What are equity markets discounting? it is not risk

 

The Iran conflict is not over, yet the markets are optimistic. Perhaps it is because we don’t know what to call this oil crisis. Is it a war? A dispute? A current pause? The SPX was up over 10% for the month. The high beta names were up over 15%. For the sector extremes, the communication services sector was up over 18%, while the energy sector was down 3.45%. Surprisingly, emerging markets were also up over 11% for the month and strongly higher over the last 12 months at 32%.  Even bonds were slightly higher for the aggregate index.Yet the market is facing a significant commodity shock, with the DJCI up 31% so far this year.

Is there anything to worry about? Central banks? Growth? Inflation? The markets are either looking through any negativity or do not believe it even exists. This is a path that should concern any investor.