Oil Hits $110 But S&P 500 Hits All-Time Highs: Markets Are Unhinged

Let's just say the quiet part out loud: two tankers hit mines in the Strait of Hormuz today, Trump floated the idea of striking Iran's Pickaxe Mountain, and the S&P 500 closed at 7,746, up 0.44%. The VIX, supposed to be the market's fear gauge, is sitting at a cozy 16.69 after falling nearly 4% on the day. If the market has a stress response, it has apparently gone full Zen monk.

Oil briefly touched $110 a barrel for the first time since May, and for exactly one afternoon it looked like energy geopolitics would finally force traders to panic. Then Putin agreed to resume three-way peace talks with Ukraine and the US, Trump waived key Russia-related sanctions, and oil tumbled back down as the prospect of more Russian fuel hitting the market cooled some of the heat. It is a geopolitical yo-yo and traders are just... buying the dip on the way down. Classic.

Social sentiment on YouTube and X is split into two very loud camps. Camp One: the AI-and-earnings crowd, still buzzing from SpaceX's monster quarter and Meta's $64.6 billion Q3 revenue beat (up 26% year-over-year, for the record). The Nasdaq is up 0.9% today, the semiconductor index reportedly surged 2.5%, and Fundstrat's Mark Newton is out here pointing out that stocks above their 20-day moving average doubled from 20% to 45% in two and a half weeks. That is a bull market doing bull market things. Camp Two: the Graham Stephan crowd, warning that the current bull run has produced over 129% returns since late 2022 and is now exceeding dot-com bubble valuations, with retail buying running at 3.5x normal on down days. Both camps have a point and that is what makes this market genuinely interesting right now.

Meanwhile, Indian Oil is trimming Middle East imports under annual deals, Egypt is backing Saudi Arabia against the Houthis, and oil majors are reportedly sitting on Iran-war windfall cash wondering whether to spend it. The energy sector is the one place where the geopolitical chaos is actually showing up in fundamentals, not just in scary Reuters headlines.

The 10-year Treasury yield is holding at 5.12%, barely moved, which tells you bond traders are not exactly rushing to safety either. When $110 oil, mine-struck tankers, and a threatened US airstrike on Iran cannot move the 10-year, the market is either very confident or very complacent. History has a strong opinion about which one usually wins.

Whatever happens in the Strait of Hormuz next week, the market has made its position clear: it would like to go higher, please, and geopolitics can take a number.