Transcription
Today I bring a video that I believe is one of the most important I have ever made on my channel. I think we are in a truly dangerous moment in terms of how this war being fought in Iran could impact the economy, inflation, and financial markets over the coming quarters, perhaps even the coming years. It's about speaking frankly about what we, the citizens of this world, are risking due to the decisions made by certain leaders like Donald Trump, Netanyahu, or the Ayatollahs. Until now, we were playing with narratives, controlling who was right, how to manage moments, but we are about to cross a red line with no return, and where the strategies Donald Trump has used until now to control markets would cease to make sense. We could not only unleash a crisis from a corrective standpoint but something much more serious, something we probably haven't faced in decades. So, I recommend you stay with me. I have been professionally managing in the markets for 40 years. I have lived through many crises, and believe me, I have the feeling that we are on the verge of one that could rival any of the worst I've had to manage throughout my career. So, if you stay, what you will see is one, the impact this has on commodities, but we're not just talking about the behavior of oil, gasoline, or diesel, but what is happening with other commodities. There you have that small chart, which you will see in more detail later, where it shows that only on one occasion in history, in 2007-2008, did the commodity index reach a higher price than the current one, which means that regardless of what happens, what is already happening is a major problem, and some clues are beginning to appear with inflation data like Spain's, which jumped almost a percentage point in just one month. The stock market. We are no longer just talking about whether there is a risk of correcting towards the base of the structure, towards the base of that large channel we have been experiencing since 2009, which would imply a further 23% drop in the market. We are talking about something much more important. Could that channel break, and what repercussions would it have? Could we face drops of over 50%? This is something I will explain during the video. Debt, in a world where we have over 300 trillion dollars in debt, or European billions, what does it mean for the cost of financing to suddenly break critical points? We are seeing it in Europe, and you have the DAX chart, you have the chart of what is happening in Japan, the strong movement from the lower band to the upper band in the United States, although it hasn't broken yet, and the decomposition that is beginning to be seen in low-quality credit markets, which we call junk bonds or high-yield. Every time there has been a major crisis in the market, that canary in the coal mine has given us the warning, and now it's screaming like a madman. Apart from this, I would like to answer some questions that I believe are crucial for any investor with two cents to rub together to have in their head. One, is a peace plan really being negotiated between the United States and Iran, or is it simply a smokescreen while the United States deploys ground forces for an invasion it said would not happen? Two, why does Donald Trump lie recurrently? Is it a stratagem, does it work for him? Where is the red line beyond which it doesn't matter what he tells us because there will be no possible turning back if he makes a mistake? From where will Donald Trump receive more pressure, both internally from advisors and from financial markets, which normally determine how aggressive he is in negotiations? What are the real keys to this conflict, and what can investors expect given the potential market breakdown? We are in one of those moments that I consider crucial for the creation or destruction of wealth in the medium and long term. And that's why, truly, I ask you to stay until the end. I believe I have rarely made a video with such direct, objective content, and I don't intend to scare anyone; I simply want to talk about the consequences of what is happening. We have been mentioning the change in the world order and the latent risks in financial markets, but we lacked a catalyst. Perhaps that catalyst is already occurring. So, the first question is, is a definitive peace plan being negotiated or not, or is it a new stratagem by Donald Trump to buy time? Personally, the last thing you have seen is this. Donald Trump says he is talking to a very important person within the Iranian regime and that there is a possibility of reaching an agreement in a few days. On the other hand, Iran says no, that there are indirect contacts through negotiators like Pakistan, but that what Trump is really trying to do is manage financial market moments and buy time, nothing more. The question I ask myself is, why does Trump lie recurrently, and why does it cost him so little to lie? In the end, you discover that he doesn't lie; he simply has a way of acting that works for him or has worked for him until now, which consists of intimidation, presenting the worst possible scenario, then creating extreme uncertainty among negotiators, manipulating the narrative, with which he controls the ground, generates distrust, and finally backs down and seeks to proclaim himself the winner in an intermediate space. It's a way of doing business, and he applies it to politics and geopolitics as if he were managing his own company. And we have seen it work when he sought an increase in military spending from NATO countries to 5%, successfully, by the way, in the trade war, where he first scared us, and then we entered a 90-day negotiation period with Greenland, with Venezuela, and now, evidently, he is returning to seek the same formula with Iran. What is the essence of Donald Trump's negotiation? First, he opens a negotiation process and says it's not progressing to justify the start of the war. Remember that Iran and the United States were negotiating, and suddenly the United States walked away from the table and said, "No, this isn't going well, and for that reason, we are attacking." The next thing he does is continuously change objectives. At first, it was to sustain the internal revolution of the Iranian population, then it was to end the Ayatollah regime, to decapitate the main leaders, as he has done. Then he talks about destroying nuclear capability, but he had told us that in June of the previous year, which makes no sense that this risk still exists, since, according to him, he had eliminated it completely. Then he talks about eliminating Iran's weapons capability. The last thing he says is controlling the Strait of Hormuz. That is to say, there are so many changes of opinion regarding the objective pursued with this attack, this war, that in the end, it is very difficult to know when it will end. When weeks of continuous bombings and attacks cause a strong rebound in oil prices, a fall in the stock markets, and a rise in financing costs, Donald Trump begins his stratagem phase of "we have almost finished, we have almost achieved the objectives, we are winning this war, don't worry, it won't last long." And what this does is inject optimism back into investors and markets. Oil corrects drastically. The bombings really don't stop, but the investor's feeling is, well, we've seen almost the worst, so we're moving our money back into risk assets. When Iran demonstrates that despite the United States