---
title: 'Stock Market Falls as Treasury Yields Surge and Rate Hike Fears Grow'
source: 'https://youtube.com/watch?v=bKQMBNGaFiM'
video_id: 'bKQMBNGaFiM'
date: 2026-07-10
channel: 'Meet Kevin'
---

# Stock Market Falls as Treasury Yields Surge and Rate Hike Fears Grow

> Source: [Stock Market Falls as Treasury Yields Surge and Rate Hike Fears Grow](https://youtube.com/watch?v=bKQMBNGaFiM)

## Summary

The video provides a detailed analysis of the stock market decline driven by rising Treasury yields, geopolitical tensions in the Middle East, and the potential for Federal Reserve rate hikes. The host discusses the impact of the Iran conflict on oil prices, the risk of recession, and the strategic importance of real estate as a hedge.

### Key Points

- **Market Decline and Real Estate Hedge** [0:03] — The stock market is falling, but the host sees this as an opportunity to promote real estate as a hedge against short-term volatility and geopolitical risks.
- **Recession and Real Estate as Piggy Bank** [1:08] — In a recession, real estate can serve as a piggy bank that can be leveraged when rates go to zero, providing liquidity.
- **Rate Prediction by 2032** [2:08] — The host predicts that interest rates will be lower than ever before by 2032, creating a 10-year window to buy real estate between 2022 and 2032.
- **Treasury Market Sell-Off** [4:10] — The Treasury market is selling off, with the 10-year yield rising to 4.35%, which is bearish for stocks.
- **Treasury Market as Canary** [5:33] — The host emphasizes that the Treasury market, not oil, is the key indicator to watch today, as rising yields signal market weakness.
- **Tesla as Rate-Sensitive Stock** [6:00] — Tesla is under pressure due to rising yields, as higher rates increase financing costs and require more subsidies to buy down loans.
- **Tesla Valuation Based on Future Products** [8:52] — A large portion of Tesla's valuation is based on enthusiasm for future products like robo-taxi and Optimus, which take longer to develop.
- **Market Pricing in Rate Hike** [9:10] — Markets are starting to price in a potential interest rate hike by October, with a 33% chance of higher rates.
- **Rate Hike Probability** [10:33] — By December, the probability of a rate hike falls to about 31%, but rate cut bets have evaporated.
- **Triple Witching Day Volatility** [11:18] — Today is triple witching day, which increases short-term volatility but is less relevant for long-term investors.
- **China Oil Industry CDSs** [12:01] — Credit default swaps for China's oil industry are rising due to supply route vulnerabilities in the Strait of Hormuz.
- **Commodity Prices Signaling Downside** [14:42] — Commodity prices are signaling further downside risk for risk assets, with markets underpricing the supply shock from the Strait of Hormuz.
- **Copper Falling** [15:23] — Copper has fallen year-to-date, and the anticipation is that this decline may continue.
- **Pentagon Sending Additional Marines** [15:38] — The Pentagon is sending three warships with thousands of additional Marines to the Middle East, including the USS Boxer Amphibious Ready Group.
- **Geopolitical Timeline** [17:10] — Last week, 2,200 Marines and 2,500 sailors were sent from Japan. This week, another 2,200-2,500 Marines are being sent from California, expected to arrive around April 3.
- **Kharg Island as Negotiation Ploy** [18:27] — The troop deployment signals a desire to take Kharg Island as a negotiation ploy to open the Strait of Hormuz, but casualties could rise.
- **Troop Deployment Delays Strait Reopening** [20:22] — The deployment delays the reopening of the Strait of Hormuz, resetting the clock on troop arrival.
- **S&P 500 Losing 100-Day Moving Average** [21:51] — The S&P 500 is losing the 100-day moving average, a level not lost since before liberation.
- **Bitcoin Under 70K** [22:24] — Bitcoin falls under $70,000 to about $69,400, off the floor but still down.
- **Tesla Semi Truck Success** [24:35] — Tesla's semi truck is winning over truckers with features like centered driving, faster charging, and longer range for $100,000 less than other battery electric trucks.
- **Tesla Semi Charging Speed** [25:59] — Tesla's semi can charge four times faster than other battery electric trucks, reaching 60% in 30 minutes.
- **Israel Strikes Iran's South Pars** [27:20] — Israel struck Iran's South Pars gas field, worsening the energy crisis.
- **10-Year Yield Increase** [28:21] — The 10-year yield has risen from 3.96% a month ago to 4.37%, a significant increase that drives mortgage rates up.
- **Oil Price Forecasts** [29:14] — Saudi officials expect oil prices to surpass $180 if disruptions last until late April, potentially triggering a recession.
- **Physical Oil Shortages** [31:42] — Physical shortages of oil will bite more deeply next week, causing prices to close in on $138-140.
- **Gasoline Demand Destruction** [33:01] — Gasoline demand tends to decline once prices exceed $3.50 per gallon; the average retail price is already $3.88.
- **Saudi Aramco's Scenarios** [35:07] — Saudi Aramco is weighing scenarios where rapid oil price rises put downward pressure on currencies, raising energy costs and driving inflation.
- **Second Massive Deployment** [36:21] — The Pentagon is sending thousands more soldiers in the second massive deployment in the past week.
- **10-Year Yield at 4.38** [38:51] — The 10-year yield continues to rise, now at 4.38%.
- **Amazon Acquires Robotics Startup** [40:55] — Amazon acquires a robotics startup called River, based in Zurich, valued at $110 million, for delivery robots.
- **Betting Markets and Brokers** [42:48] — Betting markets have higher spreads, making them more profitable for brokers like Robinhood, which encourages options and crypto trading.
- **IEA Warns of Iran War Threat** [43:43] — The IEA warns that the Iran war is the greatest threat to global energy in history.
- **JP Morgan Monitoring Keystrokes** [44:05] — JP Morgan will monitor junior bankers' keystrokes, video calls, and meetings to estimate their digital footprint.
- **Historical Strait of Hormuz Incident** [45:01] — In 1988, the USS Samuel Roberts was hit by an Iranian mine, highlighting the perils of escort operations in the Strait.
- **10-Year Yield Keeps Rising** [46:17] — The 10-year yield continues to rise, now at 4.38%.
- **Escort Operation Details** [47:20] — US escort operations would likely involve two destroyers, spaced 1.5-2 miles apart, with a commercial tanker leading to absorb mine hits.
- **Hormuz Escorts May Begin Once Amphibious Units Arrive** [50:20] — Wall Street Journal reports that Hormuz escorts may begin once amphibious units enter the region.
- **Risks from Fast Boats and Drones** [51:01] — Iranian fast boats and drones loaded with explosives are a particular concern for convoy safety.
- **US No Longer Needs NATO Assistance** [52:19] — Trump says the US no longer needs or desires NATO's assistance in the region.
- **JP Morgan's S&P 500 Target** [53:57] — JP Morgan warns that if the S&P 500 sell-off gains momentum below the 200-day moving average, strong support may not materialize until 6,000-6,200.
- **10-Year Yield Up 10.3 Basis Points** [58:52] — The 10-year yield is up 10.3 basis points, now at 4.38%.
- **S&P 500 Could Drop Another 10%** [59:50] — JP Morgan says the S&P 500 could drop another 10% if it accelerates below the 200-day moving average.
- **Iran Executes Three Men** [61:01] — Iran executed three men, including a 19-year-old wrestler, for killing police officers during protests.
- **Iran Executions in 2025** [62:09] — Iran executed more than 2,000 people in 2025, the most since 1989.
- **10-Year Yield at 4.38** [63:00] — The 10-year yield is almost at 4.38%.
- **Private Credit Risk** [63:02] — Concerns about private credit exposure to tech companies and underwriting quality remind investors that the credit cycle has not been repealed.
- **Strategic Oil Reserve Release** [64:31] — The US approved a $400 billion release of the strategic oil reserve, the largest coordinated release in history.
- **IEA Warns of 6-Month Oil Supply Restoration** [65:45] — The IEA warns it could take 6 months or longer to fully restore oil and gas flows.
- **Refined Products Crisis** [66:27] — The crisis is about refined products; even with crude oil, if refineries are shut down, it takes months to restart, leading to tighter markets.
- **Trump's Kharg Island Takeover Plan** [67:41] — Axios reports that Trump's plan to take Kharg Island could take a month to weaken Iranians with strikes before a potential invasion.
- **Saudi Arabia Sees Oil at $180** [68:42] — Saudi Arabia expects oil to spike to $180 per barrel if the Strait remains closed.
- **Ground Invasion Under Serious Consideration** [69:05] — Sources say an occupation of Kharg Island by ground troops is under serious consideration, along with a naval blockade.
- **Super Micro Selling Off** [70:23] — Super Micro is selling off due to risk that a major shareholder was involved in selling Nvidia chips to China illegally.
- **Amy Webb's Convergence Outlook** [71:17] — Amy Webb announces the end of her tech trends report, advocating for a convergence outlook that looks at intersections of trends, uncertainties, and catalysts.
