Pre‑Market Briefing

War Day 32 — WSJ: Trump Willing to End War Without Hormuz Reopening

Transcript

SPEAKER_01 0:00

You know, usually when a fire alarm goes off in a crowded building, everyone just rushes to the exits, right? Like the reaction is completely visceral.

SPEAKER_00 0:07

Yeah, absolutely. People don't even think about it.

SPEAKER_01 0:09

Aaron Powell But what happens when that exact same alarm gets pulled for um, I think it's the fifth time in a single month, and every single time it turns out to be a total false alarm.

SPEAKER_00 0:19

Aaron Powell Well, people stop running. I mean, they might glance up from their monitors, maybe check the hallway, but they wait for someone to actually smell smoke before they move.

SPEAKER_01 0:26

Aaron Powell Exactly. And that is exactly the psychological landscape of Wall Street right now. We are looking at five separate peace alarms between the US and Iran over the last few weeks, and all of them were fake outs.

SPEAKER_00 0:38

Total fakeouts.

SPEAKER_01 0:39

Right. But today, the market finally smells smoke. So today we are doing a deep dive into an incredibly critical pre-market briefing from Canon Trading Company. It's authored by Eli Levy. You can reach them at Eli at CanonTrading.com. And I mean the data in this report is actively rewiring global markets as we speak.

SPEAKER_00 1:01

Aaron Powell It really is. But setting the scene is vital today. Just to ground you, it is Tuesday, March 31st, 2026. This is war day 32 of Operation Epic Fury, so the US-Iran conflict, that officially began on February 28th.

SPEAKER_01 1:15

Aaron Powell 32 days that have just paralyzed global shipping and sent energy prices absolutely into orbit. But here is the hook that's driving futures higher this morning. There is a massive Wall Street Journal scoop reporting that President Trump has privately told AIDS he's willing to end the military campaign against Iran.

SPEAKER_00 1:33

Right.

SPEAKER_01 1:34

And get this even if the Strait of Hormuz remains closed, he is reportedly leaving the reopening of that critical waterway for a quote later stage operation.

SPEAKER_00 1:43

Which is just a staggering potential pivot. I mean, it changes everything.

SPEAKER_01 1:46

It really does.

SPEAKER_00 1:47

But before we pull apart the mechanics of why the market is reacting to this specific rumor, and you know, whether algorithmic trading bots are setting a massive trap for retail investors today, we do need to pause for a required regulatory notice regarding the financial data we're analyzing.

SPEAKER_01 2:01

Disclaimer: Trading futures, options on futures, and retail off-exchange foreign currency transactions and other financial instruments involve substantial risk of loss and are not suitable for all investors. PAS performance is not indicative of future results. Carefully consider if trading is suitable for you in light of your circumstances, knowledge, and financial resources. You may lose all or more of your initial investment. Opinions, market data, and recommendations are subject to change at any time.

SPEAKER_00 2:32

So to understand why a Wall Street Journal article is causing this much financial whiplash today, we have to look at what happened the previous five times peace was floated.

SPEAKER_01 2:41

Yeah, the Kobisi Letter actually called that the denial phase of this conflict because every previous rumor came directly from Trump himself. Right.

SPEAKER_00 2:48

Usually through social media posts or impromptu public statements.

SPEAKER_01 2:52

Exactly. And within hours, Iranian officials would publicly deny the reports, sending markets crashing right back down. It felt like a geopolitical pump and fake.

SPEAKER_00 3:01

It was. And the market developed a serious case of rumor fatigue. Traders just stopped pricing in peace because public statements were too easily walked back.

SPEAKER_01 3:10

Yeah, they stopped believing it.

SPEAKER_00 3:11

Right. But what Eli Levy highlights in the Canon briefing is the structural difference of today's scoop. The journal isn't quoting a public post, they are citing multiple internal administration officials.

SPEAKER_01 3:24

Which means this isn't just like an impulsive thought. When multiple officials leak a specific narrative to a paper of record, that's a trial balloon.

SPEAKER_00 3:33

Exactly.

