This week, the forever volatile President Donald Trump abruptly escalated U.S. tension with Iran via an order for an airstrike in Baghdad that took out the country’s second-in-command, Quds Force Commander Qasem Soleimani. Now, the shock waves from the sudden execution of that political leader have reached the economy via an abrupt Friday morning plummet in the stock market. As CNBC noted mid-Friday morning, the “Dow Jones Industrial Average plunged 212 points, or 0.8%” and counting, having spiked back up only slightly following an initial morning plummet of more than 360 points.
Anxiety-inducing possibilities sparking this withdrawal in value from the stock market include a spike in the price of oil. As CNBC also notes, on Friday, “U.S. crude oil futures shot up around 3.5% to $63.31 per barrel, raising concerns about an energy shock on the global economy.” Possible soon to be higher oil prices drove a particularly pointed drop in the stock market value of airliners including United, American, and Delta, all of whose stocks fell by more than two percent, slowly but surely wiping out value. CNBC notes that “Wall Street loaded up on safer assets on fears that an oil spike might spark a recession.”
AGF Investments’ U.S. policy strategist Greg Valliere noted:
‘Global oil markets will be volatile for weeks to come. There’s a reason, finally, for caution in the stock market. Eventually there will be an uneasy truce … But that’s a long, long way off; this will get worse before it gets better.’
That’s not exactly reassuring! No matter the many previous times that Trump has touted stock market success as reflecting his supposed success as a president, considering what’s already come out surrounding this raid, there’s not any apparent compelling reason to believe that the Trump administration considered possible financial consequences of their abrupt attack on Iran this week.
In a statement issued following the strike, the Pentagon didn’t even get the name of a key Iranian military force right — they called it the Iranian Revolutionary Guard Corps, but it’s the Islamic Revolutionary Guard Corps. There’s obviously a difference, but the sobering implication of the blatant error is that the president is running into possible major conflict with an outlandishly ramshackle operation.
A datapoint for those wondering whether the US has fully thought through and prepared for the consequences: Official Pentagon statement on killing Soleimani misstates the name of the organization he led. https://t.co/FJWr1FES0w
— Max Fisher (@Max_Fisher) January 3, 2020
Trump has been roundly defensive of his decision to execute a top political leader of a rival foreign power, but there wasn’t even any apparent Congressional consultation beforehand, no matter the grave political and security implications. Now, Iranian leaders have already publicly promised revenge against the United States, although it’s definitely unclear what form that may or may not take. House Speaker Nancy Pelosi (D-Calif.) has already publicly demanded a briefing for Congress about the administration’s strategy to deal with the situation, although following a recent militia attack on the U.S. Embassy in Iraq, the administration has already deployed an additional 750 troops to the region.
The administration has claimed that taking out the general was necessary to prevent soon incoming attacks against U.S. interests in the area, but the clear escalation of tensions seems poised to have the exact opposite effect.