In front of the front line, the "TACO" narrative is suppressed? Trump shouts "negotiating" while airstrikes in the Middle East continue.

Although U.S. President Donald Trump claimed that negotiations to end this geopolitical conflict are underway, the conflict between Iran and the U.S.-Israel alliance continues with no signs of weakening, and instead military confrontations are escalating. Trump announced "productive talks" with Iran and postponed the strikes on Iranian power plants and energy infrastructure by five days. This led to trading in the market according to the "TACO" narrative, resulting in a collective rebound of the three major U.S. stock indices on Monday and a sharp drop in international oil prices. However, with the real situation between the U.S./Israel and Iran continuing and escalating, the market began to doubt whether the prevailing "TACO" buying strategy that has been in effect since April 2025 continues to be effective. It is reported that Iran launched a new round of missile and drone attacks on important cities in Israel such as Eilat, Dimona, and Tel Aviv, as well as U.S. bases in the Middle East during the night. Saudi Arabia stated that it intercepted a drone in the eastern region; Kuwait stated that some core power transmission lines were forced to shut down after the Iranian attacks. Bahrain sounded frequent alarms. In Iran, the Fars News Agency reported that a new round of joint airstrikes by the U.S.-Israel alliance destroyed a natural gas pressure regulating plant and an administrative building in the central city of Isfahan. According to the latest reports from Fars News Agency, a pipeline that supplies gas to the Halomshahr Combined Cycle Power Plant in southwestern Iran was also hit in the airstrikes. In Israel, the latest videos on social media show security and rescue personnel inspecting a new site hit by Iranian missiles in the diplomatic capital Tel Aviv on March 24. Undoubtedly, the much-awaited "TACO bottoming moment" did occur on Monday, but it has not yet escalated into a sustainable core market logic at the medium-term level. In early Monday morning Eastern Time, as Trump's "final 48-hour ultimatum" entered its final countdown, Trump suddenly announced "productive talks" with Iran and postponed the strikes on Iranian energy infrastructure by five days. The market immediately traded according to the "TACO" script: U.S. stocks surged, oil prices plummeted, and many risk assets, including Bitcoin and high-yield bonds, rebounded rapidly. This also indicates that as long as Trump sends a de-escalation signal, the market will reflexively embrace risk-on. However, the latest developments suggest that the "TACO" strategy may have quickly lost its effectiveness as the bombings continue and the real frontlines have not truly cooled down, leading the market to not truly believe that the war is coming to an end. Shortly after Trump's social media tweet announcing a "five-day ceasefire," Iran quickly denied direct negotiations with the U.S., and the attacks from both sides did not truly stop. At the same time, oil prices quickly rebounded after a sharp drop, with Brent back above $100, indicating that the belief in a "continuing de-escalation" in the new round of geopolitical conflict is not firmly established. The fire of war has not stopped, and the authenticity of negotiations remains a mystery! Trump's "ceasefire script" is repeatedly contradicted by reality. Based on Trump's claim of having held a "productive dialogue" with Tehran and postponed the strikes on Iran's energy infrastructure, U.S. and Israeli airstrikes and Iranian missile attacks continue. Recent reports suggest that Iran is in talks with various countries including Turkey, Oman, Pakistan, Egypt, Russia, Azerbaijan, Turkmenistan, and South Korea in an effort to control the war and seek a final ceasefire agreement. Iran has warned that if its coastline is further attacked, it will lay mines in "the entire Persian Gulf." The recent statements indicate that the negotiations that follow may be very difficult, and there is no guarantee that both parties can reach an agreement to end the conflict. Iran has previously insisted on compensation and assurances from the U.S. and Israel that they will not launch further attacks - demands that Trump and Israeli Prime Minister Benjamin Netanyahu are unlikely to accept. Trump has ordered the Marine Corps to the region, including the deployment of the 31st Marine Expeditionary Unit from Japan with over 2,000 troops. In light of the ongoing conflict, the current "TACO" strategy may still be effective on a short-term tactical level, as the market remains in high volatility environment driven by news and quick rebounds. However, it is risky to view this rebound as the start of a new bull market until the real situation improves and tensions de-escalate. The belief in Trump's potential to intervene and the continued uncertainty in the region suggest that the immediate future remains volatile. As financial markets struggle to digest this geopolitical war and the energy supply crisis it has triggered, the threat of inflation and stagflation looms large. Investors, central banks, and corporate leaders are forced to face the reality of high oil prices as a sustained threat. The closure of the Strait of Hormuz has disrupted global energy flows and caused Arab countries along the Persian Gulf to cut back on millions of barrels of oil production daily. It is a challenging time for financial markets, as the conflict between the U.S., Iran, and Israel shows no signs of abating. The uncertainty in the region has led to volatility in markets, and investors face the dilemma of navigating through these turbulent times. Until a lasting ceasefire and resolution are reached, markets will likely continue to react to geopolitical events and shifts in the balance of power.