What happens to SPX when 1973 X 2000?

Investment Analysis Clubs Macro Economic Trends and Risks
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https://www.nytimes.com/2026/09/11/world/middleeast/yemen-houthis-bab-al-mandab.html

Houthis Capture Crucial Red Sea Island Off Yemen, Officials Say

The Iran-backed militia’s ground offensive has reached the Bab al-Mandab, a Red Sea strait that is a choke point for global trade.

By Adam RasgonShuaib Almosawa and Saeed Al-Batati, The New York Times, Sept. 11, 2026Updated 8:20 a.m. ET

The Houthi militia has seized a strategic Red Sea island, two Yemeni government officials said on Friday, giving the Iranian ally a foothold in a crucial choke point for global trade.

The capture of Perim Island allows the Houthis to exert greater control over energy shipments through the Red Sea, which could further strain the price of oil and gas…

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On Thursday, the Houthi-affiliated foreign ministry said that the group “will not pose a threat” and that they are “prepared to be part of the regional security framework, particularly with regard to protecting maritime navigation.”… [end quote]

Yeah, right. The Iran-backed Houthis will “protect” shipments through the Bab al-Mandab Strait the way the Iranians are protecting shipments through the Strait of Hormuz.

From Brittanica via Gemini:
Before the conflict and the closure of the Strait of Hormuz, the strait handled roughly 20% to 25% of the world’s seaborne oil trade (approximately 20 million barrels per day).

Regarding the Bab al-Mandab Strait: while normal historical traffic accounts for about 10% to 12% of total global seaborne oil shipments, the volume actually flowing through it right now is heavily shifted. Because the closure of the Strait of Hormuz cut off standard Persian Gulf export routes, regional producers have attempted to reroute what they can overland via pipelines to the Red Sea (such as Saudi Arabia’s pipeline to Yanbu). However, overall transit figures through Bab al-Mandab remain constrained and complex due to ongoing security threats and localized flashpoints in the Red Sea corridor. [end quote]

I remember the Arab Oil embargo of 1973 very well. It doesn’t really matter whether the oil is cut off due to OPEC or due to military attacks on shipping. The effect will be the same. The price of oil is already rising and the price of refined products like diesel even faster.

I also remember the very nasty 1973-74 bear market. And the late 1970s inflation driven by the rise in energy prices. The SPX went nowhere in the 1970s but had several vicious corrections embedded in the plateau.

Shifting back to the current situation, interest rates are spiking. This will cost the AI borrowers who are currently the only part of the economy that’s growing. All AI borrowers are out on a limb since their high-profit frontier AI business model is being undermined by low-profit distilled AI and probably future overcapacity (if they follow the well-trodden boom-bust pricing of memory chip manufacturing). Even operating data centers will be more expensive since electricity generation (crucial for data centers) is largely based on hydrocarbons.

All this while the SPX is in a historic bubble.

Be careful out there!

Wendy

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God willing and the creek don’t rise
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It is more important to focus on container shipping through the Bab rather than oil. The Saudi pipeline to the Red Sea has replaced the oil routed through Hormuz and the Bab. The Gulf oil restrictions thus have their major impact on flows to Asia. Europe’s consumption of goods have a large component via container ships.

DB2

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Container shipments of consumer goods to Europe don’t impact the U.S. economy the way the price of oil does.

And many oil tankers are too large to fit through the Suez Canal, not to mention the oil from the pipelines destined for Asia have to go through the Bab el-Mandab Strait.

Wendy

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True enough, but containers are the major impact of the Houthi/Bab dustup rather than the article’s focus on oil.

DB2

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Baaaa-loney. Hormuz typically transited 20m bbl daily, the pipeline can carry 7m bbl, and prior to this fiasco it was already carrying 4m bbl.

I don’t know where your figures are from, but it’s not from planet reality.

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Might be a problem if someone were to attack the pipeline.

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And most of the 4 million was to supply refineries in Saudi Arabia and Egypt. Only about 1 million was shipped off to the European/Mediterranean market. Which explains why the increase in tanker loadings at Yanbu has been over 300%.

So, the increase in tanker flows there has been roughly 5-6 Mbpd. Which makes up for the relatively low amount of oil going through the Bab. To quote Wendy from back in July:
“If the Houthis manage to completely block Saudi Arabia from using the Red Sea, they would take roughly 4 percent of the world’s oil off the global market.”

