Good morning,
The war is approaching the two-week mark—already longer than many (particularly the bulls) expected. Over that period, the S&P 500 Index has declined -2.94%, and the market now sits -4.71% below its all-time high reached six weeks ago. By almost any historical measure of market anxiety, a ~3% decline two weeks into a war with no visible end in sight is surprisingly modest.
There are likely a few explanations.
First, the U.S. economy has been firing on all cylinders. Most of the key cycles—business investment, inventories, housing, and credit—remain in good shape. Perhaps most important for financial markets, excess liquidity has climbed back toward post-pandemic highs. Of course, the longer the conflict persists, the more all of this comes into question—and policymakers in Washington know it.
That leads to the second explanation often discussed on Wall Street: the so-called “Trump put.” If there is one consistent feature of Trump’s policy style, it has been a willingness to create an off-ramp when aggressive actions trigger spikes in investor fear and declines in market values.
Strategists are actively debating whether such a “put” exists in the context of the current conflict. The consensus, however, is cautious and mixed. Many are explicitly warning investors not to rely on it this time.
Perhaps they are right. But it’s worth remembering that “this time is different” has historically been one of the least reliable strategies in investing.
I’m not suggesting investors bet on a political reversal. Rather, the market itself is sending a message: market signals have not broken down yet. A powerful underlying economy—one that likely requires a prolonged conflict to materially weaken—combined with Trump’s historical tendency to recoil from sustained market stress, may help explain the market’s relative resilience so far. It may also be hinting at the path ahead.
Be well,
Mike