Oil Falls on Iran Talks Progress or More Jawboning

Added: 2026-05-23

[00:00:14]Good morning all you magnificent melon heads of the world and happy Friday everybody. Today is May 22nd, 2026.

[00:00:22]Our top story this morning, so stop me if you've heard this one before. We've got optimism over a final draft of an agreement between the United States and Iran. It's coming out of Pakistan. Do we have peace in our time or is this just more jawboning to control the price of oil and thus interest rates? Um, I don't know. I guess we're just going to have to wait and see. Right now, oil is down sharply below its 50-day moving average, which has historically held or at least over the last few months. This has been where we get a rally in oil prices. But maybe this one is for real. Maybe this is the real deal. Uh look, apparently the the key phrase here in this in this agreement that is a draft that has not yet been agreed to says that this is the implementation of an immediate and unconditional ceasefire on all fronts, land, sea, and air. All right, that that's a big one. Typically, you you would hear that and you would think no more shooting. All right, that's kind of how that goes. But we've had all of these ceasefire agreements before and the shooting continued at ships at people at missiles flying at at countries not even involved in the war.

[00:01:32]So maybe this is the one that actually does it. We we'll have to see. Now there are still outstanding issues in particularly ne according to this term negotiations will begin within 7 days on outstanding issues. And when you hear outstanding issues, that is the nuclear question. The enriched uranium, what is going to happen to the nuclear program?

[00:01:52]That is one where both sides have pretty much planted their feet and said, "We're not going to budge on that one." So, it looks like the agreement includes a punt on that issue. But there are still outstanding issues besides the nuclear issue, the toll booth, that's the big one. Iran is insisting that the straight of Hormuz belongs to them and they're going to start charging everybody a fee to cross it. And the problem is what if people refuse to pay that fee? Well then what does Iran do? Do they shoot at them? Well then you just broke the ceasefire. Remember the unconditional ceasefire on all fronts that includes C.

[00:02:28]So it looks like right now the hangup is the question of the toll booth which I just cannot imagine the world going along with that. Uh so that's going to be the big one. Can these Pakistani negotiators with pressure from China and the US get the IRGC, which is the faction within Iran that is insisting on the toll booth to back down and allow this agreement to go through? I look, I don't know. I really don't know what's going on in the ground in that country.

[00:02:53]No information has come out of that country since January because the internet is still shut down. So, the only thing we know is what these bloiating a-holes will say in the press, which 90% of the time is Uh so uh look there's hopes right maybe the killing is going to stop. I'm not sure what we accomplish besides nothing and higher oil prices. That being said there is hope and the world is optimistic today. We've got oil prices are lower because of it. Um also in totally unrelated news we've got the Wall Street Journal is out with a report that says Iran moved billions of dollars through Binance in order to fund the IRGC as recently as this month.

[00:03:34]Boy, am I glad we gave Changpang Xho, the founder and CEO of Binance, a presidential pardon, which he may or may not have bought in exchange for billions of dollars invested in World Liberty Financial and the infrastructure for World Liberty Financials tokens, which is a company that's basically run or owned by the president's family. Oh yeah, I'm sure there's nothing unourred going on there, but basically a money launderer for terrorists was allowed out of prison by the president in exchange for billions of dollars in investment in his crypto venture. I think that should be bigger news than it really is right now. I think I think a lot of people should be leading with that story this morning and they're not. Just throwing that one out there. Uh, also going on this morning, President or not president, uh, Kevin Worsh is expected to be sworn in at the Federal Reserve as the chairman of the FOMC. U, this will be done at the White House. And look, Kevin Worsh has been put there to cut rates and he can't cut rates. The bond market is saying he's not going to cut rates. The bond market is saying he's going to hike rates one, two, maybe even three times, according to CME futures, which we'll look at. Um, the bond market is telling us something. The bond market is worried about inflation and the stock market is just blissfully unaware of what's going on all around it. Marching onward and upward to new all-time highs again this morning. One of these things is right. And typically when stocks and bonds disagree, bonds win. That's usually what happens. It's always what happens. Uh but for now onward and upward we've got copper is trading like a tech stock or more to put it more accurately it's trading like silver traded last year believe it or not. Um besides trading near a record we've got a big arbitrage opportunity has opened up. Big gap prices are higher here in the states on the comics than they are at the LME in London uh which is the biggest trading hub for copper. So what do you have? You've got metal is leaving those London vaults heading for the US.

