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If War is Terrible. Why is the Stock Market All Time HIGH? - Video học tiếng Anh
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If War is Terrible. Why is the Stock Market All Time HIGH?
If War is Terrible. Why is the Stock Market All Time HIGH?
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0:00
“Russia invades Ukraine.” That headline alone should’ve crashed the stock market.
0:05
Instead, something unexpected happened. As missiles rained down on Kyiv, the S&P 500
0:10
opened deep in the red… then erased the entire drop and closed higher by the end of the day.
0:17
In the middle of a war, investors started buying. It profited from conflict.
0:22
And it wasn’t an accident.
0:24
You probably remember where you were when you heard. The images were hard to look away from.
0:29
Columns of armor rolling across flat Ukrainian fields; heliborne troops assaulting Hostomel
0:34
airport. Civilians huddling in subway tunnels. Explosions blooming over Kyiv.
0:39
Every network had cut to live coverage, and every analyst had an opinion. The consensus,
0:44
delivered with unusual unanimity across every trading desk and television screen,
0:48
was some version of the same thing: Europe and the world needed to brace for something seismic.
0:55
And for the first few hours, the market agreed. The S&P opened down 2.6%, which
1:00
made sense. It was the only rational response to the chaos the world was watching unfold.
1:05
Then something less predictable happened.
1:07
Over the next 6 hours as the invasion continued and the death toll mounted,
1:12
the index crept upward. And it kept going, mechanically,
1:16
without pause or regard for everything happening on the other side of the world.
1:19
By 4:00 p.m., it closed up 1.5%. A 4.1% intraday reversal.
1:26
In simpler terms, the S&P 500's total market cap at the time was roughly $38 trillion. That 4.1%
1:34
swing represents approximately $1.5 trillion in value. It’s like the entire market capitalization
1:40
of a Samsung, a Tesla, or a Walmart being wiped out and then fully restored in 6 hours.
1:46
People think the stock market is a barometer. A gauge tethered to
1:50
reality. When things deteriorate, the gauge goes down. When things improve,
1:54
it goes up. That’s pretty intuitive, and simple enough for anyone to grasp.
1:58
Except on the day Europe slid into the largest conventional war in generations,
2:03
the gauge effectively screamed: bullish.
2:06
And it wasn’t alone.
2:07
In April 2026, after weeks of missile strikes involving Iran, Israel, and direct American
2:13
military action, markets again behaved as though somebody had inverted the wiring.
2:18
When Washington announced a 2 week ceasefire with Iran,
2:21
headlines exploded. CNBC anchors called it a global relief rally lifting global
2:26
assets as oil prices plunged, and markets instantly ripped upward.
2:30
The Dow surged. The S&P climbed 2.1%. Bitcoin soared to over $71,000. Global markets,
2:37
from Frankfurt to Tokyo, were pricing in peace.
2:40
Except… the ships in the Strait never moved.
2:43
Maritime traffic data showed the 24 mile (39 km) Strait of Hormuz,
2:46
the single most important oil chokepoint on Earth, was still practically frozen.
2:51
Before the war, around 3,000 vessels transited the Strait every month with
2:55
17 to 21 million barrels of oil per day. In the immediate aftermath of the April 8th ceasefire,
3:00
only 45 ships entered or exited the strait. Traffic collapsed to 5% of the pre-war average.
3:07
Most of the world’s largest shipping companies kept their vessels trapped in regional ports
3:11
and declined to move them. By the end of April 2026, a mere 191 ships transited the
3:17
strait the entire month, a far cry from the pre-war average of 138 ships a day.
3:23
The Iran War in early 2026 looked ugly enough to make even seasoned traders
3:28
nervous. There were missile exchanges between extremely volatile countries,
3:32
which led to oil disruptions and escalation risks involving American military assets in the region.
3:37
Human traders responded to the expected economic
3:40
wobble the way they always do when the sky darkens.
3:44
They shortened everything they could find.
3:45
Goldman Sachs prime brokerage data,
3:47
which tracks the actual positioning of the largest hedge funds in the world,
3:51
showed institutional investors dumping global equities in March 2026. It was at the fastest
3:57
pace in 13 years. That was the second-largest selling episode Goldman Sachs ever recorded.
