Overview
- U.S. equities logged outsized gains in President Trump’s first term, with the Dow up 57%, the S&P 500 up 70%, and the Nasdaq up 142%.
- Sharply higher oil prices have emerged as a key headwind after U.S. and Israeli military actions against Iran led to a partial closure of the Strait of Hormuz, disrupting energy flows.
- About 20% of the world’s daily liquid petroleum moves through the strait, so constraints there can quickly lift global crude benchmarks.
- The Shiller P/E, or CAPE, points to stretched market valuations by averaging inflation-adjusted earnings over the past decade to reduce short-term distortions.
- The analysis argues that valuation excess and energy supply shocks are more likely crash catalysts than gasoline sticker shock, while noting no indicator can time market turns.