War Merger
War Merger
It was just a passing mention in these digital pages 11 days ago — the possibility that the Iran and Ukraine wars would merge into a single conflict. Now we’re here.
Yeah, yeah, I know — the headlines in corporate media are all about how the Iran war is back on pause. We’ll get to that soon enough. Our objective, as always, is to separate the noise from the real news.
And the real news is that the Ukrainian military attacked an Iranian commercial ship in the Caspian Sea — the giant saltwater lake that straddles Europe and Asia, its coastline shared by five countries including Russia and Iran.
We told you back on July 16 that only 500 miles separated the Ukrainian and Iranian conflict zones. That gap is rapidly closing.
We also noted that Washington and its NATO allies furnish weapons to Ukraine to fight Russian forces… while Moscow provides ISR data (intelligence, surveillance, reconnaissance) to Iran to fight U.S. forces.
There’s no dispute about what happened on Saturday: Ukraine’s president Volodymyr Zelenskyy took credit for the strike, which killed an Iranian crew member.
Zelenskyy claimed the ship was hauling military cargo. Iran’s foreign minister Abbas Araghchi called the attack “a blatant UN Charter violation” that “cannot go unanswered.”
The stakes are high for Tehran. “Iran’s Caspian ports have become increasingly important for trade as the U.S. blockade has complicated access to its southern maritime routes,” says the Financial Times.
“The northern corridor allows Iran to import goods from states around the Caspian and receive Chinese cargo transported overland by rail through Central Asia before reaching ports on the Caspian coast.”
But if the stakes for Tehran are high, they’re even higher for Washington.
Johns Hopkins historian Michael Vlahos is alarmed. Here’s how he put it last night during his weekly spot with the veteran radio host John Batchelor…
If you look at Mr. Trump’s approach to the Ukraine war, which is to renew the assault on Russia… and you look at his approach to Iran, which has seen 14 days of relentless attacks… it speaks to an American imperial court in Washington that cannot accommodate even the idea of an alternative outcome… that they are so hooked on achieving some kind of submission on the part of their adversaries, either Russia or Iran, that they can’t give up… even though they’re losing on both fronts.
It’s too soon to say World War III started on Saturday with the attack in the Caspian. Great wars don’t arrive on a precise calendar — and when they begin often depends on where you sit.
Ask an American when World War II began and he or she is likely to say Pearl Harbor on Dec. 7, 1941. Ask a typical European and they’re more likely to say Sept. 1, 1939 — when Nazi Germany and Soviet Russia began carving up Poland. Ask someone in China and you’re liable to hear Dec. 13, 1937 — the start of the Nanjing Massacre — or even Sept. 18, 1931 when Imperial Japan invaded Manchuria.
Is It a Missile Shortage? Or Is It the Fed?
OK, we can’t ignore the noise — because that’s what’s moving markets for the moment.
When we left you on Friday, it looked as if Washington was going to step up its attacks on Iran. In the event, the attacks let up for the first time in two weeks.
Donald Trump’s UN ambassador, Mike Waltz, went on the Sunday talk shows to say the aim was “giving diplomacy some space.” And he insisted it had absolutely nothing, no sirree, to do with widespread reports that U.S. military leaders are unnerved by a shortage of interceptor missiles.
We warned you about this looming shortage during the war’s earliest days. It’s almost certainly the reason three U.S. troops were killed by an Iranian airstrike in Jordan a few days ago.
As we write at midday, Donald Trump himself has weighed in to say talks are making progress. (We await the usual statement from Tehran basically saying, “Talks? What talks?”)
If the shortage of interceptor missiles isn’t what prompted the peace-is-at-hand chatter again… maybe it’s the Federal Reserve.
The Fed holds its next policy-setting meeting on Wednesday. Going into the weekend, futures traders assigned a 40% probability that the Fed would jack up short-term interest rates because of the risk that rising oil prices would fuel a new bout of inflation. Not exactly an outcome the Trump administration wants.
But lo and behold that probability is diminishing because U.S. oil futures have gotten clobbered — down nearly six bucks as we write to $83.66.
While oil prices are falling amid claims of U.S.-Iran talks… the major U.S. stock indexes are not following the script.
Instead, they’re treading water — the S&P 500 up microscopically from Friday’s close at 7,412. The Nasdaq is down about 0.15% while the Dow is up 0.4%.
➢ Congratulations are in order for Alan Knuckman’s Weekly Wealth Alert readers, who bagged a quick 50% gain on Friday playing call options on the Big Pharma firm Bristol Myers Squibb.
Later this week, four of the “Magnificent 7” companies will report their numbers — Amazon, Apple, Meta and Microsoft.
Bond yields are climbing down in sympathy with oil prices: The 10-year Treasury note is down to 4.64% — still elevated by recent standards but well below the 4.7% threshold that was breached last Thursday.
Falling interest rates are giving a lift to precious metals — gold back within $12 of $4,100 and silver up over 1% to $58.72.
Crypto is holding its own with Bitcoin just under $65,000 and Ethereum comfortably over $1,900.
“Bitcoin still will need to post a convincing base breakout, hold the gains and advance into the $70K range,” says Trading Desk editor Greg Guenthner. “Then, it needs to erase its June swoon.
“Once it does this and gets back into the $74K range, I think it’s safe to get a little more bulled up on crypto. But until then, we could be in for more chop. For now, the crypto bulls can enjoy the reprieve from what is now a 10-month bear market.”
FDA: Regulatory Logjam Clearing
“The FDA just caught up to my medicine cabinet,” snarks Paradigm’s bleeding-edge investor James Altucher.
