In the latest Take 5, Ryan Detrick, Chief Market Strategist, and Sonu Varghese, VP, Global Macro Strategist, address the mounting uncertainty surrounding the ongoing conflict in the Middle East, reflecting on how geopolitical turmoil historically affects markets. Despite short-term volatility, they emphasize that markets tend to recover—especially when the U.S. economy remains relatively strong. Drawing lessons from past conflicts and economic disruptions, they highlight the importance of maintaining a long-term perspective and the protective power of diversified portfolios. They also discuss the potential impact of rising oil prices, U.S. shale production, and recent strong market rallies.
Key Takeaways
- Geopolitical volatility is intensifying The latest Israel-Iran military strikes and retaliations have sparked market swings and oil price fluctuations. Sonu notes that no one knows exactly what happens next—especially with the risk of broader U.S. involvement.
- Markets don’t always crash in times of conflict Ryan recalls major geopolitical events—including wars—where the U.S. stock market proved resilient.
- Historical context matters If conflict strikes during an already weak economic phase, it can push an economy into recession — but that’s not the case now.
- Energy prices are a key risk Oil price increases are a concern, but both OPEC and U.S. shale producers have spare capacity and financial incentives to ramp up production.
- Markets are up—maybe too much, too fast The S&P 500 just rallied 20% off April 8 lows—one of the quickest surges in history. Late June could see some seasonal consolidation, and that would be normal after such a run.