[00:05:33]Very similar to what was happening last year with silver when you had this big arbitrage gap opened up and a lot of the metal started flowing back over into London to capture that arbitrage. And what's going on? Well, here in the States, we're building a freaking ton of data centers that they're not building over in Europe. And so, people are trying to buy up as much copper as possible. It's probably leading to speculative mania and copper as well.

[00:05:57]Hey, just another example of all the things that the AI companies need to be build their data centers are getting a hell of a lot more expensive and they're still not profitable, but I'm sure that's all going to end very well for them and their investors.

[00:06:09]We've got we've also got to talk about the Venezuelization of Indonesia.

[00:06:15]They're nationalizing their natural resources in order to pay for social programs, which historically has been freaking catastrophic for anybody who has ever done it. Uh, so that's great.

[00:06:27]In a country of 287 million people, the fourth most populous country on earth is doing what Venezuela did. So that is the humanitarian crisis of the next decade is being set in motion right now as we speak.

[00:06:43]Meanwhile, Turkey, we got to talk about what's going on in Turkey. Uh, there's something brewing in that country right now. They sold almost all of their US treasuries in the last month. They also sold a major chunk of their gold holdings. Why are they doing this?

[00:06:57]Because the LRA is collapsing. Their currency is continues to fall because ergonomics is fundamentally insane.

[00:07:03]Lowering interest rates to fight inflation. That's not how that works.

[00:07:06]The LRA has been declining for ever and it's not stopping. And in the last 24 hours, there have been some really odd actions taken by Erdogan over in Turkey involving opposition parties and some some like shutting down a college. Some things I can't really explain, but in the context of what's going on with that currency, it looks like Erdogan is worried about a shaky grip on power.

[00:07:30]There could be something brewing in that country. Keep an eye on what's going on in Turkey here. Uh, what else we have?

[00:07:35]The FBI has indicted four of the world's biggest shipping container manufacturers for allegedly conspiring to rig prices along with seven of the executives at these companies have also been indicted.

[00:07:48]All of them are Chinese Chinese.

[00:07:49]Shocking.

[00:07:51]Um on top of that, we've got Starbucks has scrapped their AI inventory tool after just 9 months. You know, the CEO told us that their inventory tool was adding to productivity and making them a more leaner, effective organization. and then nine months later they're throwing away this tool. It's almost like CEOs sometimes say things that are true just to make their stupid ideas look better.

[00:08:12]But you know what AI a new era of human productivity has been unlocked. That's what I'm told over and over again. I'm also told I just don't get it. Which is correct. I really just don't get it. And last but not least, private credit. Uh we got to talk about that one. The unthinkable in private credit may be underway. Price discovery. Oh, that four-letter word that they've been avoiding for years. Looks like they can't avoid it. And that's the thing about avoiding price discovery. You can do it for a little while, but you only make the problems bigger. And sooner or later, the free market catches up with everybody. That may be happening in private credit this morning. Guys, we got a lot to talk about. Why don't we shrink my big melon of a head and let's see what's going on in the world of finance. Don't forget that like button and that subscribe button for the YouTube algorithm so you can come back on Monday because we do this every business day.

[00:09:03]Oh, wait. No, not even on Monday, man. I got that wrong, too, because Monday is a holiday. I believe markets are closed on Monday. So, I'll see you guys on Tuesday, but hit the subscribe button.

[00:09:11]Anyway, moving on. Uh, the S&P 500 is higher by 43 points, 58% in the green.

[00:09:17]Little bit of optimism about the Iran deal. Hopefully, maybe. Uh, the Dow is also higher by 485 points. Almost a full percent higher for the Dow. New record at the open. It looks like the Nasdaq is up 159 points, about a half a percent, lagging the Dow somewhat, but still stocks are pretty much up across the board this morning. The dollar is weaker here at 99.18.

[00:09:43]That is not surprising considering the lower oil prices and the drop in yields.

[00:09:47]Uh dollar reacting to the downside on this optimism this morning. Looking over at the bond market, we've got yields are breaking lower. Uh the 30-year yield 5.065 065 down 4 1/2 points this morning. The 10-year yield is down 5 1/2 points at 4.535.

[00:10:06]We are below that 4.6 threshold that we had been holding for most of the week.

[00:10:10]The 2-year is at 4.063, lower by 2 and a half points and the one month is at 3.670, higher by a half a point. Uh let's talk about what's going on in the bond market here because this is a pretty good one in market watch from Charlie Garcia this morning. The bond market just flipped the script on investors. Wall Street is acting like nothing's wrong. When credit and stocks disagree, credit is the one telling the truth. And I cannot agree with that statement more. That by line there, when the stock market and the bond market are moving in opposite directions, you're best off going with the bond market every time. It is bigger and more honest.

