Welcome to KAOS THEORY — a podcast collaboration between Grant Williams and me that focuses on the intersection of Macroeconomics and Geopolitics in an increasingly disorderly world.
7/13/26: Episode 13 — Michael Every Redux
In the latest episode of KAOS Theory, Grant Williams and I welcome Michael Every back to the show for a wide-ranging discussion on the latest confrontation with Iran and what it reveals about the rapidly changing geopolitical landscape.
Moving well beyond the daily headlines, our conversation examines the strategic calculations of the United States, Iran, Israel, and China, and explores why the assumptions underpinning the post-Cold War order continue to unravel.
Along the way, Michael explains why today’s conflicts are increasingly fought through economic leverage, supply chains, and energy infrastructure rather than simply military force, while Grant and I probe the implications for markets, investors, and policymakers as the global balance of power continues to shift.
Where you can find Michael Every:
X: https://x.com/TheMichaelEvery
LinkedIn: https://www.linkedin.com/in/barry-strauss-8848702/
Show Notes
As always, I include my Show Notes, and this time it’s useful to point out that no matter how much I prep for a show, the geopolitical volatility of the day is such that our conversations with Michael seldom follow any predetermined script!
Proposed Agenda for KAOS THEORY 13: Michael Every Redux
0:00–5:00 — Opening Frame: “The Peacefire and the Physical War”
Goal: Establish that this is not a normal macro conversation.
Opening prompt:
“Michael, your recent notes basically say CPI, central banks, PMIs, and oil prices are now pieces of a much larger puzzle: war, shipping, industrial choke points, and economic statecraft. So let’s start with the big frame: are Iran and China separate geopolitical problems, or are they two theaters in the same physical-world conflict?”
Core question:
“What is your current base case: messy MOU extension, renewed military escalation, or a fake peace that becomes a different kind of war?”
Part I — Iran / Middle East: The MOU as Battlefield
5:00–17:00 — Segment 1: Is the Iran MOU Sustainable?
Core questions:
You’ve described the current situation as a ‘peacefire.’ The U.S. seems to read the MOU as a path to Iran containment; Tehran seems to read it as a path to sanctions relief while preserving Hezbollah and Hormuz leverage. Can both interpretations survive inside the same document?
Is there a Venn diagram overlap for acceptable Win Conditions between Trump, Netanyahu, and IRGC?
Follow-ups:
“Is the MOU really a peace framework, or just a temporary balance sheet for coercion?”
“Who needs the MOU more: Trump, Iranian political leadership, the IRGC, Israel, or China?”
“Does Iran’s political leadership want assets unfrozen while the IRGC wants Hormuz semi-frozen?”
“What would make you say the MOU is dead even if nobody has declared it dead?”
Best trapdoor:
“Is the MOU a ceasefire, a hostage negotiation over Hormuz, or a countdown clock?”
17:00–30:00 — Segment 2: Hormuz — Open, Closed, or Weaponized?
Core questions:
· Is China playing games by restricting product exports (thereby keeping consumer-facing inflation high) while keeping oil imports low (thereby assuaging Trump)?
· The market keeps looking at crude. You keep pointing to Hormuz traffic, refined product prices, bunker fuel, war-risk insurance, and crack spreads. Is Brent now the wrong scoreboard?
Follow-ups:
“If Hormuz traffic is climbing but refined products are still tight, what is the market missing?”
“Can Iran allow enough traffic to avoid global panic while keeping enough friction to preserve leverage?”
“Is this less about closing Hormuz and more about turning Hormuz into a toll booth?”
“How important is the southern Oman passage, and why would Iran oppose its normalization?”
“Can the U.S. escort enough oil to calm markets without restoring true normality?”
Market bridge:
“Could we get the weird outcome where crude looks contained, but consumer inflation tightens through jet fuel, diesel, bunker fuel, shipping, food, and utilities?”
30:00–45:00 — Segment 3: Hezbollah, Lebanon, Israel — The MOU’s Hidden Contradiction
Core questions:
· “I want to test my Hannibalesque double-envelopment thesis. Maybe Trump appears weak in the center through the MOU, while letting the pincers form: Israel/Lebanon against Hezbollah on one side, and potentially Iraq anti-corruption / anti-IRGC moves on the other. Clever-but-too-cute, or plausible?”
· “You wrote that Tehran may read the MOU as peace where Hezbollah wins despite losing the battle, while the U.S. reads it as peace where Hezbollah loses because Israel stays or Hezbollah is disarmed. Isn’t that contradiction the real war?”
Follow-ups:
“If Israel stays in southern Lebanon until Hezbollah is disarmed, is that a violation of peace or the enforcement mechanism of peace?”
“Could Lebanon’s state interest now diverge from Hezbollah’s interest?”
“Are U.S./Gulf sanctions against Hezbollah part of the same military-diplomatic campaign?”
