Coming endgame of global macro, AI bubble

Iran appears poised to humiliate President Trump and withhold any deal to open the Strait of Hormuz until the November election. This situation echoes Iran's 1979 hostage crisis, where the nation used 444 days of captivity to overthrow President Jimmy Carter and establish a theocratic dictatorship, much like the current regime in Iran.

The IRGC fanatics ruling Iran understand that controlling Hormuz and creating chaos with the US and China in the region serves their interests for regime survival. This could lead to an oil shock in the Gulf and Red Sea, driving gas prices to $5 and diesel to $6, while also potentially crushing Trump's GOP in the midterm elections.

A MAGA revolt against another Middle East war instigated by Israel could also result in a democratic landslide in the 2028 presidential race. The crude oil market is experiencing panic with Brent prices soaring 7% in a week, nearing $90 despite a drop in Chinese imports. The Volatility Index remains low at 15, indicating that greed-driven AI-related investments are driving another capital market Armageddon, similar to the 2001 and 2008 financial crises.

Inflation is expected to rise, pushing 20-year bond yields above 6.5% or even higher. Historically, 10 out of the last 12 US recessions have been preceded by a spike in oil prices, and the potential for a $2 trillion IPO in AI startups, particularly Anthropic and OpenAI, seems unlikely given their current valuations and capital expenditure commitments.