The Only Bear Case Left Is Extinction

And even then, servers in the Fed’s basement might keep chugging along and bidding up the Dow.

The 2026 Iran war may have finally convinced me that markets have completely abandoned the Mesozoic-era tradition of actually pricing risk.

For decades we were told that financial markets serve as vast information processing machines, constantly absorbing new developments, weighing probabilities, evaluating future cash flows, and incorporating uncertainty into asset prices. Fancy shit, right?

Entire academic careers have been built around this premise. Finance textbooks are filled with elegant explanations about risk premiums, discount rates, expected returns, and rational capital allocation. Investors are supposedly compensated for bearing uncertainty. Markets are supposedly forward looking. Asset prices are supposedly mechanisms through which society collectively evaluates risk.

John Daly was a great golfer and is a hilarious human being. He gets a pass on the golf course with how he dresses because he has the game, the smarts and the swagger to back it up.

Finance professionals were assumed to know the secrets of market valuation the rest of us didn’t. They, too, are supposed to have smarts and swagger. They were assumed to know facts so esoteric that we offered up similar societal permission for them to wear shit like this on purpose.

That all sounds very impressive until you actually observe what happens in practice. Finance doesn’t need analysts for anything, because nothing matters anymore. Like my blog, most analysis now is as useless as tits on a bull. And the Iran War just proved that the only bear case at this point appears to be total human extinction, so what’s the point of sitting around pontificating about anything finance related?

Especially dressed like you’re going to the fucking Kentucky Derby every day.

The war was officially announced on February 28, 2026. At the time, the S&P 500 was trading around 6,900. Now, if you subscribe to the increasingly radical belief that markets occasionally care about small inconveniences like war, famine, plague and pestilence, you might think the announcement of a major military conflict involving one of the most strategically important regions in the world would warrant a brief period of caution.

There were obvious concerns about energy markets, regional stability, shipping routes, escalation risks, diplomatic fallout, and the possibility that events could spiral beyond anyone’s control. In previous generations these would have been classified as risks. Investors would have demanded compensation for assuming them.

And we did get our brief period of caution in markets. It lasted a couple weeks. Then, the market responded as though someone had simultaneously announced that the war was ending and we had solved our nation’s budget crisis.

Over the next three and a half months, while analysts and journalists filled thousands of pages discussing the implications of the conflict, the S&P climbed from roughly 6,900 to around 7,430 before any real framework agreement had even been reached. Instead, we endured hundreds of headlines about MOUs, letters of intent, high level discussions, ceasefire terms, agreements, disagreements and threats of total annihilation. Every day brought a new headline, none of which seemed to ever result in action.

Then, on June 14th, news arrived that a framework agreement had been reached to end the war and lift the U.S. naval blockade on Iranian ports. Faced with the conclusion of the conflict that it had already spent months completely ignoring, the market reacted in the only way modern markets know how. It went up again.

To sum it up: the war was bullish and the end of the war was bullish. And when both a problem and the resolution to that problem produce the same outcome, one begins to wonder whether there is any actual pricing taking place at all. Of course, we know there isn’t.

This creates a rather awkward problem for anyone still pretending that risk premiums exist. If the outbreak of a war is bullish and the conclusion of a war is bullish, what exactly is the mechanism that is supposed to be assigning value to uncertainty? What information would markets need to receive in order to become concerned? What event would need to occur before investors collectively decided that perhaps stocks should not immediately trade at higher prices?

The answer increasingly appears to be nothing. Or more specifically, total human extinction. And even then I’m not sure some lone server in the basement of the New York Fed Offices wouldn’t still be bidding the Dow up to all time highs.

Yes, that’s right, long after the oceans have boiled away, long after the cities have emptied, long after humanity has succeeded in turning itself into an archaeological mystery for whatever species eventually inherits the planet, that server will continue humming quietly in the darkness. It will sit there surrounded by concrete, dust, and radioactive rubble, faithfully performing the task it was designed to perform.

For nearly two decades, investors have been conditioned by repeated intervention to interpret every crisis through the same framework. If a problem emerges and threatens economic activity, policymakers respond. If financial markets become unstable, liquidity appears. If leverage starts unwinding too rapidly, some combination of central banks, governments, emergency facilities, lending programs, bond purchases, fiscal packages, regulatory adjustments, or carefully crafted press conferences eventually arrives to stabilize conditions. The details change from crisis to crisis, but the lesson remains remarkably consistent.

The “adults” in the room simply refuse to tolerate prolonged asset deflation.

Investors have learned this lesson so thoroughly that it has fundamentally altered behavior. Risk is no longer evaluated in terms of the damage an event might cause. Risk is evaluated in terms of the probability that policymakers will permit the damage to fully occur. Since the answer has repeatedly been “probably not,” investors have become increasingly comfortable treating every negative development as a temporary inconvenience on the road toward even greater liquidity.

As a result, markets have evolved into something that often resembles a religious institution more than a pricing mechanism.

See if you can stay with me here. Inflation is bullish because nominal asset prices rise. Disinflation is bullish because interest rates can fall. Strong economic growth is bullish because earnings improve. Weak economic growth is bullish because stimulus becomes more likely. War is bullish because defense spending increases. Peace is bullish because uncertainty declines. Oil prices rising are bullish because energy companies benefit. Oil prices falling are bullish because consumers benefit.

At some point the entire exercise begins to feel less like investing and more like watching medieval theologians worship the sun. No matter what happens, the conclusion is always the same. The sun rises, and stocks go higher.

And the truly infuriating part is that this absurd framework keeps working.

This is where my earlier argument about permanent distortion becomes relevant. If liquidity creation, passive investment flows, central bank intervention, retirement contributions, buybacks, algorithmic trading, derivatives markets, and institutional mandates have spent years overwhelming traditional valuation signals, then perhaps markets have genuinely changed.

Perhaps the old frameworks are not merely being ignored. Perhaps they have been structurally subordinated to forces that barely existed when many of those frameworks were developed. Namely, printing a metric fuck ton of money, anytime we want, with zero regard for the consequences. One lone “nut” jumps off the Golden Gate bridge because he can’t afford the cost of Corn Flakes anymore? No big deal, no one cares. The Dow hits an all-time nominal high at a P/E of 500x and a crypto coin with zero intrinsic value commands a market cap of $100 trillion? Well, that’s front page financial media news at its best. What a feel good story!

After all, a market trading at elevated valuations would normally imply some degree of vulnerability. Yet here we sit in mid-2026 with the S&P trading around 27x trailing earnings while the Shiller CAPE ratio hovers near 40x roughly 125% above its historical average of 16.2x and near levels previously associated with the most speculative periods in modern financial history. Investors look at these figures and react with roughly the same level of concern Winston Churchill had for his cholesterol levels.

This ultimately leaves us with a fascinating conclusion. The only event capable of genuinely breaking modern markets would likely need to be an event so catastrophic that intervention itself becomes impossible. Not a recession. Not a banking panic. Not a debt crisis. Not a war. Not even a larger war. But an I Am Legend moment.

The event would need to be so comprehensive, so absolute, and so civilization ending that there would be nobody left to announce emergency lending facilities, expand balance sheets, issue reassurances, coordinate policy responses, or remind everyone that inflation remains transitory.

In other words, the market’s only remaining bear case appears to be human extinction. And even then, that server in the Fed’s basement might keep chugging along.

I can see it now. Every few milliseconds, as the winds howl across the ruins of Manhattan and the last remnants of human achievement disappear beneath the ash, it will continue executing the only instruction modern finance has ever truly needed: buy the dip.

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