The S&P 500 made an all-time high today, and so did the Nasdaq. What matters is not the print. It is that the reasons behind it are fundamental, and they look set to continue.

Start with geopolitics, because that is what changed. The probability of peace in the Middle East, as priced on prediction markets, is higher today than it has been in two and a half months. That is good for economies, good for humanity and good for investors. The VIX has come back down to 17. Oil is back to 91 from 120, a 30% drop from the highs. The pre-conflict level was about 65 a barrel, so there is still ground to cover, and my expectation is we cover it over the next month or so.

The mechanism is control of the straits. US technology, led by the Navy and the Air Force, has controlled traffic through the Straits of Hormuz. There will be problems along the way and it will not be a smooth line. But it is restricting Iranian oil exports, and that changes how China and the rest of the Asian economies have to think. They will have to start buying oil on the open market, in dollars. That was not the case a week ago. The defense of the petrodollar has been steadfast, and I expect the dollar keeps its standing as the reserve currency for the foreseeable future.

Then the numbers. The S&P 500 is expected to grow earnings 13.2% in Q1, which would be the sixth consecutive quarter of double-digit earnings growth. I had to look at the technology figure twice: earnings per share growth of 45% in the quarter, on revenue growth of 27%. So it is no surprise that investors are buying technology at a price to earnings multiple in the low 20s. At 21 times earnings that sector is as cheap as it has been in five or six years, and it is the most profitable sector of any stock market of any size in the world. About a week ago that multiple was equal to the energy sector, whose multiple had run from 14 to 21. I have been underweight energy because I did not buy into that rally, and energy is now the laggard. We also carry an overweight in defense, which sits inside the industrial sector and continues to do very well.

I have been talking about a new high since last quarter, and I did not think it would get here this quickly. That it did, and that it did so on earnings rather than on mood, is the encouraging part. I could be wrong about how far this runs. The reasons it got here are sound.