Minutes before Trump appeared on Iran, oil traders made unusual moves

The winners are thin on the ground now.

In a case of bad timing, US President Donald Trump last week planned Easter Monday as the day he would “raise hell” if Iran’s leaders reject his latest peace plan.

It was after his initial two-day period turned into a matter of a week before he extended another 10 days, once again causing wild volatility in global markets that led to unusual but lucrative trading.

More on that later.

Trump is now looking for a ground operation to relieve Iran of its enriched uranium and take control of its oil which, surprisingly, has produced no sign of surrender from Tehran.

Despite all the president’s threats, more than a fifth of the world’s oil and gas supplies are still trapped in the Persian Gulf while Iran maintains full control of the Strait of Hormuz.

Currently, the effects are increasing on the global economy.

Fuel supplies are still in short supply, even in energy exporters like the US and Australia.

Inflation is already beginning to permeate the wider economy, as the price of money continues to rise.

Global markets, which have been remarkably restrained for the past month as the crisis unfolds, have begun to shake.

Wall Street is now down more than 10 per cent from its recent peak – considered a correction – with our ASX200 sitting within a whisker of that milestone.

As the gravity of the situation becomes apparent, investor confidence is waning, and many want to exit.

Even that pillar of economic growth and investment in the last five years, technology and artificial intelligence, is facing a potentially dangerous obstacle from the conflict, which threatens to undermine the high values ​​that have created the investment markets in the last three years.

Black swan for the AI ​​boom?

Some call it a black swan event – a life-changing wave of chaos out of left field.

Besides, after the two oil crises of the 1970s, energy industry analysts and diplomats around the world have spent decades grappling with the potential impact of a Middle East meltdown.

The only thing that was not expected in the current flow is that America is leading the charge.

For decades, since Iran captured US embassy staff and held them for more than a year, different administrations have debated the Iranian attack.

Although there were naval battles in the Persian Gulf in the 1980s, the idea of ​​an all-out war was repeatedly rejected because of the potential harm to the world economy due to the oil embargo.

Until now.

Those with long memories were always quick to remind senior officials that it was a conspiracy organized by the CIA in Tehran that deposed the elected leader and installed the shah, helping to create enmity.

But the war itself can produce other dark events, especially in the world of technology, AI and global financial markets.

Shortages of fuel and fertilizer have led to the closure of the Persian Gulf. But in the world of chip manufacturing, helium and sulfur are essential materials – most of which come from the Gulf.

Helium is produced from LNG and, due to major damage at a major facility in Qatar, it may be in short supply for who knows how long.

Meanwhile, sulfur prices are rising.

Long before the chemical shortage, which will ultimately drive up the cost of AI development, there were serious concerns about whether the huge amount of money already invested in AI would provide the kinds of rewards that justify the process.

Adding to those concerns is the expected rise in electricity costs worldwide.

Data centers are mushrooming all over the world. Australia already has about 250 which, according to the Climate Energy Council, already consume about 2 percent of the energy grid.

But the proposed new data centers are huge, with one in Sydney expected to consume as much energy as a small city, using half the energy from Victoria’s Loy Yang coal-fired power station if just two of them were running at full capacity.

Data center energy consumption is expected to increase to 6 percent of the network by 2030 and 11 percent by 2035, growth targets that could be hindered by sudden increases in power supply.

Any reduction in the ambitious growth forecast is unlikely to play well in the long-term sector-focused stock markets.

We want more, the money market is telling Trump

Cracks are already starting to appear in America’s financial position as it burns its diplomatic credibility and reduces its firepower with the relentless attack on Iran.

The debt is now at $US39 trillion and, at the latest auction last week, there was very little demand for US government bonds.

That was reflected in the financial markets. Low demand for government IOUs means that interest rates must rise to make them more attractive to buyers.

The yield, or interest rate, on US 10-year bonds has more than doubled in the past month. Investors are now fetching more than 4.4 percent.

It is an indicator of where investors see inflation and interest rates headed.

It also makes life difficult for Trump.

Last year, he asked the US Federal Reserve to cut interest rates, a requirement that if met now could cause chaos in the global financial system.

Those higher rates will add to the rising cost of servicing America’s already huge debt and will need to be paid off by, you guessed it, issuing more debt.

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On this side of the Pacific, the process has been even more painful. Australia’s 10-year government bonds are now sitting well above 5 percent as global growth expectations soften.

Yesterday, Westpac’s chief economist and former deputy governor of the Reserve Bank, Luci Ellis, predicted three more price hikes, an inflation rate of 5.4 per cent and unemployment rising to 5 per cent.

Oh.

With knowledge? Or is it just common sense?

It only took a minute to finish.

Last week, at 6:49 am on Monday, New York time, a large number of oil futures contracts were entered into the market.

At 6:50 a.m., $580 million worth of contracts covering Brent crude, the world benchmark, and West Texas Intermediate crude changed hands, sending prices into free fall, dropping from less than $US100 a barrel to $US89.

Minutes later, Donald Trump announced, through his online platform Truth Social: “VERY GOOD AND EFFECTIVE DIALOGUES” with Tehran on a “FINAL AND FINAL RESOLUTION” to the wars.

Hours later, Tehran denied the allegations and oil prices began to climb, prompting calls for an investigation into the business.

“This seems unusual, of course,” XAnalysts chief oil analyst Mukesh Sahdev told the BBC.

“At that time, there were no signs that there were still serious negotiations between the US and Iran.

As the president vacillates from one position to another, stock and stock markets are turning volatile, up nearly 10 percent since his Independence Day rate hike sent Wall Street down 10 percent.

But a new crypto-based avenue has also opened the door to high-stakes gambling with the decisions of the president, Polymarket.

A new study conducted by Columbia Law School and the University of Haifa analyzed the blockchain ledger to look for surprising business practices and discovered transactions that generated a profit of about $143 million.

“The idea that someone could sell national security information or information about an upcoming terrorist activity — people thought it was impossible,” Joshua Mitts, a Columbia law professor and one of the co-authors told Bloomberg.

“Today what we see in these prediction markets is that it is possible.”

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