The big story is on the 8th of April, 2026, Iran and the US agreed to a 2 week ceasefire. How did my forecasts stack up?
I was right where it mattered most: when my money was at stake. Even if you are bearish on Trump’s foreign policy and think Iran is mess or has no resolution, always stay invested. I did. Similar to the 2025 tariffs, the Nasdaq has recovered all the Iran losses, and then some. What a perfect V-shaped rebound:
Trump always pulls through in one way or another (unless it’s crypto, in which donors get nothing). A good heuristic is Trump’s doubters tend to look bad. So even I was wrong about strait being closed until 2028, I still make money as the stock market surges. So in that sense, I was right. The lesson: never bet against trump.
It’s also illustrative of a common tactic by Trump, which he has used with good success that I call asymptotic diplomacy or diplomacy by delay: just keep dragging things out until both sides and the public forget or lose interest about it. The issue exists in so far that it generates media coverage, but in some indeterminate state of limbo.
It’s hard to know which tariffs are extant or broken. Are the China or Canada tariffs still in effect? Or which ones? The ones from January, April, or October 2025? Or which were the threats or actual tariffs? Or are we talking the 10% or 20% tariffs? Who knows…who cares. The stock market doesn’t care. Semiconductors, Silicon Valley, and AI doesn’t care.. It all blends into a sort of background noise and is forgotten or drowned out by whatever is the new “current thing”.
A similar pattern is now seen with Iran. Is the peace agreement still in effect if Iran and Israel are still attacking? What is the status of the strait? Is partial opening the same as it being opened? What will happen when the 2 weeks are up? No one really knows. And similar to the tariffs, the stock market has decided that for all practical purposes the issue no longer matters. Like Iraq or Afghanistan, there is no resolution to Iran in any definite sense. It will continue in the background, much like the tariffs in 2025, as the stock market and economy moves on. High oil prices and gas will have a surprisingly small effect on CPI or consumer spending.
There is a very narrow window where the public cares and stock market reacts, and once that closes, the issue is in the rearview, as sentiment suddenly shifts from despondency to ebullience. The media is stumped as how the stock market has recovered so fast despite the underlying thing–be it tariffs or Iran–being unresolved.
This was also seen with Covid: the stock market rebounded to new highs far sooner than the virus went away (or the media stopped talking about it), around 2022 when Covid coverage was superseded by Ukraine and Russia. Or the 2008 financial crisis: by 2011, the stock market had recovered almost all its 2008 losses, but the aftermath was felt far longer. Its hard to sustain the public’s attention for that long, but also, things tend to recover far faster than expected.