Going into it, the framework was reported as all but done. Trump said the deal to reopen the Strait of Hormuz was close.

The market heard "close" and treated it as done. Oil eased. Stocks lifted.

And again, nothing.

We've seen this plenty of times now over the past three months.

A conciliatory headline. A market that wants to believe the pressure is over.

The reality on the ground remains: an energy supply shock. 

So what actually happened?

Trump's terms are inflexible. He wants Iran's enriched uranium dug up and destroyed, the Strait open immediately, and Iran agreeing it will never have a nuclear weapon.

That said, we already know these conditions. And it's safe to assume that anyone on the other side of the negotiation with ties to the old regime would never agree to them. 

Indeed, a senior Iranian official told Reuters they never agreed to hand over the uranium at all. 

The shooting resumed. The deal fizzled again — because the terms are about ceding control of all leverage (oil and nuclear).

As we've discussed, this is the Venezuela model.

The oil can flow, but not on the old terms, and not back to the old hands. A deal, in this framework, doesn't mean withdrawal. It means control.

Let's talk about the Fed.

On Sunday night, Jerome Powell accepted a "Profile in Courage" award. In his acceptance speech, he "warned" that if an administration removes Fed officials over policy, the Fed loses its most priceless asset, its credibility.

Let's revisit what "independence" looked like under Jay Powell. 

For the better part of two decades, the Fed has been anything but independent from fiscal policy. It financed Capitol Hill spending to the tune of trillions of dollars, through QE. Kevin Warsh (the new Fed Chair) has a name for it — "fiscal policy in disguise."

And the Powell Fed was anything but neutral.

Remember, in Trump's first term, Jerome Powell mechanically raised rates into a low inflation, recovering economy. Not only was it a headwind to the economy, it induced a liquidity shock.  

Then, Powell called inflation "transitory" in 2021. And he held rates at zero while prices ran at a four-decade high pace. It was the transitory lie that gave the Democrat-led Congress the cover to push for trillions more in spending (to fund the climate and social agenda).

So, the "independent" Powell-led central bank was, in practice, the financing arm of the government.

What Powell is now defending, is the Bernanke/Yellen/Powell Fed regime, under the guise of "independence."

Warsh was hired to end that old regime — to restore independence, by shrinking the balance sheet, by ending QE as a permanent tool, and by ending the Fed's financing of the deficit.