Stock Market Reaction to Iran: De-Escalation Priced In (Big Risk)

[00:01] understand the financial and stock market situation regarding Iran. And political whatsoever. We're just focusing on the financial aspects. So, at the time of making this video, the S&P 500 is flat. So, as you probably

[00:15] saw, it opened up lower. It turned positive. Right now, it's up 0.08%. So, it's basically no reaction, or you could say it's a muted reaction. Now, I want to warn you about this. So, this is a 5-year chart of the S&P 500.

[00:31] It Okay, so it's my belief that in the long run, yes, the stock market's going to continue to go up, especially with President Trump's new Fed chair coming into power in 2 and 1/2 months. Now, my concern is that the stock market is

[00:43] pricing in a quick de-escalation of the situation. And is that possible? Well, of course, yeah, and anything's possible, right? But the situation is just As you probably see

[00:55] for yourself, it's just escalating. Okay, now, why is this a problem for our financial markets? [snorts] It's because I'd say the biggest one is the price of oil and the concern of heightened recession risk, or you can

[01:10] say stagflationary risk, as well. So, the Strait of Hormuz has become a dangerous zone. 20 million barrels of oil passes through there every single day, and global production is about 100 million barrels a day. So, 20 million, I

[01:24] And I'll tell you this, there's still oil shipments going through the straits. but that's actually mostly Iran's going to China. significantly diminished, but that's because US and Israeli forces, they've

[01:40] been prioritizing the striking of military capabilities, offensive and defensive. So, as they're going down that priority chain, I'm sure that their energy sector is going to be

[01:53] hit, you know, sooner or later. And listen, just to get ahead of the comments, I understand that civilians sites have been struck and obviously I don't support civilians getting struck, but we're just keeping this financial.

[02:06] And relatively speaking, a smaller quantity of vessels have been struck, matter of all like just a few vessels have been struck. No, the problem, believe it or not, is the insurance on the oil

[02:19] If the insurers pull coverage and the shipping company's not going to risk it coverage. I mean, these are not cheap vehicles that we're talking about. So, I'll just I mean, I'll give you an

[02:32] did you know that if you buy a sports car, let's just say Lamborghini, racetrack, then you need special insurance to do so. And no insurance company's going to give you the insurance if they find out that

[02:46] on that racetrack there are explosive drones that are going to be chasing after you. So, obviously, you know, that in that type of going to be considered closed for business and that's what's happening in

[02:59] the Strait of Hormuz. Now, the problem is that if oil prices continue going higher, then that's going to be bad for corporate margins and also for corporate And if there's going to be demand destruction, then supply chains are

[03:11] going to stall, which is going to increase the risk of recession. So, if there's no quick de-escalation, then recession risk rises, which could, you know, weigh on the stock markets. Additionally, if the price of oil rises,

[03:24] then inflation's going to go up and then the odds of an interest rate cuts will decrease. Okay, the next Federal Reserve FOMC meeting is going to take place on And currently, according to the CME FedWatch tool, there's a 97.4%

[03:37] chance that the Federal Reserve does not cut interest rates at that meeting. Now, if the price of oil and gasoline goes up and inflation as well,

[03:49] and the Republicans for the midterm elections. Okay, so why would President Why would President Trump put himself in the situation? And from Okay, so from my point of view,

[04:04] excuse. He's just going to say, you know, rising oil, gasoline prices, environment. He's just going to blame it on Iran. all together for you so that it makes sense to you. But tell me that that's

[04:19] not what's going to happen. Now, when we take a look at the US dollar, the dollar experienced a flight to safety today, making it stronger. And this led to downward pressure on metals, gold, silver, copper.

[04:32] So silver was starting to rally again, but it took a hit today. expect it to do, then it's going to be good for silver. good for silver. This is a 24-hour chart of gold. Gold is

[04:44] it's up today. However, because the dollar strengthened, it erased most of today's spike in gold. However, I want you to gold. And I'm telling you that all of these

[04:57] geopolitical events, they're just going to further encourage dedollarization from China, from BRICS, and European countries as well. Poland is actually going nuts buying tons of gold, literally.

[05:10] this chart. It is looking very healthy, and I expect further gains in gold. And listen, I already told everyone before that Well, at least on my Patreon site, that gold mining stocks would be good picks, and here's why.

[05:24] I highlighted three sections in red boxes. And the first one is the price of gold in Q3 of 2025. And then the next box is gold prices in Q4 of 2025. And look at how gold prices have been so

[05:37] And look at how gold prices have been so far in Q1 of 2026. So obviously, gold mining companies are going to show better performance in Q1 of 2026, which we're currently in, compared to Q4 of 2025.

[05:50] I mean, look at the price of gold. Like, how likely is it that their revenue and year-over-year or quarter-over-quarter? Just look at the chart. I mean, it's a dead giveaway. Now, what's really interesting is that the dollar reacted

[06:03] by strengthening, right? But, US Treasuries did not. 30-year Treasury bond went up. So, that's not a good sign for the stock stranger. So, it's most likely

[06:17] the bond market reacting to higher oil prices, you know, pricing in a higher chance of a stagflationary environment. And it's not just the 30-year bonds, it's the 10-year notes, as well. There was no

[06:29] flight into safety for US Treasuries. The 10-year yield is up, as well. So, my sentiment is that I do not think that we have an all-clear sign to rush Like, personally, I wouldn't be surprised if we suffered a dip.

[06:45] You know, I would take advantage of the dip if it happens. However, I would still dollar cost average in. So, it's just that the stock market reaction, it's not aligning with the increased recession risk and the bond

[06:59] market's reaction. So, my warning is to be cautious here with an entry into the stock market or adding to positions. And again, it appears that the market is pricing in a quick conclusion, like the Venezuela situation, even though that

[07:12] resolved. So, I would say de-escalation. However, President Trump even said that the Iran situation could take 4 weeks or even longer.

[07:26] And that is a lot of time for major volatility, especially in a news-driven environment, in news-driven markets. And I just want to pose the question, like, how likely is it that there's going to be de-escalation when US and

[07:39] Israeli strikes have killed top officials and their supreme leader. Additionally, Iran has retaliated by attacking US bases, Israel, Bahrain, attacking US bases, Israel, Bahrain, Qatar, UAE, Kuwait, Iraq, Jordan, and

[07:52] So, that just sounds like more reason for escalation, not for de-escalation. At least that's my opinion. And I don't know how we're going to that, especially after President Trump swore to avenge the deaths of US service

[08:07] And I believe that this is going to last for the entirety of March because I believe that the US is most likely going for a regime change. 3,000 sites have been hit in Iran. And this includes police stations so

[08:20] resistance. But listen, I think it's a given that we're going to see heightened volatility, but I just want to say that even if the market goes down, I believe that the best course of action is to not panic sell.

[08:33] If you want to know what I'm doing with my investments, stocks, gold, silver, check out my Patreon sites. I'm going to leave a link for you down below. Please and I wish you a very nice day. Take care.