Investors try to stay ahead of Trump’s Iran moves

0:00Markets move fast. Get the insights you need in 10 minutes with Barclays Brief. a podcast from Barclays Investment Bank. Each week, our experts analyze market themes, helping you anticipate what's next. Listen to Barclays Brief, wherever you get your podcasts.

0:17Good morning from the Financial Times. Today is Thursday, March 26th, and this is your FT News Briefing. Investors are having a hard time keeping up with Donald Trump, and two big tech companies were found liable for harm to children's mental health as a result of social media. Plus, a look at the guardrails that might address worries over private credit. I'm Mark Filippino, and here's the news you need to start your day.

0:49There was more back and forth yesterday about what kind of negotiations are taking place between the U.S. and Iran. Washington presented Tehran with a 15-point plan to end the war, and U.S. President Donald Trump said the Islamic Republic was ready to make a deal. But then Iran's top military leadership forcefully dismissed the claim that they're talking. Now, Trump's been making a lot of bold statements like this since the start of the war. They swung wildly from escalating the conflict to signaling the end of the war is near. And oil investors have been trying to stay ahead of all this. Here to tell us more is the FT's George Steer.

1:23He covers the U.S. markets. Hi, George. Hello. So, George, do me a favor. Walk us through what's going on with Trump, oil prices, and the war in Iran. So since the war began on the 28th of February, we've noticed a pattern, and traders have noticed this too. Trump tends to intensify his threats against the Iranian regime over weekends when oil markets are closed, and then hint at impending peace. He does that basically when Brent and WTI are going crazy, as they have done since the war began. And actually, we saw that as recently as this week, right? Well, yeah, on Monday, Trump posted on Truth Social that the US had held productive talks with Iran.

2:06The Iranians denied that, but 15 minutes before his post, we noticed an unusual spike in trading activity around oil derivatives. Investors had placed bets worth about$600 million at 6.49 in the morning, a usually quite quiet period in the market when nothing else is happening. That has kind of fueled suspicions that people are making suspiciously well-timed bets ahead of big White House proclamations, especially post a lot of very successful polymarket bets on when the U.S. might invade Iran and Venezuela. So the White House said earlier this week that it, quote, does not tolerate any administration official illegally profiteering off of insider knowledge and any implication that officials are engaged in such activity without evidence is baseless.

2:58End quote. George, have you contacted the White House to see what they have to say about these market movements more broadly? They haven't responded to us just yet, but in the past when we have gone to the White House for comment on stories like this, they tend to insist that, you know, Trump is out here doing his best for American citizens, for Main Street rather than Wall Street. What kind of effect has all this had on the oil market? Because it's gone through some pretty serious gyrations. Yeah, so we began with the day before the war began on the 27th of February. Brent crude was hovering at around$70 a barrel.

3:36It peaked on March 9th at around$119 a barrel, and it collapsed to$84 a barrel, I think, the same day, maybe the next day. It's veered higher ever since then, but fell sharply on Tuesday afternoon after reports from an Israeli broadcaster that Jared Kushner and Steve Wyckoff, Trump's emissaries in the Middle East, had devised this 15-point peace plan, which they had apparently put to the Iranians. But even on Wednesday morning, oil prices have ticked higher again. How do investors approach all this unpredictability? I mean, there's got to be some sort of strategy to try and cope with all this.

4:14I think it's quite hard to trade around such unpredictability. A lot of people have identified that Trump does tend to back down when oil prices and mortgage rates tend to start careening higher. But quantitative investors who use kind of very complex algorithms to guide portfolio management, they're often backwards looking. So they're not really that well equipped to handle a market that can swing one way or the other. On a truth social post, one hedge fund investor told me that he'd chosen simply to sit out the chaos. He's not trading oil at all because it's been so volatile ever since the war broke out.

4:48But generally, I think the sense is that now is not a good time to be adding money to the market. Yeah, it's probably producing some gray hairs out there, George. What does this tell you about the power of the markets? in Trump's second term. It seems like there's this push and pull where the markets clearly have some sway over Trump's behavior, but he also has all the power to make markets swing wildly like they are now. Yeah, I guess the bond market is a big and terrifying entity that has punished presidents in the past and has punished Trump more recently than last year. He's obviously aware of the market reactions to what he says and what he posts on Truth Social.

5:27And then to a certain extent, they do curtail his most aggressive impulses. The sense now is that every time Donald Trump says something like, we have started peace talks with Tehran, the market does react to that. Every time Trump says things like this, we now are waiting for Iranian confirmation that did in fact happen. The market and investors generally believe the Iranians more than the Americans right now, which is an unusual state of affairs. Sure is. That's the FT's George Steer. Thanks, George. Thank you.

6:04meta and google were found liable in a landmark legal case yesterday a jury in los angeles ruled that social media platforms like meta owned instagram and google's youtube are designed to be addictive to children meta and google both say they disagree with the verdict the case will set a precedent for a whole bunch of similar lawsuits it's also been compared to the 1990s crackdown on big tobacco. The jury awarded$3 million in damages to the 20-year-old plaintiff. She claimed that a social media addiction during childhood harmed her mental health. Snap and TikTok settled for undisclosed amounts before the trial.

