Investors Betting Against Trump Lose Again After Iran Retaliation

The market surprised many investors with a positive open on Monday following the U.S. bombing of Iranian nuclear sites. There was some early volatility, but dip buyers showed up before the indices could even turn negative.

Later in the day, Iran launched a very anemic missile attack on a U.S. air base in Qatar. The attack was announced in advance and did no substantial damage. It appeared that it was merely a face-saving move and that Iran had no great desire to escalate the confrontation with the U.S.

This very tame response by Iran caused oil to move sharply lower since it now appears that there will be no aggressive move to close shipping channels. At this point, Iran is in desperate need of oil revenues and is putting that ahead of an aggressive military response.

Although there is still plenty of uncertainty, it appears that escalation is highly unlikely and that there will be progress toward negotiations. While some factions are still hoping for regime change, that doesn't appear to be a significant goal for the U.S. as long as uranium enrichment is controlled.

A large number of investors have been poorly positioned for this steady diet of positive news. Maybe it's due to political bias, but the market has been running higher for months as economists and experts predict that the Trump administration will fail with both tariffs and foreign relations. There have been very few folks who believe that the Trump administration would be as successful as it has been.

This skepticism about the Trump administration has created a very powerful "climb the wall of worry" dynamic. Investors keep waiting for bad news to hit, and when it doesn't, they are compelled to add more long exposure, and that pushes the market higher.

I don't ever recall an environment where political bias has been so consistently incorrect about the economy, the stock market and foreign policy. It has created a highly unusual market dynamic and is crushing those who can't let go of their disdain for Trump.

Have a good evening. I'll see you tomorrow.

At the time of publication, DePorre had no positions in any securities mentioned.