Yo pit crazies,

It's funny that I thought about this, but since I started in the options business, I've only known a world after the Cold War.

Meaning after Nov 9th, 1989 and the fall of the Berlin Wall.

I did start six months before that, but for the most part we had the peace dividend, and it took a long time to work through the system.

President Clinton really got the full benefit from that and from post-Gulf War I, since the order had been set and stayed that way for a decade.

The S&P 500 averaged about 18 percent annual returns during the 1990s, one of the best decades in market history.

That's what a peace dividend looks like when it gets priced in.

Little did we know that Islamic Fundamentalism would take center stage for the next 20 years post-9/11. In case you missed it, Israel and the USA took out all of the top echelon in Iran, from Ayatollah Khamenei on down.

The operation killed Khamenei and reportedly five to 10 other top Iranian leaders, including the armed forces chief of staff and IRGC commanders, in what was described as a coordinated daytime strike on a Tehran compound.

The fall of the Ayatollah could be the next watershed global event

A lot of the PLO movement and fundamentalism gained ground and was funded by Iran. The State Department estimated Iran funneled over 700 million a year to Hezbollah and up to 100 million annually to Hamas and other Palestinian groups. All in, Iran was spending close to a billion a year keeping the terror network running.

That funding pipeline is now in serious jeopardy as Israel, backed by the USA, moves to wipe out the source in one fell swoop. Will it work? A lot depends on what happens in Iran over the next few weeks. All I know is I don't want the job of funding Islamic extremism and running Iran at the same time.

Oil is spiking, but stocks are holding their ground

Crude is up over six percent today with Brent pushing into the high 70s and WTI jumping nearly six dollars to around 71 a barrel. The Strait of Hormuz, which handles about 20 percent of global oil consumption, has essentially shut down to tanker traffic. That's the short-term fear trade.

But the S&P is only down about one percent. Traders are sitting tight, waiting to see what happens next. That tells you something. The market isn't panicking. It's pricing in disruption, not catastrophe.

SPY 5 Day Chart

As in the past, the peace dividend will eventually turn bullish. After the Berlin Wall fell, the S&P went from about 340 to over 1,500 in a decade.

The ultimate peace dividend is just peace, and time will tell if we get it here. I expect VIX to start dropping once the dust settles and the market gets clarity on what comes next in Tehran.

To Your Trading Success,

AG