00:00A lot of people are wondering why the U.S. stock market is going up in the middle of a
00:03war with
00:04Iran. The answer is that the market doesn't care about the war, and never did. It might seem like
00:08investors cared in March when the S&P 500 turned lower in the early days of the conflict, but those
00:13losses were mostly related to the AI scare trade that began a month earlier. You know, the panic
00:18over AI eating software, but also the world. About 60% of the decline was attributable to just 20
00:24stocks, most of which are strongly related to AI sentiment, including the Magnificent Seven. But
00:30now that freakout seems to be over because big tech companies supposedly in the path of AI,
00:34like Microsoft and Amazon, have rebounded big time in April. So the market is rallying, despite an
00:40ongoing war that President Trump assures us is almost over, even though there's no sign of an
00:44agreement. But even if the war continues, don't expect the market to care any more than it does
00:48now. For one, markets are less reliant on oil than they used to be. Gulf Arab states are also looking
00:53for ways to bypass the Strait of Hormuz to get around Iran. More importantly, a conflict in the
00:58Middle East is unlikely to impact big US companies that drive the market. A couple of stats to put
01:02that in perspective. While about 30% of S&P 500 revenues come from overseas, less than 3% comes
01:08from the Middle East and Africa. Also, nine big tech companies are expected to contribute 70% of the
01:14S&P 500 revenue growth over the next 12 months. AI might disrupt them, but a far-off regional war
01:19probably won't. Now, if the conflict spreads, all of that could change. It could kick up inflation,
01:25slow consumption, and hurt company sales, all of which would hit stock prices. Let's hope this
01:30conflict doesn't widen. But if you expect the Iran war as it is now to derail the market,
01:34prepare to be surprised.
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