Weekly KAOS, 8/14/26
The Loud Hand and the Quiet Hand
Welcome to the Weekly KAOS — UrbanKaoboy’s end-of-week roundup covering Macro and Geopolitics, where I try and tease out the most impactful bits of the week.
Themes of the Week
Oil gives back its war premium as benign prints reward Disinflationary Growth, while the deficit, the Fed fight, and China's Trojan Fire Horse do the quiet damage
The Hormuz war premium bleeds right back out despite the “Loud Hand” of Hormuz as benign CPI and PPI reward my hope in Disinflationary Growth, while the “Quiet Hands” (a $432B monthly deficit, the fight over Warsh’s board, and China’s Trojan Fire Horse) do the real damage
Every good magician wins with the same trick: fix the room’s eyes on the Loud Hand while the Quiet Hand does the work. This week the Loud Hand was the Strait of Hormuz, still shut, still throwing off headlines about carriers and closures and Iran’s demand that the US Navy pack up and leave the Gulf. And yet the tape looked straight through it. Crude, which finally caught a war bid a week ago, gave that premium right back and closed lower even with the chokepoint sealed, while July’s CPI and PPI both printed benign and Goldman now pencils Core PCE at a soft 0.20% for the month. For a market braced all summer for a Hormuz shock to detonate inside the Inflation data, the shock simply didn’t show. That is the Benign Gravity of Disinflationary Growth I keep hoping reasserts itself, doing precisely what I hoped, though I’ll be honest that the jury is still out and I said as much on X this week.
The Quiet Hand is where the erosion is happening. The federal government ran a $432B deficit in July alone, and net interest now outruns national defense; the Vodka Red Bull Economy seems firmly entrenched, alas. Meanwhile the administration reopened its fight to remove a sitting Fed Governor, China’s mercantilist “Trojan Fire Horse” (courtesy of JPM) keeps flooding the world with subsidized supply, and the AI buildout keeps leaning harder on debt.
The price of Oil calmed down this week. Almost nothing underneath it did. That push and pull was the theme of the week across both the Macro and the Geopolitical ledger.
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