when headlines were headlines. Best headline ever! CTAs yesterday. from my friend Le Shrub So, take a walk with me. Whatever we think, we are where we are; a battle of attrition.
when headlines were headlines. Best headline ever!
CTAs yesterday.
from my friend Le Shrub
So, take a walk with me. Whatever we think, we are where we are; a battle of attrition. It is similar to the old story about two men running from a bear, with one telling the other, ‘I don’t need to outrun the bear, I only need to outrun you.’ Which will cause one side to blink first; the economic pain and shortages facing the US and the rest of the world, or the continued military damage and privations confronting Iran?
I would posit that an authoritarian regime with a messianic religion has staying power, and if we haven't seen a rebellion yet, one may not be imminent. The blockade will cost Iran an estimated $435mm/day, assuming no leakage or development of alternative transits; and also assuming the Chinese et al abide by the blockade and don’t dare the US to interdict them.
Global fuel supplies are dwindling; tlak is that Heathrow has 3 weeks of jet fuel and Europe as a whole six weeks; Australian diesel is running low and even in the U.S. storage numbers are dropping. Whilst we have more staying power than the rest of the world, the economy is global, and supply destruction elsewhere will have an impact everywhere. Additionally, Trump has invited the world to come buy our oil, and VLCCs are streaming this way. Do we fill all of the ships and reduce our surplus? Does this high demand impact domestic energy prices, and/or will we quickly move to export controls or a complete ban? I am sure in saying that electoral considerations here and around the world will quickly come into play.
So, what’s a fella to do? Trump really has 2 end-goals: the nuclear enrichment issue, and re-opening the Strait. He is getting increasing pressure domestically to wind this up, while Israel and the GCC are said to be pushing for continued military/economic pressure on Iran to ‘finish the job’. I had a long conversation with a scary-smart friend last night, and he posed this question: What if the Iranians propose full IEA compliance and inspection of all facilities, along with re-opening the Strait AND signing the Non-Proliferation Treaty if the United States agrees to end aid to Israel and require Israel to also sign the NPT/agree to IEA access and inspection? That, my friends, would be quite the pickle. Trump badly wants and needs to end this ‘excursion’, but would he sacrifice Israel? Would Israel accede or ratchet up its military activity in a ‘use it or lose it’ mindset?
Here’s another after-too-many beers thought. What if we ban energy exports? Europe will find itself in a vice very quickly. And then—bear with me- we graciously offer to open the gate for them for the low, low price of…..Greenland?
just sayin..Every time I hear Scott Bessent speak, I wonder if he isn’t screaming on the inside for having to lie like this for the president. I cannot accept that he believes what he is saying most of the time.
The Jesus-adjacent memes posted by Trump were troubling, but apparently, the acolytes were given their marching orders. After his very bad foreign policy week, JD Vance continues to destroy his future in service to the President.
Sean Hannity responding to Pope Leo’s comments,
*“Have you even read the Bible?’*JD Vance-
“I think it’s very, very important for the pope to be careful when he talks about matters of theology,”
From
Ron Fournier:SHOT:President Trump is deploying thousands of additional troops into the Middle East in a potential escalation of his war with Iran should a peace deal not be struck. The forces include about 6,000 ground troops aboard the aircraft carrier USS George H.W. Bush and several warships escorting it, The Washington Post reports.
About 4,200 others with the Boxer Amphibious Ready Group and its embarked Marine Corps task force, the 11th Marine Expeditionary Unit, are expected to arrive near the end of the month.
CHASER: If Iran can’t be persuaded to strike a deal, Trump may opt for an option far short of his “annihilation” threat: He may launch “the financial equivalent” of a bombing campaign. Treasury Secretary Scott Bessent told reporters at a White House briefing on Wednesday that the U.S. plans to ramp up economic pain on Iran, including secondary sanctions on countries and businesses doing business with Iran, including U.S. allies.
Bottom line: Trump doesn’t know what he will do. He reacts situationally, not strategically. Emotionally, not thoughtfully.Erratically, not consistently — and, for better or worse, certainly not predictably.
From Politico:Fortyof the Senate’s 47 Democrats took a stance against Israel last night in what felt like a watershed moment for the party. Even as Sen.Bernie Sanders’(I-Vt.) resolutions to block arms sales to Israel were voted down (again) by Republicans in the Senate, they received far more Democratic backing than ever before — including from 2028 hopefuls like Arizona Sens.Mark KellyandRuben Gallegoand Michigan Sen.Elissa Slotkin,per NYT. It’s the clearest sign yet of the growing discontent within the party surrounding Israel and its conflicts in the Middle East.POLITICO’s Victoria Guida reports in her latest Capital Letter column. Powell has “grown less and less likely to leave the Fed as Trump’s legal threats against him have intensified. Before the Justice Department went after the Fed, Powell probably would have departed when his chairmanship expired. Now, he is said to be far more open to staying on as a governor beyond that.”
