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American financier and statesman Bernard Baruch famously said, “The main purpose of the stock market is to make fools of as many men as possible.” Well, in that case, the market is having a hell of a month. On Friday, after almost no negotiations, Trump posted that Iran would give up its uranium and open the Strait of Hormuz. They even agreed to never close the Strait in the future. The market soared on the news. The weekend arrived. The Strait was closed again. Even delivered by a trusted and consistently honest source, these deal claims would have come off as outlandish. But from this source? After misleading at every turn during the war (and every other topic he’s ever touched upon), you’d have to be a little crazy to have believed Trump. So, then, it might be fair to wonder whether the market is out of its friggin’ mind. The market behaving in mysterious ways, especially over the short term, is nothing new. John Maynard Keynes explained: “Markets can remain irrational longer than you can remain solvent.” In this case, as Kyla Scanlon writes in the NYT (Gift Article), “The stock market has been trying to ignore the war in Iran.” Why the Stock Market Makes No Sense Right Now. This nonsense is especially relevant at the moment, because a rational stock market appears to be one of the few guardrails protecting against Trump’s most destructive impulses. “President Trump deeply cares about the stock market, and if the stock market had been selling off, there is a good chance that this war would have been over a while ago. More broadly, the markets are showing the single lesson that the past 40 years have taught them. It will always be saved.”
Look, I’m in the market. I really want the market to go up. But I’m worried about a market that discounts the risk of very risky world events. And I’m even more worried about a market that discounts the risk posed by the leader of the world’s largest economy, and seems, somehow, to ignore the history of instability, lies, and crazy behavior he exhibits. Even if the Strait re-opens tomorrow, those risks remain. The market needs to stop reacting to Trump’s crazy lies and start reacting to the fact that we have a crazy liar in the White House. (That line should enter the canon of great economics quotes. On the off chance it doesn’t, I’ll leave you with one more from Keynes: “In the long run we are all dead.” Today’s investors probably even see that as a buying opportunity.)
+ When it comes to the Trump tariffs and the Iran war, there are still some rational traders. Insider traders. Traders placed over $1bn in perfectly timed bets on the Iran war. What is going on? And, the insider trading suspicions looming over Trump’s presidency. (Maybe the safest investment you can make in 2026 is to be long on corruption...)
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The Kash Flow
“On multiple occasions in the past year, members of his security detail had difficulty waking Patel because he was seemingly intoxicated, according to information supplied to Justice Department and White House officials. A request for ‘breaching equipment’—normally used by SWAT and hostage-rescue teams to quickly gain entry into buildings—was made last year because Patel had been unreachable behind locked doors, according to multiple people familiar with the request.” Given his reputation and lack of qualifications, it would have been almost impossible for Kash Patel to surprise us on the downside. So give him a little credit. The Atlantic (Gift Article): The FBI Director Is MIA. “Kash Patel has alarmed colleagues with episodes of excessive drinking and unexplained absences.”
+ Patel is responding to the news that he does things Trump doesn’t like (getting drunk and not controlling the story) by doing a couple things Trump does like. Targeting enemies and suing the media.
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Lean, Mean, Green, Fighting Machine
“A humanoid robot that won a half-marathon race for robots in Beijing on Sunday ran faster than the human world record.” This, it turns out, is not the biggest (or scariest) robot news of the week. NYT (Gift Article): The Killer Robots Are Coming. The Battlefield Will Never Look the Same. “The robots charged into battle through a valley in eastern Ukraine, driving over grass toward a Russian position. Essentially little green wagons, they looked like something you might buy at a garden store to move bags of soil around. But each carried 66 pounds of explosives. As the remotely controlled vehicles approached the enemy soldiers, an aerial drone flew in and dropped a bomb to help clear a path. One of the robots then rushed in and blew itself up, while the others held back, monitoring the position. A sheet of cardboard appeared above a trench. ‘We want to surrender,’ it read.” (I hold up the same message to my laptop like three times a week.)
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Failure is Not An Option
Noah Hawley in The Atlantic (Gift Article): What I Learned About Billionaires at Jeff Bezos’s Private Retreat. “Any asset can be acquired but nothing can ever be lost, because for soon-to-be trillionaires, no level of loss could significantly change their global standing or personal power. For them, the word failure has ceased to mean anything. This sense of invulnerability has deep psychological ramifications. If everything is free and nothing matters, then the world and other people exist only to be acted upon, if they are acknowledged at all. This is different from classic narcissism, in which a grandiose but fragile self-image can mask deep insecurity. What I’m talking about is a self-definition in which the individual grows to the size of the universe, and the universe vanishes.” (Remember, this is less the era when Trump empowered these guys than it is an era when these guys decided who they wanted to empower.)
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Extra, Extra
Mind If We Play Through? “The decision was informed by the president’s behavior during the search and rescue operation for the aircrew of the downed F-15 fighter jet late last month, when the president reportedly screamed at his aides for hours. As a result, his aides ‘kept the president out of the room as they got minute-by-minute updates because they believed his impatience wouldn’t be helpful, instead updating him at meaningful moments.’” A commander-in-chief kept out of war meetings because of erratic behavior? That seems bad. Meanwhile, in Iran, it’s not completely clear who’s in charge. WSJ (Gift Article): Iran’s Hard-Liners Flex Their Muscle With a U-Turn Over Hormuz. “Divisions between moderates and the Revolutionary Guard will complicate U.S. efforts for a diplomatic win.” For now, the two sides are talking about restarting talks. Here’s the latest from The Guardian, NBC, and BBC.
+ Everybody’s Working for the Weakened: “But only the entities that officially paid the tariffs are eligible to recover that money. That means that the fuller universe of people affected by Mr. Trump’s policies — including millions of Americans who paid higher prices for the products they bought — are not able to apply for direct relief.” NYT: Trump Administration Takes Steps to Refund $166 Billion in Tariffs. (Would corporations have even demanded these refunds a few months ago, before Trump’s polls weakened?)
+ Miracle on Ice: Pancreatic cancer mRNA vaccine shows lasting results in an early trial. This is good news about mRNA, which provided a medical miracle with the Covid vaccine. So you have to wonder why Trump and RFK, Jr pulled $500 million in funding for mRNA vaccines. Of course, it’s more curious, and more dangerous, that these guys seem to hate vaccines in general. ProPublica: The Horrors That Could Lie Ahead if Vaccines Vanish. “If current rates drop by half, all four diseases could return.”
+ Shreveport Mass Shooting: “A man in Louisiana killed eight children Sunday in a shoot