The Iran war is escalating. We have spent the last 12 months analyzing EVERY geopolitical conflict involving President Trump. What's coming next? Here is our CLEAR guide to what is coming next and what it means for investors and financial markets. Before we begin, Bookmark this Article, it will be your guide to the next 2-4 weeks in the market.
On January 17th, we published our first "playbook," which we titled the Tariff Playbook as President Trump ramped up tariff pressures on the European Union amid his push for an acquisition of Greenland. This article ended up predicting the outcome of President Trump's latest tariff war down to the day. So, how did we know?
Since President Trump's inauguration on January 20th, 2025, we have spent hundreds of hours analyzing President Trump's geopolitical and trade war headlines. As a result of our research, we were able to identify a clear pattern in the way President Trump negotiates and exerts pressure on both US enemies and allies when he is attempting to accomplish an economic or military objective.
We utilized this series of pattern recognition throughout 2025 and early-2026 as a core part of our investment strategy. Today, we felt sharing this strategy with X and the world was appropriate. We hope this can serve as your guide to the volatility.
Step #1: Every Conflict Starts In The Same Way:
First, we must look at how the Iran war started. It didn't start with the first strike on Iran on February 28th, it started over 2 months ago. In the lead up to this war, President Trump posted several messages saying "a massive Armada is heading to Iran" and continuously urged Iran to "make a deal."
The Iran war is the biggest war President Trump has entered in his second term. But, if you really look at the last 6-8 weeks, the strategy President Trump has employed is completely identical to that of his trade wars and even the capture of President Maduro. How so? It's not literally identical as far as US military operations go, but the underlying negotiation tactic is following the historical pattern.
For example, take a look at the post below from November 29th, when President Trump "closed in its entirety" the airspace around Venezuela. Keep in mind, this was over ONE MONTH before the US captured President Maduro.
https://www.thekobeissiletter.com/pricing
Next, take a look at the Truth Social post from President Trump below. We saw several posts like this from President Trump between January 1st and January 18th. Trump said "it is time" to acquire Greenland and constantly threatened Denmark. Days later, President Trump imposed widespread tariffs on the EU.
It's clear: Step #1 of President Trump's War Playbook is effectively verbal pressure on the target in an effort to "make a deal."
Step #2: Strategic Posturing and Physical Positioning
The second step involves visible strategic preparation that reinforces credibility without yet triggering full scale engagement. In Iran’s case, this included military repositioning, public alliance coordination, and the "Armada" President Trump sent to the Middle East.
This pattern was visible in Venezuela when airspace closures and regional military positioning occurred well before action was taken against President Maduro. It was also seen in trade wars, where investigations, executive reviews, and public notices preceded actual tariff implementation.
For example, take a look at the below headline from August 11th, 2025, when President Trump met with Intel CEO Lip-Bu Tan. Days prior, Trump posted that Tan "is highly CONFLICTED and must resign, immediately. There is no other solution to this problem."
Days later, the Trump Administration announced they had reached a "deal" with Intel to acquire 10% of the Company. This investment ended up yielding over 80% in profit in under two months, as we outline below.
Once again, President Trump's goal is almost always to make a DEAL. This is a case where the initial "buildup" or threats resolve and the conflict simply resolves here, at Step #2. When it doesn't, move to Step #3 next:
Step #3: The Friday Night "Strike"
Now that the initial pressures President Trump has imposed did not work, President Trump progresses to physical force or economic warfare.
One of the more consistent tactical elements in President Trump’s escalation pattern is timing. Major announcements, decisive strikes, or sudden policy shifts have frequently occurred late on Friday evenings, after equity markets have closed and before futures liquidity fully develops. Why? Because President Trump is highly responsive to drastic moves in financial markets.
Below is a list of some conflicts President Trump has moved on during Friday nights/Saturday mornings:
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US and Israeli Airstrikes on Iran Nuclear Sites - June 21st
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US Military Strikes on Caribbean Drug Boats - September 1st
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100% Tariff Threat on China - October 10th
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Venezuela Airspace Closure - November 29th
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Military Action in Nigeria - December 25th
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US Airstrikes on Iran - February 28th
When a major geopolitical event breaks during active market hours, price discovery becomes disorderly. Liquidity thins immediately, algorithms amplify volatility, and intraday swings can create panic that feeds on itself. By contrast, a Friday night announcement provides a buffer. Investors, institutions, and governments have an entire weekend to digest information, assess risk, consult advisors, and model scenarios before markets reopen.
For Iran, this moment was February 28th. Often, President Trump begins teasing a "deal" before futures open on Sunday of that same week.
This time around, that clearly did not happen, which leads us to Step #4:
Step #4: Risk Premium Expansion Across Asset Classes
Following the shock event of Step #3, futures markets open with a violent move across asset prices on Sunday at 6 PM ET. However, markets will continue to doubt the longevity of the conflict. Why? Because everyone knows President Trump likes to make a deal.
