Sheep and war

Trump has promised an end to the war dozens of times, and yet the market never learns:

The president also tells us that the United States is on the cusp of a deal with Iran.

Hmm. Where have I heard that before?

By my count, he’s made similar claims fifty times so far. Fifty. Possibly more — I might have missed some. And he’s made these claims on at least twenty-five separate days. A sample:

• Feb 10 (before the war): “Iran wants to make a deal very badly.”
• March 23: “We have points, major points of agreement. I would say, almost all points of agreement.”
• April 5 (that’s weeks, not days ago): “It should be days, not weeks.”
• May 18: “We’re getting close to making a deal”
• May 31: “The U.S. is close to a deal.”
• June 8: “We are very close to a final deal with Iran.”

I’ve included the complete list (with sources) at the end of this post, so you can check them out for yourself.

And here’s the thing that you’ve probably noticed. Each time he de-escalates like this, markets go up. And each time he escalates, markets fall. Substantially.

Beyond the collective credulousness of the market, the larger lesson is that the Iran War is a massively negative-sum enterprise:

When you buy or sell stocks, you’re making a bet about the future profitability of American companies. So when stocks rise on de-escalation news, markets are saying: American firms will be worth more if this war ends.

The scale of these moves has led me to estimate that markets are behaving as if the Iran war destroys trillions of dollars of wealth. That, in turn, translates into tens of thousands of dollars per household.

But the private taxi-delivered surf-and-turf did get pretty exponsive.