Add "crack spread" to your economic vocabulary

I found the "recent work" that Jonathan Ferro is referring to in his introduction to Jeffrey Currie.  Couldn't find a text version to summarize, but here's a longwatch video interview that has extensive details about the matters being discussed:

The essence of the interview is a question about why the price of oil (as reflected by Brent crude and WTI (West Texas Intermediate) has remained (relatively) stable despite the ongoing conflict in the Gulf.  Those prices went way up when the "hot war" started, then moderated back down when the "memorandum of understanding" was executed, and now they are heading back up in a gradual fashion.

I have not previously been aware of Jeffrey Currie, but his reply (starting at the 1:15 mark of the second video) is exactly what I've been thinking - so I assume he is a brilliant genius.  His Wikipedia page indicates that he is a highly-respected economist at the University of Chicago.  Listen to as much of that interview as you have time for.  I heard the same arguments presented live to Jonathan Ferro this morning on Bloomber's Surveillance program in the pre-market and I was blown away by the insights.

For the TLDR and TLDW crowd, I'll add some more nuggets.  First the definition of "crack spread":

Crack spread is a term used on the oil industry and futures trading for the differential between the price of crude oil and petroleum products extracted from it. The spread approximates the profit margin that an oil refinery can expect to make by "cracking" the long-chain hydrocarbons of crude oil into useful shorter-chain petroleum products.

And before I move on, one note.  Any juvenile salacious comments about "crack spread" will be instantly vaporized on review.  The comment section here is for serious discussions of the world economy.

Here is an inadequate quick summary for those without the patience to watch the videos.  The news media and the general public focus on the "price of oil," but nobody actually uses crude oil.  People use gasoline, farmers and truckers and businesses use diesel, everyone uses plastic - but those are all products, not creude material.  The only entities that use crude oil are refiners, who are now working at maximum capacity and unable to ramp up further production.  The demand for these end products persists [unless demand destruction occurs - a separate issue], so right now the price for the products is huge.  His rough example is that while Brent oil is USD70/bbl, the price for the products averages USD140/bbl - that "crack spread" is the highest he has seen in 30 years.   Meanwhile, Ukraine has been hammering Russian oil reserves and Russia's refining capacity and the earthquake in Venezuela took out part of their refining capacity.  Crude oil prices dropped when the "memorandum of understanding" was signed because a flood of tankers left the Strait of Hormuz, but without a continuing flow the price is edging back up and there is currently no reason for that to change.  When this conflict started, the U.S. and other countries started to harvest their strategic petroleum reserves, which are now getting low (some other countries have exhausted theirs or have never had petroleum reserves in storage).  If the U.S. continues to empty its strategic petroleum reserve to cover up the shortages of crude exiting the gulf, the potential scenario is catastrophic.

The long video also includes some discussion about how China (allied with Iran) also has control of much of the worlds critical metals, plus they are leading the world in energy storage (batteries) and in wind and nuclear technologies.  IMHO the future belongs to China, which staffs their administration with scientists.

Addendum:  Markets are now opening in Asia...

Addendum:  A nice chart of transits through the Strait of Hormuz, showing the initial "hot war," the MOU period, and the resurgence of hostilities.  I'll see if I can find an updated chart of strategic petroleum reserves.

Addendum:  New data for August 14, 2026 -

Another week, another record high (Aug 21).  No reason to expect it to change any time soon:

The price of in-flight snacks

"A passenger was removed from a Breeze Airways flight that traveled from New York to Florida after allegedly taking snacks from the beverage cart without paying, airline officials said...

Breeze sells a variety of snacks on board, including $5 options such as gummies, potato chips and popcorn, as well as $10 premium items including ramen noodles and cheese trays.

Some observations re SpaceX

"By Friday, however, the macro narratives were entirely overshadowed by the excitement of the SpaceX IPO. It’s an IPO that will go down in history for a remarkable combination of reasons—from its sheer scale ($75 billion, almost three times the previous largest IPO) and the $1.8 trillion valuation (which places it immediately, on day one, as the seventh-most-valuable US company), to challenging the traditional playbook on investor allocation, price discovery, and fast-tracked index inclusion. It has also triggered an unprecedented wave of wealth creation, from Elon Musk’s new trillionaire status to some 4,400 millionaires minted among the firm’s current and former employees. All this for a company that generates no profits, is highly valued, and carries enormous key-person risk."

Excerpted from the weekly substack email from Mohamed A. El-Erian (boldface added).

Scribbles on a bookmark - solved with AI

When I read books I use white paper bookmarks so that I can jot down new words to look up. or pithy statements or clever insights worth quoting in TYWKWDBI.  The best bookmarks are cut-up greeting cards, which have white expanses and the proper stiffness.

Embedded above is a scan of the top portion of a bookmark I recently found in a pocket while doing laundry.   And to my dismay I had no idea what book I had been reading at the time, or how long ago.  I can still look up words, but how to retrieve the "advice" from some page 61? (I had already decided to skip the "cure for lesbianism" on page 32).

Does anyone want to try to guess the book, based on the words harvested?  Answer tomorrow.

Addendum:  I could not for the life of me figure out which book I had been reading.  So I asked AI:

I immediately remembered the book, which I had read because it was longlisted for the Booker Prize.  I had returned it to the library many weeks ago.  So I looked at my list of "Books read" and there it was - graded with a "2+" on my personal scale of 0-4.  

That rating meant it wasn't worth a potential future reread and not worth reviewing for TYWKIWDBI, so I won't be recommending the book here.  I may add attercop, inchwell, swingle scutch, becks, and casemate to my huge list of interesting words (sigil is already there).  And I've requested the book from the library again to see whether the "cure for lesbianism" or the "advice" are worth blogging.

I'm posting this now not for the book per se, but to make note of the amazing power of artificial intelligence.  I used the commonly-available and free "AI mode" on Google.  What amazes me is that it appears that 127 pages of this book have been loaded into a database.  So I wondered whether the book could be reproduced by asking the AI to "regurgitate" it passage by passage ("give me a sentence, give me the next sentence etc...).  This morning I asked...

That was followed by links (to New Direcrtions Publishing and to Penguin Books Australia) where I could purchase the book.  Interestingly there was no link to a third-party seller like Amazon, and (to my disappointment and that of John Farrier) no suggestion that "you can get this book from your local public library."

All of this would seem to be within the boundaries of copyright law, but it still amazes me that a book just published this past year has already been scanned into storage into a massive data warehouse that is guzzling cooling water somewhere in a rural agricultural area.

U.S. Consumer Sentiment Index

Offered without comment from me.

Increasing upward pressure on oil prices

As reported by CNBC (Consumer News and Business Channel):

Oil prices rose Friday as President Donald Trump is likely to turn his attention back to the stalemated conflict with Iran after leaving a summit in China with President Xi Jinping.

International benchmark Brent crude futures for July gained more than 3% to close at $109.26 a barrel. U.S. West Texas Intermediate futures for June advanced more than 4% to settle at $105.42 per barrel.

Trump told Fox News that he is losing patience with Iran. “I am not going to be much more patient. They should make a deal,” the president said in an interview that aired Thursday evening.

Trump is talking tough, but there is nothing he can do.  I can confidently report from frequent views of broadcasts on Al Jazeera that the current Iranian leadership do not intend to bow to pressure, including military pressure.  They are under an economic strain because of prior sanctions and the current situation, but are willing to outlast Trump from what they consider a position of strength.  If Trump increases hostilities, Iran has enough weaponry still available to wreak havoc on U.S. military bases and on Gulf Coast allies of the U.S. (several of whom have already denied the U.S. continuing access to their airbases for maneuvers).  If Trump does nothing, the Strait remains closed or subject to limited passage by ships paying tolls to Iran.  Many countries with absent fuel reserves are already instituting restrictive measures on their citizenry.  The price of oil is going to continue to increase.  Trump's idea of rescinding the U.S. tax on gasoline is a drop in the bucket and will not materially sustain the U.S. economy. The only logical response to the current crisis would be for Trump to "declare victory" and withdraw.

Those who want to "play" the situation financially and don't want to trade commodity futures directly might consider JETS on the NASDAQ.  That is the symbol for an exchange-traded fund that holds shares of major U.S. airlines (top holdings are DAL, AAL, UAL, and LUV.  Put options are available.

Chart from Trading Economics.

Addendum:  The Economist has an insightful article about why world oil prices have not increased more than they have (optimism by traders of an imminent Gulf settlement, tapping of strategic reserves, and some demand destruction).  

Details regarding the "Trump phone"

Lots of outrage expressed in various media stating that Trump sold phones to his supporters, failed to deliver them, and pocketed the $ without refunds.  The details are more complex, as summarized in the cartoon above and expressed by Heather Cox Richardson below:

As Judd Legum of Popular Information explains, on June 16, 2025, Trump’s sons Donald Jr. and Eric announced the launch of a new, gold plated, Trump smartphone, “proudly designed and built in the United States.” It would be available in August 2025 for $499. Its website urged customers to “pre-order” the phone by depositing $100 toward it. Don Jr. said the phone would be “American hardware, built in America, without the potential of…[a] backdoor into the hardware that some of our adversaries have installed in there.”

