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War in Iran, Shockwaves in Markets

·34 min·2 clips

Futures opened down 1%, which Wolfers translates into about $2,000 per American on the S&P 500.

1. What Next | Daily News and Analysis uses the episode "War in Iran, Shockwaves in Markets" to examine how U.S. and Israeli attacks on Iran are moving financial markets. 2. Lizzie O'Leary hosts the episode, and Justin Wolfers joins as a professor of economics and public policy at the University of Michigan. 3. The core question is whether markets, oil prices, and the VIX can give a forward-looking estimate of the economic consequences of war. 4. Wolfers says the best single metric is financial markets, because they aggregate billions of dollars in bets on future profitability. 5. He dismisses CNN talking heads, White House statements, and other underqualified commentary as poor guides to what happens next. 6. When futures reopened after the attacks, he says the market was down 1%, which he translates into about $600 billion on the S&P 500. 7. He uses the S&P 500’s roughly $60 trillion market cap and about 300 million Americans to argue that the average person was about $2,000 poorer on paper. 8. Wolfers says that if the market was already pricing in a 50% chance of war, the full economic effect could be much larger than the first move suggests. 9. He points to his Iraq War paper with Eric Zitzewitz, which found that a 10% rise in invasion odds was associated with a 1.5% decline in U.S. stocks. 10. He uses that relationship to argue that a one-tenth war could imply a 15% stock-market effect, which he calls a large number. 11. Lizzie O'Leary asks about the VIX, and Wolfers explains it as implied volatility derived from options pricing. 12. He says the VIX is often called the fear gauge because people pay for insurance-like bets that pay off if stocks fall sharply. 13. Wolfers notes that the VIX is not at record levels, but he says it is higher than it has been in a few months. 14. He compares the current uncertainty to Liberation Day tariffs, the pandemic, and market swings that reflected fears about Trump's trade policy. 15. Looking outside the United States, Wolfers says European and Asian markets have fallen much more sharply than Wall Street. 16. He says the asymmetry matters because Europe is more exposed to energy shocks, while the United States is now a net exporter of petroleum products. 17. Wolfers argues that oil now works differently than in the 1970s because U.S. producers can sell into world markets, which pushes domestic gasoline prices up with global crude prices. 18. He says gasoline is likely to rise by about 25 cents if oil is up 8%, while producers in Texas and Alaska benefit and consumers pay more. 19. The episode has a newsroom Q&A rhythm, with Lizzie O'Leary pushing for plain-language explanations and Wolfers answering with numbers, jokes, and historical comparisons. 20. People tracking markets, inflation, or oil shocks would get the most out of this episode, while listeners wanting battlefield strategy or diplomacy details might skip it.

As heard by us

A clear market lens on war, oil, and the pressure points that show up first.

This episode looks at Iran through the market, not the battlefield. Justin Wolfers keeps pulling the conversation back to oil, Europe's exposure, and the way presidents react when the numbers start to move.

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Want Justin Wolfers translating the Iran attacks into market risk, not cable-news fog?

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