Let them eat ramen
Key Markets report for Friday, 7 August 2026
It appears that Donald Trump’s Iranian excellent adventure utterly failed, like nobody’s ever seen before. Time will tell what the consequences will be, but there’s a good chance that they’ll be worse than most people can envision today.
In exacerbating financial, economic and social crises at home, it could turn out that Iran will be for the United States as Afghanistan was for the Soviet Union and iceberg was for the Titanic. The Trump admin continues to promote the positive narrative, but facts on the ground beg to differ.
Incidentally, zero barrels flowing out of Saudi Arabia toward the USA also means zero dollars flowing into US financial institutions to service those financial assets that are based on this trade as collateral. Part of all this is related to the undeniable oil market disruption which has only gotten a lot worse with the closure of the Bab-el-Mandeb Strait, severely reducing Saudi oil exports, including to the United States.
Billions and billions…
To reassure the markets, Trump came out with the compensating narrative that, “We're taking a lot of oil from Venezuela -- billions and billions of barrels of oil. To the victor belong the spoils.” In a way, Trump may be telling the truth, but “billions” of barrels are some figure close to 0.2 billions.
Namely, Nicolas Maduro was abducted exactly 2016 days ago today and since that day, Venezuelan oil production increased to just over 1 million barrels per day. If 100% of that oil was taken by the victors, that could’t be much more than 0.2 billion barrels. That’s a nice loot, to be sure, but Trump’s wording exaggerated it several-fold which doesn’t inspire confidence. Scott Bessent contributed further to the administration’s tall tales by declaring that there would be a deal this week with “freedom of movement.” That, too, was an exaggeration:
Clearly, for all the tough talk and bluster, Trump failed to gain control of the Hormuz Strait. Instead, Iran is still dictating the terms, and the terms just got a whole lot Worse for the US and its allies. According to the latest reports from Reuters, Iran is now pushing for fees calculated as 5–7% of the value of the cargo in transit, and they might have taken that idea from Trump himself, when he floated the idea of the US charging 20% of the value of the cargo.
Even if the Iranians climb down from their maximalist demands, they clearly feel like they’re in control and the result could be an energy cost inflation boost for the American people, many of whom are already struggling with the soaring costs of living. Their discontent seems to be getting real, and with real reasons, which go beyond the price of gasoline at the pump:
Eat ramen, ungrateful proles!
Squeezed between the soaring costs of living and rising taxes, the ordinary people are increasingly struggling and demanding changes, but that only seems to be annoying their devoted representatives in Congress. Texas Republican Dan Cranshaw admonished them to, "Stop whining, get a job, eat Ramen like the rest of us did in college, on a budget with [four] roommates." Again, the ideological clash seems to be shaping up between the reality, as perceived by the ordinary people and the ideology espoused by the ruling establishment.
Since the Americans already live in the freest country in all of history and benefit from the greatest system of free market capitalism ever devised, their struggles can only be explained as a result of their own failures and shortcomings. In the end, their “representatives” start to treat them with cold contempt exemplified by Cranshaw’s dumb rhetoric. President Trump and his core supporters largely share that same contempt.
The geopolitical catalyst and the hollowing base
This is how a class conflict could begin to escalate, moving the whole system toward a civil war or a revolution, in another parallel with the USSR, whose geopolitical blunder only catalyzed the unravelling of the system: the Soviets invaded Afghanistan in 1979. They withdrew by February 1989 and within two years, the USSR collapsed. The defeat in Afghanistan did not cause Soviet Union’s collapse, but it worsened its multiple brewing crises and accelerated the unravelling.
Today, the US is facing a similar precipice, although it is hard to say whether the US crisis is potentially worse than the Soviet one or not. As I mentioned yesterday, the ideology upholding “free market capitalism” may make it seem that the US economy is much more robust and resilient than that of the old USSR, but that is not entirely true.
Gradually, over the last few decades, the US has favored large monopolies and oligopolies while the bedrock of resilience - small and medium-sized enterprises - have been systematically hollowed out. For all the talk of tariffs and re-industrialization under Trump, the results on the ground now seem anemic and could amount to too little, too late.
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Today’s trading signals
With yesterday’s closing prices we have the following changes for the Key Markets portfolio:
