Wall Street’s instinct to downplay a shock is well-documented — and Robin Brooks isn’t buying it. Brooks, a Senior Fellow at The Brookings Institution, wrote on Substack on Tuesday that analysts minimizing Monday’s oil move are missing the bigger picture.
“If you admit to being surprised, this means you didn’t see something coming, which in markets means you failed,” he wrote. “This is why so much market commentary tends to downplay shocks when they happen.”
Three Times Bigger Than Ukraine
Brooks compared Monday directly against Feb. 24, 2022 — the day Russia invaded Ukraine. Brent crude surged over 7% Monday against just 2% on invasion day. “Yesterday’s spike in oil prices was more than three times as big,” he wrote. “That’s a big shock no matter how you cut it.”
The supply math explains why. Russia exports around 7 million barrels per day. Twenty million barrels transit the Strait of Hormuz — now at the center of the U.S.-Iran conflict — every single day.
Gold Up, Stocks Defensive
The S&P 500 was flat Monday, far more cautious than the 2% gain on Ukraine invasion day. Gold rallied — the opposite of 2022 — while the Dollar strengthened against G10 and emerging market currencies. Brooks called it a risk-off session, with markets “trading Iran like it’s a big shock — not a little one.”
Tuesday Price Action
WTI crude pushed toward $81 a barrel and coal jumped over 8% Tuesday, according to data from Trading Economics.
The S&P 500, tracked by the SPDR S&P 500 ETF Trust (NYSE:SPY), was down 1.36% at 6,787.71, while the Nasdaq Composite, tracked by the Invesco QQQ Trust (NASDAQ:QQQ), fell 1.42%, according to Benzinga Pro data.
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