The million dollar question: What happens to the stock market this week? Here's our view: In the lead up to this weekend's events in Iran, we saw a large geopolitical risk premium priced into many parts of this market. Oil prices are up +20% in 6 weeks and gold prices surged +13% in a month. The question becomes: is this geopolitical risk premium "enough" for what's happening now? It's an "expectations versus reality" situation. At the 6 PM ET futures open today, we expect to see an initial surge in commodity prices and drop in equities. In our view, the Strait of Hormuz situation, and its potential closure, is the biggest risk to financial markets right now which will drive broader price action. What happens in the Strait of Hormuz will largely depend on how long this conflict lasts: Historically, President Trump has heavily favored swift military operations, such as the June 2025 Iran strikes and the capture of Venezuela's President Maduro. If President Trump follows this historical path, we believe an initial surge in commodity markets and drop in equity markets could be rapidly undone, particularly if a "deal" is floated again. Even any sort of indication of when the military campaign will "end" could reverse price action rapidly. Again, a substantial geopolitical risk premium is already priced in. However, the catastrophic case for markets is one where the US and Israel enter a prolonged war with Iran lasting months or longer, resulting in a sustained closure of the Strait of Hormuz. A full closure of the Strait of Hormuz would send oil prices above $100 per barrel, according our analysis, which would imply a spike in US CPI inflation to ~5%. That said, do not forget that three of President Trump's top policy priorities are to be the "peace president," eliminate inflation, and lower US gas prices to $2.00 per gallon. A prolonged war with Iran would work in the opposite direction of these key initiatives, particularly in the short-term during a crucial midterm election year. We think Trump aims for a short and swift operation and markets prevail once again as the dust settles.(The Kobeissi Letter)