4:02
Short sales were outpacing long purchases by a ratio of 7.6 to 1 and gross leverage stood at
4:09
312.5%. That basically means that institutional positioning had become violently bearish.
4:17
In plain english, the most expensive minds on Wall Street had collectively walked into a theater,
4:22
detected smoke, and sprinted toward the exits at full speed. But not before they
4:27
stopped at the door on the way out to borrow additional gasoline on margin.
4:31
And in doing so, they accidentally built an economic bomb since every
4:34
short position contains a future buyer trapped inside.
4:38
When you short a stock, you borrow shares from someone else and immediately sell them. The hope
4:43
is that the price falls so you can buy them back cheaper later and pocket the difference.
4:49
Remember the GameStop “to the moooooooooooon” phenomenon during the Covid pandemic? Like that.
4:54
But if the stock rises instead, your losses are theoretically unlimited.
4:58
You’d still owe those borrowed shares back, and every tick upward tightens the vice.
5:03
Eventually your broker stops asking politely and forces you to close the position before
5:08
the losses become catastrophic. Meaning you are now forced to
5:11
buy because a man in risk management says so and he is not joking around.
5:16
Now scale that up across hundreds of billions of dollars in leveraged
5:20
bearish bets sitting inside an already hyper-elastic market.
5:24
The kind of marker where every dollar of buying moves prices $5 in aggregate.
5:29
What it stops resembling is sane investing.
5:32
What it starts resembling is someone compressing an industrial spring beneath a hydraulic press,
5:37
hoping nobody is dumb enough to even breathe near the release lever.
5:41
By April 2026, that spring was fully compressed.
5:44
Then, on April 8th, the ceasefire announcement hit, and prices ticked
5:48
upward ever-so-slightly. Far from enough to move tankers back into the Strait of Hormuz,
5:53
but just enough to move the number onscreen fractionally higher.
5:58
That was when the trap snapped shut.
6:00
Short squeezes are one of the few financial phenomena
6:03
that still retain traces of primal human panic.
6:06
Most modern markets feel sterile and algorithmic. But a real squeeze still
6:10
has an ancient, timeless quality about it. It feels predatory,
6:14
like watching a herd realize too late that the valley floor is moving underneath them.
6:19
The first bears caught in April 2026 probably thought
6:22
that a ceasefire rally would fade within hours.
6:24
The shipping data was catastrophic. For all intents and purposes, the Strait of Hormuz
6:28
was functionally closed. Iran and the IRGC were still, at the time, disputing the terms of the
6:34
ceasefire the morning after it was announced. And nothing had fundamentally improved. You
6:39
couldn’t blame anyone for reading this evidence and assuming the market would continue to fall.
6:44
Just don’t tell the market that.
6:46
Once the market started climbing, the margin calls began arriving and funds that had borrowed
6:51
aggressively to build short positions suddenly needed additional collateral. The losses were
6:57
widening faster than the models predicted. Brokers started to demand that positions be
7:01
closed immediately. Which meant buying back the stock they’d borrowed, which forced more buying,
7:06
which pushed prices higher. That triggered margin calls at other funds,
7:10
which created more forced buying, which pushed prices higher still.
7:15
Which finally created a self-reinforcing loop.
7:18
The bears were not exiting carefully. They were being liquidated, and each
7:22
of the largest positions in 13 years unwound simultaneously. Since so much
7:26
of that positioning sat inside broad index products and Exchange Traded
7:30
Funds (ETFs) rather than individual stocks, the squeeze hit the entire market at once.
7:36
The terrifyingly elegant part of a squeeze is that nobody involved needs to become optimistic.
7:43
The buying happens anyway.
7:45
Nobody woke up on April 9th thinking the Persian Gulf had suddenly become
7:48
a paradigm of geopolitical stability. They bought because their broker gave
7:52
them no other option, and they were not in a negotiating mood.
7:56
For a moment, this looked like a complete explanation. War creates fear. Fear creates
8:01
excessive bearish positioning. Any upward tick triggers forced buying.
