About this episode
Macro trends blogger and economist David Woo, CEO of David Woo Unbound and co-author of the upcoming financial thriller Merry Go Round Broke Down, returns to the show to break down the geopolitical and market implications of the US-Iran conflict. Woo argues that markets are dangerously mispricing the situation, betting either on a quick Trump "TACO" or a rapid US victory — both of which he sees as unlikely. With the Strait of Hormuz effectively closed, oil sitting near $100 a barrel, and Iran executing a measured, strategic response, Woo believes this conflict is far more protracted than Wall Street is pricing. He explains why Trump, now effectively a lame duck after the Supreme Court's tariff ruling, is unlikely to back down given the enormous legacy stakes, and why China's deep investment in Iran makes this the first real US-China proxy war. Woo also breaks down the winners and losers globally, shares his current positioning — short stocks, long oil — and warns that an interaction between rising oil prices, the AI bubble, and private credit stress could be the perfect storm markets aren't prepared for.Links: Book: https://www.amazon.com/Merry-Go-Round-Broke-Down-Novel-Globalization/dp/B0GCX8Y6KTYouTube: https://www.youtube.com/@DavidWooUnbound Website: https://www.davidwoounbound.com/ Twitter/X: https://twitter.com/Davidwoounbound00:00 Introduction00:43 Setting the geopolitical stage01:16 Why markets are dangerously complacent03:34 Why Trump won't TACO this time05:50 Trump's legacy shift — why Iran, why now07:48 Iran's military capabilities — what the US hasn't destroyed10:14 Oil at $95 — what's actually priced in12:47 The Strait of Hormuz and what markets are missing15:11 Can the Fed cut rates at $100 oil?16:00 Retail investors driving the market higher17:56 Global recession risk19:57 Winners and losers — Canada, Russia, Europe, Japan20:27 Why the midterms are almost irrelevant now24:41 Base case — Trump loses the House26:00 Why Trump is moving on Iran before lame duck sets in28:09 Regime change and the greatest presidential legacy29:55 China-Iran railroad and the real proxy war31:24 Can the US control the Strait of Hormuz?33:00 The Houthis playbook 35:15 UAE under attack — interceptors running out37:04 Iran's civilization and strategic depth39:12 David's positions — short stocks, long oil40:42 When will markets wake up?43:21 Most likely outcome — civil war not regime change45:11 What Xi Jinping is thinking right now47:03 Is this worth the risk for the US?49:43 The Pearl Harbor analogy and China's Belt and Road52:39 Gold, crowded trades getting blown out55:38 Private credit, the AI bubble and the perfect storm58:44 What's keeping David up at night — AI
