De-dollarizers have got some 'splaining to do



Another week of limited Strait of Hormuz traffic, another all-time high for equities. Markets are not clairvoyant (see 1929, 1987, 1999, 2008, 2021…) but they are forward-looking, and the past month’s price action is telling you something about where the investing hivemind believes the world is going with or without an official grand bargain between Orange Man and the IRGC. While bitcoiners and crypto influencers converged on Vegas this week to once again learn the meaning of negative-sum games (and we’re not just talking about the slot machines), global energy markets saw a couple headlines that we think help explain recent equity strength and will prove to be monumental developments when historians HistoryProfessorGPT eventually writes the consensus narrative on this period. First off, US exports of oil, natural gas, and jet fuel surged to new all-time highs, putting the country in league with Saudi Arabia for crude exports despite shipping virtually zero barrels only a decade ago. Even more significantly, the United Arab Emirates – which Treasury Secretary Bessent confirmed is in talks for a standing dollar swap line with the US just last week – announced it will immediately exit OPEC, the Middle Eastern oil cartel that has driven a structural floor for global energy prices for over half a century. While we can’t say for certain that those two UAE developments are directly related, we see strong odds that they collectively represent the latest bright-red signal pointing to the US’s efforts to shore up its own major sphere of influence as it looks to exert more control over energy markets, strengthen dollar dominance, and curb China’s rise.

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