The sudden changes in the US-Iran talks cannot stop the bull market? Wall Street shields the noise of war and bets on "TACOs" and AI power to dominate everything.

Due to the US government maintaining a military level blockade of the Strait of Hormuz and seizing an Iranian large cargo ship, Iran's attitude towards sending diplomats to Pakistan for the second round of talks has been wavering, making hopes of a breakthrough in efforts to end the new round of Middle East geopolitical war, including Pakistan, more elusive. In the backdrop of unpredictable Middle East geopolitical situation and conflicting geopolitical dynamics between the US and Iran, top Wall Street traders and ordinary retail investors focusing on the stock market seem to increasingly believe that the "TACO strategy" and "buying low AI computing power themes" are the most effective frameworks for asset allocation. Iran's Foreign Ministry spokesperson Esmail Baghaei even directly told reporters on Monday that Tehran has no plans to participate in potential negotiations, although a final decision has not been made. He added, "There are various indications that the US is not sincere in advancing in diplomatic aspects." His latest remarks further intensified the doubts since the weekend: whether both sides will hold formal negotiations before the expiry of the temporary ceasefire announced on April 7th late Tuesday night US time. There are still disagreements on several key issues, including Iran's nuclear program and control of the Strait of Hormuz, a critical global energy supply shipping route. According to Fox News, US President Donald Trump said on Sunday that his appointed Middle East Envoy Steve Witkoff is heading to Pakistan and preparing for talks on Tuesday. However, the US leader then resumed his tough rhetoric on escalating the situation on social media, threatening to carry out massive destruction on the Islamic Republic if an agreement cannot be reached. "We are offering a very fair and reasonable long-term stability and peace agreement, I hope they will eventually choose to accept it because if they do not intend to accept, the US will destroy every power plant in Iran, as well as every bridge and other infrastructure." Trump wrote in a post on Sunday. "The era of being nice is over!" This rhetoric marks a sudden contrast to his stance last Friday when Trump said that an agreement with Iran was almost finalized. Iranian officials collectively denied making concessions on key US demands, including ending their nuclear program and handing over their enriched uranium stockpile. However, the latest information shows that Trump's position seems to be backtracking as anticipated by the market, which is why the "TACO" strategy (Trump Always Chickens Out), has now been widely adopted by traders as the most popular trading strategy. Trump's frequent "flip-flopping" statements are also increasingly convincing market traders that the moment for "TACO" trades is approaching, at least in the short term even in the mid-term trading horizon. Whenever Trump issues new, more aggressive tariff threats or other major threats that cause a market downturn, global stock and bond market investors bet that he will ultimately back down or that the actual implementation of policies will significantly weaken Trump's verbal threats, and then choose to bottom out significantly during market downturns, betting heavily that the stock market will rebound significantly in the near future. Talks fluctuate: Doubts increase as ceasefire expiration approaches, US-Iran mutual suspicion heats up again It is understood that Iran's Foreign Ministry spokesperson Baghaei stated: "The transfer of enriched uranium materials has never been discussed during this round of talks, nor has it been discussed before." The two sides met in Islamabad, Pakistan on the weekend of April 11-12 but did not formally reach any long-term stability or peace agreement. In addition, after the US refused to lift the blockade, Iran completely reversed its decision to briefly reopen the Strait of Hormuz, which is now almost completely closed, exacerbating the global supply crisis and causing oil prices to soar again on Monday. Since the outbreak of the new round of Middle East geopolitical war, Iran has effectively closed the Strait of Hormuz to all ships except its own oil shipments. Iran had announced last Friday that it would briefly reopen the strait, causing oil prices to plummet. However, due to the US military's refusal to lift its blockade, Tehran quickly reversed this decision over the weekend, and the US Navy fired on and boarded a large cargo ship flying the Iranian flag in the Gulf of Oman. As shown in the image above, the US Navy continues to blockade the Strait of Hormuz and announces the seizure of an Iranian cargo ship heading to the port of Abbas. This is the first such incident since Washington adopted a blockade strategy a week ago. On Monday, the strait was effectively still almost closed under the control of the Iranian Revolutionary Guard, exacerbating the global supply crisis that has been deteriorating since the US and Israel began bombing Iran at the end of February. Before the start of this round of Middle East geopolitical war, about one-fifth of the world's oil and liquefied natural gas were transported through this crucial chokepoint. After the setback in the Strait of Hormuz over the weekend, investors collectively turned cautious, and the national oil price benchmark Brent crude futures price and the North American oil benchmark WTI crude futures price quickly surged on Monday, with US stock index futures falling. As of the time of writing, the Brent crude price has risen by 5.2% to over $95 per barrel, erasing most of the losses from last Friday. On Monday, Brent crude rose to a high of 7.9% to $97.50 per barrel, and WTI crude rose by over 7% to around $90 per barrel. Despite Iran's reservation on negotiation issues, Iranian President Masoud Pezeshkian stated that there is no intention from either side to return to combat. According to the Iranian state news agency, he said, "All rational and diplomatic means should be used to ease geopolitical tensions." He added, "Continuing the war is in the interest of none of the parties." Israel temporarily agreed to a ceasefire in Lebanon last week, but violated the ceasefire consensus on Saturday by announcing strikes on targets in its northern neighbor, indicating that the ceasefire status between Hezbollah, supported by Tehran, and the fragile