Iranian officials recently said that if they clash with the United States again, the conflict will last longer than last time. It sounds tough, but seems more like something aimed at a domestic audience. Iran is currently grappling with high inflation, a weakening rial, and intertwined employment and livelihood problems. Tough rhetoric can reassure conservatives and ease public tensions, while also helping preserve the narrative of “resistance” in the eyes of regional allies. But in the Middle East, there’s always a gap between tough talk and actual action: after the 2020 Soleimani incident, Iran fired missiles at U.S. bases, and oil prices spiked briefly before quickly giving back their gains; in 2024, Iran and Israel traded strikes, and markets similarly surged before retreating. This shows that there are plenty of opportunities to defuse tensions between political rhetoric and actual escalation. Then there’s the Strait of Hormuz, which carries about one-fifth of the world’s oil shipments. Any hint of trouble can amplify moves in oil prices and freight rates, but Iran itself can’t afford the cost of an actual blockade or prolonged conflict. The same goes for the United States: troops stationed in the Middle East and aircraft carrier deployments are shows of force; whether it’s willing to get drawn into another long war of attrition is a different matter. As for trading, last week I paid the price for setting my stop too tight: when the news broke, the market spiked and then moved, and my stop got hit twice. I had the direction right, but volatility shook me out of my position. I’ve learned my lesson: I no longer focus only on the initial reaction to the news. I place my stop outside the news-driven volatility zone, leave some room, and wait for the distinction between rhetoric and real action to become clear before making a move. Whether this thesis—that tough talk is aimed mainly at domestic audiences, action will be more restrained, and markets will move first and recover later—is right remains to be seen. I’ll check back next week.