Alex Krainer
On
Saturday, 28 February, U.S. and Israeli armed forces launched a
coordinated joint military operation against Iran. The U.S. designated
its side as the Operation Epic Fury (per Pentagon announcements and
multiple reports). Israelis named their campaign as Operation Roaring
Lion (or Lion’s Roar).
If
you are like me, you are swamped with news reports, analysis and
commentary of this event and much of it amounts to a hailstorm of
psyops, which is why I prefer to keep my commentary short. We will know
much more once the dust settles. The problem is, it doesn’t look like
the dust will settle any time soon.
I believe that President Trump
has just committed a colossal blunder, possibly a fatal error that will
indelibly mark his presidency and his legacy. It was a staggeringly
reckless gamble where the downside loomed large and nearly impossible to
avoid. I still can’t work out what the upside was - apart, of course,
from the noble mission of bringing democracy and freedom to the Iranian
people.
Blundering into an obvious trap
The
lust to regime-change Iran is not new and many who desired it have been
quite vocal about it. The pressure on Donald Trump to attack Iran was
obvious, already during his first term. The first time Trump was
pressured to attack Iran was in June 2019, after Iran's Air Defense
Forces shot down a US Global Hawk surveillance drone over the Strait of
Hormuz.
As it later turned out, the ring leader behind that pressure campaign was Britain’s Ambassador to Washington, Sir (now lord) Kim Darroch. During Trump’s current term, the pressure came from Israeli Prime Minister Benjamin Netanyahu.
Both then and now, a significant part of the American political class
joined in that pressure campaign. Two days ago, they finally got their
wish fulfilled.
What’s interesting, however, has been an absence of such pressure on Trump’s predecessors. Bill Clinton, George W. Bush, Barack Obama and Joe Biden
were all in a position to attack Iran, only none of them did, nor were
they pressured to attack with even remotely the same intensity as Trump
was. That’s because attacking Iran militarily was rightly perceived as a
political suicide.
Most of the “anti-Iran coalition” like
Iran almost as much as they like Trump and from their point of view,
getting Trump to pull the trigger kills two birds with one stone: you
regime-change Iran (fingers crossed), and you get rid of Trump and his
MAGA movement. This was one of the reasons why I expected that Trump
wouldn’t walk into that trap.
Back on the dream team?
Even
if those who say that Trump is ignorant, that he doesn’t read, that he
has short attention span and doesn’t listen… even if they are right, I
expected that Trump’s street smarts would alert him to the political
risk of doing something as catastrophically reckless. Unfortunately, it
appears that those with a low opinion of Trump’s intellectual acumen
were right and that I may have overestimated his street smarts. Either
that, or he’s been had somehow (there’s no shortage of those opinions in
the commentariat).
Either way, Trump, who denounced the
post World War II global order has found himself flanked by his post
World War II allies - the dream team of Sir Keir Starmer, Friedrich Merz and Emmanuel Macron,
and at this point he may not have the choice of snubbing them. In short
two days, he seems to have lost control of events and the trajectory of
U.S. foreign policy went from being the Western empire’s military
enforcement arm to being the empire’s military enforcement arm again.
His
newfound old friends will try to maneuver him to come back on board of
Project Ukraine and join them in bringing democracy and human rights to
Russia. Sadly, this is exactly the opposite of what the American people
voted for and the consequences have only begun to cascade.
Is the Commodity Super-Cycle about to go turbocharged?
Predictably,
in this morning’s trading, the price of crude oil opened much higher
than Friday’s close at about $73.50/bbl. Currently it is trading at
$79.50/bbl, but if the war in the Middle East doesn’t die down soon, the
trend which was already building before the attacks, could see the
price of oil vault far into tripple digits. We might even see a
“hockey-stick” progression as we have seen in so many other markets over
the last ten years or so. For that discussion, see last December’s
report:
https://trendcompass.substack.com/p/the-hockey-stick-regime
## The hockey stick regime
Over
the years I’ve periodically written about the increasingly frequent
emergence of hockey-stick price charts, where some security bursts into a
vertical climb. Already in January 2022 I suggested that we might see
such hockey-sticks in precious metals markets. From 20 Jan. 2022
TrendCompass:
Read full story
The
same could happen with the prices of Natural Gas and other commodities,
which could all add up to another phase in the widely anticipated
“Commodity Super Cycle.” Even though the prices of many commodities have
been on a tear, they are still near their historical all-time lows
relative to equity valuations, as the chart below illustrates:
For
that relationship to revert to its historical norm - anywhere in the
shaded band, the commodity prices would have to at least treble from
where they are, or equity prices would have to collapse by about 60%. Of
course, such events don’t unfold over night but span sustained periods
of time. What does happen in the short term
however, is that volatility explodes, so whatever you do, tread lightly
and keep plenty of dry powder to preserve your wealth and have it
available when opportunities arise.