Markets Down On Hormuz Blockade Today; Expected To Go Up Tomorrow For TACO Tuesday

ERROL PARKER | Editor-at-large | Contact

Global equities fell on Monday as the US naval blockade of Iranian ports starts this week, with Brent crude holding at $95 a barrel and the Strait of Hormuz still running at a fraction of normal shipping volume.

The sell-off came after 21 hours of peace talks in Islamabad collapsed without a deal on Sunday, with Vice President JD Vance blaming Iran and Iran blaming the United States. Futures, however, had already begun moving before Vance reached the tarmac, continuing a pattern that has repeated itself at every major inflection point since the war began in February.

Staff at Morgans Betoota, the McDonalds of private wealth management in this country, said they were enjoying the cycle.

"You buy the posturing, sell the de-escalation, buy the posturing again," said one red-toothed senior dealer, who asked not to be named because he was not authorised to speak publicly and also because he was also two bottle of Koonunga Hill deep at the Gelded Seahorse Hotel this afternoon after a client lunch on the Diamantina River.

"Rinse and repeat. It's the most predictable trade on the board."

The dealer said the desk had been long energy and defence since February and had "done very well out of every time Trump threatens to blow someone to hell," adding that the IRGC's promise to deal "harshly and decisively" with any military vessel approaching the Strait was "music to our ears, frankly."

Asked about Israel's continued strikes on Iran-backed Hezbollah terror cells in Lebanon, the dealer shrugged.

"Already priced in, don't you worry about that," he said.

The desk expects a sharp reversal on Tuesday, driven by what internal research notes are describing as "strong TACO fundamentals." TACO, for the uninitiated, is an acronym that has gained traction on trading floors since the war began. It stands for 'Trump Always Chickens Out' and refers to the now well-documented pattern of the President escalating rhetoric to the point of apparent no return before pulling back at the last moment, sending markets rebounding like a super ball off a tile floor.

"It's the most reliable indicator we've got," said the dealer, seeming unaware he keeps farting and upsetting other pub patrons.

"More reliable than CPI. More reliable than whatver. The man threatens to end a civilisation, everyone dumps, then he backs off and you buy the bounce. We've done it four times since February."

The dealer confirmed the team would be selling into the rally.

"Buy the bombs, sell the TACO," he said.

"It's not complicated."

More to come.