Good morning! Yesterday we got what seems to be the new weekly ritual of Trump pumping the markets with bullish war narrative. However, a keen ear realized that there is close to zero signal in his words.
It's a general theme of this conflict due to the simple fact that we are already forced to bear the cost of this war. Inflation and shortages will be a thing anyway at this point so why point our attention to it now?
At least we have prediction markets to help us with understanding where we are.
Iran Tracker
#1 The Ceasefire
Even prediction markets can't escape a little hopium. However it was not Trump's speech, but a rumor from Barak Ravid that pushed the ceasefire market to 41% chance by the end of April.
Iran was quick to deny the rumor, but the elevated chances stayed with us, at least for now. Recently, the market has been quicker in correcting fake narrative pumps and we fully expect it to do so here as well.
#2 The Strait Of Hormuz
There was one important point in Trump's speech and it was that there are still no countries (at least in an official capacity) that agreed to assist with Strait of Hormuz escorts.
The market on the number of crossings in any day this month lowered chances for the lowest bracket of 20+ ships to 32%. But the market on US escorts took the biggest hit:
However, despite there being very little chances of any US escort this month, with oil flows completely disrupted, crude oil is still stubborn at around $90 per barrel, with forecasts discounting a bit the high volatility it saw yesterday:
#3 Boots On The Ground
The market on US forces on the ground dipped slightly, to 61% chance by the end of the year.
The slight decrease comes as there is still no clarity on length, intensity of engagement, as well as desired end results. Since March 14th, the markets is moving sideways as traders are trying to form fundamental theses on the war.
In line with US forces on the ground, the market on Kharg Island invasion is flat:
#4 Iranian Regime Fall
The market on Iran regime fall is also flat since yesterday.
This comes even as rumors of Larijani death started to circulate around the internet. One of the top figures in the regime, believed by some to be more pragmatist due to his philosophical mind and interest in western philosophy, even his demise did not force the market higher, showcasing regime resilience in real time.
#5 Next Supreme Leader
Finally, since the weekend Mojtaba Khamenei's chances of survival as the Supreme Leader increased significantly.
As the rumors of dissent died and regime continues to exist and resist the US and Israeli strikes, traders started to price in a reality in which Khamenei junior will be well hidden, outside of missile access and steering the country through fatwas, while allowing IRGC to further consolidate their power.
Wrap up
Situation remains extremely volatile, however it is starting to become clear that we are in for longer. At least until the Strait of Hormuz issue is resolved as now ceasefire chances are below 50% for end of April strike.
Make sure to follow the markets live to get fresh information on the conflict. See you tomorrow for another Morning Brief!
This is not official investment or life advice. Do your own research. This are only my opinions and I encourage anyone to do their own research before putting any money anywhere.