IMF’s U‑turn on US Growth Fuels Market Exuberance
Most frequently asked question from policy makers is why markets are so exuberant. It's this: one year ago, after "Liberation Day," the IMF downgraded US growth sharply (blue), but had to reverse itself fully 6 months later (red). It'll be the same now... https://t.co/KdmpHdC6AD https://t.co/geVx48uwMs
Foreign Capital Floods US, Markets See Unmatched Growth
Foreign flows into the US are at eye-watering levels. There never was a "sell America" trade and there's no "Hedge America" trade either. Markets ignore much of the political volatility and continue to see the US as the single best...
Peace Hopes Boost Turkey's Gold Reserves Amid Costly Peg
Prospects of peace are helping Turkey. The central bank's gold holdings rose for the first time in data for the week of April 10. Gold holdings are now down 123 tons since the start of the conflict, which is worth...
Blockade Effective Despite Negative Press Coverage
Press coverage of the blockade is almost universally negative. That parallels press coverage of the G7 price cap against Russia in 2022. The truth is the blockade is working better than many think and the US is doing smart...
US Threatens Chinese Banks, Tightening Iran Oil Blockade
The US yesterday warned 2 Chinese banks they're at risk of secondary sanctions if they help buyers of Iran's oil. This is a very big deal. Iran has a bunch of fully-laden oil tankers already outside the SoH. This shuts...
US Blockade Shift Signals War De‑Escalation, Not Market Overreach
The most common comment I hear from policy makers at this week's IMF/WB meetings is that markets are way too early in pricing de-escalation. Disagree. It's clear the US wants wants to end this war, hence the shift to a...
US‑Iran Talks Lift Latin American Commodity Exporters
Now that Iran and the US are negotiating, fear that war may escalate out of control is leaving markets. That's lifting EM oil and commodity exporters, especially across LatAm. Good news for Colombia, Argentina and Brazil. A replay of 2022...
Blockade Targets Iran's Oil Lifeline, Forces Negotiation
Great piece by @PatcohenNYT in today’s @nytimes on what the blockade means for Iran’s economy. Oil exports are the life blood of Iran’s economy, so choking those off is a good inducement for the mullahs to negotiate in earnest and...
IMF Growth Forecasts Too Pessimistic, Revised Upward After Conflict
One year ago, the IMF put out its growth forecasts (blue) right after Liberation Day. Those forecasts were far too pessimistic and were revised up 6 months later (red). It's the same with this week's forecasts if the war -...
Blockade Iran: Safer Than War, No Oil Spike
If you're interested in the rationale for blockading Iran and why this won't spike oil prices, watch my discussion on this from a month ago with @paulkrugman. Economic warfare like a blockade isn't perfect, but it's infinitely preferable to actual...
Blockade Shift Signals Market Relief Amid De‑escalation
Big thanks to @johnauthers for including me in today's @business write-up. The shift to a blockade is good news for markets because it signals a shift away from war and possible catastrophic escalation to economic countermeasures. That's good news... https://t.co/hh4YxAnK3P
US Blockade on Iran Oil Shows Strategic Restraint
It takes courage to do a blockade and the US administration deserves credit for doing it. The key argument in favor of a blockade is that Iran is a relatively small oil exporter, so it doesn't have the power to...
Oil Doom Forecasts Wrong: Blockade Didn’t Spike Prices
One month ago, I wrote that oil price forecasts of $150 or $200 were fear-mongering and that a blockade was the way to go. We now have a blockade - an important and courageous step - and oil prices aren't...
War Blockade Deepens Iran's Rial Freefall, Sparks Capital Flight
The Iranian Rial was in freefall before the war, due to chronic economic mismanagement. The blockade will now amplify that by causing financial panic and capital flight. The parallel exchange rate will be falling as people try to convert savings...
Blockades Spark Panic and Capital Flight, Not Just Trade Halt
A successful blockade isn't just about stopping oil exports. It's about instilling panic in the population and causing capital flight. That's what happened in Russia, when fear of an embargo caused capital flight in 2022. The US has lots of...
Drone Threat to Hormuz Could Force Iran’s Oil Embargo
If Iran can stop Western ships through the Strait of Hormuz with a few drones, the mighty US Navy can embargo Iran's oil. Goal is to bring the mullahs to the negotiating table in good faith. Iran is a gas...
