Teetering
Doug Nolan
“Trump Says Hormuz Strait Is Fully Open, Cites Iran.”
“Hormuz Passage ‘Completely Open’ to Commercial Ships During Ceasefire: Iran FM.”
“Trump Says Iran Will Suspend Nuclear Program as Hormuz Reopens.”
April 17 – AFP:
“US President Donald Trump said Friday that Iran had agreed to never again shut the Strait of Hormuz, during a string of social media posts indicating a peace deal with Tehran was near.
‘Iran has agreed to never close the Strait of Hormuz again.
It will no longer be used as a weapon against the World,’ Trump said on his Truth Social network…”
April 17 – Bloomberg (Patrick Sykes):
“Passage through the Strait of Hormuz ‘is not possible without the coordination of the Islamic Republic Guard Corps navy,’ Iranian state TV cites a senior military official as saying.
Passage of military vessels through the strait remains forbidden.
Ships can only pass via the route approved by the Ports and Maritime Organization of Iran.”
“Iran to Close Strait of Hormuz if US Blockade Persists: Fars.”
“Iran Hardliners Attack Araghchi’s Hormuz Tweet as ‘Incomplete and Misleading’.”
“Iran TV: Ships Passing Through Hormuz Need IRGC Coordination.”
“Iran’s Revolutionary Guard Says It Will Decide Who Crosses Hormuz: WSJ.”
“Iran Considers a Naval Blockade to be a Violation of the Ceasefire.”
“Iran to Take Action if US Blockade Persists: Foreign Ministry.”
“Iran Tells Mediators Will Limit Ships Crossing Straight: WSJ”
“Iran Tells Mediators Will Charge Tolls During Ceasefire: WSJ”
“‘Ships Are Moving’ Through Hormuz, Lutnick Says: WSJ”
“Hormuz Remains ‘Effectively Closed’ Despite Iran’s Pledge, Kpler Says.”
April 17 – Bloomberg (Alexander Pearson):
“Asked if Iran agreed to stop enriching uranium, President Trump said ‘yes,’ according to an X post by a NewsNation reporter…
‘They agreed to everything,’ the reporter quotes Trump as adding.”
“Trump Says Iranians Have ‘Agreed to Everything,’ Including Removal of Enriched Uranium.”
“Trump Says Iran Has Agreed to Nearly All His Demands.”
“Trump: ‘No Sticking Points’ Remain With Iran, Iran to Stop Backing Proxies.”
“Trump: ‘Don’t Think There’s Too Many Significant Differences’ With Iran.”
“The U.S.A. will get all Nuclear ‘Dust,’ created by our great B2 Bombers - No money will exchange hands in any way, shape, or form.
This deal is in no way subject to Lebanon, either, but the USA will, separately, work with Lebanon, and deal with the Hezboolah situation in an appropriate manner.
Israel will not be bombing Lebanon any longer.
They are PROHIBITED from doing so by the U.S.A. Enough is enough!!!
Thank you!
President DJT.”
“Trump Says U.S. Will Work With Iran to Remove Enriched Uranium.”
“U.S. Proposal Would Allow Iran to Access $20 Billion for Handing Over Enriched Uranium.”
“‘No Money is Changing Hands’: Trump Rejects $20 billion Iran ‘Nuclear Dust’ Deal Claim.”
“Trump Says US Will Not Release Frozen Iran Funds.”
April 17 – Bloomberg (Andrea Salcedo):
“President Trump says the US will recover ‘nuclear dust’ from Iran ‘very soon,’ Reuters reports, citing a call with the president in which he discussed Iran’s enriched uranium…
The administration will also bring Iran’s uranium to the US, Trump tells Reuters.”
April 17 – AFP:
“President Donald Trump said Friday that the United States and Iran would jointly remove uranium from Tehran’s nuclear sites with excavators under any peace deal, before the material is transferred to US territory…
‘Somebody said, how are we going to get the nuclear dust?
We’re going to get it by going in with Iran, with lots of excavators,’ Trump told a gathering of the conservative Turning Point USA movement...