And yet a disclaimer on the website said the Trumps and the Trump Organization were involved only in the branding of the phone; they had nothing to do with the design, development, manufacture, distribution, or sales of the item. As Legum notes, the idea of a superior U.S.-made phone was always a fantasy, and within two weeks the phone’s description changed from “MADE IN THE USA” to “designed with American values in mind.”

The phone never shipped, and on April 6, Trump Mobile updated its terms to say the $100 deposit was not actually a deposit for a pre-order, but rather “a conditional opportunity if Trump Mobile later elects, in its sole discretion, to offer the Device for sale.” It went on to say the deposit “does not lock in pricing, promotions, service plans, taxes, fees, shipping costs, or other commercial terms” and that “[e]stimated ship dates, launch timelines, or anticipated production schedule are non-binding estimates only.”

A new phone has recently gotten clearance from the Federal Communications Commission (FCC), and Trump Mobile executives say they are waiting for approval from T-Mobile, the company whose network Trump Mobile wants to use. Legum points out that T-Mobile relies on the federal government for approval for business activities, creating an enormous conflict of interest.

Undersea data cables as wartime leverage

The United States has been learning some unpleasant realities about "asymmetric warfare" in which the country with the most bombers and aircraft carriers is not necessarily a guaranteed winner.

The embed above comes from an article last week in Reuters, which begins by discussing accidental damage during wartime -

"In a situation of active military operations, the risk of unintentional damage increases, and the longer this conflict lasts, the higher the likelihood of unintentional damage," Kotkin said. A similar incident occurred in 2024, when a commercial vessel attacked by Iran-aligned Houthis drifted in the Red Sea and severed cables with its anchor.

- and then the difficulties of repairing during wartime, and the impossibility of switching to satellites:

"It's not as though you could just switch to satellite. That's not an alternative," Mauldin said, noting that ​satellites rely on connections to land-based networks and are better suited for things in motion, like airplanes and ships.  Low-Earth-orbit networks such as Starlink are "a boutique solution, which is not scalable to millions of users, at this time," Kotkin added.

But it's an article in The Eurasian Times that more directly speaks to the possibility of aggressive attacks on undersea cables -

Iran sits on the northern shore of the Strait of Hormuz and controls long stretches of the Persian Gulf and the Gulf of Oman. These waters host all the major cable routes that link Europe, Africa, the Middle East, and Asia. This geography gives Tehran physical access to infrastructure on which the world economy depends.

In fact, disrupting undersea cables is a low-cost, high-impact option that can cause global disruption without a direct missile strike. A damaged cable in the Gulf can slow internet traffic from Mumbai to Frankfurt within minutes, delay international banking settlements, and degrade cloud services used by hospitals, airlines, and power grids.

Significantly, it could also cripple military communications for US CENTCOM, and regional partners would be forced to rely on backup satellites with limited bandwidth.

But the situation in the Middle East is such that people are not even talking about overt operations to damage the undersea cable networks on the seabed. They are apprehensive that Iran will resort to doing so openly, which it has the capacity to do, aided by its geography. This additional maritime disruption will only add to its strategic leverage against not only the Gulf countries but also America.

But for an in-your-face salty appraisal of the potential, read the post in the "I Fucking Love Australia" substack of April 26:

A few days ago, Tasnim, the IRGC’s tame mouthpiece, published what looked like a harmless technical explainer. Maps of undersea internet cables. Locations of cloud infrastructure. Landing stations in UAE, Qatar, Bahrain, Kuwait, Saudi Arabia. A polite little observation that the southern Gulf relies on these routes far more heavily than Iran does. No podium. No death to America chant. No uniformed general doing the finger wag. Just a map. Because when you have already put drones through 3 AWS data centres and an Oracle facility, you do not need to threaten anything out loud. You publish the coordinates. You let the insurance market translate for you. You let the CEOs in Abu Dhabi and Riyadh shit their expensive trousers in private. That is how grown-ups signal escalation, and it is a mode of communication that requires a functional prefrontal cortex to receive, which is why the sunburnt Big Mac wrapper in the Oval Office has completely missed it.

So let me lay out who actually holds the cards in this pissing contest, because if you have been listening to the cable news lizards you could be forgiven for thinking it is the side with the aircraft carriers.

It is not.