SPEAKER_01 3:34

It's a coordinated effort to prepare the public and the markets, really, for a policy shift that's likely already been decided behind closed doors. You leak it to gauge the reaction and normalize the idea before making it official policy.

SPEAKER_00 3:47

And the policy shift itself is fascinating because it seems totally contradictory on its face. I mean, ending a military campaign while leaving the world's most critical oil choke point, the Strait of Hormuz, closed.

SPEAKER_01 3:59

I know. I was trying to wrap my head around the logic of that. It almost feels like a massive corporate lawsuit settlement where neither company admits wrongdoing, but they both agree to just stop paying lawyers.

SPEAKER_00 4:09

That's actually a great way to look at it.

SPEAKER_01 4:11

Right. Like Trump gets to declare a military victory. He can tell the public the kinetic objectives of Operation Epic Fury were achieved without forcing Iran to formally surrender control of the strait today. He just bumps the strait issue to a diplomatic track.

SPEAKER_00 4:26

Because it gives both sides the one currency that matters most in geopolitics, which is face-saving cover.

SPEAKER_01 4:32

Face-saving cover, exactly. Right. And if the political reality is that both sides are saving face, Wall Street's algorithm should be sniffing that out. So looking at Eli Livy's real-time numbers from the briefing, we are seeing the SP 500 futures up 0.85% to 6,442, but I'm looking at the Dow futures leading the pack, up 0.90% to 45,874. Why is the Dow, of all things, outperforming the broader tech heavy indexes right now?

SPEAKER_00 5:18

Well, the Dow is heavily weighted with cyclicals. So think industrial manufacturers, massive transportation networks, and legacy energy companies.

SPEAKER_01 5:25

Uh-huh.

SPEAKER_00 5:26

These are the physical economy stocks that take the absolute hardest hit when global shipping lanes are choked off. So when the Dow leads a rally like this, the market is pricing in a return to normal physical commerce. It's basically the reopening thesis playing out in real time.

SPEAKER_01 5:41

That makes sense. Let's talk about the physical commodity at the center of all this, though. WTI crude, the U.S. benchmark, had crossed the psychological threshold of$100 a barrel recently. Now it's pulling back to the$96 to$98 range on the back of this journal scoop.

SPEAKER_00 5:55

Which is a momentary relief, yeah, but the context is brutal. Bren Crude, the global benchmark, was pushing past$110. The Canon briefing highlights a statistic that I think defines this entire conflict.

SPEAKER_01 6:06

Let's hear it.

SPEAKER_00 6:07

In the month of March, Brent saw a record-positive 50% monthly gain.

SPEAKER_01 6:11

Wow. The largest one-month oil move in modern history. That is the war in one single number.

SPEAKER_00 6:19

It really is. A 50% spike in the foundational energy commodity of a globe over just 30 days. I mean, it shatters economic models. It instantly reprices everything from the fuel and cargo ships to the plastic and consumer goods. It is just a pure injection of inflation into the global supply chain.

SPEAKER_01 6:36

And I'm seeing the weird ripple effects of that breakage in the natural gas markets, too. Like natural gas is actually down 1.4%. You'd think all energy would be up during a Middle Eastern conflict, but the briefing explains this is localized demand destruction. Right. Because the Strait of Hormuz is closed, China's liquefied natural gas or LNG imports have plummeted 45% since January. They are at their lowest level since 2018. The fuel simply can't get through the choke point, creating a massive glut in some places and starvation in others.

SPEAKER_00 7:06

Exactly. So the physical market is disjointed, but the financial market is sitting on a powder keg right now. And 0.85% bump in the SP implies traders are still highly skeptical. They haven't fully committed capital to the peace narrative yet.

SPEAKER_01 7:20

Which means if this deal is formally announced, we aren't just looking at a mild green day. The Canon Intelligence Desk points out a hundred and eighty-four billion dollar CTA short overhang in global Audis. And we need to explain how this actually works, because it's not just a bunch of guys in suits betting against the market.

SPEAKER_00 7:40

No, not at all. So a CTA or commodity trading advisor in this context refers to massive algorithmic trend following funds.

