Death, Taxes and Volatility: Why Geopolitics Tops Economic Models

There is an old saying — frequently quoted, rarely questioned — that in this world, nothing is certain except death and taxes.

It’s a neat line. Efficient. Reassuring, even. It implies structure. Predictability. A kind of quiet agreement between individuals and the systems that govern them: you will live, you will earn, you will pay, and eventually, you will die. Clean. Linear. Understandable.

Of course, the irony is not that taxes are in doubt. The IRS is doing just fine.

The irony is that everything else is.

Somewhere along the way, we mistook repetition for certainty. Just because something has happened consistently — rate cycles, economic recoveries, disinflationary periods — we began to believe it would continue to happen in the same orderly fashion. We built entire models, portfolios, and narratives around that belief. We convinced ourselves that the world, at its core, was predictable.

And then the world, as it tends to do, reminded us that it is not.

At the start of 2025, the story practically wrote itself. Inflation was coming down, steadily enough to suggest that the Federal Reserve had done its job. The most aggressive tightening cycle in decades was nearing its logical conclusion. The next chapter, everyone agreed, would be easing. Rate cuts would follow. Growth would stabilize. Housing would recover. Markets would respond accordingly.

It was the kind of narrative investors love, not because it is always right but because it is easy to believe.

The only problem is that reality refused to cooperate.

While economists debated basis points and plotted elegant glide paths toward a soft landing, the world outside those models was getting messy. Tariffs resurfaced. Trade tensions lingered. And then, more forcefully, geopolitics reasserted itself — not as a background variable, but as the main character.

The Middle East, once again, became the axis around which global uncertainty rotates.

For a brief moment, there was calm. A ceasefire. Markets rallied in relief, as they always do when given even the slightest excuse. Bond yields eased, equities climbed, and the S&P 500 edged closer to record highs, as if to say: see, the system still works.

But calm, it turns out, is not the same as stability.

Talks stalled. Positions hardened. The possibility of a blockade in the Strait of Hormuz — one of the most critical energy chokepoints in the world — entered the conversation. And just like that, the narrative shifted again. Oil prices reacted immediately, because oil does not wait for confirmation. It prices fear in real time.

And fear, lately, has been expensive.

This is where the tidy framework of “death and taxes” begins to unravel, not because taxes are in question but because everything else refuses to stay in its lane. Inflation is no longer just about demand and supply, it is about shipping routes, military posturing, and diplomatic stalemates. Monetary policy is no longer just about employment and price stability, it is about reacting to variables it cannot control.

We are still talking about rate cuts, of course. We have been talking about them for what feels like an eternity. They are always just slightly ahead of us, like a destination that keeps moving as we approach it. The expectation remains that the Federal Reserve will ease, perhaps twice this year. Not canceling the plan, just … adjusting it. Delaying it. Recalibrating it in light of new “developments,” which is a polite way of saying the world has once again refused to behave.

Yet, if you step into the real economy, the translation of this policy narrative feels incomplete.

Take mortgage rates, for example. In theory, they should be responding to the prospect of easing. In practice, they are not. The 30-year mortgage rate remains stubbornly elevated, hovering at levels that suggest not confidence, but hesitation. It is as if the market is politely nodding at the Federal Reserve while quietly betting that the story is not over.

Because it isn’t.

Mortgage rates are forward-looking by design. They reflect not just where policy is, but where it might be forced to go. And right now, the possibility that inflation could reaccelerate, driven not by consumer demand, but by geopolitical disruption, is enough to keep those rates anchored higher than anyone would like.

So while we continue to discuss easing cycles and policy pivots, the market is asking a more uncomfortable question: What if the future is not as cooperative as the past?

Equity markets, interestingly, are not particularly expensive. By traditional measures, the S&P 500 is trading at roughly 19x–20x forward earnings, compared to a 10-year average closer to 17x–18x. Not cheap, but hardly stretched — just … reasonable. The kind of valuation that, in a more predictable world, might invite confidence.

But confidence, like certainty, has become harder to come by.

It creates a peculiar environment where assets can be fairly priced and still wildly unstable. Where volatility is not a sign of imbalance, but a reflection of how little we actually know about what comes next.

Public markets wear this volatility openly. They react in real time, recalibrating with every new piece of information, or misinformation, that crosses the tape. Private markets, on the other hand, absorb it more quietly, but not without consequence.

In private debt, higher rates initially looked like an opportunity. Yields improved, structures became more attractive, and capital flowed accordingly. But as uncertainty persists, that opportunity becomes more complicated. Borrowers who underwrote deals in a low-rate environment now face a different reality — one where refinancing is not just more expensive, but less predictable. Lenders, in turn, become more cautious, spreads widen, and the entire ecosystem tightens.

Private equity faces its own version of the same problem. Exit strategies depend on visibility — on the ability to anticipate where markets will be, not just where they are. When that visibility fades, timelines extend, assumptions weaken, and patience becomes less of a virtue and more of a requirement.

And then there are commodities, which have abandoned any pretense of subtlety.

If equities whisper and bonds negotiate, commodities shout. Oil, in particular, has become the most honest asset in the room. It does not pretend to know the future, it simply reacts to the present with brutal efficiency. A hint of stability sends prices down. A suggestion of conflict sends them up. No smoothing, no narrative, just movement.

It is, in its own way, a purer reflection of the world we are in.

A world that feels less like a system and more like a series of reactions.

Which brings us, somewhat inevitably, to Darwin.

Not the version reduced to a motivational quote on adaptability, but the underlying idea: that survival does not belong to the strongest or the most intelligent, but to those most capable of adjusting to change.

For years, markets operated under the assumption that understanding the system was enough. If you could model it, you could navigate it. If you could predict it, you could profit from it.

That assumption is being tested.

Because the system is no longer stable enough to be fully understood, let alone predicted. Variables are no longer independent, they are entangled. Economics bleeds into geopolitics, which feeds back into markets, which in turn influence policy. Cause and effect blur into each other.

In that kind of environment, the advantage shifts.

It is no longer about being precisely right. It is about not being catastrophically wrong. It is about building portfolios — and expectations — that can withstand a range of outcomes, not just the most probable one.

Adaptability, in other words, stops being a philosophical concept and becomes a practical necessity.

Which is perhaps the real evolution taking place.

Not in the markets themselves, but in how we engage with them.

We are moving, slowly and somewhat reluctantly, from a world that prized certainty to one that demands flexibility. From a framework built on expectations to one built on resilience. From the comfort of clean narratives to the discomfort of constant revision.

And through it all, the saying remains: Death and taxes.

Still quoted. Still repeated. Still technically true.

Just … slightly misunderstood.

Because the point was never that taxes were uncertain. They are, and will remain, painfully reliable.

The point is that everything else — the timing of rate cuts, the path of inflation, the stability of markets, the direction of policy, the outcome of geopolitical tensions — is far more fragile than we like to admit.

We are not losing certainty because taxes are in question. We are losing it because the world refuses to be simplified.

And so we find ourselves here, in a kind of economic and geopolitical rollercoaster, gripping models that no longer fully explain what we are seeing, watching markets react to forces that sit well outside traditional frameworks, and quietly realizing that the old assumptions may not hold.

Not because they were wrong, but because they were incomplete.

In the end, perhaps the phrase needs only a slight adjustment, not in its wording but in its interpretation.

Death is certain.

Taxes are inevitable.

Everything else is … negotiable.