As a result, the initial move in stocks, commodities and bonds is frequently undone, at least partially, by the time stock markets open on Monday. For example, take a look at crude oil prices and the S&P 500 on March 2nd (one day prior to where we are as we are writing this article).
WTI Crude Oil prices initially reversed ~70% of their gains and the S&P 500 actually turned green yesterday. Today, those moves are being undone and new highs in oil prices and lows in stocks have arrived.
This is because President Trump knows that everyone knows he likes to make deals. So, this usually means the conflict will continue to escalate, even as markets price-in a brief conflict.
We are now set for Step #5.
Step #5: President Trump Teases A "Forever" Conflict
After investors quickly buy the dip in anticipation of President Trump "backing down," the market is typically blindsided. As headlines get worse, people expect that President Trump will begin removing some of the pressure on the target. However, the exact opposite happens.
As seen on March 2nd, President Trump is now stating that "wars can be fought forever" and the US has "unlimited mid to upper tier weaponry." Keep in mind how the word "forever" is put in quotation marks. This is tactical verbiage by President Trump. It's his way of saying he doesn't want to fight forever, but he can if needed. It's another negotiation tactic.
Since the start of the war between the US/Israel and Iran, and even prior to its start, our view has been that President Trump would NOT benefit from a prolonged war. This continues to be our view despite the references to a "forever" war.
Why? Because three of President Trump's top policy priorities are to be the "peace president," eliminate inflation, and lower US gas prices to $2.00 per gallon.
A prolonged war with Iran would work in the opposite direction of these key initiatives, particularly in the short-term during a crucial midterm election year.
Step #6: Markets Begin Pricing-In A Prolonged Conflict
As of today, March 3rd, Step #6 of our playbook appears to have commenced. Take a look at the quotes below. Brent crude oil prices are rising above $85/barrel for the first time in nearly two years, US equity markets have erased their gains and hit new weekly lows, and a rush to the sidelines has accelerated. The Dow is now down -1,100 points on the day.
https://www.thekobeissiletter.com/pricing
At this stage, the market is no longer assuming a short, symbolic engagement.
Oil above $85 per barrel is not pricing in a weekend flare up. It is pricing in risk to supply chains, tanker insurance costs, and a partial closure of the Strait of Hormuz. Equity markets breaking to new weekly lows are not reacting to a headline they are reacting to duration risk.
This is the exact psychological shift President Trump’s strategy is designed to produce.
The first dip gets bought because investors assume a deal is coming. The second dip gets bought because investors assume escalation is temporary. The third dip is when positioning begins to change structurally.
**SMART money has been able to consistently identify when polarity in sentiment has gone too far, particularly with increased retail participation in capital markets. **
Throughout 2025, our strategy was largely hinged on exactly that: how can we use historical patterns in President Trump's economic conflicts to get ahead of the next shift in markets.
As shown below, our investment strategy has returned nearly five times the S&P 500 since 2020. In 2025, our S&P 500 investment setups yielded +21.8%, well ahead of the S&P 500's return, because we were able to identify these clear shifts in equity markets in advance.
If you are interested in receiving our premium analysis, you may do so by joining our service here.
This brings us to Step #7.
Step #7: Conditional De-Escalation Signals Appear
Before we explain this step, we must first state that the time between Step #6 and Step #7 is HIGHLY variable. In the case of the trade war in early-2025, this took multiple months before leading into the April 9th tariff "pause," largely pressured by rapidly surging yields, as shown below. There is typically some sort of catalyst, whether it is the target of attacks asking for a "deal" or something breaking in the market, that prompts Trump to pull back.
After risk premia have expanded meaningfully across equities, commodities, and fixed income markets, President Trump historically introduces carefully calibrated de-escalation language. Importantly, this does not resemble a retreat.
In the case of the Iran war, this will either be a fall of the Iranian government or something "breaking" which is structural in nature for the US and global economies.
Language shifts toward conditional resolution. Statements begin to emphasize that negotiations are possible if certain criteria are met. References to talks, discussions, or frameworks quietly enter the narrative. This phase is designed to test both the opposing party and the financial markets without relinquishing strategic positioning.
Recent examples include President Trump's October 2025 tariff deal with China, January 2026 Greenland deal with the EU, and February 9th trade deal with India.
All of these deals began with a threat, proceeded to an action, a double-down of that action, and eventual de-escalation.
Step #8: The Market And Political Feedback Loop
One of the most overlooked elements of this strategy is the degree to which financial markets themselves become part of the negotiation environment. President Trump has consistently demonstrated awareness of equity market performance, energy prices, and inflation expectations as components of broader political optics.
A prolonged conflict that drives oil prices sharply higher would directly conflict with three core policy priorities that have been repeatedly emphasized: positioning himself as a peace-focused leader, reducing inflationary pressures, and lowering gasoline prices. Elevated energy costs feed directly into consumer sentiment and inflation data, which in turn influence electoral dynamics during a midterm cycle.
According to JP Morgan estimates, a closure of the Strait of Hormuz could send oil prices to $120-$130/barrel. This would imply a spike in US CPI inflation to ~5%. The last time we saw US inflation at 5% was in March 2023, when the Fed was aggressively hiking rates.
