This Is How Big Money Is Trading the War in Iran

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2:19Ozan Tarman:Hello and welcome to another episode of the Odd Lots podcast. I'm Joe Weisenthal. And I'm Tracy Allaway. Tracy, we're recording this March 25th, 2026. It's 9, 10 a.m. Are you going to do the seconds as well? No. Well, but the reason I do mention the time, the cash trading and the stock market hasn't opened. The reason I mentioned the time is not just because things are moving fast, but to establish we've had market moving headlines already this morning. Oh, absolutely. And so just in the last like 15, 20 minutes, we got some headlines attributed to the Fars News Agency out of Iran saying there is no interest in talks.

2:55Ozan Tarman:There's no interest in ceasefire. The U.S. position about pursuing a ceasefire is illogical. That moved futures down a little bit. We're you know, it's a cliche, you know, headline driven market. You hear that a lot. The last several weeks have felt like the headline driven market to drive all headline driven. No, it really I know it's a cliche, but it really is a headline driven market. And I think part of the issue here is because no one's entirely sure what the goals are when it comes to Iran. It's really hard to judge progress of the conflict on any sort of fundamental basis. Right. So all you can look at is basically what Trump and the other two sides are saying.

3:34And so you get these big reactions every time they tweet something or post on Truth Social and then tend to contradict each other.

3:42Ozan Tarman:Absolutely. And, you know, I do think, look, there is this extreme level of skepticism from almost any headline you get out of the U.S. White House. I think if you go back to the post-Liberation Day environment, particularly with these sort of modest rapprochement with China, you would get these headlines, we're talking, and then the Chinese would put out a headline, we're not talking. But then it turns out that there was a little bit more talk than what maybe the Chinese side had admitted to. So often, I think as much as many people are inclined to disbelieve headlines, I don't think people disbelieve them entirely.

4:17Ozan Tarman:when Trump said yesterday that the Iranians had sent him a prize that was extremely valuable. And it's like, whew. I mean, that's tough to take seriously. But is there some modest signal? I don't know. It's really tough. It's really tough. But I just want to say two other things real quickly on this, which is that even with the headlines today about Iran rejecting ceasefire, futures are still up. So it's not like people have like completely, oh, nothing's happening. And for all the talk about and we've had multiple guests and they're the smartest people in the world talk about oil is going to surge the longer this goes on.

4:53Ozan Tarman:As of the time we're talking about this, Brent crude is still right around or just under one hundred dollars. We haven't had the mega surge yet. So I like to take market seriously, even if sometimes I don't always understand what they're doing. Well, the big question to me is whether or not markets are still in denial. Right. And you see people talking about like, oh, people are being very optimistic about the future. I saw the Morgan Stanley report saying that corporate profits were going to go up this year. The oil price. Again, we're talking about the closure of the Strait of Hormuz, which is the sort of thought experiment that has bedeviled oil analysts for decades.

5:31And yet, you know, the reaction has been kind of muted. Yeah. Meanwhile, in the rates market, there's a lot going on there, too. And you still have a lot of bond traders who are very reluctant to price out the possibility of a rate cut later this year.

5:46Ozan Tarman:Completely. And it feels like the idea of a red cut, at least for now, does not seem anywhere near the quote table. But anyway, so how do traders even make sense of this headline? How do they know what headlines to believe? Why does there sometimes seem to be this gap between what a lot of people think the market should be and where it actually is? Very excited to say we have one of the most plugged in people that we know is someone who is talking to people who move serious money every single day. He goes around the world and he has dinners with them and he talks to them about their trades. He even brought us a nice gift, which is a tour t-shirt.

6:23Ozan Tarman:It is the macro dinners 2026 tour with a nice Deutsche Bank logo. You should read some of those cities just to give an idea. And the dates of the macro dinner tour. Jan 4th, London, Jan 21, Geneva, Jan 29th, Milan, Miami, Budapest, London, New York City, Montreal, Copenhagen, Riyadh, Doha, Dubai, etc. You get the idea. He's always talking to people, and he is one of the most plugged-in people that we talk to. We are going to be speaking, of course, to the one and only Ozan Tarman, Vice Chair of Global Macro at Deutsche Bank. So, Ozan, thank you for coming back on AdLots. Joe and Tracy, it's an absolute pleasure.

6:57Highlights of the week, very close to where I used to live in New York City as well.

