Despite claims from U.S. President Donald Trump that intensive negotiations are underway to conclude the ongoing geopolitical conflict, military confrontations between Iran and the U.S.-Israel alliance persist without signs of abatement, instead escalating toward greater instability. Following Trump's announcement of "productive dialogue" with Iran and a five-day postponement of strikes on Iranian power plants and energy infrastructure, markets initially traded according to the "TACO" narrative script, leading to a collective rebound in the three major U.S. stock indices and a sharp decline in international oil prices on Monday. However, as real-world hostilities between the U.S./Israel and Iran continue and intensify, markets began questioning within 24 hours whether the "TACO" buy-the-dip investment strategy, popular since April 2025, remains effective.

Reports indicate that Iran launched a new round of missile and drone attacks overnight targeting key Israeli cities including Eilat, Dimona, and Tel Aviv, as well as U.S. bases in the Middle East. Saudi Arabia reported intercepting a drone in its eastern region, while Kuwait stated that core power transmission lines were forced offline following Iranian strikes. Bahrain experienced frequent alarm sirens. In Iran, the Fars News Agency reported that new joint aerial strikes by the U.S.-Israel alliance damaged a gas pressure regulation plant and an administrative building in the central city of Isfahan. According to Fars, a pipeline supplying gas to the Khorramshahr combined-cycle power plant in southwestern Iran was also hit by airstrikes. In Israel, recently posted social media videos from March 24 show security and rescue personnel inspecting a new site in Tel Aviv struck by Iranian missiles.

While the long-awaited "TACO bottom-fishing moment" briefly materialized on Monday, it has not evolved into a sustainable medium-term core market logic. Early Monday Eastern Time, as Trump's weekend "final 48-hour ultimatum" entered its countdown phase, his sudden announcement of productive dialogue with Iran and a five-day delay in attacking Iranian energy infrastructure prompted immediate "TACO" script trading: U.S. stocks surged, oil prices plummeted, and various risk assets including Bitcoin and high-yield bonds rebounded rapidly. This demonstrated that markets still reflexively embrace risk-on sentiment when Trump signals de-escalation.

However, recent developments suggest the "TACO" strategy may be quickly losing efficacy. With bombing campaigns continuing, indicating no genuine reduction in frontline hostilities, markets have not truly accepted that the war is nearing its end. Shortly after Trump's social media post announcing a "five-day ceasefire," Iran promptly denied direct negotiations with the U.S., and attacks from both sides failed to cease. Concurrently, oil prices rebounded quickly after their decline, with Brent crude strongly returning above $100 per barrel, signaling weak market conviction in sustained geopolitical de-escalation.

The continuation of warfare casts doubt on peace talk authenticity! Trump's "ceasefire script" repeatedly contradicted by reality. Despite Trump's postponement of strikes on Iranian energy infrastructure citing productive dialogue with Tehran, U.S.-Israeli airstrikes and Iranian missile attacks persist. Recent reports indicate the U.S. President's claims of backchannel diplomacy have been widely denied by Iranian officials, creating confusion regarding negotiation participants and potential agreement parameters.

Brent crude rose nearly 3% Tuesday morning local time amid market concerns about broader regional involvement in the conflict. Since the conflict erupted on February 28, the international oil benchmark Brent futures have surged over 40%. As Iran continues missile attacks on its territory, particularly energy infrastructure, U.S. partners like Saudi Arabia and the United Arab Emirates have adopted tougher stances toward Tehran. Informed sources reveal Saudi Arabia has informed the U.S. it is prepared to strike Iran if Tehran continues targeting critical Saudi utilities including core power and water plants.

Trump told reporters Monday that envoy Steve Witkopf and his son-in-law Jared Kushner held detailed discussions with a "high-level Iranian figure" the previous day, claiming Iran is eager to "reach a deal." "Iran has one last chance to end its significant military threat to the United States and its allies, and we hope they take it," Trump stated. "This could ultimately become a very good deal for everyone," he added. Axios reported Monday that Witkopf was negotiating with Iranian Parliament Speaker Mohammad-Bagher Ghalibaf. However, Ghalibaf stated on social media platform X that no negotiations occurred.

