That's so crazy! The script quickly switched from "The Final Ultimatum" to "TACO", Trump's five-day ceasefire window reignited the market bottom fishing dream.

Global investors are weighing the contrasting outcomes that may result from US President Donald Trump's demand for Iran to reopen the Strait of Hormuz. The potential significant outcomes and market pricing trends highlight the approaching standoff between the US/Israel and Iran as a turning point. With Trump's significant announcement on social media of a "5-day delay", the market has begun to cry out for the "TACO moment". However, Wall Street institutions such as Goldman Sachs have indicated that the bottom has not been reached. In essence, the market is still oscillating between "short-term betting on Trump stepping back, long-term preparedness for extended war", and the AI super giants could be the last chips to be used by the market in exchange for cash. As the geopolitical tensions in the Middle East escalate, a sense of "extreme fear" is sweeping every corner of the global financial market. Asian stock markets collectively plummeted on Monday, being aptly described as a "Black Monday", with Japanese and Korean stock markets experiencing sharp declines. Copper prices fell to a three-month low, while spot gold dropped nearly 9%, wiping out all gains from earlier in the year, and spot silver dropped nearly 8%. Amid the fourth week of military conflict between the US/Israel and Iran, Trump's "final 48-hour ultimatum" is entering its countdown phase. The rhetoric from both sides has suddenly turned harsh. Bitcoin, considered a "risk asset indicator", along with global stocks, bonds, and gold assets, all fell simultaneously. The spike in oil prices leading to increased inflation expectations and deteriorating economic growth prospects is forcing investors to reassess the monetary policy paths of major central banks like the Federal Reserve, as market sentiment continues to lean towards defense. However, after the close of the Asian session on Monday, and at the beginning of the European market opening, Trump's latest update on social media has once again sparked risk appetite in the market. President Trump posted on the social media platform "True Social", stating, "The US and Iran have had very good and effective talks over the past two days." Trump stated that he had instructed a pause on all military strikes against Iran's power plants and energy infrastructure for five days, on the condition that ongoing meetings and discussions are successful. Risk assets like global stocks saw a broader retreat during the Asian session on Monday, primarily due to the escalating tensions in the Middle East over the weekend. Trump threatened that unless Iran reopens the Strait of Hormuz, a key global trade route, by Monday evening New York time, he would bomb Iran's power plants and other core power infrastructure, emphasizing that the largest plant would be the first to be targeted. Tehran responded by warning that if its fuel and energy infrastructure were attacked by the US and Israel, it would retaliate against critical infrastructure across the entire Middle East region. In response to this, the Iranian Defense Committee issued a statement on Monday stating that if enemies attacked Iran's coasts or islands, Iran would immediately deploy various types of naval mines in all Persian Gulf waterways. A statement from the Iranian Armed Forces' Hataam Anbia Central Command spokesperson on the 23rd local time stated that due to the precision strikes and strategic deployments of the Iranian armed forces, the multilayered defense network of the US/Israel in West Asia is collapsing, weapons supply systems are being disrupted, and the overall situation is turning in favor of Iran. The Iranian military has effectively "semi-blocked" the Strait of Hormuz, meaning about 20% of global energy flows are being disrupted, with attacks on oil tankers and shipping interruptions. A recent study from the International Energy Agency (IEA) stated that the US/Israel military actions against Iran at the end of February resulted in the largest supply disruption in the history of the global oil market. At the same time, the US government is considering military measures (including potential ground or quasi-ground control of Harak Island) to restore shipping channels and gain full control of the Strait of Hormuz. Brent crude oil has been hovering around $110 per barrel and is stabilizing, no longer experiencing the short-lived wild spike, indicating that high oil prices could pose a sustained significant threat. Investors, central bank policymakers, and business leaders are forced to confront this reality. It is worth noting that Harak Island is Iran's largest crude oil export base, from which 90% of Iran's oil is exported. Trump's ultimatum has prompted investors to contemplate the most likely scenarios of Iranian risks: is the "TACO moment" here? Some professional institutional investors are reducing their exposure and increasing their cash positions, fearing the broader destruction of infrastructure in the Gulf region, including oil and gas facilities, if the US and Iran act on their extreme military threats. Others are strategically positioning themselves for continued intense volatility and expect that regardless of the outcome, the market will continue to experience significant fluctuations. A small minority is preparing to actively implement a buy-the-dip strategy in the downturn, betting on Trump's familiar pattern of backing off before extreme action (the TACO strategy) - a pattern that has seen him soften his stance and retract before taking extreme actions. TACO (Trump Always Chickens Out): Originating from the unprecedented global "trade war" that Trump initiated in April 2025 with the equal tariffs, the TACO strategy has now been widely adopted by traders as the most popular trading strategy. Whenever Trump issues new, more aggressive tariff threats or other major threats leading to market plunges, investors bet that he will ultimately back down or significantly weaken the policy he has stated, and then choose to buy in heavily at appropriate low points. From Trump's latest announcement to suspend all military strikes against Iran's power plants and energy infrastructure, the "TACO moment" seems to have arrived. Trump has repeatedly threatened to strike Iran's power plants and numerous public utility infrastructure if the waterway is not reopened by Monday evening New York time, further escalating the conflict risk that has rocked global financial markets for several weeks. For professional Wall Street traders, the challenge is no longer about managing risks, but how to navigate through a series of dizzying follow-up effects. Michael Brown, Senior Research Strategist at London's Pepperstone Group, said that this final deadline is "extremely important." "Given the high stakes involved - essentially an either/or outcome, either a de-escalation or a large-scale escalation, market participants cannot ignore the enormous risk looming on the horizon of human society." Over the past month, financial markets have been struggling to digest the consequences of this geopolitical war and the energy supply crisis it has triggered. In particular, market stagflation risk has sharply increased, with rate hike expectations continuously being front-loaded, leading to simultaneous declines in stocks and bonds. The dollar has reestablished itself as a safe haven, while traders in the stock market are looking for selective opportunities in defense and military stocks, renewable energy, and Malaysian energy assets. On Monday, Asian stock markets bore the brunt of the heavy losses, with the MSCI Asia-Pacific index dropping by over 3%, moving towards a technical retracement area. Global bond markets also experienced significant declines due to heightened stagflation expectations under soaring oil prices. With inflation and stagflation concerns on the rise, gold has erased more than half of its gains for the year. European stock markets also saw significant declines on Monday, but after Trump's directive to pause all military strikes against Iran's power plants and energy infrastructure for five days, European stock indexes surged, while WTI and Brent crude oil prices extended their losses. For weary investors who have been tormented by the rapid market reversals, Trump's final ultimatum and the contradictory statements have further reinforced their preference for caution. As a result, many are reducing their exposure even further, rather than chasing new positions. Giorgio Pradelli, CEO of EFG International, said that one of the key themes of concern for clients is trading volatility. He added that structured products are also becoming a focus, as investors seek to capitalize on significant trading opportunities with the heightened market volatility. Chauwei Yak, CEO of Singapore multi-strategy hedge fund GAO Capital, stated, "Since the end of January, we have been maintaining bullish positions in shipping, power, natural gas, and individual stock volatility." She mentioned that the company currently holds around 10% to 12% of its assets in cash. However, Yak is also looking for buying opportunities in certain stocks, including Japanese banking, shipping, and metal refining companies, "assuming that this war will eventually end," as she stated. Indeed, for many investors, the possibility of a sudden pause in the conflict and the resulting dramatic reversal is also a significant consideration. Bhanu Baweja, Chief Strategist at UBS Group, said, "This is a very binary event. In the stock market, the market is still operating under the logic of 'things will get better soon.' And time and time again, buying the dip has paid off. The best example is 'Liberation Day'." Kensuke Togashi, Chief Strategist at Daiwa Asset Management, stated that the company's strategy is "shifting from high-momentum stocks rotation to laggard stocks", although he believes that instead of a sudden improvement in the situation, this conflict is more likely to be prolonged. This dilemma reflects the mindset of many investors. Taku Ito, Chief Portfolio Manager at Nissay Asset Management, said, "It's hard to take action. We have to consider both possibilities." For Goldman Sachs, the US stock market has entered a de-risking phase, but is far from reaching the stage of a "surrender-style sell-off" being completed, indicating the true bottom of the market. Signals like the breach of the 200-day moving average, negative gamma, insufficient emotional reset, and incomplete clearing of systemic funds already indicate market fragility; and the addition of a more dangerous exogenous variable - Trump's "final ultimatum" to Iran - pushes the market back into a dual situation of "either de-escalate or escalate significantly". In this environment, Goldman strategists view the AI conglomeration/Mag7 as the "last source of selling". The underlying logic is very firm: when cyclicals, financials, Asian risk assets, and other sectors have already been cut back, the AI super giants and large-cap tech stocks are usually the last resorts to be sold to raise cash or reduce risk. In the past few months, the market has repeatedly shown that AI trading exhibits the typical attribute of "crowded long positions"; Goldman notes that the sell-off in AI-driven tech stocks has led to the worst single-day performance for equity-based hedge funds in nearly a year. At the same time, investors have been questioning whether the massive AI capital spending can support current valuations. In other words, the AI sector is not the cheapest place to fall, but it is the most likely place to be sold for liquidity in the next round; it has shifted from "growth faith" to "financing tool", which is the key reminder in Goldman's report. According to Goldman strategists, the dominant logic in the market is shifting from a singular AI computational bull market narrative to a more brutal macro reality check: if the risks in the Strait of Hormuz do not de-escalate, and oil prices remain above $100 for longer, high-valuation tech stocks will face higher discount rates, profit expectations downsizing, and deleveraging pressure. At this stage, any rebound is more like a tactical bounce, rather than a strategic reversal. The latest insights from Goldman strategists essentially say that it is not yet the "everyone is desperate" bottom, but rather the stage where "everyone is starting to realize what can still be sold"; and that prominent and concentrated selling pool is indeed the AI super giants.