Have a look.

This is global electricity generation, by source. The biggest single slice — 34% — is coal. The single largest source of electricity on the planet, by a wide margin.

For context: that slice is bigger than every renewable source combined. Solar (7%), wind (8%), hydropower (14%), and bioenergy (3%) add up to 32% — and coal still beats them. It’s bigger than natural gas (22%) by half. Bigger than nuclear (9%) by nearly four times.

This is the world we actually live in. Not the one in the brochures.

Now, here’s the thing. This is a snapshot from a normal year. LNG tankers were still moving. Oil was well below $80. The pie reflected that.

Then Hormuz closed.

That is a big problem for resource-hungry Asia.

The region’s largest economies — Japan, South Korea, India, China — all import the bulk of their oil and LNG through that strait. Japan gets 95% of its crude from the Middle East, with roughly 70% of that travelling through Hormuz — putting two-thirds of its oil supply on the wrong side of the chokepoint. South Korea is in essentially the same position. India, 1.4 billion people, imports 85% of its oil with heavy Middle East exposure — call it half on Hormuz routes. China is at roughly 40%.

Now, this oil is all but gone.

So what’s their Plan B? More of everything that doesn’t ship through that strait — and especially coal.

Keep in mind, coal never died in Asia. It wasn’t even seriously targeted there the way it was in Europe. Japan, despite its high-tech reputation, still gets roughly a quarter of its electricity from it. China and India never stopped building new plants — quite the opposite, both have been adding record coal capacity for years. Vietnam, Indonesia, the Philippines, Bangladesh — same story across the region.

Why? Pure Asian pragmatism. Coal sits in the ground in Indonesia, Australia, Canada, the U.S., South Africa. It ships on Pacific routes that don’t run through anyone’s missile range. It’s abundant. It’s proven. It works at 3am when the sun isn’t shining and the wind isn’t blowing.

Of course, this time it’s not the sun or the wind that’s the problem. It’s Hormuz. And now that LNG tankers have stopped arriving and oil is at triple digits, governments are quietly extending the lives of plants they had announced for retirement just months earlier. They’ll burn more coal, build more plants, and lock in longer-term supply agreements with producers shipping on chokepoint-free routes — regardless of what gets said at the next climate summit.

Now, Asia is a lot of people. Billions of them. So the coal slice on the pie above isn’t shrinking. It’s growing.

Regards,

Lau Vegys

P.S. In our latest issue of Crisis Investing, we put forward two new picks built specifically for this thesis. If you’re a paid subscriber, make sure you haven’t missed it. And if you’re not yet on the paid side, the lead — featuring Doug Casey on why coal never really died — is free to all.

This is a private placement i…

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I’ve been called a contrarian for so long that I’ve started to think of it less as a label and more as a job description. And one of the positions I’ve held longest — one that’s drawn the most eye-rolls over the years — is that coal never went away. Nor is it going away.

Coal — just like oil or natural gas — is simply an arrangement of carbon, hydrogen, and oxygen. The friendliest elements, concentrated into portable, reliable energy that actually works when you need it. I’ve always been a fan.

Yes, the Western world declared war on coal. Politicians made speeches. Pension funds divested. ESG consultants wrote lengthy reports about the inevitable transition. Coal was supposed to be finished — a relic of the industrial age, embarrassing to own and dangerous to defend. And yet, quietly, the world kept burning it. Global coal demand hit all-time highs even as the eulogies were being written. China kept building coal plants. India kept building coal plants. Japan — which the world thinks of as a sophisticated, technologically advanced nation — never really stopped either. The funeral kept getting scheduled. Coal kept not showing up to it.

All of that is now being laid bare by what’s happening in the Gulf. The Iran war and the energy crisis it has unleashed have done something that years of data and argument couldn’t: they’ve stripped away the comfortable fiction and shown the world exactly how exposed it really is.

All of a sudden, scores of countries — across Europe, and particularly across Asia — found themselves staring into an energy abyss they’d spent years pretending didn’t exist. The Strait of Hormuz, through which roughly a fifth of the world’s oil and LNG flows, is effectively closed. And the countries that depend on it most have discovered, the hard way, that dependency and vulnerability are the same thing.

Consider Japan. It imports 87% of its total energy. Of its crude oil, 95% comes from the Middle East, and roughly 70% of that travels through Hormuz. With the strait closed, two-thirds of Japan’s oil supply is blocked. Not at risk. Blocked. It is now burning through emergency reserves that cover perhaps two to three weeks of stable LNG demand. South Korea is in essentially the same position — importing 98% of its energy, heavily dependent on the same routes. Australia has 38 days of fuel reserves. India, 1.4 billion people, imports 85% of its oil with heavy Middle East exposure. The list goes on.

These countries don’t have a Plan B for Middle Eastern energy. That’s not a criticism — it’s just a simple fact. For decades, the implicit Plan B was the American security guarantee. The U.S. Navy kept the sea lanes open, and everyone could afford to pretend that their energy dependency wasn’t as dangerous as it looked. But the sea lanes are no longer open. It turns out the security guarantee had fine print that nobody read carefully enough.

What you do when your Plan B evaporates is you fall back on what actually works. What’s available. What doesn’t require permission from anyone to access. And for most of Asia — and a good chunk of Europe — that means coal. It’s not glamorous. It was never supposed to be part of the story they were telling. But coal is there — abundant, proven, shippable on routes that don’t run through anyone’s missile range. When the choice is coal or cold, people choose coal. That’s why demand never fell the way the models said it would.

And it’s why, now that the vulnerability is impossible to ignore, the countries that matter most for global energy demand are making decisions that will outlast this crisis by decades. When a country genuinely stares into the abyss of energy vulnerability — when the lights flicker and the reserves start counting down — attention is drawn back to coal. As well as nuclear, of course. Japan, South Korea, India are not going back to the comfortable fiction that the shipping lanes will always be open. They’ll burn more coal, build more coal capacity, and lock in longer-term supply agreements with producers who ship on low-risk Pacific routes. And they’ll do this regardless of what gets said at the next climate summit, because physics and economics have a way of winning arguments against ideology.

