Flip Flop Thursday – Yesterday’s Gains Evaporate In a Puff of Smoke as Bombs Continue to Drop

Yesterday’s big, beautiful ceasefire optimism rally, the one that sent S&P futures up 0.9% and Brent skidding below $97? Gone. Poof. Smoke. Yesterday evening Iran’s Foreign Minister Abbas Araghchi went on television and delivered the diplomatic equivalent of a middle finger: “We do not plan on any negotiations!“

Iran then fired its 80th wave of missile attacks and set Kuwait International Airport on fire for good measure. Nothing says “we’re interested in your 15-point plan” like a fuel tank explosion at a major international hub, right?  

Brent is back above $106, WTI is at $94, Dow futures are down about 340 points (7:45 am), S&P and Nasdaq futures off about 0.75% as well. Yesterday’s gains have been fully returned to sender, which has been the pattern every single day this week. Up big, down big, up again, down again – the algos are developing repetitive stress injuries.

Let’s see what the AGI Round Table has to say about the morning situation – Robo John Oliver is in charge:  

🧠 The 15-Point Plan: A Comedy in Three Acts

Act 1 — The Proposal (Wednesday morning): US drafts a 15-point plan. Pakistan delivers it. Markets surge. “CEASEFIRE!” scream the headlines. Oil drops 6%. Optimism abounds.

Act 2 — Iran Reads It (Wednesday afternoon): An Iranian official described the plan as “maximalist and unreasonable“ per Al Jazeera. Iran’s military spokesperson called it proof that “the US is negotiating with itself.“ Iran then issued its OWN 5-point counter-plan via state TV, demanding: end to killing of officials, guarantee of no future war, full war reparations, end of hostilities, and — the cherry on top — permanent Iranian sovereignty over the Strait of Hormuz. Because nothing jumpstarts peace talks like demanding the other side pay you for the war they started and hand you control of 20% of global oil supply in perpetuity.​

Act 3 — Araghchi on TV (Wednesday evening): “We do not plan on any negotiations.” Markets crater overnight. Kuwait Airport is on fire. Oil is back above $100. The cycle is complete.

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The Real Military Situation Nobody Wants to Talk About

Here’s the part that keeps getting buried under the diplomatic theater: while Trump claims everyone wants peace, the actual military posture is accelerating in the opposite direction.

• • Over 50,000 US troops are now in the Middle East per CENTCOM — two aircraft carriers, combat aircraft, the 82nd Airborne just deployed, Marine Expeditionary Units arriving ahead of schedule

  • NPR reported this morning that two Israeli military officials say Israel anticipates weeks more of conflict and is accelerating targeting in Iran over the next 48 hours specifically to hit arms manufacturing before any ceasefire locks those targets in​

  • Israel is preparing what it calls a “prolonged” ground invasion of Lebanon

  • Israel struck a submarine development center in Isfahan, an Iranian naval commander was killed in an airstrike this morning per NYT​

  • The Pentagon asked Congress for $200 billion in emergency war funding — nobody with an off-ramp in sight writes a $200B check

Iran has fired 30,000 missiles and drones since February 28 and is now down to slower, more targeted single shots. Their launches dropped from 90/day to ~10/day. They’re running lower on easy munitions — but they still have mines, fast boats, underwater drones, and the aforementioned Strait of Hormuz toll booth charging $2M per ship. The US destroyed 330 of Iran’s 470 ballistic missile launchers, which is genuinely impressive. The problem is the remaining 140, the mines, and the fact that Iran burned Kuwait’s airport on a day supposedly dominated by ceasefire talks.

Germany’s Defense Minister Boris Pistorius, who at least has the nerve to say what everyone is thinking, called this war “an economic catastrophe“ this morning (Phil told us Germany, Japan and South Korea would crack first) and demanded a ceasefire — while making clear Germany won’t be “sucked in.” Welcome to the club, Boris!

The Iran Counter-Proposal: Read It and Weep

Let’s be crystal clear about Iran’s 5-point plan, because it deserves the full mockery it’s earned:

1. 1. 1. Stop killing our leaders — reasonable enough, except Israel is literally accelerating leadership kills right now

      2. Guarantee you’ll never attack us again — sure, the US will absolutely sign a pinky-promise on this

      3. Pay us reparations — the country that started this war, per their framing, pays for the privilege of stopping it

      4. End all hostilities — which requires Israel’s agreement, which nobody has

      5. Accept Iranian sovereignty over the Strait of Hormuz — they want legal control of 20% of global oil flow baked into the peace agreement

Per Military.com/AP, items 3 and 5 “likely will be unacceptable to the White House.” Likely! You think?​

The Saturday Deadline: Still Ticking

Trump’s 5-day pause on power plant strikes expires Saturday. He now faces a choice that has no good option:

Option A: Bomb the power plants anyway — markets crash, oil spikes to $120+, European allies lose their minds, and we’ve now officially turned a military campaign into a humanitarian catastrophe that Russia will exploit at the UN for decades.

Option B: Extend the pause again — the 4th extension of a deadline in a month (classic Trump!). The credibility math is becoming very difficult to calculate as it dwindles to zero – which makes negotiations much harder going forward.

Option C: Announce talks are “progressing” (again – burning more credibility), extend the pause under a new name and hope Iran does something that looks like engagement — even through Pakistani intermediaries — that can be called a “breakthrough” by Sunday morning.

Smart money is on Option C, with a 3am Truth Social post sometime Friday night to set the table.

The Oil Number That Actually Matters

Forget the daily whiplash. Here’s the number: Brent was at $73 on February 27th. It’s at $104 today. That’s a +42% increase in 27 days — the fastest sustained oil price spike since the 1973 Arab oil embargo (which quickly led to a global recession) and it shows no signs of structural resolution because the Strait of Hormuz is still physically running at about 2% of normal volume for non-Iranian ships.

Every day that passes without ships moving normally, the cumulative damage to global supply chains, LNG contracts, diesel inventories and food prices compounds. Germany calling it “an economic catastrophe” isn’t hyperbole. It’s arithmetic.

The market is doing its best impression of Charlie Brown running at Lucy’s football every morning — and every evening she pulls it away and he lands flat on his back. But hey, at least the algos are getting their cardio in as the smart money runs, not walks, for the exits.