That and the constraint on GPUs and datacenters and all has really brought home to me what a globalized economy we live in and how much our prosperity has depended on us being peacefully happy to trade with each other. One of my favourite books on the general subject of trade is A Splendid Exchange which gives a cool directionally-correct view of how valuable trade is.
Funny to think that Pax Americana would be ended by America.
Or has GDP growth become so decoupled from energy use that I'm wrong and stock market valuations are completely OK, even as airlines brace for fewer flights due to energy shocks?
Oftentimes, near a market top, the people who are value investors and actually care about price end up selling off all their holdings. But because they have already sold, and are not buying, they drop out of the market entirely. Prices get set by the people who are price insensitive, because they're the only ones willing to participate. As a result, you often get the "blow off top" right before a market crash, where the stock market moves sharply upwards even though fundamentals say it should crash. All the folks who believe it will crash have already left and no longer participate in price-setting.
The buy & hold value investor is also not participating in price discovery since they are just passively holding.
I mean I know it sounds absurd for something like the size of the stock market, but all you really need to do is have enough capital to consume floating demand, and you can control prices. Even easier with options, as they give leverage to do this. And arguably this essentially explains the behavior behind stocks like GME, AMC, AVIS, BIRD... heck even Tesla. If you look at Tesla, most of its stock price appreciation happened in 2020-2021, when SoftBank was allegedly controlling their options chain. And since its peak in 2021, when SoftBank stopped, Tesla has underperformed the S&P 500, and would probably would have fallen by now if it wasn't for all the passive inflows from being in the Mag 7. I mean, it could just be coincidence or genuine market activity, but how can we be certain that markets aren't just being cornered by coordinated groups?
Also, the oil market right now doesn't make a whole lot of sense if you compare futures and spot and what analyst estimates are giving even in the best case scenario. But Japan mentioned considering shorting over $1.4 trillion in oil futures, and if they actually are, then suddenly things make a bit more sense...
The stock market is basically detached from the industrial manufacturing/production economy -- and even to some extent the services/insurance economy -- and is now vibes/feels based.
If people are keeping their money in the market (regardless of allocation inside the market) they are expecting that any other asset class will perform worse in the near future. If they expect that commodities are too volatile, spending won't pay off, monies and bonds will inflate away and land may face legal risks from populist, technocratic or extrajudiciary changes to the legal system then their least worst options are to go all in on stocks. Furthermore, the energy sector is going to have a windfall from filling up the VLCCs of the world and look for anywhere to dump the cash that helps escape taxes, driving future liquidity expectations even higher.
What's even more troubling is that there was once the pretense that valuations had something to do with fundamentals, but this has gone entirely out the window since about 2013.
So basically none of it makes any sense and you've just got to ride the tiger.
Whereas a historically low ratio of earnings to index value is a deeper concern to me
Yikes.
The reason Covid wasn’t as bad as it could be was WFH.
There’s no equivalent for oil. You can’t grow food at scale without fertilizer.
You can check the term structure of oil to confirm: https://www.cmegroup.com/markets/energy/crude-oil/light-swee...
Equities are (in theory) priced on net-present-value of future cash flows, so a temporary <1 year disruption is important but not massively so.
That would explain why they're ignoring fundamentals.
They could think that OpenAI and Anthropic IPOs will drive prices higher, and it still isn't time to sell.
Probably most importantly the economy at this point is largely a digital economy rather than one centered on goods.. in other words GDP growth is no longer coupled to energy consumption. The fact that we're able to transition to a largely remote workforce around covid is a testament to this.
The implication is that in the event that these high prices sustain and there is some demand destruction a lot of fundamental parts of the economy will continue to function in an evolved way for example online.
And then of course there's AI which could be considered sort of an extension of this digital economy which is driving so much of the underlying growth.
That doesn't mean there won't be hot spots like this article is pointing out perhaps the UK is particularly exposed. On the other hand the fact that so much of the UK's economy is financial services and hence in a way benefits from all this volatility ... means it is not all so clear.
It would be easier to say that the real impact will be on the manufacturing powerhouses but even they will benefit from the transition to a solar and battery based energy system.