- **Troop Deployment Summary** [72:15] — Trump is sending more troops to the Middle East despite saying he wouldn't put troops on the ground. The first batch from Japan arrives end of next week, the second from California later.
- **Oil Price and Recession Risk** [73:25] — Saudi Arabia argues that if the oil shock continues into mid-April, oil could hit $150, which Goldman Sachs says is recessionary. By end of April, $180.
- **ECB Discussing Rate Hikes** [74:04] — The ECB is discussing rate hikes in their April meeting, with a potential hike in June, due to higher inflation from oil prices.
- **Rate Hike Probability at 48%** [75:01] — Futures markets now show a 48.4% chance of a rate hike by October 2026, with a 10% chance of two hikes.
- **Nasdaq 100 Sell-Off** [75:57] — The Nasdaq 100 sold off from 592 to 586 as yields rose, confirming the host's morning warning.
- **S&P 500 Below 200-Day Moving Average** [76:24] — The S&P 500 is trading below its 200-day moving average, and JP Morgan warns of a potential 10% correction to the low 6,000 range.
- **JP Morgan Lowers S&P 500 Outlook** [77:02] — JP Morgan lowers its S&P 500 outlook for the year, citing higher oil prices leading to demand destruction and increased recession odds.
- **Oil Shock Worse Than 2022** [77:36] — The current oil shock is already worse than the 2022 Russia-Ukraine shock, with potential for new all-time highs.
- **Oman Crude Futures at $166** [78:19] — Gulf futures tied to Oman crude are shooting past $166 per barrel, and options indicate bullish bets on oil reaching $130-140.
- **Saudi Officials Expect $150 Oil** [78:54] — Saudi officials expect oil prices to hit $150 if the Strait remains closed into the second week of April.
- **Need for More Marines** [79:05] — To reopen the Strait, more Marines are needed, but the first batch arrives end of next week, and the second from California around April 3-5.
- **Kharg Island Takeover Timeline** [79:32] — Military intelligence suggests needing about a month to weaken Iranians with strikes before taking Kharg Island.
- **Risks of Escort Operations** [80:06] — Escorting tankers through the Strait is risky due to small boats laden with explosives that can overwhelm destroyers.
- **Troops Along Shore** [80:32] — Marines may line the shore to protect ships passing through, but this puts troops at risk of Iranian fire.
- **Iran's Goal to Damage Global Economy** [80:46] — Iran wants to prolong the war to spike oil prices and cause a global recession, which they can claim as a victory.
- **Iran Executions in 2025** [81:08] — Iran executed over 2,000 people in 2025, the most since 1989, in addition to 6,000 killed in protests.
- **Hormuz Escorts Timeline** [81:33] — Hormuz escorts may begin once amphibious units arrive, but that takes 2-4 weeks, aligning with oil price forecasts of $150-180.
- **Market Pricing in Rate Hikes** [82:06] — The inflationary impact of the war is leading markets to price in rate hikes rather than cuts.
- **10-Year Yield at 4.39** [82:18] — The 10-year yield has moved to almost 4.4%, up from 4.34% earlier.
- **Private Credit as Ticking Time Bomb** [82:41] — Rising yields put pressure on private credit, similar to the 2008 real estate crisis, but now private credit is the concern.
- **Real Estate as Hedge** [82:53] — The host believes real estate is a unique hedge because rates will be lower than ever by 2032, making it a strong bet.
- **Bubble in Private Credit** [83:29] — The bubble is in private credit, not real estate, and rising yields accelerate pain in zombie businesses.
- **Bear Flattening Explained** [83:52] — A bear flattening occurs when both 2-year and 10-year yields rise, which is bearish for the economy and stocks.
- **Qs Suffering as Expected** [84:45] — The Qs are suffering due to the bear flattening, as warned in the morning Alpha report.
- **Confluence of Problems** [85:25] — Troops take time to arrive, creating risk for American lives, and the timeline aligns with potential oil price spikes.
- **War Approaching 30-Day Anniversary** [86:18] — The war is approaching 30 days with no end in sight, increasing the likelihood of higher oil prices and recession.
- **Kharg Island Takeover as Leverage** [86:48] — Taking Kharg Island could force Iran to negotiate, but it may not work as Iran may prefer to damage the global economy.
- **Iran's Potential Win** [87:50] — If Iran triggers a recession, it can claim credit and deter future attacks, even though it also hurts Iran.

### Conclusion

The video concludes that the combination of rising Treasury yields, geopolitical tensions, and potential rate hikes creates a challenging environment for stocks, but real estate may serve as a hedge. The host warns that the war could lead to significantly higher oil prices and a recession if not resolved soon.

## Transcript

Well, well, well, well, here we go. Here
we go. Another day, another down way to
lose money in the stock market. It is
disappointing. It is depressing.
But this is like the perfect time to
shamelessly shill real estate. It not
that I'm selling you real estate or
anything, but I I do want people to just
for a moment
think about real estate and a benefit
for a moment for real estate.
One thing that real estate, especially
low debt real estate does for you in
this environment we're in.
Lower debt the better, okay? Cuz debts
obviously, you know, mortgage rates are
up right now. They've they've been up
for I mean, since this war started, it's
been like straight up. Totally the
opposite of what Donald Trump wanted.
But one thing that real estate does is
it diversifies you away from the
short-term insanity, geopolitical hits,
oil, you get the short-term
you you get insulated away from that.
And in the event this lasts long enough
to where we trigger some form of a
recession,
you end up having a piggy bank that you
could pull money out of.
Money that you've allocated to real
estate, which makes it hard for it to
evaporate in the stock market. Uh but it
makes it easy to leverage against
in a recession when rates go to zero,
because that's what they will do. Rates
will go to zero.
That'll be one of the first things the
Fed does
in the event we end up striking some
form of recession, depending on how
obviously long this this conflict lasts.
So, there is a a desirability of
diversifying real estate. Even though
real estate has kind of like,
you know, it's it it's in some areas is
actually up since 2022, which is great.
You know, especially those lower built
areas. But something that you have to
think about with real estate is
nobody's really cared about real estate
the last 4 years because rates have been
high.
It's it I think it's been this perfect
opportunity to accumulate. And I think
that will continue until rates come
down. Now, my
base case is that rates will be lower
than they've ever been before by 2032.
I don't know if that's going to be
because of a recession or just because
of the deflation of artificial
intelligence that ends up arriving along
with, you know, getting through a
transitory transitory transitory
transitory.
Uh it will probably take a lot longer
than the
5-year game we've played so far.
It will probably take in in the order of
a decade, which is why I made the
estimate
in 2032. I've been saying it for the
last 4 years. Those of you have been
here for the last 4 years, you know I've
been saying this.
Uh but the last 4 years, my call has
been rates will be lower by 2032.
Um could be before that, but you know,
the call is buy.
Uh which which which which in my opinion
creates this sort of 10-year window
to buy real estate between 2022 and
2032.
Because then you go refinance
you know, super low rates, lower than
obviously your your cap rates, what
you're earning on rent. You know, so
house hack is knocking on the door of
about 100 in assets.
And if you end up taking that and
refinancing it, let's say you had to
refinance it tomorrow, uh and that
represented 35%.
You know, you could you could basically
leverage a portfolio up to almost $300
million.
Which is crazy. Uh so creates a lot of a
lot of buying power is is the point.
Uh real estate's easy to leverage
against
and harder to it takes more time, you
know, it's certainly easier to leverage
against than um
than stocks. Or sorry, harder to
leverage against the stocks. But um
in my opinion it contains less So,
I'm now getting a a read here that
there's now some pricing of a rate hike
by October.
Uh let's go take a look at that.
The
Treasury market is really selling off
leading bonds to really rocket today on
a yield basis, which is very very
bearish for the stock market. The bear
flattener is continuing. I've got 9.3
basis points on the two-year. The
two-year is almost at 4%.
And if you look at the 10-year Treasury,
we're up about 69 basis points here or
6.9 basis points. We're up at 4.35,
which is really high. Here, let me show
you you know, something you know,
attractive in the meantime just to try
to like to like relax the pain of what
you just saw. You just saw the 10-year
at 4.35.
That's painful to the eyes. You need
something better. All right, good. So,
um it's not a surprise that as
yields on bonds have risen over the last
33 minutes that the market has been
open, then the market's been selling
off. In fact, that's as usual, but I
mean, we're not always right, but that's
exactly what we flagged in the Alpha
report this morning. That this canary in
the coal mine today is not oil, it's
actually the Treasury market. And sure
enough, that's exactly what happened.
The canary in the coal mine said, "No,
no, no, no. Don't trust the bounce
because the Qs had a little bounce right
here, right?" But look, there is no
bounce
in the bond market at all. And then the
bond market fell off a cliff,
uh which suggested this was not a
durable bounce.
And so you really need yields to come
down.
Unfortunately, as as yields continue to
rise, you are seeing Tesla come under
pressure. Tesla is considered a
rate-sensitive stock.