[00:10:49]For the first time since Silicon Valley Bank failed in March of 2023, the largest pool of capital on Earth has decided rates go up from here, not down.

[00:10:59]The bond market is the only adult in American politics. It does not vote. It does not flatter. It does not return calls at 4:00 a.m. or post on Truth Social at 4 a.m. It's it prices what it sees. And what it sees now is an inflation problem nobody in Washington will mention out loud. Last week, the bond market stopped pretending the problem would fix itself. That is the story and everything else is set dressing. Bond investors and stock investors are staring at the same animal from opposite ends. The bond guy The bond guys have a hand on the trunk. The stocks guys are holding the tail. Both are sure they know what they are touching. Both are about to learn it's one elephant with three sides and one body and it is not in a good mood. I love that talking point. I'm I'm really not sure of the metaphor. I I don't know that that really holds up to scrutiny, but man, it sounds cool. It's one elephant and it's not in a good mood.

[00:11:50]Um, and yeah, the bond market is one big angry elephant right now. Let's take a look at CME Fed fund futures here. This is what the CM This is what interest rate futures are predicting the Fed funds rate will be after their FOMC meeting in December at the end of the year. Right now, the Fed target rate is 350 to 375. And you can see here based on interest rate futures, there's pretty much a 41% chance that the Fed does nothing for the rest of the year. And you'll notice there's nothing to the left of that. No chance of a rate hike.

[00:12:25]And Kevin Worsh is about to be sworn in today. And he was put there for this sole purpose of cutting rates. And he can't. He he simply can't cut rates here. Which means a few months from now we're going to be having presidential tweets badmouthing Kevin Worsh. He's supposed to be cutting rates. stock market. He can't. We've got a 41 almost 42% chance that they do one hike.

[00:12:49]And we've got a 15% chance of two rate hikes through the end of the year. A 2% chance of three rate hikes. And look at this little guy over here. Oh, that little guy. I wouldn't worry about that little guy. A 0.2% chance of four, count them, four rate hikes by the end of the year, guys. They're not going to cut.

[00:13:09]And stocks are just like all-time highs.

[00:13:12]My AI, my memory, my nuclear reactors on the moon, my data centers in space.

[00:13:18]Yeah, the bond market doesn't care about your science fiction. The bond market doesn't care about some guy who thinks they're going to build a colony on Mars by 2030. It's just not going to happen.

[00:13:30]And uh also keep an eye on this one.

[00:13:32]This is the US 10-year yield. All right.

[00:13:35]Now, I've been This was the big runup after the Fed tightening cycle culminating with uh fall of 2023. That's when we topped out and we've kind of been in this consolidation pattern ever since. And I want to zoom in here because we are currently back testing that line. We do have rates are falling right now. We broke out above this line earlier last week and now we have back tested and broken back down into that.

[00:14:00]So, a false breakout or is this just more jawboning and rates are going to go up from here? I don't know. But, uh, guys, the bond market is telling us something here and the stock market is ignoring it. And historically, that is not a good combination.

[00:14:16]Look at over at Bitcoin. Bitcoin is holding just barely above its 50-day moving average as it's done for most of this week. $77,427 is priced on Coinbase. That's lower by about 120 bucks this morning. Looking over at commodities, we've got metals are mostly lower this morning. Spot gold down by $1540 here or about a third of a percent. 4527 for spot gold. We've got spot silver is at 7627 lowered by 41 cents or about a half a percent, but I still like the shiny. Copper is up another 1% $6.36.

[00:14:53]Uh we'll we'll be talking about copper in just a minute here. Put a pin in that one. Platinum down by 1.3%. Palladium down by about twothirds of a percent.

[00:15:02]WTI, uh oh, it's only down a half a percent now. 9593. We were lower than that earlier today. Uh I guess we weren't that much lower. We were actually we were as high as 99.41. There was there was some initial doubt this morning about this this arrangement with the Iranians. We were like two or three dollars higher and then we saw oil prices dip just about an hour ago. Uh let's take a look at that oil chart. So, here's where we're at now. These are daily candles. Um, importantly, we are below the 50-day moving average, at least for now. The market is taking this seriously, this arrangement between the Iranians and the US, although we have been here before. You'll notice the big wicks and these candles here. We've been down below this 50-day moving average a couple of times since this conflict started. And then all those times it turns out that those deals were not worth the paper they were printed on, if they were printed at all, and oil prices rallied from there. So again, we're just going to have to wait and see what happens here. You know, a ask me Monday because something tells me we're going to have this piece of paper. Everybody's going to be like, "Yeah." And then somebody's going to launch a drone at a freaking boat within 24 hours. It's probably how this is going to go. Um, that's just cynical Jack. Pardon my cynicism, but I am a resident of planet Earth where cynicism is a learned behavior. Uh, but here's the deal they're talking about. Pakistan seeks breakthrough in US Iran peace talks.