‘We need the biggest excavators you can imagine,’ he added.
‘But we’re going to go in together with Iran.
We’re going to get it.
We’re going to take it back home to the USA very soon.’”
“Trump Boasts Iran ‘Agreed To Everything’ — Iran Quickly Says It Won’t Give Up Uranium.”
“Iran Rejects US President Trump’s Uranium Transfer Claim.”
“Iran Rejects Trump Claim on Deal to Surrender Nuclear Material Stockpiles.”
April 17 – Al Jazeera:
“Iran’s Foreign Ministry spokesperson Esmaeil Baghaei dismisses Trump’s claim that Tehran has agreed to allow its enriched uranium to be moved to the US.
‘Enriched uranium is as sacred to us as Iranian soil and will not be transferred anywhere under any circumstances,’ Baghaei was quoted as saying by Tasnim news agency.”
April 17 – AFP:
“Iran’s foreign ministry on Friday said the country’s stockpile of enriched uranium would not be transferred ‘anywhere’, denying an earlier claim by US President Donald Trump that the Islamic republic had agreed to hand it over.
‘Iran’s enriched uranium is not going to be transferred anywhere,’ Iranian foreign ministry spokesman Esmaeil Baqaei told state TV.
‘Transfer of Iran’s enriched uranium to the US has never been raised in negotiations.’”
“Trump Says Most Main Points ‘Finalized’ in Talks Toward Deal.”
“Trump Says Iran Agreed Unlimited Suspension of Nuclear Program.”
“Trump Tells Axios He Expects Iran Deal ‘In a Day or Two.’”
“Iran’s Baghaei Says US Statements ‘Filled with Contradictions.’”
April 17 – Al Jazeera:
“Iran’s Foreign Ministry spokesperson Esmaeil Baghaei has said remarks by US officials regarding the Strait of Hormuz have been contradictory, in a sign of ‘desperation and helplessness’.
‘We should not be influenced by the other side’s tweets,’ the spokesperson said.
‘The statements by American officials are filled with contradictions and lies, and this is nothing new.’”
April 17 – Al Jazeera:
“A Pakistani source has told Al Jazeera that much more needs to be done in talks between Iran and the US before a lasting peace in the region.
An Iranian source said that the next steps between the US and Iran will involve agreeing on a framework for negotiations – not a final agreement.”
Friday evening tweets from Speaker of the Parliament – and head of Iran’s ceasefire talks delegation in Islamabad - Mohammad-Bagher Ghalibaf (translated from Persian to English by Google).
1- The US President made seven claims in one hour, all of which are false.
2- They did not win the war with these lies and they will definitely not get anywhere in negotiations.
3- As the blockade continues, the Strait of Hormuz will not remain open.
4- Transit through the Strait of Hormuz will be carried out based on the ‘designated route’ and with ‘Iran’s permission.'
5- The open or closedness of the Strait and the regulations governing it are determined by the field, not social networks.
6- Media warfare and public opinion engineering are an important part of the war, and the Iranian nation will not be affected by these tricks.
Read the real and accurate news of the negotiations in the recent interview of the Foreign Ministry spokesman.”
And, finally, late Friday night from the Wall Street Journal (Hannah Miao):
“President Trump said he may not extend the ceasefire with Iran if no deal is reached by Wednesday, when the current pause in fighting is set to expire.
‘Maybe I won’t extend it.
So you have the blockade, and unfortunately we’ll have to start dropping bombs again,’ Trump told reporters… on Air Force One.”
Teetering on the edge of a deal with Iran to end the war — or a deeper mess.
While hopeful, all the bedlam has me leaning toward the latter.
Markets are all in on the former, rendering the “markets hate uncertainty” maxim pathetically archaic.
These days, uncertainty and mayhem are relished.
The President is spooking the entire world – just not stock markets.
“Rally Drives Nasdaq 100 to Longest Winning Streak Since 2013.”
All-time highs for the S&P500, Nasdaq Composite, Nasdaq100, S&P400 Mid-caps, small cap Russell 2000, NYSE
Securities Broker/Dealers, Dow Transports, and the Value Line Arithmetic index (for starters).
