The Strait Is Open! (Maybe, Sort Of)

The Strait Is Open! (Maybe, Sort Of)

For once, it’s someone other than Donald Trump issuing a market-moving tweet.

Specifically, the Iranian foreign minister…

That was at 8:45 a.m. EDT. The reaction in the “paper price” of oil was immediate — futures on West Texas Intermediate crude sinking more than 13% to $82.21, a five-week low.

And then the U.S. president weighed in…

To the extent that it’s possible to take a step back amid fast-moving developments like these, let’s do so.

In the first place, no one in Tehran has ever said the Strait of Hormuz was “closed.” On March 22, the foreign minister himself said the strait is “not closed. Ships hesitate because insurers fear the war…”

The Iranian government enforced a selective blockade — with the implicit threat that ships attempting to transit the strait without permission would be destroyed.

Before Washington and Tel Aviv launched their war on Tehran Feb. 28, about 120 ships passed through the strait each day. Since then that number has been slashed by 90%.

Let’s see what the numbers are this weekend.

Besides, the terms of this “reopening” seem open to interpretation. As you see above, Tehran says it hinges on a 10-day cease-fire in Lebanon sticking… but Donald Trump says, “This deal is not tied, in any way, to Lebanon.”

But let’s assume the best and that peace is, as they say, “at hand.”

There’s still a problem that colleague Sean Ring spotlighted Monday in The Rude Awakening. “Even if The Donald announced a ceasefire tonight, the spigots don't just reopen.

“Shut-in wells don't restart cleanly, due to reservoir pressure problems, viscosity issues or damaged infrastructure. LNG liquefaction plants can't simply be switched back on. They cool gases to hundreds of degrees below zero through enormously complex systems. Just flick a switch? Doesn’t happen.

“And then there's insurance. Lloyd’s of London is an intelligence operation that also writes shipping insurance policies. When the bombs dropped, the policies vanished. Every single ship, cargo and crew needs its own bespoke coverage review before they move. Thousands of vessels. No AI shortcut. No batch processing. And no American company is taking its place.

“Someone has to be the first tanker captain through the strait after the ceasefire.”

Again, let’s see how many tankers transit the strait this weekend.

OK, more about the market reaction next…

Euphoria

As you might expect, sinking oil prices translate to soaring stock prices.

The S&P 500 is on track to end the week at record levels — up 1.25% as we write to 7,129. The Nasdaq is likewise in record territory, up 1.5% and approaching 24,500. The Dow is up strongest — a little over 2% — but it still has work to do to reach a record.

Gold sits at a five-week high of $4,869. And the crypto rally is getting a head of steam — Bitcoin approaching $78,000 and Ethereum at $2,444.

Don’t count out silver yet.

For a sixth year running, silver demand will outstrip silver supply — according to a new survey commissioned by the Silver Institute.

Supply remains steady — but it can’t keep up with rising demand.

Interestingly, the survey suggests that industrial demand for silver will drop 3% this year. It seems the high price of silver is prodding the makers of solar panels to start looking for silver substitutes.

But investment demand is only getting stronger. “You could see losses in the industrial sectors being mopped up by the retail investment,” says Philip Newman of the British research firm Metals Focus, which conducted the survey. “It’s not out of the realms of impossibility,” he tells Kitco News.

Demand for coins and bars is forecast to rise 18% this year to its highest level since 2022. India is a source of growing demand because while silver isn’t as cheap as it once was, it’s still a lot cheaper than gold.

Meanwhile, demand for silver via ETFs and similar products remains robust.

Checking our screens, silver’s rallying much harder than gold today — up over four bucks to $82.65. That’s nowhere near the hyperbolic $120 highs of late January — but by the same token, an ounce of silver a year ago at this time was only $32.

A Satellite Phone for Everyone

“A flying cell tower,” is what our tech-investing specialist Ray Blanco calls it. And he’ll be on hand as it’s launched into orbit this weekend.

“At 6:45 a.m. EDT Sunday, Blue Origin's New Glenn-3 is scheduled to lift off from Launch Complex 36 at Cape Canaveral carrying a single payload: BlueBird 7.”

That’s a satellite developed by AST SpaceMobile (ASTS) — “the world's first and only direct-to-cell space broadband company,” Ray says.

“BlueBird 7 isn't just another satellite. It carries the largest communications array ever deployed to low Earth orbit — a phased-array antenna spanning roughly 2,400 square feet.”

So yes, a flying cell tower — “engineered to connect directly to the unmodified smartphone already in your pocket,” Ray says. “No dish. No ‘satellite mode.’ Just 120-plus Mbps of broadband from space to your regular iPhone or Android.”

As Ray said in this space last month, ASTS hopes to have as many as 60 of these satellites in orbit by year-end.

“As a shareholder, I was invited to watch the launch from Kennedy Space Center alongside other qualified holders. I'll be on the 4:15 a.m. bus with my kids — who, for the record, are more excited about the rocket than the ticker!”

We’ll hear from Ray post-launch on Monday…

Comic Relief

And now a guffaw that has nothing to do with war or the cost of living…

Vitriol

The following email landed in our inbox after yesterday’s edition…

“OK, I thought you were reasonable, economically oriented professionals that weren't beholden to the stupid, immoral fraud we unfortunately have as our president. And I thought you might have a unique and interesting take on our economic framework.

“But now it's clear where your political ideals lie and it's with the anti-democratic movement under the spell of a fascist from New York.

“I will never donate another dollar to your cause. Count me out!”

From the other side of the political divide, the following email also landed in our inbox after yesterday’s edition…

“I am becoming increasingly uncomfortable with the previously veiled commentary I noticed, which you started about a year ago. This is not why I’ve paid nearly $1,000 a year.

“I’m deeply disappointed, and your recent inappropriate, unprofessional and juvenile response to one of the letters yesterday proves that you just can't keep your personal political views separate.

“Deep personal introspection and maybe professional assistance are in order. I may need to stop reading your 5 Bullets, which I found to be the least helpful of all the material I’ve considered over the past year from Paradigm Press. It makes me sad, but life goes on — things change.”

First, this is a good time to reiterate that this e-letter is a free benefit stacked on top of your paid subscription.

But beyond that…

During the 2024 election campaign the atmosphere in this country became so heated that for a little while I implemented a policy: I would refrain from addressing any topic that entailed bashing a single presidential or vice presidential candidate.

I implemented the policy after I tried to address serious economic issues playing off a remark JD Vance made about “childless cat ladies” — and the reaction went off the rails.

If the atmosphere in the summer of 2024 was heated, the atmosphere in the spring of 2026 is toxic. But since it’s not a presidential election year, I’m not altogether sure what policy I can implement now to lower the temperature.

Mercifully, the weekend is upon us. Without deadline pressure, maybe I’ll come up with something. And maybe cooler heads can prevail soon…