Hormuz didn’t create the coal story. It’s just drawing attention to it.

In this month’s issue, we have two ways to play this — one for readers who want broad exposure to the sector, another for those comfortable sitting at a higher-stakes table. Lau gets into the specifics below.

Regards,

Doug Casey

Recommendation

Hi,

Lau here.

Doug has set out the macro case — a contrarian thesis he’s been holding for years, finally getting the catalyst it needed. The practical question — which names, why now, and at what price — is what follows.

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So Hormuz stays closed. And we keep stacking days.

Which is a useful moment to step back and remind you just how big this crisis really is — because the news cycle has a way of turning even genuinely historic events into background noise. Two months in, people seem to have quietly grown accustomed to the idea that a big chunk of the world’s oil is offline. Like it’s the new normal, instead of the most acute oil disruption in modern history.

But context matters. So let me give you some.

Take a look at the chart below.

This is every major oil supply disruption of the post-war era, measured by the percentage of global oil supply taken offline at the peak of each crisis. The current one — the bar on the right — is taking more than twice as much oil out of the global market as any prior crisis since the end of WWII.

Almost three times the Arab Oil Embargo — which was bad enough to crash the S&P 500 by nearly 50% and inflict a decade of stagflation on the United States.

Five times the Iranian Revolution shock — which was bad enough to push U.S. inflation to nearly 15% and force the Fed to hike rates above 19% to crush it.

And every single one of those smaller bars on the chart triggered a recession.

And as I told you in a recent essay, we may already be inside one ourselves. Layer the current oil shock on top of all of that — and what’s actually brewing isn’t your run-of-the-mill recession. It’s a different animal entirely. And one most folks aren’t prepared for.

One more thing to keep in mind. The 20% figure on the chart is the share of total global oil supply. Of seaborne oil trade — the oil that actually has to move on a tanker to reach a market — Hormuz handles closer to 30%. And that’s just oil. The strait also carries about a fifth of the world’s LNG, a fifth of seaborne nitrogen fertilizers, and meaningful shares of helium and refined petroleum products. So when Hormuz is shut, you’re not just turning off 20% of oil. You’re tightening every commodity supply chain that runs through that 21-mile gap.

So when you hear someone like our dear friend Michael Yon warning that we may be heading into one of the most epic famines in human history — and your first instinct is to dismiss it as catastrophism — well, pull up the chart again. He may very well be on to something.

Regards,

Lau Vegys

P.S. As it becomes clearer the world can't keep relying on Middle Eastern oil, countries are going to be forced to fall back on the next-best alternative. Our new issue of Crisis Investing, out later this week, features two high-conviction picks built to profit from exactly that shift. Keep an eye out.

In the past three weeks, reports suggest that as many as 10 oil refineries and energy facilities have either blown up, caught fire, or gone offline - across four continents. Russia, Australia, India, Mexico, Texas, Romania.

The Russian ones - fine, those are Ukrainian drone strikes. That’s war. But the rest? Australia just lost one of its only two working refineries to a fire. India’s brand-new $8.5 billion refinery caught fire the day before Prime Minister Modi was supposed to inaugurate it. Mexico’s newest refinery has had four separate incidents in three weeks. And in Washington State, a BP refinery exploded, injuring three workers.

Nobody’s calling it sabotage - officially. Equipment failures, gas leaks, “maintenance issues.” Just a very, very remarkable coincidence.

Needless to say, I was curious. I went through each incident and pulled the numbers. I found seven confirmed refineries that either blew up, caught fire, or went offline in a three-week window. I might have missed some - but even with just these seven, the damage is pretty striking. Here’s what I found:

That’s roughly 1.7 million barrels per day of refining capacity either knocked offline or running at significantly reduced output.

And that’s just the refineries. I also found a thermal power plant in Bucharest that had three transformers explode on April 20 - over 3,000 apartment blocks lost hot water, repairs could take a year. An Oil and Natural Gas Corporation (ONGC) well site in India that caught fire the same day, evacuating three villages. And a well site in Nacogdoches, Texas that burst into flames around the same time. These aren’t exactly refineries, but they fit the same timeline and the same pattern of energy infrastructure going up in smoke.

So add it up. 1.7 million barrels per day of refining capacity disrupted - and that’s a conservative count. This is on top of the 13 million barrels per day the International Energy Agency (IEA) chief says are already gone from the broader Iran and Hormuz crisis - what he called “the biggest energy security threat in history.”

Demand Destruction?

That said - I want to leave you with something to chew on. A reader commented on my Notes about this with two words: “demand destruction.” And I think he might be on to something. Because there are really only two ways to look at what’s happening.

The first is the innocent reading. This is just a run of bad luck - aging infrastructure, deferred maintenance, unfortunate timing. And there’s a case for it. Refineries everywhere have been running flat out since late last year, working overtime to make up for Middle Eastern and Russian supply shortfalls. Less downtime for maintenance. More stress on aging equipment. More risk of exactly the kind of failures we’re seeing now. A system running at maximum strain doesn’t need a coordinated attack to start breaking. It just needs one more degree of pressure.

The second is... well, less innocent. If you wanted to engineer demand destruction - to break an economy without firing a shot - you wouldn’t need to stop the crude from flowing. You’d just need to make sure nobody can turn it into anything useful. And if you did it gradually, across multiple countries, with plausible deniability (”equipment failure,” “gas leak,” “maintenance issue”) - nobody would connect the dots until it was too late.

I’m not saying I know which one it is. But at least seven refineries across four continents, in three weeks. That’s a lot of coincidence.

