GeoMacro

The Iran war is likely to re-escalate later this year even if shipping somehow resumes in the very near term — and yet an early reopening is looking less likely.

Peru is well established to elect a pro-market government in the June 7 run-off, with institutional constraints limiting left-tail policy risks. We will go long Peruvian assets when Hormuz volatility subsides.

The debate over “what replaces the dollar” is misguided. The real shift is toward a multi-anchor system where reserve functions fragment. That changes everything from term premia to cross-asset correlations. The implication: portfolios built for the old regime are already behind the curve.

Red Light. Green Light. So much for the “all clear” in the Hormuz saga.

The Iran war is deescalating further — against our expectations — setting up an aggressive return to the risk-on rally.

Markets may be underpricing a bifurcated political outcome. Unless the Iran deescalation succeeds, the delayed economic fallout from the energy shock could materially worsen Republican prospects and raise the probability of a Democratic Senate victory.

In this chartpack, we present the logic behind our sanguine view and why we think that oil has peaked. We also elucidate our three main scenarios from here on out.

When the ceasefire between Iran and the US was announced on April 8, several clients told us that their geopolitical consultants were pitching a bearish narrative. The US had set up the two-week ceasefire to surge more material and troops to the region, so as to set up the next phase of the conflict. One such advisory firm also pointed out that it was unlikely that the US would hold back on further conflict since it had “already amassed ground troops to the region.”

President Trump has announced that the US would impose a blockade on the Strait of Hormuz, in effect exacerbating the partial blockade that has already been in place due to Iran’s threats against shipping in the Persian Gulf. The threat comes after the direct negotiations between Iran and the US in Islamabad failed to make a breakthrough. Oil is up on the news and stock futures are down. How should investors read the situation?

As we publish this regularly scheduled GeoMacro Alpha Report, President Trump is warning of civilization-ending strikes against Iran. A bluff? Stage Five on the Seven Steps of Maximum Pressure? A real threat to use weapons of mass destruction? The odds and pattern of Trump's behavior are skewed towards the former, but even small odds of the latter make trading the next 24 hours dangerous.