Nassim Nicholas Taleb, Fooled by Randomness: "Don't cross a river if it is, on average, four feet deep." visiblefist.substack.com
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The dated board milestones are already being decided from “The Silence of Inconvenience”
Every major fuel exporter is now pulling back at once:
Russia: its diesel export ban runs through October.
India: MRPL pulled its diesel and jet fuel cargoes.
The Gulf: fuel exports are at 58% of pre-war.
The US: export curbs are under discussion.
China: now shut in.
That's fuel nationalism: each country is protecting its own supply, and the global market for refined fuel is splitting into national pools. Asian and African buyers who relied on Chinese and Indian cargoes now have to bid for Atlantic barrels.
visiblefist.substack.com/p/t…
Chinese refiners suspend October fuel exports, one cancels cargoes, sources say reut.rs/4hxKAzQ reut.rs/4hxKAzQ
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We are at the phase of the war where it runs on its own momentum, through a distributed command that no one who has stepped forward yet, in person, has the authority to stop.
In Apocalypse Now, Captain Willard's boat passes the Do Lung Bridge, the last American outpost on the river, where the bridge is blown up every night and rebuilt every day and no one can say who is in charge.
The same disorder hangs over the Strait of Hormuz, where attacks on ships keep coming despite the Islamabad memorandum and every attempt to negotiate a new settlement.
The US Navy is escorting tankers at its highest tempo in six months, on with us personnel on ships and munitions its own commanders say are running short, at a cost the Pentagon already puts above $43 billion.
That can only go on so long.
Meanwhile, the blockade is succeeding at strangling Iran's exports, and that success is what raises the threat to Gulf ports, refineries and pipelines.
Read the entire argument on Substack, with no paywall for a limited time.
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Trump couldn’t even get Soybeans this round. All of that performative loyalty for nothing.
China to cut tariffs on US farm goods, but list excludes soybeans reuters.com/world/china/chin…
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Invisible Fist retweeted
The AI cracks are starting to become very prevalent, and might be the reason both the industry stalwarts have started to flout the need to be brought under the state umbrella (bailouts?) and grifters touting nonsensical shit like infinite ROI.
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The bottom line for the AI buildout is changing because the major input costs keep going up while token prices are in a race to the bottom. In the knowledge work marketplace, it continues to produce deflation, but it’s driving inflation up for every other part of the inputs it needs to deflate the knowledge economy.
Taken together, the two numbers cancel each other out or look like modest inflation, modest aggregate growth. Look at them separately and the economy is going in two different directions at the same time. The Fed is being forced to respond to the one that’s running hot at the expense of the other. The chances for a major policy error continue to grow as a result.
Our Latest Report from the Deflation Machine is now available at Substack.
Read it with no pay-wall for a limited time.
visiblefist.substack.com/p/t…
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Our Latest Report from the Deflation Machine is now available at Substack.
Read it with no pay-wall for a limited time.
visiblefist.substack.com/p/t…
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Trump would’ve handed over Taiwan yesterday if it would’ve meant China stopped supporting Iran. Now we have it on the record with implicit reciprocal compensation by China.
Watch the arms package for Taiwan. That is the mechanism for the entire bargain.
China's ambassador to the US warned on Wednesday that the country has "red lines" on Taiwan, human rights and other issues that cannot be crossed, ahead of this week's meeting in Washington between the two countries' leaders. reuters.com/world/china/chin…
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More soybeans inbound
Today in Washington, Vice Premier He Lifeng and I held substantive discussions on the U.S.-China economic relationship ahead of President Trump’s meeting with President Xi. Our discussions continued to focus on securing meaningful commitments that protect American workers, farmers, and businesses while advancing U.S. economic and national security interests.
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Brent -3% to $96. Down $10 in a week. Classic top, say the charts.
Look at the scoreboard so far for September 22.
The headlines:
"Iran offers to reopen Hormuz in 7 days." Seven preconditions. Months to negotiate. Iran denied the report two hours later via Fars. The price had already moved.
"Saudi restarts East-West pipeline." Under 40% rate. Net 0-1 mb/d vs 4.5 pre-strike. 2.9 mb/d still transits under Iranian permission. Pipeline was closed by drone strikes two weeks ago.
"Diplomatic breakthrough." Xi lands tomorrow for 72 hours of headline management.
The receipts:
USGC three weeks from octane stockout.
Diesel $6.51/gal ATH.
SPR at 1982 lows.