“Would Iran tolerate Hezbollah being slowly strangled under cover of an Iran MOU?”
“Is Israel the spoiler, the enforcer, or the pincer?”
45:00–55:00 — Segment 4: Iraq and the Second Pincer
Core question:
· “If Iraq becomes the second pincer — through anti-corruption probes, state cleanup, or pressure on pro-IRGC commercial and militia networks — how dangerous is that for Iran’s regional architecture?”
· The Houthis have been eerily quiet. If the first 2 pincers are real, shouldn’t there be a 3rd pincer to wipe out the third H of the Houthi/Hezbollah/Hamas Cerberus to preempt any problems at Bab al Mandab?
Follow-ups:
“Is Iraq more important to Iran than markets appreciate?”
“Could anti-corruption become the polite name for anti-IRGC financial warfare?”
“Would Iran be more threatened by losing influence in Iraq than by temporary pressure in Lebanon?”
“If Hezbollah is one forward-defense pillar and Iraq is another, does pressure on both make renewed escalation more likely?”
Make-him-choose:
“If this double envelopment is real, does Iran respond in Hormuz, Lebanon, Iraq, Israel, or through China/Russia diplomatic channels?”
Part II — China / Geo-Economics: The Other Front
55:00–67:00 — Segment 5: China’s Oil Game
Core question:
“China’s oil imports have dropped sharply while the U.S., Japan, and others are using emergency or abnormal flows to keep prices contained. Is China helping suppress oil to assuage Trump, managing inventory, or positioning itself for a longer conflict?”
Follow-ups:
“Is lower Chinese oil demand a peace signal or a war hedge?”
“Could China be deliberately reducing visible oil pressure while retaining leverage elsewhere?”
“Does Beijing want Trump to get lower crude but still suffer higher consumer inflation through product bottlenecks?”
“How sustainable is the current oil calm if China resumes normal imports?”
“Would China prefer Iran to keep Hormuz semi-disrupted but not fully catastrophic?”
Sharp formulation:
“Is China playing good cop in crude and bad cop in goods?”
67:00–80:00 — Segment 6: China’s Product Export Restrictions and Industrial Choke Points
Core question:
“You’ve pointed to rare earths, Japan, tungsten scrap, cobalt curbs, Chinese solar inverters, and the broader industrial security map. Is China’s real leverage no longer commodities, but the products and components that embody commodities?”
Follow-ups:
“Are we moving from commodity inflation to product scarcity inflation?”
“Is China restricting exports to inflict inflation pain, expose Western dependency, or force a negotiation?”
“How should we think about China’s leverage over Japan specifically?”
“Is the West finally realizing that supply chains are not economic plumbing but strategic terrain?”
“Does China’s playbook amount to: ‘You control the dollar and sea lanes; we control the industrial choke points’?”
Best trapdoor:
“If China can reduce oil imports while restricting critical product exports, are markets using the wrong inflation model entirely?”
80:00–87:00 — Segment 7: Fortress North America vs China
Core questions:
· What are the US levers in bifurcating world energy flows? My gut says that the geopolitical imperative for Product Export Bans is higher than ever now given Trump’s focus on lowering gasoline prices.
· “You’ve floated the NAFTA-to-NAPHTHA idea — North America as an energy, hydrocarbons, commodities, consumers, technology, and military bloc. Is Fortress North America the logical U.S. response to China’s choke-point strategy?”
Follow-ups:
“Would a reworked USMCA become the economic backbone of a Donroe Doctrine?”
“Is the U.S. trying to build a trusted-bloc industrial system around energy, defense, minerals, chips, and capital markets?”
“Where does that leave Europe, Japan, Australia, India, and the Gulf?”
“Is this still globalization with security filters, or is it bloc formation?”
“Does Fortress North America lower inflation through energy abundance or raise inflation through deglobalization?”
87:00–90:00 — Closing Rapid Fire
Keep this brutal and clean.
“Iran MOU: extended, broken, or militarized?”
“Most likely next escalation point: Hormuz, Lebanon, Iraq, Israel, or Red Sea?”
“China: calming crude or weaponizing goods?”
“Most mispriced market variable: oil, dollar, rates, gold, shipping, or crack spreads?”
“What does the market still not understand?”
“One indicator you would watch every morning before looking at the S&P?”
Final Questions:
· You and I saw eye-to-eye on Trump’s Economic Statecraft goals and you agreed with my Reverse Marshall Plan mental model. Question: Can we still get to the nirvana of Disinflationary Growth? We were there briefly before the Iran War.
· “If you had to summarize this whole moment for a portfolio manager still staring at Fed dots and CPI prints, what would you say?”
KAOS THEORY 9: Michael Every
ICYMI, please listen to our conversation with Michael last year about the Tariff Wars:
