LOST CONTROL
By starting a real kinetic conflict in Iran, Trump has lost any semblance of control. Now, the market moves on attacks against energy infrastructure and the inability to get tankers through the Strait of Hormuz. And with higher gasoline prices, he’s also losing sway over the flagging sentiment of American consumers.
You can see the difference in market pricing. After a few brutal days in April 2025, the S&P 500 Index surged back and never retested the post-“Liberation Day” lows. While the recent selloff has unfolded much more slowly, the recovery looks elusive.
The picture is a bit worse under the surface. The average stock is actually doing worse than the index as a whole: An equal-weighted basket of stocks is underperforming the capitalisation-weighted one, and about 80 per cent of stocks are trading under their 50-day moving averages.
Another problem is Trump’s apparent desire to counter his “TACO” critics. (As a reminder, credit for the acronym belongs to the excellent Financial Times writer Rob Armstrong, of the Unhedged newsletter).
When he was asked about the TACO habit by a reporter last year, Trump called the question “nasty” and sought to reframe his behaviour as a conscious strategy. “You call that chickening out?” Trump said. “It’s called negotiation.”
But whether you call it “madman diplomacy” or the Art of the Deal or anything else, it can’t possibly work if the whole world has your number. Trump is seemingly eager to reassert his unpredictability in Iran, which – if true – would constitute an awful excuse for continuing a war with tremendous economic and, above all, human costs.