Front‑month Brent Under $100; Peace Deal Could Drop to $90
The oil price that matters is the front-month Brent futures contract (orange), which is now just below $100 per barrel. This is what people trade and where a peace deal will get priced if and when we get a deal....
Gold's Rise Shows It's No Longer Safe Haven
Gold is recovering but that's cold comfort for anyone who thinks of it as a safe haven. Gold is rising because the US and Iran are negotiating, which means it's trading like a high-beta asset, not a safe haven. All...
Blockade Aims to Crush Iran’s Economy, Force Negotiations
The goal of the blockade is to collapse Iran's export revenues and make it impossible for the regime to import anything. That should lead to deep recession, devaluation and hyperinflation. Ultimate goal is to bring the mullahs to the negotiating...
IMF/WB Summit Likely Triggers Further Oil Price Drop
The IMF/WB meetings are happening this week in DC. My best guess is that they'll be a catalyst for oil prices to fall further. A lot of people are coming to DC from across the world and will realize the...
Blockade Is Retaliation, Not Escalation, to Pressure Iran
Quick reminder that the blockade is NOT an escalation. Iran has blockaded Western ships for the past 6 weeks. This is payback for that and levels the playing field. The blockade will implode Iran's economy and bring the mullahs to...
Blockades Are the only Way to Stop Autocratic Aggression
The blockade won't break Iran in a few days. But I'll say this. If the West had blockaded Russia in 2022, Putin wouldn't still be killing innocents in Ukraine. This is the only way to deal with thuggish, resource-rich autocracies:...
Blockade Pressures Iran; Oil Prices Expected Under $120
I've pushed for a blockade for over a month. Now we have it. It's the best way to dismantle the mullahs and get them to the negotiating table in good faith. Key risk to the US is another spike in...
Blockade Cuts Iran's Oil Revenue, Exposes Economic Fragility
A blockade collapses the blue bars below to zero. This collapses Iran's business model, which means there's no money for imports and the red bars go to zero. Iran is a gas station masquerading as an Islamic Republic. Time to...
Saudi Arabia Profits From Oil Surge, Resists Swift Peace
The biggest winner in this war may be Saudi Arabia, which is likely seeing its annual export revenues from oil rise substantially even with lower volumes thanks to the spike in prices. The Saudis have very little incentive to push...
Brent at $95, but US Embargo Could Push $125
My base case is for many weeks of messy negotiations with Iran, but that war has basically ended. That's what I think is priced into Brent at $95. If negotiations fail and the US does an embargo of Iranian oil,...
Turkey Alone Cuts Central Bank Gold; Others Remain Flat
There's endless chatter central banks are selling gold. For the 3 central banks for which we have weekly data (India, Thailand, Turkey), only Turkey has seen gold holdings fall lots (-$20 bn). Gold holdings are flat for the other two....
Turkey Sells $20bn Gold as Lira Faces Depreciation Risk
If negotiations with Iran fail, Turkey will be immediately back in the firing line of global markets. It sold and swapped 128 tons of gold to bolster its FX reserves by around $20 bn in recent weeks, a sign of...
Real Set to Surge Amid US‑Iran Tension
What the Brazilian Real needs to outperform is for Iran and the US to talk, taking catastrophic escalation off the table, but for negotiations to be difficult, which keeps oil prices high. That's exactly where we are and is the...
Gold's 100% Surge Turns It Into Risk Asset
At its peak in January, gold was up 100% y/y. The bubble sucked in lots of new buyers, making gold and other precious metals trade like high-beta risk assets and not safe havens. The debasement trade made gold lose its...
Ceasefire News Drops Oil Futures, Defying Shortage Expectations
There was lots of talk how acute "physical" shortage in the spot market would pull up futures prices of oil. That turned out to be totally wrong. News of a ceasefire pulled down futures, which in turn pulled down spot...
Dollar Poised for Further 5% Decline Amid Widening G10 Gap
The Dollar has a lot further to fall. Look at the gap that's opened up between the Dollar versus the G10 (blue) and the corresponding interest rate differential (black). We're talking about another 5% drop as negotiations continue and war...
Ceasefire Confirmed, US‑Iran Talks Push Dollar Lower
Earlier this week, I predicted we'd get a ceasefire. We did. The US and Iran are negotiating, a big step forward. Lots of details to iron out, but the war is ending, which is hugely risk positive. As a result,...
