The US media simply amplifies what they are told and lacks any responsibility to explain the truth partly because our media lacks knowledge needed to do their job competently.

Oil prices are suppressed even though they are high. It is not difficult to suppress them when you can maintain supply at the pump. But allowing prices to continue to climb would extend the time we actually have gas at the pump.

We are in the final phase of supply. We are rapidly depleting inventories and the SPR now that no new oil shipments are arriving. We are also exporting our inventory at a much more rapid pace than we produce.

The reverse tsunami hits at the end of June at this pace. Someone used the 4th of July as the date and that is not a bad way to think of it. The first wave is operational stress. The final wave hits in September when “useable” inventories hit zero and damage is done if you keep draining them.

What happens if the strait opens up fully tomorrow? It will take 3 months to delivery. So August. So operational stress is baked into the cake.

Another month at this level of drain takes us to September and it will be challenging.

The problem, of course, is not all inventories are equal. Some refineries and countries will hit critical levels this summer. While the US has more inventories for most refineries, we are exporting those at a pace of 3 million barrels a day to save other countries from the disaster we created.

There are other shortages too. Once we get through this backwards looking earnings announcement season, we move into forward looking news. The big earners are oil (go figure) and semis (AI bubble). Oil profits will reverse once the strait is open, or we run out of inventory.

The AI bubble is harder to predict. Retail is rushing in as hedge funds sell to them. Will the lack of helium affect the sector? Will retail care? Will the inadequate US power grid stop the madness. Or will there be a winner declared and the other AI companies fold. I have to think the global crisis will accelerate all the above.

Realize when you hear about SP500 profit growth it is all semis and oil. When you hear about US exports growing, it has been our gold inventory and now it will include our oil inventory. These are not positives, but negatives.

A poll showed 74% of Americans think we are winning the war??? I do not know how the question was framed or who they polled, but the actual answer is we are badly losing the war at the Strategic and Grand Strategic level. Our military can kick butt at the tactical and operational level and they have. Let’s discuss my view.

We didn’t topple Iran.
We didn’t “free” its people.
WE didn’t regime change.
The Strait was open, now it’s closed.
Oil was at $55 a barrel, now it’s $100.
The uranium is still in Iran.

Rubio is begging for a return to the way the strait was before we started this war of choice. The WH is trying to get a deal on paper on nukes that is not as good as the one he tore up in Trump 1.0.

Iran and China win the Grand Strategic level longer this goes on. Everything you hear about the ups and downs of negotiations is made up and for the American press and markets. Iran has not budged one inch.

The administration has no good way out. And that reverse tsunami is coming to us and our allies regardless now. BTW, Iran has been shipping oil to China this whole time and getting supplies from China.

I recommend avoiding the TSP I fund (developed world markets). The tsunami hits them first and hard. The TSP I fund has not full participated in the latest rally and I expect it rolls over first when reality hits. Hell, if we could short it in the TSP funds, I would.

There are two outcomes to the war. The US backs down and out while trying to claim some sort of victory, but Iran controls the strait and collect tolls and requires gulf oil not to be paid in US dollars. Or…

We go with the ground attack and fully take Iran which takes many months at best and the world crashes deeply into a depression on the lack of oil, metals, fertilizer, minerals.

The first outcome is bad for the US in the long run, but saves the world economy and maybe the US stock market. The second one destroys the dollar, the stock market and the world economy. Now you see why the administration is flailing.

But the SP500 surged to a new all-time high! Of course. They are pumping money into the markets to create “stability” and the excess flows into the stock market momentum stocks. It relieves selling pressure and squeezes the shorts.

Japan has intervened in their currency four times in the last five days. Indonesia has started too. The US is trying to hold US interest rates at overhead resistance levels because that is where interventions are most effective. The 20 & 30-year yields are now over 5%. The 10-year is the most critical rate.

More sinister is someone in the WH is making bets on oil just prior to all of Trump’s social media post saying the war is over and Iran is dealing with us. No they are not but the algos slam oil prices down on these headlines and anyone shorting oil makes a quick profit.

Half a billion dollars have been made trading Trump’s social media post before he hits send. Someone in the room?

Yeah, do not expect an investigation. Do not expect a release of any files. Do not expect much at all.

So the market could continue to surge on liquidity pumps into the most highly valued market in world history. The other side of this will be hell.

Categories: Perspectives