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On this page

Speakers & Credentials

  • Speakers & Credentials
  • 1. Executive Summary
  • 2. Chronological Table of Contents
  • 3. Detailed Thematic Summary
  • The Reference Vault
  • 4. Data & Figures
  • 5. Core Frameworks & Mental Models
  • 6. Anecdotes
  • 7. References & Recommendations

On this page

  • Speakers & Credentials
  • 1. Executive Summary
  • 2. Chronological Table of Contents
  • 3. Detailed Thematic Summary
  • The Reference Vault
  • 4. Data & Figures
  • 5. Core Frameworks & Mental Models
  • 6. Anecdotes
  • 7. References & Recommendations
Middle East/March 26, 2026/10 min read/youtu.be

This Is How Big Money Is Trading the War in Iran | Ozan Tarman (Vice Chair, Global Macro at Deutsche Bank) | Odd Lots

Source
Source
Watch on YouTube ↗

"At the moment the pain trade, the momentum trade, is for this equity rally and oil fall to continue." - Ozan Tarman [00:05:47]

"Another observation today reminds me of early February 2020 while we all saw people falling over in China... the S&P made new all-time high. The same is today with Iran. Nobody cares." - Client of Ozan Tarman [00:08:39]

References

  1. Original source (youtu.be)

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Reading

Published
March 26, 2026
Read time
10 min read
Progress0%

"If you're not wounded somehow, flat is the new up. If you have survived, these are the moments to make the difference." - Ozan Tarman [00:12:36]

"Pain trade is when that hurt gets a belief in a trade so much, and when it works just the other way around." - Ozan Tarman [00:13:43]

"If this continues like this... we may very soon be at a point when some of these Asian countries can say 'Look, I need to give energy and fuel... to my households, sorry I have to choose.'" - Ozan Tarman [00:32:47]

"You can trade oil futures and assume that they're not going to have to take delivery at some point, but at the same time, if you're after the physical barrels like you can't get those at the moment." - Tracy Alloway [00:36:41]


Speakers & Credentials

  • Joe Weisenthal: Co-host of Bloomberg's Odd Lots podcast.
  • Tracy Alloway: Co-host of Bloomberg's Odd Lots podcast.
  • Ozan Tarman: Vice Chair of Global Macro at Deutsche Bank. Highly plugged into the global institutional capital network, he regularly hosts global macro dinners to gauge institutional sentiment (Tour locations include: London, Geneva, Milan, Miami, Budapest, New York City, Montreal, Copenhagen, Riyadh, Doha, Dubai).

1. Executive Summary

  • The briefing analyzes a highly volatile period of market dislocation driven by a major geopolitical conflict with Iran, contrasting apocalyptic physical supply realities with shockingly muted paper market reactions.
  • Prior to the conflict, global capital was heavily crowded into a "Goldilocks" consensus trade betting on aggressive rate cuts, a softer US dollar, and massive AI-driven productivity gains.
  • The sudden outbreak of war resulted in violent technical liquidations of highly profitable positions (such as Gold and Emerging Markets) as funds frantically raised defensive cash and braced for systemic "warflation."
  • A severe disconnect has emerged in the oil markets: despite warnings of extreme physical constraints, 10 million barrels of shut-ins, and Hormuz closures, front-month Brent crude is trading relatively flat below $99.
  • Europe faces a structural economic threat to its "Make Europe Great Again" thesis due to an embedded reliance on energy imports, while Asian economies brace for potential physical energy rationing.
  • Traders are actively struggling with epistemic boundaries, attempting to price asset models while navigating an onslaught of AI-generated propaganda and unverified diplomatic backchannel headlines.
  • Ultimately, the environment is defined by severe tail risks and institutional fear, prompting a widespread macro philosophy that "flat is the new up" until the fog of war clears.

2. Chronological Table of Contents

  • [00:00:45] Market-Moving Headlines & The Fog of War
  • [00:04:09] Introducing Ozan Tarman & Global Institutional Sentiment
  • [00:07:10] The Pivot: From AI Optimism to "Warflation" Capitulation
  • [00:09:11] The Unwinding of Gold and Crowded Consensus Winners
  • [00:13:10] Defining the "Pain Trade" and Dollar Dynamics
  • [00:16:00] The Structural Threat to Europe's Industrial Economy
  • [00:18:07] The Grand Disconnect: Physical Oil vs. Paper Futures
  • [00:27:50] Contagion Risks: The Private Credit Blind Spot
  • [00:32:05] Reaccelerating Inflation & The Specter of Energy Rationing
  • [00:36:41] Physical vs. Paper Disconnect & Final Survival Thoughts

3. Detailed Thematic Summary

Fog of War and Headline-Driven Algorithms [00:00:45]

  • Markets are currently fluctuating entirely on algorithmic responses to diplomatic updates, such as the FARS news agency declaring that Iran has no interest in a ceasefire [00:00:45].
  • Institutional traders face immense difficulties judging the fundamental progress of the war, relying heavily on contradictory statements, such as the claim that Donald Trump received an "extremely valuable prize" from the Iranian regime [00:02:20].
  • The information environment is severely polluted; institutional capital is actively being forced to parse through highly complex propaganda, including AI-generated Lego memes used by both sides to project strength [00:23:28].

The Violent Pivot from AI Optimism to Capitulation [00:07:10]

  • In the days leading up to the conflict (February 27, 2026), the prevailing macro obsession among capital managers in Miami and Palm Beach was AI productivity, underpinned by projections from names like Chuck Schumer that 50% of white-collar jobs could be automated away within 12 to 18 months [00:07:31].
  • The pre-war consensus strongly expected rate cuts; the US 10-year yield closed comfortably at 3.93% right before the outbreak, indicating markets were pricing in a pristine "bull flattener" scenario [00:08:10].
  • The onset of war entirely shattered this positioning. Pre-conflict pricing implied four rate cuts for both the Bank of England and the ECB; almost overnight, market expectations aggressively compressed to below three cuts, driving violent pod shop liquidations [00:11:23].
  • Funds abandoned pristine economic scenarios to defensively price in "warflation," completely altering the global monetary outlook [00:11:00].

Technical Unwinds and the Mechanics of the "Pain Trade" [00:13:10]

  • When a massive geopolitical shock occurs, funds do not initially sell their losers; they are forced to liquidate their most crowded "winners." Gold, which had seen a relentless bid from $3,800/oz in September to over $5,500/oz in February, suffered an immediate 10-day selloff [00:09:11].
  • Ozan Tarman describes the "Pain Trade" as instances where momentum and structural positioning completely overpower fundamentals. Many funds were heavily shorting the US Dollar on a structural de-dollarization thesis, but were brutally squeezed as safe-haven flows pushed the dollar toward the 110-111 level [00:14:02].
  • Global reserve managers from China, Turkey, and India actively re-adjusted physical reserves in response to these rapid technical unwinds [00:10:38].

The Oil Disconnect: Physical Supply Atrophy vs. Paper Pricing [00:18:07]

  • An extraordinary gap currently exists between the physical commodity markets and financial futures. Despite severe macro threats of a Strait of Hormuz closure and a massive 10 million barrels of physical shut-ins already recorded, Brent Crude remained suppressed largely beneath $99 [00:20:00].
  • This pricing reflects paper traders banking on a swift ceasefire, standing in stark contrast to March 2022, when Brent Crude briefly spiked to $139 on inflation fears alone [00:18:07].
  • The cognitive dissonance implies that financial participants utilizing front-month futures (one-month duration) are content to ignore the dire realities of long-term physical delivery constraints, banking that they will simply roll out of the trade before the physical squeeze materializes [00:37:19].
  • Traders staring at the VIX curve are recognizing a regime of "bad volatility" where risk is too opaque to reliably underwrite [00:38:31].

Systemic Headwinds: European Fragility, Asian Rationing & Private Credit [00:16:00]

  • The "Make Europe Great Again" trade has been severely undermined by the continent's structural reliance on energy imports. Based on George Saravelos's FX formula (2/3 oil price + 1/3 gas price), the Euro fundamentally should trade at 1.1250-1.13, yet it refuses to rally due to these systemic vulnerabilities [00:16:00].
  • The cascading effect of "warflation" poses catastrophic threats to Asian manufacturing hubs. Prolonged conflict will force state authorities to enforce energy rationing, physically deciding whether to allocate limited electricity to vital corporate supply chains or residential consumers [00:32:47].
  • Beneath the geopolitical surface, a silent tightening of financial conditions is emerging in Private Credit. Despite industry heavyweights like Ares and Apollo curbing withdrawals and claiming these limitations are "features, not bugs," underlying illiquidity risks spilling over to pressure public equities, leading to questions if analysts like Binky will stick to an 8,000 target for the broader market [00:30:17].

