The introductory paragraph of the WSJ piece, ‘War Shifts Whipsaw Markets’ (April 13, Markets 7 Finance p, C3) tells you all you need to know on how Trump has been playing the markets for his own ends since he sprang the Iran war on an unprepared world.
"Trump has repeatedly whipsawed markets during the Iran war, most recently by announcing a cease-fire only to declare a blockade of the Strait of Hormuz a few days later. The changing pronouncements have spurred market volatility since the early days of his first term. There are some signs that subsequent market swings are diminishing. But the past few weeks have nonetheless exhausted even seasoned investors."
The accompanying graphs show the whipsaws and frequency thereof better than any words:
The above graphs also telegraph Trump's motives better than any words. We know he sees the markets as the primary gauges of any success - especially when he's started a totally unnecessary conflict in the Middle East against Iran. Hence, each jump in the markets he can instigate is seen as a 'win' and we know he loves wins.
But get beyond the predictable jerking of the markets' chains, say to sober assessments of his Iran fiasco, and you get the real picture. Say columnist Gerard Baker's latest effort (WSJ, April 11-12, p. A15, 'For Now The Iran War Seems to be Failing'), writing:
Appearing on Sunday morning news shows, top officials in
President Donald Trump’s administration confirmed the plan for the next round
of diplomatic talks in Islamabad, Pakistan: Vice President JD
Vance, whom Trump had tapped earlier this month to lead the U.S. negotiations,
would be there again.
Even as United Nations Ambassador Mike Waltz and Energy
Secretary Chris Wright were confirming Vance’s participation, however, Trump
was telling the networks the opposite. Vance wouldn’t be traveling to Pakistan
because of security concerns, the president told journalists from ABC and MS
NOW in separate phone calls Sunday morning.
Trump’s remarks set off a scramble within the White House as
officials worked to correct the commander in chief’s claims, telling reporters
privately that Vance would, in fact, be leading the delegation to Islamabad.
The contradictory remarks highlighted a continuing challenge for the administration: On information as basic as who would attend high-stakes peace talks, as well as on broader questions of whether Iran has agreed to terms for a deal, Trump’s oscillating claims have led to confusion and required cleanup by his staff.
The United States and Israel launched their war against Iran
on the argument that if Iran one day got a nuclear weapon, it would have the
ultimate deterrent against future attacks.
It turns out that Iran already has a deterrent: its own
geography.
Iran’s decision to flex its control over shipping through
the Strait of Hormuz, the strategic choke point through which 20 percent of the
world’s oil supply flows, has brought global economic pain in the form of
higher prices for gasoline, fertilizer and other staples. It has upended war
planning in the United States and Israel, where officials have had to devise
military options to wrest the strait from Iranian control.
The U.S.-Israeli war has significantly damaged Iran’s
leadership structure, larger naval vessels and missile production facilities,
but it has done little to restrict Iran’s ability to control the strait.
Iran could thus emerge from the conflict with a blueprint
for its hard-line theocratic government to keep its adversaries at bay,
regardless of any restrictions on its nuclear program.
As stocks soared this week and oil prices dropped amid
an apparent cooling of tensions between the United States
and Iran, it may have left the impression that the energy shock that rattled
the world would quickly fade, along with the risk of sending the
global economy into recession.
The optimism may have been short-lived. On Saturday, Iran’s
military announced it would reimpose restrictions on the Strait of Hormuz, throwing the
critical waterway’s status into doubt.
The uncertainty highlights that beneath that surface, a
starkly different reality is unfolding. It is defined by disrupted supply lines
and damaged infrastructure, sparking increased concern among the people who
produce, transport and depend on energy.
“The people closest to the industry are far more concerned
about these disruptions and recognize the length of time it will take for
things to return to normal — if they ever do,” said Gerry Morton, oil and gas
co-chair at the law firm Baker Botts. “The further away you get from actually
being involved in producing oil, the less you seem to be concerned about the
physical reality and problems that are there.”
Even investors rushing to tap into market optimism warned in
interviews that it masks deep, underlying problems that threaten a reckoning in
the not too distant future.
That disconnect between what the market is signaling and
what is actually happening is increasingly shaping the global economy. As
investors and the trading algorithms they rely on react to headlines and hints
of diplomatic progress, analysts warn they are overlooking red flags around
what is coming in the weeks and months ahead. It has led some of the world’s
leading economic voices to warn that complacency is misplaced, including the
head of the International Energy Agency and officials at the International
Monetary Fund.
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