Key insights
- The author outlines a perceived pattern in Trump's negotiation tactics, suggesting a cycle of escalation and de-escalation. Currently, the author believes we are in the 'feedback loop' stage, characterized by heightened threats. The expectation is an eventual 'deal' that surpasses market expectations, leading to a rapid repositioning of asset prices. This implies potential near-term downside risk for US equities followed by a possible rally.
Step 1: Hint something -> liberation day, to iranian protestors help is on the way
Step 2: **Posturing and Positioning ->**How US is getting ripped off by everyone, send ships near Iran, send ships near venezuela
Step 3: The strike after market close -> Liberation day announcement, Maduro operation, Operation Epic Fury,
Step 4: All financial asset goes lower as they furious reprice Trump's actions
Step 5: Trump hints at something that will last a long time -> Tariffs, War with Iran, Risk assets goes down further
Step 6: De-escalation signals appear -> Countries begging us to reach deals, We are in negotiation with Iran
Step 7: Feedback Loop and further threatening -> Keep saying crazier and crazier things like sending Iran back to stone age, 100% tariff on China, Destroy entire Iranian civilization <- We are here
Step 8: The Deal -> resolution happens and it is a lot better than what markets expect, asset prices repositions rapidly. Trump furious reframe the narrative and goals to not look so bad.