Moscow refinery 230k bpd offline.
Kremenchug hit the same night Trump asked Zelenskyy to stop hitting Russian refineries.
Five tanker attacks since Sep 16.
WSJ: "Saudi spent months trying to bypass Hormuz. There's no way around it."
LeShrub nailed it. We are doing the meme again. The war keeps going anyway.
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Invisible Fist retweeted
Russia conducts large-scale strike on targets across Ukraine, defence ministry says — IFX
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As predicted, total banger
🇨🇳🇺🇸 On September 20, Chinese and U.S. teams held candid, in-depth and constructive exchanges during consultations on economic and trade issues in NYC.
The two sides engaged in exchanges on important economic and trade issues of common concern, as well as the implementation of consensus reached in previous talks. They also held dialogues on AI-related issues.
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While everyone is focused on the Strait of Hormuz and Bab El-Mandeb, China has been administering its own chokepoint over REE, keeping shipments of critical magnets and other materials needed for semiconductors and interceptor missiles constrained.
Negotiations have been going on for months in the background. The only visible signs of progress?
Soybeans.
Each time US and Chinese counterparts have met, an agreement to keep talking about the topic is announced. Each time, the outcome is the same. The numbers tell the story: Shipments to the US down 20% month-over-month, 13% year-over-year. Japan down 17%. Germany down 22%.
The RUSI finding is the structural kicker: China is using the licensing process itself to map Western supply chain dependencies. Every company that applies for a rare earth license hands Beijing a map of exactly what it needs and how badly. The West is filing intelligence reports about its own vulnerabilities and sending them to the adversary as a condition of receiving the materials it can't produce itself. A non-Chinese supply chain is "years, if not decades, away."
Chinese rare earth shipments to US drop ahead of Trump-Xi summit ft.trib.al/whORQIW
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Trump spent the weekend begging Zelensky to halt strikes on Russian refineries. Putin just extended Russia’s diesel export ban.
Trump's call to Zelenskyy is even more pointless than it looked. Even if Ukraine stopped hitting refineries tomorrow, the damaged capacity would take months to rebuild, and Russia would still need the diesel domestically before it could export again.
The export ban tells you the damage is deep enough that stopping the strikes doesn't fix the shortage. It just stops it from getting worse at the margin.
So, now Russia is in the market. They’re importing diesel, subtracting from the market and putting additional upward pressure on the price. Every barrel Russia pulls in is a barrel Europe or Asia doesn't get. European refiners are already paying $26/bbl in freight for crude that may not arrive on time.
The export ban isn't just Putin weaponizing supply. He needs the diesel domestically because Ukraine is burning his refinery capacity.
He's banning exports because he doesn't have enough to spare.
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So the scoreboard for today, September 21: tanker hit inbound through Hormuz at 0730UTC, Libya's largest oil field shutting down, diesel seaborne exports at 80-year lows, diesel at $6.51 ATH, Trump begging Zelenskyy to stop hitting refineries, Houthis escalating against Saudi Arabia, TACO on the Houthi strikes, East-West Pipeline still down, 15% of the VLCC fleet parked off Oman.
Crude is down 3% because Mike Waltz said "door is open" on X.
Every lever that the US reaches for is still a crude lever and does nothing to actually loosen inventories, or increase supply. Price, however, is holding down sovereign yields. That means they will keep pulling that lever until it stops working completely.
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Two different stories today, both explaining why crude and refined product supply will remain tight leading to higher prices, and yet, futures are down 2% in Sunday night trading.
So which is it?
If you believe price and positioning are the ultimate signal and the story being sold by the DoD about 1 billion barrels transiting Hormuz this month, you probably feel like the recent price spike is over and oil sells from now until the end of the year.
But the method of STS transfers of oil to get it out of the gulf IS taking up more ships and leading to a shortage AND the number of refineries targeted between Russia and the gulf are also leading to shortages of refined product, so the market isn’t fully reflecting those effects cumulatively.
We have written at length about the Rorschach effect, defining it as the way an observer can hold a different perspective on a set of facts based on his own priors than someone else looking at the same facts with a completely different set of priors drawing a different conclusion.
With oil, there is a physical product at the end of the story and it either gets delivered or it doesn’t, which ends the Rorschach debate. In the commodities world, it does not pay to hold a distorted view of reality when the delivery deadline arrives. One set of views will eventually dissolve and if the facts are correct, the efforts to bridge this disruption with SPR releases runs out eventually.
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