What Wall Street Got Wrong About Iran

**SPEAKER_1** (0:00)
Exchanges on the economic impact of AI.
Exchanges on gold, energy and the commodity markets. For the sharpest analysis on finance, business and the economy, count on Exchanges, the Goldman Sachs podcast. Listen now.

**SPEAKER_2** (0:15)
This monday.com ad was created by a team of people and AI agents. The agents wrote the copy and managed the timelines, while our human creative director made sure it all made sense. Easy. Create your own AI agent today on monday.com.

**SPEAKER_1** (0:30)
I'm Arch Manning.

**SPEAKER_3** (0:31)
I'm Madison Skinner. I'm Eva Jovich.

**SPEAKER_2** (0:33)
I'm Decoria Moore.

**SPEAKER_4** (0:34)
I want to train like a Red Bull athlete.

**SPEAKER_3** (0:35)
Tell us your fitness goals this summer to enter the Red Bull Athlete Challenge. You'll get to try each of our workouts for a chance to win an ultimate Red Bull experience.

**SPEAKER_5** (0:43)
Think you have what it takes?

**Ed Elson** (0:52)
If money is evil, then that building is hell.
Welcome to Prof G Markets. I'm Ed Elson. It is July 9th. Let's check in on yesterday's market vitals.
The S&P and the Dow fell as military conflict flared up in Iran. More on that in a second. Meanwhile, chip stocks pulled the NASDAQ into the green. Brent crude climbed. The yield on 10-year treasuries rose as inflation fears returned. The odds of a rate hike before year-end on calcium rose to 56 percent. And finally, SpaceX stock fell again, dropping below its IPO opening price of $150 a share.
Okay, what's happening? The fragile ceasefire between the US and Iran has collapsed. On Tuesday, Iran attacked three tankers in the Strait of Hormuz, according to US officials. In response, the US struck more than 80 targets along Iran's coast and revoked a sanctions waiver allowing for the sale of Iranian oil. Iran retaliated with strikes on US military bases in the region. It's been just 22 days since the Memorandum of Understanding was signed. Yesterday, President Trump said he believes the ceasefire is over and the US launched another round of strikes. Brent Crude soared over 7% to nearly $80 a barrel, its highest level in over two weeks. Joining us to discuss these developments in Iran, we are speaking with Brian Katulis, Senior Fellow at the Middle East Institute. Brian, thanks for joining us on the show. I'd love to start with a clip of the president. This was the moment where everyone realized, okay, maybe we're back to square one. Let's play this clip and see what you think.

**SPEAKER_3** (2:45)
Mr. President, is the ceasefire over?

**Sean Lawlinson** (2:48)
Is the ceasefire done? Is the MOU dead?

**SPEAKER_8** (2:52)
It's a very interesting question. To me, I think it's over.

**SPEAKER_5** (2:58)
I don't want to deal with them anymore. They're scum.

**SPEAKER_9** (3:00)
You know what scum is?

**SPEAKER_5** (3:01)
They're scum.

**SPEAKER_4** (3:02)
They're sick people.

**SPEAKER_5** (3:03)
They're led by sick people.

**SPEAKER_8** (3:05)
And they're vicious, violent people. And if they had a nuclear weapon, they'd use it.

**SPEAKER_5** (3:11)
As far as I'm concerned, it's over.

**Ed Elson** (3:13)
What do those comments mean for the world, the global economy, the US economy, all of us?

**Brian Katulis** (3:19)
At least for the next eight to 12 hours, it means buckle up. But if you see Trump, President Trump's record over the last four or five months, it could be 180 degree opposite of what he said. And if you look at the public statements during the war, during this very fragile ceasefire, it's all over the map because President Trump engages not in traditional diplomacy, but what I call performative diplomacy. He actually doesn't do diplomacy that tries to get deals that build trust.
He just uses what I call troll power to actually aggressively get what he wants. But he often comes up and they hand it as we see with Iran or with Russia and Ukraine.

**Ed Elson** (4:03)
So just looking at what's happened since that memorandum of understanding was signed, that was 22 days ago. What has happened? How did we get to this place?

**Brian Katulis** (4:14)
Essentially, the regime that still remains in place in Iran. Though the top leaders were killed on the first day, the regime that's been in power since 1979, it has become even less predictable and perhaps even more extreme. So what's essentially happening is that they know that President Trump is desperate because of the economic pain that America and the world is facing, because his public opinion ratings have plummeted, and the Iranians watched this very closely. So they've got him cornered in a sense, and they keep on pressing what they think is their advantage.
In essence, they engage in diplomacy to try to buy time. But the real problem here is that President Trump has never, since before the war began, articulated a clear endpoint that was realistic about what he was trying to achieve through military action. And that's why he's been all over the map. And essentially, this test of wills has been playing out. This latest escalation is just part of that.