SPEAKER_01 7:48

Okay.

SPEAKER_00 7:49

Think of these algorithms like tripwires. They don't read the Wall Street Journal or care about trial balloons. They read fewer price momentum and moving averages.

SPEAKER_01 7:57

Right. They just look at the math.

SPEAKER_00 7:58

Exactly. When the war started and the market tanked, these algorithms automatically sold short to protect themselves, systematically building up$184 billion in short positions over the last month.

SPEAKER_01 8:10

It's like a coiled spring. They are betting the market will keep going down, and the heavier the market pushes down, the more tension builds in that spring. So if peace is announced and the market suddenly jumps upward across their moving averages, those algorithms are triggered to immediately buy back shares to cover their short positions. It becomes this violent mechanical reaction where forced buying pushes the price higher, which triggers even more algorithms to buy.

SPEAKER_00 8:34

The technical term is a short squeeze. Yeah. But at$184 billion, it is a structural market event.

SPEAKER_01 8:40

I have to challenge this setup though.

SPEAKER_00 8:42

Go for it.

SPEAKER_01 8:42

If the political face-saving deal makes logical sense and there is a$184 billion coiled spring of forced algorithmic buying, just waiting to ignite a historic market rally, why are we only up less than 1%?

SPEAKER_00 8:57

I'm looking at the VIX, Wall Street's fear gauge, and it's sitting at 28.86.

SPEAKER_01 9:01

Yeah, the VIX is the key to understanding the hesitation here.

SPEAKER_00 9:04

Because the pre-war normal for the VIX was what, 19 to 20?

SPEAKER_01 9:07

Right around there, yeah.

SPEAKER_00 9:08

So a reading of almost 29 means traders are still paying a massive premium for panic insurance? What is Wall Street actually terrified of under the surface? They are terrified of the hidden tail risks mapped out by the major trading desks. Let's look at JP Morgan's warning in the briefing. To bypass the Black Strait of Hormuz, Saudi Arabia is currently rerouting five million barrels of oil a day through the Yangbu bypass.

SPEAKER_01 9:35

Okay, so if you are listening to this and looking at your 401k, you might be wondering why you should care about a specific bypass pipeline in Saudi Arabia.

SPEAKER_00 9:44

Because that pipeline moves oil westward to the Red Sea, completely avoiding the Persian Gulf. It is the only safety valve keeping global oil from spiking even higher right now.

SPEAKER_01 9:54

Oh wow.

SPEAKER_00 9:54

And JP Morgan points out a massive geographic vulnerability. The Houthis operate heavily in the Red Sea region. If that Yanggu route is targeted or disrupted, JP Morgan estimates it immediately adds a$20 per barrel premium on top of current prices.

SPEAKER_01 10:09

So that would push Brent well over$130 a barrel. That's a catastrophic scenario for inflation that the market is forced to keep pricing in.

SPEAKER_00 10:16

Precisely. Then you have the wildcards tracked by the COBC letter, and we have to analyze these strictly as market variables, removing the political noise because these dictate how capital moves today.

SPEAKER_01 10:25

Right. And just to underscore that for you listening, we are looking at this purely through the lens of financial impact. We are neutrally reporting the variables from the sources without taking any political stance, left or right. It's just about the data.

SPEAKER_00 10:38

Exactly. So Kobisi notes that Iran's parliament speaker publicly stated Trump's pre-market peace statements should be viewed as a reverse indicator. He essentially accused the U.S. administration of trying to pump and dump the market through manipulated media leaks.

SPEAKER_01 10:53

Man, that is psychological warfare injected straight into the trading day. If trading desks believe the Wall Street Journal scoop is just another manipulation tactic, they won't deploy capital.

SPEAKER_00 11:03

They'll stay on the sidelines.

SPEAKER_01 11:04

Yeah. But the briefing flags a military wild card that feels even heavier than media manipulation.

SPEAKER_00 11:10

It does. There are credible reports that the U.S. administration is weighing a highly complex military operation to extract 1,000 pounds of uranium from Iran.

