This market has all your answers: Over the last 72 hours, the US bombed Iranian nuclear sites, Russia said countries are ready to supply Iran with nukes, and Iran's parliament voted to close the Strait of Hormuz. Yet, stock market futures are down a mere -0.5% at the open and oil prices are up less than +2.5%. This is NOT a market that is pricing-in a long-term conflict. In fact, if the market was pricing in JUST a closure of the Strait of Hormuz, oil prices would be at $120+. Objectively, the market is still expecting a short-lived war. Keep following the smart money.

The bull case of this weekend’s events: While the Israel-Iran war has undeniably escalated with US involvement, it’s not all bad news. In fact, there may be a situation where this weekend’s events lead to a faster conclusion of this conflict. This situation would be one where ALL sides can claim a “win.” Here’s how it may look: US strikes on Iran were the most expected “unexpected” event of this war. If anything, it was a way for the US to appear strong after months of threatening rhetoric from Trump to Iran. On the flip side, it also allows Israel to say they “successfully” destroyed Iran’s nuclear capabilities. But, what about Iran? Between threatening to close the Strait of Hormuz, strikes on Israel, and potential retaliation against the US, Iran can maintain an image of power. Then, as Israel and the US believe Iran’s nuclear capabilities have been contained, they will come back to the table for a deal. At that point, a deal becomes even more likely as all parties can claim a “win.” Israel will say they destroyed Iran’s nuclear capabilities, the US will say the same, and Iran will say they successfully repelled Israel and the US. And, to top it all off, Russia and China are becoming mediators in this conflict, despite other unrelated tensions, bridging relations with the US as well. While all of the headlines are negative right now, there is still a highly viable path to a short-lived conflict. We are optimistic.