Blain’s Morning Porridge Feb 24th, 2026: Iran could be the flashpoint for market dislocation
“Do not defy the fates and bring shame on Rome.”
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.
Does the markets’ fixation on AI mean they are missing what might be main event?
In 53 BC Marcus Licinius Crassus, the senior member of the Roman Triumvirate (and richest man in Rome) was nervous of Caesar’s rising popularity from his military successes in Gaul. Crassus led the 7 legions of the Eastern Army into the desert to restore and enhance his own military lustre – incidentally a move made without the approval of the Senate and People of Rome (“SPQR”). His army was annihilated by Persian heavy cavalry and horse archers at the Battle of Carrhae.
Glancing through the stock market commentaries this morning the noise is all about the end of the first soft “industrial” age; the collapse in software stocks – dinosaurs replaced by evolved AI. Investors are wondering how much more damage AI will inflict upon businesses. Every firm that employs folk to actually think is at risk. How the global economy evolves as a result of AI will have profound market implications tomorrow – but today the imminent threat might be elsewhere.
Markets are often blind. Analysts are pitching investment strategies bar-belling the soft side of the economy in terms of hyperscalers and industrials for the hard stuff, while shorting the soft middle. Next up in the tumbril for the AI guillotine will be banks and investment managers, because AI is going to do it all so much better. Quite who the AI Revolution is going to leave in a job, earning enough money to actually consume anything in this new economy, is…. unclear.
Maybe put that stuff aside for a moment.
Today? Buy missile producers, buy tank makers, buy weapons. We might be about to get a thumping great lesson in logistical facts, economic reality, and geopolitical shifts.
Let me explain in a word: Iran.
Like many, I was rather perplexed to read the greatest diplomat of the modern age, Trump’s property developer sidekick, Steve Witkoff, is “curious” that Iran hasn’t capitulated to “the amount of sea power and naval power [they’re different?]” arrayed against them in the Gulf. (Witkoff also echoed the dodgy dossier approach to the Just War scenario to justify his bellicosity: “Iran is probably a week away from having industrial grade bomb material”, which is peculiar as Trump claimed last year he’d bombed their nuclear ambitions back to the stone age.)
Witkoff is overseeing the talks with Tehran, demanding the Persians surrender their nuclear ambitions – or else. The “or else” is the greatest concentration of US power since the Gulf War, set to “unleash hell” on Iran unless they bend to Trump’s will.
An Iranian minister countered: “We haven’t capitulated because we are Iranian.” As Putin discovered in Ukraine… the enemy gets a vote.
For all the talk about what’s good for the repressed people of Iran who want shot of the Revolution, or stopping an evilregime from acquiring nuclear weapons, Iran is much more a threat than is perceived by many. It’s more than just a punch bag for Trump to conveniently demonstrate his global might upon.
Trump is determined to show his strength – buoyed by the success of American arms in kidnapping Maduro from Venezuela, and the raids on Iran’s weapons sites last year. He is acutely aware his domestic lustre is slipping ahead of the looming Mid-Terms, and issues like tariffs, Fed Independence and Epstein are aligning against him.
He is gambling big. America’s power is not limitless – during the recent Iranian protests that saw thousands murdered by the regime, Trump promised them “Help is on its way”. But he couldn’t deliver because Arab states were fearful of counterstrikes and would not allow their airspace used, and his carrier task forces were in the Caribbean. The Arab States understand why Iran’s missile systems have become a significant threat.
Today, much of the USA’s military capacity for force projection is again concentrated in the region. It has to be – Iran is not going to be a 30-minute special forces raid. A meaningful attack will require full force – and will require multiple strikes. Trump has made maximalist demands of Tehran, placing very high stakes on the table.
Does he understand what he is gambling against?
A few weeks ago, I raised the reality of America’s stretched global power when the President last threatened Tehran during the January protests. I was told, by Republican sources, his campaign against Iran was succeeding beyond expectations. His public threat of interventions had forced the Ayatollahs to cancel public executions. I was told he’d won an intelligence coup by forcing the Iranian defence forces to light up all their missile and radar sites ahead of an expected raid for the Americans to log. I was told Psyops were fermenting further internal dissent, and that it’s only a matter of time before sanctions cause the economy to collapse. I was told America controls all the options and Iran is on completely on its own.
It’s not.
Iran is too close to China for any real diplomat to make that mistake. Last year the American raids on Iran overcame “modern” Russian supplied air-defences with ease, suffering zero losses and bombing Iran at will. What if that was deliberate? What if China has been quietly supplying its latest hi-grade, more modern tech radars and SAM systems that can spot and take down Stealth aircraft? If so the prospects change. Even a single captured US airman could prove a strategic humiliation for Trump.
If the Chinese have been supplying upgraded guidance and rocket tech to the Iranian missile forces – effectively upgrading their missiles into potential ballistic carrier killers – then American gulf forces could be in real jeopardy. Putting a US carrier in dry dock for even a few months would dramatically damage the USA’s capability for global force projection. (The Houthis in Yemen came much closer to inflicting significant damage on US naval vessels than is generally acknowledged.) If American carrier groups are sucked into a sustained war versus Iran, it means they aren’t elsewhere, potentially opening the gate to Taiwan in the South China seas.
Iran employing Chinese capabilities is a clear game-changing threat. That may be why the US chairman of the Joint Chiefs, General Dan Caine is said to have raised a second issue, warning Trump about the serious logistical limitations a sustained campaign against Iran would raise. The US is short of THAAD and Patriot missiles, having used 25% of war-stocks defending Israel last year, which could take 2-3 years to replenish. Ukraine has been consuming Patriots faster than they can be built or delivered. Unlike China, the West has been expecting to fight short, sharp wars, not focusing on the lessons from Ukraine about how quickly war-stocks are used up.
Caine is also said to be concerned at the lack of regional enthusiasm for taking out the Iran regime – perhaps even leaving the Republican Guard in place (like Trump has done in Venezuela). There is also the reality these states say all the right things to Trump (and give him bejewelled Jumbo jets) but are also in dialog with China. Were Trump to attack Iran then the Chinese may mount a diplomatic counteroffensive comprising their regional allied supports – including support from the Sub-Continent.
It hasn’t helped that Mick Huckabee, Trump’s Christian fundamentalist ambassador to Israel told Tucker Carlson Israel should own the entire Middle East, according to the bible. The Gulf States called the comments dangerous and inflammatory, warning they increased tensions in Gaza.
Watch Iran carefully. It’s a high stakes game. Middle East war could trigger a destabilising oil-shock. If China can entice the USA into a new sustained long-term war versus Iran, using up resources, further destabilising US politics, and further straining its global relationships… then there is only one winner… and it isn’t Washington.
Out of time, and back to the day job… .
Bill Blain
Author of the Morning Porridge
Advisor – Spitfire Strategic Capital
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“Quite who the AI Revolution is going to leave in a job, earning enough money to actually consume anything in this new economy, is…. unclear.”
This thought has been bothering me as well. And 70% of the U.S. economy is consumer consumption. Therefore, if AI comes good and lots of people lose their well-paid jobs, what? A recession? Or worse?
Useless mouths… ?