Blain’s Morning Porridge May 8^th, 2026 – 81 years later what have we learnt?

“War is the unfolding of miscalculations.”

Today is the 81^st anniversary of VE Day – the end of the Second World War in Europe. Markets are fixated on rising stock prices and probably won’t notice. Complacency is the danger. The Wars in Ukraine and Iran highlight success and failure and point towards a very different future world than the expected one. There are massive implications for markets – but that’s a tomorrow problem for markets focused on “now”.

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I try to catch “shifts” in The Morning Porridge – seeking to contextualise the significance of events across investment and trading. (I guess I always was a frustrated journalist.) I glean and refine my thoughts from the chats I have with clients, and the stuff I read while doing my day job – working to advise and finance on private capital assets, and increasingly on the defence fund, Spitfire Strategic Capital.

If there is an overarching theme to The World (in the three short hours I put aside early each morning to scribble the Porridge), it’s how swiftly expectations can change. That has never been truer than it is today. Ukraine was expected to be overrun in just a few days. Iran was going to beaten into submission to Trump’s will over a similar time frame. How these wars play out will have enormous future consequences.

While the world’s stock markets are busily speculating on the potential future income streams from AI, Compute, Data Centre Infrastructure, and other “maybe’s”, the most impressive nation on Earth is Ukraine. They don’t talk much. They actually do stuff. They have held back the Russian hordes through skill, bravery and innovation. They have done it by turning the state into an effective, latteral thinking, adaptive economy. They now lead the World in the new technologies of Warfare. They don’t build tanks, ships of planes, but they’ve built a lateralised economy to make superb kit which is effective, cheap, good enough and defines the modern battlespace.

There is a distinct change in the air when it comes to how the media are reporting the Ukraine conflict. Suddenly it’s not about Kiev’s weakness. Now it’s all about how vulnerable Putin has become to growing discontent and the collapsing economy in Russia. It may be fake news, but the 1917 revolution happened at speed as armies collapsed and workers mutinied. The Russian armed forces have proved far less effective and even more poorly led than Western analysts thought.

Last month there was a defence conference in Kiev. In the basement was an exhibition showcasing what the Ukrainians have done in terms of terms of defining the new battlespace. I am told a NATO General was stunned by what he saw: he looked around at the kit and the prices and commented: “for 1/10^th of the budget I could equip the army of tomorrow and not spend it all on the army of yesterday”.

Ukraine is succeeding in the battlespace because they are by-passing bureaucracy and innovating at speed. What takes months and years elsewhere in Europe, now takes days to design, build, test and deploy in Ukraine. And they admit the Russians are getter better and swifter at innovation as well, swiftly countering what they introduce and finding new ways to fight. They see the battlespace as evolutionary.

Ukraine’s commanders remain very aware they face enormous challenges and the criticality of not allowing the war to become attritional on their limited forces – with the average age of the Ukrainian servicemen and women in the 50s, they can’t squander them. They are now focused on ground based automated drones to take and hold territory – knowing that’s what actually counts: boots (even automated ones) on the ground and flags to mark it.

Ukraine has been a massive shock for the West. Europe is still waking up to the reality there was no post cold-war peace dividend – just a time-out. We now understand how Russia has successfully manoeuvred populist politics thru media manipulation and fake news to ensure a polarising isolationist with limited experience – like Trump – would split NATO. It was a campaign they executed with genius.

War planners in Europe are very aware around 65% of major-programme defence spending is currently propping up US defence primes. While they will need tanks and planes to defend themselves, learning from Ukraine looks a better bet in the short run. Long-term, Europe will become independent of the US.

Change indeed. The world’s perception of conflict risk and economic instability has reawakened. It should be the 1930s all-over-again as nations wake up to the rising global conflict threats and the reality that avoiding war means being prepared to fight.

