“Show me the incentive and I’ll show you the outcome.” ~ Charlie Munger
From the start of the Iran war, everything the Trump administration has done can be characterized as follows:
Pump the stock market.
Suppress crude oil.
That might seem like a surprise, given that we have an armada of issues to deal with on the Iranian front, but everything from military tactics to headline leaks shows this administration has focused on two things. Push stock prices up, push oil prices down.
Following the 40-day conflict at the start of the war, we saw time and time again the patterns in markets:
Large block sell followed by fake peace headlines.
Equity markets initially ramped up whenever there was peace and sold off whenever there was conflict. Trump alluded to this himself in June when asked why he did the MOU.
Military attacks began only after the stock market closed, not one minute before. This brought the infamous war on, war off adage back in July.
Recent “love taps” on Iranian assets were not communicated at all to the public; only OSINT accounts picked up on it.
From the start, it was clear this administration would do whatever it takes to keep oil prices from rising ahead of the midterm elections, whatever. With enough repetitive patterns, those of us who followed the incentives closely quickly understood that no matter how dirty the game, they were going to play it. Whether by intervening in the market or by having unknown news outlets like Al-Jadeed talk about a breakthrough in peace, they were going to try.
And why did they try so hard?
Midterms.
Source: Polymarket
But like all things in life, short-term thinking never wins. Intervention never wins. You need to show concrete evidence of improvement in the process for sustainable gains. In this case, this Iran war has created the very scenario that is forcing a shift in voter sentiment. Polymarket is now showing the possibility of Democrats winning at 77%.
Yes, it is stunning to see, and we have one more day to go before we find out the results.
Now there’s something I want to discuss with you that hasn’t been talked about before. You see, most analysts believe Trump could escalate after the midterms (myself included), but if you look at the incentives, there are multiple paths ahead.