Precedent · War
Regional War
1990–1991
A geopolitical/war shock archetype, anchored on the 1990–91 Gulf War and generalized across regional conflicts: a supply-risk premium spikes oil, safe-haven flows bid gold and compress yields, defense equities outperform, and broad equities sell off on the initial risk-off before typically recovering.
The signature
Each variable's peak deviation from the pre-event baseline, with the curve shape, the lag before it moved, and how long the recovery ran.
| Variable | Peak deviation | Shape | Lag / Recovery | Confidence |
|---|---|---|---|---|
| S&P 500 Initial risk-off, historically recovers within months | −10% | V | 0d lag · 90d | medium |
| Gold Safe-haven bid | +15% | Step | 0d lag · 180d | medium |
| Brent Crude Supply-risk premium; Gulf 1990 oil +~60% briefly | +40% | Spike | 0d lag · 120d | medium |
| Defense Equities Defense outperformance persists | +20% | Step | 0d lag · 365d | medium |
Methodology
A composite archetype (medium confidence — generalized across conflicts, not a single sourced series). The signature is a sharp, mostly mean-reverting shock: oil and gold spike, defense steps up and persists, broad equities take a V-shaped dip that history usually recovers within months unless the conflict escalates into a sustained energy or trade disruption.
What's different now
The equity reaction to geopolitical shocks is historically smaller and shorter than intuition expects — markets price the economic transmission (oil, trade, supply chains), not the headlines. The tail risk is escalation that closes a chokepoint (a strait, a shipping lane); absent that, treat the equity dip as transient and the oil/defense moves as the durable signal.