Uh that is because people finance
vehicles with you know, with Tesla. Now,
Tesla also buys down loans, but the more
yields go up, the more they have to pay
to buy down loans to, you know, levels
that are attractive.
If we go to
let's see what we got here. Model 3,
Model Y,
Cybertruck. And they're phasing out
obviously the three or the S and the X,
which is disappointing. But
here they're pitching lease. What if I
go to buy? Let's just take a peek. So,
if I go to finance,
they're doing 6.29
on a Model 3. That's not attractive.
Uh okay, what about over here? Let's
just load all the order now pages.
Ah, on the ones they're deprecating,
they're only buying you down to 3.99 on
the S and X. Since rates are going up,
it's getting expensive, right? On the
Cybertruck,
they are also getting you down to 3.99.
And on the Model Y, they're pulling you
to actually 0%. Wow. Uh probably more
inventory build-up over here on the Y or
they're just trying to,
you know, encourage Model 3 buyers to
get the Model Y instead because there's
more profit in the Model Y than there is
in the Model 3.
That sounds reasonable to me. Uh but
again, as yields go up, it it's going to
get more expensive for Tesla as well,
which is unfortunate.
Uh it gets more expensive for everyone,
whether it's private credit or or what
it what it could be. So, okay.
Great. So, let's go take a peek well,
how much of Tesla's valuation is based
on the car? Yeah, well, that's but
that's the problem. You know, it's maybe
150 bucks of the company's valuation is
actually the car business, probably even
less.
Uh so, what you're really talking about
is
enthusiasm around robo-taxi and Optimus.
But the problem is anytime a company
trades off of, you know, a large portion
of the business trades off of enthusiasm
for a future product,
that future product invariably takes
longer to create or to provide updates
on or to make progress on because that's
that's just the nature of building. The
things take longer than you anticipate.
And so as, you know, new future updates
are further uh and fewer between, you
end up with uh
you know, more bearishness in in the
asset. So, it's unfortunate,
but we'll see. Hopefully we can settle
out here.
I'm still not seeing the Treasury market
bounce, but I am seeing about a 5-minute
green candle set here on the Qs, which
is good. Uh but let's see how durable it
is given that again, we're we're not
seeing any kind of move on the Treasury
market to indicate that yields are
relaxing. Instead, you know, there's now
talk that markets are slowly starting to
price in an interest rate uh hike, which
is exactly what I warned about on
Tuesday, and people made fun of me for
that. They're like, "Oh, this is
ridiculous, Kevin. This is ridiculous,
Kevin." And then sure enough, you know,
they hinted at a hike.
You know, really, and we're talking with
course members about this earlier, but
this signals that markets are pricing in
at least a 25 basis point hike, maybe
even a 50.
Let's go Oh, here we go. Here is the
Reuters headline. Wow, that came in like
substantially later than than I've seen
at other sources here, but US to deploy
thousands of additional troops to the
Middle East, three US officials tell
Reuters.
Uh but that that has been now known for
about 20 minutes.
Uh, but I'm just now seeing it come
across the wire services.
Uh, all right. So, if I go out to
October of 2026,
you can actually see that we are now
pricing in
a 33% chance
of higher interest rates, not lower.
Markets are now pricing in an interest
rate hike. Uh, about a 30% chance, so
it's it's not massive, but a 30% chance
of a hike by October.
If we go to December,
you can see that falls to about 31%.
Uh,
that's not great. You know, rate cut
bets have evaporated so quickly that
you've actually now seen uh, rate hikes
begin to get priced into markets. This
is exactly why the Treasury market is
uh, moving. Oh my gosh. Yeah, look at
that. Again. Now we're up again. We're
up 7.7 basis points now at 4.36.
Uh unfortunately
and and oil's not much of a mover today.
It's it's mostly yields, which uh, you
know, is what we were focused on and
focusing on and and today is a uh,
triple witching day.
Not that that matters for a long-term
investor, but shorter term it's going to
create more volatility. But, um,
let me let me get in here. I want to see
if there's more insight on this troop
deployment.
But uh
you this also creates more burden
for people who are borrowing.
Uh, private credit, uh, buy now, pay
later,
whatever. Uh, it it all gets more
burdened and a little more poopy doopy.
So, it's not great. Uh, and it's why
today I've really been watching the
treasures.
All right.
So, interesting. There's an article here
that's called the Strait is also a
credit story. China oil industry CDSs
are pushing higher on supply route
vulnerabilities.
Uh, let me see if I can
get any more insight on that.
And then I'll share that.
Uh, oh, Chuck Norris died? No way, dude.
Uh, that was not on the bingo board
today. We Dude, we nailed it. Chuck
Norris in the Strait of Hormuz.
Come on, man.
Come on.
That's a bummer.
Um,
all right.
So,
let me see this here. Okay. Credit
default swaps. Let me see if I can get a
screenshot here that's interesting. Um,
yeah, it's not that exciting. Credit
default swaps are slowly moving up, but
there's nothing like
really scary on these, you know, Chinese
CDSs.
Petroleum or whatever. There there is a
little movement up, but there's there's
nothing crazy here.
All right, what else we have here? Uh,
let me go into
commentary here. So, stir market pricing
shows significant P&L loss. One can
conjure up many different definitions of
the word crisis, but a practical one for
portfolio
Yeah, see, look at that. Told you, it's
not durable. If yields keep going up,
the
little bounces are not playable. They're
not durable. That is like 100% what we
warned this morning in the alpha report.
I even said oil doesn't even matter as
much today. It's the Treasury market
right matters today.
Nobody wanted to hear it. Well, I mean,
course members want to hear it, but uh,
usually when when I talk about
Treasuries, people are like, "No, that's
boring Kevin."
Like uh
it's your canary. You know, I can't I
talk so much about canaries, I want to I
I almost feel like I should put a canary
in this room.
Uh,
you know, then we can hold
uh,
hold up the canary.
Anyway. All right. One can conjure many
different definitions of the word
crisis, but a practical one from
portfolio management perspective is when
the price becomes the ultimate
fundamental. In other words, when you
have to liquidate portfolio risk in mass
because of adverse price action, you're
effectively experiencing a crisis
regardless of what's going on. Um,
so,
what are what's their point here?
CFTC data suggests speculators are short
so for futures.
Blah blah blah, blah blah blah.
Some bets on forced liquidation.
All right, fine.
What else?
Commodity prices are signaling further
downside risk for risk assets.
Markets are underpricing the supply
shock stemming from the interruption of
oil flows through the Strait of Hormuz.
To gauge expected market moves from the
conflict in Iran,
we looked at the relationship between
prices and commodities
across four different shocks. US break
evens and precious metals appear too low
relative to their moves.
Uh, equities in most regions outside the
US
and Latin America look insufficiently
priced for downside with greatest
vulnerability in emerging markets from
uh,
from the sell-off in commodities,
basically. Yeah, I mean, we've been
watching copper as well. Uh, and
copper's really fallen off. Uh, I mean,
you're year-to-date negative now, and
the anticipation is that this this might
continue.
Uh,
as far as
let me see. I'm still trying to get Oh,
yeah, here it is. Pentagon sending
additional Marines.
Okay, this is now just coming through.
Pentagon is sending three warships with
thousands of additional Marines to the
Middle East. Roughly, yeah, but that's
old This is old news, isn't it? Roughly
2,200 to 2,500 Marines from California,
USS Boxer Amphibious Ready Group
are heading to Central Command.
Second massive No, it is. Second massive
deployment of Marines in the past week.
Right, because the Japan-based group was
sent uh,
last week, and they're expected to
arrive at the end of this upcoming week.
This is just a day after Donald Trump
says no, you know, no plans to put
troops on the ground, but then again, he
also wouldn't uh,
you know, rule it out or or want to tell
anybody about it. So, let's write that
down.
So,
let's see here.
Okay.
Let's pull this up here.
Come on, Mr. Mouse.
Mr. Mouse doesn't want to cooperate
today. It's okay, I have a backup mouse.
Oh,
that's why it's not cooperating.
Stand by.
Stand down and stand by.
And Mr. Mouse is working.
All right.
Let's write this down.
So geopolitics.
All right.
Uh Iran.
Last week,
last week we sent uh, 2,200
Marines
and about 2,500 sailors
to the Middle East
from Japan.
These included
USS Tripoli and 31st MEU.
Uh, and that is the um,
Marine Expeditionary
Unit. Okay?
Uh, this week,
oops.
Okay.
This week,
USS Boxer
uh Amphibious
uh, Ready Group,
and
11th Marine
uh, or MEU.
2,200
to 2,500 Marines via
There we go.
Uh,
this uh, signals
the desire
to take uh, Kharg Island
as a negotiation
ploy to open the Strait
uh,
is becoming more likely.
It also suggests,
you know, casualties could rise here.
US casualties
uh, could rise and does not imply this
war
is close to over.