saying it has no military capability, it is still holding its own against Israel and the United States, then Donald Trump raises the stakes, saying, "In 48 hours, we will have peace, because otherwise, we will unleash hell in Iran, as if he hadn't already unleashed it." And from there, he begins the game of, well, it's no longer 48 hours. Now it's 5 days, and the latest is 10 days. It's all about narrative control. The reality is that he is deploying and moving ground troops via various ships to the area, which suggests that we are not so far from an occupation or an attempted occupation of territories like Jar Island, which are absolutely essential for Iran. In any case, this game lasts as long as it lasts, because if there is ultimately a destruction of oil and gas supply in the world, the price of oil and gas will not be determined by short-term narrative, but by the real balance of global demand and available supply. Therefore, that is the red line I was referring to, that we are probably approaching, and this game that Donald Trump is playing in various conflicts since he became leader of the United States again a year ago no longer works. What is the reality? The reality is that Operation Epic Fury was not like the United States' military operation in Venezuela. It was not a surgical operation; rather, dozens of targets have been killed here, including the supreme leader of the Ayatollah regime himself. And yet, the regime has not fallen. In fact, some political scientists say there is a certain internal rapprochement with the Ayatollahs, meaning they have gained more strength in the face of the punishment inflicted by the United States and Israel within the country. On the other hand, both the United States and Netanyahu do nothing but say, "We have eliminated the entire Iranian fleet. We have destroyed the entire air capability of the Iranian army. We have destroyed the main launch base they had for their ballistic missiles," but the reality is that to this day, the Strait of Hormuz, through which one-fifth or almost a quarter of all the world's oil and liquefied natural gas passes, is impassable. Iran continues to launch drones and missiles against military bases and even civilian and energy infrastructure of countries that have US military installations on their territory. Therefore, this feeling of "we have destroyed Iran's fighting capability" is not what we are seeing on the ground. Furthermore, the United States plays this game of asking for help from the international community to ensure the transit of ships through the Strait of Hormuz. But we are already seeing the first cracks in these coalitions. Of course, one of them is within NATO itself, where countries feel somewhat ignored. "No, no, you didn't warn us or ask for permission of any kind to start this war. And now you ask for support. You said you would guarantee the transit of ships escorted by the US Navy, even provide insurance for those fleets," and none of this is happening because it is very difficult to carry out these types of operations without an enormous cost in military lives and likely destruction of Navy ships that would ensure transit, and if it is not achieved, that cost will be something the public will demand many explanations for. Therefore, between what they actually tell us is happening and what we see happening, there is an enormous difference. The next question I believe is crucial. Who can make Trump change? That is, where are the most important pressures on the US president's decisions coming from at this moment? It's not internally. Trump governs as a personalist leader. He is not an institutional president. If you look, he acts with very little internal counterbalance. At least until now, the Republican Party did not dare to contradict him, nor did many Democrats. And every time someone contradicts him, he basically dismisses them and verbally and publicly crucifies them. Therefore, Donald Trump's behavior is unlikely to change, unless we get closer to the midterm elections where Donald Trump is experiencing a huge drop in popularity. The short-term red line is marked by the markets. Financial markets are a thermometer for Donald Trump to gauge whether he is doing well or poorly with his decisions, and when they react sharply, they normally stop Trump in his tracks. We saw this very clearly with the trade war, right? If one reviews the process we have gone through, you will remember that when Donald Trump announced the tariffs with the famous whiteboard, just before he had already announced that he would impose generalized tariffs, but it was here that he caused the catastrophe. The market basically plummeted, and as soon as he saw this reaction, Trump backed down and said, "No, no, no. We are opening a 90-day period for renegotiation," and this allows investors to believe again that Donald Trump will not make a serious mistake that cannot be modified later. And from there, as you can see, Trump threatens Iran without nuance. Trump talks about destroying energy facilities and key infrastructure. Trump issues his 48-hour ultimatum, and in between, he tries to manage this deterioration by talking about the end of the war, talking about open negotiations at this moment when he has the most important leader of Iran who has suffered greatly and is eager to reach an agreement as soon as possible. This is the game, but as I say, there is a red line that if you step on it, it's like stepping on a mine in the ground; there's no solution. If you truly make the mistake of your decisions destroying real oil and gas supply in the world, it no longer matters what you say; you have already made the mistake. And that is what we will analyze in this video. If that mistake is made, which may be a matter of hours, we are in what I believe is a crucial moment. If that mistake is made, how bad can the outlook be? What can we face? What could happen with energy? What could happen with inflation? How far could the stock markets fall? Having professionally managed for 40 years, having lived through Black Monday with 20% stock market drops, having lived through 300% currency surges in '97 when the dollar peg was destroyed, having seen Russia's default in '98 and the crisis it caused, having managed a very large investment fund during the collapse of the dot-com bubble and the September 11th attacks in the United States, which caused the stock market to close for a week, or the financial crisis in 2008, where over the following years 492 financial entities went bankrupt, the pandemic, etc., etc., gives you a perspective on what can happen in the world, especially in the financial world, that other people don't have. And that's what I'm going to share with you, that touch of realism, however harsh it may be, to prepare you in case that black swan, which shouldn't be unleashed, but we are getting closer and closer to seeing, actually becomes our reality. So, what are the markets saying? For now, the markets are living in a kind of formaldehyde jar. Why? Because investors have been conditioned like Pavlov's dogs for the last 15 years to believe that nothing ever happens, and that even if something does happen, they fix it. Central banks, governments implement such brutal monetary and fiscal policies that in the end, nothing major ever happens. The last major corrections we saw were in 2022, when all financial analysts expected an economic recession, and there you see how the S&P stock