7:01Ozan Tarman:It's great having you here in studio. It's a pretty wild market to trade, I assume. Very, very wild market to trade. And on the T-shirt, unfortunately, for example, this Riyadh, Qatar, Dubai leg that I was looking forward to. We'll see what happens. Oh, right. We'll see what happens with that. But not necessarily untradable. Still, traders always smell things, always have a sense of where the pain trade is, where the momentum is. Even walking in, now I became a veteran of this wonderful show. I was thinking this time around we should really say Wednesday. Yeah, that's right. You know how it works.

7:35I know that what I can say now, one day later, may look a little bit different, etc., etc. But still, walking in now, obviously, it's a big cliche to say it takes two to tango or tackle, three maybe. But that being said, at the moment, the pain trade, the momentum trade is for this equity rally and oil fall to continue. There are many, unfortunately, I have told all my clients' friends' hands, wounded, hurt players out there. Certainly in race markets, certainly on front end. So people are reluctant to take fresh bets. But as I constantly hold these conversations, roundtables, I do get the sense that now getting to know the president well as well, people did expect this.

8:23We won the war, I won the war, mission accomplished moment, which he's trying to do in a few ways. Then the big debate is, yes, and we do get these spikes of equity sire, oil lower at the end. As you rightly said, even Brent is lower than 100 and we should talk. VDI is even lower. But do you fade it or not? That's what it boils down to. Another big true cliche is what does Iran do? What does Iran say as we speak because of Fars? Like you said, Israel 12 said these talks are happening. Fars, Iran said, no, we're still waiting. Which one to fade? That's the big question mark. My gut feel from what I sense from the clients is there is room for a squeeze here in equity, sire, oil lower, but the tail risk is very, very fat.

9:09Yeah. Wait, so talk to us more about positioning. I mean, going into this war, I think everyone was pretty much expecting rate cuts later in the year, oil prices, nothing dramatic there, certainly. Did everyone just change very, very quickly? And now we're left with positioning that can lead to a bigger squeeze higher. Very relevant question. I want to take us back to February 27, the night before the attack on Iran. Again, I was visiting Palm Beach and Miami and the feel couldn't be more different. The main obsession, focus of the U.S. client base, the key players was AI, this is really research, something big is going to happen, Schumer.

9:51how 50 % of white-collar jobs could be lost in 12 to 18 months. So finally, not only rate cut expectations were increasing, we were getting bull flatteners. So even long-end was coming down. Thursday, Friday, it was around 4.05. And I do remember before Iran, US 10-year closed top tick 3.93. And it cannot be named, but one of those more legendary French clients of mine comes to me with an email. Ozan, we nailed this, this, that. Bond is the new gold. Well, we need to talk about our friend Gold as well. Yeah, we should. One more thing. Another good friend, I did bring this on paper because it's very, very telling.

10:29This guy sends me a message, I think, Tuesday or Wednesday before Iran. The multithelium question is, can the rest of the world isolate itself from this destruction? I'm not sure. He was talking more about the AI fears. Another observation. Today reminds me of early February 2020. While we all saw people falling over in China, it became clear by the day that we're about to see a pandemic. The S &P made new all-time high. The same is today with Iran. Nobody cares. I mean, yeah. Ring so true now, right?

10:55Ozan Tarman:Actually, let's talk about gold and positioning for a second. The last time we had you on was September. And one of the themes of that was the relentless bid into gold. And whenever we frame a conversation, I'm like, oh, this is going to be the top. It was not the top even close. So that was gold was around 3 ,800 an ounce during that episode. It got over$5 ,500 an ounce in early February. As of yesterday, we saw a 10-day gold sell-off. How much is this just about all these different trades not working at once, the steepener trade not working at once, the oil trade not working at the same time, and essentially a lot of players being forced to liquidate the one big winning thing that they had in their portfolio?

11:35Very much so. And look, I love you guys, but on the last show as well, when we all started with gold NVIDIA, gold NVIDIA, I was very, you know, happily and politely answering, but in my mind, I was saying, this is an orange sign. I know, of course. And then I listened to our show. So I'm like, risk on this works, risk of this works. I'm like, Joe Tracy, it has to be something that comes from the left field that gets the whole thing unwound. And even though, the guy says here, Iran, people look and nobody cares. The repercussions on the position is just like you said. led people to get out of all winners.