US-Iran ceasefire consensus/agreement is very weak. Ship seizures, shelling, and the global energy lifeline crisis The US Central Command, responsible for overseeing military operations in the Middle East, released a statement saying that the detained Iranian ship Touska did not follow warnings to stop for six hours. The US Navy ordered the vessel to vacate its cargo holds, then fired several rounds from a 5-inch MK45 gun, rendering it immobile. US Marines subsequently boarded the ship and gained control, according to the US Central Command. In a post on social media, President Trump himself said, "The ship tried to break through our naval blockade, but their results were not good." The ship had already been under economic sanctions through the US Treasury's "shadow fleet" and is now under US military control. Iran's Press TV, citing the country's military command, reported that Iran will soon respond to the US's forceful military shelling and boarding action. Iran has also established new fee rules for the Strait of Hormuz and stated that the Iranian parliament is pushing through a law to manage the strait, including banning ships associated with Israel from passing through without permission from the National Security Council. The US naval blockade allows ships carrying non-Iranian goods to leave the Persian Gulf but prevents any ships departing from Iranian ports from leaving, prompting the Islamic Republic to re-close the strait. The Iranian Islamic Revolutionary Guard Navy issued a statement on Saturday warning ships not to leave their crucial anchorage points in the Persian Gulf and the Sea of Oman, stating that approaching the strait would be seen as cooperating with the enemy, and violators would be targeted. "When we ourselves cannot pass through the Strait of Hormuz, other hostile forces cannot pass through either," Iranian Parliament Speaker Mohammad Bagher Ghalibaf said over the weekend - he had led an Iranian delegation in talks with the US in Pakistan this month. The Joint Maritime Information Center, an international organization that shares shipping route information, reports that Iranian forces have launched multiple attacks on several ships in the strait and discovered some highly destructive mines, rating the overall risk level of the Strait of Hormuz as "critical." The UK Navy stated that a large oil tanker was approached and fired upon by Iranian Revolutionary Guard gunboats on Saturday afternoon and said that the attacked ship and its crew were safe. The British Navy also said that in another shelling incident near the coast of Oman, a container ship was hit by an unidentified projectile. India also stated that its ships were subjected to military-level firepower attacks to some extent. Do not be misled by headlines of war! "TACO Strategy" and "Buy Low AI Computing Power" become the twin investment themes of the stock market As of the close of last week's global stock markets, under the strong leadership of technology stocks, the S&P 500 index and the Nasdaq Composite index surged to record highs amid the continuous impact of the Middle East geopolitical war on oil supply and economists warning that long-term geopolitical conflicts will suppress economic growth. By the close of Monday's Asian stock markets, the KOSPI composite index of the South Korean stock market, with Samsung and SK Hynix's high weights, closed up 0.4% under the pressure of deteriorating geopolitical situation, with a new historical high point within reach. Although the storm of Middle East geopolitical turmoil is not yet over, Wall Street's bullish sentiment for the global stock market is becoming more fervent. After experiencing the initial series of intense selling turmoil, Wall Street institutions and investment forces seem to be now shielding these war-related noises, no longer seeing the war as the "core variable determining market direction", as was the case in early March. Instead, they are now largely "ignoring war noise." Several financial giants on Wall Street directly attribute the resilience of the current stock market rally to ongoing upward revision of corporate profit expectations, especially related to strong earnings expectations of technology companies closely associated with the explosive demand for AI computing infrastructure. Another major trend that is crucial for the rebound of global stock markets is the market's increasing belief in the "Trump Chickens Out" script - that is, when major issues come close to deadlines, Trump will ultimately choose to back down, leading to a significant market rally. This is the so-called "TACO" strategy. Under the backdrop of the Middle East war, the robust trajectory of technology stocks driven by the AI technology boom, which is directly related to the strong profitability expectations, is a key driver for the overall stock market or even technology stock rebound. The core logic behind this is extremely "hardcore": this layer is directly linked to the record AI capital spending by tech giants, not just storytelling. AI hyperscalers (super cloud computing giants like Google, Microsoft, and Amazon) are still engaged in a capital spending arms race. As long as they are "willing to take on debt and cut staff, and are not willing to pull back from the AI capital expenditure competition" (i.e., the so-called "AI computing power arms race"), the leaders of the entire AI computing power industry still have value. As a result, BlackRock has raised its ratings on US and emerging market stocks to "overweight" and points out that tech sector's expected earnings growth for 2026 has risen to 43%; Citi has also upgraded US stocks to "overweight," believing that market valuations after recent pullbacks are more attractive, and the US tech sector's contribution to global profit growth continues to rise. Tom Lee, a senior stock market strategist and co-founder of Fundstrat, known as the "Wall Street Whiz," believes that the current position of the US stock market and even the global stock market is stronger than when it reached its previous historical high earlier this year. Lee agrees with a typical judgment of J.P. Morgan that the tech sector, with AI computing power infrastructure at its core, must lead the next phase of the super bull market in the stock market; Citi raised its rating on US stocks from "neutral" to "overweight" and predicts that the S&P 500 index will reach 7,700 points by the end of the year. As of the stock market close on Friday, the S&P 500 index closed at 7126.06 points.