market corrected by 27%, the Nasdaq by 37%, the Russell 2000, the small-cap index, by 33%, or the Dow Jones Industrials, a drop of 22%. The next peak for corrections occurred around April 2025, when Donald Trump presented the trade war with his famous whiteboard, and there we saw corrections ranging from 21% in the S&P, 25% in the Nasdaq, 30% in the Russell, and 18% in the Dow Jones. To this day, despite the dramatic situation, we have barely seen corrections of around 10%, a little more in the Russell at 12%. But we haven't really seen a bad reaction. Next, I will show you where the volatility is, where the credit spreads are, what could happen with natural gas in Europe, could there be a 73% correction in the stock market, in the Nasdaq? What could happen with the MSCI? That's what we're going to talk about. Not a mere small movement, but if all hell breaks loose, where will we have to seek protection as investors? But before that, I would like to introduce you to today's sponsor, which is none other than Taxdown. As you all know, we are in this year's tax campaign, and there are many new developments that, from what I gather, most of you are not aware of. Why? Because when you ask me if all investments need to be declared, the answer is of course yes. And there are also new income brackets for those investments that you should be aware of. 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That the situation doesn't need to deteriorate much further. We are already going to have a huge impact in terms of inflation and economic activity. But on top of that, the bond market is giving us a very, very worrying signal. In this case, we're talking about something like the fact that the cost of financing is strongly rebounding despite interest rates falling. We've seen how the United States has carried out interest rate cuts throughout the end of 2025. For now, this year it hasn't moved, and the price of money has started to rebound in 2-year, 5-year, 10-year, and 30-year bonds from the lower band of consolidation structures to the upper band. What does this mean? That bond investors are beginning to seriously worry about a possible severe inflationary impact that would force the issuance of debt by the US government to be done at increasingly higher interest rates. Or, in other words, that financing the enormous deficit that the United States has and that growing debt, which already exceeds 120% of GDP, will become increasingly costly. But this is not only happening in the United States; it is happening in other regions, it is happening in Japan, it is happening in Europe. And this gives us an idea that even if central banks don't react by raising interest rates to combat inflation as they did in 2021, the market will force them to make debt issuances increasingly costly. Therefore, the real effect will be that there will be less room for fiscal aid from governments if things go wrong. Apart from that, we have the issue of commodities. We tend to compare things in terms of oil. We say, how is Brent or West Texas doing? It's not just Brent that matters; what citizens actually use is not crude oil. We use oil derivatives, we use refined products like diesel or gasoline. And here we discover something as important as that, despite oil still being far from the highs recorded in 2022, diesel has been above the highs of that period. That is, the reaction in the price of derivatives. And here we could talk at length about what is happening, for example, with fuel oil or kerosene used by airplanes, which has skyrocketed far above the price you see here, is what really sets the price of our plane tickets, the ability to travel, what it really costs the primary sector for fertilizers, to move combine harvesters, to move tractors. Therefore, the damage being done goes far beyond the mere rise in Brent or West Texas crude oil and is filtering into the product we actually consume. And this makes us consider that often there is hidden damage that we are not taking into account. When one reads the reports from the European Central Bank, which had the decency to start considering what we might face if oil rose to $120 or $125 or rose to $145 and then didn't correct, and it presents its severe and adverse scenarios, etc., etc., something that the United States, of course, the Federal Reserve, has not done, it projects that it will grow more this year than last year and that inflation will barely suffer. It's a completely ridiculous and unprofessional scenario in my opinion, and I broadcast Powell's press conference live. So I know what I'm talking about. But when one looks at this chart, you say, well, there are very evident ceilings, right? It reached them in 2007, it reached them during the Arab Spring in 2011-2012, the prices reached during the invasion of Ukraine by Russia and the war in Iran. All the bad, adverse, and severe scenarios work with the hypothesis of "what if we get into this red zone and take a long time to get out of it," or "what if we touch it and then go down quickly," or "what if we break this ceiling," or "what if this poorly managed war ends up destroying enough oil and gas supply so that for the next few years, we don't have the energy resources we need." And if oil exceeds the $150 mark, what happens then? It's a scenario that could happen on paper, right? But no one is considering it, except the Iranians, who hold the key to whether that can happen or not. By the way, you say, "Okay, if that happens, I mean, if that happens, we will probably experience something in the markets that only someone with over 20 years in this industry remembers. The ceiling is in the range of 116-147, and breaking it would have repercussions that I will tell you about next, which are dramatic, but the mere fact of reaching there already signifies something serious enough to wonder why the markets are only 10% off their all-time highs. Many people tell you, "No, it's because Brent oil, which is what circulates from the Middle East to Asia and to a lesser extent to Europe, is the one in question, but West Texas, which is produced in the United States, poses no problem." I say, "Well, when you look at the West Texas chart, which is what you have on screen, the exact same ceilings from 2007, the Arab Spring, the invasion of Iran, and currently the peak we've seen recorded is not very different from what we're seeing with Brent, and probably if the problem spreads generally with Brent breaking the $150 mark, West Texas will follow suit upwards. There will be a spread, a differential that will widen in favor of the higher price of Brent and lower West Texas, but the direction will probably not be different. It's like when we say, "Could the US stock market fall 40% and the European stock market rise?" I say, "No, no." At a given moment, the situation might arise where the US stock market falls 40% and the European stock market only 30%, but to expect two assets that are so correlated to move in opposite directions is not realistic. Therefore, if there is a severe, global oil and gas crisis in the world, it doesn't matter if the United States has its own West Texas production and its natural gas production; it will be affected by a dramatic price increase. And if not, just look at how much diesel and gasoline cost in the United States today compared to what they cost just a month ago. The ratio between Brent and West Texas, which is what you are seeing here, shows the quotient