Clearly the initial assumption that US can eliminate the leadership and the regime will fold has not materialized. US is able to eliminate leadership, but the regime survived. US and Israel has extensively attacked, yet Iran is still able to control the strait. This war has legs and going to continue for many more months.
- So far nations were drawing down supplies, excess supplies to keep the prices down
- Price is going to continue to go up
- US congress passed an ill-advised bill of 100% tariffs on select 4 countries for their Russian oil purchase
- Of course it is not going to take the Russian oil from the market, rather US is trying to force Russian oil to EU
- But EU doesn’t have refining capacity!
- Ukraine is destroying Russian refining capacity.
- Now, circle back, banning Russian oil to India, China means you are forcing Oil prices to go up
- When oil prices go up, prices of all things go up, i.e., pervasive inflation
- A serious food scarcity is brewing; because of paucity of fertilizers
- Fed will continue to raise rates because there is no visibility as to what the US end goals are or when they will be achieved
- A typical Republican crashing of economy will happen by the end of Trump’s term. The AI capex boom coming to an end, Trump inflation, higher rates driving credit cycle, a perfect storm to bring the economy down.
The bias is towards capital preservation.