Contrarian Codex — Macro Conflict Update (Part 24)

Part 24 — why the cash is still there

• He's not surprised to be writing a 24th installment. Recently he drew down some cash to buy the dip on beaten-down commodity/material equities in the portfolio showing "really solid value" (detailed in last week's Thursday report + Friday newsletter) — but deliberately kept the remaining 2/3 of the cash position, because "all was not well" yet on the macro front, and this weekend confirmed that.
• He said he'd be away from the desk this week but used the weekend and Monday morning to write this update anyway, to keep subscribers informed through the uncertainty.

The weekend — from Iranian bridges to a US strike wave

• For the first time since April, strikes reached Iranian bridges — a railway bridge in Golestan province and two bridges on the route into Mashhad. The diplomatic channel stayed alive underneath it: Araghchi worked the phones with his Saudi, Turkish and Omani counterparts and with Pakistan's army chief, and oil actually drifted lower into the weekend.
• Then Saturday: Iran hit another commercial ship transiting the strait, and Trump ordered fresh airstrikes in response. By Sunday night the US was flying a multi-hour wave of strikes against dozens of Iranian military targets — air defenses, coastal radar, missile and drone infrastructure, and IRGC small boats around the Strait of Hormuz — explicitly to degrade Tehran's ability to threaten commercial shipping.
• Iranian forces fired on commercial vessels mid-operation; American aircraft shot down a cruise missile and an attack drone aimed at them.

Tehran declares Hormuz "closed" — and the Gulf lights up

• Tehran declared the Strait of Hormuz closed — a claim Trump disputed within hours, insisting the waterway remains open to commercial traffic.
• Iran lashed out at the US footprint across the entire Gulf, with attacks reported in Bahrain, Kuwait, Jordan, Qatar, the UAE and Oman; 3 people were injured by falling shrapnel in Qatar.

Second night, not a cooling off

• Monday morning brought a second night of exchanges rather than any de-escalation, even with market open creeping closer. The IRGC says it struck the Sheikh Isa air base in Bahrain — hitting helicopter maintenance facilities, a hangar housing a P-8 Poseidon, and a drone command center.
• Jordan intercepted 4 missiles crossing its airspace in the early morning; the Guard promised retaliation would continue, and regional mediators are scrambling to save the memorandum of understanding.

The MOU read — leverage, not total war

• Article 5 of the MOU was supposed to reopen the trade route through the strait, but Iran has spent recent weeks diverting traffic away from Omani-controlled waters into the lane it controls, and the IRGC has been trying to charge a fee for passage — which Washington flatly rejects.
• Layer on that the framework was only ever designed to bridge into August, and that the Treasury already revoked the waiver allowing Iranian oil sales (transactions banned from later this week), and the picture is "two sides building leverage ahead of the real negotiation rather than two sides stumbling into total war." Could it change? Sure — but he hopes it calms into another round of negotiations, else "this will get worse before it gets better this month."

Why the market shrugs — a skirmish rhythm, not a closure

• Brent just under $79 with the strait nominally closed "looks absurd on its face," but the way he sees it the market is pricing a rhythm of missile skirmishes punctuated by windows of calm that let tankers through — not an actual sustained closure. Monday's move was a 4% pop that merely snapped a 2-day losing streak.
• Traffic through Hormuz has slowed as the security picture deteriorated, but it has not stopped.

Iran can't really close the strait

• Iran's own lifeline runs through the same water: roughly 90% of its oil exports pass through Kharg Island, so Tehran closing the strait for real "would amount to sanctioning itself" — and the US would likely resume its blockade as well.

The physical picture caps the bulls — and 2026's $126 muscle memory

• Brent printed above $126 during the opening phase of this war and then gave the entire premium back, "ripping off the faces" of leveraged entities and traders — who now carry that muscle memory and want proof of barrels actually going missing before they pay up a second time.
• The physical picture doesn't help the bulls: the UAE pumped at record levels last month, and the IEA frames the risk as delayed inventory rebuilding rather than shortage, while the China factor is still in play (detailed in last week's report). The waiver revocation pulls Iranian barrels off the legal market and puts a floor under crude — "but a floor is not a breakout, at least not yet."

Positioning — sitting on hands, shopping list ready

• Even while away from the desk he'll watch closely; this week is likely to give more clarity on the near-term direction for both the conflict and the market (risk assets in particular).
• If the market goes risk-off, he has "a clear shopping list ready to buy more quality companies" — but for now he's "happy to sit on my hands after buying more last week."