And honestly, it almost doesn’t matter. Whether this is coordinated or just the global energy infrastructure falling apart at the worst possible moment, the result is the same. These facilities take months to bring back online. The Strait of Hormuz will reopen eventually. The crude will flow again. But you can have all the oil in the world - if you can’t refine it, it’s just expensive mud.

The bottom line? We’re already in an energy crisis. Most people just haven’t realized it yet. And if you think this stays over there - in Russia, in Australia, in India - I have a barrel of oil to sell you.

Have a great rest of the weekend,

Lau Vegys

P.S. In last month’s issue of Crisis Investing, we went through all of this in much greater detail - and named two specific positions to profit from it. If you’re a paid subscriber, make sure you haven’t missed it. And if you’re not yet on the paid side, the lead - featuring Doug Casey’s latest words of wisdom - is free to all. Keep an eye out for this month’s issue next week.

The company is in bankruptcy. It has a terrible reputation. The airline business is brutal. And now Trump apparently wants the government to step in with a $500 million rescue.

Doug’s reaction was simple: let it die.

That’s what bankruptcy is for. The planes don’t vanish. The routes don’t vanish. The useful employees don’t vanish. The assets move to somebody who can run them better.

Instead, the government wants warrants. If it “works,” the U.S. government becomes part-owner of an airline.

That isn’t capitalism. It’s state capitalism.

We also talked about Trump’s strange claim that he saved eight Iranian girls from execution — a story that appears to have come from bad information online. Doug’s concern wasn’t just that it was wrong. It was that Trump seems to operate inside a silo, fed by loyalists and social media, and then refuses to admit when he gets something wrong.

That kind of psychology is dangerous when there are carrier groups sitting off the coast of Iran.

From there we got into marijuana reclassification, the drug war, and culture. Doug’s position is consistent: drugs should be legal, but that doesn’t make them good. The drug problem is not really a legal problem. It’s a cultural one. People use drugs to escape reality, and you don’t fix that with more DEA raids.

We also answered some good listener questions.

One young listener asked whether economics or psychology matters more. Doug’s answer: both. Economics explains incentives and how the material world works. Psychology explains how people behave — and whether they can control themselves.

Another young man asked whether he should sell an investment property to fund his own version of The Preparation. Our advice: probably not. Don’t give up ground you’ve already gained. Start where you are. Take the EMT class. Join the boxing gym. Build skills without waiting for perfect conditions.

We also talked about Roth IRAs. Doug’s view is that gold and silver are savings vehicles, but a Roth is best used for productive assets that can grow dramatically. Peter Thiel’s famous Roth IRA is the extreme example: a small early investment in PayPal shares reportedly turned into billions after later investments in companies like Facebook and Palantir.

That’s the real power of the structure.

We also covered helium, tungsten, South African REITs, medical care overseas, and the Deep State. Tungsten was especially interesting — dense, strategic, military-useful, and heavily controlled by China. It’s exactly the kind of obscure critical mineral situation we like to study.

The episode ended with Barnum World, a movie about how politicians use vague slogans that sound good but don’t mean anything concrete. “Make America Great Again” is a perfect example. People fill in the blanks themselves — until reality intrudes.

This was a wide-ranging episode, but the point was clear: politics, psychology, money, and state power are blending together in dangerous ways.

Have a great weekend,

Matt

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00:00 Newsletter Pitch and Returns
01:21 VIP Deals and Roundtable
02:50 Spirit Airlines Bailout
04:44 Abolish FAA and TSA
05:48 Iranian Girls Tweet Controversy
08:12 Marijuana Rescheduling Debate
12:02 Economics vs Psychology Discipline
16:28 Intrapreneurship at Work
17:47 Invading Iran and Deep State
19:40 Best Healthcare Abroad
21:22 US Healthcare Reality
21:55 Where Gold Is Hoarded
23:33 Property Or Self Investment
27:06 Roth IRA Asset Choices
29:45 VIP Deal Minimums
30:27 Border Tech And Customs
31:55 Shareholder Voting Skepticism
33:13 Helium And Supply Limits
34:40 Tungsten And Critical Metals
36:56 South Africa REITs Debate
40:05 Barnum Statements In Politics
41:58 Wrap Up And Next Week

The chart below is the 10-year Treasury yield minus the 2-year Treasury yield — the “2s10s spread” for short. It’s probably the most reliable recession indicator in American finance. The Fed watches it. Bond desks watch it. And since the late 1970s, it has never been wrong about a recession, with one brief exception I’ll come to in a minute.

Here’s how to read it.

Long-dated bonds normally pay more than short-dated ones — investors want extra yield for locking their money up longer. On the chart, that shows up as the line sitting above zero. Every so often, though, that relationship flips. Short-term yields climb higher than long-term ones, the line crosses below zero, and what you’ve got is called an inversion (whether that’s driven by the Fed pushing short rates up, the market pulling long rates down on weaker growth expectations, or both). In plain English, an inverted curve is the bond market telling you lower rates are coming — which, historically, only happens when the economy is headed for real trouble.

That’s the part most market-watchers at least vaguely know. But here’s the part they miss.

The inversion itself isn’t the recession signal. The un-inversion is — the moment the curve crosses back above zero after months or years of the opposite. And every single time that has happened since 1978, with that one 1998 exception, a U.S. recession was either already underway or starting within six months.

Take a look.

The blue line is the 2s10s spread I just walked you through. The grey vertical bars are NBER-dated recessions.

Note: NBER — the National Bureau of Economic Research — is the official body that dates American recessions. They’re the ones who decide, usually six to twelve months after the fact, whether we were in one.

For your convenience, I’ve marked each un-inversion on the chart with a red dot — eight of them, spanning fifty years. Six of them either sit inside a grey recession bar, or right up against one.

Let me walk through them:

• 1980 recession. Un-inversion April 1980. The recession had already started in January.

• 1981–82 recession. Un-inversion October 1981. Recession started that July.

• 1990–91 recession. Un-inversion June 1990. Recession started the following month.

