The missiles landed. The headlines screamed. And Wall Street barely blinked. The Israel-Iran conflict, now in its fourth day, has already claimed over 220 lives and triggered direct strikes on nuclear and energy infrastructure. But the market? It’s moved on. Traders have filed the war under “already priced in,” and the indexes have returned to their regularly scheduled programming. That’s not resilience. That’s detachment.
The S&P 500 closed at 5,973.91 on June 13. That’s below its all-time high of 6,147.43, but not by much. Meanwhile, oil markets surged briefly, with WTI crude peaking at $77.62 before retreating to $72.40. Brent crude followed a similar arc, topping out at $79.80 before settling near $74. The spike was real, but it didn’t last. The market absorbed the shock and went back to betting on perfection.
Volatility collapsed. The VIX remains subdued. Zero-day options continue to dominate volume. Traders are leaning into risk, not hedging against it. The war didn’t shake the tape. It barely left a smudge.
Main Street, on the other hand, is still chewing on inflation, rising delinquencies, and a labor market that’s starting to wobble. Credit card debt has crossed $1.3 trillion. Emergency savings are depleted. Rent inflation is sticky. But none of that shows up in the models that drive equity valuations. The gap between Wall Street and the real economy isn’t just wide. It’s structural.
The economy isn’t a machine you can steer. It’s a pendulum. You don’t change its direction. You change its speed. Monetary policy can slow it. Fiscal policy can shove it. But the arc is inevitable. The Fed paused. Congress stalled. The pendulum kept swinging. And it’s picking up weight.
De-dollarization and decentralization are still just headlines. The dollar remains the backbone of the global debt system. ASEAN may talk about local currency settlements, but the world still runs on green. Every trade, every bailout, every reserve still flows through the U.S. Treasury. The dollar isn’t going anywhere until the system breaks first.
The real question isn’t what breaks the market. It’s when. A black swan could hit. A geopolitical shock. A credit event. But even if none of that lands, earnings will. And when they do, the illusion dies. Profit margins are already under pressure. Revenue growth is slowing. The market is priced for perfection, but the fundamentals are whispering something else.
The illusion rolls on. But illusions don’t last in gravity.
Sources
https://www.fxstreet.com/analysis/us-economic-outlook-june-2025-202506111938
https://www.cnbc.com/2025/06/11/de-dollarization-in-asia-is-picking-up-speed.html
https://wp.nowclarity.com/blog/whats-a-black-swan-event-and-are-there-any-predicted-for-2025/