8:06
Except that’s not the whole story. Short squeezes burn hot and fast. They explain violent intraday
8:11
reversals, the kind of 4% whipsaw the S&P executed while tanks crossed into Ukraine.
8:17
But they do not, on their own, explain sustained rallies worth trillions of
8:22
dollars running across multiple volatile weeks.
8:25
Commodity Trading Advisors, or CTAs,
8:27
are vast systematic trading operations run almost entirely by algorithms.
8:32
These enormous pools of capital collectively managing hundreds
8:35
of billions of dollars are all programmed around one thing: trend-following models.
8:40
They scan price action continuously and respond according to pre-defined rules in the system.
8:45
Basically, if price crosses threshold X, buy.
8:48
If price drops below threshold Y, sell.
8:51
That is the entire decision-making process, in a nutshell. It’s data driven and sterile. The
8:57
model checks the number. The number crossed the line. The model buys.
9:00
It all happens in milliseconds on an institutional scale. When the post-ceasefire short squeeze
9:05
pushed the S&P above several key trend thresholds, the specific geopolitical
9:09
reality became completely irrelevant. The code detected upwards momentum, so the code was bought.
9:15
Goldman Sachs prime brokerage data confirmed approximately $86 billion in global equity
9:21
buying from CTAs in the single week following the ceasefire announcement.
9:25
It ranked among the top five strongest buying episodes ever recorded by the firm.
9:30
$86 billion poured into the market while analysts were still debating Iran’s naval strength,
9:36
whether the ceasefire would hold, and what global shipping data was actually signaling.
9:40
None of it changed the outcome.
9:42
The money still flowed.
9:44
Again, the systems saw numbers cross lines, and that was sufficient.
9:47
The psychological ramifications of this are difficult to overstate. For generations
9:52
people imagined Wall Street as a competitive ecosystem of brilliant analysts all racing to
9:57
interpret reality faster than everyone else. The guy who did the most homework usually won.
10:03
What April 2026 actually looked like was a gigantic automatic transmission receiving
10:08
a momentum input and responding with force amplification. A force
10:12
completely indifferent to the quality or accuracy of the signal triggering it.
10:17
This gets even more uncomfortable when you contemplate the ethical implications.
10:21
Algorithmic trading systems are not available to everyone equally. The
10:25
infrastructure required to run them is accessible only to the
10:28
largest institutional players. Hedge funds. Investment banks.
10:32
Nobody designed the system to be predatory.
10:34
It simply evolved that way, which is the major problem here. And the consequences are measurable.
10:40
In May 2010, algorithmic activity contributed to what became known as the Flash Crash.
10:45
The Dow Jones plunged nearly a thousand points in minutes before mostly recovering.
10:50
The event was so fast it basically ended before humans could react.
10:54
When it got investigated after, the question of who was responsible
10:57
begged for an answer. Was it the developers who wrote the code? The
11:01
institutions who deployed it? Or the regulators who permitted it?
11:04
While investigators eventually pinpointed a mix of automated spoofing and massive institutional
11:09
algorithms, the broader question of ultimate accountability remains a massive gray area.
11:14
The European Union has since mandated rigorous testing requirements for algorithmic trading
11:19
systems and required firms to report significant disruptions. Does enforcement actually keep
11:25
pace with the speed of technology itself? Regulators are still working that one out.
11:29
Defenders of algorithmic trading - and there are many - argue they provide
11:33
genuine benefits. Ask them and they might regale you with tales of deeper liquidity,
11:38
tighter bid-ask spreads, and lower transaction costs for ordinary people.
11:42
All of which is true, even if you still don’t understand what they were talking about.
11:47
What is also true is that the profits from these systems flow overwhelmingly
11:51
to a small number of firms that have the infrastructure in place to run them.
11:55
And the deepest layer of this entire system still hasn’t activated yet.
11:59
Ever heard of the options market? Well,
12:01
that’s the place where volatility itself becomes food for growth.
12:04
Most ordinary investors think options are niche instruments
12:08
used by aggressive traders with too many monitors and lamentable sleep schedules.
12:13
Well, not anymore.