• 2001 recession. Un-inversion December 2000. Recession started March 2001.

• 2008 recession. Un-inversion June 2007. The GFC began that December — the longest lead on the chart.

• 2020 recession. Un-inversion October 2019. COVID’s recession began February 2020.

Six un-inversions. Six recessions. Sometimes the recession arrived first. Sometimes just after. Never more than six months apart either way.

Now the exception. Look at the red dot at 1998. The curve did dip below zero during the Long-Term Capital Management / Russian ruble crisis — but only for a matter of weeks, and barely. The 1998 inversion was driven by a brief financial panic (LTCM blowing up, Russia defaulting on its debt), not by the kind of sustained monetary pressure that precedes a real recession. Every other inversion on the chart lasted months — some of them years. 1998 was an idiosyncratic shock, and that’s why no recession followed. The exception that proves the rule.

Which brings us to the red dot on the far right of the chart.

The 2022–24 inversion was the deepest since 1981 and the longest in the entire fifty-year series — twenty-six months continuously below zero. On every historical measure, it was a strong signal, not a weak one. And it un-inverted in late 2024.

So where does that leave us?

Well, the un-inversion is now well over a year ago — triple the longest historical lead (six months, from the 2007 un-inversion into the Global Financial Crisis). Which means one of two things. Either NBER simply hasn’t caught up yet — they typically lag the economy by six to twelve months, sometimes longer — or this cycle’s lag is abnormally long, with the damage still compounding under the surface.

Either way, the signal has fired. The question isn’t whether a recession is coming. It’s whether we’re already in one and just don’t have the data yet.

Regards,

Lau Vegys

P.S. Layer the Iran-driven energy shock on top of all this — a supply-side oil spike we haven’t really seen since 1979 — and what’s brewing isn’t just a recession. It’s a different animal entirely — and one most investors aren’t prepared for. Our latest issue of Crisis Investing lays out two high-conviction positions built for exactly this setup — one on the macro dislocation the chart above is pointing to, and one on a second-order effect of the energy shock that almost nobody is talking about. If you’re not yet on the paid side, the lead — featuring Doug Casey’s latest words of wisdom — is free to all.

Britain didn’t take it well. In October, it invaded — alongside France and Israel — expecting a quick, decisive victory that would restore order and remind the world who still ran the show.

Militarily, it worked. The canal zone was secured within days.

But then something happened that no one in London had gamed out. The United States — Britain’s closest ally — refused to back the operation. Eisenhower was furious. And he didn’t just voice his displeasure diplomatically. He weaponized the one thing that mattered more than tanks or aircraft carriers: money.

Eisenhower threatened to dump America’s holdings of sterling bonds. This caused a run on the pound. Sterling had already been under speculative pressure since the invasion began in late October — and the threat from Washington was what tipped that weakness into full-blown panic. The Bank of England (BoE) hemorrhaged reserves trying to defend the pound — over $200 million in November 1956 alone — as the world suddenly lost confidence in the currency. And when the BoE went to the International Monetary Fund (IMF) begging for dollar liquidity, Washington blocked that too.

The aftermath was slow but irreversible. In the mid-1950s, sterling still accounted for close to half of global reserves. Within a decade, the dollar held twice sterling’s share. By 1967, Britain was forced to devalue the pound by 14%. It never recovered its status as the world’s reserve currency.

Incompetence or Intent?

Fast forward to today. The Iran war. Where Washington may be about to learn, 70 years later, the same lesson it once taught London.

I've been writing to you about this war since it broke out in late February, but to quickly recap:

The Trump administration joined Israel’s air campaign against Iran — supposedly over Iran’s nuclear program — but never really bothered to explain why. No clear objective. No defined endgame. Just “bomb and see what happens.”

Unsurprisingly, most Americans aren’t buying it. Polling has consistently shown roughly two-thirds opposed.

And it’s not just at home. Unlike Iraq in 2003, there’s no “coalition of the willing” forming here. No allies lining up. If anything, it’s the opposite — countries are distancing themselves, sometimes quietly, sometimes not.

Eight weeks in, and what is there to show for it?

Iran’s Supreme Leader is gone — replaced almost immediately by his son, which arguably makes any future deal harder, not easier. Iran’s above-ground military is flattened, but its asymmetric capabilities — mines, fast-attack boats, mobile missile batteries — are very much intact. And America’s allies in the region, especially the Gulf states, have taken direct hits as a result of escalation they didn’t ask for and can’t control.

And then there’s the Strait of Hormuz — the single most important artery in the global energy system, a 21-mile chokepoint through which roughly 20% of the world’s oil flows every day.

Iran closed it almost immediately.

Last Thursday, Trump declared it “fully open” and took a victory lap. By Saturday, the IRGC was firing on tankers.

Open Thursday. Closed Friday. Gunfire Saturday.

And that pretty much sums up this war — constant back-and-forth, contradictory claims, and a level of dysfunction that would be funny if it wasn’t so consequential.

Watching all of this, you have to ask: is this incompetence, or is it intentional?

Because Hormuz didn’t come out of nowhere. Iranian officials said for months this is exactly what they would do. The Iranian parliament passed a motion authorizing it. CENTCOM war-gamed it. Israeli intelligence named it the “Hormuz card.” Everyone saw it coming.

Which means either the administration accepted it as collateral damage — or it was part of the plan.

America’s 1956?

Either way — and this is the point I'm getting at — if this war drags on long enough, it becomes America's Suez moment. And right now, every signal points to exactly that. Yesterday was supposed to be the day the ceasefire ended — one way or the other. Instead, Trump kicked it down the road, extending it indefinitely at Pakistan's request, while Tehran warns it has "new cards on the battlefield.”

Now, Britain's bind in '56 was a currency peg under Bretton Woods. Sterling had to defend its fixed rate against the dollar, or the whole system broke. America has no peg. What it has is worse.

