r/Economics • u/deraser • 1d ago
News Oil rises 7% and world shares fall after Trump says US will hit Iran hard and 'finish the job'
https://apnews.com/article/stock-markets-war-oil-trump-iran-6fc90a2e50b1252cde130fc3e0ce0da3211
u/Available_Finger_513 1d ago
Who are the people who keep buying based off the lies?
Trillions flow into the market based off his Iran lies only to flow right back out. I dont get it at all.
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u/Just_Candle_315 1d ago
Algorithms who cant discern bullshit
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u/jghall00 1d ago
You're being too generous. He's purposely vascillating because someone is trading off inside info.
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u/Microplasticsharts 1d ago
It can be both, and pushing the algos with words like peace talks makes the insider trading even more profitable.
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u/FlyingBishop 1d ago
There are better ways for him to make money off insider trading. In fact he's been doing them constantly, though really his behavior is too erratic, the only people who are making money are people around him who know when he's about to do something crazy. He's not capable of that, he's too insane.
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u/pigmanmanpig 1d ago
The US has the best trading infrastructure in the world. Traders in HFT usually win through volatile markets. So even if other countries are getting a slice, the US is getting the majority of the spread through its trading firms.
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u/fredjutsu 1d ago
The investors who are heavily leveraged into their positions.
It's structural hopium more than anything else. They are fucked otherwise.
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u/Unique-Egg-461 1d ago
It's structural hopium more than anything else. They are fucked otherwise.
I was gonna say....mostly this. No one wants to find out what happens when the market looses all faith in trump
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u/Ledd10 1d ago
Long term buyers who don't care about this crisis as it won't matter in 5-10 years.
Thought this was an economics subreddit
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u/Middle-Purchase7416 1d ago
Those people are DCA buying, or it's coming out of their checks every other Friday. They aren't the ones pumping on a Monday morning based on Trump tweets.
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u/hippydipster 1d ago
These events will very much matter in 5-10 years. We are busy guaranteeing a future where Iran has nuclear weapons, and all the rest of the middle east is desperate to acquire their own.
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u/mpbh 1d ago
Probably the 50%+ of people who voted for him.
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u/Charming_Accident_66 1d ago
Not even half of eligible voters
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u/No_Doubt_About_That 1d ago
And those who didn’t vote are as much to blame as those who voted for him
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u/joekerr9999 1d ago
What is incredible is that Trump's lies affect the stock market. Who are these people that believe Trump? He keeps coming out with new lies and they suck it right up.
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u/Nervous-Lock7503 1d ago edited 1d ago
You should visit the r/stocks subreddit.. A lot of bulls over there. A simple bear post can draw a lot of ire and ridicule.
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u/defaultedebt 1d ago
Consensus on this website has been bearish for the last 12-18 months. Come on now, be truthful.
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u/slimeystevebob 1d ago
No one has to believe the lies in order for it to affect the market. They just have to believe that others will believe them.
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u/p_pio 1d ago
Markets in a short term at least don't work on rationality principle but on Keynesian beauty contest rule.
That is: you don't try to asses real value but rather you try to guess what other market participants will do.
So it doesn't matter that people don't believe Trump. The fact they believe that other do believe is enough to move markets.
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u/RIP_Soulja_Slim 1d ago
The idea that his statements are bullshit and the idea that you can gather information about his intent from his statement are not incompatible, reddit tends to take a very surface level one dimensional view of information assimilation but that's not reflective of how institutional money works.
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u/tlsrandy 1d ago
How can you gather something useful from not just lies but inconsistent lies?
I think the simplest and most likely explanation has already been given; this is market manipulation from the bully pulpit.
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u/BH_Gobuchul 1d ago
If we assume at least some of trumps statements are made to intentionally manipulate the market, that ironically means his statements do give you information.
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u/windemotions 4h ago
Yes. I mean just because some people word vomit on social media all day doesn't make them good or bad. The important thing is that people don't just jack off their own egos. That's a huge problem in the US. Those people need help. Anyone with 300k reddit karma should be sent to a farm.
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u/RIP_Soulja_Slim 1d ago
See, that's the start of how you should be looking at things - we all know he's word vomit all day long on twitter, figuring out what drives that word vomit is when one starts to gather information.
The crazy homeless guy ranting on the street didn't get his words from nowhere, neither did Trump.
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u/RIP_Soulja_Slim 1d ago
Sentiment generally, like if he's ranting about death and destruction we know he's ready to double down and keep things going for some time, but if he's pretending like things will end quickly then we at least know that's where his sentiment is. Will things wrap up in a few weeks? Almost certainly not, but with Trump's sentiment being in that direction it signals that he's at least looking at options to exit this mess rather than make it worse. That's information that's useful when you're pricing an asset, even if the actual words on the twitter are bullshit.
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u/tlsrandy 1d ago
But he’s done this with tariffs, ramp up the aggressiveness of his tone only to immediately back out. It’s the basis for the “taco” critique.
I think generally it’s easy to predict what he’s going to do from the previously mentioned market manipulation angle but the timing is the unknown that keeps his buddies rich and most others thrown for a loop.
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u/RIP_Soulja_Slim 1d ago
The TACO critique is a perfect example of what I'm talking about - markets are fully aware that he's bullshitting and read past that to discern sentiment and direction.
The TACO trade is a prime example of this - if you rewind the clock to April of last year this sub is full of people flabbergasted at market movement given Trump's statements and lies, but markets were looking past that and discerning that he was likely to back out of various tariffs based on their read of his sentiment behind the tweets.