The S&P500’s 4.5% gain this week boosted the rally off March 30th lows (13 sessions) to 13.0%.
The Nasdaq100 jumped 6.2%, with the rally off lows at 17.0%.
The MAG7 Index surged 8.5% this week, boosting m-t-d gains to 14.5%.
The Semiconductors surged another 7.5% this week, boosting y-t-d gains to 34.9%.
The Transports surged 10.2%, with 2026 gains up to 29.2%.
The Broker/Dealers jumped 7.5% for the week.
The Goldman Sachs Most Short Index spiked 13.8% higher this week, with the rally off March 30th lows now at a spiffy 28.5%.
How many extraordinary squeezes have we witnessed over recent years?
While stocks have recovered all war losses (plus some), bonds have been much more circumspect.
Inflation.
Yields were down this week, with 10-year Treasury yields seven bps lower.
But 10-year yields remain 31 bps higher in the seven weeks of war.
Two-year yields (down 9bps this week) remain 33 bps higher, five-year yields (down 10bps) 34 bps higher, and long-bond yields (2 lower) 27 bps higher.
While down 13 bps this week, MBS yields have jumped 32 bps since the war’s onset.
Key global bond markets struggled to muster much of a rally.
UK 10-year gilt yields (down 7bps) have jumped 53 bps since the war’s outbreak to 4.76%, Italian yields (down 17bps) 41 bps to 3.68%, and Greek yields (down 15bps) 38 bps to 3.65%.
Retreating only a basis point this week to 2.42%, Japanese 10-year JGB yields remain 30 bps higher.
French yields (3.58%) are 36 bps higher, German yields (3.06%) 32 bps, and Spanish yields (3.39%) 33 bps higher.
From crazy speculative market trading action to booming Q1 financial sector results, Bubble confirmation was rather conspicuous this week.
April 14 – Financial Times (Eric Platt):
“BlackRock drew in $130bn of capital in the first quarter…
Inflows in the quarter were driven by its iShares exchange traded funds business, with chief executive Larry Fink characterising the results as ‘one of the strongest starts to a year in BlackRock’s history’.
Our model is working, and we’re more confident than ever in the opportunity we see ahead for our firm,’ he said.
BlackRock’s profits increased 46% from the previous year to $2.2bn as revenues jumped more than a quarter to $6.7bn…
The $130bn the company collected included $72bn across its equity funds and $34bn to its fixed income vehicles in the quarter…”
The major banks “crushed” Q1 earnings, as equities trading records were posted across Goldman, JPMorgan, Bank of America, and Citigroup.
JPMorgan revenues were up 10% y-o-y, with trading revenues 20% higher to a record $11.6 billion.
Investment banking revenues rose 28%.
Bank of America saw net income jump 17% to $8.6 billion, as revenues rose 7.2%.
Citigroup revenues expanded 14% y-o-y, with its equities segment up 39%.
Goldman Sachs revenues rose 14% y-o-y to $17.23 billion.
Investment banking fees were 48% higher at $2.84 billion.
Equities revenues were up 27%, while fixed income, currency, and commodities (FICC) disappointed with a 10% y-o-y decline.
JPMorgan Total Assets expanded $542 billion y-o-y to a record $4.90 TN.
Loans were $148 billion, or 10.9%, higher y-o-y. Goldman Sachs Total Assets surged $253 billion, or 14% annualized, during Q1 to a record $2.062 TN.
Total Assets expanded $296 billion, or 16.7%, y-o-y.
Morgan Stanley total assets expanded 11.4% q-o-q to $1.581 TN, with y-o-y growth of $228 billion, or 17.5%.
Subtle perhaps, but bank stocks notably lagged the general market this week despite big quarters.
Plenty to worry about.
April 17 – Bloomberg (Yizhu Wang):
“The biggest US banks spent the past week tallying more than $185 billion of combined exposure to private credit, an asset class that’s come under pressure in recent months.
Executives — many of whom sought to calm investors’ jitters — still see potential in the market.
