Trump hoped his Iran reprieve would bring a stock-market miracle - but investors aren't buying and time is short.
The stock market's expected "Trump put" over Iran hasn't materialized.
Markets will stop trading Trump's performative gestures and focus on the realities on the ground in the Gulf. That's a reality Trump does not control.
President Donald Trump's five-day pause in the Iran conflict - which ends on March 28 - is obviously meant to calm investors and keep the U.S. stock market's decadelong bull market going. The fifth day is two trading sessions away. By some miracle, maybe the Dow Jones Industrial Average DJIA could approach 50,000 again by Friday. What happens on Saturday? With thousands of U.S. Marines and the 82nd Airborne on their way to the Persian Gulf, we should assume the Iran conflict continues.
The stock market is flat. The S&P 500 SPX is trading sideways and has declined over the past five trading days. It has not recovered despite WTI (CL.1) oil futures falling briefly to $88 early Wednesday before climbing back above $90 late Wednesday.
Stock investors aren't buying Trump's pause. It's this market whipsawing that American and global investors are growing tired of. It all stinks. For now, Trump gets the blame.
One post by Trump on Truth Social can move markets. The president can spark a rally or buy investors a few days of optimism. But a short reprieve only to return to uncertainty is not going to cut it.
"Uncertainty is not something markets price well," Steve Blitz, managing director and chief economist at TS Lombard, wrote in a note to clients on Wednesday. "Equities have an oversized place in household portfolios and corporate behavior. The shift to a sideways trending, volatile equity market is not something anyone is prepared for."
We are approaching the March 31 deadline that imagines Iran as "Venezuela II."
What should investors expect after Friday? We are approaching the March 31 deadline that imagines Iran as "Venezuela II" - get in, declare victory, get out. Optimism erodes the longer this goes into April. Everything reprices. Domestic and global political alignments get reassessed.
It's already happening. BNP Paribas raised its 2026 headline and core CPI forecasts to 3.3% and 3.2%, respectively. Analysts warned of elevated inflation all year. If the war lasts longer than currently priced, inflation will go much higher, BNP said. On Wednesday, the European Central Bank warned about possible rate hikes.
There will be no 30-day pause in the Iran conflict.
Markets will stop trading Trump's performative gestures next week and focus on the realities on the ground in the Gulf. That's a reality Trump does not control.
The administration's five-day pause could become a 30-day pause, contingent on a 15-point surrender plan for Iran that reports say Iran has rejected. There will be no 30-day pause.
There are three views on how this conflict plays out. These views matter to investors trying to time the war's end. One view is the geopolitical view that has the U.S. forcing a derisking of the Strait of Hormuz, forcing countries to reconsider Iranian oil, and maybe rely more on U.S.-produced LNG and allied supply chains.
The other is Israel's point of view on its own security objectives. Iran has a say here. Tehran may be interested in prolonging the war and getting regime change in Washington. If either Israel or Iran prevails, the war continues.
The Iran war has backfired on Trump's campaign against Federal Reserve Chair Jerome Powell. Instead of delivering lower rates, the Iran conflict has imposed the equivalent of a surprise 50-basis-point (0.50%) tightening on the U.S. economy.
"If oil settles near $75 a barrel - still roughly 30% above the January 7 level - the bleed-through into inflation will hand Powell a clean excuse to stay hawkish into the end of his term," predicted Vlad Signorelli, head of Bretton Woods Research, a macro investment research firm. "That is a bad setup for Trump and a worse one for congressional Republicans heading into the midterms," he added.
Trump can declare victory in Iran and walk away, but can he end the war between Israel and Iran? That is a mystery. Meanwhile, fuel and fertilizer shortages will turn the world off to this war fast. Gulf states will want help with damage repairs, or their promises to invest in the U.S. could be postponed indefinitely.
Patience is paper-thin. Overextended equity markets remain fragile. As Blitz from Lombard said: "The Trump put is proving a bit wobbly."
Kenneth Rapoza is an analyst for the Coalition for a Prosperous America, which represents U.S. producers and workers. He is a former journalist who has reported from Brazil and covered the BRIC economies.