[00:16:25]This one just this morning here. Iran's foreign minister met Pakistan's interior minister on Friday to discuss proposals to end the USIsraeli war. Iranian media reported with Thrron and Washington still at odds over tan's uranium stockpile and controls on the straight of Hormuz. And those are some pretty big still at odds things there, right?

[00:16:47]Iran's nuclear weapon and the toll booth in the straight of Hormuz. Those are those are not like dimpled Chads. Those aren't teased to cross and eyes to dot later. Those are some pretty big issues there. Two days after presenting the Iranians with the latest US message in the negotiations, say Moshin Nakvi held another round of talks with Iran's foreign minister Abbat Arakachi in Thyron. The semiofficial ta nim and ISNA news reported Nakvi was facilitating communication to try and achieve a framework for ending the war and resolving differences. US Secretary of State Marco Rubio told reporters on Thursday there had been some good signs in the talks. But there could be no solution if Tyrron enforced a tolling system in the straight of Hormuz which had effectively closed to most shipping after the war began on February 28th. And I I think that toll booth is the big sticking point here.

[00:17:39]The US has already signaled they're willing to punt on the uranium issue. So it's the toll booth in the straight of horror moves that the the Iranians probably the IRGC faction won't let go of. There's some good signs, Rubio said.

[00:17:51]I don't want to be overly optimistic. So let's see what happens over the next few days. A senior Iranian source told Reuters on Thursday that gaps had been narrowed although uranium enrichment and the straight of hormuz remained among the sticking points.

[00:18:05]All right, so let's talk a little bit about that deal here. This is from Al Arabia English. The final draft of the possible agreement between the United States and Iran mediated by Pakistan is expected to be announced within hours.

[00:18:18]According to Al Arabia sources, the final draft of the possible USIran agreement mediated by Pakistan could be within a few hours. Okay, a little repetitive there. Immediate, comprehensive, unconditional ceasefire on all fronts, including land, sea, and air. Let's not leave any of that open to interpretation. All right? stop freaking shooting at each other. That seems pretty cut and dry. The last time we had a ceasefire, we forgot to cease the fire. So, let's let's kind of like let's lean into that one a little bit this time around. Also on there, mutual commitment not to target military, civilian, or economic infrastructure.

[00:18:55]See earlier commentary about leaning into that one. That's kind of a big point. An end to military operations and halt media war. I don't know what the media war is to be honest with you.

[00:19:06]um commitments to respect sovereignty, territorial integrity, and non-inference in internal affairs. Guarantees freedom of navigation in the Arabian Gulf, the straight of Hormuz, and the Gulf of Oman. Again, that's that's a big one right there. If you're going to charge a toll and you're going to shoot at people who don't charge the don't pay the toll, then you're not guaranteeing freedom of navigation. All right, that's a big point there. That is the what's most likely going to this deal, if anything.

[00:19:33]a joint mechanism to monitor implementation and resolve disputes.

[00:19:38]Negotiations on outstanding issues would begin within seven days. See that one right there? That is the US punting on the nuclear issue. All right. Right.

[00:19:48]When you sign a deal and you say, "Oh, the thing we want, you're not going to get it, but we'll talk about it later."

[00:19:53]It means you're not going to get it. All right. So, it looks like the US has taken the nuclear issue off the table.

[00:19:59]And the ask is no toll booth in the straight of Hormuz. Are the Iranians willing to make that deal? That's the That's the real question here. Gradual lifting of US sanctions in exchange for Iran's commitment to the terms of the agreement. Draft agreement reaffirms compliance with international law and the UN charter. Again, terms with international law. The UN charter that includes freedom of navigation in the straight is nobody's territorial waters.

[00:20:23]Again, the Iranians would have to agree to that. The agreement would take would take effect immediately once officially announced on both sides. All right. So, pardon my skepticism. We've been here before. Let's hope for the best, though.

[00:20:37]Meanwhile, Iran moved billions through Binance to fund the regime, continuing into this month. All right. This little weasel, this a-hole, this slimy POS, bought himself a presidential pardon with largely laundered stolen money, and now he's laundering money for the IRGC.

