Hormuz Remains Murky. Next: Make-or-Break Talk Between US and Iran. Things to Know

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“How can the market rise when there’s a war?” Analysis and perspectives on the Iran situation

Hello, moo friends!

Over the weekend, I saw this picture in my social feed, which instantly reminded me of the plotline involving Ding Xie in the drama 'The Greed of Man.'

The market panic triggered by the current situation in Iran may be repeating a classic scenario from 30 years ago.

“It’s impossible for the market to rise; how can it rise during a war?” This kind of “intuitive” panic is actually one of the easiest traps to fall into in investing. History has repeatedly shown that the low point of sentiment often marks the turning point of the market trend (has anyone ever sold at the bottom?).

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In response to yesterday's poll results↓, today I will share my views and breakdown of this issue.

If there are any topics you're interested in, feel free to let me know in the comment section

1. What exactly is the market “afraid” of? Three layers of concern progressively building on each other

The current situation in the Middle East isn’t simply “firing = falling.” Rather, progressive layers of concern are further eroding stock valuations.

Concern 1: Blockade of the Strait of Hormuz → Rising oil prices → Soaring production costs squeezing corporate profits

This is the most direct micro-level impact. Particularly for the manufacturing sector (especially Japan's vast automobile and machinery industries), fuel and electricity costs are rigid.

Rising energy costs can easily erode quarterly earnings reports of listed companies, leading to a devaluation of stock prices.

Viewpoint 1: The impact appears to be limited at this stage. Various signs indicate that all parties are making efforts to stabilize energy prices. One factor is Trump's tweet about escorting shipping channels.

The second factor is the timely announcement by OPEC members of an increase in crude oil production. Past spikes in oil prices caused by Middle East issues were often related to whether oil-producing countries were willing to stabilize oil prices (historically, there have been more instances of voluntary production cuts, embargoes, and观望).

Moreover, the rise in oil prices is not entirely negative for the US (an oil-producing country), and the economic impact will not be one-sided.

Concern 2: Secondary inflation forcing the Fed into an 'aggressive response.'

The market had been range-bound, waiting for signals of an interest rate cut. But if this fire directly spreads to consumer prices, could it lead to a shift in the Fed's policy?

Viewpoint 2：It won't necessarily lead to an interest rate hikeThe impact of oil prices on US inflation is limited, with the majority of inflation contribution coming from the service sector

From the perspective of the US bond market, long-term interest rates rose by 2.5 basis points compared to the previous day, while 2-year interest rates increased by 3.3 basis points, showing overall modest volatility.

The 10-year inflation expectation (BEI) rose by 1.0 basis point, indicating that market inflation concerns are not strong.

The current 10-year BEI is approximately2.3%which is basically within the pastone-year range (2.2% to 2.4%)at the midpoint.

The reasons why it has not yet triggered long-term inflation concerns may include three factors:

1. The market believes that this situation may be similar to the attack on Iran in June 2025, which was just a short-term uncertainty shock and would end quickly.

2. With the midterm elections approaching, President Trump is likely to try to avoid expanding inflation concerns and rising long-term interest rates.

3. This geopolitical event, led by the US, will be morecontrollability”

10-Year Inflation Expectations (BEI)

Concern 3: Could the war trigger some black swan events, leading to a domino effect of cascading crises?

Viewpoint 3：

Aren't swans supposed to be white?

(Have you noticed any 'big risks' in daily life that may not yet have surfaced? Share your thoughts in the comments section for discussion!)

Hope the war ends soon.

Second, who will 'counterattack' first? Ranking the rebound sequence.

First tier: Large-cap weighted stocks that were unfairly punished.

Focus on big tech, semiconductors, and upstream AI (data center construction, chip manufacturing, etc.): These types of stocks are the most sensitive to risk, falling the hardest, but once sentiment recovers, the first round of replenishing funds tends to flow into these areas.

For example:

$NVIDIA (NVDA.US)$

$Alphabet-A (GOOGL.US)$

$Microsoft (MSFT.US)$

$Micron Technology (MU.US)$

$Taiwan Semiconductor (TSM.US)$

(South Korea's stock market dropped nearly 20% in two days, with memory giants Samsung and SK Hynix 'contributing significantly')

Additionally, NVIDIA's Global Developers Conference (NVIDIA GTC) will take place from March 16th to March 19th, which may bring new positive news.

Historically, during the GTC period, there tend to be more gains than losses.

Second Tier: Companies with outstanding performance, strong profitability, and high dividends, acting as the 'stabilizing force'

Japan's general trading companies/large-scale manufacturing industry: They inherently possess dual attributes of 'hedging + high dividends.' Once valuations retreat to a reasonable range, long-term capital tends to start a 'buying spree' mode.

March 30th is another ex-dividend day for concentrated dividend payouts in the Japanese stock market (Rights Dropout Day), and March is typically also a month with favorable supply and demand dynamics for high-dividend stocks.

As mentioned in previous live streams, there has been a tendency for US stock funds to switch between 'HALO' stocks and AI hardware this year.

HALO stocks = Heavy Assets, Low Obsolescence. In English, this can be understood as: companies with heavy assets and low risk of technological obsolescence.

You can also try asking moomooAI which HALO stocks are available for purchase.

Ending:

Fang Zhanbo in 'The Greed of Man' once said a line:"To win, you must understand how to go with the trend."

In response to this wave of 'stress tests' brought on by the Middle East situation, which approach do you prefer?

Everyone's current strategy is:

Feel free to share your reasoning in the comments section. Together, we'll seek the direction that aligns with the trend amidst volatility.

Finally, here’s one of the classic lines from 'The Greed of Man'

Disclaimer:This submission is intended solely for macro analysis and educational sharing. It does not constitute any form of investment advice. Investing involves risks, and decisions should be made considering one's own risk tolerance.

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