between the price of oil consumed mainly in Europe and that consumed in the United States. Is it feasible to say that this could reach levels of 135, 140? Of course. The structure denotes an upward trend. We have been in the lower band for a long time, and now we could generate this movement. This means that in the short term, the strongest increases would be generated in Brent, and West Texas would be slower. But this relationship you see here tells us that there is a very high correlation between the two products. Therefore, once this small cushion that Brent has here relative to West Texas is absorbed, West Texas will probably begin to replicate exactly the same behavior as the oil consumed in Europe. And then we have another crucial factor: natural gas. If we look at natural gas traded in the United States, it has barely reacted, but the natural gas used as a benchmark in Europe and Asia is in a critical moment. Why? Basically, because, as you can observe here, we have a pivot zone in Asian gas fluctuating around old highs, lows, and we are attacking that resistance right at the top. The units used to measure gas in Asia are dollars per million British thermal units. This nomenclature explains why you have such a difference in the price scale because in Europe it is measured in euros per megawatt-hour, but as you can see, the structure is exactly the same in both cases, which means that only the scale on which we measure the units changes. But the reality for Europe and Asia is very similar. If these ceilings are broken, the most likely scenario is that we will start to see gas prices for Asia and Europe not very different from those we registered during Russia's invasion of Ukraine in 2022. And it is enough to say that the energy crisis we had to endure at that time was brutal. At that time, all television news programs talked about when to turn on the heating, how to regulate air conditioning thermostats, when to iron, when to run the dishwashers. It became a drama for citizens, a brutal problem for industries. Many of them, especially small business owners, said, "I can't keep the freezers on, I can't keep the ovens running because it's not worth it for what I get in return." It became a real economic headache. We are on the verge of repeating the same situation if this escalates. And here again, the concept arises of, well, but it won't affect the United States because they are massive producers of natural gas and even exporters of liquefied natural gas. To give you an idea, for Spain, they are one of the three largest suppliers of natural gas. And you see this chart, and I tell you to be careful, because this chart shows the relationship between US natural gas and European and Asian natural gas. What does this mean? That the ratio has already reached very significant ceilings, which means that from here on, it will probably become much more profitable for US gas producers to consider exporting it rather than dedicating it to internal US consumption. That is, in the end, globalization means that you transfer the effects of prices universally. It doesn't remain confined to one country, and no country is suddenly blocked or isolated from the problems that the rest of the world suffers. The United States' situation as a country with energy autonomy will not protect it from the effects of prices. For a time, it will have a small cushion, but sooner or later, it will suffer like the rest. And from that point on, the US citizen will begin to transfer that suffering to economic activity, wage inflation, the labor market, and price increase forecasts. Therefore, be very careful with the situation because it affects both the United States and the rest of the world. On the other hand, when we talk about prices, we have talked about oil prices, we have talked about gas prices, we have seen how it is affecting the cost of financing, we have seen the little reaction from the stock markets, but gentlemen, the movement already being registered in the CRB commodity index is very striking. The cost of commodities in aggregate in this index, where oil and gas represent approximately between 35% and 40%, meaning it is one of the indices where energy has less weight, is already exceeding the levels reached during the invasion of Ukraine by Russia. And what we still have to see is the effect it will have on inflation, in this case, US inflation, because as you can observe, there is a very high correlation between the movements in commodity prices and the movements in inflation rates. This will probably start to pivot more towards the 4% zone rather than the 2% zone. And it will unleash a real problem regarding what the Federal Reserve can or cannot do to manage interest rates. Another key point that I believe goes unnoticed is truly understanding the actors in this conflict. And that's why I want to clarify as best as possible what the keys are to knowing the possible solutions we could have. On Iran's side, Iran is a country of 92 million inhabitants. It is geographically very difficult to invade because it is spoken of as a fortress country because it has deserts, mountain ranges, a coastline riddled with caves and nooks where they can hide speedboats, missiles, drones, etc., but in return, it is economically vulnerable. The real battlefield, therefore, is being fought around the Strait of Hormuz. The island of Qeshm is also super important because it is very difficult to attack and is where Iran stores a good part of its weaponry to continue bombing US military bases in the region and, of course, Israel. The island of Hark is crucial because it represents approximately 60% of Iran's economic income and is where more than 90% of Iranian oil is exported. If the United States, and this is something you might be watching this video on Sunday, and it has already happened during Friday night, but if the United States intends to take the island of Hark, which is much discussed as an interesting point to subdue Iran, to strangle it economically, it is very important that it controls it but does not destroy the energy infrastructure there. Because if it does, Iran's reprisals will probably be dramatic. It will have already lost everything it can lose. So, what the hell? Let's make the cost of this war as high as possible. But to control the island of Hark without destroying it, it must first neutralize Qeshm, and that is much more complicated. In fact, many military analysts speak of the situation as the Gallipoli disaster, what it meant for the most powerful force to try to take a zone where it had a disadvantage. Military power with a huge difference compared to your enemy does not always guarantee victory. The United States started with a small war in Afghanistan, ended up deploying 100,000 soldiers. It lasted two decades, and in the end, it left with its tail between its legs, and the Taliban regime returned to occupy the territory in a few weeks. We also saw what happened in Vietnam, we saw what happened in Libya, we saw what happened in Iraq. One thing is to arrive and take, and another is to conserve and provoke a regime change. They are completely different things. No one doubts the military capability of the United States, but from there to being able to impose its law and manage the problem as it is currently doing with Venezuela, that is a very different matter. On the other hand, if Iran, if the United States attacks the island of Hark and destroys or damages