Ed Elson

would destroy Iranian power plants.

Iran responded by threatening to take out U.S.

energy and desalination infrastructure across the Gulf.

Just two days later, Trump said the two countries were engaging in, quote, very strong talks and that he would pause all strikes for five days.

However, Iran's parliament speaker quickly dismissed the news, saying the talks never happened.

Nonetheless, the S&P rose more than 1%, and Brent crude oil fell more than 10% on the news.

So here to help us make sense of what is actually happening here, we're joined by Justin Wolfers, professor of economics and public policy at the University of Michigan.

So,

Justin, first Trump tells us that we're having these constructive talks with Iran.

It starts to look like maybe the war is coming to an end.

Then Iran tells us, no, that didn't happen.

Markets kind of digested that.

They sort of fell down a little bit, but ultimately they're still up.

What do you make of what we've learned here in the past 24 hours?

What do you think about how investors are going to make decisions based on what they believe or don't believe going forward?

Because, I mean, it's clear that literally the entire world, the entire economy, all of global markets depend on these questions here, on what happens in Iran, what happens in the Strait of Hormuz.

And as we're learning more and more, it's also going to, I mean, our entire economy is going to depend on this question.

If this,

if this area remains closed, then we will see unbelievable amounts of inflation.

I mean, if we see oil consistently remaining at, I mean, let's call it $150, maybe $200 a barrel.