00:00If we do see the U.S. military pull back without reopening the strait, is that, in your mind, a
00:06failure?
00:08It could be a disaster, actually.
00:10What President Trump has signaled, or signaled in the last day or so, is that it's not our problem.
00:16The Strait of Hormuz is Europe's problem or Asia's problem because they're the ones who buy oil that passes through
00:21the Strait of Hormuz.
00:22But he seems to neglect the fact that oil is priced globally.
00:26And just because we produce it in the United States doesn't mean the impact of a continued closure is going
00:31to have an impact on the global economy and oil prices, even for Americans.
00:36Well, one of the questions that has come up in conversations with investors and advisors has been the potential knock
00:41-on effects if America ultimately could be facing some of the blame for inflation globally.
00:47Obviously, we've been tracking oil prices and energy prices in other regions in the world.
00:51At some point, does that impact the path forward for the Trump administration, in your mind?
00:57I think the economic impact, particularly domestically, more domestically than internationally, really weighs heavily on Trump's calculus.
01:06I think it's one of the reasons why he watches the stock market so carefully.
01:09He watches oil prices so carefully.
01:11That seems to be the gauge and the thing that's pushing him and has been pushing him for a couple
01:16of weeks now to want to figure out a way to end the war.
01:19I think it would have been easier before Iran closed the Strait of Hormuz because that now becomes the principal
01:24factor having a global economic impact, but the one over which we seem to have the least control.
01:29Well, that's what I was going to ask, Michael, is, you know, how big of a point of leverage is
01:34the fact that Iran is pretty much controlling the Strait of Hormuz and pretty much keeping it virtually closed at
01:41this point?
01:41You think about all this back and forth, the different messaging that we're seeing on the U.S. side.
01:46It all seems to hinge to an extent on the Strait, though.
01:51Exactly.
01:52President Trump keeps trying to suggest that it's not a big deal.
01:55And since it's not a big deal, somebody else should take care of it other than the United States.
01:59The Iranians have a tremendous amount of leverage, partly because it's not that hard to keep the Strait of Hormuz
02:04closed.
02:05We sank the Navy, but you never needed the Navy to keep it closed.
02:08All they need is threats against ships by drones or rockets or dissuading insurance companies in London from covering the
02:15tankers or cargo vessels.
02:17It's pretty easy to keep it closed.
02:18And as long as it's closed, you have this kind of sort of Damocles over the entire region and the
02:23economies of the Gulf and the global economy that depends on oil.
02:28So to walk away from it really would damn the credibility of the United States and pose a longstanding threat
02:37to global economic conditions.
02:38And I do wonder, you know, where the UAE, where some of the Gulf countries come in here, you know,
02:45there is still the hope of diplomacy.
02:48But also we know that the UAE is also among the Gulf countries who are asking the U.N. to
02:54basically be able to use force to help reopen the Strait here.
02:59Right. I think the UAE, Saudi, I think all the Gulf countries in a way are confounded.
03:05This is their worst scenario.
03:06They I don't think they ever wanted the war to start because I think they predicted a lot of these
03:11downside risks, including the threats to their own infrastructure, closure of the Strait.
03:16But now that it's ongoing and now that Iran has closed the Strait of Hormuz, I think they all find
03:21it just unacceptable for the U.S. or anybody else just to walk away.
03:25And different countries have different reactions.
03:27I think the UAE has signaled that they're willing to get more involved, both diplomatically and militarily.
03:32I think Saudi is cautious on that point because they really fear an escalation which could affect their energy infrastructure,
03:40desalination facilities and so forth badly.
03:42So it's true. The UAE is pursuing this resolution at the U.N., which could authorize force.
03:48I think they and the Saudis and others are supportive of mediation efforts.
03:52You know, Pakistan has gotten involved.
03:54As I understand it, the Pakistanis are consulting with the Chinese and they issued a statement together.
03:58It shows diplomatically they're bringing some heavy hitters into the equation.
04:02The question is just what is the basic outlines of a near-term deal.
04:08I don't think the U.S. or Iran can settle everything, all the differences between them.
04:12But if there's something like a de-escalation and ceasefire in exchange for the Strait of Hormuz opening again, I
04:18think at least then we're on a good path.
04:20Michael, just quickly here, wondering what you would look for when we do hear from President Trump this evening
04:25and things that investors should be keeping in mind or keeping an eye on, just given we are in a
04:30shortened trading week here in the U.S.
04:33Right. I think he's going to want to signal that he has a plan and that he intends to get
04:38out.
04:38I don't know that what he says is going to be terribly satisfying because he's been signaling that he wants
04:43to get out
04:43and that he has a plan for many, many days now.
04:47And both the timeline and the objectives keep shifting.
04:50But I think he does want to convey that this war is in everybody's interest, that he has a plan,
04:55that he doesn't intend to stay in Iran forever.
04:57I think the thing to watch tonight, though, is what does he say exactly about the Strait of Hormuz?
05:01To what degree does the United States bear any responsibility for having it closed and efforts to try to open
05:09it?
05:09And if not, whose responsibility is it?
05:11Because we can claim the war is over.
05:14We can claim we're in negotiations.
05:15But as long as that is hanging over our heads, it's a little bit hard just to walk away.
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