What the Markets Tell Trump
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On Friday, after almost a full month of bombing Iran, Donald Trump offered a glimpse of the end. American military operations in the country, he said, could soon be “winding down.” A day later, he swerved, giving Iran an ultimatum: Should its leaders refuse to lift their effective blockade on the Strait of Hormuz within 48 hours, unfreezing much of the world’s oil, he would “obliterate” the nation’s energy infrastructure. Then, yesterday morning, another swerve: Following “productive” diplomatic talks, Trump would postpone the deadline until Friday. Never mind the fact that Iran has denied that any such talks took place.
The president hasn’t always been clear about what he wants from this war—or how he plans to mitigate the energy crisis it has created. At one point, he suggested that the spike in oil prices might actually be a good thing, because “we” could stand to “make a lot of money.” That’s true for oil producers, although not exactly a counter to all of the negative effects of a global energy shock. But the timing of this ultimatum and the timing of its subsequent deferral are revealing in their own way. Oil-futures markets don’t trade from Friday to Sunday evening. Because Trump’s threat to Iran arrived on a Saturday night, speculators had a short buffer—a little less than a day—to assess the potential price impact before trading resumed. And the reprieve, which lasts exactly five days, will conclude as markets head into the weekend pause.
The persistent rise of U.S. Treasury yields, coupled with the news yesterday morning that Asia’s markets (which start trading before Western markets) had plummeted after the ultimatum, probably also contributed to the postponement. John Bolton, who served as Trump’s national security adviser from 2018 to 2019, told The Atlantic that during Trump’s first term, foreign-policy announcements were sometimes timed with trading hours in mind. Those calls were made both by the president himself and by Treasury officials who advised him to do so. Trump’s second term has only clarified how much power the markets seem to have over his decision making—and other countries are likely paying attention.
Intentionally or not, certain military actions in Iran have aligned with weekend market pauses. And Trump has made at least one big recent decision that explicitly hinged on the market’s reaction: The initial announcement of last year’s “Liberation Day” tariffs, which resulted in the most significant equities-market shake-up of Trump’s second term, was deliberately delayed until the end of the trading day, Atlantic reporting has confirmed. The president has also enjoyed his power over the markets more broadly. My colleague Jonathan Lemire told me that, according to his reporting, Trump has in the past alerted aides when he thought an upcoming social-media post would get a reaction from Wall Street—and then watched the ticker move in real time. (“The Administration is naturally attuned to how major policy decisions affect financial markets and the economy, but any implication that the President’s decision-making—and timing—is influenced by anything other than the best interest of the American people is baseless and false,” a White House spokesperson wrote in a statement to The Atlantic.)
It’s easy to get conspiratorial about how, exactly, Trump times these moves. After all, not every foreign-policy decision can be chalked up to markets alone. The United States’ and Israel’s initial strikes on Iran were planned to coincide with a meeting of top Iranian leaders. That meeting happened to be on a Saturday. The timing of the raid on Nicolás Maduro’s compound reportedly had to do with the weather in Caracas in January; unfavorable cloud conditions delayed the capture of the Venezuelan president for days. Lucky, then, that the clouds cleared up on a Saturday—energy markets had a chance to figure out what the effects of the intervention might be before they reacted.
Thomas Wright, an Atlantic contributing writer and a senior fellow at the Brookings Institution, told me that although Trump has long cared about shifts in U.S. Treasury yields (Barron’s went so far as to call them his “kryptonite”), his recent actions have underscored the importance of energy markets in his decision making. “We’ve discovered in the Iran war that he’s also very sensitive to the price of oil—which we could have gathered from what he said over many years—but I think we have some evidence to it,” he said. Yesterday, Trump appeared to acknowledge the link between oil prices and the timing of his policies; after he announced the delay of his ultimatum on Iran, the price of oil slid and the stock market bounced back. “The price of oil will drop like a rock as soon as a deal is done,” Trump told reporters. “I guess it already is today.”
Iran is likely keeping tabs on Trump’s sensitivity to the markets too. When the price of oil shot up after the start of the war, the consequences set in for Americans pretty quickly: Gasoline is up; jet-fuel prices are up, compounding the ongoing chaos at American airports; and groceries and other everyday items are poised to get more expensive as well. Iran knows it has at least some leverage here. Trump’s apparent willingness to make decisions based on the markets is a liability—the more he reacts, the more easily he can be exploited.
Jonathan Lemire and Vivian Salama contributed reporting.
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Today’s News
- The Pentagon is preparing to deploy an elite combat brigade from the Army’s 82nd Airborne Division to the Middle East, adding to recent U.S. military buildups in the region. Officials say no decision has been made about whether they will send troops into Iran.
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Evening Read
The Most Urgent Issue for the U.S. Catholic Church Isn’t Abortion Anymore
By Francis X. Rocca
Not so long ago, when U.S. Catholic leaders said something political, they tended to sound like conservatives. American bishops’ most prominent policy statements focused on three issues: same-sex marriage, contraception, and—above all—abortion. Their frequently stated opposition to all three put them at odds with not just the left but also many Catholics. It even created tension with Rome.
Since Donald Trump’s reelection, however, the Church in the United States has been sounding more liberal. Its teaching hasn’t changed, but the president’s second term has shifted the bishops’ attention. The most urgent political concern for America’s Catholic leaders is no longer abortion; it’s immigration.
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Culture Break
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Rafaela Jinich contributed to this newsletter.
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