I doubt this war will prevent further weakness in the financial markets after this weekend.
We’re watching the most dangerous escalation sequence of this entire war play out in front of our eyes.
We started with Iran setting conditions:
• Ironclad guarantees this war will never happen again.
• Every U.S. military base in the Middle East shut down.
• Full compensation from the U.S. and Israel for all damage done.
• A complete end on their terms.
This wasn’t a peace offer. This was Iran telling the world what victory looks like to them.
Trump responds with a 48-hour ultimatum. “Open the Strait of Hormuz fully — or the U.S. obliterates Iranian power plants. “Starting with the biggest one first.”
Out the window went “winding down” language. Three weeks of both sides hinting at de-escalation. All now gone in something that looks like a lot more than just a game of chicken.
Iran then raises the stakes. Their military headquarters responded within hours.
“If their energy infrastructure is attacked, ALL energy, IT, and desalination facilities of the U.S. and its allies in the entire region will be targeted.
• Saudi Arabia’s oil fields.
• UAE’s energy grid.
• Gulf desalination plants supplying water to tens of millions.
• U.S. ally infrastructure across the region.
This is now a potential regional catastrophe that can truly collapse the global energy supply chain overnight
• 20% of global oil moves through the Strait of Hormuz
• Gulf energy facilities produce a massive share of the oil markets price themselves off
• Gulf desalination plants are the primary water source for populations of Saudi Arabia, UAE, Kuwait, Qatar. One exchange of strikes takes all of it OFFLINE
• $100 Oil ends up looking very cheap
• Food supply chains that run on fuel collapse within weeks
• Inflation makes the FED’s “Transitory levels look low.
To say this is now deadly serious would be an understatement. Throw out all rules of engagement for financial markets until further notice.
Thankfully, large liquidity positions proved to be the right move at the beginning of the year. Any equity positions were suggested to only be via RILA’s, equity index annuities, and ETFs that mimic them.
The one major equity position I own, “thanks be to God”, raised all the money they needed to move forward for as far out as the eye can see.