Yet, the dance band on the Titanic is still playing catchy tunes as the waiters pour the bubbles in LA. I found myself laughing out loud at the absurdity coming out of the Milken Institute conference this week. As US chum told me money and bankers are fleeting New York for the “sanctuary” of Miami because of the threat it’s left-wing major, Zoran Mamdani, poses to their safety and their wealth. (I would hazard to say; less of a threat then ICE officers pose to US citizens…)

The FT covered the event and wrote: “investors, bankers and corporate chieftains” at the event… “have become desensitised to President Trump’s whims.” It quoted a banker asking: “does anyone really care if the Strait of Hormuz is open.” The titans of finance are much more concerned about how much higher stocks are going, and how more their personal portfolios will rise from IPOs as a soaring stock market might allow exits from their stalled Private Equity portfolios.

Oh dear… the US may be Rome in 409 AD – with little idea of what is coming their way. (Atilla the Rangers-supporter sacked Rome the following year… the greatest empire on Earth had fallen.)

While America’s wealthy party-on, and Trump’s loyal MAGA-fan base wonder why they are broke, it’s clear the world is changed. What’s clear is that Trump has accelerated the demise of the American age, exceptionalism and economic power. (Trump is not the problem – he is just another symptom.)

It now 110% clear (note the use of Trump-math) that Iran has been a massive, ill-advised and ill-considered misjudgement. Nothing is actually solved. The German president nailed it with his comment it has left Trump humiliated. I’ve been told multiple times that my repeated comments about how foolish the war has been means – by Republican thinking – I must support Iran getting Nuclear Bombs, and Islamic terrorism. Nope.

The War has achieved none of whatever its’ objectives might have been. The Iranians will likely exit the war in stronger position, the USA’s Middle East alliances are now as compromised as Nato (the fact the Saudi’s were the ones who refused to countenance Trump’s plan to fight convoys through the Staits of Hormuz confirms they are losing faith), the global economy is dealing with an oil shock, and Iran will probably agree a moratorium on nuclear enrichment of the stash Trump has obliterated 6 or 7 times.

And, in some respects, the denizens of the Milken conference are right. It doesn’t matter because nothing has changed; Iran was and remains a thorn in the flesh of global peace, prosperity and trade. From the perspective of billionaires in LA, it doesn’t matter because stock markets clearly don’t care.

Where it does matter is how it leaves America in the much wider hegemonic struggle with China for global dominance. And that’s where Trump will shortly find himself a minnow swimming in a sea of sharks.

It’s what Trump’s Iran escapade has revealed about the USA that is truly significant:

• The War, which is now 70 days old, has cost at least $1 bln per day – next year Trump is demanding $1.5 trillion for defence budget for a nation $39 trillion in hock.
• The War has emptied at least 25% (probably more) of the US tactical weapons stock – which because the US manufacturing base is so pitifully slow and dependent on imports, could take years to restock.
• US war planners know the vulnerabilities of the US manufacturing base to global supply chains (chips and critical materials) could slow replacement.
• It’s put enormous stress and strain on airframes and warships the US has been able to surge to the Gulf.
• It treated the Chinese to front row seats to how the US would employ its’ military might, and how it would cope with asymmetric warfare like drone attacks. They will have learnt much – including the value the US puts on recovering downed US airmen, which cost at least $500 mm in terms of 2 lost special forces C-130s, 2 Warthogs and 4 choppers. That’s a sensitivity the Chinese will not have missed.
• While the US is wrapped up in Iran, it leaves the doors to Taiwan and the First Island Chain, the Gateway to the Pacific wide open.

When Xi meets (I not sure greet is the right word to use) Trump next week, the Chinese leader will reveal he holds all the aces: military power, energy security, rare earths and productive capacity, and the increasing strength of China’s alliances, which now included both Pakistan and India.

Trump will find himself the supplicant.

Interesting times ahead.

Out of time and back to the day job, and have a great weekend..

Bill Blain

Author of the Morning Porridge
CEO Windshift Capital
Advisor – Spitfire Strategic Capital

Please don’t forget about my new book, The Battle For Hamble. It’s a proper grown-up examination of how bureaucracy has failed: a tale of Greedy Corporates, Bad Planning and Economic Illiteracy. It explains how a wholly unnecessary Gravel Quarry will be dug in middle of a prosperous village – putting 6000 jobs at risk. The truth is no one wants gravel, and the quarry company understands it’s not what you dig out, but what you stuff back into a hole in the ground that matters. Gravel sells for £30 a tonne – Landfill earns £150 a tonne to bury. Go figure.