***** denotes well-worth reading in full at source (even if excerpted extensively here)
Economic Fare:
Even if the Iran war ends quickly, governments will need to prioritise security of supply
Rationing, Abstraction, and the Thermodynamics of the IEA’s SPR Release
......................... But refineries do not run on financial tickers; they run on specific molecular profiles. The 20 million barrels per day currently trapped behind the Strait of Hormuz are predominantly heavy, sour crudes. These are the specific molecular inputs required to produce the diesel and asphalt that physically maintain the global logistical grid (Pmaint).
The US Strategic Petroleum Reserve, however, is heavily weighted towards light, sweet crude. Pushing 400 million barrels of light sweet into a global refining system desperately starved of heavy sour does not solve the biophysical deficit. It simply accelerates what I have previously termed the ‘Naphtha Clot’.
When refineries attempt to substitute light sweet crude for heavy sour, they produce an enormous excess of light distillates (like naphtha). Without the heavy molecules to balance the refining slate, naphtha storage rapidly hits tank tops. Once the storage is full, the refinery suffers a biophysical heart attack and must shut down entirely.
By attempting to manipulate the paper price of WTI with the wrong physical input, the IEA is not just burning the lifeboats; they are actively choking the very refineries they are trying to save. They are accelerating the systemic shutdown.
If the IEA genuinely wished to manage this biophysical bottleneck, they would not dump light sweet crude to manipulate a stock ticker. They would acknowledge chemical reality and immediately implement demand destruction and chemical rationing. ........
70% of Japan’s Oil Imports Go Through Hormuz
Market Fare:
One thing that has become incredibly consistent during times of financial stress is all of the “green dots” on Bloomberg terminals on Sunday night. This Sunday night is likely to be no different.
There are plenty of questions being asked.... There will be time to figure out how we got here. What went right, what went according to plan, and what didn’t go so well. But now is not the time for that, at least not for investors and corporate decision makers. Now is the time to plan, adapt, and ensure the best possible outcome for what you are responsible for. .........
Breadth breakdown is becoming a tactical headwind at a time when the cyclical rally is struggling for support
In last week’s update, we highlighted our global trend indicator as it approached an important support level. This week’s update of that chart shows that it has continued to deteriorate, arguing that we are moving from a “return on capital” environment to a “return of capital” environment. Managing risk by moving to the sidelines is a well-tested approach to capital preservation. ...........
Liquidity is deteriorating, margin is stretched, and the BTD crowd hasn't gotten the memo yet.
Summary: The weight of evidence favors more downside near-term. Bulls need to reclaim key levels — they haven’t. MO Liquidity Gauge hit its lowest reading since early ‘23 and is trending in the wrong direction — bad omen for forward 3-month equity returns. Sentiment and positioning nowhere near a full washout. Retail buying and margin levels near highs. Not a great look for risk assets. On the opportunity side — 2y USTs broke below a key range within a large compression, signaling a potential trend change. Coal is a major beneficiary from the conflict in the ME. And crypto is coiling.
QOTW via @Jesse_Livermore: “Best analogue I can think of for today’s market vibe is the period in mid Feb 2020 bf Covid when the news flow was uniformly negative but people weren’t selling bc they were bulled up on other themes and were scared of missing the uptrend that was set to resume once Covid faded.”
Jesse is spot on. We’re living through a major paradigm shift — multiple, actually — and the market remains deeply anchored to the recent past (as it has a tendency to do, see my AI Micron bull these from back in 2020 to learn why). The vol suppression, BTD mentality isn’t going away quietly. The next 6-12 months could be a very rude awakening. .................
3. We started last week short the Qs and added to the position as the week progressed. They’ve since closed below key levels on the daily and are now trading under their 200dma — the tape is confirming the thesis.
Nomura’s Charlie McElligott framed the broader dynamic well:
“The ‘Lazy Leverage’ that accumulated during sustained low vol is now being mechanically risk-managed lower as Commodity/Inflation/Rate-Vol risks simultaneously reprice... because the dirty secret is that every asset class is short interest rate volatility.”
