Trump and Market Manipulation

This morning at 7:23 a.m., cult leader, convicted felon, and failed President Donald Trump posted the following on Truth Social:

I AM PLEASED TO REPORT THAT THE UNITED STATES OF AMERICA, AND THE COUNTRY OF IRAN, HAVE HAD, OVER THE LAST TWO DAYS, VERY GOOD AND PRODUCTIVE CONVERSATIONS REGARDING A COMPLETE AND TOTAL RESOLUTION OF OUR HOSTILITIES IN THE MIDDLE EAST. BASED ON THE TENOR AND TONE OF THESE IN DEPTH, DETAILED, AND CONSTRUCTIVE CONVERSATIONS, WHICH WILL CONTINUE THROUGHOUT THE WEEK, I HAVE INSTRUCTED THE DEPARTMENT OF WAR TO POSTPONE ANY AND ALL MILITARY STRIKES AGAINST IRANIAN POWER PLANTS AND ENERGY INFRASTRUCTURE FOR A FIVE DAY PERIOD, SUBJECT TO THE SUCCESS OF THE ONGOING MEETINGS AND DISCUSSIONS. THANK YOU FOR YOUR ATTENTION TO THIS MATTER! PRESIDENT DONALD J. TRUMP

Trump's "truth" followed a post on Saturday saying:

If Iran doesn’t FULLY OPEN, WITHOUT THREAT, the Strait of Hormuz, within 48 HOURS from this exact point in time, the United States of America will hit and obliterate their various POWER PLANTS, STARTING WITH THE BIGGEST ONE FIRST! Thank you for your attention to this matter. President DONALD J. TRUMP

That "truth," in turn, followed a post at 5:13 p.m. Friday that said:

We are getting very close to meeting our objectives as we consider winding down our great Military efforts in the Middle East with respect to the Terrorist Regime of Iran: (1) Completely degrading Iranian Missile Capability, Launchers, and everything else pertaining to them. (2) Destroying Iran’s Defense Industrial Base. (3) Eliminating their Navy and Air Force, including Anti Aircraft Weaponry. (4) Never allowing Iran to get even close to Nuclear Capability, and always being in a position where the U.S.A. can quickly and powerfully react to such a situation, should it take place. (5) Protecting, at the highest level, our Middle Eastern Allies, including Israel, Saudi Arabia, Qatar, the United Arab Emirates, Bahrain, Kuwait, and others. The Hormuz Strait will have to be guarded and policed, as necessary, by other Nations who use it — The United States does not! If asked, we will help these Countries in their Hormuz efforts, but it shouldn’t be necessary once Iran’s threat is eradicated. Importantly, it will be an easy Military Operation for them. Thank you for your attention to this matter! President DONALD J. TRUMP

In addition, Israeli journalist Neria Kraus reported last night that she had spoken with Trump on the phone. She quoted him as saying, "It's going to be very good. The total decimation of Iran. It's going to work out very well." She also reported that Trump, referring to the Iranian regime, said, "They have been very bad for 47 years, now they're getting their comeuppance."

To reiterate, in the course of a weekend, Trump:

1. Was considering winding down U.S. military efforts against Iran and leaving the Strait of Hormuz to others with which to contend;
2. Threatened to attack Iranian power plants if the Strait of Hormuz was not opened within 48 hours;
3. Claimed that the "total decimation of Iran" would soon take place; and
4. Called off the power plant attacks because the U.S. and Iran had made progress towards a "total resolution of our hostilities".

What are we to make of this head-snapping chain of events? My advice is to be skeptical. Trump is a known liar. It is a sad state of affairs that Iranian sources are likely to be more accurate than Trump. Moreover, Trump has never had a plan for the war in Iran. He is still incapable of explaining why he started the war, and his objectives for the war have constantly changed. It is apparent that Trump is completely reactive, driven by the stock market, Fox News coverage, and the last person with whom he has spoken.

The stock market in particular is Trump's barometer. If it goes up, he assumes he is doing well. If it goes down, he gets nervous and attempts to take actions to change its direction. Last week, Israel bombed Iran's South Pars gas field. Iran responded by attacking several petroleum facilities in Gulf states. This sent oil prices skyrocketing and the stock market plummeting. Trump quickly took to Truth Social to announce that Israel had acted "out of anger" and that "NO MORE ATTACKS WILL BE MADE BY ISRAEL" on the facility. This had the effect of steadying the markets. It is very likely not coincidental that Trump's threats to obliterate Iran's power plants and decimate Iran came while the market was closed. Conversely, Trump's suspension of the attacks and announcement of productive talks with Iran came just before the market opened and expected losses were turned into gains.

