Mad Men
“Men will always be mad, and those who think they can cure them are the maddest of all.” Voltaire.
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TL;DR
The market’s decided the energy shock is over and the all-clear is in. Futures green, VIX 16.87, Polymarket 85% on a higher open. Except three shocks are live, not one: Hormuz is physically shut, Russian diesel is blowing out on Ukraine’s refinery strikes, and the rate shock isn’t going anywhere. And now IRNA says the US hit the Bushehr nuclear plant perimeter. Crude eased; the market heard ‘cured’. My read: it’s renting the calm. Long the 30-year short, long gold, not fading AI hardware on a Korean margin call. Book below the wall.
Voltaire wasn’t talking about the tape. He may as well have been.
The President went to NATO in Ankara, told the room he was ‘feeling the love’, called Zelenskyy ‘President Putin’, and informed the assembled leaders that the ‘Islamic Republic of Japan’ fired missiles at a US aircraft carrier (USAT) (Rtrs). Japan. The man running the war can’t name the country he’s at war with. Overnight the ceasefire died, the US ran a second night of strikes, and the market bought the futures. Cured, apparently.
Set up for failure, perhaps?
MY READ
Torsten’s Apollo chart has the frame right and the market only half-heard it: the energy shock is rolling over, the rate shock is not. My variant is that even the first half is premature, because there are three live shocks, not one.
Crude, where Hormuz is shut. Products, where Ukraine is torching Russian refineries and diesel went vertical. Rates, where a hawkish Warsh and an AI-supply wave pin the long end.
You do not get all three, a nuclear-site headline, and a 16-handle VIX. Something reprices. I’d rather own the reprice than the calm.
WHAT MATTERS TODAY
BUSHEHR (breaking). IRNA says the US struck the perimeter of the Bushehr nuclear plant (IRNA). One source, Iran’s own wire, unconfirmed, so hold it as a claim, not a fact. But if it stands up, it’s a rung up the ladder the tape has not priced at all: strikes near a live nuclear site are a different category of tail. Watching for a second feed before it moves from question to thesis.
CEASEFIRE, OVER. Trump called the ceasefire finished Wednesday, hours before Central Command hit roughly 90 targets near the Strait. Iran answered against US bases in Bahrain and Kuwait (BBG) (PDB). WSJ’s read on the tape: investors ‘take Mideast tensions in stride’ (WSJ). Stride. Sirens in two Gulf states, and the word is stride.
HORMUZ, PHYSICALLY SHUT. Julian’s crossing charts and the house tracker say the same thing:
Single-source tracker, so treat the decimals as mood, not gospel (PDB). Roughly 60% fewer ships is not ‘over’. The IRGC is warning tankers to use ‘approved routes’ or eat a ‘forceful response’. A blockade in a trench coat. And Brent still gave back half a percent to ~$78. Renting.
THE OTHER WAR.
The leg nobody on my screens is pricing. From my friend Peter Boockvar: forget Hormuz a second and watch Russia. Ukraine is hitting Russian refineries almost daily now, the Omsk plant (Russia’s largest) and Lukoil’s NORSI among them, and Moscow just slapped a diesel export ban on through July 31 (Boockvar) (WSJ). Russia is roughly 11% of global seaborne diesel, second only to us. Diesel ripped 9% on the CME yesterday, 12% in Europe. The energy shock isn’t over. It changed addresses.
RATES, THE ONE THAT STICKS.
June minutes: a few wanted to hike, easing bias gone, Warsh’s first meeting, nine of seventeen projecting a 2026 hike (BBG).
The 30-year prints 5.08% into today’s auction. Stack the AI debt wave (issuance already double all of last year,
Amazon’s $25B deal bumping desk capacity) and higher for longer stops being a slogan (BBG). Valuations price none of it.
The Shiller CAPE sits near 38, dot-com air, the second-richest reading in the whole series behind 2000 itself (Shiller / Deutsche Bank).