Hard to say it better than that. ............
Bubble Fare:
When we think of the word “equilibrium,” a whole range of meanings may come to mind
- “Supply equals demand.” (market clearing)
- “All deficits and surpluses add to zero.” (accounting identity)
- “Things are temporarily stable, with no impetus to change.” (steady state)
- “Every action has an equal and opposite reaction” (Newton’s Third Law)
- “Nature keeps perfect books. What changes on one side is balanced on the other. Every change in spin, charge, and momentum in one place is exactly accounted for elsewhere, so the totals never change.” (Law of conservation)
- “Nothing is lost, nothing is created, everything is transformed. (Lavoisier’s maxim)
The word “equilibrium” is an invitation to recognize that nothing exists by itself, alone. Subject and object are two sides of the same coin – their interaction is a single phenomenon.
Even at the tiniest level of the universe, if we look at the polarization of two entangled photons, the spin of two electrons, or the state of two qubits in a quantum computer, we find that measuring one immediately determines the correlated outcome for the other, even far away, without sending any signal. While there’s no theoretical limit to entanglement, the record distance measured to date was between two entangled photons – separated by 747 miles – which is kinda cool.
All of this may seem very abstract, but we can see that the workings of “equilibrium” pervade even the most ordinary aspects of daily life.
At the most basic level, for example, we realize that there’s no such thing as a buyer putting cash “into” the market without a seller taking that same cash “out of” the market. Every share someone just bought is a share someone else just sold (or issued). The buyer, the seller, and the exchange are inseparable – their interaction is a single phenomenon. Talking about “cash going into the market” is like talking about the sound of one hand clapping.
This month, we’ll examine a whole range of examples involving equilibrium, all of which are directly relevant to current economic and market conditions. First, we’ll review the strikingly lopsided equilibrium that’s emerged across various sectors of the economy. This equilibrium helps to understand the record level of corporate profits in recent years – although the distribution of corporate profits is more closely related to whatever innovations and industries are dominant at any particular point in time.
Next, we’ll examine equilibrium in the securities markets – why prices fluctuate, what “flows” actually mean, and how fundamentals, information, and investor beliefs collaborate to determine prices and trading volume.
We’ll then examine the current insensitivity of investors to valuations, and what aspects of the current speculative bubble can and cannot be well-explained by passive “money flows.”
Finally, we’ll share some perspectives, rooted in finance theory, that help to understand how “glamour” companies gain market capitalization, and the beliefs behind the “bubble on a bubble” that we’ve seen in the information technology in recent years.
We’ll do more than the usual amount of math, because equations impose discipline – allowing us to escape from the muddy trap of hidden assumptions and verbal arguments that can often sound very convincing. ..................................
Charts:
1:
(not just) for the ESG crowd:
World Oil Production Has Surpassed Another Peak. All’s Good, No?
Irreversible rifts in the global water cycle are driving shortages and droughts worldwide
................. This report declares that the global human–water system as a whole has already entered the era of Global Water Bankruptcy. While not every basin or country is water-bankrupt, enough critical systems around the world have crossed these thresholds—and are interconnected through trade, migration, climate feedbacks, and geopolitical dependencies—that the global risk landscape is now fundamentally altered.
Declaring Global Water Bankruptcy is not an exercise in rhetorical escalation. It is a necessary act of diagnosis. Without naming the condition accurately and adopting a proper discourse, governance will continue to be organized around the wrong question: how to “get through” a crisis and go back to how things were, rather than how to manage a permanent, post- crisis state and transform its institutions to establish a fresh, more sustainable relationship between societies and water.
War Fare:
........ Not this time. They forgot that in a real war you either have to completely win or the other side has to agree to end the war.
General Mattis once said “No war is over until the enemy says it’s over. We may think it over, but in fact, the enemy gets a vote.”
Now here’s the problem Iran has, they can’t negotiate with the US.
I mean, they could go thru the motions: send some diplomats, talk about terms, but there is no deal the US (or Israel) has ever made with Iran which they’ve kept. Worse than that, during negotiations they’ve killed negotiators and leaders.