[00:20:57]And he's doing it in broad freaking daylight, and he's getting away with it.

[00:21:00]This story is gross. This makes me need a shower. As Iran braced for conflict with the US, a key regime finance built a secret payment network to keep money flowing to its military forces. At its core was Binance. All right. This mfer has the blood of American servicemen on his hand, not to mention thousands of Iranian protesters. Until as recently as December, the network run by Babak Zanjani, an Iranian who is self-described anti-sanction operator, made $850 million in transactions over two years on the world's largest cryptocurrency exchange, mostly on a single trading account. Internal Binance compliance reports show Zanjani's allies, including a sister, a romantic partner, and a director of Zanjani's company, ran additional accounts, all accessed from the same devices, a pattern the Binance investigators flagged in their reports as evidence the group was evading US sanctions on Iran.

[00:21:53]You'll notice it doesn't say that Binance stopped it, that Binance didn't allow it. It doesn't say that. It just says they flagged it. Even after multiple internal flags on the activity, the main account continued to operate over a period of at least 15 months and was open as of January. According to Binance reports, Zanjani's use of Binance hasn't been previously reported.

[00:22:17]Binance's founder, Changpang Xhao, was pardoned by President Trump in October.

[00:22:23]He had plead guilty in 2023 and served four months prison sentence for an anti-money laundering violation. and he's back to laundering money after buying himself a presidential pardon.

[00:22:34]Billions of dollars into World Liberty Financial and he gets himself a presidential pardon and he's laundering money for the IRGC while we are at war with the IRGC.

[00:22:44]Uh guys, that's that's freaking treasonous. It's gross. It's gross. I don't know what to tell you. The 2020s, man, this freaking decade.

[00:22:54]And uh speaking of the war and the inflation because right now we are working on the next CPI reading, right?

[00:23:01]That data is being collected and I'm sure CPI is going to come out and they're going to be like, "Oh, there's like 3.9 maybe 4% inflation." Well, the spectator index has a pretty good post this morning. Price increases since the 1st of January 2026.

[00:23:15]All right, this is over the last five and a half months or so. Sulfur up 106%.

[00:23:22]Lithium up 50%. Bitmen 46%, ura 40%.

[00:23:27]Rice 35, canola 28, wheat 27, rubber 22, wool 22, cotton 21, aluminum 21, tea, milk, palm oil 20, 11, 111. All of these guys, all basically everything but lithium here, every one of these is the result of the war in Iran and higher oil prices or some form of disruption on Middle East production, right? like aluminum cutter cutter or bahrain I think was the big producer of aluminum that got shut down because of the war but you got a lot of agricultural commodities getting more expensive here because of what's happening with fertilizer bumen that's used for asphalt pavement that's an oil derivative sulfur is a byproduct of m of refining oil uh look at some of the numbers here 106% increases and this is what's got the bond market spooked this is why inflation is moving higher and why it's probably going to move higher for quite a Well, it's a good time to be in commodities.

[00:24:24]And along those lines, bellweather industrial metal copper is trading like an AI stock.

[00:24:31]Copper, famed for tracking shifts in the global industrial economy, is trading like a high-flying tech stock as investors bet that skyrocketing power used for AI will fuel a surge in demand.

[00:24:41]The highly conductive metal that's crucial for data centers and power grids has recently been moving in near lock step with stocks like Nvidia, ASML Holdings. Prices climbed to a record close last week, then retreated as AI related equities hit turbulence and were rallying again on Friday as investors returned to the sector. The girrations reflect how copper's exposure to all the transmission lines, transformers, and electrical equipment needed to power AI has become a key pillar in the bullish outlook for the metal. For now, that's outweighing mounting worries about the Iran war's impact on the more traditional industrial bedrock of copper demand.

[00:25:18]Let's scroll down a little bit here.

[00:25:20]Where are you? Copper prices on New York's ComX have jumped above those on the LME in recent weeks, allowing traders to capture the arbitrage by shipping cargos to the US. They're building the data centers in the US.

[00:25:32]That's where the demand is. So, the metals leaving London and it's coming to the COMX. LME futures were trading at about $13,630 a ton on the LME on Friday while COMX prices were about $400 higher. Orders to withdraw copper from warehouses tracked by the LME jumped the most since 2013 in a sign that traders may be looking to move stock into ComX warehouses to capture higher prices. That dynamic could end up triggering fresh bidding wars among buyers seeking to secure available metal even in an environment where demand is weakening. Guys, that's very similar to the arbitrage. I mean the opposite of the arbitrage we saw in silver late last year where the London spot market silver was trading at a big premium and so you had metal leaving the comx heading over to London. Um either way when you get these regional arbitragees trading tends to go wacky and prices go nuts along with it. So data centers causing a big blow up in copper prices and well data centers need a lot of copper which means data centers are getting more expensive and they're already not profitable.

