In my last note, we talked about the latest sentiment massage from Trump on Iran.
Last week, it was Operation Epic Fury “is over.”
Though operationally (the reality, the physics) nothing had changed.
And then Sunday afternoon, the ninth sentiment massage of the past ten weeks ended with this…
From Wednesday’s “OPEN TO ALL” peace pivot to Sunday’s public rejection. The sentiment massaging cycles keep getting shorter — six days, then five, then four. The reality on the ground has continued in one direction.
Then on Sunday night, Netanyahu sat down with 60 Minutes and confirmed the war isn’t over — “it’s not over because there’s still nuclear material, enriched uranium that has to be taken out of Iran.”
Trump reiterated that today, saying the uranium has to come out.
Also, while taking press questions in the Oval Office, Trump said this about the war: he said he’d expected the stock market to drop 20-25%. He said he was willing to do it because Iran couldn’t have a nuclear weapon and the threat had to be addressed.
The stock market is at new record highs because the geopolitical strategy is fueling a wartime industrial mobilization, and the AI revolution is transforming the economy.
The “boom loop” we’ve been describing is clearly showing up in the numbers. More spending on AI infrastructure is leading to more revenue, is leading to more spending on AI infrastructure.
More capacity equals more revenue.
With that, the past few weeks have been overwhelmingly about earnings and the state of AI.
Let’s talk about the big events of this week.
Kevin Warsh should take the helm as Fed Chair on Friday. The new Fed regime starts, and the globally coordinated central bank era (likely) ends.
On that note, Bessent is in Tokyo today through Wednesday meeting with the Prime Minister, Finance Minister and Bank of Japan Governor. Aligned partners get U.S. support (security, energy, dollar liquidity).
And the big one: Trump is due to meet with Xi in China, traveling Wednesday night. And they are said to be bringing a large delegation, cabinet members, and American business leaders. This sounds like the Davos playbook (when they visited the World Economic Forum earlier this year, and set the tone for American leadership).
Beijing is not Davos.
As we’ve discussed, the administration has made no secret over the past year that dealing with China’s predatory three-decade economic war is priority number one. And as we’ve discussed, the industrial mobilization under Trump, and the fortification of the Western Hemisphere, seems to be for a bigger confrontation than Iran.
With that, putting the President physically in China introduces unnecessary risk at worst — and at best, reduces control and leverage. Even our trade negotiations (led by Jamison Greer and Scott Bessent) haven’t been IN China. They’ve been in neutral sites (Switzerland, Spain, Malaysia, France).
Although Trump played up his excitement about the visit today, I suspect the chances of it being cancelled, or postponed (for a second time) are not small.
We will see.
The question: if it’s pushed again, what will be the reason?
When the April meeting was pushed “5-6 weeks”, it was said to be conditional on China helping unblock Hormuz. That hasn’t happened.
If it gets pushed again, it reinforces the direction of travel toward confrontation with China.