Not only is there no point in making a deal with the US or Israel, since they won’t keep them, doing so is dangerous. Negotiations are just a time for them to re-arm and find new targets.
Russia pointed this out years ago, calling the US “Agreement Incapable.” There’s no deal you can make with the US which they won’t break. This was true before Trump, but he’s ramped it up to eleven out of ten.
So Iran has to keep going. They have to win the war. What’s a win for them? Well, at the least, all US bases out of the Gulf States and Saudi Arabia.
............ Iran let the US and Israel off the hook during the twelve day war. The US asked for a cease-fire and they agreed, then the US and Israel came back and tried again.
Iran must, and its leaders personally must, if they don’t want to be assassinated, war this win so decisively that neither Israel nor America will even think about attacking them again. Then, if the new leader is wise, they’ll get some nukes.
This war is, I suspect, far from over. This time America has really fucked around, and it’s really going to find out. Nor are the majority of its allies going to be happy about this as they run out of oil, gas and fertilizer. Further east-Asians have now realized that US bases don’t protect your country, they only make it a target. This is going to reign hell of the willingness of other nations to militarily cooperate with America.
Good chance this is America’s last big war. They’ll push around some Lat. Am countries, but this is it. If it isn’t their last big war, they’ll regret it, there’s no possibility now of winning a war with China or Russia.
........ We sincerely doubt that it will take anywhere near as long as six months for investors to recognize that this situation is not like financial upheaval, where a Greenspan-Bernanke-Yellen-presumed Powell put to bail them out. This is an accelerating real economy crisis, with downsides far more vast and comprehensive than even in the 2008 global crisis. That merely threatened the critical payment system but would have left productive capacity intact. As we have explained previously, the exposure here is not merely an energy price shock, as bad as that is. Nor is the risk even just that of energy shortages. The closure of the Strait of Hormuz also risks food supplies, chemicals, apparel, chips, and other key sectors which depend not simply on affordable but also on petrochemicals as a key production input or the Strait for transit.
Keep in mind that new tipping points are about to start kicking in. Kuwait has said will need to halt oil production in the next few days since it will have filled up its storage by then. We have pointed out repeatedly that not only can oil and gas production not be restarted quickly, but the “back to normal” time increases disproportionately based on how long the facility has been shuttered.
Even though Trump has projected enough confidence to apply balm to rattled markets,1 the content of his statements and his actions confirm that he is seeking an exit when Iran is not going to open one for him. Oil at a mere $90, charitably assuming that the Administration can keep feeding the delusions that go along with that pricing, will produce enough sticker shock at the pump and to other costs so as to fatally sink the already very poor prospects for the Republicans at the midterms. The Hill broke the story yesterday, Trump job approval sinks in new poll, showing a further 3 point fall to a net negative of ten points. The sample period was February 27 to March 3 and so would not capture the impact of energy price increase on voter views.
As we’ll detail below, Trump is trying to declare victory and exit, when the Iranians will have none of that, and neither will the hawks and apocalypse-seekers in his inner circle. His call to Putin on Monday to discuss Iran was an admission that Trump is scrambling for a way out. .............
If you doubt that Iran retains the upper hand, this video from Richard Medhurst, documenting the damage Iran has inflicted on US bases, should convince you otherwise.
America and Israel May Have Bitten Off More Than They Can Chew
............. Iran’s strikes cannot be dismissed as acts of scattered retaliation, the flailing lashing out of a dying regime. Rather, they represent a strategy of horizontal escalation, a bid to transform the stakes of a conflict by widening its scope and extending its duration. Such a strategy allows a weaker combatant to alter the calculus of a more powerful foe.
An asymmetric war that brings the global economy to a standstill could exhaust the US and force a ceasefire
Why there is much more at stake here than rising prices
Oil markets started the week in a sense of panic, briefly pushing oil prices above the $115 mark. Then, as the initial shock eased thanks to some reassuring comments from G7 countries, panic gave way to complacency as usual. The rest of the week then saw a slow rise in price—as if we were seeing some minor disruption—showing how utterly disconnected traders are from reality. Despite claims to the contrary the Strait of Hormuz is in a choke for two weeks now. Gulf countries affected by the blockade used to export 14 million barrels of crude and 6 million barrels of refined products through that narrow strait. ............