Citizens Financial Group Inc.’s private-credit portfolio will likely climb about 5% in 2026, in line with past years, according to Chief Executive Officer Bruce Van Saun.
‘It’s an area that we feel is important to some of our big relationships,’ Van Saun said.
And the bank’s goal is to ‘cement that relationship and do a lot of other business’.”
April 16 – Bloomberg (Laura Benitez, Ellen DiMauro, Hannah Levitt, Olivia Fishlow, and Weihua Li):
“For years, Wall Street banks eagerly helped private credit funds amplify their investing firepower with hundreds of billions of dollars in loans, helping them notch ever-higher returns.
Now, those same banks are tightening their arrangements, adding to the pressure on managers already reeling from an exodus of investors.
Some big banks are raising interest rates for the leverage they provide, and they’re also marking down specific loans posted as collateral.
Behind the scenes, that’s prompting private credit fund managers to swap out holdings from the pools as banks including JPMorgan…, Goldman Sachs… and Barclays Plc exercise their right to write down individual assets…
The biggest US banks revealed this week that they’ve amassed roughly $180 billion of exposure to private credit firms.
JPMorgan pegged its portfolio at $50 billion…”
April 16 – Wall Street Journal (Telis Demos):
“Washington has been trying to free up more of the resources of big banks.
Banks have wasted no time putting them to work, but on Wall Street rather than Main Street.
Big banks’ lending to consumers and midsize companies is moving modestly ahead.
But demand for financing has boomed in their Wall Street trading businesses, which serve such clients as private-credit funds, hedge funds and institutional investors.
This kind of lending can drive big profits, in part thanks to advantageous regulatory treatment and because it brings in lots of fees for arranging trades, doing deals and other services.
But investors are starting to ask how much further banks can increase their Wall Street revenue—especially with growing risks in the current market, ranging from war to artificial-intelligence disruption.”
April 14 – Bloomberg (Liza Tetley and Laura Noonan):
“The growing dominance of a handful of banks supplying billions of dollars to help juice bets at hedge funds and proprietary trading firms is sparking new financial stability risks, ratings agency S&P Global Inc. warned.
Its latest analysis shows disclosed revenues relating to ‘markets financing’ at four major investment banks — BNP Paribas SA, Barclays Plc, Goldman Sachs... and Morgan Stanley — jumped 25% between 2024 and 2025 to more than $24 billion, representing roughly 30% of these firms’ markets business at that time.
Such scale and concentration creates a risk to financial stability, the S&P report warned.
Banks’ prime-brokerage units — which includes a range of services to hedge funds and other investment firms — exceeded $2.5 trillion of lending in 2024, a figure that has doubled over the past four years…
Hedge funds’ use of borrowed money to fuel their bets — known as leverage — has approached historic highs while assets overseen by those firms hit a record $5 trillion last year.”
April 15 – Financial Times (Ortenca Aliaj and Jill R Shah):
“Banks’ soaring exposure to hedge funds and trading firms has created ‘an inherent fragility’ in financial markets, with record leverage and the scale of financing advanced by a handful of big lenders adding to risks, according to a report.
Trading firms such as Jane Street, Hudson River Trading and Citadel Securities have reshaped financial markets, with their growth fuelled by lending from traditional investment banks that have retreated from making proprietary bets.
Banks’ gross exposure to hedge funds and trading firms was in the trillions, meaning tail risks, which have a low likelihood of occurring but can have a significant impact if they do, were ‘high’, a report from S&P Global Ratings said…
‘Together with record leverage and scale and the concentration of such exposures in a handful of banks, this means the ecosystem exhibits an inherent fragility that could be tested under severe stress,’ it added.”
Despite prospects for peace and stability breaking out all over the world, a couple “crazies” (Torsten Slok and Hank Paulson) were out this week raining on the parade.
April 17 – Bloomberg (Ye Xie):
“A buildup of leveraged hedge fund bets in Treasuries has left investors exposed to abrupt position shifts that could amplify stress across global bond markets, according to Apollo Global Management Chief Economist Torsten Slok.