You know, that as we mentioned
yesterday,
these folks are expected to show up
uh by
Friday Saturday Sunday.
Expected to show up Friday, Saturday,
Sunday
of next week. So, that'd be around 27,
28 29
of March.
It's unclear how long it'll take these
folks, but if they're going from
California,
uh, it's probably going to be
uh,
you know, this I I would guess this is
probably going to take uh, about 15
days, maybe even a little longer.
Probably closer to April 3 before this
group shows up. Uh, I'd expect uh, Trump
would
uh wait until both assets are in the
region to make any moves, right? Just
basically have more people there.
Uh this does delay
uh some of that uh
delays, you know, straight reopening
um somewhat
resets the clock
on troop arrival
if you will.
Okay, not ideal.
Oh, man. Yeah, 4. Okay. Yeah, 4.37 now
up 8.7 basis points.
It's a skyrocketing over here. See,
oil's done nothing.
Nothing. It's all in the treasures
today.
And uh
take a peek here. Qs can't really get
anywhere. I've got MP material
uh coming down just under its 55 line.
Still think this one's slowly heading to
30, although it's it's taking quite a
while. Uh calling the top
uh was was easier because it happened
faster.
But anyway,
Intuit's actually green today.
Yeah, some software plays even even
DocuSign's green uh today. Adobe's green
today.
Uh Nvidia has come down
a little bit, but it's been in the
sideways range for a while. How's Oracle
doing?
Just to pay attention to Oracle.
It's
it seems like it's trying to build some
kind of bottom here.
Let's see.
See that?
It seems like it's trying.
But we'll see if that can even hold on.
And then how are we doing on the spy?
If we just go SPX.
We're losing the 100-day moving average.
No, that's the week. Yeah, we are.
Sorry, we lost the 100-day moving
average is the one I'm referring to. We
have not lost the 100-day moving average
on the spy since liberation. Well,
actually right before liberation. Here's
where we got liberated.
That's interesting.
Uh it's been quite a time quite a bit of
time here sideways at all-time highs.
Mhm.
Bitcoin falls under 70 back to about
694, which is better than where it had
been. Now, it's it's off the floor.
And then we've got
let's look at Owl, Blue Owl.
Owl wow.
Still still under 10.
Sitting right about nine bucks over here
on Blue Owl. And I think Restoration
Hardware's at uh not quite. Not quite at
liberation day lows. Liberation day lows
were 123.
All right.
Let's uh
see what else we got here.
Wall Street Journal.
So, we saw this yesterday. These are the
uh
A-10s and the Apaches
>> [snorts]
>> trying to reopen Hormuz.
South Pars gas field's biggest is Iran's
biggest economic safety net. We'll take
a look at that.
Avoid overheated assets, says uh
the Wall Street Journal.
Battlefield map of critical energy.
Saudi Arabia
180 if this keeps going.
Uh Tesla finally has its first semi
truck and it's already a hit. Oh, that's
awesome. Take a look at that.
Some mass deportation policies went too
far, Trump told his inner circle. Oh,
interesting.
Trump sues Harvard over civil rights.
OpenAI plans to launch a desktop super
app.
Oh, to try to compete with Open Cloud.
>> [snorts]
>> Supermicro got whacked on the uh
smuggling story.
All right, I want to see the Cybertruck
thing.
Let's see what we got over here.
Anything else here? No.
Okay.
Let's take a look at this.
Tesla.
All right.
All right, surrounded by screens, backed
out of the their no problem. Pilot model
of the semi
This summer after years of delays, Tesla
began shipping mass-produced
semis from its Nevada Gigafactory. The
company's expecting to deliver between
5,000 and 15 before ramping to 50,000 a
year. Wow.
Surprisingly, Tesla's winning over a
hard-to-please influential group of
truckers. Truckers who drove it in pilot
test say they love the features
including a centered driving position,
faster charging, and longer range for
about $100,000 less than other battery
electric trucks. That's great.
Uh Tesla's focused on cyber cabs and
Optimus, bladdy bladdy bladdy.
Swapped out a 13-gear diesel truck
which is automatic for a 1-month pilot
test. It's easier on your body. It's
less stressful because you're not having
to engage the clutch
uh and the stick shift, but I thought it
was automatic. But whatever.
You've got Tesla says the semi can
charge four times faster than other
battery electric trucks reaching 60% in
30 minutes. Wow.
That's actually pretty impressive.
Uh slower than filling up with diesel,
but not bad for an EV. I think the thing
looks really cool.
So,
are these just people comparing other
battery trucks?
California uh ground zero for zero
emission, freight downturn.
Trucking companies
are securing grants for trucks. Tesla
produces two semi models, 325 miles and
500.
Haven't talked about price yet.
People familiar with the orders say they
come in at under $300,000 or double the
cost of a diesel truck. Wow.
Fewer moving parts, don't need regular
servicing.
The servicing aspect is a big win with
EVs.
You know, substantially
uh less.
That's cool. See what people are saying
here.
Now, let's see the Roadster. Haha.
Okay.
Yeah, cool. All right, great. So, that's
great for Tesla.
Let's go take a peek over here.
That's the deportation policy one. Let's
look at this.
Latest attacks on oil and gas
infrastructure mark the dangerous new
phase
worsening the energy crisis. Israel on
Wednesday struck
Iran's South Pars, which we remember
talking about that. So, South Pars is
over here.
Here's the Strait of Hormuz.
Okay.
And then of course we had the
retaliation. We had attacks continuing
Thursday.
Brent crude prices move up.
Oil markets open
after initial attacks.
Fuel tanks, Kharg Island. Well, now
there are the threats of the takeover of
Kharg Island. That's going to be
interesting to see how markets react
to that if that ends up occurring.
Let's take a look at CME Sizzl just to
see the rate change here.
And we still sit at on bonds. Well,
4.37. It's just a
massive uh increase in in the 10-year. I
mean, we were under four there for a
minute. Look at that. We were at 3.96
about a month ago.
It's incredible.
And uh you know, now we've gone up about
46 basis almost half a percent of an
increase on the 10-year.
So, you know, that just drives mortgage
rates straight up, too.
Not great.
Okay, what do we have here? Saudi
Arabia's oil officials are working to
frantically project how much how high
oil prices might go if the Iran war and
its disruption doesn't end soon.
And they don't like what they're seeing.
Uh yeah.
Okay.
Base case, several oil officials in the
Gulf
said the prices could surpass 180
if disruptions last until late April.
That would sound like a bonanza for the
kingdom still heavily leveraged oil
revenly revenue, but it's deeply
concerning because it could push
consumers into slashing oil use or
trigger a recession that hurts demand.
Right.
Uh
they would also risk casting Saudi
Arabia as the role of profiteer in a war
it didn't start. Saudi Arabia generally
doesn't like too rapid increases of oil
because it creates longer-term market
instability.
Right, you have a lot more volatility.
180, that'd be wild. You know, the rise
that we've seen in oil prices has
already been substantially worse than
what we saw when Russia invaded Ukraine.
So, it's it's been pretty aggressive
this this oil movement.
Let's take a peek here at the Qs.
Yeah, cuz see Qs can't get anywhere
until those yields come down. What's the
the meta today?
2% on Tesla despite that semi-truck
news huh?
The semi-truck news is interesting. It's
all going to come down to ultimately,
you know, how much does that actually
drive any kind of profitability.
Anyway.
Okay.
Uh let's see here. 200 200 per barrel is
not outside.
Contracts release reached an all-time
high in July of 2008 at 146.
Somebody here in the chat writes
Turbinio
writes Russia produces about 10% of
global oil. Straight produces about 20%.
Well, there you go.
Uh let's see here. Oman is
benchmark tankers of physical crude
priced at a fixed spread to the
benchmark.
Saudi customers are balking at using the
benchmark. Wars have removed millions of
barrels from global supply.
Price is up about 50% already since the
conflict began.
Saudi Arabia and light crude is being
sold to Asian buyers via the Red Sea
port for around $125 a barrel.
As extra oil in storage, some of which
was shipped out of the Gulf ahead of the
war,
uses up physical storage.
Physical shortages will bite more deeply
next week causing prices to close in to
138 to 140, the official said.
Interesting. So, as physical storage
is used up,
prices are likely to go even higher on
oil as soon as next week.
Someone in the chat says Reddit's on the
move today.
Let's go take a peek.
Yeah, look at that.
Some enthusiasm there on Reddit. Looks
like Reddit has a pretty big support
line at 133.
We didn't quite bounce off that today.
But, you're right. There's some some
real volume coming in.
This is on the 5-minute volume chart.
Man, just right off a cliff here.
Uh which means yields up.
And Qs are getting their first 5-minute
green over here
that we've seen in the last about 30
minutes, 40 minutes.
Okay.
Average pump prices have rocketed. We
are at the highest level since right
after the Russia-Ukraine invasion.
By the second week of April, Saudi
officials expect prices to hit $150
before stepping up to 180 in the weeks
after that. Wow.