And to put current missile strikes into context: “Iran’s military actions on a zero-to-nine scale of its overall capabilities have barely reached two yet”—the same source added. In other words: Iran is fully prepared to wage a long—very long—war and keep the Hormuz Strait closed till conditions for a “permanent peace” is reached. .........................
Satyajit Das: Iran – Even War Has Been Financialized
Yves here. Das, while he makes some acute observations in this article, appears to have gotten his information about Iran, as English-speaking readers overwhelmingly have, from mainstream sources that amplify deep-seated, Orientalist hostility towards Iran. Iran’s objectives are not hegemonic. They are, however, exceedingly ambitious: to force the US out of the Middle East militarily, or at least so greatly reduce its footprint that it poses not much of a threat to Iran. IMHO, that is a minimum requirement. If the US were to have a Damascene conversion and concede that right now (as in agree not to rebuild the base that Iran has pulverized), Iran might be willing to allow traffic through the Strait of Hormuz on a metered basis, based on performance by the US versus agreed targets. But Iran looks likely to have to achieve that end through force. ........
***** The Iran Blunder
Ignorance Isn't Always Bliss
The biggest story of the day is that Iran has muscled its way into both cowing and overpowering the US Navy into submission in the Strait of Hormuz.
But first, let’s back up a little bit and acknowledge that the IRGC appears to have went fully “to the mattresses” in this war. They are no longer playing games, and no longer willing to compromise. They have gained momentum and achieved military, political, and propaganda initiative and are now pushing their advantage. ...........
Yes, the Americans and Israelis are inflicting a lot of damage. But that damage does not appear to be degrading the military enough to really matter. It’s mostly hitting civilians. There is zero possibility of stopping Shahed drone production, they are made with fiberglass bodies, there are hundreds if not thousands of facilities which can make them. The US can’t interdict ground supplies from China and Russia, either, meaning that everything Iran needs to build more missiles, it can get.
And if you think China, especially, won’t send Iran everything it needs you’re whistling past the graveyard. China is winning big time from this war: its ships are allowed into the Strait and every single America ally in the East is seeing that the US not only can’t protect its allies, it can’t even protect its own bases.
Every major US base in the Gulf has been hit and as far as I can tell they’re evacuated. US forces in Iraq are being hit hard and can’t evacuate. Hezbollah is slamming the North of Israel hard, and so far they’re doing very well against Israeli ground forces (as expected, Israel ground forces are crap because they’re occupation troops used to beating up people who, at most, have some homemade weapons.)
The Strait is closed. It cannot be opened till Iran allows it. Period. Iran is hitting oil infrastructure across the Gulf and despite propaganda otherwise, no Gulf interceptors cannot stop Iranian missiles enough to matter, and they WILL run out of interceptors before Iran runs out of missiles, if they haven’t already.
I see zero prospect of America and Israel winning this war, and if Iran has any sense they won’t allow a ceasefire till they have done enough damage that the US and Israel will be scared to start a new war. ..............
.......... As Iran I would accept nothing less than all Gulf States and Saudi Arabia kicking out all US bases and the US withdrawing entirely from Iraq. That’s the very least I would tolerate.
In the larger strategic position, this is genuinely the end of the American global Empire. The US had a “one shot” military, to use Will Schryer’s term, and this is the shot. It has proved that the US can’t defend itself or its allies and it will take at least a decade to restock interceptors, if China allows that, which, if they’re smart (and they’re usually smart) they won’t. Remember, the US can’t make ANY advanced weapons without supplies from China.
I’ve lived a long time now and I’ve seen a lot of stupidity from America, but this war is the stupidest thing I’ve seen America do other than making the original decision to send its industrial base to China.
