Did Trump Just Throw Away the Best Chance to End the Iran War?

Raging Moderates with Scott Galloway and Jessica Tarlov

The episode examines the escalating economic consequences of the Iran war, specifically focusing on surging oil prices and Treasury yields.

Key takeaways

• Brent crude oil has risen to over $100 a barrel following the start of the Iran war.
• The 10-year Treasury yield has reached its highest level in two decades, signaling market distrust.

Main topics

• Iran War and Oil Economics
• Title IX Policy Reversals

Notable quotes

The bond market is the adult in the room that just isn't impressed with Trump.

Conclusion

The episode highlights a period of significant volatility in both glob

Transcript preview

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See disclosures and fund offering materials for more information. Speaker 8 (0:57) You just found out your sales team is at risk of missing quota. Don't panic. Just ask Rippling AI. Since it's built on your real-time people and business data, Rippling AI can pull metrics from Rippling and Salesforce into a meeting-ready dashboard showing quota attainment, headcount plan, and monthly revenue to quota by region. In seconds, you'll see exactly what's behind your quota risk and fix it before it's missed. Question answered. Action taken. Crisis averted. Ready to rule your business? Head to rippling.com. Get the only AI built to give you full visibility and take complex actions across your entire organization. That's R-I-P-P-L-I-N-G.com. Sign up for exclusive access today. Speaker 1 (1:45) Hogging seats on a crowded train, not saying excuse me, watching videos on your phone with no headphones in. Sometimes it feels like we don't know how to act anymore. What we have been seeing increasingly is people breaking rules. Why should I play by the rules if nobody else is going to do that for me? This week on Explain It To Me, how to mind your manners. New episodes Sundays, wherever you get your podcasts. Speaker 5 (2:18) Welcome to Raging Moderates. I'm Scott Galloway. And Speaker 3 (2:20) I'm Jessica Tarloff. Speaker 5 (2:21) Before we get started, we're just 35 days out until the midterms. Make sure to hit subscribe to support our show and help us reach new audiences. All right, let's bust into it. Trump is once again claiming the U.S. will win in the war against Iran, despite publicly rejecting Tehran's recent offer to reopen the Strait of Hormuz. Iran's foreign minister says Tehran still hasn't received a formal answer for the proposal, but expects one today. Meanwhile, Brent crude has reached over $100 a barrel again, up from $72 in February before the war began. The 10-year Treasury yield is at its highest level in two decades. And with Trump now planning to spend the next 30 days campaigning for Republicans in traditionally red states, he'll have to balance his political priorities at home with a war that's increasingly hitting Americans in the wallet. Let's listen to Mike Johnson talk about the situation this morning. Speaker 6 (3:11) The big question is, should Iran have a nuclear weapon? I think every American says they should not. That would be a danger to us and everybody around the world. Every administration for almost 50 years had the same objective to ensure that didn't happen. They got this close. I'm on the gang of eight. I got the inside highest level classified briefing. It was a very, very dangerous and imminent situation, and we had to take care of it. Operation Epic Fury was an epic success. Now we've got to resolve that. The president's laser focused on it. You've heard developments over the last 24, 36 hours. I think we're getting very close to that. I think Iran is running out of resources to sell. They're led on to 15 million barrels of oil to sell to China, we think. And so we're entering a new phase of this. Speaker 3 (3:48) He's like half right in that the past 24 to 36 hours have actually looked like. some of what we were doing in the Strait has paid off. So reports now, and they couldn't actually physically see the tankers that were going through because they were doing it completely, you know, in the pitch dark without lights on. But it looks like, and the Wall Street Journal's reporting this as well, that 80 % of the pre-war levels of regional flow are now out into the system. And so Iran's... control over the Strait of Hormuz is significantly weakened. You would not at all say at this moment that they were choking it off. That could have crazy implications in that these are a bunch of lunatics. And so maybe they lash out militarily as a response to this. But Iran's currency is enormously weakened. It's just hit an all-time low. $2,500,000 to $1 U.S. dollar for the Rial. And gas prices have ticked down a little bit, you know, a few cents here and there. Biggest drops were in the Midwest, somewhere that Republicans need to do better, and in the Gulf Coast for diesel. So I think we got to say it's a good thing that... this oil is getting out of there