And and remember, it's going to take
>> [snorts]
>> you know,
10 to 15 days to get those troops to the
region that Trump is sending.
Uh and and you know, people aren't
heavily enthused by that.
Wagers that Brent futures will hit
130, 140, 150 next month were popular
positions as of Wednesday.
Great. So, now we're getting
you know, those call options that call
option betting is starting to move up in
price.
Market is not acting like this is an end
of March thing anymore.
I don't think 150 is out of the
question.
More variables could get prices to move.
Okay, Russia is contributing to supply.
Demand could fall, which would bring
prices down, but that potentially only
in tandem with a recession.
Right, cuz then people are pulling back,
driving, going to the mall, flying,
whatever.
150 is where people really start to put
their pencils down and do the math.
Americans might start working from home,
rethinking vacations,
driving less.
Price at the pump.
Gasoline demand tends to start declining
once gas prices exceed 350 a gallon.
Uh that's interesting.
For many, that price is already here.
Average retail price of gasoline is 388
on Thursday.
A lot higher in California.
Diesel is already hitting
uh companies that rely on the fuel.
Mhm.
Let's see here.
Uh
Saudi Aramco is also weighing a scenario
where the rapid rise in oil cost puts
downward pressure on other countries'
currencies, raising their effective cost
of energy even more, driving inflation
and rates up, and slowing their
economies.
>> [snorts]
>> This run-up could eventually hit the US.
Well, that's why you're now seeing uh
the Fed market pricing in
um
a potential rate hike by October.
You know, this is uh
no bueno.
Okay. There it is. Now, the Wall Street
Journal is covering it.
See if they have any more insight here.
Okay, Box Rampageous Group.
Nope.
>> [snorts]
>> Uh Trump called NATO a paper tiger and
cowards. Um
Over 100 arrested in UAE for videos and
misinformation.
Apparently.
Wow.
Cracking down.
Pentagon sending thousands of more
warships
thousands of more soldiers.
Second massive deployment in the past
week.
Yeah.
Iranian man arrested for trying to enter
UK nuclear base.
What?
British police arrested an Iranian man
who attempted to enter a nuclear base in
Scotland.
What?
The 34-year-old was detained along with
a 31-year-old woman.
Faslane houses UK's nuclear-armed
submarines.
Unsuccessful attempt to enter the base.
Wow.
Wonder if they got any weapons with
them.
All right.
Uh deportation, some policies went a
little too far.
Yeah.
I think that's fair for him to admit.
Talk Tesla.
We saw them more troops.
Saudi Arabia.
South Pars.
Oh, ABC pulls The Bachelorette after
video showing the star's alleged violent
behavior towards ex. Yeah, doesn't she
have a domestic violence case or I think
the the prior ex has a domestic violence
case against her.
Taylor Frankie Paul being violent
towards her former partner. In light of
the newly released video that would
surface, we've made the decision not to
move forward with the new season.
Wow.
That sucks
for her.
Imagine being Well, I mean, imagine
like, "Yeah, I'm going to be the
Bachelorette or whatever." And uh
and then you get rugged.
Well,
don't beat people, I guess, huh?
Interesting.
Okay.
Let's keep going here.
Is is the video benign or is it bad?
As somebody just I don't I don't really
care to go look for it right now. But,
uh look at this. Now, we're at 4.38.
It's even worse.
She was throwing chairs? The video was
wild? Are you serious?
All right. All right. All right. All
right. I got to look. I got to look.
Ah.
Supposed to be doing work.
Uh
uh
uh Bachelorette.
Uh
TMZ.
Uh
trigger warning.
Near a child.
Oh, great. I really hate this kind of
stuff.
And then, of course, TMZ's banners are
something else.
But hold on, let's actually get this to
where the audio function.
There we go.
Oh, she's pulling her his hair.
He's documenting.
[clears throat and cough]
Oh my god.
Oh my [laughter] gosh.
Wow.
I like I like the classic
TMZ. Oh by the way, did you see the
child?
>> [laughter]
>> With the ding. OH MY GOSH.
I THINK those chairs are from Target.
Ah,
that's pretty crazy.
That's pretty wild.
All right.
Let's see here.
Okay.
Amazon acquires a robotics startup. What
for deliveries?
Uh
Ri- River River. It's a
Let's see, based in Zurich.
Valued at 110 mil previously.
Huh.
All right.
After a courier completes a drop-off,
Rivi- River's delivery robots can
shuttle other packages from the car to
separate locations nearby.
Wow. Robots are going to be delivering
our packages.
All right.
Uber self-driving quest as CC idea that
could jolt the IPO market.
Like get more people to IPO.
I don't know. I mean the market needs to
actually perform better for more
companies to IPO because people don't
want to, you know, Figma or Gemini.
I know I was looking at Gemini this
morning. The thing's down like 88%.
Something like Gemini space station.
The crypto company, right? And look at
this. This is horrible. You know, they
were up like 6% in after hours yesterday
because they said they were laying off
like 15% of their staff.
But
that got eradicated real fast.
But this is the
Yeah. Okay, only requiring
twice a week.
Or sorry, uh twice a year financials.
I I don't think it has as much to do
with the financials as it does
you know, is this the kind of market
that you want to risk your stock like
plummeting in?
All right, what else?
Cal-She raises $1 billion at a $22
billion valuation. That's wild.
Yeah, you you always see like they're
running all these ads now. Bet on
anything. Bet on anything. That's the
point. They want you to bet on anything
because the spreads are horrible and
that's how the brokers make way more
money. There's way more money to be made
in in betting than there is on like
selling, you know, having people invest
in stocks like with Robinhood uh just on
the stock side. That's why Robinhood
encourages options. That's why Robinhood
encourages crypto and margin because
that's where they actually make most of
their money. Now, betting markets,
that's even
there's even a higher spread in betting
markets. It's super juicy uh for
brokers.
Iran war threat is the greatest Iran war
is the greatest threat to global energy
in history, warns the IEA. Wow.
Desperation, thy name is Scott Bessent.
The perils of the Hormuz escort plan.
Yeah, let's take a look at that.
Oh, JP Morgan is now also going to
monitor keystrokes of their junior
bankers.
Which like how awkward is that?
I they said if I s- command F this, I
should find keystrokes. Yeah, there.
Look at this.
They're going to estimate employees
weekly digital footprint including how
many video calls they do, how many
desktop keystrokes they make, and how
many scheduled meetings they have. They
talk about a miserable job. Now how many
times you push a button on a keyboard is
going to get monitored?
Ah.
Man. Talk about a big brother crap.
Gross.
No faith anymore in humanity here
apparently JP Morgan. But it doesn't
surprise me. I hate JP Morgan.
USS Samuel Roberts was returning from
the Strait of Hormuz escort run when an
Iranian contact mine exploded ripping a
9-ft
hole into its hull.
Wow.
Uh when was this? Almost four decades
on, the Gulf incident in 1988 is a stark
reminder of the perils of Trump's plan
to restart traffic.
World economy is reeling, political
pressure building.
US military chiefs must calculate what
level of threat is available.
US military planners consider the risk
too high. US warships built with a
single hi- a hull
are particularly vulnerable from mines
and fast boats
which the Iranians have armed with small
missiles and rockets.
Right. It's the ribs.
Rigid inflatable boat or um
Uh and there what's the other one? The
one that's just rigid all around. Ah,
whatever.
Uh any convoy could also be targeted by
unmanned surface vessels, ballistic and
cruise missiles, and drones. The drone
threat's a problem.
Big problem. You can just pop out of a
cave and launch them pretty fast.
And and then you'd be pretty close to
your target, too. So interception time
frames would plummet.
Man, the 10-year does keep going. That's
crazy.
Uh supreme leader to issue message for
start of Iranian New Year within
minutes. Uh okay.
Let's see here.
Uh US would likely start an escort
operation with a small convoy. This
could be two destroyers, each with about
310 sailors. A commercial tanker would
probably lead the line of ships
because they have double hulls and could
absorb a hit from a mine without
sinking. Oh, really?
Uh the destroyers protect against
missiles and drones. They also have
anti-submarine and some limited
anti-mine technology. Ships would be
spra- spaced out 1.5 to 2 miles.
Exact formation would likely change
between runs to bit- prevent radar
missile blind spots.
You'd mix them up.
The aim would be that no commercial
vessel stands between Iran and a US
warship. Right, so that way you can
intercept.
But you'd travel through the strait
single file. Wow.
Anywhere between eight to 12 destroyers
would probably be needed for the whole
operation. 10 is a good number.
Kevin, you must look at long-range
strategic business plan that Elon Musk
posted. I see you have another plan.
Let's go see.
Uh
And then we'll come back to this.
He posts so much. It's so hard to find.
Uh his stuff.
Yeah, I don't
I'll just try to Google it.
Elon Musk long-range strategic plan.
Mm.
That's just a nice nap.
Did I miss it?
Did I scroll past it?
Elon Musk master plan equals keep
changing the plan. Yeah, I mean that's
that's exactly right.