US Fatigued, Iran Holds Leverage—Ceasefire Likely
Most frequently asked question on this morning's livestream: is a ceasefire even possible? Two things are clear: (i) the US has had enough; (ii) Iran has leverage. How that gets dressed up in face-saving language is what talks are about,...
High Oil Prices Boost Colombian Peso, Brazilian Real
We've now reached the point where commodity exporters in Latin America are up from before the start of the war with Iran. We're getting a ceasefire, but oil prices will stay elevated for a long time. That lifts the ...
Dollar Slides, Commodity Currencies Surge as War Winds Down
We've entered the phase where the Dollar falls hard against EM. This is driven by a mix of markets feeling like the war is winding down and oil prices still very elevated, which boosts commodity exporting countries like Brazil. Real...
Brazil Real Surges as Markets Sense Ukraine De‑escalation
As soon as markets decided Russia's invasion of Ukraine in 2022 wasn't going to lead to WW3, Brazil's Real began rallying hard. It's the same now. The US is clearly eager for a ceasefire and trying to de-escalate. The Brazilian...
Live at 11 Am: Inflation, Ceasefire, Gold Safe Haven
I'm doing my customary weekend livestream today at 11 am because I'm on the road tomorrow. I'll be talking about US inflation, the ceasefire and if it will hold and whether gold is still a safe haven asset. Come join...
US Signals Desire to End Iran War, Messiness Expected
Two things should now be clear to everyone on Iran. First, the US administration clearly wants to end this war. Second, ending this conflict will be messy, which goes for ending pretty much every war. It's the first signal that...
US Inflation Remains Tame Despite Oil Price Spike
How bad is the US inflation picture? The spike in oil prices will push up March CPI later today, but - under the hood - inflation is well behaved. Yesterday's PCE reading for February showed core services inflation (blue) slowing....
US Leverage Forces Israel to End Lebanon War Quickly
The US has major leverage over Israel, so there's no way war in Lebanon continues if it prevents a ceasefire with Iran and a re-opening of the Strait of Hormuz. This war is a big political liability for Republicans and...
Turkey's Central Bank Loses 128 Tons Gold Amid Lira Pressure
The latest data - out today - show gold holdings by Turkey's central bank falling a further 8 tons in the week to April 3. This brings the total drop to 128 tons since depreciation pressure on the Lira peg...
Euro's Debt Charade Leaves Spain, Italy, France Vulnerable
The Euro got hijacked by high-debt countries to foster the illusion they're solvent. But yield caps don't confer fiscal space, which is why - when a shock like Ukraine hits - Spain (ES), Italy (IT) and France (FR) can't help....
Italy's Record Deficit Highlights ECB's Debt‑Shielding Role
Italy's cash budget deficit in Mar '26 is the biggest ever, wider even than Mar '20 at the height of COVID. At the root of this lies the ECB, which is co-opted by high-debt countries and protects them from markets....
Republicans Seek Quick Ceasefire Amid War Liability
There's hardliners on both sides that want to keep fighting and will sabotage the ceasefire. But this war has become a major political liability for Republicans in the midterms and needs to end quickly. This ceasefire will hold because the...
Ceasefire Likely Holds Despite Vested Interests Driving Conflict
Is the ceasefire between the US and Iran going to hold? I expect it will, but there's vested interests on both sides of this conflict that want the fighting to continue. So here's a great piece by @baselinescene in @ProSyn...
Dollar‑EM Indicator Signals Return to 2010‑13 Weakness
It's the Dollar versus EM that's been the key leading indicator for USD direction and that's now tumbling (black). We're in a new regime for the Dollar and are going back to the 2010-2013 period, when Dollar weakness was primarily...
Dollar Set to Tumble, Weakness Through 2026
The Dollar is tumbling as I forecast in my posts predicting a ceasefire. USD will now unwind all its rise from the past month, which was entirely due to short-term safe haven flows that'll now reverse. We're back to Dollar...
Brazilian Real Surges Toward 2022 Fair Value
The Brazilian Real today is strengthening sharply against the Dollar. $/BRL has fallen below where it was on Feb. 27, i.e. before the war with Iran began. The Real will now start a big strengthening cycle. Back to $/BRL fair...
US Pushes Ceasefire End; Spot Oil Set to Drop
There's 2 pushbacks to the ceasefire: (i) it won't hold; (ii) spot oil prices (white) won't fall to futures (orange) soon. No! On (i), the signal is clear: the US wants this over. On (ii), oil tankers from the Gulf...