12:12And gold was a big winner. Emerging markets were big winners. So that was the first trigger. And then another story now, once you are in this position, once you realize it's not days, it's not weeks, this is going to continue on and on, petrodollar countries, other people start selling their winners to build defense mechanisms. I mean, it's almost like public reporting in terms of China, my motherland, Turkey, India. They have these gold reserves for a reason. So that's another reason why first technicals, you go after your winner. And then fundamentally, some of these strong hands, for understandable reasons, are selling them.

12:53Everything happened back to Tracy's question. So people were all into these bear flatteners, steepeners first. Then they believed in bull flatteners because everything was, all rates were coming down. Then you get into this world, and thanks for jumping onto it. Monday after Iran, warflation, warflation. This is serious. Inflation expectations will increase. It's not as simple as finding the next Venezuela jersey. And my God, from getting ready for cuts, discussion one, two, or maybe three in Fed, at least hold ECB and certainly cuts Bank of England. Look where we are now. For a while, we've priced in four hikes for Bank of England and ECB.

13:32We're right below three now for both. That's huge. That means seats are lost, pods are closed. I was going to say, how many times have you heard the word liquidation or, you know, a pod shop blowing up in the past few weeks? A lot, unfortunately, right? Capitulation. And I teach all our young stars or mentors. So after all, the cliche is, oh, investment bank will do well, trading floor will do well because, you know, bid offer, fear. No, not like that. But after a while, there is really something called bad volatility. And this is bad volatility. From these crazy headlines being that much slaves to what somebody says at Friday 10 p.m.

14:11to Saturday 11 p.m. to. Also, this much of liquidation and capitalization. After a while, people say the best thing is a blank piece of paper, less trading, and less watch. That's why your opening question. Some people see this market as untradable. but unfortunately in times like this especially if you're not wounded somehow flat is in you up if you have survived these are the moments to make the difference who knows, who knows Joe maybe this is right around April 9th 2025 moment this is when maybe this is right around the dip and we will remember it like the time we were able to look through it I have my doubts but maybe

15:28Ozan Tarman:Thank you. PipeDrive brings you entire sales processes into one dashboard, giving you a crystal clear, complete view of sales processes and customer information designed to help teams stay in control and close more deals faster. It all centers around the visual sales pipeline, where you can see every deal, what stage it's in, and what needs to happen next. Since everything is in one platform, PipeDrive is designed to unite your team, keep track of sales tasks, and stay on top of your leads. Switch to a CRM built by salespeople, for salespeople, and join the over 100 ,000 companies already using PipeDrive.

15:59Ozan Tarman:Right now, you'll get a 30-day free trial. No credit card or payment needed. Just head to pipedrive.com slash simpleCRM to get started. That's pipedrive.com slash simpleCRM. What is a pain trade, and why is that a useful concept? Very good question. You know what triggers me. A pain trade, I mean, it's not the ideal definition maybe because you don't want your clients and friends to be in pain. but a lot of it even before the days of quant trading crowding out positioning is so important for this market after a while it can become as important as a fundamental factor after a while you do feel that in these echo chambers players almost want to believe because of the pricing fundamentals on what they're talking about so pain trade is when that herd gets a belief in trade so much and when it works just the other way around.

16:52I mean, what happens to gold is a big one because for a long time it was unshaken, but sometimes even smaller instances. Like for the past 15 to 18 months, we really believe that big dollar would trade soft. What I mean by that is either because of hedge ratios, dedollarization, dollar wouldn't be the safe haven that it used to be it would make sense to sell dollars whenever one has a chance now all of a sudden because of iran because of people building up selling their winners to go to safe heavens if we trade towards the 110 111 before 121 21 that's a much less talked about pain trade why because it's gonna further shake places like rest of the world emerging markets korea etc etc and of course it opens conversation, right?

17:45Sometimes you say, sometimes Spain trade is so obvious. Sometimes some people say, no, that trade is there for a reason. Consensus is going to continue to work. You develop a market, you trade on it. On the dollar, and this is related to gold as well, we do seem to be in this weird situation where like, OK, people are liquidating the successful trades to raise cash, go neutral, whatever. But at the same time, you still have plenty of people talking about diversification away from the U.S. And you could make a very strong argument that given what's happening in the oil market right now, maybe you don't want to only price that in dollars.