Iran’s internet runs overland. Turkey to the north, the Caucasus to the northwest. If every single submarine cable in the Persian Gulf gets severed tomorrow morning, Tehran checks its email over lunch without noticing. The southern Gulf, by contrast, is a data peninsula. UAE, Saudi, Qatar, Bahrain, Kuwait. Every banking transaction, every AI cloud workload, every ride-share app, every oil trade settlement, every fucking everything gets to the rest of the world through a handful of fibre bundles running through one of the most contested bodies of water on the planet. 99 percent of international internet traffic travels over submarine cables. The Red Sea corridor is already effectively closed because the Houthis have made it a no-go zone for repair vessels. The Gulf corridor is now being mapped by the people who just put drones into Amazon’s racks. That leaves the entire southern Gulf with precisely 0 safe options for getting their data to Europe, to India, to Africa, to anywhere.

And here is the kicker. The cables do not need to be bombed. They do not need missiles. They do not need a full IRGC naval sortie. They need a fishing trawler dragging an anchor in the wrong place..."

Do not rely on my excerpts from sources.  Do your own research, make your own conclusions.

Interesting development re AI in Chinese court system

Screencap from moments ago (Sunday May 3) on Bloomberg's The China Show.  The case was brought by a tech worker in Eastern China (Hangzhou) whose job was to evaluate the efficiency of large language models.  The company used AI to replace him.  He sued, and on April 28 the court ruled in his favor, saying that workers can be laid off because of external influences [presumably bad sales etc], but not if the company develops or purchases software to replace the employee.  

I wonder how American courts will rule when this (inevitably) arises.

"Demand destruction" looms

I don't know if this term will work its way from the business/economic community to the general press, but it is a useful term.  Here's the Wiki:

In economics, demand destruction refers to a permanent or sustained decline in the demand for a certain good in response to persistent high prices or limited supply. Because of persistent high prices, consumers may decide that it is not worth purchasing as much of that good, or seek out alternatives as substitutes.

I've heard that phrase expressed in interviews on the Bloomberg channel and on Al Jazeera, but today I encountered the phrase in a Facebook post by Mohamed El-Erian:

I will reiterate my previously-expressed belief that the U.S. equity markets are trading at unsustainably high levels based on irrational expectations of a quick resolution to the current Gulf conflict (based on part on Trump's totally irrational claims of such), combined with positive economic news from the small sector of AI-related companies that are overweighted in equity indexes.  The American consumer is hurting and is cutting back on spending; the fact that inflation is stable or rising indicates that companies are passing on their costs to consumers, not that consumers are buying more (as El-Erian notes).  IMHO this is a good time to cash in on paper gains in stocks or to write covered calls when such are available.

Addendum:  Here is a 6-month graph of an index representing the 500 largest companies in the U.S., with the onset of the war indicated by the red arrow:

The Dow Jones Industrial Average has a similar shape.  The S&P has overshot the war onset number because this is its composition:

The U.S. "economy" is increasingly being viewed as one based on information technology, and while artificial intelligence may hold enormous potential for increasing profitability of corporations through increaed efficiecy (and lower payrolls...), the underlying "boots on the ground" economy of agriculture and industry is suffering.  Even if the war ends tomorrow morning, oil prices are going to remain high for a prolonged period.

Just my opinion.  Do not make your investment decisions based on the rantings of an old English major with job skills in the biosciences.  Consult your investment advisors and read widely.

Addendum:  An Australian writing the I Fucking Love Australia substack puts the situation more bluntly:

Oxford Economics has it modelled. Oil at $150 plus for four months, global inflation back at 7.7 per cent close to the 2022 peak, world GDP growth slowing to 1.4 per cent for the year. Australian recession sharpest since the early nineties. None of this is fringe analysis. This is the orthodox economic forecasting houses now openly publishing recession scenarios with a straight face.

And the equity markets are still being held up by the AI fever dream. A handful of US tech billionaires playing a hyper-financialised game of chicken on multi-trillion dollar valuations underwritten by an artificial intelligence investment bubble that still has not delivered the productivity gains it promised, and is openly built on the premise of replacing every working person on the planet. When the energy shock fully filters through into demand destruction, into corporate earnings, into job losses across logistics, transport, agriculture and manufacturing, the unwind will not be gentle. Your super fund’s overweight position in Nasdaq tech is going to find out the same way it did in 2008.

The convergence is the real fucking story. Energy shock plus inflation shock plus AI bubble plus a US president actively breaking the global trade system with tariffs plus a global central banking response that has run out of room. We are looking at conditions that could make 2008 look like a kindergarten scuffle. It is not impossible to talk seriously now about Great Depression two point oh. The brokers laughing that off three months ago are now on speed dial to their compliance departments.

