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Macro

War risk - why stocks keep looking through it

By Macro2 min read

11 trading sessions is the number: JPMorgan says the S&P 500 needed only 11 trading sessions to recover its preconflict level after a nearly 10% drawdown tied to the Iran shock, which is the cleanest recent read on how equities have handled war risk jpmorgan.com. That is the frame for long-term investors: the market has kept treating military escalation as a volatility event, not an earnings regime change, as long as liquidity, market structure, and policy transmission keep the hit contained. LPL reaches the same broad conclusion in its study of conflicts from 1950 onward, calling the historical pattern "impressive stock market resilience" during significant military conflicts lpl.com. So the hit for risk is a shock that stays in headlines and implied vol; the miss is a shock that migrates into energy supply, inflation, credit, and forward margins. What would change the setup is a war shock that stops being brief volatility and starts forcing a durable repricing of inflation, earnings, and policy.

11 trading sessions is the number: JPMorgan says the S&P 500 needed only 11 trading sessions to recover its preconflict level after a nearly 10% drawdown tied to the Iran shock, which is the cleanest recent read on how equities have handled war risk jpmorgan.com. That is the frame for long-term investors: the market has kept treating military escalation as a volatility event, not an earnings regime change, as long as liquidity, market structure, and policy transmission keep the hit contained. LPL reaches the same broad conclusion in its study of conflicts from 1950 onward, calling the historical pattern "impressive stock market resilience" during significant military conflicts lpl.com. So the hit for risk is a shock that stays in headlines and implied vol; the miss is a shock that migrates into energy supply, inflation, credit, and forward margins. What would change the setup is a war shock that stops being brief volatility and starts forcing a durable repricing of inflation, earnings, and policy.