infrastructure, what we are talking about is that Iran's response will be directed towards the oil facilities of allied countries, towards gas facilities of allied countries, and towards desalination plants. Here we are talking about something very serious. This is destruction of supply. This is not fixed in months; it is fixed, if anything, in many years, which means that the inflationary crisis we could unleash would be something that probably only has parallels with what happened in the 1970s when the oil embargo occurred. And at that time, it caused inflation in the United States of 14-15%, and the US central bank, the Federal Reserve, had to raise interest rates to 19%, causing two severe economic recessions in a row. Obviously, the situation is much worse. Why? First, because the level of US debt at that time was around 30-30-something percent; today it is over 120%. That is, the sensitivity of the US fiscal situation to possible inflationary spikes and increases in financing costs is infinitely greater now than then. And then, obviously, because the geopolitical situation is already very deteriorated at this moment. As I say, attacks on desalination plants would completely change the game. Arab countries have a severe climate, they live with water scarcity, they are supplied mainly by large desalination infrastructures that allow them to supply drinking water to businesses and citizens. If you destroy that source, in less than a week, many countries will be left without a water resource, which could cause migratory crises at a time when airspace is closed. So, get an idea of what we are playing with and how complicated the situation in the Middle East could become if those involved in the war suddenly lose their tempers and escalate several points above what we are seeing. In the case of Iran attacking desalination plants, gas stations, and oil facilities in Saudi Arabia, the United Arab Emirates, Qatar, Oman, Bahrain, etc. Saudi Arabia and the United Arab Emirates have said they would go to war directly with Iran, which means it is no longer a conflict where there are two attackers against Iran, but suddenly it becomes a conflict where the Middle Eastern countries themselves start warring among themselves, and therefore it is not a local conflict, but a regional one of a much broader scope. In the event that this happens, we will obviously find that the transfer of energy cost overruns through diesel, gasoline, kerosene, fuel oil, etc., will reach the tourism market, will reach the primary market cost, as I said before, of tractors, trucks, logistics, combine harvesters, will skyrocket, and also 30% of the world's maritime trade in fertilizers passes precisely through the Strait of Hormuz, which means that this component, which is vital for agriculture and significantly affects the price of products we pay out of our pockets, is suddenly directly affected. The inflationary crisis would have many, many different branches and would make it lasting, not a one-time event. When we talk about destroying supply, the restoration time is no longer measured in months; it is measured in years, which would mean we are entering a problem of magnitudes that we have probably not had to live through in recent decades. For Iran, which has years of sanctions, economic weakness, and whose Ayatollah regime has suffered an internal uprising.
Very deep recently. Ormut, uh, represents a long-term survival strategy. It doesn't need to win the war. Iran, if it has two brains to rub together, knows it's impossible to win the war. It no longer has a navy, it no longer has an air force, uh, what it needs or what it seeks is simply to resist and consolidate structural power over one of the most important international trade routes, like Ormoh. It wants to have the capacity to decide which ships pass, which ones are blocked, and how much they have to pay to transit through that bottleneck. Uh, the world is beginning to realize how dangerous it is to, uh, create a precedent where major bottlenecks and some others, like the one in the Red Sea in the Strait of Malacca, uh, can become, instead of neutral routes, weapons in the geopolitical war we are currently involved in. And that is very uncomfortable because it means that everything globalization has offered us for a long time, now with this fragmentation of the world order, works against us and inflationary risks arise from purely political decisions. In the United States, uh, it is very likely that Trump has already been, uh, uh, deceived by Netanyahu. That is to say, he has been dragged into a war that, evidently, Trump had no interest in, uh, being present for, but Israel has acted very intelligently, in my opinion. Uh, Trump already knows that this is not like Venezuela, he has already realized that this is not a surgical operation, that we go in there, we stay for a few days, we leave, uh, we subdue the Iranian regime, the population rises up, we support them, and there is a transformation of the regime, and with a bit of luck, I can profit later from the commercialization of oil because I have been involved in that change of terrorist regime. Unfortunately, that is not what is happening. And this is a bit reminiscent of the mistake Putin made in Ukraine, where a short-term military operation was planned. Uh, remember when he arrived with tanks in Kyiv and suddenly found himself in a war that lasted more than 4 years and had a brutal economic and humanitarian cost. Now that Trump is aware that he made a mistake, uh, I believe what he is looking for is to manage the narrative, uh, to say that he is winning and to try to get out of there at all costs. Why? Because he has midterm elections, because his popularity is at rock bottom. And what is clear is that, uh, citizens in a democracy matter a lot. And there are two things that I believe will not be allowed, or rather, will not be forgiven, by American citizens to Donald Trump. One is a strong resurgence of inflation, which is already beginning to be experienced, because that directly affects people's wallets, and they are starting to be very fed up. It was probably one of the points that cost Joe Biden the most. And the second is that this war begins to generate the deaths of American soldiers and coffins begin to arrive in the United States. I believe these are the two points that will truly put Donald Trump in a complex situation if he is not capable of managing the situation with more skill at this moment. Israel, for me, is the big winner. Israel, uh, has a leader, Netanyahu, who, uh, had a, a horrible international image just, uh, a few months ago. Uh, even internally, there was a great rejection due to what was happening in Gaza, and, uh, he has managed to turn the tables. Now the population supports him. Uh, they believe it is time to end the Iranian threat, with all the terrorist groups that Iran finances. And, well, uh, he has gone from being, uh, a pariah to probably being the hero of the country, and he has also achieved important successes in his fight against the terrorist groups of Hamas in Gaza, Hezbollah in southern Lebanon, the Houthis in Yemen, and of course, the regime of Bashar al-Assad in Syria. Therefore, Israel appears as the one who benefits most from what is happening right now. Some analysts say that the threat from its enemies has probably been extended by another 10 years due to the destruction of infrastructure and military heads within those terrorist