Iran's state news agency IRNA quoted Foreign Ministry spokesman Esmail Baghaei saying Tehran received U.S. negotiation requests through third-party mediators aimed at ending the war. Baghaei stated: "We have issued necessary warnings about the serious consequences of any aggression against Iran's critical infrastructure, emphasizing that any action against Iran's energy infrastructure will receive decisive, immediate, and effective responses from Iran's armed forces." In recent days, Iranian Foreign Minister Abbas Araghchi has held diplomatic calls with counterparts from Turkey, Oman, Pakistan, Egypt, Russia, Azerbaijan, Turkmenistan, and South Korea. Reports indicate Iran's deputy parliament speaker ruled out negotiations with Trump. Semi-official Fars News Agency quoted Ali Nikzad stating Iran won't negotiate with "a liar, a person showing no signs of honor, humanity, or conscience."

According to informed sources, Trump decided to initiate indirect negotiations with Iran after key allies warned the war is rapidly becoming catastrophic. Sources speaking anonymously about private discussions indicated regional partners told the U.S. that permanent damage to Iranian infrastructure would almost inevitably create failed state governance outcomes post-conflict. These sources noted they also discouraged Trump from striking Iran's electrical infrastructure, as it could prompt full-scale escalation of Iranian retaliation.

Latest developments from CBS News on March 23 reported that following Trump's暗示 of potential agreement, a senior Iranian Foreign Ministry official stated Iran received a U.S. message through mediators, potentially foreshadowing negotiations between the warring nations. The Iranian official stated: "We have learned the U.S. position through mediators and are reviewing it." The 25-day-old geopolitical conflict has caused over 4,350 fatalities, disrupted oil markets, and significantly heightened global inflation and even stagflation expectations.

Last week's Israeli airstrike on a critical Iranian gas field triggered new retaliation waves, damaging major energy production assets in the region including Qatar's giant liquefied natural gas plant at Ras Laffan.

Hormuz Strait blockade places global economy at risk of severe energy price shocks. Transit through the Hormuz Strait has nearly halted. The strait carries approximately one-fifth of global oil and LNG shipments. Since military conflict erupted between the U.S./Israel and Iran, only extremely few tankers have passed through the strait, typically only after engaging with Iranian authorities. This near-stagnation has significantly driven up global energy costs since late February, forcing Persian Gulf Arab states to cut millions of barrels daily from oil production.

Iran's military has effectively imposed a "quasi-blockade" on the Hormuz Strait, meaning approximately 20% of global energy flows face comprehensive obstruction, accompanied by tanker attacks and shipping disruptions. A recent International Energy Agency study indicated that late February U.S.-Israeli military actions against Iran triggered the largest supply disruption in global oil market history. Meanwhile, the U.S. government is considering military measures to restore shipping channels and gain full control of the Hormuz Strait.

Brent crude has continued hovering and increasingly stabilizing around $110 per barrel—no longer a brief wild spike—indicating high oil prices may pose a sustained major threat that investors, central bank policymakers, and corporate leaders must confront. Reports note that Kharg Island, Iran's largest crude export terminal accounting for 90% of its oil exports, remains a focal point.

Over the past month, financial markets have struggled to digest consequences from the geopolitical war and resulting energy supply crisis impacts. Particularly, stagflation risks have risen sharply, rate hike expectations have been brought forward, and stock and bond markets have同步暴跌. The U.S. dollar has reestablished its safe-haven status, while equity traders seek selective opportunities in defense stocks, renewable energy, and Malaysian energy assets.

Monday saw Asian equities bear the initial brunt of significant losses, with the MSCI Asia Pacific Index falling over 3% and approaching technical correction territory. Global bond markets also declined substantially amid escalating stagflation expectations under rising oil prices, while gold erased over half its year-to-date gains amid growing inflation and stagflation concerns. European equities also trended toward significant correction, but indices in Europe and North America collectively surged Monday after Trump ordered a five-day halt to all military strikes on Iranian power plants and energy infrastructure, with WTI and Brent crude price declines widening.