SPEAKER_01 11:20

Wait, how does that even work practically? Extracting half a ton of nuclear material from a hostile country isn't like a quick drone strike?

SPEAKER_00 11:27

No, it requires an unprecedented logistical footprint. You are talking about specialized extraction teams and crucially, U.S. forces physically on the ground in Iran. Oh that completely vaporizes the narrative of a neat face-saving de-escalation. If algorithms or institutional traders detect even a hint that a ground operation is imminent, the$184 billion short squeeze never happens, and this morning's rally reverses instantly.

SPEAKER_01 11:54

So the geopolitical landscape is just walking on a razor's edge. But let's play devil's advocate. Let's say the peace deal is signed in ink at 9 30 a.m. The trial balloon works, Operation Epic Fury is over. The problem is the economic damage from a 30-day, 50% oil spike has already been inflicted on the physical economy.

SPEAKER_00 12:13

Yes. And the bill for that damage comes due exactly at 10.0 a.m. Eastern today with the release of the ISM manufacturing PMI.

SPEAKER_01 12:21

Eli Levy highlights this as a massive collision course. For anyone not staring at economic calendars all day, the Institute for Supply Management's Purchasing Managers Index, it's the ultimate report card for the industrial base. Right. It measures the people buying the steel, the microchips, the lumber. It asks them, are you buying more raw materials? Are you hiring more workers? Are you seeing more orders?

SPEAKER_00 12:44

And the mechanism of the index is simple but vital. If the number prints above 50, the manufacturing sector is actively expanding. If it prints below 50, it is actively contracting.

SPEAKER_01 12:55

In January and February, so before the war, we saw solid expansion prints of 52.6 and 52.4, but today's data is the March reading. This is the very first economic data point collected entirely during the 32 days of Operation Epic Fury.

SPEAKER_00 13:10

Meaning purchasing managers were filling out these surveys while the fuel for their supply chains was spiking 50% and consumer confidence was cratering.

SPEAKER_01 13:17

Exactly.

SPEAKER_00 13:18

The briefing points out a glaring pre-existing condition, too. The prices sub-index, which measures the cost of raw materials for these factories, was already sitting at 70.5 in February.

SPEAKER_01 13:28

So their input costs were already soaring before a single missile was fired. So you take pre-existing inflation, you dump a historic oil shock on top of it, and we are staring down a brutal binary outcome at 10 a.m. Let's map this out chronologically for a second.

SPEAKER_00 13:42

Sure.

SPEAKER_01 13:43

At 9.30, the market opens and rallies on the Wall Street Journal Peace rumor. Everyone is buying the geopolitical relief.

SPEAKER_00 13:50

But 30 minutes later, the ISM number drops. If that number prints below 50, you have a violently conflicting reality. At 10.01 AM, the financial terminals flash U.S. manufacturing contracts. The market suddenly has to decide whether to trade the future promise of a peace deal or the present reality that the U.S. industrial base is shrinking.

SPEAKER_01 14:12

It's the ultimate V-shape reversal threat. You buy the rumor at the open and you get absolutely crushed by the hard economic data 30 minutes later. Hard data usually has a gravity that geopolitical rumors just can't escape.

SPEAKER_00 14:23

And as if navigating a Middle Eastern war and a potential manufacturing contraction by 10 a.m. wasn't enough, we haven't even touched the massive structural event hitting tomorrow.

SPEAKER_01 14:31

Oh, right, April 2nd, the one-year anniversary of what they are calling Liberation Day. This requires a hard pivot from the Middle East straight into global trade policy.

SPEAKER_00 14:42

Liberation Day was the date of the original sweeping tariff announcement against China a year ago.

SPEAKER_01 14:47

But those tariffs didn't survive, right? They were struck down by the Supreme Court in February. That ruling triggered a massive$170 billion refund process that is currently working its way through the system. I want to spend a second on the mechanics of that, because$170 billion being refunded to U.S. importers is a massive injection of liquidity.

SPEAKER_00 15:09

It's huge. Importers paid those tariffs at the ports over the last year. Now, the Treasury physically has to issue checks back to those companies. It acts like an enormous economic stimulus for the corporate sector.