Uh
Somebody says did a fighter jet get
taken down? Well, a couple days ago a
fighter jet did get hit
uh by Iranian fire.
We're not sure if that was
you know, a missile
or uh or what, but but yes.
Tesla terrifies
Is it the chip manufacturing project?
It's a picture. What's it a picture of?
I don't know.
Oh, there it is.
>> [laughter]
>> All right, yeah, that's a decent meme.
Okay.
>> [snorts]
>> It's all on the peg of the Strait of
Hormuz.
>> [laughter]
>> Okay. Okay. All right. It's It's It's a
good uh
It's a good uh It's a good meme.
Oh, and then somebody Oh.
Oh.
All right. I had to bring it right back
to the Epstein files.
Escort would require aircraft so they
could tackle a swarm of drones.
Any escort operation is not expected to
start until uh the US Tripoli
reaches the region from Japan.
Not expected to arrive until the
end of next week.
Interesting. All right, so let's write
down some of this. So, basically
uh escort plans.
Wall Street Journal reports
uh escort
uh how should we put it? Um
Hormuz escorts uh may begin once
uh amp-
phibious units enter region.
>> [snorts]
>> Uh but it will be hard, obviously.
Fast boats, which are hundreds if not
thousands, are a particular concern.
Hidden along the coastline, they could
be loaded with explosives.
Uh
Iranian fast boats
uh and drones
loaded with explosives and drones are
the risk.
US is using A-10 Warthog Warthog
aircraft in a hunt for Iranian vessels.
Would not be easy to determine whether
enough fast boats have been destroyed to
keep the convoy safe.
Because they are small and numerous,
they could be distributed widely and are
probably in tunnels, large garages,
hangars, and parking lots.
Yeah, cuz you just throw them in the
water pretty quickly.
They're all over the place. Creeks,
inlets, you've got to find where they're
hiring or hiding.
Minesweeper would also need to pass.
US has been striking mine-laying ships.
Yeah, but some are already probably
laid, the mines.
We're going to have to literally test
the waters a little bit.
Testing the waters.
No longer need or desire NATO's
assistance, says Trump. Right. It's We
don't need your help. Now we need your
help. Now we don't need your help.
What a mess.
What a mess.
Let's see what people are saying in the
comments on this one.
Uh
let's see.
Iran knows this long-term strategy will
do the most harm to opponents. Sure.
Blah, blah, blah. Okay.
Let's keep uh keep an eye on here. Yeah,
see? Qs can't get anywhere. Not with the
10-year Treasury doing this.
I'm just looking at the longer-term
proxy here, TLT, just as a little easy
tool to watch it.
Okay.
Not great.
Let's keep going. So, FT
uh
Okay.
Also have Where was that?
There was a piece yesterday that is Oh,
yeah, the JP Morgan piece. We'll take a
peek at that and TS.
Uh
Okay.
So, let's take a peek at this.
Mhm.
One sec.
Okay.
What do we have here? Iran oil war shock
shift towards a reprise of 22 clear
facts. Trump does not want energy prices
to remain high in an election year.
Yeah, that's true.
Iranian goal is regime survival seen as
victory in this war.
Right. Two conditions.
Okay.
Uh let's see what they say. Overall,
the change overall in our view boils
down to a bearish shift in
probabilities.
Okay.
Karg wild card war taco
limited Iran agreement that all Gulf
shipping will be unmolested
theory.
Iran has no incentive until its exports
are squeezed.
And then military solution, the non-taco
boots on the ground
Hormuz operation takes months.
And you prepare for some kind of
invasion.
Mhm.
It takes two to taco. Well, yeah, now it
takes BB to taco as well.
Karg could be part of the go-for-broke
approach. It would involve complete
destruction of the island's oil
infrastructure to starve the Iranian
regime.
Carpet bombs
of Karg might be accompanied by an inva-
invasion.
Nothing to lose retaliation from Iran
after that, though.
Also true.
Commando raid on Karg
uh Trump
let's see here.
More probable version per TS Lombard.
Commando raid of Karg
taking control of it, basically.
Okay.
And then I also saw
Trump says Iran is not going to have
nuclear weapons or is he yapping
somewhere?
Probably.
See if I can find it. But in the
meantime,
No, nobody's covering it right now as
far as I can see.
But that's all right. Cuz I want to keep
looking at this stuff anyway.
So, the JP Morgan piece
that I was sent
uh let's pop that open.
Mhm.
Apparently,
can't get the darn thing open.
All right, there we go. That'll work.
All right, here's the JP Morgan piece,
which is
Trump commented that Israel will not
have this misspelled Israel will not
conduct further attacks on Iran's main
natural gas facility.
That's fine.
Narrative. We talked about the Qatar
image.
Market is pricing in a quick end to the
Middle East conflict and reopening the
Strait.
High-risk assumption giving
S&P and oil correlations typically turn
increasingly more negative after a 30%
spike.
Yeah.
Much of the market's attention has been
focused on the inflationary impact from
higher oil prices. But in our view, the
bigger and more consequential question
is the potential negative transmission
if the Strait does not reopen.
After energy rationing and substitution
effects are exhausted, one could expect
a negative impact to GDP.
If oil demand destruction occurs, we
expect equities as well as prediction
markets to start pricing in slower
growth and the higher odds of a
recession.
Uh without
a the washout investor sentiment
could ultimately prove to be a clearing
event. The S&P If the S&P 500 sell-off
gains momentum below the 200-day moving
average, strong support may not
materialize until 6,000 or 6,200. Okay.
Let's see where we sit right now on the
SPX.
Well,
here's the day chart.
And so far, we're getting momentum under
that 200-day moving average.
Obviously, today's been, you know, an
additional rough day as uh
you know, we've got this what's it
called? Um
Uh let's see here.
This Treasury rally yield rally, rather.
It's It's not really a bond market
rally. It's a yield rally.
Which means the bond market's actually
selling off.
Oh, wow. Yeah, look at that. Now you're
up 10.3
basis points right here. That's just
nuts.
Okay. So,
mhm
Okay.
Okay, this is a little bit on the Fed,
but there's nothing new there.
Too soon to know the scope Middle East
conflict uh Tancey
extensive true Okay, excerpts.
Blah, blah, blah. All right. And the
most interesting comment out of this is
basically just the S&P 500 losing
or accelerating a sell-off under the
200-day moving average could bring the
S&P 500 down another
10%.
And they're lowering their year-end
price target because of the war.
What a mess.
All right, let's see what the times have
for us.
Okay.
"We firmly believe in strengthening the
relationship with our neighbor
countries", says the Iranian leader.
Yeah, how's that going? By attacking
everyone.
More attacks reported in the Middle
East. Of course, they're still attacking
each other.
US military ramps up to clear the
strait.
Yeah, we'll see how that goes.
Mhm.
Iran executes three men.
Including star teenage wrestler.
I wonder why they got executed.
Uh, we talked about the Fed. Okay, let's
go see.
So here
Oh, what? Protest? Three men were
executed by hanging in Iran on Thursday
as they were convicted of killing two
police officers during government
protest.
Yikes.
One of the men was a decorated
19-year-old wrestler.
The groups raised concerns about his
execution pointing to the fast track
trial
uh, and a forced confession.
Wow.
They were convicted of waging war
against God. A charge that is punishable
by death. And they uh, what the Iranians
usually use to punish dissidents.
Uh, Iranian authorities regularly
extract forced confessions from
defendants through pressure tactics
including solitary confinement, threats
against family members, and torture.
Wow.
Yikes.
Iran executed more than 2,000 people in
2025, the most since 1989.
That's a stat.
So,
Iran executions.
2,000.
More than more than 2,000 Iranians
executed most since 1989.
Uh, and then of course, I mean you had
even more people die during the protest.
Wow.
Okay. Then, US military ramps up to
clear Hormuz. We saw that.
This is Oh, this is just the A-10 and
Apache talk.
Okay, so that's nothing new.
Biggest thing today is that 10-year just
keeps going.
Almost at 4.38 now.
Private credit
risk cycle has not been repealed. What
is this?
Concerns about private credit in recent
weeks should serve as a reminder to
investors that the credit cycle has not
been repealed.
What does that mean? The unusually long
period of cheap borrowing
following this 2008
financial crisis. But worries about the
credit cycle could
be about to turn to the
due for about to turn due to the private
credit's exposure to tech companies.
Uh-huh.
Uh, in his annual letter, Solomon said
the investment bank was optimistic about
the operating environment but cautioned
that it was not hard to come up with
scenarios where risks are a lot more
pronounced.
Okay.
In recent weeks, for example, concerns
about private credit including
underwriting quality or exposure to
software companies
that may be adversely affected by AI are
a reminder that the credit cycle has not
been repealed. So, in other words, like
a down cycle is still possible.
And then of course, Iran has the
potential
uh, let's see here.
Oh, despite concerns, there's still the
potential for a more constructive
environment. Yeah, okay, whatever. This
is boring.
Okey-dokey. Crazy yields right there.