Why the oil shock may push inflation higher - before monetary policy decides the outcome
............ With no clear path to an end that would satisfy all three participants in the war, I doubt the market has fully grasped what could happen then. It feels reminiscent of February 2020, when markets strongly downplayed the economic disruptions from Covid.
........... It is not surprising that a genocidal government would commit more crimes against humanity in this war, but it is important to recognize and condemn those crimes when we see them. Poisoning the air that the entire population breathes is a horrifying crime. The U.S. and Israel are inflicting monstrous collective punishment on one of the largest cities in the world in a war they started.
Canada’s prime minister Mark Carney said today he condemns Iran’s attacks on civilians and the de facto closure of the Strait of Hormuz.
Not a word about the 1,300 Iranian civilians murdered so far by the US and Israel, attacks which break numerous international laws. Not a word about the attacks on civilian infrastructure in Iran including schools, hospitals and the international airport. Not a word about the 170 school girls burnt to a crisp by American missiles. Not a word about the 10 million people breathing poison gas after attacks against oil storage facilities in Tehran.
The same Mark Carney who, I’ll never get tired of pointing out, was being lauded for standing up to Donald Trump just a few weeks ago is now siding with the unhinged, murderous conman some naively believed he was going to help contain.
There is a deep moral rot at the heart of the western elite ..............
One of the persistent problems with Western analysts when assessing Iran’s strategy is their lack of understanding of the Islamic Republic’s culture and religious doctrine, and more importantly the role those things play in its decision-making.
— Nadeem Reza Zaidi (@Nadeem_Zaidi) March 13, 2026
Take the Strait of Hormuz. People…
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NOTE TO MEMBERS OF U.S. MILITARY: Any employee of the Pentagon or member of the U.S. military should go and read the Nuremberg Trial conclusions: if you are actively involved in the current unconstitutional & illegal, unprovoked undeclared war of aggression (in this case, on…
— Patrick Henningsen (@21WIRE) March 9, 2026
...
...Follow @firasmodad, he is brilliant.
— Peter McCormack 🏴☠️🇬🇧🇮🇪 (@PeterMcCormack) March 9, 2026
Full interview here - https://t.co/rrv5hT8QOm pic.twitter.com/SOPudZDmj7
This video defines the United States better than anything they themselves have released. Ever.pic.twitter.com/mc0X5Y0o6b
— Tiberius (@tiberiusfiles) March 9, 2026
Related Fare:
*** The Naphtha Heart Attack: Why $120 WTI is a Ghost Signal Preceding a Negative-Price Inversion
Other Fare:
Other Fare:
.................. Our brains aren’t wired for prevention
So why don’t we learn from close calls?
Psychologists have long understood the human brain is terrible at processing invisible risks. We overreact to dramatic events but underreact to near-misses. We confuse luck with safety. And we discount what “almost” happened.
Three psychological traps are especially pernicious:
- Availability bias: We remember big disasters, but not the hundreds of times catastrophe was narrowly averted. This skews our risk radar.
- Confirmation bias: We assume a system is safe because it didn’t fail. But many systems survive not because they’re strong, but because nothing has lined up to break them — yet.
- Optimism bias: We know bad things happen to other people but assume our skill or luck will protect us.
Reason’s “Swiss cheese” model describes how disasters happen when weaknesses in multiple layers of defence align. A near miss is when they almost line up and something, often by chance, blocks the path. But unless we plug those holes, the next time, we might not be so lucky.
There are exceptions. Aviation, nuclear energy and air traffic control, so-called “high-reliability organizations,” understand this. Ideally, they treat every close call as a data point. They institutionalize reporting. They never forget to be afraid.
These organizations cultivate a chronic unease, a kind of productive paranoia. It’s not pessimism; it’s realism. They know that systems often drift toward failure unless they’re constantly corrected. That mindset is why they’re among the safest sectors in the world. ...........
.................. I repeat a question that I have asked before, but to what avail I know not: Why do Americans think the United States has 750 + military bases in over 80 countries, supported by a bi-partisan consensus? The answer is blatant except for idiots and those willfully blind, and there are plenty of both.