18:20Maybe you want to start thinking about other currencies. How are people thinking about the, I guess, like U.S. exceptionalism trade at the moment? Because there's two cross currents. For sure. It's moving from U.S. exceptionalism, selling your U.S. assets to more hedge ratios. It definitely moved, let's put it that way. Again, at the beginning of January, February, all these events, one after another, Venezuela, Greenland. My God, so much happened in three months. Tell us about it. Powell's case. Again, not necessarily selling your U.S. asset, but buying more, buying less, increasing your ratios had become fashionable.

18:57But you're very right, Tracy. My partner in success, one of them, George Cerrolos, head of our FX strategy. We love George. We all do. He has this rough formula, euro dollar, roughly two-thirds oil price, one-third gas price. It should have traded around 1.1250, 1.13 as we speak. It doesn't. Part of the reason is exactly this. Despite what oil is doing, despite what gas is doing, people do want to own a little bit less dollars. But unfortunately, as I sit here, as I come to my odd loss every three months or so, So Weichsher, Deutsche Bank proudly waving my blue Make Europe Great Hagen hat. It's in trouble a bit.

19:37Whether this war takes another one week, two weeks, two months, the wounds will stay. The wounds will especially stay in oil and gas prices. We disrupt the supply enough. And the big importer, the ones who need those oil and gas prices lower, is Europe. So in an understanding way, it's talking about when consensus starts becoming more sense. In these roundtables and beyond, it's becoming a bit fashionable to start questioning the European equities, European credits. Funny enough, it doesn't show as much yet in the effects. But watch out for the equity and credit angle of this Europe trade.

20:17Ozan Tarman:So this is really important, which is that basically, OK, there is this long term pessimism about Europe, But there had been some optimism recently and cheaper energy prices certainly helped the relative competitiveness and profitability of the domestic industrial giants and so forth. But we're going to probably be regardless of the length of the war in a period of structurally higher energy prices. And that continues to build to the negative side of Europe. So let's talk a little bit more about oil, because if you just talk to the oil analysts who I love, like their hair is on fire right now.

20:53Ozan Tarman:And they probably, you know, this is cataclysm. But Brent crude, not only is it well off its highs from a week ago, it's not even anywhere close to its highs in 2022 at the peak of the inflation. I mean, we got at one point in March 2022, Brent crude was at 139. We're below 99 actually right now when I'm talking about this. The thing is like, oh, you close the straight Hormuz, oil just explodes, et cetera. We all know it. We all see it. There is nothing that any of us, you can be online all day and talk to all the energy experts. You are like, you do not know more information than the market does.

21:28Ozan Tarman:So talk to us how you're thinking about oil and the fact that there does seem to be this gap between the hair on fire rhetoric of the oil knowers versus the prices, which are high. But even by the scale of the last five years, not on sand. As the question was coming, I was preparing my next note to read. First of all, on the oil and fire, we all see and respect Jeff Curry, what he said about molecules. And interesting people are watching, right? Did you see the tweet of head of Iran parliament? Oh, yeah. He used the you can't print molecule. Yeah, exactly. This is another thing. He also referred to another thing as fake news.

22:07Ozan Tarman:Everyone around the world is now talking the same. That actually reminds me of a friend who visited Afghanistan and he met some people working for the Taliban. and they started Whatsapping him like Pepe the Frog memes and they called him a soy boy and stuff like that. Everyone talks the same way. Anyway, a bit of a divergence. A little bit depressing that this is the common language. Now this is the lingua franca of the internet. Everyone says warflation. Everyone says it takes to taco, et cetera, et cetera. All right, we'll talk more about it. But this physical versus paper trading is very, very important.

22:39So this friend of mine, ex-college I worked with him for decades, big commodity trader, now a dear client, And, you know, one of these guys, he talks math. So MIT, Russia's MIT, et cetera, et cetera. He sends me a message, and we are now even one more week late. This is last week. And he doesn't do Ozan High all the time. Ozan High on Urmuz. If it's not starting to open in one month, now three weeks, the world has a huge, huge, huge problem. And this is not Ozan. This guy doesn't say it here. Qatar LNG will need months to restart once Urmuz is clear. And in oil, we have 10 millibytes of shut-ins already.

23:15And Asian refiners are very, very starved. Pipelines to Red Sea would take years. And also Arnata Panacea, etc. He talks about hooties. So I get it. Brent versus WTI. WTI is trading even better, etc. But especially if the likes of Fars is correct. If we have a lot of talk, but one way or another, this Hormuz is only two, three tanks, one Indian tank, one China tank. I do fear that these guys warning us about physical delivery may be more right.