Good Morning, Vietnam
Hormuz, Supply Chains, The Videos Of The Week & Why Some Are Predicting Famine Later This Year
The Pizza Index was exploding last night (and the gay bars are empty), so it seems like we might be getting boots on the ground in the near future after all. The buildup of troops in the Middle East certainly seems to suggest that we are going to ramp things up from here instead of coming to a resolution. The good news is that our “greatest ally” won’t be contributing any ground troops if we do see US boots on the ground. Supposedly there is a plan to escort 20 tankers through the Strait starting tomorrow morning (and oil prices didn’t care with that headline). We now have more than 50,000 troops in the Middle East, and it seems like that number is going to climb from here.
I have heard some people say that this 8D chess, and that Trump doesn’t want the Strait open yet, but I have a hard time seeing how the last month in the Middle East is going to plan. There is news that several refueling and radar planes were damaged or destroyed at the Prince Sultan Air Base in Saudi Arabia, the THAAD system they moved from South Korea to Jordan was destroyed, and there are more rumors about the plans for Kharg Island and what the US has in store on that front. We have started targeting Iranian electricity infrastructure, and now Iran has hit Kuwait’s largest desalination plant, which accounts for almost 40% of their desalination capacity.
Many of the 13 military bases in the region used by American troops are all but uninhabitable, with the ones in Kuwait, which is next door to Iran, suffering perhaps the most damage. Six U.S. service members were killed in a strike on Port Shuaiba that destroyed an Army tactical operations center. Iranian drones and missiles also targeted Ali Al Salem Air Base, damaging aircraft structures and injuring personnel, and Camp Buehring, damaging maintenance and fuel facilities.
- Iran’s Attacks Force U.S. Troops to Work Remotely, New York Times
The Bahrain Refinery, with a capacity of 400,000 barrels per day, is now gone. Multiple aluminum operations in the Middle East have been targeted, and Airgas, one of the largest distributors of gases in the US, has declared force majeure for helium deliveries. People have pointed out that helium is crucial for semiconductor supply chains, but it’s also important for different medical and space applications. The silver lining is that Iran hit the pharmaceutical plant in Israel that makes puberty blockers, so there is that. I’m sure I’m missing several important events of the last week, but the point is that things are moving very quickly now, and the events of the last month are going to be felt for months, if not years.
As Micheal Yon likes to say, war expands, and war expands unpredictably. He is also predicting a large famine, as several large Russian fertilizer operations have been hit recently with the ongoing conflict with Ukraine. With everything going on now in the Middle East, it’s hard to overstate how ugly supply chains could be before the end of the year. I know I’m starting to sound like a broken record on this topic, but I think it’s prudent to at least stockpile food and water, because things aren’t going to get cheaper in coming months.
Jay Martin Show w/ Luke Gromen & Grant Williams
This was my favorite podcast of the week on financial markets, and they explain why the current situation is simultaneously the easiest and hardest time for macro. As long as Hormuz is closed, nothing else matters. That’s the elephant in the room, but they also cover the media environment, the fog of war, and the propaganda usage on both sides. For all of the stuff that has happened in recent weeks, the US is actually the least impacted by Hormuz closure of any of the major players. I’m not sure when exactly it was recorded, but it looks like a lot of the stuff they talked about has happened this weekend.
Apparently there are rumors from people on the ground that things are worse than we are hearing, which ties into the fog of war topic and is something I discussed last week with Veles. They covered how Russia benefits and where China stands, what the unsanctioning of Russian and Iranian oil means, and how it shows the lack of preparation from US leaders. The changes in the financial and economic systems was where they wrapped up, and they covered why all roads lead to gold, and how most of the market is very complacent about the potential chain reaction that could be coming.
The Tucker Carlson Show w/ Ben Gibney
This one isn’t focused on financial markets, but I think it’s timely with everything going on lately. They talk about the police interrogation footage of Netanyahu, and what is on more than 1,000 hours of tapes. It covered the connections to influential people in the US, and how Netanyahu arranged for the money flowing from Qatar to Hamas. The lead up to October 7th and what happened after. I haven’t seen The Bibi Files yet, but it’s on the list. Conspiracy theorists that have been talking about this for a couple years get another tally in the W column, but for anyone interested in a rabbit hole, this recent Tucker podcast would be a good place to start.
You are by far the most based and funny financial analysist I follow. Please keep it up.
"The Pizza Index was exploding (and the gay bars are empty)"
Nice, we've already got a title for our first protest song.