Winners and losers from higher oil

Macro trends blogger and economist David Woo, CEO of David Woo Unbound and co-author of the upcoming financial thriller Merry Go Round Broke Down, returns to the show to break down the geopolitical and market implications of the US-Iran conflict. Woo argues that markets are dangerously mispricing the situation, betting either on a quick Trump "TACO" or a rapid US victory — both of which he sees as unlikely. With the Strait of Hormuz effectively closed, oil sitting near $100 a barrel, and Iran executing a measured, strategic response, Woo believes this conflict is far more protracted than Wall Street is pricing. He explains why Trump, now effectively a lame duck after the Supreme Court's tariff ruling, is unlikely to back down given the enormous legacy stakes, and why China's deep investment in Iran makes this the first real US-China proxy war. Woo also breaks down the winners and losers globally, shares his current positioning — short stocks, long oil — and warns that an interaction between rising oil prices, the AI bubble, and private credit stress could be the perfect storm markets aren't prepared for.

Links:  

Book: https://www.amazon.com/Merry-Go-Round-Broke-Down-Novel-Globalization/dp/B0GCX8Y6KT

YouTube: https://www.youtube.com/@DavidWooUnbound

Website: https://www.davidwoounbound.com/

Twitter/X: https://twitter.com/Davidwoounbound

00:00 Introduction

00:43 Setting the geopolitical stage

01:16 Why markets are dangerously complacent

03:34 Why Trump won't TACO this time

05:50 Trump's legacy shift — why Iran, why now

07:48 Iran's military capabilities — what the US hasn't destroyed

10:14 Oil at $95 — what's actually priced in

12:47 The Strait of Hormuz and what markets are missing

15:11 Can the Fed cut rates at $100 oil?

16:00 Retail investors driving the market higher

17:56 Global recession risk

19:57 Winners and losers — Canada, Russia, Europe, Japan

20:27 Why the midterms are almost irrelevant now

24:41 Base case — Trump loses the House

26:00 Why Trump is moving on Iran before lame duck sets in

28:09 Regime change and the greatest presidential legacy

29:55 China-Iran railroad and the real proxy war

31:24 Can the US control the Strait of Hormuz?

33:00 The Houthis playbook

35:15 UAE under attack — interceptors running out

37:04 Iran's civilization and strategic depth

39:12 David's positions — short stocks, long oil

40:42 When will markets wake up?

43:21 Most likely outcome — civil war not regime change

45:11 What Xi Jinping is thinking right now

47:03 Is this worth the risk for the US?

49:43 The Pearl Harbor analogy and China's Belt and Road

52:39 Gold, crowded trades getting blown out

55:38 Private credit, the AI bubble and the perfect storm

58:44 What's keeping David up at night — AI

01:03:07 David's book — Merry Go Round Broke Down