Stocks Undeterred By Iranian Conflict

Welcome to Risk Reversals Market Matrix, your AI-generated podcast, curated by Guy

Adami and Dan Nathan, breaking down the day's most impactful stock market and business headlines.

I'm your host Brunson, and all of today's market data is provided by FACTSAT, its Monday,

March 2nd, and these are your top stories.

US stocks rebounded from early losses today, as investors bought the dip following US

Israeli strikes on Iran.

With the US and P500 closing in the green, after being down more than 1% at its lows, sentiment

improved as oil prices pulled back from session highs, despite still being elevated, easing

fears of an immediate economic shock, while investors rotated into mega-cap tech names

like Nvidia and Microsoft viewed as resilient.

Defense and energy stocks also rallied, and traders pointed to historical patterns, showing

equities often recover within weeks of major geopolitical conflicts.

Still, risks remained tied to oil, particularly after Iran's signaled the Strait of Hormuz

was closed, raising concerns that a prolonged disruption could push energy prices higher

and reignite inflation pressures.

In an interview with CNBC, JP Morgan, CEO Jamie Diamond, said the US Israeli strikes

on Iran are unlikely to significantly hurt the US economy, or drive sustained inflation

unless the conflict becomes prolonged, noting markets typically absorb short-lived geopolitical

shocks.

He cautioned gasoline prices could rise in the near term, and warned retaliation is likely

through cyberattacks or terrorism, with banks and critical infrastructure potential targets.

While acknowledging those immediate security risks, Diamond emphasized investors should

focus on the duration of the conflict, rather than the initial shock to markets.

The ultimately expressed cautious optimism the situation could even improve long-term

geopolitical stability, and potentially act as a catalyst for a more durable peace

in the Middle East.

The FT reports that hedge funds are reassessing heavy positions in emerging markets after

the US Israeli strikes on Iran, pushed investors towards safe havens, sending EM stocks, currencies,

and bonds lower.

The MSCI emerging markets equity index fell nearly more than 1 percent, reversing a rally

that had been fueled by a weaker dollar and low energy costs.

Investors worry the crowded long EM trade, which had become one of the year's most popular

macro bets, could unravel if higher oil prices persist, especially for energy importing

economies such as Turkey and India.

Still, managers say a lasting sell-off likely depends on whether the conflict becomes prolonged,

with many funds hedging exposures rather than exiting positions entirely while they wait

for clarity.

Bloomberg reports that wagers on geopolitical events surged to record levels on the prediction

market platform, Polly Market, following US Israeli strikes on Iran, with $425.4 million

bet in a single week and total site activity reaching $2.4 billion.

Much of the activity centered on Iran-related outcomes, including contracts tied to the

timing of military strikes, and even whether Iran's Supreme Leader Ayatollah Ali Khamenei

would remain in power while blockchain analysts flagged trading patterns that suggested

possible advance knowledge of the attacks.

The boom has intensified legal and ethical concerns, because US regulators generally prohibit

financial contracts linked to war, assassination, or terrorism, yet Polly Market operates offshore

and outside direct oversight.

Lawmakers are now urging the commodity futures trading commission to crack down, highlighting

how rapidly growing prediction markets are colliding with national security risks and

regulatory gray areas.

Mortgage rates bounced higher to start the week, with the average 30-year fixed rising

13 basis points to 6.12%, after briefly dipping below 6% and touching 5.99% last week.

The move tracked the 10-year treasury yield climbing back above 4%.

As geopolitical tensions and higher oil prices stirred renewed inflation concerns.

However, Mortgage News Daily's Matthew Graham said the rate increase was likely more

technical than geopolitical, driven by month and bond buying reversing into new month

positioning rather than oil volatility.

As a result, further declines in mortgage rates may be difficult without supportive economic

data, putting added importance on upcoming releases like the monthly jobs report and

potentially complicating the spring housing market for sideline buyers.

Turning to some other headlines, catching our attention, Apple announced a new round of

hardware updates led by the iPhone 17E, its lower price smartphone, which keeps the $599

starting price while adding the A19 processor in-house wireless chips, MagSafe charging,

and more durable glass.

According to Bloomberg, the phone maintains the same 6.1-inch design and single 48-megapixel

camera, positioning it as a mid-tier option aimed at price-sensitive buyers and emerging

markets like India, competing with Samsung and Google's budget lines.

Apple also upgraded the iPad Air to an M4 chip, about 30% faster, while keeping prices

at $599 for the 11-inch and $799 for the 13-inch, with pre-orders starting March 4th and

store availability March 11th.

The launches begin a broader product wave this week, with new Macs expected and a foldable

iPhone planned for later in the year, as Apple tries to sustain recent strength in its

iPad and hardware sales.

Nvidia shares were up 3% today after the company announced a multi-year partnership with

Lumentum that includes a multi-billion dollar purchase commitment and a $2 billion investment

to expand production of optical and laser components essential for AI data centers, particularly

silicon photonics, and high-speed interconnects that improve efficiency and scale.

The deal highlights how the AI build-out now extends beyond GPUs into networking and optical

infrastructure needed to run large computing clusters.

At the same time, Morgan Stanley reiterated an overweight rating and $260 price target,

arguing the recent pullback offers an attractive entry point, and that fears of AI spending

peaking are overstated.

The bank believes hyper-scaler demand and next-generation platforms will keep AI infrastructure

growth durable into 2027, supporting continued optimism around Nvidia's longer-term outlook.

Anthropics AI chatbot

Claude briefly went offline Monday after a surge in usage, with the company citing unprecedented

demand, as free users rose more than 60% since January, and paid subscribers more than

doubled since October.

The outage affected consumer apps, but not enterprise customers, using the models through

integrations, and service was restored later in the morning.

The spike in interest comes amid a public dispute with the Pentagon, which labeled Anthropic

a supply chain risk over its refusal to allow its AI to be used for domestic surveillance,

or fully autonomous weapons.

The controversy has broadened the competitive landscape, as rival open AI simultaneously

agreed to deploy its models inside a defense department's systems, highlighting a growing

divide in how major AI companies approach military and government use of their technology.

Bloomberg reports Elon Musk's social network, X, and AI company, XAI Plan, to fully repay

about $17.5 billion of debt.

With Morgan Stanley informing Lenders, the liabilities will be paid off, though the funding

source hasn't been disclosed.

X had taken on roughly $12.5 billion during Musk's Twitter acquisition, and XAI borrowed

about $5 billion, but recent equity fundraising, including XAI raising $20 billion, and corporate

restructuring across Musk's companies, appear to have strengthened their balance sheets.

The move comes, as Musk consolidates his businesses under XAI holdings, and prepares for a potential

space XIPO, while some bonds will be redeemed early at a premium to investors.

Paying down the debt reduces heavy interest burdens for X and XAI, both of which have

been cash intensive, and signals an effort to clean up finances ahead of public market

ambitions.

That's your risk reversal market matrix.

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All of the articles mentioned on today's podcast can be found in the show description.

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Story curation by risk reversal, scripts by perplexity pro, voice by 11 laps.

I'm Brunson.

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