In the current environment, several indicators deserve close monitoring. Sustained Brent crude above $90 per barrel would intensify inflation concerns. Equity markets falling -5% or more would shift investor sentiment. And, gas prices rising over +10% would crush consumer sentiment.
When these thresholds are approached, the probability of negotiation headlines increases substantially.
IMPORTANT: This is exactly when the smart money begins buying; when retail sentiment has collapsed.
Step #9: The Deal And Narrative Framing
In the case of the Iran war, Step #9 is conditional. If the Iranian government collapses, the US and Israel will say that the mission was a success and military objectives have been reached. This would immediately end the tariff playbook before Step #9 commences. If not, proceed below:
Every major confrontation within this framework ultimately concludes with a negotiated outcome that is framed as a strategic victory. The structure of the agreement varies by context, but the narrative remains consistent: maximum pressure produced concessions.
In prior trade wars, agreements were presented as proof that escalation yielded economic advantage (China, EU, India, Vietnam, Japan trade deals). In corporate confrontations, public pressure preceded negotiated equity stakes or structural adjustments (Intel, Rare Earths deals). In geopolitical disputes, ceasefires or framework agreements were framed as evidence that strength compelled compromise (Various Wars/Conflicts Trump Ended in 2025).
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If the Iran conflict follows the established pattern, resolution will likely occur only after sufficient leverage has been demonstrated.
That may involve a ceasefire tied to nuclear concessions, a regional security arrangement with enforcement mechanisms, or a sanctions adjustment package contingent on compliance benchmarks.
The specific architecture matters less than the timing and framing.
Step #10: The Violent Repricing And Political Victory Lap
The final stage of President Trump’s conflict playbook does not end with the announcement of a deal. It ends with the market reaction to that deal and the narrative that follows.
Historically, once a resolution framework is introduced, the repricing across financial markets is not gradual, it is abrupt, largely due to positioning. By the time negotiations become credible, investors are typically defensively allocated. Energy exposure is elevated, equity risk has been reduced, and volatility is elevated due to the implicit uncertainty.
When uncertainty suddenly collapses, those positions unwind quickly, as seen in April 2025, August 2025, October 2025, and January 2026, as seen below:
In prior trade war episodes, equity markets rallied sharply once tariff suspensions or framework agreements were announced, even if the underlying structural issues remained unresolved. During geopolitical flare-ups, oil fell sharply once it became clear that shipping lanes would reopen and escalation would not broaden regionally.
The repricing is often violent because it is driven less by improving fundamentals and more by collapsing risk premia. Markets move not because conditions are perfect, but because worst-case probabilities fall dramatically.
Again, pricing-in the "worst case scenario," even briefly, is an integral part of President Trump's negotiation strategy.
We remain adamant that if US/Israeli military action does not end in a collapse in the Iranian government in the coming days or weeks, a deal will return to the table.
President Trump does NOT want a forever war; it accomplishes NONE of his economic objectives.
What Happens Over The Next 2–4 Weeks
At present, we appear to be transitioning between peak escalation rhetoric and the early stages of conditional signaling. Markets are pricing a more prolonged engagement than they were at the initial strike. Oil has broken higher, equity markets have surrendered short-lived stabilization rallies, and defensive flows have accelerated.
Historically, this is the stage at which pessimism becomes broadly embedded in positioning. However, it is also the stage at which negotiation probability quietly increases beneath the surface and smart money begins searching for deals.
This is largely evidenced by the current price action we are seeing in silver and gold. Both commodities are down sharply, with silver now down -20% in 24 hours, even as risk premiums are being priced-in across the board. This is a clear signal that a rush to the sidelines has begun and holding cash is being viewed as the clear safe haven trade. Again, smart money watches these flows.
Lastly: Don't Forget The Objective
There are three primary scenarios over the coming weeks.
In the first scenario, escalation intensifies briefly, pushing oil higher and equities lower, before a sudden shift in language introduces negotiation headlines. In this outcome, markets reverse sharply as positioning proves overly defensive.
In the second scenario, the conflict continues in a controlled but persistent manner. Oil remains elevated but does not spike dramatically. Equity markets trade with elevated volatility while awaiting clarity. Resolution arrives later in the month after extended pressure.
In the third scenario, regional escalation broadens significantly, including material disruption to shipping lanes or direct confrontation involving additional state actors. This would drive oil toward triple-digit levels and force deeper repricing across global risk assets. Based on historical precedents and the fact that it is a crucial mid-term election year, we view this outcome as lower probability, but not impossible.
Ultimately, do not forget that EVERY conflict involving President Trump since his inauguration nearly 13 months ago has ended with a deal.
President Trump is a dealmaker, follow the patterns and you will be rewarded.
More about our strategy:
Those who are able to remain objective and follow a process during the current times of disruption are realizing some of the best trading conditions ever.
An objective and systematic approach is what has led to our outperformance of market benchmarks. As shown below, our investment strategy has returned nearly five times the S&P 500 since 2020.
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