Don’t Be Lulled Like the Dulled Markets by Glowing Headlines

Sep 25, 2026

The headlines today might lull lazy readers (somewhere other than here) into thinking that the Iranians really are desperate for a deal and have contacted Trump to plead with him to get back to the already-failed MoU. Those headlines alone certainly lulled the lazy market-making algorithms today: The oil market took them for granted. Prices lowered significantly. The stock market took them for granted. Prices rose across the board. Bond yields seemed to take things the same way and fell, but then they recovered. I’m here to tell you that the usually somewhat wiser bond investors got it right on their second take. Well, until they lost their confidence and yields fell again. Nothing has changed. Not one iota.

Take a more thoughtful look behind the headlines, and you can easily see this is the Iranian “escalation trap” in action—the strategy talked about by Professor Pape in previous videos here on The Daily Doom. You don’t have to dig deeper than a shovel full into the surface fluff to discover the markets are just being their usual dimwitted selves and trading the optimistic headlines. Your shovel quickly strikes bedrock, revealing there is no basis beneath the surface for thinking any position has softened.

Each article quoted below accurately reports that Iran is the one asking for the deal. Markets traded the headlines—Iran now wants a deal—but the articles also note only a paragraph in that the deal Iran is opening a door to is exactly the same deal they have demanded during every negotiation. This is Iran looking like it is the rational party so that Trump will take the full blame he deserves for launching this war and destroying the global economy.

Here are three leading reports on the story:

Oil prices fall after Iran asks U.S. to return to failed memorandum of understanding from June….
“We have introduced a plan to the United States through the intermediators, that if certain conditions are met, the Strait of Hormuz will be open at the end of seven days and talks will be restored,” Iran’s foreign minister, Abbas Araghchi, told reporters at the United Nations General Assembly in New York on Thursday.
Iran has asked the U.S. to meet the same conditions laid out in the June 17 memorandum of understanding.
“If anything they committed themselves in the MOU is in fact implemented in practice and the conditions that we have set are met, then the strait will be open and talks should be restarted to get to the final deal on the subjects of mutual agreement,”

I.e., “Do what we have always stipulated, and do it up front, and you can still get the strait open. Our deal is still on the table.”

It costs Iran nothing to repeat their initial offer with the followup comment that the deal they will entertain is exactly the same deal they have always said they will entertain—where Trump gets his rump out of Iran’s neighborhood, Iran rules the Strait of Hormuz and charges “fees” at whatever level it chooses to set, and Iran keeps all of its enriched uranium and continues its enrichment program while the US pays for all the damages it has caused in Iran. (The US must fulfill all terms at the start and THEN Iran will talk about its nuclear enrichment program, having promised to agree on nothing.)

Iran offers to reopen Strait of Hormuz within 7 days and restart nuclear talks
Abbas Araghchi, has proposed reopening the strategically vital Strait of Hormuz and resuming nuclear talks with the U.S. within seven days if the Trump administration accepts its conditions.
“The conditions we have asked the U.S. to meet are nothing new, nothing more than what was already in the Islamabad MOU, which was signed by the U.S. president,” he added….
“It’s America that must choose whether it wants to end this or not,” Pezeshkian said, responding to a question about whether the war could be over by year-end, in an interview that aired on Fox News.

The onus is on America: “If the war continues it is America’s choice.” A.k.a. “Humiliate yourself completely and kiss our boots, as we have demanded in the past, and we can end your pain as we have said in the past.”

Throughout this process of on-and-off negotiations, Iran has always been iron-clad and consistent regarding its demands.

US-Iran Talks Reportedly Enter ‘Technical Stage’ As Tehran Insists Will Hold Firm On Its Conditions
Latest: Iran-US negotiations in New York have moved beyond initial diplomatic contacts into a more detailed technical phase, with sources in Tehran describing the atmosphere as increasingly positive, CBS reports, citing Al Jazeera.
And an official Iranian caution, or possibly even brush off, in reaction... Tehran signaling it intends to stick by its original conditions:
Senior Iranian official says Strait of Hormuz will remain closed, no nuclear talks with US until Iran’s conditions are met, Reuters reports, citing sources; Iran will make no concessions on its nuclear program.

Tweedle Dee and Tweedle Trump

For Trump, this remains a non-starter as it requires total self-humiliation, but market algorithms, brainlessly traded the suddenly optimistic headlines, oblivious to how the human ego works. Nothing has changed beneath the headlines, and this would be a terrible deal for the US, intended to make certain America pays for a war America should have never started. It requires Trump to end the war with no gains whatsoever, while leaving America in a far worse position than where it was when it started all of this.

In the escalation trap strategy, the weaker party (militarily) seeks to make itself the reasonable party in the world’s eyes, as it is just defending itself, even as it ratchets up its own military responses anytime the stronger party makes another attack. That way world pressure intensifies on the stronger party to knock it off. Stop causing trouble. Stop bullying the smaller party. Stop bringing economic destruction to the whole world.

There is nothing new here that should have caused oil prices to settle at all. Same deal. Same excruciating pain for Trump to accept it. He exits only with his tail between his legs with the tip cropped off if he choses an exit. None of this is likely to happen.

If Trump doesn’t take up the offer and gets impatient and does something with his military again to try to push Iran forward on his terms with his war effort, Iran will seize the opportunity to tighten things up a little harder with its escalated retaliation, intensifying the conflict but only in response to the US refusing to back off on its assault.

It’s probably even wise for Iran to offer this the day before the Saudis said they’d get their east-west pipeline running again at partial capacity. Present the opportunity for the same deal again. If it’s not taken, then blow up the repaired pipeline again to show everyone you are still as serious and unafraid as ever and that Trump had an opportunity to prevent it from getting worse again!

Who could imagine that the US financial media are reporting an erroneously rosy picture?