If Iran is going to force the United States to stop by causing more economic pain to Americans, it simply does not understand how the global economy works. Kevin Hassett, Donald Trump’s chief economic adviser, thinks so. However, the markets say something completely different. The longer the United States gets bogged down in the swamp of conflict in the Middle East, the less likely it is to achieve the goals set by the White House. Including the decline in the USD index.
Treasury Secretary Scott Bessent is known as the author of the 3-3-3 concept. Economic growth by 3%, reduction of the budget deficit to 3% of GDP, additional 3 million bpd to oil production in order to reduce its price. To this should be added the president’s maniacal desire to raise the S&P 500 by hook or by crook and lower the US dollar to understand that… the plan is not working!
The conflict in the Middle East has pushed Brent to its highest levels since the summer of 2022. Treasury rates have exceeded 4.25% and continue to move up due to fears of a growing budget deficit and an increased likelihood of a prolonged pause in the Fed’s monetary policy easing cycle almost until the end of the year. The US dollar is rapidly strengthening due to the high demand for safe haven assets and the status of the United States as a net exporter of energy goods. GDP in the fourth quarter slowed sharply from 4.4% to 0.7%. Is it any wonder that Donald Trump’s ratings are falling and the chances of Republican defeat in the midterm elections are increasing?
The White House had a plan for a quick and spectacular victory, the capitulation of Tehran, after which investors could use the TACO strategy or Trump always retreats. They would sell oil and the US dollar, buy up the S&P 500 and treasuries. There’s only one problem. Iran is not going to give up. He will not be intimidated by any threats to increase bombing or launch attacks on energy infrastructure if the Strait of Hormuz is not opened.
Donald Trump has to go back to his old ways. If there is no victory, he will come up with it. According to the US president, Tehran is ready to back down, but the Americans have not yet fulfilled their goals. Iran immediately denied this information, making it clear that the owner of the White House was wishful thinking. His plan to lower oil prices by selling 400 million barrels from strategic reserves has failed. Calls for other countries to escort tankers through the Strait of Hormuz have yielded nothing.
