That was an interesting weekend. Trump announces a blockade that will impact the whole Global Economy – and South East Asia and China in particular. At least Europe got some good news from Hungary. More instability forecast before Trump inevitably TACO’s again. Markets are getting bored of it – which means the consequences could be even more volatile! That could double up No-See-Um Risks.
There is something deeply unstable underlying current markets. They don’t feel right. Something has changed. What could it be? It’s likely to be how Trump’s misjudgements in Iran and over NATO have reset expectations and accelerated the end of the American Age. The implications are huge.
I am delighted to announce the launch of a new book – The Battle of Hamble. It’s an in-depth look at the Hamble Gravel Quarry, an example of everything that is wrong with Broken Britain’s inept planning process, bureaucracy, and how greedy corporates arbitrage the system to their own ends. I’ve written about the quarry many times in the Morning Porridge.
Trump took the Off-Ramp. Markets are soaring, off to the races as the threats of global slowdown, recession and stagflation recede. But, for all the military power and competency on display – it’s a strategic defeat for the USA. That has massive implications for US Assets – Treasuries, Stocks, Investment, Market Confidence and Politics.
We think we know the patterns – how markets resonate and repeat. But…. Do we? Every so often the Earth’s polarity shifts – but its never happened in recorded history so we don’t really know. Every so often the World’s basis changes. Make merry while we can. Enjoy what is real. The rest is just numbers. You are measured not by the digits on your bank balance, but by the numbers of your friends.
Oh dear. Last night’s explanation of the War did not go well. What changed except a more unstable and fractured global economy and rising trade, supply chain and conflict risks? When markets are priced for perfection – what happens when reality intrudes. I see bad things arising.
Hype and reality seldom mix. Elon Musk is the exception that proves the rule. The Space X IPO is set to make him the first trillionaire – but what if Competition is already eating his lunch in space-based datacentres before he’s even looked at the menu? In the Tortoise vs the Hare space race – will Jeff Bezos emerge the winner?
Who needs nukes to win an Oil War when Water is the key? The Front-Line Gulf States are highly vulnerable to a Water War on their desalination plants. Yesterday Trump threatened to strike Iran’s water infrastructure – practically inviting Tehran to strike back! But the Strait of Hormuz is not Iran’s only Ace in the current war.
The global economy is inevitably slowing from the deepening Hormuz oil shock. The Americans intend to press on despite the rising costs. While the global economy burns, President Trump is mulling multiple plans to achieve his version of victory. The rest of the World is waking to the reality this war is damaging their economic interests, and wondering how to mitigate the effects.
The cost of Trump’s War on Iran is extraordinary - $1 bln a day plus. War Stocks are being consumed at incredible speed. A request for an additional $200 bln of funding is in the works. The nature of war has changed – it could prove phenomenally destructive, expensive and ruinous to winners and losers alike. Meanwhile the economic outcomes of the war remain in the balance.
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