2026-07-31XThread

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Mid-terms coming up, Iran issue dragging on, SPR depleting rapidly, yields creeping up. Each passing day I do think the risk elevates a little more incrementally. Which we've largely ignored bc we have been allowed to due to the SPR releasing real physical supply by design. Markets have largely brushed it off bc the base case has been this will be resolved, and there were more important matters. AI. There will likely be a point we cross, and have an oh shit moment. Where one day everything is fine, and the next it's not if we can't make some serious progress soon. When you think about risks, this should be the driving ideas behind it. It's always wise to have cash for opportunities that come up, especially if one like this presents itself. And the odds increase incrementally daily. My guess is, we have 4-8 weeks to resolve as things stand.

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Why have markets not cared about Iran and oil to date whatsoever? We have seen in general markets rally, and making new all time highs consistently shrugging off geopolitics The obvious answer is AI has been more important than that, and the Iran conflict currently takes a backseat to that. You could even argue it has taken a back seat to the Fed. So in order of importance to markets its been #1. AI #2. The Fed #3. Iran It's not that markets are ignoring it, its just behind the rest in order of importance. The way for the conflict to actually harm markets is sustained higher oil prices likely above that 100-110 range or new highs altogether. So the SPR releases have by design calmed markets. It's obviously engineered vs being organic in terms of that by design. You could argue that the SPR it's getting dangerously low, which it is, so therefore the complacency around that is conditional vs a depleting buffer. Markets will only care when oil prices break containment, and the capacity to contain it obviously gets smaller with each passing week the SoH isn't open. The market is pricing in that the buffer likely won't fail currently. This is all just my opinion and my own views. Right or wrong. and why I never really got all that bullish on oil to $200 was bc it was clear trump and bessent would do whatever it takes to contain the market and punish traders trying to short equities as well. Whether you agree with it or not, thats what we were given. And we have to trade whats in front of us.
Pentosh1 ↗