Lukas Ekwueme
@ekwufinance
Geopolitics, macro & commodities.
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The US is considering halting diesel exports.
The US is the world's largest diesel exporter... Russia, the 2nd largest, has already halted exports.
A US export ban would send global diesel prices even higher and force countries like Japan to dump USTs to fund their domestic needs.
In other words, imposing an export ban on diesel would blow up the UST market.
There are no easy solutions anymore.
We don't own enough hard assets for what's coming.
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The US will sacrifice the dollar to save the bond market.
It doesn't matter who is in power or how tough they act...
When push comes to shove, they will always choose to print to save the bond market.
Former Fed Chair Alan Greenspan put it best:
"The US can pay any debt it has, because we can always print money to do that."
Greenspan = Powell = Warsh = the next Fed Chair
Just look at the poor fellow next to him as he slowly realizes...
We all don't own enough hard assets for what's coming.
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Bessent is getting nervous... the yen is getting ready to dump even further.
Together, the US and Japan spent almost $100B intervening in the yen.
~50% of that move has already been reversed... in just 14 days.
To put that into perspective, after the March 2020 peak, COVID QE was ~$80B in UST purchases per month....
It looks like even this won't be enough to save the yen.
We all don't own enough hard assets.
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By starting the Iran war, the US choked one of its major funding sources... Japan.
- Japan imports 100% of its oil
- ~95% of those imports came via Hormuz
Inflationary pressures in Japan were already building prior to this war. Now they've gotten even worse.
To keep rates from surging and the yen from falling, Japan has spent over $100B, mostly by selling USTs.
This put upward pressure on US yields, which forced Bessent to step in, partner up with the BoJ and intervene in the yen...
And start laying the groundwork for QE for Japan.
The US created the conditions that threaten its own financial empire and is now busy trying to fix them on the fly.
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