There is a famous British saying “Power tends to corrupt, and absolute power corrupts absolutely”. Trump after seeing his loss of face by the SCOTUS decision on IEEPA tariffs rollback is more likely to make a military manoeuvre on Iran than before. Seeing his core policy failure, we believe Trump might be motivated to prove on global stage his authority by announcing a full-fledged war on Iran. Global risk assets are not at all pricing in this likelihood as seen in calm equities when Brent has shot up to $72 per barrel in spite of a weak physical demand supply situation. We looked at where the military assets are lined up in Iran and surround areas from both sides. We believe one can’t have this much of hardware located at one place just for show and no action. While there are valid grounds to think of this show of force as a negotiating tool from Trump, we believe he himself will light the fire if push comes to shove. From the US side, there are 2 carrier strike groups USS Abraham Lincoln (CVN-72) carrier Strike Group in the Arabian Sea & USS Gerald R. Ford (CVN-78): World's largest carrier, deployed with strike group. Then there are at least 12 destroyers along with 3 combat ships. On the airsupport side, more than 120 US aicrafts are currently positioned in & around Iran. These aircrafts include F-22 Raptors and F-35 Lightning IIs for air superiority/strike, F-15E Strike Eagles and F-16 Fighting Falcons, B-2 Spirit stealth bombers (potentially for strikes on hardened targets), surveillance aircrafts such as E-3 Sentry (AWACS), E-11A Battlefield Airborne Communications Nodes, refulers such as KC-135 Stratotankers, KC-46 Pegasus, C-17A Globemaster, and C-5M Galaxy, defence & recon aircrafts such as Navy P-8A Poseidon. Above all this there is missile defence of THAAD & Patriot battery installations. Flight-tracking data shows many departing bases in the US and Europe, supported by cargo aircraft and aerial refuelling tankers, a sign of sustained operational planning rather than routine rotations. So how is Iran responding to it. Iran has built a layered anti-access strategy centered on mines, submarines, anti-ship missiles, swarm craft, and air defenses to complicate any U.S. campaign in the Strait of Hormuz and surrounding waters. The design is less about decisive victory and more about stretching U.S. missile defenses, logistics, and political tolerance long enough to shape escalation on Tehran’s terms. Iran’s defensive design for a clash with the United States is built less around winning decisive naval or air battles and more around manufacturing sustained friction at every layer of the campaign. The intent is to pull U.S. forces into a dense, overlapping threat environment where time, interceptor inventories, and political tolerance become the real centers of gravity. Tehran’s architecture aims to force carrier air wings, Aegis destroyers, and regional airbases to fight for access step by step, while its most survivable launchers keep operating after fixed sites and static radars have been hit. The decisive question is not whether Iran can reliably sink a carrier or permanently bar stealth aircraft, but whether it can keep the Strait of Hormuz unsafe, keep U.S. strike packages stressed, and keep U.S. missile defense magazines bleeding long enough to shape escalation on Iran’s terms. Hence, we believe that if US/Israel attacks Iran in the current standoff, it might be a long drawn low intensity war. Iran had learnt it’s lessons well from the last year’s 12-day attacks from Israel. The level of Iranian preparedness we are witnessing in satellite photos as well as defence radio chatter is symbolic of Iran ready for a long-drawn war. It is US-Israeli military might versus Iran’s multi theatre low intensity defence. If our assumptions on Trump’s current frame of mind are correct, we should expect an attack soon in Iran in the next few days itself. Global equities can see 10-15% correction as the war prolongs much beyond every one’s imagination. Initially the 10yr UST yields might drop due to risk off but as brent goes above 85/90 levels, there might be massive selling in US assets as inflation fears take centre stage. DXY might strengthen initially but finally fall.