$39 trillion in federal debt. Over $1 trillion a year just in interest. Peacetime deficits near 7% of GDP. And roughly $9 trillion of Treasuries — nearly a quarter of the total — sitting in foreign hands. That pile has to be rolled over constantly.

The Gulf countries alone hold over $1 trillion in U.S. financial assets between them. The problem is, pretty much all of them are in crisis. Iraq, Kuwait, the UAE, and Bahrain have all declared force majeure or shut wells in. Saudi Arabia has cut production 20%. Around 9.1 million barrels a day of Gulf output is offline — roughly 10% of global supply, gone.

All of which means their revenues are collapsing in real time. They’re about to flip from fiscal surplus to deficit. And the way that deficit gets plugged is by reaching for the biggest pool of liquid assets they own — U.S. Treasuries. Which flips them from one of Washington’s biggest creditors into one of its biggest sellers.

Then last week, all of this stopped being theoretical.

Khaled Balama, the UAE’s central bank governor, flew to Washington and met with Treasury Secretary Scott Bessent and senior Fed officials. He came asking for a currency swap line. In private, UAE officials told the Americans that Trump’s decision to attack Iran had dragged them into a war whose economic damage was mounting daily. And that if Washington didn’t extend dollar liquidity, the UAE would begin settling oil sales in yuan.

That’s right. An oil exporter the U.S. spent four decades anchoring into dollar-denominated trade went to Washington asking for a bailout — and threatened the yuan if it didn’t get one.

And settling oil in yuan is one step short of dumping the debt. So how long before others follow — and not just in the Gulf?

We already know France, Japan, Malaysia, Thailand, and the Philippines have quietly negotiated passage through the strait directly with Iran, paying in yuan through China’s Bank of Kunlun. These are longstanding U.S. allies — treaty partners, the countries the U.S. has spent decades hosting bases in and selling arms to. And they’re settling oil trades in Chinese currency because the Iranians won’t take dollars and the Americans can’t deliver open sea lanes.

This looks a lot like 1956 all over again — America’s own Suez moment.

Regards,

Lau Vegys

He got the name wrong. It’s the Strait of Hormuz, not the “Strait of Iran.” But that’s the least of the problems here.

What actually happened was this. On Thursday, Iran announced the strait was “completely open” — tied to the Lebanon ceasefire. Trump celebrated. Markets rallied. For a few hours, it looked like the worst might be over. Around 20 ships started to move.

Then the U.S. refused to lift its naval blockade on Iranian ports. Iran reversed course. By Saturday morning, Revolutionary Guard gunboats had opened fire on a tanker transiting the strait. A container vessel took a projectile hit. Two Indian-flagged ships — including a supertanker carrying Iraqi oil — were forced to turn around.

Open on Thursday. Closed on Friday. Gunfire on Saturday.

But I want you to understand something: none of it matters. At least not in the way most people think.

Obviously, the strait matters — a fifth of the world’s oil flows through it, and its closure has turned global energy markets upside down. But the daily headline about whether it’s “open” or “closed”? That's nothing but noise at this point. The damage was done weeks ago. And it’s still being done right now — regardless of what President Trump announces on any given afternoon.

The Damage Is Already Done

A few weeks ago, I published a chart showing how much runway each Gulf oil producer has before it runs out of storage and has to start shutting wells in.

Look at those numbers again. Iraq had six days. Kuwait had 14. The UAE, 16 without rerouting. Qatar, 20.

We're now six weeks in. Every single one of those clocks has run out — except Saudi Arabia, which had 65 days with rerouting. They're almost there too.

Iraq was the first to go — it started shutting down the Rumaila oil field back in early March because storage was full and tankers couldn't move. Kuwait declared force majeure the same week. The UAE cut production. Bahrain's state energy company declared force majeure too. Saudi Arabia reduced output by 20%. As of this month, the EIA estimates 9.1 million barrels per day of Gulf oil production is shut in. That's nearly 10% of global supply, offline.

And here’s what most people don’t understand about shutting a well in: it’s not like turning off a faucet. You can’t just flip it back on. Restarting shut-in production is a delicate, drawn-out process — it takes weeks, sometimes months, and if done wrong, you risk permanently damaging the reservoir. Kuwait’s state oil company said it will take months for production to reach full capacity again. Saudi Arabia just reported that attacks on its energy infrastructure have knocked out 600,000 barrels per day of production capacity — damage that doesn’t come back with a ceasefire announcement.

So even if the strait opened tomorrow — fully, unconditionally, brass band and ribbon-cutting — the oil wouldn’t flow for months. And that’s because the physical infrastructure has been disrupted in ways that don’t reverse on a politician’s timeline.

Both Sides Are Reloading

But there's another piece of this that Doug nailed on yesterday’s Doug Casey’s Take:

This is just a pause in hostilities. Everybody’s taking the opportunity to reload.

He’s right. Since the truce was announced, dozens of military cargo flights from NATO bases in Europe have been pouring into the Middle East. We also know that GM and Ford have entered talks with the Pentagon about weapons production. You don’t do that if you’re winding down.

Iran, unsurprisingly, is doing the same. U.S. intelligence indicates China is preparing to ship weapons to Tehran — routed through third countries to mask the origin. Iran is also reportedly digging out weapons stored at underground sites buried under rubble during the bombing. And people with contacts in Iran tell me the state media is preparing the population for more war.

Not great.

But what about the ceasefire? Well, Trump says Iran agreed to everything — suspending its nuclear program, turning over enriched uranium, and ending its support for Hamas and Hezbollah. The problem is Iran denies all of it. The ceasefire expires next week, both sides are far apart, and the best anyone can report is that they may be moving toward a memorandum of understanding — a 60-day framework for more talks. Not a deal. A framework for talking about a deal.