[00:26:37]Look at the price of copper here. Over the last few months, we've not quite all-time highs. That was a few weeks ago. We hit about 671.

[00:26:46]This is uh dollars per pound, I think, is what they're talking about here.

[00:26:51]Currently at 636.

[00:26:55]And also on the commodities front, we got a lot of commodities news today. We have to talk about this, the Venezuelization of Indonesia. and and this is the the humanitarian crisis of the 2030s and the 2040s. It is in the making right now with this imbecile moves that he's making in Indonesia. Why PBO's commodity export controls are spooking Indonesian markets and they should spook everybody in Indonesia because we have seen this exact playbook before. We know how this ends. Indonesia's presidento Sububanto has been undertaking an ambitious agenda to try to remake Southeast Asia's biggest economy. The centerpiece is an effort to lift annual growth to 8% up from an average of roughly 5% over the past decade. All right, it seems altruistic in nature. We want to increase growth. Who doesn't? That seems like a great idea. PBO has increasingly pushed for the state to play a larger role in the economy, saying this will help Indonesia to avoid becoming stuck as a middle inome nation. Oh, good. More state involvement in the economy, said no one ever. He's argued that more of the profits from the country's natural resources should stay at home and be channeled into social programs that benefit ordinary citizens. Hey, that's exactly what Venezuela did with their oil industry. And didn't that work out great? Within 20 years, the whole freaking country was dumpster diving for something to eat, culminating with their president disappearing in the middle of the night, aided by some Navy Seals and US operators. Yeah, this is exactly what Venezuela did in the in the late 90s, early 2000s, and now they're trying to do it in Indonesia. The difference is Indonesia has what, like 285 million people. The president announced in May that the government would take direct control of exports of some of Indonesia's most important commodities.

[00:28:42]Such sweeping and unpredictable policy changes have unnerved investors who worry Indonesia could be drifting away from the market friendly and fiscally disciplined approach that has underpinned its economic stability. Yep.

[00:28:55]Mark my words, guys. 10, 20 years from now, this will be the big humanitarian crisis. If they push forward with this, it's not too late to switch this stupidity off.

[00:29:04]Meanwhile, pay attention to what's going on in Turkey. We hinted at this one yesterday. Uh Turkey liquidated almost all US Treasury holdings in March. Um this is not a darization story, guys.

[00:29:17]This is a desperate for dollars story.

[00:29:19]Turkey offloaded almost all of its US treasuries in March as it stepped up efforts to defend the LRA amid intense economic pressure from soaring energy costs. The amount of treasuries held by Turkey fell to just 1.8 8 billion by the end of March, down from 16 billion the previous month, according to Bloomberg estimates. The figure includes securities held by the central bank and other Turkish entities, including companies. Turkey has taken dramatic action in recent weeks to prevent the depreciation in the LRA as the country, which needs to import almost all of its energy, grapples with the effects of higher oil prices stemming from the US Iran war. Turkish markets were pitched into more turmoil on Thursday after a court removed the leader of the main opposition party. Yikes. I mean, that would be like President Trump ordering the removal of the head of the Democratic National Committee. I mean, that that that's kind of some banana Republic stuff going on there. And and yet, a lot of people are probably like, "Well, it's not so far-fetched, is it?"

[00:30:19]No. No, it really isn't. That's the sad state of affairs in the 2020s. Uh, but look, what Turkey did is exactly what Japan did. Japan's currency was falling.

[00:30:28]They needed to support it. So, they needed to sell dollars and buy their own currency in the open market in order to prop that back up. Well, where do you get dollars? When you're sitting on a big pile of US treasuries, that's where you get your dollars. So, they're selling their holdings of US government debt in order to get the dollars that they need to defend their currency. And why is their currency falling? Because they're dependent on imports. And if you're dependent on imports denominated in dollars, that means your your country's importers are probably selling their local currency in order to buy the dollars to buy the imports. This is why interest rates are rising with the price of oil. Besides the higher inflation expectations, countries across the world are selling their US treasuries, driving down the prices of those treasuries and up the interest rates on them in the process. Uh, and Turkey, remember this is not the only desperate move Turkey has made in the last couple of months.

[00:31:23]Remember this one from back in March. We talked about this one. Turkish gold reserves in largest drop in seven years data shows. Back in March, Turkey was dumping their gold reserves. Also, why were they dumping their gold reserves?

