Now For The Main Event

Writing Tuesday morning March 31st, another huge short covering rally is taking place on the optimism that the war will be ending "soon". Over the past several weeks we've seen this movie at least a dozen times, however, bulls keep believing it over and over again. Trump's goal with all of his massively contradictory messages was to lull Iran into a state of complacency while he built up ground forces in the region. However, the net effect of these "hopeful" message was to rope-a-dope stock bulls into believing in a happy ending.

Mission Accomplished:

My prediction is that a ground war is imminent based on the fact that Trump wants this war over sooner than later and he has been led to believe by Pete Hegseth that a "decisive strike" will end the war in U.S. favor.

So who is right?

Let's review the facts:

This is week five of an ever-escalating war. The U.S. has been steadily building up ground forces in the region but still remains 10:1 outnumbered in ground forces. The U.S. has approximately 60,000 troops in the region versus Iran 600,000.

The Pollyannah bullish view is that an "off ramp" is imminent. Meaning that Trump will declare "Mission Accomplished" and vacate U.S. forces from the region. The latest reason for optimism is a story in the Wall Street Journal saying that Trump is willing to end the war without opening the Strait of Hormuz:

"President Trump told aides he’s willing to end the U.S. military campaign against Iran even if the Strait of Hormuz remains largely closed, administration officials said, likely extending Tehran’s firm grip on the waterway and leaving a complex operation to reopen it for a later date."

In recent days, Trump and his aides assessed that a mission to pry open the chokepoint would push the conflict beyond his timeline of four to six weeks."

Recall that this is an idea that Trump floated over two weeks ago - that the U.S. would stand down and the rest of the world will open the Strait of Hormuz. He then spent a whole week trying to convince foreign leaders to send ships to Hormuz, but there were no takers. So why would he wait ANOTHER two weeks and send thousands more troops if that was his plan all along? Nothing has been gained in the meantime except to further implode the global economy.

It makes no sense, which is why it is now the consensus Wall Street view.

So let's pretend that trapped bulls are right and Trump turns tail leaving Iran in total control of the Strait of Hormuz. What would that imply for markets?

Ironically, that so-called "bullish" scenario is 2022 deja vu. Under that scenario, oil has peaked, but the oil shock leads to higher inflation for the rest of the year and global central bank rate hikes.

Resulting in a bear market.

This is the bull case:

But, as we all know, I don't specialize in consensus Pollyannah bull shit, so now let's review the bear case:

Under the bear case, a ground attack by the U.S. is imminent which will cause oil to spike towards $150+. The war will be bloody and protracted. Bulls are in no way prepared for this outcome therefore markets spontaneously explode:

1) The war is protracted and both sides suffer major losses.

2) Global markets collapse and the world enters recession/depression.

If we compare to last year's trade war, we see the difference in market set-up. Last year Trump escalated the trade war but then de-escalated two days later. Under the ground war scenario I am posing, there is no de-escalation for WEEKS. Where did I get that idea?

March 29th, 2026:

In summary, it's stock bulls not Iran who have been rope-a-doped by Trump.

They have been fooled over and over again.

Fool me all the time, shame on me.

Unfortunately, they can't afford to be wrong AGAIN.

Because sadly, this is not 2022 "best case scenario".

It all comes down to, who do you trust.

Crazy Donny?