Toward the end of May, James shared with 5 Bullets readers how a few months earlier he went to the doctor for the first time since he was 18. (He’s 58 now.)
The doctor was an anti-aging specialist who furnished him with a box of peptides.
“I've barely taken aspirin in my life,” he said two months ago. “Now every morning I inject a small stack of needles into myself. They're subcutaneous — about half a centimeter — so it sounds more dramatic than it is.
“What are peptides? The simplest way I've found to think about them is as text messages to your cells. Each one carries a different instruction: lose weight, grow muscle, repair tissue, improve sleep, slow aging.”
Never heard of peptides? Bet you’ve heard about the best-known category of them — the GLP-1s like Ozempic that instruct the body to stop being hungry.
James saw massive investment potential — a market that’s already grown from $20 billion in 2020 to $162 billion today, and just getting started. What’s more he saw a regulatory catalyst on the horizon.
And that catalyst triggered last Thursday — when some of the very peptides that James takes got the green light from an FDA advisory panel.
Compounding pharmacies can start making them in bulk. The panel’s decision came “over the objections of the FDA’s own scientists,” says James — “which is not a thing that happens often.”
The relevant stocks in the Atlucher’s Investment Network portfolio did a classic pop-and-drop. Maybe that’s because last week’s approval is only the second step in a three-step process.
The next step is full approval by FDA leadership. “Formal rulemaking still has to run, and that process extends into next year,” says James’ biotech analyst Ray Blanco.
But Ray says it’s only a matter of time given that Health and Human Services Secretary Robert F. Kennedy Jr. has already said he’d work to overturn current restrictions.
For now we give James the final word: “I've said for a while that the biggest shift in health care right now is the money moving away from just treating sickness and toward keeping people well in the first place.
“This is what that shift looks like when it finally reaches the regulators.”
Comic Relief
This meme is already out of date. The national debt is approaching $39.7 trillion.
Mailbag: Socialism
We got a blizzard of replies — enough to fill 10 pages of a Word doc — to last Thursday’s editionabout socialism and the advent of the DSA faction in the Democratic Party.
“As soon as physical health conditions allow, I will leave California and move to Arizona,” says a longtime reader.
“Getting out of NYC,” says another reader. “The country may go completely communist but a red state will move slower and then I’ll be dead.”
“I’m 1,000% against socialism and communism! Hands down,” says yet another. “I spread the word every chance I can to educate everyone on the dangers and expectations of it.”
This individual says it was a challenge with his own son amid a contested Democratic primary for governor of Wisconsin, “but I explain everything to him and now he understands.”
“Thank you and Jim for bringing this issue to the forefront,” a reader writes.
“Most Americans have lost faith in our elected representatives, academia, athletics, education, business community, Federal Reserve, judiciary and the media. So is it any surprise that socialism/communism would be appealing to younger generations?
“When you have grown up in a system that has manipulated capitalism, free markets and the rule of law, and engaged in endless foreign conflicts treating our military as if they are pawns in the game of chess, and then been educated that Western civilization is the source of all evil, what do expect would happen?
“So where do we go from here? It’s time to reverse Alexander Tytler’s Cycle of Democracy before it’s too late. So how do we do this? We all have to recognize that there is no Democrat or Republican Party, it is them versus us, and the only way to regain control of the republic is to either form another party or transform the Republican Party (which was formed to abolish slavery and polygamy) into a party that actually that actually restores confidence in the republic for which it was founded.
“For as long as I can remember the Republican Party has been the party that acts like the party out of power when they have it and door mates when are not. They, like all politicians, speak a good game, but it’s time to play, they are running away. Voluminous with words, cheap on actions.
“Young people want to support a message that restores confidence in their purpose and their future. Right now, the only ones that are providing any hope are the lies that Marxists spew.
“We would do all of us and them a great service by taking control of our citizenship and mentoring them that they live in the greatest country in the world, but we have gone astray from our founding principles, and it is up to us to bring it back before we suffer the fate of an evil that once established, can only be destroyed through bloodshed.”
Dave responds: Good points — although for the sake of accuracy I’m compelled to point out there’s no evidence the 18th-century Scottish historian Alexander Fraser Tytler ever described a cycle of history as you describe.
It appears to have originated instead with the 20th-century American industrialist Henning Prentiss. A lawyer named Loren Collins did yeoman’s work on this question in the early 2000s.
“I have no concerns about the ‘socialist wave’ whatsoever,” a reader avers. (We’ve had to truncate the email to keep today’s edition to a reasonable length)
“This is a natural response and should be expected. The pendulum must swing back and forth. Another opportunity for us to practice the skill of adjusting to your environment. Let me explain.
“The current economics is not working for most Americans. People are losing their quality of life. Life is getting harder, so they are searching for anything that is better. ‘Hey, that socialism sounds good, let's try that!’ So if the American people do not see life getting better for themselves, expect the socialist wave to swell.
“And we must own it. Our leadership in government and business/corporations has gotten us to this point. Your quote of Charles Goyette's 2009 lamentation sums it up simply. And the bill for the piñata party is coming due.”
Dave: It pains me to say so but I am increasingly resigned to the prospect that for the foreseeable future, America will lurch back and forth every few years between right-wing dictatorship and left-wing dictatorship.
It’s an experience familiar to many people in third-world countries, but one I’m still adjusting to after the last five years or so — and not something I relish now that I’ve (probably) entered the last third of my life.
I assume all one can do in those circumstances is try to keep one’s head down. Easier said than done in a profession where one must tease out how public policy might affect various investments. But we’ll press on…