SPEAKER_01 15:19

Right.

SPEAKER_00 15:20

But the Trump administration is now actively working to rebuild that tariff wall using different legal mechanisms, and China is preparing aggressive retaliation. Bloomberg is running wall-to-wall coverage of this anniversary today.

SPEAKER_01 15:31

The compounding effect here is terrifying. You just had a 50% spike in oil costs, and now you might slap new tariffs on top of that. It's an inflation nightmare. Which brings us to perhaps the most cynical yet fascinating piece of market psychology in the entire canon briefing.

SPEAKER_00 15:47

The taco trade.

SPEAKER_01 15:48

The taco trade. It stands for Trump Always Chickens Out.

SPEAKER_00 15:54

It sounds like a joke, but it represents a very real institutional trading thesis right now. The market is testing this taco theory simultaneously on two massive fronts.

SPEAKER_01 16:05

Front one, will the administration back down on Iran and leave the Strait of Hormuz closed just to claim a superficial win and stop the oil bleed? And front two, will they back down on the China tariffs to avoid a catastrophic trade war, right as the U.S. economy is showing signs of contracting?

SPEAKER_00 16:20

Right. You are asking investors to place a bet on the psychological threshold of one administration across two completely separate global crises in the exact same 48-hour window. It's wild. This creates a dangerous level of compression in the market. If the taco thesis is wrong on either front, say if a ground invasion is ordered in Iran, or the hardest version of the China tariffs is implemented tomorrow, the mechanical shortcovering we discussed earlier will reverse violently.

SPEAKER_01 16:48

Let's distill all of this down. If you are deploying capital today, here are the three pillars from Eli Livy's briefing you need to watch. First, the Wall Street Journal leak about a face-saving peace deal is structurally credible because it's a coordinated internal trial balloon, not just a social media post. Yes. Second, do not get blinded by the early morning rally. The 10 a.m. ISM manufacturing data is the ultimate pivot point. If it shows contraction, economic reality could overwrite geopolitical optimism instantly.

SPEAKER_00 17:18

Absolutely.

SPEAKER_01 17:18

And third, keep one eye on tomorrow because the Liberation Day tariff anniversary adds an entirely separate layer of volatility to an already explosive week.

SPEAKER_00 17:26

It's a remarkable synthesis of risks. And I want to leave you with one final, deeply provocative thought raised by the Morgan Stanley desk in this briefing, because it speaks to the next decade of fiscal policy.

SPEAKER_01 17:37

Oh, what are they looking at?

SPEAKER_00 17:39

Well, the demand destruction for March's 50% oil surge is already baked into the system. Factories have paid more, supply chains are strained, consumer wallets are damaged.

SPEAKER_01 17:48

Right. The money is gone.

SPEAKER_00 17:49

Exactly. So Morgan Stanley is asking an unresolved question. Regardless of whether the war ends today or next month, will the U.S. government be forced to pass a massive multi-trillion dollar fiscal stimulus bill just to offset the economic damage this oil shock has already caused?

SPEAKER_01 18:06

Wow. Peace or no peace, the check is already in the mail and the government might have to print the money to pay it. Are we looking at another era of forced quantitative easing where the central bank floods the market with cash purely to patch up the collateral damage of Operation Epic Fury?

SPEAKER_00 18:23

It's a real possibility, and it fundamentally changes how you value the dollar going forward.

SPEAKER_01 18:28

The geopolitical alarm might stop ringing, but that doesn't mean the global economy didn't sustain massive structural fire damage. We want to thank you for joining us on this deep dive into the Canon Trading Company material and Eli Livy's incredible insights.

SPEAKER_00 18:42

Disclaimer: Trading futures, options on futures, and retail off-exchange foreign currency transactions and other financial instruments involve substantial risk of loss and are not suitable for all investors. Past performance is not indicative of future results. Carefully consider if trading is suitable for you in light of your circumstances, knowledge, and financial resources. You may lose all or more of your initial investment. Opinions, market data, and recommendations are subject to change at any time.