Why aren't US equities responding more harshly to geopolitical events

Jay Soloff

Argonath Financial

Why aren't US equities responding more harshly to geopolitical events? Between heightening Ukraine/Russia tensions, an end to the Israel/Gaza ceasefire, and commencing airstrikes in Iraq, you'd think investors would be more cautious vis-a-vis US stocks. Yet, over the last week, the S&P 500 is actually up nearly a half a percent. To confuse matters even more, safe-haven investments are clearly in demand. The price of gold has broken above $1,300/oz and the 10-year Treasury yield is down to 2.41%. Does the rise in US equities suggest they are also considered safe-haven investments these days? To some extent, yes. None of the current geopolitical risk should impact US corporate earnings all that much - and earnings, more than any thing else, drive the long-term price of stocks. It's also noteworthy that realized volatility has been running significantly lower than implied volatility since May.


Jay Soloff
Jay Soloff
Research Analyst
Argonath Financial

I'm an investments analyst for a US-based independent investment research firm. My focus is on economics, options, and all types of stocks, but especially tech, Internet, and renewable energy companies. I have experience as a options market...

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