We've had some huge market snapbacks from the extreme levels of Sunday night, when crude oil spiked to $119.
At the best levels today, stocks (S&P futures) were up 4.5% from the worst levels of the week. And much of it has been driven by the 36% crash in oil prices — to as low as $76.73 today.
So, two closely monitored barometers of global stability have sharply reversed from the severe levels of just 48 hours ago.
Is this a "war is winding down" message?
With respect to energy, the Hormuz Strait remains closed — by the regime that's being challenged. And the new Supreme Leader has been named — it's the old Supreme Leader's son.
This doesn't look close to the required "unconditional surrender."
So, if the markets are beginning to price that in, it seems overly optimistic.
That said, let's talk about another factor at play for markets that has been underappreciated. Among the geopolitical and financial chaos of last week, Trump had three very important meetings.
On Wednesday, he had the top AI executives in the Whitehouse. The Energy Secretary (Chris Wright) said the nation that leads in AI will be the military superpower." And, on that note, the President of Meta implied that AI race has a three-year window.
In this meeting, they formalized an agreement to power AI — the government brings down regulations, so that the AI companies can build their own power generation facilities. This expansion of energy capacity for the country is part of the $650 billion of AI capex commitments made for the year from private industry.
On Friday, he had the top defense executives in for a roundtable at the White House. They agreed to "quadruple production of 'exquisite class' weaponry" — an effort that was started three months prior, with plants and production said to be already under way.
And then on Saturday, in a morning, Trump brought together 17 leaders in the Western Hemisphere to sign of formal military alliance.
Now, these are not three separate events.
This is an industrial mobilization and the fortification of the Western Hemisphere for a bigger confrontation — bigger than Iran. It's positioning for China.
This is wartime spending, blending public and private funding.
This is fuel for the economy, and the stock market.