[00:31:36]The same reason they're dumping their US treasuries right now. They are desperate for dollars.

[00:31:42]And look, there's been some really strange things happening in Turkey. Um, this post by this gentleman who I sorry, I'm going to call you soil. I'm g I I'm not even going to try to pronounce your name. I'm sorry, sir. I just my non-regional addiction isn't what it is.

[00:31:57]I'm your typical Yank. Uh, but Turkey in the last 24 hours, the court sacks the main opposition leader. The central bank sells eight billion dollars to stop the panics in the market. Erdogan closes Bilgi University in the middle of the academic term. They closed a college in the middle of Istanbul. And he also bans municipalities from establishing new companies. I don't know what the heck that is about. Is that like local government finance vehicles or something? I I don't know. But a lot of weird things happening on the ground in Turkey at a time they're dumping US treasuries and dumping gold all to support their currency. And currencies becoming worthless do have a way of causing political instability, coups, overthrows, things like that. This is USDTRY.

[00:32:39]the number of Turkish lera it takes to make one US dollar. And we're looking at daily candles going all the way back to 2022. And I I've done a couple of videos about Turkey over the years about Erdoganomics and some of their silly programs they've done to try to shore up the value of the LRA. And I was saying they were all going to fail. And oh, look, they all failed because the the the tenant of erdonomics is that lowering interest rates is how you fight inflation, which is the the opposite of real economics. That's not how you fight inflation, lowering interest rates. Uh and so the Turkish lera versus the dollar has lost like 80% of its value. And look, the dollar has lost like 40% of its value over the same time frame. Uh so inflation in Turkey is getting really really bad here. The lera just keeps getting worse. The government is selling their dollars, selling their gold, selling their kidneys, whatever they have to do in order to prop up the l. And it's not working. And then you've got all these weird actions being taken by the government in the last 24 hours.

[00:33:41]Uh, pay attention guys. Something's going to happen in Turkey. I don't know what, but something's coming out of that country soon.

[00:33:48]Meanwhile, four of the largest container manufacturing companies and seven of their executives are indicted for a global conspiracy affecting billions of dollars of commerce. This one from the FBI. This was a couple of days ago.

[00:34:01]Seven Chinese executives and four of the world's largest shipping container manufacturing companies were indicted for conspiring to restrict the output and fix the prices of nearly all of the world world's standard unrefrigerated shipping containers for over four years spanning as early as November 2019 to at least January of 2024 in violation of section one of the Sherman Antitrust Act. So, they're listing the names of these individuals who I would butcher all of them, but as alleged in the superseding indictment, as early as March of 2019, several of the conspirators began discussing a scheme to restrict the output and fix the price of standard dry shipping containers.

[00:34:42]honor about November 14th, 2019. Yang Bo Wan and Tian Hua Huang of CIMC, Kan Min Lee of Dongfang, We Too Low. Oh, we fooked, sorry, Yukiang Jiang of CXIC, and a co-conspiring executive of co-conspirator company A met at CIMC's headquarters in the city of Shenzen. The goal of the agreement was to raise the price of standard dry shipping containers. To do so, they agreed to restrict CINC's, Dongfangs, and CXIC's, and Co-conspirator Company A's output of standard dry shipping containers by various means. By the way, why are we naming three of the companies and then we've got co-conspirator company A? I don't understand why why why would we name three guys and then go company A on the fourth? But I digress. Uh so the actions they took to rig prices limiting the number of shifts and hours that each production line for standard dry containers could run per day. Installing 80 87 video surveillance cameras on all 49 dry container production lines to ensure that the companies did not exceed the agreed upon limitations. not building any new container manufacturing factories and establishing a fund that included a mechanism to penalize financially any cheating on the output restriction agreement. The participants contemplated that singing and co-conspir okay there's another company we won't name would join the output restriction agreement later those companies did so by at least as early as March of 2020.

[00:36:16]So, we got a little shipping cartel, shipping container cartel sprang up and we've indicted these four companies and seven of their executives. They're all Chinese. None of them are ever going to see a day in court. They're going to stay in China. China won't extradite any of them. Nothing's going to happen.

[00:36:32]Maybe they'll sanction these companies.

[00:36:34]Um, but yeah, while you were busy struggling with inflation and the price of everything was going up, these guys were rigging the world's shipping markets to limit the amount of containers and thus drive up shipping rates and make everything you buy more expensive. Isn't that nice?

