"History doesn't repeat… but it rhymes." — Mark Twain
◉ THE PRESENT
Late Friday night, President Trump signed an executive order waiving the Graham Act sanctions on Russia — the bipartisan law he himself had signed into law just four weeks earlier — hours before new tariffs of up to 100 percent on Russian crude importers were set to kick in. Brent crude, which had touched $110.70 on Monday for a five-month high, dropped to $108.20 by Monday morning and kept sliding. The Dow slipped 36 points on Tuesday as falling oil prices failed to offset 5-percent Treasury yields in a market that had shed 1.6 percent in the prior week. Tonight, after the close, Meta and Tesla report earnings into a market still caught between falling oil and rising yields — the Strait of Hormuz is still half-shut, the Fed meets in seven days, and the last time a president pulled this exact move, it did not end the way the bulls expected.
Brent: $108.20 (off $110.70 high) | WTI: $97.52 | S&P 500: 7,691 | Dow: 51,966 (−36 Tue) | 10Y: 5.12% | Fed rate: 3.75–4.00% | Next FOMC: Oct 28
Eight years ago, almost to the week, Trump pulled the same lever on a different country. The market loved it for about three days.
◉ THE ECHO — AUGUST 25, 1987
The President Wanted Cheap Gas. He Got a Crash Instead.
It started with a tweet on a Saturday morning. June 30, 2018. Trump told the world he had spoken with Saudi King Salman and that the king had agreed to pump more oil — maybe up to two million barrels a day more — to make up for the Iranian crude that was about to disappear under American sanctions. The Saudis confirmed they had talked. They did not confirm the number. But they started pumping anyway, because the alternative was to let Iranian hardliners claim that American sanctions didn't work, and Crown Prince Mohammed bin Salman had no interest in giving Tehran that gift.
All summer and into the fall, the global supply machine cranked. Saudi Arabia, Russia, and the United States pushed their combined output past 33 million barrels per day for the first time in history. WTI crude sat at $76.40 a barrel on October 3rd, a four-year high, because everyone on the trading floor still believed that on November 5th, when sanctions officially snapped back, Iranian barrels would vanish and the market would tighten further. Hedge funds were long crude in record numbers. The trade was simple: Iran goes dark, supply shrinks, price goes up.
Then Trump pulled the rug. On November 2nd, a Friday, the State Department announced that eight countries — including China and India — would receive waivers allowing them to keep buying Iranian oil. The sanctions that were supposed to remove 1.3 million barrels a day from the market would remove almost none. Saudi Arabia had already flooded the zone with extra supply to fill a gap that no longer existed. Oil traders woke up Monday morning to a world with too much crude in it and no reason to hold their positions. WTI dropped to $63.10 on November 5th. It had been $76.40 just four weeks earlier, and the slide was only getting started.
The irony was acid. Oil analysts at the time said the Saudis had been "duped" and "snookered" — they had increased production at America's request, and then America made the production unnecessary by letting Iran keep selling. Within weeks the oversupply turned into a rout. WTI fell through $60 in mid-November, through $50 by mid-December, and cratered to $42.53 on Christmas Eve, the same day the S&P 500 hit its low at 2,351, down nearly 20 percent from its September record of 2,930. The Fed had hiked rates on December 19th — its fourth hike of the year, lifting the target to 2.25–2.50 percent — and the combination of crashing oil, rising rates, and a trade war with China brought the entire stock market to the edge of a bear.
It took Jerome Powell walking to a podium in January 2019 and essentially saying the words "we'll be patient" to stop the bleeding. By April 23rd, the S&P 500 hit a new all-time high. The whole crash — nearly 20 percent — and the whole recovery had happened in seven months. But between September and Christmas, the pain was real, the 401(k) statements were ugly, and the people who bought the initial relief rally in early November were the ones who got hurt the worst.
◉ THE RHYME — WHAT'S IDENTICAL
Both times, a president used sanctions waivers to push oil prices down — and both times, falling oil masked a market that was more fragile than it looked.
