the kind of event that suddenly drives hiring or major expansion.
There’s also a bigger picture here. Refunds don’t solve the core issue, which is uncertainty around trade policy. If you’re an importer, you still don’t know how stable the rules are going forward. That tends to keep businesses cautious, even when they get some cash back. —Dean Lyulkin
Dean Lyulkin is the founder of The Dean’s List, a San Diego–based registered investment advisory firm focused on capital markets research, portfolio strategy, and long-term wealth building. He works with investors and entrepreneurs to help them better understand how economic cycles, credit markets, and policy decisions shape real investment outcomes.
Dean frequently writes and speaks about financial markets, private credit, interest rates, and the intersection between investing and business growth.
William Stern is the founder of Cardiff, a San Diego–based small business lender focused on speed-first capital and technology-driven underwriting. Since 2004, he has helped businesses access funding more quickly through AI-powered credit models and modern lending infrastructure.
Cardiff was named America’s Favorite Small Business Lender (2024–2025) and won the Digital Bankers Global SME Banking Innovation Award (2026).
William often shares insights on small business finance, credit markets, entrepreneurship, and economic trends affecting founders and operators. He also hosts the A Stern Talk podcast, where he speaks with entrepreneurs and investors about business growth, leadership, and navigating changing market cycles.
Photo courtesy Allison Saeng for Unsplash+