Well, it wouldn’t be taken off the market, but the indicates a throughput of roughly 4 Mbpd. From another source:
“In 2018, an estimated 6.2 million barrels per day (b/d) of crude oil, condensate, and refined petroleum products flowed through the Bab el-Mandeb Strait”

DB2

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HS2: High Speed Rail in the UK
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Oops.

https://www.wsj.com/world/middle-east/saudi-arabia-shuts-down-pipeline-that-was-a-crucial-hormuz-bypass-4fe29001

Saudi Arabia Shuts Down Pipeline That Was a Crucial Hormuz Bypass

The kingdom said drones fired from Iraq damaged the East-West pipeline, which can carry up to 7 million barrels of oil a day

DUBAI—[Saudi Arabia](https://www.wsj.com/topics/place/saudi-arabia) shut down a crucial pipeline that allowed the kingdom to continue exporting crude oil after Iran closed the Strait of Hormuz, saying it had been attacked multiple times by drones fired from Iraq.

The crucial East-West pipeline can carry up to 7 million barrels of crude a day 750 miles from Saudi Arabia’s oil-producing heartland on the Persian Gulf to the port of Yanbu on the Red Sea. From there, the Saudis had been able to ship millions of barrels of oil to customers around the world.

The Saudi foreign ministry said several drones caused injuries and damage that the kingdom was repairing. It said the drones were fired from Iraq, where authorities have struggled to control Iran-backed militias that have repeatedly targeted Saudi infrastructure. Saudi Arabia, with the U.S., carried out rare airstrikes earlier this year against Iraqi militias, but this time, the foreign ministry said it would refrain from retaliating at Baghdad’s request.

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Have you ever seen such militancy in green energy policy to restrict fossil fuel supply and use?

Are drone attacks more cost effective dollars per CO2 reduction than solar, wind and even carbon sequestration?

The war’s cost to the average American household’s pocketbook is about $1,650 as of last week, a combination of energy, interest rates and the costs of the war, according to Mark Zandi, chief economist at Moody’s Analytic. It’s a number he said grows by the day.

$221 billion = 134 million households x $1,650

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HS2: High Speed Rail in the UK
HS2: High Speed Rail in the UK
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For what it’s worth, the BBC is reporting that the attack on the Saudi pipeline originated from Iraq, not Iran. If true, that means we have another active participant in the fiasco, a nation that will profit from higher oil prices, and which is um, an ally? An enemy? A frenemy?

Yeah, this is going good.

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Nothing particularly new. From earlier this summer…

DB2

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Whew! That’s a relief. For a while I was getting worried that our pointless nine year war in Iraq might actually be over. I sleep easier at night knowing the admin is finding ways to keep it going.

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Iraq has become an Iranian proxy

GoogleAI:

The relationship between Iraq and Iran is highly complex, defined by a powerful network of Iranian-backed militias operating on Iraqi soil rather than the Iraqi state itself being a wholesale proxy. While Tehran exerts massive political, economic, and paramilitary influence through regional factions, the official government in Baghdad frequently struggles to assert its sovereignty and has actively pushed back against being dragged into regional conflicts.

there is more…

The Captain

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I remember when they fought each other almost to the death.

I guess something happened.

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Saddam Hussein dethroned and killed, replaced by Shia?

GoogleAI:

Yes, Saddam Hussein was dethroned, executed, and the governance of Iraq subsequently shifted to a political system heavily dominated by the Shia majority. [1, 2, 3]

1. Dethroned and Executed

  • Dethroned: Saddam Hussein’s Sunni-dominated Ba’athist regime was toppled in April 2003 following a US-led military invasion of Iraq. He was captured by American forces in December 2003. [1, 2, 3]
  • Executed: An Iraqi special tribunal convicted him of crimes against humanity, specifically for ordering the 1982 massacre of 148 Iraqi Shi’ites in the town of Dujail. He was executed by hanging on December 30, 2006 at an Iraqi military base in Baghdad. [1]

2. Replaced by a Shia-Led Government

While Saddam was not replaced by a single dictator, the power dynamic of the country completely flipped:

  • Sectarian Power Shift: Under Saddam Hussein, Iraq’s minority Sunni Arab population held the vast majority of political and military control. After his fall, the United States established a new political structure and constitution that introduced a sectarian quota system. [1, 2, 3]
  • Shia Majority Rule: Because Shia Muslims make up roughly 60% of Iraq’s population, democratic elections held in 2005 naturally led to majorities for religious Shia political parties. [1, 2, 3]
  • The Prime Minister Position: By political convention established after the invasion, the Prime Minister of Iraq—who holds the actual executive and governing authority of the state—is always a Shia Muslim. (The largely ceremonial role of President is held by a Kurd, and the Speaker of Parliament is a Sunni). [1, 2, 3]

Sometimes regime change does not work as expected.

The Captain

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I’ll say most of the time.

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Those Zionists again? LOL

Seriously, deep do do.

There are shortages of diesel/heating oil.

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No we killed about 500k Iraqis, hard to call us a friend.

That was when if we went to war we were reliable. Now there are $50 drones that can nip at us in dozens of wars around the world if we need to be reliable.

We did not change the regime in Venezuela. Interesting approach from a lunatic.