In his Friday statement suggesting that the U.S. would be winding down its operations against Iran, Trump left the fate of the Strait of Hormuz to others.

Trump has been wrestling with what to do about the Strait of Hormuz. According to CNN, Trump did not expect Iran to close the strait. As a result, Trump had no plans to reopen it. This has clearly frustrated Trump, and he has completely flailed in addressing the situation.

Early on, Trump was in denial about the closure, telling Fox News that oil tanker crews should "show some guts" and go ahead and cross the strait because "There’s nothing to be afraid of. They [Iran] have no Navy and we sunk all their ships."

Later, Trump tried threats, posting on Truth Social that:

If Iran does anything that stops the flow of Oil within the Strait of Hormuz, they will be hit by the United States of America TWENTY TIMES HARDER than they have been hit thus far. Additionally, we will take out easily destroyable targets that will make it virtually impossible for Iran to ever be built back, as a Nation, again — Death, Fire, and Fury will reign upon them — But I hope, and pray, that it does not happen! This is a gift from the United States of America to China, and all of those Nations that heavily use the Hormuz Strait. Hopefully, it is a gesture that will be greatly appreciated. Thank you for your attention to this matter! President DONALD J. TRUMP

It has been two weeks since that "truth" and Iran has stopped the flow of all oil except that which it has expressly authorized for the entire time.

On March 14, Trump posted on Truth Social that "Many Countries, especially those who are affected by Iran’s attempted closure of the Hormuz Strait, will be sending War Ships, in conjunction with the United States of America, to keep the Strait open and safe." This was a lie. No country had agreed to send ships to help reopen the strait. In fact, on March 17, Trump acknowledged that no NATO countries would join the effort and "truthed" that "we no longer “need,” or desire, the NATO Countries’ assistance — WE NEVER DID!"

It is completely clear that Trump has no strategy for dealing with the strait, or any other aspect of the war for that matter. This is the context in which we should view Trump's statement today. Trump's announcement that he would delay attacks on Iran's power facilities and that talks were underway had less to do with the war and more to do with the stock market. It is not even clear that there are talks going on. The Iranian government completely denied such a thing. It is probably true that third parties are relaying messages between the U.S. and Iran and, perhaps, areas of agreement have been determined. But, I will bet my bottom dollar that progress is not anywhere near what Trump claims it to be. Let me put this in starker terms. Trump's threats over the weekend promised devastation to Iran and equally devastating retaliation. This caused oil prices to rise over the weekend with Brent Crude reaching $114 at one point. There was going to be a stock market route. Then Trump said there would be no attack on the electric plants and talks were underway. This led to Brent dropping to as low as $96 at one point and the stock market opening with big gains.

There are really three things that I think can objectively be said about Trump: 1) he is cognitively impaired; 2) he is a liar; and 3) he is corrupt. We should not overlook this third element in this weekend's developments. As documented by Adam Cochran on X, 5 minutes before Trump's announcement this morning, someone bought $1.5 billion worth of S&P futures and someone sold $192 million of oil futures. This was 4-6 times the size of any other trade during the market close. Somebody knew that stocks would rise and oil would drop. The Kobeissi Letter on X also noticed Trump's impact on the market, writing:

This is absolutely insane:

At 7:04 AM ET today, President Trump said “the US and Iran have had productive discussions" to end the Iran War.

By 7:10 AM ET, the S&P 500 surged +240 points adding +$2 TRILLION in market cap.

27 minutes later, Iran completely denied all of President Trump's claims and said there has been "no contact" with the US.

By 8:00 AM ET. the S&P 500 had fallen -120 points erasing -$1 trillion in market cap.

That's a $3 TRILLION swing market cap in 56 minutes, just in the S&P 500.

What is happening here?

I have been wondering why traders are so desperate to believe Trump given the ample evidence that he so frequently lies. Are traders simply naive or actually not that bright? I've come to the conclusion that many of them are simply extremely cynical. They know that Trump is likely not telling the truth, but they know that he will move the market anyway because there are so many other morons willing to believe him. Once the market starts moving, there is a herd mentality as others join in. As a result, investing is not done based on the facts on the ground, but rather simply based on expectations of market movement, even when the premise of that movement is false. Nobody is going to be able to convince me that this is how a rational economic system should work.

Trump has twice entered negotiations with the Iranians, claimed that progress was being made, and then attacked them. As a result, the Iranian regime will be very cautious in dealing with him. It is very likely that Trump has exaggerated, if not outright lied about, any progress towards ending the war. Trump has no clue what to do about the war, but is fixated on the stock market. As such, his actions are more likely to be related to the market rather than the war itself.