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The technology and AI sectors combined now account for almost 50% of the S&P 500's market capitalization.
Since the Q3 reporting season in November, markets have begun to punish companies for higher AI capital expenditures rather than rewarding them.
Relative valuations for the S&P tech sector versus the ex-tech S&P, as well as for the Magnificent Seven stocks, are currently near 10-year lows.
Ahead of the Q1 reporting season, the ratio of negative to positive pre-announcements from US corporations was the highest it has been in five years.
A ceasefire in the Middle East conflict is currently holding, which is viewed as a positive step.
The United States has implemented a naval blockade to reduce Iran's leverage and deny it revenue from shipping tolls and exports.
Another US aircraft carrier is currently en route to the Persian Gulf.
Iran's ability to disrupt shipping in the Gulf is based on creating a perception of risk, which does not require significant resources.
Bob McNally of Rapidan Energy Group predicts that if the Strait of Hormuz does not reopen by Q3, the resulting oil price rally will cause severe hits to GDP growth.
Bob McNally expects that either a ceasefire will allow a full resumption of Hormuz flows in the coming weeks, or the U.S. military will degrade Iran's ability to interrupt shipping.
Bob McNally does not expect China to militarily challenge the US blockade of Iran.
Bob McNally predicts there will eventually be a comprehensive settlement between the US and Iran covering nuclear issues, missiles, proxies, and frozen assets, leading to the lifting of blockades.