Mission Accomplished

At the Monday open in Asia global oil prices sky-rocketed to Ukraine war highs (see second graph below) and the overnight futures imploded. However by Monday afternoon in the U.S. Trump was getting worried so he declared "victory" on the war in Iran and said it would be over "soon". Markets sky-rocketed on the news and oil tanked. However, this morning (Tuesday) the IRGC stated what anyone could predict except Trump and the Wall Street Journal, which is that they have no intention of accepting another fake ceasefire deja vu of last June.

"It is we who will determine the end of the war," the IRGC, seen as close to Iran's new supreme leader Ayatollah Mojtaba Khamenei, said in a statement carried by Iranian media."

It's clear that yesterday and carrying on Tuesday morning as I write, investors have been convinced that this latest Trump TACO is deja vu of the trade war TACO last April. However, a casual look at the graph below indicates that there has been NO CAPITULATION by investors:

The irony of this latest Trump TACO is that the consensus Wall Street trades for 2026 are all now imploding:

First off, the start of the war caused a RISK OFF move in international markets ex-U.S. the most crowded Wall Street trade of 2026, which I showed in my last blog post: Here Comes Ground and Pound.

But it's the oil market that is now even more interesting after this latest surge and crash in oil.

This spike in oil is deja vu of March 2022 at the start of the Ukraine war. As we see, oil peaked at the start of the war, but it remained volatile for several months afterwards. It's logical that we can expect the same pattern to recur now. However, more importantly, we can see in the lower pane that NYSE new lows expanded dramatically as the S&P 500 entered bear market.

As I also showed in my last blog post, banks were already imploding due to the private credit meltdown, but the additional war volatility has caused regional banks to collapse to the last line of support (200 dma, red line). For now the private credit risk has receded from the headlines, but it will be back on the front page soon.

The AI bubble is now deja vu of mid-2024, the first time it crashed.

The last time these massively overbought stocks crashed they didn't need a war to collapse them, therefore it seems a tad optimistic to believe that the end of this war will stop this latest bubble implosion:

The short covering in cloud and software stocks is running out of gas:

In summary, Iran does not fear Trump.

Markets and Trump don't fear Iran.

Someone is going to be drastically wrong in this calculation.