◉ THE DIVERGENCE — WHAT'S DIFFERENT THIS TIME
In 2018 the oversupply was real. Saudi Arabia, Russia, and the U.S. were producing at record levels simultaneously. In 2026, the Strait of Hormuz remains a chokepoint — Iran's naval provocations and Houthi strikes on Saudi infrastructure are still disrupting physical flows. The sanctions waiver adds Russian barrels in theory, but the shipping lanes that carry Middle Eastern crude are still under threat. Oil has a floor this time that it didn't have in November 2018.
The rate level is higher. The Fed sat at 2.00–2.25 percent in October 2018. Today it sits at 3.75–4.00 percent, with the 10-year Treasury above 5 percent. The economy in 2018 was growing at 3 percent with unemployment below 4 percent. The economy in 2026 is showing cracks — consumer confidence at 81.9, housing starts falling, auto loan rates at 7.4 percent. A Fed mistake at this altitude would do more damage than it did eight years ago.
In 2018, the trade war was with China over tariffs on steel and soybeans. In 2026, the trade war has expanded into AI chips, data centers, and the entire technology supply chain. CoreWeave's bonds are trading below 80 cents. The AI infrastructure debt bubble didn't exist in 2018, and it represents a layer of fragility that has no analog in the earlier period.
The political context is different. In 2018, Congress mostly stayed on the sidelines when Trump granted Iran waivers. In 2026, the Graham Act passed with overwhelming bipartisan support, and Trump waived a law named after a deceased Republican senator who was once his closest ally. McConnell, Tillis, Collins, and Cornyn have already spoken out. If Congress pushes back hard enough to override, the supply picture reverses overnight, and oil goes right back above $110.
◉ THE RECKONING — WHAT HAPPENS NEXT
Here is what happened next in 2018, in exact order. On November 5th, the day the Iran waivers took effect, WTI closed at $63.10 and the market exhaled. For about a week, stocks held. Traders told themselves the story that lower oil meant lower inflation meant the Fed could stop hiking. It was a reasonable story. It was also wrong.
Because what happened next was not one thing but three things colliding. First, oil didn't stabilize at $63 — it kept falling, through $55 in late November, through $50 in mid-December, as the oversupply that Trump had engineered became self-reinforcing. Hedge funds unwound massive long positions in crude futures, and every wave of selling triggered the next wave. Second, the trade war with China escalated after the G-20 summit in Buenos Aires failed to produce a deal. Third, and most critically, the Fed hiked rates on December 19th to 2.25–2.50 percent. Jerome Powell held a press conference and said the balance sheet runoff was on "autopilot." The market heard "autopilot" and hit the sell button. The S&P 500 fell 7.7 percent in the four trading days between the Fed meeting and Christmas Eve. WTI hit $42.53 on December 24th. The S&P touched 2,351. It was the worst December for stocks since the Great Depression.
The recovery started with a single sentence. In early January 2019, Powell told an audience in Atlanta that the Fed would be "patient" with rate hikes, and the market pivoted on a dime. Stocks rallied through January, February, March. By April 23rd, the S&P 500 had recovered every penny and hit a new record. The whole nightmare lasted four months.
The pattern today is not identical, but the sequence has started. Trump used a sanctions waiver to push oil down. The market is testing whether cheaper oil is enough. The Fed meets in seven days. Kevin Warsh hiked rates five weeks ago to 3.75–4.00 percent, and the October 28th meeting is a live one. If Warsh hikes again with oil falling and the market stalling, he risks repeating Powell's December 2018 mistake at twice the altitude. If he holds, the market may have found its floor. The difference between those two outcomes is the difference between a correction and a crash.
In 2018, the traders who bought the oil-relief rally in the first week of November and held through the Fed meeting got crushed. The traders who waited to see what the Fed did — and bought the January pivot — caught the fastest recovery in a decade. The calendar says October 28th is the date that matters, not October 21st.
◉ TOMORROW’S WATCH
Meta and Tesla report tonight after the bell. If Meta's AI capital expenditure guidance climbs above $145 billion for the year, watch whether the market treats it as growth or as the kind of spending binge that preceded Nortel's early-2001 profit warning — when the stock lost 80 percent of its value in nine months.
