$1T Moved on Iran “Talks” — Did They Even Happen?
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What is the main topic discussed in this episode?
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The show goes on! The folks in there are watching. Show! Show! Welcome to Profiteer Markets. I'm Ed Elson. It is March 24th. Let's check in on yesterday's market vitals. The major indices rallied as President Trump signaled a move to de-escalate in Iran. More on that in a moment. Oil fell on that news. Meanwhile, the yield on 10-year treasuries dropped and the dollar declined. Okay, what's happening? The war in Iran may be entering a turning point. On Saturday, Trump gave Iran a 48-hour ultimatum. Reopen the Strait of Hormuz or the U.S. 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?
It's the most extraordinary thing that... The most critical issue facing American financial markets is whether to believe the American president or the Iranian leaders about what the Americans are doing. Should we believe the American president talking to the American people about the actions of America? Yeah. And I think it remains very much up in the air. And just to be really clear on the stakes here, Ed, as you said, markets rose very strongly on news that these talks were going ahead. Probably about a third of it unwound as it appeared that the Iranians were not so confident that anyone had ever called them. So that right there tells you that markets are believed that our president is slightly more credible than the Iranian leadership, but not substantially so.
Look, 1% on the S&P 500 is $600 billion. Maybe it rose about 1.5%, actually, if I remember. So that's about a trillion dollars. There's about 100 million American households. So that says... Whether the president was telling the truth or not makes a difference in the wealth of the average American household of plus or minus $10,000. It's just a way of saying the stakes here are incredibly high and we are sailing through fog at midnight with a blindfold on while listening to the sweet, sweet tunes of our president telling us what may or may not be happening.
What do you think about how investors are going to make decisions based on what they believe or don't believe going forward?
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Chapters
5 chapters
1
What is the main topic discussed in this episode?
0:00–6:14
2
What triggered the recent market rally related to Iran?
6:14–9:06
3
How did Trump's statements affect investor confidence?
9:06–11:22
4
What does Justin Wolfers think about the credibility of the U.S. president's claims?
11:22–13:06
5
What are the implications of the Iran situation for global markets?
13:06–29:47
Speakers
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