Art of the Thrill

Late April 7th we had an official ceasefire with Trump rejoicing, but bombs were still falling with death and destruction proceeding to plan. Markets had bottomed on March 31st, while Crude still had momentum to the upside.

Information advantages by some only partly explain why markets sometimes heavily diverge from the realities on the ground – fog of war being another obvious dynamic.

We wrote about this in Fog of Markets and hypothesised why Crude and Stocks seemed to be diverging. We touched on a hidden Sword of Damocles hanging above the heads of the Pentagon (i.e. Department of War) – and wrote about a Regime Change trade that expresses that view.

In FaaC we first introduced the Kitchen Sink TACO concept, and we may be experiencing a variation of it right now.

Fog of War doesn't allow us to have a clear view why Trump wanted a ceasefire so much, if he knew it wasn't going to hold. Did they want to buy time? Was the Gulf pressuring him too much? Was he just BTFD on stocks and shorting Crude?

I don't know.

But what I do know is that if you have a solid framework and know what you are doing at any point in time – these types of moves offer opportunities.

Soros used to say the objective is operational success (making money). Ideas and hypothesis are secondary to making money.

Tactical Hedging ✂🌳

Captain Obvious here had something to say. But vague oversimplifications aren't actionable, and you can't trade them.

The market-successful TACO made in Pakistan took my AI Short Basket in the red (I mean was down!).

The profit on the NVDA puts that I closed for 7X more than covered that loss, but still, I wasn't about to let King TACO pull a fast one on me. What do I do?

My view remained that AI was turning, that most of the profits weren't there and that the prolonged war in Iran would come back to haunt AI.

The ceasefire was failing in front of our eyes, and we could safely wager that Iran would start hitting back very soon.