So, what do we get over here?
Could the US release more of its
strategic oil?
Let's see.
Basson also pointed to 400 billion
release of the strategic oil reserve
approved last week.
Largest coordinated release in history.
Huh. The US oil reserve is a series of
vast subterranean salt caverns
in four different sites in Louisiana and
Texas. Oh, that's very interesting.
The average cavern holds 10 million
barrels. Wow.
That's crazy.
Huh.
All right. What else?
US could declare an emergency.
Blah blah blah.
Drawdown of the strategic oil reserve.
Blahdy, blahdy, blahdy. Okay. Well, it
seems like we should have probably
filled that up before going to war.
Sometimes I wonder
if they just kind of forget about it for
a moment.
Okay, IEA is now warning
that it could take 6 months or longer to
fully restore oil supplies.
Well, that's not great.
So, that's the IEA.
Warns
it could take 6 months or more
to fully restore
oil and gas
flows.
That is not good.
Let's see uh
Okay.
Take a listen to it over here for a
moment. Yeah, this is definitely a
refined products product story because
you could have all the oil in the world,
but if you can't turn it into the end
product you need, it is useless. And we
talked about how some of those uh oil
fields may not come fully back online.
If you shut down a refinery, it takes,
you know, we're talking about months to
get that back online.
>> exactly what the IEA is talking about in
in this article here.
>> That's what a refinery complex is. And
the fact is that as they start reducing
runs, those markets are going to get
even tighter. And we look at things
like, you know, production being uh
diverted to Yanbu and Fujairah. That's
not the oil we need. That is Arab light
oil. What we really need is medium and
sour grade oil. This is really a a kind
of a crisis for the middle of the
barrel. That's why we're seeing diesel
prices, jet fuel both hitting records
over in Europe. In the US, we produce
jet fuel A which can't be used in Europe
because of uh uh carbon restrictions.
And so, this is really a refined product
story. And these these uh these these
supply chains are so global and so
intricate. And so, each passing day is
making those product markets even
tighter.
Wow, that was that was a lesson. So, we
need medium and light.
We we need medium and sour. We have a
lot of
Yeah, yeah. So, the Arab light is being
what's with Boring. Okay. Axios. Let's
see if there's anything new in this
piece.
So, Axios here says Trump will's Kharg
Island takeover.
We we heard this yesterday, but I want
to see if there was any
additional information here.
Process is 90% of Iran's crude.
Could put troops in the line of fire.
Within a month We need about a month to
weaken the Iranians more with strikes to
take the island and then get them by the
balls and use it for negotiations. A
source with knowledge of White House
thinking.
Ugh.
You need an additional month.
You know, that's that's exactly what uh
Saudi Arabia Yeah, Saudi Arabia was
concerned about if we look at
this. Saudi Arabia sees a spike to $180
a um
a barrel of oil.
President is going to do what's right.
No decision has been made.
We want Hormuz open.
Tom Cotton says Trump has been prudent
to not rule out
a ground invasion. Oh.
Okay.
Mhm.
Says Trump's mission could expose US
troops to a degree of risk.
Behind the scenes.
Sources said an occupation of the island
by ground troops is under serious
consideration. Another option is to
impose a naval blockade.
Hey, so you could do both.
Geez.
All right.
How are we doing over here?
So, nope. Qs keep selling down.
So lower lower lower.
Painful.
Yeah, down what? What Tesla's down 1.8,
Meta's down 2.2.
Just the bleed continues.
All right, let's do a little bit of uh
a recap of some of the uh info that
we've got so far, especially with this
uh
troop deployment.
Uh hold on. What is Let me see if
they've got anything here for a moment.
Things like know your customer, sales
processes, and the like. They didn't
mention anything in terms of like the
kind of bread-and-butter investment
banking and how that's going to really
reshape what you envision as an employee
of Goldman Sachs at this point in time.
Right now, it's more of back at Okay,
that's boring.
Let's try over here.
or ongoing, depending on your point of
view, uh chip and AI war between the
United States and China. This is a
multi- front This is in part probably
about Super Micro, which has been
selling off because of the risk that,
you know, somebody who owns like 25% of
the shares of Super Micro
was involved in selling Nvidia chips to
China uh against the law. like whether
or not it was a single actor. The point
is this is one of
you know, several cases um where we've
had to have a good hard look at at, you
know, chips between the US and and
China.
Amy, this past weekend you gave a
keynote at South by Southwest and you
announced that after 18 years you're
killing your tech trends report and
you've basically uh and I
correct me in my my summary said that
there's no point uh in in looking at
backward uh looking data and trends. You
now have a convergence outlook uh in the
time we have left, about 60 seconds,
explain it to us.
Sure, we we did throw a funeral this
weekend for the thing that we were most
famous for. Uh look, executives are very
caught up in what is trendy versus what
are the longitudinal changes impacting
their organizations, their the market,
their ability to compete. Rather than
tracking individual trends, it's
incredibly important that they start
looking at the intersection between
trends and uncertainties and catalysts.
Those are called convergences. Every
boardroom, every leader needs to start
tracking those seriously because the
fate of their ability to survive and
weather the storms that are ahead are
dependent on having that information at
their fingertips.
Amy Webb, CEO of Future Today's
>> Yeah, that was also kind of boring. All
right, let's go through this.
Uh okay.
All right.
Well, Donald Trump is now sending more
troops to the Middle East uh literally a
day after yesterday Well, yesterday
Donald Trump said, "We're not going to
put troops on the ground, though maybe
we won't tell you because uh you know,
it could be part of the element of
surprise."
Keep in mind, numbers-wise, last week we
initiated the sending of 2,200 Marines
and 2,500 sailors to the Middle East
from Japan. It's the USS Tripoli and the
31st Marine Expeditionary Unit. They're
expected to show up at the end of next
week, so around Friday, Saturday,
Sunday, that's the 27th, 28th, 29th.
Uh however, today we just announced that
we were sending an additional 2,200 to
2,500 troops uh well, Marines via the
USS Boxer Amphibious Ready Group and the
11th MEU to Central Command.
This is coming at the same time as we're
hearing rumors that the Trump
administration might want to take over
Kharg Island. We'll talk about that in
just a moment. But, before we could do
that, there are expectations that it
could take upwards of a month to be
ready to actually take over the island,
which creates other problems, including
Fed rate hikes. See, Saudi Arabia argues
that if this oil shock goes into the
middle of April, we'll probably see oil
at $150 per barrel, which Goldman Sachs
says is recessionary. If we end up
getting towards the end of April, they
see oil getting to $180
per barrel. And unfortunately, these
inflationary impetuses impetuses
impetuses, whatever. Uh they are leading
uh
the broader bond market to now start
pricing in rate hikes. Now, on Tuesday I
made a video saying prepare for the
potential of rate hikes, that Jerome
Powell and the ECB would start talking
about rate hikes.
Unfortunately, both of them did in the
days afterwards. The ECB yesterday
talking about their uh base case seeing
inflation up 0.7% above their previous
1.9 estimate, moving it up to about 2
and 1/2%, which isn't great, somewhat
leading to a potential for rate hikes.
In fact, the European Central Bank said
that they're going to start discussing
rate hikes in their April meeting, but
they probably wouldn't hike until in
April. They'd probably wait until June,
but that is now on the radar. So, the
ECB is putting on the radar rate hikes.
And now we have our futures markets
indicating an over 30 Well, let's
actually see here. Okay, well, it's
gotten even worse here uh since I last
updated this. October 28th, 2026
is now showing about a 47%
chance of rate hikes. Actually, if I
could just add this together here, it'd
be about 48.4% chance of rate hikes. All
this on the right over here would be one
rate hike and this right here would be a
10% chance of two rate hikes, so 50
basis points of hikes by October.
So again, this is what we warned about
on Tuesday. And then a bunch of people
got mad at me in the comments. They
said, "No way, Kevin. There's no way."
And I'm like, "Come on, folks. I like I
study this a lot." Uh and unfortunately,
and now the futures market is starting
to price that in. Uh one place that
you're seeing this manifest is actually
a place that in the Alpha report this
morning we said, "Listen,
the only way the only way we go bullish
on the Qs today." And this was blunt uh
in the Alpha report, "is if Treasury
yields come down because they were
rising this morning." And I'm like,
"This isn't good." Unfortunately,
exactly the opposite happened in the
Treasury market. Rather than yields
coming down, we saw yields rise as the
market is starting to price in rate
hikes. That led the Nasdaq 100 to sell
down off our opening at about 592 down
to about 586. The S&P 500 uh not looking
at the Qs there, but just looking at the
S&P 500, uh is now trading below its
200-day moving average. Uh and JP Morgan
warns that if we have any kind of
sell-off below that 200-day moving
average, which is what we're seeing
right now, so in other words, we need to
rebound to prevent this.
JP Morgan says the S&P 500 is likely to
not find support until the lower 6,000
range. You can see that document right
here that I was sent.
