IF THE WAR WITH IRAN CONTINUES, THINGS WILL GET EVEN WORSE. GOLDMAN SACHS SOLOMON: RECESSION RISK COULD CHANGE, ‘ONLY ONE TWEET AWAY’

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Equities have made up their mind:

1. The war ends
2. The Strait reopens

Therefore safe to look through it. Nothing to see here

And look, wars end. The traffic will resume. The logic isn’t wrong, it’s just missing a variable. Time.

Another couple of weeks of closure => inflation impulse (diesel and jet fuel are at ATH even with oil off the highs), Q2/Q3 earnings and guidance disappoint at the margin. Stagflation-lite.

Another couple of months? Stagflation proper. Busted supply chains. Refined product shortages rippling worldwide.Planting season fallout feeding through Q3/Q4 food prices.

Every additional day the Strait stays shut, the fundamentals degrade incrementally – for inflation, growth, and earnings

Markets are priced for the best-case resolution. They haven’t priced the clock


$200 oil will plunge the world into a global recession.

Iran just threatened to cut off the Strait of Hormuz completely, and Goldman Sachs, Bank of America, and Macquarie all say it’s now a real possibility.

Here’s what that does to your life:

Gas hits $7 a gallon in the U.S., shattering every record. But that’s just the start.

Oil powers the tractors, the fertilizers, the trucks that move your food from field to shelf.

A third of the world’s fertilizer trade passes through Hormuz and it’s already been cut off. Urea prices are up 50%.

U.S. fertilizer supply dropped to 75% of normal levels right at planting season. Less fertilizer means less corn.

Higher prices for everything the American food system touches.

At $200 oil, this stops being a Middle East problem and becomes everyone’s problem.

Source: BusinessBasicsYT