Whether you like him, loathe him, or simply can’t look away, Donald Trump’s effect on financial markets alone makes him the most consequential person on the planet — just as he would like it. Liberation Day trade pronouncements this time last year crashed markets 20%. His fourth reversal on Iran war plans this past Monday sent them surging 6%.
Since the conflict with Iran erupted nearly a month ago, US financial markets have been violently whipsawed not by macroeconomic data, but by presidential Truth Social posts and quips. Donald Trump’s dizzying reversals and impromptu proclamations on Truth Social are driving wild intraday swings of 5%, 10%, and even up to 15% in some assets since the conflict began — a level of sheer volatility we have not witnessed since the height of the COVID-19 pandemic.
Indeed, one prominent investor noted to us that right now, it is impossible to trade in financial markets without getting into the mind of Trump, which is far more important than Fed head speculation, interest rates, unemployment rates, inflation numbers, consumer sentiment, or any other macroeconomic indicator.
Simply put, in this volatile environment, we are navigating neither a bull nor a bear market. We are trapped in a Trump Market. To navigate a Trump market, one must understand how Trump thinks. And that’s the purpose of our new book, Trump’s Ten Commandments, which reveals 10 foundational patterns that underly Trump’s actions.
Below are three lessons from Trump’s Ten Commandments — and why, despite widespread optimism about a ceasefire, the speculation may be premature.
Commandment 1: The Stock Market Is Trump’s Only Real Constraint
As we reveal in Chapter 4 of Trump’s Ten Commandments, Trump has always viewed money as the ultimate scorecard — and other than perhaps pride, there is nothing he hates losing more than money. Financial markets represent nothing less than the most potent real-time report card on his own leadership, which he takes very, very personally. He might not care what panicking pundits, anxious experts, or even foreign allies and officials have to say, but financial markets are the one tripwire he cannot cross.
As many investors have remarked already, the TACO trade has played out time after time. Investors have come to expect that whenever the market violently revolts against any Trump overstep, he will miraculously reverse his own position, even if that reversal is largely cosmetic.
That part of TACO is well understood. But what fewer investors appreciate is that once markets are soothed, Trump is prone to nudging back toward his original inflammatory position until he hits the breaking point — forcing a retreat before inching toward his original position again, with this cycle playing out over and over. In this case, with financial markets soothed from Trump putting out smoke about a potential peace deal, counterintuitively, that has the opposite effect of buying Trump much more time on the clock and much more room to escalate militarily. Critics allege that these reversals also give well-connected insiders more opportunities for insider trading, pointing to suspiciously timed trades — though no direct evidence has yet emerged.
It is hardly a coincidence that Trump’s boldest and riskiest moves — whether seizing Nicolás Maduro, killing Ayatollah Ali Khamenei, or threatening to knock out Iranian power plants — all took place on late Fridays and early Saturdays, near when markets close for the weekend, followed by deescalatory rhetoric early in the week when markets reopen. Past wars have not been dictated by the operating hours of the NYSE, but in this presidential worldview, there is no more important constraint.
Commandment 2: His Reversals Are a Strategy, Not a Weakness
As we reveal in Chapter 6, Trump is not anchored in ideology but driven by pragmatism and opportunism. In fact, in August 2015, in a private Trump Tower conversation, he told me he was considering going to the left of Bernie Sanders to tap into populist anger, before ultimately choosing to pivot to the far right as a faster, frictionless route. This fluidity explains how he can, practically overnight, strike surprising alliances of convenience with NYC Mayor Zohran Mamdani and even longtime critic Elizabeth Warren, who was flattered by Trump’s outreach in collaborating — both joined Trump to cap credit card interest rates at 10%.
To Trump, fluidity and inconsistency are virtues, not bugs. That explains the strategic logic to behind why Trump puts out as many contradictory messages as he does, — wavering, seemingly wildly, between “the war is almost over” one day, and dramatic escalations of the conflict the next, and embracing peace talks the next. Not only does this nurture an aura of unpredictability, and force others into a position of weakness, having to respond to him; but even more important, as the consummate opportunist, Trump intentionally keeps all options on the table for as long as possible to give himself maximum leverage and room to maneuver amid the fog of strategic ambiguity.
As a result, he’s having his cake and eating it too — by seemingly embracing peace while substantively controlling the escalation ladder, he simultaneously calms markets, fortifies public support by recasting Iran as the peace-rejecting aggressor, all while retaining the military initiative — an otherwise impossible trifecta.
Expect more head-spinning reversals — especially since, amid widespread optimism about potential peace talks, many are forgetting that thousands of Marines, additional battleships, airborne combat forces, and special operations specialists are currently en route to the Mideast, and their arrival by the end of the week will significantly change the balance of power and provide Trump a wider range of opportunities.
Commandment 3: Nothing Will Be Left on the Table — Including the Table Itself
As we reveal in Chapter 2, while most experts teach that trust-building is foundational to negotiations, Trump takes the diametrically opposite approach, taking the biggest log he can find and whacking you in the face with it — his preferred opening move is maximal aggression.
That is always Trump’s preferred way of creating maximal leverage: by escalating and inflicting maximal pain on opponents to the point they are all but begging for mercy.
Some pundits believe Trump will offer Iran a generous compromise — preserving ballistic missile capability while lifting all sanctions. That is not his usual negotiating style, for if the other side is getting something good, that’s something left on the table that you should have seized. If the other side is getting something good, that’s something Trump should have seized.
With the balance of military power about to shift dramatically with the arrival of fresh US forces by the end of the week, it may well be that Trump will feel emboldened to authorize even bolder escalation — ranging from the seizure of Kharg Island, home of 90% of Iran’s oil facilities; to a special forces raid on Iran’s enriched uranium, stored deep in underground bunkers at Isfahan; to forcing open the Strait of Hormuz through limited ground incursions on the southern coast. While Trump appears seems to be focused on peace negotiations today, that is not the final word.
As Yogi Berra quipped, “It ain’t over till it’s over” — and in Trump’s world, even then, it’s still not really over so long as he has more force than the other side.
As one prominent cryptocurrency investor told us yesterday: “Getting inside the mind of DJT is more important to traders than who is the Fed chair, what interest rates are, what inflation is, or what unemployment is.”
Trump cultivates an aura of unpredictability, but his actions betray certain patterns that are discernible to those who know where to look. Those patterns, illuminated in Trump’s Ten Commandments, suggest that there may be quite a few more chapters to come as markets grapple with continued Trump-driven disruption.
The opinions expressed in Fortune.com commentary pieces are solely the views of their authors and do not necessarily reflect the opinions and beliefs of Fortune.
