Global/Slant

Headline:
Some Only Understand Fear + Power.

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Despite A Significant Military Advantage In Iran…

Trump = Currently/Surprisingly Balking At Advancing/Pressing The Theater Of War…

Against The Pre-Eminent State Sponsor Of Terror For The Past 50 Years…

Responsible For Ruthlessly Killing Thousands Of Innocents…

In Order To Perpetuate + Promote Their Twisted/Violent Version Of Islamic Theology.

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The Simplistic Argument…

Against A Complete Annihilation Of Iran + Its Infrastructure Seems To Be =

The Governing Leadership Of Iran = Bad People…

But The Citizens Of Iran = “Good” People.

So Why Punish The “Good” Citizens Of Iran With Universal Infrastructure Destruction?

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Whether Iran’s Citizens = “Good” People Or Not…Is Actually Quite Debate-able…

Since For 50+ Years They Have Enabled Their Government To…

1. Construct +
2. Facilitate +
3. Fund +
4. Prosecute

…The Globe’s Largest Terrorist Network = Hamas + Hezbollah Et Cetera…

Which Perhaps…Classifies Iran’s General Population As Not Entirely “Good” People…

And What Is A Nation If Not Its People?

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Furthermore…Iran’s Response To The U.S. Bombardment =

Page One/Chapter One Of Its Playbook =

To TERRORIZE =

1. REGIONAL SOVEREIGN NEIGHBORS = MISSILE BOMBARDMENTS +
2. GLOBAL ECONOMIC ACTIVITY = SHARPLY HIGHER CHEMICAL/OIL PRICES = MARITIME BLOCK OF HORMUZ.

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Therefore…How To Effectively Navigate A Terrorist Nation That Wishes “Death To America?”

Unfortunately…For A Boatload Of Reasons…

Coincident + Subsequent To The Shah’s Overthrow + U.S. Hostage Turmoil In 1979…

American Diplomacy With Iran = 100% Waste Of Time = Zero Bilateral Respect Or Trust…

And That Ain’t Changing Anytime Soon.

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However…At Least One Upside To U.S./Iran Diplomatic Failures =

The World Will No Longer Be Subjected To Trump’s Tiresome “Play By Play” Social Media Chatter Regarding Iran Conflict =

1. Diplomatic Talks “Going Well” +
2. Iranian Cooperation/Support To Remove Nuclear Dust/Sea Mines +
3. “Very Soon” Statements Vis-A-Vis Hormuz Open + War Ending

…That Have Amounted To Nothing More Than A Huge Pile Of Stinking B.S.

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So…A Different Catalyst = Required To Conclude This Conflict.

Thus…3 Remaining U.S. Options =

1. To Bail + Declare Mission Accomplished
2. Patience = Heightened Economic Embargo

However Neither #1 Or #2 = Short Term Hormuz Re-Opening = Unsustainable For Global Economy…

Which Leads To…

3. Destroy Iran’s Entire Productive Resource Base + Supportive Infrastructure Including =

i. Bridges +
ii. Desalination Plants +
iii. Kharg Island Oil Facilities +
iv. Oil Pipelines/Production +
v. Power Grids

…Intended To Suddenly + Sustainably Paralyze Iran’s Government + People…

That Will Likely Result In Quickly…

1. Emasculating Iran’s Regional Influence/Power +
2. Resuming Hormuz Oil Flow

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Maybe Eventually…Trump Will Execute This Brutal But Necessary Strike On The Corrupt Iranian Sovereign That…

Only Understands Fear + Power.

Otherwise…

1. Arrogant +
2. Bullying +
3. Chaotic +
4. Dangerous

Iran Will Continue Its Predictable Obedience To Its Terrorist Playbook.

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Headline:
Trump Does Not Seem To Care Much About Opening The Strait.

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Currently…Global Financial Markets = Focused On ONLY 1 Issue =

Unencumbered Oil Tanker Passage Through The Strait Of Hormuz.

That Hormuz Is Still An Oil Paralyzed Choke Point…

After Almost 1 Month…

Demonstrates That Somehow…

Iran Still Has Leverage Over The United States + Global Economy…

Despite Absorbing A Military “Beating” + No Legal Territorial Right To Hormuz.

The U.S. Administration’s Tactical Decision…At The Outset Of The Iranian Operation…

To Refrain From Quickly Securing Hormuz Maritime Traffic…

Now Qualifies As A Massive Unforced Error…

Still Negatively Impacting All Legitimate Sovereigns Reliant On Middle Eastern Energy.

Paradoxically…Trump = Not Thwarting Enemy Iran From Freely Exporting…At Elevated Prices.

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Naturally…The Lack Of Oil Passing Through The Region’s Strait…

Has Ramped Global Oil Prices At A Rapid Pace =

+50% In Only 30 Days…

As The Below Oil Chart Reflects…

Subjecting The Global Economy To An Enormous Supply Shock…

That Is Not Sustainable For Much Longer…

As Strait Access Is Logistically Necessary To Currently Balance + Supply Global Chemical/Energy Markets.