[00:36:51]Meanwhile, Starbucks scraps AI inventory tool across North America. A new era of human ingenuity and productivity has been unlocked, and nine months later, we're relocking it. Uh, Starbucks has terminated an AI program workers used for automating certain inventory counts this week, nine months after deploying it across its North American stores, according to an internal newsletter re reviewed by Reuters and two people with direct knowledge of the situation. The tool was part of CEO Brian Nichols efforts to fix the coffee chain persistent product shortages that he has blamed for hurting sales. The app designed to improve Starbucks visibility into shortages at stores. frequently miscounted and mislabeled items such as confusing similar milk types or missing them altogether. Reuters reported uh starting today, automated counting will be retired, read the internal company newsletter. In February, Starbucks told Reuters that adoption of the tool had improved product availability in stores, one of Nickels primary store level measures of progress in his corporate turnaround campaign. You reckon Starbucks lied about that? because only 3 months later they're scrapping the tool which was supposedly improving product availability. It's almost like they're full of it. In a statement to Reuters on Thursday, Starbucks said the termination of the program, which covered milk and other beverage products, came from a decision to standardize how inventory is counted across coffee houses as we continue to focus on consistency and execution at scale. Corporate gobbledygook speak for a thousand, Alex. The coffee chain also said it's working towards more frequent daily replenishments to stores and continued supply chain improvements. All right, let me do the short version for you. Their AI tool didn't work and so they're going to go back to counting the stuff by hand again. All right, maybe there's a message in there about this multi-t trillion dollar stock bubble that has sprung up around this technology all based on opium and trust me. Or or maybe not. Maybe this is just an isolated case. Kind of like that story about the Domino's franchisee that's suing the company for $100 million because their delivery times have like doubled because the company forced them to use their AI tool to plan for deliveries.

[00:38:57]Yep. It's the the biggest thing since sliced bread and fire AI, let me tell you. All right, last one of the day.

[00:39:05]Private credits unthinkable becomes a reality as trading revs up. Uh-oh. Price discovery just around the corner for private credit. They've been avoiding it for years, but now their investors want their money back, and they don't really have any choice. Private credit managers are increasingly turning to once unthinkable, trading in and out of loans to dump troubled assets and hunt for bargains amid the industry's first stress test after years of breakneck growth. And that they threw that last part in there and hunt for bargains to try to make it sound less catastrophic because Bloomberg is constantly giving a reacharound to the financial services industry. But yeah, they're being forced to sell because their investors want the money back, which means price discovery is coming. A number of business development companies are looking to trim software exposure as concern mounts over AIdriven disruption, according to people with knowledge of the matter.

[00:39:54]Others are moving in the opposite direction, building positions in discounted loans that rarely traded hands in the past. Apollo and KK are among the firms that have been active in the market in recent weeks, the people said, asking not to be identified because the information is confidential.

[00:40:10]Even more opportunistic players like Diameter Capital are jumping in, scooping up assets as sellers emerge.

[00:40:16]The change underscores how rapidly conditions are shifting in the $ 1.8 trillion private credit industry. Until recently, many managers viewed trading loans to new investors as almost taboo, arguing it threatened the tightly controlled lender groups and price stability that help distinguish direct lending from public markets. Yes, we don't want you trading these loans because we don't want to find out what they're worth, but we'll say, "Oh, yeah, we want price stability." Yeah, we don't we don't want price discovery is what they were saying. But as funds grapple with surging redemption requests and banks mark down loans pledged as collateral for financing facilities, some are rethinking those long-held views. Translation, they don't have a choice. They have to sell them because they need the cash. And the banks are already marking down those loans for them. And so private credit has an appointment with price discovery. It may be underway here. And well, it ain't going to be pretty. Let's just put it that way. And you can you can avoid price discovery for a little while, but sooner or later the free market always catches up with you. Maybe there's a lesson in there somewhere for private equity and commercial real estate and AI and data center debt and special purpose vehicles. Well, you know what? Whatever.

[00:41:22]Just yolo into AI stocks. What do I know? Hey, I just want to say thank you everybody for having your coffee with the melon heads. I'll see you guys on Tuesday. No show Monday for Memorial Day. Have a nice weekend everybody.

[00:41:33]Don't forget that like button and that subscribe button for the algorithm algorithm. Thank you to my magnanimous melon heads on Patreon, YouTube, and buy me a coffee. It's Friday, so I'll see you guys at 2:00 p.m. Eastern time for our weekly Q&A on Zoom. Links down below should you feel so inclined. Hi, Mom.

[00:41:50]Hi, Dad. Love you guys. Everybody, till next time, live small and dream big.