The U.S. deployed the aircraft carrier Abraham Lincoln and missile systems near Iran after a drone incident, while a 50-year nuclear agreement with Russia expired. The UN called the moment grave. Oil prices could spike if the Strait of Hormuz shuts down, keeping the Fed from cutting rates, but scheduled U.S.-Iran talks on the 7th may trigger a market rally.
So America almost bombed Iran, okay? This was in recent history. This is not old news. Like, it just happened, okay? It was actually kind of real too. Uh, we actually had fighter jets, specifically the Abraham Lincoln, um, and also THAAD and a Patriot missile defense system deployed in Iran to just in case Iran sent a nuclear missile at America, okay? So this is probably why the markets are reacting in a negative way on the short term, but But I do believe there's going to be a relief rally, and I'll explain what I mean by that. But you really have to comprehend that this is one of the biggest military buildups in the Middle East in recent years because we actually bombed— we as in the United States— actually bombed Iran last summer. So yeah, of course they're probably a little bit upset about that. But Trump was about to bomb Iran again, and you know what he said? He said, he's like, you know what, let's negotiate, right? That's basically what's happening right now. And through this process, Iran poked at America by sending a drone to the warship, and then the warship shot it down. And then there was this other incident, these small incidents. But what's really interesting about this, and I think this gave me the most clarity on what's happening right now with the market, is the fact that last night at midnight, there was actually an agreement for the past 50 years between the US and Russia, and it basically limited how many nuclear warheads that America and Russia were allowed to have ready to go. That expired. Last night, so we have the head of the United Nations literally calling this a grave moment, and we are currently sitting in the most dangerous nuclear environment in decades that most people are not talking about. And so that's probably again why the markets are acting this way. But there's hope because on the seventh, we actually have negotiations this Friday. Iran and United States are sitting down face to face, and this is the first time anything's happened in like a peace deal. Since last summer when America bombed Iran. Okay, this is important. Why? Because 20% of all oil passes through an area called the Strait of Hormuz, if I pronounce that correctly. Essentially a body of water, 20% of all of it, that's right next to Iran. So if there was a regional war, then the cost of oil would increase, right? If the cost of oil increases, that means all of the items in America will increase as well because oil is used to create every individual process, right? If you go through it, oil, you know, to, to transport it, to use it for the machines, for electricity, whatever the case is. If oil increases, that means the cost of goods increase. If the cost of goods increase, that means inflation increases. If inflation increases, then the Federal Reserve is not gonna cut interest rates because that's their number one determining factor for interest rates. So as you can imagine, this affected the markets, but I do expect a relief rally this 7th after they negotiate peace, which they'll probably obviously do because nobody wants a nuclear war.