Now if you believe that it's inevitable that this bubble will have a slowdown and you speculate that the bubble might be partially punctured by these high energy prices that seems like a reasonable hypothesis... but it could also be the opposite.. In other words the demand destruction for energy could actually mean capital is looking for a place to invest fruitful elsewhere.
Counterintuitive as it all may seem, this system is simply not one anyone can reasonably expect to make predictions around at least any more reliably than walking into a casino and expecting to beat the house.
Similarly the experts and talking heads telling you the implications of this war or the Ukraine war are making one dimensional predictions that are simply not honest enough about how chaotic and reflexive these systems are
And there is a bunch of plausible reasons that this belief is not crazy (of course nobody really knows).
- trump literally is called TACO
- the war is really unpopular in usa and midterms are getting closer. There is domestic usa pressure to wrap this up.
- Iran's ecconomy was a mess before all this and is now a disaster. The blockade goes both ways and it seems unlikely iran can keep it up long term
- As shortages approach international pressure from uninvolved parties to resolve the situation one way or another will mount.
> Fuel suppliers have indicated that May should remain manageable but have flagged “mid to late June as the potential start of disruptions”
So there is about 2 months before things run out.
And they do often smell and leave trash behind.
So I can imagine that being true if you're living in one of those hotspots... It's a hard topic though
Tourism provides low quality, transitory jobs, with income flowing more to wealth holders (property owners etc) than to wealth creators. It distorts property markets and sucks the oxygen out of other kinds of business. About time the Med weaned itself off of it.
No. It's worse than that. The transient customer base rewards the worst people. The people who make the most money and have the most influence are basically scammers who manage to stay one season ahead of the bad reviews. They're screwing customers, shafting suppliers, employees, business partners, etc, everybody. By the time the 1-star reviews are pouring in they've pivoted, sold the businesses, under new management, etc, etc, and are on to the next venture.
So over time these people get rich you basically wind up with these sorts of people running everything including the government and it's all just shit.
And it permeates everything. Everyone starts screwing everyone and being scummy by default. And the time and money and effort of having to hedge against in literally everything makes everyone all substantially poorer
Source: Grew up in it. First world white people too, so spare me some patronizing BS about low trust societies or whatever
You can fly to the EU for 600 USD (retour), more in high season. Non business people are willing to spend 1200, 1400 USD. I assume around 2000 USD the demand will fall off significantly. At 5000 USD for economy it will be close to zero.
The price is determined by who needs it the most and is willing to give up the most cash. Instead of rationing by lines, or fixed quantities, it's allocation to those who can either make the most out of the jet fuel, or those for whom money is the least valuable.
2) Use it to elect somebody else POTUS. Anybody else.
Since they're cultists, though, it took them about 10 minutes to make their peace with it.
Just constant burying heads in the sand, and believing in models where the prior assumptions are from a bygone era.
We had a good thing going, and you fucked it up.
Fixing the budget hole to pay for that spending without resorting to giving many people living in Monaco the Eichmann treatment as a side effect (which is untenable on account of French security guarantees to Monaco) would need some kind of government of hardcore believers who could also do math.
Everyone except the Iranians and maybe the Israelis were flat-footed by this, and the things that can be done about it are largely on the years/decades scale.
[To be clear, i dont 100% agree with this argument. I think there is a little truth to it but also things are much more complicated than that and it ignores the geopolitical tension in the region that was going to explode one way or another even without usa]
Until quite recently, “the US sticks its dick in the chainsaw” wasn’t a “within reason” scenario.
Reason dictates having redundancy in place. Having prepared scenarios for what to do. A lot of countries clearly don't have that and they are operating on the assumption that no major disruption is going to happen.
Depending on resources coming from historically unstable locations and not having plans to prepare for such instability is just foolish.
The UK doesn’t have a strategic oxygen reserve in case the atmosphere disappears.
It’s both implausible and not really something they can do much about.
Trump is that sort of scenario.
Wut
> they speak Persian languages
As a lingua franca, sure. By some very twisted semantics maybe, but really, no.
Cuban tankers have hardly left the island’s shores for months. Oil-rich allies have halted shipments or declined to come to the rescue. The U.S. military has seized ships that have supported Cuba. And in recent days, vessels roaming the Caribbean Sea in search of fuel for Cuba have come up empty or been intercepted by the U.S. authorities.