The United States is an imperial warfare state and these bases exist to wage wars around the world, as the U.S. has done. End of story. ...........
One of the saddest realities of political life is the way people are fooled again and again by the propaganda these people and their media at the entertainment circuses that they own and that pass lies for news feed them. That it is the same slop dished out endlessly from different media cooks means nothing. The conservative media simply shout for war and more war, while the liberal play both sides (anti-war and pro-war) against the middle in a hypocritical manner to support the wars that the U.S. wages endlessly. The most insidious garbage is swallowed by those who consider themselves “intellectuals” and highly educated. ......................................
............ Enter Trump, who seems to be and may be clinically insane or just plain evil like his Israeli counterpart Netanyahu, and who on the face of it seems to contradict much of this inside-out approach to controlling the masses. Like a bull escaped from a pen, he just bellows threats and wages wars at home and abroad, seemingly not caring whether or not he convinces the population that his actions are just and in their interest. It’s as if he is announcing to all who voted for him, that they were fools to believe for a moment that he wouldn’t start any new wars and would end America’s “endless wars,” and to those who didn’t vote for him, “Fuck you, too.”
In the past, presidents felt compelled to try to justify through propaganda the wars and coups they waged, from Vietnam to Iraq to Libya, etc. No matter how obvious their lies, like Colin Powell holding up a little vial to show how Iraq had weapons of mass destruction (which he later said was a mistake and not a lie to cover his complicity), they told them and used all the propaganda at their disposal to make them sound true, having “journalist” friends and assets provide justifications. Trump seemingly doesn’t care.
Some say that is because he is a complete anomaly and was able to twice become president by some strange twist of fate. If that is so, it would be the first and second time in modern history that it happened. A man with no political experience, a comical reality-tv joke, a bombastic fat party boy with weird dyed hair who talks like a version of an East Coast Valley Girl, a womanizer, a very wealthy New York real estate wheeler and dealer, etc. gets the votes of middle Americans who are losing their farms and factory jobs and are angry at the government. All sorts of explanations have been given for this “anomaly,” except that it was not one, except in appearance.
Before Trump was first elected in 2016, it was accepted that one could never be elected president of the U.S. unless one checked off a list of boxes approved by the inner controllers of the Democratic and Republican parties. Independent or small party candidates like Ross Perot, Ralph Nader, Jesse Jackson were never given a real chance but were viewed as spoilers. In 2000, Trump entered the primaries seeking the Reform Party’s nomination but dropped out. He had no chance, even if he had won it, and he knew it. Then came sixteen years of burnishing his establishment credentials. So by 2016, and then again in 2020 and 2024, he was the Republican Party’s nominee, clearly a member of the establishment’s two-party club that had (and has) a lock on the presidency. He was an insider.
So if this insider is no longer following the traditional propaganda script of inside/outside, it is highly likely that those who control the political parties for the imperial ruling class have invented a new technique of mind control to serve their purposes. Since more and more people are starting to question the conventional propaganda as U.S. society cracks up, a new technique must be added to the old – a turning of things inside-out and further out, so to speak. Give Trump free range to say and do the most outlandish things, the things that many have come to suspect were previously said only by the hidden manipulators like Bernays and the CIA, and one side of the western “free press/media” will rip him for his grotesquely brazen mouth and actions, while the other will praise him. The latter will claim that he has finally liberated the country, while the former will rip him as a maniac. Both, however, owned by the same imperial ruling class that might disagree over tactics but not U.S. long term strategy, and knowing Trump got elected because he is a political insider which they must deny, will be satisfied that the masses are confused, angry, and divided, and therefore more easily controlled.
They call it “transparency,” and no one has to answer the question of why, under Republican and Democratic presidents, the U.S. has 750 + military bases in over 80 countries all around the world from which they have been waging wars for many decades, some of which have recently been attacked by Iran, after the U.S./Israel waged the current savage war of aggression against it in a continuation of The Great Game.
Orwell called it Doublethink in Nineteen Eighty Four ..........