12:14
By late 2024, zero-days-to-expiration options known as 0DTEs accounted for
12:20
51% of all S&P 500 options volume. They surpassed every other expiration
12:26
category combined for the first time in history.
12:29
In later months, the figure climbed above 60%. Millions of contracts were changing hands daily,
12:34
enough volume to fill approximately 1.5 million individual trade tickets on an average Tuesday.
12:40
These are bets that expire the same day they are placed. Wall
12:43
Street basically reinvented horse racing for institutional finance
12:47
and then soldered it directly into the plumbing of the global economy.
12:51
Once enough money concentrates in these products,
12:53
the firms facilitating the trades are forced into continuous hedging operations that never stop.
12:59
Think of a sports bookie taking bets before a championship game. If too many
13:03
gamblers pile onto the outcome, the bookie faces catastrophic losses. So the bookie
13:08
adjusts exposure constantly, trying to remain neutral regardless of what actually happens.
13:13
Options dealers do the same thing. When traders become terrified during a war, they flood into
13:18
put options. Basically the same as disaster insurance that pays off if the markets crash.
13:24
Dealers selling those put options hedge their exposure by shorting
13:27
stocks or futures. They have no choice. The math demands it.
13:31
Fear forces the dealers to lean bearish. But when the apocalypse
13:35
declines to arrive on schedule and the ceasefire lands or the short squeeze
13:39
fires and prices tick upwards, those hedges reverse violently.
13:43
The put options suddenly decay toward zero and volatility collapses. Those same dealers who
13:48
were short to hedge suddenly need to buy back everything they’d previously sold.
13:53
This is known as the gamma trap, where fear
13:56
itself creates the conditions for mandatory future buying.
13:59
And because 0DTE contracts expire so quickly, these feedback loops now operate in near
14:04
real time. And that’s how war scares can create volatility, which drives put buying, which forces
14:11
dealer hedging, which leads to the stabilization of the panic, which leads to the market rallying.
14:17
The market fed on the fear generated by the event itself. War or peace. Panic or relief.
14:22
The machine does not need to know which side wins. It needs the fear
14:26
to exist long enough for the hedging flows to activate.
14:30
We’d call this “the loop.”
14:32
The stock market most people grew up with is,
14:34
today, little more than nostalgic branding. It’s a useful fiction, maintained mostly by financial
14:40
television and quarterly statements landing in retirement accounts that nobody reads.
14:44
What has replaced it looks more like a volatility conversion engine than
14:48
a stock market. Fear goes in, liquidity comes out.
14:51
War, in this framework, becomes strangely useful? Destruction isn’t economically good for business,
14:57
everyone knows that. Real people still die, and shipping lanes close. But the volatility
15:02
generated by geopolitical fear creates the precise conditions modern market structure requires.
15:08
The market doesn’t need to collapse.
15:10
It just needs enough fear to trigger defensive positioning, rapid hedging, and automated selling.
15:16
Only for all of it to reverse when the worst-case scenario fails to materialize by the afternoon.
15:21
The market rises not despite the fear, but because of it.
15:25
Today, the old metaphor is simply broken. A barometer can reflect atmospheric conditions,
15:29
but it can’t manufacture hurricanes. The stock market, in its current form,
15:33
no longer reliably does the former, and occasionally profits from the latter.
15:38
Once you see that clearly, the bizarre war rallies stop looking irrational. None of it is. The system
15:44
works as the structure compels it to work. The Loop no longer requires any optimism, only motion.
15:50
What’s most eye-opening is how quietly this transformation happened. We never
15:54
got a dramatic announcement from Wall Street or rousing speech from the podium of the New York
15:58
Stock Exchange. The system just evolved one ETF inflow at a time, behaving like
16:03
something built to metabolize fear itself. Until eventually, bad news stopped breaking
16:08
the market… and started feeding it. But there’s an obvious question hiding
16:12
underneath all of this: What happens if the fear actually does become too big to
16:16
absorb? If this system has trained itself to recover from every shock, what happens
16:21
the day it finally can’t? Find out in “What If The US Economy CRASHES” Or watch this instead.