But how do you even get there when your closest ally isn't playing along? Part of the ceasefire required Israel to stop striking Lebanon — Iran's condition for reopening the strait. Israel struck over 380 targets there as the ceasefire took effect. And yesterday, the Lebanese army reported more violations — shelling of villages in the south. This is not what ceasefire looks like.

I think it’s fair to say neither side has much faith in a positive outcome. Doug is spot-on — they’re just using the pause to reload. And if Trump’s own words are anything to go by — if no deal is reached, “we’ll have to start dropping bombs again” — more escalation may be coming.

Have a good rest of the weekend,

Lau Vegys

P.S. In our latest issue of Crisis Investing, we go through all of this in much greater detail — and name a specific position to profit from it. If you’re a paid subscriber, make sure you don’t miss it. And if you’re not yet on the paid side, the lead — featuring Doug Casey’s latest words of wisdom — is free to all.

From there the conversation goes exactly where you’d hope it would.

We get into Pete Hegseth’s now-infamous “prayer breakfast,” where the Secretary of Defense appears to have lifted Samuel L. Jackson’s Ezekiel 25:17 monologue from Pulp Fiction and delivered it to a room of bewildered military brass as scripture. Doug’s review was not kind: “It was kind of weak and mealy-mouthed the way Hegseth delivered those lines.” His proposed fix? “Next time he ought to put a red bandana around his forehead à la Rambo, strip his shirt off to expose his war-like tattoos, and then deliver it with proper fervor.”

Elsewhere in a wide-ranging episode:

• Why coin collecting is dead and what that says about how we think about money

• Doug’s characteristically diplomatic take on Ireland’s troubles

• The Argentine citizenship-by-investment program that was, then wasn’t

• Whether traveling as an American is about to get uncomfortable again (Doug remembers the Vietnam-era Canadian-flag-on-the-backpack trick)

• Human cloning, Multiplicity, and the curious case of Adolfo Cambiasso cloning his best polo ponies — which rather settles the question of whether someone, somewhere, has tried it on people

• An honest look at our private placement track record: the big winners, and the ones that aren’t

As Doug reminds us near the end: “We’re just leaves drifting down the river of time. We shouldn’t concern ourselves with these things — they’re above our pay grade anyway.”

Have a great weekend,

Matt

Since then, the S&P 500 has broken through to a new all-time high. Meanwhile, the U.S. is still blockading the Strait of Hormuz with a dozen warships. Brent crude is near $100. The IMF just slashed its global growth forecast (and raised its inflation outlook). And what the White House calls a "military campaign" looks more like an all-out war every day. The market's response? Record high.

But never mind the macro. I want to show you something that makes the point better than any of those facts could.

That’s Allbirds. Ticker: BIRD. If you don’t know them, they make wool sneakers. Or rather — they used to. Revenue had fallen nearly 50%, from $298 million in 2022 to $152 million by last year. The stock was trading under $2.50. A slow-motion failure of a company by just about every measure.

Then, yesterday, the stock spiked more than 600%. From a close of $2.49 to over $17 intraday. On a single day.

So what happened? Did they discover a new technology? Land a massive contract? Get acquired at a premium?

No. They announced they’re pivoting to AI.

That's it. The company sold its entire footwear business for $39 million, rebranded itself "NewBird AI," and declared it would become a "GPU-as-a-Service and AI-native cloud solutions provider." No product. No revenue. No customers. Just the words "artificial intelligence" in a press release — and the stock went vertical. I mean — just look at that chart.

If you’ve been reading us for a while, this might remind you of something. In the late ‘90s, the same kind of mania played out around the internet. Pets.com surged to a $290 million valuation on its IPO. theGlobe.com — an early social network — soared over 600% on its first day of trading. Webvan — an online grocery delivery company that had never turned a profit — went public at an $8 billion market cap. The numbers were just as absurd then as NewBird AI’s are now.

And we know what happened next. From 2000 to 2002, the Nasdaq lost nearly 80% of its value. The S&P 500 was cut in half. It took the stock market over a decade to recover.

That’s what I see when I look at this Allbirds chart. A symptom. The AI market right now has $700 billion a year going into infrastructure and about $12 billion coming back in consumer revenue. That’s the gap I wrote about on Tuesday. And when a gap like that exists — when there’s that much money chasing a narrative — it doesn’t just inflate the companies doing the real work. It inflates everything. Including a shoe company with a press release.

As of this writing, the stock has already given back about 30% of yesterday’s gains — trading around $12, still nearly five times where it was two days ago. I’m pretty sure it’s just the beginning. And not just for NewBird AI — for the entire mainstream stock market, which has never been more concentrated or more dependent on a single bet paying off.

Regards,

Lau Vegys

She isn’t alone. She might be all of us.

In today’s conversation, Doug and I dig into what I think is the defining condition of 2026: we are drowning in narratives. The old game was narrative control. The new game is narrative flooding — pump out so many competing stories that everyone finds one they like, latches onto it, and stops looking.

We get into:

• Why humans are wired to accept any story that’s plausible, comforting, and gratifying — and how that wiring is being weaponized against us

• The fund manager call where a genteel discussion about Iran turned ugly fast, and what it says about the battle lines being drawn

• The actual math behind the Strait of Hormuz closure — 13 million barrels a day gone, dwarfing the COVID demand shock — and why the consequences are already baked in

• Whether Trump knew the Strait would close when he authorized the strike (the evidence is uncomfortable)

• The drug boats, the 1988 Vincennes incident Americans have forgotten and Iranians have not, and why the homeland is meaningfully less secure today than it was three months ago

• Why China may quietly come out of this stronger than anyone

• And the deeper question underneath all of it: when a civilization stops sharing a story about itself, what holds it together?

Caesar was warned the Ides of March had come. He pointed out, smugly, that nothing had happened. The seer’s reply is the one to remember:

Ay, Caesar — but not gone.

