The war is over!
Well, at least that’s what Wall Street is saying but it says that EVERY Friday and every Monday we’re still at war. Next week will be our 3rd month and there hasn’t been much action this month (if you don’t count Iran attacking a UAE nuclear facility as being a big deal) and the S&P 500 has gained another 100 points (1.3%) to 7,445 – ALMOST back to the the May 14th high of 7,540.
Eugenio Catone made a compelling case in “Chained By The Markets: Why The U.S. Can’t Afford To Strike Iran Again” for several reasons:
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- We simply can’t afford the asymmetric cost of the war. We use $4M interceptor missiles to shoot down $30,000 drones.
- Now that we are well past the 60-day mark, the war is illegal (no matter what Trump and Co say) without Congressional Approval and it’s costing us $500M/day just to “park” our military in the Strait AND it’s leaving the rest of the World undefended, which I’m sure Xi and Putin took note of in their meeting this week.
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- We have this MASSIVE military BECAUSE Russia is such a threat but Russia has been fighting their own asymmetrical war since Feb 4th, 2022 and there’s no end in site to that thing either!
- Ukraine population: 37M, Iran population: 93M
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- The war is unpopular and, as I noted in the webinar, the elections may be in November but fundraising season is now and Donald Trump has never been less popular with about 2/3 disapproving of his handling of the Economy and also – THE WAR!
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- You can’t start a war and then F it up. No one likes a loser, not even Trump…
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- 30-Year Notes are at 5.09% and 10-Year Notes are at 4.57%, the Fed Funds Rate is in Fantasy Land at 3.67%
- Oil is currently (7:30 am) $98.28/105.30 into the Holiday Weekend, which kicks off the start of “Summer Driving Season.” President Trump released 10M barrels (a half a day’s US consumption!) from the Strategic Petroleum Reserves last week and we are down to 374M barrels – refineries are running at 91% of capacity (usually 85%) and will need to be maintained (taken off-line) at some point.
This is a ticking clock, like sands in the hourglass, draining away our reserves until what? We start rationing? When? At this pace (18Mb total drawdown last week) we have 90 days (1,601Mb total SPR + Commercial reserves in US) until we are living day to day on the oil we produce. Oil will be $150-200 a barrel before then.
Jet fuel is already feeling the pinch. Had Spirit Airlines NOT gone bankrupt, grounding 150 planes out of the entire US fleet (1,500 domestic), saving 10% fuel usage – we would already be rationing jet fuel – as it is, we’re juggling like mad…
On top of that, despite Trump/Hegseth’s bravado, we have barely put a dent in Iran’s Military Capabilities:
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- Missile Capacity: Iran retains about 70% of its missile capacity, access to 90% of its underground storage and still controls 30 out of 33 missile sites along the Strait of Hormuz.
- Infrastructure Threats: Iran could severely disrupt global digital communication by attacking undersea internet cables.
- Suez Canal Chokepoint: Iran could direct its Houthi allies to strike ships in the Strait of Bab al Mandeb, effectively blocking the Suez Canal and paralyzing the economies of the Gulf Cooperation Council (GCC).
Trump’s “brilliant” blockade of Iran’s ports failed to take into account that Iran has 3,662 MILES of LAND borders, where they can truck their supplies rather than ship them. Also, there’s the Caspian Sea above Iran that connects directly to Russia, who is very happy to buy Iranian oil and resell it on the International markets (in fact, Trump just lifted sanctions on Russian Oil, allowing Putin to make 8M barrels x $100 = $800M/day x 90 days (so far =) $72 BILLION.
You know, they call our great President Trump a “Putin Puppet” but it’s just a coincidence that he pulled $60Bn worth of aid we had promised to Ukraine while simultaneously handing that much money to Russia. I’m sure Stephen Colbert would agree with me (if he were still allowed to speak).
So we are F’d and Tehran is very far away from the US ships and they’ve already re-routed their trade and all they have to do is wait as the noose tightens around our necks so, when Trump makes his weekly “almost over” statement, recognize it for what it is – wishful thinking!
In fact, just the other day (Wednesday), Vice President Vance said the US is “locked and loaded for military action if Iran talks fail” and Trump said he was giving them “two (today) or three (tomorrow) days. Iran says they want to maintain control of uranium, which is a supposed deal-breaker for Trump. Trump wants Iran not to enrich more uranium for 12 years (was 20), Iran says 5 years at most.
Iran also demands BEFORE Peace Talks begin (they haven’t begun?) that sanctions be lifted, frozen assets are releases, war reparations are paid, the US recognizes their sovereign rights over the Strait of Hormuz and Israel ceases fire in Lebanon, Iraq and Yemen. How close does that sound to you?
NOTHING has been signed – not even Trump’s one-page “deal memo“, no ships are moving through the Strait without paying Iran their toll fees, there’s no actual cease-fire – just less-fire and, of course taco, Taco, TACO – every f’ing time!!!!
Some people would be embarrassed to make threats and have them not be executed, week after wEAk after weak. But not our President! He has an iron will and he doesn’t care how many times he has to threaten Iran, no matter how empty those threats begin to look – now THAT is the kind of leadership we voted for!
So Wall Street is, in fact, thrilled that World War III is not likely to break out over the holiday weekend and it’s because the US, CAN’T rationally attack Iran without shooting themselves in the foot economically and probably not without costing the GOP control of Congress in November.
So Happy Memorial Day – incompetent Governments like this insure we will always have more dead soldiers to remember, right?