Hedge funds now own roughly 8% of the entire $31 trillion US Treasury market, according to Apollo calculations…
That’s up from just 3% five years ago.
The buildup has been fueled by heavy borrowing, with combined financing via repurchase agreements and prime brokerages now exceeding $6 trillion…
‘Any forced unwind of these leveraged positions could send shockwaves through global fixed income markets,’ he wrote.”
April 16 – Bloomberg (Chris Anstey):
“Former Treasury Secretary Henry Paulson called on US authorities to prepare a back-up plan in order to avert a potential collapse in demand for Treasuries — an event that he warned would have ‘vicious’ effects…
Paulson said a breakdown in the $31 trillion market for US government debt would be different from the financial crisis he dealt with while at the Treasury’s helm two decades ago.
‘As bad as it was,’ the government had fiscal firepower to address the credit meltdown…”
Hank Paulson with Wall Street Week’s David Westin:
“This crisis is different.
When you hit the wall and you try to issue Treasuries and the Fed is the only buyer and the prices of Treasuries are going down – interest rates are up – that’s a dangerous thing.
So, the thing I am talking about now is – people say, ‘when are you going to hit the wall?’
I obviously don’t know – it’s impossible to know.
But the law of economic gravity – you’re not going to know that.
And when we hit it, it will be vicious.
So, we have to prepare for that eventuality.
And I think we need an emergency break the glass plan, which is targeted and short-term, on the shelf – so it’s ready to go when we hit the wall.”
Westin:
“If there is indeed a global shock to the economy (from the Iran War), you’ve dealt with that before with the financial crisis, at the time when you worked hard to bring the globe together…
Right now, the globe seems to be going in all different directions – with the U.S. different from Europe, different from China.”
Paulson:
“You’ve put your finger on the real difficulty.
The first thing is, there’s much more sovereign debt – not just in the U.S., but in Japan and really all around the world.
So, you’ve got more debt. And then you’ve got a diversity of economic performance.
At the same time, the U.S. economy is strong, China is weak.
There are other strengths and weaknesses.
So different macroeconomic policies – different monetary policies around the world.
So, it’s going to be very important to try to bring it together.
That’s why I think it is so important that the U.S. be talking with China and other major economies - monitoring what’s going on, so they’ve got some basis to coordinate when - if and when - there is a global crisis..”
Westin:
“When you took the job as Treasury Secretary, in your book “On the Brink,” you talk about debt – about entitlements, borrowing too much money.
You were worried about it. It was part of the reason you took the job was to address that.
Look at where we were then and where we are now.
There’s so much less fiscal headroom to deal with any of the disruption you talk about.”
Paulson:
“Wow, it’s breathtaking.
The deficit is one trillion dollars.
We’re on a path to have it be $3 trillion by 2035…
And so you look at this, clearly – we use the word “unsustainable” a lot – but this is on a path to destroy our economic well-being and our national security, which is rooted in our economic strength.
The first rule of holes is to stop digging.
And we’re digging bigtime.
The good news is we’re a rich country.
And so there’s plenty we could do if we begin to act.
It’s going to take increased revenues – taxes – and dealing with expenses.
I know you can raise the revenues without a big drag on growth if you close preferences and loopholes in the tax code.
And you can’t deal with the problem unless you deal with entitlements – social security and primarily healthcare…
I’ve worked with Congress before, and Congress doesn’t like to do unpleasant things until there is an immediate crisis.”
Westin:
“Are we any closer to having that emergency break the glass plan today than we were in 2007 when you were worried about it?”
Paulson:
“I’m not there now, but I doubt it.
I doubt it.
There are so many things out there to deal with right now.
To give credit to policymakers, when you look at wars in Ukraine, in Iran, you look at all the conflict around the world, you look at what’s going on with AI, you look what’s going on with the environment, there’s a lot of stuff going on.
But we should not forget the deficit.”
It’s worth noting that money market fund assets sank $176 billion last week, surpassing the previous record drop ($169bn) from the week of September 17, 2008.
Institutional money funds accounted for $138 billion of the decline.
While the contraction was associated with tax payments, it’s still a huge number.
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