Why Does It Seem Like The End Of The World?

Scott Poore, AIF^®, AWMA^®, APMA^®

June 18, 2026

A peace deal between the U.S. and Iran is signed, but you might not know it if you listen to the market pundits. It usually seems like the end of the world to those who seek clicks more than they provide helpful investment information. This week's musings are inspired by the 1987 song "It's The End Of The World As We Know It" by R.E.M. Here is some trivia about the song:

The song was not especially popular when released, as it only reached #69 on the Billboard charts, but has become somewhat more appreciated over the years when events such as 9/11 and COVID have occurred. It only sold about 100,000 worldwide in 1987.
Michael Stipe says he wrote the lyrics while the rest of the band went out for dinner. He wrote the song as a "stream-of-consciousness" that is not entirely related to the end of the world.
The song was heavily influenced by Bob Dylan and the way he sang "Subterranean Homesick Blues" where Dylan sang in a series of names and events, sort of a stream-of-consciousness. This style was made popular also by Billy Joel in "We Didn't Start The Fire."
The band has joked that people can't recite every word of the song. A scene in "Tommy Boy" shows Chris Farley and David Spade starting to sing along with the song when it comes on the radio and they subsequently fade off when they realize they don't know most of the words.
Whether intentional or not, the title phrase for the song appeared in the 1972 film "Conquest of the Planet of the Apes" where a human says, "If we lose this battle, that's the end of the world as we know it."
R.E.M. played this song live for the first time and the audience reacted with a happy vibe, which threw the band off. They thought the apocalyptic lyrics would create a more subdued response.
The song appears in the movies "Dream A Little Dream," Independence Day," "Tommy Boy," and "Chicken Little."

Click here to view the lyrics to the song.

Here's what we've seen so far this week...

End Of The World? A couple of verses into the song "It's The End Of The World As We Know It" describes the eye of a hurricane and the effect it has on someone inside the eye of a storm, while the world serves its own interests. With the signing of a peace deal between the U.S. and Iran¹, one would think there would be relief and praise in the media. Oh, contreras! Headlines since the announcement of a peace deal have either pivoted to some other issue or questioned the deal itself. Now that the conflict is largely over, pundits are now worried about the Fed, the housing market, or a market top. By the way, the housing headline shouldn't be a shock, as Florida is now the 3rd largest state (22 mil people) in the U.S. and has seen the migration of almost 2 mil people since 2020.² Some media that questioned why the deal was taking so long just a couple of weeks ago are now questioning the effectiveness of the deal. Such is the predominant culture today - there's rarely time to relax as the next potential crisis seems to be just around the corner. As investors, we need to understand that crises are not new and that markets tend to recover. The key is to not be subject to a change in the direction of the wind, but disciplined in our investment approach. The graph of Crises and Events shows more than 60 different happenings over the last 55+ years and the growth of the S&P 500 Index during that time. While some of these events did indeed negatively affect the market, the upward slope of equities over the long-term is readily visible and investors should take note. The job of the media today is to get eyeballs on their stories, not to focus on sound investment advice. Investors with cooler heads will likely out-pace those who fear the next crises and allow their portfolio to be subject to a headline or two.

New Fed Chair - I Feel Fine. While the chorus of "It's The End Of The World As We Know It" seems apocalyptic, the singer finishes the chorus with "and I feel fine." That should serve as comfort to investors that while life is rife with problems, life does goes on. Kevin Warsh seemed to be comfortable in his shoes as the new Fed Chair - even if the market didn't see it that way. The market reacted negatively to the June Dot-plot from the Fed and Mr. Warsh's comments with a lack of projections. First, the June dots showed most members, despite leaving interest rates steady for June, expect at least one rate hike in 2026. The market subsequently sold off more than 1%. Second, and on top of that, the market took Mr. Warsh's style just as hawkish as the Dot-plot. However, as noted by Allianz's Mohamed El-Erian, "This is a Fed now operating under a new chair while the prior chair (Powell) remains on the committee (highly unusual).³ The new chair's impact is already visible in today's communication. The statement itself is significantly more concise."⁴ The market needs to adjust to a new day at the Fed as one of fewer projections, less talk, and more data - i.e., institutional reform. Mr. Warsh stated yesterday, "I think markets perform best when reacting to incoming data. They work less efficiently when they ask how will the Fed react to that incoming information."5 Perhaps the more telling part of the new Fed Chair's speech might be one of the more overlooked points. As market pundits were wringing their hands over the Dot-plot and the potential for fewer words from the new Fed Chair, he made a comment that could help us see where the Dot-plot could be headed. When asked about the Dot-plot, Mr. Warsh stated, "I reviewed the dot plots and when I saw the submissions, I noted that all the submissions were coming in with pencils, you know those kinds with big erasers."⁵ The Dot-plot is based on data in-hand, however, now that a peace deal has been signed, the data could change. The price of oil is now trading at around $75/barrel, down 33% from its peak during the conflict. The price of gas at the pump is now below $4/gallon on the national average, which is down 13% from the peak.⁶ This could change the perspective of the FOMC members when the June and August inflation data is available. As we noted last week⁷, the largest subcomponents to May's CPI report were all energy-related. Should oil and gas continue to decline for the next two weeks, the June CPI report could be a welcomed arrival. The Cleveland Federal Reserve is expecting a flat CPI in June (+0.02%), and a year-over-year reading of +4.01%, which would be a decline from May's +4.2%.⁸ The market is adjusting to this possibility, as well. The latest swaps on Expected Inflation on a 1-year basis are now below 2.7%. A "SWAP" is a derivative contract based on an underlying asset or measurement, in this case inflation. An adjustment to the Fed's Dot-plot based on declining inflation could be good for risk assets for the remainder of 2026.

No Fear In Markets? The singer in "It's The End Of The World And We Know It" admonishes the listener to show no fear and to be cavalier. Investors need to have a healthy view of fear and to not be cavalier in their investment process. However, fear when there is little reason to fear is not so healthy. With the dawn of the U.S.-Iran conflict, the U.S. Treasury Curve made an important shift. The middle of the curve - Treasuries with 1 to 7-year maturities - have been low or inverted going back to 2023.⁹ However, that part of the curve has normalized over the past few months into its typical upward slope. That should be good news for markets as a steepening yield curve typically means the economy and markets are transitioning out of a period of stress toward a more stable condition. Markets have also shown more restraint when it comes to volatility. The VIX Index (16.7) is below its historical average of 19.5, which means volatility has eased since the first days of the U.S.-Iran conflict.¹⁰ In addition, stocks are not making substantially new lows. When more than 150 stocks on the New York Stock Exchange make new lows, that signals higher risk. The historical average of daily lows on the NYSE is 61. Over the past 3 weeks, stocks have average 66 new lows - just about par with the historical average.¹¹ Investors shouldn't have a lot of misplaced fear if the market is performing around historical averages. While market pundits and media continue to warn of the next great crisis or market peak, not all measurements are pointing to disaster. If relative performance is taken into account, stocks have been moving in normal ranges. When stocks move higher by more than 100% in a given quarter relative to their 200-day moving average, it could be reason for concern. This happened at the peak of the Dot.com market. Nearly 7% of U.S.-listed stocks moved up more than 100% while already elevated above their respective 200-day moving averages. Today, that number is only 1.1%. While elevated above the 31-year median of 0.2%, the current level is still below the Dot.com and 2008 Financial Crisis levels. In other words, while there are some points of concern in the market, overall, staying invested at this point in time is appropriate and not necessarily the end of the world.

Click here to see the original music video for the song from R.E.M......

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