The news about the 'liquidation' of Iran's Supreme Leader Ali Khamenei instantly gave the markets the illusion that war is a series where it's worth removing the main antagonist, and the credits will roll automatically.
Quotes jumped, crypto healed its wounds, investors sighed: 'Phew, well, that's it, we've shot our load.'
Well, here it is: it's too early to rejoice — and I'll explain why.
1. Iran is not a 'one old man's regime'
The whole system was not held up by the life of an 86-year-old man. Iran's power structure is a networked theocratic mechanism where one leader is just the top of the structure.
Who is in charge?
The Supreme Leader is elected by a Council of 88 experts.
And, surprise: The head of this council has no less, and often more real power than the Leader himself.
And the funniest thing is —
on the 'bench of reserves' there are not one, not two, but hundreds of such candidates.
A replacement is always being prepared — they don't need to come up with anything in emergency mode.
So, thinking that the elimination of a leader will collapse the regime — is naivety in the style of 'let's just turn off the server and end the war'.
2. The real effect: not weakening, but consolidation
And here the markets, as always, made mistakes in quick conclusions.
Similar external strikes:
● strengthen the unity of the elites,
● radicalize part of society,
● create a need for a 'hard response' (otherwise, the new power looks weak).
And this is exactly what the markets do not take into account.
Potential risks now include:
● loud steps in response,
● attempts to strike at U.S. interests,
● activation of allies,
● internal political purges,
● demonstrative displays of force for the sake of 'restoring dignity'.
The markets saw 'positive news', but reality became more dangerous.
3. The Strait of Hormuz is again in the spotlight
Footage of the second burning tanker in the Strait of Hormuz — the planet's most famous oil 'throat' — has emerged.
Historically, it has never been officially closed, but even the threat caused spikes in oil and market corrections.
Now imagine what will happen if Iran achieves a real temporary blockade:
● oil is soaring,
● fuel prices are rising,
● logistics becomes gold,
● business costs are rising,
● public sentiments are falling,
● inflation is accelerating,
● the economy is slowing down.
And this is already classic — stagflation.
The worst-case scenario for the markets.
4. There are more chances for positivity than it seems — but not now
We should not pretend that wars can end with 'good news'.
But for the markets, positive scenarios exist:
• rapid completion of the operation,
• peaceful resolution,
• habit of conflict (the market adapts),
• stabilization of the region after a change of power (if it comes to that).
But:
there is one — and the main — black swan: a successful closure of Hormuz.
This is precisely what everyone who understands the energy market fears.
5. And the final touch
The USA fully understands that excessive escalation will hit their own stock market.
And as soon as the risk becomes truly dangerous for the American economy —
— they will just hit the pause button.
Not out of love for peace.
And out of love for the S&P 500 index.
And this is precisely what makes the situation even more interesting:
Geopolitics plays, but the financial markets are the higher league judge.
And so, we are not yet at the finale of this series.