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Moreover…Prez Trump Articulates That Liberating Hormuz = Relatively Simple Military Operation =

A Neutered Iranian Military With Almost No Remaining Naval Fleet.

Yet…To This Point In Time…Has Not Executed On This Crucial Task =

Both Counter-Intuitive + Economically Dangerous.

Therefore…It Appears Securing The Strait…For Whatever Odd Reason…

Is Not/Was Never…High On Trump’s Priority List…

Or Just Another Ridiculously Obtuse Trump-ian Blind Spot.

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Nevertheless…Hormuz Must Re-Open.

All Indications = Force/Occupation Are Required…

As The Maximized Demands Of Both The U.S. + Iran…

Indicate No “Hormuz-ian” Middle Ground = Not Even Close.

So…As Terrorist State Iran Continues To Be Destroyed + Humiliated…

Yet Marginally Empowered By Controlling + Threatening The Strait…

One Paramount Question Remains =

Will Trump Ever Act To Alter The Untenable Status Quo At Hormuz?

Or Just Continue His Slippery Chatter On Truth [Or Not] Social?

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Headline:
No Chinese Money = No Iranian Government.

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Right Now…The Middle East Is A “Hot Mess.”

50 Year Tensions Between Israel/U.S. + Iran Have Manifested In Significant Armed Conflict.

At This Point…Iran Is Taking A Brutal Beating…

American + Israeli Armed Forces Have An Advantaged Aerial Position Levered With Superior…

1. Surveillance +
2. Technology +
3. Weaponry

All Iranians Can Now Do =

1. Dodge Incoming Bombs +
2. Lob An Occasional Retaliatory Drone/Missile +
3. Observe Domestic Destruction

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From A Military Perspective…

The U.S. + Israel Will Ultimately Prevail.

Still…You Cannot Eradicate Radical Ideologies With Bombs.

But You Can Starve Ideologies Of Money…

And Without Money…

Ideologies…At The Very Least Wilt…

And Can Fail.

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For Iran = Oil Exports Constitute At Least 45% Of Government Revenue = Concentration Risk #1.

And…Most Iranian Oil Exports Originate From 1 Location = Kharg Island = Concentration Risk #2.

Plus…Just 1 Customer Accounts For 85% Of It’s 1.5 Million/BPD Of Oil Exports = China = Concentration Risk #3.

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Therefore…Intended Or Not…

Chinese Petro-Dollars…

Via The Heavily Discounted “Teapot” Oil Market….

Fund Much Of Iran’s Vast Terror Network [Past + Present] =

Hamas + Hezbollah + Houthi’s + Syria.

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Further…Iran’s Annual GDP = Just $370B…

Predominantly Unchanged Since 2008…

Despite…

1. Abundant Natural Resources +
2. Large Geographic Footprint +
3. Meaningfully Literate Population Of 90M  

Plus…Economic Sanctions Have Crushed Iran’s Currency…

Resulting In Annualized Rates Of Inflation > 40%.

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So That This Economically Poor + Increasingly Emasculated Military Nation =

The Catalyst For Soaring Global Energy + Chemical Prices…

By Imposing A Maritime Threat Through The Strait Of Hormuz…

Seems A Bold Bluff…

But Will Require “Stones” To Test…

For An Oil Tanker Captain/Crew + Associated Insurance Company.

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Moreover…Iran’s Bomb/Drone Attacks On Their National Neighbors Indicate Desperation + Isolation.

Now Iran Has More Enemies Than Ever…

Is Primed To Fall + Likely Will Not Last Much Longer.

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The Final Blow To Break Iran’s Oppressive Regime Could Be…

Not Just The Aerial + Seaborne Drubbing They Are Enduring From Israel/U.S…

But Also The Halting Of Iran’s Oil Exports To China…

Thus Eliminating A…Not Currently Replaceable…Source Of Substantial National Revenue.

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Headline:
Equity Market AI Bets = Delusion Or Reality?

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Much Market AI Chatter…

With Regard To Stampeding 6 Month Price Action…In Technology Equities/Sectors = [See Charts Below]…

While Also Impacting Derivative Industries…

Such As Utilities = AI Energy Consumption…

And…Metals/Mining = AI Enabling Basic Materials…

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So…AI Expectations/Fundamental Valuations Have Dramatically Ramped…

In Just 6 Months…

Recently Fueled By OpenAI’s Sam Altman…

Almost Endlessly Announcing Hundreds Of Billions In AI Infrastructure Spend…

To Be Deployed Over The Next 5 Years…

Despite OpenAI’s Staggering Free Cash Burn…

That Is Boldly Set To Sharply Increase…

To Scores Of Billions In Just The Next 24-36 Months…

Strongly Suggesting A Bloated + Debentured Balance Sheet.

