Markets in the Fog: Why Equities Climbed While the World Held Its Breath

• Somebody made the statement: “the bears are making sense, but the bulls are making money” – relating the US-Iran war to market prices. I’d like to approach this discussion as someone who’s spent decades watching markets navigate moments exactly like this—when geopolitics dominates headlines, and yet, somewhat counterintuitively, equity markets push higher.
• Let’s start with the obvious: the Middle East conflict has been a shock. Oil prices spiked, inflation fears resurfaced, and volatility returned. At one point, Brent crude surged from below $73 a barrel to over $110. That’s not trivial—it’s the kind of move that, historically, has tipped economies toward recession.
• Think back to 1973, the oil embargo. Or 1990, Iraq’s invasion of Kuwait. In both cases, oil shocks didn’t just rattle markets—they derailed growth. So it’s natural that investors today are asking: why hasn’t that happened this time?
• The answer lies in a few words: duration & energy independence.
• Markets are constantly asking—is this temporary, or is this lasting? Because if higher energy prices persist, they act like a tax on the consumer. Also, the Middle East isn’t the only source of energy – the US is an exporter too. Otherwise, demand falls, growth slows, and valuations compress. That’s the classic playbook.
• But today, the oil market is telling a different story. The market signaling: this is a supply shock, not a structural shortage. Yes, near-term inflation pressure is real, but it’s not expected to spiral into a full-blown growth scare.
• And that distinction—between a price shock and a valuation shock—is everything. Let’s get into it!

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