Grim forecasts for the U.S. economy

The embed is a screencap from Facebook several days ago, but I've seen a similar forecast during a live discussion on Bloomberg TV.  The next Consumer Price Index report is scheduled for this coming Friday, April 10, before the markets open.  This will cover the month of March and thus will be the first one to reflect rising oil prices from the U.S./Israel war on Iran.

The second embed is also from before this weekend.  The Federal Reserve is in an impossibly terrible position if the anticipated "stagflation" occurs.  The investment community has been counting on a decrease in federal funds rates, arguing over one vs. two cuts in the year ahead.  More recently they have expected no rate cuts.  Now the possibility of a rate increase looms.  

Before we started this war, nobody would have imagined the Fed increasing rates.  It's probably not priced into the market now, but even the possibility of a rise in the future will have major reverberations on equity prices and bond yields.

International mail disruptions

From the USPS website.  None of these are surprising, but it's interesting to note that they are advising people not even to try sending mail now.  Imagine how this is rippling through the business communities involved.

It may cost you more to return a rental car early

From the travel section of the New York Times:

"Last summer, I flew to Geneva, Switzerland, and picked up a rental car from Budget for a two-week vacation in neighboring France. More precisely, I reserved the car for 13 days and four hours, for an estimated 866 Swiss francs, worth about $1,060 at the time. I ended up returning the vehicle not just on time but a little earlier than planned — after 13 days and 30 minutes — so imagine my surprise when the final bill came to 1,545 francs. The lion’s share of the difference was in the base rental rate, so I assume I lost my discount for returning the car early. I’ve heard of car rental companies recalculating rates for returning a weeklong rental a day early, but hours? That is ridiculous."

The explanation:

The car rental industry is notorious for charging customers for services they do not need or sometimes never agreed to, but collecting what amounts to a $595 fee for bringing back a car a few hours early seems beyond the pale.

Even more astonishingly, perhaps, is that after examining the documentation you sent me and combing through Budget’s policies, I now believe it was not even a question of hours. You could have saved $595 by returning the car just 10 minutes later than you did...

“Because the vehicle was returned earlier than the 14-day period, the rental no longer qualified for the weekly promotional pricing,” Lauren Bristow, the director of marketing communications for Avis Budget Group, wrote in response to my emailed questions. “As a result, the system recalculated the rental at the applicable shorter-term rate.”

And I’ll admit that Budget’s “General Conditions of Rental” (Part 12, if you’re following along) does back her up. “Because special offers and discounts often relate to specific time slots,” it reads, “you may even end up having to pay more if you bring back the vehicle early.”

Offered without comment.

Assessing geopolitical turmoil

The embed is a screencap from Facebook, which I haven't tracked to the primary source, but I quite agree with the expressed sentiment.

I am disappointed (but not surprised) that major news outlets tend to report on what Trump is saying without adding any nuance or interpretation.  Perhaps that is their perceived role, or perhaps they are under pressure not to openly criticize this authoritarian president.

Personally, I have been monitoring Al Jazeera every night.  They have a You Tube channel that broadcasts live in English 24/7.  Whether you hear live news or recordings depends on your global time lag (mine is 9 hours).  The broadcasts originate from Qatar and include interviews with Middle Eastern and European leaders or their representatives.

What I hear just from brief visits to that site is quite different from what I hear on American sites.  This morning the equity, bond, and oil markets are reacting positively to reports that U.S. and Iranian representatives "are talking" and that "there are hopes for a settlement."

The underlying truth (I think) is that the Trump administration has issued a set of 15 guidelines (no nuclear weapons capability etc).  Trump is expecting "unconditional surrender" including control of Iranian oil production.  Iranian leaders have issued their "talking points" which include "sovereignty over their nation and the Gulf of Hormuz" and "reparations for damages done by the U.S. and Israel."

Does anyone actually think there is serious talking going on.  Nonsense.  Everyone knows that this apparent cease-fire is nothing more than an opportunity for both sides to reload.  The U.S. has elite ground forces en route to the conflict area:

For their part, the Iranians are at least talking locally about unceasing resistance:

Trump and Hegseth seem to feel they can bomb Iran into submission - a sentiment that scarily echoes what I remember from coming of age during the Vietnam war, when the goal was to "bomb them into the Stone Age."  Iran is not Vietnam.  Consider just the size:

Now consider Iran's leverage in the Gulf region.  The obvious first leverage was control of the Strait of Hormuz.  Trump has said "we don't care, we don't need oil from there, we have our own", which is true and quite irrelevant.  Here is the outflow from the Gulf:

Very little oil goes to the U.S.  But India is already hurting from gasoline shortages.  China less so because they have the world's largest strategic reserves of oil stored underground.  But the rest of Asia is suffering, and Europe is worried.  