The Reference Vault

4. Data & Figures

Data PointValueContextTimestamp
Gold Price (September)~$3,800/ozThe baseline price of gold observed during Ozan's previous podcast appearance before the relentless massive bid.[00:09:11]
Gold Price Peak (February)>$5,500/ozThe massive crowded peak of gold pricing immediately prior to the start of the conflict.[00:09:11]
Gold Selloff Duration10 daysThe aggressive liquidation window as crowded investors unwound their winning positions for cash.[00:09:11]
Projected Job Automation50%Pre-war consensus estimate of white-collar jobs lost to AI within the next 12 to 18 months.[00:07:31]

5. Core Frameworks & Mental Models

  • The "Pain Trade" Theory: A market dynamic where speculative crowding and extreme positioning become the primary drivers of asset pricing, overriding fundamental realities. When a shock hits, the herd is trapped on one side of the boat, resulting in explosive reversals that cause maximum financial pain to consensus managers. Used to explain the abrupt strength of the US Dollar and the selloff in Gold. [00:13:10]
  • Physical vs. Paper Disconnect: A framework highlighting the temporal divergence between financial futures markets and physical supply chains. Financial actors trading front-month oil (with one month to expiration) price assets based on assumptions of near-term diplomatic resolutions and liquidity, completely ignoring the structural reality of multi-year pipeline deficits that physical operators are attempting to hedge against. [00:36:41]
  • George Saravelos's EUR/USD Energy Model: A macro-valuation heuristic asserting that the Euro-to-Dollar exchange rate can be roughly modeled via a ratio of two-thirds global oil price and one-third global natural gas price. Applied in the context of Europe's extreme vulnerability to imported energy inflation ("warflation"). [00:16:00]
  • "Flat is the New Up" (Survival Alpha): In environments of extreme exogenous "bad volatility" and systemic risk (like the unforecastable headline whiplash of active war), simply maintaining neutral capital preservation and avoiding massive drawdowns equates to relative outperformance over aggressive, directional pod-shop trading. [00:12:36]

6. Anecdotes

  • The Pre-War AI Obsession in Palm Beach: Just days before the conflict drastically reshaped the global macro environment, Ozan Tarman was in Miami and Palm Beach where the absolute sole focus of top-tier US clients was AI research, rate cuts, and job automation models, highlighting how utterly blind-sided the financial consensus was by physical geopolitics. [00:07:31]
  • The February 2020 S&P 500 Parallel: A legendary macro client explicitly compared the current market denial regarding the Iran war to early February 2020. Even as clear physical evidence of the COVID-19 pandemic shutting down China circulated globally, the S&P 500 stubbornly ground to new all-time highs before violently crashing. [00:08:39]
  • The "MIT Russian Friend" Oil Warning: An ex-colleague and MIT graduate currently working as a massive physical commodity trader sent a stark mathematical warning: if the Strait of Hormuz does not reopen within one month, the physical global economy faces an insurmountable catastrophic deficit that financial markets are completely mispricing. [00:19:40]
  • Taliban "Soy Boy" WhatsApp Memes: To illustrate the absurdity of the modern information war, an anecdote was shared about an individual in Afghanistan receiving WhatsApp messages from Taliban members consisting of AI-generated "Pepe the Frog" memes and internet slang ("soy boy"), demonstrating how homogenized and bizarre psychological operations have become for traders trying to interpret geopolitical risk. [00:19:11]

7. References & Recommendations

  • People: Donald Trump, George Saravelos (Head of FX Strategy, Deutsche Bank), Jeff Curry (Commodities Analyst), Rory Johnston (Oil Analyst/Researcher), Madame Lagarde (ECB President), Jerome Powell (Fed Chairman), Chuck Schumer, Binky.
  • Companies / Institutions: Deutsche Bank, Apollo Global Management, Ares Management, FARS News Agency, Bank of England, European Central Bank (ECB), Millennium Management, Northern Rock, BBC.
  • Geopolitical Locations / Concepts: Strait of Hormuz, Kharg Island, Qatar LNG, Asian Refiners, Pipeline to Red Sea, "Warflation", "Make Europe Great Again" (MEGA).

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US 10-Year Yield3.93%The closing yield on February 27th before the outbreak of the war, pricing in disinflation.[00:08:10]
BoE & ECB Rate Cuts (Pre-War)~4The aggressive easing cycle priced into European rates prior to the geopolitical shock.[00:11:23]
BoE & ECB Rate Cuts (Post-War)<3The rapid hawkish repricing of monetary expectations due to immediate "warflation" concerns.[00:11:23]
US Dollar Safe Haven Target110-111The "pain trade" squeeze upward for the USD, defying the previously crowded de-dollarization thesis.[00:14:02]
EUR/USD Model Target1.1250-1.13The fundamental trading range based on George Saravelos's 2/3 oil and 1/3 gas price metric.[00:16:00]
Brent Crude Peak (Mar 2022)$139Historical peak used to contrast against current heavily suppressed war-time oil pricing.[00:18:07]
Brent Crude (Current)<$99Stable paper pricing despite severe macro threats and active Middle Eastern conflict.[00:18:07]
Physical Oil Shut-ins10 million bblsEstimated magnitude of crude supply removed from the physical market due to regional escalations.[00:20:00]
Market Target (Binky)8,000The strategist's high-water target that could be at risk if private credit illiquidity forces public market selling.[00:30:17]