groups. And Netanyahu, for that reason, does not want this war to end. We are already seeing certain tensions between Trump and Netanyahu. Trump wants to leave there as soon as possible, but he still doesn't know how to do it. Netanyahu's intention is to prolong this conflict and eradicate his threats once and for all in the region. Allied countries of the United States in the Middle East. This is another of the key pieces. Uh, we are talking about those countries that admit, uh, US military bases and therefore have American forces deployed in their territory. These countries have until now trusted that the United States would provide, uh, in exchange for those military bases, the necessary protection in case of conflict, and that there would not be a regional war. Right now, that, uh, is beginning to be a doubt because the regional war is present. And you say, well, the United States can leave the region saying, well, I have won the war, we have sunk them, we have destroyed their fleets, their aircraft, and their capacity to launch much of their missile launching capacity, and they will not be able to have nuclear weapons. And therefore, since I have fulfilled my objective, I am leaving. I say, "Well, you really can't do this, because if you do this, with what face will the allied countries that have your military bases there look at you? Because if Iran continues to launch drones and missiles against them and against energy facilities or installations in these countries, they will tell you, 'What do you mean you've won the war? What war? Uh, you've stirred up a hornet's nest here, you've kicked the hive a few times, the angry bees or wasps have come out and are tearing us apart, and you just leave. Consequently, uh, if Trump does not want to lose credibility and international support, he has a complex situation, uh, because we have also seen how some countries like Saudi Arabia and the United Arab Emirates are beginning to talk about getting involved in the military conflict in case of continued attacks on their energy infrastructure. As I say, all of this gives us an idea of how complex the environment we are facing at this moment is, and the result is whether or not there will be an impact on the supply of oil and natural gas in the world. When we started this year, uh, there were studies that said the world had an oversupply of about three million barrels of oil per day. But the truth is that it is not only a problem of oil, it is also a problem of natural gas. Qatar is the main supplier of natural gas for Asia and one of the most important for Europe. And they have done a small assessment of what the Iranian attack on its main gas energy source has meant, and they say that it will take at least 3 years to return to the production they had at the beginning of 2026. Uh, it is important because a prolonged interruption can eliminate millions of tons of supply, and that is not recovered. There is no possibility, let no one deceive us, there are no reserves in other countries like the United States or Australia to cover the gap that Qatar is leaving in the short term, which means that the probability of a price increase is very high. And remember where we were with prices, both in natural gas for Asia and for Europe. In fact, uh, when winter ends in Europe, we usually have a drop in reserves to levels of 30%. As of today, it is at 28%. And for the European Union to say, "Don't rush to replenish reserves. It's okay if they are not at 90% by November, but at 80%." Please, don't all rush to buy natural gas, because now, globally, there is less supply, you will drive up the price, and we will create an even bigger problem. But of course, reaching next winter with lower reserves and a severe crisis and a higher price would also be a big mistake. The very fact that there is this message of "let's not drive up the price of gas now to replenish the reserves we spent during the winter" gives an idea of how serious the situation is. In terms of oil, uh, the IEA told us that there was an oversupply of 3 million barrels at the beginning of this year. Now they are starting to talk about a deficit of approximately 5 million. That is to say, it is no longer just a logistical problem of the Strait of Hormuz being blocked and therefore oil not transiting. We are talking about the attacks that have occurred in the region on more than 40 energy assets that they consider to be seriously or very seriously damaged, which will reduce the capacity of major producing countries to export oil. And this makes the idea that if the conflict ends, oil will fall back to its previous price seem unrealistic. It is very likely that when the conflict ends, oil will correct, but the question is whether it will do so at the current level or remain at clearly higher levels. Therefore, this destruction of supply is something that will impact, yes or yes, the evolution of inflation and the evolution of economic activity. We all know that the duration of the conflict is crucial, and the longer it extends, it's no longer about destroying wells, it's that the countries' reserve capacity is depleted. That is to say, if I am producing, extracting oil from the ground and not sending it to the buyer, I have to store it. But that storage capacity is almost at 100%, which means that oil facilities are forced to shut down, to close the well. And this is not like a light switch. When you turn off the wells, when you deactivate them, they cannot be easily reactivated. It's months of work, which means that the oil shortage could extend over the coming months simply because production has been forced to shut down due to a lack of storage capacity at the moment. As I said at the beginning, almost no one dares to talk about what happens if oil breaks the $147 mark, but it is evident, given what we are discussing, the magnitude of the problem. And this brings us to the most interesting part of the video. What will happen in the markets? How can the stock, bond, and commodity markets really react in these environments? And what should investors do to protect themselves? So, let's get to the big question. How would the investor react? The truth is that the investor is a very curious character. Uh, we have been observing, uh, an increase in hostilities in the Middle East, uh, a rise in the price of oil, a spillover into the price of gasoline, diesel, inflation, etc., etc. And yet, the market has the feeling of, "Ah, they'll fix it." Uh, volatility around 30%. You say, "Well, I'm not worried." I say, "When are you worried? Uh, I am, I am terrified. Uh, no, we are not even in the fear zone. The volatility that shows the degree of market concern is really, uh, very far from where we have been, for example, uh, during 2025 with the war or when the famous unwinding of the carry trade in Japan occurred. It's as if nothing is happening. And that means something very simple: the big reaction has not yet occurred, and therefore the latent risk is increasing. If I measure investor conviction or tranquility by another metric, such as the credit spread between junk bonds and top-rated bonds, we are almost in complacency territory. That is to say, the credit market is not reacting. They are not pricing in a premium for low-quality credit versus high-quality credit, which is very common during crises. That is to say, all the negative potential is yet to unfold, and that is indeed worrying. It's not the same as the market correcting