6:45We've talked in depth on this show about how investors are growing increasingly concerned about AI's impact on, well, pretty much every industry right now. Though that uncertainty is intensifying specifically when it comes to software. Private credit firms have been growing more entrenched in that area, and that's starting to cause some big problems for those companies. Brooke Masters is the FT's U.S. managing editor. She joins me now to delve into this. Hi, Brooke. Hey, Mark. So this week, we saw two big investment managers, Aries and Apollo, limit the amount of money investors can withdraw from flagship funds.

7:18How concerning is this? It's part of a trend. We've now seen from five or six of these big funds aimed at wealthy individuals, there have been requests to pull out a total of$13 billion. And these funds are in the$200 billion range. In most cases, the funds are getting almost twice as many requests for redemption as they are granting. So it's not totally scary, but it's a big chunk. You know, people are starting to get worried. Yeah, and what do these companies have to say about investor worries? What they say is that investors are responding to doomsday headlines that talk about, you know, a few high-profile bankruptcies or they're exaggerating the effect AI will have on the software companies.

8:03And the reason the software companies matter is private credit does a lot of lending to software companies because software companies don't have tangible assets that a bank is willing to lend against. And what private credit funds all say is, look, we've lent to good software companies, plus we're not very over-levered. You know, we haven't borrowed a lot on top of it. And these funds have the ability to cap withdrawals. So there isn't going to be some mass chaos that leads to, you know, fire sales. And if you just stick with it and stick it out, you know, people will largely get their money back and probably make some money.

8:35But Brooke, it's starting to look like more wealthy investors are getting nervous. How will these redemption caps affect their appetite to continue investing in these kinds of funds? What we've seen from wealthy individuals is they are being encouraged or persuaded by their advisors to put more money in what are called alternative assets, things that are not the stock market or the bond market. And they have put some money in private equity. They're putting some money in private credit, some in infrastructure. And I think what this makes some of them more conscious of is the whole point of private is you give up liquidity.

9:09You can't as easily get your money back. And that's one of the reasons why the returns are higher. And so what this hopefully will do is make these investors understand that they are making a tradeoff. These are not funds meant for you to take your daily spending out of. Brooke, the reason we have you on is because you recently wrote a column about all this. And in it, you argued that stronger guardrails are needed to prevent all of this from becoming a systemic risk to the financial sector. What would those guardrails look like? And how far away would we be from a full-blown crisis without them?

9:44Well, I think the thing you need to remember is right now, these funds aimed at wealthy individuals where the money is running out the doors are still a relatively small part of the private credit and alternative asset landscape. If they continue to expand and if the Trump administration goes forward with putting them in the$9 trillion retirement market and you would have this in your 401k plan, then they become much more systemic and people running for the exits are a problem. If we're going to do that, the guardrails you'd want to do are real rules that say you can't run for the exit. You need to understand that if you put your money in these funds, you are staying in for some period of time.

10:23because in general, in this kind of situation, it's not necessarily that the underlying assets are worth nothing. It's that if everybody's running for the exits, everyone is trying to sell the underlying assets at the same time, and the price goes down. The other thing that we could do in terms of guardrails is one of the reasons people run for the exits is they are afraid that as people leave, the funds will sell their good assets because that's what they can sell. You know, if there were penalties if you ran and if you knew if you stayed, you wouldn't get stuck. I think that would reduce the risk that these sorts of funds could cause a bigger problem.

10:58Brooke Masters is the FT's U.S. managing editor and encouraging everyone to take a deep breath. Thank you, Brooke. Thanks for having me.

11:10The World Trade Organization might not be relevant much longer without action. That's what EU Trade Commissioner Maro Sefcovic told the FT. He's joining calls to modernize the WTO. Global trade ministers and diplomats are meeting in Cameroon today for a WTO ministerial conference. They're going to negotiate changes to the trade body's consensus-based decision-making. That process has been under pressure because a small group of countries routinely block agreements. The EU and other nations would like WTO members to be able to form coalitions that can agree to deals even if not everyone is on board.

11:45The WTO's director general told the FT she expects, quote, tough conversations at the conference. you can read more on all these stories for free when you click the links on our show notes this has been your daily ft news briefing check back tomorrow for the latest business news

12:16there's one place for the newest drops in wellness and performance and the biggest sale of the year. It's The Drop by GNC, curating the best of what's new, handpicked by the pros who know what works. And right now, get it all, buy one, get one 50 % off during the semi-annual LiveWell sale. From crushing workouts to leveling up your nutrition and everything in between, get the best deals on the latest innovations. All the newness is all on sale right now during the LiveWell sale on The Drop by GNC. Self-directed investing, trading, full-service wealth management, automated investing, financial planning, thematic investing, retirement planning.

12:54And to think, that's just a small taste of what Schwab offers. Because Schwab knows that when it comes to your finances, choice matters. No matter your goals, investing style, life stage, or experience, Schwab has everything you need all in one place. So you can invest your way. Visit schwab.com to learn more.