Over the weekend Donald Trump threatened dire vengeance on Iran unless its government opened the Strait of Hormuz within 48 hours, a deadline that would expire Monday evening in Washington. Specifically, he announced that the U.S. would begin bombing power plants — plants that supply electricity to Iran’s civilian population — unless the Strait was cleared.
But at 7:05 AM Monday Trump called the whole thing off — for five days, he said, but many people are assuming that the threatened action, which would have been a massive war crime, is now off the table.
The reason for the about-face, he claimed, was that the U.S. was engaged in productive negotiations with Iranian officials — although this seems to have come as news to the Iranians, who denied that any such negotiations are taking place.
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Trump’s sudden climb-down was startling. Who could have seen this coming?
The answer is, the person or people who bought large quantities of stock market futures and sold large quantities of oil futures around 15 minutes before Trump’s announcement. As CNBC reports,
At around 6:50 a.m. in New York, S&P 500 e-Mini futures trading on the CME recorded a sharp and isolated jump in volume, breaking from an otherwise subdued premarket backdrop. With thin liquidity typical of early trading hours, the sudden burst stood out as one of the largest volume moments of the session up to that point.
A similar pattern was observed in oil markets. West Texas Intermediate May futures also saw a noticeable pickup in trading activity at roughly the same time, with a distinct volume spike interrupting otherwise quiet conditions.
Aaron Rupar on Bluesky:
Trump on Iranian leaders: "They're gonna make a deal. They did something yesterday that was amazing actually. They gave us a present, and it arrived today. It was a very big present worth a tremendous amount of money. I'm not gonna tell you what that present is but it was very significant prize."
Could there be a connection between "the very big present worth a tremendous amount of money" and the "sharp and isolated jump in volume" on S&P and oil market futures? I'm not saying there was but IF there was I have a theory about how it would play out.
Presumably Iran has intelligence gathering facilities and one of the things operators would be watching would be unusual market activity. Trump is known to time his "announcements" to maximize positive impact on stock markets and minimize negative impacts. He is a market manipulator. There have also been instances of suspicious market activity that suggests people trading on insider information. It would be foolish of an adversary not to monitor market activity as a predictor of future actions or statements. It's only a small step from monitoring suspected insider trading activity to climbing on the bandwagon and amplifying the size of the jump in volume.
The title of Paul Krugman's piece is "Treason in the Futures Market." "Why is profiting from insider information about national security decisions effectively a form of treason?" He asked. his second reason is in line with what I wrote in the previous paragraph:
Second, financial trading based on what should be closely held secrets reveals information to current or potential foreign adversaries. To exaggerate a bit, but only a bit, who needs to bribe agents within the government, or recruit them with honey traps, when you can infer the same information by keeping track of transactions on futures markets?
So what might that "very big present worth a tremendous amount of money" be? Maybe Iranian leaders signaled to Trump that they won't tell if he doesn't tell. "Lovely little war combat operation you got here, Donny. Would be a shame if something treasonous should happen to it."
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