GM. This is Milk Road Macro, the newsletter that knows that the line between piracy and diplomacy is thin enough to ARRGGue about.
Here’s what we’ve got for you today:
- ✍️ The U.S. starts new blockade in the strait of hormuz.
- 🎙️ The Milk Road Macro Show: The Commodity Crisis Playbook: Position Before It’s Too Late (From A 20-Year Veteran) w/ Ole Hansen.
- 🍪 The world needs more computing power.
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NEW ANALYST WHO DIS
Hello Frens,
This is John Gillen. I’m writing to let you all know that I’ll be taking over writing these Milk Road Macro Newsletters going forward.
You may already know me as the Host of the Milk Road Macro Podcast and the co-Host of the Milk Road Crypto Show.
I’m really excited to be doing some written content for this amazing community, and I’m going to do my best to deliver value in every edition.
Also, I wrote that opening pirate pun myself so I hope you’re ready to set sail together.
Anyway, let’s dive in before I have to walk the plank. 😀
THE U.S. STARTS NEW BLOCKADE IN THE STRAIT OF HORMUZ
The macro landscape is changing by the hour. Regardless of what happens with this blockade, we're going to see significant long-term repercussions and no one is sure how bad it will be, or what to do about it.
The conflict in Iran has now been going on for nearly two months and the Strait of Hormuz remains effectively closed.
21 hours of negotiations ends in escalating conflict
The good news - the ceasefire appears to be holding.
The bad news - after 21 hours of negotiations in Pakistan personally led by U.S. Vice President JD Vance - no deal was reached and the U.S. announced a blockade in the Strait of Hormuz.
Specifically, the U.S. is blockading ships entering or exiting Iran.
The squeeze: 90% of Iran’s economic activity flows through these seaways. The blockade is intended to force Iran back to the table to surrender its nuclear enrichment capabilities.
In response, the Iranians have indicated they are open to giving up nuclear weapons.
THIS seems to be the signal the markets have reacted to with bullish action early this week.
The conflict continuing doesn’t seem to be moving the markets down for the moment.
If things escalate and get worse, that may have an impact.
But price action seems to indicate that the market is expecting a peace deal sooner rather than later.
When it officially comes, a lot of pent-up bullish action will be released.
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THE U.S. STARTS NEW BLOCKADE IN THE STRAIT OF HORMUZ (P2)
The looming oil shock
We’ve now lost 400M barrels of oil that will not be produced in 2026.
Depending on how long this goes on, that number in total will likely be well above 1B barrels of oil.
For context, that’s a lot.
Check out my recent podcast with oil quant GOAT Rory Johnston for more details on this.
This will require a significant amount of demand destruction in energy markets.
There are going to be increases in prices across all sectors of the economy due to the rising cost of oil.
It remains to be seen how bad the economic impact of this will ultimately be, but it may be six to nine months before all of this plays out and we have a clear picture of the total impact.
Short-term, though, the markets seem eager to rally on news of the conflict ending.
The long-term risks of increased inflation are rising.
The dollar breaking down?
After threatening to break out higher for most of March, the dollar seems to finally be coming down a bit.
This is bullish for risk assets like stocks and Bitcoin.
The S&P has seen a strong almost euphoric bounce as well.
This indicates that there are a lot of bulls waiting on the sidelines looking for an all-clear signal to come back into the market.
Wrapping up
It’s clear that the bulls want to run higher.
It’s also clear that they’re waiting for confirmation that the conflict is over before they do.
Markets will remain volatile while this plays out, but there are indications that the bears haven’t won just yet.
On the economics side, the labor market has softened, but there are also signs of acceleration in many sectors of the economy.
Increased inflation risks will remain a concern, but it does not appear for the moment that the Fed will rush to rate hikes to counter this.
The macro landscape is shifting rapidly and will be reacting sharply to headlines in the coming days.
Pay attention. DON’T PANIC.
HORMUZ BLOCKADE: THE BIGGEST SUPPLY SHOCK OF OUR LIFETIME 🛢️
In today's episode, we sat down with Ole Hansen, Head of Commodity Strategy at Saxo Bank, to talk about the Strait of Hormuz blockade and what it means for energy markets, global inflation, and your portfolio.
Here's what you'll hear:
- Why Brent briefly topped $100 and jet fuel crossed $200/bbl, with physical barrels commanding massive premiums over futures contracts.
- How this started as an inflation shock but risks morphing into a global growth constraint the longer the disruption runs.
- Why the pain extends beyond crude: LNG, fertilizers, petrochemicals, and even chip supply chains are all in the crossfire.
- Ole's practical playbook for commodity investing: start broad, size carefully, and watch logistics signals, not just headlines.
Don't miss this one 👇️
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