Good morning, investors. Geopolitics are never easy to forecast, but markets behaved like a crystal ball this week, signaling the Iran turmoil was over long before formal peace talks were announced.

Today’s edition will help you sound smart at the water cooler.

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Markets saw peace ahead

Investors knew there wouldn’t be a prolonged conflict in the Middle East, according to the stock market and oil prices.

That prediction came to reality late Monday as President Trump announced there would be a peace deal between Israel and Iran.

Iran launched retaliatory missiles at a US military base in Qatar on Monday, something that analysts a day earlier cautioned could lead to a pullback in equities and a spike in crude.

Instead, stocks climbed while oil prices dropped, in part because the Iran strike was minimal and caused no casualties. 

As far as markets are concerned, the biggest risk would have been Iran shutting down the Strait of Hormuz and curbing global oil supply.

Yet based on the tepid response in crude prices, commodity traders did not see this as likely. 

That helps explain why the stock market did not reacted negatively.

“If oil traders aren’t too concerned about events involving Iran, it is difficult for their equity counterparts to maintain a major case of nerves,” said Steve Sosnick, chief strategist for Interactive Brokers.

According to DataTrek Research co-founders Nicholas Colas and Jessica Rabe, the two indicators worth paying attention to are oil prices and the VIX, also known as Wall Street’s fear gauge. 

If oil were to stay below recent highs while the volatility index climbs to 27.3 — one standard deviation above its long-run average — that would historically signal an “investable” low for stocks. 

Forward stock returns tend to improve when investors become more fearful, as the chart illustrates below.

Rising fear without a concurrent spike in energy prices would be a rare setup.

Markets last behaved this way during the Gulf War in 1990, and stocks bottomed months before any resolution on the ground. Colas and Rabe note that markets often find their footing long before headlines improve.

Short of a true oil shock, little was likely to move stocks in a big way.

As investors and market strategists have told Opening Bell Daily all week, even a small pullback would present a buying opportunity. 

“Quite frankly, the Israeli economy is too small to affect many multinationals’ bottom lines, and Iran has been isolated from the global economy for decades,” Sosnick said.

President Trump, for his part, called Iran’s missile strike “very weak,” and said 13 of the 14 projectiles were shot down by US defenses.

A couple hours after that post, the president announced that a peace deal would be coming.

Brent crude, the international benchmark, fell more than 8% on Monday, while US stocks remain within striking distance of a new record high.

Market snapshot

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Elsewhere

🚨Anthony Pompliano raised $750 million for a new company. ProCap Financial will be a bitcoin-native financial services firm and a publicly-traded entity on Nasdaq, $CCCM. The business will focus on acquiring bitcoin for its balance sheet. (Pomp Letter)

✂️ Fed governor Michelle Bowman may support a July rate cut. She said Monday that she would be open to easing policy as soon as next month. Months after the White House’s rollout of tariffs, retailers seem unwilling to raise prices on essential consumer items, she said. (WSJ)

📈 Tesla stock surged more than 9%. Elon Musk kicked off the robotaxi test in Austin on Sunday, with customers paying a flat fee of $4.20. The launch positions Tesla to take on the driverless industry leader Waymo, which is owned by Google. (Yahoo Finance)

Rapid-fire

• Fed Chair Jerome Powell will testify before the House Financial Services Committee at 10AM Tuesday, and again Wednesday before the Senate Banking Committee (Yahoo Finance)

• Super Micro stock dropped after it announced plans for $2 billion in convertible notes (CNBC)

• Home sales rose in May after two months of declines (WSJ)

• Hims & Hers stock tanked 30% after Novo Nordisk ended a collaboration with the platform (Yahoo Finance)

• Mainstream media keeps losing journalists to Substack (Blog)

• Shares of Circle extended for a third day as stablecoin enthusiasm continues (Yahoo Finance)

• What Wall Street veterans are expecting in the aftermath of the US strike on Iran (Opening Bell Daily)

Last thing

About me

📰 I’m Phil Rosen, co-founder and editor-in-chief of Opening Bell Daily. I’ve published books, lived on three continents, and won awards for my journalism, which has appeared in Business Insider, Fortune, Yahoo Finance, Bloomberg and Inc. Magazine.

I write our flagship newsletter to prepare you for each trading day — unpacking markets, economic data and Wall Street with analysis you won’t find anywhere else.

Feedback? Reply to this email, ping me on X @philrosenn, or write me directly at [email protected].