by 10-12% and risk premiums skyrocketing, in which case you think, investors have hedged their portfolios, they have already taken a protective position, and therefore they are less susceptible to damage because they have protected themselves. That's what happened in 2022, where now it feels like they are going around in short sleeves on a motorcycle at 200 mph. I say, no, no, when you fall, you're going to skin yourself, you haven't put on a jacket, you haven't put on a helmet, you haven't started worrying about the latent risk that really exists if this goes wrong. And perhaps this graph shows, not what was happening in the US debt market, but what is happening generally. That is to say, the 10-year Treasury in the United States has clearly rebounded from below 4% to levels of 4.40-4.50%. It has not yet broken the structure, but the German bond is breaking it, it is breaking the 3% mark, which means there could be a huge increase in financing costs in the euro zone. We are seeing that the Japanese bond, which had celebrated financing cost drops with the election of Sanae Takaichi as Japanese prime minister, has again become tense and is approaching maximum levels, which means that Japan, the most indebted country in the world, is finding its debt financing increasingly expensive. And we are seeing how the canary in the mine that I presented in the previous video, which is none other than the behavior of Hail bonds or junk bonds, is beginning to break pivot zones and reject trendlines that have been working very well since 2007, which unleashes the risk of a collapse like what happened in 2020 or previously between 2014 and 2016, which would be none other than the warning that this crisis has only just begun rather than being close to ending. And this brings us to the global stock market. I have used the AQI index, which as you all know is an ETF that replicates the stock market of developed and emerging countries. And the structure we see on screen indicates that since 2009 we have been immersed in a clearly bullish process that has had significant corrective phases, such as the pandemic or the year 2022 or the trade war, and that now we are rejecting the upper part of the bullish structure and beginning to detect dangerous signals such as the breakdown of the trendline in terms of RSI, descending crossovers in extreme overbought zones, which have been the same types of signals we have seen over time and which have ended up causing significant corrective moments. If we return to the lower band of this structure, the MSCI could still fall by a little more than 20% to seek this support, and it would take us back to the lows of 2025 or to the highs of 2021. That is to say, it would be like resetting the clock to what happened in the last 5 years. And you say, "Okay, and the Nasdaq? Because why are you showing me the Nasdaq?" Well, we all know which index has performed best over the last decade. It has been the Nasdaq 100 in the United States because it had a series of companies we called The Magnificent Seven, which have been the spearhead of new technological development in AI, where the bet on training centers, data centers, chip development, semiconductors, implementation of artificial intelligence to optimize resources and the way we do things. Those companies are the leaders. And now the Nasdaq has begun to generate a series of very ugly signals, such as the stochastic descending crossover in an extreme overbought zone, the breakdown of the trendline, and the rotation from the upper band to what could be the lower band, which would imply a correction of around an additional 20% simply to retest the bullish trendline. But a very important question arises here. Just because it's up, are we going to assume it will fall 20%? And the answer would be, no, it's that a double top has emerged here. The market has made a very typical distribution pattern, two highs at the same level. This support zone is beginning to be broken, and the projection of the height of the double top is 8.59%. You say, "But Pablo, this is not the scenario of a 20% fall in the Nasdaq and a 23% fall, in this case, in the MSCI, is it?" The 22-23% fall you are referring to is to attack the trendline, but it does not explain this double top movement. This would be the beginning of the movement, and then the complication that usually occurs in the market would follow. We also had a small double top here, and the downside target was much larger. Why? Because we were immersed in the famous trade war that Donald Trump proposed last April. That is to say, you have a technical catalyst that gives you a smaller downside range of around 8.5%, and then the market and the geopolitical situation are what unleash the movement. In this graph, I show you the distance to one, the objective of the double top, two, the trendline that marks the entire bullish trend since 2009, and three, the major support zone, which is that 30% drop that would mean returning to the lows of the trade war and the lows registered during 2024. These are like three short-term steps that on a weekly chart clearly show you where the most important downside points are in case things get more complicated. But at the beginning, you heard me talk about how it could get much more complicated. What happens if $147 is broken? What could happen in the market if we really have an inflationary crisis like the one experienced during the oil embargo years in the 1970s? This is the Nasdaq on a quarterly chart. What does this mean? Well, we are seeing the history of the Nasdaq since approximately 1980, and within the life of the Nasdaq 100, we have a rise in the late 80s, a brutal acceleration during the 90s, precisely because the revolution that the arrival of the internet represented was coming, or what was the dot-com bubble. The burst, many people don't remember, the Nasdaq fell 83% during the 2001-2002 burst. Then we had the financial crisis in 2008, which caused a new support on the bullish trendline, and since 2009, which is what we were analyzing a moment ago, a market that has practically not stopped rising with little interruption beyond the 2022 crisis and which marks an almost constant upward trend without risk. And this has generated a generation of investors who have 15 years of experience, who believe they know the market and that there will never be a bear market and that there is no need to worry about risk management because central banks and governments will take care of it, right? As happened during the pandemic, as happened during the war, or as happened in 2022. The divergence signals at the quarterly level in the RSI are worrying. The overbought level and the descending crossover are also concerning. And the question is, what happens if we don't have a fall of 8.5% or 20% or 30% here, which would be the blue line? But instead, all of this breaks, what do we have left? And I say, man, of course, uh, perhaps return to the long-term trendline, perhaps normalize the stock market movement from a long-term perspective. And often people love to bring up the stock market's behavior since 1900, right? To show that it always goes up. Obviously, they don't talk about periods of 20-something years where the stock market is in ranges or corrections of 40% or 50% that occur. But the reality is that if you like long-term history, this Nasdaq example is very good. Every x decades the market has a brutal adjustment that brings it back