Suddenly global markets are reeling – waking up to the reality of the unwinnable Iran War. What will a dramatic shift in sentiment mean for stocks, bonds and commodities as stagflation beckons, and Trump finds himself isolated? There is a growing risk of a liquidity shock to global markets.

While global markets are fixated on the Gulf, cast a weather eye on the Eastern Pacific where a Super El Nino climate event is developing. It could lead to Climate Whiplash events in terms of flood, storms and drought, food inflation and increasing migration tensions. It never rains, but it pours – and that’s not necessarily good for the most important commodity on the planet: Water!

The War in Iran is a kinetic feature of the economic/hegemonic struggle between the USA and China. President Trump will lose because his Iran war is unwinnable. Iran won’t lose because it does doesn’t have to win. That’s a recipe for a forever war, and a definition of asymmetric warfare. The likely winner of a wider Economic War will be China. Energy and Supply Chains will determine the future.

Pretty much as was expected Donald Trump has declared his war almost over. Its not. It has destabilised the global economy. What might be roiled in its wake? One area to watch is how a liquidity default-storm in Private Credit could infect global bond and equity markets, causing a global market crisis.

Global disruption – how likely is it to end quickly? Trump’s objective was to install a regime that will do his bidding in Iran. The appointment of Khamenei v2.0, the lack of a clear opposition, or defectors, makes a swift closure increasingly less likely. Global markets are pricing for a long, destabilising war with rising inflationary and geopolitical volatility.

Markets aren’t much concerned about Iran. US Military might is expected to prevail, cowing the Ayatollahs into acceptance of Trump’s maximalist demands. What could possibly go wrong? Trump is no student of history, and may not understand the gamut of military, logistical and geopolitical risks aligned against him.

Concepts about global law and order were left by the wayside over the weekend – Trump’s administration delivered what it said it would in terms of America First, Western Hemisphere focus. Do Venezuela and Iran raise or diminish the risks of Global Conflict in 2026. What comes next?

The Chinese curse about living in “interesting times” is a boon to anyone fascinated by markets. There is no shortage of excitement coming our way next year – everything from conflict threats, renewed inflation, the return of QE, to the Space X IPO. But the thing is… we really don’t know….. we never have!

The end of the exceptional American Century is happening faster than we think. America is dispensing with friends and allies, and American Tech leadership is no longer unquestioned. It spells rising instability and threats. Defence has never been more critical as Europe seeks to define its future.

This morning’s meeting in Busan, Korea was short and sweet. Goal achieved - the global meltdown that would have followed a rare-earth embargo by China has been avoided. What is more interesting is how it could change the current power set-up in Washington as Scott Bessent and Marco Rubio increasingly take centre stage.