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Wall Street Skeptics Are Finally Raising Logical Objections/Questions…

As Optimistic AI Platitudes…Thus Far = Too Short On Specific Financial Facts…

Especially With Respect To Underwriting The Construction/Outfitting Of Scores Of Data Centers…

Required To Meet AI’s Massive Computing Requirements.

For Instance…

How Will OpenAI’s Trillions In Capital Expenditures Be Financed?

The Current Answer By Altman = And I Paraphrase…

“We’ll Figure It Out”…

Because According To Altman…OpenAI’s Revenues Are Growing Exponentially…

But Even Altman Admitted In A Recent Interview…

His AI Vision Might Not Materialize As Hoped.

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Nevertheless…It Is Full Steam Ahead…

As Almost All Mega-Cap Technology Companies Have Embraced Altman’s/OpenAI’s Boundless Enthusiasm + Optimism…

Chugging Much AI Kool-Aid…

Convinced That AI = A Transformative Technology…

Worthy Of Enormous Financial Resources.

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Thus…At A Frenzied Pace…Hyper-Scalers Et Al…Are Announcing/Constructing AI Data Centers…

Stacked + Stuffed With Servers Containing

1. MU Memory +
2. NVDA Chips +
3. STX/WDC Hard Drives

So Much So…That…

1. ANTHROPIC +
2. GOOGL +
3. META +
4. MSFT +
5. ORCL +
6. X [Musk]

…Seem To Be “Betting A Lot Of The Ranch” On AI…

Sacrificing/Swapping Near Term Free Cash Flows + Legacy Balance Sheet/Income Statement Discipline With Debt…

Dramatically Raising The ROIC Bar.

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Interestingly…A Significant Catalyst To This Technological Excitement =

U.S. President Trump + His Stargate Blueprint…Announced In Early 2025…

Committing To Global AI Dominace + Superiority…

And Initiating The Federal Government’s Plan To Also Build-Out Dozens Of AI Data Centers…

Acting As A Pretext…To A Warp Speed AI Arms Race…

Between U.S. Based Mega-Cap Technology Companies + The Federal Government.

The President Was Likely/Strongly Influenced + Motivated By Technology Advisor David Sacks…

And His Powerful Mega-Cap Technology CEO Connections…

Whom Might Figure That The Cost Of Paying For A New White House Ballroom Is A Rounding Error…

When Contrasted To 100% AI Policy Support + Accelerated Depreciation Schedules Tied To Costs Associated With The AI Build-Out.

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Clearly AI Is Here + Gaining Great Momentum…

With Both Its Virtues [Increased Productivity] + Pitfalls [Massive Power Consumption Requirements]…

Despite Critical Financial Questions Still Outstanding =

1. What Is The Projected ROIC For These Data Centers?

And Maybe More Importantly…

2. Over What Period Of Time Will Returns Accrue?

Yet Oddly….ROIC Has Not Yet Been Specifically Or Publicly Articulated/Mapped Out…

By Any AI Technology Mega-Cap CFO/CEO.

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And Perhaps The Most Peculiar Feature Of This AI Arms Race =

Typically…Companies In A Heightened Capital Expenditure Mode…

Electing To Sacrifice Short Term EPS/FCF For Strategic Opportunity…

See Their Equity Prices Sag…

Until There Is Some Light At The End Of The Capital Expenditure Tunnel…

Rather Than Paradoxically Leap…

While The Recipients Of The Contemporary Capital Expenditure Binge…

Quickly Benefit…As Many Have…Including AI Chip Designer NVDA = The Silicon Engine Of AI.

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Furthermore…The AI Equity Narrative Almost Exclusively Focuses On Demand…

With Not Much Regard To Duplicity Of Products/Services.

Recently AMD’s CEO Lisa Su Communicated That Current Demand For AI Semiconductors = “Insatiable”…

 

While Offering Scant Commentary On An Increasingly Competitive AI Landscape.

From Ms. Su…It Sounded Like An “If We Build It…They Will Come” Moment.

Indeed…It Certainly Seems “They Will Come”…

And In Many Instances…“They” Are Already There…

But At What Ultimate Financial Cost Will “They ALL Come?”

For Now…Nobody Really Knows.

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Irrespective Of The Financial + Technological Outcomes…

It Is Certain AI Will Evolve…

Becoming Better + Faster…

Likely…Less Expensive…

Yet Potentially…

AI Could Become So Brilliant That It Will Absurdly Cannibalize + Mutate + Reinvent Itself…

Rendering Today’s AI Spend…In Retrospect…As Monetary Gluttony + Waste.

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So…Given All…

Have AI Focused Technology Stocks Already Discounted Much Of The AI Technological Mega-Trend?

In The Short Term…It Seems Like It…

As Price Charts Demonstrate An Everybody Agrees/Too Crowded Trade.

However For The Medium + Long Term…Likely Not.

But That Time Bridge From Short Term To Medium/Long Term…

Will Probably Be A Much More Challenging + Twisted Path For AI Focused Equities…Than The Prior 6 Months.

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