Here is the bull case for stock markets right now:1) Trump is bored of the warThe war will end because Trump wants it to end, period. There are things to work out but Trump measures himself on the Dow Jones Industrial Average and rising gasoline prices are kryptonite for American politicians. I'd have though we had priced in a 95% chance of the war ending 8-10 days ago, but here we are and we haven't even given back the "Hormuz is open" rally.2) AI is amazingI keep thinking about the talk a few months back from OpenAI founder Ilya Sutskever who said something like "what amazes me about AI is that works". We have become accustomed to using AI now but when you step back, it's still something that's close to magic. Sutskever said that AI will be able to do everything that humans can. If you ignore the possible apocalyptic risks, what could possibly be more bullish than that? The latest leg higher in stocks came after the leaks around Anthropics Mythos and in the long arc of history, AI will be remembered far more than this short-lived war. The investment boom will continue and it will deliver.3) The economy is goodWhile the war was going on, the US continued to release economic data and it consistently ran better than expected. Jobs have picked up again and this week's retail sales report was strong. Sentiment is ghastly but that's stopped consumers and businesses are continuing to invest. If not for this war, we would be writing about a strong economy.That's fairly compelling stuff but let me know highlight the downside risks.1) This war isn't overEvery prolonged war is the result of miscalculation. World War I was sold as a short adventure with soliders told they'd be home by Christmas, Napoleon thought Russia would capitulate after he entered Moscow, The US thought Vietnam would fold and Putin thought Ukraine would be quickly defeated.Iran suddenly finds itself holding huge leverage and time is on its side, with every barrel not produced adding pressure on the US and others to back down, remove sanctions, provide funds, accept some nuclear enrichment, pay a toll or remove military bases. Perhaps they're miscalculating as well but there's a fair chance they press their luck, perhaps more than Trump thinks as today we learned that they still have about half of their missiles.While stocks are pricing in peace, oil prices continue to rise. That dynamic can't continue.2) Rate cuts aren't comingBefore the war, the market was pricing in two rate cuts this year. December oil is at $76 now and even if we retreat back there, that's up 25% from pre-war levels. That alone is enough to keep inflation above target all year. The better economic data highlighted above also isn't necessarily good for stocks as it underscores that rate cuts aren't necessary.3) The shorts are getting squeezedToday's price action across a number of stocks worries me. Many of the top performers are some of the most-shorted names along with some meme stocks. The IGV software ETF is up 2.3% and if the AI disruption highlighted above is coming, that's hard to square.Even with that, the S&P 500 isn't making new highs (though the Nasdaq is). It's been a nice run in stocks and I've been on board with until this week but it's starting to look dangerously vulnerable. We start into the megacap earnings with Tesla today and that how those reports fare could dictate the next move but last quarter wasn't exactly inspiring. This article was written by Adam Button at investinglive.com.