to the defensible long-term growth rate. And that growth rate in this specific Nasdaq chart is around 6,000 points when we were trading near 22,000. You say, "How can this happen?" Well, it all depends on the economic circumstances we have to go through. If this war ends up unleashing an inflationary crisis like what happened in the 1970s, we are clearly not prepared for what is coming. The loss of purchasing power of citizens, the collapse of companies, the completely unsustainable fiscal situation, interest rates and financing prices that are totally inhuman compared to what we have recently been accustomed to, breakdowns in geopolitical relations, because no one here will want to admit they are to blame for what has happened. Consequently, we are already seeing how Donald Trump attacks NATO allies, saying they have not helped in the request to reopen the Strait of Hormuz. If this blows up, do not doubt that they will point fingers at each other, that there will be growing tension. We still have a war in Ukraine that is not resolved, where Russia benefits from the increase in oil prices, where European partners have increasing difficulty approving credit lines for Ukraine, where the United States has already disengaged from giving away weapons to Ukraine and now charges for them. Now it is diverting that military force to another focus, which is the Middle East. I don't know if you see the picture. I find it incredible that the investor doesn't see this picture. It may or may not happen, but we are probably not talking about something that could happen in a year. We are talking about something that, if it happens, will happen in the coming days, at most in the coming weeks. And the investor is looking as if it were a sunny spring day. Something that fascinates me. What are the conclusions? First, Trump has gotten himself into a dead end, probably, uh, dragged by Netanyahu's intelligence. He cannot leave without guaranteeing transit through the Strait of Hormuz. If he does, the image of a loser will be brutal, and that is something he cannot stand. The alternative of intensifying attacks against Iran is very dangerous because Iran, if it believes it has nothing to lose, will likely expand its targets to civilian energy and desalination facilities, and that would completely change the dimension of this conflict, especially for the countries of the Middle East, but also for everyone else due to the real loss of supply. We would also have a humanitarian crisis at a migratory level. The only thing that works for Trump is to achieve a peace agreement very quickly. The cost of any other campaign, I believe, is unassumable by Donald Trump, and it is already evident because his advisors must have told him. This is not Venezuela. We made a mistake. It is more like Putin's mistake in Ukraine or the mistake Americans made in Afghanistan thinking it would be something simple. He has sinking popularity at the moment, inflation on the rise, and in November there are midterm elections where Trump could lose the majority in the House of Representatives, and if things go very badly, who knows if not also in the Senate. From then on, it is said that they could try to impeach him. Well, Donald Trump's internal situation could become very complicated in the worst-case scenario between now and November, and he doesn't have many options to maneuver, something that probably bothers him a lot. Uh, until now, Donald Trump has been a true master of narrative control. Uh, at all times he has known how to calm the markets, how to generate uncertainty, pressure, give the impression that all bad things could happen to then back down and obtain advantages. But here we are talking about real supply of a product that is totally necessary for the world, oil and gas. The narrative lasts as long as it lasts. If you end up causing a shortage or deficit of oil and gas in the world for years, no matter what you tell us, the price of oil and gas will be set by supply and demand, and that's the end of the game, that's the end of the tricks, the end of the traps. Therefore, uh, beware, because what we are playing for in the coming days is, uh, a lot. And as I said at the beginning, there is really a clear winner, or I would dare to say two clear winners, right? One is Netanyahu, who has achieved many of the objectives he pursued in the region, and another indirect winner is Putin. Putin was financially suffocated in this war against Ukraine, and suddenly, uh, the United States' decisions to allow Russian transit oil to be sold to try to increase available supply, uh, which is a godsend for the Kremlin. And on the other hand, uh, if the scenario ends up generating much more aggressive oil price increases than we have seen so far, it gives Putin a lifeline to finance this war and complicates assistance to Ukraine, which is increasingly finding it difficult to get support from Europeans and the United States. Especially Europe has been very generous until now because we were not living in an adverse economic environment. But of course, if this causes economic recession in Europe, fiscal problems in Europe, and a need to spend a lot to get gas and oil, our willingness to continue giving money to Ukraine so it can defend itself or to send weaponry to Ukraine will be, uh, less, which means there are clear, clear beneficiaries in this conflict who are not precisely, uh, perhaps what Donald Trump had in mind when he started the conflict. He probably didn't intend to give Putin a gift, although indirectly he is doing so. As you can see, we are at a very important moment in life. Uh, this affects everything. This affects our wallets, it affects our security, it affects our well-being, it affects our investments, of course, and it affects our security. Uh, that's why I told you that this video, if you reached the end, I thought it was so important. I try to update this as much as I can. Uh, I usually do it through my newsletter. Uh, I leave you the QR code on screen so you can see it. It is completely free, and there I give my vision on what is happening geopolitically, economically, and in financial markets to try to keep you as well-informed as possible. We are at a moment where the situation hangs by a thread. Perhaps we will not end up in the worst-case scenario, although the scenario is already clearly bad, but that black swan with which we never like to play is worth bringing to the forefront and understanding, before it is unleashed, what its implications would be. Therefore, this is not about scaring anyone, this is about understanding what we are playing for and what could trigger that black swan and how we identify it through specific levels that are occurring in different assets. In the event that it is activated, in the event that all the potential negatives begin to occur, uh, I believe the correct action for the investor is to hedge risk, reduce exposure to the markets, and prepare for a very big downpour that in the long run, over the years, will be an excellent investment opportunity, but to be able to take advantage of that opportunity, you obviously cannot be caught by the wave, because if the wave catches you, totally invested. The beating you will take will make you unable to even determine where the beach is that it will eventually deposit you. So, good luck to all with your investments, pay attention to what we are experiencing, and I'll see you in the next video. Greetings and goodbye.