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US stocks surged and oil prices tumbled on Monday after Donald Trump said he'd had "productive conversations" with Iran about ending the war. Market commentary from The Kobeissi Letter quantified the move in the first hour as a more than $3 trillion swing in the S&P 500's market cap.
Yet, despite Trump's Truth Social post, Iranian state controlled media, Islamic Republic of Iran Broadcasting, posted that "No conversation has taken place between Iran and the US, and Trump's claim about having these talks is #false."The outlet added that "Trump's false claim an attempt to #escape his recent threat on Iran's power infrastructure. Iran's stance on the Strait of Hormuz has not changed."Still, markets were rallying on the prospect that an off-ramp in the conflict may be emerging for the first time since the war began. Here's what some of the top voices on Wall Street had to say. Mohamed El-Erian, the famed economist and former PIMCO chief investment officer, said that the question is not only the outcome of the talks between Washington and Tehran, but what happens in the interim and whether Israel will buy into any agreement to end the war. He told CNBC that the next five days will be critical."It's an important turnaround because we were seeing a flight to cash as the only safe haven, and that was contracting markets in a significant manner," El-Erian said. "What happens in the next five days if whatever central command is left in Iran cannot control field commanders? What happens is Israel doesn't follow the US? A lot can happen in the next five days." "This is net negative for markets. Manipulation will cause liquidity to disappear and real problems will stay," Marko Kolanovic, former quant head at JPMorgan, commented on X. Kolanovic has previously said the TACO trade won't save markets from the effects of the war.Kolanovic wrote that if Trump is indeed just trying to soothe jittery markets, with no actual buy-in from Iran, it "signals weak hand, low pain threshold so that they need to press on. What it signals to allies? Stay away unreliable policies change on few points of market drop."David Morrison, senior economist at Trade Nation, aired similar concerns, noting that it's hard for markets to interpret Trump's latest update. "It's difficult to know how seriously to take this latest interjection from President Trump," he said on Monday as markets rallied. Economist Justin Wolfers also weighed in, pointing out that Trump's tactics during the war have mirrored his tariff playbook. "The Iran war has in one respect followed a similar pattern to the trade war: Every time Trump leaned into his aggressive instincts, markets fell. This morning we see the opposite: When he backs off his aggressive instincts, markets rise," he said.Joseph Brusuelas, chief economist at RSM, flagged that even with a complete de-escalation, it will take months to reestablish the free flow of oil through the Strait of Hormuz."It is encouraging that escalation has been paused yet it is important to note that when the conflict ends the tap of oil and refined products will not just be turned back on," he wrote, adding that while prices will come down, investors shouldn't count on crude returning to pre-war levels. El-Erian also noted this dynamic, pointing to comments fro Qatari officials that said 17% of the country's liquefied natural gas production would be offline for years.
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