Underappreciated global equity and debt market observations intended to provide a foundation for better understanding today’s complex capital markets
Markets are pricing years of AI-fueled "contracts" through the lens of accrual accounting, while the physical world strains under shortages, an unending Iran war, and a bully who doesn't realize he's playing musical chairs. As the post-WWII order's music gets ready to stop, paper strength may matter far less than real capacity.
A century ago, T.E. Lawrence led an Arab Revolt on the strength of a British promise of independence, and Britain broke it with the colored-pencil borders of Sykes-Picot. Today the Houthis are using Lawrence's own asymmetric playbook against the West, and the lost Iran war may be ending the Pax Americana built on those borders.
Scott Bessent is reaching for James Baker’s Plaza Accord soft power, and missing. After a lost conventional war with Iran, sanctions without carrots collide with rising China–Russia “sharp power,” leaving markets to price stubborn inflation and higher US rates.
Like Johnson’s 1968 credibility gap after Tet, a Trump administration that has declared “victory” over Iran sixty-plus times now faces its own reckoning, as censored reality, Hormuz risk, and Taiwan spillover threaten to shatter the market narrative that this war is contained.
Like a blowfish, Yemen’s Houthis have inflated far beyond their size, seizing Bab el-Mandeb and, with Iran’s hold on Hormuz, putting roughly $10 billion a day in global trade at risk. Their “overnight” rise looks sudden only if you ignore the long asymmetric apprenticeship that made it possible.
SCOTUS’s Trump v. United States ruling handed Trump a “get out of jail free card” and Lord Acton’s warning that absolute power corrupts absolutely now reads like a diagnosis. Dillon traces the Progressive Era’s reverse via Project 25 and DOGE, then ties unchecked power to an illegal Iran war and bond-market stress past Bessent’s red line.
Saudi Arabia, Turkey, and Pakistan’s Mecca defense pact is less a Mid East NATO than a quiet hedge against American unreliability—proof that after a bungled war with Iran, the region is already learning to move on without the United States, with higher rates and gold as the market tells.
Bessent’s public jab at the WSJ over yen support reads like a poker tell—one that points at Treasury-market strain, swelling national debt, and the real cost of an illegal war that’s quietly pushing long-end yields higher.
As this piece is written, President Trump is in Beijing. He arrived yesterday at Beijing Capital International Airport, where he was greeted not by Xi Jinping — as protocol and the president's own hype machine had suggested — but by a vice foreign minister and a vice president.
"Guns and Butter" economic worries from the 1960's that caused rampant inflation in the 1970's are back. But just as Mark Twain once said that "history doesn't repeat itself, but it often rhymes" so goes today's economic policy mix that has now divided FOMC voting members, for good reason, on what to do next on monetary policy…