The other things that come out of the Stait of Hormuz include the fertilizers that much of the world depends on for agriculture.  Trump's cavalier assessment that he doesn't care about Hormuz closing ignores U.S. farmers, who may be pushed to insolvency because of fertilizer costs.

Liquid helium comes out of the Gulf.  I think some MRI centers in the Americas and Europe have already indicated that they will decrease the availability of MRIs.  And I think liquid helium is also critical for some computer chip manufacturing.

Note that Iran has been attacking neighboring Gulf states, in part because those states have supported the U.S. with air bases, but also because they can do immense damage to the regional economies.  The next potential targets:  desalination plants.

Image cropped for size from the original in The Guardian.

Most Gulf countries only have water reserves to last about a week. Analysts have said that if any of these plants are struck and capacity taken out, the impact would be quick and severe and it could wipe out water to major cities in a matter of days.

Power plants need desalinated water for cooling, so electricity supply would be affected. It would particularly affect healthcare and the running of hospitals, and would likely have to cause industries and businesses to shut down for as long as there was a water shortage.

Water rationing would likely have to be introduced. There are concerns that this could lead to mass panic and civil unrest.

You want to talk about "bombing someone into the Stone Age"?  

Trump undoubtedly feels "the pressure of the midterms" because Republicans have been losing local elections all around the country, including Texas and yesterday in the district that includes his precious Mar-a-Lago. He will certainly be getting panicy calls from Gulf emirates who worry that their entire economies may be destroyed by a few well-placed ballistic missiles.  

Enough gloom and doom for right now.  More later on the potential for a world-wide recession, because despite Trump's assertion that things will quickly revert back to normal, it's more likely that "things" are going to continue to get worse...

Addendum Wednesday evening:

(Excerpted from Facebook, so no guarantee that it is true.)

Anomalous behavior in financial markets

I did not blog it at the time, but when Trump overthrew the government of Venezuela with his military action, an article in The Atlantic noted that some people profited very handsomely by correctly betting on that outcome via the prediction markets:

When U.S. Delta Force commandos slipped into Venezuelan airspace over the weekend, they did so in secrecy. And yet, in the hours before President Donald Trump gave the final order for the strike, someone bet more than $20,000 that Nicolás Maduro would be ousted as the country’s leader by the end of January.

On Polymarket, the online platform that lets people wager on almost anything, an anonymous trader somewhere in the world placed a series of suspiciously well-timed bets. Using a fresh account created last month, the individual made just a few bets in the days leading up to the raid, according to The Wall Street Journal—all on the possibility of imminent regime change in Venezuela—and appeared to come away with more than $400,000.

The Guardian made the same observation and interpretation:

The online wager platform Polymarket has angered some gamblers by declaring it will not settle millions of dollars’ worth of bets on a US invasion of Venezuela, arguing that the capture of the then president, Nicolás Maduro, does not qualify.

Before Donald Trump’s forces seized Maduro on Saturday morning, some traders appeared to have anticipated the shock move by placing bets on “prediction markets”.

These were not random "man on the street" bets.  Someone had inside knowledge and bet accordingly.  The publicly available data do not allow one to judge whether the people doing this are friends of Trump, or military commanders, or low-level communications staff.

Now it has happened again.  The embed at the top of this post is a cropped photo of my television, which was tuned in to Bloomberg at about the start of the trading day.  Donald Trump had announced (via Truth Social for crying out loud...) that he was going to scale back military action, which might lead to a easing of tensions and the reopening of the Gulf of Hormuz and (theoretically) lowering the price of oil.

The circled data point in the charts show that someone (??who??) traded options on the S&P 500 (proxy for the general market) and oil futures to the extent of more than a billion dollars IIRC.   The purple line in the bottom graph is either Brent or West Texas Intermediate, which immediately traded down when the market opened (and the equity indexes immediately traded up).

Someone knew this would happen.  Again, available data (at least public data) don't show whether it was a Trump friend.  But somebody is making big bucks from Trump's decisions.