and that Iran is in a weakened position. But there is also no evidence that the ultimate goal here and where Mike Johnson led from, which is, I think we would all agree that we don't want Iran to have a nuclear weapon. You don't have a bunch of sane people that are coming to the table and... I'm not sure that you would even be able to get back to the JCPOA level deal that we had from the Obama administration. So weakened and in a worse position than they were a couple of weeks ago, 100 percent there. But his his glasses are a little too rose colored, I would say, especially since this guy is also out there saying that the Republicans are going to expand their majority in the House. There is no one that diluted who's saying that. I mean, even the most... you know, pro-Trump or conservative Republicans who think that they've been delivering left, right, and center understand that they're going to lose the House. The question is, what's the margin going to be? Speaker 5 (6:15) Yeah, it does feel like a lot of happy talk and all this nonsense around, you know, I think Americans are willing to pay a little bit more for, you know, for Iran not getting a nuclear weapon. They didn't have a nuclear weapon. I mean, it's just so, this is an arsonist showing up to The site where the home is burned down the next day and grabbing a hose and wanting credit for it. It's literally like, okay, we broke it and we want credit for, you know, kind of sort of trying to fix it. In terms of the oil math, Brent went from $72 to over $100, up 40 % since the war started. Rule of thumb, it's about two and a half cents a gallon for every dollar. So gas is up, sort of call it. 60 cents to a buck depending on where you are. And that's kind of the Iran war tax that every American pays every week and they get reminded of it. Oil shocks preceded the recessions of 73, 79, 90 in 2008. So oil spikes aren't a leading indicator of a recession. They're a leading cause of it. The 10-year being at a two-decade high is a pretty big deal. It's a market saying it doesn't trust the plan. Higher yields mean 7 % mortgages, pricier car loans, more interest on the debt. At the end of the day, the bond market is the adult in the room that just isn't impressed with Trump. And it's kind of the only voter that Trump can't primary, if you will. With respect to rejecting Iran's offer from the Iranians around the state of Hormuz. When the IRGC offers to reopen the world's most important oil choke point and you say no, you need to have a better idea. Having said that, and there is no evidence there is one, I don't think their offer is sincere. I think they just want to keep poking him enough such that he doesn't continue military strikes, but it's clear that they won. The tell here, and I'm curious to get your thoughts, is campaigning in red states. You don't spend the last 30 days defending Texas and Florida Speaker 2 (8:05) if you think you're winning. Or Speaker 3 (8:06) Oklahoma and Kansas. Speaker 2 (8:08) It's not a victory. It's a fire drill. They've decided to break glass. The wars that don't end become taxes that don't end. And it's clear they are playing defense right now. A Speaker 3 (8:21) hundred percent agree with that. And Axios was also reporting on the war front that apparently Trump is willing to give Iran sanctions relief and release of frozen funds for concrete progress on nuclear. I can't wait to rehash, quote unquote, pallets of cash with some of my colleagues who have been distorting the truth about what happened during the Obama administration. But it is a complete fire drill. I mean, it's diametrically opposed. to what happened in 2024 when I, and I had egg on my face about this, was sitting around saying, like, well, you know, what are you doing doing a big rally at Madison Square Garden? Like, why are you campaigning all over California or other blue states, right? And then I found out why, because every arrow on that New York Times graphic headed in the red direction, except for, I think, you know, one. suburb outside of Atlanta that was still heading blue. And they expanded the map enormously, right, for people who weren't traditional Republican voters getting young voters, Latino voters, Black voters. It is the opposite what's going on now. They're having to go to, like, the Rotary Club and beg 70-year-old white people to stick with the Republican Party. And that's a very bad place to be in 35 days out. I want to obviously talk more about the electoral stuff and what's going on in specific races. But I am curious what you think about the fact that 80 percent of the flows that used to come out of the Strait of Hormuz are apparently making it out of there. What do you think that does to the negotiating table and what Iran may do vis-a-vis a deal? Do you think now some sort of military? Speaker 3 (10:11) Activation is more likely that they're going to lash out, and that's the way that they can lash out and hurt us. They know about our munition stockpile being severely depleted.