The article referenced in the podcast:

Smith Sense

Narrative Control

“Our human actions and reactions are not rooted in statistical data but are determined instead by emotions and sentiments — narratives drive our behaviour.” — Klaus Schwab, Covid-19: The Great Reset, p. 246…

Read more

21 days ago · 64 likes · 20 comments · Matt Smith @ Crisis Investing

It’s a fair question. And I think a lot of people are asking some version of it right now. So let’s look at something.

There’s a measure called the CAPE — the cyclically adjusted price-to-earnings ratio. Unlike the regular P/E, which just looks at the last twelve months of earnings, the CAPE smooths out a full decade of data to cut through the noise. It’s the closest thing we have to a reliable gauge of whether the stock market is cheap or expensive relative to what companies actually earn over time.

Right now, the CAPE is sitting at almost 40. Take a look.

That’s the second-highest reading this measure has ever recorded. The only time in history it was higher? The dot-com peak of 2000 — right before the Nasdaq lost nearly 80% of its value. And yes — amazingly — today’s number is significantly higher than it was on the eve of the 1929 crash.

So when we say the mainstream stock market has become divorced from reality — this is what we mean.

A Lopsided House of Cards

Now, you might be thinking: “Markets have been expensive before and done just fine.” And sure — even after the dot-com crash, the market eventually recovered. But here’s the thing — this market is not 2000. The valuation looks similar on paper. Underneath, the structure is far more fragile.

Think about it this way. The top ten stocks in the S&P 500 now account for roughly 40% of the entire index. At the dot-com peak, that number was around 25%. The index has never been this top-heavy.

So when you buy “the S&P 500” today, you’re not buying 500 companies. You’re making a very concentrated bet on a handful of names. The diversification you think you’re getting is largely an illusion.

And you know what’s holding that handful together?

One thing: the bet that AI spending pays off. Tech companies are on track to pour over $700 billion into AI infrastructure this year. And that’s precisely the problem — because so far, there’s almost nothing on the other side of the ledger. American consumers spend about $12 billion a year on AI services. $700 billion going in. $12 billion coming back. That gap — between what’s being spent and what’s being earned — is the exact same dynamic that played out during the fiber optic buildout of the late 1990s. Telecom companies spent hundreds of billions laying cable for an internet economy that was real, but that took far longer to monetize than anyone expected. The infrastructure survived. The investors who bought the peak did not.

Now, none of this means AI is fake — or that it won’t eventually reshape entire industries. It probably will. But “eventually” is doing a lot of heavy lifting when you’re spending $700 billion a year on a bet that hasn’t come close to paying for itself yet. The late 1990s internet was real too. The money just showed up a decade before the revenue did.

The Fuse Is Lit

So when someone asks me why the S&P 500 hasn’t cracked yet — my answer is: give it time. We’ve seen this movie before. The S&P 500 peaked in October 2007 and spent months drifting sideways while the subprime market was already on fire underneath it. Everything looked fine — until it didn’t. By the time equities caught up to reality, Lehman was gone and the index had been cut in half.

And this time, the fuse is lit and getting shorter. We are living through the largest disruption to global oil supply since the 1970s — and as of this past weekend, the U.S. didn't resolve it. It escalated it, announcing a full naval blockade of Iran's ports after peace talks collapsed in Pakistan. As of this writing, the strait remains closed. Over 400 tankers are still anchored. And in the physical market — where actual barrels change hands — dated Brent hit $144 last week. That was before the blockade.

That kind of oil shock is a tax on every business and every consumer in the economy. But it doesn’t show up in the stock market the week it happens. It shows up in the earnings calls three to six months later, when companies start guiding down and margins start compressing. The Hormuz situation is barely seven weeks old. The damage hasn’t even arrived in the data yet.

The market will figure this out. It always does. Just probably not when you expect it to.

Regards,

Lau Vegys

P.S. In our latest issue of Crisis Investing, we go through all of this in much greater detail — and name a specific position to profit from it. If you’re a paid subscriber, make sure you don’t miss it. And if you’re not yet on the paid side, the lead — featuring Doug Casey’s latest words of wisdom — is free to all.

The Islamabad talks are dead. After 21 hours of negotiations between the U.S. and Iran this past weekend, the two sides failed to reach an agreement. The sticking points were exactly what you’d expect: Iran refused to end uranium enrichment or fully reopen the Strait of Hormuz without charging tolls. The U.S. refused to accept anything less.

Within hours of Vice President Vance announcing the collapse, President Trump posted on Truth Social that the U.S. Navy would begin blockading the Strait of Hormuz — effective today, Monday.

Let that sink in for a moment.

Iran shut the Strait six weeks ago. Now the United States is shutting it again — from the other side. The official justification is to intercept ships that have paid Iran’s tolls and block traffic to and from Iranian ports — which almost certainly includes Chinese tankers, the biggest buyers of Iranian crude. In practice, Trump is blockading a waterway that Iran already blockaded. He’s closing the strait to reopen it.

That’s an unprecedented escalation.

Oil is telling you how serious this is. WTI crude surged above $104 this morning. Brent futures crossed $102. But those are the paper prices. The physical market — where actual barrels change hands — tells a more honest story: dated Brent hit $144 per barrel last week. And that was before Trump announced the blockade.

This is the largest disruption to global oil supply since the 1970s. And by some measures, it could be the largest in the history of the world oil market. Unlike the 1973 embargo, where OPEC simply chose to withhold supply, this one involves an active shooting war, a closed strait, and now a formal U.S. naval blockade layered on top.

Over the weekend, Doug emailed me about a position we’ve had in the portfolio — a producing oil company he knows well. Now, I know for a fact that Doug owns a significant chunk of this stock personally, and he told me he’s planning to buy more. In his own words: “oil is likely to stay well above $100, maybe a lot above $100 — and we probably ought to re-recommend it.”