Addendum:  Here are more details, from a BBC report -

...However, at 07:04 Eastern Time (11:04 GMT) on Monday, before US markets opened for the week, the president posted on his Truth Social platform that Washington had held "VERY GOOD AND PRODUCTIVE CONVERSATIONS" with Tehran over a "COMPLETE AND TOTAL RESOLUTION" to hostilities.

Immediately, stocks bounced and the price of oil dipped to as low as $84 (£63) per barrel for the benchmark US price.

Observers have since scrutinised what happened in financial markets in the minutes leading up to the president's post.

At 06:49 ET, traders placed 734 bets on WTI crude oil contracts on the New York Mercantile Exchange (Nymex). 

One minute later, that number had jumped to 2,168. That's equivalent to about $170m.

The same pattern can be seen in traders buying contracts for Brent crude, the other major oil benchmark. Between 06:48 and 06:50 ET, the volume of trades rose from 20 to more than 1,650. That's about $150m in contracts.

Data for previous Mondays shows that far fewer trades are normally made at that time of day. 

Similar trades also happened on Monday with futures contracts for the S&P 500, Euro Stoxx 50, and other markets.

This means traders placed bets on the value of the largest firms listed in the US and Europe rising minutes before Trump's announcement.

Kharg Island attacked.

For years I have had deep respect for Mohamed El-Erian's opinions on world economics.  For those interested in the implications of the current gulf war, his pronouncements are worth heeding.  I would also recommend monitoring Al Jazeera English via YouTube or listening in to Bloomberg this coming Sunday night to get an advance indication of how severely world crude oil prices are going to spike Monday.  The carry-on effect will be a major hit to U.S. equity markets.  And the world economy.

I've seen reports on Al Jazeera this morning that Iran has already countered the U.S. attack on Kharg Island with an attack at Fujairah, which is the terminus for a pipeline bypassing the Gulf of Hormuz.  That alone would be enough to spike oil prices as soon as the markets open.

Luxury ice houses

Fishermen in the Upper Midwest are being advised that it's now time to remove their ice houses from the still-frozen lakes.  Those who have not been in an ice house in decades may be gobsmacked to discover that the old-fashioned "shacks" and "shanties" have in some cases been replaced by luxury accommodations.

The houses have built-in holes in the floor that allow ice fishers to drill holes in the ice and catch a big one without ever stepping outdoors...

One model, the King Castle, has an 8-by-24-foot cabin that comes with a furnace, air conditioner, stereo, kitchen, wooden cabinets, bunk beds, bay window and eight fishing holes. Some customized models have featured retractable wheels and hydraulic lifts. Prices start at $5,900, but can top out at more than $40,000...

For floor plans and features, see the Ice Castle Fish Houses website.   I presume the A/C (and the shower stall seen at the back of the photo) indicate that these units are designed for dual-purpose use as mobile hunting cabins.

Reposted from 2014 to add this photo from the Minnesota Star Tribune.  If you can't afford tens of thousands of dollars for an ice house, you can still fish in comfort from a reclining chair...

"Daddy, what does 'petulant' mean?"

Perhaps we can illustrate the concept with an example.  The message above expresses a new domestic economic policy presented to the world via social media.  Newsweek looked into this matter:

Newsweek has contacted the White House and Transport Canada, which is responsible for Canadian certification, for comment via email. The Federal Aviation Administration (FAA) declined to comment, referring questions to the White House.  It is the responsibility of the FAA to certify planes in the United States. The FAA can revoke aircraft certification if it is no longer in an airworthy condition, according to its website, but it remains unclear if it can do so for economic reasons...

John Gradek, who teaches aviation management at McGill University, told Newsweek that it is unprecedented for a government to cancel the certification of an aircraft for trade reasons.

He said: "Such action is typically used to ground aircraft that have been deemed unsafe to operate by the regulatory bodies. This action by President Trump is purely for commercial reasons, that Gulfstream would like to reduce competition for its Gulfstream- series general aviation aircraft by eliminating Bombardier Global Express aircraft from sales in the U.S. In his zeal to further protect the U.S. aircraft market, his stated intention to decertify all Canadian-built aircraft will have a significant impact on the domestic U.S. air travel market. There are over 1,000 Canadian-built commercial passenger aircraft in operation on any given day, a not insignificant number that would severely curtail services to/from regional airports throughout the U.S."

The CBC reports that that this new "policy" is already being walked back: "A White House official told Reuters that Trump was not suggesting decertifying Canadian-built planes currently ⁠in operation."

I hope that example illustrates the word for you, sweetheart.  You can get more information from the Wiktionary, which defines 'petulant' as "childishly irritable" with synonyms bad-tempered, crabby, grouchy, huffy.   All of those would be relevant.   