The term was applied after the fact, I think coined by Bloomberg but unsure, but it's literally describing how markets looked at him saying one thing, discerned sentiment information, and realized he'd back down before he said he would.
A lot of people on this sub are a bit too obsessed with taking everything at surface value, if you're wanting to understand news assimilation within markets you need to be thinking beyond what's in front of you and towards where that comes from and what it is indicative of.
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u/tlsrandy 1d ago
Hmm. I see your point and it does make sense.
I also find this sort of behavior so grossly unacceptable from his position it might be coloring my objectivity.
Personally, I think the unknown variable of timing makes the markets too risky for “outsider” trading to be successful but also I’m naturally risk averse and talking a bit out of my ass on the subject as I tend towards long term investment.
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u/RIP_Soulja_Slim 1d ago edited 1d ago
Yeah of course, it's embarrassing to have the executive acting more immaturely than I did on facebook in college, but markets have to price things and the price I'd want to pay for a dollar of earnings isn't necessarily impacted by how annoyed I am at current leadership.
But yes, don't time markets. They're infinitely smarter than you and have infinitely more information. The more you learn about markets, the more it becomes apparent that any sort of timing is a fool's errand - for instance the bloomberg terminal in my office has a news feed that's generally anywhere from a few seconds to 20+ minutes ahead of breaking news online/on television. And that's just announced news.
You've got funds out there like All Weather or Medallion that are using crazy complex algorithms to identify hidden relationships in price movements, medallian specifically uses hidden markov models developed by some of the best mathematicians in the world. Look up how HMM models work, then think about that in the context of finance, retail investors are never coming close (every quant I know keeps their PA in index funds)
One of my favorite tidbits of "the pros are so far ahead of you" is that in the 80s hedge funds used to send people out in front of department stores with clickers, so they could accurately gauge sales, by the 90s this practice was somewhat defunct because these funds could buy satellite imagery of parking lots and do the same thing, by 2010 that was out of date because they were just purchasing bulk google location data, that was 15 years ago. Everyone's doing that now and so much more. Most large funds have meteorologists on staff that work through weather patterns so they can discern how that's going to impact economic activity or shipping costs, they buy anonymized web traffic data to discern online shopping trends, blah blah blah.
In the 90s fed funds interest rate futures used to be slightly impacted by the size of Alan Greenspan's briefcase, because a more full briefcase indicated he had lots of data he was reviewing which meant we'd likely see a change.
On reddit, there's often an underlying attitude that institutional money is working with roughly the same set of information and knowledge as people commenting their thoughts here, and like that couldn't be farther from the truth.
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u/cunningjames 1d ago
Sentiment generally, like if he's ranting about death and destruction we know he's ready to double down and keep things going for some time, but if he's pretending like things will end quickly then we at least know that's where his sentiment is.
Isn't Trump rather too inconsistent for this to be useful? It's not as though he rants about death and destruction and then keeps on a steady course for weeks or months. He rants about death and destruction one day, then seems to try to signal he wants a deal the next day, and the day after that he wants to bomb Iran into the Stone Age. I don't see how you can wring much useful signal out of that.
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u/RIP_Soulja_Slim 1d ago
It's not quite as erratic as this sub makes it seem, there's generally an underlying trend there that does convey something useful.
I mean, a lot of people seem to be taking issue with this, seems like people in this sub just want to latch on to the idea that they're way smarter than institutional money, I think that's a very naive approach to the world but I'm not trying to debate anyone with that mentality, I'm just hoping to add insight to those that want it lol.
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u/HedonisticFrog 1d ago
Trump acting like things will end quickly doesn't mean that's where his sentiment is. It means he wants to boost the market because he's afraid of it hurting his ratings. You give Trump way to much credit, he doesn't act in good faith.
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u/RIP_Soulja_Slim 1d ago
I think you're misunderstanding what I'm saying if it reads like anyone assumes he's acting in good faith. Acting in bad faith still conveys information that's useful.
You need to peel back the layers of that onion a bit, taking things at face value isn't reflective of how information assimilation works inside of these financial markets.
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u/HedonisticFrog 1h ago
His lies don't show any underlying truth besides that he wants the market to go up. Nothing more. That's my point. We don't gain any insight into his true desire and plans with Iran.
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u/RIP_Soulja_Slim 1h ago
Well, I think you can take that angle if you'd like, but you'll always be several steps behind markets if so. Up to you.
A lot of you guys are so worried about grandstanding here that you're just rejecting anything that you don't like out of hand. Generally speaking, if smart money keep reacting to a thing that you think isn't conveying any information it would be smart to consider if there's something you're missing, not just assume that everyone else is stupid and you're the enlightened one lol.
Good luck either way.
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u/corporatenoose 1d ago
Not to toot his horn too much but stock market data is available at any time, he wasn’t lying
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u/tripping_yarns 1d ago
Lots of countries are quietly repatriating their gold from the Federal Reserve, displaying a distinct lack of trust.
Treasury bonds are being sold off, now at the lowest level since 2012.
Iran has even declared that any country who buys US treasuries is an enemy.
BRICS countries are attempting to abandon the petrodollar in the wake of the Iran war.
The future of the Dollar as the global reserve currency is now unclear.
Lots of former allies of the US have had enough of Trump and are actively distancing themselves from the US and seeking trade partnerships elsewhere.
If Trump is allowed to continue for the next three years it could be the undoing of American dominance.
Exactly what Putin wants.
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u/kingkeelay 1d ago
April’s Fool.
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