Trump crashed markets

Yesterday delivered the worst trading day since the war started. Hope collapsed fast. Oil jumped back above $108. The Nasdaq entered correction territory. And Trump extended his power plant strike pause to 6th Apr while simultaneously saying he does not know if the Iran is "willing" to do a deal.

🎭 HOPE BUILT ON MONDAY, COLLAPSED ON THURSDAY.

Here is the brutal summary of what happened this week.

Monday: Trump posts "very good and productive conversations" with Iran. $1.7 trillion added to markets in minutes. Oil drops 11%.

Tuesday: Iran denies the talks. Israel keeps striking. Markets give back half the gains.

Wednesday: US 15-point peace plan confirmed via Pakistan. Markets rally again. Oil drops another 6%. Stocks up 300 points on the Dow.

Thursday: Iran formally rejects the 15-point plan. Trump says he does not know if the Iran is "willing" to work on a deal. Oil surges back above $108. The S&P 500 slumped 1.7% for its worst day since January. The Dow fell 469 points. The Nasdaq sank 2.4% and fell more than 10% below its all-time high. It is now in correction territory.

Then late Thursday Trump extended his power plant strike pause for 10 more days to 6 Apr.

Iran said there are no talks.

Pete's Take 👇

This market is now trading entirely on Trump's social media posts. That is an extraordinarily fragile foundation. Monday's $1.7 trillion rally was built on one Truth Social post. Thursday's collapse was built on reality reasserting itself. Until there is a signed document, a confirmed ceasefire, or a tanker successfully transiting the Strait under naval protection, market will remain shaky. However, this is also telling us that the market is not fundamentally broken, just trading on sentiment. So be on lookout for good companies.

📋 THE 15-POINT PLAN. THE GAP THAT MARKETS FINALLY PRICED.

By Thursday the full picture of the two sides' positions became clear and markets did not like what they saw.

The US 15-point plan included sanctions relief, civilian nuclear cooperation, rollback of Iran's nuclear program, IAEA monitoring, missile limits and Strait of Hormuz access. Pakistan delivered it to Tehran.

Iran's response via state media: "Iran will end the war when it decides to do so and when its own conditions are met."

Iran's five-point counteroffer includes sovereignty over the Strait of Hormuz, war reparations, a halt to assassinations, guarantees against future war, and a comprehensive end to all hostilities including against all resistance groups across the region. (both sides like to talk in multiples of 5)

Some of the US demands were non-starters even before the war. Iran has long insisted it will not discuss its ballistic missile program or its support of regional militias. And its ability to control the Strait represents one of its biggest strategic advantages it is not willing to give up.

Pete's Take 👇

The gap between 15 points demanding nuclear dismantlement and missile limits, versus 5 points demanding Strait sovereignty and war reparations, is not a negotiating gap. It is a chasm. But here is the important context. Opening positions in any serious negotiation are always maximalist. What matters is whether there is a middle ground both sides can live with. The question is whether four weeks of war has created enough pain on both sides to find that middle (Maybe a 10 point deal?). Iran's economy is being destroyed. The US is paying $1 billion a day. That shared pain is actually the best argument for an eventual deal.

The market is trapped in a painful loop. Every peace signal sparks a relief rally that reverses when reality sets in. Every escalation drives oil higher and stocks lower. Until the Strait physically reopens and a tanker successfully transits, this pattern repeats.

However bad the situation may look, the ceasefire process is real and finally undergoing. Pakistan has publicly confirmed it is the mediator. Both sides have formal proposals on paper.

I think we starting to see the light at the end of the tunnel….. (hopefully it is not a train coming at us)

And…..TONIGHT Dividend Market Genius LIVE Friday 27 Mar 8pm

Take note it is 8pm instead of the usual 9pm because I want to cater more time for the class to share the supercharged option strategy!

Those who have signed up for DMG, find the link here: https://investwithpete.teachable.com/courses/2946512/lectures/64948678 

See you 8pm!

Pete
Invest with Pete

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The information provided in this newsletter is for informational purposes only and does not constitute financial advice. Readers should seek their own independent financial advice before making any investment decisions. Please note that while Pete is a portfolio manager, the opinions expressed in this newsletter are his own and do not represent the views of any organization. Always perform your own research and due diligence before investing.