Last week, a tanker linked to Cuba burned fuel for five days to get to the port in Curaçao but then left without cargo, according to ship-tracking data. Three days later, the U.S. Coast Guard intercepted a tanker full of Colombian fuel oil en route to Cuba that had gotten within 70 miles of the island, the data showed.
While President Trump has pledged to halt any oil headed to Cuba, the Trump administration has stopped short of calling its policy a blockade.
But it is functioning as one.
[0] https://www.nytimes.com/2026/02/20/world/americas/cuba-oil-b...
https://www.cnn.com/2026/03/30/americas/us-russian-oil-tanke...
Of course international law is not worth the paper its written on.
https://en.wikipedia.org/wiki/Blockade
> Blockades restrict the trading rights of neutrals, who must submit for inspection for contraband, which the blockading power may define narrowly or broadly, sometimes including food and medicine.
They would be allowed to blockade neutral ships going to enemy ports (e.g. Israel) subject to a bunch of rules but that doesn't seem to be what they are doing.
I dont even think Iran is claiming this is a blockade. They are claiming its part of its territorial waters, and they are claiming that they dont recognize the UNCLOS which would give vessels transit rights (but at the same time they are claiming they recognize the part of UNCLOS that allows claiming 12 miles out as territorial waters). At least that is what i got from https://www.ejiltalk.org/the-legality-of-irans-closure-of-th...
Oman is before the strait begins.
I dont think hosting a US base would necessarily make them non neutral unless that base was used offensively. According to international law, Iran would also have to justify their exercise of self-defense rights was porportional, which even if you accept hosting a us base made that state non neutral, i think it would be difficult to justify their response against states simply hosting a us base met the porportionality requirements of int law.
However even if they were enemy states, Iran would have to declare all of these countries as being under blockade, which they haven't as far as i am aware.
> Oman is before the strait begins.
How is the Oman port of Khasab before the strait begins?
Firing on neutral shipping is not the same as intercepting it and inspecting it for war materiel or other contraband. Preventing shipping from reaching or leaving Kuwaiti ports is not the same as inspecting it for war materiel or other contraband.
Ships that don’t stop get fired upon. That’s what happens in a blockade.
Kuwait is a US ally and hosts American military bases. Stopping shipping to there is very clearly legitimate.
Wikipedia is defining what the term blockade means not what constitutes a legal blockade.
Medicine is not allowed to be blockaded. Food is not allowed to be blockaded if there is a shortage.
Relavent parts of the san remo manual:
> 102 The declaration or establishment of a blockade is prohibited if:
> (a) it has the sole purpose of starving the civilian population or denying it other objects essential for its survival; or
> (b) the damage to the civilian population is, or may be expected to be, excessive in relation to the concrete and direct military advantage anticipated from the blockade.
> 103. If the civilian population of the blockaded territory is inadequately provided with food and other objects essential for its survival, the blockading party must provide for free passage of such foodstuffs and other essential supplies, subject to...
> 104. The blockading belligerent shall allow the passage of medical supplies for the civilian population or for the wounded and sick members of armed forces,...
https://ihl-databases.icrc.org/en/ihl-treaties/san-remo-manu...
You're correct that blocking oil would be allowed (barring situations where the civilian population needs it to survive, which doesnt apply here) if this was a legal blockade. However Iran is not complying with the other rules around blockades, which is the issue.
Own up to it. This is solely on the US. The rest of us had it handled until you came along.
One thing is correct though that UK security services have not anticipated such outcome and politicians have not done anything about it.
Since the inauguration Trump has supported physical seizures of many different kinds of Russia-aligned merchant shipping and the economic degradation of Russia's allies. Given all of this, we can assume that the Russian asset angle is a much less accurate explanation for Trump's behavior than the alternative theory where he is highly suggestible to the most recent person to heavily compliment him in-person which used to be Putin and has subsequently changed to some mix of Rubio, Vance, Hegseth, Netanyahu and the Trump family.
This war might be dumb but it was also predictable. Why were these no contingencies? Or to quote Churchill "If you want peace you have to prepare for war".