President Donald Trump‘s ongoing visit to China could potentially unsettle markets if it fails to bring about a breakthrough in the U.S.-Iran war, according to an analyst.
Thierry Wizman, global FX and rates strategist at Macquarie Group, told Market Watch on Wednesday that the strong performance of the stock market might give Trump the “political cover” to reconsider military strikes on Iran next week. Analysts at Macquarie coined the term “SALSA,” which stands for “Stocks are lifting, so attack,” the opposite of the popular TACO trade, an acronym for “Trump always chickens out.”
Wizman warned that a new wave of risk-off sentiment could emerge as early as next week if China refuses to intervene and the U.S.-Iran war escalates further.
“It could happen next week if the Iranians are not making concessions and if [Trump is] rebuffed by the Chinese, who tell him they’re not going to help him here,” said Wizman. He added that it is not his “baseline view,” but warned that the risk could increase.
Krugman’s NACHO Trade Scenario
Meanwhile, economist Paul Krugman warned the Strait of Hormuz could remain closed under a “NACHO trade” scenario—short for “Not A Chance Hormuz Opens”, signaling a potential U.S. strategic setback.
After Trump rejected Iran’s proposal, oil prices jumped. Commentator Robert Kagan also cautioned that escalating tensions could push oil to $150–$200 per barrel, while U.S. fuel prices are already rising sharply.
Iran War Enters Third Month
The U.S.-Iran war, now in its third month, has left Wall Street investors waiting to see if the U.S. could persuade China to pressure Iran into a deal. Meanwhile, China, a major buyer of Iranian oil, has so far stayed neutral in the Iran war and refrained from pushing Tehran to agree to the U.S. demands.
Ahead of Trump’s visit, China and Iran held meetings, demonstrating Tehran’s potential options and its non-isolation stance. Analysts called the move “deeply strategic” and indicated that Tehran and Beijing are “aligning their interests” before the U.S. President’s arrival.
Secretary of State Marco Rubio, on Wednesday, called China the top geopolitical challenge and said managing the U.S.-China relationship is critical. “We’ve made clear to them any support for Iran would be detrimental for our relationship,” Rubio told Sean Hannity of Fox News. He also said that the U.S. hopes to persuade China to take a more active role in pressuring Iran to step back from its actions in the Persian Gulf, arguing that regional stability is also in Beijing’s interest.
Meanwhile, the U.S. military is reportedly considering a name change for the Iran war from “Operation Epic Fury” to “Operation Sledgehammer” if the current ceasefire fails. This change could effectively restart the clock with Congress for war authorization, as Trump warned that the ceasefire is on “life support.”
Disclaimer: This content was partially produced with the help of AI tools and was reviewed and published by Benzinga editors.
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