If the S&P 500 sell-off gains momentum
below the 200-day moving average at
$6,600,
strong support may not materialize until
essentially an additional 10% correction
down to the low 6,000 range.
They're lowering their S&P 500 outlook
for the rest of the year. They believe
that higher oil prices can lead to
demand destruction and ultimately
increase the odds of recession, which is
that R word that we don't want to hear
about. Now, obviously, the concern is
the longer this goes on, the greater the
risk to the economy. Saudi Arabia, just
to
dive into this for a moment here,
keeping also in mind that the oil shock
that we've seen so far is already worse
than what we saw in 2022
when Russia invaded Ukraine. Obviously,
the Gulf is more important for oil, is
the previous all-time high for oil was
$146
per barrel in July of 2008, which
happened right before the recession as
Lehman Brothers collapsed in September
thanks to the excesses related to the
real estate market. Now, some people are
saying history may not repeat, but it
might rhyme that you could have excesses
in private credit coincide with
potentially new all-time highs for oil,
highs that we've never seen before.
There's an energy consulting firm here
that says $200 a barrel is not out of
the realm of possibility.
Gulf futures tied to Oman crude, which
are less liquid, are currently shooting
past $166
per barrel uh in futures pricing.
Uh and we're starting to see options
uh
indicate more bullish bets on oil
getting to about 130 to 140, which we
weren't seeing uh about 2 weeks ago.
Saudi officials say they expect that oil
prices could hit $150
if we get into the second week of April
and the Strait of Hormuz is still
closed.
The problem is, in order to actually get
the Strait of Hormuz to reopen, we're
going to need more Marines. And that's
exactly why the Pentagon is sending more
Marines.
Issue is, we're not expecting the first
batch to show up until the end of next
week, and the next batch, which is
coming from uh California, could take
even longer to show up, probably closer
to that April 3rd, 4th, 5th weekend,
which is after we get the next set of
jobs data.
Now, Trump is also thinking about taking
over Kharg Island to force Iran as a
leverage point to open up the strait
because 90% of Iran's crude oil goes
through here.
However, military intelligence suggests,
quote, "We need about 1 month to weaken
the Iranians more with strikes to take
the island and then get them by the
balls and use it for negotiations." A
source with knowledge of the White House
thinking said.
Now, the Wall Street Journal had a whole
piece about how we could potentially
escort tankers through
the Strait of Hormuz, but the big risk
that we face are that in this sort of
fish bowl that you're in going through
the strait where you've got these cliffs
around you,
the risk is that small ribs or smaller
boats laden with explosives can just
run out essentially or overwhelm by
using multiple of them, overwhelm
destroyers or escort ships that we use
in the region, which is exactly why the
Marine Expeditionary Unit is likely
being sent to the region so you could
line troops along the shore while ships
pass through.
Problem, obviously, with this is it
really puts your troops under the risk
of Iranian fire since Iran knows the
more and longer they can keep this war
going on, the more likely Iran spikes
oil prices
and as a result, the greater chance of a
global recession, which unfortunately is
exactly what Iran wants. They would love
nothing more than to damage the global
economy and then they could essentially
take credit and say, "Hey,
this is why you should never attack
Iran." Now, Iran has sometimes also a
self-destructing sort of ammo.
The
Iranian regime has executed more than
2,000 Iranians in 2025. That's the most
that they've executed since 1989 and
that's in addition to like the 6,000
people that were killed in protests in
December and January.
Wall Street Journal is reporting that
Hormuz escorts may begin once those
amphibious units are in the region, but
again, that's going to take 2 to 4 weeks
to happen,
which unfortunately aligns with this
Saudi Arabia article in the Journal that
indicates we're probably looking at 150
to 180 a barrel
not being out of the question and Brent
futures that's currently hitting the
130, 40 and 150 level for April as it
doesn't look like the war is coming
anywhere close to to an end. This is
obviously inflationary and it's exactly
why we're starting to see markets price
in rate hikes rather than cuts.
Now, what you really ought to focus on
today is not just the fact that Brent
has now moved up another $2 up to about
$110 per barrel from about the 108 where
we started the day, but the real concern
is the fact that the 10-year Treasury
yield has moved from about 4.34%,
which is like 10 basis points higher
than what we had yesterday, up to now
almost 4.4. We're sitting at 4.39.
And the more pressure we see on the
10-year or the 2-year and the more of
this sort of bearish yield curve
flattening that we're getting, more
pressure on private credit, which is
that very similar rhyming ticking time
bomb that we saw in 2008, except then
again, it was real estate. Now, it's
private credit. I actually think real
estate is a unique hedge because my base
case is that by 2032, whether it's
because we have a recession in the near
term or in the longer term, by 2032, I
think rates will be lower than they've
ever been before.
I actually think we'll have lower
mortgage rates than we had in 2020,
which seems remarkable because during
that panic, we cut rates to zero and
people were, you know, including myself,
were were getting loans at like 2.75%.
I actually think by 2032, we'll see even
lower rates, but that's just my opinion.
That's just my speculation. It's one of
the reasons why I think hedging by
exposing yourself to real estate right
now is is such a strong bet because
that's not where the bubble sits now.
Bubble sits elsewhere, but it's
triggered potentially by again, rising
inflationary concerns, rate hikes. This
increase in the 10-year
accelerates the pain in private credit,
especially since a lot of businesses are
zombie businesses that probably deserve
to go bankrupt, but they're drowning in
debt and rates are going up and not
down. Now, just so you can understand
what a bear flattening is, a bear
flattening is when yields on both the
10-year and the 2-year are rising,
which they are. The 2-year is up about
9.1%, the 10-year is up about or basis
points, the 10-year is up about 10.7.
We're almost at a four handle on the
2-year.
That has been leading the 10-2 spread
over the last few weeks to flatten down.
You can see this sort of let's go to
like the 3-month chart over here. You
can see this fall over here from about
.72 on that yield spread down.
Usually, that going down is less of a
sign of a recession risk, but it's
bearish for the economy when it's
occurring because rates are going up
rather than down. You'd rather have a
bull flattening where rates are going
down because inflation concerns are
going down and then you can actually
encourage, ship and encourage
risk-taking in the stock market or
otherwise.
Unfortunately, because that's the
opposite of what's happening right now,
we are seeing the Qs suffer, which is
exactly what we expected in the Alpha
report this morning. I hate to say it,
but I gave a very blunt warning in the
Alpha report this morning and I said
that you should watch TLT. If TLT goes
down, don't make an upside bet on the
Qs. In fact, when we saw the Qs move up
right here and we were live in our
course member live stream, I said, "This
may not be stable because we're not
actually seeing yields
come down. When yields go down, this
line goes up." And so, we were able to
use this as a canary to indicate,
"Oopsie doopsies, not great."
So, we've got a confluence of problems
here.
Troops are going to take time to show
up. They create risk for American lives,
but what we're indicating is even though
Trump is saying, "Oh, yeah, we're not
going to tell you if we put troops on
the ground. Maybe we will, maybe we
won't, but we're not going to tell you."
And the timing elements that it's going
to take two, probably to four weeks to
actually get the situation,
well, to get troops in the region,
we're in a bit of a poopy-doopy place
where we could actually see Brent crude,
as Saudi Arabia puts it or UBS or
others, that if this war continues into
April, we're probably looking at
substantially higher oil prices and that
they've been suppressed so far under the
belief that this war will end or this
incursion will end much like Operation
Midnight Hammer last year, 12-day war,
will end in a short period of time, less
than 30 days.
Well, we're coming up on our 30-day
anniversary next week of this war
already and so far, there's no end in
sight, which is bearish. If we get into
April and this war is still going on,
which at this point is likely, oil
prices and Treasury yields continue to
rise, we continue to price in rate
hikes.
Our bear-bull scale is going to continue
to decline and the odds of recession,
unfortunately, continue to rise. This is
not ideal, but it is the latest of
what's going on. Now, is it possible
that the takeover of Kharg Island
will end up forcing Iran to negotiate?
Maybe. That's the hope. We take over the
island, it squeezes 90% of their, you
know, their oil production and hopefully
that encourages Iran to negotiate. The
problem is
not only is it hard to do this, whether
you commando raid the island or you have
a naval blockade or whatever,
the problem is not just the American
lives that could be lost in this, but
the problem is also that it may not
work. You could take over Kharg Island.
You could destroy Kharg Island and Iran
may not want to negotiate and enable the
reopening of the strait
because Iran knows the longer this war
goes on, the more the global economy is
damaged.
And if we end up triggering a nasty
recession that Iran can claim claim
credit for and say, "Look, you might
have better bombs and a better military,
but we destroyed your economy.
Don't mess with Iran in the future."
that Iran
takes home a pretty big win.
It hurts the global economy, so it's
sort of like, you know, ripping off your
nose despite your face because, you
know, Iran will have a nasty recession
as well. But,
it sucks for everyone.
Anyway, that's my take today. Appreciate
you all watching and we'll see you all
in the next time. Goodbye and good luck.