From my good friend CloudBear on Substack- I think excellent description of thst State of Play- Phase Transition
Most hated rally ever? Only ~12 stocks in the SPX are at 52 week highs while the index is at 52 week highs. There have only been a handful of similar readings, mostly late 90s / early 2000s
This volatility collapse triggered massive systemic buying by volatility control and risk parity premium sleeves, which cascaded into CTA chase and short squeeze. We also saw massive sectoral rotation.
KEY THEMES
The Iran conflict is entering a critical inflection point as the US and Iran are considering a two-week ceasefire extension to allow more time to negotiate a peace deal, according to a person familiar with the matter
China has demanded that Iran reopen the Strait of Hormuz , while at least two US-sanctioned, Iran-linked vessels made their way through the strait into the Persian Gulf on Thursday, taking what may be a new route from the UAE even as a US blockade enters its third day
Global equities climbed to all-time highs on signs of the potential truce extension , with the MSCI All Country World Index rising as much as 0.3% to a record, heading for a 10th day of gains
The dollar is showing signs of weakness as international investors boost their hedges against dollar declines, with the hedging ratio rising to 63% as of April 10, the highest since the same month in 2024
Bitcoin neared $75,000 as the ceasefire bets strengthened , while European natural gas markets remain elevated despite easing from recent peaks as duration uncertainty around Qatar’s LNG outage persists
MARKET SNAPSHOT
Risk appetite is surging across asset classes as ceasefire extension hopes build momentum; global equities hit record highs , with the S&P 500 and Nasdaq already having recouped their war-driven losses
The Bloomberg Dollar Spot Index fell as much as 0.2% Thursday , reversing earlier safe-haven flows
The Australian dollar rose as much as 0.4% to 0.7197, its highest since June 2022 , while the pound sterling hit a two-month best against the dollar
Emerging market equities advanced 1.3%, coming close to erasing losses triggered by the Middle East conflict
Bitcoin rose 0.8% to $74,701 , while Ethereum and XRP gained 0.6% and 3.7% respectively
MACRO
The dollar’s retreat is accelerating as war-risk premiums unwind, with Deutsche Bank’s Saravelos saying it’s time to bet on a weaker US dollar as the risks linked to the Iran war will be subsiding
Harvard professor Kenneth Rogoff warned that the dollar is probably at least still 20% overvalued , signaling long-term correction risks
Norway’s underlying inflation remained steady at 3.0% in March, cementing chances for an interest-rate hike in coming months
Poland’s central bank held rates at 3.75% as policymakers assess the impact of the Iran war on inflation
The ECB’s Villeroy said the central bank must avoid knee-jerk adjustments to policy and should wait to have enough data to assess if surging oil prices are feeding through to broader inflation
Greece’s finance minister warned of “the greatest energy crisis of history” should the Straits not open quickly
COMMODITY
Brent crude is steady near $95 a barrel in the absence of any major fresh catalysts out of the Middle East
Goldman Sachs warned that Brent is set to average more than $100 a barrel through 2026 if the Strait of Hormuz remains closed for another month
The IEA forecast global oil demand to turn negative this year due to the Middle East conflict, penciling in the sharpest consumption decline in the second quarter since the COVID-19 pandemic ; the agency now forecasts demand to drop by 80,000 barrels a day this year, compared with a 640,000-barrel rise predicted last month
European natural gas has eased from recent peaks but remains elevated, with Italian utility Edison saying it has replaced most Qatari gas supplies disrupted by the war
The global silver market is expected to remain in a deficit for a sixth consecutive year amid robust demand for bars and coins , with the 2026 deficit projected to widen by 15% to 46.3 million troy ounces
FLOWS AND POSITIONING
Fund managers pulled back from equities in April, with confidence that stocks would outperform reaching its lowest level since July 2025, according to Bank of America’s Global Fund Manager survey ; a net 13% of fund managers surveyed are choosing to allocate more money to global stocks than the benchmark, a 24 percentage-point drop compared to March
Retail traders are pulling money out of energy exchange-traded funds, exacerbating a selloff in the sector that has sent stocks down by double-digits from their peaks last month
Foreign exodus from Indian equities continues, with overseas investors remaining net sellers for a record 23 straight sessions, pulling a net $17.8 billion from late February through April 7
PIMCO is snapping up European government bonds after a sharp selloff sparked by the Middle East war, moving from being underweight on the region’s debt before the conflict to overweight now
Inflation is showing up!
This rally is
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