And sit with the analog, because it isn’t the lazy ‘AI is a bubble’ take.
1999 was not a con. The internet was real, and it was transformative, exactly as the bulls said. Netscape was a genuine business built on a genuine revolution. The lesson of that cycle is narrower and meaner than ‘it was all fake’: a real technology, a true productivity story, heavy capex, and leadership crammed into a handful of names can still detonate a savage equity and credit cycle.
The multiple does the damage, not the invention. Netscape was right about the web and still went to zero as a stock. Today rhymes on every axis that mattered then, a $700bn capex year, AI bond issuance already double last year’s and bumping desk capacity, an index carried by a shrinking cohort (Mag 7 up ~1.7% YTD while the rest does the lifting).
‘Transformative’ and ‘overpriced’ are not opposites. They travel together, usually. That is what a 38 CAPE is trying to tell you, and what the Netscape List behind the wall exists to sort: which of today’s leaders compound, and which is this cycle’s Netscape.
WASHINGTON.
Same week the President can’t find Iran on a map, his people are re-plumbing the electorate: a July 4th push for nationwide voter ID and proof-of-citizenship, Stephen Miller online insisting babies born here to non-citizen mothers aren’t really American, and Trump v. Slaughter clearing the way to gut the agencies that referee any of it.
I’ll say the quiet part. I do not trust this crew not to lean on the midterm scale. Did I miss the memo where election machinery became a matter of executive taste? It’s a market variable now, not just a civics one.
MOVERS THAT MATTER
Nvidia / the Mag 7. NVDA has shed roughly a trillion in cap, down ~16% from its May high, back to pre-boom valuation, while the Mag 7 basket is up all of ~1.7% YTD against the Nasdaq 100’s +16% (BBG). So what: the AI trade didn’t break, it broadened.
SK Hynix. US ADR reportedly more than 7x oversubscribed, sovereigns and long-onlies piling in (BBG). So what: yesterday’s ‘AI hardware is cracking’ panic was a leveraged Korean ETF unwind on top of a Samsung beat. Mechanics, not demand.
FLOWS & POSITIONING
VIX 16.87, and Bloomberg is running ‘when the VIX isn’t telling the whole story’ (BBG).
AAII bull-bear clawed to -0.9 from -10.9, still net bearish. Polymarket 85% green (PDB).
Underneath, the hawkish drift: ECB hike bets doubled toward ~40bps after Nagel wouldn’t rule out another, and Bloomberg Economics sees structurally higher global rates for years off this war (BBG).
Jupiter took a £1.3bn bond fund’s Treasuries to zero on ‘overheating’. Crowded long oil, crowded long gold, into all of it. Fuel for a violent move either way.
THE DESK, paid | morningmusing.com
Behind the wall, the exact book. TBT is the cleanest expression of the whole thesis: short the 30-year into 5.08%, a hawkish Warsh, and an AI-supply wave the market under-hedges. Long gold, upgraded. Long SMH, and no, not fading hardware on a Korean margin call. KRE plus a KBWB catalyst into July 14 bank earnings, steepening as the NIM sweetener. The bank single names (long JPM, GS, WFC, short BAC), the WFC/BAC pair toward target, CME at the top of the single-name book with the diesel tape as its live catalyst, and the NVDA fade that I’ll be straight does not survive raw arithmetic without the regime-flip overlay. Entries, stops, targets, R:R, falsifiers, and a Bushehr-adjusted decision tree, inside.
Two live wires before the bell: Delta’s fuel line and Pepsi’s pricing. Plus a 30-year auction into a four-week-high yield. The tape says cured. The tankers, the diesel, and now a nuclear-site headline say otherwise. Somewhere a Supreme Leader nobody’s seen since February isn’t returning calls, and neither, apparently, is the country the President thinks he’s bombing.
Who’s the maddest of all? Back tomorrow.
