It is repetitious, to say the least, in noting once again the resilience of stock markets, particularly those of the United States. At present, if one allows some time to sit in front of a television and watch a financial news channel, there is hardly ever a talking head spouting doom and gloom on the ills that the current Gulf crisis might inflict on the global outlook. It would be too laboured a point for a deep dive into how shares are places of investment rather than trading. Yes, there are sophisticated exceptions who have the skills to ‘short’ the market, but as a rule of thumb when ‘risk’ is 'on' and spoken of in the world of bourses, it means to be ‘long’. This is by no means the attitude of a snark, it is an observation on the wildly optimistic ability of investors to look through any tunnel of geopolitical woe and forever see the light. Not for them the worry of higher interest rates that might come from inflation, or the wholesale and retail costs of oil that might dampen manufacturing ability and spending power. The war in Iran is a speed bump on the road to another successful leg in industrial revolution where the destination is bright, the destination is A.I. Each time a hiatus in news of technology stocks performance threatens to bench the enthusiasm, along come another stellar set of results as seen yesterday in AMD and Micron. Correlation in markets at present is a changeling and hard to formalise, yet there is no doubt that all are interconnected and the very optimism in equities is the same optimism that this episode of Middle East war will soon be over. It is believed by investor tourists; it is believed by the big-wig executives guesting on financial television and it is rolled up as a package and sold by this US President. With such sentiment armed with huge financial clout, is how oil benchmarks are being kept in check.

Fact, fiction or farce?

The author of this note must admit when learning of Donald Trump’s almost processionary march into this latest term of Presidency, it was with a touch of wry amusement. Correctly believing that Trump II would likely be as generous as Trump I in there never being a dull moment or subject matter to study, his new Administration would be a mash up in the realms of Shakespearean comedy and drama. How much damage could he do in only one term? Well, believing that much of his bluster would be ‘Much Ado about Nothing’ has proven ill-judged and with not even half of his tenure served, the White House might as well be the Globe theatre as look-a-like vignettes of ‘Macbeth’ and ‘King Lear’ play out in real time. 

The latest development, in which the US has now reversed the decision to run interference and guard ships endeavouring to cross the Strait of Hormuz is incredibly alarming. How prescient seems Iran’s Foreign Minister, Abbas Araqchi when saying, “Project Freedom is Project Deadlock.” The sight of a coming about of both US naval ships and short-lived policies are emboldening the Iranian regime who with some justification believe Iran has gained the upper hand in this quagmire. As much as military bases, missile sites and places of war machine manufacture have been blown up; as many as commanders and Ayatollahs have been killed, there has been no overthrow of the regime or witness of internal civil disintegration. Indeed, Tehran’s deployment of asymmetric warfare where instead of taking on US/Israel in headlong conflict, it needles all its neighbours with a pinpricking drone and missile campaign and pulls great authority in the world’s global economy by manipulating the oil price higher by its threats, be they real or perceived, in Hormuz.

It is interesting that after the murderous October 7th, 2023, attacks brought upon Israel, the subsequent beheading of all Iranian allies and proxies left Iran in quite the lonely state. However, after the Trump Administration’s onslaught of brow beating tariffs and threats to allies via trade exclusion and even invasion, as seen in Greenland, America’s diplomatic currency has been draining. Its attack on Iran without sanctioning from either the United Nations or its closest allies beyond Israel has left that coffer now empty, particularly after the insults against NATO members for not risking their navies to run as convey consorts to cargo trying to reach international shipping lanes. Allies in the Middle East are also beginning to show signs of frustration on the one-dimensional attitude from the US. The Tuesday attacks on the UAE and its oil assets from tankers to refineries has been largely overlooked by Donald Trump describing them as “minor.” He had been quick to warn that any strike upon US naval vessels would bring huge repercussions for Iran, but almost silent on what its Emirati friend was enduring. US Defence Secretary, Pete Hesgeth said in diplomatic ignorance that as far as Washington was concerned the ceasefire was still in place. The US is so hunkered down in pursuit of an end to this war it is more than willing to forego the interests of those the conflict has, and will continue to affect the most. 

Yesterday, Axios leaked the details of a memorandum of understanding, the plan would reportedly declare an end to the war and trigger a 30-day negotiation period, in pursuit of an agreement to open the Strait of Hormuz, limit Iran’s nuclear program, and lift US sanctions on the regime. Apparently, Iran has been given 48 hours to respond. The trouble is, Trump might end up suing for peace with a group of Iranian leaders exhibiting greater extremes in view, who feel aggrieved at having its sovereignty violated and will no doubt show battle-hardened reasoning in negotiation. The flibbertigibbet actions of this White House do not give confidence that there will be enough skill or stomach to face up to Iranian resolve, which if not countered may well end up with a grind down and retreat of the United States and an even stronger, more malevolent Iran. Comedy, drama and tragedy all combined, if the Bard were alive today, he could not write it.

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