I agreed. The company is an oil and gas producer with producing offshore assets in Africa — where the deepwater sector operates on an entirely different level than onshore — alongside international majors like TotalEnergies, thousands of miles from the Strait. Those barrels don’t need to transit anything to reach global markets. In a world where Persian Gulf oil is effectively trapped — Iraq, Kuwait, Qatar, the UAE are already shutting down fields as storage capacity runs out — African offshore crude has become premium supply.

So, today we’re upgrading this position from Hold back to Buy. Here’s the full reasoning.

Read more

You see, the Strait of Hormuz isn’t just an oil chokepoint. It also handles major volumes of LNG and petrochemicals — and almost half of all seaborne fertilizer trade.

Break it down, and the Persian Gulf accounts for 30–35% of global urea exports, 20–30% of ammonia, around 12% of phosphate fertilizers, and roughly a quarter of globally traded sulfur. That’s, again, roughly half of the world's seaborne fertilizer supply running through a single chokepoint.

And unlike oil, there are no bypass pipelines for bulk ammonia. No strategic fertilizer reserve to tap. No shadow fleet of tankers quietly moving cargo with transponders off. When fertilizer gets stuck, it just stays stuck.

The prices are telling you exactly that. Urea at the Port of New Orleans — the benchmark for U.S. fertilizer — has blown past $650 per ton, up nearly 40% since the conflict began. Futures are above $690. Some spot markets are reportedly clearing well above $700. These aren’t numbers anyone budgeted for.

Here’s why that matters to you. Right now — this week, this month — is the spring planting window across the Northern Hemisphere. Farmers are deciding how many acres of what crop, how much fertilizer to apply, whether the math still works at $690 urea. Those decisions determine how much food the world produces for the rest of 2026. And they don’t get a do-over.

You can already see it in the data. Corn — the most nitrogen-intensive major grain, at roughly $166 per acre in nitrogen costs — is where the squeeze manifests most clearly. The U.S. Department of Agriculture’s February study flagged a potential shift away from corn toward soybeans. Their March 31 report confirmed it: corn acreage expected to fall 3.5%, soybeans up 4.3%. In short, farmers are doing the math and switching.

And here's the thing. None of this has hit the grocery store yet. Fertilizer prices lead. Food prices lag. But the basic economics still apply: less supply, same demand, higher prices. The damage being done right now — fewer acres, less fertilizer applied, smaller yields — won't show up on your receipt until the fall. By then, the planting window will have been closed for months and there won't be anything anyone can do about it.

And you know what’s not helping? China — the world’s largest fertilizer producer — has restricted exports of urea, phosphates, and nitrogen-potassium blends since mid-March. Industry sources say the restrictions won’t lift before August. The world’s largest alternative supply source pulled back at the exact moment the Gulf went offline.

I bet you haven't heard about that on the evening news.

Have a great rest of the weekend,

Lau Vegys

P.S. In our latest issue of Crisis Investing, we go through all of this in much greater detail — and name a specific position to profit from it. If you’re a paid subscriber, make sure you don’t miss it. And if you’re not yet on the paid side, the lead — featuring Doug Casey’s latest words of wisdom — is free to all.

It started with a string of disappearances. Nine people with deep connections to classified physics and secure facilities have gone missing in recent weeks. Some murdered in their homes. Others just walked away. At the same time, Matt Gaetz made headlines claiming the existence of an alien-human hybrid breeding program. Wild stuff — but then Congressman Tim Burchett, a member of the UFO subcommittee, went on record and made it weirder.

“I’ve been briefed by just about every alphabet agency there is,” Burchett said. “If they would release the things that I’ve seen, you would be up at night worrying about this stuff.”

He added — for the record — that he’s “not suicidal and doesn’t take risks.” Make of that what you will.

Doug’s take? He runs the numbers on the sheer scale of the universe — 400 billion stars in the Milky Way, 2 trillion other galaxies — and concludes that while life almost certainly exists elsewhere, the odds of anyone taking an interest in our “obscure place” are about zero. But then again: “We live in the matrix, as far as I’m concerned. So anything’s possible.”

From there we got into the stuff that actually affects your portfolio and your daily life:

Coal’s moment. With oil and LNG supply under pressure from the Middle East and Russia, Doug makes the case for coal. “Coal’s underrated right now. I’m a big fan.” He points out that the natural gas to oil ratio is currently about 40 to 1, versus the typical 6 to 1 — meaning natural gas is extraordinarily cheap in the US but expensive everywhere else. Ian Coal has been on the recommended list for a long time, pays a fat dividend, and keeps climbing.

EQT’s drop. A subscriber asked why EQT got hit hard while other energy stocks held up. Simple answer: EQT is a natural gas play, and nat gas is trading at roughly $2.50 — basically an all-time low relative to oil.

The Strait of Hormuz. The energy secretary reportedly said the Strait will reopen within a couple of months. Doug and I aren’t so sure that timeline is fast enough. Australia’s last oil shipment arrives around April 20. If it takes two more months, Doug thinks we could be looking at a global depression. And Australia’s ultra-green government is making things worse by discouraging domestic drilling.

Mass migration. A subscriber asked what’s really driving migration into the US. Doug doesn’t hold back, and we debate whether it was driven by stupidity or something more intentional. My view: look at the outcome — an attack on America’s finances, culture, and communities — and ask whether maybe that was the goal.

Pensions. Doug’s blunt assessment: the only pensions that make sense are ones invested in productive businesses that pay dividends and grow. Everything else — especially state-run programs funded by diminishing tax dollars — is a ticking time bomb.

Trusts. Doug’s used them, doesn’t currently, and isn’t opposed. But he flags the tradeoff: real liability protection and tax benefits, but rigid structures that are hard to unwind if your plans change.

We also talk about Steven Spielberg’s upcoming Disclosure Day, the Canadian NDP’s increasingly creative acronyms, a fascinating ear-bud technology company called Naqi that Doug owns shares in, and why we both think entertainment has become the dominant force in modern society.

No subject too taboo. Art Bell would be proud — or at least entertained.

— Matt