Trump “TACO” again, is it possible to bet on the de-escalation of the Iran situation?
The tug-of-war between the US and Iran continues, and the short-term geopolitical premium in the market still has room to expand, but medium-term de-escalation expectations are brewing.
On Monday, according to CCTV News, Trump announced that he would postpone the deadline for bombing Iranian energy facilities by five days, and said the two sides were moving towards a “comprehensive and thorough resolution” of the conflict and conducting “very good, productive dialogue.” Crude oil tumbled in response, while European and US stock markets rebounded sharply. Although Iran denied this, US stocks still closed significantly higher overnight.
The repetition of the TACO trade means that Wall Street is betting that Trump’s fear of a market crash will ultimately become the last firewall against extreme actions. The latest report from the Industrial Securities strategy team also points out, As the intensity of the conflict approaches its peak and the “stick” effect gradually exhausts itself, the market’s sensitivity to the "carrot" signal may significantly increase, and the window for medium-term de-escalation is quietly opening.
Maximum Pressure: Trump’s Usual Playbook
To understand the US-Iran situation, we must first understand Trump’s diplomatic logic.
Industrial Securities points out, maximum pressure is Trump’s usual diplomatic tactic—building up bargaining chips with threats and tough postures, all serving to maximize interests at the negotiating table.
It is noteworthy that the current US political goals have quietly narrowed. From the early ambition of promoting regime change in Iran, they now settle for ensuring the smooth passage through the Strait of Hormuz. The downgrading of objectives itself signals an expansion of negotiation space—“Negotiation is easier to achieve this goal than victory.”
Within this framework, Trump’s operating path is clear: on one hand, using troop deployment threats as the “stick”; on the other, promising de-escalation as the “carrot.” As the threat of troop deployment is fully digested, the impact of the carrot on the market may be amplified.
Iran’s Strong Will to Resist; Weak Motivation for US Military Escalation
Industrial Securities believes that Iran’s willingness to resist does not exclude its willingness to negotiate.
Iran’s new leader, Mojtaba, reiterated three conditions for a ceasefire: US troop withdrawal, lifting of sanctions, and economic compensation. This statement clearly conveys two messages—Iran will not easily compromise, but it leaves substantial room for further negotiation.
Geographical factors further restrain US military escalation. The north shore of the Strait of Hormuz is mountainous and rugged. Industrial Securities believes that if the US forcibly occupies and escorts in the strait, it would face huge strategic risks and could also encounter tactical headwinds.
Iran has strong capability to blockade the strait, making the costs of US military escalation visibly bounded.
In contrast, Iran’s toughness in resistance weakens the US military’s willingness to escalate continuously, and both sides actually face the realistic pressure of keeping the conflict within a manageable range.
Peak Conflict is a Chance for De-escalation
Both historical experience and logical deduction point to the same conclusion: The high point of conflict intensity is often the starting point for de-escalation.
For Trump, whether to strike after troop buildup remains undecided. Industrial Securities points out that in 2018, Trump restored sanctions against Iran not because he opposed negotiation, but because, under Israeli lobbying, he overturned the nuclear agreement achieved through negotiations led by Obama. In other words, Trump does not have a natural ideological aversion to negotiation.
Lifting sanctions is a step both the US and Iran can accept. For Iran, sanctions have long been a painful issue, and lifting them is a powerful internal incentive; for Trump, this could also be touted as a diplomatic achievement both domestically and internationally. Israel, as an external variable, may have limited influence on the US’s room to maneuver.
Ultimately, the catalyst comes from the market itself: If high oil prices and negative feedback from conflict escalation exceed Trump’s threshold of tolerance, the window for de-escalation will open.
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