Let's discuss the current progress of the US-Iran negotiations.

1. The Strait has not been unblocked, and the volume of passage remains significantly unchanged from wartime levels today.

2. Oil prices, despite repeated market manipulations, have held firmly at support levels and show signs of breaking upward.

3. Both the US and Iran continue their military preparations. Iran has no intention of surrendering its enriched uranium, and fundamental disagreements persist between the two sides.

4. In the bond market, especially long-term yields, remain high. Expectations for rate cuts this year are very low, and the Federal Reserve has recently been signaling hawkish policies.

5. The stock market has become severely disconnected from bonds, commodities, and forex markets, exhibiting an independent trend. Historically, most of the time, this indicates the stock market is wrong. The only exception was mid-2023.

6. Lastly, some basic fundamentals, though seemingly insignificant, are worth noting: Shiller PE 40.6, PE 30, PS 3.46, PB 5.56, ERP -1%, buyback yield less than 3%, FCF yield is about to drop below 2%. These extreme historical valuations are roughly comparable to those at the end of 1999. A negative ERP means stock buyers are paying extra to bear risk (risk premium is negative). Such high valuations have been achieved in an environment of high interest rates and an oil crisis—humorously exaggerated by +100%. During the last oil crisis, the S&P PE dropped to single digits.

It feels like everyone is in a state of calm before the storm. Everyone knows a conflict might break out, but everyone hopes for a TACO.