Informed sources revealed Trump spoke Monday with Pakistan Army Chief Asim Munir regarding military conflict with Iran and potential negotiations. Sources stated Pakistan is pushing to mediate an end to the war, with Islamabad positioning itself as a negotiation venue. Trump indicated that the person representing the Islamic Republic in discussions was not Supreme Leader Mojtaba Khamenei. The U.S. and Israel stated they aim to prevent Iran from obtaining nuclear weapons. Trump said the U.S. would take control of Iran's uranium stockpiles, emphasizing both sides align on potential agreement parameters including prohibiting uranium enrichment for civilian purposes.

Iran has long denied seeking nuclear weapons, though since earlier strikes by Israel and the U.S. in June last year, Iran has restricted UN inspector access. Trump also suggested the U.S. and Iran might jointly control the Hormuz Strait, which could reopen soon if the latest initiative "works." This latest statement implies upcoming negotiations may be extremely difficult, with no guarantee of finalizing a war-ending agreement. Iran previously insisted on compensation and U.S./Israeli commitments against future attacks—demands Trump and Israeli Prime Minister Benjamin Netanyahu are unlikely to accept.

Meanwhile, Trump has ordered Marine deployments to the region, including the 31st Marine Expeditionary Unit from Japan comprising over 2,000 personnel. Fred Fleitz, formerly of the National Security Council and now at the America First Policy Institute, stated claims about negotiations and agreements "might just be a feint," though he still hopes they could lead to large-scale military operation cessation. Countries including Turkey, Saudi Arabia, and Oman have engaged in behind-the-scenes talks with Iran to control the war and seek an eventual ceasefire. Iran has warned it will mine "the entire Persian Gulf" if its coastline suffers further strikes.

When asked if Israel would comply with any agreement, Trump stated Israel would be "very happy." Netanyahu said Trump is promoting an agreement that would "safeguard our critical interests," but hinted Israel would continue strikes on key missile and nuclear facilities in Iran and Lebanon, where Israel is fighting a parallel war against Tehran-backed Hezbollah.

Did the "TACO" bottom-fishing strategy fail within 24 hours? TACO, emerging in April 2025 when Trump launched unprecedented "reciprocal tariffs" globally, has become widely adopted by traders as the hottest strategy. Whenever Trump issues new aggressive tariff threats or other major warnings causing market plunges, investors bet he will ultimately retreat or implemented policies will be significantly weaker than his verbal threats, thus choosing to buy the dip heavily anticipating near-term market rebounds.

From the perspective of Trump pausing strikes on Iranian power plants and energy infrastructure, some investors firmly believed the "TACO moment" had arrived. However, Wall Street institutions like Goldman Sachs indicate the bottoming moment hasn't truly occurred, essentially reflecting market tension between "short-term betting on Trump stepping back" and "long-term guarding against prolonged war," with crowded AI mega-cap trades potentially remaining the last assets sold for cash.

Some market views maintain the TACO strategy remains effective but only at a "short-term tactical level," primarily because current equity markets resemble headline-driven short-term rebounds rather than genuine belief in war resolution. In other words, markets may believe more in "Trump hitting the brakes at the edge" than "conflict entering a verifiable peace process." Some analysts argue the "TACO trading strategy" has significantly downgraded from April 2025's "reliable medium-term buying framework" to a "short-term trading manual in high-volatility environments."

The current TACO script has noticeably weakened because geopolitical conflict differs from 2025's global trade war. In trade war topics, Trump could relatively unilaterally repeat the "raise demands—create panic—then retreat" cycle for maximum pressure on trade partners. However, the Iran war isn't an asset price shock the U.S. can unilaterally withdraw; it involves Iran, Israel, Gulf allies, actual Hormuz Strait navigation, energy infrastructure damage, and global inflation spillovers. The crude market even exhibits a "Catch-22" pattern: the more markets pre-price rapid de-escalation via TACO, the more space Trump may have to prolong conflict since real pain hasn't fully materialized.

This largely means the "believe Trump first, buy first" TACO strategy exemplified by Monday's rebound cannot be mindlessly replicated this year. For equity markets, against the new geopolitical conflict backdrop, Trump's certain "de-escalation rhetoric" may indeed capture short-term trading rebounds; but until the Hormuz Strait truly reopens, Iran acknowledges formal negotiations, and military rhythms substantially cool, treating such rebounds as the start of a new sustained bull market remains highly risky.