“It’s the most bearish outcome,” says James van Geelen. “I’m losing my mind.” Citrini Research’s founder — recently famous for causing a $200 billion market meltdown with a grim paper about the post-AI economy — has been desperately trying to figure out how Donald Trump’s war on Iran will affect financial markets. He had just watched the president’s April Fools’ Day address to the nation, which left him feeling glum. Even the analyst he’d dispatched to the war zone to gather firsthand intelligence was reporting disturbing news.

Prior to the speech, stocks had been rising on expectations of a cease-fire deal and Trump’s promises that U.S. involvement was almost over. But the prime-time ramble gestured at a brutal and intractable conflict. “We’re going to bring them back to the Stone Ages,” Trump said. It didn’t sound quick or easy (among other things). His invocations of Korea, Vietnam, and Iraq didn’t help either. “It’s just like, What did we rally on, then? ” says van Geelen.

For the past month, Wall Street has been trying to game out this question: How long will the war last? Embedded within it are concerns about how high gas prices will go, whether expensive energy will dent consumer spending as a whole, and whether all that will tip the economy into recession. “The longer this war continues, the worse it’s going to be,” says Stephanie Link, chief investment strategist of Hightower Advisors, which manages $350 billion in assets. As with Trump’s year-ago “Liberation Day” tariff announcement, investors have had little to go on besides the president’s constantly shifting rhetoric, goals, and timeline. (The key difference, of course, is that it’s harder to TACO on a regional war than some arbitrary numbers on a poster.)

The financial world has been especially focused on the Strait of Hormuz, the globe’s most important oil-transport channel. As long as it remains functionally shut by Iran, the international economy is in grave danger. Big investors have been just as clueless about when it might reopen as the average cable-news viewer. “I don’t have any better information than you do on this one,” admits Mike Silverman, the chief investment officer of Cresset,........

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