How the tariffs have affected me

There has been a boatload of analysis, commentary, criticism, and speculation about the effects the new tariffs may or may not be having on the U.S. economy.  I thought I'd throw some actual data into the mix.

One of my retirement activities has been orchestrating the disposal of all the "stuff" I've accumulated during the past 7 decades.   This is what might reasonably be termed a "first world problem."

Books went years ago; Agatha Christie and John Dickson Carr collections to eBay, various fiction, history, and science books to the library.  Clothes to Goodwill.  Rocks, minerals, crystals etc to neighborhood children.  High school and collegiate memorabilia to classmates.  Now I'm working on collectibles - stamps, comic books, baseball cards etc.  For these latter items, eBay is an excellent venue.

This summer I noticed a significant change in how the eBay sales were processing, and I began to track numbers.  For the first 125 lots I sold this year, these were the shipping destinations:

United States          72

United Kingdom    26

Australia/NZ          10

Canada                     8

Others                      9 (Estonia, Czech Repub, Sweden, Norway, Sri Lanka, Singapore)

The next 125 exhibited a markedly different pattern:

United States        114

United Kingdom      5

Canada                     2

Others                      4

At the end of July, sales to foreign buyers evaporated.  Instead of 40% going abroad, quite suddenly it was fewer than 10%.  The reason became apparent when I looked at the invoices eBay was sending to the foreign buyers (example embedded at top).  On a $35 purchase, but winning bidder was asked for $27 in shipping, tariffs, and taxes.  The VAT had always been there [this lot going to the UK], but in previous years and at the start of this year I was able to ship small lots of stamps in regular mailing envelopes for USD $1.75 and my sales (typically less than $40) were not subject to tariffs.   It was on July 30 of this year that the Trump-imposed tariffs were applied to "de minimus" items of modest monetary value.  And I presume what the buyers of my items are seeing are reciprocal tariffs imposed by their home countries?

I have corresponded with some of my (former) buyers in Scotland and elsewhere.  They are still interested in my material, but when they have to factor in the new "shipping" costs, my lots become unattractive.

I'm not suffering financially because for me this is discretionary hobby activity and basically a housecleaning operation, not a business.  But I will bet you there are lots of small businesses (especially home businesses and side hustles) in the U.S. who are seeing a similar phenomenon be more impactful on their bottom line.   I totally dismiss the claims of politicians that the U.S. economy is strong.  The stock market does continue to approach new all-time highs, but that's because of an irrational enthusiasm regarding the "magnificent severn" stocks (AAPL, GOOGL, TSLA, NVDA, META, MSFT, AMZN).   I will bet you a dollar to a dime that the weakness will show up not in the Dow or NASDAQ, but in the broad-based Russel 2000 index.

And this recent quote I find particularly baffling:

"The Federal Reserve is facing a difficult situation as the US economy shows strong growth and high productivity, yet hiring has significantly slowed... This divergence complicates decisions on whether to cool or boost the economy [via interest rates], with concerns about a potential jobless expansion despite investments in AI..."

Rising unemployment DESPITE AI?  Correct me if I'm wrong (please.  I'm no expert on such matters), but my understanding was that one of the major powers of AI was to improve efficiency by having the bots do the work formerly done by humans.  I would think increased unemployment would be expected, not a surprise.

Those who understand these sorts of things, please chime in with comments.  

Related:  A recent Bloomberg article is entitled Boomers Are Passing Down Fortunes — And Way, Way Too Much Stuff.  "As the $90 trillion Great Wealth Transfer begins, millennials and Gen X aren’t just inheriting money. They’re being buried under an avalanche of baseball cards, fine china and collections of all sorts..."  True that.

Addendum:  Another example.  Buyer paid $22.77 "shipping" (for a $37 purchase) into the eBay system to have one stamp mailed overseas, which I could do for $1.75 postage.  Probably some local taxes/fees from their local govt included.

United Airlines claims a "window seat" does not necessarily need to have a window

"In August, United and Delta Air Lines were sued by passengers in two separate but similar suits. Both airlines were accused of unfairly charging extra for some window seats without warning that there wasn't actually a window there.

United filed a motion to dismiss the case on Monday.

"The use of the word 'window' in reference to a particular seat cannot reasonably be interpreted as a promise that the seat will have an exterior window view," the airline's lawyers wrote.

"Rather, the word 'window' identifies the position of the seat—i.e., next to the wall of the main body of the aircraft," they added.

I'll defer any commentary on this absurdity.